Interim / Quarterly Report • Aug 25, 2009
Interim / Quarterly Report
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| in mill. EUR | Q1-Q2 2009 | Q1-Q2 2008 |
|---|---|---|
| Sales | 113.9 | 131.4 |
| Operating result (EBIT) | -5.9 | 1.2 |
| Gross yield | 62.8 | 70,0 |
| Operational Cash Flow | -23.3 | 0.9 |
| Order volume | 97.5 | 127.9 |
| Employees | 1,567 | 1,668 |
In the second quarter of 2009, the serious crisis of the global economy continued to form the background of business at Funkwerk. The weak level of economic activity in the automobile industry and the related dip in sales in our Automotive Communication segment persisted as much as the investment restraint among customers in the railway sector and other lines of industry.
At Euro 57.2m, revenues in the second quarter thus missed the prior-year figure (Euro 69.8m) by 18 per cent, but stabilised in comparison to the previous quarter (Euro 56.7m). Sales generated in the first six months totalled Euro 113.9m and thus were down by 13.3 per cent on the previous year (Euro 131.4m).
Funkwerk counteracted this trend by adjusting its personnel and cost levels accordingly and completely restructuring Automotive Communication, initial positive effects of which are now beginning to show. Sources of loss both in our product portfolio and in our sales activities were also eliminated.
On the whole, the operating result (EBIT) of Euro -3.0m in the second quarter remained at a level comparable to the previous quarter (Euro -2.9m). Related to the full half year, this meant results were negative at Euro 5.9m. In the previous year, Funkwerk had generated an operating profit of Euro 1.2m in the first six months, although this figure contained one-off effects in the amount of Euro 4.3m. At Euro 4.8m, the first-half result for our shareholders is negative (2008: Euro +0.5m), with earnings per share adjusting to Euro -0.58 (2008: Euro +0.06).
The sluggishness of the global economy was also evident in incoming business, which particularly affected our Automotive Communication segment. By the end of June, Funkwerk had gained new contracts worth Euro 97.9m, some 26.7 per cent less than in the previous year (133.5 per cent). The level of orders as at 30 June thus reduced to Euro 97.5m (2008: Euro 127.9m).
Since the majority of our business is conducted with major companies and government organisations, the first two quarters are traditionally weak for Funkwerk in terms of incoming orders, sales and earnings. Many projects are only decided by customers throughout the remainder of the year, with settlements preferably in the fourth quarter. In addition, we usually face advance payments for major projects in the first six months, which do not generate sales and earnings until later on in the year.
Based on the general thrust of recent developments and in view of the increasing need for replacement investments in infrastructure and the further stabilisation of the global economy, we believe that the third and fourth quarters will once again see business revive, along with an increase in sales and earnings.
No recovery is as yet evident in Funkwerk's segment that proves most affected by the crisis, in Automotive Communication (AC). As an OEM supplier of communication equipment for the automobile and commercial vehicle industries, AC suffers particularly from the slump in demand in these sectors, at times of over 50 per cent.
Since Funkwerk is entirely dependent on the arrangements and operations of vehicle manufacturers and, at the same time, aftersales business remained poor, sales in this segment were similarly meagre. Add to this the fact that even Avionics as a product sector was gripped quite badly by the recession in the second quarter. Compared to the first six months of the previous year, sales in this segment thus almost halved to Euro 14.2m (2008: Euro 28.2m).
In the second quarter, the segment was subsequently adjusted quite radically to the new market conditions, with focus on rationalisation, improvement in quality and integrated solutions. A drastic cost reduction program involving a reduction in capacities, job cuts by a 50, and personnel measures such as short-time work helped prevent more serious losses in the second quarter. On the whole, however, the AC segment reported an operating loss of Euro -3.1m (2008: Euro +0.6m).
Initial positive effects of the restructuring can now be seen, but will not become fully evident in terms of improved earnings until the third and fourth quarters. The automobile sector is not predicted to recover until the end of 2010 at the earliest. By then, Funkwerk will also have launched a new signal amplifier technology which promises great sales potential. We are currently also involved in promising negotiations for cooperation with other technology companies in order to consolidate our competences and thus increase our market opportunities for equipment of the next generation of vehicles.
Furthermore, Funkwerk is in the process of opening a new future market in the area of broadband communication. Nationally, the comprehensive supply of broadband Internet access is increasing in importance. For time and cost-related reasons, radio-based concepts are a highly effective solutions particularly in rural areas and are now partly funded by the government. Funkwerk was able to prove its technological competence in this field in pilot projects in Brandenburg, so that the AC facility in Dabendorf was commissioned with the serial development and production of receivers. This opens up the potential of further sales in 2010 and 2011.
Even Traffic & Control Communication (TCC, communication and information systems for transport, logistics and industry) – which is usually the strongest segment of Funkwerk in terms of growth – continued to suffer from the influences of the economic crisis in the second quarter, but through cost adjustments was able more or less to break even in terms of operating result.
