TIDMMWE
RNS Number : 8616Y
MTI Wireless Edge Limited
28 August 2018
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR)
28 August 2018
MTI Wireless Edge Ltd
("MTI" or the "Company")
Financial results for H1 2018
MTI Wireless Edge Ltd. (AIM: MWE), a market leader in the
manufacture of flat panel antennas for fixed wireless broadband and
a wireless irrigation solutions provider, today announces its
unaudited results for the six months ended 30 June 2018.
As the merger (the "Merger") between the Company and MTI
Computers and Software Services (1982) Ltd. ("MTIC") completed on
20 August 2018 the Company is presenting in this announcement the
financial results as if the Merger was in effect as of the
establishment of the Company. The financial statements for the six
months ended 30 June 2018 (which are further below within this
announcement) are for the Company on a pre-Merger basis (i.e. they
do not contain any contribution from MTIC).
Highlights for the merged companies:
-- H1 2018 revenues increased by 3% year-on-year to $17.1m (H1 2017: $16.55m)
-- Q2 2018 revenues increased 12% year-on-year to $9.27m and 18%
over Q1 2018 (Q1 2018:$7.84m, Q2 2017: $8.26m)
-- H1 2018 profit from operations decreased year-on-year by
$0.2m to $1.06m mainly due to one-time Merger expenses of $0.16
million (2017: $1.26m)
-- Q2 profit from operations increased 16% year-on-year to $0.7m
and doubled over Q1 2018 (Q1 2018: $0.35m, Q2 2017: $0.6m)
-- H1 2018 cash flow from operations increased 16% to $2.2m (2017: $1.9m)
Zvi Borovitz, Chairman of MTI Wireless, commented:
"We are very pleased to have completed the merger and are
excited with the opportunities in each of our business segments.
During the first six months of 2018 and especially in the second
quarter we continued to see good progress. The general and
administration costs in the six months include a one-time Merger
cost of approximately $160,000. Going forward we will not only save
these costs but expect to save an additional $100,000 annually due
to the Merger.
During the first half of 2018, we continued to see good progress
in meeting our internal goals in all areas of our business. In our
wireless controller segment, via Mottech, we grew by 15%
year-on-year and we continue to see opportunities to grow the
business. In the antenna segment, we continue to see good demand in
our military and Millimetre Wave solutions. While H1 revenue in
this segment was 7% below last year, we believe that by the end of
the year, we will also see growth in this segment. Our
representation division had a small growth in revenue in the first
half of the year, and given the design win achieved and the
pipeline of opportunities, we expect to end this year with higher
revenue growth. Our system engineering division continues to
progress focusing on securing its growth for 2019 and beyond.
Overall, in all segments, we have a strong belief that our growth
will continue into 2019 and beyond".
A. Proforma interim consolidated statements of comprehensive income for the merged companies
Year ended
Six month period December
ended June 30, 31,
---------------------- ----------
2018 2017 2017
---------- ---------- ----------
U.S. $ in thousands
----------------------------------
Unaudited
---------------------- ----------
Revenues 17,112 16,550 34,653
Cost of sales 11,437 10,861 23,430
---------- ---------- ----------
Gross profit 5,675 5,689 11,223
Research and development expenses 561 461 927
Distribution expenses 2,037 2,083 4,085
General and administrative expenses 2,019 1,885 3,795
Loss (gain) from sale of property (3) - 6
---------- ---------- ----------
Profit from operations 1,061 1,260 2,410
Finance expense 227 115 249
Finance income 25 239 287
---------- ---------- ----------
Profit before income tax 859 1,384 2,448
Tax (income) expense (147) 183 440
---------- ---------- ----------
Profit 1,006 1,201 2,008
---------- ---------- ----------
Other comprehensive income (loss)
net of tax:
Items that will not be reclassified
to profit or loss:
Re-measurement of defined benefit
plans - - 53
---------- ---------- ----------
Items that may be reclassified to
profit or loss:
Adjustment arising from translation
