Final Results

BATM Advanced Communications Ld 21 February 2008 BATM Advanced Communications Limited Preliminary results for the year ended 31 December 2007 BATM Advanced Communications Limited ('BATM' or 'the Company') (LSE: BVC), a leading designer and producer of broadband data and telecoms systems, announces preliminary results for the year ended 31 December 2007. Full Year Highlights All figures in US dollars 2007 2006 Change % Revenue $96.9m $73.5m + 32 Gross Profit $45.5m $31.2m + 46 Operating profit $16.6m $7.3m + 129 Pre-tax profit $20.0m $6.9m + 190 Net profit $20.1m $6.4m + 214 Earnings per share 5.08c 1.66c + 206 • Excellent full year performance with a strong second half • Gross margins of 47% compared with 43% for full year 2006 • Operating profit more than doubled • Net profit more than tripled • Substantially enhanced year end cash position of $64.8m (2006: $50.4m) • Proposed dividend of 1 cent per share (first dividend since 1999) • Positive outlook for 2008 based on existing growth and new contracts signed in 2007 Dr Zvi Marom, Chief Executive of BATM, said: '2007 has proved to be an excellent year for BATM, with our solutions and product lines performing outstandingly well. 'Sales to existing customers have shown considerable growth and we continue to win customers both in existing and new geographical areas. We have also taken steps to further enhance our intellectual property in respect of current and new products which, we believe, will help to further underpin the Company's prospects. 'Given the progress made to date, BATM is better placed to continue its growth than ever before. The first dividend payment since 1999 is clear evidence of the confidence that we have for 2008 and beyond.' For further information please contact: 21 Feb Thereafter BATM Advanced Communications Limited Dr Zvi Marom, Chief Executive 020 7936 9606 00972 9 866 2525 Ofer Bar-Ner, Chief Financial Officer 020 7936 9606 00972 9 866 2525 Kaupthing Singer & Friedlander Nicholas How / Marc Young 020 3205 7620 020 3205 7620 Shore Capital Graham Shore 020 7408 4090 020 7408 4090 Threadneedle Communications Josh Royston / Graham Herring 020 7936 9606 020 7936 9606 Chairman's Statement I am delighted to report on a year which, by any standard, has been an outstanding one for BATM. On every measure the Company has exceeded expectations and the groundwork that has been carefully laid over the last few years has been justified by an excellent performance in a demanding and challenging environment. The feedback that we have received from customers in terms of our products, service and delivery has been gratifyingly high, and I would like to congratulate our executive team and staff at all levels for their contribution. I am also extremely pleased that our results and careful working capital management have enabled the Board to recommend the payment of a final dividend of 1 US Cent per share. Financial Performance Turnover was $96.9m (2006: $73.5m) - an increase of 31.9%. Revenues for the second half of 2007 at $57.3m (H2 2006: $39.4m) showed accelerated growth throughout the period. Gross profit margin was 46.9% (2006: 42.5%) The continued improvement in gross margin performance benefited from a product mix with a higher proportion of software content and value added services. Selling, general and administrative expenses were $18.5m (2006: $14.5m) - an increase of 28%. As a percentage of revenue these costs were 19.0%, (2006: 19.7%). Net R&D expense for the year amounted to $9.3m (2006: $8.8m) - an increase of 5.1%. This reflects our continued commitment to maintain our leading position in the carrier Ethernet access space. In addition, a growing part of our R&D efforts are currently funded by our business partners. As a result of these revenue generating arrangements, more than $2m of our R&D spend is included in cost of goods sold. Operating profit, after amortization of intangible assets for the year, was $16.6m (2006: $7.3m) - an increase of $9.3m or 129%. Operating profit for the second half of 2007 was $11.8m (H2 2006: $3.9m), an increase of $7.9m or 202%. Net financial income was $3.4m (2006: $2.3m), an increase due to higher cash balances. The company had a tax benefit for the year of $135k (2006: tax expense $504k) as net taxes in Israel of approximately $1.5m were offset by $1.7m tax income in the US as a result of deferred tax asset in respect to tax losses carried forward recognized for the first time in 2007. Net profit, after amortization of intangible assets and income tax, amounted to $20.1m (2006: $6.4m), resulting in basic earnings per share of 5.08 cents (2006: 1.66 cents) - an increase of 214% and 206% respectively. Our balance sheet remains very strong and we ended the year with effective cash balances of $64.8m (2006: $50.4m). The increase in cash and cash equivalents compared to last year is a reflection of the significant positive cash generation of the business. Period end cash and cash equivalents comprised: cash and deposits up to three months duration of $35.8 million; short-term investments up to one year of $18.5 million; and long-term investments of more than one year of $10.5 million. We continue to exercise a conservative investment strategy, maintaining most balances in bank deposits. Dividend The Board is of the opinion that, in light of the Company's profitability, it should return to a policy of making dividend payments to shareholders. Accordingly, it has