Gesco : Declaration of Corporate Governance (1 MB)

Corporate governance declaration

in accordance with Sections 289f, 315d of the German Commercial Code (HGB) Financial year 2023

In this declaration, the Executive Board and Supervisory Board report on the Company's corporate gover­ nance in accordance with Sections 289f and 315d of the German Commercial Code (HGB) and in compliance with Principle 22 of the German Corporate Governance Code ­(hereinafter also referred to as the "GCGC" or "Code").

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The Executive Board and Supervisory Board of GESCO SE are committed to corporate governance geared towards sus­ tainability. The business model is designed for the long term and all measures are geared towards the goal of sus­ tainable positive development. The Executive Board and Supervisory Board of GESCO SE identify with the aim of the Code to promote good, trustworthy corporate governance that is orientated towards the benefit of shareholders, em­ ployees and customers. § Section 161 of the German Stock Corporation Act (AktG) requires an annual declaration

of compliance with the recommendations of the Code. The possibility of a justified deviation from the Code's recom­ mendations is expressly provided for in the preamble to the Code. It is intended to enable companies to take industry- or Company-specific particularities into account. Accord­ ingly, deviations from the Code should not be seen as nega­ tive per se, but can be in the interests of good corporate governance, particularly for smaller companies.

In December 2023, the Management Board and Supervisory Board issued the statutory declaration of conformity as required by law and made it permanently available to share­ holders on the Company's website (www.gesco.de). This declaration is based on the currently valid version of the Code dated 28 April 2022.

The declaration of conformity dated December 2023 is part of this corporate governance declaration. Historical decla­ rations of compliance are also available to the public on our

website www.gesco.de under "About us / Compliance

and Corporate Governance". The Articles of Association of GESCO SE are also available on the website under this heading.

Compliance management system

GESCO Group counters compliance risks such as corrup­ tion, antitrust violations and criminal behaviour with a suitable compliance management system, which includes a Group-wide Code of Conduct, accompanying guidelines and work instructions, an online information system (Rule­ book) for GESCO Group employees, accompanying training, case-related spot checks and a whistle-blower system for employees and external parties. The managing directors of the subsidiaries are responsible for anchoring the respective requirements and principles in their companies. The Code of Conduct for GESCO Group employees can be viewed on the

website www.gesco.de under "About Us / Compliance and

Corporate Governance", along with further information on the whistle-blower system that has been set up.

For GESCO Group companies, the protection of human rights and the environment is one of the fundamental require­ ments of their business activities. GESCO Group companies have therefore adopted a declaration of principles in which they define their strategy for the protection of human rights and certain environmental assets and formulate their expectations regarding respect for human rights and ­certain environmental assets vis-à-vis their employees and suppliers. The policy statement also describes how GESCO Group companies fulfil their legal obligations to pro­ tect human rights and certain environmental goods in detail and which risks they pay particular attention to due to their specific business activities.

In order to organise the protection of these goods as

­effectively as possible, GESCO Group has set up a complaints system that can be used to report (possible) violations

of human rights and certain environmental goods if these (possible) violations have been committed by GESCO Group companies or their suppliers.

The complaints system was set up at the end of 2023 at https://www.gesco.de/ueber-uns/human-rights-and-­environmental-risksin accordance with the Supply Chain Duty of Care Act, which will apply to GESCO Group from 1 January 2024.

Shareholders and Annual General Meeting

Shareholders exercise their rights and voting rights at the Annual General Meeting. Each GESCO SE share entitles the holder to one vote. GESCO SE publishes all documents rele­ vant to the agenda in good time prior to the Annual General Meeting on its website at www.gesco.de under "Investor Relations". In the invitation to the Annual General Meeting, the Company expressly requests that shareholders exercise their voting rights. To make it easier for shareholders to exercise their voting rights, the Company appoints a proxy who votes at the Annual General Meeting in accordance with the shareholders' instructions. The Company uses an online tool to enable shareholders to order admission

tickets,­ cast postal votes and authorise the Company's proxy, among other things. The Company believes that maxi­ mising the presence of shareholders at the Annual General Meeting makes a significant contribution to shareholder democracy and to the majority of shareholders forming an opinion at the Annual General Meeting. GESCO SE pub­ lishes the invitation to the Annual General Meeting as well as reports and information required to pass resolutions

in accordance with the provisions of the German Stock

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­Corporation Act. This information is also available on the ­Company's website. Since the IPO in 1998, the Company has published the voting results on its website on the day of the Annual General Meeting.

