Manz AG — Interim / Quarterly Report 2018

Sep 20, 2018

6-MO NTHRE PORT 2018

Manz AG at a glance

2018 Financial Calendar

November 13, 2018 Publication of 2018 9-Month Report November 26–28, 2018 2018 German Equity Forum

Overview of consolidated net profits

(in million euros)	Jan. 1 to June 30, 2018	Jan. 1 to June 30, 2017	Change in %
Revenue	173.5	119.6	+45.1
Overall performance	178.4	126.7	+40.8
EBITDA	–0.7	12.4	n/a
EBITDA margin (in %)	n/a	9.8	n/a
EBIT	–5.1	7.0	n/a
EBIT margin (in %)	n/a	5.5	n/a
EBT	–5.9	5.6	n/a
Consolidated net profit (loss)	–6.5	4.7	n/a
Earnings per share (in euros)	–0.80	0.61	n/a
Cash flow from operating activities	–33.7	39.6	n/a
Cash flow from investing activities	–6.4	19.4	n/a
Cash flow from financing activities	10.0	–21.5	n/a

	June 30, 2018	Dec. 31, 2017	Change in %
Total assets	382.5	368.2	+3.9%
Equity	157.0	163.4	–3.9%
Equity ratio (in %)	41.0	44.4	–3.4 pp
Financial liabilities	53.1	40.3	+31.8%
Liquid funds	44.9	72.2	–37.8%
Net debt	8.2	–31.9	n/a

MANZ AG MISSION STATEMENT

With our claim "passion for efficiency – efficiency through passion," we, as a high-tech equipment manufacturer, make the promise of performance, to offer innovative and economic solutions to our customers in established and future-oriented markets and market segments. Extensive technological know-how, a competitive product portfolio, and customer proximity are the foundation of our company and enable us to recognize new industry requirements at an early stage and incorporate them into the development of our products. The Manz Group is an innovation driver for key technologies such as sustainable energy production and stationary power storage, displays and devices for global communication needs or E-mobility. Due to our extensive expertise in automation, laser processing, image processing, measurement technology, liquid chemistry, and roll-to-roll processes, there are application opportunities and demand for our solutions in numerous industries. We concentrate not only on customer-specific production solutions in our core segments of Solar, Electronics, and Energy Storage, but also on the development, production, and marketing of standardized individual machines and modules and their intelligent incorporation into complete, individual system solutions.

WE ACT IN A SUSTAINABLE MANNER. IN ALL AREAS. TO ALL CHALLENGES.

To open up opportunities. To enable further education. To accept social responsibility. To drive innovation. To conserve resources.

Sustainability is more than just a slogan at Manz. We have therefore decided to put the spotlight on sustainability in this year's financial reports. As a large listed company, from the fiscal year 2017 on we also appropriately summarize our diverse activities around environmental issues, employee concerns, social concerns, respect for human rights, and fight against corruption and bribery in a report.

The entire sustainability report can be found on our website. We provided interesting facts and backgrounds concerning the key topics for us in this report.

TO OUR SHAREHOLDERS

Manz AG Stock

GROUP INTERIM MANAGEMENT REPORT

• Basic Information on the Group
• Business Report
• Supplemental Report
• Report on Opportunities and Risks
• Forecast Report

CONSOLIDATED INTERIM FINANCIAL STATEMENT

• Consolidated Income Statement
• Consolidated Statement of Comprehensive Income
• Consolidated Balance Sheet
• Consolidated Cash Flow Statement
• Consolidated Statement of Changes to Equity
• Notes (abridged)

Company founded by Dieter Manz

Developed the first automation system for processing crystalline solar cells in a pilot manufacturing project

Shipped the first automation solution for the flat panel displays industry to Asia

Shipped the first automation system for a completely automated production line for crystalline solar cells

2005

Entered the thin-film market with equipment for mechanically scribing solar panels

IPO on the Entry Standard market of the Frankfurt Stock Exchange

2008

Became leading supplier of systems for wet-chemical processes by acquiring Intech, Taiwan

Entered the market for lithium-ion batteries

2012

Acquired the CIGS innovation line from Würth Solar Opened facility for solar and display production systems in Suzhou, China

Manz becomes global leading equipment supplier for the touch panel production First order from AMOLED display industry

2014

Acquisition of mechanical engineering division of Kemet Electronics Italy (formerly Arcotronics) for enlargement of technology portfolio in Battery division

Acquisition of KLEO Halbleitertechnik GmbH, expansion of the technology portfolio by the addition of "laser direct imaging"

2016

Shanghai Electric becomes strategic anchor investor of Manz AG

Start of strategic collaboration with Shanghai Electric and Shenhua in CIGS thin-film solar technology

MANZ AG STOCK

• Change in Share Price
• Stock Key Data and Performance Indicators
• Shareholder Structure
• 2018 Annual Meeting of Shareholders
• 2018 Financial Calendar

MANZ AG STOCK

CHANGE IN SHARE PRICE (JANUARY 1 TO JUNE 30, 2018)

The Manz AG share began the 2018 fiscal year on Tuesday, January 2, 2018, with a closing price of 33.90 euros. During the following period the share was characterized by volatile price performance, and on April 16, 2018 reached a low of 30.20 euros per share in the period under review. Until the beginning of June, Manz Paper trended steadily upwards; reaching its high of 37.30 euros on June 11, 2018. By the end of June 2018, the performance was marked by a slight downward trend and closed at euros 35.15 on June 29, 2018. This corresponds to a market capitalization of around 272.2 million euros and a price increase of 3.7%.

The benchmark indices developed as follows over the period under review: TecDAX +12.9%; SOX +6.2%; SOLEX –9.7%; PV30 Global –10.4%

Chart Showing Manz AG Stock (XETRA, in euros)

STOCK KEY DATA AND PERFORMANCE INDICATORS

Stock Key Data and Performance Indicators

German Securities Identification Number ISIN Ticker symbol Trading segment Share type	A0JQ5U DE000A0JQ5U3 M5Z Regulated market (Prime Standard) Bearer shares with no par value (no-par-value shares) with a pro rata amount of the share capital of 1.00 euros each
Capital stock	7,744,088 EUR
IPO	September 22, 2006
Opening price	19.00 euros
Share price at the beginning of the reporting period*	33.90 euros
Share price at the end of the reporting period*	35.15 euros
Change (in percent)	+3.7%
Period high	37.30 euros
Period low	30.20 euros

* In each case closing prices on German Stock Exchange AG's XETRA trading system

SHAREHOLDER STRUCTURE

Manz AG currently shows a high free-float of 52.57% and has a broad shareholder base. Shanghai Electric Germany Holding GmbH owns 19.67% of the shares as of Saturday, June 30, 2018. In addition, Board of Directors member Manz and his wife Ulrike Manz own 25.10% and 2.66% of the company's shares, respectively.

2018 ANNUAL MEETING OF SHAREHOLDERS

The 2018 Manz AG Annual General Meeting took place at the Filharmonie in Filderstadt, Germany, on Tuesday, July 03, 2018. A total of 269 shareholders attended and heard the report of the Managing Board on the development of business in the year 2017 and the outlook for the 2018 fiscal year. A total of 59.3% of capital stock with voting rights was represented (previous year: 57.9%); all of the items on the agenda were adopted. Detailed voting results can be found at any time on the company's website www.manz.com under Investor Relations/Annual General Meeting.

2018 Financial Calendar

November 13, 2018 Publication of 2018 9-Month Report November 26–28, 2018 2018 German Equity Forum

BASIC INFORMATION ON THE GROUP

• Business Model and Strategy
• Group Structure and Holdings
• Locations and Employees
• Control System and Performance Indicators
• Research and Development

24 BUSINESS REPORT

• Macroeconomic Environment and Industry-Related Conditions
• Analysis of the Net Assets, Financial Position and Group Profitability
• Segment Reporting

SUPPLEMENTAL REPORT

REPORT ON OPPORTUNITIES AND RISKS

FORECAST REPORT

• Expected Development of the Group and Segments
• Forward-looking Statements

BASIC INFORMATION ON THE GROUP

BUSINESS MODEL AND STRATEGY

Founded in 1987, Manz AG is a global high-tech equipment manufacturing company. Its business activities consist of five segments: Solar, Electronics, Energy Storage, Contract Manufacturing, and Service. With many years of expertise in automation, laser processing, vision and metrology, wet chemistry, and roll-to-roll processes, the company offers manufacturers and their suppliers in various industries a broad portfolio of innovative products. In addition to customer-specific production solutions, this includes standardized individual machines and modules that can be intelligently linked together to form complete, customized system solutions.

