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Share Name Share Symbol Market Type Share ISIN Share Description
Kudelski Sa LSE:0QNQ London Ordinary Share CH0012268360 KUDELSKI ORD SHS
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  0.00 0.0% 5.915 5.77 6.06 67 01:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
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Kudelski Group 2020 HALF YEAR RESULTS

20/08/2020 6:00am

UK Regulatory (RNS & others)


Dow Jones received a payment from Newsbox to publish this press release.

 
 
2020 HALF YEAR RESULTS 
 
PRESS RELEASE 
 
                             2020 HALF YEAR RESULTS 
 
Highlights: 
 
 · Total revenues and other operating income at USD 320.1 million 
 · Operating free cash flow at USD 37.7 million 
 · The COVID-19 global pandemic affected the Group's first half results mainly 
    due to project delays and cancellations 
 · Measures taken to mitigate COVID-19 impacts and short-term Group's cost base 
    reduction 
 · Resilience of DTV recurring revenues 
 · Kudelski Security delivered strong performance in EMEA 
 · Innovation to address specific COVID-19 needs in Public Access 
 · Full-year 2020 outlook with an expected EBITDA between USD 45 and 55 million 
 
KEY FIGURES HALF YEAR 2020 
 
+--------------------------------+-----------------+-----------------+ 
|(in million USD)                |     1H2020      |     1H2019      | 
+--------------------------------+-----------------+-----------------+ 
|Revenues & Other Operating      |      320.1      |      400.6      | 
|Income                          |                 |                 | 
+--------------------------------+-----------------+-----------------+ 
|OIBDA*                          |       4.9       |      15.5       | 
+--------------------------------+-----------------+-----------------+ 
|Operating Free Cash Flow        |      37.7       |      -11.0      | 
+--------------------------------+-----------------+-----------------+ 
*As used herein, OIBDA refers to operating income before depreciation and 
amortization 
 
Cheseaux-sur-Lausanne, Switzerland and Phoenix (AZ), USA ??" August 20th, 2020 ??" 
The Kudelski Group (SIX: KUD.S), a leading provider of media content protection 
and value-added service technology, announced today its 2020 half year results. 
 
In the first half 2020, total revenues and other operating income decreased from 
USD 400.6 million to USD 320.1 million. Net revenues for the Group decreased by 
19.9% to USD 316.0 million, a 18.6% evolution in constant currency, reflecting a 
decline across segments. 
 
The Group generated USD 4.9 million of operating income before depreciation and 
amortization, a USD 10.6 million decrease over the previous first half. 
 
Operating free cash flow, representing cash flow from operating activities net 
of investments in tangible and intangible assets, improved by USD 48.8 million 
from the first half 2019 to reach USD 37.7 million in the first half 2020. 
 
Digital TV revenues decreased by 18.8% to USD 154.7 million, representing a 
constant currency decline of 17.5%. This was driven by a strong reduction of 
discretionary short-term spending by operators. Recurring revenues, particularly 
in advanced pay-TV markets, were resilient. The Digital TV segment generated USD 
36.9 million of operating income before depreciation and amortization, 
representing a USD 3.0 million reduction from the previous first half. 
 
The Group's Cybersecurity business generated USD 63.2 million of gross revenues 
in the first half 2020, a 13.3% decrease from the first half 2019. Net revenues 
were at USD 38.7 million. The Cybersecurity segment posted a USD 11.5 million 
operating loss before depreciation and amortization, an increase of USD 0.8 
million from the previous year. 
 
In this first half, IoT generated revenues of USD 1.0 million, mainly from the 
IoT Center of Excellence, and reduced operating loss before depreciation and 
amortization by USD 2.6 million to USD 8.9 million, reflecting a more selective 
development approach and a shift of focus to the commercialization of the 
available portfolio. 
 
Public Access was significantly affected by COVID-19, with revenues decreasing 
by 23.6% in the first half 2020 to USD 121.6 million compared to the prior year 
period. Overall, Public Access generated an operating loss before depreciation 
and amortization of USD 4.5 million, compared to positive USD 4.7 million in 
last year's period. 
 
COVID-19 IMPACTS ON THE GROUP'S FIRST HALF RESULTS 
 
The COVID-19 global pandemic affected the Group's first half results. 
 
In Digital TV, most of the Group's large customers have shown resilient total 
subscriber numbers. However, several operators lowered paywalls for several 
months to compete with an increase in streaming activities. In addition, many 
projects scheduled for this year have been either delayed or cancelled, and a 
number of customers have sought reprieve from monthly support and maintenance 
payment obligations in order to reduce their operating expenses. The Digital TV 
business was also negatively impacted by the closure of retail markets, 
particularly in Italy. Key markets in Asia-Pacific and the Americas continue to 
remain closed and under lockdown restrictions, resulting in continued pressure 
on Digital TV revenues in these regions. 
 
