GROUP CONSOLIDATED FINANCIAL STATEMENTS

See accompanying notes to consolidated financial statements.

Consolidated Statement of Other Comprehensive Income

See accompanying notes to consolidated financial statements.

Consolidated Statement of Financial Position

See accompanying notes to consolidated financial statements.

Consolidated Statement of Cash Flow

See accompanying notes to consolidated financial statements.

Development of Group equity 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Erläuterungen siehe Anhang zum Konzernabschluss.

1. General Principles
 

AIXTRON SE (“Company”) is incorporated as a European Company (Societas Europaea) under the laws of the Federal Republic of Germany. The Company is domiciled at Dornkaulstraße 2, 52134 Herzogenrath, Germany. AIXTRON SE is registered in the commercial register of the District Court (“Amtsgericht”) of Aachen under HRB 16590.

The consolidated financial statements of AIXTRON SE and its subsidiaries (“AIXTRON“ or “Group“) have been prepared in accordance with, and fully comply with

• International Financial Reporting Standards (IFRS) as adopted for use in the European Union; and
• the requirements of Section 315e of HGB (German Commercial Law).

AIXTRON is a leading provider of deposition equipment to the semiconductor industry. The Group's technology solutions are used by a diverse range of customers worldwide to build advanced components for electronic and opto-electronic applications based on compound, silicon, or organic semiconductor materials. Such components are used in fiber optic communication systems, wireless and mobile telephony applications, optical and electronic storage devices, computing, signaling, and lighting, displays, as well as a range of other leadingedge technologies.

These consolidated financial statements have been prepared by the Executive Board and have been submitted to the Supervisory Board at its meeting held on February 23, 2022 for approval and publication.

2. Significant Accounting Policies
 

(A) Companies Included in Consolidation
 

Companies included in consolidation are AIXTRON SE, and companies controlled by AIXTRON SE. The balance sheet date of all consolidated companies is December 31. A list of all consolidated companies is shown in note 32.

(B) Basis of Accounting
 

The consolidated financial statements are presented in Euro (EUR). The amounts are rounded to the nearest thousand Euro (kEUR).

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date and the reported amounts of income and expenses during the reported period. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if this revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgments which have a significant effect on the Group’s financial statements are described in note 37.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

The accounting policies have been applied consistently by each consolidated company.
 

(C) Bases of Consolidation

(I) Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year.

Control is achieved when the Company:

• has the power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affects its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Entities over which AIXTRON SE has control are treated as subsidiaries (see note 32). The results of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

(II) Transactions Eliminated on Consolidation

All intercompany income and expenses, transactions and balances have been eliminated in the consolidation.
 

(D) Foreign Currency

The consolidated financial statements have been prepared in Euro (EUR). In the translation of financial statements of subsidiaries outside the Euro-Zone the local currencies are also the functional currencies of those companies. Assets and liabilities of those companies are translated to EUR at the exchange rate as of the balance sheet date. Revenues and expenses are translated to EUR at average exchange rates for the year or at average exchange rates for the period between their inclusion in the consolidated financial statements and the balance sheet date. Net equity is translated at historical rates. The differences arising on translation are disclosed in the consolidated statement of changes in equity.

Exchange gains and losses resulting from fluctuations in exchange rates in the case of foreign currency transactions are recognized in the income statement in „other operating income“ or „other operating expenses“.
 

(E) Property, Plant and Equipment

(I) Acquisition or Manufacturing Cost

Items of property, plant and equipment are stated at cost, plus ancillary charges such as installation and delivery costs, less accumulated depreciation (see below) and impairment losses (see accounting policy (j)).

Costs of internally generated assets include not only costs of material and personnel, but also a share of directly attributable overhead costs, such as employee benefits, delivery costs, installation, and professional fees.

Where parts of an item of property, plant and equipment have different useful lives, they are depreciated as separate items of property, plant and equipment.

(II) Subsequent Costs

Die im Zusammenhang mit der Anschaffung oder Herstellung von eigenen Vermögenswerten stehenden Zuwendungen der öffentlichen Hand werden zum Zeitpunkt der Aktivierung anschaffungs- bzw. herstellungskostenmindernd berücksichtigt.

(IV) Depreciation

AIXTRON recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing components or enhancement of such an item when that cost is incurred if it is probable that the future economic benefits embodied in the item will flow to the Group and the cost of the item can be measured reliably. All other costs such as repairs and maintenance are expensed as incurred.

(III) Government Grants

Government grants related to the acquisition or manufacture of owned assets are deducted from original cost at the date of capitalization.

(IV) Depreciation

Depreciation is charged on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Useful lives, depreciation method and residual values of property, plant and equipment are reviewed at the year-end date or more frequently if circumstances arise which are indicative of a change.

The estimated useful lives are as follows:

• Buildings 25 - 45 years
• Machinery and equipment 3 - 19 years
• Other plant, factory and office equipment 2 - 20 years

The useful lives of leased assets do not exceed the expected lease periods.

(V) Leased Assets

The Group as Lessee

AIXTRON assesses whether a contract is, or contains, a lease, at inception of the contract.

The Group recognizes a lease asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

AIXTRON recognizes a leased asset and a lease liability at the lease commencement date. The leased asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use assets are presented in property, plant and equipment, and leased assets in the consolidated statement of financial position.

The leased asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the expected end of the lease term. The estimated useful lives of leased assets are determined on the same bases as those of property, plant and equipment. In addition, the leased asset is periodically tested and reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company’s incremental borrowing rate.

The lease liabilities are included in other non-current payables and other current liabilities in the consolidated statement of financial position. Lease payments included in the measurement of the lease liability comprise fixed payments, less any lease incentives and variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in index or rate, or if the company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the# carrying amount of the leased asset, or is recorded in profit or loss if the carrying amount of the leased asset has been reduced to zero.

The Group did not make any such adjustments during the periods presented.
 

(F) Intangible Assets

(I) Goodwill

Business combinations are accounted for by applying the purchase method. Goodwill is stated at cost less any accumulated impairment loss. Goodwill is allocated to cash-generating units and is tested annually for impairment (see accounting policy (j)).

(II) Research and Development

Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding using scientific methods, is recognized as an expense as incurred. Expenditure on development comprises costs incurred with the purpose of using scientific knowledge technically and commercially. As not all criteria of IAS 38 are met AIXTRON does not capitalize such costs.

(III) Other Intangible Assets

Other intangible assets that are acquired are stated at cost less accumulated amortization (see below) and impairment losses (see accounting policy (j)). Intangible assets acquired through business combinations are stated at their fair value at the date of purchase. Expenditure on internally generated goodwill, trademarks and patents is expensed as incurred.

(IV) Subsequent Expenditure

Subsequent expenditure on capitalized intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(V) Amortization

Amortization is charged on a straight-line basis over the estimated useful lives of intangible assets, except for goodwill. Goodwill has a useful life which is indefinite and is tested annually in respect of its recoverable amount. Other intangible assets are amortized from the date they are available for use. Useful lives and residual values of intangible assets are reviewed at the year-end date or more frequently if circumstances arise which are indicative of a change.

The estimated useful lives are as follows:

• Software 2 - 5 years
• Patents and similar rights 4 - 18 years
• Customer base and product and technology know how 6 - 10 years

(G) Financial Instruments

(I) Financial Assets

Financial assets are classified into the following specific categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘at fair value through other comprehensive income (FVTOCI), and ‘at amortized cost’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

(II) Financial Assets at FVTOCI

AIXTRON did not have any financial assets in these categories during the periods covered by this report.

(III) Financial Assets at Amortized Cost

Financial assets are measured at amortized cost as they are held within a business model to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding.

(IV) Financial Assets at FVTPL

All financial assets not classified as measured at amortized cost or FVTOCI under IFRS 9 are measured at fair value through profit and loss (FVTPL). Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss. The gain or loss including dividends earned on financial asset and is included in profit and loss account and in note 5 or 6 respectively.

Fair value is determined in accordance with IFRS 13.

(V) Trade Receivables

Trade receivables and other receivables are measured at amortized cost as they are held within a business model to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding.

(VI) Impairment of Financial Assets

The Group recognizes a loss allowance for expected credit losses (ECL) on trade receivables and contract assets. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group always recognizes lifetime ECL for trade receivables, and contract assets. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Group recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12‑month ECL. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12‑month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

(VII) Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand and deposits with banks with a maturity of less than three months at inception.

(VIII) Equity Instruments

Equity instruments, including share capital, issued by the Group are recorded at the proceeds received, net of direct issue costs.

(IX) Financial Liabilities

Financial liabilities are classified as either financial liabilities “at FVTPL” or "at amortized cost".

(X) Financial Liabilities at FVTPL

AIXTRON did not have any financial liabilities in this category during the periods covered by this report.

(XI) Financial Liabilities at Amortized Cost

Other financial liabilities, including trade payables, are measured at amortized cost.

(XII) Derivative Financial Instruments and Hedge Accounting

The Group’s activities expose it to the financial risks of changes in foreign exchange currency rates (see note 25). AIXTRON may use foreign exchange forward contracts to hedge these exposures. AIXTRON does not use derivative financial instruments for speculative purposes.

