TIDMAFS
RNS Number : 2482U
Amiad Water Systems Ltd
28 March 2019
28 March 2019
Amiad Water Systems Ltd.
("Amiad" or the "Company")
Final Results
Amiad (AIM: AFS), a leading global producer of water treatment
and filtration solutions, announces its final results for the year
ended 31 December 2018.
Financial Summary
-- Revenue of $113.9m (2017: $112.3m)
-- Gross margin of 40.8% (2017: 39.5%)
-- Operating profit of $6.1m (2017: $4.6m)
-- Profit before tax of $4.8m (2017: $5.1m, which included
exceptional gains from foreign currency hedging)
-- Fully diluted earnings per share of $0.10 (2017: $0.14)
-- Net debt at 31 December 2018 was $13.8m (30 June 2018:
$10.8m) primarily reflecting an investment into inventories to
support recent product launches
-- Cash and cash equivalents at 31 December 2018 were $13.5m (30 June 2018: $14.6m)
Operational Summary
-- Positive sales momentum:
-- Growth in revenue reflecting increased sales in Americas and APAC regions
-- Key geography of the US achieved strong return to growth, with sales increasing 27.3%
-- Industry business unit sales grew by 4.9%, with growth in
Petrol, Petrochemical, Oil & Gas ("PPOG") and Municipal
segments in most geographies
-- Increase in underlying Irrigation sales offset by reduction
in revenue generated under the distribution agreement with Netafim,
resulting in slight decrease in Irrigation business unit sales
overall
-- Enhanced product offering and strengthened operations:
-- Successfully launched new range of irrigation products, which
have been well received and contributed to Irrigation revenue in
the second half of 2018
-- Completed integration of TEQUATIC(TM) PLUS Filter production
line and employees, and implemented a focused the sales effort
resulting strong pipeline and potential demand
-- Enhanced efficiency across the business with multiple
actions, including in-house metal fabrication facility and
increased automation in manufacturing
-- Gained 100% ownership of Amiad India subsidiary with
acquisition of outstanding 40% shareholding from local partner
Dori Ivzori, Chief Executive Officer of Amiad, said: "This is a
pleasing set of results with progress in most of our markets,
including a return to growth in our key geography of the US. Our
new Sigma series of irrigation products and the TEQUATIC(TM) PLUS
Filter acquisition are performing well and receiving increasing
demand. We continued to enhance our operational efficiency and
benefitted from, among other measures, the contribution from our
new in-house metal fabrication facility.
"Amiad entered 2019 in a stronger position than at the same
point of the prior year with increased sales momentum and enhanced
foundations. We are receiving strong demand for the new products,
which are expected to make an important contribution to growth in
their respective markets. This is supported by a solid backlog of
projects to be delivered in 2019 in the Irrigation and Industry
units. We also expect significant growth in the US. As a result, we
expect to achieve good revenue growth in 2019 in line with market
expectations, and are targeting an improvement in gross and
operating margins. Consequently, we look to the future with
confidence."
Enquiries
Amiad Water Systems Ltd.
Dori Ivzori, Chief Executive
Officer
Avishay Afriat, Chief Financial
Officer +972 4 690 9500
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Stifel Nicolaus Europe Ltd.
-----------------
Stewart Wallace, Ben Maddison +44 20 7710 7600
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Luther Pendragon Ltd.
-----------------
Harry Chathli, Claire Norbury +44 20 7618 9100
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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
irrigation and industrial purposes. In these markets, 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
nine subsidiaries and a comprehensive network of distributors to
customers in more than 80 countries.
For additional information or product details, please visit
www.amiad.com.
Operational Review
Amiad performed well in most of its markets during 2018,
including a return to growth in its key geography of the US, which
offset weakness in EMEA and a reduction in revenue generated under
its distribution agreement with Netafim. As a result, the Company
achieved modest growth in total revenue.
During the year, Amiad launched a new series of products
targeting the Irrigation market and completed the integration of
the TEQUATIC(TM) PLUS Filter acquisition, which is designed for
difficult-to-treat, highly loaded water. These new solutions have
been well received in the market and have strengthened Amiad's
position in Irrigation and the PPOG segment respectively.
Amiad continued to focus on improving its cost structure and
enhancing efficiency. In particular, the Company benefited from a
full year's contribution from its in-house metal fabrication
facility, which commenced operations in the second half of 2017.
Amiad also implemented a number of other measures, such as
introducing automation to certain manufacturing processes and
identifying purchase economies. As a result, the Company achieved a
solid improvement in gross margin that also translated into an
increase in operating margin.
