Final Results

MTI Wireless Edge Limited 19 February 2007 MTI WIRELESS EDGE LTD FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 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 audited full year results for the year ended 31 December 2006. 2006 Highlights •2006 revenue of $16.5m, increase of 41% over 2005; •Gross Profits of $7.3m, increase of 49% over 2005; •Profit before tax $3.8m, increase of 100% over 2005; •Net Profit of $3.6m, representing EPS of 7.36c, increase of 100% and 33%, respectively over 2005; •Net cash generated from continuing operations in 2006 reached $2.5m; Net cash at the year end of $13.2mequivalent to 12.5 pence per share; •Dividend of 1.67 c per share declared - total of $900k; •Successful admission to AIM in March 2006, raising £7m gross (US $12.2m) at 39p, including £1m of replacement capital; •Strong initial penetration into the radio frequency identification ('RFID') readers market Dov Feiner, Chief Executive of the Company: '2006 has been a landmark year for MTI. As well as our successful IPO and fund raising in March we have continued to grow the business in terms of revenue and profits for each of the last 16 quarters. 'Our order pipeline for the coming year is healthy for both military and commercial antennas and we view our prospects for 2007 with optimism.' Contacts: MTI Wireless Edge +972 3 900 8900 Dov Feiner, CEO Moni Borovitz, Financial Director Corporate Synergy Plc +44 20 7448 4400 Luke Ahern David Seal 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. Chairman's Statement I'm pleased to report for the first time as the chairman of MTI Wireless Edge Ltd. on its successful results for the financial year ended 31st December 2006, achieving 16 continuous quarters of revenue and profit growth. Since its foundation and subsequent acquisition by MTI Computers in 1994, the Company has undergone significant development and changes from a purely military antenna company to a largely commercial entity that is operating within one of the most exciting wireless markets - the fixed broadband wireless access ('FBWA'). Over the past few years, and particularly since 2003, the Company's focus on flat antenna technology has delivered continuous outstanding growth in both revenue and profits and has positioned the company as a highly reputable antenna manufacturer among leading vendors. During 2006 a new board of directors of the company was elected as part of the public offering and I would like to take this opportunity and thank all board members, previous ones and current for their support and efforts during the past years. The business enters 2007 in good health and with excellent opportunities for further growth. Winning a large military project early into the first quarter, together with penetration to RFID customers provides us with a wider product offering for 2007, although the FBWA will continue to be dominant and it is our belief that this market should again provide us with material revenue prospects in due course. The board has decided to distribute a dividend of 1.67 cents per share as we strongly believe it is in the interest of shareholders to receive a yearly yield on their investment, while the company is managing its growth not only in terms of profits but also in cash generation. The dividend will be payable on 15 March 2007 to shareholders on the register as at 2 March 2007. I would like to thank all the employees for their hard work, dedication and creativity that had enabled the improvement in the business. I further would like to acknowledge with thanks the employees' families for their continued support. Finally, on behalf of MTI Wireless Edge I would like to thank our shareholders for their confidence and continued support and we look forward to a long mutual beneficial association. Zvi Borovitz Non Executive Chairman Chief Executive's Review On behalf of management, I am delighted to report revenue growth of 40% for the fourth consecutive year. 2006 revenues of $16.5m were up 40%, and normalized PBT of $3.8m up 100% on 2005. The final quarter of 2006 was the sixteenth consecutive period of quarter on quarter growth. MTI's successful IPO in March 2006 provided not only a stronger balance sheet with the consequent increased financial flexibility, but also strengthened the Company's standing with its partners and customers. Finally, we have been delighted by the interest and support we have received from the Company's new shareholders ahead of and since the IPO. Crucial to MTI's success has been, and will continue to be, the hard work and dedication of its staff and their families' support. It is their commitment to maintaining and expanding the Company's leadership position that is propelling MTI forward at such