MANZ AG 2020 Annual Report
Growth Industries in Focus
Manz AG | |
at a glance | |
2021 Financial Calendar | |
May 4, 2021 | Publication of the 1st quarter 2021 quarterly report |
July 7, 2021 | Annual General Meeting 2021 |
August 5, 2021 | Publication of the 2021 semi-annual report |
November 9, 2021 | Publication of the 3rd quarter 2021 quarterly report |
Overview of Consolidated Net Profits |
(in EUR million)
2020 | 2019 | Change in % | |
236.8 | 264.4 | -10.4 % | |
241.7 | 259.5 | -6.9% | |
19.4 | 9.2 | +110.9 % | |
8.0 | 3.6 | +4.4 pp | |
7.2 | -7.6 | +194.7 % | |
3.0 | -2.9 | +5.9 pp | |
5.0 | -9.9 | +150.5 % | |
3.4 | -11.2 | +130.4 % | |
0.44 | -1.43 | +130.8 % | |
20.6 | -24.1 | +185.5 % | |
-9.4 | 6.3 | -249.2% | |
14.7 | 10.3 | +42.7 % | |
Dec. 31, 2020 | Dec. 31, 2019 | Change in % | |
Total assets | 357.9 | 341.5 | +4.8 % |
Shareholders' equity | 131.4 | 132.4 | -0.8% |
Equity ratio (in %) | 36.7 | 38.8 | -2.1 pp |
Financial liabilities | 77.0 | 57.9 | +33.0 % |
Liquid funds | 69.7 | 44.0 | +58.4 % |
Net debt | 7.2 | 13.9 | -48.2% |
Revenues
Total operating revenues EBITDA
EBITDA margin (in %) EBIT
EBIT margin (in %) EBT
Consolidated net profit
Earnings per share, undiluted (in EUR)
Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities
Revenues
(in EUR million)
EBITDA
(in EUR million)
2015
2016
2017
222.0 2015- 41.9
215.2 2016-20.7
266.1 2017
2018
2019
2020
296.9 2018
264.4 2019
236.8 2020
10.1
9.5
9.2
19.4
EBIT
(in EUR million)
EBIT by Business Segments 2020
(in EUR million)
2015-58.2
2016-34.7
2017 2018 2019 2020
0.6-3.4
-7.6
7.2
Solar -7.8
Electronics-5.4
Energy Storage6.9 Contract Manufacturing
Service 1.3
Revenues by Business Segment January 1 to December 31, 2020
12.2
Service
9.0 %
Revenue Distribution by Region January 1 to December 31, 2020
2020
The year at a glance
January 14
Manz and Shenzhen Yinghe Technology agree on strategic cooperation in the field of lithium-ion cell and module production
March 20
Manz reacts to corona pandemic and suspends business operations at its German and Italian locations until Easter
July 7
Manz expands its successful partnership with a leading global battery manufacturer in the Energy Storage segment with a follow-up order in the mid-double-digit million-euro range
November 11
Sale of shares in Talus Manufacturing Ltd. to finance further growth
November 17
Contract conclusion for follow-up order for assembly line for cell contacting systems in the field of electromobility
Manz AG Mission Statement
With many years of expertise in automation, laser processing, vision and metrology, wet chemistry, and roll-to-roll processes, we as a high-tech equipment manufacturing company offer manufacturers and their suppliers innovative production solutions in the areas of pho-tovoltaics, electronics and lithium-ion battery technology. Our product portfolio includes both customer-specific developments and single machines and modules that can be linked together to form individual system solutions. We are involved in customer projects from a very early stage, and thus contribute significantly to the success of our customers with high quality, needs-oriented solutions.
In addition to the CIGSfab turnkey production line in the Solar segment, we focus spe-cifically on the automotive industry in the Electronics and Energy Storage segments. With our efficient and competitive lithium-ion battery manufacturing equipment - from cell to the finished pack - and automated assembly lines for cell contacting systems, we are an important industry partner for the conversion from the classic to the electric powertrain.
We are focused on five future industries. For new growth opportunities. And a stronger market position.
Automobile and electromobility. Battery manufacturing. Electronics. Energy. Medical Technology.
Systematically taking advantage of the opportunities that arise from dynamic growth mar-kets - that is what Manz stands for. Therefore our technology and product portfolio will be even more aligned to the needs and challenges of selected industries in all segments, and it will continue to be enhanced with an industry focus. Therefore, this year's annual report concentrates on our five target industries and their potential.
The entire annual report and additional information about our industry focus can be found on our website, which has been redesigned and relaunched as part of our new alignment on growth industries.
For the sake of better readability, we consistently avoid gender-differentiating formulations (e.g. "his/her" or "he/she"). The corresponding terms apply to all genders for the purposes of equal rights. This is done solely for editorial purposes and does not imply a judgment of any kind.
Index
Overview
010 To Our Shareholders
012 Letter from the Managing Board
015 Manz AG Stock
021 Report from the Supervisory Board
027 Group Management Report
029 Basic Group Information
039 Business Report
050 Corporate Governance
071 Report on Opportunities and Risks
084 Forecast Report
089 Consolidated Financial Statement
091 | Consolidated Income Statement |
092 | Consolidated Statement of Comprehensive Income |
093 | Consolidated Balance Sheet |
095 | Consolidated Cash Flow Statement |
096 | Consolidated Statement of Changes to Equity 2019 |
097 | Consolidated Statement of Changes to Equity 2020 |
098 | Consolidated Notes for Financial Year 2020 |
174 | Responsibility Statement |
175 | Independent Auditor's Report |
185 | Imprint |
2020 Annual Report |
History
of Manz AG
Manz further expands strong market position in Energy Storage segment
2020
Shanghai Electric becomes strategic anchor investor of Manz AGAcquisition of mechanical engineering division of Kemet Electronics Italy (formerly Arcotronics) for enlargement of technology portfolio in Battery divisionAcquired the CIGS innovation line from Würth Solar Opened facility for solar and display production systems in Suzhou, China
Entered the market forlithium-ion batteriesIPO on the Entry Standard market of the Frankfurt Stock ExchangeEntered the thin-film market with equipment for mechanically scribing solar panels
Shipped the first automation system for a completely automated production line for crystalline solar cells
1994
Shipped the first automation solution for the FPD industry to Asia
1987
Company founded by Dieter Manz
To Our
Shareholders
To Our Shareholders
Content
012 Letter from the Managing Board
015 Manz AG Stock
015 Change in share price
016 Shareholder structure
017 Investor Relations
017 Annual General Meeting
018 2021 Financial Calendar
021 Report from the Supervisory Board
To Our Shareholders
Letter from the Managing Board
Dear Shareholders,
in the extraordinary year that was 2020, Manz AG focused on its strengths - these being innovation, quality and efficiency, and managed to deliver a remarkable performance. The challenges arising from the COVID-19 pandemic were met with a forward-looking, flexible and pro-active response. Our organization was carefully prepared for this special situation, we implemented an innovative approach to remote working, and we adjusted numerous processes in our group. In this way, we maintained continuous and trust-based communica- tions with our customers, and we were able to consistently work through on-going projects while also taking advantage of the opportunities that were presented to us in our role as an innovative high-tech equipment manufacturer, for example, in the battery segment.
Customers around the world are impressed with our products, which are in high demand.
Despite the expected decline in revenues due to the challenging macro-economic situation, we were nevertheless able to significantly improve profitability. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to almost 20 million EUR. This resulted in a markedly improved EBITDA margin of 8.0 % (after 3.6 % in the previous year).
Earnings before interest and taxes (EBIT) also increased by approximately 14 million EUR to over 7 million EUR.
An examination of the various segments paints a more nuanced picture. While revenues in the Solar and Electronics segments declined, partly because of the impact from COVID-19, the segment Energy Storage did very well, even though some of the orders for planned projects were - contrary to our initial planning - delayed. Overall, we were able to report numerous major orders in the high double-digit million euro range. In the future, continued growth in the e-mobility market will offer opportunities not just for our battery production equipment, but also for our assembly solutions for other electric power train components.
We believe that the very positive developments in e-mobility in 2020 are only the beginning, and we want to continue to benefit from this trend with our segments Electronics and En- ergy Storage. With decades of experience in assembly automation and the development of high-efficiency production equipment in the battery segment, we are ideally positioned for further growth in the context of the global mobility transformation. The speed with which capacities in the market are being expanded bears testament to the dynamic nature of this market and to the degree of demand for new technological fields of application. The sup- port commitment from the European Commission for the further development of the Li-Ion battery technology in the context of the Important Projects of Common European Interest (IPCEI), which was obtained in January 2021, has once more confirmed our alignment to this growth market. We want to use European financial support to implement the "Lithium-ion battery factory of the future" project. The disposal of the shares in Talus Manufacturing Ltd.
(a company that we built together with Lam Research Corporation), which was approved in November 2020, is also part of this focus strategy. The profits, which are in the middle double-digit million euro range, will also be invested in the battery and e-mobility growth segments.
We believe that the positive earnings development in a very challenging market environment dominated by the coronavirus crisis has confirmed our long-term optimization process and the visionary strategic decisions that have been taken. Our goal is to continue to enhance the extensive technology portfolio and to strengthen and expand our market position in all segments with an even stronger focus on selected industries. As a result, our technology and product portfolio will be aligned particularly to the needs of the automotive and e-mobility, battery production, electronics, energy and medical technology industries.
To Our Shareholders
With an order backlog of EUR 202 million, developments in the e-mobility market, in par- ticular, underscore the current potential for Manz AG. Therefore, we look forward to 2021 with optimism. We expect a slight to moderate increase in revenues compared with 2020, an EBITDA margin in the upper positive single-digit percentage range, and an EBIT margin in the low to mid positive single-digit percentage range.
At the same time, the performance of the past year and the future-oriented alignment of Manz AG would not have been possible without the commitment and engagement of our employees. For that, we would like to express our sincere thanks to all of them!
We hope that you, as our valued shareholders, will continue to accompany us along this exciting path - and stay healthy!
Reutlingen, March, 2021
The Managing Board
Martin Drasch
Manfred Hochleitner
Jürgen Knie
To Our Shareholders
Manz AG Stock
Change in share price
The Manz AG share began the financial year 2020 on January 2, 2020 at a price of EUR 21.95.
As a result of the Covid-19 related market crash, the shares reached their lowest price on March 12, 2020 at EUR 10.08. This was followed by a strong rally until the peak price of EUR 34.70 was reached on October 14, 2020. The shares closed on December 30, 2020 at a price of EUR 34.00, which corresponds to a market capitalization of around EUR 263.2 million and a price increase of 55%. The price continued to climb at the start of 2021 and reached a new peak of EUR 56.00 on February 3rd.
Chart Showing Manz AG Stock (XETRA, in EUR)
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12/20
Manz AG
SDAXI
TecDAX
To Our Shareholders | |
Manz AG Stock | |
Stock Key Data and Performance Indicators | |
German Securities Identification Number | A0JQ5U |
Ticker symbol | M5Z |
Trading segment | Regulated market (Prime Standard) |
Share types | Registered, common, no-par value bearer |
shares, each with a proportionate value of | |
EUR 1.00 of capital stock | |
Capital Stock | EUR 7,744,088 |
IPO | September 22, 2006 |
Opening Price | EUR 19.00 |
Share price at the beginning of the reporting period* | EUR 21.95 |
Share price as at December 31, 2020* | EUR 34.00 |
Percentage change in the reporting period | +54.90 % |
Period high | EUR 34.70 |
Period low | EUR 10.10 |
* Respectively the closing prices of the XETRA trading system of Deutsche Börse AG | |
Shareholder structure |
As of December 31, 2020, Manz AG had a free float of 45.78% and a broad shareholder base. Dieter Manz, founder and member of the Supervisory Board of Manz AG, and his family hold a total of 28.09% of the shares in the company; Shanghai Electric Germany Holding GmbH held 19.67% of the company's shares as of December 31, 2020. Investment
company Invesco Advisers, Inc. holds 6.46% of the shares.
Shareholder Structure
Invesco Advisers, Inc.
6.46 %
* Dieter Manz 12.32%, Ulrike Manz 5.44%, Stephan Manz 5.16%, Laura Manz 5.16%
To Our Shareholders
Investor Relations
Manz AG attaches great importance to active dialogue with shareholders, institutional investors, analysts and financial journalists, and has maintained a continuous, proactive exchange of information in the financial year 2020. The regular and prompt publication of reports relevant to the company underscores its goal of providing comprehensive informa- tion on the company's developments. In doing so, Manz AG, with its listing in the Prime
Standard Segment of the Frankfurt Stock Exchange, fully complies with the highest trans-parency requirements. Manz AG strives to exceed this standard.
In addition to the legal obligations, Manz AG participated in nine capital market conferences and three road shows in Germany and abroad in 2020. Manz published 23 corporate news and press releases as well as one ad-hoc release. Manz AG contributes to the greatest pos- sible transparency in its capital market communications by regularly offering conference calls with a web cast for the publication of financial reports and audio displays as an online offer on the company website.
In the course of financial year 2020, Manz AG was covered by the following institutions:
• Pareto Securities
• Stifel Europe
• Bankhaus Lampe
Annual General Meeting
In light of the Covid-19 pandemic, the Manz AG Annual General Meeting 2020 was held as a purely virtual event for the first time on June 30, 2020. The board used the new opportuni- ties to report the operational and strategic development of Manz AG for financial year 2019 to the shareholders in detail even under such extraordinary circumstances. The Managing Board and Supervisory Board received a discharge from the Annual General Meeting by a large majority. A total of 61.0% of capital stock with voting rights was represented
(previous year: 60.35%).
Detailed voting results can be found at any time on the company's websitewww.manz.com under Investor Relations/annual general meeting.
To Our Shareholders | |
Manz AG Stock | |
2021 Financial Calendar | |
May 4, 2021 | Publication of the 1st quarter 2021 quarterly report |
July 7, 2021 | Annual General Meeting 2021 |
August 5, 2021 | Publication of the 2021 semi-annual report |
November 9, 2021 | Publication of the 3rd quarter 2021 quarterly report |
Manz AG | |
2020 Annual Report |
Growth industries in focus: Automotive & Electromobility
The car of the future is digital and electric
Advancing digitization and rapid innovations in e-mobility create a number of challenges for the automotive industry. Our mission is to actively contribute to this progress as a development partner and pioneer.
Intelligent, integrated and highly innovative
We focus particularly on intelligent and integrated production solutions for various components in the segments automotive electronics as well as conventional and electric power trains.
As a technology and process experts for the automotive industry, we bundle our expertise - e.g. in the vision, metrology and laser applications segments - into tailor-made and customer-specific production solutions for::
Battery cells and battery modules
(Li-Ion battery manufacturing)
Cell contacting systems
Battery management systems and invertersDisplays
Electronic components and controllersSensors and cameras for assistance system
...in technology fields such as automation, assembly, laser and integrated testing systems are bundled into ground-breaking production solutions for the automotive industry.
In our modular production lines, we integrate and combine a variety of technologies: from assembly, ultrasound welding, bonding and soldering to laser welding and automated function tests. In this way, we support OEMs and their suppliers with optimizing their production processes and making them more efficient using our machines and equipment.
Using creative and innovative engineering, we are working hard on new production solutions that contribute to raising the per- formance parameters of end products and ultimately to reducing costs for the automotive industry.
Our task: To enable the e-mobility breakthrough.
To Our Shareholders
Report from the Supervisory Board
Dear Shareholders,
the 2020 reporting year was a year shaped by great challenges for the company, challenges which company employees overcame by virtue of their extraordinary efforts. The company was able to achieve very positive results because of these efforts despite the effects of the COVID-19 pandemic. During the course of the year, the Supervisory Board also advised the Managing Board on a regular basis with regard to the company's management and con- tinuously monitored its business activities. In doing so, we meticulously carried out the duties incumbent upon us by law, the company's Articles of Incorporation, and our rules of procedure, satisfying ourselves that the Managing Board's work was legally compliant, orderly, and appropriate. The Supervisory Board discussed the organization of the company with the Managing Board. The Managing and Supervisory Boards have also continuously agreed on the strategic alignment of the company. The Supervisory Board was involved in all significant decisions regarding the company and the Group.
The Managing and Supervisory Boards remained in close and intensive contact throughout the 2020 financial year. In this context, the Managing Board complied with its duty to provide information as set out by law and the rules of procedure, notifying us in a regular, detailed and timely manner in both written and oral form about all measures and events relevant to the company. The Managing Board also discussed deviations in the business performance from the plans and goals that had been set up and gave reasons for the deviations. As a result, the Supervisory Board was always kept informed with respect to the company's business situation and performance, the company's intended business policy and the short-, medium- and long-term planning, including investment, financial and human resources planning, as well as the company's profitability and organizational measures and the Group's overall situation. In addition, information regarding the company's risks and risk manage- ment activities was regularly provided.
The members of the Supervisory Board always had sufficient opportunity to critically discuss the reports presented and the resolutions proposed by the Managing Board and to present their own suggestions. In particular, we intensively discussed all business transactions significant to the company based on the Managing Board reports, and carefully examined them for plausibility. The Supervisory Board approved individual transactions to the extent necessary for the Managing Board under the law, the Articles of Incorporation or the rules of procedure.
In addition to the Supervisory Board meetings, the chairman of the Supervisory Board was also in regular contact with the Managing Board and obtained information concerning the current development of the business situation and significant business transactions.
To Our Shareholders
Focus of Deliberations in the Supervisory Board
The 2020 financial year for Manz AG was characterized by the strategic further development of the company in its various business segments to achieve the objective of a sustained profitable business model. The business situation, financial performance and cash flows, the capacity utilization and the measures to improve profitability, as well as risk manage- ment, in addition to these and other strategic and operational issues, were regularly the focus of the Managing Board's reporting and the monitoring and advisory support provided by the Supervisory Board. The discussions in the Supervisory Board were dominated by the large CIGS orders in the Solar business segment and the developments in the other busi- ness segments. Furthermore, the Supervisory Board approved individual transactions dur- ing the reporting year to the extent necessary for the Managing Board under the law, the Articles of Incorporation or the rules of procedure.
