TIDMMTT
RNS Number : 3254J
Metal-Tech Ltd
06 August 2012
6 August 2012
Metal-Tech Ltd.
("Metal-Tech" or "the Company")
Results for the six months ended 30 June 2012
Metal-Tech, the producer and recycler of speciality metals such
as Tungsten and Molybdenum, announces results for the half year
ended 30 June 2012.
H1 2012 Financial Summary:
-- Revenue decreased by 32% to US$20.4m (H1 2011: US$29.9m)
-- Net loss of US$1.1m (H1 2011: US$2.6m profit, including
US$3.6m of profit from discontinued operations)
-- Gross margin was 11% (H1 2011: 13%)
-- Positive cash flow from operating activities of US$0.6m (H1 2011: positive US$1.5m)
-- Operating expenses reduced to US$3.1m (H1 2011: US$3.8m)
-- Loss per share from continuing operation of US$0.03 (H1 2011: US$0.03)
-- Cash, cash deposits and restricted cash balance at 30 June
2012 were US$3.4m (30 June 2011: US$6.4m; 31 December 2011:
US$2.9m)
-- Significantly reduced debt position: bank debt balance at 30
June 2012 was US$16.4m (30 June 2011: US$20.7m; 31 December 2011:
US$15.7m)
-- Funding support received from The Israeli Investment Center
H1 2012 Operational Summary:
-- Sales volumes decreased by approximately 49% compared to H1
2011 and 12% compared to H2 2011, mainly due to working capital
restraints as well as lower demand for Tungsten
-- Cash flow is still tight and remains the barrier for further expansion.
-- Recycling increased by 34% compared to H1 2011 and by 21% compared to H2 2011
-- The Company's arbitration case against the Republic of
Uzbekistan continues with final briefs by the respondent and
claimant expected in H2 2012
-- The Company's operational focus will remain the continued
expansion of the production lines with a specific emphasis on the
recycling plant, within the constraints of working capital
Commenting on the results, Aik Rosenberg, Executive Chairman and
CEO of the Company, said: "The Company is progressing well with its
strategy to increase recycling and maintaining this with improved
commercial conduct thus minimising the effect of changing
prices.
"Looking ahead, the uncertain macro-economic climate and with
reduced demand for tungsten globally, the Company continues to
exert tight cost control in all its operations. However, the
cashflow constraints continue to restrict the Company's ability to
increase production and recycling, management will seek to ease
this pressure in order to return Metal-Tech to sustained growth and
profitability."
Enquiries:
Metal-Tech Ltd. +972 544 215454
Ariel (Aik) Rosenberg
Panmure Gordon +44 20 7459 3600
Fred Walsh
Hannah Woodley, Charles Leigh-Pemberton
Luther Pendragon +44 20 7618 9100
Harry Chathli, Alexis Gore
Operating Review
The first half of 2012 saw Metal-Tech's revenues and sales
volumes hit by the global macro-economic conditions and a slowdown
in demand for Tungsten. Revenue decreased by 32% to US$20.4m (H1
2011: US$29.9m), and the Company had a net loss of US1.1m (H1 2011:
US$2.6m profit, including US$3.6m profit from discontinued
operations).
As has been previously stated, Metal-Tech took steps to increase
its recycling and production capacity in Israel by preparing and
submitting an investment program to the Israel Ministry of Trade
and Industry as well as seeking other international opportunities
for co-production. The Israeli Investment Center approved the
Company's investment program of US$7.6m, and the Directors believe
will provide a grant of 20%, with the option of an additional 12%,
of the investment costs. The Company has commenced implementing
investment; however, further finance will be required to complete
the program. Such funding would assist Metal-Tech's plans to
increase its production capacity.
Focus on R&D
Metal-Tech continues to make investment in R&D. Its main
focus is on new technologies for recycling Tungsten and improved
water management in Tungsten recycling.
