RNS Number:9813C
Amiad Filtration Systems Ltd
30 August 2007
30 August 2007
Amiad Filtration Systems Ltd.
("Amiad" or "the Company")
Results for the six months to 30 June 2007
Amiad, the producer and global supplier of water filters and filtration systems
for the industrial, municipal and irrigation markets, announces its interim
results for the six months to 30 June 2007.
Financial Highlights
* Turnover increased by 24% to $27.4m (H1 2006: $22.0m)
* Profit before tax increased by 68% to $3.7m (H1 2006: $2.2m)
* Gross margins were 49% (H1 2006: 50%)
* Fully diluted earnings per share almost doubled to 14.8 US cents (H1 2006:
7.8 US cents)
* Interim dividend of 3.0 US cents (gross) (H1 2006: 2.385 US cents)
Operational Highlights
* Strong finish to end of 2006 continued into the first half of 2007 reflecting
the demand for its automatic filters
* Market growth in most territories and segments
* High growth in Australia, USA and Europe
* Good penetration into Russia, Ukraine and Kazakhstan
* Significant penetration for the microfiber technology as a platform for water
treatment projects
Commenting on the results, Rami Treger, Chief Executive Officer of Amiad, said:
"The market for Amiad's products continues to expand with greater global
investments in water infrastructure. Specifically, there is increasing
investment in the municipality area (waste water, desalination, potable water)
due to stricter restrictions and regulations being introduced worldwide.
These positive long-term trends underpin Amiad's prospects. The Company has
entered the second half of 2007 with an order volume and backlog which is
substantially higher at this stage than at the corresponding time last year,
which gives the Company confidence of achieving good growth across the business
in the second half of this year as compared to the equivalent period last year.
As a result, the Company expects to report a significant increase in revenues
for the full year as compared with last year."
Enquiries:
Amiad Filtration Systems Ltd.
Rami Treger, Chief Executive Officer +972 (0) 4 690 9500
Itamar Eder, Chief Financial Officer
Corfin Communications
Harry Chathli, Neil Thapar + 44 (0) 20 7929 8989
Operational Review
The Board is pleased to report robust growth in the first half of 2007, building
on the good momentum achieved in late 2006. The Company increased its revenues
by 24% compared to the first half of 2006 to $27.4 million (H1 2006: $22.0m)
and profit before tax increased by 68% compared to the first half of 2006 to
$3.7 million (H1 2006: $2.2m) reflecting demand for its automatic filters. The
results reflect increasing investment in major markets in water treatment and
filtration systems to improve the supply and availability of clean water.
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.
In the first half of 2007, order levels were good across all major territories.
Amiad now sells its products in over 70 countries across the Americas, Africa,
Europe, Asia and Australasia through a network of distributors and its own
subsidiaries.
In USA, the Company saw high growth in all parts of its business. The Company
installed filtration system for surface water for irrigation in the Bonita Bay
area and an industrial application for river water use in the cooling process of
a power generating station in Oklahoma. Its technology was also employed to
solve the problem and produce potable water at a central hospital in Virginia
when the city water supply contaminants caused upsets in the hospital water
systems and contributed to an unreasonable replacement of cartridge filters and
maintenance calls.
In Europe, Amiad entered into a contract with Bulmer, the UK cider producing
company, to install water filters in their production facility. This is a
leading brand in cider manufacturing and Amiad's filtration system has already
improved the level of efficiency of their production. In May, the Company
supplied its automatic filters to one of Scandinavia's largest oil & gas
companies for a mounted filtration solution to be used for an oil drilling rig
in the North Sea.
Earlier in the year, the Company continued its penetration into Russia. In
January 2007, Amiad resolved a severe drinking water quality problem in the City
of Ramenskoe, Russia and, as a result, received additional three substantial
projects to be supplied this year. It also received orders for the first time in
Kazakhstan and Ukraine for industrial automatic mega-filters for the steel
industry.
The Company saw growth in Australia with it being asked to deploy its solutions
at short notice and carry out water treatment projects in various cities due to
a lack of drinking water caused by severe drought.
In China, the Company experienced further expansion in the municipal sector.
