U-Blox Hldg Ag Namen Akt

Ladies and gentlemen, welcome to our presentation about our results of the fiscal year 2021. I'm glad to do this together with my colleague Roland Jud, our CFO. We make this presentation with the usual disclaimer about statements into the future. And our agenda comprises that we give an overview on the highlights, then go into more details of numbers, also talk of business and strategy, and finally provide an outlook before we then provide time for questions. So in summary, our year was very successful. It was a record year. It was a record for the top line. We increased our revenue over the previous year by 24% to 440 million. This is also a record. We never had such high revenues in the lifetime of our company. Also, we increased our gross margin to 46.8%. and followed by such a good top input, of course, ABTA and EBIT also followed to much higher levels than in the previous year. And most importantly, cash flows were very strong, almost 100 million for the operating cash flow and 56 million for free cash flow. The Business was, of course, driven by very high demand. We communicated before that we have very, very strong order intake with record bookings, and this has increased our order book. to a high level. And we had, of course, to follow and increase our production capacity. But the limiting factor was the availability of components. This has decided on what was achievable finally for the fiscal year. So we are on a very good situation also looking forward we are continually investing into R&D and we have launched again in 2021 12 new core products that of course are then defining our way forward especially business further out into the many years to come also we have expanded our capability we acquired another company for expanding our services business with companies like Cordop This was important to complement what we have on the hardware side, but also with existing services for communication and security. Now I hand over to my colleague Ron Youd for talking the financials.

Thank you, Thomas. Good afternoon, ladies and gentlemen. In the next few minutes, I'd like to give you a short overview of the financial full year results. Thomas mentioned it, the revenue increase by 24.2% to 400%. 14.1 million Swiss francs. This is above the expected range of 15 to 20% we announced in our guidance. We could do this with adjusted gross margin increase to 46.8% and as mentioned with an EBITDA of 72.1 million compared to the 42.2 million last year. Cash flow from operating activities, 97.7 million, and free cash flow, 56 million Swiss francs. Free cash flow before acquisition, 54.9 million. This is compared to the minus 16.5 million, a good achievement for you blocks in this year. Equity ratio was further increased to 59.9% compared to the 54.6% in 2022. And based on this good results, the board of directors will propose to the AGM to pay a dividend in form of a par value reduction in the amount of one Swiss franc 30 per share. This is especially tax favorable for the shareholders. A little bit more in detail on the revenue side. We mentioned it now, 24.2% compared to 2020. This is a new record level based on a strong rebound since August 2020 and the accelerated trend for connected devices. Also the expanded production output we are capable to make this a revenue. The U.S. dollar has a negative impact on our revenue growth at the 2020 rate. We even have been 26.9%. And ABTA adjusted margin with this revenue was 17.4% in 2021. This is 72.1 million Swiss francs. We see this year a strong growth in every region with higher demand in industrial automation and automotive navigation and infotainment application which let the American revenue grow by 37.6%. The growth of revenues of 30.1% in EMEA was a On one hand, driven by a strong rebound in the automotive sector, and on the other hand, by the increased demand in the industrial automation and consumer telematics area. And also in APEC, we saw 2021, a strong growth in Japan and Korea in the industrial market. as well as in the automotive market. But this growth was tempered by the flat business in China due to, on one hand, supply constraints and also some COVID impact. But although also impact resulted in growth of nearly 12% of revenues. On the market side during the year, our automotive segment experienced a higher demand for navigation and infotainment applications, especially for electric vehicles. And we were able to support this rebound in demand after a strong decline in 2020, which leads then to a growth on the voltage side of 41% compared to 2020. Our industrial segment grew by 24% thanks to a strong demand for existing applications such as smart devices, but also new applications in micro mobility or medical automation and networks helped to grow the industrial market by 24%. And the highest growth in consumer market This is due to telematics and wearables so that we are able to grow this in 51%. The split of overall revenues remains similar to the years before. 