GESCO AG

Interim / Quarterly Report • Dec 2, 2019

GESCO AG Abbreviated financial year 2019 Half year interim report 1 April to 30 September 2019

NEXT LEVEL strategy: a new chapter for GESCO

The Executive Board and the Supervisory Board of GESCO AG developed and adopted the NEXT LEVEL strategy in financial year 2018 / 2019. Based on a shared vision of GESCO as a group of hidden champions, the strategy defines key measures and objectives for GESCO Group's strategic and operational development in the years ahead.

Objectives

The NEXT LEVEL strategy marks the start of a new chapter in the company's development to coincide with GESCO's 30th anniversary.

Portfolio architecture

NEXT LEVEL defines a balanced and resilient target portfolio with three anchor investments and a series of basic investments of a substantial size.

Hidden champions

NEXT LEVEL involves excellence programmes to promote the growth of the Group's companies and increase their efficiency with the aim of transforming them into hidden champions.

Targets

The Group aims to help its companies' earnings grow 3 % faster than their respective markets and raise sales per employee by 3 % a year. GESCO envisions a target EBIT margin of 8 % to 10 % above the economic cycle.

Overview of the half year period of abbreviated financial year 2019

• • Annual General Meeting votes to change financial year to calendar year
• • Economic slowdown leads to drop in demand
• • Earnings down significantly
• • Outlook for full abbreviated financial year reduced
• • NEXT LEVEL strategy being implemented

GESCO Group at a glance

GESCO Group key figures for the first six months of abbreviated financial year 2019

01.04. – 30.09.		I. Half year 2019	I. Half year 2018 adjusted	Change
Incoming orders	€'000	280,228	306,179	- 8.5 %
Sales	€'000	290,826	283,757	2.5 %
EBITDA	€'000	28,961	33,948	- 14.7 %
EBIT	€'000	15,362	22,276	- 31.0 %
Earnings before tax	€'000	13,732	21,198	- 35.2 %
Group net income after minority interest	€'000	8,161	12,111	- 32.6 %
Earnings per share pursuant to IFRS	€	0.75	1.12	- 32.6 %
Employees as at balance sheet date	No.	2,734	2,669	2.4 %

Letter to shareholders

Dear Shareholders,

This year's Annual General Meeting voted to adjust the financial year of GESCO AG, which has so far run from 1 April to 31 March of the following year, to match the calendar year. The current financial year 2019 is therefore a nine-month abbreviated financial year that ends on 31 December 2019. Accordingly, this half-year interim report includes the months April to September 2019. The climate in the capital goods industry deteriorated increasingly during this time. The VDMA (Mechanical Engineering Industry Association) has reduced its forecast for production development in 2019 and expects a decline of 2 % rather than growth of 1 %. The trade war and Brexit are increasing uncertainty and therefore reducing companies' propensity to invest. Furthermore, the automotive sector continues to be impacted by a high degree of uncertainty and a tremendous reluctance to invest.

GESCO Group has been unable to escape these conditions. The extraordinarily difficult environment in the automotive sector is having a negative impact on the Mobility Technology segment in particular and on the companies of the Production Process Technology segment that provide capital goods for the automotive and supply industry. The decline in the capital goods industry is making itself felt in the Resource Technology segment, which is having an even more noticeable impact on earnings because the previous year was still characterised by special economic effects with above-average margins. By contrast, the Healthcare and Infrastructure Technology segment has been comparatively resilient on the whole.

All told, the prospects for the abbreviated financial year are therefore worse than originally assumed. Furthermore, the margin pressure has mounted further. As a result, we reduced the sales and earnings outlook in our ad hoc announcement on 4 November 2019.

By contrast, developments were positive at the most recent addition to GESCO Group, Sommer & Strassburger GmbH & Co. KG, which was acquired last year. Its integration has been completed, and the management team is working intensively with the specialists from GESCO AG on the further development of the company. Sommer & Strassburger continues to generate stable demand in markets such as pharmaceuticals, water and food. It also expects to see a year-on-year rise in sales and is helping to stabilise the Production Process Technology segment.

