TIDMMWE
RNS Number : 5963Q
MTI Wireless Edge Limited
01 March 2021
1 March 2021
MTI Wireless Edge Ltd
("MTI" or the "Group")
Final results for 2020
MTI Wireless Edge Ltd (AIM: MWE), the technology group focused
on comprehensive communication and radio frequency solutions across
multiple sectors, today announces its audited results for the year
ended 31 December 2020 .
HIGHLIGHTS
A solid financial performance
-- Despite the impact on sales in certain markets due to the
global COVID-19 pandemic the Group recorded revenue growth of 2% to
US$40.9m (2019: US$40.0m)
-- A 1 9 % increase in profit before tax to US$4.1m (2019:
US$3.5m) helped by the increasing scale of the Group and lower
expenditure associated with reduced travel and marketing costs
-- Earnings per share increased by 17% to 3.83 US cents (2019: 3.27 US cents)
-- Net cash increased 23 % to US$9.4m at 31 December 2020 (31 December 2019: US$7.7m)
-- Increased final dividend by 25% to 2.5 US cents per share (2019: 2.0 US cents)
Positive market trends
-- Our proven backhaul solution to support the rollout of 5G had
a good year with customer demand picking up in line with our
expectations, while investment by large mobile operators into 5G
infrastructure is still early stage, the signs are positive
-- With water scarcity being an increasingly critical, global
issue, demand for our water management solutions under the Mottech
brand continued to be strong, both from new markets and in response
to the launch of new water saving and cost-efficient products
-- Increased global defence spending underpinned another good
year for MTI Summit, which also benefits from Israel being a
central hub for the development of new global defence and wireless
technologies
-- Launched a new Canadian office in Alberta under the Mottech division in early 2021
Moni Borovitz, Chief Executive Officer of MTI Wireless Edge ,
said "We are all very pleased with the results for what was a very
challenging year for so many. Despite challenges in some of the
segments for some periods of 2020 due to COVID-19, our diversified
business divisions, our wide global presence, and the commitment of
our teams across the three divisions delivered an excellent trading
result for the year.
The diversified base of the Group enabled the business to offset
weaker areas and profitability was further boosted by cost savings
from the enforced reduction in marketing activities and associated
travel. Elements of this reduced expenditure will be maintained as
COVID-19 has revealed some working efficiencies that we can adopt
permanently.
Looking ahead, the business continues to be in a strong
financial position with net cash of US$9.4m as at the year end. The
Group's three divisions are well established, with experienced,
autonomous leadership teams all utilizing the Group's core
expertise in radio frequency communications and are all focused on
taking advantage of attractive market trends within their
respective sectors, namely: the roll-out of 5G cellular
connectivity; tackling the growing global issue of water scarcity;
and the increasing size of the international defence market. The
first two months of 2021 have started well and we look forward to
delivering another year of solid growth."
Shareholders should note that the Company will not post hard
copies of its audited annual report and accounts for the year ended
31 December 2020 (the "Annual Report") to its shareholders.
Shareholders who require a hard copy of the Annual Report may write
to the Company at MTI Wireless Edge Ltd Headquarters, 11 Hamelacha
St. Afek Industrial Park, Rosh-Ha'Ayin, Israel requesting a hard
copy. An electronic version of the Annual Report will
shortly be available on the Company's website at the following address: www.mtiwirelessedge.com
For further information please contact:
MTI Wireless Edge Ltd +972 3 900 8900
Moni Borovitz, CEO http://www.mtiwirelessedge.com
Allenby Capital Limited (Nomad and Joint Broker) +44 20 3328 5656
Nick Naylor/Alex Brearley (Corporate Finance)
Guy McDougall (Sales and Corporate Broking)
Peterhouse Capital Limited (Joint Broker) +44 20 7469 0930
Lucy Williams/ Eran Zucker
Novella (Financial PR) +44 20 3151 7008
Tim Robertson/Fergus Young
About MTI Wireless Edge Ltd. ("MTI")
Headquartered in Israel, MTI is a technology group focused on
comprehensive communication and radio frequency solutions across
multiple sectors through three core divisions:
Antenna Division
MTI is a world leader in the design, development and production
of high quality, state-of-the-art, and cost-effective antenna
solutions including Smart Antennas, MIMO Antennas and Dual Polarity
Antennas for wireless applications. MTI supplies antennas for both
military and commercial markets from 100 KHz to 90 GHz.
Internationally recognized as a producer of commercial
off-the-Shelf and custom-developed antenna solutions in a broad
frequency range, MTI addresses both commercial and military
applications.
MTI supplies directional and omnidirectional antennas for
outdoor and indoor deployments, including smart antennas for WiMAX,
Broadband access, public safety, RFID, base stations and terminals
for the utility market.
Military applications include a wide range of broadband,
tactical and specialized communication antennas, antenna systems
and DF arrays installed on numerous airborne, ground and naval,
including submarine, platforms worldwide.
Water Control & Management Division
Via its subsidiary, Mottech Water Solutions Ltd ("Mottech"), MTI
provides high-end remote control solutions for water and irrigation
applications based on Motorola's IRRInet state-of-the-art control,
monitoring and communication technologies.
As Motorola's global prime-distributor Mottech serves its
customers worldwide through its international subsidiaries and a
global network of local distributors and representatives. With over
25 years of experience in providing customers with irrigation
remote control and management, Mottech's solutions ensure constant,
reliable and accurate water usage, while reducing operational and
maintenance costs. Mottech's activities are focused in the market
segments of agriculture, water distribution, municipal and
commercial landscape as well as wastewater and storm-water
reuse.
Distribution & Professional Consulting Services Division
Via its subsidiary, MTI Summit Electronics Ltd., MTI offers
consulting, representation and marketing services to foreign
companies in the field of RF and Microwave solutions and
applications including engineering services (including design and
integration) in the field of aerostat systems and the ongoing
operation of Platform subsystems, SIGINT, RADAR, communication and
observation systems which is performed by the Company.
Chairman's Statement
I am pleased to report on a successful trading period despite
the challenges of operating through a very disrupted year caused by
the global COVID-19 pandemic. MTI delivered increases in revenue
and net profits of 2% and 18% respectively. The combination of the
Group's diversification across three divisions and multiple markets
helped overcome some of the challenges of 2020, assisted by the
strong ongoing demand for our expertise and products.
For 50 years MTI has been a leader in radio frequency
communications and this deep rooted, technical experience is the
differentiating factor that supports all of our activity across all
three divisions. Each of our target markets, is constantly
innovating and evolving, and our customers rely on us to keep them
in touch and ahead of developments. To do this our track record and
experience is key, but so is our ability to share innovations
across all three divisions so that we can consolidate our expertise
into all areas.
We believe the business to be well balanced and well placed to
continue to expand.
Trading overview
It was an unusual trading period for all companies but outside
of the enforced changes due to the pandemic, underlying demand for
the Company's products and solutions remained strong. There has
been good early uptake of the 5G backhaul antenna solution, which
is demonstrably cost efficient and effective. These initial sales
alongside the expected global roll-out of 5G connectivity bodes
well for the future. Similarly, water scarcity is driving
increasing commercial interest in Mottech's water management
products. Both private and government entities are recognising the
need to not be wasteful of water from both an environmental and
economic perspective. MTI Summit which benefits from ongoing
increases in government defence spending worldwide, enjoyed the
strongest growth of all three divisions in 2020, benefiting from
excellent customer demand. MTI Summit continues to receive requests
for future design solutions for defence and wireless related
technologies.
Dividend
Reflecting the strength of the Company's trading performance the
Board is pleased to declare a final dividend of US$0.025 per share
representing a 25% increase on the previous year (2019: US$0.02).
The dividend will be paid on 31 March 2021 to shareholders on the
register at the close of trading on 19 March 2021 (ex-dividend on
18 March 2021). The currency translation into British Pounds will
be made on 22 March 2021 and there will not be a scrip dividend
alternative.
People
I would, as always, like to thank our employees for their
significant contribution to the Company, especially for their
efforts and flexibility during 2020, which was so full of
disruptions and requests to adapt working practices to meet with
new regulations aimed at combating COVID-19.
Outlook
MTI is expanding into three separate but complementary markets.
Each market is supported by strong macro trends which are driving
investment by our customers. We believe each division is well
positioned with market leading products and solutions that provide
a good basis for future growth .
Zvi Borovitz
Chairman
Chief Executive's review
Introduction
In 2020, we achieved significant progress across all three
divisions during a highly unusual period for all businesses. There
were inevitable delays in transportation and business processes,
with some markets largely closed for parts of the year which
reduced sales. Conversely, some markets traded with very little
interruption. However, the net trading outcome was positive leaving
the Company to enter 2021 in a strong financial position and well
placed to continue to pursue opportunities across all three
divisions.
Financial Results
Revenues for the twelve months to 31 December 2020 increased
slightly by 2% to US$40.9m (2019: US$40.0m), a good performance
given the interruptions throughout the year due to COVID-19.
Gross margin rates remained solid, reflecting the mix of
products sold in different markets. Gross margin was negatively
affected by exchange rates (especially due to the strengthening of
the New Israeli Shekel), which lowered profitability relative to
revenue growth, although overall gross profit remained solid,
growing 2% broadly in line with revenue growth.
Profit before tax increased by 19% to US$4.1m (2019: US$3.4m),
which demonstrated the scalability of the business and the
reduction in marketing costs associated with the cancellation of
industry events and exhibitions as well as associated travel
expenses.
This resulted in increased earnings per share, which grew by 17%
over 2019 to 3.83 US cents (2019: 3.27 US cents), after all
existing share options granted under the Company's option plan were
exercised in 2020.
Cash generation continued to be solid at US$4m (2019: US$5.6m),
increasing net cash to US$9.4m (2019: US$7.7m).
The Company continues to have a share buy-back programme in
place. The objective of this programme is to assist with trading
liquidity, by holding purchased shares in treasury and selling
blocks of shares to institutional shareholders, subject to demand
and price.
Cash generated from any resales of purchased shares has been
reused for further share purchases, and this policy is planned to
continue for as long as the programme is in place. As at 1 March
2021, no shares were held in treasury.
Operational Review
Over the last 50 years MTI has established its reputation as a
global provider of comprehensive radio frequency solutions across
multiple sectors through three core divisions.
Antennas
This division is a one stop shop for the sale of 'off the shelf'
flat and parabolic antennas, combined with the provision of
custom-developed antenna solutions to a range of commercial and
military customers, with a growing focus on providing 5G backhaul
antenna solutions to support mobile phone operators as they
roll-out their 5G networks.
In 2020, revenues from this division decreased by 7% due to the
pandemic which mainly affected our RFID antenna solutions but also
slowed the pace of some military projects, although the division
won defence contracts for conformal antennas. On the other hand
demand began to build for the 5G backhaul solution, including multi
band and flat antenna solutions which helped to support
revenues.
The pandemic underlined the importance of internet connectivity
to support new patterns of working and schooling, with mobile phone
operators such as Apple and Samsung having launched handsets that
include 5G connectivity. Network operators are responding by
rolling out higher bandwidth 5G services to their customers. This
presents a major opportunity for MTI's multi band and flat
antennas, as operators will need to increase the backhaul
connectivity between cell towers to deliver these faster
services.
We believe that we are at the early stage of a global upgrade of
cellular network infrastructure to 5G. Order patterns for our 5G
backhaul solution, have changed from smaller quantities mainly for
field testing to larger orders indicative of the market moving
forward with the adoption of 5G backhaul solutions.
Our offset facility in India performed well at the beginning of
the year, but slowed thereafter reflecting its exposure to the
airline industry and the impact that the pandemic has had on this
market. Nevertheless, we remain optimistic as we continue to see a
good pipeline of future opportunities which should make full use of
our offset solution.
Water Control & Management
This division provides wireless control systems to manage
irrigation and water distribution for agriculture, municipal
authorities and commercial entities. It operates under the Mottech
brand and utilises part of the hardware technology from Motorola,
integrated with the Company's own proprietary management software.
Our solutions reduce water and power usage, whilst providing higher
revenue from accurate irrigation, leading to more and higher
quality crops and plants being grown.
In 2020, revenues in this division were 2% lower as a direct
result of delays caused by the pandemic, including difficulties
arising from commissioning new projects due to the severe travel
restrictions. However, prospects for this division remain positive
and are driven by increasing recognition of the problem of water
scarcity globally which is changing the approach of businesses and
governments. To take advantage of this opportunity, Mottech's
product range has been expanded and is attracting new customers
from new countries and business segments.
