Ascom Holding Ag · SIX:ASCN

Ascom — H1 2006 Earnings Presentation

50 slides from Ascom's earnings presentation, Sep 5, 2006

  1. Slide 1: Mission-Critical Communication – First Half Year 2006

    MISSION-CRITICAL COMMUNICATION First Half Year 2006 Media and Analyst Conference – 5 September 2006 Half Year Results 5 September 2006, © Ascom 1

  2. Slide 2: Table of Contents

    TABLE OF CONTENTS ƒ KEY ACHIEVEMENTS AND BUSINESS REVIEW H1 2006 ƒ FINANCIAL RESULTS H1 2006 ƒ OUTLOOK Half Year Results 5 September 2006, © Ascom 2

  3. Slide 3: Key Achievements and Business Review H1 2006

    KEY ACHIEVEMENTS AND BUSINESS REVIEW H1 2006 Half Year Results 5 September 2006, © Ascom 3

  4. Slide 4: Ascom Group – Review H1 2006

    ASCOM GROUP – REVIEW H1 2006 ƒ Incoming orders up by 6% to CHF 353.7m (CHF 333.1m in H1 2005) ƒ Order backlog grew strongly by 10% to CHF 264.7m (CHF 241.4 at 31.12.2005) ƒ Revenues almost stable with CHF 329.8m (CHF 334.0m in H1 2005) ƒ Gross margin at 30.7% (32.4% in H1 2005) ƒ Wireless Solutions

  5. Slide 5: Ascom Group – Review H1 2006

    ASCOM GROUP – REVIEW H1 2006 ƒ Group Profit of CHF 4.8m in H1 2006 – Group Profit of CHF 50.6m in H1 2005 included: • Profit from discontinued operations CHF 30.4m • Higher special effects of CHF 12.0m from divestments previous years and profits from sale of real estate ƒ Balance sheet remained stro

  6. Slide 6: Achievements in Executing Strategy

    ACHIEVEMENTS IN EXECUTING STRATEGY ƒ Clear signs for business growth thru incoming orders and backlog, particularly due to strong Wireless Solutions direct customer business ƒ Innovation programs for Wireless Solutions and Security Solutions launched successfully – reflected in orders and gaining mo

  7. Slide 7: Ascom Group – Incoming Orders and Backlog Growth

    ASCOM GROUP – INCOMING ORDERS (+6%) AND BACKLOG GROWTH (+10%) ƒ Wireless Solutions incoming orders Incoming Orders growing by 10% (+CHF 13.6m) in CHF million – Direct customer business +18% – OEM decline by (26)% 400 354 333 ƒ Security Solutions stable 300 – Growing: Defence, Public Safety, 200 Traf

  8. Slide 8: Ascom Group – Net Revenue

    ASCOM GROUP – NET REVENUE ƒ Net revenue stable: Improved Net Revenue momentum not yet visible in net revenue growth in CHF million 400 ƒ Wireless Solutions net revenue 334 330 growth in direct customer business 300 +7%, but decline in OEM (30)% 200 ƒ Security Solutions decline in net revenue mainly

  9. Slide 9: Ascom Group – EBIT

    ASCOM GROUP – EBIT ƒ Wireless Solutions stable at EBIT CHF 8.2m in CHF million ƒ Security Solutions slightly better 20 18.9 with almost break-even result at CHF (0.1)m vs. CHF (0.3)m in H1 15 2005 – major savings in administrative costs 10 6.4 ƒ Special Products weaker due to 5 differences in non-re

  10. Slide 10: Revenue Split and Group Profit HY 2006

    REVENUE SPLIT AND GROUP PROFIT HY 2006 Net Revenue CHF 329.8m Group Profit in CHF million Corporate 3% 50.6 50 Special Products 40 26% 30.4 Wireless Solutions 30 42% 20 10 20.21 4.8 4.2 0 H1 2005 H1 2006 Security Solutions Ascom Discontinued operations 29% 1 Contains divestment effects and real esta

