AFS.L Regulatory News (AFS)

4 Sep 2006 07:03

Amiad Filtration Systems Ltd04 September 2006 4 September 2006 Amiad Filtration Systems Ltd ("Amiad" or "the Company") Results for the six months to 30 June 2006 Amiad, the producer and global supplier of water filters and filtration systems for the industrial, municipal and the irrigation markets announces its interim results for the six months to 30 June 2006. Financial Highlights• Turnover was $22.0m (H1 2005: $21.8m)• Profit before tax was $2.2m (H1 2005: $2.1m)• Gross margins maintained at 50.3%• Fully diluted earnings per share 7.8 cents• Interim dividend of 2.385 cents (gross) Operational Highlights• Strong finish to first half of 2006 reflecting the demand for its automatic filters;• Downturn in irrigation offset by good growth in industrial & municipal segment in USA, China, Australia, Singapore and France;• Solid progress in high growth territories;• Significant interest in Amiad's filters for pre-filtration of membrane systems, including for desalination projects;• No material impact of conflict in Middle East Commenting on the results, Yossi Katz, Chief Executive of Amiad said: "The market for Amiad's products continues to expand with greater global investments in infrastructure. The Company saw a strong finish to the first half, especially in the industrial & municipal segment, with increased interest in the Company's new products serving this segment. As these products have a longer sales cycle, they are hoped to have a significant contribution to the Company's sales in the future. Amiad entered the second half of 2006 with good momentum and, if this is maintained until the end of the year, would expect to report higher revenues for this period compared with equivalent period last year." Enquiries: Amiad Filtration SystemsYossi Katz, Chief Executive Officer + 44 (0) 207 929 8989 on the day andItamar Eder, Chief Financial Officer +972 (0) 4 690 9500 thereafter Corfin CommunicationsHarry Chathli, Neil Thapar + 44 (0) 207 929 8989 Operational Review The Board is pleased to report that the Company has continued to build on the good progress made in 2005. Revenues for the six months ended 30 June 2006 were $22.0m (H1 2005: $21.8m), reflecting demand for its automatic filters. Asindicated in the trading update of 26 July 2006, all operations of Amiad are now profitable. At the beginning of the year, sales in the irrigation segment were affected by seasonality associated with farming patterns mainly in Spain, USA and Africa. Downturn in the irrigation segment was offset by good growth in the industrial & municipal segment in USA, China, Australia, Singapore and France. The Company made further progress within high growth territories. In China, the Company was successful in penetrating the municipal segment, mainly with pre-filtration products, and also the petrochemical industries. In India, through its new distributor for industrial & municipal products, the Company has already trebled its sales. In Russia the Company also won its first drinking water project. Other key projects have been in Brazil (offshore oil & gas), in Malaysia (drinking water) and in France (pre-filtration). The Company is currently conducting field tests in Thailand, Singapore, Japan and Israel for municipal drinking water. In Korea the company supplied its first ballast water treatment product for field tests. In Aberdeen it is conducting field tests for injection and produced water - for the offshore oil and gas application Amiad has seen a significant interest in the Company's filters for pre-filtration of membrane systems, including for desalination projects. The Company's new thread filter product, first introduced late 2005 has attracted interest from major customers globally. Financial review Revenue for the six months ended 30 June 2006 was $22.0m (H1 2005: $21.8m). Profit before tax increased by 5.4% to $2.2m (H1 2005: $2.1m). Fully diluted earnings per share were 7.8 cents. Gross margins were 50.3% which is in line with full year 2005 gross margins of 50.2%. The Company is facing pressure on its gross margins reflecting the increase in prices of raw materials due to the high oil prices and increased competition in the marketplace. The Company increased its sales and marketing effort globally but continued to keep a tight control over administrative and general expenses. Operating profit decreased by 5.5% to $2.5m compared with $2.7m in the equivalent period primarily due to the increased cost of sales and increased sales and marketing costs. Net cash, cash equivalent and