of financial statements of foreign
operations (200) 31 61
---------- ---------- ----------
Total other comprehensive income (200) 31 114
---------- ---------- ----------
Total comprehensive income 806 1,232 2,122
========== ========== ==========
Profit attributable to:
Owners of the parent 1,004 1,140 1,949
Non-controlling interest 2 61 59
---------- ---------- ----------
1,006 1,201 2,008
========== ========== ==========
Total comprehensive income attributable
to:
Owners of the parent 804 1,171 2,063
Non-controlling interest 2 61 59
---------- ---------- ----------
806 1,232 2,122
========== ========== ==========
Earnings per share (dollars)
Basic 0.0117 0.0136 0.0231
========== ========== ==========
Diluted 0.0116 0.0134 0.0230
========== ========== ==========
B. Proforma interim consolidated statements of financial position of the merged companies
30.06.2018 30.06.2017 31.12.2017
---------- ---------- ----------
U.S. $ in thousands
----------------------------------
Unaudited
---------------------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 3,946 5,690 3,508
Other current financial assets 2,031 - 2,011
Trade receivables 10,143 10,999 11,027
Other receivables 717 856 979
Current tax receivables 532 863 619
Inventories 4,746 4,849 5,481
---------- ---------- ----------
22,115 23,257 23,625
---------- ---------- ----------
NON-CURRENT ASSETS:
Long term prepaid expenses 35 49 45
Property, plant and equipment 4,229 4,272 4,211
Deferred tax assets 601 633 600
Intangible assets 940 1,051 995
---------- ---------- ----------
5,805 6,005 5,851
---------- ---------- ----------
Total assets 27,920 29,262 29,476
========== ========== ==========
30.06.2018 30.06.2017 31.12.2017
---------- ---------- ----------
U.S. $ In thousands
-----------------------------------
Unaudited
---------------------- -----------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities and short term bank
credit and loans 836 1,082 869
Trade payables 3,878 4,360 4,186
Other accounts payables 2,225 2,487 2,520
Current tax payables 34 254 237
---------- ---------- -----------
6,973 8,183 7,812
---------- ---------- -----------
NON- CURRENT LIABILITIES:
Loans from banks, net of current maturities 547 1,345 955
Employee benefits, net 706 751 734
---------- ---------- -----------
1,253 2,096 1,689
---------- ---------- -----------
Total liabilities 8,226 10,279 9,501
---------- ---------- -----------
EQUITY
Equity attributable to owners of the
parent
Share capital 205 200 200
Additional paid-in capital 22,388 21,629 21,716
Capital reserve from share-based payment
transactions 361 337 352
Translation differences (95) 75 105
Retained earnings (3,550) (3,643) (2,781)
---------- ---------- -----------
19,309 18,598 19,592
Non-controlling interest 385 385 383
---------- ---------- -----------
Total equity 19,694 18,983 19,975
---------- ---------- -----------
Total equity and liabilities 27,920 29,262 29,476
========== ========== ===========
For further information please contact:
MTI Wireless Edge Ltd Dov Feiner, CEO Moni http://www.mtiwe.com/
Borovitz, Financial Director +972 3 900 8900
Nomad and Joint Broker Allenby Capital
Limited Nick Naylor, Alex Brearley +44 20 3328 5656
Joint Broker
Peterhouse Capital Limited Lucy Williams,
Eran Zucker +44 20 7469 0930
About MTI Wireless Edge
Headquartered in Israel, MTI is a multi-faceted Group offering
comprehensive technology solutions through four core divisions:
Antennas Division
MTI Wireless Edge is a world leader in the design, development
and production of high quality, state-of-the-art, and cost
effective antenna solutions including Smart Antennas, MIMO Antennas
and Dual Polarity Antennas for wireless applications. MTI supplies
antennas for both military and commercial markets from 100 KHz to
90 GHz.
Internationally recognized as a producer of commercial
off-the-Shelf and custom-developed antenna solutions in a broad
frequency range, MTI Wireless Edge addresses both commercial and
military applications.
MTI supplies directional and omnidirectional antennas for
outdoor and indoor deployments, including smart antennas for WiMAX,
Broadband access, public safety, RFID, base stations and terminals
for the utility market.
