Ascom Holding Ag · SIX:ASCN
Ascom — FY2004 Earnings Presentation
64 slides from Ascom's earnings presentation, Mar 9, 2005
Slide 1: Financial Year 2004 Media and Analyst Conference
Financial Year 2004 Media and Analyst Conference 9 March 2005
Slide 2: Agenda
Agenda l Key achievements in 2004 Rudolf Hadorn, CEO l Details of financial results 2004 Thomas Casata, CFO l Ascom Group strategy Rudolf Hadorn, CEO l Wireless Solutions l Security Solutions l Ascom Group outlook 2005 Rudolf Hadorn, CEO Media and Analyst Conference, 9 March 2005 2
Slide 3: Achievements versus targets in FY 2004
Ascom Group Achievements versus targets in FY 2004 Profit Improvement ü NWC ü Profitable Growth ü Keep full focus Cost optimisation ü Net income Break even ü ü Maintain cash position Further ü to repay bond in 2005 Tax structure improvement Simplification of legal structure ü Manufacturing Solve ü R
Slide 4: Key achievements in FY 2004 (1)
Ascom Group Key achievements in FY 2004 (1) Financial turnaround completed and solid results achieved l Net revenue growth for continued activities of 3% compared to FY 2003, 15% compared to H1 2004 l Strong improvement in gross and operating margin l Gross margin of 29% versus 23%; Operating margin
Slide 5: Incoming order relatively stable for major Divisions
Ascom Group Incoming order relatively stable for major Divisions* 2500 in CHF million 1911 2000 1619 1500 1242 1114 1085 982 1000 500 0 (29) -500 (377) 2002 2003 2004 Var. 2003/2004 Total Ascom Divisions* *Wireless Solutions / Security Solutions / Transport Revenue / Network Integration (BC) Media a
Slide 6: Net revenue growth of 2% for major Divisions
Ascom Group – Net revenue growth of 2% for major Divisions* 13% H2 over H1 2004 2500 2066 in CHF million 2000 1515 1500 1220 1059 1021 1042 1000 500 21 0 -500 (295) 2002 2003 2004 Var. 2003/2004 Total Ascom Divisions* *Wireless Solutions / Security Solutions / Transport Revenue / Network Integration
Slide 7: Operating result strongly improved by CHF104m
Ascom Group Operating result strongly improved by CHF104m in CHF million 120 104 77 60 0 -60 (27) -120 (107) 2002 2003 2004 Var. 2003/2004 (5.2)% (1.8)% 6.3% In % of net revenue Media and Analyst Conference, 9 March 2005 7
Slide 8: Net income – turnaround achieved
Ascom Group Net income – turnaround achieved in CHF million 150 115 75 47 0 -75 (68) -150 -225 -300 (281) 2002 2003 2004 Var. 2003/2004 (13.6)% (4.5)% 3.9% In % of net revenue (10.53) (2.50) 1.31 EPS in CHF Media and Analyst Conference, 9 March 2005 8
Slide 9: Key achievements in FY 2004 (2)
Ascom Group Key achievements in FY 2004 (2) Group structure – complexity reduced l “Mission-Critical Communication Company“: Group strategy as of Sept. 2004 l Divestment programme successfully executed l Manufacturing France (HPF) sold to Oristano Group (industrial solution) l Manufacturing Switzerl
Slide 10: Group structure
Group structure Board of Directors CEO Rudolf Hadorn* General Secretary/Communications CFO/Investor Relations Daniel Lack Thomas Casata* Wireless Solutions Security Solutions Co-operation Daniel Roth* Urs Ramseier* Network Integration Transport Revenue Others Johannes Schläpfer* Riet Cadonau** * Mem
Slide 11: Wireless Solutions: Operating profit improved by over 18%
Wireless Solutions Operating profit improved by over 18% in CHF million 300 272271 283273 219226 200 100 11 2 0 2002* 2003* 2004 Var. 2003/2004 Incoming order Net revenue 25 33 39 Operating profit CHFm 11.1% 12.2% 14.3% Margin in % * FY 2002/2003 restated to reflect new reporting structure Media and
Slide 12: Wireless Solutions Achievements in FY 2004
Wireless Solutions Achievements in FY 2004 l Incoming order growth distributed over almost all activities l Launch of more segment and solution oriented business focus – Strong healthcare sector – hospitals and elderly care – Substantial investments in marketing and education programme to focus on s
