Batm Advanced Regulatory News (BVC)

RNS Number : 7950G

BATM Advanced Communications Ld

08 February 2010

 

 

 

BATM Advanced Communications Limited

 

Preliminary results for 2009

 

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 2009.

 

Full Year Highlights

 

Year ended 31 December	2009	2008	Change %
Revenue	$135.4m	$134.5m	0.7%
Gross profit	$57.7m	$61.3m	-5.8%
Reported operating profit	$16.4m	$23.6m	-30.5%
Adjusted operating profit1	$23.0m	$26.2m	-12.2%
Net profit2	$20.5m	$24.2m	-15.3%
Earnings per share	5.11¢	6.19¢	-17.4%
Liquid investments	$66.8m	$57.3m	16.6%
Dividend per share	1.35p3	0.69p	95.6%

 

1. Before intangibles amortisation of $4.0 million (2008: $2.6 million) and one-off exceptional items of $2.5 million (2008: nil)

2. Attributable to equity holders

3. Includes special payment of 0.55p per share

 

Highlights

·; Record revenues of $135.4 million, up 0.7% on 2008, despite difficult market conditions

·; Adjusted operating profit reflects a strong operating performance and the focus on cost reduction and efficiencies

·; Profit attributable to equity holders of over $20 million includes $1.5 million adverse currency movements (2008: $2.5 million gain)

·; Significantly increased recommended dividend of 1.35 pence per share, totalling approx $9 million (2008: 0.69 pence) reflects strong cash flow performance

·; Liquid investments increased by $9.5 million to $66.8 million

 

Dr Zvi Marom, Chief Executive of BATM said:

 

"The year ended 31 December 2009 has demonstrated the resilience of BATM's technologies and business model. Despite challenging market conditions, BATM has achieved modest revenue growth and strong cash flow whilst continuing to invest in technologies and sales channels to strengthen our market position. BATM has successfully established its medical division during 2009 and we expect this division to grow substantially over the coming years.

 

"We continue to implement our strategic plan in 2010 of investing in technologies and sales channels: we are seeing a high level of customer activity in our direct channels (in particular in the US) and expansion of indirect sales channels should also help to grow overall revenues. We believe that 2010 will bring to fruition a number of exciting projects including innovative product releases across all our business lines.

 

"Accordingly, despite the continuing uncertainty in the global telecoms market that will result in a higher sales mix of the medical division during 2010, we have begun the year with a healthy pipeline and remain cautiously optimistic for the coming year."

 

 

 

 

Chairman's Statement

 

 

Revenues grew modestly in 2009, despite difficult market conditions, to reach a new high of $135.4 million (2008: $134.5 million). There was a significant underlying change in sales mix with Telecom sales totalling $105.7m (2008: $116.1m) mainly as a result of lower revenues in a challenging US market, and Medical sales totalling $29.7m (2008: $18.4m).

 

The gross profit margin has decreased to 42.6% (2008: 45.6%) primarily due to this change in the sales mix. In comparison to H2 2008 the gross profit margin has increased from 41.4% due to slight increases in profitability both in the Telecoms and Medical sectors. In the Telecoms sector this is primarily due to favourable Euro - US dollar exchange rates in the last part of 2009, whilst in the Medical sector this is primarily due to efficiency programs.

 

Total sales and marketing expenses were $13.6 million (2008: $13.9 million), a decrease of 2.2% on the previous year. We have succeeded in reducing these costs by increasing the proportion of revenues through indirect sales channels with existing customers, which typically incur lower direct expense, and optimisation programmes. As a percentage of revenue, sales and marketing expenses were 10.0% (2008: 10.0%).

 

General and administrative expenses were $9.4 million (2008: $8.4 million) representing 6.9% of revenue, compared with 6.2% in 2008. This increase is primarily related to the effects of full year operations for the new medical sector businesses. We continue our integration of these new businesses into our group structure in order to reduce this overhead.

 

R&D expenses in 2009 were $11.8 million (2008: $12.8 million), a decrease of 7.8%. The decrease is largely a result of the depreciation of the Israeli Shekel against the US dollar, but also reflects our increased R&D in new fields offset by efficiency programmes in BATM's traditional R&D units.

