TIDMAFS
RNS Number : 5748N
Amiad Water Systems Ltd
10 September 2013
10 September 2013
Amiad Water Systems Ltd.
("Amiad" or the "Company")
Results for the six months to 30 June 2013
Amiad (AIM: AFS), a leading global producer of water treatment
and filtration solutions, announces its half year results for the
six months ended 30 June 2013.
H1 2013 Financial Summary
-- Revenue was $61.7m (H1 2012: $66.2m)
-- Operating profit was $4.2m (H1 2012: $5.9m)
-- Profit before tax was $4.2m (H1 2012: $5.0m)
-- Gross margins were 40.3% (H1 2012: 43.6%)
-- Fully diluted earnings per share were $0.15 (H1 2012: $0.18)
-- Net debt reduced to $16.85m (31 December 2012: $17.1m)
-- Interim dividend of $0.051 per share (H1 2012: $0.051)
-- Cash and cash equivalents at 30 June 2013 were $13.3m (31
December 2012: $14.3m; 30 June 2012: $12.7m)
H1 2013 Operational Summary
Traditional Segments (Irrigation, Industrial and Municipal)
-- Irrigation segment broadly flat with H1 2012, but progress
achieved with increase in revenues of 17% over H2 2012 due to
growth in US, Latin America and China
-- Municipal segment performed as expected, with growth in
Europe and Eastern Europe, and successful implementation of
large-scale municipal desalination plants in Australia, Israel and
India
-- Weakness experienced in Industrial segment, particularly in
South East Asia, India and East Europe, but growth achieved in West
Europe
New Developing Segments (Ballast Water and Oil & Gas)
-- Significant growth achieved in Oil & Gas segment,
including delivery of a pre-filtration solution at Pacific Rubiales
Energy Corp's desalination plant in Columbia
-- Postponement in implementation of coastguard regulations by
International Maritime Organization ("IMO") continued to negatively
impact sales in Ballast Water segment, however, the new Omega line
of screen products was well-received by potential customers and
Amiad successfully completed pilot projects with the Danish
Hydraulic Institute in Denmark and in Singapore
Commenting on the results, Arik Dayan, Chief Executive Officer
of Amiad, said: "As anticipated, 2013 is proving to be a
transitional year as our traditional and new segments continue to
be subject to fluctuating market conditions. We are also pleased
with the progress being made by our new products, which are
increasingly penetrating the market, and the significant growth
achieved in the Oil & Gas segment.
"Despite the challenging market conditions, we anticipate that
revenues for the second half of 2013 will be slightly higher than
for the first half of the year. In addition, we expect to maintain
efficiency measures and tight cost control over the course of 2013
whilst continuing to invest in new products, new territories and
growth segments. As a result, we have confidence in the growth
prospects of the Company, which is reflected in Amiad maintaining
its interim dividend at the same amount as last year."
Enquiries
Amiad Water Systems Ltd.
-------------------------------------- -----------------
Arik Dayan, Chief Executive Officer
Amir Harel, Chief Financial Officer +972 4 690 9500
-------------------------------------- -----------------
Nomura Code Securities Ltd.
-------------------------------------- -----------------
Juliet Thompson, Christopher Golden +44 20 7776 1200
-------------------------------------- -----------------
Luther Pendragon
-------------------------------------- -----------------
Harry Chathli, Claire Norbury,
Oliver Hibberd +44 20 7618 9100
-------------------------------------- -----------------
Operational Review
As stated in Amiad's announcement of its Full Year 2012 Results,
the slowdown observed in the final quarter of 2012 in Europe and
the US, particularly in the Municipal and Industrial segments,
continued into the first half of 2013, resulting in an overall
decrease in revenue for the period to $61.7m (H1 2012: $66.2m). In
addition, the Company was impacted in the Ballast Water segment by
the postponement in the implementation of IMO regulations as
expected. However, revenue in the Irrigation segment was broadly
flat with the same period last year and grew 17% sequentially
compared with H2 2012 whilst the Oil & Gas segment exceeded
expectations and achieved significant growth. Gross margins were
40.3% (H1 2012: 43.6%).
