3rd Quarter Results

RNS Number : 0306P
MTI Wireless Edge Limited
14 November 2016
 

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR)

14 November 2016

MTI Wireless Edge Ltd

("MTI" or the "Company")

Financial results for the nine months ended 30 September 2016

MTI Wireless Edge Ltd. (AIM: MWE), a market leader in the manufacture of flat panel antennas for fixed wireless broadband and a wireless irrigation solution provider, today announces its unaudited results for the nine months ended 30 September 2016 (the "Period").

Highlights:

·     Revenue increased by 31 per cent. year-on-year in the Period to US$17.6m (nine months to 30 September 2015: US$13.4m), primarily due to the acquisition of Mottech.

·     Gross profit increased by 22 per cent. year-on-year to US$6.5m (nine months to 30 September 2015: US$5.4m).

·     Operating profit of approximately US$1.0m in the Period, in line with nine months to 30 September 2015.

·     Cash flow generated from operations tripled to US$1.5m (nine months to 30 September 2015: US$0.5m).

·     Dividend of US 1.1 cent per share for the year ended 31 December 2015 paid on 1 April 2016.

·     Shareholders' equity of US$18.6m (at 30 September 2015: US$17.9m) after payment of dividend, equivalent to 28.9 pence per share.

Dov Feiner, the Company's Chief Executive Officer, commented:

"I am happy to report on another excellent quarter for Mottech and its contribution to revenue growth and profit. Our antenna business is continuing to make a good progress in the third quarter, with another military contract win, as announced in August, which provides us with longer-term visibility. The RFID business has experienced a very good year to date and together with the continued development of the 60 - 80 GHz line we continue to be confident about the long-term future of the antenna business. At Mottech, we continue to see a variety of opportunities over many continents, all of which makes us believe that the combined business will continue to grow and be successful in 2016 and beyond". 

 

For further information, please contact:

 

MTI Wireless Edge

Dov Feiner, CEO

Moni Borovitz, Financial Director

http://www.mtiwe.com/

+972 3 900 8900

Allenby Capital Limited (Nominated adviser and broker)

Nick Naylor

Alex Brearley

+44 20 3328 5656

 

 

 

About MTI Wireless Edge

MTI is engaged in the development, production and marketing of High Quality, Low Cost, Flat Panel Antennas for Commercial & for Military applications. Commercial applications such as: WiMAX, Wireless Networking, RFID readers &, Broadband Wireless Access. With over 40 years' experience, supplying antennas 100KHz to 90GHz including directional antennas and Omni directional for outdoor and indoor deployments including Smart Antennas for WiMAX, Wi-Fi, Public Safety, RFID and for Base Stations and Terminals - Utility Market. Military applications include a wide range of broadband, tactical and specialized communications antennas, antenna systems and DF arrays installed on numerous airborne, ground and naval, including submarine, platforms worldwide.

 

Via its subsidiary, Mottech Water Solutions Ltd ("Mottech"), MTI is also 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. Mottech, headquartered in Israel, is the global prime distributor of Motorola for the IRRInet remote control solutions serving its customers worldwide through its subsidiaries and a global network of local distributers and representatives. It utilizes over 25 years of experience in providing its customers with remote control and management systems which ensure constant, reliable and accurate water usage, while reducing operational costs and maintenance costly expenses. Mottech's activities are focused in the market segments of agriculture, water distribution, Municipal and Commercial Landscape and Wastewater and Storm Water Reuse.



 

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


Nine months

ended September 30,


Year ended December 31,


2016


2015


2015


U.S. $ in thousands


Unaudited


Audited

Revenues

17,582


13,405


19,579

Cost of sales

11,040


8,041


11,870







Gross profit

6,542


5,364


7,709

Research and development expenses

828


962


1,216

Distribution expenses

2,570


1,693


2,408

General and administrative expenses

2,129


1,656


2,323







Profit from operations

1,015


1,053


1,762

Finance expense

307


234


432

Finance income

55


9


44







Profit before income tax

763


828


1,374

Income tax expense

136


74


110







Profit

627


754


1,264

Other comprehensive income (net of tax):






Items that will not be reclassified to profit or loss:






Re-measurement of defined benefit plans

-


-


(42)


-


-


(42)

