FOURTH QUARTER 2010
SUMMARY COMROD COMMUNICATION GROUP 4 TH QUARTER 2010 The following are the main highlights for Comrod Group since the previous 3rd quarter report: High activity levels in all business units resulting in revenue above plan. The 4th quarter EBITDA margin of 23.33 % is the highest quarterly EBITDA margin ever for the Comrod Group. Business unit France has recovered substantially from the 3rd quarter results. This is in line with plan. Business unit Norway continued to show strong performance above plan. Fig 1 below illustrates the 2010 operating Group as compared to 2009. revenue (MNOK) for Comrod Fig 1 Operating revenues Group (MNOK) 100,0 80,0 98.8 69.7 87.0 89. 2 79..1 74.3 79.3 98.5 60,0 40,0 2009 2010 20,0 Q1 Q2 Q3 Q4 As can be seen from Fig 1 above, the 4th quarter 2010 revenue is better than all previous quarters in 2010. This has generated a best ever 2010 profit margin. The underlying reasons for the improved financial performance reflect the impact of the Group s strong ongoing focus on automated production processes to maintain high and consistentt product quality while
minimizing production costs. This has enabled the Group to increasingly demonstrate efficiency and flexibility to respond to new market demands for reduced lead times and customers constantly amending delivery schedules. The fourth quarter financial contributionn is also starting to reflect the impact of new product lines gradually converting from test production phase to full commercialization. The time to market is often difficult to predict for R& &D intensive products and systems and hencee it is rewarding for the Group to observe new product generations moving from testing to a commercial phase. The Group Board has expressed the opinion that renewed growth for Comrod is essential in order to achieve further value creation. Hencee both organic growth as well as growth through mergers and acquisitions will now be explored more vigorously. Revenues for Q4 of 20100 were MNOK 98.5 compared with MNOK 79..3 in 2009. (Figures for corresponding period of 2009 will hereafter be shown in parentheses). Revenues for full year 2010 totalled MNOK 331.7 (MNOK 344.2). Operating profit before depreciation (EBITDA) for Q4 was MNOK 23.0 (MNOK 15.9). EBITDA for full year amounted to MNOK 58.1 (MNOK 56.0). Fig 2 below illustrates the 2010 operating profit before depreciation (MNOK) for Comrod Group as compared to 2009. Fig 2 Operating profit before depreciation (EBITDA) Group (MNOK) 25 20 15 10 15.7 5.5 9.3 18.5 15.2 11.1 15.9 23.0 2009 2010 5 0 Q1 Q2 Q3 Q4
OPERATING BUSINESS UNITS BUSINESS UNIT NORWAY Fig 3 below illustrates the 2010 operating Unit Norway compared to 2009. revenues (MNOK) for Business Fig 3 Operating revenues BU Norway (MNOK) 70,,0 60,,0 50,,0 40,,0 30,,0 20,,0 69. 3 42.8 50.1 58.9 47.77 56.3 39.2 60.7 2009 2010 10,,0 0,,0 Q1 Q2 Q3 Q4 Sales and Market Revenues for Q4 2010 were MNOK 60.7 ( MNOK 39.2). Revenues for full year of 2010 came in at MNOK 218.6 (MNOK 206.3). the The Norwegian businesss unit continues its solid financial performance. Production and Results Operating profit before depreciation (EBITDA) for Q4 2010 was MNOK 13.4 ( MNOK 7. 3), while EBITDA margin was 22.1% (18.7%). EBITDA for the full year amounted to MNOK 43.2 (MNOK 41.2) ). The business unit continues to experiencee a challenging situation with the increasing global shortage of electronic components. Comrod Hungary has contributed positively to further improved margins for labour-intensive products.
BUSINESS UNIT FRANCE Fig 4 below illustrates the 2010 operating unit France as compared to 2009. revenue (MNOK) for business Fig 4 Operating revenues BU France (MNOK) 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 29.5 26.9 Q1 36.9 30.5 Q2 31.5 18.2 Q3 40.4 38.1 Q4 2009 2010 Sales and Market Revenues for Q4 2010 were MNOK 38.1 ( MNOK 40.4). For the full year of 2010 revenues were MNOK 113.7 (MNOK 138.3). Production and Results Operating profit before depreciation (EBITDA) for Q4 2010 was MNOK 11.0 ( MNOK 10.5), while EBITDA margin was 29.0% (26.1%). EBITDA for the full year of 2010 was MNOK 19.5 (MNOK 22.3) ). The business unit had a strong financial recovery from Q3. product mix contributes positively in this quarter. A favourable OTHER UNITS AND ELIMINATIONS This includes the cost of the parent company Comrod Communication ASA, Comrod UK, Comrod Hungary and Group eliminations. Operating profit before depreciation (EBITDA) for the full year of 2010 was MNOK - 4.6 (MNOK - 7.4).
