KPS : Corporate Governance Statement 2023

DECLARATION ON CORPORATE GOVERNANCE PURSUANT TO SECTION 289D/ 315D OF THE GERMAN COMMERCIAL CODE (January 2023)

The Declaration on Corporate Governance pursuant to Section 289f, 315d of the German Commercial Code ("HGB") is publicly accessible at: https://www.kps.com/de/de/investor-re-lations/corporate-governance.html.

1. DECLARATION OF COMPLIANCE PURSUANT TO SECTION 161 OF THE GERMAN STOCK CORPORATION ACT

The executive board and supervisory board of a company listed in Germany must issue an annual declaration pursuant to Section 161 of the German Stock Corporation Act ("AktG") stating the extent to which they have complied with or are complying with the German Corporate Governance Kodex ("DCGK"). Furthermore, reasons shall be provided as to which recommendations of the DCKG have not been or are not being complied with. Each declaration of compliance is made available to the public for a period of five years on the Company's website at www.kps.com under the heading "Investor Relations", "Corporate Governance". The most recent declaration of compliance of both boards relating to the version of the DCGK dated 16 December 2019 published in the German Federal Gazette (Bundesanzeiger) on 20 March 2020 and the version of the DCGK dated 28 April 2022 published in the German Federal Gazette on 27 June 2022 was published in January 2023 and states the following:

Declaration by the Executive Board and the Supervisory Board

of KPS AG

on the recommendations

of the "Government Committee of the German Corporate Governance Code"

in accordance with Section 161 of the German Stock Corporation Act

(Declaration of Compliance)

The executive board and supervisory board of KPS AG (hereinafter also referred to as the "Company ") declare:

I.

KPS AG has complied with the recommendations of the version of the German Corporate Governance Code dated 16 December 2019 ("Code 2020") published by the German Federal Ministry of Justice in the official section of the German Federal Gazette (Bundesanzeiger) on 20 March 2020 until the publication of the version of the German Corporate Governance Code dated 28 April 2022 in the Federal Gazette on 27 June 2022 ("Code 2022"), with the following exceptions:

A.1	The executive board expressly welcomed all efforts to counteract gender discrimi-
	nation and any other form of discrimination and to promote diversity as appropriate.

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	When making appointments to management positions in the Company, the execu-
	tive board was guided primarily by the competence and qualifications of the persons
	available.
A.2	In the opinion of the management, compliance with the recommendation to imple-
	ment and disclose an independent compliance management system and to imple-
	ment a whistleblowing system had not been necessary to date due to the lean hier-
	archy, the close involvement of the management in day-to-day operations and the
	manageable number of employees at the Company. Instead, the management was
	of the opinion that the control and risk management system set up in the Company
	within the meaning of Section 91 para. 3 of the German Stock Corporation Act
	("AktG") was sufficient to ensure compliance with statutory provisions and other
	regulations and to avoid possible compliance violations.
B.1	In determining the composition of the executive board, the supervisory board pri-
	marily considered special competence and qualifications; other characteristics such
	as gender, national affiliation or other diversity aspects were only of secondary im-
	portance for this decision.
B.2	The members of the supervisory board and the executive board regularly discussed
	future appointments and long-term succession on the executive board. The Com-
	pany did not consider any additional succession planning and its disclosure to be
	necessary in favor of a flexible personnel competence of the supervisory board.
B.3	The recommendation in B.3 of the Code 2020, according to which the initial appoint-
	ment of executive board members should be for a maximum period of three years,
	was not complied with because, in the opinion of the Company, it improperly re-
	stricts the supervisory board's freedom of decision.
B.5	The supervisory board did not define an age limit for members of the executive
	board. A corresponding disclosure was therefore not made. Defining an age limit
	for executive board members was not in the interest of the Company and its share-

holders, as there was no compelling link between a specific age of an executive board member and its performance.

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C.1 sentences 1 to 4

In view of the size of the Company's supervisory board and the statutory requirements of the AktG, which sets out the personal requirements for serving on the supervisory board in Section 100 AktG and the duties of the supervisory board in Section 111 AktG and thus, like the Code 2020, also defines the targets for the proposals for the re-election of the supervisory board, the supervisory board refrained from defining specific targets for the composition of the supervisory board and from drawing up a competence profile for the entire body and reporting on this. This also applied in view of Section 100 para. 5 half-sentence 2 AktG, according to which the members of the supervisory board as a whole must be familiar with the sector in which the Company operates.

C.2	No age limit was defined for membership of the supervisory board and no corre-
	sponding disclosure was made, as the supervisory board was of the opinion that
	age does not indicate the ability of a member of a governing body to perform its
	duties.

