Ascom Holding Ag · SIX:ASCN
Ascom — FY2003 Earnings Presentation
72 slides from Ascom's earnings presentation, Mar 23, 2004
Slide 1: Financial Year 2003 Media and Analyst Conference
Financial Year 2003 Media and Analyst Conference 23 March 2004
Slide 2: Overall Agenda
Overall Agenda l Welcoming address, introduction and overview 2003 Juhani Anttila, Chairman and CEO l Financial results 2003 Rudolf Hadorn, CFO l Outlook and objectives 2004 Juhani Anttila, Chairman and CEO Media and Analyst Conference 2004 2
Slide 3: Agenda Part 1
Agenda Part 1 l Tasks beginning of the year 2003 (4) l Group revenues (5) l Revenues of non-core divisions (6 - 7) l Group net loss (8) l Personnel (9 - 10) l Group net debt (11) l Core divisions (12 - 26) l Non-core divisions (27) l Corporate governance (28 - 29) l What did Ascom deliver 2003 (30 -
Slide 4: Tasks beginning of the year 2003
Tasks beginning of the year 2003 l Substantial fast reduction of loss due to equity and liquidity constraints l Fast profitability improvement in core divisions in order to show the potential of Ascom and to enable share capital increase and normal financing l Loss making divisions and activities mu
Slide 5: Group revenues 2001 - 2003
Group revenues 2001 - 2003 in CHF million 3,500 3,143 3,000 2,500 2,066 2,000 1,515 1,500 1,000 500 0 2001 2002 2003 Media and Analyst Conference 2004 5
Slide 6: Revenues of non-core divisions in relation to total revenues 2001 - 2003
Revenues of non-core divisions in relation to total revenues 2001 - 2003 3,500 3,134 in CHF million 3,000 2,500 1,962 2,066 Total 2,000 1,515 Non-core division 1,500 Continuing 984 1,000 non-core divisions 500 225 0 2001 2002 2003 Media and Analyst Conference 2004 6
Slide 7: Continuing non-core divisions 2001-2003 – share of revenues
Continuing non-core divisions 2001-2003 – share of revenues 100% 62% 48% 50% 15% 0% 2001 2002 2003 Media and Analyst Conference 2004 7
Slide 8: Group net loss 2001 - 2003
Group net loss 2001 - 2003 in CHF million 2001 2002 2003 0 -50 -100 - 67.9 -150 -200 -250 -300 - 281.2 -350 -400 - 395.5 -450 Media and Analyst Conference 2004 8
Slide 9: Personnel 2001 - 2003
Personnel 2001 - 2003 12,000 10,130 10,000 8,000 7,304 Switzerland 6,000 4,842 Worldwide 4,000 3,482 2,573 1,761 2,000 0 2001 2002 2003 Media and Analyst Conference 2004 9
Slide 10: Ascom Switzerland – employees by division
Ascom Switzerland – employees by division Total 1,697 employees (excluding apprentices, auxiliary staff and interns) Others Co-operation 30 (2%) Others N. Ascom Transport Revenue 153 (9%) 125 (7%) Manufacturing 334 (20%) Security Solutions 480 (28%) PLC 10 (1%) Wireless Solutions 73 (4%) Network Int
Slide 11: Group net debt 2001 - 2003
Group net debt 2001 - 2003 in CHF million 2001 2002 2003 100 55 0 -100 -200 -300 - 264 -400 -500 -600 - 631 -700 Media and Analyst Conference 2004 11
Slide 12: Financial year 2003 – core divisions
Financial year 2003 – core divisions l Trebling of operating result for the core Divisions (from 19 MCHF to 61 MCHF) l Improved order intake at three core Divisions (order intake + 13 %) l Continous cost management l Growth in selected markets Media and Analyst Conference 2004 12
Slide 13: Core divisions 2001 - 2003 Revenues and order intake
Core divisions 2001 - 2003 Revenues and order intake 1,300 1,223 1,216 in CHF million 1,127 1,100 1,072 1,036 998 900 Sales 700 Order intake 500 300 100 2001 2002 2003 Media and Analyst Conference 2004 13
Slide 14: Core divisions 2001 - 2003 Operating result
Core divisions 2001 - 2003 Operating result 70 61 50 Operating result in CHF million 30 19 10 -10 -30 - 37 -50 2001 2002 2003 Media and Analyst Conference 2004 14