Against the background of the global crisis, which drastically impaired the funding options for projects and companies, investments of railway companies planned for the period under review were postponed and some even terminated. At the same time, the competition in tenders and projects became increasingly fierce, which negatively affected the prices and earnings margins.
Nevertheless, TCC was able in the second quarter to stabilise sales at prior-quarter level, reporting a figure of Euro 25.6m. Compared to the previous year, however, this meant a decline of 10 per cent. For the first six months, revenues thus amounted to Euro 51.4m, down by 6 per cent on the previous year (Euro 54.9m). Due to the postponement of projects particularly in the first quarter, the first-half result in this segment thus totalled Euro 2.2m and thus remained negative (2008: Euro +4.3m). Comparing these figures with prior-year results, however, it must be borne in mind here that the latter were adjusted to the new structure resulting from the establishment of our Security Communication segment in the third quarter of 2008.
Despite aggravated competition and the continued effects of the global economic crisis, however, we expect to see a significant revival of business in TCC in the latter half of the year. In addition to seasonal effects, the state aid programmes here should bring about a number of additional contracts. The segment result is also likely to improve further due to the action taken to reduce costs (rationalisation at several locations, reduction of other operating expenses) and the more favourable conditions of purchase.
In Enterprise Communication, Funkwerk was able in the second quarter to achieve a further increase in revenues to Euro 9m (Q1 2009: Euro 7.3m). Here, too, the economic crisis has now hit customers, resulting in a slump in sales specifically in export. International business in this segment, which is focused on solutions in areas including networks, TC systems and CPE terminals for companies and telecommunication providers, also saw a decline. On the other hand, the restructuring measures implemented here in 2008 led to a reduction in costs by some 25 per cent, with a lasting positive effect on the results.
By the end of June, Enterprise Communication had generated revenues of Euro 16.4m and a positive operating result of Euro 1.8m (2008: Euro -2.1m). This improvement is due primarily to the sale of licence rights to a globally leading cooperating partner, amounting to over Euro 2m.
However, despite the difficult underlying conditions and the aggravated pricing pressures, Funkwerk anticipates sales in EC to increase slightly in the latter half of 2009.
The drastic decline in export business in the second quarter also affected our Security Communication segment (personal security, video monitoring and property protection). This, however, could be offset by the continued positive trend in foreign projects, where Funkwerk as a supplier of integrated systems for the protection of property and persons is a successful contender. On the whole, revenues in this segment of Euro 15.9m remained stable compared to the prior-quarter figure (Euro 16.1m), while the operating result slightly improved.
Since project business in the first six months necessitated advance payments and other significant expenses, the segment result remained negative, amounting to Euro 2.5m. In the further course of the year, however, we expect sales to rise, along with a positive earnings contribution. Crucial here, however, will be whether the continuing weakness in export business can be compensated by the acquisition of a new major project involving property protection.
Investments in million Euro
Q1-Q2 2009
7.5
Q1-Q2 2008
8.2
Report Accounts Notes
On account of the asymmetrical distribution of sales throughout the year and the advance payments required for major projects in the first six months, the cash flow of Funkwerk tends to be highly negative up until the third quarter. While the capital requirement decreased in the second quarter of 2009, the operating cash flow as at the end of June stood at Euro -23.3m (2008: Euro 0.9m).
In addition to the higher quarterly loss, the drastic reduction in operating cash flow on the previous year is due primarily to the increase in working capital by Euro 10.9m. In the first six months we were required to build up our inventories by Euro 1.6m to prepare for projects which will be completed in the further course of the year. Furthermore, the accounts payable including payments on account for orders reduced by Euro 10.3m in the first half-year.
In the period under review, a total of Euro 7.5m (2008: Euro 8.2m) were released for investments. The capital expenditure and investments in intangible assets reduced by Euro 1.7m on the previous year, to Euro 1.9m. The internally produced and capitalised assets rose to Euro 5.6m (2008: Euro 4.6m).
The inpayments for the acquisition of consolidated companies and shareholdings of Euro 2.2m are connected with the sale of 51 per cent of the shares in Vtech Funkwerk IAD GmbH.
As at the end of June, the free cash flow after acquisitions thus amounted to Euro -28.8m (2008: Euro -7.3m), the liquidity as at the end of the quarter stood at Euro 4.7m (2008: Euro 7.0m), which at the cutoff date is usually the lowest figure in the year.
Due to the completion of ongoing contracts and major projects progressing as planned, we expect to see a significant
improvement in the cash flow situation and thus also in our liquidity throughout the remainder of the year.
On account of the reduced business volume, the balance sheet total of Funkwerk as a group reduced in the first six months of 2009, falling by 6.5 per cent to Euro 205.9m (end of 2008: Euro 220.1m).