PARENT COMPANY The operating costs for of the parent company amounted to MNOK 7.5 (MNOK 8.8) for the full year of 2010 and MNOK 2.22 (MNOK 2.5) for Q4. GROUP Net financial items was for the quarter MNOK +0.8 (MNOK the full year MNOK -5.5 (MNOK +3.5). -1.1), and for Tax costs for the year was MNOK 7.9 (MNOK 10.7) ). Inventories are increased by MNOK 4.3 during the quarter and MNOK 10.3 during the year due to higher order backlog at year end compared with 2009 year end. Current receivables are increased by MNOK 3.2 in the quarter and decreased by MNOK 1.9 during the year. Current liabilities are increased by MNOK 11.4 in Q4 and decreased by MNOK 5.6 during the year. Total working capital is thus decreased by MNOK 3.9 in the quarter and increased by MNOK 14.0 during the year. Net interest bearing debt is decreased by MNOK 7..3 to MNOK 53.3 during the quarter and MNOK 19.9 during the year. Total balance sheet at end of December was MNOK 342.8 ( MNOK 323.9), and the equity ratio was 49.9% (45.2%). Group liquidity remains strong. The Group fulfils all financial covenants related to external funding. Research & Development Comrod Communicationn Group has a long track record of developing new, leading edge technology products in cooperation with demanding international customers. As part of the strategy for future growth, several products are in the phase of being tested and/or launched. Among these are; Jamming antennas New telescopic mast range HF antenna for navy applications Various antenna control systems (ACS) OUTLOOK The Board is satisfied with the Q4 financial results. Following a strategic review the Board is now committed to take steps to enablee the Group to further expand its business within the global niche defense communication market and other selected civil markets. However,
continued volatility in the Group s current key markets are likely to continue also in 2011 and increased shortage of electronic components might be a challenge. The current level of activity is expected to continue into the first quarter of 2011. Approved by the Board of Directors 14 February 2011.
Comrod Communication Group - Condensed interim financial information 4th quarter (All figures in NOK 1.000) Year 2010 2009 CONSOLIDATED INCOME STATEMENT 2010 2009 Unaudited Unaudited Unaudited Audited 98 535 79 319 Operating revenues 331 742 344 183 33 208 27 250 Cost of materials 115 146 127 330 25 803 28 891 Payroll expenses 107 963 115 221 16 556 7 317 Other operating expenses 50 540 45 589 22 968 15 861 Operating profit before depreciation (EBITDA) 58 093 56 044 23,3 % 20,0 % EBITDA-margin 17,5 % 16,3 % 4 373 3 985 Depreciation 16 484 28 088 18 595 11 876 Operating profit (EBIT) 41 609 27 956 18,9 % 15,0 % EBIT-margin 12,5 % 8,1 % 763-1 062 Net financial items -5 511 3 500 19 358 10 814 Profit/loss before tax 36 098 31 456-2 828-4 114 Tax -7 898-10 645 16 530 6 700 Profit/(loss) 28 200 20 812 Attributable to: 16 530 6 700 Equity holders of the parent 28 200 20 812 0 0 Non-controlling interests 0 0 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 16 530 6 700 Profit/(loss) 28 200 20 812 878-3 170 Change in actuarial gain/(loss) (Net of tax) 878-3 170 670 1 673 Change in gain/(loss) on hedge of net investment (Net of tax) 2 578 9 879 0 0 Change in gain/(loss) on cash flow hedges (Net of tax) 0 0-2 147-1 828 Exchange differences on translation of foreign operations -6 266-19 851-599 -3 325 Other comprehensive income/(loss) for the period (Net of tax) -2 810-13 142 15 930 3 375 Total comprehensive income/(loss) for the period (Net of tax) 25 390 7 670 Attributable to: 15 930 3 375 Equity holders of the parent 25 390 7 670 0 0 Non-controlling interests 0 0 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Intangible assets 75 070 75 392 Tangible fixed assets 80 646 82 101 Financial fixed assets 0 0 Inventories 63 804 53 522 Receivables 91 056 92 998 Bank deposits and cash 32 271 19 874 Total assets 342 846 323 887 Paid-in capital 99 188 99 228 Other equity 71 825 47 179 Non-controlling interests 0 0 Provisions 16 998 20 845 Interest-bearing long-term liabilities 65 071 72 336 Interest-bearing current liabilities 20 491 20 682 Other current liabilities 69 272 63 616 Total liabilities and equity 342 846 323 887 CONSOLIDATED STATEMENT OF CASH FLOW Profit before tax 36 098 31 456 Depreciation and write-downs 16 