Slide 15: Transport Revenue 2001 - 2003 Revenues and order intake
Transport Revenue 2001 - 2003 Revenues and order intake 370 345 in CHF million 327 320 283 279 267 270 225 220 Revenues 170 Order intake 120 70 20 2001 2002 2003 Media and Analyst Conference 2004 15
Slide 16: Transport Revenue 2001 - 2003 Operating result
Transport Revenue 2001 - 2003 Operating result 10 7 5 0 Operating result in CHF million -5 -10 -15 -20 -25 - 22 -30 - 28 2001 2002 2003 Media and Analyst Conference 2004 16
Slide 17: Review 2003 - Transport Revenue Highlights
Review 2003 - Transport Revenue Highlights l Remarkable turnaround achieved – faster than expected; all plan points exceeded l New customer projects awarded, extension of maintenance business l Critical projects concluded/accepted by customer (except 2) l Cost blocks reduced l Key project milestones
Slide 18: Security Solutions 2001 - 2003 Revenues and order intake
Security Solutions 2001 - 2003 Revenues and order intake 300 in CHF million 250 239 221 212 202 200 181 165 Revenues 150 Order intake 100 50 0 2001 2002 2003 Media and Analyst Conference 2004 18
Slide 19: Security Solutions 2001 - 2003 Operating result
Security Solutions 2001 - 2003 Operating result 16 15 14 12 11 11 Operating result in CHF million 10 8 6 4 2 0 2001 2002 2003 Media and Analyst Conference 2004 19
Slide 20: Review 2003 - Security Solutions Highlights
Review 2003 - Security Solutions Highlights l Foundation laid for greater internationalisation l Key customer projects progressing according to plan l Budget targets for order intake achieved Switzerland l Consolidation in very difficult market environment l Trust of key customers (re)gained l Impro
Slide 21: Network Integration 2001 - 2003 Revenues and order intake
Network Integration 2001 - 2003 Revenues and order intake 456 460 in CHF million 450 370 350 354 350 333 Revenues 250 Order intake 150 50 2001 2002 2003 Media and Analyst Conference 2004 21
Slide 22: Network Integration 2001 - 2003 Operating result
Network Integration 2001 - 2003 Operating result 15 10 10 7 5 Operating result in CHF million 0 -5 -10 -15 -20 -25 -30 -35 - 35 -40 2001 2002 2003 Media and Analyst Conference 2004 22
Slide 23: Review 2003 - Network Integration Highlights
Review 2003 - Network Integration Highlights l Further improvement in margins l For the first time, all business and country units in the profit zone l Increase in order intake by 14% l Significant advance of voice service share over all units l Strong recognition as partner: l "Best mobility partne
Slide 24: Wireless Solutions 2001 - 2003 Revenues and order intake
Wireless Solutions 2001 - 2003 Revenues and order intake 300 in CHF million 276 277 250 235 228 201 209 200 Revenues 150 Order intake 100 50 0 2001 2002 2003 Media and Analyst Conference 2004 24
Slide 25: Wireless Solutions 2001 - 2003 Operating result
Wireless Solutions 2001 - 2003 Operating result 35 33 30 25 Operating result in CHF million 25 20 15 10 9 5 0 2001 2002 2003 Media and Analyst Conference 2004 25
Slide 26: Review 2003 - Wireless Solutions Highlights
Review 2003 - Wireless Solutions Highlights l Significant increase in revenue and profitability l Largest DECT Business handset supplier after being named OEM partner for Ericsson‘s DECT Business portfolio l Positive business development in the USA l Foundations laid for operational recovery in Fran
Slide 27: Financial year 2003 – non-core divisions
