3rd Quarter Results
MTI Wireless Edge Limited
19 November 2007
MTI WIRELESS EDGE LTD
FINANCIAL RESULTS FOR THE NINE MONTHS ENDED
30 SEPTEMBER 2007
MTI Wireless Edge Ltd., (ticker: MWE) ('MTI' or 'the Company'), a market leader
in the manufacture of flat panel antennas for fixed wireless broadband, today
announces its unaudited results for the nine months ended 30 September 2007.
In addition, the Company issues its restated figures for six months ended 30
June 2007 to reflect the restated warrants position. As announced in the RNS
statement issued by the Company on 7 November 2007, the Company intends to
identify the influence of the warrants registration separately on its profit and
loss statement in its future financial reports, as the accounting treatment of
these warrants does not affect the underlying trading, earnings, prospects and
financial position of the Company.
Highlights
•Revenue increased by 21% year on year to US$14.3m (2006: US$11.8m)
•Profit before tax up 44% year on year to US$3.5m (2006: US$2.4m)
•Normalised profit before tax (without effect of warrants) up 19% year on
year to US$3.0m (2006: US$2.5m)
•Net profit improved by 42% year on year to US$3.3m (2006: US$2.3m)
•Normalised net profit (without effect of warrants) up 16% year on year to
US$2.8m (Q3 2006: US$2.4m)
•Gross profit margin of 43%
•Cash flow from operating activities of US$1.6m
Dov Feiner, Chief Executive Officer, commented:
'The Board is pleased to deliver another healthy set of figures for the 9 months
ended September 30 with the group producing a strong financial performance. We
have seen extremely good demand for our products from our military customers
whilst our other divisions have remained buoyant. In addition, the group's order
book continues to remain robust which leads us to view the foreseeable future
with optimism.
'Furthermore, the confidence shown in the potential of WiMax has delivered
significant benefits to the group as we continue to sell an increasing number of
WiMax compliant antennas. We have received every indication that this market
will grow at a considerable pace which will have a positive impact on the group
going forward.
'On 3 September, the Company was informed that Mokirei Aya Ltd., the controlling
shareholder of MTI Computers and principal shareholder of the Company, had
signed a share purchase agreement to sell all of its holdings in MTI Computers,
constituting approximately 38.87% of the outstanding shares of MTI Computers,
and for Inspire Investment Ltd., an Israeli public company, traded on the Tel
Aviv Stock Exchange, to buy, subject to the completion of due diligence, for a
consideration of US$16,326,547.'
Contacts:
MTI Wireless Edge +972 3 900 8900
Dov Feiner, CEO
Moni Borovitz, Financial Director
Blue Oar Securities Plc +44 20 7448 4400
Matthew Marchant
Shane Gallwey
Daniel Stewart & Company +44 20 7776 6550
Lindsay Mair
Threadneedle Communications +44 207 936 9605
Graham Herring
Josh Royston
About MTI Wireless Edge
MTI designs and manufactures flat panel antennas, largely supplied to
international OEMs of fixed broadband wireless access systems. With over 30
years of technical 'know-how', flexible high volume manufacturing capabilities
and low failure rates, MTI's antennas now comprise approximately 25% of the
global fixed broadband wireless antenna market. In addition, the Company has
successfully developed products for new commercial applications as wireless
systems become increasingly prevalent in new markets.
