Financial summary

Financial highlights (adjusted)

(CHF in million)	2020	2019	2018
Revenue	333.5	385.1	393.3
Growth rate over previous year	-13.4%	-2.1%	-2.6%

Gross Profit adjusted²⁾	150.9	175.1	177.9
Growth rate over previous year	-13.8%	-1.6%	-3.7%
Gross Profit adjusted²⁾ in % of revenue	45.3%	45.5%	45.2%

EBITDA¹⁾ adjusted²⁾	42.2	71.7	81.2
Growth rate over previous year	-41.2%	-11.8%	-16.9%
EBITDA adjusted in % of revenue	12.6%	18.6%	20.7%

Operating Profit (EBIT) adjusted²⁾	18.0	43.1	60.4
Growth rate over previous year	-58.3%	-28.7%	-22.6%
Operating Profit (EBIT) adjusted²⁾ in % of revenue	5.4%	11.2%	15.4%

Net Profit before minority interest adjusted²⁾	2.9	32.0	48.2
Growth rate over previous year	-90.9%	-33.5%	-21.7%
Net Profit adjusted²⁾ in % of revenue	0.9%	8.3%	12.2%

Cash generated from operating activities	39.5	77.3	36.3
Growth rate over previous year	-48.9%	112.7%	-39.9%
in % of revenue	11.8%	20.1%	9.2%

Equity	282.5	351.5	348.9
in % of total assets	54.6%	60.0%	63.1%
Adjusted²⁾ earnings per share	0.42	4.69	6.99

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

Financial highlights (IFRS)

(CHF in million)	2020	2019	2018
Revenue	333.5	385.1	393.3
Growth rate over previous year	-13.4%	-2.1%	-2.6%

Gross Profit	150.4	174.5	177.1
Growth rate over previous year	-13.8%	-1.5%	-3.7%
Gross Profit in % of revenue	45.1%	45.3%	45.0%

EBITDA¹⁾	35.4	65.2	71.6
Growth rate over previous year	-45.7%	-8.9%	-18.0%
EBITDA in % of revenue	10.6%	16.9%	18.2%

Operating profit (EBIT)	-64.8	22.1	48.3
Growth rate over previous year	-393.9%	-54.3%	-25.8%
Operating profit (EBIT) in % of revenue	-19.4%	5.7%	12.3%

Net Profit before minority interests	-64.9	12.9	38.5
Growth rate over previous year	-602.3%	-66.4	-24.9%
Net Profit before minority interests in % of revenue	-19.4%	3.4%	9.8%

Cash generated from operating activities	39.5	77.3	36.3
Growth rate over previous year	-48.9%	112.7%	-39.9%
in % of revenue	11.8%	20.1%	9.2%

Equity	282.5	351.5	348.9
in % of total assets	54.6%	60.0%	63.1%
Earnings per share	-9.32	1.89	6.99

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 333.2 million for 2020 as compared to CHF 385.0 million in 2019.
Wireless services
u‑blox also offers wireless communication technology services in terms of reference designs and software. In 2020, revenue for wireless services was CHF 31.5 million compared to CHF 32.1 million in 2019 (including intra group revenue).

Consolidated income statement (adjusted)

	Jan-Dec 2020		Adjust- ments²⁾	Jan-Dec 2020		Jan-Dec 2019
(in CHF 000s)	(IFRS)	% revenue		(adjusted)	% revenue	(adjusted)	% revenue
Revenue	333'513	100.0		333'513	100.0	385'099	100.0
Cost of sales	-183'080	-54.9	516	-182'564	-54.7	-210'022	-54.5
Gross Profit	150'433	45.1	516	150'949	45.3	175.077	45.5
Distribution and marketing expenses	-33'602	-10.1	1'712	-31'890	-9.6	-35'192	-9.1
Research and development expenses	-160'333	-48.1	77'963	-82'370	-24.7	-78'905	-20.5
General and administrative expenses	-22'976	-6.9	2'598	-20'378	-6.1	-21'622	-5.6
Other income	1'665	0.5		1'665	0.5	3'732	1.0%
Operating Profit (EBIT)	-64'813	-19.4	82'789	17'976	5.4	43'090	11.2
Finance income	226	0.1		226	0.1	547	0.1
Finance costs	-10'299	-3.1		-10'299	-3.1	-4'133	-1.1
Share of profit of equity-accounted investees, net of taxes	-4'164	-1.2		-4'164	-1.2	-4'249	-1.1
Profit before income tax (EBT)	-79'050	-23.7	82'789	3'739	1.1	35'255	9.2
Income tax expense	14'187	4.3	-15'010	-823	-0.2	-3'238	-0.8
Net profit	-64'863	-19.4	67'779	2'916	0.9	32'017	8.3
Minority interests	-238	-0.1		-238	-0.1	-149	0.0
Net profit, attributable to equity holders of the parent	-64'625	-19.4		3'154	0.9	32'166	8.4
Earnings per share in CHF	-9.32			0.42		4.69
Diluted earnings per share in CHF	-9.32			0.42		4.69
Operating Profit (EBIT)	-64'813	-19.4	82'789	17'976	5.4	43'090	11.2%
Depreciation and amortization	100'250	30.1	-76'075	24'175	7.2	28'600	7.4
EBITDA¹⁾	35'437	10.6	6'714	42'151	12.6	71.690	18.6

