Quarterly Report • Aug 4, 2022
Quarterly Report
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| IN EUR MIO. | 6M 2022 | 6M 2021 |
|---|---|---|
| Revenues | 660.7 | 600.6 |
| Gross profit | 245.9 | 233.1 |
| EBITDA | 62.6 | 58.3 |
| Amortisation and depreciation | 30.1 | 31.7 |
| EBIT before PPA amortisation1) | 36.7 | 31.8 |
| Result after non-controlling interests | 24.4 | 20.5 |
| Operating cash flow | -71.1 | -12.6 |
| Free cash flow2) | -88.2 | -35.3 |
1) EBIT before amortisation from purchase price allocation
2) Operating cash flow less purchase of non-current non-financial assets
| IN EUR MIO. | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Cash and cash equivalents | 167.6 | 296.5 |
| Equity | 432.5 | 423.3 |
| Equity ratio | 34.2% | 31.3% |
| Net Cash (+) / Net debt (-)3) | -134.2 | -14.2 |
| Working capital4) | 246.8 | 149.9 |
| Backlog | 1,512.7 | 1,334.9 |
| Project-pipeline | 3,771.5 | 3,367.0 |
| Employees5) | 5,991 | 6,206 |
3) Cash and cash equivalents less non-current and current financial liabilities
4) Inventories, trade receivables less trade payables (excl. IFRS 15)
5) Number of employees on full time equivalent basis without employees on parental leave, trainees and apprentices
The past quarter was the first under our new company name "Kontron", following a resolution at the Annual General Meeting on May 6, 2022, to change the name from S&T AG to Kontron AG. We market our IoT products under the Kontron brand and the change of company name is synonymous with our gradual transformation to a pure IoT provider. The new Kontron will focus on industrial IoT products, with the target of increasing our EBITDA margin to over 15% in the long term. Project "Focus", to evaluate the sale of the IT services business, is proceeding according to plan and we expect a decision in the third quarter of 2022. With the proceeds from the sale, we will continue to expand our IoT activities and carry out planned major IoT acquisitions.
The new Kontron was able to build on its business success in the second quarter of 2022 and, despite all adversities, continue where the last quarter left off while still under the S&T name. Kontron achieved strong organic revenue growth of 10% to EUR 331 million, with an EBITDA of EUR 33.1 million, almost achieving the 10% profitability target. At EUR 405 million, order intake was again significantly higher than generated revenue and above plan for the sixth time in a row, with a book-to-bill ratio of 1.22. This demonstrates a robust course of growth, even though the market environment is anything but friendly.
Interrupted supply chains continue to present a major challenge. With a high level of commitment, newly developed products and increased inventory, we have been able to organically increase our revenues by double digits now for the second quarter in a row. The increased inventory in response to the supply chain bottlenecks makes Kontron more capable of delivering than its competitors. Our financial reserves make it possible to finance this step in order to gain market share during these challenging times. Nevertheless, the value of overdue orders increased further to EUR 127 million. However, based on continuous improvements in the procurement market, we expect to deliver the majority of these orders during the remainder of the financial year 2022.
Furthermore, as planned, we started our withdrawal from Russia in the second quarter and have already partially executed it. This will help us to largely reduce additional liabilities caused by the war in Ukraine and the sanctions against Russia. By the end of the year, we want to be largely independent of developments in these regions.
Despite the market environment and the many influencing factors over which we have little control, we remain optimistic for 2022. In financial year 2021, we were able to book new orders worth EUR 1,743 million and a further EUR 841 million in the first half of 2022. This means EUR 581 million more than the revenue in the same period accounted for, thus EUR 581 million in growth, which we will be able to realise in the short term if the chip delivery situation improves.
For this reason – without taking into account the planned sale of IT services – we continue to expect 12% organic growth to EUR 1,500 million in 2022, despite ongoing problems in the supply chains and the loss of revenues from Russia. Should the sale of the IT service division be implemented, we plan to replace the lost revenues with IoT revenues in the short term and expect revenues to increase to EUR 2,000 million by 2025 with a significantly higher EBITDA margin of 13%. With our project "Focus" we are already laying the foundation for this today.
Hannes Niederhauser, CEO
Revenues increased again compared to the same period of the previous year from EUR 600.6 million in the first half of 2021 to EUR 660.7 million in the first 6 months of the current financial year. This represents an increase of 10.0% compared to the same period of the previous year. EBITDA increased by 7.3% to EUR 62.6 million (PY: EUR 58.3 million). The long-standing strategy of profitable revenue growth has therefore continued once again in the first half of 2022. Revenues in the second quarter of 2022 increased to EUR 331.0 million, compared with EUR 306.5 million in the same period of the previous year. EBITDA for the second quarter of 2022 amounted to EUR 33.1 million, compared to EUR 30.1 million in the same period in the previous year. This represents an increase of 10.2%.
Gross profit for the first half of 2022 amounted to EUR 245.9 million compared to EUR 233.1 million in the same period of the previous year. The increased procurement costs due to the global shortage of components were once again noticeable, as a result of which the gross margin fell by 1.6% to 37.2% in the first half of 2022 (PY: 38.8%). Gross profit in the second quarter of 2022 increased to EUR 125.8 million (PY: EUR 117.0 million).
