AFS Amiad Water Systems Ltd

 

TIDMAFS 
 
RNS Number : 3545Z 
Amiad Filtration Systems Ltd 
21 September 2009 
 

21 September 2009 
 
 
Amiad Filtration Systems Ltd. 
("Amiad" or "the Company") 
 
 
Results for the six months to 30 June 2009 
 
 
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 2009. 
 
 
Financial Highlights 
  *  Revenue was $36.8m (H2 2008: $33.8m) (H1 2008: US$39.5m) 
  *  Operating profit was $5.1m (H2 2008: $1.6m) (H1 2008: US$6.1m) 
  *  Profits before tax was US$5.7m (H2 2008: $1.3) (H1 2008: US$5.4m) 
  *  Gross margins at 47% (H1 2008: 49%) 
  *  Fully diluted earnings per share was 19 US $cents (H1 2008: 20.1 cents) 
  *  Interim dividend of 3.5 US$ cents (gross) per share (H1 2008: 3.5 US$ cents 
  (gross) per share) 
  *  Cash and cash equivalents at 30 June 2009 of US$7.3m (31 December 2008 $6.5m) 
 
 
 
Operational Highlights 
  *  Return of demand for large industrial and municipal water filtration projects 
  globally 
  *  Increased sales in new and growing geographies of Chile, India and Turkey 
  *  Continued penetration into new territories 
  *  Improved efficiency and streamlined operations 
  *  Strategic infrastructure and activities implemented 
  *  New management in place 
 
 
 
Commenting on the results, Arik Dayan, Chief Executive Officer of Amiad, said: 
"We are pleased to report strong sequential growth in the first half compared 
with second half last year indicating a sustained return of investment in water 
infrastructure projects, particularly in the municipal and industrial segments. 
In the second half of 2008, Amiad focussed on improving its operational 
efficiency and enhancing its presence strategically in growth markets as market 
conditions worsened due to the downturn of global economic conditions. As a 
result, it was able to capitalise as organisations started to re-invest in large 
scale projects. 
Looking ahead, Amiad continues to tightly manage costs. With the current 
pipeline of orders and the demand for Amiad's products set to continue in new 
territories as well as its established markets, the Board expects to report full 
year results which are in line with market expectations." 
 
 
 
 
Enquiries: 
+-------------------------------------+-------------------------------------+ 
| Amiad Filtration Systems Ltd.       |                                     | 
+-------------------------------------+-------------------------------------+ 
| Arik Dayan, Chief Executive Officer | +972 (0) 4 690 9500                 | 
| Rivka Kalmanzon, Chief Financial    |                                     | 
| Officer                             |                                     | 
+-------------------------------------+-------------------------------------+ 
| Corfin Communications               |                                     | 
+-------------------------------------+-------------------------------------+ 
| Harry Chathli, Victoria Ward        | + 44 (0) 20 7977 0020               | 
+-------------------------------------+-------------------------------------+ 
  Operational Review 
 
 
Revenues for the first half of 2009 increased 9% sequentially to $36.8m from the 
second half of 2008, however these were down compared with the same period last 
year (H1 2008: $39.5m). This decrease in revenue was mainly due to the lag in 
recovery in the irrigation segment and the overall market slowdown in certain 
key territories. 
However, the beginning of 2009 saw a return in investment in infrastructure 
projects, particularly in the industrial and municipal segment in most of the 
Company's key markets. Since October 2008 there has been a shift in the mix 
between the industrial and municipal and the irrigation segment. At present, the 
industrial and municipal segment accounts for 65% of company revenue and is 
expected to continue to be the largest contributor. 
Specifically, in the industrial and municipal segment, Europe saw heightened 
activity through the Turkish company that Amiad acquired in 2008, as it 
delivered large projects in the region as well as other countries such as 
India. One of the large projects in Turkey, accounting for over Euro 1m of 
company revenue, was to deliver its products to a new power plant in 
India. Also, the Company saw increased delivery into Western Europe with 
projects for the municipal and the oil and gas industries. 
In Asia, the Company had targeted India as its main growth area in 2009. The 
Company performed well here in the period and secured its first large project in 
the municipal segment for its automatic self cleaning filters and AMF technology 
for drinking water. This project accounted for over $680,000 of company revenue. 
With industrial growth set to continue in India, and increased interest for 
Amiad's products in the irrigation market coming through, the Company remains 
very optimistic and focussed about its efforts in the region. The Company is 
actively looking to increase its presence in the area and will consider options 
available to it to ensure further significant inroads can be made in order for 
Amiad to continue to capitalise on the increased investment in water 
infrastructure in the country. 
Additionally in Asia, in Singapore the Company secured three large projects in 
the municipal segment which were delivered and executed in the Philippines. 
These projects were for use of the AMF technology to produce drinking water. 
Furthermore, in the Malaysian oil industry, the Company won a large project for 
their AMF technology and for cooling water which was based on the screen 
technology. Elsewhere in Asia, as anticipated, the industrial markets in China 
saw a decline as the steel and petrochemical industries suffered the effects of 
the global downturn. However, the growth in other parts of Asia largely 
mitigated this decline. 
In South America, Amiad continues to perform well. In Chile, the Company built 
on its successes to date within the mining industry and secured two projects for 
cooling water for a large engineering group. The ongoing growth in Chile 
consolidates the relationship with the Company's industrial and municipal 
distributor which was started at the end of 2007 and sets the tone for further 
expansion in the region. For example, in Brazil the Company embarked on a 
project with a large oil producer in Brazil for over $400,000. With growth in 
South America set to continue as economic development in the region 
progresses, Amiad is also exploring opportunities for enhancing its presence in 
the region. 
Although the Company is seeing a general increase in interest levels coming 
through in the irrigation segment, and a return to growth in Africa, Amiad 
continues to see a lag in return to investment in this segment. The irrigation 
segment is impacted by seasonal factors and farming cycles. The Company has been 
making in roads into new territories and is well placed to capitalise should 
there be renewed investment in this segment. 
 