Performance by Segment
Amiad has two business units: Irrigation and Industry (formerly
referred to as 'Non-Irrigation'). Revenue generated under the
Company's distribution agreement with Netafim, whereby Netafim
sells Amiad's Irrigation products, contributes to the Irrigation
business unit sales. The Industry business unit comprises sales
into the Petrol, Petrochemical, Oil & Gas ("PPOG"), Municipal
and General (other industry) segments. As noted previously, during
2018 the Company amended the classification of certain sales in the
Industry business unit to better represent the segmental
activities, which, in some cases, impacts the comparison with
previous years as described below.
Irrigation
The Irrigation business unit generated $60.3m in 2018 (2017:
$61.1m), accounting for 52.9% of the Company's revenue (2017:
54.4%). The reduction was due to a decrease in sales generated
under the Company's distribution agreement with Netafim, which
offset the growth in Amiad's direct Irrigation sales. Excluding the
contribution from Netafim, Amiad's Irrigation sales increased by
4.9% over 2017, reflecting growth in Irrigation in all of Amiad's
geographic regions except EMEA.
During the year, Amiad launched a new product series targeted at
the Irrigation market, which consists of three products:
-- Mini Sigma - an automatic self-cleaning filter with Amiad's
suction-scanning technology that is compact and modular in design
to enable various installation configurations and a small
footprint
-- Sigma Pro - an automatic polymeric multi-screen filter, which
provides a large screen area while maintaining a small
footprint
-- ADI-P - an electronic controller, which can be linked to a
mobile app, for advanced filter monitoring capabilities and control
functionality
Alongside Amiad's existing media, disc, screen and microfibre
filtration solutions, this new product range offers customers a
more complete package for their irrigation filtration requirements.
In addition, thanks to its compact size and modular design, the
Mini Sigma has enabled the Company to enter the landscaping
market.
The new products were well received by the market, and made a
solid contribution to Irrigation revenue in the fourth quarter of
2018 and the backlog entering into 2019.
Industry
The Industry business unit generated $53.7m in 2018 (2017:
$51.2m), accounting for 47.1% of the Company's revenue (2017:
45.6%). The increase was due to growth in the PPOG segment within
the Industry business unit, where sales grew by 74.4% to $8.8m
(2017: $5.1m). This reflects growth in PPOG sales in all of the
Company's geographic regions.
In the Municipal segment of the Industry business unit, reported
revenue increased to $11.2m (2017: $9.7m), however this includes
approximately $2.5m of sales in the US that in the prior year were
not classified as Municipal, but were within the General industry
segment. Excluding these sales, Municipal segment sales were
slightly reduced compared with the prior year due to weakness in
EMEA.
For the Company's other projects within the Industry business
unit, which are classified within the 'General' industry segment,
sales declined to $33.7m (2017: $36.4m). However, this is primarily
due to the reclassification of approximately $2.5m sales from
General industry in 2017 to Municipal in 2018. Excluding the
reclassified sales, the General industry segment sales were 0.7%
lower as growth in EMEA was offset by slight reductions
elsewhere.
Performance by Region
Americas
The Americas region includes sales by Amiad's subsidiaries in
the US, Mexico and Brazil as well as sales from the Company's
headquarters in Israel into Latin America.
In the Americas, Amiad achieved a return to growth in 2018 with
revenue increasing by 22.6% to $30.9m. In its key geography of the
US, sales increased by 27.3% to $26.8m (2017: $21.1m), reflecting
growth in the Irrigation and Industry business units. In
Irrigation, sales grew to $12.4m (2017: $10.7m), supported by a
focused sales efforts, and in Industry sales grew to $14.4m (2017:
$10.4m) as a result of the reorganisation in 2017 of the sales team
and channel partner network.
Within the Industry business unit in the US, sales in the PPOG
segment increased by 141.9% to $3.4m (2017: $1.4m), which was
driven by the Company's acquisition at the end of 2017 of the
licence to the TEQUATIC(TM) PLUS Filter. During the year, Amiad
installed the manufacturing equipment for the TEQUATIC(TM) PLUS
Filter at the Company's US headquarters in Mooresville, North
Carolina; transitioned the existing TEQUATIC(TM) PLUS Filter
employees and customers; and implemented significant sales efforts
and cost reduction measures.