Financial year 2003 – non-core divisions l Non-core Divisions reduced to around 15% of total revenues l Disposal of Energy Systems and PBX l Powerline Communications transformed into slimmed-down technology firm with now positive operating profit l Comprehensive restructuring measures continuing in
Slide 28: Corporate Governance 2003 (1)
Corporate Governance 2003 (1) l Intensive management teamwork within Ascom - 21 Board Meetings - 20 Executive Board Meetings - Numerous Special Task Groups l Support from different stakeholders - employees - shareholders - authorities - banks Media and Analyst Conference 2004 28
Slide 29: Corporate Governance 2003 (2)
Corporate Governance 2003 (2) l Chairman & CEO role together in order to guarantee a fast implementation of the June 2002 focusing and restructuring strategy l The key success factor for the complex parallel tasks: Teamwork l The task was not to solve only one topic, but because of the vital interde
Slide 30: What did Ascom deliver 2003 (1)
What did Ascom deliver 2003 (1) l Net loss was reduced by 213 MCHF to (68) MCHF l Core Ascom order intake + 13% and operative profit increased from 19 MCHF to 61 MCHF l Sale of loss making Energy and PBX businesses (1786 employees) l Elimination of losses in PLC l Non-core business activities reduce
Slide 31: What did Ascom deliver 2003 (2)
What did Ascom deliver 2003 (2) l Cost cutting measures including people reduction (676 employees) l Strengthening of the balance sheet through divestment activities, reduction of net working capital and share capital increase l "Ascom's future has started" Media and Analyst Conference 2004 31
Slide 32: Financial Results 2003 (Part 2)
Financial Results 2003 (Part 2) Rudolf Hadorn CFO Media and Analyst Conference 2004 32
Slide 33: Key Financial Results 2003
Key Financial Results 2003 l Book-to-Bill ratio of Core Ascom Segments: 109% (93% in 2002) l Net Revenues of Core Ascom Segments: almost stable at 1'036 MCHF (-3%) l Operating Profit of Core Ascom Segments: increased from 19 MCHF to 61 MCHF l Group EBITDA: increased by 75 MCHF from (42) MCHF to 33 M
Slide 34: Profit and Loss Statement (IFRS)
Profit and Loss Statement (IFRS) (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 Incoming Orders 1'619 676 943 1'911 (292) Net Revenue 1'515 682 833 2'066 (551) Gross Profit 341 156 185 428 (87) Gross margin 23% 23% 22% 21% 2% Functional Cost (368) (158) (210) (535) 167 Operating Profit (27) (2) (25) (107)
Slide 35: Net Revenue and Operating Profit 2002 / 2003
Net Revenue and Operating Profit 2002 / 2003 (M C H F ) Net Revenue 2 '5 0 0 2 '0 0 0 (551) (462) (82) (7) 1 '5 0 0 1 '0 0 0 2'066 (27)% 1'515 500 0 2002 2003 V a r ia n c e Dive s t m e nts Operational Exchange (M C H F ) O p e r a tin g P r o fit 0 (20) (27) 75% (40) 39 (1) (107) (60) 80 (80) 42 (
Slide 36: Other Expenses / Income
Other Expenses / Income (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 Profit / (loss) on sales of subsidiaries or business units (12) (15) 3 28 (40) Restructuring costs (22) (10) (12) (46) 24 Release provisions 4 4 - - 4 Profit on sales real estate 38 39 (1) 8 30 Impairment loss charges on real estate (2
Slide 37: Profit and Loss Statement (IFRS) (continued)
Profit and Loss Statement (IFRS) (continued) (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 EBIT (45) 0 (45) (231) 186 Net Financial (Exp.) / Inc. (13) (5) (8) (31) 18 Minority (Gains)/Losses 0 0 0 3 (3) Income Taxes (10) (6) (4) (23) 13 Net Income (68) (11) (57) (281) 213 Memo: EBITDA 33 36 (3) (42) 75 N
Slide 38: Net Financial Expenses / Income
Net Financial Expenses / Income (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 Net Currency (Losses) / Gains 11 5 6 28 (17) Share in Net Income of associated companies 1 1 - - 1 Interest Expenses (net) (15) (5) (10) (29) 14 Write Down Assets/Investm. - - - (17) 17 Other Financial Expenses (10) (6) (4) (13
