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SAF Tehnika
Interim / Quarterly Report • Feb 8, 2023
2241_rns_2023-02-08_d9a9978f-0fa2-4cd3-897b-4f38a9f0c93d.pdf
Interim / Quarterly Report
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SAF Tehnika A/S Consolidated Interim Report for Q2 and 6 month of financial year 2022/2023 (July 1, 2022 – December 31, 2022)
TABLE OF CONTENTS
| KEY DATA |
3 |
|---|---|
| Share and Shareholdings | 4 |
| Information on Management and Supervisory Board members | 5 |
| Information on professional and educational background of the management board members |
6 |
| Information on professional and educational background of the supervisory council members |
8 |
| Statement of Board's Responsibilities | 10 |
| Management Report | 11 |
| Consolidated Statement of Financial Position |
16 |
| Consolidated Statement of Profit or Loss for 6 month of the financial year 2022/2023 | 18 |
| Consolidated Statement of Profit or Loss for Q2 of the financial year 2022/2023 |
19 |
| Consolidated cash flow statement for 6 months of the financial year 2022/2023 | 20 |
| Statement of changes in consolidated equity for the 6 month period ended December 31, 2022 |
20 |
| Notes for interim report Note 1 Customer receivables Note 2 Other current receivables Note 3 Inventories |
21 21 21 21 |
| Note 4 Non-current, intangible assets Note 5 Short-term loans from financial institutions |
22 22 |
| Note 6 Operating lease liabilities Note 7 Salary-related accrued expenses |
22 23 |
| Note 8 Segment information Note 9 Bad receivables Note 10 Salaries, bonuses and social expenses |
23 26 26 |
KEY DATA
SAF Tehnika (hereinafter – the Group) is a manufacturer of wireless data transmission equipment. The company's activities can be divided into three categories:
- Digital microwave radio equipment for voice and data transmission;
- Microwave spectrum analyzers and signal generators;
- Wireless sensor network solutions for environmental monitoring.
The company's 20 years of experience and knowledge have enabled it to develop a number of innovations, including the launch of the world's smallest microwave spectrum analyzers to the market – the Spectrum Compact series, as well as the introduction of wireless sensor network solutions – the Aranet brand.
SAF Tehnika products are found in more than 130 countries worldwide. The company has a total of 255 employees, most of them are considered to be leading experts in their field not only locally, but also globally.
The company's products are used by both the public and private sectors in areas such as mobile communications, internet service providing, industrial production, finance, horticulture, media and many others.
The company's activities are based on the concern for the highest quality, customer-focused business philosophy and openness.
Currently, the Group consists of the joint stock company registered in Latvia – AS SAF Tehnika (hereinafter – the Parent company), and subsidiary "SAF North America" LLC wholly owned by the Parent company. SAF North America is established in the US and operates in Denver, Colorado. AS SAF Tehnika is a public joint stock company established under applicable law of the Republic of Latvia. Shares of AS SAF Tehnika are listed on Nasdaq Riga Stock Exchange.
Commercial Registry Nr.: 40003474109 VAT Registry Nr.: LV40003474109 Beginning of financial year: 01.07.2022 End of financial year: 30.06.2023 Phone: +371 67046840 E-mail: [email protected]
Legal address: Ganību dambis 24a Rīga, LV-1005 Latvija
Share and Shareholdings
SAF Tehnika shareholders (over 5%) as of 30.06.2022.
| Shareholder | Ownership interest (%) | ||
|---|---|---|---|
| Didzis Liepkalns | 17.05% | ||
| SIA "Koka zirgs" | 11.59% | ||
| Andrejs Grišāns | 10.03% | ||
| Normunds Bergs | 9.74% | ||
| Juris Ziema | 8.71% |
SAF Tehnika share price and OMX Riga index development for the reporting period
SAF Tehnika (SAF1R) Period: July 1, 2022– December 31, 2022 Currency: EUR Marketplace: Nasdaq Riga
Information on Management and Supervisory Board members
SAF Tehnika Management Board:
| Name | Position | Ownership interest (%) |
|---|---|---|
| Normunds Bergs | Chairman | owns 9.74% of shares |
| Didzis Liepkalns | Member | owns 17.05% of shares |
| Zane Jozepa | Member | owns no shares |
| Janis Bergs | Member | owns no shares |
SAF Tehnika Supervisory Board:
| Position | Ownership interest (%) |
|---|---|
| Chairman | owns 8.71% of shares |
| Vice-Chairman | owns 10.03% of shares |
| Member | owns 2 shares |
| Member | owns 8000 shares |
| Member | owns no shares |
Information on professional and educational background of the management board members
Normunds Bergs, is Chairman of the Board and Chief Executive Officer of SAF Tehnika AS. Mr. Bergs is one of the founders of SIA Fortech (co-founding company of SAF Tehnika AS) where during the periods from 1990 to 1992 and 1999 to 2000 he acted as Managing Director and General Director, respectively. Following SIA Fortech's merger with AS Microlink in 2000, Mr. Bergs became Chief Executive Officer of SAF Tehnika AS and a member of the Management Board of AS Microlink. From 1992 to 1999, Mr. Bergs worked for World Trade Centre Riga, where he held the position of General Director and became a Member of the Board of Directors in 1998. Mr. Bergs graduated from the Riga Technical University with a degree in radio engineering in 1986.
