Frequentis : Half-Year Financial Report 2023 | 16.08.2023

Half-Year Financial Report 2023

Key figures Frequentis Group

All figures in EUR million. except where otherwise stated.

Earnings	H1 2023	H1 2022	+/- in %	+/-	2022
in EUR million
Revenues	186.8	167.3	+11.7%	+19.5	386.0
EBITDA	8.2	8.4	-3.1%	-0.3	45.6
EBITDA margin	4.4%	5.1%	-0.7 PP	-	11.8%
EBIT	-0.3	-0.5	+45.7%	+0.2	25.0
EBIT margin	-0.2%	-0.3%	+0.1 PP	-	6.5%
Profit/loss for the period	-0.5	-0.3	-79.6%	-0.2	18.9
Earnings per share in EUR, basic	-0.08	-0.03	-150.2%	-	1.41
Earnings per share in EUR, diluted	-0.07	-0.03	-149.4%	-	1.41
Orders	H1 2023	H1 2022	+/- in %	+/-	2022
in EUR million
Order intake	208.0	161.2	+29.1%	+46.8	404.8
Orders on hand at end of period	546.7	498.1	+9.8%	+48.6	522.0

Statement of financial position

30 June	30 June	+/- in %	+/-	2022
2023	2022	in EUR million

Total assets	357.3	318.5	+12.2%	+38.7	340.3
Shareholders' equity	142.8	129.8	+10.1%	+13.1	147.3
Equity ratio	40.0%	40.7%	-0.7 PP	-	43.3%
Net cash	75.1	84.5	-11.1%	-9.4	91.0
No. of employees (average, in FTE)1)	2,180	2,021	+7.9%	-	2,081

Cash flow statement

H1 2023	H1 2022	+/- in %	+/-	2022
in EUR million

Cash flow from operating activities	-1.0	-3.3	+69.7%	+2.3	14.2
Cash flow from investing activities	-22.9	-4.2	-442.8%	-18.7	-20.1
Cash flow from financing activities	-2.4	-12.3	+80.5%	+9.9	-16.5
Cash and cash equivalents at end of period	54.5	84.7	-35.6%	-30.2	81.4

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

1. Number of employees reported as average full-time equivalents (FTE).

Frequentis Group
Half-Year Financial Report 2023	Preface	3

Preface

Ladies and gentlemen,

In the first six months of 2023, the Frequentis Group registered strong revenue growth, based on the high level of orders on hand at year-end 2022 and ongoing order intake. Order intake was also considerably higher in the first half of 2023 than in the first half of 2022, thanks to intensive demand and the corresponding activities by the sales team.

Highlights

We are satisfied with our performance in the first six months and see it as the starting point for the ongoing development of the Frequentis Group.

• Order intake increased by 29.1% to EUR 208.0 million (H1 2022: EUR 161.2 million)
• Orders on hand were 9.8% higher at EUR 546.7 million at end-June 2023 (June 2022: EUR 498.1 million).
• Revenues rose by 11.7% to EUR 186.8 million (H1 2022: EUR 167.3 million)
• EBITDA decreased to EUR 8.2 million (H1 2022: EUR 8.4 million)
• EBIT improved to EUR -0.3 million (H1 2022: EUR -0.5 million).
• The profit for the period was EUR -0.5 million (H1 2022: EUR -0.3 million).
• The equity ratio was almost unchanged at 40.0% (June 2022: 40.7%)
• Net cash is EUR 75.1 million (June 2022: EUR 84.5 million)

A robust growth track

The continuous organic and inorganic expansion of our product portfolio resulted in a 29.1% rise in order intake to EUR 208.0 million in the first half of 2023. At end-June 2023, orders on hand amounted to EUR 546.7 million, an increase of 9.8% compared with end-June 2022. Thanks to the good order situation, capacity utilisation at Frequentis was and remains good and the next steps on our growth path are mapped out.