Personnel costs increased by 9.2% to EUR 164.4 million in the first half of 2022 (PY: EUR 150.6 million), whereas the number of employees (excluding apprentices and people on maternity leave or training contracts), measured in full-time equivalents, declined from 6,138 employees as of June 30, 2021, to 5,991 employees as of June 30, 2022, in particular due to the sale of the majority stake in RTSoft Project OOO, Russia, and its subsequent deconsolidation in the second quarter of 2022. At the end of 2021, the number of employees was still 6,206.
The result from the period attributable to owners of interests in Kontron (based on non-controlling interests) in the second quarter of 2022 amounted to EUR 12.8 million compared to EUR 10.4 million in the corresponding period in 2021, representing an increase of 23.0%. For the first half of the financial year, earnings improved from EUR 20.5 million to EUR 24.4 million. Earnings per share (undiluted) increased during the past six months by 18.8% to 38 cents (PY: 32 cents).
About the three segments of the Kontron Group:
ily attributable to new projects in the industrial and transport customer sector, where cooperation with leading railway companies in particular has been successfully expanded.
› "IoT Solutions America": The "IoT Solutions America" segment includes the solutions in the vertical markets of transportation and aviation as well as communications in the North America region. Revenue in this segment amounted to EUR 31.3 million in the second quarter of 2022, which corresponds to a strong increase of 26.2% (PY: EUR 24.8 million), after revenue fell by 22.7% in the same period of the previous year, in particular due to developments in the aviation industry and the development of the US dollar exchange rate. For the first half of 2022, this represents revenue growth of EUR 46.7 million to EUR 54.8 million compared to the first half of 2021. EBITDA before headquarter costs for this segment amounted to EUR 1.0 million in the second quarter (PY: EUR 1.5 million) or EUR 0.9 million in the first half of the year (PY: EUR 1.0 million). After this segment reported negative EBITDA in the first quarter of 2022, both the second quarter and the entire first half of the year were closed with positive EBITDA.
| IN EUR MIO. | IT SERVICES | IOT SOLUTIONS EUROPE |
IOT SOLUTIONS AMERICA |
KONTRON GROUP | ||||
|---|---|---|---|---|---|---|---|---|
| 6M 2022 | 6M 2021 | 6M 2022 | 6M 2021 | 6M 2022 | 6M 2021 | 6M 2022 | 6M 2021 | |
| Total revenues | 284.4 | 252.8 | 404.2 | 371.6 | 61.3 | 52.7 | 749.9 | 677.1 |
| Internal revenues | -8.1 | -9.8 | -74.6 | -60.7 | -6.5 | -6.0 | -89.2 | -76.5 |
| Revenues | 276.3 | 243.0 | 329.6 | 310.9 | 54.8 | 46.7 | 660.7 | 600.6 |
| EBITDA before HQ Charging*) |
19.6 | 20.5 | 42.1 | 36.8 | 0.9 | 1.0 | 62.6 | 58.3 |
| EBITDA after HQ Charging**) |
23.3 | 24.2 | 39.1 | 34.0 | 0.2 | 0.1 | 62.6 | 58.3 |
*) EBITDA adjusted for headquarter charging of Kontron AG (former S&T AG)
**) EBITDA after all headquarter charging of Kontron AG (former S&T AG)
| IN EUR MIO. | IT SERVICES | IOT SOLUTIONS EUROPE |
IOT SOLUTIONS AMERICA |
KONTRON GROUP | ||||
|---|---|---|---|---|---|---|---|---|
| Q2 2022 | Q2 2021 | Q2 2022 | Q2 2021 | Q2 2022 | Q2 2021 | Q2 2022 | Q2 2021 | |
| Total revenues | 137.2 | 129.2 | 206.4 | 189.1 | 35.4 | 27.9 | 378.9 | 346.2 |
| Internal revenues | -3.6 | -6.5 | -40.3 | -30.1 | -4.0 | -3.1 | -47.9 | -39.7 |
| Revenues | 133.6 | 122.6 | 166.1 | 159.0 | 31.3 | 24.8 | 331.0 | 306.5 |
| EBITDA before HQ Charging*) |
11.0 | 10.4 | 21.1 | 18.1 | 1.0 | 1.5 | 33.1 | 30.1 |
| EBITDA after HQ Charging**) |
12.9 | 12.5 | 19.9 | 16.7 | 0.4 | 0.9 | 33.1 | 30.1 |
*) EBITDA adjusted for headquarter charging of Kontron AG (former S&T AG)
**) EBITDA after all headquarter charging of Kontron AG (former S&T AG)
The company's asset and liquidity situation remains positive, despite the build-up of inventories in connection with the chip crisis leading to a corresponding reduction in liquid assets. As of June 30, 2022, cash and cash equivalents amounted to EUR 167.6 million compared to EUR 296.5 million as of December 31, 2021, and EUR 224.3 million as of March 31, 2022. In addition to the inventory build-up in connection with the chip crisis, the dividend of around EUR 22.3 million paid in June for the financial year 2021 also reduced liquid assets. Likewise, factoring was reduced in the first half of 2022 due to the general negative interest rate situation that prevailed until recently, in addition to custody fees. Furthermore, the company has access to unused financing lines, in order to finance the Kontron Group's increased liquidity requirements, also in the short term. The financial result remained virtually unchanged at minus EUR 4.8 million (PY: minus EUR 4.3 million). As of June 30, 2022, net debt increased to EUR 134.2 million (December 31, 2021: EUR 14.2 million | March 31, 2022: EUR 85.8 million). Equity amounted to EUR 432.5 million as of June 30, 2022 (December 31, 2021: EUR 423.3 million | March 31, 2022: EUR 433.0 million). This slight decline compared to Q1 2022 is attributable in particular to the dividend payment of 35 cents per dividend-bearing share. Nevertheless, due to the reduced balance sheet total compared to the end of 2021, the equity ratio rose to 34.2% as of June 30, 2022 (December 31, 2021: 31.3%). The cash flow from operating activities for the second quarter of 2022 amounted to minus EUR 11.1 million (PY: EUR 14.2 million). Operating cash flow of minus EUR 71.1 million was recorded in the first half of the year (PY: minus EUR 12.6 million), which — as in the first half of 2021 — is attributable, among other things, to the build-up of invesntory resulting from the chip shortage. Due to the strong order situation, management expects to reduce a significant proportion of the increased inventory during the financial year 2022 and to improve operating cash flow accordingly.