 

Operating profit was $16.4million (2008: $23.6 million) after amortization of intangible assets totalling $4.0 million (2008: $2.6 million), which has increased due to our acquisitions both in 2009 and 2008, and certain one-off exceptional items. Other operating expenses therefore include a one-off write-down of the leases and leasehold improvements in two US properties of $1.2 million, following a strategic decision to relocate to a purchased property in Foxboro, and an impairment of $1.3 million of goodwill in relation to Vigilant. Adjusted operating profit, adding back these items, was $23.0 million (2008: $26.2 million).

 

Net finance income was $2.0 million (2008: $0.1 million). This figure primarily consists of $2.6 million of interest income, as well as $1.3 million of gains on forward contracts and debt forgiveness, which has been offset by $1.5 million of foreign exchange losses.

 

Net profit after tax attributable to equity holders of the parent amounted to $20.5 million (2008: $24.2 million), resulting in a basic profit per share of 5.11¢ (2008: 6.19¢)

 

Our balance sheet remains strong with effective liquidity of $66.8 million (2008: $57.3 million). This is after a dividend payment of $4.6 million, and an investment of $13.5million in fixed assets (see below).

 

Intangible assets have increased to $23.3 million (2008: $18.9 million), and Goodwill has increased to $11.3million (2008: $9.4 million). This increase is primarily due to the purchase of ISE and other businesses, offset by amortisation of intangibles and goodwill impairment totalling $5.3 million.

 

Property, plant and equipment has increased by $11.8 million from 31 December 2008 to $21.9 million as at 31 December 2009. During the year BATM took advantage of low real estate prices to purchase two offices located in Foxboro, Massachusetts and Hod Hasharon, Israel. These investments cost a total of $9.7million.

 

Total liabilities have increased by $14.7million from 31 December 2008 to $46.3 million as at 31 December 2009. This increase is primarily due to $6.7 million of liabilities assumed on the acquisition of ISE, and $4.5 million mortgage drawn for the purchase of the building in Hod Hasharon, Israel.

 

 

During 2009 we have focused on strengthening and expanding our indirect sales channels. We have succeeded in increasing these channels and believe that this will help us grow our revenues in 2010. In our direct sales channels, customer activity is very high, in particular in the US.

 

 

Over the past year we have developed a new generation of cellular back-haul Ethernet products. These switches contain cutting edge technology to facilitate linking cellular masts to provider networks, including extremely accurate time synchronisation. These products provide solutions to the new infrastructure required to support the ever increasing number of IP enabled smart phones.

 

In 2010 we have an aggressive development programme for increasing our network management platform to upgrade it into a very high end servicing platform. We believe that these platforms will become increasingly important in the future as the services supplied over service providers' networks grow and become increasingly sophisticated. Over the course of the year we will release a complete solution including a 40G platform.

 

 

During the course of 2009, BATM continued its strategic investments into the Medical sector. In December 2009, BATM purchased the intellectual property and certain assets of a clinical chemistry and immunology diagnostics company for approximately €2 million. The operations of the business were purchased from bankruptcy proceedings and are based mainly in Italy. We expect these assets to significantly strengthen the product range and know how in the Group's current operations in the clinical chemistry field.

 

Towards the end of 2009 the BATM Medical Group showcased two new innovative products, the Miura One, a niche clinical chemistry analyser for small laboratories, and the Integrated Shredder Steriliser ("ISS"). The ISS is a machine that dramatically reduces the environmental impact and cost associated with the disposal of medical waste. Orders have been received for both products and BATM is gearing up production in 2010.

 

During 2010 we expect to continue our cost reduction program in the Medical Division in order to increase the gross profit margin, realise synergies across the division and begin to see revenues from OEM agreements signed over the past year in this sector.

 

 

During the first quarter of 2009 BATM strengthened its local presence in the Telecoms business in Israel by purchasing the trade and assets of a local company and integrating it into our existing local structure.

 

Our strategic investments during the year included the investment in the medical segment described above, as well as the acquisition of a controlling interest in ISE in February 2009 as previously reported.

 

 

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 2009 of 1.35 pence per share (2009: 0.69p), which includes a special payment of 0.55 pence per share as a return to shareholders of the excess cash generated by the business. 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.

