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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Pilat Tech. | LSE:PIA | London | Ordinary Share | IL0010819832 | ORD ILS0.01 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 4.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
PILAT TECHNOLOGIES INTERNATIONAL LTD ("Pilat", "PTI", the "Group" or the "Company") Announces Preliminary Results for the year to 31 December 2007 London and Tel Aviv, 28th March 2008 - Pilat Technologies International Ltd, the AIM quoted integrated HR consulting, IT solutions and services group announces its results for the year ended 31 December 2007. HIGHLIGHTS * Strong Q4 reverses earlier losses * Full year like-for-like sales up 4% * Gross profit unchanged from 2006 * Operating profit of £218,000 (2006: £547,000) * Group sales down 4% overall after disposals * Fully diluted earnings per share of 0.67p (2006: 3.49p) Through three main subsidiaries, Pilat Europe, Pilat North America and Pilat Israel, the Group provides consultancy, advanced web based software applications and data processing and analysis services in the fast growing field of Human Capital Management. Pilat has a wide and varied client base including many major global corporations and international public sector bodies. The Company works across all sectors with organisations employing from a few hundred to hundreds of thousands of staff. Pilat has extensive industry experience in Financial Services, Energy and Telecommunications and sector specific offerings in Healthcare, Public Housing, Local Government and Education. The shares of PTI are quoted on both AIM and the Tel Aviv Stock Exchange. Enquiries: Pilat Technologies International Ltd +972 3 767 9272 Jonathan Berger Chief Financial Officer Hanson Westhouse Limited +44 113 246 2610 Tim Feather / Matthew Johnson Chairman's Statement Summary The fourth quarter showed a strong performance from the Group which transformed the aggregate loss of £42,000 for the first three quarters into a full year operating profit of £218,000. Sales for the final quarter were up 21% compared with Q4 2006 and quarterly operating profits were up from £95,000 to £260,000. Overall full year sales were down 4% compared to 2006 reflecting the disposal of the Project Management Consulting operations in Israel in Q4 2006 and lower sales in North America. Disregarding the disposal, like-for-like sales for the Group grew by 4% over the year. Gross profits were broadly unchanged from 2006 but operating profits were £ 218,000 compared with £547,000 in 2006 reflecting a sharp increase in Research and Development spending (up £217,000) and some additional overhead spending. Cash generation from operations was £376,000 (2006: £1,075,000). Group cash now stands at £2,411,000 which we believe is enough to fund our immediate needs without recourse to borrowing. We will continue to monitor our funding mix and make appropriate adjustments if necessary. In Israel, like-for-like sales growth was 19% enabling us to replace nearly all the revenue previously generated by the Project Management Division, disposed of in September 2006. Overall, there was still a small revenue drop of 5% but the quarterly run rate now exceeds that of before the disposal and full year profits were maintained despite increased marketing spend. During the year and in January 2008, we made three small but important acquisitions in Israel to boost the range of our consulting capability and provide some counter cyclical business lines. "Nekudat-Mifnea" or "Turning-Point" joined Pilat Israel in July 2007. Turning-Point is mainly concerned with outplacement and career counselling and represents Right Management Consulting (a subsidiary of Manpower Inc.) for business in Israel. During January 2008, after the year end, we purchased the operations of Atzmon Advanced Remuneration Solutions Ltd and Kartash Information Systems. Both companies are leading Israeli salary survey companies operating in the "reward and remuneration" area. Atzmon is also involved in general consulting in the benefits and compensation field whilst Kartash has been focused until now on the Pharmaceutical sector. These two businesses complement Pilat's existing business in the area. We are also in negotiations to become the representative of a leading international benefits survey provider for the Israeli market. Overall HR and general consulting sales in Israel grew by more than 50% during the year. Our assessment services