Half-Year Financial Report

2021

Key figures Frequentis Group

All figures in EUR million, except where otherwise stated.

Earnings	H1 2021	H1 2020	+/- in %	+/- in EUR million	2020
Revenues	144.6	132.3	+9.4%	+12.4	299.4
EBITDA	12.4	6.0	+107.2%	+6.4	41.9
EBITDA margin	8.6%	4.5%	+4.1 PP	–	14.0%
EBIT	5.4	-1.0	–	+6.3	26.8
EBIT margin	3.7%	-0.7%	+4.4 PP	–	9.0%
Profit/loss for the period	4.1	-23.42)	–	+27.5	-3.4
Earnings per share in EUR	0.28	-1.782)	–	–	-0.30
				+/- in
Orders	H1 2021	H1 2020	+/- in %	EUR million	2020
Order intake	157.1	171.8	-8.6%	-14.7	314.6
Orders on hand at end of period	453.0	445.2	+1.8%	+7.8	427.6
Statement of financial position	30 June 2021	30 June 2020	+/- in %	+/- in EUR million	31 Dec.2020
Total assets
	290.4	258.1	+12.5%	+32.2	277.6
Shareholders' equity	115.1	94.1	+22.2%	+20.9	113.0
Equity ratio	39.6%	36.5%	+3.1 PP	–	40.7%
Net cash	77.2	51.2	+50.7%	+26.0	85.0
No. of employees (average)	2.077	1.890	+9.9%	–	1.907
Cash flow statement	H1 2021	H1 2020	+/- in %	+/- in EUR million	2020
Cash flow from operating activities	2.9	12.2	-75.9%	-9.3	54.8
Cash flow from investing activities	-9.4	-4.7	+101.7%	-4.8	-7.0
Cash flow from financing activities	-7.0	-3.7	-89.0%	-3.3	-10.1

Note: Minimal arithmetical differences may arise from the application of commercial rounding to individual items and percentages.

Preface

Ladies and gentlemen,

Based on our resilient business model, our business operations continued on the usual scale in the first half of 2021. A special highlight was the L3Harris transaction, which has extended our air traffic management product portfolio.

Given the restrictions resulting from the pandemic, especially the travel restrictions, we are satisfied with our performance in the first half of 2021:

Revenues improved by 9.4% to EUR 144.6 million (H1 2020: EUR 132.3 million)
EBITDA more than doubled to EUR 12.4 million (H1 2020: EUR 6.0 million)
EBIT turned positive at EUR 5.4 million (H1 2020: EUR -1.0 million)
Net profit for the period was EUR 4.1 million (H1 2020: EUR -23.4 million)
Order intake was EUR 157.1 million (H1 2020: EUR 171.8 million)
Orders on hand therefore increased by 5.9% to EUR 453.0 million (year-end 2020: EUR 427.6 million)
Equity was EUR 115.1 million (year-end 2020: EUR 113.0 million)
The equity ratio stood at 39.6% (year-end 2020: 40.7%)
Net cash was EUR 77.2 million (year-end 2020: EUR 85.0 million)

While a negative result is normally posted in the first half of the year, in the first six months of 2021 the Frequentis Group made a profit. This was attributable to successful project acceptances, which led to higher revenues, and to higher-margin projects and the recognition of a profit from the transaction with L3Harris. However, since travel expenses and expenses for trade shows are still at a low level as a result of the pandemic, we do not yet see this as an indication of a lasting trend to positive half-year results.

Our business model remains robust. The products supplied by Frequentis are part of the safetycritical infrastructure, in other words, the essential infrastructure of the relevant countries. This infrastructure always has to be available and ready for operation – irrespective of the number of flights/flight movements or how many times the police, fire service, and emergency rescue services are deployed. That has not changed.

Order intake was EUR 157.1 million, which was 8.6% below the relatively high level in the first half of 2020. Since order intake is normally higher in the second half of the year, for the full year 2021, we expect an increase compared to the EUR 314.6 million reported in 2020.

As in the past, we continue to monitor the quality of our balance sheet. The equity ratio of 39.6% remains above our target of >35%. We have net cash of EUR 77.2 million, despite the dividend and the initial cash outflows for the L3Harris transaction.

Highlights in the first half of 2021

Acquisition of air traffic management (ATM) product lines from L3Harris Technologies
NATS contract (British air navigation service provider)
Extension of the EAD contract (European Aeronautical Information Management Database)
Contract for the Royal Canadian Airforce
Contract for police control centres in Saarland, Germany
Rollout of ELKOS, the deployment control and communication system of the Austrian police force

Following signature of the agreement with L3Harris Technologies, Inc. (subsequently referred to as L3Harris) on 23 February 2021, we completed the transaction in just over five months. We have now taken over civil and military product lines for ATM voice communication systems and the software and cloud solutions for air traffic optimisation (air traffic synchronisation) from the US group L3Harris.

That diversifies and expands our product portfolio. In addition, we have entered into cooperation agreements with L3Harris. Under these agreements, as a technology partner, Frequentis will supply voice communications systems for L3Harris' large-scale projects in the solutions and services business, where possible. The Frequentis strategy includes searching proactively for attractive M&A opportunities to extend its product portfolio or gain access to new markets.

Under an agreement in connection with the L3Harris transaction, Frequentis has assumed the contract with the British air navigation service provider NATS to supply the main voice communication and arrival management system.

Eurocontrol has extended the contract with Frequentis for the release development, IT service management, and operations contracts of the European Aeronautical Information Management Database (EAD).

The Royal Canadian Airforce's main contractor, Thales Canada, has placed an order with our subsidiary, Frequentis Canada, for the supply of mission-critical tactical control radar communications equipment.

In the Public Safety & Transport segment, Frequentis has secured an order to supply a police communications system for the Saarland police headquarters in Saarbrücken, Germany.

In Austria, the rollout of the ELKOS deployment control and communication system for the police force in all nine federal provinces was completed.

Change on the Executive Board; Supervisory Board strengthened

Peter Skerlan became CFO of Frequentis AG on 16 April 2021, having been appointed by the Supervisory Board as successor to Sylvia Bardach. His term of office runs for five years. Peter Skerlan has held various positions in the finance area at Frequentis since 1999 and therefore has a sound knowledge of the company and our markets and products.

Mrs. Bardach was elected to the Supervisory Board at the Annual General Meeting on 20 May 2021. She worked for Frequentis for more than 30 years. From 2000 until 2007 she was Managing Director of Frequentis GmbH and from 2007 she was a member of the Executive Board of Frequentis AG. The IPO also took place in this period. Mrs. Bardach made a significant contribution to the international growth and business success of the Frequentis Group. We would like to thank her most sincerely for her outstanding achievements and many years of personal commitment to our Executive Board.

Forecast for 2021

Despite global measures to contain the pandemic and the increasing availability of vaccines, Frequentis faces a number of uncertainties in 2021. It is not possible to make a reliable estimate of the exact effect of the ongoing pandemic on costs (e.g. travel expenses), revenues (e.g. due to the deferral of project acceptances), supply chains, the budgets available, and the potential postponement of investments.

Depending on how the pandemic develops in the remaining months of the year, Frequentis aims to increase revenues and order intake in 2021 compared with 2020. Some of the increase will be attributable to the L3Harris transaction. We have earmarked an unchanged amount of around EUR 5 million for capital expenditure (capex).

We expect to report an EBIT margin of around 5-7% in 2021 – depending on how the pandemic develops and on the post-merger integration costs for the L3Harris units.

We would like to thank our customers, partners, and shareholders for their trust in our work. We thank all our employees for their commitment.

Vienna, 16 August 2021

Stay safe,

Norbert Haslacher Chairman of the Executive Board

Peter Skerlan Member of the Executive Board

Hermann Mattanovich Member of the Executive Board

The share

Dividend

A dividend of EUR 0.15 per share for the 2020 financial year (2019 financial year: EUR 0.15 per share) was approved by the Annual General Meeting on 20 May 2021. As a result, almost EUR 2.0 million was paid out, giving a dividend yield of 0.83% based on the closing price on the Vienna Stock Exchange at end-December 2020 (2019: 0.76%).

The Frequentis dividend policy is to pay out around 20-30% of adjusted profit of the Frequentis Group, after tax – bearing in mind the annual ceiling of 40% of the net profit of Frequentis AG reported in the individual financial statements of Frequentis AG prepared in compliance with the Austrian Commercial Code (UGB).

Treasury shares

On 8 April 2021, the Executive Board of Frequentis AG decided to undertake a share buyback in accordance with Section 65 (1) Nos. 4 and 8 of the Austrian Companies Act (AktG) on the basis of the authorisation of the Annual General Meeting of 20 September 2019. A total of 15,500 treasury shares with a total value of EUR 384 thousand were repurchased. The share buyback programme ended on 6 May 2021. You can find further details at www.frequentis.com > Investor Relations > Share > Share Repurchase 2021.

As a result, the company held 15,500 treasury shares as at end-June 2021. That is equivalent to around 0.12% of the share capital.

Group Management Report as at 30 June 2021

Economic environment

The areas in which the Frequentis Group operates (information and communication systems for civil and military air traffic control, emergency services, rail and water transport) have relatively low cyclical exposure compared with other sectors of industry. Frequentis' business performance would be adversely affected by a significant global decline in one of these five areas. Frequentis cannot completely avoid general economic developments. However, it supplies safety-critical infrastructure, which cannot be dispensed with and has to be upheld and maintained even in periods of crisis.

The International Monetary Fund (IMF) published its World Economic Outlook Update in July 2021. Despite the pandemic, it expects global GDP to grow by 6.0% in 2021 (2022: 4.9%). However, it points to a split in the global economy into two blocs as a result of differences in vaccine access: "those that can look forward to further normalisation of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising COVID death tolls. The recovery, however, is not assured even in countries where infections are currently very low so long as the virus circulates elsewhere."

For the USA, the IMF projects growth of 7.0% in 2021 (2022: 4.9%). It forecasts that the economy in the euro zone will grow by 4.6% in 2021 (2022: 4.3%). For the large economies in the euro zone, it anticipates that the highest growth rate will be 6.2% in Spain (2022: 5.8%), followed by France, with a growth rate of 5.8% (2022: 4.2%), Italy, with growth of 4.9% (2022: 4.2%), and Germany with growth of 3.6% (2022: 4.1%). The forecast for the UK is 7.0% growth in 2021 (2022: 4.8%).

