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Frequentis AG Interim / Quarterly Report 2022
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Interim / Quarterly Report
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FOR A SAFER WORLD
Half-year Financial Report 2022
Key figures Frequentis Group
All figures in EUR million, except where otherwise stated.
| Earnings | H1 2022 | H1 2021 | +/- in % | +/- in EUR million |
2021 |
|---|---|---|---|---|---|
| Revenues | 167.3 | 144.6 | +15.7% | +22.7 | 333.5 |
| EBITDA | 8.4 | 12.4 | -31.9% | -4.0 | 46.5 |
| EBITDA margin | 5.1% | 8.6% | -3.5 pp | – | 13.9% |
| EBIT | -0.5 | 5.4 | – | -5.9 | 29.0 |
| EBIT margin | -0.3% | 3.7% | -0.3 pp | – | 8.7% |
| Profit/loss for the period | -0.3 | 4.1 | – | -4.4 | 20.8 |
| Earnings per share in EUR | -0.03 | 0.28 | – | – | 1.50 |
| Orders | H1 2022 | H1 2021 | +/- in % | +/- in EUR million |
2021 |
| Order intake | 161.2 | 157.1 | +2.6% | +4.1 | 333.2 |
| Orders on hand at end of period | 498.1 | 453.0 | +10.0% | +45.1 | 467.9 |
| Statement of financial position | 30 June 2022 |
30 June 2021 | +/- in % | +/- in EUR million |
2021 |
| Total assets | 318.5 | 290.4 | +9.7% | +28.2 | 315.7 |
| Shareholders' equity | 129.8 | 115.1 | +12.8% | +14.7 | 129.9 |
| Equity ratio | 40.7% | 39.6% | +1.1 pp | – | 41.1% |
| Net cash | 84.5 | 77.2 | +9.5% | +7.3 | 101.1 |
| No. of employees (average, in FTE)1) | 2,021 | 1,851 | +9.2% | – | 1,937 |
| Cash flow statement | H1 2022 | H1 2021 | +/- in % | +/- in EUR million |
2021 |
| Cash flow from operating activities | -3.3 | 2.9 | – | -6.2 | 48.8 |
| Cash flow from investing activities | -4.2 | -9.4 | -55.2% | -5.2 | -24.6 |
| Cash flow from financing activities | -12.3 | -7.0 | -75.4% | -5.3 | -12.6 |
| Cash and cash equivalents at end of period |
Note: Minimal arithmetical differences may arise from the application of commercial rounding to individual items and percentages.
1) Number of employees reported as average full-time equivalents (FTE); figures for 2021 restated.
Preface
Ladies and gentlemen,
In the first six months of 2022, our operating business was hardly influenced by the COVID-19 pandemic. Thanks to the stable Frequentis business model as a provider of communication and information systems for control centres in the safety-critical sector, demand remains high, as shown by the increase in order intake. The rise in order intake and revenues was partly due to the companies acquired from L3Harris Technologies in 2021 and the acquisition of the Italian company Regola in January 2022.
Highlights
Despite the global economic disruption resulting from the war in Ukraine, we continued to grow. On this basis, we are satisfied with our performance in the first six months of 2022:
- Order intake increased by 2.6% to EUR 161.2 million (H1 2021: EUR 157.1 million)
- Orders on hand were 10.0% higher at EUR 498.1 million as at June 2022 (June 2021: EUR 453.0 million).
- Revenues rose by 15.7% to EUR 167.3 million (H1 2021: EUR 144.6 million)
- EBITDA was EUR 8.4 million (H1 2021: EUR 12.4 million)
- EBIT was EUR -0.5 million (H1 2021: EUR 5.4 million)
- The Group made a loss of EUR 0.3 million (H1 2021: profit of EUR 4.1 million)
- The equity ratio was 40.7% (June 2021: 39.6%)
- Net cash was EUR 84.5 million (June 2021: EUR 77.2 million)
Continued growth
Order intake increased further to EUR 161.2 million with orders coming from around the world. Orders on hand now amount to half a billion euros. The increase was due to our product portfolio on the one hand, and our customers' trust on the other. Revenues posted double-digit growth of 15.7% to EUR 167.3 million, thanks to organic growth, which was at 4.3%, and also to our acquisitions.
Overall, the seasonality commonly seen in previous years – with the exception of the first half of 2021 – was visible again. The seasonal pattern is due the customer structure and the nature of the project business: order intake and project acceptances are normally highest at the end of the year, which generally leads to a negative half-year result. EBIT was EUR -0.5 million and the Group made a loss for the period of EUR 0.3 million.
Our financials remain solid. The equity ratio was 40.7% as at June 2022, above the level at the end of June 2021. The net cash position was EUR 84.5 million and we reduced our borrowing to a minimum.
At the Annual General Meeting, our shareholders passed a resolution to increase the dividend by one third to EUR 0.20 per share. The dividend was paid in June.
Acquisition in Italy
At the start of 2022, Frequentis continued its growth strategy in the Public Safety domain by acquiring a 51% interest in the Italian company Regola. Regola offers innovative software solutions such as an integrated control room solution to improve the emergency response of public safety teams. The command and control (CAD) solutions from Regola complement the Frequentis portfolio in the area of public safety and adjacent markets. The aim is to step up international marketing.
Six acquisitions have been made since Frequentis' IPO in May 2019. The Frequentis strategy includes searching proactively for attractive M&A opportunities to extend its product portfolio or gain access to new markets.
Forecast for 2022
In addition to the unforeseeable development of the pandemic, Frequentis faces further uncertainties in 2022. These include the macro-economic situation, inflation, and the development of prices and the availability of raw materials, electronic components, and energy as a consequence of geopolitical crises. It is not possible to make a reliable estimate of the exact effects on costs (e.g. travel expenses, pay rises), revenues (e.g. due to the deferral of project acceptances), supply chains, the budgets available to customers, and the potential postponement of investments.
The present tension in south-east Asia could cause further disruption on the global IT hardware market. In the project business, Frequentis has always had to address extensive challenges and dynamic changes in external influences and adapts constantly to the relevant conditions. The wide range of uncertainties and the resulting interdependencies make that more difficult at present.
Depending on the aspects outlined above, Frequentis aims to increase revenues and order intake in 2022 compared with 2021. Some of the increase will be attributable to the M&A transactions that have been undertaken because in 2022 the entities acquired will make a contribution to revenues and order intake from the beginning of the year. Around EUR 7 million has been earmarked for investment (capex).
Frequentis expects to report an EBIT margin of around 6-8% in 2022 – depending on the points outlined above and any outstanding post-merger integration costs.
Vienna, 16 August 2022
Best regards,
Norbert Haslacher Chairman of the Executive Board
Peter Skerlan Member of the Executive Board
Hermann Mattanovich Member of the Executive Board
The share
Analysts
In addition to BankM (Roger Becker, Daniel Großjohann) and Raiffeisen Bank International (Teresa Schinwald), ODDO-BHF now regularly writes analyses and notes on Frequentis. That means that Frequentis is now covered by three banks. ODDO-BHF initiated coverage of the company in July 2022; the analysts are Nicolas Thorez and Amira Manai.
Dividend
The Annual General Meeting on 2 June 2022 passed a resolution to increase the dividend by one third to EUR 0.20 per share for the 2021 financial year (2020 financial year: EUR 0.15 per share). As a result, almost EUR 2.7 million was paid out, giving a dividend yield of 0.75% based on the closing price on the Vienna Stock Exchange at end-December 2021 (2020: 0.83%).
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
The company had 15,500 treasury shares as at 31 December 2021. Following the transfer of 6,590 shares to the Chairman of the Executive Board in May 2022 as settlement for the long-term incentive plan 2019 (LITP 2019), at the end of June 2022 the company held 8,910 treasury shares. That was 0.0671% of the share capital.
Group Management Report as at 30 June 2022
Economic environment
Compared with other sectors of the economy, 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. 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 on 26 July 20221. Several shocks have hit a world economy already weakened by the pandemic: higher-thanexpected inflation worldwide – especially in the United States and major European economies – triggering tighter financial conditions, a worse-than-anticipated slowdown in China, reflecting COVID-19 outbreaks and lockdowns, and further negative spillovers from the war in Ukraine.
