ADB Group reports full-year 2010 results

·        Revenue reached US$ 356.6 million

·        Full-year EBIT at 5.0% of revenue, or US$ 17.7 million

·        Newly acquired broadband business profitable and cash generating

·        Five new customers won in 2010 for ADB core business only

·        Two Tier-1 US cable deals won in early 2011

·        Revenue growth in 2011 expected to be over 40%

·        Board of Directors recommends a dividend

Geneva - 23 February 2011

Advanced Digital Broadcast Holdings S.A. (SIX: ADBN) reported today ADB Group's unaudited consolidated financial results for the full year 2010.

The full year revenue reached US$ 356.6 million, to which the newly acquired broadband business (Pirelli Broadband Solutions, renamed as "ADB Broadband", or "ADBB") contributed US$ 20.0 million.  It has been consolidated with the ADB Group core business for the month of December 2010 only.

The gross profit amounted to US$ 114.7 million or 32.2%, compared to 36.5% in 2009. The decrease is mostly attributable to the inflexible materials pricing caused mainly by continuing component shortages and competitive pricing environment that the Group experienced during the year. Another, albeit small, factor is the inclusion of the newly acquired broadband business, which yields lower gross margin than the ADB Group traditional business, as it is structurally different.

In line with the Group strategy of scalable business model and cost optimization, the gross margin decrease was partially compensated by decrease in operating expenses. The operating expenses decreased to US$ 92.6 million in 2010 from US$ 107.4 million in 2009, Earnings Before Interest and Tax (before acquisition expenses) amounted to US$ 17.7 million, or 5.0% of the revenue, in line with management expectations. Respective EBIT figures in 2009 were US$ 27.7 million and 7.3% of the revenue.

Net Profit After Tax amounted to US$ 12.9 million or 3.6% of the revenue, compared to US$ 15.3 million in 2009 or 4.0%. Earnings Per Share amount to 2.55 USD per share, compared to the reported US$ 2.76 USD per share in 2009.

The Group closed the year with the net cash position of US$ 31.6 million. The main uses of the cash during the year have been the acquisition, the distribution of a first dividend to the shareholders, the share buyback, the continued investments into new product platforms and the deliberate accumulation of inventory to mitigate component shortages.

Mr. Andrew Rybicki, Chairman and Group CEO, commented: "The acquisition of Pirelli Broadband Solutions ("PBS") has been a significant milestone and a major achievement in our corporate life. Not only have we acquired a well-run, around US$ 150 million, profit-generating European company, whose products and customer base will significantly enhance the Group's business, but we also conducted it using our in-house resources alone, and as a non-dilutive transaction to the shareholders. In short, this acquisition is a clear benefit to our shareholders and a super-charged booster to our business. I therefore consider the slight decrease of our 2010 revenue less important, as the acquisition of PBS will bring it up to around 40% in 2011. Furthermore, we again demonstrated the scalability of our business model and ability to keep the costs under control, by achieving 5% EBIT and continuing our dividend distribution. I am proud of our staff and wish to take this opportunity to express my sincere thanks to them for achieving 2010 results despite the huge effort that the process of acquisition and the first steps of integration have demanded from them."

Outlook for 2011

The Group sees 2011 as a year of significant expansion. It is also therefore a year of integration, streamlining of the product base and further optimizing the company operating costs. This will include certain reorganization, reduction of operating costs (including staff costs), and further unification of the technology base. In the market, the Group observes that while the economic recovery seems to be underway in many countries, it still appears uneven. The component shortage is easing out, but still needs to be watched closely. The Group gives the following guidance for the full year 2011:

• Revenue is expected to grow over 40%
• EBIT% (before acquisition and integration costs) is expected to be in mid single digits

The Group anticipates incurring certain costs related to acquisition and integration, particularly early in the year. Those costs, combined with the effect of normal seasonality of the business, are likely to impact our first half year results.

Business overview

The business of managing and delivering television content to consumers has been clearly evolving towards the business of delivering, managing and distributing the multimedia content within consumers' homes. Traditional television screen is quickly taking shape of a family entertainment, communication and personal data storage centre (e.g. a photo album).  It does not compete with a PC and/or with a smart phone - it embraces them as members of a new, multimedia family. A family of devices and technologies that need to be well managed to meet expectations of a modern consumer and his or her family. Similarly, the ADB Group traditional set top box, which has been serving us well over the past several decades, also changes its shape and colours. For once, today's TVs have no longer the "tops", nor do they rely on the content delivered to them through the traditional media such as satellite, cable or an unsightly antenna on the roof. They are all "flat" and they now also "listen" to the internet and "talk" to it as well, by sending home-generated content to such storage and distribution centres as YouTube^TM or Facebook^TM. And the "box" is again faithfully helping us to manage all that traffic of various signals and deliver new type of experience to consumer, although its is not just a "box" anymore - instead, it is a cluster of various "boxes", with a complex software that makes all of them work together.

