Interim Results
BATM Advanced Communications Ld
10 September 2007
BATM Advanced Communications Limited
2007 interim results
BATM Advanced Communications Limited ('BATM' or 'the Company') (LSE: BVC), a
leading designer and producer of broadband data and telecoms systems, announces
its interim results for the six months ended 30 June 2007.
Half Year Highlights
Six months ended 30 June 2007(H1) 2006(H1) Change
Revenue $39.6m $34.1m +16%
Gross profit $18.1m $13.9m +30%
Operating profit $4.8m $3.4m +44%
Pre-tax profit $5.7m $4.5m +27%
Net profit $5.2m $4.3m +21%
Profit per share 1.33c 1.10c +21%
• Improved gross margins of 46% compared with 42% for full year 2006 and
41% for H1 of 2006
• Enhanced cash position of $51.9m at 30 June 2007 ($45.4m: 30 June 2006)
• Long term supply agreement with major EU telecoms operator to provide
Carrier Ethernet equipment
• Distribution agreement with CTC Itochu, one of the largest distributors
to the Japanese technology market
Post Period End
• Initial order for pilot programme for Japan's largest telecom operator
Dr Zvi Marom, Chief Executive of BATM, said:
'I am very pleased that we have sustained the growth of our revenues and
profitability into the first half of 2007. Important customer relationships
cultivated during the past two years, combined with the increasing demand for
our software platform, have significantly contributed to our strong operating
results.'
'We will continue to execute our strategy and are confident of our prospects for
the remainder of the year, where we expect revenues for the second half of 2007
to exceed those of the first half, underpinned by strong customer relationships
and demand across all sales channels. The signing of three major new contracts,
all due to impact next year, provide us with a healthy pipeline of new business
for 2008 and beyond.'
For further information please contact: 10 Sept 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
Financial Performance
I am happy to report that the first six months of 2007 have shown continued
growth with revenues of $39,615,000 (H1 2006: $34,117,000), reflecting an
increase of 16% compared with the same period last year. Revenue growth
reflected increased purchases by certain strategic customers and greater demand
for our new software platform.
Our gross profit margin was 46% during the period (2006: 42%, H2 2006: 44%, H1
2006: 41%). The improved gross margin performance is a result of successful
cost-reduction efforts, improved product mix and high software content and
services.
Selling, general and administrative expenses were $7,873,000 (H1 2006:
$6,260,000) reflecting an increase of 26% over the same period last year. As a
percentage of revenue, selling, general and administrative expenses were 20% (H1
2006: 18%). The increased costs in this area reflect our growing trading
activities, especially in the Far East, and ensure that we are providing the
best quality of service to our customers. The significant agreements signed in
recent months demonstrate that these sales efforts are delivering results
Net R&D expense in the first half of 2007 was $4,887,000 (H1 2006: $3,963,000),
reflecting an increase of 23%. During the period we invested in the development
of new products such as the Access 500 VoIP IAD and enhanced versions of our
very successful T-Marc, T5 and T-Metro products. However, the increased cost
arises principally from the revaluation of the Israeli Shekel and Euro against
the US$.
Operating profit was $4,836,000 for the first half of 2007 (H1 2006:
$3,368,000), an increase of $1,468,000 or 44%.
Net finance income was $1,194,000 (H1 2006: $1,145,000).
Net profit after tax amounted to $5,214,000 (H1 2006: $4,284,000), resulting in
a basic profit per share of 1.33 cents (H1 2006: 1.10 cents), an increase of 22%
and 21% respectively.
Our balance sheet remains strong with effective liquidity of $51.9m (H1 2006:
$45.4m). Period end cash is comprised as follows: cash and deposits up to three
months duration of $12.0 million; short-term investments up to one year of $31.0
million; and long-term investments for more than one year of $8.9 million. We
continue to exercise a very conservative investment strategy, maintaining most
balances in bank deposits.
Sales and Marketing
Our relationships with OEM clients have continued to be an important element in
our business. A new relationship with a significant distributor in Japan has
helped our expansion into the lucrative Far East market and, as announced at our
AGM, we have recently received an initial order for a pilot programme for
Japan's largest telecom operator. We expect our presence in the Far East to grow
substantially in due course.
We have also signed a long-term supply agreement with a major European telecoms
operator to provide Carrier Ethernet equipment, which is likely to be worth
several million US dollars.
