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Amiad Water Systems (AFS)

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Wednesday 11 September, 2019

Amiad Water Systems

Interim Results

RNS Number : 8949L
Amiad Water Systems Ltd
11 September 2019
 

11 September 2019

 

Amiad Water Systems Ltd.

("Amiad" or the "Company")

 

Interim Results

 

Amiad (AIM: AFS), a leading global producer of water treatment and filtration solutions, announces its interim results for the six months ended 30 June 2019.

 

Financial Summary*

·    Revenue of $58.4m (H1 2018: $56.2m)

·    Gross margin of 39.2% (H1 2018: 42.2%)**, primarily due to sales mix and exchange rate impact

·    Operating profit of $2.5m (H1 2018: $3.1m)

·    Profit before tax of $0.9m (H1 2018: $2.2m), primarily reflecting the impact of IFRS 16

·    Fully diluted earnings per share of $0.026 (H1 2018: $0.056)

·    Net debt at 30 June 2019 was $14.4m (31 December 2018: $13.8m)

·    Cash and cash equivalents at 30 June 2019 were $14.1m (31 December 2018: $13.5m)

* H1 2018 financials have not been restated for IFRS 16, in accordance with the available exemption.

** During the period, Amiad reclassified certain expenses from 'cost of sales' to 'selling and marketing' expenses. The Company has retrospectively applied this reclassification to the prior period and restated the gross margin.

                            

Operational Summary

·    Positive sales momentum:

·    Growth in sales in all of the Company's geographic regions

·    Increase in revenue in both the Irrigation and Industry business units

·    Revenue generated under distribution agreement with Netafim increased by 8.5%

·    Received growing interest in new irrigation product range and TEQUATIC™ PLUS Filter, which is expected to translate to ramp up in sales in H2 2019

·    Improved operations:

·    Increase in total revenue achieved on consistent cost base

·   Implemented further internal efficiency measures, such as introducing automation to additional manufacturing processes

 

 

Dori Ivzori, Chief Executive Officer of Amiad, said: "With this set of results, we are beginning to see the operational benefits of our strategic plan as we achieved an increase in revenue without expanding the cost base. This was based on sales growth in all three of our geographic regions and in both the Irrigation and Industry business units. We were also pleased to see a return to growth in revenue generated under our agreement with Netafim. During the period, however, we experienced currency headwinds and the adoption of IFRS 16 had a negative impact on the financial reporting. Nonetheless, we are pleased with the operational progress that we achieved during the period.

 

"Looking ahead, we entered the second half of 2019 with a higher backlog than at the same point of the prior year as well as a larger sales pipeline, which we expect to convert to orders during the rest of this year. In particular, we expect a ramp up in sales of the new irrigation products to contribute to growth in the Irrigation business unit while the TEQUATIC™ PLUS Filter is expected to contribute to growth in the Industry business unit. We also anticipate an improvement in gross margin for the full year over the first half of 2019. We expect to experience currency fluctuations in H2, but the full extent is not known presently. Despite this, we anticipate good revenue growth for full year 2019, broadly in line with market expectations, and the Board looks to the future with confidence."

 

 

Enquiries

 

Amiad Water Systems Ltd.

 

Dori Ivzori, Chief Executive Officer

Avishay Afriat, Chief Financial Officer

+972 4 690 9500

 

Stifel Nicolaus Europe Ltd.

 

Stewart Wallace, Ben Maddison

+44 20 7710 7600

 

Luther Pendragon Ltd.

 

Harry Chathli, Claire Norbury

+44 20 7618 9100

 

 

About Amiad

 

Amiad Water Systems (AIM: AFS) is a leading global producer of automatic, self-cleaning water treatment and filtration products and systems. Through its engineering skills and ability to innovate, Amiad provides cost-effective "green" solutions for the irrigation and industrial purposes. In these markets, its patented products are being integrated into the core of systems for filtration and water treatment, micro irrigation and membrane protection, wastewater and potable water treatment, cooling systems and sea water filtration.

 

Headquartered in Israel, Amiad provides these solutions through nine subsidiaries and a comprehensive network of distributors to customers in more than 80 countries.

 

For additional information or product details, please visit www.amiad.com.

