Last checked at 7 Mar 2011 07:00
BATM Advanced Communications Limited
Preliminary results for 2010
BATM Advanced Communications Limited ("BATM" or "the Company") (LSE: BVC), a leading designer and producer of broadband data and telecoms systems and medical laboratory equipment, announces its preliminary results for the year ended 31 December 2010.
Second Half Highlights
Six months ended | 2010 (H2) | 2010 (H1) | Change % |
Revenue | $65.3m | $55.3m | 18.1% |
Gross profit | $22.9m | $19.8m | 15.7% |
EBITDA | $5.6m | $2.1m | 166.6% |
Earnings per share (basic) | 0.63c | (0.21)c | 400.0% |
Full Year Highlights
Year ended 31 December | 2010 | 2009 | Change % |
Revenue | $120.6m | $135.4m | -10.9% |
Gross profit | $42.7m | $57.7m | -26.0% |
EBITDA | $7.7m | $24.7m | -68.8% |
Earnings per share (basic) | 0.42c | 5.11c | -91.7% |
Highlights
·; Revenues in the second half of $65.3M compared to $55.3M in the first half of 2010
·; EBITDA of $5.6M in the second half compared to $2.1M in the first half of 2010
·; Liquid investments of $60.2M after distribution of dividends of $8.8M in July 2010 with respect to 2009 (including corporate tax)
·; Recommended dividend of 0.8 pence per share for 2010.
Dr Zvi Marom, Chief Executive of BATM said:
"2010 was a challenging year for the Telecom division which suffered from the substantial decline in sales to Nokia Siemens Networks (NSN). Despite this setback, in the second half of the year our solutions were adopted by new customers especially tier 2&3. That, together with growth in orders in the U.S market, led to a recovery in sales. We expect this trend to continue in the first half of 2011 and beyond.
Our medical division continued to grow significantly, reaching sales of $40 million and, although not yet profitable, is giving every indication that it will move into profit during 2011.
New facilities for the division have been acquired in late 2010 and are being prepared for the expected orders for our products. Positive indications of new business are already apparent in the early months of our new year. We have received ANVISA (Brasil and neighbouring countries) approval and an OEM of ours has achieved FDA approval. CE approvals for all of our products are expected to be obtained before the year end, several in the early part of it. A number of patents have been filed and we expect more milestones to be reached during the year.
The challenges of 2010 demonstrated the resilience of the company and its technology capabilities that enable it to maintain momentum, which we believe will allow us to grow the business as we move into 2011 and beyond."
For further information please contact: 09 March Thereafter
BATM Advanced Communications Limited
Dr Zvi Marom, Chief Executive 020 7653 9850 00972 9 866 2525
Ofer Bar-Ner, Chief Financial Officer 020 7653 9850 00972 9 866 2525
Singer Capital Markets
Shaun Dobson 020 3205 7626 020 3205 7626
Shore Capital
Pascal Keane 020 7408 4090 020 7408 4090
Threadneedle Communications
Josh Royston / Graham Herring 020 7653 9850 020 7653 9850
Chairman's Statement
Financial Review
Revenues in H2 2010 grew, as expected, by 18% compared to those in H1 2010, bringing revenues for the year to $120.6 million (2009: $135.4 million). Medical sales totalling $40.7 million (2009: $29.7 million) have continued to show significant growth and have become a larger portion of our overall sales mix.
The gross profit margin for 2010 has decreased to 35.4% (2009: 42.6%) primarily due to the change in the sales mix. The medical division had inventory adjustments and other expenses related to the higher expected demand in 2011 that resulted in a 4% lower gross margin for the division in the second half. The gross profit margin in H2 2010 of 35.1% was slightly lower than the 35.8% recorded in H1 2010.
Total sales and marketing expenses were $15.3 million (2009: $13.6 million), an increase of 12.5% on the previous year. The increase is mostly due to our acquisition of Adaltis, a medical diagnostic company, in December 2009, increased distribution revenues in 2010 and costs associated with entering a new software application market from May 2010. As a percentage of revenue, sales and marketing expenses were 12.7% (2009: 10.0%).
