Final Results
ESPRO INFORMATION TECHNOLOGIES LTD
("Espro" or "the Group")
FINAL RESULTS FY07
Strong second half supports year of growth
15th April 2008 - The Board of Espro Information Technologies Ltd (PLUS: ESP), the global provider of audio
and multimedia interpretation systems and content, today released audited results for the year ended 31st
December 2007.
Highlights
US$ 000's Unaudited results Audited results
for the 6 Months for the Year Ended
ended Dec 31st Dec 31st
2007 2006 % 2007 2006 %
Revenues 9,728 7,914 23% 16,578 15,622 6%
Operating profit/(loss) 913 449 103% 486 578 (16)%
Net profit/ (loss) 874 548 59% 196 420 (53)%
EBITDA 1,641 1,244 32% 1,871 2,116 (12)%
Equity 3,219 2,956 9% 3,219 2,956 9%
Cash flow from 1,915 1,120 71% 2,330 1,834 27%
operating activities
* Successful launch and customer take-up of the Group's audio and multimedia product-set, Opus, selling
into both new and existing clients including a significant contract with Westminster Abbey in London.
* Continued substantial demand from both tourism and corporate markets for Espro's advanced group-
guiding product, Guide U, with new customers including the U.S. Capitol, the Israel Museum in Jerusalem, the
Guinness Storehouse in Ireland, BMW in Munich and Diageo in the UK.
* Gaining market share in the U.S., with several prestigious new customers including the U.S. Capitol in
Washington and the Sears Tower Skydeck in Chicago.
* Significant progress into the market for downloadable tours: launched branded page on iTunes and
delivered downloadable tours for many clients including the National Portrait Gallery, the London School of
Economics, the Turner Prize at the Tate Liverpool, Bath Tourism, and the Clinton Presidential Museum in
Arkansas.
Israel Gal, CEO of Espro Information Technologies Ltd, commented "We have seen a considerable improvement in
revenue generation and profits in the second half of the year, and this has continued into the current
financial year. We believe 2008 will be another year of profitable growth for Espro, supported by our enhanced
product range with the addition of Opus, our entrance into new markets and geographies and the delivery of
internet based tours. Espro is well positioned to capitalise on these expected trends, and the Board is
committed to the delivery of enhanced shareholder value."
ENQUIRIES:
Espro Information Technologies Ltd Tel: + 972 9 7634400
Israel Gal, CEO
Nadav Karni, CFO
St Helens Capital plc Tel: + 44 (0) 20 7628 5582
Barry Hocken
ICIS Limited Tel: + 44 (0) 20 7651 8688
Caroline Evans-Jones
About Espro Information Technologies Ltd
Espro is a global developer, manufacturer and marketer of multi-lingual audio and multimedia content and hand
held interpretive systems that are used in museums, cultural and visitor centers, walking tours and trade shows
worldwide. The client base of the Group includes over 450 active sites, and comprises some of the world's best
known museums and heritage sites, including the Museum of Modern Art in New York, the National Gallery of Art
in Washington, the Orsay Museum and the Rodin Museum in Paris, the Imperial War Museum and Westminster Abbey in
London, the Guggenheim Bilbao in Spain, the State Hermitage Museum in St. Petersburg, the Museum of Fine Arts
in Vienna, the Israel Museum in Jerusalem, the Royal Museums of Fine Arts of Belgium in Brussels, the
International Antarctic Centre in New Zealand, Jenolan Caves in NSW Australia, the Dresden State Art
Collections in Germany and the Forbidden City in Beijing. For further information, please visit our website at
www.espro.com.
The Directors of Espro Information Technologies Ltd accept responsibility for this announcement.
CEO'S STATEMENT
Introduction
The Espro Acoustiguide Group, the brand under which we market our services globally, continues to occupy a
prominent position in the interpretation and guiding industry. During 2007 we have executed on our strategy to
strengthen our position by both expanding our list of products and services and successfully growing our
penetration in new verticals and geographies. Of particular note in the year has been the launch of the Opus
series of audio and multimedia handsets, growing demand for our group guiding product Guide U, our delivery of
an increasing number of downloadable tours and our work with Apple and iTunes.
Once again, the Board would like to thank our employees around the world for their continued dedication and
enthusiasm is delivering outstanding service to our clients.