2020 saw the successful launch of the Tethys system, a new
wireless irrigation solution developed for the French wine market.
This enables winemakers to control irrigation from their mobile
phones and several hundred winemakers have bought the system in the
first 12 months. This is expected to continue into 2021. Similarly,
Mottech also recently announced another new product offering, which
is a wired decoder system that is required in several key markets
enabling multiple commands and functions in parallel and receipt of
data from sensors.
Post year-end, Mottech launched a new office in Alberta, Canada
following the retirement of the Company's long-term Canadian
re-seller. This office will service existing clients and look to
further expand Mottech's presence in Canada.
Distribution & Professional Consulting Services
Operating under the MTI Summit Electronics brand, this division
exclusively represents approximately 40 international suppliers of
radio frequency/microwave components and sells these products to
Israeli customers. Expert knowledge of both the international
suppliers and customers further enables MTI to act as a consultant
to all parties and assist with devising complete radio
frequency/microwave solutions.
In 2020, the division's revenues grew by 18%, which the Board
considers to be an excellent performance, especially given that the
division grew by 33% in the prior year. Demand has been strong from
existing customers and markets, with additional demand from Russia
where the Company established a satellite office in 2015, which is
now beginning to perform extremely well. A key specialist area of
expertise is the tethered balloon sector and the division is
currently participating in a large tethered balloon project that
contributed strongly to its performance in the second half of 2020
and is expected to continue to do so during 2021.
There continues to be a high level of approval of the design
solutions created by MTI Summit by major corporations. These design
wins turn into orders over time and provide the division with
long-term business. The majority of these designs are for defence
related systems and new wireless applications in commercial
markets. With the consistent increases in spending on defence and
wireless solutions globally, MTI Summit looks well positioned for
the future.
Outlook
MTI is a well-balanced business with a diversified spread of
income, both geographically and across multiple markets. We have a
clear business focus on providing comprehensive radio frequency
solutions to leading technology corporations. The fact that we are
in our 51st year of operations demonstrates our longevity and our
experience, which enables our "first to develop" approach, using
MTI's intellectual property and licensed technology from leading
partners, to create unique solutions.
Our financial performance in 2020 showed a significant increase
in profit before tax and net cash balances, reflecting the benefits
of our scalable and risk adjusted business model. Looking ahead,
MTI will continue to seek to expand its business through a mix of
acquisition-led and organic growth.
Moni Borovitz
Chief Executive Officer
M.T.I Wireless Edge Ltd.
Consolidated Statements of Comprehensive Income
For the year ended
December 31,
--------------------
2020 2019
--------- ---------
Note $'000 $'000
------ --------- ---------
Revenues 3, 5 40,89 3 40,043
Cost of sales 27, 816 27,247
--------- ---------
Gross profit 13,077 12,796
Research and development expenses 1,029 1,185
Distribution expenses 3,579 4,229
General and administrative expenses 4,379 3,931
Profit from sale of property, plant and
equipment 14 (8)
--------- ---------
Profit from operations 4 4,076 3,4 59
Finance expense 6 275 211
Finance income 6 (255) (161)
--------- ---------
Profit before income tax 4,056 3,409
Tax expenses 7 564 454
--------- ---------
Profit 3,492 2,95 5
--------- ---------
Other comprehensive income (loss ) net
of tax:
Items that will not be reclassified to
profit or loss:
Remeasurements on defined benefit plans 42 (6)
--------- ---------
Items that may be reclassified to profit
or loss:
Adjustment arising from translation of
financial statements of foreign operations 253 62
--------- ---------
Total other comprehensive income (loss) 295 56
--------- ---------
Total comprehensive income 3,787 3,011
========= =========
Profit attributable to:
Owners of the parent 3,373 2,84 9
Non-controlling interest 119 10 6
--------- ---------
3,492 2,9 5 5
========= =========
Total comprehensive income (loss) attributable
to:
Owners of the parent 3,668 2,905
Non-controlling interest 119 106
--------- ---------
3,787 3,011
========= =========
Earnings per share
Basic and Diluted (dollars per share) 8 0.0383 0.0327
========= =========
The accompanying notes form an integral part of these financial
statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Changes in Equity
For the year ended December 31, 2020 :
Attributable to owners of the parent
--------------------------------------------------------------------------
Capital
Reserve Total
from attributable
Additional share-based to owners
Share paid-in payment Translation Accumulated of the Non-controlling Total
capital capital transactions differences losses parent interests equity
-------- ---------- ------------ ----------- ----------- ------------ --------------- ---------
U.S. $ in thousands
------------------------------------------------------------------------------------------------------
Balance as at January
1, 2020 207 22,868 52 (62) (658) 22,407 883 23,290
Changes during 2020:
Comprehensive
income
Profit for the
year - - - - 3,373 3,373 119 3,492
Other
comprehensive
income
Re measurements on
defined benefit
plans - - - - 42 42 - 42
Translation
differences - - - 253 - 253 - 253
-------- ---------- ------------ ----------- ----------- ------------ --------------- ---------
Total
comprehensive
income (loss) for
the year - - - 253 3,415 3,668 119 3,787
Dividend - - - - (1,758) (1,758) - (1,758)
Exercise of
options to share
capital 2 306 (54) - - 254 - 254
Acquisition of the
non-controlling
interest in
subsidiary
(note 21 B) - (15) - - - (15) (15) (30)
Profit from
acquisition and
disposal
of treasury
shares (note 23) - 8 - - - 8 - 8
Share based
payment - - 2 - - 2 - 2
-------- ---------- ------------ ----------- ----------- ------------ --------------- ---------
Balance as at
December 31,
2020 209 23,167 - 191 999 24,566 987 25,553
======== ========== ============ =========== =========== ============ =============== =========
The accompanying notes form an integral part of these financial
statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Changes in Equity (Cont.)
For the year ended December 31, 2019 :
Attributable to owners of the parent
--------------------------------------------------------------------------
Capital
Reserve Total
from attributable
Additional share-based to owners
Share paid-in payment Translation Accumulated of the Non-controlling Total
capital capital transactions differences losses parent interests equity
-------- ---------- ------------ ----------- ----------- ------------ --------------- ---------
U.S. $ in thousands
------------------------------------------------------------------------------------------------------
Balance as at January
1, 2019 205 22,388 366 (124) (2,195) 20,640 375 21,015
Changes during 2019:
Comprehensive
income
Profit for the
year - - - - 2, 84 9 2,849 106 2, 95 5
Other
comprehensive
income
Re measurements on
defined benefit
plans - - - - (6) (6) - ( 6 )
Translation
differences - - - 62 - 62 - 62
-------- ---------- ------------ ----------- ----------- ------------ --------------- ---------
Total
comprehensive
income (loss) for
the year - - - 62 2,843 2,905 106 3,011
Dividend - - - - (1,306) (1,306) - (1,306)
Non-controlling
Interest of newly
purchased
subsidiary - - - - - - 402 402
Classification of
ESOP that expired - 291 (291) - - - - -
Exercise of
options to share
capital 2 146 (31) - - 117 - 117
Profit from
acquisition and
disposal
of treasury
shares (note 5C) - 43 - - - 43 - 43
Share based
payment - - 8 - - 8 - 8
-------- ---------- ------------ ----------- ----------- ------------ --------------- ---------
Balance as at
December 31,
201 9 207 22,868 52 (62) (658) 22,407 883 23,290
======== ========== ============ =========== =========== ============ =============== =========
The accompanying notes form an integral part of the financial
statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Financial Position
As at December 31, As at December 31,
--------------------- --------------------
20 20 20 20 2019 2019
---------- --------- --------- ---------
Note $'000 $'000 $'000 $'000
---- ---------- --------- --------- ---------
ASSETS
Non-current assets:
Property, plant and equipment 10 4,818 5, 212
Intangible assets 11 1,065 1,116
Deferred tax assets 12 696 664
Long-term prepaid expenses 44 31
---------- ---------
Total non-current assets 6,623 7,023
Current assets:
Inventories 13 6,399 5,748
Current tax receivables 557 672
Unbilled revenue 14 2,318 2,866
Trade and other receivables 14 10, 658 9,799
Cash and cash equivalents 15 9,577 8,140
---------- ---------
Total current assets 29,509 27,225
--------- ---------
TOTAL ASSETS 36,132 34,248
--------- ---------
LIABILITIES
Non-curent liabilities:
Contingent consideration 27B 51 69
Lease liabilities 10 155 224
Loans from banks, net of current maturities 16 37 141
Employee benefits, net 17 826 843
---------- ---------
Total Non-current liabilities 1,069 1,277
Current Liabilities:
Current tax payables 213 230
Trade and other payables 18 9,192 9,139
Current maturities and short term bank credit 19 105 312
---------- ---------
Total current liabilities 9,510 9,681
Total liabilities 10,579 10,958
--------- ---------
TOTAL NET ASSETS 25,553 23,290
========= =========
The accompanying notes form an integral part of these financial
statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Financial Position (Cont.)
As at December As at December 31,
31,
--------------------- ----------------------
2020 2020 2019 2019
---------- --------- ---------- ----------
Note $'000 $'000 $'000 $'000
---- ---------- --------- ---------- ----------
Capital and reserves attributable
to
owners of the parent 23
Share capital 209 207
Additional paid-in capital 23,167 22,868
Capital reserve from share-based
payment transactions - 52
Translation differences 191 (62)
Accumulated losses 999 (658)
---------- ----------
24,566 22,407
Non-controlling interests 987 883
--------- ----------
TOTAL EQUITY 25,553 23,290
========= ==========
The financial statements on pages 4 to 49 were approved by the
Board of Directors and authorised for issue on February 28, 2021,
and were signed on its behalf by:
February 28, 2021
------------------------ ---------------- -------------- ----------------
Date of approval Moshe Borovitz Elhanan Zeira Zvi Borovitz
of financial statements Chief Executive Controller Chairman of the
Officer Board
The accompanying notes form an integral part of these financial
statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Cash Flows
For the year ended For the year ended
December 31, December 31,
-------------------- --------------------
2020 2020 2019 2019
----------- ------- --------- ---------
$'000 $'000 $'000 $'000
----------- ------- --------- ---------
Operating Activities:
Profit for the year 3,492 2,955
Adjustments for:
Depreciation and amortization 1,0 09 973
Equity settled share-based payment
expense 2 8
Loss (gain) on disposal of property,
plant and equipment 13 (8)
Finance expense (income), net 69 32
Income tax expense 564 454
----------- ---------
5,149 4,414
Changes in working capital and provisions
Decrease (increase) in inventories (557) 523
Decrease (increase) in trade receivables (1,053) 233
Decrease (increase) in unbilled revenues 548 (595)
Decrease (increase) in other accounts
receivables 255 (137)
Increase in trade and other accounts
payables 140 1,821
Increase (decrease) in employee benefits,
net 25 136
----------- ---------
(642) 1,981
Interest received 28 44
Interest paid (43) (77)
Income tax paid (494) (764)
----------- ---------
(509) (797)
------- ---------
Net cash provided by operating activities 3,998 5,598
------- ---------
The accompanying notes form an integral part of these financial
statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Cash Flows (Cont.)
For the year ended For the year ended
December 31, December 31,
-------------------- --------------------
2020 2020 2019 2019
--------- --------- --------- ---------
$'000 $'000 $'000 $'000
--------- --------- --------- ---------
Investing Activities:
Proceeds from sale of property, plant
and equipment 28 31
Payment of contingent consideration regarding
business acquisition (21) -
Acquisition of initially consolidated
subsidiaries - (23)
Purchase of property, plant and equipment (454) (707)
--------- ---------
Net cash used in investing activities (447) (699)
Financing Activities:
Exercise of share options 254 117
Dividend (1,758) (1,306)
Payments of lease liabilities (493) (511)
Acquisition of the non-controlling interest
in subsidiary (30) -
Treasury shares acquired (155) (428)
Treasury shares sold 163 471
Repayment of long-term loans from banks (308) (554)
--------- ---------
Net cash used in financing activities (2,327) (2,211)
--------- ---------
Increase in cash and cash equivalents 1,224 2,688
Cash and cash equivalents at the beginning
of the year 8,140 5,401
Exchange differences on balances of cash
and cash equivalents 213 51
--------- ---------
Cash and cash equivalents at the end
of the year 9,577 8,140
========= =========
The accompanying notes form an integral part of these financial
statements.
M.T.I Wireless Edge Ltd.
