RNS Number:4061I
Amiad Filtration Systems Ltd
04 September 2006
4 September 2006
Amiad Filtration Systems Ltd
("Amiad" or "the Company")
Results for the six months to 30 June 2006
Amiad, the producer and global supplier of water filters and filtration systems
for the industrial, municipal and the irrigation markets announces its interim
results for the six months to 30 June 2006.
Financial Highlights
* Turnover was $22.0m (H1 2005: $21.8m)
* Profit before tax was $2.2m (H1 2005: $2.1m)
* Gross margins maintained at 50.3%
* Fully diluted earnings per share 7.8 cents
* Interim dividend of 2.385 cents (gross)
Operational Highlights
* Strong finish to first half of 2006 reflecting the demand for its automatic
filters;
* Downturn in irrigation offset by good growth in industrial & municipal segment
in USA, China, Australia, Singapore and France;
* Solid progress in high growth territories;
* Significant interest in Amiad's filters for pre-filtration of membrane
systems, including for desalination projects;
* No material impact of conflict in Middle East
Commenting on the results, Yossi Katz, Chief Executive of Amiad said:
"The market for Amiad's products continues to expand with greater global
investments in infrastructure. The Company saw a strong finish to the first
half, especially in the industrial & municipal segment, with increased interest
in the Company's new products serving this segment. As these products have a
longer sales cycle, they are hoped to have a significant contribution to the
Company's sales in the future.
Amiad entered the second half of 2006 with good momentum and, if this is
maintained until the end of the year, would expect to report higher revenues
for this period compared with equivalent period last year."
Enquiries:
Amiad Filtration Systems
Yossi Katz, Chief Executive Officer + 44 (0) 207 929 8989 on the day and
Itamar Eder, Chief Financial Officer +972 (0) 4 690 9500 thereafter
Corfin Communications
Harry Chathli, Neil Thapar + 44 (0) 207 929 8989
Operational Review
The Board is pleased to report that the Company has continued to build on the
good progress made in 2005. Revenues for the six months ended 30 June 2006 were
$22.0m (H1 2005: $21.8m), reflecting demand for its automatic filters. As
indicated in the trading update of 26 July 2006, all operations of Amiad are now
profitable.
At the beginning of the year, sales in the irrigation segment were affected by
seasonality associated with farming patterns mainly in Spain, USA and Africa.
Downturn in the irrigation segment was offset by good growth in the industrial
& municipal segment in USA, China, Australia, Singapore and France.
The Company made further progress within high growth territories. In China, the
Company was successful in penetrating the municipal segment, mainly with
pre-filtration products, and also the petrochemical industries. In India,
through its new distributor for industrial & municipal products, the Company has
already trebled its sales. In Russia the Company also won its first drinking
water project.
Other key projects have been in Brazil (offshore oil & gas), in Malaysia
(drinking water) and in France (pre-filtration). The Company is currently
conducting field tests in Thailand, Singapore, Japan and Israel for municipal
drinking water. In Korea the company supplied its first ballast water treatment
product for field tests. In Aberdeen it is conducting field tests for injection
and produced water - for the offshore oil and gas application
Amiad has seen a significant interest in the Company's filters for
pre-filtration of membrane systems, including for desalination projects. The
Company's new thread filter product, first introduced late 2005 has attracted
interest from major customers globally.
Financial review
Revenue for the six months ended 30 June 2006 was $22.0m (H1 2005: $21.8m).
Profit before tax increased by 5.4% to $2.2m (H1 2005: $2.1m). Fully diluted
earnings per share were 7.8 cents. Gross margins were 50.3% which is in line
with full year 2005 gross margins of 50.2%. The Company is facing pressure on
its gross margins reflecting the increase in prices of raw materials due to the
high oil prices and increased competition in the marketplace.
The Company increased its sales and marketing effort globally but continued to
keep a tight control over administrative and general expenses.
Operating profit decreased by 5.5% to $2.5m compared with $2.7m in the
equivalent period primarily due to the increased cost of sales and increased
sales and marketing costs.
Net cash, cash equivalent and marketable securities as of 30 June 2006 amounted
to $6.2m. Cash from operations was positive $0.2m compared to negative $2.1m in
the first half of 2005.
