Skip to main content

AI assistant

Sign in to chat with this filing

The assistant answers questions, extracts KPIs, and summarises risk factors directly from the filing text.

Sign up Log in

GK Software SE Annual Report 2021

Apr 28, 2022

184_10-k_2022-04-28_e6324cc0-db18-4b1b-81a3-9b24c1bb8e88.pdf

Annual Report

Open in viewer

Opens in your device viewer

Annual Report 2021

The Retail Innovators

Summary of Consolidated Results

-
-
Equity ratio
%
58.0
44.0
37.1
Net debt
EUR K
(42,431)
243
11,907
Employees
1,096
1,162
1,168
(5.7)
Go to main table of contents
Turnover distribution according to
Search in document
segments
Earnings per share
Turnover (EUR million)
(weighted, EUR)
Go forward a page
EMEA
0.5%
16.9%
Earnings per share (diluted)
EUR
5.66
3.00
(1.60)
-
-
Earnings per share (weighted)
EUR
5.98
3.04
(1.60)
you to read our Annual Report.
Annual net profit/loss
EUR K
13,298
6,266
(3,139)
112.2
EBT
EUR K
16,454
9,090
1,233
81.0
We hope that these changes make it easier for
EBITDA margin (on turnover)
%
20.5
16.2
10.6
document can still be printed.
screen, we have, of course, made sure that the
EBITDA
EUR K
26,790
19,078
12,256
40.4
Despite optimising the Report to be read on a
-
way through the Report.
EBIT margin (on turnover)
%
13.2
9.0
3.0
is as simple as possible for you to navigate your
EBIT
EUR K
17,306
10,535
3,430
64.3
reading and usage habits. Our goal is to make it
Total operating revenue
EUR K
139,589
122,688
119,285
13.8
is to adapt the document to changes in digital
Operating performance
EUR K
130,847
118,391
115,448
10.5
a screen-optimised layout. The purpose of this
Turnover
EUR K
130,847
117,560
115,448
11.3
in %
We are presenting this Annual Report to you in
31.12.2021
31.12.2020
31.12.2019
changes
Dear readers,

Dear readers,

30 Consolidated Management Report
30 The Company's Business Model
36 Economic report
40 Explanation of the business results and analysis of
the assets, financial and earnings situation
51 Report on the Risks and Opportunities
for
the
GK Software
Group
51 Opportunities
52 Risks
58 Overall risk position
59 Internal monitoring and risk management systems
with regard to the Group's accounting process
60 Risk reporting in relation to the use of financial
instruments
62 Forecast report

Consolidated Management Report

Consolidated Accounts

To the Shareholders Consolidated Management Report Consolidated Accounts Further information

Overall, we consider ourselves to be in a good position to continue our growth course and increase our profitability in 2022 and the coming years. Rainer Gläss,

CEO

Letter from the Management Board

Dear shareholders,

We would like to take this opportunity to present you with the 2021 annual report for GK Software1 and to review another successful fiscal year. Both our business figures and our market position improved further in a year that was still characterised by the worldwide COVID-19 pandemic. On the other hand, we can see that our revenue growth has accelerated just as much as our transformation into a cloud company.

We are pleased to report that we were able to increase the turnover to EUR 130.85 million, exceeding the previous year's results by EUR 13.29 million (up 11.3 percent). EBITDA reached a figure of EUR 26.79 million, exceeding the previous year's results (EUR 19.08 million) by almost a third. The growth in earnings before interest and taxes (EBIT) was even higher at EUR 17.31 million (2020: EUR 10.54 million). This makes the 2021 fiscal year the most successful and most profitable for many years, This is true even when the one-off effect caused by the sale of AWEK microdata GmbH is taken into consideration.

This trend is also reflected in our market position, with independent market research once again confirming our international leadership position and naming GK as one of the key providers worldwide. But that's not all: Once again, the 2021 edition of the annually published Global POS Software study2 of British advisory company RBR found that GK is the world's fastest-growing provider in its target market in terms of the number of new installations: In this market (retailers with more than 1,000 systems, not including fuel stations and hospitality), GK rolled out more new POS installations worldwide than any of its competitors in the period investigated between June 2020 and June 2021. Even taking into account all segments (i.e., including fuel stations and hospitality), GK was the world's number 2 in terms of new installations during this period. But it is not just our momentum that justifies our being assessed

1 The name GK Software always refers to the corporate group in the following text. "The Company" is also used as a synonym. When GK Software SE is used, it exclusively refers to the individual company.

as a world-leading provider of store-automation software: Our installed base also puts GK in sixth place worldwide and in second place in Europe. Furthermore, in the period under evaluation by RBR, one in every four new installations (26 percent) in Europe was implemented using GK software.

This positioning will be further improved by the progress made over the past year toward becoming a cloud company. Our cloud products impressed new CLOUD4RETAIL customers just as much as did the performance of our subsidiary Deutsche Fiskal's Fiskal Cloud, which has been operating at full capacity since April: At the time of reporting – one year after going into production – we will have processed 20 billion transactions in real time without recording any malfunctions worthy of mention.

And we are working on new solutions for retail – in particular GK SPOT. With this, we want to give retailers the opportunity to make the most of the large amounts of data they have, and of course this big data solution is being developed as a purely cloudbased solution.

In 2021, sales to new customers revealed that GK successfully adapted to the limited sales opportunities available due to the pandemic. Overall, we were able to win 15 new customers for CLOUD4RETAIL. A very large new acquisition in South Africa was particularly prominent among these customers. These new customers also come from the UK, the US, Panama, Egypt, Mexico and France. Almost half of the new contracts (7) are already software-as-a-service (SaaS) contracts, and we are assuming that this trend will continue to strengthen in the coming years. With the installations going live at these customers, the revenue GK generates from the cloudlicense business will continue to grow and lead to a significant and foreseeable development overall. Overall, the new CLOUD4RETAIL customers acquired in 2021 represent up to 44,665 installations in 6,120 stores on four continents. In addition, 6 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

2 rbr: Global POS Software 2021

there are five more new customers in the AIR (Artificial Intelligence for Retail) segment, and more than 200 customers in the Deutsche Fiskal segment.

In the reporting period, our long-term, trusting partnership with SAP also continued to prove successful. We also concluded further important partnerships in order to establish ourselves even better in the cloud environment and to tap any additional sales potential. As part of a global alliance with IBM, CLOUD4RETAIL will now also be available in the IBM cloud. In addition, a joint go-to-market strategy was agreed, which enables IBM Global Services to provide solutions and offers for retailers. Through an agreement with AWS – yet another 7 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

Both our business figures and our market position improved further in a year that was still characterised by the worldwide COVID-19 pandemic.

issue of EUR 19.04 million, which were entered on the books at the start of the second quarter. This further strengthened the Company's liquidity. In order to meet the high demand, Mr Rainer Gläß also sold shares, which has now increased the free float to 58.15 per cent.

One important topic for us in 2021 was the reorganisation of the Group financing. Within this framework, we took out a syndicated loan for the first time on 8 December 2021 in the total amount of 45 million euros for 3 years plus a one-year option. This harmonised and streamlined the financing structure, while ensuring robust financing for the Group in an

hyperscaler – we were able to create the conditions necessary to make our solution available on major cloud platforms. Due to our partnerships with SAP, IBM, Microsoft, and AWS as well as other innovation partnerships, we are convinced that we will improve our global reach and visibility.

Another significant event in the financial year was the sale of AWEK microdata, developer of the euroSUITE solution, to the Zucchetti Group in Lodi, Italy, for a figure in the mid single-digit million range. We made this decision in view of our plan to focus more strongly on our cloud solutions, CLOUD4RETAIL and retail7. In the 2020 fiscal year, AWEK microdata generated less than five percent of the Group's revenue and had 41 employees in Hamburg and Bielefeld.

At the end of March 2021, we successfully placed a capital increase. In this context, investors subscribed for a total of 180,000 new shares, at a placement price of EUR 105.75 per share, through ICF BANK AG. This equates to gross proceeds from the

amount that will be sufficient in the long term.

In September, we set up a branch in Paris to extend our penetration into the French market and to provide our customers with local support. We also want to have more of a present in the UK and have built up further capacities there. In the first quarter of 2022, in order to increase our geographical sales reach and to provide better service for existing customers, we successfully launched two further subsidiaries in Singapore and Australia.

In the 2021 fiscal year, research and development was able to successfully develop new products and make several solutions ready for the market. We worked constantly on the further improvement of our CLOUD4RETAIL core solution and were able to provide numerous additional functionalities and improved operability, with our solutions completing the SAP Premium Qualification process on schedule.

With eReceipt (eMailBon), we were able to offer retailers a solution that meets the statutory requirement for receipts for tax purposes and roll it out successfully for the first time. With the new service for Go-style shopping introduced in autumn, we make it possible for retailers to offer a checkout-free, grab-and-go shopping experience ("frictionless retail"). With this service, shoppers don't need to scan the products or pay for them at conventional checkouts. The Deutsche Fiskal solutions obtained the necessary certifications on schedule and are under constant further development. For example, Deutsche Fiskal's native Android solution was completed in the reporting period and certified by BSI in early-2022. This makes Deutsche Fiskal available to users of a further operating system with the associated hardware. In the AIR segment, we further developed our solutions for personalisation and dynamic pricing, as well as developing a new mobile solution for preventing food waste, using artificial intelligence to ensure that goods are sold in time. In 2021, following the first test customers, further customers from a wide range of industries were connected up to our retail7 solution, and this cloud product was also further extended. 8 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

GK SPOT – our new big data solution – was a major focus of development in the past fiscal year. Its technological base was consolidated and work was carried out on initial AI-based testing applications. Besides real-time business-intelligence topics, the focus is on applications in the field of hyper-personalisation in particular.

We were also able to continue expanding our installed base for CLOUD4RETAIL last year through on-schedule project progress. The go-live of about 27,000 new installations means that 380,289 systems (tills, mobile devices, servers) are now in productive use in 63 countries. Not included in these figures are the installations of Deutsche Fiskal, of our TransAction+ payment platform in the US, and our AI solutions, as these products are distributed in a technically different manner.

As in previous years, we were able to strengthen our business relations with almost all our existing customers. Besides the annually recurring revenue arising from extension business and general operational support, we were also able to conclude contracts with several customers for the purchase of additional solutions or for switching to CLOUD4RETAIL OmniPOS. These relationships are a reliable component in GK Software's business development as our customers are permanently adapting their solutions to new requirements in their business by expanding into new countries, developing new sales concepts or introducing omni-channel standards.

The last Annual Report included a medium-term forecast for the period up to the end of the 2023 fiscal year. This would only apply, however, if the Coronavirus pandemic were brought under control by the end of 2022. Even if this is not yet foreseeable, the war in the Ukraine has presented another issue, the ramifications of which could be significantly more serious and even more difficult to assess in terms of their duration. On the condition that these issues do not result in global upheaval, we continue to stand by our current forecast and expect to be able to achieve a sales range of between EUR 160 million and EUR 175 million by the end of 2023. This could be accompanied by additional inorganic growth, but also supported by sources of organic growth if the market launch of GK SPOT opens up new geographical markets or further potential – particularly for Deutsche Fiskal and prudsys.

We expect that we will grow in 2022 by the same amount that we grew in the past year, bringing the trend in earnings closer to our target margin for the EBIT of 15 percent for 2023. With this, we are assuming that the transformation to SaaS products will also continue for CLOUD4RETAIL. The achievement of these targets will also be significantly influenced by overcoming the negative external factors caused by the pandemic and the war in Ukraine.

Overall, we consider ourselves to be in a good position to continue our growth course and increase our profitability in 2022 and the coming years. So we will continue to be optimistic about the years ahead and are delighted that you are supporting GK Software SE and its pathway of growth. We would also like to take this opportunity to thank you for placing your long-term trust in the company. 9 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

Schöneck, 28 April 2022

The Management Board

Rainer Gläss Chief Executive Officer

André Hergert Chief Financial Officer

"The year was characterised by a very encouraging economic development of GK Software SE despite the overall continuing adverse circumstances caused by the pandemic."

Dr Philip Reimann Chair of the Supervisory Board

Report of the Supervisory Board

Report of the Supervisory Board

Dear Shareholders,

We would like to take this opportunity to present you with the report of the Supervisory Board of GK Software SE for the 2021 fiscal year. The year was characterised by a very encouraging economic development of GK Software SE despite the overall continuing adverse circumstances caused by the pandemic. The results of the 2021 fiscal year confirm to the Supervisory Board that the course taken by the Company in 2019 and 2020 – years characterised by the implementation of the efficiency program – continues to be the right one. Furthermore, the strategic realignment of GK SOFTWARE SE makes even clearer and more tangible the networking of decades of experience as a leading European provider of integrated branch solutions and thus consistency on the one hand, with the innovative capacity, dynamism, readiness for change and agility of GK Software SE on the other, and therefore also contributes significantly to successful development. The Supervisory Board is convinced that the 2021 fiscal year once again saw the laying of important foundations for GK Software SE to achieve its goal of becoming the world's leading provider of the most comprehensive retail applications for omni-channel business in real time. 11 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

Composition of the Supervisory Board

In accordance with the articles of association, the Supervisory Board consists of three members. During the 2021 fiscal year these were:

  • – Dr Philip Reimann (Chair)
  • – Thomas Bleier (Deputy Chair) and
  • – Herbert Zinn

Meetings

The Supervisory Board held its ordinary meetings on 23 February, 27 April, 17 June, 6 September, and 09 December 2021, with all meetings since June again being held in Schöneck. Due to the Covid-19 situation, the meetings in February and April were held as video conferences. Additionally in 2021, regular meetings were held as phone or video conferences, many of which led to resolutions being passed. Such meetings at which resolutions were passed were held on 11 January, 15 January, 25 March, 26 March, 30 March, 28 April, 6 May, 28 May, 21 June, 25 June, 30 June, 5 August, 13 August, 27 August, 3 September, 1 October, 24 November and 26 November.

All members of the board attended all ordinary meetings and conferences. It is customary practice at GK Software to always involve the representatives of the Management Board in the meetings. Beyond these meetings, the members of the Supervisory Board were also regularly in contact with each other and – particularly through the Chair of the Supervisory Board – also with the Management Board and the members of the Group Management Board. Decisions were made during the meetings or by way of a circulation procedure. During its meetings, the Supervisory Board was briefed in detail about the Company's economic and financial situation and its fundamental corporate policy by way of verbal and written reports from the Management Board. At the request of the Supervisory Board, the Management Board also provided interim reports on the latest course of business and earnings at regular intervals between the meetings and promptly forwarded the minutes of each Group Management Board meeting.

Functions of the Supervisory Board

During the 2021 fiscal year, GK Software SE fulfilled the tasks incumbent upon it according to law, the articles of association, the recommendations of the government's "German Corporate Governance Code" commission and the Supervisory Board's latest rules of procedure, and monitored the Company's management continuously and carefully.

In the 2021 fiscal year, the Supervisory Board focused in particular on the realignment of the strategy and the brand of GK Software SE, as well as, of course, on the effects of the ongoing pandemic and, in particular, on the effects on the working conditions

Report of the Supervisory Board

of the employees of GK Software SE. The Supervisory Board received regular reports on the status of the realignment as well as on the measures taken to protect the employees of GK Software SE. It also supported the Group Management Board in defining and implementing the targets for the fiscal year and beyond.

The ongoing development and adaptation of risk-management systems was a subject again urgently pursued by the Supervisory Board during the 2021 fiscal year, as were the increase in efficiency and quality in the HR area, the advancement of further expansion, the implementation of the capital increase and the continued focus on the topic of data security and protection. The Supervisory Board welcomed the progress made in these respects.

The Supervisory Board also focused on the appropriateness of the remuneration paid to Management Board members, particularly in respect of the adjustments that have to be made to the existing employment contracts and pension agreements. As in previous years, we focused our attention on the relation of the remuneration payments to the economic situation of the Company and on the conditions prevalent at comparable companies, the soundness of the overall remuneration structure within GK Software and the composition of fixed and variable salary elements.

In order to monitor the Company's management, the Supervisory Board took the annual budget passed for 2021 for guidance and had reports prepared by the Management Board, particularly regarding the ongoing cost trends, profitability, specific characteristics of corporate policy, the reasons behind the corporate planning in all business segments, the further course of business and important measures adopted by the Company. Throughout the entire fiscal year, the Supervisory Board also requested additional reports on business development. Throughout the year, the Management Board also supplied the Supervisory Board with information, both

during and outside the meetings, which was discussed and critically reviewed by the Supervisory Board.

Corporate Governance

The Supervisory Board and Management Board have been acting for many years in the knowledge that good corporate governance forms an important basis for the Company's success and is therefore in the best interests of shareholders and capital markets. In April 2022, the Management Board and the Supervisory Board issued their annual declaration of compliance in accordance with Section 161 AktG [German Stock Corporation Act]. The wording of this declaration is included in this annual report as part of the Corporate Governance Report. In this declaration, both the Management Board and the Supervisory Board have pledged to follow the recommendations of the German Corporate Governance Code as far as possible. On 31 August 2015, a decision was made on the legal stipulation to have equal representation of women and men in management positions; this continues to apply. Again in 2021, no conflicts of interest arose for the members of the Supervisory Board. 12 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

Sustainability reporting

In line with the statutory provisions, an independent sustainability report is being published by GK Software SE together with this report for the fourth time. The Supervisory Board therefore requested an explanation of the principles of reporting and the content of the sustainability report from the Management Board at the same time as the annual accounts and consolidated accounts in accordance with requirements.

Report of the Supervisory Board

Audit of the annual accounts for 2021

The GK Software SE annual accounts compiled by the Management Board in keeping with the guidelines set by the German Commercial Code, the IFRS consolidated accounts, and the respective management report were audited by the auditing firm PriceWaterhouseCoopers GmbH, Erfurt, and were given an unqualified audit certificate. Taking into account these audit reports, the Supervisory Board inspected the annual accounts compiled by the Management Board, the consolidated accounts, the dependency report, the management report of GK Software SE and of the Group, and the Management Board's proposal for the appropriation of profits, for 2021. At its meeting on 27 April 2022, the Supervisory Board asked the Management Board to explain the 2021 annual and consolidated accounts and to report on the profitability, the Company's equity, the ongoing course of business and the Company's broader situation. All members of the Supervisory Board received the necessary paperwork and documents prior to this meeting. 13 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

During the meeting, the auditors commented on the Management Board's presentation and explained the audit findings on the basis of the audit reports and answered all the questions on these reports. The auditors were able to satisfactorily answer all issues raised. There are no concerns regarding the auditors' independence. At its meeting on 27 April 2022, the Supervisory Board approved the annual accounts of GK Software SE and endorsed the consolidated accounts of GK Software. The annual accounts have therefore been approved.

The Management Board also prepared a report on the relationships with associated companies in accordance with Section 312 AktG [German Stock Corporation Act]. The auditors examined this report and gave an oral account of the results of their examination at the meeting on 27 April 2022. The review by the Supervisory Board

did not give rise to any grounds for objection. Accordingly, it had no objection to the Management Board's final statement in its report in accordance with Section 312 AktG [German Stock Corporation Act] and confirmed this by voting in favour of it at the meeting on 27 April 2022.

The Supervisory Board would like to thank the Management Board, the complete management team and all employees for their work in 2021.

Schöneck, 27 April 2022

Dr Philip Reimann Chair of the Supervisory Board

Corporate Governance Report

Corporate Governance Report

in accordance with Section 289a HGB [German Commercial Code]

GK Software considers responsible and transparent behaviour to be absolutely essential for its longterm economic value creation. Both the Management and the Supervisory Board have therefore issued the statutory declaration of compliance in accordance with Section 161 AktG [German Stock Corporation Act]. Accordingly, monitoring compliance with the declaration is considered an important task for the Management Board and Supervisory Board. The declaration is issued every year and is available to the public on the Internet at https://investor.gk-software.com in the "Corporate Governance" section.

Cooperation between the Management Board and the Supervisory Board

The Management Board and the Supervisory Board have been working together for many years on a basis of trust. The Management Board reports at regular intervals to the Supervisory Board on profitability and the Group's strategy and its implementation, and also on existing or potential risks. These reports are given during the scheduled Supervisory Board meetings, ten of which were held in the past fiscal year, and also directly through regular monthly meetings with the Chair of the Supervisory Board. Further information on this can be found in the Supervisory Board's report. Due to the fact that it has only three members, the Supervisory Board did not form any committees. All issues are discussed and decided by the full board. The Chair of 14 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

the Supervisory Board is solely authorised to conduct negotiations on personnel decisions that pertain to the Management Board, but these must be approved by the full board. No conflicts of interest arose for members of the Management Board or the Supervisory Board.

Transparency

GK Software deliberately chose to have its shares listed in the most stringently regulated sector at Deutsche Börse, the Prime Standard, for its flotation in the summer of 2008. The highest possible degree of transparency towards its investors and all the other participants in the capital markets has been one of the most important Company principles from the outset.

The Company will also appoint a voting proxy for the 2022 Annual General Meeting; this will allow shareholders to exercise their voting rights, even if they are unable to attend the meeting in person. All public information, such as ad-hoc announcements and press releases, financial reports or reports on the annual shareholders' meeting, can be viewed at any time on the Company's website.

Risk management

The risk-management system established by the Company is geared towards the needs of its business. It is designed to help identify risks at an early stage and to prevent or limit any risks that occur. Please see the Consolidated Report for details.

Statement of compliance

On 19 April 2022, the Management Board and the Supervisory Board of GK Software SE declared that, since issuing the last annual declaration of compliance in April 2021, the recommendations of the government's German Corporate Governance Code commission had been met, apart from the exceptions noted in the declaration of April 2021, and will continue to be met with the following exceptions. The Corporate Governance Code in its 16 December 2019 version, which was valid at the time this declaration was issued, forms the basis for this declaration.

A. Management and supervision

I. Business management tasks of the Management Board

Principle 3, Recommendation A.1 In the interests of the Company, the candidates for management positions will be selected by the Management Board mainly on the basis of their personal skills and abilities. Only then will other objective background circumstances of the candidates be taken into account so as not to generally restrict the interests of the Company. When setting the target rate for the proportion of women at the first management level below the Management Board, the

Corporate Governance Report

Management Board will take into account that this consists of only three members.

Principle 5, Recommendation A.2 Work on completing the compliance system is still in progress. The Management Board plans to disclose the main features of this once it is completed. Opportunities for employers and outside parties to securely provide information about legal infringements already exist.

III. Function of the annual shareholders' meeting Principle 8, Recommendation A.5 The Company's articles of association do not provide any regulations for this case. The Management Board will comply with the statutory provisions envisaged for these cases and shall reserve the right to summon an extraordinary shareholders' meeting.

B. Composition of the Management Board

Principle 9, Recommendation B.1 When filling vacant positions on the Management Board, the Supervisory Board will mainly take into account the candidates' personal suitability, based on their individual skills and specialist expertise, so as not to generally restrict the interests of the Company. Only then will other criteria be considered. When setting the target rate for the proportion of women on the Management Board, the Supervisory Board will essentially take into account that this consists of only two members.

Principle 9, Recommendation B.2 The Supervisory Board and the Management Board will jointly ensure long-term planning with regard to successors. This method will be adapted to the relevant requirements of the specific situation in each individual case and will be described in the declaration on company management for 2022.

Principle 9, Recommendation B.5 There is no age limit for members of the Management Board; GK Software SE believes that the professional qualifications of the members of the Management Board are of greater significance.

C. Composition of the Supervisory Board

I. Composition of the Supervisory Board Principle 11, Recommendation C.1 The composition of the Supervisory Board of GK Software SE is not decided by the Supervisory Board, but by the Company's Annual General Meeting. The Supervisory Board aims at successful cooperation between its members and constructive cooperation with the Management Board. The nominations submitted by the Supervisory Board at the annual shareholders' meeting will take into account the geographical distribution and the degree of complexity of the business activities of GK Software. Criteria such as age, origin or gender of the candidates are not primary factors in considerations. When setting the target rate for the proportion of women 15 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

on the Supervisory Board, the Supervisory Board will essentially take into account that this consists of only three members.

Principle 11, Recommendation C.2 There is no obligatory age limit for the members of the Supervisory Board as particularly the older members of the Supervisory Board enrich the board with their wealth of experience and their professional qualifications are of greater significance.

II. Independence of the members of the Supervisory Board

Principle 12, Recommendation C.7 In special situations, such as proposals for the necessary appointment of members to the Supervisory Board by a court, the Management Board will, in the best interest of the Company, also propose candidates who do not meet the criteria of the Code as regards independence. The Company does not see any restrictions of independence for the Supervisory Board members who have served on this board for more than twelve years.

Principle 12, Recommendation C.10 In special situations, such as proposals for the necessary appointment of members to the Supervisory Board, who at the same time are to be appointed as Chairpersons of the Supervisory Board by a court, the Management Board will, in the best interest of the Company, also

Corporate Governance Report

propose candidates who do not meet the criteria of the Code as regards independence.

D. How the Supervisory Board operates

I. Rules of procedure

Recommendation D.1 The rules of procedure for the Supervisory Board are not made public.

II. Cooperation within the Supervisory Board and with the Management Board

Principle 14, Recommendation D.2 The Supervisory Board of GK Software SE does not form any committees as, due to its size (the Supervisory Board consists of three members), meetings attended by all members of the Supervisory Board are the most efficient way to guarantee that consistent and extensive information is provided to all members of the Supervisory Board. All questions can be discussed and answered appropriately when the full board meets.

Principle 14, Recommendation D.3 See explanation for the deviation from Recommendation D.2.

Principle 14, Recommendation D.4 See explanation for the deviation from Recommendation D.2.

Principle 14, Recommendation D.5 See explanation for the deviation from Recommendation D.2.

Recommendation D.7 The Supervisory Board usually meets together with the members of the Management Board, as both boards believe that the flow of information and the discussion of subjects that concern the Company can be best handled this way.

Recommendation D.11 See explanation for the deviation from Recommendation D.2.

F. Transparency and external reporting

Recommendation F.2 The consolidated accounts will not be published within 90 days of the end of the fiscal year, but – in keeping with the current guidelines of Deutsche Börse AG – after four months. The interim reports will not be presented after 45 days, but – in keeping with the current guidelines of Deutsche Börse AG – after two months. GK Software SE believes that the periods of time stipulated by Deutsche Börse AG are sufficient to provide shareholders with detailed information.

G. Remuneration of the Management Board and the Supervisory Board

I. Remuneration of the Management Board

Recommendation G.1 It is not possible to precisely determine the relative share that the fixed remuneration on the one hand and short-term variable and long-term variable elements of remuneration on the other hand have in the overall target remuneration. Whereas the

ratio of fixed remuneration and maximum short-term variable remuneration has been clearly defined, the longterm variable remuneration is paid out solely in the form of share options; however, the value these shares will have on the date of issue cannot be determined at the time the option is exercised.

The remuneration system stipulates the correlation between the achievement of the previously agreed performance criteria and the variable remuneration. However, the Supervisory Board reserves the right to consider the Company's overall situation when assessing the targets that have actually been achieved in terms of overall target achievement.

The variable remuneration that results from achieving long-term targets does not exceed the proportion resulting from short-term targets pro forma. However, it is deliberately assumed that the instruments for the remuneration of long-term goals (share options) with a growth value such as the company represents, have an inherent value lever - even if not exactly determinable which can and should lead to the remuneration of the long-term goals clearly exceeding that for the short-term goals. 16 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

Recommendation G.10 The members of the Management Board are not expected to invest the variable remuneration granted to them mainly in

Corporate Governance Report

Company shares, because the long-term remuneration is already paid out solely in the form of share options.

Recommendation G.11 In justified cases, there is no possibility for the Supervisory Board at GK Software to withhold or reclaim any variable remuneration earned. In such cases, mutual agreement will be sought with the members of the Management Board.

Recommendation G.13 The Supervisory Board will ensure in future contracts that payments to a member of the Management Board do not exceed the value of two annual salaries if they leave the Management Board prematurely.

Recommendation G.14 The Supervisory Board will ensure in future contracts that payment promises in the event that the employment contract is ended prematurely by the member of the Management Board due to a change of control are not agreed. As both members of the Management Board were appointed to their positions over a decade ago, the practice adopted for years has been applied to one of the current contracts. 17 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

Recommendation G.15 For those members of the Management Board, who hold supervisory board positions within the Group, the remuneration is not currently taken into account in their salaries as the

decisions were made before the corresponding rules of the Code were adopted and the additional responsibility associated with this is compensated. When making future decisions, the Supervisory Board plans to ensure that the remuneration for supervisory board positions within the Group is taken into account in the salaries.

GK Software SE Shares

GK Software SE Shares

Basic data

T.01 Basic data

Securities Identification Number
(WKN) 757142
ISIN DE0007571424
Trading symbol GKS
GK Software AG IPO 19 June 2008
Type of shares Ordinary stock in the name of the
holder without any nominal value
(individual share certificates)
Trading markets Frankfurt and XETRA
Market segment Regulated Market (Prime Standard)
Designated sponsor ICF Bank AG
Number of shares 2,258,425
Share capital EUR 2,258,425
Free float 58.15 %
Highest price in 2021 EUR 171.50 (8 September 2021)
Lowest price in 2021 EUR 96.80 (5 January 2021)

Summary/share performance

The price of GK Software shares, which are listed on the Prime Standard section of the Frankfurt Stock Exchange, continued its increase last year. The share price started the year at EUR 100.50, peaked at over EUR 170 in September and closed at EUR 160 at the end of the reporting period. Market capitalisation lay at EUR 361 million at the end of the year.

Share price development (in %) 2017 to 2021

Share price development (in %) in 2021

GK Software SE Shares

Shareholder structure on 31 December 2021

Freefloat

Number of shares issued

On 31 December 2021, the total number of voting rights was 2,258,425 shares at the end of the reporting period.

Shareholder structure

GK Software SE has an extremely stable shareholder base and this is enabling the Company to achieve longterm and sustained development. The shareholder structure on the reporting date (31 December 2021) was as follows: Rainer Gläss, company founder and Chair of the Management Board, directly held 3.00 percent and, indirectly through Rainer Gläss Vermögensverwaltungs GmbH & Co. KG, 20.57 percent of the shares. Stephan Kronmüller, also a company founder and the former Head of Technology and Development, directly held 1.63 percent and, through Stephan Kronmüller Vermögensverwaltungs GmbH & Co. KG, 16.66 percent of shares. This meant that 58.15 percent of the shares were in free float on 31 December 2021.

The Company was informed about the following holdings in GK Software SE, which exceeded the 3 percent threshold:

T.02 Amounts exceeding/falling below the threshold value

Date Shareholder Proportion
in %
1.10.20211 Universal-Investment-GmbH, Frankfurt am Main 5.03

Directors' dealings in 2021

T.03 Directors Dealings

Date Person
trading		 Position Activity Volume Quantity
EUR
23.12.2021 André Hergert Management
Board		 Sale 38,171.05 257
23.12.2021 André Hergert Management
Board		 Purchase 233,380.00 2,000
27.9.2021 Rainer
Gläss		 Management
Board		 Sale 934,200.00 6,000
27.9.2021 Rainer
Gläss		 Management
Board		 Sale 628,000.00 4,000
26.3.2021 Rainer
Gläss		 Management
Board		 Sale 6,345,000.00 60,000
1.2.2021 André
Hergert		 Management
Board		 Sale 80,649.79 670
27.1.2021 André
Hergert		 Management
Board		 Purchase 229,900.00 5,000

Investor relations

GK Software deliberately chose to have its shares listed in the most stringently regulated sector at

1 Initial notification of 5.23% on 6 March 2012. Information on the current portfolio by the shareholder on 17 March 2016.

GK Software SE Shares

Deutsche Börse, the Prime Standard, for its flotation in the summer of 2008. The highest possible degree of transparency towards its investors and all the other participants in the capital markets has been one of the most important Company principles from the outset.

André Hergert, the CFO, is responsible for investor relations, which has been assigned its own department. This guarantees that any enquiries from investors and potential investors are answered immediately.

GK Software SE also attaches great importance to providing a continual flow of information for the future. Among other things, this involves the completion of quarterly reports and extensive half-yearly and annual reports in German and English, a finance calendar, compulsory announcements, which have to be published immediately, and corporate news items. The accounting system has been adapted to the international IFRS accounting standards and also meets investors' requirements for information. As in previous years, GK Software will hold its analysts' conference during the Frankfurt Equity Capital Forum in 2021 again. Investor and press roadshows also take place at regular intervals, so that the Company remains in permanent contact with the capital markets. 20 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

Products and Services

Products and Services

The CLOUD4RETAIL platform

The CLOUD4RETAIL platform is the technological basis for the major share of GK Software's solutions. All solutions based on this cloud platform adhere to identical development paradigms and a comprehensive framework. The purpose of this is to enable software components to be used multiple times and resources to be shifted quickly between the various modules based on the platform. CLOUD4RETAIL's main goal is to further reduce the complexity of the various retail processes by way of a suitable platform solution and create solutions that remain operable and manageable for the users despite growing demands, particularly from consumers. The Company's slogan "Simply Retail" takes this into account. This is why the Company has made such significant investments during the last few years in order to enable the process of digital transformation with specific solutions. This has meant that significant parts of the range of solutions have been newly developed in order to safeguard the future viability of the GK range of solutions for years to come and not just rely on the status quo. The results of this fundamental management decision were not as clearly evident at first glance as, for example, the switch from DOS to Java. However, if we consider the resulting effect, the expenditure associated with it and the dimension of this change in general terms, the step that has been taken in the field of software development is probably much bigger as it gives digitalisation a powerful boost 21 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

and leads to large parts of the corporate IT being transformed into the cloud.

One unique feature of the CLOUD4RETAIL platform of solutions is the use of artificial intelligence to optimise decision processes involving large amounts of data. Using AIR (Artificial Intelligence for Retail), GK Software has developed the first specifically retailoriented services based on artificial intelligence in order to optimise retail processes. This is based on a self-developed AI solution, which uses processes such as machine learning and other AI methods to analyse even large amounts of data in real time and generate recommended courses of action.

The CLOUD4RETAIL platform is not geared to any individual retail segment, but is equally (not industry specific) suitable for all formats and segments in the retail sector, ranging from small shops to department stores, from food retailers to fashion and even specialist retailers.

The architecture of the platform has been designed to be used not only with a particular type or class of device (device independence). The underlying open client concept ensures that nearly all standard devices can be used on the basis of the same cloud-enabled services. They include mobile and stationary checkouts using very different hardware, scales, self-checkouts, self-scanning devices, mobile data logging devices for employees,

tablets or, not least, the wide variety of consumer smartphones.

The CLOUD4RETAIL platform has been designed for use in very large and widespread branch networks. It is critical for the retail business to be able to ensure that the daily operations involving thousands of devices and the central services associated with these are not disrupted (scalable). Retailers operating internationally are faced with the additional challenge of meeting the legal and fiscal requirements that apply in each country (internationalised for more than 60 countries). Due to this complexity, only a few providers worldwide are able to implement large international investment projects.

Elements of CLOUD4RETAIL

Three essential elements form the basis of the CLOUD4RETAIL platform. The first element is the CLOUD4RETAIL platform, which focuses on the retailers' processes ranging from the local branch to the headquarters and the extensive omni-channel features. The second element is the Mobile Consumer Cloud, which is geared towards processes performed and initiated by the customer. The third segment involves power apps, which can be made available to all retailers independent of the other elements and cover special requirements.

Products and Services

CLOUD4RETAIL as a transaction processor for retail

Starting in 2015, a fundamental new development in the range of GK solutions was launched. The first new solution that emerged from these investments was OmniPOS (POS = point of sale). The experience gained from this and the basic groundwork carried out on it formed the basis for the CLOUD4RETAIL solution platform. At the time of its official launch in 2016, OmniPOS was therefore far better than the preceding solution GK/Retail POS (version 12), which was already being used by most customers at that time. The idea of the fundamental architecture was to enable all functions to be used in both a modular and distributed way, both with and without user interfaces. Each function must be usable as a central service, but also as a local instance and be secure across network boundaries. At the same time, the central services must be able to handle the simultaneous operation of very many clients at a data centre or in a (private) cloud. This is the only way of guaranteeing operations at thousands of checkouts, calculating prices at a web shop or safeguarding communications with a huge number of customer devices, all at the same time. 22 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

The CLOUD4RETAIL platform has not only made it possible for GK Software to provide the first major enterprise-store solution entirely in the cloud, but also allows it to continue to make customised adjustments to the software at the same time. These specific characteristics for each individual retail company are

just part of the industry-specific necessities being called for.

The elements of the GK/Retail range of solutions include various components such as the comprehensive omni-channel solution package OmniPOS and the data supply/removal infrastructure for large branch networks

The CLOUD4RETAIL platform has been designed for use in very large and widespread branch networks.

associated with it. Also included are other devicespecific components, components that concentrate on certain functions such as OmniScale or Label&Poster Print, and special industry models, such as GK Drive and GK Hospitality. In 2021 the existing Scan & Go solution (with scanning and payment by smartphone) by GK GO was further adapted to allow completely contactless shopping. Here, conventional scanning is carried out completely automatically using integrated

lidar technology and intelligent scales. In addition, we pressed ahead with the development of our new GK SPOT solution, enabling us to distribute hyperpersonalised offers in real-time, for example, based on big data.

With retail7, the Company offers a completely new cloud product for small retailers and restaurateurs; this can be purchased on app stores and is offered purely as an SaaS product.