Notes forming part of the consolidated financial statements for
the year ended December 31, 2020
1. General description of the Group and its operations
M.T.I Wireless Edge Ltd. (hereafter - the "Company", or
collectively with its subsidiaries, the "Group") is an Israeli
corporation. The Company was incorporated under the Companies Act
in Israel on December 30, 1998, and commenced operations on July 1,
2000. Since March 2006, the Company's shares have been traded on
the AIM market of the London Stock Exchange.
The formal address of the Company is 11 Hamelacha Street, Afek
industrial Park, Rosh-Ha'Ayin, Israel.
The Company and its subsidiaries are engaged in the following
areas:
- Development, design, manufacture and marketing of antennas for
the military and civilian sectors.
- A leading provider of remote control solutions for water and
irrigation applications based on Motorola's IRRInet state of the
art control, monitoring and communication technologies.
- Providing consulting, representation and marketing services to
foreign companies in the field of RF and Microwave, including
engineering services in the field of aerostat systems and system
engineering services.
2. Accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
A. Basis of preparation
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS).
The financial statements have been prepared under the historical
cost convention, except for the measurement of employee benefit
assets.
The Company has elected to present the statement of
comprehensive income using the function of expense method.
B. Estimates and assumptions
The preparation of the financial statements requires management
to make estimates and assumptions that have an effect on the
application of the accounting policies and on the reported amounts
of assets, liabilities, revenues and expenses. These estimates and
underlying assumptions are reviewed regularly. Changes in
accounting estimates are reported in the period of the change in
estimate and thereafter.
The key assumptions made in the financial statements concerning
uncertainties at the end of the reporting period and the critical
estimates used by the the Company and its subsidiaries (hereafter -
the "Group " ) that may result in a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
- Deferred tax assets: Deferred tax assets are recognized for
unused carryforward tax losses and deductible temporary differences
to the extent that it is probable that taxable profit will be
available against which the losses can be utilized. Significant
management judgment is required to determine the amount of deferred
tax assets that can be recognized, based upon the estimate d timing
and the level of future taxable profits together with future tax
planning strategies.
2. Accounting policies (Cont.)
C. Revenue recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognized when control
of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods or services
1. Revenues from Construction Contracts are recognized based on
the percentage of completion to date . The percentage of completion
is determined by dividing actual completion costs incurred to date
by the total completion costs anticipated. When a loss from a
contract is anticipated, a provision for the entire loss that is
anticipated is made in the period in which this first becomes
evident, as assessed by the C ompany's management.
The Company recognizes revenue from construction contracts over
time, since the Company's performance does not create an asset with
alternative use to the Company and the Company has an enforceable
right to payment for performance completed up to that date.
The payment terms for these projects are based on milestones
specified in the contract, which are determined in relation to the
rate of progress. The Company believes that recognising revenue
based on costs incurred to the satisfy performance obligations
faithfully depicts its performance in construction contracts.
Therefore, when revenue is recognized before a specified milestone
is achieved, the Company recognizes the costs incurred to satisfy
the related performance obligation as unbilled revenue.
The Company estimates the total cost of completing each project
based on estimates of material costs, labor costs, subcontractor
performance, and other factors.
Financing components - The Company does not have any contracts
where the period between the transfer of the promised goods or
services to the customer and payment by the customer exceeds one
year.
The Company elected not to adjust the transaction price for the
effects of financing components in contracts where the period
between when the Company transfers a promised good or a service to
the customer and when the customer pays for it is one year or
less.
2. Revenues from the sale of goods are recognized at the point
in time when control of the asset is transferred to the customer,
generally upon delivery of the equipment .
Volume rebates give rise to variable consideration. The variable
consideration is estimated at contract inception and constrained
until the associated uncertainty is subsequently resolved. The
application of the constraint on variable consideration increases
the amount of revenue that will be deferred.
To estimate the variable consideration to which it will be
entitled, the Company applied the 'most likely amount method' for
contracts with a single volume threshold and the 'expected value
method' for contracts with more than one volume threshold. The
selected method that best predicts the amount of variable
consideration was primarily driven by the number of volume
thresholds contained in the contract. The Company includes in the
transaction price amounts of variable consideration only to the
extent that it is highly probable that a significant reversal in
the amount of cumulative revenue recognised will not occur when the
uncertainty associated with the variable consideration is
subsequently resolved.
2. Accounting policies (Cont.)
At the end of each reporting period, the Company updates its
estimates of variable consideration.
D. Assets and liabilities arising from contracts with customers
Contract assets (presented as "Unbilled revenue ")
A contract asset is the Company's right to consideration in
exchange for goods or services the entity has transferred to a
customer that is conditional on something other than the passage of
time
Trade receivables
A receivable represents the Company's right to an amount of
consideration that is unconditional (i.e., only the passage of time
is required before payment of the consideration is due).
E. Basis of consolidation
The Group controls an investee if and only if the Group has:
- Power over the investee (i.e. existing rights that give it the
current ability to direct the relevant
activities of the investee) .
- Exposure, or rights, to variable returns from its involvement with the investee, and
- The ability to use its power over the investee to affect its returns .
When the Group has less than a majority of the voting or similar
rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over the investee,
including: t he contractual arrangement with the other vote holders
of the investee , t he Group's potential voting rights .
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control over the
subsidiary.
Profit or loss and each component of other comprehensive income
(OCI) are attributed to the equity holders of the parent and to the
non-controlling interests, even if this results in the
non-controlling interests having a deficit balance. All intra-group
assets and liabilities, income, expenses and cash flows relating
to
transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it: (i) derecognises the
assets (including goodwill) and liabilities of the subsidiary, the
carrying amount of any non-controlling interests and the cumulative
translation differences recorded in equity: (ii) Recognises the
consideration received at fair value, recognises any investment
retained at fair value of and recognises any surplus or deficit in
profit or loss; (iii) reclassifies the parent's share of components
previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if the Company had
directly disposed of the related assets or liabilities.
F. Consolidated financial statements
Where relevant, the accounting policy in the financial
statements of the subsidiaries is adjusted to conform with the
policy applied in the financial statements of the Group.
2. Accounting policies (Cont.)
G. Goodwill
Goodwill represents the excess of the cost of a business
combination over the interest in the fair value of identifiable
assets, liabilities and contingent liabilities acquired. Cost of a
business combination comprises the fair values of assets given,
liabilities assumed and equity instruments issued. Any costs of
acquisition are charged to profit or loss (if the costs of
acquisition are related to the issue of debt or equity, they are
charged to equity or liability respectively). Goodwill is
recognized as an intangible asset with any impairment in carrying
value being charged to profit or loss. Goodwill is not
systematically amortized and the Company reviews goodwill for
impairment once a year or more frequently if events or changes in
circumstances indicate that there may be an impairment.
H. Intangible assets
Separately acquired intangible assets are measured on initial
recognition at cost including directly attributable costs.
Intangible assets acquired in a business combination are measured
on initial recognition at fair value at the acquisition date.
Expenditures relating to internally generated intangible assets,
excluding capitalized development costs, are recognized in profit
or loss when incurred. Intangible assets with finite useful lives
are amortized over their useful lives and reviewed for impairment
whenever there is an indication that the intangible asset may be
impaired. The amortization period and the amortization method for
an intangible asset are reviewed at least at each year end.
Intangible assets with indefinite useful lives are not
systematically amortized and are tested for impairment annually or
whenever there is an indication that the intangible asset may be
impaired. The useful lives of these assets are reviewed annually to
determine whether such assessment continues to be supportable. If
the events and circumstances do not continue to support the
assessment, the change in the useful lives assessment from
indefinite to finite is accounted for prospectively as a change in
accounting estimate and on that date the intangible asset is tested
for impairment.
I. Impairment of non-financial assets
Impairment tests on goodwill and indefinite useful lives assets
are undertaken annually on December 31 or sooner when there are
indicators of impairment. Other non-financial assets (excluding
Inventories) are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying amount may
not be recoverable. Where the carrying value of the non-financial
asset exceeds its recoverable amount (i.e. the higher of value in
use and fair value less costs to dispose), the asset is written
down and an impairment charge is recognized accordingly in the
profit or loss. Where it is not possible to estimate the
recoverable amount of an individual asset, the impairment test is
performed on the asset's cash-generating unit level (i.e. the
smallest Group of assets to which the asset belongs that generates
cash inflow that are largely independent of cash inflows from other
assets). Goodwill is allocated at initial recognition to each of
the Group's cash-generating units that are expected to benefit from
the synergies of the business combination giving rise to the
goodwill. An impairment loss is recognized if the recoverable
amount of the cash-generating unit (or group of cash-generating
units) is lower than the carrying amount of the cash-generating
unit (or group of cash-generating units). Any impairment loss is
allocated first to goodwill. Impairment losses allocated to
goodwill cannot be reversed in subsequent periods.
2. Accounting policies (Cont.)
An impairment loss allocated to an asset, other than goodwill,
is reversed only if there have been changes in the estimates used
to determine the asset's recoverable amount since the last
impairment loss was recognized. A reversal of an impairment loss,
as above, is limited to the lower of the carrying amount of the
asset that would have been determined (net of depreciation or
amortization) had no impairment loss been recognized for the asset
in prior years and the assets recoverable amount. The reversal of
an impairment loss of an asset is recognized in profit or loss.
Impairment charges are included in general and administrative
expenses line item in the statement of comprehensive income. During
the 2019 and 2020 financial years no impairment charges of
non-financial assets were recognized.
J. Foreign currency transactions
Transactions denominated in foreign currency (other than the
functional currency) are recorded on initial recognition at the
exchange rate as of the date of the transaction. After initial
recognition, monetary assets and liabilities denominated in foreign
currency are translated at the end of each reporting period into
the functional currency at the exchange rate as of that date.
Exchange differences, other than those capitalized to qualifying
assets are recognized in profit or loss. Non-monetary assets and
liabilities measured at cost are translated at the exchange rate of
initial recognition.
Non-monetary assets and liabilities denominated in foreign
currency and measured at fair value are translated into the
functional currency using the exchange rate prevailing at the date
on which the fair value was determined.
K. Fair value measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
A. In the principal market for the asset or liability, or
B. In the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible
by the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs .
2. Accounting policies (Cont.)
Classification by fair value hierarchy:
Assets and liabilities presented in the statement of financial
position at fair value are grouped into classes with similar
characteristics using the following fair value hierarchy which is
determined based on the source of input used in measuring fair
value:
Level - Quoted prices (unadjusted) in active markets for identical
1 assets or liabilities.
Level - Inputs other than quoted prices included within Level 1 that
2 are observable either directly or indirectly.
Level - Inputs that are not based on observable market data (valuation
3 techniques which use inputs that are not based on observable
market data).
L. Financial instruments:
1. Financial assets
The Group classifies its financial assets into one of the
following categories, based on the business model for managing the
financial asset and its contractual cash flow characteristics. The
Group's accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises in-the-money derivatives and
out-of-money derivatives where the time value offsets the negative
intrinsic value (see "Financial liabilities" section for
out-of-money derivatives classified as liabilities). They are
carried in the statement of financial position at fair value with
changes in fair value recognized in the consolidated statement of
comprehensive income in the finance income or expense line. Other
than derivative financial instruments which are not designated as
hedging instruments, the Group does not have any assets held for
trading nor does it voluntarily classify any financial assets as
being at fair value through profit or loss.
Amortized cost
These assets arise principally from the provision of goods and
services to customers (e.g. trade receivables), but also
incorporate other types of financial assets where the objective is
to hold these assets in order to collect contractual cash flows and
the contractual cash flows are solely payments of principal and
interest . They are initially recognized at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortized
cost using the effective interest rate method, less provision for
impairment .
Impairment provisions for trade receivables are recognized based
on the simplified approach within IFRS 9 using a provision in the
determination of the lifetime expected credit losses. During this
process the probability of the non-payment of the trade receivables
is assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss being recognized
within general and administrative expenses in the consolidated
statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
2. Accounting policies (Cont.)
2. Financial Liabilities
The Company classifies its financial liabilities into one of two
categories, depending on the purpose for which the liability was
acquired. The Group's accounting policy for each category is as
follows:
Fair value through profit or loss
This category comprises out-of-the-money derivatives where the
time value does not offset the negative intrinsic value (see
"Financial assets" for in-the-money derivatives and out-of-money
derivatives where the time value offsets the negative intrinsic
value). They are carried in the consolidated statement of financial
position at fair value with changes in fair value recognised in the
consolidated statement of comprehensive income. The Group does not
hold or issue derivative instruments for speculative purposes, but
for hedging purposes and they are not accounted for as hedges.
