Manz AG — Interim / Quarterly Report 2018

May 14, 2018

MANZ AG AT A GLANCE

Overview of Consolidated Results

(in million euros)	January 1 to March 31, 2018	January 1 to March 31, 2017
Revenues	86.1	47.6
Total operating revenues	92.6	51.4
EBITDA	–0.9	23.2
EBITDA margin (in %)	–	45.1
EBIT	–3.0	20.0
EBIT margin (in %)	–	39.0
EBT	–3.4	19.5
Consolidated net profit	–4.3	18.8
Earnings per share (in EUR)	–0.58	2.43
Cash flow from operating activities	–8.8	1.0
Cash flow from investing activities	–2.8	–3.6
Cash flow from financing activities	5.2	–0.6

2018 Financial Calendar

July 3, 2018 2018 Annual General Meeting August 14, 2018 Publication of 2018 6-Month Report November 13, 2018 Publication of 2018 9-Month Report

MANZ AG STOCK

Stock Key Data and Performance Indicators January 1 to March 31, 2018

Ticker/ISIN Capital stock	M5Z/DE000A0JQ5U3 7,744,088
Closing price (March 29, 2018)*	31.30 EUR
Annual high/Annual low*	35.75 EUR/30.50 EUR
Market performance – absolute	–0.76%
Market performance – TecDAX	–1.37%
Market capitalization (March 30, 2018)	242.39 Mio. EUR

* Closing prices on Deutsche Börse AG's XETRA trading system

Chart Showing Manz AG Stock (XETRA, in EUR)

Shareholder Structure

MANZ AG Report for the first three months of 2018

BUSINESS PERFORMANCE

In the Solar segment, Manz AG received a payment of around 43 million euros at the beginning of the year in conjunction with the CIGS bulk orders. Since the start of the project in 2017, Manz AG has received about 50% of the agreed total payments of 263 million euros for the 44 MW CIGS research line (CIGSlab) and the 306 MW CIGS turnkey line (CIGSfab) for serial production of CIGS thin film solar modules, in partial payments. The payment received in January, 2018 was made according to agreement, once contractually defined milestones in the completion of CIGSfab were successfully met. Revenue and earnings in the first quarter of 2018 were at the expected levels.

With orders of around 20 million US dollars for display production systems, the Electronics segment registered a strong start to the year in January 2018. Manz AG's wet chemical equipment for display production impressed existing customers such as Xianyang Cai-Hong Optoelectronics Technology Co. Ltd. ("CHOT"), a major Chinese flat panel display 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. Revenue and earnings at the end of the first quarter were below the same period in the previous year, which was boosted by a large order. In the Electronics segment also, where business activity is strengthening in the target sectors, development in the first quarter of 2018 is in line with full-year projections.

Revenue Distribution by Region January 1 to March 31, 2018

In the Energy Storage segment, Manz AG successfully advanced the business expansion in early 2018 with standardized production systems. In January alone, Manz received three orders for the flexible Battery Laser System BLS 500 from customers in the power tools and automotive/e-mobility sectors, as well as an order for a pilot line for battery cell assembly. The total volume of the orders was roughly 7 million euros. This positive trend also continued in the subsequent period. Revenue in the first quarter of 2018 was accordingly above the previous year's level as projected, with continued negative, although significantly improved, earnings as expected.

Revenues by Business Segment January 1 to March 31, 2018

In addition, Talus Manufacturing Ltd. in Taiwan also contributed to a significant increase in revenues and earnings in the Contract Manufacturing segment, while the service business registered revenues at the previous year's level with a decreased contribution to earnings during the first three months of 2018.

Incoming orders as of March 30, 2018 amounted to 87.6 million euros, following 292.7 million euros in the previous year. The previous year's amount was significantly affected by the CIGS order in the amount of 263.0 million euros. The value of orders on hand on the same reporting date was 226.4 million euros (March 30, 2017: 319.8 million euros).

BUSINESS REPORT

Revenue trend per quarter

• Total sales significantly above the previous year with growth of 80.8%

• Growth impulses from the segments Solar, Energy Storage and Contract Manufacturing

Earnings before interest, taxes, depreciation, and amortization (EBITDA) per quarter

• Q1 2017 positively influenced in particular by the one-time effect (34.4 million euros) of the sale of NICE Solar Energy GmbH (previously Manz CIGS Technology GmbH)

• Negative earnings contribution, as projected, from the segments Electronics and Energy Storage due to higher R&D expenses and investments in market development

Earnings before interest and taxes (EBIT) per quarter

• EBIT 2018 significantly improved compared to the previous year's adjusted EBIT¹ of –11.5 million euros
• Depreciation in Q1 2018 of 2.1 million euros around 1 million euros below the previous year's level because NICE Solar Energy GmbH (previously Manz CIGS Technology GmbH) is excluded from the scope of consolidation as of April 2017.
• EBIT development in Q1 2018 in line with the expectations of the Managing Board for progress towards meeting full-year projections

¹ Adjusted effects refer to a positive, one-time effect on net income in the amount of 34.4 million euros from the sale and contribution of NICE Solar Energy GmbH (previously Manz CIGS Technology GmbH) to NICE PV Research Ltd. The expenses from the operation of Manz CIGS Technology GmbH in the first three months of the year 2017, however, amounted to 2.8 million euros.