Items that may be reclassified to profit or loss:






Adjustment arising from translation of financial statements of foreign operations

202


(67)


(77)


202


(67)


(77)

Total other comprehensive income (loss)

202


(67)


(119)







Total comprehensive income

829


687


1,145







Profit Attributable to:






Owners of the parent

585


710


1,222

Non-controlling interest

42


44


42








627


754


1,264

Total comprehensive income Attributable to:






Owners of the parent

787


643


1,103

Non-controlling interest

42


44


42








829


687


1,145







Earnings per share (dollars)






Basic

0.0113


0.0138


0.0237

Diluted

0.0111


0.0138


0.0235







Weighted average number of shares outstanding






Basic

51,657,245


51,571,990


51,571,990

Diluted

52,657,327


51,571,990


51,897,027







 

 

The accompanying notes form an integral part of the financial statements.


INTERIM CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

For the nine months period ended September 30, 2016:


Attributed to owners of the parent




Share capital

Additional paid-in capital

Capital Reserve

for share-based

payment

transactions

Adjustment arising from translation of financial statements of foreign operations

Retained earnings

Total attributable to owners of the  parent

Non-controlling interest

Total equity


U.S. $ in thousands










Balance at January 1, 2016 (Audited)

109

 14,945

304

(77)

3,116

18,397

266

18,663






 

 


 

Changes during the nine months

    ended September 30, 2016 (Unaudited):








Comprehensive income






 


 

Profit for the period

-

-

-

-

585

585

42

627

Other comprehensive income




 




 

Translation differences

-

-

-

202

-

202

-

202







 


 

Total comprehensive income for the period

-

-

-

202

585

787

42

829

Share issuance to non-controlling interest in subsidiary

-

(10)

-

-

-

(10)

10

-

Exercise of options to share capital

*

23

(1)

-

-

22

-

22

Dividend paid

-

-

-

-

(568)

(568)

-

(568)

Share based payment

-

-

14

-

-

14

-

14

 

 

 

 

 

 

 

 

 

Balance at September 30, 2016 (Unaudited)

109

14,958

317

125

3,133

18,642

318

18,960

 

 

 

 

 

 

 

 

 

 

(*) less than 1 thousand dollar

 

The accompanying notes form an integral part of the financial statements.

 

 

INTERIM CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

 

For the nine months period ended September 30, 2015:

 


Attributed to owners of the parent




Share capital

Additional paid-in capital

Capital Reserve

for share-based

payment

transactions

Adjustment arising from translation of financial statements of foreign operations

Retained earnings

Total attributable to owners of the  parent

Non-controlling interest

Total equity

 

U.S. $ in thousands

 


 





 


 

Balance at January 1, 2015 (Audited)

109

14,945

286

-

2,287

17,627

216

17,843





 

 

 


 

Changes during the nine months

    ended September 30, 2015 (Unaudited):









comprehensive income









Profit for the period

-

-

-

-

710

710

44

754

Other comprehensive income




 


 


 

Translation differences

-

-

-

(67)

-

(67)

-

(67)










Total comprehensive income for the period

-

-

-

(67)

710

643

44

687

Non-controlling Interest of newly purchased subsidiary

-

-

-

-

-

-

8

8

Dividend paid

-

-

-

-

(351)

(351)

-

(351)

Share based payment

-

-

19

-

-

19

-

19

 

 

 

 

 

 

 

 

 

Balance at September 30, 2015 (Unaudited)

109

14,945

305

(67)

2,646

17,938

268

18,206









 

 

The accompanying notes form an integral part of the financial statements.

 

 



 

INTERIM CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

 

For the year ended December 31, 2015    :

 


Attributable to owners of the parent



Share capital

Additional paid-in capital

Capital Reserve from share-based payment transactions

Adjustment arising from translation of financial statements of foreign operations

Retained earnings

Total attributable to owners of the  parent

Non-controlling interest

Total equity

 

U.S. $ in thousands

 

Audited


 





 


 

Balance as at January 1, 2015

109

14,945

286

-

2,287

17,627

216

17,843


 








Changes during 2015:









Comprehensive income

 


 

 

 

 

 

 

Profit for the year

-

-

-

-

1,222

1,222

42

1,264

Other comprehensive income









Re measurements on defined benefit plans

-

-

-

-

(42)

(42)

-

(42)

Translation differences

-

-

-

(77)

-

(77)

-

(77)










Total comprehensive income for the year

-

-

-

(77)

1,180

1,103

42

1,145

Non-controlling Interest of newly purchased subsidiary

-

-

-

-

-

-

8

8

Dividend paid

-

-

-

-

(351)

(351)

-

(351)

Share based payment

-

-

18

-

-

18

-

18

Balance as at December 31, 2015

109

14,945

304

(77)

3,116

18,397

266

18,663










 

The accompanying notes form an integral part of the financial statements.


