We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Dmatek Ld | LSE:DTK | London | Ordinary Share | IL0010830052 | ORD ILS0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 210.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
Premium
RNS Number:2705P
Dmatek Ld
04 March 2008
Dmatek
Final Results for the Year Ended 31st December 2007
2007 best year ever: revenues increase 65%;
acquired business integration brings expected results
Dmatek Ltd.("Dmatek"), the London listed provider of leading electronic
monitoring technologies today announces its final results for the year ended
31st December 2007.
Financial Highlights
2007 2006* % Change
$'000 $'000
Revenues 44.3 26.8 +65
Gross profit margin 62% 66%
Adjusted EBITDA** 9.2 5.3 +73
Operating profit 4.8 4.0 +21
Profit before tax 5.2 5.0 +5
Profit available for shareholders 4.5 4.1 +8
Earnings per share 20c 19c
Net cash balances 9,744 8,013 +22%
* 2006 restated for IFRS
** Before exceptional items (other income) & share option costs
Operating Highlights
* Pro Tech acquisition brings expected results
* Revenue continues to grow, customers retained
* Turns profitable, gross profit margins continue to improve
* Integration well advanced - manufacturing, R&D
* US law enforcement business strengthens
* Elmo-Tech continues to increase customer base
* Overall customer base expands, lease business grows - higher quality,
lower risk
* Strong 22% organic growth for the European law enforcement business
* Eldercare business grows 48%
Yoav Reisman, Chief Executive Officer of Dmatek, commented:
"During 2007, we strengthened both our market and technology positions, on the
back of the successful Pro Tech acquisition. We grew revenues from $27m to
$44m, 61% of which comes from lease deals, from a much broader customer base. We
have transformed the business in terms of scale, visibility and risk."
Enquiries:
Dmatek Ltd
Idit Mor Mobile: +44 (0) 7834 126 742
Introduction
We are pleased to have delivered on our strategic goals for 2007. We have
materially expanded our business and strengthened our US market position. We now
have access to a much larger customer base, and far greater visibility thanks to
a significantly higher proportion of lease revenues.
Following the acquisition of Pro Tech at the beginning of the year, we
effectively dealt with the increased scope of activities on all operational
levels. We are pleased to see gross profit margins for the group continue to
rise, now at 62% from 58% at the half year, as we integrate the lower margin
business we acquired. Our cost control was robust and in spite of the inevitable
additional administrative costs associated with integrating a major acquisition,
we were able to increase adjusted earnings before interest, tax, depreciation
and amortisation ("EBITDA") in line with revenues and turn Pro Tech from
operating loss to operating profit.
Pro Tech Acquisition
The acquisition of Pro Tech is proving a great success. We continue to grow
revenues by adding new customers and developing existing customers
relationships. Our focus remains on GPS for home detention and sex offender
monitoring.
Integration is now well advanced. We have improved the efficiency of Pro Tech's
operations in handling field units and integrating both back office functions
and manufacturing. We have moved manufacturing to Tel Aviv or to subcontractors
as appropriate. Research and Development activities are now aligned with our
corporate R&D plan and duplicate efforts have been eliminated. Market facing
activities such as sales and account management will remain separate for the
time being.
Law Enforcement, US
Overall, our US law enforcement business has been strengthened considerably by
the Pro Tech acquisition and the broadening of Elmo-Tech US operations.
Revenues came to $20.6m, nearly tripling last year's $7.7m. These comprised
$5.3m generated by Elmo-Tech and $15.3m by Pro Tech.
Elmo-Tech revenues include the declining residual business from our historic
sole distributor and a growing, predominantly lease based revenue stream from
new customers, actively sourced by Elmo-Tech Inc. Pro Tech's business continued
to grow in 2007, reflecting both the expansion of existing customer programmes
and new accounts.
During the year, Pro Tech and Elmo-Tech have operated alongside each other, each
focusing on their core strengths. Pro Tech's expertise, technology and market
focus lie in the offender GPS tracking opportunity. Elmo-Tech' strength lies in
its single platform offering, which incorporates multiple remote monitoring
technologies. The combination of the two businesses gives us a broader product
offering, a much better view of the market and improved market access,
positioning us well for the future.
Law Enforcement, Europe
Revenues in Europe amounted to some $15m, a 22% increase (2006 $12.2). This is
attributable to the organic growth of our various accounts across the continent,
notably in France and Spain. In both these countries we have won various local
and national level contracts through the year, securing our lease revenue stream
from these accounts for 2008 and in some of the cases, further into 2009.
In Sweden, we won a contract to provide the Swedish Prison and Probation Service
(SPPS) three additional in-prison offender-monitoring systems, further to the
one installed there in 2005 on the basis of successful operations and
considerable cost savings of 20% reported by SPPS officials.
Elmo-Tech systems are currently in service in 14 countries in Europe.
Law Enforcement, Rest of the World
Programmes in other parts of the world contributed $2.5m of revenues, roughly at
the same level as 2006's $2.7m. These came mainly from the expansion of
programmes in Australia and New Zealand. We continue to monitor the markets
outside the US and Europe and to develop our business there as the opportunities
arise.
Eldercare Market
HomeFree, which operates in the market for monitoring the elderly residents and
cognitively impaired patients, achieved good growth during 2007, increasing
sales by 48% to $6.4m. We continue to focus on the US and to target larger
single facilities and multiple facility management companies. Sales in the first
half included a major installation with the US government retirement Home in
Washington DC, which together with the NY facility won in late 2006 made the two
largest projects of their kind this year. The installations of these two systems
were successfully completed during the year.
Group Operations
During the year, our focus has been on the integration of Pro Tech.
Concurrently, we enhanced our operations to enable us to manage effectively a
larger business. We are in the process of upgrading our operational
infrastructure including reporting, supply chain management, quality assurance,
information technology and information systems.
Financial Review
Revenues for the period grew by 65%. This includes a full year from Pro Tech,
which has so far proved to be an excellent deal for us. If Pro Tech had been
part of the group for the corresponding period, the increase would have been
13%. Excluding Pro Tech, organic growth was 8%. However, it is worth noting that
Pro Tech business overlaps in some areas with that of Elmo-Tech.
2007 % 2007 2006 % 2006 % change
$'000 $'000
Revenue from sale of products 13,871 31% 16,347 61% (15)%
Revenue under lease agreements 26,830 61% 7,450 28% +260%
Revenue from maintenance & services 3,622 8% 3,037 11% +19%
44,323 100% 26,834 100% +65%
Lease revenues have increased to 61% of the total from 28% in 2006, giving us a
more visible revenue stream. The increase in leases as a proportion of revenues
was due mainly to Pro Tech, but also to increased lease business for Elmo-Tech.
In the longer run, the shift to higher lease revenue will affect revenues from
maintenance and services which are typically bundled into lease agreements.
As expected, the proportion of revenues from the US rose considerably thanks to
the addition of Pro Tech and the increase in HomeFree sales. The US now
accounts for 60% of group revenues up from 43% in 2006.
2007 % 2007 2006 % 2006 % change
$'000 $'000
United States 26,487 60% 11,449 43% +131%
Europe 15,330 34% 12,563 47% +22%
Rest of the world 2,506 6% 2,822 10% (11)%
44,323 100% 26,834 100% +65%
In terms of the business split, the Eldercare business maintained its
proportionate share in the group's revenues.
2007 % 2007 2006 % 2006 % change
$'000 $'000
Law Enforcement 37,928 86% 22,521 84% +68%
Eldercare 6,395 14% 4,313 16% +48%
Total 44,323 100% 26,834 100% +65%
Gross profit margins for the year were 62%, compared with 66% in 2006, up from
58% at the half year. This decrease year on year is mainly the result of the
lower margins of the acquired business. Pro Tech's margins have improved under
our management.
Adjusted EBITDA grew to $9.2m, an increase of 73% over the corresponding period
in 2006, in line with the revenue increase. Depreciation charges totalled $3.3m
compared with $0.9m last year, reflecting the higher number of leased units.
Reconciliation of adjusted EBITDA 2007 2006 % change
$'000 $'000
Operating profit 4,825 3,998 +21%
Depreciation 3,331 867
Amortisation 1,010 293
EBITDA 9,166 5,158 +78%
Share based compensation 846 383
Exceptional items (other income) 803 206
Adjusted EBITDA 9,209 5,335 +73%
Our investment in R&D amounted to 16% of revenue (2006: 16%), reflecting our
existing business efforts, those of Pro Tech and our joint projects. Sales and
marketing costs increased by 41%, mainly in the US, to $7.8m. General &
Administrative expenses increased from $4.2m to $8.2m. The increase was a result
of the expansion in our US operations and non-cash items - the amortisation
associated with the Pro Tech acquisition and higher share-based compensation,
amounting to approximately $1.5m. Salary related expenses in Israel were
affected by the strengthened Shekel against the US dollar, which devaluated in
avarge by 8%. Other operating income for 2007 was mainly the $0.8m that we
received in cash on settlement of a patent dispute. Operating profit therefore
grew by 21%.
