1st Mar 2006 07:01
Telit Communications PLC01 March 2006 Press Release 1 March 2006 Telit Communications PLC ("Telit" or "the Company") Preliminary results Telit Communications PLC (AIM:TCM), the global wireless communications developerand distributor, announces its maiden set of preliminary results for the yearended 31 December 2005. Highlights • Turnover increased 16% to €86.4 million (2004: €74.5 million on a proforma basis)• Gross profit increased 33% to €15.1 million (2004: €11.3 million)• Gross profit margins increased to 17.5% (2004: 15.2%)• Operating loss decreased by 44% to €1.5 million (2004: €2.6 million)• Pre-tax loss decreased 44% to €1.3 million (2004: €2.4 million loss excluding exceptional income from write off of a loan made in the first half of 2004 of €12.1 million)• Significant progress during H2 2005 achieving a 36% increase in turnover and 77% decrease in the operating loss from €1.2 million to €0.2 million compared to H1 2005• Growth achieved in the Branded EVAR Business Unit with sales increasing by 11%. This division increased gross profit margin by 20% and operating profits by 11% over the year 2004. During H2 2005 this division increased sales by 20% compared to H1 2005• In the Wireless Solutions Business Unit, turnover increased 47% over 2004, leading to a 24% decrease in operating losses. During H2 2005 this division increased sales by 150% compared to H1 2005• Continued investment in the Wireless Solutions Business Unit, with particular emphasis on expansion of the sales network, through distribution agreements in 45 countries and through the opening of sales offices in a number of countries in order to establish and expand the Company's future revenues.• Continued investment in the Branded EVAR Business Unit, with particular emphasis on advertisement and participation in exhibitions for expanding the future revenues. Commenting on the results, Oozi Cats, Chief Executive Officer of Telit, said:"Telit has achieved another year of substantial growth during which we have wonseveral significant new contracts, both in the Wireless Solutions and BrandedEVAR Business Units. Trading has been particularly strong during the secondhalf of the year and we expect this trend to continue. "Our technical innovation and focus on R&D has ensured that we remain at theforefront of our industry. We look forward to another year of continued growth." For further information: Telit Communications plcOozi Cats, Chief Executive Tel: 00 39 040 419 2491 www.telit.com Media enquiries: AbchurchChris Lane / Laura Riascos de Castro Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com CHIEF EXECUTIVE'S STATEMENT AND REVIEW Introduction We are pleased to present Telit Communications PLC's preliminary report for theyear ended 31 December 2005, and I am delighted to be able to informshareholders that we have achieved strong growth, especially in the second halfof the year. Corporate governance Telit has established itself as a UK company with high levels of corporategovernance, financial reporting and controls, and investor relations. At Telit,we have put in place a professional and experienced board, with two independentdirectors as well as remuneration and audit committees. We report underInternational Financial Reporting Standards, and we have recently launched a newinvestor relations website at www.telit.com. Financial results In line with the indications we provided in our trading update on 23 January2006, the results for the year demonstrate significant improvement in theCompany's performance. Sales reached €86.4 million for the full year, an increase of 16%. Gross profitincreased 33% to €15.1 million with the gross profit margin reaching a level of17.5%, an increase of 15% against 2004. These improvements in sales and gross profit margin have led to a 44% decreasein operating losses and in pre-tax loss. The Company made significant progress during the second half of 2005 byachieving a 36% increase in turnover and a 77% decrease in operating loss from€1.2 million to €0.2 million compared to the first half of the year. Branded EVAR Business Unit The Branded EVAR Business Unit is currently Telit's main revenue and profitgenerator. The EVAR Business Unit develops software and hardware in its laboratorieslocated in Trieste, Italy and Tel Aviv, Israel for integration into cellularphones as well as other cellular-communication-based devices. We offer