Other than these derivative financial instruments, the Group does
not have any liabilities held for trading nor has it designated any
financial liabilities as being at fair value through profit or
loss.
Other financial liabilities include the following items:
Bank borrowings are initially recognised at fair value net of
any transaction costs directly attributable to the issue of the
instrument. Such interest-bearing liabilities are subsequently
measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the period to
repayment is at a constant rate on the balance of the liability
carried in the consolidated statement of financial position. For
the purposes of each financial liability, interest expense includes
initial transaction costs and any premium payable on redemption, as
well as any interest or coupon payable while the liability is
outstanding.
- Trade payables and other short-term monetary liabilities,
which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method.
3. De-recognition :
Financial assets - The Company derecognizes a financial asset
when the contractual rights to the cash flows from the financial
asset expire or it transfers the rights to receive the contractual
cash flows.
Financial Liabilities - The Company derecognizes a financial
liability when its contractual obligations are discharged or
cancelled, or expire.
M. Government grants
G rants received from the Israel-U.S. Bi-national Industrial
Research and Development Foundation (henceforth "BIRD") as support
for a research and development projects include an obligation to
pay back royalties conditional on future sales arising from the
project. Grants received from BIRD, are accounted for as forgivable
loans, in accordance with IAS 20 (Revised), pursuant to the
provisions of IFRS 9. Accordingly, when the liability for the loan
is first recognized, it is measured at fair value using a discount
rate that reflects a market rate of interest. The difference
between the amount of the grants received and the fair value of the
liability is accounted for upon recognition of the liability as a
grant and recognized in profit or loss as a reduction of research
and development expenses. After initial recognition, the liability
is measured at amortized cost using the effective interest
method.
2. Accounting policies (Cont.)
Changes in the projected cash flows are discounted using the
original effective interest and recorded in profit or loss in
accordance with the provisions of IFRS 9.
At the end of each reporting period, the Group evaluates, based
on its best estimate of future sales, whether there is reasonable
assurance that the liability recognized, in whole or in part, will
not be repaid. If there is such reasonable assurance, the
appropriate amount of the liability is derecognized and recorded in
profit or loss as an adjustment of research and development
expenses. If the estimate of future sales indicates that there is
no such reasonable assurance, the appropriate amount of the
liability that reflects expected future royalty payments is
recognized with a corresponding adjustment to research and
development expenses.
N. Deferred tax
Deferred taxes are computed in respect of temporary differences
between the carrying amounts of assets and liabilities in the
financial statements and the amounts attribut able for tax
purposes. Deferred taxes are recognized in Profit or loss, except
when they relate to items recognized in other comprehensive income
or directly in equity.
Deferred taxes are measured at the tax rates that are expected
to apply in the period when the temporary differences are reversed
in profit or loss, other comprehensive income or equity, based on
tax laws that have been enacted or substantively enacted at the end
of the reporting period. Deferred taxes in profit or loss represent
the changes in the carrying amount of deferred tax balances during
the reporting period, excluding changes attributable to items
recognized in other comprehensive income or directly in equity or
deferred tax arising on business combination .
Deferred tax assets are reviewed at the end of each reporting
period and reduced to the extent that it is not probable that they
will be utilized. In addition, temporary differences (such as
carryforward losses) for which deferred tax assets have not been
recognized are reassessed and deferred tax assets are recognized to
the extent that their recoverability is probable.
Any resulting reduction or reversal is recognized on "income
tax" within the statement of comprehensive income . Taxes that
would apply in the event of the disposal of investments in
investees have not been taken into account, as long as the disposal
of such i nvestments is not expected in the foreseeable future and
the group has control over such disposal . In addition , deferred
taxes that would apply in the event of distribution of dividends
have not been taken into account, if distributions of dividends
involve an additional tax liability ; the Group's policy is not to
initiate distribution of dividends that triggers an additional tax
liability.
All deferred tax assets and liabilities are presented in the
statement of financial position as non-current items . Deferred tax
liabilities are offset if there is a legally enforceable right to
offset a current tax asset against a current tax liability and the
deferred tax liabilities relate to the same taxpayer and the same
taxation authority.
O. Current taxes:
The current tax liability is measured using the tax rates and
tax laws that have been enacted or substantively enacted by the
reporting date as well as adjustments required in connection with
the tax liability in respect of previous years.
P. Inventories
Inventories are measured at the lower of cost and net realizable
value. Cost is calculated according to a weighted average
model.
2. Accounting policies (Cont.)
Q. Property, plant and equipment
Items of property, plant and equipment are initially recognized
at cost including directly attributable costs. Depreciation is
calculated on a straight line basis , over the useful lives of the
assets at annual rates as follows:
Rate of depreciation Mainly %
--------------------- ---------
Buildings 3 - 4 % 3.13
Machinery and equipment 6 - 20 % 10
Office furniture and equipment 6 - 15 % 6
Computer equipment 10 - 33 % 33
Vehicles 15 % 15%
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting
period in which they are incurred.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period. An
asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount .
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in profit or
loss.
R. Cash and cash equivalents
Cash equivalents are considered by the Group to be highly-liquid
investments, including, inter alia, short-term deposits with banks,
the maturity of which do not exceed three months at the time of
deposit and which are not restricted.
S. Provision for warranty
The Group generally offers up to three year warranties on its
products. Based on past experience, the Group does not record any
provision for warranty of its products and services.
T. Share-based payments
Where equity settled share options are awarded to employees, the
fair value of the options calculated at the grant date is charged
to the statement of comprehensive income over the vesting period.
Non-market vesting conditions are taken into account by adjusting
the number of equity instruments expected to vest at each reporting
date so that, ultimately, the cumulative amount recognised over the
vesting period is based on the number of options that eventually
vest. Market vesting conditions are factored into the fair value of
the options granted.
2. Accounting policies (Cont.)
U. Employee benefits
1. Short-term employee benefits: Short-term employee benefits
are benefits that are expected to be settled wholly before twelve
months after the end of the annual reporting period in which the
employees render the related services. These benefits include
salaries, paid annual leave, paid sick leave, recreation and social
security contributions and are recognized as expenses as the
services are rendered. A liability in respect of a cash bonus or a
profit-sharing plan is recognized when the Group has a legal or
constructive obligation to make such payment as a result of past
service rendered by an employee and a reliable estimate of the
amount can be made.
2. Post-employment benefits: The plans are normally financed by
contributions to insurance companies and classified as defined
contribution plans or as defined benefit plans.
The Group has defined contribution plans pursuant to Section 14
to the Severance Pay Law since 2004 under which the Group pays
fixed contributions to a specific fund and will have no legal or
constructive obligation to pay further contributions if the fund
does not hold sufficient amounts to pay all employee benefits
relating to employee service in the current and prior periods.
Contributions to the defined contribution plan in respect of
severance or retirement pay are recognized as an expense
simultaneously with receiving the employee's services and no
additional provision is required in the financial statements except
for the unpaid contribution. The Group also operates a defined
benefit plan in respect of severance pay pursuant to the Severance
Pay Law. According to the Law, employees are entitled to severance
pay upon dismissal, retirement and several other events prescribed
by that Law. The liability for post employment benefits is measured
using the projected unit credit method. The actuarial assumptions
include rates of employee turnover and future salary increases
based on the estimated timing of payment. The amounts are presented
based on discounted expected future cash flows using a discount
rate determined by reference to yields on high quality corporate
bonds with a term that matches the estimated term of the benefit
plan.
In respect of its severance pay obligation to certain of its
employees, the Company makes deposits into pension funds and
insurance companies ("plan assets"). Plan assets comprise assets
held by a Long-term employee benefits fund or qualifying insurance
policies. Plan assets are not available to the Group's own
creditors and cannot be returned directly to the Group. The
liability for employee benefits presented in the statement of
financial position presents the present value of the defined
benefit obligation less the fair value of the plan assets.
V. Earnings per Share (EPS)
Earnings per share is calculated by dividing the net profit or
loss attributable to owners of the parent by the weighted number of
ordinary shares outstanding during the period. Basic earnings per
share only include shares that were actually outstanding during the
period. Potential ordinary shares (convertible securities such as
employee options) are only included in the computation of diluted
earnings per share when their conversion decreases earnings per
share or increases loss per share from continuing operations.
Further, potential ordinary shares that are converted during the
period are included in the diluted earnings per share only until
the conversion date, and since that date they are included in the
basic earnings per share. The Company's share of earnings of
investees is included based on the proportion of the shares in the
investee held by the Company.
2. Accounting policies (Cont.)
W. Segment reporting
An operating segment is a component of the Group that meets the
following three criteria:
1. Is engaged in business activities from which it may earn revenues and incur expenses;
2. Whose operating results are regularly reviewed by the Group's
chief operating decision maker to make decisions about allocated
resources to the segment and assess its performance; and
3. For which separate financial information is available.
Segment revenue and segment costs include items that are
attributable to the relevant segments and items that can be
allocated to segments. Items that cannot be allocated to segments
include the Group's financial income and expenses and income
tax.
X. Leases
The Group has adopted IFRS 16 retrospectively from 1 January
2019, but has not restated comparatives for the 2018 reporting
period, as permitted under the specific transitional provisions in
the standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognized in the opening
balance sheet on 1 January 2019.
The main impact of adopting the standard is the elimination of
the requirement on lessees to classify leases as operating leases
(off-balance sheet) or finance leases, and they are now required to
use a single accounting model for all leases, similarly to how
finance leases under IAS 7 are currently accounted for. In
agreements where the Group is the Lessee, it applies IFRS 16 using
a single accounting model under which it recognizes a right-of-use
asset and a lease liability upon inception of the lease contract.
It does so for all leases in which the Group has the right to
control the use of identified assets for a period of time in
exchange for consideration.
Accordingly, the Group recognizes depreciation and depreciation
charges on the right-of-use asset and tests the need for
recognizing impairment of the right-of-use asset in compliance with
IAS 36 "Impairment of Assets", and also recognizes finance expenses
in relation to a lease liability. Therefore, beginning on
first-time adoption, rent expenses relating to properties rented,
are now presented as assets that are depreciated through
depreciation of assets. For all leases, the Group applied the
transitional provisions such that it initially recognized a
liability at the commencement day at an amount equal to the present
value of the lease payments during the lease, discounted using the
effective interest rate as of that date, and concurrently
recognized a right-of-use asset at an amount identical to the
liability. As a result, the standard had no impact on equity and
the accumulated losses of the Group as at initial application. As
part of the initial application, the Group elected to adopt the
following practical expedients, as permitted by the standard:
a. The use of a single discount rate for a portfolio of leases
with similar characteristics;
b. Not separating lease and non-lease components of a contract,
and instead accounting for all components as a single lease;
c. Excluding initial direct costs from the measurement of the
right-of-use asset as at initial application;
d. Use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease;
2. Accounting policies (Cont.)
The following new significant accounting policy for agreements
in which the Group is the lessee was applied beginning on 1 January
2019 following initial application of the standard:
Right-of-use assets:
The Group recognizes right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and any accumulated impairment losses, and
adjusted for any re-measurement of lease liabilities. The cost of
right-of-use assets comprises the amount of the initial measurement
of the lease liability; lease payments made at or before the
commencement date less any lease incentives received; and initial
direct costs incurred. The recognized right-of-use assets are
depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Right-of-use assets are
subject to impairment. The right-of-use assets are presented within
property, plant and equipment .
Lease liabilities :
At the commencement date of the lease, the Group recognizes
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option that is reasonably certain to be
exercised by the Group and payments of penalties for terminating a
lease, if the lease term reflects the Group exercising the option
to terminate.
The variable lease payments that do not depend on an index or a
rate are recognized as expense in the period on which the event or
condition that triggers the payment occurs.
Lease term:
The term of a lease is determined as the non-cancellable period
for which a lessee has the right to use an underlying asset,
together with both periods covered by an option to extend the lease
if the lessee is reasonably certain to exercise that option periods
covered by an option to terminate the lease if the lessee is
reasonably certain not to exercise that option.
Depreciation of a right-of-use asset:
Subsequent to the inception of the lease, a right-of-use asset
is measured using the cost method, less accumulated depreciation
and accumulated impairment losses, and is adjusted for
re-measurements of the lease liability. Depreciation is measured
using the straight-line method over the useful life or contractual
lease term, whichever ends earlier. Lessees will be also required
to re-measure the lease liability upon the occurrence of certain
events (e.g., a change in the lease term, a change in future lease
payments resulting from a change in an index or rate used to
determine those payments). The lessee will recognize the amount of
the re-measurement of the lease liability as an adjustment to the
right-of-use asset, until the carrying amount is reduced to zero.