Slide 39: Balance Sheet (IFRS)
Balance Sheet (IFRS) 31.12.2003 30.06.2003 31.12.2002 (MCHF) % (MCHF) % (MCHF) % Fixed Assets 223 20% 300 24% 382 26% Cash + Securities 321 29% 250 20% 230 15% Inventories 147 13% 235 19% 317 21% Other Current Assets 417 38% 465 37% 575 38% Total Assets 1'108 100% 1'250 100% 1'504 100% Equity 203 18
Slide 40: Balance Sheet Total reduced by 26%
Balance Sheet Total reduced by 26 % (MCHF) 1'600 1'400 (396) (295) 1'200 68 3 (172) 1'000 800 (26%) 1'504 600 1'108 400 200 0 31.12.02 31.12.03 Variance Divestments Operational Net Capital Exchange Increase Media and Analyst Conference 2004 40
Slide 41: Ascom Group Equity stabilised due to Capital Increase
Ascom Group Equity stabilised due to Capital Increase (MCHF) EQUITY ratio of 18% 3 (68) 68 (7) 11 196 203 Equity Group Purchase of Sale of Net Capital Translation Equity 31.12.2002 Net Loss own Shares own Shares Increase Adjustments 31.12.2003 Media and Analyst Conference 2004 41
Slide 42: Substantial NWC reduction achieved
Substantial NWC reduction achieved (MCHF) NWC in % of Rev. decreased from 24% to 19% (75) (64) 61 (136) 454 240 NWC Inventory Accounts Accounts Divested NWC 31.12.2002 + Prepayments Receivables Payables 31.12.2003 +Prepayments Media and Analyst Conference 2004 42
Slide 43: Net debt reduction of more than 300 MCHF resulting in a net cash position
Net debt reduction of more than 300 MCHF resulting in a net cash position (MCHF) 300 31.12.03 30.06.03 31.12.02 250 264 Bond 200 200 200 206 200 Debt 56 238 275 150 Mortages 3 11 11 Other Debt 7 7 8 100 Gross Debt 266 456 494 50 Cash (306) (247) (228) Securities (15) (3) (2) 0 Net Debt (55) 206 264
Slide 44: Net debt reduction supported by divestments
Net debt reduction supported by divestments (MCHF) 54 55 68 (264) 21 95 81 Net Debt AES PBX Sale Net Operations Net Cash 31.12.2002 Divestm. Divestm. Real Estate Capital NWC 31.12.2003 Increase Others Media and Analyst Conference 2004 44
Slide 45: Positive free cash flow in second half of 2003
Positive free cash flow in second half of 2003 (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 Net cash flow from Operating activities 54 75 (21) 105 (51) Investing activities 76 84 (8) 6 70 Free Cash Flow 130 159 (29) 111 19 Financing activities* (277) (239) (38) (272) (5) Capital increase (net) 68 68 - -
Slide 46: Ascom Group: Staffing reduction in 2003
Ascom Group: Staffing reduction in 2003 (106) (254) (316) (1'786) 7'304 (676) 4'842 Employees Ascom Group and Co- Divestments Employees 31.12.2002 Core Financial operation 31.12.2003 Segments Companies Media and Analyst Conference 2004 46
Slide 47: Key Figures 2003: Segment view
Key Figures 2003: Segment view Core Co-op* Group Contin. Divest. Total (MCHF) Activit.* Activit.* Activit.* Activit.* Ascom* Incoming Orders 1'127 277 9 1'355 265 1'619 Net Revenue 1'036 268 9 1'254 261 1'515 Operating Profit 61 (32) (27) 2 (29) (27) Restruct. cost included (6) (17) 0 (23) (2) (25)
Slide 48: Core/Non-core activities: Revenues and profitability
Core/Non-core activities: Revenues and profitability (MCHF) Net Revenue (Total MCHF 1'515)* Operating Profit (Total MCHF (27)) 80 60 1'036 9 268 40 61 20 261 0 (20) (27) (29) Core Corp. & (32) Segments Financial entities (40) Co-operation Divested Core Corp. & Co-operation Divested activities Segmen
Slide 49: P&L Core business segments
P&L Core business segments (MCHF) Transport Security Network Wireless Total Revenue Solutions Integration Solutions Core Incoming Orders 279 221 354 277 1'127 Net Revenue 267 165 333 276 1'036 Gross Profit 47 46 73 126 292 Gross Margin 18% 28% 22% 46% 28% Operating Profit 7 11 10 33 61 OP Margin 3%
