ADB Group reports its full-year 2013 results Donnerstag, 13. Februar 2014 - 19:11

ADB Group reports its full-year 2013 results

• Revenue reaching US$ 373.5 million
• EBITDA at US$ 26.0 million or 7.0% of revenue
• EBIT at US$ (5.8) million, after goodwill impairment and reorganisation charges
• Adjusted EBIT at US$ 5.3 million or 1.4% of revenue
• Net cash increased to US$ 31.4 million

Geneva – 13 February 2014

Advanced Digital Broadcast Holdings SA (SIX: ADBN) reported today its unaudited consolidated financial results for the full-year 2013.

The year 2013 revenue reached US$ 373.5 million, representing a decrease of 17.3% from the US$ 451.6 million recorded in the same period of the last year. For the first time in the history of the company, the revenue from the second half of the year was smaller than from the first half. The main reason for the decline is the contingent slow-down of sales in certain of the Group’s ‘traditional’ business areas, i.e. broadcast and broadband home equipment, during the second half of 2013. This was the result of certain key customer’s excessive inventory build-up, pushing planned equipment purchases forward, and is expected to be temporary in nature. It needs to be noted that the Group has not lost any customers.

Gross profit amounted to US$ 108.7 million, or 29.1% of revenue. The gross margin improved from the 28.3% level during the first half 2013 due to larger contribution from the software and services. Compared to the prior year, the total gross profit decreased from US$ 133.8 million in 2012 by 18.7%, following the decline in revenue.

The 2013 research and development expenses were US$ 61.5 million, decreasing 7.3% from last year’s US$ 66.4 million. The Group has successfully streamlined its product development costs, which is expected to continue. The SG&A expenses, excluding reorganisation charges, declined by 13.3% compared to last year, reaching US$ 44.1 million and reflecting the operating cost savings gained from the overhead efficiencies.

In the second half of 2013, the Group recorded a goodwill impairment charge of US$ 9.4 million, and reorganization expenses worth in aggregate US$ 1.7 million. The non-cash goodwill impairment charge refers to the acquisition of Vidiom Systems Inc., which was concluded in year 2006. The Adjusted Earnings Before Interest and Tax (Adjusted EBIT), computed before reorganization and goodwill impairment charges, was US$ 5.3 million or 1.4% of revenue, while the EBIT amounted to a negative US$ 5.8 million, compared to a positive EBIT of US$13.6 million in 2012.

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to US$ 26.0 million or 7.0% of revenue in year 2013, compared to US$ 40.9 million or 9.0% of revenue for the year 2012.

Other income of US$ 4.9 million includes US$ 3.5 million worth of refunds received from customs offices of the European Union and concerning import duties paid more than three years ago.

At the end of the year 2013, the Group posted a loss of US$ 7.9 million, compared to a profit of US$ 8.5 million for the year 2012. Loss per share (EPS) was US$ 1.55, compared to a profit per share of US$ 1.64 a year before.

At the end of December 2013, the Group closed the year with a net cash position of US$ 31.4 million. This represents an increase of US$ 7.9 million compared to US$ 23.5 million at the end of year 2012. The total cash, time deposits and treasury investments amounted to US$ 48.6 million at the end of December 2013.

At present, the Board of Directors decided not to recommend a dividend distribution to the Annual General Meeting of Shareholders, which will be held on 20 June 2014.

Mr. Andrew Rybicki, Group Chairman, commented: “This has been an unusual year for us. We had never seen the second half of the year to be slower than the first half. The organization reacted quickly, and despite the magnitude of this change we remained afloat, with a slightly positive EBIT before reorganization and impairment charges. No doubt there will be further challenges on the road, but it is good to see that our staff is prepared to embrace them.”

Mr. Peter Balchin, Chief Executive Officer of ADB Group added: “We started several initiatives in the company in the third quarter to streamline the organization and improve efficiency. Some of the results can already be seen, further ones will be seen over time. I have been impressed by the quality of the staff and products, and I remain convinced that the strategy and actions we are taking will move us forward successfully.”

Consistent with the policy adopted in 2012, the company has decided not to issue guidance for the year 2014.

Business overview

General trends

The worldwide media consumption is evolving rapidly. The average households are increasing the amount of screens at home – the number is forecast to be eight per household by 2015. Also, more and more television screens are connected to internet. Three years ago, less than a third of people who owned a smart TV actually connected it to the internet. Today, the number is already two thirds¹. Moreover, as both fixed and mobile broadband continue to evolve in speed and capacity, the content distribution possibilities expand. The increased use of tablet devices for media consumption offers the subscribers a possibility for multiple screens, and thus tailor-made user experience.

Perhaps surprisingly, this has meant an increase in the demand of enabling devices (such as set-top boxes, broadband access devices and the like). The set-top box market shipment levels remain high – 220 million units in 2013. The pay-TV providers are also upgrading to integrate IP services with broadcast content and on-demand functionality, using recommendation engines and advanced user interfaces.

The pay-TV operators’ subscriber numbers and revenue grew in 2013 worldwide, but not equally everywhere. Europe saw a slight decline in terms of revenue whereas the rest of the word enjoyed moderate growth of 0.9%², reflecting the overall economic landscape. The net subscriber numbers however increased 7.9% by end of Q3 2013, reflecting the consumers’ desire for professionally designed services. It appears that the much-advertised “cord-cutting” phenomenon has been more a question of reacting to economic downturn, rather than an overall trend. However, what is inevitably clear from the market figures is that the pressure on ARPU from the operators’ side has a big impact on the technology providers. The ability to be cost- and time- efficient is key to success.

