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Financial summary

2017 has been another good year for u‑blox, with strong revenue growth and increased profitability underpinned by exciting new product and service launches.

Financial highlights

(CHF in million)   2017 2016 2015
Revenue   403.7 360.2 338.3
Growth rate over previous year   12.1% 6.5% 25.3%
         
Gross Profit   184.0 167.1 155.0
Growth rate over previous year   10.1% 7.8% 26.3%
Gross Profit in % of revenue   45.6% 46.4% 45.8%
         
EBITDA1) adjusted2)   97.8 90.0 84.5
Growth rate over previous year   8.7% 6.5% 37.7%
EBITDA adjusted in % of revenue   24.2% 25.0% 25.0%
         
EBITDA1)   87.4 81.8 78.7
Growth rate over previous year   6.9% 3.9% 34.3%
EBITDA in % of revenue   21.6% 22.7% 23.3%
         
Operating profit (EBIT) adjusted2)   78.0 69.8 59.9
Growth rate over previous year   11.8% 16.5% 34.4%
Operating profit (EBIT) adjusted2) in % of revenue   19.3% 19.4% 17.7%
         
Operating profit (EBIT)   65.1 59.0 51.3
Growth rate over previous year   10.3% 15.0% 31.3%
Operating profit (EBIT) in % of revenue   16.1% 16.4% 15.2%
         
Net Profit adjusted2)   57.6 54.8 44.0
Growth rate over previous year   5.1% 24.6% 13.5%
Net Profit adjusted2) in % of revenue   14.3% 15.2% 13.0%
         
Net Profit   51.3 46.2 37.1
Growth rate over previous year   11.0% 24.5% 7.9%
Net Profit in % of revenue   12.7% 12.8% 11.0%
         
Cash generated from operating activities   60.5 93.6 74.7
Growth rate over previous year   -35.3% 25.3% 39.1%
in % of revenue   15.0% 26.0% 22.1%
         
Equity   318.5 284.7 248.3
in % of total assets   60.7% 67.0% 64.2%
Dividend per share in CHF3)   2.25 2.10 1.90
 
1) EBITDA (earnings before interest, taxes, depreciation and amortization) calculated by adding depreciation and amortization to profit from operations (EBIT), in each case determined in accordance with IFRS.
2)excl. share based payments, impacts based on IAS‑19, amortization of intangible assets acquired and non‑recurring expenses
3) proposal of the Board of Directors to the AGM        

 

Revenue breakdown

u‑blox operates in two segments:

  • Positioning and Wireless products
    u‑blox develops and sells chips and modules for positioning and wireless connectivity that are used in automotive, industrial and consumer applications. Revenue was CHF 403.5 million for 2017 as compared to CHF 360.1 million in 2016.
  • Wireless services
    u‑blox also offers Wireless communication technology services in terms of reference designs and software. In 2017, revenue for Wireless services was CHF 32.8 million compared to CHF 26.0 million in 2016 (including intra‑group revenue).

In 2017 based on reporting region, Asia‑Pacific generated 39.7%, EMEA 26.8% and Americas 33.5% of total revenue. u‑blox was able to grow revenues in Asia Pacific by 16.3% to CHF 160.3 million and EMEA by 16.3% to CHF 108.3 million. Also revenue in the Americas grew by 8.1% to CHF 135.1 million.

In 2017, the company made about 80% of its total revenue from 84 customers. u‑blox's largest customer accounted for less than 6% of revenue. u‑blox served over 6’100 customers and achieved global expansion into new regions and markets.

 

Consolidated income statement

(in CHF 000s)   2017 % revenue 2016 % revenue
           
Revenue   403'712 100.0% 360'230 100.0%
Cost of sales   -219'695 -54.4% -193'123 -53.6%
Gross profit   184'017 45.6% 167'107 46.4%
Distribution and marketing expenses   -36'173 -9.0% -32'032 -8.9%
Research and development expenses   -65'554 -16.2% -63'490 -17.6%
General and administrative expenses   -19'125 -4.7% -14'614 -4.1%
Other income   1'921 0.5% 2'033 0.6%
Operating profit (EBIT)   65'086 16.1% 59'004 16.4%
           
Finance income   5'668 1.4% 4'337 1.2%
Finance costs   -6'052 -1.5% -1'653 -0.5%
Profit before income tax (EBT)   64'702 16.0% 61'688 17.1%
           
Income tax expense   -13'442 -3.3% -15'488 -4.3%
           
Net profit, attributable to owners of the parent   51'260 12.7% 46'200 12.8%
           
Operating profit (EBIT)   65'086 16.1% 59'004 16.4%
Depreciation and amortization   22'290 5.5% 22'762 6.3%
EBITDA 1)   87'376 21.6% 81'766 22.7%
           
1) Management calculates EBITDA (earnings before interest, taxes, depreciation and amortization) by adding back depreciation and amortization to operating profit (EBIT), in each case determined in accordance with IFRS.

