Final Results

RNS Number : 4111C
BATM Advanced Communications Ld
07 March 2011
 



 

 

BATM Advanced Communications Limited

 

Preliminary results for 2010

 

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 2010.

 

Second Half Highlights

 

Six months ended

2010 (H2)

2010 (H1)

Change %

Revenue

$65.3m

$55.3m

18.1%

Gross profit

$22.9m

$19.8m

15.7%

EBITDA

$5.6m

$2.1m

166.6%

Earnings per share (basic)

0.63c

(0.21)c

400.0%

 

Full Year Highlights

 

Year ended 31 December

2010

2009

Change %

Revenue

$120.6m

$135.4m

-10.9%

Gross profit

$42.7m

$57.7m

-26.0%

EBITDA

$7.7m

$24.7m

-68.8%

Earnings per share (basic)

0.42c

5.11c

-91.7%

 

Highlights

 

·        Revenues in the second half of $65.3M compared to $55.3M in the first half of 2010

·        EBITDA of $5.6M in the second half compared to $2.1M in the first half of 2010

·        Liquid investments of $60.2M after distribution of dividends of $8.8M in July 2010 with respect to 2009 (including corporate tax)

·        Recommended dividend of 0.8 pence per share for 2010.

 

Dr Zvi Marom, Chief Executive of BATM said:

 

"2010 was a challenging year for the Telecom division which suffered from the substantial decline in sales to Nokia Siemens Networks (NSN). Despite this setback, in the second half of the year our solutions were adopted by new customers especially tier 2&3. That, together with growth in orders in the U.S market, led to a recovery in sales. We expect this trend to continue in the first half of 2011 and beyond.

 

Our medical division continued to grow significantly, reaching sales of $40 million and, although not yet profitable, is giving every indication that it will move into profit during 2011.

 

New facilities for the division have been acquired in late 2010 and are being prepared for the expected orders for our products. Positive indications of new business are already apparent in the early months of our new year. We have received ANVISA (Brasil and neighbouring countries) approval and an OEM of ours has achieved FDA approval. CE approvals for all of our products are expected to be obtained before the year end, several in the early part of it. A number of patents have been filed and we expect more milestones to be reached during the year.

 

The challenges of 2010 demonstrated the resilience of the company and its technology capabilities that enable it to maintain momentum, which we believe will allow us to grow the business as we move into 2011 and beyond."

 

 

For further information please contact:     09 March                            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

 

Singer Capital Markets

Shaun Dobson                                             020 3205 7626                  020 3205 7626

 

Shore Capital

Pascal Keane                                              020 7408 4090                  020 7408 4090

 

Threadneedle Communications

Josh Royston / Graham Herring                     020 7653 9850                  020 7653 9850

 



 

Chairman's Statement

 

 

Financial Review

 

Revenues in H2 2010 grew, as expected, by 18% compared to those in H1 2010, bringing revenues for the year to $120.6 million (2009: $135.4 million). Medical sales totalling $40.7 million (2009: $29.7 million) have continued to show significant growth and have become a larger portion of our overall sales mix.

 

The gross profit margin for 2010 has decreased to 35.4% (2009: 42.6%) primarily due to the change in the sales mix.  The medical division had inventory adjustments and other expenses related to the higher expected demand in 2011 that resulted in a 4% lower gross margin for the division in the second half. The gross profit margin in H2 2010 of 35.1% was slightly lower than the 35.8% recorded in H1 2010.

 

Total sales and marketing expenses were $15.3 million (2009: $13.6 million), an increase of 12.5% on the previous year. The increase is mostly due to our acquisition of Adaltis, a medical diagnostic company, in December 2009, increased distribution revenues in 2010 and costs associated with entering a new software application market from May 2010. As a percentage of revenue, sales and marketing expenses were 12.7% (2009: 10.0%).

 

General and administrative expenses were $9.2 million (2009: $9.4 million) representing 7.6% of revenue, compared with 6.9% in 2009. The decrease in costs is primarily related to actions we have taken to integrate the medical businesses into three distinct groups (Distribution, Diagnostics and Sterilization).

 

R&D expenses in 2010 were $12.4 million (2009: $11.8 million), an increase of 5%. R&D expenses in H2 2010 were $5.9 million compare to $6.5 million in H1 2010. The decrease is largely due to efficiency programmes in BATM's traditional R&D units.

 

Operating profit was $1.1 million (2009: $16.4 million) after other operating expenses of $4.5 million (2009: $6.5 million) which primarily relates to the amortization of intangible assets.

 

Net finance loss was $0.1 million (2009: $2.0 million profit), derived from $0.8 million of interest income, as well as $0.7 million of foreign exchange gains, which have been offset by $1.0 million of loss on forward transaction and $0.6 million of finance costs.