There is no progress to report on negotiations regarding the
implementation of the previously announced project regarding
extraction technology completed under the supervision of a major
publicly-traded international Chilean coppermolybdenum company. The
Company does not have any information on when and what type of
project will be implemented, and the financial impact of this
development which may include an element of required funding by the
Company.
Update on Uzbekistan Action
As announced in January 2010, Metal-Tech filed a Request for
Arbitration against the Republic of Uzbekistan, alleging that the
country's treatment of Metal-Tech's 50% investment in
UzMetal-Technology, a joint venture to produce high-quality
molybdenum products, is unlawful.
Metal-Tech is seeking damages because it claims that Uzbekistan
breached its obligations by denying Uzmetal Technology necessary
inputs of molybdenum concentrate in mid-2006, thereby forcing the
joint venture to become idle for lack of raw materials to process.
The damage to Metal-Tech was exacerbated when Uzbekistan and its
state-owned companies (which owned the other 50 percent of Uzmetal
Technology) later forced the joint venture into bankruptcy and
eventual liquidation.
The current position is that both parties have filed all their
respective submissions before the Tribunal, in accordance with the
procedural calendar. The hearings of the case took place in January
2012 and in May 2012. The parties have presented their respective
briefs in June 2012, and supplementary briefs on 2 August 2012.
Following this, further announcements will be made as and when new
information becomes available; but the Company expects to receive
the Tribunal's award on jurisdiction and on merits in approximately
6 months time.
Update on Mongolian Operations
There is no progress since the update provided in the Company's
2011 full year results statement. As stated on 28 June 2011, the
Company was informed that the court in Erdenet has in May 2011
declared Shim-Tech, the Company's Mongolian subsidiary, bankrupt
and ordered relevant authorities to freeze its accounts and seize
its assets. As a result, the Company is no longer in control of
Shim-Tech and therefore ceased to consolidate the financial
statements of Shim-Tech. Metal-Tech is taking all necessary actions
in Mongolia to attain a fair and just result for the Company,
including the submission of its claims as creditor of
Shim-Tech.
Update on prospective investment
As stated in March 2012, following the signing of a memorandum
of understanding (MOU) for the potential investment from Technoplus
to Metal-Tech in October 2011, the MOU with Technoplus and the
"no-shop" period pursuant thereto, during which the Company and
anyone acting on its behalf refrained from negotiating with third
parties any transaction, which involves issuance of shares and/or
options in the Company's equity, have expired.
Metal-Tech received a letter from Technoplus in March 2012,
which included an allegation with respect to the Company's and
other third parties liability for breach of the MOU. The Company
strongly rejected any allegations that it has breached any of the
conditions of the MOU and has not had any follow up from
Technoplus.
Metal-Tech and Aik Rosenberg continues to hold discussions with
other potential investors and will inform the market of any further
developments as required. The Board maintains that any future
fundraising will be utilised to support the growth of the Company,
both through investments in the Company's production facilities,
and facilitating working capital as required.
Financial Review
Income statement
Revenues for the six months ending 30 June 2012 were US$20.4m,
compared with US$29.9m for the prior period. Loss attributable to
equity holders was US$1.1m (H1 2011: US$2.7m profit, including
US$3.6m income from discontinued operations). Metal-Tech achieved a
gross profit of US$2.1m, compared with a gross profit of US$3.9m
for H1 2011, due to lower sales volume.
Throughout H1 2012 the Company continued to reduce operating
expenses across all business functions. The Company reduced its
selling and marketing expenses by US$0.6m, compared with the prior
period.
General and Administrative expenses remained on the same level
of US$2.1m in H1 2012 compared with the prior period.
Balance sheet statement
The Company has significantly reduced its debt levels with a
reduction of bank debt from US$20.7m at 30 June 2011 to US$16.4m at
30 June 2012.
At 30 June 2012, the cash, cash equivalents and restricted cash
balance of the Company was US$3.4m compared to US$6.4m at 30 June
2011, and US$2.9m at 31 December 2011. The Company believes this is
sufficient to meet Metal-Tech's current financing costs and
expected operating expenses. The Company will continue to prudently
manage its affairs in order to maintain sufficient operating cash
flow.