The positioning of the Kontron Group as a leading international provider of Industry 4.0 and Internet of Things technology and a wellknown system integrator with a focus on the development of its own technologies and presence in the DACH (Germany, Austria, Switzerland), Eastern Europe, North America and Chinese markets is still maintained, while presence in the Russian market was significantly reduced due to the partial sale of RTSoft companies. The strategic goal of management to further transform the Kontron Group into a leading innovative technology company and solution provider with the highest possible proportion of in-house development, especially in the software sector, as well as increasing focus on IoT services, higher profit margins due to increasing added value are consistently pursued regardless of the ongoing corona and supply chain crises. That is why an evaluation of the sale of the IT Services segment was launched in 2021 as part of Project "Focus".
The corona and chip crisis also stood out in the first half of 2022 and the past second quarter: In particular, the economic impact of the lockdown in Shanghai, which had a significant impact on supply chains in the technology sector with regard to the supply of chips. The lockdown in Shanghai has already ended, but the war in Ukraine is also impacting supply chains, meaning there is still no easing of the situation in sight. Apart from this, however, there is still hope that the European "NextGeneration EU" plan can provide the necessary impetus. The Kontron Group expects that the recovery plan's focus on digitalisation and green technologies, to name but two priorities, will also open up opportunities for the Kontron Group. In the vertical end markets in which the Kontron Group is active, there was an unexpectedly rapid recovery in aviation technology. However, the management of the Kontron Group assumes that economic development will continue to be volatile over the medium term against the backdrop of the numerous current uncertainty factors.
There is also a risk that taxation regulations may change, which can occur especially if governments have to consolidate their budgets to meet extremely high recent costs. In addition, the aggravated chip shortage presents a risk to the Kontron Group's business, which affects the IoT segments both in terms of hardware components and system integration projects in the IT services sector. This also led to significant delivery delays in the first half of 2022 and had a negative impact on the profitability of the group. Likewise, the chip shortage and the development of energy prices also led to price increases, which were significant in some cases, and only some of which could be passed on to customers. Ultimately, the ongoing development of the Kontron Group will depend on whether the uncertainties and distortions on the energy markets caused by the war in Ukraine will lead to a further downturn on the overall economic situation.
Against this backdrop and in addition to the strategic goals, management continues to focus on the ongoing review and optimisation of cost structures. Within the Kontron Group, this also includes the continued reduction of rental space and in turn rental payments, as well as ongoing restrictive travel expense management. With the termination of some of the state support programmes and the end of deferred payment of taxes and duties a rise in the number of insolvencies is expected. To cushion the impact of the increased risk of default on payments, more attention will be attached to accounts receivable management. In addition, with the end of negative interest rates, promoting factoring and reverse factoring will also open up new perspectives in liquidity management. Moreover, there are also opportunities for the Kontron Group in the M&A sector, for example, to take over IoT competitors who are financially weaker at advantageous valuations, while gaining market shares as a result of agile inventory management and a better starting position on the procurement market and to expand the group's position as a leading player in the IoT sector.