It also won the second phase of the project to treat water in the Beijing
Olympic Village. The Company also saw sales growth in Japan, India and Singapore.
It was also asked to supply a desalination system to convert sea water into
potable water for the Davis Research Station in Antarctica.
In the irrigation segment, the Company saw a worldwide increase in its sales
activities, mainly in Western Europe, Argentina, Mexico and Australia.
Financial review
Revenue for the six months ended 30 June 2007 increased by 24% compared to the
first half of 2006 to $27.4m (H1 2006: $22.0m). Profit before tax increased by
68% compared to the first half of 2006 to $3.7m (H1 2006: $2.2m). Fully diluted
earnings per share were 14.8 US cents (H1 2006: 7.8 US cents). Gross margins
were 49% (H1 2006: 50%) mainly reflecting the weakness of the US dollar and
increases in raw material prices. The Company introduced increase in its prices
effective from 1 July 2007 in those areas where its products are invoiced in US
dollars.
The Company increased its sales and marketing effort globally and this will
continue in the second half, but the Company continues to keep a tight control
over administrative and general expenses.
Operating profit increased by 44% compared to the first half of 2006 to $3.7m
(H1 2006: $2.5m) reflecting the substantial growth in the business.
The significant growth is also reflected in the working capital requirements
which resulted in an even net cash balance from operating activities. However,
the Company improved its working capital ratio from 44% at the end of 2006 to
41% as at 30 June 2007.
Net cash and cash equivalent and marketable securities amounted to $5.9m as of
30 June 2007.
Dividend
The Directors have decided to declare a dividend out of the Company's profits
for the six months ended 30 June 2007 of approximately 3.0 US cents (gross) per
share, with an ex dividend date of 26 September 2007, a record date of 28
September 2007 and a payment date of 26 October 2007.
Management
In June, the Company announced the appointment as CEO of Rami Treger to lead the
Company in its next phase of long-term growth. He succeeds Yosef Katz, who is
stepping down from the Board at the Company's EGM on 5 September 2007.
Water Treatment Entity
As part of its strategy, the Company has recently started the process of setting
up a separate entity to provide end-to-end solutions for the treatment of water,
in addition to continuing to provide automated filters. Recently, it appointed a
senior manager to develop this part of its business.
Outlook
The market for Amiad's products continues to expand with greater global
investment in water infrastructure. Specifically, there is increasing investment
in the municipality area (waste water, desalination and potable water) due
to stricter restrictions and regulations being introduced worldwide.
These positive long-term trends underpin Amiad's prospects. The Company has
entered the second half of 2007 with an order volume and backlog which is
substantially higher at this stage than at the corresponding time last year.
This gives the Company confidence of achieving good growth across the business
in the second half of 2007 as compared to the second half of last year. As a
result, the Company expects to report a significant increase in revenues for the
full year compared to 2006.
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
AT 30 JUNE, 2007
30 June 31 December,
2007 2006 2006
U.S. dollars in thousands
A s s e t s (Unaudited) (Audited)
CURRENT ASSETS:
Cash and cash equivalents 3,369 4,537 4,217
Short term investments 2,511 1,688 1,869
Accounts receivable and accruals:
Trade 19,888 16,523 16,871
Other 1,245 1,456 1,009
Inventories 13,223 8,769 10,470
Income Tax assets 745 - 431
T o t a l current assets 40,981 32,973 34,867
NON-CURRENT ASSETS:
Property and equipment 2,943 2,433 2,617
Intangible assets 2,759 2,447 2,759
Loan to a related party 659 503 685
Long term receivables 154 548 105
Deferred income tax assets 1,301 708 1,225
Severance pay assets 1,993 1,905 1,872
T o t a l non-current assets 9,809 8,544 9,263
T o t a l assets 50,790 41,517 44,130