 

Despite the continuing uncertainty in the global economy we have begun 2010 with a healthy pipeline of business across the Group. In the coming year BATM should begin to benefit from the impact of the release of our complete solution in the telecoms sector, replacing declining business in some of our legacy product lines. In the medical sector we believe that we will see significant growth from new channels and synergies. Accordingly we remain cautiously optimistic for the coming year.

 

 

 

 

Peter Sheldon

Chairman

 

08 February 2010

 

 

 

 

BATM ADVANCED COMMUNICATIONS LTD.

CONSOLIDATED INCOME STATEMENTS

 

	Year ended 31 December
	2009	2008
	US$ in thousands
Revenues	135,395	134,462
Cost of revenues	77,671	73,157
Gross profit	57,724	61,305
	---------	---------
Operating expenses
Sales and marketing expenses	13,591	13,948
General and administrative expenses	9,407	8,376
Research and development expenses	11,763	12,829
Other operating expenses	6,529	2,597
Total operating expenses	41,290	37,750
	---------	---------
Operating profit	16,434	23,555
Investment revenue	2,562	2,453
Gains (losses) on financial instruments	1,260	(4,340)
Foreign exchange differences	(1,452)	2,512
Finance cost	(356)	(480)
Profit before tax	18,448	23,700
Tax benefit	867	454
Profit for the year	19,315	24,154
Attributable to:
Owners of the Company	20,517	24,205
Non-controlling interests	(1,202)	(51)
Income for the year	19,315	24,154
Earnings per share (in cents) basic	5.11	6.19
Earnings per share (in cents) diluted	5.08	6.15

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year ended 31 December
	2009	2008
	US$ in thousands
	Unaudited	Unaudited
Profit for the year	19,315	24,154
Exchange differences on translating foreign operations	2,669	(6,111)
Total Comprehensive Income of the year	21,984	18,043
Attributable to:
Owners of the Company	22,562	18,220
Non-controlling interest	(578)	(177)

 

 

BATM ADVANCED COMMUNICATIONS LTD.

CONSOLIDATED BALANCE SHEETS

 

	31 December	31 December
	2 0 0 9	2 0 0 8
	US$ in thousands
Non-current assets
Goodwill	11,345	9,418
Other intangible assets Property, plant and equipment Held to maturity investments Deferred tax assets	23,323 21,911 4,347 4,848	18,937 10,041 5,468 3,531
	65,774	47,395
Current assets
Inventories	22,040	20,984
Investments	34,332	21,086
Trade and other receivables	31,171	29,192
Cash and cash equivalents	28,095	30,737
	115,638	101,999
Total assets	181,412	149,394
Current liabilities Short-term bank credit Trade and other payables Provisions	6,139 21,624 3,505 31,268	3,632 20,283 2,181 26,096
Net current assets	84,370	75,903
Non-current liabilities Long-term liabilities	14,219	4,599
Retirement benefit obligation     Total liabilities	875 15,094 ______   46,362	926 5,525 ______  31,621
Net assets	135,050	117,773
Equity
Share capital	1,214	1,210
Share premium account	405,961	404,928
Foreign currency translation reserve and other reserves	(3,229)	(6,060)
Accumulated Deficit	(270,808)	(286,764)
Equity attributable to:
Owners of the Company	133,138	113,314
Non-controlling interest	1,912	4,459
Total equity	135,050	117,773

 

 

 

BATM ADVANCED COMMUNICATIONS LTD.

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

	Year ended 31 December
	2 0 0 9	2 0 0 8
	US$ in thousands
Net cash from operating activities  (Appendix A)	20,234	9,094
	----------	----------
Investing activities
Interest received 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	1,461 3,233   18,433 30,453	1,363 1,472   13,608 17,908
Purchases of property, plant and equipment Proceeds on disposal of property, plant and equipment Purchases of intangible assets Purchases of activity Purchases of held to maturity investments Purchases of financial assets carried at fair value through profit and loss Purchases of deposits	(13,583) 61 (361) (2,967) -   (15,450) (47,335)	(1,154) - - - (1,050)   (21,574) (14,000)
Investment in a company	-	(280)
Acquisition of subsidiaries (Appendix B)	132	(7,239)
Net cash used in investing activities	(25,923)	(10,946)
	----------	----------
Financing activities
Dividend payment	(4,561)	(3,936)
Increase (decrease) in short-term bank credit	1,468	(1,549)
Bank loan received	3,000	-
Bank loan repayment	(59)	-
Proceeds on issue of shares	378	3,515
Net cash from (used in) financing activities	226	(1,970)
	----------	-----------
Decrease in cash and cash equivalents	(5,463)	(3,822)
Cash and cash equivalents at the beginning of the year	30,737	35,809
Effects of exchange rate changes on the balance of cash held in foreign currencies	2,821	(1,250)
Cash and cash equivalents at the end of the year	28,095	30,737

