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Vtion Wireless Technology AG remains profitable despite lower revenues

Results Q1 2015

  • Revenues decreased by 13 per cent to EUR 9.5 million
  • EBIT margin improved by 1 percentage point to 7 per cent
  • Guidance for 2015 confirmed with revenues of EUR 37 million and an EBIT margin of approximately 6 per cent

 

Frankfurt, May 28, 2015

Vtion Wireless Technology AG (Vtion), a supplier of wireless data terminals and associated services for mobile computing via broadband wireless networks in China, generated revenues of EUR 9.5 million in the first three months of 2015, corresponding to a decrease of 13 per cent compared to the same period 2014. Nevertheless, the company improved its profitability. Year-on-year the EBIT margin rose by 1 percentage point to 7 per cent, while the gross profit margin increased to 22 per cent (Q1 2014: 20 per cent).

The majority of the total revenue was generated in the company's core business with wireless data terminals. This segment comprises of wireless data cards, wireless routers, and wireless high definition sharers. Year-on-year the revenues in this segment increased by 1 per cent to EUR 9.3 million (Q1 2014: EUR 9.2 million).

The decrease of the total revenues during the reporting period was mainly due to lower sales of wireless data cards using the 3G technology, which dropped by 49 per cent to EUR 2.7 million. The sharp decline is based on the fact that more and more other devices are used to get access to the mobile internet. This development was partly offset by the increasing sales of wireless data cards developed specifically for the storage and transfer of tax data as well as the growth of sales of other Vtion products like the wireless high definition sharer named "PCtoTV". The latter contributed EUR 1.3 million to the total revenues in the first quarter 2015. Vtion's most important products in the core business remained the new wireless data routers based on the 4G-techology for the Chinese operators China Unicom and China Telecom. During the reporting period the company generated revenues of EUR 5.3 million with wireless routers, an increase of EUR 2.6 million or 96 per cent compared to the previous year's quarter.

In contrast, revenues in the software-focused business segment remained low. Among these products are a network camera, a health self-checking instrument and particularly the mobile applications, offered by Vtion Anzhou's VMarket and partner sales platforms. Therefore, the Management Board decided to sell the 100 per cent of equity stake of its subsidiary Vtion Anzhou to its management team via a management buyout (MBO) in March 2015.

The decision was in line with a strategic realignment of Vtion Group to refocus on the hardware market as the Management Board considers this as the core strength of the company.

"In the mobile applications space, the Chinese market is defined by a cutthroat competition for users, where massive investments are required to build a user base in a market where monetization models remain immature and ill-defined. Therefore, instead of joining this competition and the massive investments it would entail, we decided to divest our wholly-owned subsidiary Vtion Anzhuo through a management buyout", says Vtion's CEO Chen Guoping. "As the margins for more generic hardware products decline sharply we currently focus on specific-use products that, due to their more specialized nature, generally command higher selling prices. Furthermore, we have increased the development of our 4G wireless router products as we expect the market to expand greatly", adds Guoping.

Although the Management was able to reduce the cost of sales by 15 per cent to EUR 7.5 million year-on-year, the company's EBIT decreased by 4 per cent to EUR 0.6 million, due to the lower revenues. Compared with the same period of 2014, EBIT margin improved by 0.6 percentage points to 6.7 per cent in the first quarter of 2015. The company was able to maintain its profitability and therefore the solid cash position due to a lean cost structure: As of March 31, 2015, Vtion's cash and cash equivalents amounted to EUR 163.8 million, which implies an equity ratio 93 per cent.

 

Outlook 2015

The Management Board expects 2015 to be a year of further transition and therefore remain difficult from an operational standpoint. Vtion predicts total revenues of around EUR 37 million for the full year 2015 and an EBIT margin of approximately 6 per cent.

 

 

About Vtion

The Vtion Group is a leading supplier of wireless data terminals and associated services for the mobile use of computers via broadband wireless networks in the People's Republic of China. Vtion Wireless Technology AG was established in 2002 and currently has 228 employees. The 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
Andreas Friedemann, phone: +49 40 60 91 86 0, mail: andreas.friedemann@kirchhoff.de
or visit the company website: www.vtion.de

 

Disclaimer concerning prognoses

This communication contains forward-looking statements. Forward-looking statements are statements that are not historical facts instead they reflect Vtion's current views and expectations and the assumptions underlying them about future events. Forward-looking statements are subject to many risks and uncertainties. If any of such risks and uncertainties materialise or if the assumptions underlying any of Vtion's forward-looking statements are proving to be incorrect, Vtion's actual results may be materially different from those expressed or implied by such forward-looking statements. Vtion does not intend or assume any obligation to update these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made.

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