STATEMENTS OF OPERATIONS
For the nine months ended Year ended
September 30 December 31
2007 (*)2006 (*)2006
U.S. $ in thousands
Revenues 14,283 11,757 16,463
Cost of sales 8,108 6,559 9,159
Gross profit 6,175 5,198 7,304
Research and development expenses 1,076 875 1,121
Selling and marketing expenses 1,402 1,291 1,783
General and administrative expenses 948 798 1,088
Operating profit 2,749 2,234 3,312
Financial (income) expenses, net (757) (202) (644)
Profit before taxation 3,506 2,436 3,956
Tax on profit 200 106 161
Net profit 3,306 2,330 3,795
Earnings per share:
Basic 0.0615 0.0488 0.0770
Diluted 0.0607 0.0466 0.0741
Weighted average number of shares
outstanding:
Basic 53,779,998 47,734,124 49,262,202
Diluted 54,493,586 50,029,108 51,182,578
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
BALANCE SHEETS
30.9.2007 (*) 31.12.2006
30.9.2006
U.S. $ In thousands
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,597 2,266 2,167
Short-term investments 12,281 10,902 11,133
Trade receivables 5,706 4,455 5,154
Other receivables 178 213 206
Inventories 2,163 1,598 1,724
Total current assets 21,925 19,434 20,384
LONG TERM PREPAID EXPENSES 49 28 32
PROPERTY AND EQUIPMENT, NET 1,522 1,401 1,435
OTHER ASSETS, NET 503 462 475
23,999 21,325 22,326
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
30.9.2007 (*) (*)
30.9.2006 31.12.2006
U.S. $ In thousands
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans 43 85 87
Trade payables 2,281 2,712 2,470
Other accounts payables 1,009 1,013 1,047
Liabilities due to warrants 729 1,484 1,240
Total current liabilities 4,062 5,294 4,844
LONG-TERM LIABILITIES:
Liabilities to banks - 46 22
Accrued severance pay 300 221 231
300 267 253
SHAREHOLDERS' EQUITY
Share capital 115 115 115
Additional paid-in capital 14,945 14,945 14,945
Retained earnings 4,577 704 2,169
Total shareholders' equity 19,637 15,764 17,229
23,999 21,325 22,326
(*) Restated - see note 3.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the nine months ended September 30, 2007:
Share Additional Retained
capital paid-in earnings
capital Total
U.S. $ in thousands
Balance at January 1, 2007 115 14,945 2,169 17,229
Changes during the nine months
ended September 30, 2007:
Dividend distributed - - (898) (898)
Net profit - - 3,306 3,306
Balance at September 30, 2007 115 14,945 4,577 19,637
For the nine months ended September 30, 2006(*):
Share Additional Retained
capital paid-in earnings
capital Total
U.S. $ in thousands
Balance at January 1, 2006 2 7,561 374 7,937
Changes during the nine months
ended September 30, 2006:
Dividend distributed - - (2,000) (2,000)
Issuance of share capital*** ** 79 - 79
Share capital as a result of split 80 (80) - -
Additional capital raised in Aim 33 7,385 - 7,418
listing ****
Net profit - - 2,330 2,330
Balance at September 30, 2006 115 14,945 704 15,764
(*) Restated - see note 3.
** Less than 1 thousands dollar.
*** Exercise of options of employees to shares, grant of shares to directors
and investors.
**** Net of issuance expenses in the amount of $1,631 thousand.
The accompanying notes form an integral part of the financial statements.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended December 31, 2006(*):
Share Additional Retained
capital paid-in earnings
capital Total
U.S. $ in thousands
Balance at January 1, 2006 2 7,561 374 7,937
Changes in the year ended December
31, 2006:
Dividend distributed - - (2,000) (2,000)
Issuance of share capital** * 79 - 79
Share capital as a result of split 80 (80) - -
Additional capital raised in Aim 33 7,385 - 7,418
listing ***
Net profit - - 3,795 3,795
Balance at December 31, 2006 115 14,945 2,169 17,229
(*) Restated - see note 3.
* Less than 1 thousands dollar.
** Exercise of options of employees to shares, grant of shares to directors and
investors.
*** Net of issuance expenses in the amount of $1,631 thousand.
The accompanying notes form an integral part of the financial statements.
STATEMENTS OF CASH FLOWS
For the nine months Year ended
ended September 30 December
31
2007 (*)2006 (*)2006
U.S. $ in thousands
Cash Flows from Operating Activities:
Net profit 3,306 2,330 3,795
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation and amortization 229 207 281
Gain from short-term investments (290) (313) (340)
Deferred taxes (28) (14) (13)
Issuance of share capital - 79 79
Decrease in fair value of liabilities due to (512) 72 (172)
warrants
Changes in operating assets and liabilities:
(Increase) in inventories (439) (590) (716)
(Increase) in trade receivables (552) (1,050) (1,749)
Decrease in other accounts receivables for 10 52 43
short and long term
Increase (decrease) in trade payables (152) 1,051 789
Increase in other accounts payables (41) 414 446
Severance pay, net 69 47 57
Net cash provided by (used in) operating 1,600 2,285 2,500
activities
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
STATEMENTS OF CASH FLOWS
For the nine months Year ended
ended September 30 December
31
2007 (*)2006 (*)2006
U.S. $ in thousands
Cash Flows From Investing Activities:
Sale (purchase) of short-term investment (858) (10,589) (10,793)
Purchase of property and equipment (348) (175) (263)
Net cash (used in) provided by investing (1,206) (10,764) (11,056)
activities
Cash Flows From Financing Activities:
Dividend distributed (898) (2,000) (2,000)
Additional capital raised in Aim Listing, - 8,830 8,830
net
Repayment of long-term loans (66) (65) (87)
Net cash used in financing activities (964) 6,765 6,743
INCREASE (DECREASE) IN CASH AND (570) (1,714) (1,813)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS 2,167 3,980 3,980
AT BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT 1,597 2,266 2,167
END OF PERIOD
Appendix B - Non-cash activities:
For the nine months Year ended
ended September 30 December
31
2007 (*)2006 (*)2006
U.S. $ in thousands
Purchase of property and equipment against 33 47 66
trade payables
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - General:
MTI wireless Edge Ltd. (hereafter - the Company) is an Israeli corporation. It
was incorporated on December 30, 1998 as a wholly - owned subsidiary of M.T.I.
