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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Tescom Software | LSE:TSCM | London | Ordinary Share | IL0010896228 | 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% | 70.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:8238W Tescom Software Systems Testing Ltd 18 May 2007 Tescom Software Systems Testing Ltd. ("Tescom" or "the Company") Quarterly Results for the three months ended 31 March 2007 Tescom Software Systems Testing Ltd. (Symbol: TSCM), the international quality assurance and software testing service provider, announces its results for the three months ended 31 March 2007. Highlights * Revenues remained stable, amounting to NIS 59.3 ($14.3m), versus NIS 59.6m in 2006 * Gross margins were 34.3%, compared to 32.3% in 2006 * Profit before tax was NIS 3.8m ($0.9m), versus NIS 1.4m in 2006 * Diluted earnings per share were NIS 0.18 ($0.04), versus NIS 0.05 in 2006 * Solid profitability improvement in all key territories * Strengthening of senior sales and delivery management in the UK, US and Israel * Continued emphasis on European activities, which comprise over 52% of consolidated revenues Ofer Albeck, CEO of Tescom, said: "Tescom's results for the three months ended 31 March 2007 reflect a noticeable improvement in gross margins, alongside stability in revenues. We look forward to a positive trend in our top line throughout the remainder of 2007, as we see the benefit of the reorganization and strengthening of our senior sales and management team. The market in Israel remains extremely competitive, which continues to have a negative impact on our overall sales growth and profitability. Despite this, Tescom has won a number of major new contracts, including long-term fixed contracts in the public sector, from which we expect to benefit during the remainder of 2007. We also expect to leverage the infrastructure improvements which we put in place during 2006 in order to achieve consistent and sustainable growth in both revenues and profitability." Enquiries: Tescom Ofer Albeck, CEO + 972 3 535 0990 Phil Serlin, VP Finance + 972 3 535 0990 Ravit Halevy, VP Corporate Development + 972 3 535 0990 Teather & Greenwood Tom Hulme +44 (0)20 7426 9593 Chief Executive's Review Tescom's revenues for the three months ended 31 March 2007 of NIS 59.3m ($14.3m) remained stable in comparison to the corresponding period in 2006. Revenue increases in Europe and in the Asia-Pacific region, mainly as a result of new contracts in these locations, were offset by a decline in revenues in Israel. Tescom's strategy is to continue focusing its efforts on large projects with fixed-price contracts, mainly in Europe and the US. Gross margins have increased to 34.3% from 32.3% in the corresponding 2006 period, as we begin to see the effects of improved account and delivery management. Europe continues to represent over 50% of our consolidated revenues and this percentage is expected to increase. The Company has been successful at gaining new contracts in both the private and public sector and this is expected to bear fruit in the latter half of 2007. Revenues in the US increased in dollar terms by approximately 10% in comparison to the corresponding 2006 period; however, this increase was offset by a weakening of the dollar against the NIS of about 10%.Tescom continues to make progress in the US, and has won several new long-term contracts in the state and local government sector and the financial services sector. In addition, the strengthening of new senior sales and delivery management in the US is expected to have a positive effect on 2007 revenue and profitability. In the Asia-Pacific region, Tescom has won several new contracts, which contributed to an increase in revenues of over 60% in comparison with the 2006 quarter. Tescom Israel has showed a 17% decrease in revenues over the comparative period in 2006, primarily due a focus on accounts with higher margins. This strategy is reflected in a 2% increase in gross margins during the period, which has contributed to an overall increase in profitability. The Company has been successful at gaining new contracts in the finance sector, as well as a new framework contract in the defence sector. Nevertheless, the Israeli market continues to be very competitive, and it is not expected to be a significant source of growth in revenue or profitability in 2007. Since the beginning of 2006, we have also placed significant emphasis on strengthening our Global Executive Management Team. In this regard, in May 2007, we appointed Ravit Halevy as Vice-President Corporate