Last checked at 24 Nov 2008 07:00
MTI WIRELESS EDGE LTD
FINANCIAL RESULTS FOR THE NINE MONTHS ENDED
30 SEPTEMBER 2008
MTI Wireless Edge Ltd., (ticker: MWE) ('MTI' or 'the Company'), a market leader in the manufacture of flat panel antennas for fixed wireless broadband, announces its unaudited results for the nine months ended 30 September 2008.
Highlights
Revenues slightly down on last year to $13.6m (2007: $14.3m)
Within this, third quarter revenues flat on second quarter 2008 and slightly higher than third quarter 2007
Gross Profit reduced to $4.9m (2007: $6.2m)
Strong cash and cash equivalents together with financial assets at $13.7m (Q3 2007: $13.9m)
Dov Feiner, Chief Executive Officer, commented:
"The Company maintained its revenue performance compared to the second quarter of the year, but comparatives with last year continue to suffer from the strength of the Israeli Shekel against the US Dollar, which is reflected in the results for the year to date. In addition to the various adverse external conditions, the Company has borne some start-up costs associated with its Indian production facility, which is due to begin commercial shipments before the end of 2008.
As previously advised, the Board expects that the profits for the year end 31 December 2008 will be significantly below those reported for the last financial year. Looking forward, the current order book is consistent with current levels of revenue and continues to be from good quality customers. Starting in 2009 the Indian manufacturing facility is expected to help reduce manufacturing costs as well as provide some additional marketing opportunities. The Company continues to be in a strong financial position to take advantage of future growth opportunities."
MTI Wireless Edge Ltd + 972 3 900 8900
Moni Borovitz, Finance Director
Dov Feiner, CEO
Noble & Company Limited +44 20 7763 2200
John Llewellyn-Lloyd
James Nelson
Threadneedle Communications +44 20 7936 9605Graham HerringJosh Royston
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.
Consolidated Profit and Loss Statement
| For the nine months ended September 30 | Year ended December 31 | |||||
| 2008 | 2007 | 2007 | ||||
| U.S. $ in thousands | ||||||
| Unaudited | Audited | |||||
| Revenues | 13,605 | 14,283 | 19,035 | |||
| Cost of sales | 8,693 | 8,108 | 10,605 | |||
| Gross profit | 4,912 | 6,175 | 8,430 | |||
| Research and development expenses | 1,030 | 1,076 | 1,415 | |||
| Selling and marketing expenses | 1,788 | 1,402 | 1,946 | |||
| General and administrative expenses | 1,360 | 948 | 1,340 | |||
| Profit from operations | 734 | 2,749 | 3,729 | |||
| Finance expense | 166 | 71 | 94 | |||
| Finance income | 631 | 828 | 1,369 | |||
| Profit before tax | 1,199 | 3,506 | 5,004 | |||
| Tax expense (income) | (247) | 200 | 364 | |||
| Net profit | 1,446 | 3,306 | 4,640 | |||
| Earnings per share: | ||||||
| Basic (dollars per share) | 0.0274 | 0.0615 | 0.0863 | |||
| Diluted (dollars per share) | 0.0274 | 0.0607 | 0.0853 | |||
| Weighted average number of shares outstanding: | ||||||
| Basic | 52,729,640 | 53,779,998 | 53,779,998 | |||
| Diluted | 52,729,640 | 54,493,586 | 54,405,033 | |||
CONSOLIDATED BALANCE SHEETS
| 30.9.2008 | 30.9.2007 | 31.12.2007 | |||
| U.S. $ In thousands | |||||
| Unaudited | Audited | ||||
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and cash equivalents | 3,764 | 1,597 | 3,370 | ||
| Other financial assets | 9,974 | 12,281 | 11,203 | ||
| Trade receivables | 6,323 | 5,706 | 6,248 | ||
| Other receivables | 276 | 178 | 121 | ||
| Inventories | 2,466 | 2,163 | 2,253 | ||
| Total current assets | 22,803 | 21,925 | 23,195 | ||
| LONG TERM PREPAID EXPENSES | 54 | 49 | 55 | ||
| PROPERTY AND EQUIPMENT, NET | 1,677 | 1,522 | 1,522 | ||
| GOODWILL | 406 | 406 | 406 | ||
| DEFERRED TAX ASSETS | 395 | 97 | 95 | ||
| 25,335 | 23,999 | 25,273 | |||
| 30.9.2008 | 30.9.2007 | 31.12.2007 | |||
