DJ HUGIN NEWS/ADB Group Reports Record Financial Results For 2008

DJ HUGIN NEWS/ADB Group Reports Record Financial Results For 2008

Corporate news announcement processed and transmitted by Hugin AS. The issuer is solely responsible for the content of this announcement. =--------------------------------------------------------------------- =------------- * Revenue grew 22.6 % over 2007, reaching US$ 360.8 million * EBIT increased by 188%, to US$ 19.4 million * More than 80% of Digital TV Equipment revenue from high-end products * Seven new customer wins in Digital TV Equipment segment * Two significant new customers won for Software and Services segment * Good order backlog and visibility for 2009 Geneva - February 24, 2009, 06:00 a.m. (CET) ADB Holdings SA (SIX: ADBN) reported today ADB Group's unaudited consolidated financial results for the full year 2008. Revenue for the full year 2008 reached US$ 360.8 million, increasing 22.6% compared to 2007 and ahead of the Group's expectations, driven by strong demand in the last quarter across all business sectors. Gross profit reached US$ 144.3 million or 40.0% of the revenue, increasing 44.8% over 2007. This development was due to favorable sales mix throughout the year, positive impact of foreign exchange, favorable purchasing environment, and contribution of the Software and Services segment. The efficiencies in the supply chain management and successful cost reduction programs also contributed to the outcome. Earnings Before Interest and Tax rose to US$ 19.4 million or 5.4% of revenue, compared to US$ 6.7 million or 2.3% of revenue in 2007, while cash EBIT was US$ 28.1 million. Net profit reached US$ 14.9 million or 4.1% of revenue, increasing 172% compared to US$ 5.5 million or 1.9% of revenue. Fully diluted earnings per share increased to USD 2.52, up 177% from US$ 0.91 a year earlier. The Group cash generation from operating activities was strong all along the entire year 2008, reaching US$ 88.2 million. After investing US$ 12.4 million in share buy-back programs, the Group recorded a net cash position of US$ 43.8 million at the end of 2008. This compares to a net debt position of US$ 11.7 million at the end of 2007. The Group has also significantly reduced its working capital, closing the year with net current assets of US$ 38.0 million ($22.0 million in 2007), and a gross cash and cash reserves position of US$ 71.0 million ($30.8 million in 2007). Consequently, the Group enters the year 2009 with a strong balance sheet. Andrew Rybicki, Chairman and CEO of ADB Group, commented: "After two-and-half years of hard work our Group has finally returned to the level of performance which meets my minimum expectations. We fixed all problems that have been degrading our results since mid-2006, addressing both internal and external factors. We have overhauled the ship completely and made it more resilient to such external factors by diversifying our supplier base, decreasing certain dependencies and significantly strengthening internal controls and the management. We also benefited from adhering to our strategy of delivering high-end products and advanced technology. Consequently, we have firmly returned to a reasonable profitability level, supported by a strong balance sheet. With almost two-thirds of our 2009 sales budget covered by customers' orders and long-term commitments, we expect this performance to continue and improve in 2009 and beyond." Outlook for 2009 While ADB Group starts the year 2009 with a good visibility and order backlog, it takes into account the challenging overall macroeconomic situation and uncertain foreign exchange environment. The Group observes that the macroeconomic environment may present factors, the impact of which on the Group's business is at this point minimal, but unpredictable in its developments. The Group therefore gives the following guidance for the full year 2009: Revenue is expected to continue growing in 2009. The gross margin is likely to come in line with the Group long-term strategy and expectations. Finally, the Group expects to maintain an acceptable level of profitability. Business segment performance Digital TV Equipment segment The Digital TV Equipment business segment yielded US$ 353.0 million of revenue in 2008, growing 25.8% over 2007. It delivered segment Earnings Before Interest and Tax of US$ 22.4 million, or 6.3% of revenue, growing 155% over 2007. High-definition TV (HDTV) product sales grew significantly, accounting for 72% of the segment's revenue, up from 57% in 2007. Personal Video Recorders (both high and standard definition) represented 39% of the Digital TV Equipment revenue, compared to 26% in 2007. The key contributing factors to this development are high demand from pay-TV operators, generated by growing public awareness and acceptance, as well as by increasing simplicity and reliability of such devices' operation. This in turn is a clear result of more efficient software solutions which the Group provides. The year was strong for IPTV business, which constituted 27% of the Group revenue and grew 36% over 2007. The main drivers were the expansion of the customer base as well as the demand by recurring customers. Terrestrial segment represented 18% of Group revenue, compared to 12% in 2007. Terrestrial share of revenue grew significantly due to increased product purchases in Northern Europe and solid demand in Italy. Cable maintained its position as the largest business of the Group, representing 39% of Group overall revenue, driven by demand from both existing and new customers. Satellite segment sales represented 13% of the Group revenue, all generated by the Group's high-end products. The efforts of Group's technology departments received three significant recognitions during 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; * In May the Group obtained CableLabs' tru2way(TM) (formerly known as OCAP) certification for its new set-back box model (thus far the only one in the world); * In September, the International Broadcast Conference recognized ADB Group with "Best Customer Premises Technology Award". Building on the achievement of the CableLabs' certification, ADB Group signed in June 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. In early January 2009, the Group also announced its co-operation with Sony for developing products for the US cable market. Software and Services segment The Software and Services business segment recorded revenue of US$ 18.2 million, out of which US$ 9.0 million were intergroup sales. The segment recorded a Loss Before Interest and Tax of US$ 3.0 million. During the latter part of 2008, the Group re-aligned the Software and Service segment's US operations to be more in line with its North American strategy. The segment was profitable in the second half of the year. Some of the key achievements for this segment were the first commercial deployment of its Blu-ray software solution, the acquisition of new customers for its MHP middleware as well as for its newest product additions such as its push-VOD system. In addition, the Software and Services segment played a key role in the Group's win of TFN in Taiwan. The Group regards these successes as an indication that the strategy of product portfolio development matches the market demand. 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. 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 full year of 2008, Europe represented 84.6% of the Group revenue whilst Middle East and Africa accounted for 6.5%, Asia Pacific 2.5% and the Americas 6.4%. Both West and East European customers accounted for a large part of the growth, Eastern Europe representing 20% of the Group's total revenue. The top 10 customers of the Group grew strongly during the year, representing 84% of revenue. No customer represented more than 22% of the Group's revenue. Overall, Group's customer base continues to consist of a well balanced mix of recurring and new customers. Impact of discontinued operations The New Initiatives business segment was discontinued during 2008, and all its activities were closed down entirely before the end of the year. When including the impact of the discontinued operations, the Group's net profit was US$ 11.6 million, or 3.2% of revenue compared to US$ 0.5 million or 0.2% of revenue in 2007. Earnings per share were USD 1.96, compared to US$ 0.08 in 2007. Results for the second half of 2008 Results for the second half of 2008 developed as follows, compared to the previous semesters: +-------------------------------------------------------------------+ | US$ millions | Second half | First half | Second half | | | 2008 | 2008 | 2007 | |-------------------+----------------+--------------+---------------| | Revenue | 190.9 | 169.9 | 173.3 | |-------------------+----------------+--------------+---------------| | Gross profit | 76.6 | 67.7 | 59.4 | |-------------------+----------------+--------------+---------------| | Gross margin % | 40.1% | 39.9% | 34.3% |

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February 24, 2009 00:01 ET (05:01 GMT)