Finance income was down on the prior year because of lower average cash
balances, following the Pro Tech acquisition. The effective tax rate was 15%
(2006: 17%) thanks to tax benefits from Pro Tech transactions. Going forwards we
expect an effective tax rate of approximately 17%. The profit attributable to
shareholders was $4.5m, compared to $4.1m for 2006.
Management's Cash Flow Analysis 2007 2006 % change
$'000 $'000
Operating profit 4,825 3,998 +21%
Net cash flow from working capital etc (1,254) 220
Share options 846 383
Depreciation and amortisation 4,341 1,160
Cash inflow from operating activities 8,758 5,761 +52%
Acquisition of fixed assets & other assets (3,274) (1,545)
Acquisition of Pro Tech (717) (13,218)
Net finance income 370 963
Tax paid (626) (875)
Net cash inflow/outflow before financing 4,511 (8,914)
Repayment of borrowings (3,374) (323)
Exercise of options 594 29
Net Cash inflow/(outflow) 1,731 (9,208)
Net cash at beginning of year 8,013 17,221
Net cash at end of year 9,744 8,013 +22%
We generated nearly $9m from operating activities, up 52% on 2006. The overall
net acquisition cost of Pro Tech was $13.9m. The consideration for the Pro Tech
acquisition went into an escrow account at the end of 2006, some transaction
costs were capitalized during 2006 and the balance was paid at the beginning of
2007. Even after funding the acquisition of Pro Tech, we ended the year with net
cash balances of $9.7m. Our financial position therefore
remains very strong.
Conclusion & Outlook
During 2007, we strengthened both our market and technology positions, on the
back of the successful Pro Tech acquisition. We have transformed the business in
terms of scale, visibility and risk. We grew revenues from $27m to $44m, 61% of
which comes from lease deals, from a much broader customer base.
Our targets for 2008 are to strengthen our organic growth rates whilst further
improving operational performance. We will continue the focus on converting
market opportunities into top-line growth. We believe that we have the products,
solutions and people to deliver on our targets. Simultaneously, we will continue
to look out for further step growth opportunities.
Independent auditors' report
To the Shareholders of
Dmatek Ltd.
We have audited the accompanying consolidated financial statements of Dmatek
Ltd. and its subsidiaries (the "Group"), which comprise the consolidated balance
sheet as at 31 December 2007 and 2006, and the consolidated income statement,
and the consolidated cash flow statement for the years then ended, and a summary
of significant accounting policies and other explanatory notes.
We did not audit the financial statements of certain consolidated subsidiaries,
whose assets constitute approximately 7.4% and 6.8% of the total consolidated
assets as at December 31, 2007 and 2006, respectively, and whose revenues
constitute approximately 9.3%, and 13.4% of the total consolidated revenues for
the years ended December 31, 2007 and 2006, respectively. The financial
statements of those subsidiaries were audited by other auditors whose reports
thereon have been furnished to us' and our opinion, insofar as it relates to the
amounts included in respect of the aforementioned consolidated subsidiaries, is
based solely on the reports of the other auditors.
Management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with International Financial
Reporting Standards. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatements, whether due
to fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audit. We conducted our audit in accordance with
generally accepted auditory standards, including standards prescribed by the
Auditors Regulations (manner of Auditor's Performance) - 1973. Those standards
require that we comply with relevant ethical requirements and plan and perform
the audit to obtain reasonable assurance whether the financial statements are
free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on our judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, we consider internal control relevant to the
entity's preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity's
internal control. An audit also includes evaluating the appropriateness of
accounting principles used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
The financial statements do not include disclosure regarding segments as
required in International Accounting Standard No. 14 due to the reasons
described in Note 2(M).
In our opinion, With the exception of the disclosure described above regarding
segments, the consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2007 and 2006,
and of its consolidated financial performance and its consolidated cash flows
for the years then ended in accordance with International Financial Reporting
Standards.
Somekh Chaikin
Certified Public Accountants (Isr.)
Member Firm of KPMG International
Tel-Aviv Israel
March 3, 2008
CONSOLIDATED INCOME STATEMENT
Year ended 31st December
Note 2007 2006
US$'000 US$'000
Revenue 6 44,323 26,834
Cost of sales (17,014) (9,113)
Gross profit 27,309 17,721
Research and development expenses (7,303) (4,174)
Sales and marketing (7,825) (5,547)
General and administrative expenses (8,159) (4,208)
Other income net 7 803 206
Operating profit 4,825 3,998
Financial income 9 742 1,248
Financial expenses 9 (372) (285)
Net finance income (expenses) 370 963
Profit before income tax 5,195 4,961
Income tax expense 10 (681) (824)
Profit for the period 4,514 4,137
Attributable to:
Equity holder of the Company 17 4,467 4,126
Minority interest 17 47 11
Profit for the period 4,514 4,137
Basic earnings per share (U.S. dollars) 21, 18 0.20 0.19
Diluted earnings per share (U.S. dollars) 21, 18 0.19 0.18
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED BALANCE SHEET
Year ended 31st December
Note 2007 2006
US$'000 US$'000
Assets
Property, plant and equipment 11 5,823 2,272
Intangible assets 12 9,187 3,692
Deferred tax assets 13 1,471 557
Total non-current assets 16,481 6,521
Inventories 14 4,916 2,864
Trade and other receivables 15 13,461 10,526
Deposits - 12,500
Cash and cash equivalents 16 10,391 8,667
Total current assets 28,768 34,557
Total assets 45,249 41,078
Equity
Share capital 17 70 69
Share premium and reserves 17 20,758 19,319
Retained earnings 17 14,218 9,751
Total equity attributable to equity holders of the Company 35,046 29,139
Minority interest 17 151 104
Total equity 35,197 29,243
Liabilities
Employee benefits 20 331 306
Total non-current liabilities 331 306
Bank overdraft 16 647 654
Loans and borrowings 19 - 3,374
Trade and other payables 24 7,493 6,568
Deferred income 22 774 338
Warranty provisions 23 807 595
Total current liabilities 9,721 11,529
Total liabilities 10,052 11,835
Total equity and liabilities 45,249 41,078
These financial statements have approved by the Board of Directors on 3rd March,
2008 and were signed on its behalf by:
Yoav Reisman - Director Asher Zysman - Director
CEO CFO
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED CASH FLOW STATEMENTS
Year ended 31st December
Note 2007 2006
US$'000 US$'000
Cash flows from operating activities
Profit for the period 4,514 4,137
Adjustments for:
Depreciation 11 3,331 867
Amortization of intangible assets 12 1,010 293
Net finance income 9 (370) (963)
Equity-settled share-based payment transactions 21 846 383
Disposals of leased equipment 11 7 -
Income tax expense 10 681 824
10,019 5,541
Increase in inventories 14 (1,716) (1,140)
Decrease (increase) in trade and other receivables 15 387 (1,027)
Increase (decrease) in trade and other payables 24 (598) 1,978
Increase (decrease) in deferred income 22 436 (29)
Increase in warranty provisions 23 212 319
Increase in employee benefits 20 25 119
(1,254) 220
Income tax paid (626) (875)
Net cash from operating activities 8,139 4,886
Cash flows from investing activities
Cash in escrow 5 12,500 (12,500)
Acquisition of subsidiary, net of cash acquired 5 (13,217) -
Acquisition of property, plant and equipment 11 (944) (444)
Payment in respect of acquisition of subsidiary 5 - (718)
Acquisition of lease equipment 11 (2,262) (1,049)
Acquisition of patents and trademarks 12 (75) (52)
Net cash used in investing activities (3,998) (14,763)
Cash flows from financing activities
Exercise of options 17 594 29
Repayment of borrowings 19 (3,374) (323)
Financial income 9 253 627
Financial expenses 9 (372) (285)
Net cash from (used in) financing activities (2,899) 48
Net decrease in cash and cash equivalents 1,242 (9,829)
Cash and cash equivalents at 1 January 8,013 17,221
Effect of exchange rate fluctuations on cash held 489 621
Cash and cash equivalents at 31 December 9,744 8,013
The accompanying notes are an integral part of these consolidated financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31ST DECEMBER 2007
Note 1 - Reporting Entity
A. DMATEK Ltd. ("DMATEK" or "the Company") and its subsidiaries ("the
Group") operate in the field of electronic monitoring of moving objects. The
Group develops, manufactures, and markets its products utilizing a combination
of hardware and software based on its technologies. In addition, certain
subsidiaries provide maintenance services for the Group's products.