Slide 13: Security Solutions: Improved net revenue and progress on transformation
Security Solutions Improved net revenue and progress on transformation in CHF million 287 309 300 253 248 260 226 200 100 12 0 -100 (83) 2002* 2003* 2004 Var. 2003/2004 Incoming order Net revenue 16 18 19 Operating profit CHFm 5.6% 7.3% 7.3% Margin in % * FY 2002/2003 restated to reflect new reporti
Slide 14: Security Solutions Achievements in FY 2004
Security Solutions Achievements in FY 2004 l Successful transformation in view of more international business and international growth through new orders in Public Safety (e.g. London Underground, ICE Stations at Airport Cologne-Bonn, emergency call systems for Highway to CDG Airport, Paris) and thr
Slide 15: Network Integration: Strong growth and profitability
Network Integration (Business Communication) Strong growth in net revenue and profitability in CHF million 400 285 268268 300 263 254235 200 100 33 10 0 2002* 2003* 2004 Var. 2003/2004 Incoming order Net revenue 6 5 14 Operating profit CHFm 2.3% 2.1% 5.2% Margin in % * FY 2002/2003 restated to refle
Slide 16: Network Integration Achievements in FY 2004
Network Integration (Business Communication) Achievements in FY 2004 l Financial performance strongly improved l Above-market growth: Net revenue increased by 14% to CHF268m l Operating profit improved by 180% to CHF14m l International activities significantly expanded l Market leadership in Italy,
Slide 17: Transport Revenue: Strong incoming order and increased profitability
Transport Revenue Strong incoming order and increased profitability in CHF million 350 308 283 279 267 225 241 250 150 50 29 -50 (26) 2002 2003 2004 Var. 2003/2004 Incoming order Net revenue (28) 7 23 Operating profit CHFm (9.9)% 2.6% 9.5% Margin in % Media and Analyst Conference, 9 March 2005 17
Slide 18: Transport Revenue Achievements in FY 2004
Transport Revenue Achievements in FY 2004 l Strong incoming order across the globe, large contracts, most of which signed in H2 2004, will lead to net revenue growth above-market in 2005 and the following years l Fare Collection – Norwegian State Railways (NSB), City of Venice, City of Toulouse, Par
Slide 19: Co-operation Others – Declining share and positive operating profit
Co-operation Others* – Declining overall share and positive operating profit in 2004 in CHF million 130 120 115 106 106 101 96 80 30 14 -20 (10) 2002** 2003 2004 Var. 2003/2004 Incoming order Net revenue (19) (26) 7 Operating profit CHFm (15.8)% (25.7)% 6.1% Margin in % * Payphones, Manufacturing Fr
Slide 20: Co-operation Others Achievements in FY 2004
Co-operation Others Achievements in FY 2004 l Operating profit strongly improved to CHF7m from CHF(26)m in 2003 l Payphones – Strong profit improvement in 2004 due to strong top line and the benefit of a restructured cost base in a cyclical sales environment – Substantial order signing and delivery
Slide 21: Personnel: Divestments and staff reduction programme impact
Personnel Divestments and staff reduction programme impact 5000 4700 (314) Employees 4400 (67) 4842 4100 14 3800 (598) 3877 3500 31 Dec 03 Restructuring Outsourcing Divestments Acquisition 31 Dec 04 Tumsan Oy Media and Analyst Conference, 9 March 2005 21
Slide 22: Current partnership/divestment processes
Current partnership/divestment processes l Transport Revenue and Network Integration (Business Communication) l Ascom in process of finding best ownership solutions l Quality of solution being balanced with speed of action l Both Divisions operating on profitable levels l Discussions and negotiation
Slide 23: Financial results 2004
Financial results 2004 Thomas Casata CFO Media and Analyst Conference, 9 March 2005 23
Slide 24: Profit and loss statement
Profit and loss statement CHF million FY 2004 H2 2004 H1 2004 FY 2003 ∆ 04/03 Incoming order 1242 655 587 1619 (377) Net revenue 1220 624 596 1515 (295) Gross profit 356 181 175 341 15 Gross margin 29.2% 29.0% 29.4% 22.5% 6.7% Functional cost (279) (143) (136) (368) 89 Operating profit 77 38 39 (27)
