26th Sep 2005 07:03
Emblaze Ltd26 September 2005 Emblaze Ltd. Interim results for six months ended 30 June 2005 Ra'anana, Israel, 26 September 2005: Emblaze Ltd (Emblaze or the Group), thetelecom technology group listed on the London Stock Exchange (LSE: BLZ),announces its financial results for the six months to 30 June 2005. Financial Highlights • Group results are strong with continued growth across all businesses • Revenues from operations for the half are up 24 times to $48.3m (H1 2004: $2.1m) • The Company has recorded additional financial revenues of $23.3m resulting primarily from floatation of subsidiaries bringing the total revenue of the group for the half to $71.6m • Net profit of $10m (H1 2004: $29.4m loss); • Profits from continuing activities of $10.1m (H1 2004: $7.4m loss) • Operating loss narrowed to $0.9m (H1 2004: $11.5m loss) and sequentially down from loss of $9.3m in the second half of 2004 • Although the Company has become net profitable it incurred operational losses from its commercial operations of $24.3m due to its product penetration strategy that includes lower margins and increased spend on marketing • Diluted earnings per share $0.07 (H1 2004: $0.22 loss) • Cash portfolio up by $19m to $268m ($249m as at 31 December 2004) • Total assets for the Group at 30 June 2005 was up $110m to $371m (30 June 2004: $261m); $350m at 31 December 2004 • On track to deliver revenues of $120m for full year 2005 (FY 2004: $57.5m) • Fast growing and strong trading performance across all Group companies Commenting on the results Eli Reifman, Chief Executive Officer of Emblaze, said:"Emblaze is one of the fastest growing telecom services and technology providersin Europe. Our focus on some of the most exciting segments of the telecomsindustry means Emblaze is superbly positioned to continue delivering stronggrowth and shareholder value as telecoms market experiences a sustained upturn." Enquiries:EmblazeDoron Cohen, Hagit Gal + 972 9 7699831/ 339 Corfin Communications + 44 20 7929 8989Harry Chathli, Neil Thapar Overview Emblaze Ltd is a group of companies sharing a common mission to provide telecomoperators with technologies, products and solutions for next generationservices: Emblaze Mobile, a new breed in handsets design and manufacturing;Adamind (LSE: ADA), a global leader in content adaptation (transcoding) forwireless operators; Emblaze VCON, is a leading provider of wireless videocommunications technologies and conferencing solutions for operators andenterprise markets over IP networks and Orca Interactive (LSE: ORCA), providerof Interactive Television IPTV middleware for Video On Demand (VOD) andbroadcast services, aimed at Telecom, cable and xDSL operators. The Group results were strong and showed growth across all business units.Revenues from business operations was $48.3m. Business Units* Six months ended 30 June 2005 Revenues (US $million)Adamind 3.2Emblaze Mobile 41.8Emblaze Systems 0.3Orca Interactive 3.0 Total $48.3 * These are the first six monthly results of the restructured EmblazeGroup after it underwent extensive changes during 2004 to position it forgrowth. Adamind was formed in November 2004 from the merger of the transcodingbusiness units of Royal Philips Electronics and Emblaze Ltd; Philips MP4NET andEmblaze Transcoding. In June 2004 Emblaze merged two of its business unitsEmblaze Systems provider of management solutions for video over wireless IPnetworks, and Emblaze Mobile, the developer of customised rich media handsets.In August 2005, Emblaze VCON was formed following the merger of Emblaze Systems,and VCON, a leading video communication systems company based in Israel. EmblazeSystems revenue figures in the table above have been separated from EmblazeMobile revenues for illustrative purposes as they are going to be reported asEmblaze VCON in the future. Financial Results Group revenue increased to $71.6m (H1 2004: $2.1m) of which, $48.3m was frombusiness operations. Growth was primarily due to demand for Emblaze Mobilehandsets in the far-east. The Group moved to interim net profits of $10m againsta net loss of $29.4m loss in the first half of 2004. The Group also achieved sequential growth, with revenues from businessoperations up 12.1% and net profits up 60% compared with the second half of2004. Net profits from continuing activities amounted to $10.1m compared with a $7.4mloss in first half of 2004. Operating expenses include cost of $46m for cost of revenues, $10.7m for R&Dexpenses, $10.5m for sales & marketing expenses, $5.5m for general andadministrative expenses and income of $0.2m from restructuring, other charges,impairment of property and equipment and amortization of intangible assets, net.The Group has a strong balance sheet with $254 million in total shareholders'equity, and increased its cash portfolio to $268 million compared with $249m at31 December 