RNS Number : 0613I
Orpak Systems Ltd
13 November 2008
13 November 2008
Orpak Systems Ltd
("Orpak" or "the Company")
Financial results for the third quarter and nine months ended 30 September 2008
Orpak Systems Ltd, the leading provider of card-free secure fuel payment systems based on vehicle identification and end-to-end
solutions for the automation of fuel stations, announces its financial results for the third quarter and nine months ended 30 September
2008.
Third Quarter 2008 Highlights
* Revenues increased 27% to $19.7m (Q3 2007: $15.5m), representing twenty-first consecutive quarter of growth
* Operating profit increased 8% to $3.5m (Q3 2007: $3.2m)
* Net profit declined to $1.4m (Q3 2007: $2.2m), primarily due to loss in marketable securities and the weakness of the US dollar. Non
GAAP net profit was $1.6m (Q3 2007: $2.3m)
* Company's systems were delivered to 200 petrol stations and 100,000 vehicles bringing the total petrol stations equipped to 10,700 and
2.2 million vehicles to date, distributed across 30 countries
* Interim dividend of US$ 2.6 cents (US$ 2.21 cents net) per Ordinary Share to be paid on 10 December 2008 to shareholders on the
register of members of Orpak Systems Ltd at the close of business on 21 November 2008. The ordinary shares will go ex-dividend on 19
November 2008
Nine months ended 30 September 2008 Highlights
* Revenues increased 27% to $52.4m (2007: $41.2m)
* Operating profit increased 17% to $7.2m (2007: $6.2m)
* Net profit declined to $4.2m (2007: $6.3m), mainly due to loss in marketable securities and the weakness of the US dollar. Non GAAP
net profit was $4.7m (2007: $6.6m)
* Net cash and cash equivalents totaled $33.1m at 30 September 2008 (2007: $27.2m), despite making an acquisition for $3.7m and $2.4m
dividend payment for the year 2007
* Executed cost cutting plan to restore bottom-line performance and mitigate impact of currency factors on operational efficiency
* Revenues in Europe increased by 57% to $42.3m (2007: $26.9m)
* Finalised equipment of 570 BP stations in Turkey with automation and fuel payment systems based on vehicle identification, and began
to deliver the first batch of 25,000 vehicle identification units to approximately 65,000 vehicles
* Significant progress in opportunities in USA, Europe and Far East
Outlook
* Demand for Orpak's products remains strong and the Company continues to benefit from a robust order book, with a high level of repeat
business
* Firm action taken to stem the decline in net profits caused by the impact of currency movements and challenging financial markets
* Post period end, Orpak's subsidiary in Turkey, Turpak, signed an umbrella agreement with global oil company, LUKoil, to equip its
network of stations in Turkey with tank automation, site automation and C-store management system
* For full year 2008, the Company expects to continue to gain market share in emerging markets and report solid revenue growth compared
with previous year
Hayim Kohen, Chief Executive of Orpak, said: "We are pleased that this period has seen sustained momentum in revenue growth as demand
for our products across all markets remains encouraging. Our response to the challenges of the weakness of the US dollar and financial
markets has largely succeeded in mitigating the negative impact.
Looking ahead, the fourth quarter has begun well with the signing of a new contract with LUKoil in Turkey. It demonstrates our strength
in the region, where we already work with other global oil companies such as BP and Shell. Sales continue to increase and our order book
remains solid. As a result, we remain confident of delivering further revenue growth in the full year, as well as an improvement in profits
in the fourth quarter of 2008."
Hayim Kohen, CEO and Hemi Shtral, CFO will be hosting a conference call for investors today at 4pm GMT (11am EDT, 8am PDT). In the US,
please dial +1 866 966 5335; In the UK, please dial 0808 109 0700; Outside the US and UK, please dial +44 203 037 9095
Enquiries:
Orpak Systems Ltd
Hayim Kohen, CEO +972 3 577 6868
Hemi Shtral, CFO
Libertas Capital
Sandy Jamieson +44 20 7569 9650
Corfin Communications
Harry Chathli, Claire Norbury +44 20 7977 0020
Note to Editors:
Orpak develops, manufactures and markets end-to-end solutions for the automation of fuel stations and fleet management. Orpak is a
market leader in automated refueling systems that incorporate fuel payment based on vehicle identification. Using advanced technologies to
meet customer requirements, Orpak's solutions integrate forecourt automation and management, convenience-store management systems,
commercial and retail sales solutions, and fuel delivery systems. The Company's solutions are designed to benefit customers through enabling
fuel savings, preventing fuel fraud, maximizing loyalty programs and providing other advanced services that increase profitability.
