Interim / Quarterly Report • Aug 25, 2022
Interim / Quarterly Report
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VARTA AG Group Half-year Financial Report
as of June 30, 2022
MISSION
Through continuous investment in research and development, we set the benchmark in battery technology and customization to strive for market leadership in our business segments.
| VARTA AG – SELECTED GROUP KPIs |
||
|---|---|---|
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
| Revenue | 376,810 | 397,562 |
| EBITDA | 66,234 | 111,912 |
| Adjustments: | ||
| Cost of share-based payment | 9 | 285 |
| Costs of M&A transactions | 2,665 | 71 |
| Adjusted EBITDA | 68,908 | 112,268 |
| Adjusted EBITDA Margin (%) | 18.3% | 28.2% |
| Net income | 2,784 | 45,593 |
| Earnings per share | 0.07 | 1.13 |
| Investments (CAPEX) | 66,852 | 85,648 |
| Free Cash Flow | -97,923 | -119,326 |
| Equity ratio* | 33.1% | 42.6% |
| Balance sheet total* | 1,343,390 | 1,250,173 |
| Employees at the end of quarter | 4,712 | 4,606 |
* Comparison period relates to December 31, 2021
VARTA AG produces and markets a comprehensive battery portfolio that ranges from microbatteries, household batteries and energy storage systems up to customer-specific battery solutions for a wide range of applications, setting the industry standards as technology leader in many important areas. As the parent company of the Group, it is active in the "Lithium-Ion Solutions & Microbatteries" and "Household Batteries" business segments. The "Lithium-Ion Solutions & Microbatteries" segment focuses on the microbatteries business, Lithium-Ion CoinPower, Lithium-Ion Round Power (former Lithium-Ion large cells), Lithium-Ion Solution (former Lithium-Ion battery pack) business and the new Lithium-Ion V4 Drive business. Through intensive research and development, VARTA sets global standards in many areas of lithium-ion technology and microbatteries and is therefore a recognized innovation leader in the most important growth markets of lithium-ion technology and primary hearing aid batteries. The "Household Batteries" segment covers the battery business for end customers, and includes household batteries, rechargeable batteries, chargers, portable power (power banks), lights and energy storage systems. The VARTA AG Group currently employs around 4,700 employees. At present, VARTA AG's operating subsidiaries are active in more than 75 countries around the world, with five production and assembly facilities located in Europe and Asia as well as distribution centers in Asia, Europe and the USA.
The "Lithium-Ion Solutions & Microbatteries" segment focuses on the microbatteries, Lithium-Ion CoinPower, Lithium-Ion Round Power, Lithium-Ion Solutions business as well as the new Lithium-Ion V4 Drive business.
The VARTA AG Group is a globally leading manufacturer of microbatteries for hearing aids and rechargeable microbatteries. The Company boasts reputable firms as clients and manufactures batteries in numerous important electro-chemical systems as well as in a variety of structural shapes and sizes, while the range of applications extends from hearing aid batteries to wireless headsets, all the way through to automotive applications that operate on microbatteries. The Group can call on extensive industry experience in the construction of high-performance, safe and needs-based lithium battery packs within the Lithium-Ion Solutions segment – for medical technology, robotics, connectivity and telecommunications applications. The product portfolio ranges from customer-specific battery packs to fully configured standard batteries that can be used immediately.
The "Household Batteries" segment covers the battery business for end customers and includes household device batteries, rechargeable batteries, chargers, portable power (power banks), lights and energy storage systems. In the Consumer segment (household device batteries), VARTA AG is the European market leader, with a production site in Germany. The innovative, high-quality products are developed and manufactured with state-of-the art technology and by leveraging the expertise of internationally qualified specialists. In addition to the innovative strength, the range of products, quality and design make the offer unique. For VARTA, an intensive focus on consumer lifestyles and close working relationships with retailers are essential to react quickly and flexibly to current device trends with the optimal energy solutions. Within the Energy Storage Systems (ESS) business segment, VARTA contributes to the implementation of the energy revolution with the development and production of energy storage systems. The energy storage solutions developed by VARTA in the home and mass storage markets range from compact, basic models such as the wall-mounted VARTA pulse neo to large-scale storage solutions including the VARTA flex storage for commercial applications. The ACcoupled systems feature integrated battery inverters and can be combined with all sources of green energy without the need for additional PV inverters. As such, they are suitable for all new installations and retrofit projects. The smart energy management system also ensures optimal use of self-produced solar energy and is designed to significantly increase domestic solar power use.
| Business development in the first half of 2022 |
6 | |
|---|---|---|
| Consolidated management report for the first half of fiscal year 2022 |
8 | |
| 1. | Group Structure8 | |
| 1.1 | Business model8 | |
| 1.2 | Strategy and Goals 9 | |
| 1.3 | Corporate Management9 | |
| 1.4 | Management and Control 10 | |
| 2. | Economic Report10 | |
| 2.1 | Markets and influencing factors 10 | |
| 2.2 | Macroeconomic and industry-related framework conditions 10 | |
| 2.3 | Key events in the first half of 2022 11 | |
| 2.4 | Business development 12 | |
| 3. | Development of Financial Position and | |
| Financial Performance13 | ||
| 3.1 | Financial Performance13 | |
| 3.2 | Financial Position 15 | |
| 4. | Investments excluding M&A (Capex)17 | |
| 5. | Financial Performance: Segments17 | |
| 6. | Employees18 | |
| 7. | Opportunity and Risk Report19 | |
| 8. | Outlook19 | |
| Interim financial statements of the VARTA AG Group as at | ||
| June 30, 2022 22 |
||
| Year | Consolidated Notes of VARTA AG for the First Half of Fiscal 2022 28 |
|
| Statement by the legal representatives56 |
VARTA AG is confident about the second half of the year, despite the global challenges
Despite continuing global challenges, VARTA is expecting a significantly stronger second half of the current fiscal year compared with the first six months of 2022. The start of production for new customer projects and the experience-based strong last quarter in the business unit Consumer Batteries are important growth and earnings factors, notwithstanding the ongoing consequences of COVID-19 and the war in Ukraine, which impacted the company in the first six months of the year. Local lockdowns and problems with semiconductor and energy deliveries led to production stoppages at some customers. In addition, prices for raw materials and energy rose steeply. As a result, on July 30, VARTA AG adjusted its outlook for 2022. The technology company now expects consolidated revenue of between € 880 m and € 920 m (instead of originally € 950 m to € 1 bn) and adjusted EBITDA of between € 200 m and € 225 m (originally € 260 m to € 280 m). Nevertheless, VARTA AG anticipates increased sales momentum for the coming months, especially in the lithium-ion business. Investment in the expansion of production capacities is ongoing.
Herbert Schein, CEO of VARTA AG: "The desire for mobility and independence in every area of life remains undiminished. Lithium-ion business is already the most important market for us today. We have set the course for our future growth with the development of our new lithium-ion round cells, which we will now be rapidly transferring to mass production, with the aim of occupying this market even more strongly in many lucrative areas. This also applies to the fast-growing business of energy storage systems, where we have presented new products that are in the pipeline."
Armin Hessenberger, CFO of VARTA AG: "Delays in customer projects, the continuing tense situation with regard to the prices for raw materials and energy, as well as high transport costs, have caused us to adjust our guidance for the year. Nevertheless, we continue to be very well positioned. New orders and customer projects starting in the second half of the year will ensure that 2022 will also be a good year for VARTA."
VARTA Aktiengesellschaft, Ellwangen (Jagst), Germany (VARTA AG), is the parent company of the corporate group. The business activities of VARTA AG and its subsidiaries encompasses the development, production and distribution as well as research and development of micro batteries, large format batteries, household batteries and energy storage solutions
The business activities of the VARTA AG Group are divided into two separate business segments: "Lithium-Ion Solutions & Microbatteries" and "Household Batteries".
The "Lithium-Ion Solutions & Microbatteries" segment focuses on the Microbatteries, Lithium-Ion CoinPower, Lithium-Ion Round Power (former Lithium-Ion Large Cells), Lithium-Ion Solutions (former Lithium-Ion Battery Packs) business and on the new Lithium-Ion V4Drive business. The "Household Batteries" segment covers the battery business for end customers, and includes household batteries, rechargeable batteries, chargers, portable power (power banks), lights and energy storage systems.
The Group develops, produces and sells a comprehensive battery portfolio that ranges from microbatteries, household batteries, large-format cells and energy storage systems all the way through to customer-specific battery solutions for a wide range of applications and end customer markets. Through intensive research and development, VARTA sets global standards in many areas of lithium-ion technology and microbatteries, and is a recognized innovation leader in the important growth markets of lithium-ion technology and primary hearing aid batteries.
Since the end of the first half of 2022, the Group has operated five production and battery manufacturing plants in Germany, Romania and Indonesia in addition to distribution centers in the USA, Europe and Asia, from which direct sales to customers in more than 75 countries around the world are coordinated. Operating on a global basis today, VARTA AG can proudly look back on 135 years of company history.
The "Lithium-Ion Solutions & Microbatteries" segment focuses on the Microbatteries, Lithium-Ion CoinPower, Lithium-Ion Round Power (former Lithium-Ion Large Cells) and Lithium-Ion Solutions (former Lithium-Ion Battery Packs) business and the new Lithium-Ion V4Drive business. Microbatteries and hearing aid batteries for the professional area are still shown within the Microbatteries business, while CoinPower with the OEM microbatteries is allocated to the Lithium-Ion CoinPower business. VARTA AG is one of the leading manufacturer of microbatteries for hearing aids and rechargeable microbatteries in the area of Entertainment. The Company boasts reputable firms as customers and manufactures batteries in numerous key electro-chemical systems as well as in a variety of structural shapes and sizes, while the range of applications extends from hearing aid batteries to wireless headsets all the way through to automotive applications operated by way of microbatteries. The Microbatteries and Lithium-Ion CoinPower business work together in a synergistic manner. In the area of Lithium-Ion V4Drive, VARTA is preparing to enter the e-mobility market. The first pilot plant is already supplying round cells for OEMs to use for testing purposes. The Lithium-Ion RoundPower business also focuses on potential uses outside e-mobility. The Group can call on extensive industry experience in the construction of high-performance, safe and needsbased lithium battery packs within the Lithium-Ion Solutions business – for medical technology, robotics, connectivity and telecommunications applications. The product portfolio ranges from customer-specific battery packs to fully configured standard batteries that can be used immediately.
The "Household Batteries" segment covers the battery business for end customers and includes household device batteries, rechargeable batteries, chargers, portable power (power banks), lights and energy storage systems. In the Consumer (household device batteries) business, VARTA AG is a European market leader, with production located in Germany. The innovative, high-quality products are developed and manufactured using cutting-edge technology and by leveraging the expertise of internationally qualified specialists. A combination of innovative capacity, breadth, quality and design make the product range unique. For VARTA, a pronounced focus on consumer lifestyles and close working relationship with retail partners are essential in order to react quickly and flexibly to emerging device trends with the best energy solutions. By developing and manufacturing energy storage solutions within the Energy Storage Systems (ESS) business, VARTA is contributing to the energy revolution. The energy storage solutions developed by VARTA in the home and mass storage markets range from compact, basic models such as the wall-mounted VARTA pulse neo to large-scale storage solutions including the VARTA flex storage for commercial applications. The AC-coupled systems feature integrated battery inverters and can be combined with all sources of green energy without the need for additional PV inverters. As such, they are suitable for all new installations and retrofit projects. The smart energy management system also ensures optimal use of self-produced solar energy and is designed to significantly increase domestic solar power use.
With its two segments, the Group is well positioned to take advantage of relevant growth trends such as demographic change, technological progress, increased connectivity, renewable energies and e-mobility.
The VARTA AG Group focuses on the following growth areas and objectives:
The VARTA AG Group is managed on the basis of internally defined financial and nonfinancial key performance indicatores to pursue a strategy focused on sustained value growth. As in the previous year, the following most significant key financial indicators were used for the purposes of corporate management.
Due to the dynamic growth of the Group, the development of the number of employees continues to be a key non-financial performance indicator.
As of June 30, 2022, the Executive Board of VARTA AG comprised three members: Herbert Schein (Chairman of the Executive Board/CEO), Armin Hessenberger (Chief Financial Officer/CFO) and Rainer Hald (Chief Technology Officer/CTO). The Executive Board members share joint responsibility for the management of the company.
As of August 1, 2022, Markus Hackstein (Executive Director) was appointed as a new member of the Executive Board.
As at June 30, 2022 the Supervisory Board was composed of the following members: Prof. DDr. Michael Tojner (Chairman), Dr. Harald Sommerer (Vice Chairman), Sven Quandt, Martin Ohneberg, Prof. Dr. Werner Tillmetz and Dr. Michael Pistauer.
The markets in which the VARTA AG Group operates and the influence factors to which it is exposed have deteriorated since the first half of the previous year. The various economic challenges resulting from rising raw material and energy prices, the effects of the war in Ukraine, the ongoing global pandemic and the insufficient availability of semiconductors are burdening either us directly or our customers.
The VARTA AG Group manufactures and sells batteries around the world, benefiting still from the trend towards mobile devices that relies on a battery. This infers that any negative trends in the macroeconomic environment would not entail any direct consequences for the business model, as the majority of products are unaffected by the economic cycle. These are used, for example, in the medical setting or are established in the consumer sector.
In geographical terms, revenue distribution is diversified. Most of our products are sold in Europe, followed by Asia and North America (see chapter 3.1 Revenue). This therefore means that dependency on individual countries and their respective economic development is comparatively low. Irrespective of the main sales focus, the Asian market plays the most significant role owing to its market and customer structure; many major manufacturers of wireless headsets base their production activities in this region. The key influencing factors are dealt with in the following chapter 2.2 "Macroeconomic and industry-related framework conditions".
The markets and influencing factors have deteriorated compared with the first half of the previous year, as described in Chapter 2.1 "Markets and influencing factors". Production activities at our own sites have continued without interruption since the start of the COVID-19 pandemic, while no impact on supply chains has been identified either. However, some of our customers have been affected by this. Their suppliers have occasionally been delayed in the delivery of raw materials or semiconductors, which in turn has led to periods of production downtime. Our largest customers manufacture their products (TWS) in Asia, where individual factories have had their production processes temporarily restricted by energy failures or, in some cases, lockdowns caused by COVID-19. Delays in starting new customer projects resulted in lower sales growth. The trend in the USD/EUR exchange rate, price reductions in non-strategic assembly and higher
prices for raw materials also had an adverse impact, which could not be entirely offset by efficiency gains or could only be passed onto customers in part.