In the Municipal segment in the US, sales increased by 183.7%,
which was partly due to the reclassification of certain sales as
mentioned above. However, on an underlying basis, excluding these
projects, sales in the Municipal segment nonetheless increased by
approximately 45.3%. On a reported basis, General industry revenue
declined in the US, however, this is due to the sales
reclassification: on an underlying basis, sales in this segment
also grew.
In Latin America, sales were broadly flat year-on-year in the
Irrigation and Industry business units respectively, but with a
greater diversification of projects within the industry segments:
in 2017 all of the projects in the Industry business unit were in
General industry whereas in 2018 there were also projects in the
PPOG and Municipal segments.
EMEA
The EMEA region includes sales by Amiad's subsidiaries in France
(Amiad Europe), Turkey and the UK as well as the domestic sales of
the Company's headquarters in Israel and also into Europe, the
Middle East and Africa.
Revenue in EMEA was $34.2m compared with $36.9m in 2017. The
reduction in revenue was primarily due to lower sales in the
Industry business unit, which generated $18.2m (2017: $20.4m).
Sales were also lower in the Irrigation unit at $16.0m (2017:
$16.5m), as an increase in Irrigation sales in Amiad Europe was
offset by a reduction in Israel (domestic) sales as activity
returned to normalised levels following an exceptional year in
2017.
In the Industry business unit, a significant reduction in the
Municipal segment offset growth in sales in the PPOG and General
industry segments. In particular, the economic difficulties in
Turkey resulted in a postponement in much public investment and,
consequently, a substantial decline in municipal activity.
During the year, the Company implemented organisational
restructuring, including a relocation to a new facility and
logistics centre in Europe, to better support the regional sales
activities.
APAC
The APAC region includes sales by Amiad's subsidiaries in
Australia, China, India and Singapore as well as sales from the
Company's headquarters in Israel into the Asia-Pacific
geography.
Revenue in APAC increased by 5.0% to $28.1m (2017: $26.8m),
reflecting growth in the Irrigation unit to $8.8m (2017: $8.1m) and
in the Industry unit to $19.3m (2017: $18.7m). Australia continued
to be the largest contributor to regional revenue, accounting for
49.1% of total sales (2017: 50.1%), with sales increasing to $28.1m
(2017: $26.8m).
Within the Industry business unit, there was an increase in
revenue in the PPOG and Municipal segments in most geographies,
which was partially mitigated by a reduction in General industry.
The reduction in General industry was primarily in due to a decline
in India where there was a reorganisation of the management team
and sales force in that subsidiary following the Company acquiring
the outstanding 40% share capital to take full ownership.
Singapore performed particularly well across the Industry
business unit, with sales increasing by 72.2% to $4.6m, primarily
as a result of the delivery of a few major projects in the
Municipal segment that had been delayed from 2017, as previously
noted.
Financial Review
Revenue for the year ended 31 December 2018 increased to $113.9m
compared with $112.3m for 2017.
Gross margin improved to 40.8% (2017: 39.5%) with gross profit
increasing to $46.5m (2017: $44.3m). This was a result of multiple
actions, including recognising the full benefits from the Company's
new metal fabrication facility that was completed in the second
half of 2017, which enables a greater amount of in-house
production; introducing automation to certain manufacturing
processes; and reviewing global operations to identify further
purchase economies and efficiencies through global production
planning.
Sales and marketing costs increased to $27.3m (2017: $25.9m)
primarily due to the launch of the new Irrigation products during
the year as well as a general increase in sales and marketing
activities and some exceptional expenses related to the
reorganisation in Amiad Europe. R&D costs were broadly flat at
$3.6m (2017: $3.7m) and administrative and general expenses were
reduced to $9.5m (2017: $10.2m) as the Company continued to
maintain tight cost control.
Operating profit increased by 34.6% to $6.1m (2017: $4.6m)
through improved margins as described above. Profit before tax was
$4.8m (2017: $5.1m) and fully diluted earnings per share were $0.10
(2017: $0.140). The reduction was due to net finance expenses of
$1.3m in 2018 compared with a net finance income of $0.5m in 2017
primarily as a result of exceptional gains from foreign currency
hedging in the earlier period.
As at 31 December 2018, cash and cash equivalents were $13.5m
(30 June 2018: $14.6m). Net debt at 31 December 2018 was $13.8m (30
June 2018: $10.8m), with the increase primarily due to an increase
in inventories relating to the launch of the new products and in
anticipation of sales in 2019, supported by the level of backlog,
as well as a slight increase in other receivables due to timing of
revenue recognition and the impact of currency fluctuations.