Slide 25: Other expenses and income
Other expenses and income CHF million FY 2004 H2 2004 H1 2004* FY 2003 ∆ 04/03 Profit/(loss) on sales of subsidiaries or business units 9 10 (1) (12) 21 Restructuring costs (2) (2) - (22) 20 Released provisions 7 7 - 3 4 Profit on sales of real estate 5 3 2 39 (34) Impairments (4) (4) - (2) (2) Othe
Slide 26: Profit and loss statement
Profit and loss statement CHF million FY 2004 H2 2004 H1 2004 FY 2003 ∆ 04/03 EBIT 63 33 30 (45) 108 Net financial (expenses)/income (13) (8) (5) (13) 0 Share in net income of assoc. companies 1 1 0 0 1 Income taxes (4) (1) (3) (10) 6 Net income 47 25 22 (68) 115 Memo: EBITDA 107 56 51 33 74 EPS (CH
Slide 27: Balance sheet
Balance sheet 31 Dec 2004 30 June 2004 31 Dec 2003 CHFm % CHFm % CHFm % Fixed assets 167 18 186 19 223 20 Cash and securities 344 36 331 34 321 29 Inventories 108 11 143 15 147 13 Other current assets 336 35 318 32 417 38 Total assets 955 100 978 100 1108 100 Equity 246 26 223 23 203 18 Minority sha
Slide 28: Net Working Capital
Net Working Capital 250 240 in CHF million 16 (16) 200 186 (25) (54) (29) 150 100 NWC in % of net revenues further decreased from 19% to 16% (12 months rolling) 50 0 31 Dec 03 31 Dec 04 Variance Inventory + Accounts Accounts Divestments Prepayments Receivable Payable + Prepayments Media and Analyst
Slide 29: Net cash position increased by 131% YoY
Net cash position increased by 131% YoY in CHF million 150 127 CHF million Dec 04 Jun 04 Dec 03 87 Bond (200) (200) (200) 100 55 Debt (11) (36) (56) 50 Mortgages (2) (2) (3) 0 Other debt (5) (5) (7) Jun 03 Dec 03 Jun 04 Dec 04 -50 Gross debt (218) (244) (266) Cash 309 306 306 -100 Securities 35 25 1
Slide 30: Continued positive operating cash flow
Continued positive operating cash flow CHF million FY 2004 H2 2004 H1 2004 FY 2003 ∆ 04/03 Cash flow from operating activities before changes in NWC 100 62 38 48 52 Changes in NWC 27 3 24 97 n/a Cash flow from operating activities 127 65 62 145 (18) Net cash flow from operating activities 45 25 20 5
Slide 31: Wireless Solutions – Profitability improved
Wireless Solutions – Profitability improved CHF million FY 2004 H2 2004 H1 2004* FY 2003* ∆ 04/03 Incoming order 283 140 143 272 11 Net revenue 273 140 133 271 2 Gross profit 130 65 65 125 5 Gross margin 47.6% 46.4% 48.9% 46.1% 1.5% Operating profit 39 20 19 33 6 Operating profit margin 14.3% 14.3%
Slide 32: Wireless Solutions – Net revenue CHF273m
Wireless Solutions – Net revenue CHF273m Geographic split Segment split USA / CDN RoW Switzerland OEM Hospitals 4% 2% 8% Belgium 4% 19% 19% other Europe Germany 10% 4% Elderly Care France 16% Others 11% 14% Sweden / OEM 24% UK Hotel/Retail 11% 9% Secure Est. Industry Netherlands 5% 18% 22% Media and
Slide 33: Security Solutions – In transition
Security Solutions – In transition CHF million FY 2004 H2 2004 H1 2004* FY 2003* ∆ 04/03 Incoming order 226 105 121 309 (83) Net revenue 260 145 115 248 12 Gross profit 70 33 37 66 4 Gross margin 26.9% 22.8% 32.2% 26.6% 0.3% Operating profit 19 10 9 18 1 Operating profit margin 7.3% 6.9% 7.8% 7.3% -
Slide 34: Security Solutions – Net revenue CHF260m
Security Solutions – Net revenue CHF260m Geographic split Segment split other Europe 2% Traffic Scandinavia 20% 4% Telco* Austria 33% 12% Defence 21% Germany 17% Switzerland 65% Public Safety Industry 11% 15% *Carrier Products, Supplier Business, Systems & Solutions Media and Analyst Conference, 9 M
Slide 35: Network Integration – Strong growth and op. profit
Network Integration – Strong growth and op. profit CHF million FY 2004 H2 2004 H1 2004* FY 2003* ∆ 04/03 Incoming order 268 153 115 254 14 Net revenue 268 160 108 235 33 Gross profit 61 35 26 51 10 Gross margin 22.8% 21.9% 24.1% 21.7% 1.1% Operating profit 14 11 3 5 9 Operating profit margin 5.2% 6.