62.7% of our revenues we make in the industrial market has the biggest sex of 27.8% in automotive and this year 9.5% goes to consumers. If we have a look at the volumes after years of flat volumes or even declining, we are back on the growth path. In 2021, our volume grew by 36.6% and we sold roughly 48 million chipsets, which you see result as a graph 5.9% increase on volume from 2020 to 2021. As you can see, the chipset volume is driven by the uBlocks 8 series. And also on chipset side, at least the ASPs are increasing. This is due to sales price increases, which helped here as well. On the split between the different between modules and chips that you see a trend towards modules in 2021 81% of our revenue is we make with module sales 18% goes into chipset sales. On the gross profit side, our gross profit adjusted was 193.9 million Swiss francs. This is an increase to the margin from 45.3% to 46.8%. This is mainly due to a failure of products mix and also the sales price increases helped here. Now, a comment to the cost side. Distribution and marketing expense adjusted remain at the level of the years before with 9.4% of revenues. We spent in distribution and marketing 38.9 million Swiss francs in 2021. The income statement here, you see the adjustments we make to the IFRS figures, which are in more detail in the annual report as well. The adjustments are the usual ones. As in the past year, we have share-based payment adjustment of $3.3 million, pension impact of IS-19 of $1.3 million, and the adjustments from amortization of intangible assets acquired, including impairments of $3. 3 million and non-curring expense of 1.5 million. This ends up with an EBIT impact of 9.2 million and an impact on EBITDA of 6.2 million Swiss francs. On the financial result, this consists primarily of foreign exchange gains, the interest of the bond and the result of the equity counting in the fees and also the impact of the takeover of full control over subcorda. For all these adjustments on the tax side, we do apply the group tax rate of 18.1%. With that, we had earnings per share adjusted of three Swiss francs per key. Now let's have a look at the financial position. Our financial position is still high with a liquidity of 84 million in cash. Our inventories level 31.4 million. This is mainly raw material and working process. And trade vehicles were 51.1 million Swiss francs in 2021. On the other current assets then amounted to 35.2 million compared to the 56.1 million to 2020. In our books, we have also capitalized R&D. They are now at the level of 175.4 million Swiss francs compared to the 162.5 million in 2020. And right-of-use assets based on the IFRS 16 evaluation are 32 million Swiss francs and corresponding that there are leasing liabilities in the balance sheet of 32.8 million Swiss francs in the balance sheet end of December 2021. Our current liabilities contain trade liabilities of 25 million Swiss francs and also non-current liabilities which are mainly the bond of 59.8 million. This is repayable in 2023. Deferred tax liabilities of 1.5 million and the employee benefits are according to IS19, of 21.3 million. Last but not least, also in the liabilities, we have provisions of 7.7 million Swiss francs. On the cash flow statement, we mentioned it already. Cash flow from operating activities was very positive, 97.7 million Swiss francs compared to 39.5 million Swiss francs. This positive impact is due to the increased business on firsthand and also the used networking capital, which helped to increase this operating cash flow. We maintained our investing activities and paid with that result in a free cash flow of $56. million Swiss francs. I mentioned it before, free cash flow before acquisitions and participation in capital increase was 54.9 million Swiss francs in 2021. Also, the acquisition of full ownership in the joint ventures of Corda and the sale of Dachshund is part of this cash flow statement resulted at the end in an amount of cash inflow of 1.5 4 million Swiss francs. You can also see on the cash flow statement the repayment of the first bond in April, the 60 million here, which ends up then in total cash used of 11.8 million Swiss francs. And this leads to a cash of 83.5 million Swiss francs at the end of the year. Now, total equity we are still a very solid equity base. We were able to increase our equity ratio to 59.9% compared to 54.6% in 2020. Our treasury shares for the option program remained at 31.9 million Swiss francs, and without these treasury shares, our equity ratio would even have been 62.3% of assets. With the sale of Dachang, we have no more any minority interest in our books. Last year, this was still 100,000 Swiss francs. All this is based on a widespread global customer base over all geographical regions. We were able to increase our customer base again to 12,200 customers worldwide in 2021, which we serve. We could also remain our low customer dependency 74 customers were responsible for 80% of our revenues and our largest customer accounts only for 4.6% of our revenues in 2021. And the 10 largest customer accounts for 31% of our revenues. On the employee side, the usual picture Two-thirds of our employees are working in R&D, 758 FTEs, 193 were engaged in logistics and administration tasks, and 196 are in sales and marketing support. 76% of our employees are based outside Switzerland and across 18 countries spread. And now last but not least, our two segments, still the positioning and wireless product segment. The strong bond with 413.5 million Swiss francs revenue. The wireless service event, although we improved our services in our product offer, is still mainly dependable on intergroup revenue use, but as you already can see, there is an improving path. We are on the third party revenues and all service revenues will go in the future into this segment. And with that, I hand over for the business review back to Thomas.