During the reporting year, a total of four meetings were held in which all members of the Supervisory Board participated. As a result of the pandemic, some of these meetings were held by video conference. Members of the Managing Board also attended Supervisory Board meetings, insofar as these meetings did not include discussions of those members' per- sonal matters. In addition, six written resolutions were adopted by the Supervisory Board.
The following topics were the focus of deliberations at the Supervisory Board meetings and resolutions:
At the meeting on March 23, 2020, the Managing Board reported on current business de- velopments, including the orders on hand, and planning for the individual segments and concerning the effects of the COVID-19 pandemic on the company along with countermea- sures undertaken in the current financial year 2020. The focal points of this meeting were the annual financial statements as of December 31, 2019, the management report, the consolidated financial statements as of December 31, 2019 and the consolidated manage- ment report, as well as the audit report of the auditor. Following a discussion with the audi- tor, the Supervisory Board approved the annual and consolidated financial statements for the financial year 2019. The Supervisory Board also discussed and approved the report from the Supervisory Board to the annual general meeting, the Corporate Governance Statement and the Corporate Governance Report for the financial year 2019. The draft resolutions for the 2020 Manz AG Annual General Meeting were discussed at the meeting and were ad- opted by the Supervisory Board on May 7, 2020, by written ballot. In addition, the Managing Board discussed the main risks at the Manz Group on the basis of the annual risk report.
The meeting on May 7, 2020 focused on the report by the Managing Board regarding the end of the first quarter of 2020 and a discussion of the current business and financial situ- ation subject to particular consideration of the financial effects of the pandemic. We also discussed the company's financial position in this context, particularly regarding the devel- opment of the segments and their contributions to the result. Other topics included the li- quidity and financial situation, incoming orders and proposed resolutions for the Annual
General Meeting. In addition, the Supervisory Board approved of the resolution of the
MANZ AG Geschäftsbericht 2014
To Our Shareholders
Managing Board to hold the Annual General Meeting as a virtual meeting and approved the partial salary waiver on the part of the Managing Board in the amount of 10% as a sign of solidarity during the pandemic. The salary waiver is determined by resolution of the Super-visory Board as an addendum to the employment contracts for members of the Managing Board.
At the meeting on July 21, 2020, the Managing Board reported on the interim financial state- ments for the first six months of 2020, as well as financial performance and cash flows along with current business performance, incoming orders and, in particular, the effects of the COVID-19 pandemic. In this context, the Board addressed the Energy Storage and Electron- ics segments, in particular, along with trends related to their opportunities and distribution activities. The Managing Board also reported on developments related to CIGS major orders in the Solar segment and the current status of material projects.
At the last meeting for the reporting year on November 24, 2020, the Managing Board re-ported on the business developments in the first three quarters, the liquidity and earnings situation, as well as the business outlook for the entire year. We placed particular focus on a detailed examination of the planning and profitability in the individual segments, taking into account the incoming orders. The Supervisory Board discussed the financial and liquid- ity planning of the Manz Group and the related risk management based on the Managing Board report.
On the basis of the audit of the compliance with the recommendations of the German Cor-porate Governance Code by Manz AG, the Supervisory Board together with the Managing Board adopted the statement of compliance pursuant to section 161 of the German Stock Corporation Act (AktG) on November 24, 2020.
Work in the Economic Committee of the Supervisory Board
Manz AG's Economic Committee, which consists of two members, is to assume certain supervisory tasks and prepare the deliberations and draft resolutions of the Supervisory Board, particularly in the areas of accounting, auditing, finance including planning, Managing Board matters, corporate governance and compliance. Prof. Dr. med. Heiko Aurenz and
Dieter Manz are members of the committee.
The Economic Committee met seven times during the reporting year. Regular discussion topics included the current business situation, liquidity and earnings situation, including orders on hand, the status of major projects as well as strategic measures for the further structural development of the Manz Group. In addition, it also discussed the annual and consolidated financial statements for December 31, 2019, the Corporate Governance State- ment and the Corporate Governance Report for the financial year 2019, the proposed resolu- tions for the regular 2020 Manz AG Annual General Meeting and the annual risk report. The
To Our Shareholders
Economic Committee and the Managing Board also discussed measures to reduce costs, potential cooperation partners in all segments, the planning for the financial year 2020 and the filling of executive positions within the company.
Conflicts of Interest
There are no conflicts of interest on the part of members of the Managing or Supervisory Boards that must be disclosed to the Supervisory Board, nor does the handling thereof have to be disclosed at the Annual General Meeting.
German Corporate Governance Code
In the financial year 2020, the Managing and Supervisory Boards once again dealt in detail with the further development of corporate governance and the recommendations of the German Corporate Governance Code. The Managing and Supervisory Boards issued a joint statement of compliance pursuant to section 161 Stock Corporation Act (AktG), according to which the company complies and will comply with the recommendations in the Code with only one exception. The statement of compliance from November 2020 is perma- nently available to the public on the Manz AG website.
Annual and consolidated financial statements for the financial year 2020
The annual and consolidated financial statements as of December 31, 2020, prepared by the Managing Board, and the management report and consolidated management report for the financial year 2020 were audited by the company's and Group's auditor, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, and given an unqualified auditor's opinion.
The documents mentioned above were provided to us by the auditor. The Supervisory Board examined the annual financial statements and the management report, the consolidated financial statements and the consolidated management report, as well as the non-financial consolidated statement including the auditor's reports submitted to the members of the Supervisory Board prior to the meeting. The financial statements and reports shown above were discussed in detail at the meeting of the Economic Committee on January 25, 2021, as part of a preliminary examination. At the meeting of the Economic Committee and the annual accounts meeting of the Supervisory Board on March 23, 2021, the Managing Board explained the financial statements of Manz AG and the Group comprehensively in the pres- ence of the auditors. The auditor reported on the scope, focus and significant findings in its audit, focusing in particular on the states of affairs particularly important to the audit and the audit procedures performed during the meeting of the Economic Committee and in the
To Our Shareholders
annual accounts meeting of the Supervisory Board. The auditor also provided information about its findings regarding the internal controlling and risk management systems in relation to the accounting process. The Economic Committee also reported to the Supervisory Board on its own audit of Manz AG's financial reporting and consolidated financial statements, its discussions with the Managing Board and the auditor, and its monitoring of the accounting process.
After examining and discussing the annual financial statements and management report, the consolidated financial statements and the consolidated management report as well as the non-financial consolidated statement along with the auditors' reports, the Supervisory Board approved the result of the audit conducted by the auditors.
No objections were raised based on the definitive finding of the Supervisory Board's review.
In a resolution dated March 23, 2021, the Supervisory Board approved the annual financial statements and consolidated financial statements as of December 31, 2020. Manz AG's annual financial statements as of December 31, 2020, are thereby adopted.
Changes in the Managing and Supervisory Boards
The composition of the Supervisory Board and the Managing Board remained unchanged in the financial year 2020.
Thanks and Acknowledgment
The Supervisory Board wishes to thank the Managing Board for the constantly open and constructive collaboration in the past financial year. We would also like to express our gratitude to our employees for the commitment they have demonstrated during the financial year 2020. Last but not least, we would like to thank you, our valued shareholders, for the trust you have placed in us and for your willingness to shape the future of Manz AG to- gether with us.
Reutlingen, March 24, 2021
Prof. Dr. Heiko Aurenz
Chairman of the Supervisory Board
Group Management
Report
Content
029 Basic Group Information
029 Business model and strategy
031 Group structure and holdings
033 Locations and employees
033 Control system and performance indicators
034 Research and development
036 Sustainability report and non-financial statement
039 Business Report
039 General economic environment and industry-specific conditions
041 Analysis of the financial, liquidity and earnings position of the group
044 Segment report
047 Overall statement on corporate development 2020
050 Corporate Governance
050 Declaration on corporate governance in accordance with section 289f and section 315d HGB
050 Disclosures in accordance with section 315a (1) HGB
and notes pursuant to section 176 (1), Sentence 1
Stock Corporation Act (AktG) on the disclosures in accordance with sections 289a (1) and 315a (1) HGB
061 Compensation report
071 Report on Opportunities and Risks
071 Risk Management and Internal Control System
074 Risk report
079 Opportunities report
084 Forecast Report
084 | Economic and Sectoral Outlook |
086 | Expected Development of the Group and Segments |
088 | Forward-looking statements |
2020 Annual Report |
Basic Group Information
Business model and strategy
Founded in 1987, Manz AG is a global high-tech equipment manufacturing company. Its business activities comprise five segments: Electronics, Energy Storage, Solar, Contract Manufacturing and Service. With many years of expertise in automation, laser processing, vision and metrology, as well as wet chemistry, the company offers a broad portfolio of products and solutions to manufacturers and their suppliers in various industries. In addition to customized production solutions, this also includes individual machines and modules that can be linked together to form complete, individual system solutions. The company also offers a comprehensive range of services around Manz AG's core technological com- petencies: From simulation and factory planning to process and prototype development, customer training and after-sales service. Manz AG is a development partner for industrial companies, and in this role helps to support new technologies to market maturity.
ENERGY STORAGE
• Li-Ion Battery
ELECTRONICS
• Capacitors
Electronic Devices
• Consumer Electronics
• Cover Glass/ Enclosures
• Cell Contacting Systems
Electronic Components
• Printed Circuit Boards
• Display & Touch
SOLAR
• Thin-Film/CIGS
SERVICE
CONTRACT MANUFACTURING
The core of the company's strategy is to make use of the technology portfolio across all industries and regions. This cross-segment exchange of technology and expertise not only offers a high level of flexibility in the realization of individual customer solutions, but also the possibility of generating internal synergies and making economic use of them.
Manz AG maintains business relationships with manufacturers and their suppliers, espe- cially in the automotive and electro-mobility, battery manufacturing, electronics, energy, and medical technology industries. As a high-tech equipment manufacturing company, Manz operates internationally and has development and production sites in Germany, Slo- vakia, Hungary, Italy, China and Taiwan as well as further sales and service branches in India and the US. Manz AG also has long-standing customer relationships and a strong presence, above all in the global economic hub that is the Asian region: approx. 450 employees at its locations in Taiwan and China, comprising roughly 30 % of Manz employees in this region, offer excellent access to this growth market.
Manz AG's goal is to achieve a sustained increase in competitiveness with earnings-orient- ed growth. Manz AG aims to increase its competitiveness and profitability through a strong focus on fully interlinked, individual system solutions and equipment, and by expanding its global customer base. The cross-regional use of technological expertise and its standardiza- tion beyond industry boundaries significantly reduces development effort and time and continuously creates new unique selling points, creating opportunities for additional pos- sible applications. Growth opportunities likewise arise from individual development projects for customer-specific pilot lines with corresponding scaling potential. In addition, continuous targeted organizational, procedural and process improvements in all segments of the Group are intended to contribute to further increasing the competitiveness and profitability of the company.
Locations and Employees
Employees and managers from 26 different countries work in our Group's various subsidiaries.
5
2
5
8
Arounda third of employees work in researchand development worldwide.
Locations
1 Germany Reutlingen, Tübingen Production, Sales & Service
4
Italy
7
China
Sasso Marconi
Production, Sales & Service
Shanghai, Suzhou, Hongkong Production, Sales & Service
2 Hungary
5 USA
8 India
Debrecen Production & Service
North Kingstown, Cupertino Sales & Service
New Delhi Sales & Service
3 Slovakia
6
Nove Mesto nad Vahom Production, Sales & Service
Taiwan Chungli
Production, Sales & Service
Locations and employees
Employees by country
437 438
325
280
284 274
233
217
Total Dec. 31, 2020 Total Dec. 31, 2019
104 95
86 92
12 10
9 9
Germany
China
TaiwanSlovakiaHungary
Italy
USA
India
Employees as of Dec. 31, 2020
Employees as of Dec. 31, 2019
Control system and performance indicators
Manz AG is organized, for corporate management purposes, by product and service seg- ment at Group level and has the five business segments "Electronics," "Energy Storage,"
"Solar," "Contract Manufacturing," and "Service." In order to decide on the allocation of resources and control the profitability of the divisions, they are monitored separately by management. Details of the course of business are provided to the entire Managing Board through regular reports and management meetings. As a result, it is possible for the respec- tive Managing Board to control the company in a timely manner.
Principles and goals of the financial management
Manz AG's key figures for corporate development are revenues, earnings before interest, taxes, depreciation and amortization (EBITDA), earnings before interest and taxes (EBIT), and the equity ratio.
The Managing Board has defined the following rolling target values for the long term
(5 years):
• Revenues: an annual average revenue increase of between 10% and 20% is forecast.
• EBIT margin: A target margin of 10% is defined for the EBIT margin.
• EBITDA margin: a target of more than 15% is defined for the EBITDA margin.
• Equity ratio: the target corridor for shareholders' equity as a percentage of total assets is between 40% and 60%.
• Gearing: Manz AG has defined gearing as a ratio of net financial liabilities (short-term and long-term bank liabilities less cash and cash equivalents) to equity before minority inter-ests of less than 50% as a target.
Performance indicators
in % | 2020 | 2019 | 2018 |
Revenue (in EUR million) | 236.8 | 264.4 | 296.9 |
EBITDA margin | 8.0 | 3.6 | 3.2 |
EBIT margin | 3.0 | -2.9 | -1.1 |
Equity ratio | 36.7 | 38.8 | 43.4 |
Gearing | 5.5 | 10.5 | -5.1 |
Manz AG's financial management system is centrally organized. To minimize risks and lever- age Group-wide optimization potential, the company bundles decisions on financing, cash investments and currency hedges of subsidiaries within the Group. In this context, the company follows value-based financing principles in order to secure its liquidity at all times, limit financial risks and optimize the cost of capital. In addition, Manz strives for a well- balanced debt maturity profile. Further information on the management of the individual financial risks can be found in the notes to the consolidated financial statements under
"Reporting on financial instruments".
Research and development
For Manz as a high-tech equipment manufacturer, research and development continued to play an important role in the financial year 2020. With over 500 engineers, technicians and scientists at its various development sites, Manz AG focuses on the development of manu- facturing, assembly and handling technologies, integrated into modularized individual ma-chines, tools and linked system solutions. The Manz AG interdisciplinary "R & D Council" is intended to enable the internal, cross-segment integration of competencies.
Manz AG maintains numerous cooperative arrangements with research institutions, univer- sities and colleges. For example, the company is active in the segment Energy Storage in the Lithium-Ion Battery (KLiB) competence network and as a committee member of the European Technology and Innovation Platform (ETIP). The goal in each case is to create the conditions for establishing European battery production within the European Commission.
In addition, Manz AG has an advisory role in the European LIPLANET project under the umbrella of the European Commission's "Horizon 2020 Project". This project aims to coor-dinate the European research and pilot lines for the production of lithium-ion battery cells and to ensure better efficiency of European battery research.
At the EU level, Manz AG, in addition to Saft S.A., Solvay S.A. and Siemens AG, is also a member of the "EU Battery Alliance", a complementary initiative to the "Horizon 2020" EU program.
From the beginning of 2018 to the end of March 2020, Manz AG had conducted research and development efforts in processes for the large-scale production of lithium-ion battery cells as part of the Fab4Lib project. Other project partners include BMZ Battery Assembly Group GmbH, SGL CARBON GmbH, Umicore AG & Co. KG, Siemens AG, ThyssenKrupp
System Engineering GmbH and RWTH Aachen University. The aim of the project is to define or develop the basis for a competitive production line with an annual capacity of 6 GWh.
This modular line is then to be set up where the corresponding capacity is required. Fab4Lib combines necessary competencies in order to completely plan German mass battery cell production and to realize cell production in a timely and cost-effective manner.
Another national research project related to battery manufacturing in which Manz is par- ticipating with research tasks is the STACK project. Here, Manz is further developing, among other things, laminating and stacking technology, which is judged to be a key technology for the manufacture of solid-state batteries, in particular. The partners are ZSW and the company Freudenberg.
In another project funded by the BMWi, Manz is working on the development of innovative housing technologies for the production of prismatic battery cells together with the Techni- cal University of Munich, Elring-Klinger and RWTH Aachen University.
Overall, Manz AG has a ratio of 7.5% for research and capitalized development services for the reporting period (previous year: 7.3%). The increase in the ratio is due to the fact that development expenses remained roughly the same, while total operating revenues decreased.
The capitalization ratio, i.e. the proportion of capitalized development costs in the total R&D expenses is 32.0 % (previous year: 25,7 %). R&D investments amounting to EUR 18.1 million are similar to the previous year's level of EUR 18.9 million.
Scheduled depreciation on activated development services of EUR 4.7 million (previous year: EUR 4.7 million) was charged in the reporting period 2020. The company will also continue to place a clear emphasis on R&D activities in future. Manz AG strives for an an- nual rate of R & D to revenues of 5% on average in order to provide sustained and long-term consolidation of its technological positioning and its innovations in the relevant target markets.
Sustainability report and non-financial statement
Manz AG is required to prepare a sustainability report or to submit a non-financial statement in accordance with the European Corporate Social Responsibility Directive and the provi- sions of sections 315b and 315c in conjunction with section 289c HGB (German Commercial Code). The non-financial consolidated statement is published separately from the consoli-dated management report in a separate sustainability report. For this purpose, the Manag- ing Board of Manz AG has decided to use the German Sustainability Code (DNK) as a framework. The sustainability report and the non-financial Group statement can be viewed on our websitewww.manz.comin the "Investor Relations" section under "Publications" and in the "Company" section under the heading "Sustainability."
Growth industries in focus: Battery technology
Energy transformation, e-mobility, electronic products - nothing moves without batteries
Energy storage is one of the main growth fields for the future. With its novel technology portfolio for the production of lithium-ion battery cells, modules and systems, as well as capacitors, Manz is setting new standards worldwide.
The production of battery cells places high demands on precision and productivity. Every single process step, e.g. coating, cutting, stacking or winding, affects the battery's performance parameters.
With its highly-efficient and fully-integrated production solu- tions, Manz covers the entire value chain for the production of battery cells --from wound button cells and prismatic cells to stacked pouch cells - and ensures that they can be produced in an efficient manner.
From individual cells to entire battery systems
The energy transformation and e-mobility require powerful all-in-one battery systems. In addition to our extensive know-how in process control, automation and laser technology, we offer our customers mature production solutions for all processes that are required for the assembly of battery modules.