2004 due to Adamind's IPO. Cash investments portfolio increased to $268m is presented in the balance sheetunder the following breakdown: 30 June 2005 $mCash and cash equivalents 23.6Short-term bank deposits, marketable securitiesand 96.2accrued interestLong-term (over 1 year to maturity) marketablesecurities*, deposits and other long terminvestments 147.9 ==========Total: 267.7 *Marketable securities are mainly comprised of US Government Treasuries andother agencies and highly rated corporate debentures. In accordance with the Israeli Court's approval to repurchase up to 13% of theissued ordinary shares of the Group, Emblaze has to date purchased approximately3.4% of the ordinary share capital. We continue to regularly review costs in relation to our view on how our marketsare developing. EMBLAZE LTD. AND ITS SUBSIDIARIESCONSOLIDATED BALANCE SHEETS U.S. dollars in thousands, except share data June 30 December 31 2005 2004 --------- -------- Unaudited ---------ASSETS CURRENT ASSETS:Cash and cash equivalents $ 23,567 $ 31,908Short-term bank deposits 328 1,862Deposit in Escrow 5,557 -Accrued interest 1,852 2,332Short-term available-for-sale marketable securities 88,447 52,990Trade receivables 5,482 4,414Other receivables and prepaid expenses 7,627 9,150Inventories 7,023 6,872Assets of discontinued operations 205 769 -------- --------Total current assets 140,088 110,297----- -------- -------- LONG-TERM INVESTMENTS:Long-term available-for-sale marketable securities 139,023 97,270Restricted deposit 8,900 51,955Other long-term investments 1,498 10,911Severance pay fund 1,076 1,194 -------- --------Total long-term investments 150,497 161,330----- -------- --------PROPERTY AND EQUIPMENT, NET 5,743 6,539 -------- --------GOODWILL 70,431 67,264 -------- --------INTANGIBLE ASSETS, NET 4,157 4,853 -------- --------Total assets $ 370,916 $ 350,283----- ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:Short-term loans $ 16,270 $ 15,042Trade payables 35,116 37,708Deferred revenues 654 333Other payables and accrued expenses 33,132 31,426Liabilities of discontinued operations 413 1,585 -------- --------Total current liabilities 85,585 86,094----- -------- -------- LONG-TERM LIABILITIES:Long-term loan 5,000 479Accrued severance pay 3,452 3,488Long-term restructuring accrual 3,269 4,559 -------- --------Total long-term liabilities 11,721 8,562 -------- --------MINORITY INTERESTS 19,722 11,115 -------- --------SHAREHOLDERS' EQUITY:Share capital:Ordinary shares of NIS 0.01 par value: 416 416Authorized - 200,000,000 shares at December 31, 2004and June 30, 2005; Issued - 140,562,700 shares atDecember 31, 2004 and June 30, 2005; Outstanding -135,064,166 shares at December 31, 2004 andJune 30, 2005Additional paid-in capital 466,336 465,896Treasury stock, at cost (7,434) (8,623)Accumulated other comprehensive income (loss) (809) 1,501Accumulated deficit (204,621) (214,642) -------- --------Total shareholders' equity 253,888 244,548----- -------- -------- $ 370,916 $ 350,283 ======== ======== The accompanying notes are an integral part of the interim consolidatedfinancial statements. EMBLAZE LTD. AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSU.S. dollars in thousands, except share and per share data Six months ended Year ended June 30 December 31 ---------------------- 2005 2004 2004 -------- ---------- --------- Unaudited -------------------Revenues * $ 71,573 $ 2,115 $ 57,491Operating cost and expenses:Cost of revenues from products 45,995 708 38,220Research and development, net 10,685 3,053 11,386Selling and marketing 10,545 4,804 11,547General and administrative 5,506 4,795 10,240Amortization of intangible assets 456 215 509Restructuring, other charges andimpairment of property and equipment (720) - 6,338 ------- ------- -------Total cost and expenses 72,467 13,575 78,240----- ------- ------- -------Operating loss (894) (11,460) (20,749)Financial income, net 4,828 4,067 9,540Taxes on income 956 - - ------- ------- -------Income (loss) before minorityinterests in losses of subsidiaries 4,890 (7,393) (11,209)Minority interests in losses ofsubsidiaries 5,242 - 61 ------- ------- -------Income (loss) from continuingoperations 10,132 (7,393) (11,148)Loss from discontinued operations,net of capital gain (111) (22,023) (12,015) ------- ------- -------Net income (loss) $ 10,021 $(29,416) $(23,163) ======= ======= =======Basic and diluted net income (loss)per share:From continuing operations $ 0.07 $ (0.06) $ (0.08)From discontinued operations, netof capital gain - (0.16) (0.09) ------- ------- -------Basic net income (loss) per share $ 0.07 $ (0.22) $ (0.17) ======= ======= =======Weighted average number of sharesused in computing basic netincome (loss) per share 135,647,025 135,303,314 134,953,259 =========== =========== ===========Weighted average number of sharesused in computing diluted netincome (loss) per