Batm Advanced Regulatory News (BVC)

14 Sep 2006 07:00

BATM Advanced Communications Ld14 September 2006 BATM Advanced Communications Limited - 2006 interim results BATM Advanced Communications Limited ("BATM" or "the Company"), (LSE: BVC), aleading designer and producer of broadband data and telecoms systems, announcesits interim results for the six months ended 30 June 2006. Six months ended 30th June 2006(H1) 2005(H1) Turnover $34.1m $26.2mGross Profit $14.0m $11.1mOperating profit (loss) $ 3.5m $(2.4)mPre-tax profit (loss) $ 4.7m $(1.7)mProfit (loss) per share 1.14c (0.45)c Half Year Highlights • Net Profit of $4.4m (H1 2005: loss of $1.7m) • Revenue growth of 30% over comparable period last year • Gross margins of 41% compared with 39% for full year 2005 and 36% for H2 of 2005 • Acquisition of Metrobility Optical Systems Inc. in June for $6.85m • Strong cash position of $45.4m at 30 June 2006 ($47.1m at 30 June 2005) Dr Zvi Marom, Chief Executive of BATM, said: "These results mark a significant period in the Company's progress. Ourrecovery from the difficult trading conditions of the last 5 years has beenmarked by a return to profitability and the business relationships that we haveestablished and built upon provide a substantial underpinning of our prospectsfor future growth. "We are encouraged by these favorable results and look forward to a continuationof our renewed, profitable, strong growth into the second half of this year andbeyond." For further information please contact: 14 Sept Thereafter BATM Advanced Communications LimitedDr Zvi Marom, Chief Executive 020 7936 9605 00972 9 866 2525Ofer Bar-Ner, Chief Financial Officer 020 7936 9605 00972 9 866 2525 Dresdner Kleinwort WassersteinJames Rudd 020 7623 8000 020 7623 8000 Shore CapitalGraham Shore 020 7408 4090 020 7408 4090 Threadneedle CommunicationsGraham Herring / Josh Royston 020 7936 9605 020 7936 9605 Chairman's Statement Financial Performance Revenue for the period was $34,117,000 (H1 2005: $26,177,000), an increase of30%, which is primarily related to our successful relationships with existingcustomers and the addition of a number of new ones in the period.Our gross profit margin was 41% (2005: 39%, H2: 2005: 36%, H1: 2005: 42%). Asexpected, gross margins returned to our targeted levels of above 40%. Whilst revenues increased significantly during the first half of 2006, selling,general and administrative expenses of $6,244,000 were maintained at the samelevel as last year (H1 2005: $6,222,000). As a percentage of revenue, selling,general and administrative expenses were 18%, reflecting a decrease of 25%compared with last year (H1 2005: 24%). Gross R&D expense in the first half of 2006 was $4,533,000 (H1 2005:$5,183,000), a decrease of 13%. This decrease is primarily related to therestructuring of our R&D team in the US. After contributions from the IsraeliChief Scientist and from the European Community, net research and developmentexpenditure was $3,945,000 (H1 2005: $4,798,000). Operating profit after amortization of intangible assets was $3,511,000 for thefirst half of 2006 (H1 2005: loss $2,427,000). Financial income was $1,206,000 (H1 2005: $689,000). This increase is primarilyrelated to increased gains from the sale of marketable securities, an element ofwhich was a one off gain of approximately $300,000. Net profit after amortization of intangible assets and tax, amounted to$4,439,000 (H1 2005: Loss $1,737,000), resulting in a basic profit per share of1.14 cents (H1 2005: Loss 0.45 cents). Our balance sheet remains strong with cash of $45.4m (H1 2005: $47.1m). Themajority of the decrease in cash compared to last year resulted from ourinvestment of approximately $1.8 million in Metrobility Optical Systems, Inc.which was completed on 30 June 2006. Period end cash is comprised as follows:Cash and deposits up to three months duration of $6.6 million; short-terminvestments up to one year of $34.9 million; and long-term investments for morethan one year of $3.9 million. We continue to exercise a conservative investmentstrategy maintaining most balances in bank deposits. Sales and Marketing We have continued with our strategy both to broaden our relationships withexisting OEM clients as well as developing new relationships. As reported inMay, we are expanding an existing relationship with a leading telecom customerto secure business now that will materialize over the next several years. Inaddition, as reported in February and March, we are signing OEM agreements andhave started doing business with new partners. We are optimistic that this trendof expanding business relationships will continue into the second half of 2006as well as for 2007 and beyond. In addition to our success with our OEM clients, we expect that our new productsfor Metro Ethernet rings and VOIP solutions will continue to provide growthopportunities