Demographic trends are key to the sales of batteries for healthcare applications, while it is trends in consumer electronics that exert the greatest influence on sales of batteries for entertainment applications and the trend towards wireless products that most impacts sales of products in the Solutions segment. The Consumer Batteries segment is benefiting from structural growth across a broad product portfolio (batteries, rechargeable batteries, chargers, portable power/power banks).
Increased life expectancy of people across all societies in addition to rising acceptance of hearing aids supports sales of such products and therefore also the sale of batteries for hearing aids. For example, in this context, the UN expects the global population of people aged 65 or over to at least double. In 2020, around 727 million people belonged to this age group, and this figure is forecast to rise to more than 1.5 billion by 2050 (United Nations: World Population Ageing 2020 Highlights). As such, this share of the population would increase from the current level of 9.3 % to approximately 16.0 % in 2050. At the same time, life expectancy is continually rising. In 2019, this stood at 72.6 years on a global basis, and is expected to rise to 77.1 years by 2050 (United Nations: World Population Prospects 2019 Highlights). The human requirement for hearing aids is therefore also set to rise. Rising demand for OTC hearing aids will also have a positive impact. These affordable hearing amplifiers offer fewer adjustment options that can be adapted by users themselves, e.g. via an app. Following their launch on the market at the end of 2020, a market share of more than 30 % is expected for these products by 2030 (IDTechEx, 2021). The increased use of rechargeable coin-shaped batteries will provide additional growth impetus.
Overall, growth of just under 37 % is expected in the area of hearing aids (2021: \$ 10.5 bn; 2030: \$ 14.3 bn) (IDTechEx, 2021).
The area of Entertainment is benefiting from very high customer demand for high-tech consumer products, in particular for wireless premium headsets with rechargeable lithium-ion cells. Improvements to the operating time and expanded functionality will see the market share of wireless headsets increased further. The more wireless devices that are developed, particularly for micro-applications (e.g. headsets), the stronger the position of the VARTA AG Group is here. For example, a study carried out by IDTechEX in 2021 revealed that continued strong demand for TWS (True Wireless Stereo) headsets is anticipated. From 2021 to 2030, market growth of 190 % in US dollars is expected here.
In terms of the global demand for consumer batteries, annual growth of 4.2 % for the period between 2020 and 2026 has been forecast. During this time, the market looks set to increase from \$ 39.9 bn to a value of \$ 52.5 bn. Annual growth of 3.3 % (Global Industry Analysts Inc, 2021) has been forecast for alkaline batteries.
The European market for branded batteries, which is crucial for VARTA, has also seen growth. According to the most recent figures published by the European Portable Battery Association (EPBA), growth in this segment came in at 3.6 % for 2020.
The ongoing war in Ukraine is increasingly leading to significant price increases in the raw materials and energy sectors, which are having a negative impact on the company's performance.
Apart from this, there were no other key events in the first half of the year.
The VARTA AG Group has achieved consolidated revenue of € 376.8 m in the first half of 2022 and is still 5.2 % below the corresponding period of the previous year (first half of 2021: € 397.6 m). During the first quarter, the company lay around 9 % below the comparable period in the previous year. Thus, the VARTA AG Group has reduced the gap to the previous year as of the current reporting date.
The performance of the "Lithium-Ion Solutions & Microbatteries" segment, in particular sales of lithium-ion CoinPower batteries for TWS, failed to meet expectations. Revenue is expected to be boosted by various new businesses starting in the second half of the year. The "Household Batteries" segment performed well. The performance of earnings is affected by a large number of external negative impacts.
Adjusted EBITDA amounted to € 68.9 m and is therefore € 43.4 m below the figure of the previous year. The sharp increases in raw material and energy prices, in particular, depressed earnings. For instance, the cost of material rose by € 41.4 m, which corresponds to an increase of 26.1 %. This is attributable to the increase in raw material prices. Furthermore, the company has built up security reserves in case of supply bottlenecks through an additional stockpiling of raw materials and supplies.
Consolidated income statement for the period January 1st – June 30th 2022 (unaudited) VARTA Aktiengesellschaft, Ellwangen (Jagst)
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Sales revenue | 376,810 | 397,562 |
| Increase in finished and unfinished goods | 50,147 | 31,056 |
| Own work capitalized | 6,167 | 1,586 |
| Other operating income | 49,013 | 21,637 |
| Cost of materials | -200,260 | -158,827 |
| Personnel expenses | -135,727 | -126,554 |
| Other operating expenses | -79,916 | -54,548 |
| EBITDA | 66,234 | 111,912 |
| Depreciation and amortization | -52,563 | -45,057 |
| Operating income (EBIT) | 13,671 | 66,855 |
| Financial income | 970 | 32 |
| Financial expenses | -3,504 | -1,727 |
| Other financial income | 766 | 119 |
| Other financial expenses | -5,422 | -1,928 |
| Financial result | -7,190 | -3,504 |
| Earnings before taxes | 6,481 | 63,351 |
| Income taxes | -3,697 | -17,758 |
| Net income | 2,784 | 45,593 |
| Appropriation of profit: | ||
| Shareholders of VARTA AG | 2,784 | 45,550 |
| Non-controlling interests | 0 | 43 |
In the first half of fiscal year 2022, revenue at the VARTA AG Group dropped by 5.2 % in comparison with the same period of the previous year, falling from € 397.6 m to € 376.8 m. This was due to the pandemic-related disruptions in production at our customers, the low availability of semiconductors and the temporary interruption of raw material and energy supplies, which led to lower demand for our products. In addition, customer projects were delayed.
Revenue in the "Lithium-Ion Solutions & Microbatteries" segment decreased from € 233.2 m in the previous year by 19.5 % to € 187.7 m in the current year. Pandemic-related production disruptions at our customers led to reduced demand for CoinPower cells, particularly for wireless premium headsets (TWS). In addition, our customers have reacted to the global shortage of semiconductors by using the electronic components available to them more selectively. As expected, no new major customer projects involving rechargeable lithium-ion cells for high-tech consumer products on the market were launched. However, we expect projects of this kind to be launched in the second half of 2022.
Revenue in the "Household Batteries" segment rose from € 164.4 m to € 189.1 m, reflecting growth of € 24.7 m overall. The high demand for household batteries and the very high growth rates in the area of energy storage solutions contributed to this positive development.
In the first half year, the cost of materials totaled € 200.3 m in comparison with € 158.8 m in the prior year. This equates to growth of 26.1 %. The cost of materials ratio in relation to total output (sales plus increase in finished goods and work in progress) rose from 37.1 % to 46.9 %. This above-average rise in the cost of materials ratio is the result of increased prices for raw materials and changes to the product mix. Restrained demand for CoinPower cells led to an increased share of products that contain a higher degree of raw materials.
Personnel expenses rose by 7.2 % from € 126.6 m to € 135.7 m. The reason for this is the increase in personnel costs owing to a higher number of employees, which increased from 4,606 to 4,712 members of staff.
Other operating expenses increased from € 54.5 m by 46.5 % to € 79.9 m overall. This development is attributable, among other factors, to the rise in legal and consulting costs in connection with patent law disputes amounting to € 4.7 m. Due to rising energy costs, these expenses have more than doubled from € 4.7 m to € 10.1 m compared with the same period of the previous year. Expenses for IT services increased by € 2.2 m. Changes in exchange rates have increased expenses by around € 5.0 m compared with the corresponding period in the previous year.
Other operating income rose by € 27.4 m from € 21.6 m in the prior year to € 49.0 m in 2022. In the first half year of 2022, income from subsidies and government grants totaled € 41.3 m, increasing by € 23.0 m year on year in the process. This increase essentially relates to the "Important Project of Common European Interest on Batteries" (IPCEI).
EBITDA (earnings before interest, taxes, and depreciation and amortization) fell from € 111.9 m to € 66.2 m. The negative influence factors that apply on a global level as described above and the subdued trend in revenue were essentially responsible for this development.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for special effects) represents a sustainable earnings indicator for the Group. At the same time, adjusted EBITDA is a suitable control variable for the Executive Board to assess the operating earnings capacity of the Group and/or the two segments. As special effects, both non-cash expenses for share-based remuneration and expenses from M&A transactions were adjusted. The following table shows the reconciliation from EBITDA to adjusted EBITDA:
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| EBITDA | 66,234 | 111,912 |
| Expenses from share-based remuneration | 9 | 285 |
| Expenses for M&A transactions - VARTA AG Group | 2,665 | 71 |
| adjusted EBITDA | 68,908 | 112,268 |
The development of adjusted EBITDA is essentially in line with that of EBITDA. The amount of the adjustments is insignificant overall.
Operating income totaled € 13.7 m and is consequently down on the previous year (Q2 2021: € 66.9 m). The main effect of the reduction in operating income is attributable to operating business and the negative influencing factors described above. Depreciation and amortization rose by € 7.5 m in comparison with the prior-year period on the back of increased investments for the planned expansion of production capacities last year.
The financial result deteriorated in the financial year from € -3.5 m in 2021 to € -7.2 m in 2022. This is due to increased foreign exchange losses of approximately € 3.7 m compared with the previous year.
The rise in interest expenses of around € 1.8 m due to the higher volume of debt financing is offset by non-recurring interest income of a corresponding amount.
The tax expenses is lower due to the development of the result. Overall, tax expenses declined from € 17.8 m in the first half year of 2021 to total € 3.7 m as at June 30, 2022. This results in an effective tax ratio of 57.0 % (Q2 2021: 28.0 %) in relation to the pre-tax result. This ratio is expected to significantly improve over the course of the remaining two quarters of the year.
Due to the above-mentioned reasons, the consolidated result is significantly below the value recorded in the first six months of the previous year and amounts to € 2.8 m (2021: € 45.6 m).
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| ASSETS | ||
| Non-current assets | 858,196 | 806,312 |
| Current assets | 485,194 | 443,861 |
| Total assets | 1,343,390 | 1,250,173 |
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
| EQUITY AND LIABILITIES | ||
| Equity | 444,512 | 532,496 |
| Total liabilities | 898,878 | 717,677 |
| Non-current liabilities | 514,833 | 289,917 |
| Current liabilities | 384,045 | 427,760 |
| Total equity and liabilities | 1,343,390 | 1,250,173 |
Non-current assets increased by € 51.9 m from € 806.3 m as at year-end 2021 to € 858.2 m in the year under review. This rise mainly results from the increase of property, plant and equipment from € 711.3 m to € 737.9 m as of June 30, 2022. The reason of this development was the investment program launched in 2019 to expand capacities, which has seen production capacities increased at existing production facilities in Germany. Moreover, other assets rose due to the addition of the reimbursement right arising from the accession to debt between VARTA Consumer Batteries GmbH & Co. KGaA with VC Pensionen GmbH, Ellwangen, (Germany), in the amount of € 28.7 m. In contrast, changes to interest rates for the pension obligations reduced both claims for reimbursement by € 11.2 m.
Current assets rose from € 443.9 m as at the reporting date in 2021 by € 41.3 m to € 485.2 m as of June 30, 2022. The increase results from the buildup of inventories by € 75.3 m, the increase in other assets of € 38.3 m based on receivables from development projects, and tax refund claims by € 16.9 m. Trade receivables fell by € 64.5 m, a development which can be attributed to the very strong result in this context recorded in the fourth quarter of 2021. In addition, cash and cash equivalents decreased by € 35.3 m.
Equity decreased from € 532.5 m as of December 31, 2021 to € 444.5 m as of June 30, 2022. As of the reporting date, the equity ratio stood at 33.1 % (2021: 42.6 %). The decline in the equity ratio is essentially due to payment of the dividend of € 100.2 m. Borrowings in connection with a long-term promissory note loan in the amount of € 250.0 m, which accounted for an increase in the balance sheet total of the same amount, also had a negative impact on the equity ratio. These funds are available for investment activities connected with the capacity expansion program for the new round cells.
Non-current liabilities rose by € 224.9 m from € 289.9 m as of December 31, 2021 to € 514.8 m in the reporting period. The growth here is primarily attributable to borrowing of € 250.0 m in the form of a promissory note loan.
As at June 30, 2022, current liabilities have fallen from € 427.8 m to € 384.0 m. This was due to a partial repayment of the syndicated loan of € 35.0 m.
Net Working Capital increased from € 134.2 m at year-end 2021 to € 166.8 m as of June 30, 2022. This equates to a increase of € 32.5 m compared to the prior year. The net working capital ratio is calculated as a ratio of net sales for the past three months extrapolated to one year and stands at 21.8 % as of June 30, 2022 (December 31, 2021: 12.0 %). The change in the net working capital ratio by 9.8 percentage points is mainly due to the fact that, as experience has shown, the fourth quarter of a financial year tends to be much stronger.
| JUNE 30, 2021 | |
|---|---|
| 73,107 | 121,889 |
| -26,509 | -28,190 |
| -71,414 | -91,136 |
| 60,922 | 45,251 |
| -37,001 | -74,075 |
| 1,737 | 772 |
| 37,843 | 48,586 |
| JUNE 30, 2022 |
Cash flow from operating activities amounts to € -26.5 m in the reporting period and is therefore € -1.7 m up on the value recorded in the prior year period. Over the first half of 2022, inventories were increased by € -73.7 m. This is mainly a precautionary measure to ensure that production can be maintained undiminished in the event of supply bottlenecks. Trade receivables have decreased by € 15.5 m since the beginning of the year. This trend is attributable to the reduction in business volume.
The cash flow from investing activities decreased from € -91.1 m to € -71.4 m. Payment outflows in connection with investments in intangible assets and property, plant and equipment (CAPEX) amounted to € 66.9 m (Q2 2021: € 85.6 m).
