RNS Number:8450W
Gilat Satcom Limited
18 May 2007
Gilat Satcom Ltd
Unaudited results for the 3 months ended 31 March 2007
Gilat Satcom Ltd. ("Gilat" or "the Company"), the provider of international
broadband satellite services in the developing world (AIM symbol: GLT),
announces its financial results for the 3 months ended 31 March, 2007.
Financial Highlights
*The first quarter results reflect management's decision to write-off a
debt owed by a large customer of approximately $740,000, whereas the related
expenses have been accrued. Out of this amount $380,000 are unrecognized
revenues from the first quarter and additional $360 thousands reflect a
provision for doubtful accounts relating to this customer's debt from the
fourth quarter of 2006.
*Gilat revenues in the first quarter of 2007 were $8.7 million, compared
to $8.0 million in Q1 2006.
*Gross profit was US$1.8 million compared to $2.5 million in Q1 2006.
*Gross margin was 21% for the 3 months period ended 31 March 2007,
compared to 31% in Q1 2006.
*Operating loss in Q1 2007 was US$798 thousands compared to operating
profit of US$661 thousands in Q1 2006.
*Excluding the effect of the above mentioned debt, revenues were $9.1
million with 24% gross margin and operating loss of $58 thousands.
*EBITDA for the first quarter of 2007 was $732 thousands, compared to $2.1
million in the first quarter of 2006, due primarily to the provision for
doubtful account and an increase in space segment costs.
*Net debt decreased to $5.1 million compared to $5.4 million in December
2006.
CEO STATEMENT
Overview
Following our efforts to continue the expansion of our presence in African
countries where Gilat is well established, we presented an increase of 8% in
revenues during Q1 2007 compared to Q1 2006. This increase does not include $380
thousands of revenues attributed to a customer in Africa which we assume will
not be collectable. If collection efforts succeed we will be able to recognize
these revenues in the coming quarters.
Excluding the effect of the above mentioned debt, revenues were $9.1 million
with 24% gross margin and operating loss of $58 thousands.
On April 26 2007, a controlling stake in Satcom Systems Ltd. (Gilat's parent
company) was acquired by the Eurocom Group. The Eurocom Group is Israel's
largest privately owned communications group with a presence in the Israeli and
international markets. It operates in the space and the internet arena through
its holdings in several public and private companies. Among Eurocom's holdings
are: Spacecom Ltd. Which is a satellite operator, D.B.S. Satellite Services
(1998) Ltd., a TV broadcast services provider, 012-Internet Gold which is an ISP
and a local international voice carrier (Nasdaq: IGLD) and has various other
holdings in radio stations, internet portals, financial and real-estate
companies, in Israel and Europe.
The Company believes that joining the Eurocom Group will strengthen its core
capabilities. The support of the Eurocom Group global platform for marketing and
business development will assist Gilat Satcom's business and financial growth.
Eurocom's purchase is in line with its business strategy to increase and broaden
its service offering, together with a mutual contribution to other companies
within the Eurocom Group.
On February 2007 the company agreed with the bank to provide a deposit of $3
million as collateral for all existing loans. Following the change of control in
the company in May 2007 the bank agreed to release the deposit of $3 million and
reduce the interest rate.
Board Changes
Following the completion of the Transaction the following new board members were
appointed to the Board of Directors of the Company: Mr. Shaul Elovitch, Mr Or
Elovitch, Mr. Amikam Shorer and Mr David Grossman.
For more information about the Eurocom Group and about Satcom new board members,
please see the Company's press announcement from April 26th, 2007.