The onset of COVID-19 also brought disruption to the Group's Cybersecurity 
business, affecting the Group's ability to engage with clients, slowing sales 
activities and delaying delivery of services traditionally delivered in person. 
This had a greater impact on US revenues, where a large number of clients are in 
verticals impacted by the pandemic and a higher proportion of services are 
delivered in person at client locations. The pace of growth and expansion of the 
Cybersecurity business in Europe was less impacted and has even continued to 
grow by 46% compared to first half 2019. 
 
Of the Group's business units, Public Access was the most significantly affected 
by COVID-19, as large customers, including in particular airports, shopping 
centers and stadiums, postponed new deployments and asset refreshment projects. 
Service volume dropped to nearly 25% of normal volume in April and May due to 
shutdowns, reflecting reduced usage of the parking infrastructure. By the end of 
June, service volumes within Europe were recovering to approximately 90% of the 
prior year volumes with other regions averaging about 75%. 
 
MEASURES TO MITIGATE COVID-19 IMPACTS AND REDUCE THE GROUP'S COST BASE 
 
With the onset of the pandemic, the Group implemented a set of measures aimed at 
temporarily reducing its cost base in order to align with the reduced levels of 
demand in the Public Access and Digital TV segments. Partial unemployment 
measures in several countries enabled the Group to reduce personnel costs. At 
the end of June 2020, the Group's headcount was lower by 489 FTEs (Full Time 
Equivalents) than at the end of December 2019, representing a 14% reduction. 
 
The Group is taking a very selective approach to capital expenditures, resulting 
in a USD 7.2 million reduction of cash flows used in investing activities to USD 
2.9 million. As a further lever of cash generation, the Group managed to 
materially reduce working capital in this first half. Overall, working capital 
improvements allowed the Group to release USD 36.5 million of cash. In this 
first half, the Group obtained COVID-related loans at favorable terms for a 
total amount of USD 22.2 million. Further additional loans for smaller amounts 
were secured in the initial weeks of the second half. 
 
Despite COVID-19, the Group was able to ensure the continuity of its operations, 
in particular by transitioning employees to work from home arrangements, and to 
deliver its solutions and services without any disruption. 
 
DIGITAL TV: A WELL-DIVERSIFIED CLIENT PORTFOLIO AND STRENGTHENED RELATIONS WITH 
OPERATORS 
 
Despite the macro-economic conditions created by the pandemic, the Group's 
partnerships with the largest pay-TV operators worldwide continue to expand; the 
Group's solutions and capabilities integrated within the fabric of their 
operations are essential for securely delivering content to their subscriber 
base. Highlights of activities for the first half of 2020 demonstrate that 
NAGRA's has a well-diversified client portfolio, with fit-for-purpose products 
and solutions. Highlights include: 
 
 · NAGRA and Vodafone Group have agreed on terms of reference for a long-term 
    deal to further deploy Vodafone TV. As part of this deal, the first 
    countries in Central and Eastern Europe have started the rollout with 
    Vodafone TV. 
 · Altice USA and NAGRA have extended their partnership on antipiracy, 
    leveraging NAGRA's antipiracy expertise in Open Source Intelligence (OSINT), 
    field investigation and IoT forensic analysis. NAGRA's innovative approach 
    has already demonstrated positive results. Altice USA has also extended the 
    reach of NAGRA Insight, the advanced analytics platform that leverages 
    artificial intelligence not only to address the business challenges 
    associated with subscriber churn and business growth but also to help 
    monitor and address customer quality of service and experience with the aim 
    to continue increasing customer satisfaction. 
 · Claro Colombia, the largest cable operator in Colombia, has successfully 
    deployed NAGRA Insight to define strategies based on clear and trustable 
    data. 
 · In Singapore, StarHub selected and launched NAGRA's OpenTV Video Platform, 
    OpenTV Player, and SSP for its StarHub TV+ service and to converge its IPTV 
    and OTT platforms, replacing their legacy system. 
 
KUDELSKI SECURITY DELIVERED STRONG PERFORMANCE IN EMEA 
 
Kudelski Security's EMEA business continued to deliver a strong performance in 
the first half of the year, driven by sales of managed security services and 
associated third party technology bundling. The EMEA region added 37 new clients 
while growing revenue and gross profit year over year. This includes four new 
clients in Germany, three in France ??" including the largest MSS contract to date 
??" and one new client in the UK. 
 
In the US, Kudelski Security is accelerating its sales transformation effort, 
transitioning its business to solution-oriented, higher margin contracts. 
Kudelski Security's US business gained 27 new clients during the first half. 
With the growth of the clients' pipeline during the first half, Kudelski 
Security has increased its visibility for the second half. 
 
Kudelski Security continued to expand its cloud-first cybersecurity portfolio, 
supporting digital transformation initiatives of global enterprises using 
private and public cloud services. In June 2020, it launched its dedicated 
Microsoft Security services, enabling clients to effectively consume and 
configure Microsoft security capabilities and add additional monitoring to their 
Microsoft 365 and Azure environments. 
 