The Mobile Consumer Cloud

The Mobile Consumer Cloud is another element of the CLOUD4RETAIL platform. This combines all of the solutions that think processes from the perspective of the (mobile) customers and place these at the head of the process chain. The Mobile Consumer Cloud was based on the Mobile Consumer Assistant (MCA), which is used modularly depending on the customer's needs. Over the past years, investments have been made in the further development of the solution, allowing us to offer an extensive range of self-scanning and buy online / pick-up in store (BOPIS) products as well as other mobile application scenarios. The Mobile Consumer Cloud follows a framework approach. Retailers can use the framework and other components and integrate them into their existing apps so that they can offer self-scanning and self-payment options to consumers straight on their smartphones, for example. The Mobile Consumer Cloud works together seamlessly

Products and Services

with the modules of the GK/Retail range of solutions, significantly increasing its added value and thus its competitive ability.

Power apps

Power apps form the third segment of the CLOUD4RETAIL platform. They share the same technological basis as the GK/Retail range of solutions and the Mobile Consumer Cloud, but can be used completely as stand-alones. Each power app is geared towards a specific retail-related topic. The main solutions are currently being used in the Deutsche Fiskal and AIR segments. All power apps are usually available as cloud solutions only in a Software-as-a-Service form.

Deutsche Fiskal

GK Software has been developing a solution to meet the new tax requirements that can be summarised under the heading of "German fiscalisation of till systems" since the end of March 2019 and has put this successfully on the market through its subsidiary, DF Deutsche Fiskal GmbH. GK Software is not only providing a cloud solution for customers of the corporate group, but for all operators of till systems through Deutsche Fiskal. As the requirements in Germany in terms of cryptography and the security architecture are more complex than in any other EU member state, an exclusive partnership has been established with the Bundesdruckerei (Federal Printing Office). This cooperation resulted in the development of the cloud solution by Deutsche Fiskal, 23 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

while Bundesdruckerei is making the certified technical security facilities available and is hosting them at its high-security data centre. GK Software has pooled its activities related to German fiscalisation in its subsidiary known as "DF Deutsche Fiskal GmbH".

Since 1 April 2021, a large number of customers have activated their till and register systems. Transactions in the high double-digit million range are made every day in real time. Fiskal Cloud exceeded the 20-billion transaction mark in just one year. with an error rate of practically zero.

AIR – Artificial Intelligence for Retail

In the AIR – Artificial Intelligence for Retail segment, GK Software provides services based on artificial intelligence, each of which focuses on specific retail processes. Retailers can automatically introduce many processes by using AIR – ranging from dynamic pricing to personalisation and even fraud detection – on the basis of machine learning and other AI methods. The major solutions in this segment concentrate on dynamic pricing and personalisation/recommendations.

The AIR | Dynamic Pricing module determines the fair market value for each product at any time. The AI service reduces the workload for management, optimises the price strategy and makes the best pricing decisions for the product range taking into account the respective targets (for example, increased turnover

Fiskal Cloud exceeded the 20-billion transaction mark in just one year. with an error rate of practically zero.

or a higher margin). A number of factors are included such as competition, costs, product relationships, relationships between the various price categories and price sensitivity.

The aim of the real-time solution AIR | Personalisation is to address customers' current needs at any time by offering intelligent recommendations. Personalisation can be offered at a different place each time – it may be on a website, a smartphone or a printed invoice in a parcel. The goal is to offer the customer a personal, relevant and positive shopping experience along each step of their customer journey,

Products and Services

In the AIR segment, a new solution was developed that makes it possible to open up a new dimension of personalised offers on the basis of image similarity.

eMailBon.de

Another power app has emerged in the retail7 segment. The slimline solution for all retailers makes it possible to issue completely digital receipts, saving cost and reducing environmental waste.

GK Software solutions under the SAP brand

SAP is also selling almost the entire portfolio related to the CLOUD4RETAIL platform with identical features using the SAP Omnichannel Point-of-Sale by GK, SAP Mobile Consumer Assistant by GK, SAP Store Inventory Management by GK, SAP Pricing by GK and SAP Frictionless Checkout by GK product names.

Ongoing product development

In 2021, investments were made in the further development of CLOUD4RETAIL and the associated services of the GK/Retail range of solutions as well as in the Mobile Consumer Cloud and the power apps. The solutions sold by SAP, including those from the AIR segment, have once again successfully completed the premium qualification process. New products and functions are checked by SAP as part of this kind of product test and in each case the current version is approved for sale. Development activities concentrated on the topics of GK SPOT and GK GO, the latter of

which is almost ready for the market. In the Deutsche Fiskal segment, in addition to the further development of products, a new native version was developed for Android devices.

Other solutions in the portfolio

Payment services

In the field of payment services, GK Software, in our view, offers a market-leading solution for handling

Retailers can automatically introduce many processes by using AIR – ranging from dynamic pricing to personalisation and even fraud detection – on the basis of machine learning and other AI methods. 24 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

payments in the USA in the form of TransAction+ and it is able to integrate a large number of point-of-sale systems and a large range of payment authorisation providers. It meets the highest data protection standards and supports credit and debit cards and gift vouchers, "electronic benefits" as well as handling cheque authorisation and accounting for payment providers in the USA. The software controls the payment devices in the branches and makes it possible for retailers to significantly reduce their costs. We continue to work on the transition to cloud technology, meaning that this solution will become a power app in future.

The euroSUITE solution from AWEK

For customers in German-speaking countries, GK Software developed and marketed a solution, known as euroSUITE, through its subsidiary, AWEK microdata GmbH. This solution complements the GK Software product range for medium-sized retailers.

The SQRS software package

When acquiring the assets of the former company Solquest GmbH, its range of solutions, Solquest Retail Solutions (SQRS), was also taken over and is still being used by one customer.

Developing and adapting software

In addition to its products, GK Software also provides comprehensive software services. The most important component in this context involves customising and

Products and Services

adapting software developments during the initial projects and subsequently introducing change requests, which are a permanent feature of most projects. They include, for  example, adapting software that is already in productive use to broader customer requirements, such as integrating new bonus systems in the checkout environment. Classic issues like consulting, project management or training courses come under the heading of developing and adapting software too.

Maintenance and services

In addition to software maintenance that is subject to charges, where the aim is to eliminate errors and faults, GK Software offers other services to the retail trade. A customer care management department has been established as part of focusing the Company's software service portfolio; it supports existing customers in a wide variety of tasks related to operating and adapting the solutions that they use. A special services department has also been made available to customers to help them continually optimise their productive applications and the way that they interact. 25 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

Partner training

The GK Academy is responsible for qualifying implementation partners and customer employees as well as training GK Software workers. The Group is also training implementation partners in 2021, which can then introduce CLOUD4RETAIL on their own.

New customers acquired in 2021

New customers acquired in 2021

GK Software and its subsidiaries oversee a total of more than 458 customers. A distinction must be made between projects that apply the core solution, which run today under CLOUD4RETAIL, and were primarily sold under the name OmniPOS or GK 12 until 2019. This segment also includes projects that were sold by SAP under the SAP brand, but in most cases are still implemented and overseen by GK Software. The core solutions segment covers all major and longterm projects. Overall, i.e., not only directly, but also in cooperation with SAP, GK Software oversees in this segment 98 mainly large and medium-sized customers on all continents and in many different branches of industry. SAP also sells a central solution for pricing 26 Annual Report 2021 | GK Software SE Consolidated Management Report Consolidated Accounts Further information

In the reporting period, the Group won 15 new projects for CLOUD4RETAIL, five new customers for prudsys, and a large number of new customers for Deutsche Fiskal.

and promotion, which was developed by GK, directly and solely under its own brand. Taking into account this pricing engine, SAP and GK Software share more than 150 customers.

Other customers are being supported by prudsys, the US company, AWEK and Deutsche Fiskal. The AI solutions offered by prudsys and the US company's payment solution TransAction+ are each being used by around 50 customers. Some of the solutions offered by Deutsche Fiskal are being used by the same customers that use the core solutions. Many other retailers and partners have opted to use them as well. Deutsche Fiskal has a total of 215 customers.

The majority of the Company's customers are retailers, with a focus on large, internationally leading companies. Of the Global TOP 50 retailers alone, GK Software counts ten among its customers.

In the reporting period, the Group won 15 new projects for CLOUD4RETAIL, five new customers for prudsys, and a large number of new customers for Deutsche Fiskal. In addition to these are two migration projects involving the switch from an older GK solution to OmniPOS. A total of seven new customers have signed SaaS contracts.

In most cases, the name of the customer is to be kept secret until the roll-out is completed. The 15 new customers acquired in 2021 come from the foodretail (3), fashion (5), specialist-trade (4), consumerelectronics (1), DIY (1) and department-store (1) sectors. A pre-project has been agreed with a customer in the fuel-station sector. Without this project, the deals finalised in 2021 alone represent up to 44,665 installations in 6120 stores in the coming years. This shows that the reporting year was also extremely successful in terms of sales.

Besides the new projects, revenue was generated in most of the ongoing projects through the platform or smart extensions or through the sale of other solutions.

Consolidated Management Report

Forecast report

Corporate Governance Report

"2021 was characterised not only by further growth in turnover, but above all by a considerable increase in profitability."

André Hergert, Chief Financial Officer

The Company's Business Model

Subject matter and purpose

GK Software SE1 is one of the world's leading technology companies for retail sector software with a special focus on solutions for large and very large retail companies with many local stores. GK Software SE and its predecessor company, G&K Datensysteme GmbH, which was founded in 1990 by Rainer Gläss and Stephan Kronmüller and changed its name to GK Software AG in 2001, have been successfully operating in the marketplace for over 30 years. The Company's flotation took place in the Prime Standard segment of the Frankfurt Stock Exchange in 2008. GK Software AG was transformed into GK Software SE on 19 January 2018.

Group structure and holdings

In principle, the Group companies can be divided into three groups. On one hand, national companies provide sales services and support customers in the further development of the standard software platforms used in various international regions. On the other hand, there are subsidiaries responsible for the development and distribution of special product components of

the overall product range of the GK Software Group, as well as those that take care of development work within the Group without having relationships with external customers. All subsidiaries are wholly owned by GK Software SE. The sole exception is prudsys AG, in which GK Software SE holds more than 80 percent of the shares. A third group comprises other companies that provide services for the company that are not related to the Group's range of solutions.

The core solution of GK Software is our CLOUD4RETAIL platform, which is now marketed outside the European Union by six companies.

The Group's headquarters have been located in Schöneck/Vogtl. since it was founded. Alongside its administration department, the product development department, project management and third-level support facilities are all based at this site. GK Software SE also has a business site in Berlin which is primarily

responsible for the marketing, sales and partner activities; parts of the software development work are also based there. The branch in Jena started operating in 2018 so that the Company can benefit from the excellent opportunities for gaining personnel in this high-tech region in the state of Thuringia. There are also other sites located in St. Ingbert, Cologne, Hamburg and Chemnitz.

The core solution of GK Software is our CLOUD4RETAIL platform, which is now marketed outside the European Union by six companies. The largest of these companies is GK Software USA, Inc., founded in December 2013, which takes charge of CLOUD4RETAIL sales in North and South America and at the same time is responsible for specific solutions for the US market such as our Payment solution or the US version for the standard supplementary solution GK Drive. GK Software Africa (Pty) Ltd. in South Africa has been performing these activities for CLOUD4RETAIL since 2015. There is also a corresponding company in Russia, namely OOO GK Software RUS. GK Software SE has another wholly owned subsidiary in Dübendorf in Switzerland called StoreWeaver GmbH, which takes care of the Group's Swiss-based clients. The Company has a further German branch at St. Ingbert in Saarland. This branch is primarily concerned with product development and the implementation of customer requirements. In the reporting year, GK Software SE (France) was launched as another (legally independent) foreign company. 30 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

1 The expression GK Software always refers to the corporate Group in the following text. "The Group" is also used as a synonym for this. When GK Software SE is used, this exclusively refers to the individual company.

Additionally, two further national companies were founded: GK Software Asia Pte. Ltd. in Singapore and GK Software Australia Pty. Ltd. in Melbourne. The latter two companies are still in the process of being established and their purpose is both to further develop sales in the respective countries and their environments, and to build up local project organisations.1 Supplementary solutions (so-called "power apps") to CLOUD4RETAIL are developed by prudsys AG, Chemnitz, and DF Deutsche Fiskal GmbH, Berlin. Prudsys AG, in which GK Software SE holds more than 80 percent of the shares, develops the Group's solutions, which are based 31 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

on the application of artificial intelligence methods and are connected via the platform concept AIR (Artificial Intelligence for Retail), a so-called "power app", according to customer requirements. With the Fiskal Cloud, DF Deutsche Fiskal GmbH offers a cloud-based core solution to automatically satisfy the requirements of the legislation on so-called "German fiscalisation".

The subsidiaries that take care of software development and research and development exclusively on behalf of the Group form an essential part of the corporate Group. Plzen, Czech Republic, for example, has been the Group's second-largest location for more than 20 years. The subsidiary company Eurosoftware s.r.o.,

which is located there, carries out the essential parts of the CLOUD4RETAIL product development, as well as research and development work. This is complemented by the development of enhancements to the platform (so-called extensions) for the Group's customers. Since the beginning of 2016, TOV Eurosoftware-UA in Lviv has also been working on developing platform extensions.

AWEK GmbH, which focuses on providing services, is also a wholly owned subsidiary. It has its headquarters in Hamburg. AWEK microdata GmbH in Hamburg, which was also wholly owned until 21 May and has a location in Bielefeld, focuses on the further development of the euroSUITE cash-register software for small and medium-sized enterprises. This company was sold, and the business of AWEK GmbH, which is focused on field services, is currently being phased out.

Berlin is also home to the subsidiary retail7 GmbH, founded in 2020, which develops and sells a cloud solution for small retailers in a wide range of industries, the marketing of which began in 2021.

The Management Board of GK Software SE consists of the company founder Rainer Gläss (CEO, Strategy, Marketing & Sales) and André Hergert (Finances). The Management Board is supported by a Group Management Board, which consisted of the following members in 2021: Michael Jaszczyk (CEO of GK Software USA, who is responsible for North and

South America), Harald Göbel (Senior Vice-President at GK Software SE, who is responsible for Europe, the Middle East and Africa) and Michael Scheibner (Chief Strategy Officer).

The three-membered Supervisory Board at GK Software SE is led by Dr Philip Reimann. The 2020 Annual General Meeting confirmed Dr Reimann in this position until the annual shareholders' meeting in 2024. Thomas Bleier was elected to the Supervisory Board in 2003. His period in office was confirmed until the annual shareholders' meeting in 2022 at the annual shareholders' meeting in 2018. Herbert Zinn was first elected to the Supervisory Board at the annual shareholders' meeting in 2011. His current period in office ends with the annual shareholders' meeting in 2023.

Control parameters for the Group

Management of the Group is largely determined by two control parameters: turnover and revenue; two main elements are largely used to determine the latter: earnings before interest and taxes (EBIT) and earnings before interest taxes depreciation and amortisation (EBITDA), as well as the relationship between these two revenue factors and turnover (operating performance).

Alongside these two group control parameters, we continue to use the margin of gross profits on turnover. We view gross profits as the surplus achieved by

1 GK Software Asia Pte. Ltd., with headquarters in Singapore, was registered on 26 November 2021 and started work with a first employee in January 2022. As of 2 April, GK Software Australia Pty. Ltd. in Melbourne was registered as a new wholly owned subsidiary of GK Software SE. Preparations for starting work are currently in progress.

turnover for services purchased from third parties, semifinished products and goods, which are used to directly provide this turnover, in order to be able to view the effect and degree of outside services on the turnover that is achieved.

This system of key performance indicators, which is geared towards earnings capacity, is accompanied by KPIs, which deal with the funding for the group. The issue here is the ability of the Group to be able to service its financial obligations at any time, both in the long and short term. The key performance indicators used here concern the equity ratio and the capitalisation ratio in different variants as a measure of matching the maturities of assets and the capital used to fund them. Another major aspect concerns the Group's ability to be able to make use of investment opportunities that arise at very short notice. A central KPI here is the surplus of cash and cash equivalents over interest-bearing liabilities. Depending on the goal of the approach, there are variants for this KPI too.

These key indicators are regularly monitored and are the subject to reporting to the management and the

1,096

Employees

Supervisory Board, and any deviations from the set targets trigger the introduction of countermeasures.

Human resources

1,096 people in all were employed within the Group on the reporting date of 31 December 2021 (excluding members of the Management Board and trainees). This means that 66 fewer people were employed than on the previous year's reporting date (1,162) and 2 fewer than at the end of the first half of 2021. A large number of the Group's employees, 353, (383 in the previous year), continue to work at the business site in Schöneck. The Berlin branch of GK Software SE currently has 67 employees working in the sales & marketing, project and partner management and development fields (the figure was 66 in the previous year). The number of people employed at the Czech subsidiary Eurosoftware s.r.o in Plzen increased to 273 (as against 244 in the previous year). 51 Group employees were employed in Hamburg

Personnel structure of GK Software by location as of 31 December 2021

T.04 Change in employee structure

Consolidated Management Report
Consolidated Management Report
at the end of the year (previous year: 77). Due to the
sale and deconsolidation of AWEK microdata GmbH,
there are 0 employees in Bielefeld compared to 41 in
the previous year, most of whom worked in software
development. 104 people were working at the business
site in St. Ingbert at the end of the year (previous year:
111). 5 people were working in Dübendorf at this time,		 courses at the GK Academy in 2021 (some of them on
more than one occasion). New employees undergo
extensive and standardised introductory courses,
while a permanently adapted training programme is
made available to all employees too. The range of
online training courses has also been extended, and
this increases the potential number of those attending		 T.04 Change in employee structure
Schöneck
Berlin
Hamburg
St. Ingbert		 31.12.2021
353
72
51
104		 31.12.2020
383
66
62
111		 Change
in %
(7.8)
9.1
(17.7)
(6.3)
one more than twelve months ago. them. The Group is also actively involved in training Chemnitz 41 45 (8.9)
new or future employees. They include trainees on Cologne 17 16 6.3
The number of employees working at the branch in apprenticeship courses, students from universities of Jena 18 23 (21.7)
Bielefeld 0 41 (100.0)
Cologne on the reporting date was 17, as against 16 cooperative education or students on sandwich courses. Czech Republic 273 244 11.9
at the end of the 2020 fiscal year. Ninety people were These different measures are already providing the first Ukraine 21 28 (25.0)
working for GK Software in the US (2020: 97). The South success stories in attracting new employees and the Switzerland 5 4 -
25.0
African subsidiary employed 35 people on the reporting aim is to further intensify them in future. France 4 0
date (31 in 2020). The number of people employed at Russia 2 2 0.0
Other European countries 10 9 11.1
TOV Eurosoftware UA in Lviv has decreased from 28 to South Africa 35 31 12.9
21 since the end of 2020. The branch in France, which US 90 97 (7.2)
opened in 2021, had four employees as of the reporting
date.		 Total 1,096 1,162 (5.7)
Prudsys AG in Chemnitz employed 35 people on the
reporting date compared with 42 at the same time in the
previous year. The Group pools its expertise in the field
of artificial intelligence at this business site.
Huge investments have been made in training and
developing employees for years in order to be able to
provide a foundation for and boost growth in turnover at
GK Software from a human resources point of view too.
Most of our employees for example attended training		 The
GK
Software
GK Software essentially sells software and services
to retail companies. The range of solutions is grouped
around the CLOUD4RETAIL core business. Following
the structure of this software platform, this can be
further differentiated into the central process control
(GK/Retail solution world – including all processes for
controlling the branch processes of a retailer as well
as their integration with the eCommerce activities) and
the Power Apps, which serve to automate and optimise		 Business
Model
Annual Report 2021 GK Software SE

The GK Software Business Model

the process landscape of both downstream processes and central tasks, such as the pricing of the goods on offer. These two blocks are complemented by a product that enables retailers to enter into direct contact with their customers – the end consumers – and allows the latter to influence the initiation, the process and the conclusion of trade transactions (Mobile Consumer Cloud).

CLOUD4RETAIL

In the CLOUD4RETAIL sector, sales are generated primarily by the transfer of use of standard software platforms, the special development of software enhancements at the customer's request (so-called "extensions") and services related to the introduction of the software platforms and their operation.

The solution is completely designed for operation in the cloud, but can be operated in a private, hybrid or public cloud at the customer's choice.

Revenue from software arises either from the collection of fees from the granting of licences for an unlimited period of time (so-called "perpetual licences") or from subscription agreements that limit the granting of use to a certain period of time. The fees for perpetual licences are paid in one lump sum. For the subscriptions, payments are usually agreed in equal amounts over the period of use, with a minimum payment agreed for

the period following the introduction of the application. Where GK Software also takes over the operation of the applications, the entire solution is made available as software as a service (SaaS) and remunerated through a correspondingly increased subscription price.

CLOUD4RETAIL is a platform1 consisting of various solution components that customers select according to their needs and priorities. At the core of this platform, which is geared towards the needs of medium and large retailers, is an application suite that brings together the retailer's processes. Examples of this platform core – the GK/Retail portfolio of solutions – are the processes for cash registers, scales, store merchandise management including the associated infrastructure, and the management and monitoring functions. Also part of the CLOUD4RETAIL sector is the Mobile Consumer Assistant (MCA) range of solutions, which enables direct communication between the customer and the retailer, but also offers the customer the possibility, as required, to initiate (Click & Collect), continue and also complete (e.g., through products such as Scan & Co) the retail processes that are offered in the GK/RETAIL portfolio of solutions. Implementation takes place with apps branded to the retailer, which end consumers keep available on their mobile devices. 34 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

To accommodate the retailers' many ideas, CLOUD4RETAIL is designed as a standard platform that can be quickly adapted to new situations. This is all the more relevant when applications like CLOUD4RETAIL are used over longer periods of time. CLOUD4RETAIL has therefore been especially designed with this need in mind and allows for a quick enhancement of the solutions through extensions. It is necessary to distinguish between extensions that are relevant for the customer on a permanent basis, which as platform extensions are linked with maintenance contracts that guarantee the release capability of the extension even over long release cycles, and smart extensions that are only of temporary importance for the customer. In the past, we have observed that the sales for these services maintain a very constant level and represent a reliable foundation for sales expectations in the coming years.

CLOUD4RETAIL contracts based on perpetual licences also generate a permanent revenue stream through maintenance services. These maintenance services result as a fraction of the remuneration for the right of use and are payable for the duration of the use of the respective platform. These maintenance services are included in the subscription payments in the SaaS contracts.

Because of the customary project size, implementation support is always necessary when implementing the project, thereby generating consulting turnover. The

1 For components of the CLOUD4RETAIL platform see the Products and Services section above.

normal course of the project therefore usually consists of an initial project, after the successful completion of

which the customer can roll out the solution. Even during the initial project, but especially afterwards, additional or new requirements (smart or platform extensions) arise to extend the solution.

These main groups are complemented by the power apps. By these means, further process steps that do not belong to the immediate core of the branch processes can be presented, or main processes can be automated or optimised. The Deutsche Fiskal solutions constitute one block of these power apps. Deutsche Fiskal offers its services exclusively as software as a service. The Fiskal Cloud range of solutions based on the CLOUD4RETAIL platform offers as a service the generation and storage of the legally required electronic signature as well as the associated storage of various receipt-related transactions. Other management and monitoring functions are also available to the customers. Fiskal Cloud Archiv is likewise a pure SaaS offering, enabling the storage and provision of the data required by the tax authorities in the prescribed format. The "Email-Bon" solution for the digital implementation of the legal receipt obligation also belongs in this context. CLOUD4RETAIL provides AI solutions for the automation and optimisation of the main trading processes. These are developed by prudsys AG and are offered to brick-and-mortar retailers under the AIR (Artificial Intelligence for Retail) brand as part of the 35 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

CLOUD4RETAIL platform. The prudsys brand continues to be used for pure e-commerce. The solutions from the AIR platform are also mostly positioned as SaaS offerings and flanked by advisory and introductory offers.

Transaction+

GK Software USA offers the Transaction+ solution exclusively in the USA. Up to now, this has been sold in the classic licensing business, for which maintenance is incurred accordingly. On top of this comes regular extension business that also requires maintenance as an extension of the licence. The US organisation is currently converting the solution so that it can be offered as software as a service and thus be integrated into CLOUD4RETAIL as a power app.

retail7

retail7 GmbH has developed a completely new solution for small and micro retailers, which had its market launch in 2021. It will primarily generate SaaS revenue only, since as few as possible individual changes to the solution are planned for individual customers. retail7 GmbH has also developed the eReceipt solution (emailbon.de), which is also sold by GK Software.

GK Academy

GK Academy generates sales through the sale of training and the provision of certification.

AWEK – IT Services

AWEK GmbH offers services for the trade sector primarily in the area of hardware and on-site maintenance. This business has been in decline for several years now and no new clients are being sought as this service is being discontinued. For this reason, the previous segment reporting has also been changed. As a result, AWEK was no longer presented as a separate segment.

Sales via partners

The most important partner generating sales for GK Software is SAP, which sells a considerable part of the CLOUD4RETAIL platform under its own brand. A corresponding agreement on the sharing of licence and maintenance revenues exists in this connection. In addition, there are implementation partners who

Consolidated Management Report

18.38 Million euro R&D expenses

Group's business sites. Application-related "product development work" is primarily conducted in Germany and the Czech Republic. Overall, about € 17.42 million was spent on this work during the past year.

Overall, GK Software spent € 18.38 million on researchand-development work during the 2021 fiscal year, corresponding to about 14% of the Group's sales.

purchase services from GK Software that they cannot provide themselves.

Research and development

GK Software has always focused on the ongoing development of existing products and the development of new software solutions during the past financial years and they will be strategic competitive factors in the future too. This is also reflected in the significant number of employees working in this field.

GK Software is continually investing in research and development in order to maintain its leading technological position in the long term too. A distinction needs to be made here between applied research, which is handled by its own innovation and research teams, and application-oriented product development. The expenditure for research amounted to € 0.96 million in 2021. The research teams are based at several of the

Economic report

General economic and industry-related conditions

Business developments at GK Software are determined by several factors and their effects in different economic regions. The most important determining factors are the general economic conditions, the current situation and the expected business prospects for the retail sector.

With GK Software's business expansion into more and more economic areas, it goes without saying that the number of factors affecting its business have increased, as the situation in some individual markets may move in different directions in spite of global economic trends. However, this provides at least a partial detachment in the Company's general operations from the developments in its original core markets – primarily in Central Europe – without these markets losing their significance for GK Software. The Company is now in a position to be able to routinely compensate for low revenue or a total lack of revenue from licence agreements in Germany, Austria and Switzerland with revenue from other regions. 36 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

Like the previous year, 2021 was still marked by the global pandemic. Nevertheless, despite continuing restrictions, the establishment of a new normality was

noted. Furthermore, the large share of customers from the food and DIY sectors proved to be an anchor of stability. At the same time, GK Software was able to expand further into new geographical markets in the past fiscal year. As a result, dependencies on the original home market in the region of Germany, Austria, and Switzerland have been further reduced.

Global economic output increased by 5.5% in 2021. According to the IMF, the emerging and developing countries were able to show a stronger increase in their economic performance (6.3%) than the industrialised countries (4.3%). There were also still considerable differences between the respective countries. The US economy grew by 5.1% in 2021, while the euro area economy grew by 4.2%. In Germany, economic output increased by 3.5% in 2021.1 Because of the current Ukraine war, the Institute for the World Economy forecasts a halving of global economic growth to 2.1% for 2022.2

In parallel with the basic economic trends in the markets served directly or through sales partners, the general trends in the retail sector are also an extremely important factor influencing the Company's business. The issue of omni-channel retailing continues

to be a major area of focus, because it is exerting a huge influence on retailers' strategic decisions in all markets. Beyond this, the introduction of genuine cloud services based on enterprise POS solutions is becoming increasingly important for all sizes of retailers. For example, there are already markets such as North America, where demand is almost exclusively for subscription products (SaaS). Long-term issues like demographic developments, new ways of establishing customer loyalty or internationalisation also remain important driving forces and are becoming more and more connected to the mega-trend of omni-channel retailing. GK Software responded to these priorities in the retail sector at an early stage and made significant preparations for the future through OmniPOS. The CLOUD4RETAIL cloud platform and the Mobile Customer Cloud customer-loyalty solution are further strengthening the Company's competitive position. We expect the same effect from the market launch of new solutions such as GK GO and GK SPOT. 37 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

Even though the licensing business in 2021 was again strongly powered by customers from outside the German-speaking countries, the developments in Germany, Austria and Switzerland continue to remain very significant for the direct business of GK Software, as this is an internationally leading market in the sector and many existing customers have their headquarters there. The German retail trade, Europe's largest single market, experienced very varied trends in 2021

depending on the sector. Overall, the retail sector (excluding motor vehicles, fuels stations, fuels and pharmacies) turned over around € 588.0 billion in 2021, an increase of 1.8%.3 While it was a good year for areas such as online retailing and food, and furniture and DIY stores did better than expected, sales in other fields, such as clothing, shoes, textiles, and leather goods, decreased. This will most likely also have an impact on the readiness to invest of these parts of the retail sector. In a scenario for 2022 published before the Ukraine war and the rise in inflation initiated by it, the trade association assumed an increase in turnover of around 3% for the entire retail sector.4 This figure may be too high in the context of recent developments.

After a downturn for the entire European retail sector in 2020, an upward trend was identified in 2021 in the overall perspective.5 In the UK, however, sales continued to rise despite the weakness of the pound in connection with Brexit. In 2021, retail sales here reached £ 463.7 billion6. Similarly, the US has seen a steady upward trend in retail sales in recent years, creating more movement in the world's largest retail market7 . At

7 http://ycharts.com/indicators/retail_sales

1 https://www.imf.org/-/media/Files/Publications/WEO/2021/Update/January/ English/text.ashx

2 https://www.handelsblatt.com/politik/konjunktur/nachrichten/konjunktur-heftigergegenwind-institut-fuer-weltwirtschaft-halbiert-wachstumsprognose/28171910.html

3 https://einzelhandel.de/images/presse/Pressekonferenz/2022/Charts_3.pdf

4 https://einzelhandel.de/images/presse/Pressekonferenz/2022/Charts_3.pdf

5 http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=sts_trtu_a&lang=en 6 https://www.ons.gov.uk/businessindustryandtrade/retailindustry/datasets/

poundsdatatotalretailsales

\$ 4.4 trillion, retail sales there surpassed the previous year's high of \$ 3.9 trillion1 .

E-commerce is also continuing its lively development. This division again increased its sales by 19.0% to around € 99.1 billion.2 This trend is even clearer in other important, leading retail markets like the United Kingdom. However, it is not yet observable to the same degree everywhere. While the share of online retail trade amounts to 15.3% of total retail sales in the US3, the figure was only 9.2% in Italy, for example.4It is generally assumed, however, that online retail sales will continue to grow in all developed retail markets.5 38 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

The omni-channel retailers continued with disproportionately high growth in 2021, increasing their sales by 16.7% to around € 15.0 billion. This means that brick-and-mortar retailers, who have also mastered their e-commerce business, are increasingly able to leverage the advantages of combining a branch and web shop.6 GK Software has been preparing its solutions for this development by moving in the direction of successful omni-channel retailing for years and therefore believes that it is in an excellent position to meet the relevant

demands. These unabated developments are triggering huge challenges for the in-store retail sector and the challenges are also being driven by other innovations.

General assessment of the course of business

For the 2021 fiscal year, the Management Board had forecast a slight increase in revenue from turnover and a further slight improvement in EBIT as part of the medium-term forecast until 2023. This outlook was subject to the continued uncertainty of the development of the COVID-19 pandemic. Such impairments have not been reflected in the business figures – despite the further hampered sales activities. The earnings of the 2021 fiscal year are thus fully in line with the forecast.

As forecast, the 2021 fiscal year recorded stronger revenue growth than the previous year (2020 = 1.8% or € 2.11 million) at 11.3% or € 13.3 million, and earnings before financial result and taxes on income (EBIT) of €17.31 million (after € 10.54 million in the previous year). Excluding the one-off effects resulting from the sale of AWEK microdata GmbH, the EBIT margin on turnover increased from 9.0% to just under 11.0%.

With 15 new customers around the globe, the undiminished attractiveness of our solution portfolio was once again proven. Long-term SaaS contracts were concluded with almost one third of the new customers. At the same time, Deutsche Fiskal was able to fulfil the

expectations placed in it and contribute considerably to growth. The positive development of our activities also continued on the American continent. Here, turnover increased only slightly from € 20.9 million to € 22.0 million compared with the previous year; however, the net contribution margin generated by the region was increased from € 0.7 million to € 5.4 million and now makes a reliable positive contribution to the group result.

+11.3%

Revenue growth

Earnings before interests, taxes, depreciation, and amortisation (EBITDA) amounted to € 26.79 million, compared to € 19.08 million in the previous year, and were thus 40.4% higher year on year. The EBIT (earnings before interest and income taxes) reached the value of € 17.31 million and was € 6.77 million above the previous year's figure of € 10.54 million and thus, even including the aforementioned one-time effects, was significantly increased.

To sum up: the targets for 2021 were achieved.

1 https://nrf.com/media-center/press-releases/retail-sales-now-exceed-444-trillion-2021-nrf-revises-annual-forecast l

2 https://www.bevh.org/presse/pressemitteilungen/details/e-commerce-ist-dasneue-normal-branchenumsatz-waechst-2021-auf-mehr-als-100-mrd-euro.html

3 https://www.emarketer.com/content/us-ecommerce-forecast-2021

4 https://www.retailresearch.org/online-retail.html

5 https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/ 6 https://www.bevh.org/fileadmin/content/05_presse/Auszuege_Studien_

Interaktiver_Handel/Interaktiver_Handel_in_Deutschland_2021.pdf

Developments in new and existing business

GK Software's customers come from almost all areas of the retail sector and are distributed around the globe. The important market sectors, where the Company is active, are primarily the food retail sector, pharmacy & household goods, fashion & lifestyle. DIY & furniture markets or technology & cars. The products and services are mainly geared towards large and mediumsized enterprises and are particularly suitable for customers with many stores in several countries. In total, GK Software supports several hundred customers of various sizes who either use or are preparing the use of solutions from the different sectors of the Group.

In the reporting period, the Group was also able to acquire 15 new customers for the core solutions in the CLOUD4Retail area, as well as others for the prudsys AI solutions. A new feature in 2020 and 2021 was the acquisition of numerous customers for Deutsche Fiskal solutions. However, most of these made visible contributions to turnover only from 2021 onwards. In this area, only SaaS contracts were concluded. Seven new SaaS contracts were concluded in the CLOUD4RETAIL sector in 2021. Deutsche Fiskal was able to win well over 200 customers and got a six-figure number of cashregister and recording systems up and running in 2021. 39 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

In the area of existing customers, 2021 was also characterised by extensive new orders, pilot starts and rollouts in several projects and an intensive extensions business. Our core solutions were successfully rolled out to additional customers from different trading segments and successfully went live in new countries.

SAP and GK Software further intensified their partnership again in 2021, and some of the new customers in the CLOUD4RETAIL sector are joint customers with SAP.

Explanation of the business results and analysis of the assets, financial and earnings situation

T.05 Total operating revenue

Consolidated Management Report
Consolidated Management Report
Explanation of the business on 21 May, contributed to these earnings with sales of T.05 Total operating revenue
results and analysis of the assets, € 1.40 million. 31.12.2021 31.12.2020 Change
kEUR in % kEUR in % kEUR in %
financial and earnings situation The balance of the development of sales and
operating costs (i.e., costs excluding depreciation		 Sales 130,847 93.7 117,560 95.8 13,287 11.3
GK Software was also able to expand its business in and amortisation) of € 7.71 million led to an increase revenues Operating
130,847		 93.7 118,391 96.5 12,456 10.5
2021. With sales of € 130.85 million, the previous year's in EBITDA from € 19.08 million to € 26.79 million. At Other operating
figure of € 117.56 million was exceeded, and the forecast € 17.31 million, EBIT was € 6.77 million higher than earnings 8,742 6.3 4,297 3.5 4,444 103.4
was fully met. in 2020. With the financial result remaining negative
(−€ 0.85 million after −€ 1.44 million), earnings		 revenue Total operating 139,589 100.0 122,688 100.0 16,901 13.8
In anticipation of the discontinuation of the business
operations of the IT Services segment in 2022, we
have decided to adjust the segment reporting to
these circumstances and will report according to the
responsibilities for the sales regions "Americas" and
"EMEA and Rest of the World" (hereinafter always
referred as just "EMEA" for short). This means that our
portfolio now only includes cloud solutions that are
suitable for software-as-a-service offerings.
Looking at sales by these market regions, EMEA		 before taxes (EBT) were € 16.45 million (previous
17.31
Million euro		 –
–
EBIT		 Earnings
situation
Sales at 130.85 million euros
EBITDA at 26.79 million euros
Total Group sales rose by around 11.3% from
€ 117.56 million to € 130.85 million. These sales include
€ 0.99 million in revenue from other periods.
With this annual report, as mentioned above, segment
accounted for sales of € 108.11 million (an increase of
€ 11.32 million or just over 12% over the previous year),
whilst the Americas region grew less markedly to sales
of now € 22.09 million (by € 1.33 million or 6.4%).
The old IT Services business segment declined as
planned and still achieved revenues of € 2.84 million in
2021. The "euroSUITE" solution for small and medium
sized retailers, which we sold to the Zuccetti Group		 year € 9.09 million). Against this come tax expenses
totalling € 3.16 million, resulting in annual net income of
€ 13.30 million.		 reporting is being carried out according to a new
system. The reason for this is that, according to the old
system, 97.8% of the sales would have been generated
in only one of the two segments and that, after the
sale of AWEK microdata GmbH and the phasing out of
the remaining AWEK maintenance business, no more
revenues could be expected for the IT Services segment
in the future.
40 Annual Report 2021 GK Software SE

Earnings situation

We have therefore decided to switch to a geographical system by concentrating on our core business area CLOUD4RETAIL. The new EMEA (Europe, Middle East and Africa) segment therefore reports all sales from this region plus those from the APAC (Asia and the Pacific) region. The integration of APAC into this segment is due to the fact that the turnover generated here is currently still too low to justify a separate reporting segment. The second new segment – Americas – comprises all sales generated on the American continents. In addition, there is a third segment that is not based on a regional affiliation but rather records turnover from other business activities that cannot be allocated to the core business. With this new system, we are now able to show more precisely both the geographical distribution of our turnover and the allocation to recurring and repeatable turnover.

