Frequentis : Consolidated Non-financial Report 2023 | 09.04.2024

Consolidated 2023 Non-financial Report

				Frequentis Group
2		Key figures Frequentis Group		Non-Financial Report 2023

Key figures Frequentis Group

All figures in EUR million, except where otherwise stated.

Earnings

		+/-
2023	2022 +/- in %	2021	2020	20191
in EUR

million

Revenues	427.5		386.0	+10.8%	+41.5	333.5	299.4	303.6
EBITDA	44.2		45.6	-3.2%	-1.5	46.5	41.9	30.2
EBITDA margin	10.3%		11.8%	-1.5 PP	-	13.9%	14.0%	9.9%
EBIT	26.6		25.0	+6.6%	+1.7	29.0	26.8	17.2
EBIT margin	6.2%		6.5%	-0.3 PP	-	8.7%	9.0%	5.7%
Profit/loss for the period	20.0		18.9	+5.8%	+1.1	20.8	-3.4	12.5
Earnings per share in EUR	1.39		1.41	-1.7%	-	1.50	-0.30	0.93
Dividend in EUR (for the financial year)	0.244		0.22	+9.1%	-	0.20	0.15	0.15

Orders

		+/-
2023	2022 +/- in %	2021	2020	2019
in EUR

million

Order intake	504.8		404.8	+24.7%	+100.0	333.2	314.6	333.7
Orders on hand (at year-end)	594.7		522.0	+13.9%	+72.6	467.9	427.6	391.5
Statement of financial position	2023		2022	+/- in %	+/-	2021	2020	20191
	in EUR
						million
Total assets		371.1		340.3	+9.1%	+30.8	315.7	277.6	272.1
Shareholders' equity	155.6		147.3	+5.7%	+8.3	129.9	111.42	116.2
Equity ratio	41.9%		43.3%	-1.4 PP	-	41.1%	40.1%2	42.7%
Net cash	84.3		91.0	-7.3%	-6.6	101.1	85.0	77.8
No. of employees (average, FTE3)	2,217		2,081	+6.5%	-	1,937	1,907	1,849
No.of employees (average)	2,341		2,193	+6.7%	-	2,157	1,907	1,849
Cash flow statement	2023		2022	+/- in %	+/-	2021	2020	20191
	in EUR
						million
Cash flow from operating activities		25.7		14.2	+80.4%	+11.4	48.8	54.8	17.7
Cash flow from investing activities	-18.8		-20.1	+6.5%	+1.3	-24.6	-7.0	-4.6
Cash flow from financing activities	-13.4		-16.5	+18.7%	+3.1	-12.6	-10.1	8.0
Cash and cash equivalents at end of	74.2		81.4	-8.8%	-7.2	103.8	91.3	66.9
period

Note: Slight differences may result from rounding of individual items and percentages.

1. Initial application of IFRS 16 (Leases) from 1 January 2019 (↗ Note 41 to the consolidated financial statements 2019)
2. Comparative figures for 2020 restated.
3. Average number of employees expressed as full-time equivalents (FTE); comparative figures for 2021 restated.
4. Proposal to the Annual General Meeting 2024.

Consolidated Non-financial Report 2023

Key figures Frequentis Group	2
Contents	3
Foreword by the Executive Board	4
About this report	6
Company profile	9
Business model	12
ESG at Frequentis	13
Preparations for CSRD reporting	19
Impact of the geopolitical situation	24
Social and employee matters	25
Environmental matters	36
Human rights, compliance & anti-corruption	43
Safety, security & data protection	50
Risk-impact analysis	58
ESG outlook	61
KPIs for non-financial reporting	62
GRI content index	70
Sustainable Development Goals (SDGs)	73
EU Taxonomy	74
Report on the independent audit of the consolidated non-financial report in
accordance with section 267a of the Austrian Commercial Code (UGB)	82
Declaration by all legal representatives	84

				Frequentis Group
4		Foreword by the Executive Board		Non-Financial Report 2023

	Foreword by the Executive Board
	Safe. Secure. Sustainable.
	Putting our responsibility into practice.
GRI 2-22	Corporate social responsibility and sustainability are values that the Frequentis Group has been
	committed to in all its activities for many years. Sustainability is therefore a fundamental element in
	our holistic corporate culture and covers the entire value chain1. We see sustainability as an
	opportunity for our future development.

In 2023, ESG (environment - social - governance) was integrated into Frequentis' overall strategy under the motto "Safe. Secure. Sustainable". By making ESG a key element of our corporate strategy, we want to emphasise the importance of sustainability and corporate social responsibility for the development of our group of companies, strengthen the related awareness throughout the Frequentis Group, and ensure comprehensive understanding and support for the implementation of measures. Our ESG strategy takes a very broad approach. ESG is reflected in our corporate purpose ("for a safer world"), the Frequentis culture, and the values and objectives of the Frequentis Group.

