1st Quarter Results

Orad Hi-Tec Systems 25 May 2005 Orad Hi-Tec Systems Limited. ('Orad' or the 'Company') Results for the quarter ended 31 March 2005 Orad Hi-Tec Systems Ltd. (Frankfurt - Prime Standard; London - AIM. Symbol: OHT), a leading developer, marketer and distributor of state-of-the-art, 3D graphical solutions for the broadcasting, advertising and visual simulation markets, today announced its results for the quarter ended 31 March, 2005. • Revenues of $3.5 million compared to $3.3 million in Q1/04 • Gross margin of 57% • Net loss $1.1 million compared to $1.5 million in Q1/04 'The first quarter is traditionally weak and in addition some of the deals planned to be recognised in Q1/05 were shifted to Q2/05. Hong Kong Jockey Club's race mode final testing was conducted during Q1/05 and we expect to see the out-come of these tests during Q2/05.' commented Avi Sharir, Orad's President and Chief Executive Officer, and added: 'During April 05 we participated in the NAB show and presented our new product line of High Definition. We had a good show and expect to see results during the second 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) 00 49 211 301 260 Michael Kempkes Orad Hi-Tec Systems Ltd ('Orad' or the 'Company') Results for the quarter ended 31 March 2005 Chief Executive's Statement Revenues for the first quarter of 2005 were $3.5 million, compared to $3.3 million in the first quarter of 2004 and $4.6 million in the fourth quarter of 2004. Gross margin in the first quarter of 2005 was 57% and net loss amounted to $1.1 million. 'The first quarter is traditionally weak and in addition some of the deals planned to be recognised in Q1/05 were shifted to Q2/05. Hong Kong Jockey Club's race mode final testing was conducted during Q1/05 and we expect to see the out-come of these tests during Q2/05.' commented Avi Sharir, Orad's President and Chief Executive Officer, and added: 'During April 05 we participated in the NAB show and presented our new product line of High Definition. We had a good show and expect to see results during the second half of the year.' Financial & Operational Highlights for the quarter ended March 31, 2005 compared to the same period in 2004: Revenues The revenues for the first quarter of 2005 were $3.5 million, compared to $3.3 million for the first quarter of 2004. Gross Margin Gross margin for the first quarter of 2005 was 57%, compared to 58% in the first quarter of 2004, mainly as a result of different sales mix. Research & Development Research and development ('R&D') expenses were $0.6 million in the first quarter of 2005, compared to $0.8 million in the first quarter of 2004. The decrease is due to organizational changes. Selling & Marketing Selling and Marketing ('S&M') expenses were $1.7 million in the first quarter of 2005, compared to $2.1 million in the first quarter of 2004, a decrease of $0.4 million as a result of organizational changes. General & Administrative General & Administrative ('G&A') expenses were $0.6 million in the first quarter of 2005, the same level as in the first quarter of 2004. Financial income (expenses) Financial income (expenses) consists primarily of exchange rate differences related to non-US dollar balances and interest income earned on cash and cash equivalents offset by bank charges. Financial expenses for the first quarter of 2005 were $0.2 million, compared to financial expenses of $0.03 million in the first quarter of 2004. The financial expenses in the first quarter of 2005 derived mainly from exchange rate differences resulting from strengthening of the Dollar compared to the Euro during the quarter. Net Loss Net loss for the first quarter of 2005 was $1.1 million, compared to $1.5 million for the first quarter of 2004. The decrease in losses is due to reduced operational expenses. Net loss per share Net loss per share for the first quarter of 2005 was $0.10, compared to a net loss per share of $0.14 for the first quarter of 2004. Cash Position As of March 31, 2005, cash and cash equivalents and restricted cash amounted to $4.9 million, compared to $5.5 million at the end of 2004. Financial & Operational Highlights for the first quarter of 2005 compared to the fourth quarter of 2004: Revenues Revenues for the first quarter of 2005 amounted to $3.5 million, compared to $4.6 million in the fourth quarter of 2004. Gross Margin Gross margin in the first quarter of 2005 is 57% compared to 60% in the fourth quarter of 2004. Gross margin decreased in the current quarter mainly due to low volume of revenues. Research & Development R&D expenses in the first quarter of 2005 were $0.6 million, compared to $0.7 million in the fourth quarter of 2004. Selling & Marketing S&M expenses in the first quarter of 2005 were $1.7 million compared to $2.1 million in the fourth quarter of 2004, a decrease of $0.4 million mainly due to reduce in sales related expenses. General & Administrative G&A expenses were $0.6 million in the first quarter of 2005, the same as in the fourth quarter of 2004. Financial income (expenses) Financial income consists primarily of exchange rate differences related to non-US dollar balances and interest income earned on cash and cash equivalents offset by bank charges. Financial expenses for the first quarter of 2005 were $0.2 million, compared to financial income of $0.2 million in the fourth quarter of 2004. The change is explained mainly by exchange rate differences resulting from