Manz AG — Interim / Quarterly Report 2020

Nov 9, 2020

9-MO NTHRE PORT 2020

MANZ AG AT A GLANCE

Overview of Consolidated Results

January 1 to Sept. 30, 2020	January 1 to Sept. 30, 2019
172.4	198.2
176.0	201.8
17.6	5.8
10.0	2.9
8.2	–7.7
4.7	–3.8
6.4	–9.6
4.0	–11.4
0.52	–1.44
–14.5	–38.3
–5.4	–6.7
17.7	18.3

2020/2021 Financial Calendar

November 16, 2020	Deutsches Eigenkapitalforum, Frankfurt
March 30, 2021	Publication of Annual Report 2020
May 4, 2021	Publication of 2021 3-month financial report
July 7, 2021	2021 Annual General Meeting
August 5, 2021	Publication of 2021 6-month financial report
November 9, 2021	Publication of 2021 9-month financial report

For the sake of better readability, we consistently avoid gender-differentiating formulations (e.g. "his/her" or "he/she"). The corresponding terms apply to all genders for the purposes of equal rights. This is done solely for editorial purposes and does not imply a judgment of any kind.

MANZ AG STOCK

Stock Key Data and Performance Indicators Jan. 1 to Sept. 30, 2020

Ticker/ISIN Capital stock	M5Z/DE000A0JQ5U3 7,744,088
Closing price (Sept. 30, 2020)*	24.20 EUR
Annual high/Annual low*	24.40 EUR/10.10 EUR
Market performance – absolute	10.25%
Market performance – TecDAX	0.22%
Market capitalization (Sept. 30, 2020)	187.4 Mio. EUR

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

Chart Showing Manz AG Stock (XETRA, in EUR)

Shareholder Structure

* Dieter Manz 12.32%, Ulrike Manz 5.44%, Stephan Manz 5.16%, Laura Manz 5.16%

MANZ AG 9-Month Report 2020

FOREWORD FROM THE MANAGING BOARD

Dear Shareholders,

The Covid-19 pandemic continues to pose major political, social and economic challenges. We have also been closely monitoring developments since the beginning and devised methods early on to protect our employees and our business. A glance at the figures shows that our measures were correct and appropriate in hindsight: We are able to report positive consolidated net profits for the third quarter in succession despite temporary facility closures in Germany and Italy in March and April.

However, the revenue trend has lagged behind original expectations due to the effects of the Covid-19 pandemic. Projects in the segments Solar and Electronics were delayed during the course of the year, in some cases considerably, and contract awards for planned projects in the segment Energy Storage were likewise pushed back in some cases. This was mainly due to worldwide travel restrictions and delayed investment decisions on account of the Covid-19 pandemic. Accordingly, some of the revenues that had already been budgeted for this financial year will not be realized until 2021. As a result, we are now expecting a slight decrease in revenue for the current financial year compared to the previous year. The decisive factor for us, however, is that we continue to expect profitable business performance and we therefore continue to anticipate a positive EBIT margin in the low to mid-single-digit percentage range.

Manz AG's positive earnings growth in such a difficult market environment so profoundly influenced by the Corona virus crisis confirms the effectiveness of the long-term optimization process and forward-looking strategic developments we have undertaken in preceding years. In the segment Energy Storage, in particular, we are now able to benefit from the global tailwinds pushing the future trend towards e-mobility. Our outstanding expertise and efficient project management in this segment have been confirmed by explosive growth in order intakes, especially in the third quarter of 2020. These factors attest to the high levels of confidence among our new and existing customers. Manz AG continues to be perceived as a reliable partner in the segment Contract Manufacturing, as well. For example, Talus Manufacturing Ltd. was not the only business to exhibit very positive performance over the past nine months.

Despite uncertainties that continue to prevail with regard to the financial performance of many companies as a result of the ongoing – and once again intensifying Covid-19 pandemic – we believe that Manz AG remains well-positioned to continue delivering positive business performance beyond 2020. We hope that you, as our valued shareholders, will continue to accompany us along this path – and stay healthy!