Slide 50: Transport Revenue: Strong progress on profit improvement
Transport Revenue: Strong progress on profit improvement (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 Incoming Orders 279 172 107 225 54 Net Revenue 267 143 124 283 (16) Gross Margin 18% 16% 20% 9% 9% Operating Profit 7 5 2 (28) 35 OP Margin 3% 3% 2% (10)% 13% CapEx 3 - 3 3 - Employees 860 878 842 18 Me
Slide 51: Transport Revenue: 267 MCHF Revenue 2003
Transport Revenue: 267 MCHF Revenue 2003 Segment Split Geographic Split Product Split 18% 25% 30% 47% 57% 25% 23% 75% Toll Parking North North & Eastern Projects America Europe Fare Southern & Western Service & Europe Maintenance Media and Analyst Conference 2004 51
Slide 52: Security Solutions: Transformation underway
Security Solutions: Transformation underway (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 Incoming Orders 221 85 136 181 40 Net Revenue 165 82 83 212 (47) Gross Margin 28% 25% 30% 24% 4% Operating Profit 11 4 7 15 (4) OP Margin 7% 5% 8% 7% - CapEx 5 2 3 1 4 Employees 582 602 638 (56) Media and Analyst Co
Slide 53: Security Solutions: 165 MCHF Revenue 2003
Security Solutions: 165 MCHF Revenue 2003 Segment Split Geographic Split 3% 18% 27% 18% 36% 19% 79% Public Safety Traffic Switzerland Austria Industry Defense Germany Media and Analyst Conference 2004 53
Slide 54: Network Integration: Positive development in H2 2003
Network Integration: Positive development in H2 2003 (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 Incoming Orders 354 155 199 370 (16) Net Revenue 333 171 162 350 (17) Gross Margin 22% 23% 21% 23% (1)% Operating Profit 10 9 1 7 3 OP Margin 3% 5% 1% 2% 1% CapEx 7 5 2 2 5 Employees 948 1'002 1'016 (68) Me
Slide 55: Network Integration: 333 MCHF Revenue 2003
Network Integration: 333 MCHF Revenue 2003 Segment Split Geographic Split Product Split 4% 8% 2% 1% 8% 21% 6% 13% 41% 51% 29% 27% 75% 14% Business Supplier Switzerland Germany Italy Consulting Maintenance Communication Business Carrier Systems & France Belgium Others Deployment & Product Products So
Slide 56: Wireless Solutions: Profitable growth
Wireless Solutions: Profitable growth (MCHF) 2003 H2 2003 H1 2003 * 2002 ∆ 03/02 Incoming Orders 277 146 131 228 49 Net Revenue 276 145 131 235 41 Gross Margin 46% 46% 45% 45% 1% Operating Profit 33 18 15 25 8 OP Margin 12% 12% 11% 11% 1% CapEx 14 9 5 8 6 Employees 1'142 1'090 1'142 0 Media and Anal
Slide 57: Wireless Solutions: 276 MCHF Revenue 2003
Wireless Solutions: 276 MCHF Revenue 2003 Segment Split Geographic Split 21% 18% 12% 22% 4% 4% 3% 5% 24% 10% 19% 24% 9% 15% 10% OEM Hospitals Elderly Netherlands Sweden France Industry Secure Other Switzerland UK United States Belgium Germany Other Media and Analyst Conference 2004 57
Slide 58: Key Figures Co-operation
Key Figures Co-operation (MCHF) 2003 H2 2003 H1 2003 2002 ∆ 03/02 Incoming Orders 277 123 154 295 (18) Net Revenue 268 141 127 310 (42) Gross Margin 1% (3)% 5% 12% (11)% Operating Profit (32) (17) (15) (20) (12) OP Margin (12)% (12)% (12)% (6)% (6)% Employees 1'173 1'489 (316) Media and Analyst Conf
Slide 59: Turnaround... What has been achieved in 2003
Turnaround... What has been achieved in 2003 AES, PBX Capital All Core Segments Divestment Increase Profitable Real estate Syndicated loan Net Cash Disposal (replacement of standstill) Position Book-to-Bill ratio >1 Cost NWC Reduction Reduction Manufacturing F PLC transformed Restructuring Payphones
Slide 60: Turnaround... What's up in 2004!