 

Operational Review

 

During the first half of 2019, Amiad recognised the initial benefits from the implementation of the Company's strategic plan established in 2017 as it delivered an increase in revenue without expanding the cost base. This was based on modest growth in most of the Company's geographies, and the Irrigation and Industry business units. In Irrigation, there was an increase in the Company's direct sales as well as in revenue generated under its distribution agreement with Netafim.

 

The Company's new products - the Sigma series for the Irrigation market and the TEQUATIC™ PLUS Filter in the Industry business unit - generated initial sales and continued to receive growing interest, with a ramp up in sales expected in the second half.

 

Amiad continued with the implementation of measures to increase internal efficiency. In particular, the Company introduced automation to additional manufacturing processes and expects to benefit from these measures during the current year.

 

Performance by Segment

 

Amiad has two business units: Irrigation and Industry. Revenue generated under the Company's distribution agreement with Netafim, whereby Netafim sells Amiad's Irrigation products, contributes to the Irrigation business unit sales. The Industry business unit comprises sales into the Petrol, Petrochemical, Oil & Gas ("PPOG"), Municipal and General (other industry) segments.

 

Irrigation

 

Revenue in the Irrigation business unit increased to $33.4m in the first half of 2019 (H1 2018: $31.7m), accounting for 57.2% of the Company's revenue (H1 2018: 56.4%). This primarily reflects a return to growth in sales generated under the Company's distribution agreement with Netafim, which increased by 8.5%. There was also overall growth in Amiad's direct Irrigation sales due to an increase in the APAC region.

 

The new product series that Amiad launched last year, targeted at the Irrigation market, consisting of the Mini Sigma, Sigma Pro and ADI-P, performed well with good sales through the Company's direct channels. During the period, the Company's distributors finalised testing and validating the new products, and the Company anticipates an increase in sales of the new products in the second half of the year.  

 

Industry

 

The Industry business unit revenue increased slightly to $25.0m in the period (H1 2018: $24.5m), accounting for 42.8% of the Company's revenue (H1 2018: 43.6%). The increase was primarily due to growth in the Municipal segment within the Industry business unit, where sales grew by 15.7% to $7.0m (H1 2018: $6.1m) due to growth in the Americas and EMEA regions.

 

Sales in the PPOG segment within the Industry business unit grew by 27.2% to $4.1m (H1 2018: $3.2m). This reflects growth in PPOG sales in all of the Company's geographic regions.

 

For the Company's other projects within the Industry business unit, which are classified within the 'General' industry segment, sales were $13.9m (H1 2018: $15.2m) as growth in EMEA was offset by reductions elsewhere.

 

Performance by Region

 

Americas

 

The Americas region includes sales by Amiad's subsidiaries in the US, Mexico and Brazil as well as sales from the Company's headquarters in Israel into Latin America. In the Americas, revenue was $15.2m (H1 2018: $15.2m).

 

In the US, sales increased to $13.5m (H1 2018: $13.3m), reflecting growth in the Industry business unit to $6.5m (H1 2018: $6.2m) and a slight reduction in the Irrigation business unit to $7.0m (H1 2018: $7.1m). The main contributor to growth in the US was the Municipal segment, with sales increasing by 29.2% to $3.8m (H1 2018: $2.9m). There was also growth in PPOG segment with a 64.7% increase in sale to $1.4m (H1 2018: $0.8m).

 

The Company expects significant growth in revenue in the US in the second half of 2019 over the first half. In particular, the Company anticipates a strong increase in sales in the PPOG segment, primarily through sales of the TEQUATIC™ PLUS Filter.

 

EMEA

 

The EMEA region includes sales by Amiad's subsidiaries in France (Amiad Europe), Turkey and the UK as well as the domestic sales of the Company's headquarters in Israel and also into Europe, the Middle East and Africa. Revenue in EMEA was 4.6% higher at $16.9m (H1 2018: $16.1m) based on growth in the Industry business unit, particularly in Amiad Europe.

 

Sales in the Industry business unit in EMEA increased to $8.7m (H1 2018: $7.8m), reflecting growth in all of the industrial segments. In particular, Amiad Europe achieved strong growth in the Industry business unit. There was also increased sales in the Industry business unit in Turkey due to growth in the Municipal segment following a tentative return to public investment. In the Irrigation business unit, sales were slightly lower at $8.2m (H1 2018: $8.3m).