For the emerging and developing economies in Asia, the forecast growth rate is 7.5% for 2021 (2022: 6.4%). The IMF assumes growth of 5.8% in Latin America in 2021 (2022: 3.2%). The projection for the Middle East and Central Asia is 4.0% growth (2022: 3.7%).

Business performance

In the first six months of 2021, Frequentis' operating business was still influenced by the COVID-19 pandemic. Thanks to its stable business model as a provider of communications and information solutions for control centres within the safety-critical sector, the measures introduced in 2020, and further successful project acceptances, the impact has been minimised.

Order intake as well as project acceptances and therefore revenues tend to be highest at the end of the year, which generally results in a negative half-year result as fixed costs are spread evenly over the year. Frequentis' half-year result in 2021 was positive due to successful project acceptances, which led to higher revenues, higher-margin projects, and the recognition of a profit from the transaction with L3Harris.

Significant events in the first half of 2021

Acquisition of air traffic management (ATM) product lines from L3Harris Technologies, Inc.

On 23 February 2021, Frequentis signed an agreement to acquire civil and military ATM voice communications product lines and software and cloud solutions for air traffic optimisation (traffic synchronisation) of the US group L3Harris Technologies, Inc. (subsequently referred to as L3Harris). This transaction, which was subject to various competition clearance and regulatory approvals, comprised

the acquisition of 100% of the shares in Harris Orthogon GmbH, Bremen, Germany (closing: 30 April 2021);
the assumption of a customer contract between L3Harris and the British air navigation service provider NATS (contract transferred on 28 May 2021);
the acquisition of the Harris ATC Solutions business unit based in Gatineau, Canada, which Harris Canada Systems, Inc. first transferred to a Canadian company established specifically for the purpose of this transaction; Frequentis then acquired all shares in the new company (closing: 28 May 2021);
the acquisition of 100% of the shares in Harris C4i Pty. Ltd., Melbourne, Australia (closing: 30 July 2021).

This transaction extends the Frequentis ATM product portfolio. In addition to these acquisitions, L3Harris and Frequentis entered into cooperation agreements: as a technology partner of L3Harris, where possible Frequentis will provide voice communication systems for use in L3Harris' large-scale projects in the solutions and service business. For details see ↗ consolidated financial statements as at 30 June 2021, note 2.

COVID-19 pandemic

The outbreak of the COVID-19 pandemic at the start of the 2020 financial year triggered a global economic crisis. Frequentis could not completely avoid the general economic developments. However, it supplies safety-critical infrastructure, which has to be upheld and maintained even in periods of crisis. Alongside the effects described in the annual report for 2020, the impact of the COVID-19 pandemic in the interim reporting period to 30 June 2021 included the following:

As in 2020, travel restrictions prevented many business trips so travel expenses have settled at a low level.
Since many trade shows were also cancelled or held remotely in the first half of 2021, advertising expenses have also settled at a low level.

For details see ↗ consolidated financial statements as at 30 June 2021, note 4.

Order intake

Order intake in the Frequentis Group was EUR 157.1 million in the first six months of 2021, a drop of 8.6% compared with the first half of 2020 (EUR 171.8 million).

The distribution of order intake between the two segments in the first six months of 2021 was as follows: Air Traffic Management 75% (H1 2020: 68%), Public Safety & Transport 25% (H1 2020: 32%).

Highlights of order intake in the Air Traffic Management segment

Frequentis' Air Traffic Management segment acquired a variety of orders. Under an agreement in connection with the L3Harris transaction, Frequentis took over the contract with NATS (British air navigation service provider) for the delivery of the main voice communication and arrival management system.

Eurocontrol has extended the contract with Frequentis for the release development, IT service management, and operations contracts of the European Aeronautical Information Management Database (EAD).

Further orders were secured, among others, from the Swiss air navigation service provider skyguide to extend collaboration on the Virtual Centre. Bahrain ordered voice communication systems to modernise its air traffic control centre.

Frequentis and its long-term partner Bayanat secured an order to supply two D-ATIS systems (digital automatic terminal information service) for Dubai International Airport and Dubai World Central.

Defence business domain: The Royal Canadian Airforce's main contractor, Thales Canada, placed an order with our subsidiary, Frequentis Canada, for the supply of mission-critical tactical control radar communications equipment.

Installed base business with established customers developed favourably, especially in Europe. For example, Frequentis secured an order from the Polish armed forces for the modernisation of the air defence centre.

Highlights of order intake in the Public Safety & Transport segment

In the Public Safety & Transport segment, the Public Safety business domain is increasing its market leadership with the emergency services in Germany thanks to an order to supply a police communications system for the federal state of Saarland.

In the Public Transport business domain, orders were mainly secured from the installed base in Europe. As well as orders for releases and upgrades, these include expansion and maintenance contracts.

In the Maritime business domain, Frequentis was awarded the order for control centre communications for the coastguard in New South Wales, Australia.

Orders on hand

Orders on hand amounted to EUR 453.0 million as at 30 June 2021, an increase of 5.9% or EUR 25.4 million compared with year-end 2020 (EUR 427.6 million). The Air Traffic Management segment accounted for around 64% of total orders on hand (December 2020: 58%) and the Public Safety & Transport segment for 36% (December 2020: 42%).

Revenues and operating performance

Despite the continued impact of the COVID-19 pandemic on the global economy, in the first half of 2021 revenues of EUR 144.6 million (H1 2020: EUR 132.3 million) were generated, an increase of 9.4%. In the Air Traffic Management segment, revenues dropped to EUR 88.9 million (-1.2%), whereas revenues in the Public Safety & Transport segment increased by 31.9% to EUR 55.8 million.

In the first half of 2021, the Air Traffic Management segment accounted for 61% of Group revenues (H1 2020: 68%) and the Public Safety & Transport segment accounted for 39% (H1 2020: 32%). Looking at the regional revenue split, in the first half of 2021 Europe accounted for 70% (H1 2020: 64%), the Americas for 14% (H1 2020: 17%), Asia for <9% (H1 2020: 13%), Australia/Pacific for 4% (H1 2020: 4%), and Africa for around 3% (H1 2020: 1%).<1% (H1 2020: 1%) of revenues were not allocated to a region.

Other income declined to EUR 3.2 million (H1 2020: EUR 3.5 million). The biggest single items here are grants and subsidies for research and development costs and income from a research subsidy.

The profit of EUR 1.7 million from a business combination resulted from the acquisition of the ATC Solutions business unit of Harris Canada Systems Inc. For further information, see ↗ consolidated financial statements as at 30 June 2021, note 2.

The operating performance increased by 11.1% to EUR 151.3 million in the first half of 2021.

Earnings

The cost of materials and purchased services decreased by 2.7% to EUR 34.0 million (H1 2020: EUR 34.9 million) due to the lower material intensity of the projects undertaken. Personnel expenses increased by 10.2% to EUR 89.1 million (H1 2020: EUR 80.9 million), principally due to the increase in the number of employees (+9.9%) as a result of the new companies in the consolidated group.

The other operating expenses rose by 9.4% to EUR 15.9 million (H1 2020: EUR 14.5 million). Multiyear comparison: in the first half of 2019, before the outbreak of the COVID-19 pandemic, the other operating expenses were EUR 19.9 million, mainly because travel expenses were higher. Travel expenses amounted to EUR 1.5 million in the first six months of 2021 (H1 2020: EUR 2.4 million; H1 2019: EUR 6.0 million).

As in 2020, travel restrictions prevented many business trips in the first half of 2021, so travel expenses have remained at a low level. Since many trade shows were also cancelled or held remotely in the first half of 2021, advertising expenses have also remained at a low level.

The present level of travel expenses is related to the travel restrictions due to the COVID-19 pandemic, the resulting necessary widespread switch to project acceptance via video conferencing, and digital marketing and sales activities. The travel restrictions also led to a reduction in advertising expenses due to the cancellation or postponement of trade shows. It should be noted that savings on

this scale will not be repeated in the future because complete digitalisation of on-site acceptance procedures, training, trade shows, and sales activities is not possible. Much will depend on the extent to which projects and sales activities can be carried out virtually in the future or whether, when the pandemic is contained, customers, suppliers, and business partners will move back towards presence-based activities.

Legal and consulting expenses (which form part of other expenses) rose to EUR 4.7 million in the first half of 2021 (H1 2020: EUR 2.5 million), partly due to expenses for legal steps relating to the insolvency of Commerzialbank Mattersburg and to M&A activities.

EBITDA (earnings before interest, taxes, depreciation, amortisation, and impairment losses) improved by EUR 6.4 million to EUR 12.4 million in the first six months of 2021 (H1 2020: EUR 6.0 million). The EBITDA margin (relative to revenues) was 8.6%, compared with 4.5% in the first half of 2020.

Depreciation and amortisation increased by EUR 0.1 million to EUR 7.0 million.

Despite the COVID-19 pandemic, as a result of the changes outlined above, EBIT increased by EUR 6.3 million to EUR 5.4 million in the first six months of 2021 (H1 2020: EUR -1.0 million). The EBIT margin (relative to revenues) was 3.7%, compared with -0.7% in the first half of 2020.

In the first six months of 2020, the following items were affected by the impairment loss on deposits following the insolvency of Commerzialbank Mattersburg. The profit before tax was EUR 5.3 million in the first half of 2021 (H1 2020: EUR -32.0 million). Income tax expense was EUR 1.1 million, whereas income tax income of EUR 8.6 million was recorded in the first half of 2020.

The Frequentis Group made a profit of EUR 4.1 million in the first half of 2021, compared with a loss of EUR 23.4 million in the first half of 2020. Basic and diluted earnings per share were EUR 0.28 in the first half of 2021, compared with EUR -1.78 in the first half of 2020.

Employees

The headcount increased by 9.9% to an average of 2,077 employees (already including the additional employees from the transaction with L3Harris) in the first half of 2021 (H1 2020: 1,890 employees).

Asset and capital structure

Total assets increased by 4.6% to EUR 290.4 million as at end-June 2021 (year-end 2020: EUR 277.6 million). The equity ratio was 39.6% (year-end 2020: 40.7%). Equity rose by 1.8% to EUR 115.1 million (year-end 2020: EUR 113.0 million).