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.
²⁾Adjustments are impacts of share based payments, Pension calculation according to IAS-19, non-recurring expenses, impairment and amortization of intangible assets acquired

For the full-year 2020, u‑blox generated revenues of CHF 333.5 million, an EBIT (adjusted) of CHF 18.0 million and an EBITDA (adjusted) of CHF 42.2 million. The pandemic and its effect on the global economy negatively impacted our business for much of the year. AMEC and EMEA were especially affected by prolonged automotive and business shutdowns and companies adopting a delayed approach through much of 2020. APAC, where the initial outbreak occurred and, accordingly, where the economy reopened earlier, showed signs of a recovery earlier. Across all regions, demand in the automotive and certain industrial sectors were substantially impacted. The weakened USD/CHF exchange rate impacted the topline by ‑4.1%, resulting in a currency adjusted revenue decline of -9.3%.

In APAC, full-year 2020 revenues amounted to CHF 137.7 million, compared to CHF 145.6 million in 2019 (-5.4%). While revenues in China benefitted from the steady development and deployment of 5G networks during the first half of 2020, this development became more subdued during the second half due to the U.S. government placing bans on certain manufacturing technologies. From an end-market perspective, revenues increased from a rebound in automotive, particularly Japan and Korea, but were offset by decreased demand in telematics and in some consumer product markets in the second half of 2020.

Revenues in EMEA decreased to CHF 95.9 million in 2020 from CHF 119.3 million in 2019 (-19.6%). Revenues were substantially impacted by automotive markets and mobility end markets as a direct result of COVID-19. Automotive OEMs enacted prolonged shutdowns due to the pandemic and the mobility markets, where applications used in shared services such as scooters and e-bikes were particularly impacted by reduced localized travel and transit. We began to see signs of a rebound in automotive beginning in the second half of 2020, accelerating toward the end of the year. Other areas of revenue growth in EMEA included industrial automation in general.

AMEC revenues decreased to CHF 99.5 million in 2020 from CHF 119.2 million in 2019 (-16.5%). AMEC revenues declined due primarily to decreased demand in general consumer and fleet management applications. The pandemic caused many businesses in AMEC to push out decisions from the first half of the year to the second half of 2020 and into 2021. Partially offsetting this decline was increased year-on-year demand from industrial automation applications, such as metering, as well as fitness applications and healthcare.

In 2020, approximately 80% of total revenue was generated by 93 customers. u‑blox's largest customer accounted for only 7.4% of revenue. u‑blox serves over 9’000 customers worldwide.

Gross Profit

Adjusted Gross Profit decreased by 13.8% to CHF 150.9 million in 2020 from CHF 175.1 million in 2019, resulting in an adjusted Gross Profit margin of 45.3% (2019: 45.5%).

Distribution and marketing activities

Distribution and marketing expenses (adjusted) in 2020 were CHF 31.9 million as compared to CHF 35.2 million in the previous year. As a percentage of revenue, distribution and marketing expenses (adjusted) were 9.6% in 2020 compared to 9.1% in 2019. Distribution and marketing expenses declined as expositions, conferences and other large-scale events were cancelled or moved to a virtual setting and business travel was reduced due to government-imposed travel restrictions in the Americas and EMEA for the majority of 2020.

Research and product development

Adjusted R&D expenses in 2020 were CHF 82.4 million as compared to CHF 78.9 million in 2019 due to lower capitalization rates and higher amortization than in 2019. As a percentage of revenue, adjusted R&D expenses in 2020 were 24.7% as compared to 20.5% in 2019. During the first half of 2020, u‑blox recognized an impairment charge of CHF 74.1 million due to the COVID-19 induced market conditions mainly in automotive, changes in business plan expectations and refocusing of various programs. The company’s existing lines of product offerings remain unaffected and no further impairment is expected.

Share based payment

Share based payment expenses recognized according to IFRS in 2020 were CHF 4.8 million as compared to CHF 5.3 million in 2019.

Operating Profit (EBIT)

Adjusted EBIT was CHF 18.0 million in 2020 as compared to CHF 43.1 million in 2019, a decline of 58.3%. Accordingly, adjusted EBIT margin was 5.4% in 2020 compared to 11.2% in 2019. Adjusted Operating Profit before depreciation and amortization (EBITDA) was 42.2 million, a decline of 41.2% from 2019. The decline was primarily due to the declined revenues, increased expense for R&D projects and further R&D investments into new products. U-blox initiated a CHF 15 million cost savings program driven in large part by the discontinuation of one large non-revenue generating program. As of year-end 2020, the company had completed this savings program on an annualized basis.