The use of financial derivatives is governed by policies approved by the Executive Board, which provide written principles on the use of financial derivatives. AIXTRON did not have any derivative financial instruments in the periods covered by this report.

(H) Inventories

Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. Cost is determined using weighted average cost.

The cost includes expenditures incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of work in progress and finished goods, cost includes direct material and production cost, as well as an appropriate share of overheads based on normal operating capacity. Scrap and other wasted costs are expensed on a periodic basis either as cost of sales or, in the case of beta tools as research and development expense.

Allowance for slow moving, excess and obsolete, and otherwise unsaleable inventory is recorded based primarily on either the estimated forecast of product demand and production# requirement or historical usage. When the estimated future demand is less than the inventory, AIXTRON writes down such inventories.

(I) Operating Result

Operating result is stated before finance income, finance expense and tax.

(J) Impairment of Property, Plant and Equipment and Intangible Assets

Goodwill purchased as part of a business acquisition is tested annually for impairment, irrespective of whether there is any indication of impairment. For impairment test purposes, the# goodwill is allocated to cash-generating units. Impairment losses are recognized to the extent that the carrying amount exceeds the higher of fair value less costs of disposal or value in use of the cash-generating unit. Details of impairment test are shown in note 12.

Property, plant and equipment as well as other intangible assets are tested for impairment, where there is any indication that the asset may be impaired. The Group assesses at the end of each period whether there is an indication that an asset may be impaired. Impairment losses on such assets are recognized, to the extent that the carrying amount exceeds both the fair value that would be obtainable from a disposal in an arm’s length transaction, and the value in use.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments and the risks associated with the asset.

Impairment losses are reversed if there has been a change in the estimates used to determine the recoverable amount. Reversals are made only to the extent that the carrying amount of the asset does not exceed the carrying amount that would have been determined if no impairment loss had been recognized.

An impairment loss in respect of goodwill is not reversed.
 

(K) Earnings Per Share
 

Basic earnings per share are computed by dividing net income (loss) by the weighted average number of issued common shares for the year. Diluted earnings per share reflect the potential dilution that could occur if options issued under the Company’s stock option plans were exercised unless such exercises had an anti-dilutive effect.
 

(L) Employee Benefits

(I) Defined Contribution Plans
 

Obligations for contributions to defined contribution pension plans are recognized as an expense in the income statement as incurred.

(II) Share-based Payment Transactions

Stock Option Programs
 

The stock option programs from 2007 and 2012 allow members of the Executive Board, management, and employees of the Group to acquire shares of AIXTRON SE. The contractual terms of these share programs are presented in note 22. These stock option programs are accounted for according to IFRS 2 for equity-settled share-based payment transactions. The fair value of options granted is recognized as personnel expense with a corresponding increase in additional paid-in capital. The fair value is calculated at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a mathematical model, taking into account the terms and conditions upon which the options were granted. The vesting conditions relate to a service condition and a market condition in relation to the share price of AIXTRON SE. In the calculation of the personnel expense options forfeited during the performance period are taken into account.

Long-term Incentive of the Board of Directors (LTI)
 

Executive Board remuneration system at AIXTRON SE consists long-term variable remuneration incentives (LTI) granted in shares of AIXTRON SE. These equity-settled share-based payments are measured at fair value of the equity instruments at the grant date. The fair value of the shares granted is measured using a mathematical model, taking into account the terms and conditions upon which the shares were granted. Further details regarding the equity-settled share-based transactions are set out in note 22 and 31.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the performance period, based on the Group’s estimate of the number of equity instruments expected to vest. For non-market-based vesting conditions, the Group reviews its estimate of number of equity instruments at each reporting date during vesting period. The impact of the revision of the original estimates, if any, is recognized in profit or loss and a corresponding adjustment is recognized to equity.

(M) Provisions
 

A provision is recognized when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle this obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax interest rate that reflects current market assessments of the time value of money and, where appropriate, the risks associated with the liability.

(I) Warranties
 

The Group normally offers one- or two-year warranties on all of its products. Warranty expenses generally include cost of labor, material and related overhead necessary to repair a product free of charge during the warranty period. The specific terms and conditions of those warranties may vary depending on the equipment sold, the terms of the contract and the locations from which they are sold. The Group establishes the costs that may be incurred under its warranty obligations and records a liability in the amount of such costs at the time revenue is recognized. Factors that affect the warranty liability include the historical and anticipated rates of warranty claims and cost per claim.

The Group accrues warranty cost for systems shipped based upon historical experience. The Group periodically assesses the adequacy of its recorded warranty provisions and adjusts the amounts as necessary.

Extended warranties, beyond the normal warranty periods, are treated as maintenance services in accordance with (n) below.

(II) Onerous Contracts
 

A provision for onerous contracts is recognized when the expected economic benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The amount recognized as a provision is determined as the excess of the unavoidable costs of meeting the obligations under the contract over the economic benefits expected to be received. Before making that provision any impairment loss that has occurred on assets dedicated to that contract are recognized. The provision is discounted to present value if the adjustment is material.

(III) Restructuring
 

A restructuring provision is recognized when the Group has developed a detailed formal plan for the restructuring and the parties concerned have been informed. The measurement of restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.

(N) Revenue
 

AIXTRON enters contracts with customers for goods and services, including combinations of goods and services. Contracts are usually for fixed prices and do not offer any unilateral right of return to the customer.

Revenue is generated from the following major sources:

• sale of equipment
• installation of equipment
• sale and installation of customer specific equipment
• spare parts
• services

Revenue is recognized when the Group satisfies a performance obligation in contracts with its customers by transferring control of goods or services to the customer and it is probable that the economic benefits associated with the transaction will flow to the entity.

The sale of equipment involves acceptance tests at AIXTRON´s production facility. After successful completion of this test, the equipment is dismantled and packaged for shipment.

Revenues from the sale of products that have been demonstrated to meet product specification requirements are recognized at a point in time upon shipment to the customer if full acceptance tests have been successfully completed at the AIXTRON production facility and control has passed to the customer and the customer can benefit from the product either on its own or with other resources that are readily available.

Upon arrival at the customer site the equipment is reassembled and installed, which is a service generally performed by AIXTRON engineers. Revenue relating to the installation of the equipment is recognized at the point in time when AIXTRON has fulfilled its performance obligations under the contract and control of the goods has passed to the customer.

Revenue related to equipment where meeting the product specification requirements has not yet been demonstrated or the customer cannot benefit from the product either on its own or with other resources that are readily available, or where specific rights of return have been negotiated, is recognized only at the point in time when the customer finally accepts the equipment and has control.

Revenue for the sale of equipment which is built for a specific customer and does not have an alternative use is recognized over time based on milestones for the particular contract and the extent to which the Group’s performance obligations have been satisfied. Typically, these contracts relate to a small number of upgrades to equipment already belonging to the customer.

Revenue related to spares is recognized at the point in time at which the customer obtains control of the goods, generally at the point of delivery.

Revenue related to services is recognized either at the point in time at which the service, such as a repair, is delivered and the customer obtains control of the related item, or for services such as extended warranty, revenue is recognized over time during the period in which it is provided.

AIXTRON gives no general rights of return, settlement discounts, credits or other sales incentives within its terms of sale. The consideration from contracts which include combinations of different performance obligations such as equipment, spares and services is allocated to each performance obligation in an amount that depicts the amount of consideration to which the Group expects to be entitled in exchange for transferring the goods or services to the customer.

The Group uses a combination of methods such as an estimated cost plus margin approach, and allocating discounts from list price proportionately to each performance obligation when determining the consideration for each performance obligation.

The portion of equipment revenue related to installation services is determined based on either the fair value of the installation services or, if the Group determines that there may be a risk that the economic benefits of installation services may not flow to the Group, the portion of the contract amount that is due and payable upon completion of the installation.

Fair value of the installation services corresponds to the part of the transaction price that the Group would be expected to receive as consideration in exchange for this service in the sale of such an equipment.

(O) Expenses

(I) Cost of Sales

Cost of sales includes such direct costs as materials, labor, and related production overheads.

(II) Research and Development

Research and development costs are expensed as incurred. Costs of beta tools which do not qualify to be recognized as an asset are expensed as research and development costs.

Project funding received from governments (e.g. state funding) and the European Union is recorded in other operating income, if the research and development costs are incurred and provided that the conditions for the funding have been met.

(III) Lease Payments

Payments made under leases for assets which have not been capitalized are recognized as expense on a straight-line basis over the term of the lease.
 

(P) Government Grants
 

Government grants awarded for project funding are recorded in other operating income if the research and development costs are incurred and provided that the conditions for the funding have been met.

Government grants awarded to support continued employment where work is not allowed are recorded as a reduction in the related expense, as this presents the underlying reason for the grant better.
 

(Q) Tax
 

The tax expense represents the sum of the current and deferred tax. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits can be set off against timing differences and tax losses carried forward or taxable temporary differences exist. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit can be realized. The recoverability of deferred tax assets is reviewed at least annually.

