TIDMAFS
RNS Number : 1218T
Amiad Water Systems Ltd
24 March 2016
24 March 2016
Amiad Water Systems Ltd.
("Amiad" or the "Company")
Full Year Results
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 2015.
Successful Restructuring and Return to Profitability
-- Restructuring exercise, improved efficiencies and
consequential higher-than-expected cost savings resulted in the
Company achieving its goal of returning to profitability
-- Underlying performance of the Company improved, resulting in
revenue growth of 8% year-on-year on a constant currency basis
-- Growth in the Irrigation and Oil & Gas segments mitigated
weakness in the Municipal and Industrial segments
-- New products continued to contribute to revenue growth,
positioning the Company to improve gross margin
Financial Summary
-- Revenue was broadly flat at $118.8m on a reported basis (2014: $118.5m)
-- Gross margin improved 160 basis points to 40.5% (2014: 38.9%)
-- Operating profit more-than-trebled to $8.8m (2014: $2.9m)
-- Profit before tax increased significantly to $6.7m (2014: $0.4m loss)
-- Fully diluted earnings per share increased to $0.166 (2014: $0.065 loss)
-- Dividend for 2015 of $0.067 per share (2014: $0.022 per share)
-- Successfully executed on restructuring and cost cutting
exercise resulting in reduction in cost base by approximately $4m
on an annualised basis
-- Net debt substantially reduced to $8.8m at 31 December 2015
(30 June 2015: $18.2m; 31 December 2014: $21.3m)
-- Cash and cash equivalents at 31 December 2015 were $17.0m (30
June 2015: $14.5m; 31 December 2014: $14.1m)
Operational Summary
-- Largest growth was seen in EMEA where sales increased by
approximately 15% driven by large projects carried out in the
Irrigation and Oil & Gas segments
-- Established a subsidiary in the UK to support increasing
demand for clean water solutions in the UK and Europe
-- Growth in sales of new products maintained, accounting for
approximately 9% of revenues (2014: c. 7%)
-- Irrigation segment sales accounted for 46.6% of total revenue
o In Q4 2015, signed exclusive distribution agreement with
Netafim, a global leader in smart irrigation solutions for
sustainable productivity, which is expected to be a significant
contributor to 2016 revenue
-- Sales in the Oil & Gas segment were the highest ever in
the history of the Company, contributing almost 10% of revenue
-- Industrial segment sales decreased to $42.8m (2014: $46.9m),
mainly due to weakness in the US, Australia, China and South East
Asia, but partly mitigated by growth in EMEA
-- Municipal segment continued to suffer from lack of investment
in major infrastructure projects by local authorities as revenue
declined to $8.9m compared with $10.7m in 2014
Arik Dayan, Chief Executive Officer of Amiad, said: "We are
pleased that the business demonstrated solid underlying growth as
sales of new products and our traditional automatic filters
increased worldwide. The sales of new products helped improve our
gross margin and this, combined with our restructuring programme,
meant that we achieved our goal of returning to profitability.
Irrigation continued to be the main growth segment along with Oil
& Gas also showing good growth. The global macro-economic
conditions continued to have an impact on large infrastructure
municipal projects and the Industrial segment suffered primarily
due to slowdown in the mining industry in Australia and China.
"In 2016, we continue to demonstrate progress and maintain tight
cost control. However, we are cautious about the potentially
negative impact of global macro-economic conditions, currency
headwinds and uncertainty due to the US elections. We expect the
Irrigation segment to continue to be the main contributor to
revenue, supported by the partnership with Netafim. The Municipal
segment is anticipated to return to growth, and there are increased
orders from India and China in the Industrial segment compared with
last year. In the Oil & Gas segment, 2015 was an exceptionally
good year, however, in 2016 we expect a reduction in projects due
to the effect on the industry from lowered oil prices. As a result,
the fundamentals of the business remain sound and the management
team continues to drive the business forward."
Enquiries
Amiad Water Systems Ltd.
-------------------------------- -----------------
Arik Dayan, Chief Executive
Officer
Irit Ben-Dov, Chief Financial
Officer +972 4 690 9500
-------------------------------- -----------------
Stifel Nicolaus Europe Ltd.
