Ascom Investor Presentation November 2016

Ascom Investor Presentation

November 2016

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This document contains specific forward-looking statements, e.g. statements including terms like

“believe”, “expect” or similar expressions. Such forward-looking statements are subject to known and

unknown risks, uncertainties and other factors which may result in a substantial divergence between

the actual results, financial situation, development or performance of Ascom and those explicitly

presumed in these statements.

Against the background of these uncertainties readers should not rely on forward-looking

statements. Ascom assumes no responsibility to update forward-looking statements or adapt them to

future events or developments.

Ascom Investor Presentation, November 2016 © Ascom Group 2

Workflow Intelligence in several sectors

Business-to-business

B2B

Software & integration solutionsNurse callWireless on-site communication

Global workflow solution

provider for:

• Ad-hoc

• Mobile

• Mission-critical

communication

• Decision making

Dedicated solutions for

the healthcare sector

Leveraging these solutions

in other segments:

• Secure establishments

• Industry

• Retail

• Hospitality

• Headquartered in Baar,

CH

• CHF 300m+ annual

turnover

• 60% in healthcare,

• 1,300 employees in 15

countries

Ascom today



By customer segment By region

(CHFm, % based on FY 2015 figures at actual currencies)

9%

6%

5%

59%

9%

12%

2014

318.9

10%

12%

60%

5%

3%

10%

2015

304.24%

21%

20%

15%20%

20%

2014

318.9

19%

21%

19%

5%

17%

19%

2015

304.2

Net revenue development

Ascom Investor Presentation, November 2016 © Ascom Group

Cost reducers

Information management

Avoid adverse events

Decision support

Cost drivers

Aging populations

Scientific progress

Analogue workflows

Digitalization of clinical

and care workflow

REMEDY

But: Healthcare did not embrace the full potential of digitalization.

Today’s challenges of healthcare

Healthcare is at a pivotal moment!

5

Clinical environments are highly mobile, largely ad-hoc and always mission-critical


Source: Institute for Healthcare Optimization, Newton, MA (E.L.); and the Institute of Medicine of the National Academies, Washington, DC (H.V.F.).

Ad hoc:

Why is healthcare not digital?

6




7

Mobile:



No true digitalization without support of ad-

hoc, mission-critical and mobile workflows!


8

Vision of Ascom

Ascom strives to close the digital information gap allowing for the best possible

decisions - anytime and anywhere.



Clinical

(Nurse)

Bed/

Patients The paper chasm (and telephone

chasm) on the «last mile to the patient»

ER System

OR System

Rad System

Lab, Onc,

Meds, Pharm

etc. System

Patient

Record

(desktop)

PAS,

Billing

(desktop)

That is the very reason for the paper chasm in healthcare

Medical

Device(Monitor, Pump,…)

10


ER System

OR System

Rad System

Lab, Onc,

Meds, Pharm

etc. System

Patient

Record

(desktop)

PAS,

Billing

(desktop)

Ascom USP: The ”power of one” to bridge the chasm

Purpose built devices

Workflow supporting middleware

Device connectivity

Data interoperability

Nurse Call and Alarm-

Management

Ascom’s

Power of One

Workflow

Engine

Clinical

(Nurse)

Bed/

Patients

Medical

Device(Monitor, Pump,…)

11

Mission of Ascom

Ascom will bridge the information gap on the last mile of mobile workflows

by providing mission-critical, real time solutions

for the highly mobile, ad hoc and time sensitive environments.


A worthwhile mission indeed…

• Making clinical providers more effective and efficient, improving healthcare

• More patient safety and better outcome quality

• Connecting the analogue and the digital world, …

• …bringing the lever of healthcare digitalization to bear at all

• Help keeping healthcare affordable


=> Ascom will be mission-critical to healthcare!

13

…in a promising addressable healthcare market!

• USD 3.3 billion* current size of addressable healthcare market for Ascom

• Expected to grow at 9% p.a. to USD 4.7 billion* in 2020

• Representing only 2.3% of overall HICT market size

• Hence, a highly attractive market for meaningful and sustainable growth


* Source: McKinsey & Company

=> Ascom will gain market share in this highly fragmented market,

leveraging growing innocation capacities to enhance solution portfolio

14

How do we do it? – By integrating communication into

workflow intelligence solutions…

From patients… …via Unite middleware & SW applications… …to care staff

General

Operations software

Specialized

operations software

IT & comms. software

& infrastructure

Clinical

Alarms

Clinical

Information

Workforce

Management

Unite Today Current Roadmap Mid-term Plan Long-term Plan


Other

information

Click to edit Master text styles


…with a clear USP: End to end integrated solution provider

Patient Systems Middleware Services

System integrators

Reseller

C U S T O M E R

Patient Systems Unite Middleware Mobility

Services

Mobility

Where do we stand?