484 28 088 Other Non cash elements -306 4 106 Change in net working capital -14 023-9 954 Net cash flow from operating activities 38 253 53 696 Net cash flow from investment activities -18 686-23 624 Net cash flow from financing activities -7 170-19 179 Net change in cash and cash equivalents 12 397 10 893 Cash and cash equivalents at start of period 19 874 8 981 Cash and cash equivalents at end of period 32 271 19 874 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Equity at start of period 146 407 109 725 Profit/loss in period 28 200 20 812 Other comprehensive income/(loss) -2 810-13 142 Share based payment 23 96 Capital increase (Net of tax) 0 28 916 Purchase of own shares -807 0 Equity at end of period 171 013 146 407 KEY FIGURES Equity ratio 49,9 % 45,2 % Liquidity ratio I 2,1 2,0 Return on equity (annualised) 17,8 % 16,3 % Total return (annualised) 9,4 % 7,5 % Earnings per share 1,44 1,21 Diluted earnings per share 1,44 1,21 Cash flow from operations per share 1,96 3,13 Equity per share 8,76 8,53 Net interest-bearing liabilities 53 291 73 144
Comrod Communication Group - Condensed interim financial information 4th quarter (All figures in NOK 1.000) Year 2010 2009 INFORMATION ON BUSINESS OPERATING UNITS 2010 2009 Unaudited Unaudited Unaudited Audited France: 38 108 40 357 Operating revenues 113 738 138 262 11 044 10 524 Operating profit before depreciation (EBITDA) 19 492 22 323 29,0 % 26,1 % EBITDA-margin 17,1 % 16,1 % 9 942 9 369 Operating profit (EBIT) 15 470 17 659 26,1 % 23,2 % EBIT-margin 13,6 % 12,8 % 9 940 9 233 Pretax income 15 173 17 058 Norway: 60 654 39 222 Operating revenues 218 640 206 348 13 409 7 319 Operating profit before depreciation (EBITDA) 43 162 41 165 22,1 % 18,7 % EBITDA-margin 19,7 % 19,9 % 11 056 5 448 Operating profit (EBIT) 34 346 33 675 18,2 % 13,9 % EBIT-margin 15,7 % 16,3 % 12 254 5 172 Pretax income 31 452 42 414 Other, adjustments and eliminations: -227-260 Operating revenues -637-427 -1 485-1 982 Operating profit before depreciation (EBITDA) -4 561-7 444-2 403-2 941 Operating profit (EBIT) -8 207-23 379-2 836-3 591 Pretax income -10 527-28 016 Group: 98 535 79 319 Operating revenues 331 742 344 183 22 968 15 861 Operating profit before depreciation (EBITDA) 58 093 56 044 23,3 % 20,0 % EBITDA-margin 17,5 % 16,3 % 18 595 11 876 Operating profit (EBIT) 41 609 27 956 18,9 % 15,0 % EBIT-margin 12,5 % 8,1 % 19 358 10 814 Pretax income 36 098 31 456 1) Figures for the operating business units do not include elimination of internal sales.
NOTE 1: REPORTING ENTITY Comrod Communication ASA is a company domiciled in Norway. The interim financial statements ending on 31 December 2010 comprise Comrod Communication ASA and its subsidiaries (collectively referred to as the Group). NOTE 2: SIGNIFICANT ACCOUNTING PRINCIPLES AND STATEMENT OF COMPLIANCE The accounting policies applied by the Group in these financial statements are the same as those applied by the Group for the year ended 31 December 2009. As per Q2 2010 the newly elected Board of Directors decided to amend the composition of the Groups segments with the objective to obtain full focus on the Groups operational units. From Q2 2010, the reported segment information will consist of the operating units in Norway and France. The segment category Other, adjustments and eliminations includes the parent company Comrod Communication ASA, Comrod UK, Comrod Hungary and group eliminations. Figures for corresponding periods have been restated accordingly. These interim financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), IAS 34 Interim Financial Reporting. These statements do not include all the information required for full annual financial statements, and should be read in conjunction with the financial statements of the Comrod Communication Group for the year ended 31 December 2009 and the above mentioned accounting principles. NOTE 3: ESTIMATES The preparation of interim financial statements requires management to make judgments, estimates and assumptions which affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgments made by management in preparing these interim financial statements when applying the Group's accounting policies and the key sources of estimate uncertainty are the same as those applied to the consolidated financial statements of the Group for the year ended 31 December 2009.