30th Aug 2005 13:00
Orad Hi-Tec Systems30 August 2005 Orad Hi-Tec Systems Ltd. ('Orad' or the 'Company') Results for the six month period and the quarter ended June 30 2005 Tel Aviv, 30 August, 2005 - Orad Hi-Tec Systems Ltd. (Frankfurt - PrimeStandard; London - AIM. Symbol: OHT), a leading developer, marketer anddistributor of state-of-the-art, 3D graphical solutions for the broadcasting,advertising and visual simulation markets, today announced its results for thesecond quarter and first half year of 2005. • Revenues of $7.3 million in H1 2005 • Improved broadcast market in Europe and the acceptance by the Hong-Kong Jockey Club of the horse tracking system • Strong revenue pipeline of more than $8 million for H2 2005 which includes: two multi channel virtual sets from Portugal SIC TV fourth system contract with RAI Italy virtual advertisement and sport enhancement business has won the largest European contract of over $3 million with the Dutch football league, and the extension of the advertisement deal with TV Globo Brazil Avi Sharir, Orad's President and Chief Executive Officer, commented: "The firstsix months were slower than we expected, mainly as a result of delays indecision taking by customers and delays in product deliveries. In the last twomonths we have received those new orders. This is reflected in the increasedbacklog. We are optimistic that the results for the second half of the yearwill show an improvement compared to the results of the first half of the year." For further information: Orad (www.orad.tv) Avi Sharir 00 972 976 768 62 Shore Capital (London) Graham Shore 00 44 20 7408 4090 Haubrok IR GmbH (Frankfurt) Michael Kempkes 00 49 211 301 260 Orad Hi-Tec Systems Ltd ('Orad' or the 'Company') Results for the six month period and the quarter ended June 30 2005 Chief Executive's Statement Revenues for the second quarter of 2005 were $3.8 million, including $900,000from the HKJC project, compared to $3.5 million in the first quarter of 2005 and$3.7 million in the second quarter of 2004. The Company has a strong pipeline ofcommitted revenue for the remainder of the year, which exceeds $8 million. Thisincludes revenues from the Hong Kong Jockey Club project, the remaining parts ofwhich are expected to be recognised in the second half of 2005. Gross margin inthe second quarter of 2005 was 52% (excluding the HKJC 66%) and the net loss was$1.265 million. Avi Sharir, Orad's President and Chief Executive Officer, commented: "The firstsix months were slower than we expected mainly as a result of delays in decisiontaking by customers and delays in product deliveries. In the last two months wehave received those new orders. This is reflected in the increased backlog. Weare optimistic that the results for the second half of the year will show animprovement compared to the results of the first half of the year." Revenues in H1 2005 were $7.3 million, compared to $7.1 million in H1 2004.Operational expenses in H1 2005 were $6 million, compared to $6.5 million in H12004, as a result of a cost reduction programme. The net loss was $2.34 millionin H1 2005, compared to $2.45 million in H1 2004. Financial & Operational Highlights for the second quarter 2005 compared to firstquarter 2005: Revenues Revenues for the second quarter of 2005 were $3.8 million, compared to $3.46million in the first quarter of 2005, an increase of 10%. Gross Margin Gross margin in the second quarter of 2005 was 52%, compared to 57% in the firstquarter of 2005. The decrease in gross margin is the result of the low marginof the HKJC contract. The gross margin without the HKJC was 66%. Research & Development R&D expenses in the second quarter of 2005 were $640,000, compared to $600,000in the first quarter of 2005. Selling & Marketing S&M expenses in the second quarter of 2005 increased to $1.9 million, comparedto $1.65 million in the previous quarter, mainly as a result of trade showexpenses . General & Administrative G&A expenses were $600,000 in the second quarter of 2005, the same as the firstquarter of 2005. Financial income (expenses) Financial expenses consists primarily of exchange rate differences related tonon-US dollar balances and interest income earned on short-term deposits offsetby bank charges. Financial expenses for the second quarter of 2005 were$110,000, compared to $170,000 in the first quarter of 2005. The reductionarose from exchange rate differences resulting from devaluation of the Euroagainst the Dollar and less assets exposed to the Euro. Net Loss Net loss for the second quarter of 2005 amounted to $1.265 