Financial review 
 
 
Revenues for the first half of 2009 increased 9% sequentially to $36.8m from the 
second half of 2008, however these were slightly down compared with the same 
period last year (H1 2008: $39.5m). Fully diluted earnings per share decreased 
by 5% to 19 US $cents (H1 2008: 20.1 cents). 
 
 
Operating profit increased by 210% sequentially to $5.1m compared to $1.6m in H2 
2008 (H1 2008: US$6.1m) and profit before tax increased over threefold 
sequentially to US$5.7m (from H2 2008: $1.3) (H1 2008: US $6.1m). 
Gross margins increased by 10% sequentially to $17.4m compared to $14.6m in H2 
2008 (H1 2008: US$19.2m). 
 
 
Operating profit decreased by 33% sequentially to $5.1m compared to H2 2008: 
$7.7m (and decreased 16% from H1 2008: $6.1m). 
 
 
Cash and cash equivalents in the bank was US$7.3m at the end of the period 
compared with H2 2008 $6.5m and $6.5m in H1 2008, reflecting the increase in 
organic and strategic growth. 
 
 
 
 
Dividend 
 
 
The Directors have decided to declare a dividend out of the Company's profits 
for the six months ended 30 June 2009 of 3.5 US$ cents (gross) per share (H1 
2008: US $cents  3.5 (gross) per share), with an ex dividend date of 7 October 
2009, a record date of 9 October 2009 and a payment date of 13 November 2009. 
 
 
Management 
 
 
Arik Dayan was promoted to the position of CEO of the Company in March 2009. 
Since his appointment Arik has been focussing on cash flow and expense 
management. Arik has been working at Amiad since 1997 and has a unique 
understanding of the business and operations through the insight and experience 
which he has acquired during his time at the Company. 
Ms. Rivka Kalmanzon was appointed as CFO in August 2009. Ms. Kalmanzon has 
senior management experience in one of the "big 5" CPA firms in Israel, handling 
a broad spectrum of financial activities. Prior to joining Amiad she served as 
CFO of several hi-tech, bio-tech and manufacturing companies in Israel and 
abroad, all of which have several overseas operations. 
 
 
Outlook 
 
 
The Company continues to tightly manage costs and is focussed on managing 
suppliers, inventories and overheads efficiently. As a response to slowdown in 
global macro economic conditions it is forming local alliances and strategically 
increasing its presence in territories that are expected to invest heavily in 
water infrastructure projects. 
 
 
Looking ahead to second half of 2009, whilst the irrigation market remains 
unstable, the demand for Amiad's products is set to continue in new territories 
as well as its established markets in the municipal and industrial segments. As 
a result, the Board expects to report full year results which are in line with 
market expectations. 
  AMIAD FILTRATION SYSTEMS LTD. 
CONDENSED CONSOLIDATED BALANCE SHEET 
JUNE 30, 2009 
 
 
 
 
+--------------------------------------------+----------+----------+------------+ 
|                                            |      June 30,       |  December  | 

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