The regional segments EMEA and Americas comprise the previous "CLOUD4RETAIL" segment. The complementary segment "IT Services" will finally be discontinued in April 2022 for the reasons explained in previous reports. The "euroSuite" business included in this was sold to third parties, and amicable solutions were found with the employees for the remaining IT field-services subsegment. For the purposes of this year's reporting, the business in this former segment will be subsumed under the EMEA region for 2020 and 2021. It includes revenues of € 7.02 million in 2020 (€ 3.89 million for "Eurosuite" and € 3.14 million for IT

(field) services) and € 3.74 million for the 2021 fiscal year (€ 1.38 million for Eurosuite until the sale of the associated company and € 2.36 million for the IT (field) services business)

In the past fiscal year, the EMEA segment achieved sales of € 108.11 million (previous year: € 96.79 million); of this, € 9.21 million were accounted for by platform licences. Sales in the Americas segment amounted to € 22.09 million (previous year € 20.77 million), including € 2.29 million in platform licences. However, when assessing this development, it should be borne in mind that most of the new deals in the Americas were SaaS deals, whereas the EMEA sales successes were characterised by a rather large perpetual licence deal. Such deals usually result in immediate one-off remuneration for the granting of the licence. Wiederkehrende Umsätze Wiederholbare Umsätze

Compared to the previous year, the "Other business activities" segment includes additional revenue in the

Most of the new deals in the Americas were for SaaS.

amount of € 0.64 million from the Tannenhaus UG hotel business, which was acquired in 2021.

Looking at the sales composition, GK Software achieved total software-related sales of € 60.41 million (previous year: € 75.96 million) of which € 46.47 million (previous year: € 63.20 million) were attributable to the EMEA region and € 13.94 million (previous year: € 12.77 million) to the Americas.

Encouragingly, € 20.04 million of this in EMEA was from standard platform licensing, and € 10.83 million was from licence-subscription revenue. In the previous year, 8.08 million was accrued for licence revenues from standard revenues; the increase of 147% is thus more than double the value. Of this, € 4.84 million was for the German legal fiscal system solution and € 2.53 million for Artificial Intelligence for Retail (AIR) solutions. These contracts will result in a total Annual Recurring Run Rate (ARR) of € 12.48 million from 2023.

In the Americas, revenues totalling € 2.71 million (after € 2.31 million in the previous year) were collected in 2021 for this reason. Of the € 2.71 million, € 0.42 million were from subscriptions.

Because of deliberate capacity management, sales from customised extensions to our standard platforms were lower than in the previous year. At € 26.44 million (down from € 55.11 million in the previous year) for

EMEA and € 11.23 million (€ 10.46 million in 2020) in the Americas, both areas fell short of the previous year's figures; however, this movement was negligible in the Americas. In the EMEA region, the reason for this is the coincidence of two expansion projects by two major customers in 2020, as well as the conscious decision to provide new customers acquired in the course of 2019 and 2020 with rapid access to the software products they have purchased. The development in the Americas in particular shows that the order situation surrounding the expansion of the standard software platforms is highly stable and justifies our classification of this revenue block as "reliably repeatable business".

The capacities not used for the customised expansion of our standard platforms were therefore used for the go-live of the new customers of the last two years or the support of existing customers in the operation of the platforms of GK Software. Accordingly, there was an increase in retail consulting revenues. In total, the EMEA region recorded retail consulting revenues of € 39.40 million (up from € 12.99 million in the previous year), while the Americas market organisation reported sales of this type totalling € 4.55 million (up from € 2.87 million in 2020). In EMEA, € 11.53 million was from support for or the operational management of our standard platforms. In the Americas, a turnover of € 0.14 million was received for such services. This difference in level shows the different maturity we have reached since our respective market entries into these 42 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

major regions. As a new entrant into the American markets, we are still obviously at the beginning of a development that we have already supported for EMEA. However, it is precisely this difference that also shows the as-yet unrealised potential of the American market for GK Software.

In the area of maintenance, € 22.89 million were collected. Because of the large number of projects already rolled out, EMEA accounted for € 19.35 million and the Americas for € 3.54 million. Because of the discontinuation of the AWEK business, maintenance income decreased by −€ 0.19 million overall. A considerable part of the reduced AWEK turnover was compensated by the CLOUD4RETAIL business.

22.89 Million euro Maintenance

Other turnover of € 3.59 million (previous year: € 2.65 million) was generated in the "Other" segment (€ 0.64 million) and predominantly in EMEA

Consolidated Management Report

(€ 2.89 million). A larger portion can be attributed to revenue from the supply of hardware as part of the placement of our hybrid solution for the German legal fiscal system. This is because we offer customers who cannot (or can only at disproportionately high cost) incorporate parts of their electronic recording systems to be secured (within the meaning of the German cash register regulation) into a network environment a certified hardware solution, which can be administered via the management components of our solution. In total, this results in recurring (contractually fixed) or repeatable (not contractually agreed but – based on experience – highly likely to recur) sales of € 65.82 million compared to € 81.64 million in the previous year. This corresponds to a 60.9% proportion of the total sales of all segments (previous year: 84.3%). The main reason for this is the strong increase in turnover in Retail Consulting. It should be noted in particular that the turnover associated with the cloud business (subscription and cloud operational support) more than quadrupled from € 5.34 million to € 22.91 million. 43 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

T.06 Turnover according to segments

Consolidated Management Report
Consolidated Management Report
T.06 Turnover according to segments
Other business
EMEA Americas activities1 Consolidations
kEUR FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020
Sales with third parties 108,114 96,792 22,092 20,767 640 — — — 130,847 117,559
Licences and software2 46,473 63,195 13,938 12,769 — — — — 60,411
Licence Platform 9,212 8,081 2,292 2,313 — — — — 11,504
Licence Platform Extension 7,546 19,218 374 4,219 — — — — 7,920
Licence Platform from subscription
agreements
Smart Extension		 10,826
18,889		 —
35,896		 418
10,853		 —
6,237		 —
—		 —
—		 —
—		 —
—		 11,244
29,743
Maintenance 19,351 18,446 3,544 4,639 — — — — 22,895
Software Maintenance 19,351 18,446 3,544 4,639 — — — — 22,895
Retail Consulting 39,402 12,994 4,554 2,867 — — — — 43,956
Retail Consulting 27,877 8,626 4,411 1,894 — — — — 32,288
(Cloud) Operations Support 11,526 4,368 142 973 — — — — 11,668
Others 2,888 2,157 57 492 640 — — 3,586
Turnover with other segments 2,568 2,684 — 511 149 — 2,717 3,195 —
Depreciations 7,688 6,862 1,051 1,101 744 580 — — 9,484
of which impairment in accordance with IAS 36 1,642 — — — 376 312 — 2,018
Segment EBIT 14,718 11,085 2,862 (514) (261) (44) (14) 7 17,305
Assets
thereof long term3		 128,428
33,242		 96,443
37,487		 22,801
12,315		 20,509
12,341		 8,170
7,693		 6,770
6,765		 (15,218)
(74)		 (13,046)
(74)		 144,181
53,176		 110,676
Debts 45,766 48,503 20,247 19,678 9,683 6,770 (15,144) (12,972) 60,553
Cash and cash equivalents 42,430 6,572 4,508 2,854 7 — — — 46,945

At € 8.74 million, other operating earnings were considerably higher than in the previous year (€ 4.30 million). Because of the sale of AWEK microdata GmbH, income from the disposal of fixed assets in the amount of € 2.75 million and tax credits of € 0.71 million; these were recognised as other operating income. These items have no equivalent in the previous year. In addition, income from currency differences was € 1.40 million higher than in the previous year.

This results in a total operating revenue of € 139.59 million for the fiscal year (after € 122.69 million in the previous year).

The costs of consumables and supplies and for goods and services acquired increased in the 2021 fiscal year compared to 2020. Consumption of goods increased by € 0.25 million, from € 1.16 million in 2020 to € 1.40 million. This is due to the significant increase in the acquisition of licenses from third parties. The use of purchased services also increased, growing by € 4.49 million compared with the previous year (€ 8.28 million) and amounting to € 12.77 million in the reporting year. The reason is largely to be found in the performance of the cryptography partner of Deutsche Fiskal.

Human resources expenditure now amounted to € 78.74 million after € 75.64 million in the previous year and was thus € 3.10 million lower than in the previous

year. Despite a reduced number of employees (as of 31 December 2020, the Group had an annual average of 1,140 employees, whereas on 31 December 2021 there were 1,086 remaining), this is mainly due to the completion of the planned expansion of specialists in various areas, as well as one-off special effects in 2021 (special payments of COVID-19 premiums, increased payment in kind due to the issue of share options for employees and increased variable salaries).

At € 19.89 million, other operating expenses were down € 1.36 million on the previous year's figure of € 18.54 million. The development was promoted by the increase in legal and consulting costs by € 1.07 million to € 4.13 million due to the capital increase, the development of the new corporate brand, the company sale of AWEK microdata GmbH and the efforts to further digitalise internal processes. Sales expenditures, which

EBITDA

were € 0.49 million higher than the previous year and used for the participation in trade fairs and similar events (which were once again possible) also had a cost-increasing effect, so that €1.66 million was used for such purposes. The successful business performance of GK Software was also reflected in the increased costs of staff recruitment. These costs were increased by € 0.25 million and now amount to € 0.91 million. Software costs were also increased by € 0.73 million to € 3.08 million. Here, the increased demand for cloud infrastructures is particularly evident. A final increasing item is the ancillary costs of the office space due to higher energy prices. The amount spent on this exceeded the previous year's amount of € 1.14 million by € 0.17 million. 45 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

These increasing factors were offset by a number of cost-reducing trends. The most important are the considerably reduced need for allowances for receivables, which were lower by € 0.98 million, and the once again lower travel expenses, which were € 0.61 million lower than in the previous year (€ 3.37 million).

In summary, these developments led to EBITDA of € 26.79 million, following a figure of € 19.08 million in the previous year. Depreciation and amortisation increased slightly by € 0.94 million from € 8.54 million to € 9.48 million. In total, this results in an EBIT of 26.79 € 17.31 million, after € 10.54 million in the previous year. Million euro

The financial result was again negative in the 2021 fiscal year with surplus expenses of € 0.85 million. However, this was € 0.59 million lower than in the previous year (€ 1.44 million). The reasons for this are mainly to be found in the lower expenditure on interest, which was

€ 0.36 million down on the previous year because of the reduced interest-bearing liabilities. In fact, interest of € 0.75 million was paid in the fiscal year.

This results in earnings before income taxes (EBT) of € 16.45 million, after € 9.09 million in the previous year. T.07 Earnings figures

31.12.2021 31.12.2020 Change
EUR K in %1 EUR K in % EUR K in %
EBITDA 26,790 20.5 19,078 16.2 7,712 40.4
EBIT 17,306 13.2 10,535 9.0 6,771 64.3
EBT 16,454 12.6 9,090 7.7 7,363 81.0
Group result 13,298 10.2 6,266 5.3 7,032 112.2

Income taxes of € 3.16 million (previous year € 2.82 million) were recorded for this pre-tax result. This results in an annual result of € 13.30 million.

Assets situation

The assets situation is also characterised by the favourable business development and the simultaneous measures to improve the financing of the corporate

1 Margin on turnover

group. The balance-sheet total amounted to € 144.18 million as of the reporting date, and was thus € 33.51 million lower than the previous year's figure of € 110.68 million.

The development was particularly pronounced on the capital side and here again in equity. This received € 18.50 million because of the capital increase carried out in March 2021 and € 13.30 million because of positive business development. Because of the reduced remaining maturity of the promissory note to less than one year, also the long-term debts decreased by the outstanding debt of the promissory note, and short-term debts increased by the same amount. On the assets side, these correlations were expressed primarily in a considerable increase in liquid assets amounting to € 37.52 million. 46 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

In detail, the major blocks of the balance sheet changed as follows: Non-current assets amounted to € 53.18 million and were thus € 3.34 million lower than the value on the reporting date of the previous fiscal year. Current assets, excluding liquid funds, were down by € 0.67 million compared with the previous year's figure, and now amount to € 44.06 million. At the same time, cash and cash equivalents increased by € 37.52 million to € 46.95 million.

The Group's equity amounted to € 83.63 million as of the reporting date; this represents an increase of € 34.93 million year on year. Long-term debts amounted to € 15.81 million and were thus € 16.62 million lower than in the previous year. At the same time, current liabilities increased by € 15.20 million to € 44.74 million.

This resulted in an equity ratio of 58.0% (44.0% in the previous year).

Consolidated Management Report
Consolidated Management Report
T.08 Assets situation 31.12.2021
EUR K
in %		 31.12.2020
EUR K		 in % Change
EUR K
in %		 A major reason for this was the increase of € 6.41 million
in property, plant and equipment. Because of the
discrepancy between ownership of the operating
company and the real estate, this real estate held as		 the convertible bond to short-term debts. The long
term leasing and rental liabilities to be reported
according to IFRS 16 amount to € 5.33 million and are
thus € 1.40 million below the previous year's figure.
Non-current
assets
Current assets
without cash and
cash equivalents
Cash and cash
equivalents		 53,176
36.9
44,060
30.6
46,945
32.6		 56,520
44,730
9,425		 51.1
40.4
8.5		 (3,344)
(5.9)
(670)
(1.5)
37,520 >250		 a financial investment had to be reported separately
according to IAS40. The transfer of ownership of
the operating company to GK Software SE led to the
reclassification of € 7.86 million to property, plant and		 Provisions for pensions, reported at € 1.88 million, are
also down at € 0.85 million less than the previous year's
figure, which is attributable to the deconsolidation
of AWEK microdata and the development of plan
Assets
Equity
Long-term
liabilities
Current liabilities		 144,181 100.0
83,628
58.0
15,814
11.0
44,739
31.0		 48,696
32,438
29,541		 110,676 100.0 33,505
44.0
26.7		 30.3
34,932
71.7
29.3 (16,624) (51.3)
15,197
51.4		 equipment.
Under current assets, contract-generated current assets
decreased by € 1.44 million to a present € 12.15 million.
At € 24.30 million, receivables from deliveries and
services were € 0.92 million higher than the previous		 46.95
Liabilities
Non-current assets decreased by € 3.34 million
because of scheduled depreciations in these assets
in the amount of € 7.47 million. There was a one-off		 144,181 100.0 110,676 100.0 33,505 30.3 year's figure. This is where the further-improved
processes of receivables management have an effect.
In addition, December 2021 once again did not stand
out above the other months of a fiscal year to the same
extent as in the years up to 2019.		 Million euro
Cash and cash equivalents
depreciation of € 2.02 million on real estate held as
a financial investment (IAS40) and on the goodwill
of Tannenhaus UG, the operating company for the
hotel and restaurant business acquired in June for its
sales impact and on property, plant and equipment.
The property in question was originally acquired and
repaired for the company's own purposes, but was no		 Cash and cash equivalents amount to € 46.95 million,
which is € 37.52 million above the previous year's
reporting date figure of € 9.43 million. We would refer
you to the explanations on the development of the
financial situation.		 assets. The long-term bank liabilities were reduced
by € 0.93 million with the scheduled repayment of
those components reported as current liabilities, and
still amount to € 3.51 million. Deferred tax liabilities
decreased by € 0.82 million to € 4.37 million. This
development results mainly from GK Software SE and is
due to the realisation of income from project business
longer used for the company's own purposes because of
the trend in the number of employees at the location. We
have therefore rented it out to third parties for their use.		 Long-term debts fell by € 16.62 million compared with
the reporting date of the previous year, to € 15.81 million.
The main reason for this was the reclassification of		 and the resulting balance-sheet changes, which was
earlier than in the tax balance sheet.
Annual Report 2021 GK Software SE

The development of short-term debts is characterised mainly by the reclassification of the convertible bond to other current liabilities. This will be repaid or converted by October 2022. This increase is counteracted by the decrease in short-term bank liabilities, which are characterised by the repayment of current-account credit lines used and the scheduled repayment of loans in the amount of € 4.22 million to now € 1.00 million. On the other hand, contractual liabilities ended up € 2.04 million higher than in the previous year due to advance payments being made in the project business. At the end of the reporting year, contractual liabilities of € 5.63 million were still on the books. Trade accounts payable increased by EUR 1.57 million from EUR 3.59 million to EUR 5.16 on account of the balance sheet date. 48 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

Financial situation

Cash and cash equivalents in the Group amounted to € 46.95 million on 31 December 2021, € 37.52 million higher than on the previous year's reporting date.

These considerable changes stem from the trend in cash flow in the narrower sense (i.e., without the change in working capital [net current assets], which increased by € 1.83 million to € 22.41 million compared with the previous year) and the reduced need due to the trend in net current assets. This change was € 2.96 million and the inflows from financing activities, which led to outflows of € 11.29 million in the previous year and inflows of € 15.49 million this year.

In the narrow sense, the increase in cash flow is essentially due to the considerable improvement in the annual result of the Group, which alone contributed € 7.03 million to the change in this item.

In the reporting year, this cash flow is relieved by the change in working capital of € 1.72 million. In the previous year, on the other hand, a burden of € -1.24 million arose here. Receivables from deliveries and services, other receivables and inventories increased by € 2.35 million (in the previous year there was a decrease of € 0.09 million). This drop in incoming funds was offset by the increase in contractual liabilities by € 2.04 million, in liabilities from deliveries

and services by € 1,91 million and in provisions by € 0.14 million. In contrast, the change in liabilities/ provisions in the previous year had a negative impact on cash flow of € –1.33 million.

Taking into account payments for interest and income taxes, the net cash inflow from operating activities amounted to € 23.22 million, € 5.50 million higher than in the previous year (€ 17.71 million). The special effect of the sale of AWEK microdata in the amount of € 2.75 million should be noted.

Investing activities led to inflows of € 2.43 million because of the sale of the shares in AWEK microdata GmbH. In the previous year, there was an outflow of € 2.97 million. These changes are due mainly to the inflow of € 4.54 million for the payment in the context of a company acquisition. Investments in tangible assets were up by € 0.67 million compared with the previous year.

Financing activities generated cash inflows of € 15.49 million. This was mainly due to the successful capital increase on 26 March 2021 in which the company received € 19.04 million as well as the loan repayments made in the previous year. The repayments made in the current year led to a reduction in liabilities to banks by € 5.15 million. This resulted from the repayments for bank loans in accordance with the cash-flow statement (€ 1.54 million) and the reduction of utilised current-

account credit lines (cash and cash equivalents) in the amount of € 3.61 million. The repayment of leasing liabilities amounts to € 2.67 million. There were also inflows from the exercise of share options in the amount of € 2.34 million and the capital increase carried out in March 2021 in the amount of € 18.50 million (net costs and tax effects). In contrast to the previous year, the outflows from dividend payments to minority shareholders of the subsidiary prudsys AG amounted to € 0.00 million (previous year: € 0.40 million). Interest paid to lenders and for the granting of credit facilities totalled € 0.75 million. 49 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

Overall, cash and cash equivalents increased by € 37.52 million to € 46.95 million during the financial year. Cash and cash equivalents (balance of cash and cash equivalents and utilisation of currentaccount credit lines) increased by € 41.19 million to € 46.88 million. With current account and credit card lines of EUR 0.06 million being used, the Group had unused credit lines of EUR 30.00 million available on the balance sheet reporting date.

The Group's financial managers are seeking to meet the goal of guaranteeing that the company is able to service its loans and debts at all times and have adequate liquidity to secure investment projects; it therefore places the highest priority on maintaining capital.

€ 44.74 million in current liabilities will have to be serviced during 2022. These liabilities are offset by cash and cash equivalents of € 46.95 million and current liquid assets of another € 44.06 million.

The Management Board believes that it has established an adequate funding framework and funding opportunities for the Group's current potential in normal circumstances. The general conditions for funding need to be constantly compared with investment opportunities and adjustments have to be made, if necessary.

The continued special situation resulting from the COVID pandemic did not have any threatening effects on the business of GK Software in 2020 or in the reporting year. The Management Board believes that it has created the most stable framework possible for the Group. This will prove to be as far as humanly possible sufficient even under the additionally aggravated conditions in the wake of the war in Ukraine.

The Management Board believes that the efficiency programme launched in 2019 has created a stable basis for the Group to cope with the situation. The simultaneous improvement of the controlling and budgeting processes should also have created a level of cost flexibility beyond the usual scope, enabling a fast and adequate response even to deep cuts. In the

opinion of the Board of Directors, the past business years have proven this. Combined with the opportunities for GK Software arising from the crisis that lie in the digitalisation of retail-store operations, which is increasingly being regarded as more of a necessity than an option, and in the transcendence of sales channels in terms of omni-channel retailing, the Management Board remains confident that GK Software is in a position to overcome this general crisis and to be able to defy the currently once again tightened conditions.

Despite this, commercial prudence is required to determine all the possible ways of achieving secure funding, even in the crisis, and, if possible, adopting these courses. The Management Board is therefore continuing to work on restructuring the capital side of the balance sheet in order to continue to be able to react appropriately to these situations. It already did so on 8 December 2021 by concluding a syndicated loan totalling € 45 million for a term of three years with an option for an additional year.

Financial and non-financial performance indicators

Financial performance indicators. It should be noted that the key indicators, on which the financial data is based, are very much connected to each other. As a result, the development of these figures largely depends on the development of two key indicators. These are turnover and earnings. In order to normalise tax effects, GK Software uses earnings before income taxes and the financial result (EBIT) and the margin on operating performance derived from this and figures derived from these like earnings before interest taxes, depreciation and amortisation (EBITDA).

T.09 Financial performance indicators

31.12.2021 31.12.2020
Gross earnings margin on
turnover		 % 95.9 96.3
Personnel ratio % 60.2 64.3
EBITDA margin on operating
performance		 % 20.5 16.2
EBIT margin on operating
performance		 % 13.2 9.0
Equity ratio % 58.0 44.0
Investment ratio I % 36.9 51.1
Net debt EUR K (42,431) 243

The net debt (excess of interest-bearing liabilities over liquid assets) only refers to those liabilities that can be unequivocally assigned to debts. The convertible bond is only entered in the balance sheet at the carrying amount of the statement of debt, taking into account the equity character of the conversion option. The key performance indicators listed above help to analyse developments and discrepancies from plans. For example, the personnel ratio is an important figure for analysing the development of the earnings situation. On the other hand, this largely depends on the "turnover" key performance indicator and any deterioration in its value may express both wrongly established production apparatus and missing the target figure for the "turnover" key performance indicator. However, this can be directly deduced. In this sense, these key indicators 50 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

are important aids in analysing developments, but are not control parameters in themselves.

Non-financial performance indicators. Management largely observes key figures in sales activities when it comes to non-financial performance indicators. There are two key values here: customer satisfaction and the number of customer contacts. They are not observed in a formalised manner, but are documented and assessed through regular reports about existing projects and sales activities with possible new customers and are presented to the responsible members of the Group Management Board and the Management Board and then assessed. Decisions about ongoing actions and procedures are made at an individual case level. Overall, we expect customer satisfaction to continue to improve.

45 Million euro Syndicated loan

Report on the Risks and Opportunities for the GK Software Group

Opportunities

As in previous years, there are still growth opportunities for the Group both in Germany and abroad. The topics addressed by GK Software's products are on many retailers' agendas for strategic IT projects. To ensure its success at the international level, the Group has references with leading retailers worldwide and is represented with a technically mature product on the market. GK Software has a number of major partners with good networks in the retail sector. In particular, its partnership with SAP is set to facilitate access to new customers in international markets such as the US and Africa. This cooperation is complemented by partnerships with Microsoft and IBM, which further increase the sales reach of GK Software. In addition, partnerships with other hyperscalers such as Amazon AWS, as well as with innovation partners such as Abacus, mySize, and others, ensure that the attractiveness of GK solutions is further increased. For further international expansion, the group can draw on the experience gained with its German and international customers due to the fact that the solutions have already been successfully implemented in more than 60 countries and can thus be quickly transferred to other foreign customers. 51 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

Domestic prospects for growth are still far from being exhausted as well. In addition to gaining further market share in all developed retail markets worldwide, the Group's focus will continue to be on new areas. In addition, small and medium-sized chains that have not been addressed as a matter of primary importance also offer great potential, particularly through the sale

With the development of GK SPOT, GK Software is currently making preparations for a cloudbased big data platform that is designed to open up new sales potential.

of standardised solutions. With the development of GK SPOT, GK Software is currently making preparations for a cloud-based big data platform that is designed to open up new sales potential. The internationalisation of the activities of Deutsche Fiskal and the market entry of retail7 could also create new or expanded opportunities for acquiring customers.

Over the coming years, a key focal point of the retail trade will continue to be the integration of the stationary business with other channels, such as online shops or mobile apps in cloud environments. In addition, current trends such as Go-style shopping, scan and go, home delivery, mobile payment and social networks are to be integrated into a single platform. Other long-term topics such as integrated and automated processes for inventory optimisation, scheduling and efficient customer management systems will continue to play a key role when it comes to reducing costs and enhancing customer loyalty. For these reasons, the retail trade is likely to step up its investments in solutions that integrate all business processes based on modern cloud technology. Moreover, retailers will face greater pressure on their margins unless they standardise and simplify their processes. The homogenisation of store solutions and the centralisation of data streams therefore remain of high strategic importance for the retail sector. In general, new methods and procedures (e.g., from artificial intelligence) will lead to new approaches and a further-intensified use of information technology.

We have seen that the still-ongoing COVID-19 crisis has already accelerated these trends. GK Software will thus continue to benefit from this retail investment

behaviour. Solutions from GK Software – automation and optimisation through digitalisation and the use of artificial intelligence – offer traditional retailers the opportunity to control their branch networks in a centralised manner. This can be in the supply of data for increased consumer self-service, as well as the automation of the handling of goods and money, thereby making it contactless. The solutions create a truly seamless transition to retail processes that are initiated, handled and concluded from the consumer's viewpoint. With its omni-channel possibilities, the open CLOUD4RETAIL platform offers an excellent basis. This is opening up numerous opportunities for GK Software. 52 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

The consolidation process in the software industry with industry solutions for the retail sector already began a number of years ago and is continuing to progress apace. Based on its attractive range of products and sound financial basis, GK Software is aiming to play an active role in this process.

Risks

Risk management system

The risk management system focuses on recognising risks at an early stage.

For this purpose, GK Software regularly takes stock of the risks and classifies them according to their type and probability of occurrence, as well as the presumed consequences arising from them. Each of the risks identified is assigned to a defined risk owner in the Group.

The process and methods of risk identification, evaluation and assessment are documented in a risk manual. This is regularly reviewed and developed.

The process initially involves recording all possible negative deviations from the specified company targets. In a further step, these deviations identified as risks are analysed in terms of their possible damage and probability that they will occur. The possible damage is determined by its negative impact on the company's development, assets, equity and liquidity. The effects of the risks are quantified as far as possible. However, risks that cannot be reasonably quantified are also considered. The risks are grouped into risk areas.

The risks are categorised as follows:

T.10 Risk assessment

Probability of
occurrence		 Amount of damage
in % EUR K
Very high >80 >5,000 High
High 50-80 2,000-5,000 Considerable
Medium 10-50 500-2,000 Limited
Low <10 <500 Negligible

The risk matrix derived from this results in the classification into risks that pose a threat to the company's existence, significant risks and irrelevant risks. Depending on this, the possibilities of countermeasures to reduce the amount of damage and/ or the probability of occurrence or the bearing of risk are derived.

The Management Board has appointed a risk manager who is responsible for regularly updating the risk inventory on a quarterly basis and reporting the results to the Management Board. Firstly, the risk manager obtains the necessary information from the risk owners as part of a formalised process. Secondly, they conduct informal discussions and evaluate other documents (including internal and external reports and minutes).

In the event of significant risks and, in particular, risks that pose a threat to the company's existence,

the risk owners and all management employees are obliged to inform the risk manager immediately and comprehensively. Flat hierarchies, short communication channels and an open communication culture ensure that important risk information also reaches the Management Board immediately. The Supervisory Board is informed by the Management Board at least once a quarter, but usually more frequently, about important developments in the company.

Risks are recorded across the Group and therefore include all subsidiaries. Specific individual risks and general business risks are recorded and considered. Individual risks can together lead to cumulative risks. Changes to the measured values of accumulation risks are indicators of change to individual risks.

The risk management scheme and early risk recognition do not consider positive opportunities separately. On the one hand, opportunities represent positive deviations from identified risks; on the other hand, opportunities are the subject of strategic corporate management.

Strategic risks

As a software vendor, GK Software operates in a highly dynamic market that is subject to ongoing as well as abrupt changes, for example, because of technological advances, changes in companies' IT landscapes, the consolidation of suppliers and buyers, new competitors, new strategies and patterns of behaviour on the part of players on the market. Given this situation, the Group is faced with various strategic risks; the potential for damage from all of these risks together is high.

Management reporting focuses on significant risks and those that could pose a threat to the company's existence.

Of the risks presented below, the most serious is the risk of damage to the Group's reputation due to a single project with a negative outcome. The risks affecting customer behaviour, such as the impact on demandrelated behaviour because of business performance that is perceived as inadequateor slowdowns in investments as a result of new market conditions or regulatory influences, are of secondary importance. There is certainly a possibility that feedback effects could develop between the two types of risks mentioned here: Changes in market conditions or regulatory requirements could make projects more complex and thus increase the likelihood of negative project outcomes. 53 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

GK Software tries to quantify the impact of the risks on the ongoing fiscal year to the greatest possible extent according to the amount of damage and likelihood of their occurring. In principle, the risks can also be classified in the context of the sequence of risks described above. Nonetheless, the immediate damage

is typically comparatively inconsequential (amounting to several tens of thousands of euros) particularly in the case of the risks that could result in damage to the Group's reputation. However, they could cause indirect damage that is almost impossible to quantify and manage (e.g., negative market sentiment towards GK Software) and that cannot be assigned to a single case of risk that occurred. For this reason, the Group focuses a great deal of attention on adverse project developments of this type in order to keep the risks within a manageable scope. This analysis applies equally to all business segments at GK Software in principle.

The risks presented in the following section can be summarised as follows:

The first risks to be summarised are those that could result from perceived performance or changes in requirements on the part of those interested in the products and services provided by the company group (product risks). On the one hand, customers might be of the opinion that changes in market requirements are not adequately represented in the portfolio of services offered by the company group. Alternatively, the products might not correspond to the performance requirements of the target market, or might no longer do so. In either case, this situation could result in lower demand for the products and services offered by GK Software. As things currently stand, we believe there

is a low probability that this risk will materialise based on reviews conducted by external technical analysts; likewise, the analyses on customer satisfaction that we have carried out in-house, as well as the rating of our solutions by external analysts, point to a rather lower probability of this risk materialising.

However, changes in requirements could lead to longer sales cycles given that the requirements are generally increasing because of the trends towards high integration, digitalisation and automation of business processes. These aspects mean that the investment decisions made by customers are of greater relevance, and that they lead to more intensive and potentially longer decision-making processes and thus to extended sales cycles, which results in a reduced number of sales opportunities that can be realised in a given period (sales market risks). Experience shows that the investment cycles in the retail industry are stable in the long term, and investments not made are generally always made at a later date when investment backlogs have been cleared. Therefore the probability of the risk materialising is extremely low, particularly when considered over longer periods.

At the same time, the increased requirements that can actually be identified lead to greater project complexity, which increases the probability that project plans will be met with failure (production risks). GK Software

counters this risk through the approach it applies when developing, employing, managing and retaining project capacities. In a tight job market (human resources and procurement risks), developing and retaining employee capacities are particularly important aspects, which we seek to accommodate by creating an attractive working environment with competitive compensation and general measures aimed at retaining staff. However, it should be noted that the general and probably permanent shifts between the use of traditional office workplaces and mobile/home-office working associated with the pandemic have made the situation more challenging in the area of recruitment. As the proximity of the place of residence to the place of work becomes less important, the competitive pressure in the search for qualified workers continues to increase. At the same time, regional differences in the salaries demanded are levelling out because companies in regions with low costs of living and wages increasingly have to compete with those where these are considerably higher. In addition, there has been a considerable increase in inflation; this can also lead to a higher than usual increase in salary adjustments at the request of employees. Another capacity risk for the company could result from the continuation of the war in Ukraine, because GK employs more than 20 qualified IT specialists in Lviv (western Ukraine), and it is not foreseeable how developments will unfold there. 54 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

The probability of the aforementioned risks materialising was rather low, as the experience of the last few years has shown. However, the topic of personnel risks is treated with special attention by the Management Board, because there is a possibility that the probability of occurrence will increase here.

One significant secondary risk consists of maintaining the functionality that is necessary to meet the complex requirements. These systems comprise all IT systems that can be grouped together as a dedicated risk group (IT risks). These risks increase the prospect that damage to the Group's reputation could occur because the potential scarcity of sales opportunities means that individual projects are of greater significance for GK Software's reputation as a whole. The Group is making significant efforts in the area of IT-related risks, therefore the probability of these risks materialising is, so far, rather low.

A further group of risks involves environmental risks, such as the development of the economy as a whole, trends towards concentration in customer and competitive environments and the development of regulatory conditions (legal and compliance risks). These risks cannot be controlled by the Group and, in some cases, play a role in increasing the risks in the first group. That is why it is not possible to estimate

the probability of the risk materialising in this segment either.

A significant risk – and one which cannot be influenced by the company – is how the businesses of GK Software's customers grow as a result of the development of the general economic situation and consumer sentiment (customer and market-related risks).

Until the outbreak of the war in Ukraine, development was dominated by the global pandemic and the associated uncertainties for the future. Before it became clear whether, to what extent and for how long the COVID-19 crisis would have an impact on overall social and economic trends, it was overshadowed by the Ukraine war. The longer this lasts, the greater its effect is likely to be – not only on trends in Europe, but also in the world as a whole. This can be justified above all by the fact that sanctions and counter-sanctions influence the globally interconnected world everywhere. At present, the effects of the overlapping pandemic and the consequences of the war are far from fully assessable. However, it is already clear that the Russian business of international retailers will come to a standstill – at least temporarily. The same can be expected for the company's new business in Russia, most of which was initiated through SAP. The way in which these situations actually develop, as well as their attendant uncertainties, could have an influence on the growth of our customers' 55 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

businesses that is impossible to determine at this point. The Company has absolutely no control over these risks and therefore it is not possible to estimate the probability of these materialising.

Given this climate of general uncertainty, the Management Board is striving to maintain its scope for action by structuring costs as flexibly as possible and only incurring costs where intended.

Moreover, the continuing consolidation of the retail market can result in a reduction in the number of branch networks over the long term, which would mean that the retail sector would have greater purchase power. In general, the retail sector in Germany is subject to strong price competition. For this reason, retail companies are seeking to pass the price pressure caused by this situation on to their suppliers and contractual partners. This also carries over to investments in IT and can have an impact on manufacturers of retail software. However, because GK Software provides strategically important solutions for retail groups and is globally positioned, these risks are also not considered to be a threat to the company, and their probability of occurrence is classified as low.

The consolidation that is occurring on the customer side is continuing to progress in the same manner, including among competitors. This concentration is characterized by the acquisition of direct competitors of GK Software

by globally significant manufacturers of hardware, which thus become universal suppliers for the retail market. This combination could prompt potential customers to obtain all the services they require from these competitors. While the Management Board believes that the previous trend on the market towards procuring hardware and software separately is set to continue, a reversal of this trend and consequent adverse effects on GK Software's sales opportunities cannot be ruled out. As things currently stand, however, there is no sign of any such trend so that the probability of any ensuing risks materialising is low.

The Group's planned expansion likewise involves certain financial risks. The company group primarily forms these relationships on the basis of preliminary work aimed at customer acquisition. This risk increases as a result of the extended sales cycles mentioned above. One of the factors in this is the increase in sales applications that is linked with longer sales cycles. One aspect of particular significance, however, is the need to maintain delivery capabilities when contracts are concluded. This can lead to considerable costs as a result of idle capacity. In addition to these general risks resulting from events on the market, there are also internal organisational risks that arise in relation to the aspect of internationalisation as a result of the operation of the Group's national and international subsidiaries. Adverse developments or threats to the existence of the Group's subsidiaries have direct (contracts to balance results) or

indirect (evaluation of finance assets, recoverability of receivables, loss of business activities by the subsidiary) negative impacts on the development of the Group. The Group counters this risk by continually developing its investment controlling measures. In order to reduce the danger from such risks, the efficiency programme initiated by the Company in 2019 provided the basis for ensuring that the probability of such risks occurring is significantly reduced and now at a low level.

In the course of the ongoing expansion, the project business must also be scaled to an increasing extent, which is to be accomplished through the involvement of partners. Nonetheless, there are other risks – and particularly quality risks – that arise because of the limited ability to control work in conjunction with partners. To this end, GK Software operates a partner programme with the certification of integration partners. This programme aims to guarantee the quality of project management and is developed on an ongoing basis.