acomprehensive product portfolio that includes several different types of mobilehandsets, including CDMA, GSM, Smart phones and UMTS end user equipment. Telitincorporates its own comprehensive design and then distributes the products tomobile operators and independent resellers under the well-known brand Telit. During 2005, Branded EVAR sales increased by approximately 11% compared to 2004.In addition to the increase in sales, the gross profit margin increased by 20%reaching a level of 16% in 2005. These results have led to an 11% increase in operating profits for the BrandedEVAR Business Unit compared to the corresponding period last year. We have significantly increased sales to operators, particularly in Israel andItaly, and during the second half of 2005 this division increased sales by 20%compared to the first half. Sales to Italian operator Wind continued with a new model that was launchedexclusively. We maintained our ongoing sales to Vodafone, Eplus, KPN and TelcelMexico and have introduced a new UMTS model that was launched by Telecom ItaliaMobile (TIM). We believe that more products will follow in the future. During 2005 the Company increased its number of suppliers from three in 2004 toseven in 2005. New agreements with cellular equipment suppliers from the FarEast, including Bellwave, Amoi and Pantech & Curitel will enable us to broadenour line of products, as well as to offer a full range of devices to the marketfrom entry level to UMTS phones. In addition, we have maintained our strongrelationship with Curitel, a Korean supplier, in the CDMA market and haveexpanded our cooperation with a new line of UMTS devices. New supplier agreements have allowed Telit's EVAR to introduce a total of twelvenew handsets this year compared with the five handsets that we introduced in2004. Our sales in the open market in Italy were generated by distribution agreementswith some of the largest distributors in Italy. We have continued ourproductive relationship with ADR throughout Italy, and new agreements weresigned with "Rilcla" in Italy (a retail chain with 2,000 stores), "MerchantoneUno" (an Italian retail chain), "APF" in Slovenia (a distributor) and "DavonBusiness SL" in Spain. As a result of these sales activities, we expect to be able to sustain ourgrowth rates in this highly profitable and cash generative business. Customersatisfaction with our Company's products is encouraging, and we expect sales toincrease as customers experience Telit's quality of service. Wireless Solutions Business Unit The development of the Wireless Solutions Business Unit is the key to our futurevalue creation, and we have invested heavily in it. The Wireless Solutions Business Unit conducts intensive research and developmentto enable the Company to offer an advanced and diverse portfolio of products.We have a full line of machine-to-machine (m2m) GSM/GPRS products based on ourproprietary technology. Our data products are suitable for a variety ofapplications, including remote metering and monitoring, vending machines,security systems, fleet management and point of sales terminals. The Wireless Solutions division achieved sales growth of 47% compared to 2004,and this has led to a 24% decrease in operating loss. During the second half of 2005 this division increased sales by 150%, leading toa 53% decrease in operating loss compared to the first half of the year. Performance during 2005, along with our reinforced focus on the m2m business,has positioned Telit as a leading supplier in the Italian market. Our salesgrowth exceeds the industry's (GSM/GPRS) growth, which as indicated in ABIresearch grew only by 6.7% in 2005 while our sales grew by 47%. Our product offering that contained two products in 2004 has been diversifiedinto four families of products offering seven products during 2005. Ourproducts are cost optimised, scalable solutions offering the latest technologyfrom leading suppliers such as Infineon and SiRF. Our customers benefit fromour IPR, GPRS Platform and protocol stack and our fully furnished testlaboratory for CE and R&TTE measurements that support them. Telit outsources the manufacturing of its products utilising electronicsmanufacturing services (EMS). In 2005 the major EMS-manufactured product hasbeen Solectron, based on regular leaded process. In 2005, the Companyestablished a new production line at Celestica Rajecko for RoHS (European UnionRestriction of Hazardous