With our solutions, we support our customers from the initial idea to the finished production process:
Individual machines for e.g. laboratory productionEquipment for pilot and small series production
Turnkey production solutions for battery cell and module production.
Business Report
General economic environment and industry-specific conditions
Economic market environment
Global economic activity in 2020 was dominated by the COVID-19 pandemic. According to the Kiel Institute for the World Economy (IfW), the global slump in economic activity in March and April was initially followed by strong catch-up effects as the pandemic situation began to ease, along with the associated easing of the economic situation. In the wake of the second wave of infection, countries around the world, including Germany, took numerous measures in November and December, which again had a noticeable impact on economic development in the fourth quarter of 2020. However, global trade was more robust this time than in the first half of the year. In December 2020, the IfW estimated that the global economy would contract by -3.8% for the year as a whole (2019: increase of +3.0%).
According to the IfW, economic output in the USA decreased by -3.6% compared with 2019 (increase of +2.3%). According to the IfW, the Chinese economy expanded by 1.8% in 2020, compared with economic growth of 6.2% in 2019. By contrast, the European economy recorded a sharp decline in economic output of -6.7% (previous year: increase of +1.2%). The German economy also suffered from the restrictions resulting from the COVID-19 pandemic. According to the IfW, economic output fell by -5.6% compared with growth of 0.5% in the previous year.
Engineering industry
In November 2020, the German Engineering Federation (VDMA) predicted a global decline in industry revenues for 2020 of between -7% and -9%. In 2019, there had still been zero growth. The main reason for the decline was the COVID-19 pandemic, which caused a sharp drop in machinery production, particularly during the first lockdown in April and May. By contrast, the industry in China recorded growth of 5% in 2020, up from 4% in 2019 , as the measures taken by the country largely brought the COVID-19 pandemic under control during the year. Germany was hit harder by the dislocations caused by the COVID-19 pandemic:
Here, according to the VDMA's December forecast, the mechanical engineering sector fared significantly worse than in the previous year (-2.6%), with a 15% drop in revenues. From January to November 2020, the German mechanical engineering sector also received 7% fewer orders than in the previous year, although according to a VDMA release from Novem- ber, the order situation improved again slightly toward the end of the year.
Core segment sectors
In the VDMA's photovoltaic production equipment sector, incoming orders in Germany were weaker during the first COVID-19 wave in the second quarter of 2020 than at the beginningof the year. However, the order situation in the third quarter of 2020 recovered significantly to the level of the first quarter. The revenue trend in the third quarter also points to a sus-tained market recovery in the second half of 2020. Supported by catch-up effects from the second quarter, revenues in the period from July to September were more than 40% higher than in the previous quarter. For the final quarter of 2020, the VDMA expected a further stabilization of overall revenues.
In the segment Electronics, Manz AG addresses several industries with its machines, which developed differently in 2020. These include equipment for the electronics and display in-dustries, as well as assembly lines for other industries, including, for example, the produc-tion of cell contact systems (CCS) for electric vehicles.
In the VDMA business climate survey at the end of the third quarter of 2020, German manufacturers of equipment for electronics production expected a 13.1 % decline in revenues for the year as a whole. The majority of the electronics industry's revenues generated in the first nine months of 2020 came from Germany, at 40.7 % (9M 2019: 29 %). Europe ac- counted for 28.8% of revenues (9M 2019: 22%). By contrast, Asia's importance declined sharply with a 16.0% share of revenues (9M 2019: 33%).
With regard to the market for LCD and AMOLED displays, Display Supply Chain Consultants (DSCC) expects global revenues to stagnate at an anticipated USD 103 billion in 2020. In this context, OLED technology will be able to expand its share compared to LCD technol-ogy, which is more widespread in terms of volume, due to the greater stability of its price level. According to Prismark revenues of printed circuit boards grew 6.4% globally in 2020 compared to the previous year.
The market for assembly, assembly systems and industrial robots in Germany was charac- terized by a difficult overall environment in 2020. In the first quarter of 2020, revenues already fell by 31.9% to EUR 1.8 billion compared with the fourth quarter of 2019. This development continued in the second and third quarters, with revenues of EUR 1.6 billion and
EUR 1.7 billion, respectively. Overall, revenues in this sector amounted to EUR 5.1 billion in the first three quarters of 2020. In contrast, the market segment served by Manz for as- sembly lines for the manufacture of cell contacting systems was able to benefit from the dynamics in the market for electric vehicles. The Samsung EV Research Center estimates that global revenues of electric vehicles (EVs) will reach 2.79 million vehicles by 2020. This means EVs will account for 3.8% of global car revenues (2019: 2.6%). EV turnover showed particular momentum in Europe in the third quarter, rising 171% to 380,000 units. EVs thus accounted for 10% of European turnover volume. This is due not only to government sub- sidies, but also to additional offerings by automakers in the lower price segment. For the fourth quarter of 2020, the Samsung EV Research Center expects a decline in demand compared to the previous quarter, as some EU countries had imposed lockdown measures again due to a second COVID-19 wave.
The market environment in the segment Energy Storage was also positive. The machine manufacturers benefited, in particular, from the very positive development in the market
for electric vehicles described above. According to the VDMA, the revenue growth forecast for the Battery Production Equipment segment in 2020 was 6.1% (as of September 2020).
Accordingly, the largest markets for revenues in 2020 were Asia with a 36% share of rev- enues, and Germany and Europe around 50%. For EV batteries shipped, Samsung EV Re-search Center expects a volume of 140 GWh worldwide in 2020, which corresponds to an increase of 29% compared to the previous year. For Europe, the turnover estimate is 52
GWh, an increase of 104% year-on-year.
Analysis of the financial, liquidity and earnings position of the group
Earnings position
Based on consolidated revenues of EUR 264.4 million in the financial year 2019, Manz AG's Managing Board had forecast a slight to moderate increase in revenues for 2020 compared to 2019, a positive EBITDA margin in the mid-single-digit percentage range, and an EBIT margin in the low, positive single-digit percentage range. The forecast took into account the impact of the COVID-19 pandemic on the company's economic development, which was assessable at the time, but was based on the assumption that the further spread of the virus would not have any additional negative impact on the development of business activities. Because of the revenue shifts in the segment Electronics due to the COVID-19 pandemic, customer delays and revenue shifts as a result of the COVID-19 pandemic in the segment Solar, as well as delayed order intake in the segment Energy Storage, in November 2020 the Managing Board corrected its revenue forecast for the financial year 2020 and was now expecting a slight decline in revenues in comparison with the preceding year while maintaining an unchanged positive earnings contribution.
Revenue Distribution by Region January 1 to December 31, 2020
Subsequently, revenues decreased by 10.5% to EUR 236.8 million (previous year:
EUR 264.4 million). The original revenue forecast of a slight to moderate increase in revenues compared to the financial year 2019 was therefore not achieved. By contrast, the earnings forecast was met in a financial year characterized by macroeconomic challenges, with an
EBITDA margin of 8.0% and EBIT of EUR 7.2 million, an improvement of around
EUR 15 million, corresponding to an EBIT margin of 3.0%.
Changes in inventories of finished goods and work in progress amounted to EUR -0.9 mil- lion (previous year: EUR -9.7 million). Own work capitalized amounted to EUR 5.8 million (previous year: EUR 4.9 million) and is attributable to the activities developing new tech- nologies in the segments Solar and Energy Storage. This resulted in a total operating per-formance of EUR 241.7 million (previous year: EUR 259.5 million).
At EUR 7.2 million, other operating income was lower compared to the previous year's figure of EUR 9.7 million and includes EUR 2.8 million from subsidies and EUR 1.2 million in ex- change rate gains.
Material costs in the financial year 2020 amounted to EUR 130.3 million (previous year:
EUR 160.8 million); the material cost ratio declined to 53.9% (previous year: 62.0%) as a result of changes in project composition, and as a result of the effects from the ongoing optimization projects. Personnel expenses remained virtually unchanged at EUR 71.9 million
(previous year: EUR 71.6 million). Due to the lower revenue level, the personnel expenses ratio increased from 27.6% in the previous year to 29.8%.
At EUR 36.6 million, other operating expenses were slightly higher than the previous year's figure of EUR 36.4 million, mainly due to the depreciation of an order with a customer in Asia.
The share of profit from associates increased to EUR 9.4 million (previous year: EUR 8.8
million) in light of positive business performance by Talus Manufacturing Ltd. in the Contract
Manufacturing segment.
Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to
EUR 19.4 million, more than double the previous year's figure of EUR 9.2 million. This is largely due to improved and more efficient order processing. The EBITDA margin increased to 8.0% from 3.6% in the previous year. Among others because of a lower amortization in value of the costs of obtaining a contract, the depreciation of EUR 12.1 million was below the previous year's level of EUR 16.8 million. Earnings before interest and taxes (EBIT) of EUR 7.2 million reflect the positive development in results and are above the previous year's figure of EUR -7.6 million by EUR 14.8 million.
Financial income amounted to EUR 91 thousand in 2020 (previous year: EUR 94 thousand),
financial expenses to EUR 2.3 million and were thus roughly at the previous year's level
(previous year: EUR 2.4 million). Earnings before taxes (EBT) were at EUR 5.0 million (previ- ous year: EUR -9.9 million). After deducting income taxes of EUR 1.5 million (previous year:
EUR 1.3 million), Manz AG's consolidated net income amounted to EUR 3.4 million (previous year: EUR -11.2 million) and thus is finally positive again. Based on a weighted average of 7,440,088 shares, this results in undiluted earnings per share of EUR 0.44 (previous year undiluted: EUR -1.43).
Financial position of the Group
The balance sheet total as at December 31, 2020 increased from EUR 341.5 million to
EUR 357.9 million compared to the previous year's balance sheet date.
On the assets side, non-current assets, amounting to EUR 120.4 million as of December 31, 2020, were above the level of the 2019 balance sheet date (EUR 144.8 million). This develop- ment resulted mainly from the reclassification of investments in associates accounted for using the equity method in the course of the planned disposal of the shares in the joint venture Talus Manufacturing Ltd. (December 31, 2019: EUR 21.4 million) to current assets.
As of December 31, 2020, current assets, standing at EUR 237.5 million, were above the value on the balance sheet date 2019 of EUR 196.7 million. Inventories and receivables decreased to EUR 29.9 million (December 31, 2019: EUR 35.7 million) and EUR 27.2 million, respectively, as of the reporting date (December 31, 2019: EUR 42.8 million). In addition, contract assets of EUR 68.9 million were recognized (December 31, 2019: EUR 59.9 million).
This increase was attributable to positive incoming orders during the reporting period. As a result of the planned disposal of the shares in Talus Manufacturing Ltd., which was com- pleted in January 2021, assets held for sale in the amount of EUR 30.0 million have been recognized for the first time. As of the reporting date 2020, cash and cash equivalents amounted to EUR 69.7 million and due to advance payments received increased consider- ably compared to the previous year's reporting date (December 31, 2019: EUR 44.0 million).
As of December 31, 2020, restricted cash in the amount of EUR 7.1 million (previous year: EUR 6.8 million) was reported under other current assets.
On the equity and liabilities side, equity of EUR 131.4 million was at the same level as the previous year (December 31, 2019: EUR 132.4 million). The equity ratio as of December 31, 2020 was 36.7% (December 31, 2019: 38.8%) with an increased balance sheet total.
Non-current liabilities increased from EUR 29.3 million as of December 31, 2019 to
EUR 35.6 million as of December 31, 2020. Reason for the increase is the inclusion of new loans. Current liabilities also increased to EUR 191.0 million as of December 31, 2020 (December 31, 2019: EUR 179.8 million). Current financial liabilities amounted to
EUR 71.3 million on the 2020 reporting date (December 31, 2019: EUR 57.2 million). The increase in this case resulted from the utilization of additional credit lines for purposes of working capital financing. Trade payables decreased to EUR 47.0 million at the end of the 2020 reporting period (December 31, 2019: EUR 57.4 million) as a result of consistent completion of current projects. The company had contract liabilities of EUR 43.9. million as of December 31, 2020 (December 31, 2019: EUR 35.8 million).
Liquidity position of the Group
The starting point for the cash flow from operating activities is the consolidated net profit of EUR 3.4 million. In the previous year, Manz AG recorded a cash outflow of
EUR 19.6 million from the decrease in trade payables, contract liabilities, and other liabilities.
In the financial year 2020 this cash outflow amounted to EUR 3.7 million. Manz also re- corded a cash inflow of EUR 12.0 million from the decrease in inventories, trade receivables, contract assets, and other assets, compared to an outflow of EUR 10.0 million in the previ- ous year. Cash flow from operating activities thus improved significantly by around EUR 45 million compared to the previous year and totaled EUR 20.6 million for the financial year 2020.
Cash flow from investment activities amounted to EUR -9.4 million in the 2020 reporting period (previous year: EUR 6.3 million). The cash outflow mainly results from investments in intangible assets and equipment.
Cash flow from financing activities in the financial year 2020 amounted to EUR 14.7 million and resulted primarily from the change in current and non-current financial liabilities from borrowing. Taking exchange rate changes into account, Manz AG thus had cash and cash equivalents of EUR 69.7 million as of December 31, 2020 (December 31, 2019:
EUR 44.0 million). Unused bank lines of credit amounted to EUR 16.9 million as of the 2020 balance sheet date (December 31, 2019: EUR 18.0 million). The considerably improved net debt amounted to EUR 7.2 million with a bank balance of EUR 69.7 million (Dezember 31, 2019: EUR 13.9 million).
Segment report
Revenues by Business Segment January 1 to December 31, 2020
Service
9.0 %
Order intake
(in million EUR)
2020 | 2019 | Change in % | |
Solar Electronics Energy Storage Contract Manufacturing Service | 0.7 85.4 129.5 34.9 21.2 | 8.1 74.3 84.8 37.5 19.1 | -91.0 +14.9 +52.8 -7.0 +11.0 |
Group total | 271.7 | 223.7 | +21.4 |
Electronics
Manz AG offers its customers production, assembly and handling systems for the production of LCD, OLED and AMOLED flat screen displays, touch sensors, printed circuit boards and chip carriers, as well as smart phones, tablet computers, laptops, wearables and other con- sumer electronics in the Electronics segment. In addition, the automated assembly solutions provide "tier 1 and tier 2 companies" in the automotive industry with transformation solutions from the classic drive train to the future e-drive train. Here, the company would like to profit from the increasing digitization and automation of production and final assembly.
Overall, Manz AG recorded a mixed segment performance in 2020. Demand for machines for electronic components declined noticeably in 2020, partly due to the COVID-19 pan- demic, after the strong business performance in this segment had benefited from the completion of a major order in the area of displays in the previous year. However, business with customers from the assembly automation segment developed positively, particularly in the cell contacting systems segment.
At EUR 90.7 million, revenues in the Electronics segment in 2020 were down on the previous year's figure of EUR 115.7 million. This corresponds to a 38.3% share of consolidated rev-enues (previous year: 43.7 %). However, the decline in revenues of around 20% was more significant than forecast. This is due to the declining business in Asia for production equip- ment for the manufacture of displays. At EUR -5.4 million, the segment EBIT showed an improvement over the previous year (EUR -7.6 million), but remained well below the target of a balanced EBIT.
Energy Storage
In the segment Energy Storage, Manz AG offers production, assembly and handling equip-ment for lithium-ion battery cells, modules, and packs, as well as for capacitors. The prod- uct portfolio encompasses production solutions for lithium-ion batteries and (super) ca- pacitors in the areas of electronic end devices such as tablet PCs, mobile phones and laptops, battery-powered power tools and gardening equipment, stationary energy storage for private households and large-scale photovoltaic systems as well as in the focus market e-mobility.
In the 2020 financial year, the segment Energy Storage developed very positively. For ex- ample, Manz AG was able to report numerous major orders in the high double-digit million euro range overall. The clients include AKASOL AG, a German manufacturer of battery systems for hybrid and fully electric commercial vehicles, and an internationally active bat-tery manufacturer from the consumer electronics sector.
The segment Energy Storage achieved revenue growth of 59% to EUR 64.7 million (previous year: EUR 40.7 million). This corresponds to a revenue contribution to the Group of 27.3% after 15.4% in the previous year. Despite the strong increase in revenues, the forecast growth of between +110% and + 130% could not be achieved due toCOVID-19-related order deferrals. At EUR 6.9 million, segment EBIT increased significantly compared to the previous year (2019: EUR -11.3 million), thus exceeding the forecast EBIT margin in the low single-digit percentage range.
Solar
The focus within the Solar segment in the 2020 financial year continued to be on the imple- mentation of the large CIGS orders from China Energy Investment Corporation Limited.
Manz was able to install the majority of the machines at the CIGSfab turnkey tools at the beginning of the year, but had to interrupt further work soon thereafter due to the COVID-19 pandemic. Despite these difficulties, Manz AG remained in close contact with the client and was able to resume the installation of additional machines during the third quarter to a limited extent. The installation start of the CIGSlab research facility was also delayed by COVID-19 and customer delays. Due to the delays in both projects, the full completion of the two CIGS orders is expected to be postponed to the end of financial year 2021.
As a result, Solar segment revenues of EUR 23.2 million fell short of original expectations of a revenue decline of up to 35% compared to 2019. The segment's share of revenues thus corresponds to 9.8% of consolidated revenues (previous year: EUR 47.5 million or 18.0%).
As a result of the delayed realization of revenues, segment EBIT totaled EUR -7.8 million compared to EUR -2.0 million last year.
Contract Manufacturing
In 2020, the operating activities in the Contract Manufacturing segment were mainly carried out by the sites in Slovakia, Hungary, China and by the associated company Talus Manufac- turing Ltd. at the Taiwan site. Among other things, equipment for the semiconductor indus- try is built there. Furthermore, at these locations Manz AG is also a high-tech partner for equipment manufacturing, parts manufacturing and assembly work for clients from a wide range of industries.
