REPORT OF THE SUPERVISORY BOARD
To the Shareholders of
SINGULUS TECHNOLOGIES AG
Our company was able to further develop dynamically in the business year 2018. Compared with 2017, sales were increased by 39.8 % to EUR 127.5 million. This results in positive operating earnings (EBIT) in the amount of EUR 6.8 million. The forecast for the business year 2018 was completely met and the company is confident that it will - then for the third consecutive time - continue to expand in the business year 2019 as well. All divisions within our company experienced a positive trend in the past business year. In particular in our key segment Solar we were very successful in 2018. In a globally expanding energy market, which due to the imminent climate change is increasingly positioning towards photovoltaics as a promising and cost-efficient energy resource of the future, we still see attractive growth potential for our company. In addition, we were also able to successfully position ourselves in the market with our products and new orders in the new work areas Semiconductor, Decorative Coatings as well as Medical Technology.
DEVELOPMENT OF THE COMPANY
SINGULUS TECHNOLOGIES' profitable growth in the business year 2018 was once again a result of the successes in the Solar division. Here, SINGULUS TECHNOLOGIES was and is successful in the business activities for production machines for thin-film modules on the basis of CIGS technology. With the customer China National Building Materials, Beijing, China (CNBM), the company did not only work on the current major orders. Furthermore, in November 2018 several letters-of-intent (LOI) for the delivery of additional production machines for CIGS thin-film solar modules were signed. These LOIs point the way to the near future and the production and delivery of the machines are scheduled to a large extent for the years 2019 and 2020.
At the same time, the company works on introducing new machine concepts to the solar market during the course of 2019, which are targeting the area of state-of-the-art, highly-efficient crystalline solar cells, for example based on heterojunction technology (HJT).
Also in other work areas, and here predominantly in the new business areas, key orders were won. For example, SINGULUS TECHNOLOGIES received a trend-setting order from the automotive sector for a production line of the DECOLINE II type for the finishing of threedimensional plastic parts and of decorative elements of car interiors.
SINGULUS TECHNOLOGIES had also expanded its activities to the work area Medical Technology at the end of 2017 and received a first order in excess of EUR 10 million in November 2017 for the sale of production machines for the treatment of contact lenses. At the beginning of June 2018 another order for such a machine was received and the company sees potential for additional customers and orders for Medical Technology here.
For a detailed description of the development of the company please refer to the detailed information provided in the presented Status Report. Overall, the Supervisory Board recognizes that SINGULUS TECHNOLOGIES consistently continues to pursue the path taken in the past years and that the company is thus on the right way for a successful future.
Activities of the Supervisory Board in the Business Year 2018
On the following pages, the report of the Supervisory Board informs about the focus of the activities of the Supervisory Board in the past business year.
In the business year 2018 the Supervisory Board attended to all legal and statutory duties and adhered to the guidelines of the bylaws of the Supervisory Board. The Supervisory Board advised the Executive Board on the management of the company and monitored the activities of the Executive Board in the business year 2018. The Executive Board of the SINGULUS TECHNOLOGIES AG timely updated the Supervisory Board with regards to all significant decisions and processes. It also informed the Board about all relevant proceedings. There were no objections on part of the Supervisory Board regarding the conduct of business in the course of the business year 2018 by the Executive Board of the SINGULUS TECHNOLOGIES AG at any time.
During the business year 2018 eight meetings of the Supervisory Board were convened: there were five meetings in presence and three conference calls. Except for one meeting, all Supervisory Board meetings in the year 2018 were attended by all members of the Supervisory Board.
- Meeting in presence on January 25, 2018
- Meeting in presence on March 20, 2018
- Conference call on May 9, 2018
- Meeting in presence on June 27, 2018
- Conference call on August 9, 2018
- Meeting in presence on September 11, 2018
- Conference call on November 12, 2018
- Meeting in presence on November 28, 2018
Advisory and Monitoring of Executive Board by the Supervisory Board
During the course of all of its meetings, the Supervisory Board attended to the business trends of the SINGULUS TECHNOLOGIES AG during the business year 2018 and discussed and evaluated these developments with the Executive Board. The Executive Board regularly reported to the Supervisory Board about the key figures concerning the course of order intake, sales and earnings trends. The underlying trends were also discussed. The Executive Board informed the Supervisory Board through monthly reports on the current course of business and backlog as well as other key financial indicators. The course of the business in the year 2018 was compared with the company’s forecasts for the business year 2018. All deviations were documented and the required measures for potential adjustments were discussed with the Executive Board. Additional written and oral reports of the Executive Board, by other employees, the auditors as well as by external consultants supplemented the reporting.
The Executive Board provided the Supervisory Board with the interim reports as well as the half-year report for the business year 2018 in a timely manner ahead of the publication. The reports were presented by the Executive Board and important key figures and statements explained in detail. In particular, the Supervisory Board had the profit-and-loss statements, the liquidity situation and the trend in shareholders' equity as well as other selected balance sheet positions explained in detail. The recommendations of the Supervisory Board with regards to individual interim reports as well as to the half-year report were implemented by the Executive Board.
The development of the shareholders’ equity of the SINGULUS TECHNOLOGIES Group (IFRS), the development of the shareholders’ equity of the SINGULUS TECHNOLOGIES Aktiengesellschaft (HGB) as well as the liquidity situation within the Group were a topic of each of the meetings of the Supervisory Board. The liquidity of the company was documented and continuously monitored during the entire course of the year. Furthermore, the Chairman of the Supervisory Board regularly discussed the situation of the company and its future development in individual talks with the Executive Board. At all times, the other members of the Supervisory Board were informed about these meetings thereafter.
