3rd Quarter Results

RNS Number : 8129Q

MTI Wireless Edge Limited

12 November 2012

 



12 November 2012

MTI Wireless Edge Ltd

("MTI" or the "Company")

Financial results for the nine months ended 30 September 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 nine months ended 30 September 2012.

Highlights

·     Continued progress in third quarter

·     Gross profit margins increase to 37.6% in Q3 (Q2 2012: 34.9%)

·     Profit from operations in Q3 was at US$56k, a margin of 2%, (Q2 2012: US$19k)

·     Strong cash flow from operations in Q3 generating US$0.56m (Q2 2012: $3k)

·     Net profit of US$102k in Q3 (Q2 2012: US$74k loss)

·     Revenue for the 9 months was US$9.5m (9 months to Q3 2011: US$11.1m)

·     Net loss for the 9 months was US$355k (9 months to Q3 2011:  profit of US$133k)

·     Cash, cash equivalents and marketable securities remain strong at US$7m

Dov Feiner, Chief Executive Officer, commented:

"I am pleased to announce that the upturn which commenced in the second quarter has gained momentum, with a net profit of US$102k in the latest three months. The cost saving measures implemented after the testing first quarter continued to flow through with gross margins in the latest quarter improving to 37.6%, a gain of more than two and a half points over the previous three months. Cash generation was also strong in the period at US$0.56m and the balance sheet remains very robust.

"Our commercial activities have been the dominant contributor so far this year.   To date the division's revenue is off 4% at US$8.1m for the nine months compared with the previous year, but with improved margins as a result of tight cost controls and a better mix of products, the division contributed a profit of US$285k to the Group during the first nine months of 2012. In particular our 80GHz product line has been a major part of this growth and we believe this will continue to be a major factor for the rest of the year.  Our military business is a project based operation and therefore inevitably experiences an uneven revenue flow.  This year, to date, delays to some orders have held the business in check but we are very optimistic that we will achieve a positive outcome for a number of tenders we are progressing.

"Overall, we have made solid progress after a difficult first quarter thanks to a combination of cost savings and improving revenues and the Board believes this trend will continue for the rest of the year.  Beyond that, the Board remains optimistic that the outlook for the Group remains positive even though, in the current worldwide economic environment, optimism must be balanced by a degree caution."

Contacts:

MTI Wireless Edge Dov Feiner, CEO Moni Borovitz, Financial Director	[phone]
Allenby Capital Nick Naylor Alex Price	[phone]
Newgate Threadneedle Graham Herring Terry Garrett	[phone]

About MTI Wireless Edge

MTI Wireless Edge is a world leader in the development and production of high quality, low cost, antenna solutions including Smart Antennas, MIMO antennas and Dual Polarity for wireless applications such as WiMAX, WiFi, Broadband Wireless Access and RFID.  MTI is supplying antennas for both military and commercial applications from 100 KHz to 90 GHz. We offer the most dynamic variety of off-the shelf and customised antennas range including sector, directional and Omni Directional antennas for all broad and narrow band wireless applications in both licensed and unlicensed bands. MTI Military products include a wide range of broadband, tactical and specialized communications antennas, antenna systems and DF arrays installed on numerous airborne, ground and naval, including submarine, platforms worldwide.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Nine months ended September 30,				Year ended December 31,
	2012		2011		2011
	U.S. $ in thousands
	Unaudited				Audited
Revenues	9,502		11,146		14,701
Cost of sales	6,168		7,293		9,642
Gross profit	3,334		3,853		5,059
Research and development expenses	822		910		1,176
Selling and marketing expenses	1,324		1,472		1,925
General and administrative expenses	1,517		1,290		1,707
Profit (loss) from operations	(329)		181		251
Finance expense	215		253		456
Finance income	191		134		163
Profit (loss) before taxes on income	(353)		62		(42)
Taxes on income	2		(71)		(80)
Total comprehensive income (loss)	(355)		133		38
Attributable to:
Owners of the parent	(448)		112		3
Non-controlling interest	93		21		35
	(355)		133		38
Earnings (loss) per share
Basic and Diluted (U.S. $)	(0.0087)		(0.0022)		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 Nine months ended September 30, 2012:

