TIDMAFS
RNS Number : 5685T
Amiad Water Systems Ltd
26 March 2021
26 March 2021
Amiad Water Systems Ltd.
("Amiad" or the "Company")
Preliminary Results
Amiad (AIM: AFS), a leading global producer of water treatment
and filtration solutions, announces its preliminary results for the
year ended 31 December 2020.
Financial Summary
-- Revenue of $104.6m (2019: $115.6m)
-- Gross margin improved to 39.9% (2019: 38.9%)
-- Operating profit increased to $5.4m (2019: $3.1m)
-- Profit before tax increased to $4.1m (2019: $0.08m)
-- Cash generated from operations increased to $22.7m (2019: $12.9m)
-- Net cash at 31 December 2020 of $23.5m (30 June 2020: $12.2m
net cash; 31 December 2019: $12.5m net debt)
-- Cash and cash equivalents at 31 December 2020 of $35.3m (30
June 2020: $27.8m; 31 December 2019: $15.0m)
Operational Summary
-- Successful 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 COVID-19
-- Took actions in response to the pandemic to ensure that
production continued in each territory, in accordance with local
regulations and health and safety procedures
-- Total sales were lower, particularly in the Industry segment,
due to reduced market activity as a result of the pandemic -
however the Company did not receive any order cancellations of a
material nature
-- 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
-- Post period, launched the Spin Klin(TM) Nova innovative disc filtration system that offers industry-leading efficiency
Dori Ivzori, Chief Executive Officer of Amiad, said: "I am
pleased to be reporting an overall great set of results for 2020.
While our sales were lower due to the reduced global activity
resulting from the COVID-19 pandemic, particularly in the Industry
segment, we didn't receive any material order cancellations and we
expect the postponed projects to convert to orders as markets
improve. Moreover, thanks to the actions that we took at the end of
2019 to improve operational efficiency, which we continued to
progress this year, we significantly increased our cash generation.
Our financial position was also bolstered with the investment from
FIMI. Consequently, the fundamentals of our business have been
greatly strengthened.
"Looking ahead, we entered 2021 with a significantly higher
backlog than at the same point of the prior year and there has been
a strong increase in sales activity, reflecting improved conditions
in all of our markets. We are greatly encouraged by this resumption
in activity, while remaining cautiously optimistic that recovery
will be sustained as the year progresses. We expect to report
revenue growth in both the Irrigation and Industry segments for the
full year compared with 2020 and to continue to drive improvements
in the efficiency of our operations, subject to no further
unexpected disruption arising from the pandemic. Additionally, with
our strong financial position, the Board intends to explore
acquisition opportunities to accelerate our growth. As a result, we
continue to look to the future with optimism."
Enquiries
Amiad Water Systems Ltd.
Dori Ivzori, Chief Executive
Officer
Relly Shimko, Chief Financial
Officer +972 4 690 9500
-----------------
Stifel Nicolaus Europe Ltd.
-----------------
Fred Walsh, Stewart Wallace +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
39.5% of the Company's outstanding issued share capital.
For additional information or product details, please visit
www.amiad.com .
Operational Review
Amiad delivered a solid performance in 2020. There was reduced
activity across the Company's markets and a postponement in the
conversion of new projects in the pipeline due to the global
economic uncertainty and restrictions on movement caused by the
COVID-19 outbreak. However, the Company did not receive any order
cancellations of a material nature and continues to expect the
delayed projects to transition to orders as market conditions
improve in 2021, albeit the exact timing of this will likely be
dependent on how the pandemic progresses globally.
The Company successfully executed on its strategy that was
initiated at the end of 2019 to improve its operations, with a
particular focus on efficiency, and responded effectively to the
COVID-19 outbreak to implement cost mitigation measures. As a
result, notwithstanding the impact of the pandemic on sales, the
Company achieved a strong financial performance, with cash
generated from operations increasing by 76.0% to $22.7m (2019:
$12.9m). In addition, the financial position of the Company was
strengthened through raising gross proceeds of $21.8m 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 year, 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.