Substances) processes. The focus of productionactivities in 2005 was the transition of production process from leaded tolead-free. This activity was completed successfully and all new productionstarting from Q1/06 will be based on a lead-free (RoHS compliant) process (EUDirective 2002/95/EG). The Company uses other EMS facilities for prototyping and small productionseries. Celestica is a world leader in the delivery of innovative EMS. Celesticaoperates a highly sophisticated global manufacturing network with operations inAsia, Europe and the Americas, providing a broad range of integrated services toleading original equipment manufacturers (OEMs) across a variety of industries.Celestica's expertise in quality, technology and supply chain management andleadership in the global deployment of Lean principles, enable the company toprovide competitive advantage to our customers by improving time-to-market,scalability and manufacturing efficiency. Celestica is our main contract manufacturer (EMS), supplying us with finishedgoods (turn-key) according to our manufacturing forecast and purchase orders. Telit renewed its ISO9001: 2000 certification in November 2005, for the 3rdconsecutive year. This certification covers Telit's business operations relatedto: development, sales and delivery of wireless solutions m2m applications andEVAR activities. Furthermore, to ensure that overall quality standards are met and maintained,Telit uses ISO-certified component suppliers and works with Celestica, inRajecko, Czech Republic for all of its production. The Celestica facility isISO-certified. Telit received the approval of two patent applications filed in 2004; thesepatents enhance the Company's IP portfolio. We offer our customers a competitive edge by reducing solution cost andoptimising performance of their applications. We offer a wide variety offeatures and services such as Quad-band GSM/GPRS technology, unique BGA mountedmodule, application engineering for design-in support and complete applicationdevelopment, technical approvals including FTA and CE preparations andco-ordination, customisation services: Integration of specific customerfeatures in the product, support hotline for feedback on customers' requestswithin 48 hours worldwide, full control of production line, fast hardwarecustomisation as well as full project development chain. To continue the Company's successful growth within the cellular m2m market, weimplemented a systematic product and sales strategy that converts opportunitiesinto customers within a six to twelve months sales cycle. The Company currentlyutilises direct and indirect distribution channels to reach the market. Inaddition to setting up our own sales offices in Copenhagen, London, Madrid,Milan, Munich, Rome and Tel Aviv, we have extended our global distributionnetwork to include most relevant component distributors as well as productspecialists for cellular solutions covering 45 countries to date: • Microdis covering Turkey, Poland, Czech Republic, Slovakia, Hungary, Baltic States and CIS countries, • Azzurri Technologies covering Germany, Austria and Switzerland, • Sequoia covering UK and Ireland • Elektroinvest covering Bulgaria • Arrow, global market leader in electronic component distribution - a new contract was signed with Arrow Nordic covering the Nordic and Baltic countries. • Glynn - a new contract was signed covering Australia and New Zealand. New customers were acquired and we supplied wireless data cards to cellularoperators Wind (Italy) and KPN (Netherlands), and signed agreements with Base(Belgium) and Eplus (Germany) for future sales. Our commitment to global marketing was demonstrated by our participation ininternational exhibitions including the 3GSM World Congress in Cannes, Franceand CeBit 2005 in Hanover, Germany. By displaying Telit's portfolio of productsin this way, we have generated a network of connections, and have developedprocesses and customisations for future customers, which we expect to yieldsignificant benefits in terms of increased sales over the next two years. The potential growth of the Wireless Solutions Business Unit depends on ourcontinuing successful development of state of the art products as well as onsecuring the necessary distribution agreements as well as our direct sales. Atthis point, our team of engineers are supporting over 500 new customer designsin progress. We are pleased to report a