Quarterly Report • May 26, 2011
Quarterly Report
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| Q1 2011 | Q1 2010 | |
|---|---|---|
| € M | € M | |
| Results of operations | ||
| Revenues | 43.9 | 47.4 |
| Gross yield | 23.5 | 25.1 |
| Operating profit* | –0.7 | –0.2 |
| Operating result * | –2.9 | –2.4 |
| Operating result/EBIT | –2.9 | –2.9 |
| Earnings per share in EUR | –0.48 | –0.36 |
| Receipt of order | 46.2 | 61.4 |
| Order volume | 104.2 | 112.1 |
| Net assets and financial position | ||
| Operating Cash Flow | –10.4 | –6.1 |
| Working Capital | 46.4 | 55.4 |
| Shareholder's Equity | 60.6 | 86.2 |
| Equity ratio in % | 41.7 | 53.6 |
| Balance sheet total | 145.2 | 160.8 |
| Employees (annual average) | 1,357 | 1,401 |
*result before impairment charges and restructuring costs
Funkwerk specialises in solution-oriented information and communication systems for such applications as transport and traffic, vehicles, security and data networks. Funkwerk systems automate, rationalise and secure the operating processes of customer target groups covering a wide range from private enterprises to public institutions. Based on different areas of application and appropriate target groups, Funkwerk today is an active technology provider with four strategic business units.
AUTOMOTIVE Communication
The recovery of economic activity after the global economic crisis proved surprisingly expeditious, but in reference to infrastructure remains rather shaky. The consolidation of public budgets is taking precedence over investments. Continuously aggravating public debt in many industrialised nations, especially in Greece, Ireland, and Portugal, but also the fact that there is no telling as yet what the consequences of the earthquake disaster in Japan and the unrest in the Arab world will be, potentially hold considerable risk and result in a lack of planning certainty.
This also defined the investment and spending propensity of some of Funkwerk's customer target groups, most specifically in the transport sector, throughout the reporting period. As a result, the acceleration in demand which had been noticeable at the end of the previous financial year failed to continue in the first quarter. On the whole, sales and incoming business were marginally less than projected. In contrast, our cost cutting measures completed in 2010 showed further effect in the first quarter, so that earnings before interest and taxes proved better than predicted.
The sales trend in the first quarter of 2011 also shows the effect of adjustments to our product portfolio in the previous year. In consequence of this, a number of low-margin products, which had still contributed to sales in 2010, were discontinued in all business segments, but especially in Traffic & Control Communication.
In comparison, revenues as at the end of March totalled EUR 43.9m and so were down by 7 per cent on the previous year (EUR 47.4m). The first quarter in Funkwerk's yearly cycle is typically the weakest in terms of sales, whereas the fourth quarter tends to write the strongest figure. This is due to the budgeting of customers such as transport operators and public institutions. The poor season was compounded by the continuing investment restraint among international railway operators and the product adjustments mentioned earlier.
Because of efficiency increases, Funkwerk was able to fully compensate the decline in sales compared to the previous year in the operating result. At EUR -2.9m, it remained at prior-year level, although it must be noted here that Funkwerk is currently facing a higher level of advances for projects which will not result in sales and earnings until later. One such example is Automotive Communication, where initial engineering and investment costs accrued in preparation of major framework contracts.
In the first quarter of 2011, Funkwerk was able in Automotive Communication to conclude multiyear framework contracts with leading automobile and lorry manufacturers worth almost EUR 100m in total. From 2013, these will lead to significant growth rates in this segment. Nonetheless, these contracts do not yet show in our current rate of new orders, as the call-off points and the quantities to be delivered cannot as yet be specified in concrete terms.
On the whole, Funkwerk reported new order bookings of EUR 46.2m in the first three months to reach the lower end of our projected target range. Incoming business particularly in Traffic & Control Communication was affected by delays at the customer side. This, however, results in a book-to-bill ratio of 1.05, an indication of increasing revenues in the coming quarters.
Compared to the previous year (EUR 61.4m), the level of new orders was significantly down. That being said, this only paints a distorted picture because of one-off catch-up effects in 2010. Adjustments made to our product range since then are a further contributing factor to producing a lower figure. The volume of orders is more informative here for our further development. At EUR 104.2m on the cutoff date at the end of March it ranged two per cent higher than our target figure. Again, this shows that orders in Traffic & Control Communication were stretched with the result that they could no longer be added to sales in the first quarter.