The Company was pleased to sign a new five-year global
distribution agreement with Netafim, the global leader in precision
irrigation solutions. In addition, Amiad continued to conduct
R&D into improving existing products as well as new product
development, which culminated, post period, in the launch of the
Spin Klin(TM) Nova, an innovative disc filtration system that is
the Company's most efficient product to date.
Performance by Segment
Amiad provides solutions for the Irrigation and Industry
segments. Revenue generated under the Company's distribution
agreement with Netafim, whereby Netafim sells Amiad's irrigation
products, contributes to the Irrigation segment sales.
Irrigation
Amiad's filtration solutions for the Irrigation segment prevent
organic and inorganic materials from clogging the emitters of
irrigation systems used in agricultural and landscaping
applications. This ensures uniform water distribution while
reducing the need for system maintenance as well as saving water
and energy costs.
Revenue from the Irrigation segment was $56.4m in 2020 (2019:
$59.3m), accounting for 53.9% of the Company's revenue (2019:
51.3%). This primarily reflects growth in the USA and Israel being
offset by reductions elsewhere. In particular, revenue generated
under the Netafim agreement was $16.1m compared with $20.2m for
2019.
Gross margin for the Irrigation segment improved to 40.1% (2019:
37.8%) resulting in increased gross profit of $22.6m (2019: $22.4m)
despite the lower revenue partly due to product mix. Segment
operating profit generated by the Irrigation segment (before
indirect cost allocation) grew by 14.1% to $15.5m (2019:
$13.6m).
The Company's innovative Sigma 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. Sales of this series, which were predominantly
into the Irrigation segment, increased by 27% over 2019 and
accounted for almost 10% of total revenue.
Industry
In the Industry segment, Amiad's solutions are integrated into
the core of water filtration systems in multiple industries and for
numerous applications. In particular, Amiad operates in the metal,
plastic, energy and chemical industries as well as providing
solutions for municipal purposes. The Company is involved in the
treatment of intake water, cooling water, process water and
wastewater where its products are used for purposes such as
protecting the nozzles or membranes of the filtration system and
removal of invasive species.
Revenue from the Industry segment was $48.2m for 2020 (2019:
$56.2m), accounting for 46.1% of the Company's revenue (2019:
48.7%). This reflects lower revenue in all of the Company's regions
in the Industry segment except Israel, in part as a result of the
more project-led nature of this segment and the delays to certain
projects due to the pandemic.
Gross margin for the Industry segment was broadly maintained at
39.7% (2019: 40.0%) and gross profit was $19.1m (2019: $22.5m),
primarily reflecting the lower revenue. Segment operating profit
generated by the Industry segment (before indirect cost allocation)
was $9.5m (2019: $10.5m).
Performance by Region
Amiad sells its products worldwide from its ten subsidiaries and
both domestically and internationally from its headquarters in
Israel. During 2020, there was growth in Amiad's direct sales in
Israel and reduced activity in the Company's other regions as a
result of the COVID-19 pandemic, with a particular impact on
countries where Amiad's sales are primarily project-based, such as
Germany and Singapore.
USA
In the USA, revenue was broadly flat at $26.1m (2019: $26.2m).
This reflects a reduction in the Industry segment to $11.4m (2019:
$13.8m) being largely offset by growth in the Irrigation segment to
$14.8m (2019: $12.4m). The USA accounted for 25.0% of total revenue
compared with 22.7% in 2019, and continued to be the largest
regional contributor to Irrigation segment sales representing 26.2%
(2019: 20.9%).
EMEA and LATAM
The EMEA and LATAM region includes sales by Amiad's subsidiaries
in France (Amiad Europe), Turkey, the UK and Mexico as well as
sales of the Company's headquarters in Israel into Europe, the
Middle East, Africa and Latin America. The EMEA and Latin America
geographies have been grouped into the same reporting region as
they are managed by the same executive within Amiad.
Revenue in EMEA and LATAM was $25.5m (2019: $30.1m). In the
Industry segment, revenue was $16.4m (2019: $19.6m). In the
Irrigation segment, revenue was $9.1m (2019: $10.5m). EMEA and
LATAM represented 24.4% of total revenue compared with 26.1% in
2019.
