RNS Number:9918R
BATM Advanced Communications Ld
28 February 2007
BATM Advanced Communications Limited - 2006 preliminary results
BATM Advanced Communications Limited ("BATM" or "the Company"), (LSE: BVC), a
leading designer and producer of broadband data and telecom systems, announces
preliminary results for the year ended 31 December 2006.
The preliminary results and the comparative 2005 information are presented in
accordance with International Financial Reporting Standards ("IFRS")
Highlights
2006 2005
Turnover $73.5m $56.5m
Gross Profit $31.1m $21.8m
Operating profit (loss) $ 7.7m $(4.5)m
Pre-tax profit (loss) $ 7.4m $(3.1)m
Basic earning (loss) per share 1.77c (0.88)c
• A significant return to profitability for the full year
• Turnover growth of 30.1% over 2005
• Gross margin of 42.3% compared with 38.5% for 2005
• Operating profit of $7.7m compared to operating loss of $4.5m in 2005
• Net profit of $6.9m compared to net loss of $3.4m in 2005
• Strong cash position of $50.4m at year end, excluding short and
long-term notes payable in connection with the acquisition of Metrobility
Optical Systems Inc.
• Company cash generative after investment in Metrobility, now fully integrated
Dr Zvi Marom, Chief Executive of BATM, said:
"2006 has seen BATM deliver excellent top line growth with a strong increase in
margins to see the Group return to profitability for the year. Together with our
acquisition of Metrobility and our strong cash position, these results confirm
our belief that BATM has emerged from the telecoms recession in excellent shape.
"We believe that our relationships with the leading players in our industry and
the infrastructure that we have put in place will continue to drive us forward
in all aspects of our business."
For further information please contact: 28 Feb Thereafter
BATM Advanced Communications Limited
Dr Zvi Marom, Chief Executive +972 9 866 2525 00972 9 866 2525
Ofer Bar-Ner, Chief Financial Officer +972 9 866 2525 00972 9 866 2525
Shore Capital
Graham Shore +44 20 7408 4090 +44 20 7408 4090
Kaupthing Singer and Friedlander
Nicholas How +44 20 3205 7620 +44 20 3205 7620
Threadneedle Communications
Graham Herring / Josh Royston +44 20 7936 9605 +44 20 7936 9605
Chairman's Statement
Financial Performance
I am delighted to report on a year that has seen the Company return to
profitability in a significant way.
Turnover was $73.5m (2005: $56.5m), an increase of 30.1% compared with last
year. Revenues for the second half of 2006 at $39.4m (H2 2005: $30.3m) broadly
maintained the rate of increase achieved in the first half of the year..
Gross profit margin was 42.3% (2005: 38.5%). Our margins have improved
throughout 2006 as increased sales from our higher-margin software business
replaced the declining revenues in our legacy business.
Selling, general and administrative expenses were $14.5m (2005: $12.6m),
representing 19.7% (2005: 22.3%) as a percentage of revenue. General and
administrative expenses in 2006 include expenses of $400k related to the
acquisition and relocation of Metrobility to Telco Systems' facilities and
expenses of $357k related to the grant of stock options to employees.
Net R&D expense for the year amounted to $8.2m (2005: $9.9m) a decrease of
17.0%. This primarily relates to our software related development activities,
where some of the costs have been allocated to Cost of Goods Sold as a result of
the growth in our software business. The balance represents the restructuring of
our R&D team in the US.
Operating profit after amortisation of intangible assets for the year was $7.7m
(2005: loss of $4.5m).
Financial income was $2.3m (2005: $1.7m). The increase is mainly due to higher
interest rates, gains from the sale of marketable securities and higher cash
balances.
Impairment of investments in 2006 amounted to $2.6m (2005: $294k). A significant
portion (approximately $2.3m) of this is related to a loss on the expected sale
of our shares in Lantech, a Taiwanese company acquired by BATM in 2001. The
remainder represents our investment in Vidyatel, a small startup company that
develops specialist video technology, which was fully expensed in 2006.
Net profit after amortisation of intangible assets and tax amounted to $6.9m
(2005: Loss $3.4m), resulting in a basic earnings per share of 1.77 cents (2005:
Loss of 0.88 cents).
Our balance sheet remains strong and we ended the year with cash balances of
$50.4m (H1 2006: $45.4m; year end 2005: $48.0m).The increase in cash compared to
June 30, 2006 and December 31, 2005 is principally related to increased revenues
and improved operating profit. Period end cash is comprised as follows: Cash and
deposits up to three months duration of $15.4m; short-term investments up to one
year of $31.6m; and long-term investments for more than one year of $3.4m. We
continue to exercise a conservative investment strategy, maintaining most
balances in bank deposits. Our balance sheet at December 31, 2006 also includes
$1.8m of short-term notes payable and $1.9m of long-term notes payable relating
to the acquisition of Metrobility during the year.