 

Net profit after tax attributable to equity holders of the parent amounted to $1.7 million (2009: $20.5 million), resulting in a basic earnings per share of 0.42¢ (2009: 5.11¢)

 

Our balance sheet remains strong with effective liquidity of $60.2 million (2009: $66.8 million). This is after a dividend payment and related taxes of $8.8 million in July 2010. Year- end cash is comprised as follows: cash and deposits of up to one year of $52.6 million and bonds of 7.6 million

 

Intangible assets have decreased to $19.8 million (2009: $23.3 million), and Goodwill remains unchanged at $11.3million (2009: $11.3 million). The decrease in intangible assets is primarily due to the amortization of intangible assets that appears in other operating expenses.

 

Property, plant and equipment have increased by $4.0 million from 31 December 2009 to $26 million as at 31 December 2010. Towards the end of the year, BATM acquired the manufacturing site of our diagnostics business in Italy in order to start the production of immunoassay reagents.

 

Total liabilities have increased by $3.6 million from 31 December 2009 to $49.9 million as at 31 December 2010. This increase is primarily due to increase in trade payables of $4 million.

 

 

 

 

 

 

Business Review

 

Telecoms Division

 

The year 2010 has been affected by the substantial decrease in revenues from our major OEM customer Nokia Siemens Networks as reported previously. We expect the trend from this customer to continue to have an impact on our overall telecom business going forward, however due to the significantly lower level of business in 2010 the impact of this trend will be much smaller in 2011.

 

Revenues in the Telecom division increased during H2 2010 to $44.3 million from $35.6 million recorded during H1 2010. The increase in revenues was almost evenly distributed between our direct channels in the US and our OEM customers. Following our announcement of a first order from a prominent defence force customer in December 2009, we recorded more than $1 million worth of revenues in 2010 related to our win for a military version of our next generation secured access platform technology. We expect revenues to grow following deployment at the end of 2011.

 

We have also recorded approximately $600,000 of revenue from a leading semi- conductor manufacturer as part of a licensing arrangement reported in April 2010. We expect royalties to grow in the coming years as the chip is released to the market.

 

In our OEM channels, we announced in February 2011 a new strategic partnership with Advantech to deliver integrated 40G ATCA platforms. This partnership brings our carrier-grade switching software technology and blades to  Tier-1 and 2 Telecom Equipment Manufacturers (TEMs) enabling a cost effective, high quality carrier grade solution to support next generation telecom networks.

 

In our direct channels we have added several new Tier 2 and 3 telecom operators to our customer base during the second half of 2010. We have also made significant progress with a major Tier 1 operator in South America, including a new contract and first order from this important customer. These new wins were accomplished by leveraging our latest product offerings including our new Service Management platform that revolutionises the way providers manage their Ethernet edge network. With growth in the market for cell site aggregation and migration to 4G networks, our solution allows operators to upgrade their network without having to replace their core networks. In 2011, our focus will be on the Utilities and Mobile backhaul markets especially in the US where our product solutions will complement the existing infrastructure as they leverage their assets to build communications networks.

 

As indicated during our investor day in September, we expect the Telecoms group to return to growth within the next 18 to 24 months. We are now building the necessary channels to replace the revenues recorded with Nokia Siemens Networks, and gain better access to the market both through direct and indirect channels. We believe the progress we have made during the second half of the year will help us achieve our targets.

 

 

Medical Division

 

We have made significant progress during 2010 in realising our long term goals for the division. Although growth between H1 and H2 of 2010 was only 7%, the increase is purely organic. During 2010, we continued our investment in the Division by purchasing the manufacturing facility of our diagnostics business.  In 2011 we expect to continue to expand this business through investment, albeit at a much lower scale than in 2010. In 2011, we have begun to incorporate operational efficiencies into our growth strategy by consolidating our investments in the medical diagnostics field into one operating entity.

 

The gross margin of the medical division was 20% in 2010 (2009: 20%). Although the gross margin was lower than expected during the second half of 2010, it includes certain expenses related to inventory adjustment and increasing operating capacity in both the sterilization and diagnostics sectors of our business to meet increased demand and enable much higher revenues in 2011.

 

The operating loss for the medical division was $2.2 million in 2010 (2009: $1.7 million). The increase is mostly due to higher operating expenses.

During February 2011 we acquired the minority holdings of two of the original founders of the medical group. This will allow us to accelerate the process of improving operational efficiency and growth in the group.

 

We expect the medical group to continue to grow sales and improve gross margins during 2011. We also expect the sterilization and diagnostics units that currently comprise 43% of the overall revenues of the Division to become a larger portion of our overall sales.