Thank you Roland. So let's quickly review how our business was doing last year. So we mentioned already that the demand came back and the bookings recovered strongly. It started already in August 2020, so a time ago, and it was a continuous path upwards. Of course, the automotive segment recovered the most after a sharp dip in 2021, in the beginning of 2021. But it was not only the recovery. It was also a change in the industry, mainly that electrical vehicles suddenly took a very strong increase in production and interest, of course, in the market. And this across the regions with many of our customers. In the industrial segment, the difference was not that big because industry was less affected by the COVID crisis, but the growth continued and it was across the entire industry and the driving force was as before that the customers want to make their devices smart and connected away from what was before a standalone unit. The supply chain situation was challenging. There were disruptions. There was a lot of sudden changes because of COVID measures that were taken by governments in the various countries where components are manufactured. But we were able to manage well. We were optimizing everything we could. And by that, we were able to continually increase the production output and, of course, reply to the demand of our customers. It took a lot of effort to fine-tune what was then finally the output, fine-tune it to the actual demand of our customers. And in the far we were operating on availability driven system, no longer an inventory based system as many years before. So we were really reacting on whatever was on hands and that was put into production for making the products for our customers. And despite these challenges that affected the whole company, we continued to introduce new products to the market. And had at the same time also to redesign and remodel the products to also allow more different sources of components and broaden the supply basis for being able to deliver. So, when you look into markets, you heard it already from Roland in a patch, we had very strong growth in Japan and Korea, of course, also driven from the automotive side, but also in industrial. For continued expansion in automation. In China, the result was more flat. We had a good year before already, so it was also a base effect, but also supply constraints made it difficult. We sell a lot of chipset into China, and there, of course, we had severe limitations, as we said. In EMEA, the increase came on the one side from automotive, as we said, and similarly from industrial automation. And interestingly, also from some consumer telematics that had a very good growth pattern. The interest was enormous with some customers in this domain. In the Americas, here also, it was the industrial automation sector that drove us upwards and also automotive for the manufacturers in this region. So the order book reached record levels. It was eight times higher finally by the end of 21 compared to end of 2020. Now, a little more in detail, we have already seen the recovery made that the automotive sector again goes more towards the 30% we have traditionally. And of course, the growth of 41% was enormous. And we have, I think, still very good driving forces. Aside the rebound effect, it is the electric vehicle that demands a lot more electronic components and has a lot more automation right from the beginning in the car. And the autonomous driving is an important move in the industry. More and more cars are road to market that have certain autonomous driving capability and the industry is going to higher levels of such automation so we see a lot more new designings for higher capabilities. We believe that this is continuing. So autonomous driving is an important factor in the industry. And here we are very well positioned with our products, mainly for positioning. So it needs better capability to find out where is the car and what is driving. And also, what is added on is functional safety, because this is an automated device. Finally, it needs to be safe. And this is an additional value, respectively, technical challenge to solve. And this is where we have invested over many years and are now seeing fruits becoming available that we are harvesting. And of course, as I said, the electric vehicle has a strong drive, particularly in India and China. In the industrial sector, we see a relative similar importance as before. The growth was what we made as a company, about 24%. And interestingly, again, across the many different application areas, as you can reach them here. And this is, of course, most helpful that we have a diversified entry to this market that we profit from the many different applications that allow to expand our business. And it is the only one major driving force, the need to make devices connected and more intelligent. So when we look into the industries, in healthcare, it is the growing role that diagnosis is possible by delivering data and also by that helping to cut costs because there is better information available how to cure diseases. And of course, also on a much higher level because with such data, you have much better insights and this is of high interest in this industry. In mobility, we were very strong with smart micro mobility, that these devices are connected is the only reason why this market is existing and why business models are available. Insofar, this is a growing area and also with the changes in becoming a more green This has, of course, a high interest how in towns mobility is finally organized. In production, continued expansion because devices become better automated and also better maintained because you are continually collecting data and you deliver insights into how to keep the production equipment even more efficient and how you can increase productivity. And last but not least, also infrastructure in the form of homes and buildings are becoming more smart. Here also, it is primarily the aim to reduce energy consumption with regard to becoming greener and less CO2 effects. And of course, it's also about comfort and safety. Finally, our consumer segment. Here we saw a very strong uptick because also during the COVID time, the demand dropped in the first instance. But also, wearables and everything that gives to consumers certain data points is in high demand. And insofar, we have seen very good success with customers around the globe here. It's not the segment where we are focusing on, but for certain applications where it's rather the upper end and the high-touch consumer goods, here our technology and our qualities that we have in the products are the perfect fit. And therefore, we have seen very good success with customers. So our launches of products have been numerous and this is important. This is what we will have for our future. And this is laying the basis to again create new solutions for our customers and build business from which we will profit in the many years to come. In the cellular domain, we have launched a product called Alex R5. This is a super compact module for connectivity in the standard of category M and is essentially helpful for anything that needs to be compact and portable. It is a product that can run from batteries for a long time and is made Uh, for, um, these, uh, use case. Where, uh, you want to have a wide area connectivity in your pocket. Also, we launched a new family of products called R6 and R8. This is the category one. So this is a category for higher data throughput. This is mainly used when our customers want to transmit videos or pictures. and is the appropriate standard in for our industrial customers. Here we see a continued good demand and we replace all the products by these new generations to support our customers continually. In Schotterdrengio, we brought out a new module for Wi-Fi and mainly for more for applications that do not need extremely wide bandwidth, but are here to have a connection point, for