Ascom: Operating result and EBIT doubled

In the first six months of 2008, Ascom posted 5.8% growth in core business and doubled the EBIT margin from 3.3% to 6.7%. As a result, the Ascom Group is once again profitable and has succeeded in increasing revenue further despite negative currency effects. Both divisions improved profitability, Security Solutions has booked a return to profit.
At CHF 14.4 million, the operating result was significantly higher compared with the previous year (CHF 6.2 million). At EBIT level, profit grew substantially to CHF 16.7 million (previous year: CHF 7.8 million). Ascom posted a Group profit of CHF 7.1 million compared to CHF 1.1 million recorded in the first half of 2007. This includes one-off losses amounting to CHF 8.9 million incurred from the two divested business units Industry (Switzerland) and Traffic in Switzerland.

In the first half of 2008, Ascom increased Group revenue by 5.8% to CHF 249.1 million. At CHF 292.4 million, incoming orders are sizeable, up 5% compared to the prior-year level, while order backlog grew by 19% to CHF 301.4 million, thus providing a solid foundation for future revenue growth.

Wireless Solutions improved its operating result by 25% to CHF 15.3 million and further increased profit at EBIT level by over 30% to CHF 12.3 million. At the same time, the EBIT margin improved by 8.3% compared to 6.6% in the first half of 2007. Wireless Solutions posted a 5.1% increase in revenue to CHF 147.4 million in the first half of 2008; adjusted for currency movements, the increase amounted to 8.3%. A 6% increase in incoming orders was recorded compared to the same period last year; adjusted for currency movements, this amounted to an increase of 9% to CHF 175.5 million.

In the first half of 2008, the Security Solutions division returned to the profit zone. At CHF 8.4 million, the operating result during the reporting period was 180% higher compared to previous year (CHF 3.0 million). Security Solutions has thus achieved a significant improvement at EBIT level. After reporting a loss in the previous year, the division is once more profitable and ended the first half of 2008 with a profit of CHF 6.7 million and a healthy EBIT margin of 6.6%. Compared to last year’s results, Security Solutions improved revenue by 7.1% to CHF 102.2 million, with 4.5% of this increase attributable to the acquisition of Argo Group, which has been consolidated since March 2008.

Consistent implementation of the VITESSE investment program enabled Ascom, among other things, to post a substantial increase in Group profit for the first half of 2008. A profit of CHF 14.1 million was recorded in the first half of 2008 from continuing operations (previous year: CHF 6.9 million). Despite one-off losses from the divested Industry (Switzerland) and Traffic business units in Switzerland, a substantial increase was reported in Group profit to CHF 7.1 million (previous year: CHF 1.1 million). Ascom is debt-free and has a healthy balance sheet. At June 30, 2008, Group net liquidity was high at CHF 200.6 million and the equity ratio amounted to 33.2%.

Given the successful first half-year performance, the Group is on track to achieving its 2008 year-end targets. Since Ascom’s business is mainly of a non-cyclical nature, the Company should be able to compensate impacts on the currently conceivable economic trends the fiscal year 2008 results. Organic revenue growth of 5% was set as the target for 2008 for both divisions. This can be achieved provided there are no further negative changes in currency relations. Ascom is confident that the targeted 2008 EBIT margins of 9-11% for Wireless Solutions and 4-6% for Security Solutions will be met. It also remains committed to its medium-term target of achieving an EBIT margin of 10% at Group level by 2010, accompanied by organic growth of 5% in core business.

KEY FINANCIAL FIGURES, INCOME STATEMENT

¹ Payphones, LPS (= Industry CH) and Traffic Security were classified in December 2007 as activities suitable for divestiture (within discontinued operations)

² Before amortization of intangible assets and other income/(expenses)

ABOUT ASCOM

Ascom is an international solution provider with comprehensive technological know-how in Mission-Critical Communication. The company concentrates on the core areas of Wireless Solutions (high-value, customer-specific on-site communications solutions) and Security Solutions (applications for security, communication and control systems for infrastructure operators, public security institutions and the army). The company has subsidiaries in 17 countries and a workforce of some 2,000 employees worldwide. Ascom registered shares (ASCN) are listed on the SWX Swiss Exchange in Zurich.

This document does not constitute an offer or solicitation to subscribe for, purchase or sell any securities. This document is not being issued in the United States of America or the United Kingdom and should not be distributed in any jurisdiction in a manner where such distribution would not comply with regulatory requirements. In particular, this document may not be distributed into the United States, to United States persons or to publications with a general circulation in the United States. In addition, the securities of Ascom have not been and will not be registered in any jurisdiction outside Switzerland. The securities of Ascom may not be offered, sold or delivered and no solicitation to purchase such securities may be made within the United States or to U.S. persons absent an applicable exemption from the registration requirements of the United States securities laws or within any other jurisdiction and in a manner where such offer, sale, delivery or solicitation might not be in compliance with regulatory requirements (including the United Kingdom).