How are we acting in this challenging environment? In light of the weaker business activity in mechanical engineering and plant construction, as well as in the automotive industry, we have taken a critical look at the planned investments, postponed certain measures or cancelled them altogether at the companies affected. However, we continue making countercyclical investments in growth in those areas where we see clear prospects in the medium term. We have adjusted temporary employment agreements and have temporarily introduced

H A L F - Y E A R I

short-time working at some subsidiaries. At those companies that have been affected by a noticeably longer decline in demand, we are currently reducing the workforce – but are doing so without endangering long-term competitiveness.

If possible, companies with underutilised capacities support those sister companies with full order books, for example in design or assembly. We believe that this approach presents us with a good opportunity to keep expertise within the Group. Some companies are taking advantage of the phase of lower capacity utilisation to further train their employees or to expand expertise across department boundaries.

Regardless of the current economic situation, we are hard at work on the implementation of our NEXT LEVEL strategy. We have held further workshops on business model analysis, strengthening operational excellence and active brand and product portfolio development at several subsidiaries in recent months. Initial concrete measures have been derived and are being implemented.

Finally, we would like to say a few words about the share. The significant decline in share price since the start of the year and since the start of the financial year is disappointing. We have clearly fallen short of our benchmark, the SDAX. We are doing our utmost to actively take countermeasures and set a course for better results and stronger growth with NEXT LEVEL.

Wuppertal, November 2019

Ralph Rumberg (CEO) Kerstin Müller-Kirchhofs (CFO)

Half year interim report

Change of financial year

The Annual General Meeting on 29 August 2019 voted to change the financial year of GESCO AG, and therefore that of GESCO Group, to the calendar year. The financial years of GESCO AG and GESCO Group have so far run from 1 April to 31 March of the following year, while the financial years of the subsidiaries have coincided with the calendar year, resulting in a three-month difference between the financial years of the subsidiaries and that of the parent company. The periods have now been harmonised. As a result, this half-year interim report includes the months April to September at both GESCO AG and the subsidiaries. By contrast, the half-year interim report published in the previous year 2018 / 2019 encompassed the months January to June at the subsidiaries and April to September at GESCO AG. In the interest of comparability, the previous year's figures have been adjusted accordingly in this report and, following the change in the financial year, also include the months April to September at the subsidiaries.

Correspondingly, the months January to March 2019 at the GESCO Group subsidiaries are not included in the reporting period. They were included in the financial statement for the first quarter (1 April to 30 June 2019) of the original financial year 2019 / 2020, which was published on 14 August 2019 – prior to the change in the financial year. The earnings of subsidiaries from January to March 2019 are reported in the revenue reserves in this opening balance sheet as at 1 April 2019.

Changes to the scope of consolidation

In August 2018, GESCO AG acquired 100 % of the shares in Sommer & Strassburger GmbH & Co. KG, Bretten, Germany. One month of operations at the company was included in the income statement in the previous-year period; a full period was included for the first time in the most recent reporting period.

Development of Group sales and earnings in the first six months of the financial year

In terms of sales and earnings, business development was largely similar in the first two quarters of the year. At € 149.9 million, incoming orders were significantly higher in the second quarter than in the first quarter (€ 130.3 million). The increase was mainly due to major orders in the Resource Technology segment.

Total incoming orders stood at € 280.2 million in the first six months of the financial year and were therefore down 8.5 % from the previous year's figure of € 306.2 million. The decline was particularly tangible in those areas that are influenced by the automotive and supply industry, especially in the Mobility Technology segment and in Production Process Technology.

At € 290.8 million, on the other hand, sales were up by 2.5 % on the previous year's figure of € 283.8 million. They increased significantly in the Production Process Technology segment. The Healthcare and Infrastructure Technology segment also recorded growth.

In organic terms – in other words, excluding figures relating to Sommer & Strassburger in the previous year and in the reporting period – incoming orders would have declined by 11.6 %, and sales would have fallen by 0.6 %.

Earnings came under pressure compared to the figures seen in the previous year, which was largely due to the lapsing of special economic effects in the Resource Technology segment. Moreover, Mobility Technology operated in a difficult environment that further deteriorated over the course of the financial year.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at € 29.0 million in total at Group level (previous year: € 33.9 million). EBIT came to € 15.4 million (€ 22.3 million) and declined to a greater extent than EBITDA due to disproportionately higher depreciation and amortisation caused by accounting changes resulting from IFRS 16. The EBIT margin fell from 7.9 % to 5.3 %. Group net income after minority interest stood at € 8.2 million (€ 12.1 million), which corresponds to earnings per share pursuant to IFRS of € 0.75 (€ 1.12).

