TIDMAFS
RNS Number : 5456Y
Amiad Water Systems Ltd
10 September 2020
10 September 2020
Amiad Water Systems Ltd.
("Amiad" or the "Company")
Interim Results
Amiad (AIM: AFS), a leading global producer of water treatment
and filtration solutions, announces its interim results for the six
months ended 30 June 2020.
Financial Summary
-- Revenue of $51.5m (H1 2019: $58.4m)
-- Gross margin improved to 40.1% (H1 2019: 39.2%)
-- Operating profit increased to $3.0m (H1 2019: $2.5m)
-- Profit before tax increased to $3.0m (H1 2019: $0.9m)
-- Cash generated from operations increased to $8.1m (H1 2019: $3.7m)
-- Net cash at 30 June 2020 of $12.2m (31 December 2019: $12.5m
net debt; 30 June 2019: $14.4m net debt), having raised gross
proceeds of $21.3m through a subscription and open offer
-- Cash and cash equivalents at 30 June 2020 of $27.8m (31
December 2019: $15.0m; 30 June 2019: $14.1m)
Operational Summary
-- The Company took actions in response to COVID-19 to ensure
that production continued in each territory throughout the period,
in accordance with local regulations and health and safety
procedures
-- Total sales were lower due to reduced market activity as a
result of COVID-19, including the postponement of new projects -
however the Company has not received any order cancellations
o The Company's Irrigation business unit was more resilient
while the Industrial business unit experienced a greater impact
-- Sustained execution on strategy to improve operations:
o Introduced further manufacturing automation and other process
enhancements
o Maintained tight cost control and introduced cost mitigation
measures in response to the pandemic
-- New Sigma product series, targeted at the Irrigation market,
continued to perform well with sales increasing by 16.1%
-- Secured a new five-year global distribution agreement with
Netafim, the global leader in precision irrigation solutions, for
Amiad's disc filtration products for the irrigation market
Dori Ivzori, Chief Executive Officer of Amiad, said: "While our
sales were lower for the period due to the postponement, as a
result of the COVID-19 outbreak, of certain projects we had
expected to secure, we are encouraged that we have not received any
order cancellations. Moreover, thanks to the actions that we took
at the end of 2019 to improve operational efficiency, we delivered
strong cash generation from operations. During the first half, we
were able to maintain production throughout the period and we
continued to enhance our manufacturing processes. In addition, our
financial position was significantly bolstered with the investment
from FIMI - resulting in Amiad moving to a net cash position.
Consequently, the fundamentals of our business were greatly
strengthened during this period.
"Looking ahead, we entered the second half of 2020 with a higher
backlog than at the same point of the prior year and the rate of
new orders is robust. There remains uncertainty over the timing of
when our markets will recover and the rescheduling of postponed
projects in our various geographies and segments. However, we
expect to continue to benefit from our measures to improve
operational efficiency. Consequently, the Board anticipates revenue
for full year 2020 to be lower than that for 2019, but operating
profit to be significantly higher given the level of profit
generated in the first half, albeit the Board is cautious on the
outlook for the rest of the year given the uncertain macroeconomic
environment. In addition, the Board believes that the current
market conditions, in particular, could offer acquisition
opportunities to accelerate our growth. As a result, the Board
continues to look to the future with optimism."
Enquiries
Amiad Water Systems Ltd.
Dori Ivzori, Chief Executive
Officer
Avishay Afriat, Chief Financial
Officer +972 4 690 9500
-----------------
Stifel Nicolaus Europe Ltd.
-----------------
Stewart Wallace, Ben Maddison +44 20 7710 7600
-----------------
Luther Pendragon
-----------------
Harry Chathli, Claire Norbury +44 20 7618 9100
-----------------
About Amiad
Amiad Water Systems (AIM: AFS) is a leading global producer of
automatic, self-cleaning water treatment and filtration products
and systems. Through its engineering skills and ability to
innovate, Amiad provides cost-effective "green" solutions for
irrigation and industrial purposes. In these markets, its unique
and high-quality products are being integrated into the core of
systems for filtration and water treatment, micro irrigation and
membrane protection, wastewater and potable water treatment,
cooling systems and sea water filtration. Headquartered in Israel,
Amiad provides these solutions through ten subsidiaries and a
comprehensive network of distributors to customers in more than 80
countries.