The net cash position (cash and cash equivalents and time deposits less liabilities to banks and other financial liabilities) was EUR 77.2 million as at end-June 2021, which was below the net cash position of EUR 85.0 million recorded at year-end 2020.

Non-current assets amounted to EUR 68.2 million at end-June 2021 (year-end 2020: EUR 62.2 million). The main items here are property, plant and equipment, which totalled EUR 45.3 million (year-end 2020: EUR 46.6 million), and intangible assets which amounted to EUR 12.9 million (yearend 2020: EUR 9.0 million).

Current assets totalled EUR 222.2 million at end-June 2021 (year-end 2020: EUR 215.4 million). The most important item here is cash and cash equivalents, including time deposits, which amounted to EUR 82.8 million (year-end 2020: EUR 91.3 million), followed by trade accounts receivable totalling

EUR 55.1 million (year-end 2020: EUR 59.3 million) and contract assets from contracts with customers, which amounted to EUR 54.3 million (year-end 2020: EUR 38.4 million).

Over 80% of the cash and cash equivalents and time deposits of EUR 82.8 million as at end-June 2021 (year-end 2020: 91.3 million) were deposited with eleven system-relevant major banks in Austria and Germany. Less than 20% was deposited with approximately 20 other banks in Europe, Australia, Asia, and the Americas.

On the liabilities side, the main item was current liabilities of EUR 116.6 million as at end-June 2021 (year-end 2020: EUR 107.2 million). In particular, contract liabilities from contracts with customers amounted to EUR 59.5 million (year-end 2020: EUR 62.8 million).

The second largest item was equity, which was EUR 115.1 million as at end-June 2021 (year-end 2020: EUR 113.0 million). Non-current liabilities totalled EUR 58.7 million (year-end 2020: EUR 57.5 million). The biggest item here was non-current lease liabilities, which totalled EUR 29.0 million (year-end 2020: EUR 31.8 million).

Cash flow

The cash flow from operations rose to EUR 8.6 million in the first half of 2021 (H1 2020: EUR 2.4 million).

The cash flow from operating activities decreased to EUR 2.9 million in the first half of 20221 (H1 2020: EUR 12.2 million), mainly due to the decline in contract liabilities and the change in the line item income taxes paid/refunded.

The cash outflow for investing activities was EUR 9.4 million in the first half of 2021 (H1 2020: outflow of EUR 4.7 million), mainly as a result of the investment of funds in time deposits. In connection with the transaction with L3Harris, after deduction of the acquired cash and cash equivalents, there was a cash outflow of EUR 2.0 million in the first six months of 2021. By comparison, in the first half of 2020, EUR 1.8 million was spent on the acquisition of ATRiCS. Capital expenditures (cash outflows for the purchase of intangible assets, property, plant and equipment) were around the same level as in the first half of 2020 at EUR 2.9 million.

The cash outflow for financing activities declined to EUR 7.0 million the first half of 2021 (H1 2020: cash outflow of EUR 3.7 million). The change is mainly due to the payment of the dividend of almost EUR 2.0 million to shareholders of Frequentis AG in the first half of 2021 (in the previous year, the dividend was paid in the second half of the year). In addition, there was a change in the line item capital increase because, unlike the first half of 2021, in the first half of 2020 a cash inflow of EUR 1.3 million from the employee participation programme was recorded as a capital increase.

The total cash outflow resulting from the changes recorded in the first half of 2021 was EUR 13.5 million (H1 2020: cash inflow of EUR 3.8 million). Cash and cash equivalents, excluding time deposits, were EUR 78.2 million as at end-June 2021 (year-end 2020: EUR 57.7 million).

Business relations with related parties

For details see ↗ consolidated financial statements as at 30 June 2021, note 15 and ↗ consolidated financial statements as at 31 December 2020, note 38.

Segment performance

Air Traffic Management / ATM

The Air Traffic Management (ATM) segment comprises the ATM Civil business domain (which includes AIM / Aeronautical Information Management) and the ATM Defence business domain. This segment focuses on civil and military air traffic control organisations and therefore generally on one to two customers per country. It is estimated that the market entry barriers are relatively high.

The business domains' products are similar and are based on the same product platform. In the Defence business domain, there is also demand for additional encryption solutions. The safety and quality management requirements are the same: the international regulations for standardisation of air traffic issued by the International Civil Aviation Organization (ICAO) apply. Moreover, the infrastructure to be installed for customers (radar, radio transmission, networks) is similar.

Revenues in the Air Traffic Management segment fell by 1.2% in the first half of 2021 to EUR 88.9 million (H1 2020: EUR 89.9 million). EBIT improved to EUR -1.8 million (H1 2020: EUR -2.6 million).

Highlights from the operating business

Despite the challenging conditions of the pandemic, a number of important project acceptances took place. One example was the optimised network for air traffic management for the air traffic control organisation in Kazakhstan. In Denmark, the concept for the remote tower project was approved by the Danish air navigation service provider, Naviair. The operating and verification tests for the first military remote digital tower in the USA were successfully completed.

The kick-off of the GOF 2.0 project, which is part of the EU's SESAR programme and focuses on flight tests for drones and air taxis in complex, urban airspace, took place.

Public Safety & Transport / PST

The Public Safety and Transport segment comprises the Public Safety, Public Transport, and Maritime business domains. Its customers are public authorities or related organisations with monitoring and control functions.

The Public Safety business domain's customers are the police, fire, and rescue services. Police organisations also require additional encryption solutions. Alongside conventional rail operators, the Public Transport business domain's customers include local public transport providers. The Maritime business domain focuses on coastguards and port operators.

The business domains' products are similar and are based on the same product platform. Moreover, the infrastructure to be installed for customers (phones, radio transmission, networks) is similar. Despite several international standardisation efforts, different national and regional requirements and regulations still apply.

Revenues in the Public Safety & Transport segment increased by 31.9% to EUR 55.8 million in the first six months of 2021 (H1 2020: EUR 42.3 million). EBIT improved to EUR 7.2 million (H1 2020: EUR 1.8 million), mainly due to higher-margin projects.

Highlights from the operating business

In the Public Safety business domain, the rollout of the ELKOS deployment control and communication solution for the police force in all nine federal provinces of Austria was completed. Key certifications and interim acceptances took place for the new Emergency Services Network (ESN) ordered by the Home Office in the UK.

Further milestones were achieved in rail projects in the Public Transport business domain, for example for Irish Rail. The Maritime business domain also reported important project acceptances.

Opportunity and risk management

For information on opportunities and risks, please refer to page 105f of the Annual Report 2020.

Outlook

Acquisitions

Following the acquisition of C4i, Australia, which was closed on 30 July 2021, the acquisition of all units in the L3Harris transaction has now been completed. Finalisation of the L3Harris transaction, including finalisation of the total purchase price, will take place in the second half of 2021. In the first full year, i.e. 2022, this transaction is expected to generate revenues of around EUR 30 million, depending on how the pandemic develops.

Frequentis' strategy includes searching proactively for attractive M&A opportunities to extend its product portfolio or gain access to new markets.

Forecast for 2021

Depending on how the pandemic develops in the remaining months of the year, Frequentis aims to increase revenues and order intake in 2021 compared with 2020. Some of the increase will be attributable to the L3Harris transaction. An unchanged amount of around EUR 5 million has been earmarked for capital expenditure (capex).

Frequentis expects to report an EBIT margin of around 5-7% in 2021 – depending on how the pandemic develops and on the post-merger integration costs for the L3Harris units.

Consolidated Financial Statements as at 30 June 2021

Consolidated income statement

		01-06/2021	01-06/2020
		EUR thousand	EUR thousand
	Note	unaudited	unaudited
Revenues	(5) (6)	144,634	132,250
Change in inventories of finished goods and work in progress	(5)	1,781	480
Own work capitalised	(5)	6	45
Other operating income	(5)	3,246	3,485
Profit from a business combination	(2)	1,657	0
Total income (operating performance)		151,324	136,260
Cost of materials and purchased services		-33,966	-34,907
Personnel expenses		-89,094	-80,877
Other operating expenses		-15,860	-14,490
Earnings before interest, taxes, depreciation, amortisation,
and impairment losses (EBITDA)		12,404	5,986
Depreciation of property, plant and equipment and
amortisation of intangible assets		-7,020	-6,938
Earnings before interest and taxes (EBIT)	(5)	5,384	-952
Financial income		18	63
Financial expenses		-369	-275
Net change in impairment losses on financial assets		6	-30,919
Earnings from investments accounted for at equity		242	117
Profit/loss before tax		5,281	-31,966
Income taxes		-1,152	8,597
Profit/loss for the period		4,129	-23,369
Profit/loss attributable to:
Equity holders of the company		3,741	-23,568
Non-controlling interests		388	199
		4,129	-23,369
Basic earnings per share		0.28	-1.78
Diluted earnings per share		0.28	-1.78

Consolidated statement of comprehensive income

		01-06/2021	01-06/2020
		EUR thousand	EUR thousand
	Note	unaudited	unaudited
Profit/loss for the period		4,129	-23,369
Items that may be reclassified to the income statement in subsequent periods
Foreign currency translation		396	-310
Measurement of cash flow hedges		-210	632
Income taxes relating to cash flow hedges		52	-158
Items that may not be reclassified to the income statement
Remeasurement of post-employment benefits		175	1
Investments accounted for at equity – amounts recognised in other comprehensive income		0	0
Income taxes relating to the remeasurement of defined
benefit plans in other comprehensive income		-44	0
Other comprehensive income, net of tax		369	166
Total comprehensive income		4,498	-23,203
Total comprehensive income attributable to:
Equity holders of the company		4,139	-23,426
Non-controlling interests		359	223
		4,498	-23,203

