TIDMAFS
RNS Number : 8058D
Amiad Water Systems Ltd
02 April 2014
2 April 2014
Amiad Water Systems Ltd.
("Amiad" or the "Company")
Results for the twelve months to 31 December 2013
Amiad (AIM: AFS), a leading global producer of water treatment
and filtration solutions, announces its full year results for the
twelve months ended 31 December 2013.
Financial Summary
-- Revenue was $118.8m (2012: $130.8m)
-- Operating profit was $5.7m (2012: $10.7m)
-- Profit before tax was $5.1m (2012: $10.2m)
-- Gross margin was 40.8% (2012: 42.8%)
-- Fully diluted earnings per share was $0.153 (2012: $0.344)
-- Net debt reduced to $13.7m (30 June 2013: $16.9m; 31 December 2012: $17.3m)
-- Final dividend for 2013 of $0.022 per share (2012: $0.06),
making a total dividend for the year of $0.073 (total dividend for
2012: $0.111)
-- Cash and cash equivalents at 31 December 2013 were $14.9m (30
June 2013: $13.3m; 31 December 2012: $14.3m)
Operational Summary
-- Irrigation segment broadly flat on 2012 despite postponement
of contracts in second half of the year
-- Excluding the exceptional contract delivered in Australia in
2012, Municipal segment performance in 2013 was solid and was only
slightly down on the previous year
-- Strong growth experienced in Industrial segment in Europe,
but was offset by a reduced number of projects in the US, Australia
and South East Asia
-- 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 impact
sales in Ballast Water segment
Arik Dayan, Chief Executive Officer of Amiad, said: "As
anticipated, 2013 was a transitional year as our traditional and
new segments continued to be subject to the fluctuating market
conditions and cautious spending on capital infrastructure
projects. Additionally, the strengthening of the New Israeli Shekel
against the US Dollar negatively impacted the profits more than
expected. However, we were 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.
"As the global economy improves, we anticipate returning to
growth in 2014. We expect an increase in revenue in the Oil &
Gas segment, and the resumption of demand in the Industrial and
Municipal segment in the second half of the year. The Irrigation
segment, particularly in US, is expected to show sustained momentum
through the year. We expect the exchange rate issue to continue to
have a negative impact. As a result, the management is committed to
maintaining tight cost control whilst continuing to invest in
targeted sales & marketing and product development so that we
are well-positioned to exploit the expansion opportunities as we
return to growth in 2014."
Enquiries
Amiad Water Systems Ltd.
-------------------------------------- -----------------
Arik Dayan, Chief Executive Officer
Amir Harel, Chief Financial Officer +972 4 690 9500
-------------------------------------- -----------------
Oriel Securities Ltd
-------------------------------------- -----------------
Juliet Thompson, Giles Balleny +44 20 7710 7600
-------------------------------------- -----------------
Luther Pendragon
-------------------------------------- -----------------
Harry Chathli, Claire Norbury,
Oli Hibberd +44 20 7618 9100
-------------------------------------- -----------------
About Amiad
Amiad Water Systems (AIM: AFS) is a leading global producer of
automatic, self-cleaning water treatment and filtration products
and systems. Through its engineering skills and ability to
innovate, Amiad provides cost-effective "green" solutions for the
industrial, municipal, irrigation, oil & gas and ballast water
markets. In these segments its patented products are being
integrated into the core of systems for filtration and water
treatment, micro irrigation and membrane protection, wastewater and
potable water treatment, cooling systems and sea water
filtration.
Headquartered in Israel, Amiad provides these solutions through
ten subsidiaries and a comprehensive network of over 170
distributors to customers in more than 80 countries.
For additional information or product details, please visit
www.amiad.com.