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 $27.4m (2019: $30.6m), with Industry segment
sales of $18.0m (2019: $20.7m) and Irrigation segment sales of
$9.4m (2019: $9.9m). APAC accounted for 26.2% of total revenue
compared with 26.4% in 2019, and continued to be the largest
regional contributor to Industry segment sales accounting for 37.3%
(2019: 36.8%).
The Company was encouraged that China, having been the Company's
first territory to be impacted by the COVID-19 pandemic, recovered
during the second half of the year and its performance for the full
year was broadly in line with 2019. Overall, sales declined in
Australia while India was particularly badly impacted by logistical
difficulties associated with the pandemic.
Israel
The Company's domestic sales in Israel (excluding Netafim)
increased to $9.5m (2019: $8.6m), reflecting growth in both the
Irrigation and Industry segments, and accounted for 9.1% of total
revenue (2019: 7.4%). Irrigation segment revenue increased by 10.8%
to $7.1m (2019: $6.4m), which was supported by demand for the Mini
Sigma as well as the Israeli agricultural market performing well in
2020. In the Industry segment, revenue increased by 9.0% to $2.4m
(2019: $2.2m).
Strengthened Operations
Amiad continued to strengthen the fundamentals of the business
and invest in securing future growth. In particular, the Company
automated manufacturing in its metal department and installed
welding robots at its headquarters and introduced automation at its
Beit Zera facility. These measures will increase the efficiency of
the business, with the initial benefits expected to be recognised
during the current year.
The Company 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. As noted above,
Netafim represents a material contributor to the Company's sales in
the irrigation market and management believes the new agreement
will be particularly important in supporting the launch of new
products .
Amiad continued to conduct R&D into improving existing
products as well as new product development. Post the period end,
as announced on 2 March 2021, the Company launched the Spin
Klin(TM) Nova, an innovative disc filtration system that offers
greater filtration efficiency and can process larger volumes of
water per hour with a smaller system footprint than Amiad's
existing products and, the Company believes, than competing
solutions available in the market today. It has also been designed
to allow flexibility and adaptability of configuration to suit the
potentially changing needs of the customer as well as being
equipped with the Company's real-time app-based controller. The
Spin Klin(TM) Nova is being marketed and sold in Israel by the
Company is being exclusively distributed for the irrigation market
worldwide by Netafim under the name AlphaDisc(TM) , which forms
part of the new five-year global distribution agreement.
Financial Review
Revenue for the year to 31 December 2020 was $104.6m compared
with $115.6m for 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 39.9% (2019: 38.9%) as the Company
began to benefit from the actions taken at the end of 2019 to
increase operational efficiency. In particular, the Company
substantially reduced the cost of subcontractors as it continued to
reduce its use of outsourcing. Gross profit was $41.8m (2019:
$45.0m) 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 $36.4m (2019: $41.8m). Sales and marketing
costs were reduced to $23.3m (2019: $28.5m); administrative and
general expenses were $9.6m (2019: $9.8m); and R&D costs were
$3.4m (2019: $3.6m). Following the launch of the Spin Klin(TM) Nova
earlier this month, the Company expects a further slight reduction
in R&D expenses during 2021 before returning to normalised
levels from next year as it continues to invest in developing
market-leading solutions to support the growth of the business.
Other expenses are expected to increase in 2021 compared with 2020
as a result of the anticipated greater activity (subject to no
further unexpected disruption as a result of the pandemic) but
remain below the pre-pandemic levels.
Operating profit increased by 74.1% to $5.4m (2019: $3.1m) as a
result of the reduction in expenses, which, combined with the
improved gross margin, more than offset the lower revenue. Net
finance costs were reduced to $1.3m (2019: $3.1m), which primarily
reflects greater financial expenses in 2019 from the implementation
of IFRS 16. In addition, in 2020, the Company raised gross proceeds
of $21.8m via a subscription by its significant shareholder, FIMI,
and open offer for 7,652,174 new ordinary shares. The proceeds of
the fundraise were used to reduce the Company's bank credit and
short-term borrowing by $9.2m with the remainder generating
interest from being bank deposits. The Company generated $2.1m from
financing activities during the year compared with using $4.1m in
2019.
