Connecting the World from the Inside Out
Total Page:16
File Type:pdf, Size:1020Kb
Connecting the world from the inside out 2020 Annual Report Telit Communications PLC, together with its subsidiaries (the “Group”, “Telit”) is a global leader in Internet of Things (IoT) enablement. The Group has an extensive portfolio of IoT products and services including wireless connectivity Y ’ modules (from 2G to 5G technologies), Global Ex i ce i oT Navigation Satellite System (GNSS) modules, short-range wireless modules including low op 1 t s r’s co pr s 31 6 power Wi-Fi and Bluetooth, IoT sofertiewn a in rIoe ev es platforms, and globally Managed IoT Connectivity services, all of which empower hundreds of T us rs millions of connected “things”. c p is .6 f r nue dul s The Group sells its products and services directly and indirectly via a network of distributors, to thousands of customers, worldwide. With nearly two decades of od ypes l es experience in IoT , Telit continues to redefine the l id boundaries of digital transformation, by delivering ea ’s secure, integrated end-to-end IoT solutions for many of xp i e in I the world’s largest brands, including enterprises, original E pl ye equipment manufacturers (OEMs), system integrators l ffic and service providers across all industries. or d i Y ’ p c to er Ex i c i oT ri e 1. Telit is listed on the AIM market of the o ve London Stock Exchange (AIM: TCM). At the end of 2020, the Group al s f i s employed 820 people worldwide. Top 1 st s co pris 31.6 f e es al f c (i cl di le t is ri ut s S es or Global footprint (in uding M dul s i tribu or ) Ce er lo s o ld ide 4 3 20+ 20+ 820+ Year’s Employees Manufacturing Experience in IoT R&D Centers Worldwide Sites (EMS) Sales offices cus o rs a fa uring i . l ffic gi s of r enu it (EMS) l fo ce i l in 02 Telit Communications PLC Annual Report 2020 d st i to ) Eng er o e type Highlights Financial Highlights1 $343.6m $343.6m $44.0m $40.6m -10.2% Total Group revenues +7.3% +6.3% Group revenues (2019: $392.5 million, IoT Cloud and connectivity Adjusted EBITDA (2019: $382.8 million including two months revenues (2019: $38.2 million), excluding automotive revenue from automotive (2019: $41.0 million), driven with $15.0 million of R&D revenue). business). by a strong performance of capitalisation both the connectivity and the (2019: $15.3 million). IoT platforms businesses. $13.2m $7.9m 4.7¢ $63.7m Operating profit (EBIT) Profit before tax Basic earnings per share Net cash at (2019: operating profit (2019: profit $59.9 million). (2019: earnings per share 31 December 2020 $63.6 million includes Adjusted profit before tax 36.0 cents). Adjusted (31 December 2019: $54.5 million related to the $12.5 million earnings per share of Net cash of $48.2 million). gain on disposal of the (2019: $13.2 million). 7.4 cents (2019: earnings automotive business2). per share 12.5 cents). Adjusted EBIT of $17.8 million (2019: $16.9 million). $16.0m $42.6m Profit in cash3 Cash flow generated from (2019: profit $11.7 million), operating activities, substantial improvement before movement in working of $4.3 million in 2020 capital (2019: $34.6 million). reflecting the focus on cash generation. 1. For the definition of “Adjusted” figures and reconciliation from IFRS financial results to adjusted financial results please refer to Note 10 to the attached financial statements. 2. Please refer to Note 4C to the attached financial statements. 3. Profit (loss) in cash see Note 10. Operational Highlights Telit 5G data cards receive extensive global certifications Received certifications for: Telit modules joined Microsoft Azure certified for IoT – CAT-M Modules from Verizon catalogue – LTE-M NB-IoT from Telstra Telit wins 2020 IoT evolution 5G leadership award – LTE-M NB-IoT from Radio equipment directive New partnership with Sequans to launch CBRS Modules – LTE-M for SK Telecom Telit 5G data card series for the world’s first American football helmet with 360° video cameras Contents Overview Corporate Governance Financial Statements Financial and Operational Highlights 01 Board of Directors 24 Independent Auditor’s Report 44 Telit and the Internet of Things 02 Chairman’s introduction to Financial Statements 55 Corporate Governance report 28 Strategic Report Report on Directors’ Remuneration 34 Chairman’s Statement 05 Report of the Audit Committee 39 Other Information Our Business Model 06 Directors’ Report 41 Glossary 110 Chief Executive Officer’s Statement 08 Statement of Directors’ Company Information 111 Chief Financial Officer’s Statement 12 Responsibilities 43 Principal Risks and Uncertainties 19 Corporate Social Responsibility 23 Telit Communications PLC Annual Report 2020 01 Telit and the internet of things Manufacturing in transition 5G poised to remove all but power The report Covid-19 created an inflection point for the cabling from factories and more manufacturing industry. According to the 5G is here. As of December 2020, 140 mobile expects that across World Economic Forum (WEF), “Covid-19 operators across 59 countries were in full showed the