Military applications include a wide range of broadband,
tactical and specialized communication antennas, antenna systems
and DF arrays installed on numerous airborne, ground and naval,
including submarine platforms worldwide.
Aerostat Operation Division
Via its system engineering division, the Group offers design and
integration of aerostat operation systems along with the ongoing
operation of Platform subsystems, SIGINT, RADAR, communication and
observation systems.
Water Control & Management Division
Via its subsidiary, Mottech Water Solutions Ltd ("Mottech"), the
Group provides high-end remote control solutions for water and
irrigation applications based on Motorola's IRRInet
state-of-the-art control, monitoring and communication
technologies.
As Motorola's global prime-distributor Mottech serves its
customers worldwide through its international subsidiaries and a
global network of local distributors and representatives. With over
25 years of experience in providing customers with irrigation
remote control and management, Mottech solutions ensure constant,
reliable and accurate water usage, while reducing operational and
maintenance costs. Mottech activities are focused in the market
segments of agriculture, water distribution, municipal and
commercial landscape as well as wastewater and storm-water
reuse.
RF and Microwave Representative and Consultation Division
Via its subsidiary, MTI Summit Electronics Ltd. the group offers
representative and expert consultation services specializing in RF
and Microwave solutions and applications. It provides its services
to international electronics suppliers operating in Israel, Eastern
Europe, and Russia.
MTI WIRELESS EDGE LTD.
(An Israeli Corporation)
INTERIM CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
Year ended
Six month period ended December
June 30, 31,
-------------------------- -------------
2018 2017 2017
------------ ------------ -------------
U.S. $ in thousands
-----------------------------------------
Unaudited
--------------------------
Revenues 13,236 12,758 26,376
Cost of sales 8,233 7,896 16,828
------------ ------------ -------------
Gross profit 5,003 4,862 9,548
Research and development expenses 561 461 927
Distribution expenses 1,938 1,912 3,796
General and administrative expenses 1,704 1,610 3,216
loss from sale of property, plant
and equipment - - 6
------------ ------------ -------------
Profit from operations 800 879 1,603
Finance expenses 178 101 216
Finance income 25 205 242
------------ ------------ -------------
Profit before income tax 647 983 1,629
Income tax expenses (income) (203) 111 320
------------ ------------ -------------
Profit 850 872 1,309
------------ ------------ -------------
Other comprehensive income (loss)
net of tax:
Items that will not be reclassified
to profit or loss:
Re-measurement of defined benefit
plans - - 12
------------ ------------ -------------
Items that may be reclassified to
profit or loss:
Adjustment arising from translation
of financial statements of foreign
operations (200) 31 61
------------ ------------ -------------
Total other comprehensive income (200) 31 73
------------ ------------ -------------
Total comprehensive income 650 903 1,382
============ ============ =============
Profit attributable to:
Owners of the parent 848 811 1,250
Non-controlling interests 2 61 59
------------ ------------ -------------
850 872 1,309
============ ============ =============
Total comprehensive income attributable
to:
Owners of the parent 648 842 1,323
Non-controlling interests 2 61 59
------------ ------------ -------------
650 903 1,382
============ ============ =============
Earnings per share (dollars)
Basic 0.0156 0.0155 0.0236
============ ============ =============
Diluted 0.0154 0.0153 0.0234
============ ============ =============
Weighted average number of shares
outstanding
Basic 54,480,915 52,346,974 52,866,352
============ ============ =============
Diluted 54,936,165 53,167,096 53,309,196
============ ============ =============
The accompanying notes form an integral part of the financial
statements.
MTI WIRELESS EDGE LTD.