While our equity decreased to some Euro 125m due to the loss in the period under review, the equity ratio improved on the end of the year, up from 58.9 per cent to 60.7 per cent because of a more drastic reduction in short-term liabilities.
In view of the continued unstable condition of the global economy and the as yet uncertain point of a fundamental recovery, Funkwerk continued to adjust its capacities and the number of employees in its various business sectors accordingly. The necessary restructuring in Automotive Communication in particular necessitated a cut in jobs. As at 30 June, Funkwerk employed 1,567 employees (2008: 1,664). The personnel development throughout the remainder of the year will result in a further reduction of staff levels to around 1,400.
In the period under review, our self-financed research and development continued to concentrate on TETRA handsets for security solutions and on electronic interlocking systems (Alister) for regional rail transport. Both product lines will be launched before the end of 2009. Furthermore, Funkwerk endeavours to keep up with technological advances in all areas and to enhance its portfolio by introducing innovative solutions.
On the whole, Funkwerk capitalised a total of Euro 5.7m (2008: Euro 4.4m) in own developments in the first half of 2009. This must be set against depreciations of these in the amount of Euro 2.8m (2008: Euro 3.2m).
All risks relating to the financial, net worth and earnings positions of Funkwerk along with the risk management system are described in detail in the 2008 annual report of the company. There are no new aspects that may have a significant effect on these situations.
In the second quarter of 2009, the general economic setting on the whole continued to deteriorate to impact the business trend of Funkwerk. The effects of the global economic crisis on the operations of our customers are now noticeable in all four of our segments. This was evident in particular in incoming business. The state aid programmes and the investments in infrastructure as well as the usual seasonal revival in the latter half of the year, however, should improve the economic situation. The trend of business in each Funkwerk segment will be different though.
Automotive Communication can expect a minor stabilisation of sales. Due to the cost reduction measures now taking effect and the comprehensive restructuring, the operating loss here will continue to reduce. A return to the profit zone, however, is not likely until 2010 at the earliest, when automobile business is expected to start up again.
Traffic & Control Communication is still expected to see a revival in business in the latter half of the year, though customers here also continue to plan conservatively and place new orders quite hesitantly. Due to our adjustment measures relating to product groups affected by project postponements or cancellations, however, we anticipate earnings in this segment to improve quite significantly by the end of the year.
Lastly, our Security Communication growth segment also experienced a slump in exports, although the scheduled progress of major projects and the prospect of improving our market position in video systems provide good prospects of compensating this negative effect. Enterprise Communication
managed to get back into the black in the first six months and should be able to further confirm this positive trend by the end of the year.
Although we were unable in the second quarter to improve our operating result, we still see a good chance for Funkwerk to develop its potentials in the current recession and gain further market shares. Business is expected to revive in the third and fourth quarters and will largely reduce our losses in the first six months by year-end.
Kölleda, June 2009
For the Executive Board
Dr.-Ing. Hans Grundner Chairman of the Board
In the second quarter of 2009, the global financial and economic crisis continued to be the dominating factor in the capital markets. Though a fundamental revival of the economy cannot as yet be seen, the stock markets finally saw a trend reversal by mid-year. Both the German stock index DAX and the index of leading technology shares, TecDax, recovered from their lows. As at the end of June, the DAX had all but compensated its losses previously accrued, while the TecDAX improved by as much as 23 per cent. This trend, however, is primarily due to the upturn in the price of the share weighted most favourably, of Infineon AG.
While Funkwerk initially suffered from the poor appraisal of the automobile supplier industry, though only one of our four segments is affected by the automobile crisis, the price improved in the second quarter. In the wake of the TecDAX, the price of the Funkwerk share (ISIN DE0005753149) also steadily began to point up again. Starting from its lowest point of Euro 4 in March, the price had neared the Euro 7 mark again by June. As at the end of June, the Funkwerk share had fully made up for losses earlier in the year and even managed to break through the Euro 7 mark in July. The four financial institutions that regularly analyse our share currently consider a valuation of Euro 5 to Euro 8.50 fair for Funkwerk.
Company calendar 2009
| 10/2009 | Capital Markets Day |
|---|---|
| 06/11/2009 | Disclosure of nine-monthly report |
| 11/11/2009 | Analysts' conference Eigenkapitalforum, Frankfurt |
In addition to authorising the purchase of own shares on 28 May 2009, the shareholders' meeting of Funkwerk AG decided on the creation of new "approved capital" in the amount of Euro 4,050,000. This will replace an arrangement established in 2004 which expired at the 2009 shareholders' meeting. The approved capital is to enable the company generally to adapt the equity base of the company to its business requirements.
Further information on the Funkwerk share along with presentations and reports on the company are available on the Internet at www.funkwerk.com/investor-relations.