Turnaround... What's up in 2004! Profit Net Income Organic Improvement break even Growth in Core Segments in Core Segments Cost optimisation Implementation ongoing "One company concept" NWC Maintain Cash Keep full Further Focus Tax Structure Position to repay Bond in Feb'05 Improvement Simplificatio
Slide 61: Outlook and objectives 2004
Outlook and objectives 2004 Juhani Anttila Chairman and CEO Media and Analyst Conference 2004 61
Slide 62: Agenda Part 3
Agenda Part 3 l Positioning (63) l Strenghts (64) l Market Ranking (65) l Outlook and objectives 2004 (66 - 71) Media and Analyst Conference 2004 62
Slide 63: Positioning
Positioning l Ascom is an international solutions provider for mission critical communication and fare collection systems l Ascom has a comprehensive own technology expertise l Ascom is active in key markets across Europe, North America, Asia and Latin America l Ascom service offer ranges from analy
Slide 64: Strengths
Strengths In its individual business areas and country markets, Ascom has l a strong market position in niche markets l a broad client base and expandable customer relationships l in-depth expertise in key technologies as well as in execution of complex projects in demanding environments l strong pa
Slide 65: Market ranking
Market ranking Ascom core Divisions Rank in 2003 Network Integration No. 3 (CH, I, B) - QVoice (testing system for mobile networks) No. 1 (worldwide) Security Solutions No. 1 (CH) - Public safety and traffic security No. 2 (CH, A) Wireless Solutions No. 1 (NL, UK, S, CH) Transport Revenue No. 3 (wor
Slide 66: Outlook and objectives 2004 - Transport Revenue
Outlook and objectives 2004 - Transport Revenue Integrated solutions for revenue collection in public-sector transportation (Fare Collection), parking systems (Parking) and toll booths (Toll) Measures l Expand service and maintenance business l Increase the sales of solutions already successfully im
Slide 67: Outlook and objectives 2004 - Security Solutions
Outlook and objectives 2004 - Security Solutions Integrated communication, management and information solutions for public security, traffic security and for the military and industry Measures l Closer focus on civilian markets, in particular through communication, information and management systems
Slide 68: Outlook and objectives 2004 - Network Integration
Outlook and objectives 2004 - Network Integration Networks and applications in voice, data and video communications Measures l Expand service and maintenance business l Increase revenues through outsourcing solutions and expanding supplier business l Deepen strategic partnerships l Migration partner
Slide 69: Outlook and objectives 2004 - Wireless Solutions
Outlook and objectives 2004 - Wireless Solutions World’s leading supplier of advanced on-site communications solutions for demanding environments Measures l Continue to focus on hospitals, retirement and nursing homes, industry and closed establishments l Extend value chain by offering solutions inv
Slide 70: Outlook and objectives 2004 – core/non-core Divisions
Outlook and objectives 2004 – core/non-core Divisions Core Divisions l Expand strong market positions through profitable, organic growth l Achieve further increase in profit margins l Continue to expand service business via existing client base Non-core Divisions l Finalize restructuring and divestm
Slide 71: Outlook and objectives 2004 - Group
Outlook and objectives 2004 - Group l Return to normality in the management organization l Continued swift pace and urgency l Full concentration on operational aspects of the business l Streamlining and simplification of Group structures l Constant alignment of cost structures with market circumstan
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