BSD.L Regulatory News (BSD)

2 Apr 2007 07:56

Emblaze Ltd02 April 2007 The following replaces the Final Results released at 07.00 under RNS number 1878U Corrections: Deleted: Formula's revenues for the full year of 2006 have amounted to $560m and its net profit was $10m. Sentence changed from: "As a result, the Company provided the appropriate allowances. Group management will adjust strategy of Emblaze Mobile according to future developments with HMRC." To: "The Company provided the appropriate allowances and Group management will adjust strategy of Emblaze Mobile according to future developments." Emblaze Ltd. Audited Results for the year ended 31 December 2006 Ra'anana, Israel, 2 April 2007: Emblaze Ltd (Emblaze or "the Group") (LSE: BLZ), announces today its audited financial results for the 12 months ended 31 December 2006. Financial Highlights •Revenues from operations increased by 179% to $351.5m (2005: $126m) •Operating loss increased to $45.0m (2005: $10.3m) mainly due to provisions and reserves taken in consideration of VAT refunds withheld by the UK HMRC authorities. •Net loss from continuing operations was $25.8m (2005: $0.6m profit) •Strong balance sheet with total assets amounting to $249.7m (2005: $290.7m) Operational Highlights •Guy Bernstein and Hadas Gazit-Kaiser appointed as Chief Executive and Chief Financial Officer respectively •Eli Reifman appointed as Vice Chairman •Emblaze Mobile has been the main provider of revenues for the group business representing 98% of the total revenues in 2006, however, its business has been significantly hindered by the nationwide HMRC withholding of VAT refunds and prompted the earnings warning earlier this month. •Purchase of 50.01% in Formula Systems (1985) Ltd., a global group of technology, software and IT Guy Bernstein, Chief Executive Officer of Emblaze, said: "Emblaze is a company that has developed many technologies and innovative solutions since its inception. Much has been spent into R&D, market education and significant knowledge and skills have been accumulated in the group over the years. I believe it is time now to divert all those skills and talents focusing into profit generation and value to shareholders. We are not happy about the HMRC issues but it is truly an industry matter that is beyond our control. Emblaze Mobile is but one company in the group, while my team and I are fully committed to make the group successful as a whole." Enquiries: Emblaze Ltd Hadas Gazit, Hagit Gal +972 9 7699302/ 339 Corfin Communications (UK) Harry Chathli, Neil Thapar +44 (0)20 7929 8989 Eisenberg-Eliash LTD., Investor relations & Public relations (Israel) Amir Eisenberg +972 3 7538828 / +972 52 8260285 The full results are available from www.emblaze.com Review The Group reports that it has maintained operational performance led primarily by the Emblaze Mobile division. Consolidated Revenues for the full year were up to $351.5m (2005: $126.0m). However, in the second half of the year, the Group experienced a significant slowdown in the trading and distribution business of Emblaze Mobile. This slowdown was mainly as a result of a dispute with Her Majesty Revenue & Customs (HMRC) regarding a decision made by the HMRC to withhold VAT reclaims in the sum of $16.2m. These actions taken by the HMRC represent a part of general measures applied to battle against VAT fraud exposed within the mobile telephone handset sector. The Company provided the appropriate allowances and Group management will adjust strategy of Emblaze Mobile according to future developments. In September 2006, it was announced that Emblaze had agreed to take effective control of Formula Systems (1985) Ltd (NASDAQ:FORTY) by purchase of 33.4% of the entire issued share capital from its largest shareholder, Fimgold Partnership Ltd. Since then, the Company has increased its holding in Formula through various purchases of shares in the open market. On March 30, 2007, Emblaze completed a special tender offer for the purchase of additional 5.3% of the issued and outstanding share capital of Formula. As a result, Emblaze now owns 50.01% of Formula and will be consolidating the Formula Group results from Q2 2007 and on. Historically, Emblaze's growth strategy was based both on organic as well as M&A driven growth. The acquisition of Formula is aimed at expanding the Group's business in the technology arena and providing a solid foundation for the future evolution of the Group. Formula Systems Ltd is a global provider of technology, software and IT