TIDMAFS

RNS Number : 6108Y

Amiad Water Systems Ltd

10 September 2015

10 September 2015

Amiad Water Systems Ltd.

("Amiad" or the "Company")

Interim Results

Amiad (AIM: AFS), a leading global producer of water treatment and filtration solutions, announces its interim results for the six months ended 30 June 2015.

Financial Summary

   --     Revenue was $59.2m (H1 2014: $60.2m) 
   --     Gross margin was 40.1% (H1 2014: 39.4%) 
   --     Operating profit increased 88% to $3.9m (H1 2014: $2.1m) 
   --     Profit before tax more than doubled to $3.5m (H1 2014: $1.7m) 
   --     Fully diluted earnings per share increased 33% to $0.065 (H1 2014: $0.049) 
   --     Net debt reduced to $18.2m (31 December 2014: $21.3m; 30 June 2014: $19.7m) 

-- Cash and cash equivalents at 30 June 2015 were $14.5m (31 December 2014: $14.1m; 30 June 2014: $14.7m)

Operational Summary

-- Growth in the Irrigation and Oil & Gas segments mitigated weakness in the Industrial and Municipal segments - resulting in sales being broadly flat

o Irrigation segment sales increased to $30.5m (H1 2014: $27.7m), and continued to be the largest contributor to total revenues accounting for 52% of total revenue

o Sales in the Oil & Gas segment increased 74% to $4.7m (H1 2014: $2.7m)

o Industrial segment sales declined due to weakness in industry in most geographies, in particular China

o Municipal segment continued to suffer from lack of investment in major infrastructure projects by local authorities

o Ballast Water segment still depressed due to lack of regulatory impetus

   --      Growth in sales of new products maintained, accounting for 9.8% of revenues (H1 2014: 5.5%) 

-- Completed implementation of restructuring and cost cutting exercise, resulting in reduction in expenses

-- Post period end, established a subsidiary in the UK to support increasing demand for clean water solutions in UK and Europe

Arik Dayan, Chief Executive Officer of Amiad, said: "We are pleased with the significant growth in the Irrigation and Oil & Gas segments - based on our latest products - which largely served to mitigate the weakness in the Industrial and Municipal segments. In addition, thanks to the implementation of the restructuring and cost cutting exercise, we were able to improve gross margins, reduce operational expenses and strengthen the foundations of the business. As a result, we achieved our goal of getting back to being profitable.

"Amiad entered the second half of 2015 with a higher backlog than at the same time in the prior year, which is primarily based on the continued growth in Irrigation and Oil & Gas. Global macro-economic conditions continue to impact certain parts of our business, particularly Industrial and Municipal segments, however, our broad portfolio and presence in over 80 countries buffer us from major fluctuations. As we have said previously, our focus in 2015 is on generating profits through expanding our business and maintaining tight cost control. As a result, the Board is confident of achieving year-end results in line with market expectations."

Enquiries

 
 Amiad Water Systems Ltd. 
--------------------------------  ----------------- 
 Arik Dayan, Chief Executive 
  Officer 
  Irit Ben-Dov, Chief Financial 
  Officer                          +972 4 690 9500 
--------------------------------  ----------------- 
 
 Stifel Nicolaus Europe 
  Ltd. 
--------------------------------  ----------------- 
 Giles Balleny                     +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 11 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

During the period, Amiad made significant progress in the Irrigation and Oil & Gas segments - based largely on its new Omega and Sigma products - but this was mitigated by a slowdown in the Industrial, Municipal and Ballast Water segments. As a result, total revenues were broadly flat at $59.2m (H1 2014: $60.2m). However, due to the restructuring and cost cutting exercise that the Company commenced in November 2014 and completed during the period, the Company reduced expenses thereby achieving growth in operating profit - and enabling a return to profitability on pre-tax and net basis.