The Managing Board of Manz AG

Martin Drasch Manfred Hochleitner Jürgen Knie

MANZ AG 9-Month Report 2020

BUSINESS PERFORMANCE

Manz AG was able to record positive consolidated net profit for the first three quarters of the 2020 financial year despite macroeconomic challenges resulting from the Covid-19 pandemic, which, among other things, have led to project delays and postponements in the awarding of projects in our segments Solar, Electronics and Energy Storage. Positive development of the segments Energy Storage and Contract Manufacturing was the main driver in this context. Whereas revenues in the first nine months of 2020 amounted to EUR 172 million, down 13% from the same period of the previous year, earnings before interest and taxes (EBIT) improved significantly by nearly EUR 16 million to reach EUR 8.2 million (previous year: EUR –7.7 million).

The focus within the segment Solar for the first nine months of financial year 2020 continued to be on the implementation of the two major CIGS orders from China Energy Investment Corporation Limited and Shanghai Electric. Manz was able to install the majority of the machines at the CIGSfab turnkey facility at the beginning of the year, but had to interrupt further work soon thereafter due to the Covid-19 pandemic. Despite these difficulties, Manz AG remained in close contact with the client and was able to resume the installation of additional machines during the third quarter to a limited extent. The start of installation for the CIGSlab research facility was likewise delayed as a result of Covid-19. It is foreseeable that full completion of the two CIGS orders will be postponed until the 2021 financial year due to delays in both projects.

Revenues by Business Segment January 1 to September 30, 2020

Manz AG reported only fair performance in the segment Electronics on the whole. Demand for machines for electronic components declined noticeably in the first nine months, partly due to the Covid-19 pandemic, after the strong business performance in this segment had benefited from the completion of a major order in the area of displays in the previous year. However, business with customers in the assembly automation segment showed positive performance. For example, the automotive supplier TE Connectivity, an established customer in the field of cell contacting systems, plans to further expand its successful collaboration with Manz. The final contract award for the LOI signed at the end of the third quarter for a follow-up order in the lower double-digit million-euro range is expected in the fourth quarter of 2020.

The segment Energy Storage exhibited very positive performance during the first nine months of the financial year. For example, we reported numerous large-scale orders in the high double-digit million-euro range overall. AKASOL AG, a German manufacturer of battery systems for hybrid and fully electric commercial vehicles, placed orders for two module production lines for the production of lithium-ion battery modules in Germany and the United States. In addition, Manz AG received a follow-up order from a leading international battery manufacturer for an upgrade to existing production lines and the installation of additional production lines intended to significantly increase existing production capacity. Manz AG will be working on a pilot production line for stacked li-ion pouch cells for electric vehicles in conjunction with InoBat Auto, a Slovakian manufacturer of li-ion batteries. If the pilot project will be carried out successfully, InoBat plans to gradually expand its production capacities to an annual capacity of 10 GWh by 2024. The management expects growth in the segment Energy Storage to remain strong beyond 2020 in light of high incoming order levels.

While the segment Service (maintenance and upgrade of machines and assemblies) performed largely in line with expectations, the segment Contract Manufacturing made a significant contribution to the profitable result for the first three quarters of financial year 2020. This was largely due to a positive contribution by Talus Manufacturing Ltd. In addition, however, we also concluded a long-term cooperation agreement with a leading German manufacturer in the electronics industry at Manz AG's Slovakian location. A cooperation agreement with another leading semiconductor specialist was also successfully launched at the Suzhou, China site.

Revenue Distribution by Region January 1 to September 30, 2020

Manz AG's segments performed in line with the Managing Board's full-year expectations with the exception of project delays in the segments Solar and Electronics. Manz AG's prospects for the future remain positive in light of our positive earnings development. In addition, the strong order situation continues to make a contribution. Incoming orders as of September 30, 2020, rose to EUR 181.9 million from EUR 128.7 million in the previous year. The volume of orders on hand as of the same reporting date rose to EUR 177.0 million (September 30, 2019: EUR 140.6 million).