example, in industrial applications or in the power management for electrical vehicles, where you basically transmit data to just steer the charging, and therefore the bandwidth needs not be that wide. and secondly very interesting are new modules in the bluetooth domain here with mesh networking this means bluetooth is not only connecting between two points but it can build a mesh network that connects many points and is sort of expanding itself into wide area there we see a lot of interest in the industrial use case where you have many data points to connect and to collect data. This is, of course, a very low cost solution for these use cases, primarily in smart buildings or in the smart industry. On the positioning side, we continue to expand. We have brought out the module, the NIO-M9V. for dead reckoning and this is a combination where you can collect additional information from the vehicle by being connected to certain sensors in the car but also without and this is a very versatile solution and offers additional capability especially for anything that is also a vehicle and not only a car. And the other products you are seeing here are very special receivers. They receive satellite signals in the sense of communication signals, not positioning signals. As you know, there are also satellites that provide connectivity signals. um from the space to the earth and this is very nice because we can deliver wire satellites correction data to anything that moves on the earth and is independent of the terrestrial communication network this is of course extremely flexible and versatile and is an extension of our product offer into such a very specific receiver And on the services side, we have expanded the offer. Again, all these services do improve the functionality of our products in cellular, short-range radio, and positioning. They make these products to better perform, to deliver additional capability, and also to maintain them over the entire lifetime. this point perfect. This is our correction service for high precision. This is what we got via the acquisition of Subcorda. It is now part of our SyncStream platform where all these services are available. And it does complement our hardware offer for high precision. And with that, our customers get everything out of one hand. what is in the hardware, and what comes through the air, so to say, as a service, to make then finally a very precise position determination possible. And this cloud locate, it's also about positioning, but this is an alternative. It delivers positioning without the availability of satellite signals. It does compute position in the cloud and through data. delivery of the positioning information directly to the back end. The information is not in the device, but is precisely where normally you want to have the information this means in the cloud. And here are a few examples. So this is an example for mesh connectivity. It's a Bluetooth device in this lighting sensor, and you can put many sensors. They connect one to each other and help to easily install such a system in the building. This is very typical for light installations in buildings to have them connected via Bluetooth. Here is a very different example in the medical area. This is a special device to help treat chronic pain treatment, chronic pains, excuse me. And here, of course, the Bluetooth connectivity is to connect to the smartphone to make the smartphone the user interface. And, of course, it is important here that it's a very compact and lightweight device because you wear this device on your head. And here, the typical use case for micromobility, here a bicycle, where we supply all the elements to make this device connected. First of all, that you know where is the device. Second, that you can connect via the cellular network and connected to the back end and also with a Bluetooth device that the user can unlock the device, respectively, also program the functionality of this bicycle. And all is handled via our SyncStream platform. This makes it very easy for this customer to have the solution readily available with little engineering effort and, of course, fully maintained over the lifetime of the product. And finally, a little device available for temperature measurement. This was invented during the times of COVID. It existed before for a different use case. Now it helps to do body temperature monitoring. And the Bluetooth device must be very low power. It must have a long lifetime from battery. And it is here to monitor the well-being of people. So our strategy is still that we are looking for good solutions for our customers. We solve problems to connect and to make devices smart. We are continually working on our innovation paths to preempt what markets are needing and insofar invest with a long-term perspective into R&D. We are expanding sales channels to reach markets. We have, again, reached more customers than ever before and make sure whatever we offer is the perfect solution for our customers that we are here, that we have the capability that makes it easy for customers to work with us. We, of course, look continually not to do everything ourselves, but if possible, also look for inorganic growth whenever there is an opportunity. And primarily, we look for bolt-on acquisitions that are not so large in size, that have a very good fit for culture, for strategy. And, of course, they need to be financially attractive. And we made acquisition, as we mentioned, last year. And all in all, the goal is to provide shareholder value return, consistent dividend. Unfortunately, during the crisis year, we had no dividend, but I think we are recovering very well now with what we propose and based on strong free cash flow also for the future. And again, when we look into acquisitions, we have done 17 so far. We have a strategy team that does look continually into such cases. It needs a lot of effort and a long time to really build a final case that becomes viable. And of course, it is not directly predictable when such cases become mature. However, they help us as before and in the future to expand our technological capabilities or, in the other case, to gain economies of scale. In the far, we believe we still have opportunities and are, of course, continually reaching out to find more possibilities. Now I come to our outlook. We are providing here the numbers what we think we could achieve in 2022. And as we have explained, we see continued expansion of demand. The industry has very strong needs for all what we do in automotive and in the space of industrial Internet of Things. And we see very good ramp up these new products, meaning new products that make our customers, but also, of course, with our products that are new and help customers to build new solutions. We see no direct impact from the Ukraine crisis. Fortunately, we had very, very little business in the Russian territory. However, of course, the supply constraints continue still. I mean, with the revenue growth that we predict between 21% and 32%, this is a little relative. We could grow more because we have higher demand than this 20% to 30%. But this is our estimate what our suppliers can deliver more in 2022. And insofar, whatever you see as numbers, and also when you look into 21, don't forget it was driven by supply and not by what customers really demand. This means we have quite some distortion in the numbers because they are created by the supply side and not by the demand side. So we also guide for ABTA and EBIT margin that are in similar ranges as we had in 2021. Also, this guidance is made with exchange rates average of 21. And of course, with the current exchange rate situation, we have a positive impact, probably, at least actually, because the dollar has increased, the euro has become weaker. That means our top line has a positive boost, whereas our breaking expenses are reduced by this currency situation. And with that, we come to the time to answer your questions.