The following table presents a summary of the impact on the
consolidated statement of financial position as of 1 January
2019.
2. Accounting policies (Cont.)
Y. New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the group has decided
not to adopt early.
The following amendments are effective for the period beginning
1 January 2022:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments
to IAS 37);
-- Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16);
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
-- References to Conceptual Framework (Amendments to IFRS
3).
The Group is currently assessing the impact of these new
accounting standards and amendments. The Group does not believe
that those amendments will have a significant impact on the
financial statement.
3. Revenues
For the year ended
December 31,
--------------------
2020 2019
--------- ---------
Revenues arises from: $'000 $'000
--------- ---------
Sale of goods * 33,788 32,236
Rendering of services ** 4,863 4,299
Projects ** 2,242 3,508
--------- ---------
40,893 40,043
========= =========
(*) at a point in time
(**) over time
4. Profit from operations
For the year ended
December 31,
--------------------
2020 2019
--------- ---------
This has been arrived at after charging: $'000 $'000
--------- ---------
Material and subcontractors 20,664 20,635
Wages and salaries 12,372 12,195
Plant, Machinery and Usage 1,268 897
Depreciation and amortization 1,011 981
Travel and Exhibition 137 595
Advertising and Commissions 767 492
Consultants 419 368
Others 165 429
--------- ---------
36,803 36,592
========= =========
5. Operating segments
The Company and its subsidiaries are engaged in the following
segments:
- Development, design, manufacture and marketing of antennas for
the military and civilian sectors.
- A leading provider of remote control solutions for water and
irrigation applications based on Motorola's IRRInet state of the
art control, monitoring and communication technologies.
- Providing consulting, representation and marketing services to
foreign companies in the field of RF and Microwave, including
engineering services in the field of aerostat systems and system
engineering services.
1. Segment information
Year ended December 31, 2020
Water Distribution Adjustment
Antennas Solutions & Consultation & Elimination Total
--------- ----------- ---------------- --------------- -------
U.S. $ in thousands
------------------------------------------------------------------
Revenue s
External 11,187 16,121 13,585 - 40,893
Inter-segment - - 144 (144) -
--------- ----------- ---------------- --------------- -------
Total 11,187 16,121 13,729 (144) 40,893
========= =========== ================ =============== =======
Segment profit 158 1,928 1,614 376 4,076
========= =========== ================ =============== =======
Finance expense, net 20
Tax expenses 564
-------
Profit 3,492
=======
December 31, 2020
Distribution Adjustment
Antennas Water Solutions & Consultation & Elimination Total
-------- --------------- --------------- -------------- --------
U.S. $ in thousands
--------------------------------------------------------------------
Segment assets 14,531 11,194 8,429 - 34,154
======== =============== =============== ============== ========
Unallocated assets 1,978
========
Segment liabilities 3,511 3,133 3,621 - 10,265
======== =============== =============== ============== ========
Unallocated liabilities 314
========
5. Operating Segments (cont.)
Year ended December 31, 2019
Water Distribution Adjustment
Antennas Solutions & Consultation & Elimination Total
--------- ----------- ---------------- --------------- -------
U.S. $ in thousands
------------------------------------------------------------------
Revenue s
External 12,015 16,518 11,510 - 40,043
Inter-segment - - 171 (171) -
--------- ----------- ---------------- --------------- -------
Total 12,015 16,518 11,681 (171) 40,043
========= =========== ================ =============== =======
Segment profit 444 1,562 1,228 225 3,459
========= =========== ================ =============== =======
Finance expense, net 50
Tax expenses 454
-------
Profit 2,955
=======
December 31, 2019
Distribution Adjustment
Antennas Water Solutions & Consultation & Elimination Total
-------- --------------- --------------- -------------- --------
U.S. $ in thousands
--------------------------------------------------------------------
Segment assets 14,576 9,793 5,729 - 30,098
======== =============== =============== ============== ========
Unallocated assets 4,150
========
Segment liabilities 3,514 1,836 3,837 - 9,187
======== =============== =============== ============== ========
Unallocated liabilities 1,771
========
2. Entity wide disclosures External revenue by location of customers.
For the year ended
December 31,
--------------------
2020 2019
--------- ---------
$'000 $'000
--------- ---------
Israel 23,108 22,417
America 4,245 5,459
Europe Middle East & Africa 9,015 8,549
Asia Pacific 4,525 3,618
--------- ---------
40,893 40,043
========= =========
3. Additional information about revenues:
There is one single customer from which revenues amount to 11%
in 2020 (7% in 2019) of total revenues reported in the financial
statements. This is a customer for the antenna and representations
divisions and the credit terms with it are usually end of month +
90 days.
6. Finance expense and income
For the year ended
December 31,
--------------------
2020 2019
--------- ---------
$'000 $'000
--------- ---------
Finance expense
Interest on bank loans 12 32
Leases 40 45
Interest and bank fees 223 134
--------- ---------
275 211
Finance income
Interest from bank deposits 28 44
Net Foreign exchange gain 227 117
--------- ---------
255 161
--------- ---------
20 50
========= =========
7. Tax expenses
A. Tax Laws in Israel
1. Amendments to the Law for the Encouragement of Capital
Investments, 1959 (the "Encouragement Law"):
In December 2010, the "Knesset" (Israeli Parliament) passed the
Law for Economic Policy for 2011 and 2012 (Amended Legislation),
2011 ("the Amendment"), which prescribes, among others, amendments
to the Law. The Amendment became effective as of January 1, 2011.
According to the Amendment, the benefit provisions in the Law were
modified and a flat tax rate applies to the Company's entire
preferred income. Commencing from the 2011 tax year, the Group will
be able to opt to apply (the waiver is non-recourse) the Amendment
and from the elected tax year and onwards, it will be subject to
the amended tax rates that are: 2014 and thereafter will be 16% (in
development area A - 9%).
The Group applied the Amendment effectively from the 2011 tax
year.
2. Tax rates:
On December 29, 2016, the Law for Economic Efficiency
(Legislative Amendments for Achieving the Budgetary Goals for
2017-2018) was published in Reshumot (the Israeli government
official gazette), which enacts, among other things, the following
amendments:
- Decreasing the corporate tax rate to 24% in 2017 and to 23% in
2018 and thereafter (instead of 25%).
- Commencing tax year 2017 and thereafter the tax rate on the
income of preferred enterprises of a qualifying Company in
Development Zone A as stated in the Encouragement of Capital
Investment Law, shall decrease to 7.5% (instead of 9%) and for
companies located in zones other than Zone A the rate shall remain
16%.
- In addition, the tax rate on dividends distributed on January
1, 2014 and thereafter originating from preferred income under the
Encouragement Law will be raised to 20% (instead of 15%).
Therefore the applicable corporate tax rate for 2014 and
thereafter is 16%.
7. Tax expenses (cont.)
B. The principal tax rates applicable to the subsidiaries whose
place of incorporation is outside Israel are:
A company incorporated in India - The statutory tax rate is 28%
and the Company was in an exempt zone until end of March 2013 and
further in a 50% tax exempt zone until end of March 2018.
Nevertheless from the Tax Year 2011-12, in the absence of taxable
income or tax due on taxable income (calculated as per normal
rates) being less than 18.5% of the Accounting Book Profits during
a particular year, the Indian regulation states that the company
has to pay a Minimum Alternate tax at a rate of 18.5% of the
Accounting Book Profits for that year. Such excess Minimum
Alternate Tax paid on book profits over the Tax due on Actual
Taxable Income (calculated as per normal rates) of each year is
capable of set off against the taxable profits of future years.
A company incorporated in Switzerland - The weighted tax rate
applicable to a company operating in Switzerland is about 25%
(composed of Federal, Cantonal and Municipal tax). Provided that
the company meets certain conditions, the weighted tax rate
applicable to its income in Switzerland will not exceed 10%.
A company incorporated in South Africa - The statutory tax rate
is 28%
A company incorporated in Australia - The statutory tax rate is
30%
A company incorporated in United States of America - The
statutory tax rate is 21%.
A Company incorporated in Russia - the statutory tax rate is
20%.
A Company incorporated in China - the statutory tax rate is 25%
but for small entities the tax rate is 10%. To be classified as a
small entity all following should apply (i)Annual taxable income
not exceeding 3 million yuan, (ii) Number of employees not
exceeding 300 and (iii) Total assets not exceeding 50 million yuan.
The Company meets the criteria of a small entity.
C . Income tax assessments
The Company has tax assessments considered as final up to and
including the year 201 6 .
For the year ended December 31,
-------------------------------------
2020 2020 2019 2019
--------- -------- ------- -------
$'000 $'000 $'000 $'000
--------- -------- ------- -------
Current tax expense
Income tax on profits for the year 592 402
Taxes in respect of previous years 4 29
--------- -------
596 431
-------- -------
Deferred tax income (see note
12)
Origination and reversal of temporary
differences (32) 23
--------- -------
(32) 23
-------- -------
Total tax expenses 564 454
======== =======
7. Tax expenses (cont.)
The adjustments for the difference between the actual tax charge
for the year and the standard rate of corporation tax in Israel
applied to profits for the year are as follows:
For the year ended
December 31,
--------------------
2020 2019
--------- ---------
$'000 $'000
--------- ---------
Profit before income tax 4,048 3,409
--------- ---------
Tax using the Company's domestic tax rate of
16% 648 545
Non-deductible expenses (Tax-exempt income ) (138) (95)
Taxes resulting from different tax rates applicable
to foreign and other subsidiaries 41 79
Adjustments for current income tax of prior
years 31 (29)
Other (18) (46)
--------- ---------
Total income tax expense 564 454
========= =========
8. Earnings per share
Net earnings per share attributable to equity owners of the
parent
For the year ended
December 31,
----------------------
2020 2019*
---------- ----------
$'000 $'000
---------- ----------
Net Earnings used in basic and diluted EPS 3,373 2,849
Weighted average number of shares used in basic
and diluted EPS 88,093,025 87,229,851
basic and diluted net EPS (dollars) 0.0383 0.0327
========== ==========
* The employee options have been excluded from the calculation
of diluted EPS as their exercise price is greater than the weighted
average share price during the year (i.e. they are
out-of-the-money) and therefore it would not be advantageous for
the holders to exercise those options. There are no options in
issue as the date of this report) See note 24).
9. Dividends
For the year ended
December 31,
--------------------
2020 2019
--------- ---------
$'000 $'000
Dividend paid 1,758 1,306
Scrip dividend (1) - -
--------- ---------
1,758 1,306
========= =========
9. Dividends (cont.)
(1) In previous years, under a scrip dividend policy,
shareholders have had the option to elect to receive dividends in
new shares of the Company rather than in cash. The Company has not
offered a scrip dividend alternative in relation to the final
dividend declared for the year ended 31 December 2020.
