21st Feb 2008 07:00
BATM Advanced Communications Ld21 February 2008 BATM Advanced Communications Limited Preliminary results for the year ended 31 December 2007 BATM Advanced Communications Limited ("BATM" or "the Company") (LSE: BVC), aleading designer and producer of broadband data and telecoms systems, announcespreliminary results for the year ended 31 December 2007. Full Year Highlights All figures in US dollars 2007 2006 Change % Revenue $96.9m $73.5m + 32 Gross Profit $45.5m $31.2m + 46 Operating profit $16.6m $7.3m + 129 Pre-tax profit $20.0m $6.9m + 190 Net profit $20.1m $6.4m + 214 Earnings per share 5.08c 1.66c + 206 • Excellent full year performance with a strong second half • Gross margins of 47% compared with 43% for full year 2006 • Operating profit more than doubled • Net profit more than tripled • Substantially enhanced year end cash position of $64.8m (2006: $50.4m) • Proposed dividend of 1 cent per share (first dividend since 1999) • Positive outlook for 2008 based on existing growth and new contracts signed in 2007 Dr Zvi Marom, Chief Executive of BATM, said:"2007 has proved to be an excellent year for BATM, with our solutions andproduct lines performing outstandingly well. "Sales to existing customers have shown considerable growth and we continue towin customers both in existing and new geographical areas. We have also takensteps to further enhance our intellectual property in respect of current and newproducts which, we believe, will help to further underpin the Company'sprospects. "Given the progress made to date, BATM is better placed to continue its growththan ever before. The first dividend payment since 1999 is clear evidence of theconfidence that we have for 2008 and beyond." For further information please contact: 21 Feb Thereafter BATM Advanced Communications LimitedDr Zvi Marom, Chief Executive 020 7936 9606 00972 9 866 2525Ofer Bar-Ner, Chief Financial Officer 020 7936 9606 00972 9 866 2525 Kaupthing Singer & FriedlanderNicholas How / Marc Young 020 3205 7620 020 3205 7620 Shore CapitalGraham Shore 020 7408 4090 020 7408 4090 Threadneedle CommunicationsJosh Royston / Graham Herring 020 7936 9606 020 7936 9606 Chairman's Statement I am delighted to report on a year which, by any standard, has been anoutstanding one for BATM. On every measure the Company has exceeded expectationsand the groundwork that has been carefully laid over the last few years has beenjustified by an excellent performance in a demanding and challengingenvironment. The feedback that we have received from customers in terms of ourproducts, service and delivery has been gratifyingly high, and I would like tocongratulate our executive team and staff at all levels for their contribution. I am also extremely pleased that our results and careful working capitalmanagement have enabled the Board to recommend the payment of a final dividendof 1 US Cent per share. Financial Performance Turnover was $96.9m (2006: $73.5m) - an increase of 31.9%. Revenues for thesecond half of 2007 at $57.3m (H2 2006: $39.4m) showed accelerated growththroughout the period. Gross profit margin was 46.9% (2006: 42.5%) The continued improvement in grossmargin performance benefited from a product mix with a higher proportion ofsoftware content and value added services. Selling, general and administrative expenses were $18.5m (2006: $14.5m) - anincrease of 28%. As a percentage of revenue these costs were 19.0%, (2006:19.7%). Net R&D expense for the year amounted to $9.3m (2006: $8.8m) - an increase of5.1%. This reflects our continued commitment to maintain our leading position inthe carrier Ethernet access space. In addition, a growing part of our R&Defforts are currently funded by our business partners. As a result of theserevenue generating arrangements, more than $2m of our R&D spend is included incost of goods sold. Operating profit, after amortization of intangible assets for the year, was$16.6m (2006: $7.3m) - an increase of $9.3m or 129%. Operating profit for thesecond half of 2007 was $11.8m (H2 2006: $3.9m), an increase of $7.9m or 202%. Net financial income was $3.4m (2006: $2.3m), an increase due to higher cashbalances. The company had a tax benefit for the year of $135k (2006: tax expense $504k) asnet taxes in Israel of approximately $1.5m were offset by $1.7m tax income inthe US as a result of deferred tax asset in respect to tax losses carriedforward recognized for the first time in 2007. Net profit, after amortization of intangible assets and income tax, amounted to$20.1m (2006: $6.4m), resulting in basic earnings per share of 5.08 cents (2006:1.66 cents) - an increase of 214% and 206% respectively. Our balance sheet remains very strong and we ended the year with effective cashbalances of $64.8m (2006: $50.4m). The increase in cash and cash equivalentscompared to last year is a reflection of the significant positive cashgeneration of the business. Period end cash and cash equivalents comprised: cashand deposits up to three months duration of $35.8 million; short-terminvestments up to one year of $18.5 million; and long-term investments of morethan one year of $10.5 million. We continue to exercise a conservativeinvestment strategy, maintaining most balances in bank deposits. Dividend The Board is of the opinion that, in light of the Company's profitability, itshould return to a policy of making dividend