The first question comes from Francois Boubini from UBS. Please go ahead.

Hi, can you hear me?

Yes, bonjour, Monsieur Boubini.

Bonjour, Thomas. I have a couple of questions, if I may. So the first one is on... Your guidance, obviously you deliver a very strong revenue growth in 2022, I mean, what you expect. And it's interesting because we are in a short, tight situation for many of your peers and others that struggle to get capacity for foundries. So you mentioned a bit what you have done maybe on the inventory management level, but can you explain us? You know, how did you do basically to get, you know, this capacity? And maybe if you can explain what is volume versus price in 2022 revenue goals, how much is driven by price and how much is driven by volume, if you don't mind. I have other questions as well, quickly. Thank you.

Yes, so the explanation to growth here is that, of course, all depends on what we have a relationship with our suppliers and what we can negotiate for a volume for 2022. So, of course, we have taken enormous efforts to get the commitment from suppliers and the growth rates we are here indicating are based on such growth. um agreements i mean it's not on paper but at least what we have as an indication from suppliers and what we believe we can execute uh then together with them And, of course, we have made also all efforts, as already explained, to more diversify the supply bases. Fortunately, we have not all eggs in one basket. We have quite a diversification with regard to how we make the products and what sources they are depending on. And this helps, of course, to optimize here the growth path. Now, the growth is mainly volume-driven, but of course, we increased prices, as you correctly say. So, if we take a number of 25% growth, then we have probably 3% to 5% price effect, and the rest is volume.

Okay, thank you, Thomas. That's very clear. Did you take into account any price increase from the fund rate in 2022 from your partners?

Yes, of course. We have also price increases from our suppliers. This is, of course, as you can read everywhere. The good thing is that these increases are, especially from the foundries, at a level where we are not yet through our value chain. This means they are not 100% rippling through, but only partially. And insofar, we have some protection with regard to this impact.

Okay, thank you. And maybe on the gross margin side, I was a bit surprised by how steady the margins were when, you know, maybe it was more module than chip-driven. I would have thought that modules was, you know, lower margin. And I know modules can include chips, so it doesn't tell you the full picture. But can you help us understand, you know, whether this is cellular, mainly module-driven, how, you know, should we think about the margins going forward? I mean, do you expect the gross margin to remain where it is today, or do you expect some dilution due to maybe price increase on the manufacturing side or the mix towards cellular and more modules?

Okay, again, my answer about gross margin development. So there are two effects. One is we optimized the mix and we made sure we were mainly manufacturing products with very good margin and compromised on the ones that had not so good margin. And the other effect is price increase. We were able to increase prices a little better than what we had increased on the cost of goods.

Okay, great. Thank you very much. And last one, if I may, on APAC side, I mean, you have a strong exposure there. Do you see any, how should we feel about the competition from local players? And can you remind us which process node your products are using? Just a I was not sure, you know, which process do you use at Foundry mostly? In majority, I guess you have different ones, but in majority. Thank you very much.

Yes. So talking about Asia, Dan, you talk probably of China. Of course, in China, on the one hand, we have a large business. On the other hand, we also have competitors. But this is not a new situation. It was always so that we had local competitors in China. And we are able to compete. We have very good products, very good customer loyalty and enjoy also broad diversification of applications in the industrial and automotive space. Your question about process nodes, this is also, I think, important to know. We are not dependent on the one node or one manufacturer. We have two suppliers, Taiwan Semiconductor and Global Foundries, and we use nodes between 28 and 65 nanometers and even more, even higher nodes also for legacy products to make the various chipsets we have.

Thank you, Thomas.

Merci à vous.

The next question comes from Harold Eggling from ZKB. Please go ahead.

Yes, thank you for taking my question. Basically, I was wondering, when I look at the midpoint of your guidance, obviously it implies a very low incremental EBIT margin of roughly 11%. Could you please give some more color what these cost elements are? And then I was also curious, what basically the underlying assumption regarding Ukraine and Russia is. What's your gut feeling or what are your customers feeling regarding duration and potential impact? Thank you.

Sure. On the first question about the guidance of profitability, so the first question was about the profitability guidance. Here we are a little conservative because we have inflation, and inflation will impact our operating costs, mainly on the salary side. The numbers are still increasing, as we all witness, and therefore we have probably here an effect that we wanted to at least have already in the numbers. But on the other hand, as I said, the guidance is based on previous year's exchange rates. Now with the quite sharp changes in exchange rate against Swiss franc, of course, we have at the moment a positive impact, meaning better profitability. Now to the question of Ukraine, I cannot say much. We see no direct impact so far. As I said, also, we had no business in this territory. And therefore, I cannot give another opinion or insight than what we all can read. It's, of course, very hard to predict what is the outcome of this crisis.

Okay, thank you. May I ask a follow-up, please, on automotive and industrial environment? What basically is your production expectation, roughly speaking, for global light vehicle production? As we have seen, I would say some shutdowns of major OEMs in Europe and today, obviously, also lockdown in Chengdu, China was announced. Plus, regarding commodity prices rising recently sharply, is there any gut feeling you would see for electric car demand? Thank you.

Yeah, that are several questions together, I think. Of course, we have impact from the Ukraine crisis, but also still from COVID that production output is hampered in certain places. But fortunately, we have a very diversified customer base and insofar are they not so directly affected. affected by the one or the other event. And hopefully this is not becoming more widespread as before. Whether the basic, I mean, you again talk of inflation. Yes, of course, inputs to production are becoming more expensive, but normally this is far away and very down in the value chain. So the direct impact is finally diluted a lot.

Okay, but you expect global light vehicle production to grow in 2022. Did I get that right?

Oh, yes, the demand is constantly increasing. We cannot fulfill the demand of our customers. OK, thank you. Limited demand on our side, supply on our side.

The next question comes from Serge Roger from Credit Suisse. Please go ahead.

