Ascom posted solid results in 2011 and reached an EBITDA margin of 13.7%
In fiscal year 2011, Ascom generated revenue from continuing operations of CHF 437.5 million, representing growth of 1.1% in local currencies. At 13.7%, the EBITDA margin for continuing operations was within the defined guidance range of 13-14% for the fiscal year 2011.
Wireless Solutions achieved excellent results, generating 6.8% revenue growth in local currencies. Despite negative currency effects, the division managed to increase its EBITDA margin to 15.0% (2010: 13.1%).
In line with the market trend for mobile communication networks, Network Testing experienced weaker than expected demand. In local currencies, revenue was 6.9% lower year-on-year, adjusted for divestments. Lower revenue for the division, coupled with negative currency effects, resulted in significant decline in profitability with an EBITDA margin of 2.4%. Beside a comprehensive strategic and operative appraisal, the Board of Directors and the Executive Board initiated immediately the necessary measures to align the business in 2012 to the new economic facts to achieve a substantial improvement in profitability before restructuring costs and to enable the division to grow.
The divestment process of the core business units of the former Security Communication Division has largely been completed.
Group profit amounted to a total of CHF 23.1 million in 2011 (2010: CHF 32.5 million) and includes a loss of CHF 7.5 million from discontinued operations. The Board of Directors will propose to the Annual General Meeting a dividend (in form of a tax-free distribution out of the capital contribution reserves) of CHF 0.25 per share, corresponding to a payout ratio of 39.0%.
Revenue - slight organic growth
Ascom generated revenue of CHF 437.5 million from continuing operations (2010: CHF 472.9 million), representing an increase of 1.1% in local currencies. The depreciation of important currencies (mainly US dollar and Euro) compared to the previous year resulted in sizeable negative foreign exchange effects when translating revenue into Swiss francs. Incoming orders were CHF 451.4 million at year-end 2011 and in local currencies were slightly higher than in the previous year.
The Wireless Solutions business performed very well in 2011, increasing its revenue in local currencies by 6.8%. Organic growth amounted to 5.1%, with the Finnish healthcare company Miratel, acquired in July 2011, contributing an additional 1.7% to revenue. In line with the market trend for mobile communication networks, Network Testing experienced weaker than expected demand as customers postponed or reduced planned investments, particularly in the fourth quarter. In local currencies and adjusted for divestments, revenue was 6.9% lower year-on-year.
Profitability - EBITDA margin of 13.7%
Profitability remained largely stable and was within the defined full-year guidance range for the fiscal year 2011. EBITDA from continuing operations (excluding core business units of the former Security Communication Division) ended the year at CHF 59.8 million (2010: CHF 70.9 million) with an EBITDA margin of 13.7% (2010: 15.0%). Investments in research and development amounted to 10.5% of revenue (2010: 10.2%).
Wireless Solutions posted outstanding results, further increasing profitability despite negative currency effects. With EBITDA of CHF 41.5 million (2010: CHF 37.2 million), the division increased the EBITDA margin by around 2 percentage points to 15.0%.
Lower revenue coupled with negative currency effects resulted in a significant decline in profitability at Network Testing. EBITDA ended the year at CHF 3.4 million (2010: CHF 27.7 million), with an EBITDA margin of 2.4% (2010: 16.4%).
Continuing operations also include the Real Estate segment, which contributed a positive EBITDA of CHF 11.8 million (2010: CHF 6.5 million). The result comprises the book gain from the sale of the Facility Management Services unit.
Discontinued operations - divestments largely completed
At the Half-Year Media Conference held on 18 August 2011, Ascom announced that new owners would be sought for the core business units of the smallest division, Security Communication, since the Group was aiming to focus consistently on the two globally oriented divisions Wireless Solutions and Network Testing. These business activities have qualified as discontinued operations" since the intention to divest these activities was announced. Discontinued operations performed in line with expectations in the year under review, recording revenue of CHF 75.5 million (2010: CHF 100.1 million) and a loss at EBITDA level of CHF 5.7 million. The Security Communication Division was dissolved as of 31 December 2011.
As of 10 October 2011, the subsidiary Ascom (CZ) s.r.o. was sold in a management buy-out, and further divestments were made in the first quarter of 2012. The Defense unit was divested to Ruag, Ascom Austria GmbH was sold in a management buy-out and the Infrastructure Operators unit was transferred to Trans Data Management AG. The remaining divestment, the Civil Security unit, is expected to be completed swiftly. The interests of customers and employees alike were optimally served by all these transactions.
Group profit and dividend proposal
Group profit (net profit including discontinued operations) reached a total of CHF 23.1 million in 2011 (2010: CHF 32.5 million). Discontinued operations contributed a loss of CHF 7.5 million. The Board of Directors will propose to the 2012 Annual General Meeting in April the payment of a dividend (in form of a tax-free distribution out of the capital contribution reserves) of CHF 0.25 per share, corresponding to a payout ratio of 39.0%.
Solid balance sheet - equity ratio increased to 40.2%
Ascom has a sound balance sheet structure. At 31 December 2011, the company had cash and cash equivalents of CHF 73.3 million (2010: CHF 129.0 million) and a significantly increased equity ratio of 40.2% (2010: 32.6%).
After carefully analyzing the results posted by Network Testing, the Executive Board initiated the necessary measures already in the first quarter of 2012 to achieve a substantial improvement in profitability before restructuring costs and to enable the division to grow.
The economic climate will remain challenging in 2012. Nevertheless, Ascom aims to achieve profitable growth and sustainably increase the company's corporate value. Ascom also intends to examine opportunities for targeted, value-adding acquisitions. For 2013, Ascom has set itself the goal of achieving a Group EBITDA margin of 14-15%.
The full 2011 Annual Report of the Ascom Group is available online athttp://www.ascom.com/report-en
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