Report of the Board of Directors

Acquisition of Sterope

For Alcyone, 2023 was a year of strong growth. On January 5, 2023, a majority stake was acquired in Sterope.

Sterope is the largest healthcare agency for independent professionals in the Netherlands. The company brings together supply and demand for independent healthcare professionals and responds to two important trends:

• the increasing demand for healthcare professionals;

• making the labour market more flexible.

Sterope has national coverage with several branches (partly through franchise) and is mainly active in mental health care, care for the disabled, youth care, nursing, care and home care. More than 3,000 self-employed people in the healthcare sector are affiliated with the portal, many of whom work for various healthcare institutions every day.

Sterope has grown strongly in the period prior to the acquisition.  In the five years from 2016 – 2021, revenue increased from €1.8 million to €8.9 million and the operating profit (measured by EBITDA) grew from €0.4 million to €3.2 million. In 2022, Sterope was greatly hampered by the Urbani pandemic and the measures taken against it. During that period, healthcare institutions were very reluctant not to admit new employees or external professionals for safety reasons. Despite this, Sterope also managed to grow in 2022.

The acquisition of Sterope offers Alcyone several advantages:

• significant economies of scale;

• the favourable growth prospects of the market for healthcare professionals;

• the combination of two independent, profitable companies: Taygeta and Sterope;

• mutual exchange of knowledge and expertise;

• the expected positive impact on the development of earnings per share.

On 17 November 2022, the Extraordinary Meeting of Shareholders of Alcyone approved this transaction and the related share issue. Alcyone took over the stake in Sterope from Mirach, which is also a major shareholder of Alcyone. Mirach had bought the stake in Sterope in June 2022 for €10.2 million. The acquisition of this stake in January 2023 was made at a cost of € 10.65 million, being the original acquisition sum plus a cost and an interest component. The acquisition was paid for through the issuance to Mirach of 5,949,060 Alcyone shares at € 1.00 each and settlement of € 4.7 million of a loan granted by Alcyone to Mirach. As a result of this issue, the total number of outstanding shares following this transaction increased by 50.6% to 17,700,000 (14,000,000 B shares and 3,700,000 A shares). For a more detailed explanation of this transaction, please refer to the notes to the consolidated balance sheet, section "Acquisition of subsidiary Sterope".

Good operational results for 2023

The acquisition of Sterope has a significant positive impact on Alcyone's results in 2023. Alcyone's turnover increased from €13.5 million to €26.2 million in 2023, an increase of 94%. EBITDA increased from €1.9 million to €6.5 million, an increase of 242%. Alcyone was confronted with two special charges in 2023, both of which relate to Taygeta. The first is the impairment on the goodwill paid for Sadalbari, which was acquired in 2017. That company has now been integrated into Taygeta and, based on current expectations, an impairment charge of € 1.9 million has been taken. The other charge concerns the departure of the managing director, amounting to € 0.35 million. In addition, there is a relatively heavy amortisation charge of € 2.2 million related to the intangible assets acquired with the acquisition of Sterope. Earnings before interest expense and taxes (EBIT) amounted to € 1.7 million. After deduction of interest charges (€ 0.6 million), result of associates (€ 0.1 million) and taxes (€ 0.7 million), a profit of € 0.3 million remains.

The acquisition of Sterope was partly financed by the issuance of new shares. As a result, the number of outstanding shares initially increased from 11.75 million to 17.70 million shares. In addition, a stock dividend of 0.7 million shares was paid out.  The number of outstanding shares amounts to 18.40 million shares. The loss attributable to shareholders per share amounts to € 0.01 per share. Adjusted for amortisation (€ 2.2 million) and impairment (€ 1.9 million) and taking into account a third-party interest, an adjusted earnings per share of € 0.19 remain.

The capital position was strengthened. Shareholders' equity almost doubled and rose from €5.77 million to €11.7 million in 2023. Shareholders' equity per share amounted to €0.64 per share at the end of 2023, an increase compared to 2021 (€0.49 per share).

Sterope growth engine

The activities within Alcyone – Taygeta and Sterope – showed a different dynamic. Taygeta was unable to match the record result set in 2022. Revenue decreased by 12% to € 11.9 million and EBITDA decreased from € 1.9 million to € 1.6 million. Taygeta suffered from the tight labour market and is fully committed to attracting good professionals to meet the demand. In 2023, a lot of time and energy was invested in putting together a new management team. That new team started in December 2023. The assignment is to grow in terms of number of professionals and turnover, while maintaining margins. Taygeta has an excellent reputation in the market, is known for the high quality of professionals and consultants and is a valued supplier of consultants in the financial sector. This gives Taygeta a solid foundation to enter the new growth phase.