for our direct business. Research and Development and New Products As carriers continue to migrate to IP and Ethernet based infrastructure, wecontinue to enhance our solutions in these areas. Our major investment is in oursoftware platform. This software platform is expanding to include additionalresiliency capabilities as well as different layout configurations. Support forlegacy services is another area where we have a unique position in the market. We are also working on releasing additional hardware platforms, all based on ourunique software. These new platforms will allow us to present complete Ethernetbased solutions for the access and metro space. Plans to integrate Metrobility's product line with our solutions are wellunderway. Together with the Metrobility products, we are now positioned toprovide even more solutions for our customers' needs. In the VOIP area, we have released a new version of our popular residentialsolution. We are building on this success and will introduce a new accesssolution for business customers before the end of the year. These products aredesigned to meet the needs of carriers as they migrate services to IP basednetworks. Investment On 21 June 2006, we announced the acquisition of the business and assets ofMetrobility Optical Systems, Inc. for a total consideration of $6.85m payable incash over the next two years. Metrobility's products complement our offerings inboth the US market and South America. We expect to integrate them into our USoperations as soon as possible. Prospects We are encouraged by these favorable results and look forward to a continuationof our renewed, profitable, strong growth in the second half of this year andbeyond. Peter SheldonChairman 14 September 2006 BATM ADVANCED COMMUNICATIONS LTD. -------------------------------- CONSOLIDATED INCOME STATEMENTS ------------------------------ Six months ended June Six months ended June 30, 2006 30, 2005 --------------------- --------------------- $US'000 $US'000 --------- --------- Unaudited Unaudited --------- --------- Revenues 34,117 26,177 Cost of revenues 20,149 15,109 -------- -------- Gross profit 13,968 11,068 Operating expenses Research and development expenses, net 3,945 (*)4,798 Sales and marketing expenses 4,808 (*)4,584 General and administrative expenses 1,436 (*)1,638 Amortization of intangible assets 268 2,475 -------- -------- Total operating expenses 10,457 13,495 -------- -------- Operating profit (loss) 3,511 (2,427) Finance income, net 1,206 689Other income, net 2 1 -------- -------- Profit (loss) before tax 4,719 (1,737) Tax (280) - -------- -------- Profit (loss) for the period 4,439 (1,737) ======= ========= Profit (loss) per share (in cents) basic 1.14 (0.45) -------- --------Profit (loss) per share (in cents) diluted 1.12 (0.45) -------- -------- (*) Restated to reflect stock options granted to employees BATM ADVANCED COMMUNICATIONS LTD. -------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- June 30, 2 0 0 6 2 0 0 5 US$ in thousands Unaudited Non-current assets Intangible assets 7,181 -Property, plant and equipment 10,606 10,628Investment in companies 3,475 3,688Long-term investments 3,959 8,607 -------- --------Total non-current assets 25,221 22,923 -------- --------Current assetsInventories 12,128 10,322Short term investments 34,888 37,736Trade and other receivables 17,027 11,810Cash and cash equivalents 6,592 801 -------- -------- 70,635 60,669 -------- -------- -------- --------Total assets 95,856 83,592 ======== ======== Current liabilities Short-term credit 2,254 - Trade and other payables 17,495 13,782 -------- -------- 19,749 13,782 -------- -------- -------- --------Net current assets 50,886 46,887 -------- --------Non-current liabilitiesLiability for employee termination benefits, net 369 402 Other long-term Liabilities 2,560 - -------- -------- 2,929 402 -------- --------Total liabilities 22,678 14,184 -------- --------Net assets 73,178 69,408 ======== ======== EquityShare capital 1,178 1,177Share premium account 398,415 (*)397,610Foreign currency translation adjustment 16 16 Deficit (326,431) (*)(329,395) -------- --------Total equity 73,178 69,408 ======== ======== (*) Restated to reflect stock options granted to employees BATM ADVANCED COMMUNICATIONS LTD. -------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ Six months ended June Six months ended June ---------------------- ---------------------- 30, 2006 30, 2005 ---------------------- ---------------------- $US'000 $US'000 --------- --------- Unaudited Unaudited --------- --------- Net cash used in operating activities (Appendix A) (1,747) (3,387) -------- --------Investing activities Investment in short-term investments (11,031) (5,965)Investment in long-term investments (474) (8,445)Proceeds from long-term investments 3,092 18,075Purchase of property, plant and equipment (378) (648)Investment in a company (87) -Acquisition of subsidiary (Appendix B) (1,863) - -------- --------Net cash from (used in) investing activities (10,741) 3,017 -------- --------Financing activities Increase in short-term bank credit 431 -Exercise of share based options by employees 172 18 -------- --------Net cash from financing activities 603 18 -------- -------- Decrease in cash and cash equivalents (11,885) (352) Cash and cash equivalents at the beginning of the period 18,477 1,153 -------- -------- Cash and cash equivalents at the end of the period 6,592 801 ======== ======== BATM ADVANCED COMMUNICATIONS LTD. -------------------------------- APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS -------------------------------------------------- APPENDIX A----------RECONCILIATION OF PROFIT (LOSS) FOR THE PERIOD TO NET CASHUSED IN OPERATING ACTIVITIES Six months ended Six months ended ---------------- ---------------- June 30, 2006 June 30, 2005 ---------------- ---------------- $US'000 $US'000 --------- --------- Unaudited Unaudited ----------- ----------- Profit (loss) for the period 4,439 (*)(1,737)Amortization of intangible assets 268 2,475Depreciation of property, plant and equipment 455 607Stock options granted to employees 280 (*)43Increase (decrease) in liability of employee termination benefits, net (3) 26Loss (profit) from marketable securities (303) 154Interest incurred on investments (640) (586) -------- --------Operating cash flow before movements in working capital 4,496 982Decrease (increase) in Inventory 32 (2,897)Decrease (increase) in receivables (4,782) (2,031)Increase (decrease) in payables (1,493) 559 -------- --------Net cash used in operating activities (1,747) (3,387) ======== ======== APPENDIX B----------ACQUISITION OF SUBSIDIARY Six months ended June 30, 2006 ------------------------------ $US'000 --------- Unaudited -----------Net assets acquiredProperty, plant and equipment 206Inventory 1,715Trade and other receivables 1,450Trade and other payables (1,173)Short-term bank credit (1,823) ------- 375Intangible assets 5,772 -------Total consideration 6,147Less-consideration recorded as liability (4,284) -------Total cash consideration 1,863 ------- (*) Restated to reflect stock options granted to employees BATM ADVANCED COMMUNICATIONS LTD -------------------------------- NOTES TO THE FINANCIAL STATEMENTS --------------------------------- Note 1 - General The unaudited results for the six months ended 30th June 2006 have been preparedin accordance with generally accepted accounting principles set out in theAnnual Report and Accounts for the year ended 31st December 2005. The unauditedresults for the six months ended 30th June 2005 were prepared on the same basis. Note 2 - Profit (loss) per share Profit (loss) per share is based on the weighted average number of shares inissue for the period of 389,031,244 (2005 H1: 388,541,758). The number used forthe calculation of the diluted profit per share for H1:2006 (which includes theeffect of dilutive stock option plans) is 395,107,967 shares. Note 3 - Reconciliation of movements in shareholders' equity Foreign Share currency Share Premium translation capital Account adjustment Deficit Total ------- ------- ---------- ------- -------- US$'000 US$'000 US$'000 US$'000 US$'000 ------- ------- ---------- ------- -------- As at January 1, 2006 1,178 (*)397,963 16 (*)(330,870) 68,287 Stock options granted toemployees 280 280 Exercise of sharebased options byemployees (**) 172 172 Profit for the period - - - 4,439 4,439 ------ ------ ------ ------ ------ As at June 30,2006 (unaudited) 1,178 398,415 16 (326,431) 73,178 ====== ====== ====== ====== ====== (*) Restated to reflect stock options granted to employees (**) Less than $1 thousands Note 4 - Material difference between Israeli and UK GAAP The material difference between Israeli and UK GAAP, as applicable to theGroup's financial statements, is the accounting treatment with regard toemployees share option schemes. Israeli GAAP require the reflection in thefinancial statements for the difference, if any, at the date of the award,between the fair value of the share and the exercise price of the optionstarting only from January 1, 2006 ( while restating the comparative figures forgrants made after March 15, 2005). Under UK GAAP (FRS 20 "share-based payments")such a difference is charged to the income statement, basically over the vestingperiod of the options. Had the company applied UK GAAP, the profit and the profit per share, for thesix months ended June 30, 2006 would have decreased by $47 thousands and $0.012per share, respectively and for the six months ended June 30, 2005 the loss andthe loss per share would have increased by $82 thousands and $0.02 per share,respectively. This information is provided by RNS The company news service from the London Stock Exchange