General and administrative expenses were $9.2 million (2009: $9.4 million) representing 7.6% of revenue, compared with 6.9% in 2009. The decrease in costs is primarily related to actions we have taken to integrate the medical businesses into three distinct groups (Distribution, Diagnostics and Sterilization).
R&D expenses in 2010 were $12.4 million (2009: $11.8 million), an increase of 5%. R&D expenses in H2 2010 were $5.9 million compare to $6.5 million in H1 2010. The decrease is largely due to efficiency programmes in BATM's traditional R&D units.
Operating profit was $1.1 million (2009: $16.4 million) after other operating expenses of $4.5 million (2009: $6.5 million) which primarily relates to the amortization of intangible assets.
Net finance loss was $0.1 million (2009: $2.0 million profit), derived from $0.8 million of interest income, as well as $0.7 million of foreign exchange gains, which have been offset by $1.0 million of loss on forward transaction and $0.6 million of finance costs.
Net profit after tax attributable to equity holders of the parent amounted to $1.7 million (2009: $20.5 million), resulting in a basic earnings per share of 0.42¢ (2009: 5.11¢)
Our balance sheet remains strong with effective liquidity of $60.2 million (2009: $66.8 million). This is after a dividend payment and related taxes of $8.8 million in July 2010. Year- end cash is comprised as follows: cash and deposits of up to one year of $52.6 million and bonds of 7.6 million
Intangible assets have decreased to $19.8 million (2009: $23.3 million), and Goodwill remains unchanged at $11.3million (2009: $11.3 million). The decrease in intangible assets is primarily due to the amortization of intangible assets that appears in other operating expenses.
Property, plant and equipment have increased by $4.0 million from 31 December 2009 to $26 million as at 31 December 2010. Towards the end of the year, BATM acquired the manufacturing site of our diagnostics business in Italy in order to start the production of immunoassay reagents.
Total liabilities have increased by $3.6 million from 31 December 2009 to $49.9 million as at 31 December 2010. This increase is primarily due to increase in trade payables of $4 million.
Business Review
Telecoms Division
The year 2010 has been affected by the substantial decrease in revenues from our major OEM customer Nokia Siemens Networks as reported previously. We expect the trend from this customer to continue to have an impact on our overall telecom business going forward, however due to the significantly lower level of business in 2010 the impact of this trend will be much smaller in 2011.
Revenues in the Telecom division increased during H2 2010 to $44.3 million from $35.6 million recorded during H1 2010. The increase in revenues was almost evenly distributed between our direct channels in the US and our OEM customers. Following our announcement of a first order from a prominent defence force customer in December 2009, we recorded more than $1 million worth of revenues in 2010 related to our win for a military version of our next generation secured access platform technology. We expect revenues to grow following deployment at the end of 2011.
We have also recorded approximately $600,000 of revenue from a leading semi- conductor manufacturer as part of a licensing arrangement reported in April 2010. We expect royalties to grow in the coming years as the chip is released to the market.
In our OEM channels, we announced in February 2011 a new strategic partnership with Advantech to deliver integrated 40G ATCA platforms. This partnership brings our carrier-grade switching software technology and blades to Tier-1 and 2 Telecom Equipment Manufacturers (TEMs) enabling a cost effective, high quality carrier grade solution to support next generation telecom networks.
In our direct channels we have added several new Tier 2 and 3 telecom operators to our customer base during the second half of 2010. We have also made significant progress with a major Tier 1 operator in South America, including a new contract and first order from this important customer. These new wins were accomplished by leveraging our latest product offerings including our new Service Management platform that revolutionises the way providers manage their Ethernet edge network. With growth in the market for cell site aggregation and migration to 4G networks, our solution allows operators to upgrade their network without having to replace their core networks. In 2011, our focus will be on the Utilities and Mobile backhaul markets especially in the US where our product solutions will complement the existing infrastructure as they leverage their assets to build communications networks.