In 2020, revenues in this segment totaled EUR 37.0 million; this represents a 15.6% share of consolidated revenues (previous year: EUR 41.5 million or 15.7%). This development corresponds to the forecast revenue decline of between 20% and 25%. At EUR 12.3 million (previous year: EUR 11.5 million), the EBIT target of a margin in the low single-digit percent- age range was exceeded. This includes the result from Talus Manufacturing Ltd. of
EUR 9.4 million (previous year: EUR 8.8 million). The share of profit of Talus was recognized until the beginning of November 2020. At this time, Manz AG was informed by its American business partner of the exercise of a contractual call option so that it would take over the share in Talus Manufacturing Ltd. held by Manz Taiwan Ltd. Furthermore, thanks to the outstanding development seen with other customer projects, Manz AG achieved a positive segment EBIT in the fourth quarter of 2020. For example, a long-term cooperation agree- ment was concluded with a German manufacturer from the electronics industry at Manz
AG's Slovakian location in 2020. A cooperation agreement with another leading semiconduc- tor specialist was successfully launched at the Suzhou, China site.
Service
In the Service segment, Manz AG combines all of its after-sales services, such as repairs and maintenance or the conversion and upgrade of machines and assemblies. In 2020, the Service segment contributed 9.0% of the Group's total revenues with revenues amounting to EUR 21.2 million (previous year: EUR 19.1 million or 7.2%). With the increase in revenues compared to the previous year, Manz AG was able to achieve its 2020 forecast. The segment EBIT in 2020 was EUR 1.3 million and therefore below the previous year's level of
EUR 1.6 million. Margin development remained below expectations due to increasing com- petition in the display market.
Overall statement on corporate development 2020
Revenue trend in 2020 fell short of original expectations due to the effects of the COVID-19 pandemic and customer delays. Projects in the segments Solar and Electronics were delayed during the course of the year, in some cases considerably, and contract awards for planned projects in the segment Energy Storage were likewise pushed back in some cases. Accord- ingly, some of the revenues that had already been budgeted for 2020 will not be realized until 2021. Despite the fall in revenues, Manz AG reported a profitable business development with a positive EBIT margin in 2020, among other things because of a considerable improve- ment in internal processes.
As a result of the positive earnings development in a difficult market environment character- ized by the COVID-19 crisis, Manz AG sees itself confirmed in its long-term optimization process and the forward-looking strategic development of recent years. With an order backlog as of December 31, 2020 of EUR 202.3 million (previous year: EUR 168.5 million)
and incoming orders of EUR 271.7 million as of December 31, 2020 (previous year: EUR 223.7 million), the developments on the market for electromobility in particular under- line the potential for Manz AG. Further information on the achievement of targets can be found in the corresponding section of the forecast report.
At the end of 2019,
renewable energies
accounted for
34.7%
of global electricity production capacity.
The share of renewable energies is growing worldwide.
The renewable energies sector will have to expand much more rapidly to ensure that growing global demand for energy can be met and that the Paris climate targets can be achieved. That is what we are committed to.
Growth industries in focus: Energy
Making efficient use of the sun's energy
The production of electricity using photovoltaics equipment and the storage of energy are important components of a successful energy transformation. In both of these areas, Manz is among the leading development partners to industry.
Our motivation: Electricity supplies should be reliable - even when the sun does not shine.
...three are addressed by Manz solutions: affordable and clean energy; industry, innovation and infrastructure; climate protection measures.
With our turnkey production lines for CIGS thin-film solar modules, we play a role in the production of climate-friendly electricity. And our production solutions for battery storage systems ensure that this electricity is available around the clock. The energy industry profits from
thin-film solar modules based on the CIGS technology, i.e.
a semiconductor consisting of copper, indium, gallium and seleniumstationary energy storage systems for the decentralized storage of energy from renewable sources for secure elec-tricity supplies.
Making sure that elec-tricity remains secure, clean and affordable
As one of the pioneers in photovoltaics machine building, Manz plays a major role in ensuring that solar companies are able to bring their products to market at more affordable prices and with a greater degree of efficiency, which means that solar electricity can be offered at competitive prices.
The greater the share of renewable energies in the electricity mix, the greater the demand for load balancing technologies.
These include storage systems that keep available excess energy that is not required or that cannot be fed into the grid immedi- ately. Our production technology increases the performance of the required energy storage systems and also makes them cheaper to produce.
Corporate Governance
Declaration on corporate governance in accordance with section 289f and section 315d HGB
The corporate governance statement in accordance with sections 289f and 315d of the
German Commercial Code (HGB) was prepared jointly for Manz AG and the Manz Group and published under the heading "Manz AG Corporate Governance Statement and Corporate Governance Report for the Financial Year 2020" on the company's websitewww.manz.com in the Investor Relations section under the heading "Corporate Governance - Corporate
Governance Statement."
Disclosures in accordance with section 315a (1) HGB and notes pursuant to section 176 (1), Sentence 1 Stock Corporation Act (AktG) on the disclosures in accordance with sections 289a (1) and 315a (1) HGB
Composition of subscribed capital
Manz AG's subscribed capital is valued at EUR 7,744,088.00 and is divided into 7,744,088 no-par value bearer shares. All shares are associated with the same rights and duties. Each share grants its holder one vote at the Annual General Meeting. Each share offers the same share of profits. This would exclude treasury shares held by Manz AG, which do not entitle the company to any rights. At the present time, the company does not hold any treasury shares. In other respects, shareholders' individual rights and duties result from the provi- sions of the German Stock Corporation Act (AktG), particularly sections 12, 53a et seqq., 118 et seqq., and 186.
Restrictions that apply to voting rights or the transfer of shares
The Managing Board of Manz AG does not know of any agreements pertaining to restric- tions on the use of voting rights or the transfer of shares.
Shareholdings that exceed 10% of voting rights
As a result of notifications received regarding major holdings of voting rights pursuant to sections 33 and 34 of the German Securities Trading Act (Wertpapierhandelsgesetz - WpHG) and transactions involving company shares executed by managers pursuant to Article 19 of the Market Misuse Directive, the Managing Board is aware of the following direct and indirect holdings in the company's capital that exceed 10% of the voting rights:
Number of voting rights
Percentage of voting rights
Dieter Manz, Schlaitdorf thereof, directly (33 WpHG) thereof, attributed (34 WpHG)
2,175,199 953,942 1,221,257
28.09% 12.32 % 15.77 %
People's Republic of China, acting through the State-owned Asset Supervision Commission (SASAC) of the People's Government of Shanghai, People's Republic of China
1,523,480
19.67 %
Full chain of subsidiaries:
Shanghai Electric (Group) Corporation
Shanghai Electric Group Company Limited
Shanghai Electric Hongkong Co. Limited
Shanghai Electric Germany Holding GmbH (shareholder)
Shares with special rights that confer authority to exercise control
The company does not have shares with special rights that confer authority to exercise control.
Type of voting right controls when employees are issued shares of company stock and do not directly exercise their control rights
Employees with holdings in the capital of Manz AG may directly exercise any control rights to which they are entitled based on the shares transferred to them in accordance with provisions of the company's Articles of Incorporation and the law.
Legal requirements and provisions of the Articles of Incorporation regarding the ap- pointment and dismissal of members of the Managing Board and regarding amendments to the Articles of Incorporation
The appointment and dismissal of members of the Managing Board is governed by sections 84 and 85 of the German Stock Corporation Act. These sections stipulate that members of the Managing Board are to be appointed by the Supervisory Board for a period lasting a maximum of five years. Members may be repeatedly appointed or have their term extend-ed, in either case for another period lasting a maximum of five years. Pursuant to section 5 of the company's Articles of Incorporation, the Managing Board may consist of one or more persons. The Supervisory Board appoints the members of the Managing Board pursuant to
the provisions of the German Stock Corporation Act and determines their number. The
Supervisory Board may appoint a member as chairperson of the Managing Board. Pursuant to section 84(3) of the German Stock Corporation Act (AktG), the Supervisory Board may revoke the appointment of a member of the Managing Board and the appointment of a chairperson of the Managing Board for good cause.
Amendments to the Articles of Incorporation are governed by sections 133 et seqq. and 179 et seqq. of the German Stock Corporation Act (AktG). In general, amendments require a resolution passed at the Annual General Meeting. A resolution passed at the annual gen-eral meeting requires a majority of at least three-quarters of the capital stock represented at the time the resolution is adopted. The Articles of Incorporation may determine a differ- ent, but only greater capital majority, for any amendment to the corporate purpose of the company.
Pursuant to Article 16 (1) of the company's Articles of Incorporation, resolutions are passed at the Annual General Meeting by a simple majority of the votes cast, unless mandatory provisions of the German Stock Corporation Act stipulate otherwise. Where the German Stock Corporation Act also stipulates that a majority of the represented capital stock is required to pass a resolution, a simple majority of the represented capital fulfills this require- ment, as permitted by law.
Authority of the Managing Board to issue or repurchase company shares
The Managing Board may issue new shares only on the basis of resolutions passed at the annual general meeting in respect of an increase in capital stock or in respect of authorized and conditional capital. Purchasing treasury shares is governed by section 71 et seqq. of the German Stock Corporation Act (AktG) and, in certain cases, is permitted by operation of law or as a result of authorization given at the Annual General Meeting.
Authorized capital
On the basis of a resolution passed by the Annual General Meeting of July 12, 2016 pursu- ant to Article 3, sentence 3 of the Articles of Incorporation, the Managing Board is authorized to increase the company's capital stock, with Supervisory Board approval, in the period until July 11, 2021, on a one-time basis or in partial contributions, up to a total of
EUR 3,872,044.00 through the issuance of a total of 3,872,044 new bearer shares (no-par-value shares) by means of cash or non-cash contributions (Authorized Capital 2016).
In principle, the new shares must be offered to shareholders for subscription. The new shares may also be assumed by banks designated by the Managing Board with the obliga-tion to offer them to the shareholders for subscription (indirect Reference right). However, the Managing Board was authorized, with Supervisory Board approval, to exclude sharehold- ers' subscription rights
• in the event of a capital increase for cash consideration, if the issue amount of the new shares is not significantly less, within the meaning of section 203 (1) and (2) and section 186 (3) sentence 4 of the German Stock Corporation Act (AktG), than the stock exchange price of shares of the company of the same type at the time of establishment of the issue price, which is to be as close in time as possible to the time of issue of new shares. This authorization to exclude the subscription right applies only to the extent that shares to be issued in the capital increase do not in total represent a proportionate amount of the capital stock of more than EUR 774,408.00 and overall do not comprise more than 10% of the capital stock at the time the authorization is exercised. The proportionate amount of capital stock of shares which are issued or sold during the period of this authorization based on other authorizations in direct or corresponding application of section 186 (3), sentence 4 of the German Stock Corporation Act (AktG), with exclusion of subscription rights, is to be credited toward this maximum amount for the exclusion of subscription rights;
• in the case of capital increases against contribution in kind for the acquisition of compa- nies, parts of companies or participations in companies or other assets or for the purpose of business combinations;
• to the extent that it is necessary to give owners of warrant or convertible bonds, profit-sharing rights, or profit-sharing bonds (or combinations of these instruments) issued by the company or direct or indirect affiliates of the company a subscription right to new shares to the same extent as they would have upon exercising their option or conversion right or after fulfilling their conversion obligation;
• in order to exclude fractional amounts from subscription rights.
The Managing Board is authorized, with Supervisory Board approval, to determine the fur-ther details of the implementation of the capital increases based on the authorized capital.
Authorization to issue partial debentures with options or conversion rights or conver- sion obligations, profit-sharing rights, and profit-sharing bonds (or combinations of these instruments), as well as Conditional Capital I
At the Annual General Meeting on July 2, 2019, a resolution was passed authorizing the
Managing Board, with Supervisory Board approval, to issue bearer warrant or convertible bonds, profit-sharing rights and/or profit-sharing bonds, or a combination of these instru- ments (collectively referred to as "bonds"), up to a total nominal value of EUR 150 million, on one or more occasions until July 1, 2024. In addition, the Managing Board was also au- thorized to grant owners of warrant bonds option rights and owners of convertible bonds conversion rights for bearer shares of the company with a proportionate amount of capital stock totaling up to EUR 3,100,000.00, in accordance with the detailed terms and conditions of the warrant/convertible bonds.
The statutory subscription right is granted to the shareholders in the way that the bonds are underwritten by a bank or a syndicate of banks with the obligation to offer them for subscription to shareholders. If bonds are issued by one of Manz AG's subsidiaries pursuant to section 18 of the German Stock Corporation Act, the company must ensure that the statutory subscription right is granted accordingly to shareholders of Manz AG.
The Managing Board is however authorized, with Supervisory Board approval, to exclude fractional amounts from shareholders' Right of occupation and also to exclude the share- holders' subscription rights to the extent necessary in order to give holders of already issued bonds with options or conversion rights and/or conversion obligations a subscription right to the extent to which they would be entitled after exercising their options or conversion rights or upon fulfilling their conversion obligation.
Furthermore, the Managing Board is authorized, with Supervisory Board approval, to com- pletely exclude shareholders' subscription rights to bonds issued with an option and/or conversion right or conversion obligation, provided the Managing Board, after dutiful ex- amination, arrives at the view that the issue price of the bonds is not significantly below their hypothetical market value as calculated according to accepted and, in particular, actu- arial methods. This authorization to exclude the subscription right applies to bonds issued with an option and/or conversion right or a conversion obligation, carrying an option and/or conversion right or a conversion obligation for shares with a total proportionate amount of the capital stock, which may not exceed 10% of the capital stock, either at the time the authorization becomes effective or - in the event that this amount is lower - at the time this authorization is exercised. The following are offset against the aforementioned ten percent limit:
• new shares issued from authorized capital excluding subscription rights in accordance with section 186 (3) sentence 4 Stock Corporation Act (AktG) during the term of this au- thorization up to issue of bonds with option and/or conversion rights or conversion obligations pursuant to section 186 (3) sentence 4 Stock Corporation Act (AktG),
such as
• such shares as are acquired on the basis of an authorization granted at the Annual
General Meeting and are disposed of, with exclusion of the subscription right, pursuant to section 71 (1) no. 8 sentence 5 German Stock Corporation Act (AktG), in conjunction with section 186 (3) sentence 4, of the German Stock Corporation Act (AktG) during the term of this authorization up to the issue, subject to the exclusion of subscription rights pursuant to section 186 (3) sentence 4 of the German Stock Corporation Act (AktG), of the bonds carrying an option and/or Conversion right or conversion obligation.
Where profit-sharing rights or profit-sharing bonds without an option right or conversion right/obligation are issued, the Managing Board is authorized, with Supervisory Board ap- proval, to completely exclude shareholders' subscription rights if these profit-sharing rights or profit-sharing bonds have the characteristics of a debenture; i.e., do not give rise to any membership rights in the company, do not grant a share in the liquidation proceeds, andthe interest payable is not calculated on the basis of the net income for the year, net retained profit, or the dividend. Moreover, in such a case, the interest payment and the issue price of the profit-sharing rights or profit-sharing bonds must reflect current market conditions at the time of issue.
Pursuant to Article 3 (4) of the Articles of Incorporation, the capital stock of the company has been conditionally increased by up to EUR 3,100,000.00 through the issue of up to 3,100,000 no-par value bearer shares (Conditional Capital I). The contingent capital increase will only be carried out to the extent that the holders of option or conversion rights or those obliged to convert from warrant or convertible bonds, profit participation rights or participat- ing bonds issued by the Company or a Group company within the meaning of section
18 AktG on the basis of issued or guaranteed at the Annual General Meeting on Tuesday, July 2, 2019 under agenda item 5, exercise their option or conversion rights or, if they are required to convert, fulfill their obligation to convert, unless a cash settlement is granted or treasury shares or shares of another listed company. The new shares are issued at the op- tion or conversion price to be determined in each case in accordance with the authorization resolution described above. The new shares are to participate in profit from the beginning of the financial year in which they are created on the basis of the exercise of options or conversion rights or of the fulfillment of conversion obligations. The Managing Board is authorized, with Supervisory Board approval, to establish the further details of the execution of the conditional capital increase.
Authorization to issue share subscription rights within the scope of the Manz Performance Share Plan 2019 as well as Conditional Capital III
At the Annual General Meeting held on July 2, 2019, a resolution was passed authorizing the Managing Board, with Supervisory Board approval, to issue a total of up to 95,000 sub-scription rights for subscription of a total of up to 190,000 shares in the company to execu- tives of affiliated companies of the company, as well as Manz's own managers below the executive level and managers of affiliated companies, both domestic and foreign, below the executive level on one or more occasions through June 30, 2024. The Supervisory Board was authorized to grant one or several times a total of up to 85,000 subscription rights for the purchase of up to 170,000 shares in the company to members of the company's Manag- ing Board until June 30, 2024.
Subscription rights are to be granted, structured and exercised in accordance with the provisions in the resolution of the Annual General Meeting on July 2, 2019.
The authorization of July 7, 2015 was revoked by a resolution passed at the Annual General Meeting of July 2, 2019, insofar as no subscription rights had been issued on the basis of this authorization.
Pursuant to Article 3 (6) of the Articles of Incorporation, the company's capital stock has been conditionally increased by up to EUR 360,000.00 through the issue of up to 360,000 no-par value bearer shares (Conditional Capital III). The conditional capital increase servesto secure the rights of the holders of subscription rights granted on the basis of the autho-rization granted by the Annual General Meeting on July 2, 2019. The shares will be issued at the issue amount established in the authorization adopted at the annual general meeting on Tuesday, July 2, 2019. The contingent capital increase will be carried out only to the extent subscription rights are exercised and the company does not issue either treasury shares or a cash settlement for the purpose of fulfillment of the subscription rights. The new bearer shares will be equivalent to already issued shares of the same class with respect to their dividend entitlement. The Managing Board and, to the extent members of the Man- aging Board are affected, the Supervisory Board are authorized to establish the further details of the conditional capital increase and its implementation.
Authorization to issue share subscription rights within the scope of the 2015 Manz Performance Share Plan as well as Conditional Capital II
At the annual general meeting held on July 7, 2015, a resolution was passed authorizing the Managing Board, with Supervisory Board approval, to issue a total of up to 59,000 subscrip- tion rights ("Performance Shares") for a total of up to 118,000 shares in the company to executives of affiliated companies as well as Manz's own managers below the executive level and managers of affiliated companies, both domestic and foreign, below the executive level on one or more occasions through June 30, 2020. The Supervisory Board was given authorization to issue a total of up to 56,000 subscription rights ("Performance Shares") for a total of up to 112,000 shares in the company to members of Manz's Managing Board, on one or more occasions, through June 30, 2020.