Slide 36: Network Integration – Net revenue CHF268m
Network Integration – Net revenue CHF268m Geographic split Offering split Product split RoW Others Maintenance 1% Contact / Call Center Voice 1% 24% Belgium 2% 28% 10% Switzerland 41% Italy 45% Data Germany 70% 3% Depl.& Realisation Product Reselling 67% 8% Media and Analyst Conference, 9 March 2005
Slide 37: Transport Revenue – Strong incoming order H2 2004
Transport Revenue – Strong incoming order H2 2004 CHF million FY 2004 H2 2004 H1 2004 FY 2003 ∆ 04/03 Incoming order 308 206 102 279 29 Net revenue 241 108 133 267 (26) Gross profit 67 32 35 47 20 Gross margin 27.8% 29.6% 26.3% 17.6% 10.2% Operating profit 23 11 12 7 16 Operating profit margin 9.5%
Slide 38: Transport Revenue – Net revenue CHF241m
Transport Revenue – Net revenue CHF241m Geographic split Segment split RoW Switzerland Toll 5% 11% 15% USA / CDN France 31% 22% Parking UK 23% other Europe 5% 4% Fare 62% Italy Scandinavia 10% 7% Greece Spain 2% 3% 75% Projects 25% Service & Maintenance Media and Analyst Conference, 9 March 2005 38
Slide 39: Co-operation Others – Positive operating profit
Co-operation Others – Positive operating profit CHF million FY 2004 H2 2004 H1 2004 FY 2003 ∆ 04/03 Incoming order 96 41 55 106 (10) Net revenue 115 60 55 101 14 Gross profit 22 15 7 (2) 24 Gross margin 19.1% 25.0% 12.7% (2.0)% 21.1% Operating profit 7 3 4 (26) 33 Operating profit margin 6.1% 5.0% 7
Slide 40: Group strategy
Group strategy Rudolf Hadorn CEO Media and Analyst Conference, 9 March 2005 40
Slide 41: Recap on decision factors leading to Mission-Critical Communication strategy
Recap on decision factors leading to the “Mission-Critical Communication“ strategy l Market niches, where Ascom has strong market positions in certain geographic markets and customer segments l Strong technology and application know-how as platform for future development l Selection of businesses co
Slide 42: Ascom Group strategy: Mission-Critical Communication Company
Ascom Group strategy Mission-Critical Communication Company l Focus on Wireless Solutions and Security Solutions as growth company with double-digit profitability l Fostering profitable organic growth through international- and vertical market segment penetration (like Healthcare and Public Safety)
Slide 43: Wireless Solutions strategy (1): Customer segments
Wireless Solutions strategy (1) Customer segments Hospital Elderly care Industry Hotel Retail On-site wireless communication enables quicker response Systems integrated “smartly“ into existing environments Media and Analyst Conference, 9 March 2005 43
Slide 44: Wireless Solutions strategy (2)
Wireless Solutions strategy (2) Current position Growth opportunities l Strong, complete portfolio with proven l Vertical market opportunities: technology for core communication and – Hospital/elderly care market needs messaging functionality solutions, that increase operating and process efficiency
Slide 45: Wireless Solutions strategy (3)
Wireless Solutions strategy (3) l Achieve profitable, organic growth l Increase international sales and project delivery staff numbers l Increase solution selling capabilities for targeted vertical markets l Geographic focus: l Leverage existing client base in Western Europe l Strong focus on indust
Slide 46: Linking the value-chain
Wireless Solutions Personal Alarm HIS RIS Network Management Database Enterprise LAN E-mail Scada PLC Linking the value-chain Linking the value-chain Web Mail Contacts Serial TCP/IP OAT Ascom Wireless Solutions Applications and Information Routing Paging WLAN GSM E-mail DECT End user Communication s
Slide 47: Security Solutions strategy – Customer segments (1)
Security Solutions strategy – Customer segments (1) Defence Telco Traffic Security l Army l Telco operators l Railway operators l Civil protection l Motorway operators l Infrastructure providers l Airports Public Safety l Coach industries l Police l Fire brigade Industry l Rescue organisations l ESA
Slide 48: Security Solutions strategy (2)
Security Solutions strategy (2) Current position Growth opportunities l Public Safety/Defence l Expand internationally the Traffic Se- – Competitive technical solution plat- curity segment within the large railway/ forms for Command & Control in transportation market in W. Europe Public Safety as we
Slide 49: Security Solutions strategy – Next steps (3)
