full-year results presentation 2014 - ascom · pdf filebusiness development in ... 2013. 2014....

WELCOME TO ASCOM’S 2014

FULL-YEAR RESULTS CONFERENCE

HIGHLIGHTS OFASCOM’S 2014 PERFORMANCE

FRITZ MUMENTHALER

MANAGEMENT TEAM

Joined in 2005. More than 20 years experience with internationalindustrial companies.

Joined in 2013.Experienced finance expert with a solid track record and a broad international background.

Joined in 2011.Based in Asia for 8 years; Taiwan and Singapore.

Joined in 2009.Significant international experience.

FRITZ MUMENTHALER

CHIEF EXECUTIVE OFFICER

BIANKA WILSON

CHIEF FINANCIAL OFFICER

CLAES ÖDMAN

GENERAL MANAGER

WIRELESS SOLUTIONS

RIKARD LUNDQVIST

GENERAL MANAGER

NETWORK TESTING

3

Joined in 2014.Solid track record in strategy and business development in multiple industries and geographies.

FRANCIS SCHMEER

HEAD STRATEGY AND BUSINESS DEVELOPMENT

2014 Full-Year Results Conference, 11 March 2015 © Ascom Group

AGENDA 11 MARCH 2014

4

1. Highlights of Ascom’s 2014 performance Fritz Mumenthaler

2. 2014 financial results Bianka Wilson

3. Wireless Solutions Claes Ödman

4. Network Testing Rikard Lundqvist

5. Markets and positioning Francis Schmeer

6. Outlook and summary Fritz Mumenthaler


HIGHLIGHTS

5

Very strong “bounce-back” in second half-year- Both divisions increased their revenue by about 26% compared to the first half-year

- Reveals “true” potential of the Ascom Group

Brilliant year for Wireless Solutions Division- Revenue growth of 6.4% yoy *- EBITDA margin of 18.0%

Guidance met, Ascom created shareholder value- Revenue development in line with prior-year *- Higher EBITDA margin of 15.4% on Group level- Increased Group profit to CHF 38.5m

*at constant currencies


STRONG MOMENTUM IN HEALTHCARE

Healthcare as % of total Wireless Solutions’ revenue

2011

2014

Strong performance over past 4 years Revenue grew over 7% CAGR since 2011 ~ 75% of revenue from repeat customers Healthcare business

~ 60% of Wireless Solutions’ revenue > 40% of Ascom Group’s revenue

Achievements 2014 Game changer Ascom Myco Repositioned as global leader in healthcare

ICT for integrated workflow intelligence Broadened geographic footprint: Australia,

Malaysia

51%49%

HealthcareOther

segments

59%

41%

HealthcareOther

segments

2014 Full-Year Results Conference, 11 March 2015 © Ascom Group 6

PROMISING PLATFORM FOR GROWTH

7

2014 – strong revenue momentum in H2

Wireless Solutions – ongoing shift from products & systems to workflow solutions –workflow intelligence in healthcare

Network Testing – solidify core business while accelerating analytics


8

STRATEGIC SHIFT TO ACHIEVE ASCOM 2020 AMBITION

Strategic direction Implication 2020 ambition

1 Increased focus on healthcare ICT

Larger addressablemarket

> 75% of revenuefrom healthcare

2 From products to solutions Increasing recurring andservice content ofrevenue

> 50% of revenuefrom solutions and service

3 From hardware-centric to software-centric

Higher margin business > 25% of revenuefrom connectivity software

4 Network Testing refocusing Larger addressablemarket

> 20% growth rate in analytics

Ascom in every Tier 1 hospital


INVESTMENT FOCUS 2015

9

Sales and marketing Solutions sales and healthcare business developers Strengthen key account management across all regions

Global solutions development Solution architects Software development engineers

Local deployment capabilities Healthcare solutions design experts Integration and customization engineers

Up to 100 FTE across both divisions Majority targeted at Wireless Solutions


ASCOM 2020 – ACCELERATE, INNOVATE, DELIVER

1 2014 a strong platform for growth

2 Focusing on healthcare ICT market where Ascom can and does win

3 Investing to accelerate growth

4 Creating sustainable, higher, more predictable returns


2014 FINANCIAL RESULTS

BIANKA WILSON

12

GUIDANCE 2014 FULLY MET

* Core business = Total Group minus non-core activities (segment “Other”) comprising real estate activities related to businesses disposed of in prior years cc = at constant currencies

