30 Aug 2012 07:13
Emblaze Ltd ("Emblaze" or "the Company") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012 Herzeliya, Israel, 30 August 2012: Emblaze Ltd. today announces its unauditedfinancial results for the six month period ended 30 June 2012 (the "ReportedPeriod"). All references to $ are to US Dollars.
FINANCIAL HIGHLIGHTS FOR THE FIRST HALF OF 2012:
* Continued strong cash position with cash and short term investments of $148
million;
* Achieved positive net cash flow from continued operating activities (H1/
2011: net decrease of $1.4 million); * Profit from continued operations totaled $1.3 million (H1/2011: $3.1 million); * Basic and diluted earnings per share reached $0.01 (H1/2011: $0.04 per share).
Naftali Shani, Executive Chairman of Emblaze, commented:
"During the period we continued to review potential opportunities forinvestment in growth activities and we believe that market conditions may provefavourable to us. The economic environment has been challenging and naturallyaffected the ability to increase sales during the first half of the year.Nevertheless, we maintained our focus on strengthening EMOZE's position andcontinued to invest in the future growth of the business. We believe that EMOZEhas the potential to contribute to the Company's growth. The Company remains insound financial position and we believe that its strength lies in the qualityof its people and technology and hence remain confident in its future success."
A copy of the Company's interim results for the six months ended 30 June 2012 will shortly be available for inspection at the National Storage Mechanism, which is located at www.hemscott.com/nsm.do
The report is also available on the Company's website, www.emblaze.com
Information in this announcement is based upon unaudited management accounts. In addition, certain statements made are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements.
Enquiries:
Piers Coombs
Canaccord Genuity Ltd. +44 20 7523 8000
Emblaze is traded on the London Stock Exchange since 1996. www.emblaze.com
Emblaze holds EMOZE Ltd., an acknowledged world leader, providing transparent,synchronized mobile push messaging and push content solutions for handsetmanufactures, mobile operators and enterprises. EMOZE supports all major emailproviders, instant messaging services and social networks. EMOZE push messagingsolution is based on EMOZE patented technology and provides real pushexperience combined with an efficient mechanism, minimizing both data trafficand battery consumption to all mobile devices (feature-phones andsmart-phones). EMOZE architecture is based on reliable, redundant, scalableserver-technology that offers a low TCO and quick-to-market deployment. www.emoze.com
Executive Chairman's Statement
Financial Review
The Company's cash and short term investments amounted to $148 million.
Profit from continued operations totaled $1.3 million (H1/2011: $3.1 million);the decrease is due to the difference between VAT returns recorded in the firsthalf of 2011 and the first half of 2012 from ongoing legal proceedings againstHM Revenue & Customs.Business ReviewEMOZE Ltd.
The Company's main innovation activity remains under EMOZE Ltd., a provider ofpush messaging solutions. EMOZE is an acknowledged world leader, providingtransparent, synchronised mobile push messaging and push content solutions forhandset manufactures, mobile operators and enterprises. EMOZE supports allmajor email providers, instant messaging services and social networks. EMOZEpush messaging solution is based on EMOZE patented technology and provides realpush experience combined with an efficient mechanism, minimising both datatraffic and battery consumption to all mobile devices (feature andsmart-phones). EMOZE architecture is based on reliable, redundant, scalableserver-technology that offers a low total-cost-of-ownership andquick-time-to-market deployment.
EMOZE's is focusing its sales efforts in markets where demand for a differentiating feature is an asset for mobile manufacturers, operators and content providers such as in Asia and Latin America.
During the first half of the year we have seen improvements in our OEM channelsbusiness as additional handset manufacturers chose to pre-install EMOZE'sproprietary push-mail application into their mobile devices. Such new dealsinclude MyPhone (Philippines) that launched a new range of smart feature phonedevices embedded with EMOZE's push mail and messaging technology, KarbonnMobiles (India) that chose to integrate EMOZE's push mail solution into itsKT21 phone-series. Additional releases took place in Canada and Latin America,with EMOZE's solution for both Android and feature phones embedded as a WhiteLabel.The first half of the year saw also technological advances in EMOZE with theintroduction of its Push Email solution for Android. The Android operatingsystem has gained significant market share and is fast becoming the mostpopular choice among smartphone consumers. The native Android Operating Systemhas a built in POP3/IMAP as well as a corporate mail client, but the EMOZE PushEmail solution for Android is much more powerful and user-friendly, conservingbattery resources and reducing the time needed for data transfer. By embeddingthe EMOZE solution, manufacturers can offer end-users mobile devices thatprovide faster, more efficient service, with advanced push email, PIM (Contactsand Calendar), and Instant Messaging.
