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ASCOM FINANCIAL PRESENTATIONASCOM FINANCIAL PRESENTATION
Martin Zwyssig CFO
June 9, 2009, © Ascom 1
TABLE OF CONTENTSTABLE OF CONTENTS FY 2008 AT A GLANCE
HIGHLIGHTS FROM THE DIVISIONS
ASCOM ACQUISITION OF TEMS 23 MARCH 2009
FINANCIAL RESULTS 2008
May 28, 2009, © Ascom 2
FY 2008 AT A GLANCEFY 2008 AT A GLANCE
May 28, 2009, © Ascom 3
[ ASCOM GROUP ]
TARGETS ACHIEVED (1)
CONTINUED OPERATIONS
Revenue growth in continued operations of 3.8% (at constant exchange rates: +7.4%)
Group EBIT: CHF 44.0m (2007: Loss of CHF -16.1m)
Remarkable EBIT margin of 8.6%
Excellent performance of Wireless Solutions: EBIT CHF 36.0m; EBIT margin: 11.7%
Security Solutions returns to profit: EBIT CHF 9.7m; EBIT margin: 4.8%Security Solutions returns to profit: EBIT CHF 9.7m; EBIT margin: 4.8%
May 28, 2009, © Ascom 44
[ ASCOM GROUP ]
TARGETS ACHIEVED (2)
GROUP LEVEL
Profit from Continuing Operations: CHF 32.7m
One-off losses of CHF -24.5m from the operations and divestments of the fourdivested units which have been disposed of in the meantime
Net income: CHF 8.2 m (2007: loss of CHF 48.1 million)
May 28, 2009, © Ascom 55
[ ASCOM GROUP ]
TARGETS ACHIEVED (3)
CHFm 2008 2007
Incoming Orders 511 9 545 6Incoming Orders 511.9 545.6
Net Revenue 509.2 490.5
EBIT 44.0 (16.1)
EBIT margin 8 6% n/aEBIT margin 8.6% n/a
Profit from continuing operations 32.7 (20.6)
Group profit (after divestments) 8.2 (48.1)
May 28, 2009, © Ascom 66
[ ASCOM GROUP ]
TARGETS ACHIEVED (4)
Rigorous and on schedule implementation of the VITESSE investment program
Divestment of all four discontinued and loss-making units (Traffic in Switzerland,
Industry Switzerland, Toll and Payphones) had been completed on schedule by year
end 2008
Successful acquisitions of two companies as part of the growth and internationalization
strategy:
Argogroup (UK based): Transaction closed in March 2008
Comarco WTS (US based): Transaction closed in January 2009Comarco WTS (US based): Transaction closed in January 2009
May 28, 2009, © Ascom 77
[ ASCOM GROUP ]
GROUP STRUCTURE IN 2008
CORPORATE / HQCORE ACTIVITIES
WIRELESS SOLUTIONS SECURITY SOLUTIONS NON-CORE/DISCONTINUED
TRAFFICTRAFFIC
INDUSTRY (CH)
SECURITY COMMUNICATION
Direct Channel
MTS
TELECOMS
PAYPHONESIndirect Channel
TNS
S&S TOLLOEM Channel
May 28, 2009, © Ascom 8
[ ASCOM GROUP ]
GROUP STRUCTURE AS OF JANUARY 2009
CORPORATE / HQ
WIRELESS SOLUTIONS SECURITY SOLUTIONS
SECURITY COMMUNICATION
Direct Channel TELECOM SOLUTIONS
MTSIndirect Channel
MTS TNS
S&S
OEM Channel
May 28, 2009, © Ascom 9
[ ASCOM GROUP ]
ABOUT ASCOM
P id t i d i i iti l i ti d t l ti dProvide customized, mission-critical communication products, solutions andservices for demanding environments
Wireless Solutions: Focusing on wireless communication for demanding environments to allow for seamless on-site communication for hospitals, elderly care, industry and others (like hotels and retail)
Security Solutions: Focusing on integrated communication solutions and alarming / mobilizationFocusing on integrated communication solutions and alarming / mobilization applications for armies and public / private security organizations, as well as products and services for telecom operators
May 28, 2009, © Ascom 1010
HIGHLIGHTS FROM THE DIVISIONSHIGHLIGHTS FROM THE DIVISIONS