Segment Performance

The Irrigation and Industrial segments generated $30.5m and $19.0m respectively during the period (H1 2014: $27.7m and $22.9m), accounting for 52% and 32% of the Company's revenues (H1 2014: 46% and 38%). The decline in the Industrial segment was mainly due to weakness in China compared with the prior year. The Municipal segment sales decreased to $4.8m (8%) from $6.1m in H1 2014 due to a lack of investment by municipal entities in large infrastructure projects. Revenue in the Oil & Gas segment grew to $4.7m, or 8% of total sales, from $2.7m (5%) in the first half of 2014. The Ballast Water segment remained weak with revenues of $0.1m (H1 2014: $0.8m) due to the continued lack of regulatory impetus for ship owners to invest in new systems.

Global Activity

US

In the US in H1 2014, Amiad had been delivering an exceptional Navy project, which finished in H2 2014. As a consequence, in H1 2015 the Company experienced a decline in revenues in the Industrial segment and this resulted in overall sales in the US being lower at $12.3m compared with $15.2m in the first half of 2014. Sales in the Irrigation segment in the US were slightly higher than in H1 2014, which was based on increasing demand for water filtration as a result of the widespread drought in California. Whilst sales in the Oil & Gas segment were lower than in the prior period, the Company delivered some strategic projects such as for injection water.

EMEA

Revenues in EMEA grew 10% in aggregate over H1 2014. Sales in the Irrigation segment in Europe increased significantly as a result of the Irrigation sales office that was established last year in the region. Amiad also performed well in the Oil & Gas segment in EMEA.

Post period, as announced on 7 September 2015, Amiad established a wholly-owned subsidiary in the UK to support the increasing demand for clean water solutions in the UK and Europe. It will operate from Swansea, Wales and, when the office opens later this month, will be 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, will report to Amiad Europe, and provide marketing and technical support functions.

Asia

In Asia, revenues were slightly softer compared with the prior year period, with a general decline in the Industrial segment being largely offset by an exceptional Industrial project in India, an improvement in Irrigation in China for food production and growth in Oil & Gas in South East Asia.

In China, sales were significantly lower in the Industrial segment due to a lack of activity in the steel industry. In the Company's other segments in China, the Company achieved an increase in revenues, but the contribution (other than Irrigation) remains unsubstantial. Amiad also strengthened the management team in China. Amiad continues to believe that the longer-term growth opportunities offered by China remain substantial.

Australia

The Industrial segment continued to suffer in Australia 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, sales increased in the Irrigation and Municipal segments, resulting in overall revenues for the period being slightly lower than the first half of 2014. The growth in the Irrigation segment was based on 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.

Product Development

Amiad's portfolio of products launched in November 2011 continued to be well-received and increasingly penetrate the market. In particular, the growth in the Irrigation and Oil & Gas segments was based on sales of the Omega and Sigma products.

Investment in R&D was $1.5m compared with $1.8m for the first half of 2014. The reduction was due to the restructuring and cost cutting exercise. Following the appointment of a new Vice President of R&D during the period, the Company intends to increase spending on R&D to continue to develop market-leading technology and products.

Financial Review

Revenues for the six months ended 30 June 2015 were $59.2m compared with $60.2m for the first half of 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. However, despite revenues being broadly flat, fully diluted earnings per share increased 33% to $0.065 (H1 2014: $0.049).

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Operating profit increased 88% to $3.9m compared with $2.1m for the first half of 2014, and profit before tax more than doubled to $3.5m (H1 2014: $1.7m). In addition, this represents a return to profit compared with the previous six months period: for the second half of 2014, the Company made a loss before tax of $2.1m.

Gross margins were 40.1% (H1 2014: 39.4%). The increase was mainly due to the benefits of the cost cutting and restructuring programme as well as the impact of currency exchange rate.

As of 30 June 2015, cash and cash equivalents were $14.5m (31 December 2014: $14.1m; 30 June 2014: $14.7m). Net debt decreased to $18.2m (31 December 2014: $21.3m; 30 June 2014: $19.7m) as a result of the increase in the net cash generated from operating activities.