Yes, good afternoon, gentlemen. By the way, congrats to the result. It's really I'm happy for you after this long dry season. So looking forward with you. We'll deliver in the future. Still, I have some questions here. The first one is about the volume and price. When I go on slide number 13, volume growth in module was 37% almost, and in GNSS chips, almost 6%. The breakdown is 18%, 81%, you mentioned. When I make a rough calculation, I get a growth of 31%, and You reported in constant currency 27%. So this would tell me that you had a price decline of 4%. What is wrong in my calculation or why do you say you had a price increase last year?

Yeah, the problem with this computation is that you have, of course, also a product mix effect in the numbers you use that have seemingly decreased the average price. But this is not what we have, of course, experienced as a price per product family where we have an increase. Okay.

Then the next question would be again on volumes. You mentioned that you had some from the supplier, you get some confirmed volumes, but still you grew by about 80 million last year. And now the guidance is for plus 87 or 133 million, roughly speaking. So the difference is still 50 million within the guidance for this year or a plus from low to high plus 66%. Where is this big, huge variance coming from when you tell us you have a commitment from the supplier? Can you explain this to us?

Yes, so first and foremost by increased volume. So we were able to negotiate for higher volumes being attributed to us. That's, of course, most important. And the other effect is again the mix. We have a good outlook for certain products that have higher prices in average. And this, of course, helps also to boost the top line.

I don't understand that because you know what you have to order and you know exactly what you will ship and products, you know, and you have a good feeling for the price. And still we have a variance of 50 million in the guidance. So, well, you don't have a better visibility because you have also from your suppliers to get them. you get the volumes you mentioned. So I still don't understand where this difference is coming from.

Yeah, but the difference is we do manufacture a different mix of products in this year than in the previous year. This is why we have a mix effect and it's a change to products with higher prices.

Yeah, compared to previous year, yes, but in the current year, you know. In the current year, you said that you will grow Let me check exactly the numbers. Whoa, where are we here? Between 21% and 32%, you know? Yes. And the growth of 21%, the growth of 32%, the delta in between is 50 million, 5.0 Swiss francs. And this is quite a lot. So this I would like to understand.

Ah, okay, then I'm in the studio. Yeah, okay.

I noticed it now.

That's such a range. It's, of course, always then finally also a matter of estimates again. I mean, suppliers give you a number, but it is not accurate, and we have to also then estimate what might be a minimum and rather a maximum, and therefore we have such a range.

Okay, then we will see in the course of time. Probably the last question for the CFO. The cash flow benefited quite a lot from the change in working capital, from receivables and tax. Tax paid was quite low. Could you give us a guidance for this year? What does this mean? Where do you see the largest thing, but especially for tax paid and also probably the working capital, as you will, as you expect, growth of 20 to 30 percent. So this sounds like that you need cash.

Yes, thank you for the question. This is really difficult. Cash flow is really difficult to guide and also for us because you have seen it right. Networking capital impact in 2021 is quite big. And for sure what we can say, we shouldn't expect an even high, big positive impact from working capital anymore in 2022. But to give here a prediction that's rather difficult on one hand on the tax side, you have here the impacts when you pay taxes, at which point in time, when you get, let's say, a surplus you paid, maybe get back in cash. It's just a cash view and not... an expense view. And so it's rather difficult to say. But let's say I would not expect to grow the cash flow similarly than we did from 2020 to 2021. Again, in 2022.

Okay, we leave it like that. Thank you so much and bon voyage for 2022. Bye-bye.

Thank you, Mr. Rotter. Gentlemen, so far, there are no questions from the phone.

Good. Then we continue on the chat questions. And we start off with a couple of questions from Mr. Sauter from Kepler Chevro. Could you help us understand the contribution by subcourter, please? What's been subcourter's top line in 2021 and 2020? How much of your growth is organic in 2021 and maybe 2022?

Yeah, so two questions. The growth was not impacted by support. The number was very, very small. So all our growth was organic in 2021. Normally, we do not give details on product lines, how much we make in detail, the numbers. However, Mr. Sauter is lucky. This time, we have a number about what is subcorda, because it was an acquisition, and for some information in the annual report, we have roughly 180,000 effect on the top line of this acquisition. So very small.

Then on slide 13, you are showing volume and price data for modules and GNSS chips. Are these GNSS chips sales only the external revenues? Yes, they are. How does the share of your modules, which are chipped, change? I'm asking because you have invested so much into chipset R&D, but apparently GNSS chipset revenues are not growing much. Is this a worry?

Yeah, that's an important consideration. And I think also good that we explain again, as said, we show here what we sell to the markets, modules and chips. And here, of course, I like to repeat our aim is to mainly sell modules. First of all, they serve our customers much better. It's a complete solution that is easy to use. And of course, it has also a higher price. We make more value out of the market with a module than with an integrated circuit. Now, because we had supply limitations, we, of course, optimized for selling modules, and we kept the chip sales rather limited, and this is why the growth rate in modules is much higher than for chipset.

Then Thomas Kaiser from the family office, Kaiser Buchen. What are your goals in times of yearly revenue growth? The next forward years and also the APTA target if there would be no restrictions in components, what revenue could you achieve?