As a result of our success in developing new markets, we remain optimistic that
we can continue to expand our existing relationships and develop more in the
future.
Building on the success with our OEM clients, we are also experiencing increased
demand for new products for Metro Ethernet rings and VoIP solutions.
Research and Development and New Products
We believe that our robust operating system offers a significant area of growth
for the company. To that end, we are continuing to invest heavily in BiNOS. As
the cornerstone of all of our switching products, we have committed our R&D
resources to ensure that our (leading)position in the market is maintained. We
will shortly be offering our customers a Linux real time embedded version of the
BiNOS giving them greater flexibility and more choices.
We have added a suite of new features to our EdgeGate CPE family of products to
address new applications in the residential and small business markets. Our
development efforts are aimed at meeting the ever-increasing demand for more
bandwidth with unique product solutions.
Development advancements in Ethernet demarcation have resulted in our new T-Marc
300 demarcation series already having been requested by several customers.
Incorporating Advanced Layer 2 (Optional L3) Networking as well as MPLS/Hvpls
QOS traffic shaping and load balancing, this family of products is designed to
provide significant value to service providers delivering converged services.
More products within this range are expected to be introduced during 2008.
Investment
During the first half of 2007, $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.
Prospects
The further development of our OEM strategy has been a key element of our
success in the first six months of 2007. Looking forward, strong forecasts from
our customers and a good success rate in tenders provides confidence for the
medium term. We expect revenues for the second half of the year, which has
started strongly, to exceed those of the first half. The signing of three major
new contracts, all due to impact next year, provide us with a healthy pipeline
of new business for 2008 and beyond.'
Peter Sheldon
Chairman
10 September 2007
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED INCOME STATEMENTS
Six months Six months
ended June 30 ended June 30
2007 2006
$US'000 $US'000
----------- -----------
Unaudited Unaudited
----------- -----------
Revenue 39,615 34,117
Cost of sales 21,501 (*)20,258
----------- -----------
Gross profit 18,114 13,859
Sales and marketing expenses 5,702 (*)4,811
General and administration expenses 2,171 (*)1,449
Research and development expenses 4,887 (*)3,963
Other expenses 518 268
----------- -----------
Total operating expenses 13,278 10,491
----------- -----------
Operating profit 4,836 3,368
----------- -----------
Investment revenue 975 953
Other gains 365 (*)217
Finance costs (146) (25)
Impairment of investments (310) -
----------- -----------
Profit before tax 5,720 4,513
Tax (470) (229)
----------- -----------
Profit for the period 5,250 4,284
=========== ============
Attributable to
Equity holders of the parent 5,214 4,284
=========== ============
Minority interests 36 -
----------- -----------
5,250 4,284
----------- -----------
Profit per share (in cents) basic 1.33 1.10
------- -------
Profit per share (in cents) diluted 1.32 1.08
----------- -----------
(*) Restated to reflect IFRS
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED BALANCE SHEETS
June 30
2 0 0 7 2 0 0 6
$US'000
Unaudited
Non-current assets
Goodwill 1,984 1,984
Other intangible assets 6,672 4,897
Property, plant and equipment 9,262 (*)9,316
Investment in companies - 3,475
Held to maturity investments 8,905 3,959
Deferred tax assets 505 700
----------- -----------
Total non-current assets 27,328 24,331
Current assets
Inventories 13,929 12,128
Short term investments 30,950 34,888
Trade and other receivables 19,361 17,027
Cash and cash equivalents 12,027 6,592
76,267 70,635
Total assets 103,595 94,966
Current liabilities 134 985
Short-term bank credit 17,891 16,696
Trade and other payables 177 164
Current tax liabilities 2,310 1,502
Provisions 20,512 19,347
Net current assets 55,755 51,288
Non-current liabilities
Long-term payables - 1,804
Retirement benefit obligation 293 369
Long-term provisions 385 756
678 2,929
Total liabilities 21,190 22,276
Net assets 82,405 72,690
Equity
Share capital 1,186 1,178
Share premium account 400,118 (*)398,592
Revaluation reserve - (*)(158)
Accumulated deficit (319,107) (*)(326,922)
Equity attributable to equity
holders of the parent 82,197 72,690