Didzis Liepkalns, is Member of the Board and Technical Director of SAF Tehnika. Mr.Liepkalns founded a private enterprise SAF in 1995 and co-founded the company SAF Tehnika AS in 1999. From 1985 to 1990 he worked as an engineer at the Institute of Electronic Engineering and Computer Sciences. Mr.Liepkalns has graduated Riga Technical University with a degree in radio engineering in 1985.
Zane Jozepa, is Member of the Board and Chief Financial Officer. Prior to her employment with SAF Tehnika, Ms.Jozepa has been working in the leading IT and telecommunication services provider in Latvia – SIA Lattelecom, which is a subsidiary company of SIA Citrus Solutions that provides design, construction and maintenance of the engineering and technical systems and infrastructure. Ms.Jozepa has been working as a Business Controller for the first two years. She became Head of Finance in 2008, and a Board Member in 2012. Ms.Jozepa gained her professional experience in finance while working for SIA Coca Cola HBC Latvia during 2001-2006. She has graduated the BA School of Business and Finance (Banku Augstskola) and has a BA degree in finance management.
Jānis Bergs, is Member of the Board, Vice President of Sales and Marketing, and the President of "SAF North America". From 2000 till 2006 Mr.Bergs was a Member of the Board and later CEO of AS Microlink. When Microlink was sold to the TeliaSonera group in 2006, Jānis became a shareholder and CEO of SIA FMS, where he worked until January 2015. Mr.Bergs was a Member of AS SAF Tehnika Council from November 2006 till August 2010, and for more than 10 years he has been managing the Latvian IT and Telecommunications Association (LIKTA) and the ICT cluster, as well as giving lectures in business studies in Riga Business School. Mr. Bergs has graduated Riga Technical University as radio engineer and has an MBA degree from Riga Business School.
Information on professional and educational background of the supervisory council members
Juris Ziema, co-founder of the Company, is Chairman of the Supervisory Council and Production Department Director. From 1998 to 1999 he worked as an engineer at Mr. Liepkalns private enterprise SAF. From 1987 to 1999 Mr. Ziema worked as an engineer at the Institute of Electronic Engineering and Computer Sciences. Mr. Ziema has graduated Riga Technical University with a degree in radio engineering in 1987.
Andrejs Grišāns, co-founder of the Company, is Vice-Chairman of the Supervisory Council and Production Department Manager. Prior to joining the Company, he owned and managed a private company specializing in electronic equipment engineering, production and distribution. From 1992 to 1999 Mr. Grisans was involved in entrepreneurial activities in the field of radio engineering. He worked as an engineer-constructor at the Institute of Polymer Mechanics from 1984 to 1992 and in the constructing bureau Orbita from 1980 to 1984. Mr. Grisans has graduated Riga Technical University with a degree in radio engineering in 1980.
Ivars Šenbergs, Member of the Supervisory Council, also Chairman of the Board of SIA Juridiskais Audits, SIA Namipasumu parvalde, SIA Synergy Consulting, SIA IŠMU, SIA Dzirnavu centrs and Member of the Supervisory Council of AS MFS bookkeeping. From 1999 until 2000 he worked as Finance and Administrative Director at SIA Fortech. Mr. Šenbergs has graduated Faculty of Law, University of Latvia in 1986.
Aira Loite, Member of the Supervisory Council, has resumed working in SAF Tehnika in a position of a Director of Digital Transformation in September 2021. She has extensive experience in management, finance, administration and IT, gained in companies operating in local and international markets. She worked as an Administrative Director (2019-2020) in a food production company "Forevers" Ltd.), metal processing company group "Torgy Mek" as Finance Director (2016-2019) and as a Director of Torgy Baltic SIA (2018-2019). Aira Loite has been a member of the Board of SAF Tehnika, Finance and Administrative Director (2007-2011), Managing Director (2011-2015). From 2006 to 2007, she worked as the director of the Business Information and Control Department of SIA Lattelecom. From 2000 to 2006, she was a member of the Board and Chief Financial Officer of SIA Microlink Latvia. A. Loite has graduated the University of Latvia in 1988 and holds Masters degree in Mathematics and MBA from Salford University, GB, obtained in 2009.
