Interim Results
Orad Hi-Tec Systems
30 August 2005
Orad Hi-Tec Systems Ltd. ('Orad' or the 'Company')
Results for the six month period and the quarter ended June 30 2005
Tel Aviv, 30 August, 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
second quarter and first half year of 2005.
• Revenues of $7.3 million in H1 2005
• Improved broadcast market in Europe and the acceptance by the Hong-Kong
Jockey Club of the horse tracking system
• Strong revenue pipeline of more than $8 million for H2 2005 which
includes:
two multi channel virtual sets from Portugal SIC TV
fourth system contract with RAI Italy
virtual advertisement and sport enhancement business has won the
largest European contract of over $3 million with the Dutch football
league, and the extension of the advertisement deal with TV Globo
Brazil
Avi Sharir, Orad's President and Chief Executive Officer, commented: 'The first
six months were slower than we expected, mainly as a result of delays in
decision taking by customers and delays in product deliveries. In the last two
months we have received those new orders. This is reflected in the increased
backlog. We are optimistic that the results for the second half of the year
will show an improvement compared to the results of the first 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)
Michael Kempkes 00 49 211 301 260
Orad Hi-Tec Systems Ltd ('Orad' or the 'Company')
Results for the six month period and the quarter ended June 30 2005
Chief Executive's Statement
Revenues for the second quarter of 2005 were $3.8 million, including $900,000
from the HKJC project, compared to $3.5 million in the first quarter of 2005 and
$3.7 million in the second quarter of 2004. The Company has a strong pipeline of
committed revenue for the remainder of the year, which exceeds $8 million. This
includes revenues from the Hong Kong Jockey Club project, the remaining parts of
which are expected to be recognised in the second half of 2005. Gross margin in
the second quarter of 2005 was 52% (excluding the HKJC 66%) and the net loss was
$1.265 million.
Avi Sharir, Orad's President and Chief Executive Officer, commented: 'The first
six months were slower than we expected mainly as a result of delays in decision
taking by customers and delays in product deliveries. In the last two months we
have received those new orders. This is reflected in the increased backlog. We
are optimistic that the results for the second half of the year will show an
improvement compared to the results of the first half of the year.'
Revenues in H1 2005 were $7.3 million, compared to $7.1 million in H1 2004.
Operational expenses in H1 2005 were $6 million, compared to $6.5 million in H1
2004, as a result of a cost reduction programme. The net loss was $2.34 million
in H1 2005, compared to $2.45 million in H1 2004.
Financial & Operational Highlights for the second quarter 2005 compared to first
quarter 2005:
Revenues
Revenues for the second quarter of 2005 were $3.8 million, compared to $3.46
million in the first quarter of 2005, an increase of 10%.
Gross Margin
Gross margin in the second quarter of 2005 was 52%, compared to 57% in the first
quarter of 2005. The decrease in gross margin is the result of the low margin
of the HKJC contract. The gross margin without the HKJC was 66%.
Research & Development
R&D expenses in the second quarter of 2005 were $640,000, compared to $600,000
in the first quarter of 2005.
Selling & Marketing
S&M expenses in the second quarter of 2005 increased to $1.9 million, compared
to $1.65 million in the previous quarter, mainly as a result of trade show
expenses .
General & Administrative
G&A expenses were $600,000 in the second quarter of 2005, the same as the first
quarter of 2005.
Financial income (expenses)
Financial 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 second quarter of 2005 were
$110,000, compared to $170,000 in the first quarter of 2005. The reduction
arose from exchange rate differences resulting from devaluation of the Euro
against the Dollar and less assets exposed to the Euro.
Net Loss
Net loss for the second quarter of 2005 amounted to $1.265 million, compared to
$1.188 million in the first quarter of 2005.
Net loss per share
Net loss per share for the second quarter of 2005 was $0.12, compared to a net
loss per share of $0.10 for the first quarter of 2005.