The Irrigation and Industrial segments generated $27.1m and
$23.1m respectively during the period (H1 2012: $27.8m and $24.9m),
accounting for 43.7% and 37.3% of the Company's revenues. The
Municipal segment generated $4.9m (8%) compared with $7.3m in H1
2012, however this decline was partly due to the delivery of an
extraordinary project, in the first half of 2012, in the Municipal
segment in Australia where Amiad provided its automatic
self-cleaning screen filter technology for sea water reverse
osmosis membrane protection at the Southern SeaWater Desalination
Plant based south of Perth.
There was a significant decline in revenues in the Ballast Water
segment to $1.1m, representing 1.8% of overall revenue, compared
with $3.8m in the first half of 2012. This was largely due to the
postponement in the implementation of coastguard regulations by the
IMO, which will now come into force in 2014. However, during the
period, Amiad successfully completed pilot projects with the Danish
Hydraulic Institute in Denmark and in Singapore, and its products
are being well-received by potential customers. In addition, Amiad
has been engaged in discussions to form partnerships with further
integrators (as a complement to Calgon Carbon Corporation) in this
segment. As a result, Amiad is well-positioned to benefit from the
significant growth opportunity in this segment when market
conditions improve, where it is expected that around 60,000 ships
worldwide will need refitting with one or more cleansing units by
2020 resulting in a filtration market worth approximately $1bn.
The Oil & Gas segment exceeded expectations, generating
revenues of $5.7m compared with $3.0m in H1 2012 and $1.3m in H2
2012. The segment accounted for 9.2% of overall revenues -
representing a larger proportion than the Municipal segment.
Amiad's portfolio of new products that were launched in November
2011 are increasingly penetrating the market and continue to be
well-received. All of the products are now in the commercial pilot
phase apart from one, which is in a non-commercial pilot
project.
Global Activity
Asia
During the first half of the year, Amiad experienced weakness in
the Industrial segment in South East Asia. However, in the new
segments, the Company delivered a project in the Oil & Gas
segment and successfully completed a pilot project in the Ballast
Water segment.
Amiad also suffered from weak demand in India, which was
compounded by the weakness of the rupee against the US dollar and
the resulting negative effect on Amiad importing products. However,
Amiad continued work on its production line at its subsidiary in
India and expects to reach full, local production next year. In
addition, Amiad successfully commissioned a pre-filtration solution
at a newly-built municipal seawater desalination plant in Chennai,
India.
In China, the government's decision to increase the country's
agricultural production resulted in increasing demand for Amiad's
Irrigation solutions.
US and South America
Amiad performed well and achieved growth in the Irrigation
segment in the US. As the most significant market for the Ballast
Water segment, the Company suffered from the setbacks in this
industry. In addition, the constraints on public funding and
projects persisted into 2013 resulting in continued weakness in the
Municipal segment.
The Irrigation segment in Latin America experienced growth. In
the Oil & Gas segment, as announced in March, the Company was
awarded a $7.7m contract in Colombia, by Nirosoft Industries Ltd.,
for the supply and maintenance of a pre-filtration solution
providing protection for reverse osmosis membranes. Amiad's screen
and microfiber filtration technology has been shipped and is in the
pre-installation phase at a desalination plant that is part of the
oil & gas operations of Pacific Rubiales Energy Corp., one of
the largest independent oil & gas exploration and production
companies in Colombia.
EMEA
Amiad performed well in the Municipal segment in Europe and
Eastern Europe, and undertook significant work in Germany and
Scandinavia for pre-filtration membrane protection. In Denmark, the
Company successfully concluded a pilot project in the Ballast Water
segment with the Omega, one of Amiad's new products. However, the
extreme and extended winter across large parts of Europe resulted
in weakness in the Irrigation segment with a delay in a number of
projects.
In Israel, Amiad installed and commissioned a solution for the
protection of ultra-filtration membranes at the Ashdod Desalination
Plant in the Municipal segment. This represented the first
commercial application of Amiad's new products. Similarly, Amiad
successfully commissioned a project in Cyprus involving cartridge
replacement.
Australia
Amiad suffered in Australia from the weakness in the Australian
economy due to the reduced demand for raw materials from China,
Australia's largest export customer, which has resulted in resource
companies cancelling or postponing projects. Amiad anticipates some
improvement in this geography going forward, but does not expect
this to be of a material nature.
Financial Review
Revenues for the six months ended 30 June 2013 decreased by 6.8%
to $61.7m compared with $66.2m for the first half of 2012. Fully
diluted earnings per share were $0.15 (H1 2012: $0.18).
Operating profit was $4.2m compared with $5.9m for the first
half of 2012, and profit before tax was $4.2m (H1 2012: $5.0m).