In its meeting on 28 July, the Supervisory Board of Funkwerk AG decided to reduce the Executive Board to two members. At the same time, Mr. Johann Schmid-Davis (35, MBA) was appointed as the new CFO. Effective from 1 September 2009, Mr. Schmid-Davis will take over the function of Norbert Gunkler, who will resign from the Executive Board on termination of his contract at the end of August 2009 to take on new duties and responsibilities. The Supervisory Board thanked Norbert Gunkler for his many years of successful work. At the request of the Supervisory Board, Norbert Gunkler will continue to be available to the company in an advisory capacity. The contract of Lutz Pfister also terminated at the end of August, though Mr. Pfister will continue as head of the Automotive Communication segment.
In the period under review, Funkwerk was not notified of any material changes to the shareholder structure. As at the end of March, the shares in Funkwerk AG were distributed as follows:
| Total shares | 8,101,241 | 100.00% |
|---|---|---|
| Hörmann Funkwerk Holding GmbH | 4,280,000 | 52.83% |
| Free float | 3,821,241 | 47.17% |
| thereof own shares | 41,579 | 0.51% |
| thereof Executive Board | 500 | 0.01% |
| ASSETS | 30/06/2009 | 31/12/2008 | |
|---|---|---|---|
| EUR k | EUR k | ||
| A. Non-Current Assets | |||
| 1. | Intangible assets | 50,392 | 47,499 |
| thereof goodwill | 19,265 | 19,065 | |
| thereof development costs | 25,275 | 22,089 | |
| 2. | Property, plant and equipment | 17,789 | 19,146 |
| thereof land, leasing rights and buildings including those on third-party land | 7,378 | 7,578 | |
| thereof technical equipment, plant and machinery | 5,128 | 5,883 | |
| thereof other equipment, operational and business equipment | 5,152 | 5,605 | |
| thereof advanced payments and construction in progress | 131 | 79 | |
| 3. | Loans to affiliated companies | 0 | 0 |
| 4. | Other financial assets | 2,310 | 126 |
| 5. | Deferred taxes | 587 | 372 |
| 71,078 | 67,143 | ||
| B. Current Assets | |||
| 1. | Inventories | 49,932 | 46,193 |
| thereof raw materials and supplies | 24,223 | 24,486 | |
| thereof work in progress | 9,871 | 7,875 | |
| thereof finished goods and merchandise | 15,011 | 13,240 | |
| thereof advance payments | 827 | 592 | |
| 2. | Trade accounts receivable | 43,728 | 50,702 |
| 3. | Accounts due from projects in process | 24,428 | 18,611 |
| 4. | Accounts due from affiliated companies | 436 | 617 |
| 5. | Other taxes receivable | 4,206 | 4,477 |
| 6. | Other asset value | 7,434 | 4,252 |
| 7. | Securities | 638 | 642 |
| 8. | Cash | 4,035 | 25,365 |
| 9. | Long-term assets received for sale | 2,100 | |
| 134,837 | 152,959 | ||
| 205,915 | 220,102 |
| EQUITY AND LIABILITIES | 30/06/2009 | 31/12/2008 | |
|---|---|---|---|
| EUR k | EUR k | ||
| A. Shareholders' Equity | |||
| 1. | Subscribed capital | 8,101 | 8,101 |
| 2. | Additional paid-in capital | 63,163 | 63,017 |
| 3. | Appropriated retained earnings | 38,211 | 38,211 |
| 4. | Own shares | (1,062) | (1,062) |
| 5. | Consolidated unappropriated retained earnings | 16,848 | 21,657 |
| 6. | Minority interest | (26) | 11 |
| 7. | Foreign currency items | (243) | (379) |
| 124,992 | 129,556 | ||
| B. Accrued Liabilities | |||
| 1. | Pension accrued | 12,444 | 12,640 |
| 2. | Prepaid expenses item for investment subsidies and allowances | 1,447 | 1,358 |
| 3. | Deferred taxes | 925 | 3,008 |
| 4. | Liabilities due to banks | 28 | 33 |
| 14,844 | 17,039 | ||
| C. Current Liabilities | |||
| 1. | Liabilities due to banks | 7,895 | 341 |
| 2. | Trade accounts payable | 24,788 | 33,730 |
| 3. | Advance payments received on orders | 2,475 | 3,844 |
