Message to shareholders
In the first half, the Group's total revenues and other operating income grew by 7% compared to the same period of last year. This increase comes principally from the Digital TV activity (+12.2%), while other activities, more tightly correlated to the evolution of the world economics, have demonstrated resilience against a difficult environment.
The Group's profitability progressed positively during the first half of 2009 with an operating income of CHF +8 million reflecting simultaneously an improvement in the quality of the DTV division's revenues (improved product mix), the effect of the migration to the service mode and the careful management of the Group's cost base.
The performance of the first half is not a goal in itself but an important step allowing the Group to get back to a sustainable profitable growth. Since the end of the first half, all of the key DTV accounts that we had decided to migrate to the service mode are now operating in this mode and fully contribute to the Group's profitability. Out of our 114 million active smart cards/modules in use worldwide, about 57 million are now in service mode.
The year 2009 is important for us as our Group's solidity is being put to a test in a difficult economic environment. In particular, the core DTV activity is demonstrating the strength of its new business model, delivering growth and profitability despite a challenging environment.
With the transition to the service mode now completed, the Kudelski Group can fully focus on its strategic objectives which aim at ensuring sustained growth and profitability. As a reminder, the strategic objectives include gaining market share, offering new solutions to address new market segments and extending the realm of our competencies in order to provide more comprehensive turnkey solutions.
During the first half of 2009, the Kudelski Group worked in all three strategic directions resulting in several new important contracts throughout the world, the release of new concepts as part of the TV 2.0 experience and the deployment of integrated solutions. These include various product lines such as turnkey solutions, conditional access systems and interactive solutions.
In addition to business development activities, the Kudelski Group started to reap the fruit of its cost reduction initiatives, optimizing its structures and concluding important agreements with strategic partners. Finally, with the powerful development of its Beijing site, the Group is in a position to both strengthen its presence in this promising market and reduce its cost structure while leveraging on positive growth dynamics.
Perspectives for the full year are promising and we expect improved profitability compared to previous expectations due to positive developments in the core DTV activity. In parallel, the impact of the economic downturn on the Public Access and Middleware & Advertising businesses lead us to manage those activities carefully.
Eighteen months ago, the Kudelski Group took the risk to adopt a new approach to the digital television market to become stronger and better face future challenges. We are convinced that our Group is now particularly well positioned to fully benefit from an upturn in the world's economic situation thanks to solutions tailored to address new needs and to motivated teams.
Finally, we would like to thank our employees for their efforts as well as our clients, partners and shareholders for the trust that they have placed in our Group, allowing it to take up new challenges every day.
André Kudelski