Intellectual Property
In July 2010, Emblaze filed a complaint against Apple Inc. for infringement of the Company's U.S. Patent No. 6,389,473 through Apple's HTTP Live Streaming protocol used in Apple products such as iPhones and iPads.
Legal proceedings in this case are ongoing.
Emblaze has recently filed a Patent Statement & Licensing Declaration with theInternational Organization for Standardization (ISO) and the InternationalElectrotechnical Commission (IEC) stating that the ISO/IEC 23009-1 standard forHTTP streaming of multimedia content, known as MPEG Dynamic Adaptive Streamingover HTTP (MPEG-DASH), incorporates Emblaze's patented streaming technologyand, therefore, the use of this technology is subject to a license fromEmblaze.The information concerning the declaration filed by Emblaze is available in theISO patent database at: http://www.iso.org/iso/standards_development/patentsand the IEC database at: http://patents.iec.ch/Having invested substantial research and development efforts to build a richportfolio of intellectual property over many years, Emblaze will continue topursue its rights and defend its competitive position.
Corporate
During the first half of the year, the Company's UK subsidiary, Emblaze Mobility Solutions Limited ("EMSL"), has been successful in recovering the remaining disputed sum of £1.5 million, which was part of the overall VAT repayments claimed withheld by HM Revenue & Customs ("HMRC") since March 2006.
In term of corporate actions, we continue the process of reviewing investmentopportunities. We believe that while imposing challenges to our own businessgrowth, the overall uncertain economic outlook will present betteropportunities for potential acquisitions.
Share repurchase program
On 3 June 2012 the Directors of the Company approved a share repurchase program of the Company's shares up to a maximum consideration of US$2 million, representing approximately 3% of the Company's issued share capital.
The repurchase program was undertaken in accordance with Israeli Companies Law,the FSA Listing Rules (the "Listing Rules") and the Commission Regulation (EC)No 2273/2003 (the "EC Buy-back Regulations"). The program was implemented byway of market purchases of the Company's own shares for transfer into Treasury.In accordance with the Listing Rules, the maximum price which may be paid bythe Company was not more than the higher of (i) an amount equal to 105% of theaverage market closing price (as derived from the London Stock Exchange DailyOfficial List) for the five dealing days immediately preceding such purchase;and (ii) the amount stipulated by Article 5(1) of the EC Buy-back Regulations,exclusive of expenses.The Company now holds 29,092,971 of its shares in Treasury, including shareswhich have been purchased recently. Following the share repurchase, the numberof shares in issue (excluding shares held in Treasury) is now 111,485,183.
Trading since the end of June 2012 has shown a similar trend to the first six months.
Risks and Uncertainties
The Board's primary focus areas when reviewing key risks and uncertainties considers strategic, operational and financial risks and identifies actions to mitigate those risks. Pursuant to the requirements of the Disclosure and Transparency Rules the Company provides the following
information on its principal risks and uncertainties:
* The continuing challenges in macro-economic environment and turbulence in
the overall financial markets economy as well as the drive for our
technology solutions and products directly or indirectly by consumer demand
and preferences - all of which may have an impact on our business; * Risks associated with acquisitions: We seek to reshape our holdings by making strategic bolt-on acquisition of complementary business. Such
acquisitions involve legal and economic risks. We also encounter risks in
the selection of appropriate investment targets, execution of the
transactions, integration of acquired businesses and a risk that we may not
generate the anticipated returns from our anticipated acquisitions.
* Claims brought against the Company, and some of its directors and officers,
in the context of a former director's bankruptcy proceedings and personal
financial affairs (see note 5 for further information)
The Directors continue to monitor all of the key risks and uncertainties andthe Board will take appropriate actions to mitigate these risks and theirpotential outcomes. These actions include close review and monitoring of theeconomic environment to ensure the business can respond appropriately tochanges in trading conditions, careful management of costs across all areas ofthe business with increased expenditure only in those areas that the Boarddecides are appropriate to drive growth and deliver long term strategicbenefits, as well as maintaining focus on strengthening the Company's positionas a leading provider of innovative technology and advanced, high qualitysolutions.
Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
Directors' responsibilities
Responsibility statement of the directors in respect of the half-yearly financial report:
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance
with US GAAP. Nevertheless, these financial statements follow the
guidelines of IAS 34 Interim Financial Reporting as adopted by the EU,
which defines the minimum content of an interim financial report as
including condensed financial statements and selected explanatory notes.
The interim financial report is intended to provide an update on the latest
complete set of annual financial statements. Accordingly, it focuses on new
activities, events and circumstances, and does not duplicate information
previously reported.