BUSINESS REPORT

Revenue trend per quarter

• Revenues after three quarters around 26.4% below previous year; in Q3, revenue decrease of 23.4% compared to Q2 2020.
• Revenues from Solar and Electronics dampened due to project delays caused by the Corona virus crisis
• Shifts in revenue are partially offset by strong performance in the segment Energy Storage: at EUR 42.1 million, revenues almost doubled compared to the same period last year (9M 2019: EUR 23.2 million)

• At 10.0%, the EBITDA margin more than tripled compared to the same period in the previous year (9M 2019: 2.9%)
• Significantly improved profitability in the segments Electronics and Energy Storage is greatly contributing to improvements in earnings
• In the segment Contract Manufacturing, Talus Manufacturing Ltd. continues to make a positive contribution to earnings thanks to its strong position in the semiconductor market

Earnings before interest and taxes (EBIT) per quarter

• Significantly improved EBIT of EUR 8.2 million (9M 2019: EUR –7.7 million)
• The segment Solar has dampened earnings by EUR –5.9 million on account of Covid-19-related project delays
• Positive EBIT in the segments Electronics and Energy Storage that had been significantly negative in the previous year – thanks to efficiency increases and improved project structures

EVENTS AFTER THE BALANCE SHEET DATE

No further events took place after the end of the reporting period that would have had a significant impact on our financial position, financial performance or cash flows.

FORECAST REPORT

Manz AG's Managing Board has corrected its previous revenue forecast as a result of overall economic trends resulting from the Covid-19 pandemic and ensuing delays in the completion of some projects. Scheduled project completions could not be achieved as planned contrary to original expectations. This has led to a time lag in revenue generation. Accordingly, the Managing Board now expects revenues for the 2020 financial year to be slightly below the previous year's level, having previously assumed a slight to moderate increase in revenues. Forecasts call for an EBITDA margin in the mid-single-digit percentage range and an EBIT margin in the low-single-digit percentage range for the 2020 financial year.

CONSOLIDATED INCOME STATEMENT

	1st to 3rd Quarter (in EUR tsd.)		3rd Quarter (in EUR tsd.)
	January 1 to Sept. 30, 2020	January 1 to Sept. 30, 2019	July 1 to Sept. 30, 2020	July 1 to Sept. 30, 2019
Revenues	172,386	198,168	48,069	65,383
Inventory changes, finished and unfinished goods	–837	–152	149	–2,360
Work performed by the entity and capitalized	4,464	3,792	1,960	2,050
Total operating performance	176,013	201,809	50,178	65,072
Other operating income	4,605	6,328	1,422	1,185
Material expenses	–96,348	–126,364	–26,605	–41,991
Personnel expenses	–54,006	–54,798	–16,426	–17,997
Other operating expenses	–21,962	–26,296	–7,038	–8,270
Share of profit (loss) of associates	9,280	5,076	3,985	2,053
EBITDA	17,582	5,755	5,517	52
Amortization/depreciation	–9,353	–13,444	–2,937	–4,310
EBIT	8,230	–7,689	2,580	–4,258
Finance income	47	43	14	13
Finance costs	–1,849	–1,915	–849	–666
Earnings before taxes (EBT)	6,428	–9,560	1,744	–4,911
Income taxes	–2,386	–1,789	–23	–979
Consolidated net profit	4,042	–11,350	1,721	–5,889
thereof attributable to non-controlling interests	–20	–166	–3	–37
thereof attributable to shareholders of Manz AG	4,063	–11,183	1,724	–5,853
Weighted average number of shares	7,744,088	7,744,088	7,744,088	7,744,088
Earnings per share (diluted = undiluted) in EUR per share	0.52	–1.44	0.22	–0.76

CONSOLIDATED BALANCE SHEET

ASSETS (in EUR tsd.)

