RNS Number:1902V
Amiad Filtration Systems Ltd
06 December 2005
6 December 2005
Amiad Filtration Systems Ltd
("Amiad" or "the Company")
Results for the Nine Months to 30 September 2005
Amiad, a producer and global supplier of water filters and filtration systems
for the industrial & municipal and the irrigation markets announces third
quarter and nine month results to 30 September 2005. These results cover the
trading period prior to the Company's admission to the Alternative Investment
Market on 5 December 2005.
Key Highlights
* Turnover rose 18% to $33m (9 months, 2004: $28m)
* Operating income up 75% to $4.25m (9 months, 2004: $2.43m)
* Profit before tax increased 48% to $3.25m (9 months, 2004: $2.20m)
* Basic and fully diluted earnings per share increase 77% to 16 cents
(9 months, 2004: 9 cents)
* Entered into 50% joint venture with Yixing Taixing Environtec Co Ltd (China)
* Raised #6.5m before expenses for the Company through admission to AIM
in December 2005
Commenting on the results, Yossi Katz, Chief Executive of Amiad said: "Trading
in the nine months to September 2005 was in line with the management's
expectations. The strong start in the first two quarters has continued into the
third quarter.
"Continued demand for the Company's automatic filters means that it is
positioned for a strong finish for the year. The Directors are confident about
the Group's prospects for the current financial year."
Enquiries:
Amiad Filtration Systems
Yossi Katz, Chief Executive Officer +972 (0) 4 690 9500
Itamar Eder, Chief Financial Officer
Corfin Communications
Harry Chathli, Neil Thapar + 44 (0) 207 929 8989
Overview
Amiad made significant progress in the nine months to 30 September 2005. Amiad
increased its revenues by 18% to $33 million (9 months, 2004: $28m) and profit
before tax increased by 48% to $3.25 million (9 months, 2004: $2.20m). If the
non-recurring expenses, management fees payable to the shareholders, which were
terminated on Admission, and amortization of non-tangible assets were excluded,
the profit before tax was $2.8m.
The results reflect continued strong demand for automatic filters specifically
in Mexico and Central America, Spain and China. Over 85% of the Company's
revenues are generated outside Israel. Amiad's automatic filters require low
maintenance and can be adapted to provide bespoke solutions to a wide range of
applications in industries including, steel, power, oil and gas, pulp and paper,
in addition to a wide variety of other applications in the irrigation market.
Amiad now sells its products worldwide to over 60 countries across the Americas,
Africa, Europe, Asia and Australasia.
The gross margin for nine months to 30 September 2005 was 49.8%
(9 months 2004: 49.3%). Also, as expected the gross margin in the third quarter
fell marginally to 45.8% (third quarter 2004: 48.7%) due to maturing projects
and a change of product mix. Margins are expected to recover for the last
quarter of the year.
In July 2005, the Company increased to 50 per cent. its stake in Yixing Taixing
Environtec Co. Ltd, a Chinese affiliate, which will allow it to accelerate sales
in the rapidly growing Chinese market and lower the cost of manufacturing of
steel manual and automatic filters.
In the year to date the Company has identified a number of key market segments
that are expected to experience strong market growth due to increasing demand
for clean water or higher environmental standards. The Company made significant
progress in these markets including ballast water for shipping and oil and gas.
The Company intends to increase substantially its presence in the provision of
small to medium sized complete drinking water treatment systems by leveraging
its market position and aims to achieve this through corporate activity, such as
mergers and acquisitions. This market is currently estimated to be worth
approximately US$1 billion per annum.
On 5 December 2005, the Company was admitted to AIM. The main rationale for the
float was to enable the Company to focus on high growth territories in China,
India, Mexico, Africa and Eastern Europe.
Earnings Per Share
The Directors of Amiad would like to clarify that the earnings per share figures
disclosed in the Final Admission Document reflect the actual number of shares
that were outstanding as of June 30, 2005 and the three previous financial
years ended December 31, 2002, 2003 and 2004 before the share split and bonus
share issue that occurred on November 27, 2005. It has come to their attention
that footnote 28(f) on page 47 of the Admission Document indicates that the
earnings per share calculation reflected these post balance sheet events which
is not the case. In accordance with IFRS, earnings per share for historical
periods should have reflected the post-balance sheet events, namely the share
split and the bonus share issue. Taking into account these adjustments, earnings
per share would have been calculated using a figure of 13,826,758 shares in
issue. Using this revised figure, the historical earnings per share figures
would have been as follows:
Adjusted Basic and Fully Diluted Earnings Per Share
---------------- ---------------------------
Six months ended Year ended
June 30 December 31
---------------- ---------------------------
2005 2004 2004 2003 2002
------ ------ ------ ------ ------
EPS - restated 0.11 0.06 0.11 0.08 0.07
Going forward, following the issue of 5,045, 965 new shares in the initial
public offering, basic earnings per share calculations will take into account
the share split, bonus issue and new shares issued. As of today, the number of
outstanding shares issued, after taking into account these adjustments, is
18,872,723. Under IFRS, for the year ended December 31, 2005, basic earnings per
share will be calculated based on the weighted average number of shares
outstanding during the year.