marketable securities as of 30 June 2006 amounted to $6.2m. Cash from operations was positive $0.2m compared to negative $2.1m in the first half of 2005. DividendThe Directors decided to distribute dividends from the Company's profits for the six months ended 30 June 2006, of approximately 2.385 cents (USD, gross) per share, with an ex dividend date of 4 October 2006 record date of 6 October 2006 and payment date of 6 November 2006. Outlook The market for Amiad's products continues to expand with greater global investments in infrastructure. The Company saw a strong finish to the first half of 2006, especially in the industrial & municipal segment, with increased interest in the Company's new products serving this segment. As these products have a longer sales cycle, they are hoped to have a significant contribution to the Company's sales in the future. Amiad entered the second half of 2006 with good momentum and if this is maintained until the end of the year, would expect to report higher revenues for this period compared with the equivalent period last year. AMIAD FILTRATION SYSTEMS LTD. CONDENSED CONSOLIDATED BALANCE SHEET AT 30 JUNE 2006 30 June 31 December 2006 2005 2005 $ in thousands Assets (Unaudited) (Audited) CURRENT ASSETS:Cash and cash equivalents 4,537 2,900 7,692Marketable securities 1,688 77 4Accounts receivable and accruals:Trade 16,523 14,601 14,467Other 1,456 1,159 1,250Inventories 8,769 8,797 8,210Total current assets 32,973 27,534 31,623 NON-CURRENT ASSETS:Loan to jointly controlled entity - 241 -Loan to a related party 503 398 411Fixed assetes 2,433 2,783 2,613Other assets, net 2,447 2,703 2,618Long term receivables 548 112 94Deferred income tax assets 708 891 1,128Severance pay assets 581 532 558Total non-current assets 7,220 7,660 7,422Total assets 40,193 35,194 39,045 Abraham Heifetz Yosef Katz Itamar Dov EderChairman of the Board CEO and Director CFO and Director Date of approval of the financial statements: 31 August, 2006 AMIAD FILTRATION SYSTEMS LTD. CONDENSED CONSOLIDATED BALANCE SHEET AT 30 JUNE 2006 30 June 31 December 2006 2005 2005 $ in thousands (Unaudited) (Audited) Liabilities and shareholders' equityCURRENT LIABILITIES:Short-term credit from bank and other andcurrent maturities of long-term bank loans 7,646 8,620 6,348Accounts payable and provisions:Trade 6,688 6,839 5,833Other 2,453 4,078 2,579Income tax liability 629 870Total current liabilities 17,416 19,537 15,630 NON-CURRENT LIABILITIES:Loans from banks and other(net of current maturities) 2,761 4,879 3,601Severance pay obligations 637 558 519Deferred taxes 565 700 629Total non-current liabilities 3,963 6,137 4,749Total liabilities 21,379 25,674 20,379SHAREHOLDERS' EQUITYCapital and reserves attributable to theCompany's equity holders:Share capital 2,291 1,497 2,291Capital reserve 12,797 1,020 12,797Perpetual debenture - 2,704 -Currency translation reserve 134 99 123Retained earnings 3,294 4,045 3,190 18,516 9,365 18,401MINORITY INTEREST 298 155 265Total shareholders' equity 18,814 9,520 18,666Total liabilities and shareholders' equity 40,193 35,194 39,045 The notes on pages 11 to 16 are an integral part of these condensed financialstatements. AMIAD FILTRATION SYSTEMS LTD. CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2006 6 months ended Year ended 30 June 31 December 2006 2005 2005 $ in thousands except per share data (Unaudited) (Audited) Revenue 22,045 21,768 42,406Cost of sales 10,946 10,483 21,139Gross profit 11,099 11,285 21,267Selling and marketing costs 5,680 5,291 10,571Administrative and general expenses 2,699 2,761 5,471Amortization of other assets 170 169 340Other expenses, net 8 375 1Operating profit 2,542 2,689 4,884Financial expenses 364 623 822Profit before income tax 2,178 2,066 4,062Taxes on income 618 583 1,151Profit for the period 1,560 1,483 2,911Attributable to:Equity holders of the Company 1, 491 1,530 2,943Minority interest 69 (47) (32) 1, 560 1,483 2,911 $Earnings per share attributable to the equityholders of the Company during the period(See note 3e):Basic 0.079 0.107 0.200Diluted 0.078 0.107 0.200 The notes on pages 11 to 16 are an integral part of these consolidated financialstatements. AMIAD FILTRATION SYSTEMS LTD. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2006 Attributable to equity holders of the Company Share Capital Perpetual Currency Retained Minority Total capital reserve debenture translation earning interest share- reserve holders equity $ in thousands BALANCE AT 1 JANUARY 2006(audited) 2,291 12,797 - 123 3,190 265 18,666 Currency translationdifferences - - - 11 - - 11Dividend - - - - (1,455) - (1,455)Dividend to minority - - - - - (36) (36)Share-based payment - - - - 68 - 68Profit for the period - - - - 1,491 69 1,560BALANCE AT 30 JUNE 2006(unaudited) 2,291 12,797 - 134 3,294 298 18,814 BALANCE AT 1 JANUARY 2005(audited) 1,497 1,020 2,871 39 2,872 238 8,537Interest on perpetualdebenture** - - - (54) - (54)Exchange differences on perpetual debenture - - (167) - 167 - -Currency translationdifferences - - - 60 - - 60Dividend - - - - (470) - (470)Dividend to minority - - - - - (36) (36)Profit for the period - - - - 1,530 (47) 1,483BALANCE AT 30 JUNE 2005(unaudited) 1,497 1,020 2,704 99 4,045 155 9,520 ** See note 3cThe notes on pages 11 to 16 are an integral part of these condensed financialstatements. AMIAD FILTRATION SYSTEMS LTD. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2006 Attributable to equity holders of the Company Share Capital Perpetual Currency Retained Minority Total capital reserve debenture translation earning interest share- reserve holders equity $ in thousands BALANCE AT 1 JANUARY2005 1,497 1,020 2,871 39 2,872 238 8,537(audited) Net proceeds fromissuance 545 8,730 - - - - 9,275of shares in IPO*Deferred taxes inrespect of - 621 - - - - 621IPO costs*Interest on perpetualdebenture** - - - - (81) - (81)Exchange differences on perpetual debenture - - (196) - 196 - -Conversation ofperpetual - 2,675 (2,675) - - - -debenture**Currency translationdifferences - - - 84 - - 84Dividend - - - - (2,804) - (2,804)Dividend to minority - - - - - (36) (36)Changes in minorityinterest - - - - - 95 95upon the sale ofinvestment in acompanyIssuance of bonus shares 249 (249) - - - - -Share-based payment - - - - 64 - 64Net income - - - - 2,943 (32) 2,911 BALANCE AT 31 DECEMBER2005 2,291 12,797 - 123 3,190 265 18,666(audited) * See note 3b** See note 3cThe notes on pages 11 to 16 are an integral part of these condensed financialstatements. AMIAD FILTRATION SYSTEMS LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2006 6 months ended Year ended 30 June 31 December 2006 2005 2005 $ in thousands (Unaudited) (Audited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income 1,560 1,483 2,911 Adjustments to reconcile net income to net cash (1,341) (3,577) (3,220) used in operating activities (a) Net cash generated from (used in) operating 219 (2,094) (309) activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchases fixed assets (202) (679) (1,041) Purchases of other assets - (44) Investments grants received 61 53 113 Disposal of (investment in) marketable securities (1,679) 225 300 Acquisition of company included according to proportionate consolidation method (b) - - (517) Increase in cash resulting from transition to full consolidation of a company previously included - - 8 according to the proportionate consolidation method (d) Proceeds from sale of fixed assets 27 16 41 Proceeds from sale of a subsidiary (c) - - 50 Long-term loan granted to a related party and (543) (56) (284) others Collection of long-term loan granted to a related 28 34 268 party Net cash used in investing activities (2,308) (407) (1,106) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of shares in IPO - - 9,275 Dividends paid to the minority interest (36) (36) (36) Dividends paid to company's shareholders (1,455) - (2,804) Interest on perpetual debenture - (81) (135) Repayments of long term loans (981) (855) (1,928) Receipt of long-term loans and other liabilities 29 1,636 1,964 Short-term credit from banks and other, net 1,356 2,640 840 Net cash generated from financing activities (1,087) 3,304 7,176 Effect of exchange rate changes on cash and cash equivalents 21 93 (73) NET INCREASE (DEREASE) IN CASH AND CASH EQUIVALENTS (3,155) 896 5,688 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 7,692 2,004 2,004 CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 4,537 2,900 7,692 Interest paid 281 326 823 Income taxes paid 1,327 804 1,643 The notes on pages 11 to 16 are an integral part of these condensed financialstatements. AMIAD FILTRATION SYSTEMS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - GENERAL The interim financial statement as of 30 June 2006 and for the six-month periodthen ended (hereafter - the interim statements) has been prepared in condensedform in accordance with IAS 34 - "Interim Financial Reporting". The interim condensed financial report should be read in conjunction with theannual financial statements for the year ended 31 December 2005.NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted are consistent with those of the annualfinancial statements for the year