Supervisory Board Report

In fiscal year 2021, AIXTRON generated the highest order intake and revenues since 2012. This is the result of a consistent focus on applications of compound semiconductor materials in fast growing end markets, which we have been pursuing in a targeted manner for several years. The outstanding commitment of AIXTRON’s employees has made this performance possible, despite a challenging business environment in the face of the COVID-19 pandemic.

AIXTRON provides the key technology for the megatrends of sustainability and digitalization, which offer exceptionally attractive growth opportunities. With respect to sustainability, AIXTRON’s innovative power electronics solutions are making a significant contribution to climate protection and energy efficiency, as well as to the expansion of electromobility and renewable energies. Compound semiconductors manufactured on AIXTRON equipment are core components of electric vehicles, highly efficient data centers, and in the area of power generation from renewable sources. The rapidly advancing digitalization is enabled by AIXTRON’s solutions in optoelectronics. Here, the focus is on the expansion of optical data transmission networks, high-speed mobile networks, and environment detection through optical sensors. In addition, micro LEDs will form the backbone for the next generation of displays, whether in wearables, smartphones, in TV sets or in AR/VR glasses. All of these applications will be unlocked by technologies manufactured on AIXTON equipment. AIXTRON has established an outstanding global market position in these markets through targeted investments in research and development and will consistently exploit the resulting sales opportunities in the coming years.

The new appointments to the Executive Board, as resolved by the Supervisory Board in 2019, were successfully completed in 2021. Dr. Bernd Schulte retired on April 1, 2021, after nineteen successful years on the Executive Board. The Chief Financial Officer (CFO) position was appointed with Dr. Christian Danninger as of May 1, 2021. Since then, the Executive Board has comprised a total of three members. In addition to Dr. Felix Grawert, who was appointed Chairman of the Executive Board on April 1, 2021, these are Dr. Joachim Linck, Chief Operating Officer (COO), and Dr. Christian Danninger, Chief Financial Officer (CFO). Due to the complementary competence profiles and backgrounds of experience, the Executive Board is now best positioned to seize the growth opportunities in the coming years.

Training or professional development measures for members of the Supervisory Board are appropriately supported by the Company.

The growing importance of sustainability in Group management was taken into account in 2021 by creating a new staff function ESG & Sustainability Management, reporting directly to the Executive Board. As a climate-neutral company, AIXTRON is also striving to play a pioneering role in this area and is already reporting voluntarily on its EU taxonomy-compliant revenues, capital expenditure (CapEx) and operating expenses (OpEx) for fiscal year 2021. The results impressively reflect the decisive contribution AIXTRON is making with its technologies to reducing the global CO2 footprint and thus to reducing global warming.

The Supervisory Board has prepared for the upcoming change of auditor and has decided to propose to the Annual General Meeting the election of KPMG AG Wirtschaftsprüfungsgesellschaft as auditor for the company’s annual and consolidated financial statements for the 2022 financial year.

Throughout the reporting year, the Supervisory Board performed the duties and responsibilities entrusted to it by law, the Articles of Association, and the Rules of Procedure without limitation.

Cooperation between the Supervisory Board and the Executive Board

The Supervisory Board continuously monitored the Executive Board in its management of the company and advised it on all matters of importance to the company, so that the Supervisory Board was always able to verify the legality and regularity, expediency, and economic efficiency of the company’s management.

The Supervisory Board was directly involved at an early stage in all decisions of fundamental importance to the Company. The Executive Board informed the Supervisory Board regularly, promptly, and comprehensively about the course of business, corporate planning, and the strategic development of the AIXTRON Group. In addition, the Supervisory Board regularly consulted with the Executive Board on the Company’s risk situation, risk management, and compliance. Based on the Executive Board’s reports, business developments and other events of importance to the Company were discussed in detail. The Supervisory Board approved the respective resolution proposals of the Executive Board after thorough examination and consultation.

The Supervisory Board did not make use of the opportunity to review the Company's books and records (Section 111 (2) of the German Stock Corporation Act (AktG)).

Cooperation with the Executive Board was characterized in every aspect by responsible and targeted action. The Executive Board fully complied with its reporting obligations to the Supervisory Board, both verbally and in writing.