Finance income and costs

Adjusted finance income was CHF 0.2 million. Adjusted finance costs of CHF 10.3 million consisted primarily of interest payments for the two outstanding bonds and unrealized foreign currency losses. Share of loss of equity-accounted investees net of tax was CHF 4.2 million in 2020.

Net cash generated from operating activities

In 2020, u‑blox generated cash from operating activities in the amount of CHF 39.5 million a decline of 48.9% compared to the previous year (2019: CHF 77.3 million), due to lower business levels. Net working capital improved with inventory levels adjusted to the declined revenues.

Main investing activities

Investments in property, plant and equipment, and intangible assets amounted to CHF 42.8 million in 2020 compared to CHF 56.9 million in 2019. As a percentage of sales, the investment ratio decreased to 12.8% in 2020 from 14.8% in 2019.

Due to differing maturities of projects in the R&D pipeline and the refocusing of some development projects across all product categories, capitalization of development costs decreased to CHF 36.8 million from CHF 50.0 million in 2019. There were small investments in intellectual property rights in 2020 of CHF 1.0 million (none in 2019). Investments in software amounted to CHF 0.7 million in 2020 compared to CHF 0.4 million in 2019. In 2020, investments in property, plant and equipment were CHF 4.3 million compared to CHF 6.5 million in 2019.

In 2020, 88.3% of total investments went into the development of new products compared to 87.9% in 2019. No investments were made into production capacity expansion in 2020 and also none in 2019.

Financing activities

In 2020 u‑blox paid total dividends of CHF 4.3 million by means of a nominal value repayment of CHF 0.60 to CHF 14.80 per share.

Solid financial position

At 31 December 2020, u‑blox had a solid balance sheet with an equity ratio of 54.6%.

Cash and cash equivalents and marketable securities amounted to CHF 94.4 million on December 31, 2020, compared to CHF 128.3 million on December 31, 2019.

Goodwill increased due to the acquisition of Thingstream from CHF 56.0 million in 2019 to CHF 59.9 million or 11.6% of total assets in 2020.

Based on the challenges faced and the Company’s financial results in 2020, the Board of Directors will not propose any form of dividend payment at the Annual General Meeting this year.

Condensed consolidated statement of financial position

(in CHF 000s)	At December 31, 2020 (audited)	At December 31, 2019 (audited)

ASSETS
Current assets
Cash and cash equivalents	93'874	127'424
Marketable securities	498	898
Trade accounts receivables	33'959	48'469
Other assets	89'627	83'670
Total current assets	217'958	260'461
Non-current assets
Property, plant and equipment	10'024	12'707
Right-of-use assets	32'499	21'824
Goodwill	59'910	56'027
Intangible assets	176'829	219'194
Financial assets (incl. equity accounted investees)	9'011	8'844
Deferred tax assets	11'671	6'886
Total non-current assets	299'944	325'482
Total assets	517'902	585'943

LIABILITIES AND EQUITY
Current liabilities	112'107	61'431
Non-current liabilities	123'110	172'913
Total liabilities	235'217	234'344
Shareholders’ equity
Share capital	105'300	109'569
Share premium	16'600	16'600
Retained earnings	160'645	225'295
Total equity, attributable to owners of the parent	282'545	351'464
Non-controlling interest	140	135
Total equity	282'685	351'599
Total liabilities and equity	517'902	585'943

Consolidated cash flow statement

(in CHF 000s)	For the period ended December 31, 2020	For the period ended December 31, 2019
Net Profit	-64'863	12'913
Depreciation & Amortization	100'250	43'189
Other non-cash transactions	7'606	5'263
Financial income & financial expense	14'237	7'835
Income tax expense	-14'187	1'306
Change in networking capital and provision	3'370	16'186
Income tax paid	-6'894	-9'401
Net cash generated from operating activities	39'519	77'291

Net investment into property, plant and equipment	-4'278	-6'454
Net investment into intangibles	-38'441	-50'446
Net investments into financial assets	241	874
Acquisition of subsidiaries, net of cash acquired and participations	-13'517	-10'734
Net cash used in investing activities	-55'995	-66'760
Free Cash Flow (before acquisitions and participations in capital increase)	-2'959	21'265
Free Cash Flow	-16'476	10'531

Proceeds from issuance of ordinary shares (par value reduction)	0	876
Par value reduction / Dividends paid to owners of the parent	-4'269	-11'077
Net proceeds from borrowings	1'046	0
Payment of lease liabilities	-5'726	-4'996
Purchase of treasury shares	107	0
Non-controlling interests	243	85
Interest paid	-2'678	-2'544
Net cash used in financing activities	-11'277	-17'656
Net decrease in cash and cash equivalents	-27'753	-7'125

Cash and cash equivalents at beginning of year	127'424	136'296
Exchange gains/(losses) on cash and cash equivalents	-5'797	-1'747
Cash and cash equivalents at end of the period	93'874	127'424

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