Development. Ms Halevy brings extensive experience in the strategic business development and investor relations fields, most recently with the U. Dori Group, a large publicly traded company on the Tel Aviv Stock Exchange. We are pleased with our progress and we expect to leverage the infrastructure improvements which we have put in place in order to achieve consistent, sustainable growth in both revenues and profitability. I also wish to thank our employees for their efforts, which have contributed to a solid start to 2007. Financial Review Results Revenues for the three months ended 31 March 2007 of NIS 59.3m ($14.3m) remained stable in comparison to the corresponding period in 2006. Revenue increases in Europe and in the Asia-Pacific region, mainly as a result of several new contracts in these locations, were offset by a decline in revenues in Israel. Pre-tax profit amounted to NIS 3.8m ($0.9m), versus NIS 1.4m in 2006. Despite the stable revenues, gross profit increased by 5.5% from the 2006 period, mainly as a result of higher margin contracts in Israel, the US and Australia. G&A expenses decreased by NIS 0.6m in the 2007 period, to NIS 12.6m ($3.0m) from NIS 13.2m in 2006. This decrease primarily relates to management's continuing emphasis on cost control. Sales and marketing expenditure was in line with the 2006 period, showing a slight decrease to NIS 3.9m ($0.9m), from NIS 4.0m in the 2006 period. The Company's results were also positively impacted by a decrease in net financial expenses of NIS 0.5m, as a result of fluctuations in the exchange rates between the NIS, dollar and the other operating currencies in the various Group locations. The Company utilized NIS 2.7m ($0.6m) in cash from operating activities in the three-month 2007 period, versus utilizing NIS 5.9m in 2006. The utilization of operating cash flows results primarily from an increase in trade receivables, which is mainly due to certain government contracts with longer trade terms. The Company's cash balance at 31 March 2007 was NIS 6.0m ($1.5m). The Company maintains short-term bank credit lines in both Israel and the UK in the aggregate amount of approximately NIS 32.0m ($8.0m). NIS 11.5m ($2.8m) had been drawn against these lines as of 31 March 2007. Dividends The Company's dividend policy is subject to the future performance of the Company and its funding requirements. In March 2007, the Company declared a final dividend of NIS 3.8m ($0.9m) on account of 2006, which was paid on 2 May 2007. Outlook Tescom has won a number of significant long-term contracts in 2006 and the first three months of 2007. These contracts are expected to positively affect the top line towards the latter half of 2007. The Company also expects to benefit from its continued emphasis on the European market, which has higher gross margins. Competitive pressures, particularly in the Israeli market, continue to affect revenue growth, but there are signs of improving performance in gross margins and operating profitability. Tescom intends to focus efforts on increasing gross margins, including assessing the feasibility of staffing certain projects from less costly locations where suitable. We anticipate continuing the year-on-year progress that has been achieved over the last five quarters. The Board of Tescom continues to examine a number of strategic opportunities to expand its businesses in its current territories and enhance shareholder value. CONSOLIDATED BALANCE SHEETS Convenience Translation March 31, March 31, December 31, 2007 2007 2006 2006 (US$ 000's) (NIS 000's) (NIS 000's) CURRENT ASSETS: Cash and cash equivalents 1,456 6,049 6,935 8,750 Trade receivables 15,797 65,638 60,961 58,431 Other current assets and 1,488 6,184 3,686 5,185 Prepaid expenses Total current assets 18,742 77,871 71,582 72,366 NON-CURRENT ASSETS: Severance pay fund 2,338 9,715 10,066 9,579 Property and equipment, net 1,866 7,751 4,906 7,016 Goodwill and other intangible 424 1,761 2,090 1,826 assets Deferred income taxes 1,378 5,726 5,491 5,827 Total non-current assets 6,006 24,953 22,553 24,248 Total assets 24,747 102,824 94,135 96,614 The accompanying note is an integral part of the consolidated financial statements. CONSOLIDATED BALANCE SHEETS Convenience Translation March 31, March 31, December 31, 2007 2007 2006 2006 (US$ 000's) (NIS 000's) (NIS 000's) LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term credit and current 2,769 11,504 13,552 10,588 portion of long-term loans Trade payables 1,807 7,509 4,888 5,643 Income taxes payable 169 704 2,419 1,237 Other current liabilities and 7,300 30,330 29,859 29,020 accrued