Operational Review
As stated previously, 2013 was a transitional year as the
Company's new products gained traction, and both its traditional
and new segments continued to be subject to fluctuating market
conditions, resulting in a decline in revenue to $118.8m (2012:
$130.8m). In particular, the Company suffered from a slowdown in
the US and India, particularly in the Municipal and Industrial
segments, as well as from the postponement in the implementation of
IMO regulations in the Ballast Water segment. However, revenue in
the Irrigation segment was flat with the prior year whilst the Oil
& Gas segment achieved significant growth. Gross margin was
40.8% (2012: 42.8%).
The Irrigation and Industrial segments generated $50.9m and
$47.3m respectively during the period (2012: $50.9m and $52.3m),
accounting for 42.9% and 39.9% of the Company's revenues. The
Municipal segment generated $10.4m (8.7%) compared with $17.8m in
2012, however this decline was partly due to the delivery of an
extraordinary project in the prior year 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.
Revenue in the Oil & Gas segment was $8.0m, representing an
increase of over 80% compared with $4.4m in 2012. The segment
accounted for 6.7% of overall revenue in 2013. Amiad expects that
the Oil & Gas segment will continue to be a key growth engine
and will increase its contribution to overall revenue.
There was a significant decline in revenue in the Ballast Water
segment to $2.1m, representing 1.8% of overall revenue, compared
with $5.7m in 2012. This was largely due to the previously stated
postponement in the implementation of coastguard regulations by the
IMO.
Amiad's new products continued to be well-received and are
increasingly penetrating the market. During the year, the Company
supplied the Scanjet in France; the Omega in Europe, Australia and
South East Asia; and the Sigma in Australia and US.
Global Activity
Asia
Amiad achieved slight growth in Asia in 2013 compared with 2012,
with revenue remaining stable in South East Asia whilst increasing
in China and India.
In South East Asia, Amiad experienced weakness in the Industrial
segment. However, the impact was mitigated by significant growth in
the Oil & Gas segment due to new project wins in South East
Asia. The Company also continued to supply its solutions to a large
dairy farm in Vietnam for providing clean drinking water and
process water
Revenue in India increased 20% (albeit from a low base), with a
weak first half being offset by a strong second half of the year.
The Company's strength in India is primarily based on the servicing
of the steel & power industry in the Industrial segment. During
the year, Amiad commissioned a project for Monnet Ispat &
Energy Ltd to provide complete filtration for the cooling system at
Monnet's integrated steel plant at Raigarth, which caters to the
rapidly growing infrastructure and construction industry in
India.
In China, the government's decision to increase the country's
agricultural production resulted in increasing demand for Amiad's
Irrigation solutions. The Company also increased its revenue in the
Industrial segment. However, this was partially offset by a
decrease in the Municipal and Oil & Gas segment, which resulted
in 10% revenue growth overall in this territory.
US and South America
Amiad performed well and achieved growth in the Irrigation
segment in the US, including a project in Florida using the
Company's Filtomat solutions, and an increase in revenue in the Oil
& Gas segment, including delivering a project in Canada for a
global energy and petrochemical company, albeit from a very low
base. 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
as well as from a lack of projects in the Industrial segment. As a
result, revenue for the year was approximately 15% below that in
2012. However, looking ahead, the Company is experiencing
indications of recovery in the Industrial, Irrigation and Oil &
Gas segments, and Amiad entered 2014 with a higher backlog than in
the prior year in the US. In particular, it is witnessing
significant activity in the fracking industry of the Oil & Gas
segment. In addition, the Company installed its automatic
self-cleaning screen filters in the first ship of a new class of US
Navy aircraft carrier, the USS Gerald R. Ford (CVN 78), which was
launched on 17 November 2013. Following the successful
installation, the Company was awarded a contract to supply a
pre-filtration solution for the aircraft carrier John F. Kennedy
(CVN 79), the second ship of the new class, which will provide
protection for the reverse osmosis ("RO") system to provide fresh
water. Amiad's filtration solution was selected to extend the life
of the RO membranes as well as reduce operating costs.
