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ADB Holdings S.A. (SWF:ADBN) Corporate news announcement processed and transmitted by Hugin ASA. The issuer is solely responsible for the content of this announcement. ---------------------------------------------------------------------- --------------
ADB Group Reports Record First-Half 2008 Financial Results
* First-half year results at the record level * Revenue grew 40% compared to first-half 2007 * EBIT reached 6.5% of revenue * Gross margin increased 68% from first-half 2007 * 67% of Digital TV Equipment revenue from high definition TV products * Five new customer wins announced during the first-half * High visibility for the rest of the year * Increased guidance for full year 2008
Geneva - August 12, 2008, 07:00 a.m. (CET)
ADB Holdings SA (SWX: ADBN) reported today ADB Group's unaudited consolidated financial results for the first half of the year 2008.
Revenue for the first-half 2008 reached US$ 169.9 million, increasing 40% compared to the same period in 2007. Gross profit increased to a record level of US$ 67.7 million or 39.9% of revenue, increasing 68% over the first-half of 2007, and ahead of the Group's expectations. This development had three main contributors: greater efficiency in the operating activities due to significantly improved supply chain management; successful cost reduction programs, and a favorable sales mix during the first-half of the year, with higher contributions from high-end products. Operating expenses, including the costs of research and development, accounted for US$ 59.5 million in the first half of 2008, representing an increase of 41% year-on-year, as a result of increased royalty costs due to larger sales volume, employee compensation plan and unfavorable foreign exchange development in European currencies. Earnings Before Interest and Taxes rose to US$ 11.1 million or 6.5% of the revenue during the first-half of 2008, compared to a loss of US$ 0.8 million for the same period in 2007. Net profit from continuing operations reached US$ 7.6 million or 4.5% of the revenue, and a final net profit after a correction for discontinued operations was US$ 4.7 million.
The Group net cash generation from operating activities during the first-half of 2008 exceeded US$ 52 million. As a result, the Group had a net cash position of US$ 28.3 million at the end of June, with cash and reserves totaling US$ 67.7 million. The Group has also introduced a hedging plan for the rest of the year.
Andrew Rybicki, Chairman and CEO of ADB Group, commented: "I am very pleased with our overall results during the first half of 2008. After two years of a very hard work the company is finally getting back to the performance track. The main drivers for the growth were continuing and solid demand for high-definition TV products combined with successful customer base expansion, helped by the European Football Championship and the Beijing Olympic Games. Increased profitability was largely a result of improved efficiencies, favorable product mix and streamlined supply chain operations. It is also an impressive achievement from our staff whom I wholeheartedly congratulate for this. We are now set for the second half of 2008."
Outlook for 2008
ADB Group regards the second half of 2008 with reasonable confidence, but remains cautious due to external macroeconomic factors. The Group increases its full year guidance for continuing operations to be as follows:
* Revenue growth range 12-16% (up from 9-13%) * Gross margin range of 36-38% (up from 33-36%) * Earnings before interest and taxes range 4-6% (up from 3-5%)
Business segment performance
Digital TV Equipment segment
The Digital TV Equipment yielded US$ 166 million of revenue during the first-half of 2008, and delivered Earnings Before Interest and Taxes of US$ 16 million, or 9.7% of revenue.
High-definition TV (HDTV) product sales accounted for 67% of the Digital TV Equipment revenue, up from 49% in the first half of 2007 and 57% in the entire year 2007. Personal Video Recorders (both high and standard definition) represented 29% of the Digital TV Equipment revenue, compared to 22% in the first half of 2007 and 26% of the full year 2007.
The first half of the year was particularly strong for IPTV segment, which constituted 31% of the Group revenue. The main drivers were both excellent performance of ADB's products as well as rapid pace of deployment at recently acquired customers. Terrestrial segment represented 20% of Group revenue, compared to 12% in 2007. This segment's share of revenue increased due to strong take-up in Northern Europe and solid demand in Italy. Cable maintains its position as the largest segment of the Group, representing 35% of the overall sales. Satellite segmental sales represented 11% of the overall Group revenue, delivering mainly high-end products.