Dividend

The Company has a progressive dividend policy and has historically paid dividends twice annually. However, the Board has resolved, from the current year, to consider and pay dividends once a year after the approval of the Company's audited annual financial statements. The Board expects to declare a dividend in March 2016 for the year ending 31 December 2015.

Outlook

Amiad entered the second half of 2015 with a higher backlog than at the same time in the prior year, which is primarily based on the continued growth in the Irrigation segment. Global macro-economic conditions continue to impact certain parts of the business, particularly Industrial and Municipal segments, however, the Company's broad portfolio and presence in over 80 countries buffer it from major fluctuations. As stated previously, the management team's focus in 2015 is on generating profits through expanding the business and maintaining tight cost control. As a result, the Board is confident of achieving year-end results that are in line with market expectations.

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 2015

 
       June 30        December 
                         31, 
  ----------------- 
    2015      2014       2014 
  --------  -------  ----------- 
     (Unaudited)      (Audited) 
  -----------------  ----------- 
     U.S. dollars in thousands 
  ------------------------------ 
 
 
 
 Assets 
 CURRENT ASSETS: 
    Cash and cash equivalents                 14,452    14,743    14,090 
    Financial assets at fair 
     value through 
         profit or loss                          477        44       452 
    Trade and other receivables: 
          Trade                               47,824    46,916    44,091 
          Other                                5,716     5,105     3,230 
                                            ========  ========  ======== 
    Current income tax assets                    322       775       869 
    Inventories                               24,702    26,097    23,729 
                                            --------  --------  -------- 
              T o t a l Current Assets        93,493    93,680    86,461 
                                            --------  --------  -------- 
 
 NON-CURRENT ASSETS: 
    Investment in joint venture                   10        10        10 
    Severance pay fund, net                       49       254       105 
    Long-term receivables                         55        46        48 
    Property, plant and equipment             10,913    11,094    11,184 
    Intangible assets                         16,329    16,508    16,849 
    Deferred income tax assets                 1,884     2,064     2,738 
                                            --------  --------  ======== 
             T o t a l Non Current Assets     29,240    29,976    30,934 
                                            --------  --------  -------- 
              T o t a l Assets               122,733   123,656   117,395 
                                            ========  ========  ======== 
 
 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 2015

 
       June 30        December 
                         31, 
  ----------------- 
    2015      2014       2014 
  --------  -------  ----------- 
     (Unaudited)      (Audited) 
  -----------------  ----------- 
     U.S. dollars in thousands 
  ------------------------------ 
 
 
 
 Liabilities and equity 
 CURRENT LIABILITIES: 
    Bank credit and current maturities 
     of 
          borrowings from banks                      21,252     20,987     23,212 
    Financial liabilities at 
     fair value through profit 
     or 
          loss - derivatives                             95         86      1,066 
    Trade and other payable: 
          Trade                                      18,262     18,956     15,064 
          Other                                      13,202      9,891      8,431 
     Put option liability                             2,927      2,204      2,927 
     Current income tax liability                       371        735        463 
     Dividend payable                                   -,-        499        -,- 
                                                  ---------  ---------  --------- 
              T o t a l Current Liabilities          56,109     53,358     51,163 
                                                  ---------  ---------  --------- 
 NON-CURRENT LIABILITIES: 
    Borrowings from banks 
          (net of current maturities)                11,404     13,444     12,205 
     Deferred income tax liabilities                    227        -,-        823 
     Accrued severance pay, net                         377        340        450 
                                                  ---------  ---------  --------- 
              T o t a l Non Current Liabilities      12,008     13,784     13,478 
                                                  ---------  ---------  --------- 
              T o t a l Liabilities                  68,117     67,142     64,641 
                                                  =========  =========  ========= 
 EQUITY: 
     Capital and reserves attributable 
      to 
     equity holders of the Company: 
     Share capital                                    2,798      2,798      2,798 
     Capital reserves                                28,372     28,332     28,371 
     Currency translation reserve                   (2,881)    (1,218)    (2,188) 
     Transaction with non-controlling 
      interest                                        (180)      (180)      (180) 
     Retained earnings                               26,373     26,830     23,944 
                                                  ---------  ---------  --------- 
                                                     54,482     56,562     52,745 
 Non-controlling interests                              134       (48)          9 
                                                  ---------  ---------  --------- 
     Total Equity                                    54,616     56,514     52,754 
                                                  ---------  ---------  --------- 
        Total Liabilities and Equity                122,733    123,656    117,395 
                                                  =========  =========  ========= 
 
