3rd Quarter Results
Orad Hi-Tec Systems
24 November 2005
Orad Hi-Tec Systems Ltd. ('Orad' or the 'Company')
Results for the nine month period and the quarter ended 30 September 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 announces its results for the third quarter and nine month period
of 2005.
Highlights
• Revenues of $3.4 million in Q3 2005
• Stable gross margin - 61% in Q3 2005
• Positive cash flow of $1 million in Q3 2005
• Backlog increased to $10 million
• Strengthening presence in sport systems, mainly in Europe.
For further information:
Orad (www.orad.tv)
Avi Sharir- CEO 00 972 976 768 62
Shore Capital (London)
Graham Shore 00 44 20 7408 4090
Haubrok IR GmbH (Frankfurt)
Michael Kempkes 00 49 211 301 260
Orad Hi-Tec Systems Ltd ('Orad' or the 'Company')
Results for the nine month period and the quarter ended 30 September 2005
Chief Executive's Statement
Revenues for the third quarter of 2005 were $3.4 million, compared to $3.8
million in the second quarter of 2005 and $4.1 million in the third quarter of
2004. Gross margin in the third quarter of 2005 was 61%, compared to 52% in the
second quarter of 2005 and 64% in the third quarter of 2004. Net loss was $0.8
million, compared to the loss of $1million in the third quarter of 2004.
Avi Sharir, Orad's President and Chief Executive Officer, commented: During the
last quarter we participated in the IBC trade show where we introduced some new
products: a new graphic computer for broadcast systems, the HDVG, a new system
for sport, and the Trackvision, which has already been purchased by CANAL+ in a
substantial sale. We expect our product lines in High Definition and sport
systems to generate new revenue stream in the next quarters.
Revenues for the nine months of 2005 were $10.7 million, compared to $11.2
million for the first nine months of 2004. Operational expenses in the nine
months of 2005 decreased to $8.9 million, compared to $10.1 million in 2004. The
net loss was $3.1 million in the nine months of 2005, compared to $3.5 million
in 2005.
Operational Highlights for the third quarter of 2005:
• Positive cash flow of $1 million
• Increased revenue from broadcast systems
• Backlog increased to $10 million
• Strengthening the presence in sport systems, mainly in Europe.
Financial & Operational Highlights for the third quarter 2005 compared to second
quarter of 2005:
Revenues
Revenues for the third quarter of 2005 were $3.4 million, compared to $3.8
million in the second quarter of 2005, a decrease of 11%. However, sales of
broadcast systems increased by 15% from $2.9 million in Q2 2005 to $3.4 million
in Q3 2005.
Gross Margin
Gross margin in the third quarter of 2005 was 61%, compared to 52% in the second
quarter of 2005. The increase in gross margin is the result of improved sales
volumes of broadcast systems.
Research & Development
R&D expenses in the third quarter of 2005 were $0.5 million compared to $0.6
million in the second quarter of 2005. The decrease of $0.1 million resulted
from one-time expenses recorded last quarter and reduced expenses as a result of
the participation in the Le-Match program.
Selling & Marketing
S&M expenses in the third quarter of 2005 decreased to $1.6 million, compared to
$1.9 million in the previous quarter, mainly as a result of a decrease in sales
related expenses.
General & Administrative
G&A expenses were $0.7 million in the third quarter of 2005, compared to $0.6
million in the second quarter of 2005, mainly as a result of an additional
provision for doubtful debts and the costs associated with the replacement of
the previous CFO.
Financial income (expenses)
Financial income arises primarily from exchange rate differences related to
non-US dollar balances and interest income earned on short-term deposits offset
by bank charges. Financial expenses for the third quarter of 2005 were $0.02
million, compared to financial expenses of $0.11 million in the second quarter
of 2005. This reflected exchange rate differences, resulting mainly from
devaluation of the Euro against the Dollar.
Net Loss
Net loss for the third quarter of 2005 amounted to $0.8 million, compared to
$1.3 million in the second quarter of 2005.
Net loss per share
Net loss per share for the third quarter of 2005 was 7 cents, compared to a net
loss per share of 12 cents for the second quarter of 2005.
Financial & Operational Highlights for the nine months and the quarter ended
September 30, 2005 compared to the same period in 2004:
Revenues
The revenues for the first nine months of 2005 were $10.7 million, compared to
$11.2 million for the first nine months of 2004, a decrease of 5%. The revenues
for the third quarter of 2005 were $3.4 million, compared to $4.1 million for
the third quarter of 2004, a decrease of 17%.