Dividend
As stated above, the Company is going through a growth phase
with the launch of new products and a higher rate of activity,
which requires increased investment in working capital. As a
result, the Board of Directors believe that it would be in the best
interests of the Company and its shareholders to not declare a
final dividend for 2018 thereby strengthening the financial
position to support this expansion. The Company continues to adhere
to a progressive dividend policy and, assuming the Company grows as
anticipated, the Board expects to resume dividend payments.
Outlook
Amiad entered 2019 in a stronger position than at the same point
of the prior year with increased sales momentum and enhanced
foundations. The Company is receiving strong demand for the new
Irrigation products that were launched in 2018 and the TEQUATIC(TM)
PLUS Filter, which are expected to make an important contribution
to growth in their respective markets. This is supported by a solid
backlog of projects to be delivered in 2019 in the Irrigation and
Industry units. The Company also expects significant growth in the
US.
The Company continues to focus on increasing efficiency and
reducing operating expenses, such as through introducing further
automation and value engineering. In addition, the Company expects
to benefit from operational gearing, with the anticipated growth in
revenue being achievable without expanding the cost base.
Amiad continues to actively manage the impact of foreign
currency movement and believes that its hedging position is well
established for 2019. However, if there is significant erosion of
the US Dollar against the New Israeli Shekel, it could have an
adverse effect on the Company's reported results.
As a result, the Company anticipates good revenue growth in 2019
- with increased sales in both the Irrigation and Industry business
units - in line with market expectations, and is targeting an
improvement in gross and operating margins as it benefits from
additional operational efficiencies. Consequently, the Board looks
to the future with confidence.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31
-----------------
2018 2017
-------- -------
$ in thousands
-----------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 13,526 16,122
Financial assets at fair value
through profit
or loss - derivatives 158 238
Trade and other receivables:
Trade 37,154 38,795
Other 4,761 3,935
Inventories 30,975 28,470
Current income tax assets 632 615
-------- --------
Total Current Assets 87,206 88,175
-------- --------
NON-CURRENT ASSETS:
Investment in joint venture - 10
Severance pay fund, net 160 184
Long-term receivables 276 57
Property, plant and equipment 11,086 11,271
Intangible assets 13,267 14,745
Deferred income tax assets 2,687 2,480
-------- --------
Total Non-Current Assets 27,476 28,747
-------- --------
Total Assets 114,682 116,922
======== ========
Date of approval of the financial statements by the board of
directors: March 27, 2019.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31
-----------------
2018 2017
-------- -------
$ in thousands
-----------------
Liabilities and Equity
CURRENT LIABILITIES:
Bank credit and current maturities
of
borrowings from bank 17,365 13,746
Financial liabilities at fair value
through
profit or loss - derivatives 180 108
Trade and other payables:
Trade 14,414 15,855
Other 10,841 12,826
Current income tax liability 340 287
--------- ---------
Total Current Liabilities 43,140 42,822
--------- ---------
NON-CURRENT LIABILITIES:
Borrowings from banks
(net of current maturities) 9,914 12,037
Liability for royalty payment 1,008 1,116
Remeasurements of post-employment
benefit obligations, net 345 372
Deferred income tax liabilities - -
--------- ---------
Total Non-Current Liabilities 11,267 13,525
--------- ---------
Total Liabilities 54,407 56,347
========= =========
EQUITY:
Capital and reserves attributable
to
equity holders of the Company:
Share capital 2,800 2,798
Capital reserves 28,781 28,720
Transaction with non-controlling
interests (416) (259)
Currency translation reserve (7,380) (5,206)
Retained earnings 33,574 31,916
--------- ---------
57,359 57,969
Non-controlling interests 2,916 2,606
--------- ---------
Total Equity 60,275 60,575
--------- ---------
Total Liabilities and Equity 114,682 116,922
========= =========
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended December
31
-------------------------
2018 2017
------------ -----------
$ in thousands
except per share data
-------------------------
Revenue 113,923 112,269
Cost of revenue 67,388 67,924
--------- ---------
Gross Profit 46,535 44,345
Research and development, net 3,644 3,698
Selling and marketing costs 27,326 25,872
Administrative and general expenses 9,489 10,221
Other (gains) losses (64) (6)
--------- ---------
Operating Profit 6,140 4,560
--------- ---------
Finance income 510 1,761
Finance expenses (1,814) (1,241)
--------- ---------
Finance income (expenses), net (1,304) 520
--------- ---------
Profit before income taxes 4,836 5,080
Income tax expenses 1,075 932