number of developments, which we believe willsignificantly increase future sales over the next two years. These developmentsinclude: • Winning contracts with IBM for the development and supply of a GPRS based communications solution as part of an AMR project. The Telit designed AMR solution allows for automated meter readings whereby energy providers will be able to read their customers' electricity and gas meters through m2m ("machine to machine") wireless communication. Telit's GPRS modules will be integrated into electricity meters in households in Europe as part of the AMR rollout within the utility sector. Due to the extensive R&D necessary for the project, Telit's module will be an integral part of the design and functionality of the AMR device. Shipments are planned for March 2006 and we have plans to supply around 250,000 units within the next 2 years.• Selection by DKTS, a leading systems integrator, to supply GPRS modules for the connection of cash registers in Serbia and Montenegro. IR Electronic, an Arrow company, will act as Telit's distribution partner for this transaction. We expect the Company's participation in this new application field to lead to significant future sales.• Signing a Memorandum of Understanding with the European Commission's Emergency Call initiative ("eCall") in order to secure an EU-wide commitment to creating an in-vehicle emergency call service to help reduce the number of fatalities and accidents on European roads. An on-board GSM-based emergency call system can significantly shorten the time it takes emergency services to be deployed. The consequence of the eCall campaign is that all cars sold from 2009 will be equipped with GPRS modules. Telit will be at the forefront of this campaign and we will be able to position ourselves as a key supplier. The Company has appointed Chicco Testa as a member of the Board of Directors ofour Italian subsidiary. Mr. Testa served as Chairman of the Board at ENEL SpA(the Italian provider of power and gas) and was a founder and member of theBoard of Directors at WIND SpA. Mr. Testa is currently a member of the Board ofDirectors of Rothschild SpA, Executive President at Roma Metropolitane SpA (thecompany building the new underground lines in Rome), Vice Chairman of the WorldEnergy Council and Senior Partner of the Franco Bernabe Group, which ownsseveral investments in the IT sector. The Company has appointed Tommaso Pompei as Chairman of the Italian Subsidiary.Tommaso Pompei is the CEO of Tiscali, the main independent European InternetCommunication Company, since October 31st 2005. Since 1997 Mr. Pompei was CEOat Wind, the main alternative operator to Telecom Italia on the Italian TLCmarket, guiding the company from the start-up to the sale. Prior to Wind, he hadbeen CEO of Pronto Italia - which later merged to become Omnitel Pronto Italiaand today Vodafone Italia - and of Sigma, a company specialised in thedevelopment of value-added information technology services owned by IRI andFerrovie dello Stato. Board changes In September 2005, Avigdor Kelner was appointed to replace Yitzhak Apeloig asChairman of the Board. Mr. Kelner's vast experience and contacts within Telit'smarketplace is a great resource for our Group. Mr Kelner is a partner of Shrem,Fudim, Kelner & Co. and Chairman and CEO of Polar Investments Ltd., as well asUrdan Industries. Mr Kelner co-founded Telit and in his career spanning over 30years, managed numerous global mergers and acquisitions and acquired vastexperience and expertise in the communications, technology, industrial and realestate sectors. Also in September 2005, Avi Israel was appointed to the Board as a non-executiveDirector. Mr. Israel, with his strong background in the industry and experiencewith public companies, is making a significant contribution to Telit. Mr.Israel is currently Vice President and Chief Financial Officer of PolarInvestments Ltd. Previously Mr. Israel was employed at Formula Systems Group, aNASDAQ traded Company. Outlook Telit is positioned within strong growth markets and, over the past year, wehave achieved significant increases in turnover whilst dramatically reducingoperating losses. We expect the profitable Branded EVAR Business Unit to continue its steadygrowth over the next financial year and are confident that losses from theWireless Solutions Business Unit will further reduce over the period. Oozi CatsChief Executive Officer