Deferred tax assets and liabilities are recorded for temporary differences between tax and commercial balance sheets and for losses brought forward for tax purposes as well as for tax credits of the companies included in consolidation. The deferred taxes are calculated, based on tax rates applicable at the balance sheet date or known to be applicable in the future.

Effects of changes in tax rates on the deferred tax assets and liabilities are recognized upon substantively enacted amendments to the law.
 

(R) Segment Reporting
 

An operating segment is a component of the Group that is engaged in business activities and whose operating results are reviewed regularly by the Chief Operating Decision Maker, which AIXTRON considers to be its Executive Board, to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. AIXTRON has only one reportable segment.

Accounting standards applied in segment reporting are in accordance with the general accounting policies as explained in this section.
 

(S) Cash Flow Statement
 

The cash flow statement is prepared in accordance with IAS 7. Cash flows from operating activities are prepared using the indirect method. Cash flows from taxes are included in cash flows from operating activities.
 

(T) Adoption of New and Revised Standards

New and Amended IFRS Standards Effective for the Current Year

In the current year, the Group has applied the below amendments to IFRS standards and interpretations issued by the Board that are effective for an annual period that begins on or after 1 January 2021. Their adoption has not had any material impact on the disclosures or on the amounts reported in these consolidated financial statements.

New and Revised IFRS Standards in Issue but not yet Effective

At the date of authorization of these consolidated financial statements, the Group has not applied following new and revised standards and interpretations which have been issued but are not yet effective. AIXTRON does not expect that the adoption of these standards will have a material impact on the financial statements of the Group in future periods.

1) Initial application to annual reporting periods beginning on or after 1 January 2022.

2) Initial application to annual reporting periods beginning on or after 1 January 2023.

3) The effective date of the amendments has yet to be set by the Board.

4) EU endorsement is still pending.

3. Segment Reporting and Revenues

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Executive Board, as chief operating decision maker, in order to allocate resources to the segments and to assess their performance.

In the period 2020 to 2021 the Executive Board regularly reviewed financial information to allocate resources and assess performance only on a consolidated Group basis since the various activities of the Group are largely integrated from an operational perspective. In accordance with IFRS, AIXTRON has only one reportable segment.

The Group’s reportable segment is based around the category of goods and services provided to the semiconductor industry Revenues are recognized as disclosed in note 2 (n).

AIXTRON values the equipment revenue deferred for equipment installation services, using a market-based approach, based on observed transactions for all such contracts involving two elements where revenue has been recognized during the financial year. This is level 2 within the fair value hierarchy described in IFRS 13. The fair value of the installation services is taken as the most frequently observed (modal value) percentage of the contract price payable upon completion of the installation service. For the years 2020 to 2021, 10% of the revenue related to equipment is allocated for installation services.

For contracts where equipment revenue is recognized in two elements, the same method is also used to determine the fair value of products delivered, which is taken to be the most frequently observed (modal value) percentage of the contract value payable upon delivery of the equipment to the customer. This is also level 2 in the fair value hierarchy.

Segment revenues and results

Reversals of impairment allowances are included in other operating income as described in note 5. The accounting policies of the reportable segment are identical to the Group’s accounting policies as described in note 2. Segment profit represents the profit earned by the segment without the allocation of investment revenue, finance costs and income tax expense. This is the measure reported to the Executive Board for the purpose of resource allocation and assessment of performance.

The transaction price allocated to (partially) unsatisfied performance obligations at 31 December 2021 is Euro 214.6 million (31 December 2020: Euro 150.9 million). Management expects that approximately 82% of the transaction price allocated to the unsatisfied contracts as of the year ended 2021 will be recognized as revenue during 2022. The remaining amount will be recognized during the next financial year.

Segment assets and liabilities

For the purpose of monitoring segment performance and allocating resources all assets other than tax assets, cash and other financial assets are treated as allocated to the reportable segment. All liabilities are allocated to the reportable segment apart from tax liabilities and post-employment benefit liabilities.

Additions and changes to property, plant and equipment, to goodwill and to intangible assets, and the depreciation and amortization expenses are given in notes 11 and 12. Other non-current financial assets decreased by kEUR 59,794 during 2021 (increased by kEUR 60,051 during 2020).

Information concerning other material items of income and expense for personnel expenses and R&D expenses can be found in notes 7 and 4.

Geographical Information
 

The Group’s revenue from continuing operations from external customers and information about its non-current assets by geographical location are detailed below. Revenues from external customers are attributed to individual countries based on the country in which it is expected that the products will be used.

Sales from external customers attributed to Germany, AIXTRON’s country of domicile, and to other countries which are of material significance are as follows:

Revenues from all countries outside Germany were kEUR 391,844 and kEUR 257,012 for the years 2021 and 2020 respectively. In 2021 sales to one customer represented 12.1% of Group revenue, with no other customer exceeding 10%. During 2020 sales to one customer represented 10.4% of Group revenue, with no other customer exceeding 10%.140

Non-current assets exclude deferred tax assets, financial instruments, post-employment benefit assets and rights arising under insurance contracts.

4. Research and Development
 

Research and development costs, before deducting project funding received, were kEUR 56,809 and kEUR 58,379 for the years ended December 31, 2021 and 2020 respectively.

After deducting project funding received and not repayable, net expenses for research and development were kEUR 47,876 and kEUR 50,327 for the years ended December 31, 2021 and 2020 respectively.

5. Other Operating Income

The total amount of exchange gains and losses (see also note 6) recognized in profit or loss was a gain of kEUR 1,160 (2020: gain kEUR 795).

Compensation received in 2021 of kEUR 10 (2020: kEUR 535) is an insurance claim for damages incurred during shipment of goods. In 2021 the gain on disposal of assets amounted to kEUR 20 (2020: kEUR 1).

6. Other Operating Expenses

The net loss of kEUR 708 in 2021 arose on financial assets required to be measured at FVTPL (2020: loss kEUR 16). The amount includes unrealized losses of kEUR 659 (2020: kEUR 0) and realized losses of kEUR 49 (2020: kEUR 16).

7. Personnel Expense
 

8. Net Finance Income
 

9. Income Tax Expense / Benefit

The following table shows income tax expenses and income recognized in the consolidated income statement:

The income/loss before income taxes and income tax expense and income relate to the following regions:

The Group’s effective tax rate is different from the German statutory tax rate of 32.80% (2020: 32.80%);which is based on the German corporate income tax rate, including solidarity surcharge, and trade tax.

The following table shows the reconciliation from the expected to the reported tax expense:

In addition to the amount charged to profit or loss, the following amounts relating to tax have been recognized in other comprehensive income (OCI):

10. Current Tax Receivable and Payable

As of December 31, 2021 the current tax receivable and payable, arising because the amount of tax paid in the current or in prior periods was either too high or too low, are kEUR 2,363 (2020: kEUR 949) and kEUR 9,729 (2020: kEUR 2,215) respectively.

11. Property, Plant and Equipment and Leased Assets

Depreciation
 

Depreciation expense amounted to kEUR 7,843 for 2021 and kEUR 8,962 for 2020 respectively. During each financial year, asset useful lives and residual values are reviewed in accordance with IFRS. There was no significant adjustment of asset useful lives and residual values in 2021. In 2020 the effect of the changes in asset useful lives and residual values has been to decrease the depreciation expense by kEUR 962 compared with the depreciation which would have occurred had the asset useful lives and residual values remained unchanged.

Impairments

In 2021 AIXTRON reviewed the valuation of its property, plant and equipment and wrote down the value of some specific laboratory equipment that no longer had any economic value. An impairment expense of kEUR 355 was incurred (2020 kEUR 2,563).

In 2020 AIXTRON reviewed the valuation of its German production facilities and reversed an impairment allowance of kEUR 2,909 for one of the two production sites as we expect to continue to use this facility for production.

Assets Under Construction and Prepayments Made

 

Assets under construction relates mainly to self-built systems for development laboratories and advanced payments made for laboratory equipment in 2021 and 2020.
 

Leased Assets

Disclosures in respect of the underlying leases are shown in note 27.

12. Intangible Assets

Amortization and Impairment Expenses for Other Intangible Assets

Amortization and impairment expenses for other intangible assets are recognized in the income statement as follows:

In 2021 AIXTRON wrote down the value of one IT project that no longer had any economic value and intangible assets in scope of the restructuring of APEVA Group. An impairment expense of kEUR 456 was incurred. In 2020 no impairment losses were incurred, and no reversals of impairment losses were made.

The amortization expected to be charged on other intangible assets in the future years is as follows:

in EUR thousands

The actual amortization can differ from the expected amortization.

Impairment of Goodwill

At the end of 2021 the Group assessed the recoverable amount of goodwill and determined that no impairment loss had to be recognized (2020: kEUR 0).

As at the end of 2021 the cash generating unit, to which the goodwill has been allocated, is the AIXTRON Group Semiconductor Equipment segment.

The recoverable amount of the cash-generating unit is determined through a fair value less cost to sell calculation. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As AIXTRON has only one cash generating unit (CGU), market capitalization of AIXTRON, adjusted for a control premium, has been used to determine the fair value less cost to sell of the cash generating unit. This is level 2 in the hierarchy of fair value measures set out in IFRS 13.

