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| 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 |
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RNS Number : 9631B
Dmatek Ld
26 August 2008
Dmatek: Half-Yearly Results
for the Six Months ended 30th June 2008
Strong Organic Growth & Profitability Delivered:
Revenue Increase 29% to $26.3m;
Profit Before Tax Soars Five-fold to $3.4
Dmatek Ltd. ("Dmatek", or the "Company") (LSE: DTK.L), the provider of leading electronic monitoring technologies for the law
enforcement and elderly care markets, today announces its half-yearly results for the six months ended 30th June 2008:
Financial Highlights
6 months ended30th June 6 months ended30th June 2007
2008
Revenue $26.3m $20.4m
Gross profit margin 63% 58%
Operating Profit $3.5m $0.6m
Profit before tax $3.4m $0.6m
Earning per share 13¢ 2¢
Net cash balance $12.6m $6.6m
Yoav Reisman, Chief Executive of Dmatek commented:
"Performance in the first six months was excellent and we are very pleased to see the scaled up business delivering on targets. It is
also encouraging to see greater demand for offender monitoring technologies across geographies and applications. Our expanded work base and
strong financial performance lay the foundation for our full year prospects and beyond."
Media & Investor Enquiries:
Dmatek Ltd.
Idit Mor/Michal Marx
Mobile: 07834 126 742
idit@dmatek.com; michalm@dmatek.com
Overview
Dmatek is pleased to report record results for the first half of 2008, reflecting the strengthening of the Company's growth in the law
enforcement market.
Revenue grew by 29% to $26.3m. 75% of total revenue came from lease and service (recurring revenues), up from 66% in the corresponding
period last year. Both periods include a full contribution from the Pro Tech acquisition, which was completed in January 2007, and so are
fully comparable.
Operating profit grew strongly from $0.6m to $3.5m. Most of the benefit flowed straight through to shareholders with net income growing
from $0.5m to $3.0m.
Revenue Analysis
Composition of H1 2008 H1 2007 Growth
Revenue by Type* $'000 $'000 % +/-
Revenue from sale of products 6,452 25% 7,000 34% -8%
Revenue from lease agreements 18,264 69% 11,595 57% +57%
Revenue from maintenance & services 1,620 6% 1,759 9% -8%
26,336 100% 20,354 100.0% +29%
* Maintenance and service income is generated from sales deals, over the lifetime of the product in the field. Lease agreements
incorporate maintenance and service fees.
Law Enforcement Market
The Company sees consistently growing demand for its law enforcement technologies. This demand is predominately driven by the globally
common situation of overcrowding in incarceration facilities and new legislation requiring the application of electronic monitoring
solutions as a penal measure in additional cases.
Law enforcement revenue by region
H1 2008 H1 2007 Growth
$'000 $'000 % +/-
United states 13,029 55% 9,440 56% +38%
Europe 8,144 34% 6,439 38% +26%
Rest of the world 2,690 11% 1,008 6% +167%
23,863 100% 16,887 100% +41%
Law enforcement, US
Growth in the US came from the expansion of existing client programmes as well as from new clients, both in the context of a growing
market. Revenue, therefore, increased by 38% over the corresponding period in 2007, with a high proportion being recurring revenues.
The US is Dmatek's largest addressable market, and management is very pleased with the progress there. The Company's approach to
developing the business in the US over the last two years resulted in wider market access and a much stronger positioning. Dmatek is now
starting to reap the benefits.
The period saw continued demand for the TRaCE in-prison monitoring solution. The Company is currently in the process of implementing a
new multiple-site state contract and have also seen additional system upgrades and expansion.
Applicable legislation has continued to drive US market expansion. All states are utilising various technologies for remote offender
monitoring. More recently, 43 US states have legislated GPS tracking of offenders, designating the use of real time tracking primarily to
sex offenders and a similar wave of legislation is currently underway for domestic abusers, with 13 US states having already passed such
bills.
Management feels that there is still great unexplored potential in the US offender monitoring market and plans to use the Company's
enhanced market position to take full advantage of future developments.
Law enforcement, Europe
Revenue in Europe amounted to $8.1m, a 26% increase over the corresponding period in 2007 (H1 2007: $6.4). This expansion came from
continued growth in the Company's various accounts across the continent, notably in France and Spain. On a constant currency basis, growth
in revenue was 14%.