a rate. I would like to thank them for their continuous contribution and their dedication to the company's success. The Company remains focused on the growth of the business and on further developing its position as a leader in the antenna markets for fixed wireless communication. Having captured a significant market share of 25% in the fixed broadband wireless access, we have learned that in order to achieve solid and stable leadership positioning it is imperative to manage the growth of the company in each of its fields of activities. Our strategy aims to deliver not only top-line growth, but comprehensive, cross-company, managed growth in terms of geography, technology, range of competences and customer base within our selected markets. We aim to strengthen the Company's leadership standing within its markets of operation, and maintain our position as a first choice partner for antennas. We were able to achieve these goals in 2006 by gaining some additional original equipment manufacturer ('OEM') customers as well as developing our distribution channels, which grew by approximately 70% over 2005. Our penetration into Europe, partly through our partnerships, continued to increase and our sales to this continent represented 22% of our revenues in 2006. In the past year leading companies such as Sprint, Clearwire, Alcatel, Siemens Motorola and Intel have chosen Wimax as their solution for future wireless services and solutions for 4G. Although this is only a starting point for adoption of mobile Wimax, which is only in trials and will continue to be so in 2007, MTI is developing the base station antennas for such application to assure MTI enjoys this growth when it occurs. Although RFID is only in its initial stages we believe in the potential of this market and have made some important steps to position the Company as a key antenna provider. We were able to penetrate Tier 1 customers, participate in the key trials and provide a full range of reader's antennas for portals, forklift and near field antennas. We foresee 2007 as a next step in key trials and plan to be involved to ensure that MTI is well positioned to enjoy success once this market enters the deployment stage. Our military segment grew 32% in 2006. With the new naval contract win announced several weeks ago we enter 2007 with a significant backlog for military orders and hope to maintain this momentum and grow this segment by penetrating new markets and by utilizing new technologies. Looking ahead, management is optimistic that the current positioning in fixed broadband wireless access and expansion into new markets such as RFID through this year, will deliver significant contribution to revenue and profit over the next 12 months. We anticipate that establishing an operational set-up outside of Israel will result in a solid foundation for continual growth for years to come. As always, our pipeline orders reflect several weeks, but the forecast for the year is built from long term relationships with our leading customers and is based on their view of the market. The current pipeline comprises both military applications and commercial ones and includes expansion of MTI's activities with both existing and new customers, as well as of several wider-scale, innovative opportunities. Dov Feiner Chief Executive Officer M.T.I Wireless Edge Ltd. Income statement for the year ended December 31, 2006 Year ended December 31, 2006 2005 $'000 $'000 --------- -------- Revenues 16,463 11,694 Cost of sales 9,159 6,780 --------- -------- Gross profit 7,304 4,914 Research and development expenses 1,121 855 Distribution costs 1,783 1,237 General and administrative expenses, net 1,088 779 --------- -------- Profit from operations 3,312 2,043 Finance cost 102 191 Finance income 574 355 --------- -------- Profit before tax 3,784 1,879 Tax on profit from ordinary activities 161 130 --------- -------- Profit for the year 3,623 1,749 ========= ======== Earnings per share Basic (dollars per share) 0.0736 * 0.0556 ========= ======== Diluted (dollars per share) 0.0708 * 0.0461 ========= ======== * Restated due to split of the Company's ordinary share in a ratio of 3,000 new shares for each 1 ordinary share, prior to the IPO in the AIM. M.T.I Wireless Edge Ltd. Balance sheets As at December 31, As at December 31, 2006 2006 2005 2005 $'000 $'000 $'000 $'000 ------ ----- ------ ------ ASSETS Non-current assets: Property, plant and equipment (PPE) 1,435 1,441 Intangible assets 406 406 Financial assets 32 26 Deferred tax assets 69 51 ------ ------ Total non-current assets 1,942 1,924 Current assets: Inventories 1,724 1,008 Trade and other receivables 5,360 3,663 Other financial assets 11,133 - Cash and cash equivalents 2,167 3,980 ------ ------ Total current assets 20,384 8,651 ------ ------ Total assets 22,326 10,575 ====== ====== M.T.I Wireless Edge Ltd. Liabilities and shareholders' equity As at December 31, As at December 31, 2006 2006 2005 2005 $'000 $'000 $'000 $'000 ----- ------ ----- ------ LIABILITIES Current Liabilities: Trade and other payables 3,517 2,268 Other financial liabilities 87 87 ----- ----- Total current liabilities 3,604 2,335 Non-current liabilities: Financial liabilities 22 109 Employee benefits 231 174 ----- ----- Total Non-current liabilities 253 283 ------ ------ Total liabilities 3,857 2,638 ------ ------ TOTAL NET ASSETTS 18,469 7,937 ====== ====== 22,326 10,575 ====== ====== Capital and reserves attributable to equity holders of the company Share capital 115 2 Additional paid-in capital 16,357 7,561 Retained earnings 1,997 374 ------ ------ 18,469 7,937 ------ ------ TOTAL EQUITY 18,649 7,937 ====== ====== M.T.I Wireless Edge Ltd. Cash flow statement for the year ended 31 December 2006 For the year ended For the year ended December 31, December 31, 2006 2006 2005 2005 $'000 $'000 $'000 $'000 ------ ------ ------ ------ Operating Activities: Net profit from ordinary activities 3,623 1,749 Adjustments for: Compensation expenses resulting from - 73 options granted to employees Depreciation and amortization 281 272 Gain from short-term investments (340) (58) Income tax expense 161 130 Issuance of share capital 79 - ------ ------ Operating profit before changes 3,804 2,166 in working capital and provisions Decrease (increase) in inventories (716) 309 Increase in trade receivables (1,749) (1,178) Decrease (increase) in other accounts 43 (21) receivables for short and long term Increase (decrease) in trade payables 789 (128) Increase (decrease) in other 283 (50) accounts payables Severance pay, net 57 12 ------ ------ Cash generated from operations 2,511 1,110 Income taxes paid 11 10 ------ ------ Cash flows from operating activities carried forward 2,500 1,100 ------ ------ M.T.I Wireless Edge Ltd. Cash flow statement for the year ended 31 December 2006 (Cont.) For the year ended For the year ended December 31, December 31, 2006 2006 2005 2005 $'000 $'000 $'000 $'000 ------ ------ ------ ------ Cash flows from operating activities 2,500 1,100 brought forward Investing Activities: Sale (purchase) of short-term investment (10,793) 2,095 Purchase of PPE (263) (112) ------- ------ (11,056) 1,983 Financing Activities: Dividend paid to shareholders equity (2,000) - Issue of ordinary shares 8,830 - Repayment of bank borrowing (87) (87) ------- ------ 6,743 (87) Increase (decrease) in cash ------ ------ and cash equivalents (1,813) 2,996 ====== ====== Notes to Editors 1 Accounting policies Basis of preparation The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) and with those parts of the Companies Act 1985 applicable to companies preparing their accounts under IFRS. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss. 2 Turnover by geography The Company's secondary reporting format for reporting segment information is geographic segments. External revenue by location of customers 2006 2005 $'000 $'000 -------- -------- Israel 7,996 5,666 North America 3,738 3,422 Europe 3,548 1,902 Asia 1,029 476 Other 152 228 ------ ------ 16,463 11,694 ====== ====== 3. Earnings per share 2006 2005 $'000 $'000 --------- --------- Earnings used in basic EPS 3,623 1,749 Earnings used in diluted EPS 3,623 1,749 Weighted average number of shares used in basic EPS 49,262,202 *31,470,000 Effects of: employee share options 1,920,376 6,462,000 1,920,376 6,462,000 Weighted average number of shares ---------- ----------- used in diluted EPS 51,182,578 *37,932,000 ========== =========== * Restated due to split of the Company's ordinary share in a ratio of 3,000 new shares for each 1 ordinary share, prior to the IPO in the AIM. 4. Dividend Following the balance sheet date, the Company declared a dividend of 1.67c per share which totals approximately 900,000 US$ to its shareholders. Shareholders that are listed on the Israeli register will be paid in US Dollars, whilst holders of depository interests will be paid in Pounds Sterling that will be converted from US Dollars at the prevailing rate on 12 March 2007. The dividend will be payable on 15 March 2007 to shareholders on the register as at 2 March 2007. 5. The Annual Report and Accounts The annual report and accounts for the year ending 31 December 2006 will be posted to shareholders on or before end of March, 2007 and copies will be available from the offices of Corporate Synergy Plc, 30 Old Broad Street, London EC2N 1HT. This information is provided by RNS The company news service from the London Stock Exchange

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