As indicated during our investor day in September, we expect the Telecoms group to return to growth within the next 18 to 24 months. We are now building the necessary channels to replace the revenues recorded with Nokia Siemens Networks, and gain better access to the market both through direct and indirect channels. We believe the progress we have made during the second half of the year will help us achieve our targets.
Medical Division
We have made significant progress during 2010 in realising our long term goals for the division. Although growth between H1 and H2 of 2010 was only 7%, the increase is purely organic. During 2010, we continued our investment in the Division by purchasing the manufacturing facility of our diagnostics business. In 2011 we expect to continue to expand this business through investment, albeit at a much lower scale than in 2010. In 2011, we have begun to incorporate operational efficiencies into our growth strategy by consolidating our investments in the medical diagnostics field into one operating entity.
The gross margin of the medical division was 20% in 2010 (2009: 20%). Although the gross margin was lower than expected during the second half of 2010, it includes certain expenses related to inventory adjustment and increasing operating capacity in both the sterilization and diagnostics sectors of our business to meet increased demand and enable much higher revenues in 2011.
The operating loss for the medical division was $2.2 million in 2010 (2009: $1.7 million). The increase is mostly due to higher operating expenses.
During February 2011 we acquired the minority holdings of two of the original founders of the medical group. This will allow us to accelerate the process of improving operational efficiency and growth in the group.
We expect the medical group to continue to grow sales and improve gross margins during 2011. We also expect the sterilization and diagnostics units that currently comprise 43% of the overall revenues of the Division to become a larger portion of our overall sales.
Dividend
The Board is of the opinion that, in light of the Company's profitability, it should continue its dividend distribution policy. Accordingly, it has proposed, subject to shareholder consent, a final dividend for 2010 of 0.8 pence per share (2009: 0.8p and 0.55p special payment). In making this decision the Board has carefully considered the likely future capital requirements of the business and believes that the Company should have fully adequate cash resources to meet these requirements. The Board does not envisage recommending an interim dividend in the coming year.
Current Trading and Prospects
Trading in the first 2 months of the year was encouraging. Our revenues are 5% ahead of our performance last year and we expect a strong March as well. This and other developments in our business lead us to believe that even after the additional expected reduction in the Nokia Siemens Networks (NSN) business, 2011 will be a year in which we can grow the business.
Peter Sheldon
Chairman
07 March 2011
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED INCOME STATEMENTS
Year ended 31 December | ||
2010 | 2009 | |
US$ in thousands | ||
Revenues | 120,578 | 135,395 |
Cost of revenues | 77,905 | 77,671 |
Gross profit | 42,673 | 57,724 |
--------- | --------- | |
Operating expenses | ||
Sales and marketing expenses | 15,332 | 13,591 |
General and administrative expenses | 9,241 | 9,407 |
Research and development expenses | 12,450 | 11,763 |
Other operating expenses | 4,517 | 6,529 |
Total operating expenses | 41,540 | 41,290 |
--------- | --------- | |
Operating profit | 1,133 | 16,434 |
Finance Income | 1,549 | (*)3,822 |
Finance expense | (1,652) | (*)(1,808) |
Profit before tax | 1,030 | 18,448 |
Income tax benefit (expense) | (836) | 867 |
Profit after tax | 194 | 19,315 |
Attributable to: | ||