30 June 31 December,
2007 2006 2006
U.S dollars in thousands
(Unaudited) (Audited)
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Short term credit, loans from banks and other 8,948 7,646 7,532
Accounts payable and provisions:
Trade 10,496 6,688 7,862
Other 3,583 2,453 3,111
Income tax liability 366 629 488
T o t a l current liabilities 23,393 17,416 18,993
NON-CURRENT LIABILITIES:
Loans from banks and other
(net of current maturities) 2,800 2,761 2,786
Severance pay obligations 2,027 1,961 1,909
Deferred taxes 471 565 542
T o t a l non-current liabilities 5,298 5,827 5,237
T o t a l liabilities 28,691 22,703 24,230
SHAREHOLDERS' EQUITY
Capital and reserves attributable to the
Company's equity holders:
Share capital 2,291 2,291 2,291
Capital reserve 12,797 12,797 12,797
Currency translation reserve 240 134 164
Retained earnings 6,340 3,294 4,303
21,668 18,516 19,555
MINORITY INTEREST 431 298 345
T o t a l shareholders' equity 22,099 18,814 19,900
T o t a l liabilities and shareholders' equity 50,790 41,517 44,130
The notes on pages 9 to 13 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 2007
6 months Year ended
ended 31 December,
30 June
2007 2006 2006
U.S dollars in thousands
except per share data
(Unaudited) (Audited)
Continuing operations:
Revenue 27,437 22,045 44,076
Cost of sales 14,009 10,946 22,097
Gross profit 13,428 11,099 21,979
Selling and marketing costs 6,486 5,680 11,455
Administrative and general expenses 3,071 2,699 5,581
Amortization of other assets 188 170 348
Other expenses, net 12 8 4
Operating profit 3,671 2,542 4,591
Financial expenses, net 15 364 864
Profit before income tax 3,656 2,178 3,727
Income tax expenses 749 618 736
Profit for the period 2,907 1,560 2,991
Attributed to:
Equity holders of the company 2,821 1,491 2,875
Minority interest 86 69 116
2,907 1,560 2,991
U.S dollars
Earnings per share attributable to the equity
holders of the Company during the period
(see note 3d):
Basic 0.149 0.079 0.152
Diluted 0.148 0.078 0.150
The notes on pages 9 to 13 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 2007
Attributable to equity holders of the Company
Share Capital Currency Retained
capital reserve translation earning
reserve
$ in thousands
BALANCE AT JANUARY 1, 2007 (audited) 2,291 12,797 164 4,303
CHANGES DURING THE 6 MONTH
ENDED 30 June 2007:
Currency translation differences - - 76 -
Profit for the period - - - 2,821
Total recognized profit for
6 month ended 30
June 2007 - - 76 2,821
Employees share purchase plan - value of
employee services - - - 60
Cash dividend ($ 0.045 per share) - - - (844)
BALANCE AT JUNE 30, 2007 (unaudited) 2,291 12,797 240 6,340
BALANCE AT JANUARY 1, 2006 (audited) 2,291 12,797 123 3,190
CHANGES DURING THE 6 MONTH
ENDED 30 June 2006:
Currency translation differences - - 11 -
Profit for the period - - - 1,491
Total recognized profit for
6 month ended 30
June 2006 - - 11 1,491
Employees share purchase
plan - value of
employee services - - - 68
Cash dividend ($0.077 per share) - - - (1,455)
Dividend to minority - - - -
BALANCE AT JUNE 30, 2006
(unaudited) 2,291 12,797 134 3,294
The notes on pages 9 to 13 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 2007 (continued)
Attributable to equity holders of the Company
Share Capital Currency Retained
capital reserve translation earning
reserve
$ in thousands
BALANCE AT JANUARY 1, 2006 (audited) 2,291 12,797 123 3,190
CHANGES DURING THE YEAR
ENDED 31 December 2006:
Currency translation differences - - 41 -
Profit for the period - - - 2,875
Total recognized profit for
year ended 30
December 2006 - - 41 2,875
Employees share purchase
plan - value of
employee services - - - 143
Cash dividend ($0.1 per share) - - - (1,905)
Dividend to minority - - - -
BALANCE AT DECEMBER 31, 2006
(audited) 2,291 12,797 164 4,303
The notes on pages 9 to 13 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 2007 (continued)
Attributable to equity holders of the Company
Total Minority Total
interest shareholders
equity
$ in thousands
BALANCE AT JANUARY 1, 2007 (audited) 19,555 345 19,900
CHANGES DURING THE 6 MONTH
ENDED 30 June 2007:
Currency translation differences 76 - 76
Profit for the period 2,821 86 2,907