million, compared to$1.188 million in the first quarter of 2005. Net loss per share Net loss per share for the second quarter of 2005 was $0.12, compared to a netloss per share of $0.10 for the first quarter of 2005. Financial & Operational Highlights for the six months and the quarter ended June30, 2005 compared to the same period in 2004: Revenues The revenues for the first six months of 2005 were $7.3 million, compared to$7.1 million for the first six months of 2004, an increase of 3%. The revenuesfor the second quarter of 2005 were $3.8 million, compared to $3.7 million forthe second quarter of 2004. Gross Margin Gross margin for the first six months of 2005 was 54% and 52% for the secondquarter of 2005, compared to 59% in the first six months of 2004 and 60% for thesecond quarter of 2004. Gross margin decreased in 2005 compared to 2004, mainlyas the result of the lower margin of the HKJC project. Research & Development Research and development (R&D) expenses were $1.25 million in the first sixmonths of 2005, compared to $1.4 million in the first six months of 2004. R&Dexpenses in the second quarter of 2005 were $600,000, the same as the secondquarter of 2004. The decrease is mainly the result of measures taken by theCompany to increase efficiency and consolidate R&D efforts of subsidiarieshaving complementary technologies as well as cost reductions from otherorganisational changes. Selling & Marketing Selling and Marketing (S&M) expenses were $3.56 million in the first six monthsof 2005, compared to $4 million in the first six months of 2004, a decrease of$440,000, reflecting the organisational changes made during the second half of2004. General & Administrative General & Administrative (G&A) expenses were $1.2 million in the first sixmonths of 2005, compared to $1.1 million in the first six months of 2004. G&Aexpenses in the second quarter of 2005 were $600,000, compared to $500,000 inthe second quarter of 2004. The increase mainly reflects provisions fornon-deductable taxes in Israel and abroad. Financial income (expenses) Financial income (expenses) consists primarily of exchange rate differencesrelated to non-US dollar balances and interest income earned on short-termdeposits offset by bank charges. Financial expenses for the first six months of2005 were $300,000, compared to financial expenses of $100,000 in the first sixmonths of 2004. Financial expenses for the second quarter of 2005 were$100,000, compared to financial expenses of $10,000 in the second quarter of2004. The financial expenses in 2005 mainly arose from exchange ratedifferences resulting from strengthening of the Dollar compared to the Euroduring H1 2005. Other Expenses Other expenses in the first six months of 2004 and in the second quarter of 2004were $3,000. Net Loss Net loss for the first six months of 2005 decreased to $2.34 million, comparedto $2.45 million for the first six months of 2004. Net loss for the second quarter of 2005 was $1.3 million, compared to $900,000for the second quarter of 2004. The increase in losses is the result of thedecreased sales of the broadcasting products. Net loss per share Net loss per share for the second quarter of 2005 was $0.12, compared to a netloss per share of $0.09 for the second quarter of 2004. Net loss per share forthe first six months of 2005 was $0.22, compared to a net loss per share of$0.23 for the first six months of 2004. Cash Position As of June 30, 2005, cash and short-term bank deposits and restricted cashamounted to $3.95 million, compared to $5.5 million at the end 2004. Contact: Orad Hi-Tec Systems Ltd.Ehud Ben-YairChief Financial OfficerPO Box 2177Kfar Saba 44425, IsraelTel: +972-9-767-6862 Fax: +972-9-767-6861E-Mail: [email protected] CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31, June 30, 2004 2005 UnauditedASSETS CURRENT ASSETS:Cash and cash equivalents $ 4,752 $ 3,453Restricted cash 750 500Trade receivables, net 4,106 3,416Other accounts receivables and prepaid expenses 910 795Inventories 3,646 3,554Contracts in progress, net of advances 1,111 1,337 Total current assets 15,275 13,055 SEVERANCE PAY FUND 773 810 PROPERTY AND EQUIPMENT, NET 2,195 1,980 Total assets $ 18,243 $ 15,845 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:Trade payables $ 1,761 $ 1,550Deferred revenues 741 806Other accounts payable and accrued expenses 3,280 3,295 Total current liabilities 5,782 5,651 ACCRUED SEVERANCE PAY 1,103 1,148 SHAREHOLDERS' EQUITY:Share Capital 28 28Additional paid-in capital 75,241 75,272Accumulated other comprehensive loss (547) (547)Accumulated deficit (63,364) (65,707) Total shareholders' equity 11,358 9,046 Total liabilities and shareholders' equity $ 18,243 $ 15,845 CONSOLIDATED STATEMENTS OF OPERATIONSU.S. dollars in thousands, except share and per share data Year ended Six months ended Three months ended December 31, June 30, June 30, 2004 2004 2005 2004 2005 Unaudited Revenues:Products sales $ 15,728 $ 7,092 $ 6,363 $ 3,749 $ 2,895Long term projects - - 916 - 916 Total revenues 15,728 7,092 7,279 3,749 3,811 Cost of product sales 6,188 2,911 2,475 1,510 980Cost of Long term projects - - 847 - 847 Total cost of revenues 6,188 2,911 3,322 1,510 1,827 Gross profit 9,540 4,181 3,957 2,239 1,984 Operating expenses: Research and development, net 2,844 1,413 1,248 624 644Sales and marketing 8,224 4,000 3,556 1,937 1,905General and administrative 2,388 1,113 1,210 534 589 Total operating expenses 13,456 6,526 6,014 3,095 3,138 Operating loss 3,916 2,345 2,057 856 1,154 Financial income (expenses), net 189 (93) (284) (61) (114)Other income (expenses), net (148) (15) (2) (10) 3 Net loss $ 3,875 $ 2,453 $ 2,343 $ 927 $ 1,265 Basic and diluted net loss per share $ 0.36 $ 0.23 $ 0.22 $ 0.09 $ 0.12 Weighted average number of shares used 10,698 10,679 10,779 10,679 10,779in computing basic and diluted net lossper share (in thousands) STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY U.S. dollars in thousands, except for share data Number of Share Additional Accumulated Accumulated Total outstanding paid-in other deficit ordinary capital capital comprehensive shares loss Balance as of January 1, 2004 10,650,726 $ 28 $ 75,107 $ (547) $ (59,489) $ 15,099 Comprehensive loss:Net loss - - - - (3,875) (3,875)Total comprehensive loss (3,875)Compensation expenses in respect of share - - 38 - - 38options whose terms have been modifiedIssuance of shares upon exercise of employees' 100,000 *) - 96 - - 96share options Balance as of December 31, 2004 10,750,726 28 75,241 (547) (63,364) 11,358 Issuance of earnout shares 28,645 *) - 31 - - 31 Comprehensive loss:Net loss for the period - - - - (2,343) (2,343)Total comprehensive loss (2,343) Balance as of June 30, 2005 (unaudited) 10,779,371 28 75,272 (547) (65,707) 9,046 Balance as of January 1, 2004 10,650,726 28 75,107 (547) (59,489) 15,099 Comprehensive loss:Net loss for the period - - - - (2,453) (2,453) Total comprehensive loss - - - - - (2,453) Balance as of June 30, 2004 (unaudited) 10,650,726 $ 28 $ 75,107 $ (547) $ 61,942 $ 12,646 *) Represent an amount lower than $ 1. CONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands Year ended Six months ended December 31, June 30, 2004 2004 2005 UnauditedCASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (3,875) $ (2,453) $ (2,343) Adjustments to reconcile net loss to net cash used inoperating activities:Depreciation 1,091 610 335Compensation expenses in respect of share options whose 38 - -terms have been modifiedDecrease in trade receivables, other accounts receivable and 938 635 805prepaid expensesDecrease in inventories 234 328 133Decrease (increase) in contracts in progress, net of 229 400 (226)advancesDecrease in trade payables, other accounts payable and (592) (1,096) (188)accrued expenses and accrued severance pay, netIncrease (decrease) in deferred revenues 217 (121) 65Other 28 14 33 Net cash used in operating activities (1,692) (1,683) (1,386) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (298) (78) (182)Proceeds from sale of property and equipment 88 58 19Decrease (increase) in restricted cash (227) 23 250 Net cash provided by (used in) investing activities (437) 3 87 CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term bank loan (16) (16) -Issuance of shares upon exercise of employees' share options 96 - - Net cash provided by (used in) financing activities 80 (16) - Decrease in cash and cash equivalents (2,049) (1,696) (1,299)Cash and cash equivalents at the beginning of the period 6,801 6,801 4,752 Cash and cash equivalents at the end of the period $ 4,752 $ 5,105 $ 3,453 SUPPLEMENTARY INFORMATION a. Company's shares and options held by members of the board of directors and officers of the Company: Number of Number of Ordinary shares share options *) Avi Sharir 1,306,238 184,932 Moshe Nissim - 56,428 Sarit Sagiv - 15,000 Orna Nehustan - 20,000 Yehuda Bronicki - 10,000 Amos Horev - 10,000 Dan Falk - 10,000 Anat Segal - 10,000 *) Each share option is convertible into one Ordinary share. b. As of June 30, 2005, the Company employed 118 employees. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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