May 28, 2009, © Ascom 11
WIRELESS SOLUTIONSWIRELESS SOLUTIONS
May 28, 2009, © Ascom 12
[ WIRELESS SOLUTIONS ]
MISSION CRITICAL COMMUNICATION FOR SPECIFIC CUSTOMER SEGMENTS
WIRELESS SOLUTIONS (‘INDOOR’)
Core
Hospitals, elderly care, industry, hotels, retail sector, secure establishments (e.g. prisons) via direct and indirect channelCore
segmentsdirect and indirect channel Mobile workplace telephony equipment through
OEM’s
Product / Service Offering
Voice Alarming Messaging
Products Systems SolutionsOffering
Direct channel: own sales organizations in most
Localisation Services
Key Geographies
larger EU countries and the US Indirect channel: selected distributors in European
countries, CEE, Australia and Middle East OEM’s
May 28, 2009, © Ascom 13
[ WIRELESS SOLUTIONS ]
WIRELESS SOLUTIONS ACHIEVED EXCELLENT RESULT
EBIT: CHF 36.0m (2007: CHF 17.0m)
EBIT margin of 11.7%
Revenue growth of 2.3% (at constant exchange rates +7.6%)to CHF 308.3m
Incoming Orders increased by 2.2% (at constant exchange rates +7.4%) to CHF 316.0mto CHF 316.0m
Solid order backlog of CHF 75.5m
May 28, 2009, © Ascom 1414
SECURITY SOLUTIONSSECURITY SOLUTIONS
May 28, 2009, © Ascom 15
[ SECURITY SOLUTIONS ]
MISSION CRITICAL COMMUNICATION FOR SPECIFIC CUSTOMER SEGMENTS
SECURITY SOLUTIONS (‘OUTDOOR’)
C t
SECURITY SOLUTIONS (‘OUTDOOR’)
Defence, Public Safety organizations and infrastructure operators
Core segments
Telecom operators
Product/Service offering
Solution supplier, contractor and system integrator for defence, public safety (Voice, Alarming, Messaging, Mobilisation) and infrastructure operators
Network quality of service benchmarking and diagnostic systems for mobile operatorssystems for mobile operators
Software solutions and services for Telecom operators
Security Communication: Today focus on S it l d A t i d Fi l d
Key geographics
Switzerland, Austria and Finland Telecom Solutions:
MTS: globally active TNS: Switzerland and Germany
May 28, 2009, © Ascom 16
y S&S: Germany and Switzerland
[ SECURITY SOLUTIONS ]
2007 2008
SESO ROADMAP 2007 / 2008
Security CommunicationMergedDefense
P bl S f t
MTS Argogroup ComarcoAcquisitions
Publ.Safety
MTSMobile Test Solutions
TNS
S&S
TNS
S&S
TelcoNet Services
S&S
Divested
Di t d
Systems & Solutions
Traffic
I d t CH
EBIT + 9.7 MCHF
Divested
EBIT - 28.8 MCHF
Industry CH
May 28, 2009, © Ascom 17
[ SECURITY SOLUTIONS ]
SECURITY SOLUTIONS RETURNS TO PROFIT
EBIT increased to CHF 9.7m (2007: loss of CHF -28.8m)
EBIT margin of 4.8%
Revenue growth +6.3% (5.6% due to acquisition of Argo) to CHF 201.9m
Incoming Orders: CHF 196 8m Incoming Orders: CHF 196.8m(2007 CHF 236.9m due to large orders received from military customers)
May 28, 2009, © Ascom 1818
OVERVIEW OF TEMSOVERVIEW OF TEMS
May 28, 2009, © Ascom 19
TEMS COMPELLING STRATEGIC RATIONALE[ TRANSACTION HIGHLIGHTS ]
TEMS – COMPELLING STRATEGIC RATIONALE
1 Acquisition of a global leading market player with a large installed base and critical mass in mobile network testing and optimization
2 Profitable, software-driven business model
3 Experienced, successful and committed management team
4 Enables Ascom to broadly cover the mobile testing value chain by adding planning and optimization to Ascom’s current testing capabilities