FIMI Opportunity Funds, the leading private equity investor in
Israel, is a controlling shareholder of Amiad, with an interest in
39.6% of the Company's outstanding issued share capital.
For additional information or product details, please visit
www.amiad.com .
Operational Review
Amiad entered 2020 with a higher backlog than at the same point
of the prior year and a solid pipeline. However, primarily in the
second quarter, there was reduced activity and a postponement in
the conversion of new projects in the pipeline to orders across the
Company's markets due to the economic uncertainty caused by the
COVID-19 outbreak. As a result, revenue for the period was lower at
$51.5m (H1 2019: $58.4m). Nonetheless, the Company is encouraged
that it has not received any order cancellations of a material
nature.
Notwithstanding the impact of the pandemic on sales, as a result
of the successful execution on its strategy to improve its
operations, which was initiated at the end of 2019, the Company
achieved a strong financial performance during the period, with net
cash generated from operations increasing by 118.8% to $8.1m (H1
2019: $3.7m). This was also supported by the Company's effective
response to the COVID-19 outbreak to implement cost mitigation
measures, including the Board of Directors agreeing to a voluntary
reduction in their remuneration until at least year end. In
addition, the financial position of the Company was strengthened
through raising gross proceeds of $21.3m via a subscription by the
Company's significant shareholder, FIMI Opportunity Funds ("FIMI"),
and an open offer.
In response to COVID-19, alongside implementing cost mitigation
measures, the Company acted to ensure the safety of its employees
and complied with the regulatory requirements in each of its
territories, while preserving business continuity as far as
possible. Throughout the period, production continued in each
territory and the Company took measures to ensure it could still
deliver products to its customers, as far as circumstances
allowed.
In addition, during the first half of the year, Amiad continued
to strengthen the fundamentals of the business and invest in
securing future growth. The Company introduced manufacturing
automation in its metal department along with other process
enhancements. Amiad conducted R&D into improving existing
products as well as new product development. The Company also
signed a new five-year global distribution agreement with Netafim,
the global leader in precision irrigation solutions, for the
Company's disc filtration products for the irrigation market, which
extends the existing long-term strategic relationship between the
two companies. This agreement provides Amiad with continued access
to Netafim's extensive distribution network, covering over 110
countries, which the Company believes will yield significant
revenue over the five-year period. Netafim represents a material
contributor to the Company's sales in the irrigation market and
management believes this new agreement will be particularly
important in supporting the launch of future products.
Performance by Segment
Amiad has two business units: Irrigation and Industry. Revenue
generated under the Company's distribution agreement with Netafim,
whereby Netafim sells Amiad's irrigation products, contributes to
the Irrigation business unit sales. The Industry business unit
comprises sales into the Petrol, Petrochemical, Oil & Gas
("PPOG"), Municipal and General (other industry) segments.
Irrigation
The Irrigation business unit generated $30.3m in the first half
of 2020 (H1 2019: $33.4m), accounting for 58.9% of the Company's
revenue (H1 2019: 57.2%). This primarily reflects growth in the US
and China being offset by reductions elsewhere. In particular,
revenue generated under the Netafim agreement was $9.5m compared
with $12.3m for the first half of 2019.
The Company's latest product series targeted at the irrigation
market, which was launched in 2018 - consisting of the innovative
Sigma Pro, Mini Sigma and ADI-P controller - continued to perform
well with sales increasing by 16.1% over the same period of the
previous year.
Industry
The Industry business unit generated $21.2m for the first half
of 2020 (H1 2019: $25.0m), accounting for 41.1% of the Company's
revenue (H1 2019: 42.8%). This reflects lower revenue in all
segments with the Industry business unit and in all geographies
except Singapore.
The Municipal segment accounted for 31.3% of the Industry
business unit's sales (H1 2019: 28.1%); the PPOG segment accounted
for 16.0% (H1 2019: 16.2%); and other industry accounted for 52.7%
(H1 2019: 55.6%).
Performance by Region
Americas
The Americas region includes sales by Amiad's subsidiaries in
the US and Mexico as well as sales from the Company's headquarters
in Israel into Latin America. In the Americas, Amiad delivered
sales of $14.1m (H1 2019: $15.2m), which accounted for 27.5% of
total Company revenue (H1 2019: 26.1%).
