11 Sep 2014 07:00
11 September 2014
Amiad Water Systems Ltd.
("Amiad" or the "Company")
Results for the six months to 30 June 2014
Amiad (AIM: AFS), a leading global producer of water treatment and filtration solutions, announces its interim results for the six months ended 30 June 2014.
Financial Summary
· Revenue was $60.2m (H1 2013: $61.7m)
· Operating profit was $2.1m (H1 2013: $4.2m)
· Profit before tax was $1.7m (H1 2013: $4.2m)
· Gross margin was 39.4% (H1 2013: 40.3%)
· Fully diluted earnings per share was $0.049 (H1 2013: $0.147)
· Net debt of $19.7m (31 December 2013: $13.7m; 30 June 2013: $16.9m)
· Interim dividend of $0.022 per share (H1 2013: $0.051)
· Cash and cash equivalents at 30 June 2014 were $14.7m (31 December 2013: $14.9m; 30 June 2013: $13.3m)
Operational Summary
· Amiad returned to growth following the downturn in the second half of 2013
· Irrigation segment revenues were slightly higher than H1 2013 and over 16% higher than H2 2013 due to return of projects delayed from that period
· Municipal segment in Israel, USA and Europe saw significant increase in sales, resulting in revenues being 24% higher in this segment compared with H1 2013
· Overall, Industrial segment sales were broadly flat compared with H1 2013, although revenue growth of 40% was achieved in US compared with equivalent period last year
· Sales in Oil & Gas segment were over 50% lower in H1 2014 compared with the same period of the prior year due to the exceptionally large project in Colombia in H1 2013. Excluding the Colombian project, the Oil & Gas segment revenues almost tripled as a result of sales in Europe, Australia and South East Asia
· Postponement in implementation of coastguard regulations by International Maritime Organization ("IMO") continued to impact sales in Ballast Water segment
· Sales from new products - Omega, Sigma and Super Galaxy - contributed around 10% of overall revenues in H1 2014 compared with 1-2% of overall revenues in H1 2013, demonstrating the continuing demand and technological lead of these products
Arik Dayan, Chief Executive Officer of Amiad, said: "Whilst the first half results were down year-on-year, the increase over H2 2013 is a clear indication that Amiad is back to growth as the global economy continues to improve.
"Looking ahead, the Company entered the second half of 2014 with a higher backlog than at the equivalent period last year. We expect the Municipal and Oil & Gas segments to accelerate in the second half of the year and the Irrigation segment, particularly in the US, to continue to show sustained momentum. Hence, we expect to deliver revenue growth for full year 2014 compared with 2013 and, despite the uncertainty surrounding the extent of the impact of the NIS strength against the US Dollar, we still expect to report a higher net profit than last year."
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
In the first half of the year, the Company saw the Irrigation segment and Municipal segments reporting revenues higher than H1 2013. The Industrial segment remained flat and the Oil & Gas segment saw revenues reduce by over 50% due to the lack of a single large project similar to that delivered in Colombia in H1 2013. As a result, overall revenues for H1 2014 decreased by 2.5% to $60.2m (H1 2013: $61.7m). However, revenues were up by 5% compared with H2 2013 - a clear indication of the Company's return to growth.
Specifically, the Irrigation and Industrial segments generated $27.7m and $22.9m respectively during the period (H1 2013: $27.1m and $22.8m), accounting for 46% and 38% respectively of the Company's revenues. There was a resumption of demand in the Municipal segment as it reported revenues 24% higher at $6.1m (10% of the Company's revenues), compared with $4.9m in H1 2013. There was a significant decline in sales in the Oil & Gas segment at $2.7m (H1 2013: $5.7m) - 5% of overall revenues. However, this decline was due to the delivery of a single large project in the first half of 2013, valued at approximately $5m. The Company continues to be impacted in the Ballast Water segment by the postponement in the implementation of IMO regulations. Revenues in this segment were $0.8m compared with $1.1m in H1 2013.
Amiad's portfolio of new products continue to be well-received and are increasingly penetrating the market. In H1 2013, sales of Omega, Sigma, ScanJet and Super Galaxy products all across the globe reached an all-time high at approximately $6m, representing 10% of overall sales.
Global Activity
US and South America
Amiad performed well and achieved growth in all five segments in the US, with Irrigation and Industrial segments being the best performers. This was due to projects such as that awarded by Newport News Shipbuilding (NNS), a division of Huntington Ingalls Industries (HII), to supply Amiad automatic self-cleaning screen filters for the aircraft carrier John F. Kennedy (CVN 79), the second ship of the new class of US Navy aircraft carriers as well as several Irrigation projects across the US.
