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AVT reports lower net profit, sales up

Press release from the issuing company

Hod-Hasharon, Israel, February 4, 2008 – Advanced Vision Technology Ltd. (AVT, Prime Standard of the Frankfurt Stock Exchange, ISIS: IL001837248), the world's leading provider of automatic optical inspection, quality assurance and closed loop color control systems for the printing industry, completed a successful 2007 with 40% increase in revenues to USD 39.9 million compared with USD 28.5 million in 2006.  The sharp increase in revenues is partially attributed to the consolidation of GMI's results in Q4 of 2007. GMI was acquired in October 2007 for USD 33.5 million and contributed USD 7.5 million to AVT's Q4 revenues. AVT's revenues for the year (excluding GMI) were up 13.7% over 2006 to USD 32.4 million. The increase in revenues is attributed to the good market conditions, allowing the company to expand its activities in the labels and packaging markets.

The acquisition of Graphics Microsystems Inc (GMI) was closed on October 1, 2007. GMI is the world's premier supplier of closed loop color control (CLC) systems, color management reporting software and remote digital ink fountain control systems to leading commercial printers and press manufacturers worldwide.

This acquisition signifies the continuing growth of AVT and its ability to move into new markets, with GMI products largely targeted in the commercial, semi-commercial, newspaper and specialty printing markets.

Consolidated revenues from maintenance, service and training increased to USD 4.1 million in 2007. AVT's service revenues (excluding GMI) increased to USD 2.5 million, an increase of 25% over the previous year.
Gross profit increased to USD 23 million up from USD 17.6 million in 2006, up 30%.

AVT's net profit for the year (excluding GMI) totalled USD 6.7 million, up 23% over 2006. GMI's loss in Q4 2007 totalled USD 1.8 million (mostly attributable to USD 2.23 million amortization of acquired intangibles) leading to a net profit of USD 4.82 million compared with USD 5.4 million in 2006. Proforma net profit excluding amortization of intangibles increased to $7.05 million, up 30.6% over 2006.

As of December 31st, the company had an order back log of USD 23 million, an increase of 145% over 2006. Order back log (excluding GMI) was USD 10.94 million, up 16.5% compared to 2006.

AVT's strategic commitment to investment in R&D is based on the continuous dialogue with industry leaders and press manufacturers to understand their needs. Research and development expenses (excluding GMI) increased to USD 4.5 million in 2007, up 29% over 2006 results (USD 3.5 million). This increase in investment is owed largely to R&D activities as we move towards the industry's most important print trade show, DRUPA, in May 2008.

"The continued growth and success of AVT in 2007 is a reflection of our sustained market focus, extensive R&D, business development activities and acquisitions," said Shlomo Amir, President and CEO. "We can take encouragement from the complementary technological and marketing strengths delivered by the acquisition of GMI last year. We intend to make every effort to build on technological synergies and to grasp the opportunity to enter new market segments."

"It is thus clear to envision the many new channels of opportunity the GMI acquisition represents: new capabilities for our label and packaging automatic inspection platforms, and an open road to new market segments," continued Shlomo Amir.

"China continues to be a developing market for AVT with distribution agreements signed with Chinese partners. These relationships will support our healthy growth in this market, particularly the label and narrow web segments," said Shlomo Amir.

"In 2008 we look forward to a number of key international trade shows with stands at both Interpack in April and DRUPA in May. DRUPA, held once every 4 years, will witness the first combined appearance of both AVT and GMI, and we anticipate a busy and successful show," concluded Shlomo Amir.

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