In its key geography of the US, sales were $12.6m (H1 2019:
$13.5m), reflecting growth in the Irrigation business unit to $7.8m
(H1 2019: $7.0m) offset by a reduction in the Industry business
unit to $4.8m (H1 2019: $6.5m). Within the Industry unit in the US,
sales in the Municipal segment were $2.8m (H1 2019: $3.8m); sales
in the PPOG segment were $0.9m (H1 2019: $1.4m); and other industry
sales were $1.1m (H1 2019: $1.3m). The produced water market
(within the PPOG segment), which the Company had targeted for
growth in 2020, remained depressed as a result of the low oil
price, and the Company redirected its efforts to the other
segments. However, Amiad continues to believe that this segment
offers significant potential once market conditions improve.
In Latin America, sales were $1.5m for the first half of 2020
compared with $1.8m for the first half of the prior year. This
reflects a decrease in the Industry business unit to $0.4m (H1
2019: $0.8m) and a slight increase in sales in the Irrigation
business unit at $1.1m (H1 2019: $1.0m).
EMEA
The EMEA region includes sales by Amiad's subsidiaries in France
(Amiad Europe), Turkey and the UK as well as the domestic sales of
the Company's headquarters in Israel and also into Europe, the
Middle East and Africa.
Revenue in EMEA was $15.4m (H1 2019: $16.9m). In the Industry
business unit, revenue was $7.8m (H1 2019: $8.7m) as a reduction in
other industry sales at $4.7m (H1 2019: $7.3m) offset growth in the
Municipal segment to $2.6m (H1 2019: $0.8m) and flat sales in PPOG
at $0.6m (H1 2019: $0.6m). Irrigation business unit revenue was
$7.6m (H1 2019: $8.2m). Geographically, reductions in Amiad Europe
and Turkey offset growth in Amiad UK, Israel and from the Company
headquarters into EMEA.
APAC
The APAC region includes sales by Amiad's subsidiaries in
Australia, China, India and Singapore as well as sales from the
Company's headquarters in Israel into the Asia-Pacific
geography.
Revenue in APAC was $12.5m (H1 2019: $14.0m), with Industry
business unit sales of $8.2m (H1 2019: $9.1m) and Irrigation
business unit sales of $4.3m (H1 2019: $4.9m). Within the Industry
business unit, reduced sales in the Municipal segment at $1.2m (H1
2019: $2.4m) and PPOG at $1.9m (H1 2019: $2.0m) offset an increase
in other industry sales to $5.1m (H1 2019: $4.7m). Geographically,
growth in Singapore was offset by reductions elsewhere. Australia
continued to be the overall largest contributor to regional
revenue, accounting for 48.4% of total sales (H1 2019: 54.8%).
Financial Review
Revenue for the six months to 30 June 2020 was $51.5m compared
with $58.3m for the first half of 2019. The reduction was due to
reduced market activity and some customers postponing new projects
that the Company had expected to convert to orders as a result of
the economic uncertainty caused by the COVID-19 outbreak.
Gross margin improved to 40.1% (H1 2019: 39.2%) as the Company
began to benefit from the actions taken at the end of 2019 to
increase operational efficiency. Gross profit was $20.6m (H1 2019:
$22.9m) due to the lower revenue.
As a result of the actions taken at the end of 2019 to improve
efficiency combined with the cost mitigation measures implemented
in response to the COVID-19 outbreak, total operating costs were
significantly reduced to $17.6m (H1 2019: $20.4m). Sales and
marketing costs were reduced to $11.4m (H1 2019: $14.0m);
administrative and general expenses were reduced to $4.5m (H1 2019:
$4.7m); and R&D costs were slightly lower at $1.7m (H1 2019:
$1.8m).
Operating profit increased by 22.1% to $3.0m (H1 2019: $2.5m) as
a result of the reduction in expenses, which more than offset the
lower revenue. Net finance costs were immaterial ($0.008m) for the
period compared with net finance costs of $1.5m for the first half
of 2019. This primarily reflects finance income due to foreign
exchange hedging and favourable interest rates during the period
combined with significant financial expenses in the first half of
2019 from the implementation of IFRS 16. In addition, during the
period, the Company raised gross proceeds of $21.3m via a
subscription by its significant shareholder, FIMI, and open offer
for 7,652,174 new ordinary shares. The proceeds of the fund raise
were used to reduce the Company's bank credit and short-term
borrowing by $9.1m with the remainder generating interest from
being bank deposits. Consequently, the Company generated $7.2m from
financing activities during the period compared with using $0.5m
for the first half of 2019.