 

Increased gross profit

Gross profit increased by 10.1% to CHF 184.0 million in 2017 from CHF 167.1 million in 2016. Gross profit margin was 45.6% for 2017 compared to 46.4% in 2016 due to changes in product mix.

Distribution and marketing activities

Distribution and marketing expenses increased in 2017 due to the expansion of the business. In 2017, distribution and marketing activities were CHF 36.2 million as compared to CHF 32.0 million in the previous year. As a percentage of revenue, distribution and marketing expenses remained stable with 9.0% in 2017 compared to 8.9% in 2016.

Research and product development

R&D expenses in 2017 were CHF 65.6 million as compared to CHF 63.5 million in 2016. As a percentage of revenue, R&D expenses in 2017 were 16.2% as compared to 17.6% in 2016. The percentage of revenue decreased because of higher capitalized R&D expenses and lower amortization in 2017. Including capitalized efforts, we have again invested considerable amounts into R&D.

 

Share based payment

Share based payment expenses recognized in 2017 were CHF 8.1 million as compared to CHF 7.0 million in 2016.

 

Growth of operating profit (EBIT)

Operating profit (EBIT) was CHF 65.1 million in 2017 as compared to CHF 59.0 million in the previous year. The growth rate from 2016 to 2017 was 10.3%. Operating profit (EBIT) margin was 16.1% and EBITDA margin was 21.6% in 2017.

 

Finance income and costs

Finance income was CHF 5.7 million containing also income from establishing the joint venture Sapcorda GmbH. Finance costs were CHF 6.1 million, mainly due to foreign exchange effects and interest for the two bonds.

 

Net cash generated from operating activities

In 2017, u‑blox generated cash from operating activities in the amount of CHF 60.5 million as compared to CHF 93.6 million in 2016, a decline of 35.3% compared to previous year, due to supply constraints driven increase of inventory level, increased trade receivables related to the expansion of the business with higher revenues and high tax payments.

 

Main investing activities

Investments in property, plant and equipment and intangible assets increased to CHF 65.1 million in 2017 (2016: CHF 49.5 million). As a percentage of sales, the investment ratio increased slightly to 16.1% in 2017 (2016: 13.7%).

With the continued expansion of the R&D pipeline and the increased number of development projects for all product categories, the investments into capitalized development costs increased to CHF 53.8 million (2016: CHF 37.2 million). Additionally CHF 0.2 million (2016: CHF 1.2 million) was invested into intellectual property rights and CHF 0.5 million (2016: CHF 1.4 million) into software. In 2017, CHF 10.6 million of investments were used for property, plant and equipment (2016: CHF 9.7 million).

In the context of the employee share option program we invested CHF 24.4 million for the purchase of 125‘000 treasury shares.
u‑blox invested 82.9% of total investments (2016: 77.5%) into the development of new products and 2.0% of total investments were invested into capacity expansion (2016: 2.9%).

 

Financing activities

In 2017 u‑blox paid dividends of CHF 14.5 million and received proceeds from the issuance of ordinary shares connected with the employee share option plan of CHF 6.8 million. To further profit from the good market conditions and to secure future operating flexibility u‑blox issued on April 18 2017 a CHF 60.0 million bond with duration of 6 years at an interest rate of 1.375% p.a.

 

Solid financial position

u‑blox has a very strong balance sheet with an equity ratio of 60.7%. Cash and cash equivalents and marketable securities amounted to CHF 172.4 million on December 31, 2017, compared to CHF 157.1 million on December 31, 2016.

Goodwill increased due to changes in EUR/CHF exchange rate from CHF 54.1 million in 2016 to CHF 57.6 million or 11.0% of total assets in 2017.

On the basis of this strong financial position and the positive outlook, the Board of Directors is proposing at the Annual General Meeting to pay out dividends. For this year an increased dividend of CHF 2.25 per share is proposed, which represents a payout ratio of 30.5% of consolidated net profit, attributable to owners of the parent.

 

Condensed consolidated statement of financial position

(in CHF 000s)       At December 31, 2017   At December 31, 2016
ASSETS            
Current assets            
Cash and cash equivalents       169'624   149'545
Marketable securities       2'813   7'573
Trade accounts receivables       50'401   39'792
Other assets       60'476   42'670
             
Total current assets       283'314   239'580
             
Non‑current assets            
Property, plant and equipment       17'494   15'774
Goodwill       57'628   54'104
Intangible assets       153'986   111'905
Financial assets (incl. equity accounted investees)       8'351   1'074
Deferred tax assets       3'739   2'435
             
Total non‑current assets       241'198   185'292
             
Total assets       524'512   424'872
             
LIABILITIES AND EQUITY            
             
Current liabilities       58'946   59'098
Non‑current liabilities       147'054   81'047
             
Total liabilities       206'000   140'145
             
Shareholders' equity            
Share capital       6'261   6'152
Share premium       66'579   74'387
Retained earnings       245'672   204'188
             
Total equity, attributable to owners of the parent       318'512   284'727
             
Total liabilities and equity       524'512   424'872