The risks to the outlook are overwhelmingly tilted to the downside. The war in Ukraine could lead to a sudden stop of European gas imports from Russia, inflation could be harder to bring down than anticipated, and tighter global financial conditions could induce debt distress in emerging markets and developing economies. Renewed COVID-19 outbreaks and lockdowns as well as a further escalation of the property sector crisis might further suppress Chinese growth. Geopolitical fragmentation could impede global trade and cooperation.
For the USA, the IMF projects economic growth of 2.3% in 2022 (2023: 1.0%). It forecasts that the economy in the euro zone will grow by 2.6% in 2022 (2023: 1.2%). For the major economics in the euro zone, differing growth rates are predicted for 2022 and 2023: for Germany it is forecasting growth of 1.2% in 2022 (2023: 0.8%), for France it anticipates a growth rate of 2.3% (2023: 1.0%), for Italy growth of 3.0% is forecast for 2022 (2023: 0.7%), and for Spain the forecast is 4.0% (2023: 2.0%). The forecast for the UK is 3.2% growth in 2022 (2023: 0.5%).
For the emerging and developing economies in Asia, the forecast growth rate is 4.6% for 2022 (2023: 5.0%). For Latin America, the IMF assumes growth of 3.0% in 2022 (2023: 2.0%). The projection for the Middle East and Central Asia is 4.8% growth (2023: 3.5%).
Business performance
In the first six months of 2022, Frequentis' operating business was hardly influenced by the COVID-19 pandemic. Revenues rose, partly due to the companies acquired from L3Harris Technologies during 2021 and the acquisition of the Italian company Regola in January 2022. Thanks to Frequentis' stable business model as a provider of communication and information systems for control centres in the safety-critical sector, demand remains high, as shown by the increase in order intake.
Significant events in the first half of 2022
Acquisition of Regola
On 3 January 2022, Frequentis acquired a 51% interest in Regola S.r.l. (based in Turin, Italy). This Italian company's innovative software solutions complement Frequentis' public safety product portfolio and therefore support its long-term growth strategy in this business domain.
Frequentis and Regola supply integrated solutions to improve the response of emergency services. Regola's command and control (CAD) solutions complement the Frequentis portfolio in the area of public safety and adjacent markets. Its main product is the UNIQUE CAD product family, accompanied by products offered on a software-as-a-service basis. The aim is to step up international marketing.
The Frequentis strategy includes searching proactively for attractive M&A opportunities to extend its product portfolio or gain access to new markets.
Frequentis turns 75
In 2022, Frequentis is celebrating its 75th anniversary. From its origins as a small company – what would be called a start-up today – founded by two ambitious engineers in post-war Vienna in 1947, it grew first into a medium-sized company and eventually into a successful global group of companies.
A distinctive culture with a safety-critical focus plays a key role in the success of the Frequentis team. 75 years of experience with projects in the safety-critical sector have resulted in extensive expertise and a deep understanding of customers' needs. Frequentis intends to continue to use this knowledge on the world's markets in the future – wherever the mission is to protect people and property.
Order intake
Order intake in the Frequentis Group was EUR 161.2 million in the first six months of 2022, an increase of 2.6% compared with the first half of 2021 (EUR 157.1 million).
The distribution of order intake between the two segments in the first six months of 2022 was as follows: Air Traffic Management 73% (H1 2021: 75%), Public Safety & Transport 27% (H1 2021: 25%).
Highlights of order intake in the Air Traffic Management segment
The Frequentis Air Traffic Management segment acquired a wide variety of orders across its product range from all over the world – from countries including e.g. Australia, Austria, and France.
Demand for remote digital towers remains consistently high. The French air navigation service provider, DSNA (Direction des Services de la Navigation Aérienne), has placed an order with Frequentis to supply its state-of-the-art remote digital tower solution for France.
In the area of drones, the Australian air navigation service provider has selected Frequentis to participate in the tender procedure for the country's first Flight Information Management System (FIMS). This system will support the secure integration of drones as emerging airspace users into Australia's low-altitude airspace.
The Austrian air navigation service provider Austro Control and Frequentis have started to build a digital traffic management solution for secure integration of drones into Austrian airspace.
Highlights of order intake in the Public Safety & Transport segment
In the Public Safety & Transport segment, the Public Safety business domain increased its market leadership with the emergency services in Germany by securing an order to supply a system to connect the emergency rescue services and fire brigades to the safety-critical digital communication network in the federal state of North Rhine-Westphalia as well as an order for an integrated control centre solution 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 add-on and maintenance contracts.
In the Maritime business domain, Frequentis acquired an order to upgrade the control centre communications for Australia's nationwide coastal surveillance (search and rescue) service, as well as orders from the installed base, for example from the Dutch coast guard organisation.
Orders on hand
Orders on hand amounted to EUR 498.1 million as at 30 June 2022 (including orders on hand from the new acquisition, Regola). That marked an increase of 10.0% or EUR 45.1 million compared with end-June 2021 (EUR 453.0 million). The Air Traffic Management segment accounted for around 64% of total orders on hand (June 2021: 64%) and the Public Safety & Transport segment for 36% (June 2021: 36%).
Revenues and operating performance
In the first half of 2022, revenues increased by 15.7% (EUR 22.7 million) to EUR 167.3 million (H1 2021: EUR 144.6 million). Organic growth – i.e. growth excluding the L3Harris transaction in 2021 and the acquisition of the Italian company Regola in 2022 – was 4.3%.
Revenues in the Air Traffic Management segment grew by 26.9% to EUR 112.8 million. In the Public Safety & Transport segment revenues decreased by 2.8% to EUR 54.3 million. The revenue split between the Air Traffic Management and Public Safety & Transport segments was 67% : 33% in the first half of 2022 (H1 2021: 61% : 39%).
Looking at the regional revenue split, in the first half of 2022 Europe accounted for 65% (H1 2021: 70%), the Americas for 17% (H1 2021: 14%), Asia for 11% (H1 2021: <9%), Australia/Pacific for 5% (H1 2021: 4%), and Africa for 1% (H1 2021: 3%).1% (H1 2021: <1%) of revenues were not allocated to a region.
The change in inventories of finished goods and work in progress amounted to EUR 1.8 million in the first half of 2022 (H1 2021: EUR 1.8 million) and own work capitalised totalled EUR 0.5 million (H1 2021: EUR 0.0 million).
The other operating income increased to EUR 4.6 million (H1 2021: EUR 3.2 million). The biggest single items here are grants and subsidies for research and development costs and income from research subsidies.
No profit from business combinations was recorded in the first half of 2022. In the first half of 2021, a profit from business combinations of EUR 1.7 million was recorded in connection with the acquisition of the ATC Solutions business unit of Harris Canada Systems Inc.
The operating performance increased by 15.1% to EUR 174.1 million in the first half of 2022 (H1 2021: EUR 151.3 million).
Earnings
The cost of materials and purchased services increased by 18.4% to EUR 40.2 million (H1 2021: EUR 34.0 million). Personnel expenses rose 16.0% to EUR 103.4 million (H1 2021: EUR 89.1 million). The increase was due principally to an increase in the number of employees as a result of the newly consolidated companies and to salary rises.
The other operating expenses were EUR 6.2 million higher at EUR 22.1 million (H1 2021: EUR 15.9 million), driven principally by higher travel and advertising expenses, for example for trade shows and the new companies acquired in 2021 and 2022. Since almost unrestricted travel is now possible, travel expenses increased by EUR 3.0 million year-on-year to EUR 4.5 million. Even so, they are still lower than in 2019, before the COVID-19 pandemic (H1 2019: EUR 6.0 million).
EBITDA (earnings before interest, taxes, depreciation, amortisation, and impairment losses) declined to EUR 8.4 million in the first six months of 2022 (H1 2021: EUR 12.4 million). The EBITDA margin (relative to revenues) was 5.1%, compared with 8.6% in the first half of 2021.
Depreciation and amortisation increased to EUR 9.0 million (H1 2021: EUR 7.0 million), principally due to the newly consolidated companies.
As a result of all the changes outlined above, EBIT decreased to EUR -0.5 million in the first half of 2022 (H1 2021: EUR 5.4 million). The EBIT margin (relative to revenues) was -0.3%, compared with 3.7% in the first half of 2021. It therefore exhibited the seasonality commonly seen in previous years – with the exception of the first half of 2021. The seasonal pattern is due the customer structure and the nature of the project business: order intake and project acceptances are normally highest at the end of the year, which generally leads to a negative half-year result.
