Financial Statements Simona Ag Contents

FINANCIAL STATEMENTS SIMONA AG CONTENTS COMBINED MANAGEMENT REPORT 03 Fundamental information about the group 05 Business review 14 Events after the Reporting Period 14 Report on Opportunities and Risks 17 Report on Expected Developments 18 Other Information FINANCIAL STATEMENTS 23 Balance Sheet 25 Income Statement 26 Notes 34 Statement of Changes in Fixed Assets 35 Details of Shareholdings 36 Reproduction of the Auditorʼs Report 2 3 COMBINED MANAGEMENT REPORT FOR THE 2015 FINANCIAL YEAR PRELIMINARY NOTE The SIMONA Group markets its products worldwide. The This management report combines the Group management primary reporting segments are categorised according to report and the separate management report of SIMONA the following regions: Aktiengesellschaft, Kirn (referred to also as SIMONA AG, J Europe SIMONA or company) (Section 315(3) in conjunction with J Americas Section 298(3) of the German Commercial Code Handels- J Asia and Pacific gesetzbuch – HGB). This combined management report The secondary classification is based on product areas: has been published instead of a Group management report J Semi-finished and finished parts in the annual report of the SIMONA Group. It includes J Pipes and fittings details relating to the course of business, including performance, as well as the position and expected development of Production and sales locations the Group and SIMONA AG. Information pertaining to Sales activities at Group level are conducted by SIMONA AG SIMONA AG has been included in the business review that and subsidiaries in the United Kingdom, Italy, France, Spain, can be found in a separate section with details presented Poland, the Czech Republic, Russia, Hong Kong, China and in accordance with provisions set out in the German Com- the United States, both directly and via trading partners. mercial Code (Handelsgesetzbuch – HGB). Beyond this, SIMONA AG operates a sales office in Möhlin, Switzerland. The parent company, SIMONA AG, has its regis- tered office in 55606 Kirn (Germany). In the period under 1. FUNDAMENTAL INFORMATION ABOUT THE GROUP review, the SIMONA Group operated three facilities in Ger- many and four plants located abroad. Semi-finished parts 1.1 Group business model (sheets, rods, welding rods) are manufactured at two plants The SIMONA Group develops, manufactures and markets a in Kirn (Rhineland-Palatinate), while pipes, fittings and fin- range of semi-finished thermoplastics, pipes and fittings as ished parts are produced at a facility in Ringsheim well as finished parts and profiles. The materials used (Baden-Württemberg). The plant in Litvinov (Czech Republic) include polyethylene (PE), polypropylene (PP), polyvinyl produces pipes and sheets, while the site in Jiangmen chloride (PVC), polyethylene terephthalate (PETG), polyvi- (China) manufactures extruded sheets. The facility operated nylidene fluoride (PVDF) and ethylene-chlorotrifluoroethyl- by SIMONA AMERICA Inc. In Archbald (Pennsylvania, USA) ene (E-CTFE) as well as various specialist materials. The mainly produces extruded sheet products. Additionally, production methods applied within this area range from Boltaron Inc. produces thermoplastic sheets at its plant in extrusion, pressing and injection moulding to CNC manu- Newcomerstown (Ohio, USA), which are primarily used for facturing. SIMONA also maintains its own plastics work- aircraft interiors. The sales company SIMONA-PLASTICS CZ shop for the production of customised fittings. s.r.o., Prague, was closed effective from 30 June 2015 and integrated within the production company SIMONA Key sales markets Plast-Technik s.r.o., Litvinov. Semi-finished parts are deployed mainly within the area of chemical tank and equipment construction, mechanical Management and supervision at SIMONA AG engineering, the transport industry, the construction sec- In the financial year under review the Management Board tor, the exhibition and display sector as well as the automo- consisted of Wolfgang Moyses (Chairman/CEO), Dirk Möller bile industry. Pipes and fittings are used primarily for drink- (Deputy Chairman/COO) and Fredy Hiltmann (Board Mem- ing-water supply, sewage disposal and industrial piping ber Finance & Administration/CFO). systems, including the chemical process industry. Finished parts and profiles are destined in particular for the The Supervisory Board included the following members in mechanical engineering and transport technology sectors. the financial year under review: Dr. Rolf Goessler (Chair- man), Roland Frobel (Deputy Chairman), Dr. Roland Reber, Joachim Trapp as well as Jörg Hoseus (Employee Repre- sentative) and Gerhard Flohr (Employee Representative). 