Future European growth is expected to come from the expansion of existing programmes, whether in size or additional technology
applications. Management further expects to see new countries in the region adding offender monitoring to their penal systems.
Law enforcement, Rest of the World
Revenues from other parts of the world have increased substantially to $2.7m (H1 2007: $1.0m). This growth is primarily attributable to
Dmatek's expanding programmes in Israel, Mexico and New Zealand. Towards the end of the period the Company announced a renewed 5-year
contract in Singapore. The deal is expected to generate revenues of over $2.5m, the majority of which are expected over the coming 12
months.
As established offender monitoring programmes continue to grow, the Company is experiencing increasing levels of interest from countries
which have not yet initiated such programmes and therefore expects this interest to turn into business opportunities in the coming years.
Elderly Care Market
Sales into the elderly care market were $2.5m (H1 2007: $3.5m), comprising 9% of Dmatek's overall business. While the slower sales
during the period are disappointing, management does not identify a fundamental long-term market issue. It is, however, evident that care
homes are deferring capital expenditure decisions, presumably due to concerns that the state of the US housing market may result in lower
care home entrants.
HomeFree's focus remains on larger facilities and networks of care homes, for whom its wireless, integrated platform is most effective.
Average deal size continued to grow during the period and so did the backlog of orders. HomeFree further saw customers returning to expand
installations, equip additional facilities and order consumable parts, which form a new recurring type income within HomeFree's revenue.
Operating Costs and Profit
Gross profit margin for the period was 63%, compared with 58% in the corresponding period and 62% for the whole of last year.
Roughly 35% of Dmatek's operating expenses are denominated in Israeli Shekels. In comparison with the corresponding period in 2007, the
Israeli Shekel appreciated against the US Dollar by 15% on average. This has increased the Company's costs by approximately $0.6m.
The Company continued to invest in R&D, spending $4.2m, almost 16% of revenues on these activities, similar to last year's proportion.
Selling, general and administrative expenses increased by just 17% to $9.0m against a 29% increase in revenues. The benefit of Dmatek's
operational gearing can be seen in the operating profit achieved, which grew dramatically from $0.6m to $3.5m and the growth in net income
from $0.5m to $3.0m
Tax for the first half of 2008 was 11% of pre tax profit. This rate reflects a combination of Dmatek's foreign subsidiaries' tax rate
and the tax payable in Israel.
Cash Flows & Balance Sheet
During the half-year, the Company generated net cash inflows from operations before tax of $6.5m, compared with $2.0m for the first half
of 2007. The half-year ended with net cash of $12.6m, compared with $9.7m as at December 2007, forming a strong platform for future growth.
Risk Factors
Dmatek does not anticipate that the principal risks and uncertainties that affect the business, and which are set out on pages 19 - 21
of the 2007 Annual Report, will change in respect of the second six months of the current financial year.
Strengthened Technology Position, Wearable GPS Technology Offered
Wearable GPS devices combine all tracking and communication functions in one unit that can be securely strapped to the ankle. Such
wearable GPS tags have drawn considerable interest in the market recently. These tags' operational features fit new client segments and
increase the range of monitoring solutions extended to law enforcement agencies, which effectively expand the Company's target market.
Dmatek's wearable units' advantage is in their availability as part of a single monitoring platform, alongside the dual-piece tracking
solutions and other monitoring tools. This single platform concept extends customers maximal flexibility in managing their programmes.
Conclusion and Outlook
Performance in the first six months was excellent and management is very pleased to see the scaled up business delivering on targets. It
is also encouraging to see greater demand for offender monitoring technologies across geographies and applications. Dmatek's expanded work
base and strong financial performance lay the foundation for our full year prospects and beyond.
For the remainder of 2008 the Company plans to continue its growth efforts and look to improve operational efficiencies and resulting
performance. Dmatek will continue implementing its product development plan in support of existing and new business. Following the
significant progress made in integrating Pro Tech into the business, management will be renewing the search for additional growth
opportunities.