 

APAC

 

The APAC region includes sales by Amiad's subsidiaries in Australia, China, India and Singapore as well as sales from the Company's headquarters in Israel into the Asia-Pacific geography. Revenue in APAC increased to $14.0m (H1 2018: $13.6m), reflecting growth in the Irrigation business unit to $4.9m (H1 2018: $3.6m) while sales in the Industry unit were slightly lower at $9.1m (H1 2018: $10.0m).

 

Australia continued to be the largest contributor to regional revenue, accounting for 54.8% of sales (H1 2018: 49.6%), with sales increasing to $7.7m (H1 2018: $6.7m). This was based on good growth in the Irrigation business unit, primarily due to two large projects.

 

The Company continued to execute on its reorganisation at its subsidiary in India. It is progressing as planned and the Company expects to start receiving the benefits from this next year.

 

 

Financial Review

 

Revenue for the six months ended 30 June 2019 was $58.4m compared with $56.2m for the first half of 2018.

 

Gross margin was 39.2% (H1 2018: 42.2%) with the reduction due to the negative impact of a number of factors:

·     Impact on sales of currency fluctuations: primarily the strengthening of the US Dollar against the Australian Dollar and the Euro. This was the largest single factor, although partly mitigated by the positive impact on costs of the strengthening of the US Dollar against the New Israeli Shekel.

·     Sales mix: margin dilution arose from (i) two significant projects in the PPOG segment that had a lower margin than average Amiad sales; (ii) increased contribution to sales in H1 2019, compared with H1 2018, from a lower-margin customer of Amiad Europe in the Industry business unit; and (iii) the increased volumes with Netafim.

·     Amiad benefited from a government grant in the first half of 2018, which wasn't repeated in H1 2019.

 

As a result of the lower gross margin, gross profit for the period was $22.9m (H1 2018: $23.7m). The Company expects an improvement in gross margin for full year 2019 as the large, lower-than-average margin projects were completed in the first half and there is expected to be an increase in sales of Amiad's new Irrigation products, which carry a higher gross margin as well as a higher total revenue without an expansion in the cost base.

 

Sales and marketing costs were $14.0m for the first half of 2019 (H1 2018: $14.2m). During the period, the Company reclassified approximately $0.7m in 'cost of goods' items as 'sales and marketing' costs to better reflect the nature of the expenses. The reclassification has been applied retrospectively to the previous year's figures, which was also in the amount of approximately $0.7m, and these have been restated where applicable.

 

R&D costs were $1.8m (H1 2018: $1.9m) and administrative and general expenses were $4.7m (H1 2018: $4.6m). As a result, total operating expenses were reduced to $20.4m (H1 2018: $20.7m).

 

Operating profit was $2.5m (H1 2018: $3.1m), with the reduction due to the lower gross margin, and profit before tax was $0.9m (H1 2018: $2.2m). The reduced profit before tax was due to the lower operating profit as well as financial expenses of $1.2m from the application of IFRS 16 as described below. Fully diluted earnings per share were $0.026 (H1 2018: $0.056).

 

EBITDA increased to $5.5m for the period (H1 2018: $4.2m) due to the adoption of IFRS 16 in the current year financials whereby the lease operating cost was replaced with a lower depreciation charge and an interest charge, which are not reflected in the EBITDA measure. Excluding the impact of IFRS 16, EBITDA was broadly flat year-on-year. Cash generated from operations increased to $3.9m (H1 2018: $1.0m), with approximately $2.0m of the increase due to less cash being absorbed into working capital compared with the earlier period. It was also positively impacted by the application of IFRS 16 due to the reallocation of lease charges from operating activities to finance activities. The impact of IFRS 16 on EBITDA and cash generation is described further below. 

 

As at 30 June 2019, cash and cash equivalents were $14.1m (31 December 2018: $13.5m). Net debt at 30 June 2019 was $14.4m (31 December 2018: $13.8m), with the increase primarily due to an expansion in working capital primarily as a result of a $4.3m increase in trade receivables. This increase in trade receivables was largely ($3.5m) due to increased volumes with Netafim. The Company expects the net debt position to be reduced at year-end.