As Chairman of the Supervisory Board, I was also in regular contact with the Executive Board even beyond the Supervisory Board meetings. In addition to the current business situation and important business transactions, we discussed especially matters of strategic positioning.

Supervisory Board Meetings in 2021

In the year 2021, the Supervisory Board met in four ordinary meetings on February 22, May 18, September 22, and December 15. The February meeting was attended by the Supervisory Board members via audio and video conference to avoid COVID-19 infection risks, with the exception of Chairman Kim Schindelhauer, who was present. The meetings in February and May were each attended by all acting Supervisory Board members. Prof. Dr. Biagosch was unable to attend the meeting in September 2021 and Prof. Dr. Denk was unable to attend the meeting in December 2021. After the meetings, both expressly approved all the resolutions adopted.

Prior to the meetings, all Supervisory Board members received detailed quarterly reports on the Company's situation, as well as other information, such as internal control reports, meeting minutes, company presentations, analyst reports, consensus estimates, press releases, and the AIXTRON financial reports or financial notifications. These are made available via an encrypted digital platform specially set up for the Supervisory Board. The Supervisory Board obtained a comprehensive picture of the business situation before and during the meetings based on current financial figures as well as updated forecast reports and development plans (orders, revenues, competition, market shares). Deviations in the course of business from the planned budgets were explained and justified in detail.

In addition, the Supervisory Board focused intensively on the development progress of new equipment generations. These are key to the Company's sustainable and profitable growth, resulting from the expected growth in AIXTRON’s target markets.

The meeting on February 22, 2021, focused on the annual and consolidated financial statements and the combined management report for fiscal year 2020 and the corresponding discussions and resolutions. We also discussed the draft agenda for the 2021 Annual General Meeting, which we approved after clarification of some unresolved items. Furthermore, the Supervisory Board discussed and approved the proposed Declaration of Corporate Governance. The non-financial report of AIXTRON SE and the Group (Sustainability Report) for fiscal year 2020 to be prepared by AIXTRON and reviewed by the auditor was reviewed, discussed, and approved. The Supervisory Board then discussed in detail the business development in 2021 and the future strategic alignment of APEVA. The Supervisory Board again formally confirmed the appointment of Dr. Grawert as Chairman of the Executive Board from April 1, 2021. The Supervisory Board thanked Dr. Schulte, who contributed to the Company as a member of the Executive Board for 19 years, for his long-standing service to AIXTRON SE and the trustful cooperation.

At the meeting on May 18, 2021, the Executive Board explained the year-to-date business performance and the planning for the 2021 Annual General Meeting, which was to be held virtually once again for the protection of all participants. In addition, the Supervisory Board addressed in detail the strategy and development roadmap in the power electronics technology segment based on GaN and SiC materials. It was outlined that the majority of power electronics manufacturers and also automotive equipment suppliers are working intensively on SiC technology. It was also discussed how the resulting market opportunities were to be addressed. With regard to the GaN-based power electronics technology segment, the expected market development and the AIXTRON technology and product roadmap were discussed. In addition, the status of the restructuring of the APEVA companies was presented.

At the ordinary meeting on September 22, 2021, the Executive Board reported on the business development in the 1st half of the year and provided an outlook for the second half of the fiscal year 2021. The Supervisory Board was updated on the strategy and development planning in the Optoelectronics technology segment. The industry dynamics in the Laser and LED segments were presented in detail and a comprehensive overview of the current development in the future segment micro LED was given. In addition, the Executive Board provided information on the status of various strategy projects and gave an update on the restructuring of the APEVA companies.

On December 15, 2021, the Supervisory Board of AIXTRON SE held its last ordinary meeting of the year. The budget for 2022 presented by the Executive Board was discussed in detail and approved. The 2022 budget includes, among other things, the detailed revenue, earnings, financial and investment planning as well as the planned personnel development of the AIXTRON Group. Furthermore, the Supervisory Board discussed the agenda for the next Annual General Meeting on May 25, 2022. As in the previous year, this Annual General Meeting is to be held virtually. As part of the annual efficiency review, the Supervisory Board's activities were assessed using a comprehensive questionnaire and specific areas were identified where work can be done even more effectively.