Restructuring measures in 2010 concentrated on improving the quality of our products and increasing our efficiency by streamlining our organisation and the processes within our operating units. In 2011 we will focus on standardising and consolidating central functions. Our aim here is, in a next step, to increase our productivity and further reduce our structure costs. In addition, we are working on readjusting our overall strategy with the goal to standardise Funkwerk's products in better ways and to market increasingly uniform sector solutions. For this purpose, we will push ahead with the further development of generic product and development platforms, the benefits of which can be seen as early as at the product origination stage. This should make it possible not only to occupy individual niches, but also to address the open market more effectively
For the latter half of the year in particular, Funkwerk therefore expects a rising trend in both sales and earnings, along with a positive turnaround of the currently less than satisfactory business trend. Considerable efforts are still necessary, however, in order to further improve our competitive position and regain our earning power.
The economic development of the largest business segment of Funkwerk, Traffic & Control Communication (TCC), tends to follow the general economic trend with a certain time lag. This is due to the fact that its customers are primarily international state-owned companies or global operators whose operations greatly depend on the trend in rail freight and passenger transport and on government budgets and investment subsidies. Against the background of initiated budget consolidations, however, the investment propensity particularly of railway operators continued to be rather restrained. As a result, the measures announced to improve the transport infrastructure, which should also increase the demand for communication and information technology such as produced and sold by Funkwerk, are very slow to get started.
This left its mark both on the sales trend and on incoming business at TCC in the first quarter of 2011. In comparing current figures with the previous year, it is also necessary to factor in the adjustment of our product portfolio. At EUR 19.8m (2010: EUR 22.5m), revenues failed to reach the target, as call orders in the railway sector for GSM-R terminals were postponed because of stretched-out budgets and technical problems at customers. At EUR 22.0m, incoming business on the whole remained within the target range but significantly below the benchmark quarter in the previous year (EUR 32.3m). Satisfactory increases in incoming business for our product groups information and management systems, specifically in business with industrial customers, could just about compensate the poor demand in the mobile radio sector. Industrial business rose by a two-digit figure to exceed our projections quite notably.
The cost cuts achieved in 2010 and the positive effects from the adjustment of our product portfolio also resulted in a segment result which at EUR –0.4m (2010: EUR –0.1m) surpassed our projections. It must be borne in mind here that the first quarter in this segment is typically the weakest because of advance performances for projects required in many cases, which will not lead to sales until some time later.
In the medium term, we expect to see growth in TCC; brought on by the new generation of Dual Mode handheld radio devices for railway companies, but also by our electronic interlocking system, Alister.
Our Security Communication (SC) segment started into fiscal 2011 somewhat better than expected. Due to the advanced stage of consolidation and reorientation, the first quarter saw initial successes in the sale of new personal emergency call systems as well as DECT and TETRA handheld devices with special applications, but also in the open marketing of other key components. A framework contract with an energy company which is equipping its power plants with personal security systems based on DECT technology from Funkwerk now produces a steady flow of payments adding to sales in this segment.
As a result, segment revenues marginally rose both on our projections and on the previous year. Again, however, production of a number of devices with product life cycles that were well advanced, including analogue emergency call systems, was discontinued. At EUR 11.2m in sales (2010: EUR 10.8m), SC therefore generated an operating result of EUR –1.3m (2010: EUR –2.7m). Here, too, the first quarter required advance performances for sales in the following periods. At EUR 10.8m, incoming business as at the end of March trailed behind the previous year (2010: EUR 13.9m), primarily because export orders for video monitoring systems failed to materialise due to social tension in the Middle Eastern regions.
In terms of personal security and video monitoring, Funkwerk will in future increasingly specialise in energy, industry, local and long-distance transport, supply and correctional and forensics facilities, and expand business at international level through cooperation with infrastructure suppliers. With this step we hope to expand our target market. We are also quite encouraged by the keen interest shown globally in Argoscan, the system for hard shoulder release on motorways which Funkwerk developed. Additional potential is expected from new applications, such as the equipment of road and rail tunnels, car parks and motorway stations.
As a system supplier of optical security solutions, Funkwerk boasts technological key expertise in top-of-the-range video cameras, highly precise and robust pan/tilt heads, video transmission systems, video management systems, video analysis and processing, and feature recognition through image processing. This will help us to further successes in our efforts to strengthen business with sector solutions.
Good progress has also been made in the production and sale of radio devices used for security functions. We register increased demand for DECT-based radio devices for professional applications. The marketing of TETRA-based radio devices is beginning to show initial successes. Further impulses are expected from the imminent certification for use in explosion-prone areas and from new device models based on our product development plan.
On the whole, the market for our Security Communication segment will greatly widen after implementation of our product strategy, which will result in significant growth. The technological hurdles have largely been overcome, and we are now focusing our marketing efforts increasingly on new partnerships and on the further development of standardised sector solutions.
The increasing use of smartphones requires flexible adapter and connectivity solutions as well as cost-effective signal amplifiers in vehicles. Funkwerk has successfully focused on this rapidly growing demand specifically in OEM business with leading automobile manufacturers in its Automotive Communication (AC) segment.