The Group technology received significant recognition during the first-half of the year. In March, the IPTV World Forum awarded ADB Group with "Best IPTV Customer Premise Equipment Technology", for the second year in a row. It is exceptional for the same company to be able to win the award two subsequent times.
In May the Group obtained a first CableLabs' "tru2way(TM)" (formerly known as OCAP) certification for its new box model specially designed for the US cable market. Building on this achievement, in June ADB Group signed a Memorandum of Understanding with the leading US cable operators and major consumer electronics companies for the committed development of "tru2way", the new interactive technology platform for the US cable market. This is a significant milestone in the Group North American strategy.
Software and Services segment
The Software and Services recorded revenue of US$ 9.4 million, out of which US$ 4.4 million were intergroup sales. The segment recorded a Loss Before Interest and Taxes of US$ 4.9 million. Revenue fell short of the Group expectations due to a faster than anticipated reduction of development services demand from one customer in US. Therefore the Group has decided to accelerate the reorganization of its Software and Services activities in the US to focus mainly on supporting Group's North American growth strategies.
The Software and Services segment remains a powerful facilitator in building the Group overall business, and plays an important role in the Group overall strategy. Following the official adoption of open-standard middleware by the US cable, the Group is currently seeing an increased interest and commitments to deploying such technologies in North America. Therefore, the Group intends to continue its investment in this segment to develop a complete product and services offering and targeting its self-sustainability and profitability.
Revenue analysis per region and customer base
During the first half of 2008, Europe, Middle East and Africa accounted for 92% of revenue while Asia Pacific represented 2% and the Americas 6%. Both West and East European customers accounted for a large part of the growth, Eastern Europe representing 18% of the Group's total revenue. The top 10 customers of the Group grew strongly during the first half of 2008, representing 88% of revenue. No customer represented more than 18% of the Group's revenue. Many new customers are in the early stage of their development, representing a great potential for the Group going forward. Overall, Group's customer base continues to evolve favourably with a well balanced mix of recurring and new customers: close to half of the Group's top 10 customers in first-half 2008 have maintained their position for three years or more.
Organisational update
During the first-half of 2008, Mr. François Pogodalla was nominated CEO of Advanced Digital Broadcast S.A., the Group's affiliate operating the Digital TV Equipment activities. He also continues holding the position of ADB Group's Deputy CEO. Ms. Tina Nyfors was appointed Executive Vice President, Corporate Development, and Mr. Janusz Szajna was appointed President of ADB Group Eastern Europe. The Group's US activities were strengthened by Mr. Tim Schermerhorn, who joined in May to lead the US cable set-top box business unit as General Manager, ADB Americas.
Share buy-back
During the first half of the year, ADB Group continued its buyback programme by acquiring 36,500 shares at an average price of CHF 29.90 per share. In July, the Company purchased 52,764 shares at an average price of CHF 30.29 per share. Subsequently the number of shares held in treasury at the time of this release is 253,353.
Note:
Following the decision to abandon the New Initiatives business segment, announced at the beginning of year 2008, and the application of IFRS 5: "Non-current Assets Held for Sale and Discontinued Operations", financial data is reported only in respect of the continuing operations of the Group unless otherwise indicated. Analysis and comparison to previous periods are also made with reference to the continuing operations only.
Conference Call
The management of ADB Group will hold a conference call to discuss first-half 2008 financial results and outlook for the full year, today at 15:00 CET.
To connect to this conference, participants will be required to dial: +41 (0) 44 580 33 41. To ask a question, participants will be required to dial: 01
The main financial statements for the first half of 2008 are attached to this press release. This press release and further information on ADB Group can be found on the Group's website at www.adbholdings.com
For further information please contact: Tina Nyfors EVP, Corporate Development Telephone: +41 22 592 8433 t.nyfors@adbglobal.com -end-
About ADB Group (SWX: ADBN)
ADB Group (www.adbholdings.com) was founded in 1995 and is a leading developer of solutions required to view and interact with digital TV broadcast through cable, satellite, terrestrial and IP networks. The Group primarily sells consumer premise devices, including set-top boxes, with over 11 million units deployed since 1997. The development and sales of the Group's products and services are conducted in three main operating segments: the Digital TV Equipment segment, mainly operated by ADB (www.adbglobal.com), Software and Services segment, encompassing Osmosys (www.osmosys.tv) and Vidiom Systems (www.vidiom.com).