Consolidated statement of financial position

		30 June 2021	31 Dec. 2020
		EUR thousand	EUR thousand
ASSETS	Note	unaudited	audited
Non-current assets
Property, plant, and equipment	(7)	45,333	46,605
Intangible assets	(7)	12,861	9,020
Goodwill	(8)	5,462	2,886
Investments accounted for at equity		1,627	1,509
Equity instruments		863	863
Other non-current financial assets		243	228
Deferred tax assets		1,802	1,092
		68,191	62,203
Current assets
Inventories		14,393	12,628
Trade accounts receivable		55,108	59,318
Contract assets from contracts with customers	(9)	54,291	38,420
Contract costs		2,686	3,029
Other current financial assets		3,368	2,750
Other current non-financial assets		8,736	7,524
Income tax receivables		756	481
Time deposits		4,606	0
Cash and cash equivalents		78,233	91,265
		222,177	215,415
Total assets		290,368	277,618

		30 June 2021	31 Dec. 2020
		EUR thousand	EUR thousand
LIABILITIES AND EQUITY	Note	unaudited	audited
Shareholders' equity
Share capital		13,280	13,280
Capital reserves		21,138	21,138
Retained earnings	(10) (11)	77,760	75,863
Treasury shares		-384	0
Adjustments for foreign currency translation		-629	-1,053
Equity attributable to equity holders of the parent
company		111,165	109,228
Non-controlling interests		3,903	3,751
Total shareholders' equity		115,068	112,979
Non-current liabilities
Liabilities to banks and other financial liabilities		4,366	4,907
Provisions	(12)	19,237	17,212
Lease liabilities		29,049	31,811
Other non-current financial liabilities	(13)	1,719	1,722
Deferred tax liabilities		4,295	1,831
		58,666	57,483
Current liabilities
Liabilities to banks and other financial liabilities		1,260	1,315
Contract liabilities from contracts with customers	(9)	59,512	62,849
Trade accounts payable		14,460	11,923
Lease liabilities		7,567	7,292
Other current financial liabilities	(13)	5,537	1,600
Other current non-financial liabilities	(13)	14,926	6,617
Current tax liabilities		1,673	1,981
Provisions	(12)	11,699	13,579
		116,634	107,156
Total shareholders' equity and liabilities		290,368	277,618

Consolidated cash flow statement

		01-06/2021	01-06/2020
		EUR thousand	EUR thousand
	Note	unaudited	unaudited
Profit/loss before tax		5,281	-31,966
Net interest income/expense		259	212
Foreign currency translation		-230	45
Profit/loss from the disposal of non-current assets		7	7
Depreciation of property, plant and equipment, amortisation of
intangible assets, and impairment loss on goodwill		7,020	6,938
Earnings from investments accounted for at equity		-242	-117
Change in provisions	(12)	-1,982	-3,657
Impairment loss on time deposits at Commerzialbank Mattersburg		0	17,995
Impairment loss on current account deposits (due on demand) at Commerzialbank Mattersburg		0	12,718
Impairment loss on interest receivables from Commerzialbank
Mattersburg		0	205
Profit from a business combination	(2)	-1,657	0
Other non-cash income/expenses		165	67
Net cash flow from operations		8,621	2,447
Change in inventories		-1,021	-1,411
Change in trade accounts receivable		6,567	7,328
Change in contract assets	(9)	-13,162	-10,642
Change in contract costs		476	-1,068
Change in other receivables		-1,391	-632
Change in trade accounts payable		2,998	3,485
Change in contract liabilities	(9)	-5,551	5,258
Change in other liabilities	(13)	7,437	6,085
Change in net working capital		-3,647	8,403
Interest paid		-267	-276
Interest received		15	64
Dividends received		124	0
Income taxes paid/refunded		-1,910	1,558
Net cash flow from operating activities		2,936	12,196

		01-06/2021	01-06/2020
		EUR thousand	EUR thousand
	Note	unaudited	unaudited
Cash inflows from the sale of intangible assets		5	0
Cash inflows from the sale of property, plant and equipment		100	0
Cash inflows from the sale of securities and equity instruments		0	6
Cash outflows for the purchase of intangible assets		-1,701	-1,397
Cash outflows for the purchase of property, plant and equipment		-1,240	-1,437
Cash outflows for time deposits		-4,606	0
Cash outflows for the acquisition of associated companies		0	0
Cash outflows for the acquisition of subsidiaries, less acquired cash
and cash equivalents		-1,991	-1,849
Net cash flow from investing activities		-9,433	-4,677
Dividends paid to owners	(10)	-1,990	0
Dividends paid to non-controlling interests		-206	-84
Cash inflows from capital increase		0	1,324
Cash outflows for transaction costs for the capital increase		0	-109
Purchase of treasury shares	(10)	-384	0
Cash inflows from non-controlling interests		0	98
Cash inflows from loans and other financing		0	55
Cash outflows for repayment of loans and other financing		-646	-1,137
Cash outflows for payments of principal on lease liabilities		-3,783	-3,855
Net cash flow from financing activities		-7,009	-3,708
Change in cash and cash equivalents:
Net cash flow from operating activities		2,936	12,196
Net cash flow from investing activities		-9,433	-4,677
Net cash flow from financing activities		-7,009	-3,708
Net change in cash and cash equivalents		-13,506	3,811
Cash and cash equivalents at start of period		91,265	66,882
Cash-flow related change in cash and cash equivalents		-13,506	3,811
Foreign currency translation		468	-276
Impairment loss on current account deposits (due on demand) at
Commerzialbank Mattersburg		0	-12,718
Other loss allowances		6	3
Cash and cash equivalents at end of period		78,233	57,702

Consolidated statement of changes in shareholders' equity

in EUR thousand (unaudited)	Share capital	Capital reserves	IAS 19 reserve (net of tax)	Option reserve (net of tax)	Cash flow hedge reserve (net of tax)	Retained earnings	Treasury shares	Foreign currency translation	Equity attributable to equity holders of the parent company	Non controlling interests	Total shareholders' equity
Note				(11)		(10)	(10)
As at 1 January 2021	13,280	21,138	-6,133	232	-123	81,887	0	-1,053	109,228	3,751	112,979
Profit/loss for the period						3,741			3,741	388	4,129
Other comprehensive income			131		-157			424	398	-29	369
Total comprehensive income			131		-157	3,741		424	4,139	359	4,498
Dividends						-1,990			-1,990	-206	-2,196
Change in treasury shares							-384		-384		- 384
Other changes				172					172		172
As at 30 June 2021	13,280	21,138	-6,002	404	- 280	83,638	-384	- 629	111,165	3,903	115,068

As at 30 June 2020	13,280	21,138	-5,607	134	- 201	62,355	- 583	90,516	3,628	94,144
controlling interests									1,824	1,824
Acquisition of non
Other changes				71		4		75	0	75
Dividends						-1,992		-1,992	-84	-2,076
Total comprehensive income			1	0	474	-23,568	-334	-23,427	222	-23,205
Other comprehensive income			1	0	474	0	-334	141	24	165
Profit/loss for the period						-23,568		-23,568	198	-23,370
Cash inflows from non controlling interests									98	98
Related income taxes		27						27		27
Costs of the capital increase		-109						-109		- 109
Capital increase	80	1,244						1,324		1,324
As at 1 January 2020	13,200	19,976	-5,608	63	-675	87,911	-249	114,618	1,568	116,186
Note				(11)		(10)
in EUR thousand (unaudited)	Share capital	Capital reserves	IAS 19 reserve (net of tax)	Option reserve (net of tax)	Cash flow hedge reserve (net of tax)	Retained earnings	Foreign currency translation	Equity attributable to equity holders of the parent company	Non controlling interests	Total shareholders' equity

Selected notes to the condensed consolidated interim financial statements

1. General information

These interim financial statements include Frequentis AG and its subsidiaries (subsequently referred to as the Frequentis Group or the Group).

Frequentis AG is a company established under Austrian law. Its registered address is Innovationsstrasse 1, 1100 Vienna, Austria, and it has been listed on the Vienna and Frankfurt stock exchanges since May 2019.

The consolidated interim financial statements of Frequentis AG have been prepared in accordance with the provisions of the International Financial Reporting Standards (IFRS) as adopted by the European Union, and therefore in accordance with the provisions of IAS 34. They are presented in condensed form.

In the opinion of the management, the consolidated interim financial statements contain all adjustments required to provide a true and fair view of the company's net assets, financial position, and results of operations. The consolidated interim financial statements have not been audited, nor have they been subject to a review. They should be read in conjunction with the audited consolidated financial statements of the Frequentis Group as at 31 December 2020 and are not necessarily indicative of the year-end results for 2021.

Compared to other sectors of the economy, the sectors in which the Frequentis Group operates (information and communication systems for civil and military air traffic control, emergency services, rail and water transport) are subject to relatively low cyclical exposure. Within the sector, the individual segments of the Frequentis Group are exposed to the same fluctuations as their competitors (lower revenues and earnings in the first and second quarters and higher revenues and earnings in the third and fourth quarters). This is because a high proportion of the Frequentis Group's customers are public authorities and government-related businesses, which often only utilise their budget for the current year in the final quarter since they only take the related decisions in the third or fourth quarter. Consequently, the Frequentis Group normally generates a considerable proportion of its revenues in the second half of the year and usually reports negative earnings during the first half of the year as fixed costs are distributed evenly over the year. In the first half of 2021, the Group reported a profit for the period. This was attributable to successful project acceptances, which led to higher sales, higher-margin projects, and the recognition of a profit from the transaction with L3Harris.

Rounding may result in minor discrepancies in totals and percentages as a result of the use of automatic data processing.

2. Consolidated group

Besides Frequentis AG, which is the parent company of the consolidated group, the consolidated financial statements of Frequentis AG include 6 (31 December 2020: 6) domestic subsidiaries and 24 (31 December 2020: 23) foreign subsidiaries controlled by Frequentis AG.

Changes to the consolidated group

As at 1 January 2021, Frequentis Slovakia s.r.o. was merged into Frequentis Solutions s.r.o., and Frequentis Solutions s.r.o. was renamed Frequentis Solutions & Services s.r.o.

As at 20 May 2021, TEAM Communication Technology Management GmbH was renamed team Technology Management GmbH.

Acquisition of air traffic management (ATM) product lines from L3Harris Technologies, Inc.

the acquisition of 100% of the shares in Harris Orthogon GmbH, Bremen, Germany (closing: 30 April 2021);
the assumption of a customer contract between L3Harris and the British air navigation service provider (NATS) (contract transferred on 28 May 2021);
the acquisition of the Harris ATC Solutions business unit based in Gatineau, Canada, which Harris Canada Systems, Inc. first transferred to a Canadian company established specifically for the purpose of this transaction; Frequentis then acquired all shares in the new company (closing: 28 May 2021);
the acquisition of 100% of the shares in Harris C4i Pty. Ltd., Melbourne, Australia (closing: 30 July 2021).