--------- ---------
Profit for the year 3,762 4,148
========= =========
Other comprehensive loss (income):
Items that will not be reclassified to profit
or loss:
Remeasurements of post-employment benefit
obligations, net 1 221
--------- ---------
Items that may be subsequently reclassified
to profit or loss:
Currency translation differences 2,886 (919)
--------- ---------
Other comprehensive loss (income) for the
year 2,887 (698)
========= =========
Total comprehensive income for the year 875 4,846
========= =========
Profit attributable to:
Equity holders of the Company 2,294 3,178
Non-controlling interests 1,468 970
--------- ---------
3,762 4,148
========= =========
Total comprehensive income attributable
to:
Equity holders of the Company 119 4,039
Non-controlling interests 756 807
--------- ---------
875 4,846
========= =========
$
------------
Earnings per share attributable to the equity
holders of the Company during the year:
Basic 0.101 0.140
===== =====
Diluted 0.100 0.140
===== =====
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
------------------------------------------------------------------------
Transaction
Currency with
Number Share Capital translation non-controlling Retained Non-controlling Total
of shares capital reserve reserve interest earnings Total interest equity
----------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
$ in thousands
----------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1, 2017 22,663,651 2,798 28,520 (6,288) (259) 29,857 54,628 2,902 57,530
=========== ======== ======== ============= ================ ========= ======== ================ ========
Comprehensive income
(loss):
Profit (loss) for
the year 3,178 3,178 970 4,148
Currency translation
differences 1,082 1,082 (163) 919
Remeasurement of net
defined
benefit liability (221) (221) (221)
------------- --------- -------- ---------------- --------
Total comprehensive
income
(loss) 1,082 2,957 4,039 807 4,846
Transaction with owners:
Recognition of
compensation
related to
employee stock and
options
grants 27 27 27
Capitalisation of
retained
earnings 173 (173) - - -
Dividend to
Non-controlling
interest (1,103) (1,103)
Dividend ($0.032
per share) (725) (725) (725)
-------- ---------------- --------- -------- ---------------- --------
Total transaction with
owners 200 (898) (698) (1,103) (1,801)
----------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
BALANCE AT DECEMBER 31, 2017 22,663,651 2,798 28,720 (5,206) (259) 31,916 57,969 2,606 60,575
=========== ======== ======== ============= ================ ========= ======== ================ ========
Comprehensive income
(loss):
Profit (loss) for
the year 2,294 2,294 1,468 3,762
Currency translation
differences (2,174) (2,174) (712) (2,886)
Remeasurement of net
defined
benefit liability (1) (1) (1)
------------- --------- -------- ---------------- --------
Total comprehensive
income
(loss) (2,174) 2,293 119 756 875
Transaction with owners:
Recognition of
compensation
related to
employee
stock and
options
grants 63 63 63
Exercise of options 15,461 2 (2) -
Acquisition of
non-controlling
interest (157) (157) (173) (330)
Dividend to
non-controlling
Interest (273) (273)
Dividend ($0.028
per share) (635) (635) (635)
----------- -------- -------- ---------------- --------- -------- ---------------- --------
Total transaction with
owners 15,461 2 61 (635) (729) (446) (1,175)
----------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
BALANCE AT DECEMBER 31, 2018 22,679,112 2,800 28,781 (7,380) (16) 33,574 57,359 2,916 60,275
=========== ======== ======== ============= ================ ========= ======== ================ ========
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December
31
----------------------
2018 2017
---------- ----------
$ in thousands
----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations 1,114 5,719
Interest paid (455) (35)
Interest received 228 201
Income taxes paid, net (751) (1,333)
-------- --------
Net cash generated from operating activities 136 4,552
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of investment 40 -
Business acquisition - (1,173)
Purchase of property, plant and equipment (3,223) (2,607)
Purchase of intangible assets (63) (179)
Investment grants received 1,626 89
Proceeds from sale of property, plant
and equipment 44 35
Restricted deposit 212 (302)
-------- --------
Net cash used in investing activities (1,364) (4,137)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to equity holders of the
Company (635) (725)
Dividends paid to non-controlling interest (273) (1,103)
Acquisition of non-controlling interest (330)
Receipt of long-term borrowings 5,373 6,005
Payments of long-term borrowings (7,505) (6,838)
Increase (decrease) in bank credit and
short-term
borrowing, net 3,685 1,760
-------- --------
Net cash generated from (used in) financing
activities 315 (901)
-------- --------
EXCHANGE RATE LOSS ON CASH AND CASH EQUIVALENTS (1,683) 517
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (2,596) 31
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 16,122 16,091