As at December 31, 2021 the market capitalization of AIXTRON was Euro 2,005.2 million, based on a share price of Euro 17.87 and issued shares (excluding Treasury Shares) of 112,207,915.

In an orderly selling process costs are incurred. AIXTRON has used 1.5% to account for the costs to sell.

A control premium typically in the range 20%-40% is incurred in the acquisition of a company. A 20% premium has been applied in this test to adjust the market capitalization to the fair value. Market capitalization was also adjusted for net debt and tax assets prior to comparing it to the carrying amount of the CGU. The analysis shows that the fair value less costs to sell of the CGU AIXTRON exceeds its carrying amount and that Goodwill is not impaired.

The fair value less costs to sell, which is the recoverable amount, exceeds the carrying amount of the CGU by 797% (2020: 803%).

A sensitivity analysis of the impairment test, in which the control premium is reduced to zero, shows that the carrying amount of the CGU would equal the recoverable amount should the market capitalization of AIXTRON fall by 70.0% (2020: 68.4%) to Euro 601.2 million (2020: Euro 503.9 million).

13. Other Non-Current Financial Assets

Long-term deposits are cash deposits at banks. Miscellaneous other non-current financial assets mainly include security deposits for buildings.

The deposits are with a first-rate bank within the European Union and the company does not expect to incur any credit losses in respect of these deposits. The deposits are measured at amortized cost.

14. Deferred Tax Assets and Deferred Tax Liabilities

Recognized Deferred Tax Assets and Deferred Tax Liabilities

Deferred tax assets and liabilities are attributable to the following items:

Deferred tax assets are recognized at the level of individual consolidated companies in which a loss was realized in the current or preceding financial year, only to the extent that realization in future periods is probable. The nature of the evidence used in assessing the probability of realization includes forecasts, budgets and the recent profitability of the relevant entity.

The carrying amount of deferred tax assets for entities which have made a loss in either the current or preceding year was kEUR 427 (2020: kEUR 453).

Deferred taxes for tax losses in the amount of kEUR 99,429 (2020: kEUR 144,190) and on deductible temporary differences in the amount of kEUR 9,956 (2020: kEUR 7,765) were not recognized.

Tax losses in the amount of kEUR 90.694 can be used indefinitely (2020: kEUR 141,535), kEUR nil expire by 2026 (2020: kEUR nil, by 2025) and kEUR 8.735 expire after 2026 (2020: kEUR 10,420 after 2025).

The following table shows the development of deferred tax assets and liabilities during the financial year:

15. Inventories

The reversal of write-downs recognized during the year in both 2021 and 2020 mainly relates to inventories which had been written down to their net realizable value and subsequently were sold.

Customer-specific work in process relates to work performed at the customers’ site, typically to install equipment or to upgrade customers’ existing equipment. Variations in the level of contract balances - work in process in the year have occurred because of the normal variations in the stage of completion of the work on individual contracts. Completion of installation is the final contractual deliverable in most customer contracts which typically allows any remaining payments to be received from the customer.

16. Trade Receivables and Other Current Assets

in EUR thousands

Additions to allowances against trade receivables are included in other operating expenses, releases of allowances are included in other operating income. Allowances against receivables developed as follows:

Ageing of past due but not impaired receivables:

Due to the worldwide spread of risks, there is a diversification of the credit risk for trade receivables. Generally, the Group demands no securities for financial assets. In accordance with usual business practice for capital equipment however, the Group mitigates its exposure to credit risk by requiring payment by irrevocable letters of credit and substantial payments in advance from most customers as conditions of contracts for sale of major items of equipment.

In 2021 three customers accounted for 28%, 12% and 12% of net trade receivables respectively. In 2020 three customers accounted for 16%, 11% and 10% of net trade receivables respectively. In determining concentrations of credit risk, the Group defines counterparties as having similar characteristics if they are connected entities.

Included in the Group’s trade receivable balance are debtors with a carrying amount of kEUR 2,644 (2020: kEUR 4,111) which are past due at the reporting date for which the Group has not provided. As there has not been a significant change in credit quality, and although the Group has no collateral, the amounts are considered recoverable.

The Group measures the loss allowance for trade receivables at an amount equal to the lifetime expected credit loss. Based on its experience, the Group uses a general provision rate for lifetime expected credit loss of 0%, adjusted for factors which are specific to the debtors, general economic conditions, and an assessment of both the current as well as the forecast direction of conditions at the reporting date. In determining receivables which may be individually impaired the Group has taken into account the likelihood of recoverability based on the past due nature of certain receivables, and our assessment of the ability of all counterparties to perform their obligations.

17. Other Financial Assets

In 2021 other financial assets comprise fund investments and cash deposits at banks with a maturity of less than twelve months at inception of the contracts. In 2020 other financial assets comprise fund investments.

The composition of the other financial assets and the maturities at inception of the deposits were as below.

The fair value of fund investments is determined using the quoted prices in active markets at reporting date which is level one of the fair value hierarchy.

18. Cash and Cash Equivalents

Cash and cash equivalents comprise short-term bank deposits with an original maturity of 3 months or less. The carrying amount and fair value are the same.

Bank balances included kEUR 0 given as security (2020: kEUR 0) at December 31, 2021.

19. Shareholders’ Equity
 

Share Capital

The share capital of the Company consists of no-par value shares and was fully paid-up during 2021 and 2020. Each share represents a portion of the share capital in the amount of EUR 1.00.

Authorized Share Capital
 

Authorized share capital, including issued capital, amounted to EUR 201,284,934 (2020: EUR 201,284,934).

Additional Paid-In Capital

Additional paid-in capital mainly includes the premium on increases of subscribed capital as well as cumulative expense for share-based payments.

In 2021 364,700 new shares were issued within the scope of AIXTRON stock option plans (2020: nil). No treasury shares were transferred in 2021 as part of the share-based payments scheme (2020: 3,200 shares).

A dividend of kEUR 12,303 was paid to shareholders of AIXTRON SE in May 2021 (2020: kEUR 0).

The Group regards its shareholders’ equity as capital for the purpose of managing capital. Changes in Shareholders’ equity are shown in the consolidated statement of changes in equity. The Group considers its capital resources to be adequate.

Income and Expenses Recognized in Other Comprehensive Income

Income and expenses recognized in other comprehensive income are shown in the statement of other comprehensive income.

The foreign currency translation adjustment comprises all foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries whose functional currency is not the Euro.

During 2021 an income of kEUR 112 (2020: expense kEUR 21) was recorded from the remeasurement of defined benefit obligations in other comprehensive income.

20. Earnings Per Share

Basic Earnings Per Share
 

The calculation of the basic earnings per share is based on the weighted-average number of common shares outstanding during the reporting period.
 

Diluted Earnings Per Share

The calculation of the diluted earnings per share is based on the weighted-average number of outstanding common shares and of common shares with a possible dilutive effect resulting from share options being exercised under the share option plan.

In 2021 and 2020 no share options existed that would be anti-dilutive.

Amounts recognized as distributions to shareholders during the financial year and the proposed dividend for the year ended December 31, 2021 are set out in the table below

21. Employee Benefits

Defined Contribution Plan

The Group grants retirement benefits to qualified employees through various defined contribution pension plans. In 2021 the expense recognized for defined contribution plans amounted to kEUR 1,149 (2020: 1,248).

In addition to the Group’s retirement benefit plans, the Group is required to make contributions to state retirement benefit schemes in the countries in which it operates. AIXTRON is required to contribute a specified percentage of payroll costs to the retirement schemes in order to fund the benefits. The only obligation of the Group is to make the required contributions.

Defined Benefit Plan

Provisions for defined benefit pension plans in the amount of kEUR 200 (2020: kEUR 300) are reported under other non-current provisions.

22. Share-Based Payment

The Company has different fixed option plans which reserve shares of common stock for issuance to members of the Executive Board, management, and employees of the Group.

The Executive Board remuneration system at AIXTRON SE also consists long-term variable remuneration components (long-term incentive, LTI) that are granted in shares of AIXTRON SE.

The fair value of services received in return for shares or stock options granted is measured by reference to the fair value of the equity instruments or stock options granted..

AIXTRON Stock Option Plans

The fair value of the shares and stock options is determined on the basis of a mathematical model. There were no expenses recognized for the existing programs in 2021 and 2020.

AIXTRON Stock Option Plan 2007

In May 2007, options were authorized to purchase 3,919,374 shares of common stock. 50% of the granted options may be executed after a waiting period of not less than two years, further 25% after three years and the remaining 25% after at least four years. The options expire 10 years after they have been granted. Under the terms of the 2007 plan, options were granted at prices equal to the average closing price over the last 20 trading days on the Frankfurt Stock Exchange before the grant date, plus 20%. There were no shares outstanding under this plan as of December 31, 2021.

AIXTRON Stock Option Plan 2012

In May 2012, options were authorized to purchase shares of common stock. The granted options may be exercised after a waiting period of not less than four years. The options expire 10 years after they have been granted. Under the terms of the 2012 plan, options are granted at prices equal to the average closing price over the last 20 trading days on the Frankfurt Stock Exchange before the grant date, plus 30%. Options to purchase 182,500 common shares were outstanding under this plan as of December 31, 2021.