ended 31 December 2005. As described in theannual financial statements for the year ended 31 December 2005. The following new standards, amendments to standards and interpretations aremandatory for financial year ending 31 December 2006. • IAS 19 (Amendment), Employee Benefits (effective from 1 January 2006). This amendment introduces the option of an alternative recognition approach for actuarial gains and losses. It may impose additional recognition requirements for multi-employer plans where insufficient information is available to apply defined benefit accounting. It also adds new disclosure requirements. As the Group dose not intend to change the accounting policy adopted for recognition of actuarial gains and losses, adoption of this amendment is impact the format and extent of disclosures presented in the accounts. • IAS 39 (Amendment), The Fair Value Option (effective from 1 January 2006 ). This amendment changes the definition of financial instruments classified at fair value through profit or loss and restricts the ability to designate financial instruments as part of this category. The Group believes that this amendment should not have a significant impact on the classification of financial instruments, as the Group should be able to comply with the amended criteria for the designation of financial instruments at fair value through the income statements. The following new standards, amendments to standards and interpretations havebeenissued but are not effective for 2006 and have not been early adopted: • IFRIC 8, Scope of IFRS 2, effective for annual periods beginning on or after 1 May 2006. Management is currently assessing the impact of IFRIC 8 on the Company's operations. • IFRIC 9, Reassessment of Embedded Derivatives, effective for annual periods beginning on or after 1 June 2006. Management is currently assessing the impact of IFRIC 9 on the Company's operations. AMIAD FILTRATION SYSTEMS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued): • IFRS 7, Financial Instruments: Disclosures, and a complementary Amendment to IAS 1, Presentation of Financial Statements - Capital Disclosures (effective from 1 January 2007). IFRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. It replaces IAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions, and disclosure requirements in IAS 32, Financial Instruments: Disclosure and Presentation. It is applicable to all entities that report under IFRS. The amendment to IAS 1 introduces disclosures about the level of an entity's capital and how it manages capital. The Group assessed the impact of IFRS 7 and the amendment to IAS 1 and concluded that the main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures required by the amendment of IAS 1. The Group will apply IFRS 7 and the amendment to IAS 1 for annual periods beginning from 1 January 2007. NOTE 3 - SHAREOLDERS' EQUITY: a. On 27 March 2006, the Company's Board of Directors resolved to distributedividends to its shareholders in the amount of $1,455 thousand. b. On 27 November 2005, the company affected a split of the company's sharecapital such that each ordinary share 1 was split into 2 ordinary shares on NIS0.5 par value each. In addition, the company approved a distribution of2,339,704 ordinary shares as bonus shares to any party that was a shareholder inthe company on November 24, 2005. Subsequent to the split and bonus shares,immediately before the IPO (see below), the number of outstanding shares was13,826,758.On 5 December 2005, the company issued 5,045,965 ordinary sharesin an IPO. Concurrently, the company's ordinary shares were admitted totrading on the AIM in London. The net proceeds from the issuance of the shares(after costs of $2,023 thousand) were $9,275 thousand.c. The perpetual debenture, which was denominated in NIS in the amount of NIS12,370 thousand, bore annual interest at the rate of 4%, payable on a quarterlybasis. The debenture was converted into capital reserves of the company onDecember 5, 2005 with no issuance of ordinary shares. d. Share options: On 12 August 2005, the Company granted to three senior employees, the chairmanof 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 sharesplit and bonus shares). The options to the senior employees were granted in theframework of the Company's option plan that was submitted to the Israeli TaxAuthorities, in accordance with the provisions of Section 102 to the IsraeliIncome Tax Ordinance and the remaining options were granted under the provisionsof section 3(i) of the Income Tax Ordinance. The options vest over a period