Ann: Half Year Results Announcement, page-3

1H20 financial result
The first half of 2020 has been marked by a global pandemic, placing governments and businesses around the world in a survival mode. Shekel, a global company with manufacturing in China, R&D in Israel, and global sales teams, has delivered a healthy result, in an extremely volatile and uncertain environment.
Shekel reported total revenue of US$7.9 million, down US$0.5 million or 5 per cent compared to the previous corresponding period in the first half of 2019 (“1H19” ).This was a result of decreased orders and a reduction in distribution activity of Healthweigh line due to COVID-19 affecting the healthcare sector.

We are starting to see orders rebound in the second half in the healthcare sector.

In June 2020, the Retail Innovation division recorded its first revenues for the new technology, including US$93,000 in proceeds from product and Proof of Concept pilots and US$14,000 from the sale of Innovendi machines and supporting software services.

Cost of revenue was US$5.0 million, up US$0.4 million or 10 per cent, driven by higher direct costs. This included: commencement of depreciation of an intangible asset, Smart Shelf (US$0.2 million) upon receipt of first revenues for this product; and fixed costs.

Gross profit was US$2.9 million, down US$0.9 million or 23 per cent. This resulted in a gross margin of 37 per cent, down from 45 per cent in 1H19.

Shekel managed costs down where possible during COVID-19; through furloughs and salary reductions, resulting in total operating costs of US$5.1 million, down $0.3 million or 6 per cent.
Statutory net loss after tax was US$2.5 million, in line with 1H19, as a result of lower finance expenses, down from US$0.6 million to US$0.2 million; and an income tax expense of US$0.2 million in the previous corresponding period.

Cash balance at 30 June 2020 was US$1.6 million1.

Global production
In the healthcare market, orders for Shekel’s proprietary incubator sensor weighing technology rose by 17 per cent to 3,604 units, following increased orders from Atom and GE Healthcare.
This was offset by COVID- 19 induced disruption to distribution of Healthweigh products.
In the retail market, demand for the Company’s self-checkout technology fell by 6,533 units on the 1H19 to 8,189 units, due to a change in ordering policy of one of the OEM customers.
2H20 outlook

There are signs of early recovery in Shekel’s core markets in Europe and US. Post 30 June 2020, the business has seen a resurgence of orders for Shekel’s products , resulting in July 2020 sales exceeding July 2019 sales by approximately 18%. We are encouraged by these results. Shekel’s continued progress in innovative product developments led to new agreements for product pilots for Innovendi and Capsule.

This positions the Retail Innovation platform for growth in 2H20 and into FY21.


The priority for the remainder of 2020 is to continue to ensure adequate liquidity for the company to enable it to thrive in offering autonomous shopping solutions for the future.

However, the macro-economic outlook remains uncertain, and Shekel will continue to be rigorous in its cash management and prudent investing in R&D. Shekel Brainweigh’s established growth platform, and profitable core business supported by professional, dedicated and determined management team and employees will enable the Company to continue to address the challenges of the global pandemic while progressing with the commercialization of its innovative new products