Cash flow from financing activities improved in the period under review from € 45.3 m in 2021 to € 60.9 m in 2022. Taking out the promissory note loan in the amount of € 250.0 m, to help finance the expansion of production capacities, is the primary reason for this development. This was offset by the repayment of € 35.0 m of the short-term syndicated loan, the dividend payment of € 100.2 m, the payment of € 28.7 m as part of the agreed of the reimbursement right arising from the accession to debt between VARTA Consumer Batteries GmbH & Co. KGaA with VC Pensionen GmbH, Ellwangen, (Germany), the cash outflow in the context of the factoring of around € 13.0 m and the repayment of lease liabilities in the amount of € 10.8 m.
As of the reporting date of June 30, 2022, cash and cash equivalents amounts to a total of € 37.8 m (2021: € 48.6 m).
The Group refers to investments in intangible assets and property, plant and equipment as CAPEX. This is an important control variable for high-growth manufacturing companies. In the first half of 2022, VARTA AG continued its investment program. In doing so, the Company is pursuing the goal of comprehensively expanding capacities in the area of CoinPower cells (TWS). With the construction of a pilot plant for large-format lithium-ion round cells, the company is pursuing its goal of opening up new business activities with this V4Drive cell in the automotive sector and with the RoundPower cell in all non-automotive applications.
In first half of 2022, expenditure related to the purchase of intangible assets and property, plant and equipment totaled € 66.9 m (corresponding period in the previous year: € 85.6 m) and was therefore in line with expectations.
The majority of investments in property, plant and equipment served to expand production capacity of lithium-ion button cells and the construction of a pilot production line for large-format cells. Replacement investments to renew production equipment, to develop new products and for quality assurance measures continue to be necessary at regular intervals.
The Company is active in the "Lithium-Ion Solutions & Microbatteries" and "Household Batteries" business segments. The former comprises the microbatteries business, Lithium-Ion Coin Power, Lithium-Ion Round Power, Lithium-Ion Solutions as well as Lithium-Ion V4Drive, while the latter covers the Consumer Batteries and Energy Storage Systems business areas.
VARTA is still very well positioned in the face of the ongoing global COVID-19 pandemic and fluctuating infection rates. In line with customer demand, production activities at proprietary facilities have continued without serious interruption since the start of the pandemic.
Around the world, many of our customers have faced major challenges. The war in Ukraine, rising costs in terms of raw materials and energy prices triggered by this crisis, occasional production interruptions due to the ongoing pandemic and the shortage of semiconductors has led to some of our customers suspending production activities and therefore depressed demand for our batteries as a result. Our OEM customers were above all impacted by this, whereas the direct consumer business developed positively.
| JUNE 30, 2022 | JUNE 30, 2021 | Change | |
|---|---|---|---|
| Sales revenue (€ k) | 187,722 | 233,200 | -19.5% |
| Adjusted EBITDA (€ k) | 53,055 | 84,440 | -37.2% |
| Adjusted EBITDA margin % | 28.3% | 36.2% | -7.9 PP |
In the first half of 2022, revenue in the "Lithium-Ion Solutions & Microbatteries" segment totaled € 187.7 m, which equates to a revenue decline of -19.5 %. Compared with the first quarter, the shortfall was reduced. The current challenging economic situation is compromising the fundamentally sound demand for lithium-ion batteries for True Wireless Stereo Headsets (TWS) in the area of Lithium-Ion CoinPower. VARTA is reacting to the restrained demand with temporary capacity adjustments and cost savings but is able to return to full capacity utilization at short notice and can also take advantage of additional growth opportunities through the short-term expansion of production capacities. Production for the new product launches expected in the second half of the year has started. Business is expected to pick up significantly by the end of the year. In the second half of the year, new products are expected to be launched that should contribute to a significant upturn in business.
Across the first six months of financial year 2022, adjusted EBITDA fell from € 84.4 m to € 53.1 m, in comparison with the same period in the previous year, which represents a disproportionately sharp decline in comparison with revenue development. This gap has also been reduced compared to the first quarter. This development can be ascribed to the caution shown by our customers in the TWS area described above.
| JUNE 30, 2022 | JUNE 30, 2021 | Change | |
|---|---|---|---|
| Sales revenue (€ k) | 189,088 | 164,362 | 15.0% |
| Adjusted EBITDA (€ k) | 15,853 | 27,828 | -43.0% |
| Adjusted EBITDA margin % | 8.4% | 16.9% | -8.5 PP |
The "Household Batteries" segment comprises the Consumer Batteries business and Energy Storage Systems. In the first half of 2022, sales in the "Household Batteries" segment rose from € 164.4 m to € 189.1 m versus the prior-year period. This equates to revenue growth of 15.0 %. This positive performance is mainly attributable to very high growth in the Energy Storage Systems business, which is benefiting from the very high demand for home storage systems.
Adjusted EBITDA fell by € 12.0 m from € 27.8 m to € 15.9 m which equates to a decline of 43.0 %. The significant increase in the prices of raw material, substantial additional energy costs and higher transport costs have had a negative impact. The adjusted EBITDA margin stands at 8.4 % in relation to revenue, which corresponds to an decline totaling € 8.5 percentage points in comparison with the previous year.
The number of employees across the entire Group changed only marginally, increasing from 4,606 members of staff in the first half of the previous year to 4,712 members of staff as at June 30, 2022.
The interim management report on the first half-year does not contain any comprehensive and complete statement on the opportunity and risks report. These notes should therefore be read in conjunction with the consolidated annual financial statements published as of December 31, 2021.
In view of the current challenging macroeconomic situation and the risks mentioned in the annual financial statements 2021, the assessment will remain the same.
The war in Ukraine, the procurement risks in the form of sharply increased raw material prices, rising energy costs and the securing of energy supplies are, according to current assessments, the main named and known risks for VARTA AG, which continue to be assessed as high.
The risk management system as a whole is evaluated at Group level and focuses on strategic, operating, financial and other risks. In this process, the risks are categorized as low, medium or high according to the net loss potential.
The CFO bears responsibility for managing all opportunities and risks, which is an integral part of corporate governance. Based on the assessment of the Executive Board, the risks are still considered manageable as of the publication date. There continues to be no discernible individual risks that may endanger the existence of the company. At the same time, there is also a firm conviction that the VARTA AG Group remains well-placed strategically and financially to exploit all opportunities that arise.
A comprehensive review of the risk situation was carried out as of June 30, 2022. Compared with the previous year, the risk of gas supplies has been added. In the previously existing risks, there were no material changes in the areas of operating, strategic, financial and default risks compared with December 31, 2021. The opportunities and risks that pose a threat to the company's continuing existence were updated, as scheduled, on June 30, 2022.
Despite the strong market position in the core markets and the production capacities available due to past investments, the temporary weakening of demand for CoinPower cells (TWS) and higher raw material prices, which can only be passed on with a significant delay, will led to a decline in earnings compared with the previous year. This outlook is based on the assumption of constant exchange rates.
Despite the ongoing global COVID-19 pandemic and fluctuating infection rates, the Company remains very well positioned. Production activities at proprietary facilities have continued without any material interruption since the start of the crisis. Although many companies around the world have suffered supply chain interruptions, VARTA has been able to maintain its supply chains at all times. In addition, VARTA has significantly increased its stock of raw materials. Nevertheless, negative impacts on the VARTA AG Group are unable to be totally ruled out.
At present, the war in Ukraine and assessment of future developments are difficult to evaluate in terms of their impact on the Company. The share of revenue attributable to Ukraine, Belarus and Russia is less than 1 % of consolidated revenue and takes place exclusively via supply contracts. The company does not operate its own plants in these countries. VARTA also does not maintain any supplier relationships on the procurement side. As such, the potential negative impact from this crisis area is currently assessed as
The increase in prices for raw materials and energy resulting from this war are currently very high, and it cannot be estimated how long this will continue or even increase further. The company will, at least in part, pass on the price increases to customers by raising prices. However, this will only be implemented with a time delay and is dependent on the market and competitive situation and can thus lead to a negative impact on the earnings situation. Possible supply chain interruptions are being counteracted by increased stockpiling of raw materials. In the event of longer-lasting interruptions or persistently rising raw material prices, production interruptions or negative impacts on revenue and profit cannot be ruled out.
It can also not be ruled out that our customers are temporarily unable to accept deliveries of our products due to disrupted production processes at their own sites. This may be caused by the ongoing pandemic as well as the effects of the Ukraine war. In addition, there is a very high demand for semiconductors worldwide, which is leading to production interruptions or in some cases causing manufacturers to selectively use the electronic components available to them. Furthermore, the negative economic environment is impacting consumer spending, which in turn is having a negative effect on our customers in the TWS area, causing customer projects to be delayed or start up with lower volumes.
The guidance presented below was published on March 31, 2022 and amended on June 30, 2022. The main reasons for this adjustment are delays in customer projects and the continuing situation of raw material and energy prices as well as high transportation costs.
In view of the diverse risk situation, Group revenue of between € 880 m and € 920 m is expected for 2022. (initial forecast: € 950 m to € 1 bn).
Adjusted operating earnings (adjusted EBITDA) is anticipated to total between € 200 m and € 225 m (initial forecast: € 260 m and € 280 m and therefore below € 282.9 m compared to the past financial year. The risk situation outlined above and set-up costs in connection with V4Drive cells impact the Company's profit development.
VARTA continues to invest in the expansion of its production capacities for lithium-ion batteries, with a focus on the following two aspects: After the completion of the pilot production line for V4Drive round cells, the focus will be on establishing additional highly automated production capacities in order to be able to fulfill existing and expected future OEM contracts. The capacities for CoinPower cells (TWS) will be increased in line with the demand situation. This can be implemented at short notice.
CAPEX – cash outflows for the purchase of intangible assets and property, plant and equipment – is expected to exceed the level recorded in fiscal year 2021 and could amount to more than € 230 m depending on investment requirements for the V4Drive/Roundpower cell.
The focus of the "Lithium-Ion Solutions & Microbatteries" segment is on OEM business with lithium-ion and zinc-air batteries in addition to the Lithium-Ion Battery Packs business.
The current situation is affecting the fundamentally good demand for lithium-ion batteries for True Wireless Stereo Headsets (TWS) in the area of Lithium-Ion CoinPower applications. VARTA can take advantage of growth opportunities through the short-term expansion of capacities. In the hearing aid batteries business, the company intends to further consolidate its market-leading position in a market subject to structural growth. The Company expects moderate growth in the area of zinc-air batteries and will benefit from its highly automated and efficient production plants. The structural transition towards rechargeable hearing aid batteries will again lead to high growth rates in 2022 in the rechargeable area. In terms of the Lithium-Ion Battery Packs business, further growth rates are anticipated.
The "Lithium-Ion Solutions & Microbatteries" segment will stagnate over the year. Compared with the previous year, significantly higher growth is expected in the second half of 2022 compared with the first six months of 2022 due to the start-up of new customer projects. Adjusted EBITDA is expected to be below the prior year level due to the above-mentioned effects.
The "Household Batteries" segment consists of the two business areas Consumer and Energy Storage Systems. Its focus is on Consumer business with its own sales, marketing and production.
The Consumer business will record further growth in fiscal year 2022, with a particular emphasis in this context on further expanding the brand business. Very significant revenue growth is expected in the area of stationary energy storage systems, which should at least match the level of market growth.
The "Household Batteries" segment will record growth in fiscal year 2022 that is comparable with that seen in 2021. Adjusted EBITDA is expected below the level recorded in the previous year, since higher raw material prices and exchange rate fluctuations can not be offset by raising sales prices.
Our long-standing experience over many years in the battery business is factored into the opportunity and risk guidance mapping further business development. This report contains information and guidance referring to the company's future development. However, it must be noted that actual results may vary greatly from the expectations surrounding the projected developments.