offour years (except in the case of the CEO where the period is two years) andhave an exercise price of $ 1.53 per share. The options will be held during thevesting period by a trustee and will be released in accordance with the terms ofthe option plan. Unexercised options expire 10 years after date of grant. AMIAD FILTRATION SYSTEMS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - SHAREOLDERS' EQUITY (continued): The weighted average fair value of the options as at the grant date is was $0.49per share, and was estimated using a binomial option pricing model based on thefollowing data and assumptions: Share price - $1.53; exercise price - $ 1.53,expected validity - 38.4%; risk-free interest rate - 4.4%, expected dividends -0% and expected average life of options 4 years.The expense recognized in the 6-month period ended 30 June 2006 is $ 68 thousand(in the year ended in 31 December 2005 $ 68 thousand) e. Earnings per share As described in Note 3b, in November 2005, the Company affected a split of theCompany's share Capital, and distributed bonus shares to the shareholders.The earnings per share presented in these financial statements have beenadjusted retrospectively to reflect the share split and the bonus shares. 6 months ended Year ended 31 30 June December 2006 2005 2005 $ in thousands (Unaudited) (Audited)Weighted average number of Ordinarysharesoutstanding (in thousands) Basic:Number of shares in the beginning ofthe period 18,873 5,743 5,743Effect of split and bonus shares - 8,084 8,084Effect of issuance of shares in IPO - - 420Number of shares used for calculation ofearningsper share -basic 18,873 13,827 14,247Diluted:Number of shares used for calculation ofearningsper share -basic 18,873 13,827 14,247Adjustments for share options 321 - -Number of shares used for calculation ofearningsper share -diluted 19,194 13,827 14,247 Net income attributable to equity holdersof theparent 1,491 1,530 2,862Less - interest on perpetualdebenture - (54) (81) 1,491 1,476 2,862 Basic earnings per share (in U.S.dollars) 0.079 0.107 0.200 Diluted earnings per share (in U.S.dollars) 0.078 AMIAD FILTRATION SYSTEMS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - REVENUES FROM SALES Sales by customer location: 6 months ended Year ended 30 June 31 December 2006 2005 2005 $ in thousands (Unaudited) (Audited) North America 5,804 5,686 10,517Europe 4,684 5,522 11,090Australia 3,064 3,356 6,281East Asia 3,967 2,264 6,889Israel 2,337 2,581 3,459South America 1,789 1,608 2,478Africa 400 751 1,692 Total 22,045 21,768 42,406 NOTE 5 - RECLASSIFICATIONOther income expenses net, in respect of prior periods have been reclassifiedfrom "profit before income tax" to"Operating profit" in order to conform withthe current period presentation. AMIAD FILTRATION SYSTEMS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 - CASH FLOWS FROM OPERATIONS: 6 months ended Year ended 30 June 31 December 2006 2005 2005 $ in thousands (a) Adjustments for:Depreciation 471 468 980Share based payment 68 - 64Deferred taxes, net 355 (207) 107Accrued severance pay, net 95 (7) (72)Exchange rate differences on liabilities to banksand other long-term liabilities 17 (3) 61Loss on sale of fixed assets and others 2 1 66Gain from marketable securities, net (5) - -Exchange rate differences in on loans to relatedparty and others (18) 53 22 985 305 1,228Changes in working capital:Increase in accounts receivable:Trade (2,026) (3,566) (3,068)Other (208) (51) (59)(Decrease) increase in accounts payable:Trade 804 882 (392)Other (372) (803) (1,096)Decrease (increase) in inventories (524) (344) 167 (2,326) (3,882) (4,448)Cash generated from operations (1,341) (3,577) (3,220) (b) Acquisition of company included according to theproportionate consolidation methodWorking capital (excluding cash and cashequivalents) (321)Other assets (42)Fixed assets, net (229)Long-term receivables 75Long-term liabilities -Cash outflow (517) AMIAD FILTRATION SYSTEMS LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 - CASH FLOWS FROM OPERATIONS (continued): 6 months ended Year ended 30 June 31 December 2006 2005 2005 $ in thousands (c) Proceeds from the sale of subsidiaryWorking capital (excluding cash and cashequivalents) (476)Fixed assets, net 526Cash inflow 50 (d) Increase in cash resulting from transition to full consolidation of acompany previously included according to the proportionate consolidationmethodWorking capital (excluding cash and cash 121equivalents)Fixed assets, net (113)Cash flow 8 This information is provided by RNS The company news service from the London Stock Exchange