The Annual General Meeting on 12 June 2023 was held in person as usual. The Executive Board and Supervisory Board have spoken out in favour of holding future Annual General Meetings in person, provided that external cir­ cumstances permit.

Executive Board and Supervisory Board

The Executive Board is responsible for managing the Com­ pany, while the Supervisory Board monitors the manage­ ment and advises the Executive Board. The Executive Board and Supervisory Board work together closely and in a spirit of trust within the scope of their legally defined duties. The Executive Board informs the Supervisory Board regu­ larly, promptly and comprehensively about corporate

planning,­ the earnings and financial position, risk manage­ ment, strategy development and acquisition projects. A

catalogue­ of transactions requiring approval defines those Executive Board decisions that require the approval of the Supervisory Board.

There was no remuneration or benefits granted to members of the Supervisory Board for services provided personally, such as consulting and mediation services, either in the re­ porting year or in the previous year. There were no con­ flicts of interest for members of the Executive Board or the Supervisory Board.

Executive Board

	The Executive Board is responsible for managing GESCO SE
	and conducting its business. The members of the Executive
	Board jointly manage the Company's business in accordance
	with the law, the Articles of Association and the rules of
	procedure issued by the Supervisory Board. The Executive
96	Board develops the Company's strategic development,

coordinates­ it with the Supervisory Board and implements it. The Executive Board also defines the objectives, pre­ pares the planning and manages the Company's internal control and risk management system as well as controlling. The Executive Board also prepares the quarterly reports and quarterly statements, the half-year financial report, the separate financial statements of GESCO SE and the con­ solidated financial statements. The Executive Board bases its actions and decisions on the interests of the Company.

The rules of procedure for the Executive Board issued by the Supervisory Board regulate the responsibilities of the Executive Board and further organise the work of the ­committees. The rules of procedure also regulate the details of the Executive Board's reporting to the Supervisory Board. They also stipulate which decisions of the Executive Board require the approval of the Supervisory Board. The age limit for the Executive Board is 65.

In the reporting year, the Executive Board consisted of Mr Ralph Rumberg (CEO) and Ms Andrea Holzbaur (CFO).

Relevant disclosures on corporate ­governance practices

The members of the Executive Board conduct the Com­ pany's business with the diligence of a prudent and conscien­ tious manager in compliance with the statutory provi­ sions, the Articles of Association and the Executive Board's rules of procedure.

In addition, the GESCO Code of Conduct contains the basic rules and principles for our actions resulting from our self-­ image, including our behaviour towards customers, busi­ ness partners, competitors and other third parties and the public. The GESCO Code of Conduct is available on our

website­ www.gesco.de under "About us / Compliance and

Corporate Governance".

There are no relevant corporate governance practices at GESCO SE that go beyond these requirements.

Long-term succession planning for the ­Executive Board

Together with the Management Board, the Supervisory Board ensures long-term succession planning for the Man­ agement Board. The Supervisory Board regularly deals with succession planning for the Management Board, re­ gardless of the occasion. Taking into account the require­ ments of the German Stock Corporation Act, the Code and the target set by the Supervisory Board for the propor­ tion of women on the Management Board, the Supervisory Board draws up a requirements profile with the key ­characteristics and qualifications of candidates who could be considered for Management Board positions. The profile of requirements is also influenced by the departments likely to be filled and the Company's strategic planning. In the event of a necessary new appointment or replacement on the Management Board, the Supervisory Board conducts structured selection interviews with selected candidates, on the basis of which the new appointment or replacement is made. If necessary, the Supervisory Board is supported by external consultants in the development of job profiles and the selection of suitable candidates.

Supervisory Board

The Supervisory Board appoints the Executive Board, moni­ tors its management and advises it on the management

of the Company. Detailed information on the work of the Supervisory Board in the reporting year can be found in the Report of the Supervisory Board.