| Consolidated balance sheet as at June 30, 2022 (unaudited) |
||
|---|---|---|
| VARTA Aktiengesellschaft, Ellwangen (Jagst) | ||
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
| ASSETS | ||
| Property, plant and equipment | 737,947 | 711,346 |
| Intangible assets | 74,919 | 71,227 |
| Long-term investments and other participations recognized in the balance sheet under the equity method |
58 | 60 |
| Deferred tax assets | 10,130 | 6,035 |
| Other assets | 35,142 | 17,644 |
| Non-current assets | 858,196 | 806,312 |
| Inventories | 232,391 | 157,110 |
| Contract assets | 4,221 | 6,736 |
| Trade receivables | 98,399 | 162,903 |
| Other financial assets | 1,508 | 108 |
| Tax refund claims | 20,651 | 3,764 |
| Other assets | 90,181 | 40,133 |
| Cash and cash equivalents | 37,843 | 73,107 |
| Current assets | 485,194 | 443,861 |
| Total assets | 1,343,390 | 1,250,173 |
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| Subscribed capital | 40,422 | 40,422 |
| Capital reserve | 252,284 | 252,275 |
| Retained earnings | 143,526 | 111,009 |
| Net income | 2,784 | 125,956 |
| Other reserves | 5,496 | 2,834 |
| Equity of the VARTA AG Group | 444,512 | 532,496 |
| Lease liabilities | 79,210 | 80,710 |
| Other financial liabilities | 367,181 | 117,990 |
| Provisions for employee benefits | 51,074 | 68,837 |
| Advance payments received | 2,213 | 14,208 |
| Deferred tax liabilities | 9,814 | 2,397 |
| Other provisions | 2,897 | 2,897 |
| Deferred liabilities | 2,444 | 2,878 |
| Non-current liabilities | 514,833 | 289,917 |
| Tax liabilities | 52,089 | 50,540 |
| Lease liabilities | 17,693 | 16,995 |
| Other financial liabilities | 49,777 | 85,785 |
| Provisions for employee benefits | 3,510 | 3,442 |
| Contract liabilities | 3,172 | 4,374 |
| Trade payables and advance payments received | 123,783 | 132,132 |
| Other liabilities | 33,727 | 22,747 |
| Other provisions | 14,946 | 19,197 |
| Deferred liabilities | 85,348 | 92,548 |
| Current liabilities | 384,045 | 427,760 |
| Liabilities | 898,878 | 717,677 |
| Equity and total liabilities | 1,343,390 | 1,250,173 |
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Sales revenue | 376,810 | 397,562 |
| Increase in finished and unfinished goods | 50,147 | 31,056 |
| Own work capitalized | 6,167 | 1,586 |
| Other operating income | 49,013 | 21,637 |
| Cost of materials | -200,260 | -158,827 |
| Personnel expenses | -135,727 | -126,554 |
| Other operating expenses | -79,916 | -54,548 |
| EBITDA | 66,234 | 111,912 |
| Depreciation | -52,563 | -45,057 |
| Operating income (EBIT) | 13,671 | 66,855 |
| Financial income | 970 | 32 |
| Financial expenses | -3,504 | -1,727 |
| Other financial income | 766 | 119 |
| Other financial expenses | -5,422 | -1,928 |
| Financial result | -7,190 | -3,504 |
| Earnings before taxes | 6,481 | 63,351 |
| Income taxes | -3,697 | -17,758 |
| Group result | 2,784 | 45,593 |
| Appropriation of profit: | ||
| Shareholders of VARTA AG | 2,784 | 45,550 |
| Non-controlling interests | 0 | 43 |
| JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|
| 2,784 | 45,593 |
| 19,066 | 5,677 |
| -9,501 | 1,927 |
| -2,758 | -1,154 |
| 6,807 | 6,450 |
| 2,662 | 3,273 |
| 2,662 | 3,273 |
| 9,469 | 9,723 |
| 12,253 | 55,316 |
| 12,253 | 51,603 |
| 0 | 42 |
| January 1, 2022 to June 30, 2022 |
| JUNE 30, 2022 | JUNE 30, 2021 | |
|---|---|---|
| Basic earnings per share | 0.07 | 1.13 |
| Diluted earnings per share | 0.07 | 1.13 |
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Cash flow from ongoing operating activities | ||
| Earnings before taxes | 6,481 | 63,351 |
| Net financial result less sundry financial expense/sundry financial income | 2,534 | 1,695 |
| Depreciation | 52,563 | 45,057 |
| Losses from the sale of property, plant and equipment and intangible assets | 101 | 5 |
| Other non-cash income | 2,932 | 3,444 |
| Change in working capital | ||
| Inventories | -73,718 | -29,604 |
| Trade receivables and other current assets | 15,522 | -28,942 |
| Trade payables and other current and non-current liabilities | -10,730 | -35,970 |
| Provisions and liabilities from pensions | -3,930 | -18,791 |
| Income tax paid | -18,264 | -28,435 |
| Net cash flow from ongoing operating activities | -26,509 | -28,190 |
| Cash flow from investing activities | ||
| Capital expenditure on the acquisition of intangible and tangible assets | -66,852 | -85,648 |
| Own work capitalized | -6,167 | -1,586 |
| Cash receipts from the sale of intangible and tangible assets | 8 | -114 |
| Payments from raising loans | 2 | 1 |
| Investment in investments less acquired cash and cash equivalents | 1,217 | -3,469 |
| thereof acquisition of VARTA Consumer less acquired cash and cash equivalents | 1,217 | 0 |
| thereof acquisition of VARTA Micro Innovation GmbH less acquired cash and cash equivalents |
0 | -4,475 |
| Receipts from the repayment of loans | 0 | -349 |
| Interest received | 378 | 29 |
| Cash flow from investing activities | -71,414 | -91,136 |
| Cash flow from financing activities | ||
| Repayments for leasing liabilities | -10,775 | -8,666 |
| Payments from the payment of interest-bearing financial liabilities | 256,529 | 202,223 |
| Repayments of interest-bearing current financial liabilities | -54,077 | -4,461 |
| Repayments of interest-bearing non-current financial liabilities | 0 | -42,291 |
| Payment of dividend and distribution to non-controlling interests | -100,246 | -100,585 |
| Payments from the assumption of the joint debt obligation | -28,737 | 0 |
| Interest paid | -1,772 | -969 |
| Cash flow from financing activities | 60,922 | 45,251 |
| Net change in cash and cash equivalents | -37,001 | -74,075 |
| Cash and cash equivalents as of January 1 | 73,107 | 121,889 |
| The effects of changes in foreign exchange rates | 1,737 | 772 |
| Cash and cash equivalents as of June 30 | 37,843 | 48,586 |
| OTHER RESERVES | ||||||||
|---|---|---|---|---|---|---|---|---|
| (€ k) | SUBSCRIBED CAPITAL |
CAPITAL RESERVE | RETAINED EARNINGS* |
CURRENCY TRANSLATION ADJUSTMENTS |
HEDGING RESERVE |
NON CONTROLLING INTERESTS |
TOTAL EQUITY | |
| As of January 1, 2021 | 40,422 | 251,705 | 209,825 | -3,209 | 21 | 311 | 499,075 | |
| Effect of share-based payment | 0 | 285 | 0 | 0 | 0 | 0 | 285 | |
| Dividend distribution shareholders VARTA AG |
0 | 0 | -100,246 | 0 | 0 | 0 | -100,246 | |
| Capital distribution Auditas GmbH | 0 | 0 | -294 | 0 | 0 | -45 | -339 | |
| Comprehensive income | 0 | |||||||
| Net income | 0 | 0 | 45,550 | 0 | 0 | 42 | 45,592 | |
| Other comprehensive income | 0 | 0 | 2,779 | 3,273 | 0 | 0 | 6,052 | |
| Total comprehensive income | 0 | 0 | 48,329 | 3,273 | 0 | 0 42 |
51,644 | |
| As of June 30, 2021 | 40,422 | 251,990 | 157,614 | 64 | 21 | 308 | 450,419 |
| OTHER RESERVES | ||||||||
|---|---|---|---|---|---|---|---|---|
| SUBSCRIBED | RETAINED | CURRENCY TRANSLATION |
HEDGING | NON CONTROLLING |
||||
| (€ k) | CAPITAL | CAPITAL RESERVE | EARNINGS* | ADJUSTMENTS | RESERVE | INTERESTS | TOTAL EQUITY | |
| As of January 1, 2022 | 40,422 | 252,275 | 236,965 | 2,813 | 21 | 0 | 532,496 | |
| Effect of share-based payment | 0 | 9 | 0 | 0 | 0 | 0 | 9 | |
| Dividend distribution shareholders VARTA AG |
0 | 0 | -100,246 | 0 | 0 | 0 | -100,246 | |
| Comprehensive income | ||||||||
| Group result | 0 | 0 | 2,784 | 0 | 0 | 0 | 2,784 | |
| Other comprehensive income | 0 | 0 | 6,807 | 2,662 | 0 | 0 | 9,469 | |
| Comprehensive income | 0 | 0 | 9,591 | 2,662 | 0 | 0 | 12,253 | |
| As of June 30, 2022 | 40,422 | 252,284 | 146,310 | 5,475 | 21 | 0 | 444,512 |
* Retained earnings including net income
VARTA Aktiengesellschaft (VARTA AG) is a company headquartered in Ellwangen (Jagst), Germany, registered in the Commercial Register of the Ulm District Court, Germany, under HRB 728059. The company's present condensed consolidated interim financial statements comprise VARTA Aktiengesellschaft and its subsidiaries (collectively, "VARTA AG Group"). The reporting date for these interim financial statements for VARTA AG, all subsidiaries and for the consolidated accounts is June 30, 2022. These interim financial statements are presented in euro, which is the company's functional currency. All financial information presented in euro was, unless specified otherwise, rounded up to the next thousand. The interim financial statements were prepared in compliance with the International Financial Reporting Standards (IFRS), which are applied in the European Union.
The business activities of VARTA AG, which it conducts through its operating subsidiaries, comprise production, sales, research and development in two business segments: "Lithium-Ion Solutions & Microbatteries" and "Household Batteries". The VARTA AG Group is a globally operating international company with over 135 years' experience.
VARTA AG is headquartered in Ellwangen (Jagst), VARTA-Platz 1, Germany. The ultimate parent of VARTA AG is Montana Tech Components AG, subsequently "MTC", Reinach, Switzerland.
The shares of VARTA AG are traded on the regulated market under the securities identification number (WKN) A0TGJ5, the international securities identification number (ISIN) DE000A0TGJ55 and the ticker symbol "VAR1".
In fiscal year 2022, there were the following changes in the scope of consolidation:
| 2022 | 2021 | ||||
|---|---|---|---|---|---|
| EQUITY FULL CONSOLIDATION CONSOLIDATION |
FULL CONSOLIDATION | EQUITY CONSOLIDATION |
|||
| As of January 1 | 44 | 1 | 43 | 1 | |
| Disposals | 0 | 0 | -2 | 0 | |
| Start-Up | 1 | 0 | 1 | 0 | |
| Acquisition | 0 | 0 | 2 | 0 | |
| As of June 30 | 45 | 1 | 44 | 1 |
V4Drive Romania S.R.L.
The company V4Drive Romania S.R.L. was established as a subsidiary of PERTRIX V SE on March 22, 2022. The company, which is based in Otopeni, was registered in the Romanian Commercial Register under the number 45838253. The object of the company is to manufacture electronic components.
The consolidated interim financial statements as of June 30, 2022 were prepared in compliance with the International Financial Reporting Standards (IFRS), Interim Financial Reporting (IAS 34). The condensed consolidated interim financial statements were prepared based on of all IAS / IFRS published by the International Accounting Standards Board (IASB) that were applicable on the reporting date as well as all interpretations (IFRIC / SIC) drawn up by the International Financial Reporting Interpretations Committee and the Standing Interpretations Committee, provided these have been adopted by the European Union through the endorsement process. The present interim report does not contain all the disclosures in the notes that are usually included in annual financial statements. This report must therefore be read in conjunction with the consolidated financial statements prepared as of December 31, 2021.
Use was made of the option of preparing condensed interim financial statements. They are based on all interpretations of the International Financial Reporting Interpretations Committee (IFRIC) that are compulsory as of June 30, 2022. This interim report is also consistent with the German Accounting Standard 16 (DRS 16 Interim Financial Reporting) of the Deutsche Rechnungslegungs Standard Committee e.V. (DRSC).
Given the absence of any obligation to audit the interim financial statements, the interim report was not subjected to an audit or a review by an auditor.
In compliance with IAS 1.25, the consolidated financial statements were prepared on the assumption that the company is a going concern.
The scope of consolidation comprises all companies which VARTA AG controls, either directly or indirectly. Control is deemed to exist if VARTA AG holds the majority of voting rights (including potential voting rights) or can determine the financial and business policy directly or indirectly based on of a controlling position and can therefore benefit
from the business activity. These companies are fully consolidated. Subsidiaries are consolidated for the first time when control is acquired. Subsidiaries are deconsolidated when control ends.
Intercompany gains and losses, expenses and income as well as receivables and liabilities between consolidated companies are eliminated.
Joint ventures in which VARTA AG holds 50 % directly or indirectly, or for which management responsibility is performed equally, are accounted for in accordance with the equity method, as specified in IAS 28.
The consolidated companies are presented in a table under note 41 "Investment companies".
The same accounting and measurement principles were recognized for the condensed consolidated interim financial statements as were used for the consolidated financial statements as of December 31, 2021. A detailed description of these methods is included in the consolidated financial statements as of December 31, 2021. Changes that result from the first-time application / amendment of new standards are presented in the notes.
The Group currency is the Euro. Unless indicated otherwise, all amounts are given in thousand Euro (€k).
As a rule, the functional currency of the respective Group companies is based on their primary economic environment and corresponds, in principle, to the national currency. For most of the activities, the Euro (EUR or €) is the functional currency, which is why the present consolidated financial statement was prepared in Euro (EUR or €).
Please note that rounding may result in differences compared with the mathematically precise figures calculated (monetary units, percentages etc.).
The exchange rates used for foreign currency translation that have a significant impact on the condensed consolidated financial statements are as follows:
| 1 EURO EQUALS | AVERAGE RATE | RATE ON THE CLOSING DATE | |||
|---|---|---|---|---|---|
| JUNE 30, 2022 | JUNE 30, 2021 | JUNE 30, 2022 | DECEMBER 31, 2021 | ||
| US Dollar (USD) | 1.093 | 1.205 | 1.039 | 1.133 | |
| British pound (GBP) | 0.842 | 0.868 | 0.858 | 0.840 | |
| Romanian leu (RON) | 4.946 | 4.902 | 4.946 | 4.949 | |
| Danish crones (DKK) | 7.440 | 7.437 | 7.439 | 7.436 | |
| Swedish crones (SEK) | 10.480 | 10.131 | 10.730 | 10.250 |
Of these effects, only USD/EUR are material for unrelated third parties. The remaining transactions were largely settled between affiliated companies. The Chinese yuan (CNY), Norwegian krone (NOK), Hungarian forint (HUF), Swiss franc (CHF), Croatian kuna (HRK), Czech koruna (CZK), Russian ruble (RUB) and Turkish lira (TRY) also affect the consolidated financial statements. But the effect is not significant for the VARTA AG Group.
The effects of the new accounting policies applied from January 1, 2022 are disclosed below. They have resulted in no significant effects for the Group.
The changes include the definition of which costs a company can include when assessing whether a contract will be loss-making. Accordingly, the costs for fulfilling a contract are all costs directly related to the order. Therefore, both costs that would not accrue without the contract (incremental costs) and other costs that are directly attributable to the contract must be taken into consideration.
The following Standards were amended through the Annual Improvements to IFRS.
In IFRS 1, subsidiaries adopting IFRS for the first time that applied IFRS 1.D16 (a) were permitted to measure cumulative translation differences using the amounts reported by their parent companies.
The amendment to IFRS 9 clarified which fees an entity can include when it applies the 10% test (IFRS 9.B3.3.6) in assessing whether to derecognize a financial liability. Only fees that are paid or received between the entity as borrower and the lender may be included.
In IFRS 16, the illustration of the reimbursement of leasehold improvements was removed from the illustrative example 13 accompanying IFRS 16.
In IAS 41, the ban on taking tax payments into consideration as part of fair value measurement was deleted.
References to the conceptual framework in various standards, as in IFRS 3, were adjusted along with the changes to the conceptual framework. The content of the rules for accounting for business acquisitions was not changed.
The amendments make clear that proceeds which an entity received from the sale of items produced while the asset was being prepared for its intended use (such as product samples) and the costs associated therewith must be recognized in profit or loss. Consideration of amounts of this kind when determining the cost of acquisition is not permissible.