Customer projects at home and abroad, which were described in the analysis of the market and competitive environment and are becoming increasing complex, also present risks to the further development of GK Software that could lead to higher warranty and goodwill provisions – not just for individual projects, but for all projects. This aspect is also important in view of the ever increasing number of SaaS contracts, which also include the operation of the customer's

systems, because the company takes on the risk for the smooth operation of the customer's business. However, the Management Board is confident that we have taken the development of the software in a direction that guarantees existing quality standards can be maintained in general. This quality risk in relation to individual projects is managed by means of regular reporting by the responsible project managers to the relevant members of the Group Management Board. A summarised report of the known risks is presented to the Management Board in its meetings, which are typically held monthly. To date, the results of the organisational measures adopted here show that there are only minor risks for the Company in this segment.

GK Software will also continue to expand its products and sales base through activities including targeted acquisitions of companies in view of its planned expansion of its business activities in the coming years. In doing so, the company group will prepare for and examine acquisitions with the utmost possible diligence. Nonetheless, the risk that an acquisition could have negative impacts on the earnings of GK Software cannot be ruled out.

On the whole, GK Software assesses these risks as strategic risks that could have significant impacts on the company's financial and earnings situation over the long term. At the moment, however, we are not seeing any

or only weak indicators that suggest these risks could materialise.

Operational and financial risks

Third parties could accuse GK Software of infringements against intellectual property rights, such as patents or copyrights, and make claims for damages or seek to limit the sale of GK Software solutions. This is seen as a significant risk. In order to limit this risk, GK Software reviews whether third-party licensing terms are complied with, starting in the development process.

Given the structure of its customer base and that of its target market, the Group's business is continually characterised by large individual projects with a relatively small number of customers, which means that these business relationships make considerable contributions to our turnover and earnings within the course of a given fiscal year. The Management Board foresees that this will continue to be the case in future as well. If a business partner cancels a project or experiences financial difficulties, this can also have financial impacts for GK Software. However, this risk can be limited by regular payment plans or by agreeing on payments after so-called "project milestones". Therefore, the probability of risks materialising in this segment is low. 56 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

Specialised and standardised contracts are given preference for the sale of GK Software products. As a rule, these contract templates are deviated from at the request of customers and on the basis of the respective individual circumstances. In these cases, there is a risk that the contractual arrangement is to the disadvantage of GK Software (contract risk). This risk is seen as a significant one that is addressed through legal examination on the part of our in-house legal experts.

Receivables from deliveries and services are owed by customers of the Group. The maximum credit risk corresponds to the carrying amount of the receivables from deliveries and services. All of the Group's customers are companies. GK Software has set up a receivables-management system in order to address the risk of customers defaulting on payments. Customers' payment behaviour is monitored at short intervals. If there is reason to assume that individual customers' economic situations have changed, further measures are taken in coordination with Management in order to limit any potential loss. A general allowance is made for all pending receivables in order to determine the general risk of defaults for receivables from deliveries and services. 57 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

GK Software manages the general liquidity risk (cumulative risk from other individual upstream risks) by maintaining appropriate liquid assets and credit lines as well as a rolling weekly liquidity forecast along with assessing forecast and actual payment flows.

We refer to the separate section of the report with respect to the risks involved in the use of financial instruments.

On the whole, GK Software assesses these financial risks as operational risks that could have considerable impacts on the Group's financial and earnings situation. At the moment, however, we are not seeing any or only weak indicators that suggest these risks could materialise.

Overall risk position

The overall risk position means all individual risks to which GK Software is exposed in its entirety. There are no discernible risks that could pose a threat to the company's existence. The Group's overall risk position has continued to improve – and now considerably – over the course of the 2021 fiscal year in keeping with the trend since the second half of 2019.

Ukraine war

So far, the impact of the war on the company has been limited. However, It should be noted that the situation is stressful and uncertain for the workers concerned in Lviv, Ukraine. The political situation means that the further development of the site needs to be reassessed. As things look at the moment, the site will not be developed further, and alternative options will be reviewed. Events are permanently monitored and evaluated by a specially created task force at the company headquarters. If the site were to become nonoperational, this would naturally result in a restriction of the company's development resources. For customers and potential customers of the company who were or are active in Russia, the war and its consequences will also result in burdens, the effects of which currently cannot be assessed. There are no impacts on finances or earnings worthy of mention to be expected as a result of sanctions imposed on or by Russia. It is 58 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

The Group's overall risk position has continued to improve over the course of the 2021 fiscal year in keeping with the trend since the second half of 2019.

already certain that the direct and indirect economic consequences of the war, as well as the sanctions and counter-sanctions, will lead to a serious disruption of the world economy for the unforeseeable future.

A complete closure of the Russian market would have only minor direct consequences for the company, but would close off access to a not inconsiderable market in the longer term and thus jeopardise the sales investments made in recent years.

COVID-19

The renewed review of the recorded risks did not result in any significant changes to the risk structure for the "normal" circumstances of the forecast report. The exceptional circumstances caused by the COVID-19 pandemic, which, contrary to expectations, has now lasted for more than two years, remain essentially unchanged since the Group's last forecast report. It remains difficult to assess the impacts of these circumstances. We continue to expect that the affected economies and companies will experience significant "downstream damage", which will be correspondingly higher the longer the current situation persists.

The issue raised by this concerns the effects of this crisis on GK Software's general business environment and particularly its financial situation.

The crisis is having effects on the operating business of our customers, and therefore on their investment and demand behaviour, as well as their assets, financial and earnings situation. It is also having effects on various company departments at GK Software. We are trying to meet the risks that result from these by adopting very different sets of measures. Hygiene measures have been intensified to protect our employees and work from home has been almost exclusively introduced on a temporary basis. At the same time, control and

budgeting processes for turnover, costs and liquidity have been adapted to the situation.

To secure our financial situation, we carried out a capital increase in March 2021, among other things, and successfully placed our debt financing on a more longterm basis in March 2022.

Internal monitoring and risk management systems with regard to the Group's accounting process

The internal monitoring system of the GK Software SE and of the entire corporate Group comprises the principles, procedures and measures introduced by the Management Board for the organizational implementation of its decisions to ensure the effectiveness, efficiency and correctness of the accounting as well as the compliance with the legal provisions relevant for the company. GK Software SE (as well as the Group) is structured according to the responsibilities of the Management Board, whose different departments report to the responsible Management Board. The departments are subdivided into different cost centres, which each have a responsible head of department. The heads of department are either responsible for turnover and costs or only for costs. 59 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

The business release rules (requirement requests, purchase orders, invoice release, labour law agreements, submission of offers, customer contracts) are regulated by signature authorisations with value limits, which are regularly checked and adjusted as required. In addition to the release rules, GK Software SE has other guidelines for different areas of application (travel policy, anticorruption guideline, procurement directive, company car guideline), which are also regularly checked and adjusted if necessary. Appropriate local regulations have been established in the Group companies.

The Group accounts and the accounts of the individual companies are organised and handled in-house, as is the financial accounting of GK Software and all the individual companies. GK Software completes the accounts for the German subsidiaries or branches of subsidiaries as part of agency agreements, with the exception of AWEK GmbH, AWEK Microdata GmbH and prudsys AG. The foreign Group companies each have their own accounting departments, which are responsible for the local accounts of the companies. The wage and salary administration for the German companies is carried out by GK Software as part of agency agreements.

The financial accounting of GK Software SE and some of its subsidiaries is carried out directly in the accounting software Microsoft Dynamics NAV (NAV). The individual accounts according to the local accounting standards of the other subsidiaries are imported in detail into NAV. The information necessary to consolidate or prepare a complete Annual Report is provided by the local units on the basis of instructions issued by the Group. During the preparation of both the individual accounts and consolidated accounts, internal checks are in place

under the "four eyes" principle to ensure the reliability of the individual and consolidated accounts.

The Controlling department, which is centrally located in Schöneck but has a Group-wide focus, prepares detailed monthly evaluations to show the development of the Group and the cost centres. The reports are made available to the cost centre managers with specific inquiries about conspicuous developments. The Management Board receives an overall report.

Risk reporting in relation to the use of financial instruments

Financial market risks The Group is exposed to risks associated with exchange and interest rates as a result of its business activities. The exchange rate risks result from the business sites maintained in different currency areas and increasingly from customer relations that go beyond the euro zone. The interest risks are the result of selected types of financing to enhance the Group's financial leeway.

Exchange rate risks arise from the Group's exposure to Czech crowns, Swiss francs, Russian roubles, South African rand, US dollars as well as Canadian dollars and Ukrainian hryvnia. The Group therefore accepts payment obligations arising from work, renting and leasing contracts in all these currencies. GK Software with its Groups therefore not only issued invoices for sales and services in euros on the balance sheet reporting date, but also in Swiss francs, US dollars, Canadian dollars and South African rand. In order to be able to handle the Group's currency risks in a standard manner, GK Software SE tries to combine the currency risks internally. The Group carried out a sensitivity analysis to determine its risk of exposure to foreign currencies. 60 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

We normally handle business transactions in the operational currency of the Group firm concerned. Operational business transactions are not handled in the operational currency in individual cases so that there is a currency risk for monetary financial instruments. As of 31 December 2021, the Group had foreign-currency receivables of approximately € 616,000 that differed from local currencies. Currency rate fluctuations in conjunction with our original monetary financial instruments do not have any major effects on our profits. The Group's exchange-rate risk sensitivity mainly increased because of the increased business activities in the US dollar region and in South Africa.

In the view of the Management Board, the sensitivity analysis, however, only reflects one part of the exchange rate risk, as the risk at the end of the reporting period only reflects the risk during the year to a certain extent. Risks exist in possible changes to exchange rates for services, which the Group companies provide to the parent company to settle in local currencies every month. In the first half of 2021, services totalling € 17.89 million were purchased in a currency other than euros. These service invoices were settled mainly by Group companies in Czech crowns, Russian roubles, Ukrainian hryvnia, Swiss francs or US dollars.

Interest risks result from taking out interest-bearing borrowings and from balance sheet items that contain an interest component.

When borrowing, the cash outflow resulting from the interest payments becomes the object of possible hedging measures. The risk is controlled by the Group by maintaining an appropriate ratio because it takes out a mixture of fixed and variable interest rates on funds. As a rule, long-term borrowings are made at fixed interest rates, while short-term borrowings are subject to variable interest rates or fixed interest rates with short fixed-interest periods. 61 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

The currency and interest rate risk is presented in the Notes on the Consolidated Accounts.

Forecast report

Market environment

Looking at the retail sector as a whole, after the record turnover of € 587.8 billion1 in 2021, the German Retail Association (Handelsverband Deutschland, HDE) also expected an increase in turnover of 3% for 2022 (with this being divided into 1.2% in over-the-counter retail and 13.5% in online retail).2 However, this assessment was made before the outbreak of the war in Ukraine. Events so far have shown that the markets have reacted strongly to this. It can be assumed that this will increasingly be the case the longer the war lasts. Moreover, the disruption of international cooperation and supply chains, as well as the monetary imbalances, can be expected to have a prolonged aftermath even after the (hopefully soon) end of the war. Even before the war, market-research company GfK saw an increase in consumers' economic expectations for 2022, with rising private consumption playing an important role here. However, the supply-chain problems and the sharply rising prices in the energy sector have already had a negative impact on these forecasts.3Forecasts of economic development within the European Union also fluctuate between hopes of an upswing based on successes in the fight against the pandemic and, on the other hand, assessing the rise in inflation due

1 cf. https://einzelhandel.de/images/presse/Pressekonferenz/2022/Charts_3.pdf; p. 4 2 cf. https://einzelhandel.de/hdepk sowie https://einzelhandel.de/images/presse/

3 cf. https://www.gfk.com/de/presse/konsumklima-februar2022-zwischenkurzfristigen-einbussen-und-mittelfristigen-erholungsaussichten

rising energy prices and continuing disruptions in supply chains as risky for the economy as a whole.4 The assessment of the EHI Retail Institute is therefore not surprising: "In particular, AI-based decisionmaking in procurement, range management and pricing will continue to become more important".5 As a direct consequence of the COVID-19 pandemic, the EHI assumes that the importance of omni-channel strategies will increase, and that the digitalisation of consumer behaviour will gain more importance in stationary retail.6 Overall, as the study "IT Trends in Retail 2021" shows, the retail sector's need for investment was assessed as high even before the outbreak of the pandemic. 41% of those questioned believe that analytics/AI and 39% believe that connected retail will be the most important IT projects during the next two years.7 The respondents see customer centricity and self-checkout/scanning as further key trends.8 In the light of the months-long lockdown and the closure of many shops in Germany, we will have to wait and see what this means for the retail sector's readiness to invest, as in-store turnover will collapse significantly in some sectors, whilst other fields, particularly the food or pharmacy retailers, will experience an exceptional boom.9 62 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

The IT departments of the retail trade are focusing on topics relating to new technologies, solutions and processes, for which GK is excellently positioned with the OmniPOS solution.

Cloud and dynamic pricing are other areas that are predicted to grow significantly. The white paper "Sustainable Smart Stores" by EHI and Microsoft shows that cloud-based applications for electronic price labelling are in use at 79% of the grocery retailers surveyed; the remaining 21% are planning to implement this in the near future.10 The RIS News "Store Experience Study 2022" predicts that retail IT spending will increase by 5.6% in 2022; around half of respondents stated that they would like to improve CRM.11 When it comes to

11 Vgl. https://risnews.com/store-experience-study-2022

Pressekonferenz/2022/PM_JahresPK.pdf

4 cf. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_926

5 https://www.ehi.org/de/technologie-trends-on-stage/

6 https://www.ehi.org/de/technologie-trends-on-stage/

7 EHI Retail Institute, Technologie-Trends im Handel (Technology Trends in Retail) 2021, p17

8 Ibid. p14 9 Ibid. p39

10 cf. https://www.ehi.org/de/pressemitteilungen/digitalisierung-pusht-nachhaltigkeit/

Forecast report

home delivery, Germany still has some catching up to do even two years into the pandemic. In 2020, the HDE showed a rapid increase in the importance of online retail in the entire grocery market.1 According to figures from IFH Cologne, this also continued in 2021.2 However, the thesis paper of the IFH also shows that there is potential above all in the increasing dovetailing of digital and analogue shopping experiences.3 These positive market trends have also been significantly reflected in the discussions that GK Software is holding with existing customers and potential interested parties. The IT departments of the retail trade are focusing on topics relating to new technologies, solutions and processes, for which GK is excellently positioned with the OmniPOS solution.

1 HDE: Handelsreport Lebensmittel 2020, p. 14

  • 2 cf. https://www.ifhkoeln.de/trotz-onlineshift-stationaerer-handel-hat-grosseszukunftspotenzial/
  • 3 cf. https://www.ifhkoeln.de/trotz-onlineshift-stationaerer-handel-hat-grosseszukunftspotenzial/

Company outlook

Despite the ongoing global pandemic, the company was able to grow more strongly in 2021 than in the previous year and to further improve the earnings. Further progress in the Americas and the full utilisation of Deutsche Fiskal since April 2021 contributed to this – as did the new customers acquired in the previous fiscal year in the area of core solutions. The first few months of 2022 suggest that positive trends are continuing to consolidate and the trend in financial indicators is likewise positive.

In view of the fact that, contrary to assumptions, the Corona pandemic is apparently still lasting much longer than expected, and that the war in Ukraine has created massive new uncertainties, all longer-term forecasts are subject to stronger reservations than they were a year ago. Nevertheless, with reference to these incalculables, the Management Board sees itself in a position to fully maintain the medium-term forecast made last year until the end of the 2023 fiscal year. We expect turnover to continue to grow considerably, ranging between € 160 million and € 175 million by the end of the forecast period for 2023. We expect this growth to primarily occur on the basis of the solutions and products we are currently offering on the market. Further potential could develop as a result of new solutions or the geographical expansion of our sales regions. This forecast is based on organic growth and could be enhanced by inorganic 63 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

growth, although a more detailed plan for this is not available at present.

We are expecting annual gains for the SaaS business for CLOUD4RETAIL (without Deutsche Fiskal) to reach the level seen in 2021, with the share of subscriptions growing continuously but not at a rapid rate. In the area of Deutsche Fiskal, we will be able to achieve sales for the full 12 months for the first time in 2022. Because the initial distribution to the market has largely taken place, we are initially assuming a steady but slower growth here. Further potential could arise if fiscal legislation is extended to other sectors, or if branches originally equipped with hardware are switched to software solutions. An expansion to other geographical markets is plausible as well.

In the area of EBIT, we are sticking to the target of 15% of turnover in the medium-term forecast until 2023.

Forecast report

In the area of EBIT, we are sticking to the target of 15% of turnover in the medium-term forecast until 2023. This target is subject to the proviso that the pandemic in the developed markets has been overcome and that the war in Ukraine and the resulting increased risk of inflation do not have a massive effect on purchasing power and thus retail sales. It remains our goal to maintain and stabilise EBIT at this level after reaching this mark.

We expect the GK Software Group to achieve an increase in revenue from turnover similar to that in the 2021 fiscal year and a further slight improvement in EBIT towards achieving the medium-term target for 2023.

This forecast is based on our existing customer relations, the current position our solutions occupy on the market as well as planned and current demand for these solutions. GK Software is currently in an excellent position in many ongoing tender procedures in different regions of the world and has important advantages over its competitors with its innovative, broad portfolio of products, the internationality of its solutions and its proven ability to introduce projects quickly. This makes us optimistic about increasing the number of customer contacts in the following business year. We are also expecting to see positive effects from partnership agreements with hyperscalers1 such as Microsoft, IBM, and AWS, who are hopeful that large numbers of terminals and transactions in the retail sector will yield potential for their cloud offers. 64 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

On the whole, we believe that we are in a good position to continue to keep the Company and its Group on a growth trajectory in the coming years while also tapping into new opportunities alongside those currently available to us. One helpful factor is that we have only felt the impacts of the existing pandemic slowdown to a minor extent and primarily in relation to our new business. However, we expect to see catch-up effects in the coming years as a result of delayed investments if the pandemic can be largely overcome this year.

General statement for 2022

Based on the assumptions and influencing factors described, we expect the GK Software Group to achieve an increase in revenue from turnover similar to that in the 2021 fiscal year and a further slight improvement in EBIT towards achieving the medium-term target for 2023 (15 percent EBIT margin on turnover).

These statements (like those of the medium-term forecast) are therefore still subject to the considerable reservation of the difficulty of assessing the further course of the COVID-19 crisis and its consequences in the various regional markets in which the group of companies is active, as well as the global impact of the war in Ukraine. Actual developments may thus still deviate considerably from this assessment.

1 Hyperscalers are large cloud providers. In some cases, this term is used to refer exclusively to the three largest providers (Amazon, Microsoft and Google). However, it is used somewhat more broadly here in reference to the retail sector.

Takeover-relevant information in accordance with Section 315a German Commercial Code (HBG)

Takeover-relevant information in accordance with Section 315a German Commercial Code (HBG)

Information in accordance with Section 315a German Commercial Code (HBG)

    1. Capital structure. The nominal share capital of GK Software SE as of 31 December 2021 was € 2,258,425.00 and is broken down into 2,258,425 no-par ordinary bearer shares with a pro-rated share in the share capital of € 1.00 each. Each individual share entitles the holder to one vote in accordance with Section 4 of the articles of association. Because of the issue of employee shares from the conditional capital, the number of shares increased to 27,325 shares in the course of 2021. As part of the capital increase from authorised capital, the number of shares increased by 180,000 shares during 2021.
    1. Shareholders' rights and duties. The same rights and duties are attached to each share, with the shareholder entitled to property and administration rights. The property rights include the right to a share in profits as well as the right to subscribe to shares in the event of capital increases. Shareholders' proportionate share in the Group's profits is determined by their proportionate share in the share capital. The administration rights include the right to participate in the annual shareholders' meeting of the Group, to speak at the meeting, pose questions and make proposals, as well as exercise the right to vote.
    1. Capital investments. As of the reporting date, the following direct or indirect shareholdings in excess of 10% are known:

  • a. As of 31 December 2020, Mr Rainer Gläss held 532,292 shares (23.57%) either directly or indirectly, of which 464,500 shares were held indirectly via Gläss Vermögensverwaltung GmbH & Co KG.

  • b. Mr Stephan Kronmüller held 412,949 shares (18.28%) either directly or indirectly, of which 376,200 shares were held indirectly via Kronmüller Vermögensverwaltung GmbH & Co KG.
    1. Composition of the Management Board and modification of the articles of association. The appointment and dismissal of members of the Management Board are regulated in Sections 84 and 85 Aktiengesetz [German Stock Corporation Act]. Members of the Management Board are appointed by the Supervisory Board for a term of five years at most, and extensions of five years each are permitted – potentially multiple times. According to the articles of association, the number of members on the Management Board is determined by the Supervisory Board; however, the Management Board must have at least two members. The Management Board of GK Software SE currently has two members. The articles of association can only be modified by the annual shareholders' meeting in accordance with the provisions of the Aktiengesetz. Amendments to the articles of association – that is, linguistic changes to the articles of association only – can be determined by the Supervisory Board in accordance with Section

10(8) of the articles of association. Resolutions of the annual shareholders' meeting require a simple majority of votes cast in accordance with Section 15(2) of the articles of association, unless otherwise stipulated by law.

  1. Powers of the Management Board to issue and repurchase shares. Share repurchase programme.

There is conditional capital (Conditional Capital IV € 250,000; Conditional Capital V € 83,500; Conditional Capital VI € 75,000). Conditional capitals II and III have expired because of the passage of time; remaining options can no longer be exercised. These contingent increases in capital are only performed if the owners or creditors of convertible bonds or share options make use of their conversion or subscription rights. According to Section 4a Para. 1, 3 and 6 of the articles of association, the Management Board was entitled to grant subscription rights to individual share certificates as part of the share option programme on one or more occasions, provided that the Supervisory Board approves these measures. The share options are exclusively for subscription by members of the GK Software SE Management Board, selected managers and other senior employees at GK Software SE and for subscription by members of the management team and selected managers and other leading employees in companies, which are independently associated firms in a relationship with GK Software SE in the sense of Sections 15 and 17 of the German Stock Corporation Act. The 65 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

Consolidated Management Report
Takeover-relevant information in accordance with Section 315a German Commercial Code (HBG)
decisions taken at the annual shareholders' meeting
on 28 June 2012 (conditional capital II), 29 June
2015 (conditional capital III) and 29 June 2018
(conditional capital V) empowered the Management
Board to issue subscription rights to GK Software
SE shares with a term of up to five years, with the
proviso that each share option grants the right to
subscribe to one GK Software SE share. The annual
shareholders' meeting of 16 June 2016 empowered
the Management Board (with the consent of the		 Supervisory Board) to issue bearer or registered
of these instruments, and to exclude subscription
on one or more occasions until 15 June 2021
(conditional capital IV).
For a summary of the individual share option
programmes, please refer to the following overview:		 warrant and/or convertible bonds, profit-participation
rights or profit-participating bonds, or a combination
rights to these instruments or a combination thereof		 the property of the Group or can be allocated to the
Group in accordance with Sections 71a et seq. AktG
[German Stock Corporation Act], the acquired shares
may not amount to more than 10% of the share
capital at any given time. The authorisation may not
be given for the purpose of trading in the Group's
own shares. The Management Board may use the
shares acquired within the scope of the authorisation
for any legal purpose, provided that the Supervisory
Board agrees.
T.11 Share options 7.
Compensation agreements. There are no
compensation agreements for the case of a takeover
Date of issue Issue
options		 of which
forfeited		 of which
lapsed		 of which
redeemed		 Options
remaining Exercise price		 Exercise
period		 End of exercise
period		 offer.
Number Number Number Number EUR Years 8.
Shares
with
special
rights. There are no owners
20.6.2017 8,500 1,250 1,150 6,100 0 92.10 4 1/4 21.6.2021 of shares with special rights that grant controlling
Conditional capital II 0 powers, as this type of share class does not exist
at GK Software SE. Likewise, there is no control of
29.8.2016 32,025 1,600 7,050 23,375 0 45.98 4 1/4 29.8.2020 voting rights for shares held by employees for which
4.12.2017
Conditional capital III		 16,500 0 4,000 6,500 6,000
6,000		 116.69 4 1/4 3.12.2021 the employees do not exercise their rights of control
directly.
9.
Change-of-control clause: The "Software
26.11.2018
3.8.2020		 37,000
20,525		 8,950
2,000		 0
0		 0
0		 28,050
18,525		 75.16
68.00		 4 1/4
4 1/4		 28.11.2022
3.8.2024		 License and Reseller Agreement" between SAP
5.10.2021 23,725 0 0 0 23,725 154.40 5 5.10.2025 and GK Software can be terminated by SAP for
Conditional capital V 70,300 an important reason, if the majority of shares in
GK Software are sold to an entity that is a close
76,300 competitor of SAP. Members of the Management
Total amount
Share repurchase programme. The 2018 annual the Group's share capital existing at the point at Board are granted a special right of termination in the
shareholders' meeting on 21 June 2018 empowered which the resolution was passed in the amount of event of a fundamental change to the composition of
the Management Board to acquire its own shares
in the Group until 20 June 2023 up to 10% of		 € 1,919,875.00, provided that the Supervisory Board
agrees. Together with other own shares that are		 the shareholder structure of GK Software SE.

Total amount 76,300

    1. Compensation agreements. There are no compensation agreements for the case of a takeover offer.
    1. Shares with special rights. There are no owners of shares with special rights that grant controlling powers, as this type of share class does not exist at GK Software SE. Likewise, there is no control of voting rights for shares held by employees for which the employees do not exercise their rights of control directly.
    1. Change-of-control clause: The "Software License and Reseller Agreement" between SAP and GK Software can be terminated by SAP for an important reason, if the majority of shares in GK Software are sold to an entity that is a close competitor of SAP. Members of the Management Board are granted a special right of termination in the event of a fundamental change to the composition of the shareholder structure of GK Software SE.

Corporate Governance Report

Corporate Governance Report

Information on separate nonfinancial report

Non-financial report

The non-financial report is submitted separately and, after being reviewed by the Supervisory Board, will be published on the Group's website at: https://investor. gk-software.com/de/veroeffentlichungen/csr-bericht.

Information on female quota and diversity concept

The Management Board of GK Software SE consists of two members, including one of the founders. The Supervisory Board consists of three members. The quota for both boards was set at 0%. GK Software employs staff from more than 50 countries and is to be achieved by 2025. It welcomes all qualified job applicants, regardless of gender, nationality or skin colour, and also fills its management positions within the company according to this overarching principle.

Corporate governance statement (Section 289f, Section 315d German Commercial Code [HBG])

Explanation in accordance with Section 161 AktG [German Stock Corporation Act]

The annual German Corporate Governance code Statement in line with Section 161 AktG [German Stock Corporation Act] was submitted by the Management Board and Supervisory Board and has been published on the Company's homepage at

https://investor.gk-software.com/de/corporategovernance/entsprechenserklaerung.

Relevant information regarding corporate governance practices

The Group does not have any relevant corporate government practices extending beyond the legal requirements and the requirements we comply with in the German Corporate Governance Code.

Description of the working methods of the Management Board and Supervisory Board

A regular Supervisory Board meeting is held at least once every quarter. However, the members of the

Supervisory Board also maintain close contact with one another outside of the meetings and stay informed about the Group's development and events that could influence this development. In addition to the official, mandatory provision of information to the Supervisory Board, the Supervisory Board and Management Board also take part in informal meetings between their members. The Management Board takes care of the Group's business on a cooperative basis; however, the members of the Management Board are assigned dedicated business areas. The members of the Management Board report on developments in their business areas at the Management Board meetings, which are typically held monthly. In addition to the meetings, the members of the Management Board maintain ongoing contact with one another. 67 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Accounts Further information

Because of their size, neither of the boards forms any committees. All matters are dealt with jointly.

The Management Board

Rainer Gläss Chief Executive Officer

André Hergert

Chief Financial Officer

Consolidated Accounts

Consolidated Balance Sheet

T.14 Assets T.13 Liabilities
EUR K Notes on the
Consolidated
Accounts No.		 31.12.2021 31.12.2020 EUR K Notes on the
Consolidated
Accounts No.		 31.12.2021 31.12.2020
Property, plant and equipment 2.1.; 3.1. 21,087 14,675 Subscribed capital 2.7.; 4.3. 2,258 2,051
Right of use assets IFRS16 2.3.; 4.2.2. 7,665 9,246 Capital reserves 2.7.; 4.3. 49,302 28,667
Property held as a financial investment 4.2.3. 224 6,765 Retained earnings 2.7.; 4.3. 31
Intangible assets 2.4.; 3.2.; 4.2.4. 23,999 25,412 Other reserves 2.7.; 4.3. (1,742) (2,534)
Financial assets 2.8.; 4.1. 6 6 Profit brought forward 5. 19,755 13,545
Active deferred taxes 2.12.2.; 4.2.7. 193 416 Shortfall for period minorities interests 5. 13,157 6,210
Total non-current assets 53,176 56,520 Equity attributable to GK Software SE stockholders 82,761 47,971
Goods 2.6.; 4.2.5.; 5.3. 70 6 Equity attributable to non-controlling interest 867
Auxiliary materials and supplies 2.6.; 4.2.5.; 5.3. 0 167 Total equity 83,628 48,696
Initial payments made 2.6.; 4.2.5.; 5.3. 1 4 Provisions for pensions 2.11.1.; 4.2.8. 1,881 2,730
Trade accounts receivable 2.8.; 2.13.6.; Non-current bank liabilities 4.1.3. 3,512 4,446
4.1.1. 24,298 23,382 Non-current leasehold liabilities 2.3.; 4.1.4.;
Trade accounts receivable from ongoing work 2.13.6.; 3.6. 12,152 13,587 4.2.2. 5,328 6,731
Income tax claims 4.1.2. 997 941 Convertible bond 4.1.5. 0 14,222
Other accounts receivable and assets 4.1.2. 6,542 6,643 Deferred public-sector subsidies 2.10.; 4.2.9. 723
Cash and cash equivalents 2.5.; 6. 46,945 9,425 Deferred tax liabilities 2.12.2.; 4.2.7. 4,370 3,546
Total current assets 91,005 54,156 Total non-current liabilities 15,814 32,438
Balance sheet total 144,181 110,676 Current provisions 2.11.; 4.2.10. 546
Current bank liabilities 2. 1,002 5,223
Current leasehold liabilities 2.3.; 4.1.4.;
4.2.2. 2,457 2,580
Liabilities from trade payables 2.8.; 4.1.6. 5,162 3,591
Initial payments received 2.13.6. 5,626 3,589
Income tax liabilities 4.1.9. 2,041
Other current liabilities 4.1.8. 13,265 13,025
Convertible bond 4.1.5. 14,639
Total current liabilities 44,739 29,541
Balance sheet total 144,181 110,676

Consolidated statement of income and accumulated earnings

T.14 Consolidated statement of income and accumulated earnings Notes on the T.15 Other results after income taxes
Notes on the
EUR K Consolidated
Accounts No.		 FY 2021 FY 2020 Consolidated
EUR K
Accounts No.		 FY 2021 FY 2020
Ongoing business operations
Turnover revenues 2.13.; 5.1. 130,847 117,560 Items, which will be reclassified in the consolidated profit
Own work capitalised 3.4. 0 831 and loss statement in future under certain conditions
Other operating revenues 5.2. 8,742 4,297 Differences in exchange rates from recalculating
1.5. 1.5.
Turnover and other revenues 139,589 122,688 foreign business operations
Deferred taxes from differences in the conversion rates for		 48 (546)
Materials expenditure 5.3. (14,168) (9,436) foreign business operations1 (45) (258)
Personnel expenditure 5.4. (78,740) (75,640) Items, which will not be reclassified in the consolidated
Depreciation and amortisation on non-financial assets 5.5. (9,484) (8,543) profit and loss statement in future
Losses from derecognition of financial assets 3.11. (153) (612) Actuarial gains/ losses from defined benefit pension plans
2.11.; 4.2.7.
Other expenditure 5.6. (19,739) (17,923) 2.10.; 4.2.7. 648 (35)
Total operating expenses (122,283) (112,153) Deferred taxes on actuarial gains/losses from defined benefit
pension plans2		 141 (25)
Overall results 14,090 5,402
Operating results
Financial income		 5.7. 17,306
575		 10,535
192		 of which attributable to non-controlling interest 141 55
Negative interest on bank balances/deposit rates (148) 0 of which attributable to GK Software SE stockholders 13,949 5,347
Financial expenditure 5.7. (1,279) (1,637)
Financial results (852) (1,445) Earnings per share (EUR/share)
8.2.
Income tax results 16,454 9,090 from consolidated surplus for the period – undiluted 5.98 3.04
Income taxes 2.12.; 5.8. (3,156) (2,824) Earnings per share (EUR/share)
8.2.
Consolidated surplus for the period 13,298 6,266 from consolidated surplus for the period – diluted 5.66 3.00
of which attributable to non-controlling interest 141 55
13,157 6,210
T.15 Other results after income taxes
EUR K Notes on the
Consolidated
Accounts No.		 FY 2021 FY 2020
Items, which will be reclassified in the consolidated profit
and loss statement in future under certain conditions
Differences in exchange rates from recalculating
foreign business operations		 1.5. 1.5. 48 (546)
Deferred taxes from differences in the conversion rates for
foreign business operations1		 (45) (258)
Items, which will not be reclassified in the consolidated
profit and loss statement in future
Actuarial gains/ losses from defined benefit pension plans 2.11.; 4.2.7.
2.10.; 4.2.7.		 648 (35)
Deferred taxes on actuarial gains/losses from defined benefit
pension plans2		 141 (25)
Overall results 14,090 5,402
of which attributable to non-controlling interest 141 55
of which attributable to GK Software SE stockholders 13,949 5,347
Earnings per share (EUR/share)
from consolidated surplus for the period – undiluted		 8.2. 5.98 3.04
Earnings per share (EUR/share)
from consolidated surplus for the period – diluted		 8.2. 5.66 3.00

Consolidated statement of changes in equity

T.16 Consolidated Statement of Changes in Equity

Consolidated statement of changes in equity Consolidated Accounts
Consolidated statement of changes in equity
for the financial year from 1 January to 31 December 2021
T.16 Consolidated Statement of Changes in Equity
Earnings
Notes on the Consolidated attributable to
GK Software SE		 Equity attributable
to GK Software SE		 Equity attributable
to non-controlling
EUR K Accounts No. Subscribed capital Capital reserves Retained earnings Other reserves stockholders stockholders interest Total
Figures on 1 January 2020 2,023 27,332 31 (1,670) 13,545 41,260 1,068 42,328
Share option scheme 4.3.; 8.1.1. 28 1,336 0 0 0 1,364 0 1,364
Allocation based on IAS 19 2.11.1.; 4.2.8. 0 0 0 (59) 0 (59) 0 (59)
Allocation based on IAS 21 1.5. 0 0 0 (804) 0 (804) 0 (804)
Distribution of profits to non-controlling
interests		 0 0 0 0 0 0 (398) (398)
Consolidated surplus for the period 5. 0 0 0 0 6,210 6,210 55 6,266
Figures on 31 December 2020 2,051 28,667 31 (2,534) 19,755 47,971 726 48,696
Share option scheme 4.3.; 8.1.1. 27 2,315 0 0 0 2,342 0 2,342
Convertible bond 180 18,320 0 0 0 18,500 0 18,500
Allocation based on IAS 19 2.11.1.; 4.2.8. 0 0 0 789 0 789 0 789
Allocation based on IAS 21 1.5. 0 0 0 3 0 3 0
Distribution of profits to non-controlling
interests 0 0 0 0 0 0 0
Consolidated surplus for the period 5. 0 0 0 0 13,157 13,157 141 13,298
Figures on 31 December 2021 2,258 49,302 31 (1,742) 32,912 82,761 867 83,628

Consolidated Cash Flow Statement

T.17 Cash flows from operating business

T.17 Cash flows from operating business T.18 Cash flows from investment and financing activities, loans and cash and cash equivalents
EUR K Notes on the Consolidated
Accounts No.		 FY 2021 FY 2020 EUR K Notes on the Consolidated
Accounts No.		 FY 2021 FY 2020
Cash flows from operating business Cash flow from operating business 23,218 17,714
Surplus for period 13,298 6,266 Cash flow from investment activities
Share option scheme (non-cash expenditure) 384 389 Payments for property, plant and equipment and non-current
assets		 (2,517) (1,850)
Income taxes affecting results 5.8. 3,156 2,824 Proceeds from disposals of fixed assets 87
Interest expenditure affecting results 1,279 1,637 Payments for software development costs 3.4. — (831)
Interest income/expenses affecting results (575) (192) Proceeds from the sale of subsidiaries 4,544
Profit/ loss from the sale or disposal of property, plant and
equipment		 (87) (23) Disbursement as part of a company acquisition 171 (357)
Reversals of deferred public sector subsidies (40) (49) Interest payments received 139
Write-downs recognised for receivables
(including losses from receivables)		 121 1,715 Net inflow/outflow of cash and cash equivalents from
investment activities		 2,425 (2,973)
Write-ups recognised for receivables (92) (564) Cash flow from financing activities
Impact on earnings from deconsolidation (3,458) — Distribution to non-controlling interests — (398)
Depreciation and amortisation 4.2. 9,484 8,543 Taking out equity 4.3. 20,457
Net profits from financial tools assessed at their fair value 66 77 Taking out loans —
Other non-cash revenues and expenditure (1,127) (47) Interest paid (755) (868)
Cash flow from operating business before the change in Repayment of loans (1,541) (8,209)
working capital 22,408 20,575 Issue of convertible bond 2.3. (2,672) (2,786)
Changes in net current assets Net inflow/outflow of cash and cash equivalents from
Changes in trade accounts receivable and other receivables (2,469) (157) financing activities 15,490 (11,286)
Changes in inventories 106 247 Net cash inflow 41,134 3,454
Changes in trade accounts payable and other liabilities 1,906 (705)
Changes in initial payments received 2,037 43 Cash at the beginning of the financial year 5,696 2,291
Changes in provisions
Income taxes paid		 138
(908)		 (671)
(1,618)		 Cash at the end of the financial year 46,884 5,696
Cash flow from operating business 23,218 17,714 Impact of changes in exchange rates on cash 54
T.19 Summary of cash and cash equivalents
Notes on the Consolidated
EUR K Accounts No. FY 2021 FY 2020
Cash and cash equivalents 46,945 9,425
Utilisation of current account credit / credit
card and exchange rate effects		 4.1.3. (61) (3,729)

T.18 Cash flows from investment and financing activities, loans and cash and cash equivalents

EUR K Notes on the Consolidated
Accounts No.		 FY 2021 FY 2020
Cash flow from operating business 23,218 17,714
Cash flow from investment activities
Payments for property, plant and equipment and non-current
assets		 (2,517) (1,850)
Proceeds from disposals of fixed assets 87 23
Payments for software development costs 3.4. — (831)
Proceeds from the sale of subsidiaries 4,544 —
Disbursement as part of a company acquisition 171 (357)
Interest payments received 139 41
Net inflow/outflow of cash and cash equivalents from
investment activities		 2,425 (2,973)
Cash flow from financing activities
Distribution to non-controlling interests — (398)
Taking out equity 4.3. 20,457 974
Taking out loans — —
Interest paid (755) (868)
Repayment of loans (1,541) (8,209)
Issue of convertible bond 2.3. (2,672) (2,786)
Net inflow/outflow of cash and cash equivalents from
financing activities		 15,490 (11,286)
Net cash inflow 41,134 3,454
Cash at the beginning of the financial year 5,696 2,291
Cash at the end of the financial year 46,884 5,696
Impact of changes in exchange rates on cash 54 (49)

T.19 Summary of cash and cash equivalents

Notes on the Consolidated
Accounts No.		 FY 2021 FY 2020
46,945 9,425
4.1.3. (61) (3,729)
46,884 5,696

Notes on the Consolidated Accounts

for the 2021 financial year

1. Principles of Reporting

1.1. General information

GK Software SE is a European public limited company based in Schöneck, Germany. The address of the registered headquarters and head office for business operations is Waldstrasse 7, 08261 Schöneck.

