BSD.L Regulatory News (BSD)

25 Sep 2006 07:03

Emblaze Ltd25 September 2006 Emblaze Ltd. Interim results for six months ended 30 June 2006 Ra'anana, Israel, 25 September 2006: 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 2006. Highlights • Results are significantly ahead of management expectations. • Total revenues from operations are up 16 fold to $260.9m (H1 2005: $16.1m) • Net profit of $11m (H1 2005: $10m); • EPS amounted to $0.08 (H1 2005: $0.08) • Total assets for the Group at 30 June 2006 were $253m; $291m at 31December 2005 • Europe becomes the largest market for Emblaze Mobile with 90% ofsales in to the region and over 60 operators and distributors clientele • Emblaze Mobile appointed as ODM supplier to Virgin Mobile for itsexclusive Lobster mobile phone range • Established new sales channels ideally suited for prepay propositions • On track to deliver further growth for full year 2006 • Fast growing and strong trading performance across all Group companies Commenting on the results Eli Reifman, Chief Executive Officer of Emblaze, said:"We are very pleased with our progress in Emblaze Mobile which is now asignificant player in Europe. We still maintain significant investment in R&Dfor our next generation mobile devices and technologies that we believe willlead to new major contracts and a significant increase in profit margins. Ascurrent main business keeps strong growth and is on track to increasedprofitability we intend to use our resources to further expand the group viainternal developments as well as acquisitions to realize our vision of becomingone of the world's largest and most significant groups for technology, software,IT and innovative solutions." Enquiries:EmblazeDoron Cohen + 972 9 7699831 Corfin Communications + 44 207 929 8989Harry Chathli, Neil Thapar Overview The Group is pleased to report that it has maintained a strong operationalperformance during the first half led primarily by the Emblaze Mobile division.Revenues for the six months ended 30 June 2006 were up 16 fold to $260.9m (H12005: $16.1m). In addition to the above, in March 2006, Emblaze sold its entire shareholding inAdamind and recorded a capital gain of $15.9m. According to accounting standardSFAS144, Adamind business has been treated as discontinued operation in thefinancial statements for all periods reported. Operational Highlights These results are vindication of Emblaze's strategy as it has continued in itsvision to build itself into a global business by assembling companiesspecializing in technology, telecommunications, software and products. Emblaze Mobile As indicated, Emblaze Mobile (EM) was the highest contributor to the Grouprevenues (99%). European Telecom has been fully integrated into Emblaze Mobileand is beginning to deliver results ahead of management's expectations. EM hasnow positioned itself as an end-to-end mobile business with particular focus ondelivery of device, content and applications with a view to deliver increasedARPU and reduce churn for operators globally. In H1 2006 its revenues wereprimarily from wireless devices trading and as an Original Device Manufacturer(ODM) virtual manufacturer. Earlier in the year, Emblaze Mobile was appointed asODM supplier to Virgin Mobile for its exclusive Lobster mobile phone range. EM has also established and developed a number of new sales channels ideallysuited for prepay propositions. It was appointed as an official distributor ofone of world's largest mobile operators' pay as you talk products. It wasselected to contribute to the operator's drive to broaden sales of pay as youtalk handsets and services across the dealer and retail community. The company now expands to move into additional mobile value added services toincrease the overall offering around mobile devices. Such services will includemobile content, airtime and many other complementary technologies, services andcustomized solutions that will further strengthen EM position in the marketplaceas a value added mobile device vendor. Management expects such services tobecome a more significant part of the business in 2007 and contribute to anincrease in gross profits and further growth. Most of EM's handsets (around 90%)are sold in Europe and UK accounts for approximately 30%. EM continues to invest in the development of breakthrough technologies and nextgeneration mobile devices that are planned to provide an advantage overpotential competition over the next five years period. Such technologies andproducts are aimed at changing the very essence of mobile device usage from thecurrent voice centric approach to a new breed of devices that will allow anyuser to conduct most their daily lives and basic functions via their mobiledevice. The company is currently negotiating significant contracts with top tieroperators over the development and delivery of such Emblaze next generationproducts. In addition, the group maintains investments in advanced technologies that cansignificantly contribute to its mobile handset business while having a strongmerit as independent services to a global audience. Examples of suchdevelopments are emoze and SmartContent. emoze In April 2006, Emblaze launched emoze, the world's first free and secure "push"email and PIM service providing Blackberry like solution to most of all othermobile devices. With emoze Personal Edition, anyone with a compatible mobilephone can receive work or home emails and Personal Information Manager (PIM)data such as contacts and diary scheduling on their mobile phone or PDA on themove, anywhere in the world. Email on the go has become the battleground for major vendors around the world.With the success of Research in Motion, the Blackberry has changed the waycorporate users communicate on a day to day basis but it is still the privilegeof "elitist few". Emblaze believes that mobile push email and PIM data shouldbecome a commodity service - a given - just like a voice call. Anyone fromcorporate users to individuals should have access to this basic service as partof their day to day communications. This is the background and reason for thedevelopment and introduction of emoze to the world, a free Push Email and PIMservice to anyone, anywhere and on any device. Smart Content In January 2006, Emblaze announced that it has entered into an agreement toacquire majority interest in Israeli based software technology company, SmartContent, developer of highly advanced technology for Content-Push over wirelessand IP networks to mobile devices and personal computers. Emblaze believes that a significant part of the solution will be formalized in amanner of personalized push of user specific content. Push technology wasregarded as the industry "Holy Grail" before the tech boom but was neverimplemented in a manner that created mass adoption. Smart Content's technology is considered to be the "missing link" that willallow users to receive real-time personalized content directly on their devicespersonal computers. Their current FreeMate technology automatically collectsinformation from the web, routes, and "pushes" a variety of digital contentpre-defined as relevant by any mobile or PC user. Such technologies areessential as content and vital information are converging into everyday livesand devices as users demand relevant content to be present and directlyavailable to them at all times without thinking or doing anything in order toactually get it. The trend is towards receiving quick updates, accurateinformation and personalized content at work, at home and on the move. Emblaze intends to drive the FreeMate technology roadmap to be adapted into themobile environment and physically embedded into Emblaze Mobile devices over thecoming year which will create a significant advantage of its devices overpotential competition and will create a new class of terminals that address themobile needs beyond a regular voice call. Financial Highlights Group revenue increased to $260.9m (H1 2005: $16.1m) of which, $261.7m frombusiness operations that were offset by equity losses of affiliated company.Growth was primarily due to demand for Emblaze Mobile handsets. Interim netprofits were $11m against a profit of $10m in the first half of 2005. Operating expenses include cost of 248.5m for cost of revenues, $4.2m for R&Dexpenses, $10.1m for sales & marketing expenses and $6.8m for general andadministrative expenses. Cash