Owners of the Company | 1,699 | 20,517 |
Non-controlling interests | (1,505) | (1,202) |
Profit for the year | 194 | 19,315 |
Earnings per share (in cents) basic | 0.42 | 5.11 |
Earnings per share (in cents) diluted | 0.42 | 5.08 |
(*) Reclassified
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December | ||
2010 | 2009 | |
US$ in thousands | ||
Profit for the year | 194 | 19,315 |
Exchange differences on translating foreign operations | ( 4,911) | 2,669 |
Total Comprehensive Income of the year | (4,717) | 21,984 |
Attributable to: | ||
Owners of the Company | (4,312) | 22,562 |
Non-controlling interest | (405) | (578) |
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED BALANCE SHEETS
31 December | 31 December | |
2 0 1 0 | 2 0 0 9 | |
US$ in thousands | ||
Assets | ||
Non-current assets | ||
Goodwill | 11,300 | 11,345 |
Other intangible assets Property, plant and equipment Held to maturity investments Deferred tax assets | 19,798 25,943 - 5,122 | 23,323 21,911 4,347 4,848 |
62,163 | 65,774 | |
Current assets | ||
Inventories | 19,470 | 22,040 |
Financial assets | 38,079 | 34,332 |
Trade and other receivables | 30,900 | 31,171 |
Cash and cash equivalents | 22,087 | 28,095 |
110,536 | 115,638 | |
|
| |
Total assets | 172,699 | 181,412 |
Liabilities Current liabilities Short-term bank credit Trade and other payables Provisions
|
6,135 27,900 3,190 37,225 |
6,139 21,624 3,505 31,268 |
Net current assets | 73,311 | 84,370 |
Non-current liabilities Long-term liabilities |
11,840 |
14,219 |
Retirement benefit obligation
Total liabilities | 884 12,724 49,949
| 875 15,094 46,362
|
Net assets | 122,750 | 135,050 |
Equity | ||
Share capital | 1,215 | 1,214 |
Share premium account | 406,504 | 405,961 |
Foreign currency translation reserve and other reserves |
(8,798) |
(3,229) |
Accumulated Deficit | (277,236) | (270,808) |
Equity attributable to: | ||
Owners of the Company | 121,685 | 133,138 |
Non-controlling interest | 1,065 | 1,912 |
Total equity | 122,750 | 135,050 |
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 December | ||
2 0 1 0 | 2 0 0 9 | |
US$ in thousands | ||
Net cash from operating activities (Appendix A) | 12,481 | 20,234 |
---------- | ---------- | |
Investing activities | ||
Interest received Proceeds on forward transactions Proceeds on disposal of held to maturity investments Proceeds on disposal of financial assets carried at fair value through profit and loss Proceeds on disposal of deposits |
612 1,154 4,316
13,108 38,427 |
1,461 - 3,233
18,433 30,453 |
Purchases of property, plant and equipment Proceeds on disposal of property, plant and equipment Purchases of intangible assets Purchases of other business combinations Purchases of activity Payment of forward transactions Purchases of financial assets carried at fair value through profit and loss Purchases of deposits | (6,392) - - (171) - (1,099)
(20,221) (39,727) | (13,583) 61 (361) - (2,967) -
(15,450) (47,335) |
Acquisition of subsidiaries (Appendix B) | - | 132 |
Net cash used in investing activities | (9,993) | (25,923) |
---------- | ---------- | |
Financing activities | ||
Dividend payment Tax on dividend | (8,127) (637) | (4,561) - |
Increase (decrease) in short-term bank credit | (1,761) | 1,468 |
Bank loan received | 1,500 | 3,000 |
Bank loan repayment | (1,032) | (59) |
Proceeds on issue of shares | 118 | 378 |
Net cash from (used in) financing activities | (9,939) | 226 |
---------- | ---------- | |
Decrease in cash and cash equivalents | (7,451) | (5,463) |
Cash and cash equivalents at the beginning of the year |
28,095 |
30,737 |
Effects of exchange rate changes on the balance of cash held in foreign currencies |
1,443 |
2,821 |
Cash and cash equivalents at the end of the year | 22,087 | 28,095 |
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS
APPENDIX A
RECONCILIATION OF OPERATING PROFIT FOR THE YEAR TO NET CASH
FROM OPERATING ACTIVITIES