 

 

 

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 2010 of 0.8 pence per share (2009: 0.8p and 0.55p special payment). 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. 

 

Current Trading and Prospects

 

Trading in the first 2 months of the year was encouraging. Our revenues are 5% ahead of our performance last year and we expect a strong March as well. This and other developments in our business lead us to believe that even after the additional expected reduction in the Nokia Siemens Networks (NSN) business,  2011 will be a year in which we can grow the business.

 

 

 

Peter Sheldon

Chairman

 

07 March 2011

 

 

 

 



BATM ADVANCED COMMUNICATIONS LTD.

CONSOLIDATED INCOME STATEMENTS

 
Year ended 31 December
 
                         2010
2009
 
US$ in thousands
 
 
Revenues
120,578
135,395
 
 
 
Cost of revenues
77,905
77,671
 
 
 
Gross profit
42,673
57,724
 
---------
---------
 Operating expenses
 
 
 
 
 
 Sales and marketing expenses
15,332
13,591
 
 
 
 General and administrative expenses
9,241
9,407
 
 
 
 Research and development expenses
12,450
11,763
 
 
 
 Other operating expenses
4,517
6,529
 
 
 
  Total operating expenses
41,540
41,290
 
---------
---------
 Operating profit
1,133
16,434
 
 
 
 Finance Income
1,549
(*)3,822
 
 
 
   Finance expense 
(1,652)
(*)(1,808)
 
 
 
Profit before tax
1,030
18,448
 
 
 
Income tax benefit (expense)  
(836)
867
 
 
 
Profit after tax
194
19,315
 
 
 
Attributable to:
 
 
Owners of the Company
1,699
20,517
Non-controlling interests
(1,505)
(1,202)
 
 
 
Profit for the year
194
19,315
 
 
 
Earnings per share (in cents) basic
0.42
5.11
Earnings per share (in cents) diluted
0.42
5.08

(*) Reclassified

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


Year ended 31 December


          2010

2009


US$ in thousands




Profit for the year

194

19,315

Exchange differences on translating foreign operations

( 4,911)

  2,669

Total Comprehensive Income of the year

(4,717)

21,984

Attributable to:



Owners of the Company

(4,312)

22,562

Non-controlling interest

(405)

(578)

                                    

 

BATM ADVANCED COMMUNICATIONS LTD.

CONSOLIDATED BALANCE SHEETS

 


31 December

31 December


   2 0 1 0

2 0 0 9


US$ in thousands

Assets



Non-current assets



Goodwill

11,300

11,345

Other intangible assets

Property, plant and equipment

Held to maturity investments

Deferred tax assets

19,798

25,943

-

5,122

23,323

21,911

4,347

4,848


62,163

65,774




Current assets



Inventories

19,470

22,040

Financial assets

38,079

34,332

Trade and other receivables

30,900

31,171

Cash and cash equivalents

22,087

28,095


110,536

115,638


 

 

Total assets

172,699

181,412

Liabilities

Current liabilities

  Short-term bank credit

  Trade and other payables

  Provisions

 

 

 

6,135

27,900

3,190

37,225

 

 

6,139

21,624

3,505

31,268

Net current assets

73,311

84,370

Non-current liabilities

Long-term liabilities

 

11,840

 

14,219

Retirement benefit obligation

 

Total liabilities

                  884

              12,724

  49,949

 

                  875

                15,094

  46,362

 

Net assets

122,750

135,050




Equity



Share capital

1,215

1,214

Share premium account

406,504

405,961

Foreign currency translation reserve and other reserves

 

(8,798)

 

(3,229)

Accumulated Deficit

(277,236)

(270,808)

Equity attributable to:



Owners of the Company

121,685

133,138

Non-controlling interest

1,065

1,912

Total equity

122,750

135,050

 

 

BATM ADVANCED COMMUNICATIONS LTD.

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 


Year ended 31 December





 2 0 1 0

2 0 0 9




US$ in thousands










Net cash from operating activities  (Appendix A)

12,481

20,234


----------

----------

Investing activities



 

Interest received

Proceeds on forward transactions

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

 

612

1,154

4,316

 

13,108

38,427

 

1,461

-

3,233

 

18,433

30,453

Purchases of property, plant and equipment

Proceeds on disposal of property, plant and equipment

Purchases of intangible assets

Purchases of other business combinations

Purchases of activity

Payment of forward transactions

Purchases of financial assets carried at fair value through profit and loss

Purchases of deposits

 (6,392)

-

-

(171)

-

(1,099)

 

(20,221)

(39,727)

 (13,583)

61

(361)

-

(2,967)

-

 

(15,450)

(47,335)

Acquisition of subsidiaries (Appendix B)

-

132

Net cash used in investing activities

(9,993)