Our generic development platform introduced in 2010 has allowed us to close a technological gap and establish system expertise in integrative solutions. Our new, qualitatively distinct products such as coupling chambers, WLAN routers and USB hubs have enabled Funkwerk to convince major partners in the automobile industry, with the result that we were able to conclude new framework contracts in the first quarter of 2011. On the whole, these new contracts make up an order volume of almost EUR 100m. They are not, however, booked as yet under new or unfilled orders, as the call-offs are not yet determined. These contracts will be reflected in sales from 2013.
One such contract, for example, involves Funkwerk supplying an automobile manufacturer with a product used for the integration of mobile terminals in vehicles, and we received a contract from another major car manufacturer for the universal inductive connection of mobile phones in the vehicle to optimise wireless reception. Funkwerk will also in the future supply the telematics unit for a leading lorry manufacturer. These contracts confirm the attractiveness of Funkwerk's automotive connectivity solutions, but also our expertise in the integration of mobile phones and of other mobile consumer electronics products in the vehicle.
At EUR 6.4m (2010: EUR 7.7m), new orders booked in the first quarter of 2011 therefore remained at a comparatively low level. Again, it must be borne in mind here that Funkwerk now focuses exclusively on high-quality products and is phasing out aged products with poor volumes specifically for the aftercare market. At EUR 6.7m, revenues in Automotive Communication in the first quarter therefore, on the whole, remained roughly at prior-year level (EUR 7.1m). Due to the advance of investment and development costs for the new framework contracts, the segment's operating result totalled EUR –0.7m (2010: EUR –0.5m). We anticipate sales to increase gradually in the further course of the year. The main effects from the new framework contracts and from focusing sales on OEM business are due to show in the medium term, from 2013, and are set to produce a substantial growth spurt.
Modern data networks enable a wealth of new solutions for communication within and across companies. On the other hand, the complexity of the systems is increasing, requiring appropriate tools for configuration, administration and protection of the networks. As a specialist in integrated communication solutions, Funkwerk satisfies this increasing demand in our Enterprise Communication segment. Based on a well-rounded and cutting-edge product portfolio, which comprises all the necessary devices and components (routers and gateways) including data security for private data networks in addition to classic TC systems, Funkwerk realises professional solutions for small to mid-sized companies.
Funkwerk has taken account of the current transition from classic telephone system to integrated IP solutions through such new products as the communication platform »hybird« launched at the end of 2010. Our Unified Threat Management (UTM) systems have also positioned Funkwerk in the growing security market. In connection with our strategy change from individual component supplier to integrated solution provider for special applications and sectors, Funkwerk has now completely pulled out of consumer-oriented broadband business. The final step in this direction was taken in the first quarter of 2011 by selling our investment in the unit set up jointly with VTech for the development and marketing of integrated network access solutions (Integrated Access Devices).
While this means that Funkwerk also gave up sales potential in EC, we are now in a position to further concentrate our development expertise and further improve the profitability of this segment.
In the first quarter of 2011, segment revenues at EC totalled EUR 6.2m (2010: EUR 7.0m), segment earnings reduced to EUR –0.4m (2010: EUR 0.2m). Incoming business came to EUR 7.0m, after EUR 7.5m in the previous year. In the further course of the year, we expect this segment to see an increase in revenues and a positive earnings contribution for the year.
The earnings position of the Funkwerk group in the first quarter of 2011 was defined by an as yet comparatively restrained investment and spending propensity among a number of customer target groups specifically in the transport sector, the product portfolio adjustments already largely completed across all business segments in 2010, and the cost cutting programme implemented since the end of 2009, which was now taking full effect. Whereas sales as a result remained somewhat below our projections, earnings from operations proved better than expected.
Group revenues of EUR 43.9m as at the end of March were down by 7 per cent on the previous year (EUR 47.4m). This is due to the still restrained investment propensity of international railway operators, but also to the mentioned product adjustments in our individual segments. Because of efficiency increases, Funkwerk was able to compensate the decline in sales compared to the previous year in the operating result.
As a result, the cost of materials reduced disproportionately to EUR 22.3m (2010: EUR 24.8m), which increased the gross yield margin as at the end of March 2011 from 50.3 per cent in the previous year to 51.3 per cent. This is fully in line with our new strategy of improving the real net output ratio for key products.
Personnel costs also again decreased marginally to EUR 20.4m (2010: EUR 20.8m). The other operating expenses could be cut from EUR 8.0m in the previous year to EUR 6.9m, so that the structure costs reduced by EUR 1.5m in total.
On the whole, the operating result of EUR –2.9m remained at prior-year level despite the decrease in sales. It must be noted here, though, that Funkwerk was required in the first quarter of 2011 to make advances for projects which will only result in sales and earnings later in the year or, as especially in Automotive Communication and Traffic & Control Communication, in the medium term.