Sanda Šalma, Member of the Supervisory Council, currently leading Microsoft Azure business in Small and Medium segment in CEE (Central and Eastern Europe) 30+ countries. Almost 15 years spent in the information technology industry in various business development and sales leader roles in the Baltic and European markets. Previous experience in banking (Parex Bank, 2006-2008) and sales account management in a Danish and Swedish owned logistics company Baltic Transhipment Center (2000-2006). She graduated from Salford University in 2009 with MBA, as well as Riga Stradins University in 2021, and holds a Master degree in Clinical Psychology.
Statement of Board's Responsibilities
The Board of SAF Tehnika JSC (hereinafter – the Parent) is responsible for preparing the consolidated financial statements of the Parent and its subsidiaries (hereinafter - the Group).
The consolidated financial statements are prepared in accordance with the source documents and present fairly the consolidated financial position of the Group as of 31 December, 2022 and the consolidated results of its financial performance and cash flows for the quarter then ended.
The above mentioned financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and are prepared on a going concern basis. Appropriate accounting policies have been applied on a consistent basis. The consolidated interim financial statements have been prepared based on the same accounting principles applied in the Consolidated Financial Statements for the year ended on June 30, 2022.
Prudent and reasonable judgments and estimates have been made by the management in the preparation of the financial statements.
The Board of SAF Tehnika JSC is responsible for the maintenance of proper accounting records, the safeguarding of the Group's assets and the prevention and detection of fraud and other irregularities in the Group. The Board is responsible for compliance with the requirements of normative acts of the countries the Group operates in (Latvia and United States of America).
The interim financial statements have been prepared in Euro.
_________________________
Zane Jozepa CFO, Member of the Management Board
Management Report
The Group's unaudited consolidated net turnover for the second quarter (Q2) of the financial year 2022/2023 was EUR 10.5 million, which is an increase of 15% compared to the second quarter of the financial year 2021/2022.
The turnover of the region of the countries of North and Latin America amounted to 77%, or EUR 8.1 million. Compared to the same quarterly turnover last financial year, the turnover increased by 97%.
The turnover of the European region is 21%, or EUR 2.1 million, which is 48% less than in the 2nd quarter of the previous financial year. Compared to the corresponding quarter of the last financial year, the turnover of Asia, Africa and the Middle East region is three times less and accounts for 3% of the total quarterly turnover (or EUR 272 thousand). Fluctuations in quarterly turnover are explained by the implementation of some more large-scale projects.
In the second quarter of the financial year 2022/2023, in order to strengthen its position in the international market and promote brand and product recognition, SAF Tehnika participated in 9 international exhibitions, covering industries of different scale in the USA, Europe and in the Middle East. Exhibitions such as AUSA (USA), Wispapalooza (USA) and Gitex global (UAE) are considered the most important shows for business development. At the same time, great emphasis was placed on digital marketing activities and e-commerce, promoting both brand awareness and increasing sales figures.
The company's brand and product line Aranet continues to play a priority role in business development, the rapid growth rates are due to the development of more and more new industries, as well as strengthening positions in existing segments. Aranet4 experienced the highest sales in the US during the world-popular Black Friday sales week. A number of school projects were successfully implemented. Aranet4 is now also located at the Latvian Embassy in the UK, and several other public benefit projects are planned in the near future.
The Spectrum Compact product vertical has undergone changes in marketing management and, with a new approach, is increasingly promoting product recognition in global markets. Now, on the LinkedIn platform, it is possible to follow all the latest developments directly related to the TM product vertical. On the vertical of microwave products, a webinar training course was released in the second quarter, consisting of seven series that give an insight into the product characteristics, functionality, linking them to the needs of the industry. All episodes are available on SAF YouTube channel.
Comparative charts of Q2 sales volumes by regions:
In the reporting quarter, the Group's products were sold in 60 countries.
The Group's unaudited consolidated net turnover for 6 months of the financial year 2022/2023 was EUR 21.95 million, which is a 29% increase compared to the volume of revenues in the last financial year.
Over a 6-month period, revenues in North and Latin Americas represented 73% of the total turnover of the Group and amounted to EUR 15.93 million, thus showing a 76% increase against the result of the 6 months of the previous financial year. 19% of the total turnover is made up of revenues from European countries, which have decreased by 32% in relation to 6 months of the previous year, and amount to EUR 4.2 million. Revenue from Asia, Africa and the Middle East region grew by 6%, or EUR 105 thousand, accounting for 8% of the Group's total turnover.
Comparative charts of 6-month sales volumes by region:
The Group's expenditures did not exceed the planned volumes and were generally higher than in the same period a year earlier, which is due to the increase in the number of employees, investment in sales promotion in existing and new market segments. The Group continues to invest in the development of new products and modification of existing products.
The Group completed the 2nd quarter of the financial year 2022/2023 with a profit of EUR 1 million (unaudited). The result of the 2nd quarter of the previous year was profit of EUR 1.97 million.
The consolidated unaudited result of 6 months of the financial year 2022/2023 is profit of EUR 3.56 million. The Group's profit for the 6 months of the previous financial year 2021/2022 was EUR 3.49 million.