The following new and revised standards and interpretations were adopted but will not come into force until later and were not applied prematurely in the present consolidated financial statements. The company does not plan to apply them prematurely either. Unless specified otherwise below, the effects are currently being investigated.
| New or amended standards and interpretations Amendments adopted in EU law: |
ENACTMENT | |
|---|---|---|
| Standards | ||
| IFRS 17 | Insurance contracts (incl. Amendments to IFRS 17) | January 1, 2023 |
| Amendments: | ||
| IAS 8 | Amendment Definition of Accounting Estimates | January 1, 2023 |
| IAS 1 / IFRS | January 1, 2023 | |
| Not yet adopted in EU law: Amendments: |
||
| IAS 1 | Classification of Liabilities as Current or Non-current | January 1, 2023 |
| IFRS 17 | First-time application of IFRS 17 and IFRS 9 - Comparative Information | January 1, 2023 |
| IAS 12 | Deferred Tax related to Assets and Liabilities arising from Single Transaction |
January 1, 2023 |
| IFRS 10/IAS 28 | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |
uncertain |
Application of the following innovations and amendments published by the IASB is not yet mandatory and VARTA AG has not yet applied them to date either. The Group currently assumes that they will have no material effects on the consolidated financial statements.
IFRS 17 replaces IFRS 4 and therefore sets uniform requirements for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts and investment contracts with discretionary participation features for the first time. Under the IFRS 17 measurement model, groups of insurance contracts are measured on the basis of the expected value of discounted cash flows, including an explicit risk adjustment for non-financial risk and a contractual service margin, which leads to recognition of a profit corresponding to fulfillment of the contract.
Instead of premium income, the changes from the liability for granting insurance cover in each period are shown as "insurance turnover", for which the insurance company receives payment and the part of the premiums that covers the acquisition costs. In-payments and out-payments of savings components are not recognized as revenue or income or expenditure in the income statement. Insurance financial income and expense result from discounting effects and financial risks. Depending on the portfolio, they can either be recognized through profit or loss in the income statement or in other comprehensive income.
Changes in assumptions that do not relate to interest rates or financial risks are not recognized immediately in the income statement but are posted against the contractual service margin and therefore spread over the period remaining for fulfillment of the contract. Changes to estimates are only recognized immediately for groups of insurance contracts that are likely to incur losses.
IFRS 17 provides for an approximation method for short-term contracts, which depicts the liability for granting insurance cover via unearned premiums, as was previously the case. Liabilities for insurance claims that have been incurred but not yet been settled must be discounted with the current interest rates under IFRS 17. For large parts of with-profits life insurance business, IFRS 17 modifies the general measurement model to the effect that changes to the shareholder's share in the development of the sources of income on which the profit participation is based are also recognized in the contractual service margin and spread over the period remaining for fulfillment of the contract.
If retrospective application is not possible, the contractual service margin can be determined at the transition date on the basis of a modified retrospective process or by comparing the expected value of the discounted cash flows and risk adjustment with the fair value at the transition date.
The changes from June 2020 include postponement of first-time application of IFRS 17 from January 1, 2021 by two years to January 1, 2023.
The exemption applicable to insurance companies from first-time application of IFRS 9 is also postponed to January 1, 2023, meaning that both standards can still be applied simultaneously for the first time.
The changes also largely relate to the following areas:
The amendment to IAS 8 makes clear how companies can differentiate more clearly between changes to accounting policies and changes to estimates. To this end, it defines that an accounting related estimate always refers to uncertainty in the measurement of a financial parameter in the financial statements. In addition to input parameters, a company also uses measurement processes to determine an estimate. Measurement processes may be estimation processes or measurement techniques.
The changes are applicable to reporting periods starting on or after January 1, 2023. Premature application of the changes is permissible.
The amendments to IAS 1 adopted relate to a limited adjustment to the assessment criteria for classifying liabilities as current or non-current.
They make clear that the classification of liabilities as current depends on the rights of the entity at the reporting date to defer settlement of the liability by at least twelve months after the end of the reporting period: if such rights exist, they classify the liability as non-current. The right to defer settlement of the liability must be substantial here. If the entity must fulfill certain conditions to exercise a right of this kind, they must be fulfilled on the reporting date; otherwise, the liability will be classified as current.
For the classification of a liability, it is immaterial whether management intends or expects that the liability will be settled within twelve months after the balance sheet date. Classification will be decided solely by any rights to defer settlement of the debt by at least twelve months existing on the reporting date. This will also apply to settlement within the period permitted for measurement.
In July 2020, the initial application date was deferred by one year to reporting periods beginning on or after January 1, 2023.
The changes are therefore applicable to reporting periods starting on or after January 1, 2023. Premature application of the changes is permissible.
The amendment to IAS 1 will require that only "material" accounting policies are presented in the notes to the financial statements. To be material, the accounting policy must be associated with material transactions or other events and there must be grounds for presentation. Grounds may, for example, be that the policy was amended, it is a choice between alternative means of accounting, the policy is complex or highly discretionary or was developed in compliance with IAS 8.10-11. Accordingly, the changes in Practice Statement 2 highlight how the concept of materiality is applied to the disclosure of accounting policies. The aim is that company-specific statements should be paramount in future in place of standardized statements.
The changes are applicable to reporting periods starting on or after January 1, 2023. Premature application of the changes is permissible.
The amendment to IFRS 17 introduces the possibility of applying a classification overlay approach if certain preconditions are met. This makes the comparative information on financial instruments in the year before first-time application of IFRS 17, i.e., in 2022, more meaningful. The classification overlay approach can be applied if a financial asset is not restated in view of the comparative information in IFRS 9 when IFRS 17 and IFRS 9 are applied simultaneously for the first time. When the classification overlay approach is applied, the current level of information at the transition date is used for classification into the categories of IFRS 9, i.e., how the company plans to classify its financial assets when applying IFRS 9 for the first time. In principle, comparative information is disclosed as if the classification and measurement provisions in IFRS 9 had already been applied in the comparative period, except for impairment rules where use of the classification overlay approach does not necessitate disclosure in accordance with IFRS 9. Differences between the previous carrying amount of a financial asset and the result arising from the classification overlay approach must be recognized in equity.
The extent to which a company has made use of the approach (for example whether it was applied to all financial assets being disposed of in 2022) must be disclosed and whether and to what extent disclosures followed the impairment rules of IFRS 9.
On first-time application of IFRS 9 on January 1, 2023, the transitional provisions applicable under IFRS 9 must be applied regardless of whether the classification overlay approach was applied or not.
The amendments are applicable – subject to adoption in EU law – to reporting periods starting on or after January 1, 2023. Premature application of the amendments is permissible but requires an endorsement in the EU.
The amendments address existing uncertainties regarding the accounting for deferred taxes associated with leases and disposal and restoration obligations.
If assets and liabilities are recognized for the first-time, the initial recognition exemption applied previously subject to certain preconditions (IAS 12.15). In these cases, deferred taxes are exceptionally not to be recognized. In practice, it was uncertain whether this exemption also applied to leases and disposal and restoration obligations. A strictly limited amendment to IAS 12 has now been introduced to guarantee uniform application of the standard.
Due to this amendment, the initial recognition exemption no longer applies to transactions where both deductible and taxable temporary differences of equal amounts arise on first-time recognition, even if the other preconditions that were previously valid are met. The amendment therefore results in a reverse exemption from the initial recognition exemption for narrowly defined cases. The changes lead to deferred taxes for example having to be recognized for leases accounted for by the lessee and on disposal and restoration obligations.
The amendments are applicable – subject to adoption in EU law – to reporting periods starting on or after January 1, 2023. Premature application of the amendments is permissible but requires an endorsement in the EU.
The amendments address a known inconsistency between the provisions of IFRS 10 and IAS 28 (2011) in the event of assets being sold to an associate or joint venture or assets being contributed to an associate or joint venture.
According to IFRS 10, a parent company must recognize the gain or loss from the sale of a subsidiary in the full amount in the income statement if the possibility of control is lost. In contrast, the currently applicable IAS 28.28 demands that the disposal gain on disposals between an investor and an investment measured at equity – be it an associate or a joint venture – must only be recognized in the amount of the other's share in this company.
In future, the entire profit or loss from a transaction is only to be recognized if the assets sold or contributed constitute an operation within the meaning of IFRS 3. This will apply regardless of whether the transaction is structured as a share or asset deal. If, however, the assets do not constitute a business, the gain may only be recognized pro rata.
The initial application date for the changes was postponed indefinitely by the IASB.
The accounting and measurement policies for the segment reporting are based on the IFRS used in the present consolidated financial statements. The Executive Board uses adjusted EBITDA for management purposes, as it allows it to assess operating performance despite increasing investment in property, plant and equipment and the resulting depreciation. Shares of profits or losses of companies included in the consolidated financial statements under the equity method are not included in segment reporting as they are not a component of reported EBIT and adjusted EBITDA and are not regularly reported to the Executive Board otherwise.
The operating business units "Microbatteries", "Lithium-Ion CoinPower", "Lithium-Ion Round Power", "Lithium-Ion Solutions", "Lithium-Ion V4Drive", "Consumer" and "Energy Storage Systems" were identified in the VARTA Group. Given the homogeneous production process, the customer structure and the similarity in the products, the operating business units "Microbatteries", "Lithium-Ion CoinPower", "Lithium-Ion Round Power", "Lithium-Ion Solutions" and "Lithium-Ion V4Drive" are combined into the reporting segment "Lithium-Ion Solutions & Microbatteries". The two operating business units "Consumer" and "Energy Storage" are aggregated in the reporting segment "Household Batteries" based on the customer structure and sales management in particular. The breakdown is consistent with the internal organizational and reporting structure.
The elimination of intra-Group interrelations between the segments is combined in the reconciliation column. The reconciliation column also contains facts that cannot be directly allocated to any segment, such as the effects of share-based payment.
The management variables which are used to assess the performance of the operating segments, are shown below:
| LITHIUM-ION SOLUTIONS & MICROBATTERIES |
HOUSEHOLD BATTERIES | TOTAL | RECONCILIATION | GROUP | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (€ k) | JUNE 30, 2022 |
JUNE 30, 2021 |
JUNE 30, 2022 |
JUNE 30, 2021 |
JUNE 30, 2022 |
JUNE 30, 2021 |
JUNE 30, 2022 |
JUNE 30, 2021 |
JUNE 30, 2022 |
JUNE 30, 2021 |
| Segment revenue | 196,810 | 240,600 | 189,090 | 164,364 | 385,900 | 404,964 | 0 | 0 | 385,900 | 404,964 |
| Revenue with other segments |
9,088 | 7,400 | 2 | 2 | 9,090 | 7,402 | 0 | 0 | 9,090 | 7,402 |
| Revenue with third parties |
187,722 | 233,200 | 189,088 | 164,362 | 376,810 | 397,562 | 0 | 0 | 376,810 | 397,562 |
| Thereof Point-in-time | 174,910 | 216,872 | 186,266 | 158,683 | 361,176 | 375,555 | 0 | 0 | 361,176 | 375,555 |
| Thereof Point-over time |
12,812 | 16,328 | 2,822 | 5,679 | 15,634 | 22,007 | 0 | 0 | 15,634 | 22,007 |
| Depreciation and amortization |
-44,023 | -36,872 | -8,540 | -8,185 | -52,563 | -45,057 | 0 | 0 | -52,563 | -45,057 |
| Material effects in income and expenses |
0 | 0 | 0 | 0 | 0 | 0 | -2,674 | -356 | -2,674 | -356 |
| EBITDA | 53,055 | 84,440 | 15,853 | 27,828 | 68,908 | 112,268 | 0 -2,674 |
-356 | 66,234 | 111,912 |
| The following facts are included in the reconciliation of Group EBITDA: | |||||
|---|---|---|---|---|---|
| -- | -- | -- | -- | -- | ------------------------------------------------------------------------- |
| JUNE 30, 2022 | JUNE 30, 2021 | |||
|---|---|---|---|---|
| (€ k) | SPECIAL EFFECTS | TOTAL | SPECIAL EFFECTS | TOTAL |
| Effects in income and expenses | -2,674 | -2,674 | -356 | -356 |
| EBITDA | -2,674 | -2,674 | -356 | -356 |
Circumstances which are taken into account in adjusting EBITDA are shown in the column "Special effects". In fiscal year 2022, there were such circumstances at VARTA AG. "Special effects" from M&A transactions of € 2.7 m (2021: € 0.1 m) and effects from sharebased payment of € 0.01 m (2021: € 0.3 m) were attributable to VARTA AG as the parent company.
The following table shows the reconciliation of the segments' EBITDA to earnings before taxes.
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| EBITDA | 66,234 | 111,912 |
| Depreciation and amortisation | -52,563 | -45,057 |
| EBIT | 13,671 | 66,855 |
| Financial result | -7,190 | -3,504 |
| Earnings before taxes | 6,481 | 63,351 |
The following statement shows the Group's revenue divided according to specific geographical locations. In the presentation of this information on a geographical basis, a segment's revenue is based on the geographical locations of customers and a segment's assets on the geographical locations of the assets.
| JUNE 30, 2022 | JUNE 30, 2022 | JUNE 30, 2021 | DECEMBER 31, 2021 | |
|---|---|---|---|---|
| (€ k) | REVENUES* | NON-CURRENT ASSETS** |
REVENUES* | NON-CURRENT ASSETS** |
| Europe | 253,084 | 795,236 | 229,536 | 766,058 |
| Thereof Germany | 114,076 | 739,910 | 96,937 | 721,476 |
| America | 16,478 | 3,951 | 50,918 | 4,005 |
| Asia | 102,858 | 13,679 | 110,825 | 12,510 |
| Other | 4,390 | 0 | 6,283 | 0 |
| Total | 376,810 | 812,866 | 397,562 | 782,573 |
* Sales revenues are based on the customer's headquarters.
** For this purpose, non-current assets include property, plant and equipment and intangible assets.
The revenue of the "Household Batteries" segment is mainly contained in the item for Europe. Accordingly, the revenue of the Asia and America regions is mainly assigned to the "Lithium-Ion Solutions & Microbatteries" segment.