• Strong global market presence

• Highly visible reference customers

• A loyal installed base

• Great team of unique industry and technology experts

• History as a product company migrating towards a solution business

• A historically divisional company transforming into a OneCompany


From

Telecom to

Healthcare ICT

From product

to consultative

selling

From handset

to mindset


Aspect From products… … to Solutions

Sales approach Responsive: RFP Proactive: During strategy

Typical customer IT, Facilities CEO, CIO, CMO, IT

Ascom sales team Sales, technical pre-sales + solution team & industry experts

Sales channel Direct/indirect More direct/consortia/indirect

Offering One to few products Several products, SW and services

Deal size 10k-500k 500k-2000k

Decision based on Price, functionality Functionality, strategic relationship /

vision, price

Timeline 1-3 months 6-18 months

Ascom as healthcare ICT provider

18



Provider

of medical device

integrations and digital

medical records

software solutions for

life-critical patient

care

UMS

(United Medical

Software) in Italy -

2015 revenues:

EUR 3-4m,

27 employees

> 200 medical

device integrations

and 1,000 different

EMR forms and

integrations

Well-established

customer installed

base in Italy and

products ready for

international

deployment

Access to new

software and

competence including

device connectivity

Improves

Ascom’s market

position in Italy and

Southern Europe

Perfect

strategic fit

19

UMS acquisition

Nurse Call

and Workflow

Solution for

major hospital

in South East

Asia


Key project wins

Mobile Workflow

Solution for

Sunshine Coast

University Hospital

Australia

2,000 Ascom

Myco delivered

to major Northern

European

state-of-the-art

hospital1,000 Ascom

Myco for one

of the largest US

hospital systems,

covering

17 states

Nurse Call and

Workflow Solution

for University

Hospital in

Germany

20


Frost & Sullivan Best Practices Award

for Nurse Workflow Solutions

• Award highlights technology leadership and workflow management

• Based on its recent analysis of the North American healthcare market and

the migration to electronic medical records and digital information that

utilizes advanced IT capabilities, global consulting and research firm Frost

& Sullivan recognizes the North American division of Ascom, the leading

global healthcare information and communication technology provider,

with the 2016 Best Practices Award for Nurse Workflow Solutions.


6 September, 2016

Sales, Sales, Sales!

Solution, not product selling

Focus

Alliances

Delivery

Solution delivery,

transformation and thought

leadership!

Innovation

Increased and focused

SW investment!

OneCompany

Operational excellence,

customer orientation

and scale

Ascom’s four main strategy areas

Drive

Growth

and

Cash Flow


OneCompany

Operational excellence,

customer orientation

and scale

•OneCompany with one mission and one culture

•Streamlined corporate organization to allow

economies of scale and market proximity

•Efficiency through corporate standardization

and global teams

•Operational excellence

Strategic Area: OneCompany


Ascom OneCompany - on target with savings, restructuring

costs and timeline

On track to achieve:

• 10 mCHF in run rate EBITDA savings

• 10 mCHF in restructuring costs

• OneCompany program lowers FTE base

• Process changes result in sustainable structural cost reductions

CHF


Innovation

Increased and focused

SW investment!

Strategic Area: Innovation

•Focused innovation drivers

• Systems – existing products and applications

• Platforms – solution driven software innovation

• Investment in in-house software development

capabilities and capacities

•Focus on global, open and flexible architecture

Architecture matters!


