Interim Results
Orad Hi-Tec Systems
19 August 2004
Orad Hi-Tec Systems Ltd. ('Orad' or the 'Company')
Results for the six month period and the quarter ended June 30 2004
Tel Aviv, August 19th, 2004 - 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 2004.
• Revenues of $7.1 million in H1 2004
• Strong revenue pipeline of more than $9 million for H2 2004
• Significant decrease in operational expenses in H1 2004
Avi Sharir, Orad's President and Chief Executive Officer, commented: 'The second
quarter results are better than the previous quarter's, with higher revenues and
a significant decrease in the net loss for the quarter. We continue to have a
strong revenue pipeline of more than $9m for the remainder of 2004. This
pipeline and the results for the first half indicate an improvement in the
Company's business.'
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 2004
Chief Executive's Statement
Revenues for the second quarter of 2004 were $3.7 million, compared to $3.3
million in the first quarter of 2004 and $4.4 million in the second quarter of
2003. The Company has a strong pipeline of committed revenue for the remainder
of the year, which exceeds $9 million. This includes revenues from the Hong Kong
Jockey Club project, which is expected to be recognized in the second half of
2004. Gross margin in the second quarter of 2004 was 60% and the net loss was
$0.9 million.
Avi Sharir, Orad's President and Chief Executive Officer, commented: 'The second
quarter results are better than the previous quarter's, with higher revenues and
a significant decrease in the net loss for the quarter. We continue to have a
strong revenue pipeline of more than $9m for the remainder of 2004. This
pipeline and the results for the first half indicate an improvement in the
Company's business.'
Revenues in H1 2004 were $7.1 million, compared to $8.6 million in H1 2003.
Operational expenses in H1 2004 decreased significantly to $6.5 million,
compared to $7.7 million in H1 2003, as a result of a cost reduction programme.
The net loss was $2.5 million in H1 2004, compared to $2.3 million in H1 2003.
Financial & Operational Highlights for the second quarter 2004 compared to first
quarter 2004:
Revenues
Revenues for the second quarter of 2004 were $3.7 million, compared to $3.3
million in the first quarter of 2004, an increase of 12%.
Gross Margin
Gross margin in the second quarter of 2004 was 60%, compared to 58% in the first
quarter of 2004. The increase in gross margin is the result of improved sales
volumes.
Research & Development
R&D expenses in the second quarter of 2004 were $0.6 million compared to $0. 8
million in the first quarter of 2004, decrease of $0.2 due to expenses cuts
related to organizational changes.
Selling & Marketing
S&M expenses in the second quarter of 2004 decreased to $1.9 million, compared
to $2.1 million in the previous quarter, mainly as a result of cost reduction
from organizational changes.
General & Administrative
G&A expenses were $0.5 million in the second quarter of 2004, compared to $0.6
million in the first quarter of 2004.
Financial income (expenses)
Financial income 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 2004 were $0.06
million, compared to $0.03 million in the first quarter of 2004. The change is
explained by exchange rate differences resulting from devaluation of the Euro
against the Dollar.
Net Loss
Net loss for the second quarter of 2004 amounted to $0.9 million, compared to
$1.5 million in the first quarter of 2004.
Net loss per share
Net loss per share for the second quarter of 2004 was $0.09, compared to a net
loss per share of $0.14 for the first quarter of 2004.
Financial & Operational Highlights for the six months and the quarter ended June
30, 2004 compared to the same period in 2003:
Revenues
The revenues for the first six months of 2004 were $7.1 million, compared to
$8.6 million for the first six months of 2006, a decrease of 18%. The revenues
for the second quarter of 2004 were $3.7 million, compared to $4.4 million for
the second quarter of 2003, a decrease of 16%.
Gross Margin
Gross margin for the first six months of 2004 was 59% and 60% for the second
quarter of 2004, compared to 63% in the first six months of 2003 and the second
quarter of 2003. Gross margin decreased in 2004 compared to 2003, mainly as the
result of lower sales volume.