B. The Company's ordinary shares have been listed on the Official List of
the London Stock Exchange since April 2000. Prior to that date and commencing
from December 1995, the Company's ordinary shares were listed on AIM.
C. On 12 January 2007, DMATEK acquired 100% of the Pro Tech Monitoring,
Inc. share (see Note 5).
Note 2 - Basis of Preparation
A. Statement of compliance
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs). These are the Group's first
IFRS consolidated annual financial statement.
An explanation of now, the transition to IFRS has affected the reported
financial position, financial performance and cash flows of the Group is
provided in Note 29. This Note includes reconciliation of equity and profit or
loss for comparative periods reported under Israeli GAAP (previous GAAP) to
those reported for those periods under IFRSs.
The consolidated financial statements were authorized for issuance on 3 March
2008.
B. Basis of measurement
The consolidated financial statements have been prepared on the historical costs
basis.
C. Functional and presentation currency
These consolidated financial statements are presented in U.S. dollar ("dollar"),
which is the Group's functional currency. All financial information presented in
dollar has been rounded to the nearest thousand and prepared on the historical
cost basis.
D. Use of estimates and judgments
The preparation of financial statements in conformity with IFRSs requires
management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in which the estimates are
revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and
critical judgments in applying accounting policies that have the most
significant effect on the amounts recognized in the financial statements is
included in the following notes:
Note 5 - business combination
Note 10 - utilization of tax losses
Note 20 - measurement of defined benefit obligations
Note 21 - measurement of share-based payments
Note 23 - warranty provision
Note 3 - Significant Accounting Policies
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements, and have been
applied consistently by Group entities.
Certain comparative amounts have been reclassified to conform with the current
year's presentation.
A Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group
has the power, directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that presently are exercisable or convertible
are taken into account. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control commences until
the date that control ceases.
(ii) Transactions eliminated on consolidation
Intragroup balances, and any unrealized gains and losses or income and expenses
arising from intragroup transactions, are eliminated in preparing the
consolidated financial statements.
B. Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the
reporting date are retranslated to the functional currency at the exchange rate
at that date.
(ii) Foreign operations
The assets and liabilities of foreign operations are translated to dollar at
exchange rates at the reporting date. The income and expenses of foreign
operations are translated to dollar at exchange rates at the dates of the
transactions.
C. Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of
the asset. The cost of self-constructed assets includes the cost of materials
and direct labor, any other costs directly attributable to bringing the asset to
a working condition for its intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located. Purchased
software that is integral to the functionality of the related equipment is
capitalized as part of that equipment. Borrowing costs related to the
acquisition or construction of qualifying assets is recognised in profit or loss
as incurred.
When parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components) of property,
plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are
determined by comparing the proceeds from disposal with the carrying amount of
property, plant and equipment and are recognised net within "other income" in
profit or loss.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is
recognised in the carrying amount of the item if it is probable that the future
economic benefits embodied within the part will flow to the Group and its cost
can be measured reliably. The carrying amount of the replaced part is not
recognised. The costs of the day-to-day servicing of property, plant and
equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is recognized in profit or loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and equipment.
Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term.
The estimated useful lives for the current and comparative periods are as
follows:
%
Computers 33
Equipment and molds 7-25
Leasehold improvements 10
Lease equipment 25-50
Depreciation methods, useful lives and residual values area reassessed at the
reporting date.
D. Intangible assets
(i) Goodwill
Goodwill represents the excess of the cost of the acquisition over the Group's
interest in the net fair value of the identifiable assets, liabilities and
contingent liabilities of the acquiree.
(ii) Research and development
Expenditure on research activities, undertaken with the prospect of gaining new
scientific or technical knowledge and understanding, is recognized in profit or
loss when incurred.
Development activities involve a plan or design for the production of new or
substantially improved products and processes. Development expenditure is
capitalized only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are
probable, and the Group intends to and has sufficient resources to complete
development and to use or sell the assets. The expenditure capitalized includes
the cost of materials, direct labour and overhead costs that are directly
attributable to preparing the asset for its intended use. Borrowing costs
related to the development of qualifying assets are recognized in profit or loss
as incurred. Other development expenditure is recognized in profit or loss as
incurred.
Capitalized development expenditure is measured at cost less accumulated
amortization and accumulated impairment losses.
(iii) Other intangible assets
Intangible assets other than goodwill (patents, trademarks and intellectual
property) that are acquired by the Group are measured at cost less accumulated
amortisation (see below) and impairment losses.
Expenditure on internally generated goodwill and brands is recognised in profit
or loss as an expense as incurred.
(iv) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other
expenditure is expensed as incurred.
(v) Amortisation
Amortisation is recognised in profit or loss on a straight-line basis over the
estimated useful lives of intangible assets are between 7 and 12 years. Goodwill
is tested systematically for impairment at each annual balance sheet date. Other
intangible assets are amortised from the date that they are available for use.
E. Inventories
Inventories are measured at the lower of cost and net realizable value. Cost is
calculated for raw materials on the basis of the average purchase prices. Cost
is determined for finished goods and work-in-progress on the basis of the
average purchase prices of raw materials plus subcontractors and direct labor
costs.
In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
F. Impairment
The carrying amounts of the Group's assets, other than inventories (see
accounting policy E), employee benefit assets (see accounting policy G), and
deferred tax assets (see accounting policy K), are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any
such indication exists, the asset's recoverable amount is estimated (see
accounting policy F(i)).
For goodwill, intangible assets that have an indefinite useful life and
intangible assets that are not yet available for use, the recoverable amount is
estimated at each annual balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in profit or loss unless the asset is recorded at a revalue amount in
which case it is treated as a revaluation decrease.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to the
cash-generating unit (group of units) and then, to reduce the carrying amount of
the other assets in the unit (group of units) on a pro rata basis.
(i) Calculation of recoverable amount
The recoverable amount of assets is the greater of their net selling price and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
G. Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are
recognised as an expense in profit or loss as incurred.
(ii) Defined benefit plans
The Group's net obligation in respect of defined benefit post-employment plans,
including pension plans, is calculated separately for each plan by estimating
the amount of future benefit that employees have earned in return for their
service in the current and prior periods. That benefit is discounted to
determine its present value, and the fair value of any plan assets is deducted.
The discount rate is the yield at the balance sheet date on Israeli government
bonds that have maturity dates approximating the terms of the Group's
obligations. The calculation is performed by a qualified actuary using the
projected unit credit method.
All actuarial gains and losses at 1 January 2006, the date of transition to
IFRSs, were recognised. The Group recognises actuarial gains and losses that
arise subsequent to 1 January 2006 to the profit and loss accounts.
(iii) Share-based payment transactions
The share option programme allows Group employees to acquire shares of the
Company. The fair value of options granted is recognised as an employee expense
with a corresponding increase in equity. The fair value is measured at grant
date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options granted
is measured using the Monte-Carlo valuation method, taking into account the
terms and conditions upon which the options were granted.
H. Provisions
A provision is recognised if, as a result of past event, the Group has a present
legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability.
(i) Warranties
A provision for warranties is recognised when the underlying products or
services are sold.
The Group generally warrants its products for a period of one year. The
provision with respect to these warranties is computed at 2% of the revenues,
based on the Group's previous experience and management's estimate.
I. Revenue
(i) Goods sold
Revenue from the sale of goods is measured at the fair value of the
consideration received or receivable, net of returns, trade discounts and volume
rebates. Revenue is recognised when the significant risks and rewards of
ownership have been transferred to the buyer, recovery of the consideration is
probable, the associated costs and possible return of goods can be estimated
reliably, there is no continuing management involvement with the goods, and the
amount of revenue can be measured reliably.
Transfers of risks and rewards vary depending on the individual terms of the
contract of sale.
Revenues from leased products are recognised in profit and loss over the period
of the lease contract.
(ii) Services
Revenue from services rendered is recognised in profit or loss in proportion to
the stage of completion of the transaction at the reporting date. The stage of
completion is assessed by reference to surveys of work performed.
J. Finance income and expenses
Interest income or expenses in borrowings are recognised as it accrues in profit
or loss, using the effective interest method.
K. Income tax
Income tax expense comprises current and deferred tax. Income tax expense is
recognised in profit or loss except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
A deferred tax asset is recognised to the extent that it is probable that future
taxable profits will be available against which the temporary difference can be
utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
L. Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its
ordinary shares.
Basic EPS is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares
outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares
outstanding for the effects of all dilutive potential ordinary shares, which
comprise share options granted to employees.
