Half Yearly Report

RNS Number : 0818J

MTI Wireless Edge Limited

02 August 2012

 



2 August 2012

MTI Wireless Edge Ltd

("MTI" or the "Company")

Financial results for the half year ended 30 June 2012

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 six months ended 30 June 2012.

Highlights

·     Q2 revenue of US$3.3m was 3% up on the first quarter

·     Return to profitability with profit from operations of US$19k in Q2 (Q1 2012: loss of US$404k after US$300k litigation provision)

·     Revenue for six months of US$6.49m (H1 2011: US$7.44m)

·     Half year loss of US$385k (H1 2011: US$78k profit)

·     Cash, cash equivalents and marketable securities remained strong US$6.75m  

Dov Feiner, Chief Executive Officer, commented:

"I am pleased to report that the Group has achieved some recovery in activity during the three months to 30 June after the disappointing loss of the first quarter. In particular we have seen strong demand for our high quality antennas for fixed broadband wireless applications where revenue increased by 10 per cent in the second quarter compared with the previous three months, helping the Group to attain an overall 3 per cent revenue increase. 

"Commercial activities' revenue was slightly up, quarter on quarter, and the division achieved a profit of US$238k in the latest three months after a reported loss in the previous three which was a direct result of the provision on the IP litigation. Revenue from our Military business remained relatively subdued after the buoyant period of 2011 but there was an encouraging operating improvement with a reduced operating loss against the previous quarter.

"These figures highlight the fact that the cost saving measures we undertook during the second quarter are beginning to bear fruit with a two point rise in gross margins to 35 per cent in the latest quarter which produced a modest overall operating. 

"We expect that the second half of 2012 will see further benefits flowing through from those cost reductions and, with further sales progress, the Board is optimistic about the Group's prospects. However, in the current worldwide economic environment, it is right to temper optimism with a good degree of caution."

Contacts:

MTI Wireless Edge Dov Feiner, CEO Moni Borovitz, Financial Director	[phone]
Allenby Capital Nick Naylor Alex Price	[phone]
Newgate Threadneedle Graham Herring Terry Garrett	[phone]

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.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Six months ended June 30,				Year ended December 31,
	2012		2011		2011
	U.S. $ in thousands
	Unaudited				Audited
Revenues	6,490		7,436		14,701
Cost of sales	4,289		4,829		9,642
Gross profit	2,201		2,607		5,059
Research and development expenses	544		618		1,176
Selling and marketing expenses	938		1,023		1,925
General and administrative expenses	1,104		888		1,707
Profit (loss) from operations	(385)		78		251
Finance expense	105		123		456
Finance income	89		35		163
Loss before taxes on income	(401)		(10)		(42)
Taxes on income	56		(74)		(80)
Total comprehensive income (loss)	(457)		64		38
Attributable to:
Owners of the parent	(524)		73		3
Non-controlling interest	67		(9)		35
	(457)		64		38
Earnings (loss) per share
Basic and Diluted (U.S. $)	(0.0102)		0.0012		0.0001
Weighted average number    of shares outstanding
Basic and Diluted	51,571,990		51,571,990		51,571,990

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

For the Six months ended June 30, 2012:

	Attributed to owners of the parent
	Share capital		Additional paid-in capital		Employee equity benefits reserve		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
Balance at January 1, 2012 (Audited)	109		14,945		176		2,625		17,855		37		17,892
Changes during the Six month period     ended June 30, 2012 (Unaudited):
Comprehensive income (loss) for the period	-		-		-		(524)		(524)		67		(457)
Share based payment	-		-		22		-		22		-		22
Balance at June 30, 2012 (Unaudited)	109		14,945		198		2,101		17,353		104		17,457

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

For the Six months ended June 30, 2011:

	Attributed to owners of the parent
	Share capital		Additional paid-in capital		Employee equity benefits reserve		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
Balance at January 1, 2011 (Audited)	109		14,945		137		3,617		18,808		2		18,810
Changes during the Six month period       ended June 30, 2011 (Unaudited):
Total comprehensive income for the period	-		-		-		73		73		(9)		64
Share based payment	-		-		17		-		17		-		17
Balance at June 30, 2011 (Unaudited)	109		14,945		154		3,690		18,898		(7)		18,891

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

For the year ended December 31, 2011:

	Attributable to owners of the parent
	Share capital		Additional paid-in capital		Employee equity benefits reserve		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
	Audited
Balance at January 1, 2011	109		14,945		137		3,617		18,808		2		18,810
Changes during 2011:
Comprehensive income for the year	-		-		-		3		3		35		38
Dividend paid	-		-		-		(995)		(995)		-		(995)
Share based payment	-		-		39		-		39		-		39
Balance at December 31, 2011	109		14,945		176		2,625		17,855		37		17,892

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

	30.6.2012		30.6.2011		31.12.2011
	U.S. $ in thousands
	Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	752		419		625
Other financial assets	6,350		8,326		6,651
Trade receivables	4,898		5,189		5,274
Other receivables	847		381		508
Income taxes receivable	-		53		-
Inventories	3,169		2,856		2,996
	16,016		17,224		16,054
NON-CURRENT ASSETS:
Long term prepaid expenses	40		46		24
Property, plant and equipment	5,487		5,621		5,465
Investment property	1,328		1,362		1,345
Deferred income tax assets	268		195		248
Goodwill	406		406		406
	7,529		7,630		7,488
Total assets	23,545		24,854		23,542

 

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

	30.6.2012		30.6.2011			31.12.2011
	U.S. $ In thousands
	Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit	612		250		250
Trade payables	2,028		2,354		2,078
Other accounts payables	681		740		830
Tax liability	185		-		68
	3,506		3,344		3,226
NON- CURRENT LIABILITIES:
Loans from banks	1,938		2,187		2,063
Employee benefits, net	268		312		265
Provisions	376		120		96
	2,582		2,619		2,424
Total liabilities	6,088		5,963		5,650
EQUITY
Equity attributable to owners of the parent
Share capital	109		109		109
Additional paid-in capital	14,945		14,945		14,945
Employee equity benefits reserve	198		154		176
Retained earnings	2,101		3,690		2,625
	17,353		18,898		17,855
Non-controlling interest	104		(7)		37
Total equity	17,457		18,891		17,892
Total equity and liabilities	23,545		24,854		23,542

August 1, 2012
Date of approval of financial statements		Moshe Borovitz Finance Director	Dov Feiner Chief Executive Officer	Zvi Borovitz Non-executive Chairman

The accompanying notes form an integral part of the financial statements.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

			Six months ended June 30,						Year ended December 31,
		2012			2011			2011
		U.S. $ in thousands
		Unaudited						Audited
Cash Flows from Operating Activities:
Profit (loss) for the period		(457)			64		38
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		235			248		493
Loss (gain) from short-term  investments		(56)			139		294
Equity settled share-based payment expense		22			17		39
Finance expenses		57			58		117
Tax expense (Income)		56			(74)		(80)
Changes in operating assets and  liabilities:
Decrease (increase) in inventories		(173)			111		(29)
Decrease (increase) in trade receivables		376			(257)		(342)
increase in other accounts receivables including non-current		(355)			(182)		(287)
Decrease in trade and other accounts payables		(366)			(282)		(476)
Increase (decrease) in provisions		280			39		15
Increase (decrease) in employee benefits, net		3			40		(7)
Interest paid		(57)			(58)		(117)
Taxes received		43			71		200
Taxes paid		(2)			(21)		(76)
Net cash used in operating activities		(394)			(87)		(218)

 

The accompanying notes form an integral part of the financial statements.

 INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

			Six months ended June 30,					Year ended December 31,
			2012			2011		2011
			U.S. $ in thousands
				Unaudited				Audited
Cash Flows From Investing Activities:
Sale of short-term investment, net			357			183		1,703
Purchase of property and equipment			(73)			(460)		(524)
Net cash (used in) provided    by investing activities			284			(277)		1,179
Cash Flows From Financing Activities:
Receipt of short-term loan from banks			362			-		-
Dividend paid to the holders of the parent			-			-		(995)
Repayment of long-term loan from banks			(125)			(63)		(187)
Net cash (used in) provided    by financing activities			237			(63)		(1,182)
Increase (decrease) in cash and cash equivalents			127			(427)		(221)
Cash and cash equivalents  at the beginning of the period			625			846		846
Cash and cash equivalents  at the end of the period			752			419		625

Appendix A - Non-cash activities:

			Six months ended June 30,						Year ended December 31,
			2012			2010				2011
			U.S. $ in thousands
				Unaudited						Audited
Purchase of property and equipment   against trade payables			183			8				16

The accompanying notes form an integral part of the financial statements.

