SIMONA : Earnings Document

084_Reproduction of the Auditor's Report

This management report combines the Group management report and the separate management report of SIMONA Aktiengesell-schaft, Kirn (referred to also as SIMONA AG, SIMONA or company) (Section 315(3) in conjunction with Section 298(3) of the German Commercial Code - HGB). It includes details relating to the course of business, including performance, as well as the position and expected development of the Group and SIMONA AG. Information pertaining to SIMONA AG has been included in the business review that can be found in a separate section with details presented in accordance with provisions set out in the German Commercial Code (Handels-gesetzbuch - HGB).

039_Group Statement of Changes in Equity

040_Notes to Consolidated Financial Statements

034

Consolidated Financial Statements

034_Group Income Statement

035_Group Statement of Comprehensive Income

036_Group Statement of Financial Position

038_Group Statement of Cash Flows

007_Business review

019_Report on opportunities and risks

024_Report on expected developments

026_Other information

027_Non-financial statement pursuant to section 289b and section 315b HGB

Combined Management Report

004

004_Fundamental information about the group

SHAPING THE WORLD

1. Fundamental information about the group

1.1 The business model

The SIMONA Group develops, manufactures and markets a range of semi-finished thermoplastics, pipes and fittings as well as profiles. The materials used include polyethylene (PE), polypropylene (PP), polyvinyl chloride (PVC), polyethylene terephthalate (PETG), polyvinylidene fluoride (PVDF), ethylene-chlorotrifluoroethylene (E-CTFE), perfluoroalkoxy (PFA), thermoplastic olefins (TPO), acrylonitrile butadiene styrene (ABS) and various specialist materials. The production methods applied within this area range from extrusion, pressing, injection moulding and machining as well as the manufacture of customised fittings by the company's in-house plastics workshop.

Key sales markets

The SIMONA Group's sales markets are reflected in its business lines. The Industry business line mainly supplies the chemical process and semiconductor industry, in addition to manufacturing products used in the field of water treatment, swimming pool construction and medical technology. The Infrastructure business line primarily manufactures piping systems for infrastructure applications centred around water and gas supply, waste water disposal, the protection of power and data lines, and traffic route technology. The Advertising & Building business line mainly supplies PVC foam products for building and advertising applications. The Mobility business line specialises in products used in the interior design of aircraft and trains as well as motor vehicles. In addition, the fish farming equipment within our Aquaculture business line represents another growth market for SIMONA.

The SIMONA Group markets its products worldwide. The reporting structure is categorised geographically according to the following regions:

EMEA (Europe, Middle East, Africa) Americas

Asia-Pacific

In addition, the reporting structure covers the following business lines:

Industry Infrastructure Advertising & Building Mobility

Others

Production and sales locations

Sales activities at Group level are conducted by SIMONA AG and subsidiaries in the United Kingdom, Italy, France, Spain, Poland, the Czech Republic, Russia, Hong Kong, China, India, Norway, Turkey and the United States, both directly and via trading partners. Beyond this, SIMONA AG operates a sales office in Möhlin, Switzerland. It contributes around 3 per cent to Group sales revenue. The parent company, SIMONA AG, has its registered office in 55606 Kirn (Germany). In the period under review, the SIMONA Group operated three manufacturing facilities in Germany and seven plants located abroad. Semi-finished products (sheets, rods, welding rods) are manufactured at two plants in Kirn (Rhineland-Palatinate), while pipes, fittings and customised parts are produced at a facility in Ringsheim (Baden-Württemberg). The plant in Litvinov (Czech Republic) produces pipes and sheets, while SIMONA Stadpipe AS, Stadlandet (Norway), plans, produces and installs piping systems for aquaculture applications. SIMONA PLASTECH Levha Sanayi Anonim Şirketi, Düzce (Turkey) produces sheet products. while the site in Jiangmen (China) manufactures sheets. The facility operated by SIMONA AMERICA Industries LLC in Archbald (Pennsylvania, USA) mainly produces sheet products. SIMONA Boltaron Inc. produces thermoplastic sheet products at its plant in Newcomerstown (Ohio, USA), which are primarily used for aircraft interiors and in the building sector. Additionally, SIMONA PMC, LLC manufactures sheet products at its facility in Findlay (Ohio, USA). Made primarily from thermoplastic olefins (TPO) and acrylonitrile butadiene styrene (ABS), they are used in thermoforming applications.