	Sept. 30, 2020	Dec. 31, 2019
Non-current assets
Intangible assets	60,335	60,849
Property, plant and equipment	41,180	44,006
Investment in an associate	30,321	21,382
Financial assets	11,700	11,700
Other non-current assets	1,083	1,256
Deferred tax assets	6,139	5,651
	150,760	144,844
Current assets
Inventories	36,480	35,739
Trade receivables	30,238	42,812
Contract assets	70,558	59,939
Current income tax receivables	456	288
Derivative financial instruments	0	10
Other current assets	14,708	13,892
Cash and cash equivalents	41,739	44,005
	194,178	196,685
Total assets	344,937	341,528

CONSOLIDATED BALANCE SHEET

SHAREHOLDERS' EQUITY AND LIABILITIES (in EUR tsd.)

	Sept. 30, 2020	Dec. 31, 2019
Equity
Issued capital	7,744	7,744
Capital reserves	42,824	42,545
Retained earnings	74,452	70,390
Accumulated other comprehensive income	10,342	11,457
Shareholders of Manz AG	135,362	132,136
Non-controlling interests	878	275
	136,240	132,411
Non-current liabilities
Non-current financial liabilities	17,283	728
Non-current financial liabilities from leases	11,165	12,268
Pension provisions	6,792	7,202
Other non-current provisions	2,951	2,659
Other non-current liabilities	0	7
Deferred tax liabilities	6,921	6,462
	45,112	29,325
Current liabilities
Current financial liabilities	61,901	57,185
Current financial liabilities from leases	3,433	3,329
Trade payables	42,902	57,407
Contract liabilities	30,137	35,774
Current income tax liabilities	2,290	602
Other current provisions	10,119	10,693
Other current liabilities	12,804	14,803
	163,586	179,793
Total liabilities	344,937	341,528

CONSOLIDATED CASH FLOW STATEMENT

(in EUR tsd.)

	Jan. 1 to Sept. 30, 2020	Jan. 1 to Sept. 30, 2019
Net profit/loss after taxes	4,042	–11,350
Amortization/depreciation	9,353	13,444
Increase (+)/decrease (–) of pension provisions
and other non-current provisions	–117	–223
Interest income (–) and expenses (+)	1,802	1,871
Taxes on income and earnings	2,386	1,789
Other non-cash income (–) and expenses (+)	278	158
Gains (–)/losses (+) from disposal of assets	10	17
Share of profit/loss of associates	–9,280	–5,076
Increase (–)/decrease (+) in inventories, trade receivables, contract assets and other assets	–1,333	–24,194
Increase (+)/decrease (–) in trade payables, contract liabilities and other liabilities	–18,949	–11,031
Received (+)/Paid income taxes (–)	–866	–1,801
Interest paid	–1,849	–1,915
Interest received	47	43
Cash flow from operating activities	–14,475	–38,266
Cash receipts from the sale of fixed assets	200	411
Cash payments for the investments in intangible assets and property, plant and equipment	–5,298	–5,873
Changes in investments on financial assets	–255	–1,275
Cash flow from investing activities	–5,353	–6,737
Cash receipts from the assumption of non-current financial liabilities	17,084	609
Cash payments for the repayment of non-current financial liabilities	–536	0
Cash receipts from the assumption of current financial liabilities	8,330	20,538
Cash payments for the repayment of current financial liabilities	–3,614	–184
Purchase of treasury shares	0	–2
Cash payment for lease liabilities	–3,567	–2,693
Cash flow from financing activities	17,697	18,268
Cash and cash equivalents at the end of the period
Net change in cash funds (subtotal 1–3)	–2,131	–26,736
Effect of exchange rate movements on cash and cash equivalents	–129	144
Credit risk allowance on bank deposit	–6	324
Cash and cash equivalents on January 1, 2020	44,005	51,006
Cash and cash equivalents on September 30, 2020	41,739	24,739
Composition of cash and cash equivalents
Cash and cash equivalents	41,739	24,739
Cash and cash equivalents as of September 30, 2020	41,739	24,739