* the interim management report includes a fair review of the information
required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial period and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for
the remaining six months of the period; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial period and that have materially affected the financial position
or performance of the entity during that period; and any changes in the
related party transactions described in the last annual report that could do so. By order of the Board,Naftali ShaniExecutive Chairman EMBLAZE LTD. AND ITS SUBSIDIARIESCONSOLIDATED BALANCE SHEETSU.S. dollars in thousands June December 30, 31, 2012 2011 Unaudited Audited Cash and cash equivalents $ 42,296 $ 148,261 Short-term bank deposits 105,792 - Marketable securities 175 196 Restricted bank deposits 198 198 Prepaid expenses, accrued interest and other 1,552 1,103receivables
Assets of discontinued operations 133
176 Total current assets 150,146 149,934 SEVERANCE PAY FUND 412 356 PROPERTY AND EQUIPMENT, NET 61 59 Total assets $ 150,619 $ 150,349
The accompanying notes are an integral part of the financial statements.
EMBLAZE LTD. AND ITS SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
June 30, December 31, 2012 2011 Unaudited Audited LIABILITIES AND EQUITY CURRENT LIABILITIES: Trade payables $ 280 $ 325 Deferred revenues and accrued expenses 5,907
6,725
Liabilities of discontinued operations 628
647 Total current liabilities 6,815 7,697 ACCRUED SEVERANCE PAY 594 507
COMMITMENTS AND CONTINGENT LIABILITIES
EQUITY:
Equity attributable to the Company's
shareholders: Share capital -
Ordinary shares of NIS 0.01 par value - 416
416
Authorized: 200,000,000 shares at June 30, 2012 and December 31, 2011; Issued: 140,578,154 shares at June 30, 2012 and December 31, 2011; Outstanding: 111,485,183 shares at June 30, 2012 and 111,755,932 shares at December 31, 2011
Additional paid-in capital 469,886 469,864 Treasury stock, at cost (75,770) (75,555) Accumulated deficit (251,801) (253,054) Total Company's shareholders' equity 142,731 141,671 Non- controlling interest 479 474 Total equity 143,210 142,145 Total liabilities and equity $ 150,619 $
150,349
The accompanying notes are an integral part of the financial statements.
EMBLAZE LTD. AND ITS
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Six months ended Year ended June 30 December 31 2012 2011 2011 Unaudited Audited Revenues $ 893 $ 557 $ 1,207 Cost of revenues 224 120 247 Gross profit 669 437 960 Operating expenses: Research and development, net 820 650 1,401 Selling and marketing 376 279 599 General and administrative 1,411 1,380 2,504 Total operating expenses 2,607 2,309 4,504 Operating loss (1,938) (1,872) (3,544) Financial income 1,208 1,191 2,210 Other income, net 2,002 3,787 4,114
Profit from continuing operations 1,272 3,106
2,780
Profit (loss) from discontinued (19) 1,410
1,289operations, net Net income attributable to Company's $ 1,253 $ 4,516 $ 4,069shareholders
Basic and diluted income per share to
Company's shareholders: From continuing operations $ 0.01 $ 0.03 $ 0.02 From discontinued operations $ (0.00) $ 0.01 $ 0.01 Net gain per share $ 0.01 $ 0.04 $ 0.03
Weighted average number of shares used 111,710,807 111,755,932 111,755,932 in computing basic earnings per share
Weighted average number of shares used 111,716,323 111,755,932 111,756,536 in computing diluted earnings per
share
The accompanying notes are an integral part of the financial statements.
EMBLAZE LTD. AND ITS
SUBSIDIARIES
STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Share Additional Treasury Accumulated Non-controlling Total Total capital paid-in stock, deficit interest equity comprehensive capital at cost income Balance as of December $ 416 $ 469,844 $(75,555) $ (257,123) $ 469 $138,051 31, 2010
Changes during 2011:
Share based - - - - 5 5 -
compensation expenses
of subsidiaries Share based - 20 - - - 20 -
compensation expenses Comprehensive income:
Net income - - - 4,069 - 4,069 4,069
Balance as of December 416 469,864 (75,555) (253,054)
474 142,145 31, 2011 Total comprehensive
$ 4,069income
Changes during 2011:
Repurchase of own - - (215) - - (215) -shares, net Share based - - - - 5 5 -
compensation expenses
of subsidiaries Share based - 22 - - - 22 -
compensation expenses Comprehensive income:
Net income - - - 1,253 - 1,253 1,253 Balance as of June 30, $ 416 $ 469,886 $(75,770) $ (251,801) $ 479 $143,210 2012 (unaudited) Total comprehensive $ 1,253income
The accompanying notes are an integral part of the financial statements.