Consolidated FinanciAanl nSutatleRmeepnotrst 2021

Management and supervision at SIMONA AG

The Management Board members in the financial year under review were Matthias Schönberg (Chairman/CEO), Michael Schmitz and Dr. Jochen Hauck. SIMONA has established a Global Management Team (GMT) at Group level that consists of the Management Board of SIMONA AG as well as the regional CEOs in the Americas, Adam Mellen, and in Asia-Pacific, Y.K. Wong. The GMT facilitates a regular exchange relating to Group strategy, in addition to managing global projects and driving the process of internationalisation within the company.

The Supervisory Board was composed of the following members in the reporting year: Dr. Rolf Goessler (Chairman until 2 June 2021, resigned 2 June 2021), Dr. Klaus F. Erkes (member and Chairman since 2 June 2021), Roland Frobel (Deputy Chairman until 2 June 2021), Dr. Roland Reber (Deputy Chairman since 2 June 2021), Martin Bücher and, as employee representatives, Andy Hohlreiter and Markus Stein.

1.2 Objectives and strategies

The SIMONA Group conducted an in-depth analysis of its strategic positioning in 2020, which included redefining the direction to be taken. Its ambitions within this area have been summarised under the heading "GrowTogether". A target has been set for profitable growth based on an EBIT margin of 6-8 per cent, which is to be achieved organically and through company acquisitions. In this context, the focus is on thermoplastic sheets, pipes and fittings, which SIMONA supplies to industries undergoing global growth. SIMONA is looking to become the company with the highest degree of end-consumer orientation within its industry. The motto "A Company Like a Friend" emphasises the aspiration of a close and trusting relationship with all stakeholders. This is promoted by well-trained employees, open communication and a culture of feedback.

SIMONA has introduced strategic initiatives in pursuit of these goals.

Process orientation: with the aim of achieving excellence relating to all processes, the latter are to be further refined, documented and continuously improved. SIMONA will drive consistent process

orientation through intensive staff training and development as well as an open culture of communication and feedback. Application orientation: SIMONA focuses on core markets and aligns its structural and process organisation with the requirements of end customers. This provides the foundation for an in-depth understanding of the fields of application relating to the various products. New areas of application are to be cultivated selectively according to this principle.

Agile partner to industry: SIMONA wants to think in a market-and applications-driven way, while acting in a product-based manner. A close dialogue with end customers and a thorough understanding of the challenges they face are essential, regardless of the sales channel of the products in question. Global profitability: each and every region is to make a consistently profitable contribution to the company's success. Sustainable added value for society and the environment: the intelligent and resource-efficient use of plastics, for example, can help to reduce energy consumption and emissions, facilitate water treatment or ensure the transport of energy from renewable sources.

The achievement of these goals was consistently pursued in 2021. The business lines introduced on 1 January 2021 did the necessary groundwork in their respective market segments, including the task of defining their business strategies. In addition, Global Industry Working Groups (GIWGs) are focusing on fields of application in which the associated market players operate globally and which are expected to deliver considerable market potential. These include rail vehicle interiors, the semiconductor industry and aquaculture. The GIWGs each defined their vision, mission and long-term growth and earnings targets in 2021. In addition, a uniform reporting structure with fixed KPIs was drawn up within this area.

The investment programme associated with the Group's strategic realignment is being implemented as planned. In 2021, one focus was on automating picking operations at the central warehouse in Kirn as well as channelling further investments into measures aimed at raising efficiency levels in the area of production, especially at the Kirn and Ringsheim sites.

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