Summary of Stock Option Programs

AIXTRON Stock Options as of December 31, 2021

Long- Term Incentive of the Board of Directors (LTI)

The amount of long-term performance-related remuneration (LTI) is geared to the performance of the Group over a 3-year reference period and is granted entirely in AIXTRON shares. Executive Board members may first dispose of these shares following a four-year holding period calculated from the start of the reference period. Before the start of a fiscal year, the Supervisory Board determines the long-term targets for each Executive Board member for the forthcoming reference period. Each Executive Board member receives forfeitable stock awards in the amount of the target LTI as a percentage of the consolidated net income for the year pursuant to the budget adopted for the fiscal year. The number of forfeitable stock awards is calculated based on the average of the closing prices on all stock market trading days in the final quarter of the previous year.

LTI target achievement is determined using the indicators consolidated net income for the year and total shareholder return (TSR), as well as sustainability targets. In this regard, the relative weighting amounts to 50% for consolidated net income for the year, 40% for TSR, and 10% for sustainability targets.

After the expiry of the three-year reference period, the degree of LTI target achievement is determined by the Supervisory Board. Depending on the degree of target achievement, the forfeitable stock awards are then converted into vested stock awards or otherwise lapse. The maximum number of vested stock awards that may be granted in connection with LTI is capped at 250% of the number of forfeitable stock awards granted at the start of the reference period. The shares are transferred to the Executive Board member after the four-year restriction period.

The fair value of equity-settled share-based payment transactions is recognized as an expense over the vesting period and a corresponding adjustment is made to equity. The fair value of the shares granted is measured based on a valuation model taking into account the vesting conditions at which the shares are granted. The TSR ratio is used as a market condition in estimating the fair value at the valuation date. For the other non-market-based vesting conditions, the Group reviews its estimate of the number of equity instruments during the vesting period. Adjustments in the original estimates, if any, are recognized in profit or loss and a corresponding adjustment is made to equity.

The following table shows the main parameters of the valuation model (Monte Carlo simulation)for the long-term variable remuneration of the Executive Board (LTI) for the LTI Tranche 2021 and 2020:

In 2021 and 2022 there were two grant dates each, due to a later entry date of an Executive Board member. Assumptions regarding volatility and correlation between the AIXTRON share and the Peer Group were determined based on historical share price developments.

Within the scope of the LTI Tranche 2021 177,930 forfeitable share awards were granted with the weighted average fair value of EUR 15.54 per award on grant date (LTI Tranche 2020: 26,474 forfeitable share awards with the weighted average fair value of EUR 11.82 per award). As of December 31, 2024 or 2023, the forfeitable share awards of LTI Tranche 2021 or 2020 are converted into vested stock awards or partially forfeited.

In 2021, the personnel expenses from share-based payments, all of which were equity settled share-based payments, were kEUR 3,860 (2020: kEUR 1,129). Share-based payments include the expense of long-term incentive of the Executive Board which is paid in shares (see note 31).

23. Provisions

Development and breakdown of provisions:

Personnel Expenses

These include mainly provisions for holiday pay, payroll, severance payments and other variable element of pay, which are financial liabilities.

Provisions for Onerous Contracts

These include provisions associated with contracts where the unavoidable costs of meeting the contract obligations exceed the economic benefits expected to be received. These mainly relate to supply contracts for materials which are excess to the forecast future requirements.

Warranties

Warranty provisions are the estimated unavoidable costs of providing parts and service to customers during the normal warranty periods.
 

Other Provisions

Other provisions consist mainly of the estimated cost of services received and also includes pension provisions. For provisions existing at both December 31, 2021 and December 31, 2020, the economic outflows resulting from the obligations that are provided for are expected to be settled within one year of the respective balance sheet date for current provisions and within two years of the respective balance sheet date, but more than one year, for the main non-current provisions (excluding pension provisions).

24. Trade Payables and Other Current Liabilities

The liabilities consist of the following:

The carrying amount of trade payables and other current liabilities approximates their fair value. Trade payables, grant liabilities, taxes and other liabilities fall due for payment within 90 days of receipt of the relevant goods or services.

25. Financial Instruments
 

Details of the significant accounting policies and methods, the basis of measurement that are used in preparing the financial statements and the other accounting policies that are relevant to an understanding of the financial statement are disclosed in note 2 to the financial statements.

Financial Risk Management Objectives

Financial Risk Management ObjectivesThe Group seeks to minimize the effects of any risk that may occur from any financial transaction. Key aspects are the exposures to liquidity risk, credit risk, interest rate risk and currency risk arising in the normal course of the Group’s business.

The AIXTRON Group’s central management coordinates access to domestic and international financial institutions and monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposure to risk by likelihood and magnitude. These risks cover all aspects of the business, including financial risks; and the risk management system is in accordance with the corporate governance recommendations specified in the German Corporate Governance Code.

Liquidity Risks
 

Liquidity risk is the risk that the Group is unable to meet its existing or future obligations due to insufficient availability of cash or cash equivalents. Managing liquidity risk is one of the central tasks of AIXTRON SE. In order to be able to ensure the Group’s solvency and flexibility at all times cash and cash equivalents are projected on the basis of regular financial and liquidity planning.

As of December 31, 2021 the Group did not have any borrowings (2020: nil). Financial liabilities, all due within one year, of kEUR 26,018 (2020: kEUR 18,225) consisting of trade payables and other liabilities and are shown in note 24, together with an analysis of their maturity.

Non-current payables consist of lease liabilities and other payables. Long term lease liabilities of kEUR 3,052 (2020: kEUR 2,245) are shown with an analysis of their maturity in note 27. Other non-current payables of kEUR 244 (2020: kEUR 372) are due after more than one year.

As of December 31, 2021 the Group had kEUR 352,694 (2020: kEUR 309,681) of bank deposits and investments as described in notes 13, 17 and 18.
 

Credit Risks
 

Financial assets generally exposed to a credit risk are trade receivables, investments, and bank deposits.

The Group’s bank deposits and investments are kept with financial institutions that have a good credit standing. Central management of the Group assesses the counter-party risk of each financial institution dealt with and sets limits to the Group’s exposure to those institutions.

These credit limits are reviewed from time to time so as to minimize the default risk as far as possible and to ensure that concentrations of risk are managed.

The maximum exposure of the Group to credit risk is the total amount of receivables, financial assets and bank deposits as described in notes 13, 16, 17 and 18.

For contract assets measured at fair value, the maximum amount of the exposure to credit risk is the amount of contract assets measured at fair value as disclosed in note 25. There are no credit derivatives or similar instruments which mitigate the maximum exposure to credit risk and there has been no change during the period or cumulatively in the fair value of such receivables that is attributable to changes in the credit risk.

Market Risks
 

The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates and interest rate risks. Interest rate risks are not material as the Group only receives a minor amount of interest income. The Group does not use derivative financial instruments to manage its exposure to interest rate risk. Cash deposits are made with the Group’s bankers at the market rates prevailing at inception of the deposit for the period and currency concerned. The Group’s investments are made into funds bases in the European Union and are exposed to changes in the market value of those funds. There has been no change to the Group’s exposure to market risk or the manner in which it manages and measures the risk.

Foreign Currency Risk
 

The Group may enter into a variety of derivative financial instruments to manage its exposure to foreign currency risk, including forward exchange contracts to hedge the exchange rate risk arising on the export of equipment. The main exchange rates giving rise to the risk are those between the US Dollar, GB Pound, Chinese Renminbi and Euro.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

Exposures are reviewed on a regular basis and are managed by the Group through sensitivity analysis.

Foreign Currency Sensitivity Analysis
 

The Group's global operations expose it primarily to foreign exchange risks by the US Dollar, GB Pound and Chinese Renminbi.

The following table details the Group’s sensitivity to a 10% change in the value of the Euro against the US Dollar, GB Pound and Chinese Renminbi. A positive number indicates an increase in profit and other equity, a negative number indicates a reduction in profit and other equity.

The sensitivity analysis represents the foreign exchange risk at the year-end date only. It is calculated by revaluing the Group's financial assets and liabilities, existing at 31 December, denominated in US-Dollars, GB Pounds or Chinese Renminbi by 10%. It does not represent the effect of a 10% change in exchange rates sustained over the whole of the financial year, only the effect of a different rate occurring on the last day of the year.
 

Fair Values and Contract Assets

Cash and cash equivalents, receivables are stated at amortized cost. Other financial assets in 2021 comprise financial assets measured at FVTPL. Contract assets are outside the scope of IFRS 9.
 

Trade Receivables / Payables

For trade receivables/payables due within less than one year, measured at amortized cost, the fair value is taken to be the carrying amount.

Financial Assets 2021

Financial Liabilities 2021

Financial Assets 2020

Financial Liabilities 2020

26. Advance Payments – Contract Liabilities

Contract liabilities for advance payments from customers occur when a contract requires the customer to pay a deposit to the Group and the deposit has actually been paid, typically near the commencement of the contract, or if it reflects an unconditional payment claim. Usually, advance payments are up to 50% of the total contract price.