In addition to the CIGSfab turnkey production line in the Solar segment, the company is paying special attention to the automotive industry in the Electronics and Energy Storage segments. For example, economical and competitive lithium-ion battery manufacturing equipment – from the cell to the finished pack – and automated assembly lines for cell contact systems are helping the industry transform from the classic to the electric power train. The company also offers a comprehensive range of services around Manz AG's core technological competencies: From simulation and factory planning to process and prototype development, customer training, and after-sales service.

MANZ AG 6-Month Report 2018 The core of the company's strategy is to make use of the technology portfolio via a Groupwide established R&D Council across all industries and regions. This overarching exchange of technology and know-how offers not only a high level of flexibility, but also the possibility of creating internal synergies with regard to platform structures and kits, product portfolios and processes and procedures, and to use them economically.

Manz AG's business model offers a sustainable increase in competitiveness combined with profit-oriented growth. The strategic cooperation in the Solar segment with Shanghai Electric Group and Shenhua Group ensures stability. The company is increasing its competitiveness and profitability with a strong focus on the expansion of the business with standard equipment and rapidly broadening its global customer base. A group-wide structured process for product identification, development and implementation significantly reduces development effort and time. Additional growth opportunities arise from individual development projects for customer-specific pilot lines. Here, Manz AG is a sought-after development partner throughout the industry and a pioneer for new future technologies.

GROUP STRUCTURE AND HOLDINGS

LOCATIONS AND EMPLOYEES

Employees by country

CONTROL SYSTEM AND PERFORMANCE INDICATORS

Manz AG is organized for the purpose of corporate management by product and service segments at Group level and consists of the five business segments "Solar," "Electronics," "Energy Storage," "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. The Managing Board is informed about business performance in the individual segments on a regular basis by means of detailed reports and regular management meetings. As a result, it is possible for the respective Managing Board to control the company in a timely manner.

The control indicators for Manz AG's corporate development are sales, earnings before interest and taxes (EBIT), and earnings before interest, taxes, depreciation, and amortization (EBITDA). Further performance indicators are the equity rate and liquidity. The Manz AG control system has not changed relative to the previous year.

Manz AG's financial management system is centrally organized. In order to minimize risks and make use of the potential to optimize activities across the entire group, the company concentrates decisions about subsidiaries' financing, investments, and currency hedging activities 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.

Locations and Employees

• Debrecen Production & Service
• 3 Slovakia Nove Mesto nad Vahom Production, Sales & Service
• 6 Taiwan Taoyuan Production, Sales & Service

Sales & Service

North Kingstown, Cupertino

8 India New Delhi Sales & Service

RESEARCH AND DEVELOPMENT

With more than 500 engineers, technicians, and scientists at its development sites, Manz AG concentrates on the development of innovative production, assembly and handling technologies, standardized individual machines, modules, and completely interlinked, customized system solutions and systems, as well as the interdepartmental linking of its competencies through the R&D Council to maximize synergy effects and economies of scale. In addition, Manz AG maintains numerous cooperative agreements with well-known research institutes, universities and colleges.

Manz AG had a total R&D ratio of 4.5% in the reporting period (previous year: 8.7%). On the one hand, the significant decline is attributable to increased overall performance and to the elimination of high R&D expenditures in the Solar division as a result of the sale of NICE Solar Energy GmbH (formerly Manz CIGS Technology GmbH) as of April 1, 2017. If only the capitalized development costs are considered, the research expense ratio amounts to 1.7% (previous year: 3.6%). R&D investments of 7.9 million euros are below the prior year's level of 10.4 million euros.

Scheduled depreciation on activated development services of 1.6 million euros (previous year: 1.8 million euros) was charged in the reporting period 2018. There was no unscheduled depreciation. The company will also continue to place a clear emphasis in the R&D area. Manz AG strives for an annual rate of R&D to sales of 6.5% on average in order to provide sustained and long-term consolidation of its positive technological positioning and its innovations in the relevant target markets.

KNOWL EDGEED UCATI IONTRA INING

The best possible qualification for us is the key to sustainable success. Against this background, we maintain a variety of programs and initiatives for the further qualification of our employees. We also want to establish the professional development opportunities of our global employees in a more diverse manner with the promotion of the international, internal job market.

Dual Education is an investment in the future Dual training and dual studies are very important to Manz AG.

The internationalization of the dual training concept is also of great importance to us as a globally operating company. For example, at the location in Slovakia, in close cooperation with the German training department, a successful commercial/technical training structure based on the German model has been established.

Qualification means you never stop learning

Lifelong learning is an essential part of our sustainability strategy. We offer a broad range of training and further education measures, as well as subjectspecific qualification measures, as part of the Manz Academy. In 2017, a total of 37,996.50 hours of training were held. On average, each employee received 21.8 hours of training in 2017. ø21.8h

"The top tier" is also further developed

"Future Leadership@Manz" is a new program for the management level in the company, in the framework of which a common, cross-location understanding of leadership is developed.

BUSINESS REPORT

MACROECONOMIC ENVIRONMENT AND INDUSTRY-RELATED CONDITIONS

Economic Market Environment

According to the Kiel Institute for the World Economy (IfW), the expansion of the global economy lost momentum at the beginning of 2018. Accordingly, the US trade conflicts noticeably slow down global economic activity. In China, measures to curb credit expansion and prevent overheating in the real estate market are weighing on the economy. Additionally, there was a heightened political uncertainty in the eurozone, largely due to the change of government in Italy. The IfW forecasts an increase in global gross domestic product (GDP) for the entire year of 2018 of 3.8% (previous year: +3.9%) for the USA, 2.8% (previous year: +2.2%) for China the IfW experts calculate GDP growth of 6.5% (previous year: +6.9%), for Europe an increase of 2.1% (previous year: +2.6%) and for Germany 2.0% (Previous year: +2.6%).

Mechanical Engineering Industry

The Federation of German Mechanical and Plant Engineers (VDMA) continues to regard mechanical engineering as being on a growth path worldwide. Adjusted for prices, the association expects a global increase in sales of 4% for 2018 (previous year: +3%), and 4% growth for China after the market declined in the previous year (previous year: –2%), and even for Germany 5% forecast (previous year: +5%). The Robotics & Automation division will be able to post significant growth in Germany with a clearly above-average price growth of 10% (previous year: +12%). The positive expectations for the German mechanical engineering industry are supported by the strong foreign orders, which were around 6% above the previous year's level in the first four months of 2018.

Core Segment Industries

Solar

According to VDMA, the German engineering companies for solar industry were able to increase sales in the first half of 2018 by 7.7% compared to the previous year. The overwhelming share was generated by the companies with 58.6% in the Chinese market. The strong market position of German mechanical engineering companies in thin-film technology is reflected in a market share of 61.6% in the first quarter of 2018. This was significantly above the corresponding value of the previous year. Based on previous year values, however, a decrease in the share of the thin-film market can be expected later in the year. The overall positive outlook is based on the growing global demand for PV installations: newly installed capacity is expected to increase in 2018 by 5.8%, from 98 gigawatts (GW) to 104 gigawatts (GW) compared to the previous year.

Electronics

According to the VDMA, German manufacturers for electronics production are expecting an average sales increase of 7.9% over the previous year for 2018. The Asia region is the largest buyer of electronic engineering products, with a market share of 33.1%, followed by Germany with 26.3% and Europe with 24.1%. According to IHS Research, the global display market will increase overall production capacity by 6.4% to 210.8 million sqm, with the trend from LED to AMOLED technology continuing. Accordingly, the AMOLED technology will contribute a revenue share of 26.6% in 2018 (previous year: 18.3%). An increase of over 20% for the creation of value of the machine-builders all around the electronic power train is forecast by the VDMA for 2018.