10. Property, plant and equipment
Machinery Office Right
& furniture Computer of use
Building equipment & equipment equipment Vehicles asset Total
-------- ---------- ------------ ---------- -------- ------- -------
$'000
--------------------------------------------------------------------------
Cost:
Balance as of January 1, 2020 5,046 6,241 673 2,354 832 1,098 16,244
Acquisitions 15 78 12 32 289 172 598
Disposals - - - - 103 67 170
Exchange differences 9 4 3 - 14 - 30
-------- ---------- ------------ ---------- -------- ------- -------
Balance as of December 31,
2020 5,070 6,323 688 2,386 1,032 1,203 16,702
-------- ---------- ------------ ---------- -------- ------- -------
Accumulated Depreciation:
Balance as of January 1, 2020 2,328 5,068 597 2,237 345 457 11,032
Additions 93 195 16 26 144 484 958
Disposals - - - - 62 59 121
Exchange differences - 4 1 1 9 - 15
-------- ---------- ------------ ---------- -------- ------- -------
Balance as of December 31,
2020 2,421 5,267 614 2,264 436 882 11,884
-------- ---------- ------------ ---------- -------- ------- -------
Net book value as of December
31, 2020 2,649 1,056 74 122 596 321 4,818
======== ========== ============ ========== ======== ======= =======
10. Property, plant and equipment ( cont.)
Lease liabilities Year ended December
31
---------------------
2020 2019
---------- ---------
$'000 $'000
---------- ---------
Interest expense 36 45
Total cash outflow for leases 529 511
Additions to right-of-use assets 164 204
Less than 1 to 2 2 to 3 3 to 4 > 4
December 31 , 2020 one year years years years years Total
--------- ------ ------ ------ ------ -----
$'000
Lease liabilities 286 140 11 - - 437
========= ====== ====== ====== ====== =====
Less than 1 to 2 2 to 3 3 to 4 > 4
December 31 , 2019 one year years years years years Total
--------- ------ ------ ------ ------ -----
$'000
Lease liabilities 613 512 150 32 - 694
========= ====== ====== ====== ====== =====
Machinery Office Right
& furniture Computer of use
Building equipment & equipment equipment Vehicles asset Total
-------- ---------- ------------ ---------- -------- ------- -------
$'000
--------------------------------------------------------------------------
Cost:
Balance as of January 1, 2019 5,069 5,680 640 2,325 707 - 14,421
Recognition of initial application
of
IFRS 16 - - - - - 920 920
Acquired through business
combinations 14 6 4 3 85 - 112
Acquisitions 28 554 2 8 26 118 204 95 8
( 76 ( 26 ( 102
Disposals - - - - ) ) )
Exchange differences (65) 1 1 - (2) - (65)
-------- ---------- ------------ ---------- -------- ------- -------
Balance as of December 31,
2019 5,046 6,241 673 2,354 832 1,098 16,244
-------- ---------- ------------ ---------- -------- ------- -------
Accumulated Depreciation:
Balance as of January 1, 2019 2,244 4,887 583 2,193 269 - 10,176
Additions 84 181 14 44 129 483 935
( 53 ( 26
Disposals - - - - ) ) (79)
-------- ---------- ------------ ---------- -------- ------- -------
Balance as of December 31,
2019 2,328 5,068 597 2,237 345 457 11,032
-------- ---------- ------------ ---------- -------- ------- -------
Net book value as of December
31, 2019 2,718 1,17 3 7 6 117 487 641 5,212
======== ========== ============ ========== ======== ======= =======
1 1 . Intangible assets
Goodwill
from business Customer relations
combination * Total
-------------- ------------------ ------
$'000
------------------------------------------
Cost:
Balance as of December 31, 2020 2,088 715 2,803
-------------- ------------------ ------
Accumulated Amortization:
Balance as of January 1, 2020 1,227 460 1,687
Amortization charge - 52 52
-------------- ------------------ ------
Balance as of December 31, 2020 1,227 512 1,739
-------------- ------------------ ------
Net book value as of December 31, 2020 861 203 1,064
============== ================== ======
Goodwill
from business Customer relations
combination * Total
-------------- ------------------ ------
$'000
------------------------------------------
Cost:
Balance as of January 1, 2019 2 ,007 5 2 3 2,530
Acquired through business combinations 81 192 273
-------------- ------------------ ------
Balance as of December 31, 2019 2,088 715 2,803
-------------- ------------------ ------
Accumulated Amortization:
Balance as of January 1, 2019 1,227 422 1,649
Amortization charge - 38 38
-------------- ------------------ ------
Balance as of December 31, 2019 1,227 460 1,687
-------------- ------------------ ------
Net book value as of December 31, 2019 861 255 1,116
============== ================== ======
(*) Customer relations is amortized over an economic useful life
of between 6.5 to 10 years.
1 2 . Deferred tax assets
Deferred tax asset is calculated on temporary differences under
the liability method using the tax rates that are expected to apply
to the period when the asset is realised.
The movement in the deferred tax asset is as shown below:
20 20 2019
----- ------
$'000 $'000
----- ------
At January 1 664 687
Charged to other comprehensive income - -
Charged to profit or loss 32 (23)
----- ------
At December 31 696 664
===== ======
Deferred tax assets have been recognized in respect of all
differences giving rise to deferred tax assets because it is
probable that these assets will be recovered.
1 2 . Deferred tax assets (Cont.)
Composition:
31.12.2020 31.12.2019
---------- ----------
$'000 $'000
---------- ----------
Accrued severance pay 89 99
Other provisions and employee-related obligations 137 105
Research and development expenses deductible
over 3 years 177 201
Carry forward tax losses 293 259
---------- ----------
696 664
========== ==========
Deferred tax assets relating to carry forward capital losses of
the Group total approximately $ 1,139 and $1,059 thousand as of
December 31, 2020 and 2019 respectively were not recognized in the
financial statements because their utilization in the foreseeable
future is not probable .
1 3 . Inventories
31.12.2020 31.12.2019
---------- ----------
$'000 $'000
---------- ----------
Raw materials and consumables 4,364 4,049
Work-in-progress 155 130
Finished goods and goods for sale 1,880 1,569
---------- ----------
6,399 5,748
========== ==========
1 4 . Trade receivables, other receivables and unbilled revenue
31.12.2020 31.12.2019
---------- ----------
$'000 $'000
---------- ----------
Trade receivables 9,818 8,727
Unbilled revenue - Projects 2,318 2,866
Other receivables 840 1,072
---------- ----------
12,976 12,665
========== ==========
Trade receivables:
31.12.2020 31.12.2019
---------- ----------
$'000 $'000
---------- ----------
Trade receivables (*) 9,697 8,424
Notes receivable 224 398
Allowance for doubtful accounts (103) (95)
---------- ----------
9,818 8,727
========== ==========
(*) Trade receivables are non-interest bearing. They are generally on 60-120 day terms.
14. Trade receivables, other receivables and unbilled revenue (cont.)
As at 31 December 2020 trade receivables of $593,000 (2019 -
$946,000) were past due but not impaired.
They relate to the customers with no default history.
Unbilled revenue:
31.12.2020 31.12.2019
----------- --------------------
$'000 $'000
----------- --------------------
Actual completion costs 4,059 4,529
Revenue recognised 1,779 4,415
Billed revenue (3,520) (6,078)
----------- --------------------
Total Unbilled receivables - Projects 2,318 2,866
========== ==========
Other receivables:
31.12.2020 31.12.2019
---------- ----------
$'000 $'000
---------- ----------
Prepaid expenses 305 755
Advances to suppliers 168 161
Tax authorities - V.A.T 295 101
Employees 72 54
Other receivables - 1
---------- ----------
840 1,072
========== ==========
15. Cash and cash equivalents
31.12.2020 31.12.2019
---------- ----------
$'000 $'000
---------- ----------
In U.S. dollars 6,552 5,295
In other currencies 3,025 2,845
---------- ----------
9,577 8,140
========== ==========
1 6. Loans from banks
31.12.2020 31.12.2019
---------- ----------
$'000 $'000
---------- ----------
US Dollars - unlinked 63 313
NIS 42 77
South African Rand 37 63
Less - current maturities (105) (312)
---------- ----------
37 141
========== ==========
In 2011 the Company received a US$ 2.5 Million loan for the
purchase of the company building in Rosh ha'ayin, Israel, secured
by a mortgage on the said asset. The loan is for 10 years, with
repayment on a quarterly basis from April 2011 until January 2021
and bears interest at a fixed rate of 4.9%.
On August 2016, the Company received a NIS 100,000
(approximately US$ 29 thousand) loan respectively for purchase of a
car . The loan is for 4 years with a monthly repayments starting
August 2016 and bears interest of Prime +0. 6 % ( 2 .35 % as of
December 31, 2020).
During 2018 two additional loans for purchases of cars were
taken, which total NIS 320,000 (approximately US$ 85 thousand).
These loans are for 4 years with a monthly repayment and bears
interest of Prime +0. 4 % ( 2 .15 % as of December 31, 2020). All
bank loans for the purchase of cars are secured by a fixed lien on
the car .
On June 2015 the Company received NIS 8 Million (approximately
US$ 2.08 Million) loan for funding the acquisition of Mottech. The
loan is for 4 years, with repayment on a quarterly basis from
September 2015 until June 2019 and bears interest at a fixed rate
of 3.5%.
During 2017 Mottech South Africa entered into a loan agreement
of approximately US$ 37 thousand for purchase of cars payable over
60 months on a monthly basis. The interest rate is linked to the
South Africa prime lending rate.
During 2018 Mottech South Africa had entered into a loan
agreement of approximately US$ 30 thousand for the purchase of
cars, which is payable over 36 - 48 months on a monthly basis. The
interest rate is linked to the South Africa prime lending rate.
Fifth
At December 31 First Second Third Fourth year and
2020 year year year year thereafter
----- ------ ----- ------ -----------
$'000
Long-term loan 105 32 5 - -
===== ====== ===== ====== ===========
17. Employee benefits
A. Composition:
As at December 31
-------------------
2020 2019
--------- --------
$'000 $'000
--------- --------
Present value of the obligations 1,756 1,818
Fair value of plan assets (930) (975)
--------- --------
826 843
========= ========
B. Movement in plan assets:
Year ended December
31
---------------------
2020 2019
---------- ---------
$'000 $'000
---------- ---------
Year begin 975 990
Foreign exchange gain (loss) 74 80
Interest income 15 19
Contributions 13 18
Benefit paid (137) (152)
Re measurements gain (loss)
Actuarial profit (loss) from financial assumptions (1) 3
Return on plan assets (excluding interest) (9) 17
---------- ---------
Year end 930 975
========== =========
C. Movement in the liability for benefit obligation:
Year ended December
31
---------------------
2020 2019
---------- ---------
$'000 $'000
---------- ---------
Year begin 1,818 1,691
Foreign exchange ( gain) loss 140 152
Interest cost 39 63
Current service cost 40 48
Benefits paid (229) (162)
Re measurements loss ( gain )
Actuarial loss (gain) from financial assumptions (2) 78
Adjustments (experience) (50) (52)
---------- ---------
Year end 1,756 1,818
========== =========
Supplementary information
1. The Group's liabilities for severance pay, retirement and
pensions pursuant to Israeli law and employment agreements are
recognized by full - in part by managers' insurance policies, for
which the Group makes monthly payments and accrued amounts in
severance pay funds and the rest by the liabilities which are
included in the financial statements.
17. Employee benefits (cont.)
2. The amounts funded displayed above include amounts deposited
in severance pay funds with the addition of accrued income.
According to the Severance Pay Law, the aforementioned amounts may
not be withdrawn or mortgaged as long as the employer's obligations
have not been fulfilled in compliance with Israeli law.
3. Principal nominal actuarial assumptions:
As at December 31,
--------------------
2020 2019
--------- ---------
Discount rate on plan liabilities 2.12% 3.51%
Expected increase in pensionable salary 2% 2%
4. Sensitivity test for changes in the expected rate of salary
increase or in the discount rate of the plan assets and
liability:
Change in defined
benefit obligation
---------------------
As at December 31,
---------------------
20 20 2019
---------- ---------
$'000 $'000
---------- ---------
The change as a result of:
Salary increase of 1 % 74 75
Salary decrease of 1 % (65) (64)
The change as a result of:
Increase of 1% in discount rate (63) (62)
Decrease of 1% in discount rate 73 74
Year ended December
31,
---------------------
2020 2019
---------- ---------
$'000 $'000
---------- ---------
Expenses in respect of defined contribution
plans 457 441
========== =========
18. Trade and other payables
As at December 31,
--------------------
2020 2019
--------- ---------
$'000 $'000
--------- ---------
Trade payables 5,098 6,289
Employees' wages and other related liabilities 1,814 1,569
Advances from trade receivables 1,417 58
Accrued expenses 396 392
Government authorities 44 52
Lease liability 231 389
Others 192 390
--------- ---------
9,192 9,139
========= =========
19. Current maturities
As at December 31,
--------------------
Interest rate
as at December
31, 2020 2020 2019
--------- ---------
% $'000 $'000
--------- ---------
Current maturities In NIS Prime+0.6 24 39
Current maturities In SA ZAR 9.5 - 11 18 23
Current maturities In US $ 4.9 63 250
--------- ---------
Total Current maturities and short-term
bank loans 105 312
========= =========
Changes in liabilities arising from financing activities
Reconciliation of the changes in liabilities for which cash
flows have been, or will be classified as financing activities in
the statement of cash flows
Loans and Lease
borrowings liabilities total
------------ ------------- --------
$'000
-------------------------------------
At 1 January 2020 453 658 1,111
Changes from financing cash flows:
Payments of lease liabilities - (493) (493)
Repayment of long-term loans from banks (308) - (308)
------------ ------------- --------
Total changes from financing cash flows 145 165 310
Changes in fair value:
New leases - 172 172
Leases cancelled before maturity - (8) (8)
Interest expense - 40 40
Interest paid - (40) (40)
------------ ------------- --------
Total changes from financing cash flows - 164 164
Effects of foreign exchange (3) 57 54
------------ ------------- --------
At 31 December 2020 142 386 528
============ ============= ========
19. Current maturities (Cont.)
Loans and Lease
borrowings liabilities total
------------ ------------- --------
$'000
-------------------------------------
At 1 January 2019 1,008 - 1,008
Changes from financing cash flows:
Recognition of initial application of IFRS
16 - 920 920
Payments of lease liabilities - (511) (511)
Repayment of long-term loans from banks (554) - (554)
------------ ------------- --------
Total changes from financing cash flows 454 409 863
Changes in fair value:
New leases - 249 204
Leases cancelled before maturity - (26) (26)
Interest expense - 45 45
Interest paid - (45) (45)
------------ ------------- --------
Total changes from financing cash flows - 223 178
Effects of foreign exchange (1) 26 25
------------ ------------- --------
At 31 December 2019 453 658 1 , 066
============ ============= ========
20. Financial instruments - Risk Management
The Group is exposed through its operations to the following
financial risks:
-- Foreign currency risk
-- Liquidity risk
-- Credit risk
Foreign currency risk
Foreign exchange risk arises when Group companies enter into
transactions denominated in a currency other than their functional
currency.