INTERIM CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

 


30.9.2016


30.9.2015


31.12.2015


U.S. $ in thousands


Unaudited


Audited

ASSETS






CURRENT ASSETS:






Cash and cash equivalents

5,100


3,054


2,634

Restricted cash

-


170


-

Other current financial assets

-


2,051


2,086

Trade receivables

7,886


7,721


8,074

Other receivables

1,169


1,392


1,296

Current tax receivables

393


74


139

Inventories

3,943

 

4,239


4,426








18,491

 

18,701


18,655













NON-CURRENT ASSETS:






Long term prepaid expenses

52


21


28

Property, plant and equipment

5,545


5,130


5,643

Investment property

635


1,212


656

Deferred tax assets

564


336


393

Intangible assets

348


456


429

Goodwill

573

 

573


573








7,717

 

7,728


7,722








 

 

 


 







Total assets

26,208

 

26,429


26,377







 

The accompanying notes form an integral part of the financial statements.



 

INTERIM CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

 


30.9.2016


30.9.2015


31.12.2015


U.S. $ In thousands


Unaudited


Audited

LIABILITIES AND EQUITY






CURRENT LIABILITIES:






Current maturities and short term bank credit and loans

811


790


792

Trade payables

2,239


2,392


1,772

Other accounts payables

1,702


1,777


2,098

Current tax payables

100


170


192








4,852


5,129


4,854







NON- CURRENT LIABILITIES:






Loans from banks, net of current maturities

1,870


2,578


2,381

Employee benefits

434


424


387

Other liabilities

92


92


92








2,396


3,094


2,860







Total liabilities

7,248


8,223


7,714







EQUITY






Equity attributable to owners of the parent






Share capital

109


109


109

Additional paid-in capital

14,958


14,945


14,945

Capital reserve from share-based payment transactions

317


305


304

Translation differences

125


(67)


(77)

Retained earnings

3,133


2,646


3,116








18,642


17,938


18,397







Non-controlling interest

318


268


266







Total equity

18,960


18,206


18,663


 


 


 







Total equity and liabilities

26,208


26,429


26,377







 

 

November 13, 2016

 

 

 

Date of approval of financial statements

Moshe Borovitz

Finance Director

Dov Feiner

Chief Executive Officer

Zvi Borovitz

Non-executive Chairman

 

 

The accompanying notes form an integral part of the financial statements.

 

INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

 


Nine months

ended September 30,


Year ended December 31,

 



2016


2015


2015



U.S. $ in thousands

 



Unaudited


Audited

Cash Flows from Operating Activities:







 

Profit for the period


627


754


1,264

 

Adjustments for:







 

Depreciation and amortization


385


428


593

 

Loss (gain) from investments in financial assets


7


(1)


(36)

 

Equity settled share-based payment expense


14


19


18

 

Finance expenses, net


79


74


113

 

Income tax expense


136


74


110

 

Changes in operating assets and  liabilities:







 

Decrease in inventories


534


269


90

 

Decrease (increase) in trade receivables


315


(763)


(1,136)

 

Decrease (increase) in other accounts receivables and prepaid expenses


126


(418)


(326)

 

Increase (decrease) in trade and other accounts payables


9


202


(98)

 

Increase (decrease) in employee benefits, net


47


25


(54)

 

Interest paid


(79)


(74)


(113)

 

Income tax paid


(658)


(77)


(214)

 








 

Net cash provided by (used in)  operating activities


1,542


512


211

 








 








 

 

 

The accompanying notes form an integral part of the financial statements.



 INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

 



Nine months

ended September 30,


Year ended December 31,



2016


2015


2015



U.S. $ in thousands



Unaudited


Audited

 

Cash Flows From Investing Activities:







Sale of investments in financial assets, net


2,142


1,639


1,639

Acquisition of subsidiary, net of cash acquired


-


(3,042)


(3,042)

Increase in restricted cash


-


(170)


-

Purchase of property, plant and equipment


(171)


(195)


(297)








Net cash provided by (used in) investing activities


1,971


(1,768)


(1,700)















Cash Flows From Financing Activities:







Exercise of share options


22


-


-

Long term loan received from banks


27


2,090


2,090

Dividend paid to the owners of the parent


(568)


(351)


(351)

Repayment of long-term loan from banks


(582)


(331)


(526)








Net cash provided by (used in) financing activities


(1,101)


1,408


1,213















Increase (decrease) in cash and

cash equivalents during the period 


2,412


152


(276)

Cash and cash equivalents

 at the beginning of the period


2,634


2,918


2,918

Exchange differences on balances of cash and  

     cash equivalents


54


(16)


(8)








Cash and cash equivalents

 at the end of the period


5,100


3,054


2,634








 

Appendix A - Non-cash transactions:



Nine months

ended September 30,


Year ended December 31,

 



2016


2015


2015

 



U.S. $ in thousands

 



Unaudited


Audited








 

Purchase of property, plant and equipment

  against trade payables


27


17


8

 








 

 

 

The accompanying notes form an integral part of the financial statements.



 

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 - General:

Corporate information:

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 as a wholly-owned subsidiary of M.T.I Computers and Software Services (1982) Ltd. (hereafter - the "Parent Company") and commenced operations on July 1, 2000.

Since March 2006, the Company's shares have been traded on the AIM Stock Exchange.

The formal address of the company is 11 Hamelacha Street, Afek industrial Park, Rosh-Ha'Ayin, Israel.

The Company is engaged in the development, design, manufacture and marketing of antennas and accessories.  Since September 11, 2015 via its subsidiary, Mottech Water solutions, MTI is also 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.

 

Note 2 - Significant Accounting Policies:

The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in International Accounting Standard No. 34 ("Interim Financial Reporting").

The interim consolidated financial information set out above does not constitute full year end accounts within the meaning of Israeli Companies Law. It has been prepared on the going concern basis in accordance with the recognition and measurement criteria of the International Financial Reporting Standards (IFRS). Statutory financial information for the financial year ended December 31, 2015 was approved by the board on February 16, 2016. The report of the auditors on those financial statements was unqualified.

The interim consolidated financial statements as of September 30, 2016 have not been audited.

The interim consolidated financial information should be read in conjunction with the annual financial statements as of 31 December, 2015 and for the year then ended and with the notes thereto. The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2015 are applied consistently in these interim consolidated financial statements.

 

Note 3 - operating SEGMENTS:

The following tables present revenue and profit information regarding the Group's operating segments for the nine months ended September 30, 2016 and 2015, respectively and for the year ended December 31, 2015.

 

Nine months ended September 30, 2016 (Unaudited)









Antennas


Water Solutions


 

Total



U.S. $ in thousands

Revenue







External


8,324


9,258


17,582








Total


8,324


9,258


17,582















Segment income


(305)


1,320


1,015















Finance expense, net






(252)








Profit before income tax






763








Other







Depreciation and amortization


347


38


385








 

 

Nine months ended September 30, 2015 (Unaudited)









Antennas*


Water Solutions**


 

Total



U.S. $ in thousands

Revenue







External


10,297


3,108


13,405








Total


10,297


3,108


13,405















Segment income


648


405


1,053















Finance expense, net






(225)








Profit before income tax






828








Other







Depreciation and amortization


408


20


428








 (*)  Reclassified.

 (**)  Results for four month ending on September 30, 2015.

 

Year ended December 31, 2015 (audited)





Antennas


Water Solutions*


Total



U.S. $ in thousands

Revenue







External


13,305


6,274


19,579








Total


13,305

 

6,274

 

19,579















Segment profit


859


903


1,762








Unallocated corporate expenses





















Finance expense, net






(388)








Profit before income tax






1,374








Other







Depreciation and amortization


561


32


593








(*)  Results for seven month ending December 31, 2015.