Subscription rights are to be granted, structured and exercised in accordance with the provisions in the resolution of the Annual General Meeting on July 7, 2015.
Pursuant to Article 3 (5) of the Articles of Incorporation, the company's capital stock has been conditionally increased by up to EUR 230,000.00 through the issue of up to 230,000 no-par value bearer shares (Conditional Capital II). The conditional capital increase serves to secure the rights of the holders of subscription rights ("Performance Shares") granted on the basis of the authorization granted by the annual general meeting on July 7, 2015. The shares will be issued at the issue amount established in the authorization adopted at the annual general meeting on Tuesday, July 7, 2015. The contingent capital increase will be carried out only to the extent subscription rights are exercised and the company does not issue either treasury shares or a cash settlement for the purpose of fulfillment of the sub- scription rights. The new shares will be equivalent to already issued shares of the same class with respect to their dividend entitlement. The Managing Board and, to the extent members of the Managing Board are affected, the Supervisory Board are authorized to establish the further details of the conditional capital increase and its implementation.
In addition, the Managing Board and - when issuing shares to members of the Managing Board - the Supervisory Board were authorized on June 30, 2020, to use acquired Manz AG treasury shares to service subscription rights that have been or will be issued to members of the Managing Board and executives as part of the Manz Performance Share Plan 2015
approved by the Annual General Meeting on July 7, 2015, under Item 6 on the agenda, or as part of the Manz Performance Share Plan 2019 approved by the Annual General Meeting on July 2, 2019, under Item 6 on the agenda. This authorization to reissue clearly defines the group of people to whom the Manz shares can be transferred.
The Manz Performance Share Plan 2015 for Managing Board members and Company ex- ecutives as well as the Company or its subsidiaries was explained in a report from the
Managing Board at the Annual General Meeting on July 7, 2015. Likewise, the Manz Perfor- mance Share Plan 2019 for members of the Managing Board and Company executives and its group companies, which was approved during the Annual General Meeting 2019, was explained in a report by the Managing Board to the Manz AG Annual General Meeting on July 2, 2019.
The option to grant Manz AG's own shares to those entitled to subscribe in fulfillment of their subscription rights is a suitable means of counteracting the dilution of capital holdings and voting rights that would occur if the subscription rights were fulfilled with newly cre- ated shares based on the contingent capital. To the extent that the Company makes use of this option, there is no need to make use of contingent capital II according to Section 3 (5)
of the Articles of Incorporation or contingent capital III according to Section 3 (6) of the
Articles of Incorporation. Whether and to what extent the authorization to issue treasury shares is used to fulfill the subscription rights or whether new shares are issued instead from the contingent capital, is to be decided by the Managing Board and - if a member of the Managing Board exercises the subscription right - by the Supervisory Board, which is guided by the interests of the Company and its shareholders.
Authorization to purchase and dispose of treasury shares
The annual general meeting held on June 30, 2020, authorized the Managing Board of the company to acquire treasury shares until July 1, 2024, pursuant to section 71 (1) number 8 of the German Stock Corporation Act (AktG) with a proportional value of up to 10% of the capital stock at the time this authorization becomes effective or of the existing capital stock of the company at the time of exercise of the authorization, if such amount is lower, where- by at no point in time more than 10% of the capital stock of the company may be repre- sented by the shares acquired on the basis of this authorization together with other shares of the company, which the company has already acquired and still possesses or which are attributable to it pursuant to sections 71d and 71e AktG. The provisions in Section 71 (2), sentences 2 and 3 AktG must be observed.
The acquisition may take place only through the securities exchange or by means of a pub- lic purchase order and must satisfy the principle of equal treatment of shareholders (section 53a AktG).
The Managing Board was authorized to sell the treasury shares acquired on the basis of the above authorization also in manners other than through the stock exchange or through an offer to other shareholders, under the condition that the sale is for cash and is at a pricethat is not significantly below the stock-exchange price, at the time of the sale, of company shares with the same features. This authorization of use is restricted to shares with a pro- portionate amount of capital stock that in total does not exceed 10% of the capital stock of the Company, neither at the time of coming into effect of this authorization, nor - if such amount is lower - at the time of exercise of the above authorization. The maximum limit of 10% of the capital stock is reduced by the proportionate amount of the capital stock that is attributable to those shares that are issued or sold during the term of this authorization with exclusion of the subscription rights pursuant to or in accordance with section 186 (3) sentence 4 AktG. The maximum limit of 10% of the capital stock is further reduced by the proportionate amount of the capital stock represented by those shares that were to be is- sued in order to service bonds with option or conversion rights and/or option or conversion obligations to the extent such bonds are issued during the term of this authorization with exclusion of subscription rights in analogous application of section 186 (3) sentence 4 AktG.
The Managing Board was further authorized to transfer treasury shares acquired on the basis of the above authorization to third parties insofar as this is for the purpose of acquiring companies, parts of companies or interests in companies or other assets, or to carry out business combinations.
The Managing Board and - to the extent there is an obligation with respect to members of the Managing Board - the Supervisory Board were further authorized to use the treasury shares acquired on the basis of the above authorization for the purpose of fulfilling the subscription rights that were or are issued in the framework of the Manz Performance Share Plan 2015 resolved at the Annual General Meeting of July 7, 2015, under item 6 of the agenda or in the framework of the Performance Share Plan 2019 adopted at the Annual
General Meeting of July 2, 2019, under item 6 of the agenda.
The Managing Board was also authorized to use the treasury shares acquired on the basis of the above authorization for the purpose of fulfillment of the subscription and conversion rights that result from exercising option or conversion rights or fulfilling option or conversion obligations that have been granted or imposed within the framework of issuing convertible or warrant bonds, profit-sharing rights, or profit-sharing bonds (or combinations of these instruments) of the company or its subsidiaries.
The Managing Board was further authorized to transfer own shares acquired on the basis of the above authorization to employees of the Company or employees or members of governing bodies of subordinate affiliates of the Company within the meaning of sections 15 et seqq. AktG.
Significant company agreements that are conditional on a change of control as a result of a takeover bid
Patent and expertise license agreement with ZSW
There is a patent and expertise license agreement from the year 2017 between Manz AG and the Center for Solar Energy and Hydrogen Research Baden-Württemberg (Zentrum für Sonnenenergie- und Wasserstoff-Forschung Baden-Württemberg, ZSW), which is a founda- tion under German civil law and a research institution of the state of Baden-Württemberg, under which the ZSW grants Manz AG certain licenses to its patents and expertise with regard to CIS and/or CIGS technology for the manufacture of thin-film solar cells. The new patent and expertise license agreement can be terminated by ZSW for good cause if a competitor of ZSW acquires or exceeds 30% of voting rights in Manz AG in terms of section 33 et seqq. WpHG.
Patent and expertise license agreement with NICE Solar Energy GmbH
In addition, Manz AG and NICE Solar Energy GmbH (formerly Manz CIGS Technology GmbH),
a subsidiary of NICE PV Research Ltd., in which China Energy Investment Corporation Lim- ited (formerly Shenhua Group), Shanghai Electric Group Co. Ltd , and Manz AG, a patent and expertise licensing agreement from 2017, according to which NICE Solar Energy GmbH
(formerly Manz CIGS Technology GmbH) of Manz AG has granted certain patents and ex- pertise regarding the CIS or CIGS technology for the production of thin-film solar cells. The patent and expertise licensing agreement can be terminated by NICE Solar Energy GmbH
(formerly Manz CIGS Technology GmbH) for good cause if a third party directly or indi- rectly acquires at least 30.0% of the shares in Manz AG where a direct or indirect purchase of shares by Shanghai Electric Group Co. Ltd., China Energy Investment Corporation Lim- ited (formerly Shenhua Group) exceeding 30.0 % or such acquisition by Dieter Manz does not give rise to the right of termination. NICE Solar Energy GmbH filed for protective shield proceedings at the Heilbronn District Court in accordance with Section 270b of the German Insolvency Code in 2021. As a result, the company is now in the process of restructuring, but business operations will continue unchanged. The licenses granted for the production of thin-film solar cells of the CIS and CIGS technology remain valid. At the current time, Manz
AG does not expect any significant effects on the assets, financial and earnings situation from the protective shield proceedings of NICE Solar Energy GmbH.
Talus Manufacturing Ltd.
An agreement existed between the subsidiary Manz Taiwan Ltd. and Lam Research Corpo- ration, a leading US manufacturer of equipment for the semiconductor industry regarding
Talus Manufacturing Ltd. in Chungli, Taiwan, in which Manz Taiwan Ltd. held an 80.5% stake and the partner held a 19.5% stake. The partner has informed Manz AG that it will acquire the shares held by Manz Taiwan Ltd. in Talus Manufacturing Ltd. By exercising the contrac- tually agreed purchase option, the partner acquires this 80.5%. Regulatory approval for the sale of the shares was granted at the end of January 2021.
Apart from the agreements mentioned above and in the section below, there are no sig- nificant company agreements that are conditional on a change of control as a result of a takeover bid.
Compensation agreements of the company that have been made in the event of a take- over bid with members of the Managing Board or with employees
In the event of a change of control, the employment contract of Managing Board member
Martin Drasch stipulates that the Managing Board member is entitled to terminate the employment contract with a notice period of three months to the end of a calendar month and to resign from his office as member of the Managing Board with the same deadline.
These rights may be exercised only within six months after the change of control has oc- curred.
A change of control is to be deemed to have taken place when the company receives noti- fication from a notifying party in accordance with section 33 (1), sentence 1 WpHG that the notifying party, with inclusion of the voting rights attributable to him pursuant to section 34 WpHG, has reached or exceeded a 25% or higher share of voting rights in the company.
In the event of a termination of the employment contract pursuant to the above provisions, the member of the Managing Board shall receive a severance payment. This severance payment shall consist of the total amount of the fixed salary owed for the remaining term of the employment contract and the total amount of the cash bonus owed for the remaining term of the employment contract, whereby for the calculation of the amount, the average of the EBT return in the last financial year before the termination and the EBT return that is expected to be realized in the current financial year according to the forecast of the com- pany are to be taken as the basis. The severance payment is limited to the amount that corresponds to 150% of the severance cap. The value of two years' annual compensation is deemed to be the severance cap. If the remaining employment term on the date the resignation becomes effective amounts to more than two years, the severance payment is reduced, insofar as it is being granted for the exceeding period, by 75% for the purposes of offsetting the severance payment with a lump sum equal to the member's expected in- come from other sources after ending employment. In addition, the amounts used in the calculation of the severance payment must also be discounted at 3 % p.a. each to the date on which the severance payment is due.
In other respects, the company has not entered into any agreements with members of the Managing Board or with employees that make provision for compensation payments in the event of a takeover bid.
Compensation report
The following compensation report presents the basic principles of the compensation systems for the Managing and Supervisory Boards of Manz AG, as well as the salaries earned by the members of the Managing and Supervisory Boards in the financial year 2020.
System of compensation for the Managing Board
The aim of the compensation system is to compensate the members of the Managing Board commensurately according to their area of activity and responsibility, taking into account not only the personal performance of each respective Managing Board member, but also the company's overall situation and business success. The compensation structure is geared toward sustainable corporate growth.
The compensation paid to members of the Managing Board consists of fixed and variable components. When assessing the amount of the remuneration elements, a distinction is made between the Chairman of the Managing Board and the other members of the Manag- ing Board.
Fixed elements of compensation
The fixed components of Managing Board compensation consist of a fixed monthly salary, benefits in kind, and contributions to a company retirement scheme.
The fixed salary is paid in twelve equal monthly installments. These fixed payments function as a base salary to cover Managing Board members' and their families' ongoing cost of living expenses irrespective of the company's performance.
An appropriate company car, which can also be used for private purposes, is provided to Managing Board members as a benefit in kind. In addition, the company has taken out ac- cident insurance policies with appropriate benefits for each of the Managing Board members.
These policies also cover non-work-related accidents. Furthermore, there is a directors and officers pecuniary damage liability insurance policy (so-called D & O insurance) for the members of the Managing Board at the company's expense.
The company has undertaken to pay pension contributions to members of the Managing Board, Martin Drasch, Manfred Hochleitner and Jürgen Knie, by paying annual contributions to a support fund.
Variable elements of compensation
General
The variable compensation comprises an annual component linked to the company's suc- cess in the form of an annual cash bonus (short-term variable compensation) on the onehand, and on the other hand, a share-based component with a multi-year assessment in the form of annual stock options based on the 2019 Manz Performance Share Plan (long- term variable compensation).
The variable components complement the fixed elements of compensation, serving as a specific incentive to achieve sustained corporate growth while contributing to the Manag- ing Board members' accumulation of personal assets and financial independence. In the interest of an alignment of variable compensation with sustainable corporate development, the fair value of the subscription rights granted on the basis of the recognized 2019 Manz Performance Share Plan outweighs the annual cash bonus.
Annual cash bonus
The aim of the annual cash bonus is to allow the members of the Managing Board to par- ticipate in the company's success in a given financial year as a result of their own personal management performance.
The cash bonus is granted annually, depending on the EBIT margin of the respective finan- cial year. The EBIT margin is calculated as the ratio of earnings before interest and taxes (EBIT) to total revenues in accordance with the consolidated financial statements in accor- dance with IFRS. Moreover, the cash bonus is calculated based on the fixed salary of the particular Managing Board member for the given financial year (fixed annual salary).
The granting of cash bonuses requires an EBIT margin of at least 0.1%, depending on the contractual agreement with the board member. The Managing Board member receives a cash bonus of 1 % of the annual fixed salary with an EBIT margin of 0.1 %. Accordingly, the percentage applicable for calculating the cash bonus increases by one percentage point for each full 0.1 percentage point by which the achieved EBIT margin exceeds 0.1 %. Therefore, the Managing Board member receives, for example, a cash bonus of 50% of the annual fixed salary with an EBIT margin of 5.0%, and, with an EBIT margin of 10%, a cash bonus of 100% of the annual fixed salary. The upper limit is set at an EBIT margin of 16.0%, at which the cash bonus is 160% of the annual fixed salary.
The Supervisory Board has set an EBIT margin of 6% as the medium target of short-term variable compensation for the purpose of determining the ratio between the individual compensation elements. At this middle value, the cash bonus is 60% of the fixed annual salary.
Manz Performance Share Plan 2019
The rights to Manz shares granted and to be granted on the basis of the 2019 Manz Perfor-mance Share Plan in the years 2019 to 2022 are intended to stimulate the Managing Board members to increase their internal and external company value in a sustainable way and, therefore, their interests with those of the shareholders, but also with the other stakeholders.
The Supervisory Board may in principle determine the number of subscription rights to be granted to the individual members of the Managing Board at its own discretion - in line with the legal requirements for the appropriateness of the compensation. There is no contrac- tual claim for the granting of performance shares.
However, the Supervisory Board has specified as a guideline that the annual long-term vari- able compensation in the form of performance shares (allocation value) should, as a rule, amount to 50% of the annual total cash compensation of the respective Managing Board member. In this case, total cash compensation consists of the member's annual fixed salary, as well as the middle target value of the annual cash bonus equal to 60% of the annual fixed salary. The performance shares to be granted shall be valued upon issuance through the price of the Manz share in Xetra trading on the Frankfurt Stock Exchange on the basis of an appropriate period of time at the beginning of the particular issuing period.
Further details of the 2019 Manz Performance Share Plan and the subscription rights to shares of the Company issued on the basis thereof are set out in the "Corporate Governance State- ment and Corporate Governance Report of Manz AG for the Financial Year 2020" in section VI, which can be downloaded from the Manz AG website atwww.manz.com, in the Investor Relations section under the heading "Corporate Governance".
Severance cap in the event of early termination of Managing Board duties
The service contracts of the Managing Board members stipulate that, in the event of early termination of the term of office and service which is not based on cause, severance pay-ments to the Managing Board member, including fringe benefits do not exceed two years' compensation (severance payment cap) and not more than the remainder of the employment relationship. The calculation of the severance payment cap will be based on the total com-pensation of the past financial year and, if applicable, the expected total compensation for the financial year in progress at the time of early termination.
Provisions in the event of a change of control
In the event of a change of control, the employment contract of CEO Martin Drasch stipulates that the member of the Managing Board is entitled to terminate the employment contract with three months' notice to the end of a calendar month and to resign from his office as member of the Managing Board with the same deadline. In principle, a change of control occurs when the company receives a notice from a party that the party, including the voting rights attributable to it, has reached or exceeded 25% or a higher proportion of the voting rights in the company. In the event of a termination of the employment contract pursuant to the above provisions, the member of the Managing Board shall receive a severance pay-ment.
Further details on the change of control provisions in the service contracts of the named members of the Managing Board are provided in this consolidated situation report in the "Disclosures pursuant to section 315a paragraph (1) HGB and explanatory report pursuantto section 176 (1) sentence 1 of the Stock Corporation Act (AktG) on the disclosures pursu-ant to section 289a (1) and section 315a (1) HGB" in the subsection" Compensation Agree- ments of the Company, which have been concluded in the event of a takeover bid with members of the Management Board or with employees ".
Compensation in the financial year 2020
Compensation of the Managing Board
Compensation of the Managing Board according to DRS 17
The members of the Managing Board received total compensation of TEUR 2,250 for car-rying out their duties in the financial year 2020 (previous year: TEUR 996).
The following table provides an overview of the compensation paid to individual members of the Managing Board according to DRS 17 for performing their duties in the financial year 2020:
Managing Board compensation in the Financial Year 2020
Non performance-related components
Performance-based components (short-term incentive)Components with long-term incentive
(in TEUR)
Previous year's figures in brackets
Fixed salaryOther benefits1
Discre-tionary bonus
Martin Drasch Chairman of the Managing Board
310 (307)
23 (37)
0 (0)Manfred Hochleitner Chief Financial Officer
241 (240)
21 (24)
20 (0)Jürgen Knie Chief Operations Officer
242 (124)
25 (10)
0 (0)
Total
793 (671)
69 (71)
20 (0)
1,134 (254)
234 (0)
2,250 (996)
1 In particular, monetary advantages of benefits in kind and contributions to the company pension scheme (support fund).
The subscription rights to shares of Manz AG on the basis of the Manz Performance Share Plan 2019 were measured at fair value using recognized mathematical finance methods.