| CONSOLIDATED INCOME STATEMENT IN TEUR |
6M 2022 | 6M 2021 | Q2 2022 | Q2 2021 |
|---|---|---|---|---|
| Revenues | 660,677 | 600,583 | 331,012 | 306,490 |
| Capitalised development costs | 11,139 | 8,129 | 5,633 | 3,979 |
| Other income | 13,886 | 3,470 | 2,936 | 1,436 |
| Expenses for materials and other services purchased | -414,742 | -367,443 | -205,217 | -189,473 |
| Personnel expenses | -164,446 | -150,573 | -82,904 | -74,841 |
| Depreciation and amortisation | -30,140 | -31,688 | -15,481 | -16,172 |
| Other operating expenses | -43,962 | -35,859 | -18,315 | -17,505 |
| Result from operations | 32,412 | 26,619 | 17,664 | 13,914 |
| Finance income | 535 | 809 | 269 | 311 |
| Finance expenses | -5,332 | -5,118 | -2,624 | -2,761 |
| Financial result | -4,797 | -4,309 | -2,355 | -2,450 |
| Earnings before taxes | 27,615 | 22,310 | 15,309 | 11,464 |
| Income taxes | -3,801 | -2,182 | -2,669 | -1,055 |
| Net income | 23,814 | 20,128 | 12,640 | 10,409 |
| Results from the period attributable to owners of non-controlling interests | -563 | -366 | -146 | 14 |
| Results from the period attributable to owners of interests in parent company |
24,377 | 20,494 | 12,786 | 10,395 |
| Earnings per share (undiluted) | 0.38 | 0.32 | 0.20 | 0.16 |
| Earnings per share (diluted) | 0.38 | 0.31 | 0.20 | 0.15 |
| Average number of shares in circulation (in thousands undiluted) | 63,631 | 64,251 | 64,130 | 64,130 |
| Average number of shares in circulation (in thousands diluted) | 64,631 | 65,251 | 65,130 | 65,130 |
| STATEMENT OF OTHER COMPREHENSIVE INCOME IN TEUR |
6M 2022 | 6M 2021 | Q2 2022 | Q2 2021 |
|---|---|---|---|---|
| Net income | 23,814 | 20,128 | 12,640 | 10,409 |
| Items that may be subsequently reclassified to profit or loss | ||||
| Unrealised gains/losses from currency translation | 9,296 | 3,349 | 10,767 | 641 |
| Net loss on debt instruments at fair value through other comprehensive income |
-46 | 0 | -46 | 0 |
| 9,250 | 3,349 | 10,721 | 641 | |
| Other comprehensive income | 9,248 | 3,350 | 10,719 | 642 |
| Comprehensive income | 33,062 | 23,478 | 23,359 | 11,051 |
| of which attributable to | ||||
| Results from the period attributable to owners of non-controlling interests |
-121 | -271 | 710 | 18 |
| ASSETS IN TEUR |
30.06.2022 | 31.12.2021 |
|---|---|---|
| NON-CURRENT ASSETS | ||
| Property, plant and equipment | 124,665 | 132,536 |
| Intangible assets | 105,419 | 104,207 |
| Goodwill | 209,388 | 208,251 |
| Financial assets non-current | 12,552 | 12,594 |
| Contract assets non-current | 195 | 194 |
| Other non-current assets | 17,544 | 21,018 |
| Deferred tax assets | 41,214 | 40,179 |
| 510,977 | 518,979 | |
| CURRENT ASSETS | ||
| Inventories | 246,162 | 187,349 |
| Trade receivables | 216,397 | 232,546 |
| Contract assets current | 35,120 | 32,834 |
| Financial assets current | 16,136 | 19,902 |
| Other receivables and assets current | 71,400 | 64,011 |
| Cash and cash equivalents | 167,608 | 296,512 |
| 752,823 | 833,154 | |
| Total assets | 1,263,800 | 1,352,133 |
| EQUITY AND LIABILITIES IN TEUR EQUITY |
30.06.2022 | 31.12.2021 |
| Subscribed capital | 63,631 | 66,096 |
| Capital reserves Accumulated results |
124,905 241,538 |
168,283 239,431 |
| Other reserves | 401 | -8,405 |
| Treasury shares | 0 | -46,848 |
| Equity attributable to owners of interests in parent company | 430,475 | 418,557 |
| Non-controlling interests | 1,978 | 4,706 |
| 432,453 | 423,263 | |
| NON-CURRENT LIABILITIES | ||
| Financing liabilities non-current | 231,618 | 238,376 |
| Other financial liabilities non-current | 39,979 | 54,084 |
| Contract liabilities | 16,125 | 16,952 |
| Other liabilities non-current | 488 | 488 |
| Deferred tax liabilities | 13,211 | 13,206 |
| Provisions non-current | 24,571 | 25,056 |
| 325,992 | 348,162 | |
| CURRENT LIABILITIES | ||
| Financing liabilities current | 70,210 | 72,319 |
| Trade payables | 215,710 | 269,975 |
| Contract liabilities | 87,843 | 85,025 |
| Other financial liabilities current | 38,122 | 47,712 |
| Provisions current | 31,715 | 31,436 |
| Other liabilities current | 61,755 | 74,241 |
| 505,355 | 580,708 | |
| Total equity and liabilities | 1,263,800 | 1,352,133 |
| CONSOLIDATED CASH FLOW STATEMENT IN TEUR |
6M 2022 | 6M 2021 | Q2 2022 | Q2 2021 |