The financial result remained largely unchanged, and so consolidated earnings before taxes also stayed virtually the same at EUR –3.1m (2010: EUR –3.2m). In contrast, the tax burden rose on the previous year, which widened the quarterly loss after taxes to EUR –3.9m (2010: EUR –2.9m). This corresponds to total earnings per share of EUR –0.48 (2010: EUR –0.36).
The development of the financial and net worth position of Funkwerk in the reporting period was defined by a sluggish sales trend, but also by project and development advances and investment costs required for our further growth. In addition, debts to suppliers were reduced by some EUR 3.4m on the end of 2010. This was reflected particularly in the free cash flow, which at EUR –13.4m was down by just under EUR 4m on the previous year (EUR –9.8m). On the balance sheet, this primarily registered in the liquid funds, which reduced to EUR 2.3m (end of 2010: EUR 12.1m). The net debt at end of the quarter totalled EUR 1.7m.
To ensure lasting financial stability, we concluded a multiyear syndicated loan agreement of EUR 75.5m with three German commercial banks headed by Commerzbank AG in March 2011.
The syndicated loan is made up of a revolving money market loan in the amount of EUR 17.5m and a guaranteed credit line of EUR 58m. Funkwerk AG and its subsidiaries have provided collateral in the form of blanket assignments of trade receivables of individual subsidiaries, assignment of inventories of all companies in the Funkwerk group, and land charges on company property in Dabendorf and Kölleda. The loan has a term of three years with a renewal option of a further two years.
As further collateral for the syndicated loan agreement, Funkwerk received an 80 per cent indemnity bond for EUR 9.0m of cash credit and a 60 per cent indemnity bond for EUR 10.6m of guaranteed credit for a term of five years from the Federal Government /Laender programme »Germany funds« in May 2011. As a result, Funkwerk has sufficient facility to achieve its mid-term targets.
Total assets reduced in the reporting period primarily due to the quarterly loss, down from EUR 149.7m to EUR 145.2m. Equity and equity ratio decreased accordingly. The latter sank from 43.1 per cent to 41.7 per cent, but compared to the sector average remained at a high level.
On the assets side, long-term assets marginally rose from EUR 49.9m to EUR 50.7m due to the increasing capitalisation of development costs of EUR 2.2m (2010: EUR 2.1m) required for the new products.
In order to avoid procurement bottlenecks as far as possible, specifically with respect to the disaster in Japan, and to allow us to work off the upcoming projects and framework contracts on schedule, we raised our inventories in the reporting period from EUR 43.6m to EUR 48.5m. In contrast, trade accounts receivable were reduced by a good EUR 5.8m to EUR 21.8m compared to the end of 2010 (EUR 27.6m). Receivables from projects in progress for contracts in the project stage totalled EUR 12.7m as at the end of the first quarter, which corresponds to a gain on the end of 2010 of EUR 4.7m.
On the liabilities side, equity reduced from EUR 64.5m to EUR 60.6m. This was opposite an increase in financial liabilities to banks from EUR 0.4m to EUR 4.0m. The accounts payable and other liabilities decreased notably in line with the reduction of trade accounts receivable, down from EUR 29.4m to EUR 26.0m and from EUR 13.8m to EUR 11.7m, respectively. Advances received on account of ongoing projects and orders could be increased further by EUR 1.9m, from EUR 8.7m at the start of the year to EUR 10.6m.
Compared to the prior-year quarter, further progress in optimising our working capital was evident as at the end of March 2011. As a result of improved inventory management at group level in the previous year, the figure here reduced by more than EUR 8m to EUR 46.4m (2010: EUR 55.4m).
In the first quarter of 2011, the working capital was built up by around EUR 5.1m on the end of 2010, including EUR 4.9m in inventories. This happened because of project advances for subsequent growth, the aggravating delivery risks in the electronic componentry and display sector after the disaster in Japan, and the launch of new products. Along with the necessary development advances, this was the main reason for the high capital requirement in the first quarter of 2011.
Research and development are given top priority in each of our segments as crucial factors ensuring a competitive position and sustainable growth for Funkwerk. Rather than restricting ourselves to basic research, however, we concentrate on the development of products and systems that meet the needs of our customers. Some of the development work was realised together with customers in the context of projects; the expenses relating to this flow directly into sales.
Capitalised product development costs concentrated on the further development of our product portfolio, the standardisation of our range of solutions, and the integration of cutting-edge technologies. The focal points here were the TETRA product range, the development of a new HD camera, the certification of our interlocking system, Alister SIL4, the product developments for the framework contracts in Automotive Communication, and the development of a new, compact IP-based telecommunications system. Capitalised development costs in the reporting period amounted to around EUR 2.2m (2010: EUR 2.1m). This figure is opposite depreciation of around EUR 0.8m (2010: EUR 0.6m).