| 4. | Accounts due to affiliated companies | 73 | 73 |
| 5. | Taxes payable | 3,985 | 3,474 |
| 6. | Other accrued liabilities | 9,845 | 10,767 |
| 7. | Prepaid expenses item for investment subsidies and allowances | 0 | 184 |
| 8. | Financial liabilities | 17,018 | 21,094 |
| thereof personnel liabilities | 7,081 | 8,566 | |
| thereof for taxes | 2,248 | 4,016 | |
| thereof for social security | 167 | 641 | |
| 66,079 | 73,507 | ||
| 205,915 | 220,102 |
| Q2 2009 | Q2 2008 | Q1-Q2 2009 | Q1-Q1-Q1-Q2 2008 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 01/04/2009 | 01/04/2008 | 01/01/2009 | 01/01/2008 | ||||||
| to 30/06/2009 to 30/06/2008 |
to 30/06/2009 | to 30/06/2008 | |||||||
| EUR k | % | EUR k | % | EUR k | % | EUR k | % | ||
| 1. | Revenues | 57,204 | 94.1 | 69,777 | 92.6 | 113,944 | 90.9 | 131,408 | 92.4 |
| 2. | Increase in inventories of finished | ||||||||
| goods and work in progress | 795 | 1.3 | (1,074) | 1.4 | 2,142 | 1.7 | (795) | 0.6 | |
| 3. | Other own work capitalised | ||||||||
| (development costs) | 2,751 | 4.5 | 2,192 | 2.9 | 5,712 | 4.6 | 4,437 | 3.1 | |
| 4. | Other operating income | 16 | 0.0 | 4,479 | 5.9 | 3,556 | 2.8 | 7,203 | 5.1 |
| 5. | Gross income | 60,766 | 100 | 75,374 | 100 | 125,354 | 100 | 142,253 | 100 |
| 6. | Material expenses | (27,514) | 45.3 | (35,491) | 47.1 | (58,979) | 47.0 | (65,063) | 45.7 |
| 7. | Personnel expenses | (24,613) | 40.5 | (25,233) | 33.5 | (48,282) | 38.5 | (48,920) | 34.4 |
| 8. | Depreciation and amortisation | (3,084) | 5.1 | (3,679) | 4.9 | (6,172) | 4.9 | (7,363) | 5.2 |
| thereof development costs | (1,411) | 2.3 | (1,583) | 2.1 | (2,760) | 2.2 | (3,240) | 2.3 | |
| 9. | Other operating expenses | (8,554) | 14.1 | (9,846) | 13.1 | (17,846) | 14.2 | (19,688) | 13.8 |
| 10. Operating expenses | (63,765) | 104.9 (74,249) | 98.5 | (131,279) | 104.7 (141,034) | 99.1 | |||
| 11. Operating profit (EBIT) | (2,999) | (4.9) | 1,125 | 1.5 | (5,925) | (4.7) | 1,219 | 0.9 | |
| 12. Financial income | 54 | 0.1 | 195 | 0.3 | 117 | 0.1 | 261 | 0.2 | |
| 13. | Depreciation/Amortisation | ||||||||
| of financial assets | (0) | 0.0 | (0) | 0.0 | (0) | 0.0 | (0) | 0.0 | |
| 14. | Financial expenditure | (252) | 0.4 | (442) | 0.6 | (487) | 0.4 | (833) | 0.6 |
| 15. Financial income | (198) | 0.3 | (247) | 0.3 | (370) | 0.3 | (572) | 0.4 | |
| 16. Income from ordinary operations | (3,197) | (5.3) | 878 | 1.2 | (6,295) | (5.0) | 647 | 0.5 | |
| 17. | Deferred taxes | 1,127 | 1.9 | 484 | 0.6 | 2,277 | 1.8 | 650 | 0.5 |
| 18. | Taxes on income and earnings | (265) | 0.4 | (688) | 0.9 | (575) | 0.5 | (756) | 0.5 |
| 19. | Other taxes | (120) | 0.2 | (95) | 0.1 | (251) | 0.2 | (240) | 0.2 |
| 20. Consolidated net income | (2,455) | (4.0) | 579 | 0.8 | (4,844) | (3.9) | 301 | 0.2 | |
| 21. | Minority interests | 20 | 0.0 | 135 | 0.2 | 35 | 0.0 | 210 | 0.1 |
| 22. Shareholders' equity | (2,435) | (4.0) | 714 | 0.9 | (4,809) | (3.8) | 511 | 0.4 | |
| 23. | Profit carried forward | 21,657 | 35.6 | 15,473 | 20.5 | 21,657 | 17.3 | 15,473 | 10.9 |
| 24. Donation of surplus reserve | (0) | 0.0 | (0) | 0.0 | (0) | 0.0 | (0) | 0.0 | |
| 25. Dividends paid | (0) | 0.0 | (2,014) | 2.7 | (0) | 0.0 | (2,014) | 1.4 | |
| 26. Consolidated unappropriated | |||||||||
| retained earnings | 19,222 | 31.6 | 14,173 | 18.8 | 16,848 | 13.4 | 13,970 | 9.8 | |
| Earnings per share according to IAS 33 | |||||||||
| Consolidated net income EUR k |
(2,435) | 714 | (4,809) | 511 | |||||
| Number of shares (undiluted) Shares k |
8,060 | 8,060 | 8,060 | 8,060 | |||||
| Earnings per share (undiluted) EUR |
(0.30) | 0.09 | (0.60) | 0.06 | |||||
| Consolidated net income EUR k |
(2,435) | 714 | (4,809) | 511 | |||||