Dividend
The Directors decided to distribute dividends from the Company's profits for the
six months ended 30 June 2006, of approximately 2.385 cents (USD, gross) per
share, with an ex dividend date of 4 October 2006 record date of 6 October 2006
and payment date of 6 November 2006.
Outlook
The market for Amiad's products continues to expand with greater global
investments in infrastructure. The Company saw a strong finish to the first
half of 2006, especially in the industrial & municipal segment, with increased
interest in the Company's new products serving this segment. As these products
have a longer sales cycle, they are hoped to have a significant contribution to
the Company's sales in the future.
Amiad entered the second half of 2006 with good momentum and if this is
maintained until the end of the year, would expect to report higher revenues for
this period compared with the equivalent period last year.
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2006
30 June 31 December
2006 2005 2005
$ in thousands
Assets (Unaudited) (Audited)
CURRENT ASSETS:
Cash and cash equivalents 4,537 2,900 7,692
Marketable securities 1,688 77 4
Accounts receivable and accruals:
Trade 16,523 14,601 14,467
Other 1,456 1,159 1,250
Inventories 8,769 8,797 8,210
Total current assets 32,973 27,534 31,623
NON-CURRENT ASSETS:
Loan to jointly controlled entity - 241 -
Loan to a related party 503 398 411
Fixed assetes 2,433 2,783 2,613
Other assets, net 2,447 2,703 2,618
Long term receivables 548 112 94
Deferred income tax assets 708 891 1,128
Severance pay assets 581 532 558
Total non-current assets 7,220 7,660 7,422
Total assets 40,193 35,194 39,045
Abraham Heifetz Yosef Katz Itamar Dov Eder
Chairman of the Board CEO and Director CFO and Director
Date of approval of the financial statements: 31 August, 2006
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2006
30 June 31 December
2006 2005 2005
$ in thousands
(Unaudited) (Audited)
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Short-term credit from bank and other and
current maturities of long-term bank loans 7,646 8,620 6,348
Accounts payable and provisions:
Trade 6,688 6,839 5,833
Other 2,453 4,078 2,579
Income tax liability 629 870
Total current liabilities 17,416 19,537 15,630
NON-CURRENT LIABILITIES:
Loans from banks and other
(net of current maturities) 2,761 4,879 3,601
Severance pay obligations 637 558 519
Deferred taxes 565 700 629
Total non-current liabilities 3,963 6,137 4,749
Total liabilities 21,379 25,674 20,379
SHAREHOLDERS' EQUITY
Capital and reserves attributable to the
Company's equity holders:
Share capital 2,291 1,497 2,291
Capital reserve 12,797 1,020 12,797
Perpetual debenture - 2,704 -
Currency translation reserve 134 99 123
Retained earnings 3,294 4,045 3,190
18,516 9,365 18,401
MINORITY INTEREST 298 155 265
Total shareholders' equity 18,814 9,520 18,666
Total liabilities and shareholders' equity 40,193 35,194 39,045
The notes on pages 11 to 16 are an integral part of these condensed financial
statements.
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2006
6 months ended Year ended
30 June 31 December
2006 2005 2005
$ in thousands
except per share data
(Unaudited) (Audited)
Revenue 22,045 21,768 42,406
Cost of sales 10,946 10,483 21,139
Gross profit 11,099 11,285 21,267
Selling and marketing costs 5,680 5,291 10,571
Administrative and general expenses 2,699 2,761 5,471
Amortization of other assets 170 169 340
Other expenses, net 8 375 1
Operating profit 2,542 2,689 4,884
Financial expenses 364 623 822
Profit before income tax 2,178 2,066 4,062
Taxes on income 618 583 1,151
Profit for the period 1,560 1,483 2,911
Attributable to:
Equity holders of the Company 1, 491 1,530 2,943
Minority interest 69 (47) (32)
1, 560 1,483 2,911
$
Earnings per share attributable to the equity
holders of the Company during the period
(See note 3e):
Basic 0.079 0.107 0.200
Diluted 0.078 0.107 0.200
The notes on pages 11 to 16 are an integral part of these consolidated financial
statements.