limits of globalised manufacturing commercial operation8. With 5G, factory all applications, processes to meet people’s needs. Localised floors can become uncluttered and easy to production could allow for greater resilience reconfigure with autonomous vehicles and including robotics, and opportunity as the globe struggles with robots. Deloitte states “robotics is expected the coronavirus.”6 Deloitte also noted that to make up a sizable fraction of the enterprise there will be “Covid-19 may be the catalyst for companies IoT market, which in turn is predicted to be to revisit their global supply chain strategy one of 5G’s major beneficiaries”. The report 4.1 billion 5G IoT and accelerate the adoption of Digital Supply expects that across all applications, including Network models and capabilities.”7 Below we robotics, there will be 4.1 billion 5G IoT connections review how Telit is strongly positioned as a connections by 2024. The market for private vendor and partner to Industry 4.0 system 5G networks was estimated by Deloitte at a by 2024. integrators and solution providers, to take few hundred million dollars in 2020 and is set advantage of opportunities as the digital to reach billions of dollars in spending by transformation of the manufacturing industry enterprises in 20239. IOT enters the democratization process predicted Covid and IoT markets by the WEF, expanding into small and medium manufacturers across all industries and The Covid-19 global pandemic crisis had a geographies. multifaceted impact on IoT markets with stalling growth for the year across all regions except China. However, IoT adoption The “first mile of the IoT” goes sentiment remained positive. In its October private 2020 Quarterly IoT Buyer’s Index4, the IoT In 2019, we introduced the concept of the “first M2M Council (IMC) reported that the mile of the IoT”, laying out the solution stack “perspective of adopters hasn’t been greatly that starts at the edge of the data path, where affected by the pandemic.” The report also sensors and actuators generate or consume highlighted that healthcare and energy data to and from orchestration, travelling adopters surveyed were planning on making across secure but public wide area networks. major IoT investments throughout 2021. OneEdge, Telit’s pillar first mile product has Another factor impacted was the disruption collected industry accolades including eleven of global supply chains, impacting our own awards from media and analysts. and our customers’ ability to source components to deliver finished goods, even Comprised of module-embedded and cloud- in the case of confirmed orders. native software elements, OneEdge is set to evolve, utilising components from strategic We estimate that the global cellular module ecosystem partners, to support on-premises market excluding China contracted from 140 instances and other refinements making it million units in 2019 to about 127 million in more aligned with private LTE and private 2020, or a 10% drop year-on-year. Despite an 5G network architectures. estimated annual growth of 15% in non- China shipments in 2021, we project annual levels to reach pre-Covid levels no sooner than 20245. 4. IoT Buyer’s Index, Quarter 3 2020 Survey, IMC – IoT M2M Council. 5. Telit assessment based on the following industry reports: TSR 2020 Cellular MBB and Module Market Data; M2M Embedded Cellular Modules - 4Q 2019 (MD-M2MM-167) & M2M Embedded Cellular Modules - 3Q 2020 (MD-M2MM-168); Cellular IoT Market Tracker - Q2 2020, Cellular IoT Market Tracker – Q1 2020. 6. Small, independent manufacturers could be crucial to reshaping industry post-COVID- Here’s why; George Juraj Salapa, Co-founder, Bardicredit GmbH; World Economic Forum; 31, July 2020. 7. Covid-19 - Managing supply chain risk and disruption, February 2020, Deloitte. 8. Networks, Technologies & Spectrum Snapshot, December 2020, Global mobile Suppliers Association (GSA). 9. Technology, Media, and Telecommunications Predictions 2020, Deloitte Insights. 02 Telit Communications PLC Annual Report 2020 Products & services for end-to-end IoT solutions THINGS IoT Products IoT Services IoT Services IoT Modules IoT Connectivity IoT Software Plans & Platforms Simplifying digital transformation Global presence providing intelligent edge solutions (modules, connectivity, software, platforms) to enable IoT -based digital transformation Telit Communications PLC Annual Report 2020 03 Telit and the internet of things continued Telit’s 5G vision and execution A unique approach to cellular Aligning platforms to the connected Telit sees 5G fundamentally as an IoT connectivity in the Telit Network factory movement emboldened by ecosystem play, requiring the surrender of Since entering the cellular connectivity Private 5G linear product push models, still practiced by business in 2011, Telit has worked on creating deviceWISE, the award-winning industrial commodity module vendors, in favour of a the ideal connectivity services provider for IoT platform with over 35 years of evolution clustered go to market approach with IoT.