(An Israeli Corporation)
INTERIM CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY
For the six month period ended June 30, 2018 (Unaudited):
Attributed to owners of the parent
------------------------------------------------------------------------
Capital
Reserve Total
for attributable
Additional share-based to owners
Share paid-in payment Translation Retained of the Non-controlling Total
capital capital transactions differences earnings parent interest equity
------- ---------- ------------ ----------- ---------- ------------ --------------- ---------
U.S. $ in thousands
Balance at
January 1, 2018 114 15,343 352 105 4,212 20,126 383 20,509
Changes during
the Six month
period
ended June 30,
2018:
Comprehensive
income
Profit for the
period - - - - 848 848 2 850
Other
comprehensive
loss
Translation
differences - - - (200) - (200) - (200)
------- ---------- ------------ ----------- ---------- ------------ --------------- ---------
Total
comprehensive
income (loss)
for the
period - - - (200) 848 648 2 650
Dividend 5 672 - - (1,073) (396) - (396)
Share based
payment - - 9 - - 9 - 9
------- ---------- ------------ ----------- ---------- ------------ --------------- ---------
Balance at
June 30,
2018 119 16,015 361 (95) 3,987 20,387 385 20,772
======= ========== ============ =========== ========== ============ =============== =========
The accompanying notes form an integral part of the financial
statements.
INTERIM CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY (CONT.)
For the six month period ended June 30, 2017 (Unaudited):
Attributed to owners of the parent
-----------------------------------------------------------------------
Capital
Reserve Total
for attributable
Additional share-based to owners
Share paid-in payment Translation Retained of the Non-controlling Total
capital capital transactions differences earnings parent interest equity
-------- ---------- ------------ ----------- -------- ------------ --------------- ---------
U.S. $ in thousands
Balance at
January 1, 2017 109 14,964 323 44 3,468 18,908 324 19,232
Changes during
the six month
period
ended June 30,
2017:
Comprehensive
income
Profit for the
period - - - - 811 811 61 872
Other
comprehensive
income
Translation
differences - - - 31 - 31 - 31
-------- ---------- ------------ ----------- -------- ------------ --------------- ---------
Total
comprehensive
income for
the
period - - - 31 811 842 61 903
Exercise of
options to
share capital (*) 14 (*) - - 14 - 14
Dividend 3 280 - - (518) (235) - (235)
Share based
payment - - 14 - - 14 - 14
-------- ---------- ------------ ----------- -------- ------------ --------------- ---------
Balance at
June 30,
2017 112 15,258 337 75 3,761 19,543 385 19,928
======== ========== ============ =========== ======== ============ =============== =========
(*) less than one thousand dollars
The accompanying notes form an integral part of the financial
statements.
INTERIM CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY (CONT.)
For the year ended December 31, 2017 :
Attributable to owners of the parent
-----------------------------------------------------------------------
Capital
Reserve Total
from attributable
Additional share-based to owners
Share paid-in payment Translation Retained of the Non-controlling Total
capital capital transactions differences earnings parent interest equity
-------- ---------- ------------ ----------- -------- ------------ --------------- ---------
U.S. $ in thousands
---------------------------------------------------------------------------------------------------
Balance as at January
1, 2017 109 14,964 323 44 3,468 18,908 324 19,232
Changes during 2017:
Comprehensive
income
Profit for the
year - - - - 1,250 1,250 59 1,309
Other
comprehensive
income
Re measurements on
defined benefit
plans - - - - 12 12 - 12
Translation
differences - - - 61 - 61 - 61
-------- ---------- ------------ ----------- -------- ------------ --------------- ---------
Total
comprehensive
income for the
year - - - 61 1,262 1,323 59 1,382
Exercise of
options to share
capital 2 99 (*) - - 101 - 101
Dividend 3 280 - - (518) (235) - (235)
Share based
payment - - 29 - - 29 - 29
-------- ---------- ------------ ----------- -------- ------------ --------------- ---------
Balance as at
December 31,
2017 114 15,343 352 105 4,212 20,126 383 20,509
======== ========== ============ =========== ======== ============ =============== =========
(*) less than one thousand dollars
The accompanying notes form an integral part of these financial
statements.
MTI WIRELESS EDGE LTD.