solutions to a wide range of sectors in over 50 countries. The net cash investments portfolio is presented in the balance sheet under the following breakdown: 31 December 2006 $m Cash and cash equivalents 12.7 Short-term bank deposits, marketable securities (1 andaccrued interest net of short term borrowing 63.1Long-term (over 1 year to maturity) marketable Securities(1,2, deposits and other long term investments 55.5Sub Total: 131.3 Short-term bank loans (49.9)======================== ==================Total net cash investments portfolio 81.4 1) Including restricted marketable securities2) Marketable securities are mainly comprised of US Government Treasuries and other agencies and highly rated corporate debentures. CONSOLIDATED BALANCE SHEETSU.S. dollars in thousands December 31, 2005 2006 -------- --------ASSETSCURRENT ASSETS:Cash and cash equivalents $ 23,233 $ 12,676Short-term bank deposits 217 237Deposits in escrow 5,526 -Restricted deposit - 5,149Accrued interest 1,917 1,180Short-term marketable securities 32,315 30,797Restricted short-term marketable securities - 25,752Trade receivables (net of provision for doubtfulaccounts of $ 329 and $ 1,643 as of December31,2005 and 2006, respectively) 14,484 10,503Other receivables and prepaid expenses 12,428 4,244Inventories 4,536 7,063Short-term assets of discontinued operations 22,437 - -------- -------- Total current assets 117,093 97,601 -------- -------- LONG-TERM INVESTMENTS:Long-term marketable securities 145,198 30,151Restricted long-term marketable securities - 25,357Restricted deposits 3,751 -Other long-term investments 3,990 86,535Severance pay fund 1,436 1,378Long-term assets of discontinued operations 12,712 - -------- -------- Total long-term investments 167,087 143,421 -------- -------- PROPERTY AND EQUIPMENT, NET 1,966 2,392 -------- -------- GOODWILL 1,710 3,679 -------- -------- INTANGIBLE ASSETS, NET 2,864 2,570 -------- -------- Total assets $ 290,720 $ 249,663 ======== ======== CONSOLIDATED BALANCE SHEETSU.S. dollars in thousands, except share and per share data December 31, 2005 2006 --------- --------LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:Short-term bank loans $ 3,799 $ 49,935Trade payables 15,732 11,385Advance payments from customers - 10,107Deferred revenues 822 949Other payables and accrued expenses 15,451 27,565Short-term liabilities of discontinued operations 2,825 - --------- -------- Total current liabilities 38,629 99,941 --------- -------- ACCRUED SEVERANCE PAY 2,069 2,020 --------- -------- LONG-TERM LIABILITIES 18,586 847 --------- -------- MINORITY INTERESTS 12,456 363 --------- -------- COMMITMENTS AND CONTINGENT LIABILITIES SHAREHOLDERS' EQUITY:Share capital:Ordinary shares of NIS 0.01 par value: Authorized - 200,000,000 shares as of December 31, 2005 and 2006; Issued - 140,578,154 shares as of December 31, 2005 and 2006; Outstanding - 135,872,691 shares as of December 31, 2005 and 111,473,687 shares as of December 31, 2006 416 416Additional paid-in capital 463,848 468,400Treasury stock, at cost (7,381) (76,441)Accumulated other comprehensive loss (2,187) (328)Accumulated deficit (235,716) (245,555) --------- -------- Total shareholders' equity 218,980 146,492 --------- -------- Total liabilities and shareholders' equity $ 290,720 $ 249,663 ========= ======== CONSOLIDATED STATEMENTS OF OPERATIONSU.S. dollars in thousands, except share and per share data Year ended December 31, ----------------------- 2004 2005 2006 --------- --------- --------- Revenues:Revenues from sales ofproducts and related services $ 6,617 $ 120,136 $ 354,807Equity in earnings (losses) ofaffiliated companies, net - (613) 239Other revenues and capitalgains (losses), net 11,438 6,475 (3,517) --------- --------- --------- Total revenues 18,055 125,998 351,529 --------- --------- --------- Costs and expenses: Cost of sales and related services 2,233 108,268 335,893 Research and development, net 5,654 4,898 8,301 Selling and marketing 9,019 16,104 17,382 General and administrative 8,892 7,618 16,381 Other expenses - - 18,078 Amortization of intangible assets - 121 512 Restructuring, other charges and impairment of property and equipment, net 6,338 (720) - --------- --------- --------- Total costs and expenses 32,136 136,289 396,547 --------- --------- --------- Operating loss 14,081) (10,291) (45,018)Financial income, net 9,501 10,197 5,925 --------- --------- --------- Loss before taxes on income (4,580) (94) (39,093)Taxes on income - 353 2,125 --------- --------- --------- Loss before minority