 

 

BATM ADVANCED COMMUNICATIONS LTD.

APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS

 

APPENDIX A

RECONCILIATION OF OPERATING PROFIT FOR THE PERIOD TO NET CASH

FROM OPERATING ACTIVITIES

	Year ended 31 December
	2 0 0 9	2 0 0 8
	US$ in thousands
Operating profit from continuing operations Adjustments for:	16,434	23,555
Amortization of intangible assets and goodwill	5,355	2,597
Depreciation of property, plant and equipment	2,865	2,401
Stock options granted to employees	659	791
Increase (decrease) in retirement benefit obligation	(65)	154
Increase (decrease) in provisions	575	(313)
Operating cash flow before movements in working capital	25,823	29,185
Increase in Inventory	(310)	(4,080)
Decrease (increase) in receivables	(2,186)	3,965
Decrease in payables	(3,180)	(18,709)
Cash generated by operations	20,147	10,361
Income tax paid	(173)	(844)
Income tax received	557	-
Interest paid	(297)	(423)
Net cash from operating activities	20,234	9,094

 

APPENDIX B

ACQUISITION OF SUBSIDIARIES

	Year ended 31 December
	2 0 0 9	2 0 0 8
	US$ in thousands
Net assets acquired
Property, plant and equipment	1,432	2,727
Inventory	205	4,436
Trade and other receivables	446	6,008
Trade and other payables Short-term bank credit Retirement benefit obligation Long term payables	(2,387) (2,823) - (3,044)	(14,310) (5,091) (437) (1,117)
Provisions	-	(178)
Non controlling interest	1,183	(3,678)
	(4,988)	(11,640)
Goodwill	1,231	11,519
Intangible assets	3,625	9,772
Total consideration	(132)	9,651
Less-consideration recorded as liability	-	(2,412)
Total cash consideration	(132)	7,239

 

 

 

 

 

BATM ADVANCED COMMUNICATIONS LTD

CONSOLIDATED STATEMENTS OF CHANGE 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 2008	1,186	400,646	(29)	-	(307,033)	94,770	958	95,728
Exercise of share based options by employees	20	2,583				2,603	-	2,603
Recognition of share-based payments		791				791	-	791
Share based purchase of Vigilant	4	908				912	-	912
Purchase of non- controlling interest			(46)			(46)	-	(46)
Non-controlling interest acquired						-	3,678	3,678
Dividend					(3,936)	(3,936)	-	(3,936)
Other comprehensive income	-	-	(5,985)	-	24,205	18,220	(177)	18,043
As at 31 December 2008	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

 

 

 

 

 

 

BATM ADVANCED COMMUNICATIONS LTD

NOTES TO THE FINANCIAL STATEMENTS

 

Note 1 - General

 

The preliminary results for the year ended 31 December 2009 and the comparative 2008 information are presented in accordance with International Financial Reporting Standards ("IFRS").

 

 

Note 2 - Profit per share

 

Earning per share is based on the weighted average number of shares in issue for the year of 401,579,099 (2008: 396,222,088). 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 403,939,818 shares (2008: 398,679,591).

 

 

Note 3 - Business Segment

 

Year ended 31 December 2 0 0 9
	Telecommunications	Medical	Total
US$ in thousands
Revenues	105,702	29,693	135,395
Operating profit (loss), before other operating expenses	24,664	(1,701)	22,963
Assets	144,553	36,859	181,412
Year ended 31 December 2 0 0 8
	Telecommunications	Medical	Total
US$ in thousands
Revenues	116,053	18,409	134,462
Operating profit, before other operating expenses	25,600	552	26,152
Assets	124,728	24,666	149,394

 

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