Outlook
Trading in the nine months to September 2005 was in line with the management's
expectations. The strong start in the first two quarters has continued into the
third quarter. Continued demand for the Company's automatic filters means that
it is positioned for a strong finish for the year. The Directors are confident
about the Group's prospects for the current financial year.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September 30, December 31,
2005 2004
---------- ----------
Unaudited Audited
---------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 2,600 2,004
Marketable securities 77 307
Trade receivables 14,792 11,055
Other accounts receivable 1,396 1,078
Inventories 8,185 8,483
---------- ----------
Total current assets 27,050 22,927
---------- ----------
NON-CURRENT ASSETS:
Loan to a jointly controlled entity - 256
Loans to a related party 376 400
Severance pay fund 531 538
Long-term receivables 102 228
Fixed assets, net 2,683 2,544
Other assets, net 2,656 2,872
Deferred taxes 834 696
---------- ----------
Total non-current assets 7,182 7,534
---------- ----------
TOTAL ASSETS 34,232 30,461
========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Credit from banks and others 8,531 5,866
Trade payables 5,293 6,002
Other accounts payable 4,458 4,454
---------- ----------
Total current liabilities 18,282 16,322
---------- ----------
NON-CURRENT LIABILITIES:
Liabilities to banks and others 4,472 4,319
Accrued severance pay 521 571
Deferred taxes 663 712
---------- ----------
Total non-current liabilities 5,656 5,602
---------- ----------
TOTAL LIABILITIES 23,938 21,924
---------- ----------
EQUITY
Equity attributable to equity holders of the
parent 10,035 8,299
Minority interest 259 238
---------- ----------
TOTAL EQUITY 10,294 8,537
---------- ----------
TOTAL LIABILITIES AND EQUITY 34,232 30,461
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except per share data)
----------------- ------------------
Nine months ended Three months ended Year ended
September 30, September 30, December 31,
----------------- ------------------
2005 2004 2005 2004 2004
-------- ------- -------- ------- ------------
Unaudited Unaudited Audited
----------------- ------------------ ------------
Revenues from sales 33,029 28,006 11,261 9,087 36,934
Cost of sales 16,585 14,193 6,102 4,662 18,376
------- ------- ------- ------ --------
Gross profit 16,444 13,813 5,159 4,425 18,558
------- ------- ------- ------ --------
Selling and marketing
expenses 7,880 6,826 2,589 2,280 9,774
General and
administrative expenses 4,062 4,248 1,301 1,619 5,562
Amortization of other
assets 254 309 85 103 411
------- ------- ------- ------ --------
12,196 11,383 3,975 4,002 15,747
------- ------- ------- ------ --------
Operating income 4,248 2,430 1,184 423 2,811
Financial expenses
(income), net 848 238 225 (210) 249
Other income
(expenses), (146) 10 229 26 23
net ------- ------ ------- ------ --------
Income before taxes on
income 3,254 2,202 1,188 659 2,585
Taxes on income 968 949 385 266 864
------- ------ ------- ------ --------
Net income 2,286 1,253 803 393 1,721
======= ====== ======= ====== ========
Attributable to:
Equity holders of the
parent 2,325 1,289 795 413 1,671
Minority interest (39) (36) 8 (20) 50
------- ------ ------- ------ --------
2,286 1,253 803 393 1,721
======= ====== ======= ====== ========