-------------------------------- -----------------
Stewart Wallace, Ben Maddison +44 20 7710 7600
-------------------------------- -----------------
Luther Pendragon Ltd.
-------------------------------- -----------------
Harry Chathli, Claire Norbury,
Oliver 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
nine 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
This was a significant year which saw the Company benefit from
the organisational efficiencies implemented during 2014 that were
designed to enhance the Company's efficiency and flexibility. This
enabled the Company to react quickly to the slowdown experienced at
the end of 2014 and commence a restructuring programme as the first
step towards a return to profitability. The sales of Amiad's new
products, particularly the Omega and Sigma, increased which
contributed to improvement in the performance of the business and
the gross margins, which was also supported by efficiency gains in
the manufacturing process. On a constant currency basis, there was
an increase in revenues of 8% compared with 2014 and the Company
achieved its goal of returning to profitability for full year
2015.
Segment Performance
The Irrigation and Industrial segments generated $55.3m and
$42.8m respectively during the period (2014: $52.5m and $46.9m),
accounting for 46.6% and 36.0% of the Company's revenue (2014:
44.3% and 39.6%). The Irrigation segment continued to perform well
in the US, Australia, EMEA and China, supported by sales of Amiad's
Omega and Sigma products. In addition, the Company signed an
exclusive distribution agreement with Netafim, a global leader in
smart irrigation solutions for sustainable productivity, whereby
Netafim will market Amiad's Arkal product lines for the irrigation
market in numerous countries outside of Israel as part of its
filtration offering. The decrease in revenue in the Industrial
segment was mainly due to weakness in the US, Australia, China and
South East Asia, but it was partly mitigated by growth in EMEA.
The Municipal segment sales decreased to $8.9m (accounting for
7.5% of 2015 total revenue) from $10.7m in 2014 due to a lack of
investment by municipal entities in large infrastructure projects.
Revenue in the Oil & Gas segment grew to $11.6m, or 9.7% of
total sales, from $7.1m (6.0% of total revenue) in 2014 mainly due
to sales from injection water and fracking water projects that were
awarded during 2014 and completed in 2015. The Ballast Water
segment remained weak with revenues of $0.2m (2014: $1.3m) due to
the continued lack of regulatory impetus for ship owners to invest
in new systems.
Global Activity
US
In the US, revenues amounted to $26.0m compared with $28.7m in
2014. The decline was primarily due to the Industrial segment,
which was lower by $2.6m year-on-year. There was an increased
contribution from the Oil & Gas segment, which offset slight
declines in the Irrigation, Municipal and Ballast Water
segments.
EMEA
Revenues in EMEA grew approximately 15% in aggregate over 2014
despite currency headwinds in Europe. Specifically in Europe, the
reported revenue would be higher on a constant currency basis.
Sales in the Irrigation segment in Europe increased significantly
as a result of the sales office established in the region last
year. Amiad also performed well in the Oil & Gas segment in
EMEA.
On 7 September 2015, Amiad announced that it had established a
wholly-owned subsidiary in the UK to support the increasing demand
for clean water solutions in the UK and Europe. Its operations are
based in Swansea, Wales and it is the Company's first permanent
base in the UK. Previously, Amiad's products and solutions were
sold through its distributor based in Swansea. The new subsidiary,
Amiad Water Systems UK Ltd, reports to Amiad Europe, and provides
marketing and technical support functions. Amiad UK has already
contributed to sales and the Company expects the UK subsidiary to
be a major player in the non-irrigation segment in Europe.
Asia
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 03:01 ET (07:01 GMT)
Sales in Asia, on aggregate, decreased to $13.3m compared with
$15.4m in 2014, primarily due to weakness in China where sales were
significantly lower in the Industrial segment as a result of a lack
of activity in the steel industry. Chinese operations were also
impacted by a strong currency effect as the Chinese Renminbi fell
against the US Dollar. Amiad took positive action to restructure
its subsidiary, Amiad China, and strengthen its management team
resulting in growth in the Irrigation segment. Amiad continues to
believe that the longer-term growth opportunities offered by China
remain substantial.