FY 2014 vs. FY 2013 FY 2014

Incoming orders

(in % cc)

Revenue (in % cc)

Gross profit

margin(in %-p)

EBITDAmargin

(in %-p)

Group Profit (in %)

EBITDAmargin

WirelessSolutions +6.9 +6.4 +0.7 +0.7 - 18.0%

Network Testing -13.8 -8.9 -1.0 -4.0 - 9.4%

Core business * +0.6 +1.8 +0.1 -0.5 - 15.2%

Other -44.7 -44.9 +3.2 +30.4 - 24.1%

Group -1.3 -0.3 +1.3 +0.7 +4.3 15.4%


13

GROWTH ANALYSIS

* Core business = Total Group minus non-core activities (segment “Other”) comprising real estate activities related to businesses disposed of in prior years

CHFm 2013 Organic M&A FX 2014 Δ 14/13RevenueWireless Solutions 306.1 +3.6% +2.8% -2.2% 318.9 +4.2%

Network Testing 133.3 -8.9% - -1.8% 119.0 -10.7%

Core business * 439.2 -0.1% +1.9% -2.2% 437.6 -0.4%

Other 20.5 -2.9% -42.0% -0.5% 11.2 -45.4%

Ascom Group 459.7 -0.3% - -2.1% 448.8 -2.4%


Revenue per customer segment Revenue per region

WIRELESS SOLUTIONS – FOCUS ON HEALTHCARE

14

0

50

100

150

200

250

300

350

2013 2014

CH

Fm

Healthcare OEM IndustryHotel & Retail Secure establishm. Others

0

50

100

150

200

250

300

350

2013 2014C

HFm

Rest of EMEA NetherlandsScandinavia DACHAmericas APAC

56%

12%10%6%5%

11%

59%

12%9%6%5%9%

16%

21%

22%

21%

19%

1%15%

21%

20%

20%

20%

4%


15

WIRELESS SOLUTIONS – H2 RECOVERY, MARGIN IMPROVEMENT AND CONTINUING MOMENTUM

Record H2/2014 after weak H1/2014

149.7 156.4 140.8 178.1

50.5% 50.9% 49.5%52.9%

14.0%

20.5%

10.9%

23.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0

50

100

150

200

250

H1/2013 H2/2013 H1/2014 H2/2014

Half-yearly view

Revenue Gross margin EBITDA margin

53.157.3

5.6

3.8 -1.9

-3.3

EBITDA2013

Volumeimpact

Marginimpact

Func.costs

Others EBITDA2014

EBITDA bridge(CHFm)

+26.5%


Revenue per product group Revenue per region

NETWORK TESTING – FOCUS ON REGAININGMARKET SHARE IN TEST & MEASUREMENT

16

0

20

40

60

80

100

120

140

2013 2014

CH

Fm

Test & Measurement Benchmarking & MonitoringReporting & Analysis Systems & Solutions

16%9%

33%

42%

15%11%

27%

47%

0

20

40

60

80

100

120

140

2013 2014C

HFm

Americas MEA Europe APAC

38%

17%

37%

8%

34%

21%

34%

11%


17

NETWORK TESTING – STABLE MARGINS,BUT H2 RECOVERY BELOW EXPECTATIONS

Better H2, but full year 2014 EBITDA suffering from reduced volumes

65.2 68.1 52.7 66.3

55.7% 55.4% 54.3% 54.8%

11.8%15.0%

4.4%

13.4%

-5.0%

5.0%

15.0%

25.0%

35.0%

45.0%

55.0%

65.0%

0

50

100

150

H1/2013 H2/2013 H1/2014 H2/2014

Half-yearly view

Revenue Gross margin EBITDA margin

17.9

11.2

- 6.4

- 1.0 0.9 - 0.2

EBITDA2013

Volumeimpact

Marginimpact

Funct.costs

Others EBITDA2014

EBITDA bridge(CHFm)

+25.8%


18

EBITDA TO GROUP PROFIT RECONCILIATION

69.2

38.5

- 17.6 0.5

- 1.1 - 1.2 - 11.3

EBITDA 2014 Depreciation /amortization

Net FX gain Net interestexpenses

Other financialexpenses

Income tax Group profit2014

EBITDA and Group profit CHF 1.6m above 2013

(CHFm)


