Ascom achieves solid results: Revenue growth and significant increase in Group profit

At CHF 24.4 million, Group profit was well above the prior-year figure of CHF 8.2 million. Supported by the acquisition of TEMS, revenue grew by 5.5% (10.9% at constant exchange rates) to CHF 537.2 million (previous year: CHF 509.2 million). At EBITDA level, the result was CHF 49.8 million with an encouraging margin of 9.3%.Ascom is a financially sound technology group and, with cash and cash equivalents of CHF 127.7 million and an equity ratio of 29.4%, has a solid balance sheet structure.
In 2009, Ascom consistently implemented its niche strategy of Mission-Critical Communication. With the acquisition of TEMS, it succeeded in taking a strategically important step. Ascom has actively contributed to the consolidation of the Mobile Network Testing niche market and created a world market leader in this business area. 

Ascom records 10.9% revenue growth at constant exchange rates

Taking into account the pro rata consolidation of acquisitions, Ascom grew revenue by 5.5% to CHF 537.2 million, compared to CHF 509.2 million in 2008. At constant exchange rates, revenue growth was 10.9%. The result was negatively affected by currency fluctuations, on top of the economic environment. In particular, revenue from Network Testing was impacted by the significantly weaker US dollar against the Swiss franc since spring 2009.
At CHF 514.4 million, incoming orders for the Ascom Group were slightly above the previous-year level, or 5.7% higher at constant exchange rates. 

Significant increase in Group profit

The Group's consistent focus since autumn 2007 is clearly bearing fruit. Ascom recorded Group profit of CHF 24.4 million, compared to CHF 8.2 million in the previous year. In order to further strengthening the company, the Board of Directors will propose to the Annual General Meeting that the proceeds be invested in the company's development and that no dividend be paid. 

Solid profitability

All three divisions were profitable in the 2009 financial year. At EBITDA level (including restructuring and integration costs totaling CHF 8.3 million), a result of CHF 49.8 million was achieved with an EBITDA margin of 9.3%.
At EBIT level, a result of CHF 32.8 million was achieved with an EBIT margin of 6.1%. Excluding restructuring, integration and amortization cost, the EBIT margin amounts to 9.1%.
Wireless Solutions posted EBITDA of CHF 30.0 million and an EBITDA margin of 11.3%. At EBIT level, a result of CHF 23.2 million was achieved with an EBIT margin of 8.7%. Excluding one-time restructuring costs of CHF 3.8 million related to the timely adjustment of capacities, Wireless Solutions ended the year with an EBIT margin of 10.2%.
At EBITDA level, Network Testing posted a result of CHF 18.1 million in 2009 with an EBITDA margin of 13.6%. EBIT amounted to CHF 9.3 million with an EBIT margin of 7.0%. Excluding integration costs of CHF 4.5 million related to acquisitions, and disregarding the additional amortization of CHF 7.9 million for intangible assets from acquisitions, the EBIT margin came to 16.3%, which is slightly above the expected range defined in March 2009. Since its consolidation on 2 June 2009, TEMS has succeeded in achieving its targeted profitability and generated an EBIT margin above 20% (excluding integration and amortization costs).
Security Communication posted EBITDA of CHF 4.8 million, corresponding to an EBITDA margin of 3.5%. Costs related to the internationalization strategy could only be partly offset. At EBIT level, the division posted a result of CHF 3.4 million with an EBIT margin of 2.5%.

Solid balance sheet structure

Ascom is a financially sound technology group. With cash and cash equivalents of CHF 127.7 million and an equity ratio of 29.4% as at 31 December 2009, Ascom has a solid financial basis for its targeted further development. 

Substantial investments in research and development

Despite the difficult economic environment, Ascom made substantial investments in research and development (R&D) in 2009, with expenses for R&D rising to CHF 47.0 million (previous year: CHF 32.9 million) and accounting for 8.7% of revenue (previous year: 6.5%). 

Outlook

Although signs of a recovery were apparent towards the end of 2009, market conditions are expected to improve relatively slowly in 2010. With its business activities, Ascom is well positioned to capitalize on emerging business opportunities in its markets. Ascom's goal is to end 2010 with growth in revenue and an EBITDA margin of 10% to 11.5%, provided the economic environment at least remains stable.
Since 1 January 2010 Ascom has comprised three divisions: Wireless Solutions, Network Testing and Security Communication. The new Network Testing Division combines TEMS (consolidated since June 2009) and Telecom Solutions (part of the former Security Solutions division until the end of 2009). The remaining part of Security Solutions continues to operate under the name Security Communication. For ease of comparison, reporting on the 2009 financial year already reflects the new divisional structure.

About Ascom

Ascom is an international solution provider with comprehensive technological know-how in Mission-Critical Communication. The company concentrates on core areas as Wireless Solutions (high-value, customer-specific on-site communications solutions), Network Testing (a global market leader in optimization solutions for mobile networks) and Security Communication (applications for security, communication and control systems for infrastructure operators, public security institutions and the army). The company has subsidiaries in 20 countries and a workforce of some 2,300 employees worldwide. Ascom registered shares (symbol ASCN) are listed on the SIX Swiss Exchange in Zurich.