BSD.L Regulatory News (BSD)

27 Jun 2007 07:02

Emblaze Ltd27 June 2007 Emblaze Ltd Strategy Update and Trading Statement Ra'anana, Israel, 27 June 2007: Emblaze Ltd ("Emblaze" or "the Group") providesthe following trading statement and strategy update ahead of meetings withinvestors and institutions in the first week of July. Group strategy Emblaze core competency and skills are in the technology arena. The group strategy is two-pronged addressing both growth and innovationcompanies thus combining the stability of "bread and butter" mature technologyenterprises with "high-risk / high-reward" innovation companies. Growth activities The solid side of the activities will consist mainly of companies with acritical mass of international business, sustained client base, revenues andvisibility to profit. Emblaze will seek companies that pose significant synergywith group portfolio direction. The Emblaze management will be highly involvedin taking such companies to the next level, focusing on growth and profitabilitywhile generating shareholders value based on significant improvement offundamental financials and business performance over the medium term. Theacquisition of Formula Group and recent measures taken within the variouscompanies in the group as detailed herein, pose a good example of such activityand its value generation to Emblaze and its shareholders. Innovation activitiesEmblaze also believes in value derived from innovation and early stagetechnology companies. While high-risk in nature, such development investmentswill be shared with leading global industry partners and managed closely tomitigate risks. Innovation and technology development is part of the Emblazevision representing its core essence. This approach is maintained in Groupcompanies such as Emblaze Mobile, emoze, Zone-IP (Emblaze V CON) and OrcaInteractive. Management intends to maximize the value from these companies anddoes not intend to expand its investments and portfolio of innovation companiesbeyond the current scope. The board of Emblaze believes that this strategic approach has established asolid platform for long term growth and profitability from well establishedtechnology companies addressing global markets coupled with innovativetechnology companies and high reward opportunities. Operational highlights Growth activities Formula Systems: • Q1 2007 revenues increased by 20% to $136.1m (Q1 2006: $113.5m); • Operating income increased 108% to 9.2m (Q1 2006: $4.4m); • Net income from continued operations rose 557% to $2.9m (Q1 2006: $0.4); • Net Asset Value as of June 25 increased by 30% to $245m or $18.4 per share and market cap increased by approx. 40% since the acquisition of control by Emblaze; and • Cash position increased in Q2 2007 by $64m due to the sale of BluePhoenix shares on June 18. Innovation activities • Emblaze Mobile continues development of the Monolith project • emoze gains continuous growth in public and analysts awareness • Zone-IP (Emblaze V CON) launched new attractive product line • Orca Interactive improves operating efficiencies Emblaze Group expects to report consolidated revenues for H1 2007 of approx.$110m and approx. $340m for the full calendar year 2007. Trading update As announced on 31 May 2007, Emblaze Mobile, the majority contributor to theGroup revenues in 2006, had to scale down its trading and distribution businessprimarily as a result of the unresolved industry wide VAT refunds dispute withUK's HMRC. Hence, Group's revenues will be considerably lower in the first halfof 2007 compared to the full calendar year. Formula Systems is performing ahead of management's expectations at the time ofthe full year results announcement dated 2 April 2007, and as stated previously,Emblaze will consolidate Formula System's results with the rest of Group'sactivities from the second quarter of 2007. As a result, the Group expectsrevenues to reach approximately $340m from continuing operations for the fullyear 2007. Overview The Emblaze management was personally involved in driving significant changeacross all Group companies in order to maximize value. Growth activities The acquisition of Formula Systems has been extremely successful and Emblaze hashad a great influence in turning around the portfolio companies, as detailedbelow: Magic Software: operational efficiency measures and new tactics moved thecompany to a net profit of $1m in Q1 2007 vs. loss of $0.2m in 2006, with totalrevenues of $16.4m, a 7% increase over Q1 2006 and a positive cash flow of$3.9m. BluePhoenix increased revenue in Q1 2007 by 25% to $20m and profits (on anon-GAAP