In the Oil & Gas segment, 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 being installed 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 Europe, achieving revenue growth of over
40%, primarily based on strength in the Industrial and Municipal
segments, including significant work in Germany and Scandinavia for
pre-filtration membrane protection as well as delivering a project
at a paper mill in Spain. In the Oil & Gas segment, Amiad
executed a project in Italy and installed its Omega products at a
refinery in Romania. 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 and the region, revenue was in-line with the prior
year, with significant growth in the Oil & Gas segment and an
increase in the Municipal segment being offset by slight declines
in the Irrigation and Industrial segments. Amiad installed and
commissioned a solution for the protection of ultra-filtration
membranes at the Ashdod Desalination Plant in the Municipal
segment. 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. Revenue was also
significantly lower in the Municipal segment due to the delivery of
exceptional contracts in 2012. However, Amiad did undertake a
continuation project with Origin Energy, one of Australia's leading
integrated energy companies, for the supply of the Company's
solutions for a project involving the processing of coal seam gas
to liquefied natural gas.
Financial Review
Revenue for the twelve months ended 31 December 2013 was $118.8m
compared with $130.8m for the full year 2012.
Fully diluted earnings per share was $0.153 (2012: $0.344).
Operating profit was $5.7m compared with $10.7m in 2012 and
profit before tax was $5.1m (2012: $10.2m). Net profit was $3.6m
(2012: $8.1m), which was slightly below the Company's expectations
due to the negative impact of the weakness of the US Dollar against
the New Israeli Shekel, which was greater than expected, as well as
higher than anticipated taxation and operating expenses.
Gross margin was 40.8% compared with 42.8% in 2012. 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 31 December 2013, cash and cash equivalents in the bank
were $14.9m compared with $13.3m at 30 June 2013 and $14.3m at 31
December 2012. Net debt at year end was $13.7m, a reduction of
$3.2m from $16.9m at 30 June 2013. The decrease in net debt was
primarily due to strong cashflow from operations and effective
management of capital investment in the second half of the
year.
Dividend
The Directors have decided to declare a final dividend out of
the Company's profits for the twelve months ended 31 December 2013
of $0.022 gross per share (final dividend 2012: $0.06 gross per
share), with an ex dividend date of 11 June 2014, a record date of
13 June 2014 and a payment date of 10 July 2014. This makes a total
dividend for the year of $0.073 per share (total dividend for 2012:
$0.111 gross per share), which represents approximately 45% of net
earnings compared with approximately 33% in 2012.
Outlook
The fundamental proposition of the Company remains strong as
there is sustained and increasing demand for clean water. The
management believes that it has the market-leading technology and
products that will enable it to capture opportunities across all
the market segments and territories in which it operates.
As the global economy improves, Amiad anticipates returning to
growth in 2014. At the end of Q1 2014, backlog was 15% higher than
at 31 December 2013. The Company expects the resumption of demand
in the Industrial and Municipal segment with acceleration in the
second half of the year. The Irrigation segment, particularly in
US, is expected to show sustained momentum through the year.
The Oil & Gas segment is expected to continue to grow in
2014 and beyond. This segment has entered 2014 with a higher
backlog of orders in the US where, in particular, Amiad is
witnessing an increase in activity in the fracking industry. The
Ballast Water segment continues to suffer from the postponement of
the implementation of IMO regulation and a lack of clear direction
resulting in reduced impetus for change amongst ship builders. As a
result, growth in this segment will occur when a significant number
of ship builders commence implementing the IMO regulations once
they come into force. Whilst this is an increasingly competitive
area, there are considerable growth expectations for the Ballast
Water industry in general over the next few years and the Company
believes it can increase its share of this market over that
period.
