report of the board of directors

Dear Members,
Ladies and Gentlemen,

the Corona pandemic is already keeping Germany and the world on tenterhooks for the second year - and there seems to be hardly any end in sight. As easy as it would be to place the year 2021 solely under the headline "Corona", it would be wrong. Rather, it is the year of upheavals, changes and setting the course for the future. "Building Business Across Borders" is therefore the guiding theme of this year's annual report.

The aim here is to deepen existing business relationships and establish new ones as a result of changed framework conditions. In a united Europe, national borders are no longer the natural stopping point. Today, the interdependencies in economic relations are reflected in our industry on an international level, and this leads to industry changes that we inevitably have to face. However, no one should be afraid of changing markets, but see them as a chance to engage in something new.

It is important to deepen existing business relationships and establish new ones due to changed framework conditions.

In addition to Corona, the supply chain problems of the industry, especially with semiconductor chips, were a central topic that moved the ICT sector - and will probably continue to do so. Increasingly complex products that require a multitude of components from different suppliers in many different countries require extremely complex purchasing and production planning and supply chains that function one hundred percent - but this is precisely what was undermined in 2021. The supply crisis jeopardised the entire economic recovery in Germany at the end of 2021. According to the Kiel Institute for the World Economy, it will weigh on industrial production for even longer. For the whole of 2021, the losses for the German economy are likely to amount to around 25 billion euros. Already since summer 2021, electronics manufacturers, the automotive sector and suppliers have had problems getting hold of chips. Therefore, new cars were parked "on stockpile" until components were available again, or certain equipment was no longer offered for order. Processors, displays and memory chips are particularly affected. Our industry is not unaffected by this either and felt the effects especially in the last quarter of 2021.

GFT Gemeinschaft Fernmelde-Technik eG was unable to maintain the previous year's revenue due to the delivery situation of its industrial partners. This was particularly noticeable in the fourth quarter of 2021, which is traditionally one of GFT's strongest revenue quarters, with a decline in revenue of 11.3 per cent. Compared to the previous year, revenue fell by 2.0 percent to € 129.7m (previous year: € 132.4m) - nevertheless, earnings before taxes and dividends are again almost at the previous year's level at almost € 5.0m. The total payout in relation to sales revenue before sales deductions rose to 3.77 percent (previous year: 3.69 percent). The focus of the total distribution is the suppliers' merchandise bonus with a share of 65 percent, followed by the cooperative merchandise reimbursement (30 percent) and the IT bonus (5 percent). The order situation of our member companies remains good, so that order execution is temporarily shifted to the current year due to the situation on the international procurement markets. The acquisition of 14 new member companies in the past financial year, as well as the continued internationalisation, will further stabilise GFT's future growth in revenue and earnings and thus enable GFT to continue to fulfil its cooperative sponsorship mandate in the future.

We were also able to welcome the first three Austrian member companies to the GFT Group in 2021. Against the background of the worsening pandemic situation at the end of the year, we are confident that we will be able to successfully continue our expansion in the neighbouring country in 2022. In mid-2021, the opportunity arose to bring forward the planned market entry into the Netherlands. All organisational and personnel preparations in this regard were successfully completed at the end of 2021, so that the market entry has now been taking place from Hilden since the beginning of 2022. On the one hand, internationalisation helps GFT to gain new members and, on the other hand, to leverage synergy effects for the entire GFT Group through the inclusion of new, interesting suppliers.

Another major project concerns Asteria - GFT's new cloud/PBX billing platform. The constant new developments at the large telecommunications providers such as Unify, ALE and Mitel are particularly challenging. The division of labour between VAF and GFT with regard to the development of the legal-contractual and technical-commercial components has proven successfully. The first tests of the platform at the end of 2021 were promising. Parallel to the development of the technical-commercial platform, preparations were made to provide the legally required proof of billing accuracy to the BNetzA in accordance with the Telecommunications Act. By using Asteria, our members will in future be able to offer cloud/PBX services to their customers and to handle the open-vendor onboarding process as well as customer billing in their own name and with their own invoice via a central platform.

Asteria enables our members to enter another business segment in cloud telephony.

Last year's highlight was the GFT/VAF autumn conference in Leipzig at the end of September with over 140 participants. There was communication and "brainstorming" until the early hours of the morning. The event was again accompanied by a trade fair for our suppliers and an interesting technical programme with a focus on cloud telephony. 

In recent years - against the background of the globalisation of markets - the importance of the legal form of the cooperative has increased. The idea behind the cooperative: many independent entrepreneurs who pursue the same goal combine synergies and thus significantly increase their influence on the market - without losing their individuality. In this way, they secure their independence in the long term - for example from multinational companies that increasingly dominate many markets. GFT's business policy goals have been determined by its members for 50 years now. They exert a decisive influence in the important bodies - the Annual General Meeting, the Supervisory Board and the Executive Board. GFT thus always acts in the interests of its member companies, which are managed under their own responsibility.

We would like to express our appreciation and heartfelt thanks for the trust you have placed in your GFT in the financial year 2021 and hope to see you again in person at our Spring Conference in Münster on 28th-29th of April 2022.

Your

Rudolf H. Saken
CEO

Dr. Stefan Touchard
CFO

Hilden, 2nd March 2022