Computers & Software Services (1982) Ltd. (hereafter - the Parent Company) and
commenced operations on July 1, 2000 and since March 2006, the Company's shares
have been traded on the AIM Stock Exchange
The Company is engaged in the development, design, manufacture and marketing of
antennas.
Note 2 - Significant Accounting Policies:
The significant accounting policies applied in the annual financial statements
of the Company as of December 31, 2006 are applied consistently in these interim
consolidated financial statements.
The company prepares its financial statements in accordance with the
international reporting standards.
Note 3 - Restatement:
The company has restated the financial data for the periods ending 31.12.2006
and 30.9.2006 in order to retroactively reflect the change made in the
accounting treatment of warrants granted to certain investors.
The restatement relates to the 3,730,631 warrants (the 'Warrants') provided to
certain investors. These Warrants contain an option to be exercised on a
'cashless' basis (allowing the investors to get less shares but with no payment
for the exercise, resulting in a lower dilution to existing shareholders). These
Warrants should have been recorded at their fair value as a liability instead of
Company's equity on the IPO date, and thereafter in each financial reporting
statement be marked to market by adjusting the liability against financial
income or expenses as applicable.
A. Following are the effects of the restatement on the balance sheet items (in
US$ thousands):
As of 30.9.2006:
Prior to the Net change Following the
restatement restatement
Liabilities due to warrants - 1,484 1,484
Additional paid-in capital 16,357 (1,412) 14,945
Retained earnings 776 (72) 704
Note 3 - Restatement (Cont.):
As of 31.12.2006:
Prior to the Net change Following the
restatement restatement
Liabilities due to warrants - 1,240 1,240
Additional paid-in capital 16,357 (1,412) 14,945
Retained earnings 1,997 172 2,169
B. Following are the effects of the restatement on the statement of operations
items (in US$ thousands):
For the period ended 30.9.2006:
Prior to the Net change Following the
restatement restatement
Financial (income) expenses, net (274) 72 (202)
Net profit 2,402 (72) 2,330
For the period ended 31.12.2006:
Prior to the Net change Following the
restatement restatement
Financial (income) expenses, net (472) (172) (644)
Net profit 3,623 172 3,795
C. Following are the effects of the restatement on the earnings, per share:
For the period ended 30.9.2006:
Prior to the Net change Following the
restatement restatement
Basic 0.0503 (0.0015) 0.0488
Diluted 0.0480 (0.0014) 0.0466
For the period ended 31.12.2006:
Prior to the Net change Following the
restatement restatement
Basic 0.0736 0.0034 0.0770
Diluted 0.0708 0.0033 0.0741
Restated figures for six months ended 30 June 2007 to reflect the restated
warrants position
STATEMENTS OF OPERATIONS
For the six months ended Year ended
June 30 Dec 31
(*)2007 (*)2006 (*)2006
U.S. $ in thousands
Revenues 9,731 7,290 16,463
Cost of sales 5,587 4,061 9,159
Gross profit 4,144 3,229 7,304
Research and development expenses 700 506 1,121
Selling and marketing expenses 968 893 1,783
General and administrative expenses 600 480 1,088
Operating profit 1,876 1,350 3,312
Financial (income) expenses, net (591) (407) (644)
Profit before taxation 2,467 1,757 3,956
Tax on profit 249 58 161
Net profit 2,218 1,699 3,795
Earnings per share:
Basic 0.0412 0.0381 0.0770
Diluted 0.0406 0.0355 0.0741
Weighted average number of shares
outstanding:
Basic 53,779,998 44,644,010 49,262,202
Diluted 54,598,079 47,887,383 51,182,578
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
BALANCE SHEETS
(*) (*) (*)
30.6.2007 30.6.2006 31.12.2006
U.S. $ In thousands
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,241 1,495 2,167
Short-term investments 12,076 10,678 11,133
Trade receivables 5,680 4,168 5,154
Other receivables 169 181 206
Inventories 2,034 1,287 1,724
Total current assets 21,200 17,809 20,384
LONG TERM PREPAID EXPENSES 60 28 32
PROPERTY AND EQUIPMENT, NET 1,541 1,415 1,435
OTHER ASSETS, NET 507 458 475
23,308 19,710 22,326
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
(*) (*) (*)
30.6.2007 30.6.2006 31.12.2006
U.S. $ In thousands
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans 65 87 87
Trade payables 2,298 2,229 2,470