basis) by 43% to $2m. The company expects revenues to exceed $80million in 2007. Share price rose 60% since the acquisition by Emblaze. Lastweek, Emblaze has decided to monetize on its holdings by selling its share ofthe company for $64m in cash, thus increasing its cash position and creatingcapital gain of $18m to the Formula group. Sapiens Q1 2007 reports are showing an increase of 8.9% in revenue and moving tooperational profit of $0.15m vs. $1.8m loss in Q1 2006. Emblaze completed a $20mcash infusion round (by means of PIPE) for the company at a 12% premium tomarket price, a round which significantly strengthens the company's balancesheet and position in the global market. Since Emblaze's acquisition of theFormula group, Sapiens share price rose 144% to $3, representing $66m marketcap. Matrix reached a net profit of $4.5m in Q1 2007, representing an increase of 38%compared to Q1 2006 with revenues of $72m, up from $62m in Q1 2006. During Q22007, the company has acquired two IT companies as a direct effect of Emblaze'sdirective of expanding Matrix to overseas markets. As a result of all these activities, Emblaze reports a 20% increase in firstquarter of Formula's revenues to $136.1m and a 557% increase in net income fromcontinuing operations to $2.9m. Net Asset Value rose by 30% to $245m as of June25, 2007. Innovation activities Emblaze Mobile R&D team in Israel continues the development of its nextgeneration advanced mobile device, namely, the "Monolith" project. emoze is gaining continuous momentum and recognition from industry analysts andplayers as one of the strongest technology solutions for Push Email. The companyhas improved product functionality and is now in advanced talks with strategicpartners for global cooperation. Zone-IP (Emblaze V CON) has launched new product lines for the infrastructureand end points that are expected to increase revenues and provide a faster routeto increased market share and sustained profitability. Orca Interactive undergoes operational efficiency measures to overcome theperiod of difficult pick up of IPTV services worldwide. The management is focused on implementing important strategic and operationalmeasures for the delivery of profitable growth and shareholder value across allactivities and intends to provide full transparency for shareholders on allprogress within the group. Enquiries: Emblaze LtdHadas Gazit, Hagit Gal +972 9 7699302/ 339 Corfin Communications (UK)Harry Chathli, Neil Thapar +44 (0)20 7929 8989 Eisenberg-Eliash LTD., IR & PR (Israel)Amir Eisenberg +972 3 7538828 / +972 52 8260285 About EmblazeEmblaze Ltd is a group of technology companies addressing both growth andinnovation activities thus combining the stability of "bread and butter" maturetechnology enterprises with "high-risk / high-reward" investments in innovation. Growth activities Formula Systems, which includes: •BluePhoenix Solutions Ltd. (NASDAQ & TASE: BPHX) develops and markets unique enterprise IT modernization solutions that enable companies to automate the process of modernizing and upgrading their mainframe and distributed IT infrastructure; •Magic Software Enterprises Ltd. (NASDAQ & TASE: MGIC) develops, markets and supports 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; •Matrix IT Ltd. (TASE: MTRX) is one of Israel's leading integration and information technology services companies, active in four principal areas: software solutions and services, software products, infrastructure solutions and hardware products, and training and assimilation. •Sapiens International Corporation N.V. (NASDAQ & TASE: SPNS) is a provider of IT solutions that modernize business processes to enable insurance and other companies to quickly adapt to changes. •nextSource Inc., designs, develops and implements web-based, high quality, innovative human capital management solutions. Innovation activities •Emblaze Mobile, an designer of advanced mobile devices; •emoze, a free global Push Email technology for mobile devices •ZONE-IP (Emblaze V CON), a provider of wireless video communications technologies and conferencing solutions for operators and enterprise markets over IP networks •Orca Interactive (LSE: ORCA), provider of Interactive Television IPTV middleware for Video On Demand (VOD) and broadcast services ; and •Visual Defence (LSE: VDI), (minority stake) a wireless and IP video solutions provider for military and homeland security markets. Emblaze Group is traded on the London Stock Exchange (LSE: BLZ) since 1996.www.Emblaze.com This information is provided by RNS The company news service from the London Stock Exchange