Energy Storage

According to the VDMA, the sales growth of German machinery and equipment manufacturers for battery production will amount to around 15.2% in 2018 (previous year: +14%). The main reasons for this development are the growing demand from the automotive industry for batteries for electro-mobility and stationary energy storage devices for the energy turnaround. The average export rate in German battery engineering is generally over 80%, with Asia and North America accounting for the largest share (53%).

ANALYSIS OF THE NET ASSETS, FINANCIAL POSITION AND GROUP PROFITABILITY

Group profitability

Revenues in the first six months of 2018 half of 2018 amounted to 173.5 million euros compared to 119.6 million euros in the previous year. This corresponds to 45% increase and essentially reflects the strong development of the Solar segment. The contribution to sales in the second quarter, at 87.4 million euros, was at the level of the first quarter of 2018 (March 31, 2018: 86.1 million euros) and 21.4% above the sales revenues of the second quarter of the previous year (72.0 million euros).

Changes in finished goods and work in progress inventories amounted to 2.0 million euros (previous year: 2.9 million euros). Capitalized proprietary contributions of 2.9 million euros were below the previous year's level (previous year: 4.3 million euros) and is largely attributed to activities for product development in the solar business sector. This resulted in a total contribution of 178.4 million euros (previous year: 126.7 million euros).

Revenues by Regions January 1 to June 30, 2018

Other operating income amounted to 2.4 million euros (previous year: 38.9 million euros) and mainly comprises income from share price gains and subsidized projects. The reason for the significant decrease compared to the previous year is the special effect of 34.4 million euros in connection with the sale of NICE Solar Energy GmbH (formerly Manz CIGS Technology GmbH) in fiscal year 2017.

The cost of materials amounted to 121.1 million euros (previous year: 77.7 million euros) and the materials cost ratio was 67.9% (previous year: 61.3%). The increase compared to the previous year is a result of the dynamic development of the Contract Manufacturing segment, the implementation of material-intensive energy storage pilot projects and a high proportion of CIGS contracts. As a result, the gross profit amounted to 59.7 million euros compared to 87.9 million euros in the previous year, including the special effect from the sale of NICE Solar Energy GmbH (formerly Manz CIGS Technology GmbH). Adjusted for this one-time effect, the gross profit for the first six months of 2017 amounted to 53.5 million euros. Personnel expenses in the first six months of 2018 were slightly below the previous year at 37.8 million euros (38.4 million euros).

Compared to the previous year, the personnel expenses ratio improved substantially due to the significantly increased total output to 21.2% (previous year: 30.3%). The other operating expenses were significantly lower at 22.7 million euros than in the previous year (37.1 million euros). This decrease is mainly due to expenses in the previous year in connection with the CIGS major orders. A cable fire at the Taiwan site had a negative impact on Manz AG of 2.2 million euros. This value is included in other operating expenses. Earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to –0.7 million euros after a non-recurring prior-year EBITDA of –22.0 million euros, adjusted for the non-recurring one-time special effect from the sale of NICE Solar Energy GmbH (unadjusted previous year: 12.4 million euros). In regard to the second quarter, Manz AG generated an EBITDA of 2.4 million euros, which was adjusted for the negative one-time effect of the cable fire at the Taiwan site. This corresponds to an increase of 3.3 million euros compared to the first quarter of 2018 (March 31, 2018: –0.9 million euros). At 4.3 million euros, depreciation was slightly below the previous year's level of 5.4 million euros and included only scheduled depreciation of proprietary capitalized contributions and tools or equipment.

EBIT in the second quarter of 2018 amounted to –2.1 million euros. As in the case of EBITDA, the negative effect of the fire in Taiwan, with a value of 2.2 million euros, also has an effect here. Adjusted for this one-time effect, the EBIT for the second quarter of 2018 was +0.1 million euros. EBIT therefore increased significantly by 3.1 million euros, compared to the first quarter of 2018 EBIT. The increase in EBIT of +13.2 million euros is even more significant compared to the second quarter of 2017, with –13.1 million euros. Manz AG believes that its strategy towards a sustainable profitable business model has been confirmed in light of this positive trend in its operating business. The overall EBIT for the first six months of 2018 will be –5,1 million euros (previous year: 7.0 million euros, including the special effect from the sale of NICE Solar Energy GmbH – formerly Manz CIGS Technology GmbH – in the amount of 34.4 million euros).

Finance costs amounted to –0.9 million euros in the first six months of 2018, compared to –1.4 million euros in the previous year. This improvement is mainly due to the repayment of debt capital in Manz AG. After deducting taxes on income and earnings, Manz AG's consolidated net income for the first six months of 2018 amounts to –6.5 million euros (previous year: 4.7 million euros, including the special effect from the sale of NICE Solar Energy GmbH – formerly Manz CIGS Technology GmbH – in the amount of 34.4 million euros). This results, based on a weighted average of 7,744,088 shares, in undiluted earnings per share of –0.80 euros (previous year undiluted: 0.61 euros, including the special effect from the sale of NICE Solar Energy GmbH – formerly Manz CIGS Technology GmbH – in the amount of 34.4 million euros).

Group Net Assets

Total assets as of June 30, 2018 increased from 368.2 million euros to 382.5 million euros, compared to December 31, 2017.

On the asset side, as of June 30 2018, long-term assets amounted to 132.6 million euros above the level of the 2017 balance sheet date (125.8 million euros). The increase is mainly due to greater intangible assets of 63.4 million euros (December 31, 2017: 58.7 million euros). The increase is largely a result of the application of IFRS 15 and the associated capitalization of order acquisition. Current assets as of June 30, 2018, at 249.9 million euros, were well above the amount of 242.4 million euros as of the 2017 balance sheet date. In view of the positive order situation, inventories increased to 90.0 million euros as of the reference date (December 31, 2017: 62.2 million euros). Due to the first-time application of IFRS 15, receivables from construction contracts amounting to over 61.0 million euros are reported for the first time as contractual assets in the interim financial statements as of June 30, 2018. This position was previously an integral part of trade receivables. At the same time, trade receivables also decreased significantly as of June 30, 2018 to 39.6 million euros (December 31, 2017: 95.7 million euros). The decrease in liquid assets to 44.9 million euros by the end of the 2018 period of review (December 31, 2017: 72.2 million euros) mainly resulted from the use of prepayments in connection with the processing of CIGS contracts in line with the progressive project cycle. On the liabilities side, equity amounted to 157.0 million euros (December 31, 2017: 163.4 million euros), which resulted in an equity ratio of 41.0% (December 31, 2017: 44.4%) in an increased balance sheet amount. Long-term liabilities increased from 17.2 million euros as of December 31, 2017, to 18.3 million euros as of June 30, 2018. The reason for the slight increase is greater long-term financial liabilities of 4.3 million euros (December 31, 2017: 3.3 million euros).

Short-term debt increased substantially to 207.2 million euros compared to the end of fiscal year 2017, mainly due to the inclusion of bank overdrafts in the foreign subsidiaries (December 31, 2017: 187.7 million euros). Current financial liabilities as of June 30, 2018, amounted to 48.8 million euros (December 31, 2017: 37.0 million euros). Trade payables at the end of the 2018 reporting period amounted to 101.2 million euros (December 31, 2017: 117.5 million euros) and are mainly related to the commissioning of third parties to implement the large CIGS orders. As a result of the implementation of IFRS 15 for the fiscal year 2018, the company will for the first time report contractual liabilities of 27.9 million euros as of June 30, 2018. Previous advance payments received are included in this position (December 31, 2017: 13.4 million euros). As of Saturday, June 30, 2018, other short term accruals amounted to 10.9 million euros, compared with 5.2 million euros at the end of 2017. Other current liabilities amounted to 18.2 million euros (Sunday, December 31, 2017: 13.2 million euros).