The constraints on public funding and projects have continued to persist, but not as much as during 2013. The Municipal segment continues to penetrate the market and achieved increased sales. In the first half, the Company completed several projects using Amiad's automatic self cleaning filters and Arkal automatic disk filters for algae removal, membrane protection and dust abatement.
However, it was a disappointing period for sales in Latin America. The Company continues to build an effective team and to increase its presence locally.
EMEA
Amiad performed well in most segments in Europe - undertaking significant work in Italy, Spain and France - thereby reporting an increase in sales of 18% compared with the equivalent period last year. In the Municipal, Oil & Gas and Industrial segments, Amiad completed projects resulting in revenues increasing by 66%.
Asia
During the first half of the year, Amiad experienced weakness in the Industrial segment in South East Asia. Revenues in China declined by approximately 20% primarily due to reduced revenues from the Industrial segment. Demand in India remained weak and so revenues in that territory were broadly similar to H1 2013. However, Amiad continued work on its production line at its Indian and Chinese subsidiaries and expects to increase local production next year. South East Asia saw a 16% improvement in revenues compared with H1 2013 due to Oil & Gas and Municipal projects.
Australia
The Industrial segment 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. However, the Irrigation segment almost doubled its sales due to several projects in protecting drip irrigation based on the new Amiad self cleaning filters, Omega and Sigma. In addition, a number of mining projects and a further project with Origin Energy, one of Australia's leading integrated energy companies, providing filtration for a coal seam gas to liquefied natural gas plant contributed towards a marked improvement in sales in the Oil & Gas segment.
Financial Review
Revenues for the six months ended 30 June 2014 decreased by 2.5% to $60.2m compared with $61.7m for the first half of 2013. Fully diluted earnings per share were $0.049 (H1 2013: $0.147).
Operating profit was $2.1m compared with $4.2m for the first half of 2013, and profit before tax was $1.7m (H1 2013: $4.2m).
Gross margins were 39.4% (H1 2013: 40.3%). The decline was mainly due to the weakness of the US dollar against the Israeli shekel as well as slightly lower sales but the same fixed costs compared with the prior year.
As of 30 June 2014, cash and cash equivalents were $14.7m (31 December 2013: $14.9m; 30 June 2013: $13.3m). Net debt increased to $19.7m (31 December 2013: $13.7m; 30 June 2013: $16.9m). This was mainly due to reduced net profits and an increase in working capital, primarily for trade receivables as well as increased levels of inventory and some capital investment.
Dividend
The Directors have decided to declare an interim dividend out of the Company's profits for the six months ended 30 June 2014 of $0.022 gross per share (interim dividend 2013: $0.051 gross per share), with an ex dividend date of 9 October 2014, a record date of 10 October 2014 and a payment date of 29 October 2014.
Outlook
As stated at the time of the Company's full year results on April 2014, with an improving global economy, Amiad anticipates returning to growth for full year 2014.
Amiad entered the second half of 2014 with a higher backlog than at the equivalent period last year. The Company expects the Municipal and Oil & Gas segments to grow in the second half of the year and the Irrigation segment, particularly in the US, to continue to show sustained momentum. The Industrial segment remains stable and is performing as expected. Hence, the Company anticipates delivering revenue growth for full year 2014 compared with 2013. Despite the uncertainty surrounding the extent of the impact of the NIS strength against the US Dollar, the Company still expects to report a higher net profit than last year. In addition, the Company expects to be able to maintain efficiency measures and tight cost control over the course of 2014.