Segment performance

In the Production Process Technology segment, the automotive sector's reluctance to invest made itself felt at a number of companies. At € 42.6 million, incoming orders for the first six months of the financial year therefore fell short of the figure of € 50.0 million seen in the adjusted previous-year period. By contrast, segment sales stood at € 46.2 million and were up significantly on the previous year's figure of € 36.0 million. EBIT also surpassed the previous year's figure of

€ 2.6 million, coming in at € 3.9 million. In organic terms, incoming orders would have declined by 34.7 %, with sales rising 4.3 %. For the year as a whole, we anticipate higher sales year on year on an annualised basis. The expected rise is based on the addition of Sommer & Strassburger. Without this external growth, sales would have fallen. In terms of earnings, we anticipate a year-on-year decline for the segment.

In the Resource Technology segment, the same period in the previous year was characterised by above-average margins. By contrast, the downturn in the capital goods industry made itself felt in the reporting period. Incoming orders amounted to € 141.3 million (previous year: € 147.5 million), whereas sales stood at € 139.6 million (€ 146.3 million). In particular, the end of the special economic effects led to a significant drop in earnings from € 18.6 million to € 10.1 million. On an annualised basis, we also anticipate year-on-year declines in sales and earnings for the year as a whole.

The Healthcare and Infrastructure Technology segment recorded incoming orders of € 74.5 million (€ 78.9 million) and sales of € 78.5 million (€ 72.9 million) in the first six months of the financial year. At € 6.6 million, the segment's EBIT remained down on the previous year's figure of € 7.8 million. We expect to see year-on-year sales growth on an annualised basis for the year as a whole due to the strong growth of Setter Group, which has benefited from a rise in demand for paper sticks for the confectionery and hygiene industries. By contrast, annualised segment earnings will be lower year on year due primarily to a decline in earnings in plastics processing and agricultural engineering.

In the Mobility Technology segment, the negative trend gathered strength, with tool manufacturing particularly feeling the impact of the automotive and supply industry's reluctance to invest. At € 21.9 million, incoming orders were down significantly on the previous year's figure of € 29.7 million. Sales also declined from € 29.0 million in the previous year to € 26.7 million. Segment EBIT fell into negative territory to stand at € -0.1 million (€ 1.5 million) due to the underutilisation of capacities. For the full abbreviated financial year, we anticipate lower sales and a decline in earnings year on year on an annualised basis, along with negative segment EBIT.

Assets and financial position

Total assets increased slightly by 1.5 % from € 525.6 million to € 533.5 million compared to the adjusted balance sheet as at the reporting date of 31 March 2019. Previously unrecognised leases with a volume of roughly € 16.0 million have been reported as assets and lease liabilities in line with IFRS 16 since the start of the financial year, thereby increasing total assets. IFRS 16 was already used in the interim report for the first quarter of the original financial year (2019 / 2020). Following the change of financial year and adjustment of the opening balance sheet, IFRS 16 was applied for the first time at the start of the first quarter of the new abbreviated financial year.

On the assets side, the new accounting standards under IFRS 16 contributed to a € 13.6 million rise in non-current assets. By contrast, current assets fell by € 5.7 million due in part to a significant reduction in trade receivables.

At € 27.2 million, liquid assets were down on the figure of € 29.3 million reported at the start of the reporting period. However, it was possible to largely compensate for the dividend payment in the amount of € 9.8 million through new cash inflow. Cash flow from ongoing business activities amounted to € 16.0 million (€ 7.3 million).

On the liabilities side, equity – at € 246.5 million – was down slightly on the figure of € 251.2 million reported at the start of the abbreviated financial year. The dividend payment was among the factors responsible for the reduction. The equity ratio amounted to 46.2 % following 47.8 % as at 31 March. Liabilities to financial institutions increased by € 5.1 million in total. Current liabilities increased as result of activities to finance the operating business, whereas non-current liabilities decreased.

Investments

As explained earlier in this report, we have reduced our investment volume in light of weaker business activity in the mechanical engineering and plant construction industry and in the automotive sector. In the first six months of the financial year, the Group's companies invested a total of € 9.5 million in property, plant and equipment and in intangible assets (previous year: €13.3 million). This total was spread across a series of small and medium-sized replacement and expansion investments. VWH GmbH started building a new production hall in the reporting period. Upon completion in February 2020, the building will provide additional production space of around 3,000 m² while also making it possible to set up a new technology centre for plastics in the existing space and expanding the range of

services for customers. Setter Group expanded its machine park significantly in the reporting period in view of the rising demand.