	Attributed to owners of the parent
	Share capital		Additional paid-in capital		Employee equity benefits reserve		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
Balance at January 1, 2012 (Audited)	109		14,945		176		2,625		17,855		37		17,892
Changes during the Nine month period     ended September 30, 2012 (Unaudited):
Comprehensive income (loss) for the period	-		-		-		(448)		(448)		93		(355)
Share based payment	-		-		33		-		33		-		33
Balance at September 30, 2012 (Unaudited)	109		14,945		209		2,177		17,440		130		17,570

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

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the Nine months ended September 30, 2011:

	Attributed to owners of the parent
	Share capital		Additional paid-in capital		Employee equity benefits reserve		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
Balance at January 1, 2011 (Audited)	109		14,945		137		3,617		18,808		2		18,810
Changes during the Nine month period       ended September 30, 2011 (Unaudited):
Total comprehensive income for the period	-		-		-		112		112		21		133
Share based payment	-		-		29		-		29		-		29
Balance at September 30, 2011 (Unaudited)	109		14,945		166		3,729		18,949		23		18,972

The accompanying 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		Employee equity benefits reserve		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
	Audited
Balance at January 1, 2011	109		14,945		137		3,617		18,808		2		18,810
Changes during 2011:
Comprehensive income for the year	-		-		-		3		3		35		38
Dividend paid	-		-		-		(995)		(995)		-		(995)
Share based payment	-		-		39		-		39		-		39
Balance at December 31, 2011	109		14,945		176		2,625		17,855		37		17,892

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

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	30.9.2012		30.9.2011		31.12.2011
	U.S. $ in thousands
	Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	4,657		40		625
Other financial assets	2,371		8,118		6,651
Trade receivables	4,561		5,454		5,274
Other receivables	663		648		508
Income taxes receivable	-		63		-
Inventories	3,050		3,075		2,996
	15,302		17,398		16,054
NON-CURRENT ASSETS:
Long term prepaid expenses	35		38		24
Property, plant and equipment	5,530		5,560		5,465
Investment property	1,319		1,354		1,345
Deferred income tax assets	185		206		248
Goodwill	406		406		406
	7,475		7,564		7,488
Total assets	22,777		24,962		23,542

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

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	30.9.2012		30.9.2011			31.12.2011
	U.S. $ In thousands
	Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit	250		250		250
Trade payables	1,486		2,490		2,078
Other financial liabilities	-		44		-
Other accounts payables	608		655		830
Tax liability	232		14		68
	2,576		3,453		3,226
NON- CURRENT LIABILITIES:
Loans from banks	1,875		2,125		2,063
Employee benefits, net	274		295		265
Provisions	482		117		96
	2,631		2,537		2,424
Total liabilities	5,207		5,990		5,650
EQUITY
Equity attributable to owners of the parent
Share capital	109		109		109
Additional paid-in capital	14,945		14,945		14,945
Employee equity benefits reserve	209		166		176
Retained earnings	2,177		3,729		2,625
	17,440		18,949		17,855
Non-controlling interest	130		23		37
Total equity	17,570		18,972		17,892
Total equity and liabilities	22,777		24,962		23,542

November 11, 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

			Nine months ended September 30,						Year ended December 31,
		2012			2011			2011
		U.S. $ in thousands
		Unaudited						Audited
Cash Flows from Operating Activities:
Profit (loss) for the period		(355)			133		38
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		357			371		493
Loss (gain) from short-term  investments		(168)			391		294
Equity settled share-based payment expense		33			29		39
Finance expenses		84			85		117
Tax expense (Income)		2			(71)		(80)
Changes in operating assets and  liabilities:
Increase in inventories		(54)			(108)		(29)
Decrease (increase) in trade receivables		713			(522)		(342)
Increase in other accounts receivables including non-current		(166)			(441)		(287)
Decrease in trade and other accounts payables		(818)			(231)		(476)
Increase (decrease) in provisions		386			36		15
Increase (decrease) in employee benefits, net		9			23		(7)
Interest paid		(84)			(85)		(117)
Taxes received		227			71		200
Taxes paid		(2)			(31)		(76)
Net cash used in operating activities		164			(350)		(218)