INTERNET OF THINGS (IoT): EVOLVING STRATEGY TOWARDS END-TO-END SOLUTIONS 
 
After delivering Kudelski IoT keySTREAM (the Group's IoT solution) to its first 
customers in 2019, the Group has evolved its strategy with new leadership and an 
upgrade of its solution portfolio, while continuing to enhance keySTREAM. 
 
Hardy Schmidbauer joined the Kudelski Group to lead the IoT business in June 
this year, bringing with him significant knowledge and a deep network in IoT. 
 
Kudelski IoT continued its shift from a pure IoT security approach to offering 
end-to-end solutions that solve specific industry challenges and expanding its 
design capabilities to include designing entire devices and ecosystems for 
customers. 
 
The Group launched a standalone IoT secure element, the Pico SE 800, allowing 
IoT device manufacturers to easily embed keySTREAM into their devices. 
 
INNOVATION TO ADDRESS SPECIFIC COVID-19 NEEDS IN PUBLIC ACCESS 
 
SKIDATA launched several product innovations to address specific 
COVID-19-related needs. In the events segment, in anticipation of the re-opening 
of stadiums around the world, SKIDATA launched the Safe Guest Solution, which 
helps enable a safer re-opening of events by combining full electronic ticketing 
with integrated automated coronavirus screening upon entry and subsequent 
tracking of participants to identify potential infection clusters. The solution 
was first deployed in Berlin at the ABB FIA Formula E races held in early 
August. 
 
In the mountain segment, SKIDATA premiered the first installation of a complete 
electronic ski ticket on mobile phones at the Snow Space resort in Salzburg. 
Based on Bluetooth technology, this solution enables a complete contactless 
customer journey and multiple upselling options for ski operators. 
 
In the parking business, as an upgrade to existing installations, SKIDATA 
launched touch-free buttons and mobile payments to enable completely touch-free 
parking transactions. 
 
FULL YEAR 2020 OUTLOOK WITH AN EXPECTED EBITDA BETWEEN USD 45 AND 55 MILLION 
 
In the second half 2020, the Group expects revenues in the Digital TV segment to 
be higher compared to the first half, as customers pushed projects originally 
scheduled for the first half into the second half. As operating expenses are not 
expected to significantly increase, the Digital TV segment should generate a 
higher second half profit, compared to the first half. 
 
In the Cybersecurity segment, the Group expects to generate higher revenues in 
the second half compared to the first half. As the Cybersecurity business 
continues to drive the development of higher margin product lines, margin after 
cost of material should continue to grow. The Group is targeting a material 
improvement of segment operating income before depreciation and amortization 
compared to the first half. 
 
The improved IoT opportunity funnel is expected to translate into additional 
second half revenues. As investment levels in the IoT domain have stabilized, 
the Group expects to continue reducing its segment operating loss. 
 
In the Public Access segment, SKIDATA is expected to deliver higher revenues in 
the second half, in line with the seasonality patterns of the past years. In 
addition, SKIDATA is starting to recover from the negative effects of the 
pandemic. While full year operating income is expected to improve compared to 
the previous year, Public Access profitability will remain short of its 
structural profitability target in 2020. 
 
For the full year 2020, the Group expects EBITDA to be between USD 45 and 55 
million. 
 
Note to the editors: 
 
The 2020 first half Financial Statements and MD&A are available in PDF format 
under: www.nagra.com>> Investors >> Publications. 
 
About the Kudelski Group 
 
The Kudelski Group (SIX: KUD.S) is a world leader in digital security and a 
provider of end-to-end convergent media solutions to the digital entertainment 
industry, including services and applications requiring access control and 
rights management to secure the revenue in digital television, internet, mobile 
and interactive applications. The Group also offers cybersecurity solutions and 
services focused on helping companies assess risks and vulnerabilities and 
protect their data and systems. It also supplies integrated solutions to manage 
access control of people and vehicles to sites and events. The Kudelski Group is 
headquartered in Cheseaux-sur-Lausanne, Switzerland and Phoenix (AZ), USA. For 
more information, please visit www.nagra.com. 
 
Contacts 
 
Cédric Alber 
 
Kudelski Group 
Director Media Relations 
+41 21 732 01 81 
 
+1 (415) 962 5005 
 
cedric.alber@nagra.com 
 
Santino Rumasuglia 
Kudelski Group 
Vice President ??" Head of Investor Relations 
+1 (623) 235-2510 
 
santino.rumasuglia@nagra.com 
 
Press Release English (PDF) 
Press Release French (PDF) 
Interim financial report 
 
### END ### 
 
+---------------------------++--------------++---------------------------------+ 
|Provider                   ||Channel       ||Contact                          | 
+---------------------------++--------------++---------------------------------+ 
|Tensid EQS Ltd.,           ||newsbox.ch    ||Provider/Channel related         | 
|Switzerland                ||www.newsbox.ch||enquiries                        | 
|www.tensid.ch              ||              ||marco@tensid.ch                  | 
|                           ||              ||+41 41 763 00 50                 | 
+---------------------------++--------------++---------------------------------+ 
 
 

(END) Dow Jones Newswires

August 20, 2020 01:00 ET (05:00 GMT)

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