  11. Slide 11: Wireless Solutions

    WIRELESS SOLUTIONS ƒ Strong growth incoming orders – +10% overall in CHF million – +18% from direct customer business 160 153 – +38% in USA, overcompensating 139 138 137 ƒ Incoming orders (26%) adverse OEM 120 ƒ Order backlog CHF 74.0m at 30 June 80 2006 (CHF 58.3m at 31 Dec 2005) building a strong

  12. Slide 12: Wireless Solutions – Key Facts H1 2006

    WIRELESS SOLUTIONS – KEY FACTS H1 2006 ƒ Building growth momentum – Double digit incoming orders growth in key direct sales markets (NL, US, UK, CH, NO) – First success in re-establishing / strengthening sales momentum in Germany – Build distribution system across the US market by signing-up 18 dist

  13. Slide 13: Wireless Solutions – Plan to Win

    WIRELESS SOLUTIONS – PLAN TO WIN Organic Growth Develop Solutions Business Grow the Service Business Grow the OEM Business Expand into New Geographies Innovate and Streamline Product Range Innovation Strive for Operational Excellence Operational Improvement Half Year Results 5 September 2006, © Asco

  14. Slide 14: Wireless Solutions – Key Actions 2006

    WIRELESS SOLUTIONS – KEY ACTIONS 2006 • Implement Products to • Focus on selected segments Develop Solutions Business Solutions (P2S), roll-out solutions • Hire and train new sales force • Systematically deploy the • Develop comprehensive installed base service offering Grow the Service Business • I

  15. Slide 15: Wireless Solutions – Results H1 2006

    WIRELESS SOLUTIONS – RESULTS H1 2006 • Defined local solutions to be standardized for entire division Develop Solutions Business • Reached 70% of sales force trained in certified solution selling • Reached higher service penetration on new sales Grow the Service Business • Started up-selling efforts

  16. Slide 16: Wireless Solutions – Key Targets H2 2006

    WIRELESS SOLUTIONS – KEY TARGETS H2 2006 • Eight standardized solutions ready for entire divisional use • Set-up of dedicated solution development team Develop Solutions Business • Reach 85% of sales force trained in certified solutions selling • Hiring / redirecting of Service Sales staff (ca 15-20

  17. Slide 17: Wireless Solutions – Innovation

    WIRELESS SOLUTIONS – INNOVATION Product-Platform Offering Milestones Launched April 06 Launch Ascom i75 VoWiFi Ascom i75 uses the latest converged Dec 06 wireless technology (WLAN) for i75 R1 telephony, messaging and alarm as well as for configuration and maintenance. Launched i75 R2 (Cisco SIP) Jun

  18. Slide 18: Security Solutions

    SECURITY SOLUTIONS ƒ Incoming Orders stable in CHF million – Dynamics higher vs. H2 2005 in Traffic Security, Public Safety, 160 Telecom Operations ƒ Revenue lower due to Telco Net 120 112 97 97 95 Services (insourcing by customer in 2005), legacy projects in Traffic 80 Security and time lag in Defe

  19. Slide 19: Security Solutions – Key Facts H1 2006

    SECURITY SOLUTIONS – KEY FACTS H1 2006 ƒ Traffic Security – 4 legacy projects completed in H1 2006; rest under control – Substantial new projects won like „Westumfahrung Zurich“ and „Simplon“ – New IP-based emergency call systems NIS Road and NIS Rail launched in European markets ƒ Defence – Substan

  20. Slide 20: Security Solutions

    SECURITY SOLUTIONS Homeland Security Traffic Security Telecom Operation Defence Public Safety – Communication – Alarming – Emergency call – Quality of – Recognition – Mobilisation – Passenger info measurement – Identification – Surveillance – Tunnel tools – Monitoring communication – Telco services

  21. Slide 21: Security Solutions – Plan to Win

    SECURITY SOLUTIONS – PLAN TO WIN Expand through partners, VAR’s Growth and general contractors Internationalise business through local subsidiaries Keep on pushing product platform concept Innovation Work on structural costs Fix known issues (legacy projects) Operational Improvement Business Unit or