As a result of the lower net finance costs, profit before tax
for the first half of 2020 increased by 218.5% over the same period
of 2019 to $3.0m (H1 2019: $0.9m).
Net profit for the period increased by 402.8% to $2.7m (H1 2019:
$0.5m), with slightly lower income tax expenses of $0.3m (H1 2019:
$0.4m). Fully diluted earnings per share was $0.07 (H1 2019:
$0.03).
Net cash generated from operations increased by 118.8% to $8.1m
(H1 2019: $3.7m), reflecting the increased profitability and
improvements in stock management and working capital, which
generated $2.2m of incremental cash flow, partly due to measures
implemented in response to COVID-19 and to a certain extent from
the lower revenues.
Net cash used in investing activities was reduced to $1.2m (H1
2019: $2.5m). This primarily reflects lower investment in equipment
at $0.9m (H1 2019: $2.2m) due to some product launch and machine
installation delays as a result of the pandemic.
At 30 June 2020, cash and cash equivalents were $27.8m (31
December 2019: $15.0m; 30 June 2019: $14.1m). As a result of the
fund raise and increased cash from operations, the Company had net
cash of $12.2m at period end compared with net debt of $12.5m at 31
December 2019 and $14.4m at 30 June 2019.
Outlook
Amiad entered the second half of 2020 with a higher backlog than
at the same point of the prior year and the Company has not
received any order cancellations of a material nature. The rate of
new orders has remained robust, but slightly below that of the
prior year with the potential that a proportion of these orders
will be delivered in 2021. There remains uncertainty over the
timing of market recovery and rescheduling of postponed projects in
Amiad's various geographies and segments, with the oil & gas
market, in particular, expected to continue to be depressed into
next year. However, the Company is encouraged that China, having
been the Company's first territory to be impacted by the pandemic,
is now performing well and the Company expects to recover a large
proportion of the losses of the first half by year end in that
subsidiary.
As a result of the actions taken at the end of 2019 and during
the period to improve the Company's operational efficiency, the
fundamentals of the business are solid and the Company expects to
maintain gross margin for the full year. However, the Company is
keeping under review the impact of the currency markets.
Consequently, the Board of Amiad expects revenue for full year
2020 to be lower than that for 2019, but operating profit to be
significantly higher given the level of profit generated in the
first half, albeit the Board is cautious on the outlook for the
rest of the year given the uncertain macroeconomic environment.
Amiad continues to invest in R&D to develop new and improved
products and expand the Company's offering to gain market share,
particularly in Irrigation and in the US. Additionally, with the
investment from FIMI as well as the strong cash generation during
the period, the Company is well-capitalised and the Board believes
that the current market conditions, in particular, could offer
acquisition opportunities to accelerate the growth of the Company.
As a result, the Board continues to look to the future with
optimism.