The Group's net cash flow for the 6 months of the financial year is EUR 897 thousand. In December 2022, dividends were paid in the amount of EUR 0.68 (sixty-eight cents) per share, or total EUR 2.02 million. The Group's net cash balance at the end of the period was EUR 3.7 million.
To ensure liquidity, in August of the financial year 2022/2023, the Parent Company entered into a Credit Line Agreement with Luminor Bank AS for the total amount of EUR 4.95 million. At the end of the reporting period, the use of the credit line was EUR 1.87 million.
In the 2nd quarter of the financial year 2022/2023, EUR 532 thousand were invested in the acquisition of fixed assets.
Market Overview
There has been no rapid change in the microwave radio market over the last quarter. We believe that significant changes in the microwave radio market are not expected in the near term, but, in the longer term, there may be certain customer segments that could reconsider investment volumes in network construction. SAF regularly works with all clients to identify and minimize risks in a timely manner, as well as works with IoT segment solutions in order to continue the development and diversify SAF Tehnika's product offering. The Group does not have significant customers and suppliers in the region involved in military operations (Russia, Ukraine or Belarus), so there is no direct impact on the volume of orders.
There is still an increase in demand for radio links that provide increased data transfer rates.
Guidelines
SAF Tehnika is a company with long-accumulated experience and knowledge in the development and production of microwave links. During the second quarter, the manufacturing facility of SAF Tehnika operated in its normal mode, the company manufactured and shipped its products worldwide. At the manufacturing facility, the work is organized paying special attention to ventilation and air quality.
Since the outbreak of hostilities in Ukraine by Russia, the overall uncertainty of the business environment has increased. Although its direct impact on the Group's activities is relatively limited, the Group carefully assesses possible cost growth forecasts and potential risks. The Group's operations are affected by the global shortage of various electronic components. Supply chains remain difficult – alternative transportation options increase delivery times and costs. The company regularly reviews procurement volumes and deadlines, and continues to accumulate inventory in order to be able to fulfil most of the orders within normal lead times. This applies to all SAF product families – microwave links, Spectrum Compact and Aranet.
The Group continues to study market demand and problematic issues in order to be able to offer the necessary product modifications both on a daily basis and in the context of changing global circumstances. Investment in product development continues.
The goal of the company is to stabilize the turnover level, which ensures a positive net result in the long run. The Board of SAF Tehnika remains cautious and refrains from providing specific sales and performance forecasts.
As of December 31, 2022, the Group had 257 employees (258 employees as of December 31, 2021).
KEY indicators
| Q2 2022/23 | Q2 2021/22 | Q2 2020/21 | |
|---|---|---|---|
| EUR | EUR | EUR | |
| Net Sales | 10,538,867 | 9,163,076 | 6,707,178 |
| Earnings before interest, taxes and depreciation (EBITDA) | 1,961,062 | 2,185,497 | 1,178,451 |
| share of the turnover % | 19% | 24% | 18% |
| Profit/loss before interest and taxes (EBIT) | 1,675,808 | 2,000,556 | 988,008 |
| share of the turnover % | 16% | 22% | 15% |
| Net Profit | 1,001,070 | 1,971,918 | 766,142 |
| share of the turnover % | 9% | 0% | 11% |
| Total assets | 30,436,140 | 21,860,936 | 16,675,446 |
| Total Owners equity | 18,885,695 | 14,710,788 | 10,418,745 |
| Return on equity (ROE) % | 3.31% | 9.06% | 4.77% |
| Return on assets (ROA) % | 5.14% | 13.41% | 7.40% |
| Liquidity ratio | |||
| Quick ratio % | 41% | 84% | 118% |
| Current ratio % | 77% | 124% | 144% |
| Earnings per share | 0.34 | 0.66 | 0.26 |
| Last share price at the end of period | 12.65 | 12.05 | 4.66 |
| P/E | 6.23 | 5.50 | 11.95 |
| Number of employees at the end of reporting period | 257 | 258 | 222 |
| Note | 31.12.2022 | 31.12.2021 | |
|---|---|---|---|
| CURRENT ASSETS | EUR | EUR | |
| Cash and bank | 3 677 672 | 4 823 526 | |