Frequentis made a loss before tax of EUR 0.7 million in the first half of 2022 (H1 2021: profit before tax of EUR 5.3 million). In view of this loss, income tax income of EUR 0.4 million was recorded, compared with income tax expense of EUR 1.2 million in the first half of 2021.
The Frequentis Group registered a loss for the period of EUR 0.3 million in the first half of 2022, compared with a profit of EUR 4.1 million in the first half of 2021. Basic and diluted earnings per share were EUR -0.03 in 2022 (2021: EUR 0.28).
Employees
Since increasing use is being made of opportunities to work part-time, starting with this report the number of employees is expressed as full-time equivalents (FTE). This development reflects the general trend on the labour market, where there is increasing demand for part-time jobs.
The number of employees increased by 9.2% to an average of 2,021 FTEs (2,185 employees) in the first half of 2022 (including the additional employees from the transactions with L3Harris and Regola). The restated headcount in the first six months of 2021 was 1,851 FTEs (1,969 employees, excluding employees on leave of absence).
Asset and capital structure
Total assets increased by 0.9% to EUR 318.5 million as at end-June 2022 (end-December 2021: EUR 315.7 million). The equity ratio was 40.7% (end-December 2021: 41.1%). Equity decreased by EUR 0.1 million to EUR 129.8 million (end-December 2021: EUR 129.9 million).
The net cash position (cash and cash equivalents and time deposits less liabilities to banks and other financial liabilities) was EUR 84.5 million as at end-June 2022, which was below the net cash position of EUR 101.1 million recorded at the end of December 2021.
Non-current assets amounted to EUR 81.1 million at the end of June 2022 (end-December 2021: EUR 72.6 million). The main items here were property, plant and equipment, which totalled EUR 49.8 million (end-December 2021: EUR 47.7 million), and intangible assets which amounted to EUR 19.5 million (end-December 2021: EUR 17.7 million).
Current assets totalled EUR 237.5 million at the end of June 2022 (end-December 2021: EUR 243.1 million). The most important item here is cash and cash equivalents, including time deposits, which amounted to EUR 84.9 million (end-December 2021: EUR 106.0 million), followed by trade accounts receivable totalling EUR 55.6 million (end-December 2021: EUR 69.4 million), contract assets from contracts with customers, which amounted to EUR 50.8 million (end-December 2021: EUR 38.4 million), and inventories, which totalled EUR 27.6 million (end-December 2021: EUR 17.1 million). The increase in inventories was mainly due to increased stocking of components to ensure an adequate safety net to meet long-standing delivery and maintenance obligations despite the withdrawal of products by producers and supply bottlenecks.
As at end-June 2022, more than 75% of total cash and cash equivalents and time deposits were deposited with eleven system-relevant major banks in Austria and Germany. Less than 25% were deposited with approximately 20 other banks in Europe, Australia, Asia, and the Americas.
On the liabilities side, the main item was equity of EUR 129.8 million as at end-June 2022 (end-December 2021: EUR 129.9 million). The second largest item comprised current liabilities, which amounted to EUR 127.9 million as at end-June 2022 (end-December 2021: EUR 125.2 million). Contract liabilities from contracts with customers accounted for EUR 66.4 million of this amount (end-December 2021: EUR 65.4 million).
Non-current liabilities (third-largest item on the liabilities side) totalled EUR 60.9 million (end-December 2021: EUR 60.6 million). The biggest item here comprised non-current lease liabilities, which totalled EUR 30.3 million (end-December 2021: EUR 29.8 million).
Cash flow
The cash flow from operations declined to EUR 2.7 million in the first half of 2022 (H1 2021: EUR 8.6 million).
The cash flow for operating activities decreased to EUR -3.3 million in the first half of 2022 (H1 2021: EUR 2.9 million), mainly due to the change in inventories and trade accounts receivable.
The cash outflow for investing activities was EUR 4.2 million in the first half of 2022 (H1 2021: outflow of EUR 9.4 million). This includes all expenses for the acquisition of the Italian company Regola. Capital expenditures (cash outflows for the purchase of intangible assets, property, plant and equipment) amounted to EUR 4.2 million, which was higher than in the first half of 2021 (EUR 2.9 million).
The cash outflow for financing activities was EUR 12.3 million in the first half of 2022 (H1 2021: outflow of EUR 7.0 million), mainly as a result of loan repayments.
The total cash outflow in the first half of 2022 was EUR 19.8 million (H1 2021: outflow of EUR 13.5 million). Cash and cash equivalents, excluding time deposits, were EUR 84.7 million as at end-June 2022 (end-June 2021: EUR 78.2 million).
Business relations with related parties
For details see ↗ consolidated financial statements as at 30 June 2022, note 15 and ↗ consolidated financial statements as at 31 December 2021, 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 grew by 26.9% to EUR 112.8 million in the first half of 2022 (H1 2021: EUR 88.9 million). EBIT was EUR -2.1 million (H1 2021: EUR -1.8 million).
Highlights from the operating business
Project acceptances were performed around the world in the first half of 2022. They included key milestones and acceptances of voice communication systems for the British, French, Spanish, Portuguese, and Brazilian air navigation service providers. To handle the increased air traffic during the World Cup 2022 in Qatar, the country's voice communication system is being upgraded and air traffic control at the airport tower is being digitalised and modernised.
A prototype for multiple remote tower modules developed within the framework of the SESAR programme funded by the EU was set up and tested by Frequentis and the German Aerospace Centre (DLR) during validation exercises in Germany. Located in a remote tower centre outside the airport, these modules allow control of several airports from a single location. This will also allow centralisation air traffic services (ATS) and the combining of resources at different airports, providing efficiency gains.
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 fell by 2.8% to EUR 54.3 million in the first half of 2022 (H1 2021: EUR 55.8 million). EBIT decreased to EUR 1.7 million (H1 2021: EUR 7.2 million). When comparing the figures, it should be noted that higher-margin projects were invoiced in the first half of 2021.
Highlights from the operating business
In the Public Safety business domain, the rollout of the regional solution for the police force in the German state of North Rhine-Westphalia should be highlighted. Frequentis has been presented with the International Critical Communications Award (ICCA) in the category control room innovation for the integration and brokering of multiform critical communications via the 3020 LifeX platform.
The MissionX innovation was exhibited internationally for the first time at this year's Critical Communications World in Vienna. MissionX is an integrated end-to-end (E2E) system solution for the operation of mission-critical communication services via 4G/5G networks.
The Public Transport business domain achieved key milestones, for example in European rail projects. The Maritime business domain reported important project acceptances in Greenland and on the Faeroe Islands.
Opportunity and risk management
For information on opportunities and risks, please refer to page 141f of the Annual Report 2021.
Outlook
Forecast for 2022
In addition to the unforeseeable development of the pandemic, Frequentis faces further uncertainties in 2022. These include the macro-economic situation, inflation, and the development of prices and the availability of raw materials, electronic components, and energy as a consequence of geopolitical crises. It is not possible to make a reliable estimate of the exact effects on costs (e.g. travel expenses, pay rises), revenues (e.g. due to the deferral of project acceptances), supply chains, the budgets available to customers, and the potential postponement of investments.
The present tension in south-east Asia could cause further disruption on the global IT hardware market. In the project business, Frequentis has always had to address extensive challenges and dynamic changes in external influences and adapts constantly to the relevant conditions. The wide range of uncertainties and the resulting interdependencies make that more difficult at present.
Depending on the aspects outlined above, Frequentis aims to increase revenues and order intake in 2022 compared with 2021. Some of the increase will be attributable to the M&A transactions that have been undertaken because in 2022 the entities acquired will make a contribution to revenues and order intake from the beginning of the year. Around EUR 7 million has been earmarked for investment (capex).
Frequentis expects to report an EBIT margin of around 6-8% in 2022 – depending on the points outlined above and any outstanding post-merger integration costs.
