Final Results

RNS Number : 7950G
BATM Advanced Communications Ld
08 February 2010
 



 

 

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

 

 

 

 



BATM ADVANCED COMMUNICATIONS LTD.

CONSOLIDATED INCOME STATEMENTS

 


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

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


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

 

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
 

 


This information is provided by RNS
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