The Group's revenue and trade receivables and contract assets are split as follows between products and services:
| JUNE 30, 2022 | JUNE 30, 2022 | JUNE 30, 2021 | DECEMBER 31, 2021 | |
|---|---|---|---|---|
| (€ k) | REVENUES | TRADE RECEIVABLES AND CONTRACT ASSETS |
REVENUES | TRADE RECEIVABLES AND CONTRACT ASSETS |
| Of which from product sales | 376,076 | 99,213 | 395,573 | 165,809 |
| Of which from the sale of services | 734 | 3,407 | 1,989 | 3,830 |
| Total | 376,810 | 102,620 | 397,562 | 169,639 |
In 2022, revenue with a specific customer amounted to € 71.9m, which equates to a share of revenue of more than 10 % of consolidated revenue. In the previous year, revenue with one customer and a share of revenue of more than 10 % amounted to € 71.7m. The revenue is attributable to the "Lithium-Ion Solutions & Microbatteries" segment.
| (€ k) Acquisition values |
LAND | BUILDINGS | RIGHT OF USE BUILDINGS |
TECHNICAL EQUIPMENT AND MACHINERY |
RIGHT OF USE TECHNICAL EQUIPMENT AND MACHINERY |
OTHER EQUIPMENT |
RIGHT OF USE OTHER EQUIPMENT |
CONSTRUCTION IN PROGRESS AND PREPAY MENTS |
TANGIBLE ASSETS |
|---|---|---|---|---|---|---|---|---|---|
| As of January 1, 2021 | 3,165 | 18,057 | 71,819 | 344,598 | 14,408 | 64,950 | 7,910 | 198,191 | 723,098 |
| Currency differences | 0 | -4 | 434 | 522 | 571 | 197 | -453 | -61 | 1,206 |
| Additions | 0 | 348 | 34,944 | 15,878 | 0 | 5,307 | 1,399 | 147,539 | 205,415 |
| Additions consolidation scope Disposals |
0 0 |
0 0 |
475 -667 |
439 -8,982 |
0 -8 |
6 -1,121 |
0 -1,022 |
0 0 |
920 -11,800 |
| Reclassifications | 0 | 1,276 | 0 | 44,428 | 0 | 8,714 | 0 | -55,119 | -701 |
| As of December 31, 2021 | 3,165 | 19,677 | 107,005 | 396,883 | 14,971 | 78,053 | 7,834 | 290,550 | 918,138 |
| Currency differences | 0 | 0 | 461 | 837 | 0 | 284 | 25 | 1 | 1,608 |
| Additions | 0 | 18 | 7,581 | 5,483 | 0 | 1,722 | 730 | 53,949 | 69,483 |
| Disposals | 0 | 0 | -440 | -1,470 | -605 | -817 | -571 | 0 | -3,903 |
| Reclassifications | 0 | 214 | 0 | 39,725 | 0 | 15,698 | 0 | -50,042 | 5,595 |
| As of June 30, 2022 | 3,165 | 19,909 | 114,607 | 441,458 | 14,366 | 94,940 | 8,018 | 294,458 | 990,921 |
| (€ k) Cumulative depreciation |
LAND | BUILDINGS | RIGHT OF USE BUILDINGS |
TECHNICAL EQUIPMENT AND MACHINERY |
RIGHT OF USE TECHNICAL EQUIPMENT AND MACHINERY |
OTHER EQUIPMENT |
RIGHT OF USE OTHER EQUIPMENT |
CONSTRUCTION IN PROGRESS AND PREPAY MENTS |
TANGIBLE ASSETS |
|---|---|---|---|---|---|---|---|---|---|
| As of Jan 1, 2021 | 0 | 651 | 9,790 | 86,357 | 2,786 | 24,083 | 2,849 | 0 | 126,516 |
| Currency differences | 0 | -1 | 274 | 242 | 212 | 156 | -226 | 0 | 657 |
| Additions | 0 | 788 | 12,326 | 61,949 | 3,085 | 8,187 | 2,256 | 0 | 88,591 |
| Disposals | 0 | 0 | -446 | -7,529 | -8 | -135 | -854 | 0 | -8,972 |
| Reclassifications | 0 | 0 | 0 | -8 | 29 | 8 | -29 | 0 | 0 |
| As of Dec 31, 2021 | 0 | 1,438 | 21,944 | 141,011 | 6,104 | 32,299 | 3,996 | 0 | 206,792 |
| Currency differences | 0 | 0 | 306 | 373 | 0 | 222 | 17 | 0 | 918 |
| Additions | 0 | 389 | 6,877 | 34,144 | 1,514 | 4,980 | 1,115 | 0 | 49,019 |
| Disposals | 0 | 0 | -440 | -1,469 | -605 | -710 | -563 | 0 | -3,787 |
| Reclassifications | 0 | 0 | 0 | 0 | 0 | 32 | 0 | 0 | 32 |
| As of June 30, 2022 | 0 | 1,827 | 28,687 | 174,059 | 7,013 | 36,823 | 4,565 | 0 | 252,974 |
| Carrying amounts | |||||||||
| Carrying amounts on Jan 1, 2021 |
3,165 | 17,406 | 62,029 | 258,241 | 11,622 | 40,867 | 5,061 | 198,191 | 596,582 |
| Carrying amounts on Dec 31, 2021 |
3,165 | 18,239 | 85,061 | 255,872 | 8,867 | 45,754 | 3,838 | 290,550 | 711,346 |
| Carrying amounts on June 30, 2022 |
3,165 | 18,082 | 85,920 | 267,399 | 7,353 | 58,117 | 3,453 | 294,458 | 737,947 |
A major part of the investment in property, plant and equipment served to expand production capacity for lithium-ion button cells and the construction of a pilot plant for large-format cells. Replacement investment to renew production equipment, to develop new products and for quality assurance measures is also required at regular intervals. As a result of this, holdings of technical plant and machinery increased from € 255.9 m in 2021 to € 267.4 m as of June 30, 2022.
Accordingly, depreciation and amortization of property, plant and equipment is expected to increase only significantly at the year end.
Additions include own work capitalized of € 0.9 m (2021: € 0.8 m).
There were no restrictions on rights of ownership or disposal for property, plant and equipment during financial years 2021 and 2022. Order commitments from the purchase of property, plant and equipment amounted to € 101.9 m (2021: € 95.1 m).
| COMMERCIAL | |||||
|---|---|---|---|---|---|
| TRADEMARK RIGHT | PROPERTY RIGHTS | ||||
| (€ k) | GOODWILL | AND OTHER INTANGIBLE RIGHTS |
AND OTHER | INTANGIBLE ASSETS DEVELOPMENT COSTS | TOTAL |
| Acquisition values | |||||
| As of January 1, 2021 | 638 | 37,102 | 23,386 | 20,394 | 81,520 |
| Currency differences | 0 | -1 | 2 | 12 | 13 |
| Additions | 0 | 1,389 | 8 | 7,357 | 8,754 |
| Additions in the scope of consolidation | 4,298 | 673 | 0 | 0 | 4,971 |
| Disposals | 0 | -88 | 0 | -69 | -157 |
| Reclassifications | 0 | 23,129 | -22,428 | 0 | 701 |
| As of December 31, 2021 | 4,936 | 62,204 | 968 | 27,694 | 95,802 |
| Currency differences | 0 | 0 | 2 | 0 | 2 |
| Additions | 0 | 65 | 765 | 11,967 | 12,797 |
| Reclassifications | 0 | -150 | 1,208 | -6,653 | -5,595 |
| As of June 30, 2022 | 4,936 | 62,119 | 2,943 | 33,008 | 103,006 |
| TRADEMARK RIGHT | COMMERCIAL PROPERTY RIGHTS |
||||
|---|---|---|---|---|---|
| AND OTHER | AND OTHER | ||||
| (€ k) | GOODWILL | INTANGIBLE RIGHTS | INTANGIBLE ASSETS DEVELOPMENT COSTS | TOTAL | |
| Cumulative depreciation | |||||
| As of Jan 1, 2021 | 0 | 6,135 | 864 | 10,588 | 17,587 |
| Additions | 0 | 4,523 | 101 | 2,454 | 7,078 |
| Disposals | 0 | -90 | 0 | 0 | -90 |
| Reclassifications | 0 | 192 | -192 | 0 | 0 |
| As of Dec 31, 2021 | 0 | 10,760 | 773 | 13,042 | 24,575 |
| Currency differences | 0 | 0 | -1 | 1 | 0 |
| Additions | 0 | 144 | 2,315 | 1,085 | 3,544 |
| Reclassifications | 0 | 382 | -414 | 0 | -32 |
| As of June 30, 2022 | 0 | 11,286 | 2,673 | 14,128 | 28,087 |
| Carrying amounts | |||||
| Carrying amounts on Jan 1, 2021 | 638 | 30,967 | 22,522 | 9,806 | 63,933 |
| Carrying amounts on Dec 31, 2021 | 4,936 | 51,444 | 195 | 14,652 | 71,227 |
| Carrying amounts on June 30, 2022 | 4,936 | 50,833 | 270 | 18,880 | 74,919 |
Of the own work capitalized of € 6.2 m (2021: € 1.6 m), self-manufactured intangible assets, which are not yet ready for use, of € 5.2 m (2021: € 6.9 m) were recognized in 2022.
Research and development expenses amounting to € 14.1 m (2021: € 44.0 m) were recognized in the income statement.
There were no restrictions on rights of ownership or disposal for intangible assets during fiscal years 2021 and 2022.
The Group leases various production, office and storage buildings as well as plants and vehicles. Leases are usually concluded for fixed periods from 1.5 to 13 years but may include options to extend or may even be unlimited in individual cases. Changes to leased fixed assets are presented in note 14 "Property, plant and equipment".
Future lease payments based on non-terminable leases total:
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Lease liabilities - current | 17,693 | 16,995 |
| Lease liabilities - non current | 79,210 | 80,710 |
| Total | 96,903 | 97,705 |
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
| thereof residual term of up to 1 year | 18,781 | 17,826 |
| thereof residual term of 1 to 5 years | 55,866 | 54,533 |
| thereof residual term of more than 5 years | 26,565 | 31,299 |
| Total minimum lease payments (undiscounted) | 101,212 | 103,658 |
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
| Amounts recognised in the income statement | ||
| Interest expense on lease liabilities | 626 | 532 |
| Income from the subleasing of leased assets | -72 | -72 |
| Expense from short-term leases | 359 | 824 |
| Expense from long-term leases of low-value assets | 1,297 | 920 |
| Total | 2,210 | 2,204 |
Variable lease payments, residual value guarantees and options to terminate do not apply at present.
Inventories are divided into the following items:
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Raw materials and supplies | 91,397 | 74,891 |
| Unfinished goods | 39,057 | 34,525 |
| Finished goods and merchandise | 101,936 | 47,678 |
| Advance payments made | 1 | 16 |
| Inventories | 232,391 | 157,110 |
| Impairment income (+) / expense (-) recognized in the income statement |
-196 | -4,128 |
Inventories were increased massively in the first half of 2022 in response to current developments on commodity markets. Impairments of inventories recognized as expense in the reporting period amounted to € 0.2 m (2021: € 4.1 m). In the first half of 2022, as in the previous year, no reversals were undertaken, which were recognized as an
impairment of the cost of materials in the reporting period. The carrying amount of inventories after impairment totaled € 15.5 m (2021: € 12.3 m).
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Receivables due from third parties (gross) | 99,812 | 163,621 |
| Receivables due from related parties | 1,913 | 2,175 |
| Total trade receivables | 101,725 | 165,796 |
| Contract assets | 4,221 | 6,736 |
| Gross trade receivables and contract assets | 105,946 | 172,532 |
| Less loss allowances | -3,326 | -2,893 |
| Net trade receivables and contract assets | 102,620 | 169,639 |
Existing net receivables have fallen as of June 30, 2022. This is due to the strong fourth quarter in 2021, which led to substantial receivables.
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Other assets | 125,323 | 57,777 |
| Of which current | 90,181 | 40,133 |
| Of which non-current | 35,142 | 17,644 |
Both the reimbursement right from the assumption of debt obligation for pensions of VARTA Microbattery GmbH in June 2017 and the debt contribution for pensions of VARTA Consumer Batteries GmbH & Co. KGaA in 2022 are reported in the amount of € 35.1 m (2021: € 17.6 m) under non-current assets.
Current other assets consisted of the following:
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Receivables from grant projects | 56,777 | 18,455 |
| Other tax receivables | 7,170 | 6,475 |
| Other Receivables | 17,275 | 13,521 |
| Miscellaneous other assets | 8,959 | 1,682 |
| Total | 90,181 | 40,133 |
Receivables from grant projects of € 56.8 m (2021: € 18.5 m) are due from both the European Commission as well as the German Federal Ministry of Economics and Energy (BMWi), and the States of Bavaria and Baden-Württemberg.
Receivables from grant projects of € 6.4 m (2021: € 6.0 m) due from the European Commission relate to government subsidies for projects in which the Group acts as coordinator and receives and manages the subsidies on a fiduciary basis from the funding authority. As of June 30, 2022, existing forwarded advance payments to the participating cooperation partners amounted to € 7.1 m (2021: € 4.4 m).
in 2022, receivables from the IPCEI promotional project increased from € 12.5 m to € 50.4 m.
As of June 30, 2022, other receivables have risen by € 3.8 m year on year. This increase is mainly the result of a legally determined compensation receivable from patent disputes.
The item for miscellaneous other assets largely consists of prepaid expenses, which have risen from € 1.7 m to € 9.0 m.