Committees

The Supervisory Board has formed four committees: an Audit Committee, a Capital Markets Committee, a Nomination Committee, and a Remuneration Committee. The committees prepare resolutions and issues to be dealt with in the plenary sessions of the Supervisory Board.

The Audit Committee deals with the monitoring of accounting, the accounting process, corporate governance & compliance, the effectiveness of the internal control system, the risk management system, the internal audit system, the audit of the financial statements as well as assessing the quality of the audit. The Chairwoman of the Audit Committee, Prof. Dr. Anna Weber, has expertise in the areas of accounting and auditing (Section 107 (4), Section 100 (5) of the German Stock Corporation Act (AktG)) as well as special knowledge and experience in the application of internal control procedures.

In the year under review, the Supervisory Board commissioned Deloitte GmbH Wirtschaftsprüfungsgesellschaft, as proposed by the Audit Committee, with the audit of the annual and consolidated financial statements as well as the combined management report of AIXTRON SE as of December 31, 2021, the audit of the Company's early risk detection system within the meaning of § 91 (2) AktG, the preparation of a "Management Letter", the findings pursuant to Section 7.2.3 of the German Corporate Governance Code and, pursuant to 111 (2) AktG, with the content review of the separate Group non-financial report to be prepared for 2021. In addition, the key audit matters (KAM) to be mentioned in the auditor's report on the AIXTRON Annual and Consolidated Financial Statements 2021 were discussed with the auditor.

The Audit Committee met eight times in 2021 (February 22, February 23, May 18, June 8, September 21, September 29, November 10, December 14). The significantly higher number of meetings compared to the previous year is due to the tendering of the audit for fiscal year 2022. All members of the Audit Committee attended the meetings in person or by video link. All resolutions were passed unanimously. For the quarterly financial statements as of March 31, 2021, June 30, 2021, and September 30, 2021, the Audit Committee held discussions with the auditors and accounting representatives in each case and discussed the publication of the quarterly figures in detail with the Executive Board. In addition to the above-mentioned tasks and the quarterly accounting issues, the Audit Committee dealt with the following special topics, among others:

• Declaration of independence and ongoing monitoring of the auditor's independence
• Tender for the audit of the financial statements for fiscal year 2022
• Non-financial Group report (Sustainability Report), in particular implementation of the requirements of the EU Taxonomy Directive
• Implementation of the requirements under the Financial Market Integrity Strengthening Act (Finanzmarktintegritätsstärkungsgesetz - FISG)
• Risk management, in particular implementation of the requirements from the new version of the auditing standard IDW PS 340 n.F.
• Internal (accounting-related) control system
• Internal audits 2021 and audit plan for the following year
• Compliance, esp. compliance training plan for 2021
• Information security, esp. focus topics in 2021 
• Tax audits, esp. at AIXTRON SE
• Assessment of the quality of the audit of the financial statements

The Capital Market Committee is concerned with the evaluation of activities with potential capital market relevance. It consists of two members. No meetings were held in 2021.

The Nomination Committee consists of three members and makes appropriate proposals to the full Supervisory Board in the event of new appointments to the corporate bodies. In doing so, it also considers the targets for the composition of the corporate bodies.

In 2021, the Nomination Committee met three times, on September 21, October 19 and November 5. These meetings, the majority of which were held by telephone, were attended by all members of the Nomination Committee and invited guests. At the meeting of the Nomination Committee held on September 21, 2021, Mr. van Hout was elected Chairman. The meetings dealt primarily with issues relating to the appointment of Supervisory Board members at the 2022 Annual General Meeting.

In the past fiscal year, issues relating to the Remuneration Committee were dealt with at the meetings of the Nomination Committee, as the members of both committees are identical. The Remuneration Committee dealt mainly with issues relating to the remuneration of the members of the Executive Board, in particular its variable short- and long-term remuneration components.

Corporate Governance and Declaration of Conformity

The Supervisory Board continuously monitors the development of corporate governance standards and prepares a joint corporate governance report together with the Executive Board. The Supervisory Board will continue to support the Executive Board in its efforts to fully comply with the recommendations of the German Corporate Governance Code.