Yeah, that is, of course, a good question. And actually, I could give quite high numbers, but you would not believe it. I mean, we could make probably 50% more at the top line if we had everything we want. the demand is very, very large. And also on the basis of our order book, of course, we have almost unlimited capability to expand. But this is, of course, very hypothetical. The fact is all the supply is limited. All the suppliers are bursting at seams. And therefore, I think our guidance is also, I mean, On the one side, a strong one, but we cannot make it much higher than what we have on the table here.

Then Mr. Christoph Grau from AWP Finanznachrichten. You have won quite many customers, new customers, but on the other hand, you are more dependent on lesser number of key customers. How will this impact your strategy? And do you have any plans to diversify your customer base?

Yes, so customer base is important. This is, of course, where we derive the business from. We already have a very diversified customer base because we serve three different application sectors, as we have explained, and, of course, many, many different applications in these sectors, and also they are distributed across the three regions, the Americas, Europe, and Asia. And that on the one hand we have so many customers is important because this just shows us how much more interest is created for making things connected. More and more companies are really jumping on the bandwagon and want to have this technology in the products. And of course, many of them that look small in the beginning become then the growing contributors and help us to grow overall the company. That this year, 21, we have seen somehow reduced number of customers that make 80%, again, is a result of supply restrictions. This is only a result of what were we able to deliver to the certain customers. This is not what really is the potential with all our customers we have. So insofar, we have here a distortion and is only attributable to this supply situation.

He asks as well, your order book is quite full. How long will it take to convert these orders into real revenue? What are the main obstacles?

Yeah, again, all dependent on the behavior of our suppliers. It is for sure not resolved this year and probably also not next year where we could talk of an equilibrium between supply and demand. So we will have a large order book quite for a time, I would say at least for the next two years. And of course, it is insofar a positive event that we have a much better visibility on business at hand.

And then, Mr crow has two additional questions one on merchant acquisitions and one r&d what are your key regions and business sectors for further m&a activities. And will your investments in r&d stay that high, how will this impact your business strategy.

Yeah, quite a few aspects here. With regard to acquisitions, we have two dimensions. One is we want to add on technical capability and, of course, in the far finally be able to expand solution capability with our customers. This is one aspect, and I would say the more important one. The other is to add scale, so by business to become a larger company, to have scale effect on our cost. We have also done such acquisitions and we remain also open here for more such cases. And when you mean by region geographically, then, of course, we are not geographically limited. We have a global footprint and insofar can do that in almost any place of the world, in the places where we do business. R&D investment yes of course we need to remain competitive and leading and are an innovation company we will of course balance the R&D investment in a way that this is achieved but also that we have a good production of cash flows and profitability this is the management task we have to solve. How do we balance these two aspects? And this is what we have done over the past and we will do also into the future. This is the track we need to maintain to keep the company successful.

Then, Mr Kaiser from family office Kaiser Buchen, and I think he asked this on slide 25 he's asking is the redesigning ongoing or running out, and I believe it's about redesigning of modules.

yeah in the indeed this this effort is finished, we have done what what was possible, I mean there's a. a limited number of suppliers that are available on the globe. And we have taken the ones that are capable in helping us. And insofar, this exercise is closed.

Then Bernd Loh from Blackwell Capital. Can you please comment on the expected average selling prices for modules and chips for 2022 in light of current inflation everywhere? What will be U-Blocks cross-margin trend 2022 year over year? Thank you.

Yeah, we explained it before that at this time we are in a seller's market, so we have the power to set prices. And of course, we will react to further cost increase driven by the inflationary tendency. So the prices will increase by tendency. Again, what then is visible in our accounts is finally also dependent on product mix. So this is why sometimes there's a difference in what you see and what we say, as already discussed with Mr. Rotzer.

Yeah, what was the other question? The... So what will be uBlock's gross margin trends?

Yeah, the gross margin is insofar, I think we can well manage the gross margin again, because it's a seller's market, we can better or well increase prices over the cost increases.

Then Mr. Jeff Hamilton from Altair Management. Your product mix is likely far more relevant than your end market mix in helping to understand your business and competitive dynamics. Can you help provide the mix between GNSS, seller, and short-range products? What are the gross margin trends in each given product? the new product generations. For instance, in past years, you indicated that gross margins on Qualcomm-based cellular products were far below 20%. Where are you in transitioning to your own chipsets in cellular and what are those gross margins? Many questions. I can also repeat them.

Yeah, okay. It's all about how much gross margin we make in certain product segments. I mean, we are not giving guidance here or any detailed information. It is so that not all part of our catalog have the same gross margin but the numbers that I mentioned is a little too low we make better margins and especially we have a widespread of gross margin that can go from roughly 30% up to above 80% and this tells you that of course it's a little difficult to give general numbers here

Okay, then Miss Hamilton continues the folks at eBay have been telling the market that they have started to market tell it all over again. Is tell it still on your potential acquisition list? Can you share any competitive details? And what do you know of the state of Thales plans to sell Sinterian?

yeah i cannot make any comments here i mean we are not doing anything unless we would announce it and therefore no further comments what is the process node and semiconductor fab that you use for your eighth generation gnss and new cellular parts Yeah, as mentioned before, I can just repeat, we have two fabs, Taiwan Semiconductor and Global Foundries, and we have a variety of nodes between 28 and maybe 65, but also larger nodes for some speciality chips.