This basic approach accompanied us throughout 2023, a year of notable successes, yet, at the same time, increasing geopolitical tension and crises. That made the achievements of the Frequentis team even more impressive - and they were rewarded by the market, as shown by the figures for 2023.

In addition, in 2023, we focused on extending the ESG organisation, especially with a view to the upcoming requirements of the CSRD (the European Union's Corporate Sustainability Reporting Directive). The aim of the CSRD is to improve the quality and comparability of sustainability reporting. To achieve that, the established reporting requirements on environmental, social, human rights, and governance aspects have been greatly extended and standardised.

1 The value chain is defined as the entire spectrum of activities, resources, and relationships associated with the company's business model and the external environment in which it operates. In this context, Frequentis concentrates on monitoring its direct upstream and downstream relationships.

Frequentis Group
Non-Financial Report 2023	Foreword by the Executive Board	5

Although reporting in compliance with the CSRD only becomes mandatory from the 2024 financial year, we have already embarked on extensive preparatory work. An ESG Steering Group, headed by the CFO as the representative of the Executive Board, is driving forward this work by defining and coordinating further ESG measures. All activities are discussed with the Executive Board and Supervisory Board and are supported by the Supervisory Board, as the company's highest governance body.

A central milestone in the preparations for reporting in accordance with the CSRD was a materiality assessment based on the ESRS (European Sustainability Reporting Standards), which was undertaken in October 2023. The principle of double materiality on which this materiality assessment was based allows two perspectives on materiality in the context of sustainability reporting (impact materiality and financial materiality). In addition to the topics covered by the ESRS, safety and security are material company-specific topics for sustainability reporting at Frequentis (↗ Materiality assessment in conformance with the ESRS).

The results of this new materiality assessment, along with the previous materiality analyses, pave the way for the future: we strive to improve all aspects of our social and ecological performance throughout the Group, fulfil our compliance obligations, and actively work towards sustainable development.

For a safer world: Safe. Secure. Sustainable.

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

6

GRI 2-3 GRI 2-4 GRI 2-8

		Frequentis Group
About this report		Non-Financial Report 2023

About this report

In keeping with its mission "for a safer world", the Frequentis Group is committed to sustainability in everything it does. Appropriate initiatives are implemented locally in conformance with local law. The reporting period covered by this non-financial report is 2023 (publication date: 9 April 2024). The non- financial report on 2022 was published on 12 April 2023.

This non-financial report covers Frequentis AG, registered address Innovationstraße 1, 1100 Vienna, Austria, and its subsidiaries (subsequently referred to as Frequentis, the Frequentis Group, or the Group). As in the previous year, in the non-financial report the number of employees presented is given as a headcount because all employee-related indicators refer to the number of individuals employed. This supplements the presentation in the Group management report, where the employee data are based on full-time equivalents (FTEs). No disclosures were made on GRI 2-8 in the non- financial report for 2022. The data for 2022 are included in this report, together with the data for 2023, in the section "KPIs for non-financial reporting / Social and employee matters" (↗ KPIs for non- financial reporting). Further, the KPI table now contains data on water consumption (GRI 303-5) and more detailed disclosures on the weight of waste generated by Frequentis AG (GRI 306-3, GRI 306-4). No other new or supplementary disclosures have been added for 2023.

The basis for the content of this annual non-financial report and the level of detail is the Austrian Sustainability and Diversity Improvement Act (NaDiVeG), which was published in 2017 in the Austrian Federal Law Gazette (Bundesgesetzblatt) and transposes the European Union's Non-Financial Information (NFI) Directive (2014/95/EU) into Austrian law. This consolidated report was prepared in all material respects in conformance with the legal requirements of the Austrian Sustainability and Diversity Improvement Act (Sections 243b and 267a Austrian Commercial Code [UGB]) and meets the requirements set out in Section 243b UGB for the individual financial statements of Frequentis AG and Section 267a UGB for the consolidated financial statements. The materiality assessment, risks, and the concepts developed also apply for both Frequentis AG and the Frequentis Group.

This is the fifth non-financial report of the Frequentis Group. It was prepared on the basis of the materiality assessment performed in November 2021. To meet the extended requirements of the CSRD (Corporate Sustainability Reporting Directive), a new materiality assessment in accordance with the ESRS (European Sustainability Reporting Standards), based on the principle of double materiality, was performed in October 2023. The results of this new materiality assessment will form the basis for Frequentis' sustainability report from the 2024 financial year. The topics examined in the non-financial report 2023 will be taken into account in the transition to this new reporting basis

(↗ Materiality assessment in conformance with the ESRS).