Total recognized profit for
6 month ended 30 June 2007 2,897 86 2,983
Employees share purchase plan
- value of employee
services 60 - 60
Cash dividend ($ 0.045 per share) (844) - (844)
BALANCE AT JUNE 30, 2007 (unaudited) 21,668 431 22,099
BALANCE AT JANUARY 1, 2006 (audited) 18,401 265 18,666
CHANGES DURING THE 6 MONTH
ENDED 30 June 2006:
Currency translation differences 11 - 11
Profit for the period 1,491 69 1,560
Total recognized profit for 6 month
ended 30 June 2006 1,502 69 1,571
Employees share purchase plan
- value of employee
services 68 - 68
Cash dividend ($0.077 per share) (1,455) - (1,455)
Dividend to minority - (36) (36)
BALANCE AT JUNE 30, 2006 (unaudited) 18,516 298 18,814
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2007 (continued)
Attributable to equity holders of the Company
Total Minority Total
interest shareholders
equity
$ in thousands
BALANCE AT JANUARY 1, 2006 (audited) 18,401 265 18,666
CHANGES DURING THE YEAR
ENDED 31 December 2006:
Currency translation differences 41 - 41
Profit for the period 2,875 116 2,991
Total recognized profit for year
ended 30 December
2006 2,916 116 3,032
Employees share purchase plan
- value of employee
services 143 - 143
Cash dividend ($0.1 per share) (1,905) - (1905)
Dividend to minority - (36) (36)
BALANCE AT DECEMBER 31, 2006 (audited) 19,555 345 19,900
AMIAD FILTRATION SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2007
6 months ended Year ended
30 June 31 December,
2007 2006 2006
U.S. dollars in thousands
(Unaudited) (Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations 1,353 1,827 3,805
Interest paid (298) (281) (633)
Income tax paid (1,078) (1,327) (1,833)
Net cash generated from (used in) operating
activities (23) 219 1,339
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (729) (202) (677)
Purchases of intangible assets (189) - (527)
Investments grants received 93 61 79
Short term investments, net (630) (1,679) (1,853)
Proceeds from sale of property and equipment 58 27 62
Long-term loan granted to a related party and
others (49) (543) (328)
Collection of long-term loan granted to a related
party 23 28 85
Net cash used in investing activities (1,423) (2,308) (3,159)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to the minority interest - (36) (36)
Dividends paid (844) (1,455) (1,905)
Repayments of long term loans (1,048) (981) (1,872)
Receipt of long-term loans and other liabilities 1,003 29 1,075
Short-term loans, net 1,473 1,356 1,092
Net cash generated from (used in) financing
activities 584 (1,087) (1,646)
NET INCREASE (DEREASE) IN CASH AND CASH
EQUIVALENTS (862) (3,176) (3,466)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR 4,217 7,692 7,692
EXCHANGE GAINS ON CASH AND CASH
EQUIVALENTS 14 21 (9)
CASH AND CASH EQUIVALENTS AT
END OF THE PERIOD 3,369 4,537 4,217
The notes on pages 9 to 13 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 2007 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 2006.
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 2006, As described in the
annual financial statements for the year ended 31 December 2006.
The following new standards, amendments to standards and interpretations have
been issued but are not effective for 2007 and have not been early adopted:
* IAS 23 (revised March 2007), Borrowing Costs (effective from 1 January
2009). The standard is not expected to have any impact on the Company's
accounts.
* IFRIC 13, Customer Loyalty Programmes, effective for annual periods
beginning on or after 1 July 2008. IFRIC 13 is not expected to have any
impact on the Company's accounts.
* IFRIC 14, IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction, effective for annual periods beginning
on or after 1 January 2008. Management is currently assessing the impact of
IFRIC 14 on the Company's operations.
NOTE 3 - SHAREOLDERS' EQUITY:
a. On 26 March, 2007, the Company's Board of Directors resolved to distribute
dividends to its shareholders in the amount of $844 thousand.
b. Share options
1) 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 three 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 expire10 years after date of grant.