Group liquidity position

The basis for the cash flow from operating activities, totaling –33.7 million euros, is the positive EBIT of –5.1 million euros. The increase in intangible assets and contractual assets in connection with the application of IFRS 15, as well as the improved order backlog and the resulting increase in inventories, resulted in a corresponding cash outflow with a simultaneous decrease in trade receivables.

Cash flow from investment activities amounted to –6.4 million euros in the 2018 reporting period. The cash outflow resulted mainly from investments in intangible assets and tools or equipment, primarily in development activities.

The cash flow from financing activities in the first six months of 2018 amounted to 10.0 million euros and resulted primarily from the change in short-term financial debt. If exchange rate changes are taken into account, Manz AG therefore had liquid funds totaling 44.9 million euros as of June 30, 2018 (December 31, 2017: 72.2 million euros). Unused lines of credit with banks as of the 2018 balance sheet date come to 14.0 million euros (December 31, 2017: 20.7 million euros).

Net debt amounted to 8.2 million euros with a bank balance of 44.9 million euros. Since the beginning of 2018, new Aval loan commitments have been issued in the amount of 36.1 million euros.

SEGMENT REPORTING

Revenues by Business Units January 1 to June 30, 2018

Solar

The first six months of the year 2018 were also marked by the implementation of the major CIGS contracts with a total volume of 263 million euros, which Manz AG received in January 2017 as part of the strategic cooperation with Shanghai Electric and the Shenhua Group. The groundbreaking ceremony for the CIGS Turnkey Plant (CIGSfab) for the series production of thin-film CIGS solar modules in China took place as planned at the beginning of 2018. In January 2018, Manz also received a payment of approximately 43 million euros related to the large CIGS contracts. The payment was made according to the agreement, after contractually defined milestones had been successfully achieved in the completion of CIGSfab.

In the first six months of 2018, Manz AG generated around 69.3 million euros, or 39.9% of the Manz Group's total revenues, in the solar segment (previous year: 16.5 million euros, or 13.8%). The EBIT segment amounted to 6.5 million euros in the first six months of 2018 compared to 26.1 million euros in the same period of the previous year, whereby this figure was significantly affected by the revenue-enhancing, positive special effect of 34.4 million euros from the sale of the NICE Solar Energy GmbH (formerly Manz CIGS Technology GmbH) as reported on March 31, 2017. In comparison with the EBIT segment adjusted for this special effect of –8.3 million euros as of June 30, 2017, the EBIT for the solar segment increased by around 15 million euros.

Electronics

At the beginning of the year, Manz had received new and subsequent orders from the electronics business segment with a total volume of approximately 20 million USD for wet-chemical tools or equipment for the manufacture of Displays. Manz AG's wet-chemical equipment convinced, not least, their existing customers, such as Xianyang CaiHong Optoelectronics Technology Co. Ltd. ("CHOT"), a well-known Chinese flat screen manufacturer that is part of the China Electronics Corporation Group (CEC). Two other long-time customers, one electronics manufacturer located in Taiwan and a Japanese technology group, also decided to purchase innovative Manz equipment for manufacturing high-end TFT displays and flexible OLED displays.

Manz received a major order in the double-digit million euros range from a global electronics company in May 2018. Part of the order to manufacture the cell contact system for battery cells in electric vehicles is the LightAssembly modular assembly line. Contacting systems are integrated into the electrical energy storage system in order to allow series or parallel switching of lithium-ion battery cells or to complete voltage measurements in each cell and temperature measurements in the module. The overall order was divided into two equal parts: Manz AG has already received the first installment during the second quarter, and the second installment is expected for the third quarter of 2018.

In the first six months of 2018, Manz AG generated around 30.0 million euros, or 17.3% of the Manz Group's total revenues, in the electronics segment (previous year: 42.1 million euros, or 35.2%). The EBIT segment improved in the reporting period from –11.0 million euros in the previous year to –8.1 million euros, despite a significantly lower level of sales, and reflects the improved cost structures.

Energy Storage

Manz received three orders for the flexible Battery Laser System BLS 500 laser system in the Energy Storage business segment from customers from the power tools and automotive/e-mobility sectors, as well as an order for a pilot line for assembling battery cells in January 2018. The total volume of the orders was roughly 7 million euros. The company has already sold 10 BLS 500 type laser systems since the system was launched. With the BLS 500, Manz has introduced a flexible laser platform to the market that is designed for different laser processes in the manufacture of lithium-ion batteries. Customers can design powerful laser equipment matched to specific requirements and processes, structured around a standardized machine base. In doing so, Manz combines the advantages of a standard system with those of a customized solution.

In addition, Manz received an order from a European customer in April 2018 for a standard production line for the production of laminated lithium-ion pouch battery cells and their battery modules. These will be used for electric forklift trucks, automated guided vehicle systems and stationary energy storage. The order volume is in the low tens of millions of euros. The order will have an impact on revenues and earnings in the 2018 and 2019 business years.

The sales business segment generated around 13.8 million euros, or 8.0% of Manz AG's total revenues in the first six months of 2018 (previous year: 12.0 million euros, or 10.0%). The EBIT business segment improved to –6.2 million euros in the reporting period compared to –11.5 million euros in the previous year, but is still influenced by expenses for the development of new standard products, automation and process modules, as well as the expansion of sales in Asia, Europe and the United States.

Contract Manufacturing

During the 2018 reporting period, Manz AG generated 49.9 million euros, or 28.8% of the Manz Group's total revenues, in the contract manufacturing business segment (previous year: 40.4 million euros, or 33.8%). The EBIT segment amounted to 0.3 million euros in 2017, compared to 0.7 million euros in the previous year. The one-time special effect in connection with the fire at the Taiwan location had a negative impact on earnings.

Service

The company generated 10.4 million euros, or 6.0% of the Manz Group's total revenue in the service business segment (previous year: 8.7 million euros, or 7.3%). The EBIT segment amounted to 2.7 million euros in 2018, compared to 2.6 million euros in the previous year.

SUPPLEMENTAL REPORT

Effective July 01, 2018, the company's Managing Board appointed Mr. Manfred Hochleitner (45) as Chief Financial Officer, who will immediately take over responsibility for the Finance and Controlling, HR, IT, Organization, Administration, Investor Relations, and Legal departments. After successfully completing his degree at the University of Passau in mathematics, with a minor in economics, Manfred Hochleitner gained extensive experience in the electronics and electrical engineering sector in his seven years at the VOGT electronic Group, ultimately being appointed as an authorized signatory and head of the Production and Supply Chain Management business segment. From 2007 to 2011, Mr. Hochleitner was the managing director of Optiplan GmbH. Following his role as commercial manager at mechanical engineering company Grämmer AG, he spent six years at Phoenix Solar AG as Director of Controlling/Finance and as Chief Financial Officer until 2018.

On July 26, 2018, Manz AG announced that Eckhard Hörner-Marass would be leaving the Managing Board at the end of 2018 at his own request. Mr. Hörner-Marass has been a member of the Managing Board since October 2016 and Chairman of the Managing Board since July 2017 and has agreed with the Supervisory Board for a one-year reduction of his term of office, which originally ran until December 31, 2019. The Supervisory Board intends to appoint Managing Board member Martin Drasch as the future Chairman of the Managing Board.

REPORT ON OPPORTUNITIES AND RISKS

No significant changes have arisen compared with the opportunities and risks presented in the 2017 Annual Report.

FORECAST REPORT

EXPECTED DEVELOPMENT OF THE GROUP AND SEGMENTS

The Managing Board considers the industry outlook in the three strategic business segments Electronics, Solar and Energy Storage to be thoroughly positive. Based on an order intake of 196 million euros in the first six months of 2018, an order backlog of 240 million euros on June 30, 2018, and an expected continuous increase in productivity in all segments, the management board foresees a corresponding improvement of revenues and earnings in the second half of 2018. Assuming that the underlying conditions remain unchanged, the Managing Board therefore continues to expect sales growth of between 10% and 14% for the current financial year compared to 2017, with a slightly positive EBIT excluding special effects. This would amount to an improvement in operating earnings of around 30 million euros. Revenue is expected to increase across all business segments. Due to the continued high research and development expenses for further expanding the product portfolio, as well as investments in market cultivation, the Electronics and Energy Storage segments are not expected to make a positive contribution to the Group's EBIT until 2019. Detailed prognoses for all the segments have been published in the 2017 Annual Report.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements, which are based on the current assumptions 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, development center or high performance of the Company to differ materially from the estimates given here. Our company assumes no obligation to update these forward-looking statements or adapt them to future events or developments.