 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2015

 
                                                           Six months 
                                                              ended                 Year ended 
                                                                                     December 
                                                            June 30                     31, 
                                              ----------------------------------- 
                                                         2015              2014        2014 
                                              -------------------------  --------  ----------- 
                                                          (Unaudited)               (Audited) 
                                              -----------------------------------  ----------- 
                                                          U.S dollars in thousands 
                                                            except per share data 
                                              ------------------------------------------------ 
Revenue                                                          59,167    60,217         118,471 
Cost of sales                                                    35,461    36,477          72,418 
                                              -------------------------  --------  -------------- 
Gross Profit                                                     23,706    23,740          46,053 
Research and development, net                                     1,497     1,759           3,158 
Selling and marketing costs                                      12,613    14,349          28,204 
Administrative and general expenses                               5,746     5,586          11,359 
Other gains (losses)                                                 85        52           (468) 
                                              -------------------------  --------  -------------- 
Operating Profit                                                  3,935     2,098           2,864 
                                              -------------------------  --------  -------------- 
Finance income                                                      887       275             137 
Finance costs                                                   (1,283)     (713)         (3,430) 
                                              -------------------------  --------  -------------- 
Finance costs, net                                                (396)     (438)         (3,293) 
                                              -------------------------  --------  -------------- 
Profit (loss) before income 
 taxes                                                            3,539     1,660           (429) 

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Income (expenses) tax                                             (984)     (452)             559 
                                              -------------------------  --------  -------------- 
Profit (loss) for the period                                      2,555     1,208           (988) 
                                              =========================  ========  ============== 
Other comprehensive income (loss)- 
Items that will not be reclassified 
 to profit or loss: 
Re-measurements of post-employment 
 benefit obligations                                                -,-       -,-           (135) 
Items that may be subsequently 
 reclassified to profit or loss: 
Currency translation differences                                  (694)     (197)           (773) 
                                              -------------------------  --------  -------------- 
Other comprehensive income (loss) 
 for the period                                                   (694)     (197)           (908) 
                                              -------------------------  --------  ============== 
Total comprehensive income (loss) 
 for the period                                                   1,861     1,405         (1,896) 
                                              =========================  ========  ============== 
Profit (loss) attributable to: 
        Equity holders of the Company                             2,429     1,247         (1,006) 
        Non controlling interests                                   126      (39)              18 
                                              -------------------------  --------  -------------- 
                                                                  2,555     1,208           (988) 
                                              =========================  ========  ============== 
Total comprehensive income (loss) 
 attributable to: 
    Equity holders of the Company                                 1,736     1,445         (1,913) 
    Non-controlling interest                                        125      (40)              17 
                                              -------------------------  --------  -------------- 
                                                                  1,861     1,405         (1,896) 
                                              =========================  ========  ============== 
 
                                                                 U.S dollars 
                                              ------------------------------------------------ 
 Earnings (loss) per share attributable 
  to the equity 
 holders of the company during 
  the period: 
            Basic                                                 0.107     0.053      (0.044) 
                                              =========================  ========  =========== 
            Diluted                                               0.065     0.049      (0.065) 
                                              =========================  ========  =========== 
 