(An Israeli Corporation)
INTERIM CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
30.06.2018 30.06.2017 31.12.2017
---------- ---------- ----------
U.S. $ in thousands
----------------------------------
Unaudited
---------------------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 3,363 4,786 2,642
Other current financial assets 2,031 - 2,011
Trade receivables 9,115 9,525 8,988
Other receivables 556 792 850
Current tax receivables 283 586 360
Inventories 4,476 4,605 5,281
---------- ---------- ----------
19,824 20,294 20,132
---------- ---------- ----------
NON-CURRENT ASSETS:
Long term prepaid expenses 28 39 34
Property, plant and equipment 5,275 5,328 5,302
Investment property 598 619 609
Deferred tax assets 583 617 582
Intangible assets 159 267 212
Goodwill 573 573 573
---------- ---------- ----------
7,216 7,443 7,312
---------- ---------- ----------
Total assets 27,040 27,737 27,444
========== ========== ==========
The accompanying notes form an integral part of the financial
statements.
MTI WIRELESS EDGE LTD.
(An Israeli Corporation)
INTERIM CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
30.06.2018 30.06.2017 31.12.2017
---------- ---------- ----------
U.S. $ In thousands
-----------------------------------
Unaudited
----------------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities and short term bank
credit and loans 817 1,018 848
Trade payables 2,606 2,621 2,239
Other accounts payables 1,871 2,247 2,322
Current tax payables 12 143 114
---------- ---------- -----------
5,306 6,029 5,523
---------- ---------- -----------
NON- CURRENT LIABILITIES:
Loans from banks, net of current maturities 509 1,321 935
Employee benefits, net 453 459 477
---------- ---------- -----------
962 1,780 1,412
---------- ---------- -----------
Total liabilities 6,268 7,809 6,935
---------- ---------- -----------
EQUITY
Equity attributable to owners of the parent
Share capital 119 112 114
Additional paid-in capital 16,015 15,258 15,343
Capital reserve from share-based payment
transactions 361 337 352
Translation differences (95) 75 105
Retained earnings 3,987 3,761 4,212
---------- ---------- -----------
20,387 19,543 20,126
Non-controlling interest 385 385 383
---------- ---------- -----------
Total equity 20,772 19,928 20,509
---------- ---------- -----------
Total equity and liabilities 27,040 27,737 27,444
========== ========== ===========
August 28, 2018
------------------------- --------------- ----------------- ------------------------
Date of approval Moshe Borovitz Dov Feiner Zvi Borovitz
of financial statements Chief Finance Chief Executive Non-executive Chairman
Director Officer of the Board
The accompanying notes form an integral part of the financial
statements.
MTI WIRELESS EDGE LTD.
(An Israeli Corporation)
INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOWS
Year ended
Six month period ended December
June 30, 31,
------------------------ ----------
2018 2017 2017
---------- ------------ -------------
U.S. $ in thousands
-------------------------------------
Unaudited
------------------------
Cash Flows from Operating Activities:
Profit for the period 850 872 1,309
Adjustments for:
Depreciation and amortization 296 326 637
Loss (gain) from investments in financial
assets (48) 133 -
Loss from sale of property, plant and equipment - - 6
Equity settled share-based payment expense 9 14 29
Finance expenses, net 36 56 162
Income tax expense (benefit) (203) 111 320
Changes in operating assets and liabilities:
Decrease (increase) in inventories 742 372 (269)
Increase in trade receivables (266) (1,409) (879)
Decrease (increase) in other accounts receivables
and prepaid expenses 294 (34) (88)
Increase (decrease) in trade and other
accounts payables (97) 700 396
Increase (decrease) in employee benefits,
net (24) 54 84
---------- ------------ -----------
Cash from operations 1,589 1,195 1,707
Interest received - - 22
Interest paid (36) (56) (109)
Income tax received (paid) 173 (215) (190)
---------- ------------ -----------
Net cash provided by operating activities 1,726 924 1,430
---------- ------------ -----------
The accompanying notes form an integral part of the financial
statements.
INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOWS (cont.)