Financial & Operational Highlights for the six months and the quarter ended June
30, 2005 compared to the same period in 2004:
Revenues
The revenues for the first six months of 2005 were $7.3 million, compared to
$7.1 million for the first six months of 2004, an increase of 3%. The revenues
for the second quarter of 2005 were $3.8 million, compared to $3.7 million for
the second quarter of 2004.
Gross Margin
Gross margin for the first six months of 2005 was 54% and 52% for the second
quarter of 2005, compared to 59% in the first six months of 2004 and 60% for the
second quarter of 2004. Gross margin decreased in 2005 compared to 2004, mainly
as the result of the lower margin of the HKJC project.
Research & Development
Research and development (R&D) expenses were $1.25 million in the first six
months of 2005, compared to $1.4 million in the first six months of 2004. R&D
expenses in the second quarter of 2005 were $600,000, the same as the second
quarter of 2004. The decrease is mainly the result of measures taken by the
Company to increase efficiency and consolidate R&D efforts of subsidiaries
having complementary technologies as well as cost reductions from other
organisational changes.
Selling & Marketing
Selling and Marketing (S&M) expenses were $3.56 million in the first six months
of 2005, compared to $4 million in the first six months of 2004, a decrease of
$440,000, reflecting the organisational changes made during the second half of
2004.
General & Administrative
General & Administrative (G&A) expenses were $1.2 million in the first six
months of 2005, compared to $1.1 million in the first six months of 2004. G&A
expenses in the second quarter of 2005 were $600,000, compared to $500,000 in
the second quarter of 2004. The increase mainly reflects provisions for
non-deductable taxes in Israel and abroad.
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 six months of
2005 were $300,000, compared to financial expenses of $100,000 in the first six
months of 2004. Financial expenses for the second quarter of 2005 were
$100,000, compared to financial expenses of $10,000 in the second quarter of
2004. The financial expenses in 2005 mainly arose from exchange rate
differences resulting from strengthening of the Dollar compared to the Euro
during H1 2005.
Other Expenses
Other expenses in the first six months of 2004 and in the second quarter of 2004
were $3,000.
Net Loss
Net loss for the first six months of 2005 decreased to $2.34 million, compared
to $2.45 million for the first six months of 2004.
Net loss for the second quarter of 2005 was $1.3 million, compared to $900,000
for the second quarter of 2004. The increase in losses is the result of the
decreased sales of the broadcasting products.
Net loss per share
Net loss per share for the second quarter of 2005 was $0.12, compared to a net
loss per share of $0.09 for the second quarter of 2004. Net loss per share for
the first six months of 2005 was $0.22, compared to a net loss per share of
$0.23 for the first six months of 2004.
Cash Position
As of June 30, 2005, cash and short-term bank deposits and restricted cash
amounted to $3.95 million, compared to $5.5 million at the end 2004.
Contact:
Orad Hi-Tec Systems Ltd.