The Supervisory Board of GESCO SE is deliberately kept small. This has proven to be extremely effective, as both strategic issues and detailed questions can be discussed intensively by the full Supervisory Board. We see a particu­ lar strength in the fact that all members of the Supervisory Board are equally involved in all issues. Beyond the Audit Committee, which is required by law from 1 January 2022 and has since been established, the formation of commit­ tees is therefore not considered expedient. Accordingly, the Supervisory Board of GESCO SE did not have any other

committees­ in the reporting year. In this respect, the Exec­ utive Board and Supervisory Board declare a deviation from recommendation D.5 GCGC.

In accordance with the requirements of the law and the Articles of Association, the Supervisory Board has adopted rules of procedure in line with the recommendation in

D.1 GCGC, which are available on the website www.gesco.de

under "About us / Compliance and Corporate Governance".

The Chairman coordinates the work of the Supervisory Board, chairs its meetings and represents the interests of the Supervisory Board externally.

In the reporting year, the Supervisory Board consisted of Mr Klaus Möllerfriedrich (Chairman until 12 June 2023; thereafter ordinary member), Mr Stefan Heimöller (Deputy Chairman until 12 June 2023; thereafter Chairman),

Mr Jens Große-Allermann (ordinary member until 12 June 2023, thereafter Deputy Chairman) and Dr Nanna Rapp.

In the opinion of the Supervisory Board, it is appropriate for at least two members of the Company's Supervisory Board to be independent within the meaning of the Code. All members of the Supervisory Board currently fulfil the inde­ pendence criterion. Mr Möllerfriedrich has been a mem­ ber of the Company's Supervisory Board for more than thir­ teen years, but the Supervisory Board still considers

Mr Möllerfriedrich to be independent within the meaning of recommendation C.7 of the GCGC. In view of his previ­ ous performance in office, the Supervisory Board is convinced that, despite his many years of service on the Supervisory Board, Mr Möllerfriedrich continues to have the critical distance to the Company and its Executive Board that is necessary for the performance of his office. Further­ more, Mr Möllerfriedrich has no personal or business rela­ tionship with the Company or its Management Board that could give rise to a conflict of interest; nor does he hold any shares in the Company. All members of the Supervisory Board are also qualified as financial experts in accordance with Section 100 (5) AktG. The members of the Supervisory Board as a whole are familiar with the sector in which GESCO SE operates.

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Composition of the Supervisory Board and diversity on the Supervisory Board, Executive Board and managers

According to recommendation C.1 sentence 1 GCGC, the Supervisory Board should specify concrete objectives for its composition and draw up a profile of skills and expertise for the entire Board. In doing so, the Supervisory Board should pay attention to diversity.

For the Supervisory Board of GESCO SE, diversity is not only defined by gender or nationality, but also and especially by professional diversity and a well-balanced mix of exper­ tise from different specialist areas. The areas of expertise to be covered by the Supervisory Board of GESCO SE include, in particular, accounting, auditing and monitoring the effectiveness of internal control systems ("financial ex­ pert"), capital market experience, entrepreneurial expertise and experience as well as broad-based expertise in stra­ tegic, operational and financial entrepreneurial functions. The Supervisory Board believes that these competences are fully covered by the current composition of the Board and are represented as follows:

The age limit for members of the Supervisory Board stipu­ lates that the term of office of a Supervisory Board member generally ends at the end of the regular term of office fol­ lowing the member's 70th birthday. Details on the election and term of office of Supervisory Board members, the con­ stitution of the Supervisory Board, its meetings and reso­ lutions as well as the rights and obligations of its members are governed by the Articles of Association of GESCO SE.

Working methods of the Audit Committee

As required by law, the Audit Committee monitors the accounting process, the effectiveness of the internal control system (ICS), the effectiveness of the risk management system (RMS), the effectiveness of the internal audit and the audit of the financial statements (in particular the ­independence of the auditor). The Audit Committee discusses the assessment of the audit risk, the audit strategy and audit planning as well as the audit results with the auditor.