Over 500 engineers, technicians, and scientifically trained employees, as well as numerous partnerships with renowned universities, colleges, and institutes, demonstrate the importance of research and development at Manz. We not only ensure the sustainable development of our company with continuous innovation, but we also make a significant contribution to the success of our customers with our high-quality, demand-oriented products and services.

CONSOLIDATED INCOME STATEMENT

• CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
• CONSOLIDATED BALANCE SHEET
• CONSOLIDATED STATEMENT OF CASH FLOWS
• CONSOLIDATED STATEMENT OF CHANGES TO EQUITY

NOTES (ABRIDGED)

• Explanations of Individual Items in the Income Statement
• Explanations of Individual Items in the Balance Sheet
• Relationships with Related Companies and Related Persons
• Contingent Liabilities and Other Financial Commitments
• Segment Reporting for Divisions
• Segment Reporting for Regions
• Key Events of Particular Importance Occuring After the End of the Reporting Period
• Further Disclosures
• Responsibility Statement

CONSOLIDATED INCOME STATEMENT

1. Half Year (in EUR tsd.)	2nd Quarter (in EUR tsd.)
----------------------------	---------------------------

	January 1 to June 30, 2018	January 1 to June 30, 2017	April 1 to June 30, 2018	April 1 to June 30, 2017
Revenues	173,532	119,600	87,431	71,982
Inventory changes, finished and unfinished goods	1,972	2,856	–3,207	1,948
Work performed by the entity and capitalized	2,904	4,281	1,589	1,397
Total operating revenues	178,408	126,737	85,814	75,327
Other operating income	2,436	38,864	908	3,236
Cost of materials	–121,113	–77,736	–56,321	–44,040
Gross profit	59,731	87,865	30,400	34,523
Personnel expenses	–37,812	–38,374	–18,656	–18,624
Other operating expenses	–22,657	–37,126	–11,561	–26,701
EBITDA	–738	12,365	183	–10,802
Amortization/Depreciation	–4,325	–5,411	–2,255	–2,270
Operating earnings (EBIT)	–5,063	6,954	–2,072	–13,072
Finance income	112	39	70	14
Finance costs	–901	–1,405	–476	–818
Earnings before taxes (EBT)	–5,852	5,588	–2,478	–13,875
Income taxes	–667	–889	259	–227
Consolidated profit or loss	–6,518	4,699	–2,219	–14,102
of which attributable to minority interests	–350	–25	–545	–15
of which attributable to shareholders of Manz AG	–6,168	4,724	–1,674	–14,087
Weighted average number of shares	7,744,088	7,744,088	7,744,088	7,744,088
Earnings per share (undiluted) in EUR per share	–0.80	0.61	–0.22	–1.82
Earnings per share (diluted) in EUR per share	–0.80	0.60	–0.22	–1.82

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		1. Half Year (in EUR tsd.)		2nd Quarter (in EUR tsd.)
	January 1 to June 30, 2018	January 1 to June 30, 2017	April 1 to June 30, 2018	April 1 to June 30, 2017
Consolidated profit or loss	–6,518	4,699	–2,219	–14,102
Difference resulting from currency translation	119	–6	–114	36
Cash flow hedges	7	5	5	2
Tax effect resulting from components not recognized in profit/loss	–2	–1	–2	–16
Total of expenditures and income recorded directly in equity with future reclassification with tax effect	124	–2	–111	22
Revaluation of defined benefit pension plans	178	51	88	84
Tax effect resulting from components not recognized in profit/loss	–41	–11	–20	–19
Total of expenditures and income recorded directly in equity without future reclassification
with tax effect	137	40	68	65
Consolidated comprehensive income	–6,257	4,737	–2,262	–14,015
of which minority interests	–336	–123	–501	–103
of which shareholders of Manz AG	–5,921	4,861	–1,761	–13,912

CONSOLIDATED BALANCE SHEET

ASSETS (in EUR tsd.)

June 30, 2018	Dec. 31, 2017
63,350	58,729
39,689	38,070
23,575	23,575
620	540
5,350	4,934
132,584	125,848
89,950	62,159
39,566	95,709
61,037	0
75	4
0	29
14,319	12,270
44,933	72,209
249,880	242,380
382,464	368,228

CONSOLIDATED BALANCE SHEET

LIABILITIES AND SHAREHOLDERS' EQUITY (in EUR tsd.)

	June 30, 2018	Dec. 31, 2017
Equity
Issued capital	7,744	7,744
Capital reserve	98,798	98,917
Revenue reserves	24,850	31,018
Other comprehensive income	20,373	20,125
Shareholders of Manz AG	151,765	157,804
Non-controlling interests	5,213	5,549
	156,978	163,353
Non-current liabilities
Non-current financial liabilites	4,326	3,332
Pension provisions	7,287	7,435
Other non-current provisions	2,979	2,716
Other non-current liabilities	18	248
Deferred taxes liabilities	3,638	3,480
	18,247	17,211
Current liabilities
Current financial liabilities	48,803	36,973
Trade payables	101,181	117,509
Payments received	0	13,395
Contract liabilities	27,876	0
Current income tax liabilities	31	1,406
Other current provisions	10,894	5,180
Derivative financial instruments	268	7
Other current liabilities	18,185	13,194
	207,239	187,664
Total liabilities and shareholders' equity	382,464	368,228

CONSOLIDATED STATEMENT OF CASH FLOWS

(in EUR tsd.)

Operating earnings (EBIT) –5,063 Depreciation/amortization of fixed assets 4,325 Increase (+)/decrease (–) in pension provisions and other non-current provisions 115 Other non-cash income (–) and expenses (+) 119 Gains (–)/losses (+) from disposals of assets 395 Increase (–)/decrease (+) in inventories, trade receivables and other assets –39,847 Increase (+)/decrease (–) in trade payables, contract liabilities and other liabilities 9,130 Income tax received (+)/paid (–) –2,111 Interest paid –901 Interest received 112 –33,726 Cash flow from operating activities Cash receipts from the sale of fixed assets 117 Cash payments for investments in intangible assets and property, plant and equipment –6,547 Cash receipts from the sale of consolidated entities less cash outflow 0 Payments for the acquisition of consolidated entities and other business units 0 –6,430 Cash flow from investing activities Cash receipts from the assumption of non-current 1,417 financial liabilities Cash payments for the repayment of non-current –412 financial liabilities Change in current financial liabilities 11,831 Purchase of treasury shares –78 Cash payments for the repayment of financial leases 0 Changes in restricted cash –2,804 9,953 Cash flow from financing activities Cash and cash equivalents at the end of the period Net change in cash funds (subtotal 1 – 3) –30,203 Effect of exchange rate movements 124 on cash and cash equivalents Cash and cash equivalents on January 1 55,575 25,495 Cash and cash equivalents on June 30 Composition of cash and cash equivalents Cash and cash equivalents 44,933	Jan. 1 to June 30, 2017	Jan. 1 to June 30, 2018
	6,954
	5,411
	195
	85
	–34,372
	10,558
	52,362
	–327
	–1,287
	39
	39,618
	97
	–5,158
	48,676
	–24,221
	19,394
	0
	–460
	–21,007
	–3
	–6
	0
	–21,476
	37,536
	–336
	55,722
	92,922
	92,922
	0	–19,438	Less restricted cash
25,495 Cash and cash equivalents on June 30	92,922

MANZ AG 6-Month Report 2018

CONSOLIDATED STATEMENT OF CHANGES TO EQUITY

(in EUR tsd.)