Ehud Ben-Yair
Chief Financial Officer
PO Box 2177
Kfar Saba 44425, Israel
Tel: +972-9-767-6862 Fax: +972-9-767-6861
E-Mail: ehudb@orad.tv
www.orad.tv
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, June 30,
2004 2005
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,752 $ 3,453
Restricted cash 750 500
Trade receivables, net 4,106 3,416
Other accounts receivables and prepaid expenses 910 795
Inventories 3,646 3,554
Contracts in progress, net of advances 1,111 1,337
Total current assets 15,275 13,055
SEVERANCE PAY FUND 773 810
PROPERTY AND EQUIPMENT, NET 2,195 1,980
Total assets $ 18,243 $ 15,845
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 1,761 $ 1,550
Deferred revenues 741 806
Other accounts payable and accrued expenses 3,280 3,295
Total current liabilities 5,782 5,651
ACCRUED SEVERANCE PAY 1,103 1,148
SHAREHOLDERS' EQUITY:
Share Capital 28 28
Additional paid-in capital 75,241 75,272
Accumulated other comprehensive loss (547) (547)
Accumulated deficit (63,364) (65,707)
Total shareholders' equity 11,358 9,046
Total liabilities and shareholders' equity $ 18,243 $ 15,845
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Year ended Six months ended Three months ended
December 31, June 30, June 30,
2004 2004 2005 2004 2005
Unaudited
Revenues:
Products sales $ 15,728 $ 7,092 $ 6,363 $ 3,749 $ 2,895
Long term projects - - 916 - 916
Total revenues 15,728 7,092 7,279 3,749 3,811
Cost of product sales 6,188 2,911 2,475 1,510 980
Cost of Long term projects - - 847 - 847
Total cost of revenues 6,188 2,911 3,322 1,510 1,827
Gross profit 9,540 4,181 3,957 2,239 1,984
Operating expenses:
Research and development, net 2,844 1,413 1,248 624 644
Sales and marketing 8,224 4,000 3,556 1,937 1,905
General and administrative 2,388 1,113 1,210 534 589
Total operating expenses 13,456 6,526 6,014 3,095 3,138
Operating loss 3,916 2,345 2,057 856 1,154
Financial income (expenses), net 189 (93) (284) (61) (114)
Other income (expenses), net (148) (15) (2) (10) 3
Net loss $ 3,875 $ 2,453 $ 2,343 $ 927 $ 1,265
Basic and diluted net loss per share $ 0.36 $ 0.23 $ 0.22 $ 0.09 $ 0.12
Weighted average number of shares used 10,698 10,679 10,779 10,679 10,779
in computing basic and diluted net loss
per share (in thousands)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands, except for share data
Number of Share Additional Accumulated Accumulated Total
outstanding paid-in other deficit
ordinary capital 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 - - 38 - - 38
options whose terms have been modified
Issuance of shares upon exercise of
employees' 100,000 *) - 96 - - 96
share options
Balance as of December 31, 2004 10,750,726 28 75,241 (547) (63,364) 11,358
Issuance of earnout shares 28,645 *) - 31 - - 31
Comprehensive loss:
Net loss for the period - - - - (2,343) (2,343)
Total comprehensive loss (2,343)
Balance as of June 30, 2005 (unaudited) 10,779,371 28 75,272 (547) (65,707) 9,046
Balance as of January 1, 2004 10,650,726 28 75,107 (547) (59,489) 15,099
Comprehensive loss:
Net loss for the period - - - - (2,453) (2,453)
Total comprehensive loss - - - - - (2,453)
Balance as of June 30, 2004 (unaudited) 10,650,726 $ 28 $ 75,107 $ (547) $ 61,942 $ 12,646
*) Represent an amount lower than $ 1.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended Six months ended
December 31, June 30,
2004 2004 2005
Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,875) $ (2,453) $ (2,343)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 1,091 610 335
Compensation expenses in respect of share options whose 38 - -
terms have been modified
Decrease in trade receivables, other accounts receivable and 938 635 805
prepaid expenses
Decrease in inventories 234 328 133
Decrease (increase) in contracts in progress, net of 229 400 (226)
advances
Decrease in trade payables, other accounts payable and (592) (1,096) (188)
accrued expenses and accrued severance pay, net
Increase (decrease) in deferred revenues 217 (121) 65
Other 28 14 33
Net cash used in operating activities (1,692) (1,683) (1,386)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (298) (78) (182)
Proceeds from sale of property and equipment 88 58 19
Decrease (increase) in restricted cash (227) 23 250
Net cash provided by (used in) investing activities (437) 3 87
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term bank loan (16) (16) -
Issuance of shares upon exercise of employees' share options 96 - -
Net cash provided by (used in) financing activities 80 (16) -
Decrease in cash and cash equivalents (2,049) (1,696) (1,299)
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 $ 5,105 $ 3,453
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
Sarit Sagiv - 15,000
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 June 30, 2005, the Company employed 118 employees.
This information is provided by RNS
The company news service from the London Stock Exchange
Wednesday, 15th May 2024
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