Revenues were 11.7% higher at EUR 186.8 million. The German company FRAFOS, which we acquired in April 2023, made a slight contribution to this increase. The war in Ukraine, which started in February 2022, indirectly impacted the Frequentis Group through higher inflation, which then filtered through stepwise to the cost of goods sourced from suppliers, salary rises, and other cost items.

Despite the negative inflation-driven effects, EBITDA was EUR 8.2 million (H1 2022: EUR 8.4 million). Depreciation and amortisation were almost unchanged. Overall, EBIT improved to EUR -0.3 million (H1 2022: EUR -0.5 million). The second half of the year will remain by far the more relevant period for our overall profitability.

Our financials remain solid. Total assets were EUR 357.3 million, 12.2% higher than at end-June 2022, equity increased to EUR 142.8 million and the equity ratio was therefore 40.0% at end-June 2023. The net cash position was EUR 75.1 million at end-June 2023.

We are pleased that in June we could hold our Annual General Meeting 2023 in person again.

Our shareholders approved our proposal and passed a resolution to increase the dividend by 10% to EUR 0.22 per share. The dividend was paid in June.

				Frequentis Group
4		Preface		Half-Year Financial Report 2023

Expansion of the product portfolio

Frequentis has made nine acquisitions since its IPO in May 2019. Proactively searching for attractive M&A opportunities is part of the Frequentis strategy of extending its product portfolio. In addition to acquisitions, we naturally also focus on developing new products and solutions and enhancing existing products and solutions through company- and customer-funded research & development.

Acquisition to strengthen expertise in cybersecurity

In April 2023, Frequentis acquired a 76.67% interest in FRAFOS GmbH, which is based in Berlin, Germany. FRAFOS will deliver key security components for Frequentis' communication solutions for all safety-critical sectors. Solutions from FRAFOS are approved for safety-critical installations of government organisations and by Germany's Federal Office for Security and Information Technology (BSI).

FRAFOS is an expert in VoIP firewalls (Voice Over Internet Protocol), which support Frequentis in solutions for safety-critical operations by expanding protection against denial-of-service (DOS) attacks and attempted fraud.

Acquisition on the recorder market

In July 2023, Frequentis acquired 100% of the Norwegian software company GuardREC ATC AS, which has since been renamed Frequentis Recording AS as part of the integration process. This acquisition will increase recording competence in all business areas. Its portfolio covers all aspects of surveillance as well as audio, video, and data recording, including data analysis. Frequentis' recording solution DIVOS will be merged with the solution that has been acquired to provide a new global product offer.

Forecast for 2023

The uncertainties remain in the second half of the year:

• the war in Ukraine has entered its second year,
• inflation is still far from the average of less than 2% (in the euro zone) seen since the start of the millennium,
• the major economic areas such as the USA and the euro zone will probably achieve growth of just 1.8% and 0.9%, respectively, in 2023 (IMF forecast July 2023).

The outbreak of even limited conflicts can rapidly cause distortion of the global IT hardware market. In the project business, Frequentis has always had to address extensive challenges and dynamic changes in external influences and adapts constantly to the relevant conditions. The wide range of uncertainties makes forecasting difficult at present.

It is not possible to make a reliable estimate of the exact effect on costs, e.g., travel expenses, higher salaries, delays in passing on inflation-driven price rises to customers, and potential supply chain bottlenecks and delivery delays.

In 2023, expenses for company-funded research & development will be higher than in 2022. Capital expenditure (capex) will be around EUR 10 million.

Frequentis Group
Half-Year Financial Report 2023	Preface	5

Depending on the development of the aspects outlined above, Frequentis considers that it is moving in the right direction to achieve the following targets for 2023 compared with 2022:

• Increase revenues
• Increase order intake
• EBIT margin of around 6-8%.

Vienna, 14 August 2023

Best regards,

Norbert Haslacher

Chairman

of the Executive Board

Monika Haselbacher		Hermann Mattanovich		Peter Skerlan
Member		Member		Member
of the Executive Board		of the Executive Board		of the Executive Board