| Number of shares (diluted) Shares k |
8,268 | 8,272 | 8,268 | 8,272 | |||||
| Earnings per share (diluted) EUR |
(0.29) | 0.09 | (0.58) | 0.06 |
| Q2 2009 01/04/2009 to 30/06/2009 |
Q2 2008 01/04/2008 to 30/06/2008 |
Q1-Q2 2009 01/01/2009 to 30/06/2009 |
Q1-Q1-Q1-Q2 2008 01/01/2008 to 30/06/2008 |
|||||
|---|---|---|---|---|---|---|---|---|
| EUR k | % | EUR k | % | EUR k | % | EUR k | % | |
| Consolidated net income | (2,455) | (4.0) | 579 | 0.8 | (4,844) | (3.9) | 301 | 0.2 |
| Other comprehensive income | ||||||||
| Foreign currency items | 177 | 0.3 | (20) | 0.0 | 136 | 0.1 | (53) | 0.0 |
| Other comprehensive income for the period, net of income tax |
177 | 0.3 | (20) | 0.0 | 136 | 0.1 | (53) | 0.0 |
| Total comprehensive income | ||||||||
| for the period | (2,278) | (3.7) | 559 | 0.8 | (4,708) | (3.8) | 248 | 0.2 |
| Attributable to shareholders' equity | (2,258) | (3.7) | 694 | 0.9 | (4,673) | (3.8) | 458 | 0.3 |
| Attributable to minority interests | (20) | 0.0 | (135) | (0.1) | (35) | 0.0 | (210) | (0.1) |
| Q1-Q2 2009 | Q1-Q2 2008 | ||
|---|---|---|---|
| 01/01/2009 | 01/01/2008 | ||
| to 30/06/2009 | to 30/06/2008 | ||
| EUR k | EUR k | ||
| 1. | Consolidated net income | (4,809) | 511 |
| 2. | Depreciation and amortisation | 6,172 | 7,363 |
| 3. | Other non-cash expenditure and income | (2,285) | (0) |
| 4. | Increase/Decrease in the special line item | (95) | (99) |
| 5. | Increase/Decrease in deferred taxes | (2,298) | (675) |
| 6. | Cash flow according to DVFA | (3,315) | 7,100 |
| 7. | Increase/Decrease of accounts receivable and other assets | (5,184) | 6,000 |
| 8. | Increase/Decrease of accounts payable and other equity and liabilities | (14,818) | (12,154) |
| 9. | Net cash from operating activities | (23.317) | 946 |
| 10. | Cash paid for investments | (7,530) | (8,243) |
| 11. | Alienation of financial assets | (0) | (0) |
| 12. Net cash used in investing activities | (7,530) | (8,243) | |
| 13. Free Cash Flow before acquisitions | (30,847) | (7,297) | |
| 14. | Cash paid for consolidated and related companies | (232) | (0) |
| 15. | Cash-inflow from disposal of consolidated and related companies | 2,233 | (0) |
| 16. | Allocation of own shares for the acquisition of associated companies | (0) | (0) |
| 17. | Net cash used in financing activities | 2,001 | (0) |
| 18. Free Cash Flow incl. acquisitions | (28,846) | (7,297) | |
| 19. | Proceeds from raising of (finance) loans | 7,549 | 49 |
| 20. Payment for repayment of (finance) loans | (0) | (1,730) | |
| 21. | Capital increase for shareholders' capital | (0) | (0) |
| 22. Allocation in additional paid-in capital | (0) | (0) | |
| 23. | Receipt of payment/Disbursement from claims | ||
| of adjustments to minority interest | (37) | (209) | |
| 24. Dividends paid | (0) | (2,014) | |
| 25. Net cash used in financing activities | 7,512 | (3,904) | |
| 26. Change in cash | (21,334) | (11,201) | |
| 27. | Cash at beginning of period | 26,007 | 18,247 |
| 28. Cash at end of period | 4,673 | 7,046 | |
| Composition of cash at the end of the reporting period | |||
| Cash in hand and deposit at banks | 4,035 | 6,472 | |
| Securities | 638 4,673 |
574 7,046 |
|
| Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Additional | unappropri- | Foreign | |||||||
| Subscribed | paid-in Retained ated retained | Own currency | Minority | Total | |||||
| EUR k | Capital | Capital earnings | earnings Shares | items | Total | interests Capital | |||
| December 31, 2007 | 8,101 | 62,560 | 38,211 | 15,473 (1,062) | (85) 123,198 | 628 123,826 | |||
| Distribution | 0 | 0 | 0 | (2,014) | 0 | 0 | (2,014) | 0 | (2,014) |
| Stock options (according to IFRS 2) | 0 | 363 | 0 | 0 | 0 | 0 | 363 | 0 | 363 |