This transaction expands the Frequentis ATM product portfolio. In addition to these acquisitions, L3Harris and Frequentis have entered into cooperation agreements: under these agreements, as a technology partner of L3Harris, Frequentis will provide voice communication systems for use in L3Harris' large-scale projects in the solutions and service business, where possible.

Although this acquisition comprises a single agreement, the individual transactions have been valued separately because, in principle, the acquisitions of the individual companies were not dependent on each other and took place at different times. Only the second part-payment of the basic purchase price for Harris Orthogon was due and payable simultaneously with the closing of the Harris C4i transaction. Moreover, the sellers of the individual companies in the L3Harris group were different.

Harris Orthogon GmbH

The Harris Orthogon transaction was successfully closed on 30 April 2021 with the acquisition of all shares in Harris Orthogon GmbH. This company is based in Bremen, Germany, and has been operating successfully in the air traffic control market for around 30 years. It has already been renamed Frequentis Orthogon GmbH (subsequently referred to as Orthogon). The company is an innovative provider of air traffic synchronisation solutions for en-route, approach, and airport ATC centres. Its air traffic optimisation solutions are designed, among other things, to reduce air traffic emissions.

Orthogon's solutions expand the Frequentis range of integrated air traffic management solutions. Frequentis can therefore offer an even more extensive range of products with higher performance and greater digitalisation.

The contractually agreed purchase price comprises the following components and is still subject to possible adjustments on the basis of the mechanism agreed with L3Harris (closing accounts):

	Fair value	Fair value
	as at	as at
	30 April 2021	30 April 2021
	USD thousand	EUR thousand
Basic purchase price	8,000	6,625

Orthogon net cash	2,056	1,703
Target Orthogon net cash	0	0
	2,056	1,703
Orthogon working capital	2,891	2,395
Target Orthogon working capital	3,591	2,975
	-700	-580
Payments under a profit-and-loss transfer agreement	463	383
Total consideration	9,818	8,131

The basic purchase price according to the purchase agreement is USD 8,000 thousand. USD 4,000 thousand of this was due at closing and had been paid at the reporting date. A further USD 4,000 thousand was due and payable with the closing of the acquisition of Harris C4i Pty. Ltd., Australia, on 30 July 2021.

The target net cash agreed in the purchase agreement is USD 0. The purchase price was increased by the company's cash and cash equivalents of USD 2,056 thousand.

The target Orthogon working capital agreed in the purchase agreement is USD 3,591 thousand. The final net cash and Orthogon working capital correspond to the closing statements to be agreed between Frequentis and L3Harris. These will be drawn up by Frequentis 60 days after the closing of the Harris C4i Pty. Ltd. transaction (which took place on 30 July 2021) and will be finalised after giving L3Harris an opportunity for review. As at the date of preparation of the interim financial statements, it is estimated that the final working capital will amount to USD 2,891 thousand. This is a provisional figure because the relevant items in the statement of financial position have not yet been finalised.

Orthogon had a profit-and-loss transfer agreement with a company in the L3Harris group. For the period from 1 January 2021 until 30 April 2021, L3Harris will therefore cover the losses incurred by Orthogon as reported in accordance with the German Commercial Code (HGB). Moreover, this increases the purchase price to be paid by Frequentis. The loss incurred in this period was already known at the reporting date but there had not been any cash flow from L3Harris to Orthogon. That took place in July 2021.

In accordance with the purchase agreement, as at the reporting date, USD 5,609 thousand had been transferred to L3Harris. The remaining estimated purchase price liability amounting to USD 4,209 thousand (EUR 3,484 thousand) is included in other liabilities.

The provisional fair value of the assets acquired and liabilities assumed is as follows:

	Fair value
	as at
	30 April 2021
	EUR thousand
Intangible assets	4,538
Property, plant, and equipment	1,237
Trade accounts receivable	1,687
Contract assets	2,667
Contract costs	133
Receivable from profit-and-loss transfer agreement	383
Other assets	68
Cash and cash equivalents	1,702
Deferred tax liabilities	-1,839
Non-current lease liabilities	-89
Provisions for pensions	-2,183
Contract liabilities from contracts with customers	-1,754
Trade accounts payable	-267
Current lease liabilities	-69
Other liabilities	-543
Other current provisions	-116
Net assets	5,555

Attributable to the Frequentis Group	5,555
Goodwill	2,576
Consideration paid	8,131

The goodwill from this acquisition can be allocated, in particular, to the expected synergies from the use of the Group's worldwide distribution network and the new technologies.

Transaction costs incurred for the business combination were recognised in current expenses for the period. The receivables assumed do not contain any receivables that are expected to be uncollectable, so the carrying amount corresponds to the fair value.

Since the acquisition, Orthogon has contributed revenues of EUR 1,320 thousand and EBIT of EUR 276 thousand to the consolidated figures of the Frequentis Group. Had the acquisition been made at the beginning of the 2021 financial year, Orthogon would have contributed revenues of EUR 3,396 thousand and EBIT of EUR -664 thousand to the consolidated figures of the Frequentis Group.

Due to time constraints, initial consolidation of all assets acquired and liabilities assumed was based on preliminary valuations and provisional figures. In accordance with the provisions of IFRS 3 on initial consolidation, the items presented in the statement of financial position will be finalised within 12 months from the acquisition.

Assumption of the NATS contract

On 29 January 2016, Harris Corporation signed a contract with the UK air navigation service provider NATS to supply a comprehensive solution for a voice communication system and a maintenance contract.

The solution to be provided is for several hundred controller workstations at various locations and comprises hardware and software, including customisation.

In a deed of novation and a contract amendment effective at novation of the contract dated 23 February 2021, NATS (En Route) plc, L3Harris Technologies, Inc., and Frequentis AG agreed that Frequentis would take over the contract. The contract was transferred with the closing of the ATC Solutions business in Canada on 28 May 2021.

No purchase price was agreed for the NATS contract. Frequentis AG's main reason for assuming this contract was to regain NATS as a customer in order to strengthen its own market position.

Harris ATC Solutions business unit of Harris Canada Systems Inc.

The closing of the acquisition of the Harris ATC Solutions business unit from L3Harris took place on 28 May 2021. Until then, this business was part of Harris Canada Systems Inc. With a view to the transaction, Harris Canada Systems Inc. transferred it to a new company established specifically for this purpose. As at the closing date, Frequentis acquired all shares in this new company, which has already been renamed Frequentis Canada ATM Ltd.

The company has around 60 employees, who work in development and business development.

The acquisition of the ATC business unit was mainly attributable to fulfilment of the NATS contract.

The contractually agreed purchase price comprises the following components and is still subject to possible adjustments on the basis of the mechanism agreed with L3Harris (closing accounts):

Fair value
as at as at
28 May 2021
EUR thousand
82
935
0
935
2,059
2,994
-935
82
Fair value 28 May 2021 USD thousand 100 1,141 0 1,141 2,512 3,653 -1,141 100

The basic purchase price of USD 100 thousand was not contingent upon any further conditions and payment has already been made.

The target Harris ATC Solutions net cash agreed in the purchase agreement is USD 0. The purchase price was increased by the company's cash and cash equivalents of USD 1,141 thousand.

The final ATC Solutions net cash and the final ATC Solutions working capital correspond to the closing statements to be agreed between Frequentis and L43Harris. These will be prepared by Frequentis 60 days after closing of the Harris C4i Pty. Ltd. transaction (which took place on 30 July 2021) and will be finalised after giving L3Harris an opportunity for review. As at the date of preparation of the interim financial statements, it is estimated that the final working capital will be USD 2,512 thousand. This is a preliminary figure because the relevant items in the statement of financial position have not yet been finalised.

In addition, in the purchase agreement it was agreed that Frequentis Canada ATM Ltd. can use the office premises free of charge until the end of May 2022.

The preliminary fair value of the assets acquired and liabilities assumed is as follows:

	Fair value
	as at
	28 May 2021
	EUR thousand
Property, plant, and equipment	165
Right of use of office premises	293
Inventories	745
Trade accounts receivable	669
Contract assets	42
Other assets	9
Cash and cash equivalents	1,036
Deferred tax liabilities	-99
Contract liabilities from contracts with customers	-459
Trade accounts payable	-55
Other liabilities	-605
Other current provisions	-2
Net assets	1,739
Attributable to the Frequentis Group	1,739
Profit from a business combination	-1,657
Consideration paid	82

The fair value of the net assets acquired exceeds the value of the consideration paid because the company is expected to make an operating loss in 2021 and 2022. The profit from the business combination was recognised immediately in profit/loss. As at 30 June 2021, the operating loss (EBIT) was EUR 832 thousand.

Transaction costs incurred for the business combination were recognised in current expenses for the period. The receivables assumed were examined for collectability and recognised at fair value. The gross carrying amount is EUR 783 thousand and the cash flows that are expected to be uncollectable amount to EUR 114 thousand.

Since the acquisition, Frequentis Canada ATM has contributed revenues of EUR 78 thousand and EBIT of EUR -893 thousand to the consolidated figures of the Frequentis Group. The revenues and EBIT that would have contributed to the consolidated figures of the Frequentis Group if the acquisition had been made at the start of the 2021 financial year could not be determined because this business was only transferred to a new company on the closing date and did not constitute a separate legal entity within the L3Harris Group prior to this date.

Harris C4i (event after the reporting date as the transaction was closed on 30 July 2021)

Harris C4i, which is based in Melbourne, Australia, develops, manufactures, and integrates customtailored, mission-critical communication solutions for the defence sector around the world and will strengthen the Frequentis range of solutions for encrypted and unencrypted cyber-secure defence communications in the Australian and US markets.

Combining the Frequentis and C4i mission-critical communication platforms enables the Group to offer market-leading technology and solutions based on extensive security, compliance, and export trade processes. Frequentis is the market leader in communication systems for military air traffic control and this acquisition secures its dominant global position in the defence command & control market.