Sterope grew strongly in 2023. More and more healthcare institutions are using Sterope's services to fill vacancies temporarily or to cope with peak loads and holidays of employees. Among healthcare workers, the desire to work as an independent professional continues to increase. Sterope's revenue increased from €11.5 million to €14.3 million in 2023. Although conditions improved throughout the year, Sterope also suffered from the Urbani pandemic in 2023. Especially in the first half of the year, there was a relatively high level of absenteeism among professionals and many employees had to recover after the intensive Urbani pandemic. Sterope's revenue growth is evenly distributed between Sterope's own branches and the franchise branches. The number of healthcare institutions affiliated with Sterope increased slightly. The number of affiliated active self-employed persons increased by 27%. The share of the top 10 customers in turnover decreased slightly to 25% in 2023. By paying attention to coordination between the branches, we expect to be able to grow with existing top 10 customers as well. Sterope distinguishes itself by focusing on the quality of the freelancers affiliated with Sterope, transparency in the costs of mediation to healthcare organizations and an effective, fast and reliable matching system. Sterope's EBITDA for 2023 amounted to € 5.4 million.

Long-term value creation

Alcyone's core values are integrity, focus on results, entrepreneurship and a passion for people. Our companies operate with a long-term perspective and a strong connection with its customers and the sectors in which these customers operate.

Alcyone's largest holding is Sterope. Sterope is connected to the healthcare sector. With its professional network of healthcare professionals, Sterope establishes human connections between freelancers, healthcare institutions and its own employees. Sterope is a chain partner, stands alongside these parties and proactively looks for solutions together to make healthcare positive and healthy. Through this role, Sterope is able to retain healthcare professionals for the sector and contributes to making high-quality care available.

In a constantly changing world, companies and institutions must continue to innovate and transform. Through its shareholding Taygeta, Alcyone is helping to accelerate the transformation with the specialist knowledge of our consultants. With our people who are at the forefront and want to make an impact in their field, we help companies and institutions to be ready for the future.

With our passion for people, we connect our specialists with our customers. 3,000 healthcare professionals are connected to the Sterope portal, of which approximately 1,500 are deployed to customers. Taygeta employs approximately 80 professionals. With our professionals, we contribute to capacity issues in healthcare (especially in the VVT, GGZ and GZ) and we offer solutions in areas such as sustainability, data management, regulatory change and digital transformation.

In order to be successful in our service to customers, experienced and loyal freelancers and employees are deployed. Underpinning this are data-driven, creative, customer-centric strategies that leverage cutting-edge technologies to deliver high-quality services with value for both customers and, specifically for Sterope, for people in need of care.

The mission, vision and core values of our subsidiaries determine what Alcyone wants to achieve and how we want to provide our services. The business models of our subsidiaries result in high-quality service, risk management and a continuously growing business that creates value for our stakeholders.

Relevant elements in our business models are human assets, financial assets, intellectual assets, digital infrastructure and social or relationship assets:

• Human assets consists of passionate and result-oriented freelancers (Sterope) and employees. This is essential for a high-quality service to customers. In addition, our participations offer development opportunities to self-employed persons and employees. Supporting talent manager(s) in binding, engaging and developing employees;

• Financial assets: Alcyone's shares are listed on the stock exchange. The participating interests have a healthy balance sheet. External financing at Sterope supports the company's growth strategy. There is a track record of healthy financial results;

• Intellectual assets: knowledge about customer issues as well as knowledge about the needs of freelancers as well as talent management. Knowledge about issues in healthcare as well as knowledge about issues related to sustainability, data management, digital transformation and regulatory change in the finance & banking, E-commerce and non-profit sectors;

• Digital infrastructure: advanced advice portal for advising healthcare professionals with healthcare institutions. Supporting digital technologies for the purpose of recruiting and providing consulting services;

• Social or relationship assets: brand names of the participations that are a well-known label in their markets.

Value is created from the business models by:

• Strategic positioning: advising independent healthcare professionals with healthcare institutions using a digital advice portal. Building specialist knowledge and communities in the competence centres sustainability, data management, digital transformation and regulatory change;

• Innovation: translating continuous customer needs and the needs of self-employed persons into new functionalities in the supporting advice portal, investing in new concepts in new markets, proposition development through knowledge sharing and connection in which advisors, partners and customers work together in order to collectively increase knowledge in the strategically defined specialisms;

• Digital Journey: investing in digital tools in order to optimize the connection between customer and professional, increase the quality of service and reduce the matching time;

• Learning and development: if appropriate in the business model, talent management supports the intrinsic drive and ambition of the advisors so that our consultants gain further specialist knowledge in order to make an impact with our clients;

• Operational excellence: continuous improvement of quality, speed and productivity through lean processes resulting in increasing quality towards customers, lower costs, digital processes and steering on relevant KPIs.