Minority Interest 208 -
Total equity 82,405 72,690
(*) Restated to reflect IFRS
BATM ADVANCED COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months
ended June 30 ended June 30
2007 2006
$US'000 $US'000
----------- -----------
Unaudited Unaudited
----------- -----------
Net cash from (used in
operating activities (Appendix A) 1,559 (1,880)
Investing activities
Interest received 1,195 516
Dividend received from
available for sale investments 15 15
Proceeds on disposal of
held to maturity investments - 3,000
Proceeds on disposal of
available for sale investments 24,370 33,181
Proceeds on disposal of deposits 16,075 5,000
Proceeds on disposal of investment
in a company 691 -
Purchases of property, plant and equipment (653) (378)
Purchases of held to maturity investments (5,494) -
Purchases of available for sale investments (26,398) (33,550)
Purchases of deposits (13,387) (19,525)
Investment in a company - (87)
Acquisition of subsidiaries (Appendix B) (1,969) (1,863)
----------- -----------
Net cash used in investing activities (5,555) (13,691)
----------- -----------
Financing activities
Increase in short-term bank credit 46 431
Proceeds on issue of shares 614 172
----------- -----------
Net cash from financing activities 660 603
----------- -----------
Decrease in cash and cash equivalents (3,336) (14,968)
Cash and cash equivalents at
the beginning of the period 15,363 21,560
----------- -----------
Cash and cash equivalents at
the end of the period 12,027 6,592
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
Six months Six months
ended June 30 ended June 30
2007 2006
$US'000 $US'000
----------- -----------
Unaudited Unaudited
----------- -----------
Operating profit from
continuing operations 4,836 3,368
Adjustments for:
Amortization of intangible assets 518 268
Depreciation of property,
plant and equipment 837 522
Stock options granted to employees 442 316
Increase (decrease) in
retirement benefit obligation (17) 83
Decrease in provisions (6) (208)
Operating cash flow before
movements in working capital 6,610 4,349
Decrease(increase) in Inventory 435 (485)
Increase in receivables (2,138) (4,750)
Decrease in payables (3,176) (949)
Cash generated by operations 1,731 (1,835)
Income taxes paid (26) (20)
Interest paid (146) (25)
Net cash from (used in)
operating activities 1,559 (1,880)
============
APPENDIX B
ACQUISITION OF SUBSIDIARIES
Six months Six months
ended June 30 ended June 30
2007 2006
$US'000 $US'000
----------- -----------
Unaudited Unaudited
----------- -----------
Net assets acquired
Property, plant and equipment 261 164
Inventory 1,188 1,198
Trade and other receivables 863 1,483
Trade and other payables (2,031) (1,860)
Short-term bank credit (88) (985)
Provisions - (257)
Minority Interest (171) -
----------- -----------
22 (257)
Intangible assets 2,634 6,104
----------- -----------
Total consideration 2,656 5,847
Less-consideration recorded
as liability (687) (3,984)
----------- -----------
Total cash consideration 1,969 1,863
=========== ===========
BATM ADVANCED COMMUNICATIONS LTD
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - General
The unaudited results for the six months ended 30th June 2007 have been prepared
in accordance with International Financial Reporting Standards (IFRS) set out in
the Annual Report and Accounts for the year ended 31st December 2006. The
unaudited results for the six months ended 30th June 2006 were prepared on the
same basis.
Note 2 - Profit per share
Profit per share is based on the weighted average number of shares in issue for
the period of 390,778,083 (2006 H1: 389,031,244). The number used for the
calculation of the diluted profit per share for H1:2007 (which includes the
effect of dilutive stock option plans) is 395,288,758 shares (2006 H1:
395,107,967).
Note 3 - Consolidated statements of changes in equity
Share Premium Revaluation Accumulated Minority
Share capital Account reserve Deficit Parent Interest Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at
January 1, 2007 1,180 399,068 118 (324,321) 76,045 - 76,045
Stock options
granted to
employees 442 442 - 442
Exercise of
share based
options by
employees 6 608 614 - 614
Released on
disposal of
available for
sale investments (118) (118) - (118)
Minority Interest
acquired - 172 172
Profit for
the period - - - 5,214 5,214 36 5,250
--------- --------- --------- --------- --------- --------- ---------
As at June
30, 2007
(unaudited) 1,186 400,118 - (319,107) 82,197 208 82,405
This information is provided by RNS
The company news service from the London Stock Exchange
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