Area of competence		Heimöller		Große-Allermann		Möllerfriedrich		Dr Rapp
Organisation of the Supervisory Board′s work						x
Corporate Governance						x
Legal						x
Taxes						x
Controlling and risk management		x		x		x		x
Accounting		x		x		x		x
Personnel		x		x				x
Production		x						x
Financing		x		x		x		x
Capital market				x		x
M&A		x		x		x		x
Strategy		x				x
Internationalisation				x				x

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Target quotas for the proportion of women

The "Act on Equal Participation of Women and Men in Leadership Positions in the Private and Public Sector", which came into force on 1 May 2015, requires the definition of target quotas for the proportion of women on the ­Supervisory Board, Management Board and in the two top management levels as well as the specification of dead­ lines for achieving these target quotas. The Management Board and Supervisory Board defined corresponding tar­ gets on 13 August 2015 and have since reported on the status of target achievement and, if necessary, adjustments to the targets in the annual corporate governance statement.

GESCO Group companies expressly and unreservedly pursue a policy of equal opportunities in their daily practice. Irre­ spective of legal obligations, this is a matter of course. The companies make every effort to attract female applicants, they support applications from female candidates, take part in campaigns such as "Girls' Days" and seek dialogue with schools and universities. None of this is due to quota pres­ sure, but rather out of conviction and the need to fill vacan­ cies with qualified candidates. Overall, the GESCO Group companies have a vital interest in positioning themselves as an attractive employer.

In 2017, the Supervisory Board of GESCO SE set a target

quota of 25 % for the proportion of women on the Super­

visory Board. This quota is currently being met.

In 2015, the Supervisory Board of GESCO SE set a target

quota of 30 % for the Executive Board. This quota is

currently­ being met.

A first management level below the Executive Board was added to the organisational structure of GESCO SE as

at 1 September 2020. There is still no second management level below the Executive Board. The Executive Board

has set a target quota of 25 % for the first management

level. This quota is currently not met.

Comprehensive and transparent communication­

GESCO SE informs shareholders, the capital market, the media and the general public about all relevant events and the economic development of the Company at the same time and with the same content. Financial reports, announce­ ments, the financial calendar, Annual General Meeting ­documents and a wide range of other information are avail­ able on the Company's website at www.gesco.de under "Investor Relations".

Shareholdings of board members

GESCO SE immediately publishes transactions in shares and debt instruments of the Company or related financial instruments by the persons named in Article 19 of the Market Abuse Regulation, in particular members of the executive bodies and persons closely associated with them, in accordance with the statutory provisions. The transac­ tions reported to GESCO SE are available on the Company's website at www.gesco.de under "Investor Relations". No transactions were reported in financial year 2023.

Remuneration report/remuneration system

The applicable remuneration system for the members of the Management Board pursuant to Section 87a (1) and (2) sen­ tence 1 AktG, which was approved by the Annual General Meeting on 30 June 2021, and the resolution adopted by the Annual General Meeting on 18 June 2020 pursuant to Sec­ tion 113 (3) AktG on the remuneration of the members of the Supervisory Board are publicly available on the website www.gesco.de under "Compliance and Corporate Govern­ ance". The remuneration report and the auditor's report

in accordance with Section 162 AktG are made publicly avail­ able in the published annual reports at https://www.gesco.de/ en/investor-relations/financial-reports/.

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The deadline for the next review of target achievement is
30 June 2024.	99

Accounting and auditing

GESCO SE, Wuppertal

The separate financial statements of GESCO SE are prepared in accordance with the German Commercial Code, while the consolidated financial statements of GESCO SE have been prepared in accordance with the International Financial

Reporting Standards (IFRS) since financial year 2002 / 2003.

The separate and consolidated financial statements were audited by Mazars GmbH & Co. KG, Wirtschaftsprüfungs­ gesellschaft - Steuerberatungsgesellschaft, Düsseldorf. The responsible auditor is Mr Heiko Wittig.

Mazars GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft - Steuerberatungsgesellschaft, Düsseldorf, also audited the individual financial statements of the subsidiaries. The audit of the foreign sub-subsidiaries was predominantly carried out by international partners of our German auditor.