recommended, subject to shareholder consent, a final dividend for 2007 of 1 US cent per share. In making this decision the Board has carefully considered the likely future working capital requirements of the business and believes that the Company should have sufficient cash resources to meet these requirements, as well as retaining the ability to take advantage of appropriate investment opportunities as and when they might occur. The Board does not envisage recommending an interim dividend in the coming year. Sales and Marketing Our direct sales business have continued to be an important driver of our growth in tandem with our OEM channels During the course of the year we signed new contracts with new customers. These contracts which increase our penetration of new markets will benefit the company in 2008 and beyond. We have also targeted the cable industry as a strong source of potential new customers. Initial results have been good, mainly in the U.S, and we expect this area to grow substantially. We remain in discussions with leading telecom vendors who are not yet customers, to offer them our latest generation of carrier Ethernet products. We are optimistic that we can continue to expand our existing relationships and develop more in 2008 and beyond. We also continue to invest in the development of our direct channels and see increased demand for new Metro Ethernet and IP solutions with an emphasis on advanced management options. Research and Development and New Products During 2007 we continued to enhance our network management solution. This software allows us to tie several of our products together to provide a full carrier Ethernet access solution to our customers. To complement our capabilities in this area, we have increased our investment in this field and added significant expertise in this technology. This, we believe, will shorten our time to market and in conjunction with our BINOS software platform will provide a market leading solution. We also continue to add features and capabilities to our BINOS software platform which are mainly service oriented. This robust operating system continues to be the foundation of our core technology. By making this platform more modular and operating systems independent, our opportunities to provide flexible solutions to our customers are significantly increased. We have also added further resource and increased our focus on technology which will allow us to integrate legacy services into our Ethernet transport solutions. This technology, some of it already integrated into several of our products, will add another leadership edge to our engineering capabilities. Investment During 2007, as reported in the interim results, $310,000 was recorded as Impairment of Investments in relation to one small investment in Lynx Photonic Networks Inc which we have now completely written off. We also recorded a gain of $250,000 from the sale during 2007 of an investment that was written off in the prior year. Prospects The world economy is entering an uncertain period. The current turmoil in the financial markets will almost certainly have an impact on economic activity and BATM will not be immune from its effect on our market segment. However, we are very confident of our positioning in the market and the steps that we have taken to continue to produce results that reflect our growing reputation for technological innovation and excellence. I look forward to my being able to report further progress in 2008. Peter Sheldon Chairman 21 February 2008 BATM ADVANCED COMMUNICATIONS LTD. CONSOLIDATED INCOME STATEMENTS Year ended Year ended December 31, December 31, 2007 2006 $US'000 $US'000 --------- --------- Revenue 96,952 73,472 Cost of sales 51,456 (*)42,233 -------- ----------- Gross profit 45,496 31,239 Sales and marketing expenses 12,353 10,402 General and administration expenses 6,119 4,063 Research and development expenses 9,275 (*)8,824 Other expenses 1,146 691 ------- ------- Total operating expenses 28,893 23,980 ------- ------- Operating profit 16,603 7,259 Investment revenue 2,667 1,906 Other gains 1,038 567 Finance costs (286) (201) Impairment of investments (60) (2,582) ------ ------- Profit before tax 19,962 6,949 Tax 135 (504) ------ ------- Profit for the period 20,097 6,445 ======= ======= Attributable to: Equity holders of the parent 19,874 6,445 Minority interests 223 - ----- ----- 20,097 6,445 ====== ===== Earning per share (in cents) basic 5.08 1.66 ------ ------ Earning per share (in cents) diluted 5.02 1.64 ------ ------ (*) Restated to reflect a change in accounting policies regarding Government Grants BATM ADVANCED COMMUNICATIONS LTD. CONSOLIDATED BALANCE SHEETS December 31, 2 0 0 7 2 0 0 6 $US'000 Non-current assets Goodwill 3,184 2,284 Other intangible assets 6,737 4,556 Property, plant and equipment 8,702 9,185 Investment in companies - 1,001 Held to maturity investments 10,501 3,432 Deferred tax assets 735 ---- 2,217 ----- Total non-current assets 31,341 21,193 ------ ------ Current assets Inventories 12,211 13,176 Short term investments 18,462 31,612 Trade and other receivables 26,216 16,360 Cash and cash equivalents 35,809 15,363 ------ ------ 92,698 76,511 ------ ------ Total assets 124,039 97,704 ======= ====== Current liabilities Short-term bank credit 90 - Trade and other payables 22,266 (*)17,047 Current tax liabilities 280 199 Provisions 2,952 2,116 -------- -------- 25,588 -------- 19,362 -------- Net current