M. Segment reporting
The Group generates revenues from sale, lease and maintenance of electronic
monitoring products in the law enforcement and the elderly care fields (as
presented in Note 6). The revenues are segmented geographically due to the fact
that the two businesses operate in what the Group considers to be a highly
competitive and narrow sector within the electronic monitoring market.
Furthermore, the Group deems this true and fair disclosure without exposing the
Group to significant business risks and therefore Segment reporting is not
presented according to IAS 14.
N. Derecognition of financial assets
According to IAS 39, "Financial Instruments: Recognition and Measurement", the
Group derecognises financial assets when the contractual rights to cash flow
expire or there is a "transfer of a financial asset" and that transfer qualifies
for derecognition.
O. Reclassification
Certain amounts in prior years' financial statements have been reclassified to
conform to the current year's presentation.
P. New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not
yet effective for the year ended 31 December 2007, and have not been applied in
preparing these consolidated financial statements:
l. IFRS 8 Operating Segments introduces the "management approach" to
segment reporting. IFRS 8, which becomes mandatory for the Group's 2009
financial statements, will require the disclosure of segment information based
on the internal reports regularly reviewed by the Group's Chief Operating
Decision Maker in order to assess each segment's performance and to allocate
resources to them. Currently the Group presents segment information in respect
of its business and geographical segments (see Note 6). Under the management
approach no change is anticipated.
2. Revised IAS 23 Borrowing Costs removes the option to expense
borrowing costs and requires that an entity capitalise borrowing costs directly
attributable to the acquisition, construction or production of a qualifying
asset as part of the cost of that asset. The revised IAS 23 will become
mandatory for the Group's 2009 financial statements and will constitute a change
in accounting policy for the Group. In accordance with the transitional
provisions the Group will apply the revised IAS 23 to qualifying assets for
which capitalisation of borrowing costs commences on or after the effective
date.
3. IFRIC 11 IFRS 2 - Group and Treasury Share Transactions requires a
share-based payment arrangement in which an entity receives goods or services as
consideration for its own equity instruments to be accounted for as an
equity-settled share-based payment transaction, regardless of how the equity
instruments are obtained. IFRIC 11 will become mandatory for the Group's 2008
financial statements, with retrospective application required. It is not
expected to have any impact on the consolidated financial statements.
4. IFRIC 12 Service Concession Arrangements provides guidance on certain
recognition and measurement issues that arise in accounting for
public-to-private service concession arrangements. IFRIC 12, which becomes
mandatory for the Group's 2008 financial statements, is not expected to have any
effect on the consolidated financial statements.
5. IFRIC 13 Customer Loyalty Programmes addresses the accounting by
entities that operate, or otherwise participate in, customer loyalty programmes
for their customers. It relates to customer loyalty programmes under which the
customer can redeem credits for awards such as free or discounted goods or
services. IFRIC 13, which becomes mandatory for the Group's 2009 financial
statements, is not expected to have any impact on the consolidated financial
statements.
6. IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction clarifies when refunds or reductions
in future contributions in relation to defined benefit assets should be regarded
as available and provides guidance on the impact of minimum funding requirements
(MFR) on such assets. It also addresses when a MFR might give rise to a
liability. IFRIC 14 will become mandatory for the Group's 2008 financial
statements, with retrospective application required. The Group has not yet
determined the potential effect of the interpretation.
7. IAS 27 (2008), "Consolidated and Separate Financial Statements",
reflects changes in the accounting treatment of the rights of holder of
con-controlling interests (the minority) and mainly discusses the accounting
treatment of changes in ownership rights in subsidiaries after obtaining
control, the accounting treatment of loss of control in subsidiaries, and the
attribution of income or loss to the holders of the controlling and
non-controlling interests of a subsidiary. IAS 27 shall apply to the financial
statements of the Company for 2010. The standard is not anticipated to have an
effect on the financial statements of the Company.
8. IFRS 3 (2008), "Business Combinations", refers also to business
combinations executed only by means of contract. The definition of a business
combination focuses on obtaining control, including by means of a contingent
consideration. The buyer can choose to measure the non-controlling rights at
their fair value on the date of acquisition or according to their relative
portion in the fair value of the identified assets and identified liabilities of
the acquired entity. When an acquisition is executed by means of consecutive
purchases of shares (step acquisition), the identified assets and identified
liabilities of the acquired entity are recognized at their fair value when
control is obtained. IFRS 3 (2008) applies to the financial statements of the
Company for 2010 and is not anticipated to have an effect of the financial
statements of the Company.
Note 4 - Financial Risk Management
Overview
The Group has exposure to the following risks from its use of financial
instruments:
credit risk
liquidity risk
market risk.
This note presents information about the Group's exposure to each of the above
risks, the Group's objectives, policies and processes for measuring and managing
risk, and the Group's management of capital. Further quantitative disclosures
are included throughout these consolidated financial statements.
The Board of Directors has overall responsibility for the establishment and
oversight of the Group's risk management framework.
The Group's risk management policies are established to identify and analyse the
risks faced by the Group, to set appropriate risk limits and controls, and to
monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group's
activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the
Group's risk management policies and procedures and reviews the adequacy of the
risk management framework in relation to the risks faced by the Group. The Group
Audit Committee is assisted in its oversight role by Internal Audit. Internal
Audit undertakes both regular and ad hoc reviews of risk management controls and
procedures, the results of which are reported to the Audit Committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group's receivables from customers.
Trade and other receivables
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer. The demographics of the Group's customer base,
including the default risk of the industry and country in which customers
operate, has less of an influence on credit risk.
The Group establishes an allowance for impairment that represents its estimate
of incurred losses in respect of trade and other receivables and investments.
The main components of this allowance are a specific loss component that relates
to individually significant exposures, and a collective loss component
established for groups of similar assets in respect of losses that have been
incurred but not yet identified. The collective loss allowance is determined
based on historical data of payment statistics for similar financial assets.
Guarantees
The Group's policy is to provide financial guarantees only to wholly-owned
subsidiaries.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial
obligations as they fall due. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group's
reputation.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange
rates, interest rates and equity prices will affect the Group's income or the
value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that
are denominated in a currency other than the respective functional currencies of
Group entities.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the business.
Neither the Company nor any of its subsidiaries are subject to externally
imposed capital requirements.
Note 5 - Pro Tech Acquisition
On 12 January, 2007, Dmatek acquired 100% of the Pro Tech Monitoring, Inc.
share, by Pro Tech Holdings, Inc., a fully-owned subsidiary of Dmatek. The
combined purchase price was US$ 12,500,000 divided into payment for the entire
issue share capital of Pro Tech (US$6,304,045) and payment for the credit note
issued by Pro Tech to the former owner, RMS (US$6,195,955). The amount was
settled in cash from existing reserves that were held in an escrow account as at
31 December 2007. The overall acquisition cost was US$14.1 million.
Pro Tech Monitoring Inc. is a privately owned US based, specialised in people
tracking technology as a developer and system vendor offering a range of GPS
products.
The acquisition is accounted for under the purchase method of accounting. The
purchase price of Pro Tech Monitoring Inc. has been allocated based on
independent appraisals and management estimates.
Pre-acquisition carrying amounts were determined based on applicable IFRSs
immediately before acquisition. The values of assets, liabilities, and
contingent liabilities recognised on acquisition are their estimated fair
values. In determining the fair value of intangible assets acquired, the Group
applied the income approach which utilizes a Discounted Cash Flow analysis
The goodwill recognised on the acquisition is attributable mainly to the skills
and technical talent of the acquired business's work force, and the synergies
expected to be achieved from integrating the company into the Group's existing
business.
The allocation of the acquisition cost is as follows:
Pre-acquisition
Recognized
carrying Fair values values on
Note amounts adjustments acquisitions
Property, plant and equipment 11 3,683 - 3,683
Intangible assets:
Technology 12 - 3,800 3,800
Trademarks and trade name 12 36 500 536
Customer-related intangible 12 - 2,700 2,700
Loss carried forward - 3,770 3,770
Inventory 336 - 336
Deposits 299 - 299
Current assets 3,023 - 3,023
Cash and cash equivalents 184 - 184
Trade and other payables (2,332) - (2,332)
Deferred tax related to intangibles - (2,800) (2,800)
Net identifiable assets and liabilities 5,229 7,970 13,199
Goodwill on acquisition 920
Consideration paid* 14,119
Cash and cash equivalents acquired (184)
Payment in 2006 (718)
Net cash outflow 13,217
* Includes brokerage fee and other transaction costs.
In the year ended 31st December, 2007, Pro Tech Monitoring Inc. contributed
revenue of $15.3m.