Cash and cash equivalents can be broken down as follows:
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Cash | 212 | 19 |
| Credit balances with financial institutions |
37,631 | 73,088 |
| Total | 37,843 | 73,107 |
There were the following changes to the equity of the VARTA AG Group in 2022:
| OTHER RESERVES | |||||||
|---|---|---|---|---|---|---|---|
| SUBSCRIBED CAPITAL |
CAPITAL RESERVE | RETAINED EARNINGS* |
CURRENCY DIFFERENCES |
HEDGING RESERVE |
NON CONTROLLING INTERESTS |
TOTAL EQUITY | |
| As of Jan 1, 2022 | 40,422 | 252,275 | 236,965 | 2,813 | 21 | 0 | 532,496 |
| Effect of share-based payment | 0 | 9 | 0 | 0 | 0 | 0 | 9 |
| Dividend distribution shareholders VARTA AG | 0 | 0 | -100,246 | 0 | 0 | 0 | -100,246 |
| Comprehensive income | |||||||
| Group result | 0 | 0 | 2,784 | 0 | 0 | 0 | 2,784 |
| Other comprehensive income | 0 | 0 | 6,807 | 2,662 | 0 | 0 | 9,469 |
| Comprehensive income | 0 | 0 | 9,591 | 2,662 | 0 | 0 | 12,253 |
| As of June 30, 2022 | 40,422 | 252,284 | 146,310 | 5,475 | 21 | 0 | 444,512 |
* Retained earnings including net income
After the reporting date, the Executive Board of VARTA Aktiengesellschaft proposed that the group result for financial year 2021 of € 147.9 m reported in the annual financial statements of VARTA Aktiengesellschaft be used to pay a dividend of € 2.48 per share entitled to dividends.
The dividend payment totaling € 100.2 m for 40,421,686 shares entitled to dividends was resolved by the Annual General Meeting of VARTA Aktiengesellschaft on June 21, 2022. The remaining amount of € 47.6 m was carried forward to 2022.
The calculation of earnings per share* is based on the profit attributable to shareholders and a weighted average of the shares in circulation. Since there were no circumstances either in the reporting period or in the previous year that resulted in dilution effects, diluted earnings per share correspond to basic earnings per share.
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Earnings, attributable to shareholders in € k* | 2,784 | 45,550 |
| Weighted average of ordinary shares in circulation ('000 shares) |
40,422 | 40,422 |
| Basic earnings per share in € | 0.07 | 1.13 |
| Diluted earnings per share in € | 0.07 | 1.13 |
* Earnings per share relate to the shares of VARTA AG
Other financial liabilities consisted of the following:
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Other financial liabilities | 416,958 | 203,775 |
| Of which non-current | 367,181 | 117,990 |
| Of which current | 49,777 | 85,785 |
| Composition of other financial liabilities | |||
|---|---|---|---|
| Total | 416,958 | 203,775 | |
| Liabilities to financial institutions | 382,644 | 164,643 | |
| Derivative financial instruments | 10,758 | 5,657 | |
| Other financial liabilities | 23,556 | 33,475 |
Liabilities to banks have risen from 164.6 Mio. € to 382.6 Mio. € due to the drawing of a promissory note loan. VARTA AG placed promissory note loans totaling € 250 m on the capital market via a consortium consisting of BayernLB, HSBC and UniCredit. The four tranches have maturities of five or seven years (3/4 of the credit volume) and primarily carry a fixed interest rate. The funds are available to the company for general financing projects. The initial average interest rate is 1.44%. The transaction was linked to VARTA AG's ESG rating by Morningstar Sustainalytics, the leading independent company in the area of research, rating and analysis of ESG and corporate governance. The promissory note's spread may change in line with any change in VARTA's rating. Inversely, € 35.0 m was repaid from the existing syndicated loan.
Composition of provisions for employee benefits
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Total | 54,584 | 72,279 |
| Of which non-current | 51,074 | 68,837 |
| Of which current | 3,510 | 3,442 |
| Composition of provisions for employee benefits Total |
54,584 | 72,279 |
| Pensions | 39,599 | 58,352 |
| Severance payments | 9,407 | 8,410 |
| Service anniversary bonuses | 1,953 | 1,932 |
| Partial retirement | 3,625 | 3,585 |
Provisions for pensions decreased as a result of changes to actuarial assumptions, in particular, the increase in the discount rate from 1.1% to 3.3%.
Trade payables, contract liabilities and advance payments received were composed as follows:
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Advance payments received | 2,213 | 14,208 |
| Non-current liabilities | 2,213 | 14,208 |
| Trade payables to third parties | 76,394 | 77,084 |
| Liabilities from the acquisition of tangible and intangible assets |
18,844 | 17,890 |
| Liabilities to related parties | 35 | 269 |
| Sum trade payables | 95,273 | 95,243 |
| Contract liabilities | 3,172 | 4,374 |
| Advance payments received | 28,510 | 36,889 |
| Current liabilities | 126,955 | 136,506 |
| Total trade payables, contract liabilities and advance | ||
| payments received | 129,168 | 150,714 |
| of which due immediately | 33,754 | 26,449 |
| of which residual term of up to 1 year | 93,201 | 110,057 |
| of which residual term over to 1 year | 2,213 | 14,208 |
The advance payments received came to € 30.7 m in total and were associated with obligations from, to some extent, pending transactions by the VARTA AG Group to deliver batteries. The resultant liabilities of the VARTA AG Group are repaid as part of future deliveries and meet the requirements for recognition as advance payments received in accordance with IFRS 15.16. This presentation is based on the assumption that the advance payments will be covered in full by subsequent call-offs and consequently do not contain a financing component. In the first half of 2022, € 27.8 m of the advance
payments received shown in the previous year were netted off against matching receivables from call-offs (previous year: € 43.7 m).
As of June 30, 2022, contract liabilities have decreased slightly year-on-year to € 3.2 m (2021: € 4.4 m).
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Other current liabilities | 33,727 | 22,747 |
| Other liabilities | 33,727 | 22,747 |
Current other liabilities rose from € 22.7 m to € 33.7 m. This is mainly due to the increase in liabilities from promotional projects of € 6.9 m (December 31, 2021: € 4.1 m), and deferred income, which mainly relates to government grants, of € 9.6 m (December 31, 2021: € 2.2 m).
Other provisions consisted of the following:
| As of Jun 30, 2022 | 0 | 11,109 | 20 | 6,714 | 17,843 |
|---|---|---|---|---|---|
| Foreign exchange differences | 0 | 30 | -2 | 55 | 83 |
| Reversal | 0 | -1 | 0 | -703 | -704 |
| Consumption | -716 | -3,981 | -1,335 | -2,793 | -8,825 |
| Addition | 0 | 4,304 | 0 | 891 | 5,195 |
| As of Jan 1, 2022 | 716 | 10,757 | 1,357 | 9,264 | 22,094 |
| Changes in other provisions in 2022 | |||||
| Total provisions | 0 | 11,109 | 20 | 6,714 | 17,843 |
| Current | 0 | 8,212 | 20 | 6,714 | 14,946 |
| Non-Current | 0 | 2,897 | 0 | 0 | 2,897 |
| Maturity | |||||
| (€ k) | RESTRUCTURING | WARRANTIES, GUARANTEES |
RESTORATION & SIMILAR OBLIGATIONS |
OTHER PROVISIONS | TOTAL 2022 |
| DISPOSAL, |
| RESTRUCTURING | WARRANTIES, | DISPOSAL, RESTORATION & |
|||
|---|---|---|---|---|---|
| (€ k) | GUARANTEES | SIMILAR OBLIGATIONS | OTHER PROVISIONS | TOTAL 2021 | |
| Maturity | |||||
| Non-Current | 0 | 2,897 | 0 | 0 | 2,897 |
| Current | 716 | 7,860 | 1,357 | 9,263 | 19,197 |
| Total provisions | 716 | 10,757 | 1,357 | 9,263 | 22,094 |
| Changes in other provisions in 2021 | |||||
| As of Jan 1, 2021 | 15,719 | 8,551 | 1,410 | 15,454 | 41,134 |
| Change in consolidation scope | 0 | 0 | 0 | 46 | 46 |
| Addition | 0 | 6,312 | 1,356 | 7,828 | 15,496 |
| Consumption | -14,161 | -3,724 | -1,259 | -12,329 | -31,473 |
| Reversal | -842 | -416 | -150 | -1,839 | -3,247 |
| Foreign exchange differences | 0 | 34 | 0 | 104 | 138 |
| As of Dec 31, 2021 | 716 | 10,757 | 1,357 | 9,264 | 22,094 |
Miscellaneous provisions for commissions of € 2.6m (2021: € 3.2m) and provisions for legal disputes have decreased to € 0.9m (2021: € 1.3m). Provisions for other uncertain liabilities have also reduced to € 0.4m (2021: € 1.3m).
Deferred liabilities comprise the following material items:
| (€ k) Holiday entitlements, overtime and time off Employee bonuses Other deferred liabilities for personnel |
JUNE 30, 2022 14,462 9,836 5,000 |
DECEMBER 31, 2021 8,820 9,098 8,104 |
|---|---|---|
| Deferred liabilities for personnel | 29,298 | 26,022 |
| Outstanding invoices Customer bonus Audit, tax and legal advice Miscellaneous deferred liabilities |
9,367 41,300 3,808 4,019 |
5,870 56,004 2,576 4,954 |
| Other deferred liabilities | 58,494 | 69,404 |
| Deferred liabilities | 87,792 | 95,426 |
Deferred liabilities to employees have only risen very slightly from € 26.0 m to € 29.3 m compared with the previous year. This was largely due to the increase in provisions for annual leave resulting from the accrual of leave in the first half. This development is due to seasonal factors and will become less significant at the end of the year. Other deferred liabilities for personnel, which include country-specific legal requirements for delayed profit participation for employees, trended in the opposite direction. They have decreased by € 0.4m compared with December 31, 2021.
Other deferred liabilities came to € 58.5 m (December 31, 2021: € 69.4 m). The major part of this was attributable to the fall in provisions for customer bonuses of € 41.3 m (2021: € 56.0 m ), which are settled and paid out on the basis of annual agreements at the beginning of the calendar year for the previous year. This development is therefore due to seasonal factors and will become less significant at the end of the year.
The following revenue was achieved from the sale of products and the supply of services:
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Sales revenue | 376,810 | 397,562 |
| of which from the sale of products | 376,076 | 395,573 |
| of which from the provision of services | 734 | 1,989 |
In the first half of 2022, sales revenue fell by 5.2% year on year from 397.6 Mio. € to 376.8 Mio. €. This was due to the disruption of production caused by the pandemic, the shortage of semiconductors and the intermittent disruption of supply chains at our customers' factories, which reduced demand for our products. Customer projects were also delayed.
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Change in unfinished goods | 6,180 | 15,603 |
| Change in finished goods | 43,967 | 15,453 |
| Increase in finished and unfinished goods |
50,147 | 31,056 |
Changes in finished and unfinished goods cannot be reconciled directly with the changes apparent from the consolidated balance sheet. This was due to existing currency differences that affect these items.
The increase in the change in inventories of finished goods was mainly the result of stockpiling of consumer batteries in the "Household Batteries" segment for the impending year end business.
| Total | 200,260 | 158,827 |
|---|---|---|
| Other | 1,687 | 1,269 |
| Materials processing and refining by third parties | 5,924 | 5,212 |
| Miscellaneous cost of materials and purchased services | 7,518 | 9,966 |
| Cost of raw materials, supplies and goods purchased | 185,131 | 142,380 |
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
The increase in the "expense for raw materials, supplies and goods purchased" resulted largely from the increases in commodity prices, which are linked to the depressing assessments of the war situation in Ukraine and the changes in the product mix. In the previous year, the item "other material expenses and services purchased" temporarily included higher costs for temporary staff because of the expansion in capacity and the need for personnel associated therewith. The item "Other" contains consumables which were purchased directly for production or customer orders and consumed without being stored. Expenses for packaging, waste disposal and storage costs and advance freight are also included here.
The personnel expenses contained the following items:
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Wages and salaries | 111,414 | 104,428 |
| Expenses for severance payments | 1,753 | 952 |
| Expenses for statutory social security contributions |
11,871 | 11,049 |
| Pension expenses | 9,209 | 8,796 |
| Other personnel expenses | 1,480 | 1,329 |
| Total | 135,727 | 126,554 |
Personnel expenses have risen marginally compared with the previous year. The increase in wages and salaries as well as expenses for statutory social security contributions is attributable to the increase in staff numbers.
Depreciation and amortization comprised the following:
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Scheduled depreciations of property, plant and equipment (excluding right-of-use assets) |
39,513 | 33,524 |
| Scheduled depreciations of right-of-use assets | 9,506 | 8,226 |
| Scheduled depreciations of intangible assets | 3,544 | 3,307 |
| Total | 52,563 | 45,057 |
As expected, depreciation and amortization have significantly increased year on year through the commissioning of new machinery and equipment.
The other operating income contained the following items:
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Grants and public donations | 41,304 | 18,351 |
| Reversal of provisions and accruals | 1,045 | 747 |
| Income from the sale of property, plant and equipment | 2 | 0 |
| Other | 6,662 | 2,539 |
| Total | 49,013 | 21,637 |
In fiscal year 2022, public grants amounted to € 41.3 m in total (2021: € 18.4 m) and were essentially provided for VARTA Microbattery GmbH, VARTA Micro Production GmbH and VARTA Microbattery S.R.L. For the "Important Project of Common European Interest on Batteries" (IPCEI) explained in the next section, the support was linked to various conditions and granted by the Federal Ministry of Economics and Energy and by the States of Baden-Württemberg and Bavaria. If there is sufficient certainty that the conditions will be met, a receivable is put in and other operating income recorded.
The project, which has been assessed as eligible for support, is part of the IPCEI and is expected to contribute to the development of an innovative battery value-added chain that goes beyond the current state of the art while being sustainable and environmentally compatible in Germany and the European Union. Accordingly, the results of the subsidized project are primarily to be used commercially in the European Union. The grant also aims to achieve spillover effects from the subsidized project on the European economy and society through the exchange of knowledge and technology with research and scientific institutions and other companies. It is also expected, as far as is legally permissible, that recipients of grants will use the grant to purchase components, materials and production plants for their products and services from other German and European companies, if economically possible, to promote upstream markets and sections of the value-added chain as well. Furthermore, the products and services are expected to be characterized by particularly high levels of sustainability and environmental compatibility and encourage sustainable and environmentally compatible reuse and disposal.
The grant is also expected to promote and reinforce Ellwangen and Nördlingen as locations for innovation, business and production. At the same time, the grant aims to develop, manufacture and operate especially sustainable and environmentally compatible plants, buildings and business premises compared with the state of the art. Sustainability issues are to be taken into consideration in all planning, construction and management processes.
The increase in the item "Other" is largely attributable to compensation from patent disputes of € 3.8m.
