BSD.L Regulatory News (BSD)

6 Sep 2007 07:02

Emblaze Ltd06 September 2007 Emblaze Ltd. Interim results for six months ended 30 June 2007 Record results for the Group and net profits from continuing operations Ra'anana, Israel, 6 September 2007: Emblaze Ltd ("Emblaze" or "the Group"), the technology services group (LSE: BLZ), announces its financial results for the six months ended 30 June 2007. First half financial highlights • Revenues reached $127.9m (H1 2006: $3.2m*), reflecting maiden contribution from the Formula Systems (1985) Ltd ("Formula") operation• Net profit from continuing operations amounted to $4.4m (H1 2006: $4.1m loss) • Group net assets up to $151.2m from $146.5m as at 31 December 2006• Trading during second half of 2007 continues to be strong • Moved to 4 cents of earnings per share from continued operations (H1 2006: 3 cents loss) • Raising revenue guidance for the full year from $340m to $360m Second quarter operating highlights • Formula second quarter revenues were $124.7m, while income from continuing operations increased to $4.6m (Q2 2006: $1.4m)• Sold interest in BluePhoenix for $64m, creating a capital gain of approx. $6m (Formula recorded capital gain of $17.7m, classified as discontinued operation)* • Raised $20m for Sapiens through private placement at a 12% premium to the prevailing share price • After the end of the period, raised approx. $60m for Matrix through the issuance of unlisted bonds to institutional investors in the Tel-Aviv stock exchange (*) According to accounting rule (SFAS No. 144), the comparative figures of any discontinued operation must be re-classified. Therefore, the results of operations of the trading and distribution business of Emblaze Mobile, which were scaled down earlier this year, were re-classified back to H1 2006 and year end 2006 and present the majority of the "Discontinued Operations" line. In addition, BluePhoenix activity has never been consolidated into Emblaze figures and hence under the accounting rules is not classified as discontinued operations in the Group reports. Accordingly, the entire net contribution of the BluePhoenix activity was recorded in one line under "Other Income" and therefore, does not influence the operation sections in the Profit and Loss statement of H1 2007. Guy Bernstein, Chief Executive Officer of Emblaze, said: "Emblaze is going through restructuring throughout the Group and these results are a confirmation of the steps we are taking. We are delighted to return to operating profitability. Looking ahead, we are carrying on streamlining our costs and improving operations throughout our subsidiaries. The Group also continues to examine opportunities to optimise its asset base through various corporate actions including mergers and acquisitions. As a result of this and improving performance of the subsidiaries in their markets the management team is confident in its ability to deliver solid results for the second half of 2007." Enquiries: Emblaze Ltd Hadas Gazit, Hagit Gal +972 9 7699302/ 339 Corfin Communications (UK) Harry Chathli, Neil Thapar +44 (0)20 7977 0020 Eisenberg-Eliash LTD., Investor relations & Public relations (Israel) Amir Eisenberg +972 3 7538828 / +972 52 8260285 Overview The first six months of 2007 have been characterised by significant action to reorganise and streamline the Group's activities. As announced previously, the Group's activities are now focused on two business segments operating globally. The first segment is focused on software and IT products and services through Matrix, Magic and Sapiens. The second segment is concentrated on innovation businesses that management believe have a potential for delivering an upside in shareholder value namely, Emblaze Mobile, emoze, Emblaze V CON and Orca. Group revenues in the period under review are $127.9m and the Group moved into profits with income from continuing operations of $4.4m (H1 2006: $4.1m loss). The results reflect a maiden contribution from Formula, which was consolidated into Emblaze's results from the second quarter. In addition, the Group achieved a strong improvement at all operating subsidiaries as a result of actions implemented by the Group management to streamline operations and reduce costs. Operational Highlights Formula (NASDAQ & TASE: FORTY) Formula revenues increased 19% to $124.7m in the second quarter with an operating profit of $6.7m (an increase of 145% over Q2 2006) and net profit of $22.3m. Excluding the impact of the BluePhoenix disposal, Formula's net income from continued operations increased to $4.6m in the second quarter compared with $1.4m in Q2 2006. The strong underlying improvement in its profits stemmed from reorganisation and efficiency