Employees

We are currently reducing the workforce at those companies that have been affected by a noticeably longer decline in demand. On the other hand, Setter Group, for example, has stocked up its workforce at its headquarters in Emmerich and at its international subsidiaries to a total of 49 employees. GESCO Group employed 2,734 people as at the reporting date, compared to 2,669 in the same period in the previous year.

Opportunities, risks and risk management

Our general explanations on the subject of opportunities and risks as well as the presentation of specific individual risks in the Group financial statements as at 31 March 2019 remain essentially unchanged and valid. For more details, please refer to the Annual Report 2018 / 2019, which is available online at www.gesco.de. As usual in the mechanical engineering and plant construction industry, risks posed to the achievement of the targets for the current financial year include delays in the delivery of larger machinery, plants or components to the next financial year.

Outlook and events after the reporting date

In August 2019, we published an outlook for the nine-month abbreviated financial year 2019. The outlook predicted Group sales in the middle of a range between € 435 million and € 455 million. In light of the previously mentioned deterioration in the general economic conditions, we reduced this outlook to between € 425 million and € 435 million in our ad hoc announcement on 4 November 2019. In August, we forecast Group net income after minority interest at the lower end of a range between € 16 million and € 18 million. We now expect this figure to stand between € 11.5 and € 13 million.

No further significant events occurred after the end of the reporting period.

GESCO AG The Executive Board

Wuppertal, November 2019

GESCO Group balance sheet

€'000		30.09.2019	31.03.2019 adjusted
	Assets
	A. Non-current assets
I.	Intangible assets
1.	Industrial property rights and similar rights and assets as well as
	licences to such rights and assets	20,699	22,320
2.	Goodwill	26,994	26,927
3.	Prepayments	401	240
		48,094	49,487
II.	Property, plant and equipment
1.	Land and buildings	83,527	71,526
2.	Technical plant and machinery	56,664	56,455
3.	Other plant, fixtures and fittings	21,945	21,271
4.	Prepayments and assets under construction	10,088	9,135
		172,224	158,387
	III. Financial assets
1.	Shares in affiliated companies	38	38
2.	Shares in companies valued at equity	1,673	1,610
3.	Investments	236	236
4.	Other loans	155	181
		2,102	2,065
	IV. Other assets	947	982
V.	Deferred tax assets	5,161	4,045
		228,528	214,966
B.	Current assets
I.	Inventories
1.	Raw materials and supplies	29,795	31,353
2.	Unfinished products and services	55,322	54,660
3.	Finished products and goods	88,996	89,920
4.	Prepayments	2,119	896
		176,232	176,829
II.	Receivables and other assets
1.	Trade receivables	77,056	84,932
2.	Amounts owed by affiliated companies	3,182	1,179
3.	Amounts owed by companies valued at equity	514	603
4.	Other assets	19,778	16,099
		100,530	102,813
	III. Cash and credit with financial institutions	27,189	29,336
	IV. Accounts receivable and payable	1,024	1,669
		304,975	310,647
		533,503	525,613

€'000	30.09.2019	31.03.2019 adjusted
Equity and liabilities
A. Equity
I. Subscribed capital	10,839	10,839
II. Capital reserves	72,364	72,364
III. Revenue reserves	154,368	157,137
IV. Own shares	0	0
V. Other income	- 5,339	- 4,252
VI. Minority interest (incorporated companies)	14,236	15,146
	246,468	251,234
B. Non-current liabilities
I. Minority interest (partnerships)	936	1,170
II. Provisions for pensions	18,011	16,445
III. Other non-current provisions	586	586
IV. Liabilities to financial institutions	81,034	85,879
V. Lease liabilities	19,992	8,324
VI. Other liabilities	1,002	1,801
VII. Deferred tax liabilities	3,129	2,643
	124,690	116,848
C. Current liabilities
I. Other provisions	10,260	10,445
II. Liabilities
1. Liabilities to financial institutions	64,782	54,834
2. Lease liabilities	4,792	971
3. Trade payables	20,008	27,535
4. Prepayments received on orders	27,534	24,769
5. Liabilities to affiliated companies	525	724
6. Other liabilities	34,053	37,940
III. Accounts receivable and payable	391	313
	162,345	157,531
	533,503	525,613

