ADB Group FY 2011 Results Zurich, 22 February 2012
This presentation contains forward-looking statements. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. Advanced Digital Broadcast Holdings SA undertakes no obligation to publicly update or revise any forward-looking statements. Advanced Digital Broadcast Holdings SA reserves the right to amend the information at any time without prior notice. The information contained in this presentation may not be considered as being a substitute for economic, legal, tax or other advice and you are cautioned to base investment decisions or other decisions on the content of this presentation. You are recommended to consult your investment advisers or other advisers prior to making any decision. This presentation is not an offer of securities for sale nor a solicitation to invest in Advanced Digital Broadcast Holdings SA securities. In particular, it is not an offer of securities for sale in the United States of America, its territories and possessions. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Advanced Digital Broadcast Holdings S.A. does not intend to register its securities in the United States of America. 2
Andrew Rybicki, Chairman and CEO Alessandro Brenna, CFO Tina Nyfors, SVP IR/Group Communications
2011 in brief
ADB Group 2011 business in two statements A tough market – with some good news Persisting unfavorable macroeconomic conditions in Europe made the business truly tough Slow transition to digital TV in Taiwan and poor market in India – a disappointment Flood in Thailand a major disturbance for up-coming 2012 business HDTV moves into commercial areas in the U.S. – a very promising business HDTV moves into commercial areas in the U.S. – a very promising business A very challenging year for ADB organization A change of company strategic direction and new business model on-going Staff mindset and attitude change slow, but clearly visible Changes in top managment an unwanted disturbance Integration with former PBS slower and more costly than anticipated A number of corrective actions taken and largely completed 5
Transformation of ADB Group Stress on Core Values Strategy and Business Model Change Cutting Unprofitable Ventures and Businesses Integration and Reorganization for Efficiency Building on Synergies Expansion of Well Performing Businesses 6
ADB Group Core Values Product Innovation Technology Performance Quality and Teamwork Efficiency 7
Strategy and Business Model Change Focus on complete systems solutions Focus on profitable and high margin products and services Capitalize on our innovative software and engineering services Focus on Intellectual Property: maximize in-house software Focus on Intellectual Property: maximize in-house software development, minimize purchases development, minimize purchases Thrive for a superior quality and turn it into a saleable product Replace OEM with ODM – minimize in-house hardware design and raw materials purchase Prioritize margins, not revenue growth 8
Pruning Unprofitable Activities Elimination of unprofitable businesses and operations Shut-down of UK retail DTT business Substantial (80%) scaling-down of Italian DTT distribution business Shut-down of Spain and UK sales offices and refocus of Asia-Pac presence Status: largely done Writing-off slow-moving inventory and engineering projects - Completed Writing-off slow-moving inventory and engineering projects - Completed F/G and raw materials (mainly DTT) write-down: - $6.4M Cancelled engineering projects and write-offs: - $4.1M Eliminating excessive IP licensing charges - Ongoing process Re-negotiated IPR licensing contracts Legally challenging 3 rd party patents validity and/or applicability Overall annual savings in 2012 and beyond: more than $3M 9
Reorganization & Cost Reduction Organizational structure: includes the acquired companies Five Business Division (completed) Broadcast US Cable Broadband (former PBS) Systems Services Five Central Functions Departments (completed) Strategy & Technology Finance, Legal & IPR Operations & Procurement HR & Admin Quality & Reliability Continuous O/H cost reduction: approximately 11%* * Jan – Dec 2011 run rate reduction 10
New ADB Organization Broadband Broadcast Services US Cable Systems Division Division Division Division Division Shared resources and processes 11