Gross margins were 40.3% (H1 2012: 43.6%; H2 2012: 42%). The
decline was due to: the strategic decision to enter the produced
water market in the Oil & Gas segment in Colombia; a higher
proportion of revenue being derived from the Irrigation segment,
which typically carries a lower gross margin; the impact of fixed
expenses on lower total revenue; and the weakness of the US dollar
against the Israeli shekel.
As of 30 June 2013, cash and cash equivalents were $13.3m
compared with $14.3m at 31 December 2012 and $12.7m at 30 June
2012. Net debt decreased to $16.85m from $17.1m at 31 December
2012.
Dividend
The Directors have decided to declare an interim dividend out of
the Company's profits for the six months ended 30 June 2013 of
$0.051 gross per share (interim dividend 2012: $0.051 gross per
share), with an ex dividend date of 9 October 2013, a record date
of 11 October 2013 and a payment date of 30 October 2013.
Outlook
As anticipated, 2013 is proving to be a transitional year as the
Company's new products gain traction, and its traditional and new
segments continue to be subject to fluctuating market
conditions.
Looking ahead, in the second half, the Irrigation segment is
expected to perform well and grow in accordance with the
management's expectations. Amiad still anticipates good growth in
the Ballast Water segment in the long term. However, as a result of
the postponement in the implementation of the IMO regulations, a
vast majority of the revenues in the Ballast Water segment that the
Company had expected to generate in 2013 have been delayed to 2014.
The delay in the implementation of the regulations has allowed
Amiad to broaden its marketing and sales efforts as well as product
offering in this segment. As a result, the Company is
well-positioned to benefit when the markets return. The slowdown
observed in the first half of 2013 in the US, particularly in the
Municipal segment, is expected to continue. The Company anticipates
that this weakness will be slightly offset by activity in its
growth territories in the second half of the year.
Despite the challenging market conditions, the Company continues
to anticipate that revenues for the second half of 2013 will be
slightly higher than for the first half of the year. In addition,
the Company expects to be able to maintain efficiency measures and
tight cost control over the course of 2013.
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2013
June 30 December
31,
------------------
2013 2012* 2012*
-------- -------- ----------
(Unaudited) (Audited)
------------------ ----------
U.S. dollars in thousands
------------------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 13,267 12,697 14,255
Financial assets at fair value through
profit or loss 1,243 229 1,140
Accounts receivable and accruals:
Trade 44,096 45,049 40,831
Other 3,599 5,219 5,336
======== ========
Income tax assets 1,130 1,235 701
Inventories 22,556 28,021 26,017
-------- -------- --------
T o t a l current assets 85,891 92,450 88,280
-------- -------- --------
NON-CURRENT ASSETS:
Investments in associates 24 80 76
Loan to a related party 633 627 635
Long-term receivables 104 273 72
Prepaid expenses 104 163 49
Property and equipment 11,399 9,692 11,609
Intangible assets 16,879 18,090 17,482
Deferred income tax assets 1,679 1,733 2,035
-------- -------- --------
T o t a l non-current assets 30,822 30,658 31,958
-------- -------- --------
T o t a l assets 116,713 123,108 120,238
======== ======== ========
* Reflects the adoption of IFRS 11 and IAS 19
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2013
June 30 December
31,
------------------
2013 2012* 2012*
-------- -------- ----------
(Unaudited) (Audited)
------------------ ----------
U.S. dollars in thousands
------------------------------
Liabilities and equity
CURRENT LIABILITIES:
Short-term credit and current maturities
of
borrowings from banks 15,719 17,907 13,421
Financial liabilities at fair value
through profit or
loss - derivatives 93 625 112
Accounts payable and accruals:
Trade 16,972 20,471 19,807
Other 9,103 9,367 10,499
Current income tax liability 365 545 958
Dividend payable 1,360 1,242
--------- -------- ---------
T o t a l current liabilities 43,612 50,157 44,797
--------- -------- ---------
NON-CURRENT LIABILITIES:
Borrowings from banks and others
(net of current maturities) 14,403 18,515 18,158
Put option liability 1,924 1,435 1,795
Accrued severance pay 171 11 115
Deferred income tax liabilities 1 1 1
--------- -------- ---------
T o t a l non-current liabilities 16,499 19,962 20,069