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AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2014
June 30 | December 31, | ||
2014 | 2013 | 2013 | |
(Unaudited) | (Audited) | ||
U.S. dollars in thousands | |||
Assets | |||
CURRENT ASSETS: | |||
Cash and cash equivalents | 14,743 | 13,267 | 14,871 |
Financial assets at fair value through | |||
profit or loss | 44 | 1,243 | 480 |
Accounts receivable and accruals: | |||
Trade | 46,916 | 44,096 | 41,560 |
Other | 5,105 | 3,599 | 3,501 |
Income tax assets | 775 | 1,130 | 367 |
Inventories | 26,097 | 22,556 | 25,277 |
T o t a l current assets | 93,680 | 85,891 | 86,056 |
NON-CURRENT ASSETS: | |||
Investment in joint venture | 10 | 24 | -,- |
Severance pay fund, net | 254 | 169 | 261 |
Loan to a related party | -,- | 633 | 100 |
Long-term receivables | 46 | 104 | 36 |
Prepaid expenses | -,- | 104 | -,- |
Property and equipment | 11,094 | 11,399 | 11,449 |
Intangible assets | 16,508 | 16,879 | 16,846 |
Deferred income tax assets | 2,064 | 1,678 | 1,721 |
T o t a l non-current assets | 29,976 | 30,990 | 30,413 |
T o t a l assets | 123,656 | 116,881 | 116,469 |
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2014
June 30 | December 31, | ||
2014 | 2013 | 2013 | |
(Unaudited) | (Audited) | ||
U.S. dollars in thousands | |||
| Liabilities and equity | |||
CURRENT LIABILITIES: | |||
Short-term credit and current maturities of | |||
borrowings from banks | 20,987 | 15,719 | 10,544 |
Financial liabilities at fair value through profit or | |||
loss - derivatives | 86 | 93 | 63 |
Accounts payable and accruals: | |||
Trade | 18,956 | 16,972 | 19,670 |
Other | 9,891 | 9,103 | 9,433 |
Put option liability | 2,204 | -,- | 2,204 |
Current income tax liability | 735 | 365 | 529 |
Dividend payable | 499 | 1,360 | -,- |
T o t a l current liabilities | 53,358 | 43,612 | 42,443 |
NON-CURRENT LIABILITIES: | |||
Borrowings from banks and others | |||
(net of current maturities) | 13,444 | 14,403 | 17,988 |
Investment in joint venture | -,- | -,- | 110 |
Put option liability | -,- | 1,924 | -,- |
Accrued severance pay | 340 | 340 | 381 |
T o t a l non-current liabilities | 13,784 | 16,667 | 18,479 |
T o t a l liabilities | 67,142 | 60,279 | 60,922 |
EQUITY: | |||
Capital and reserves attributable to | |||
equity holders of the Company: | |||
Share capital | 2,798 | 2,798 | 2,798 |
Capital reserves | 28,332 | 28,161 | 28,271 |
Currency translation reserve | (1,218) | (1,016) | (1,416) |
Transaction with non controlling interest | (180) | (180) | (180) |
Retained earnings | 26,830 | 26,862 | 26,082 |
56,562 | 56,625 | 55,555 | |
NON CONTROLLING INTEREST | (48) | (23) | (8) |
T o t a l equity | 56,514 | 56,602 | 55,547 |
T o t a l liabilities and equity | 123,656 | 116,881 | 116,469 |
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED INCOME STATEMENTFOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2014
| Six months ended | Year ended |
| ||||||||
| June 30 | December 31, |
| ||||||||
| 2014 | 2013 | 2013 |
| |||||||
| (Unaudited) | (Audited) |
| ||||||||
| U.S dollars in thousandsexcept per share data |
| |||||||||
REVENUE | 60,217 | 61,746 | 118,787 | ||||||||
COST OF SALES | 36,477 | 36,832 | 70,360 | ||||||||
GROSS PROFIT | 23,740 | 24,914 | 48,427 | ||||||||
RESEARCH AND DEVELOPMENT EXPENSES | 1,759 | 1,478 | 3,357 | ||||||||
SELLING AND MARKETING EXPENSES | 14,349 | 13,261 | 27,456 | ||||||||
ADMINISTRATIVE AND GENERAL EXPENSES | 5,586 | 5,950 | 11,929 | ||||||||
OTHER LOSSES (INCOME) NET | (52) | (6) | (27) | ||||||||
OPERATING PROFIT | 2,098 | 4,231 | 5,712 | ||||||||
FINANCIAL INCOME | (275) | (1,353) | (1,901) | ||||||||
FINANCE EXPENSES | 713 | 1,319 | 2,278 | ||||||||
FINANCE EXPENSES (INCOME) - NET | 438 | (34) | 377 | ||||||||
SHARE OF PROFIT OF ASSOCIATES | -,- | 50 | 188 | ||||||||
INCOME BEFORE TAXES ON INCOME | 1,660 | 4,215 | 5,147 | ||||||||
INCOME TAX EXPENSES | 452 | 889 | 1,499 | ||||||||
INCOME FOR THE PERIOD | 1,208 | 3,326 | 3,648 | ||||||||
OTHER COMPREHENSIVE INCOME- | |||||||||||
Items that may be subsequently reclassified to profit or loss: | |||||||||||
Currency translation differences | (197) | 868 | 1,271 | ||||||||
Items that will not be reclassified to profit or loss: | |||||||||||
Remeasurements of post- employment benefits obligations | -,- | -,- | 72 | ||||||||
(197) | 868 | 1,199 | |||||||||
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 1,405 | 2,458 | 2,449 | ||||||||
PROFIT FOR THE PERIOD ATTRIBUTED TO: | |||||||||||
Equity holders of the Company | 1,247 | 3,396 | 3,700 | ||||||||
Non controlling interest | (39) | (70) | (52) | ||||||||