 

Note 4-TRANSACTIONS AND BALANCES WITH RELATED PARTIES:

The following transactions occurred with the Parent Company and other related parties:



Nine months ended 

    September 30,


Year ended December 31,

 



2016


2015


2015



U.S. $ in thousands



Unaudited


Audited

Purchased Goods


221


218


328

Management Fee


320


314


410

Services Fee


187


159


212

Lease income


(54)


(86)


(104)

 

Compensation of key management personnel of the Group:



Nine months ended 

    September 30,


Year ended December 31,

 



2016


2015


2015



U.S. $ in thousands



Unaudited


Audited

Short-term employee benefits *)


584


560


738








 

*) Including Management fees for the CEO, Directors Executive Management and other related parties

All Transactions were made at market value.

 

Balances with related parties:


As at


30.9.2016


30.9.2015


31.12.2015


U.S. $ in thousands


Unaudited


Audited

Other receivables (Other accounts payables)

(113)


(17)


50







 

Amendment to Service Agreement with controlling shareholder:

Following the receipt of recommendations of both the remuneration committee and the board of directors of the Company, an amendment to the service agreement between the Company and the controlling shareholders (via their management company) was approved at a shareholders' meeting held on May 18, 2016. According to the amendment, the agreement is in place for 3 years starting September 1, 2016, after which it will be renewed for periods of 3 years in accordance to the relevant rules and regulations. Nevertheless the agreement can be terminated by either party by providing 90 days' notice. The agreement includes remuneration (per month) of:

1.     25,000 NIS to Mr. Zvi Borovitz (raised from 20,000 NIS prior to this approval) for his service as a chairman of the board of the Company in capacity of at least 25% and

2.     65,000 NIS to Mr. Moni Borovitz (raised from 60,000 NIS prior to this approval) for his service as CFO of the Company in capacity of at least 80%.

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$400,000 per year (raised from US$250,000 prior to this approval), prior to any bonuses grant in the Company. In case of a loss in a year the bonus for the next year will be for a net profit exceeding US$400,000 above the loss made in the previous year. In addition Mr. Moni Borovitz shall be entitled to a bonus equal to two months management fee, based on the meeting of targets specified by the remuneration committee at the beginning of each year.

A ceiling to the bonuses was set at 8 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 of the 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.   

 

Note 5 - SIGNIFICANT EVENTS:

a.  On January 12, 2016, following the approval of its shareholders, the Company adopted a change to its article of association allowing the Company the ability to pay dividends by way of scrip, meaning the board would be able to announce a dividend which could be paid in cash or through the issue of new shares in the Company (the "Scrip Dividend Policy").Under the Scrip Dividend Policy, shareholders could, in the future, be given the option to elect to receive dividends in new shares of the Company rather than in cash. The default arrangement will be for the payment of dividends in cash, and if the shareholder prefers to receive their dividends in new shares of the Company, then they would have to make an election. There would be no ability to make mixed elections and each shareholder would be able to choose either cash or new shares but not both. The decision to offer shareholders a scrip dividend alternative for future dividend payments will be at the sole discretion of the Board.

b.  During the first half of 2016 several employees exercised options over 167.5 thousand shares in exchange for an approximately of US$22,000.

c.  On April 1, 2016 the company paid a dividend of 1.1 US cents per share totaling approximately $568,000.

d.  On May 2, 2016 shares in Mottech Water Management (Pty) Ltd. in South Africa ("Mottech SA") were allotted to its general manager. Following this allotment the Company owns 85% of Mottech SA.

e.  A new option scheme for key Employees was approved at the Company's Annual General Meeting on May 18, 2016. Under the plan, options to purchase 800,000 ordinary shares were granted (with each option being over one ordinary share). This represents approximately 1.5% of the Company's current issued and voting share capital on a fully diluted basis. The vesting period of the options shall be as follows: 2 years for 50% of the options, 3 years for additional 25% of the options and 4 years for the reminder of the options. Unexercised options expire nine years after 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, which 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 US cents)

Exercise price - 27 pence (representing approximately 39 US cents)

Expected volatility - 45.34%

Risk-free interest rate - 0.85%

And expected average life of options 4.375 years

The volatility measured at the standard deviation of expected share price returns is based on the historical volatility of the Company's share price. 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.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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