Other accounts payables 1,212 883 1,047
Liabilities due to warrants 907 1,105 1,240
Total current liabilities 4,482 4,304 4,844
LONG-TERM LIABILITIES:
Liabilities to banks - 65 22
Accrued severance pay 277 208 231
277 273 253
SHAREHOLDERS' EQUITY
Share capital 115 115 115
Additional paid-in capital 14,945 14,945 14,945
Retained earnings 3,489 73 2,169
Total shareholders' equity 18,549 15,133 17,229
23,308 19,710 22,326
(*) Restated - see note 3.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended June 30, 2007(*):
Share Additional Retained
capital paid-in earnings
capital Total
U.S. $ in thousands
Balance at January 1, 2007 115 14,945 2,169 17,229
Changes during the six months
ended June 30, 2007:
Dividend distributed - - (898) (898)
Net profit - - 2,218 2,218
Balance at June 30, 2007 115 14,945 3,489 18,549
(*) Restated - see note 3.
For the six months ended June 30, 2006(*):
Share Additional Retained
capital paid-in earnings
capital Total
U.S. $ in thousands
Balance at January 1, 2006 2 7,561 374 7,937
Changes during the six months
ended June 30, 2006:
Dividend distributed - - (2,000) (2,000)
Issuance of share capital*** ** 79 - 79
Share capital as a result of split 80 (80) - -
Additional capital raised in Aim 33 7,385 - 7,418
listing ****
Net profit - - 1,699 1,699
Balance at June 30, 2006 115 14,945 73 15,133
(*) Restated - see note 3.
** Less than 1 thousands dollar.
*** Exercise of options of employees to shares, grant of shares to directors and
investors.
**** Net of issuance expenses in the amount of $1,631 thousand.
The accompanying notes form an integral part of the financial statements.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended December 31, 2006(*):
Share Additional Retained
capital paid-in earnings
capital Total
U.S. $ in thousands
Balance at January 1, 2006 2 7,561 374 7,937
Changes in the year ended December
31, 2006:
Dividend distributed - - (2,000) (2,000)
Issuance of share capital** * 79 - 79
Share capital as a result of split 80 (80) - -
Additional capital raised in Aim 33 7,385 - 7,418
listing ***
Net profit - - 3,795 3,795
Balance at December 31, 2006 115 14,945 2,169 17,229
* Less than 1 thousands dollar.
** Exercise of options of employees to shares, grant of shares to directors and
investors.
*** Net of issuance expenses in the amount of $1,631 thousand.
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
STATEMENTS OF CASH FLOWS
For the six months Year ended
ended June 30 December
31
(*)2007 (*)2006 (*)2006
U.S. $ in thousands
Cash Flows from Operating Activities:
Net profit 2,218 1,699 3,795
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation and amortization 151 138 281
Gain from short-term investments (173) (149) (340)
Deferred taxes (32) (8) (13)
Issuance of share capital - 79 79
Decrease in fair value of liabilities due to (333) (307) (172)
warrants
Changes in operating assets and liabilities:
(Increase) in inventories (310) (279) (716)
(Increase) in trade receivables (526) (763) (1,749)
Decrease in other accounts receivables for 9 82 43
short and long term
Increase (decrease) in trade payables (130) 563 789
Increase in other accounts payables 165 284 446
Severance pay, net 46 34 57
Net cash provided by (used in) operating 1,085 1,373 2,500
activities
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
STATEMENTS OF CASH FLOWS
For the six months Year ended
ended June 30 December
31
(*)2007 (*)2006 (*)2006
U.S. $ in thousands
Cash Flows From Investing Activities:
Sale (purchase) of short-term investment (770) (10,529) (10,793)
Purchase of property and equipment (299) (115) (263)
Net cash (used in) provided by investing (1,069) (10,644) (11,056)
activities
Cash Flows From Financing Activities:
Dividend distributed (898) (2,000) (2,000)
Additional capital raised in Aim Listing, - 8,830 8,830
net
Repayment of long-term loans (44) (44) (87)
Net cash used in financing activities (942) 6,786 6,743
INCREASE (DECREASE) IN CASH AND (926) (2,485) (1,813)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS 2,167 3,980 3,980
AT BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT 1,241 1,495 2,167
END OF PERIOD
Appendix A - Non-cash activities:
For the six months Year ended
ended June 30 December
31
(*)2007 (*)2006 (*)2006
U.S. $ in thousands
Purchase of property and equipment against 24 52 66
trade payables
(*) Restated - see note 3.