Compensation of the Managing Board according to the German Corporate Governance Code
The compensation of the Managing Board for the financial year 2020 is also disclosed on the basis of the presentation recommended by the German Corporate Governance Code in the framework of exemplary tables broken down by the benefits granted and the allocation.
The following table shows the benefits, including fringe benefits, granted to the individual members of the Managing Board for the reporting year and the previous year in accordance with the recommendations of the German Corporate Governance Code. The target values (payment at 100% target achievement) as well as the minimum and maximum compensa-tion achievable for the reporting year are specified for the variable compensation.
Martin Drasch | Manfred Hochleitner | Jürgen Knie |
Chairman of the Managing Board | Chief Financial Officer | Chief Operations Officer |
Benefits granted | 2019 | 2020 | 2020 | 2020 | 2020 | 2019 | 2020 | 2020 | 2020 | 2020 | 2019 | 2020 | 2020 | 2020 | 2020 |
(in TEUR) | Actual | Actual | Target | (Min) | (Max) | Actual | Actual | Target | (Min) | (Max) | Actual | Actual | Target | (Min) | (Max) |
value | value | value | value | value | value | ||||||||||
Fixed compensation | 307 | 310 | 313 | 313 | 313 | 240 | 241 | 245 | 245 | 245 | 124 | 242 | 245 | 245 | 245 |
Fringe benefits | 19 | 11 | 11 | 11 | 11 | 12 | 9 | 9 | 9 | 9 | 4 | 13 | 13 | 13 | 13 |
Total | 326 | 321 | 324 | 324 | 324 | 252 | 250 | 254 | 254 | 254 | 128 | 255 | 258 | 258 | 258 |
Single-year variable | 0 | 90 | 180 | 0 | 480 | 0 | 92 | 144 | 0 | 384 | 0 | 72 | 144 | 0 | 384 |
compensation | |||||||||||||||
Multi-year variable | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
compensation | |||||||||||||||
Manz Performance | 110 | 436 | 240 | 0 | 4802 | 88 | 349 | 192 | 0 | 3842 | 56 | 349 | 192 | 0 | 3842 |
Share Plan 2019 - | |||||||||||||||
Tranche 2020 | |||||||||||||||
(Term to 2022) | |||||||||||||||
Total | 436 | 847 | 744 | 324 | 1,284 | 340 | 691 | 590 | 254 | 1,022 | 184 | 676 | 594 | 258 | 1,026 |
Pension expense1 | 18 | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 6 | 12 | 12 | 12 | 12 |
Total compensation | 454 | 859 | 756 | 336 | 1,296 | 352 | 703 | 602 | 266 | 1,034 | 190 | 688 | 606 | 270 | 1,038 |
1 Contribution-based payments to the support fund for Martin Drasch, Manfred Hochleitner and Jürgen Knie.
2 The value of the performance shares is limited to 300% of the grant value upon exercise.
The following table shows the allocation of the compensation granted to the individual members of the Managing Board in or for the reporting year and the previous year in ac- cordance with the recommendations of the German Corporate Governance Code.
Martin Drasch
Manfred Hochleitner
Jürgen Knie
Chairman of the Managing Board
Chief Financial Officer
Chief Operations Officer
Allocation (in TEUR)
Fixed compensation
Fringe benefits
Total
Single-year variable compensation
Multi-year variable compensation
Other
Total
Pension expense1
Total compensation
2020 | 2019 | 2020 | 2019 | 2020 |
310 11 | 307 19 | 241 9 | 240 12 | 242 13 |
321 | 326 0 0 | 250 | 252 0 0 | 255 |
0 0 | 20 0 | 0 0 | ||
0 | 0 | 0 | 0 | 0 |
321 | 270 | 255 | ||
12 | 12 | 12 | ||
333 | 282 | 267 |
2019
124 4
128
0
0
0
128
6
134
1 Contribution-based payments to the support fund for Martin Drasch, Manfred Hochleitner and Jürgen Knie.
The following table contains the proportion of the total expenses for share-based compen- sation (IFRS 2.51a) recorded in the reporting period for each individual director:
Martin Drasch | Manfred Hochleitner | Jürgen Knie | |
Chairman of the | Chief Financial | Chief Operations | |
(in TEUR) | Managing Board | Officer | Officer |
Manz AG | |||
2020 Annual Report |
Total
Total com-pensation Per Execu-tive Board member | 160 | 86 | 73 | 689 319 |
Compensation of the Supervisory Board
The Supervisory Board compensation regulated in the Articles of Incorporation was amend- ed by resolution of the Annual General Meeting on July 3, 2018.
According to the regulation in force until July 3, 2018, each member of the Supervisory
Board receives fixed compensation payable after the end of the financial year amounting to EUR 12,000.00, in addition to the reimbursement of expenses. The compensation for the chairperson of the Supervisory Board is EUR 24,000.00, while, for the deputy chairperson, it is EUR 18,000.00. Supervisory Board members who are only members during a portion of a financial year receive proportionately less compensation.
The applicable rules since July 4, 2018 stipulate that each member of the Supervisory Board receives fixed compensation of EUR 16,000.00, payable after the end of the financial year.
The members of the Supervisory Board receive an additional fixed compensation for each financial year for their work on Supervisory Board committees, which amounts to
EUR 8,000.00 for each member of a committee. Committee activities are to be considered for a maximum of two committees. In addition, the members of the Supervisory Board re-ceive an attendance fee of EUR 1,500.00 for each attendance at a meeting of the Supervi-sory Board and its committees. Attendance fees are to be granted only once when several sessions take place in one day. The Chairman of the Supervisory Board receives three times the aforementioned compensation. His deputy receives double the fixed compensation mentioned in the first sentence.
The company also reimburses Supervisory Board members for any VAT to be paid on their compensation. Moreover, the company can insure Supervisory Board members at its own expense against civil and criminal recourse in connection with the execution of their official duties; the company can also take out corresponding liability insurance against legal ex- penses and property loss (D&O insurance policy).
The following table provides an overview of the compensation paid to individual members of the Supervisory Board for performing their duties in the financial year 2020 (previous year's values in parentheses):
Supervisory Board Compensation in Financial Year 2020
Fixed salary (in TEUR)
Previous year in parentheses
Prof. Dr. Heiko Aurenz, Chairperson
101
(130.5)
Dieter Manz Vice Chairperson
48
(59.5)
20
Prof. Dr.-Ing. Michael Powalla
(23.5)
20
Dr. Zhiming Xu
(23.5)
Total | 189 (237) |
Furthermore, the company also covered the cost of D&O insurance for each member of the Supervisory Board.
As in the previous years, no loans or advances were granted to members of the Supervi- sory Board and no contingencies were entered into for their benefit.
Growth industries in focus: Electronics
Electronics: A necessity for daily life and industry
Electronics have become a fixture of daily life. With our machines and equipment for producing electronic components, as well as performance and consumer electronics devices, we create the conditions for the continuous optimization of end products while also reducing production costs. This makes Manz a sought-after development and technology partner.
The electronics industry is a very dynamic sector. With its integrated and automated production solutions, Manz creates the conditions for rapid time-to-market while also improving the performance characteristics of end products and reducing production costs.
Our customers profit from these advantages for the production of
electronic components such as displays and touch screens, printed circuit boards and semiconductorsconsumer electronics such as smart watches, wearables, laptops, digital cameras or navigation equipmentperformance electronics e.g. inverter modules for solar power equipment, DC or frequency converters
Ever smaller, lighter - and more powerful
The main requirement for rapid digitization in many areas of our daily life is increased miniaturization, that is, ever smaller and ever more high-performance components. The mega trends of electromobility and autonomous driving, in addition to the driver assistance systems already installed in vehicles today, will cause major leaps in installed chips in the automotive industry.
Our equipment for implementing the innovative packaging method for microchips, Fan-Out Panel Level Packaging, plays a major role in the realization of this trend. In addition to a significant reduc- tion in volume, thickness, weight and manufacturing cost of the packaging while doubling the number of pins, the process also has significant positive effects on the thermal conductivity and speed of the components.
Electromobility and autonomous driving are responsible for the sudden jump from 60-100 sensors per car in the year 2016 to...
Our challenge: From microchip to solar power facility
Report on Opportunities and Risks
Risk Management and Internal Control System
The goal of Manz AG's risk management system is to identify possible risks early on and to initiate appropriate measures to avert any threat of damage. The risk management system records both risks and opportunities. The application of a risk management system inte-grated into corporate management is aimed at identifying and assessing potential risks throughout the group in good time and countering them with appropriate measures. Risks cannot be avoided in principle within the scope of business activities, but are minimized or transferred as far as possible.
The company's risk management activities are managed centrally by the risk management officer, are regularly evaluated with regard to their effectiveness and appropriateness and they are the complete responsibility of the CFO. Responsibility for risk monitoring, on the other hand, is decentralized and, depending on the risk category and scope, is the respon-sibility of both the divisional managers and managing directors as well as Manz AG's Man-aging Board members. Regular written and oral inquiries are used to detect potential risks in all business segments and, at the same time, they also provide the opportunity to take prompt countermeasures to prevent any negative developments. The Managing Board and the Supervisory Board are presented with an overall report at regular intervals for a compre-hensive assessment of the risk situation.
Risks are analyzed and assessed on the basis of a risk management system that is essen-tially unchanged from the previous year, consisting of a defined group of risk owners, spec-ified risk categories and a risk classification that reflects the risk potential and the urgency of the need for action. Particular attention is paid to risks whose probability of occurrence is high and whose potential damage in the event of occurrence is high. The identification and handling of risks is anchored in the corporate principles and defined as the task of all Manz AG employees. Integrating the company's entire workforce enables risks to be identi-fied quickly and communicated to the appropriate risk officer, who must then take appropri-ate steps in accordance with the principles of action defined across the Group.
The risks are attributed to the following categories:
• Operating risks
• Strategic risks
• Market risks
• Environmental risks
In addition to this risk management system, as part of the planning process based on con-tinuous technology and market observation, further activities are taking place both for risk identification and mitigation and for identifying opportunities.
The effectiveness and appropriateness of our risk early detection system have been as-sessed by the public auditor. He noted that the Managing Board has taken the measures required under section 91 (2) of the Stock Corporation Act (AktG), in particular with regard to the establishment of a monitoring system, in an appropriate manner, and that the moni-toring system is capable of identifying developments that endanger the continued exis-tence of the company at an early stage.
Risk management system for the financial reporting process
(section 289 (4) and section 315 (4) of the German Commercial Code [HGB])
The goal of Manz AG's risk management system with regard to the financial reporting pro-cess is to identify and assess risks that could prevent the consolidated financial state-ments from conforming to the rules. Risk management encompasses the entirety of the organizational regulations and measures for detecting risks and for dealing with the risks associated with entrepreneurial activity. With regard to the accounting process, Manz has implemented the following structures and processes:
The CFO has total responsibility for the company's internal monitoring and risk manage-ment system as it pertains to the accounting process. All of the companies included in the consolidated financial statements are integrated via a defined management and reporting organizational structure. The separate financial statements of Manz AG and its subsidiaries are prepared in accordance with the corresponding national legislation and reconciled in financial statements in accordance with IFRS.
The purpose of the group' s accounting policies and group accounting, which are regularly adapted to current external and internal developments, is to ensure uniform accounting and valuation on the basis of the regulations applicable to the parent company. Further-more, companies in the Group are prescribed report packages that they are required to prepare. The SAP SEM-BCS tool is used for the monthly consolidation process. Automatic plausibility checks are already carried out during data collection in order to test the consis-tency of the data.
Consolidation measures and monitoring of adherence to chronological and process-relat-ed requirements are carried out by members of the consolidation department at Group level. Additional monitoring activities at Group level include analyzing, and if necessary, adjusting the separate financial statements submitted by the Group's subsidiaries, in ac-cordance with the reports submitted by the auditors. Key elements of the company's strat-egy for monitoring risks in the accounting process also include the functional separation between entry, verification, and approval, as well as a clear allocation of responsibilities in the departments in question. The use of SAP as an IT financial system is another important means of systematically preventing errors. Furthermore, the company should use a dualcontrol system at all process levels. If there are special issues of a technical or complex nature, the company also involves external experts. Further monitoring activities include analyzing and conducting plausibility checks on transactions as well as continuously mon-itoring project calculations.
The illustrated structures, processes and features of the internal control and risk manage-ment system ensure that Manz AG's financial reporting is consistent and in accordance with legal requirements, generally accepted accounting principles, international account-ing standards and consolidated internal guidelines. The Managing Board considers the established systems, which are reviewed annually for their ability to optimize and develop, to be appropriate. Any potential improvements identified are implemented by the Manag-ing Board in conjunction with Manz AG's employees.
All risks are classified according to the matrix below, which quantifies both probability of occurrence (likelihood) and potential effect (impact).
Impact
High damage (>5,000 TEUR)
Medium damage (500 TEUR to 5,000 TEUR)
low damage (50 TEUR to 500 TEUR)
low
medium
high
very highProbability
(0% to 20%)
(20 % to 40 %)
(40% to 70%)
(70 % to 99 %)
Risk report
The following summary shows the evaluation of the risks, which could occur in the financi-al year 2021 (forecast period) and could lead to deviations in the development of the reve-nues and/or results.
Risks | Impact | Probability of occurrence | Change to previous year | |
Operating risks | Project risks Personnel risks Liquidity and financing risks Currency risks Risks from IT | high medium high medium medium | medium low low high low | - |
Strategic risks | Risks from the strategic focus on dynamic growth markets Dependence on major customersand industries | high high | medium medium | |
Market risks | Risks in connection with international business activities Risks due to increasing competition Risks arising from rapid technological change and the market launch of new products | high low high | medium medium medium | |
Environmental risks | Risks related to pandemics Risks from the environment and nature | medium medium | medium low | - |
Operating risks
Project risks
Project risks relate primarily to non-standardized major contracts. In such contracts, risks arise from potential missing planned costs or schedules, the non-fulfillment of the accep-tance criteria and order cancellations and the associated non acceptance of contracts as well as contract risks. By expanding the share of standardized machine components in the product portfolio, which can be modularly customized to modules or entire production equipment according to the customer's requirements, Manz AG intends to reduce the aforementioned project risks overall. In order to keep projects under control, costs, time and quality are coordinated in a gate process between business unit and operations. De-sign changes to non-standard machines that are necessary and unforeseeable at the be-ginning of an order could lead to higher costs than expected and thus erode project mar-gins. In order to avoid additional work and associated additional costs for project completion, project and product specifications are to be already clearly and precisely de-fined in the contract offers through interdepartmental cooperation. Specific project risks also exist, in particular with regard to contracts concluded with Shanghai Electric Group and China Energy Investment Corporation Limited for the supply of a CIGS production line, and a CIGS research line with a total order volume of EUR 263 million. The expertise re-quired for the commissioning of the equipment is currently not available in its entirety in the Manz Group and must, therefore, be built up, for example, through new hires or pur-chases. Project handling risk is reduced through the use of external project management experts experienced in such major projects, some of whom are also temporarily engaged, as well as through a monthly steering committee, which also includes all members of the Managing Board. The large CIGS projects are currently suspended because of the con-struction work caused by the customer at the corresponding production sites. As of De-cember 31, 2020 there were contractual assets from these orders of EUR 21.5 million. To date, the customers have fulfilled all the contractual obligation, notably the payment obli-gations. Manz expects a temporary interruption and a continuation of the orders in the course of 2021.
Personnel risks
For the corporate success of a high-tech equipment manufacturer, qualified and motivat-ed managers and employees are of decisive importance. The departure of executives or key employees could have a negative impact on the company's business performance, thereby affecting its net assets, financial position and operational results. At the same time, there is also a risk that the company will not be able to hire a sufficient number of new, suitable executives or additional employees. Manz creates a positive working envi-ronment with measures such as flexible working time models or employees' financial participation in the success of the company, and can therefore retain employees and ex-pertise in the company in the long term. As a listed company, Manz AG enjoys greater attention from potential employees than do unlisted companies. This allows Manz AG to better present its offerings to employees, such as flat hierarchies, exciting activities, flex-ible working hours, and well-equipped workplaces. However, it also brings extra attention in economically challenging times, which can temporarily make it harder to recruit. An-other positive aspect of stock market listing is the ability to bind employees more closely to the company through the issue of shares and a corresponding profit share.
Liquidity and financing risks
At present, parent company Manz AG, is financing itself via bank balances and a small The subsidiaries in Slovakia, Hungary, Italy, China and Taiwan are financed primarily through short-term overdraft facilities and, to a lesser extent, long-term loans. As of the reporting date December 31, 2020, the Manz Group had surplus cash and cash equivalents in the amount of EUR 69.7 million as well as free cash and guarantee credit lines in the amount of EUR 16.9 million (previous year: EUR 18.0 million). The Manz companies are required, where possible, to process orders cash positive in order to reduce liquidity and financing risks. Here, the deposits should exceed the payouts over the entire term of the respective project. If normal in project-based business, a delay on incoming orders or payments hassignificant effects on liquidity or the relevant company and possibly also on the Group. In order to recognize risks from delayed payments in a timely manner, the Manz Group works with a rolling liquidity forecast, which is updated bi-weekly. Based on current corporate planning and an order backlog of EUR 202.3 million as of the reporting date December 31, 2020 (previous year: EUR 168.5 million), which leads to future the payment receipts, the Managing Board assumes that Manz AG will be able to meet its future payment obliga-tions.
Currency risks
Manz AG's currency risks arise from operating activities. In financial year 2020, these mainly related to transactions of the Asian companies from the sale of machinery.
The transaction-related exchange rate risk resulting from the appreciation or depreciation of the US dollar against the New Taiwan Dollar, the euro against the New Taiwan Dollar and the euro against the Hong Kong Dollar is generally hedged by forward exchange transac-tions wherever necessary and possible. Furthermore, economic currency risk is generally also reduced by distributing the production locations over several countries (natural hedging).
Information technology risks
A large proportion of the processes and communication in the Manz Group are IT-based.