Business Overview
The Group made excellent progress across the majority of subsidiaries, showing strong growth in the U.S. in
particular. This was tempered slightly by a drop in revenues from Taiwan, where government heritage events
which took place in 2006 were not repeated in 2007 and also Turkey where the Group's contract with a site was
not renewed. In total, the Group added over 200 new contracts and contract extensions, with only 28 customers
choosing not to renew or extend their contracts.
A selection of some of the Group's most prestigious new contracts and extensions signed during 2007 are listed
below.
Europe:
* The extension of an existing long-term contract with the Guggenheim Bilbao in Spain for an additional
two years as of March 2007.
* A contract to supply Westminster Abbey with audioguiding and interpretation services from June 2007,
followed by a second contract later in the year to supply 1,500 of the Group's Opus handsets.
* The extension of an existing long-term contract with the Cabinet War Rooms and Churchill Museum in
London for another five years from September 2007.
* A contract to supply 250 iPods to the Jeudisches Museum in Berlin in September 2007, followed by an
additional contract later in the year.
US:
* A new long-term agreement with the Detroit Institute of Art ("the DIA") for an additional three years
from October 2007, building on a nine year relationship.
* A three year contract with the Sears Tower Skydeck in Chicago from May 2007 to supply multimedia and
audio content and exSite and Opus handsets.
* A contract with the United States Capitol Visitors Center ("the U.S. Capitol") to supply 1,700 Guide U
handsets.
Asia:
* A tender with the Archaeological Survey of India, a department under the Indian Ministry of Culture,
to provide guiding and interpretation services to a number of prestigious sites.
* A new contract with the Forbidden City in Beijing for 2008, the year of the Olympic Games.
* In Taipei, Taiwan the development of content for the National Taiwan Museum at the Futain Street
Mansion and a contract to support the British Museum's exhibition: "Treasures of the World's Cultures - the
British Museum after 250 Years" at the National Palace Museum.
Product development
The Group is continually enhancing its product ranges to meet the growing demands of the tourism and guiding
industry.
Opus
In May 2007 the Group launched its first product set to have multimedia capabilities, the Opus series. This
consists of Opus Click?, a keypad driven guide, and Opus Touch? a touch screen driven guide. Opus has been
ordered by many of the Groups customers upgrading from previous product sets. The ability of Espro to deliver
multimedia content with audio over an advanced handset has been instrumental in the winning of several of the
Group's most prestigious new clients in 2007. Customers include Westminster Abbey in London, the Australian War
Memorial in Canberra which became the first site in the world to launch the Opus Touch and since the period
end, the Imperial War Museum in London and Cardiff Castle in Wales.
Guide U
An advanced group-guiding product launched by Espro in 2006, Guide U continues to generate high levels of new
business as increasing tourism around the world leads to a need for sites to accommodate an ever increasing
number of daily visitors. New customers signed in the year included the U.S. Capitol and the Israel Museum in
Jerusalem. Guide U has also proven popular with corporate clients, such as the Guinness Storehouse in Ireland,
BMW in Munich and Diageo in the UK. Revenues generated from group guiding products increased from approximately
US$200,000 in the year to December 2006 to approximately US$1,500,000 in the year to December 2007.
Downloadable tours
As previously stated, a key part of the Group's growth strategy is to leverage its valuable library of content
and extensive content creation expertise to capitalise on the growth of downloadable digital content.
Over the year, downloadable tours were created by the Group for the Tate Liverpool, in support of the Turner
Prize, The National Portrait Gallery in support of the Pop Art Portraits exhibition, which also included a
mobile phone tour, the London School of Economics, Bath Tourism, and the Clinton Presidential Museum in
Arkansas.
Since the end of the year, the Group has also been commissioned to create and promote downloadable tours for
the Victoria and Albert Museum in London in support of the China Design Now exhibition, the China Millennium
Monument Beijing World Art Museum and the Fashion Museum in Bath.
Additionally, Espro is now benefiting from the huge popularity of iTunes with an Acoustiguide branded page on
the iTunes website, carrying downloadable tours designed for Espro clients, delivering a potential new sales
channel for the Group and its clients whilst raising brand awareness.
The Group does not currently charge for the download of tours but is investigating the potential to do so.
FINANCIAL RESULTS
The Group's consolidated revenues increased 6% to US$16,578,000 for the year (FY06: US$15,622). The second
half of FY07 was particularly strong, resulting in growth of 23% over H2 FY06.