Research & Development
Research and development (R&D) expenses were $1.4 million in the first six
months of 2004, compared to $1.9 million in the first six months of 2003. R&D
expenses in the second quarter of 2004 were $0.6 million, compared to $0.9
million in the second quarter of 2003. 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 organizational changes.
Selling & Marketing
Selling and Marketing (S&M) expenses were $4.0 million in the first six months
of 2004, compared to $3.8 million in the first six months of 2003, an increase
of $0.2 million, reflecting a one-off reduction in 2003. S&M expenses in the
second quarter of 2004 were $1.9 million, compared to $2.3 million in the second
quarter of 2003, resulting from cost reductions.
General & Administrative
General & Administrative (G&A) expenses were $ 1.1 million in the first six
months of 2004, compared to $1.2 million in the first six months of 2003. G&A
expenses in the second quarter of 2004 were $0.5 million, compared to $0.6
million in the second quarter of 2003. In both cases the decrease is mainly from
a reduced bad debts allowance.
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
2004 were $0.09 million, compared to financial income of $0.2 million in the
first six months of 2003. Financial expenses for the second quarter of 2004 were
$0.06 million compared to financial income of $0.01 million in the second
quarter of 2003. The financial expenses in 2004 derived mainly from exchange
rate differences resulting from strengthening of the Dollar compared to the Euro
during H1 2004.
Other Expenses
Other expenses in the first six months of 2003 and in the second quarter of 2003
were $0.2 million and represent costs of the Company's admission to AIM.
Net Loss
Net loss for the first six months of 2004 was $2.5 million compared to $2.3
million for the first six months of 2003.
Net loss for the second quarter of 2004 was $0.9 million compared to $1.3
million for the second quarter of 2003. The decrease in losses is the result of
the cost reduction programme mentioned above.
Net loss per share
Net loss per share for the second quarter of 2004 was $0.09, compared to a net
loss per share of $0.12 for the second quarter of 2003. Net loss per share for
the first six months of 2004 was $0.23, compared to a net loss per share of
$0.22 for the first six months of 2003.
Cash Position
As of June 30, 2004, cash and short-term bank deposits amounted $5.6 million,
compared to $5.9 million at the end of the first quarter of 2004.
Contact:
Orad Hi-Tec Systems Ltd.
Sarit Sagiv
Chief Financial Officer
PO Box 2177
Kfar Saba 44425, Israel
Tel: +972-9-767-6862 ext. 578
Fax: +972-9-767-6861
E-Mail: sarit@orad.tv
www.orad.tv
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, June 30,
2003 2004
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,801 $ 5,105
Restricted cash 523 500
Trade receivables, net 4,649 4,145
Other receivables and prepaid expenses 1,018 887
Inventories 4,115 3,601
Work in process net of advances from customers 1,340 940
Total current assets 18,446 15,178
SEVERANCE PAY FUNDS 848 711
PROPERTY AND EQUIPMENT, NET 2,869 2,451
$ 22,163 $ 18,340
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturity of long-term bank loan $ 16 $ -
Trade payables 2,025 1,398
Deferred revenues 524 403
Other payables and accrued expenses 3,657 3,189
Total current liabilities 6,222 4,990
ACCRUED SEVERANCE PAY 1,129 991
MINORITY INTEREST (287) (287)
SHAREHOLDERS' EQUITY:
Share capital 28 28
Additional paid-in capital 75,107 75,107
Accumulated other comprehensive loss (547) (547)
Accumulated deficit (59,489) (61,942)
Total shareholders' equity 15,099 12,646
$ 22,163 $ 18,340
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Year ended Six months ended Three months ended
December 31, June 30, June 30,
2003 2003 2004 2003 2004
Unaudited
Revenues $ 15,439 $ 8,642 $ 7,092 $ 4,439 $ 3,749
Cost of revenues 5,608 3,161 2,911 1,628 1,510