The non-financial report 2023, like the non-financial report 2022, was prepared on the basis of the GRI (Global Reporting Initiative) Standards 2021. These were used as a guide for the key performance indicators and management approaches. The goal is to continuously enhance the quality of the report and enable all stakeholders to obtain an objective and transparent overview of the company and the actions taken in the past year.

Frequentis Group
Non-Financial Report 2023	About this report

Data compiled and evaluated with reference to the GRI Standards and the related explanations are indicated by stating the applicable GRI Standards in the margin and are listed in the overview in the appendix to this report (↗ GRI content index). From the 2024 financial year, when the CSRD takes effect, the reporting will no longer be based on the GRI Standards. Instead, it will be based on the new ESRS (European Sustainability Reporting Standards). As set out in a joint statement by the European Financial Reporting Advisory Group (EFRAG) and the GRI in September 2023, a high level of interoperability is to be achieved between both standards so the use of the KPIs can be extended in the sustainability report (↗ Preparations for CSRD reporting).

In addition to representative initiatives and relevant disclosures, this report includes topics that have had a significant influence on the company's business activities, together with their social and ecological impact. For the sustainable orientation of the company, Frequentis also observes the United Nations Sustainable Development Goals (↗ Sustainable Development Goals (SDGs)).

Basis for the materiality assessment 2021

As in the non-financial reports on 2021 and 2022, the materiality assessment performed in November 2021 forms the starting point for the non-financial report 2023. The structure of the report is therefore based on the four sections of the materiality assessment, which contain a total of 21 sustainability topics:

• Social and employee matters
• Environmental matters
• Human rights, compliance, anti-corruption
• Safety, security & data protection

The stakeholder survey covered a total of 2,609 people:

• Employees and prospective employees
• Customers
• Shareholders / capital market representatives
• Suppliers
• Top management

These stakeholders were asked to give their assessment of the relevance of the various aspects (shown on the x axis in the following chart). The y axis shows their assessment of the impact of the various activities on society, the economy, and/or the environment. The size of the bubbles shows the top management's assessment of the relevance of each activity for the business, taking into consideration both quantitative and qualitative aspects.

The overview of the 21 statements used in the questionnaire shows that the topics from the areas of safety, security & data protection, and human rights, compliance, anti-corruption are considered to be particularly relevant. In the other two areas, the aspects "family-friendly company" and "efficient energy use" received high ratings.

7

GRI 3-2

GRI 3-1

GRI 3-2

				Frequentis Group
8		About this report		Non-Financial Report 2023

	Assurance review
GRI 2-5	The content of the non-financial report was the subject of a limited assurance review by the external
	audit and tax consultancy BDO Assurance GmbH. The basis for this review was the Austrian
	Sustainability and Diversity Improvement Act (NaDiVeG) in accordance with Section 267a of the
	Austrian Commercial Code (UGB). This report was reviewed by Frequentis' Supervisory Board in
	accordance with Section 96 (1) of the Austrian Companies Act (AktG) (↗ Independent audit of the
	consolidated non-financial report).
GRI 2-2	The consolidated group on which this report is based is the same as for the financial reporting (↗
	Annual Report / Consolidated financial statements / Consolidated group). Besides Frequentis AG, which
	is the parent company, the consolidated group comprises 6 (2022: 6) domestic subsidiaries and 31
	(2022: 28) foreign subsidiaries controlled by Frequentis AG. The financial statements of subsidiaries
	are included in the consolidated financial statements from the date on which control commences
	until the date when control ends. 6 (2022: 7) foreign and 1 domestic (2022: 2) companies are included
	in the consolidated financial statements by applying the equity method. The reporting date for all
	companies included in the financial statements is 31 December.
	If any information applies only to Frequentis AG or to a selected group of consolidated companies,
	this is specifically stated. The risk assessment meets the requirements of the Austrian Sustainability
	and Diversity Improvement Act (NaDiVeG).
	To avoid redundancy, where appropriate, the report refers to the notes to the consolidated financial
	statements for 2023 ("consolidated financial statements"), the Group management report
	("management report"), the consolidated corporate governance report for 2023, the compensation
	report 2023, or the profile of the company. References within this report are indicated by an arrow ↗
	followed by the title of the section in italics.
	Contact

GRI 2-3	If you have any questions about this report, please contact Brigitte Gschiegl, ESG Group Coordinator;
[e-mail].