 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2015

 
                                                     Attributable to owners of the parent 
                          ----------------------------------------------------------------------------------------- 
                                                                  Transaction 
                                                   Currency           with                                               Non- 
          Number                                                Non-controlling 
            of               Share      Capital   translation                     Retained                            controlling 
                                                                   Interest                                                         Total 
          shares            capital     Reserve     reserve                       earning            Total             interest     equity 
 -----------------------  -----------  --------  ------------  ----------------  ---------  -----------------------  ------------  ------- 
                                                                      U.S dollars in thousands 
                          ---------------------------------------------------------------------------------------------------------------- 
 BALANCE AT JANUARY 1, 
  2015 (audited)           22,663,651     2,798        28,371           (2,188)      (180)   23,944          52,745             9   52,754 
 CHANGES DURING THE SIX 
  MONTH ENDED 
      JUNE 30, 2015 
      (unaudited): 
     Comprehensive 
     income 
     - 
          Profit for the 
           period                                                                             2,429           2,429           126    2,555 
          Currency 
           translation 
           differences                                                    (693)                               (693)           (1)    (694) 
                                                               ----------------             -------  --------------  ------------  ------- 
     Total comprehensive 
      income                                                            (2,881)              26,373          54,481           134   54,615 
     Transaction with 
     owners: 
          Recognition of 
           compensation 
           related 
           employee 
           stock 
           and option 
           grants                                           1                                                     1                      1 
     Total transactions 
     with 
     owners 
                          -----------  --------  ------------  ----------------  ---------  -------  --------------  ------------  ------- 
  BALANCE AT JUNE 30, 
   2015 (unaudited)        22,663,651     2,798        28,372           (2,881)      (180)   26,373          54,482           134   54,616 
                          ===========  ========  ============  ================  =========  =======  ==============  ============  ======= 
 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 
          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 
           employee 
           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 
                          ===========  ========  ============  ================  =========  =======  ==============  ============  ======= 
 
 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2015 (contd.)

 
                                                  Attributable to owners of the parent 
                           --------------------------------------------------------------------------------- 
                                                                           Transaction 
                                                              Currency      with non-                             Non- 
                              Number                                       Controlling 
                                of        Share    Capital   translation                 Retained              controlling 
                                                                            Interest                                          Total 
                              shares     capital   reserve     reserve                   earning     Total      interest      equity 
                           -----------  --------  --------  ------------  ------------  ---------  ---------  ------------  -------- 
                                                                          U.S dollars 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 for the 

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        period                                                                            (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                                                       (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 
                           ===========  ========  ========  ============  ============  =========  =========  ============  ======== 
 
 

AMIAD WATER SYSTEMS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2015

 
                                                     Six months              Year ended 
                                                        ended 
                                                       June 30                December 
                                                                                 31, 
                                            ---------------------------- 
                                                   2015           2014          2014 
                                            ------------------  --------  --------------- 
                                                     (Unaudited)             (Audited) 
                                            ----------------------------  --------------- 
                                                     U.S dollars in thousands 
                                            --------------------------------------------- 
 CASH FLOWS FROM OPERATING ACTIVITIES: 
    Cash generated from (used in) 
     operations (see note 5)                             4,770   (3,700)            (302) 
     Interest paid                                       (570)     (433)            (816) 
     Interest received                                      58        41              162 
     Income tax paid                                       (7)     (842)          (2,576) 
                                            ------------------  --------  --------------- 
    Net cash generated from (used 
     in) operating activities                            4,251   (4,934)          (3,532) 
                                            ------------------  --------  --------------- 
 
 CASH FLOWS FROM INVESTING ACTIVITIES: 
    Purchase of property, plant 
     and equipment                                       (898)     (838)          (2,581) 
     Purchase of intangible assets                       (253)     (357)            (653) 
    Investments grants received                            -,-       -,-              332 
    Restricted deposit                                     245      (48)            (266) 
    Proceeds from sale of property, 
     plant and equipment                                    75        29               57 
    Collection of long-term loan 
     to a related party                                    -,-        40               40 
                                            ------------------  --------  --------------- 
    Net cash used in investing activities                (831)   (1,174)          (3,071) 
                                            ------------------  --------  --------------- 
 