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
JUNE 30, 2020
June 30 December
31,
------------------
2020 2019 2019
-------- -------- ----------
(Unaudited) (Audited)
------------------ ----------
U.S. dollars in thousands
------------------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 27,835 14,055 14,991
Financial assets at fair value through
profit or loss 799 262 54
Trade and other receivables:
Trade 34,605 41,212 35,503
Other 5,869 4,868 7,945
Current income tax assets 395 514 502
Inventories 26,653 29,240 27,682
-------- -------- --------
TOTAL CURRENT ASSETS 96,156 90,151 86,677
-------- -------- --------
NON-CURRENT ASSETS:
Investment in joint venture -,- -,- -
Severance pay fund, net 227 164 227
Long-term receivables 76 64 108
Property, plant and equipment 12,501 11,901 12,824
Intangible assets 11,970 13,058 12,100
Right of use assets 19,141 21,503 20,704
Deferred income tax assets 3,008 2,536 2,676
-------- -------- --------
TOTAL NON-CURRENT ASSETS 46,923 49,226 48,639
-------- -------- --------
TOTAL ASSETS 143,079 139,377 135,316
======== ======== ========
Date of approval of the interim financial information by the
Company's Board of Directors: September 9, 2020
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
JUNE 30, 2020
June 30 December
31,
------------------
2020 2019 2019
-------- -------- ----------
(Unaudited) (Audited)
------------------ ----------
U.S. dollars in thousands
------------------------------
Liabilities and equity
CURRENT LIABILITIES:
Bank credit and current maturities
of borrowings from banks 4,411 18,790 17,589
Financial liabilities at fair value
through profit or
loss - derivatives -,- 20 -
Trade and other payable:
Trade 13,225 16,101 13,899
Other 12,267 10,420 13,384
Operating lease liabilities 3,096 3,843 3,096
Current income tax liability 472 265 24
-------- -------- --------
TOTAL CURRENT LIABILITIES 33,471 49,439 47,992
-------- -------- --------
NON-CURRENT LIABILITIES:
Borrowings from banks (net of current
maturities) 11,193 9,623 9,866
Liability for royalty payment -,- 1,058 -
Remeasurements of post-employment
benefit obligations, net 386 387 405
Operating lease liabilities 17,794 18,608 19,285
Deferred income tax liabilities 103 12 179
-------- -------- --------
TOTAL NON-CURRENT LIABILITIES 29,476 29,688 29,735
-------- -------- --------
TOTAL LIABILITIES 62,947 79,127 77,727
======== ======== ========
EQUITY -
Capital and reserves attributable
to equity
holders of the Company:
Share capital 3,897 2,801 2,801
Capital reserves 48,774 28,828 28,874
Transaction with non-controlling
interest (416) (416) (416)
Currency translation reverse (8,953) (7,751) (8,160)
Retained earnings 34,019 33,725 31,762
-------- -------- --------
77,321 57,187 54,861
NON-CONTROLLING INTERESTS 2,811 3,063 2,728
-------- -------- --------
TOTAL EQUITY 80,132 60,250 57,589
-------- -------- --------
TOTAL LIABILITIES AND EQUITY 143,079 139,377 135,316
======== ======== ========
The attached notes are an integral part of this condensed
consolidated interim financial information.
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
FOR THE SIX-MONTH PERIODED JUNE 30, 2020
Six months ended Year ended
June 30 December 31,
-------------------
2020 2019 2019
-------- --------- -------------
(Unaudited) (Audited)
------------------- -------------
U.S dollars in thousands
except per share data
----------------------------------
Revenue 51,537 58,387 115,585
Cost of sales 30,877 35,507 70,628
-------- -------- -----------
Gross Profit 20,660 22,880 44,957
Research and development, net 1,708 1,766 3,567
Selling and marketing costs 11,386 13,995 28,523
Administrative and general expenses 4,545 4,682 9,844
Other gains (5) (42) (113)
-------- -------- -----------
Operating Profit 3,026 2,479 3,136
-------- -------- -----------
Finance income 1,609 534 755
Finance costs (1,617) (2,066) (3,812)
-------- -------- -----------
Finance costs, net (8) (1,532) (3,057)
-------- -------- -----------
Profit (loss) before income taxes 3,018 947 79
Income tax expense 278 402 974
-------- -------- -----------
Profit (loss) for the period 2,740 545 (895)
======== ======== ===========
Other comprehensive income (loss)-
Items that will not be reclassified to
profit or loss:
Re-measurements of post-employment benefit
obligations -,- -,- 42
Items that may be subsequently reclassified
to profit or loss:
Currency translation differences (1,193) (618) (1,133)
-------- -------- -----------
Other comprehensive loss for the period (1,193) (618) (1,091)
-------- -------- ===========
Total comprehensive income (loss) for
the period 1,547 (73) (1,986)
======== ======== ===========
Profit (loss) attributable to:
Equity holders of the Company 2,257 151 (1,854)
Non-controlling interests 483 394 959
-------- -------- -----------
2,740 545 (895)
======== ======== ===========
Total comprehensive income (loss) attributable
to:
Equity holders of the Company 1,464 (220) (2,592)
Non-controlling interest 83 147 606
-------- -------- -----------
1,547 (73) (1,986)
======== ======== ===========
Earnings per share attributable to the
equity
holders of the company during the period:
Basic 0.074 0.026 (0.082)
======== ======== ================
Diluted 0.073 0.026 (0.081)
======== ======== ================
The attached notes are an integral part of this condensed
consolidated interim financial information.