The further development of strategic positioning of the company was agreed between the Executive Board and the Supervisory Board and its implementation discussed at regular intervals. The required capital expenditure plans were analyzed and decided within the scope of the resolved strategy. The Supervisory Board has assured itself of the legitimacy, expediency and compliance of the presented business events under the particular consideration of the economic situation of the company.
Business activities that had to be approved or were required to be discussed by the Supervisory Board due to company interests were discussed and reviewed by the Supervisory Board. In particular, these also included new projects concerning the extension of the current range of products and services offered. The Supervisory Board was directly involved in all decisions, which were significant for the company's course of business.
Supervisory Board Matters
There were no elections to the Supervisory Board during the business year 2018.
In the business year 2018 the Supervisory Board continued to refrain from forming audit, nomination and other Supervisory Board committees, since a proper attainment of the tasks of the Supervisory Board is given for the full Supervisory Board with a three-member Supervisory Board. The Supervisory Board is continuously reviewing its efficiency and identifies potential improvements. Required improvements were discussed and resolved in the course of the meeting on September 11, 2018.
Conflicts of Interest
In the past business year there were no conflicts of interest of members of the Executive or Supervisory Boards, which have to be disclosed to the Supervisory Board immediately and which the Annual General Meeting has to be informed about.
Shareholdings of Supervisory Board Members
The stock holdings of Supervisory Board members are published in this Annual Report as well as on the internet (for a detailed presentation please refer to the annotations on page 27 of this Annual Report 2018).
The SINGULUS TECHNOLOGIES AG and its Supervisory Board subscribe to the principles of proper and responsible corporate governance. The Executive Board and the Supervisory Board have made a declaration of conformity pursuant to Art. 161 AktG and Art. 3.10 of the German Corporate Governance Code (the Code), according to which the company adheres to the recommendations of the German Corporate Governance Code except for the mentioned and explained deviations. The declaration of conformity was published on the company’s website in March 2019. For a detailed representation of the Corporate Governance Report as well as the current Declaration of Conformity, please refer to page 19 of the Annual Report 2018.
Executive Board Matters
During its meeting on January 25, 2018, the Supervisory Board reviewed the remuneration of the Executive Board, discussed target agreements for the business year 2018 with the Executive Board and resolved these as well as resolved the review of the remuneration of the Executive Board by an external advisor. The results of the review were presented in the course of the Annual General Meeting in June 2018 in detail. The target agreements as of January 25, 2018 form the basis for the determination of the variable compensation components of the Executive Board members. In its meeting on March 20, 2019 the Supervisory Board resolved the level of target achievements for both members of the Executive Board for the business year 2018 on the basis of the annual results. For this purpose the Supervisory Board assessed all personal targets individually and reviewed the respective levels of target achievement. Overall, the Supervisory Board recognized the achievements of the Executive Board and made positive representations about the dedication, commitment and the qualitative results.
According to relevant regulations of stock corporation and commercial laws, the SINGULUS TECHNOLOGIES AG is subject to special requirements with respect to an internal risk management system. The relevant monitoring system is adjusted to the respective current developments. During its meeting on November 28, 2018 the Supervisory Board was presented the system as well as results of the internal risk management system in detail. The Supervisory Board regards the monitoring system of the SINGULUS TECHNOLOGIES AG as constructive and satisfactory and shares the risk assessment of the Executive Board in all aspects (the Risk Report can be found on page 60 of the Annual Report 2018).
Annual and consolidated financial statements as well as Status Report
The audited financial accounts of the SINGULUS TECHNOLOGIES AG, the audited consolidated financial statements as well as the combined status report as of December 31, 2018 were subject of the Supervisory Board meeting on March 20, 2019 concerning the adoption of the financial statements. The Executive Board has drawn up the financial statements and the status report of the SINGULUS TECHNOLOGIES AG for the business year 2018 pursuant to the regulations of the German Commercial Code (HGB) and the German Stock Corporation Act (AktG). The consolidated financial statements were drawn up pursuant to the International Financial Reporting Standards (IFRS). The consolidated financial statements were supplemented by a respective consolidated status report, which was combined with the status report of the individual financial results pursuant to Art. 315 Para. 5 read in conjunction with Art. 298 Para. 2 Sent. 1 HGB. The auditor KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), Frankfurt am Main reviewed the financial statements and the consolidated financial statements as well as the combined status report considering the accounting principles and approved them without reservation. The members of the Supervisory Board were provided with the audited financial results, the combined status report as well as the audit report of KPMG for review in a timely manner. During the meeting on March 20, 2019 the responsible auditors were present. They explained the results of the audit and answered the questions of the Supervisory Board members in detail.
The Supervisory Board extensively continued to discuss the financial statements, the consolidated financial statements, the combined status report as well as the audit by the auditor and did not have any objections. The assumptions, on which the going-concern assumption rested, as well as the conclusions drawn by the Executive Board and KPMG, were discussed. Requests by members of the Supervisory Board were answered by the Executive Board and by present auditors with due elaborateness.
There were no objections on part of the Supervisory Board regarding the annual accounts of the SINGULUS TECHNOLOGIES AG, the consolidated financial statements and the combined status report as of December 31, 2018 as well as regarding the audit by KPMG.
In its meeting on March 20, 2019 the Supervisory Board approved the financial statements of the SINGULUS TECHNOLOGIES AG drawn up by the Executive Board, the consolidated financial statements and the combined status report. The annual accounts have thus been finalized.
The Supervisory Board would like to thank the Executive Board and all employees for their commitment in the past business year 2018 and wishes success for the business year 2019.
Kahl am Main, March 2019
Dr.-Ing. Wolfhard Leichnitz
Chairman of the Supervisory Board