|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Earnings before taxes | 27,615 | 22,310 | 15,309 | 11,464 |
| Depreciation and amortisation | 30,140 | 31,688 | 15,481 | 16,172 |
| Interest expenses | 5,332 | 5,117 | 2,624 | 2,716 |
| Interest and other income from the disposal of financial assets | -538 | -809 | -272 | -267 |
| Increase/decrease of provisions | -131 | -6,485 | -2,570 | -3,143 |
| Gains/losses from the disposal of non-current non-financial assets | 361 | -1,007 | 347 | -949 |
| Changes in inventories | -58,430 | -18,347 | -28,410 | -7,159 |
| Changes in trade receivable and contract assets | 13,623 | 8,063 | -2,058 | -8,900 |
| Changes in other receivables and assets | -8,641 | -6,820 | 3,310 | 1,657 |
| Changes in trade payable and contract liabilities | -50,921 | -26,234 | -1,166 | 14,529 |
| Changes in other liabilities | -11,529 | -12,894 | -7,913 | -6,605 |
| Other non-cash income and expenses | -11,586 | -32 | -2,255 | -602 |
| Cash and cash equivalents from operations | -64,705 | -5,450 | -7,573 | 18,913 |
| Income taxes paid | -6,348 | -7,150 | -3,501 | -4,708 |
| Net cash flows from operating activities | -71,053 | -12,600 | -11,074 | 14,205 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Purchase of non-current non-financial assets | -17,144 | -22,707 | -8,651 | -13,257 |
| Purchase/sale of financial instruments | 0 | -4 | 0 | 0 |
| Proceeds from sale of non-current non-financial assets | 2,052 | 1,161 | 846 | 967 |
| Disposal/purchase of financial instruments | 10,787 | 128 | 3,474 | 926 |
| Payments to acquire subsidiaries less cash assumed and plus current account liabilities assumed |
-8,300 | -1,569 | -6,230 | 512 |
| Proceeds /Payments from disposal/sale of subsidiaries less cash disposed and plus current account liabilities disposed |
-966 | 0 | -966 | 0 |
| Interest income | 300 | 539 | 154 | 343 |
| Net cash flows from investing activities | -13,271 | -22,452 | -11,373 | -10,509 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Increase in financing liabilities and financial liabilities | 95 | 45,419 | 0 | 419 |
| Decrease in financing liabilities and financial liabilities | -30,563 | -22,210 | -17,123 | -12,174 |
| Interests paid | -4,418 | -3,540 | -2,861 | -2,513 |
| Acquisition of non-controlling interests | -1,655 | -728 | -1,686 | -41 |
| Dividends to owners of interests in parent company | -22,271 | -19,183 | -22,271 | -19,183 |
| Payments for acquisition of treasury shares | 0 | -16,017 | 0 | -7,342 |
| Net cash flows from financial activities | -58,812 | -16,259 | -43,941 | -40,834 |
| Changes in exchange rates | 4,164 | 2,367 | 6,112 | 1,330 |
| Changes in financial funds | -138,972 | -48,944 | -60,276 | -35,808 |
| Financial funds as of the beginning of the period | 267,934 | 254,951 | 189,238 | 241,815 |
| Financial funds as of the end of the period | 128,962 | 206,007 | 128,962 | 206,007 |
| Overdrafts | 33,483 | 32,833 | 33,483 | 32,833 |
| Restricted cash | 5,163 | 4,332 | 5,163 | 4,332 |
| Total cash and cash equivalents | 167,608 | 243,172 | 167,608 | 243,172 |
| Development of equity IN TEUR |
Subscribed capital | Capital reserves |
|---|---|---|
| as of January 1, 2021 | 66,096 | 169,441 |
| COMPREHENSIVE INCOME | ||
| Consolidated income | 0 | 0 |
| Other comprehensive income | 0 | 0 |
| 0 | 0 | |
| OTHER CHANGES | ||
| Stock options | 0 | 675 |
| Other | 0 | -728 |
| 0 | -53 | |
| TRANSACTIONS WITH OWNERS OF INTERESTS | ||
| Dividends | 0 | 0 |
| Repurchase of treasury shares | 0 | 0 |
| 0 | 0 | |
| as of June 30, 2021 | 66,096 | 169,388 |
| as of January 1, 2022 | 66,096 | 168,283 |
| COMPREHENSIVE INCOME | ||
| Consolidated income | 0 | 0 |
| Other comprehensive income | 0 | 0 |
| 0 | 0 | |
| OTHER CHANGES | ||
| Stock options | 0 | 52 |
| 0 | 52 | |
| TRANSACTIONS WITH OWNERS OF INTERESTS | ||
| Acquisition of non-controlling interests | 0 | 953 |
| Dividends | 0 | 0 |
| Capital reduction from withdrawal of treasury shares | -2,465 | -44,383 |
| -2,465 | -43,430 |
| EQUITY | NON-CONTROLLING INTERESTS |
EQUITY ATTRIBUTABLE TO OWNERS OF INTERESTS IN PARENT COMPANY | |||
|---|---|---|---|---|---|
| Total | Treasury shares |
Other reserves | Accumulated results | ||
| 409,470 | 5,432 | 404,038 | -26,262 | -15,591 | 210,354 |
| 20,128 | -366 | 20,494 | 0 | 0 | 20,494 |
| 3,350 | 95 | 3,255 | 0 | 3,255 | 0 |