The Group records the liability as the advance payment is received and eliminates the liability at the same time and up to the same amount as it records revenue until the liability is fully extinguished. Changes in contract liabilities for advance payments in the year reflect the changing level of outstanding customer orders.

Revenues of kEUR 40,278 were realized in 2021 from the kEUR 50,824 of contract liabilities for advance payments outstanding at the end of 2020. Revenues of kEUR 45,341 were realized in 2020 from the kEUR 51,051 of contract liabilities for advance payments outstanding at the end of 2019. In 2021 no revenue was recognized from performance obligations that were settled in prior years.

27. Leases

Leases as Lessee
 

The undiscounted lease liabilities are payable as follows:

Note 11 includes the disclosures required by IFRS 16 concerning the depreciation charge for leased assets by underlying class of asset, additions to leased assets and the carrying value of leased assets at the end of the reporting period.

The Group has applied paragraph 6 of IFRS 16 when accounting for short-term leases and low-value leases and has expensed these on a straight-line basis. A similar portfolio of shortterm leases exists at the reporting date.

The Group leases certain buildings, equipment and vehicles under various leases. Under most of the lease commitments for buildings the Group has options to renew the leasing contracts. The leases typically run for a period between one and ten years. None of the leases include contingent rentals.

28. Restructuring Costs

the second quarter of 2021, the Group’s OLED activities were initially restructured and focused on the Chinese market. In the course of this, the workforce of APEVA Co. in Korea and of APEVA SE in Germany were reduced. In the first half year, costs of kEUR 3,233 were incurred in scope of these activities, mainly for severance payments and other personnel-related expenses.

As customers in this market are also opting for Micro LED as the technological basis for the development of the next generation of displays even faster than originally expected the shareholders of APEVA have decided not to make further investments in APEVA and to wind up the APEVA Group. In course of this development, an additional impairment, and other costs according to the restructuring in the amount kEUR 655 were recognized in the fourth quarter 2021.

Expenses incurred in the following areas:

29. Capital Commitments

30. Contingencies

AIXTRON is involved in various legal proceedings or can be exposed to a threat of legal proceedings in the normal course of business. The Executive Board regularly analyses these matters, considering any possibilities of avoiding legal proceedings or of covering potential damages under insurance contracts and has recognized, where required, appropriate provisions.

It is not expected that such matters will have a material effect on the Group’s net assets, results of operations and financial position.

31. Related Parties

Related parties of the Group are members of the Executive Board and members of the Supervisory Board and their close relatives.

The disclosures of key management personnel compensation are as follows:

Share-based payments refer to the fair value of share options at grant date and includes that portion of bonus agreements which is settled in shares.

Individual amounts and further details regarding the remuneration of the members of the Executive Board and Supervisory Board are disclosed in the Remuneration Report.

32. Consolidated Entities
 

AIXTRON SE controls the following subsidiaries:

All companies in the Group are engaged in the supply of equipment to the semiconductor industry or development facilities. Design and manufacture of equipment takes place at the entities in Germany and the UK. Service and distribution take place at all locations.

33. Events After the Reporting Period
 

There are no events which have occurred after the balance sheet date, of which the directors have knowledge, which would result in a different assessment of the Group’s net assets, results of operation and financial position.

34. Auditors’ Fees
 

Fees expensed in the income statement for the services of the Group auditor, Deloitte, are as follows:

Included in the total amount of fees are fees for the Group auditor Deloitte GmbH Wirtschaftspruefungsgesellschaft, Duesseldorf, in the amount of kEUR 447 for audit (2020: kEUR 399), kEUR 101 for other confirmation services (2020: kEUR 31), kEUR 4 for tax services (2020: kEUR 41) and kEUR 0 for other services (2020: kEUR 2).

The amounts for other confirmation services include fees for audits on EEG (renewable energy law) and KWKG (act on combined heat and power generation) as well as the non-financial report.

35. Employees

Compared to last year, the average number of employees during the current year was as follows:

36. Supervisory Board and Executive Board
 

Supervisory Board
 

• Kim Schindelhauer
  Chairman of the Supervisory Board since 2002
  Businessman
• Frits van Hout
  Vice Chairman of the Supervisory Board since 2019
  Entrepreneur
  Membership of Supervisory Boards and Controlling Bodies:
  •  
  • Bambi Belt Holding BV, Eindhoven/Netherlands (Member of the Supervisory Board)
  • Kendrion NV, Amsterdam/Netherlands (Chairman of the Supervisory Board, since April 12, 2021)
  • SmartPhotonics BV, Eindhoven/Netherlands (Member of the Supervisory Board, since May 31, 2021)
• Prof. Dr. Andreas Biagosch
  Member of the Supervisory Board since 2013
  Entrepreneur
  Membership of Supervisory Boards and Controlling Bodies:
  • Ashok Leyland Limited, Chennai/India (Non-Executive Director)
  • Wacker Chemie AG, Munich (Member of the Supervisory Board)
  • Hinduja Leyland Finance Limited, Chennai/India (Non-Executive Director, until November 9, 2021)
  • Athos Service GmbH, Munich (Chairman of the Advisory Board)
• Prof. Dr. Anna Weber
  Member of the Supervisory Board since 2019
  Professor for Economics esp. External Financial Accounting
  German Public Auditor (Wirtschaftsprueferin), German Tax Advisor (Steuerberaterin)
• Prof. Dr. Petra Denk
  Member of the Supervisory Board since 2011
  Professor of Energy Economics
  Membership of Supervisory Boards and Controlling Bodies:
  • Pfisterer Holding AG, Winterbach (Member of the Supervisory Board)
  • BKW AG, Bern/Switzerland (Member of the Advisory Board, since May 7, 2021

Executive Board

 

The composition of the Company’s Executive Board in 2021 is:

• Dr. Felix Grawert
  Aachen, Chairman of the Executive Board and Chief Executive Officer (CEO), member of the Executive Board since 2017
• Dr. Jochen Linck
  Aachen, member of the Executive Board and Chief Operating Officer (COO), member of the Executive Board since 2020
• Dr. Christian Danninger
  Cologne, member of the Executive Board and Chief Financial Officer (CFO), member of the Executive Board since May 1, 2021
• Dr. Bernd Schulte
  Aachen, member of the Executive Board until March 31, 2021
  Membership of supervisory boards and controlling bodies:
  • Suess Microtec SE, Garching (Member of the Supervisory Board since November 6, 2020)

37. Critical Accounting Judgments and Key Sources of Estimation and Uncertainty

The preparation of AIXTRON’s Consolidated Financial Statements requires the Group to make certain estimates, judgments, and assumptions that the Group believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts and related disclosures and are made in order to fairly present the Group’s financial position and results of operations. The following accounting policies are significantly impacted by these estimates and judgments that AIXTRON believes are the most critical to aid in fully understanding and evaluating its reported financial results:

Revenue Recognition
 

Revenue for the supply of most equipment to customers is generally recognized in two stages, partly on delivery and partly on final installation and acceptance (see note 2 (n)). The Group believes, based on past experience, that this method of recognizing revenue fairly states the revenues of the Group. The judgements made by management include an assessment of the point at which control has passed to the customer.

Valuation of Inventories
 

Inventories are stated at the lower of cost and net realizable value. This requires the Group to make judgments concerning obsolescence of materials. This evaluation requires estimates, including both forecasted product demand and pricing environment, both of which may be susceptible to significant change. The carrying amount of inventories is disclosed in note 15. As disclosed in notes 3 and 15, during the years 2021 and 2020 the Group incurred expenses of kEUR 2,851 and kEUR 1,918 respectively arising mainly from changes to past assumptions concerning net realizable value of inventories and excess and obsolete inventories. In future periods, write-downs of inventory may be necessary due to (1) reduced demand in the markets in which the Group operates, (2) technological obsolescence due to rapid developments of new products and technological improvements, or (3) changes in economic or other events and conditions that impact the market price for the Group’s products. These factors could result in adjustment to the valuation of inventory in future periods, and significantly impact the Group’s future operating results.

Income Taxes
 

At each balance sheet date, the Group assesses whether the realization of future tax benefits is sufficiently probable to recognize deferred tax assets. This assessment requires the exercise of judgement on the part of management with respect to future taxable income. The parent company AIXTRON SE does generally not exceed a planning horizon of twelve months. The recorded amount of total deferred tax assets could be reduced or increased if estimates of projected future taxable income are lowered or increased, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Group’s ability to utilize future tax benefits. The carrying amount of deferred tax assets is disclosed in note 14.

Provisions
 

Provisions are liabilities of uncertain timing or amount. At each balance sheet date, the Group assesses the valuation of the liabilities which have been recorded as provisions and adjusts them if necessary. Because of the uncertain nature of the timing or amounts of provisions, judgement has to be exercised by the Group with respect to their valuation. Actual liabilities may differ from the estimated amounts. Details of provisions are shown in note 23.

Legal proceedings

In the normal course of business, the Group is subject to various legal proceedings and claims. The Company, based upon advice from legal counsel, believes that the matters the Group is aware of are not likely to have a material adverse effect on its financial condition or results of operations. The Group is not aware of any unasserted claims that may have a material adverse effect on its financial condition or results of operation.