CONSOLIDATED INCOME STATEMENT(Euro in thousands) Year ended Year ended 31 31 December December 2 0 0 5 2 0 0 4 __________ __________ Revenues 86,444 74,522Cost of sales 71,331 63,174 ____________ __________Gross profit 15,113 11,348 Research and development expenses (3,914) (4,201)Selling and marketing expenses (5,293) (2,143)General and administrative expenses (7,372) (7,602) ____________ __________Operating loss (1,466) (2,598) Financial costs, net (282) (650) ____________ __________Operating loss after financial expenses, net (1,748) (3,248) Other income 389 12,914 ____________ __________(Loss) income before income taxes (1,359) 9,666 Income taxes (1,338) (327) ____________ __________(Loss) income after income taxes (2,697) 9,339 Share of results of associate (164) (321) ____________ __________Net (loss) income for the yearfrom continuing operations (2,861) 9,018 Loss for the year from discontinued operations (1,306) (596) ___________ __________ (Loss) income for the year (4,167) 8,422 ========== ========= Basic (loss) earnings per share (in Cents) (11.3) 47.05 ========== =========Diluted (loss) earnings per share (in Cents) (11.3) 47.05 ========== ========= The accompanying notes are an integral part of the financial statement. CONSOLIDATED BALANCE SHEET (Euro in thousands) 31 December 31 December 2 0 0 5 2 0 0 4 ___________ ___________ASSETS Current assetsCash and cash equivalents 17,207 582Trade accounts receivable 33,286 34,777Receivables and other current assets 4,357 8,400Inventory 12,030 6,093 ___________ ___________ 66,880 49,852 ----------- -----------Non-current assetsInvestment in associate 649 746Deferred expenses 73 46Property, plant and equipment 1,414 1,558Intangible assets 616 86Deferred income tax asset 3,696 3,687 ___________ ___________ 6,448 6,123 ----------- ----------- ___________ ___________ 73,328 55,975 ========== ==========LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilitiesShort-term borrowings from banks and other lenders 22,823 28,022Trade accounts payable 8,955 6,297Payables and other current liabilities 4,368 9,633 ___________ ___________ 36,146 43,952 ----------- ----------- Non current liabilitiesLoan from parent company 3,054 4,121Retirement benefit costs 856 1,591Provisions and other long-term liabilities 106 159 ___________ ___________ 4,016 5,871 ----------- -----------Shareholders' equityShare capital 627 -Other reserve (260) -Share premium 29,651 -Translation adjustments (284) (915)Retained earnings 3,432 7,067 ___________ ___________ 33,166 6,152 ----------- ----------- 73,328 55,975 ========== ========== The accompanying notes are an integral part of the financial statement. CONSOLIDATED CASH FLOW STATEMENT (Euro in thousands) Year ended Year ended 31 December 31 December 2 0 0 5 2 0 0 4 ____________ ___________CASH FLOWS - OPERATING ACTIVITIESNet (loss) income for the year (4,167) 8,422Adjustments to reconcile loss to net cash provided by(used in) continuing operating activities (Appendix A) 443 (43,366) ____________ ___________ Net cash used in continuing operating activities (3,724) (34,944)Net cash used in continuing discontinuedactivities (1,301) (429) ____________ ___________Net cash used in operating activities (5,025) (35,373) ------------ -----------CASH FLOWS - INVESTING ACTIVITIESAdditions to fixed assets (431) (298)Proceeds from disposal of fixed assets 41 215Additions to financial assets (190) -Investment in associate - (409)Addition to intangible assets (622) (10)Additions to long-term receivable (27) -Sales of financial assets 211 - ____________ ___________Net cash used in investing activities (1,018) (502) ------------ -----------CASH FLOWS - FINANCING ACTIVITIESShort-term borrowings from banks and others, net (7,772) 26,234Proceeds from issuance of share capital 368 -Loan from parent company - 4,121Proceeds from issuance of capital 29,651 - ____________ ___________Net cash provided by financing activities 22,247 30,355 ------------ -----------Effect of exchange rate differences 421 (1) ------------ ----------- ____________ ___________Increase (decrease) in cash and cash equivalents 16,625 (5,521) Cash and cash equivalents-balance at beginning ofyear 582 6,103 ____________ ___________ Cash and cash equivalents-balance at end of year 17,207 582 =========== ========== Supplemental disclosure of cash flow information:Interest paid 1,029 503 =========== ==========Income taxes paid 1,240 609 =========== ========== The accompanying notes are an integral part of the financial statement. CONSOLIDATED CASH FLOW STATEMENT (Euro in thousands) Appendix A - Adjustments to reconcile net income to net cash provided byoperating activities Year ended Year ended 31 December 31 December 2 0 0 5 2 0 0 4 ___________ ___________ Income and expenses not involving cash flows:Depreciation and amortisation 661 665Deferred taxes 9 (5)Other income (2) (3)Write-off of long term loan - (12,090)(Decrease) increase in liability forretirement benefit costs (735) 33Capital fund to employees 532 -(Increase) decrease in deposit designated for (24) 3investment in associateEquity in results of associate 164 321Discontinued operations 1,306 596Income from financial assets (21) - Changes in assets and liabilities:Decrease (increase) in trade receivables 3,439 (24,685)Decrease (increase) in receivables and othercurrent assets 4,039 (685)Increase in inventory (5,952) (1,889)Increase (decrease) in trade payables 2,681 (4,563)Decrease in other current liabilities (5,654) (1,064) __________ __________ 443 (43,366) ========= ========== The accompanying notes are an integral part of the financial statement. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Euro in thousands) Year ended 31 December 2005 Share Other Share Translation Retained capital reserve premium, adjustment earnings Total net ______ ________ ________ __________ __________ ________ Balance- 1 January - - - (915) 7,067 6,1522005 Reverseacquisitioncapitaladjustment - (260) - - - (260)Issue of sharecapital 388 - - - - 388Initial publicoffering 239 - 29,651 - - 29,890Translationadjustments, net - - - 631 - 631Compensation foremployee - - - - 532 532options planLoss for the year - - - - (4,167) (4,167) ______ ________ ________ _________ _________ ________Balance-31December 2005 627 (260) 29,651 (284) 3,432 33,166 ====== ======= ======== ========= ====== ======= Year ended 31 December 2004 Share Translation Retained capital adjustment earnings Total _________ _________ _________ _________ Balance- 1 January 2004 - (645) (1,355) (2,000)Translation adjustments, net - (270) - (270)Net income for the period - - 8,422 8,422 __________ ___________ __________ __________Balance-31 December 2004 - (915) 7,067 6,152 ========== ========== ========= ========= The accompanying notes are an integral part of the financial statement. NOTES TO THE PRELIMINARY ANNOUNCEMENT AT 31 DECEMBER 2005 1. Telit Communications PLC ("the Company") was incorporated and registered inEngland and Wales as a public limited company on 30 November 2004 under theCompanies Act 1985. On 4 April 2005, the Company completed an Initial PublicOffering on the AIM Market, for the issue of 16,428,571 ordinary shares, at aprice of 140 p per share, for aggregate proceeds of £20.5 million(approximately • 30 million), net of certain issuance costs and expenses. The Company has control over two Israeli consolidated subsidiary companies- Dai Telecom Holdings (2000) Ltd. (formerly Polar Trade and Services Ltd.-"DaiIsrael"), of which the Company holds 100% of its issued and paid in capital, andDai Telecom Ltd., of which the Company holds directly 20% of its issued and paidin capital, and indirectly an additional 80% through the Holdings in Dai TelecomHoldings (2000) Ltd. The Company also owns 100% of the issued and paid incapital of Telit Communications SpA ("Telit Italy) (all together - "the Group").The Group is currently engaged in the following two main activities: • Wireless Solutions - Development manufacturing and sale of modules -cellular products for transmitting data designed for the (machine-to-machine)telecom market and services entailing the development and licensing of cellulartechnology to third parties based on the Company's technological property. • Branded Enhanced Value Added Reseller (BEVAR) - Distribution of cellularproducts manufactured in the Far East on the Israeli, Italian and Europeanmarket and rendering warranty on this equipment. 