GK Software SE is registered in the Commercial Register at Chemnitz Local Court under reference number HRB 31501.

The promised change in legal form for GK Software from a public limited company (AG) to a European share company (Societas Europaea/SE) was formally completed through the entry in the Commercial Register on 19 January 2018. The annual shareholders' meeting had adopted this change on 22 June 2017 in line with a draft resolution suggested by the Management Board and the Supervisory Board.

The Group's business involves developing, manufacturing, selling and trading software and hardware for POS solutions.

1.2. Compliance with IFRS

The consolidated accounts for GK Software on 31 December 2021 were prepared in line with the accounting standards of the International Accounting Standards Board (IASB) – the International Financial Reporting Standards (IFRS) – to the extent that these have been adopted by the European Union, and the provisions to be applied in line with Section 315e(1) HGB [German Commercial Code]. The Company's consolidated accounts were also prepared, taking into account the Interpretations (IFRIC, SIC) of the International Financial Reporting Standards Interpretations Committee (IFRS IC). 73 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

The reporting procedures for the 2021 financial year took place exclusively in line with the standards and interpretations that have to be applied and they provide a picture of the Group's assets, financial and earnings situation, which matches the actual circumstances.

The following accounting standards and interpretations were obligatory for the first time for the 2021 financial year:

T.20 Newly applied IFRS standards

IFRS Amendment Amendment
for the financial
year from
IFRS 9, IFRS 7,
IAS 39, IFRS 16,		 Amendments to IFRS 9, IFRS 7, IAS 39,
IFRS 16 and IFRS 4: Reform of reference
IFRS 4 interest rates (phase 2) 1.1.2021
IFRS 4 Amendments to IFRS 4 1.1.2021
IFRS 16 Amendments to IFRS 16: COVID-19-
related rental concessions 1.1.2021

The changes listed above had no effect on the amounts entered for earlier periods, nor did they have any significant influence on the current period nor are they likely to have any influence on future periods.

The International Accounting Standards Board (IASB) has also issued the following standards, interpretations and amendments to existing standards; it is not yet compulsory to apply these on 31 December 2021, nor has their adoption into European law yet been fully completed by the European Union. These standards have not been used in advance and no premature usage is planned in future either. The Group believes that the effects of these new rules on the current or future reporting periods or on foreseeable future transactions will not be significant.

T.21 IFRS standards not applied

IFRS Amendment Amendment for
the financial year
from
Annual
improvements in
IFRS 3, IFRS 16,
IFRS 37(2018-2020)		 Improvement in IFRS 3, IAS 16,
IAS 37		 1.1.2022
Annual IFRS
improvements
(2018–2020)		 Improvements to IFRS 9, IFRS 16,
IFRS 1, IFRS 41		 1.1.2022
IAS 1 Amendment to IAS 1: Classification
of liabilities as current or non
current		 1.1.2023
IAS 8 Amendments to IAS 8: Definition of
assessment uncertainties		 1.1.2023
IFRS 17 Insurance Contracts 1.1.2023

1.3. Consolidated companies and consolidation principles

1.3.1. Consolidated companies

T.22 Subsidiaries of GK Software SE

Notes on the Consolidated Accounts
T.21 IFRS standards not applied With the exception of the company-owned kindergarten
the financial year
IAS 37
Improvements to IFRS 9, IFRS 16,
IFRS 1, IFRS 41
Amendment to IAS 1: Classification
of liabilities as current or non
assessment uncertainties 1.1.2023
Insurance Contracts 1.1.2023 company does not engage in any business operations.
Switzerland 100.0 350 74
DF Deutsche Fiskal GmbH Berlin 100.0 (122) 57 The company's own kindergarten, PIXEL gUG (limited
Tannenhaus UG Schöneck 100.0 (1,513) (284)
GK Software USA Inc. Raleigh/USA 100.0 2,035 1,008
GK Software Africa (Pty) Ltd Bryanston /
South Africa Bryanston / South Africa		 100.0 2,858 1,334
TOV Eurosoftware-UA Lviv/Ukraine 100.0 313 64
prudsys AG Chemnitz 80.12 3,029 1,034
liability) Schöneck/Vogtland 100.0 1 0
subsidiaries included are controlled by GK Software
follows the maturity of the assets and debts. Assets and 1
Equity on 31 December 2021, converted at exchange rates that applied on the
Amendment
Improvement in IFRS 3, IAS 16,
current
Amendments to IAS 8: Definition of		 Amendment for
from
1.1.2022
1.1.2022
1.1.2023
The consolidated accounts have been presented in
euros. If not indicated otherwise, all the amounts are
specified in EUR K. Normal commercial practices of
rounding figures up or down have been used. As a result,
there may be differences caused by rounding.
The financial year for GK Software SE and all the
subsidiaries included in the consolidated accounts
corresponds to the calendar year. The consolidated
accounts are prepared on the basis of the standard
balance sheet and assessment methods used within the
Group. The profit and loss statement has been prepared
using the total cost method. The balance sheet structure		 principles
firms.
T.22 Subsidiaries of GK Software SE
Name and headquarters of a subsidiary
Eurosoftware s.r.o. Plzen/Czech Republic
Storeweaver GmbH Dübendorf/
OOO GK Software RUS Moscow/Russian
Federation
AWEK GmbH Hamburg
R7MA Beteiligungs-GmbH Schöneck
retail7 GmbH Berlin
PIXEL Kindertagesstätte gUG (limited		 1.3.1. Consolidated companies
Capital
share
%
100.0
100.0
100.0
100.0
100.0		 Equity1
EUR K
4,742
145
1,666
21
152		 1.3. Consolidated companies and consolidation
The consolidated companies not only include the parent
company, but also 7 German companies and 6 foreign
Annual
results2
EUR K
1,384
23
(7)
(2)
124		 PIXEL gUG (limited liability), all of the above-mentioned
companies are fully consolidated in these consolidated
accounts. Tannenhaus UG will be included in the
consolidated companies at 6 months. AWEK microdata
GmbH was deconsolidated at the time of the sale on 21
May 2021. The result of the deconsolidation at the time
of the final consolidation amounted to EUR 3,458,000.
GK Software SE also has a 50 percent holding in Unified
Experience UG (limited liability), Lindlar. The entry
is made under "Non-current financial assets". The
liability), was part of the scope of consolidation, but also
entered under the non-current financial assets and not
fully consolidated because of its negligible effect on the
consolidated accounts.
R7MA Beteiligungs- GmbH was founded back on 20
January 2020 as a shelf company. It was then entered
in the commercial register with the commencement of
business operations on 21 April 2021.
The consolidated accounts include the accounts of the
parent company and the companies that it controls. The

GK Software SE can influence the amount of profits at the subsidiaries because of its power of control and is subject to fluctuating profits from its holdings.

A subsidiary is fully consolidated in the consolidated financial statements from the time at which the Company gains control of the subsidiary to the time at which the Company's control ends or until its liquidation, unless it is only of minor importance for providing a view that represents the actual circumstances in terms of the assets, financial and earnings situation.

1.3.2. Accruals through corporate mergers

Capital consolidation for acquired companies takes place at the time of acquisition according to the purchase method. The acquired assets and liabilities are recognised at their fair value. Any remaining positive balance from the purchase price and determined fair values is capitalised as goodwill. A negative balance is immediately entered to affect the results. Ancillary purchase costs are entered as expenditure.

During following consolidation, the hidden reserves and hidden liabilities disclosed during initial consolidation are continued, amortised or cancelled in line with the way that the corresponding assets are treated. The goodwill is checked at least once a year to determine its intrinsic value during the following periods and if any impairment of value has taken place, it is amortised to the lower achievable figure outside the normal schedule. Expenditure and earnings as well as accounts receivable and debits between consolidated companies are eliminated.

1.4. Segment reporting

The past fiscal year, the switch from the secondary to the primary reporting structure was completed. Whereas previously the annual report was subdivided by business segments, in future the reporting will be divided into regions and responsibilities of the sales regions according to the decision-making basis of the Management Board. This is because the Company decided to discontinue the business operations of the IT segment in 2022, whereafter the segment reporting would have only one remaining category and other business activities, and this would not constitute any further information content. At the end of the day, the portfolio now only includes cloud solutions that are suitable for software-as-a-service offerings. 75 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

The "property held as financial investments" is shown as "Other business activities" and does not represent an independent segment needing to be reported. No special reporting was passed on to the decision committee in this matter. For information on rental and leasing income, we refer you to Section 4.2.3. "Property held as a financial investment".

The key components needing to be checked include the segment sales with third parties and the total operating performance of a segment and its earning power, which is determined on the basis of earnings before income taxes (EBIT).

The Group sells its products in the CLOUD4RETAIL1 segment in the form of licences and provides introductory and adjustment services in this regard as well as services related to the maintenance of these products. In terms of regions, a distinction is made between the "Americas" (North, Central and South America) and "EMEA" (Europe, Middle East, Africa and Asia). The Group also sells hardware for store IT solutions to a limited degree, but this is manufactured by third parties. The subdivision of turnover according to fields of work is part of the reporting process.

The distribution of turnover according to products and business activity areas can be summarised as follows:

1 Until the 2019 annual report, this segment was known as GK/Retail. It was renamed CLOUD4RETAIL in the course of the reorganisation of the cloud solution.

T.23 Turnover according to segments

Consolidated Accounts
Notes on the Consolidated Accounts
T.23 Turnover according to segments EMEA Americas Other business
activities		 Consolidations Group
EUR K FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020
Sales with third parties
Licences and software		 108,114
46,473		 96,792
63,195		 22,092
13,938		 20,767
12,769		 640
—		 —
—		 —
—		 —
—		 130,847
60,411		 117,559
75,964
Licence Platform 9,212 8,081 2,292 2,313 — — — — 11,504 10,394
Licence Platform Extension 7,546 19,218 374 4,219 — — — — 7,920 23,437
Licence Platform from subscription
agreements 10,826 — 418 — — — — — 11,244
Smart Extension 18,889 35,896 10,853 6,237 — — — — 29,743 42,133
Maintenance 19,351 18,446 3,544 4,639 — — — — 22,895 23,085
Software Maintenance 19,351 18,446 3,544 4,639 — — — — 22,895 23,085
Retail Consulting 39,402 12,994 4,554 2,867 — — — — 43,956 15,861
Retail Consulting 27,877 8,626 4,411 1,894 — — — — 32,288 10,520
(Cloud) Operations Support 11,526 4,368 142 973 — — — — 11,668 5,341
Others 2,888 2,157 57 492 640 — — 3,586 2,649
Turnover with other segments 2,568 2,684 — 511 149 — 2,717 3,195 —
Depreciations
of which impairment in accordance with IAS 36		 7,688
1,642		 6,862
—		 1,051
—		 1,101
—		 744
376		 580
312		 —
—		 — 9,484
2,018		 8,543
312
Segment EBIT 14,718 11,085 2,862 (514) (261) (44) (14) 7 17,305 10,534
Assets 128,428 96,443 22,801 20,509 8,170 6,770 (15,218) (13,046) 144,181 110,676
thereof long term1 33,242 37,487 12,315 12,341 7,693 6,765 (74) (74) 53,176 56,520
Debts 45,766 48,503 20,247 19,678 9,683 6,770 (15,144) (12,972) 60,553 61,979
Cash and cash equivalents 42,430 6,572 4,508 2,854 7 — — — 46,945 9,425

The accounting principles for the figures specified in the segment information correspond to those that are used for the consolidated accounts.

The consolidation of the assets and liabilities largely complies with the accounts receivable and payable arising from internal Group funding.

A differentiation of non-current assets by German (EUR 39,252 K) and non-German (EUR 13,923 K).

Work based on software servicing contracts, which imitate the normal segment revenues in their outside markets, is charged between the segments. Administrative work is accounted for on the basis of general service contracts. The amount crosscharged corresponds to the original costs of providing the administrative work based on our experience of estimating the time involved.

Revenue amounting to EUR 62,848 K (previous year: EUR 58,033 K) was generated with customers that are not part of the Group and have their decision-making headquarters located abroad (not in Germany). On the other hand, a revenue of EUR 68,000 K (previous year: EUR 38,759 K) was recorded with customers who have their decision-making headquarters. Significant revenue with third countries amounted to EUR 48,202 K (previous year: EUR 41,603 K)

Revenue with one customer that accounts for more than 10 percent of turnover amounted to EUR 12,259 K in the previous year (10.4 percent). In 2021, the proportion of turnover was less than 10 percent.

1.5. Currency conversions

When preparing the local accounts of each individual consolidated company, any business transactions, which are made in other currencies than the Group's functional currency (foreign currencies), were converted using the exchange rates valid on the day of the transaction. Monetary items in a foreign currency are converted using the valid exchange rate on the reporting date for the accounts. The currency conversion differences were entered to affect the results. Non-monetary items were converted using the exchange rate at the time when they were first entered on the balance sheet. 77 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

The subsidiaries' functional currency is the local currency in the country where the subsidiary is based. As the subsidiaries perform their business independently from a financial, economic and organisational point of view, the functional currency is identical with the national currency in the firm's country. The functional currency for GK Software SE is the euro.

Converting the accounts of subsidiaries located outside the euro zone, which have been prepared in a foreign currency, takes place according to the modified exchange rate method on the reporting date. The assets and liabilities are converted using the exchange rate on the reporting date, but the revenues and expenditure by means of the average annual exchange rate. The conversion difference, which results from this currency conversion, is entered so as not to affect the results and is shown under "Other reserves" as a separate item in equity (as accumulated exchange rate differences according to IAS 21). At the time when a subsidiary is removed from the consolidated companies, the conversion differences are reversed to affect the results.

2. Accounting Methods

The consolidated accounts have been prepared on the basis of historical purchase and production costs:

wherever IFRS prescribes different assessment concepts, they are used. Special reference is made to them in the following statements on the accounting methods.

Historical purchasing or production costs are generally based on the fair value of the equivalent paid in exchange for the asset. The fair value also represents an upper value limit for any valuation adjustments needing to be made, if regular intrinsic value tests have to be made or they are made because of the points mentioned above.

The fair value is the price, which would be acquired for the sale of an asset between the market participants or paid for the transfer of a debt in an orderly business transaction on the assessment date. This is valid, regardless of whether the price was directly observable or was estimated using an assessment method.

We would refer you to Section 3 regarding the assessment uncertainties when determining fair value. Significant Assessment Uncertainties and Discretionary Decisions

The main balance sheet and assessment principles are explained below in relation to individual items in the financial statements.

2.1. Property, plant and equipment

Property, plant and equipment is assessed at its historical purchase costs or production costs, reduced by the accumulated scheduled depreciation and accumulated impairment in value, taking into account any possible appreciation in value (if there was any previous impairment in value), These assets are depreciated in a linear and pro rata fashion in line with their economic serviceable life.

The depreciation on buildings is made in a linear fashion over a period of use of 15 – 40 years. Movable fixed assets depreciate in a linear fashion; the period of use varies between three and fourteen years.

The estimated periods of use, the carrying amounts and the depreciation methods are checked on each balance sheet date and, if necessary, the effect of possible changes to the means of assessment is entered prospectively. GK Software also assesses on each reporting date whether there are any indications suggesting that the value of an asset could be impaired.

The "Tannenhaus" hotel complex was reclassified under tangible assets. Tannenhaus UG has been

included in the consolidated companies since 1.7.2021. The acquisition costs amount to EUR 6,998 K and amortisation to EUR 858 K.

Fully depreciated property, plant and equipment assets are shown with historical purchasing and production costs and accumulated depreciation until the assets in question are removed from operation. In cases of disposals of assets, the acquisition and manufacturing costs as well as the cumulated depreciation are written off. Earnings from the disposal of assets (proceeds from disposal less residual carrying amounts are reported in the profit-and-loss statement under "Other revenues" or "Other expenditure" as applicable. 78 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

On the basis of the intrinsic-value test, write-downs were made for land (EUR 82 K) and buildings (EUR 207 K).

2.2. Property held as a financial investment

Property held as a financial investment was entered on the balance sheet at ongoing purchase costs according to the purchase cost method, in a manner similar to tangible fixed assets.

Property held as financial investments was entered on the balance sheet according to the rules for the purchase cost model. For the fiscal year, write-downs in the amount of EUR 376 K (previous year: EUR 312 K) were required.

GK Software generated lease revenue from the property taken into account and for this reason had to enter this as "property held as a financial investment" according to IAS 40. Income of EUR 207 K from operating leasing was collected for the fiscal year.

2.3. Leases

2.3.1. GK as the lessee

The Group rents various office buildings and premises as well as vehicles to a significant extent. The rental contracts normally involve set periods of three to five years, but may also contain extension options.

IFRS 16 replaces the previous differentiation of operating and financial leases by a unified lessee balancing model, according to which lessees are obliged to report all leases on the balance sheet in the form of usage rights and a corresponding leasing liability. Assets and debts from leases are entered at their cash value on the first occasion when they are used. Leasing payments are subject to interest at the implicit interest rate that forms the basis for the lease, if this can be determined. Otherwise, discounting takes place using the lessee's incremental borrowing rate. An incremental average borrowing rate of 1.20% was used to discount leasing payments for rented office premises and a rate of 2.20% for leased vehicles. 79 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

The weighted average incremental borrowing rate, which the lessee would have to pay if it had to provide funds, in order to acquire an asset in a comparable economic setting with a comparable value for a comparable term with comparable security in comparable conditions. In order to determine this interest rate, GK Software had relevant quotations sent by banks.

The leasing liabilities include the cash value of the lease payments, exclusively as set payments.

When valuing the leasing liability, leasing payments must also be considered to ensure that any use of extension options is sufficiently certain.

The usage rights are amortised in a linear fashion along the shorter of the two periods consisting of the usage time and term of the underlying leasing contract. If exercising a purchase option is sufficiently certain from the Group's point of view, the amortisation takes place along the usage period of the underlying asset.

2.3.2. GK as the lessor

Income from operating leases for the leased properties that are held as financial investments (see Section 2.2. "Real estate held as a financial investment") are recorded in a linear fashion over the term of the leasing contract in accordance with the contractually agreed payment. The expenditure attributed to these buildings

was entered in the profit and loss statement during the period when it was incurred.

2.4. Intangible assets

2.4.1. Intangible assets acquired in return for payment

Intangible assets that have been acquired in return for payment are entered with their ongoing purchasing costs, i.e., minus any accumulated amortisation and impairment of value. The scheduled amortisation expenditure is entered as expenditure in a linear fashion to cover the expected useful serviceable life of between three and seven years.

2.4.2. Capitalised development costs

Costs for research activities are entered as expenditure during the period, in which they are incurred.

An intangible asset that has been developed in-house, which is the result of development work (or the development phase of an internal project), is capitalised if the following evidence can be provided accumulatively:

  • – The technical feasibility of the completion of the intangible asset exists in order to make it available for use or for sale
  • – The company intends to complete the intangible asset and use it or sell it
  • – There is a capability for using or selling the intangible asset
  • – The method by which the intangible asset is expected to achieve some economic benefits in future is known. GK Software may be able to provide evidence of the existence of a market for the intangible asset products or the intangible asset in itself or, if it is to be used internally, the usage of the intangible asset.
  • – Adequate technical, financial or other resources are available to complete the development and be able to use or sell the intangible asset and
  • – It is possible to reliably determine the expenditure that can be allocated within the framework of developing the intangible asset.

The amount used to capitalise this kind of intangible asset, which has been developed in-house, is the total amount of expenditure that was incurred from the day when the intangible asset cumulatively met the conditions outlined above for the first time. The costs directly attributable to a software product cover the personnel costs for the employees involved in the development work and appropriate parts of the relevant overheads. 80 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

If the capitalisation conditions are not met, the development costs are entered to effect net income in the period, in which they are incurred. Any development costs already entered as expenditure are not capitalised during the following period.

Intangible assets that have been created in-house are entered with their ongoing production costs, i.e., minus any accumulated amortisation and impairment of value. Scheduled amortisation starts in the year of capitalisation with the pro rata amount and it uses the linear method over a period of five years as a matter of principle.

2.4.3. Intangible assets acquired as part of a corporate merger

Intangible assets, which have been acquired as part of a company merger, are entered separately from the goodwill and are assessed with their fair value at the time of the acquisition.

During the following periods, intangible assets, which were acquired as part of a company merger, are assessed in the same way as individually acquired intangible assets using their procurement costs minus any accumulated amortisation and any accumulated write-downs.

Customer base

Customer bases were identified and entered in each case in association with the acquisition of AWEK GmbH, DBS, and prudsys AG.

The amortisation is entered according to schedule as expenditure in a linear fashion for the expected period of use.

We normally estimated the period of use of existing customer relationships at between 7 and 10 years. The estimate is derived from the average period of use of the solutions sold by the Group – i.e., 7–15 years, the introductory expenditure for these systems and their flexible extension, but considerable expertise is required to use them. The high reputation of the unit taken over

also allows customer relations to be serviced for a longer period, particularly as the employees permanently work with the requests for expansion and changes from these existing customers.

Technology

The acquisition of prudsys AG also involved the purchase of technology, which primarily consists of the in-house developed software. This has been assigned to stocks of industrial property rights and similar rights and is subject to amortisation related to the period of use.

2.5. Cash and cash equivalents

Cash and cash equivalents comprise cash and deposits with financial institutions that can be withdrawn at short notice if they have a maturity of up to three months from the date of acquisition and are repayable within 24 hours upon notice without loss of interest.

2.6. Stocks

The following assets are entered as assets, if they are:

  • – set to be used as ancillary or working materials or purchased goods for consumption when producing something or providing a service,
  • – being produced for this kind of sale or

– kept for sale in normal business procedures. The assets include stock at the "Tannenhaus" hotel complex.

The inventories are assessed based on their purchase or production costs or a lower net sales value. The purchase or production costs contain all the costs of purchase, processing and workmanship and any other costs that occur in order to transport the inventories to their current location in their current state (IAS 2.10). As a result, the inventories embrace both the individual costs and the attributable overheads (mainly depreciation). 81 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

2.7. Equity

The subscribed capital includes the nominal number of ordinary shares issued and made out to the holder (without any nominal amount with a proportional amount of EUR 1 each in the share capital). The firm has not issued any other types of shares.

Any additional costs incurred, which are directly attributable to the issue of new shares or share options, are entered on the balance sheet under equity as a deduction in the issue proceeds, minus taxes.

Any buy-backs of equity instruments are directly deducted from the equity capital. No purchases or sales, issues or withdrawals of equity instruments are entered in the profit and loss statement.

The capital reserves contain the expenditure arising from share options from previous years, the equity share of the convertible bond that was issued in 2017 and the amounts generated beyond the nominal value when issuing shares, minus the transaction costs for capital increases.

The revenue reserves item not only contains the adjustment to the statutory reserve funds, but also differences in amounts due to the initial switch to IFRS.

Currency exchange differences arising from the conversion of foreign subsidiaries and the actuarial profits/losses from defined benefit schemes are entered under "Other reserves".

2.8. Financial liabilities and financial assets

Financial liabilities and financial assets are entered if a Group company becomes a contract party to a financial instrument.

The classification and assessment of the financial liabilities and assets is determined using the business model already used and the structure of the cash flows. A financial liability/financial asset is classified as an "ongoing purchase cost" the first time when it is used, as "fair value with a neutral entry on changes in value under other earnings" or as "fair value with an entry of changes in value on the profit and loss statement".

GK Software did not hold any financial instruments on the balance sheet reporting date, which are classified at their fair value according to IFRS 9 with a neutral entry under changes in value in "Other income".

Financial assets valued as ongoing purchase costs, trade accounts receivable, cash and cash equivalents and other assets all existed at GK Software at this time. Liabilities towards banks existed as interest-bearing bank loans, trade accounts payable, leasing liabilities

and other current liabilities all existed as ongoing purchase costs. The convertible bond that was issued was assessed at ongoing purchase costs according to the effective interest method. This is a method for calculating the ongoing purchase costs of financial instruments and allocating the interest expenditure/ earnings to the relevant periods. The effective interest method is the rate of interest, with which the estimated future outgoing/incoming payments – including all the fees and paid or received charges, which are an integral part of the effective interest rate, transactions and premiums or discounts – are discounted from the net carrying amount of their initial entry over the expected term of the financial instrument or over a shorter period. 82 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

Financial assets, with the exception of financial assets assessed at their fair value and affecting the results, are checked to see whether they have any possible writedown indications on the balance sheet date. Non-current due dates (longer than 1 year) were taken into account using normal market discount rates.

Consideration is given to any recognisable default risks by making an appropriate devaluation. We would refer you to Section 3.1 'Impairment of value for assets'.

Regarding contract-generated current asset, please refer to the notes in Section 3.6. "Intrinsic value of contract assets".

The Group removes a financial liabilities and financial assets from the accounts if the relevant obligation has been settled, cancelled or has lapsed, or the inflow of cash and cash equivalents meets the account receivable, or cannot be recovered.

2.9. Loan capital

General and specific loan capital costs, which accrue directly in conjunction with the acquisition, construction or production of a qualified asset, are capitalised during the period that is necessary to make the asset and prepare for its intended usage or sale. Qualified assets are assets, for which a considerable period of necessary until they have been made for their intended usage or sale.

Earnings generated from the temporary formation of specially received loan capital until its expenditure for qualified assets are deducted from the loan capital costs that could be capitalised.

No loan capital costs were capitalised in 2021. The noncapitalised loan capital costs were entered as interest expenditure during the period, in which they were incurred.

2.10. Public sector subsidies

Public sector subsidies are not included in the figures until appropriate collateral exists for them that the Group will meet the conditions attached to the subsidies and the subsidies are also actually granted.

Public sector subsidies must be entered as expenditure according to schedule in the Group's profit and loss statement, particularly during the course of the periods when the Group values the corresponding expenditure, which the public sector subsidies are supposed to compensate for. Public sector subsidies, the most important condition for which is the sale, construction or other kind of purchase of non-current assets, are entered on the balance sheet as accruals and deferrals and are entered on a systematic and reasonable basis so that they affect the results over the term of the relevant asset.

Public sector subsidies, which are granted in order to compensate expenditure or losses that have already been incurred or for the purpose of providing immediate financial support to the Group, for which there will not be any corresponding costs in the future, are entered to affect the net income during the period in which the claim for their entitlement arose.

2.11. Provisions

Provisions are formed if the Group has a current obligation (of a legal or factual nature) from a past event and it is likely that the meeting of the obligation is related to an outflow of resources and a reliable estimate of the amount of the provision is possible.

On the other hand, no provisions are made for items that are in principle sufficiently secure and have only insignificant residual uncertainties due to the amount or timing. These are reported under current liabilities.

Largely secure liabilities of GK Software SE against services already provided by employees in the past, such as employees' untaken leave or working-time credits, are presented as deferred and likewise reported under current liabilities.

The assessed amount of the provision is the best estimated value, which is the result of the remuneration required to settle the current obligation on the reporting date of the accounts. Inherent risks in the obligation and uncertainties must be taken into consideration here. If a provision is assessed on the basis of the flows of funds estimated to meet the obligation, these flows of funds must be discounted if the interest effect plays a major role.

If it can be assumed that parts of or the complete economic benefit required to meet the provision will be repaid by an outside third party, this claim shall be capitalised as an asset if the repayment is as good as certain and its amount can be reliably estimated.

2.11.1. Provisions for pensions

The costs for providing benefits in the case of defined benefit pension plans are determined using the projected unit credit method, where an actuarial assessment is conducted on each balance sheet date. Any new assessments, consisting of actuarial gains and losses, changes, which are the result of the use of the upper asset threshold and the revenues from the plan assets (without any interest on the net debt), are entered directly under "Other income" and directly as "Other reserves" in equity (accumulated actuarial gains and losses in accordance with IAS 19 "Employee benefits"). They are no longer reclassified in the profit and loss statement. Any past service costs are entered as expenditure when the change of plan comes into effect. 83 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

The net interest is the result of multiplying the discount rate by the net debt (pension obligation minus the plan assets) or with the net asset value, which in turn arises at the start of the financial year, if the plan assets exceed the pension obligation. The defined benefit costs contain the following elements:

– Past service costs (including current service costs, past service costs to be calculated subsequently and

any gains or losses from the change to or reduction of the plan),

  • – Net interest expenditure or revenues on the net debt or the net asset value,
  • – A new assessment of the net debt or the net asset value.

The Group reports the first two elements in the profit and loss statement under "Personnel expenditure" and "Financial expenditure" or "Financial revenues". Any gains or losses from plan reductions are entered on the balance sheet as "Past service costs" to be calculated subsequently.

The defined benefit obligation entered in the consolidated accounts represents the current shortfall or excess in cover for the Group's defined benefit pension plans. Any excess cover, which accrues as a result of this calculation, is restricted to the cash value of any future economic benefit, which is available in the form of repayments from the plans or reduced future contributions to the plans.

Payments for defined benefit pension plans are entered as expenditure if the employees have performed the work, which entitles them to the contributions.

2.11.2. Onerous contracts

Current obligations, which arise in conjunction with onerous contracts, are entered as a provision. The existence of an onerous contract is assumed if the

Group is a contract partner in an agreement, from which there is an expectation that the unavoidable costs of meeting the agreement will exceed the economic benefits accruing from this contract.

2.11.3. Warranties

Provisions for the expected expenditure arising from warranty obligations according to national purchase contract law shall be assessed at the sale time for the products concerned according to the best estimate of management with regard to the necessary expenditure to meet the Group's obligation.

2.11.4. Provisions in the financial sector

Provisions in the financial sector are entered as soon as a payment obligation with adequate arises from the underlying event and the amount can already be reliably assessed.

2.12. Income taxes

The expenditure/earnings on income tax represent the account balance for current tax expenditure and deferred taxes.

Current or deferred taxes are entered as expenditure or earnings in the Group's profit and loss statement, unless they relate to items that were directly entered under "Other income" or under "Equity". In this case,

the current or deferred tax is also entered under "Other income" or directly under "Equity". If current or deferred taxes result from the first time that a corporate merger is entered on the balance sheet, the tax effects shall be included in the balance sheet entries of the corporate merger.

2.12.1. Current taxes

The current tax expenditure is determined on the basis of the income that is subject to tax during the year. The income, on which tax is to be paid, is different from the consolidated net income from the Group profit and loss statement, as it excludes expenditure and revenues that will not attract tax in later years or at any time or can be offset against tax. The Group's liability for current taxes will be calculated on the basis of current tax rates that apply or those that will apply at the expected time of taxation from the point of view of the balance sheet date. 84 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

2.12.2. Deferred taxes

Deferred taxes are entered to cover the temporary differences between the carrying amount of assets and liabilities in the consolidated accounts and the relevant tax valuation rates as part of calculating the taxable income and they are entered on the balance sheet according to the balance sheet liability method (balance sheet-oriented method). Deferred tax debts are entered on the balance sheet for all temporary differences in taxes and deferred claims for taxes are entered if it is

probable that taxable profits will be available, for which these temporary differences can be used to offset tax payments. These assets and liabilities are not entered if the temporary differences result from goodwill or from the initial entry of other assets and liabilities (except in the case of company mergers), which result from events that do not affect the taxable income or the consolidated net income.

Deferred tax liabilities are formed for temporary differences in tax payments, which arise from shareholdings in subsidiaries, unless the Group can manage the reversal of the temporary differences and it is probable that the temporary difference will not reverse within the foreseeable future.

The carrying amount of the deferred tax claims is checked every year on the balance sheet date and is reduced, if it is no longer probable that sufficient taxable income will be available in order to realise the claim completely or in part. A deferred tax asset is entered for the amount of unused tax losses and unused tax credits, which have been carried forward, if it is probable that a future taxable profit will be available, which can be used against the tax losses and the unused tax credits not yet used. 85 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

Deferred tax claims and tax liabilities are determined on the basis of the expected tax rates (and tax laws), which will probably apply at the time when the debt has to be

paid or when the asset value is realised. The valuation of deferred tax claims and tax liabilities reflects the tax consequences, which would arise from the manner that the Group is expecting on the balance sheet date in order to settle the liability or realise the asset value.

Deferred tax claims and tax liabilities are balanced out if there is an enforceable right to offset current tax claims with current tax liabilities and if they are related to income taxes that are collected by the same tax office and if the Group intends to settle its current tax claims and tax liabilities on a net basis.

2.13. Revenue from contracts with customers

2.13.1. Recognising turnover

Turnover revenue is recognised if the power of disposition over definable goods and services passes to the customer, that is to say, if the customer has the ability to largely make use of the benefits arising from the transferred goods or services.

The condition for this is that a contract exists with enforceable rights and obligations and, among other things, the receipt of the counter-performance is probable – taking into consideration the customer's creditworthiness.

The turnover revenue corresponds to the transaction price, which is likely to attribute to GK Software.

If the period between the transfer of the goods or services and the payment time exceeds twelve months and significant benefits have resulted for the customer or for GK Software from the funding, the counterperformance is adjusted by the current value of the money.

If individual sales prices cannot be directly observed, GK Software assesses them appropriately.

Turnover revenue is recognised for each performance obligations, either at a particular time or over a particular period.

2.13.2. Revenue from licences

Turnover recognition takes place at the time the licence is transferred, i.e., at the time the licence is issued, if the promised licence grants the customer the right to use the intellectual property. This takes place at the time when a functioning software solution is handed over to a customer.

The payment of the transaction price is normally due within 30 days. In rare cases, postponed payments may be agreed, but they may not exceed 12 months. No significant funding component is therefore taken into consideration in the transaction price.

2.13.3. Earnings from SaaS contracts

For earnings from ongoing service provision (so-called "continuous obligations") by GK Software arising from software-as-a-service contracts with customers, the revenue is recognised on a pro-rata basis over the term of the subscription. The invoicing for this takes place annually, quarterly or monthly. In some cases, invoices are issued with advance payments (contractual liabilities 86 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

in accordance with IFRS 15). For example, in the case of an annual contract, 1/12 of the total transaction price is effectively recognised as revenue for each month. In any case, a period-appropriate deferral is guaranteed.

The payment period for services arising from SaaS contracts as well as for other invoices is generally 30 days.

2.13.4. Providing software services

The software service agreements contain both earnings from licence agreements, which are calculated according to time and the consumption of materials, and earnings from contracts, where an agreed item of work is due (fixed price contracts).

The turnover recognition always takes place at the time when the power of disposition passes to the customers. This is normally the time when the agreed service is handed over or when the agreed service is accepted by the customer (confirmation of the working hours provided or acceptance of the item of work).

If the contract contains a fixed hourly rate (calculation according to time and consumption of materials, turnover realised at a specific time), the amount of revenue was entered to reflect the claim that GK Software SE has arising from the service that has been provided. Invoices are generated every month and the payment in return is normally due for settlement 30 days after the receipt of the invoice.

In the case of fixed price contracts, the revenue is entered over a particularly period according to the percentage of completion method based on the actual work that has been performed at the end of the reporting period in relation to the work that needs to be provided overall. This takes place on the basis of the actual working hours in relation to the total number of expected hours.

Estimates about the revenue, costs or the progress made in the order are corrected if the circumstances change. Any increases or reductions in the estimated revenue or costs arising from this are entered under profits or losses in the period when the company managers learnt about the circumstances that provided the reason for the correction (cf. Section 3.6. "Intrinsic value of contract assets").