COVID-19 
 

Effects of COVID-19 on the business are discussed in the Group Management Report. The effects on the consolidated financial statements of 2021 are immaterial and it is similarly expected that the effects in 2022 will be immateria

Herzogenrath, February 23, 2022
AIXTRON SE

Executive Board

Responsibility Statement required by Sections 297(2) sentence 4 and 315(1) sentence 5 of the Handelsgesetzbuch (HGB – German Commercial Code) for the Consolidated Financial Statements:
 

“To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group Management Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated with the expected development of the Group.”

Herzogenrath, February 23, 2022
AIXTRON SE

Executive Board

Independent Auditor’s Report

To AIXTRON SE, Herzogenrath/Germany

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE COMBINED MAN-AGEMENT REPORT

Audit Opinions

We have audited the consolidated financial statements of AIXTRON SE, Herzogenrath/Germany, and its subsidiaries (the Group) which comprise the consolidated statement of financial position as at December 31, 2021, the consolidated income statement, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the financial year from January 1 to December 31, 2021, and the notes to the consolidated financial statements, including the presentation of the recognition and measurement policies. In addition, we have audited the combined management report for the parent and the group of AIXTRON SE, Herzogenrath/ Germany, for the financial year from January 1 to December 31, 2021. In accordance with the German legal requirements, we have not audited the content of the corporate governance statement pursuant to Sections 289f and 315d German Commercial Code (HGB), including the further reporting on corporate governance included therein, nor the content of the consolidated non-financial report pursuant to Sections 315b and 315c HGB, each of which is referred to in the combined management report.

In our opinion, on the basis of the knowledge obtained in the audit,

• the accompanying consolidated financial statements comply, in all material respects, with the IFRS as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e (1) HGB and, in compliance with these requirements, give a true and fair view of the assets, liabilities and financial position of the Group as at December 31, 2021 and of its financial performance for the financial year from January 1 to December 31, 2021, and
•  the accompanying combined management report as a whole provides an appropriate view of the Group’s position. In all material respects, this combined management report is consistent with the consolidated financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development. Our audit opinion on the combined management report does not cover the content of the corporate governance statement pursuant to Sections 289f and 315d HGB, including the further reporting on corporate governance included therein, nor the content of the consolidated non-financial report pursuant to Sections 315b and 315c HGB stated above.

Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the consolidated financial statements and of the combined management report

Basis for the Audit Opinions

We conducted our audit of the consolidated financial statements and of the combined management report in accordance with Section 317 HGB and the EU Audit Regulation (No. 537/2014; referred to subsequently as “EU Audit Regulation”) and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW). Our responsibilities under those requirements and principles are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements and of the Combined Management Report” section of our auditor’s report. We are independent of the group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the consolidated financial statements and on the combined management report.

Key Audit Matters in the Audit of the Consolidated Financial Statements

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the financial year from January 1 to December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our audit opinion thereon; we do not provide a separate audit opinion on these matters.

In the following we present the key audit matters we have determined in the course of our audit:

1. Revenue Recognition for Multiple-element Arrangements Including Cut-off

2. Measurement of Deferred Tax Assets

Our presentation of these key audit matters has been structured as follows:

a) description (including reference to corresponding information in the consolidated financial statements)

b) auditor’s response

1. Revenue Recognition for Multiple-element Arrangements Including Cut-off

a) The revenue as stated in the consolidated income statement amounts to kEUR 428,954. A substantial proportion of this revenue comprises the settlement of customer contracts that include multiple performance obligations. These arrangements primarily deal with the customer- specific manufacturing and supply of semiconductor equipment and its installation at the customer’s site. Furthermore, in specific cases, the Group and the customer agree on the supply of related spare parts and/or the provision of services such as maintenance services and/or certain rights of return. These services are to be measured separately. As part of the technical acceptance process with regard to the equipment, additional services may be required. These additional services also have to be considered when recognizing revenue. Generally, the contract with the customer provides for a transaction price for the equipment and the remaining elements such as installation, spare parts packages, services and specific rights of return. Consequently, the transaction price needs to be allocated to each performance obligation based on a relative stand-alone selling price basis. Except for certain rights of return that exceed the common periods, the performance obligations are satisfied at a certain point in time and the related revenue is realized. The determination of the time of revenue recognition regarding arrangements comprising multiple performance obligations and the cut-off as part of revenue recognition are subject to the executive directors’ judgment and assumptions due to the highly individual customer contracts and complex equipment. As a consequence, we considered this issue to be a key audit matter.

The information of the executive directors on revenue is provided in section 2 “Significant Accounting Polices” in note N “Revenue” as well as in section 3 “Segment Reporting and Revenues” in the notes to the consolidated financial statements.

b) First, we recorded and assessed the major processes from order confirmation until settlement including the audit of the design, implementation and effectiveness of the accounting- related controls regarding revenue recognition. In this context, our audit primarily covered the effectiveness of the controls regarding the allocation of the transaction price to the individual performance obligations, the complete provision of the supply and installation services and the recognition of the supplied equipment and installation services on an accrual basis.

We performed the following audit procedures based on a stratified and random selection of a sample taken from equipment supplies and installation services by means of a representative sampling method:

• equipment supplies: audit of an existent customer contract, evaluation of the allocation of the transaction price on a relative stand-alone selling price basis to the individual supply and service elements by verifying the underlying contract, reviewing the time of revenue recognition pursuant to contract terms, primarily the incoterms based on the acceptance test records and based on the acceptance and supply records of the dispatch company.
• installation services: audit of an existent final acceptance record signed by the customer including the review of estimations made by the executive directors regarding work to be done yet as well as any additional agreements to the contract with the customer as regards additional services to be rendered and review of the related cut-off of revenue.
• assessment of the completeness and appropriateness of the corresponding information provided in the notes to the consolidated financial statements.

2. Measurement of Deferred Tax Assets

a) Total deferred tax assets of kEUR 24,735 (accounting for 3.3% of the Group’s total assets) are stated as “Deferred tax assets” in the consolidated statement of financial position. These deferred tax assets were determined based on the Group’s tax planning and mainly result from tax loss carry-forwards (kEUR 23,649) and deductible differences between IFRS carrying values and their tax base to be reversed in the following years (kEUR 1,086). The majority of the deferred tax assets (kEUR 20,714) results from the parent company AIXTRON SE, which has comprehensive tax loss carry-forwards. The executive directors are of the opinion that for the parent company a reasonable derivation of an estimation of taxable results beyond a period of twelve months after the reporting date is not possible for a technology company characterized by highly fluctuating demand and volatile results. Accordingly, deferred taxes on tax loss carry-forwards and temporary differences concerning the parent company AIXTRON SE were only recognized insofar as they are expected to be used in 2022. The deferred tax assets concerning the parent company AIXTRON SE are measured using a tax rate of 32.8%, which is the currently applicable income tax rate. The other deferred tax assets result from tax loss carry-forwards and deductible differences concerning the foreign subsidiaries of AIXTRON SE. As they are largely secured by costplus agreements with the parent company, which bears the major risks, these deferred tax assets are based on tax planning strategies over a period of three years using the corresponding local tax rates.

The result of the computation of the deferred tax assets depends on whether tax benefits can be realized from tax loss carry-forwards according to estimations and assumptions of the executive directors and, therefore, are subject to uncertainties. Accordingly, we considered the measurement of deferred taxes to be a key audit matter.

Information on deferred taxes is provided by the executive directors of the parent company in note 14 to the consolidated financial statements.

b) As part of our audit, we used the knowledge and audit results gained in previous years. For the purpose of risk assessment, we obtained an understanding of the past adherence to the budget. First, we assessed whether the measurement methods applied are appropriate. General and industry-specific market expectations of the executive directors of AIXTRON SE were compared with external sources. As part of our examination of the tax matters, we consulted internal tax experts, who were involved in the audit team. They supported us in assessing the installed processes and controls for validating the budget estimations and recognizing tax matters. In addition, with respect to the tax planning, we queried the recognition of the deferred taxes and the explanations of the executive directors. We assessed the recoverability of the deferred tax assets on tax loss carry-forwards on the basis of corporate forecasts and the budget prepared by the executive directors concerning the future taxable profits of AIXTRON SE and its major subsidiaries and reviewed the appropriateness of the basis used for the budget. Furthermore, we obtained an understanding of the reconciliation between the expected tax expense, which was determined by applying the weighted group tax rate, and the recognized tax expense.

Other Information

The executive directors and/or the supervisory board are responsible for the other information.
The other information comprises

• the report of the supervisory board,
• the corporate governance statement pursuant to Sections 289f and 315d HGB, including the further reporting on corporate governance included therein, referred to section “Legal Disclosures” of the combined management report,
• the consolidated non-financial report pursuant to Sections 315b and 315c HGB referred to in section “Legal Disclosures” of the combined management report,
• he executive directors’ confirmation regarding the consolidated financial statements and the combined management report pursuant to Section 297 (2) sentence 4 and Section 315 (1) sentence 5 HGB, and
• all other parts of the annual report,but not the consolidated financial statements, not the audited content of the combined management report and not our auditor’s report thereon.