investments portfolio of $158.1m is presented in the balance sheet underthe following breakdown: 30 June 2006 $mCash and cash equivalents 8.3Short-term deposits, marketable securities* and 49.4accrued interestLong-term (over 1 year to maturity) marketable 136.7securities*, deposits and other long term investmentsBank credit and short-term loans (36.3) ==========Total: 158.1 *Marketable securities are mainly comprised of US Government Treasuries andother agencies and highly rated corporate debentures. The decrease in cash portfolio ($239m at 31 December 2005) was mainly due to theshare buyback program. CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31, June 30, 2005 2006 ---------- ---------- Unaudited ----------ASSETS CURRENT ASSETS:Cash and cash equivalents $ 23,233 $ 8,287Short-term bank deposits 217 3,000Deposits in escrow 5,526 -Restricted deposit - 1,995Accrued interest 1,917 1,433Short-term marketable securities 32,315 43,075Trade receivables 14,484 10,033Other receivables and prepaid expenses 12,428 22,634Inventories 4,536 11,535Short-term assets of discontinued operations 22,437 - ---------- ---------- Total current assets 117,093 101,992 ---------- ---------- LONG-TERM INVESTMENTS:Long-term marketable securities 145,198 91,664Restricted long-term marketable securities - 38,383Restricted deposits 3,751 1,788Other long-term investments 3,990 10,676Severance pay fund 1,436 1,490Long-term assets of discontinued operations 12,712 - ---------- ---------- Total long-term investments 167,087 144,001 ---------- ---------- PROPERTY AND EQUIPMENT, NET 1,966 2,115 ---------- ---------- GOODWILL 1,710 1,714 ---------- ---------- INTANGIBLE ASSETS, NET 2,864 2,775 ---------- ---------- Total assets $ 290,720 $ 252,597 ========== ========== CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands, except share and per share data December 31, June 30, 2005 2006 ---------- ---------- Unaudited ----------LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:Bank credit and short-term loans $ 3,799 $ 36,289Trade payables 15,732 17,079Advance payment from customers - 6,598Deferred revenues 822 1,113Other payables and accrued expenses 15,451 14,551Short-term liabilities of discontinued operations 18,141 - ---------- ---------- Total current liabilities 53,945 75,630 ---------- ---------- ACCRUED SEVERANCE PAY 2,069 2,267 ---------- ---------- LONG-TERM LIABILITIES 3,270 887 ---------- ---------- MINORITY INTERESTS 12,456 11,660 ---------- ---------- SHAREHOLDERS' EQUITY:Share capital:Ordinary shares of NIS 0.01 par value - 416 416Authorized: 200,000,000 shares at December 31, 2005 andJune30, 2006; Issued: 140,578,154 shares at December 31,2005 and June30, 2006; Outstanding: 135,872,691 and135,951,191 shares at December 31, 2005 and June30,2006, respectivelyAdditional paid-in capital 463,848 396,609Treasury stock, at cost (7,381) (7,257)Accumulated other comprehensive loss (2,187) (2,946)Accumulated deficit (235,716) (224,669) ---------- ---------- Total shareholders' equity 218,980 162,153 ---------- ---------- Total liabilities and shareholders equity $ 290,720 $ 252,597 ========== ========== CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except share and per share data Year ended Six months ended December 31, June 30, ---------------- 2005 2005 2006 ---------- -------- -------- Unaudited ---------------- Revenues * 125,998 16,711 260,957 ---------- -------- -------- Costs and expenses:Cost of salesand relatedservices 108,268 478 248,506Research anddevelopment, net 4,898 1,967 4,205Selling andmarketing 16,104 6,174 10,139General andadministrative 7,615 3,222 6,837Amortizationof intangible assets 124 - -Restructuring,other chargesand impairmentof propertyand equipment, net (720) (720) - ---------- -------- -------- Total costsand expenses 136,289 11,121 269,687 ---------- -------- -------- Operating gain (loss) (10,291) 5,590 (8,730)Financial income, net 10,197 4,215 3,895 ---------- -------- -------- Income (loss) before tax (94) 9,805 (4,835)Taxes on income (353) - (1,177) ---------- -------- -------- Income (loss) before minorityinterests in losses ofsubsidiaries (447) 9,805 (6,012)Minority interests inlosses of