Consolidated Financial Statements as at 30 June 2022
Consolidated income statement
| 01-06/2021 | ||
|---|---|---|
| EUR thousand | EUR thousand | |
| Note | unaudited | unaudited |
| (3) (4) | 167,296 | 144,634 |
| (3) | 1,760 | 1,781 |
| (3) | 457 | 6 |
| (3) | 4,605 | 3,246 |
| 0 | 1,657 | |
| 174,118 | 151,324 | |
| -40,215 | -33,966 | |
| -103,374 | -89,094 | |
| (5) | -22,080 | -15,860 |
| 8,449 | 12,404 | |
| (6) | -8,992 | -7,020 |
| (3) | -543 | 5,384 |
| 41 | 18 | |
| -316 | -369 | |
| 0 | 6 | |
| 119 | 242 | |
| - 699 | 5,281 | |
| (7) | 411 | -1,152 |
| - 288 | 4,129 | |
| -377 | 3,741 | |
| 89 | 388 | |
| - 288 | 4,129 | |
| -0.03 | 0.28 | |
| -0.03 | 0.28 | |
| 01-06/2022 |
Consolidated statement of comprehensive income
| 01-06/2022 EUR thousand |
01-06/2021 EUR thousand unaudited |
||
|---|---|---|---|
| Note | unaudited | ||
| Profit/loss for the period | -288 | 4,129 | |
| Items that may be reclassified to the income statement in | |||
| subsequent periods | |||
| Foreign currency translation | 1,050 | 396 | |
| Measurement of cash flow hedges | 90 | -210 | |
| Income taxes relating to cash flow hedges | (7) | -30 | 52 |
| Items that may not be reclassified to the income statement | |||
| Remeasurement of post-employment benefits | 3,383 | 175 | |
| Investments accounted for at equity – amounts recognised in | |||
| other comprehensive income | 4 | 0 | |
| Income taxes in connection with the remeasurement of post | |||
| employment benefits | (7) | -1,016 | -44 |
| Other comprehensive income, net of tax | 3,481 | 369 | |
| Total comprehensive income | 3,193 | 4,498 | |
| Total comprehensive income attributable to: | |||
| Equity holders of the company | 3,032 | 4,139 | |
| Non-controlling interests | 161 | 359 | |
| 3,193 | 4,498 |
Consolidated statement of financial position
| 30 June 2022 | ||||
|---|---|---|---|---|
| EUR thousand | 31 Dec. 2021 EUR thousand |
|||
| ASSETS | Note | unaudited | audited | |
| Non-current assets | ||||
| Property, plant, and equipment | 49,779 | 47,717 | ||
| Intangible assets | 19,518 | 17,717 | ||
| Goodwill | (8) | 5,593 | 3,433 | |
| Investments accounted for at equity | 1,930 | 1,656 | ||
| Equity instruments | 0 | 0 | ||
| Other non-current financial assets | 867 | 241 | ||
| Deferred tax assets | 3,381 | 1,849 | ||
| 81,068 | 72,613 | |||
| Current assets | ||||
| Inventories | 27,622 | 17,077 | ||
| Trade accounts receivable | 55,625 | 69,435 | ||
| Contract assets | (9) | 50,782 | 38,353 | |
| Contract costs | 3,777 | 3,712 | ||
| Other current financial assets | (10) | 1,538 | 672 | |
| Other current non-financial assets | (10) | 12,319 | 7,389 | |
| Income tax receivables | 910 | 448 | ||
| Time deposits | 206 | 2,199 | ||
| Cash and cash equivalents | 84,688 | 103,798 | ||
| 237,467 | 243,083 | |||
| Total assets | 318,535 | 315,696 |
| 30 June 2022 | 31 Dec. 2021 | ||
|---|---|---|---|
| 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 | (11) (12) | 91,264 | 92,274 |
| Treasury shares | (11) | -221 | -384 |
| Adjustments for foreign currency translation | 1,144 | 106 | |
| Equity attributable to equity holders of the parent company | 126,605 | 126,414 | |
| Non-controlling interests | 3,146 | 3,436 | |
| Total shareholders' equity | 129,751 | 129,850 | |
| Non-current liabilities | |||
| Liabilities to banks and other financial liabilities | 270 | 3,820 | |
| Provisions | (13) | 18,645 | 19,992 |
| Lease liabilities | 30,313 | 29,785 | |
| Other non-current financial liabilities | (14) | 3,784 | 858 |
| Deferred tax liabilities | 7,900 | 6,166 | |
| 60,912 | 60,621 | ||
| Current liabilities | |||
| Liabilities to banks and other financial liabilities | 106 | 1,085 | |
| Contract liabilities | (9) | 66,439 | 65,388 |
| Trade accounts payable | 18,760 | 13,422 | |
| Provisions | 11,203 | 17,415 | |
| Lease liabilities | 8,235 | 7,794 | |
| Other current financial liabilities | (14) | 5,833 | 4,996 |
| Other current non-financial liabilities | (14) | 12,931 | 10,133 |
| Current tax liabilities | 4,365 | 4,992 | |
| 127,872 | 125,225 | ||
| Total shareholders' equity and liabilities | 318,535 | 315,696 |
Consolidated cash flow statement
| 01-06/2022 EUR thousand |
01-06/2021 EUR thousand unaudited |
||
|---|---|---|---|
| Note | unaudited | ||
| Profit/loss before tax | -699 | 5,281 | |
| Net interest income/expense | 275 | 259 | |
| Foreign currency translation | -226 | -230 | |
| Profit/loss from the disposal of non-current assets | -1 | 7 | |
| Depreciation of property, plant, and equipment, and | |||
| amortisation of intangible assets | (6) | 8,992 | 7,020 |
| Earnings from investments accounted for at equity | -119 | -242 | |
| Change in provisions | (13) | -5,690 | -1,982 |
| Profit from business combinations | 0 | -1,657 | |
| Other non-cash income/expenses | 206 | 165 | |
| Net cash flow from operations | 2,738 | 8,621 | |
| Change in inventories | -10,344 | -1,021 | |
| Change in trade accounts receivable | 19,788 | 6,567 | |
| Change in contract assets | (9) | -12,429 | -13,162 |
| Change in contract costs | -66 | 476 | |
| Change in other receivables | -5,453 | -1,391 | |
| Change in trade accounts payable | 5,197 | 2,998 | |
| Change in contract liabilities | (9) | -3,506 | -5,551 |
| Change in other liabilities | (14) | 3,536 | 7,437 |
| Change in net working capital | -3,277 | -3,647 | |
| Interest paid | -320 | -267 | |
| Interest received | 43 | 15 | |
| Dividends received | 0 | 124 | |
| Income taxes paid/refunded | -2,482 | -1,910 | |
| Net cash flow from operating activities | -3,298 | 2,936 |
| 01-06/2022 | 01-06/2021 | ||
|---|---|---|---|
| EUR thousand | EUR thousand | ||
| Note | unaudited | unaudited | |
| Cash inflows from the sale of intangible assets | 0 | 5 | |
| Cash inflows from the sale of property, plant and equipment | 132 | 100 | |
| Cash inflows from the sale of securities and from equity | |||
| instruments and time deposits | 1,993 | 0 | |
| Cash outflows for the purchase of intangible assets | -528 | -1,701 | |
| Cash outflows for the purchase of property, plant and | |||
| equipment | -3,690 | -1,240 | |
| Cash outflows for time deposits | 0 | -4,606 | |
| Cash outflows for the acquisition of associated companies | -35 | 0 | |
| Cash outflows for the acquisition of subsidiaries, less | |||
| acquired cash and cash equivalents | -2,097 | -1,991 | |
| Net cash flow from investing activities | -4,225 | -9,433 | |
| Dividends paid to owners | (11) | -2,654 | -1,990 |
| Dividends paid to non-controlling interests | -896 | -206 | |
| Purchase of treasury shares | 0 | -384 | |
| Cash inflows from loans and other financing | 21 | 0 | |
| Cash outflows for repayment of loans and other financing | -4,548 | -646 | |
| Cash outflows for payments of principal on lease liabilities | -4,215 | -3,783 | |
| Net cash flow from financing activities | -12,292 | -7,009 | |
| Change in cash and cash equivalents: | |||
| Net cash flow from operating activities | -3,298 | 2,936 | |
| Net cash flow from investing activities | -4,225 | -9,433 | |
| Net cash flow from financing activities | -12,292 | -7,009 | |
| Net change in cash and cash equivalents | -19,815 | -13,506 | |
| Cash and cash equivalents at start of period | 103,798 | 91,265 | |
| Cash-flow related change in cash and cash equivalents | -19,815 | -13,506 | |
| Foreign currency translation | 705 | 468 | |
| Other loss allowances | 0 | 6 | |
| Cash and cash equivalents at end of period | 84,688 | 78,233 |
Consolidated statement of changes in shareholders' equity