EBITDA increased by 26.9% to $12.1m compared with $9.7m for
2019.
With increased operating profit and lower net finance costs,
profit before tax grew substantially over 2019 to $4.1m (2019:
$0.08m). Income tax expenses were $0.5m compared with $1.0m for
2019. As a result, the Company generated a net profit of $3.6m for
2020 compared with a net loss of $0.9m for 2019.
Fully diluted earnings per share were $0.093 (2019: $0.082 loss
per share).
Cash generated from operations increased by 75.9% to $22.7m
(2019: $12.9m), reflecting the increased profitability and
improvement in working capital, partly due to delivery of work in
progress and to a certain extent from the lower activity. Net cash
generated from operating activities increased by 86.1% to $21.4m
(2019: $11.5m).
Net cash used in investing activities was reduced to $2.6m
(2019: $5.4m). This primarily reflects lower investment in
equipment at $2.8m (2019: $4.3m) due to some product launch and
machine installation delays as a result of the pandemic.
At 31 December 2020, cash and cash equivalents were $35.3m (30
June 2020: $27.8m; 31 December 2019: $15.0m). As a result of the
increased cash from operations as well as the fundraise during the
first half of the year, the Company had net cash of $23.5m at year
end compared with $12.2m at 30 June 2020 and net debt of $12.5m at
31 December 2019.
The Board is currently considering the optimum platform for the
Company's listing, including the potential benefits of moving its
listing to be traded in its home state of Israel on the Tel Aviv
Stock Exchange. There is no guarantee that any action will be taken
as a result of this review. The Company will update the market in
due course.
Outlook
Amiad entered 2021 with a significantly higher backlog than at
the same point of the prior year, consisting both of projects
delayed from 2020 and new orders. There has been a strong increase
in sales activity, including the award of a particularly large
project in January. This reflects improved conditions in all of the
Company's markets as well as growth in sales from Netafim. The
Company is greatly encouraged by this strong resumption in
activity, while remaining cautiously optimistic that recovery will
be sustained as the year progresses as the global economy continues
to be impacted by the pandemic.
The Company expects to report revenue growth for 2021 in both
the Irrigation and Industry segments, subject to no further
unexpected disruption arising from the pandemic . The Company also
continues to drive improvements in the efficiency of its
operations. The Irrigation segment is expected to continue to be
the largest contributor to revenue. The Company anticipates
increased revenue in the Industry segment as infrastructure
projects are resumed. Additionally, with the investment from FIMI
as well as the strong cash generation, the Company is
well-capitalised and the Board intends to pursue 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.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
UNAUDITED
December 31
-----------------
Note 2020 2019
---- -------- -------
$ in thousands
-----------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 35,250 14,991
Financial assets at fair value
through profit
or loss - derivatives 512 54
Trade and other receivables:
Trade 28,607 35,503
Other 5,812 7,945
======== ========
Inventories 28,208 27,682
Current income tax assets 305 502
-------- --------
Total Current Assets 98,694 86,677
-------- --------
NON-CURRENT ASSETS:
Severance pay fund, net 247 227
Long-term receivables 197 108
Property, plant and equipment 13,034 12,824
Intangible assets 11,602 12,100
Right of use assets 17,642 20,704
Deferred income tax assets 3,558 2,676
-------- --------
Total Non-Current Assets 46,280 48,639
-------- --------
Total Assets 144,974 135,316
======== ========
The accompanying notes are an integral part of these financial
statements.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
UNAUDITED
December 31
-----------------
Note 2020 2019
---- -------- -------
$ in thousands
-----------------
Liabilities and Equity
CURRENT LIABILITIES:
Bank credit and current maturities
of
borrowings from bank 6,445 17,589
Financial liabilities at fair value
through
profit or loss- derivatives 405 91
Trade and other payables:
Trade 13,13 7 13,899
Other 15,439 13,293
Lease liabilities 2,857 3,096
Current income tax liability 830 24
--------- ---------
Total Current Liabilities 39,113 47,992
--------- ---------