5 Creates a strong third pillar for Ascom in line with its “Mission-Critical Communication” strategy
May 28, 2009, © Ascom 20
TRANSACTION SUMMARY[ TRANSACTION HIGHLIGHTS ]
TRANSACTION SUMMARY
Purchase price CHF 190 million on a debt and cash free basis
Financing Combination of Ascom cash (CHF70m) and secured debt financing (CHF120m)secured debt financing (CHF120m)
Significantly enhances Ascom’s profitabilityFinancial impact Significantly enhances Ascom s profitability and expected to be EPS accretive in FY 2010
Timing Closing expected in June 2009
May 28, 2009, © Ascom 21
TEMS FULFILS ALL OF ASCOM’S ACQUISITION CRITERIA[ TRANSACTION HIGHLIGHTS ]
TEMS FULFILS ALL OF ASCOM’S ACQUISITION CRITERIA
S f ( C C ) Yes, complementary toStrategic fit (Mission-Critical Communication)
Focus on offering and/or geographic extension
Yes, complementary to Mobile Test Solutions
Yes, both
Own technology and/or customer base Yes, both
Profitable business (track record)
Potential for profitable growth
Yes, highly profitable
YesPotential for profitable growth
Management / key people strength and retention
Yes
Yes, both
Interested in being acquired and reasonable price Yes, both
May 28, 2009, © Ascom 22
TEMS AT A GLANCE[ACQUISITIONS]
TEMS – AT A GLANCE
Seller EricssonSeller
Business activities Testing and optimization of mobile networks
Market position A global leading market player in mobile network optimization
L ti
Financial highlights 2008 Sales of CHF165m / Strong profitability
Locations in 17 countries around the globe
Customers
Locations Locations in 17 countries around the globe
Over 450 telecom operators including the world’s 20 largest
Employees Around 300 employees and 60 contractors worldwide
May 28, 2009, © Ascom 23
TEMS IMPRESSIVE GLOBAL CUSTOMER BASE[ OVERVIEW OF TEMS ]
Global top 20 operatorsSelected customers in Europe, Middle East and Africa
TEMS – IMPRESSIVE GLOBAL CUSTOMER BASE
Operator Subscribers
(millions) TEMS
customer China Mobile 369 Vodafone 252 China Unicom 160 China Unicom 160 Telefónica 160 America Movil 153 T-Mobile 120 Orange 115 Telenor 90
Selected customers in Americas Telenor 90 MTS 86 AT&T 70 Orascom 70 Telecom Italia 67
Verizon 66 VimpelCom 63 SingTel 61 Bharti Airtel 55 Sprint 54
Selected customers in Asia
NTT DoCoMo 53 Telkomsel 44 TeliaSonera 42 Source: Company reports
May 28, 2009, © Ascom 24
TEMS A TRACK RECORD OF UNINTERRUPTED GROWTH[ OVERVIEW OF TEMS ]
TEMS – A TRACK RECORD OF UNINTERRUPTED GROWTH
TEMS revenue development (USDm)
150
TEMS revenue development (USDm)
100
150
50
100
01997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Revenue growth showed to be resilient to the telecom industry recession 2001–2002
May 28, 2009, © Ascom 25
TEMS A GLOBAL PRESENCE[ OVERVIEW OF TEMS ]
TEMS – A GLOBAL PRESENCE
Skellefteå (165)
Ki t (67)
Sales: 1 Elstead (36)
Kista (67)
Lake Forest CA (48)
Solothurn (77)Reston VA (61)
TEMS l ti d
Lake Forest CA (48)
Cyberjaya (18)
TEMS locations and number of employees incl. contractors
Ascom MTS locations andnumber or employees
TEMS presence
May 28, 2009, © Ascom 26
TEMS presence
Ascom MTS presence
MOBILE NETWORK TESTING MARKET OVERVIEWMOBILE NETWORK TESTING - MARKET OVERVIEW
May 28, 2009, © Ascom 27
MOBILE NETWORK TESTING ADDRESSABLE MARKET[ MARKET OVERVIEW ]
MOBILE NETWORK TESTING – ADDRESSABLE MARKET
What is being tested?