| Cash flow to equity Retained IAS 19 Option hedge Foreign holders of Non earnings in EUR thousand Share Capital reserve reserve reserve Treasury currency the parent controlling (unaudited) capital reserves (net of tax) (net of tax) (net of tax) shares translation company interests Note (11) (11) (11) As at 1 January 2022 13,280 21,138 -6,284 602 -346 98,302 -384 106 126,414 3,436 Profit/loss for the period -377 -377 89 Other comprehensive income 2,309 60 1,038 3,408 73 Total comprehensive income 2,309 60 -377 1,038 3,032 161 Dividends -2,654 -2,654 -896 Change in treasury shares -44 163 119 Changes in connection with put options -167 -167 -1,148 Acquisition of non controlling interests 1,592 Other changes -47 -92 -138 |
As at 30 June 2022 | 13,280 | 21,138 | -3,975 | 556 | -286 | 94,968 | -221 | 1,144 | 126,605 | 3,146 | 129,751 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| -138 | ||||||||||||
| 1,592 | ||||||||||||
| -1,314 | ||||||||||||
| 119 | ||||||||||||
| -3,550 | ||||||||||||
| 3,193 | ||||||||||||
| 3,481 | ||||||||||||
| -288 | ||||||||||||
| 129,850 | ||||||||||||
| attributable | Total share holders' equity |
| As at 30 June 2021 | 13,280 | 21,138 | -6,002 | 404 | - 280 | 83,638 | -384 | - 629 | 111,165 | 3,903 | 115,068 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Other changes | 172 | 172 | 172 | ||||||||
| shares | -384 | -384 | - 384 | ||||||||
| Change in treasury | |||||||||||
| Dividends | -1,990 | -1,990 | -206 | -2,196 | |||||||
| Total comprehensive income |
131 | -157 | 3,741 | 424 | 4,139 | 359 | 4,498 | ||||
| income | 131 | -157 | 424 | 398 | -29 | 369 | |||||
| Other comprehensive | |||||||||||
| Profit/loss for the period |
3,741 | 3,741 | 388 | 4,129 | |||||||
| As at 1 January 2021 | 13,280 | 21,138 | -6,133 | 232 | -123 | 81,887 | 0 | -1,053 | 109,228 | 3,751 | 112,979 |
| Note | (11) | (11) | (11) | ||||||||
| (unaudited) | capital | reserves | (net of tax) | (net of tax) | (net of tax) | earnings | shares | translation | company | interests | equity |
| in EUR thousand | Share | Capital | IAS 19 reserve |
Option reserve |
hedge reserve |
Retained | Treasury | Foreign currency |
holders of the parent |
Non controlling |
share holders' |
| Cash flow | attributable to equity |
Total |
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, Frequentis, 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 Frequentis Group'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 2021 and are not necessarily indicative of the year-end results for 2022.
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) have 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 portion 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 incurred evenly during the year. In the first half of 2021, Frequentis reported a profit for the period. This was attributable to one-off effects such as cost reductions, successful project acceptances, which led to higher revenues, 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.
Consolidated group
Besides Frequentis AG, which is the parent company of the Group, the consolidated financial statements of Frequentis AG include 6 (31 December 2021: 6) domestic subsidiaries and 28 (31 December 2021: 26) foreign subsidiaries controlled by Frequentis AG.
Changes to the consolidated group
On 3 January 2022, Frequentis acquired a 51% interest in Regola S.r.l. (based in Turin, Italy). This Italian company's innovative software solutions complement the Frequentis public safety product portfolio and therefore support its long-term growth strategy in this business domain.
Frequentis and Regola supply integrated solutions to improve the response of emergency services. Regola's command and control (CAD) solutions complement the Frequentis portfolio in the area of public safety and adjacent markets. Its main product is the UNIQUE CAD product family, accompanied by products offered on a software-as-a-service basis. The aim is to .step up international sales and marketing.
The purchase agreement was signed on 22 October 2021 and the transaction was closed on 3 January 2022.
| Fair value | Fair value | |
|---|---|---|
| as at | as at | |
| 3 Jan. 2022 | 3 Jan. 2022 | |
| 100% | 51% | |
| EUR thousand | EUR thousand | |
| Basic purchase price | 4,020 | 2,050 |
| Earn-out payments | 980 | 500 |
| 5,000 | 2,550 | |
| Regola NFP (net financial position) | -130 | -66 |
| Target Regola NFP | 0 | 0 |
| -130 | -66 | |
| Regola working capital | 1,104 | 563 |
| Target Regola working capital | 560 | 286 |
| 544 | 277 | |
| Total consideration | 5,414 | 2,761 |
The contractually agreed purchase price comprised the following components:
The earn-out payments are based on the relevant annual financial statements in accordance with the Italian generally accepted accounting principles and are defined as follows:
| Earn-out payment |
|
|---|---|
| EUR thousand | |
| EBIT 31 Dec. 2021 more than EUR 539 thousand | 250 |
| EBIT 31 Dec. 2022 more than EUR 746 thousand | |
| or EBIT 31 Dec. 2021 + EBIT 31 Dec. 2022 more than EUR 1,285 | |
| thousand | 250 |
| 500 | |
| or | |
| EBIT 31 Dec. 2021 + EBIT 31 Dec. 2022 more than EUR 1,285 thousand | 500 |
Based on the local annual financial statements as at 31 December 2021, Regola achieved the EBIT target for 2021 and the earn-out payment of EUR 250 thousand was paid in 2022. From the information available, Frequentis estimates that the EBIT target for 2022 will also be achieved, resulting in a further earn-out payment of EUR 250 thousand.
In accordance with the purchase agreement, EUR 2,050 thousand was paid at the closing date, 3 January 2022, and EUR 461 thousand (earn-out-payment of EUR 250 thousand and EUR 211 thousand due to NFP and working capital adjustments) was paid as at 1 April 2022 following final approval of the local financial statements for 2021.
In addition, the purchase agreement includes an option for non-controlling shareholders in Regola to transfer their interests to Frequentis. If this option is exercised, Frequentis has an irrevocable obligation to acquire the interests in this business. The put option can be exercised at the earliest on 31 December 2027. It is based on the enterprise value, calculated as a multiples valuation less net financial debt. The multiples valuation is based on EBIT as at 31 December 2027. The liability from this put option in the amount of TEUR 2,375, which has already been recognised as other non-current financial liabilities, reduced the non-controlling interests.
The fair value of the assets acquired and liabilities assumed was as follows:
| Fair value | Fair value | |
|---|---|---|
| as at | as at | |
| 3 Jan. 2022 | 3 Jan. 2022 | |
| 100% | 51% | |
| EUR thousand | EUR thousand | |
| Intangible assets | 3,440 | 1,754 |
| Property, plant, and equipment | 447 | 228 |
| Investments accounted for at equity | 152 | 77 |
| Other non-current receivables | 15 | 8 |
| Advance payments made | 201 | 103 |
| Trade accounts receivable | 5,977 | 3,048 |
| Other assets | 349 | 178 |
| Cash and cash equivalents | 414 | 211 |
| Deferred tax liabilities | -876 | -447 |
| Non-current lease liabilities | -175 | -89 |
| Provisions for severance payments | -816 | -416 |
| Contract liabilities | -4,557 | -2,324 |
| Trade accounts payable | -769 | -392 |
| Current lease liabilities | -65 | -33 |
| Other liabilities | -280 | -143 |
| Current tax liabilities | -83 | -42 |
| Other current provisions | -125 | -64 |
| Net assets | 3,249 | 1,657 |
| Consideration paid | 5,414 | 2,761 |
| Goodwill | 2,165 | 1,104 |
The goodwill from this acquisition was recognised using the full goodwill method and relates primarily to the anticipated synergies from use of the new technologies.