 

IFRS 16

 

IFRS 16 is the new lease accounting standard that came into effect on 1 January 2019. The most significant impacts of this new accounting standard are the recognition of operating lease liabilities on the balance sheet as a liability (lease liability) and as an asset (right-of-use) and the operating lease charge being replaced by a charge to depreciation and interest.

 

The overall impact of the adoption of IFRS 16 was to increase EBITDA by $1.5m, operating profit by $0.25m and decrease net profit by $0.87m. As a result of the initial application of IFRS 16, in relation to the leases that were previously classified as operating leases, the Company recognised $17.6m of right-of-use assets and $17.6m lease liabilities as at 1 January 2019. As at 30 June 2019, the Company recognised $21.5m right-of-use assets and $22.5m lease liabilities on its balance sheet. The Company has elected not to restate the 2018 comparatives in line with the transitional exemptions available. As a result of IFRS 16, the Company has recognised depreciation and interest costs instead of operating lease expense. During the six months ended 30 June 2019, the Company recognised $1.3m of depreciation charges and $0.4m of interest costs instead of a $1.55m operating lease charge.

 

In addition, there was a $0.8m negative currency impact on finance costs resulting from the revaluation of the operating leases that are denominated in the New Israeli Shekel, which strengthened against the Company's reporting currency of the US Dollar. Financing expenses were therefore increased by $1.2m (being the lease interest cost and currency impact), with net finance costs being $1.5m (H1 2018: $0.9m), resulting in profit before tax being reduced to $0.9m (H1 2018: $2.2m). See note 2 to the consolidated financial statements for further detail.

 

 

Outlook

 

Amiad entered the second half of 2019 with a higher backlog than at the same point of the prior year as well as a larger sales pipeline, which the Company expects to convert to orders this year. In particular, following the successful completion of the evaluation of the Company's new Irrigation product range by its distributors, Amiad expects a ramp up in sales of the new products in the second half of the year. The Company continues to expect significant growth in the US for the full year, with sales of the TEQUATIC™ PLUS Filter anticipated to make an important contribution.

 

As noted, the Company expects improvement in gross margin for the full year, with an increase in revenue being achievable without expanding the cost base as well as a change in sales mix. The Company continues to focus on increasing efficiency, such as through introducing further automation and value engineering.

 

As a result, the Company continues to anticipate good revenue growth for full year 2019 over 2018 - with increased sales in both the Irrigation and Industry business units - broadly in line with market expectations and is targeting an improvement in gross margin for the full year over the first half of 2019. However, the Company remains cautious about the uncertainty regarding currency fluctuations, particularly regarding the application of IFRS 16.

 

As previously announced, the Company is currently in discussions with FIMI Opportunity Funds, a significant shareholder in the Company, regarding a potential investment in Amiad through the placing of new ordinary shares. While there is no guarantee that the discussions will lead to an investment in the Company, the Board is encouraged by the support demonstrated by its significant shareholder and, were the investment to be completed, believes that the proceeds would enable the Company to accelerate the achievement of its growth objectives.  

 

Consequently, with good growth expected for full year 2019, as well as potential opportunities for accelerated growth, the Board continues to look to the future with confidence.

 

 

 

 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

JUNE 30, 2019

 

 

 

2019

2018

2018

       

 

Assets

 

 

 

CURRENT ASSETS: 

 

 

 

Cash and cash equivalents 

14,055

14,575

13,526

Financial assets at fair value through

 

 

 

profit or loss

262

162

158

Trade and other receivables: 

 

 

 

Trade 

41,212

36,203

37,154

Other 

4,868

4,164

4,761

Current income tax assets

514

609

632

Inventories

29,240

30,070

30,975

TOTAL CURRENT ASSETS

90,151

85,783

87,206

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

Investment in joint venture

-,-

10

-,-

Severance pay fund, net

164

159

160

Long-term receivables

64

273

276

Property, plant and equipment

11,901

10,168

11,086

Intangible assets

13,058

13,927

13,267

Right of use assets

21,503

-,-

-,-

Deferred income tax assets          

2,536

2,634

2,687

TOTAL NON-CURRENT ASSETS

49,226

27,171

27,476

TOTAL ASSETS 

139,377

112,954

114,682

 