NON CURRENT LIABILITIES:
Borrowings from banks
(net of current maturities) 5,349 9,866
Post-employment benefit obligations,
net 433 405
Lease liabilities 17,878 19,285
Deferred income tax liabilities 37 179
--------- ---------
Total Non-Current Liabilities 23,697 29,735
--------- ---------
Total Liabilities 62,810 77,727
========= =========
EQUITY:
Capital and reserves attributable
to
equity holders of the Company:
Share capital 3,900 2,801
Capital reserves 48,760 28,874
Transaction with non-controlling
interests (416) (416)
Currency translation reserve (7,566) (8,160)
Retained earnings 34,365 31,762
--------- ---------
79,043 54,861
Non-controlling interests 3,121 2,728
--------- ---------
Total Equity 82,164 57,589
--------- ---------
Total Liabilities and Equity 144,974 135,316
========= =========
The accompanying notes are an integral part of these financial
statements.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
UNAUDITED
Year ended December
31
-------------------------
Note 2020 2019
---- ------------ -----------
$ in thousands
except per share data
-------------------------
Revenue 3c 104,602 115,585
Cost of revenue 62,823 70,628
--------- ---------
Gross Profit 41,779 44,957
Research and development, net 3,381 3,567
Selling and marketing costs 23,303 28,523
Administrative and general expenses 9,631 9,844
Other (gains) losses 50 (113)
--------- ---------
Operating Profit 5,414 3,136
--------- ---------
Finance income 870 755
Finance expenses (2,148) (3,812)
--------- ---------
Finance expenses, net (1,278) (3,057)
--------- ---------
Profit before income taxes 4,136 79
Income tax expenses 530 974
--------- ---------
Net profit (Loss) for the year 3,606 (895)
========= =========
Other comprehensive income (loss):
Items that will not be reclassified to profit
or loss:
Remeasurements of post-employment benefit
obligations, net (1) 42
--------- ---------
Items that may be subsequently reclassified
to profit or loss :
Exchange differences on translation of foreign
operations (15) (1,133)
--------- ---------
Other comprehensive loss for the year (16) (1,091)
========= =========
Total comprehensive income (loss) for the
year 3,590 (1,986)
========= =========
Profit (Loss) attributable to:
Equity holders of the Company 2,604 (1,854)
Non-controlling interests 1,002 959
--------- ---------
3,606 (895)
========= =========
Total comprehensive income (Loss) attributable
to:
Equity holders of the Company 3,197 (2,592)
Non-controlling interests 393 606
--------- ---------
3,590 (1,986)
========= =========
$
----------------
Earnings (Loss) per share attributable to the
equity
holders of the Company during the year :
Basic 0.094 (0.082)
===== =========
Diluted 0.093 (0.08 2 )
===== =========
The accompanying notes are an integral part of these financial
statements.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
UNAUDITED
Attributable to equity holders of the Company
------------------------------------------------------------------------
Transaction
Currency with
Number Share Capital translation non-controlling Retained Non-controlling Total
of shares capital Reserve Reserve Interest earnings Total interest equity
------------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
$ in thousands
----------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1,
2019 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
liability 42 42 42
------------- --------- -------- ---------------- --------
Total comprehensive
income (1, 8
(loss) (780) 12) (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)
Dividend to
non-controlling
Interest in
subsidiaries (794) (794)
------------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
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
============= ======== ======== ============= ================ ========= ======== ================ ========
Comprehensive income
(loss)
:
Profit (loss)
for the year 2,604 2,604 1,002 3,606
Currency
translation
differences 594 594 (609) (15)
Remeasurement of
net defined
benefit
liability (1) (1) (1)
------------- --------- -------- ---------------- --------
Total comprehensive
income
(loss) 594 2,603 3,197 393 3,590
Transaction with
owners:
Recognition of
compensation
related to
employee stock
and options
grants 29 29 29
Exercise of
options 20,679 3 (3)
Issuance of
shares 7,652,174 1,096 19,860 20,956 20,956
------------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
Total transaction with
owners 7,672,853 1,099 19,886 20,985 20,985