in Israel also reported steady growth in 2007, reflecting the strong economic conditions. To date, we have not seen any indication of an economic slowdown affecting our business but clearly it is unlikely that the Israeli economy will escape a global downturn without any ill-effects. We continue to work hard to increase the flexibility of our assessment model and to differentiate ourselves from the competition by offering a better quality product. In Pilat Europe, sales grew by over 15% compared with 2006 with an especially strong showing by our HR consulting team where sales doubled. Consulting projects are usually the first sale to new clients and their introduction to Pilat and provide an opportunity for further potential sales. We continue to strongly differentiate ourselves in the market though our combination of HR process expertise and software and systems solutions to deliver this expertise. We plan to deliver more of our solutions via the internet in 2008, on a "Software as a Service (SaaS)" basis, as this method of delivery becomes increasingly more acceptable to our customers. In North America, 2007 was a more difficult year as sales fell by 20% in sterling terms, or 13% in dollar terms, after a poor start to the year. Our cooperation with the American Hospital Association in the healthcare market has not developed as quickly as we had planned and competition in the core Performance Management and Talent Management sectors remains very strong. Nevertheless, the North American business remained profitable and is core to our ability to support multinational clients. We are now building up our consulting capability in North America and focusing more on specific markets where we already have a strong presence. We believe that the launch of PULSE 8.0 will have a positive impact on our business in North America and continue to seek additional channel partners to increase our sales reach in this market. During 2008 we plan to re-establish our presence in the Asia-Pacific market through a local partner. This will again enable us to provide global 24 hour support as well as better local support for our clients in the region. There will also be the opportunity to share more fully in the region's high rates of growth. Our increased spending on Research and Development has enabled us to set up an outsourced software development team in India that gives us the capability of adding (or subtracting) resources more quickly than in the past. The new release of our premier Human Capital Management - web based platform PULSE 8.0 is progressing to plan and the first new product lines for Talent Management and Succession are currently being configured for the lead client. PULSE 8.0 incorporates Microsoft .NET technology and AJAX functionality to revolutionise the interface to our systems and thus the user experience. This work will form the foundation for a whole raft of new product releases over the next couple of years. Revenues and profitability The Group's revenues decreased by 4% from £8,162,000 in 2006 to £7,837,000 in 2007. As in 2006, the 2007 revenues originated from a large number of client organisations in Europe, Israel and North America. There was no substantial dependency on a single client. The decrease in revenue was accompanied by a decrease in cost of sales leading gross margins to increase slightly to 41% (2006: 40%). R&D expenses increased by 77% from £283,000 in 2006 to £500,000 in 2007, in line with management's strategic goal to significantly increase our investment in R&D. In 2007 the Group's financial expenses were £26,000 compared with income of £ 13,000 in 2006. This expense consisted of net interest of £63,000 (2006: £ 30,000) and translation of foreign exchange balances expenses, net, of £89,000 (2006: £17,000). Selling and marketing expenses remained stable at £880,000 compared to £868,000 in 2006, which was in line with expectations. General and administrative expenses have increased by £73,000 from £1,553,000 in 2006 to £1,626,000. Overall, the Group's operating income stood at £218,000 compared with £547,000 in 2006. The Group's net income from continuing operations was £174,000 compared with £ 651,000 in 2006, a decrease of 73%. The operating income in 2006 includes a one-off gain of £267,000 from the sale of the Project Management unit of Pilat Israel. Fourth Quarter Trading Overall sales in the fourth quarter 2007 were £2,217,000, an increase of 21% over the sales in the same quarter in 2006 (£1,839,000). This