GESCO AG Company Presentation November 17th 2016

From melting steel to 3D-printing: investing

in the technology-driven German “Mittelstand”

as at 17 November 2016

1. Business Model

2. Financial Year 2016/2017

3. M&A and Capital Market

Overview

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GESCO Group – an association of industrial SMEs

including market and technology leaders

Currently 17 operating subsidiaries under the roof of GESCO AG

We think and act on a sustainable and entrepreneurial basis

We operate in established sectors with innovative technologies

We offer technology “made in Germany” for the world’s markets

GESCO is comprised of flexible, operationally independent and

entrepreneurially-managed entities that benefit from being part of a strong group

GESCO AG – long-term investor and safe haven

for succession solutions

We acquire and develop industrial SMEs on a long-term basis without exit intentions

Majority acquisitions, generally 100 %

Usually as part of a succession arrangement

New management is offered opportunity to acquire stake

of up to 20 % of the company it runs

1. The business model

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GESCO’s new portfolio strategy: What remains, what changes?

Preserving the well-proven:

Long term oriented, sustainable business model

Long term investments, no exit-focus

Combination of internal and external growth

Entrepreneurial approach, independently managed subsidiaries

Active IR, open communication with the capital market

Providing new impetus:

A new portfolio strategy

4 segments higher transparency, new framework for acquisitions

Systematic benchmarking

Optimisation projects for individual subsidiaries

A more active role of GESCO AG in terms of consulting for its subsidiaries

The holding provides stronger support for its subsidiaries

A stronger focus on free cash flow (working capital, investments)

A more active approach towards M&A

Our goals:

Living up to historic margins and growth rates

Stimulating external growth

Strengthening the GESCO model for a rougher, faster changing environment

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GESCO’s portfolio strategy

Spring 2016: development of a portfolio strategy of profitable growth

based on tried-and-tested GESCO business model

Criteria: long-term positive megatrends, comparable end customer markets,

similar economic fluctuation and growth rates

Definition of 4 relevant end customer market segments

Grouping of existing GESCO Group companies into the new segments,

new segment reporting since Q1 2016/2017

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Production process

technology

Resource

technology

Health and

infrastructure

technology

Mobility

technology

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Production process

technology

Dynamically growing markets,

high degree of innovation,

automation, „batch size 1“

Robotics and automation

solutions in machine and plant

construction, technology-intense

manufacturing services

Resource technology

Consolidating markets, focus on

niches and customer service

Customised preparation of

primary materials, e. g. materials

supply, transport and loading

technology

Health and infrastructure

technology

Not very cyclical, relatively

resilient to economic fluctuation

Components, modules and

primary products for providers

for mass markets close to end

customers

Mobility technology

Cyclical automotive market,

positive outlook driven by

technological leaps, e. g.

electromobility

Tools and moulds, components,

parts etc. for vehicle industry


Objective of the GESCO portfolio strategy: enhance value

of investment portfolio organically and through acquisitions

Respective managing directors continue to have exclusive

operating responsibility for GESCO Group companies

As the majority shareholder GESCO AG has “3 levers”

1. Appointment of best possible management

2. Prioritisation of investment projects within the individual companies

which promise the highest return on capital employed in the long term

3. Active consulting and support role of shareholder:

Monthly discussions, regular exchange, sparring, best practice

Setting focal themes on strategy days: digitalisation and Industry 4.0

Support for technical optimisation projects for profitable growth and

cost efficiency, from the beginning of a project to its implementation

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Please note:

FY subsidiaries = calendar year

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2. Financial year 2016/2017

1 January 2016 31 December 2016

31 March 2017 1 April 2016

FY GESCO AG / GESCO Group = 1 April to 31 March

The environment

Forecast GDP growth: 1.7 % to 1.8 %

Forecast VDMA: stagnation at best

Agricultural machinery and oil industry: still no growth impetus

„Dieselgate“ burdens automotive industry‘s propensity to invest

Political risks (Brexit decision, Turkey) increase uncertainty

Outcome of US elections unclear

Industrial customers still generally showing reluctance to invest

New growth stimuli still lacking in capital goods industry

Our measures:

Short term: cost reduction, questioning investments

Medium term: optimisation projects on cost and opportunities side

in the context of the new portfolio strategy

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2. Financial year 2016/2017 – 1st HY

1st HY

2015/2016

1st HY

2016/2017

Change

Order intake €m 258.1 250.3 -3.0 %

Group sales €m 237.3 228.7 -3.6 %

EBITDA €m 26.1 21.0 -19.6 %

EBIT €m 16.0 10.6 -33.9 %

Group net income after minority interest €m 7.9 4.8 -39.2 %

Earnings per share acc. to IFRS € 2.39 1.46 -39.2 %

Cashflow from ongoing business activities €m -3.2 13.9 -

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The first half year

Q1: rather weak initial quarter

Q2: burdened, since customers postponed deliveries

of major orders to Q3

1st HY: slightly declining order intake and sales,

earnings figures clearly burdened

Cash flow significantly improved

2. Financial year 2016/2017 – Segment Development 1st HY

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1st HY

2015/

2016

1st HY

2016/

2017

Remarks

€ m € m

Production

Process

Technology

Sales 32.2 30.7 production of machinery

and plants in progress;

significant improvement

expected for 2nd HY EBIT 1.1 0.5

Resource

Technology

Sales 107.7 100.7 customers from oil and

chemical industry

reluctant to invest, price

pressure in steel industry,

postponements to Q3

EBIT 9.8 6.4

Healthcare /

Infrastructure

Technology

Sales 58.7 59.9 very robust, less sensitive

to economic climate,

profitable growth EBIT 5.1 6.2

Mobility

Technology

Sales 39.0 38.8 uncertainty in end-

markets, challenging

tooling environment EBIT 4.4 1.5

2. Financial year 2016/2017 – Q3 (operating months July to Sept. 2016)

Preliminary figures for the third quarter

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Q3: order intake +5% yoy

─ Order intake (€‘000)