For this reason, the security of corporate data and the avoidance of interruptions to IT-supported business processes have high priority. For this purpose, IT systems are pro-tected against possible unauthorized access by third parties, as well as against malware, and alternative solutions are developed in the event of stability problems.
Strategic risks
Risks from the strategic focus on dynamic growth markets
As a high-tech equipment manufacturer, Manz AG focuses on rapidly growing future mar-kets with short product life cycles. With its production solutions, Manz contributes to the development of numerous technologies. For instance, components for smartphones and tablet computers, batteries for electrical vehicles, consumer electronics and stationary energy storage systems as well as solar modules are produced on Manz machines. This market positioning on highly competitive and innovation-driven markets bears the risk of a competitive disadvantage due to insufficient structural flexibility, insufficient expertise or a slow pace of development. In order to avoid this, the respective segments therefore al-ways endeavor to recognize customer requirements and future technological trends in the industries at an early stage. Based on this knowledge, the company derives innovations with unique selling points in order to stay one step ahead of the competition. The innova-tion approaches are presented and discussed by the business units in a group-wide strat-egy meeting every six months and their implementation is approved after a detailed, posi-tive review.
Dependence on major customers and industries
The development of production equipment for industrial companies entails the risk of a concentration in the order volume on individual projects, sectors and customers. For ex-ample, Manz AG generated around 42% of its revenues with three customers in the 2020 financial year. If the loss of a major client cannot be compensated for, negative effects on the Manz Group's results are to be expected. For this reason, Manz pursues the goal of achieving a balanced order structure within its three strategic segments. In this regard, modularly combinable machines and machine components, as well as "small lines" and major projects (> EUR 10 million order volume) should be balanced. The risk of a decline in major customers is to be reduced in principle by broadening the customer base and diver-sifying project volumes and the business model. In addition, Manz accepts third-party business in the Contract Manufacturing segment in order to achieve balanced capacity utilization despite the cyclical development of its strategic business divisions.
Market risks
Risks in connection with international business activities
Negative macroeconomic and financial developments in the international sales markets may have negative effects on business development. As a result, refinancing for Manz as a listed company via the capital market could become significantly more difficult. With potential clients of Manz AG in general, there is a risk that the necessary capital for invest-ments in new equipment may not be available based on the markets, some of which are still young. As a result, Manz constantly monitors and analyzes the market and the compe-tition in order to recognize such developments at an early stage and to counteract them.
The flexibility of the entire corporate organization, the expansion of the product portfolio, the customer base and global sales capacities, and the focus on growth markets of the three core regions of Asia, Europe and the United States make it possible to react quickly to negative changes in individual markets.
Risks due to increasing competition
Existing and potential competitors, especially Asian manufacturers, could seek to gain market share in Manz AG's target industries, notably through aggressive pricing, imbal-ances through local tax and subsidy policies by states and governments, or through import restrictions to support national companies. A further risk is that there are too many new competitors, resulting in an oversupply on the market and, as a consequence, consolida-tion among companies. This could have a direct impact on the development of the com-pany's market share and thus on Manz AG's sales, revenues and earnings. In order to counteract these risks effectively, the "Market Intelligence" division constantly conducts market and competitive surveys, which are discussed in detail in international sales meet-ings on a regular basis and serve as a basis for possible countermeasures. Furthermore, the CRM system (Customer Relationship Management System) provides leading indicators for assessing future market development. A detailed analysis of lost projects provides clar-ity about the competitive situation in a timely manner. The process of "product identifica-tion, development and market launch" also aims to provide the necessary competitive ad-vantage on growth markets with strategic innovations and to further strengthen Manz AG's position as a high-tech equipment manufacturer. With its local facilities in Taiwan and China, the associated production costs that are standard for the local area, and direct cus-tomer contacts, Manz counteracts any churn to domestic competitors. Strategic coopera-tions, e.g., in the segment Energy Storage with the Chinese company Shenzhen Yinghe Technology Co. Ltd. are also aimed at streamlining the individual service portfolio by focus-ing, thereby reducing the cost base and increasing the company's competitiveness.
Risks from rapid technological change and from launching new products
Research and development as well as an innovative product portfolio are of crucial impor-tance for the company to maintain its technological positioning in the market. The indus-tries for which Manz AG develops and manufactures its machines and equipment are char-acterized by rapid technological change. Substitutive or disruptive technologies may occupy substantial parts of an existing market. As a result, Manz AG's competitors may be able to react faster or better to changes in customer requirements by developing corre-sponding technologies or software, thus gaining a competitive advantage over Manz AG.
In these cases, the demand for the products of Manz AG could be significantly impaired.
Furthermore, the Manz Group could develop machines and equipment for which there is little or no demand on the market. There is also a risk that the completion of new products currently under development may prove to be more complex than expected in the future.
Problems with, e.g., technical feasibility, quality assurance, failure to meet deadlines, in-creased costs, etc., could at worst lead to the loss of customers in conjunction with finan-cial losses. Manz AG endeavors to maintain close contact with its clients and thus to rec-ognize new trends at an early stage. Furthermore, in the Business Development segment, we are also working on new application possibilities for the technologies developed by Manz. The proximity to the customer further enhances Manz AG through the constant ex-pansion of the associated service business, in particular with after-sales service. Based on our risk analysis, Manz also pursues the goal of ensuring that projects and products are implemented in line with contractual agreements. Manz AG also counters the fundamental risk involved in developing and launching new products for individual customers by ex-panding its product portfolio to include machine components which can be customized to form modular assemblies or complete production machines at the customer's request.
Environmental risks
Risks related to pandemics
As an internationally active high-tech equipment manufacturer, Manz AG has production facilities in Germany, China, Taiwan, Slovakia, Hungary, and Italy, as well as global service branches. Activities in regions with less developed healthcare systems could have a nega-tive impact on the company's business in the region in the event of pandemics and the resulting production stops, thus impacting the company's net assets, financial positionand results of operations. In this context, the COVID-19 pandemic could continue to have a negative impact on the execution of our customer projects in the segments Solar and Electronic Components in Asia, in particular.
Risk from the environment and nature
Natural disasters - such as earthquakes and floods or other events like fires - can lead to production stoppages, which could have a negative impact on the company's business development and thus impair its net assets, financial position and results of operations. In addition, there are risks of environmental pollution for which Manz AG could be held liable.
Opportunities report
Industry focus with competitive and customer-oriented, innovative technology portfolio
With many years of proven expertise in automation, laser processing, vision processing, metrology, wet chemistry and roll-to-roll processes, Manz AG is active in the segments Solar, Electronics and Energy Storage. Manz AG offers a broad portfolio of innovative prod-ucts to producers and their suppliers in a wide variety of industries worldwide. This in-cludes customer-specific production systems right up to machines that can be linked to-gether to form complete, individual system solutions based on a modular system. Manz AG also offers services around its core technological competencies. Diversification in tech-nologies, industries and regions is aimed at adjusting production capacities in line with the investment cycles of individual industries and using them by other segments within the Group. This should create the stability necessary for sustainable corporate development.
At the same time, this diversified business model gives the company the opportunity to benefit from the growth potential of several dynamic target markets. The company has, for example, opened up a further significant area in connection with the electric power trains in electric vehicles with a major order from a Tier 1 automotive supplier for machines for the automated assembly of cell contacting systems for battery cells.
Sustainable competitiveness and profitability through profitable growth
Manz AG's diversified business model forms the basis for the sustained stability and long-term growth we are striving for. With the aim of significantly expanding its customer base and thus further stabilizing its business model, Manz AG is constantly expanding the pro-portion of modular machines in its product portfolio for all segments, in addition to cus-tomized solutions. These modular machines should be intelligently linked to complete, in-dividual system solutions based on a modular system. This step should significantly reduce development risks, effort and duration and thus significantly shortens the amortization of development efforts. At the same time, this should create synergy effects for Manz AG which support the productivity of the entire Group.
Cost-conscious management is of crucial importance for the profitable development of a company. The diversified business model and ongoing measures to optimize costs are aimed at maintaining long-term competitiveness and profitability.
Cross-segment technology deployment offers possibilities for synergy effects and flexibility
In developing its production equipment, Manz AG carries out an active technology transfer between the relevant target industries. By using its extensive technological expertise across industries, the company generates synergies and thus aims to make a contribution to minimizing its customers' production costs, thus contributing to their economic produc-tion. At the same time, the synergy effects achieved between the segments should in-crease the Manz Group's productivity and profitability. By leveraging the synergies be-tween the individual segments, Manz AG's business model is also flexibly positioned for new growth trends and sales markets with additional revenues and earnings potential.
Strategic cooperation with Chinese partners opens up growth potential
Manz also entered into a strategic alliance with a Chinese partner in the segment Energy Storage at the start of 2020. Shenzhen Yinghe Technology Co. Ltd. was formed in 2006 and is engaged in research and development, production and sales of intelligent automation solutions for the manufacture of lithium-ion battery cells. As part of this cooperation, Manz and Yinghe will jointly offer their customers the best equipment technology from their re-spective product portfolios in the form of a licensing arrangement. In addition to joint proj-ect management, both partners have agreed to provide mutual support for research and development activities in conjunction with production equipment for lithium-ion batteries.
With this step, Manz is pursuing the goal of significantly improving its own starting posi-tion when placing orders for projects to be implemented in future, and thus being able to benefit from the market potential.
Assessment and Summary of the Risk and Opportunity Situation
Manz AG's risk portfolio consists of risks that can be influenced by the Group as well as risks that cannot be influenced, such as economic activity and sector development. The company regularly monitors and analyses the situation in these areas. Risks that can be influenced are identified at an early stage by appropriate monitoring and control systems and should therefore be avoided. Significant risks, which are likely to have serious nega-tive effects on the ecological or social aspects, cannot be deduced from the business model of Manz AG.
The identification of risks and opportunities has not given rise to any risks that could jeop-ardize the continued existence of the entire Group or its Group companies for the financial year 2020 or for the forecast period 2021. A going concern risk is derived from the risk-bearing capacity key figure, which takes into account the cumulative expected value of all risks with a probability of occurrence of more than 40%. If this key figure exceeds half ofthe previous year's consolidated or individual financial statement equity, this is defined as a going concern risk.
In the financial year 2020, the risk and opportunity situation has improved in respect of the effects of the COVID-19 pandemic, while the current temporary interruption of work on the CIGS orders in China is having a detrimental effect. For the other risks, the situation has not changed materially compared to the previous year. Risks which do not have any or little relevance according to the risk management system in comparison with the preceding year have not been shown in the current risk report. The risks and their possible effects are known, as are the measures to be introduced. The resulting opportunities are analyzed and, if necessary, implementation is initiated.
Opportunities
ImpactProbability of occurrence
Industry focus with competitive and customer-oriented, innovative technology portfolio
high
high
Sustainable competitiveness and profitability through profitable growth
high
medium
Cross-segmental use of technology offers synergy effects and flexibility
high
high
Strategic cooperation with Chinese partners opens up growth potential
medium
high
The Managing Board of Manz AG thus fulfills its obligation to inform the Supervisory Board and shareholders about the opportunities and risks of the company. It regards this report-ing as an important element of corporate governance in practice.
From today's perspective, there are no existential risks to the future development of Manz AG that could have a material adverse effect on the Group's assets, financial and earnings situation.
Our reliable equipment guarantees compliance with the
strictest quality requirements
across all production steps.
From fitness tracker to insulin pump
Self-monitoring as well as the remote monitoring and control of vital functions are important growth drivers in the medical industry. Our extensive experience in the production of electronic products makes us an ideal partner in the Digital Health segment.
Growth industries in focus: Medical technology
When wearables monitor blood pressure and heart rate.
So-called "smart medical devices" provide the technical technology sector with new opportunities for improving medical care and the quality of life. Maximum process accuracy and a high degree of production automation are required to take advantage of these opportunities.That is exactly what Manz stands for.
Our mission: To improve health and quality of life
...with unique identification of implants using fully automated laser engraving.
We bundle decades of experience and our extensive process know-how from the production of electronic components. The result: modular and scalable production systems that guarantee tremendous cost efficiency and excellent product quality.
Smart Medical Devices to monitor health data or for dosing medication, e.g. fitness trackers, digital injection and inhalation systems, sensor-based glucose measurements or patch-based infusion systems.
Cardiac rhythm management systems such as pace mak- ers and defibrillators, as well as systems for at-home health monitoring (e.g. heart monitoring).
Orthopedics, including implants for knee, shoulder, elbow and hips, dental and surgical screws, bone saws or surgical instruments.
Maximum product and patient safety
Our equipment guarantees compliance with the strictest quality requirements across all production steps. It also ensures the seamless tracking of components and process parameters. And it does so with a high degree of efficiency and reliability using integrated testing systems. In this way, it is also possible to test products such as cardiac rhythm systems in-line during the manufacturing process, and to document all process steps and process results thanks to automated testing methods.
Forecast Report
Economic and Sectoral Outlook
According to the forecast of the Kiel Institute for the World Economy (IfW), a significant part of the decline in production levels in the first half of the year was able to be recovered in the third quarter of 2020. While parts of the world again had to contend with rising infec-tions in the winter, other regions such as the Asian region remained largely unaffected. Assuming a progressive normalization due to falling infection figures, the International Monetary Fund (IMF) forecasts global economic growth of 5.5% in 2021, following a de-cline of 3.5% in 2020. In contrast to most other nations, China showed positive economic growth of +2.3% in 2020, and the IMF expects growth of 8.1% for the current year. The projected growth of the USA is 5.1% (2020: -3.4%). The euro area was hit far harder than the global average in 2020 with -7.2%, while expected growth in 2021 is put at 4.2%. For Germany, growth of 3.5% is assumed for 2021 following a slump of -5.4% in 2020.
For global mechanical engineering revenues, the VDMA expects a recovery of 7% in 2021 after a decline of 6% in 2020 if the restrictions are lifted soon. Accordingly, the industry's revenue growth will be 6 % in the USA (2020: -8%) and 7% in the Chinese market (2020: 5%). In Germany, revenue growth is expected to be 10% (2020: -15%). In the event of a rapid upswing due to a quick return to normality, lifting of travel restrictions and fiscal incentives, the VDMA believes that higher growth of 10% in industry revenues worldwide is also possible. A global third wave with renewed lockdowns, on the other hand, would result in lower revenue growth of 3%, according to VDMA.
In the fall of 2020, German manufacturers of PV production equipment were much more positive about the future than they were in 2019, expecting an average increase in revenues of 8.6% in 2021. Globally, the International Energy Agency expects record growth in PV expansion in its baseline scenario for 2021, with around 117 GW installed. This would rep-resent growth of 10% compared to 2020, based primarily on a strong upswing in large-scale installations outside China, where expiring subsidies are slowing PV expansion. In contrast, large-scale development is resuming in India and the main EU markets (France and Germany).
As of Q3 2020, German electronics production manufacturers expect revenues to increase by 1.4 % in 2021 after a decline in 2020, according to VDMA. Similarly, Display Supply Chain Consultants (DSCC) expects global revenues of LCD and AMOLED displays to increase by 13.6% to USD 117 billion in 2021. And Prismark is also forecasting growth of 8.6% for the global PCB industry in 2021 due to the recovery in demand for computers, communication devices, consumer electronics and automotive electronics.
Manz expects strong demand for its assembly lines for the production of cell contacting systems in the coming years due to the rapidly growing market for electric vehicles. The consulting firm McKinsey forecasts sharply rising revenues figures for electric vehicles inthe coming years. In Europe, for example, revenues are expected to rise from 0.6 million vehicles in 2019 to 2.9 million vehicles in 2022. China and the U.S. are expected to see 3.5 million and 1.0 million revenues, respectively. The Samsung EV Research Center also projects that global e-vehicle turnover will increase 34% to 3.8 million vehicles in 2021, which would make EVs account for 4.7% of global vehicle purchases.
According to the management consultancy Roland Berger, the growing popularity of elec-tric vehicles will also lead to enormous demand for lithium-ion batteries in the coming years. Accordingly, battery production in Europe is on the verge of a major breakthrough: by 2025, an annual production capacity of almost 500 GWh is expected to come on stream.
The global market volume for the high-value production equipment needed to build numer-ous gigafactories will grow by 34% annually through 2030. As the market volume increas-es more than tenfold - from EUR 1.7 billion in 2020 to EUR 3.2 billion in 2021 and EUR 20.9 billion in 2025 - European equipment suppliers, in particular, will benefit from this development. Although they accounted for only 8% of the market in 2020, Europe will be the second largest market for production equipment by 2025, with a market share of 15% and a volume of more than EUR 3.2 billion in 2025. Based on a survey of German manufac-turers, the Battery Production Association of the VDMA expects year-on-year revenue growth of 14% in 2021, up from 6% in the previous year (as of Q3 2020). And develop-ments in the market for wearables are also likely to further support demand for lithium-ion batteries. For example, IDC forecasts a five-year compound annual growth rate (CAGR) of 12.4% and a total number of 637.1 million devices in 2024.
Expected Development of the Group and Segments
Revenue in EUR million | Revenue trend | Revenue in EUR million | Revenue trend | |
Group | 264.6 | Low to moderate increase over previous year | 236.8 | Slight to moderate increase over previous year |
Solar | 47.5 | Up to 35% less than the previous year | 23.2 | Up to +60 % increase compared to previous year |
Electronics | 115.7 | Slightly below previous year | 90.7 | On par with the previous year |
Energy Storage | 40.7 | Between +110 % and +130 % | 64.7 | Between +20% and +40% |
Contract Manufacturing | 41.5 | Between 20 % and 25 % less than in the previous year | 37.0 | Between 20 % and 30 % less than in the previous year |
Service | 19.1 | Slightly above previous year | 21.2 | On par with the previous year |
Revenue forecast
2019 actual
2020 forecast
2020 actual
Earnings forecast
2021 forecast
2019 actual
2020 forecast
2020 actual
2021 forecastGroupSolarElectronicsEnergy StorageContract ManufacturingServiceEBIT in
EUR million
EBIT/EBIT margin development
-7.6
EBIT margin in the low positive single-digit percentage range
-2.0
EBIT margin in the high negative single-digit percentage range
-7.6
Balanced EBIT
-11.3
EBIT margin in the low single-digit percentage range
11.5
EBIT margin in the low double-digit percentage range
1.6
EBIT margin in the high single-digit percentage range
EBIT in
EUR million
EBIT/EBIT margin development
7.2
EBIT margin in the low to mid positive single-digit percentage range
-7.8
EBIT margin in the low negative single-digit percentage range
-5.4
EBIT margin in the low negative single-digit percentage range
6.9
EBIT margin in the mid positive single-digit percentage range
12.3
EBIT margin in the mid positive double-digit percentage range
1.3
EBIT margin in the low positive single-digit percentage range
Given the overall positive outlook for the industry in the countries and markets relevant to Manz AG, the Managing Board is confident that Manz AG will again grow profitably in 2021.