Strategically, the ADB Group is well-positioned. The company’s software and service capabilities include some of the most sophisticated user interfaces in the world. Leveraging on these, building new product ranges that are easily combined to customer friendly solutions, and streamlining operating processes accordingly are the key elements of the strategy going forward. The Group remains confident that this strategic focus will deliver results and restore profitability.

Group business during year 2013

Europe continues being the largest platform for the Group business. Total of Europe constituted 93.1% of revenue, where Western Europe contributed 69.4% and Eastern Europe 23.7% to the business. Americas brought 6.5% and Asia Pacific closed to 0.4% of the revenue during the year 2013.

During the year 2013, the top ten customers accounted for 79% to the total revenue, which is roughly in line with the 76% of year 2012. The composition of the top ten customers was unchanged, reflecting an overall good satisfaction level enjoyed by our customers.

The digital television products and services provided to broadcasting customers accounted for 62% of our revenue during the year 2013. The demand stemmed largely from cable and satellite operators. Products and services to broadband customers accounted for 27% of our overall revenue; the demand came mostly from Switzerland, Italy and Spain. Customer services and systems accounted for 11% of the Group revenue.

¹Source : Futuresource Consulting

²Source : Datixis, Q3/2013

Conference call

The management of ADB Group will hold a conference call to comment on this press release today at 15.00 CET. Participants shall dial the number +41 (0) 44 580 7718 with pass code “ADB”.

This press release and further information on ADB Group can be found on the Group’s the Group website at www.adbholdings.com

For further information please contact:

Tina Nyfors

Investor Relations /Group Communication

Tel: +41 22 592 8433

Fax: +41 22 592 8402

t.nyfors@adbglobal.com

-end-

About ADB Group (SIX: ADBN)

ADB Group (www.adbholdings.com) was founded in 1995 and is a leading developer and supplier of solutions required to view and interact with digital TV broadcast through cable, satellite, terrestrial and IP networks, as well as products and systems for broadband data communication business. The Group today sells a broad range of products and services, including connected home multimedia solutions, software, consumer premises devices, consulting and engineering services and after sales services for digital pay-TV broadcast operators and broadband network operators. The Group’s sales are conducted through the brand of ADB (www.adbglobal.com), and the trademarks of i-Can, Epicentro and Carbo.

This press release 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 due to various factors, among which:

• future developments of the world digital TV and broadband markets, in particular the future demand for digital TV and broadband products in the key markets and from key customers served by our Group;
• pricing pressures, competitive market situation;
• our and the industry’s capability to successfully and timely innovate and develop challenging technology, and our capability to hire and retain high-level employees;
• changes in the exchange rates between the US$ and the main other operating currencies of the Group, including the Euro, Swiss Franc and the Polish Zloty;
• our ability in an intensive competitive environment, to continue securing orders from existing or new customers and to achieve our pricing expectations for products for which we have or are currently investing into development;
• the ability of our suppliers to meet our demands for supplies, qualitatively or quantitatively, and to offer competitive pricing;
• our gross margin could vary significantly from expectations based on changes in revenue levels, product mix and pricing, changes in unit costs, and the timing and execution of shipments ramp-ups;
• changes in the economic, tax, social or political environment, including import and other duties, military conflict, terrorist activities, as well as natural events such as severe weather, health risks, epidemics or earthquakes in the countries in which we, our key customers and our suppliers operate;
• our ability to obtain required licenses on third-party intellectual property on reasonable terms and conditions, the impact of potential claims by third parties involving intellectual property rights relating to our business, and the outcome of potential related litigations;
• the results of actions by our competitors, including new product offerings and our ability to react thereto.

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 press release 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 release. You are recommended to consult your investment advisers or other advisers prior to making any decision.

This press release is not an offer of securities for sale or 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 SA does not intend to register its securities in the United States of America.

The information contained in this press release 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 release. You are recommended to consult your investment advisers or other advisers prior to making any decision.

This press release is not an offer of securities for sale or 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 SA does not intend to register its securities in the United States of America.

ADVANCED DIGITAL BROADCAST HOLDINGS SA AND SUBSIDIARIES

EARNINGS BEFORE INTEREST AND TAX

YEARS ENDED 31 DECEMBER 2013 AND 2012

(Expressed in United States Dollars)

ADVANCED DIGITAL BROADCAST HOLDINGS SA AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

YEARS ENDED 31 DECEMBER 2013 AND 2012

(Expressed in United States Dollars)

ADVANCED DIGITAL BROADCAST HOLDINGS SA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED 31 DECEMBER 2013 AND 2012

(Expressed in United States Dollars)

ADVANCED DIGITAL BROADCAST HOLDINGS SA AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

31 DECEMBER 2013 AND 2012

(Expressed in United States Dollars)

* represented for changes in defined benefit pension plan related to prior years

ADVANCED DIGITAL BROADCAST HOLDINGS SA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

YEARS ENDED 31 DECEMBER 2013 AND 2012

(Expressed in United States Dollars)

* represented for changes in defined benefit pension plan related to prior year

ADVANCED DIGITAL BROADCAST HOLDINGS SA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED 31 DECEMBER 2013 AND 2012

(Expressed in United States Dollars)

(continued)

ADVANCED DIGITAL BROADCAST HOLDINGS SA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED 31 DECEMBER 2013 AND 2012

(Expressed in United States Dollars)