In the case of fixed price contracts, the customer pays a set amount according to a payment plan. If the services provided by GK Software exceed the payment amount, a contract-generated current asset is entered. If the payments are higher than the services provided, a contract liability is entered.

2.13.5. Revenue from maintenance work

Revenue from maintenance work is charged at the contractually agreed rates or the number of hours that have been agreed in the contract and any costs that have been directly incurred on a monthly basis. The flatrate amounts are either invoiced monthly or deferred for advance payments (contractual liabilities in accordance with IFRS 15) and are recognised monthly over the appropriate period.

Invoices are issued monthly and are normally due for settlement 30 days after the receipt of the invoice.

2.13.6. Contract assets, contract liabilities and trade accounts receivable

If one of the parties to the contract meets its contract obligations with customers, regardless of the relationship between the performance of the work by GK Software and the customer's payment, a contract asset, a contract liability or an account receivable is entered. Trade accounts receivable are entered if the claim for receipt of the counter-performance is no longer subject to any condition.

If the order costs related to an order and incurred by the reporting date plus published gains and minus published losses exceed the partial payments, the excess is entered as a manufacturing order with a credit balance due from the customer (contract asset). In the case of contracts in which the milestone invoices exceed the order costs incurred plus accrued gains and less recognised losses, the excess is entered as a manufacturing order with a debit balance (contract liabilities) in relation to the customer. 87 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

Amounts received before the work has been performed are entered as debts in the contract liabilities on the consolidated balance sheet.

With regard to the adjustments to valuations of contractgenerated current assets and receivables, please refer to the information in Appendix 3.1. "Impairment of value

for assets" and 4.1.10. "Further details on financial assets and financial liabilities".

be found in the following paragraphs in the notes on the accounts.

3.1. Impairment of value for assets

On each reporting date, the Group checks the carrying amounts for property, plant and equipment, property held as a financial investment, usage rights, and intangible assets in order to determine whether there are any indications of the need to write down these assets. If these indications can be recognised, the achievable value of the asset is assessed in order to determine the scope of any possible write-down expenditure.

The achievable amount is the higher amount arising from the fair value minus any sales costs and the value in use of an asset. The amount involving the fair value minus any sales costs describes what could have been generated by selling an asset in a transaction at market conditions between parties willing to reach agreement. When determining the value in use, the estimated future flows of cash are discounted by a normal market interest rate. If it is not possible to estimate the achievable amount for an individual asset, the assets are combined into cash-generating units.

If the estimated achievable amount of an asset (or a unit generating cash and cash equivalents) is less than the carrying amount, the carrying amount of the asset (or unit generating cash and cash equivalents) is reduced to

3. Significant Assessment Uncertainties and Discretionary Decisions

Assumptions have to be made to a certain degree when preparing the consolidated accounts and estimates are made, which have an effect on the amount and entry of the assets and liabilities on the balance sheet and the earnings and expenditure. The assumptions and estimations largely relate to an assessment of the intrinsic value of intangible assets (including goodwill), the standard definition of the economic serviceable life of property, plant and equipment and intangible assets, the valuation of inventories and accounts receivable related to the intrinsic value of capitalised deferred taxes and the balance sheet entries and assessment of provisions. The assumptions and estimations are based on premises, which in turn are founded on the level of awareness that is available at the current time. Particularly with regard to the expected future development of business, the circumstances, which exist at the time when the net income for the period is prepared, and a realistic assessment of the future development of the global and sector-based business environment form the basis of the estimations. The amounts that have been entered may deviate from the originally expected estimated values as a result of developments in these general conditions, which differ from the assumptions and lie beyond the sphere 88 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

of influence of management. If actual developments differ from those that are expected, the premises and, if necessary, the carrying amounts of the assets and liabilities that are affected are adjusted accordingly. At the time when the consolidated annual statements were prepared, the assumptions and estimations, on which they were based, were not subject to any major risks; so that it is assumed that no major adjustments of the carrying amounts of the assets and liabilities indicated on the balance sheet will be necessary in the following financial year from a current point of view. In consideration of the business model and customer structure of GK Software, this assessment continues to apply, even taking into account the effects of the coronavirus pandemic.

The following indicates the most important assumptions made about the future and the other major sources of estimation uncertainties on the balance sheet date. A major risk may arise as a result of these and mean that a major adjustment to the assets and liabilities recorded here becomes necessary within the next financial year.

The use of the Group's accounting methods is also subject to various discretionary decisions by management. Significant discretionary decisions are exercised when entering leases on the balance sheet and when impairing the value of financial assets. More detailed information about discretionary decisions can

the recoverable amount. The expenditure for the writedown is entered immediately in the accounts.

If the circumstances that led to the impairment of value disappear completely or partly, the carrying amount of the asset (or unit generating cash and cash equivalents) is increased to the latest estimate of the recoverable amount. The increase in the carrying amount is restricted to the value, which would have occurred if no write-down expenditure had been entered for the asset (unit generating cash and cash equivalents) in previous years. Any write-up is directly entered in the accounts to affect net income.

Consideration is given to any recognisable default risks in accounts receivable and other assets by making an appropriate devaluation. Individual value corrections are formed, if the incoming payment for individual accounts receivable items is in doubt. In the case of trade accounts receivable, which are not examined individually, value corrections are formed to a different extent, depending how old the account receivable is. When setting these percentage figures, GK Software takes into account its experience with collecting funds in the past and the current tendencies in the economy (cf. also Section 4.1.10. "Further details on financial assets and financial liabilities").

Cash and cash equivalents are also subject to the impairment requirements of IFRS 9; however, the

impairment loss identified was insignificant and was not recognised.

3.2. Intrinsic value of goodwill

The goodwill amounts are checked for their intrinsic value at least once a year or if there are specific reasons for impairment in their value. Checking the intrinsic value of goodwill amounts is conducted at the level of the units generating cash and cash equivalents, to which the goodwill figures are attributed.

The carrying amount of the unit generating cash and cash equivalents is compared with the achievable amount in the first step on the balance sheet reporting date. The achievable amount is defined as the higher amount of the usage value and (if it can be determined reliably) the sale value minus the selling costs. If this amount falls below the carrying amount of the unit, including the assigned goodwill, impairment expenditure for the goodwill is determined in a second step.

When determining the usage value, cash values of the estimated future incoming funds on the basis of a discount interest rate after tax (WACC) are calculated as the pre-tax WACC cannot be directly determined or observed. The pre-tax WACC is derived iteratively from the WACC after tax. The estimates take place within the planning horizon for Group planning for three years in detail and for the subsequent years 4 and 5

in the form of a trend projection and consideration of known specific individual circumstances. As the use of goodwill beyond planning year 5 appears possible and probable, the subsequent period is taken into account in the form of a perpetual annuity when determining the value. For this purpose, uniform growth rates oriented to inflation developments in the relevant currency areas are applied. Planned balance sheets and planned profit and loss statements are prepared for the individual unit generating the cash and cash equivalents and cash flow plans are derived from them.

The series of payments determined in this way are discounted with an interest rate that represents the weighted capital costs before income taxes. Capital market data from a group of comparable companies is used in order to determine the weighted capital costs. Key assumptions for determining the series of payments are the assumptions contained in the corporate planning for the development of turnover revenues and the necessary expenditure. These consist mainly of assumptions for the planned license revenues, product life cycles, growth rates and the target margin on the EBITDA for the revenue side. On the expense side, assumptions about personnel expenses and financing costs are priority applied. Because of the specific business model for the respective unit generating the cash and cash equivalents, specific parameters were used for this unit, which are based on the experience and the analysis of the actual development of the unit 89 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

generating the cash and cash equivalents in the past. The planning conventions always include planning the balance sheet and the profit and loss statement and, derived from these, planning for the expected flows of cash and cash equivalents.

Any write-down expenditure is directly entered in the profit and loss statement and may not be reversed in the following reporting periods. Regular checks are made on 31 December each year.

With regard to the individual details on the balance sheet on 31 December 2021, please refer to Section 4.2.4. "Intangible assets".

3.3. Intrinsic value of customer bases

GK Software acquired customer bases as part of the purchase price allocation when acquiring various subsidiaries. With regard to the individual details on values, please refer to Section 4.2.4. "Intangible assets".

The intrinsic value of customer relationships is the result of a comparison drawn from the past of the underlying turnover from existing customer relationships with the turnover actually achieved and the revenues generated from them on the basis of the business planning underlying the procurement costs that have been entered as part of allocating the purchase price and the

expectations for the further development of these key figures.

The expected period of use (7 or 10 years) and the amortisation method are checked on each reporting date and all the changes to estimates are taken into consideration prospectively. As soon as there are some signs that the carrying amount of the customer base exceeds the expected influx of funds, the customer base is revalued with this lower figure. Impairment charges, if any, are entered under the item "Depreciation and amortisation". The achievable amount is the higher amount of the fair value minus any sales costs and the value in use. The value in use is the cash flow reduced to its cash value minus any interest for the unit, which could generate cash and cash equivalents and to which the customer base is assigned. 90 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

3.4. Intrinsic value of software and capitalised development costs

Software that is acquired is amortised in a linear fashion over a period of 3 to 7 years. The software acquired through the purchased holdings (prudsys AG and valuephone GmbH) is being amortised in a linear fashion over a period of 7 years. There was no suggestion of any impairment of value.

The capitalised development costs are amortised in a linear fashion over a period of 5 years. Based on the business planning, there were no suggestion of any impairment of value on the reporting date.

3.5. Intrinsic value of property held as a financial investment

No specific market price could be determined for property held as a financial investment and no comparable transactions on the property market could be observed either. The recoverable amount is therefore estimated on the basis of the value in use, i.e., as a capitalisation of the lease revenue.

A reassessment of the cash flow on the balance sheet date determined the need for a write-down on 31 December 2021.

3.6. Intrinsic value of contract assets

The intrinsic value of the assets entered on the balance sheet are checked by ongoing project monitoring.

If the outcome of a manufacturing order can be reliably assessed, the revenues and the order costs, which arise in connection with this manufacturing order, are entered according to the percentage of completion of work on the balance sheet date and are shown as a contract asset. The contract asset is determined on the basis of the work actually performed at the end of the reporting period in relation to the total contract asset. This takes place on the basis of the actual working hours in relation to the total number of expected hours. Changes in the contracted work, claims and performance bonuses are included to the extent that their amount can be reliably determined and it is deemed that they will probably be received. 91 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

If the outcome of a manufacturing order cannot be reliably assessed, the revenues are only entered according to the amount of order costs that have already been incurred and can probably be recovered. Costs for orders are entered as expenditure during the period, in which they are incurred.

Estimates about the costs of the progress made in the order are corrected if the circumstances change. If it is likely that the total costs for orders will exceed the total revenues from orders, the expected loss is immediately entered as expenditure.

3.7. Uncertainty regarding the income tax items

The estimation and assessment of deferred taxes assets from any losses carried forward assumes that the Group companies concerned will in future once again generate profits which allow for the utilisation of the tax losses carried forward. This is done by planning the economic development of the individual companies in the Group. This decision takes into consideration the increased requirements for substantial information about the recognisability of these deferred tax assets with a loss history in the relevant individual accounts.

The tax audit for GK Software SE started for the period 2015 - 2017 during the reporting year and had not been completed during the auditing period. The back taxes that are more likely than not due as a result of the audit have been taken into account in these accounts.

3.8. Recognition and measurement of provisions

By its very nature, the recognition and measurement of provisions involves assessment uncertainties. With regard to the special estimation risks associated with

provisions for pensions, please refer to the summary information in Section 4.2.8. "Provisions for pensions".

3.9. Assessments of fair value and assessment procedures

When determining the fair value of an asset or a debt, the Group takes into account particular features of the asset or the debt (for example, the condition and location of the asset or sales and usage restrictions), if market participants would also take into account these features when setting the price for the acquisition of the particular asset or when transferring the debt on the assessment date. The fair value for assessment purposes and/or the obligation to specify details is determined on this basis in these consolidated accounts as a matter of principle. The following are excluded from this process:

  • – Share-based payments covered by IFRS 2 Share-Based Payments,
  • – Assessment standards, which are similar to fair value, but do not correspond to it, e.g. the net sales value in IAS 2 Inventories or the value in use in IAS 36 Impairment of Assets.

The fair value is not always available as a market price. If often has to be determined on the basis of different assessment parameters. Depending on the availability of observable parameters and the significance of these parameters for determining the fair value overall, the fair value is assigned to the stages 1, 2 or 3. The subdivision takes place according to the following proviso:

  • – The input parameters in stage 1 are listed prices (unadjusted) in active markets for identical assets or debts, which the Company can access on the assessment reporting date.
  • – The input parameters in stage 2 are different input parameters to the prices listed in stage 1, which are either directly observable for the asset or the debt or can be indirectly derived from other prices.
  • – The input parameters in stage 3 are parameters that are not observable for the asset or the debt.

3.10. Other assessment uncertainties

Other sources of uncertainty regarding estimates exist with regard to the useful serviceable life of assets, the assessment of the intrinsic value of trade accounts receivable, the valuation of stocks and entering leases according to IFRS 16. A term of 5 years is assumed for all the unlimited contracts for rented property in the sense of IFRS 16. This corresponds to the experience that rented buildings are used on a long-term basis. As no interest rates were communicated by the lessor for the lease contracts, the incremental borrowing rate was determined by comparing outside examples. It was assumed for this purpose that the two investment classes (vehicles and property) could be entirely funded by loans from our local bank. 92 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

We also assume that options from the share option programmes will be exercised when the conditions have been met.

3.11. Balance sheet reclassifications in the consolidated accounts

Losses from the derecognition of financial assets are shown separately in the statement of income and accumulated earnings. The change in the way these figures are shown provides the reader with much more information and has no major effect on the assets, financial and earnings situation.

4.1. Financial assets and financial liabilities

4.1.1. Trade accounts receivable

4.1.2. Other accounts receivable and assets

T.24 Other accounts receivable, assets and income tax claims

Consolidated Accounts
Notes on the Consolidated Accounts
Balance Sheet 4. Notes on the Consolidated The trade accounts receivable are all due for payment
within one year.		 tax, plus the solidarity surcharge and business tax
advance payments.
4.1.2. Other accounts receivable and assets 4.1.3. Non-current and current bank liabilities
4.1. Financial assets and financial liabilities T.24 Other accounts receivable, assets and income tax claims The non-current and current bank liabilities involved all
EUR K 31.12.2021 31.12.2020 the loans exclusively taken out by GK Software SE.
The financial instruments include original and derivative T.25 Loans
financial instruments. Financial assets 31.12.2021 31.12.2020
Accounts receivable with associated firms 589 2,247
Suppliers with debit balances 112 74 EUR K Balance Thereof
short term		 Balance Thereof
short term
The original financial instruments largely comprise trade Loans paid to third parties 112 138
accounts receivable on the assets side, other financial Accounts receivable from derivatives 727 398 Loan Commerzbank 2,075 300 2,375 300
assets as well as other liabilities. On the liabilities side, Accounts receivable from members of the
Management Board		 39 37 Loan Sparkasse 2,183 508 2,799 616
the original financial instruments largely comprise Others 822 119 Loan IKB 188 125 813 625
the convertible bond, bank liabilities, trade accounts
payable as well as other liabilities. The portfolio of		 Intermediate total 2,401 3,012 Current account
credit and credit card		 69 69 3,682 3,682
Non-financial assets Account balance 4,514 1,002 9,669 5,223
original financial instruments is shown on the balance Accounts from asset deferrals 3,536 2,823
sheet. The Company is subject to a possible default risk, Accounts from value-added tax 605 480
mainly with trade accounts receivable. Receivables from income-tax claims 997 328 The debts existing on the balance-sheet reporting date
Intermediate total 5,138 3,631 have been divided into current and non-current debts
Firstly, please find below general information about Total 7,539 6,643 in the consolidated accounts (cf. T.33 "Schedule of
the financial assets and financial liabilities and then liabilities" in Section 4.1.10. "Further details on financial
more details about the resulting risk items according to assets and financial liabilities"). The current shares
IFRS 9. With regard to receivables from related companies,
please refer to Section 8.4. "Details of Related Parties		 therefore match the repayments that are due within one
year.
4.1.1. Trade accounts receivable and Companies".
The trade accounts receivable have a term of less than Repayment shares of up to one year for non-current
one year. Because of the short term involved and the low The receivables from income-tax claims (non-financial bank liabilities were entered under current bank
interest level at the moment, it is assumed that the fair assets) in the amount of EUR 997 K (previous year: EUR liabilities.
value in each case will match the carrying amount. 941 K) mainly consisted of receivables from corporation
Annual Report 2021 GK Software SE

4.1.3. Non-current and current bank liabilities

31.12.2021 31.12.2020
EUR K Balance Thereof
short term		 Balance Thereof
short term
Loan Commerzbank 2,075 300 2,375 300
Loan Sparkasse 2,183 508 2,799 616
Loan IKB 188 125 813 625
Current account
credit and credit card		 69 69 3,682 3,682
Account balance 4,514 1,002 9,669 5,223

In addition to this, the current bank liabilities also include utilised credit card limits amounting to EUR 69 K (previous year: EUR 1 K) and a current account credit lines that were used. Details on the latter are made available in the Table T.25 'Loans'.

Of the loans cited here, EUR 3,917 K (previous year: EUR 4,424 K) have been secured by real-estate liens. The current account lines are secured by a collateral trust agreement, which is subject to a blanket assignment.

4.1.4. Liabilities arising from leases

With regard to further information on leases, please refer to the summary in Section 4.2.2. "Usage rights and expenditure on leases".

4.1.5. Convertible bond

With the agreement of the Supervisory Board, the Management Board at GK Software SE decided on 18 October 2017 to issue secondary, unsecured convertible bonds with a total nominal value of up to EUR 15,000,000 and with a term that runs until 26 October 2022. Due to its maturing within one year, the convertible bond is shown under Section 4.1.8. "Other current liabilities".

The convertible bonds have a term of 5 years and were issued at 100 percent of their nominal value of EUR 1,000,000 per convertible bond. If they were not converted into ordinary shares by a decision of the

holder in advance or repurchased by GK Software SE and retracted, they will be repaid at the nominal amount when they are finally due.

The bonds accrue interest of 3 p.a. on the nominal amount. The interest must be paid annually in arrears on the relevant interest payment date. The initial fair value of the outside capital share of the bond was determined with a market interest rate for a bond of the same value without any conversion option on the issue date. The liability is then entered on the basis of the depreciated purchase costs until it has lapsed by the conversion or the due date of the convertible bond. The remaining revenues are assigned to the conversion option and entered under "Equity" and then not reassessed at a later date.

4.1.6. Liabilities from trade payables

Trade accounts payable are still due for settlement within one year.

4.1.7. Initial payments received

Contract liabilities include liabilities from advance payments on manufacturing contracts (advance payments received) of EUR 907 K (previous year: EUR 1,489 K) and advance payments on revenues to be received periodically at later periods (deferred revenue) of EUR 4,720 K (previous year: EUR 2,100 K).

The transaction price that was attributed to performance obligations from manufacturing orders on 31 December 2021 amounted to EUR 5,684 K on the reporting date (previous year: EUR 5,436 K). Management expects that EUR 5,052 K (previous year: EUR 4,568 K) of the transaction price that was attributed to service obligations, which had not been provided on 31 December 2021, will be entered as revenue in the next reporting period. The remaining EUR 632 K (previous year: EUR 869 K) will be recognised in later financial years. The amount entered above did not contain any variable service in return that is restricted. 94 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

The remaining terms of the deferred liabilities are essentially less than one year.

4.1.8. Other current liabilities

T.26 Other current liabilities

Consolidated Accounts
Notes on the Consolidated Accounts
4.1.8. Other current liabilities
The tax liabilities cover outstanding income tax and
value-added tax payments.
T.26 Other current liabilities
EUR K 31.12.2021 31.12.2020
Financial liabilities
Liabilities from wages and salaries 9,066 8,539
Outstanding invoices 2,026 933
Other liabilities towards members of staff 81 8
of which an overpayment by customers 24 25
Others 2,068 1,600
Intermediate total 13,265 11,104
Non-financial liabilities
Liabilities from other taxes 2,041 1,921
Intermediate total 2,041 1,921
Total 15,306 13,025
4.1.9. Income tax liabilities
T.27 Income tax liabilities
EUR K 31.12.2021 31.12.2020
Income tax liabilities 2,041 784
thereof in Germany 1,733 591
thereof in Czech Republic 95 119
thereof in Switzerland 7 13
thereof in USA 0 38
thereof in South Africa 200 12
6 11
0
thereof in Ukraine
thereof in Russia		 0

4.1.9. Income tax liabilities

EUR K 31.12.2021 31.12.2020
Income tax liabilities 2,041 784
thereof in Germany 1,733 591
thereof in Czech Republic 95 119
thereof in Switzerland 7 13
thereof in USA 0 38
thereof in South Africa 200 12
thereof in Ukraine 6 11
thereof in Russia 0 0

4.1.10. Further details on financial assets and financial liabilities

Consolidated Accounts
Notes on the Consolidated Accounts
4.1.10.
Further		 details
on
financial
assets
and		 financial liabilities
T.28 Carrying amounts and the fair value of financial instruments
Recognised at fair value: Recognised at fair value: Recognised at fair
value: On the basis
Recognised at amortised On the basis of publicly
listed market prices (stage		 On the basis of observable
market data (stage 2) –		 of non-observable input
factors (stage 3) – FVTPL		 Non-financial assets/
EUR K cost 1) – FVTPL category FVTPL category category liabilities Carrying amount Fair value
31 December 2021 (IFRS 9) -
(IFRS 9)		 (IFRS 9) (IFRS 9) -
Trade accounts receivable 24,298 - 0 -
0		 24,298
Other financial assets 1,674 - 727 -
4,141		 6,541
Cash and cash equivalents 46,945 - 0 -
0		 46,945
Total financial assets 72,917 - 727 -
4,141		 77,785
Convertible bond 0 - 0 0 - 0
Bank liabilities 4,514 0 -
0		 4,514
Leasehold liabilities 0 -
0		 0 -
7,784		 7,784
Trade accounts payable 5,162 -
0		 -
0		 5,162
Other financial liabilities 14,721 2,042
-		 - 11,142 27,904
Total financial liabilities 24,397 0 18,926 45,366 12,299
31 December 2020 (IFRS 9) (IFRS 9) (IFRS 9) (IFRS 9)
Accounts receivable 23,382 0 0 0 0 23,382
Other financial assets 2,614 0 398 0 3,631 6,643 6,643
9,425 0 0 0 0 9,425
Liquid assets 0 3,631 39,450 6,643
Total financial assets 35,422 0 398
Convertible bond 14,222 0 0 0 0 14,222
Bank liabilities 9,669 0 0 0 0 9,669
Leasehold liabilities 0 0 0 0 9,310 9,310 14,222
9,669
9,310
Trade accounts payable
Other financial liabilities		 3,591
2,565		 0
0		 0
0		 0
0		 0
10,460		 3,591
13,025
Total financial liabilities 30,047 0 0 0 19,770 49,817 33,201

Due to its maturing within one year, the convertible bond is shown under "Other financial liabilities".

As the financial assets are normally not covered by securities, the maximum default risk corresponds to their gross carrying amount minus value adjustments, therefore leaving the net carrying amount that is shown. Thus, the circumstances at GK Software are consistent with the general case assumed by the IASB. Securities and other risk-mitigating agreements are therefore generally not to be taken into account at this point.

The cap premiums were reported under "Other assets" with figures of EUR 0 K (previous year: EUR 4 K) and were reversed on a pro rata basis and entered as interest expenditure. For this reason, these cap premiums were not classified under the "Financial assets assessed at their fair value in terms of affecting the net income" category. The market value of these interest capping mechanisms on a nominal volume of EUR 123 K (derived from the mid-market price through bank assessments) amounted to a total figure of EUR 0 K on the balance sheet date (previous year: EUR 0 K).

Currency option transactions amounting to a total nominal value of CZK 300,000 K were reported on 31 December 2021. The purpose of these transactions is to secure payment obligations within the Group until 31 December 2022. No valuation unit was formed. The fair value according to the bank valuation is EUR 727 K and is shown under "Other financial assets".

The Group still has only financial instruments that are valued at amortised cost. The other financial assets of EUR 1,674 K (previous year: EUR 2,614 K) are subject to the general impairment approach of IFRS 9 and are to be classified fully as 12-month credit losses. There were no impairments made because the financial assets are not overdue and there is also no other indication of impairment in value. The credit risk did not increase significantly compared to the previous year.

A simplified approach using industry-specific risks was used to value the accounts receivables. In addition to default rates calculated for the individual maturity bands based on historical experience, forward looking elements based on country-specific default rates (credit default swaps) are also used. The value adjustments relate exclusively to trade accounts receivable and, in addition to the expected loss ratios determined according to IFRS 9, also include value adjustments on individual items within the due dates, which are based on individualised valuation information. If there was no longer any expectation that they could be realised, the financial asset was removed from the accounts. 97 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

T.29 Default risk for trade accounts receivable and contract assets

Consolidated Accounts
Notes on the Consolidated Accounts
T.29 Default risk for trade accounts receivable and contract assets business activities. The exchange rate risks result from
Not overdue 1 to 30 days
overdue		 31 to 60 days
overdue		 61 to 90 days
overdue		 More than 90
days overdue		 Total the business sites maintained in different currency
areas and increasingly from customer relations that
go beyond the euro zone. The interest rates are the
31 December 2021 result of selected types of funding to enhance the
Expected loss ratio % 0.3 1.0 2.2 3.2 5.1 Group's financial latitude. The Group typically accepts
Trade accounts receivable EUR K 19,182 3,850 922 263 459 24,676 additional conditions (so-called "covenants") in addition
Trade accounts receivable from ongoing work
Value adjustments		 EUR K
EUR K		 12,152
71		 —
37		 —
24		 —
8		 —
237		 12,152
378		 to the general loan conditions when funding projects
with loans that are provided by banks and they relate
31 December 2020 to general financial figures or other conditions. Failure
Expected loss ratio % 0.2 0.9 1.5 2.2 3.0 to meet these additional conditions normally entitles
Trade accounts receivable EUR K 21,868 1,291 95 37 572 23,864 the bank concerned to make the loans in question
Trade accounts receivable from ongoing work
Value adjustments		 EUR K
EUR K		 13,587
234		 —
—		 —
10		 —
37		 —
200		 13,587
482		 due for payment in full immediately, regardless of
The value adjustments developed as follows during
2021:
T.30 Changes in impairments on trade accounts receivable		 EUR K T.31 Net profits and losses per category of financial instrument Interest revenues
(-expenditure /
+earnings)		 gains (+) / losses (-)
from derecognition		 others gains / losses Total
EUR K 2021 2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020
Situation at the start of the year 482 712
Value adjustments on accounts receivable 122 59 Financial assets recognised at amortised cost 192 161 (153) (612) — — 39 (452)
Liquidation (205) (289) Fair value through profit and loss (FVPL) Financial liabilities recognised at amortised cost —
(1,605)		 —
(1,610)		 —
—		 —
—		 —
—		 —
—		 —
(1,605)		 —
(1,610)
Situation at the end of the year 399 482 Total (1,413) (1,449) (153) (612) — — (1,566) (2,062)
Value adjustments amounting to EUR 399 K, which relate
in total to trade receivables, were made at the end of the
year.		 separately in the total income statement. Impairments/appreciations in value on financial assets
are no longer part of the net income and are shown
Market risks: The Group is exposed to risks associated
with exchange and interest rates as a result of its		 met and probably can continue to be met or not. The
Group handles this risk by monitoring the covenants
and communicating with the banks concerned in an
appropriate manner. Among other things, a quarterly list
of assignments was sent to the credit institutions, and
Annual Report 2021 GK Software SE

The value adjustments developed as follows during 2021:

T.30 Changes in impairments on trade accounts receivable
EUR K 2021 2020
Situation at the start of the year 482 712
Value adjustments on accounts receivable 122 59
Liquidation (205) (289)
Situation at the end of the year 399 482

T.31 Net profits and losses per category of financial instrument

EUR K Interest revenues
(-expenditure /
+earnings)		 gains (+) / losses (-)
from derecognition		 others gains / losses Total
31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020
Financial assets recognised at amortised cost 192 161 (153) (612) — — 39 (452)
Fair value through profit and loss (FVPL) — — — — — — — —
Financial liabilities recognised at amortised cost (1,605) (1,610) — — — — (1,605) (1,610)
Total (1,413) (1,449) (153) (612) — — (1,566) (2,062)

at no point did this trigger an immediate maturity of the loans.

In order to have some protection against these market risks, the Group uses derivative financial instruments like interest rate caps to provide certain security against increases in the interest rate that is charged. As the Group's exposure to currency risks has increased considerably in absolute terms, larger items of business are being secured by exchange rate hedging mechanisms like currency options to safeguard the value of payments made in the non-functional currency in proportion to the functional currency.

Exchange rate risks: We normally handle business transactions in the operational currency of the Group firm concerned. Operational business transactions are not handled in the operational currency in individual cases so that there is a currency risk for monetary financial instruments. There are also internal service relationships within the Group and currency risks from the resulting cash flows.

The following accounts receivable existed with exchange rate risks on 31 December 2021:

T.32 Accounts receivable with exchange rate risks

EUR K 31.12.2021 31.12.2020
CHF 421 751
GBP 41 143
CAD 18 609
AUD 229 384

Currency rate fluctuations in conjunction with our original monetary financial instruments did not have any major effects on our annual profits.

Interest risks: The Group is exposed to interest risks, as the Group's companies take out financial resources at fixed and variable interest rates. The risk is controlled by the Group by maintaining an appropriate ratio because it takes out a mixture of fixed and variable interest rates on funds. This takes place by using interest rate caps.

The interest risk on the Group's financial assets and financial liabilities is fully described in the section on managing the liquidity risk.

Credit default risks: We understand a credit default risk to be the risk of a loss for the Group if one contractual party does not meet its contractual obligations. In principle, the Group only maintains business relations with those contractual parties where any deviation from the contractual obligations does not appear to be probable.

The maximum credit risk corresponds to the carrying amount of the trade accounts receivable and other accounts receivable. The default risk regarding trade accounts receivable is limited by the fact that the Company has a broadly spread customer structure. The Company does not generally demand any collateral security for its accounts receivable. Close monitoring takes place by observing the customer's payment behaviour, the market environment and drawing on external sources such as reports from the relevant specialist press. When assessing financial assets subject to the general approach, it is generally assumed that there is no significant increase in credit risk if they are less than 30 days overdue. If this monitoring process gives rise to an assumption that the general economic situation for individual customers (with individual circumstances) has changed, further measures are adopted in agreement with the management team in order to restrict any possible losses. Value adjustments may also occur if customers believe that work has not been completed or is inadequate. In these cases, the Group basically carries out individual value adjustments for precautionary reasons, if there is some expectation that settlements on a goodwill basis – without any recognition of legal grounds – might be necessary. Consideration is given to the general default risk by making an appropriate general value adjustment (cf. Section 3.1. "Impairment of value for assets"). 99 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

Consolidated Accounts

Consolidated Accounts
Notes on the Consolidated Accounts
The default risk on liquid funds is slight, as the banks
managing the accounts are all members of the German		 T.33 Schedule of liabilities Weighted T.34 Credit lines
EUR K		 31.12.2021 31.12.2020
deposit protection scheme or they have an outstanding average
reputation with corresponding credit ratings. EUR K interest
rate		 Less than
1 month		 1 to 5
years		 More than
5 years		 Total Non-collateralised current account lines 30,000 -
of which: taken up — -
Overall, the Management Board believes that the of which: not taken up — -
31.12.2021
Interest-free		 0 18,496 0 0 18,496 Collateralised current account lines — 17,600
value adjustments currently performed have taken Variable of which: taken up — 3,681
into account all the probable risks for the Group to an interest rate 2.66 192 1,910 0 2,102 of which: not taken up — 13,919
appropriate degree. Fixed interest rate 2.42 18,274 8,075 0 26,349
31.12.2020
Liquidity
risks
and
due
dates
for
financial
obligations:		 Interest-free 0 16,617 0 0 16,617
The Group controls the liquidity risks by having available Variable
appropriate reserves and credit lines and by monitoring interest rate 2.66 1,918 2,123 0 4,041
the deviations between forecast and actual cash flows. Fixed interest rate 2.36 6,073 26,448 0 32,521
The following table shows the remaining contract
terms for the Group's financial liabilities. The tables
are founded on non-discounted cash flows for financial
liabilities (interest and repayments) based on the
earliest date on which the Group can be obligated to
make payment.		 We also refer you to the explanations on leasing
liabilities in Section 4.2.2. Usage rights and expenditure
on leases.
In the year under review, GK Software took out a
syndicated loan in the amount of EUR 45 million. This
replaces the previous current-account credit lines.
The agreement for this was concluded on 08.12.2021
between the Company and UniCredit Bank AG as agent.
Of this, EUR 15 million were allocated directly towards
redeeming a convertible bond and EUR 30 million was
agreed to secure operating resources, which has not yet
been used.
In greater detail, this involves the following:
Annual Report 2021 GK Software SE

T.34 Credit lines

EUR K 31.12.2021 31.12.2020
Non-collateralised current account lines 30,000 -
of which: taken up — -
of which: not taken up — -
Collateralised current account lines — 17,600
of which: taken up — 3,681
of which: not taken up — 13,919

4.2. Non-financial assets and liabilities

T.36 Property, plant and equipment in 2020

4.2.1. Property, plant and equipment

T.35 Property, plant and equipment in 2021

Consolidated Accounts
Notes on the Consolidated Accounts
4.2. Non-financial assets and liabilities T.36 Property, plant and equipment in 2020
Operating Technical
4.2.1.
Property,
plant
and
equipment		 Real
estate and		 and
business		 facilities
under		 equipment
and
T.35 Property, plant and equipment in 2021 EUR K buildings equipment construction machines Total
Operating Technical
Real and facilities equipment Purchasing or production costs
EUR K estate and
buildings		 business
equipment		 under
construction		 and
machines		 Total Figures on 1 January 2020 14,063 17,019 146 0 31,229
Accruals 191 684 52 0 927
Purchasing or production costs Changes caused by exchange rates 0 1 0 0 1
Figures on 1 January 2021 13,629 15,842 183 0 29,653 Transfers
Disposals		 (626) (24) (15) 0 (664)
Accruals 853 1,453 627 0 2,933 Figures on 31 December 2020 0
13,629		 (1,839)
15,842		 0
183		 0
0		 (1,839)
29,653
Changes caused by exchange rates (3) 0 0 (3) Accumulated depreciation
Accruals through corporate mergers 0 88 0 0 88 Figures on 1 January 2020 2,291 11,950 0 0 14,241
Transfers 633 3 (442) 0 194 Accruals 485 2,065 0 0 2,549
Reclassifications 5,994 237 501 0 6,731 Accruals through corporate mergers 0 0 0 0 0
Disposals 0 (2,591) (8) 0 (2,598) Transfers (19) (6) 0 0 (25)
As of 31 December 2021 21,109 15,029 860 0 36,998 Disposals 0 (1,786) 0 0 (1,786)
Accumulated depreciation Figures on 31 December 2020 2,756 12,222 0 0 14,979
Figures on 1 January 2021 2,756 12,222 0 0 14,979
Accruals 672 1,635 0 0 2,307 Carrying amounts on 31 December 2020 10,873 3,620 183 0 14,675
Accruals through corporate mergers 0 31 0 0 31
Transfers 0 0 0 0 0 Some of the plots of land serve as security for liabilities through real-estate liens; for
Reclassifications 769 58 0 0 827
Disposals 0 (2,421) 0 0 (2,421) more details, see Section 4.1.3. "Non-current and current bank liabilities".
Impairment of value in accordance with IAS 36 189 0 0 0 189
As of 31 December 2021 4,386 11,525 0 0 15,911
16,723 3,504 860 0 21,087
EUR K Real
estate and
buildings		 Operating
and
business
equipment		 facilities
under
construction		 Technical
equipment
and
machines		 Total
Purchasing or production costs
Figures on 1 January 2020 14,063 17,019 146 0 31,229
Accruals 191 684 52 0 927
Changes caused by exchange rates 0 1 0 0 1
Transfers (626) (24) (15) 0 (664)
Disposals 0 (1,839) 0 0 (1,839)
Figures on 31 December 2020 13,629 15,842 183 0 29,653
Accumulated depreciation
Figures on 1 January 2020 2,291 11,950 0 0 14,241
Accruals 485 2,065 0 0 2,549
Accruals through corporate mergers 0 0 0 0 0
Transfers (19) (6) 0 0 (25)
Disposals 0 (1,786) 0 0 (1,786)
Figures on 31 December 2020 2,756 12,222 0 0 14,979
Carrying amounts on 31 December 2020 10,873 3,620 183 0 14,675

4.2.2. Usage rights and expenditure on leases

T.37 Usage rights in the sense of IFRS 16 in 2021

Real Operating
and
EUR K estate and
buildings		 business
equipment		 Total
Purchasing or production costs
Figures on 1 January 2021 10,721 4,400 15,121
Accruals 171 1,094 1,265
Changes caused by exchange rates 179 9 188
Disposals (334) (90) (423)
Figures on 31 December 2021 10,736 5,414 16,150
Accumulated depreciation
Figures on 1 January 2021 3,291 2,584 5,875
Accruals 1,654 1,161 2,816
Disposals (143) (63) (206)
Figures on 31 December 2021 4,802 3,683 8,485
Carrying amounts on
31 December 2021		 5,934 1,731 7,665