In the current Declaration of Conformity pursuant to Section 161 of the German Stock Corporation Act (AktG) dated February 2022, full compliance with the recommendations of the German Corporate Governance Code is declared, except for the deviation explained.

No conflicts of interest involving members of the Supervisory Board or Executive Board were reported in the fiscal year.

Audit and Annual Financial Statements

Pursuant to the resolution of the general shareholders meeting on May 19, 2021, the Supervisory Board commissioned Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Düsseldorf, with the audit of the annual financial statements and the consolidated financial statements as well as the combined management report of AIXTRON SE for fiscal year 2021.

The audits also covered the measures taken by the Executive Board to identify risks at an early stage that could jeopardize the success and continued existence of the company, as well as the lawful, proper, and appropriate reporting of non-financial information in the Sustainability Report for 2021. It was also agreed that the auditor must inform the Supervisory Board or make a note in the audit report if, during the performance of the audit, it ascertains facts that show a misstatement in the Declaration of Conformity issued by the Executive Board and Supervisory Board in accordance with Section 161 of the German Stock Corporation Act (AktG). As in previous years, such a determination was not necessary for the 2021 fiscal year.

The annual financial statements and the combined management report of AIXTRON SE and the AIXTRON Group as of December 31, 2021, were prepared in accordance with the rules of the German Commercial Code (HGB), the consolidated financial statements and the group management report as of December 31, 2021, were prepared in accordance with § 315e HGB on the basis of the International Financial Reporting Standards IFRS. The independent auditing company Deloitte GmbH Wirtschaftsprüfungsgesellschaft audited both the annual financial statements and the consolidated financial statements and combined management report prepared by AIXTRON SE for fiscal year 2021 and reviewed the separate Group non-financial report. The financial statements including the combined management report were issued with an unqualified audit opinion. The non-financial consolidated report received the opinion of an audit to obtain limited assurance. The auditors found that the combined management report of the Company and the Group accurately presents the current business and future development of the Company and the Group. The audit of the financial statements of AIXTRON SE in fiscal year 2021 by Deloitte GmbH Wirtschaftsprüfungsgesellschaft was performed by the audit team with the lead auditor Mr. André Bedenbecker.

The financial statement documents (annual financial statements of AIXTRON SE and consolidated financial statements as of December 31, 2021, as well as the combined management report of AIXTRON SE and the Group), the separate Group non-financial report as well as the auditor's reports were submitted to the Audit Committee and the Supervisory Board in a timely manner. These documents were reviewed in detail by us. In the meeting of the Audit Committee and the full Supervisory Board on February 23, 2022, both the annual financial statements of AIXTRON SE and the consolidated financial statements as well as the combined management report and the Group non-financial report were discussed and debated in detail, considering the audit reports of the auditor. The auditor, who attended both the Audit Committee meeting and the Supervisory Board meeting, reported on the main results of its audit, which also included the internal control and risk management system regarding the accounting process, and was available to the Audit Committee and the Supervisory Board, respectively, for any additional questions and information.

The results of our own review did not give rise to any objections either to the Group non-financial report or to the annual financial statements, the consolidated financial statements and the combined management report. The combined management report is consistent with our own assessment of the situation of the Company and the Group. We concurred with the auditor's findings, with which we fully agreed in terms of content, and approved the annual financial statements and the consolidated financial statements as well as the combined management report prepared by the Executive Board, as well as the Group non-financial report of the Company for fiscal year 2021, by resolution dated February 23, 2022. The annual financial statements of AIXTRON SE are thus formally adopted.

Note of thanks from the Supervisory Board

On behalf of the Supervisory Board, I would like to thank the members of the Executive Board and all employees of the AIXTRON Group for their extraordinary dedication and hard work in fiscal year 2021, which was characterized by immense growth of the Company and dealing with the difficulties caused by the COVID 19 pandemic. The entire Supervisory Board would also like to thank the employee representatives for their constructive cooperation with the Company's executive bodies in this successful and challenging year.

Herzogenrath, February 2022 

Kim Schindelhauer

Chairman of the Supervisory Board