						Cumulative other equity
					Components which are not transferred to profit or loss		Components which may be transferred to profit or loss
	Subscribed capital	Capital reserves	Treasury shares	Revenue reserves	Remeasurement of pensions	Available-for-sale financial assets	Cash flow hedges	translation Currency	Cumulative other equity capital	attributable to share holders of Manz AG Equity capital shareholders	Minority shares	equity capital Total
As of January 1, 2017	7,744	143,681	0	–10,839	–2,047		–15	21,995	19,933	160,519	4,587	165,106
Consolidated net profit				4,724						4,724	–25	4,699
Other comprehensive income					40		4	92	136	136	–98	38
Consolidated income statement	0	0	0	4,724	40	0	4	92	136	4,860	–123	4,737
Purchase of treasury shares			–3							–3		–3
Use of treasury shares			3							3		3
Share-based payment As of June 30, 2017	7,744	85 143,766	0	–6,115	–2,007	0	–11	22,087	20,069	85 165,464	4,464	85 169,928
As of January 1, 2018	7,744	98,917	0	31,018	–2,344	–475	–14	22,958	20,125	157,804	5,549	163,353
Consolidated net profit				–6,168						–6,168	–350	–6,518
Other comprehensive income					137		5	105	248	248	14	262
Consolidated income statement	0	0	0	–6,168	137	0	5	105	248	–5,921	–336	–6,257
Withdrawal from capital reserves										0		0
Purchase of treasury shares										0		0
Use of tresury shares			–78							–78		–78
Share-based payment		–119	78							–41		–41
Changes to the basis of consolidation										0		0
As of June 30, 2018	7,744	98,798	0	24,850	–2,207	–475	–9	23,063	20,373	151,765	5,213	156,978

NOTES (ABRIDGED)

GENERAL DISCLOSURES

Manz AG has its headquarters in Steigaeckerstrasse 5 in 72768 Reutlingen, Germany. Its business activities consist of five segments: Solar, Electronics, Energy Storage, Contract Manufacturing, and Service. With many years of expertise in automation, laser processing, vision and metrology, wet chemistry, and roll-to-roll processes, the company offers manufacturers and their suppliers in various industries a broad portfolio of innovative products. In addition to customer-specific production solutions, this includes standardized individual machines and modules that can be intelligently linked together to form complete, customized system solutions. Manz AG shares are traded on the regulated market (Prime Standard segment) of the Frankfurt Stock Exchange.

Pursuant to Section 115 of the Securities Trading Act (WpHG), the interim consolidated financial statements as of June 30, 2018 have been prepared in condensed form in accordance with the International Financial Reporting Standards (IFRS) – including IAS 34 – of the International Accounting Standards Board (IASB), London, which are endorsed by the European Union, and the Interpretations of the IFRS Interpretations Committee in effect on the balance sheet date. Standards and interpretations that have not yet taken effect have not been applied. The present interim consolidated financial statements and the interim group management report have not been subject to an audit or an audit review in accordance with Section 317 of the Commercial Code.

The interim consolidated financial statements are prepared in euros. Unless otherwise stated, the information is given in thousands of euros.

ACCOUNTING AND VALUATION PRINCIPLES

The accounting policies applied to the condensed consolidated interim financial statements as of Saturday, June 30, 2018, as well as the calculation methods and input parameters used to measure fair value are the same as those of the consolidated financial statements as of Sunday, December 31, 2017. A detailed description of these policies was published in the notes to the consolidated financial statements in the 2017 Annual Report.

What is different is that, as of January 1, 2018, Manz is for the first time applying IFRS 9 "Financial Instruments" and IFRS 15 "Revenue from Contracts with Customers". Values from prior periods have not been adjusted.

First-time application of IFRS 9 financial instruments

The application of IFRS 9 results in a different measurement of financial assets. The regulations for financial liabilities have been adopted from IAS 39.

IFRS 9 contains new classification and valuation rules for financial assets that are based on the business model and the type of cash flows. The classification into the different evaluation categories is done as follows:

• Amortized cost (AC)
• Fair Value Through Other Comprehensive Income (FVTOCI)
• Fair Value Through Profit or Loss (FVTPL)
• Equity instruments classified as FVTOCI. Fluctuations in the fair market value are recognized in other results.

The Manz Group financial instruments were assigned to the business models and the valuation categories were determined in accordance with IFRS 9.

IFRS 9 contains a depreciation model in which the expected losses must be taken into account. The depreciation is to be determined either on the basis of the expected 12-month loss or on the basis of the total expected loss over the remaining term of the instrument. Depreciation losses in the amount of the expected remaining life of the instrument must be recognized for instruments whose default risk has significantly increased since inception. The same applies irrespective of an increase in the default risk for trade receivables and contractual assets that do not contain a financing component.

To implement the new depreciation requirements, valuation models have been developed that are used to determine default rates for trade receivables and contract assets. An analysis of the historical default rates takes into account different regions. These historical default rates are adjusted by the influence of forward-looking information in the macroeconomic environment. In addition, the default rates are reviewed by the responsible management.

Manz uses the simplified depreciation approach as defined under IFRS 9 for all trade receivables and contract assets. Current adjustments are recognized in profit and loss in the amount of the expected credit losses for financial instruments over their lifetime. The IFRS 9 application did not result in valuation differences for financial instruments, as the previous approach to creating valuation allowances was essentially in line with IFRS 9 requirements.

First-time application of IFRS 15 revenue from customer contracts

The previous IAS 11 Construction Contract standards, IAS 18 revenues, and the related interpretations will be replaced effective January 1, 2018, when IFRS 15 enters into force. IFRS 15 establishes when, and in what amount, revenues are to be recognized. Manz applies IFRS 15 in accordance with the modified retrospective method. The resulting conversion effects are recognized in retained earnings. Production orders in the inventory that were previously accounted for by using the percentage of completion method correspond to the requirements for period-related revenue recognition. The presentation of the comparative period is not adjusted. With regard to the disclosure, as of January 1, 2018, receivables from construction contracts are recognized as contract assets. These were previously recognized under trade receivables. Advance payments received so far are reported under contract liabilities.

As of January 1, 2018, the former "Payments received" item is recognized under "Contract liabilities".

The resulting figures are shown below:

(in EUR tsd.)	June 30, 2018	Jan. 1, 2018
Trade accounts receivable	39,566	47,191
Contract asset	61,037	48,518
Contract liabilities	27,876	13,395

Of the contractual liabilities as of January 1, 2018 in the amount of 13,395 thousand euros, revenues of 2,504 thousand euros were recognized in the period up to June 30, 2018.

Additional costs for the acquisition of a contract are activated if they are covered by income from the contract and can be clearly assigned to a project. The capitalized costs for the acquisition of contracts are reduced linearly by the consumption of value over the planned project duration.

In addition, through the capitalization of sales commissions, long term intangible assets and contract assets as of June 30, 2018 increased by 3,427 thousand euros (January 1, 2018: 5,143 thousand euros higher). A loss of value of 1,716 thousand euros in the reporting period was recorded.

CONSOLIDATION RANGE

Manz AG's consolidated interim financial statements include all the companies whose financial and operating policy can be either directly or indirectly determined by Manz AG ("controlling relationship"). In addition to Manz AG, the group of consolidated companies includes 14 fully consolidated subsidiaries (December 31, 2017: 16 fully consolidated subsidiaries).

At the end of June 30, 2018, Manz China WuZhong Co. Ltd., Suzhou/PR China and Manz China Shanghai Ltd. (Shanghai), Shanghai/PR China were liquidated. Its assets, liabilities and equity are held by Manz Asia Ltd. Hongkong/PR China.