Market Environment

1991 2020November

2016

…1991 ERP

- R/3 marked SAP ERP

breakthrough and was

introduced into many industries

1998 BI

- Business Intelligence concepts

and technology becoming

more common

2004 Mobile Computing

- Blackberry

- Salesforce.com

- EDGE, 3G

1995 Department Solutions

- Laboratory and Radiology leverage

ERP-like information systems to

coordinate work and distribute results

2002 EMR

- ERP-like coordination of schedules

- Charting on PC

Healthcare

Non-H

ealthcare

2016 Point of Care

- Solutions leveraging mobile devices

2006 Mobile Devices

- Smartphones

- Tablets


Product Portfolio -> Solution Portfolio

ICU & OR

Device Mgmt

Mobile

Medical

Device

Gateway

Nurse CallDispatch

ACD / Skill-based

routing of tasks

KPI tracking

Coordinate robot

devices

Bi-directional

device connectivity

Smart room technology

interacting with mobile

devices

Information

within clinical

context

Decision support,

information aggregation

Raw Data

Vitals and alarms

AlarmsAlarms


Expanding the Solution Portfolio

ICU & OR

Device Mgmt

Mobile

Medical

Device

Gateway

Nurse CallDispatch

ACD / Skill-based

routing of tasks

KPI tracking

Coordinate robot

devices

Bi-directional

device connectivity

Smart room technology

interacting with mobile

devices

Information

within clinical

context

Decision support,

information aggregation

Data

Device settings

Vitals and alarms

Medical device settings

Alarms

Responses

Documentation


Contextual

information

Location

information

Point of Care

Purpose built

device


Delivery

Solution delivery,

transformation and thought

leadership!

Strategic Area: Delivery

• Thought leadership in transformation of mobile,

mission-critical and ad-hoc business processes

• Value and margin enhancement through world

class consulting organization

• New and enhanced value proposition through

innovative service offerings

• Increase share of recurring revenues


“Power of One” execution

Products

Installation

&

Commissioning

Pro

du

ct

Pro

fessio

nal

Serv

ices

Project

Management

Clinical

Consulting

Application

DevelopmentTraining Go-live

Assistance

Remote

Access

Solu

tion L

ifecycle

Manag

em

ent

HelpdeskSoftware

Updates

& Upgrades

Remote

Support

Onsite

SupportInteroperability

Integration

Extended

HW Warranty


Why Solution Lifecycle Maintenance?

CustomerProtect Investment Complex and highly

integrated environment

Business-Critical

Solution

Lifecycle

Maintenance

Ascom Solution

Lifecycle plan

Recurring revenueRevenue

developmentCustomer intimacy Up selling

1


What do we provide?

Customer support Software maintenance Hardware repair

Ascom

Solution

Lifecycle

plan


Success of Ascom Solution Lifecycle plan

• 8,000 Contracts

• 90% renewal rate

• 5-10 years duration

• Software Maintenance

• Repair and Replacement

+7.5%At constant currencies

H1 2016

Solution

Lifecycle

Revenue growth

• 1/3 Professional

services

• 2/3 Solution

lifecycle services

~1/3


Professional Services

Change managementWorkflow analysis

and system designClinical assessment System delivery System validation

Norway

SE Asia

Erasmus,

Netherlands

GE MMG

projects


OneCompany for Services Growth

500Service

professionals

16Countries

Portfolio Resources Knowledge

sharing

Global Global Global

OneCompany

10,000Projects

8,000Solution Lifecycle plans

>50Global service

consultant engagements

8 projectsLarger than

1 mCHF


• Continue and accelerate solution and strategic

sales transformation

• Build strategic alliances

• Assess new market entries in attractive additional

geographies

• Strengthen focus and solution sales in non-

healthcare markets

• Increase direct engagement of CEO in sales

Strategic area: Sales

Sales, Sales, Sales!

Solution, not product selling

Focus

Alliances


Sales Transformation

• New Sales Transformation Executive with change management experience and coaching/training

skills

• Skill and knowledge increase programs

• HR quality initiative

• Harvesting of regional solutions to provide global scale to great ideas

Past:

Regionalized Product Sales

Organization

Future:

Strategic Solution Selling

Organization with

Global Scale and local Flavor

Continuous

Transformation

Transform

Organization

& Process

Transform

Capabilities

&

Knowledge

• Delayering hierarchy and escalation chain, simplifying processes

• Regions focussed on Top Line enabled by globalizing and centralizing back office and delivery skills


Re-inventing indirect business

Healthcare Channels

• Build strong Alliances team

• Create strong, global value added

partnerships

• Device Manufacturers

• HIT vendors

• ICT Services and Integrators

Non-Healthcare Channels

• Re-launching targeted OEM strategy

• Combining with Global Reselling accounts

• Review new and enhanced value

propositions with indirect channels


H1/2016 results at a glance


WS

Division

+10.1%

Health-

care

+6.8%

Backlog (per 30.06.2016)

CHFm

155.5

NT

Division

CHFm

-7.9m

WS

Division

10.0%

EBITDA

margin

WS

Division

CHFm

146.5

Group

loss

CHFm

-5.6CHFm

33.6

Equity

ratio

35.5%

NT

Division

CHFm

35.2

Ascom

GroupEBITDA

CHFm

5.2

Net

revenue

CHFm

181.3

Cash

and cash

equivalents

H1/2016 review

• Integration of UMS acquisition well under way

•Further key project wins on the back of prior year investments...