| 23,478 | -271 | 23,749 | 0 | 3,255 | 20,494 |
| 675 | 0 | 675 | 0 | 0 | 0 |
| -728 | 0 | -728 | 0 | 0 | 0 |
| -53 | 0 | -53 | 0 | 0 | 0 |
| -19,182 | 0 | -19,182 | 0 | 0 | -19,182 |
| -16,017 | 0 | -16,017 | -16,017 | 0 | 0 |
| -35,199 | 0 | -35,199 | -16,017 | 0 | -19,182 |
| 397,696 | 5,161 | 392,535 | -42,279 | -12,336 | 211,666 |
| 423,263 | 4,706 | 418,557 | -46,848 | -8,405 | 239,431 |
| 23,814 | -563 | 24,377 | 0 | 0 | 24,377 |
| 9,248 | 442 | 8,806 | 0 | 8,806 | 0 |
| 33,062 | -121 | 33,183 | 0 | 8,806 | 24,377 |
| 52 52 |
0 | 52 | 0 | 0 | 0 |
| 0 | 52 | 0 | 0 | 0 | |
| -1,654 | -2,607 | 953 | 0 | 0 | 0 |
| -22,270 | 0 | -22,270 | 0 | 0 | -22,270 |
| 0 | 0 | 46,848 | 0 | 0 | |
| -23,924 | -2,607 | -21,317 | 46,848 | 0 | -22,270 |
| 432,453 | 1,978 | 430,475 | 0 | 401 | 241,538 |
The interim consolidated financial statements of Kontron AG (formerly S&T AG) as of June 30, 2022, have been compiled according to the financial reporting standards of the International Accounting Standards Board (IASB), of the International Financial Reporting Standards (IFRS) and to the interpretations of the IFRS Interpretation Committee (IFRS IC), as they are to be applied in the European Union. The principles of financial reporting and measurement employed in the financial statements for the year ending on December 31, 2021 were applied to the compilation of the present statements without there having been any changes in such.
The interim consolidated financial statements as of June 30, 2022, have been subject to neither an audit nor an auditor's review.
Unless otherwise noted, all amounts are denominated in thousands of euros (TEUR).
Comprised in the consolidated financial statements are Kontron AG and all subsidiaries upon which Kontron AG directly or indirectly exerts control. The number of companies fully consolidated in the Group developed as follows during the first six months of financial year 2022:
| GROUP COMPANIES (NUMBER) | 2022 | |
|---|---|---|
| Number of fully consolidated companies as of January 1 | 78 | |
| Group companies merged | -4 | |
| Disposals | -6 | |
| Number of fully consolidated companies as of June 30 | 68 |
The following companies were merged into others in the first half of financial year 2022:
Effective January 1, 2022, S&T Deutschland GmbH, Mendig, Germany, a direct 100% subsidiary of Kontron AG, took over assets such as rental and customer contracts as well as IT equipment of CNT Computer, Netzwerke, Technik GmbH, Saarwellingen, Germany, and CNP Computer, Netzwerktechnik Pusse GmbH, Saarwellingen, Germany. CNT Computer, Netzwerke, Technik GmbH as well as CNP Computer, Netzwerktechnik Pusse GmbH particularly serve medium-sized companies in the field of ERP solutions, which will be served from the S&T Deutschland GmbH data centre in the future and will benefit from the extended range of services offered by S&T Deutschland GmbH. Furthermore, the acquisition and the new branch office will further strengthen the position of S&T Deutschland GmbH in the south-east of Germany.
The exclusively fixed purchase price for this amounted to TEUR 470.
The assets and liabilities acquired were recognised at the following preliminary fair values upon the company's initial consolidation in the Group's consolidated financial statements:
| NET ASSETS ACQUIRED | IN TEUR |
|---|---|
| Property, plant and equipment and intangible assets | 648 |
| Other non-current liabilities | -288 |
| Deferred tax liabilities | -80 |
| Other current liabilities | -77 |
| Net assets at fair value | 203 |
| GOODWILL | IN TEUR |
| Consideration transferred | 470 |
| Net assets at fair value | -203 |
|---|---|
| Goodwill | 267 |
The goodwill resulting from the preliminary purchase price allocations was assigned to the "IT Services" segment.
The analysis of the cash flows due to the acquisition of the companies takes the following form:
| NET FLOW OF CASH | IN TEUR |
|---|---|
| Purchase price paid in cash | -470 |
| Cash assumed through takeover of subsidiary | 0 |
| Cash flow from investing activities | -470 |
The Kontron Group has deconsolidated the following companies in the first six months of financial year 2022:
In March 2022, FinTel Holding d.o.o. & co k.d., holdinška družba, Kranj, Slovenia, and FinTel holding d.o.o., Kranj, Slovenia, were liquidated.