(Continued) - 1
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED JUNE 30, 2020
Attributable to owners of the parent
------------------------------------------------------------------
Transaction
Currency with non- Non-
Number
of Share Capital translation controlling Retained controlling Total
shares capital reserve reserve interest earnings Total interest equity
----------- -------- -------- ------------ ------------ --------- ------- ------------ --------
U.S dollars in thousands
------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1,
2020
(audited) 22,698,743 2,801 28,874 (8,160) (416) 31,762 54,861 2,728 57,589
=========== ======== ======== ============ ============ ========= ======= ============ ========
CHANGES DURING THE SIX
MONTHSED JUNE 30,
2020 (unaudited):
Comprehensive
income: 2,257 2,257 483 2,740
Profit for
the period
Currency
translation
differences (793) (793) (400) (1,193)
------------ --------- ------- ------------ --------
TOTAL COMPREHENSIVE
INCOME (793) 2,257 1,464 83 1,547
------------ --------- ------- ------------ --------
Transaction with
owners:
Recognition
of
compensation
related
employee
stock and
option
grants
Exercise of
options 40 40 40
----------- -------- -------- ------- --------
Issuance of
shares 7,652,174 1,096 19,860 20,956 20,956
----------- -------- -------- ------- --------
TOTAL TRANSACTIONS
WITH OWNERS 7,652,174 1,096 19,900 (793) 2,257 22,460 83 22,543
----------- -------- -------- ------------ ------------ --------- ------- ------------ --------
BALANCE AT JUNE 30,
2020 (unaudited) 30,350,917 3,897 48,774 (8,953) (416) 34,019 77,321 2,811 80,132
=========== ======== ======== ============ ============ ========= ======= ============ ========
The attached notes are an integral part of this condensed
consolidated interim financial information.
(Continued) - 2
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED JUNE 30, 2020
Attributable to owners of the parent
------------------------------------------------------------------
Transaction
Currency with non- Non-
Number
of Share Capital translation controlling Retained controlling Total
shares capital reserve reserve interest earnings Total interest equity
----------- -------- -------- ------------ ------------ --------- ------- ------------ -------
U.S dollars in thousands
-----------------------------------------------------------------------------------------
BALANCE AT JANUARY 1,
2019
(audited) 22,679,112 2,800 28,781 (7,380) (416) 33,574 57,359 2,916 60,275
----------- -------- -------- ------------ ------------ --------- ------- ------------ -------
CHANGES DURING THE SIX
MONTHSED JUNE 30,
2019 (unaudited):
Comprehensive
income:
Profit for
the period 151 151 394 545
Currency
translation
differences (371) (371) (247) (618)
------------ --------- ------- ------------ -------
TOTAL COMPREHENSIVE
INCOME (371) 151 (220) 147 (73)
------------ --------- ------- ------------ -------
Transaction with
owners:
Recognition
of
compensation
related
employee
stock and
option
grants 48 48 48
Exercise of
options 8,563 1 (1) -,- -,-
----------- -------- -------- ------- -------
TOTAL TRANSACTIONS
WITH OWNERS 8,563 1 47 48 48
----------- -------- -------- ------------ ------------ --------- ------- ------------ -------
BALANCE AT JUNE 30,
2019 (unaudited) 22,687,675 2,801 28,828 (7,751) (416) 33,725 57,187 3,063 60,250
=========== ======== ======== ============ ============ ========= ======= ============ =======
The attached notes are an integral part of this condensed
consolidated interim financial information.