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2006
Attributable to equity holders of the Company
Share Capital Perpetual Currency Retained Minority Total
capital reserve debenture translation earning interest share-
reserve holders
equity
$ in thousands
BALANCE
AT 1 JANUARY
2006
(audited) 2,291 12,797 - 123 3,190 265 18,666
Currency
translation
differences - - - 11 - - 11
Dividend - - - - (1,455) - (1,455)
Dividend
to minority - - - - - (36) (36)
Share-based
payment - - - - 68 - 68
Profit for
the period - - - - 1,491 69 1,560
BALANCE AT
30 JUNE 2006
(unaudited) 2,291 12,797 - 134 3,294 298 18,814
BALANCE AT
1 JANUARY 2005
(audited) 1,497 1,020 2,871 39 2,872 238 8,537
Interest on
perpetual
debenture** - - - (54) - (54)
Exchange
differences
on perpetual
debenture - - (167) - 167 - -
Currency
translation
differences - - - 60 - - 60
Dividend - - - - (470) - (470)
Dividend
to minority - - - - - (36) (36)
Profit for
the period - - - - 1,530 (47) 1,483
BALANCE AT
30 JUNE 2005
(unaudited) 1,497 1,020 2,704 99 4,045 155 9,520
** See note 3c
The notes on pages 11 to 16 are an integral part of these condensed financial
statements.
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2006
Attributable to equity holders of the Company
Share Capital Perpetual Currency Retained Minority Total
capital reserve debenture translation earning interest share-
reserve holders
equity
$ in thousands
BALANCE
AT 1 JANUARY
2005 1,497 1,020 2,871 39 2,872 238 8,537
(audited)
Net proceeds
from
issuance 545 8,730 - - - - 9,275
of shares
in IPO*
Deferred
taxes in
respect of - 621 - - - - 621
IPO costs*
Interest
on perpetual
debenture** - - - - (81) - (81)
Exchange
differences
on perpetual
debenture - - (196) - 196 - -
Conversation
of
perpetual - 2,675 (2,675) - - - -
debenture**
Currency
translation
differences - - - 84 - - 84
Dividend - - - - (2,804) - (2,804)
Dividend
to minority - - - - - (36) (36)
Changes in
minority
interest - - - - - 95 95
upon the sale of
investment in a
company
Issuance of
bonus shares 249 (249) - - - - -
Share-based
payment - - - - 64 - 64
Net income - - - - 2,943 (32) 2,911
BALANCE
AT 31 DECEMBER
2005 2,291 12,797 - 123 3,190 265 18,666
(audited)
* See note 3b
** See note 3c
The notes on pages 11 to 16 are an integral part of these condensed financial
statements.
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2006
6 months ended Year ended
30 June 31 December
2006 2005 2005
$ in thousands
(Unaudited) (Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 1,560 1,483 2,911
Adjustments to reconcile net income
to net cash (1,341) (3,577) (3,220)
used in operating activities (a)
Net cash generated from (used in) operating 219 (2,094) (309)
activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases fixed assets (202) (679) (1,041)
Purchases of other assets - (44)
Investments grants received 61 53 113
Disposal of (investment in) marketable
securities (1,679) 225 300
Acquisition of company included according to
proportionate consolidation method (b) - - (517)
Increase in cash resulting from transition to
full
consolidation of a company previously included - - 8
according
to the proportionate consolidation method (d)
Proceeds from sale of fixed assets 27 16 41
Proceeds from sale of a subsidiary (c) - - 50
Long-term loan granted to a related party and (543) (56) (284)
others
Collection of long-term loan granted to a related 28 34 268
party
Net cash used in investing activities (2,308) (407) (1,106)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of shares in IPO - - 9,275
Dividends paid to the minority interest (36) (36) (36)
Dividends paid to company's shareholders (1,455) - (2,804)
Interest on perpetual debenture - (81) (135)
Repayments of long term loans (981) (855) (1,928)
Receipt of long-term loans and other liabilities 29 1,636 1,964
Short-term credit from banks and other, net 1,356 2,640 840
Net cash generated from financing activities (1,087) 3,304 7,176
Effect of exchange rate changes on cash and cash
equivalents 21 93 (73)
NET INCREASE (DEREASE) IN CASH AND CASH
EQUIVALENTS (3,155) 896 5,688
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR 7,692 2,004 2,004
CASH AND CASH EQUIVALENTS AT
END OF THE PERIOD 4,537 2,900 7,692
Interest paid 281 326 823
Income taxes paid 1,327 804 1,643
The notes on pages 11 to 16 are an integral part of these condensed financial
statements.