C.7 sentences 1 and 2

In the opinion of the management, the added value of the specific expertise and the in-depth knowledge of the Company gained over many years by the supervisory board members Tsifidaris and Grünewald, who are operationally active in the Com- pany, outweighed the potential disadvantages of a supervisory board composed of a majority of independent members.

C.10	In the opinion of the management, Mr. Tsifidaris' extensive knowledge of the Com-
	pany and specific technical expertise outweighed any lack of independence of the
	chairman of the supervisory board.
D.1	The rules of procedure of the supervisory board were not made publicly available,
	as the Company did not consider publication to be of significant added value for
	shareholders.
D.2, D.5	From 1 January 2022, it was mandatory for public interest entities pursuant to Sec-
	tion 316a sentence 2 of the German Commercial Code (HGB) to form an audit com-
	mittee. Pursuant to Section 107 para. 4 sentence 2 AktG, a supervisory board con-
	sisting of three members also forms the audit committee. Apart from this, no other

committees were formed at the Company, and thus no nomination committee. The formation of further committees was not expedient in the case of a supervisory board with three members and - contrary to the case with a larger plenary body -

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	did not lead to an increase in efficiency. This applied in particular in view of the fact
	that committees require at least three members.
D.7	The executive board also regularly participated in the meetings of the supervisory
	board of the Company for reasons of efficiency. However, in the case of particular
	matters for discussion, especially in connection with executive board personnel
	matters, the supervisory board met without the executive board.
F.2	The group annual reports and management reports as of 30 September of each
	business year were published within four months after the end of the relevant re-
	porting period. Financial information during the course of the year in the form of half-
	year financial reports and quarterly statements were published within two months
	of the end of the reporting period. The executive board and the supervisory board
	considered the statutory publication deadlines and the supplementary regulations
	for the Prime Standard of the Frankfurt Stock Exchange to be sufficient to inform
	investors regularly and promptly.
F.5	In the past, the Company has only published the currently applicable Declaration
	on Corporate Governance on its website, as there has been no reason to publish
	older declarations as well.
G.1 and	For each business year, the supervisory board defined specific targets for the as-
G.2	sessment of the performance-related bonus for the members of the executive

board, which was based on a multi-year assessment. Taking into account the fixed compensation of the executive board and additional benefits, this resulted in a specific target compensation. However, any higher total target compensation for this business year was subject to the supervisory board issuing stock options to a member of the executive board in the further course of the business year. The compensation system for the executive board also provided the option of defining non-financial performance criteria as well as financial performance criteria for performance -related compensation in form of bonus payments based on a multi-year assessment basis as performance parameters. The selection of these performance criteria and their concrete determination was at the discretion of the supervisory board on the basis of the executive board compensation system approved by the annual general meeting on 21 May 2021. This scope gave the supervisory board

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	the necessary flexibility to make individual compensation decisions in response to
	operational changes and the associated incentive aspects.
G.3	For the purposes of the horizontal peer group comparison, the supervisory board
	selected a suitable peer group of companies whose market position was compara-
	ble to that of the Company. The focus was on those companies that are comparable
	to the Company in terms of market capitalization, revenue and industry. However,
	the supervisory board refrained from disclosing the composition of the peer group.
	For reasons of flexibility, the supervisory board rather reserved the right to deter-
	mine an appropriate peer group only in preparation for a concrete compensation
	decision, taking into account the above criteria. The early disclosure of a compara-
	tive group did not do justice the fact that up to this point in time certain companies
	could be added to or excluded from the peer group.
G.4	In determining the appropriate compensation of the executive board, the supervi-
	sory board considered the compensation structure of the upper management of the
	KPS Group as part of a vertical (internal) comparison, but did not consider the ratio
	of executive board compensation to the compensation of the workforce as a whole,
	including the development over time. The recommendation in G.4 of the Code 2020
	did not appear to be very practicable due to the particular personnel structure of the
	Company as a consulting company and, moreover, was not suitable for ensuring
	that the compensation of the executive board was appropriate in every case.
G.7	According to the recommendation in G.7 of the Code 2020, the supervisory board
	should define the performance criteria for all variable compensation components for
	each executive board member for the upcoming business year, which, in addition
	to operational objectives, should primarily be based on strategic objectives. There
	have been some deviations from this recommendation with regard to the time com-
	ponent. The supervisory board did not make this definition prior to a business year,
	but only within the first half of the business year, as it waited for the end of the
	previous year in order to be able to define performance criteria in a reliable manner
	on the basis of the audited figures for the previous year and the associated corpo-
	rate planning.
G.10	The long-term variable compensation components were not primarily granted by the
	Company based on shares or invested in shares of the Company. In the view of the
	supervisory board, such a share-based compensation component did not offer any

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