======= ====== ======= ====== ========
Basic and diluted
earnings per share
(in U.S.dollars) 0.16 0.09 0.06 0.03 0.11
- see also Note 4
======= ====== ======= ====== ========
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Attributable to equity holders of the parent
---------------------------------------------------------
Share Capital Perpetual Foreign currency
capital reserves debenture translation
reserve
-------- --------- ---------- ----------
Audited
---------
Balance at
January 1,
2004 1,497 1,020 2,824 41
Interest on
perpetual
debenture - - - -
Exchange
differences
on
perpetual
debenture - - 47 -
Currency
translation
differences - - - (2)
Dividend - - - -
Net income - - - -
------- -------- --------- ---------
Balance at
December
31, 2004 1,497 1,020 2,871 39
Unaudited
-----------
Interest on
perpetual
debenture - - - -
Exchange
differences
on
perpetual
debenture - - (181) -
Currency
translation
differences - - - (38)
Dividend - - - -
Changes in
minority
interest
upon the sale
of investment
in a company - - - -
Net income - - - -
------- ------- -------- --------
Balance at
September
30, 2005 1,497 1,020 2,690 1
======= ======= ======== ========
Unaudited
-----------
Balance at
January 1,
2004 1,497 1,020 2,824 41
Interest on
perpetual
debenture - - - -
Exchange
differences
on
perpetual
debenture - - (64) -
Currency
translation
differences - - - 45
Dividend - - - -
Changes in
minority
interest
from the
investment
in a company - - - -
Net income - - - -
------- ------- ------- --------
Balance at
September
30, 2004 1,497 1,020 2,760 86
======= ======= ======= ========
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands - Continued
Attributable
to equity
holders of
the parent
-----------
-------- --------- -------- ---------
Retained earnings Total Minority Total Total
interest equity recognized
income
(expense) *)
----------- -------- --------- -------- ---------
Audited
---------
Balance at
January 1,
2004 1,734 7,116 188 7,304
Interest on
perpetual
debenture (113) (113) - (113) -
Exchange
differences
on
perpetual
debenture (47) - - - -
Currency
translation
differences - (2) - (2) (2)
Dividend (373) (373) - (373) -
Net income 1,671 1,671 50 1,721 1,671
---------- -------- -------- -------- ---------
Balance at
December
31, 2004 2,872 8,299 238 8,537 1,669
=========
Unaudited
-----------
Interest on
perpetual
debenture (81) (81) (81) -
Exchange
differences
on
perpetual
debenture 181 - - - -
Currency
translation
differences - (38) - (38) (38)
Dividend (470) (470) (36) (506) -
Changes in
minority
interest
upon
the sale of
investment
in a company - - 96 96 -
Net income 2,325 2,325 (39) 2,286 2,325
--------- -------- ------- ------- ---------
Balance at
September
30, 2005 4,827 10,035 259 10,294 2,287
========= ======== ======= ======= =========
Unaudited
-----------
Balance at
January 1,
2004 1,734 7,116 188 7,304 1,288
Interest on
perpetual
debenture (113) (113) - (113) -
Exchange
differences
on
perpetual
debenture 64 - - - -
Currency
translation
differences - 45 - 45 45
Dividend (373) (373) - (373) -
Changes in
minority
interest
from the
investment
in a company - - 35 35 -
Net income 1,289 1,289 (36) 1,253 1,289
--------- -------- ------- -------- ---------
Balance at
September
30, 2004 2,601 7,964 187 8,151 2,622
========= ======== ======= ======== =========
*) Attributable to equity holders of the parent.