measures implemented by Emblaze management since the Group took control of Formula. Formula contributed $9.5m in net income to the Group results, of which $6m are a result of the sale of the controlling stake in BluePhoenix in June 2007 for a total consideration of $64m. Matrix IT Ltd. (TASE: MTRX) Matrix, one of Israel's leading integration and information technology services companies, recorded an increase of 7% in revenues and net profit of $4.7m compared to $4.0m in Q2 2006. With the intention to expand into international markets, Matrix recently completed its first acquisition in Bulgaria. In August 2007 despite difficult world-wide financial markets condition, raised approximately $60 million through the issuance of unlisted bonds to institutional investors in the Tel-Aviv stock exchange. The bonds were rated AA3 by Midroog, a Moody's affiliate, which is the highest ever credit rating received by an IT company in Israel. The company continues its two-digit number growth alongside continuous growth of net profit, even in a period that is traditionally considered to be slow for Israeli IT companies. The management expects to see further growth in the local market, specifically in the financial sector and the company is planning to further increase its efforts to enter the international markets which should deliver good results in the near future. Magic Software Enterprises Ltd. (NASDAQ & TASE: MGIC) Magic, provider of composite application development and deployment platforms with a service-oriented architecture (SOA), including application integration and business process management (BPM), with existing and legacy systems, has moved from net loss of approximately $1.3 million in second quarter of 2006 to a net profit of $0.8 million in the second quarter of 2007. Magic ended the second half of 2007 with net profit of $1.8 million compared with a net loss of $1.5 million in the first half of 2006. The net income also reflects in the company's cash flow from continuing operations which amounted in $0.6 million for the quarter. Magic's revenue for the second quarter of 2007 increased by 11% to $16.8 million and it has a solid balance sheet with total assets amounting to $17 million. The company is currently turning its focus onto its core business, sales execution and customer support. Sapiens International Corporation N.V. (NASDAQ & TASE: SPNS) Sapiens, a global provider of IT solutions that modernize business processes to enable insurance and other companies to quickly adapt to changes, is undergoing a reorganisation and operation efficiency program which already delivered improved operational profit for the second half of 2007 of $0.3 million compared to operational loss of $1.1 million in the second half of 2006. The company maintained its revenue level with approximately $21.7 million and significantly improved its cash position by successfully completing a $20 million private placement earlier this year and repaying part of its debt to certain Israeli institutional investors through the repurchase of the company's convertible debentures. Going forward, the company is focused on profitability and growth as it tries to capture the strong opportunity in a large global market. Innovation activities Emblaze also believes in value derived from innovation and early stage technology companies. While high-risk in nature, such development investments will be shared with leading global industry partners and burn rate and budgets will be monitored and controlled in order to mitigate risks. This approach is maintained in Group companies such as Emblaze Mobile, emoze, Zone-IP (Emblaze V CON) and Orca Interactive. The board of Emblaze believes that this strategic approach has established a solid platform for long term growth and profitability from well established technology companies addressing global markets coupled with innovative technology companies and high reward opportunities. Outlook Trading conditions in the second half have remained encouraging and Emblaze is making good progress to further improve the performance of all subsidiaries, in particular Formula. In addition, the Group continues to examine opportunities to optimise its asset base through various corporate actions. As a result, the Group is raising its revenue forecast for the full year to $360m, compared with the previous revenue guidance of $340m. CONSOLIDATED BALANCE SHEETSU.S. dollars in thousands December 31, June 30, 2006 2007 ----------- ---------- Unaudited ----------ASSETS CURRENT ASSETS:Cash and cash equivalents $ 10,784 $ 147,624Short-term bank deposits 237 9,464Restricted deposit 5,110 7,916Accrued interest 983 531Short-term marketable securities 21,631 13,746Restricted short-term