Ascom achieved very good results in 2010: Substantial increase in profitability and Group profit
Ascom can look back on a very successful 2010 financial year. At CHF 32.5 million, Group profit is one third higher than in the previous year. The divisions Wireless Solutions and Network Testing significantly improved profitability. At Group level EBITDA rose by 37.3% to CHF 68.4 million (2009: CHF 49.8 million). The EBITDA margin increased to 12.0% (2009: 9.3%). At CHF 571.2 million, Group revenue grew by 9.5% (at constant exchange rates) and in Swiss franc terms by 6.3%.
Ascom is a financially sound technology group, and at 31 December 2010 held cash and cash equivalents amounting to CHF 129.0 million, with an increased equity ratio of 32.6%.
The Board of Directors proposes to the 2011 Annual General Meeting a dividend of CHF 0.25 per share, corresponding to a payout ratio of 28%.
Organic growth of 5.3%
In fiscal 2010, Ascom achieved organic growth of 5.3%, despite lower revenue for Security Communication. At constant exchange rates, Group revenue grew by 9.5% (6.3% in Swiss francs) to CHF 571.2 million (2009: CHF 537.2 million).
Both the Wireless Solutions and Network Testing divisions reported very good results for 2010. Wireless Solutions posted 6.7% higher revenue, an increase of 11.6% at constant exchange rates. Network Testing achieved impressive organic growth of 11.1% in 2010.
Incoming orders for the Ascom Group were 15.2% higher at constant exchange rates (11.8% in Swiss francs), ending the year at CHF 575.1 million.
Substantial rise in Group profit - payment of a dividend
Ascom increased Group profit by about one third to CHF 32.5 million in 2010 (2009: CHF 24.4 million). Given this positive performance, the Board of Directors proposes to the 2011 Annual General Meeting a payment of a dividend of CHF 0.25 per share, corresponding to a payout ratio of 28%.
EBITDA margin increased to 12.0%
Ascom recorded a significant improvement in profitability in 2010, growing EBITDA by more than one third to CHF 68.4 million compared to CHF 49.8 million in 2009. At the same time, the EBITDA margin increased to a remarkable level of 12.0%. EBIT amounted to CHF 48.4 million resulting in a significantly higher EBIT margin of 8.5% (2009: 6.1%). In addition, R&D spending was increased to 10.0% of revenue (2009: 8.7%).
Wireless Solutions posted excellent results, increasing EBITDA to CHF 37.2 million versus CHF 30.0 million in 2009 and improving the EBITDA margin from 11.3% to 13.1%.
Network Testing also saw substantial improvement in its results, posting EBITDA of CHF 27.7 million (2009: CHF 18.1 million) and the EBITDA margin increasing from 13.6% in 2009 to 16.4%.
Security Communication closed the 2010 financial year with lower profit. Provisions to cushion operational risks reduced EBITDA from CHF 4.8 million in the previous year to CHF 2.2 million, corresponding to an EBITDA margin of 1.8% (2009: 3.5%).
Solid balance sheet structure
At 31 December 2010, Ascom had cash and cash equivalents of CHF 129.0 million (2009: CHF 127.7 million) and an equity ratio of 32.6% (2009: 29.4%). Ascom is therefore a financially sound technology group.
Clear profitability targets "in 13: 14 to 15"
Over the next few years, Ascom will continue to pursue the corporate strategy it adopted in 2004 and focus consistently on Mission-Critical Communication in its business-to-business activities.
The Wireless Solutions and Network Testing divisions are both aiming for an average annual organic growth of 5-10% in 2012 and 2013. At Group level Ascom wants to achieve an EBITDA margin of 14-15% in 2013. The basis for accelerated growth in the future are targeted investments in the Wireless Solutions and Network Testing divisions, as well as in new technologies, innovative products and new markets.
Wireless Solutions: Focus on Mission-Critical Communication for the healthcare sector
Wireless Solutions aims to become the international market leader in Mission-Critical Communication in the healthcare sector. Parallel to this, the division will continue to develop business in other target segments such as industry, retail, hotels and security institutions. Wireless Solutions will broaden the product range and further expand its sales channels. In addition, growth initiatives will be underpinned by targeted acquisitions, preferably in the healthcare sector.
The target for Wireless Solutions in 2013 is an EBITDA margin of 12-15% and an average annual growth of 5-10% in the years 2012 and 2013. Wireless Solutions is expected to show slight revenue growth in 2011.
Network Testing: Further expansion of global market position in benchmarking and optimization of mobile networks
The forthcoming introduction of the new LTE (Long Term Evolution) mobile standard, which is being driven by increased demand for mobile broadband services, is expected to boost investment spending by mobile network operators from 2012 onwards, although investment levels will vary from region to region. Rising demand for LTE in mobile networks will be a key driver of growth for Network Testing, a global market leader in the areas of benchmarking and mobile network optimization, in 2012 and 2013.
Network Testing has set itself the goal of achieving an EBITDA margin of 16-19% in 2013. In 2012 and 2013, the target is an average organic growth of 5-10% while in 2011 revenue is predicted to remain stable.
Security Communication: Focus as national champion in secure communications
Security Communication is aiming to further consolidate its position as a leading provider of secure communications for national and civilian security institutions. The main focus will be on enhancing offerings and life cycle management for the Swiss market in order to improve the profitability and to reduce the volatility of the business. Projects were launched in order to further reduce risks and to improve the division's profitability already this year.
Security Communication has set itself the goal of achieving an EBITDA margin of 7-10% in 2013. The division expects slightly lower revenue but improved profitability in 2011.
Outlook for 2011
The priority in 2011 is on targeted investments which will enable accelerated growth from 2012 onwards, provided the economic climate remains largely stable.
For 2011, the target at Group level is to achieve an EBITDA margin of 11.5-12.5%.
The full 2010 Annual Report of the Ascom Group is available online athttp://www.ascom.com/report2010-en.
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