Building on Synergies Organization: integration & elimination of overlaps Five Integrated Central Functions: - Strategy & Technology - Operations - Quality – Finance/Legal/IP – HR & Admin IT process and tools - Communication, Business & Production Planning Tools, Financial Tools (Navision, EBOS), HR tools (HROS) Status: 50% done Markets, Business, Products: cross-divisional development & sales ADBB products for ADB cable TV markets: gateways Geographical expansion of ADBB business: gateways for USA ADB products for ADBB markets: IPTV for telcos Combined ADBB and ADB software & systems products for all markets: Carbo and Epicentro Status: < 20% of full potential - Huge future potential 12
Expansion – 1 Expansion of well performing businesses Boost for the Broadcast Division Large new customers in Scandinavia, incl. a long-term technology partnership agreement Take-off of US Cable: delivery of products to N2 and N4 largest operators 2011 business growing from $0.2M to more than $4M 2011 business growing from $0.2M to more than $4M Boost for the Services Division: new facility in Poland 2011 business growth: +59% Long-term partnership with Group’s No. 1 customer Creation of System & Software Division : the future of ADB Group business 13
Expansion – 2 Quality, Engineering and B2B Marketing Creation of the Group-wide Total Quality Organization A must for the future success Direct contributes to overall business by minimizing cost of non- quality Creation of the cross-divisional Product Technology Group Creation of the cross-divisional Product Technology Group cross-divisional use of engineering skills and development efforts re-usability of engineering designs Marketing re-organization centralized B2B Strategic Marketing significant reduction of consumer-oriented marketing activities expansion of Divisions’ Product Marketing 14
Key figures of 2011 $ million - except EPS 2011 2010 Revenue 399.0 356.6 Gross profit 124.0 114.7 31.1% 32.2% EBIT before 7.6 17.7 1.9% 5.0% (16.3) (0.5) Reorganization + acquisition EBIT (8.7) 17.2 (2.2)% 4.8% Net profit after tax (12.2) 12.9 (3.1)% 3.6% EPS (basic) $(2.27) $2.55 Net cash + treasury investments 28.9 31.6 15
Business review Andrew Rybicki, Group CEO
FY2011 Top Ten Customers - in alphabetical order Canal Digital Satellite, Norway Eurocom Satellite, Israel ITI Neovision Satellite, Poland Swisscom Broadband, Switzerland 70% 70% of Telekom Austria B-band & IPTV, Austria Group revenue Telecom Italia Broadband, Italy in 2011 Telefonica IPTV, Spain Telenet Cable, Belgium Vectra Cable, Poland ZAP Terrestrial & Satellite, Italy 17
Top customer business brought by the acquisition Customer name (alphabetical order) Country Fastweb Italy Swisscom Switzerland Telecom Argentina Argentina Telekom Austria Telekom Austria Austria Austria Telecom Italia Italy Telefonica Spain Vodafone D2 Germany Vodafone Italia Italy 18
ADB Group total revenue by geography Eastern Europe 22% Americas Americas 6% Asia Pacific MEA 1% 5% Western Europe 66% 19
ADB Group revenue by product/service family Customer care and other services 10% Broadband Broadband equipment Digital TV 32% equipment 58% 20
ADB Group worldwide business split 60% 50% 40% 30% 30% Western Europe Western Europe Eastern Europe MEA 20% Americas Asia-Pcific 10% 0% Digital TV equipment Gateways Customer care & services 21
Financial review Alessandro Brenna
Profit and loss statement 2011 2010 $ million - excluding EPS Revenue 399.0 356.6 Gross profit 124.0 114.7 Gross margin% 31.1% 32.2% R&D (68.6) (48.9) SG&A (48.8) (43.7) Other 1.0 (4.4) EBIT before reorganization + acquis. 7.6 17.7 EBIT% 1.9% 5.0% Reorganization + acquisition charges (16.3) (0.5) EBIT (8.7) 17.2 Financial costs, net (4.8) (2.4) Profit before tax (13.5) 14.8 Taxes 1.3 (1.9) (12.2) 12.9 Net profit Profit % (3.1)% 3.6% EPS (basic) $ (2.27) $ 2.55 23
Key balance sheet items 2011 2010 $ million Cash and cash equivalents 42.3 84.5 Treasury investments 14.3 14.5 Trade receivables, net 52.8 92.8 Inventories, net 29.6 50.4 Other current assets 21.3 28.1 Total current assets 160.3 270.3 Current bank liabilities 14.4 64.5 Trade and other payables 107.2 144.4 Accrued expenses 23.3 34.5 Total current liabilities 161.8 263.0 Long-term bank loans 13.4 2.9 Equity 52.0 68.7 Net cash + treasury investments 28.9 31.6 24
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