The accompanying notes form an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - General:
MTI Wireless Edge Ltd. (hereafter - the Company) is an Israeli corporation. It
was incorporated on December 30, 1998 as a wholly - owned subsidiary of M.T.I.
Computers & Software Services (1982) Ltd. (hereafter - the Parent Company) and
commenced operations on July 1, 2000 and since March 2006, the Company's shares
have been traded on the AIM Stock Exchange
The Company is engaged in the development, design, manufacture and marketing of
antennas.
Note 2 - Significant Accounting Policies:
The significant accounting policies applied in the annual financial statements
of the Company as of December 31, 2006 are applied consistently in these interim
consolidated financial statements.
The company prepares its financial statements in accordance with the
international reporting standards.
Note 3 - Restatement:
The company has restated the financial data for the periods ending 30.6.2007,
30.12.2006 and 30.6.2006 in order to retroactively reflect the change made in
the accounting treatment of warrants granted to certain investors.
The restatement relates to the 3,730,631 warrants (the 'Warrants') provided to
certain investors. These Warrants contain an option to be exercised on a
'cashless' basis (allowing the investors to get less shares but with no payment
for the exercise, resulting in a lower dilution to existing shareholders). These
Warrants should have been recorded at their fair value as a liability instead of
Company's equity on the IPO date, and thereafter in each financial reporting
statement be marked to market by adjusting the liability against financial
income or expenses as applicable.
A. Following are the effects of the restatement on the balance sheet items (in
US$ thousands):
As of 30.6.2007:
Prior to the Net change Following the
restatement restatement
Liabilities due to warrants - 907 907
Additional paid-in capital 16,357 (1,412) 14,945
Retained earnings 2,984 505 3,489
Note 3 - Restatement (Cont.):
A. (cont.):
As of 30.6.2006:
Prior to the Net change Following the
restatement restatement
Liabilities due to warrants - 1,105 1,105
Additional paid-in capital 16,357 (1,412) 14,945
Retained earnings (234) 307 73
As of 31.12.2006:
Prior to the Net change Following the
restatement restatement
Liabilities due to warrants - 1,240 1,240
Additional paid-in capital 16,357 (1,412) 14,945
Retained earnings 1,997 172 2,169
B. Following are the effects of the restatement on the statement of operations
items (in US$ thousands):
For the period ended 30.6.2007:
Prior to the Net change Following the
restatement restatement
Financial (income) expenses, net (258) (333) (591)
Net profit 1,885 333 2,218
For the period ended 30.6.2006:
Prior to the Net change Following the
restatement restatement
Financial (income) expenses, net (100) (307) (407)
Net profit 1,392 307 1,699
Note 3 - Restatement (Cont.):
B. (cont.):
For the period ended 31.12.2006:
Prior to the Net change Following the
restatement restatement
Financial (income) expenses, net (472) (172) (644)
Net profit 3,623 172 3,795
C. Following are the effects of the restatement on the earnings, per share:
For the period ended 30.6.2007:
Prior to the Net change Following the
restatement restatement
Basic 0.0351 0.0061 0.0412
Diluted 0.0345 0.0061 0.0406
For the period ended 30.6.2006:
Prior to the Net change Following the
restatement restatement
Basic 0.0312 0.0069 0.0381
Diluted 0.0295 0.0060 0.0355
For the period ended 31.12.2006:
Prior to the Net change Following the
restatement restatement
Basic 0.0736 0.0034 0.0770
Diluted 0.0708 0.0033 0.0741
This information is provided by RNS
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