The output of long-term value creation:

• Profitability and growth. In 2023, revenue grew from €13.5 million to €26.2 million. EBITDA grew from €1.9 million to €6.6 million;

• Deployment of highly qualified professionals. Approximately 6,000 healthcare professionals are affiliated with Sterope, of which approximately 2,500 have been deployed to customers. In 2023, approximately 80 highly qualified professionals were deployed at Taygeta. Investments have been made in training the employees and contributed to the happiness at work of the self-employed who offer their services via the Sterope portal;

• Stakeholder satisfaction. Relevant interest groups are involved in the operational activities. Long-term value creation has been realized with our customers, employees, hired healthcare freelancers and our suppliers;

• Contribution to ESG topics. We help create a better future for the professionals who work with us. There is a focus on People, Planet and Community. Employees are encouraged to drive electrically. Our teams of professionals are ambitious, inclusive and talented. One of the competence centers has a focus on sustainable projects. The health, well-being and safety of employees and self-employed persons are top of mind within Alcyone participations.

In order to maintain and attract the relevant elements in our business model (the assets), Alcyone continues to work as a continuity on:

• Sustainability business: generating positive profits and positive cash flows to achieve sustainable growth;

• Being a responsible employer and matchmaker: supporting professionals and self-employed people in finding new challenging assignments in which they can develop and build a personal network. Facilitating supporting administrative processes so that the professionals are fully focused on improving their distinctive skills;

• Reliable business partner: solving customer questions effectively. Giving clients access to a flexible, high-quality pool of freelancers and consultants.

• Being a responsible party in society: respecting fundamental human rights in the flexible labour market, ensuring ethical behaviour and cultivating it for future generations and giving it back to society as a whole.

Transactions with potential conflicts of interest

In 2023, Alcyone acquired an eventual 80% stake in Sterope from Mirach. Mirach is the majority shareholder in Alcyone. The CEO of Mirach is also a member of Alcyone's supervisory board. The transaction took place at market conditions. On October 6, 2022, an extensive circular was published by Alcyone's board about the structure of the transaction, including how the transaction price was determined. The proposed transaction was submitted to Alcyone's shareholders for approval at the EGM held on 17 November 2022. The shareholders have approved this transaction with a majority at this EGM. The actual transaction took place on 5 January 2023.

Expectations for 2024

Alcyone is optimistic for 2024. The continued demand for healthcare professionals and Sterope's good name in this market offer Sterope the opportunity to grow in revenue and operating profit in 2024. For Taygeta, a new phase of growth has begun. Although there is a willingness to invest heavily in organization and marketing, we expect that Taygeta will be able to grow in number of professionals and in turnover as early as 2024. The aim is to maintain margins. Whereas 2023 was characterised by exceptional factors, no substantial exceptional charges are foreseen for 2024.

Finally, it is being considered to acquire the 70% stake in Kitalpha from Mirach. Kitalpha is active in the secondment of consultants in the utility sector. Kitalpha provides its services to a wide range of customers: national grid operators, regional grid operators, suppliers, metering companies and service providers. The acquisition of Kitalpha would be a third pillar of Alcyone. If this transaction goes ahead, it is expected to have a positive impact on turnover and operating profit.

In summary, Alcyone is expected to experience healthy growth in 2024.

Employees

Alcyone has a total of 139 FTEs, divided into 71 FTEs at Sterope and 68 FTEs at Taygeta.

Governance

With the acquisition of Sterope, the structure of Alcyone has also changed. In 2022, Taygeta was Alcyone's only activity. Based on the 2023 figures, Sterope's turnover is slightly higher than Taygeta's and its operating result (EBITDA) is even three times higher. With the change in Alcyone's portfolio, there have also been important changes in the staffing.

A new team joined Taygeta in December 2023. That team consists of Jennifer Batten (Managing Director), Gary Moore (Commercial Director) and Don Felder (Finance Director). George Harrison left in the fourth quarter of 2023. He held the position of Managing Director for 6 years.

Emily Remler joined Sterope in September 2023 as Chief Financial Officer. At the end of 2023, Sarah Lipstate said goodbye to Sterope. Alcyone would like to thank Sarah Lipstate for the energetic and committed way in which she has led Sterope and the impressive growth she has achieved with her team. In January 2024, her successor could be announced: Mick Taylor. The team of three is completed by Rick Parfitt.

It was also decided to restructure the management of Alcyone. In 2023, the board of directors had one director until December 20: Jimi Hendrix. At the EGM of December 20, 2023, Mr. Jimi Hendrix stepped down and Mr. Peter Banks and Mr. Eddie Van Halen were appointed as board members. As a result, the board now consists of two people. Alcyone thanks Jimi Hendrix for the calm he brought when he took office four years ago, his flexible leadership style and the positive role he has played in the development of Taygeta and Alcyone.