Year ended
Six month period ended December
June 30, 31,
--------------------------------- -----------
2018 2017 2017
---------------------- --------- -----------
U.S. $ in thousands
-----------------------------------------------------
Unaudited
----------------------
Cash Flows From Investing Activities:
Purchase of investments in financial
assets, net - - (2,000)
Proceeds from sale of property, plant
and equipment - - 100
Purchase of property, plant and equipment (142) (119) (447)
---------------------- --------- -----------
Net cash used in investing activities (142) (119) (2,347)
---------------------- --------- -----------
Cash Flows From Financing Activities:
Exercise of share options - 14 101
Dividend (396) (235) (235)
Short term loan from banks - 166 -
Long term loan received from banks - - 60
Repayment of long-term loan from banks (429) (426) (829)
---------------------- --------- -----------
Net cash used in financing activities (825) (481) (903)
---------------------- --------- -----------
Increase (decrease) in cash and
cash equivalents during the period 759 324 (1,820)
Cash and cash equivalents
at the beginning of the period 2,642 4,428 4,428
Exchange differences on balances of
cash and
cash equivalents (38) 34 34
---------------------- --------- -----------
Cash and cash equivalents
at the end of the period 3,363 4,786 2,642
====================== ========= ===========
Appendix A - Non-cash transactions:
Year ended
Six month period ended December
June 30, 31,
------------------------ ----------
2018 2017 2017
----------- ----------- ----------
U.S. $ in thousands
------------------------------------
Unaudited
-------------------------
Purchase of property, plant and equipment
against trade payables 84 6 3
============ =========== ==========
Scrip dividend (Note 6 B) 677 283 283
============ =========== ==========
The accompanying notes form an integral part of the financial
statements.
MTI WIRELESS EDGE LTD.
(An Israeli Corporation)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General:
Corporate information:
M.T.I Wireless Edge Ltd. (hereafter - the "Company", or
collectively with its subsidiaries, the "Group") is an Israeli
corporation. The Company was incorporated under the Companies Act
in Israel on December 30, 1998 as a wholly-owned subsidiary of
M.T.I Computers and Software Services (1982) Ltd. (hereafter - the
"Parent Company"), and commenced operations on July 1, 2000. Since
March 2006, the Company's shares have been traded on the AIM market
of the London Stock Exchange.
The formal address of the Company is 11 Hamelacha Street, Afek
industrial Park, Rosh-Ha'Ayin, Israel.
The Company is engaged in the development, design, manufacture
and marketing of antennas and accessories.
Via its subsidiary, Mottech Water solutions Ltd. (hereafter
"Mottech"), the Company is also a leading provider of remote
control solutions for water and irrigation applications based on
Motorola's IRRInet state of the art control, monitoring and
communication technologies.
Certain operational and administrative services are provided by
the Parent Company.
Note 2 - Significant Accounting Policies:
The interim consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for the
preparation of financial statements for interim periods, as
prescribed in International Accounting Standard No. 34 ("Interim
Financial Reporting").
The interim consolidated financial information set out above
does not constitute full year-end accounts within the meaning of
Israeli Companies Law. It has been prepared on the going concern
basis in accordance with the recognition and measurement criteria
of the International Financial Reporting Standards (IFRS).
Statutory financial information for the financial year ended
December 31, 2017 was approved by the board on February 15, 2018.
The report of the auditors on those financial statements was
unqualified.
The interim consolidated financial statements as of June 30,
2018 have not been audited.
The interim consolidated financial information should be read in
conjunction with the annual financial statements as of December 31,
2017 and for the year then ended and with the notes thereto. The
significant accounting policies applied in the annual financial
statements of the Company as of December 31, 2017 are applied
consistently in these interim consolidated financial statements.
except for the adoption of new standards effective as of 1 January
2018.
New IFRSs adopted in the period
1. IFRS 9 Financial Instruments
IFRS 9 Financial Instruments replaces IAS 39 Financial
Instruments: Recognition and Measurement for annual periods
beginning on or after 1 January 2018, bringing together all six
aspects of the accounting for financial instruments: classification
and measurement; impairment; and hedge accounting.
The details of new significant accounting policies and the
nature and effect of the changes to previous accounting policies
are set out below:
(b) Classification and measurement
The classification of financial assets under IFRS 9 is generally
based on the business model in which a financial asset is managed
and its contractual cash flow characteristics. Derivatives embedded
in contracts where the host is a financial asset in the scope of
the standard are never separated. Instead, the hybrid financial
instrument as a whole is assessed for classification.