Non-capitalised spending on research and development in the same period aggregated some EUR 5m in the group, primarily for basics, concepts and product maintenance.
Capital spending and intangible investments at Funkwerk were again kept at a low level in the reporting period. The total here, without capitalised development costs, amounted to EUR 0.7m (2010: EUR 0.4m). Investments focused on tools, test equipment and production increases required in connection with the new product launches
In 2010, Funkwerk largely completed the necessary personnel and capacity adjustments in all its business segments. Compared to the previous year, the number of employees (excl. trainees) at the cutoff date had once again reduced by 25 to 1,298 (2010: 1,323). This is due primarily to streamlining our operating units, which will continue in 2011. At around EUR 20k, the value added per employee in the quarter ranged around prior-year level.
The main opportunities and risks affecting the asset, financial or earnings position of Funkwerk, along with the risk management system are described in detail in the 2010 annual report of our company. No new aspects have arisen since then.
It is to be expected, however, that the earthquake disaster in Japan and the unrest in the Arab countries will bring with them uncertainties and adverse knock-on effects for the global economy on the whole. To what extent this will affect business at Funkwerk in the further course of the year, cannot currently be assessed with the necessary degree of certainty.
No events of special significance other than described in this quarterly report have to date occurred since the conclusion of the financial year
All four business segments of Funkwerk operate in challenging and some also fiercely competitive growth markets. In Traffic & Control Communication and Security Communication especially we can see considerable potential for the future. The use of information and communication technology at transport companies, in the industry and the security sector will continue to gain in importance in the long term. This opens up promising prospects for our company, as Funkwerk is regarded a prime manufacturer in this area in Europe.
In Automotive Communication, securing new framework contracts and other specific business initiations present us with considerable opportunities to grow in the next few years, which should notably increase sales in this segment. The use of electronic interlocking systems also opens up a new market for cost-effective systems in the railway sector. In the medium term, Funkwerk expects to see a significant sales contribution here from its proprietary development Alister and the prospective approval of SIL4 in the latter half of 2011. Funkwerk also follows the strategy in Security Communication of continuing its component business. We hope this will broaden the addressable OEM product market quite substantially. In this context, we also expect to conclude strategic cooperation agreements here before the end of the year.
The risk factors for the global economy increased in the first quarter of 2011. It is hard to tell at this point what lasting effects the earthquake disaster in Japan and the unrest in the Arab countries will have on the global procurement of goods and services. From our point of view, however, we can see a slight slowdown of the general growth dynamics. It also remains to be seen how budget spending on infrastructure investments develops in the further course of the year in view of the continuing restrictive fiscal policies in the European buyer countries which are significant for us.
Irrespective of all this, we can see opportunities for organic growth at Funkwerk because of the new products and solutions prepared in 2010 and launched in 2011. The economy for investments in infrastructure is, however, lagging behind the general trend. Nonetheless, we should be able at group level to move into profit again over the year. Over and above that, we are pursuing strategic options to focus on promising business activities as part of our efforts to structure our group along clear lines. Based on this, suitable strategic acquisitions which will add to our technological portfolio and expand or develop international markets could increase our potential for growth in focal areas in the medium term.
Dr.-Ing. Hans Grundner Johann M. Schmid-Davis Carsten Ahrens (Chairman)
In the first quarter of 2011, Funkwerk's share (ISIN DE0005753149) largely followed the trend of the German stock index, DAX. After continuing strong on an upward trend that had become apparent as early as in the last quarter of 2010, Funkwerk's share marked its peak of EUR 8.20 for the period in mid-January. Following the announcement and writedown of the majority of business in Algeria, the downward spiral of the share accelerated with the result that Funkwerk tested the EUR 6 mark by mid-March. The subsequent price rally saw the share recover to EUR 7.19 and near its starting level early in the year. Germany's stock index DAX also had trouble remaining steady until the end of March, whereas the technology index TecDAX gained around 9 per cent in the first three months of 2011.
Analyst opinions are currently divided on Funkwerk's share – two buy recommendations are opposite a neutral rating. As a result, the upside targets range widely from EUR 6.30 to EUR 9.
In consequence thereof, the Investor Relations efforts of Funkwerk AG will concen-trate on making the successes of reorientation measures and the resulting price potential transparent in individual investor talks and analyst presentations in the hope of bringing about a more positive rating for the share.