share 137,640,210 135,303,314 134,953,259 =========== =========== =========== The accompanying notes are an integral part of the interim consolidatedfinancial statements. (*) Revenues include financial consulting services and other are as follows: forthe six months ended June 30, 2005 and June 30, 2004, $23,341 and $0,respectively; and for the year ended December 31, 2004, $12,345. EMBLAZE LTD. AND ITS SUBSIDIARIESSTATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITYU.S. dollars in thousands Share Additional Deferred Treasury capital paid-in stock Stock capital compensation at cost ------- -------- -------- --------Balance as of January 1, 2004 $ 414 $ 465,056 $ (219) $ (5,702) Repurchase of shares, net - - - (3,539)Issuance of shares upon exerciseof stock options 2 848 - 618Amortization of deferred stockcompensation, net - (8) 219 -Comprehensive loss:Unrealized losses on put andcall option contracts, net - - - -Unrealized losses fromavailable-for-sale marketablesecurities, net - - - -Foreign currency translationadjustments - - - -Net loss - - - - ------- -------- -------- --------Balance as ofDecember 31, 2004 416 465,896 - (8,623)Issuance of shares upon exerciseof stock options - 440 - 1,189Comprehensive loss:Unrealized losses fromavailable-for-salemarketable securities, net - - - -Foreign currency translationadjustments - - - -Net Income - - - - ------- ------- -------- --------Balance as of June30, 2005 (unaudited) 416 466,336 - (7,434) ======= ======= ======== ======== *) Less than $ 1. The accompanying notes are an integral part of the interim consolidatedfinancial statements. EMBLAZE LTD. AND ITS SUBSIDIARIESSTATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Cont)U.S. dollars in thousands Accumulated other Total comprehensive Accumulated comprehensive income (loss) deficit Loss Total ------- ------- ------- -------Balance as of January 1, 2004 $ 66 $(191,479) $268,136 Repurchase of shares, net - - (3,539)Issuance of shares upon exercise of stock options - - 1,468Amortization of deferred stock compensation, net - - 211Comprehensive loss:Unrealized losses on putand call option contracts, net (66) - $ (66) (66)Unrealized losses fromavailable-for-sale marketablesecurities, net (284) - (284) (284)Foreign currencytranslation adjustments 1,785 - 1,785 1,785Net loss - (23,163) (23,163) (23,163) ------- ------- ------- -------Total comprehensive loss $ (21,728) =======Balance as ofDecember 31, 2004 1,501 (214,642) 244,548 Issuance of shares upon exercise of stock options - - 1,629Comprehensive loss:Unrealized lossesfrom available-for-sale marketable securities, net (2,851) - (2,851) (2,851)Foreign currencytranslation adjustments 541 - 541 541Net Income - 10,021 10,021 10,021 ------- ------- ------- -------Total comprehensive loss $ 7,711 =======Balance as of June 30, 2005 (unaudited) (809) (204,621) 253,888 ======= ======= ======= *) Less than $1. The accompanying notes are an integral part of the interim consolidatedfinancial statements. EMBLAZE LTD. AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands Six months ended Year ended June 30 December 31 -------------------- 2005 2004 2004 -------- -------- --------- Unaudited --------------------Cash flows from operating activities:-------------------------------------Net income (loss) $ 10,021 $ (29,416) $ (23,163)Less: Net loss from discontinuedoperation 111 22,023 12,015 -------- -------- ---------Net loss from continuing operations 10,132 (7,393) (11,148)Adjustments to reconcile net loss fromcontinuing operations to net cash used inoperating activities from operations:Impairment of acquired technology 2,732 1,646Depreciation, amortization and writeoff of in-process research and development 1,917 (1,316) 4,825Amortization of marketable debtsecurities premium and accretion ofdiscounts, net 311 1,050 1,669Stock compensation expenses - 211 211Net gain on sales of marketablesecurities (138) - (1,267)Write down of investments incompanies - - 30Net gain from Initial Public Offeringof Orca Interactive Ltd. - - (11,537)Revenue from financial activities andCapital gain, net (24,168) - (1,057)Minority interest in losses ofsubsidiaries (5,147) - (61)Decrease (increase) in tradereceivables, other receivables andprepaid expenses, inventories andaccrued interest income (1,294) 3,234 6,749Increase (decrease) in tradepayables, other payables and accruedexpenses and accrued severance pay, net (2,223) 1,500 (4,647)Increase (decrease) in deferredrevenues 321 435 5Increase (decrease) in long-termrestructuring accrual (1,290) (240) 2,678Other (8) 30 49 -------- -------- --------Net cash provided by (used in)operating activities from continuingoperations (21,587) 243 (11,855)Net cash used in operating activitiesfrom discontinued operations (719) (16,533) (37,616) -------- -------- --------Net cash used in operating activities (22,306) (16,290) (49,471) -------- -------- --------- Cash flows from investing activities:--------------------------------------- Purchase of property and equipment,net (469) (137) (252)Proceeds from sale of property andequipment 77 - 13Investment in short-term bank deposit (3,980) - (240)Investment in short-termavailable-for-sale marketablesecurities (249,914) (2,000) (24,333)Proceeds from maturity of short-termheld-to-maturity marketablesecurities 223,810 57,256 1,032Investment in long-termheld-to-maturity marketablesecurities (5,029) - -Investment in long-termavailable-for-sale marketablesecurities (61,382) (43,790) (68,147)Proceeds from sales, calls andmaturity of long-termheld-to-maturity marketablesecurities 25,844 13,000 154,344Proceeds from (investment in)long-term bank deposits 10,690 237 (4,140)Restricted deposit, net 43,055 - (51,955)Payment for the acquisition of 60%interest in Innostream Inc. (1) - - (11,432)Payment associated with the businesscombination of Adamind Ltd. - - (500)Investment in Companies (2,607) - - ------- ------- --------Net cash provided by (used in)investing activities from continuingoperations (19,905) 24,566 (5,610)Net cash provided by (used in)investing activities fromdiscontinued operation - (3,514) 43,897 ------- ------- --------Net cash provided by (used in)investing activities (19,905) 21,052 38,287 ------- ------- -------- The accompanying notes are an integral part of the interim consolidatedfinancial statements. EMBLAZE LTD. AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands Six months ended Year ended June 30 December 31 --------------------- 2005 2004 2004 -------- -------- --------- Unaudited ---------------------Cash flows from financing activities:--------------------------------------- Repurchase of shares, net - (3,537) (3,539)Short-term loans 966 - (3,327)Long-term loans 4,624 - -Proceeds from Initial Public Offeringof a subsidiary, net 25,490 - 22,621Proceeds from exercise of stock options, net 2,689 67 405 -------- -------- ---------Net cash provided by (used in) financingactivities from continuing operations 33,769 (3,470) 16,160Net cash provided by (used in) financingactivities from discontinued operation - - - -------- -------- ---------Net cash provided by (used in) financingactivities 33,769 (3,470) 16,160 -------- -------- ---------Effect of exchange rate translationadjustments on cash 101 - 237 -------- -------- ---------Increase (decrease) in cash and cashequivalents from continuing operations (7,622) 21,339 (1,068)Increase (decrease) in cash and cashequivalents from discontinued operations (719) (20,047) 6,281Cash and cash equivalents from continuingoperations at beginning of period 31,908 26,192 26,192Cash and cash equivalents from discontinuedoperations at beginning of period - 503 503 -------- -------- ---------Cash and cash equivalents from continuingoperations at the end of period $ 23,567 $ 27,232 $ 31,908 ======== ======== =========Cash and cash equivalents from discontinuedoperations at the end of period - 755 - ======== ======== =========Acquisition of 60% interest inInnostream Inc.: (1) Estimated fair values of assets acquired and liabilities assumed at the date of acquisition: --------------------------------Working capital deficiency, excludingcash and cash equivalents $ - $ - $ 56,092Property and equipment - - (4,811)Other long-term investment - - (2,283)Intangible assets, mainly goodwill - - (62,041)Long-term loan - - 437Accrued severance pay, net - - 1,174 -------- -------- -------- $ - $ - $(11,432) ======== ======== ======== The accompanying notes are an integral part of the interim consolidatedfinancial statements. EMBLAZE LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1:- GENERAL Emblaze Ltd. (the "Company") and its subsidiaries provide solutions forrich-media delivery and associated services over wireless and broadband IPnetworks. The Company's products are marketed worldwide. NOTE 2:- INTERIM CONSOLIDATED FINANCIAL STATEMENTS INFORMATION The financial statements include the unaudited consolidated balance sheets asof June 30, 2005 and the results of operations and cash flows for the six monthsended June 30, 2005 and 2004 and the statements of changes in shareholders'equity for the six months ended June 30, 2005. This unaudited information hasbeen prepared by the Company on the same basis as the audited consolidatedfinancial statements for the year ended December 31, 2004, and, in management'sopinion, reflects all adjustments necessary for a fair presentation of thefinancial information in accordance with generally accepted accountingprinciples in the United States, for the periods presented. Reclassification: Certain amounts from prior year have been reclassified to conform to the currentperiod presentation. - - - - - - - - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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