4.7

11.32.1

2.5

2.0

Income tax 2013 Increased EBT Net effect from tax loss carry-forwards

Other effects Income tax 2014

19

TAX BRIDGE 2013 TO 2014

Higher effective tax rate due to reduced one-off effects in 2014(CHFm)

11.3%

22.7%


20

CONTINUED STRONG FREE CASH FLOW GENERATION

58.2 50.2

69.2

- 9.9 - 13.5 7.0

- 39.9

- 14.0 - 6.9

Cash at1.1.2014

EBITDA Income taxpaid

CapEx Proceedsfrom assetdisposals

Net debtrepayments

Dividends Other cashflows

Cash at31.12.2014

Free cash flows enable further debt reductions and higher dividends

(CHFm)


21

SOLID BALANCE SHEET

Well positioned to accelerateg Ascom’s strategic path

(CHFm)

80.3 83.2

-40.0

-

40.0

80.0

120.0

2013 2014

Net working capital (NWC)

Trade receivables InventoriesTrade payables Customer prepaymentsTotal NWC

-2.9

27.1 52% 52%

-80.0

-60.0

-40.0

-20.0

-

20.0

40.0

60.0

80.0

2013 2014

Net cash/debt and Equity ratio

Cash and equivalents BorrowingsNet cash/debt Equity ratio


0.35 0.40 0.45

2012 2013 2014

Dividend per share

22

RETURN TO SHAREHOLDERS

Demonstrated commitment to consistent cash return

0.64

1.07 1.10

2012 2013 2014

Basic earnings per share (EPS)

Pay-out ratio *58% 39% 42%

Note: Distribution per share in the following year based on prior year’s profit, i.e. dividend proposed to 2015 AGM based on the profit for the year 2014

proposed

* Calculated on gross dividend amount multiplied by all outstanding shares divided by Group profit as reported in the financial statements of Ascom Group

(CHF)


23

FX CURRENCY FLUCTUATIONS

31.12.2013 Average 2013 31.12.2014 Average

2014 30.1.2015

EUR/CHF 1.23 1.23 1.20 1.21 1.06GBP/CHF 1.47 1.45 1.54 1.51 1.40SEK/CHF 0.139 0.142 0.127 0.133 0.113USD/CHF 0.89 0.92 0.99 0.92 0.93

EUR/SEK 8.85 8.66 9.45 9.10 9.38USD/SEK 6.40 6.48 7.80 6.92 8.23

Note: Rates are based on European Central Bank reference rates.

Main currencies relevant for translational riskMain currencies relevant for transactional risk

Significant fluctuation in FX exchange rates relevant for Ascom


33%

19%11%6%

10%

21% 32%

22%11%

7%

9%

19%

Translational exposure

EUR SEK CHF GBP Other USD

24

ASCOM FX EXPOSURE ON 2014 REVENUE AND EXPENSES(CHFm)

29%

22%6%

5%9%

29% 39%

7%8%5%

8%

33%

Transactional exposure

EUR SEK CHF GBP Other USD

CHF exposure minimal and naturally hedged

Expenses

Revenue


449

380

69

409347

62

Revenue Expenses EBITDA

Income statement

2014 reported 2014 pro-forma

25

IMPACT OF RECENT FX CURRENCY FLUCTUATIONS

Ascom affected by translational impact only, underlying cash flows intact

(CHFm)

Note: 31.12.2014 and 2014 figures re-translated with FX rates prevailing on 30 January 2015.

469425

243 219

-226 -206

51.8% 51.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

-250.0 -210.0 -170.0 -130.0 -90.0 -50.0 -10.0 30.0 70.0

110.0 150.0 190.0 230.0 270.0 310.0 350.0 390.0 430.0 470.0

31.12.2014reported

31.12.2014pro-forma

Balance sheet

Assets Equity Liabilities Equity ratio

15.4% 15.1%

EBITDA margin


2016 2017

Ascom Group

Revenue EBITDA margin

5–10% organic growth

5–10% organic growth

GUIDANCE 2015 - 2017

26

437.6

397.7

15.2% 14.8%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

200

250

300

350

400

450

500

550

2014 reported 2014 pro-forma ** 2015

Ascom Core *

Revenue EBITDA margin

(CHFm)

13%–16%

409.6425.5 3-7%

organicgrowth

14%–18% 14%–18%

In 2015, Ascom Core targets 3–7% organic growth, with EBITDA margin13–16% reflecting ~CHF 10m investments. In 2016–2017, Ascom Group targets 5–10% organic growth, with EBITDA margin 14–18%.