South East Asia also suffered from a decline in the Industrial
segment, which reduced overall revenues, but this was partly offset
by strong performance in the Oil & Gas segment. Short-term
weakness in China and South East Asia was partly mitigated by a
strong year in India, primarily in the Industrial segment, which
experienced demand from the power generation sector - which also
carries a higher gross margin.
Australia
In Australia, revenues amounted to $10.0m compared with $14.4m
in 2014. The decline was primarily due to the Industrial and Oil
& Gas segments that continued to suffer 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. The Municipal segment also declined as a
result of the lack of public spending on large infrastructure
projects. However, the Irrigation segment performed well, achieving
a slight increase in revenues, based on sales of the new Omega and
Sigma filters, with the demand being due to investment in upgrading
irrigation systems used in food production to advanced, automatic
solutions, which is being supported by public authorities. As with
China, Australian operations were heavily affected by currency
fluctuations, particularly in the Industrial segment.
Financial Review
Revenue for the twelve months ended 31 December 2015 was $118.8m
compared with $118.5m in 2014. The Company's revenue recognition
continued to be impacted by adverse changes in exchange rates,
mainly the US Dollar against the New Israeli Shekel, but also
between the Australian and US Dollars as well as the Euro and US
Dollar. On a constant currency basis, Amiad achieved a growth in
revenue of 8%.
Gross margin improved to 40.5% (2014: 38.9%). The increase was
mainly due to the benefits of the cost cutting and restructuring
programme, efficiency gains in the manufacturing process and
product mix as well as the impact of currency exchange rates.
During the year, Amiad completed the implementation of the
restructuring and cost cutting programme, which performed better
than expected, resulting in cost savings of approximately $4m on an
annualised basis. The Company also took actions to significantly
clean the balance sheet through making provisions for bad debt and
inventory write-offs and restoring certain performance-based
employee bonuses.
As a result, operating profit increased by 208% to $8.8m (2014:
$2.9m) and the Company achieved a profit before tax of $6.7m
compared with a $0.4m loss for the prior year. Significantly,
despite the provisions for bad debt, the Company earned a net
profit of $5.1m compared with a $1.0m loss in 2014.
Fully diluted earnings per share increased to $0.166 compared
with a $0.065 loss in 2014.
As of 31 December 2015, cash and cash equivalents were $17.0m
(30 June 2015: $14.5m; 31 December 2014: $14.1m). Net debt reduced
to $8.8m (30 June 2015: $18.2m; 31 December 2014: $21.3m), which
exceeded expectations, as a result of the return to profit,
decrease in working capital and improved collection of
receivables.
Dividend
The Directors have decided to declare a dividend out of the
Company's profits for the twelve months ended 31 December 2015 of
$0.067 gross per share (dividend 2014: $0.022 gross per share),
with an ex-dividend date of 7 April 2016, a record date of 8 April
2016 and a payment date of 5 May 2016.
Outlook
In 2016, the Company continues to demonstrate progress and
maintain tight cost control. However, it is cautious about the
potentially negative impact of global macro-economic conditions,
currency headwinds and uncertainty due to the US elections.
Amiad expects the Irrigation segment to continue to be the main
contributor to revenues, supported by the partnership with Netafim.
The Municipal segment is anticipated to return to growth, and there
are increased orders from India and China in the Industrial segment
compared with last year. In the Oil & Gas segment, 2015 was an
exceptionally good year, however, in 2016 the Company expects a
reduction in projects due to the effect on the industry from
lowered oil prices. As a result, the fundamentals of the business
remain sound and the management team continues to drive the
business forward.