Security Solutions strategy – Next steps (3) l Traffic Security l Internationalise technical solutions and promote them in Western European railway market l Public Safety l Utilise the existing international hubs in CH, D, A, CZ, PL, SF and the partner in CIS to meet public safety needs l Deploy exi
Slide 50: Security Solutions
Security Solutions Government and Private Businesses Traffic Infrastructure Defence (D) Public Safety (PS) Operators (T) Solutions Design Security Solutions Industrialisation/ Technology Assembly/Test Platform Third party systems Ascom Products & Systems Infrastructure Solutions End User Swiss Army
Slide 51: Guidance on Outlook 2005
Guidance on Outlook 2005 l Net revenue: l Achieve moderate organic revenue growth for Wireless Solutions and Security Solutions in line with markets: 4-5% (combined for both Divisions) l Profitability: l Maintain Wireless Solutions profitability at guidance level during growth and improve Security S
Slide 52: Annual General Meeting 2005
Annual General Meeting 2005 Resolutions at AGM on 19 April 2005: l Dividend proposal l Dividend of 5% of share capital l i.e. CHF 0.275 per share l Pay-out ratio of 21% Media and Analyst Conference, 9 March 2005 52
Slide 53: Annual General Meeting 2005
Annual General Meeting 2005 l Board of Directors l Resignation of Peter Schöpfer from the Board of Directors l Re-election of Paul E. Otth and Dr. Wolfgang Kalsbach l Election of three new Board members with global experience in technology as well as experience in the relevant to Ascom markets and c
Slide 54: Summary
Summary l Turnaround in 2004 puts an end to the phase of painful restructuring at Ascom during 2001-2004 l 2004: Net income of CHF47m on a turnover of CHF1220m with net operating cash flow of CHF45m l Future platform of ”Mission-Critical Communication Company“: l A growth company with double-digit p
Slide 55: Additional information
Additional information Media and Analyst Conference, 9 March 2005 55
Slide 56: Personnel: 3877 employees as at 31 December 2004
Personnel 3877 employees as at 31 December 2004 Group Functions USA 2% RoW Co-operation Others Wireless Solutions 6% other Europe 2% 11% 29% 6% Switzerland Sweden 33% 10% Transport Revenue Netherlands 21% 8% Belgium Italy 4% 4% Germany Security Solutions UK 4% Network Integration France 21% 4% 16% 1
Slide 57: Balance sheet total reduced by 14%
Balance sheet total reduced by 14% 1200 in CHF million 1108 1100 1000 (67) 955 (153) (83) (3) 900 800 700 600 31 Dec 03 31 Dec 04 Variance Divestments Operational Exchange Media and Analyst Conference, 9 March 2005 57
Slide 58: Revenues 2003/2004
Revenues 2003/2004 1600 in CHF million 1515 1220 31 6 1200 (295) (332) 800 2003 2004 Variance Divestments Operational Exchange Media and Analyst Conference, 9 March 2005 58
Slide 59: Operating result 2003/2004
Operating result 2003/2004 110 in CHF million 67 104 1 77 80 50 36 20 -10 (27) -40 2003 2004 Variance Divestments Operational Exchange Media and Analyst Conference, 9 March 2005 59
Slide 60: Net financial expenses/income
Net financial expenses/income CHF million FY 2004 H2 2004 H1 2004 FY 2003 ∆ 04/03 Net currency (losses)/gains (1) (3) 2 11 (12) Share in net income of associated companies 1 1 - - 1 Interest expenses (net) (8) (3) (5) (15) 7 Other financial expenses (4) (2) (2) (8) 4 Net financial (expenses)/income
Slide 61: Key figures 2004: Segment view
Key figures 2004: Segment view Security Wireless Group Co-op Contin. Divest. Total CHF million Solutions Solutions Compan. Activit. * Activit. Ascom * Incoming order 226 283 7 672 1173 77 1242 Net revenue 260 273 7 624 1153 80 1220 Gross profit 70 130 - 150 350 6 356 Gross margin 26.9% 47.6% n/a 24.
Slide 62: Key figures 2004: Details Co-operation
Key figures 2004: Details Co-operation Transport Network Payphones Manuf. Real Other Total CHF million Revenue Integrat. France Estate Co-op Incoming order 308 268 43 25 21 7 672 Net revenue 241 268 62 25 21 7 624 Gross profit 67 61 18 3 (1) 2 150 Gross margin 27.8% 22.8% 29.0% 12.0% (4.8)% 28.6% 24
Slide 63: Legal Disclaimer
Legal Disclaimer This document contains specific forward-looking statements, e.g. statements including terms like “believe”, “expect” or similar expressions. Such forward- looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial div
Slide 64: Solutions in time
Solutions in time