Gross profit 9,831 5,481 4,181 2,811 2,239
Operating expenses:
Research and development 3,502 1,910 1,413 934 624
Sales and marketing 8,296 3,802 4,000 2,299 1,937
General and administrative 2,700 1,243 1,113 593 534
Amortization of deferred share 784 784 - 184 -
compensation
Total operating expenses 15,282 7,739 6,526 4,010 3,095
Operating loss 5,451 2,258 2,345 1,199 856
Financial income (expenses), net 433 166 (93) 129 (61)
Other expenses, net 333 234 15 234 10
Loss before minority interest in 5,351 2,326 2,453 1,304 927
losses of a subsidiary
Minority interest in losses of a 199 44 - 4 -
subsidiary
Net loss $ 5,152 $ 2,282 $ 2,453 $ 1,300 $ 927
Basic and diluted net loss per $ 0.49 $ 0.22 $ 0.23 $ 0.12 $ 0.09
share
Weighted average number of shares 10,582 10,562 10,679 10,562 10,679
used in computing basic and
diluted net loss per share (in
thousands)
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Share Additional Warrants Deferred Accumulated Accumulated Total
paid-in share other deficit
capital capital compensation comprehensive
loss
Balance as of January 1, 2003 $ 28 $ 74,682 $ 425 $ (784) $ (547) $ (54,337) $ 19,467
Comprehensive loss:
Net loss - - - - - (5,152) (5,152)
Total comprehensive loss
(5,152)
Amortization of deferred share - - - 784 - - 784
compensation
Forfeiture of warrants - 425 (425) - - - -
Balance as of December 31, 2003 28 75,107 - - (547) (59,489) 15,099
Comprehensive loss:
Net loss - - - - - (2,453) (2,453)
Total comprehensive loss (2,453)
Balance as of June 30, 2004 $ 28 $ 75,107 $ - $ - $ (547) $ 61,942 $ 12,646
(unaudited)
Balance as of January 1, 2003 28 74,682 425 (784) (547) (54,337) 19,467
Comprehensive loss:
Net loss - - - - - (2,282) (2,282)
Total comprehensive loss (2,282)
Amortization of deferred share - - - 784 - - 784
compensation
Forfeiture of warrants - 425 (425) - - - -
Balance as of June 30, 2003 $ 28 $ 75,107 $ - $ - $ (547) $ (56,619) $ 17,969
(unaudited)
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended Six months ended
December 31, June 30,
2003 2003 2004
Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,152) $ (2,282) $ (2,453)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 1,534 859 610
Amortization of deferred share compensation 784 784 -
Minority interest in losses of a subsidiary (199) (44) -
Decrease (increase) in trade receivables, other receivables 709 (950) 635
and prepaid expenses
Decrease in inventories 262 996 328
Decrease (increase) in work in process net of advances from (825) (699) 400
customers
Decrease in trade payables, other payables and accrued (88) (617) (1,096)
expenses and accrued severance pay, net
Increase (decrease) in deferred revenues 34 81 (121)
Other 1 - 14
Net cash used in operating activities (2,940) (1,872) (1,683)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (156) (66) (78)
Proceeds from sale of property and equipment 32 24 58
Restricted cash (23) - 23
Net cash (used in) provided by investing activities (147) (42) 3
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term bank credit, net (30) (30) -
Payment of long-term loan (116) (76) (16)
Net cash used in financing activities (146) (106) (16)
Decrease in cash and cash equivalents (3,233) (2,020) (1,696)
Cash and cash equivalents at beginning of the year 10,034 10,034 6,801
Balance of cash and cash equivalents at end of the period $ 6,801 $ 8,014 $ 5,105
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
SUPPLEMENTARY INFORMATION
a. Company's shares and share options held by members of the board of
directors and officers of the Company:
Number of Number of
Ordinary shares share options *)
Avi Sharir 1,228,578 184,932
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, 2004, the Company employs 107 employees.
Copies of this announcement are available from the Company's website www.orad.tv
This information is provided by RNS
The company news service from the London Stock Exchange
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