------------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
BALANCE AT DECEMBER 31,
2020 30 , 371,596 3,900 48,760 (7,566) (416) 34,365 79,043 3,121 82,164
============= ======== ======== ============= ================ ========= ======== ================ ========
The accompanying notes are an integral part of these financial
statements.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
Year ended December
31
----------------------
Note 2020 2019
----- ---------- ----------
$ in thousands
----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations 2 22 , 775 12,893
( 957
Interest paid (1,282) )
Interest received 132 176
Income taxes paid (226) (588)
---------- ---------
Net cash generated from operating activities 21,399 11 , 524
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2,409) (4,307)
Purchase of intangible assets (609) (1,150)
Proceeds from sale of property, plant
and equipment 32 72
Restricted deposit ) repayments) 293 -
Restricted deposit (additions) - (10)
---------- ---------
( 2 , 693
Net cash used in investing activities ) (5,395)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to non-controlling interest
in subsidiaries - (794)
Payments of lease liabilities (3,122) (3,578)
Issuance of shares ) net of issuance expenses
- 893K$) 20, 956 -
Receipt of short-term borrowings 1,312 -
Receipt of long-term borrowings - 8,634
Payments of long term borrowings (7,903) (7,562)
Payment of short term borrowings (9,211) (797)
---------- ---------
Net cash generated from (used in) financing
activities 2,032 (4,097)
---------- ---------
EXCHANGE RATE LOSS ON CASH AND CASH EQUIVALENTS (479) (567)
---------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 20,259 1,465
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 14,991 13,526
---------- ---------
CASH AND CASH EQUIVALENTS AT OF YEAR 35,250 14,991
========== =========
The accompanying notes are an integral part of these financial
statements.
AMIAD WATER SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1 - GENERAL INFORMATION:
1. Basis of preparation:
The data in this preliminary results announcement are unaudited
and do not constitute a substitute for the full disclosure that
will be included in the audited financial statements as of December
31, 2020. There is no certainty that the data in this preliminary
results announcement will be identical to the final data included
in the audited financial statements. In whole or in part, these
data may change, and even materially, up to the date of publication
of the audited financial statements as of December 31, 2020.
2. Incorporation and activity:
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 in the
industrial and irrigation segments.
Following a change in the strategy focus of the Company, a need
arose to examine its activity differently relative to previous
years. Therefore, the Chief Executive Officer (the " Chief
Operating Decision Maker") began reviewing the activity of the
Company by looking at the irrigation and industry activity
segments.
As of the financial year 2020, the Company is presenting
information in its financial statements relating to its operating
segments (see note 3).
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 Opportunity Funds (hereafter - "FIMI"), A.M.S.I.
Investments Ltd. (hereafter - "AMSI"), a wholly owned subsidiary of
HaChoshlim Foundation - Agricultural Cooperative Society for
Business Ltd. (hereafter "HaChoshlim Foundation"), and Kibbutz
Amiad (hereafter - The "Kibbutz"), who is an affiliate of
HaChoshlim Foundation.
c. On February 26, 2020, the Company entered into a subscription
agreement with FIMI following which FIMI subscribed for 7,652,174
Subscription Shares (the "Capital Raising"). The Company gave all
qualifying shareholders an opportunity to participate in the
capital raising via an Open Offer for up to 856,556 ordinary shares
of the Company. In addition, FIMI has entered into a conditional
agreement with HaChoshlim, to acquire, subject to the completion of
the Capital Raising, a further 1,109,918 new ordinary shares of the
Company (the "HaChoshlim/FIMI Share Purchase Agreement"). Following
the completion of the Capital Raising and the HaChoshlim/FIMI Share
Purchase Agreement on May 1, 2020. As of December 31, FIMI holds
approximately 39.6% of the issued and outstanding share capital of
the Company, while HaChoshlim (together with Kibbutz Amiad) holds
32.91% of the Company's issued and outstanding share capital.