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - SHAREOLDERS' EQUITY (continued):
2) On 19 April 2007, following a request made by the Company, the senior
employees and the chairman of the board of directors gave written notice to the
Company of their waiver, with immediate effect, of 21,874 and 8,751 options
respectively granted to them by the Company.
At the same time, the Company received written notice from Kibbutz Amiad of its
waiver, with immediate effect, of its right to options granted to it by the
Company over 77,336 ordinary shares.
3) On 19 April 2007, the board of directors resolved to grant options over
72,961 ordinary shares under the plan to a director of the Company, at an
exercise price of $ 1.53 per ordinary share (being the same price as the
exercise price for the options previously granted to Kibbutz Amiad and all other
option holders), such options to vest over a period of 2.13 years. Unexercised
options expire 8.13 years after date of grant. The actual grant date of the
above option was 26 Jun 2007 following the approval company grant at the company
annual general meeting on the 26 Jun 2007.
4) On 14 May 2007, the CEO announced that he was stepping down and would stay on
as Chief Executive Officer until a replacement is appointed.
On 27 July 2007, following a request made by the Company, the CEO gave his
consent to amend his option agreement, so that the number of options and
ordinary shares exercisable there under, will be reduced by 54,722 options
(from 218,886 options to 164,164 options), that there vesting period under the
options agreement is August 11, 2008.
5) On 5 July 2007, the Company entered into an employment agreement with a new
CEO in respect of his employment as of 1 August 2007. Pursuant to the terms of
the agreement the CEO entitled to receive a phantom bonus which will be
calculated on base of the change in the average price of the company's ordinary
share for the 2 years period ended in August 2009. The bonus will be paid on
August 2009, provided that CEO is employed by the Company at the record date.
On 27 July 2007, the Company entered into an Option Agreement with the CEO
pursuant to which the CEO granted options to purchase 54,722 ordinary shares of
the company, subject to the terms and conditions set out in the Option
Agreement.
The phantom bonus and the Option Agreement are conditional upon obtaining
shareholder approval at the Company's Annual General Meeting to be held in
September 2007.
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - SHAREOLDERS' EQUITY (continued):
c. Earnings per share
6 months ended Year ended
30 June 31 December,
2007 2006 2006
U.S. dollars in thousands
(Unaudited) (Audited)
Diluted:
Number of shares used for calculation of earnings
per share -basic 18,873 18,873 18,873
Adjustments for share options 200 321 309
Number of shares used for calculation of earnings
per share -diluted 19,073 19,194 19,182
Net income attributable to equity holders
of the parent 2,821 1,491 2,875
Basic earnings per share (in U.S. dollars) 0.149 0.079 0.152
Diluted earnings per share (in U.S. dollars) 0.148 0.078 0.150
NOTE 4 - EMPLOYEE INCNTIVE PLAN
On 27 July 2007, the board of directors approved a Bonus Scheme which will be
available to staff members and members of Senior Management, including to three
members of the board conditional upon obtaining shareholder approval at the
Company's Extraordinary General Meeting to be held in September 2007.
a. Senior Management - bonus scheme will be in operation in relation to
financial year ending 31 December 2007 which will pay a bonus to the Senior
Management team by reference to their monthly salary. The level of bonus payable
will be depended on the achievement of targets as set out in the Bonus Scheme.
The maximum total bonus liability for the Company is NIS 600,000.
Any bonus shall be paid following Board's approval of the 2007 financial
statement in March 2008. If any member of Senior Management is not employed by
the Company for the whole of the Bonus Year or is not employed at the bonus
payment date, the payment of any bonus to that individual shall be subject to
the absolute discretion of the Chairman and/or CEO of the Company.
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - EMPLOYEE INCNTIVE PLAN (continued):
b. Staff members -a discretionary bonus scheme will be in operation in
relation to the financial year ending 31 December 2007 which will provide a
bonus pool for Staff to recognize their contribution to the success of the
business. The level of bonus payable will be depended on the achievement of
targets as set out in the Bonus Scheme. The amount of the bonus for the Staff
will be calculated as a bonus pool, the amount in the pool being dependent on
the achievement of the targets. The maximum bonus pool is NIS 900,000.