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 as a result of various factors, among which:
* future developments of the world digital TV market, in particular the future demand for digital TV 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 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 volume supplies of new products in whose development we have or are currently investing; * 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 litigation; * 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 S.A. does not intend to register its securities in the United States of America.
ADVANCED DIGITAL BROADCAST HOLDINGS S.A. AND SUBSIDIARIES
Consolidated Income Statements
SIX MONTHS ENDED 30 JUNE 2008, 31 DECEMBER 2007, 30 JUNE 2007 (Expressed in United States Dollars)
* Re-presented to reflect the requirements of IFRS 5: "Non-current Assets Held for Sale and Discontinued Operations"
ADVANCED DIGITAL BROADCAST HOLDINGS S.A. AND SUBSIDIARIES
Consolidated BALANCE SHEETS
30 JUNE 2008, 31 DECEMBER 2007, 30 JUNE 2007 (Expressed in United States Dollars)
30 JUNE (Expressed
30 30 June 31 December June 2008 2007 2007 (Unaudited) (Audited) (Unaudited) $ $ $ ASSETS
Non-current assets Goodwill 18,030,051 18,030,051 18,030,051 Intangible assets 18,592,421 17,026,839 15,962,690 Property and equipment 14,007,242 13,676,461 14,340,005 Deferred income tax assets 2,509,147 3,323,146 4,195,396 Due from shareholders - - 4,673,366 Long-term trade receivables 14,484,573 14,803,689 41,045,290 Other 1,389,754 1,123,006 2,330,471 Total non-current assets 69,013,188 67,983,192 100,577,269
Current assets Inventories, net 36,098,636 32,594,941 37,094,639 Other current assets 7,427,247 7,897,588 10,896,877 Trade receivables, net 54,347,284 100,871,902 54,171,415 Available-for-sale investments 8,797,330 2,023,743 19,552,846 Cash and cash equivalents 58,941,623 28,785,049 28,216,083 Total current assets 165,612,120 172,173,223 149,931,860
Total assets 234,625,308 240,156,415 250,509,129
30 June 31 December 30 June 2008 2007 2007 (Unaudited) (Audited) (Unaudited) (Re-presented)* (Re-presented)* $ $ $ EQUITY AND LIABILITIES
Capital and reserves Share capital 1,326,181 1,326,181 1,326,181 Share premium 76,551,414 76,551,414 76,551,414 Share-based compensation reserve 2,420,717 1,674,280 1,069,823 Other reserves (1,103,683) (1,563,899) (2,315,555) Retained earnings 17,926,752 13,195,304 9,359,453 Treasury shares (9,969,714) (8,975,137) (8,977,102)
Current liabilities Bank loans (secured) 11,571,150 24,770,040 13,983,256 Bank loans (unsecured) 7,874,000 14,892,000 14,896,200 Current portion of long-term bank loans 5,005,439 151,406 167,780 Trade and other payables 71,267,018 55,406,464 83,032,966 Accrued expenses 24,493,843 47,403,048 49,739,695 Provisions 2,372,933 1,924,000 1,500,000 Taxes payable 993,213 221,363 584,029 Other current liabilities 3,109,768 5,395,192 1,328,468 Total current liabilities 126,687,364 150,163,513 165,232,394
Total liabilities 147,473,641 157,948,272 173,494,915
Total equity and liabilities 234,625,308 240,156,415 250,509,129
* Re-presented to reflect the reclassification of share-based payments compensation to share-based compensation reserve (Note 1)
Consolidated statements of cash flows
SIX MONTHS ENDED 30 JUNE 2008, 31 DECEMBER 2007, 30 JUNE 2007 (Expressed in United States Dollars)