was due to strong increases in sales in Israel (31%) and Europe (46%). Sales in North America fell by 15% compared with the fourth quarter of 2006. The gross margin for the quarter was £898,000 (41%), compared to a gross margin of £707,000 (38%) in the equivalent quarter of 2006. This increase is due to the growth in sales during the quarter. Research and development costs increased 94% to £130,000 in line with management policy. Sales and marketing expenditure remained stable at £204,000 (Q4 2006- £ 213,000). General and administrative costs for Q4 2007 were £304,000, a reduction by 8% compared to Q4 2006, mainly due to a reduction in provisions towards the end of 2007. Operating income for the quarter was £260,000 compared with £95,000 in Q4 2006. Due to the weakness of the US dollar in the quarter and the reduction of the value of assets and balances denominated in US dollars, the Group had net financing costs of £32,000. Net income for Q4 2007 was £168,000 compared with £125,000 net income from continuing operations in Q4 2006. Total net income for the fourth quarter of 2006 was £197,000 including a one-off £72,000 profit for the sale of the Project Management unit of Pilat Israel. Balance Sheet The Group's current assets as at 31 December 2007 were £4,869,000 (2006: £ 4,224,000) representing 94% of total assets (2006: 92%). Cash and short term deposits were £2,558,000 compared with £2,188,000 at 31 December 2006. Trade accounts receivable at year end stood at £2,013,000, an increase of £ 185,000 over the previous year end. This was mainly due to strong sales in the last quarter of 2007 which had not yet been collected at year end. Current liabilities as at 31 December 2007 were £1,903,000 (2006: £1,618,000). Long term liabilities were £22,000 at 31 December 2007, compared to £27,000 at the end of 2006. Shareholders' equity increased by £336,000 to £3,269,000 in the period, reflecting the profit of £174,000, a conversion of options by employees (£ 14,000) and cumulative foreign exchange translation gain of £148,000. Liquidity The Group had a positive cash flow from continuing operations of £376,000, resulting from the operating profit after adjustments. The total increase in cash and equivalents during 2007 was £367,000. PTI enjoys a healthy current ratio of 2.56 (2006: 2.61). Michael Zukerman, Chairman David Sapiro, Chief Executive Officer Jonathan Berger, Chief Financial Officer CONSOLIDATED BALANCE SHEETS British pounds in thousands December 31, 2007 2006 ASSETS CURRENT ASSETS Cash and cash equivalents 2,411 2,044 Short term investments 147 144 Trade receivables 2,013 1,828 Other accounts receivable 298 208 4,869 4,224 LONG-TERM LOANS AND RECEIVABLES: Long-term loans and receivables 25 14 FIXED ASSETS, NET Cost 1,292 1,324 Less - accumulated depreciation 995 974 297 350 DEFERRED TAXES 2 2 OTHER ASSETS 14 - 5,207 4,590 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term bank loans 10 18 Trade payable 359 334 Other accounts payable 1,534 1,266 1,903 1,618 LONG-TERM LIABILITIES: Liabilities to banks 6 15 Accrued severance pay, net 16 12 22 27 LIABILITIES RELATED TO DISCONTINUED 13 12 OPERATIONS CONTINGENT LIABILITIES AND COMMITMENTS SHAREHOLDERS' EQUITY 3,269 2,933 5,207 4,590 CONSOLIDATED STATEMENTS OF OPERATIONS British pounds in thousands (Except for net earnings (loss) per share amounts) Year ended December 31, Note 2007 2006 2005 Revenues 7,873 8,162 7,460 Cost of revenues 4,649 4,911 4,624 Gross profit 3,224 3,251 2,836 Research and development costs 500 283 272 Selling and marketing expenses 880 868 664 General and administrative expenses 1,626 1,553 1,490 Operating income 218 547 410 Financial income (expenses) , net (26) 13 18 Other income (expenses), net 1 271 - Net income before taxes on income 193 831 428 Taxes on income 19 180 20 Net income from continuing 174 651 408 operations Income (loss) from discontinued - 269 (91) operations, net Net income 174 920 317 Net earnings (loss) per share (in 1 British pence): Basic earnings (loss) Net earnings from continuing 0.67 2.50 1.57 operations Earnings (loss) from discontinued - 1.04 (0.35) operations, net Net income 0.67 3.54 1.22 Diluted earnings (loss) Net earnings from continuing 0.65 2.47 1.55 operations Earning (Loss) from discontinued - 1.02 (0.35) operations, net Net income 0.65 3.49 1.20 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY British pounds in thousands Share Additional Capital Cumulative Accumulated Less - Total capital paid in