marketable securities 25,752 30,961Trade receivables 1,800 130,179Other receivables and prepaid expenses 2,509 23,162Inventories 1,407 4,984 ----------- ---------- Total current assets 70,213 368,567 ----------- ---------- LONG-TERM INVESTMENTS:Long-term marketable securities 24,188 15,954Restricted long-term marketable securities 25,357 10,435Long-term deposits - 238Other long-term investments 84,110 8,481Severance pay fund 690 31,143 Total long-term investments 134,345 66,251 ----------- ---------- PROPERTY AND EQUIPMENT, NET 1,017 16,191 ----------- ---------- INTANGIBLE ASSETS, NET 1,230 178,510 ----------- ---------- ASSETS OF DISCONTINUED OPERATIONS 42,858 21,398 ----------- ---------- Total assets $ 249,663 $ 650,917 =========== ========== The accompanying notes are an integral part of the consolidated financialstatements. CONSOLIDATED BALANCE SHEETSU.S. dollars in thousands, except share and per share data December 31, June 30, 2006 2007 ----------- ---------- Unaudited ----------LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:Short-term loans $ 45,423 $ 76,220Trade payables 2,257 55,106Debenture - 3,671Other payables and accrued expenses 18,126 75,893 ----------- ---------- Total current liabilities 65,806 210,890 ----------- ---------- LONG-TERM LIABILITIES:Liabilities to banks and others - 42,283Debenture - 8,697Deferred taxes - 3,077Other long-term liabilities 847 3,752Accrued severance pay 1,133 37,397 ----------- ---------- Total long-term liabilities 1,980 95,206 ----------- ---------- LIABILITIES OF DISCONTINUED OPERATIONS 32,937 12,003 ----------- ---------- MINORITY INTERESTS 2,448 181,561 ----------- ---------- SHAREHOLDERS' EQUITY:Share capital -Ordinary shares of NIS 0.01 par value - Authorized: 200,000,000 shares at December 31, 2006 andJune30, 2007; Issued: 140,578,154 shares at December31, 2006 and June30, 2007; Outstanding: 111,473,687 and111,476,687 shares at December 31, 2006 and June30,2007, respectively 416 416Additional paid-in capital 468,400 468,742Treasury stock, at cost (76,441) (76,433)Accumulated other comprehensive loss (328) 1,248Accumulated deficit (245,555) (242,716) ----------- ---------- Total shareholders' equity 146,492 151,257 ----------- ---------- Total liabilities and shareholders equity $ 249,663 $ 650,917 =========== ========== The accompanying notes are an integral part of the consolidated financialstatements. CONSOLIDATED STATEMENTS OF OPERATIONSU.S. dollars in thousands, except share and per share data Year ended Six months ended December 31, June 30, 2006 2006 2007 ---------- -------- -------- Unaudited --------------- Revenues $ 7,629 $ 3,219 $ 127,873Cost of sales 4,071 1,613 95,152 ---------- -------- -------- Gross profit 3,558 1,606 32,721 ---------- -------- --------Operating expenses:Research and development,net 5,571 2,573 4,495Selling and marketing 7,185 4,270 24,090General and administrative 6,634 2,832 4,110 ---------- -------- -------- Total operating expenses 19,390 9,675 32,695 ---------- -------- -------- Operating income (loss) (15,832) (8,069) 26Financial income, net 5,831 3,732 1,126 ---------- -------- -------- Income (loss) beforetaxes on income (10,001) (4,330) 1,152Other income (loss) (3,601) 7 7,064Taxes on income - - (206) ---------- -------- --------Income (loss) beforeminority interests inincome (losses) ofsubsidiaries (13,602) (43,300) 8,010Equity income (loss) 327 (797) 859Minority interests inincome (losses) ofcertain subsidiaries 2,174 1,076 (4,435) ---------- -------- -------- Income (loss) fromcontinuing operations (11,101) (4,051) 4,434Income (loss) fromdiscontinued operations 1,262 15,098 (1,595) ---------- -------- -------- Net income (loss) $ (9,839) $ 11,047 $ 2,839 ========== ======== ========Basic and diluted net earnings(loss) per share:From continuingoperations $ (0.09) $ (0.03) $ 0.04From discontinuedoperations 0.01 0.11 (0.01) ---------- -------- -------- Net earnings (loss) $ (0.08) $ 0.08 $ 0.03 ========== ======== ========Weighted average numberof shares used incomputing basicearnings (loss) per share 123,595,330 135,891,998 111,476,190 ========== ======== ======== Weighted average numberof shares used incomputing diluted netearnings (loss) per share 123,595,330 136,172,046 111,518,352 ========== ======== ======== The accompanying notes are an integral part of the consolidated financialstatements. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITYU.S. dollars in thousands, except share and per share data ------ -------- -------- -------- Share Additional Treasury Accumulated capital paid-in Stock, other capital at cost comprehensive income (loss) ------ -------- -------- -------- Balance as of January 1, 2006 $ 416 $ 463,848 $ (7,381) $ (2,187) Repurchase of shares fromrelated parties, net - - (70,953) -Issuance of shares uponexercise of stock options - 49 182 -Issuance of shares uponbusiness combinations, net - 1,139 1,711 -Debt security from relatedparty - 2,500 - -Share based compensationexpenses - 864 - -Comprehensive loss:Unrealized gains fromavailable-for-sale marketablesecurities, net - - - 1,905Foreign currency translationadjustments - - - (46)Net loss - - - - ------ -------- -------- --------Total comprehensive loss Balance as of December 31, 2006 416 468,400 (76,441) (328) Issuance of shares uponexercise of stock options - (1) 8 -Share based compensationexpenses - 343 - -Comprehensive loss:Unrealized gains fromavailable-for-sale marketablesecurities, net - - - 735Foreign currency translationadjustments - - - 841Net income - - - - ------ -------- -------- -------Total comprehensive lossBalance as of June 30, 2007(unaudited) $ 416 $ 468,742 $ (76,433) $ 1,248 ====== ======== ======== ======== The accompanying notes are an integral part of the consolidated financialstatements. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (cont')U.S. dollars in thousands, except share and per share data -------- -------- -------- Accumulated Total deficit comprehensive loss Total -------- -------- -------- Balance as of January 1, 2006 $ (235,716) $ 218,980 Repurchase of shares from relatedparties, net (Note 15b) - (70,953)Issuance of shares upon exercise ofstock options - 231Issuance of shares upon businesscombinations, net - 2,850Debt security from related party(Note2j) - 2,500Share based compensation expenses - 864Comprehensive loss:Unrealized gains fromavailable-for-sale - 1,905 1,905marketable securities, netForeign currency translation adjustments - (46) (46)Net loss (9,839) (9,839) (9,839) -------- -------- -------- Total comprehensive loss $ (7,980) ======== Balance as of December 31, 2006 (245,555) - 146,492 - -Issuance of shares upon exercise ofstock options - - 7Share based compensation expenses - - 343Comprehensive loss:Unrealized gains fromavailable-for-sale - 735 735marketable securities, netForeign currency translation - 841 841adjustmentsNet income 2,839 2,839 2,839 -------- --------Total comprehensive loss $4,415Balance as of June 30, 2007 $ (242,716) - $ 151,257(unaudited) ======== ======== ======== The accompanying notes are an integral part of the consolidated financialstatements. CONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands Year ended Six months ended December 31, June 30, 2006 2006 2007 ------- -------- -------- Unaudited --------------Cash flows from operating activities: Net income (loss) $ (9,839) $ 11,047 $ 2,839Less: gain (loss) fromdiscontinued operations 1,262 15,098 (1,595) ------- -------- -------- Net income (loss) from continuingoperations (11,101) (4,051) 4,434 Adjustments to reconcile net income(loss) from continuing operations to netcash used in operating activities fromcontinuing operations:Depreciation and amortization 907 275 3,936Amortization of marketable debtsecurities premium and accretionof discounts, net 511 276 217Stock compensation expenses 300 230 150Stock compensation expenses ofsubsidiaries 461 85 189Net gain on sales of marketablesecurities and change in accruedinterest 41 (56) 112Equity gains (losses) inaffiliated companies (327) 797 (859)Capital loss (gain), net 3,601 (7) (7,064)Minority interest (2,174) (1,076) 4,435Changes in value of long termloans and deposits, net - - 179Decrease (increase) in tradereceivables, other receivables andprepaid expenses and inventories 7,600 4,693 318Increase (decrease) in tradepayables, other payables andaccrued expenses, accruedseverance pay, net and long-termliabilities 2,491 (2,022) (18,824)Deferred Tax - - (1,815)Other 204 (89) (163) ------- -------- --------Net cash provided by (used in)operating activities fromcontinuing operations 2,514 (945) (14,755)Net cash used in operatingactivities from discontinuedoperations 18,333 20,762 (3,324) ------- -------- -------- Net cash provided by (used in)operating activities 20,847 19,817 (18,079) ------- -------- -------- Cash flows from investing activities: Purchase of property andequipment, net (395) (244) (1,377)Proceeds from sale of property andequipment 54 - 51Investment in short-term bankdeposits and restricted deposits,net 396 748 (1,214)Investment in short-termmarketable securities (111,945) (103,048) -Proceeds from maturity ofshort-term marketable securities 111,088 101,088 4,193Investment in long-term marketablesecurities (12,994) (12,994) (1,682)Proceeds from sales, calls andmaturity of long-term marketablesecurities 86,545 14,968 28,479Investment in long-term bankdeposits and restricted deposits 3,751 (2,797) (223)Payment