devaluation of the Euro versus the Dollar (in Q1/05 the Euro weakened by 5.2% against the Dollar, compared to Q4/04 in which the Euro strengthened by 9.6% compared to the Dollar). Net Loss Net loss for the first quarter of 2005 amounted to $1.1 million, compared to $0.4 million in the fourth quarter of 2004. Net loss per share Net loss per share for the first quarter of 2005 was $0.10, compared to a net loss per share of $0.04 for the fourth quarter of 2004. Contact: Orad Hi-Tec Systems Ltd. Sarit Sagiv Chief Financial Officer PO Box 2177 Kfar Saba 44425, Israel Tel: +972-9-767-6862 ext. 578 Fax: +972-9-767-6861 E-Mail: sarit@orad.tv www.orad.tv ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands 31 December, 31 March, 2004 2005 Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4,752 $ 4,491 Restricted cash 750 500 Trade receivables, net 4,106 3,512 Other accounts receivables and prepaid expenses 910 830 Inventories 3,646 3,372 Contracts in progress, net of advances 1,111 1,168 Total current assets 15,275 13,873 SEVERANCE PAY FUND 773 790 PROPERTY AND EQUIPMENT, NET 2,195 2,158 Total assets $ 18,243 $ 16,821 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 1,761 $ 1,535 Deferred revenues 741 584 Other accounts payable and accrued expenses 3,280 3,296 Total current liabilities 5,782 5,415 ACCRUED SEVERANCE PAY 1,103 1,126 SHAREHOLDERS' EQUITY: Share Capital 28 28 Additional paid-in capital 75,241 75,241 Accumulated other comprehensive loss (547) (547) Accumulated deficit (63,364) (64,442) Total shareholders' equity 11,358 10,280 Total liabilities and shareholders' equity $ 18,243 $ 16,821 ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except share and per share data Year ended Three months ended 31 December, 31 March, 2004 2004 2005 Unaudited Revenues $ 15,728 $ 3,343 $ 3,468 Cost of revenues 6,188 1,401 1,495 Gross profit 9,540 1,942 1,973 Operating expenses: Research and development, net 2,844 789 604 Sales and marketing 8,224 2,063 1,651 General and administrative 2,388 579 621 Total operating expenses 13,456 3,431 2,876 Operating loss 3,916 1,489 903 Financial income (expenses), net 189 (32) (170) Other expenses, net 148 5 5 Net loss $ 3,875 $ 1,526 $ 1,078 Basic and diluted net loss per share $ 0.36 $ 0.14 $ 0.10 Weighted average number of shares used in computing basic and diluted 10,698 10,679 10,779 net loss per share (in thousands) ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY U.S. dollars in thousands, except share data Number of Share Additional Accumulated Accumulated Total outstanding capital paid-in capital other deficit ordinary comprehensive shares income (loss) Balance as of 10,650,726 $ 28 $ 75,107 $ (547) $ (59,489) $ 15,099 January 1, 2004 Comprehensive loss: Net loss - - - (3,875) (3,875) Total (3,875) comprehensive loss Compensation - 38 - - 38 expenses in respect of share options whose terms have been modified Issuance of 100,000 *) - 96 - - 96 shares upon exercise of employees' share options Balance as of 10,750,126 28 75,241 (547) (63,364) 11,358 December 31, 2004 Comprehensive loss: Net loss for - - - - (1,078) (1,078) the period Total (1,078) comprehensive loss Balance as of 10,750,126 28 75,241 (547) (64,442) 10,280 March 31, 2005 (unaudited) Balance as of 10,650,126 28 75,107 (547) (59,489) 15,099 January 1, 2004 Comprehensive loss: Net loss for (1,526) (1,526) the period Total - - - (1,526) comprehensive loss Balance as of 10,650,126 $ 28 $ 75,107 $ (547) $ (61,015) $ 13,573 March 31, 2004 (unaudited) *) Represent an amount lower than $ 1. ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Year ended 31 December, Three months ended 31 March, 2004 2004 2005 Unaudited CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (3,875) $ (1,526) $ (1,078) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 1,091 332 167 Compensation expenses in respect of share options whose terms have 38 - - been modified Decrease in trade receivables, other accounts receivable and 938 117 674 prepaid expenses Decrease in inventories 234 217 274 Decrease (increase) in contracts in progress, net of advances 229 3 (57) Decrease in trade payables, other accounts payable and accrued (592) (603) (204) expenses and accrued severance pay, net Increase (decrease) in deferred revenues 217 77 (157) Other 28 5 5 Net cash used in operating activities (1,692) (1,378) (376) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (298) (34) (145) Proceeds from sale of property and equipment 88 5 10 Decrease (increase) in restricted cash (227) 23 250 Net cash provided by (used in) investing activities (437) (6) 115 CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term bank loan (16) (10) - Issuance of shares upon exercise of employees' share options 96 - - Net cash provided by (used in) financing activities 80 (10) - Decrease in cash and cash equivalents (2,049) (1,394) (261) 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 $ 5,407 $ 4,491 ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES 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 1,303,738 184,932 Moshe Nissim - 56,428 Sarit Sagiv - 15,000 Orna Nehushtan - 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 31 March, 2005, the Company employed 105 employees. c. Further copies of the results are available at the Company's website, www.orad.tv This information is provided by RNS The company news service from the London Stock Exchange

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