  22. Slide 22: Security Solutions – Key Actions 2006

    SECURITY SOLUTIONS – KEY ACTIONS 2006 Expand through partners, VAR’s z Evaluate new distribution partners for Mobile Test Solutions 9 z Intensify sales activities towards train manufacturers in Traffic H2 and general contractors z Expand Sales via global key customers in Systems & Solutions 9 Intern

  23. Slide 23: Security Solutions – Key Targets H2

    SECURITY SOLUTIONS – KEY TARGETS H2 z Acquire new profitable projects Traffic Security z Complete remaining legacy projects z Grow organisation / capabilities for new projects z Develop and continue to build the business in CH, Finland and Crisis Defence Mgt. based on new offering. z Start developme

  24. Slide 24: Security Solutions – Innovation

    SECURITY SOLUTIONS – INNOVATION Product-Platform Solution / Application Milestones openTAS® Segment Public Safety: Start June 05 AlarmLink: IP based solution for secure Launched alarm transmission, reception and March 06 Design management. Development Test / pilot openAccess® Segment Homeland Securi

  25. Slide 25: Security Solutions – Innovation

    SECURITY SOLUTIONS – INNOVATION Product-Platform Solution / Application Milestones openAccess® Segment Traffic Security: Start June 05 NIS Rail and NIS Road application for Launched station communication, emergency call Design April 06 and dispatching. Development Test / pilot QVoice® Segment Teleco

  26. Slide 26: Security Solutions – Geography

    SECURITY SOLUTIONS – GEOGRAPHY Revenue split FY 2005 H1 2006 Defence 18 % 17 % Public Safety 16 % 18% Traffic Security 22 % 22 % Telecom Operation MTS: TNS/S&S: 32 % 33 % Industry: various local activities 12 % 10 % Revenue Switzerland 55% Revenue through local subsidiaries 35% Revenue with direct e

  27. Slide 27: Special Products

    SPECIAL PRODUCTS ƒ Network Integration Italy in CHF million – Difficult, recessive market environment 160 – EBIT break-even (CHF 0.1m in 2005) 120 104 95 96 ƒ Payphones 90 – Revenue +3% 80 – EBIT of CHF 0.9m (CHF 0.5m in H1 2005) 40 ƒ Other 0 – EBIT of CHF (2.3)m vs. CHF H1 2005 H1 2006 3.3m in H1 2

  28. Slide 28: Special Products – Innovation

    SPECIAL PRODUCTS – INNOVATION Product-Platform Solution / Application Milestones Start E-GOVERNMENT TERMINALS: Q4 04 Launch E-Government applications for public Q3 06 Design administration and telecom customer operated business models Development Test / pilot USP’s : z “Push-button” MMI z Accessible

  29. Slide 29: Financial Results H1 2006

    FINANCIAL RESULTS H1 2006 Half Year Results 5 September 2006, © Ascom 29

  30. Slide 30: Profit and Loss Statement – Ascom (1)

    PROFIT AND LOSS STATEMENT – ASCOM (1) CHF million H1 2006 FY 2005 H2 2005 H1 2005 ∆ H1 Incoming orders 353.7 701.3 368.2 333.1 20.6 Order backlog 264.7 241.4 241.4 226.9 37.8 Net revenue 329.8 688.6 354.6 334.0 (4.2) Gross profit 101.3 222.3 114.0 108.3 (7.0) Gross margin 30.7% 32.3% 32.1% 32.4% (1.

  31. Slide 31: Profit and Loss Statement – Ascom (2)

    PROFIT AND LOSS STATEMENT – ASCOM (2) CHF million H1 2006 FY 2005 H2 2005 H1 2005 ∆ H1 EBIT 6.4 34.7 15.8 18.9 (12.5) Financial income/(expenses), net 0.9 (6.7) (4.6) (2.1) 3.0 Share in net income assoc. companies - 0.3 (0.1) 0.4 (0.4) Income taxes (3.1) 1.2 (1.8) 3.0 (6.1) Profit continuing operati