A portion of the bonus pool shall be paid to Kibbutz Amiad subject to the
formula that is presented in the bonus scheme conditional upon obtaining
shareholder approval at the Company's Extraordinary General Meeting to be held
in September 2007.
The bonus shall be paid, subject to the absolute discretion of management,
following Board's approval of the 2007 financial statements in March 2008. As
the payment of the bonus is fully discretionary, the Company reserves the right
not to pay a bonus.
NOTE 5 - REVENUES FROM SALES
Sales by customer location:
6 months ended Year ended
30 June 31 December,
2007 2006 2006
U.S. dollars in thousands
(Unaudited) (Audited)
North America 7,383 5,804 11,558
Europe 6,433 4,684 9,842
Australia 4,761 3,064 6,252
East Asia 3,411 3,967 7,655
Israel 3,174 2,337 4,486
South America 1,831 1,789 3,051
Africa 444 400 1,232
Total 27,437 22,045 44,076
NOTE 6 - CONTINGENT LIABILITIES
a. On or about August 21, 2007, Amiad USA, Inc. received a draft complaint from
counsel for Yitzhak Orlans, the former President and a current director of Amiad
USA, Inc. The draft complaint alleges age discrimination, disability
discrimination, employment discrimination, wrongful termination and further
alleges various other violations of the California Labor Code and the California
Business & Professions Code in connection with the termination of Mr. Orlans'
employment with Amiad USA, Inc. The draft complaint indicates that Mr. Orlans
is seeking damages in excess of USD$2,625,000 as well as unspecified amounts of
non-economic damages, punitive damages and attorneys' fees and costs. It is too
early to predict any outcome or potential liability.
b. In March 2006, a claim was filed in the supreme court of Victoria against the
subsidiary in Australia, Amiad Australia PTY Ltd. (hereafter - the subsidiary)
as well as 8 other defendants for damages allegedly caused by inducing certain
people who were then employed by the claimant to breach their employment and
other duties to the claimant, and otherwise interfered with their employment
contracts.
AMIAD FILTRATION SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - CONTINGENT LIABILITIES (continued):
In May 2007, the claimant filed an Amended Statement of Claim which altered the
nature of the claim and increased the quantum of the claim against the
subsidiary and the other defendant.
The amount alleged to have been lost by the claimant as a result of the conduct
complained of in its Amended Statement of Claim is estimated by the claimant in
its Amended Statement of Claim to be between $16.5 million AUD and $25 million
AUD.
According to the legal counsel of the subsidiary it is not possible to predict
whether this claim will succeed. Further, even if the claimant is successful in
establishing that the subsidiary (either alone or with other defendants) is
liable to it in the manner alleged, it is not possible to predict the amount (if
any) that will be awarded against it.
In addition to the amount referred to above, the claimant is also seeking an
order that the defendants pay its cost of the proceedings, and that they pay
interest on any amount awarded against them.
Based on its agreements with Plastro Irrigation Ltd the Company believes to be
substantially indemnified in this claim.
NOTE 7 - CASH FLOWS FROM OPERATIONS:
6 months ended Year ended
30 June 31 December,
2007 2006 2006
U.S. dollars in thousands
Profit for the period 2,907 1,560 2,991
(a) Adjustments for:
Depreciation and amortization 509 471 941
Interest paid 298 281 633
Income taxes paid 1,078 1,327 1,833
Share based payment 60 68 143
Deferred taxes, net (146) 355 (184)
Accrued severance pay, net (3) 95 76
Exchange rate differences on liabilities to
banks 2 17 69
Loss on sale of fixed assets and others 11 2 14
Gain from marketable securities, net (12) (5) (12)
Exchange rate differences in on loans to related
party and others 3 (18) (48)
4,707 4,153 6,456
Changes in working capital:
Increase in accounts receivable:
Trade (2,861) (2,026) (2,261)
Other (613) (208) (187)
Increase (Decrease) in accounts payable:
Trade 2,405 804 1,802
Other 328 (372) 131
Increase in inventories (2,613) (524) (2,136)
(3,354) (2,326) (2,651)
Cash generated from operations 1,353 1,827 3,805
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Amiad Water Systems (LSE:AFS)
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