2 36 3 37 COMPANY GROUP MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS OTHER DETAILS Preliminary note Fundamental information about the group 1.2 Objectives and strategies initiating adjustments to the BSC process and the BSC-re- The SIMONA Group made further progress in the year lated corporate goals. The BSC cascades down to the com- under review with measures initiated back in 2013 with the pany’s other management levels. aim of strategic realignment. In this context, the Industrial Products division operated by the US-based subsidiary The analysis and assessment of earnings performance by SIMONA AMERICA Inc. was successfully reorganised. This SIMONA is conducted primarily with the help of sales reve- helped to improve its positioning within the market and nue as well as the two financial indicators EBIT and EBITDA produce a positive EBIT and cash contribution at a division- (earnings before interest, taxes, depreciation and amort- al level. The Reengineering Europe project saw SIMONA isation as well as investment income). EBIT represents the step up its innovation process, the focus being on refining operating result before interest and taxes as well as and evolving the Group’s portfolio of materials. The comple- income from investments. EBITDA represents an approxi- tion of the new Technology Centre at SIMONA’s corporate mation for cash flow from operating activities, as non-cash headquarters in Kirn represented an important milestone depreciation/write-downs of property, plant and equipment in pursuit of this goal. as well as amortisation/write-downs of intangible assets are added to the EBIT figure. In 2015, SIMONA extended and reprioritised the following key objectives of its new strategic realignment programme: Reconciliation from IFRS to HGB of EBIT generated by J Enter new fields of application beyond the core market of SIMONA AG is mainly as follows: chemical-technical plant engineering in Europe. J Accelerate growth in selected regions outside Europe. in € million 2015 2014 J Raise the level of profitability in a sustainable manner for EBIT under IFRS 15.2 20.5 the Group as a whole by embracing the idea of profitable Change in inventories –0.8 –3.5 operations in all processes. Staff costs (pensions) 2.4 2.8 Depreciation/amortisation/ write- The decision was made to introduce the role of Business downs of intangible assets and Development for defined market segments, the aim being property, plant and equipment 1.1 1.1 to accelerate the process of developing new applications Other changes –1.0 –2.4 and products. In the emerging markets the focus for the EBIT under HGB 16.9 18.5 coming years will be on the Asia-Pacific region, where SIMONA will concentrate on the premium segment within Additionally, the return on operating assets is reviewed the core fields of application centred around Chemical Pro- annually within the Group as part of the forecasting process Industry, Green Technologies and Semicon. Commit- cess and is an important criterion when it comes to manag- ted to further improving its earnings capacity, SIMONA ing the investment budget. ROCE, which stands for return launched a project aimed at reducing the complexity of its on capital employed, is used as a profitability indicator; product portfolio, particularly in the area of semi-finished capital employed includes property, plant and equipment, parts marketed in Europe. The strategy for the Pipes and inventories and trade receivables less trade payables. Fittings division was redefined at an international level. The principal non-financial indicators employed by the company include customer satisfaction, number of staff and 1.3 Internal management system their qualifications as well as quality and energy manage- SIMONA uses the Balanced Scorecard (BSC) as a strategic ment. management and monitoring instrument. Within this context, the Management Board is responsible for the BSC-re- lated corporate goals, as well as being accountable for 1.4 Research and development regularly reviewing the efficacy of the BSC process as part Research and development is subdivided into the areas of of an overall assessment of the management system and Formula Development, New Products & Applications and 36 4 37 5 Process Development. In completing the new Technology 2. BUSINESS REVIEW Centre, SIMONA reached an important milestone when it comes to strengthening the company’s capabilities as an 2.1 Macroeconomic and sector-specific environment innovator. In mid-2015, two machines capable of process- According to initial calculations, the world economy grew by ing high-performance plastics commenced operations. approx. 3 per cent in 2015, which falls 0.5 percentage points Towards the end of 2015, work began on relocating the short of the outlook presented a year ago by the International Research and Development, Process Development and Monetary Fund (IMF). In fact,

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