Frequentis Group
Non-Financial Report 2023	Company profile	9

Company profile

Frequentis AG, which is based in Vienna, Austria, is a global provider of communication and information systems for control centres that perform safety-critical tasks. It develops and markets its "control centre solutions" in the Air Traffic Management segment (civil and military air traffic control, air defence, AIM [aeronautical information management]) and the Public Safety & Transport segment (police, fire service, emergency rescue services, railways and local public transport systems, coastguards, port authorities).

The primary objective of a control centre is to protect people and property from danger. Optimised solutions for this are especially important to customers operating in safety-critical sectors. More than 90% of customers are state-run or other public authorities. Customer requirements often include requests for even more efficient and sustainable solutions and the need to adapt quickly to constantly changing conditions. That increases the demand for integrated solutions. A human- centred design process enables the provision of a secure, efficient, and stable working environment for controllers, operators, and dispatchers.

As a global group of companies, Frequentis has an international network of companies and local representatives in more than 50 countries. In addition to its headquarters in Vienna, Austria, Frequentis' locations include Australia, Brazil, Canada, the Czech Republic, France, Germany, Italy, Norway, Romania, Singapore, Slovakia, Switzerland, the UK, and the USA.

For further information, see ↗ Annual report / Consolidated financial statements / Consolidated group.

The chart below shows the significant Group companies around the world, together with their main activities.

Frequentis has made nine acquisitions since its IPO in May 2019. Frequentis' strategy includes searching proactively for attractive M&A opportunities to extend its product portfolio or gain access to new markets.

GRI 2-1 GRI 2-6

				Frequentis Group
10		Company profile		Non-Financial Report 2023

	Frequentis' products and solutions are used at more than 49,000 working positions in around 150
	countries. Founded in 1947, Frequentis estimates that it is the world market leader in voice
	communication systems for air traffic control with a market share of 30%. Frequentis is also the
	global leader in aeronautical information management and aeronautical message handling systems.
	In April 2023, Frequentis acquired a 76.67% interest in FRAFOS GmbH, which is based in Berlin,
	Germany. FRAFOS delivers 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 Information Security (BSI). FRAFOS is
	an expert in VoIP (voice over internet protocol) firewalls, which support Frequentis in solutions for
	safety-critical operations by expanding protection against denial-of-service (DOS) attacks and
	attempted fraud.
	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
	increases 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 is being merged with the solution that has been acquired to provide a new global product offer.
GRI 2-6	In 2023, revenues increased by 10.8% (EUR 41.5 million) to EUR 427.5 million (2022: EUR 386.0
	million). Taken together, the two acquisitions - the German company FRAFOS and the Norwegian
	company Frequentis Recording - contributed around EUR 2 million to revenues in 2023. Organic
	growth was therefore 10.2%. Revenues in the Air Traffic Management segment grew by 13.8% to
	EUR 293.3 million. In the Public Safety & Transport segment, revenues increased by 4.8% to
	EUR 133.8 million. The revenue split between the Air Traffic Management and Public Safety &
	Transport segments was 69% : 31% in 2023 (2022: 67% : 33%). Looking at the regional revenue split,
	in 2023 Europe accounted for 66% (2022: 65%), the Americas for 16% (2022: 16%), Asia for 11% (2022:
	12%), Australia/Pacific for 6% (2022: 5%), and Africa for 1% (2022: 2%). Less than 1% (2022: <1%) of
	revenues were not allocated to a region.
GRI 2-7	Since increasing use is being made of opportunities to work part-time, the Group management report
	states the number of employees as full-time equivalents (FTEs). This development reflects the trend
	on the labour market, where the offer of part-time employment is increasing. The number of
	employees increased by 6.5% to an average of 2,217 FTEs in 2023 (2022: 2,081 FTEs). Around 1,100
	FTEs, which was around half of the total, were employed in Austria. In the non-financial report for
	2023, the number of employees is supplemented by data on the headcount, because all employee-
	related indicators refer to the number of individuals employed. The headcount was 2,341 in 2023,
	compared with 2,193 in 2022.
GRI 2-1	Since May 2019 shares in Frequentis AG have been listed on the prime market at the Vienna Stock
	Exchange and the General Standard on the Frankfurt Stock Exchange, with the ticker symbol FQT
	(ISIN: ATFREQUENT09). The core shareholder is Johannes Bardach. He holds around 68% of the
	shares (about 8% directly and about 60% indirectly through Frequentis Group Holding GmbH). B&C
	Holding Österreich GmbH holds more than 10% of the shares. The free float is approximately 22%,
	mainly investors from Germany, Austria, and other European countries. For further information, see
	↗ Annual report / The company, ↗ Annual report / The share.
	Details of suppliers can be found in the section ↗ Selection of suppliers.