| Minority interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (209) | (209) |
| Profit Q1 2008 | 0 | 0 | 0 | 511 | 0 | 0 | 511 | 0 | 511 |
| Currency exposure | 0 | 0 | 0 | 0 | 0 | (53) | (53) | 0 | (53) |
| June 30, 2008 | 8,101 | 62,923 | 38,211 | 13,970 (1,062) | (138) 122,005 | 419 122,424 | |||
| December 31, 2008 | 8,101 | 63,017 | 38,211 | 21,657 (1,062) | (379) 129,545 | 11 129,556 | |||
| Distribution | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Stock options (according to IFRS 2) | 0 | 146 | 0 | 0 | 0 | 0 | 146 | 0 | 146 |
| Minority interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (37) | (37) |
| Loss Q1 2009 | 0 | 0 | 0 | (4,809) | 0 | 0 | (4,809) | 0 | (4,809) |
| Currency exposure | 0 | 0 | 0 | 0 | 0 | 136 | 136 | 0 | 136 |
| June 30, 2009 | 8,101 | 63,163 | 38,211 | 16,848 (1,062) | (243) 125,018 | (26) 124,992 |
| Executive | Managing | Employees | Total | ||
|---|---|---|---|---|---|
| Board | Director | executive | other | ||
| of affiliated | staff | staff | |||
| companies | |||||
| Opening balance 01/01/2009 | 114,000 | 50,450 | 82,735 | 315,065 | 562,250 |
| + Options rights granted | 0 | 0 | 0 | 0 | 0 |
| - Options rights exercised | 0 | 0 | 0 | 0 | 0 |
| - Options rights forfeited | 0 | 0 | (6,250) | (15,182) | (21,432) |
| Closing balance 30/06/2009 | 114,000 | 50,450 | 76,485 | 299,883 | 540,818 |
| Year | TCC | AC | EC | SC | Total | |
|---|---|---|---|---|---|---|
| EUR k | EUR k | EUR k | EUR k | EUR k | ||
| 1. Revenues | 2009 | 51,494 | 14,265 | 16,790 | 36,492 | 119,041 |
| 2008 | 74,287 | 28,220 | 28,906 | - | 131,413 | |
| 2. Revenues by segment* | 2009 | 74 | 32 | 413 | 4,578 | 5,097 |
| 2008 | 0 | 0 | 5 | - | 5 | |
| 3. External revenues | 2009 | 51,420 | 14,233 | 16,377 | 31,914 | 113,944 |
| 2008 | 74,287 | 28,220 | 28,901 | - | 131,408 | |
| 4. Increase/Decrease in inventories of | 2009 | 1,159 | 389 | 0 | 594 | 2,142 |
| finished goods and work in progress | 2008 | (1,630) | 418 | 417 | - | (795) |
| 5. Other own work capitalised | 2009 | 1,604 | 1,720 | 1,029 | 1,359 | 5,712 |
| (development costs) | 2008 | 1,816 | 1,050 | 1,571 | - | 4,437 |
| 6. Other operating income | 2009 | 1,599 | 644 | 876 | 437 | 3,556 |
| 2008 | 6,199 | 594 | 410 | - | 7,203 | |
| 7. Gross income | 2009 | 55,782 | 16,986 | 18,282 | 34,304 | 125,354 |
| 2008 | 80,672 | 30,282 | 31,299 | - | 142,253 | |
| 8. Material expenses | 2009 | (25,440) | (9,349) | (7,172) | (17,018) | (58,979) |
| 2008 | (34,623) | (17,083) | (13,357) | - | (65,063) | |
| 9. Personnel expenses | 2009 | (23,824) | (6,521) | (5,204) | (12,733) | (48,282) |
| 2008 | (29,297) | (7,691) | (11,932) | - | (48,920) | |
| 10. Depreciation of non-current assets | 2009 | (1,423) | (835) | (402) | (752) | (3,412) |
| 2008 | (2,003) | (976) | (1,144) | - | (4,123) | |
| 11. Depreciation of development costs | 2009 | (377) | (1,180) | (758) | (445) | (2,760) |
| 2008 | (1,024) | (1,000) | (1,216) | - | (3,240) | |
| 12. Other operating expenses | 2009 | (6,877) | (2,164) | (2,930) | (5,875) | (17,846) |
| 2008 | (10,961) | (2,978) | (5,749) | - | (19,688) | |
| 13. Operating profit (EBIT) | 2009 | (2,159) | (3,063) | 1,816 | (2,519) | (5,925) |
| 2008 | 2,764 | 554 | (2,099) | - | 1,219 |
* Within consolidation revenues with other segments will be eliminated.
The Security Communication segment features in an interim report for the first time not as a result of acquisitions but of a reorganisation of existing business in the previous year. The sectors video monitoring (previously TCC) and messaging (previously EC) were combined here to form the new Security Communication segment. The prior-year figures were not adjusted.