The Company's products have been delivered to more than 10,700 fuel stations and 2.2 million vehicles in 30 countries across the globe
and are distributed through an international network of subsidiaries and partners.
Orpak has been ISO-9001 certified since 1995, and the Company's products meet appropriate local safety standards and regulations in
markets in which it operates.
Orpak (AIM: ORPK) was admitted to AIM in December 2005.
Financial review
Orpak is pleased to announce strong growth in revenues for the third quarter and nine months ended 30 September 2008, reflecting
sustained demand for the Company's products and services in key territories.
Third quarter revenues increased by 27% to $19.7m (Q3 2007: $15.5m). Operating profit increased by 8% to $3.5m (Q3 2007: $3.2m). Net
profit for the third quarter decreased to $1.4m (Q3 2007: $2.2m) primarily due to loss in its marketable securities and the weakness of the
US dollar. To counteract this, in the beginning of October, the Company moved all its marketable securities into short-term Israel State's
debentures with guaranteed interest.
Turnover in the nine months to 30 September 2008 rose 27% year-on-year to $52.4m (2007: $41.2m) and operating profit increased by 17% to
$7.2m (2007: $6.2m). Net profit decreased to $4.2m (2007: $6.3m) primarily due to volatile financial markets and the impact of a weak US
dollar, which depreciated by about 20% against the Israeli shekel since early 2007.
The Company has taken firm action to address these challenges by reducing operating expenses. These steps have produced encouraging
results in the third quarter and the benefits are expected to continue in the next quarter.
Net profit, excluding the provision of expenses for stock option plans and the amortization of intangible assets associated with
acquisitions, amounted to $4.7m (2007: $6.6m).
Fully diluted earnings per share were 12.5 cents (2007: 18.7 cents).
Sales and marketing expenditure amounted to $11.0m compared with $9.5m in 2007 as the Company continued to expand its global sales
infrastructure.
A subsidiary of the Company received tax assessments in respect of 2003-2005, where the subsidiary is required to pay a total amount of
about NIS 14 million. On the basis of the strong legal consultation the Company received, the financial statement for the period does not
include a provision in respect of the tax assessments.
Operating review
Orpak succeeded in increasing its market share in the territories in which it is established and continued to expand into new areas.
During the third quarter, the Company's systems were delivered to 200 petrol stations and 100,000 vehicles bringing the total number of
petrol stations equipped to 10,700 and 2.2 million vehicles to date, distributed across 30 countries.
During the nine month period, revenues in Europe increased by 57% to $42.3m (2007: $26.9m), maintaining the region's position as the
largest revenue contributor to the Company. The revenue growth reflected the completion of major orders, including contracts with oil
companies in several countries in Eastern Europe, which were delivered on time and within budget, thereby consolidating Orpak's position in
this region.
Under a contract with BP, a major global oil company, in the nine month period the Company equipped a network of 570 stations in Turkey
with automation and fuel payment systems based on vehicle identification, and began to deliver the first batch of 25,000 vehicle
identification units to approximately 65,000 vehicles. These systems allow drivers, in particular of fleet vehicles, to fill-up and pay for
their fuel through automatic and card-free payment technology, thereby saving considerable time. These systems also help oil companies to
strengthen customer loyalty while improving convenience and fuel cost management for fleet owners and drivers.
The Company also made good progress in discussions with retail networks in the Netherlands and Belgium, receiving orders from Texaco in
Belgium and Gulf in Netherlands to equip 100 retail outlets respectively with its convenience store and station automation systems.
Orpak's presence in India is based on executing orders with two of India's leading and largest petroleum companies - HPCL and IOCL -
delivering end-to-end retail management systems and increasing the total number of systems delivered to these customers to 1,438.
Post period end, the Company's subsidiary in Turkey, Turpak, signed an umbrella agreement with global oil company, LUKoil, to equip its
network of stations in Turkey with tank automation, site automation and C-store management system.
Currently, LUKoil has a network of 80 petrol stations and has recently acquired an additional network of 550 stations of Akpet, the
Turkish gas station operator. Under the terms of the agreement, Orpak will commence the supply, installation and commissioning of its
management system in 80 petrol stations, which is expected to be complete by the middle of 2009. Orpak will be paid $1.5m in stages for
fulfilling the terms of the contract.