The other operating expenses contained the following items:
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Legal, auditing and consultancy fees | 12,782 | 8,083 |
| Cost of energy | 10,130 | 4,748 |
| Maintenance | 8,219 | 6,760 |
| Outward freight and customs duties | 6,618 | 5,752 |
| Telephone, postage and IT | 4,989 | 2,787 |
| Other sales and distribution costs | 4,376 | 4,050 |
| Marketing, advertising and representation | 3,841 | 3,364 |
| Commission | 2,807 | 2,327 |
| Warranties | 2,136 | 2,047 |
| Rent and leases | 1,657 | 1,744 |
| Insurance contracts | 1,413 | 1,274 |
| Travel expenses | 1,099 | 460 |
| Cleaning | 1,091 | 916 |
| Contributions and fees | 1,026 | 562 |
| Licenses and patent fees | 763 | 869 |
| Impairment losses from trade receivables | 711 | 93 |
| Bank charges / fund transfer fees | 493 | 504 |
| Apprenticeship and training costs | 472 | 219 |
| Customer credit insurance | 273 | 111 |
| Expenses with related companies | 195 | 112 |
| Engineering and professional fees | 31 | 99 |
| Miscellaneous other operating expenses | 14,794 | 7,667 |
| Total | 79,916 | 54,548 |
Other operating expenses have increased by € 25.4 m in total from € 54.5 m to € 79.9 m. The item "Cost of energy" has more than doubled due to rising energy costs, increasing from 5.4 Mio. € to 10.1 Mio. € compared with the corresponding period in the previous year. The item "Legal, auditing and consultancy fees" posted an increase of 4.7 Mio. €, which is largely attributable to patent disputes. Expenses for IT have risen by 2.2 Mio. €. The change in miscellaneous other operating expenses mainly resulted from exchange rate fluctuations, which rose by € 4.9m from € 0.5m to € 5.4m.
Sundry financial income and sundry financial expenses comprised the following:
| (€ k) | JUNE 30, 2022 | JUNE 30, 2021 |
|---|---|---|
| Foreign exchange gains | 19 | 5 |
| Other financial income, measured at FVTPL |
747 | 114 |
| Sundry financial income | 766 | 119 |
| Loss from disposal of IC investment | 0 | -340 |
| Foreign exchange losses | -5,241 | -1,572 |
| Other financial expense with third parties |
-181 | -16 |
| Sundry financial expense | -5,422 | -1,928 |
Other financial expense has risen significantly compared with the previous year due, in particular, to higher foreign exchange losses. Due to fluctuations in exchange rates, especially USD rates, the change came to 3.7 Mio. €.
Income tax expense is recognized on the basis of the estimate of the weighted average annual income tax rate for the financial year as a whole. The estimated tax rate for the period covered by the interim report up to June 30, 2022, accordingly comes to 28.84% (June 30, 2021: 29.08%).
| (€ k) | JUNE 30, 2022 | LEVEL 1 | LEVEL 2 | LEVEL 3 |
|---|---|---|---|---|
| Financial instruments measured at fair value through profit and loss |
||||
| Factoring | -38,725 | 0 | -38,725 | 0 |
| Debtor warrant | -7,922 | 0 | 0 | -7,922 |
| Derivative financial instruments - assets | 1,508 | 0 | 1,508 | 0 |
| Derivative financial instruments - liabilities | -10,758 | 0 | -10,758 | 0 |
| Total | -55,897 | 0 | -47,975 | -7,922 |
| (€ k) | DECEMBER 31, 2021 | LEVEL 1 | LEVEL 2 | LEVEL 3 |
| Financial instruments measured at fair value through profit and loss |
||||
| Factoring | -55,307 | 0 | -55,307 | 0 |
| Debtor warrant | -8,798 | 0 | 0 | -8,798 |
| Sale & Leaseback contract | -10,555 | 0 | -10,555 | 0 |
| Derivative financial instruments - assets | 108 | 0 | 108 | 0 |
| Derivative financial instruments - liabilities | -5,657 | 0 | -5,657 | 0 |
| Total | -80,209 | 0 | -71,411 | -8,798 |
| (€ k) | JUNE 30, 2022 | DECEMBER 31, 2021 |
|---|---|---|
| Derivative financial instruments | 1,508 | 108 |
| Derivative financial instruments measured at fair value through comprehensive income | 1,508 | 108 |
| Cash and cash equivalents | 37,843 | 73,107 |
| Trade receivables | 98,399 | 162,903 |
| Other assets* | 109,202 | 49,622 |
| Loans and receivables | 207,601 | 212,525 |
| Financial assets measured at amortized cost | 245,444 | 285,632 |
| Total financial assets | 246,952 | 285,740 |
| Derivative financial instruments measured at fair value through comprehensive income | 10,758 | 5,657 |
| Other financial liabilities** | 406,200 | 198,118 |
| Trade payables | 95,273 | 95,243 |
| Deferred liabilities | 58,494 | 69,404 |
| Other liabilities*** | 5,515 | 4,599 |
| Financial liabilities measured at amortized cost | 565,482 | 367,364 |
* Excluding other tax receivables of € 7.2 m (2021: € 6.5 m) and prepaid expenses of € 9.0 m (2021: € 1.7 m)
** Excluding derivative financial instruments of € 10.8 m (2021: € 5.7 m); including a debt waiver of € 7.9 m with an anticipated term of less than 5 years, which can be repaid earlier because of specific circumstances. (cf. note 23 "Other financial liabilities")
Total financial liabilities 576,240 373,021
*** Excluding deferred income of € 9.6 m (2021: € 2.2 m), liabilities from promotional projects of € 6.9 m (2021: € 4.1 m), customs liabilities of € 3.3 m (2021: € 3.0 m), other tax liabilities of € 8.0 m (2021: € 8.9 m) and social security of € 0.38 m (2021: € 0.04 m)
The contractual relationships with related parties described in the annual report 2021 continue almost unchanged.
In July 2021, VARTA Consumer Batteries GmbH & Co. KGaA concluded an agreement with VC Pensionen GmbH, Ellwangen, (German) in which it agreed to assume the pension obligations of VARTA Consumer Batteries GmbH & Co. KGaA as part of a joint debt obligation in return for payment of an agreed fee. According to the agreement, the joint debt assumption is subject to the condition precedent of the first payment by VARTA being received. This occurred at the beginning of fiscal year 2022. Payment of the second tranche took place in the second quarter of 2022.
Still outstanding transactions with related parties which were received after June 30, 2022 and before publication are described under Chapter 42 "Events after the reporting date"
The Executive Board of VARTA AG is composed as follows:
Herbert Schein, Chairman of the Executive Board / CEO Additional board memberships:
Armin Hessenberger, Member of the Executive Board / CFO Additional board memberships:
Rainer Hald, Member of the Executive Board / CTO since January 1, 2022 Additional board memberships:
Dr. Markus Hackstein, Member of the Executive Board since August 1, 2022 Additional board memberships:
Prof. DDr. Michael Tojner (Chairman)
Chairman of the Board of Directors of Montana Tech Components AG and entrepreneur Additional board memberships (among others):
Dr. Harald Sommerer (Deputy Chairman)
Additional board memberships:
Managing Partner of HENN Industrial Group GmbH & Co. KG and entrepreneur Additional board memberships:
The following companies were included for the periods presented in the consolidated financial statements in accordance with section 315e (1) in conjunction with section 313 (2) No. 1 – 6 HGB:
| COMPANY NAME | REGISTERED OFFICE | COUNTRY | CURRENCY | PARTICIPATION STAKE |
|---|---|---|---|---|
| VARTA Aktiengesellschaft | Ellwangen | Germany | EUR | 100.00 % |
| Anabasis Handelsgesellschaft mbH | Dischingen | Germany | EUR | 100.00 % |
| Auditas GmbH | Nördlingen | Germany | EUR | 100.00 % |
| Auditas Inc. | Ridgefield | United States of America |
USD | 100.00 % |
| Connexio alternative investment holding GmbH | Vienna | Austria | EUR | 100.00 % |
| EMEA Consumer Batteries (Shenzhen) Co. Ltd. | Shenzhen | China | CNY | 100.00 % |
| LLC Consumer Batteries Company (Eastern Europe) | Moscow | Russia | RUB | 100.00 % |
| Mezzanin Finanzierungs GmbH | Vienna | Austria | EUR | 100.00 % |
| Paula Grundstücksverwaltungs GmbH & Co. Verm. KG | Pullach i. Isartal | Germany | EUR | 100.00 % |
| Pertrix V SE1 | Ellwangen | Germany | EUR | 100.00 % |
| P.T. VARTA Microbattery Indonesia | Batam | Indonesia | USD | 100.00 % |
| V4Drive Ellwangen GmbH2 | Ellwangen | Germany | EUR | 100.00 % |
| V4Drive Romania S.R.L.3 | Otopeni | Romania | RON | 100.00 % |
| VARTA Consumer Austria GmbH | Brunn am Gebirge | Austria | EUR | 100.00 % |
| VARTA Consumer Batteries Benelux B.V. | Utrecht | Netherlands | EUR | 100.00 % |
| VARTA Consumer Batteries GmbH & Co. KGaA | Ellwangen | Germany | EUR | 100.00 % |
| VARTA Consumer Batteries Iberia S.L.U. | Madrid | Spain | EUR | 100.00 % |
| VARTA Consumer Batteries Italia s.r.l. | Basiglio | Italy | EUR | 100.00 % |
| VARTA Consumer Batteries Poland Sp.z.o.o. | Warsaw | Poland | PLN | 100.00 % |
| VARTA Consumer Batteries UK Ltd. | Oldham | United Kingdom | GBP | 100.00 % |
| VARTA Consumer Bulgaria EOOD | Sofia | Bulgaria | BGN | 100.00 % |
| VARTA Consumer Czech spol. s.r.o. | Česká Lípa | Czech Republic | CZK | 100.00 % |
| VARTA Consumer Denmark A/S | Albertslund | Denmark | DKK | 100.00 % |
| VARTA Consumer Europe Holding GmbH | Ellwangen | Germany | EUR | 100.00 % |
| VARTA Consumer Finland Oy | Vantaa | Finland | EUR | 100.00 % |
| VARTA Consumer France S.A.S. | Courbevoie | France | EUR | 100.00 % |
| VARTA Consumer Hrvatska d.o.o. | Zagreb | Croatia | HRK | 100.00 % |
| VARTA Consumer Hungaria Kft. | Budapest | Hungary | HUF | 100.00 % |
| VARTA Consumer Kommandit GmbH | Ellwangen | Germany | EUR | 100.00 % |
| VARTA Consumer Komplementär GmbH | Ellwangen | Germany | EUR | 100.00 % |
| VARTA Consumer Norway AS | Oslo | Norway | NOK | 100.00 % |
| VARTA Consumer Schweiz GmbH | Dietlikon | Switzerland | CHF | 100.00 % |
| VARTA Consumer Slovakia spol. s.r.o. | Prievidza | Slovakia | EUR | 100.00 % |
| VARTA Consumer Sweden AB | Bromma | Sweden | SEK | 100.00 % |
| VARTA Consumer Trgovina d.o.o. | Ljubljana | Slovenia | EUR | 100.00 % |
| VARTA Innovation GmbH | Graz | Austria | EUR | 100.00 % |
| VARTA Micro Production GmbH | Nördlingen | Germany | EUR | 100.00 % |
| VARTA Microbattery GmbH | Ellwangen | Germany | EUR | 100.00 % |
| VARTA Microbattery Inc. | Rye, NY | United States of America |
USD | 100.00 % |
| VARTA Microbattery Japan KK | Tokyo | Japan | USD | 100.00 % |
| VARTA Microbattery Pte. Ltd. | Singapore | Singapore | USD | 100.00 % |
| VARTA Microbattery S.R.L. | Brasov | Romania | RON | 100.00 % |
| Varta Pilleri Ticaret Limited Sirketi | Istanbul | Turkey | TRY | 100.00 % |
| VARTA Storage GmbH | Nördlingen | Germany | EUR | 100.00 % |
| VHB Real Estate Holdings LLC | Delaware | United States of America |
EUR | 100.00 % |
| VW-VM Verwaltungsgesellschaft mbH i.L.4 | Ellwangen | Germany | EUR | 50.00 % |
1 previously Youco B21-D439 Vorrats-SE
2 previously VARTA Drive GmbH
3 Establishment of the company with effect from March 22, 2022
4 Accounted for at-equity, in liquidation since July 1, 2020
There were no events after the end of the reporting period.
Ellwangen (Jagst), August 10, 2022
CEO CFO
CTO
Executive Board member - Rainer Hald - - Dr. Markus Hackstein -
We hereby declare that, to the best of our knowledge, and in accordance with the applicable reporting principles for the interim financial reporting, the interim consolidated financial statements provide a true and fair view of the Group's net assets, financial position and earnings and that the Group Interim Management Report presents the business development including the results of operations and the position of the Group in such a way that a true picture is provided and the significant risks and opportunities associated with the Group's probable development are described.
Ellwangen, August 10, 2022
CEO CFO
CTO
Executive Board member - Rainer Hald - - Dr. Markus Hackstein -
The condensed consolidated interim financial statements were prepared on the basis of all IAS / IFRS published by the International Accounting Standards Board (IASB) that were applicable on the reporting date as well as all interpretations (IFRIC / SIC) drawn up by the International Financial Reporting Interpretations Committee and the Standing Interpretations Committee, provided these have been adopted by the European Union through the endorsement process. These condensed consolidated interim financial statements should be read in conjunction with the consolidated annual financial statements prepared as of December 31, 2021.
The condensed consolidated interim financial statements as of June 30, 2022 and the Group Interim Management Report have neither been audited in accordance with section 317 of the German Commercial Code (HGB) nor reviewed by an auditor.
Financial statements 2021 March 31, 2022 Interim statement Q1 2022 May 12, 2022 Annual General Meeting June 21, 2022 Half-year report 2022 August 11, 2022 Interim statement Q3 2022 November 15, 2022
Half-year report 2022: https://www.varta-ag.com/en/investoren/publications
Investor Relations VARTA AG Bernhard Wolf T: +49 79 61 921 2969 E: [email protected]
Corporate Communications VARTA AG Dr. Christian Kucznierz T: +49 79 61 921 2727 E: [email protected]
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