  32. Slide 32: Wireless Solutions

    WIRELESS SOLUTIONS CHF million H1 2006 FY 2005 H2 2005 H1 2005 ∆ H1 Incoming orders 153.1 279.8 140.3 139.5 13.6 Order backlog 74.0 58.3 58.3 59.8 14.2 Net revenue 137.2 279.0 141.4 137.6 (0.4) Gross profit 62.6 130.0 63.7 66.3 (3.7) Gross margin 45.6% 46.6% 45.0% 48.2% (2.6)% Operating result 10.6

  33. Slide 33: Security Solutions

    SECURITY SOLUTIONS CHF million H1 2006 FY 2005 H2 2005 H1 2005 ∆ H1 Incoming orders 97.4 213.6 116.5 97.1 0.3 Order backlog 113.3 111.8 111.8 98.6 14.7 Net revenue 95.0 205.7 93.5 112.2 (17.2) Gross profit 28.5 59.1 29.0 30.1 (1.6) Gross margin 30.0% 28.7% 31.0% 26.8% 3.2% Operating result 2.3 3.1 (

  34. Slide 34: Special Products

    SPECIAL PRODUCTS CHF million H1 2006 FY 2005 H2 2005 H1 2005 ∆ H1 Incoming orders 95.5 211.0 106.8 104.2 (8.7) Order backlog 77.6 71.9 71.9 73.0 4.6 Net revenue 89.7 211.5 116.3 95.2 (5.5) Gross profit 11.0 33.1 19.5 13.6 (2.6) Gross margin 12.3% 15.7% 16.8% 14.3% (2.0)% Operating result (1.3) 8.1 8

  35. Slide 35: Balance Sheet

    BALANCE SHEET 30 June 2006 31 Dec 2005 30 June 2005 CHF m % CHF m % CHF m % Fixed assets 82.6 16 103.9 13 117.1 16 Cash and securities 110.6 22 281.1 37 131.3 18 Inventories 70.7 14 70.0 9 78.8 11 Other current assets 209.4 41 217.5 29 249.5 34 Assets held for sale 34.9 7 89.3 12 151.4 21 Total asse

  36. Slide 36: Net Working Capital

    NET WORKING CAPITAL NWC in % of net revenue decreased from 21% to 19% (12 months rolling) in CHF million 160 147 129 7 120 (18) (23) (5) 3 80 40 0 31 Dec 05 30 Jun 06 Variance Inventory + Trade Trade Assets held for Prepayments Receivables Payables + sale Customer prepayments Half Year Results 5 Sep

  37. Slide 37: Net Cash Position

    NET CASH POSITION in CHF million CHF million Jun 06 Dec 05 Jun 05 300 Debt - - (9.8) 279 Mortgages (0.4) - (1.4) 240 Other debt (0.1) (2.0) (6.7) 180 Gross debt (0.5) (2.0) (17.9) 134 128 Cash and securities 111.1 281.1 145.9 120 110 Net cash 110.6 279.1 128.1 87 60 0 Net cash position of CHF 110.6m

  38. Slide 38: Operating Cash Flow

    OPERATING CASH FLOW CHF million H1 2006 FY 2005 H2 2005 H1 2005 ∆ H1 Cash flow from operating 16.7 61.1 33.1 28.0 (11.3) activities before changes in NWC Changes in NWC (7.8) 36.6 (7.4) 44.0 (51.8) Cash flow from operating activities 8.9 97.7 25.7 72.0 (63.1) Net cash flow from operating activities

  39. Slide 39: The Ascom Brand

    THE ASCOM BRAND Half Year Results 5 September 2006, © Ascom 39

  40. Slide 40: The Ascom Brand

    THE ASCOM BRAND ƒ Ascom is a strong brand recognized by its customers ƒ Ascom started a SINGLE BRAND strategy to strengthen the brand even further ƒ 4 brand values – Responsibility – Competence – Talent – Ambition Half Year Results 5 September 2006, © Ascom 40

  41. Slide 41: Outlook

    OUTLOOK ƒ Outlook until year end 2006 – Targets for FY 2006 re-confirmed: Wireless Solutions 2006 Revenue growth ~ 5%, EBIT margin 8-10% Security Solutions 2006 Revenue stable, EBIT positive ƒ Mid- to long-term targets – Wireless Solutions Annual Revenue growth 5-10%, EBIT margin 9-11% – Security So