Note 6 - Revenue
Year ended 31st December
2007 2006
US$'000 US$'000
Composition:
Revenue from sale of products 13,871 16,347
Revenue under lease agreements 26,830 7,450
Revenue from maintenance and services 3,622 3,037
44,323 26,834
Analysis of revenue by geographic
markets and business:
Law Enforcement Business
United states 20,613 7,705
Europe 14,817 12,150
Rest of the world 2,498 2,666
37,928 22,521
Eldercare Business
United States 5,874 3,744
Europe 513 413
Rest of the world 8 156
6,395 4,313
All Group
United States 26,487 11,450
Europe 15,330 12,563
Rest of the world 2,506 2,821
44,323 26,834
Note 7 - Other Income
On November 27, 2007, ProTech Monitoring Inc, a subsidiary of Dmatek, entered
into a Settlement Agreement, which caused the dismissal of its lawsuit against
iSecureTrac Corp. ("iST"). In consideration, iST paid Pro Tech $800,000 in cash
upon execution of the Settlement Agreement and has agreed to purchase $600,000
worth of remote alcohol monitoring equipment prior to December 31, 2007. In
addition, iST has agreed to make a modification to its GPS tracking equipment to
eliminate or disable a particular component that was claimed by Pro Tech to
contribute to the infringement of its patent. To the extent this component is
not removed or disable from iST's equipment within two months, iST will be
subject to royalty payments on unmodified equipment in the field which escalate
over time. The amount of such royalty payments, if any, cannot be estimated at
this time.
During 2006, the Group recorded a total of US$206 thousand of other income, net,
resulting from an earn out against the sale of a subsidiary in 1997 and the
setting of a provision against a minority debt.
Note 8 - Personnel Expenses
Year ended 31st December
2007 2006
US$'000 US$'000
Wages and salaries 15,125 8,611
Equity-settled share-based payment transactions 846 383
Other benefit 695 615
16,666 9,609
Note 9 - Finance Income and Expense
A. Finance income
Year ended 31st December
2007 2006
US$'000 US$'000
Interest receivable, primarily from bank deposits 253 627
Foreign currency exchange gains, net 489 621
Total financial income 742 1,248
B. Finance expense
Year ended 31st December
2007 2006
US$'000 US$'000
Interest payable on short-term bank loans 215 144
Bank fees and others 157 141
Total financial expenses 372 285
C. Net Finance Income 370 963
Note 10 - Income Tax Expense
A. Reconciliation of effective tax rate
Year ended 31 December
2007 2006
US$'000 US$'000
Profit for the period 4,514 4,137
Total income tax expense 681 824
Profit excluding income tax 5,195 4,961
Statutory tax rate 29% 31%
Income tax using the Company's
domestic tax rate 1,507 1,538
Effect of tax rates in foreign jurisdictions 5 2
Effect of exchange rate (708) (457)
Effect of local law (228) 7
Tax exempt income 54 (76)
Tax incentives (533) (920)
Current year losses for which no
deferred tax asset was recognized 765 953
Change in unrecognized temporary
differences (181) (223)
681 824
B Composition:
Year ended 31st December
2007 2006
US$'000 US$'000
Current tax 625 863
Deferred tax 56 (51)
Adjustment for prior periods - 12
Income tax expense 681 824
C. The Company and two of its subsidiaries, Elmo-Tech and HomeFree, are
assessed under the provisions of the Israeli Tax Ordinance and the Israeli
Income Tax Law (Inflationary Adjustments), 1985, pursuant to which the results
for tax purposes are measured in Israeli currency in real terms in accordance
with changes in the Israeli CPI.
The Company and its subsidiaries, Elmo-Tech and HomeFree, are "Industrial
Companies" as defined in the Israeli Law for the Encouragement of Industry
(Taxes) - 1969, and, as such, are entitled to certain tax benefits, primarily
increased depreciation rates, the right to deduct public offering costs and the
amortization of patents and other intangible property. Based on this Law,
commencing 2002, the Company, Elmo-Tech and HomeFree submit consolidated tax
returns.
The Company's foreign subsidiaries are assessed for tax purposes individually
according to each company's local tax rules at a tax rate of 28% to 34%.
D. Substantially all of the Company's subsidiaries', Elmo-Tech and
HomeFree, facilities as at 31st December 2006, have been granted approved
enterprise status programs, as provided by the Israeli Law for the Encouragement
of Capital Investments - 1959 ("Investments Law"). The Company and Elmo-Tech
have completed their investments under those programs, complied with their
conditions as of 31 December 2007. The tax benefits derived from approved
enterprise status relate only to taxable income attributable to approved
enterprise investments.
Pursuant to the Investments Law and the approval certificates for Elmo-Tech's
approved enterprise programs obtained in 1996, 2000 and 2003, Elmo-Tech's income
attributable to its approved enterprise investment for the years 1999 and 2000
was tax-exempt. Any income for 2001-2010 attributable to said approved
enterprise programs will be taxed at a rate of 10% to 20%. The investments under
all these programs were completed and the programs of 1996 and 2000 have
received final approvals from the Investment Center of the Ministry of Trade and
Industry of the State of Israel. In 2005, Elmo-Tech submitted the final report
in relation to the 2003 program. As of December 31, 2007, the report has not yet
received final approval from the Investment Center.
In October 2002, the Ministry approved HomeFree's investment program for its new
plant under similar terms to the above-mentioned program, entitling HomeFree to
tax benefits for a period of 7 years. The period of benefits may commence any
time within 14 years of receiving approval and 12 years from the date the
approved enterprise first generates profits.
E. Taxable income that is not attributable to approved enterprise
investments is taxed at a rate of 29% in 2007 (regular "Company Tax"). The
regular Company Tax rate is to be gradually reduced to 25% until 2010, (27% in
2008 and 26% in 2009).
The Israeli withholding tax rate on dividends distributed from income not
attributable to approved enterprise investments is 25%.
F. As at 31st December 2007, the Group has net operating loss
carry-forwards for tax purposes of approximately US$19.5 million, and a capital
loss of approximately US$0.2 million. Both of these may be carried forward for
an unlimited period of time.
G. The Company, Elmo-Tech and HomeFree have received final tax
assessments for tax years up to and including 2003. One of the foreign
subsidiaries has received final tax assessments for the years up to and
including tax year 2006. The other subsidiaries have not yet been assessed for
tax since their incorporation.
Note 11 - Property, Plant and Equipment
*Leased Leasehold Equipment
equipment improvements Computers and molds Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
At 1st January
2006 2,963 294 1,376 1,620 6,253
Additions 1,049 46 283 115 1,493
At 31st December
2006 4,012 340 1,659 1,735 7,746
Acquisitions through
business
combinations 3,198 18 314 153 3,683
Additions 2,262 121 470 353 3,206
Disposals (331) - - - (331)
At 31st December
2007 9,141 479 2,443 2,241 14,304
Accumulated
depreciation
At 1st January
2006 2,302 130 1,081 1,094 4,607
Depreciation for
the year 507 32 205 123 867
At 31st December
2006 2,809 162 1,286 1,217 5,474
Depreciation for
the year 2,740 33 354 204 3,331
Disposals (324) - - - (324)
At 31st December
2007 5,225 195 1,640 1,421 8,481
Carrying
amounts
At January 1, 2006 661 164 295 526 1,646
At 31st December
2006 1,203 178 373 518 2,272
At January 1, 2007 1,203 178 373 518 2,272
At 31st December
2007 3,916 284 803 820 5,823
* Reclassified - The Company reclassified monitoring systems from inventories
to fixed assets.
Note 12 - Intangible Assets
A. Intangible assets are comprised as follows:
Year ended 31st December
2007 2006
US$'000 US$'000
Acquisition deferred costs (1) - 1,526
Goodwill 1,666 746
Patents and trademarks 1,468 1,179
Intellectual property 6,053 241
9,187 3,692
B. Movement in intangible assets:
Patents and Intellectual
Goodwill trademarks property
US$'000 US$'000 US$'000
Cost
Balance at 1st January 2006 1,875 2,100 373
Additions - 52 -
Balance at 31st December 2006 1,875 2,152 373
Acquisitions through business
combinations 920 536 6,500
Additions - 75 -
Balance at 31st December 2007 2,795 2,763 6,873
Amortization and
impairment loss
Balance at 1st January 2006 1,129 718 94
Amortization for the year - 255 38
Balance at 31st December 2006 1,129 973 132
Amortization for the year - 322 688
Balance at
31st December 2007 1,129 1,295 820
Carrying amounts
At 1st January 2006 746 1,382 279
At 31st December 2006 746 1,179 241
At 1st January 2007 746 1,179 241
At 31st December 2007 1,666 1,468 6,053
As at 31 December the Company presented US$1,526 million as acquisition deferred
costs, which were direct cost related to acquisition of Pro Tech Monitoring Inc.
