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."
For further information please contact: 08 Feb Thereafter
BATM Advanced Communications Limited
Dr Zvi Marom, Chief Executive 020 7653 9850 00972 9 866 2525
Ofer Bar-Ner, Chief Financial Officer 020 7653 9850 00972 9 866 2525
Shore Capital
Graham Shore 020 7408 4090 020 7408 4090
Singer Capital Markets
Nicholas How 020 3205 7620 020 3205 7620
Threadneedle Communications
Josh Royston / Graham Herring 020 7653 9850 020 7653 9850
Chairman's Statement
I am pleased to report on a year which has delivered record revenues despite challenging market conditions and seen the strengthening of BATM's business in every aspect. During 2009 BATM has released market leading cellular backhauling technology, broadened its Medical division and focused on reducing its cost base and strengthening its cash flow. Working capital management has been improved with $66.8 million of liquid investments at the year end (2008: $57.3 million).
BATM has used its strong cash position to acquire real estate at opportunistic prices in the U.S and Israel which will replace rented properties currently used by BATM in the course of 2010 and 2011. The Company also intends to utilise some of its accumulated cash at the year end to distribute a significantly increased final dividend.
During the year the Company maintained its long held policy of working with minimum risk customers and short credit terms.
On the basis of these results, the Board is in a position to recommend the payment of a final dividend of 1.35 pence per share (2008: 0.69 pence), which includes a special payment of 0.55 pence per share as a return to shareholders of the excess cash generated by the business.
Financial Performance
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.
Sales and Marketing
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.
Research and Development and New Products
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.
BATM Medical
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.
Investments
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.
Dividend
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.
Prospects
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
|
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 |
|
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
|