 CASH FLOWS FROM FINANCING ACTIVITIES: 
    Dividends paid to equity holders 
     of the Company                                        -,-       -,-            (997) 
    Receipt of long-term borrowings                      3,000        51            3,072 
    Payments of long term borrowings                   (4,451)   (4,488)          (9,016) 
     Increase (decrease) in bank 
      credit and short term 
      borrowing, net                                   (1,252)    10,368           12,988 
                                            ------------------  --------  --------------- 
    Net cash generated from (used 
     in) financing activities                          (2,703)     5,931            6,047 
                                            ------------------  --------  --------------- 
 
 EXCHANGE RATE GAIN (LOSS) ON 
  CASH AND CASH EQUIVALENTS                              (355)        49            (255) 
                                            ------------------  --------  --------------- 
 NET INCREASE (DECREASE) IN CASH 
  AND CASH EQUIVALENTS                                     362     (128)            (781) 
 CASH AND CASH EQUIVALENTS AT 
  BEGINNING OF PERIOD                                   14,090    14,871           14,871 
                                            ------------------  --------  --------------- 
 CASH AND CASH EQUIVALENTS AT 
  END OF PERIOD                                   14,452         14,743            14,090 
                                            ==================  ========  =============== 
 
 
 
 
 
 
 

AMIAD WATER SYSTEMS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1 - GENERAL INFORMATION

a. Amiad Water Systems Ltd. (hereafter -"the Company") and its subsidiaries (together- the Group) is a producer and global supplier of water filters and filtration systems used in the industrial, municipal market and the irrigation market.

b. The Company was incorporated in Israel in June 1997. The address of its registered office is Kibbutz Amiad, Israel.

The Company has traded on the Alternative Investment Market in London (AIM), a part of the London Stock Exchange, since December 2005.

The principal shareholders of the Company, as of the report release date, are Kibbutz Amiad (hereafter -The "Kibbutz"), directly and through a Company controlled by the Kibbutz, A.M.S.I. Investments Ltd. ("AMSI") which owns 45.49% of the Company's outstanding shares.

The Kibbutz and AMSI are engaged in a shareholders agreement with Kibbutz Beit Zera Cooperative Agricultural Society Ltd. and two cooperatives held by Beit Zera (hereinafter - "Beit Zera") which owns 4.5% of the Company's outstanding shares and with Bermad Industries Cooperative Agricultural Society Ltd. (hereinafter - "Bermad") which owns 8.99% of the Company's outstanding shares. The agreement was signed upon Beit Zera and Bermad becoming shareholders in the Company pursuant to the acquisition of Arkal Filtration systems Cooperative Agricultural Society Ltd. Pursuant to the shareholders agreement the parties thereto shall vote their shares together at all meeting of the shareholder of the Company, as shall be agreed among them or in the absence of an agreement as shall be decided by the Kibbutz. In addition, the shareholder agreement imposes on Beit Zera and Bermad certain limitations on the transferability of shares of the Company they received pursuant to the acquisition of Arkal Filtration systems Cooperative Agricultural Society Ltd.

These group consolidated financial statements were authorized for issue by board of directors on September 9, 2015.

AMIAD WATER SYSTEMS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 2 - BASIS OF PREPARATION

a. These condensed consolidated interim financial statements for the six months ended 30 June 2015 have been prepared in accordance with IAS 34, 'Interim financial reporting'. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2014, which have been prepared in accordance with IFRSs.

This condensed consolidated interim financial information is reviewed and not audited.

   b.       Estimates - 

The preparation of interim financial statements requires management to exercise its judgment; it also requires the use of accounting estimates and assumptions that affect the application of the group's accounting policy and the amounts of reported assets, liabilities, income and expenses. Actual results may differ from those estimates.

In preparation of these condensed consolidated interim financial statements, the significant judgments that were exercised by the management in applying the group's accounting policy and the key sources of estimation uncertainty were similar to those applied in the consolidated annual financial statements for the year ended December 31, 2014.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies and computation methods used in preparing the interim financial information are consistent with those used in preparing the 2014 annual financial statements, except for the following:

NOTE 4 - REVENUES FROM SALES:

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