--------- -------- ---------
T o t a l liabilities 60,111 70,119 64,866
--------- -------- ---------
EQUITY:
Capital and reserves attributable
to
equity holders of the Company:
Share capital 2,798 2,798 2,798
Capital reserves 28,161 24,794 28,029
Currency translation reserve (1,016) 189 (147)
Transaction with non controlling
interest (180) (180) (180)
Retained earnings 26,862 25,329 24,826
--------- -------- ---------
56,625 52,930 55,326
NON CONTROLLING INTEREST (23) 59 46
--------- -------- ---------
T o t a l equity 56,602 52,989 55,372
--------- -------- ---------
T o t a l liabilities and equity 116,713 123,108 120,238
========= ======== =========
* Reflects the adoption of IFRS 11 and IAS 19
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2013
Six months ended Year ended
June 30 December 31,
--------------------------
2013 2012* 2012*
------------ ------------ ---------------
(Unaudited) (Audited)
-------------------------- ---------------
U.S dollars in thousands
except per share data
-------------------------------------------
REVENUE 61,746 66,214 130,764
COST OF SALES 36,832 37,375 74,800
----------- ------------ ---------------
GROSS PROFIT 24,914 28,839 55,964
RESEARCH AND DEVELOPEMEMNT EXPENSES 1,478 1,560 2,893
SELLING AND MARKETING EXPENSES 13,261 15,031 29,162
ADMINISTRATIVE AND GENERAL EXPENSES 5,950 6,323 13,191
OTHER LOSSES (INCOME) NET (6) 59 60
----------- ------------ ---------------
OPERATING PROFIT 4,231 5,866 10,658
----------- ------------ ---------------
FINANCIAL INCOME 1,353 428 1,336
FINANCE EXPENSES (1,319) (1,259) (1,829)
----------- ------------ ---------------
FINANCE EXPENSES - NET (34) 831 493
EQUITY EARNING 50 (1) 6
----------- ------------ ---------------
INCOME BEFORE TAXES ON INOCME 4,215 5,036 10,159
INCOME TAX EXPENSES 889 884 2,086
----------- ------------ ---------------
INCOME FOR THE PERIOD 3,326 4,152 8,073
=========== ============ ===============
OTHER COMPREHENSIVE INCOME-
Currency translation differences 868 (208) 128
Remeasurement of net defined benefit
liability 46
----------- ------------ ---------------
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD 2,458 4,360 7,899
=========== ============ ===============
PROFIT FOR THE PERIOD ATTRIBUTED TO:
Equity holders of the Company 3,396 4,188 8,122
Non controlling interest (70) (36) (49)
----------- ------------ ---------------
3,326 4,152 8,073
=========== ============ ===============
U.S dollars
------------------------------------------
EARNINGS PER SHARE:
Attributable to the equity holders
of
the Company during the period:
Basic 0.147 0.180 0.355
=========== ============ ===============
Diluted 0.147 0.180 0.340
=========== ============ ===============
* Reflects the adoption of IFRS 11 and IAS 19
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2013
Attributable to equity holders of the Company
-----------------------------------------------------------------------
Transaction
Currency with Non- Total
Number non
of Share Capital translation controlling Retained controlling shareholders'
shares capital Reserve reserve Interest earning Total interest equity
------------- -------- -------- ------------ ------------ --------- ------------ -------------------- --------------
U.S dollars in thousands
-------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1, 2013
(audited) 22,663,651 2,798 28,029 (147) (180) 24,826 55,326 46 55,372
CHANGES DURING THE SIX MONTH
ENDED
JUNE 30, 2013
(unaudited):
Comprehensive income -
Income for the
period 3,396 3,396 (70) 3,326
Other comprehensive
income
-
Currency translation
differences (869) (869) 1 (868)
------------ --------- ------------ -------------------- --------------
Total comprehensive
income (869) 3,396 2,527 (69) 2.458
Transaction with owners:
Recognition of
compensation
related stock
and option grants 132 132 132
Dividend ($0.06 per
share) (1,360) (1,360) (1,360)
-------- --------- ------------ --------------
Total transactions with
owners 132 (1,360) (1,228) (1,228)
------------ -------- -------- ------------ ------------ --------- ------------ -------------------- --------------
BALANCE AT JUNE 30, 2013
(unaudited) 22,663,651 2,798 28,161 (1,016) (180) 26,862 56,625 (23) 56,602
============ ======== ======== ============ ============ ========= ============ ==================== ==============
BALANCE AT JANUARY 1, 2012
(audited) 22,590,690 2,789 24,692 (20) (180) 22,383 49,664 96 49,760
CHANGES DURING THE SIX MONTH
ENDED
JUNE 30, 2012
(unaudited):
Comprehensive income -
Income for the
period 4,188 4,188 (36) 4,152