 

 

 

 

 

 

 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

JUNE 30, 2019

 

 

 

2019

2018

2018

       

 

Liabilities and equity

 

 

 

CURRENT LIABILITIES: 

 

 

 

Bank credit and current maturities of borrowings from banks

18,790

10,956 

17,365 

Financial liabilities at fair value through profit or
loss - derivatives

20

303 

180 

Trade and other payable: 

 

 

 

Trade 

16,101

14,132 

14,414 

Other 

10,420

11,626 

10,841 

Operating Lease liabilities

3,843

-,-

-,-

Current income tax liability

265

253 

340 

TOTAL CURRENT LIABILITIES

49,439

37,270 

43,140 

NON-CURRENT LIABILITIES: 

 

 

 

Borrowings from banks (net of current maturities)

9,623

14,442 

9,914 

Liability for royalty payment

1,058

1,066 

1,008 

Remeasurements of post-employment benefit obligations, net

387

335 

345 

Operating Lease liabilities

18,608

-

-

Deferred income tax liabilities

12

56 

TOTAL NON-CURRENT LIABILITIES

29,688

15,899 

11,267 

TOTAL LIABILITIES 

79,127

53,169 

54,407 

EQUITY:

 

 

 

Capital and reserves attributable to equity
holders of the Company:

 

 

 

Share capital

2,801

2,798 

2,800 

Capital reserves

28,828

28,558 

28,781 

Transaction with non-controlling interest

(416)

(259)

(416)

Currency translation reverse

(7,751)

(6,344)

(7,380)

Retained earnings

33,725

32,732 

33,574 

 

57,187

57,485 

57,359 

NON-CONTROLLING INTERESTS

3,063

2,300 

2,916 

TOTAL EQUITY

60,250

59,785 

60,275 

TOTAL LIABILITIES AND EQUITY

139,377

112,954 

114,682 

 

 

 

 

 

 

 

 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2019

 

 

Six months ended

Year ended

 

June 30

December 31,

 

2019

2018

2018

 

(Unaudited)

(Audited)

 

U.S dollars in thousands
except per share data

       

 

Revenue

58,387

56,245 

113,923 

 

Cost of sales

35,507

*32,498 

*65,936 

 

Gross Profit

22,880

23,747 

47,987

 

Research and development, net

1,766

1,854 

3,644 

 

Selling and marketing costs

13,995

*14,222 

*28,778

 

Administrative and general expenses

4,682

4,626 

9,489 

 

Other gains

(42)

(31)

(64)

 

Operating Profit

2,479

3,076 

6,140 

 

Finance income

534

122 

510 

 

Finance costs

(2,066)

(1,028)

(1,814)

 

Finance income (costs), net

(1,532)

(906)

(1,304)

 

Profit (loss) before income taxes

947

2,170 

4,836 

 

Income tax expense

402

481 

1,074 

 

Profit for the period

545

1,689 

3,762 

 

 

 

 

Other comprehensive income (loss)-

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

Re-measurements of post-employment benefit obligations

-,-

-,- 

 

Items that may be subsequently reclassified to profit or loss:

 

 

 

 

Currency translation differences

(618)

(1,582)

(2,886)

 

Other comprehensive loss for the period

(618)

(1,582)

(2,887)

 

Total comprehensive income (loss) for the period

(73)

107 

875 

 

Profit attributable to:

 

 

 

 

Equity holders of the Company

151

1,278 

2,294 

 

Non-controlling interests

394

411 

1,468 

 

 

545

1,689 

3,762 

 

Total comprehensive income (loss) attributable to:

 

 

 

 

Equity holders of the Company

(220)

140 

119 

 

Non-controlling interest

147

(33)

756 

 

 

(73)

107 

875 

 

 

 

 

U.S dollars

Earnings per share attributable to the equity

 

 

 

holders of the company during the period:

 

 

 

Basic

0.026

0.056

0.101

Diluted

0.026

0.056

0.100

             

 

*Restated for reclassification of certain expenses from 'cost of sales' to 'selling and marketing'. No restatement has been made for IFRS 16 in the 2018 comparative periods.