interestsin losses of subsidiaries (4,580) (447) (41,218)Minority interests in lossesof certain subsidiaries 35 1,103 15,445 --------- --------- --------- Net income (loss) fromcontinuing operations (4,545) 656 (25,773)Gain (loss) from discontinuedoperations, net (18,618) (21,730) 15,934 ---------- ---------- --------- Net loss $(23,163) $ (21,074) $ (9,839) ========= ========= ========= Basic and diluted earnings(loss) per share: From continuing operations $ (0.03) $ 0.01 $ (0.21) From discontinued operations (0.14) (0.16) 0.13 --------- --------- --------- Net loss $ (0.17) $ (0.15) $ (0.08) ========= ========= ========= Weighted average number ofshares used in computing basicearnings (loss) per share 134,953,259 135,765,992 123,595,330 =========== =========== =========== Weighted average number ofshares used in computingdiluted earnings (loss) pershare 134,953,259 137,069,366 123,595,330 =========== =========== =========== STATEMENTS 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 exercise of stock options 2 848 - 618 Amortization of deferred stock compensation, net - (8) 219 - Comprehensive loss: Unrealized losses on put and call option contracts, net - - - - Unrealized losses from available-for-sale marketable securities, net - - - - Foreign currency translation adjustments - - - - Net loss - - - - ------- ------- -------- ------- Balance as of December 31, 2004 416 465,896 - (8,623) Issuance of shares upon exercise of stock options - 452 - 1,242 Debt security from related party - (2,500) - - Comprehensive loss: Unrealized gains from available-for-sale marketable securities, net - - - - Foreign currency translation adjustments - - - - Net loss - - - - ------- ------- -------- ------- Balance as of December 31, 2005 416 463,848 - (7,381) Repurchase of shares from related parties, net - - - (70,953) Issuance of shares upon exercise of stock options - 49 - 182 Issuance of shares upon business combinations, net - 1,139 - 1,711 Debt security from related party - 2,500 - - Share based compensation expenses - 864 - - Comprehensive loss: Unrealized gains from available-for-sale marketablesecurities, net - - - -Foreign currency translation adjustments - - - -Net loss - - - - ------- ------- -------- ------- Balance as of December 31, 2006 416 468,400 - (76,441) ======= ======= ======== ======= STATEMENTS 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 - - 1,468 Amortization of deferred stock compensation, net - - 211 Comprehensive loss:Unrealized losses on put and call option contracts, net (66) - $ (66) (66) Unrealized losses from available-for-sale marketable securities, net (284) - (284) (284)Foreign currency translation adjustments 1,785 - 1,785 1,785Net loss - (23,163) (23,163) (23,163) -------- -------- -------- ------- Total comprehensive loss $ (21,728) ========= Balance as of December 31, 2004 1,501 (214,642) 244,548 Issuance of shares upon exercise of stock options - - 1,694 Debt security from related party - - (2,500) Comprehensive loss: Unrealized gains from available-for-sale marketable securities, net (1,857) - $ (1,857) (1,857)Foreign currencytranslation adjustments (1,831) - (1,831) (1,831)Net loss - (21,074) (21,074) (21,074) -------- -------- -------- ------ Total comprehensive loss $ (24,762) ======== Balance as of December 31, 2005 (2,187) (235,716) 218,980 Repurchase of shares from related parties, net - - (70,953) Issuance of shares upon exercise of stock options - - 231 Issuance of shares upon business combinations, net - - 2,850 Debt security from related party - - 2,500 Share based compensation expenses - - 864 Comprehensive loss: Unrealized gains from available-for-sale marketable securities, net 1,905 - 1,905 1,905 Foreign currency translation adjustments (46) - (46) (46) Net loss - (9,839) (9,839) (9,839) -------- -------- -------- ------ Total comprehensive loss $ (7,980) ========= Balance as of December 31, 2006 (328) (245,555) 146,492 ======== ======== ======= CONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands Year ended December 31, --------------------- 2004 2005 2006 -------- -------- --------Cash flows from operating activities: Net loss $ (23,163) $ (21,074) $ (9,839) Less: loss (gain) from discontinued operations 18,618 21,730 (15,934) -------- -------- -------- Net income (loss) from continuing operations (4,545) 656 (25773) Adjustments to reconcile net income(loss) from continuing operations tonet cash provided by (used in)operating activities from continuingoperations: Impairment of goodwill - - 150 