(Concluded) - 3
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED JUNE 30, 2020
Attributable to owners of the parent
-------------------------------------------------------------------------------------------
Transaction
Currency with non- Non-
Number of Share Capital translation controlling Retained controlling Total
shares capital reserve reserve interest earnings Total interest equity
----------- -------- -------- ------------ ------------ --------- ------------------- ------------ --------
U.S dollars in thousands
----------- ------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1, 2019
(audited 22,679,112 2,800 28,781 (7,380) (416) 33,574 57,359 2,916 60,275
Comprehensive income
(loss)
:
----------- -------- -------- ------------ ------------ --------- -------- ----------------------- --------
Profit (loss) for
the year (1,854) (1,854) 959 (895)
Currency
translation
differences (780) (780) (353) (1,133)
Remeasurement of
net defined
benefit 42 42 42
Liability
------------ --------- -------- ----------------------- --------
TOTAL COMPREHENSIVE INCOME
(LOSS) (780) (1,812) (2,592) 606 (1,986)
------------ --------- -------- ----------------------- --------
TRANSACTION WITH OWNERS:
Recognition of
compensation
related to
Employee stock
and options grants 94 94 94
Exercise of options 19,631 1 (1)
Acquisition of
non-controlling
interest
Dividend to
non-controlling
interest (794) (794)
Dividend ($0.028
per share)
----------- -------- ------------ --------- -------- ----------------------- --------
TOTAL TRANSACTION WITH
OWNERS 19,631 1 93 94 (794) (700)
----------- -------- -------- ------------ ------------ --------- -------- ----------------------- --------
BALANCE AT DECEMBER 31, 2019 22,698,743 2,801 28,874 (8,160) (416) 31,762 54,861 2,728 57,589
=========== ======== ======== ============ ============ ========= ======== ======================= ========
The attached notes are an integral part of this condensed
consolidated interim financial information.
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIODED JUNE 30, 2020
Six months ended Year ended
June 30 December 31,
-------------------
2020 2019 2019
--------- -------- -------------
(Unaudited) (Audited)
------------------- -------------
U.S dollars in thousands
------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations (see note
5) 9,680 3,949 12,893
Interest paid (988) (156) (957)
Interest received 25 38 176
Income tax paid (587) (115) (588)
--------- -------- ---------------
Net cash generated from operating activities 8,130 3,716 11,524
--------- -------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (875) (2,160) (4,307)
Purchase of intangible assets (482) (379) (1,150)
Restricted deposit 174 (1) (10)
Proceeds from sale of property, plant
and equipment 22 50 72
--------- -------- ---------------
Net cash used in investing activities (1,161) (2,490) (5,395)
--------- -------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipt of long-term borrowings 1,313 4,267
Dividends paid to non-controlling interest -,- -,- (794)
Payments of operating lease liabilities (2,036) (1,554) (3,578)
Issuance of shares 20,956 -,- -,-
Payments of long-term borrowings (3,949) (3,786) (7,562)
Receipt of long-term borrowings -,- -,- 8,634
Increase (decrease) in bank credit and
short-term borrowing, net (9,131) 613 (797)
--------- -------- ---------------
Net cash generated from (used in) financing
activities 7,153 (460) (4,097)
--------- -------- ---------------
EXCHANGE RATE LOSS ON CASH AND CASH EQUIVALENTS (1,278) (237) (567)
--------- -------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 12,844 529 1,465
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 14,991 13,526 13,526
--------- -------- ---------------
CASH AND CASH EQUIVALENTS AT OF PERIOD 27,835 14,055 14,991
========= ======== ===============
The attached notes are an integral part of this condensed
consolidated interim financial information.
AMIAD WATER SYSTEMS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 1 - GENERAL INFORMATION:
a. Amiad Water Systems Ltd. (hereafter -"the Company") and its
subsidiaries (together- the Group) is a producer and global
supplier of water filters and filtration systems used mainly in the
industrial, municipal and irrigation markets.
b. The Company was incorporated in Israel in June 1997. The
address of its registered office is Kibbutz Amiad, Israel. The
Company is traded in the Alternative Investment Market in London
(AIM), a part of the London Stock Exchange, since December 2005.
The principal shareholders of the Company, as of the report release
date, are FIMI Israel Opportunity 6, Limited Partnership and FIMI
Opportunity 6, L.P. (together "FIMI Investment Funds") that
collectively hold 39.55% of the Company's outstanding shares,
HaChoshlim Foundation - Agricultural Cooperative Society for
Business Ltd. (hereafter "HaChoshlim Foundation") that holds 30.53%
of the Company's outstanding shares through A.M.S.I. Investments
Ltd. (hereafter - "AMSI") and Kibbutz Amiad (hereafter -The
"Kibbutz") and affiliate of Hachoshlim Foundation, that holds
directly 2.3% of the company's outstanding shares.
These group consolidated financial statement were authorized for
issue by board of directors on September 9, 2020.
NOTE 2 - BASIS OF PREPARATION :
a. These condensed consolidated interim financial statements for
the six months ended 30 June 2020 have been prepared in accordance
with IAS 34, 'Interim financial reporting'. The condensed
consolidated interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 December 2019, which have been prepared in accordance with
IFRS.