Note 13 - Deferred Tax Assets
Recognized deferred tax assets are attributable to the following:
As at December 31
2007 2006
$ thousands $ thousands
Deferred tax assets
Research and development costs 413 411
Other payables and liability for employee severance benefits 39 33
Deferred tax, net, related to acquisitions 861 -
Other 158 113
Total 1,471 557
Note 14 - Inventories
Year ended 31st December
2007 2006
US$'000 US$'000
Raw materials and consumables 2,736 1,541
Work in progress 1,500 716
Finished goods 680 607
4,916 2,864
Note 15 - Trade and Other Receivables
A. Trade receivables
Year ended 31st December
2007 2006
US$'000 US$'000
Trade receivables - open accounts 12,355 9,308
Checks receivables - 420
Allowance for doubtful receivables (372) (161)
11,983 9,567
B. Other receivables
Year ended 31st December
2007 2006
US$'000 US$'000
Income receivable 81 295
Prepaid expenses and accrued receivable 951 496
Employees, shareholders and officers 177 149
Others 269 19
1,478 959
13,461 10,526
The group's exposure to credit and currency risks and impairment losses related
to trade and other receivables and disclosed in Note 25.
Note 16 - Cash and Cash Equivalents
Year ended 31st December
2007 2006
US$'000 US$'000
Cash and cash equivalents (1) 10,391 8,667
Bank overdraft used for cash management purposes (2) (647) (654)
Cash and cash equivalents in the statement of cash flow 9,744 8,013
(1) Cash and cash equivalents comprise cash balance of US$8,226 thousand and
US$6,188 thousand as at 31st December 2007 and 2006 respectively and call
deposits with an original maturity of three months or less of US$2,165 thousand
and US$2,479 as at 31st December 2007 and 2006 respectively
(2) Bank overdrafts that are repayable on demand and from an integral part of
the Group's cash management are included as a component of cash equivalents for
the purpose of the statement of cash flows.
Note 17 - Capital and Reserves
Share
Share premium Retained Minority
capital and reserves earnings interest Total
US$'000 US$'000 US$'000 US$'000 US$'000
Year ended
31st December, 2007:
Balance at
1st January, 2007 69 19,319 9,751 104 29,243
Changes in 2007
Exercise of options 1 593 - - 594
Share-based payments - 846 - - 846
Profit for the year - - 4,467 47 4,514
Balance at
31st December, 2007 70 20,758 14,218 151 35,197
Year ended
31st December, 2006:
Balance at
1st January, 2006 69 18,907 5,625 93 24,694
Changes in 2006
Exercise of options *- 29 - - 29
Share-based payments - 383 - - 383
Profit for the year - - 4,126 11 4,137
Balance at
31st December, 2006 69 19,319 9,751 104 29,243
* Less than one thousand dollars.
Note 18 - Earnings Per Share
Earnings per share is calculated on the profit attributable to shareholders of
$4,467 thousand and $4,126 thousand for the years ended December 31, 2007 and
2006 respectively, applied to the weighted average number of shares.
The weighted average number of shares during each of the years was calculated as
follows:
Number of shares (Thousands)
December 31 December 31
2007 2006
Issued ordinary shares at beginning of the year 21,896 21,881
Weighted average number of shares:
Issue of new shares resulting from exercise of options 204 12
Weighted average number of shares issued used in calculation of
basic earnings per share 22,100 21,893
Dilutive effect of share options 840 602
Weighted average number of shares used in calculation of
diluted earnings per share 22,940 22,495
The basic earning per share is 0.2 and the diluted earning per share is 0.19.
Note 19 - Loans and Borrowings
As at 31st December 2006, the Group presented short-term loans which were backed
up by expected payments from trade debtors. The amount of US$ 2,593 thousand
denominated in U.S dollars, the amount of US$ 781 thousand denominated to Euro.
Note 20 -Employee Benefits
A. Israeli labor laws and agreements require the Company to pay severance
pay to dismissed or retiring employees (including those leaving their employment
under certain other circumstances). The calculation of the severance pay
obligation was made in accordance with labor agreements in force and based on
salary components, which in Management's opinion, create entitlement to
severance pay.
B. The Israeli company's severance pay liabilities to its employees are
funded partially by regular deposits with recognized severance pay funds in the
employees' names and by purchase of insurance policies and are accounted as
defined benefit plans.
C. Employee benefits are comprised as follows:
Year ended 31st December
2007 2006
US$'000 US$'000
Present value of the obligation 1,604 1,430
Fair value of individual plan assets 1,273 1,124
Liability for defined benefit obligation 331 306
The Group makes contributions to defined benefit plans that provided pension
benefits for employees upon retirement or post employment.
Movements in the liability for defined benefit obligation:
Year ended 31st December
2007 2006
US$'000 US$'000
Liability for defined benefit obligation at January 1 1,430 1,146
Benefits paid (321) (155)
Current service costs and interest 272 321
Actuarial losses 32 11
Foreign exchange losses 135 107
Joining new population 56 -
Liability for defined benefit obligation as at
the end of the period 1,604 1,430
Movement in the individual plan assets
Year ended 31st December
2007 2006
US$'000 US$'000
Fair value of the individual assets at January 1 1,124 958
Contribution paid 160 166
Joining new population 56 -
Benefits paid (305) (136)
Expected return on individual assets 66 33
Actuarial gains 59 14
Foreign exchange gains 113 89
Fair value of the individual assets at the end
of the period 1,273 1,124
Expenses recognized in profit or loss:
Year ended 31st December
2007 2006
US$'000 US$'000
Current service costs 193 188
Interest on obligation 78 40
Joining new population 1 -
Expected return on individual assets (66) (33)
PV of contribution 46 42
Net actuarial gain in the period (27) (3)
225 234
Actuarial assumptions:
A. The calculations for all periods presented are based on the following
demographic assumptions about future characteristics of current employees who
are eligible for benefits:
i) Mortality rates are based on the Ministry of Finance insurance
circular 2007-1-3, reflecting the latest mortality assumptions in Israel,
including future mortality improvements.
ii) Disability rates are based upon the pension circular 2000/1 of the
Ministry of Finance (Israel).
iii) The leave rate assumed is derived from the experience of the
Company. Leave rates are assumed to be dependent on the number of service years,
as follows:
With entitlement to Without entitlement
Number of service years severance to severance
0 0% 13%
1 + 3% 10%
iv) Retirement age: 67 for men, 64 for women.
B. The calculations are based on the following financial assumptions:
i) The discount rate used is based on the yield of fixed-interest
Israeli government bonds with duration equal to the duration of the gross
liabilities:
Valuation Date Duration of Liabilities Discount Rate
31st December 2007 6.47 years 3.35%
31st December 2006 6.47 years 3.66%
ii) The salary pattern is based on the experience analysis from the
company. The future real salary increase is assumed to be 4.0% per age year.
Note 21 - Share-Based Payments
The Option Plans of the Group are administered by the Board of Directors, which
designates the optionees and dates of grant. Under the Share Option Plans, the
exercise price of an option could be set with a maximum discount of 10% of the
fair market value of the Company's Ordinary Shares (as determined on the grant
date). However, for all grants made in the years 2003 - 2007, the exercise price
of the options was set as the fair market value of the Company's Ordinary
Shares. The options are generally granted with a vesting period of up to three
years and are non-assignable except by the laws of descent. According to the
Share Option Plans, the options are subject to certain vesting conditions and
are exercisable for a period of ten years from the grant of options. The grantee
is responsible for all personal tax consequences arising out of the grant and
exercise of the options.
The terms and conditions of the grants are as follows; all options are to be
settled by physical delivery of shares:
Number of Contractual
options in life of
Grant date / employees entitled thousands Vesting conditions options
4/8/1999 Dir. 990,461 3 10
4/8/1999 Emp. 270,000 3 10
23/3/2000 Dir. 75,000 3 10
16/11/2000 Dir. 39,000 3 10
1/2/2000 Emp. 230,000 3 10
16/7/2000 Emp. 10,000 3 10
1/3/2001 Dir. 85,000 3 10
1/3/2001 Emp. 318,000 3 10
11/10/2001 Emp. 63,500 3 10
2/1/2002 Emp. 10,000 3 10
24/2/2002 Emp. 15,000 3 10
7/4/2002 Emp. 60,000 3 10
30/12/2004 Emp. 910,705 3 10
2/6/2005 Dir. 215,000 4 10
2/6/2005 Dir. 185,000 3 10
30/12/2005 Emp. 94,500 3 10
25/1/2007 Emp. 100,000 3 10
26/4/2007 Dir. 525,000 0-3 10
4,196,166
During the year ended 31st December 2007, the Company granted 625,000 options to
its directors and employees. The CEO has been granted 500,000 options and the
balance related to employees under a new U.S. tax program and to a new
appointment of director. The U.S tax program and the grant for the directors
including the CEO have been approved by the AGM on 26th April 2007.