The Company expects the weakness of the US Dollar against the
New Israeli Shekel to continue to have a negative impact. As a
result, the management is committed to maintaining tight cost
control whilst continuing to invest in targeted sales &
marketing and product development so that the Company is
well-positioned to exploit the expansion opportunities as Amiad
returns to growth in 2014.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
------------------
2013 2012*
-------- --------
$ in thousands
------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 14,871 14,255
Financial assets at fair
value through profit
or loss 480 1,140
Trade and other receivables:
Trade 41,560 40,831
Other 3,501 5,336
======== ========
Inventories 25,277 26,017
Current income tax assets 367 701
-------- --------
Total Current Assets 86,056 88,280
-------- --------
NON-CURRENT ASSETS:
Investment in joint venture -,- 76
Loans to a related party 100 635
Severance pay fund, net 261 215
Long-term receivables 36 72
Prepaid expenses -,- 49
Property, plant and equipment 11,449 11,609
Intangible assets 16,846 17,482
Deferred income tax assets 1,722 2,035
======== --------
Total Non Current Assets 30,414 32,173
-------- --------
Total Assets 116,470 120,453
======== ========
* Reflects the adoption of IFRS 11 and IAS 19 amendment.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
-----------------
2013 2012*
------- --------
$ in thousands
-----------------
Liabilities and Equity
CURRENT LIABILITIES:
Bank credit and current maturities
of
borrowings from bank 10,544 13,421
Financial liabilities at fair value
through
profit or loss- derivatives 63 112
Trade and other payable:
Trade 19,670 19,807
Other 9,433 10,499
Put option liability 2,204
Current income tax liability 529 958
--------- ---------
Total Current Liabilities 42,443 44,797
--------- ---------
NON CURRENT LIABILITIES:
Borrowings from banks
(net of current maturities) 17,988 18,158
Investment in associate 110
Put option liability 1,795
--------- ---------
Accrued severance pay ,net 381 330
--------- ---------
Deferred income tax liabilities 1 1
--------- ---------
Total Non Current Liabilities 18,480 20,284
--------- ---------
Total Liabilities 60,923 65,081
--------- ---------
EQUITY:
Capital and reserves attributable
to
equity holders of the Company:
Share capital 2,798 2,798
Capital reserves 28,271 28,029
Transaction with non-controlling
interests (180) (180)
Currency translation reserve (1,416) (147)
Retained earnings 26,082 24,826
========= ---------
55,555 55,326
Non-controlling interests (8) 46
--------- ---------
Total Equity 55,547 55,372
--------- ---------
Total Liabilities and Equity 116,470 120,453
========= =========
* Reflects the adoption of IFRS 11 and IAS 19 amendment.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
-------------------------
2013 2012*
----------- ------------
$ in thousands
except per share
data
-------------------------
Revenue 118,787 130,764
Cost of sales 70,360 74,800
--------- ---------
Gross Profit 48,427 55,964
Research and development, net 3,357 2,893
Selling and marketing costs 27,456 29,162
Administrative and general expenses 11,929 13,191
Other gains (losses) 27 (60)
--------- ---------
Operating Profit 5,712 10,658
--------- ---------
Finance income 1,901 1,450
Finance costs (2,278) (1,943)
--------- ---------
Finance costs, net (377) (493)
Share in loss of joint venture (188) (6)
--------- ---------
Profit before income taxes 5,147 10,159
Income tax expenses 1,499 2,086
--------- ---------
Profit for the year 3,648 8,073
========= =========
Other comprehensive income (loss)-
Items that will not be reclassified to profit
or loss:
Remeasurements of post-employment benefit
obligations 72 (46)
--------- ---------
Items that may be subsequently reclassified
to profit or loss:
Currency translation differences 1,271 128
--------- ---------
Other comprehensive income for the year 1,199 174
========= =========
Total comprehensive income for the year 2,449 7,899
========= =========
Profit attributable to:
Equity holders of the Company 3,700 8,122
Non controlling interests (52) (49)
--------- ---------
3,648 8,073
========= =========
Total comprehensive income attributable to:
Equity holders of the Company 2,503 7,949
Non controlling interests (54) (50)
--------- ---------
2,449 7,899
========= =========
$
----------------
Earnings per share attributable to the equity
holders of the Company during the year :
Basic 0.163 0.359
======= =======
Diluted 0.153 0.344
======= =======