| U.S. $ In thousands | |||||
| Unaudited | Audited | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Financial liabilities | - | 43 | 22 | ||
| Trade payables | 3,363 | 2,281 | 2,625 | ||
| Other accounts payables | 901 | 677 | 597 | ||
| Tax liability | 171 | 332 | 494 | ||
| Liabilities due to warrants | 2 | 729 | 298 | ||
| Total current liabilities | 4,437 | 4,062 | 4,036 | ||
| LONG-TERM LIABILITIES: | |||||
| Employee benefits | 318 | 300 | 266 | ||
| SHAREHOLDERS' EQUITY | |||||
| Share capital | 109 | 115 | 115 | ||
| Additional paid-in capital | 14,960 | 14,945 | 14,945 | ||
| Retained earnings | 5,511 | 4,577 | 5,911 | ||
| Total shareholders' equity | 20,580 | 19,637 | 20,971 | ||
| 25,335 | 23,999 | 25,273 | |||
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the nine months ended September 30, 2008:
| Share capital | Additional paid-in capital | Retained earnings (accumulated deficit) | Total | ||||
| U.S. $ in thousands | |||||||
|
| Unaudited | ||||||
| Balance at January 1, 2008(Audited) | 115 | 14,945 | 5,911 | 20,971 | |||
| Changes during the nine months ended September 30, 2008: | |||||||
| Net profit | - | - | 1,446 | 1,446 | |||
| Total recognized income for the period | - | - | 1,446 | 1,446 | |||
| Dividend distributed | - | - | (979) | (979) | |||
| Buyback purchase of stock (*) | (6) | - | (867) | (873) | |||
| Share based payment (**) | - | 15 | - | 15 | |||
| Balance at September 30, 2008 | 109 | 14,960 | 5,511 | 20,580 | |||
(*) see note 3
(**) see note 4
For the nine months ended September 30, 2007:
| Share capital | Additional paid-in capital | Retained earnings | Total | ||||
| U.S. $ in thousands | |||||||
|
| Unaudited | ||||||
| Balance at January 1, 2007(Audited) | 115 | 14,945 | 2,169 | 17,229 | |||
| Changes during the nine months ended September 30, 2007: | |||||||
| Net profit | - | - | 3,306 | 3,306 | |||
| Total recognized income for the period | - | - | 3,306 | 3,306 | |||
| Dividend distributed | - | - | (898) | (898) | |||
| Balance at September 30, 2007 | 115 | 14,945 | 4,577 | 19,637 | |||
For the year ended December 31, 2007:
| Share capital | Additional paid-in capital | Retained earnings (accumulated deficit) | Total | ||||
| U.S. $ in thousands | |||||||
| Audited | |||||||
| Balance at January 1, 2007 | 115 | 14,945 | 2,169 | 17,229 | |||
| Changes during 2007: | |||||||
| Net profit | - | - | 4,640 | 4,640 | |||
| Total recognized income for the year | - | - | 4,640 | 4,640 | |||
| Dividend distributed | - | - | (898) | (898) | |||
| Balance at December 31, 2007 | 115 | 14,945 | 5,911 | 20,971 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the nine months ended September 30 | Year ended December 31, | |||||||
| 2008 | 2007 | 2007 | ||||||
| U.S. $ in thousands | ||||||||
| Unaudited | Audited | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net profit | 1,446 | 3,306 | 4,640 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 246 | 229 | 309 | |||||
| Gain from short-term investments | (307) | (290) | (104) | |||||
| Deferred tax assets | (300) | (28) | (26) | |||||
| Equity settled share-based payment expense | 15 | - | - | |||||
| Decrease in fair value of liabilities due to warrants | (296) | (512) | (942) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in inventories | (213) | (439) | (529) | |||||
| Increase in trade receivables | (75) | (552) | (1,094) | |||||
| Decrease (increase) in other accounts receivables for short and long term | (154) | 10 | 62 | |||||
| Increase (decrease) in trade payables | 752 | (152) | 180 | |||||
| Increase (decrease) in other accounts payables | 304 | (123) | (200) | |||||
| Increase (decrease) in tax liability | (323) | 82 | 244 | |||||
| Increase in employee benefits | 52 | 69 | 35 | |||||
| Net cash provided by operating activities | 1,147 | 1,600 | 2,575 | |||||
Consolidated Statement of Cash Flows (cont..)