Other comprehensive
income
-
Currency translation
differences 209 209 (1) 208
------------ --------- ------------ -------------------- --------------
Total comprehensive
income 209 4,188 4,397 (37) 4,360
Transaction with owners:
Dividend ($0.055 per
share) (1,242) (1,242) (1,242)
Exercise of
options of
employee 72,961 9 102 111 111
------------ -------- -------- --------- ------------ --------------
Total transactions with
owners 72,961 9 102 (1,242) (1,131) (1,131)
------------ -------- -------- ------------ ------------ --------- ------------ -------------------- --------------
BALANCE AT JUNE 30, 2012
(unaudited) 22,663,651 2,798 24,794 189 (180) 25,329 52,930 59 52,989
============ ======== ======== ============ ============ ========= ============ ==================== ==============
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2013
Attributable to equity holders of the Company
---------------------------------------------------------------------------------------
Transaction
Currency with non- Non- Total
Number of Share Capital translation Controlling Retained controlling shareholders'
shares capital reserve reserve Interest earning Total interest equity
----------- -------- -------- ------------ ------------ --------- --------------- ------------ --------------
U.S dollars in thousands
----------- --------------------------------------------------------------------------------------------------------
Balance at 1 January 2012 22,590,690 2,789 24,692 (20) (180) 22,383 49,664 96 49,760
Comprehensive income -
Income for the year 8,122 8,122 (49) 8,073
Other comprehensive income
Currency translation
differences (127) (127) (1) (128)
remeasurement of net
defined
benefit liability (46) (46) (46)
------------ --------- --------------- ------------ --------------
Total comprehensive income (127) 8,076 7,949 (50) 7,899
Transaction with owners:
Issuance of shares to
a senior
employee 72,961 9 102 111 111
Allocation of share
capital 3,235 (3,235)
Dividend ($0.106 per
share) (2,398) (2,398) (2,398)
----------- -------- -------- --------- --------------- --------------
Total transaction with owners 72,691 9 3,337 (5,633) (2,287) (2,287)
----------- -------- -------- ------------ ------------ --------- --------------- ------------ --------------
Balance at 31 December 2012 22,663,651 2,798 28,029 (147) (180) 24,826 55,326 46 55,372
=========== ======== ======== ============ ============ ========= =============== ============ ==============
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2013
Six months ended Year ended
June 30 December 31,
---------------------
2013 2012* 2012*
--------- ---------- --------------
(Unaudited) (Audited)
--------------------- --------------
U.S dollars in thousands
-------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations (see note
6) 2,730 2,370 15,265
Interest paid (382) (516) (1,054)
Interest received 78 250 325
Income tax paid (1,462) (528) (677)
--------- --------- ---------------
Net cash generated from operating activities 964 1,576 13,859
--------- --------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,085) (1,757) (5,053)
Purchases of intangible assets and capitalized
development
Expenses (339) (799) (1,386)
Investments grants received 112 11 499
Restricted deposit 912 (1,222) (1,254)
Proceeds from sale of property and equipment 12 87 122
Collection of long-term loan granted to
a related party (13) 42 127
--------- --------- ---------------
Net cash used in investing activities (401) (3,638) (6,945)
--------- --------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to equity holders of the
Company (2,398)
Receipt of long-term borrowings and other
liabilities 20 5,805 9,811
Repayments of long term borrowings (3,746) (3,093) (6,930)
Proceeds from exercise of options 111 111
Short-term borrowings (repayments) from
banks, net 2,422 185 (5,080)
--------- --------- ---------------
Net cash generated from (used in) financing
activities (1,304) 3,008 (4,486)
--------- --------- ---------------
EXCHANGE LOSS (GAIN) ON CASH AND CASH
EQUIVALENTS (247) 41 117
--------- --------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS (988) 987 2,545
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 14,255 11,710 11,710
--------- --------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 13,267 12,697 14,255
========= ========= ===============
* Reflects the adoption of IFRS 11 and
IAS 19
This information is provided by RNS
The company news service from the London Stock Exchange
END
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