A financial asset is measured at amortized cost if it meets both
of the following conditions and is not designated as at fair value
through profit or loss ("FVTPL"):
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
A debt investment is measured at fair value through other
comprehensive income ("FVOCI") if it meets both of the following
conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial
assets; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Company may irrevocably elect to present
subsequent changes in the investment's fair value in OCI. This
election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized
cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition,
the Company may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortized cost
or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
A financial asset (unless it is a trade receivable without a
significant financing component that is initially measured at the
transaction price) is initially measured at fair value plus, for an
item not at FVTPL, transaction costs that are directly attributable
to its acquisition.
The following accounting policies apply to the subsequent
measurement of financial assets.
Financial assets at FVTPL: These assets are subsequently
measured at fair value. Net gains and losses, including any
interest or dividend income, are recognized in profit or loss.
Financial assets at amortized cost: These assets are
subsequently measured at amortized cost using the effective
interest method. The amortized cost is reduced by impairment losses
(see b below). Interest income,
foreign exchange gains and losses and impairment are recognized
in profit or loss. Any gain or loss on derecognition is recognized
in profit or loss.
Debt investments at FVOCI: These assets are subsequently
measured at fair value. Interest income calculated using the
effective interest method, foreign exchange gains and losses and
impairment are recognized in profit or loss. Other net gains and
losses are recognized in OCI. On de-recognition, gains and losses
accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI: These assets are subsequently
measured at fair value. Dividends are recognized as income in
profit or loss unless the dividend clearly represents a recovery of
part of the cost of the investment. Other net gains and losses are
recognized in OCI and are never reclassified to profit or loss.
The Company has implemented the classification and measurement
requirements of IFRS 9 retrospectively on the basis of the facts
and circumstances that existed as of January 1, 2018 by recognizing
the cumulative effect of the retrospective application as an
adjustment to the opening balance of retained earnings and other
components of equity as of January 1, 2018.
(c) Impairment
IFRS 9 replaces the 'incurred loss' model in IAS 39 with an
'expected credit loss' (ECL) model. The new impairment model
applies to financial assets measured at amortized cost, contract
assets and debt investments at FVOCI, but not to investments in
equity instruments. Under IFRS 9, credit losses are recognized
earlier than under IAS 39.
Under IFRS 9, loss allowances are measured on either of the
following bases:
- 12-month ECLs: these are ECLs that result from possible
default events within the 12 months after the reporting date;
and
- lifetime ECLs: these are ECLs that result from all possible
default events over the expected life of a financial
instrument.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECLs, the Company considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Company's historical experience and
informed credit assessment and including forward-looking
information.
The Company considers a debt security to have low credit risk
when its credit risk rating is equivalent to the globally
understood definition of 'investment grade'.
The maximum period considered when estimating ECLs is the
maximum contractual period over which the Company is exposed to
credit risk.
Trade receivables
Exposures within each Company were segmented based on
delinquency status, geographic region, age of relationship and type
of product purchased.
Actual credit loss experience was adjusted by scalar factors to
reflect differences between economic conditions during the period
over which the historical data was collected, current conditions
and the Company's view of economic conditions over the expected
lives of the receivables.
Changes in accounting policies resulting from the adoption of
IFRS 9 have been applied retrospectively, on the basis of the facts
and circumstances that existed as of January 1, 2018 by recognizing
the cumulative effect of the retrospective application as an
adjustment to the opening balance of retained earnings and other
components of equity as of January 1, 2018.
The adoption of IFRS 9 did not have an impact on the financial
statements.
2. IFRS 15 Revenue from Contracts with Customers
IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue
and related Interpretations and it applies to all revenue arising
from contracts with customers, unless those contracts are in the
scope of other standards. The core principle of IFRS 15 is that an
entity will recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services.