The accounts were compiled in Euro in compliance with the International Financial Reporting Standards (IFRS). IFRS 3R "Business Combinations", IAS 27R "Consolidated and Separate Financial Statements" and IAS 1A " Presentation of Financial Statements" were applied early as standards applicable to the period under review. IFRS 8 "Operating Segments" was also applied for the first time. Furthermore the six month accounts are based on the accounting principles and methods applied to the consolidated financial statement for the 2008 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 operating companies were included as subsidiaries in the six month accounts of the company according to the full consolidation method:
| Direct subsidiaries | Registered office | Voting rights in % |
|---|---|---|
| Hörmann-Funkwerk Kölleda GmbH (FWK) | Kölleda, Thuringia | 100 |
| ALPHA Meß-Steuer-Regeltechnik GmbH (Alpha) | Neustadt/Weinstr., Rhineland-Palatinate | 100 |
| Funkwerk Dabendorf GmbH (FWD) | Zossen, Brandenburg | 100 |
| Funkwerk Enterprise Communications GmbH (FEC-new) | Nuremberg, Bavaria | 100 |
| Funkwerk Information Technologies GmbH (FIT) | Kiel, Schleswig-Holstein | 100 |
| Bouyer S.A.S. | Montauban, France | 100 |
| Funkwerk Security Communications GmbH (FSC) | Salzgitter, Lower-Saxony | 100 |
| Indirect subsidiaries | Registered office | Voting rights in % |
| Funkwerk eurotelematik GmbH | Ulm, Baden-Württemberg | 100 |
| Funkwerk Avionics GmbH | Waal, Bavaria | 100 |
| Funkwerk Enterprise Communications Iberia S.L. | Madrid, Spain | 100 |
| Funkwerk Enterprise Communications France S.A.S. | Gradignan Cedex, France | 100 |
| Funkwerk Enterprise Communications Italy S.R.L. | Milan, Italy | 100 |
| Funkwerk Aphona GmbH | Vienna, Austria | 100 |
| Indirect subsidiaries | Registered office | Voting rights in % |
|---|---|---|
| Funkwerk IP-Appliances GmbH | Neu-Ulm, Bavaria | 100 |
| Funkwerk Information Technologies | ||
| Karlsfeld GmbH (FITK) | Karlsfeld, Bavaria | 100 |
| Funkwerk Information Technologies York Limited | York, Great Britain | 100 |
| Funkwerk Information Technologies Malmö AB | Malmö, Sweden | 100 |
| Funkwerk IT Polska Sp. Z.o.o. | Warsaw, Poland | 100 |
| Microsyst Systemelectronic GmbH | Weiden, Bavaria | 100 |
| Funkwerk plettac electronic GmbH | Fürth, Bavaria | 100 |
| Funkwerk Systems Austria GmbH | Vienna, Austria | 100 |
| Funkwerk Ungarn Kft. | Budapest, Hungary | 85 |
| Funkwerk Akademie GmbH | Beichlingen, Thuringia | 100 |
| Funkwerk Electronic Services GmbH | Salzgitter, Lower-Saxony | 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.
Following the preparation of the six month report, there have been no key events that might have a major influence on our business operations.
Thefollowing tableshowsthe actual personnelexpenses and theeffects on the net income of the period and theearnings per share in compliance with IFRS 2:
| 30/06/2009 | 30/06/2008 | |
|---|---|---|
| Consolidated net income in EUR k | ||
| before the issue of IFRS 2 | (4,955) | 874 |
| share-based personnel expenses | (146) | (363) |
| after the issue of IFRS 2 | (4,809) | 511 |
| Earnings per share in EUR (undiluted) | ||
| before the issue of IFRS 2 | (0.61) | 0.11 |
| after the issue of IFRS 2 | (0.59) | 0.06 |
| Earnings per share in EUR (undiluted) | ||
| before the issue of IFRS 2 | (0.60) | 0.11 |
| after the issue of IFRS 2 | (0.58) | 0.06 |
Thefair value of the options granted in the financial years from 2003 to 2008 which were used for thecalculation of the expenses and the prior-year comparative data was determined using the binomial option pricing model. The valuation premises taken into account here are unmodified against the previous periods.
"In compliance with the generally accepted accounting principles for the interim report, we hereby confirm to the best of our knowledge and belief that theconsolidated interim financialstatements give a true and fair view of thecompany's assets, liabilities, financial position, and profit and loss, and that the group management report is an accuraterepresentation of thetrend of business of thecompany 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, June 2009
Funkwerk AG Im Funkwerk 5 99625 Kölleda/Thüringen
Telephone +49-3635-600-0 Fax +49-3635-600-507 eMail [email protected] Internet www.funkwerk.com
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[email protected] www.funkwerk.com
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