| Customer receivables | 1 | ||
| Accounts receivable | 3 198 883 | 2 462 825 | |
| Allowance for uncollectible receivables | -20 671 | -219 852 | |
| Total | 3 178 212 | 2 242 973 | |
| Other receivables | |||
| Other current receivables | 2 | 18 673 | 34 941 |
| Total | 18 673 | 34 941 | |
| Prepaid expenses | |||
| Prepaid taxes | 155 489 | 130 081 | |
| Other prepaid expenses | 262 699 | 186 419 | |
| Total | 418 187 | 316 500 | |
| Inventories | 3 | ||
| Raw materials | 6 418 337 | 4 445 814 | |
| Work-in-progress | 3 275 215 | 3 441 077 | |
| Finished goods | 7 625 018 | 3 539 736 | |
| Prepayments to suppliers | 288 080 | 235 040 | |
| Total | 17 606 650 | 11 661 667 | |
| TOTAL CURRENT ASSETS | 24 899 394 | 19 079 607 | |
| NON-CURRENT ASSETS | |||
| Long-term financial assets | |||
| Investments in other companies | 209 044 | 7 146 | |
| Total | 209 044 | 7 146 | |
| NON-CURRENT physical assets | 4 | ||
| Plant and equipment | 4 887 513 | 4 854 410 | |
| Other equipment and fixtures | 2 584 718 | 2 095 911 | |
| Accumulated depreciation | -5 367 835 | -5 956 406 | |
| Prepayments for noncurrent physical assets | 257 685 | 41 582 | |
| Unfinished renovation works | 344 094 | 111 363 | |
| Long-term investment - lease | 2 173 169 | 1 173 967 | |
| Total | 4 879 344 | 2 320 826 | |
| Intangible assets | 4 | ||
| Purchased licenses, trademarks etc. | 415 544 | 420 014 | |
| Other long-term intangible assets | 32 815 | 33 342 | |
| Total | 448 359 | 453 356 | |
| TOTAL NON-CURRENT ASSETS | 5 536 747 | 2 781 329 | |
| TOTAL ASSETS | 30 436 140 | 21 860 936 |
Consolidated Statement of Financial Position
| LIABILITIES AND OWNERS' EQUITY | Note | 31.12.2022 | 31.12.2021 |
|---|---|---|---|
| CURRENT LIABILITIES | EUR | EUR | |
| Debt obligations | |||
| Short-term loans from financial institutions | 5 | 1 872 346 | 454 |
| Customer prepayments for goods and services | 1 510 674 | 981 339 | |
| Accounts payable | 1 824 010 | 1 984 292 | |
| Accrued short-term operating lease liabilities | 6 | 389 553 | 317 630 |
| Tax liabilities | 1 010 199 | 290 091 | |
| Salary-related accrued expenses | 7 | 1 900 635 | 1 824 446 |
| Provisions for guarantees | 45 636 | 45 636 | |
| Deffered income | 413 927 | 305 781 | |
| TOTAL CURRENT LIABILITIES | 8 966 981 | 5 749 669 | |
| NON-CURRENT LIABILITIES | |||
| Long-term liabilities | |||
| Long-term deffered income | 744 545 | 563 109 | |
| Accrues long-term operating lease liabilities | 6 | 1 838 919 | 837 370 |
| TOTAL LONG-TERM LIABILITIES | 2 583 464 | 1 400 479 | |
| TOTAL LIABILITIES | 11 550 445 | 7 150 148 | |
| OWNERS' EQUITY | |||
| Share capital | 4 158 252 | 4 158 252 | |
| Paid in capital over par | 2 851 726 | 2 851 726 | |
| Other reserves | 8 530 | 8 530 | |
| Retained earnings | 8 213 515 | 4 143 257 | |
| Net profit for the financial year | 3 562 989 | 3 491 000 | |
| Currency translation reserve | 90 683 | 58 023 | |
| TOTAL OWNERS' EQUITY | 18 885 695 | 14 710 788 | |
| TOTAL LIABILITIES AND OWNERS' EQUITY | 30 436 140 | 21 860 936 |
Consolidated Statement of Profit or Loss for 6 month of the financial year 2022/2023
| Note | 31.12.2022 | 31.12.2021 | |
|---|---|---|---|
| EUR | EUR | ||
| Net sales | 8 | 21 954 750 | 16 967 209 |
| Other operating income | 60 003 | 59 590 | |
| Total income | 22 014 753 | 17 026 799 | |
| Direct cost of goods sold or services rendered | -8 570 028 | -6 358 861 | |
| Marketing, advertising and public relations expenses | -717 326 | -527 497 | |
| Bad receivables | 9 | 215 | 5 669 |
| Operating expenses | -1 092 125 | -688 792 | |
| Salaries and social expenses | 10 | -4 663 282 | -3 701 559 |
| Bonuses and social expenses | 10 | -2 017 742 | -1 805 289 |
| Depreciation expense | -359 229 | -213 662 | |
| Amortization of operating lease | -196 092 | -150 612 | |
| Other expenses | -23 188 | -15 604 | |
| Operating expenses | -17 638 797 | -13 456 206 | |
| EBIT | 4 375 956 | 3 570 593 | |
| Financial income (except ForEx rate difference) | 389 | 297 | |
| Financial costs (except ForEx rate difference) | -33 015 | -13 844 | |
| Foreign exchange +gain/(loss) | -115 881 | 118 286 | |
| Financial items | -148 508 | 104 739 | |
| EBT | 4 227 448 | 3 675 332 | |
| Corporate income tax | -664 459 | -184 332 | |
| Profit after taxes | 3 562 989 | 3 491 000 | |
| Net profit/(loss) | 3 562 989 | 3 491 000 |
*Earnings per share EPS 31.12.2023. = 1.20 EUR