Then Mr. Robin Alexander. Congratulations for such an excellent job. Could you give us a sense of the size of the order book in relation with the sales made in financial year 2021? Merci.

Yeah, thanks for the congratulations. We are glad as well about the good result. Obviously, the order book, we give an indication that the order book is eight times higher than it was end of 2020. You can imagine that this number is quite a bit larger than what was our annual revenue in 2021.

Then Mr. Jonathan Art asking partners, can you share some sense of the backlog? Is it larger than one quarter of shipments? Can I please highlight the disclosure of one of your suppliers and competitors Nordic Semiconductor, which explicitly provides backlog every quarter?

yes so i just replied this answer about how big is the order book so it's more than a quarter of business it's much more than an annual revenue and i know this company nordic does provide order book information we have decided not to do so the mr philip vaness from teslin is the adoption of the r5 series according to plan

Why did you sell your stake in Tashong Semiconductor?

Yep. The R5 is doing very well indeed. We have, I mean, we enjoy very much having this product. It's very convincing with our customers. And the simple reason is because we have control over everything in this product. It makes it a lot more easy to go forward, to support customers. And also on this platform, we can add on values that otherwise are not possible to achieve online. especially additional functionality. The divestiture of Taishang is basically the insight that the Chinese market is not lucrative for certain products, especially cellular. The market is not delivering profits, and therefore it does not make sense to invest in such an endeavor.

Mr. Ruben from Teslin had exactly the same question, therefore not repeating it. Mr. Thomas Fonderor, Belvalor, congratulations to the excellent result and achievements. How would you expect merchants, EBITDA, EBIT, to develop in this situation when the global supply chain situation eased again? Under which circumstances and revenue growth level would you expect financial leverage, higher increasing margins, to unfold in the future?

Thank you for the questions. To estimate what would change if supply is easing is probably, again, not so easy because it all depends whether we still have some Price setting power because it's a seller's market, but this could, of course, also turn into, again, a customer's market where then the other side has more price setting power. However, as I mentioned already, this is not going to change that quickly. And of course, we do a lot also to continually develop products to make them more differentiated, to add on additional value that are important to our customers. And that is, of course, the major measure to keep a good margin for our products. And with regard to continued growth, of course, we have a leverage. We have a business model that is fabulous and any top line growth does well add on the bottom line.

Then Mr. Art from Asken Partners. How much revenue do you think you missed shipping in 2021 due to supply shortages?

Yeah, that's a similar question than before. Of course, we could have made a lot more and had another 10 or 20% on top of everything. But finally, it's a little hypothetical answer because it was not available.

Then we have the three last questions of Mr. Hamilton. I did not catch your comment on the mix between GNSS and CELDOR. and the growth rate of each, as they are such very different markets and businesses. Can you please address this? He also asked, can you please address what the mix is of our new seller products based on your own chips as opposed to Qualcomm? And then what is your mix in seller between LTE and 3G and CAT M1? versus all other modalities? When will you offer 5G modules and will they be based on your own silicon?

Yes. So quite some questions about details, but We can probably relatively easily answer. First of all, the gross rate or the gross in cellular all these questions around the cellular product comes from all angles. So, again, this has to do with the diversification of the customer base and applications and where we have across the board strong demand. And of course, we profit as well in products that have our own chipset. It's not everything we sell, but it is important. The category M is the leading standard for most of the industrial applications because they do transport relatively small amounts of data and have not a video capability, for example. And that means also LTE is important. That was the other question. The legacy standards 2G and 3G are on a strong shrink and the migration to LTE of either category M or possibly cat one is really going or being accelerated a lot. We have probably 80% of business today is LTE based and no longer legacy based. And how we go forward, I mean, LTE means long-term evolution, and you hear of 3G, 4G, 5G, whatever number. This just means the application of a next release of standards. That is adding more and extended capability. However, this is almost too much. There are so many new capabilities that are not of interest to the industrial customers. They are, for example, invented for the smartphones or for some other applications. So we are, of course, following both parts of these standards make sense for our customers, and they are then also the basis to decide what products we make, either because it's then part of an own chipset or it is then part of any module we are conceiving for the future.

Thank you very much. That's all.

We have a question on the phone from Mr. Mark Poser from VVAG. Please go ahead.

Yes, good morning or hello, gentlemen. Do you hear me? Yes, hello. Yes, hello. Just a simple question. Could you elaborate on the capitalization of R&D efforts this year and how you forecast them to evolve over the next couple of years? in order of or in dependence of your development pipeline that you have and foresee.

Yeah, we make an indication of one of the slides. We count on a capitalization rate going forward of 40%. And this is mainly defined or a result of how our R&D work is structured, how much throughput time it needs, and what, of course, is new development versus maintaining existing products. So this is what is the indication we can give here. And because we have sort of a constant mix between making new things and maintaining existing products, this is why the indication of 40% is also valid quite for the next future.

Okay, thank you very much.

You're welcome. Gentlemen, so far there are no more questions from the phone.

Very good. Then, ladies and gentlemen, thanks for attending this presentation. I hope we were able to give you good insights in what we achieved in the last year, and I'm looking forward to meeting you in person at possibly next events. Thank you very much, and goodbye.