(Continued) - 1

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2019

 

 

 

 

Attributable to owners of the parent

 

 

 

 

 

 

Transaction with

 

 

 

 

 

Number of

Share

Capital

Currency translation

non-controlling

Retained

 

Non-controlling

Total

 

shares

capital

reserve

reserve

interest

earning

Total

interest

equity

 

 

U.S dollars in thousands

BALANCE AT JANUARY 1, 2019 (audited)

 

 

 

 

 

 

 

 

 

CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2019 (unaudited):

22,679,112

2,800

28,781

(7,380)

(416)

33,574

57,359

2,916

60,275

Comprehensive income:

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

 

 

 

151

151

394

545

Currency translation differences

 

 

 

(371)

 

 

(371)

(247)

(618)

TOTAL COMPREHENSIVE INCOME

 

 

 

(371)

 

151

(220)

147

(73)

Transaction with owners:

 

 

 

 

 

 

 

 

 

Recognition of compensation related employee stock and option grants

 

 

48

 

 

 

48

 

48

Exercise of options

8,563

1

(1)

 

 

 

-,- 

 

-,- 

TOTAL TRANSACTIONS WITH OWNERS

8,563

1

47

 

 

 

48

 

48

BALANCE AT JUNE 30, 2019 (unaudited)

22,687,675

2,801

28,828

(7,751)

(416)

33,725

57,187

3,063

60,250

 

 

 

 

 

(Continued) - 2

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2019

 

 

 

 

Attributable to owners of the parent

 

 

 

 

 

 

Transaction with

 

 

 

 

 

Number of

Share

Capital

Currency translation

non-controlling

Retained

 

Non-controlling

Total 

 

shares

capital

reserve

reserve

interest

earning

Total

interest

equity

 

 

U.S dollars in thousands

BALANCE AT JANUARY 1, 2018 (audited)

22,663,651

2,798

28,547

(5,206)

(259)

32,089

57,969 

2,606 

60,575 

CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2018 (unaudited):

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

 

 

 

1,278

1,278 

411 

1,689 

Currency translation differences

 

 

 

(1,138)

 

 

(1,138)

(444)

(1,582)

TOTAL COMPREHENSIVE INCOME

 

 

 

(1,138)

 

1,278

140 

(33)

107 

Transaction with owners:

 

 

 

 

 

 

 

 

 

Recognition of compensation related employee stock and option grants

 

 

11

 

 

 

11 

 

11 

Dividend to a non-controlling interest

 

 

 

 

 

 

 

(273)

(273)

Dividend ($0.028 per share)

 

 

 

 

 

(635)

(635)

 

(635)

TOTAL TRANSACTIONS WITH OWNERS

 

 

11

 

 

(635)

(624)

(273)

(897)

BALANCE AT JUNE 30, 2018 (unaudited)

22,663,651

2,798

28,558

(6,344)

(259)

32,732

57,485 

2,300 

59,785 

                             

  

 

 

 

 (Concluded) - 3

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2019

 

 

 

Attributable to owners of the parent

 

 

 

U.S dollars in thousands

BALANCE AT JANUARY 1, 2018 (audited)

 

 

 

 

 

 

 

 

 

Comprehensive income (loss):

22,663,651

2,798

28,720 

(5,206)

(259)

31,916 

57,969 

2,606 

60,575 

Profit (loss) for the year

 

 

 

 

 

2,294 

2,294 

1,468 

3,762 

Currency translation differences

 

 

 

(2,174)

 

 

(2,174)

(712)

(2,886)

Remeasurement of net defined benefit liability

 

 

 

 

 

(1)

(1)

 

(1)

TOTAL COMPREHENSIVE INCOME (LOSS)

 

 

 

(2,174)

 

2,293 

119 

756 

875 

TRANSACTION WITH OWNERS:

 

 

 

 

 

 

 

 

 

Recognition of compensation related to Employee stock and options grants

 

 

63 

 

 

 

63 

 

63 

Exercise of options

15,461

2

(2)

 

 

 

 

 

-,- 

Acquisition of non-controlling interest

 

 

 

 

(157)

 

(157)

(173)

(330)

Dividend to non-controlling interest

 

 

 

 

 

 

 

(273)

(273)

Dividend ($0.028 per share)

 

 

 

 

 

(635)