This is what ADB Group has started developing few years ago and this is what it has been increasingly offering to its customers: a variety of "boxes", run by a powerful and complex software that makes them work together and "talk sense" to their smart phone and laptop peers, as well as to the outside, not less complex world. That is where the newly acquired broadband technology and products come strongly into the picture. In addition of being strategically important, the acquisition also provides interesting opportunities for cross-selling and thus leveraging the existing customer base. For example, the Group sees a possibility of migrating the gateway technology to the cable business, in addition to its current IP markets.

Mr. Rybicki said: "From the Group's operational and business development points of view, we have significantly improved our position and competitiveness by instant addition of the broadband technology and respective new customers to our portfolio of assets, in line with our long term convergence strategy. This will significantly help offering our customers the solutions they expect faster, and will broaden the base of our prospects."

Mr. Francois Pogodalla, CEO of ADB S.A., commented: "We are thrilled to see our convergence strategy accelerating rapidly now. We already have our Virtual Gateway - the advanced software solution that distributes seamlessly any multimedia content throughout the household. Now we can also add the residential gateways with their connectivity software and create new end-to-end solutions for the operators. This gives us a fantastic platform to build on."

The Group won five new customers during 2010 for its ADB core business: CableTel (Bulgaria), Canal Digital (Norway), Telecom Italia (Italy), First Media (Indonesia), and TSTT (Trinidad&Tobago). Further customers were added as well to the portfolio as a result of the acquisition

ADB Group is pleased to announce today that it has concluded a deal with one of the largest cable operators in the United States for a delivery of a turnkey pay-TV solution for applications in the commercial segment. This solution includes ADB's next generation set-back box, together with communication and system management software, as well as the integration of the entire system. The Group is also pleased to announce that it has just received a purchase order from another major US cable operator for the same type of product and application. Francois Pogodalla, CEO of ADB S.A., commented: "After a lot of work, it feels good to finally get going with the US cable market, in addition to the US IPTV market where we have been successfully operating for years. Our team has been working really hard to make this happen. Now we are in with the customers, and we can start delivering. We conservatively anticipate rather modest contribution in 2011, but for the first time in our history we will generate revenue from the US cable business this year. This is a strategically important move for us."

In the field of technology recognitions during 2010, ADB Group received an award for The Best Interactive TV Service/Application, at IPTV World Forum in London.  This was particularly important achievement, as it was the first such solution operating in the three-way hybrid environment. Furthermore, ADB took first prize in both "The Best Interactive TV Technology or Application" and "Best Customer Premise Technology" categories at 2010 IBC, in Amsterdam. The winning solution included our highly acclaimed Carbo^TM high definition user interface, and its three-way hybrid platform,  

During 2010, the cable business continued to be Group's largest business segment, contributing 35% of its revenue (39% in 2010). The cable TV industry, which has also evolved significantly, both in technical and commercial sense, still represents the largest business opportunity amongst the four segments ADB Group serves.  The above notwithstanding, we note a strong growth of our IPTV segment in 2010, which increased its share of the total Group's business from 19% in 2009 to 26% in 2010. Satellite business continued at the same level as last year, accounting for 29% of the Group revenue as in 2009. Terrestrial demand remained subdued due to the general economic conditions, and only contributed 5% to the Group revenue, compared to 12% in 2009. Other businesses, consisting of specialized software, gateway products and accessories, contributed 5% to the Group revenue, compared to 1% in 2009.

The Group keeps focusing on the high end of the market with a particular emphasis on software and system solutions. The user interface, Carbo^TM continues to win new customers, and is becoming an industry benchmark with its super-fast channel change and clear, intuitive navigation. Nine customers have now adopted Carbo user interface in their system. This represents a steep increase from the year before.

Organizational update

Mr. Francesco Schiavinato, the head of ADB Broadband business, has been appointed to the ADB Group Executive Committee, effective immediately.