for Acquisition of FormulaSystems (84,414) - 88,865Acquisition of newly consolidatedsubsidiaries - - (4,802) CONSOLIDATED STATEMENTS OF CASH FLOWS (cont')U.S. dollars in thousands Year ended Six months ended, December 31, June 30, 2006 2006 2007 -------- ------- -------- Unaudited Proceeds from realization of investment - - 59,461Purchase of minority interest in subsidiaries - - (2,834)Capitalization of software development - - (1,971)Other investment (1,215) (2,340) - -------- ------- -------- Net cash provided by (used in) investingactivities from continuing operations (9,129) (4,619) 166,946Net cash used in investing activities fromdiscontinued operations 2,038 2,158 2,927 -------- ------- -------- Net cash used in investing activities (7,091) (2,461) 169,873 -------- ------- -------- Cash flows from financing activities: Repurchase of shares, net (70,953) - -Debt security from related party - 2,500 -Short-term bank credit, net 44,759 31,944 2,656Long-term loan to related party - (70,000) -Proceeds from exercise of subsidiariesstock options, net - - 874Proceeds from exercise of stock options,net 257 155 8Dividend to minority shareholders insubsidiaries - - (2,887)Repayment of long term loans - - (36,043)Receipt of long term loans - - 11,952Issuance in a subsidiary to minorityshareholders, net - - 11,955Debenture repayment - - (3,416)Sale of treasury stock in a subsidiaryby a subsidiary thereof - - 2,731 -------- ------- --------Net cash provided by (used in) financingactivities from continuing operations (25,937) (35,401) (12,170)Net cash provided by financingactivities from discontinued operation 713 783 - -------- ------- --------Net cash provided by (used in) financingactivities (25,224) (34,618) (12,170) -------- ------- --------Effect of exchange rate on cash forcontinuing operations - - (2,305)Effect of exchange rate translationadjustments on cash of discontinuedoperation (966) 439 - Increase (decrease) in cash and cashequivalents from continuing operations (32,552) (40,965) 137,716Increase (decrease) in cash and cashequivalents from discontinued operations 20,118 24,142 (397)Cash and cash equivalents fromcontinuing operations at beginning ofperiod 15,237 15,237 10,784Cash and cash equivalents fromdiscontinued operations at beginning ofperiod 9,873 9,873 1,892 -------- ------- -------- Cash and cash equivalents fromcontinuing operations at the end ofperiod $ 10,784 $ 6,674 $ 147,624 ======== ======= ======== Cash and cash equivalents fromdiscontinued operations at the end ofperiod $ 1,892 1,613 2,371 ======== ======= ======== CONSOLIDATED STATEMENTS OF CASH FLOWS (cont')U.S. dollars in thousands (1) Payment for acquisition of Formula System Ltd. Estimated fair values of assets acquired and liabilities assumed atthe date of acquisition: Working capital, excluding cash and cash equivalents $ (15,137)Long term investments (49,475)Investment in affiliates 87,160Property and equipment (15,669)Other assets and goodwill (175,100)Debenture 15,387Long term liabilities 81,980Minority interest 159,719 -------- 88,865 ======== The accompanying notes are an integral part of the consolidated financialstatements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1:- GENERAL Emblaze Ltd. ("Emblaze" or "the Company"), an Israeli corporation, is a holdingcompany. The Company's subsidiaries and affiliated companies provide telecomoperators with technologies, products and solutions for next generation services NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES a. The significant accounting policies applied in the annualfinancial statements of the Company as of December 31, 2006, are appliedconsistently in these financial statements. b. Reclassification: Certain reclassifications were made to prior years' financial statements toconform to the current year's presentation. NOTE 3:- UNAUDITED INTERIM FINANCIAL STATEMENTS The accompanying unaudited interim financial statements have been prepared inaccordance with accounting principles generally accepted in the United Statesfor interim financial information. Accordingly, they do not include all theinformation and footnotes required by accounting principles generally acceptedin the United States for complete financial statements. In the opinion ofmanagement, all adjustments (consisting of normal recurring accruals) considerednecessary for a fair presentation have been included. Operating results for thesix-month period ended June 30, 2007 are not necessarily indicative of theresults that may be expected for the year ended December 31, 2006. Reclassification: Certain amounts from prior year have been reclassified to conform to the currentperiod presentation. 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