The Group's policy is to allow the Group's entities to pay
liabilities denominated in their functional currency using the cash
flows generated from the operations of each entity. When the
Group's entities have liabilities denominated in a currency other
than their functional currency (and the entity does not have
sufficient cash balances in this currency to settle the liability)
the Group, if possible, transfers cash balances in one entity to
another entity in the Group. The Group's currency risks are as
follows:
A. Most of the Company's revenues are in US dollars or linked to
that currency, and the Company's inputs are mainly linked due to
the importation of raw materials paid for in US dollars, but the
wages and salary expenses (which constitutes a material input in
the Company's operations) are in NIS. Therefore, there is an
exposure to changes in the exchange rate of the NIS against the
dollar.
B. The exercise price of the options granted to employees is
denominated in British pounds (GBP) while the functional currency
is the US dollar, and therefore the Company is exposed to changes
in the exchange rate in respect of these options.
20. Financial instruments - Risk Management (Cont.)
Management mitigates that risk by holding some cash and cash
equivalents and deposit accounts in NIS. The Company also purchases
from time to time some forward contracts on the NIS/$ exchange rate
to hedge part of the salary costs. As of December 31, 2020 no such
transactions were open. Since the purchase of Mottech the Group has
an additional currency risk due to its subsidiaries' activity.
The following is a sensitivity analysis of a change of 5% as of
the date of the financial position in the NIS exchange rates
against the functional currency, while the rest of the variables
remain constant, and their effect on the pre-tax profit or loss on
equity:
Profit
Profit (loss) (loss)
from change Book value from change
-------------- ----------- -------------
December 31, 2020
------------------------------------------
NIS exchange rate 0.327 0.311 0.295
-------------- ----------- -------------
Total assets, net 48 951 (48)
============== =========== =============
December 31, 2019
-----------------------
NIS exchange rate 0.303 0.289 0.275
------ ------ -------
Total assets, net 63 1,260 ( 63 )
====== ====== =======
The Company's exposure to changes in foreign currency in all
other currencies is immaterial.
Total Other currencies NIS USD
------- ----------------- ------ -------
As at December 31, 2020
-------------------------------------------
Assets
Current assets :
9,577 2,869 945 5,763 Cash and cash equivalents
12,136 570 5,810 5,756 Trade receivables
840 6 651 183 Other receivables
Liabilities
current liabilities:
Current maturities and short term
105 18 24 63 bank credit and loans
5,098 1,000 2,837 1,261 Trade payables
4,094 331 3,576 187 Other accounts payables
non- current liabilities:
Loans from banks, net of current
37 19 18 - maturities
13,219 2,077 951 10,191 Total assets, net
======= ================= ====== =======
20. Financial instruments - Risk Management (Cont.)
Total Other currencies NIS USD
------- ----------------- ------ -------
As at December 31, 2019
-------------------------------------------
Assets
Current assets :
8,140 1,975 870 5,295 Cash and cash equivalents
11,593 454 5,730 5,409 Trade receivables
1,072 - 908 164 Other receivables
Liabilities
current liabilities:
Current maturities and short term
312 23 39 250 bank credit and loans
6,289 1,220 3,561 1,508 Trade payables
2,861 98 2,610 153 Other accounts payables
non- current liabilities:
Loans from banks, net of current
141 40 38 63 maturities
11,202 1,048 1,260 8,894 Total assets, net
======= ================= ====== =======
Liquidity Risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk
of insufficient liquidity means to fulfil its immediate
obligations. The Group's objective is to maintain a balance between
continuity of funding and flexibility. The Group have sufficient
availability of cash including the short-term investment of cash
surpluses and the raising of loans to meet its obligations by cash
management, subject to Group policies and guidelines.
The table below summarizes the maturity profile of the Group's
financial liabilities based on contractual undiscounted payments
(including interest payments):
Less than 1 to 2 2 to 3 3 to 4 > 4
December 31 , 2020 one year years years years years Total
--------- ------ ------ ------ ------ -------
$'000
Loans from banks 105 32 5 - - 142
Trade payables 5,098 - - - - 5,098
Payables 4,094 - - - - 4,094
--------- ------ ------ ------ ------ -------
9,297 32 5 - - 9,334
========= ====== ====== ====== ====== =======
Less than 1 to 2 2 to 3 3 to 4 > 4
December 31 , 2019 one year years years years years Total
--------- ------ ------ ------ ------ -------
$'000
Loans from banks 31 2 10 7 23 7 4 45 3
Trade payables 6,289 - - - - 6,289
Payables 2,850 - - - - 2,850
--------- ------ ------ ------ ------ -------
9,4 51 107 23 7 4 9,592
========= ====== ====== ====== ====== =======
Credit risks
Financial instruments which have the potential to expose the
Group to credit risks are mainly deposit accounts, trade
receivables and other receivables. The Group holds cash and cash
equivalents in deposit accounts in big banking institutions in
Israel, thereby substantially reducing the risk to suffer credit
loss.
20. Financial instruments - Risk Management (Cont.)
With respect to trade receivables, the Group believes that there
is no material credit risk which is not mitigated in light of
Group's policy to assess the credit risk of customers before
entering contracts. Moreover, the Group evaluates trade receivables
on a day to day basis and adjusts the allowance for doubtful
accounts accordingly and since January 2019 had entered into an
agreement with credit insurance company to further mitigate this
risk.
The aging analysis of these trade-receivable balances by
business segment:
Past due trade
receivables with
December 31, 2020 aging of
------------------------------ --------------------
Total Neither
trade past due < 30 >30
Revenues receivables nor impaired days days
--------- ------------- -------------- --------- ---------
Antennas - other receivables 11,187 6,586 6,161 423 2
Water Solutions - other
receivables 16,121 2,502 2,465 18 19
Distribution & Consultation
- other receivables 13,729 3,048 2,917 26 105
intercompany (144) - - - -
--------- ------------- -------------- --------- ---------
total 40,893 12,136 11,543 467 126
========= ============= ============== ========= =========
Past due trade
receivables with
December 31 , 2019 aging of
------------------------------ --------------------
Total Neither
t rade past due < 30 >30
Revenues receivables nor impaired days days
--------- ------------- -------------- --------- ---------
Antennas - other receivables 12,015 6,131 5,642 300 189
Water Solutions - other
receivables 16,518 2,405 2,248 148 9
Distribution & Consultation
- other receivables 11,681 3,057 2,758 271 28
intercompany (171) - - - -
--------- ------------- -------------- --------- ---------
total 40,043 11,593 10,648 719 226
========= ============= ============== ========= =========
Fair value
The carrying amount of cash and cash equivalents, trade
receivables, other accounts receivable, credit from banks and
others, trade payables and other accounts payable approximate their
fair value.
Sensitivity tests relating to changes in market price of listed
securities
The Group has performed sensitivity tests of the principal
market risk factors that are liable to affect its reported
operating results or financial position. The sensitivity tests
present the profit or loss and change in equity (before tax) in
respect of each financial instrument for the relevant risk variable
chosen for that instrument as of each reporting date. The test of
risk factors was determined based on the materiality of the
exposure of the operating results or financial condition of each
risk with reference to the functional currency and assuming that
all the other variables are constant. The sensitivity tests for
listed investments with quoted market prices (bid price) were
performed on possible changes in these market prices.
20. Financial instruments - Risk Management (Cont.)
The Group is not exposed to cash flow risk due to interest rates
since the long-term loan bears fixed interest.
The following table demonstrates the carrying amount and fair
value of the groups of financial instruments that carrying amounts
does not approximate fair value:
Carrying amount Fair value
----------------- ------------
2020 2019 2020 2019
-------- ------- ----- -----
Financial liabilities: $'000
-------------------------------
Long-term loan with interest (1) 142 453 142 454
======== ======= ===== =====
(1) The fair value of the long-term loan received with fixed
interest is based the present value of cash flows using an interest
rate currently available for a loan with similar terms.
Linkage terms of financial liabilities by groups of financial
instruments pursuant to IAS 39
December 31, 2020:
NIS Unlinked S.A Rand Total
---- -------- -------- -----
$'000
-------------------------------
Financial liabilities measured at
amortized cost 42 63 37 142
==== ======== ======== =====
December 31, 2019:
NIS Unlinked S.A Rand Total
---- -------- -------- -----
$'000
-------------------------------
Financial liabilities measured at
amortized cost 77 313 63 453
==== ======== ======== =====
Capital management
The Group's objective is to maintain, as much as is possible, a
stable capital structure. In the opinion of Group's management its
current capital structure is stable. Consistent with others in the
industry, the Group monitors capital, including others also, on the
basis of the gearing ratio.
This ratio is calculated as net debt divided by total capital.
Net debt is calculated as total borrowings (including 'current and
non-current borrowings' as shown in the consolidated statement of
financial position) less cash and cash equivalents. Total capital
is calculated as 'equity' as shown in the consolidated statement of
financial position plus net debt.
The gearing ratios at 31 December 2020 and 2019 were as
follows:
31.12.2020 31.12.2019
----------- -----------
Loans from banks 142 453
bank credit - -
----------- -----------
Total liabilities 142 453
=========== ===========
31.12.2020 31.12.2019
----------- -----------
Share capital 209 207
Additional paid-in capital 23,167 22,868
Retained earnings 999 (658)
Capital reserves 191 (10)
Non-controlling interest 987 883
----------- -----------
Total equity 25,553 23,290
=========== ===========
Leverage ratio 0.55% 1.9%
----------- -----------
20. Financial instruments - Risk Management (Cont.)
The net debt ratios stem from the Board of Directors' decision
to continue to invest in the Company's development, but without the
use of excessive leverage. The Group intends to examine the
leverage ratio from time to time and to define it according to its
needs. The decrease in the net debt ratio in 2020 derived mainly
from the repayment of credit, in accordance with the repayment
schedules, alongside an increase in the Company's equity as a
result of the Company's profits. The Group intends to maintain the
leverage ratio in future periods as well. Beyond that stated above,
there were no other material changes in the objectives, policies or
processes of managing the Group's capital during the year, as well
as in the Group's definition of capital.
21. Subsidiaries:
A. The principal subsidiaries of Company, all of which have been
consolidated in these consolidated financial statements, are as
follows:
Proportion of
Country of ownership interest
Name incorporation at 31 December Held by
--------------- --------------------- ------------------------
2020 2019
---------- ---------
AdvantCom Sarl Switzerland 100% 100% M.T.I Wireless Edge
Global Wave Technologies PVT
Limited India 80% 80% AdvantCom Sarl
Ginat Wave India Private ltd. India 49% 49% M.T.I Wireless Edge
Mottech water solutions ltd. Israel 100% 100% M.T.I Wireless Edge
Aqua water control solution
ltd Israel 100% 100% Mottech water solutions
Mottech Water Management (pty)
ltd. South Africa 85% 85% Mottech water solutions
Aqua water control
Mottech USA Inc. United states 100% 100% solution
M.T.I Engineering ltd. Israel 100% 100% M.T.I Wireless Edge
M.T.I Engineering
Summit electronics ltd. Israel 100% 100% ltd.
M.T.I Summit electronics ltd. Israel 100% 100% M.T.I Wireless Edge
M.T.I Summit electronics
M.T.I Summit SPB ltd. Russia 99.9% 99.9% ltd.
Mottech Water Management (Shenzhen) Mottech water solutions
Ltd. China 100% 60% ltd.
Mottech water solutions
Mottech Parkland (pty) Ltd.** Australia 50% 50% ltd.