The Board of Directors has acknowledged the resignation of Mr. Philippe Geyres from his position at the Board of Directors of ADB Holdings S.A. Mr. Rybicki stated: "Mr. Philippe Geyres has brought valuable insights to our company, and contributed to its development. He left the Board due to certain conflict of interests resulting from his new executive position. We thank him for all his contributions and wish him well in his future endeavours."

Ms Tina Nyfors has agreed to be in charge of the Group's Investor Relations and Communications, as Senior Vice President, starting March 2011.

Dividend policy and dividend distribution

The Board of Directors have decided to establish a dividend payment policy. Such a policy calls for distributing to the shareholders 30% or more of the net profit after taxes of each business year. In agreement with this policy, the Board of Directors recommends a dividend to be paid out with respect to the year 2010 profits, and intends to propose the payment of such a dividend at the next Annual General Meeting of the Shareholders.

Conference call

ADB Group management will hold a telephone conference on that day to discuss the 2010 financial results and outlook for the year 2011, today at 15.30 CET.

To connect to the conference call, participants should dial the following number:  +41 (0) 44 580 6398

Participant pass code is "ADB".

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

Executive Vice President

Corporate Development

Tel:  +41 22 592 8433

t.nyfors@adbglobal.com

-end-

About ADB Group (SIX: 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 sells a broad range of products and services,, including software, consumer premises devices, system integration and after sales services, The development and sales of the Group's products and services are conducted through the brands ADB (www.adbglobal.com) and ADB Broadband (broadband.adbglobal.com) 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.

2010

2009

$

$

Revenue

             356,619,397

             381,005,778

Cost of sales

          (241,898,796)

          (241,967,509)

Gross profit

             114,720,601

             139,038,269

Research and development expenses

            (48,918,533)

            (60,758,207)

Selling, general and administrative expenses

            (43,681,682)

            (46,681,151)

Other income

                 1,001,534

                    329,551

Other expenses

              (5,378,074)

              (4,240,232)

Acquisition expenses

                 (538,539)

                               -

Impairment charges

                               -

              (8,180,625)

Finance income

                 2,111,027

                 2,311,978

Finance costs

              (4,526,086)

              (3,806,975)

Profit before tax

               14,790,248

               18,012,608

Income tax expense

              (1,883,360)

              (2,761,968)

Profit for the year

               12,906,888

               15,250,640

Earnings per share

Basic

                          2.55

                          2.76

Diluted

                          2.51

                          2.71

2010

2009

$

$

Movement in available-for-sale investments

                (626,086)

                   673,381

Credit (charge) of deferred tax from movement in available-for-sale investments

                     49,022

                  (49,894)

Actuarial loss directly recognised in equity

                (133,601)

                (571,422)

 (Charge) credit of deferred tax for direct recognition of actuarial loss in equity

                    (3,942)

                     96,065

Movement in cash flow hedges

                (726,027)

                1,897,114

Credit (charge) of deferred tax from movement in cash flow hedges

                     52,194

                (221,393)

Translation adjustments

                   307,336

                   401,324

Net (loss) gain recognised directly in equity

             (1,081,104)

                2,225,175

Profit for the year

              12,906,888

              15,250,640

Total comprehensive income for the year

              11,825,784

              17,475,815

ASSETS

2010

2009

$

$

Non-current assets

Goodwill

              25,792,385

                9,393,440

Intangible assets

              32,784,758

              18,595,435

Property and equipment

              15,773,046

              11,370,070

Deferred income tax assets

                4,785,778

                3,718,745

Long-term trade receivables

                              -

                4,056,908

Other non-current assets

                1,027,545

                1,223,478

Total non-current assets

              80,163,512

              48,358,076

Current assets

Inventories, net

              50,362,159

              19,722,746

Other current assets

              28,096,129

                5,557,166

Trade receivables, net

              92,822,350

              78,587,485

Treasury investments

              14,522,613

              28,731,753

Time deposits

                              -

                6,173,850

Cash and cash equivalents

              84,502,898

              65,405,033

Total current assets

            270,306,149

            204,178,033

Total assets

            350,469,661

            252,536,109

EQUITY AND LIABILITIES

Capital and reserves

Share capital

                1,193,563

                1,326,181

Share premium

              59,786,295

              76,551,414

Share-based compensation reserve

                4,586,298

                4,373,022

Other reserves

           (13,102,458)

                (768,854)

Retained earnings

              19,630,344

              39,252,110

Treasury shares

             (3,370,395)

           (42,759,071)

