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Vtion Wireless Technology AG: Company Shows Strong Financial Profile.

2010 Q3 Results
  • Strong operational results with earnings per share of Euro 0.72 for Q3, Euro 1.30 for the nine month period
  • Net cash flow from operations of Euro 1.26 million in Q3, Euro 19.47 million in the nine month period
  • Net cash position of Euro 83.6 million, or Euro 5.23 per share
  • Strong balance sheet with an equity ratio of 85%

 

Frankfurt, Germany, 25 November 2010

Vtion Wireless Technology AG, one of the main providers of wireless data solutions for mobile computing in China, announces its full Q3 2010 financial results: Earnings per share reached Euro 0.72 for the quarter and Euro 1.30 for the nine month period. Net cash flow from operations reached Euro 1.26 million for the quarter. Vtion currently has a net cash position of Euro 83.6 million, or Euro 5.23 per share, and a strong equity ratio of 85%.


Cash Flow Positive; Strong Cash Position
Vtion generated a net cash flow of Euro 1.26 million from operations in the third quarter, bringing the company's net cash flow from operations for the nine month period to Euro 19.47 million. Company CEO Chen Guoping states, "During this time last year, we were cash flow negative in our operations, due to a large ramp-up in our working capital requirements due to the introduction of 3G technology in China. We are pleased to see that we have been cash-flow positive throughout the year, as we have continued to experience rapid development. With nearly Euro 84 million of net cash, we are well-positioned to invest in our future growth, particularly as the company begins a transition next year into a more diversified business model to more fully take advantage of the growth opportunities offered by 3G in China."

 

Strong Balance Sheet
Vtion has maintained a strong balance sheet throughout its history, something that Vtion believes is a prerequisite to having a strategic relationship with China's telecom operators. Vtion's equity ratio decreased slightly, from 87% at the end of 2009 to 85% as of September 30, 2010, but remains very strong. Vtion CFO Henry Chen states, "Despite our rapid growth we have managed to maintain a strong balance sheet and equity ratio. We are currently holding a significant cash position of Euro 83.6 million. We will look to use cash in China to develop our business, while also returning some cash to shareholders in the form of a dividend."


Outlook

As previously communicated, Vtion expects a slowdown in its sector during the fourth quarter, given that it is typical for China's telecom operators to scale back their sales and marketing efforts as the year draws to a close, something Vtion also witnessed at the end of 2009. This is in line with the company's expectations and something for which the company is prepared. Vtion's Supervisory Board will take a resolution on the company's dividend policy in its next meeting; in Vtion's prospectus the company stated that it intends to issue a dividend for
10-30% of 2010 net profit beginning in 2011. Vtion CEO Chen Guoping concludes, "Though we expect the year to end somewhat slowly compared to the first nine months, it is still an exciting time at Vtion. We are formulating our strategy for the coming year, a time that will see change in the company as we look to evolve alongside changing market conditions and position the company on a path for sustainable long-term growth."

 

The Chinese Market
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; Vtion Group is expecting the completion of the establishment of 3G mobile networks to lead to greater demand for wireless data cards in China, along with new opportunities for applications and value-added services in the 3G space.

 

Vtion Wireless Technology at a glance

 

 

Q3

 

Q1-Q3

 

 

2010

2009

+/–%

 

2010

2009

+/–%

Sales

million € 29.85 26.60 12   85.64 47.73 79

Gross profit

million € 12.02 9.05 33   32.81 16.18 103

Gross profit margin

% 40 34 6PP   38 34 4PP

EBITDA

million € 10.14 8.30 22   26.87 14.36 87

EBITDA margin

% 34 31 3PP   31 30 1PP

EBIT

million € 10.02 8.23 22   26.56 14.20 87

EBIT margin

% 34 31 3PP   31 30 1PP

Net profit

million € 11.57 8.54 35   20.78 13.88 50

Net profit margin

% 39 32 7PP   24 29 -5PP

Earnings per share1

0.72 0.74 -3   1.30 1.21 8

Net Cash flow from operations

million € 1.26 -7.90 N/A   19.47 -6.38 N/A

1Computed on the basis of average weighted 15,980,000 shares for Q3 2010 and 1st to 3rd quarter 2010, and respectively average weighted 11,480,000 shares for Q3 2009 and 1st to 3rd quarter 2009

 

About Vtion

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. Vtion Group concentrates mainly on the development and sale of wireless data cards, including provision of appropriate after-sales services. Vtion Group also supplies Internet-based data service solutions. The company currently has about 180 employees. Vtion Group generated sales of EUR 67.6 million and a net profit of EUR 16.6 million in 2009. Vtion Wireless Technology AG's 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

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