The Managing Board expects a slight to moderate increase in revenues compared with 2020, an EBITDA margin in the upper positive single-digit percentage range, and an EBIT margin in the low to mid positive single-digit percentage range. A value of around 40% is expected for the equity ratio; with regard to Gearing, the Managing Board is anticipating a value in the lower single-digit percentage range.
The forecast includes the positive one-off effect from the selling of the shares in Talus Manufacturing Ltd. and also continues to assume that the COVID-19 pandemic will not have an additional negative impact on the development of our business in the segments Solar, Electronics, Energy Storage, and Contract Manufacturing and Service in the financial year 2021.
At segment level, the Managing Board expects revenues at the prior-year level and an EBIT margin in the low single-digit negative percentage range for Electronics. For Energy Stor-age, the Managing Board forecasts revenue growth of between 20% and 40% with an EBIT margin in the mid single-digit percentage range. In the segment Solar, revenues should increase considerably compared to the previous year, provided work on the CIGS orders continues in the first half of 2021 and finalization at the end of the financial year 2021. The EBIT margin is expected to be in the low single-digit negative percentage range.
For Contract Manufacturing, the Managing Board forecasts revenues between 20% and 30% below the previous year and an EBIT margin in the mid double-digit positive percent-age range. In the Service segment, revenues are expected to be approximately at the level of the previous year, with an EBIT margin in the low single-digit positive percentage range.
The goal of the Managing Board is to further develop the comprehensive technology port-folio on the one hand, and to strengthen and expand Manz AG's favorable market position in all segments on the other. With its technologies, Manz AG will focus, in particular on the automotive and electromobility, battery manufacturing, electronics, energy and medical technology industries in the future.
Forward-looking statements
This report contains forward-looking statements, which are based on the current assump-tions and forecasts of Manz AG's Managing Board. Such statements are subject to both risks and uncertainties. These and other factors could cause the actual results, financial position, developments or performance of the Company to differ materially from the esti-mates given here. Our company assumes no obligation to update these forward-looking statements or adapt them to future events or developments.
Reutlingen, March 23, 2021
The Managing Board
Martin Drasch
Manfred Hochleitner
Jürgen Knie
Consolidated Financial Statement
Content
091 Consolidated Income Statement
092 Consolidated Statement of Comprehensive Income
093 Consolidated Balance Sheet
095 Consolidated Cash Flow Statement
096 Consolidated Statement of Changes to Equity
2019
097 Consolidated Statement of Changes to Equity
2020
098 Consolidated Notes for Financial Year 2020
099 Bases of Accounting
117 Notes to the Income Statement
126 Notes to the Segment Reporting
129 Notes to the Cash Flow Statement
131 Notes to the Balance Sheet
157 Leases
158 Report on Financial Instruments
169 Contingencies and Other Financial Obligations
169 Events after Reporting Period
170 Related Party Disclosures
174 Responsibility Statement
175 Independent Auditor's Report
185 Imprint
MANZ AG
Geschäftsbericht 2019
Consolidated Income Statement
Consolidated Income Statement
(in TEUR)
Notes | 2020 | 2019 | |
Revenues | 1 | 236,768 | 264,404 |
Inventory changes, finished and unfinished goods | -908 | -9,737 | |
Work performed by the entity and capitalized | 2 | 5,790 | 4,862 |
Total operating performance | 241,650 | 259,528 | |
Other operating income1 | 3 | 7,181 | 9,690 |
Material expenses | 4 | -130,338 | -160,829 |
Personnel expenses | 5 | -71,916 | -71,584 |
Other operating expenses2 | 6 | -36,600 | -36,421 |
Share of profit (loss) of associates | 9,381 | 8,829 | |
EBITDA | 19,358 | 9,213 | |
Amortization/depreciation | 7 | -12,132 | -16,838 |
EBIT | 7,225 | -7,625 | |
Finance income | 8 | 91 | 94 |
Finance costs | 9 | -2,345 | -2,397 |
Earnings before taxes (EBT) | 4,971 | -9,928 | |
Income taxes | 11 | -1,547 | -1,320 |
Consolidated net profit | 3,425 | -11,248 | |
thereof attributable to non-controlling interests | 12 | -10 | -200 |
thereof attributable to shareholders of Manz AG | 3,434 | -11,048 | |
Weighted average number of shares (undiluted) | 7,744,088 | 7,744,088 | |
Weighted average number of shares (diluted) | 8,011,876 | 7,905,128 | |
Earnings per share | |||
undiluted in EUR | 13 | 0.44 | -1.43 |
diluted in EUR | 13 | 0.42 | -1.43 |
1 This includes TEUR 246 (previous year: TEUR 1,769) reversal of valuation allowances on receivables.
2 This includes TEUR 6,524 (previous year: TEUR 548) impairment losses on financial assets and contract assets.
Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
(in TEUR)Consolidated profit or loss
Difference resulting from currency translation Cash flow hedges
Tax effect resulting from components not recognized in profit/loss
Total of expenditures and income recorded directly in equity capital with future reclassification with tax effect
Financial assets measured at fair value through other comprehensive income (FVOCI)
Tax effect resulting from financial assets measured at fair value through other comprehensive income (FVOCI)
Revaluation of defined benefit pension plans
Tax effect resulting from revaluation of defined benefit pension plans
Share of other comprehensive income from investments in associates using the equity method1
Total of expenditures and income recorded directly in equity without future reclassification with tax effect
Group comprehensive income
thereof non-controlling interests thereof shareholders Manz AG
1 For further explanations, please refer to section "(24) Assets held for sale" in the notes to the consolidated financial statements for the financial year 2020.
Consolidated Balance Sheet
Assets (in TEUR)
Notes | Dec. 31, 2020 | Dec. 31, 2019 | |
Non-current assets | |||
Intangible assets | 14 | 59,119 | 60,849 |
Property, plant and equipment | 15 | 45,426 | 44,006 |
Investment in an associate | 16 | 0 | 21,382 |
Financial assets | 17 | 7,260 | 11,700 |
Other non-current assets | 18 | 1,770 | 1,256 |
Deferred tax assets | 11 | 6,835 | 5,651 |
120,411 | 144,844 | ||
Current assets | |||
Inventories | 19 | 29,913 | 35,739 |
Trade receivables | 20 | 27,204 | 42,812 |
Contract assets | 21 | 68,907 | 59,939 |
Current income tax receivables | 347 | 288 | |
Derivative financial instruments | 22 | 15 | 10 |
Other current assets | 23 | 11,375 | 13,892 |
Assets held for sale | 24 | 30,039 | 0 |
Cash and cash equivalents | 25 | 69,736 | 44,005 |
237,535 | 196,685 | ||
Total assets | 357,946 | 341,528 | |
Manz AG | |||
2020 Annual Report |
Shareholders' Equity and Liabilities (in TEUR)
Notes | Dec. 31, 2020 | Dec. 31, 2019 | |
Equity | 26 | ||
Issued capital | 7,744 | 7,744 | |
Capital reserves | 33,234 | 42,545 | |
Retained earnings | 83,824 | 70,390 | |
Accumulated other comprehensive income | 6,352 | 11,457 | |
Shareholders of Manz AG | 131,154 | 132,136 | |
Non-controlling interests | 255 | 275 | |
131,410 | 132,411 | ||
Non-current liabilities | |||
Non-current financial liabilities | 27 | 5,677 | 728 |
Non-current financial liabilities from leases | 28 | 12,609 | 12,268 |
Pension provisions | 29 | 6,708 | 7,202 |
Other non-current provisions | 30 | 3,719 | 2,659 |
Other non-current liabilities | 11 | 7 | |
Deferred tax liabilities | 11 | 6,831 | 6,462 |
35,555 | 29,325 | ||
Current liabilities | |||
Current financial liabilities | 31 | 71,298 | 57,185 |
Current financial liabilities from leases | 3,446 | 3,329 | |
Trade payables | 32 | 47,000 | 57,407 |
Contract liabilities | 33 | 43,865 | 35,774 |
Current income tax liabilities | 1,084 | 602 | |
Other current provisions | 34 | 7,575 | 10,693 |
Other current liabilities | 35 | 16,713 | 14,803 |
190,980 | 179,793 | ||
Total liabilities | 357,946 | 341,528 | |
Manz AG | |||
2020 Annual Report |
Consolidated Cash Flow Statement
Consolidated Cash Flow Statement
(in TEUR)
Amortization/depreciation 12,132 16,838
Net profit/loss after taxes 3,425 -11,248
Increase (+) / decrease (-) of pension provisions and other non-current provisions
Interest income (-) and expenses (+) Taxes on income and earnings
Other non-cash income (-) and expenses (+) Gains (-) / losses (+) from disposal of assets
Share of profit (loss) of associates -9,381 -8,829
Increase (-) / decrease (+) in inventories, trade receivables,
contract assets and other assets
Increase (+) / decrease (-) in trade payables,
contract liabilities and other liabilities -3,696 -19,631
Received (+) / Paid income taxes (-) Interest paid
Interest received
Cash flow from operating activities
Cash receipts from the sale of fixed assets
Cash payments for the investments in intangible assets and property, plant and equipment
Changes in investments on financial assets
Cash flow from investing activities
Cash receipts from the assumption of non-current financial liabilities Cash payments for the repayment of non-current financial liabilities Cash receipts from the assumption of current financial liabilities Cash payments for the repayment of current financial liabilities Purchase of treasury shares
Cash payment of lease liabilities Cash flow from financing activities
Cash and cash equivalents at the end of the period Net change in cash funds (subtotal 1-3)
Effect of exchange rate movements on cash and cash equivalents Credit risk allowance on bank deposit
Cash and cash equivalents on January 1, 2020
Cash and cash equivalents on December 31, 2020
The cash flow statement is discussed in the notes
Dec. 31, 2019
567 -304
2,254 2,303
1,547 1,320
5,129 8,644
11 19
12,013 -9,962
-948
-2,345 -2,397
94
20,623 -24,101
569 1,063 -9,660 -8,893
-271 14,173
6,343
4,949 5
-7 -411
71,298 57,185
-42,173 -4 -4,340
14,655 10,262
25,916 -7,496
-234 167
48 328
44,005 51,006
44,005
Consolidated Statement of Changes to Equity 2019
Consolidated Statement of Changes to Equity 2019
(in TEUR)As of
Jan. 1, 2019
Consolidated net profit
Other comprehensive income
Consolidated income statement
Withdrawal from Capital reserves
Purchase of treasury shares
Use of treasury shares
Share-based payment
As of
Dec. 31, 2019
Other comprehensive income
IssuedcapitalCapitalreserves
TreasurySharesRevenuereserves
Equity toshareholders ofManzAG
7,744
79,208
0
44,438
-2,209
-3,004
0
-130
-2
23,459
18,114
0
0 -11,048
0
0
0
0
0
0
345 -9,541
0
0
0
-3
2 2,540
-6,657
0
0
0
-11,048
345
-9,541
-3
2
2,540
-6,657
0 -37,000
0 37,000
0
0
0
0
0
0
0
-4
0
0
0
0
0
0
0
0
4
0
0
0
0
0
0
0
338
0
0
0
0
0
0
0
7,744
42,545
0
70,390
-1,864
-12,545
-133
0
25,999
11,457
1 For further explanations, please refer to section "(24) Assets held for sale" in the notes to the consolidated financial statements for the financial year 2020.
0
0
0
0
0
149,503
132,136
-11,048 -200 -11,248
-6,657
-17,705
0
-4
4
338
Consolidated Statement of Changes to Equity 2020
Consolidated Statement of Changes to Equity 2020
(in TEUR)As of
Jan. 1, 2020
Consolidated net profit
Other comprehensive income
Consolidated income statement
Withdrawal from Capital reserves
Purchase of treasury shares
Use of treasury shares
As of
Share-based payment
Dec. 31, 2020
Other comprehensive income
1 For further explanations, please refer to section "(24) Assets held for sale" in the notes to the consolidated financial statements for the financial year 2020.
Consolidated Notes for Financial Year 2020
Consolidated Notes for Financial Year 2020
General Disclosures
Manz AG ("Manz AG" or "Group") is a stock corporation (Commercial Registration Stuttgart,
Registration number 353 989) incorporated in Germany with its registered office at Steigäck- erstrasse 5 in 72768 Reutlingen, Germany. Manz AG and its subsidiaries ("Manz Group" or "Manz") have many years of expertise in automation, laser processing, image processing and metrology as well as in wet chemistry and roll-to-roll processes. Manz AG's shares are traded on the regulated market (Prime Standard) of the Frankfurt Stock Exchange.
Manz AG's consolidated financial statements as of December 31, 2020 were prepared in accordance with International Financial Reporting Standards (IFRS), as applicable in the EU, and the supplementary provisions of German commercial and corporate law applicable in accordance with Section 315e(1) of the German Commercial Code (HGB). All mandatory standards and interpretations were taken into account. IFRS standards that have not yet become mandatory are not applied.
To better clarity, individual items have been summarized in the balance sheet and the in- come statement and disclosed separately in the notes. The Manz Group's financial year covers the period from January 1 to December 31 of one year. The consolidated financial statements are prepared in EUR. Unless stated otherwise, the disclosures in the notes are made in thousands of euro (TEUR). The income statement is prepared in accordance with the total cost method. The consolidated financial statements for 2020 were released for submission to the Supervisory Board by resolution of the Managing Board on
March 23, 2021.
Bases of Accounting
Consolidated group
The consolidated financial statements of Manz AG include all domestic and foreign compa- nies which Manz AG can exercise direct or indirect control. Controll influence exists when Manz AG is exposed to, or has rights to, fluctuating returns on its investment and has the ability to influence these returns through its power over the company.
In addition to Manz AG, the group of consolidated companies includes the following domes- tic and foreign subsidiaries as of December 31, 2020:
Shares in %
Manz Batterytech Tübingen GmbH | Tübingen/Germany | 100.0 % |
Manz USA Inc. | North Kingstown/USA | 100.0 % |
Manz Hungary Kft. | Debrecen/Hungary | 100.0 % |
Manz Slovakia s.r.o. | Nove Mesto nad Vahom/Slovakia | 100.0 % |
Manz Italy s.r.l. | Sasso Marconi/Italy | 100.0 % |
Suzhou Manz New Energy Equipment Co., Ltd. | Suzhou/P.R. China | 56.0 % |
Manz Asia Ltd. | Hong-Kong/P.R. China | 100.0 % |
Manz China Suzhou Ltd. | Suzhou/P.R. China | 100.0 % |
Manz India Private Ltd. | New Delhi/India | 75.0 % |
Manz Chungli Ltd. | Chungli/Taiwan | 100.0 % |
Manz Taiwan Ltd. | Chungli/Taiwan | 100.0 % |
Manz (B.V.I.) Ltd. | Road Town/British Virgin Islands | 100.0 % |
The financial statements of the subsidiaries are prepared on the reporting date of the con-solidated financial statements, which corresponds to the reporting date of Manz AG.
Manz holds 80.5% in the associated company Talus Manufacturing Ltd., Chungli, Taiwan, which was included at equity into the consolidated financial statements until November 6, 2020.
On November 6, 2020, Lam Research Corp. informed Manz AG that it would exercise the contractually agreed call option to acquire Manz's shares. The regulatory approvals still required for the acquisition were granted at the end of January 2021. The asset was reclas- sified from "Investments in associates" to "Assets held for sale" following the announcement of the exercise of the purchase option.
As of October 31, 2020, Manz (Shanghai) Trading Company Ltd., Shanghai, PRC, was liq- uidated. Its assets, liabilities and equity were transferred to Manz Asia Ltd., Hongkong, PRC.
100
There is an investment over 11.1% (previous financial year: 11.1%) in NICE PV Research Ltd.
Beijing, PR China, which is included in the consolidated financial statement according to the IFRS 9 as an equity instrument to fair value through other comprehensive income.
Covid-19: Effects
At the beginning of 2020, the Covid 19 pandemic spread first in China and later worldwide.
On March 11, 2020, Covid-19 was declared a worldwide pandemic by the WHO. This re- sulted in economic uncertainties worldwide, which also had a negative impact on Manz AG in some cases.
This resulted in postponements of projects in the Solar and Energy Storage sectors, and there were on hold and delays at construction sites, mainly in China.
In addition, further customer projects - mainly in the Electronics segment - were postponed or delayed in the past fiscal year. This was mainly due to the Covid-19 pandemic.
Short-time work during the first lockdown resulted in lower productivity, the effects of which were partly compensated by the payment of short-time allowances. The postponement of orders led to lower revenues in 2020 and a shift to subsequent years. The Solar segment was mainly affected.
Due to unforeseeable global consequence of Covid-19 pandemic, the available information about the expected economic trends and country-specific measures regarding Covid-19 pandemic were considered in the update of estimation, exercise of discretion as well as planning assumptions.
Due to the increased uncertainty at the beginning of the pandemic, an additional impairment test was performed in June 2020. This did not result in any need for impairment.
Overall, no fundamental influence of Covid-19 could be identified on reporting and account- ing as well as the underlying estimation, exercise of discretion and planning assumptions of reporting and accounting.
Consolidation principles
Capital consolidation uses the acquisition method. In this case, the acquired assets and lia-bilities are measured at their fair market values at the acquisition date. The acquisition costs for the acquired shares are then offset against the proportionate revalued equity of the subsidiary. Any remaining positive difference from offsetting the purchase price against the identified assets and liabilities is presented as goodwill in intangible assets. Costs in- curred as part of the corporate merger are expensed and therefore are not part of the ac- quisition costs.
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Manz AG published this content on 30 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 March 2021 08:44:01 UTC.