certainsubsidiaries 1,103 396 1,174 ---------- -------- -------- Income (loss) fromcontinuing operations 656 10,201 (4,838)Income (loss) fromdiscontinued operations (21,730) (180) 15,885 ---------- -------- -------- Net income (loss) $ (21,074) $ 10,021 $ 11,047 ========== ======== ======== Basic and diluted net earnings(loss) per share:From continuing operations $ 0.005 $ 0.08 $ (0.04)From discontinued operations $ (0.16) $ - $ 0.12 ---------- -------- -------- Net earnings (loss) $ (0.155) $ 0.08 $ 0.08 ========== ======== ======== Weighted average numberof shares usedin computing basic earnings(loss) per share 135,765,992 135,647,025 135,891,998 ========== ======== ======== Weighted average numberof shares usedin computing diluted netearnings (loss) per share 137,069,366 137,640,210 136,172,046 ========== ======== ======== * Revenues include capital gain and other income. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY U.S. dollars in thousands, except share and per share data ------- ------- ------- -------- Share Additional Treasury Accumulated capital paid-in capital Stock, other at cost comprehensive income (loss) ------- ------- ------- -------- Balance as ofJanuary 1,2005 $ 416 $ 465,896 $ (8,623) $ 1,501 Issuance ofshares uponexercise ofstock options - 452 1,242 -Debt securityfrom relatedparty - (2,500) - -Comprehensive loss:Unrealizedlosses fromavailable-for-salemarketablesecurities, net - - - (1,857)Foreigncurrencytranslationadjustments - - - (1,831)Net loss - - - - ------- ------- ------- -------- Balance as ofDecember 31,2005 416 463,848 (7,381) (2,187) Issuance ofshares uponexercise ofstock options - 31 124 -Bridge loan torelated party - (70,000) - -Repayment ofdebt securityfrom relatedparty - 2,500 - -Comprehensive loss:Unrealizedlosses fromavailable-for-salemarketablesecurities, net - - - (1,092)Share basedcompensationexpenses - 230 - -Foreigncurrencytranslationadjustments - - - 333Net income - - - - ------- ------- ------- -------- Balance as ofJune 30, 2006(unaudited) $ 416 $ 396,609 $ (7,257) $ (2,946) ======= ======= ======= ======== -------- -------- ------- Accumulated Total Total deficit comprehensive loss -------- -------- ------- Balance as of January 1, 2005 $ (214,642) $ 244,548 Issuance of shares upon exercise ofstock options - 1,694Debt security from related party - (2,500)Comprehensive loss:Unrealized losses fromavailable-for-sale marketablesecurities, net - $ (1,857) (1,857)Foreign currency translation - (1,831) (1,831)adjustmentsNet loss (21,074) (21,074) (21,074) -------- -------- ------- Total comprehensive loss $ (24,762) ======== Balance as of December 31, 2005 (235,716) 218,980 Issuance of shares upon exercise ofstock options - 155Bridge loan to related party - (70,000)Repayment of debt security fromrelated party - 2,500Comprehensive loss:Unrealized losses fromavailable-for-sale marketablesecurities, net - $ (1,092) (1,092)Share based compensation expenses - 230 230Foreign currency translation 333 333adjustmentsNet income 11,047 11,047 11,047 -------- -------- ------- Total comprehensive income $ 10,518 ======== Balance as of June 30, 2006 $ (224,669) $ 162,153(unaudited) ======== ======= CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Year ended Six months ended December 31, June 30, -------------- 2005 2005 2006 --------- -------- -------- Unaudited --------------Cash flows from operating activities: Net income (loss) $ (21,074) $ 10,021 $ 11,047Less: loss (gain) from discontinuedoperations 21,730 180 (15,885) --------- -------- -------- Net income (loss) from continuingoperations 656 10,201 (4,838) Adjustments to reconcile net income(loss) from continuing operations to netcash used in operating activities fromcontinuing operations:Depreciation and amortization 1,081 512 644Amortization of marketable debtsecurities premium and accretion ofdiscounts, net 612 311 316Stock compensation expenses - - 230Stock compensation expenses ofsubsidiary 248 95 181Net gain on sales of marketablesecurities (140) (138) (56)Equity in losses of affiliated company 613 - 797Capital loss (gain), net 3,252 (13,562) -Minority interest in losses ofsubsidiaries (1,103) (396) (1,174)Decrease (increase) in