In accordance with legal requirements, the auditor is elected by the Annual General Meeting for one financial year at a time. At the Annual General Meeting on 12 June 2023, the Annual General Meeting elected Mazars GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft - Steuerberatungsgesell­ schaft, Düsseldorf, as the auditor of the annual and con­ solidated financial statements for the 2023 financial year and as the auditor for any audit review of the condensed financial statements and the interim management report as at 30 June 2023, as proposed by the Supervisory Board. On the basis of this resolution, the Chairman of the Super­ visory Board commissioned the auditor for the single-entity and consolidated financial statements. An audit or review

of the half-year financial report and / or the quarterly state­

ments for the first and third quarters did not take place in the reporting year.

Security identification number A1K020

ISIN DE000A1K0201

Declaration of compliance in accordance with Section 161 AktG

The Executive Board and Supervisory Board of GESCO SE declare in accordance with Section 161 AktG that the recom­ mendations of the Government Commission on the German Corporate Governance Code in the version dated 28 April 2022, published in the official section of the Federal Gazette on 27 June 2022, have been and are being complied with since the last declaration of compliance was issued in De­ cember 2022, with the following exceptions:

A.1: Systematic identification and assessment of risks and opportunities and of the environmental and social impacts of the Company's activities, and consideration of environmental and social objectives in corporate strategy and planning

Due to the lead time required to implement the new recom­ mendations on ESG, which came into force in June 2022, the necessary processes have not yet been fully completed. However, GESCO SE intends to fully comply with the rec­ ommendations in the future.

A.3: Coverage of sustainability-related objectives in the internal control and risk management system

Due to the lead time required to implement the new recom­ mendations on ESG, which came into force in June 2022, the necessary processes have not yet been fully completed. However, GESCO SE intends to fully comply with the rec­ ommendations in the future.

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A.5: Description of the main features of the overall internal control and risk management system and statement on its adequacy and effectiveness

In accordance with legal requirements, the presentation in the management report is currently limited to a description of the key features of the internal control and risk man­ agement system with regard to the accounting process. Due to the lead time required to implement the new recom­ mendation, which came into force in June 2022, the neces­ sary processes have not yet been fully finalised. In the future, GESCO SE intends to expand its reporting in line with the more extensive recommendation.

D.4: Formation of a nomination committee

The Supervisory Board of GESCO SE consists of four mem­ bers. Due to the small size of the Supervisory Board, both overarching strategic issues and detailed questions can be discussed and decided upon intensively by the full Supervisory Board without any loss of efficiency. We there­ fore do not consider it expedient to form committees over and above the Audit Committee required by law. Instead, we believe that the fact that all members of the Supervisory Board are equally involved in all topics is a strength.

G.18: Remuneration of the Supervisory Board

The remuneration system for the Supervisory Board of GESCO SE approved by the Annual General Meeting on

18 June 2020 includes a fixed component as well as a per­ formance-related component based on Group net income after minority interest. Any Group net losses are carried for­ ward to the next year and offset against positive amounts. We are convinced that this arrangement is in line with a sustainable and entrepreneurial mindset and should also ful­ fil the focus on the long-term development of the company required by the Code. However, as it cannot be ruled out that other opinions may be held in this regard, we declare a deviation from this recommendation of the Code as a pre­ cautionary measure.

Wuppertal, December 2023
GESCO SE
For the Supervisory Board	For the Executive Board
Stefan Heimöller	Ralph Rumberg
(Chairman of the	(Spokesman of the
Supervisory Board)	Executive Board)

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F.2, 1st half-sentence: Publication of financial information (90-day deadline)

Personnel changes at the Company and the associated in­ creased coordination effort with the auditor mean that the consolidated financial statements and the Group man­ agement report cannot be published within 90 days of the end of the financial year. Publication in accordance with the GCGC is planned for the 2024 financial year.

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Remuneration report

Report on the Remuneration of the Executive Board and the Supervisory Board of GESCO SE in 2023