The contractually agreed purchase price comprises the following components and is still subject to possible adjustments on the basis of the mechanism agreed with L3Harris (closing accounts):

	Fair value	Fair value
	as at	as at
	30 July 2021	30 July 2021
	USD thousand	EUR thousand
Basic purchase price	12,000	10,005

C4i net cash	1,362	1,145
Target C4i net cash	0	0
	1,362	1,145
C4i working capital	4,218	3,547
Target C4i working capital	4,216	3,546
	2	1
Payments due to Group taxation	-348	-293
Total consideration	13,016	10,858

The basic purchase price of USD 12,000 thousand was not contingent upon any further conditions and was paid on 30 July 2021.

The target C4i net cash agreed in the purchase agreement is USD 0. The purchase price was increased by the company's cash and cash equivalents of USD 1,362 thousand.

The target C4i working capital agreed in the purchase agreement is USD 4,216 thousand. The final C4i net cash and the final C4i working capital correspond to the closing statements to be agreed between Frequentis and L3Harris. These will be prepared by Frequentis 60 days after closing (which took place on 30 July 2021) and will be finalised after giving L3Harris an opportunity for review. As at the date of preparation of the interim financial statements, only provisional figures were available for the determination of the provisional purchase price.

As a result of Group taxation, there is still an outstanding tax liability between Harris C4i and L3Harris. This liability of USD 348 thousand reduces the purchase price.

Since closing was on 30 July 2021, the analysis of the assets and liabilities for the purchase price allocation had only just begun during preparation of the interim financial statements. Therefore, no complete data were available on the fair values of the assets acquired and the liabilities assumed.

3. Accounting policies

The interim financial statements are prepared in accordance with IAS 34 "Interim Financial Reporting" and require estimates and assumptions that affect the amounts reported in the interim financial statements. The significant assumptions and key sources of estimation uncertainty remain unchanged from those set out in the notes to last year's consolidated financial statements. The actual results could differ from these estimates.

New and amended standards and interpretations

When preparing the consolidated interim financial statements, the following amendments to existing IAS/IFRS standards and interpretations, as well as the new standards and interpretations, were applied, insofar as they had been endorsed by the European Union by 30 June 2021 and were effective at that date:

COVID-19-Related Rent Concessions (amendments to IFRS 16)
Extension of the Temporary Exemption from Applying IFRS 9 (amendments to IFRS 4)
Interest Rate Benchmark Reform (amendments to IFRS 9, IAS 39, IFRS 7, and IFRS 16)
Annual Improvements to IFRS Standards (2018 2020 Cycle)

Where applicable, the above standards and amendments were applied in these consolidated interim financial statements. The effects of these changes on the financial statements were insignificant.

4. Impact of the COVID-19 pandemic

The outbreak of the COVID-19 pandemic at the start of the 2020 financial year triggered a global economic crisis. Frequentis could not completely avoid the general economic developments. However, it supplies safety-critical infrastructure, which has to be upheld and maintained even in periods of crisis. Alongside the effects described in the annual report for 2020, the COVID-19 pandemic had the following impact in the interim reporting period to 30 June 2021:

As in 2020, travel restrictions prevented many business trips so travel expenses remained at a low level.
Since many trade shows were also cancelled or held remotely in the first half of 2021, advertising expenses have also remained at a low level.
In the interim reporting period, there were no defaults on receivables due to the COVID-19 pandemic because most customers are in the public sector. As in 2020, a scale factor of 1.5 was taken into account when calculating loss allowances pursuant to IFRS 9.
Due to the COVID-19 pandemic, the Frequentis Group assessed whether there is an indication that an asset is impaired. There were no indications of impairments relating to the COVID-19 pandemic.
In certain cases, postponement of project milestones was negotiated at the request of customers as a result of the COVID-19 pandemic. This resulted in a shift in revenues and rescheduling of payment milestones to a later date.

In the reporting period, the Frequentis Group received various types of government grants totalling EUR 281 thousand (H1 2020: EUR 371 thousand).

Notes to the consolidated income statement and statement of financial position

5. Segment report

Operating segments

Air Traffic Management
Public Safety & Transport

The main customer groups in the market served by the Air Traffic Management (ATM) segment are civil and military air traffic control and homeland security organisations. The Frequentis Group supports its customers in their central role of air traffic management and efficient and safe control and management of aviation. Product solutions for control centres in the ATM segment range from voice communication, networks, digital (remote) towers, ATC towers, surveillance, AIM (aeronautical information management), and AMHS (aeronautical message handling systems) to ATM/UTM (unmanned traffic management) integration. For the defence sector, the portfolio is supplemented by secure communications and situational awareness applications. The acquisitions, which have been allocated to the ATM segment, resulted in revenues of EUR 1,398 thousand and EBIT of EUR -617 thousand.

The market served by the Public Safety & Transport (PST) segment comprises public safety (police, fire, and emergency rescue services), public transport (railways), and maritime (coastguard, port operators, and organisations that monitor shipping on inland waterways). The Frequentis Group's PST segment delivers emergency management solutions for police, ambulance, and fire service organisations, search and rescue, coastal surveillance, operations communications, and incident and crisis management.

Data on the operating segments

The chief operating decision maker of the Frequentis Group is the Executive Board. The accounting policies applied by the individual segments are the same as those for the Frequentis Group. Earnings before interest and taxes (EBIT) are used for internal reporting and correspond to the segment result as defined in IFRS 8.23. There are no inter-segment revenues. The amounts in the column headed reconciliation/consolidation mainly comprise transactions that cannot be allocated clearly to one segment and were undertaken for both segments.

	Air Traffic	Public Safety	Reconciliation/
	Management	& Transport	consolidation	Total
01-06/2021	EUR thousand	EUR thousand	EUR thousand	EUR thousand
Revenues	88,882	55,835	-83	144,634
Change in inventories of finished goods
and work in progress	815	425	541	1,781
Own work capitalised	0	0	6	6
Other operating income	2,473	482	291	3,246
Profit from a business combination	1,657	0	0	1,657
Total income (operating performance)	93,826	56,742	756	151,324
EBIT	-1,776	7,249	-89	5,384

	Air Traffic	Public Safety	Reconciliation/
	Management	& Transport	consolidation	Total
01-06/2020	EUR thousand	EUR thousand	EUR thousand	EUR thousand
Revenues	89,920	42,330	0	132,250
Change in inventories of finished goods
and work in progress	202	278	0	480
Own work capitalised	26	0	19	45
Other operating income	1,799	469	1,217	3,485
Profit from a business combination	0	0	0	0
Total income (operating performance)	91,947	43,077	1,236	136,260
EBIT	-2,536	1,785	-201	- 952

Segment assets and segment liabilities are not disclosed here because internal reporting does not include a breakdown of assets between the two segments.

Details of Group-wide data

Neither in 2021, nor in 2020, did the Frequentis Group generate more than 10% of its total revenues with any single customer.

Orders on hand as at 30 June 2021 totalled EUR 452,981 thousand (30 June 2020: EUR 445,156 thousand). The ATM segment accounted for EUR 292,119 thousand (30 June 2020: EUR 280,531 thousand) of this amount and the PST segment for EUR 160,862 thousand (30 June 2020: EUR 164,625 thousand).

6. Revenues

The revenue split by category in the reporting period was as follows:

	01-06/2021	01-06/2020
	EUR thousand	EUR thousand
New products and/or new customer business	57,448	53,694
IBB (installed base business)	82,218	74,181
Other revenues	4,968	4,375
	144,634	132,250

The regional breakdown of revenues by end-users was as follows:

	01-06/2021 EUR thousand	01-06/2020 EUR thousand
Europe	101,526	84,297
Americas	19,918	22,244
Asia	12,581	16,761
Australia/Pacific	5,505	5,630
Africa	4,208	1,959
Small orders (not allocated)	896	1,359
	144,634	132,250

The line item "small orders" relates to revenues from customer contracts that were not allocated to the other categories in the above table.

Apart from a few exceptions, all revenues of the Frequentis Group are realised at a point in time, so no further breakdown is made into revenues realised at a point in time and those realised over time.

7. Intangible assets, property, plant and equipment

The additions to intangible assets, property, plant and equipment in the first half of 2021 amounted to EUR 9,530 thousand (H1 2020: EUR 6,602 thousand). Amortisation of intangible assets and depreciation of property, plant and equipment was EUR 7,020 thousand (H1 2020: EUR 6,938 thousand).

The increase in intangible assets is mainly due to the intangible assets acquired in connection with the acquisition of Harris Orthogon GmbH.

8. Goodwill

Goodwill increased by EUR 2,576 thousand in the reporting period. This is attributable to the acquisition of Harris Orthogon GmbH.

For the purpose of impairment testing, goodwill has been allocated to the Frequentis Group's cashgenerating units (CGUs) as follows:

	30 June 2021	31 Dec. 2020
	EUR thousand	EUR thousand
Systems Interface Ltd.	194	194
Frequentis Comsoft GmbH	909	909
team Technology Management GmbH	53	53
ATRiCS Advanced Traffic Solutions GmbH	1,730	1,730
Harris Orthogon GmbH	2,576	0
	5,462	2,886

As at the date of preparation of the financial statements, there were no indications of any need to recognise an impairment loss. The annual impairment test is performed in the fourth quarter of the financial year.

9. Contract assets from contracts with customers and contract liabilities from contracts with customers

	30 June 2021	31 Dec. 2020
	EUR thousand	EUR thousand
Contract assets from contracts with customers	89,754	53,591
Advances from customers	-35,463	-15,171
	54,291	38,420

The contract assets mainly result from performance obligations already satisfied by the Group but not yet invoiced. Contract assets are reclassified to trade accounts receivable when there is an unconditional right to receive consideration. This is normally the case when the Group issues an invoice for the goods and services provided.

The increase in contract assets compared with 31 December 2020 is the net result of a large number of newly commenced and invoiced projects.

It is assumed that there are no relevant default risks for contract assets from contracts with customers. The creditworthiness of customers is carefully checked, particularly in the case of orders for which the Group makes advance payments. These orders primarily relate to work for public authorities or major international companies.

Contract liabilities from contracts with customers comprise obligations to transfer goods and services to customers, for which consideration has already been received. These primarily relate to advance payments, some of which are secured by prepayment guarantees.