EXPLANATIONS OF INDIVIDUAL ITEMS IN THE INCOME STATEMENT

OTHER OPERATING INCOME

(in EUR tsd.)	June 30, 2018	June 30, 2017
Exchange rate gains	949	93
Subsidies	286	130
Changes to valuation allowances on receivables	254	203
Income from the reversal of provisions	120	138
Other	827	3,944
Income from the deconsolidation of NICE Solar Energy GmbH, Schwäbisch HaII (formerly Manz CIGS Technology GmbH)	0	34,356
	2,436	38,864

COST OF MATERIALS

(in EUR tsd.)	June 30, 2018	June 30, 2017
Cost of raw materials, consumables and supplies and of purchased merchandise	113,087	67,060
Cost of purchased services	8,026	10,676
	121,113	77,736

OTHER OPERATING EXPENSES

(in EUR tsd.)	June 30, 2018	June 30, 2017
Advertising and travel expenses	3,151	3,495
Other research-related operating expenses	2,995	7,565
Rent and leasing	2,607	2,704
Outgoing freight	1,786	1,726
Appropriation to provisions	1,110	513
Other personnel-related expenses	840	1,038
Legal and consulting costs	832	1,145
Distribution expenses	463	8,140
Valuation allowances for receivables and losses on receivables	316	427
Exchange rate losses	287	1,012
Other	8,270	9,361
	22,657	37,126

EXPLANATIONS OF INDIVIDUAL ITEMS IN THE BALANCE SHEET

INTANGIBLE ASSETS

(in EUR tsd.)	June 30, 2018	June 30, 2017
Licenses, software and similar rights and values	6,096	6,718
Capitalized development costs	19,710	18,680
Activated contract preparation expenses	3,427	0
Goodwill	34,117	33,331
	63,350	58,729

PROPERTY, PLANT AND EQUIPMENT

(in EUR tsd.)	June 30, 2018	June 30, 2017
Land and buildings, including buildings on third-party land	28,681	26,739
Technical equipment and machinery	5,491	4,567
Other equipment, operating and office equipment	2,941	2,952
Prepayments	2,576	3,813
	39,689	38,070

INVENTORIES

(in EUR tsd.)	June 30, 2018	June 30, 2017
Raw materials, consumables, and supplies	42,882	24,062
Work in progress	22,104	19,859
Finished goods and merchandise	12,481	12,754
Prepayments	12,483	5,484
	89,950	62,159

TRADE ACCOUNTS RECEIVABLE

(in EUR tsd.)	June 30, 2018	June 30, 2017
Future receivables from construction contracts	0	48,518
Trade accounts receivable	39,566	47,191
	39,566	95,709

CONTRACT ASSETS

(in EUR tsd.)	June 30, 2018	June 30, 2017
Manufacturing costs, including profit or loss on the construction contracts	231,157	0
Minus advance payments received	–170,120	0
	61,037	0

OTHER CURRENT RECEIVABLES

(in EUR tsd.)	June 30, 2018	June 30, 2017
Tax receivables (not income and income taxes)	7,869	5,658
Personnel receivables	492	510
Other accruals (primarily insurance policies)	1,397	593
Other	4,561	5,509
	14,319	12,270

EQUITY

In the first six months of 2018, the Manz Group purchased 2,267 treasury shares at an average price of 32.68 euros per share (market value of 74,081.05 euros), which were transferred to employees in the context of jubilee benefits and project sharing.

Capital reserves are comprised primarily of contributions from shareholders pursuant to Section 272(2), No. 1 of the Commercial Code, minus financing costs after taxes. Furthermore, this also includes the value of share-based compensation granted to management (including the Managing Board) as a salary component in the form of equity instruments (Performance Share Plan). The increase in capital reserves of 119 thousand euros in the first six months of 2018 relates to the allocation from share-based compensation (Manz Performance Share Plan).

CONTRACT LIABILITIES

(in EUR tsd.)	June 30, 2018	Dec. 31, 2017
Manufacturing costs, including profit or loss on the construction contracts	7,258	0
Minus advance payments received	–35,134	0
	–27,876	0

ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS

The hedging relationships recognized by Manz in accordance with IAS 39 also meet the requirements of IFRS 9.

The following table shows the reconciliation of balance sheet items to the categories of financial instruments, divided according to the carrying amounts and fair values of the financial instruments.

Trade receivables, other current receivables, liquid funds, trade payables, and the majority of other liabilities as set out in IFRS 7 mostly have short remaining terms. The carrying amounts of these financial instruments are therefore assumed to equate approximately to their fair market values.

FAssets (in EUR tsd.)	IAS 39 Classification	IFRS 9 Classification	Book Value Dec. 31, 2017	Book Value Jan. 1, 2018	Book Value June 30, 2018
Other longterm assets	Loans and receivables	At continued acquisition cost	540	540	620
Financial investments	Financial assets available for sale	Profit and loss recognized at fair value in other results (Equity instruments)	23,575	23,575	23,575
Trade receivables	Loans and receivables	At continued acquisition cost	95,709	47,191	39,566
Contract assets	–	–	0	48,518	61,037
Derivative financial instruments	Designated hedge fund instruments	Designated hedge fund instruments	29	29	0
Other current receivables	Loans and receivables	At continued acquisition cost	12,270	12,270	14,319
Cash and cash equivalents	Loans and receivables	At continued acquisition cost	72,209	72,209	44,933
			204,332	204,332	184,050

Carrying Amounts by Measurement Category

Liabilities (in EUR tsd.)

Financial liabilities	At continued acquisition cost	At continued acquisition cost	40,305	40,305	53,129
Liabilities from goods and services	At continued acquisition cost	At continued acquisition cost	117,509	117,509	101,181
Derivative financial instruments	Designated hedge fund instruments	Designated hedge fund instruments	7	7	268
Other liabilities
	Fair value through profit or loss (FVTPL)	Fair value through profit or loss (FVTPL)	3,422	3,422	3,425
	At continued acquisition cost	At continued acquisition cost	10,020	10,020	14,778
			171,263	171,263	172,781

Assets as of June 30, 2018

IFRS 9 – Financial assets Carrying Amounts by Measurement Category

(in EUR tsd.)	Fair value	At continued acquisition cost	Profit and loss recognized at fair value in other results (Equity instruments)	Designated hedge fund instruments	Not in the application area IFRS 7, IFRS 9	Carrying amount June 30, 2018
Other longterm assets	620	620	–	–	–	620
Financial investments	23,575	–	23,575	–	–	23,575
Trade receivables	39,566	39,566	–	–	–	39,566
Contract assets	61,037	61,037	–	–	–	61,037
Derivative financial instruments	0	0	–	–	–	0
Other current receivables	14,319	6,450	–	–	7,869	14,319
Cash and cash equivalents	44,933	44,933	–	–	–	44,933
	184,050	152,606	23,575	0	7,869	184,050

Liabilities as of June 30, 2018

IFRS 9 –

Financial liabilities Carrying Amounts by Measurement Category

(in EUR tsd.)	Fair value	At fair value through profit or loss	Valued at amortized cost	Recognized value according to IAS 17	Designated hedge fund instruments	Not in the application area IFRS 7, IFRS 9	Carrying amount June 30, 2018
Financial liabilities	53,129	–	53,129	–	–	–	53,129
Liabilities from goods and services	101,181	–	101,181	–	–	–	101,181
Derivative financial instruments	268	–	–	–	268	–	268
Other liabilities	18,203	3,425	3,157	–	–	11,621	18,203
	172,781	3,425	157,467	0	268	11,621	172,781

Assets as of December 31, 2017

IAS 39 –

Financial assets Carrying Amounts by Measurement Category

application area IFRS 7, IAS 39	Carrying amount Dec. 31, 2017
–	540
–	23,575
48,518	95,709
–	29
5,657	12,270
–	72,209
54,175	204,332
	Not in the

Liabilities as of Dec. 31, 2017

IAS 39 –

Financial liabilities Carrying Amounts by Measurement Category

(in EUR tsd.)	Fair value	At fair value through profit or loss	Valued at amortized cost	Recognized value according to IAS 17	Designated hedge fund instruments	Not in the application area IFRS 7, IAS 39	Carrying amount Dec. 31, 2017
Financial liabilities	40,305	–	40,305	–	–	–	40,305
Trade receivables	117,509	–	117,509	–	–	–	117,509
Derivative financial instruments	7	–	–	–	7	–	7
Other liabilities	13,442	3,422	1,826	–	–	8,194	13,442
	171,263	3,422	159,640	–	7	8,194	171,263

VALUATION CLASSES

The Group uses the following hierarchy to determine and present the fair market values of financial instruments for each measurement method:

• Level 1: (unadjusted) prices for identical assets or liabilities quoted on active markets.
• Level 2: input data that is observable either directly (i.e. as prices) or indirectly (i.e. derived from prices) for the asset or liability and that does not represent any quoted price as described in Level 1.
• Level 3: input data that is not based on observable market data for the measurement of the asset or liability (unobservable input data).