Remuneration of the members of the Executive Board

I. Introduction

A.  Review of the financial year from a remuneration perspective

GESCO SE ("GESCO", or the "Company") acquires successful industrial SMEs as a long-terminvestor. Proven business models are continued and further developed over the long term. The central task is to utilise growth potential and secure the Group's future viability in the long term. In this way, GESCO SE creates added value for all stakeholders: shareholders, employees, customers, suppliers and business partners of all kinds. Under the umbrella of a lean holding company, the companies operate independently, but with the support of GESCO. The goal: a strong group of hidden champions, market and technology leaders. The prerequisite for this is an experienced management team ("Executive Board" or "Executive Board members") that acts responsi­ bly and operates efficiently with the resources granted by the shareholders. On 13 May 2021, the members of the Supervisory Board ("Supervisory Board" or "Supervisory Board members") adopted a remuneration system for this management, which applies to all new Executive Board service contracts to be concluded or extended with effect from the Annual General Meeting on 30 June 2021. The remu­ neration system complies with the applicable statutory

provisions­ of the German Stock Corporation Act ("AktG") in the current version following the implementation of the

102 1) "Act on the Implementation of the Second Shareholders' Rights Directive"

Second Shareholders' Rights Directive ("ARUG II")1) and takes into account the recommendations of the German Cor­ porate Governance Code ("GCGC") in the version dated

28 April 2022.

This remuneration report was prepared jointly by the

­members of the Executive Board and the Supervisory Board of the Company and audited by the auditor in accord­ ance with the statutory requirements with regard to its formal completeness.

The current Chief Executive Officer (CEO), Mr Ralph Rumberg, has held his position since 1 July 2018 and his term of office was extended for a further two years with effect from 1 July 2022. Ms Andrea Holzbaur was appointed Chief Financial Officer (CFO) of the Company with effect from 26 September 2022. The current remuneration system applies to both Mr Rumberg and Ms Holzbaur. The employ­ ment contracts run until 30 June 2024 (CEO) and 30 Sep­ tember 2025 (CFO).

1. Overview of variable remuneration

The performance-related remuneration elements ("variable remuneration") consist of a one-year component (Short Term Incentive, "STI") and a multi-year element (Long Term Incentive, "LTI"). Both elements are linked to the con­ solidated net earnings after minority interests ("consolidated net earnings"). After the end of the financial year, the ­consolidated net earnings reported in the approved consoli­ dated financial statements is determined. The consoli­ dated net earnings then serves as the starting point for the variable remuneration ("assessment basis"). The assess­ ment basis is then multiplied by an individual percentage for each member of the Executive Board ("base figure") to

obtain the individual starting amount for each Executive Board member ("starting amount"). This base amount for the variable remuneration is determined by the Supervisory Board after the end of the financial year, whereby the Supervisory Board has the discretion to change the base

amount upwards or downwards by 20 %. The initial amount is limited to 100 % of the fixed annual salary"Cap( I"),

but can also be zero. If a Management Board member is not employed for the entire financial year, the variable remu­ neration is reduced in proportion to the length of service in the corresponding financial year. While a smaller propor­ tion of the base amount, and therefore of the initial amount, is allocated to the STI, the proportion of the LTI is always greater than the proportion of the STI in order to focus

on the long-term development of the Company. The portion of the performance-related remuneration granted as STI is paid out in cash to the members of the Executive Board no later than eight months after the end of the financial year. The portion of the initial amount attributable to the LTI is granted in the form of a virtual share programme with a four-year term ("share-basedcomponent").

The majority of the variable remuneration is granted as a LTI in the form of virtual shares with a term of four years. The amount of variable remuneration attributable to

the LTI is divided by the average XETRA closing price of the GESCO share on the consecutive trading days in the last three months prior to the date of adoption of the con­ solidated financial statements for the corresponding year in order to obtain the initial number of virtual shares ("virtual shares"). This number of virtual shares (com­ mercially rounded to the nearest whole number) is recorded as a calculation item. At the end of the four years, the phantom shares are multiplied by the average XETRA clos­ ing price of the GESCO share on the consecutive trading days in the last three months prior to the date of approval of the consolidated financial statements for the fourth financial year, plus the dividend accrued during the four years. The amount calculated in this way is paid out

in cash up to the maximum remuneration (Cap II, see section B.).

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Overview of variable remuneration

Consolidated net profit for the financial year ended:

Determination

Assessment basis

					No later than
Basic size			eight months after
		the end of the
				STI	financial year	STI
	=
			< 50 %		payout
Outgoing amount* **

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LTI		Virtual share programme:	Payment
> 50 %	Conversion after	4 years	LTI
* + / - 20 % Discretion	determination		103
** Limited to 100 % of the annual fixed salary	Annual accounts