payments to shareholders.Accordingly, it has recommended, subject to shareholder consent, a finaldividend for 2007 of 1 US cent per share. In making this decision the Board hascarefully considered the likely future working capital requirements of thebusiness and believes that the Company should have sufficient cash resources tomeet these requirements, as well as retaining the ability to take advantage ofappropriate investment opportunities as and when they might occur. The Boarddoes not envisage recommending an interim dividend in the coming year. Sales and Marketing Our direct sales business have continued to be an important driver of our growthin tandem with our OEM channels During the course of the year we signed newcontracts with new customers. These contracts which increase our penetration ofnew markets will benefit the company in 2008 and beyond. We have also targeted the cable industry as a strong source of potential newcustomers. Initial results have been good, mainly in the U.S, and we expect thisarea to grow substantially. We remain in discussions with leading telecom vendors who are not yet customers,to offer them our latest generation of carrier Ethernet products. We areoptimistic that we can continue to expand our existing relationships and developmore in 2008 and beyond. We also continue to invest in the development of our direct channels and seeincreased demand for new Metro Ethernet and IP solutions with an emphasis onadvanced management options. Research and Development and New Products During 2007 we continued to enhance our network management solution. Thissoftware allows us to tie several of our products together to provide a fullcarrier Ethernet access solution to our customers. To complement ourcapabilities in this area, we have increased our investment in this field andadded significant expertise in this technology. This, we believe, will shortenour time to market and in conjunction with our BINOS software platform willprovide a market leading solution. We also continue to add features and capabilities to our BINOS software platformwhich are mainly service oriented. This robust operating system continues to bethe foundation of our core technology. By making this platform more modular andoperating systems independent, our opportunities to provide flexible solutionsto our customers are significantly increased. We have also added further resource and increased our focus on technology whichwill allow us to integrate legacy services into our Ethernet transportsolutions. This technology, some of it already integrated into several of ourproducts, will add another leadership edge to our engineering capabilities. Investment During 2007, as reported in the interim results, $310,000 was recorded asImpairment of Investments in relation to one small investment in Lynx PhotonicNetworks Inc which we have now completely written off. We also recorded a gainof $250,000 from the sale during 2007 of an investment that was written off inthe prior year. Prospects The world economy is entering an uncertain period. The current turmoil in thefinancial markets will almost certainly have an impact on economic activity andBATM will not be immune from its effect on our market segment. However, we arevery confident of our positioning in the market and the steps that we have takento continue to produce results that reflect our growing reputation fortechnological innovation and excellence. I look forward to my being able toreport further progress in 2008. Peter SheldonChairman 21 February 2008 BATM ADVANCED COMMUNICATIONS LTD. CONSOLIDATED INCOME STATEMENTS Year ended Year ended December 31, December 31, 2007 2006 $US'000 $US'000 --------- --------- Revenue 96,952 73,472 Cost of sales 51,456 (*)42,233 -------- -----------Gross profit 45,496 31,239 Sales and marketing expenses 12,353 10,402 General and administration expenses 6,119 4,063 Research and development expenses 9,275 (*)8,824 Other expenses 1,146 691 ------- -------Total operating expenses 28,893 23,980 ------- -------Operating profit 16,603 7,259 Investment revenue 2,667 1,906Other gains 1,038 567Finance costs (286) (201)Impairment of investments (60) (2,582) ------ -------Profit before tax 19,962 6,949 Tax 135 (504) ------ ------- Profit for the period 20,097 6,445 ======= =======Attributable to: Equity holders of the parent 19,874 6,445Minority interests 223 - ----- ----- 20,097 6,445 ====== ===== Earning per share (in cents) basic 5.08 1.66 ------ ------Earning per share (in cents) diluted 5.02 1.64 ------ ------ (*) Restated to reflect a change in accounting policies regarding Government Grants BATM ADVANCED COMMUNICATIONS LTD. CONSOLIDATED BALANCE SHEETS December 31, 2 0 0 7 2 0 0 6 $US'000 Non-current assetsGoodwill 3,184 2,284Other intangible assets 6,737 4,556Property, plant and equipment 8,702 9,185Investment in companies - 1,001Held to maturity investments 10,501 3,432Deferred tax assets 735 ---- 2,217 -----Total non-current assets 31,341 21,193 ------ ------Current assetsInventories 12,211 13,176Short term investments 18,462 31,612Trade and other receivables 26,216 16,360Cash and cash equivalents 35,809 15,363 ------ ------ 92,698 76,511 ------ ------Total assets 124,039 97,704 ======= ======Current liabilities Short-term bank credit 90 -Trade and other payables 22,266 (*)17,047Current tax liabilities 280 199Provisions 