tradereceivables, other receivables andprepaid expenses, inventories andaccrued interest 7,672 (3,472) (13,321)Increase (decrease) in trade payables,other payables and accrued expenses andaccrued severance pay, net (7,936) (3,664) 5,666Increase in deferred revenues 794 977 291Increase (decrease) in long-termliabilities (1,289) (1,290) 199Other (17) (8) (96) --------- -------- -------- Net cash provided by (used in)operating activities from continuingoperations 4,443 (10,434) (11,161)Net cash provided by (used in)operating activities from discontinuedoperations (4,281) (11,872) 30,978 --------- -------- -------- Net cash provided by (used in)operating activities 162 (22,306) 19,817 --------- -------- -------- Cash flows from investing activities: Purchase of property and equipment, net (1,124) (219) (568)Proceeds from sale of property andequipment 123 62 -Investment in short-term bank depositsand deposits in escrow, net (45) (154) -Proceeds from short-term bank depositsand deposits in escrow, net - - 748Investment in short-term marketablesecurities (234,700) (234,914) (112,948)Proceeds from maturity of short-termmarketable securities 255,366 223,810 113,988Investment in long-term marketablesecurities (88,145) (61,382) (12,994)Proceeds from sales, calls and maturityof long-term marketable securities 32,851 25,844 14,968Investment in long-term bank depositsand restricted deposits - - (2,797)Proceeds from long-term bank depositsand restricted deposits 51,712 53,693 -Payment for the acquisition ofsubsidiaries shares (4,492) - -Payment for acquisition of intangibleassets from VCON (1,225) - -Other investment (2,944) - (2,756) --------- -------- -------- Net cash provided by (used in)investing activities from continuingoperations 7,377 6,740 (2,359)Net cash used in investing activitiesfrom discontinued operations (41,823) (26,645) (102) --------- -------- -------- Net cash used in investing activities (34,446) (19,905) (2,461) --------- -------- -------- CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Year ended Six months ended December 31, June 30, 2005 2005 2006 --------- -------- -------- Unaudited -------------- Cash flows from financing activities: Debt security from related party (2,500) - 2,500Short-term borrowings, net (120) (262) 32,727Long-term borrowing, net - (376) -Short-term loan to related party, net - - (70,000)Proceeds from issuance of Emblaze VCON sharesto third parties, net 1,803 - -Proceeds from exercise of subsidiaries stockoptions, net 42 - -Proceeds from exercise of stock options, net 2,759 2,689 155 --------- -------- -------- Net cash provided by (used in) financingactivities from continuing operations 1,984 2,051 (34,618)Net cash provided by financing activities fromdiscontinued operation 25,502 31,718 - --------- -------- -------- Net cash provided by (used in) financingactivities 27,486 33,769 (34,618) --------- -------- -------- Effect of exchange rate translationadjustments on cash of discontinued operation - 101 439 --------- -------- -------- Increase (decrease) in cash and cashequivalents from continuing operations 13,804 (1,643) (48,138)Increase (decrease) in cash and cashequivalents from discontinued operations (20,602) (6,698) 31,315Cash and cash equivalents from continuingoperations at beginning of period 25,533 25,533 23,233Cash and cash equivalents from discontinuedoperations at beginning of period 6,375 6,375 1,877 --------- -------- -------- Cash and cash equivalents from continuingoperations at the end of period $ 23,233 $ 14,525 $ 8,287 ========= ======== ======== Cash and cash equivalents from discontinuedoperations at the end of period $ 1,877 $ 9,042 $ - ========= ======== ======== Payment for acquisition of 51% Global TelecomDistribution PLC. Estimated fair values of assets acquired andliabilities assumed at the date of acquisition: Working capital, excluding cash and cashequivalents $ 4,452 $ - $ -Property and equipment 477 - -Distribution networks 1,776 - -Goodwill 67 - -Investment in affiliates 360 - -Minority interest (2,640) - - --------- -------- -------- $ 4,492 $ - $ - ========= ======== ======== This information is provided by RNS The company news service from the London Stock Exchange