RNS Number:7789L
Pilat Technologies International Ld
02 June 2003
PILAT TECHNOLOGIES INTERNATIONAL LTD
("PTI", the "Group" or the "Company")
Results for Quarter One ended 31 March 2003
London and Tel Aviv 30 May 2003 - Pilat Technologies International Ltd ("PTI "or
the "Company"), the AIM quoted human resources management consultancy, software
and services group, announces its results for the first quarter of 2003 (the "
Period"). PTI is also quoted on the Tel Aviv Stock Exchange.
SUMMARY
Operating loss for Q1 2003 was #185,000 (# 314,000 in Q1 2002). The expenses of
PTI's two core HR software, consulting and services businesses, in the UK and
the USA were lower than in 2002. The sales for the two business units were also
higher.
We have adopted several cost cutting measures in Israel, which will take effect
in June 2003 and will save approximately #200,000 on an annual basis. Further
rationalisation undertaken in the US will achieve additional savings during the
next quarters.
Enquiries:
Pilat Technologies International Ltd 00 972-3-767-9230
Chaim Helfgott, Chief Financial Officer
Chairman's Statement
Revenues and profitability
Overall sales in Q1 2003 fell by approximately 10% to #2,766,000, from
#3,060,000 in Q1 2002. However, gross profit remained at the same #1.1 million
level reflecting an increase in gross margin from 36% to 39%. The increased
profitability stems mainly from the operations in the US and UK.
As a result of the cost saving actions taken across the group and especially in
Israel, General and Administration costs for the Period decreased by 18%, to
#863,000. Selling and Marketing costs increased slightly to #384,000 (from
#354,000 in 2002), due to the generation of higher sales in the UK and US.
PTI suffered an operating loss of #185,000 in Q1 2003 compared to a #314,000
loss for the equivalent period of 2002.
The effect of exchange rate fluctuations included in the quarterly figures was
positive in Q1,2003 (#4,000 gain resulting from the Shekel strengthening against
the pound) compared with a negative impact in Q1 2002 (#63,000 loss for the
Shekel weakening against the pound)
Balance Sheet
The Company's current assets at 31 March 2003 were #5,335,000, which represents
approximately 82% of assets (82 % at Q1 2002 and 81.5% at 31 December 2002). On
31 March 2003 the fixed assets were #965,000 (#1,139,000 at 31 December 2002).
The reduction in fixed assets was due to amortisation.
Current liabilities decreased slightly from #4,812,000 at the end of 2002 to
#4,585,000 as a result of a decrease in accounts payable and trade debtors, as
explained below. Long-term liabilities increased slightly to #225,000 (#217,000
at 31 December 2002).
The company's current ratio is a healthy 1.16.
Shareholders' equity decreased to #1,726,000.
Liquidity
The Company had a negative cash flow of #867,000 from its operations during the
Period, compared with a higher negative cash flow of #1,109,000 in the
equivalent period of 2002. The negative cash flow was mainly due to a #745,000
reduction in accounts payable, of which an approximate #544,600 payment of
suppliers was made by Pilat Israel. The funds to pay off most of those suppliers
of Pilat Israel had already been advanced to Pilat Israel in December 2002. In
addition, Renaissance, which had sales in December 2002 amounting to
approximately #610,000, paid off approximately #100,000 of its suppliers before
collecting from its customers during the Period. During the equivalent period
of 2002 the company suffered a #1,109,000 negative cash flow from operations.
The Company used #291,000 for investment activities mainly by investing #297,000
of its cash equivalent in short term deposits. Increased short-term credit
provided #404,000 from financing activities.
Avi Engel, Chairman Chaim Helfgott, Chief Financial Officer
CONSOLIDATED BALANCE SHEETS
British pounds in thousands
March 31, December 31,
2003 2002 2002
Unaudited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,058 1,174 1,810
Short-term deposits 453 674 156
Trade receivables 3,038 3,692 2,963
Other accounts receivable 442 685 410
Inventory 344 424 322
5,335 6,649 5,661
LONG-TERM INVESTMENTS, LOANS AND RECEIVABLES:
Investments in investees - 98 -
Long-term loans and receivables 192 120 214
192 218 214
FIXED ASSETS, NET 965 1,139 1,022
OTHER ASSETS, NET 44 63 43
6,536 8,069 6,940
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit 1,732 1,504 1,319
Trade payables 1,379 1,699 1,777
Other accounts payable 1,474 1,615 1,716
4,585 4,818 4,812
LONG-TERM LIABILITIES:
Liabilities to banks 59 15 64
Accrued severance pay, net 166 158 153
225 173 217
SHAREHOLDERS' EQUITY 1,726 3,078 1,911
6,536 8,069 6,940
CONSOLIDATED STATEMENTS OF OPERATIONS
British pounds in thousands (except per share amounts)
Three months ended Year ended
March 31, December 31,
2003 2002 2002
Unaudited Audited
Revenues from sales and services provided 2,766 3,060 11,476
Cost of sales and services 1,661 1,955 7,300
Gross profit 1,105 1,105 4,176
Research and development costs 43 18 99
Selling and marketing expenses, net 384 354 1,389
General and administrative expenses 863 1,047 3,840
Operating loss (185) (314) (1,152)
Financial income (expenses), net 4 (63) (287)
Other income (expenses), net (13) 40 (45)
Loss before taxes on income (194) (337) (1,484)
Taxes on income 2 (39) (27)
Loss after taxes on income (196) (298) (1,457)
Equity in losses of affiliates, net - - -
Loss from continuing operations (196) (298) (1,457)
Loss from discontinued operations, net - (643) (643)
Loss for the period (196) (941) (2,100)
Net earning (loss) per NIS 1 par value of Ordinary shares
(in British pounds)
Loss from continuing operations (0.757) (1.14) (5.6)