  42. Slide 42: Additional Information

    ADDITIONAL INFORMATION Half Year Results 5 September 2006, © Ascom 42

  43. Slide 43: Wireless Solutions – Net Revenue CHF 137m

    WIRELESS SOLUTIONS – NET REVENUE CHF 137m Geographic split Segment split OEM Switzerland Belgium OEM 13% 7% Hospitals RoW 4% 13% 24% other Europe 2% Germany Others 2% 4% 12% USA / CDN 5% France 11% Hotel/Retail 9% Elderly Care Scandinavia 21% 16% UK 11% Secure Est. 4% Netherlands Industry 25% 17% Ha

  44. Slide 44: Security Solutions – Net Revenue CHF 95m

    SECURITY SOLUTIONS – NET REVENUE CHF 95m Geographic split Segment split other Europe Industry 5% 10% Traffic Security Scandinavia 22% 2% Austria 11% Defence 17% Germany 17% Telecom Operation Switzerland 33% 65% Public Safety 18% Half Year Results 5 September 2006, © Ascom 44

  45. Slide 45: Key Figures H1 2006 – Segment View

    KEY FIGURES H1 2006 – SEGMENT VIEW Wireless Security Special Cor- Divested Consoli- CHF million Solutions Solutions Products porate activ. * dation Ascom Incoming orders 153.1 97.4 95.5 11.3 - (3.6) 353.7 Net revenue 137.2 95.0 89.7 11.4 - (3.5) 329.8 Gross profit 62.6 28.5 11.0 (0.8) - (3.8) 101.3

  46. Slide 46: Key Figures H1 2006 – Special Products

    KEY FIGURES H1 2006 – SPECIAL PRODUCTS Total CHF million NI Italy Payphones Other Sp. Prod. Incoming order 49.2 20.3 26.0 95.5 Net revenue 43.9 13.2 32.6 89.7 Gross profit 6.8 5.1 (0.9) 11.0 Gross margin 15.5% 38.6% n/a 12.3% Functional cost (6.2) (4.6) (1.5) (12.3) Operating result 0.6 0.5 (2.4) (1

  47. Slide 47: Balance Sheet Details

    BALANCE SHEET DETAILS TRADE RECEIVABLES AND OTHER CURRENT ASSETS 30 June 2006 31 Dec 2005 30 June 2005 CHF m CHF m CHF m Trade receivables 146 169 122 Other receivables 19 14 15 Prepayments / Accruals 18 21 25 Accrued revenue POC 26 14 53 Total trade receivables 209 217 250 & other current assets Ha

  48. Slide 48: Balance Sheet Details

    BALANCE SHEET DETAILS SHORT TERM LIABILITIES 30 June 2006 31 Dec 2005 30 June 2005 CHF m CHF m CHF m Interest bearing - 1 7 Provisions 26 26 51 Customer prepayments 49 22 34 Trade payables 46 71 58 Personnel related 30 30 35 Income tax 8 6 4 Other tax 6 12 12 Other accruals 32 54 70 Other liabilitie

  49. Slide 49: Discontinued Operations H1 2006

    DISCONTINUED OPERATIONS H1 2006 CHF million NI PLC TR Total Incoming orders 2.8 0.1 - 2.9 Net revenue 3.1 - - 3.1 Gross profit 0.2 - - 0.2 Gross margin 6.5% n/a n/a 6.5% Operating profit (0.4) - - (0.4) Operating margin n/a n/a n/a n/a EBIT (0.5) 1.0 0.1 0.6 EBIT margin n/a n/a n/a n/a EBITDA (0.5)

  50. Slide 50: Assets and Liabilities Held for Sale

    ASSETS AND LIABILITIES HELD FOR SALE Real Man. 30 June CHF million NI * TR Estate France 2006 Property, plant and equipment 19.6 - - 3.7 23.3 Intangibles, other non-current assets - - 4.0 4.0 Non-current assets 19.6 - - 7.7 27.3 Inventories, work in process - 0.2 - 0.8 1.0 Trade receivables, other c

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