Metal-Tech continues to invest in expansion of the recycling
plant. The Company's investments in six months ending 30 June 2012
amounted to US$0.7m.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
Unaudited Audited
---------------- ---------
December
June 30, 31,
---------------- ---------
2012 2011 2011
------- ------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 990 790 354
Restricted cash 2,449 5,631 2,564
Trade receivables 5,213 11,281 5,604
Other accounts receivable 1,190 1,462 1,297
Inventories 22,092 17,441 23,401
------- ------- ---------
31,934 36,605 33,220
------- ------- ---------
NON-CURRENT ASSETS:
Trade receivables 321 - 620
Property, plant and
equipment 10,329 10,194 10,173
------- ------- ---------
10,650 10,194 10,793
------- ------- ---------
Total assets 42,584 46,799 44,013
======= ======= =========
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
Unaudited Audited
-------------------- ---------
December
June 30, 31,
-------------------- ---------
2012 2011 2011
--------- --------- ---------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit 4,295 4,354 2,702
Short-term loans and current maturities 11,670 15,973 12,616
Trade payables 9,195 7,128 10,015
Income taxes payable 2,857 5,529 3,000
Other accounts payable 4,752 4,674 4,773
--------- --------- ---------
32,769 37,658 33,106
--------- --------- ---------
NON-CURRENT LIABILITIES:
Long-term loans 447 414 414
Employee benefit obligations 223 387 214
Other liabilities 384 436 404
Provision for losses in excess of investment
in investee - 69 -
--------- --------- ---------
1,054 1,306 1,032
--------- --------- ---------
Total liabilities 33,823 38,964 34,138
--------- --------- ---------
EQUITY:
Equity attributable to the equity holders
of the Company:
Issued capital 2,399 2,399 2,399
Share premium 23,892 23,892 23,892
Other capital reserves 1,131 1,066 1,131
Capital reserves from transaction with
controlling shareholders 96 - 96
Accumulated deficit (18,757) (19,522) (17,643)
--------- --------- ---------
Total equity 8,761 7,835 9,875
--------- --------- ---------
Total liabilities and equity 42,584 46,799 44,013
========= ========= =========
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. dollars in thousands (except share and per share data)
Unaudited Audited
---------------------------- ------------------------
Six months ended June 30, Year ended December 31,
---------------------------- ------------------------
2012 2011 2011
------------- ------------- ------------------------
Revenues 20,397 29,900 52,149
Cost of sales 18,232 26,035 45,256
------------- ------------- ------------------------
Gross profit 2,165 3,865 6,893
------------- ------------- ------------------------
Research and development expenses ,net 332 473 573
Selling and marketing expenses 659 1,238 2,101
General and administrative expenses 2,064 2,078 4,722
------------- ------------- ------------------------
Total operating expenses 3,055 3,789 7,396
------------- ------------- ------------------------
Operating profit (loss) (890) 76 (503)
Finance costs (396) (1,260) (1,309)
Finance income 236 197 783
Other income (expense), net (25) 20 -
Company's share of loss of company accounted for at equity - - 69
------------- ------------- ------------------------
Loss before tax (1,075) (967) (960)
Income tax benefit (expense) (39) (4) 1,769
------------- ------------- ------------------------
Income (loss) from continuing operations (1,114) (971) 809
Income from discontinued operations, net - 3,564 3,663
------------- ------------- ------------------------
Net income (loss) (1,114) 2,593 4,472
Total comprehensive income (loss) (1,114) 2,593 4,472
============= ============= ========================
Total comprehensive income (loss) attributable to:
Equity holders of the Company (1,114) 2,727 4,606
Non-controlling interest - (134) (134)
------------- ------------- ------------------------
(1,114) 2,593 4,472
============= ============= ========================
Net earnings (loss) per share attributable to equity holders
of the company (in USD)
Basic and diluted earnings (loss):
Earnings (loss) from continuing operation (0.03) (0.03) 0.02