PERFORMANCE FUNKWERK-SHARE (INDICATED TO 100)
Funkwerk Tec-DAX DAX Prime Technology
| Assets | 31/03/2011 | 31/12/2010 |
|---|---|---|
| eur K |
EUR K | |
| A. Long-Term Assets | ||
| 1. Intangible assets | 36,820 | 35,658 |
| thereof goodwill | 9,161 | 9,161 |
| thereof development costs | 24,925 | 23,184 |
| 2. Tangible assets | 13,825 | 14,224 |
| 3. Other assets | 43 | 43 |
| 50,688 | 49,925 | |
| B.Short-Term Asset | ||
| 1. Inventories | 48,469 | 43,560 |
| 2. Trade accounts receivable | 21,753 | 27,629 |
| 3. Receivables from projects in progress | 12,732 | 8,017 |
| 4. Due from affiliated companies | 73 | 206 |
| 5. Tax refund claims | 1,132 | 1,304 |
| 6. Other assets | 4,119 | 3,026 |
| 7. Financial assets | 3,984 | 3,969 |
| 8. Liquid assets | 2,277 | 12,056 |
| 94,539 | 99,767 | |
| 145,227 | 149,692 | |
| Liabilities | 31/03/2011 | 31/12/2010 |
|---|---|---|
| eur K |
EUR K | |
| A. Equity Capital | ||
| 1. Subscribed capital | 8,101 | 8,101 |
| 2. Capital reserve | 63,451 | 63,422 |
| 3. Retained earnings | 38,211 | 38,211 |
| 4. Own shares | –1,062 | –1,062 |
| 5. Net loss | –47,830 | –43,976 |
| 6. Foreign currency items | –262 | –237 |
| 60,609 | 64,459 | |
| B.Long-Term Liabilities | ||
| 1. Pension obligations | 12,421 | 12,525 |
| 2. Deferred investment subsidies | 947 | 874 |
| 3. Deferred taxes | 1,373 | 1,071 |
| 4. Financial liabilities | 9 | 12 |
| 14,750 | 14,482 | |
| C. Short-Term Liabilities | ||
| 1. Financial liabilities | 3,999 | 422 |
| 2. Trade accounts payable | 25,984 | 29,368 |
| 3. Advance payments received on orders | 10,593 | 8,735 |
| 4. Due to affiliated companies | 20 | 56 |
| 5. Tax liabilities | 3,903 | 3,867 |
| 6. Accured liabilities | 13,495 | 14,323 |
| 7. Deferred investment subsidies | 126 | 138 |
| 8. Other liabilities | 11,748 | 13,842 |
| 69,868 | 70,751 | |
| 145,227 | 149,692 |
| Q1 2011 | Q1 2010 | |
|---|---|---|
| 01/01/2011 | 01/01/2010 | |
| TO 31/03/2011 | to 31/ 03/2010 | |
| eur K |
eur K |
|
| 1. Sales revenues | 43,888 | 47,440 |
| 2. Increase in finished goods inventories and work in progress | 1,933 | 2,491 |
| 3. Other own work capitalised | 2,209 | 2,136 |
| 4. Other operating income | 810 | 1,307 |
| 5. Total operating performance | 48,840 | 53,374 |
| 6. Cost of materials | 22,287 | 24,819 |
| 7. Personnel expenses | 20,406 | 20,763 |
| 8. Planned depreciation | 2,146 | 2,251 |
| 9. Other operating expenses | 6,870 | 7,987 |
| 10. Operating result before impairment charges and restructuring costs | –2,869 | –2,446 |
| 11. Restructuring costs | 0 | 441 |
| 12. Operating result (EBIT) | –2,869 | –2,887 |
| 13. Earnings from financial assets reported using the equity method | 0 | –200 |
| 14. Financial income | 4 | 88 |
| 15. Financial expenses | 274 | 158 |
| 16. Financial results | –270 | –270 |
| 17. Earnings before taxes | –3,139 | –3,157 |
| 18. Taxes on income | –715 | 218 |
| 19. Earnings after taxes / result for the period | –3,854 | –2,939 |
| Amounts directly included in equity | ||
| 20. Currency differences | –25 | –30 |
| 21. Other period results | –25 | –30 |
| 22. Total | –3,879 | –2,969 |
| The result for the quarter comprises | ||
| Funkwerk AG shareholders | –3,854 | –2,930 |
| Minority interests | 0 | –9 |
| The amounts directly included in equity comprise | ||
| Funkwerk AG shareholders | –21 | –30 |
| Minority interests | 0 | 0 |
| Earnings per share acc. to IAS 33 | ||
| Earnings per share (undiluted) in EUR | –0.48 | –0.36 |
| Earnings per share (diluted) in EUR | –0.48 | –0.36 |
| Q1 2011 | Q1 2010 | |
|---|---|---|
| 01/01/2011 | 01/01/2010 | |
| TO 31/03/2011 | TO 31/03/2010 | |
| eur K |
eur K |
|
| 1. Annual result | –3,854 | –2,939 |
| 2. Income tax revenues /expenditure | 715 | –218 |
| 3. Depreciation of development costs | 820 | 632 |
