FORTEC Elektronik : Report 3rd quarter FY 2020/2021

BIG ENOUGH

TO COMPETE -

SMALL ENOUGH

TO CARE.

REPORT 3rd QUARTER 2020/2021

Report 3rd Quarter BY 2020/2021

Content

Preface

Management Report

Consolidated Balance Sheet

Consolidated Statement of Comprehensive Income

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Preface

Dear Shareholders,

Although we have so far coped well with the changing challenges posed by the COVID 19 pandemic since the beginning of 2020, the difficulties, e.g. in the supply chain and the impact of the changing Corona regulations, have reached a new dimension for us and our business partners.

In addition to the continuing uncertainty on the part of customers and suppliers regarding the economic consequences of the pandemic, long delivery times and supply bottlenecks for important components are having a negative impact. Despite extraordinary steps and the immediate introduction of measures to safeguard inventories, timely processing of customer orders was not always possible. Thus, the business development and the result as of 31 March 2021 were again influenced by the pandemic.

In this situation our corporate policy, which provides for a high stock of standard products with appropriate capital commitment, is particularly beneficial to us. Only through sound supply chain management and the early introduction of measures to protect our employees from infection have we been able to achieve a result after three quarters that is below the previous year's figure but within the range of the last forecast. FORTEC had already lowered its forecast for the current financial year at the beginning of February as a precautionary measure.

The order backlog, which stood at EUR 55.0 million as of 31 March 2021 (PY: EUR 51.3 million), shows that the company's medium-term prospects are quite positive. Significant cost-cutting measures have also been introduced to improve the result.

Despite existing challenges, we continue to modernise and transform the Group with the necessary sense of proportion. The current pandemic in particular has shown that the trend towards further digitalisation has been significantly strengthened. This has confirmed our business model and is a sign for us that we are on the right track in our future orientation. So we look to the near future with cautious optimism.

Thank you for your trust & stay healthy!

Sandra Maile

CEO

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Group Management Report: 3rd Quarter 01.07.2020- 31.03.2021

Income Position

Group revenue in three quarters of the 2020/2021 business year amounts to EUR 57.7 million (PY: EUR 65.8

million). Our segments developed as follows: The Data Visualisation segment contributed EUR 35.1 million (PY:

EUR 42.1 million) and the Power Supply segment contributed EUR 22.5 million (PY: EUR 23.6 million) to the Group's revenue.

Other operating income fell from EUR 2.8 million to EUR 0.9 million due to the absence of positive special effects compared to the same period of the previous year.

The gross margin, taking into account the work in progress, increased from 30.7% to 31.7% in three quarters of the business year 2020/2021. Cost of materials fell to EUR 39.2 million (PY: EUR 46.1 million) as an inevitable consequence of the existing supply bottlenecks. The cost of sales ratio fell from 70.1% in the previous year to 68.0%.

Synergy effects resulting from the leasing of the operating business to EMTRON and DISTEC again led to a reduction in personnel expenses from EUR 10.8 million to EUR 9.9 million in the three quarters; the personnel expense ratio rose from 16.4% to 17.1%.

Depreciation remained almost constant at EUR 1.3 million (PY: EUR 1.4 million).

Other operating expenses of EUR 4.4 million, down from EUR 5.8 million in the previous year, were lower due to measures and amounted to 7.6% of turnover (PY: 8.8%).

Due to the aforementioned factors, the operating result (EBIT) as a key financial performance indicator of EUR

3.6 million was below the previous year's value of EUR 5.2 million. The EBIT margin, based on sales revenue, fell from 7.9% in the previous year to 6.2%.

The Data Visualisation segment's share of the Group's operating result is 78% at EUR 2.8 million (PY: 69%, EUR

3.6 million); the EBIT margin fell from 8.5% to 7.9%. Data Visualisation contributed EUR 2.0 million (PY: EUR 2.6 million) to the net income for the period. The segment Power Supply achieved an operating result of EUR 0.8 million (PY: EUR 1.6 million) and an EBIT margin of 3.4% (PY: 6.9%, adjusted for the sale of the building: 4.4%).

Compared to the previous year the net income for the period after three quarters fell from EUR 3.8 million to EUR

2.6 million. The return on sales after taxes decreased from 5.7% to 4.5%. Earnings per share amounted to EUR 0.79 after EUR 1.16 in the previous year.

Asset Position

On the assets side with a balance sheet total of EUR 62.8 million (30.06.2020: EUR 64.6 million) non-current

assets amount to EUR 18.1 million (30.06.2020: EUR 18.9 million).

Of this, goodwill of the acquired subsidiaries is the largest item with EUR 6.7 million (30.06.2020: EUR 6.7 million), followed by the rights of use recognised in accordance with IFRS 16 in the amount of EUR 5.8 million (30.06.2020: EUR 6.3 million).

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With a value of EUR 20.9 million (30.06.2020: EUR 24.7 million), inventories represent the largest single item in

current assets, accounting for 33,3% of the balance sheet total (30.06.2020: 38.2%). Here, the already mentioned difficulties in the procurement of goods are becoming apparent. The trade receivables item decreased from EUR

9.3 million on 30 June 2020 to EUR 8.4 million. As a result, cash and cash equivalents increased to EUR 13.2 million (30.06.2020: EUR 8.9 million) and represent the second largest item under current assets.

Financial and Liquidity Position

The financial situation of the company continues to be excellent, especially in comparison with companies pursuing similar business models, with a high and above-average equity ratio of 68,9% (30.06.2020: 66.3%). With EUR 43.3 million (30.06.2020: EUR 42.8 million), the company is sufficiently equipped with equity capital for future-oriented decisions.

Long-term liabilities to banks, the second-largest item under non-current liabilities, were reduced from EUR 3.5 million as of 30 June 2020 to EUR 2.7 million in accordance with the repayment plan. The largest item continues to be the long-term leasing liabilities in the amount of EUR 4.9 million (30.06.2020: EUR 5.4 million).

Under current liabilities, trade payables decreased from EUR 5.5 million on 30 June 2020 to EUR 4.7 million. Other liabilities slightly increased from EUR 2.2 million to EUR 2.3 million.

The order backlog at the end of March was EUR 55.0 million (PY: EUR 51.3 million) and is a good basis for the coming months, but it also shows that problems in the supply chain are hindering the timely processing of orders.

Forecast

The business development of FORTEC Elektronik AG will continue to be affected by the COVID 19 pandemic and will depend very much on how quickly the incidence of infection can be sustainably controlled worldwide through improved vaccination progress.

Reliable statements cannot be made at present with a longer-term perspective due to the continuing supply bottlenecks and the remaining uncertainties in relation to the pandemic. Therefore, an adjustment of the forecast cannot be completely ruled out.

However, the Management Board of FORTEC AG will continue to do everything in its power and implement the necessary measures to achieve the targets set. FORTEC will continue to be profitable and is well positioned for the period after the pandemic.

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