T.38 Usage rights in accordance with IFRS 16 in 2020

Consolidated Accounts
Notes on the Consolidated Accounts
4.2.2. Usage rights and expenditure on leases T.38 Usage rights in accordance with IFRS 16 in 2020 Payments for leasing liabilities on 31 December 2021
This following information on leases refer to amounting to EUR 2,457 K (previous year: EUR 2,580
Real Operating
and
transactions where the Group is the lessee. Information estate and business K) are expected within one year. For the rest of the
about leases, where the Group is the lessor, is EUR K buildings equipment Total liabilities of EUR 5,328 K (previous year: EUR 6,731 K),
explained in Section 4.2.3. 'Property held as a financial future payments amounting to EUR 10,394 K (previous
investment'. Purchasing or production costs year: EUR 10,878 K) with due dates of up to 5 years are
T.37 Usage rights in the sense of IFRS 16 in 2021 Figures on 1 January 2020 8,465 3,429 11,895 expected with a declining trend.
Accruals 2,207 992 3,199
Real Operating
and		 Changes caused by exchange rates (112) (6) (118)
estate and business Disposals 160 (15) 146 During the financial year, the residual terms for the
EUR K buildings equipment Total Figures on 31 December 2020 10,721 4,400 15,121 buildings entered in the balance sheet in accordance
Accumulated depreciation with IFRS 16 were reviewed. As the intention to continue
Purchasing or production costs Figures on 1 January 2020 1,654 1,327 2,981 using these buildings remains unchanged, usage rights
Figures on 1 January 2021 10,721 4,400 15,121 Accruals 1,637 1,269 2,906
Accruals 171 1,094 1,265 Disposals 0 (12) (12) and the corresponding expenditure were again assigned
Changes caused by exchange rates 179 9 188 Figures on 31 December 2020 3,291 2,584 5,875 a full residual term of 5 years. This did not apply to
Disposals (334) (90) (423) Carrying amounts on contracts for longer periods of use.
Figures on 31 December 2021 10,736 5,414 16,150 31 December 2020 7,430 1,816 9,246
Accumulated depreciation T.39 Expenditure on leases 4.2.3.
Property
held
as
a		 financial
investment
Figures on 1 January 2021 3,291 2,584 5,875
Accruals 1,654 1,161 2,816 EUR K 31.12.2021 31.12.2020 Up until 31 December 2020, the property held
Disposals (143) (63) (206) as a financial investment related primarily to the
Figures on 31 December 2021 4,802 3,683 8,485 Depreciation and amortisation 2,762 2,906 "Tannenhaus" hotel complex. Tannenhaus UG has
Carrying amounts on Thereof buildings 1,600 1,637 belonged to the Group since 1.7.2021. This explains the
31 December 2021 5,934 1,731 7,665 Thereof vehicles 1,161 1,269 reclassification of the property from acquisition costs
Interest expenditures 119 117
Expenditures for short term and low value
contracts not entered on the balance sheet		 74 76 to tangible assets in the amount of EUR 9,998 K and
Total payments 2,955 3,100 amortisation in the amount of EUR 868 K.
Financial debts arising from leases amounting to EUR
2,672 K (previous year: EUR 2,786 K) were repaid during
the financial year and EUR 119 K (previous year: EUR 117		 Further property belonging to the GK Software
SE portfolio also continued to be rented in 2021.
These properties are also being rented to a different
associated company by means of a rental contract.
K) in interest was paid for leasing. Please also refer to 8.4.3. "Associated firms". Any

4.2.3. Property held as a financial investment

EUR K Real estate and buildings
Purchasing or production costs
Figures on 1 January 2021 7,662
Accruals 0
Reclassifications (6,998)
Figures on 31 December 2021 665
Accumulated depreciation
Figures on 1 January 2021 897
Accruals 25
Reclassifications (858)
Impairment of value in accordance with IAS 36 376
Figures on 31 December 2021 440
Carrying amounts on 31 December 2021 224

T.41 Property held as a financial investment in 2020

Consolidated Accounts
Notes on the Consolidated Accounts
developments resulting from this relating to the
"property held as a financial investment" can be seen in
the summary of fixed assets. The assessment methods
remain unchanged. Amortisation takes place in a linear
fashion over the assumed usage period. The assumed		 T.41 Property held as a financial investment in 2020
EUR K
Purchasing or production costs
Figures on 1 January 2020		 Real estate and
buildings
6,652		 also refer to 8.4.3. "Associated firms".
The reclassification concerns the "Tannenhaus" hotel
property in Schöneck. Due to the complete takeover of		 amount to EUR 207 K in fixed monthly payments. Please
usage period of the building is 33 years and 7–15 years Accruals 346 the Tannenhaus UG hotel-operating company, this is no
have been assumed for the fittings. Transfers 664 longer "real estate held as a financial investment".
T.40 Property held as a financial investment in 2021 Disposals 0
Figures on 31 December 2020 7,662 The value adjustment of EUR 376 K relates to the
EUR K
Real estate and buildings		 Accumulated depreciation remaining properties leased to third parties and
Purchasing or production costs Figures on 1 January 2020
Accruals		 302
257		 results from a separate valuation of the properties in
Figures on 1 January 2021 7,662
Transfers		 25
Accruals 0
Disposals		 0 accordance with the income-value method.
Reclassifications (6,998)
Impairment of value in accordance with IAS 36		 312
Figures on 31 December 2021 665
Figures on 31 December 2020		 897
Accumulated depreciation Carrying amounts on 31 December 2020 6,765
Figures on 1 January 2021 897
Accruals Payments from rental and leasing income amounting to
25
Reclassifications
Impairment of value in accordance with IAS 36		 (858)
EUR 19 K (previous year: EUR 199 K) are expected within
376
Figures on 31 December 2021 one year. Payments in the amount of EUR 28 K (previous
440
year EUR 208 K) are expected within the next 18 months
Carrying amounts on 31 December 2021 224
after the balance-sheet date.
In the profit and loss statement, rental and leasing
income as well as charges passed on from agency
services amounting to EUR 214 K (previous year: EUR
394 K) and direct operating expenses amounting to EUR
588 K (previous year: EUR 839 K) including amortisation
are attributable to these properties. The annually agreed
lease and rental payments from operating leasing
Annual Report 2021 GK Software SE

4.2.4. Intangible assets

Consolidated Accounts
Notes on the Consolidated Accounts
4.2.4. Intangible assets
T.42 Intangible assets in 2021		 T.43 Intangible assets in 2020
EUR K Capitalised
develop
ment costs		 Industrial
property
rights and
similar
rights and
values		 Goodwill Customer
base		 Orders on
hand		 Total EUR K Capitalised
develop
ment costs		 Industrial
property
rights and
similar
rights and
values		 Goodwill Customer
base		 Orders on
hand		 Total
Purchasing or production costs Purchasing or production costs
Figures on 1 January 2021 8,819 11,043 18,097 9,048 0 47,007 Figures on 1 January 2020 7,988 10,555 18,900 9,645 0 47,089
Accruals 0 222 1,453 0 0 1,675 Accruals 831 514 0 0 0 1,346
Changes caused by exchange rates 0 11 726 147 0 885 Changes caused by exchange
Transfers 0 (194) 0 0 0 (194) rates 0 (26) (804) (194) 0 (1,024)
Reclassifications 0 267 0 0 0 267 Transfers 0 0 0 0 0 0
Disposals 0 (824) (244) 0 0 (1,069) Disposals 0 0 0 (403) 0 (403)
As of 31 December 2021 8,819 10,525 20,032 9,195 0 48,572 Figures on 31 December 2020 8,819 11,043 18,097 9,048 0 47,007
Accumulated depreciation Accumulated depreciation
Figures on 1 January 2021 7,988 7,911 870 4,826 0 21,595 Figures on 1 January 2020 7,912 6,417 870 4,283 0 19,481
Accruals 166 1,224 0 928 0 2,318 Accruals 76 1,494 0 946 0 2,517
Accruals  through corporate Disposals 0 0 0 (403) 0 (403)
mergers 0 30 0 0 0 30 Figures on 31 December 2020 7,988 7,911 870 4,826 0 21,595
Disposals
Impairment of value in accordance		 0 (824) 0 0 0 (824) Carrying amounts on 31
December 2020		 831 3,132 17,227 4,222 0 25,412
with IAS 36
As of 31 December 2021		 0
8,155		 0
8,341		 1,453
2,323		 0
5,754		 0
0		 1,453
24,572
Carrying amounts on
31 December 2021		 665 2,185 17,709 3,441 0 23,999 The capitalised development costs (preliminary versions of GK/Retail software) are
amortised according to schedule in a linear fashion over an estimated serviceable life
of five years.
The following goodwill was entered on the balance sheet in the consolidated accounts
of GK Software:
Annual Report 2021 GK Software SE

T.44 Goodwill

Consolidated Accounts
Notes on the Consolidated Accounts
T.44 Goodwill
Company		 Year of
acquisition		 Segment
allocation		 Initial
recognition
value		 Interest rate
(after and before tax) Growth rate 31.12.2021 31.12.2020		 The assumptions on which the planning is based (see
3.2. "Intrinsic value of goodwill") are, by their very nature,
subject to risk. For the goodwill SOLQUEST/SQ-IT/
Valuephone, an increase to the discount interest rate
EUR K in % in % EUR K EUR K by one percentage point or a reduction in the cash flow
Solquest GmbH / SQ IT-Services GmbH 2009 EMEA 6,403 8.04/10.62 1 5,533 5,533 by up to 30% would not have any effects on the results
IT Services (AWEK GmbH) 2012 EMEA 244 8.04/10.62 1 0 244 of the tests. For the goodwill TAPS, an increase to the
TransAction+ Products and Services / DBS 2015 Americas 9,838 8.24/10.49 2 9,432 8,706 pre-tax discount interest rate by one percentage point
prudsys AG 2017 EMEA 122 8.04/10.62 1 122 122 or a reduction in the cash flow by up to 50% compared
valuephone GmbH (MCA) 2018 EMEA 2,622 8.04/10.62 1 2,622 2,622
Tannenhaus 2021 Other business
activities		 1,453 7.72/8.22 1 0 0 to plans would not have any effects on the results of the
tests. Realistic changes to the parameters would not
Total 20,682 17,709 17,227 result in an impairment.
of Solquest GmbH by SQ IT-Services GmbH. The accrual
of EUR 6,403 K took place in the 2009 fiscal year and
the value was adjusted to EUR 5,533 K in the 2013 fiscal
year.		 the first time. valuephone, so that goodwill amounting to this sum was
entered on the balance sheet on 31 December 2018 for
The acquisition of the Tannenhaus UG hotel-operating		 parts of firms and within the purchase price allocations
that took place:
The goodwill 'TransAction+ Products and Services'
from the takeover of the business segment from DBS
Data Business Systems Inc. by GK Software USA is
balanced in the individual accounts of GK Software USA.
Currency-related changes in value have an effect on its		 company in the year under review resulted in goodwill
in the amount of EUR 1,453 K. The review of its intrinsic
value as at 31 December 2021 revealed a complete
impairment requirement.
valuation on the balance sheet date. The intrinsic value
test is performed in the functional currency of the unit
generating the cash and cash equivalents, in USD.		 The goodwill for Solquest GmbH / SQ IT-Services
GmbH and valuephone GmbH relate to the same
"CLOUD4RETAIL" cash-generating unit (previously
GKRetail) and are tested in a consolidated manner.
Annual Report 2021 GK Software SE

T.45 Customer bases

Consolidated Accounts
Notes on the Consolidated Accounts
T.45 Customer bases Year Book value or the preceding salaries or the length of services or
revenues in the fund. No fixed pension adjustment has
Company acquisition Service life Book value 31.12.2020 Depreciation Currency conversions 31.12.2021 been agreed. There are also individual entitlements in
Years EUR K EUR K EUR K EUR K case somebody suffers invalidity or a widow's pension is
AWEK GmbH 2012 10 88 (46) — 42 necessary if somebody dies.
DBS Data Business
Systems Inc.		 2015 10 2,026 (494) 147 1,678 The Group is exposed to the following risks through its
prudsys AG 2017 10 1,122 (164) — 958 commitments to pension payments:
valuephone GmbH 2018 7 986 (223) — 763
Total 4,222 (928) 147 3,441 Investment risks. The cash value of the defined benefit
Systems). valuephone GmbH was merged with
GK Software SE on 1 January 2019.		 and assets 4.2.7. Deferred taxes cover future payment obligations. As soon as the yields
from the plan asset fall below this interest rate, this
creates a shortfall in the cash value of the obligation
4.2.5. Stocks We refer you to Section 5.8. Income taxes created by the plan.
T.46 Stocks
EUR K 31.12.2021 31.12.2020 4.2.8. Provisions for pensions Risks
associated
with
changes		 in
interest
rates. A
Goods 70 6 GK Software and the subsidiary AWEK GmbH issued reduction in the loan interest rate will lead to an increase
in the plan liability.
Auxiliary materials and supplies 0 167 pension benefit plans for members of the Management
Board and managing directors in the form of
Advance payments on inventories 1 4 performance-related plans. Risks arising from longevity. The cash value of the
Total 71 177 defined benefit obligation from the plan is determined on
With regard to the expenditure that was incurred in 2021,
please refer to Section 5.3. Materials expenditure		 adjustments are made in line with the final salary paid The pension benefit plans have been organised so
that they form a life-long, fixed retirement pension,
which is to be paid once employees reach the age of
65 or 68 or 67. As this involves fixed pension sums, no		 the basis of the best possible estimate of the probability
of death for the employees benefiting from the scheme,
both during their working relationship and also after
this ends. Any increase in life expectancy on the part of

4.2.5. Stocks

T.46 Stocks
EUR K 31.12.2021 31.12.2020
Goods 70 6
Auxiliary materials and supplies 0 167
Advance payments on inventories 1 4
Total 71 177

4.2.6. Other accounts receivable, assets and income tax claims

4.2.7. Deferred taxes

4.2.8. Provisions for pensions

Risks associated with changes in interest rates. A

The calculations are based on the following assumptions:

T.47 Assumptions for calculating cash values

FY 2021 FY 2020
Pensionable age (m/f) 65-68 65-68
Discount factor(s) on 1 January % p.a. 1.00 1.00
Discount factor(s) on 31 December % p.a. 1.31 1.00
Rate of pension increase % p.a. 1.50 1.50

T.48 Reconciliation account to determine the cash values

EUR K FY 2021 FY 2020
Figures on 1 January: 6,469 5,741
+ Interest expenditure 57 57
+ Working period costs 782 788
+ Working period costs to be additionally
calculated		 318 (53)
− Benefits paid out (7) (61)
+ Actuarial losses (+)/ gains (-) (395) (3)
of which adjustments based on experience - (3)
of which changes in financial assumptions - -
- disposal and deconsolidation of AWEK
microdata GmbH		 (815) -
Figures on 31 December 6,409 6,469

T.49 Development of the plan assets

EUR K FY 2021 FY 2020
Figures on 1 January 3,739 2,976
- disposal and deconsolidation of AWEK
microdata GmbH		 (396) -
+ Expected yields from plan assets 383 31
+ Contributions by employer 880 873
– Benefits paid out 0 (54)
– Effect of the asset ceiling (78) (86)
Figures on 31 December 4,528 3,739

T.50 Impact on earnings from pension payment obligations

Notes on the Consolidated Accounts
the employees benefiting from the scheme leads to an
A reconciled financial statement of the opening and
This therefore gave rise to a plan deficit of EUR 1,881
increase in the plan's liability.
final balances of the cash value of the defined benefit
K (previous year: EUR 2,730 K), which was entered as a
obligations with the reasons for changes provides the
pensions provision.
The cash value of the defined benefit obligation and the
following picture:
associated current service costs are determined using
The following amounts were entered in the overall
T.48 Reconciliation account to determine the cash values
the projected unit credit method.
results with regard to the defined benefit plans:
EUR K
FY 2021
FY 2020
T.50 Impact on earnings from pension payment obligations
Figures on 1 January:
6,469
5,741
The calculations are based on the following
EUR K
2021
+ Interest expenditure
57
57
assumptions:
+ Working period costs
782
788
Current service costs
782
T.47 Assumptions for calculating cash values
+ Working period costs to be additionally
Past service costs
318
calculated
318
(53)
FY 2021
FY 2020
-
Net interest expenditure
(326)
− Benefits paid out
(7)
(61)
Liquidation
-
+ Actuarial losses (+)/ gains (-)
(395)
(3)
Pensionable age (m/f)
65-68
65-68
Components of the defined benefit costs
-
-
of which adjustments based on experience
(3)
Discount factor(s) on 1 January
% p.a.
1.00
1.00
entered in the profit and loss statement
774
of which changes in financial assumptions
Discount factor(s) on 31 December
% p.a.
1.31
1.00
-
Reassessment of net debt from the defined
- disposal and deconsolidation of AWEK
benefit plan
Rate of pension increase
% p.a.
1.50
1.50
microdata GmbH
(815)
Gains from plan assets (with the exception of the
amounts contained in the net interest)
0
Figures on 31 December
6,409
6,469
The calculations are based on the "2018G Guideline
Actuarial gains and losses from the change in
Tables" by Klaus Heubeck.
financial assumptions
(395)
of which adjustments based on experience
0
The development of the plan assets is shown as follows:
of which changes in financial assumptions
(395)
The assets of the associated plan assets are pension
T.49 Development of the plan assets
Effect of the asset ceiling
(78)
fund special assets amounting to EUR 2,080 K (previous
EUR K
FY 2021
FY 2020
Components in the defined benefit costs
entered under "Other income"
(473)
year: EUR 1,702 K), as well as asset values from
Figures on 1 January
3,739
2,976
contributions to provident funds amounting to EUR
Total
301
-
- disposal and deconsolidation of AWEK
2,309 K (previous year: EUR 1,525 K) and reinsurances
microdata GmbH
(396)
of EUR 140 K (previous year: EUR 512 K). In this respect,
In terms of the ongoing annual expenditure amounting to
+ Expected yields from plan assets
383
31
+ Contributions by employer
880
873
it is not possible to provide any other information on
EUR 774 K (previous year: EUR 761 K), interest revenues
– Benefits paid out
0
(54)
investment categories.
amounting to EUR 383 K (previous year: EUR 63 K) and
– Effect of the asset ceiling
(78)
(86)
interest expenditure amounting to EUR 57 K (previous
Figures on 31 December
4,528
3,739
year: EUR 90 K) were entered under "Interest results"
Annual Report 2021 GK Software SE		 Consolidated Accounts
2020
(86)
(89)

and the remaining expenditure amounting to EUR 1.100 K (previous year: EUR 735 K) was entered as "Expenditure for old-age pensions".

The reassessment of net debt from a defined benefit plan was entered under "Other income".

The cash value of the defined benefit obligation and the fair value of the plan assets developed as follows:

T.51 Development of the cash values of defined benefit obligations and plan assets

EUR K Cash value of the
defined benefit
obligation		 Fair value of the plan
assets		 Shortfall (−) surplus
(+)
FY 2021 6,409 4,528 (1,881)
FY 2020 6,469 3,739 (2,730)

T.52 Development of the plan liabilities and plan assets based on past experience

EUR K Liabilities in the plan Assets in the plan
FY 2021 10 (11)
FY 2020 20 (23)
FY 2019 29 (404)
FY 2018 16 16
FY 2017 (199) 0
FY 2016 273 (12)

We are assuming that contributions amounting to EUR 957 K (previous year: EUR 782 K) will be paid into the plan during 2022.

The crucial actuarial assumptions, which are used to determine the defined benefit obligation, are the actuarial interest rate and the pension trend. The sensitivity analyses shown below were carried out on the basis of the possible changes to each assumption on the balance sheet date determined by prudent judgement, although the remaining assumptions remained unchanged in each case. 108 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

  • – If the actuarial interest rate increases [falls] by 0.5 percent, the defined benefit obligation would be increased by EUR 596 K [reduced by EUR 680 K] (previous year: increased by EUR 705 K [reduced by EUR 849 K]).
  • – If the pension trend increases [falls] by 0.5 percent, the defined benefit obligation would be reduced by EUR 473 K [increased by EUR 428 K]) (previous year: reduced by EUR 554 K [increased by EUR 423 K]).

The aforementioned sensitivity analysis should not represent the actual change in the defined benefit obligation, as it is improbable that any deviations from the assumptions made will occur in isolation, as some of the assumptions are connected to each other.

The cash value of the defined benefit obligation in the aforementioned sensitivity analysis was also determined using the current single premium method on the balance sheet reporting date, i.e., the same method as that used to calculate the defined benefit obligation entered on the consolidated balance sheet.

The promised benefits from the defined benefit pension plans have the following effects on the flows of payments (expected pension payments) for the balance sheet years following the reporting date:

T.53 Benefits from the plan in the following years

EUR K Value Amount previous
year
Fiscal year 1 7 62
Fiscal year 2 8 63
Fiscal year 3 92 64
Fiscal year 4 129 146
Fiscal year 5 130 182
Fiscal year 6-10 1,499 1,535

The average weighted term (duration) of the performance-related payment obligation is between 18.2 years and 29.45 years (previous year: 19.54 to 30.71).

4.2.9. Deferred public-sector subsidies

This item concerns investment subsidies subject to tax from the Free State of Saxony (provided by the Sächsische AufbauBank) as part of its regional business stimulus programme and investment grants that are not subject to tax.

The reversal of the subsidies and grants takes place in a linear fashion over the serviceable life of the assets that have been supported by public funds.

4.2.10. Provisions

T.54 Provisions

EUR K Production
department		 Financial
department		 Total
As of 1 January 73 473 546
Amounts used 4 330 334
Liquidation 2 66 67
Additional funds 0 401 401
As of 31 December 67 479 546

The provisions in the production department exclusively cover warranties for individual items. The individual risks were analysed and a provision was formed on the basis of this individual analysis. The figures for human resources have been shown under "deferred liability" since 2021. The balance from the financial department includes EUR 380 K from auditor costs for the annual accounts and EUR 42 K from archiving costs. With the exception of the warranty provision and the archiving costs, a complete outflow of funds is expected in 2022. 109 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

We refer you to Section 3.10. "Other assessment uncertainties" with regard to the assessment uncertainty.

4.3. Equity

We would refer you to the 'Statement of changes in the Group's equity' if you wish to gain information on changes to the equity at GK Software until the 2021 balance sheet reporting date.

The Company's share capital amounted to EUR 2,258,425.00 on 31 December 2021 (2,051,100.00 on 31 December 2020) and was divided into 2,258,425 par value, individual share certificates each worth EUR 1. All the shares issued had been fully paid for by the reporting date. The amendment of EUR 207,325.00 resulted from a capital increase of EUR 180 K and EUR 27 K from exercising the share option scheme.

No shares were owned by GK Software on the balance sheet date.

Authorised capital. On 17 June 2021, the annual shareholders' meeting passed a resolution authorising the Management Board to increase the Company's share capital, with the Supervisory Board's approval, against cash contributions or assets in kind by up to a total of EUR 1,115,550.00 on one or more occasions until 16 June 2026, whereby shareholders' subscription rights can be excluded.

Contingent capital. Conditional capital (conditional capital II EUR 50,000; conditional capital III EUR 75,000; conditional capital IV EUR 250,000; conditional capital V EUR EUR 83,500; contingent capital VI 75,000) exists. The options issued under contingent capital I, II and III have either lapsed, been fully redeemed or can no longer be redeemed. These contingent increases in capital are only performed if the owners or creditors of convertible bonds or share options make use of their conversion or subscription rights.

With regard to the issue of share options and the amount of contingent capital, we refer you to Section 8.1.1. "Share-option scheme" in the notes on the consolidated accounts.

The revenue reserves item not only contains the adjustment to the statutory reserve funds, but also differences in amounts due to the initial switch to IFRS.

Extra charges arising from the issue of shares minus the additional costs for the capital increase are shown in the capital reserves.

Accumulated other earnings from currency exchange differences arising from the conversion of foreign business operations and the actuarial profits/losses from defined benefit schemes are entered under "Other reserves".

5. Notes on the Consolidated Profit and Loss Statement

5.1. Turnover revenues

5.2. Other operating revenues

T.55 Other operating revenues

Consolidated Accounts
Notes on the Consolidated Accounts
5. Notes on the Consolidated 5.2. Other operating revenues 5.3. Materials expenditure
Profit and Loss Statement T.55 Other operating revenues T.56 Materials expenditure
EUR K FY 2021 FY 2020 EUR K FY 2021 FY 2020
5.1. Turnover revenues Offset benefits in kind 1,345 1,461 Cost of auxiliary materials and supplies 1,402 1,156
Deferred public-sector subsidies 737 817 Expenditure on purchased services 12,766 8,279
The turnover revenues are exclusively the result of Rent/leases with associated firms 207 360
the sale of hardware and software and the provision Earnings from currency differences 2,024 623 Total 14,168 9,436
of services for international and national customers. Reductions in valuation adjustments 10 228
With regard to the breakdown of revenue from turnover, Other onward charges with associated firms 80 134 5.4. Personnel expenditure
please refer to Section 1.4. "Segment reporting" Revenue from other periods and insurance
policies		 284 124
Revenue from deconsolidation 3,458 — T.57 Personnel expenditure
Contract assets amounted to EUR 12,152 K (previous Others 596 323 EUR K FY 2021 FY 2020
year: EUR 13,587 K) on the balance sheet reporting date. Total 8,742 4,070
Wages and salaries 65,230 62,897
In the year under review, EUR 3,589 K reported as Revenue from deconsolidation relates to the Social security contributions 13,509 12,742
of which expenditure on retirement benefits 1,596 1,211
contractual liabilities as of 31 December 2020 were discontinued business operations of AWEK microdata Total 78,740 75,640
included in revenue from turnover. In the previous year, GmbH.
EUR 3,547 K reported as contractual liabilities as of 31
December 2019 were recorded as revenue.		 The "Reductions in valuation adjustments" refers to the
reversal of individual valuation adjustments that are no
longer required and the revaluation of derivatives.		 On average, 1,086 people were employed during the
2021 financial year (1,140 in the previous year). On the
reporting date of 31 December 2021, 1,096 people, not
including the Management Board, were employed (1,162
in the previous year).
With 608 staff members (previous year: 644), a large
proportion of the Group's employees were employed at
GK Software SE on the reporting date of 31 December
2021. The number of people employed at Eurosoftware
s.r.o. in Plzen increased to 273 (previous year: 244). 22
110 Annual Report 2021 GK Software SE

5.3. Materials expenditure

T.56 Materials expenditure

Total 14,168 9,436
Expenditure on purchased services 12,766 8,279
Cost of auxiliary materials and supplies 1,402 1,156
EUR K FY 2021 FY 2020

5.4. Personnel expenditure

T.57 Personnel expenditure

EUR K FY 2021 FY 2020
Wages and salaries 65,230 62,897
Social security contributions 13,509 12,742
of which expenditure on retirement benefits 1,596 1,211
Total 78,740 75,640

5.5. Depreciations

5.6. Other expenditure

T.58 Other operating expenditure

Consolidated Accounts
Notes on the Consolidated Accounts
employees were employed at AWEK GmbH (previous
year: 29). Due to the sale of AWEK microdata GmbH, 0		 5.6. Other expenditure 5.7. Financial results
employees were employed (previous year: 41). 2 people T.58 Other operating expenditure T.59 Financial results
were employed at OOO GK Software RUS (2 in the EUR K FY 2021 FY 2020 EUR K FY 2021 FY 2020
previous year). 90 people were employed at GK Software
USA Inc. (previous year: 97). GK Software Africa Ltd had Travel expenses 3,370 3,977 Financial income 575 192
35 employees (previous year: 31). TOV Eurosoftware-UA Legal and consultancy costs 4,134 3,065 Negative interest on bank balances/deposit rates (148) —
employed 21 people (previous year: 28). 5 people were Other operating requirements 1,202 1,252 Financial expenditure (1,279) (1,637)
Impairment of value on derivatives 250 263 Balance (852) (1,445)
employed at the Swiss subsidiary, StoreWeaver GmbH Value adjustment on receivables 122 1,103
(previous year: 4). There were 35 people employed at Sales expenditure
Maintenance costs for software		 1,657
3,079		 1,164
2,348
prudsys AG (previous year: 42). DF Deutsche Fiskal Attracting and tying employees 906 654 5.8. Income taxes
GmbH has 5 employees (previous year: 0). Ancillary costs for business premises 1,310 1,138
Data traffic 588 688 T.60 Income taxes
5.5. Depreciations Voluntary social benefits 311 373 EUR K FY 2021 FY 2020
Insurance policies and fees 731 631
Currency losses 740 816 Current tax liabilities 2,317 1,569
Apart from the scheduled depreciation of property, plant Rent for business premises 96 96 Deferred tax expenditure 839 1,255
and equipment, and amortisation of usage rights from Special expenditure for projects 141 205
leasing contracts and intangible assets, this item also Others 1,101 148 Balance 3,156 2,824
includes a write-down resulting from an intrinsic value
test carried out for a building (EUR 107 K) and a plot of
land (EUR 82 thousand). With regard to the assessment
method used, we refer you to Section 3.1. "Impairment of
value for assets"		 Total
The lower travel expenses continue to result from the
decrease in business trips due to the pandemic.		 19,739 17,923 Deferred taxes on existing losses carried forward
(provided that they cannot be balanced out with existing
deferred tax assets) were not entered because of the
uncertainty regarding the use of these losses carried
forward in the next five years. All losses carried forward
were taken into account in the calculation of deferred
taxes. The losses carried forward have an indefinite
term.
111 Annual Report 2021 GK Software SE

5.7. Financial results

T.59 Financial results

Financial income 575 192
Negative interest on bank balances/deposit rates (148) —
Financial expenditure (1,279) (1,637)
Balance (852) (1,445)

5.8. Income taxes

T.60 Income taxes

EUR K FY 2021 FY 2020
Current tax liabilities 2,317 1,569
Deferred tax expenditure 839 1,255
Balance 3,156 2,824

T.61 Income tax rates

Percent 31.12.2021 31.12.2020
Group tax rate (parent company) 29.4 29.8
Consolidated Accounts
Notes on the Consolidated Accounts
T.61 Income tax rates T.62 Deferred taxes
Percent 31.12.2021 31.12.2020 31.12.2021 31.12.2020
EUR K Assets Liabilities Assets Liabilities
Group tax rate (parent company) 29.4 29.8
Intangible assets
Other assets		 —
37		 3,817
17		 104
37		 3,798
130
The change in the Group tax rate compared with the
previous year results from the weighted trade-tax		 Usage rights in the sense
of IFRS 16		 — 2,106 — 2,571
collection rate. The deferred taxes are included in the following balance Trade accounts
receivable from ongoing
work		 — 1,208 — 1,883
sheet items: Receivables and other
assets		 332 1,159 929 —
Pension provisions 1,886 181 1,084 181
Changes in exchange
rates		 298 10 283 6
Provisions 16 — 12 —
Liabilities 63 4,103 185 3,196
Leasing liabilities in the
sense of IFRS 16		 2,139 — 2,590 —
Losses carried forward 3,654 — 3,411 —
Balancing (8,231) (8,231) (8,220) (8,220)
Total according to the
balance sheet		 193 4,370 416 3,546
Consolidated Accounts
Notes on the Consolidated Accounts
T.63 Deferred tax claims/liabilities T.64 Transfer of tax expenditure
31.12.2021 31.12.2020 EUR K 2021
2,020
Changes
related to		 Changes not
related to		 Changes
related to		 Changes not
related to		 Pre-tax earnings 16,454 9,090
Initial the income Deconsoli the income Final Initial the income the income Final
EUR K balance statement dation statement balance balance statement statement balance Anticipated tax expenditure 29.4% (previous year:
29.825%)		 4,837 2,711
Intangible assets (3,694) (18) (104) 0 (3,817) (3,794) 100 0 (3,694) Tax-rate deviations (61) (72)
other assets (94) 113 0 19 8 (102) 0 (94) Tax impact on non-deductible company spending 532 415
Right of use assets IFRS16 (2,571) 429 35 0 (2,106) (2,325) (246) 0 (2,571) Tax impact on tax-free income (1,160) (1)
Trade accounts receivable from Tax impact on trade tax additions 84 85
ongoing work (1,883) 625 50 0 (1,208) (2,398) 515 0 (1,883) Tax impact on trade tax reductions (28) -7
Receivables and other assets 929 (1,786) (4) 34 (827) 494 465 (29) 929 Impairment on deferred tax assets from losses
Pension provisions 903 995 (52) (141) 1,705 1,298 (419) 25 903 carried forward — —
Changes in exchange rates IAS 21 277 0 11 288 (10) 0 287 277 Not entered losses carried forward 150 63
Provisions 12 4 0 16 0 12 0 12 Use of losses carried forward for which no
Leasing liabilities in the sense of deferred taxes were previously recognised. (1,752) (488)
IFRS 16 2,590 (415) (36) 0 2,139 2,352 238 0 2,590 Tax effects from other periods 55 1,407
Liabilities (3,011) (1,029) 0 (4,040) 66 (3,077) 0 (3,011) Permanent differences — (1,260)
Losses carried forward 3,411 243 0 3,654 2,151 1,260 0 3,411 Other tax effects 498 (28)

5.9. Expenditure and earnings from currency conversions

T.65 Currency conversions

Consolidated Accounts
Notes on the Consolidated Accounts
5.9.
Expenditure
and
earnings
from		 currency 6. Notes on the Cash Flow
conversions Statement
Profits and losses from currency differences were
present in the following items in the profit and loss We recognise all paid taxes in the cash flow from
statement:
T.65 Currency conversions		 operating activities. Any interest received is shown in
the cash flow from investment activities. Any dividends
EUR K 2021 2020 and interest paid are considered in the cash flow from
financial activities.
Other expenses 740 816
Other operating revenues (2,024) (623) Other non-cash earnings and expenditure main involved
Balance (1,283) 194 writing off other liabilities to affect the income.
The change on the balance sheet to liabilities arising
from funding activities resulted from the following
circumstances, which affected both cash and non-cash
items:
114 Annual Report 2021 GK Software SE

6. Notes on the Cash Flow Statement

T.66 Explanation of cash and non-cash changes in 2021

1.1.2021 Changes to cash Changes related to non cash 31.12.2021
EUR K Repayments Taking out
funds		 Others
Non-current liabilities with banks 4,446 (551) — (383) — 3,512
Non-current leasehold liabilities 6,731 — — — (1,403) 5,328
Convertible bond 14,222 — — — (14,222) —
Total 25,398 (551) — (383) (15,625) 8,840
Current liabilities with banks 5,223 (236) — (372) (3,614) 1,002
Current leasehold liabilities 2,580 — — — (123) 2,457
Total 7,803 (236) — (372) (3,737) 3,459
Liabilities from funding activities 33,201 (786) — (755) (19,361) 12,299

T.67 Explanation of cash and non-cash changes in 2020

Consolidated Accounts
Notes on the Consolidated Accounts
T.66 Explanation of cash and non-cash changes in 2021 7. Items Not Entered
Changes related to non
1.1.2021 Changes to cash cash 31.12.2021
EUR K Repayments Taking out
funds		 Others 7.1. Contingent liabilities
Contingent liabilities cover possible obligations, but
Non-current liabilities with banks
Non-current leasehold liabilities		 4,446
6,731		 (551)
—		 —
—		 (383)
—		 —
(1,403)		 3,512
5,328
Convertible bond 14,222 — — — (14,222) — their existence is only confirmed if one or several
Total 25,398 (551) — (383) (15,625) 8,840 uncertain future events actually take place and there
Current liabilities with banks 5,223 (236) — (372) (3,614) 1,002 is no possibility of exercising complete control over
Current leasehold liabilities 2,580 — — — (123) 2,457 these factors. However, this term also covers existing
Total 7,803 (236) — (372) (3,737) 3,459 obligations, which will probably create no outflow of
Liabilities from funding activities 33,201 (786) — (755) (19,361) 12,299 assets. According to IAS 37, contingent liabilities are
T.67 Explanation of cash and non-cash changes in 2020 not entered on the balance sheet. Guarantee loans
amounting to EUR 232 K (previous year:
Changes related to non
1.1.2020 Changes to cash cash 31.12.2020 EUR 207 K) existed for contingent liabilities and they
EUR K Repayments Taking out
funds		 Others were granted by Volksbank Vogtland e.G. (EUR 23 K),
Commerzbank (EUR 176 K) and the DZ Bank (EUR 8 K).
Non-current liabilities with banks 6,132 (1,508) — (178) — 4,446 The securities act as normal coverage for renting the
Non-current leasehold liabilities 6,279 — — — 452 6,731 business premises in Berlin, Cologne and St. Ingbert.
Convertible bond 13,826 — — 395 14,222 The rental guarantee from the Volksbank is secured
Total 26,238 (1,508) — (178) 847 25,398 by pledging bank credit balances amounting to EUR 11
Current liabilities with banks 13,861 (5,832) — (690) (2,116) 5,223 K (previous year: EUR 11 K). The Management Board
2,735 (2,786) — — 2,630 2,580
Current leasehold liabilities 16,596 (8,618) — (690) 514 7,803 does not expect it to be necessary to make use of the
guarantee.
Total 1,361 33,201

7. Items Not Entered

7.1. Contingent liabilities

7.2. Financial obligations

GK Software SE and its Group companies did not enter any relevant purchase obligations during the year ending 31 December 2021. The obligations arising from leases and rental contracts were recognised on the balance sheet in line with IFRS 16.

7.3. Results after the reporting period

With GK Software Asia Pte. Ltd. in Singapore and GK Software Australia Pty. Ltd. in Melbourne, 2022 saw the establishment of two further national companies.