This condensed consolidated interim financial information is
reviewed and not audited.
b. Estimates
The preparation of interim financial statements requires
management to exercise its judgment; it also requires the use of
accounting estimates and assumptions that affect the application of
the group's accounting policy and the amounts of reported assets,
liabilities, income and expenses. Actual results may differ from
those estimates.
In preparation of these condensed consolidated interim financial
statements, the significant judgments that were exercised by the
management in applying the group's accounting policy and the key
sources of estimation uncertainty were similar to those applied in
the consolidated annual financial statements for the year ended
December 31, 2019.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies and computation methods used in
preparing the interim financial information are consistent with
those used in preparing the 2019 annual financial statements.
NOTE 4 - REVENUES FROM SALES:
Sales by customer location:
Year ended
Six months ended December
June 30 31,
-------------------
2020 2019 2019
-------- --------- ------------
(Unaudited) (Audited)
------------------- ------------
U.S. dollars in thousands
---------------------------------
North America 13,785 15,265 29,401
Europe 10,628 11,520 21,523
Australia 6,735 7,660 15,135
Israel 5,454 4,983 9,453
South America 3,267 3,650 7,152
Africa 1,983 2,388 4,540
Middle East 1,494 2,805 6,665
The Far East 8,191 10,116 21,716
------- ------- --------
Total 51,537 58,387 115,585
======= ======= ========
NOTE 5 - CASH FLOWS FROM OPERTIONS:
APPENDIX A:
Six months ended Year ended
June 30 December
31,
-------------------
2020 2019 2019
-------- --------- -----------
(Unaudited) (Audited)
------------------- -----------
U.S. dollars in thousands
--------------------------------
Profit for the period 2,740 545 (895)
------ -------- ----------
(a) Adjustments to reconcile net income
to net cash
generated from operating activities:
Depreciation and amortization 3,306 3,065 6,532
Interest paid 988 156 957
Interest received (25) (38) (176)
Income taxes paid, net 587 115 588
Share-based payment, net 40 48 94
Increase in deferred income taxes, net (420) 163 192
Accrued severance pay, net 2 47 48
Exchange rate differences and interest
accrued on borrowings and other liabilities 1,078 1,208 2,154
Loss (profit) from sale of property,
plant and equipment 1 (26) (25)
Decrease (increase) in assets at fair
value
through prof it or loss (789) (264) 15
------ -------- ----------
4,768 4,474 10,379
------ -------- ----------
Changes in working capital:
Decrease (increase) in accounts receivable:
Trade 171 (4,328) 1,139
Other 1,564 (113) (3,318)
Decrease (increase) in long-term receivable 3 208 192
Increase (decrease) in accounts payable:
Trade (178) 1,874 (191)
Other (113) (348) 2,521
Decrease (increase) in inventories 725 1,637 3,066
------ -------- ----------
2,172 (1,070) 3,409
------ -------- ----------
Cash generated from operations 9,680 3,949 12,893
====== ======== ==========
NOTE 6 - EFFECT OF CORONAVIRUS (COVID-19) :
In late 2019, a novel strain of coronavirus (COVID-19),
originating from China, spread worldwide.
So far, during 2020, the COVID-19 pandemic has negatively
impacted the global economy and created significant volatility,
uncertainty and disruption of financial markets.
The various precautionary measures taken by many governmental
authorities around the world in order to limit the spread of the
coronavirus has affected, and could have an adverse effect on, the
global markets and its economy, including the demand for
consumables, products and services, as well as on the availability
and pricing of employees, resources, materials, manufacturing and
delivery efforts and other aspects of the global economy.
As a result of COVID-19 and its severe worldwide economic impact
on demands, the Company expects the revenue for the year ending
December 31, 2020 to be lower than the revenue for the year ending
December 31, 2019.
In the wake of the crisis, the Company took various steps to
cope with the decline in revenue. The moves included, among others,
payroll cuts, including placing employees on unpaid leave, reducing
marketing activities and other expenses.
The Company believes that there is no concern about its ability
to repay financial liabilities
The Company continues to monitor and conduct regular assessments
of the development of the crisis, examine its exposure and impact
on the Company's activities, and take steps as required.
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