•…Strengthening Ascom brand and enlarging our footprint internationally

•Market challenges in WS UK and short-term volatility impact in OEM

•Strong Q2/2016 order intake strengthens backlog for H2/2016 in both divisions


• WS

• Lower profitability (EBITDA margin 10%) during investment payback period

• While growing 6.8% in healthcare and further building backlog and pipeline

• NT:

• Unfavorable business development vs. prior year H1 and EBITDA loss

• As business continues realignment to new US market realities and rebuilds order book

• Corporate one-off costs: CHF -3m or -1.7%-p. Group EBITDA impact


…project 2016 to be a transitional year

H1/2016 financial performance drivers…

42


(CHFm, figures and % based on actual currencies)

1) Figures according to IFRS

2) Derived from full-year figures according to Swiss GAAP FER

Gross margin

EBITDA margin

Net revenue

43

Half-year analysis

H2/2014H1/2014 H2/2015H1/20152)1)

146.5157.0

147.1

178.1

140.8

22.7%

52.6%51.1%

11.0%

49.5%

14.4%

49.9%

15.5%

10.0%

49.3%

H1/2016

• Strong and steady margin with 50%

hardware and 50% software and

services

• 2015 includes CHF 6.3m of accelerated

organic investments into WS business

transformation from product to solutions

provider

• 2016 will be impacted by the CHF 10m

OneCompany program


-40

-20

0

20

40

60

80

100

31.12.201531.12.2014

NWC PPE

Intangible assets Provisions

Key balance sheet positions Net cash/debt and equity ratio

37.327.1

-40

-20

0

20

40

60

31.12.2015

34.4%40.7%

31.12.2014

Borrowings

Net cashCash and equivalents

Equity ratio (in %)

(CHFm, % based on figures at actual currencies)

Healthy balance sheet

As per 30.6.2016: equity ratio 35.5%, cash balance CHF 33.6m and overall net cash position


201520142013*

Basic earnings per share (EPS) Dividend per share

201520142013*

Pay-out ratio **

39%* 43% 67%

Note: Annual distribution per share based on prior year’s profit

(CHF, % based on figures at actual currencies)

Commitment to return to shareholders

0.40 0.45 0.45

1.07

0.69

1.07

* Figures according to IFRS

** Calculated on gross dividend amount multiplied by issued shares divided by Group profit as reported in the financial statements of Ascom Group

Strategic Growth Opportunities

GROWTH

New

Solutions

New

Markets

New

Partners

New

Services

Alliances

Global Accounts

OEM

Evaluation of additional

emerging markets

Transformation Services

Managed Services

Portfolio Integration

More Workflows, Apps, SW


Net Additional Revenue Potential

Alliances

Global Accounts

OEM

Evaluation of additional

emerging markets

Portfolio Integration

More Workflows, Apps, SW

Net

additional

potential:

1-3%

CAGR

Net

additional

potential:

2-4%

CAGR

Net

additional

potential:

1-3%

CAGR

Net

additional

potential:

3-5%

CAGR

GROWTH

New

Solutions

New

Markets

New

Partners

New

Services


Strategic Growth Opportunities

Total mid-term (2020)

growth target:

7-10%

of which:

Healthcare >10%

Non-Healthcare >GDP%


Mid-term Profitability Ambition

Grow total cost base

under-proportionately

20%

7-10%Revenue Growth

5-7%Sales & Marketing Cost

Growth

7-10%R&D Investment Cost

Growth

2%Other Cost Growth

Mid-term EBITDA

ambition (2020)

Accelerate Topline

Growth


Ascom Holding AG

Zugerstrasse 32

Baar, Switzerland

Phone: +41 41 544 78 00

Email: [email protected]


www.ascom.com

www.linkedin.com/company/ascom

50

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http://www.ascom.com/

http://www.linkedin.com/company/ascom

Documents

Ascom Investor Presentation November 2016