Amos Lasker,
CEO
For further information, please contact:
Gilat Satcom Ltd.: +972 3 925 5015
Liat Helman, CFO
Commitment-IR: +972 3 61144 66
Yael Nevat or Zion Bahloul
Seymour Pierce +44 20 7107 8000
Stuart Lane or John Depasquale
CONSOLIDATED BALANCE SHEETS
IN THOUSAND U.S. DOLLARS
March 31, December 31,
2 0 0 7 2 0 0 6
Unaudited Audited
ASSETS
CURRENT ASSETS
Cash and cash equivalents 2,519 5,916
Short-term deposits 3,258 248
Trade receivables 1,420 2,315
Other receivables 839 (*) 803
Inventories 883 1,011
Total current assets 8,919 10,293
NON-CURRENT ASSETS
Property and equipment 19,480 20,339
Intangible assets 7,349 7,430
Deferred income taxes 1,564 1,130
Other 371 536
Total non-current assets 28,764 29,435
37,683 39,728
LIABILITES AND EQUITY
CURRENT LIABILITIES
Current maturities of long term loans 2,600 2,600
Current maturities of long term leases 627 626
Trade accounts payable 3,591 3,863
Other payables and current liabilities 1,149 1,539
Total current liabilities 7,967 8,628
NON-CURRENT LIABILITIES
Long-term credit from banks 8,275 8,925
Obligations under finance leases 7,025 7,080
Liabilities for severance pay, net 95 70
Total non-current liabilities 15,395 16,075
SHARE HOLDERS' EQUITY
Share capital 39 39
Capital reserves 15,321 15,321
Accumulated deficit (1,039) (*) (335)
Total equity 14,321 15,025
37,683 39,728
(*) Restated.
CONSOLIDATED INCOME STATEMENTS
IN THOUSAND U.S. DOLLARS
(UNAUDITED)
Three months ended
March 31,
Unaudited
2 0 0 7 2 0 0 6
Revenues 8,710 8,048
Cost of revenues 6,921 5,577
Gross profit 1,789 2,471
Operating expenses:
Selling and marketing, net 962 724
General and administrative 1,625 1,086
Total operating expenses 2,587 1,810
Profit (loss) from operations (798) 661
Financial Income 16 134
Financial expenses (351) (457)
Profit (loss) before tax (1,133) 338
Income Tax benefit (expenses) 429 (310)
Profit (loss) for the period (704) 28
Basic earnings (loss) per share (in dollars) (0.040) 0.001
Diluted earning (loss) per share (in dollars) (0.040) 0.001
Number of shares used in computing basic earnings
per share
(in thousand) 17,692 17,692
Number of shares used in computing diluted earnings
per
share (in thousand) 17,692 17,731
STATEMENT OF CHANGES IN EQUITY
IN THOUSAND U.S. DOLLARS
(UNAUDITED)
Share Capital Accumulated
Capital reserves Deficit Total
Balance as of January 1, 2007 39 15,321 (*)(335) 15,025
Net loss for the period - - (704) (704)
Balance as of March 31, 2007 39 15,321 (1,039) 14,321
Share Capital Accumulated
Capital reserves Deficit Total
Balance as of January 1, 2006 39 15,267 (*)(712) 14,594
Share based payments to employees - 20 - 20
Net profit for the period - - 28 28
Balance as of March 31, 2006 39 15,287 (684) 14,642
(*) Restated
CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSAND U.S. DOLLARS
(UNAUDITED)
Three months ended
March 31,
2 0 0 7 2 0 0 6
Cash flows from operating activities:
Net Profit (loss) for the period (704) 28
Adjustments to reconcile net profit to net
cash provided by operating activities:
Depreciation of property and equipment 1,530 1,407
and amortization of intangible assets
Share based payment - 20
Appreciation of finance lease 102 84
Appreciation of bank deposits (10) (1)
Decrease (Increase) in trade receivables 895 (271)
Decrease in other receivables 161 913
Decrease (Increase) in inventories 128 (121)
Increase (decrease) in trade accounts payable (272) 39
Decrease in other payables and current liabilities (422) (130)
Decrease Increase () in deferred income taxes (434) 308
Increase in liabilities for severance pay, net 25 18
Net cash provided by operating activities 999 2,294
Cash flows from investing activities:
Purchases of property and equipment (394) (117)
Purchases of intangible assets (196) -
Investment in short-term bank deposit, net (3,000) -
Net cash used in investing activities (3,590) (117)
Cash flows from financing activities:
Repayment of finance lease (156) -
Repayments of loans from banks (650) (9,125)
Receipt of long term loans from bank - 5,325
Net cash used in financing activities (806) (3,800)
Increase (decrease) in cash and cash equivalents (3,397) (1,623)
Cash and cash equivalents at the beginning of the period 5,916 6,987
Cash and cash equivalents at the end of the period 2,519 5,364
Note 1 - Basis of preparation
The financial statements have been prepared in conformity with International
Accounting Standards (IAS) 34, interim financial reporting.
Note 2 - Significant Accounting Policies
The accounting policies adopted are consistent with those followed in the
preparation of the company's annual Financial Statements for the year ended 31
December 2006.