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
For the sixmonths For the six months For the year ended
ended30th June ended 30th June 31st December
2008US$ 2008US$ 2007US$
thousands(Unaudited) thousands(Unaudited) thousands(Audited)
Revenue 26,336 20,354 44,323
Cost of revenues (9,688) (8,592) (17,014)
Gross profit 16,648 11,762 27,309
Research and development (4,168) (3,377) (7,303)
expenses
Sales and marketing (4,529) (3,924) (7,825)
General and administrative (4,529) (3,828) (8,159)
expenses
Other income 53 - 803
Other expenses - (2) -
Operating profit 3,475 631 4,825
Finance income 92 215 742
Finance expenses (189) (206) (372)
Net finance income (expenses) (97) 9 370
Profit before income tax 3,378 640 5,195
Income tax expense (380) (129) (681)
Profit for the period 2,998 511 4,514
Attributable to:
Equity holder of the Company 2,985 508 4,467
Minority interest 13 3 47
Profit for the period 2,998 511 4,514
Basic earnings per share (U.S. 0.13 0.02 0.20
dollars)
Diluted earnings per share 0.13 0.02 0.19
(U.S. dollars)
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
As at 30th June 2008 As at 30th As at 31st December
US$ thousands June 2007 2007
(Unaudited) US$ thousands US$ thousands
(Unaudited) (Audited)
Assets
Property, plant and equipment 7,453 4,656 5,823
Intangible assets 8,690 10,580 9,187
Deferred tax assets 1,628 552 1,471
Total non-current assets 17,771 15,788 16,481
Inventories 4,518 4,393 4,916
Trade and other receivables 14,602 12,354 13,461
Cash and cash equivalents 13,187 8,041 10,391
Total current assets 32,307 24,788 28,768
Total assets 50,078 40,576 45,249
Equity
Share capital 70 70 70
Share premium and reserves 21,011 20,465 20,758
Retained earnings 17,203 10,373 14,218
Total equity attributable to 38,284 30,908 35,046
equity holders of
the Company
Minority interest 164 107 151
Total equity 38,448 31,015 35,197
Liabilities
Employee benefits 321 333 331
Total non-current liabilities 321 333 331
Bank overdraft 598 1,427 647
Trade and other payables 8,864 6,491 7,493
Deferred income 1,163 358 774
Warranty provision 684 952 807
Total current liabilities 11,309 9,228 9,721
Total liabilities 11,630 9,561 10,052
Total equity and liabilities 50,078 40,576 45,249
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
These financial statements were approved by the Board of Directors on 25th August, 2008 and were signed on its behalf by:
Yoav Reisman - Director Asher Zysman - Director
CEO CFO
CONDENSED CONSOLIDATED INTERIM STATEMET OF CHANGE IN EQUITY
Attributable to equity holders of the Company
Share capital Share premium and Retained earnings Total Minority interest Total equity US$
US$ thousands reserves US$ thousands US$ US$ thousands thousands
US$ thousands thousand
s
Six months ended
30th June, 2008:
Balance at 70 20,758 14,218 35,046 151 35,197
1st January, 2008
(Audited)
Changes during
the period
(Unaudited):
Exercise of options *- 200 - 200 - 200
Share-based - 53 - 53 - 53
payments
Profit for the - - 2,985 2,985 13 2,998
period
Balance at 70 21,011 17,203 38,284 164 38,448
30th June, 2008
(Unaudited)
Six months ended
30th June, 2007:
Balance at 69 19,319 9,751 29,139 104 29,243
1st January, 2007
(Audited)
Changes during
the period
(Unaudited):
Exercise of options 1 539 - 540 - 540
Share-based - 607 - 607 - 607
payments
Profit for the - - 508 508 3 511
period
Balance at 70 20,465 10,259 30,794 107 30,901
30th June, 2007
(Unaudited)
Year ended
31st December,
2007:
Balance at 69 19,319 9,751 29,139 104 29,243
1st January, 2007
(Audited)
Changes in 2007
(Audited):
Exercise of options 1 593 - 594 - 594
Share-based - 846 - 846 - 846
payments
Profit for the year - - 4,467 4,467 47 4,514
Balance at 70 20,758 14,218 35,046 151 35,197
31st December,
2007 (Audited)
* Less than US$1 thousand.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
Six months ended Six months ended Year ended 31st
30th June 2008 30th June 2007 December
US$ thousands US$ thousands 2007
(Unaudited) (Unaudited) US$ thousands
(Audited)
Cash flows from operating
activities
Profit for the period 2,998 511 4,514
Adjustments for:
Depreciation 1,974 1,947 3,331
Amortization of intangible 497 492 1,010
assets
Net finance (income) expenses 97 (9) (370)
Equity-settled share-based 53 607 846
payments transactions
Disposal of leased equipments - - 7
Income tax expense 380 129 681
5,999 3,677 10,019
Decrease (increase) in 398 (1,192) (1,716)
inventories
Decrease (increase) in trade (1,141) 1,379 387
and other receivables
Increase (decrease) in trade 1,032 (2,552) (598)
and other payables
Increase in deferred income 389 278 436
Increase (decrease) in (123) 357 212
warranty provision
Increase in employee benefits (10) 27 25
545 (1,703) (1,254)
Income tax paid (199) (124) (626)