The following table shows the structure of contract liabilities from contracts with customers:

	30 June 2021	31 Dec. 2020
	EUR thousand	EUR thousand
Advances for customer projects	76,907	62,490
Advances offset against contract assets from contracts with
customers	-31,838	-12,249
	45,069	50,241
Other contract liabilities	7,328	6,546
Other contract liabilities offset against contract assets from contracts
with customers	-3,626	-2,922
	3,702	3,624
Accrued revenue for maintenance contracts	10,486	8,828
Liabilities for outstanding performance obligations for customer
orders after final invoicing (current)	208	142
Liabilities for outstanding performance obligations for customer
orders after final invoicing (non-current)	47	13
Total contract liabilities from contracts with customers	59,512	62,848

Other contract liabilities contain contractual claims to advance payments.

10.Share capital and retained earnings

Treasury shares

At the Extraordinary General Meeting of Frequentis AG on 20 September 2019, the Executive Board was authorised, for a period of 30 months, to purchase shares in Frequentis AG pursuant to Section 65(1) No. 4 and Section 8 of the Austrian Companies Act (AktG), both via the stock market and outside the stock exchange, and to exclude the general selling possibilities of shareholders related to such purchase. Furthermore, the Executive Board was authorised to reduce the share capital by cancelling shares in Frequentis AG without a further resolution of the General Meeting.

In the first half of 2021, Frequentis repurchased a total of 15,500 treasury shares with a total value of EUR 384 thousand. The share buyback programme ended on 6 May 2021.

The change in shareholders' equity is presented in the consolidated statement of changes in shareholders' equity.

Dividend

The Annual General Meeting of Frequentis AG on 20 May 2021 passed a resolution to pay a dividend of EUR 0.15 per no-par value share entitled to the dividend for the 2020 financial year. The payment of EUR 1,990 thousand to the shareholders was made in the reporting period.

11.Share-based payment

Frequentis AG agreed long-term incentive plans with the Chairman of the Executive Board, Mr. Norbert Haslacher, in 2019, 2020, and 2021 (LTIP 2019, LTIP 2020, and LTIP 2021).

The share-based payment is measured in accordance with IFRS 2 at fair value on the grant date. The expense is allocated over the required vesting period. Since the agreements stipulate that the shares awarded under the LTIP cannot be settled in cash, the share-based payment is recognised in a separate item of equity.

The participant in the LTIP plans is not required to make a personal investment in Frequentis AG shares. From the grant date, in each calendar year the beneficiary can sell a maximum of one third of the shares awarded under the LTIP 2019, the LTIP 2020, and the LTIP 2021. In any case, the beneficiary may only sell the number of shares awarded under the LTIP 2019, the LTIP 2020, and the LTIP 2021 or any subsequent long-term incentive plans if, at all times, he holds at least 7,000 of the shares awarded under a long-term incentive plan ("minimum shareholding").

The service period for the fulfilment of the targets has been set at three years. The targets for the key indicators were set by the Supervisory Board. On the settlement date (at the earliest three years after the grant date), assuming 100% target achievement, a maximum of 14,000 shares (LTIP 2019) or 17,000 shares (LTIP 2020 and LTIP 2021) – in each case gross, i.e., before deduction of taxes and fees – but no more than 200% of the beneficiary's annual gross base salary for the 2019, 2020, or 2021 financial year, as applicable, will be granted. Settlement is effected by transferring the number of shares corresponding to the net amount of the award to the respective securities account. Subject to the approval of the Supervisory Board, the settlement date is 30 April 2022 for the LTIP 2019, 30 April 2023 for the LTIP 2020, and 30 April 2024 for the LTIP 2021.

The entitlement to the maximum number of shares arises at 100% target achievement. A lower target achievement level will result in a proportionate reduction in the entitlement. No shares will be allocated if target achievement is less than 50%.

The LTIP 2019 was approved by the General Meeting on 20 September 2019 and the agreement with the Chairman of the Executive Board was signed on 30 September 2019. The agreed targets are based on the total shareholder return (TSR), organic growth of the operating performance, the EBIT margin, the profit margin, non-refinanced R&D expenses as a percentage of total operating performance, and the development of key accounts, employee satisfaction, and customer satisfaction.

The LTIP 2020 was approved by the General Meeting on 14 May 2020 and the agreement with the Chairman of the Executive Board was signed on 15 May 2020. The agreed targets are based on the total shareholder return (TSR), orders on hand, growth in the regions, and growth via acquisitions. The LTIP 2021 was approved by the General Meeting on 20 May 2021 and the agreement with the Chairman of the Executive Board was signed on 15 June 2021. The agreed targets are based on the total shareholder return (TSR), the increase in operating performance through key accounts, and growth via new business development. Apart from the achievement of the targets, the Executive Board member does not have to provide any consideration for the shares awarded.

The following table summarises the main conditions for the share-based payment granted in the reporting period:

	LTIP 2021	LTIP 2020	LTIP 2019
Start of plan	1 Jan. 2021	1 Jan. 2020	1 Jan. 2019
Grant date	15 June 2021	15 May 2020	30 Sep. 2019
End of service period	31 Dec. 2023	31 Dec. 2022	31 Dec. 2021
Vesting date	30 Apr. 2024	30 Apr. 2023	30 Apr. 2022
Expected target achievement	95%	100%	86%
Expected number of shares	16,150	17,000	12,012
Maximum number of shares	17,000	17,000	14,000
Bonus shares allocated	None	None	None

Of the expected total future expense relating to the LTIP, the portion already earned as at the reporting date is recognised in shareholders' equity. This is based on the fair value on the grant date. The total expected expense for the LTIP obligation is measured at the fair value of the share as at the date of the agreement multiplied by the number of shares granted and the expected target achievement. In the reporting period, EUR 185 thousand (H1 2020: EUR 75 thousand) including payroll-related costs was recognised in personnel expenses in the consolidated statement of comprehensive income for the LTIP 2019, the LTIP 2020, and the LTIP 2021.

For the LTIP 2019, the LTIP 2020, and the LTIP 2021, it is assumed that both the market-oriented target and the non-market-oriented targets will be achieved so the effect of the market-oriented targets must be reflected in the expected level of target achievement and not in the fair value of the shares.

12.Provisions

	30 June 2021 EUR thousand	31 Dec. 2020 EUR thousand
Provisions for severance payments	15,487	15,395
Provisions for pensions	5,880	3,260
Less pension insurance scheme	-3,294	-2,696
	2,586	564
Provisions for anniversary bonuses	384	369
Other provisions	780	884
Total non-current provisions	19,237	17,212

The increase in provisions for pensions is mainly due to the acquisition of Harris Orthogon GmbH.

Since the life insurance policies are pledged to cover pension obligations, the corresponding amount accumulated in the pension insurance scheme is offset against the pension provisions.

The other non-current provisions contain provisions of EUR 645 thousand (31 December 2020: EUR 764 thousand) for projects for which provisions have to be recognised due to the excess of expected future expenses over revenues.

The other current provisions comprise:

	30 June 2021	31 Dec. 2020
	EUR thousand	EUR thousand
Provisions for bonuses	5,734	7,525
Provisions for projects	1,502	2,919
Provisions for litigation costs	2,603	1,686
Other provisions	1,860	1,449
Total current provisions	11,699	13,579

The provisions for bonuses contain employee bonuses and variable salary components that are not yet due for payment.

The provisions for projects contain project costs for which provisions are recognised due to the excess of estimated future expenses over revenues.

The provisions for litigation costs mainly relate to the lawsuits filed in connection with Commerzialbank Mattersburg. The increase as at 30 June 2021 is principally attributable to additional court fees.

13.Other liabilities

The other liabilities comprise:

	30 June 2021	31 Dec. 2020
	EUR thousand	EUR thousand
Earn-out payment liability	1,245	1,238
Loans from non-controlling interests	465	480
Other liabilities	9	4
Total non-current financial liabilities	1,719	1,722
Purchase price liability for Harris Orthogon GmbH	3,484	0
Other liabilities	1,000	1,203
Negative fair values of cash flow hedges and MTM valuation	1,053	397
Total current financial liabilities	5,537	1,600
Accrual for holidays not yet taken	6,372	2,282
Advances received in connection with grants and subsidies	3,000	619
Liabilities to the Austrian fiscal authorities (excluding income taxes)	2,771	1,614
Accrual for overtime	712	466
Accrual for consultancy costs	158	656
Other liabilities	1,913	980
Total current non-financial liabilities	14,926	6,617

Other information

14.Financial instruments

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including the categories to which they are allocated. It does not contain any information on the fair value of financial assets and financial liabilities that are not measured at fair value if the carrying amount is a reasonable approximation of the fair value (amounts in EUR thousand).

30 June 2021	Hedge accounting	Measured at fair value Mandatory recognition at fair value through profit or loss	Equity instruments – at fair value through profit or loss	Measured at amortised cost Financial assets	Other financial liabilities	Carrying amount Total
Financial assets
Equity instruments			863			863
Trade accounts receivable				55,108		55,108
Financial derivatives	134	451				585
Other current and non-current
assets				3,025		3,025
Time deposits				4,606		4,606
Cash and cash equivalents				78,233		78,233
Total	134	451	863	140,972		142,420
Financial liabilities
Liabilities to banks and other financial liabilities					5,626	5,626
Trade accounts payable					14,460	14,460
Lease liabilities					36,617	36,617
Financial derivatives	731	322				1,053
Other liabilities		1,378			4,825	6,203
Total	731	1,700			61,528	63,959

						Carrying amount
31 Dec. 2020		Measured at fair value		Measured at amortised cost		Total
		Mandatory recognition	Equity instruments –		Other
	Hedge	at fair value through	at fair value through	Financial	financial
	accounting	profit or loss	profit or loss	assets	liabilities
Financial assets
Equity instruments			863			863
Trade accounts receivable				59,318		59,318
Financial derivatives	12	1,293				1,305
Other current and non-current
assets				1,673		1,673
Cash and cash equivalents				91,265		91,265
Total	12	1,293	863	152,256		154,424
Financial liabilities
Liabilities to banks and other
financial liabilities					6,222	6,222
Trade accounts payable					11,923	11,923
Lease liabilities					39,103	39,103
Financial derivatives	267	131				398
Other liabilities		1,345			1,579	2,924
Total	267	1,476			58,827	60,570

Fair value

Trade accounts receivable, contract assets, other receivables, time deposits, cash and cash equivalents, trade accounts payable, contract liabilities, and other liabilities are measured at their carrying amount, which is a reasonable approximation of the fair value, due to their essentially short remaining term.