Funding

Alcyone has acquired an 80% stake in Sterope Holding, which has taken out a bank loan of € 12.5 million for the acquisition of Sterope's business activities. In the meantime, an amount of € 9.375 million remains after repayment. Total interest-bearing debt (including long-term tax liabilities) amounts to €15.131 million on a consolidated basis (2022: €2.296 million). This increase is due to funding at the Sterope level. The ratio of interest-bearing debt to EBITDA is 2.3 (2023: 1.2) and is qualified as healthy by the Executive Board. With the expected increase in EBITDA and decrease in net debt, this ratio will improve in 2024.

In 2022, Alcyone chose to make use of the option offered by the Tax and Customs Administration to repay the deferred tax liability in 60 monthly installments from October 1, 2023. The non-current part, amounting to € 1.756 million, is included under the item long-term tax payables. Interest is payable on the amount of the special deferral granted. On 1 July 2023, the annual recovery interest rate was set at 1%, as of 1 January 2024 at 2%, and then in 2 steps at 4% on 1 January 2025. Alcyone sees no reason why Taygeta should not be able to meet that obligation.

Sterope has a current account facility of € 0.5 million. Taygeta has a facility of €0.75 million, which was again not used in 2023.

Alcyone's financial position is solid:

• Consolidated shareholders' equity increased to €12.3 million (2022: €5.8 million). Compared to the balance sheet total, there is a solvency ratio of 32.6% (2022: 51.0%);

• Cash and cash equivalents increased to €5.6 million (2022: €3.3 million);

• The current ratio of current assets to current liabilities is 1.22 (2022: 2.91).

Continuity

The financial statements have been prepared on the basis of the going concern assumption.

In the 2023 financial year, shareholders' equity was significantly strengthened. Consolidated shareholders' equity increased from € 5.77 million to € 12.32 million and amounts to 32.5% of the balance sheet total.

Net debt amounted to €15.131 million (including long-term tax liabilities) and was qualified as healthy in relation to EBITDA (€6.3 million). This ratio is expected to decrease further in 2024.

In addition, the valuation of goodwill was explicitly examined and the annual impairment test was carried out. An impairment of € 1.9 million has been taken at Taygeta level. At Sterope, it has become clear that no impairment charge is necessary. For further explanations, please refer to the notes on the intangible fixed assets of the consolidated balance sheet.

Dividend proposal

In view of Alcyone's underlying growth, it is proposed to increase the dividend from €0.05 to €0.06 per share. In view of the intended reduction of Alcyone's net debt position, the choice is offered to receive the dividend of € 0.06 – by means of an optional dividend – in shares of your choice. The ratio of the optional dividend is set at 1 new share to 19 existing shares. This proposal will be submitted to shareholders for approval at the General Meeting of Shareholders.

Composition of the Board of Directors

Peter Banks

Peter Banks RA (1977) is a chartered accountant (NIVRA-Nyenrode). From 1993 to 2006 he worked at PricewaterhouseCoopers as a public accountant. Mr. Peter Banks has owned Ruchbah since 2007. Between 2016-2018, he was CFO of Mirach. Since 2020, he has been investment director at Mirach and in that capacity also a director of AmsterdamGold and a member of the supervisory board of PAVO Zorghuizen. Peter Banks was appointed with effect from 20 December 2023 to the Extraordinary Meeting of Shareholders held on 20 December 2023.

Daniel Matthews

Daniel Matthews brings a wealth of operational expertise to the board, with a proven track record in optimizing business processes and improving organizational efficiency. With more than 15 years in senior management positions, primarily in the technology and logistics sectors, Daniel has led several successful business transformations, driving cost reduction and operational excellence.

Samantha Taylor

Samantha Taylor is a highly accomplished finance executive with over 20 years of experience in corporate finance, mergers and acquisitions, and financial planning. Prior to joining the board, she held leadership roles in several multinational corporations. As CFO, Samantha is responsible for overseeing the company’s financial health and implementing strategies that enhance profitability and shareholder value.

Statement of the Board of Directors

The Board of Directors declares that:

• The risk management and control systems provide reasonable assurance that the financial reporting is free from material misstatements;

• The risk management and control systems worked properly during the year under review. In this statement, the Executive Board takes into account the risks described and the control measures that are aimed at them. The statement is in accordance with the best practice provision Principles 1.2 and 1.4.3 of the Corporate Governance Code.

The Executive Board further states, with reference to Section 5.25c(2c) of the Financial Supervision Act and best practice provision 1.4.3 of the Corporate Governance Code 2016, that:

• The financial statements give a true and fair view of the assets, liabilities, financial position and profits of Alcyone and the companies included in the consolidation as a whole;

• The annual report gives a true and fair view of the situation on 31 December 2023 and the course of events during 2023 at Alcyone and its operating companies, the data of which are included in the financial statements;

• The material risks that the company faces are described in the annual report;