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
-----------------
2015 2014
-------- -------
$ in thousands
-----------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 17,018 14,090
Financial assets at fair value
through profit
or loss 148 452
Trade and other receivables:
Trade 36,014 44,091
Other 4,488 3,230
======== ========
Inventories 24,719 23,729
Current income tax assets 430 869
-------- --------
Total Current Assets 82,817 86,461
-------- --------
NON-CURRENT ASSETS:
Investment in joint venture 10 10
Severance pay fund, net 95 105
Long-term receivables 43 48
Property, plant and equipment 10,731 11,184
Intangible assets 15,690 16,849
Deferred income tax assets 1,778 2,738
-------- --------
Total Non Current Assets 28,347 30,934
-------- --------
Total Assets 111,164 117,395
======== ========
AMIAD WATER SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
-----------------
2015 2014
-------- -------
$ in thousands
-----------------
Liabilities and Equity
CURRENT LIABILITIES:
Bank credit and current maturities
of
borrowings from bank 14,188 23,212
Financial liabilities at fair value
through
profit or loss- derivatives 214 1,066
Trade and other payable:
Trade 15,461 15,064
Other 9,946 8,431
Put option liability -,- 2,927
Liability to the CEO of a subsidiary 1,367 -,-
Current income tax liability 321 463
--------- ---------
Total Current Liabilities 41,497 51,163
--------- ---------
NON CURRENT LIABILITIES:
Borrowings from banks
(net of current maturities) 11,673 12,205
Liability to the CEO of a subsidiary 1,508 -,-
Accrued severance pay, net 321 450
Deferred income tax liabilities 329 823
--------- ---------
Total Non Current Liabilities 13,831 13,478
--------- ---------
Total Liabilities 55,328 64,641
========= =========
EQUITY:
Capital and reserves attributable
to
equity holders of the Company:
Share capital 2,798 2,798
Capital reserves 28,437 28,371
Transaction with non-controlling
interests (180) (180)
Currency translation reserve (4,145) (2,188)
Retained earnings 28,773 23,944
--------- ---------
55,683 52,745
Non-controlling interests 153 9
--------- ---------
Total Equity 55,836 52,754
--------- ---------
Total Liabilities and Equity 111,164 117,395
========= =========
AMIAD WATER SYSTEMS LTD.
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 03:01 ET (07:01 GMT)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
-------------------------
2015 2014
------------ -----------
$ in thousands
except per share
data
-------------------------
Revenue 118,779 118,471
Cost of sales 70,630 72,418
--------- ---------
Gross Profit 48,149 46,053
Research and development, net 2,932 3,158
Selling and marketing costs 25,460 28,204
Administrative and general expenses 11,049 11,359
Other gains (losses) 114 (468)
--------- ---------
Operating Profit 8,822 2,864
--------- ---------
Finance income 790 137
Finance costs (2,960) (3,430)
--------- ---------
Finance costs, net (2,170) (3,293)
--------- ---------
Profit (loss) before income taxes 6,652 (429)
Income tax expenses 1,581 559
--------- ---------
Profit (loss) for the year 5,071 (988)
========= =========
Other comprehensive loss-
Items that will not be reclassified to profit
or loss:
Remeasurements of post-employment benefit
obligations, net 92 135
--------- ---------
Items that may be subsequently reclassified
to profit or loss:
Currency translation differences 1,963 773
--------- ---------
Other comprehensive loss for the year 2,055 908
========= =========
Total comprehensive income (loss) for the
year 3,016 (1,896)
========= =========
Profit (loss) attributable to:
Equity holders of the Company 4,921 (1,006)
Non controlling interests 150 18
--------- ---------
5,071 (988)
========= =========
Total comprehensive income (loss) attributable
to:
Equity holders of the Company 2,872 (1,913)
Non controlling interests 144 17
--------- ---------
3,016 (1,896)
========= =========
$
----------------
Earnings (loss) per share attributable to the equity
holders of the Company during the year:
Basic 0.217 (0.044)
===== =========
Diluted 0.166 (0.065)
===== =========
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 1 JANUARY 2014 22,663,651 2,798 28,271 (1,416) (180) 26,082 55,555 (8) 55,547
=========== ======== ======== ============= ================ ========= ======== ================ ========
Comprehensive income
(loss):
Profit (loss) for
the year (1,006) (1,006) 18 (988)
Currency translation
differences (772) (772) (1) (773)
Remeasurement of net
defined
benefit liability (135) (135) (135)
------------- --------- -------- ---------------- --------