NOTE 1 - GENERAL INFORMATION (continued):
3. Effect of Coronavirus (COVID-19):
In late 2019, a novel strain of coronavirus (COVID-19) spread
worldwide. In 2020, the COVID-19 pandemic had negatively impacted
the global economy and created significant volatility, uncertainty,
and disruption of financial markets. The various preventive
measures taken by many governmental authorities around the world to
limit the spread of the coronavirus has affected, and 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.
a. The effect of the crisis on Company revenues
The spread of the coronavirus affected the Company's revenues
during 2020 due to a global economical standstill in the first
global wave of the COVID-19. However, after a short period of
stagnation in the global economy, the Company's activity in the
various markets returned, which partially compensated for the
damage to the Company's sales at the beginning of the crisis.
b. Steps taken by the Company to deal with the crisis
Due to the crisis's effects, the Company has taken steps to
reduce its current expenses as much as possible, including
canceling welfare and training activities, reducing the Company's
employees' compensation on various periods, including unpaid leave,
and utilizing accumulated vacation days while reducing workload due
to the COVID-19 impact on global economy.
As part of tackling the economic impacts of the COVID-19,
business assistance programs have been implemented by various
governments:
-- Amiad USA has applied for a loan amount of $1,312 thousands
under the Paycheck Protection Program (PPP)
-- Other subsidiaries have benefited from income through the
COVID-19 Job Retention Scheme received from governments to sustain
their employees for a certain period, amounting to a saving (from
expenses) of
approximately $ 220 thousands
c. Consequences of the continuing crisis
The Company continues to monitor and conduct regular assessments
of the development of the COVID-19 crisis, examine its exposure and
impact on the Company's activities and take steps as required. The
Company has no concerns about its ability to repay financial
liabilities.
At present, the Company is unable to assess the consequences of
the continuing COVID-19 crisis accurately. These implications
depend, among other things, on the extent, intensity, and duration
of the situation and its economic consequences, the depth of the
restrictions imposed, the imposition of additional closures, the
rate of return to routine, the extent of government support,
vaccine development and associated schedules.
NOTE 2 - CASH FLOWS FROM OPERATING ACTIVITIES:
Year ended December
31
----------------------
2020 2019
------------ --------
$ in thousands
----------------------
Profit (Loss) for the year 3,606 (895)
------------ --------
(a) Adjustments to reconcile net income to net cash
generated from operating activities:
Depreciation and amortization 6,650 6,532
Interest paid 1,282 957
Interest received (132) (176)
Income taxes paid 226 588
Share based payment 29 94
Decrease (increase) in deferred income taxes, net (905) 192
Accrued severance pay (income), net (2) 48
Interest expenses , net 2 8 106
Exchange rate differences 1 , 70 5 2,048
Net Increase (decrease) in assets and liabilities
at fair value through profit or loss (144) 15
Other loss (gain) 50 (25)
------------ --------
8,787 10,379
============ ========
Changes in working capital:
Decrease (increase) in accounts receivable:
Trade 6,952 1,139
Other 1,716 (3,318)
Decrease (increase) in long term receivable (101) 192
Increase (decrease) in accounts payable:
Trade ( 1,365 ) (191)
Other 3,056 2,521
Decrease in inventories 124 3,066
------------ ----------
10 , 382 3,409
------------ ----------
Cash generated from operations 2 2 , 775 12,893
============ ==========
(b) Information about financial activities not involving
cash flows :
Purchase of property, plant and equipment 399 -
======== ============
Leases- Additions 1,038 6,156
======== ============
NOTE 3 - SEGMENT INFORMATION:
a. Description of segments and principal activities
Following a change in the strategic focus of the Company, a need
arose to examine its activity differently compared with previous
years. Therefore, the Chief Operating Decision Maker began
reviewing the activity of the Company by looking at the irrigation
and industry segments.
As a result, at year end 2020, the Company had two operating
segments - Industry and Irrigation - which are reviewed by the
Chief Operating Decision Maker, who is responsible for assessing
the performance of the Company and for making resource allocation
decisions.