EVENTS AFTER THE BALANCE SHEET DATE

On April 6, 2018, Manz AG reported a cable fire at the Taiwanese site in Taoyuan City. No one was injured in the fire, which was brought under control and extinguished quickly by the local fire department. Along with some parts of the building, some of the equipment used for wet chemical production processes and the semiconductor industry was in some cases severely damaged. Manz AG's insurance company was immediately informed of the incident. Manz AG expects damages in the single-digit million euros range according to the current status of the investigation. Due to the temporary production stoppage resulting from the fire, Manz AG expects revenue losses in the Contract Manufacturing segment in the second quarter of 2018 which it should be possible to offset over the entire fiscal year.

Aside from this, no other events have occurred after the end of the reporting period that would have had a significant impact on the financial position, financial performance and cash flows.

FORECAST REPORT

Assuming unchanged conditions, the Managing Board expects revenue growth for the current fiscal year between 10% and 14% over 2017 with a slightly improved EBIT excluding one-time 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 segments Electronics and Energy Storage 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.

CONSOLIDATED INCOME STATEMENT

(in EUR tsd.)

	January 1 to March 31, 2018	January 1 to March 31, 2017
Revenues	86,100	47,618
Inventory changes, finished and unfinished goods	5,179	908
Work performed by the entity and capitalized	1,314	2,884
Total operating revenues	92,594	51,410
Other operating income	1,529	35,628
Cost of materials	–64,791	–33,696
Gross profit	29,331	53,342
Personnel expenses	–19,155	–19,750
Other operating expenses	–11,096	–10,425
EBITDA	–920	23,167
Amortization/Depreciation	–2,070	–3,141
Operating earnings (EBIT)	–2,990	20,026
Finance income	42	25
Finance costs	–425	–587
Earnings before taxes (EBT)	–3,374	19,463
Income taxes	–926	–662
Consolidated net profit	–4,300	18,801
of which attributable to minority interests	195	–10
of which attributable to shareholders of Manz AG	–4,495	18,811
Weighted average number of shares	7,744,088	7,744,088
Earnings per share (diluted = undiluted) in EUR per share	–0.58	2.43

CONSOLIDATED BALANCE SHEET

ASSETS (in EUR tsd.)

	March 31, 2018	March 31, 2017
Non-current assets
Intangible assets	62,913	58,729
Property, plant, and equipment	38,655	38,070
Financial assets	23,575	23,575
Other non-current assets	537	540
Deferred tax assets	4,402	4,934
	130,083	125,848
Current assets
Inventories	80,730	62,159
Trade receivables	32,149	95,709
Contract assets	34,319	0
Current income tax receivables	75	4
Derivative financial instruments	40	29
Other current assets	9,991	12,271
Cash and cash equivalents	65,755	72,209
	223,058	242,380
Total assets	353,141	368,228

CONSOLIDATED BALANCE SHEET

LIABILITIES AND SHAREHOLDERS' EQUITY

(in EUR tsd.)

	March 31, 2018	Dec. 31, 2017
Equity
Issued capital	7,744	7,744
Capital reserve	98,858	98,917
Revenue reserves	26,523	31,018
Other comprehensive income	20,460	20,125
Shareholders of Manz AG	153,585	157,804
Non-controlling interests	5,714	5,549
	159,299	163,353
Non-current liabilities
Non-current financial liabilites	4,581	3,332
Pension provisions	7,412	7,435
Other non-current provisions	2,413	2,716
Other non-current liabilities	264	248
Deferred tax liabilities	3,480	3,480
	18,151	17,211
Current liabilities
Current financial liabilities	40,936	36,973
Trade payables	103,435	117,509
Payments received	0	13,396
Contract liabilities	10,952	0
Current income tax liabilities	772	1,406
Other current provisions	6,325	5,180
Derivative financial instruments	6	7
Other current liabilities	13,264	13,194
	175,691	187,664
Total liabilities	353,141	368,228

CONSOLIDATED CASH FLOW STATEMENT

(in EUR tsd.)