Exchange rate issues accounted for approximately US$650,000 of the increase in revenues in the year. Therefore
whilst Group gross profit increased 8% to US$10,092,000 for the year, this represented 61% of revenues a drop
of 2 points from the previous year (FY06: US$9,792,000, 63% of revenues).
The Group's operating profit decreased 16% to US$486,000 for the year from a profit of US$578,000 for the
previous year. Again, the second half performance was particularly strong, operating profits increasing by
103% to US$913,000 compared to US$449,000 in H2 FY06. This resulted in an operating profit margin of 9% in H2
FY07, compared to an operating profit margin of 6% in H2 FY06.
The Group's net profit for the year decreased to US$196,000 from US$420,000 in the previous year. Net profits
in the second half of the year were US$874,000 an increase of 59% compared a net profit of US$548,000 in H2
FY06.
The Group had a positive cash flow of US$2,330,000 from operating activities in the year, compared to a
positive cash flow of US$1,834,000 for the same period last year.
The Directors do not recommend the payment of a dividend for this period.
Balance sheet
The Group's total assets increased to US$12,331,000 31 December 2007 from US$11,723,000 at 31 December 2006.
The Group had a negative working capital of US$480,000 as at 31 December 2007, compared to a positive working
capital of US$528,000 at 31 December 2006. Total equipment leased amounted to US$1,843,000. Shareholders
equity amounted to US$3,195,000 as at 31 December 2007 (FY06: US$2,940,000).
Contracted Revenues
As of 31 December 2007 the Group had orders and signed contracts of approximately US$15.5m.
CURRENT TRADING AND PROSPECTS
We have seen a considerable improvement in revenue generation and profits in the second half of the year, and
this has continued into the current financial year. We believe 2008 will be another year of profitable growth
for Espro, supported by our enhanced product range through the addition of Opus, our entrance into new markets
and geographies and the delivery of internet based tours. Espro is well positioned to capitalise on these
expected trends, and the Board is committed to the delivery of enhanced shareholder value.
CONSOLIDATED INCOME STATEMENT
Year ended December 31,
2007 2006
U.S. dollars in thousands,
except share amounts
Revenues 16,578 15,622
Cost of revenues 6,486 5,830
Gross profit 10,092 9,792
Research and development costs 197 374
Selling and marketing expenses 5,049 4,452
General and administrative expenses 4,360 4,388
Operating profit 486 578
Financial expenses 510 337
Financial incomes (439) (316)
Other expenses, net 194 180
Profit (loss) before taxes on income (tax benefit) 221 377
Taxes on income (tax benefit) 25 (43)
Net profit (loss) 196 420
Attributable to:
Equity holders of the Parent 188 421
Minority interest 8 (1)
Net profit (loss) 196 420
Basic earnings (loss) per share (in U.S.$) 0.011 0.025
Diluted earnings (loss) per share (in U.S.$) 0.01 0.024
CONSOLIDATED BALANCE SHEETS
December 31,
2007 2006
U.S. dollars in thousands
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 2,190 2,166
Trade receivables, net 3,428 3,221
Income tax receivable 32 109
Other accounts receivable 459 455
Inventories 526 533
6,635 6,484
NON-CURRENT ASSETS:
Assets held for lease 1,843 2,000
Finance lease receivables 1,186 909
Deposits 293 284
Property and equipment, net 348 340
Deferred taxes 405 348
Intangible assets, net 1,621 1,358
5,696 5,239
Total assets 12,331 11,723
CONSOLIDATED BALANCE SHEETS
December 31,
2007 2006
U.S. dollars in thousands
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit 2,278 1,484
Trade payables 1,032 980
Liability in respect of acquisition of investee companies 25 662
Income tax payable 44 188
Other accounts payable 3,736 2,642
7,115 5,956
LONG-TERM LIABILITIES:
Long-term loans from banks and others 1,435 1,821
Employee benefits liability 186 168
Government grants payable 198 613
Deferred taxes 118 149
Liability in respect of warrants 60 60
1,997 2,811
Total liabilities 9,112 8,767
EQUITY:
Equity attributable to equity holders of the Parent:
Share capital 44 43
Additional paid-in capital 18,621 18,385
Foreign currency translation reserve (108) 70
Accumulated deficit (15,362) (15,558)
3,195 2,940
Minority interest 24 16
Total equity 3,219 2,956
Total liabilities and equity 12,331 11,723
ESPRO Information Technologies Ltd
Friday, 22nd November 2024
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