EPS 31.12.2022. = 1.18 EUR
| 31.12.2022 | 31.12.2021 | |
|---|---|---|
| EUR | EUR | |
| Net sales | 10 538 867 | 9 163 076 |
| Other operating income | 49 386 | 52 803 |
| Total income | 10 588 253 | 9 215 879 |
| Direct cost of goods sold or services rendered | -4 308 197 | -3 279 280 |
| Marketing, advertising and public relations expenses | -457 216 | -337 130 |
| Bad receivables | -1 024 | -989 |
| Operating expenses | -549 634 | -432 404 |
| Salaries and social expenses | -2 417 941 | -1 942 585 |
| Bonuses and social expenses | -883 849 | -1 032 264 |
| Depreciation expense | -187 297 | -109 462 |
| Amortization of operating lease | -97 957 | -75 479 |
| Other expenses | -9 330 | -5 730 |
| Operating expenses | -8 912 445 | -7 215 323 |
| EBIT | 1 675 808 | 2 000 556 |
| Financial income (except ForEx rate difference) | 140 | 115 |
| Financial costs (except ForEx rate difference) | -17 424 | -6 947 |
| Foreign exchange +gain/(loss) | -116 533 | 45 154 |
| Financial items | -133 817 | 38 322 |
| EBT | 1 541 991 | 2 038 878 |
| Corporate income tax | -540 921 | -66 960 |
| Net profit/(loss) | 1 001 070 | 1 971 918 |
Consolidated Statement of Profit or Loss for Q2 of the financial year 2022/2023
*Earnings per share EPS 31.12.2023. = 0.34 EUR
EPS 31.12.2022. = 0.66 EUR
| Consolidated cash flow statement for 6 months of the financial year 2022/2023 |
|
|---|---|
| ---------------------------------------------------------------------------------------- | -- |
| 31.12.2022 | 31.12.2021 | |
|---|---|---|
| EUR | EUR | |
| CASH GENERATED FROM OPERATIONS (of which) | 2 014 435 | -313 682 |
| Cash received from customers | 21 101 071 | 16 481 387 |
| Cash paid to suppliers and employees | -19 556 991 | -16 990 212 |
| Paid/Received VAT | 470 355 | 195 143 |
| NET CASH USED IN INVESTING ACTIVITIES (of which) | -1 520 871 | -796 562 |
| Cash paid for purchasing shares in subsidiary | -201 898 | 0 |
| Cash paid for purchasing non-current physical assets | -1 318 973 | -796 562 |
| NET CASH USED IN FINANCING ACTIVITIES (of which) | 4 074 | -1 813 067 |
| Repayment of short-term loans | 1 872 346 | 0 |
| Paid interest | -1 856 | 0 |
| Cash received from EU fonds | 153 306 | 176 954 |
| Dividends paid | -2 019 722 | -1 990 021 |
| Effects of exchange rate changes | 398 867 | 57 089 |
| TOTAL CASH FLOW: | 896 505 | -2 866 222 |
| Cash and cash equivalents as at the beginning of period | 2 781 167 | 7 689 748 |
| Cash and cash equivalents as at the end of period | 3 677 672 | 4 823 526 |
| NET INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS | 896 505 | -2 866 222 |
Statement of changes in consolidated equity for the 6 month period ended December 31, 2022
| Share capital |
Share premium |
Other reserves |
Currency translation |
Retained earnings |
||
|---|---|---|---|---|---|---|
| EUR | EUR | EUR | reserve EUR |
EUR | EUR | |
| As at 30 June 2021 | 4 158 252 | 2 851 726 | 8 530 | 10 324 | 6 133 278 | 13 162 110 |
| Dividend relating to 2016/2020 | - | - | - | - | -1 990 021 | -1 990 021 |
| Currency translation difference | - | - | - | 135 481 | - | 135 481 |
| Profit for the year | - | - | - | - | 6 089 980 | 6 089 980 |
| As at 30 June 2022 | 4 158 252 | 2 851 726 | 8 530 | 145 805 | 10 233 237 | 17 397 550 |
| Dividend relating to 2020/2021 | - | - | - | - | -2 019 722 | -2 019 722 |
| Currency translation difference | - | - | - | -55 122 | - | -55 122 |
| Profit for the year | - | - | - | - | 3 562 989 | 3 562 989 |
| As at 31 December 2022 | 4 158 252 | 2 851 726 | 8 530 | 90 683 | 11 776 504 | 18 885 695 |
Notes for interim report
Note 1 Customer receivables
| 31.12.2022 EUR |
31.12.2021 EUR |
|
|---|---|---|
| Accounts receivable | 3 198 883 |
2 462 825 |
| Provisions for bad and doubtful accounts receivable |
(20 671) | (219 852) |
| Total receivables | 3 178 212 |
2 242 973 |
As compared to the same balance sheet date of the previous financial year the total receivables have increased
Note 2 Other current receivables
| 31.12.2022 EUR |
31.12.2021 EUR |
|
|---|---|---|
| Other current receivables |
18 673 | 34 941 |
Other current receivables include the amounts of calculated co-financing from EU funds for ongoing product development projects. Co-financing is assigned via competence center "LEO pētījumu centrs" (LEO) and will be received when project documentation and results are reviewed and accepted by project sponsor.