expenses Dividend payable 915 3,800 - - Total current liabilities 12,960 53,847 50,718 46,488 LONG-TERM LIABILITIES: Long-term loans 334 1,388 46 1,066 Accrued severance pay 2,775 11,530 11,757 11,370 Total long-term liabilities 3,109 12,918 11,803 12,436 EQUITY: Share capital 54 225 225 225 Share premium 9,157 38,046 40,094 37,987 Treasury shares, at cost (366) (1,522) (1,460) (1,522) Foreign currency translation (507) (2,108) (10,578) (1,031) reserve Accumulated deficit 341 1,418 3,333 2,031 Total equity 8,678 36,059 31,614 37,690 Total liabilities and equity 24,747 102,824 94,135 96,614 The accompanying note is an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF OPERATIONS Convenience Translation Three months ended Three months ended Year ended March 31, March 31, December 31, 2007 2007 2006 2006 (US$ 000's) (NIS 000's) (NIS 000's) Revenues 14,264 59,267 59,636 237,933 Cost of revenues 9,376 38,959 40,395 159,436 Gross profit 4,888 20,308 19,241 78,497 Selling and marketing 930 3,861 3,992 13,897 expenses General and administrative 3,035 12,612 13,208 50,694 expenses 3,965 16,473 17,200 64,591 Operating profit 923 3,835 2,041 13,906 Financial income 107 444 83 472 Financial expenses (127) (529) (668) (1,111) Other expenses, net - - (23) (16) Profit before taxes on 903 3,750 1,433 13,251 income Taxes on income 247 1,027 653 2,924 Net profit 656 2,723 780 10,327 Earnings per share 0.04 0.17 0.05 0.65 The accompanying note is an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS Convenience Translation Three Three months Year ended months ended ended March 31, March 31, December 31, 2007 2007 2006 2006 (US$ 000's) (NIS 000's) (NIS 000's) Cash flows from operating activities Net profit 656 2,725 780 10,327 Adjustments to reconcile net profit to net cash provided by (used in) operating activities Share-based compensation 14 59 323 (1,784) Depreciation 102 423 432 1,670 Amortisation 15 62 24 303 Increase in accrued 6 24 438 539 severance pay, net Deferred income taxes, net 14 60 (826) (607) Increase in trade (1,901) (7,899) (8,023) (5,669) receivables Increase in other current (251) (1,044) (713) (2,204) assets and prepaid expenses Increase in trade payables 473 1,965 923 1,675 Increase (decrease) in other 223 928 749 (2,797) current liabilities and accrued expenses Net cash provided by (used (649) (2,699) (5,893) 1,453 in) operating activities Cash flows from investing activities Additions to property and (108) (448) (174) (2,092) equipment Proceeds from sale of - - 12 - property and equipment Net cash used in investing (108) (448) (62) (2,092) activities Cash flows from financing activities Short-term credit, net 126 523 5,957 2,434 Shares repurchased by the Company - - (662) (724) Proceeds of long-term loans - - - 110 Repayments of long-term loans (7) (29) (31) - Dividends paid - - (4,700) (4,700) Net cash provided by (used in) 119 494 564 (2,880) financing activities Effect of exchange rate changes on (12) (48) 213 56 cash and cash equivalents Decrease in cash and cash (650) (2,701) (5,278) (3,463) equivalents Cash and cash equivalents at 2,106 8,750 12,213 12,213 beginning of period Cash and cash equivalents at end of 1,456 6,049 6,935 8,750 period The accompanying note is an integral part of the consolidated financial statements. Convenience Translation Three months ended Three months ended Year ended March 31, March 31, December 31, 2007 2007 2006 2006 (US$ 000's) (NIS 000's) (NIS 000's) Supplemental disclosure of cash flow information: Cash paid during period for interest 49 205 179 760 Cash paid during period for income taxes - - 421 7,093 Cash received during period for interest 10 40 97 156 Non-cash transactions Property and equipment purchased with 226 938 - 1,438 loan received Dividends declared but not paid 915 3,800 - - The accompanying note is an integral part of the consolidated financial statements. NOTE 1:- GENERAL AND PRESENTATION The accompanying financial statements have been prepared in adjusted New Israeli Shekels ("NIS") and in accordance with International Financial Reporting Standards ("IFRS"). The US dollar amounts as of March 31, 2007 and for the three months then ended have been translated for the convenience of the reader, using the closing NIS/US dollar exchange rate of 4.155 as of March 31, 2007. These financial statements should be read in conjunction with the Company's audited annual financial statements and accompanying notes as of December 31, 2006. This information is provided by RNS The company news service from the London Stock Exchange END QRTGUUBUAUPMGMM
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