Total equity

              68,723,647

              77,974,802

Non-current liabilities

Long-term bank loans

                2,906,044

                6,041,849

Retirement benefit obligations

                7,243,199

                5,166,459

Deferred income tax liabilities

                   398,888

                1,186,411

Long-term liabilities

                8,211,074

                     72,332

Total non-current liabilities

              18,759,205

              12,467,051

Current liabilities

Bank loans

              63,624,901

              21,198,243

Current portion of long-term bank loans

                   904,834

                3,793,087

Trade and other payables

            144,400,590

              95,305,468

Accrued expenses

              34,483,385

              33,590,350

Provisions

              10,868,616

                3,140,133

Taxes payable

                   515,797

                2,821,626

Other current liabilities

                8,188,686

                2,245,349

Total current liabilities

            262,986,809

            162,094,256

Total liabilities

            281,746,014

            174,561,307

Total equity and liabilities

            350,469,661

            252,536,109

2010

2009

$

$

CASH FLOWS FROM OPERATING ACTIVITIES

Profit for the year

              12,906,888

              15,250,640

Adjustments for:

Income tax expense

                1,883,360

                2,761,968

Depreciation

                2,394,061

                2,454,542

Amortisation

              18,031,398

              18,217,561

Impairment charges

                              -

                8,180,625

Finance costs

                4,526,086

                3,806,975

Finance income

             (2,111,027)

             (2,311,978)

Share-based payment expense

                   396,223

                1,171,479

Provision for inventory

                1,473,069

                3,147,816

Others

                   201,983

                     59,817

Profit before working capital changes

              39,702,041

              52,739,445

Working capital changes:

Trade and other receivables

              29,675,570

           (13,712,022)

Inventories

           (21,395,907)

                3,136,076

Other current assets

           (11,673,027)

                1,226,811

Trade and other payables

                4,665,102

              22,380,474

Accrued expenses

           (13,595,662)

                7,097,988

Provisions

              (1,068,740)

                (337,737)

Other current liabilities

                     40,581

             (1,307,258)

Others

                   967,980

                   304,385

Cash generated by operating activities

              27,317,938

              71,528,162

Interest paid

             (2,965,504)

             (3,806,426)

Tax paid

             (3,942,790)

             (2,355,555)

Net cash provided by operating activities

              20,409,644

              65,366,181

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions of property and equipment

             (3,979,037)

             (2,172,317)

Proceeds from sale of property and equipment

                   116,026

                     93,497

Payments for intangible assets

           (23,493,535)

           (18,203,728)

Sale (purchase) of treasury investments and time deposits

              19,756,904

           (24,632,728)

Interest received

                2,114,303

                2,158,122

Payments for acquisition of business

             (8,600,424)

                               -

Net cash used in investing activities

           (14,085,763)

           (42,757,154)

2010

2009

$

$

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in bank loans

                 34,896,180

                   3,855,671

Share sale pursuant to exercise of stock options

                      925,908

                      744,158

Share purchase

                (8,318,291)

              (23,021,937)

Dividends paid

               (13,955,473)

                                  -

Net cash provided by (used in) financing activities

                 13,548,324

              (18,422,108)

TRANSLATION ADJUSTMENT ON FOREIGN CURRENCY

                   (774,340)

                    (147,478)

NET INCREASE IN CASH

                 19,097,865

                  4,039,441

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

                 65,405,033

                 61,365,592

CASH AND CASH EQUIVALENTS, END OF YEAR

                 84,502,898

                 65,405,033

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

Time deposits

                   7,521,703

                        17,648

Cash and bank balances

                 76,981,195

                 65,387,385

                 84,502,898

                 65,405,033

Balance at 1 January 2009

1,326,181

76,551,414

3,342,232

(2,994,029

)

24,783,800

(21,404,311

)

81,605,287

Profit for the year

-

-

-

-

15,250,640

-

15,250,640

Other comprehensive income

-

-

-

2,225,175

-

-

2,225,175

Total comprehensive income

-

-

-

2,225,175

15,250,640

-

17,475,815

Purchase of ordinary shares

-

-

-

-

-

(22,877,273

)

(22,877,273

)

Share purchase costs, net

-

-

-

-

-

(144,664

)

(144,664

)

Sale of treasury shares pursuant to exercise of stock options

-

-

-

-

-

744,158

744,158

Reclassification of losses on sale of treasury shares

-

-

-

-

(923,019

)

923,019

-

Share-based payments

-

-

1,030,790

-