In April 2022, RTSoft Project OOO, Moscow, Russia, signed a contract for the sale of 55% of the shares in RTSoft Project OOO, Moscow, Russia. The purchase price amounts to approx. TEUR 13. The deconsolidation result from the disposal of RTSoft Project OOO and its direct subsidiaries – Software Development Center RTSoft OOO, Moscow, Russia, RTSoft-ES OOO, Moscow, Russia, RTSoft Smart Grid OOO, Moscow, Russia – amounts to TEUR -1,112.
| Cash flow from investing activities | -966 |
|---|---|
| Disposal of cash and cash equivalents | -979 |
| Income from sale of subsidiaries | 13 |
| NET FLOW OF CASH | IN TEUR |
| Deconsolidation result (loss) | 1,112 |
| Reclassification currency translation differences | 361 |
| Non-controlling interests in net assets disposed of | -1,220 |
| Income from sale of subsidiaries | -13 |
| Net assets disposed of at fair value | 1,984 |
| Current liabilities | -5,357 |
| Non-current liabilities | -181 |
| Current receivables and assets | 2,354 |
| Non-current assets | 4,189 |
| Cash and cash equivalents | 979 |
| NET ASSETS DISPOSED OF | IN TEUR |
As of December 31, 2021, the purchase price allocation in connection with the share acquisition of PSB IT-Service GmbH, Ober-Mörlen, Germany, was recorded at preliminary fair values.
The final calculation of the acquired assets and liabilities at fair value and the resulting goodwill – carried out within twelve months of the acquisition date – did not result in any change compared to the preliminary record dated December 31, 2021.
As of June 30, 2022, the share capital of Kontron AG amounted to TEUR 63,631 (December 31, 2021: TEUR 66,096). It is divided into 63,630,568 (December 31, 2021: 66,096,103) no-par value bearer shares. The reduction in share capital results from the capital reduction resolved at the 23rd Annual General Meeting on May 6, 2022, through the redemption of 2,465,535 treasury shares.
The dividend of EUR 0.35 per share proposed for the financial year 2021 was approved at the 23rd Annual General Meeting on May 6, 2022. The dividends were paid on May 25, 2022.
As of June 30, 2022 the company has two stock options programmes. Eligible to participate in these are members of the Executive Board of Kontron AG and employees of Kontron AG and its subsidiaries.
The 2021 annual report contains a detailed description of the stock option programs.
During the first six months of financial year 2022 no options were exercised. Outstanding rights for the stock options program 2018 therefore total 500,000 (PY: 500,000) and 500,000 (PY: 500,000) for the stock options program 2018 (Tranche 2019).
The expenses for stock options are reported in personnel expense and came to TEUR 51 (PY: TEUR 675).
In the second half of financial year 2021, there was a change in segment reporting within the Kontron Group. In line with the change in internal corporate management and decision-making with regard to the allocation of resources, S&T Slovenija d.d. has been allocated to the "IoT Solutions Europe" segment as of financial year 2021. Prior to this change, S&T Slovenija d.d. was allocated to the "IT Services" segment; the previous year's figures have been adjusted accordingly.
| 6M 2022 IN TEUR |
IT SERVICES | IOT SOLUTIONS EUROPE |
IOT SOLUTIONS AMERICA |
TOTAL |
|---|---|---|---|---|
| Total revenues | 284,425 | 404,239 | 61,253 | 749,916 |
| Internal revenues | -8,140 | -74,636 | -6,464 | -89,240 |
| Revenues | 276,285 | 329,603 | 54,789 | 660,677 |
| EBITDA before HQ-Charging | 19,566 | 42,100 | 885 | 62,552 |
| EBITDA after HQ-Charging | 23,251 | 39,145 | 156 | 62,552 |
| 6M 2021 IN TEUR |
IT SERVICES | IOT SOLUTIONS EUROPE |
IOT SOLUTIONS AMERICA |
TOTAL |
|---|---|---|---|---|
| Total revenues | 252,786 | 371,583 | 52,717 | 677,085 |
| Internal revenues | -9,798 | -60,686 | -6,017 | -76,502 |
| Revenues | 242,987 | 310,897 | 46,699 | 600,583 |
| EBITDA before HQ-Charging | 20,489 | 36,803 | 1,015 | 58,307 |
| EBITDA after HQ-Charging | 24,219 | 34,002 | 86 | 58,307 |
| Q2 2022 IN TEUR |
IT SERVICES | IOT SOLUTIONS EUROPE |
IOT SOLUTIONS AMERICA |
TOTAL |
|---|---|---|---|---|
| Total revenues | 137,215 | 206,356 | 35,353 | 378,924 |
| Internal revenues | -3,635 | -40,267 | -4,011 | -47,912 |
| Revenues | 133,580 | 166,089 | 31,343 | 331,012 |
| EBITDA before HQ-Charging | 11,043 | 21,150 | 953 | 33,145 |
| EBITDA after HQ-Charging | 12,875 | 19,871 | 399 | 33,145 |
| Q2 2021 IN TEUR |
IT SERVICES | IOT SOLUTIONS EUROPE |
IOT SOLUTIONS AMERICA |
TOTAL |
| Total revenues | 129,166 | 189,147 | 27,909 | 346,222 |
| Internal revenues | -6,521 | -30,143 | -3,066 | -39,731 |
| Revenues | 122,645 | 159,003 | 24,843 | 306,491 |
| EBITDA before HQ-Charging | 10,419 | 18,132 | 1,535 | 30,086 |
| EBITDA after HQ-Charging | 12,490 | 16,712 | 884 | 30,086 |
"EBITDA before HQ-Charging" represents EBITDA before expenses for headquarters are cleared by Kontron AG, while "EBITDA after HQ-Charging" contains all costs. In addition, the segment "IT Services" covers all costs for Kontron AG (headquarters costs), that cannot be distributed functionally among the other segments. The effects upon consolidated income that are not directly associated with the operative businesses of the segments are therefore also reported in the "IT Services" segment.