SEGMENT REPORTING FOR DIVISIONS

As of September 30, 2020

(in EUR tsd.)	Solar	Electronics	Energy Storage	Contract Manu facturing	Service	Consoli dation	Group
Revenues with third parties Jan. 1 to Sept. 30, 2020	17,569	68,434	42,076	30,923	13,382	0	172,386
Jan. 1 to Sept. 30, 2019	38,987	91,644	23,154	29,608	14,774	0	198,168
Revenues with other segments
Jan. 1 to Sept. 30, 2020 Jan. 1 to Sept. 30, 2019	0 0	260 –18	0 0	0 0	0 0	–260 18	0 0
Total revenues
Jan. 1 to Sept. 30, 2020	17,569	68,694	42,076	30,923	13,382	–260	172,386
Jan. 1 to Sept. 30, 2019	38,987	91,626	23,154	29,608	14,774	18	198,168
Share of profit (loss) of an associate
Jan. 1 to Sept. 30, 2020	0	0	0	9,280	0	0	9,280
Jan. 1 to Sept. 30, 2019	0	0	0	5,076	0	0	5,076
EBITDA
Jan. 1 to Sept. 30, 2020	–3,920	3,507	5,511	12,291	256	–63	17,582
Jan. 1 to Sept. 30, 2019	3,328	–1,271	–5,895	7,548	1,983	62	5,755
Amortization/depreciation
Jan. 1 to Sept. 30, 2020	1,998	3,446	2,793	601	514	0	9,353
Jan. 1 to Sept. 30, 2019	2,914	6,303	3,061	616	549	0	13,444
EBIT
Jan. 1 to Sept. 30, 2020	–5,918	61	2,718	11,690	–259	–63	8,230
Jan. 1 to Sept. 30, 2019	414	–7,574	–8,957	6,931	1,434	63	–7,689
Financial results
Jan. 1 to Sept. 30, 2020	–164	–618	–498	–158	–365	0	–1,802
Jan. 1 to Sept. 30, 2019	–244	–744	–375	–194	–314	0	–1,871
Earnings before taxes (EBT)
Jan. 1 to Sept. 30, 2020	–6,082	–557	2,221	11,533	–624	–63	6,428
Jan. 1 to Sept. 30, 2019	169	–8,318	–9,331	6,737	1,120	63	–9,560
Income taxes Jan. 1 to Sept. 30, 2020	–86	–255	–735	–434	–875	0	–2,386
Jan. 1 to Sept. 30, 2019	–310	–244	–300	–279	–656	0	–1,789
Consolidated profit or loss
Jan. 1 to Sept. 30, 2020	–6,168	–812	1,486	11,099	–1,499	–63	4,042
Jan. 1 to Sept. 30, 2019	–141	–8,562	–9,632	6,458	464	63	–11,350

SEGMENT REPORTING FOR REGIONS

As of September 30, 2020

(in EUR tsd.)	Third-party revenues by destination of delivery
Germany
Jan. 1 to Sept. 30, 2020	79,129
Jan. 1 to Sept. 30, 2019	35,458
Rest of Europe
Jan. 1 to Sept. 30, 2020	28,919
Jan. 1 to Sept. 30, 2019	36,062
China
Jan. 1 to Sept. 30, 2020	43,364
Jan. 1 to Sept. 30, 2019	100,531
Taiwan
Jan. 1 to Sept. 30, 2020	8,337
Jan. 1 to Sept. 30, 2019	8,603
Rest of Asia
Jan. 1 to Sept. 30, 2020	6,410
Jan. 1 to Sept. 30, 2019	6,557
USA Jan. 1 to Sept. 30, 2020	5,668
Jan. 1 to Sept. 30, 2019	10,956
Other Regions
Jan. 1 to Sept. 30, 2020	560
Jan. 1 to Sept. 30, 2019	0
Group
Jan. 1 to Sept. 30, 2020	172,386
Jan. 1 to Sept. 30, 2019	198,168

IMPRINT

Publisher

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

Investor Relations

Manz AG Axel Bartmann abartmann@manz.com

cometis AG Claudius Krause krause@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

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.

For the sake of better readability, we consistently avoid gender-differentiating formulations (e.g. "his/her" or "he/she"). The corresponding terms apply to all genders for the purposes of equal rights. This is done solely for editorial purposes and does not imply a judgment of any kind.

MANZ AG

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