EMBLAZE LTD. AND ITS
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands Six months ended June Year ended 30, December 31, 2012 2011 2011 Unaudited
Cash flows from operating activities:
Consolidated net income $ 1,253 $ 4,516 $ 4,069 Less: Loss from discontinued (19) 1,410 1,289operations Income from continuing operations 1,272 3,106 2,780 Depreciation 15 17 33
Share based compensation expenses 22 10
20
Share based compensation expenses of 5 5
5subsidiaries
Net loss from sales of marketable (287) (295)
(34)
securities, changes in accrued interest, net and increase in value of
marketable securities
Increase in trade receivables, prepaid (150) (3,903) (81) expenses and other receivables
Increase (decrease) in trade payables, (832) (349) 2,465 other payables and accrued expenses,
accrued severance pay, net and
deferred revenues Net cash provided by (used in) 45 (1,409)
5,188
operating activities from continuing
operations Net cash provided by (used in) 5 491
(1,274)
operating activities from discontinued
operations Net cash provided by (used in) 50 (918) 3,914operating activities
Cash flows from investing activities: Purchase of property and equipment, (17) (35)
(48)net
Investment in short-term bank deposits (105,792) -
-
Investment in short term marketable - (40,000)
securities
Proceeds from short-term securities 9 345
222and restricted deposits
Net cash provided by (used in) (105,800) (39,690)
174investing activities
The accompanying notes are an integral part of the financial statements.
EMBLAZE LTD. AND ITS
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands Six months ended June Year ended 30, December 31, 2012 2011 2011 Unaudited
Cash flows from financing activities:
Repurchase of own shares, net (215) - -
Net cash used in financing activities (215) -
-
Net increase (decrease) in cash and (105,965) (40,608) 4,088cash equivalents Cash and cash equivalents at the 148,261 144,173 144,173beginning of the year*)
Cash and cash equivalents at the end of $ 42,296 $ 103,565 $ 148,261 the year *)
*) Cash and cash equivalents for December 31, 2011 include Cash and Cash equivalents of discontinued operations.
The accompanying notes are an integral part of the financial statements.
EMBLAZE LTD. AND ITS
SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 1:- GENERAL
Emblaze Ltd. ("Emblaze" or "the Company") is an Israeli corporation. The Company's shares are traded on the London Stock Exchange ("LSE") under the symbol BLZ since 1996.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2011, are applied consistently in these financial statements.
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)considered necessary for a fair presentation have been included. Operatingresults for the six-month period ended June 30, 2012 are not necessarilyindicative of the results that may be expected for the year ended December 31,2012.
NOTE 4:- SUPPLEMENTARY INFORMATION
In June 2012 the Company's Board of Directors approved a share repurchaseprogram of the Company's ordinary shares. The Company purchased 270,749 of itsown shares at a consideration of $215 thousand during the month of June 2012.The repurchase of shares stopped on 30 June, 2012 due to the entering of theCompany into a closed period until publication of its interim results.
NOTE 5:- LEGAL PROCEEDINGS
1. Emblaze Mobility Solutions Limited ("EMSL"), the Group subsidiary, has been
successful in recovering the remaining disputed sum of £1.5 million (approximately $ 2,500), which was part of the overall VAT repayments claimed withheld by HM Revenue & Customs ("HMRC") since March 2006. As a result, the Company recorded $ 2,000 as other income, net of related expenses, in the six months ended on June 30, 2012. EMBLAZE LTD. AND ITS SUBSIDIARIESNOTES TO FINANCIAL STATEMENTSU.S. dollars in thousands
NOTE 5:- LEGAL PROCEEDINGS (Cont.)
2. Mr. Reifman, who was a director of the Company until 2009, was declared
bankrupt in July 2011. In the context of Mr. Reifman's bankruptcy
proceedings and personal financial affairs, certain claims were directed at
the Company.
The information provided below is a summary of the two claims that have been filed in the six-month period ended June 30, 2012 and await proceedings:
a. In April 2012, two of Mr. Reifman's creditors filed a claim against their
own law firm for the amount of NIS 73 million (approximately $ 18,600 as of
June 30, 2012), alleging malpractice, negligence and failure by their
lawyers to properly secure their loans to Mr. Reifman. As part of this
claim, the two creditors have also named Emblaze, and some of its directors
and officers, as well as its external legal advisor and auditors, as
defendants for "caution reasons".
b. In June 2012, several other creditors of Mr. Reifman filed a claim against
Emblaze, some of its directors and officers as well as against its external
legal advisor and auditors, for up to NIS 86.5 million (approximately $ 22,000 as of June 30, 2012), alleging malpractice and misrepresentation in connection with information provided by the Company on Mr. Reifman's holdings in the Company.
While these two cases are still in preliminary stages, the Company's legal advisors are of the opinion that the chances of success of these claims are remote.
3. In June 2012, the Supreme Court has rejected an appeal filed by Paldom
Feingold Metals L.P. (the "Applicant") to order Emblaze to register a
transfer of shares into the name of the Applicant pursuant to a share
transfer deed between the Applicant and Mr. Reifman.
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