The outbreak of the war in Ukraine in February 2022 represents an event after the balance-sheet of currently inestimable extent, duration and negative consequences for the economy as a whole. GK Software SE principally acquires development services from its Ukrainian subsidiary. Due to the countermeasures taken, no significant burdens on the assets, financial and earnings situation of the Company are expected for the 2022 fiscal year.

8. Other Information

8.1. Share-based remuneration

Share-based payments with compensation through equity instruments to employees and others, who provide comparable services, are assessed at the fair value of the equity instrument on the day that it is granted.

The fair value determined when granting the sharebased payments with compensation through equity instruments is entered in linear fashion as expenditure with a corresponding increase in equity over the period until the start of the exercise time (provision for benefits to employees provided in equity) and is based on the Group's expectations with regard to the equity instruments, which will probably be exercisable. The Group must check its estimates regarding the number of equity instruments, which are ready to be exercised, on each reporting date for the accounts. The effects of the changes to the original estimates must be entered to affect the net income, if they exist. The entry takes place in such a way that the total expenditure reflects the change in estimate and leads to a relevant adaptation of the reserve for benefits to employees with compensation through equity instruments. 116 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

Share-based payments with compensation through equity instruments to employees and different parties are assessed at the fair value of the goods or services received, unless the fair value cannot be reliably determined. In this case, they are assessed at the fair value of the equity instruments granted at the time when the Company receives the goods or the opposing party provides the services. In the case of share-based payments with cash compensation, a liability is entered for the goods or services obtained and is assessed at the fair value when they accrue. Until the debt is settled, the fair value of the debt is newly determined on each reporting date for the accounts and on the settlement date and all the changes to the fair value are entered to affect the net income.

8.1.1. Share option scheme

Share option programmes were introduced to supplement the normal remuneration to improve the loyalty and motivation of leading employees and those who provide special services.

According to Section 4a Para. 1, 3 and 6 of the articles of association, the Management Board was entitled to grant subscription rights to individual share certificates as part of the share option programme on one or more occasions, provided that the Supervisory Board approves these measures. The share options are exclusively for subscription by members of the GK Software SE Management Board, selected managers and other senior employees at GK Software SE and for subscription by members of the management team and selected managers and other leading employees in

Consolidated Accounts
Notes on the Consolidated Accounts
companies, which are independently associated firms The options exercised during the reporting period
in a relationship with GK Software SE in the sense of involved an average share price of EUR 130 (previous
Sections 15 and 17 of the German Companies Act. The year: EUR 66.86).
decisions taken at the annual shareholders' meeting T.68 Development of outstanding options that have been exercised and
on 28 June 2012 (contingent capital II), 29 June 2015 lapsed or forfeited
(contingent capital III), 29 June 2018 (contingent capital Number of options
V) and 17 June 2021 (contingent capital VI) empowered
the Management Board to issue subscription rights to Options outstanding on 1 January 2020 112,250
GK Software SE shares with a term of up to five years Options granted during the course of the 2020 financial
year		 20,525
provided that each share option grants the right to Options lost during the reporting period (3,875)
subscribe to one GK Software SE share. The time limits Options redeemed during the reporting period (27,800)
for contingent capital II and III have expired. Remaining Options expiring during the reporting period (4,500)
options from contingent capital III can no longer be Options outstanding on 31 December 2020 96,600
exercised. Exercisable options on 31 December 2020 21,650
Options outstanding on 1 January 2021 96,600
A decision taken at the annual shareholders' meeting Options granted during the course of the 2021 financial
on 16 June 2016 empowered the Management Board year 23,725
Options lost during the reporting period
Options redeemed during the reporting period		 (4,500)
(27,325)
to issue on one or several occasions option and/or Options expiring during the reporting period (12,200)
convertible bonds, profit participation certificates or Options outstanding on 31 December 2021 76,300
participating bonds made out to the holder or name Exercisable options on 31 December 2021 6,000
or a combination of these financial instruments and Weighted average of options exercised in 2021 129.94
exclude the subscription rights to these instruments or
their combination until 15 June 2021, provided that the We would refer you to the following summaries to
Supervisory Board agrees. provide an overview of the individual share option
programmes.
The individual conditions are recorded in the following
tables.
117 Annual Report 2021 GK Software SE
Consolidated Accounts
Notes on the Consolidated Accounts
T.69 Options granted and obstacles to exercising them T.70 Currency rates, interest rates and volatility
Date of issue Issue
options		 of which
forfeited		 of which
lapsed		 of which
redeemed		 Options
remaining		 Exercise
price		 Exercise
period		 End of
exercise
period		 Term from Stock ex
change
price on as
sessment		 Retention Risk-free
interest		 Shares for
Manage
Number Number Number Number EUR Years Date of issue issue date date period rate Volatility ment Board Total value
Years EUR Years % % Number EUR K
20.6.2017 8,500 1,250 1,150 6,100 0 92.10 4 1/4 21.6.2021
Conditional capital II 0 20.6.2017 4 1/2 93.00 4 (0.52) 31.97 0 195
29.8.2016 32,025 1,600 7,050 23,375 0 45.98 4 1/4 29.8.2020
4.12.2017 16,500 0 4,000 6,500 6,0001 116.69 4 1/4 3.12.2021 29.8.2016 5 44.20 4 (0.60) 31.64 10,000 294
Conditional capital 4.12.2017 4 1/2 116.30 4 (0.47) 32.01 10,000 468
III 6,000
26.11.2018 4 1/2 76.20 4 (0.36) 29.08 10,000 633
26.11.2018 37,000 8,950 0 0 28,050 75.16 4 1/4 28.11.2022 3.8.2020 4 1/2 70.00 4 (0.73) 34.71 10,000 363
3.8.2020 20,525 2,000 0 0 18,525 68.00 4 1/4 3.8.2024 5.10.2021 5 151.50 4 (0.70) 36.25 10,000 663
5.10.2021 23,725 0 0 0 23,725 154.40 5 5.10.2025
Conditional capital V 70,300 The non-risk interest rate for the SOP programme released on 05.10.2020 was
calculated using the average cost method.
Total amount 76,300 T.71 Distribution of expenditure entered
Date of issue Fair value/
option		 balance sheet reporting Probable average
exercise period on the
date		 Assumed annual
dividend per share		 Expendi
ture en
tered		 of which
Manage
ment Board
EUR Months EUR EUR K EUR K
20.6.2017 22.934 0 0.50 39 -
4.12.2017 28.370 4 0.50 86 52
26.11.2018 17.100 10 0.50 131 35
3.8.2020 19.170 31 0.50 88 43
5.10.2021 42.600 45 0.50 40 17
Total amount 384 147
1
The remaining options can no longer be exercised		 Annual Report 2021 GK Software SE
Date of issue Term from
issue date		 Stock ex
change
price on as
sessment
date		 Retention
period		 Risk-free
interest
rate		 Volatility Shares for
Manage
ment Board Total value
Years EUR Years % % Number EUR K
20.6.2017 4 1/2 93.00 4 (0.52) 31.97 0 195
29.8.2016 5 44.20 4 (0.60) 31.64 10,000 294
4.12.2017 4 1/2 116.30 4 (0.47) 32.01 10,000 468
26.11.2018 4 1/2 76.20 4 (0.36) 29.08 10,000 633
3.8.2020 4 1/2 70.00 4 (0.73) 34.71 10,000 363
5.10.2021 5 151.50 4 (0.70) 36.25 10,000 663

The non-risk interest rate for the SOP programme released on 05.10.2020 was

Date of issue Fair value/
option		 Probable average
exercise period on the
balance sheet reporting
date		 Assumed annual
dividend per share		 Expendi
ture en
tered		 of which
Manage
ment Board
EUR Months EUR EUR K EUR K
20.6.2017 22.934 0 0.50 39 -
4.12.2017 28.370 4 0.50 86 52
26.11.2018 17.100 10 0.50 131 35
3.8.2020 19.170 31 0.50 88 43
5.10.2021 42.600 45 0.50 40 17
Total amount 384 147

8.2. Earnings per share

Consolidated Accounts
Notes on the Consolidated Accounts
The process of determining the fair values per option
took place on the basis of 10,000,000 simulations using		 T.72 Reconciliation of the results used to determine the earnings per
share.		 interest-rate advantage from the convertible bond and
reduced by the resulting tax effect.
the Monte Carlo procedure. The total value per share EUR K FY 2021 FY 2020
option scheme was determined by taking into account 8.3. Details of capital management
each option. This figure must be entered as personnel Annual results 13,298 6,266
expenditure on a pro-rata basis for the elapsed
qualifying period and assigned to the capital reserves.		 Less the proportion of non-controlling shares
Group result (numerator for the undiluted
earnings per share)		 (141)
13,157		 (55)
6,210		 The Group manages its capital – which not only includes
equity, but all accounts receivable and accounts payable
The exercise price, the exercise hurdle and the exercise – with the aim of guaranteeing the Group's ability
period were taken into consideration in the underlying Annual results 13,298 6,266 to service its loans and debts and provide sufficient
Plus interest saved on convertible bonds 450 450 liquidity to maintain collateral for investment projects at
observation. Less the tax drawback due to conversion (131) (131)
Less the proportion of non-controlling shares (141) (55) all times.
The volatility was calculated according to IFRS 2 B25(b)
in line with an estimated average term of the option		 Adjusted Group result (numerator for the
diluted earnings per share)		 13,476 6,529 These goals are monitored by tracking financial
rights of 4 ¼ years based on the company's historical T.73 Weighted average of shares used as denominator indicators (e.g. the equity ratio, capitalisation ratio,
share price during the last four years on the relevant
granting date.		 Number FY 2021 FY 2020 surplus of liquid funds over interest-bearing liabilities)
for the target corridors. The aim of maintaining
The average weighted residual term for the options is Weighted average of shares used as the
denominator to determine the undiluted earnings
per share		 2,201,490 2,040,376 adequate capital is supported by investing cash and
cash equivalents in a non-risk manner. Derivative
1.29 years. Options 52,575 73,725 financial instruments are only used to the extent that
Convertible bond 96,774 96,774
Earnings
per
share		 Adjustment by fictitious bonus shares due to
exchange rate differences		 30,174 (32,101) they are needed to hedge actual business deals.
The earnings per share are determined as a quotient Weighted average of the shares and potential
shares used as the denominator to determine
the diluted earnings per share		 2,381,013 2,178,774 8.4. Details of associated persons and firms
There was no need for any expenditure on valuation
of the total results and the weighted average of the
number of shares in circulation during the financial year.
The consolidated annual surplus for 2021 amounts to
EUR 13,298 K (previous year: EUR 6,266 K) As a result,		 When calculating the diluted earnings per share, the
total number of shares, the number of existing and		 adjustments or irrecoverable accounts receivable with
associated persons or these items did not exist at all.
the earnings per share in 2021 amounted to EUR 5.66
diluted and EUR 5.98 undiluted (previous year: EUR 3.00		 possible new shares from the share option schemes and
the convertible bond were all taken into consideration.		 Any business transactions between GK Software and its
consolidated subsidiaries were illuminated as part of the
consolidation process.

8.3. Details of capital management

8.4. Details of associated persons and firms

8.4.1. Management Board

T.74 Pension provisions for members of the Management Board

Consolidated Accounts
Notes on the Consolidated Accounts
8.4.1. Management Board and EUR 975 K (2020: EUR 420 K) was for the variable T.74 Pension provisions for members of the Management Board
The following people are members of the Management components. EUR K 31.12.2021 31.12.2020
Board:
Mr Rainer Gläss, Schöneck, CEO, engineering
graduate
Mr André Hergert, Hamburg, CFO, business graduate
The members of the Management Board at GK Software
SE receive not only a fixed salary, but also a salary
component that is dependent on results and is linked to
qualitative targets and mainly relates to the development
of the business. These qualitative targets are set by the
Supervisory Board for the members of the Management
Board each year.
The members of the Management Board are granted
benefits in kind in addition to fixed remuneration. This
includes the provision of company cars, also for private
use. In addition, the members of the Management Board
are reimbursed for the costs of maintaining residences
at the company's various locations. The members of
the Management Board are granted pension packages
according to their level of seniority.		 In addition, payments of EUR 739 K (previous year: EUR
628 K) for active members of the Management Board
and EUR 205 K (previous year: EUR 205 K) for two former
members of the Management Board were made to
retirement pension institutions. These were a reinsured
provident fund, a pension fund and a direct insurance.
Forfeitable share provisions (share options) are granted
as long-term share-based remuneration. If they are
exercised, the options are serviced by the issue of new
non-par value company shares made out to the holder
with a calculated share in the nominal capital of EUR
1 from the authorised capital without any additional
payment. In terms of the organisation of the stock
awards, the same general conditions apply to the
Management Board as to leading members of staff,
please refer to Section 8.1.1. "Share-option scheme".
As of 31 December 2021, 50,000 share options were
held by the members of the Management Board and		 Provisions for pensions
thereof for board members
thereof for former board members
Settlement amount of the provision
thereof for board members
thereof for former board members
Fair value of net contribution margin
thereof for board members
thereof for former board members
Working period costs
thereof for board members
thereof for former board members
Regarding the form of the pension commitments, please
refer to Section 4.2.8. "Provisions for pensions".
Those who are or were members of the Company's
Management Board or Supervisory Board during
the 2021 financial year, directly held the following
shareholdings in GK Software on 31 December 2021:
T.75 Shareholdings held by members of the Management Board and the
Supervisory Board		 1,881
1,572
309
6,409
5,065
1,344
4,528
3,493
1,035
782
542
240		 2,730
1,891
839
6,469
4,404
2,065
3,739
2,514
1,226
788
548
241
The overall remuneration (without LTI1
) of the		 2,000 by two former members of the same body. In the Name Number of shares in %
Management Board for their work in the 2021 financial
year was EUR 2,181 K (2020: EUR 1,426 K), of which
EUR 1,206 K (2020: EUR 1,006 K) was for fixed salary		 year under review, the members of the Management
Board were each granted 5,000 shares. The expenditure
from the share-based remuneration for the members
of the Management Board entered on the basis of the		 Rainer Gläss
Herbert Zinn
André Hergert		 67,792
3.00
2,000
0.09
14,198
0.63
1
LTI: Long-term incentive
Annual Report 2021 GK Software SE		 assessment was EUR 147 K (previous year: EUR 159 K).

T.75 Shareholdings held by members of the Management Board and the Supervisory Board

Name Number of shares
Rainer Gläss 67,792 3.00
Herbert Zinn 2,000 0.09
André Hergert 14,198 0.63

8.4.2. Supervisory Board

  • – Dr Philip Reimann Hamburg, until 30.09.2021 partner, solicitor, tax consultant, solicitor specialising in tax law, Dierkes & Partner Partnergesellschaft mbB, since 1.10.2021 managing director, solicitor, tax consultant, solicitor specialising in tax law, LPJ Bantelmann & Reimann Rechtsanwaltsgesellschaft mbH, Chief Executive Officer
  • – Mr Herbert Zinn Ebersburg, managing partner at SÜBET RHEIN-MAIN Handels-und Beteiligungsgesellschaft mbH und Co.KG and managing partner of HBZ Immobilien-Verwaltungs-GmbH
  • – Mr Thomas Bleier Oelsnitz, business economist (Sparkasse), Deputy Chair

8.4.3. Associated firms

T.76 Accounts receivable with associated firms

Consolidated Accounts
Notes on the Consolidated Accounts
Mr Gläss indirectly held a further 464,500 shares
through Gläss Vermögenverwaltungs GmbH & Co KG on
31 December 2021.
Other accounts receivable with members of the
Management Board amounting to EUR 39 K involved
various advance payments for purchases, travel
expenses and similar items and they were therefore not
subject to any interest. These accounts receivable can
be recovered at any time.
8.4.2. Supervisory Board		 envisage severance payments or other benefits for the
members of the Supervisory Board when they finish
their membership of this body. There are no conflicts of
interest between their obligations towards the Company
and their private interests or other obligations at the
moment.
There were no agreements with the Company regarding
pensions for the members of the Supervisory Board.
For the 2021 financial year, the members of the
Supervisory Board are entitled to a fixed remuneration		 T.76 Accounts receivable with associated firms
EUR K
31.12.2021
Suppliers with debit balances
79
Other claims
628
Trade accounts receivable
228
Total receivables
935
Accounts payables
69
Total liabilities
69
The balance of creditors with a debit account resulted
The Company's Supervisory Board consists of three
members.
–
Dr Philip Reimann — Hamburg, until 30.09.2021
partner, solicitor, tax consultant, solicitor specialising
in tax law, Dierkes & Partner Partnergesellschaft
mbB, since 1.10.2021 managing director, solicitor,
tax consultant, solicitor specialising in tax law, LPJ
Bantelmann & Reimann Rechtsanwaltsgesellschaft
mbH, Chief Executive Officer
–
Mr Herbert Zinn — Ebersburg, managing
partner at SÜBET RHEIN-MAIN Handels-und
Beteiligungsgesellschaft mbH und Co.KG and
managing partner of HBZ Immobilien-Verwaltungs
GmbH
–
Mr Thomas Bleier — Oelsnitz, business economist
(Sparkasse), Deputy Chair
No agreements exist between members of the
Supervisory Board and the parent company, which		 of EUR 120 K (2020: EUR 83 K) according to the articles
of association. This is entered under the current
liabilities. There was no entitlement to any performance
related remuneration in 2021 or 2020 and there are no
provisions for such in the articles of association.
8.4.3.
Associated
firms
Accounts receivable with associated firms are those
that are not included in the consolidated companies. All
the business transactions with associated firms involved
other related companies in line with the categorisation in
IAS 24.19.		 associated firms.
Schöneck, of EUR 579 K.
and expenses.		 from credits issued after the balance sheet reporting
date in conjunction with purchased services from
The other accounts receivable involved advanced
payments made on the contingent purchase price
arising from the acquisition of valuephone GmbH,
The trade accounts receivable largely consisted of
service relationships with 'Mountain View Transport
GmbH', Schöneck. These relate to transport services
121 Annual Report 2021 GK Software SE

T.77 Expenditure and earnings with associated firms and persons

Consolidated Accounts
Notes on the Consolidated Accounts
T.77 Expenditure and earnings with associated firms and persons T.78 Auditor's fees 8.8.
Day
when
the
accounts		 were approved
for
EUR K 31.12.2021 31.12.2020 GK Software publication
Expenses with related companies EUR K GK Software SE Africa prudsys AG
thereof other services received 1,271
586		 1,641
881		 Auditing the annual The Management Board cleared these consolidated
thereof transport services 633 707 accounts 443 27 8 accounts to be forwarded to the Supervisory Board on
thereof rents/leases 53 53 Other services 10 0 0 27 April 2022. The Supervisory Board has the job of
Earnings with related companies 289 495 Total 453 27 8 checking the consolidated accounts and stating whether
thereof provided cars and services 66 82 it endorses them or not.
thereof rents/leases 207 376
thereof internal charging 16 35 8.6. Statement of compliance
thereof from loan interest 0 3
canteen services and the transport services are travel
services.		 homepage of GK Software SE in the "Corporate
Governance" section at https://investor.gk-software.com.
8.5. Auditor's fees 8.7. Details of Group affiliation
The auditor and companies attributable to it received the
following fees in 2021:		 company. GK Software SE, and therefore the GK Software Group
(the smallest and largest consolidated companies),
are subject to the direct control of GK Software
Holding GmbH (HRB 24111 Chemnitz), which has its
headquarters in Schöneck and is the senior parent
Annual Report 2021 GK Software SE

8.5. Auditor's fees

T.78 Auditor's fees

Total 453 27 8
Other services 10 0 0
Auditing the annual
accounts		 443 27 8
EUR K GK Software SE GK Software
Africa		 prudsys AG

8.6. Statement of compliance

8.7. Details of Group affiliation

8.8. Day when the accounts were approved for publication

Consolidated Accounts

Guarantee by the Legal Representatives

Guarantee by the Legal Representatives

We guarantee to the best of our knowledge that the consolidated accounts present a realistic view of the actual circumstances in the assets, financial and earnings situation at GK Software SE in line with the relevant accounting principles and that the consolidated annual report reveals the course of business including the business results and the situation within the Group in such a way that it communicates a view, which reflects the actual circumstances, and describes the main opportunities and risks for probable developments at the Company. 123 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Further information

Schöneck, 27 April 2022

The Management Board

Rainer Gläss Chief Executive Officer

André Hergert Chief Financial Officer

Independent Auditor's Report

The auditor's report reproduced below also includes a "Report on the Audit of Electronic Reproductions of the Consolidated Financial Statements and of the Management Report Prepared for the Purpose of Disclosure Pursuant to Section 317, Paragraph 3b HGB" (ESEF report). The subject matter of the ESEF report (the ESEF documents to be audited) is not attached. The audited ESEF documents can be viewed in or retrieved from the Federal Gazette.

Independent Auditor's Report

To GK Software SE, Schöneck / Vogtland

Report on the Audit of the Consolidated Financial Statements and of the Group Management Report

Audit Opinions

We have audited the consolidated financial statements of GK Software SE (formerly GK Software AG), Schöneck / Vogtland, and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2021, the total income statement, the consolidated statement of changes in equity and the consolidated statement of cash flows for the financial year from January 1 to December 31, 2021, and notes to the consolidated financial statements, including a summary of significant accounting policies. In addition, we have audited the group management report of GK Software SE for the financial year from January 1 to December 31, 2021. 124 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

In our opinion, on the basis of the knowledge obtained in the audit,

– the accompanying consolidated financial statements comply, in all material respects, with the IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315e, Paragraph 1 HGB and, in compliance with these requirements, give a true and fair view of the assets, liabilities, and financial position of the Group as at December 31, 2021, and of its financial performance for the financial year from January 1 to December 31, 2021, and

– the accompanying group management report as a whole provides an appropriate view of the Group's position. In all material respects, this group management report is consistent with the consolidated financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development.

Pursuant to Section 322, Paragraph 3, Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the consolidated financial statements and of the group management report.

Basis for the Audit Opinions

We conducted our audit of the consolidated financial statements and of the group management report in accordance with Section 317 HGB and the EU Audit Regulation (No. 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are further described in the "Auditor's Responsibilities for the Audit of the Annual Financial Statements and of the Management Report" section of our auditor's report. We are independent of the group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements.

In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the consolidated financial statements and on the group management report.

Key Audit Matters in the Audit of the Consolidated Financial Statements

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the financial year from January 1 to December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon; we do not provide a separate audit opinion on these matters.

In our view, the matters of most significance in our audit were as follows:

1 Recoverability of goodwill

2 Revenue recognition and allocation of revenue to correct periods Our presentation of these key audit matters has been structured in each case as follows:

  • 1 Matter and issue
  • 2 Audit approach and findings
  • 3 Reference to further information

Hereinafter we present the key audit matters:

1 Recoverability of goodwill

  • 1 Goodwill amounting in total to EUR 17.709 K (representing 12 % of total assets and 21 % of equity) is reported under the "Intangible assets" balance sheet item in GK Software SE (formerly GK Software AG)'s consolidated financial statements. Goodwill is tested for impairment by the Company once a year or when there are indications of impairment to determine any possible need for write-downs. Impairment testing is carried out at the level of the cash-generating units to which the relevant goodwill has been allocated. The carrying amount of the cash-generating unit, including goodwill, is compared with the corresponding recoverable amount in the context of the impairment test. The calculation of the recoverable amount generally employs the value in use. The present value of the future cash flows from the cashgenerating unit normally serves as the basis of valuation. The present values are calculated using discounted cash flow models. For this purpose, the medium-term business plan adopted by the Group forms the starting point for future projections. Expectations relating to future market developments and assumptions about the development of macroeconomic factors are also taken into account. The discount rate used is the weighted average cost of capital for the cash-generating unit. The impairment test determined that no writedowns were necessary. The outcome of this valuation exercise is dependent to a large extent on the estimates made by the executive directors with respect to the future cash inflows from the cash-generating unit, the discount rate used, and other assumptions, and is therefore subject to considerable uncertainty. Against this background and due to the complex nature of the valuation, this matter was of particular significance in the context of our audit. 125 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts
  • 2 As part of our audit, we reviewed the methodology employed for the purposes of performing the impairment test, among other things. After matching the future cash inflows used for the calculation against the medium-term

business plan adopted by the Group, we assessed the appropriateness of the calculation, in particular by reconciling it with general and sector-specific market expectations. In the knowledge that even relatively small changes in the discount rate applied can have a material impact on the value of the entity calculated using this method, we focused our testing on the parameters used to determine the discount rate applied, and verified the calculation procedure. We reproduced the sensitivity analyses performed by the Company, in order to reflect the uncertainty inherent in the projections. Taking into account the information available, we determined that the carrying amount of the cashgenerating unit, including the allocated goodwill, were adequately covered by the discounted future net cash inflows. Overall, the measurement inputs and assumptions used by the executive directors are in line with our expectations and are also within the ranges considered by us to be reasonable. 126 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

3 The Company's disclosures regarding the impairment test and the balance sheet item "Intangible Assets" are included in the sections "3.2 Goodwill Impairment" and "4.2.4 Intangible Assets" in the notes to the consolidated financial statements.

2 Revenue recognition and allocation of revenue to correct periods

1 Revenue amounting to EUR 130,847 K is reported in the Consolidated Profit and Loss Statement of GK Software SE. The company recognizes revenue from the sale and temporary granting of licenses, the provision of installation services and advice, maintenance and other services. The recognition of revenue from the sale of licenses depends on the existence of a binding contractual arrangement, the transfer of material rights to the buyer and the ability to reliably determine the consideration paid. Proceeds from services are realized as at the date the services are rendered, while maintenance revenue and proceeds from the temporary granting of licenses is realized over the performance period. These various services rendered by the company can be the object of agreements with customers, either individually or in various constellations. In this connection, the company must also identify contracts relating to multiple components and account for agreed individual services individually. In light of the complexity of the customer agreements underpinning revenue recognition, these significant items are subject to particular risk. Against this background, the correct application and deferral of revenues under the Group-wide application of the accounting standard IFRS 15 is considered to be complex and is based in some respects on estimates, assumptions and discretion used by the executive directors, with the result that this matter was of particular importance for our audit.

2 As part of our audit, we assessed, among other things, the correct presentation of revenue in the consolidated financial statements on the basis of the accounting policies applied by GK Software SE (formerly GK Software AG) in relation to the recognition of software revenue in accordance with the relevant IFRSs, in particular IFRS 15. To do so, we particularly first identified the material controls implemented by the Group to ensure the correct identification of contracts and performance obligations and the subsequent recognition of revenue, assessed their appropriateness and tested their effectiveness in preventing and detecting errors. In addition, we particularly have performed detailed revenue recognition reviews of individual significant transactions and other transactions on a test basis, including, inter alia, reviewing customer contracts, identifying performance obligations and assessing whether these services were rendered over a specified period or at a specified time and what transaction prices were received. Based on our audit procedures, we satisfied ourselves that the estimates and assumptions relating to revenue recognition made by the executive directors were adequately documented and justified.

3 The Company's disclosures on revenue recognition are contained in sections "Accounting and measurement methods" and "2.13 Income from contracts with customers" of the notes to the consolidated financial statements.

Other Information

The executive directors are responsible for the other information.

The other information comprises

  • – the statement on corporate governance pursuant to Section 289f HGB and Section 315d HGB.
  • – the separate non-financial report pursuant to Section 289b, Paragraph 3 HGB and Section 315b, Paragraph 3 HGB.
  • – all other information comprises further the remaining parts of the annual report – excluding cross-references to external information – with the exception of the audited consolidated financial statements, the audited group management report as well as our auditor's report

Our audit opinions on the consolidated financial statements and on the group management report do not cover the other information, and consequently we do not express an audit opinion or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the other aforementioned information and, in so doing, to consider whether the other information

  • – is materially inconsistent with the consolidated financial statements, with the content of the audited group management report or our knowledge obtained in the audit, or
  • – otherwise appears to be materially misstated.

Responsibilities of the Executive Directors and the Supervisory Board for the Consolidated Financial Statements and the Group Management Report

The executive directors are responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e, Paragraph 1 HGB and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial position, and financial performance of the Group. In addition the executive directors are responsible for such internal control as they have determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. 127 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

In preparing the consolidated financial statements, the executive directors are responsible for assessing the Group's ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.

Furthermore, the executive directors are responsible for the preparation of the group management report that, as a whole, provides an appropriate view of the Group's position and is, in all material respects, consistent with the consolidated financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a group management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the group management report.

The supervisory board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated financial statements and of the group management report.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements and of the Group Management Report

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether the group management report as a whole provides an appropriate view of the Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor's report that includes our audit opinions on the consolidated financial statements and on the group management report. 128 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Section 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and this group management report.

We exercise professional judgment and maintain professional scepticism during the audit. We also:

  • – Identify and assess the risks of material misstatement of the consolidated financial statements and of the group management report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  • – Obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and measures (systems) relevant to the audit of the group management report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an audit opinion on the effectiveness of these systems.
  • – Evaluate the appropriateness of accounting policies used by the executive directors and the reasonableness of estimates made by the executive directors and related disclosures.

  • – Conclude on the appropriateness of the executive directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are inadequate, to modify our respective audit opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.

  • – Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e, Paragraph 1 HGB.

  • – Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express audit opinions on the consolidated financial statements and on the group management report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinions.
  • – Evaluate the consistency of the group management report with the consolidated financial statements, its conformity with German law, and the view of the Group's position it provides.
  • – Perform audit procedures on the prospective information presented by the executive directors in the group management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the executive directors as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate audit opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information. 129 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with the relevant independence requirements, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.

Other Legal and Regulatory Requirements

Report on the Audit of Electronic Reproductions of the Consolidated Financial Statements and of the Group Management Report Prepared for the Purpose of Disclosure Pursuant to Section 317, Paragraph 3a HGB

Audit Opinion

Pursuant to Section 317, Paragraph 3a HGB, we have performed an audit with reasonable assurance to determine whether the reproductions of the consolidated financial statements and the group management report (hereinafter also referred to as the "ESEF documents") contained in the file GK Software_SE_KA+KLB_ESEF-2021- 12-31.zip and prepared for the purpose of disclosure comply in all material respects with the requirements of Section 328, Paragraph 1 HGB regarding the electronic reporting format ("ESEF format"). In accordance with German legal requirements, this audit only covers the conversion of the information in the consolidated financial

statements and the group management report into the ESEF format and therefore covers neither the information contained in these reproductions nor any other information contained in the aforementioned file.

In our opinion, the reproductions of the consolidated financial statements and the group management report contained in the aforementioned file and prepared for the purpose of disclosure comply in all material respects with the requirements of Section 328, Paragraph 1 HGB regarding the electronic reporting format. Beyond this audit opinion and our audit opinions on the accompanying consolidated financial statements and the accompanying group management report for the financial year from 1 January to 31 December 2021 contained in the preceding "Report on the Audit of the Consolidated Financial Statements and of the Group Management Report", we do not express any audit opinion on the information contained in these reproductions or on the other information contained in the aforementioned file.

Basis for the Audit Opinion

We conducted our audit of the reproductions of the consolidated financial statements and the group management report contained in the aforementioned file in accordance with Section 317, Paragraph 3a HGB, taking into account the IDW Auditing Standard: The audit of electronic reproductions of financial statements and management reports prepared for the purpose of disclosure was carried out pursuant to Section 317, Paragraph 3a HGB (IDW PS 410 (10.2021)) and the International Standard on Assurance Engagements 3000 (Revised). Our responsibilities thereafter are further described in the "Group Auditor's Responsibility for the Audit of the ESEF Documents" section. Our auditing practice has applied the quality assurance system requirements of the IDW Quality Assurance Standard: Requirements for Quality Assurance in the Auditing Practice (IDW QS 1). 130 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

Responsibilities of the Executive Directors and the Supervisory Board for the ESEF Documents

The executive directors of the company are responsible for the preparation of the ESEF documents with the electronic reproductions of the consolidated financial statements and the group management report in accordance with Section 328, Paragraph 1, Sentence 4, No. 1 HGB and for the mark-up of the consolidated financial statements in accordance with Section 328, Paragraph 1, Sentence 4, No. 2 HGB.

In addition, the company's executive directors are responsible for the internal controls as they deem necessary to enable the preparation of the ESEF documents that are free from material non-compliance, whether due to fraud or error, with the electronic reporting format requirements of Section 328, Paragraph 1 HGB.

The supervisory board is responsible for overseeing the preparation processes of the ESEF documents as part of the financial reporting process.

Group Auditor's Responsibilities for the Audit of the ESEF Documents

Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material non-compliance, whether due to fraud or error, with the requirements of Section 328, Paragraph 1 HGB. We exercise professional judgment and maintain professional scepticism during the audit. We also:

  • – Identify and assess the risks of material non-compliance with the requirements of Section 328, Paragraph 1 HGB, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinion.
  • – Obtain an understanding of internal controls relevant to the audit of the ESEF documents in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an audit opinion on the effectiveness of those controls.

  • – Assess the technical validity of the ESEF documents, i.e. whether the file containing the ESEF documents meets the requirements of Delegated Regulation (EU) 2019/815, as amended at the reporting date, for the technical specification for that file.
  • – Assess whether the ESEF documents provide a consistent XHTML reproduction of the audited consolidated financial statements and the audited group management report.
  • – Assess whether the mark-up of the ESEF documents with inline XBRL technology (iXBRL) in accordance with Articles 4 and 6 of Delegated Regulation (EU) 2019/815, as applicable at the reporting date, provides an adequate and complete machine-readable XBRL copy of the XHTML rendering.

Further Information pursuant to Article 10 of the EU Audit Regulation

We were elected as group auditor by the annual general meeting on June 17, 2021. We were engaged by the supervisory board on October 27, 2021. We have been the group auditor of GK Software SE (formerly GK Software AG), Schöneck / Vogtland, without interruption since financial year 2017.

We declare that the audit opinions expressed in this auditor's report are consistent with the additional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).

Reference to Any Other Matters - Use of the Auditor's Report

Our auditor's report should always be read in conjunction with the audited consolidated financial statements and the audited group management report as well as the audited ESEF documents. The consolidated financial statements and the group management report converted into the ESEF format - including the versions to be published in the Federal Gazette - are merely electronic reproductions of the audited consolidated financial statements and the audited group management report and do not replace them. In particular, the "Report on the Audit of Electronic Reproductions of the Consolidated Financial Statements and of the Group Management Report Prepared for the Purpose of Disclosure Pursuant to Section 317, Paragraph 3a HGB" and our audit opinion contained therein can only be used in conjunction with the audited ESEF documents provided in electronic form. 131 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

Independent Auditor's Report

German Public Auditor Responsible for the Engagement

The German Public Auditor responsible for the engagement is Carl Erik Daum.

Leipzig, 27 April 2022

PricewaterhouseCoopers GmbH Auditing company

Carl Erik Daum Auditor

132 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

Financial Calendar 133 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

15 June 2022 Annual Shareholders' Meeting 2022

26 August 2022 Interim Report as of 30 June 2022

28 – 30 November 2022 Equity Quality Forum in Frankfurt/M.

28 November 2022 Quarterly Report as of 30 September 2022

24 April 2023 Annual Report as of 31 December 2022

25 May 2023 Quarterly Report as of 31 March 2023

15 June 2023 Annual Shareholders' Meeting 2023

29 August 2023 Interim Report as of 30 June 2023

November 2023 Equity Quality Forum in Frankfurt/M.

28 November 2023 Quarterly Report as of 30 September 2023

Legal Notice

Publisher

GK Software SE Waldstr. 7 08621 Schöneck Germany T: +49 37464 84-0 F: +49 37464 84-15

www.gk-software.com [email protected]

Chair of the Supervisory Board Dr Philip Reimann

Management Board Dipl.-Ing. Rainer Gläss, CEO Dipl.-Kfm. André Hergert, CFO

Commercial Register Chemnitz HRB 31501

VAT ID. DE 141 093 347

Photos Image archive GK Software SE, Contact Investor Relations

GK Software SE Dr. René Schiller Friedrichstr. 204 10117 Berlin

T: +49 37464 84-264 F: +49 37464 84-15

[email protected]

Notes

Note on the Annual Report

The Annual Report is also available as a translation into English. In the event of deviations, the German version shall apply. The Annual Report is available for download in both languages on the Internet at https://investor.gk-software.com.

Note on Rounding

When using rounded amounts and percentages, minor deviations may occur due to commercial rounding.

Forward-Looking Statements

This Annual Report contains forward-looking statements that are subject to risks and uncertainties. They are estimates of the Executive Board of GK Software SE and reflect its current views with respect to future events. Such forward-looking statements can be identified by terms such as "expect", "estimate", "intend", "may", "will" and similar expressions with reference to the company. Factors that may cause or influence a deviation include, without claim to completeness: the development of the retail and IT markets, competitive influences, including price changes, regulatory measures, risks in the integration of newly acquired companies and participations. If these or other risks and uncertainties materialise, or if the assumptions underlying any of the statements prove incorrect, GK Software SE's actual results may be materially different from those expressed or implied by such statements. The company assumes no obligation to update such forward-looking statements. 134 Annual Report 2021 | GK Software SE To the Shareholders Consolidated Management Report Consolidated Accounts

More from GK Software SE

Legal Proceedings Report 2024
Dec 3
AGM Information 2024
Dec 2
Report Publication Announcement 2023
Aug 29
Delisting Announcement 2023
Jul 27
Declaration of Voting Results & Voting Rights Announcements 2023
Jun 2
Declaration of Voting Results & Voting Rights Announcements 2023
Jun 1
Declaration of Voting Results & Voting Rights Announcements 2023
Jun 1
Board/Management Information 2023
May 31
Declaration of Voting Results & Voting Rights Announcements 2023
May 30
Major Shareholding Notification 2023
May 30
View all filings →