Sales and Marketing
2006 saw us increase our direct relationships with Tier 2 customers such as Time
Warner Telecom, as well as embarking on several large-scale, long-term projects
with other new carriers. In addition, we have increased our global presence with
activities in several new geographical markets, mainly in Asia, where previously
we have not been active. We expect these activities to increase during 2007 and
become a significant portion of our business in 2008.
As reported in May, we have commenced a relationship with one of the world's
largest suppliers of network equipment for mobile telecommunications and we
believe that this relationship will secure business opportunities for the next
several years.
We are optimistic that this trend of expanding business relationships will
continue into 2007 and beyond with substantial revenue opportunities
materialising in 2008.
Research and Development and New Products
R&D activities continue to enhance our product range for Carrier Ethernet
solutions as we look to expand our Ethernet demarcation family, our integrated
business solution and Advanced TCA offerings.
The acquisition of Metrobility increased our product portfolio for Ethernet
transport and demarcation, and our focus now is to launch next generation
products in 2007 that will deliver higher speed services, guarantee the quality
of services and improve testing capabilities for operators.
The first half of 2007 will also see the launch of our integrated business
solution in the North American market. This product allows carriers to provide
both new and legacy services over IP networks. The product incorporates our
latest IP software with interfaces to many of the standard telecom protocols and
will enhance our direct channels position primarily in the US and subsequently
in Europe and the Rest of the World.
In addition to new products to address our direct channels, we continue to
invest in Advanced TCA technology. In co-operation with some of our largest
customers we are developing the fastest, most advanced products in this field.
Although our efforts are currently focused on existing OEM channels, we believe
that this will lead to further contracts with new clients in the future.
Investment
At the end of the first half of 2006, we acquired Metrobility. Its products
complement our offerings in both the US and South American markets. Metrobility
has been fully integrated into our business during the second half of 2006 and
relocated to our Telco Systems facilities in the U.S.
Following negotiations in late 2006, we agreed at the beginning of 2007 to sell
our holdings in Lantech, a Taiwanese manufacturer of Ethernet switches, with
consideration for our holding expected to amount to approximately $700k. As the
remaining book value of our holdings was approximately $3.0m, we have recognised
the loss of approximately $2.3m in our 2006 income statement under Impairment of
Investments.
Prospects
Our return to profitability in 2006 is vindication of the positive stance that
the company took throughout the telecoms downturn and we are taking additional
steps to improve further our operating performance for 2007 and beyond. The
current phase of industry consolidation, which includes some of our major
customers, means that there may be some uncertainty of visibility in the next
few months, whilst in the medium and long term we believe the effects for the
Company will be positive . BATM continues to adapt and respond to the market in
order to support our growth objectives. Together with a multi-year strategic
plan and our new customer and channel relationships, we are committed to
building on the success of 2006 and remain confident that our growth and
profitability will continue.
Peter Sheldon
Chairman
28 February 2007
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED INCOME STATEMENTS
Year ended Year ended
December 31, December 31,
2006 2005
$US'000 $US'000
--------- ---------
Revenues 73,472 56,514
Cost of sales 42,412 34,748
--------------- -------- --------
Gross profit 31,060 21,766
Sales and marketing expenses 10,402 9,521
General and administration expenses 4,063 3,109
Research and development expenses, net 8,205 9,887
Other expenses 691 3,780
----- -------
Total operating expenses 23,361 26,297
-------- --------
Operating profit (loss) 7,699 (4,531)
Investment income 1,906 1,535
Other gains 567 194
Finance costs (201) (51)
Impairment of investments (2,582) (294)
------- --------
Profit (loss) before tax 7,389 (3,147)
Tax (504) (276)
------- -------
Profit (loss)for the year 6,885 (3,423)
======= =========
Earning (loss) per share (in cents) basic 1.77 (0.88)
------ --------
Earning (loss) per share (in cents) diluted 1.74 (0.88)
------ --------
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSE
Year ended Year ended
December 31, December 31,
2006 2005
$US'000 $US'000
--------- ---------
Gains(losses) on revaluation of
available-for-sale investments taken to equity 158 (219)
Tax on items taken directly to equity (40) -
-------- -------
Net income (loss) recognised directly in equity 118 (219)
Transfers
Transferred to profit or loss on sale of
available-for-sale investments 219 -
-------- -------
Profit (loss) for the year 337 (219)
-------- -------
Total recognised income and expense for the year 7,222 (3,642)
======== =======
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED BALANCE SHEETS
December 31,
2 0 0 6 2 0 0 5
US$ in thousands