	January 1 to March 31, 2018	January 1 to March 31, 2017
Operating earnings (EBIT)	–2,990	20,026
Depreciation/amortization of fixed assets	2,070	3,141
Increase (+)/decrease (–) in pension provisions
and other non-current provisions	–325	–172
Other non-cash income (–) and expenses (+)	59	0
Gains (–) / losses (+) from disposals of assets	0	3
Increase (-)/decrease (+) in inventories trade receivables, contract assets and other assets	9,476	–20,815
Increase (+)/decrease (–) in trade payables and other liabilities	–15,086	–833
Received (+)/Paid income taxes (–)	–1,630	214
Interest paid	–425	–587
Interest received	42	25
Cash flow from operating activities	–8,810	1,002
Cash receipts from the sale of fixed assets	990	9
Cash payments for investments in intangible assets
and property, plant and equipment Cash flow from investing activities	–3,768 –2,778	–3,580 –3,571
Cash receipts from the assumption of non-current
financial liabilities	1,461	0
Cash payments for the repayment of non-current financial liabilities	–207	–230
Change in current financial liabilities	3,964	–330
Purchase of treasury shares	–2	0
Cash flow from financing activities	5,216	–560
Cash and cash equivalents at the end of the period
Net change in cash and cash equivalents (subtotal 1 – 3)	–6,373	–3,129
Effect of exchange rate movements on cash and cash equivalents	–81	725
Cash and cash equivalents on January 1, 2018	72,209	55,722
Cash and cash equivalents on March 31, 2018	65,755	53,318
Composition of cash and cash equivalents Cash and cash equivalents	65,755	53,318
less restricted cash	–16,634	0
Cash and cash equivalents on March 31, 2018	49,121	53,318

SEGMENT REPORTING

As of March 31, 2018

(in EUR tsd.)
	Solar	Electronics	Energy Storage	Contract Manu facturing	Service	Consoli dation	Group
Revenues with third parties
1. Quartal 2018	35,857	12,548	7,852	25,134	4,709	0	86,100
1. Quartal 2017	1,493	19,653	6,093	15,626	4,753	0	47,618
Revenues with other segments
1. Quartal 2018	0	2,266	0	0	0	–2,266	0
1. Quartal 2017	0	0	0	0	0	0	0
Total revenues
1. Quartal 2018	35,857	14,814	7,852	25,134	4,709	–2,266	86,100
1. Quartal 2017	1,493	19,653	6,093	15,626	4,753	0	47,618
EBITDA
1. Quartal 2018	2,308	–4,830	–1,346	2,454	706	–212	–920
1. Quartal 2017	26,422	–2,834	–2,800	844	1,535	0	23,167
Depreciation
1. Quartal 2018	256	815	696	248	55	0	2,070
1. Quartal 2017	1,253	1,110	473	269	36	0	3,141
EBIT
1. Quartal 2018	2,052	–5,645	–2,042	2,206	651	–212	–2,990
1. Quartal 2017	25,169	–3,944	–3,273	575	1,499	0	20,026

SEGMENT REPORTING FOR REGIONS

As of March 31, 2018

(in EUR tsd.)	Third-party revenues by destination of delivery
Germany
Q1 2018	6,890
Q1 2017	8,316
Rest of Europe
Q1 2018	8,819
Q1 2017	8,427
China
Q1 2018	43,744
Q1 2017	16,898
Taiwan
Q1 2018	6,259
Q1 2017 Rest of Asia	4,614
Q1 2018	1,173
Q1 2017	2,146
USA
Q1 2018	19,183
Q1 2017	6,886
Other Regions
Q1 2018	32
Q1 2017	331
Group
Q1 2018	86,100
Q1 2017	47,618

ACCOUNTING AND VALUATION METHODS

The Manz AG quarterly statement on March 31, 2018 was prepared in accordance with the International Financial Reporting Standards (IFRS) and was largely unchanged from December 31, 2017. What is new 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.

APPLICATION OF IFRS 15

In conjunction with the first-time application of IFRS 15, as of January 1, 2018 trade receivables are presented as contract assets.

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

The resulting figures are shown below:

		January 1, 2018
Contract asset	34,318.98	48,518.00
Contract liability	10,951.90	13,395.63

In addition, through the capitalization of sales commissions non-current intangible assets and contract assets as of March 31, 2018 increased by 4,285 thousand euros (January 1, 2018: 5,143 thousand euros higher).

APPLICATION OF IFRS 9

The application of IFRS 9 results in a different measurement of financial assets. Manz uses the simplified impairment 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 effects of the application of IFRS 9 in the consolidated financial statements are insignificant.

IMPRINT

Publisher

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

Investor Relations cometis AG Claudius Krause Unter den Eichen 7 65195 Wiesbaden Phone +49 (0) 611 20 585 5-0 Fax +49 (0) 611 20 585 5-66 krause@cometis.de www.cometis.de

Design

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

The quarterly report for the first quarter is also available in English. In the case of discrepancies, the German version shall prevail.

Digital versions of the Manz AG annual report and the quarterly reports are also available on the Internet under "Investor Relations" in the "Publications" section.

MANZ AG

Steigäckerstraße 5 72768 Reutlingen Phone +49 (0) 7121 9000-0 Fax +49 (0) 7121 9000-99 info@manz.com www.manz.com