Dividend
In line with the Group's policy, the Directors have declared an interim dividend of NIS 0.10 per Ordinary Share in respect of the nine
months ended 30 September 2008. This amount will be converted to US dollars per the exchange rate on the date the dividend is paid. For
convenience, as of today, the above-mentioned dividend is equivalent to US$0.026 per Ordinary Share.
The dividend will be paid on 10 December 2008, to shareholders on the register of members of Orpak Systems Ltd at the close of business
on 21 November 2008. The ordinary shares will go ex-dividend on 19 November 2008.
The Total interim dividend amounts to NIS 3.4m (which, as mentioned above, is equivalent to US$ 0.9m).
Net cash and cash equivalents totaled $33.1m at 30 September 2008 (2007: $27.2m). This was despite making cash payments of $6.1m - $3.7m
in acquisition costs and $2.4m for final dividend payment.
Outlook
Demand for Orpak's products remains strong and the Company continues to benefit from a robust order book, with a high level of repeat
business. The Company has also taken firm action to stem the decline in net profits caused by the impact of currency movements and
challenging financial markets. These steps have already produced encouraging results in the current quarter and the benefits are expected to
continue in the next quarter.
With a strong pipeline of new business and a successful start to the final quarter of 2008 with the signing of a new contract with
LUKoil, Orpak remains on track to deliver solid revenue growth in the fourth quarter and full year 2008. As a result, the Board looks to the
future with confidence and to delivering shareholder value.
Interim Condensed Consolidated Income Statements for the
Nine month period ended September 30 Three month period ended September 30 Year ended December
31
2008 2007 2008 2007 2007
$ thousands $ thousands $ thousands $ thousands $ thousands
Unaudited Unaudited Unaudited Unaudited Audited
Revenues from sales and 52,388 41,226 19,720 15,476 58,044
services
Cost of sales and services 28,734 19,968 10,397 6,827 28,140
Gross profit 23,654 21,258 9,323 8,649 29,904
Research and development costs 2,731 3,322 922 1,066 4,374
Selling and marketing costs 11,014 9,475 3,955 3,478 12,727
General and administrative 2,730 2,290 981 935 3,182
expenses
Other expenses 22 1 22 1 3
Other income (21) (76) - (5) (81)
Results from operating 7,178 6,246 3,443 3,174 9,699
activities
Financing expense (2,673) (715) (1,733) (649) (1,403)
Financing income 494 1,742 - - 2,020
Net financing income (expense) (2,179) 1,027 (1,733) (649) 617
Profit before income tax 4,999 7,273 1,710 2,525 10,316
Income tax (expense) (480) (706) (121) (246) (876)
Profit for the period 4,519 6,567 1,589 2,279 9,440
Attributable to:
Equity holders of the Parent 4,240 6,338 1,360 2,174 8,978
Minority interest 279 229 229 105 462
Profit for the period 4,519 6,567 1,589 2,279 9,440
Earnings per share (in U.S. dollars)
Basic 0.126 0.188 0.040 0.065 0.266
Diluted 0.125 0.187 0.040 0.064 0.264
Interim Condensed Consolidated Balance Sheets as at
September 30 December 31
2008 2007 2007
$ thousands $ thousands $ thousands
Unaudited Unaudited Audited
Assets
Current assets
Cash and cash equivalents 15,014 8,265 9,061
Marketable securities 17,554 18,970 19,780
Trade receivables 10,249 13,846 19,889
Other receivables 2,820 2,469 1,429
Inventories 8,974 8,977 10,487
Total current assets 54,611 52,527 60,646
Non-current assets
Held to maturity investments 2,463 - -
Deferred income tax assets 524 140 562
Employee benefits 171 110 105
3,158 250 667
Property and equipment, net 3,079 2,699 2,915
Intangible assets 19,037 4,330 14,857
Total non-current assets 25,274 7,279 18,439
Total assets 79,885 59,806 79,085
Interim Consolidated Balance Sheets as at
September 30 December 31
2008 2007 2007
$ thousands $ thousands $ thousands
Unaudited Unaudited Audited
Liabilities and equity
Current liabilities
Overdraft and current maturities of 1,952 113 388