Gross Margin
Gross margin for the first nine months of 2005 was 56% and 61% for the third
quarter of 2005, compared to 61% in the first nine months of 2004 and 64% in the
third quarter of 2004. The change in gross margin changes in 2005 arose mainly
as a result of the lower margin of the Hong Kong Jockey Club project.
Research & Development
Research and development (R&D) expenses were $1.8 million in the first nine
months of 2005, compared to $2.2 million in the first nine months of 2004. The
decrease is mainly the result of measures taken by the Company to increase
efficiency and consolidate the R&D efforts of subsidiaries with complementary
technologies, as well as cost reductions from other organizational changes and
reduced costs as a result of participating in the Le-Match European program. R&D
expenses in the third quarter of 2005 were $0.5 million compared to $0.8 million
in the third quarter of 2004.
Selling & Marketing
Selling and Marketing (S&M) expenses were $5.2 million in the first nine months
of 2005, compared to $6.2 million in the first nine months of 2004, a decrease
of $1 million resulting from non-recurring expenses in 2004 connected to
organizational changes. S&M expenses in the third quarter of 2005 were $1.6
million, compared to $2.2 million in the third quarter of 2004.
General & Administrative
General & Administrative (G&A) expenses were $1.9 million in the first nine
months of 2005, compared to $1.7 million in the first nine months of 2004. G&A
expenses in the third quarter of 2005 were $0.7 million, compared to $0.6
million in the third quarter of 2004. In both cases the increase arises mainly
from an increase in the allowance for bad debts.
Financial income (expenses)
Financial income (expenses) consists primarily of exchange rate differences
related to non-US dollar balances and interest income earned on short-term
deposits offset by bank charges. Financial expenses for the first nine months of
2005 were $0.3 million, compared to financial expenses of $0.1 million in the
first nine months of 2003. Financial income for the third quarter of 2004 was
$0.05 million, compared to financial expenses of $0.04 million in the third
quarter of 2004. The financial expenses in 2005 derived mainly from exchange
rate differences resulting from changes in the Euro compared to the Dollar.
Other Expenses
Other expenses in the first nine months of 2004 amounted to $0.1 million, mainly
because of costs related to the share transfer agreement of Orad's subsidiary in
Hong Kong under which Orad became sole owner of the company. In 2005 the Company
did not record any other expenses.
Net Loss
Net loss for the first nine months of 2005 was $3.1 million, compared to $3.5
million for the first nine months of 2004.
Net loss for the third quarter of 2005 was $0.8 million, compared to $1 million
for the third quarter of 2004. The decrease in losses is the result of the cost
reduction measures taken by the Company.
Net loss per share
Net loss per share for the third quarter of 2005 was 7 cents, compared to a net
loss per share of 10 cents for the third quarter of 2004.. Net loss per share
for the first nine months of 2005 was 29 cents, compared to a net loss per share
of 33 cents for the first nine months of 2004.
Cash Position
As of September 30, 2005, cash and short-term bank deposits amounted $5 million,
compared to $4 million at the end of the second quarter of 2005.
Contact:
Orad Hi-Tec Systems Ltd.
Ehud Ben-yair
Chief Financial Officer
PO Box 2177
Kfar Saba 44425, Israel
Tel: +972-9-767-6862 ext. 578
Fax: +972-9-767-6861
E-Mail: : ehudb@orad.tv
www.orad.tv
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, September 30,
2004 2005
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,752 $ 4,464
Restricted cash 750 500
Trade receivables, net 4,106 2,596
Other accounts receivables and prepaid expenses 910 925
Inventories 3,646 3,146
Contracts in progress, net of advances 1,111 838
Total current assets 15,275 12,469
SEVERANCE PAY FUND 773 794
PROPERTY AND EQUIPMENT, NET 2,195 2,006
Total assets $ 18,243 $ 15,269
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 1,761 $ 1,569
Deferred revenues 741 1,028
Other accounts payable and accrued expenses 3,280 3,295
Total current liabilities 5,782 5,892
ACCRUED SEVERANCE PAY 1,103 1,135
SHAREHOLDERS' EQUITY:
Share Capital 28 28
Additional paid-in capital 75,241 75,272
Accumulated other comprehensive loss (547) (547)
Accumulated deficit (63,364) (66,511)