Net cash from operating 6,345 1,850 8,139
activities
Cash flows from investing
activities
Cash in escrow - 12,500 12,500
Acquisition of subsidiary, net - (12,306) (13,217)
of cash acquired
Acquisition of property, plant (548) (333) (944)
and equipment
Acquisition of property, plant (3,055) (285) (2,262)
and equipment (leased
equipments)
Acquisition of intangible - - (75)
assets
Interest received 92 118 253
Net cash used in investing (3,511) (306) (3,745)
activities
Cash flows from financing
activities
Exercise of options 200 540 594
Repayment of borrowings - (3,374) (3,374)
Interest paid and bank charges (177) (206) (372)
Net cash from (used in) 23 (3,040) (3,152)
financing activities
Net increase (decrease) in 2,857 (1,496) 1,242
cash and cash equivalents
Cash and cash equivalents at 1 9,744 8,013 8,013
January
Effect of exchange rate (12) 97 489
fluctuations on cash held
Cash and cash equivalents at 12,589 6,614 9,744
end of period
* Cash and cash equivalents for the purpose of the cash flow statement includes bank overdrafts.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS AT 30th JUNE 2008
(UNAUDITED)
Note 1 - Reporting Entity
A. DMATEK Ltd. ("DMATEK" or "the Company") is a company domiciled in Israel. The Company and its subsidiaries (together referred to
as 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.
The condensed consolidated interim financial statements of the company as at and for the six months ended 30th June, 2008 comprise the
Company and its subsidiaries.
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.
The consolidated statements of the Group as at and for the year ended 31 December, 2007 are available at upon request from the Company's
registered office at 2 Habarzel Street, Tel Aviv, Israel or at http://www.dmatek.com/
Note 2 - Statement of Compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31
December 2007.
The condensed consolidated interim financial statements approved by the Board of Directors on 25th August, 2008.
Note 3 - Significant Accounting Policies
The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied
by the Group in its consolidated financial statements as at and for the year ended 31 December 2007.
New Standards and Interpretation Not Yet Effective
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 30 June 2008, and have
not been applied in preparing these consolidated financial statements:
A. IFRS 8 Operating Segments introduces the "management approach" to segment reporting. IFRS 8, which becomes mandatory for the
Group's 2009 consolidated financial statements, will require a change in the presentation and 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. The Group has not yet determined the potential effect of the standard.
B. Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalize 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 consolidated financial statements and will constitute a change in accounting
policy for the Group. Revised IAS 23, is not expected to have any impact on the consolidated financial statements.
C. IFRIC 13 Customer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate in, 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 consolidated financial statements, is not expected to have any impact on the consolidated financial
statements.
D. Revised IAS 1 Presentation of Financial Statements (2007) introduces the term total comprehensive income, which represents changes
in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive
income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all
non-owner changes in equity in a single statement), or in an income statements and a separate statement of comprehensive income. Revised IAS
1, which becomes mandatory for the Group's 2009 consolidated financial statements, is expected to have a significant impact on the
presentation of the consolidated financial statements.
E. Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements - Puttable Financial
Instruments and Obligations Arising on Liquidation requires puttable instruments, and instruments that impose on the entity an obligation to
deliver to another party a pro rata share of the net assets of the entity only on liquidation, to be classified as equity if certain
conditions are met. The amendments, which become mandatory for the group's 2009 consolidated financial statements, with retrospective
application required, are not expected to have any impact on the consolidated financial statements.
F. Revised IFRS 3 Business Combinations (2008) incorporates the following changes that are likely to be relevant to the Group's
operations:
* The definition of a business has been broadened, which is likely to result in more acquisitions being treated as business
combinations.