long-term loan
Trade payables 5,835 5,841 6,918
Other payables 12,709 12,029 19,989
Total current liabilities 20,496 17,983 27,295
Non-Current liabilities
Long-term loans from banks - 28 -
Deferred tax liabilities 2,031 511 1,776
Employee benefits 276 210 213
Other long-term liabilities 5,145 1,767 5,749
Total non-current liabilities 7,452 2,516 7,738
Total liabilities 27,948 20,499 35,033
Equity
Share capital 179 179 179
Share premium 21,705 21,694 21,705
Treasury shares (501) (501) (501)
Translation reserve 7,156 (140) 1,631
Retained earnings 22,395 17,698 20,400
Total equity attributable to equity 50,934 38,930 43,414
holders of the parent
Minority interest 1,003 377 638
Total equity 51,937 39,307 44,052
Total liabilities and equity 79,885 59,806 79,085
Interim Statement of Changes in Equity
Attributable to equity holders of the Parent
Share Share Treasury Retained Translation Minority
capital premium shares earnings reserve interest
Total Total equity
$ thousands $ thousands $ thousands $ thousands $ thousands $ thousands $ thousands $ thousands
For the nine month period
ended September 30, 2008
Balance as at January 1, 2008 179 21,705 (501) 20,400 1,631 43,414 638 44,052
(Audited)
Changes during 2008:
Profit for the period - - - 4,240 - 4,240 279 4,519
(Unaudited)
Adjustments arising from
translation of
financial statements for the - - - - 5,525 5,525 86 5,611
period (Unaudited)
Total recognized income and - - - 4,240 5,525 9,765 365 10,130
expense for the period
Dividend to equity holders - - - (2,383) - (2,383) - (2,383)
(Unaudited)
Share based payment settled in - - - 138 - 138 - 138
shares (Unaudited)
Balance as at September 30, 179 21,705 (501) 22,395 7,156 50,934 1,003 51,937
2008 (Unaudited)
For the nine month period
ended September 30, 2007
Balance as at January 1, 2007 179 21,648 (501) 12,120 (1,983) 31,463 179 31,642
(Audited)
Changes during 2007:
Profit for the period - - - 6,338 - 6,338 229 6,567
(Unaudited)
Adjustments arising from
translation of
financial statements for the - - - - 1,843 1,843 22 1,865
period (Unaudited)
Total recognized income and - - - 6,338 1,843 8,181 251 8,432
expense for the period
Acquisition of additional - - - - - - (53) (53)
rights in subsidiary
Exercise of share-based - 46 - - - 46 - 46
payment (unaudited)
Dividend to equity holders - - - (1,006) - (1,006) - (1,006)
(Unaudited)
Share-based payment settled in - - - 246 - 246 - 246
shares (Unaudited)
Balance as at September 30, 179 21,694 (501) 17,698 (140) 38,930 377 39,307
2007 (Unaudited)
Year ended December 31, 2007
Balance as at January 1, 2007 179 21,648 (501) 12,120 (1,983) 31,463 179 31,642
(Audited)
Changes during 2007:
Profit for the year (Audited) - - - 8,978 - 8,978 462 9,440
Adjustments arising from
translation of
financial statements for the - - - - 3,614 3,614 50 3,664
year (Audited)
Total recognized income and - - - 8,978 3,614 12,592 512 13,104
expense for the period
Acquisition of additional - - - - - - (53) (53)
rights in subsidiary
Exercise of share based - 57 - - - 57 - 57
payment (Audited)
Dividend to equity holders - - - (1,006) - (1,006) - (1,006)
(Audited)
Share based payment settled in - - - 308 - 308 - 308
shares (Audited)
Balance as at December 31, 179 21,705 (501) 20,400 1,631 43,414 638 44,052
2007
Interim Statement of Changes in Equity
Attributable to equity holders of the Parent
Share Share Treasury Retained Translation Minority
capital premium shares earnings reserve interest
Total Total equity
$ thousands $ thousands $ thousands $ thousands $ thousands $ thousands $ thousands $ thousands
For the three month period 179 21,705 (501) 20,996 8,144 50,523 633 51,156
ended September 30, 2008
Balance as at July 1, 2008
(Unaudited)
Changes during 2008:
Profit for the period - - - 1,360 - 1,360 229 1,589
(Unaudited)
Adjustments arising from
translation of
financial statements for the - - - - (988) (988) 141 (847)
period (Unaudited)
Total recognized income and
expense for the