Note 1 - General:

A.    Corporate information:

M.T.I Wireless Edge Ltd. (hereafter - the Company) is an Israeli corporation. It was incorporated under the Companies Act in Israel on December 30, 1998 as a wholly- owned subsidiary of M.T.I Computers and 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 formal address of the company is 11 Hamelacha Street, Afek industrial Park, Rosh-Ha'Ayin, Israel.

The Company is engaged in the development, design, manufacture and marketing of antennas and accessories.

B.    Assets and Liabilities in foreign currencies

Henceforth are the details of the foreign currencies of the main currencies and the changes percentage in the reporting period:

	June 30,			December 31,
	2012		2011	2011
NIS (New Israeli Shekel)	0.255		0.293	0.262

	Six months ended June 30,			Year ended December 31,
	2012		2011	2011
	%		%	%
NIS (New Israeli Shekel)	(2.6)		3.9	(7.09)

Note 2 - Significant Accounting Policies:

The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in International Accounting Standard No. 34 ("Interim Financial Reporting").

The interim consolidated financial information set out above does not constitute full year end accounts within the meaning of Israeli Companies Law. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of the International Financial Reporting Standards (IFRS). Statutory financial information for the financial year ended December 31, 2011 was approved by the board on February 16, 2012. The report of the auditors on those financial statements was unqualified. The interim consolidated financial statements as of June 30, 2012 have not been audited.

The interim consolidated financial information should be read in conjunction with the annual financial statements as of 31 December, 2011 and for the year ended on that date and with the notes thereto,

The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2011 are applied consistently in these interim consolidated financial statements.

Note 3 - SEGMENTS:

The following table's present revenue and profit information regarding the Group's operating segments for the Six months ended June 30, 2012 and 2011, respectively and for the year ended December 31, 2011.

Six months ended June 30, 2012 (Unaudited)
		Commercial		Military		Total
		$'000
Revenue
External		5,621		869		6,490
Total		5,621		869		6,490
Segment profit (loss)		129		(512)		(385)
Unallocated corporate expenses
Finance expenses, net						17
loss before taxes on income						(402)
Other
Depreciation		215		20		235

Six months ended June 30, 2011 (Unaudited)
		Commercial		Military		Total
		$'000
Revenue
External		5,510		1,926		7,436
Total		5,510		1,926		7,436
Segment profit (loss)		(105)		183		78
Unallocated corporate expenses
Finance expenses, net						88
Loss before taxes on income						(10)
Other
Depreciation		208		40		248

Year ended December 31, 2011 (audited)
		Commercial		Military		Total
		$'000
Revenue
External		11,213		3,488		14,701
Total		11,213		3,488		14,701
Segment profit		128		123		251
Unallocated corporate expenses
Finance expenses, net						293
loss before taxes on income						(42)
Other
Depreciation		419		74		493

 (*) The Group cannot distinguish between Commercial and Military assets and liabilities, due to the fact that some of the assets and liabilities are used by both segments.

Note 4 -TRANSACTIONS WITH RELATED PARTIES:

The Parent Company and other related parties provide certain services to the Group as follows:

		Six months ended      June 30,				Year ended December 31,
		2012		2011			2011
		U.S. $ in thousands
		Unaudited					Audited
Purchased Goods		121		74			165
Management Fee		142		133			259
Services Fee		80		80			160
Lease income		(104)		(103)			(120)
Total		239		184			464

Compensation of key management personnel of the Group:

		Six months ended      June 30,				Year ended December 31,
		2012		2011			2011
		U.S. $ in thousands
		Unaudited					Audited
Short-term employee benefits *)		310		312			596

*) Including Management fees for the CEO, Directors Executive Management and other related parties

Note 4 -TRANSACTIONS WITH RELATED PARTIES (CONT.):

All Transactions are made at market value.

As of June 30, 2012 the parent company and related parties owe to the Group US $65,000 while in December 31, 2012 and in June 30, 2011 the Group owed to the parent group and related party US $5,000 and US $45,000 respectively. 

Note 5 - SIGNIFICANT EVENTS:

A.  During the current and the previous quarter the Company used US$ 0.5 million out of US$ 4 million credit line from banking corporation.

B.   Contingent liability:

Due to a hearing sessions held during May 2012 by the District Court in Mars lawsuit (as specified in note 24 to the Annual Report for December 31, 2011), the Company updated the provision recorded to the amount of US $310,000 as at June 30, 2012.

C.   On June 21, the board announced the passing of Mr. Stewart Millman who served as independent external director of the company since 2006.

 

END

 

 

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