The number and weighted average exercise prices of share options are as follows:
31st December, 2007 31st December, 2006
Weighted Weighted
Number average Number average
of exercise of exercise
options price options price
£ £
Outstanding at the beginning of 2,066,374 0.902 2,141,359 0.905
the period
Forfeited during the period 98,120 1.355 59,818 0.944
Exercised during the period 295,375 0.961 15,167 1.127
Granted during the period 625,000 1.526 - -
Outstanding at the end of period 2,297,879 1.045 2,066,374 0.902
Exercisable at the end of period 1,812,801 0.973 1,460,471 0.873
The fair value of services received in return for share options granted is based
on the fair value of share options granted, measured using a Monte Carlo model,
with the following inputs:
Number of Vesting Contractual Risk free Expected Exercise Share Fair value at
Date of grant options periods life of interest volatility price price grant date
(years) options rate
% % £ £ £
30th December 2004 - 1,405,205 3 - 4 10 2.76 - 4.41 34.07 - 76.15 0.85 - 1.2 0.89 - 1.23 0.42 - 0.62
31st December, 2005
1st January 2007 - 625,000 0 - 3 10 4.59 - 5.11 28.91 - 56.34 1.35 - 1.56 1.36 - 1.58 0.49 - 0.64
31st December 2007
Risk free interest rate is based on US government bond.
The expected volatility is based on the historic volatility (calculated based on
the weighted average remaining life of the share options), adjusted for any
expected changes to future volatility due to publicly available information.
The expenses derived from equity settled share based payment transactions are as
follow:
Year ended 31st December
2007 2006
US$'000 US$'000
Cost of sales 5 27
Research and development expenses 75 76
Selling and marketing expenses 26 96
General and administrative expenses 740 184
846 383
Note 22 - Deferred Income
Deferred income classified as current consists of customer advance for lease
agreements and maintenance and services. Deferred Incomes are stated at their
nominal value.
Note 23 - Warranty Provision
Warranty provisions - relates mainly to electronics product sold during the
years ended 31 December 2006 and 2007. The provisions are based on estimates
made from historical warranty data associate with similar products and services.
The Group expects to utilise most of this processions over the next year.
The movement in the warranty provision is as follows:
As at December 31 2007
$ thousand
Balance at the beginning of the year 595
Provisions used during the year (375)
Provisions made and acquired during the year 578
Balance at the end of the year 807
Note 24 - Trade and Other Payables
Year ended 31st December
2007 2006
US$'000 US$'000
Trade creditors 2,040 1,717
Bills of exchange payables 1,238 944
Government authorities 1,193 793
Employees' wages and related expenses 1,998 1,689
Accrued expenses 674 1,275
Other 350 150
7,493 6,568
The Group's exposure to currency and liquidity risk related to trade and other
payables is disclosed in Note 27.
Note 25 - Financial Instruments
Credit risk
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was:
Carrying amount
Note 2007 2006
$ thousands $ thousands
Trade and other receivables 15 13,461 10,526
Cash and cash equivalents 16 10,391 8,667
23,852 19,193
The maximum exposure to credit risk for trade receivables at the reporting date
by geographic region was:
Carrying amount
2007 2006
$ thousands $ thousands
United States 6,019 4,598
Europe 5,260 4,368
Other 704 601
11,983 9,567
The aging of trade receivables at the reporting date was:
2007 2006
$ thousands $ thousands
Predue 4,662 4,839
Overdue 7,693 4,469
12,355 9,308
Majority are large companies and government agents.
Liquidity risk
The group's approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet into liabilities when due,
under both normal and stressed conditions, without incurring unacceptable losses
or risking damage of the Group's reputation.
Currency risk
Exposure to currency risk
The Group's exposure to foreign currency risk was as follows based on notional
amounts:
NIS USD Euro Other NIS USD Euro Other
31st December, 2007 31st December, 2006
Trade receivables 25 6,090 5,195 673 376 4,728 4,283 180
Trade creditors and bills 1,047 1,729 407 95 1,002 1,224 121 314
exchange payables
Revenue* 42 28,595 14,961 725 10 16,048 9,568 1,208
Purchases* 3,643 6,680 1,100 6 1,496 5,569 1,546 70
The following significant exchange rates applied during the year:
Average rate Average rate
2007 2006 2007 2006
Euro 1 1.369 1.256 1.471 1.317
NIS 1 0.243 0.225 0.260 0.237
* The management believes that the currency risk exposure in the future
will be proportionality.
Interest rate risk
Profile
At the reporting date the interest rate profile of the Group's interest-bearing
financial instruments was:
Carrying amount
2007 2006
$ thousands $ thousands
Instruments
Bank overdrafts (1) 647 654
Short-term loans (2) - 3,374
647 4,028
(1) The overdrafts are linked to the dollar and bear annual interest at
an average rate of LIBOR+1.1%.
(2) The short-term loans - see Note 19.
Fair values
The Group financial instruments include primarily debtors, deposits at bank,
cash and cash equivalent at the bank, bank overdrafts, short-term bank loans and
creditors. Due to the nature of the financial instruments included in working
capital, their fair value is identical to or approximates, in general, the value
at which they are presented in the balance sheet.
Note 26 - Commitments and Contingent Liabilities
A. The Group has provided guarantees to the banks totaling, as at 31st
December 2007, US$1,415 thousand.
B. On July 24, 2007, HomeFree Inc. was added as a defendant (together
with another company SM-Tek, Inc.) to a lawsuit that was filed by Willie E.
Stacey and Carol Daily, Administrators of the Estate of William T. Stacey,
against Thomas J. Mabry & Associates (Mabry health care & rehabilitation Center)
on January 12, 2007, in the United States Circuit Court for Jackson County,
Tennessee.
The Company believes it has a valid defense against its participation in this
lawsuit and against the material allegations made against it. The Company
intends to vigorously defend itself against this lawsuit. The Company is unable
to predict the outcome of this lawsuit at this time.
Independently from the aforementioned lawsuit all of the Company's products are
covered by a comprehensive Product Liability Insurance policy.
C. In 2005 a lawsuit was filed in the US, state of Tennessee, against Pro
Tech by Satellite Tracking of People, LLC, alleging an infringement of its US
patent number 6-405-213. The lawsuit did not indicate any specific damages or
amounts.
On 29 August 2006 the court granted a stay of proceedings pending re-examination
of the patent by the United States Patent Office.
D. In August 2005, the Company has entered into an operating lease
agreement. Under the provisions of the Lease Agreement the Company has leased
office and storage space and additional parking spaces, for an approximate
monthly rental fee of US$28 thousand. The lease period is 5 years and the
Company has an option to extend it for an additional 5 year period. The Lease
Agreement includes certain options to lease additional space in the building.
The Company has an option to terminate the Lease Agreement prior to the end of
the 5 year lease period, by payment of a penalty, which is determined as a
function of the time left on the lease. The Company's maximum aggregate
liability under the Lease Agreement is limited to US$140 thousand.
E. From time to time, the Company enters into accounts receivable
factoring agreements with a financial institution. Under the terms of the
agreements, the Company factors receivables, with the financial institution on a
non-recourse basis. In some cases, as in general for trade debtors, the Company
continues to be obligated in the event of commercial disputes (such as product
defects), which are not covered under the agreement, unrelated to the credit
worthiness of the customer. The Company accounts for the factoring of its
financial assets in accordance with IAS 39. In the past, there were no cases in
which the Company had to reimburse the financial institution for accounts
receivables following business disputes. The Company does not expect any
reimbursements to take place in the foreseeable future.
Note 27 - Related Parties
Transactions with key management personnel
There is no related party transaction apart from the details of key management
remuneration.
Executive officers also participate in the Group's share option programme (see
note 21).
Executive officers and key management personnel compensation comprised:
Year ended 31st December
2007 2006
US$'000 US$'000
Salaries, fees and benefits 1,465 1,096
Share-base payments 714 215
2,179 1,311
Director's Remuneration
The non-executive director's remuneration for both years 2007 and 2006 were $98
thousand.
Note 28 - Group Entities
A. The following subsidiaries have been included in the consolidated
financial statements. The figures in the percentage column present the
proportion of voting rights and ordinary share capital held as at 31st December
2007.