assets 67,110 57,149 -------- -------- Non-current liabilities Long-term payables 2,388 (*)4,188 Retirement benefit obligation 335 310 Long-term provisions - -------- 2,723 385 -------- ----- Total liabilities 28,311 4,883 -------- ----- 24,245 ------ Net assets 95,728 73,459 -------- ------ Equity Share capital 1,186 1,180 Share premium account 400,646 399,068 Revaluation reserve - 118 Translation adjustment (29) - Accumulated deficit (307,033) (*) (326,907) -------- ------- Equity attributable to equity holders of the parent 94,770 73,459 Minority Interest 958 - -------- ------- Total equity 95,728 73,459 ======== ======= (*) Restated to reflect a change in accounting policies regarding Government Grants BATM ADVANCED COMMUNICATIONS LTD. CONSOLIDATED STATEMENT OF CASH FLOWS Year ended Year ended December 31, December 31, 2007 2006 $US'000 $US'000 --------- --------- Net cash from operating activities (Appendix A) 12,629 3,760 --------- --------- Investing activities Interest received 2,945 1,551 Dividend received from available for sale investments 15 16 Proceeds on disposal of held to maturity investments 1,904 3,000 Proceeds on disposal of available for sale investments 26,273 8,956 Proceeds on disposal of deposits 34,104 13,000 Proceeds on disposal of investment in Companies 941 - Purchases of property, plant and equipment (1,012) (1,279) Purchases of held to maturity investments (10,292) - Purchases of available for sale investments (26,665) (7,657) Purchases of deposits (18,387) (24,625) Investment in a company - (200) Acquisition of subsidiaries (Appendix B) (2,440) (1,933) --------- --------- Net cash from (used in) investing activities 7,386 (9,171) --------- --------- Financing activities Repayment of borrowings (237) (985) Proceeds on issue of shares 668 199 ----- ----- Net cash from (used in) financing activities 431 (786) ----- ----- Increase(decrease) in cash and cash equivalents 20,446 (6,197) Cash and cash equivalents at the beginning of the year 15,363 21,560 -------- -------- Cash and cash equivalents at the end of the year 35,809 15,363 ======== ======== BATM ADVANCED COMMUNICATIONS LTD. APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS APPENDIX A RECONCILIATION OF OPERATING PROFIT FOR THE PERIOD TO NET CASH FROM (USED IN) OPERATING ACTIVITIES Year ended Year ended December 31, December 31, 2007 2006 $US'000 $US'000 --------- --------- Operating profit from continuing operations 16,603 7,259 Adjustments for: Amortization of intangible assets 1,146 691 Depreciation of property, plant and equipment 1,690 1,598 Stock options granted to employees 916 767 Increase in retirement benefit obligation 25 24 Decrease in provisions (269) (175) ------- ------- Operating cash flow before movements in working capital 20,111 10,164 Decrease (increase) in Inventory 2,100 (1,433) Increase in receivables (8,308) (4,007) Decrease in payables (483) (744) ------- ------- Cash generated by operations 13,420 3,980 Income taxes paid (505) (19) Interest paid (286) (201) ------- ------- Net cash from operating activities 12,629 3,760 ======= ======= APPENDIX B ACQUISITION OF SUBSIDIARIES Year ended Year ended December 31, December 31, 2007 2006 $US'000 $US'000 --------- --------- Net assets acquired Property, plant and equipment 195 208 Inventory 1,135 1,298 Trade and other receivables 1,548 1,564 Trade and other payables (3,404) (1,944) Short-term bank credit (327) (985) Provisions - (257) Minority Interest (735) - ------- ----- (1,588) (116) Goodwill 1,200 2,284 Intangible assets 3,326 3,859 ------- ------ Total consideration 2,938 6,027 Less-consideration recorded as liability (498) (4,094) ------- ------ Total cash consideration 2,440 1,933 ======= ====== BATM ADVANCED COMMUNICATIONS LTD NOTES TO THE FINANCIAL STATEMENTS Note 1 - General The preliminary results for the year ended 31st December 2007 and the comparative 2006 information are presented in accordance with International Financial Reporting Standards ('IFRS'). Note 2 - Earning per share Earning per share is based on the weighted average number of shares in issue for the year of 391,530,389 (2006: 389,467,186). The number used for the calculation of the diluted earning per share for the year (which includes the effect of dilutive stock option plans) is 396,146,949 shares (2006: 394,741,263). Note 3 - Consolidated statements of changes in equity Share Share Premium Revaluation Translation Accumulated Minority capital Account reserve reserve Deficit Parent Interest Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 ------- ------- ------- ------- ------- ------- ------- ------- As at January 1, 2007 1,180 399,068 118 - (*)(326,907) 73,459 - 73,459 Stock options granted to employees 916 916 - 916 Exercise of share based options by employees 6 662 668 - 668 Released on disposal of available for sale investments (118) (118) - (118) Minority Interest acquired - 735 735 Translation adjustment (29) (29) (29) Profit for the period - - - - 19,874 19,874 223 20,097 ----- ----- ----- ----- ------- ------ ----- ------ As at December 31, 2007 1,186 400,646 - (29) (307,033) 94,770 958 95,728 ===== ======= ===== ===== ======= ====== ==== ====== (*) Restated to reflect a change in accounting policies regarding Government Grants This information is provided by RNS The company news service from the London Stock Exchange

Companies

BATM Advanced Communications Ltd. (BVC)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today