| 4. Depreciation of tangible assets and intangible assets | 1,326 | 1,619 |
| 5. Earnings from financial assets reported using the equity method | 0 | 200 |
| 6. Other non-cash expenditure and income | 9 | 33 |
| 7. Reversal of investment subsidies | –34 | –50 |
| 8. Changes in reserves | –1,043 | –260 |
| 9. Profit /loss from disposal of fixed assets | –2 | –88 |
| 10. Changes in inventories, receivables and other assets | –4,360 | –6,382 |
| 11. Changes in advance payments received on orders | 1,858 | 473 |
| 12. Changes in other debts | –5,780 | 402 |
| 13. Interest income | –4 | –88 |
| 14. Interest expenditure | 178 | 158 |
| 15. Interest paid | –70 | –48 |
| 16. Interest received | 6 | 0 |
| 17. Paid income tax | –208 | 474 |
| 18. Cash flow from operating activities | –10,443 | –6,082 |
| 19. Receipts from the disposal of fixed assets | 2 | 8 |
| 20. Payments for investments and development costs | –2,209 | –2,136 |
| 21. Payments for investments in intangible assets without goodwill | ||
| and development costs | –172 | –62 |
| 22. Payments for investments in fixed assets | –531 | –377 |
| 23. Payments for the acquisition of consolidated companies | ||
| less acquired cash and cash equivalents | 0 | 25 |
| 24. Payments for deconsolidationg | 0 | –1,131 |
| 25. Cash flow from investing activities | –2,910 | –3,673 |
| 26. Free cash flow | –13,353 | –9,755 |
| 27. Receipts from take-up of (financial) credit | 3,574 | 0 |
| 28. Payments for the redemption of loans and (financial) credit | 0 | –2,254 |
| 29. Cash flow from financing activities | 3,574 | –2,254 |
| 30. Net change in cash and cash equivalents | –9,779 | –12,009 |
| 31. Cash and cash equivalents at beginning of period | 12,056 | 22,141 |
| 32. Cash and cash equivalents at end of period | 2,277 | 10,132 |
| YEAR | tCC | AC | EC | SC | Group | |
|---|---|---|---|---|---|---|
| EUR K | EUR K | EUR K | EUR K | EUR K | ||
| Total sales revenues | 2011 | 19,807 | 6,678 | 6,269 | 13,318 | 46,072 |
| 2010 | 22,530 | 7,216 | 7,058 | 12,669 | 49,473 | |
| Sales revenues with other | 2011 | 0 | 16 | 26 | 2,142 | 2,184 |
| business segments* | 2010 | 15 | 86 | 40 | 1,892 | 2,033 |
| External sales revenues | 2011 | 19,807 | 6,662 | 6,243 | 11,176 | 43,888 |
| 2010 | 22,515 | 7,130 | 7,018 | 10,777 | 47,440 | |
| Other operating income | 2011 | 311 | 261 | 104 | 134 | 810 |
| 2010 | 837 | 231 | 80 | 159 | 1,307 | |
| Segment revenues | 2011 | 20,118 | 6,923 | 6,347 | 11,310 | 44,698 |
| 2010 | 23,352 | 7,361 | 7,098 | 10,936 | 48,747 | |
| Inventory changes of finished goods | 2011 | 775 | 274 | 0 | 884 | 1,933 |
| and work in progress | 2010 | 2,632 | 211 | 0 | –352 | 2,491 |
| Own work capitalised (development) | 2011 | 561 | 460 | 462 | 726 | 2,209 |
| 2010 | 199 | 875 | 556 | 506 | 2,136 | |
| Cost of materials | 2011 | 8,839 | 4,165 | 2,921 | 6,362 | 22,287 |
| 2010 | 12,114 | 4,672 | 3,341 | 4,692 | 24,819 | |
| Personnel expenses | 2011 | 9,777 | 2,836 | 2,571 | 5,222 | 20,406 |
| 2010 | 9,757 | 2,732 | 2,493 | 5,781 | 20,763 | |
| Planned depreciation of fixed assets | 2011 | 471 | 320 | 178 | 357 | 1,326 |
| 2010 | 671 | 369 | 211 | 368 | 1,619 | |
| Planned depreciation of | 2011 | 148 | 123 | 264 | 285 | 820 |
| development work | 2010 | 58 | 179 | 26 | 369 | 632 |
| Other operating expenses | 2011 | 2,668 | 957 | 1,281 | 1,964 | 6,870 |
| 2010 | 3,436 | 1,012 | 1,409 | 2,130 | 7,987 | |
| Operating result before | 2011 | –449 | –744 | –406 | –1,270 | –2,869 |
| restructuring costs | 2010 | 147 | –517 | 174 | –2,250 | –2,446 |
| Restructuring costs | 2011 | 0 | 0 | 0 | 0 | 0 |
| 2010 | 4 | 0 | 0 | 437 | 441 | |
| Operating result | 2011 | –449 | –744 | –406 | –1,270 | –2,869 |
| 2010 | 143 | –517 | 174 | –2,687 | –2,887 | |
* The sales revenues with other business segments are eliminated in the consolidated financial statements.