Transaction costs incurred for the business combination were recognised in current expenses for the period. The receivables assumed did not contain any receivables that are expected to be uncollectable, so the carrying amount corresponded to their fair value.
Since the acquisition, Regola has contributed revenues of EUR 2,216 thousand and EBIT of EUR -36 thousand to the consolidated figures of the Frequentis Group.
Initial consolidation of all assets acquired and liabilities assumed was based on preliminary figures as the valuations have not been finalised. 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.
In addition, Frequentis USA Holdings, Inc. (based in Maryland, USA) was established in February 2022. This company is wholly owned by Frequentis AG.
2. 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 2022 and were effective at that date:
- Property, Plant and Equipment Proceeds before Intended Use (IAS 16)
- Onerous Contracts Cost of Fulfilling a Contract (IAS 37)
- Reference to the Conceptual Framework (IFRS 3)
Where applicable, the above standards and amendments were adopted in these consolidated interim financial statements. The effects of these changes on the financial statements were insignificant.
Notes to the consolidated income statement and statement of financial position
3. 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, (remote) digital 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 market served by the Public Safety & Transport (PST) segment comprises public safety (police, fire, and emergency rescue services), public transport (railways), and maritime (coast guard, port operators, and organisations that monitor shipping on inland waterways). The Frequentis Group's PST segment delivers control centre solutions for police, ambulance, and fire service organisations, search and rescue, coastal surveillance, operations communications, and incident and crisis management. The acquisition made in 2022, which has been allocated to the PST segment, resulted in revenues of EUR 2,216 thousand and EBIT of EUR -36 thousand.
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.
| 01-06/2022 | Air Traffic Management EUR thousand |
Public Safety & Transport EUR thousand |
Reconciliation/ consolidation EUR thousand |
Total EUR thousand |
|---|---|---|---|---|
| Revenues | 112,769 | 54,260 | 267 | 167,296 |
| Change in inventories of finished goods and work in progress |
581 | 462 | 717 | 1,760 |
| Own work capitalised | 367 | 0 | 90 | 457 |
| Other operating income | 3,812 | 587 | 207 | 4,605 |
| Total income (operating performance) | 117,529 | 55,309 | 1,281 | 174,118 |
| EBIT | -2,125 | 1,706 | -124 | -543 |
| 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 business combinations | 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 |
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 the reporting period nor in the prior-year period did the Frequentis Group generate more than 10% of its total revenues with any single customer.
Orders on hand as at 30 June 2022 totalled EUR 498,085 thousand (30 June 2021: EUR 452,981 thousand). The ATM segment accounted for EUR 319,989 thousand (30 June 2021: EUR 292,119 thousand) of this amount and the PST segment for EUR 178,096 thousand (30 June 2021: EUR 160,862 thousand).
4. Revenues
The revenue split by category in the reporting period was as follows:
| 01-06/2022 | 01-06/2021 | |
|---|---|---|
| EUR thousand | EUR thousand | |
| New products and/or new customer business | 68,208 | 57,448 |
| IBB (installed base business) | 94,085 | 82,218 |
| Other revenues | 5,003 | 4,968 |
| 167,296 | 144,634 |
The regional breakdown of revenues by end-users was as follows:
| 01-06/2022 | 01-06/2021 | |
|---|---|---|
| EUR thousand | EUR thousand | |
| Europe | 109,106 | 101,526 |
| Americas | 27,974 | 19,918 |
| Asia | 18,263 | 12,581 |
| Australia/Pacific | 8,795 | 5,505 |
| Africa | 1,811 | 4,208 |
| Small orders (not allocated) | 1,347 | 896 |
| 167,296 | 144,634 |
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.
5. Other operating expenses
| 01-06/2022 | 01-06/2021 | |
|---|---|---|
| EUR thousand | EUR thousand | |
| Travel expenses | 4,500 | 1,479 |
| Other consulting expenses | 2,589 | 2,040 |
| External personnel | 2,124 | 1,334 |
| Advertising | 1,988 | 574 |
| Insurance expenses | 1,342 | 1,199 |
| Licenses (terms of up to 1 year) | 1,140 | 527 |
| Maintenance | 1,122 | 994 |
| Legal and consulting expenses | 1,102 | 2,571 |
| Energy | 940 | 507 |
| Changes in the fair value of forward exchange contracts | 924 | 1,034 |
| Operating expenses (buildings) | 676 | 571 |
| Transport | 648 | 552 |
| Exchange rate differences | 637 | 368 |
| Telephone and communications expenses | 613 | 505 |
| Cleaning | 504 | 392 |
| Bank charges and bank guarantee fees | 500 | 406 |
| Miscellaneous | 731 | 807 |
| 22,080 | 15,860 |
Since almost unrestricted travel is now possible, travel expenses were EUR 3,021 thousand higher than in the prior-year period. However, they are still lower than in 2019 (H1 2019: EUR 5,957 thousand).
EUR 2,409 thousand of the increase in other operating expenses is attributable to the acquisitions made in 2021 and 2022.
6. Depreciation of property, plant and equipment and amortisation of intangible assets
| 01-06/2022 EUR thousand |
01-06/2021 EUR thousand |
|
|---|---|---|
| Depreciation of right-of-use assets | 4,515 | 3,917 |
| Depreciation of property, plant and equipment and amortisation of | ||
| intangible assets | 3,961 | 2,931 |
| Depreciation and amortisation of low-value assets | 516 | 172 |
| 8,992 | 7,020 |
EUR 1,407 thousand of the increase in depreciation and amortisation is attributable to the acquisitions made in 2021 and 2022.
7. Income taxes
In January 2022, Austria decided to reduce the corporation tax rate stepwise from 25% to 23%. With effect from 1 January 2023, the applicable corporation tax rate will initially be reduced to 24% for the 2023 calendar year, followed by a further reduction in 2024 to bring it to the target rate of 23%. As at 30 June 2022 deferred tax assets and liabilities were therefore measured using the tax rates applicable for the years when reversal of the temporary differences is expected. The resulting remeasurement effect was EUR 126 thousand as at 30 June 2022 and was recognized in the line item "income taxes" in the income statement.
8. Goodwill
Goodwill increased by EUR 2,160 thousand in the reporting period. EUR 2,165 thousand of this amount was due to the acquisition of Regola S.r.l. and EUR -5 thousand was due to currency translation differences at Systems Interface Ltd.
For the purpose of impairment testing, goodwill has been allocated to the Frequentis Group's cashgenerating units (CGUs) as follows:
| 30 June 2022 EUR thousand |
31 Dec. 2021 EUR thousand |
|
|---|---|---|
| ATRiCS Advanced Traffic Solutions GmbH | 0 | 0 |
| Frequentis Comsoft GmbH | 909 | 909 |
| Frequentis Orthogon GmbH | 2,263 | 2,263 |
| Regola S.r.l. | 2,165 | |
| Systems Interface Ltd. | 203 | 208 |
| team Technology Management GmbH | 53 | 53 |
| 5,593 | 3,433 |
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 and contract liabilities
| 30 June 2022 | 31 Dec. 2021 | |
|---|---|---|
| EUR thousand | EUR thousand | |
| Contract assets | 76,890 | 70,643 |
| Advances from customers | -26,108 | -32,290 |
| 50,782 | 38,353 |
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 2021 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. In the case of orders for which the Group makes advance payments, the creditworthiness of customers is carefully reviewed. These orders primarily relate to work for public authorities or major international companies.
Contract liabilities comprise obligations to transfer goods or 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:
| 30 June 2022 | 31 Dec. 2021 | |
|---|---|---|
| EUR thousand | EUR thousand | |
| Advances for customer projects | 76,471 | 83,106 |
| Advances offset against contract assets | -24,056 | -29,075 |
| 52,415 | 54,031 | |
| Other contract liabilities | 4,102 | 6,332 |
| Other contract liabilities offset against contract assets | -2,052 | -3,215 |
| 2,050 | 3,117 | |
| Accrued revenue for maintenance contracts | 11,357 | 7,500 |
| Liabilities for outstanding performance obligations for customer | ||
| orders after final invoicing (current) | 554 | 708 |
| Liabilities for outstanding performance obligations for customer | ||
| orders after final invoicing (non-current) | 63 | 32 |
| Total contract liabilities | 66,439 | 65,388 |
Other contract liabilities contain contractual claims to advance payments.