Earnings (loss) from discontinuing operation - 0.1 0.10
------------- ------------- ------------------------
Net earnings (loss) (0.03) 0.07 0.12
============= ============= ========================
Weighted average number of shares used in computing basic and
diluted net loss per share attributable
to Ordinary equity holders of the Company 38,376,923 38,376,923 38,376,923
============= ============= ========================
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Attributable to equity holders of the Company
----------------------------------------------------------------------------
Capital
reserve
Other from transaction Total
Share Share capital with controlling Accumulated equity
capital premium reserves shareholder deficit Total (deficit)
--------- --------- ---------- ------------------ ------------ -------- -----------
Unaudited
-----------------------------------------------------------------------------------------
Balance as of January 1,
2012
(Audited) 2,399 23,892 1,131 96 (17,643) 9,875 9,875
Total comprehensive loss - - - - (1,114) (1,114) (1,114)
Balance as of June 30,
2012 2,399 23,892 1,131 96 (18,757) 8,761 8,761
========= ========= ========== ================== ============ ======== ===========
Attributable to equity holders of the Company
------------------------------------------------------
Share Share Other Accumulated Non controlling Total
capital premium reserves deficit Total interest equity
--------- --------- ------------ ---------------- --------
Unaudited
----------------------------------------------------------------------------------
Balance as of January 1, 2011
(Audited) 2,399 23,892 878 (22,249) 4,920 (5,921) (1,001)
Total comprehensive income
(loss) - - - 2,727 2,727 (134) 2,593
Deconsolidation of company
that ceased being consolidated - - - - - 6,055 6,055
Share based payment - - 188 - 188 - 188
--------- --------- ---------- ------------ ------ ---------------- --------
Balance as of June 30, 2011 2,399 23,892 1,066 (19,552) 7,835 - 7,835
========= ========= ========== ============ ====== ================ ========
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Attributable to equity holders of the Company
---------------------------------------------------------------------
Capital
reserve
from
transaction
Other with Non Total
Share Share capital controlling Accumulated controlling equity
capital premium reserves shareholder deficit Total interest (deficit)
--------- --------- ---------- ------------- ------------ ------ -------------- -----------
Audited
------------------------------------------------------------------------------------- -----------
Balance as of
January 1, 2011 2,399 23,892 878 - (22,249) 4,920 (5,921) (1,001)
Total
comprehensive
(income)
loss - - - - 4,606 4,606 (134) 4,472
Share based
payment - - 253 - - 253 - 253
Deconsolidation
of subsidiary - - - - - - 6,055 6,055
Fair value of
bank guarantees
provided by
controlling
shareholder - - - 96 - 96 - 96
--------- --------- ---------- ------------- ------------ ------ -------------- -----------
Balance as of
December 31,
2011 2,399 23,892 1,131 96 (17,643) 9,875 - 9,875
========= ========= ========== ============= ============ ====== ============== ===========
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Unaudited Audited
------------------- -----------
Year ended
Six months ended December
June 30, 31,
------------------- -----------
2012 2011 2011
--------- -------- -----------
Cash flows from operating activities:
Net income (loss) (1,114) 2,593 4,472
--------- -------- -----------
Adjustments to reconcile net loss to
net cash provided by operating activities:
Adjustments to the profit or loss items:
Depreciation 615 558 1,188
Income from discontinued operations,
net - (3,564) (3,663)
Employee benefit obligations 9 (119) (292)
Accrued interest and foreign exchange
differences on
short and long-term liabilities, net 265 529 384
Share based payments - 188 253
Company's share of loss (income) of company
accounted for at equity - - (69)
Income tax expenses (benefit) 39 4 (1,769)
--------- -------- -----------
939 (2,404) (3,968)
--------- -------- -----------