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Nine months ended Nine months ended Year ended
September 30, September 30, December 31,
2005 2004 2004
--------- --------- ---------
Unaudited Unaudited Audited
--------- --------- ---------
Cash flows from operating activities:
-------------------------------------
Net income 2,286 1,253 1,721
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities (a) (3,840) (629) 92
--------- --------- ---------
Net cash provided by
(used in) operating
activities (1,554) 624 1,813
--------- --------- ---------
Cash flows from investing activities:
---------------------------------------
Purchase of fixed assets (891) (892) (1,151)
Investment grants
received 150 - 128
Acquisition of company
included according to the
proportionate
consolidation method (b) (517) - -
Increase in cash
resulting from transition
to full consolidation of
a company previously
included according to the
proportionate
consolidation method (d) 8 - -
Disposal of (investment
in) marketable securities 218 (243) (261)
Proceeds from sale of
fixed assets 16 40 46
Proceeds from the sale of
a subsidiary(c) 50 - -
Long-term loan granted to
a related party and
others (122) (55) (154)
Collection of long-term
loan granted to a related
party 65 43 57
--------- --------- ---------
Net cash used in
investing activities (1,023) (1,107) (1,335)
--------- --------- ---------
Cash flows from financing activities:
---------------------------------------
Dividends paid to the
minority interest (36) - -
Dividends paid to equity
holders of the parent (470) (373) (373)
Interest on perpetual
debenture (108) (109) (109)
Receipt of long-term
loans and other
liabilities 2,326 2,743 2,911
Repayment of long-term
loans (1,513) (1,328) (1,662)
Receipt of loans from
others - 214 233
Short-term credit from
banks, net 3,008 (938) (1,280)
--------- --------- ---------
Net cash provided by
(used in) financing
activities 3,207 209 (280)
--------- --------- ---------
Effect of exchange rate
changes on cash and cash
equivalents (34) 16 19
--------- --------- ---------
Increase (decrease) in
cash and cash equivalents 596 (258) 217
Cash and cash equivalents
at the beginning of the
period 2,004 1,787 1,787
--------- --------- ---------
Cash and cash equivalents
at the end of the period 2,600 1,529 2,004
========= ========= =========
Interest paid 595 287 490
========= ========= =========
Income taxes paid 1,241 416 530
========= ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Nine months ended Nine months ended Year ended
September 30, September 30, December 31,
2005 2004 2004
--------- --------- ---------
Unaudited Unaudited Audited
--------- --------- ---------
(a) Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
----------------------------------------------------------
Income and expenses not involving operating cash flows:
Depreciation and amortization 683 563 902
Deferred taxes, net (187) (320) (206)
Accrued severance pay, net (43) 16 (83)
Exchange rate differences on liabilities to banks and (29) (93) 235
other long-term liabilities
Loss on sale of fixed assets and other 38 15 15
Exchange rate differences on loans to related party and 77 (19) (19)
others --------- --------- ---------
539 162 844
--------- --------- ---------
Changes in operating assets and liabilities:
Increase in trade receivables (3,362) (3,745) (1,099)
Decrease (increase) in other accounts receivable (161) 163 (77)
Decrease (increase) in inventories 237 (1,587) (2,860)
Increase (decrease) in trade payables (1,000) 2,864 1,707
Increase (decrease) in other accounts payable (93) 1,514 1,577
--------- --------- ---------
(4,379) (791) (752)
--------- --------- ---------
(3,840) (629) 92
========= ========= =========
(b) Acquisition of company included according to the
proportionate consolidation method
----------------------------------------------------------
Working capital (excluding cash and cash equivalents) (321)
Long term loans 75
Fixed assets, net (271)
---------
(517)
=========
(c) Proceeds from the sale of a subsidiary
----------------------------------------
Working capital (excluding cash and cash equivalents) (434)
Fixed assets, net 484
---------
50
=========
(d) Increase in cash resulting from transition to full
consolidation of a company previously included according
to the proportionate consolidation method
----------------------------------------------------------
Working capital deficiency (excluding cash and cash 126
equivalents)
Fixed assets, net (118)
---------
8
=========
The accompanying notes are an integral part of the consolidated financial
statements.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:- GENERAL
a. These financial statements have been prepared in a condensed format as of
September 30, 2005 and for the nine months and three months then ended. These
financial statements should be read in conjunction with the Company audited
annual financial information and accompanying notes as of December 31, 2004,
included in the admission document dated November 29, 2005.
b. On December 5, 2005, the Company's shares were admitted to trading on AIM, a
market operated by the London Stock Exchange. Concurrently, the Company
completed an initial public offering (IPO) of 5,045,965 Ordinary shares at 129
pence ($2.24) per share. The total cash proceeds derived from the IPO (before
placement and other related costs) were $11.3 million. The placement expenses
are estimated to amount of approximately $ 1.7 million
In the framework of placement, a shareholder of the Company (Gaon Agro) sold
1,164,454 Ordinary shares.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a. The interim consolidated financial statements have been prepared in
accordance with International Financing Reporting Standards ("IFRS") in the
context of interim condensed financial standards. The significant accounting
policies and methods of computation applied in the preparation of the interim
financial statements are the same as those applied in the annual financial
information as of December 31, 2004.
b. Following are data regarding the exchange rates of certain foreign currencies
in relation to the U.S Dollar:
As of 1 Euro 1 AUD 1 NIS
----------------------- -------- -------- --------
US$
--- ---------------------
September 30, 2005 0.832 1.315 0.217
December 31, 2004 0.733 1.283 0.232
NOTE 3:- SIGNIFICANT EVENTS IN THE REPORTING PERIOD
a. On March 25, 2005, the Company resolved to pay a dividend in amount of $ 470
thousand. The dividend was paid in August 2005.
