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Vtion Wireless Technology AG: Net cash position of Euro 125 million

2011 Full Year Results, 2012 Guidance

  • Revenue of Euro 77 million and EBIT margin of 10% meets guidance for 2011;
  • Company generated a free cash flow of approx. Euro 16.7 million over 2011;
  • Vtion confirms 2012 full year guidance for revenues of between Euro 80 million and Euro 100 million, with EBIT margin stable at 10%-12%;
  • Vtion will recommend to again pay a dividend of 15% of net profit, or Euro 792,000

 

Frankfurt, 19 April 2012

Vtion Wireless Technology AG, one of the leading suppliers of wireless data solutions for mobile computing in China, announces its financial results for FY 2011 and guidance for 2012. The company achieved revenues of Euro 77 million, in line with its guidance of Euro 75-100 million, and an EBIT margin of 10.3%, consistent with the forecasted 10%-12%. Vtion generated a free cash flow of approx. Euro 16.7 million over the course of the year, bringing the company's total net cash position to Euro 124.5 million. The company expects its EBIT margin to remain stable for 2012, while revenue is expected to grow to Euro 80-100 million.

 

Greater Diversification as Year Progressed

Vtion's results for 2011 were driven nearly exclusively by its wireless data terminal segment for the first half of the year, while it saw growing revenues from the mobile intelligent terminal (tablet PC) segment during the second half of the year. The company's third business segment, mobile applications, is run through the company's wholly owned subsidiary, Vtion Anzhuo. Though Vtion Anzhuo did not record significant revenues during 2011, the company made important progress in establishing its own online store as well as shop-in-shop cooperation agreements with all three of China's major telecom operators, China Telecom, China Unicom and China Mobile.

"As the year progressed, we began to see our newer business segments take hold, particularly in the mobile intelligent terminal business segment, where we saw strong sales of our tablet PC's targeted at consumers, particularly young, fashion-conscious female consumers," states Vtion CEO Chen Guoping. "Our business selling tablet PC's and customized applications to insurance companies progressed more slowly than originally expected. Though we expect to gain ground in this segment over the course of 2012. Due to the nature of the B2B sales model, sales will not move as quickly in this segment as in the consumer space. We believe we are well-positioned to begin to build more sales in this area."

 

Profitability Maintained in Difficult Environment

For Vtion, 2011 was a year of transition, and the company faced difficult circumstances throughout the year, brought about by a change in procurement policy on the part of its three main clients, China Telecom, China Unicom and China Mobile. Despite falling sales prices in Vtion's core segment wireless data terminal business, the company remained profitable throughout the year, while simultaneously building up new business segment to be better positioned in China's changing telecom market. Vtion's EBIT margin of 10% and net profit margin of 7% are a testament to the company's lean cost structure and ability to stay profitable even in difficult times.

 

"I am proud that we stayed profitable and cash flow-positive over the course of 2011," states Chen Guoping. "From a market environment standpoint, this was the most difficult year we have faced in company history, yet we were still able to achieve strong results. More importantly, we have built a foundation in two new business segments, mobile intelligent terminals and mobile applications, which will allow us to resume growth in 2012 and beyond."

 

New Business Segments Expected to Grow in 2012

Vtion expects revenues and margins in the wireless data terminal business segment to remain steady over the course of 2012. Though selling prices are lower than years past, and demand has weekend due to a greater presence in the market of tablet PC's and smartphones, there is still a market for providing wireless data cards and 3G routers for China's many laptop users. Stronger growth, however, should come from the company's other two segments, mobile intelligent terminals and mobile applications.

 

"Wireless data terminals will remain a reliable and profitable business for us," states Vtion CEO Chen Guoping. "Though margins are lower than they have been in the past, we are able to draw on our strong customer and supplier relationships to continue making money in this segment. We see our next growth phase as being based on our mobile intelligent terminal and mobile application business segments. Though competition is increasing in the consumer tablet PC market, we are confident in building sales gradually over the course of 2012 in our insurance industry-specific business, thus avoiding the competition of the consume space. In the applications segment, though most of our applications are still free downloads, we have built up strong sales channels and supplier relations, and will see our first significant revenues through our subsidiary Vtion Anzhuo, by the end of 2012," he concludes. Vtion Anzhuo currently offers 10,000 mobile applications.

 

Dividend and Share Buyback

As of April 13, 2012, Vtion has repurchased a total of 879,259 shares, for an average price of Euro 3.5810. The company intends to continue its share buyback program until it has repurchased the total 1.598 million shares originally authorized under its AGM resolution. The company has maintained its dividend payout ratio of 15% of net profit, and will pay a dividend of Euro 792,000 the day after the AGM, should the resolution pass.

 

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 company offers tablet PC products and support services through its mobile intelligent terminals business segment, including both to the consumer market and industry-specific clients. Through its wholly-owned subsidiary, Vtion Anzhuo, the company offers online applications for the Android operating system. For 2011, the company reached sales revenues of EUR 77 million with an EBIT margin of 10.3%. 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

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