| For the nine months ended September 30 | Year ended December 31, | ||||||
| 2008 | 2007 | 2007 | |||||
| U.S. $ in thousands | |||||||
| Unaudited | Audited | ||||||
| Cash Flows From Investing Activities: | |||||||
| Sale(Purchase) of short-term investment, net | 1,536 | (858) | 34 | ||||
| Purchase of property and equipment | (415) | (348) | (421) | ||||
| Net cash (used in) provided by investing activities | 1,121 | (1,206) | (387) | ||||
| Cash Flows From Financing Activities: | |||||||
| Dividend distributed | (979) | (898) | (898) | ||||
| Buyback purchase of stock | (873) | - | - | ||||
| Repayment of bank borrowing | (22) | (66) | (87) | ||||
| Net cash used in by financing activities | (1,874) | (964) | (985) | ||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 394 | (570) | 1,203 | ||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,370 | 2,167 | 2,167 | ||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 3,764 | 1,597 | 3,370 | ||||
Appendix A - Non-cash activities:
| For the nine months ended September 30 | Year ended December 31, | |||||||
| 2008 | 2007 | 2007 | ||||||
| U.S. $ in thousands | ||||||||
| Unaudited | Audited | |||||||
| Purchase of property and equipment against trade payables | 27 | 47 | 41 | |||||
Appendix B - Additional Information:
| For the nine months ended September 30 | Year ended December 31, | |||||||
| 2008 | 2007 | 2007 | ||||||
| U.S. $ in thousands | ||||||||
| Unaudited | Audited | |||||||
| Income tax | 420 | 152 | 181 | |||||
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - General:
MTI wireless Edge Ltd. (hereafter - the Company) is an Israeli corporation. It was incorporated on December 30, 1998 as a wholly - owned subsidiary of M.T.I. Computers & 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 Company is engaged in the development, design, manufacture and marketing of antennas.
On March 2008, the company has invested in establishing of a wholly owned subsidiary Switzerland based ADVANT COM Sarl, (hereinafter called AdvantCom). AdvantCom is engaged in selling and distributing of antennas and accessories and in manufacturing through an Indian subsidiary.
Note 2 - Significant Accounting Policies:
The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2007 are applied consistently in these interim consolidated financial statements.
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") .
Basis of consolidation
Where the company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary.
The consolidated financial statements present the results of the company and its subsidiaries ("the group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
Note 3 - SHAREHOLDERS' EQUITY:
A. Further to the US$1.5 million share buyback program announced with the full year results, during the period under review the Company purchased for cancellation 1,928,008 ordinary shares for total of $873 thousand.
Following the above transaction the Company has 51,851,990 ordinary shares in issue.
B. On April 4, 2008 the company paid a dividend of 1.85 cents per share totaling US$ 978,594.
NOTE 4 - EMPLOYEE STOCK OPTION PLAN:
A new option scheme for key Directors and Employees was approved at the company's Annual General Meeting on May 15, 2008. Under the plan, options for 1.5 million shares were granted on July 15, 2008. This represents approximately 2.89% of the Company's current issued and voting share capital. Among those options 275,000 options (0.53%) were granted to each of Dov Feiner and Moni Borovitz, with a vesting date of 1st April 2011 and an exercise price of 30 pence (representing approximately 60 cents) per share. The fair value for each option, according to the Black and Scholes option pricing method which was used, is 5 pence (approximately 11 cents).
The options were granted as part of a plan that was adopted in accordance with the provision of section 102 of the Israeli Income Tax Ordinance.