Loss on business combination - - 1,405 Impairment of property and equipment 1,646 - - Depreciation and amortization 2,493 1,077 1,786 Amortization of marketable debt securities, premiums and accretion of discounts, net 1,669 612 511 Stock compensation expenses 211 - 300 Stock compensation expenses of subsidiaries - 248 637Net loss (gain) on sales of marketable securities (1,267) (140) 41 Equity in losses (earnings of affiliated companies - 613 (239)Other revenues and capital loss (gain), net (11,489) (6,030) 1,962Minority interests in lossesof subsidiaries (35) (1,103) (15,445)Decrease in trade receivables, other receivables and prepaid expenses, inventories and accrued interest 1,200 7,672 12,436Increase (decrease) in trade payables, other payables and accrued expenses and accrued severance pay, net 4,586 (7,936) 11,191Increase (decrease) in deferred revenues (213) 794 127Increase (decrease) in long-term liabilities 2,678 (1,289) 159 Other 12 (13) 571 -------- -------- -------- Net cash provided by (used in) operating activities from continuing operations (3,054) (4,839) (10,181)Net cash provided by (used in) operating activities from discontinued operations (46,416) (4,281) 31,028 -------- -------- -------- Net cash provided by (used in)operating activities (49,470) (9,120) 20,847 -------- -------- -------- Cash flows from investing activities:Purchase of property and equipment, net (230) (1,124) (1,578)Proceeds from sale of property and equipment 13 123 56Investment in (proceed from) short-term bank deposits and deposits held in escrow (183) (45) 357Investment in short-term marketable securities (24,333) (234,700) (126,036)Proceeds from maturity of short-term marketable securities 1,031 255,366 130,888Investment in long-term marketable securities (68,147) (78,863) (13,422)Proceeds from sales, calls and maturity of long-term marketable securities 154,344 32,851 86,545Proceeds from (investment in) long-term bank deposits and restricted deposits (56,477) - 3,751Proceeds from long-term bank deposits and restricted deposits - 51,712 -Payment for acquisition of 51% of Global Telecom Distribution plc. - (4,492) -Payment for acquisition of intangible assets from VCON - (1,225) -Investment in Formula (84,414)Investment in subsidiaries - - (1,922)Other investment - (2,944) (1,215) -------- -------- -------- Net cash provided by (used in)investing activities fromcontinuing operations 6,018 16,659 (6,990)Net cash provided by (used in)investing activities fromdiscontinued operations 32,268 (41,823) (101) -------- -------- -------- Net cash provided by (used in)investing activities 38,286 (25,164) (7,091) -------- -------- -------- CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.)U.S. dollars in thousands Year ended December 31, -------------------- 2004 2005 2006 -------- -------- -------- Cash flows from financing activities: Repurchase of shares, net (3,539) - (70,953) Debt security from related party - (2,500) - Short-term borrowings, net - (120) 45,472 Proceeds from Initial Public Offering of Orca Interactive Ltd., net 22,621 - - Proceeds from issuance of Emblaze VCON shares to third parties, net - 1,803 - Proceeds from exercise of subsidiaries' stock options, net - 42 - Proceeds from exercise of stock options, net 405 2,759 257 -------- -------- -------- Net cash provided by (used in) financing activities from continued operations 19,487 1,984 (25,224)Net cash provided by (used in) financing activities from discontinued operations (3,327) 25,502 - -------- -------- -------- Net cash provided by (used in) financing activities 16,160 27,486 (25,224) -------- -------- -------- Effect of exchange rate translation adjustments on cash of discontinued operations 237 - (966) -------- -------- -------- Increase (decrease) in cash and cash equivalents from continuing operations 24,534 13,804 (43,361)Increased (decrease) in cash and cash equivalents from discontinued operations (19,321) (20,602) 30,927Cash and cash equivalents from continuing operations at the beginning of the year 26,192 25,533 23,233Cash and cash equivalents from discontinued operations at the beginning of the year 503 6,375 1,877 -------- -------- -------- Cash and cash equivalents from continuing operations at the end of the year $ 25,533 $ 23,233 $ 12,676 ======== ======== ======== Cash and cash equivalents from discontinues operations at the end of the year $ 6,375 $ 1,877 $ - ======== ======== ======== This information is provided by RNS The company news service from the London Stock Exchange