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

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

			Nine months ended September 30,					Year ended December 31,
			2012			2011		2011
			U.S. $ in thousands
				Unaudited				Audited
Cash Flows From Investing Activities:
Sale of short-term investment, net			4,448			183		1,703
Purchase of property and equipment			(392)			(514)		(524)
Net cash (used in) provided    by investing activities			4,056			(331)		1,179
Cash Flows From Financing Activities:
Receipt of short-term loan from banks			-			(125)		-
Dividend paid to the holders of the parent			-			-		(995)
Repayment of long-term loan from banks			(188)			-		(187)
Net cash (used in) provided    by financing activities			(188)			(125)		(1,182)
Increase (decrease) in cash and cash equivalents			4,032			(806)		(221)
Cash and cash equivalents  at the beginning of the period			625			846		846
Cash and cash equivalents  at the end of the period			4,657			40		625

Appendix A - Non-cash activities:

			Nine months ended September 30,				Year ended December 31,
			2012		2011		2011
			U.S. $ in thousands
		Unaudited					Audited
Purchase of property and equipment   against trade payables		20			8		16

The accompanying notes form an integral part of the 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 changes percentage in the reporting period:

	September 30,			December 31,
	2012		2011	2011
NIS (New Israeli Shekel)	0.256		0.269	0.262

	Nine months ended September 30,			Year ended December 31,
	2012		2011	2011
	%		%	%
NIS (New Israeli Shekel)	(2.33)		4.39	(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 Accounting Standard No. 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 December 31, 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 September 30, 2012 have not been audited.

The interim consolidated financial information should be read in conjunction with the annual financial statements as of 31 December, 2011 and for the year ended on that date and with the notes thereto,

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 Nine months ended September 30, 2012 and 2011, respectively and for the year ended December 31 ,2011.

Nine months ended September 30, 2012 (Unaudited)
		Commercial		Military		Total
		$'000
Revenue
External		8,049		1,453		9,502
Total		8,049		1,453		9,502
Segment profit (loss)		285		(614)		(329)
Unallocated corporate expenses
Finance expenses, net						24
loss before taxes on income						353
Other
Depreciation		322		35		357

Nine months ended September 30, 2011 (Unaudited)
		Commercial		Military		Total
		$'000
Revenue
External		8,433		2,713		11,146
Total		8,433		2,713		11,146
Segment profit		44		137		181
Unallocated corporate expenses
Finance expenses, net						119
Profit before taxes on income						62
Other
Depreciation		314		57		371

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 profit		128		123		251
Unallocated corporate expenses
Finance expenses, net						293
loss before taxes on income						(42)
Other
Depreciation		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 Company and other related parties provide certain services to the Group as follows:

		Nine months ended      September 30,				Year ended December 31,
		2012		2011			2011
		U.S. $ in thousands
		Unaudited					Audited
Purchased Goods		208		111			165
Management Fee		215		197			259
Services Fee		120		120			160
Lease income		(156)		(154)			(120)
Total		387		274			464

Compensation of key management personnel of the Group:

		Nine months ended      September 30,				Year ended December 31,
		2012		2011			2011
		U.S. $ in thousands
		Unaudited					Audited
Short-term employee benefits *)		465		448			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 September 30, 2012 the parent company and related parties owe to the Group US $72,000 while in December 31, 2012 and in September 30, 2011 the Group owed to the parent group and related party US $5,000 and US $19,000 respectively. 

Note 5 - SIGNIFICANT EVENTS:

Contingent liability:

Due to a hearing sessionsheld during May 2012 by the District Court in Mars lawsuit (as specified in note 24 to the Annual Report for December 31, 2011), the Company updated the provision recorded by the amount of US $280,000 as at June 30, 2012.

 

END

 

 

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