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Vtion Wireless Technology AG: Strong Results for the Financial Year 2009

  • FY 2009 Financial Figures

Frankfurt, 22. April 2010

The Vtion Group, one of the three leading suppliers of wireless data solutions for mobile computer use in China, has released its results for the full year 2009, which was by far the strongest financial year in company history. Vtion increased sales by 73% to EUR 67.6 million and net profit by 34% to EUR 16.5 million, which represents a net profit margin of 24%. For the year, the company sold a total of just over 1.65 million wireless data cards, with an average selling price of 39 Euro for the full year, which allowed Vtion to reach its guidance almost spot-on.

"Vtion's increase in sales is a testament to our strong sales and marketing efforts as well as the growth of the market itself. We take pride in our competitive cost structure and healthy financial profile, and place a great emphasis on maintaining that," says Guoping Chen, CEO of Vtion Wireless Technology. "2009 was a very exciting year in our sector, particularly in China, which at long last saw the beginning of 3G commercialization in May 2009. From our perspective, 2009 was a year of 3G construction in China, laying the foundation for true growth in the market and development momentum, which we expect to see as 2010 progresses."

 

Strong sales growth

Sales increased from EUR 39.12 million in 2008 by EUR 28.46 million, or 73%, to EUR 67.64 million in fiscal year 2009. This increase in sales was primarily due to the increase in the sales of wireless data cards (wireless modem segment), which increased from EUR 35.28 million in 2008 by EUR 28.99 million, or 82%, to EUR 64.27 million in 2009. Vtion started to sell virtual network operation (VNO) packages in mid-August 2009. In 2009, the company recognized the commission amounting to EUR 0.56 million for activated internet access plans in those packages.

 

Healthy Financial Profile

Taking advantage of its competitive cost structure and sound value chain, the company realized an EBIT margin of approximately 28%, and a net profit margin of 24% for the full year 2009. Profit from operations increased from EUR 12.6 million in 2008 by EUR 6.32 million, or 50%, to EUR 18.93 million in fiscal year 2009. This increase was largely brought by the strong increase of sales and gross profit in 2009, which was the result of the ramp up of 3G wireless data card sales. The company also maintains a strong balance sheet: Cash and cash equivalents amount to EUR 61.48 million and the equity ratio lies at 87%.

 

Long-standing Telecom Operator Cooperation

Vtion maintains its status as a top-tier wireless data card supplier of all three of China's telecom operators. Over the course of 2009, as the groundwork was being laid for 3G development in China, the company enjoyed very strong hardware sales of its comprehensive line of wireless data card products, which cover all standards and interfaces. The management expects this to pick up even more in 2010 given that with their respective network foundations in place the telecom operators can turn full attention to developing the user bases on their 3G networks.

 

Expansive Market Opportunity

The Chinese wireless network industry is currently going through a process of market development from second generation networks to network standards of the third mobile phone generation - known as 3G standards. China is the only country in the world with three different 3G wireless standards, the CDMA 2000 EVDO Network operated by China Telecom, the WCDMA Network operated by China Unicom and the TD-SCDMA Network operated by China Mobile. Network rollouts for the latter two networks are still in progress; the Vtion Group is expecting the completion of the establishment of 3G mobile networks to lead to a further increase in demand for wireless data cards in China.

The 3G market in China grew to over 20 million 3G users by the end of 2009; this growth continues to gain momentum due to an active marketing push by China's three telecom operators. However, 20 million users represent a small portion of the over 800 million total mobile users in China, signifying strong opportunity for future market growth.

 

Positive Outlook

Vtion believes that year 2010 and 2011 will be crucial for 3G developments in China, given that the network rollouts have now reached a stage in their progress where the buildup of the user bases should accelerate and greater demand for services and other industry applications should begin to emerge. Going forward the company intends to leverage that position to take advantage of the market opportunity before it. At the same time, the company anticipates that as the networks mature, other opportunities will emerge beyond the pall of wireless data card supply. Therefore, while staying true to its current core strength as a wireless data card supplier, the company will also use the next three to five years' time to put a stronger strategic emphasis on the services and applications portions of the company business.

In addition to lifting sales, the management believes the earnings in 2010 and 2011 would experience positive development through active cost management and the improvement of highly efficient use of resources. The company aims to generate competitive returns.

 

About Vtion

The Vtion Group is one of the three leading suppliers of wireless data cards and associated services for the mobile use of computers via broadband wireless networks in the People's Republic of China. The Vtion Group concentrates mainly on the development and sale of wireless data cards, including provision of appropriate after-sales services. The Vtion Group also supplies Internet-based data service solutions. The company has about 150 employees. The Vtion Group generated sales of EUR 67.6 million and a net profit of EUR 16.5 million in 2009. The Vtion Wireless Technology AG shares are being traded in the Prime Standard on the Frankfurt Stock Exchange with the ISIN DE000CHEN993. The company's ticker symbol is V33.

 

For further information, please contact:

Kirchhoff Consult AG
Dr Kay Baden, tel.: +49 40 60 91 86 0, baden@kirchhoff.de
Janina Wismar, tel.: +49 40 60 91 86 50, janina.wismar@kirchhoff.de

 

Disclaimer concerning prognoses

Certain statements in this communication contain formulations or terms referring to the future or future developments, as well as negations of such formulations or terms, or similar terminology. These are described as forward-looking statements. In addition, all information in this communication regarding planned or future results of business segments, financial classification numbers, developments of the financial situation, or other financial or statistical data contains such forward-looking statements. The company cautions prospective investors not to rely on such forward-looking statements as certain prognoses of actual future events and developments. The company is neither responsible nor liable for these forward-looking statements. It is not responsible for updating such information, which only represents the state of affairs on the day of publication.

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