2. The consolidated financial statements of the Company have been preparedbased upon the accounting policies set out in the financial statements of DaiTelecom Ltd for the year ended 31 December 2004 The Company has adopted IFRS2Share-based payment for the first time in these financial statements. TheCompany's auditors have indicated that they intend to issue an unqualifiedauditors' report, and will not contain any statement under Section 237(2) or (3)of the Companies Act 1985, on the statutory financial statements for the yearended 31 December 2005. Copies of the Company's Report and FinancialStatements will be sent to shareholders in due course and will be available fromthe registered office of the Company: 110 Cannon Street, London EC4N 6AR. The Company has treated the acquisition of Dai Telecom Holdings (2000) Ltd inaccordance with the reverse acquisition method described in IFRS 3 Businesscombinations. Accordingly the acquisition has been treated as if Dai TelecomHoldings (2000) Ltd had acquired the Company. The comparative figures relate toDai Telecom Holdings (2000) Ltd .The accounting policies applied in thesefinancial statements are consistent with those of Dai Telecom Holdings (2000)Ltd for the year ended 31 December 2004 which were prepared under InternationalFinancing Reporting Standards (IFRS). 3. The Company provides certain guarantees for its subsidiary; TelitCommunications SpA ("Telit Italy"). On 6 November 2005, the Company's Board ofDirectors authorised the Company to provide a guarantee to a modules supplier ofTelit Italy, to sustain a credit line to be granted by the modules supplier inrespect of purchases made by Telit Italy. The guarantee shall not exceed theamount of • 7 million or a higher amount to be agreed from time to time. Inaddition, the Company deposited an amount of • 4 million, in a bank account,bearing annual interest of 2.3%, as security in favour of a credit line grantedto Telit Italy by an Italian bank. 4. (Loss) earnings per share: Year ended Year ended 31 December 2005 31 December 2004 (Loss) earnings for the year (4,167) 8,422Weighted average number of equity shares in issue 36,886,157 17,901,785Basic (loss) earnings per share from continued (7.76) 50.38operationBasic loss per share from discontinued operation (3.54) (3.33)Basic (loss) earnings per share (11.3) 47.05Diluted (loss) earnings per share from continued (7.76) 50.38operationDiluted (loss) earnings per share from discontinued (3.54) (3.33)operationsDiluted (loss) earnings per share (11.3) 47.05 The calculation of basic (loss) earnings per share is based on the loss for theyear and on a weighted average number of ordinary shares of 1p each in issueduring the period. The diluted (loss) earnings per share for the year takesaccount of the 1,141,071 outstanding ordinary share options during the period.The outstanding share options have no impact on loss per share. 5. The Directors have not declared a final dividend. 6. Following the final settlement of all litigation between the Company'ssubsidiary Telit Italy and Nuove Iniziative SpA and the mutual waivers of allclaims filed by Telit Italy and Finmek SpA, Telit Italy recorded net income of€548,000 resulting from offsetting of all the outstanding balances between theparties as other income in the income statement for the year ended 31 December2005. 7. Pursuant to the restructuring of Telit Italy, which commenced on itsacquisition in 2002, Telit Italy dismissed 42 employees. Dismissal expenses inthe amount of €723,000 are included in "loss for the period from discontinuedoperations" in the income statement. 8. Other income - other income in 2005 includes income of €548,000 resultingfrom the final settlement of all litigation between Telit Italy and NuoveIniziative SpA and expenses resulting from the expected settlement with the VATAuthority of Israel as described in note 9. Other income for 2004 includes the write off of a loan made in the amountof €12.1 million. 9. For management purposes, the Group is currently organised into two operatingdivisions, Wireless Solutions and Branded Enhanced Value Added Reseller ("BEVAR"). These divisions are the basis on which the Group reports its segmentinformation. Segmental information for these businesses is presented below. Year ended Year ended 31 December 31 December 2 0 0 5 2 0 0 4 Audited Audited ____________ ____________REVENUESBEVAR 70,677 63,784 ____________ ____________WIRELESS SOLUTIONS 15,767 10,738 ____________ ____________CONSOLIDATED ____________ ____________Total revenue 86,444 74,522 ------------ ------------OPERATING PROFIT (LOSS)BEVAR 3,929 3,541WIRELESS SOLUTIONS (4,530) (6,000) ____________ ____________ (601) (2,459)Unallocated corporate expenses (865) (139)Operating loss (1,466) (2,598) ------------ ------------ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TCM.L