(635)

 

(635)

TOTAL TRANSACTION WITH OWNERS

15,461

2

61 

 

(157)

(635)

(729)

(446)

(1,175)

BALANCE AT DECEMBER 31, 2018

22,679,112

2,800

28,781

(7,380)

(416)

33,574 

57,359 

2,916 

60,275 

                     

 

 

 

 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2019  

 

Six months ended

Year ended

 

 

June 30

December 31,

 

 

2019

2018

2018

 

 

(Unaudited)

(Audited)

 

 

U.S dollars in thousands

CASH FLOWS FROM OPERATING ACTIVITIES: 

 

 

 

Cash generated from operations (see note 1)

3,949

1,000 

1,114 

Interest paid

(156)

(523)

(455)

Interest received

38

118 

228 

Income tax received (paid)

(115)

(552)

(751)

Net cash generated from operating activities

3,716

43 

136 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Proceeds from sale of investment

-,-

-,- 

40 

Purchase of property, plant and equipment

(2,160)

(1,011)

(3,223)

Purchase of intangible assets 

(379)

(21)

(63)

Investments grants received

-,-

1,626 

1,626 

Restricted deposit

(1)

80 

212 

Proceeds from sale of property, plant and equipment

50

39 

44 

Net cash used in investing activities

(2,490)

713 

(1,364)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Receipt of long-term borrowings

4,267

3,037 

5,373 

Dividends paid to equity holders of the Company

-,-

(635)

(635)

Dividends paid to non-controlling interest

-,-

(273)

(273)

Acquisition of non-controlling interest

-,-

-,- 

(330)

Payments of lease liabilities

(1,554)

-,-

-,-

Payments of long-term borrowings

(3,786)

(3,528)

(7,505)

Increase in bank credit and short-term borrowing, net

613

109 

3,685 

Net cash generated used in financing activities

(460)

(1,290)

315 

 

 

 

 

EXCHANGE RATE GAIN (LOSS) ON CASH AND CASH EQUIVALENTS

(237)

(1,013)

(1,683)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

529

(1,547)

(2,596)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

13,526

16,122 

16,122 

CASH AND CASH EQUIVALENTS AT END OF PERIOD 

14,055

14,575 

13,526 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

AMIAD WATER SYSTEMS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

1)    CASH FLOWS FROM OPERATIONS:

 

 

 

2019

2018

2018

       

 

Profit for the period

545

1,689 

3,762 

 

(a) Adjustments to reconcile net income to net cash    

 

 

 

 

generated from operating activities:

 

 

 

 

Depreciation and amortization

3,065

1,082 

2,864 

 

Interest paid

156

523 

455 

 

Interest received

(38)

(118)

(228)

 

Income taxes paid, net

115

552 

751 

 

Share-based payment, net

48

11 

63 

 

Increase in deferred income taxes, net

163

(139)

(299)

 

Accrued severance pay, net

47

19 

50 

 

Exchange rate differences and interest accrued on borrowings and other liabilities

1,208

265 

237 

 

Gain from sale of investment

-,-

-,- 

(30)

 

Loss (Profit) from sale of property, plant and equipment

(26)

(25)

(30)

 

Decrease (Increase) in assets at fair value

 

 

 

 

through profit or loss

(264)

271 

152 

 

 

4,474

2,441 

3,985 

 

Changes in working capital:

 

 

 

 

Decrease (increase) in accounts receivable:

 

 

 

 

            Trade

(4,328)

1,614 

(245)

 

            Other

(113)

(566)

(1,435)

 

Decrease (increase) in long-term receivable

208

(225)

(230)

 

Increase (Decrease) in accounts payable:

 

 

 

            Trade

1,874

(1,029)

(21)

 

            Other

(348)

(800)

(1,236)

 

 Decrease (increase) in inventories

1,637

(2,124)

(3,466)

 

 

(1,070)

(3,130)

(6,633)

 

     Cash generated from operations

3,949

1,000 

1,114 

 

           

 

 

 

2)   INITIAL IMPLEMENTATION OF NEW STANDARDS

 

IFRS 16 replaced the guidance in IAS 17, Leases ("IAS 17") upon initial application. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases, and have material impact mainly on the accounting treatment applied by the lessee in a lease transaction.