* Reflects the adoption of IFRS 11 and IAS 19 amendment.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
------------------------------------------------------------------------
Transaction
Currency with Non
Number Share Capital translation non-controlling Retained controlling Total
of shares capital reserve Reserve Interest earnings Total interest Equity
----------- -------- -------- ------------- ---------------- --------- -------- ------------ --------
$ 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:
Profit for the
year 8,122 8,122 (49) 8,073
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
=========== ======== ======== ============= ================ ========= ======== ============ ========
Comprehensive income:
Profit for the year 3,700 3,700 (52) 3,648
Currency
translation
differences (1,269) (1,269) (2) (1,271)
Remeasurement of
net defined
benefit liability* 72 72 72
------------- --------- -------- ------------ --------
Total comprehensive
income (1,269) 3,772 2,503 (54) 2,449
Transaction with owners:
Recognition of
compensation
related to
employee
stock and
options
grants 242 242 242
Dividend ($0.106
per share) (2,516) (2,516) (2,516)
-------- --------- -------- --------
Total transaction with
owners 242 (2,516) (2,274) (2,274)
----------- -------- -------- ------------- ---------------- --------- -------- ------------ --------
BALANCE AT 31 DECEMBER 2013 22,663,651 2,798 28,271 (1,416) (180) 26,082 55,555 (8) 55,547
=========== ======== ======== ============= ================ ========= ======== ============ ========
* Reflects the adoption of IFRS 11 and IAS 19 amendment.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 31 December
-------------------------
2013 2012*
----------- ------------
$ in thousands
-------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations 9,547 15,265
Interest paid (815) (1,054)
Interest received 273 325
Income taxes paid (926) (677)
-------- --------
Net cash generated from operating activities 8,079 13,859
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2,406) (5,053)
Purchase of intangible assets (756) (1,386)
Investment grants received 130 499
Proceeds from sale of property, plant
and equipment 40 122
Restricted deposit 718 (1,254)
Collection of long-term loan granted
to a related party and other 637 127
-------- --------
Net cash used in investing activities (1,637) (6,945)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to equity holders of
the Company (2,516) (2,398)
Proceeds from exercise of option 111
Receipt of long-term borrowings 8,570 9,811
Payments of long term borrowings (7,452) (6,930)
Short-term payments from banks (3,932) (5,080)
-------- --------
Net cash used to financing activities (5,330) (4,486)
-------- --------
EXCHANGE RATE GAIN (LOSS) ON CASH AND
CASH EQUIVALENTS (496) 117
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 616 2,545
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 14,255 11,710
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
YEAR 14,871 14,255
======== ========
* Reflects the adoption of IFRS 11 and IAS 19 amendment.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
Year ended 31 December
-------------------------
2013 2012
---------- -------------
$ in thousands
-------------------------
Profit for the year 3,648 8,073
---------- -------------
(a) Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 3,839 3,635
Interest paid 815 1,054
Interest received (273) (325)
Income taxes paid 926 677
Share based payment 242
Increase in Put option 130 384
Share in loss of joint venture 188 6
Decrease (Increase) in deferred income taxes, net 277 (537)
Accrued severance pay, net 120 171
Exchange rate differences on borrowings (201) 254
Decrease (Increase) in assets at fair value
through profit or loss 611 (1,402)
Loss(profit) from sale of fixed assets (3) 60
Exchange rate differences on loans to related
party and others (33) (13)
---------- -------------
6,638 3,964
========== =============
Year ended 31 December
-------------------------
2013 2012
------------ -----------
$ in thousands
-------------------------
Changes in working capital:
Decrease (increase) in accounts receivable:
Trade (1,265) 224
Other 1,177 1,355
Decrease in prepaid expenses 54 138
Decrease in long term receivable 276
Increase (decrease) in accounts payable:
Trade 482 (4,742)
Other (1,361) 2,208
Decrease in inventories 174 3,769
-------- --------
(739) 3,228
-------- --------
Cash generated from operations 9,547 15,265
======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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