Note 3 Inventories
| 31.12.2022 EUR |
31.12.2021 EUR |
|
|---|---|---|
| Raw materials | 8 508 729 |
5 374 937 |
| Allowance for slow-moving items | (2 090 392) |
(929 123) |
| Work-in-progress | 3 275 215 |
3 441 077 |
| Finished goods | 7 625 018 |
3 539 736 |
| Prepayments to suppliers |
288 080 | 235 040 |
| 17 606 650 |
11 661 667 |
As compared to 31 December 2021, total inventories increased by 50%.
The Group maintains the amount of raw materials and auxiliary supplies at the defined level to be able to deliver all products in the Group's product portfolio within the competitive timeframes. The Group's inventories must include previously produced and sold equipment components in order to provide corresponding maintenance service.
Note 4 Non-current, intangible assets
| 31.12.2022 EUR |
31.12.2021 EUR |
|
|---|---|---|
| Plant and equipment | 4 887 513 |
4 854 410 |
| Other equipment and fixtures | 2 584 718 |
2 095 911 |
| Accumulated depreciation |
(5 367 835) |
(5 956 406) |
| Prepayments for noncurrent physical assets |
257 685 | 41 582 |
| Unfinished renovation works | 344 094 | 111 363 |
| Long-term investment lease* | 2 173 169 |
1 173 967 |
| 4 879 344 |
2 320 826 |
|
| Purchased licenses, trademarks etc. | 415 544 |
420 01422 |
| Other long-term intangible assets |
32 815 | 33 342 |
| 448 359 | 453 356 | |
| Total non-current, intangible assets |
5 327 703 |
2 774 182 |
*See Note 6 Operating lease liabilities
During Q2, the Group acquired fixed assets and intangible assets in the amount of 532 thousand euros – mainly, in order to ensure production and testing processes, as well as to acquire office equipment.
Note 5 Short-term loans from financial institutions
| 31.12.2022 EUR |
31.12.2021 EUR |
|
|---|---|---|
| Short-term loans from financial institutions | 1 872 346 |
454 |
To ensure liquidity, in August of the financial year 2022/2023, the Parent Company entered into a Credit Line Agreement with Luminor Bank AS for the total amount of EUR 4.95 million. At the end of the reporting period, the use of the credit line was EUR 1.87 million.
Note 6 Operating lease liabilities
| 31.12.2022 EUR |
31.12.2021 EUR |
|
|---|---|---|
| Accrued short-term operating lease liabilities | 389 553 | 317 630 |
| Accrued long-term operating lease liabilities |
1 838 919 |
837 370 |
| 2 228 471 |
1 155 000 |
As a result of the introduction of IFRS 16 "Leases", the Group has made estimates in respect of concluded operating leases, assuming that over the next 5 (five) years, it will continue to lease premises in accordance with the concluded lease agreements. In addition, the volume of leased premises has also increased.
| Note 7 Salary-related accrued expenses |
31.12.2022 EUR |
31.12.2021 EUR |
|---|---|---|
| Salary-related accrued expenses | 1 900 635 |
1 824 446 |
The increase in the balance sheet is due to fluctuations in vacation and bonus savings between periods, and due to the increase in wages.
Note 8 Segment information
- a) The Group's (Parent company's) operations are divided into two major structural units:
- SAF branded equipment designed and produced in-house as one of the structural units containing CFIP, Integra (Integrated carrier-grade Ethernet microwave radio), Spectrum Compact (measurement tools for radio engineers) and Aranet (environmental monitoring solutions).
CFIP – product line is represented by:
-
Phoenix, a split mount (IDU+ODU) PhoeniX hybrid radio system with Gigabit Ethernet and 20E1 interfaces;
-
Lumina high capacity Full Outdoor all-in-one radio with Gigabit Ethernet traffic interface;
-
Marathon FIDU low frequency low capacity system for industrial applications, energy companies and rural telecom use.
All CFIP radios are offered in most widely used frequency bands from 1.4GHz to 38 GHz, thus enabling the use of CFIP radios all across the globe.
Integra – is a next generation radio system employing latest modem technology on the market as well as radio technology in an innovative packaging.
Spectrum Compact is the latest product line in SAF's portfolio, it is a measurement tool for field engineers for telecom, broadcasting and other industries using radio technologies. It comprises of a number of units covering several frequency bands and proving various functionality.