The accounts were compiled in Euro in compliance with the International Accounting Standards Board (IASB) passed and published by the International Financial Reporting Standards (IFRS). The accounts are based on the accounting principles and methods applied to the consolidated financial statement for the 2010 financial year.
This interim report has neither been audited under § 317 of the German Commercial Code (HGB) nor reviewed and verified by an auditor.
In addition to the parent company, Funkwerk AG, the following companies were included as subsidiaries in the accounts of the company according to the full consolidation method:
| Direct subsidiaries |
Registered office |
Voting rig hts |
|---|---|---|
| in % | ||
| Hörmann-Funkwerk Kölleda GmbH (HFWK) | Kölleda, Thüringen | 100 |
| ALPHA Meß-Steuer-Regeltechnik GmbH (Alpha) | Neustadt/Weinstraße, Rheinland-Pfalz | 100 |
| Funkwerk Dabendorf GmbH (FWD) | Zossen, Brandenburg | 100 |
| Funkwerk Enterprise Communications GmbH (FEC) | Nürnberg, Bayern | 100 |
| Funkwerk Information Technologies GmbH (FIT) | Kiel, Schleswig-Holstein | 100 |
| Funkwerk Security Communications GmbH (FSC) | Salzgitter, Niedersachsen | 100 |
| Indirect subsidiaries |
Registered office |
Voting rig hts |
| Funkwerk eurotelematik GmbH | Ulm, Baden-Württemberg | in % 100 |
| Funkwerk Avionics GmbH | Waal, Bayern | 100 |
| Funkwerk Enterprise Communications Iberia S.L. | Madrid, Spanien | 100 |
| Funkwerk Enterprise Communications France S.A.S. | Gradignan Cedex, Frankreich | 100 |
| Funkwerk Enterprise Communications Italy S.R.L. | Mailand, Italien | 100 |
| Funkwerk Aphona Communications GmbH | Wien, Österreich | 100 |
| Funkwerk IP-Appliances GmbH | Nürnberg, Bayern | 100 |
| FunkTech GmbH | Nürnberg, Bayern | 100 |
| Funkwerk Information Technologies Karlsfeld GmbH | Karlsfeld, Bayern | 100 |
| Funkwerk Information Technologies York Limited | York, Großbritannien | 100 |
| Funkwerk Information Technologies Malmö AB | Malmö, Schweden | 100 |
| Funkwerk IT Polska Sp. z o.o. | Warschau, Polen | 100 |
| Microsyst Systemelectronic GmbH | Weiden, Bayern | 100 |
| Funkwerk Systems Austria GmbH | Wien, Österreich | 100 |
| Funkwerk Akademie GmbH | Beichlingen, Thüringen | 100 |
| Funkwerk plettac electronic GmbH | Fürth, Bayern | 100 |
| Funkwerk Electronic Services GmbH | Salzgitter, Niedersachsen | 100 |
| Funkwerk Engineering GmbH | Kiel, Schleswig-Holstein | 100 |
Seasonal or economic influences exceeding the norm which require reporting or were not already disclosed in the report of the Executive Board did not exist.
No events of special significance other than already described in the management report have occurred after the cutoff date on 31 March 2011.
»In compliance with the generally accepted accounting principles for the interim report, we hereby confirm to the best of our knowledge and belief that the consolidated interim financial statements give a true and fair view of the company's assets, liabilities, financial position, and profit and loss, and that the group management report is an accurate representation of the trend of business of the company including operating result and group situation, and appropriately describes the opportunities and risks of the anticipated future development of the group in the remaining financial year.«
The Executive Board of Funkwerk AG Kölleda, May 2011
| April 8, 2011 | Publication of the 2010 annual report |
|---|---|
| May 13, 2011 | Disclosure of quarterly report |
| May 19, 2011 | Shareholder´s meeting |
| August 12, 2011 | Disclosure of half-yearly report |
| September 2011 | Analyst-conference |
| November 11, 2011 | Disclosure of nine-monthly report |
Jörg Reichenbach Im Funkwerk 5 99625 Kölleda/Thüringen Germany Phone: +49 (0) 3635 600 –346 Fax: +49 (0) 3635 600 –507 E-Mail: [email protected] www.funkwerk.com
Editing: Funkwerk AG, Kölleda Design and Typesetting: Studio Delhi, Mainz
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