Total shareholders' equity 11,358 8,242
Total liabilities and shareholders' equity $ 18,243 $ 15,269
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Year ended Nine months ended Three months ended
December 31, September 30, September 30,
2004 2004 2005 2004 2005
Unaudited
Revenues:
Product sales $ 15,728 $ 11,157 $ 9,770 $ 4,065 $ 3,407
Long term - - 916 - -
contracts
Total revenues 15,728 11,157 10,686 4,065 3,407
Cost of products
sales 6,188 4,373 3,805 1,462 1,330
Cost of long
term contracts - - 847 - -
Total cost of
revenues 6,188 4,373 4,652 1,462 1,330
Gross profit 9,540 6,784 6,034 2,603 2,077
Operating
expenses:
Research and
development, net 2,844 2,177 1,789 764 541
Sales and
marketing 8,224 6,179 5,168 2,179 1,612
General and
administrative 2,388 1,739 1,921 626 711
Total operating
expenses 13,456 10,095 8,878 3,569 2,864
Operating loss 3,916 3,311 2,844 966 787
Financial income
(expenses), net 189 (43) (303) 50 (19)
Other income
(expenses), net (148) (139) - (124) 2
Net loss $ 3,875 $ 3,493 $ 3,147 $ 1,040 $ 804
Basic and diluted $ 0.36 $ 0.33 $ 0.29 $ 0.10 $ 0.07
net loss per
share
Weighted average
number of shares
used in computing
basic and diluted
net loss per share
(in thousands) 10,698 10,679 10,779 10,679 10,779
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Number of Share Additional Accumulated Accumulated Total
outstanding capital paid-in other deficit
Ordinary capital comprehensive
shares loss
Balance as of
January 1, 2004 10,650,726 $ 28 $ 75,107 $ (547) $ (59,489) $ 15,099
Comprehensive loss:
Net loss - - - - (3,875) (3,875)
Total comprehensive
loss (3,875)
Compensation expenses
in respect of share
options whose terms
have been modified - - 38 - - 38
Issuance of shares
upon exercise of
employees'
share options 100,000 *) - 96 - - 96
Balance as of
December 31,
2004 10,750,726 28 75,241 (547) (63,364) 11,358
Issuance of
earn-out
shares 28,645 *) - 31 - - 31
Comprehensive loss:
Net loss for
the period - - - - (3,147) (3,147)
Total comprehensive
loss - - - - - (3,147)
Balance as of
September 30,
2005 (unaudited) 10,779,371 28 75,272 (547) (66,511) 8,242
Balance as of
January 1, 2004 10,650,726 $ 28 $ 75,107 $ (547) $ (59,489) $ 15,099
Comprehensive loss:
Net loss for the
period - - - (3,493) (3,493)
Total comprehensive
loss - - - - (3,493)
Compensation expenses
in respect of share
options whose terms
have been modified - 38 - - 38
Balance as of
September 30,
2004 (unaudited) 10,650,726 $ 28 $ 75,145 $ (547) $ (62,982) $ 11,644
*) Represent an amount lower than $1.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended Nine months ended
December 31, September 30,
2004 2004 2005
Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,875) $ (3,493) $ (3,147)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 1,091 911 490
Compensation expenses in respect of share options whose 38 38 -
terms have been modified
Decrease (increase) in trade receivables, other accounts 938 963 1,598
receivables and prepaid expenses
Decrease (increase) in inventories 234 (79) 275
Decrease (increase) in contracts in progress, net of 229 337 273
advances
Decrease in trade payables, other accounts payable and (592) (735) (166)
accrued expenses and accrued severance pay, net
Increase (decrease) in deferred revenues 217 (151) 287
Other 28 17 27
Net cash used in operating activities (1,692) (2,192) (363)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (298) (269) (201)
Proceeds from sale of property and equipment 88 66 26
Decrease (increase) in restricted cash (227) 23 250
Net cash used in investing activities (437) (180) 75
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term loan (16) (16) -
Issuance of shares upon exercise of employees' share options 96 - -
Net cash used in financing activities 80 (16) -
Decrease in cash and cash equivalents (2,049) (2,388) (288)
Balance of cash and cash equivalents at beginning of period 6,801 6,801 4,752
Balance of cash and cash equivalents at end of period $ 4,752 $ 4,413 $ 4,464
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 1,306,238 184,932
Moshe Nissim - 56,428
Ehud Ben-Yair - 25,000
Orna Nehustan - 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 September 30, 2005, the Company employs 113 employees.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 18 minutes ago Mattioli Woods
- 52 minutes ago Morgan Advanced Materials
- 1 hour ago Capita
- 1 hour ago Judges Scientific
- 1 hour ago Me Group International