GESCO Group income statement for the half year period (01.04. to 30.09.) of abbreviated financial year 2019

€'000	I. Half year 2019	I. Half year 2018 adjusted
Sales revenues	290,826	283,757
Change in stocks of finished and unfinished products	2,167	5,349
Other company-produced additions to assets	263	1,194
Other operating income	2,923	3,051
Total income	296,179	293,351
Material expenditure	- 154,722	- 151,073
Personnel expenditure	- 79,024	- 73,578
Other operating expenditure	- 33,443	- 34,721
Impairment losses on financial assets	- 29	- 31
Earnings before interest, tax, depreciation and amortisation (EBITDA)	28,961	33,948
Amortisation of intangible assets and depreciation on property, plant and equipment	- 13,599	- 11,672
Earnings before interest and tax (EBIT)	15,362	22,276
Earnings from companies valued at equity	63	348
Other interest and similar income	39	33
Interest and similar expenditure	- 1,579	- 1,298
Third party profit share in incorporated companies	- 153	- 161
Financial result	- 1,630	- 1,078
Earnings before tax (EBT)	13,732	21,198
Taxes on income and earnings	- 4,553	- 7,350
Group net income	9,179	13,848
Minority interest in incorporated companies	- 1,018	- 1,737
Group net income after minority interest	8,161	12,111
Earnings per share (€) acc. to IFRS	0.75	1.12
Weighted average number of shares	10,838,733	10,835,198

GESCO Group statement of comprehensive income for the half year period (01.04. to 30.09.) of abbreviated financial year 2019

€'000	I. Half year 2019	I. Half year 2018 adjusted
Group net income	9,179	13,848
Revaluation of benefit obligations not impacting income	- 1,341	49
Items that cannot be transferred into the income statement	- 1,341	49
Difference from currency translation
a) Reclassification into the income statement	0	0
b) Changes in value with no effect on income	498	817
Difference from currency translation from companies valued at equity
a) Reclassification into the income statement	0	0
b) Changes in value with no effect on income	- 1	- 245
Market valuation of hedging Instruments
a) Reclassification into the income statement	0	0
b) Changes in value with no effect on income	- 324	- 109
Items that can be reclassified into the income statement	173	463
Other income	- 1,168	512
Total result for the period	8,011	14,360
of which shares held by minority interest	937	1,702
of which share attributable to GESCO shareholders	7,074	12,658

GESCO Group income statement for the first quarter (01.04. to 30.06.) of abbreviated financial year 2019

€'000	I. Quarter 2019	I. Quarter 2018 adjusted
Sales revenues	147,393	139,058
Change in stocks of finished and unfinished products	1,184	3,224
Other company-produced additions to assets	156	176
Other operating income	1,249	1,878
Total income	149,982	144,336
Material expenditure	- 79,796	- 73,473
Personnel expenditure	- 39,450	- 37,214
Other operating expenditure	- 16,253	- 16,466
Impairment losses on financial assets	- 15	- 15
Earnings before interest, tax, depreciation and amortisation (EBITDA)	14,468	17,168
Amortisation of intangible assets and depreciation on property, plant and equipment Earnings before interest and tax (EBIT)	- 6,835 7,633	- 5,710 11,458
Earnings from companies valued at equity	56	142
Other interest and similar income	7	9
Interest and similar expenditure	- 812	- 612
Third party profit share in incorporated companies	- 16	- 56
Financial result	- 765	- 517
Earnings before tax (EBT)	6,868	10,941
Taxes on income and earnings	- 2,277	- 3,794
Group net income	4,591	7,147
Minority interest in incorporated companies	- 281	- 973
Group net income after minority interest	4,310	6,174
Earnings per share (€) acc. to IFRS	0.40	0.57
Weighted average number of shares	10,839,499	10,835,927

GESCO Group income statement for the second quarter (01.07. to 30.09.) of abbreviated financial year 2019