reserve foreign deficit shares capital currency held by translation subsidiaries adjustments Balance at January 48 7,065 - (221) (5,084) (96) 1,712 1, 2005 Net income - - - - 317 - 317 Cumulative foreign - - - 84 - - 84 currency translation adjustments Balance at December 48 7,065 - (137) (4,767) (96) 2,113 31, 2005 Net income - - - - 920 - 920 Options exercise 1 13 - - - - 14 into shares Cumulative foreign - - - (114) - - (114) currency translation adjustments Balance at December 49 7,078 - (251) (3,847) (96) 2,933 31, 2006 Net income - - - - 174 - 174 Options exercise 1 5 - - - - 6 into shares Amounts assigned to - - 8 - - - 8 employees and director stock- based compensation Cumulative foreign - - - 148 - - 148 currency translation adjustments Balance at December 50 7,083 8 (103) (3,673) (96) 3,269 31, 2007 CONSOLIDATED STATEMENTS OF CASH FLOWS British pounds in thousands Year ended December 31, 2007 2006 2005 Cash flows from operating activities: Net income 174 920 317 Adjustments to reconcile net income to net 202 155 183 cash provided by continuing operating income (a) Net cash provided by continuing operating 376 1,075 500 activities Net cash used in discontinued operating - - (258) activities Net cash provided by operating activities 376 1,075 242 Cash flows from investing activities: Purchase of fixed assets (102) (84) (168) Proceeds from sale of fixed assets 21 26 33 Short-term investments, net 6 242 17 Purchase of other assets (16) - - Net cash provided by (used in) continuing (91) 184 (118) investing activities Net cash used in discontinued investing - (64) (3) activities Net cash provided by (used in) investing (91) 120 (121) activities Cash flows from financing activities: Repayment of long-term loans from banks (18) (29) (37) Short-term bank credit, net - - (126) Shares issue 6 14 - Net cash used in continuing financing (12) (15) (163) activities Net cash provided by discontinued financing - - 137 activities Net cash used in financing activities (12) (15) (26) Effect of exchange rate changes on cash and 94 (74) 47 cash equivalents Increase in cash and cash equivalents 367 1,106 142 Cash and cash equivalents at the beginning 2,044 938 796 of the year Cash and cash equivalents at the end of the 2,411 2,044 938 year Year ended December 31, 2007 2006 2005 (a) Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing operating income: Income and expenses not involving cash flows: Loss (income) from discontinued - (269) 91 operations, net Depreciation and amortization 145 146 148 Deferred taxes, net (37) 53 (19) Increase (decrease) in accrued severance 3 28 (60) pay, net Capital gain from sale of fixed assets (3) (4) (4) Erosion of long-term loans - - 1 Stock-based compensation 8 - - Changes in operating assets and liability items: Decrease (increase) in trade (183) 158 364 receivables, other accounts receivable and long-term loans and receivables Increase (decrease) in trade payables 269 43 (338) and other accounts payable 202 155 183 (b) Noncash investing and financing activities Property and equipment acquired Under - 21 20 capital leases Non-cash sale of fixed assets (7) - - NOTE 1: NET EARNINGS (LOSS) PER SHARE Below is the share amount and the net earning (loss) data for the computation of net earnings (loss) per share. Basic earnings (loss) Year ended December 31, 2007 2006 2005 a. Number of shares used in the computation of earnings (loss) per share (in thousands): Weighted average of nominal 26,510 26,354 26,279 outstanding share capital Treasury shares (386) (386) (386) Total 26,124 25,968 25,893 b. Net income (loss) used in the computation of net income (loss) per share: Net income for the year, 174 651 408 according to the statement of operations from continuing operations Income (loss) according to - 269 (91) statement of operations from discontinued operations Net income 174 920 317 Diluted earnings (loss) Year ended December 31, 2006 2005 2005 a. Number of shares used in the computation of earnings (loss) per share (in thousands): Weighted average of nominal 27,085 26,785 26,654 outstanding share capital Treasury shares (386) (386) (386) Total 26,699 26,399 26,268 b. Net income (loss) used in the computation of net income (loss) per share: Net income for the year, 174 651 408 according to the statement of operations from continuing operations Income (loss) according to - 269 (91) statement of operations from discontinued operations Net income 174 920 317 END
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