The supervisory board is responsible for the report of the supervisory board. The executive directors and the supervisory board are responsible for the statement according to Section 161 German Stock Corporation Act (AktG) concerning the German Corporate Governance Code including the further reporting on corporate governance, which is part of the corporate governance statement, and which is referred to in the combined management report. Otherwise the executive directors are responsible for the other information. Our audit opinions on the consolidated financial statements and on the combined management report do not cover the other information, and consequently we do not express an audit opinion or any other form of assurance conclusion thereon. In connection with our audit, our responsibility is to read the other information identified above and, in doing so, to consider whether the other information

• materially inconsistent with the consolidated financial statements, with the auditet content of the combined management report or our knowledge obtained in the audit,
  or
• otherwise appears to be materially misstated.

Responsibilities of the Executive Directors and the Supervisory Board for the Consolidated Financial Statements and the Combined Management Report

The executive directors are responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRS as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e (1) HGB, and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial position and financial performance of the Group. In addition, the executive directors are responsible for such internal control as they have determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the executive directors are responsible for assessing the Group’s ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.

Furthermore, the executive directors are responsible for the preparation of the combined management report that as a whole provides an appropriate view of the Group’s position and is, in all material respects, consistent with the consolidated financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a combined management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the combined management report.

The supervisory board is responsible for overseeing the Group’s financial reporting process for the preparation of the consolidated financial statements and of the combined management report.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements and of the Combined Management Report

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether the combined management report as a whole provides an appropriate view of the Group’s position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor’s report that includes our audit opinions on the consolidated financial statements and on the combined management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Section 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and this combined management report.

We exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• identify and assess the risks of material misstatement of the consolidated financial statements and of the combined management report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
• obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and measures relevant to the audit of the combined management report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an audit opinion on the effectiveness of these systems.
• evaluate the appropriateness of accounting policies used by the executive directors and the reasonableness of estimates made by the executive directors and related disclosures.
• conclude on the appropriateness of the executive directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the consolidated financial statements and in the combined management report or, if such disclosures are inadequate, to modify our respective audit opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.
• evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance with IFRS as adopted by the EU and with the additional requirements of German commercial law pursuant to Section 315e (1) HGB.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express audit opinions on the consolidated financial statements and on the combined management report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinions.
• evaluate the consistency of the combined management report with the consolidated financial statements, its conformity with German law, and the view of the Group’s position it provides.
• perform audit procedures on the prospective information presented by the executive directors in the combined management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the executive directors as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate audit opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We provide those charged with governance with a statement that we have complied with the relevant independence requirements, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the current period and are therefore the key audit matters. We describe these matters

in the auditor’s report unless law or regulation precludes public disclosure about the matter

OTHER LEGAL AND REGULATORY REQUIREMENTS

Report on the Audit of the Electronic Reproductions of the Consolidated Financial Statements and of the Combined Management Report Prepared for Publication Pursuant to Section 317 (3a) HGB

Audit Opinion

We have performed an audit in accordance with Section 317 (3a) HGB to obtain reasonable assurance whether the electronic reproductions of the consolidated financial statements and of the combined management report (hereinafter referred to as “ESEF documents”) prepared for publication, contained in the provided file, which has the SHA-256 value 8A92B40D93B1C77570DCC62AD1B3F2E68CBB059EDCCB71E9DE08C9F30C0C7195, meet, in all material respects, the requirements for the electronic reporting format pursuant to Section 328 (1) HGB (“ESEF format”). In accordance with the German legal requirements, this audit only covers the conversion of the information contained in the consolidated financial statements and the combined management report into the ESEF format, and therefore covers neither the information contained in these electronic reproductions nor any other information contained in the file identified above.

In our opinion, the electronic reproductions of the consolidated financial statements and of the combined management report prepared for publication contained in the provided file identified above meet, in all material respects, the requirements for the electronic reporting format pursuant to Section 328 (1) HGB. Beyond this audit opinion and our audit opinions on the accompanying consolidated financial statements and on the accompanying combined management report for the financial year from January 1 to December 31, 2021 contained in the “Report on the Audit of the Consolidated Financial Statements and of the Combined Management Report” above, we do not express any assurance opinion on the information contained within these electronic reproductions or on any other information contained in the file identified above.

Basis for the Audit Opinion

We conducted our audit of the electronic reproductions of the consolidated financial statements and of the com-bined management report contained in the provided file identified above in accordance with Section 317 (3a) HGB and on the basis of the IDW Auditing Standard: Audit of the Electronic Reproductions of Financial Statements and Management Reports Prepared for Publication Purposes Pursuant to Section 317 (3a) HGB (IDW AuS 410 (10.2021)). Our responsibilities in this context are further described in the “Group Auditor’s Responsibilities for the Audit of the ESEF Documents” section. Our audit firm has applied the IDW Standard on Quality Manage-ment: Requirements for Quality Management in the Audit Firm (IDW QS 1).

Responsibilities of the Executive Directors and the Supervisory Board for the ESEF Documents

The executive directors of the parent are responsible for the preparation of the ESEF documents based on the electronic files of the consolidated financial statements and of the combined management report according to Section 328 (1) sentence 4 no. 1 HGB and for the tagging of the consolidated financial statements according to Section 328 (1) sentence 4 no. 2 HGB.

In addition, the executive directors of the parent are responsible for such internal controls that they have considered necessary to enable the preparation of ESEF documents that are free from material intentional or unintentional non-compliance with the requirements for the electronic reporting format pursuant to Section 328 (1) HGB.

The supervisory board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.

Group Auditor’s Responsibilities for the Audit of the ESEF Documents

Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional non-compliance with the requirements of Section 328 (1) HGB. We exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Section 328 (1) HGB, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinion.
• obtain an understanding of internal control relevant to the audit on the ESEF documents in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these controls.
• evaluate the technical validity of the ESEF documents, i.e. whether the provided file containing the ESEF documents meets the requirements of the Delegated Regulation (EU) 2019/815, in the version in force at the balance sheet date, on the technical specification for this electronic file.
• evaluate whether the ESEF documents enable a XHTML reproduction with content equivalent to the audited consolidated financial statements and to the audited combined management report.
• evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Articles 4 and 6 of the Delegated Regulation (EU) 2019/815, in the version in force at the balance sheet date, enables an appropriate and complete machine-readable XBRL copy of the XHTML reproduction

Further Information pursuant to Article 10 of the EU Audit Regulation

We were elected as Group auditor by the annual general meeting on May 19, 2021. We were engaged by the supervisory board on October 20, 2021. We have been the group auditor of AIXTRON SE, Herzogenrath/Germany, without interruption since the financial year 1996.

We declare that the audit opinions expressed in this auditor’s report are consistent with the additional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).

OTHER MATTER – USE OF THE AUDITOR’S REPORT

Our auditor’s report must always be read together with the audited consolidated financial statements and the audited combined management report as well as with the audited ESEF documents. The consolidated financial statements and the combined management report converted into the ESEF format – including the versions to be published in the Federal Gazette are merely electronic reproductions of the audited consolidated financial statements and the audited combined management report and do not take their place. In particular, the ESEF report and our audit opinion contained therein are to be used solely together with the audited ESEF documents made available in electronic form.

GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE ENGAGEMENT

The German Public Auditor responsible for the engagement is André Bedenbecker.

Düsseldorf/Germany, February 23, 2022
Deloitte GmbH

(André Bedenbecker)                (Dr. Peter Dittmar)

Wirtschaftsprüfer                      Wirtschaftsprüfer
(German Public Auditor)           (German Public Auditor)                   

Financial Calendar

Imprint

Publisher: AIXTRON- Gruppe, Herzogenrath, Deutschland

Editor: Investor Relations & Corporate Communications, AIXTRON- Group, Germany

Auditor: Deloitte GmbH, Wirtschaftsprüfungsgesellschaft, Düsseldorf, Germany

Concept and Design: EQS Group AG, München, Germany

Forward-Looking Statements
 

This document may contain forward-looking statements regarding the business, results of operations, financial condition and earnings outlook of AIXTRON. These statements may be identified by words such as “may”, “will”, “expect”, “anticipate”, “contemplate”, “intend”, “plan”, “believe”, “continue” and “estimate” and variations of such words or similar expressions. These forward-looking statements are based on the current assessments, expectations and assumptions of the executive board of AIXTRON, of which many are beyond control of AIXTRON, based on information available at the date hereof and subject to risks and uncertainties. You should not place undue reliance on these forward-looking statements. Should these risks or uncertainties materialize or should underlying expectations not occur or assumptions prove incorrect, actual results, performance or achievements of AIXTRON may materially vary from those described explicitly or implicitly in the relevant forward-looking statement. This could result from a variety of factors, such as those discussed by AIXTRON in public reports and statements, including but not limited those reported in the chapter “Risk Report”. AIXTRON undertakes no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise, unless expressly required to do so by law.

This document is an English language translation of a document in German language. In case of discrepancies, the German language document shall prevail and shall be the valid version.