€'000	II. Quarter 2019	II. Quarter 2018 adjusted
Sales revenues	143,433	144,699
Change in stocks of finished and unfinished products	983	2,125
Other company-produced additions to assets	107	1,018
Other operating income	1,674	1,173
Total income	146,197	149,015
Material expenditure	- 74,926	- 77,600
Personnel expenditure	- 39,574	- 36,364
Other operating expenditure	- 17,190	- 18,255
Impairment losses on financial assets	- 14	- 16
Earnings before interest, tax, depreciation and amortisation (EBITDA)	14,493	16,780
Amortisation of intangible assets and depreciation on property, plant and equipment	- 6,764	- 5,962
Earnings before interest and tax (EBIT)	7,729	10,818
Earnings from companies valued at equity	7	206
Other interest and similar income	32	24
Interest and similar expenditure	- 767	- 686
Third party profit share in incorporated companies	- 137	- 105
Financial result	- 865	- 561
Earnings before tax (EBT)	6,864	10,257
Taxes on income and earnings	- 2,276	- 3,556
Group net income	4,588	6,701
Minority interest in incorporated companies	- 737	- 764
Group net income after minority interest	3,851	5,937
Earnings per share (€) acc. to IFRS	0.35	0.55
Weighted average number of shares	10,837,968	10,834,469

GESCO Group statement of changes in equity

€'000	Subscribed capital	Capital reserves	Revenue reserves	Own shares
As at 01.04.2018 adjusted	10,839	72,364	140,298	- 119
Dividends			- 6,502
Acquisition of own shares				- 335
Acquisition of shares in subsidiaries			- 55
Result for the period			12,186
As at 30.09.2018	10,839	72,364	145,927	- 454
As at 01.04.2019 adjusted	10,839	72,364	157,137	0
Dividends			- 9,756
Acquisition of shares in subsidiaries			- 1,174
Result for the period			8,161
As at 30.09.2019	10,839	72,364	154,368	0

GESCO Group segment report for the half year period (01.04. to 30.09.) of abbreviated financial year 2019

€'000	Production Process Technology		Resource Technology		Healthcare and Infrastructure Technology
	I. Half year 2019	I. Half year 2018 adjusted	I. Half year 2019	I. Half year 2018 adjusted	I. Half year 2019	I. Half year 2018 adjusted
Order backlog	45,885	60,747	80,602	80,337	46,289	48,328
Incoming orders	42,552	50,005	141,328	147,521	74,472	78,928
Sales revenues	46,249	35,967	139,572	146,270	78,521	72,859
of which with other segments	12	0	176	324	0	0
Depreciation and amortization	1,583	1,470	2,341	2,218	3,437	3,121
EBIT	3,930	2,566	10,098	18,588	6,632	7,832
Investments	1,548	1,150	2,249	5,115	4,163	4,476
Employees (No. / reporting date)	618	617	752	750	900	818

Equity	Minority interest incorporated companies	Total	Hedging instruments	Revaluation of pensions	Exchange equalisation items
234,148	15,603	218,545	11	- 3,349	- 1,499
- 10,152	- 3,650	- 6,502
- 335		- 335
- 55		- 55
14,435	1,702	12,733	- 98	44	601
238,041	13,655	224,386	- 87	- 3,305	- 898
251,234	15,146	236,088	- 83	- 3,941	- 228
- 10,731	- 975	- 9,756
- 2,046	- 872	- 1,174
8,011	937	7,074	- 333	- 1,251	497
246,468	14,236	232,232	- 416	- 5,192	269

GESCO Group statement of changes in equity

GESCO Group segment report

of abbreviated financial year 2019

for the half year period (01.04. to 30.09.)

Production Process Resource Healthcare and Technology Infrastructure Technology		Mobility Technology	GESCO AG / other companies		Reconciliation			Group
I. Half year I. Half year I. Half year I. Half year I. Half year 2018 2019 2018 2019 2018 adjusted adjusted adjusted	I. Half year 2019	I. Half year 2018 adjusted	I. Half year 2019	I. Half year 2018 adjusted	I. Half year 2019	I. Half year 2018 adjusted	I. Half year 2019	I. Half year 2018 adjusted
80,337 46,289 48,328	37,254	47,052	0	0	0	0	210,030	236,464
74,472 78,928	21,876	29,725	0	0	0	0	280,228	306,179
78,521 72,859	26,676	29,006	222	9	- 414	- 354	290,826	283,757
0	4	21	222	9	- 414	- 354	0	0
	2,106	2,108	52	88	4,080	2,666	13,599	11,671
	- 109	1,462	- 4,163	- 4,329	- 1,026	- 3,843	15,362	22,276
	1,314	2,494	236	28	0	0	9,510	13,263
	446	467	18	17	0	0	2,734	2,669

