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Dear Shareholders,

Against the backdrop of challenging economic conditions, the SIMONA Group had to contend with a significant decline in revenue in 2023. Amid geopolitical conflicts and anaemic global trade, the market's propensity to invest, which is of particular importance to SIMONA, was less pronounced in the period under review, especially in the industrial sector. With this in mind, it was encouraging to see the Group strengthen its profitability and achieve very solid earnings. In absolute terms, the Group came close to equalling the record earnings performance of the previous year, while its EBIT margin improved significantly due to the downturn in revenue. SIMONA also achieved its strategic goals in the financial year just ended, as evidenced by the inauguration of the plant expansion in China, measures implemented as part of the sustainability strategy and the foundations laid for a new process-orientated system landscape. 


Cooperation with the Management Board

Over the course of the 2023 financial year, the Supervisory Board discharged its duties under statutory provisions, the company's articles of association and rules of procedure, advised the Management Board on a regular basis and evaluated and monitored management's activities in respect of legality, appropriateness and regularity. It also conducted an assessment of the company's risk management and compliance procedures and came to the conclusion that the system implemented meets the requirements to the fullest extent. The Management Board and Supervisory Board engaged in dialogue concerning the strategic direction of the company and regularly discussed the status of execution with regard to strategic initiatives. This also included aspects relating to sustainability. The Supervisory Board was directly involved in all decision-making processes of fundamental importance to the company. The Management Board informed the Supervisory Board as part of regular written and verbal reports, furnished in a timely and comprehensive manner. 

At the same time, the Management Board outlined any deviations between specified targets and the actual course of business, elucidated them in full and explained any countermeasures taken to rectify the situation. The content and scope of reports furnished by the Management Board met the requirements set out by the Supervisory Board. In addition to the above-mentioned reports, the Supervisory Board asked the Management Board to provide supplementary information relating to certain issues. 

In particular, the Management Board was available at Supervisory Board meetings for the purpose of discussing specific points and answering any questions put to it by the Supervisory Board. Transactions requiring the Supervisory Board's consent were discussed and examined in depth in cooperation with the Management Board. 

Where required, the Supervisory Board also convened without the Management Board being present. 


Supervisory Board meetings

The Supervisory Board held four ordinary in-person meetings over the course of 2023. At two of these meetings, one member took part via video conference. Each member of the Supervisory Board attended all meetings of the 2023 financial year in person with the following exception: Supervisory Board member Martin Bücher was unable to attend the meeting on 21 April 2023 and was excused from participating. 

At the meeting on 21 April 2023, the consolidated financial statements and the annual financial statements of the AG (parent company) were adopted and approved. The proposal by the Management Board for the appropriation of profit generated in the 2022 financial year, to be submitted to the Annual General Meeting, was discussed and approved. 

Furthermore, the report by the Supervisory Board for the 2022 financial year was adopted and the result of the audit conducted by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, was discussed. At this meeting, the Supervisory Board also approved the Non-Financial Statement pursuant to Section 289b and Section 315b HGB and the Corporate Governance Statements in accordance with Section 289f HGB and Section 315d HGB as well as the agenda for the Annual General Meeting in 2023. The Supervisory Board also informed itself about the direction taken by business, the situation regarding mergers and acquisitions, aspects of occupational safety, IT projects and progress made with regard to the renovation of the administrative offices at the company's headquarters in Kirn. 

The meeting of 1 June 2023 focused on the current business performance and the outlook for the full annual period. In addition, the Supervisory Board was informed about productivity levels at the plants and about strategic projects within the company. 

At the meeting on 18/19 September 2023, the Supervisory Board visited the site of acquiree SIMONA PEAK Pipe Systems in the UK to inform itself about current business performance, price trends and the situation with regard to raw materials and competition. The agenda also included issues relating to sustainability, in particular strategic considerations regarding the use of recycled materials and investment projects. The Supervisory Board also dealt with the basic planning assumptions for the 2024 financial year and approved the financial calendar for 2024. 

At the meeting on 7 December 2023, the Supervisory Board informed itself about aspects of occupational safety as well as business and market developments. It also approved the forecast and budget for 2024 prepared by the Management Board. Another item on the agenda was a status report in respect of ESG matters.

Committee work

The Audit Committee and the Personnel and Nomination Committee are responsible for supporting the Supervisory Board. Both committees regularly provide the Supervisory Board with extensive information relating to their activities.