Aranet- the latest SAF product line for environmental monitoring, consisting of various wireless sensors, base stations and Aranet cloud solution for data collection, aggregation and analysis.
• operations related to sales of products purchased from other suppliers, like antennas, cables, SAF renamed (OEMed) products and different accessories - as the second unit.
This note provides information about division of the Group's turnover and balance items by structural units by product type for 6 month of the financial year 2022/23 and financial year 2021/22.
| CFIP, Integra, Spectrum | ||||||
|---|---|---|---|---|---|---|
| Compact, Aranet | Other | Total | ||||
| 2022/23 | 2021/22 | 2022/23 | 2021/22 | 2022/23 | 2021/22 | |
| EUR | EUR | EUR | EUR | EUR | EUR | |
| Segment assets | 22 753 532 14 580 102 | 1 436 543 | 1 046 320 | 24 190 075 15 626 422 | ||
| Undivided assets | 6 246 065 | 6 234 514 | ||||
| Total assets | 30 436 140 21 860 936 | |||||
| Segment liabilities | 3 750 434 | 3 271 615 | 69 888 | 61 209 | 3 820 322 | 3 332 824 |
| Undivided liabilities | 7 730 123 | 3 817 324 | ||||
| Total liabilities | 11 550 445 | 7 150 148 | ||||
| Net sales | 20 998 908 16 680 921 | 955 842 | 286 288 | 21 954 750 16 967 209 | ||
| Segment results | 10 006 824 | 7 771 568 | 1 487 410 | 439 972 | 11 494 234 | 8 211 540 |
| Undivided expenses | -7 178 282 | -4 700 536 | ||||
| Profit from operations | 4 315 952 | 3 511 004 | ||||
| Other income | 60 003 | 59 590 | ||||
| Financial income (except ForEx rate difference) | 389 | 297 | ||||
| Financial costs (except ForEx rate difference) | -33 015 | -13 844 | ||||
| Foreign exchange +gain/(loss) | -115 881 | 118 286 | ||||
| Profit before taxes | 4 227 448 | 3 675 333 | ||||
| Corporate income tax | -664 459 | -184 332 | ||||
| Profit after taxes | 3 562 989 | 3 491 001 | ||||
| Net profit | 3 562 989 | 3 491 001 | ||||
| Other information | ||||||
| Additions of property plant and | ||||||
| equipment and intangible asets | 207 988 | 133 375 | 0 | 0 | 207 988 | 133 375 |
| Undivided additions | 488 114 | 486 581 | ||||
| Total additions of property plant and | ||||||
| equipment and intangible asets | 696 102 | 619 956 | ||||
| Depreciation and amortization | 331 819 | 212 276 | 0 | 0 | 331 819 | 212 276 |
| Undivided depreciation | 223 502 | 151 998 | ||||
| Total depreciation and amortization | 555 321 | 364 274 |
b) This note provides information about division of the Group's turnover and assets by geographical regions (customer location) for 6 month of the financial year 2022/23 compared to the same period of financial year 2021/22.
| Net sales | Assets | |||
|---|---|---|---|---|
| 2022/23 | 2021/22 | 31.12.2022 | 31.12.2021 | |
| EUR | EUR | EUR | EUR | |
| Americas | 15 928 028 | 9 064 210 | 2 624 308 | 1 575 440 |
| Europe, CIS | 4 202 563 | 6 184 000 | 402 040 | 596 363 |
| Asia, Africa, Middle East | 1 824 158 | 1 718 999 | 151 864 | 71 170 |
| 21 954 750 | 16 967 209 | 3 178 212 | 2 242 973 | |
| Unallocatted assets | - | - | 27 257 928 | 19 617 963 |
| 21 954 750 | 16 967 209 | 30 436 140 | 21 860 936 |
Note 9 Bad receivables
| 31.12.2022 EUR |
31.12.2021 EUR |
|
|---|---|---|
| Bad receivables | 215 | 5 669 |
Provisions for doubtful and bad accounts receivable were calculated according to Group's provision calculation policy. The Group starts to calculate provisions for customers who delays payment terms more than 3 months. Additional provisions were calculated for debts were probability not to receive payment is high, although agreed payment term has not come yet. Assessing the risks of receivables, additional provision for insecure debts has been made.
Note 10 Salaries, bonuses and social expenses
| 31.12.2022 EUR |
31.12.2021 EUR |
|
|---|---|---|
| Salaries and social expenses |
4 663 282 |
3 701 559 |
| Bonuses and social expenses | 2 017 742 |
1 805 289 |
| 6 681 024 |
5 506 848 |
Compared to the second quarter of the previous financial year 2021/2022, the amount of salary costs and related social costs increased by 21%. This reflects changes in the number and composition of the staff (employees with critical competencies), as well as provisions for performance bonuses.