The financial assets and liabilities recognized by Manz at fair market value break down as follows in the fair market value hierarchy levels:

ASSIGNED TO FAIR MARKET VALUE HIERARCHY STEPS

	Fair Value Hierarchy
(in EUR tsd.)	June 30, 2018	Step 1	Step 2	Step 3
Assets at fair value – affecting net income
Derivatives with on-balance-sheet hedging relationship	0	–	–	–
Assets at fair value – not affecting net income
Financial investments	23,575	–	–	23,575
Liabilities at fair value – affecting net income
Conditional purchase price liabilities	3,425	–	–	3,425
Liabilities at fair value – not affecting net income
Derivatives with on-balance-sheet hedging relationship	268	–	268	–

	Fair Value Hierarchy
(in EUR tsd.)	Dec. 31, 2017	Step 1	Step 2	Step 3
Assets at fair value – affecting net income
Derivatives with on-balance-sheet hedging relationship	29	–	29	–
Assets at fair value – not affecting net income
Financial investments	23,575	–	–	23,575
Liabilities at fair value – affecting net income
Conditional purchase price liabilities	3,422	–	–	3,422
Liabilities at fair value – not affecting net income
Derivatives with on-balance-sheet hedging relationship	7	–	7	–

The fair value of the contingent purchase price installment from the acquisition of Kleo Halbleitertechnik GmbH classified in level 3 of the measurement hierarchy increased by 3 thousand euros as of June 30, 2018. The calculation is based on contractual agreements and internal company planning data.

RELATIONSHIPS WITH RELATED COMPANIES AND RELATED PERSONS

IAS 24 requires disclosures of relationships, transactions and outstanding balances (including obligations) with related parties.

Accordingly, the Supervisory Board and the executive Board of Manz AG, including their family members, have been identified as related parties. It also includes companies that are controlled by a related party or are under the joint control of a related company or are involved with a related party, to the related company. This circle includes the 2H.IM Executive Interim Management GmbH, Langweid. Services were received from 2H.IM Executive Interim Management GmbH, Langweid up to June 30, 2018 in the amount of 65 thousand euros.

CONTINGENT LIABILITIES AND OTHER FINANCIAL COMMITMENTS

There were no major changes to other financial commitments and contingencies, or connections to related businesses and parties in the first six months of 2018, compared to December 31, 2017.

SEGMENT REPORTING FOR DIVISIONS

As of June 30, 2018
(in EUR tsd.)
	Solar	Electronics	Energy Storage	Contract Manu facturing	Service	Consolidation	Group
Revenues with third parties
Q1 + Q2 2018	69,341	30,010	13,812	49,941	10,428	0	173,532
Q1 + Q2 2017 Revenues with other segments	16,447	42,073	11,975	40,367	8,738	0	119,600
Q1 + Q2 2018	0	2,758	0	0	0	–2,758	0
Q1 + Q2 2017	0	0	0	0	0	0	0
Total revenues
Q1 + Q2 2018	69,341	32,768	13,812	49,941	10,428	–2,758	173,532
Q1 + Q2 2017	16,447	42,073	11,975	40,367	8,738	0	119,600
EBITDA
Q1 + Q2 2018	7,056	–6,455	–4,782	855	2,858	–269	–738
Q1 + Q2 2017	27,853	–9,050	–10,323	1,258	2,627	0	12,365
Depreciation
Q1 + Q2 2018	525	1,655	1,453	583	110	0	4,325
Q1 + Q2 2017	1,705	1,959	1,131	553	63	0	5,411
EBIT
Q1 + Q2 2018	6,532	–8,110	–6,236	272	2,748	–268	–5,063
Q1 + Q2 2017	26,148	–11,009	–11,454	705	2,564	0	6,954

SEGMENT REPORTING FOR REGIONS

As of June 30, 2018

(in EUR tsd.)	Third-party revenues by customer location
Germany
Q1 + Q2 2018	16,085
Q1 + Q2 2017	13,401
Rest of Europe
Q1 + Q2 2018	20,728
Q1 + Q2 2017	20,028
China
Q1 + Q2 2018	91,067
Q1 + Q2 2017	50,417
Taiwan
Q1 + Q2 2018	12,869
Q1 + Q2 2017	12,659
Rest of Asia
Q1 + Q2 2018	2,072
Q1 + Q2 2017	2,172
USA
Q1 + Q2 2018	30,455
Q1 + Q2 2017	20,568
Other regions
Q1 + Q2 2018	256
Q1 + Q2 2017	355
Group
Q1 + Q2 2018	173,532
Q1 + Q2 2017	119,600

The Manz Group has five business segments - Solar, Electronics, Energy Storage, Contract Manufacturing and Service as well as an international presence. This structure corresponds to the business activities of Manz and is therefore the basis of management control by management.

All revenues come from customer contracts.

KEY EVENTS OF PARTICULAR IMPORTANCE OCCURRING AFTER THE END OF THE REPORTING PERIOD

On July 26, 2018, Manz AG announced that Eckhard Hörner-Marass would be leaving the Company's Managing Board at the end of 2018 at his own request. Mr. Hörner-Marass has been a member of the Managing Board since October 2016 and Chairman of the Managing Board since July 2017. He has agreed with the Supervisory Board on a one-year reduction in his term of office, which originally ran until December 31, 2019. The Supervisory Board intends to appoint Managing Board member Martin Drasch as the future Chairman of the Managing Board.

FURTHER DISCLOSURES

EMPLOYEES

As of June 30, 2018, the Manz Group had an average of 1,719 employees (June 30, 2017: 1,733 employees).

MANAGING BOARD

Eckhard Hörner-Marass, Dipl.-Ing. (FH), Chief Executive Officer Martin Drasch, Dipl.-Ing. (FH), Chief Operations Officer Manfred Hochleitner, Dipl.-Math., Chief Financial Officer (from July 1, 2018) Gunnar Voss von Dahlen, Dipl.-Kfm., Chief Financial Officer (until March 26, 2018)

RESPONSIBILITY STATEMENT

To the best of our knowledge, and in accordance with the applicable accounting principles for interim financial reporting, the condensed consolidated interim financial statements give a true and fair view of the Manz Group's financial position, financial performance and cash flows, and the Manz Group's interim management report includes a true and fair view of the trends and performance of the business and the position of the Group, as well as a description of the principal opportunities and risks associated with the Group's expected development in the remaining fiscal year.

Reutlingen, August 14, 2018

The Executive Board of Manz AG

Eckhard Hörner-Marass Martin Drasch Manfred Hochleitner

Publisher

IMPRINT

Manz AG Steigaeckerstrasse 5 72768 Reutlingen Tel.: +49 (0) 7121 9000-0 Fax: +49 (0) 7121 9000-99 info@manz.com www.manz.com

Editor

cometis AG Unter den Eichen 7/Gebaeude D 65195 Wiesbaden Tel.: +49 (0) 611 20 585 5-0 Fax: +49 (0) 611 20 585 5-66 www.cometis.de

Design

Art Crash Werbeagentur GmbH Weberstrasse 9 76133 Karlsruhe Tel.: +49 (0) 721 94009-0 Fax: +49 (0) 721 94009-99 info@artcrash.com www.artcrash.com

MANZ AG

Steigaeckerstrasse 5 72768 Reutlingen Tel.: +49 (0) 7121 9000-0 Fax: +49 (0) 7121 9000-99 info@manz.com www.manz.com