Total comprehensive
income
(loss) (772) (1,141) (1,913) 17 (1,896)
Transaction with owners:
Recognition of
compensation
related to
employee
stock and
options
grants 100 100 100
Dividend ($0.106
per share) (997) (997) (997)
----------- -------- -------- --------- -------- --------
Total transaction with
owners 100 (997) (897) (897)
----------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
BALANCE AT 31 DECEMBER 2014 22,663,651 2,798 28,371 (2,188) (180) 23,944 52,745 9 52,754
=========== ======== ======== ============= ================ ========= ======== ================ ========
Comprehensive income
(loss):
Profit for the year 4,921 4,921 150 5,071
Currency
translation
differences (1,957) (1,957) (6) (1,963)
Remeasurement of
net defined
benefit liability (92) (92) (92)
------------- --------- -------- ---------------- --------
Total comprehensive
income
(loss) (1,957) 4,829 2,872 144 3,016
Transaction with owners:
Recognition of
compensation
related to
employee
stock and
options
grants 66 66 66
Total transaction with
owners 66 66 66
----------- -------- -------- ------------- ---------------- --------- -------- ---------------- --------
BALANCE AT 31 DECEMBER 2015 22,663,651 2,798 28,437 (4,145) (180) 28,773 55,683 153 55,836
=========== ======== ======== ============= ================ ========= ======== ================ ========
AMIAD WATER SYSTEMS LTD.
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 03:01 ET (07:01 GMT)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 31 December
-------------------------
2015 2014
------------ -----------
$ in thousands
-------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from (used in) operations 16,425 (302)
Interest paid (781) (816)
Interest received 130 162
Income taxes paid, net (312) (2,576)
--------- --------
Net cash generated from (used in) operating
activities 15,462 (3,532)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2,084) (2,581)
Purchase of intangible assets (334) (653)
Investment grants received 131 332
Proceeds from sale of property, plant
and equipment 131 57
Restricted deposit 25 (266)
Collection of long-term loan to a related
party -,- 40
--------- --------
Net cash used in investing activities (2,131) (3,071)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to equity holders of the
Company -,- (997)
Receipt of long-term borrowings 10,000 3,072
Payments of long term borrowings (8,522) (9,016)
Increase (decrease) in bank credit and
short term
borrowing, net (10,958) 12,988
--------- --------
Net cash generated from (used in) financing
activities (9,480) 6,047
--------- --------
EXCHANGE RATE LOSS ON CASH AND CASH EQUIVALENTS (923) (225)
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,928 (781)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 14,090 14,871
--------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR 17,018 14,090
========= ========
AMIAD WATER SYSTEMS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Year ended 31 December
-------------------------
2015 2014
------------ -----------
$ in thousands
-------------------------
Profit (loss) for the year 5,071 (988)
------------ -----------
(a) Adjustments to reconcile net income to net cash
generated from (used in) operating activities:
Depreciation and amortization 3,446 3,690
Interest paid 781 816
Interest received (130) (162)
Income taxes paid, net 312 2,576
Share based payment, net 66 100
Distribution of profits to a CEO of a subsidiary (102) -,-
Changes in liability to the CEO of a subsidiary 50 -,-
Share in loss of joint venture -,- (60)
Decrease (increase) in deferred income taxes, net 442 (217)
Accrued severance pay, net (155) 127
Exchange rate differences on borrowings 347 (133)
Decrease (increase) in assets at fair value through profit
or loss (548) 1,031
Profit from sale of property, plant and equipment (111) (2)
------------ -----------
4,398 7,766
============ ===========
Year ended 31 December
-------------------------
2015 2014
------------ -----------
$ in thousands
-------------------------
Changes in working capital:
Decrease (increase) in accounts receivable:
Trade 6,383 (3,604)
Other (1,101) (118)
Increase in long term receivable (5) (13)
Increase (decrease) in accounts payable:
Trade 1,617 (3,579)
Other 1,670 (893)
Decrease (Increase) in inventories (1,608) 1,127
-------- --------
6,956 (7,080)
-------- --------
Cash generated from (used in) operations 16,425 (302)
======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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