For the equity instrument, there is no quoted price available on an active market. Therefore, it is measured using parameters that are unobservable on the market. Measurement is based on the discounted cash flow method or any equity transactions close to the reporting date. The fair value is allocated to level 3 in the fair value hierarchy. There is currently no intention of selling the equity instrument.

The earn-out liability relating to the acquisition of ATRiCS and the outstanding contingent consideration for the acquisition of Orthogon are measured at fair value and allocated to the category at fair value through profit or loss. The fair value is allocated to level 3 in the fair value hierarchy.

The carrying amounts of derivative financial assets and liabilities correspond to their fair values. Derivatives that have not been designated as a hedging instrument nevertheless serve economically to hedge fluctuations in exchange rates. Their fair values are based on the present value of expected future cash flows, discounted by the interest rate that the Group estimates could be obtained for comparable financial instruments. They are allocated to level 2 in the fair value hierarchy.

The long-term incentive plans (LTIP), which are classified as an equity-settled share-based payment, were measured at fair value and allocated to level 3 in the fair value hierarchy.

The following hierarchy was used to allocate all financial instruments measured at fair value to a valuation method:

Level	Financial instruments at fair value
Level 2:
Measurement based on quoted prices for similar assets	Financial derivatives
Level 3:
Measurement based on models with significant valuation
parameters that are unobservable on the market	Equity instruments, earn-out liability

A further financing round for the 6.88% interest in the start-up company Altitude Angel Ltd., Reading, UK, took place in November 2020. Since there were no indications of a material change in the value of the company since the initial investment, this was once again based on the initial valuation. The Frequentis Group decided not to participate in this financing round, in which new investors participated. Consequently, its interest has decreased to 4.56%.

Financial derivatives

The carrying amount of financial derivatives corresponds to their current fair value, whereby the fair value was determined from the current market value based on the closing exchange rate for the foreign currency as at 30 June 2021.

The following table shows the development of financial derivatives:

30 June 2021	Derivative			Cash flow hedge		For MTM valuation		Total
	Sale	Purchase amount	Average hedging	Foreign currency	Fair value	Foreign currency	Fair value	Fair value
Sale currency	amount	EUR thousand	rate	amount	EUR thousand	amount	EUR thousand	EUR thousand
AUD	-392	247	1.59	0	0	-392	0	0
CHF	-396	364	1.09	0	0	-396	3	3
CZK	3,260	-125	26.05	0	0	3,260	2	2
HKD	-1,400	156	9.00	0	0	-1,400	4	4
SGD	-3,422	2,149	1.59	0	0	-3,422	16	16
USD	-1,353	1,630	1.17	11,000	134	12,353	425	559
		4,421			134		450	584
AUD	-4,300	2,651	1.62	0	0	-4,300	-54	-54
GBP	-12,858	14,203	0.91	-9,215	-643	-3,643	-93	-736
NOK	-2,908	269	10.82	0	0	-2,908	-16	-16
SGD	-790	485	1.63	0	0	-790	-8	-8
USD	-6,256	5,018	1.25	-2,165	-88	-4,092	-151	-239
		22,626			-731		-322	-1,053

31 Dec. 2020	Derivative		Cash flow hedge			For MTM valuation		Total
		Purchase	Average	Foreign		Foreign
	Sale	amount	hedging	currency	Fair value	currency	Fair value	Fair value
Currency	amount	EUR thousand	rate	amount	EUR thousand	amount	EUR thousand	EUR thousand
CZK	3,700	-344	10.76	0	0	3,700	6	6
GBP	-5,377	6,114	0.88	-26	0	-5,351	168	168
HKD	-2,000	222	9.01	0	0	-2,000	14	14
SGD	-4,183	2,628	1.59	0	0	-4,183	66	66
USD	-21,677	18,591	1.17	-1,329	11	20,348	1,040	1,051
		27,211			11		1,294	1,305

AUD	-6,355	3,900	1.63	-397	-7	-5,958	-68	-75
CHF	-627	577	1.09	0	0	-627	-5	-5
GBP	-8,733	9,482	0.92	-7,828	-173	-906	-4	-177
JPY	-7,092	55	128.95	0	0	-7,092	-1	-1
NOK	-3,500	324	10.80	0	0	-3,500	-8	-8
SGD	427	-268	1.59	0	0	427	-7	-7
USD	-1,874	1,390	1.35	-2,071	-88	197	-38	-126
		15,460			- 268		- 131	- 399

For the carrying amount of the cash flow hedge and the carrying amount of the MTM valuation, a positive fair value of EUR 584 thousand was recognised in other receivables as at 30 June 2021 (31 December 2020: EUR 1,305 thousand), while a negative fair value of EUR 1,053 thousand was recognised in other liabilities (31 December 2020: EUR 399 thousand). When the hedged item (revenue) is realised, the amount relating to the hedging transaction recognised in other comprehensive income is reclassified to revenues.

15.Information on business relations with related parties

Transactions with associated and non-consolidated companies are not material and mainly comprise business relations in the form of deliveries and services. These transactions are undertaken exclusively on an arm's length basis and there were no material changes compared with the transactions presented in the annual report for 2020.

16.Significant events after the reporting date

The official closing of the acquisition of C4i Pty. Ltd. on 30 July 2021 completed the L3Harris transaction, which was signed on 23 February 2021. For further details, see note 2 "Changes to the consolidated group".

Statement by the Executive Board pursuant to section 125 paragraph 1 of the (Austrian) Stock Exchange Act

We hereby confirm that, to the best of our knowledge, the condensed interim financial statements as at 30 June 2021, drawn up in compliance with the applicable accounting standards, provide a true and fair view of the Group's net assets, financial position and results of operations, and that the half-year management report provides a true and fair view of the net assets, financial position and results of operations in respect of the significant events of the first six months of the financial year and their impact on the condensed interim financial statements as at 30 June 2021, the major risks and uncertainties relating to the remaining six months of the financial year, and major business transactions with related parties that are subject to disclosure.

Vienna, 16 August 2021

Norbert Haslacher Chairman of the Executive Board

Peter Skerlan Member of the Executive Board

Hermann Mattanovich Member of the Executive Board

Financial Calendar 2021

http://www.frequentis.com/en/ir > Financial Calendar

Notes / Disclaimer

The terms "Frequentis" and "Frequentis Group" in this publication refer to the Group; "Frequentis AG" is used to refer to the parent company.

Minimal arithmetical differences may arise from the application of commercial rounding to individual items and percentages.

The forecasts, plans, and forward-looking statements contained in this publication are based on the knowledge and information available and the assessments made at the time that this publication was prepared. As is true of all forward-looking statements, these statements are subject to risk and uncertainties. As a result, actual events may deviate significantly from these expectations. No liability whatsoever is assumed for the accuracy of projections or for the achievement of planned targets or for any other forward-looking statements.

The information contained in this publication is for general information purposes only. There can be no guarantee for the completeness of the content. Typing and printing errors reserved.

All references to people are gender neutral.

Frequentis accepts no liability for any error or omission in this publication. The information in this publication may not be used without the express written permission of Frequentis.

This document has been prepared in German, which is the official version. The English translation is for information only. In case of discrepancies in the English translation, the German version shall prevail. All rights reserved.

Investor Relations: Stefan Marin Tel. +43 1 81150 1074 [email protected] www.frequentis.com/en/ir Corporate Communications: Brigitte Gschiegl Tel. +43 1 81150 1301 [email protected] www.frequentis.com/en/irnews

Publishing details

Frequentis AG Innovationsstraße 1, 1100 Vienna, Austria Tel: +43 1 81150 0

44_ COR_H1-2020_E_0821

AI assistant

Frequentis AG — Interim / Quarterly Report 2021

745_ir_2021-08-17_040b3709-474c-424e-8577-81dbb869b0c9.pdf

Key figures Frequentis Group

Preface

Highlights in the first half of 2021

Change on the Executive Board; Supervisory Board strengthened

Forecast for 2021

The share

Dividend

Treasury shares

Group Management Report as at 30 June 2021

Economic environment

Business performance

Significant events in the first half of 2021

Acquisition of air traffic management (ATM) product lines from L3Harris Technologies, Inc.

COVID-19 pandemic

Order intake

Highlights of order intake in the Air Traffic Management segment

Highlights of order intake in the Public Safety & Transport segment

Orders on hand

Revenues and operating performance

Earnings

Employees

Asset and capital structure

Cash flow

Business relations with related parties

Segment performance

Air Traffic Management / ATM

Highlights from the operating business

Public Safety & Transport / PST

Highlights from the operating business

Opportunity and risk management

Outlook

Acquisitions

Forecast for 2021

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated cash flow statement

Consolidated statement of changes in shareholders' equity

Selected notes to the condensed consolidated interim financial statements

1. General information

2. Consolidated group

Changes to the consolidated group

Acquisition of air traffic management (ATM) product lines from L3Harris Technologies, Inc.

Harris Orthogon GmbH

Assumption of the NATS contract

Harris ATC Solutions business unit of Harris Canada Systems Inc.

Harris C4i (event after the reporting date as the transaction was closed on 30 July 2021)

3. Accounting policies

New and amended standards and interpretations

4. Impact of the COVID-19 pandemic

Notes to the consolidated income statement and statement of financial position

5. Segment report

Operating segments

Data on the operating segments

Details of Group-wide data

6. Revenues

7. Intangible assets, property, plant and equipment

8. Goodwill

9. Contract assets from contracts with customers and contract liabilities from contracts with customers

10.Share capital and retained earnings

Treasury shares

Dividend

11.Share-based payment

12.Provisions

13.Other liabilities

Other information

14.Financial instruments

Fair value

Financial derivatives

15.Information on business relations with related parties

16.Significant events after the reporting date

Statement by the Executive Board pursuant to section 125 paragraph 1 of the (Austrian) Stock Exchange Act

Financial Calendar 2021

Notes / Disclaimer

Publishing details

More from Frequentis AG

Frequentis AG Interim / Quarterly Report 2021