10.Other current assets
| 30 June 2022 | 31 Dec. 2021 | |
|---|---|---|
| EUR thousand | EUR thousand | |
| Receivables from grants and subsidies | 1,182 | 435 |
| Positive fair value of cash flow hedges and MTM valuation | 108 | 92 |
| Other financial assets | 248 | 145 |
| Other current financial assets | 1,538 | 672 |
| Prepaid expenses and deferred charges | 7,725 | 4,462 |
| Receivables from fiscal authorities (excluding income taxes) | 2,409 | 1,281 |
| Other assets | 2,185 | 1,646 |
| Other current non-financial assets | 12,319 | 7,389 |
11.Share capital and retained earnings
Treasury shares
At the Extraordinary General Meeting of Frequentis AG on 20 September 2019, the Executive Board was authorised, pursuant to Section 65 (1b) AktG, for a period of five years from the date of the resolution, therefore up to and including 19 September 2024, with the consent of the Supervisory Board but without a further resolution by the General Meeting, to sell or use treasury shares, also in a manner other than by sale on the stock exchange or by means of a public offer, in particular to sell or use treasury shares
- a) to grant treasury shares to employees, senior managers, and/or members of the Executive Board or the managing boards of its affiliates, including for purposes of share transfer programmes, in particular stock options, long-term incentive plans, and other stock ownership plans,
- b) to deliver treasury shares under convertible bonds issued by Frequentis AG,
- c) as consideration for the acquisition of entities, business operations, parts of business operations, or shares in one or several domestic or foreign companies, and
- d) for any other legally permissible purpose
and to exclude the subscription rights of shareholders. This authorisation may be exercised in full or in part or in several tranches and for several purposes.
With the approval of the Supervisory Board, in May 2022 the Executive Board passed a resolution to transfer 6,590 treasury shares to the Chairman of the Executive Board for achievement of the targets for the LTIP 2019, under exclusion of the subscription rights of shareholders.
The change in shareholders' equity is presented in the consolidated statement of changes in shareholders' equity.
As at 30 June 2022, Frequentis held 8,910 treasury shares (30 June 2021: 15,500).
Dividend
The Annual General Meeting of Frequentis AG on 2 June 2022 passed a resolution to pay a dividend of EUR 0.20 per no-par-value share entitled to the dividend for the 2021 financial year. The dividend totalling EUR 2,654 thousand was paid in June 2022.
12.Share-based payment
Frequentis AG agreed long-term incentive plans with the Chairman of the Executive Board in 2019, 2020, 2021, and 2022 (LTIP 2019, LTIP 2020, LTIP 2021, and LTIP 2022).
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 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 LTIPs. However, the beneficiary may only sell the number of shares awarded under the current LTIPs or any subsequent long-term incentive plan 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), a maximum of 14,000 shares for the LTIP 2019, 17,000 shares each for the LTIP 2020 and 2021, and maximum of 18,000 shares for the LTIP 2022 (gross, i.e., before deduction of taxes and fees) but no more than 200% of the beneficiary's annual gross base salary will be granted if the targets are fully achieved. Settlement is effected by transferring the number of shares corresponding to the net amount of the award to the respective securities account.
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 the target achievement is less than 50%.
Apart from the achievement of the targets, the Executive Board member does not have to provide any consideration for the shares awarded.
In order to qualify for the allocation of shares in the company, targets must be achieved. The achievement of the targets for each of the plans is measured over a three-year performance period.
The following table summarises the main conditions for the share-based payment granted in the current financial year and previous years:
| allocated | None | None | None | None |
|---|---|---|---|---|
| Bonus shares | ||||
| shares | 18,000 | 17,000 | 17,000 | 14,000 |
| Maximum no. of | ||||
| Expected no. of shares | 16,425 | 17,000 | 17,000 | 14,000 |
| achievement | 91% | 127% | 130% | 103% |
| Expected target | ||||
| Vesting date | 30 Apr. 2025 | 30 Apr. 2024 | 30 Apr. 2023 | 30 Apr. 2022 |
| End of service period | 31 Dec. 2024 | 31 Dec. 2023 | 31 Dec. 2022 | 31 Dec. 2021 |
| Grant date | 2 June 2022 | 15 June 2021 | 14 May 2020 | 30 Sep. 2019 |
| General Meeting | 2 June 2022 | 20 May 2021 | 14 May 2020 | 20 Sep. 2019 |
| Date of approval by | ||||
| Beginning of the plan | 1 Jan. 2022 | 1 Jan. 2021 | 1 Jan. 2020 | 1 Jan. 2019 |
| LTIP 2022 | LTIP 2021 | LTIP 2020 | LTIP 2019 |
| LTIP 2022 | LTIP 2021 | LTIP 2020 | LTIP 2019 |
|---|---|---|---|
| Total shareholder return (TSR) |
Total shareholder return (TSR) |
Total shareholder return (TSR) |
Total shareholder return (TSR) |
| Revenue growth | Increase in operating performance through key accounts |
Orders on hand | Organic growth in operating performance |
| Earnings increase | Growth through new business development |
Growth in the regions | EBIT margin |
| Employee satisfaction | Growth through acquisitions |
Profit margin | |
| Development of key | |||
| accounts | |||
| Non-refinanced R&D | |||
| expenses as a percentage of | |||
| total operating performance | |||
| Employee satisfaction | |||
| Customer satisfaction |
The agreed targets are measured against the following performance indicators:
In May 2022, the targets set for the LTIP 2019 were evaluated for the performance period from 1 January 2019 to 31 December 2021 and it was established that they had been fully met, so 14,000 treasury shares (gross number of shares before taxes) were to be transferred to the Chairman of the Executive Board. Taking into consideration the tax to be withheld, 6,590 treasury shares were transferred in this context.
Of the expected total future expense relating to the LTIPs, 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 relative to the share price on the date of the agreement, multiplied by the number of shares granted and the expected target achievement. In the reporting period, EUR 227 thousand (H1 2021: EUR 185 thousand) including payroll-related costs was recognised in personnel expenses in the consolidated statement of comprehensive income for the LTIPs.
For the LTIPs, it was estimated that both the market-oriented targets and the non-market-oriented targets will be met. Therefore, 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.
13.Non-current provisions
| 30 June 2022 | 31 Dec. 2021 |
|---|---|
| EUR thousand | EUR thousand |
| 15,421 | 16,110 |
| 4,756 | 6,046 |
| -2,939 | -3,427 |
| 1,817 | 2,619 |
| 334 | 389 |
| 1,073 | 874 |
| 18,645 | 19,992 |
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 reduction in provisions for severance payments and provisions for pensions is attributable to the increase in the discount rate.
Obligations for severance payments were measured using the following parameters:
| 30 June 2022 | 31 Dec. 2021 | |
|---|---|---|
| Interest rate | 3.0% | 1.0% |
| Wage and salary trend | 4.0% | 3.3% |
The pension benefit obligations were measured using the following parameters:
| 30 June 2022 | 31 Dec. 2021 | |
|---|---|---|
| Interest rate | 3.0% | 1.3% |
| Retirement age | 60/65 years | 60/65 years |
The other non-current provisions contain provisions of EUR 660 thousand (31 December 2021: EUR 529 thousand) for projects because the expected future expenses exceed expected revenues.
