Last checked at 18 May 2010 07:00
18 May 2010
BATM Advanced Communications Limited
Interim Management Statement
BATM Advanced Communications Limited ("BATM" or the "Company") (LSE: BVC), a leading designer and producer of Carrier Ethernet and Metropolitan Telecom Systems, is today issuing its Interim Management Statement for the period from 1 January 2010 to 30 April 2010.
Current trading update
Total revenues in the first four months of 2010 were $ 36.0 million, compared with $38.9 million in the equivalent period in 2009. The decrease is due to a significant decline of revenues during the period from a major OEM channel in the Telecom division, as compared to those in the equivalent period in 2009. This has been somewhat offset by growth in other areas.
During these four months the sales mix was 63% from the Telecoms division and 37% from the Medical division. During April 2010, total revenues for the month were equal to those in April 2009, despite continuing weakness in the aforementioned OEM customer and substantial weakness in European economies.
The gross margin has decreased by 7% during the first four months of 2010 when compared to the same period in 2009, due to the change in the sales mix, caused by the reduced revenues from the major OEM customer. The gross margin in the Medical division has increased above the margin in 2009, a trend which we expect to continue.
Financial position
The Company's balance sheet remains very strong and at the end of April the effective cash balance stood at $64.5 million, a decrease of $2.3 million compared to the position at 31 December 2009, largely due to erosion of Euro denominated balances.
Board Developments
As reported in the Annual Report for 2009 both Ms Ariella Zochovitsky and Mr Koti Gavish will complete the second of their three year terms, the maximum term prescribed by Israeli law, in September 2010. In addition Dr. Dan Kaznelson has announced his decision to step down immediately prior to the forthcoming Annual General Meeting.
At the AGM the Board will be proposing the appointment of three new non-executives:
- Roger Lacey, Senior Vice President, Strategy and Planning, 3M with 11 years experience in the 3M Telecoms division;
- Professor Gideon Chitayat, currently Chairman of Delta Galil Industries and Honigman. Professor Chitayat has served as a director for Teva Pharmaceutical Industries and Bank Hapoalim among others; and
- Amos Shani, serial entrepreneur with experience in the Telecoms sector, former Division Engineering Manager for Intel, Israel.
Full resumes of the proposed new appointees will be made available ahead of the Annual General Meeting. The Board believes that these strong candidates will make an important contribution to the continued success of BATM.
Outlook Despite the disappointing start to the year, due almost exclusively to the low orders from our major OEM customer, from April onwards we have begun to see positive signs in our business. High customer activity in the US reported earlier in the year has started to convert into orders and we have signed two licensing agreements with new customers, including an agreement reported in April 2010 with a leading semi-conductor manufacturer, to license some of our mobile backhaul technology. Revenues from the licensing will begin in mid 2011 and are initially expected to be in the region of several US$ million. Management also sees positive prospects with important new customers.
Due to the substantial impact of the OEM customer decline coupled with the weakness of the Euro, we currently expect to be broadly break-even for the first six months. For the year as a whole, management are encouraged by the recent positive signs in the business, and remain cautiously optimistic that BATM will meet its revenue targets for the full year. The sales mix to date is expected to continue and management expects that the profitability in the second half of the year will be similar to that of the second half of 2009.
- ends -
Enquiries
BATM Advanced Communications +972 9866 2525
Dr Zvi Marom, Chief Executive
Threadneedle Communications 020 7653 9850
Josh Royston / Graham Herring
Singer Capital Markets Ltd 020 3205 7626
Shaun Dobson
Shore Capital 020 7408 4090
Pascal Keane