 

IFRS 16 changes the existing guidance in IAS 17 and requires lessees to recognize a lease liability that reflects the discounted value of future lease payments and a "right of use asset" in all lease contracts (except for the following exemption), with no distinction between financing and capital leases. However, IFRS 16 permits the lessee to elect not to apply these provisions for short-term leases, according to groups of underlying assets, and for leases where the underlying assets has a low value. 

 

IFRS 16 also changes the definition of "a lease" and the manner of assessing whether a contract contains a lease.

 

IFRS 16 requires a lessee to account for each lease component in a contract separately from non-lease components. However, as a practical expedient, IFRS 16 permits the lessee to choose, according to groups of an underlying asset, not to separate non-lease components from lease components, and instead to account for all the lease components and associated non-lease components as one lease.

 

For lessors, the guidance in IFRS 16 is similar to that in IAS 17, such that the lessors will continue to classify leases as operating leases or financing leases, similar to the guidance in IAS 17.

 

The Company applied IFRS 16 as from January 1, 2019.

 

For agreements in which the Group is the lessee, the Company elected to apply the standard for the first time by recognizing lease liabilities, for leases previously classified as operating leases, based on the present value of the remaining lease payments, discounted at the incremental interest rate of the lessee as at the date of initial application. Concurrently, the Company recognized a right-of-use asset at the same amount of the liability, adjusted for any prepaid or accrued lease payments. Therefore, application of the standard did not have an effect on the balance of retained earnings as of January 1, 2019.

 

It should be noted that as part of the initial application of the standard, the Company chose to apply the following practical expedients:

 

-    To apply this Standard to contracts that were previously identified as leases applying IAS 17 Leases and IFRIC 4 Determining whether an Arrangement contains a Lease and not to apply this Standard to contracts that were not previously identified as containing a lease applying IAS 17 and IFRIC 4

-    To apply a single discount rate to a portfolio of leases with reasonably similar characteristics.

-    To rely on a previous assessment of whether a contract is onerous in accordance with IAS 37 at the transition date, as an alternative to assessing impairment of right-of-use assets.

-    Not applying IFRS 16 with respect to leases that end within 12 months from the date of initial application and leases where the underlying asset has a low value.

-    Using hindsight when determining the lease term if the contract includes an extension or termination option.

-    Excluding initial direct costs from measurement of the right-of-use asset at the date of initial application.

 

 

 

The impact of initial implementation the IFRS 16 on the Company's statement of financial position as of January 1, 2019:

 

In accordance

 

In accordance

 

with the new

Initial

With the

 

policy

implementation

previous policy

 

U.S. dollars in thousands

 

 

 

 

Non-current assets:

17,578

17,578

-

Assets

 

 

 

 

 

 

 

current liabilities:

2,732

2,732

 

Current maturities of long-term liabilities

 

 

 

 

 

 

 

non-current liabilities:

14,846

14,846

-

Other liabilities

17,578

17,578

-

 

 

 

 

 

 

 

The book value of right of use assets as of the reporting date by groups of the underlying asset:

 

 

 

June 30, 2019

 

January 1, 2019

 

U.S. dollars in thousands

 

 

 

Buildings

18,565

16,175

Vehicles and other

2,938

1,403

Total right of use assets

21,503

17,578

 

 

The table below represents the accumulated effect of the initial implementation of IFRS 16 on the income statement for the six-month period ended 30, June 2019.

 

In accordance

 

In accordance

 

with the new

Initial

With the

 

policy

implementation

previous policy

 

U.S. dollars in thousands

 

2,479

250

2,229

Impact on Operating profit

1,532

1,198

334

Impact on Financing expenses

545

(868)

1,413

Impact on Net profit

 

 

 

The table below represents the accumulated effect of the initial implementation of IFRS 16 on the cash flows for the six-month period ended 30, June 2019.

  

 

In accordance

 

In accordance

 

with the new

Initial

With the

 

Policy

implementation

previous policy

 

U.S. dollars in thousands

 

 

 

 

 

3,716

1,554

2,162

Cash flows from operating activities

(460)

(1,554)

1,094

Cash flows from (used in)  financing activities

 

 

 

 

 

 

 

 

 
 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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