* Ascom Group minus “Other” ** 2014 figures re-translated with FX rates prevailing on 30 January 20152014 Full-Year Results Conference, 11 March 2015 © Ascom Group

WIRELESS SOLUTIONS

CLAES ÖDMAN

Annual revenue +6.4% at constant FX H2 revenue +26% vs. H1 Incoming orders +6.9% at constant FX

book to bill >1 Order backlog ~CHF 117m,

brings ~CHF 14m more into 2015

Gross margin improvement driven by efficiency measures securing synergies across the division

~CHF 9m run rate savings as a result of the Regional Efficiency Program

Healthcare strategy execution: +10% revenue (~60% of total division revenue)

Strategic project wins Integration of acquisitions Professional services +9% (services &

software ~40% of division revenue)

2014 – HIGHLIGHTS

18% EBITDA margin

- best ever -

Growth

Efficiency

Strategy Execution


ASCOM WELL-POSITIONED TO MEET NEEDS &CHALLENGES IN ~USD 200bn HEALTHCARE ICT MARKET

Patient safety and outcome

Patient satisfaction and caregiver experience

Hospital efficiency & financial performance

High-level hospital needs

Integration of legacy and new technology

Launch new systems for front line staff

Holistic, coordinated care

Hospital challenges

Intelligent alarm handling

Point of care support

Empowering patients

Staff collaboration

Continuity of care

Workflow analysis

Key Ascom value propositions


Value proposition

Full solutions design and systems integration

Smart 24/7 monitoring to flexibly adjust care to clients. 80% less alarms

Workflow optimization –smart sensoring system integrated with the Ascom Unite connectivity platform

MORE TIME FOR CARE - SMART SENSORINGAT COLORIET (NETHERLANDS)

Umbrella organization 1,100 clients

1,000 employees 4 intramural locations

3 care hotels Elderly and dementia

care and services Strong focus on

innovation, cooperation and care without fixation

Coloriet Lelystad

The benefits More freedom and better privacy Increased patient safety Better quality of life More time for care


Value proposition

Full solutions design and systems integration

Wireless wandering resident tracking solution for vulnerable clients

Staff personal alarm capability for staff safety

Complete maintenance service

PATIENT SAFETY AND CAREGIVER EXPERIENCEAT WESLEY MISSION (AUSTRALIA)

Umbrella organization Non-profit Christian charity association 1,900 staff & 4,000 volunteers Range of services: cater to a broad

spectrum of the community, from children, youth, and families, to senior citizens and caretakers, to anyone struggling with financial or domestic challenges, homelessness, addiction or mental health issues

Ascom’s client runs the elderly care homes for the Brisbane region in Queensland

Wesley Mission Brisbane (WMB)

The benefits Reduced care cost Increased patient safety Increased staff safety Increased satisfaction


STRONG MOMENTUM FOR ASCOM MYCO –LAUNCH ON TRACK

• First orders received

• More than 10,000 units quoted

• Very positive response across acute care and elderly care clients

• Trials on-going in US and Europe

• Start shipping in 20 days


INNOVATION FOR TRANSFORMATION TO BECOME A GLOBAL LEADER IN HEALTHCARE ICT

Healthcareconnectivity

software

• Reinforced development team for healthcare software• Focus on connectivity – EMR and patient monitoring• Focus on integration capabilities – virtualized software and open API

Healthcare solutions

• Establish a Global Solutions Excellence Center with healthcare solutions experts

• Further strengthen local solutions design & project execution capacity

Communications& connectivity

systems

• Delivery start and continued launch of Ascom Myco solution• Further releases of Ascom Myco hardware and software• Developing next generation of nurse call system for global hospital and

elderly care markets


NETWORK TESTING

RIKARD LUNDQVIST

35

MIXED MARKET ENVIRONMENTS

GROWTH

Difficult North American market environment with orders shifted over year-end

Change in buying behavior in Systems & Solutions

Revenue declined

8.9% *to CHF

119m

Sequential growth in H2

26%

Re-gained market share in Asia Pacific

18%Prioritized Analytics product

17%

Middle East & Africa18%


*at constant currencies

36

LOWER REVENUE PRESSURES PROFITABILITY

Diligent cost control

Maintaining savings achieved 2012/13

Revenue decline resulted in EBITDA margin of 9.4%

Maintained 55% gross margin

Despite lower revenue

Greater than 90% gross margin for prioritized analytics product

Stability in Test & Measurement products contributes to profitability

Functional costs reduced 4% R&D costs reduced 3% –

continued transition to lower cost locations

With topline growth in 2015, profitability will bounce back


Automateddrive testing

Small cell efficiency SON partnership

B2BSimpleX

More than 30 patents worldwide

1Technology evolution

2

Network &service quality

VoLTE,ViLTE,VoWiFiBroadcast video (eMBMS)LTE-A: Carrier aggregation Device integration: iPhone, Samsung