Country of
incorporation
Names Percentage
Elmo-Tech Ltd. ("Elmo-Tech") Israel 100
Electronic Monitoring Technologies Svenska AB ("EMTS") Sweden 100
Electronic Monitoring Technology (Europe) B.V. Netherlands 100
Abakus - ElmoTech Pty. Limited Australia 51.0
ElmoTech France s.a.r.l. France 100
ElmoTech Inc. USA 100
ElmoTech CLFI, Inc. USA 100
Comguard Holdings LLC. USA 50.1
Comguard Leasing & Financial Inc. USA 100
Comguard Inc. USA 100
HomeFree Systems Ltd. ("HomeFree") Israel 100
HomeFree Inc. USA 100
ProTech Holdings Inc. USA 100
ProTech Monitoring Inc. USA 100
B. Additional information:
1. On 12 January 2007, Dmatek acquired 100% of the Pro Tech Monitoring
Inc. share, by Pro Tech Holdings Inc., a fully-owned subsidiary of Dmatek (See
Note 5).
2. In 2006, Dmatek established ProTech Holdings, Inc., a wholly-owned
subsidiary engaged to acquire ProTech Monitoring, Inc. (see Note 5).
3. Elmo-Tech Ltd., which specializes in the development, marketing and
manufacturing of electronic monitoring systems for law enforcement applications,
is the subsidiary that manufactures most of the Group's products.
4. For information on the activities of the Company and its
subsidiaries, see Note 1a.
Note 29 - Explanation of Transition to IFRS
As stated in Note 2(A), these are the Group's first Annual consolidated
financial statements prepared in accordance with IFRS.
The accounting policies in Note 3 have been applied in preparing the annual
consolidated financial statements for the year ended 31 December 2007, the
comparative information for the year ended 31 December 2006 and the preparation
of an opening IFRS balance sheet at 1 January 2006 (the Group's date of
transition).
In preparing its opening IFRS balance sheet, comparative information for the
year ended 31 December 2006, the Group has adjusted amounts reported previously
in financial statements prepared in accordance with previous GAAP.
An explanation of how the transition from previous GAAP to IFRSs has affected
the Group's financial position and financial performance is set out in the
following tables and the notes that accompany the tables.
A. Reconciliation of equity
1 January, 2006 31 December, 2006
Effect of Effect of
Previous transition Previous transition
Note GAAP to IFRS IFRSs GAAP to IFRS IFRSs
U.S.$'000
Assets
Property, plant and
equipment 11 *1,647 - 1,647 *2,272 - 2,272
Intangible assets 12 2,688 (282) 2,406 3,842 (150) 3,692
Deferred tax assets 13 - 506 506 - 557 557
Total non-current assets 4,335 224 4,559 6,114 407 6,521
Inventories 14 *1,724 - 1,724 *2,864 - 2,864
Trade and other
receivables 15 9,723 (224) 9,499 10,933 (407) 10,526
Deposits - - - 12,500 - 12,500
Cash and cash
equivalents 16 17,625 - 17,625 8,667 - 8,667
Total current assets 29,072 (224) 28,848 34,964 (407) 34,557
Total assets 33,407 - 33,407 41,078 - 41,078
* Reclassified - The Company reclassified monitoring system to Fixed
assets.
A. Reconciliation of equity (cont'd)
1 January, 2006 31 December, 2006
Effect of Effect of
Previous transition Previous transition
Note GAAP to IFRS IFRSs GAAP to IFRS IFRSs
U.S.$'000
Liabilities
Employee benefits 20 300 (113) 187 441 (135) 306
Total non-current
liabilities 300 (113) 187 441 (135) 306
Bank overdraft 16 404 - 404 654 - 654
Loans and
borrowings 19 3,697 - 3,697 3,374 - 3,374
Trade and other
payables 24 4,425 - 4,425 7,501 - 7,501
Total current
liabilities 8,526 - 8,526 11,529 - 11,529
Total liabilities 8,826 (113) 8,713 11,970 (135) 11,835
Minority interest 93 (93) - 104 (104) -
8,919 (206) 8,713 12,074 (239) 11,835
Equity
Share capital 17 69 - 69 69 - 69
Share premium 17 18,385 - 18,385 18,414 - 18,414
Reserves 17 123 399 522 265 640 905
Retained earnings 17 5,911 (286) 5,625 10,256 (505) 9,751
Total equity
attributable to
equity holders of the
company 17 24,488 113 24,601 29,004 135 29,139
Minority interest - 93 93 - 104 104
Total equity 24,488 206 24,694 29,004 239 29,243
Total equity and
liabilities 33,407 - 33,407 41,078 - 41,078
B. Reconciliation of profit
For the year ended 31 December 2006
Effect of
Previous transition to
Note GAAP IFRS IFRSs
US$'000
Revenue 6 26,834 - 26,834
Cost of revenues (9,086) (27) (9,113)
Gross profit 17,748 (27) 17,721
Research and development expenses (4,098) (76) (4,174)
Selling and marketing expenses (5,450) (97) (5,547)
General and administrative expenses (4,189) (19) (4,208)
Other income, net - 206 206
Operating profit 4,011 (13) 3,998
Financial income 9 1,248 - 1,248
Financial expenses 9 (285) - (285)
Net finance costs 963 - 963
Other income net 206 (206) -
Profit before income tax expense 5,180 (219) 4,961
Income tax expense 10 (824) - (824)
Profit for the period 4,356 (219) 4,137
Attributable to:
Equity holder of the company 17 4,345 (219) 4,126
Minority interest 17 11 - 11
Profit for the period 4,356 (219) 4,137
Basic earnings per share (in
U.S. dollars) 18 0.2 (0.01) 0.19
Diluted earnings per share
(in U.S. dollars) 18 0.19 (0.01) 0.18
(*) Restated - see Note 12(A)
Notes to the reconciliation of equity
C. Summary of significant differences between IFRS and Israeli GAAP
1. Employee benefits
Under Israeli GAAP, the Group recorded liabilities for the severance pay on an
undiscounted basis as if it was payable at the balance sheet date. Under IFRS,
these liabilities are accounted as defined benefit plans (as more fully
described in Note 20).
Under Israeli GAAP, certain deposits related to severance pay in central funds
to manage the Group's exposure in respect of certain employee liability were
deducted from the liability. The income in respect of these assets was also
deducted from the employee benefit expenses. Under IFRS, these assets do not
qualify under the definition of plan assets in accordance with IAS 19. As a
result, these assets presented as non-current financial assets.
The effect on the balance sheet is to decrease liabilities for Employee benefits
by US$113 thousand at 1st January 2006 and by US$135 thousand at 31st December
2006. The effect on the profit and loss for the year ended 31st December 2006 is
to decrease cost of general and administrative expenses by US$22 thousand.
2. Share-based payment transactions
Under Israeli GAAP, all share-based payments granted after 15 March 2005 that
have not yet vested by the effective date of the Standard (1st January 2006)
should be applied.
Under IFRS, all share-based payments granted after 7th November 2002 that have
not yet vested by the transition date of the company (1st January 2006) should
be applied.
The effect on the balance sheet is to increase equity for reserves by US$399
thousand at 1st January 2006, by US$640 thousand at 31st December, 2006.
The effect on the profit and loss for the year ended 31st December, 2006 are to
increase cost of sales, research and development expenses, selling and marketing
expenses and general and administrative expenses by US$241 thousand.
3. Gains on sale of property, plant and equipment
Gains on sale of property and equipment are classified under Israeli GAAP as
other income outside the operating results. Under IFRS, such gains are
classified as other gains within the operating results.
Notes to the reconciliation of equity
C. Summary of significant differences between IFRS and Israeli GAAP
(cont'd)
4. Classifications in accordance with IFRS
The following items have been reclassified:
a. Warranty provisions have been separated from other payables and
employee benefits.
b. Income Tax payables have been separated from other payables.
5. Minority Interest
Under Israeli GAAP, the share of minority shareholders in the net assets of
subsidiary is presented as "Minority Interests" in the consolidated balance
sheet. Also the minority interests are presented in the statement of operations.
Under IFRS, the "Minority interests" is presented in the consolidated balance
sheet under shareholders' equity, separately from the shareholders' equity of
the parent company.
6. The effect of the above adjustments on retained earnings is as
follow:
1 January 31st December
2006 2006
US$'000 US$'000
(Audited) (Audited)
Employee benefits 113 135
Equity-settled share-based payment transactions (399) (640)
Total adjustment to retained earnings (286) (505)
D. Explanation of material adjustments to the cash flow statement
Bank overdrafts of US$647 thousand at 31st December 2007 that are repayable on
demand and form an integral part of the Group's cash management were classified
as financing cash flows under previous GAAP and are reclassified as cash and
cash equivalents under IFRSs. There are no other material differences between
the cash flow statement presented under IFRSs and the cash flow statement
presented under previous GAAP.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FKQKBKBKKPNK
1 Year Dmatek Ld Chart |
1 Month Dmatek Ld Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