Non-current assets
Goodwill 2,284 -
Other Intangible assets 4,556 1,088
Property, plant and equipment 9,185 9,296
Investments in other companies 1,001 3,388
Held to maturity investments 3,432 8,635
Deferred tax assets 735 649
Total non-current assets 21,193 23,056
Current assets
Inventories 13,176 10,445
Investments 31,612 17,773
Trade and other receivables 16,360 10,794
Cash and cash equivalents 15,363 21,560
76,511 60,572
Total assets 97,704 83,628
Current liabilities
Trade and other payables 16,748 13,605
Current tax liabilities 199 171
Provisions 2,116 949
19,063 14,725
Net current assets 57,448 45,847
Non-current liabilities
Long-term payables 1,901 -
Retirement benefits obligation 310 286
Long-term provisions 385 760
2,596 1,046
Total liabilities 21,659 15,771
Net assets 76,045 67,857
Equity
Share capital 1,180 1,178
Share premium account 399,068 398,104
Revaluation reserve 118 (219)
Deficit (324,321) (331,206)
Total equity 76,045 67,857
======== ========
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
December 31, December 31,
2006 2005
$US'000 $US'000
--------- ---------
Net cash (used in)/from operating
activities 3,760 (3,256)
Investing activities
Interest received 1,551 4,042
Dividends received from available-for-sale
investments 16 43
Proceeds on disposal of held to maturity
investments 3,000 1,500
Proceeds on disposal of available-for-sale
investments 8,956 6,359
Proceeds on disposal of deposits 13,000 39,193
Purchases of property, plant and equipment (1,279) (692)
Purchases of held to maturity investments - (3,423)
Purchases of available-for-sale investments (7,657) (5,041)
Purchases of deposits (24,625) (18,000)
Investment in a Company (200) -
Acquisition of subsidiaries (1,933) (200)
-------- ---------
Net cash (used in)/from investing activities (9,171) 23,781
Financing activities
Repayments of borrowings (985) (250)
Exercise of shares based options by employees 199 132
-------- ---------
Net cash used in financing activities (786) (118)
-------- ---------
Net increase/(decrease) in cash and
cash equivalents (6,197) 20,407
Cash and cash equivalents at
beginning of year 21,560 1,153
Cash and cash equivalents at -------- ---------
end of year 15,363 21,560
======== =========
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
December 31, December 31,
2006 2005
$US'000 $US'000
--------- ---------
Operating profit(loss) from continuing
operations 7,699 (4,531)
Adjustments for:
Depreciation of property, plant
and equipment 1,598 1,463
Stock options granted to employees 767 420
Amortisation of intangible assets 691 2,696
Increase in retirement benefit obligation 24 5
Increase/(decrease) in provisions (175) (281)
------- -------
10,604 (228)
Operating cash flows before movements in working
capital
Increase in inventories (1,433) (2,283)
Increase in receivables (4,007) (366)
Decrease in payables (1,184) (297)
------- -------
Cash generated by operations 3,980 (3,174)
Income taxes paid (19) (31)
Interest paid (201) (51)
------- -------
Net cash (used in)/from
operating activities 3,760 (3,256)
======= =======
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term highly
liquid investments with a maturity of three months or less.
BATM ADVANCED COMMUNICATIONS LTD.
APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS
Acquisition of subsidiaries:
Year ended Year ended
December 31, December 31,
2006 2005
$US'000 $US'000
--------- ---------
Net assets acquired
Property, plant and equipment 164 443
Inventories 1,198 737
Trade and other receivables 1,483 649
Trade and other payables (1,860) (1,137)
Bank loan (985) (250)
Provisions (257) (613)
----- -----
(257) (171)
Other Intangible assets 4,120 1,311
------
Goodwill 2,284 -
------ ------
Total consideration 6,147 1,140
Less- consideration recorded as liability (4,284) (940)
------ ------
Total consideration 1,863 200
======= ======
Year ended
December 31,
2006
$US'000
---------
Net assets acquired
Property, plant and equipment 44
Inventories 100
Trade and other receivables 81
Trade and other payables (84)
----
141
Goodwill 39
----
Total consideration 180
Less- consideration recorded as liability (110)
-----
Total consideration 70
=====
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - General
The preliminary results for the year ended 31st December 2006 and the
comparative 2005 information are presented in accordance with International
Financial Reporting Standards ("IFRS").
Note 2 - Earning (loss) per share
Earning (loss) per share is based on the weighted average number of shares in
issue for the year of 389,467,186 (2005: 388,578,761). The number used for the
calculation of the diluted earning per share for 2006 (which includes the effect
of dilutive stock option plans) is 394,741,263 shares.
Note 3 - Reconciliation of movements in shareholders' equity
Share capital Share Premium Revaluation Deficit Total
Account reserve
US$000 US$000 US$000 US$'000 US$000
------ ------ ------ ------- -------
As at January 1, 2006 1,178 398,104 (219) (331,206) 67,857
Stock options granted
to employees 767 767
Exercise of share
based options by
employees 2 197 199
Recognized income and
expense 337 337
Profit for the year - - - 6,885 6,885
- - - ------ ------
As at December
31, 2006 1,180 399,068 118 (324,321) 76,045
====== ======= === ========= =======
This information is provided by RNS
The company news service from the London Stock Exchange
END
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