period - - - 1,360 (988) 372 370 742
Share based payment settled in - - - 39 - 39 - 39
shares (Unaudited)
Balance as at September 30, 179 21,705 (501) 22,395 7,156 50,934 1,003 51,937
2008 (Unaudited)
For the three month period
ended September 30, 2007
Balance as at July 1, 2007 179 21,694 (501) 15,451 (2,271) 34,552 254 34,806
(Unaudited)
Changes during 2007:
Profit for the period - - - 2,174 - 2,174 105 2,279
(Unaudited)
Adjustments arising from
translation of
financial statements for the - - - - 2,131 2,131 18 2,149
period (Unaudited)
Total recognized income and - - - 2,174 2,131 4,305 123 4,428
expense for the period
Share-based payment settled in - - - 73 - 73 - 73
shares (Unaudited)
Balance as at September 30, 179 21,694 (501) 17,698 (140) 38,930 377 39,307
2007 (Unaudited)
Interim Consolidated Statements of Cash Flows for the
Nine month period ended Three month period ended Year ended
September 30 September 30 December 31
2008 2007 2008 2007 2007
$ thousands $ thousands $ thousands $ thousands $ thousands
Unaudited Audited Unaudited Unaudited Audited
Operating activities
Profit for the period 4,519 6,567 1,589 2,279 9,440
Depreciation 776 510 263 220 766
Amortization 403 - 134 - -
Gain (loss) from sale of
property and equipment, net (12) (74) 4 (4) (81)
Decrease (Increase) in value
of marketable securities, net 2,320 (545) 1,690 441 (551)
Decrease in value of long-term
liabilities (1,118) - 25 - -
Income tax expense 480 706 121 246 876
Financing income (541) (488) (167) (130) (606)
Share based payments 138 246 39 73 308
6,965 6,922 3,698 3,125 10,152
Changes in working capital:
Decrease (increase) in trade
receivables 11,752 (828) (1,412) (291) (5,984)
(Increase) decrease in other
receivables (1,248) 60 302 (171) 322
Decrease (increase) in 2,742 (1,497) 833 (947) (2,584)
inventories
(Decrease) increase in
trade payables (1,887) 243 (64) (990) 992
(Decrease) increase in other
payables (7,143) (669) (1,464) 2,719 3,763
Changes in employee benefits (16) 100 38 45 105
4,200 (2,591) (1,767) 365 (3,386)
Income tax paid (380) (345) (144) (214) (495)
Net cash provided by
operating activities 10,785 3,986 1,787 3,276 6,271
Investing activities
Long-term loan paid from
(granted to ) Rapac group
companies 107 (626) (164) (526) (236)
Acquisition of property
and equipment (647) (1,015) (120) (179) (1,356)
Acquisition of other
intangible assets (1,398) (1,055) (460) (364) (1,559)
Investments in marketable
securities, net (155) (52) (718) (194) (27)
Proceeds from sale of
property and equipment 77 153 44 4 177
Payment for investment in
a subsidiary (3,705) - - - -
Investment in company
Consolidated for the first - (908) - - (2,656)
time
Interest received 541 488 167 130 606
Net cash used in investing
activities (5,180) (3,015) (1,251) (1,129) (5,051)
Interim Consolidated Statements of Cash Flows for the (cont'd)
Nine month period ended Three month period ended Year ended
September 30 September 30 December 31
2008 2007 2,008 2007 2007
$ thousands $ thousands $ thousands $ thousands $ thousands
Unaudited Audited Unaudited Audited Audited
Financing activities
Exercise of share based - 46 - - 57
payment
Dividend paid (2,383) (1,006) - - (1,006)
Payment of long term loan - - - - (28)
Receipt of loan from
Rapac group companies - (102) (75) - (102)
Acquisition of additional
rights in subsidiary - (46) - - (71)
Interest bearing loans
and borrowings, net 1,964 - 27 1 -
Long-term financing lease (71) (13) (36) (13) 2
Net cash (used in) provided
by financing activities (490) (1,121) (84) (12) (1,148)
Net increase (decrease) in
cash
and cash equivalents 5,115 (150) 452 2,135 72
Cash and cash equivalents
at beginning of period 8,673 7,870 14,850 5,594 7,870
Translation differences in
respect of cash balances 1,225 432 (289) 423 731
Cash and cash equivalents
at end of period 15,013 8,152 15,013 8,152 8,673
This information is provided by RNS
The company news service from the London Stock Exchange
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