─ Sales (€‘000)

In Q3 order intake (approx. € 126 m) and sales (approx. € 128 m) on satisfactory level

Q2: order intake +14% yoy

The second half year

In Q3 quite a number of machines and plants delivered strong quarter

In Q4 declining operating business and one-off expenses

Guidance for the full FY from August 2016 was narrowed

2015/2016

Actual

2016/2017

Guidance as at

Aug. 2016

2016/2017

Guidance as at

Nov. 2016

Group sales € m 494.0 480 at best 480 at best

Group net income after minority interest

€ m 16.1 13.5 at best 11.5 to 12.5

Guidance

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More active approach towards M&A

Market still characterized by strong demand

and a limited number of companies offered

Focus on 4 end customer segments

GESCO still generates high deal flow

GESCO has intensified its activities, aims to generate direct contact

with entrepreneurs / business owners, which has already led to a number

of personal meetings

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3. M&A and Capital Market

3. Share price development (%) – 1 and 10 years

GESCO vs. Indices, 1 year GESCO vs. Indices, 10 years

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GESCO DAX SDAX

Resolution of Annual General Meeting on 25 August 2016:

capital increase from company funds and share split

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Share capital (€) No. of shares Nominal value

per share (€)

Current 8,645,000 3,325,000 2.60

Capital increase by 1,330,000 0.40

Share capital new 9,975,000 3,325,000 3.00

Share split 1:3 9,975,000 9,975,000 1.00

3. The GESCO share

Objective: to make the share “lighter” through higher number of

shares in order to enhance the share’s attractiveness for private

investors and to improve liquidity.

Implementation started, expected to be finalized by end of 2016.

3. The GESCO share – shareholder structure

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Free float: 85.1%

14.9 % Stefan Heimöller

(entrepreneur, member of supervisory board,

private investor)

13.9 % Investmentaktiengesellschaft

für langfristige Investoren TGV

(institutional investor)

approx. 40.0 %

other private investors approx. 31.2 % other

institutional investors

Directors‘ Dealings: In current FY purchases by members of supervisory and executive board.

Appendix – GESCO Group overview

Company Sales 2015

€‘000

Staff as at

31/12/2015

GESCO AG

shareholding *)

AstroPlast Kunststofftechnik GmbH & Co. KG 16,262 92 100%

Paul Beier GmbH Werkzeug- und Maschinenbau & Co. KG 12,117 117 100%

C.F.K. CNC-Fertigungstechnik Kriftel GmbH 9,708 66 80%

Dömer GmbH & Co. KG Stanz- und Umformtechnologie 15,661 104 100%

Dörrenberg Edelstahl GmbH 179,243 509 90%

Frank Group 27,629 258 90%

Franz Funke Zerspanungstechnik GmbH & Co. KG 15,383 80 80%

Haseke GmbH & Co. KG 12,969 64 80%

Hubl GmbH 12,775 106 80%

Georg Kesel GmbH und Co. KG 11,239 60 90%

MAE Group 44,359 222 100%

Modell Technik Formenbau GmbH 13,961 115 100%

Protomaster GmbH 17,688 123 82.17%

Setter Group 26,984 98 100%

SVT GmbH 33,464 186 90%

VWH GmbH 11,421 109 80%

Werkzeugbau Laichingen Group 26,594 177 100%

18 *) as at 14 Nov. 2016

Founded: 1989

Share capital: € 8,645,000

Shares: 3,325,000 registered shares

Free float: 85.1%

Stock markets: Xetra; Frankfurt (regulated market); Berlin, Düsseldorf, Hamburg, Hanover, Munich, Stuttgart (open market)

Sec. identification number: A1K020

ISIN: DE000A1K0201

IPO: 24/03/1998

End of financial year: 31 March

Designated sponsors: equinet Bank AG Oddo Seydler Bank AG

Appendix – Facts and figures for GESCO AG

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Appendix – Financial calendar and IR contact

Financial calendar

21 - 23 Nov. 2016 German Equity Forum, Frankfurt/Main

14 Feb. 2017 Q3 figures

29 June 2017 Annual Accounts Press Conference /

Analysts‘ Meeting

Aug. 2017 Q1 figures

31 Aug. 2017 Annual General Meeting, Wuppertal

Nov. 2017 Q2 figures

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Investor Relations GESCO AG Telephone: +49 202 24820-18 Investor Relations Fax: +49 202 24820-49 Oliver Vollbrecht E-mail: [email protected] Johannisberg 7 Internet: www.gesco.de 42103 Wuppertal

Germany