1st Quarter Results

RNS Number : 5184D

MTI Wireless Edge Limited

17 May 2012

 



17 May 2012

MTI Wireless Edge Ltd

("MTI" or the "Company")

Financial results for the three months ended 31 March 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 three months ended 31 March 2012.

Highlights

·     Revenue of US$3.2m (Q1 2011: US$3.7m)

·     Gross profits  of US$1.1m (Q1 2011: US$1.3m)

·     Loss before tax of US$351k after US$300k litigation provision (Q1 2011: US$65k profit)

·     Gross cash, cash equivalents and marketable securities remain strong at $7m after $1m dividend distribution in December 2011

Dov Feiner, Chief Executive Officer, commented:

"The three months to the end of March 2012 experienced a US$0.5m decline in revenues against the first quarter of 2011 which resulted in a reduction in gross profits of approximately US$0.2m.  Revenue within our commercial operations increased with strong demand for our 80GHz antenna product range.  However, after the strong growth for our Military business last year, reflecting major contracts won in 2010, we experienced a quieter start to the current year and Military revenue more than halved to US$405k in the quarter with a resulting sharp drop into losses within that segment, leaving the Group, overall, with a pre-tax loss. 

"Yet, despite the low level of Military revenue in the first quarter, we remain optimistic that this division will recover in the remainder of the year.  Indeed, we entered the second quarter of the year with a stronger order book, supported by strong bookings early this quarter to a current order book of US$5.1m for the remainder of this year, mostly in Q2 and Q3. This with continued progress from our commercial activities we remain confident in the long term growth prospects of the Company."

"In tandem we have attended several court hearings since the beginning of 2012 relating to a long running litigation that has been ongoing since 2005.  The Board believes that the situation is now close to reaching a settlement and therefore it has decided to update the provision in the accounts under contingent liabilities by a further US$300k which is recognised as a G&A expenses of the reported quarter."

Contacts:

MTI Wireless Edge Dov Feiner, CEO Moni Borovitz, Financial Director	[phone]
Allenby Capital Nick Naylor Alex Price	[phone]
Threadneedle Communications 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

	Three months ended March 31,				Year ended December 31,
	2012		2011		2011
	U.S. $ in thousands
	Unaudited				Audited
Revenues	3,190		3,669		14,701
Cost of sales	2,141		2,362		9,642
Gross profit	1,049		1,307		5,059
Research and development expenses	280		319		1,176
Selling and marketing expenses	475		494		1,925
General and administrative expenses	698		480		1,707
Profit (loss) from operations	(404)		14		251
Finance expense	87		82		456
Finance income	140		133		163
Profit (loss) before tax	(351)		65		(42)
Tax expense (income)	32		18		(80)
Total comprehensive income (loss)	(383)		47		38
Attributable to:
Owners of the parent	(412)		49		3
Non-controlling interest	29		(2)		35
	(383)		47		38
Earnings (loss) per share
Basic and Diluted (dollars per share)	(0.0080)		0.0009		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 three months ended March 31, 2012:

	Attributed to owners of the parent
	Share capital		Additional paid-in capital		Reserve for share-based payment transactions		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
	Unaudited
Balance at January 1, 2012 (Audited)	109		14,945		176		2,625		17,855		37		17,892
Changes during the three months ended March 31, 2012:
Comprehensive income (loss) for the period	-		-		-		(412)		(412)		29		(383)
Share based payment	-		-		11		-		11		-		11
Balance at March 31, 2012	109		14,945		187		2,213		17,454		66		17,520

The ac companying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

For the three months ended March 31, 2011:

	Attributed to owners of the parent
	Share capital		Additional paid-in capital		Reserve for share-based payment transactions		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
	Unaudited
Balance at January 1, 2011 (Audited)	109		14,945		137		3,617		18,808		2		18,810
Changes during the three months     ended March 31, 2011:
Comprehensive income (loss) for the period	-		-		-		49		49		(2)		47
Share based payment	-		-		13		-		13		-		13
Balance at March 31, 2011	109		14,945		150		3,666		18,870		-		18,870

The ac companying 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		Reserve for share-based payment transactions		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
	Audited
Balance as at December 31, 2010	109		14,945		137		3,617		18,808		2		18,810
Changes during 2011:
Comprehensive income for the year	-		-		-		3		3		35		38
Dividends	-		-		-		(995)		(995)		-		(995)
Share based payment	-		-		39		-		39		-		39
Balance as at December 31, 2011	109		14,945		176		2,625		17,855		37		17,892

The ac companying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATMENTE OF

FINANCIAL POSITION

	31.3.2012		31.3.2011		31.12.2011
	U.S. $ in thousands
	Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	929		348		625
Other financial assets	6,433		8,781		6,651
Trade receivables	5,036		4,957		5,274
Other receivables	827		278		508
Income taxes receivable	-		24		-
Inventories	3,105		2,799		2,996
Total current assets	16,330		17,187		16,054
LONG TERM PREPAID EXPENSES	23		42		24
PROPERTY AND EQUIPMENT, NET	5,405		5,727		5,465
INVESTMENT PROPERTY	1,336		1,371		1,345
GOODWILL	406		406		406
DEFERRED TAX ASSETS	249		114		248
	23,749		24,847		23,542

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

INTERIM CONSOLIDATED STATMENTE OF

FINANCIAL POSITION

	31.3.2012		31.3.2011			31.12.2011
	U.S. $ In thousands
	Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit	699		250		250
Trade payables	2,040		2,331		2,078
Other accounts payables	1,000		766		830
Tax liability	147		-		68
Total current liabilities	3,886		3,347		3,226
NON- CURRENT LIABILITIES:
Loans from banks	2,000		2,250		2,063
Employee benefits	277		298		265
Provisions	66		82		96
Total non-current liabilities	2,343		2,630		2,424
EQUITY
Share capital	109		109		109
Additional paid-in capital	14,945		14,945		14,945
Employee equity benefits reserve	187		150		176
Retained earnings	2,213		3,666		2,625
Equity attributable to owners of the parent	17,454		18,870		17,855
Non-controlling interest	66		-		37
Total equity	17,520		18,870		17,892
	23,749		24,847		23,542

May 16, 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.

INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

			Three months ended March 31,						Year ended December 31,
		2012			2011			2011
		U.S. $ in thousands
		Unaudited			Unaudited		Audited
Cash Flows from Operating Activities:
Profit (loss) for the period		(383)			47		38
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		116			125		493
Loss (Gain) from short-term  investments		(134)			(133)		294
Equity settled share-based payment expense		11			13		39
Finance expense		29			29		117
Tax expense (Income)		32			18		(80)
Changes in operating assets and  liabilities:
Decrease (increase) in inventories		(109)			168		(29)
Decrease (increase) in trade receivables		238			(25)		(342)
Decrease (increase) in other accounts receivables for short and long term		(318)			(75)		(287)
Increase (decrease) in trade and other payables		122			(293)		(476)
Increase (decrease) in provisions		(30)			1		15
Increase  in employee benefits		12			26		(7)
Interest paid		(29)			(29)		(117)
Taxes received		47			70		200
Taxes paid		(1)			(2)		(76)
Net cash used in operating activities		(397)			(60)		(218)

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

 INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

		Three months ended March 31,					Year ended December 31,
		2012		2011			2011
		U.S. $ in thousands
		Unaudited				Audited
Cash Flows From Investing Activities:
Sale (purchase) of short-term investment, net		352		-			1,703
Purchase of property and equipment		(37)		(438)			(524)
Net cash (used in) provided    by investing activities		315		(438)			1,179
Cash Flows From Financing Activities:
Receipt of short-term loan from banks		449		-			-
Dividend paid to the holders of the parent		-		-			(995)
Repayment of long-term loan from banks		(63)		-			(187)
Net cash provided    by financing activities		386		-			(1,182)
INCREASE (DECREASE) IN CASH AND CASH  EQUIVALENTS		304		(498)			(221)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		625		846			846
CASH AND CASH EQUIVALENTS AT END OF PERIOD		929		348			625

Appendix A - Non-cash activities:

		Three months ended March 31,				Year ended December 31,
		2012		2010			2011
		U.S. $ in thousands
		Unaudited				Audited
Purchase of property and equipment against trade payables		26		22			16

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

NOTES TO INTERIM CONSOLIDATED 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 percentage changes in the reporting period:

	March 31,			December 31,
	2012		2011	2011
NIS (New Israeli Shekel)	0.269		0.287	0.262

	Three months ended March 31,			Year ended December 31,
	2012		2011	2011
	%		%	%
NIS (New Israeli Shekel)	2.85		1.09	(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 Financial Reporting Standard IAS 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 31 December 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 31 March 2012 have not been audited.

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 there months ended March 31, 2012 and 2011, respectively.

Three months ended March 31, 2012 (Unaudited)
		Commercial		Military		Total
		$'000
Revenue
External		2,785		405		3,190
Total		2,785		405		3,190
Segment loss		(109)		(295)		(404)
Unallocated corporate expenses
Finance income, net						53
loss before taxes on income						(352)
Other
Depreciation and other non-cash expenses		106		10		116

Three months ended March 31, 2011 (Unaudited)
		Commercial		Military		Total
		$'000
Revenue
External		2,632		1,037		3,669
Total		2,632		1,037		3,669
Segment income (loss)		(50)		64		14
Unallocated corporate expenses
Finance income, net						71
Income before taxes on income						85
Other
Depreciation and other non-cash expenses		86		39		125

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 income		128		123		251
Unallocated corporate expenses
Finance expenses, net						293
loss before taxes on income						(42)
Other
Depreciation and other  non-cash expenses		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 Group and other related party provides certain services to the Group as follows:

		Three months ended      March 31,				Year ended December 31,
		2012		2011			2011
		U.S. $ in thousands
		Unaudited				Audited
Purchased Goods		76		34			165
Management Fee		72		66			259
Services Fee		40		40			160
Lease		(52)		(51)			(120)
Total		136		89			464

Compensation of key management personnel of the Group:

		Three months ended      March 31,				Year ended December 31,
		2012		2011			2011
		U.S. $ in thousands
		Unaudited				Audited
Short-term employee benefits *)		156		155			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 March 31, 2012 the parent group and related party owes to the Group US $43,000 while in 31 March 2011 the Group owed to the parent group and related party US $121,000. 

Note 5 - SIGNIFICANT EVENTS:

During the current quarter the Company used US$ 0.5 million out of US$ 4 million credit line from banking corporation. The Company pledged its financial assets as collateral for this line of credit.

NOTE 6 - SUBSEQUENT EVENTS:

Contingent liability

Due to a hearing sessionsheld during 2012 by the District Court in Mars lawsuit (as specified in note 25 to the Annual Report for December 31, 2011), the Company updated the provision recorded by the amount of US $300,000.

 

END

 

 

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