(25,923)


----------

----------

Financing activities






Dividend payment

Tax on dividend

(8,127)

(637)

(4,561)

-

Increase (decrease) in short-term bank credit

(1,761)

1,468

Bank loan received

1,500

3,000

Bank loan repayment

(1,032)

(59)

Proceeds on issue of shares

118

378

Net cash from (used in) financing activities

(9,939)

226


----------

----------




Decrease in cash and cash equivalents

(7,451)

(5,463)




Cash and cash equivalents at the beginning of the year

 

28,095

 

30,737




Effects of exchange rate changes on the balance of cash held in foreign currencies

 

1,443

 

2,821

Cash and cash equivalents at the end of the year

   22,087

   28,095




 

 



BATM ADVANCED COMMUNICATIONS LTD.

APPENDICES TO CONSOLIDATED STATEMENT OF CASH FLOWS

 

APPENDIX A

RECONCILIATION OF OPERATING PROFIT FOR THE YEAR TO NET CASH

FROM OPERATING ACTIVITIES


Year ended 31 December


 2 0 1 0

2 0 0 9


US$ in thousands




Operating profit from continuing operations

Adjustments for:

1,133

16,434

Amortization of intangible assets and impairment of goodwill

3,738

5,355

Depreciation of property, plant and equipment

2,482

2,865

Stock options granted to employees

426

659

Increase (decrease) in retirement benefit obligation

41

(65)

Increase (decrease) in provisions                                                                                           

(898)

575

Operating cash flow before movements in working capital

6,922

25,823

Decrease (increase) in Inventory

1,959

(310)

Increase  in receivables

(480)

(2,186)

Increase (decrease) in payables

4,466

(3,180)

Cash generated by operations

12,867

20,147

Income tax paid                                                         

(338)

(173)

Income tax received                                                        

378

557

Interest paid

(426)

(297)

Net cash from operating activities 

12,481

20,234

 

APPENDIX B

ACQUISITION OF SUBSIDIARIES


Year ended 31 December


2 0 1 0

2 0 0 9


US$ in thousands




Net assets acquired



Property, plant and equipment

-

1,432

Inventory

-

205

Trade and other receivables

-

446

Trade and other payables

Short-term bank credit

Long term payables

-

-

-

(2,387)

(2,823)

 (3,044)

Non controlling interest

-

1,183



(4,988)

Goodwill

-

1,231

Intangible assets

-

3,625

Total cash consideration

-

(132)

 

 

 

 

 

 

 

 

BATM ADVANCED COMMUNICATIONS LTD

CONSOLIDATED STATEMENT OF CHANGES 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 2009

 

 

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










Exercise of share based options by employees

 

 

1

 

 

117

 




 

118

 

 

-

 

 

118

 

Recognition of share-based payments

 


426

 




426

 

-

 

426

 

Non-controlling interest acquired




 

442


 

442

 

(442)

 

-

 

Dividend

 





(8,127)

 

(8,127)

 

-

 

(8,127)

 

Other comprehensive income

 

-

 

-

 

(6,011)

 

-

 

      1,699

  

(4,312)

 

    (405)

 

  (4,717)

 

As at 31 December 2010

 

 

1,215

 

 

406,504

 

 

(10,026)

 

 

1,228

 

 

 (277,236)

 

 

121,685

 

 

1,065

 

 

122,750

 

 

BATM ADVANCED COMMUNICATIONS LTD

NOTES TO THE FINANCIAL STATEMENTS

 

Note 1 - General

 

The preliminary results for the year ended 31 December 2010 and the comparative 2009 information will presented in the full Annual report in accordance with International Financial Reporting Standards ("IFRS").

 

 

Note 2 - Profit per share

 

Earnings per share is based on the weighted average number of shares in issue for the year of 402,494,652 (2009: 401,579,099). 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 403,222,832 shares (2009: 403,939,818).

 

 

Note 3 - Business Segment

 

Year ended 31 December 2 0 1 0
 
 
Telecommunications
 
             Medical
 
Total
US$ in thousands
 
 
 
 
Revenues
79,877
40,701
120,578
 
 
 
 
Operating profit (loss)(*)
7,834
(2,184)
5,650
 
 
 
 
Assets
128,804
43,895
172,699

 

 

Year ended 31 December 2 0 0 9
 
    Telecommunications
 
             Medical
 
Total
US$ in thousands
 
 
 
 
Revenues
105,702
29,693
135,395
 
 
 
 
Operating profit (loss)(*)
24,664
(1,701)
22,963
 
 
 
 
Assets
144,553
36,859
181,412

(*) Excluding other operating expenses


This information is provided by RNS
The company news service from the London Stock Exchange
 
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