Loss from discontinued operations - (2.47) (2.5)
Loss for the period (0.757) (3.61) (8.1)
CONSOLIDATED STATEMENTS OF CASH FLOWS
British pounds in thousands
Three months ended Year ended
March 31, December 31,
2003 2002 2002
Unaudited Audited
Cash flows from operating activities:
Loss for the period (196) (941) (2,100)
Adjustments to reconcile loss to net cash used in operating (671) 124 1,658
activities (a)
Net cash used in continuing operating activities (867) (817) (442)
Net cash used in discontinued operating activities - (292) (343)
Net cash used in operating activities (867) (1,109) (785)
Cash flows from investing activities:
Purchase of fixed assets (37) (100) (277)
Proceeds from sale of fixed assets 17 28 28
Sale of previously consolidated subsidiary (b) - (81) (81)
Short term investments ,net (297) (38) 306
Long-term loans and receivables - 134 174
Grant of loan to affiliate 26 - 145
Net cash provided by (used in) continuing investing (291) (57) 295
activities
Net cash provided by (used in) discontinued investing - (215) (174)
activities
Net cash provided by (used in) investing activities (291) (272) 121
Cash flows from financing activities:
Receipt of long-term loans from banks - - 57
Repayment of long-term loans from banks (6) (4) (13)
Short-term bank credit, net 410 (87) (286)
Net cash provided by (used in) continuing financing 404 (91) (242)
activities
Net cash provided by discontinued financing activities - 537 537
Net cash provided by financing activities 404 446 295
Effect of exchange rate changes on cash and cash equivalents 2 - 70
Decrease in cash and cash equivalents (752) (935) (299)
Cash and cash equivalents at the beginning of the period 1,810 2,109 2,109
Cash and cash equivalents at the end of the period 1,058 1,174 1,810
CONSOLIDATED STATEMENTS OF CASH FLOWS
British pounds in thousands
Three months ended Year ended
March 31, December 31,
2003 2002 2002
Unaudited Audited
(a) Adjustments to reconcile loss to net cash used in
operating activities:
Income and expenses not involving cash flows:
Income from discontinued operations, net - 643 643
Erosion of long term debts 18 (24) -
Depreciation and amortization 82 55 392
Deferred taxes, net (2) 2 12
Accrued severance pay, net 13 16 11
Capital loss (gain) from sale of fixed assets (3) (7) (9)
Erosion of long-term loans 2 1 (1)
Gain from short-term investment (1) - 24
Changes in operating asset and liability items:
Decrease trade receivables, other accounts receivable (13) 542 1,231
and long-term receivables
Decrease (increase) in inventory (22) (144) (42)
Decrease in trade payable and other accounts payable (745) (960) (603)
(671) 124 1,658
(b) Sale of previously consolidated subsidiary:
Assets and liabilities of the subsidiary at date of
sale:
Working capital (excluding cash and cash equivalents) - (1,061) (1,061)
Fixed assets, net - 1,085 1,085
Investments in affiliates, net - (98) (98)
- (74) (74)
Receivables for sale of previously consolidated - (7) (7)
subsidiary
- (81) (81)
(c) Significant non-cash activity:
Purchase of fixed assets - 2 22
NOTE 1:- GENERAL
These financial statements have been prepared as of March 31 2003 and for the
three months then ended. These financial statements are to be read in
conjunction with the audited annual financial statements of the Company as of
December 31, 2002, and their accompanying notes.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the audited annual financial
statements of the Company as of December 31 2002 are applied consistently in
these financial statements.
NOTE 3:- FINANCIAL STATEMENTS IN BRITISH POUNDS
a. The financial statements are prepared in accordance with generally
accepted accounting principles in Israel.
b. The Company's transactions are recorded in New Israeli Shekels.
However, the Company's management has determined the British pounds as its
primary reporting currency since the majority of the Group revenues are in
foreign currency and a substantial portion of the fixed assets is purchased in
foreign currency. Accordingly, monetary accounts maintained in currencies other
than the British pounds are remeasured using the foreign exchange rate at
balance sheet date. Operational accounts and non-monetary balance sheet accounts
are measured and recorded at the exchange rate in effect at the date of the
transaction. The effects of foreign currency remeasurement are reported in
current operations.
NOTE 4:- DISCONTINUED OPERATIONS
On February 26 2002, the procedure for the spin-off of the Company's
media activity to PMG was completed. In the context of this procedure, the
assets and liabilities of the media industry were transferred to the spinning
company against capital surplus.
In view of the aforementioned, the assets, liabilities and results of
Pilat were presented in the consolidated balance sheets and in the consolidated
statements of operations as discontinued operations and the comparative figures
were reclassified.
Following are the results of the discontinued operations from the three months
periods ended March 31, 2003 and 2002 and for the year ended December 31, 2002:
Three months ended Year ended
March 31, December 31,
2003 2002 2002
Unaudited Audited
Revenues from sales - 572 572
Cost of sales and services - 372 372
Gross profit - 200 200
Research and development costs - 278 278
Selling and marketing expense, net - 73 73
General and administrative expenses - 441 441
Operating loss - (592) (592)
Financial income (expenses), net (1) - 3 (3)
Other income (expenses), net - (54) 54
Loss from discontinued operations - (643) (643)
(1) Including gain from sale of activity.
This information is provided by RNS
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END
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