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The interim financial statement as of 30 June 2006 and for the six-month period
then ended (hereafter - the interim statements) has been prepared in condensed
form in accordance with IAS 34 - "Interim Financial Reporting".
The interim condensed financial report should be read in conjunction with the
annual financial statements for the year ended 31 December 2005.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 December 2005. As described in the
annual financial statements for the year ended 31 December 2005.
The following new standards, amendments to standards and interpretations are
mandatory for financial year ending 31 December 2006.
* IAS 19 (Amendment), Employee Benefits (effective from 1 January 2006).
This amendment introduces the option of an alternative recognition approach
for actuarial gains and losses. It may impose additional recognition
requirements for multi-employer plans where insufficient information is
available to apply defined benefit accounting. It also adds new disclosure
requirements. As the Group dose not intend to change the accounting policy
adopted for recognition of actuarial gains and losses, adoption of this
amendment is impact the format and extent of disclosures presented in the
accounts.
* IAS 39 (Amendment), The Fair Value Option (effective from 1 January 2006
). This amendment changes the definition of financial instruments classified
at fair value through profit or loss and restricts the ability to designate
financial instruments as part of this category. The Group believes that this
amendment should not have a significant impact on the classification of
financial instruments, as the Group should be able to comply with the
amended criteria for the designation of financial instruments at fair value
through the income statements.
The following new standards, amendments to standards and interpretations have
been
issued but are not effective for 2006 and have not been early adopted:
* IFRIC 8, Scope of IFRS 2, effective for annual periods beginning on or
after 1 May 2006. Management is currently assessing the impact of IFRIC 8 on
the Company's operations.
* IFRIC 9, Reassessment of Embedded Derivatives, effective for annual
periods beginning on or after 1 June 2006. Management is currently assessing
the impact of IFRIC 9 on the Company's operations.
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
* IFRS 7, Financial Instruments: Disclosures, and a complementary
Amendment to IAS 1, Presentation of Financial Statements - Capital
Disclosures (effective from 1 January 2007). IFRS 7 introduces new
disclosures to improve the information about financial instruments. It
requires the disclosure of qualitative and quantitative information about
exposure to risks arising from financial instruments, including specified
minimum disclosures about credit risk, liquidity risk and market risk,
including sensitivity analysis to market risk. It replaces IAS 30,
Disclosures in the Financial Statements of Banks and Similar Financial
Institutions, and disclosure requirements in IAS 32, Financial Instruments:
Disclosure and Presentation. It is applicable to all entities that report
under IFRS. The amendment to IAS 1 introduces disclosures about the level of
an entity's capital and how it manages capital. The Group assessed the
impact of IFRS 7 and the amendment to IAS 1 and concluded that the main
additional disclosures will be the sensitivity analysis to market risk and
the capital disclosures required by the amendment of IAS 1. The Group will
apply IFRS 7 and the amendment to IAS 1 for annual periods beginning from 1
January 2007.
NOTE 3 - SHAREOLDERS' EQUITY:
a. On 27 March 2006, the Company's Board of Directors resolved to distribute
dividends to its shareholders in the amount of $1,455 thousand.
b. On 27 November 2005, the company affected a split of the company's share
capital such that each ordinary share 1 was split into 2 ordinary shares on NIS
0.5 par value each. In addition, the company approved a 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,
immediately before the IPO (see below), the number of outstanding shares was
13,826,758.
On 5 December 2005, the company issued 5,045,965 ordinary shares
in an IPO. Concurrently, the company's ordinary shares were admitted to
trading on the AIM in London. The net proceeds from the issuance of the shares
(after costs of $2,023 thousand) were $9,275 thousand.
c. The perpetual debenture, which was denominated in NIS in the amount of NIS
12,370 thousand, bore annual interest at the rate of 4%, payable on a quarterly
basis. The debenture was converted into capital reserves of the company on
December 5, 2005 with no issuance of ordinary shares.
d. Share options:
On 12 August 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 (as adjusted for the share
split and bonus shares). 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 provisions
of section 3(i) of the 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
the option plan. Unexercised options expire 10 years after date of grant.