ITU, IEEEGSMA5G Innovation center

STRATEGY EXECUTION THROUGH INNOVATION

TEMS Capacity Manager

Core network offerings

3

Networkefficiency


38

Test & Measurement

Localization & customizationTime-to-market leadership

Strengthening relationshipBroadening installed base

Key accounts Product-near serviceofferings

Hosted or managed services, capitalizing on operator outsourcing trend with flexible business models utilizing broad portfolio


2015 GROWTH INVESTMENTS

39

Partnering with key customers

Hosted and managed solutions

Capacity management a critical aspect of network build out

Especially in an investment constrained market such as the US

currently

Customer experience solutions and analytics

Address key operator challenges at senior management level


TRUSTED PARTNER TO LEADING OPERATORS

MARKETS ANDPOSITIONING

FRANCIS SCHMEER

[ ]

Global healthcare IT

spend8.8% CAGR to

USD 201bn

Healthcaresoftware

spend13.3% CAGR to USD 51bn

Hospital IT spend

8.2% CAGR toUSD 85bn

Global healthcareintegration

market10% CAGR to

USD 3bn

>USD 7bnAddressable market

HEALTHCARE DRIVES WIRELESS SOLUTIONS MARKETOPPORTUNITY

Sources: Ovum, Market and Markets Research


42

Sources: Gartner, Analysis Mason, Frost & Sullivan, ABI Research

NETWORK ROLLOUT AND CUSTOMER EXPERIENCE COMPLEXITY DRIVES NETWORK TESTING CURRENTAND FUTURE MARKET OPPORTUNITIES

Global 4G LTE CAPEX 26% CAGR

to USD 25bn

Drive test equipment

spend6% CAGR toUSD 0.6bn

>USD 1.5bnExpanding the addressable market


Service assurance

marketgrowing

above USD 4bn

MobileNetwork analyticsgrowing

above USD 3bn

Over 40% Group

revenue in 2014 fromhealthcare

>CHF 55m healthcare

R&D over thepast 2 years

#1 in nursecall

7% CAGR in healthcare

revenue since2011…and

10% in 2014

>150 healthcarepartners

Myco-industry`s 1st

bespokehealthcare

smart device

120 healthcaresoftware

engineers

CAPTURING THE HEALTHCARE OPPORTUNITIES AS A WORKFLOW SOLUTIONS LEADER


44

Healthcare solutionsdesign and

development

Local customizationand installation

Medical deviceconnectivity

Hospital systemsintegration

Solutions softwaredevelopment

Open and neutral healthcare middleware

THROUGH A MIX OF ORGANIC AND INORGANIC INVESTMENT

INCREASING GLOBAL COMPETENCIES


INCREASED SHAREHOLDER RETURN

45

Proposal to the Annual General Meeting 2015:

Pay-out of a dividend of CHF 0.45 Dividend yield of 3% for 2014 Pay-out ratio of 42% (2013: 39%)


Ascom Dividend Policy Pay-out ratio of 35–50%

GUIDANCE

46

2015: Revenue growth of 3–7% (organic, Core Business) * EBITDA margin of 13–16% (due to additional investments)

2016/17: Revenue growth of 5–10% (organic) * EBITDA margin of 14–18%

* at constant currencies


ASCOM 2020 – ACCELERATE, INNOVATE, DELIVER

1 2014 a strong platform for growth

2 Focusing on healthcare ICT market where Ascom can and does win

3 Investing to accelerate growth

4 Creating sustainable, higher, more predictable returns


Ascom Holding AG

Corp. Communications / IR Tel: + 41 41 544 78 00Zugerstrasse 32 Fax: + 41 41 761 97 256340 Baar [email protected]

48

GROUP CONTACT[ ]


49

[ ]


THANK YOU!

full-year results presentation 2014 - ascom · pdf filebusiness development in ... 2013. 2014....

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