The consolidated interim financial statements of Gilat Satcom Ltd. ("the
Company"), have been prepared as of march 31, 2007 and for the three months then
ended. These financial statements should be read in conjunction with the
Company's 2006 annual financial statements, including their accompanying notes.
Adoption of new and revised Standards
* IAS 1 - Presentation of Financial Statements - Effective - January 1,
2007.
* IFRS 7 - Financial Instruments: Disclosures - Effective - January 1,
2007.
At the date of authorisation of these financial statements, the following
Standards and Interpretations were in issue but not yet effective:
* IFRS 8 - Operating Segments - Effective for annual periods beginning on
or after 1 January 2009
* IFRIC 11 - IFRS 2 - Group and Treasury Share Transactions - Effective
for annual periods beginning on or after 1 March 2007
* IFRIC 12 - Service Concession Arrangement - Effective for annual periods
beginning on or after 1 January 2008
* IAS 23 - Borrowing costs - Effective for annual periods beginning on or
after 1 January 2009
Restatement
The financial statements as of December 31, 2006 were adjusted retroactively by
way of restatement in order to reflect adjustments to currency appreciation of
related party balance in the year 2005.
The effect of the restatements on the financial statements as of December 31,
2006 are as follows:
As of December 31, 2006
As Previously Effect of Reported in these Financial
Reported Restatement Statements
Balance
sheet:
Other
receivables 946 143 803
Accumulated
deficit (192) (143) (335)
As of January 1, 2006
As Previously Effect of Reported in these Financial
Reported Restatement Statements
Balance
sheet:
Accumulated
deficit (569) (143) (712)
Note 3 - Exchange rates and linkage basis:
Assets and liabilities in or linked to the Israeli currency, New Israeli Shekel
("NIS"), are included in the financial statements according to the
representative exchange rate as published by the Bank of Israel at the balance
sheet date.
Data regarding exchange rates of NIS in relation to U.S. dollar are as follows:
Exchange rate
of one U.S. dollar
31 March 2007 4.155
31 March 2006 4.665
31 December 2006 4.225
Note 4 - Business Segments
The communications services provided by the Company are divided into three main
communications sectors: VSAT private network services, Internet backbone
connectivity and International voice services.
Segment information about these businesses is presented below:
Three months ended March 31, 2007
VSAT Private Internet International
Network Backbone Voice
Services Connectivity Services Total
REVENUE
External sales 726 6,625 1,359 8,710
RESULT
Segment result 293 442 124
Three months ended March 31, 2006
VSAT Private Internet International
Network Backbone Voice
Services Connectivity Services Total
REVENUE
External sales 681 6,316 1,051 8,048
RESULT
Segment result 110 1,619 53
Note 5 - Other Information
a. In connection with note 12 to the annual financial statements In April the
Israeli Minister Of Communications has notified the company that it intends to
fine the company and the Company have began an administrative process in which
the minister will hear out the Company's claims. The company cannot asses at
this point what will be the final amount to be paid, if at all.
b. In January the company's subsidiary Gilat Satcom Nigeria Ltd. Was granted
licence from the Nigerian Communication Commission for consideration of
$214,000. The licence is for a period of 10 years and it will be amortized over
its estimated useful life. This license will allow Gilat Satcom Nigeria to
operate as a local satellite communications services provider and to provide
services to a wider range of customers.
c. On February 2007 one of the managers of the company, was granted options
exercisable to company's shares in the amount of 176,923 options. The options,
each to purchase one Ordinary share par value of NIS 0.01 of the Company at an
exercise price per share of 120p. Subject to his continued employment with the
Company, 44% are fully vested at the grant day and additional 7% will become
vested at the end of each calendar quarter, until the end of 2008. All terms and
conditions including price adjustments and dividend adjustments are according to
the company's share option plan. The fair value of the options granted to the
manager is $10,000 (computed based on the following data: share price 40p,
expected volatility: 45%, risk free rate - 5%).
d. In connection with note 12 (i) to the yearly financial statement, on February
2007 the company agreed with the bank that it will hold a deposit of $3 million
as collateral for the loans. During May 2007 the bank agreed to release the
deposit of $3 million and reduce the interest rate.
e. The first quarter income statement reflects a provision for doubtful account
of $359,000. In addition, the Company did not recognize additional revenues of
approximately $381,000 from the same customer.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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