14.Other liabilities
The other liabilities comprise:
| 30 June 2022 | 31 Dec. 2021 | |
|---|---|---|
| EUR thousand | EUR thousand | |
| Liability for put options, non-controlling interests | 2,375 | 0 |
| Loans from non-controlling interests | 440 | 449 |
| Earn-out payment liability | 404 | 402 |
| Loan from FFG (Austrian Research Promotion Agency) | 284 | 0 |
| Other liabilities | 281 | 7 |
| Total non-current financial liabilities | 3,784 | 858 |
| Negative fair values of cash flow hedges and MTM valuation | 2,277 | 1,562 |
| Liability for put options held by non-controlling interests | 2,036 | 2,036 |
| Earn-out payment liability | 250 | 0 |
| Other liabilities | 1,270 | 1,398 |
| Total current financial liabilities | 5,833 | 4,996 |
| Accrual for holidays not yet taken | 7,129 | 3,919 |
| Liabilities to the Austrian fiscal authorities (excluding income taxes) | 2,981 | 2,694 |
| Liabilities to health insurers | 934 | 370 |
| Accrual for overtime | 725 | 710 |
| Advances received in connection with grants and subsidies | 320 | 1,065 |
| Accrual for consultancy costs | 230 | 702 |
| Other liabilities | 612 | 673 |
| Total current non-financial liabilities | 12,931 | 10,133 |
Other information
15.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).
| Total carrying |
||||||
|---|---|---|---|---|---|---|
| 30 June 2022 | Measured at fair value | Measured at amortised cost | amount | |||
| Hedge | Mandatory recognition at fair value through |
Equity instrument – at fair value through |
Financial | Other financial |
||
| accounting | profit or loss | profit or loss | assets | liabilities | ||
| Financial assets |
||||||
| Equity instruments | 0 | 0 | ||||
| Time deposits | 206 | 206 | ||||
| Trade accounts receivable | 55,625 | 55,625 | ||||
| Financial derivatives | 108 | 108 | ||||
| Other current and non current assets |
2,297 | 2,297 | ||||
| Cash and cash equivalents | 84,688 | 84,688 | ||||
| Total | 108 | 0 | 142,816 | 142,924 | ||
| Financial liabilities | ||||||
| Liabilities to banks and other financial liabilities |
376 | 376 | ||||
| Trade accounts payable | 18,760 | 18,760 | ||||
| Lease liabilities | 38,548 | 38,548 | ||||
| Derivative financial | ||||||
| instruments | 464 | 1,813 | 2,277 | |||
| Other liabilities | 5,065 | 2,275 | 7,340 | |||
| Total | 464 | 6,878 | 59,959 | 67,301 |
| Total | ||||||
|---|---|---|---|---|---|---|
| 31 Dec. 2021 | Measured at fair value | Measured at amortised cost | carrying amount |
|||
| Hedge | Mandatory recognition at fair value through |
Equity instrument – at fair value through |
Financial | Other financial |
||
| accounting | profit or loss | profit or loss | assets | liabilities | ||
| Financial | ||||||
| assets | ||||||
| Equity instruments | 0 | 0 | ||||
| Time deposits | 2,199 | 2,199 | ||||
| Trade accounts receivable | 69,435 | 69,435 | ||||
| Financial derivatives | 92 | 92 | ||||
| Other current and non | ||||||
| current assets | 821 | 821 | ||||
| Cash and cash equivalents | 103,798 | 103,798 | ||||
| Total | 92 | 0 | 176,253 | 176,345 | ||
| Financial liabilities | ||||||
| Liabilities to banks and other | ||||||
| financial liabilities | 4,905 | 4,905 | ||||
| Trade accounts payable | 13,422 | 13,422 | ||||
| Lease liabilities | 37,579 | 37,579 | ||||
| Derivative financial | ||||||
| instruments | 716 | 846 | 1,562 | |||
| Other liabilities | 2,438 | 1,854 | 4,292 | |||
| Total | 716 | 3,284 | 57,760 | 61,760 |
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 liabilities relating to the acquisition of ATRiCS and Regola were 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 liabilities relating to the put options of the non-controlling interests in ELARA Leitstellentechnik GmbH and Regola were recognised at fair value, while changes were recognised in equity with no impact on profit or loss in accordance with IFRS 10. 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 1: | ||||
| Measurement based on quoted prices | n/a | |||
| 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 liabilities, liabilities under put options |
Derivative financial instruments
The carrying amount of derivative financial instruments 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 2022.
The following table shows the development of derivative financial instruments:
| 30 June | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | Derivative | Cash flow hedge | For MTM valuation | Total | ||||
| Purchase | Fair | Fair | ||||||
| amount | Average | Foreign | value | Foreign | value | Fair value | ||
| Sale | Sale | EUR | hedging | currency | EUR | currency | EUR | EUR |
| currency | amount | thousand | rate | amount | thousand | amount | thousand | thousand |
| AUD | -4,348 | 2,872 | 1.51 | 0 | 0 | -4,348 | 27 | 27 |
| CZK | 18,300 | -704 | 26.01 | 0 | 0 | 18,300 | 14 | 14 |
| GBP | -3,300 | 3,848 | 0.86 | 0 | 0 | -3,300 | 38 | 38 |
| HUF | -30,000 | 74 | 402.93 | 0 | 0 | -30,000 | 2 | 2 |
| SGD | 427 | -265 | 1.61 | 0 | 0 | 427 | 27 | 27 |
| 7,233 | 0 | 108 | 108 | |||||
| AUD | -1,821 | 1,115 | 1.63 | 0 | 0 | -1,821 | -73 | -73 |
| CAD | -2,473 | 1,620 | 1.53 | 0 | 0 | -2,473 | -144 | -144 |
| CHF | -130 | 120 | 1.09 | 0 | 0 | -130 | -11 | -11 |
| GBP | -7,603 | 8,228 | 0.92 | -6,479 | -454 | -1,124 | -97 | -551 |
| HKD | -230 | 25 | 9.11 | 0 | 0 | -230 | -3 | -3 |
| NOK | -1,672 | 152 | 11.01 | 0 | 0 | -1,672 | -8 | -8 |
| SGD | -2,695 | 1,677 | 1.61 | 0 | 0 | -2,695 | -152 | -152 |
| USD | -16,676 | 14,426 | 1.16 | -77 | -10 | -16,600 | -1,325 | -1,335 |
| 27,363 | - 464 | -1,813 | -2,277 |
| 31 Dec. | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | Derivative | Cash flow hedge | For MTM valuation | Total | ||||
| Purchase | Fair | Fair | ||||||
| amount | Average | Foreign | value | Foreign | value | Fair value | ||
| Sale | EUR | hedging | currency | EUR | currency | EUR | EUR | |
| Currency | amount | thousand | rate | amount | thousand | amount | thousand | thousand |
| GBP | 349 | -401 | 0.87 | 0 | 0 | 349 | 8 | 8 |
| SGD | 427 | -265 | 1.61 | 0 | 0 | 427 | 12 | 12 |
| USD | -10,860 | 9,502 | 1.14 | 0 | 0 | -10,860 | 72 | 72 |
| 8,836 | 0 | 92 | 92 | |||||
| AUD | -2,351 | 1,439 | 1.63 | 0 | 0 | -2,351 | -49 | -49 |
| CAD | -2,600 | 1,703 | 1.53 | 0 | 0 | -2,600 | -28 | -28 |
| CHF | -345 | 318 | 1.09 | 0 | 0 | -345 | -17 | -17 |
| GBP | -15,045 | 16,706 | 0.90 | -7,572 | -695 | -7,474 | -274 | -969 |
| HKD | -700 | 77 | 9.11 | 0 | 0 | -700 | -2 | -2 |
| NOK | -1,672 | 152 | 11.01 | 0 | 0 | -1,672 | -13 | -13 |
| SGD | -5,030 | 3,120 | 1.61 | 0 | 0 | -5,030 | -128 | -128 |
| USD | -13,385 | 11,296 | 1.18 | -327 | -21 | -13,058 | -335 | -356 |
| 34,811 | - 716 | - 846 | -1,562 |
For the carrying amount of the cash flow hedge and the carrying amount of the MTM valuation, a positive fair value of EUR 108 thousand was recognised in other receivables as at 30 June 2022 (31 December 2021: EUR 92 thousand), while a negative fair value of EUR 2,277 thousand was recognised in other liabilities (31 December 2021: EUR 1,562 thousand). When the hedged item (revenue) is realised, the amount relating to the hedging transaction recognised in other comprehensive income is reclassified to revenues.
16.Information on business relations with related parties
Transactions with associated companies and related parties are not material and mainly comprise deliveries of goods 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 note 38 in the annual report for 2021.
17.Significant events after the reporting date
There were no events after the reporting date that would have impacted the interim financial statement as at 30 June 2022.
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 2022, 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 2022, 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 2022
Norbert Haslacher Chairman of the Executive Board
Peter Skerlan Member of the Executive Board
Hermann Mattanovich Member of the Executive Board
Financial Calendar
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: Barbara Fürchtegott Tel. +43 1 81150 4631 [email protected] www.frequentis.com/en/pr
Publishing details
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