Year ended 31 December | ||
2 0 1 0 | 2 0 0 9 | |
US$ in thousands | ||
Operating profit from continuing operations Adjustments for: | 1,133 | 16,434 |
Amortization of intangible assets and impairment of goodwill | 3,738 | 5,355 |
Depreciation of property, plant and equipment | 2,482 | 2,865 |
Stock options granted to employees | 426 | 659 |
Increase (decrease) in retirement benefit obligation | 41 | (65) |
Increase (decrease) in provisions | (898) | 575 |
Operating cash flow before movements in working capital | 6,922 | 25,823 |
Decrease (increase) in Inventory | 1,959 | (310) |
Increase in receivables | (480) | (2,186) |
Increase (decrease) in payables | 4,466 | (3,180) |
Cash generated by operations | 12,867 | 20,147 |
Income tax paid | (338) | (173) |
Income tax received | 378 | 557 |
Interest paid | (426) | (297) |
Net cash from operating activities | 12,481 | 20,234 |
APPENDIX B
ACQUISITION OF SUBSIDIARIES
Year ended 31 December | ||
2 0 1 0 | 2 0 0 9 | |
US$ in thousands | ||
Net assets acquired | ||
Property, plant and equipment | - | 1,432 |
Inventory | - | 205 |
Trade and other receivables | - | 446 |
Trade and other payables Short-term bank credit Long term payables | - - - | (2,387) (2,823) (3,044) |
Non controlling interest | - | 1,183 |
(4,988) | ||
Goodwill | - | 1,231 |
Intangible assets | - | 3,625 |
Total cash consideration | - | (132) |
BATM ADVANCED COMMUNICATIONS LTD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital | Share Premium Account |
Translation reserve |
Other reserves |
Accumulated Deficit | Attributable to owners of the parent |
Non- controlling interest |
Total equity | ||
US $ in thousands | |||||||||
As at 1 January 2009 |
1,210 |
404,928 |
(6,060) |
- |
(286,764) |
113,314 |
4,459 |
117,773 | |
Exercise of share based options by employees
| 4
|
374
|
378
|
-
|
378
| ||||
Recognition of share-based payments
| 659
| 659
|
-
|
659
| |||||
Purchase of non- controlling interest
|
|
|
| -
| (1,183)
| (1,183)
| |||
Non-controlling interest acquired |
786 |
786 |
(786) |
- | |||||
Dividend
| (4,561)
| (4,561)
| -
| (4,561)
| |||||
Other comprehensive income |
- |
- |
2,045 |
- |
20,517 |
22,562 |
(578) |
21,984 | |
As at 31 December 2009 |
1,214 |
405,961 |
(4,015) |
786 |
(270,808) |
133,138 |
1,912 |
135,050 | |
Exercise of share based options by employees
|
1
|
117
|
118
|
-
|
118
| ||||
Recognition of share-based payments
| 426
| 426
| -
| 426
| |||||
Non-controlling interest acquired |
442 |
442 |
(442) |
- | |||||
Dividend
| (8,127)
| (8,127)
| -
| (8,127)
| |||||
Other comprehensive income |
- |
- |
(6,011) |
- |
1,699 |
(4,312) |
(405) |
(4,717) | |
As at 31 December 2010 |
1,215 |
406,504 |
(10,026) |
1,228 |
(277,236) |
121,685 |
1,065 |
122,750 | |
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - General
The preliminary results for the year ended 31 December 2010 and the comparative 2009 information will presented in the full Annual report in accordance with International Financial Reporting Standards ("IFRS").
Note 2 - Profit per share
Earnings per share is based on the weighted average number of shares in issue for the year of 402,494,652 (2009: 401,579,099). The number used for the calculation of the diluted earning per share for the year (which includes the effect of dilutive stock option plans) is 403,222,832 shares (2009: 403,939,818).
Note 3 - Business Segment
Year ended 31 December 2 0 1 0 | |||
Telecommunications | Medical | Total | |
US$ in thousands | |||
Revenues | 79,877 | 40,701 | 120,578 |
Operating profit (loss)(*) | 7,834 | (2,184) | 5,650 |
Assets | 128,804 | 43,895 | 172,699 |
Year ended 31 December 2 0 0 9 | |||
Telecommunications | Medical | Total | |
US$ in thousands | |||
Revenues | 105,702 | 29,693 | 135,395 |
Operating profit (loss)(*) | 24,664 | (1,701) | 22,963 |
Assets | 144,553 | 36,859 | 181,412 |
(*) Excluding other operating expenses