b. In April 2005, the Company reached an agreement with respect to final tax
assessments for the tax years until and including 2003. Due to this agreement,
an income tax benefit in respect of prior years was recorded in the financial
statements for the nine months period ended September 30, 2005, amounting to $
271 thousand, which was not included in prior years since their utilization was
uncertain.
c. In June 2005, the Company entered into a settlement agreement with a
plaintiff. Due to the settlement agreement, expenses of $ 300 thousand were
recorded in respect of payments to the plaintiff and other expenses relating to
the lawsuit. These expenses were included in other expenses in the statement of
income.
d. In July 2005, the Company, through its subsidiary in Singapore, purchased 50%
of a company in China for a total consideration of $ 1.4 million (a loan
previously granted to the company in China, was included as part of the cost of
shares).
e. On September 1, 2005, the Company signed an agreement with Plastro
Irrigation Ltd. ("Plastro"), which held until the said date 50% of the shares of
Amiad Australia Pty Ltd. ("Amiad Australia"). Pursuant to the agreement, Amiad
Australia transferred to Plastro all of its shares in a 50%-owned subsidiary,
PAP, and, in consideration, Plastro transferred to the Company all of its shares
in Amiad Australia. After implementation of the agreement, the Company holds
100% of the shares of Amiad Australia. The fair value of the shares received in
Amiad Australia approximated the carrying values of the PAP shares that were
transferred.
In addition, the parties agreed that the securities and guarantees that the
Company extended to PAP, and the securities and guarantees that Plastro extended
to Amiad Australia will be cancelled by no later than February 2006 .Each of the
parties agreed to indemnify the other party in respect to claims that are based
on the holdings of the other party in the shares that were sold in the framework
of the transaction.
f. On August 12, 2005, the Company granted to three senior employees, the
chairman of the board of directors and to Kibbutz Amiad options to purchase
386,682, 154,674 and 77,336 Ordinary Shares, respectively (adjusted for the
share split and bonus share-see Note 5(b)). The options were granted according
to the share option plan adopted by the Company on June 22, 2005. The options
granted were conditional on admission of the Company's shares on AIM. The
options to the senior employees were granted in the framework of the Company's
option plan that was submitted to the Israeli Tax Authorities, in accordance
with the provisions of Section 102 to the Israeli Income Tax Ordinance and the
remaining options were granted under the provision of section 3(i) of the
Israeli Income Tax Ordinance. The options vest over a period of four years
(except in the case of the CEO where the period is two years) and have an
exercise price of $ 1.53 per share. The options will be held during the vesting
period by a trustee and will be released in accordance with the terms of option
plan. Unexercised options expire 10 years after date of grant.
NOTE 3:- SIGNIFICANT EVENTS IN THE REPORTING PERIOD (Cont.)
f. (Cont.)
The accounting treatment in respect of the options is in accordance with the
provisions of IFRS 2, "Share-based payment", according to which the fair value
of the options on the date of the grant is recorded as compensation expense over
the vesting period with a corresponding increase in capital reserves in
shareholders' equity.
NOTE 4:- EARNINGS PER SHARE
As described in Note 5(b) below, the Company effected a split of the share
capital and approved bonus shares to the shareholders. Immediately before
admission, the number of outstanding Ordinary shares was 13,826,758 shares.
The earnings per share presented in these financial statements have been
adjusted retrospectively to reflect the share split and the bonus shares.
------------ ------------
Nine months ended Three months ended Year ended
September 30 September 30 December 31
------------ ------------
2005 2004 2005 2004 2004
------- ------- ------- -------
Unaudited Audited
----------- ---------
Actual weighted
average number of
outstanding
Ordinary shares as
of the respective
period (in
thousands) 5,743 5,743 5,743 5,743 5,743
Effect of split
and Bonus shares
(in thousands) 8,084 8,084 8,084 8,084 8,084
------- ------- ------- ------- --------
Number of shares
used for
calculation of
earnings per share
(in thousands) 13,827 13,827 13,827 13,827 13,827
======= ======= ======= ======= ========
Net income,
attributable to
shareholders of
the parent
according to the
statement of
income (US dollars
in thousands) 2,325 1,288 795 413 1,671
Less - interest on
perpetual
debenture (US
dollars in
thousands) (81) (81) (27) (27) (113)
------- ------- ------- ------- --------
2,244 1,207 768 386 1,558
======= ======= ======= ======= ========
Basic and diluted
earnings per share
(in US dollars) 0.16 0.09 0.06 0.03 0.11
======= ======= ======= ======= ========
NOTE 4:- EARNINGS PER SHARE (Cont.)