The Audit Committee is responsible primarily for issues relating to the supervision of the accounting process, the efficacy of the internal control system, the internal risk management system and the internal auditing system, year-end auditing, with a particular focus on the independence of the auditor, the quality of the audit, the additional services provided by the independent auditor, the issuing of the audit mandate to the auditor, the determination of auditing focal points and arrangements relating to fees as well as compliance.

The Audit Committee convened two meetings in 2023, one of which was held via video conference and one as an in-person meeting.

The principal duties of the Personnel and Nomination Committee are centred around compensation as well as the conclusion, amendment, extension and termination of Management Board members' employment contracts. In addition, its task is to nominate suitable candidates to the Supervisory Board for its proposals to the Annual General Meeting for the election of Supervisory Board members. The Personnel and Nomination Committee held three meetings in 2023, one of which was conducted via video conference and two as in-person meetings.


Dealing with conflicts of interest

All members of the Supervisory Board are obliged to disclose conflicts of interest as soon as they occur. As in the previous years, there were no conflicts of interest during the 2023 financial year. Following our review, we ascertained that all members of our board are independent within the meaning of the German Corporate Governance Code. In this context, please refer to the Corporate Governance Statement issued pursuant to Section 289f HGB and Section 315d HGB.


Annual financial and consolidated financial statements

The accounts of SIMONA AG for the 2023 financial year were audited by Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Munich. The firm was elected as auditor at the Annual General Meeting on 2 June 2023. Before proposing Deloitte GmbH Wirtschaftsprüfungsgesellschaft as auditor to the Annual General Meeting of Shareholders, the Chairman of the Supervisory Board had obtained confirmation from Deloitte GmbH that there were no circumstances which might prejudice its independence as an auditor. 

The auditor conducted an audit and furnished an unqualified audit opinion with regard to the financial statements and management report of SIMONA AG and the consolidated financial statements and Group management report, which was combined with the management report of SIMONA AG, as well as the explanatory report by the Management Board in respect of disclosures under Section 289a and 315a HGB in conjunction with the accounting records. The financial statements mentioned above, the audit reports and the Management Board's proposal for the appropriation of the unappropriated surplus were submitted to all Audit Committee and Supervisory Board members in good time. At the Supervisory Board meeting on 17 April 2024, the independent auditor furnished detailed information about all material conclusions of the audit and answered all questions put forward by the Supervisory Board in a detailed and comprehensive manner. The Supervisory Board independently examined the financial statements and management report of SIMONA AG as well as the consolidated financial statements and the Group management report, which has been combined with the management report of SIMONA AG, as prepared by the Management Board, in addition to the explanatory report by the Management Board in respect of disclosures required under Section 289a and Section 315a HGB, the audit reports issued by the independent auditor and the proposal put forward by the Management Board with regard to the appropriation of profit. The Supervisory Board raised no objections upon conclusion of this final examination. The Supervisory Board concurs with the findings of the audit conducted by the independent auditor and approved the company's financial statements, which are thereby adopted pursuant to Section 172 sentence 1 AktG, as well as the consolidated financial statements at its meeting on 17 April 2024. It also approved the report by the Supervisory Board. Furthermore, the Supervisory Board concurs with the Management Board's proposal for the appropriation of profit. The Supervisory Board conducted a thorough review of the Non-Financial Statement issued by the company in accordance with Section 289b and Section 315b HGB; it discussed it at its audit meeting on 17 April 2024 and adopted it accordingly. No voluntary review by the independent auditors was conducted in respect of the Non-Financial Statement, as the Supervisory Board possesses the requisite expertise in this matter.

In view of the difficult economic environment, all SIMONA Group employees faced significant challenges in the 2023 financial year. The decline in order intake and capacity utilisation as well as intense competition and efforts centred around strategic projects were among the key obstacles to be overcome. We would therefore like to extend our special thanks to all SIMONA employees worldwide. We would also like to thank our suppliers and business partners for their spirit of cooperation and the projects that we were able to pursue in 2023. Last but not least, we thank all our shareholders for placing their trust in our company.

Kirn, 17 April 2024
The Supervisory Board
Dr. Klaus F. Erkes, Chairman

This document is published in German and as an English translation. Only the German original shall be deemed authoritative.