Mobile network signal and network protocols (‘air interface’) Mobile network services and applications
When tested? Network build
Network
operat
New servic
e deplo
Optimizatio
n and
Enables mobile network operators to:
ion yment
expansion
Why test?
p increase capital and operational efficiency measure performance against competitors cost-effectively manage growth in network trafficy g g efficiently deploy new value-added services optimize the user experience of mobile services
May 28, 2009, © Ascom 28
MOBILE NETWORK TESTING KEY SEGMENTS[ MARKET OVERVIEW ]
MOBILE NETWORK TESTING – KEY SEGMENTS
Testing of services and applications over the networkStationary Testing
Measurement of network during operation (signal strength, capacity, call quality, user experiences)
Testing
Air Interface Benchmarking
Fault diagnosis and identification of measures to improve performance and radio coverage
Benchmarking
Air Interface Optimization
Software tools for analyzing data from network elements
Optimization
Post-processing
Optimizing cell-site locations and configurations
processing
Network Planning
May 28, 2009, © Ascom 29
Planning
HIGHLY COMPLEMENTARY MARKET POSITIONS[ MARKET OVERVIEW ]
HIGHLY COMPLEMENTARY MARKET POSITIONS
Stationary TestingTesting
Air Interface BenchmarkingBenchmarking
Air Interface OptimizationOptimization
Post-processingprocessing
Network Planning
May 28, 2009, © Ascom 30
Planning
MARKET ATTRACTIONS AND DRIVERS[ MARKET OVERVIEW ]
MARKET ATTRACTIONS AND DRIVERS
E pos re to all phases of the mobile net ork lifec cle deplo ment e pansion maintenance Exposure to all phases of the mobile network lifecycle – deployment, expansion, maintenance and optimization
Enables operators to reduce both capital and operating expenditures through efficient networkEnables operators to reduce both capital and operating expenditures through efficient network planning, maximizing capacity of existing networks and automation of otherwise resource-intensive tasks
Combination offers greater resilience to economic downturns as operators choose to optimize capacity on existing networks rather than invest in new ones
Facilitates operators in ser ice differentiation and red cing ch rn b meas ring and optimi ing Facilitates operators in service differentiation and reducing churn by measuring and optimizing user experience and effective deployment of new services
Combination ideally positioned to benefit from next wave of growth driven by migration from 3G Combination ideally positioned to benefit from next wave of growth driven by migration from 3G to 4G (LTE)
May 28, 2009, © Ascom 31
MOBILE TEST EQUIPMENT MARKET[ MARKET OVERVIEW ]
MOBILE TEST EQUIPMENT MARKET
Market anticipated to grow at 4 2% CAGR
1,750
Market forecasts (USDm)¹ Market anticipated to grow at 4.2% CAGR
between 2009 and 2015 TEMS has historically grown at 8.4% CAGR
between 2005 to 2008 vs. 7.2% market
1,500
2009-2015 CAGR: 4.2% between 2005 to 2008 vs. 7.2% market
Market growth driven by: Proliferation of mobile
broadband access
1,000
1,250broadband access
Growth in voice traffic in emerging markets
Adoption of new network technologies
750
Adoption of new network technologies such as LTE
Growing focus of mobile carriers on service quality
500
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
N t
Ascom expects above market CAGR of 5%, particularly driven by software focus and optimization capabilities
May 28, 2009, © Ascom 32
Note:1 Hard- and software mobile test equipment market for installation and maintenance application
Source: Frost & Sullivan (March 2009)
WAY FORWARDWAY FORWARD
May 28, 2009, © Ascom 33
ASCOM THREE CLEARLY FOCUSED DIVISIONS[ WAY FORWARD ]
Wireless Solutions
ASCOM – THREE CLEARLY-FOCUSED DIVISIONS
Security Communication1 Network Testing2,3Wireless Solutions Secu ty Co u cat o Network TestingKey numbers (2008 pro-forma)4
Sales (CHFm) 308 134 251
Hospitals elderly care Mobile network operators
EBIT (CHFm)margin (%)
Employees (no.)