* Contingent consideration will be measured at fair value, with subsequent changes therein recognized in profit or loss
* Transaction costs, other than share and debt issue costs, will be expensed as incurred.
* Any pre-existing interest in the acquiree will be measured at fair value with the gain or loss recognized in profit or loss.
* Any no-controlling (minority) interest will be measured at either fair value, or at its proportionate interest in the identifiable
assets and liabilities of the acquiree, on a transaction-by-transaction basis.
Revised IFRS 3, which becomes mandatory for the Group's 2010 consolidated financial statements will be applied prospectively and therefore
there will be no impact on prior periods in the Group's 2010 consolidated financial statements.
G. Amended IAS 27 Consolidated and Separate Financial Statements (2008) requires accounting for changes in ownership interests by the
Group in a subsidiary, while maintaining control, to be recognized as an equity transaction. When the Group loses control of a subsidiary,
any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognized in profit or loss. The
amendments to IAS 27, which become mandatory for the Group's 2010 consolidated financial statements, are not expected to have a significant
impact on the consolidated financial statements.
H. Amendment to IFRS 2 Share-based Payment-Vesting Conditions and Cancellations clarifies the definition of vesting conditions,
introduces the concept of non-vesting conditions, requires non-vesting conditions to be reflected in grant-date fair value and provides the
accounting treatment for non-vesting conditions and cancellations. The amendments to IFRS 2 will become mandatory for the Group's 2009
consolidated financial statements, with retrospective application. The Group has not yet determined the potential effect of the amendment.
Note 4 - Estimates
The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from
these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the
Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial
statements as at and for the year ended 31 December 2007.
Note 5 - Financial Risk Management
The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial
statements as at the year ended 31st December 2007.
Note 6 - Revenue
Six months ended Six months ended Year ended
30th June 2008US$ 30th June 2007US$ 31stDecember 2007US$
thousands(Unaudited) thousands(Unaudited) thousands(Audited)
Composition:
Revenue from sale of products 6,452 7,000 13,871
Revenue under lease agreements 18,264 11,595 26,830
Revenue from maintenance and 1,620 1,759 3,622
services
26,336 20,354 44,323
Analysis of revenue by
geographic
markets and business:
Law Enforcement Business
United states 13,029 9,440 20,613
Europe 8,144 6,439 14,817
Rest of the world 2,690 1,008 2,498
23,863 16,887 37,928
Eldercare Business
United States 2,291 3,252 5,874
Europe 182 207 513
Rest of the world - 8 8
2,473 3,467 6,395
All Group
United States 15,320 12,692 26,487
Europe 8,326 6,646 15,330
Rest of the world 2,690 1,016 2,506
26,336 20,354 44,323
Note 7 - Income Tax Expense
The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 30th June 2008 was 11 percent
(for the year ended 31st December 2007: 13 percent; for the six months ended 30th June 2007: 20 percent). Differences between the estimated
effective income tax rate and statutory rate include but are not limited to the effect of tax rates in foreign jurisdictions, currency
effect, non-deductible expenses, tax incentives not recognised in profit or loss, the effect of tax losses utilised and under (over)
provisions in previous years.
Note 8 - Share-Based Payments
The Group established share option programmes that entitle key management personnel and senior employees to purchase shares in the
entity. The terms and conditions of the share option plans are disclosed in the consolidated financial statements as at and for the year
ended 31 December 2007. At April 13, 2008 a further grant of 60,000 options on similar terms at an exercise price of 113 Pence, was made to
key management.
As for 30 June, 2008, the outstanding and the exercisable options sum-up to 2,228,424 and 2,001,259 respectively.
Note 9 - Related Parties
Key management personnel receive compensation in the form of salaries, fees, benefits and share-based payments. Key management personnel
received total compensation of 1,061 thousand for the six months ended 30 June 2008 (six months ended 30 June 2007: 1,137 thousand).
Note 10 - Property, Plant and Equipment
Acquisitions
During the six months ended 30th June, 2008, the Group acquired assets with a cost of $US 3,603 thousand (six months ended 30th June,
2007; $US 618 thousand), including assets for leased equipments at the sum of $US 3,055 thousand (six months ended 30th June, 2007: $US 285
thousand).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ZGGZRFVDGRZG
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