B. On 24 June 2019 the Company announced that Mottech Water
Solution Ltd ("Mottech"), had entered into a share purchase
agreement to acquire 50% of Parkland Australia Pty Ltd ("Parkland
Australia"), a value added reseller of Mottech's solutions in
Australia, for a consideration of up to 0.8m Australian dollars
("AUD") (approximately US$0.55m). 0.6m AUD (US$0.41m) of the
consideration was paid upon closing and the remainder is to be paid
in two tranches by July 2020 and July 2021 based on the financial
performance of Parkland Australia in FY 2020 and FY 2021 (ending 30
June 2020 and 2021 respectively) (the "Acquisition"). The
Acquisition was completed on 30 July 2019 and in July 2020 the
company paid additional 30,000 AUD (approximately US$21K) for the
first tranche. The consideration for the acquisition of Parkland
Australia is not viewed as a material expenditure for the
Company.
21. Subsidiaries (Cont.):
C. Mottech Water Solutions Ltd ("Mottech"), a subsidiary of the
company, signed an agreement in May 2020 to acquire its joint
venture partner's 40% holding in a joint venture it established in
China in 2017 ("Mottech China"). Following this acquisition,
Mottech China is now a fully owned subsidiary of the Company.
22. Share capital
Authorized
-------------------------------------------------------------
2020 2020 2019 2019
------------- --------- ----------- ----------------------
Number NIS Number NIS
------------- --------- ----------- ----------------------
Ordinary shares of NIS 0.01 each 100,000,000 1,000,000 100,000,000 1,000,000
------------- --------- ----------- ----------------------
Issued and fully paid
-----------------------------------------------------------
2020 2020 2019 2019
------------- ---------------------- ---------- --------
Number NIS Number NIS
------------- ---------------------- ---------- --------
Ordinary shares of NIS 0.01 each at
beginning of the year 87,828,724 878,288 87,038,724 870,388
Changes during the year
Scrip dividend - - - -
Exercise of options to share capital 710,000 7,100 790,000 7,900
------------- ---------------------- ---------- --------
At end of the year 88,538,724 885,388 87,828,724 878,288
============= ====================== ========== ========
23. Share-based payment
On May 18, 2016 a new option scheme for key Employees was
approved at the Company's Annual General Meeting. Under the plan,
options to purchase 800 thousand ordinary shares were granted (each
option for the purchase of one ordinary share) at a price of 27
pence per share (approximately 33 US cents). At that point in time,
this represented approximately 1.5% of the Company's issued and
voting share capital on a fully diluted basis. The vesting period
of the options was as follows: 2 years for 50% of the options, 3
years for an additional 25% of the options and 4 years for the
reminder of the options. Unexercised options expire nine years
after the date of the grant after which they will be void. Options
are forfeited when the employee leaves the Company.
There is no cash settlement of the options. The weighted average
fair value of the options as at the grant date is 6 pence
(approximately 9 US cents) per option, and was estimated using a
Black and Scholes option pricing model based on the following
significant data and assumptions:
Share price - 19.88 pence (representing approximately 29
cents)
Exercise price - 27 pence (representing approximately 39
cents)
Expected volatility - 45.34%
Risk-free interest rate - 0.85%
And expected average life of options 4.375 years
The volatility measured the standard deviation of expected share
price returns is based on the historical volatility of the Company.
The options were granted as part of a plan that was adopted in
accordance with the provision of section 102 of the Israeli Income
Tax Ordinance.
23. Share-based payment (Cont.)
The expense recognized in the financial statements for employee
services received for the year ended December 31, 2020 and 2019 was
US $2,000 and US $6,000 respectively.
The following table lists the number of share options, the
weighted average exercise prices of share options and modification
in employee option plans during the current year:
2020 2020 2019 2019
--------- --------- --------- -----------
weighted weighted
average average
exercise exercise
price Number price Number
--------- --------- -----------
$ $
--------- ---------
Outstanding at beginning of
year 0.35 710,000 0.35 1,500,000
Exercised during the year 0.35 710,000 0.15 790,000
Granted during the year - - - -
Forfeited during the year - - - -
--------- -----------
Outstanding at the end of - - 0.35 -
the year
========= ===========
Exercisable at the end of
the year - - 0.35 710,000
========= ===========
During January to September 2020, employees of the Company
exercised options over 710,000 Ordinary Shares in exchange for a
total consideration of approximately $254,000. There are currently
no share options granted under the current employee share option
plan of the Company.
24. Commitments and guarantees
A. Royalty commitments
(i) The Group is committed to pay royalties to the Government of
Israel on proceeds from sales of products in the research and
development of which the Government of Israel participates by way
of grants. Under the terms of the Group's funding from the
Government of Israel, royalties of 2%-3.5% are payable on sales of
products developed from a project so funded, up to 100% of the
amount of the grant received, including amounts received by the
Parent Company and its subsidiaries through July 1, 2000.
The maximum royalty amount payable by the Group at December 31,
2020 is US$ 470,000.
No provision is recognized due to the lack of expectation to
sale relevant products in the foreseeable future.
During 2020 the Group did not pay any royalties.
(ii) The Group is committed to pay royalties to the Government
of Israel on proceeds from growth in sales of Mottech's products in
China of which the Government of Israel participates by way of
grants. Under the terms of the Group's funding from Government of
Israel, royalties of 3% from the increase of sales in China (base
year was 2017) shall be paid up to 100% of the amount of the grant
received. Payment of royalties shall begin after completion of the
grant receipt, which occurred 2020. The maximum royalty amount
payable by the Group at December 31, 2020 is US$ 237,000 .
24. Commitments and guarantees (cont.)
B. Guarantees
The Group has provided guarantees in favour of customers and
government institutes in the amount of US$ 750 ,000 and US$ 400
,000 respectively. The guarantees are mainly to guarantee advances
received from customers and performance of contracts signed.
C. Charges
In order to secure the Group's liabilities, real estate
properties were mortgaged and fixed charges were recorded on
property and some bank deposits (see also note 16).
25. Transactions with related parties:
A. Service Agreement with controlling shareholder:
On March 1, 2019, an amendment to the agreement with Mokirey Aya
Management Ltd. (hereinafter: the "Management Company") was renewed
to include remuneration (per month) of:
1. 55,000 NIS to Mr. Zvi Borovitz for his service as a chairman
of the board of the Company in capacity of at least 50% and
2. 77,000 NIS to Mr. Moni Borovitz for his service as CEO of the
Company in capacity of at least 90%.
All amounts are prior to VAT which will be added to the invoices
and are linked to the increase in the consumer price index. In
addition to the above, and in accordance with the remuneration
policy adopted by the Company, as required under rule 20 to the
Israeli Companies Law, a bonus scheme was granted to each of the
managers. The bonus scheme states that Zvi Borovitz and Moni
Borovitz will be entitled (each one of them) to a bonus amounting
2.5% of the Company's net profit exceeding US$800,000 per year,
prior to any bonuses grant in the Company. In the case of a loss in
a year the bonus for the next year will be for a net profit
exceeding US$800,000 above the loss made in the previous year. In
addition Mr. Moni Borovitz shall be entitled to a bonus equal to
three months management fee, based on the meeting of targets
specified by the remuneration committee at the beginning of each
year or per the remuneration committee decision to give such for
special performance plus one month's management fee if the
consolidated revenue of the Company increases by more than 5% from
previous year. A ceiling to the bonuses was set at eight months
management fees for Mr. Moni Borovitz and US$100,000 for Mr. Zvi
Borovitz. The agreement also states that the Company shall
reimburse the Management Company for any expense made in
performance of the manager's duty. The Company shall also provide
each of the managers with a car and phones and will be responsible
for all its related expenses, including all relevant taxes.
B. Transaction with the Parent Group:
The following transactions occurred with the Controlling
shareholder and other related parties:
2020 2019
------ -----
$'000 $'000
------ -----
Management Fee 787 714
====== =====
25. Transactions with related parties (cont.):
Compensation of key management personnel of the Group:
2020 2019
------- -------
$'000 $'000
------- -------
Short-term employee benefits *) 1,216 1,153
======= =======
*) Including Management fees for the CEO, Directors, Executive
Management and other related parties including the Controlling
shareholder.
Balances with related parties:
2020 2019
----- -----
$'000 $'000
----- -----
Other accounts payables 374 231
===== =====
26. Significant Events:
A. On January 24 2019 the Company announced a share repurchase
program to conduct market purchases of ordinary shares of par value
0.01 Israeli Shekels each ("Ordinary Shares") in the Company up to
a maximum value of GBP150,000 (the "Programme"). The Programme is
managed by Peterhouse Capital Limited ("Peterhouse Capital").
B. The Company has entered into an arrangement with Peterhouse
Capital in relation to the Programme where Peterhouse Capital will
make the trading decisions concerning the timing of the market
purchases of Ordinary Shares independently of and uninfluenced by
the Company, with such trading decisions being in line with the
terms of the Programme. Purchases may continue during any
prohibited periods of the Company, as defined by the Market Abuse
Regulation 596/2014/EU ("MAR"), which may fall during the term of
the Programme. The Company reserves the right to bring a halt to
the Programme under circumstances that it deems to be appropriate,
provided that it is permissible for this to occur in compliance
with MAR.
The Programme commenced on 28 January 2019 and was originally to
continue until no later than 26 July 2019. Thereafter, the board of
directors of the Company and the board of directors of MTI
Engineering had decided to continue with the Programme for several
further six months periods and it is currently in effect until 26
July 2021. Ordinary Shares acquired as a result of the Programme
will be held by MTI Engineering and in accordance with the Israeli
Companies Law, 1999 will not have any voting rights. An objective
of the Programme is that Ordinary Shares acquired by MTI
Engineering will be resold, provided that this occurs under
circumstances that the Board of MTI deems to be appropriate and in
compliance with MAR. Cash generated from any eventual resales of
Ordinary Shares acquired by MTI Engineering under the Programme
will be credited to an account held with a third party, which will
be under the direction of Peterhouse Capital and such cash may be
used by Peterhouse Capital to make future purchases of Ordinary
Shares under the Programme. As at 31 December 2020, no Ordinary
Shares were held in treasury under the Programme.
In 2020, MTI Engineering generated a profit of $8,000 in
relation to the Programme, which was recorded in additional
paid-in-capital.
26. Significant Events (cont.):
C. Outbreak of COVID-19 and Business Continuity - In December
2019, the COVID-19 pandemic broke out in China, and the virus has
spread to many countries around the world. In January 2020, the
World Health Organization announced the outbreak of the Coronavirus
as a global health emergency, and in March 2020, the World Health
Organization declared the pandemic to be a global pandemic. The
spread of the virus is an unusual event on its scale and is dynamic
and emergent. Policymakers around the world were forced to take
unprecedented steps to curb the pandemic, including the isolation
of civilians and establishing strict regulations and rules to
create social distancing, to reduce the chances of infection. This
included restricting inbound and outbound flights. Along with the
dangerous impacts on human lives as a result of the outbreak,
significant global and local business impacts have been recorded.
While the Group's offices were partially and/or temporarily closed
(depending on country of operations) during 2020, the Group was
able to maintain good levels of operation using remote work
procedures and a sufficient level of production in its production
facilities while assuring the health of employees. As of the date
of this report the Group has resumed operations in all of its
facilities (still under health requirements and regulations),
although working from home is still allowed in Israel. The Company
sees recovery in most of the territories where it operates,
although there are still significant challenges. All aspects of the
Group's supply chain are working slower, and the Company's industry
has been affected on the operational level, along with the rest of
the world economy as it faces the risk of a global recession where
the ability to predict the timing of a recovery is uncertain. The
introduction of vaccines and the fast adoption in Israel does
provide hope that the recovery will start in the near term, but
there is still uncertainty regarding vaccines' effectiveness and
duration.
27. Subsequent events
A. On 25 January 2021, the Company announced that the board of
directors of the Company and the board of directors of MTI
Engineering had decided to continue with the Programme for another
six months until 26 July 2021.
B. The Board of directors has decided to declare a cash dividend
of 2.5 US cents per share being approximately $2,213,000. This
dividend will be paid on 31 March 2021 to shareholders on the
register at the close of trading on 19 March 2021 (ex-dividend on
18 March 2021).
C. The financial statements were authorized for issue by the
board as a whole following their approval on February 28, 2021.
D. On 4 February 2021, Mottech registered a opened a fully owned
subsidiary in Canada and is working on establishing its activity in
Canada.
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END
FR EAAAKALNFEAA
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March 01, 2021 02:00 ET (07:00 GMT)
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