Mission critical Defense public safety and
36 64.4403
3815.2640
11.71,168
Hospitals, elderly care, industry, hotels, retail sector, secure establishments (e.g. prisons)
Mobile workplace equipment
Mobile network operators, service providers, infrastructure vendors, governmental agencies
Mission critical communication –targeted end markets
Defense, public safety and infrastructure operators (rail, road, others)
Mobile workplace equipment
No. 2 in European enterprise DECT
Leading in Benchmarking and Optimization
Market position Leading position in domestic markets (CH/AT/FI) for
it i ti Leading in paging and
professional messaging No. 2 in Stationary Testing
Notes:
security communication
May 28, 2009, © Ascom 34
1 Excluding TNS, S&S and MTS 2 Including TNS, S&S, MTS and Comarco WTS (Comarco WTS not consolidated for 2008 in Ascom Group); CHF/USD=1.18913 Before integration costs and amortisation of intangible assets acquired4 Unaudited pro-forma numbers except for Wireless Solutions
INTEGRATING TEMS[ WAY FORWARD ]
INTEGRATING TEMS
2009 2010ASCOM GROUP
ASCOM GROUPGROUP
Security
GROUP
Wireless SecurityWirelessSecurity Solutions Network Testing Wireless
SolutionsSecurity
CommunicationWireless Solutions
MTS
May 28, 2009, © Ascom 35
EXPECTED SYNERGIES AND INTEGRATION COSTS[ WAY FORWARD ]
EXPECTED SYNERGIES AND INTEGRATION COSTS
Expected synergies Ability to provide full suite of stationary test, benchmarking, optimization and post-processing tools globally (“one-stop shopping”)
Leverage installed base comprising almost every major mobile network Leverage installed base comprising almost every major mobile network operator
Cost synergies (e.g. supply chain)
Estimated total of CHF20m for 2009/2010Associated integration costs
May 28, 2009, © Ascom 36
FINANCING THE TRANSACTIONFINANCING THE TRANSACTION
May 28, 2009, © Ascom 37
ATTRACTIVE FINANCING OF THE TRANSACTION SECURED[ FINANCING THE TRANSACTION ]
ATTRACTIVE FINANCING OF THE TRANSACTION SECURED
Ascom cash CHF70m
Credit facility CHF120m senior amortising term loan facility
Ascom cash CHF70m
Credit facility g y
Attractive spread over LIBOR
Maturity: 31 December 2012
Lending banks Consortium of 8 Swiss banks led by UBS and Credit Suisseg
May 28, 2009, © Ascom 38
FINANCING OF THE TRANSACTION[ FINANCING THE TRANSACTION ]
200
FINANCING OF THE TRANSACTION
70150
200
190100
150Key financial data (CHFm, 2008 pro-forma)1
Total cash 113
120
190
50
100Total debt 120
Net debt 7
0
50Total debt/EBITDA(x) 1.4
Net debt/EBITDA (x) 0.1
Sources UsesCredit facilityAscom Cash
Purchase price
May 28, 2009, © Ascom 39
Notes:1 Pro-forma unaudited numbers
FINANCIAL RESULTS FY 2008FINANCIAL RESULTS FY 2008
May 28, 2009, © Ascom 40
[ ASCOM GROUP ]
ASCOM P&L