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - SHAREOLDERS' EQUITY (continued):
The weighted average fair value of the options as at the grant date is was $0.49
per share, and was estimated using a binomial option pricing model based on the
following data and assumptions: Share price - $1.53; exercise price - $ 1.53,
expected validity - 38.4%; risk-free interest rate - 4.4%, expected dividends -
0% and expected average life of options 4 years.
The expense recognized in the 6-month period ended 30 June 2006 is $ 68 thousand
(in the year ended in 31 December 2005 $ 68 thousand)
e. Earnings per share
As described in Note 3b, in November 2005, the Company affected a split of the
Company's share Capital, and distributed bonus shares to the shareholders.
The earnings per share presented in these financial statements have been
adjusted retrospectively to reflect the share split and the bonus shares.
6 months ended Year ended 31
30 June December
2006 2005 2005
$ in thousands
(Unaudited) (Audited)
Weighted average number of Ordinary
shares
outstanding (in thousands)
Basic:
Number of shares in the beginning of
the period 18,873 5,743 5,743
Effect of split and bonus shares - 8,084 8,084
Effect of issuance of shares in IPO - - 420
Number of shares used for calculation of
earnings
per share -basic 18,873 13,827 14,247
Diluted:
Number of shares used for calculation of
earnings
per share -basic 18,873 13,827 14,247
Adjustments for share options 321 - -
Number of shares used for calculation of
earnings
per share -diluted 19,194 13,827 14,247
Net income attributable to equity holders
of the
parent 1,491 1,530 2,862
Less - interest on perpetual
debenture - (54) (81)
1,491 1,476 2,862
Basic earnings per share (in U.S.
dollars) 0.079 0.107 0.200
Diluted earnings per share (in U.S.
dollars) 0.078
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - REVENUES FROM SALES
Sales by customer location:
6 months ended Year ended
30 June 31 December
2006 2005 2005
$ in thousands
(Unaudited) (Audited)
North America 5,804 5,686 10,517
Europe 4,684 5,522 11,090
Australia 3,064 3,356 6,281
East Asia 3,967 2,264 6,889
Israel 2,337 2,581 3,459
South America 1,789 1,608 2,478
Africa 400 751 1,692
Total 22,045 21,768 42,406
NOTE 5 - RECLASSIFICATION
Other income expenses net, in respect of prior periods have been reclassified
from "profit before income tax" to"Operating profit" in order to conform with
the current period presentation.
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - CASH FLOWS FROM OPERATIONS:
6 months ended Year ended
30 June 31 December
2006 2005 2005
$ in thousands
(a) Adjustments for:
Depreciation 471 468 980
Share based payment 68 - 64
Deferred taxes, net 355 (207) 107
Accrued severance pay, net 95 (7) (72)
Exchange rate differences on liabilities to banks
and other long-term liabilities 17 (3) 61
Loss on sale of fixed assets and others 2 1 66
Gain from marketable securities, net (5) - -
Exchange rate differences in on loans to related
party and others (18) 53 22
985 305 1,228
Changes in working capital:
Increase in accounts receivable:
Trade (2,026) (3,566) (3,068)
Other (208) (51) (59)
(Decrease) increase in accounts payable:
Trade 804 882 (392)
Other (372) (803) (1,096)
Decrease (increase) in inventories (524) (344) 167
(2,326) (3,882) (4,448)
Cash generated from operations (1,341) (3,577) (3,220)
(b) Acquisition of company included according to the
proportionate consolidation method
Working capital (excluding cash and cash
equivalents) (321)
Other assets (42)
Fixed assets, net (229)
Long-term receivables 75
Long-term liabilities -
Cash outflow (517)
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - CASH FLOWS FROM OPERATIONS (continued):
6 months ended Year ended
30 June 31 December
2006 2005 2005
$ in thousands
(c) Proceeds from the sale of subsidiary
Working capital (excluding cash and cash
equivalents) (476)
Fixed assets, net 526
Cash inflow 50
(d) Increase in cash resulting from transition to full consolidation of a
company previously included according to the proportionate consolidation
method
Working capital (excluding cash and cash 121
equivalents)
Fixed assets, net (113)
Cash flow 8
This information is provided by RNS
The company news service from the London Stock Exchange
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