ADB Group reports full-year 2011 resultsWednesday, February 22nd, 2012
GENEVA — Advanced Digital Broadcast Holdings SA (SIX: ADBN) reported today ADB Group’s unaudited consolidated financial results for the full year 2011.
The full year revenue reached US$ 399.0 million, representing a growth of 12% compared to 2010. The growth was largely attributable to integration of the new broadband business, as indicated when reporting the half-year results. The sales of the digital TV equipment contributed strongly during the second half of the year, following the usual seasonality cycle of this business. Due to the consolidation of only one month of the acquired entity business in 2010, year-on-year results are not directly comparable.
Gross profit amounted to US$ 124.0 million or 31.1% of revenue. This is an increase from the 29.2% reported in the first half of 2011, and represents the Group profiting from redirecting its business away from the retail activities, in accordance with its strategy. The service business still represents a relatively small portion of the Group revenue, but has grown significantly compared to previous year.
Operating expenses accounted for US$ 117.4 million with research and development amounting to US$68.5 million, and operating expenses to US$ 48.8 million. The decrease in operating expenses as percentage of revenue during the second half of 2011 is the result of the Group’s ongoing streamlining process. Key contributors have been integration of the Operations, Finance and central R&D, and overall headcount reduction. The Group has also recorded significantly lower royalty payments to third parties, as a result of its proactive reviews and adjustments of the respective licensing agreements. This effort will continue into 2012 and beyond.
The Earnings Before Interest and Taxes (before reorganization and acquisition expenses) amounted to US$ 7.6 million, or 1.9% of the revenue, almost in line with management expectations and represents the increased profitability in the second half of 2011. The reorganization expenses amounted to US$ 15.4 million, while the expenses related to the acquisition were US$ 0.9 million, both slightly higher than anticipated. Consequently, the Group’s pro-forma profit before tax was US$ 2.8 million. Taking the reorganization and acquisition charges into account, the reported loss for the year amounted to US$ 12.2 million or US$ 2.27 per share.
The net cash position of the Group strengthened significantly during the second half of 2011, allowing the Group to close the year with a net cash position of US$ 28.9 million, while the gross cash and treasuries amounted to US$ 56.7 million.
Mr. Andrew Rybicki, Group Chairman and CEO, commented: “We expected the year 2011 to be a year of transformation, and it has certainly been one. We have changed our organization, integrated the acquired broadband business into the Group, and streamlined our expenses and processes. Our staff has gone to extraordinary lengths to make it happen, and I am sure it will support a continuation of this effort in 2012. Our customers’ confidence in our products and services remains strong, despite certain quality issues we had experienced during the past year, which we are now correcting. I share this confidence and am glad to see the company shaping itself up to the new challenges in 2012 and beyond, particularly in the areas of product quality improvement, the services, and the focus on complete digital TV and broadband systems, connectivity and software – the pillars of our new strategy. The outlook for 2012 is definitely positive, but due to the uncertainty of still persisting unfavorable macroeconomic situation, the Group has decided not to issue specific guidance for this year”.
As the convergence of digital television and broadband connectivity technologies and services continues, the Group’s vision of its future follows the suit. The connectivity between any and every consumer device, mobile and stationary, will remain the main theme in the coming years. The Group is today particularly well equipped to take a prominent position in these developments, owing to its years-long experience in the digital TV combined with the broadband communication expertise of the acquired entity, as well as to its successful in-house development of the service business. Consequently, it will channel this expertise into creation of complete solutions, which, along with associated services, will be offered to both the Group’s traditional customers – pay-TV and telco operators – as well as to other interested parties. The Group is confident that this strategy, supported by over 15-years long success as a supplier of top performance and competitive end-user products, will make its effort successful in relatively short time.
The new product and service structure of the Group is reflected already today by its revenue constitution. Digital TV equipment brought in a total 58%, broadband products yielded 32%, while the customer care and other services grew to 10% of the Group 2011 revenue.
Geographically, Western Europe remains the Group’s largest and dominating market, bringing in 66% of the overall revenue. Eastern Europe sales contributed 22%, Americas 6%, Middle-East and Africa 5% and Asia Pacific 1%. Please note that the comparison to previous years should take into consideration the impact of the acquisition, as the majority of the broadband products are sold to Western European customers and therefore that region is now represented more prominantly.
The year 2011 saw important business development activities making progress. Opening of the US cable market with Charter Communications and Time Warner Cable in the commercial market segment was brought into fruition, and is progressing according to plan. The business in the Nordic countries has grown considerably as well, and the Group is also pleased to announce its new cable pay-TV customer in Belgium, Tecteo/VOO TV-NET-TEL (“VOO”).
The customer diversification after the acquisition remains largely unchanged. The top ten customers contributed to 70% of the Group revenue, with no single customer bringing more than 15.3%. The Group considers this to be healthy and balanced approach fostering enough cost-efficiencies but diversifying risks sufficiently.
The Group has also been nominated for “Best Quality Improvement Solution” at the IP&TV Industry Award with its Epicentro®-PMP remote management solution. This product allows operators manage the entire home network from a distance, activate services on new devices and fix issues without the end-user even noticing. It signifies the Group’s entry into the business of complete systems and associates services, very much in line with the Groups new strategy.
The Board of Directors have reviewed the Group unaudited financial results of the year, and have not yet decided on their recommendation for dividend distribution, which it will make to the Annual General Meeting of Shareholders.
Management of ADB Group will hold a conference call to comment on this press release today at 16:00 CET. Participants shall dial the number +41 (0) 44 580 6398 with pass code “ADB”.
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