The earnings per share ("EPS") data reported on page 27 to the admission
document dated November 29, 2005 were not retrospectively adjusted of the
effects share split and the bonus shares as required by IFRS. The adjusted EPS
data for the periods reported in the admission document are as follows (in US
dollars):
-------------- -----------------------
Six month ended Year ended
June 30 December 31
-------------- -----------------------
2005 2004 2004 2003 2002
------- --------- -------- --------- ---------
Audited Unaudited Audited
------- --------- -----------------------
--------- ---------
EPS as reported 0.26 0.14 0.27 0.20 0.18
EPS as adjusted 0.11 0.06 0.11 0.08 0.07
Following the completion of the Company's IPO, the number of outstanding shares
increased by 5,045,965 shares.
NOTE 5:- EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
a. On November 9 and November 23, 2005, the Company distributed a dividend to
its shareholders in the amounts of NIS 10 million ($ 2.13 million) and NIS 760
thousand ($ 161 thousand), respectively.
These amounts were immediately extended as shareholders loans to the Company,
and will be repaid immediately upon the Company's IPO.
b. On November 27, 2005, the Company effected a split of the Company's share
capital such that each NIS 1 Ordinary Share was split into 2 Ordinary Shares of
NIS 0.5 par value each. In addition, the Company approved distribution of
2,339,704 Ordinary shares as bonus shares to any party that was a shareholder in
the Company on November 24, 2005.
Subsequent to the split and bonus shares, the number of outstanding shares
immediately before admission is 13,826,758. For the affect on the earnings per
share, see Note 4.
c. The following agreement, dated November 24, 2005 between the Company and its
shareholders, amends or terminates the respective agreements as described in
note 26 of the financial information of the Company as of June 30, 2005:
(1) Addendum to a sublease agreement between the Company, Kibbutz Amiad and
Amiad Filtration System LLP. According to the addendum, the monthly rate is US$
32 Thousand. The rent is reviewed every 3 years. The term of the sublease is 10
years with an option to extend until December 31, 2022.
NOTE 5:- EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE (Cont.)
(2) Termination agreements dated November 24, 2005. It was agreed that the
management agreements with the Kibbutz, the indemnification agreements with the
Kibbutz in the event of dissolution, the consulting agreements with Gaon Agro
and the investment agreement with Gaon Agro will be cancelled upon the
completion of the Company's IPO.
In addition, the perpetual debenture that the Company issued to Gaon Agro will
be converted into additional paid-in capital and, therefore, the interest
payment in respect thereof will be ceased.
As of the date of approval of these financial statements, the Company completed
the admission and all these agreements came into force and effect.
(3) Addendum to a manpower agreement dated November 24, 2005 between the Company
and Kibbutz Amiad pursuant to which the Kibbutz agrees to provide the Company
with manpower services. The term of the agreement is 10 years commencing on
October 1, 2005. The agreement is automatically renewable for additional 10
years each, unless either party notifies the other of its intention not to renew
the term of the agreements six month prior to the end of the agreement. The
Kibbutz may terminate the agreement by a six month written notice at any time.
Upon termination all personnel supplied by the kibbutz, may become the Company
employees. The cost of the manpower services under the agreement will be paid
monthly based on a formula which varies depending on the number of workers and
the function each worker undertake in the Company.
(4) Addendum to a service agreement dated November 24, 2005 between the Company
and Kibbutz Amiad pursuant to which the Kibbutz agrees to provide the Company
with various services including utilities, maintenance etc. The term of the
agreement is 10 years commencing on October 1, 2005. The agreement is
automatically renewable for additional 10 years each, unless either party
notifies the other of its intention not to renew the term of the agreements six
month prior to the end of the agreement. In accordance with the addendum, the
cost of services was updated to $ 12 thousand per month from $ 16 thousand per
month.
NOTE 6:- TAXES ON INCOME
On July 25, 2005 the Knesset enacted the Law for Amendment of the Income Tax
Ordinance (Amendment No. 147), 2005 ("the Law"). The Law determines, inter alia,
that the corporate tax rate will be reduced gradually as follows: 2006 - 31%;
2007 - 29%; 2008 - 27%; 2009 - 26%; 2010 and onward - 25%.
The effect of the Law on the financial statements for the periods ended
September 30, 2005 was not material.
- - - - - - - - - - -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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