Beginning with the financial year 2020, the Company is
presenting information in its financial statements relating to its
operating segments. In previous years, the Company operated in one
operating segment.
The Chief Operating Decision Maker has determined the operating
segments based on the reports used to make resource allocation to
the segments and evaluate their performance.
The Chief Operating Decision Maker examines the operating
segments' performance based on sales net of cost of sales and
direct sales and marketing expenses. Non-direct selling and
marketing costs, administrative and general expenses, research and
development, other (gains) losses, financing expenses, and taxes
are not allocated between the operating segments. Segmental
information in respect of these activities is not provided to the
Chief Operating Decision Maker regularly.
As mentioned, the Group's companies are engaged in two main
areas of activity: Industry and Irrigation.
The Company's irrigation segment provides filtration solutions
for agriculture and landscape applications. The Company protects
drip lines and micro-sprinklers - water-efficient irrigation.
The Company's industry segments have a range of technologies
that offer solution for various filtration needs. This includes
self-cleaning to a fine degree; key reference projects in
iron/steel, power and paper industries with major groups for
cooling systems; pump seals and intake nozzle protection; fine
cleansing for wastewater; and recycling.
b. Segment results and profit adjustment:
1. Revenue from external customers:
Year ended December 31
--------------------------
2020 2019
------------ ------------
$ in thousands
--------------------------
Revenue:
Industry 48,224 56,248
Irrigation 56,378 59,337
------------ ------------
104,602 115,585
------------ ------------
NOTE 3 - SEGMENT INFORMATION ( continued ):
2. Segments results and profit adjustment:
Year ended December
31
-----------------------------
2020 2019
------------ ---------------
$ in thousands
-----------------------------
Industry 9,486 10,478
Irrigation 15,530 13,608
------------ ---------------
Total Segment
Profit 25,016 24,086
------------ ---------------
Expenses not allocated between
the operating segments:
Indirect Selling
and Marketing
expenses 6,540 7,652
Administrative
and general
expenses 9,631 9,844
Research and
development, net 3,381 3,567
Other (gains)
losses 50 (113)
------------ ---------------
Operating Profit 5,414 3,136
------------ ---------------
Finance income 870 755
Finance expenses 2,148 3,812
------------ ---------------
Profit before
income taxes 4,136 79
Income tax
expenses 530 974
------------ ---------------
Net Profit (Loss)
for the year 3,606 (895)
============ ===============
3. Amortization and depreciation :
Year ended December
31
-----------------------------
2020 2019
-------------------- -------
$ in thousands
-----------------------------
Amortization and depreciation
Industry 1,598 1,471
Irrigation 2,397 2,420
-------------------- -------
Total Amortization and depreciation
allocated to segments 3,995 3,891
-------------------- -------
Total Amortization and depreciation not
allocated to segments 2,655 2,641
-------------------- -------
Total Amortization and depreciation 6,650 6,532
==================== =======
NOTE 3 - SEGMENT INFORMATION ( continued ):
c. Sales by geographic markets (by customer location):
Year ended December
31
----------------------
2020 2019
---------- ----------
$ in thousands
----------------------
Sales by customer location:
North America 28,125 29,401
Europe 21,407 21,523
Australia 14,472 15,135
Israel 10,982 9,453
South America 5,888 7,152
Africa 4,081 4,540
Middle east 3,359 6,665
The Far East 16,288 21,716
-------- --------
Total 104,602 115,585
======== ========
Revenues of $18,829 thousands in 2020 and $23,572 thousands in
2019 are derived from a single external irrigation customer.
d. Non-current assets classified by geographical areas:
December 31
-----------------
2020 2019
-------- -------
$ in thousands
-----------------
Israel 33,323 36,902
United States (Oxnard CA, Mooresville
NC) 7,927 6,296
Turkey 1,627 1,852
Australia 1,867 1,238
China 696 617
Other 840 1,734
-------- -------
46,280 48,639
-------- -------
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March 26, 2021 03:00 ET (07:00 GMT)
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