H

GESCO Group cash flow statement for the half year period (01.04. to 30.09.) of abbreviated financial year 2019

€'000	I. Half year 2019	I. Half year 2018 adjusted
Group net income for the year (including share attributable to minority interest in incorporated companies)	9,179	13,848
Depreciation on property, plant and equipment and intangible assets	13,599	11,672
Earnings from companies valued at equity	- 63	- 348
Share attributable to minority interest in partnerships	153	161
Decrease in non-current provisions	- 364	- 119
Other non-cash income	- 59	248
Cash flow for the period	22,445	25,462
Losses from the disposal of property, plant and equipment / intangible assets	219	224
Gains from the disposal of property, plant and equipment / intangible assets	- 266	- 494
Decrease/increase in stocks, trade receivables and other assets	3,252	- 21,916
Decrease/increase in trade creditors and other liabilities	- 9,645	3,992
Cash flow from ongoing business activity	16,005	7,268
Incoming payments from disposals of property, plant and equipment / intangible assets	1,152	946
Disbursements for investments in property, plant and equipment	- 9,035	- 12,873
Disbursements for investments in intangible assets	- 473	- 390
Incoming payments from disposals of financial assets	26	8
Disbursements for investments in financial assets	0	- 28
Disbursements for the acquisition of consolidated companies and other business units	0	- 20,435
Cash flow from investment activity	- 8,330	- 32,772
Disbursements to shareholders (dividends)	- 9,756	- 6,502
Disbursements for the acquisition of own shares	0	- 335
Incoming payments from minority interests	- 1,731	- 4,064
Disbursements for the purchase of non-governing shares	- 1,685	- 750
Incoming payments from raising (financial) loans	20,490	32,019
Outflow for repayment of (financial) loans	- 17,234	- 4,553
Cash flow from funding activities	- 9,916	15,815
Changes in cash and cash equivalents	- 2,241	- 9,689
Exchange-rate related changes in cash and cash equivalents	94	74
Financial means on 01.04. Financial means on 30.09.	29,336 27,189	47,754 38,139

Explanatory notes

Accounts, accounting and valuation methods

The report of GESCO Group for the first six months (1 April to 30 September 2019) of the abbreviated financial year 2019 (1 April to 31 December 2019) was prepared on the basis of the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB). It was drawn up in compliance with IAS 34.

The accounting and valuation principles applied generally correspond to those in the consolidated financial statements as at 31 March 2019. The financial statements are affected by the accounting and valuation methods as well as assumptions and estimates which affect the level and recognition of assets, liabilities and contingent liabilities on the balance sheet, as well as those of the income and expenditure items. Sales-related figures are accrued throughout the year.

Following an error finding submitted by the German Financial Reporting Enforcement Panel (FREP) in relation to the consolidated financial statements as at 31 March 2018 (violation of IFRS 10.B92), the consolidated financial statements as at 31 March 2019 were adjusted with regard to the periods at the subsidiaries. The reported consolidated financial statements as at 31 March 2019 encompassed the months April 2018 to March 2019 at GESCO AG and the months January to December 2018 at the subsidiaries, whereas the figures adjusted with this half year interim report as at 31 March 2019 included the months April 2018 to March 2019 at all Group companies. The same applies for the same period in the previous year. Accordingly, opening balance sheets adjusted with this half year interim report as at 1 April 2018 and as at 1 April 2019 deviated from the reported closing balance sheets as at 31 March 2018 and as at 31 March 2019.

IFRS 16 was applied for the first time at the start of the new abbreviated financial year using the modified retrospective approach. At the beginning of the financial year, rights of use and lease liabilities in the amount of € 16.0 million were recognised. Rights of use are attributed to the intangible assets (€ 0.1 million), land and buildings (€ 14.2 million), technical plants and machinery (€ 0.8) and other plants, fixtures and fittings (€ 0.9 million) items on the balance sheet. EBIT was not influenced significantly by the application of the new standard.