1,208 | 3,326 | 3,648 | |||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: | |||||||||||
Equity holders of the Company | 1,445 | 2,527 | 2,503 | ||||||||
Non controlling interest | (40) | (69) | (54) | ||||||||
1,405 | 2,458 | 2,449 | |||||||||
|
| ||||||||||
| U.S dollars |
| |||||||||
| EARNINGS PER SHARE: |
| |||||||||
| Attributable to the equity holders of the company during the period: |
| |||||||||
| Basic | 0.053 | 0.147 | 0.163 |
| ||||||
| Diluted | 0.049 | 0.147 | 0.153 |
| ||||||
(Continued) - 1
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2014
Attributable to owners of the parent | ||||||||||||||||
Currency | Transaction with | Non- | ||||||||||||||
Number of | Share | Capital | translation | non controlling | Retained | controlling | ||||||||||
shares | capital | Reserve | reserve | Interest | earning | Total | interest | Total equity | ||||||||
U.S dollars in thousands | ||||||||||||||||
BALANCE AT JANUARY 1, 2014 (audited) | 22,663,651 | 2,798 | 28,271 | (1,416) | (180) | 26,082 | 55,555 | (8) | 55,547 | |||||||
CHANGES DURING THE SIX MONTH ENDED | ||||||||||||||||
JUNE 30, 2014 (unaudited): | ||||||||||||||||
Comprehensive income - | ||||||||||||||||
Profit for the period | 1,247 | 1,247 | (39) | 1,208 | ||||||||||||
Other comprehensive income - | ||||||||||||||||
Currency translation differences | 198 |
| 198 | (1) | 197 | |||||||||||
Total comprehensive income | 198 | 1,247 | 1,445 | (40) | 1,405 | |||||||||||
Transaction with owners: | ||||||||||||||||
Recognition of compensation related stock and option grants | 61 | 61 | 61 | |||||||||||||
Dividend ($0.022 per share) |
| (499) | (499) | (499) | ||||||||||||
Total transactions with owners |
|
| 61 |
|
| (499) | (438) |
| (438) | |||||||
BALANCE AT JUNE 30, 2014 (unaudited) | 22,663,651 | 2,798 | 28,332 | (1,218) | (180) | 26,830 | 56,562 | (48) | 56,514 | |||||||
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 - | ||||||||||||||||
Profit 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 | |||||||
(Concluded) - 2
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2014
| Attributable to owners of the parent | ||||||||||
| Transaction | ||||||||||
| Currency | with non- | Non- | ||||||||
| Number of | Share | Capital | translation | Controlling | Retained | controlling | ||||
| shares | capital | reserve | reserve | Interest | earning | Total | interest | Total equity | ||
|
| U.S dollars in thousands | |||||||||
Balance at 1 January 2013 | 22,663,651 | 2,798 | 28,029 | (147) | (180) | 24,826 | 55,326 | 46 | 55,372 | ||
Comprehensive income - | |||||||||||
Profit for the period | 3,700 | 3,700 | (52) | 3,648 | |||||||
Other comprehensive income | |||||||||||
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 | ||
AMIAD WATER SYSTEMS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2014
Six months ended | Year ended | ||||
June 30 | December 31, | ||||
2014 | 2013 | 2013 | |||
(Unaudited) | (Audited) | ||||
U.S dollars in thousands | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Cash generated from (used in) operations | (3,700) | 2,730 | 9,547 | ||
Interest paid | (433) | (382) | (815) | ||
Interest received | 41 | 78 | 273 | ||
Income tax paid | (842) | (1,462) | (926) | ||
Net cash generated from (used in) operating activities | (4,934) | 964 | 8,079 | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property and equipment | (838) | (1,085) | (2,406) | ||
Purchases of intangible assets and capitalized development | |||||
Expenses | (357) | (339) | (756) | ||
Investments grants received | -,- | 112 | 130 | ||
Restricted deposit | (48) | 912 | 718 | ||
Proceeds from sale of property and equipment | 29 | 12 | 40 | ||
Collection (payments) of long-term loan to a related party | 40 | (13) | 637 | ||
Net cash used in investing activities | (1,174) | (401) | (1,637) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Dividends paid to equity holders of the Company | -,- | -,- | (2,516) | ||
Receipt of long-term borrowings and other liabilities | 51 | 20 | 8,570 | ||
Repayments of long term borrowings | (4,488) | (3,746) | (7,452) | ||
Short-term borrowings (repayments) from banks, net | 10,368 | 2,422 | (3,932) | ||
Net cash generated from (used in) financing activities | 5,931 | (1,304) | (5,330) | ||
EXCHANGE GAIN (LOSS) ON CASH AND CASH | |||||
EQUIVALENTS | 49 | (247) | (496) | ||
NET INCREASE IN CASH AND CASH EQUIVALENTS | (128) | (988) | 616 | ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 14,871 | 14,255 | 14,255 | ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 14,743 | 13,267 | 14,871 | ||