Changes in operating asset and liability
items:
Decrease (increase) in trade receivables,
net 690 (205) 4,852
Decrease (increase) in other accounts
receivable 107 (261) (52)
Decrease (increase) in inventory 1,309 3,690 (2,270)
Increase (decrease) in trade payables (820) (1,415) 1,505
Increase (decrease) in related parties,
net (50) - 689
Increase (decrease) in other accounts
payable 9 (43) (664)
--------- -------- -----------
1,245 1,766 4,060
--------- -------- -----------
Cash paid and received during the year
for:
Interest received 14 15 26
Interest paid (267) (380) (730)
Income tax paid (183) (7) (163)
--------- -------- -----------
(446) (372) (867)
--------- -------- -----------
Net cash provided by (used in) continuing
operating
activities 624 1,583 3,697
--------- -------- -----------
Net cash used in discontinuing operating
activities - (97) (268)
--------- -------- -----------
Net cash provided by operating activities 624 1,486 3,429
--------- -------- -----------
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Unaudited Audited
-------------------- -----------
Year ended
Six months, ended December
June 30, 31,
-------------------- -----------
2012 2011 2011
-------- ---------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (771) (1,013) (1,622)
Increase in restricted cash 115 (527) 2,540
-------- ---------- -----------
Net cash provided by (used in) investing
activities (656) (1,540) 918
-------- ---------- -----------
Cash flows from financing activities:
Proceeds (repayment) from short -term
loans, net (925) (615) 783
Repayment of long-term loans - (1,376) (5,959)
Increase (decrease) in short-term bank
credit, net 1,593 592 (1,060)
-------- ---------- -----------
Net cash provided by (used in) financing
activities 668 (1,399) (6,236)
-------- ---------- -----------
Increase (decrease) in cash and cash
equivalents 636 (1,453) (1,889)
Cash and cash equivalents at the beginning
of the year 354 2,243 2,243
-------- ---------- -----------
Cash and cash equivalents at the end
of the period 990 790 354
======== ========== ===========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 1 - GENERAL:
The interim financial statement as of 30 June 2012 and for the
six month period then ended (hereafter - the interim statements)
were prepared in condensed form in accordance with IAS 34 -
"Interim Financial Reporting".
The accounting policies applied in preparation of the interim
financial statements are consistent with those used in the 2011
annual financial statements but have not been audited or reviewed
by the auditors. Nevertheless, the interim statements do not
include all the information and explanations required for annual
financial statements, and should be read in conjunction with the
2011 annual financial statements.
Costs incurred unevenly during the year are brought forward or
deferred, for interim reporting purposes if, and only if, such
costs may be brought forward or deferred in the annual
reporting.
NOTE 2 - REVENUES BY GEOGRAPHIC AREAS
Revenues classified by geographical destinations based on the
customer location:
Unaudited Audited
------------------- -----------
Year ended
Six month, ended December
June 30, 31,
------------------- -----------
2012 2011 2011
--------- -------- -----------
United States 9,527 10,561 19,134
Europe 6,462 11,589 22,781
South Africa 3,455 4,700 6,008
India 181 1,806 1,806
Japan 99 729 1,008
Israel 236 137 3,68
Others 437 378 1,044
--------- -------- -----------
20,397 29,900 52,149
========= ======== ===========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 3 - METAL-TECH PERSONAL GUARANTTES :
In June 2012, Ariel (Aik) Rosenberg, Metal-Tech's Chairman and
Chief Executive Officer, as the controlling shareholder, provided,
at the Company's request and for no consideration, a personal
guarantee in favor of Israeli Discount Bank Ltd. guaranteeing the
Company's short-term loan and credit line in an amount of up to
$500,000, as may renewed or extended in accordance with the
Company's needs and subject to Aik's consent.
This information is provided by RNS
The company news service from the London Stock Exchange
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