2,952 2,116 -------- -------- 25,588 -------- 19,362 --------Net current assets 67,110 57,149 -------- --------Non-current liabilities Long-term payables 2,388 (*)4,188Retirement benefit obligation 335 310Long-term provisions - -------- 2,723 385 -------- ----- Total liabilities 28,311 4,883 -------- ----- 24,245 ------Net assets 95,728 73,459 -------- ------EquityShare capital 1,186 1,180Share premium account 400,646 399,068Revaluation reserve - 118Translation adjustment (29) -Accumulated deficit (307,033) (*) (326,907) -------- -------Equity attributable to equity holders of the parent 94,770 73,459Minority Interest 958 - -------- -------Total equity 95,728 73,459 ======== ======= (*) Restated to reflect a change in accounting policies regarding Government Grants BATM ADVANCED COMMUNICATIONS LTD. CONSOLIDATED STATEMENT OF CASH FLOWS Year ended Year ended December 31, December 31, 2007 2006 $US'000 $US'000 --------- ---------Net cash from operating activities (Appendix A) 12,629 3,760 --------- ---------Investing activities Interest received 2,945 1,551Dividend received from available for sale investments 15 16Proceeds on disposal of held to maturity investments 1,904 3,000Proceeds on disposal of available for sale investments 26,273 8,956Proceeds on disposal of deposits 34,104 13,000Proceeds on disposal of investment in Companies 941 -Purchases of property, plant and equipment (1,012) (1,279)Purchases of held to maturity investments (10,292) -Purchases of available for sale investments (26,665) (7,657)Purchases of deposits (18,387) (24,625)Investment in a company - (200)Acquisition of subsidiaries (Appendix B) (2,440) (1,933) --------- ---------Net cash from (used in) investing activities 7,386 (9,171) --------- ---------Financing activities Repayment of borrowings (237) (985)Proceeds on issue of shares 668 199 ----- -----Net cash from (used in) financing activities 431 (786) ----- -----Increase(decrease) in cash and cash equivalents 20,446 (6,197) Cash and cash equivalents at the beginning of the year 15,363 21,560 -------- --------Cash and cash equivalents at the end of the year 35,809 15,363 ======== ======== BATM ADVANCED COMMUNICATIONS LTD. APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS APPENDIX ARECONCILIATION OF OPERATING PROFIT FOR THE PERIOD TO NET CASHFROM (USED IN) OPERATING ACTIVITIES Year ended Year ended December 31, December 31, 2007 2006 $US'000 $US'000 --------- ---------Operating profit from continuing operations 16,603 7,259Adjustments for:Amortization of intangible assets 1,146 691Depreciation of property, plant and equipment 1,690 1,598Stock options granted to employees 916 767Increase in retirement benefit obligation 25 24Decrease in provisions (269) (175) ------- -------Operating cash flow before movements in working capital 20,111 10,164Decrease (increase) in Inventory 2,100 (1,433)Increase in receivables (8,308) (4,007)Decrease in payables (483) (744) ------- -------Cash generated by operations 13,420 3,980 Income taxes paid (505) (19)Interest paid (286) (201) ------- -------Net cash from operating activities 12,629 3,760 ======= ======= APPENDIX BACQUISITION OF SUBSIDIARIES Year ended Year ended December 31, December 31, 2007 2006 $US'000 $US'000 --------- ---------Net assets acquiredProperty, plant and equipment 195 208Inventory 1,135 1,298Trade and other receivables 1,548 1,564Trade and other payables (3,404) (1,944)Short-term bank credit (327) (985)Provisions - (257)Minority Interest (735) - ------- ----- (1,588) (116)Goodwill 1,200 2,284Intangible assets 3,326 3,859 ------- ------Total consideration 2,938 6,027Less-consideration recorded as liability (498) (4,094) ------- ------Total cash consideration 2,440 1,933 ======= ====== BATM ADVANCED COMMUNICATIONS LTD NOTES TO THE FINANCIAL STATEMENTS Note 1 - General The preliminary results for the year ended 31st December 2007 and thecomparative 2006 information are presented in accordance with InternationalFinancial Reporting Standards ("IFRS"). Note 2 - Earning per share Earning per share is based on the weighted average number of shares in issue forthe year of 391,530,389 (2006: 389,467,186). The number used for the calculationof the diluted earning per share for the year (which includes the effect ofdilutive stock option plans) is 396,146,949 shares (2006: 394,741,263). Note 3 - Consolidated statements of changes in equity Share Share Premium Revaluation Translation Accumulated Minority capital Account reserve reserve Deficit Parent Interest Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 ------- ------- ------- ------- ------- ------- ------- -------As at January 1, 2007 1,180 399,068 118 - (*)(326,907) 73,459 - 73,459 Stock options granted to employees 916 916 - 916Exercise of share based options by employees 6 662 668 - 668Released on disposal of available for sale investments (118) (118) - (118)Minority Interest acquired - 735 735Translation adjustment (29) (29) (29) Profit for the period - - - - 19,874 19,874 223 20,097 ----- ----- ----- ----- ------- ------ ----- ------As at December 31, 2007 1,186 400,646 - (29) (307,033) 94,770 958 95,728 ===== ======= ===== ===== ======= ====== ==== ====== (*) Restated to reflect a change in accounting policies regarding Government Grants This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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