-------- --------
CASH AND CASH EQUIVALENTS AT OF YEAR 13,526 16,122
======== ========
AMIAD WATER SYSTEMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1) CASH FLOWS FROM OPERATIONS
Year ended December
31
----------------------
2018 2017
---------- ----------
$ in thousands
----------------------
Profit for the year 3,762 4,148
---------- ----------
(a) Adjustments to reconcile net income to net
cash
generated from operating activities:
Depreciation and amortisation 2,864 3,460
Interest paid 455 35
Interest received (228) (201)
Income taxes paid, net 751 1,333
Share-based payment, net 63 27
Increase in deferred income taxes, net (299) (199)
Increase (decrease) in accrued severance pay,
net 50 (58)
Gain from sale of investment (30) -
Exchange rate differences on borrowings 237 (198)
Net increase (decrease) in assets and liabilities
at fair value through profit or loss 152 (111)
Loss (profit) from sale of property, plant and
equipment (30) 5
---------- ----------
3,985 4,093
========== ==========
Changes in working capital:
Decrease (increase) in accounts receivable:
Trade (245) (3,878)
Other (1,435) 624
Decrease (increase) in long-term receivables (230) 4
Increase (decrease) in accounts payable:
Trade (21) 997
Other (1,236) 1,852
Increase in inventories (3,466) (2,121)
-------- --------
(6,633) (2,522)
-------- --------
Cash generated from operations 1,114 5,719
======== ========
2) IFRS 16 - New standards and interpretations not yet adopted
In January 2016, the IASB issued IFRS 16 - Leases which sets out
the principles for the recognition, measurement, presentation and
disclosure of leases for both parties to a contract and replaces
the previous leases standard, IAS 17 - Leases.
IFRS 16 eliminates the classification of leases for the lessee
as either operating leases or finance leases as required by IAS 17
and instead introduces a single lessee accounting model whereby a
lessee is required to recognize assets and liabilities for all
leases with a term that is greater than 12 months, unless the
underlying asset is of low value, and to recognize depreciation of
leases assets separately from interest on lease liabilities in the
income statement. As IFRS 16 substantially carries forward the
lessor accounting requirements in IAS 17, a lessor will continue to
classify its leases as operating leases or finance leases and to
account for those two types of leases differently. The standard is
effective for annual periods beginning on or after January 1,
2019.
The Group plans to apply IFRS 16 as from January 1, 2019 and has
chosen to apply a modified retrospective approach and to measure a
right-of-use asset in an amount equal to the lease liability.
It is noted that in the framework of the initial application of
IFRS 16, the Group has elected to apply the following practical
expedients with respect to leases in which it is the lessee:
-- To apply this Standard to contracts that were previously
identified as leases applying IAS 17 Leases and IFRIC 4 Determining
whether an Arrangement contains a Lease and not to apply this
Standard to contracts that were not previously identified as
containing a lease applying IAS 17 and IFRIC 4
-- Applying a single discount rate to a portfolio of leases with
reasonably similar characteristics;
-- Assessing whether a contract is onerous in accordance with
IAS 37 immediately before the date of initial application instead
of assessing impairment of right-of-use assets.
-- Not applying IFRS 16 with respect to leases that end within
12 months from the date of initial application and leases where the
underlying asset has a low value.
-- Using hindsight when determining the lease term if the
contract includes an extension or termination option.
-- Excluding initial direct costs from measurement of the
right-of-use asset at the date of initial application.
Furthermore, it is noted that the Group has chosen to apply the
exemption from recognizing short-term leases and leases where the
underlying asset has a low value, and to not include amounts
relating to non-lease components in the measurement of the
liability.
The Company expects that the adoption of the standard will
result in recognition of approximately $20.5 million of lease
assets and lease liabilities as of January 1, 2019 on the Company's
balance sheets.
The Group's management estimates that the main expected effects
of the implementation of the Standard on the consolidated statement
of comprehensive income for 2019 will be a decrease in rental
expenses of approximately $ 3.2 million, an increase in
depreciation expenses in the amount of about $2.7 million, an
increase in financing expenses in the amount of about $0.8
million.
The information presented above is an estimate of the Group and
may differ from the data that will ultimately be included in the
financial statements for the initial implementation period.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR CKODNCBKDDNB
(END) Dow Jones Newswires
March 28, 2019 03:01 ET (07:01 GMT)
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