Related-party transactions

Business relationships between fully consolidated and not fully consolidated companies within the Group are conducted under regular market terms and conditions. Receivables from related companies are mainly due from Connex SVT Inc., USA. Stefan Heimöller, member of the Supervisory Board, maintains business relationships to a minor extent with Dörrenberg Edelstahl GmbH as well as SVT GmbH through his company Platestahl Umformtechnik GmbH. These business relationships are conducted under regular market terms and conditions.

1 A P R I L T O 3 0 S E P T E M B E R 2 0 1 9

Financial audit

The condensed half-year interim financial statements as at 30 September 2019 and the interim management report as well as the adjusted opening balance sheet as at 31 March 2019 and the corresponding previous year's figures were neither audited in accordance with Section 317 HGB nor reviewed by an auditor.

€'000	Book value 30.09.2019	Not in the scope of application of IFRS 9	Application IFRS 9	Of which at fair value	Of which historical production or acquisition cost
Financial assets	2,102	1,673	429	274	155
Receivables	80,752	0	80,752	0	80,752
Other assets	20,725	15,284	5,441	0	5,441
Liquid assets	27,189	0	27,189	0	27,189
Financial assets	130,768	16,957	113,811	274	113,537
Liabilities to financial institutions	145,816	0	145,816	0	145,816
Lease liabilities	24,784	0	24,784	0	24,784
Trade payables	20,008	0	20,008	0	20,008
Other receivables	35,580	3,347	32,233	634	31,599
Financial liabilities	226,188	3,347	222,841	634	222,207
€'000	Book value 31.03.2019 adjusted	Not in the scope of application of IFRS 9	Application IFRS 9	Of which at fair value	Of which historical production or acquisition cost
Financial assets	2,065	1,610	455	274	181
Receivables	86,714	0	86,714	0	86,714
Other assets	17,081	12,082	4,999	0	4,999
Liquid assets	29,336	0	29,336	0	29,336
Financial assets	135,196	13,692	121,504	274	121,230

Information on financial instruments

€'000	Book value 31.03.2019 adjusted	Not in the scope of application of IFRS 9	Application IFRS 9	Of which at fair value	Of which historical production or acquisition cost
Financial assets	2,065	1,610	455	274	181
Receivables	86,714	0	86,714	0	86,714
Other assets	17,081	12,082	4,999	0	4,999
Liquid assets	29,336	0	29,336	0	29,336
Financial assets	135,196	13,692	121,504	274	121,230
Liabilities to financial institutions	140,713	0	140,713	0	140,713
Lease liabilities	9,295	0	9,295	0	9,295
Trade payables	27,535	0	27,535	0	27,535
Other receivables	40,465	7,923	32,542	448	32,094
Financial liabilities	218,008	7,923	210,085	448	209,637

Assignment of financial instruments to categories according to IAS 9

€'000	Balance sheet recognition		Net results in the income statement
Category IFRS 9	30.09.2019	31.03.2019 adjusted	30.09.2019	31.03.2019 adjusted
Financial assets measured at fair value included in earnings	274	274	56	315
Financial assets measured at cost of acquisition	113,537	121,230	109	403
Financial assets	113,811	121,504	165	718
Financial liabilities measured at fair value included in earnings	634	448	- 104	785
Financial liabilities measured at cost of acquisition	222,207	209,637	- 1,808	- 2,307
Financial liabilities	222,841	210,085	- 1,912	- 1,522

Statement of the Legal Representatives

To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim Group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.

GESCO AG The Executive Board

Wuppertal, November 2019

9

Financial calendar for abbreviated financial year 2019

25 November 2019

Publication of the Half Year interim report

28 April 2020

Annual accounts press conference and analysts' meeting  

18 June 2020

Annual General Meeting at the Stadthalle Wuppertal, Germany Dear Shareholder,

If you would like to be kept regularly informed, please let us know and ask to be included in our mailing list.

Contact for shareholders

GESCO AG
Investor Relations
Johannisberg 7
42103 Wuppertal, Germany
Phone: +49 (0) 202 24820-18
Fax: +49 (0) 202 24820-49
E-mail: info@gesco.de
Website: www.gesco.de

First name / name:

Street / house number:
------------------------	--

Zip code / City:

E-mail:

Please send me your annual report for financial year 2018/2019

Please add me to your mailing list. I would like to receive information by e-mail.

e-mail (please send annual report per post).

post.

H

www.gesco.de