CHFm 2008 2007Net revenue 509.2 490.5Gross profit 208.9 177.1Gross margin 41.0% 36.1%Marketing and distribution costs (102.7) (104.4)Research and development costs (32.9) (33.7)Administration costs (31.5) (38.9)Total functional costs (167.1) (177.0)Operating results 41.8 0.1Non operating result 2.2 (16.2)EBIT 44.0 (16.1)Net financial result (3.1) 2.3Income taxes (8.2) (6.8)Profit/(loss) from continuing operations 32.7 (20.6)Loss from discontinued operations (24.5) (27.5)
May 28, 2009, © Ascom 4141
GROUP PROFIT 8.2 (48.1)
[ ASCOM GROUP ]
NET REVENUE
2007
in CHFmOrganic growth
Acquisition FOREX
translation
2008in CHFm
Δ 08/07
Wireless Solutions 301.3 7.6% - (5.3)% 308.3 2.3%
Security Solutions 189 9 1 4% 5 6% (0 7)% 201 9 6 3%Security Solutions 189.9 1.4% 5.6% (0.7)% 201.9 6.3%
Ascom Group 490.5 5.2% 2.2% (3.6)% 509.2 3.8%
May 28, 2009, © Ascom 4242
[ ASCOM GROUP ]
A G Wi l S l ti S it S l ti
EBIT – SUBSTANTIAL IMPROVEMENT
in CHF million
44 050
Ascom Groupin CHF million
36.040.0
Wireless Solutions Security Solutionsin CHF millionin CHF millionin CHF million
44.0
20
30
40
50
17.0
10 0
20.0
30.0
in CHF million
9.710
(16 1)20
-10
0
10
FY 2007 FY 20080.0
10.0
FY 2007 FY 2008
-10
-5
0
5
FY 2007 FY 2008
(16.1)-20
(28.8)-30
-25
-20
-15
EBIT marginFY 2008: 8.6% FY 2007: negative
EBIT marginFY 2008: 11.7% FY 2007: 5.6%
EBIT marginFY 2008: 4.8%FY 2007: negative
May 28, 2009, © Ascom 4343
g % g
[ ASCOM GROUP ]
CONDENSED BALANCE SHEET
31 Dec 2008 31 Dec 2007
Assets CHFm % CHFm %
Intangible assets 31.1 7 17.0 3Intangible assets 31.1 7 17.0 3
Other non-current assets 44.9 10 53.0 10
Non-current assets 76.0 17 70.0 13
Cash and cash equivalents 182.6 40 223.0 44
Other current assets 192.6 43 219.1 43
T t l A t 451 2 512 1Total Assets 451.2 512.1
Equity 148.7 33 162.5 32
Long term liabilities 35 0 8 49 3 10Long term liabilities 35.0 8 49.3 10
Short term liabilities 267.5 59 300.3 58
Total Liabilities and Shareholders equity 451.2 512.1
May 28, 2009, © Ascom 4444
[ ASCOM GROUP ]
EQUITY
in CHF million
162.5 8.2180
(17.3) (4.7)
148.7
120
140160
6080
100120
0
2040
60
031 Dec 2007 Group profit Currency translation
adjust.Other items 31 Dec 2008
May 28, 2009, © Ascom 45
[ LOOKING FORWARD ]
HOW TO COPE WITH THE CHALLENGING ENVIRONMENT?
A d t thi d f A ’ ti iti l t d t li l Around two thirds of Ascom’s activities are related to non-cyclical business areas
Group’s structures and processes have largely been streamlinedGroup s structures and processes have largely been streamlined thanks to the early implementation of VITESSE investment program and the divestment projects
Ascom is prepared based on contingency plans for further restructuring,if needed
Ascom has a solid balance sheet
May 28, 2009, © Ascom 46
THANK YOU!THANK YOU!
May 28, 2009, © Ascom 47