First-half Second-half First-half 2008 2007 2007 (Unaudited) (Unaudited) (Unaudited) (Re-presented)* CASH FLOWS FROM OPERATING ACTIVITIES From continuing operations: Profit (loss) for the period 7,591,097 6,835,061 (1,347,320) Adjustments for: Income tax expense 2,313,853 176,810 79,950 Depreciation 1,573,541 1,821,084 1,533,228 Amortisation 9,063,488 8,112,859 7,794,924 Finance costs 2,489,202 2,305,892 2,321,126 Interest income (1,297,152) (1,791,145) (1,856,606) Share-based payment expense 746,437 607,311 - Provision for inventory 1,607,822 1,110,707 751,813 Others 234,941 167,337 (27,258) Profit before working capital changes 24,323,229 19,345,916 9,249,857 Working capital changes: Trade and other receivables 45,817,673 (19,828,305) (2,250,125) Inventories (5,119,985) 3,373,354 1,162,626 Trade and other payables 15,901,371 (27,622,540) 5,062,258 Accrued expenses (22,222,079) (2,305,237) (8,756,421) Provisions 448,933 424,000 360,000 Other current liabilities (2,260,126) 4,004,014 (925,646) Others (911,370) 4,129,459 (1,838,061) Retirement benefit obligations 491,548 278,511 209,247 Cash generated by (used in) operating activities 56,469,194 (18,200,828) 2,273,735 Interest paid (2,515,615) (2,267,818) (2,311,304) Tax paid (310,215) (463,365) (1,872,337) Net cash provided by (used in) operating activities 53,643,364 (20,932,011) (1,909,906) Net cash used in operating activities from discontinued operations (1,225,833) (2,856,152) (1,431,376) Net cash provided by (used in) operating activities 52,417,531 (23,788,163) (3,341,282)
* Re-presented to reflect the requirements of IFRS 5: "Non-current Assets Held for Sale and Discontinued Operations"
First-half Second-half First-half 2008 2007 2007 (Unaudited) (Unaudited) (Unaudited) (Re-presented)* CASH FLOWS FROM INVESTING ACTIVITIES From continuing operations: Acquisitions of property and equipment (1,351,917) (1,519,350) (1,403,443) Proceeds from sale of property and equipment 146,972 390,455 146,419 Payments for intangible assets (11,153,371) (8,571,534) (10,100,758) Proceeds from sales of intangible assets 1,701 - - (Purchase) sale of available-for-sale investments (6,846,137) 17,962,450 (1,830,212) Interest received 1,523,675 2,394,564 909,406 Net cash (used in) provided by investing activities (17,679,077) 10,656,585 (12,278,588) Net cash provided by (used in) investing activities from discontinued operations 5,071 (897,967) (42,652) Net cash (used in) provided by investing activities (17,674,006) 9,758,618 (12,321,240)
CASH FLOWS FROM FINANCING ACTIVITIES From continuing operations: (Decrease) increase in bank loans (3,082,736) 10,707,594 (6,309,247) Decrease in loans to shareholders - 4,673,366 3,292,835 Share purchase (994,577) (889) (2,587,376) Net cash (used in) provided by financing activities (4,077,313) 15,380,071 (5,603,788) Net cash provided by financing activities from discontinued operations - - - Net cash (used in) provided by financing activities (4,077,313) 15,380,071 (5,603,788)
TRANSLATION ADJUSTMENT ON FOREIGN CURRENCY (509,638) (781,560) (44,824)
NET INCREASE (DECREASE) IN CASH 30,156,574 568,966 (21,311,134)
CASH, BEGINNING OF THE PERIOD 28,785,049 28,216,083 49,527,217
CASH, END OF THE PERIOD 58,941,623 28,785,049 28,216,083
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Time deposits 33,624,966 10,172,074 712,587 Cash and bank balances 25,316,657 18,612,975 27,503,496
58,941,623 28,785,049 28,216,083
* Re-presented to reflect the requirements of IFRS 5: "Non-current Assets Held for Sale and Discontinued Operations"
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ADB Holdings S.A. Avenue de Tournay 7 Chambesy Switzerland
ISIN: CH0021194664; Index: SPI, SPIEX, SSCI; Listed: Main Market in SWX Swiss Exchange;