Revenues from contracts with customers are comprised of the following:
| 6M 2022 IN TEUR |
IT SERVICES | IOT SOLUTIONS EUROPE |
IOT SOLUTIONS AMERICA |
TOTAL |
|---|---|---|---|---|
| Sale of products featuring proprietary technologies (hardware and software) |
0 | 178,401 | 45,662 | 224,063 |
| Sale of products from third parties (hardware and software) |
113,676 | 51,236 | 156 | 165,068 |
| Recurring operating services | 140,192 | 96,452 | 8,971 | 245,615 |
| One-time project services | 22,417 | 3,514 | 0 | 25,931 |
| Total revenues from contracts with customers | 276,285 | 329,603 | 54,789 | 660,677 |
| 6M 2021 IN TEUR |
IT SERVICES | IOT SOLUTIONS EUROPE |
IOT SOLUTIONS AMERICA |
TOTAL |
|---|---|---|---|---|
| Sale of products featuring proprietary technologies (hardware and software) |
0 | 163,750 | 42,900 | 206,650 |
| Sale of products from third parties (hardware and software) |
95,441 | 68,460 | 139 | 164,040 |
| Recurring operating services | 132,069 | 76,045 | 3,301 | 211,415 |
| One-time project services | 15,477 | 2,642 | 359 | 18,478 |
| Total revenues from contracts with customers | 242,987 | 310,897 | 46,699 | 600,583 |
Of the revenues achieved during the first six months of financial year 2022, TEUR 55,404 were earned in Austria (PY: TEUR 52,150).
The 23rd Annual General Meeting of S&T AG (subsequently renamed Kontron AG) was held on May 6, 2022. In accordance with § 1 section 2, COVID-19-GesG (Health and Food Safety Act), Austrian Civil Code (BGBl) I no. 16/2020 BGBl as amended I no. 246/2021 and the COVID-19-GesV (Corporate Law), BGBl. II no. 140/2020 BGBl as amended II no. 609/2021 it was held as a virtual meeting. At this virtual AGM, the following resolutions were passed:
In the course of normal business operations, relationships of supply and service provision exist with affiliated companies and persons, which primarily include Ennoconn Corporation, Taiwan, and Hon Hai Precision Industry Co. Ltd., Taiwan. In this context, a reverse factoring program was initiated in the first half of 2022. There is also a liability from a shareholder loan and a rental agreement for the use of office space. Business transactions with related companies and persons are conducted at arm's length.
There are no significant events that occurred after June 30, 2022, pending the preparation of this report.
We confirm to the best of our knowledge that the condensed interim financial statements give a true and fair view of the assets, financial position and profit or loss of the Group as required by the applicable accounting standards and that the Group management report gives a true and fair view of important events that have occurred during the first six months of the financial year and their impact on the condensed interim financial statements and of the principal risks and uncertainties for the remaining six months of the financial year and of the major related party transactions to be disclosed.
Linz, August 4, 2022
Hannes Niederhauser m.p. Michael Jeske m.p. Richard Neuwirth m.p.
Dr. Peter Sturz m.p. Michael Riegert m.p. Dr. Clemens Billek m.p.
Our annual report, quarterly reports and other bulletins are available at https://ir.kontron.ag from the day of publication. Any changes to schedules and dates are also announced on our website in good time.
This half-year management report was published on August 4, 2022. The report is available in German and English. The English version is provided for convenience only. The German version is definitive.
This half-year report contains statements that refer to future developments. These are based on assumptions and estimates made by the Executive Board. Although we are of the opinion that the assumptions and estimates are realistic and correct, they are subject to certain risks and uncertainties that may cause actual future results to diverge materially from the assumptions and estimates. Factors that may result in a discrepancy include changes in the overall economic, business, financial and competitive situation, exchange and interest rate fluctuations as well as changes to the business strategy. We cannot guarantee that the future development and actual future results will coincide with the assumptions and estimates expressed in this half-year report. Assumptions and estimates presented in this half-year report will not be updated.
| 04.08.2022 | Half-year report 2022 (Earnings-Call Q2 2022) |
|---|---|
| 03.11.2022 | Q3-quarterly statement 2022 (Earnings-Call Q3 2022) |
| 28.11.2022 | Equity forum (28.11. - 30.11.2022) |
Further details available under https://ir.kontron.ag/Financial_calendar.en.html
Kontron AG, 4020 Linz, Industriezeile 35 Investor Relations: +43 1 80191 1196 | [email protected]
www.kontron.ag
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