IFRS 15 sets out a single revenue recognition model, according
to which the entity shall recognize revenue in accordance with the
said core principle by implementing a five-step model
framework:
1. Identify the contract(s) with a customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price.
4. Allocate the transaction price to the performance obligations in the contract.
5. Recognize revenue when the entity satisfies a performance obligation.
Below are the significant accounting policies and judgments
applied by the Company in recognizing revenue from customer
contracts in detail according to the Company's main activities:
(a) Sale of goods
The Company's contracts with customers for the sale of goods
generally include one performance obligation. The Company has
concluded that revenue from sale of goods should be recognized at
the point in time when control of the asset is transferred to the
customer, generally on delivery of the equipment.
Variable consideration
Under IFRS 15, volume rebates give rise to variable
consideration. The variable consideration is estimated at contract
inception and constrained until the associated uncertainty is
subsequently resolved. The application of the constraint on
variable consideration increases the amount of revenue that will be
deferred.
To estimate the variable consideration to which it will be
entitled, the Company applied the 'most likely amount method' for
contracts with a single volume threshold and the 'expected value
method' for contracts with more than one volume threshold. The
selected method that best predicts the amount of variable
consideration was primarily driven by the number of volume
thresholds contained in the contract. The Company then applies the
requirements on constraining estimates of variable
consideration.
Warranty obligations
The Company generally provides warranties for general repairs of
defects that existed at the time of sale, as required by law. As
such, most warranties are assurance-type warranties under IFRS 15,
which the Company accounts for under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, consistent with its practice
prior to the adoption of IFRS 15.
Financing components
The Company does not expect to have any contracts where the
period between the transfer of the promised goods or services to
the customer and payment by the customer exceeds one year. As a
consequence, the Company does not adjust any of the transaction
prices for the time value of money.
(b) Rendering of services
Provided the amount of revenue can be measured reliably and it
is probable that the Company will receive any consideration,
revenue from services is recognized in the period in which they are
rendered.
(c) Revenues from Construction Contracts
Revenues are reported by the "percentage of completion" method.
The percentage of completion is determined by dividing actual
completion costs incurred to date by the total completion costs
anticipated.
When a loss from a contract is anticipated, a provision is made
in the period in which it first becomes evident, for the entire
loss anticipated, as assessed by the company's management.
The Company recognizes income from construction contracts over
time, since the Company's performance does not create an asset with
alternative use to the Company and the Company has the right to
enforce payment for performance completed up to that date.
The payment terms in the projects are based on milestones set at
the date of signing the contract and are based mainly on the rate
of progress. For this reason, the Company is not expected to
recognize assets in respect of contracts and liabilities in respect
of contracts in significant amounts in relation to these
contracts.
Causes of uncertainty in material estimates
Measuring the progress of long-term performance commitments -
the Company is required to estimate the total cost of completing
each project based on estimates of material costs, labor costs,
subcontractor performance, and more.
First time application
The Company elected to apply IFRS 15 retrospectively for the
first time by recognizing the cumulative effect of the retroactive
application as an adjustment to the opening balance of retained
earnings as at January 1, 2018.
The adoption of IFRS 15 did not have an impact on the financial
statements.
Note 3 - REVENUES:
Year ended
Six month period ended December
June 30, 31,
------------------------ ------------------
2018 2017 2017
----------- ----------- ------------
U.S. $ in thousands
----------------------------------------------
Unaudited
------------------------
Revenues arises from:
Sale of goods 9,911 10,266 21,271
Rendering of services 1,334 1,175 2,492
Projects 1,991 1,317 2,613
----------- ----------- ------------
13,236 12,758 26,376
=========== =========== ============
Note 4 - operating SEGMENTS:
The following table's present revenue and profit information
regarding the Group's operating segments for the six month period
ended June 30, 2018 and 2017 respectively and for the year ended
December 31, 2017.
Six month period ended June 30, 2018 (Unaudited)
Antennas Water Solutions Total
-------- --------------- ---------
U.S. $ in thousands
------------------------------------
Revenues
External 6,111 7,125 13,236
-------- --------------- ---------
Total 6,111 7,125 13,236
======== =============== =========
Segment profit 228 572 800
======== ===============
Finance expense, net 153
---------
Profit before income tax 647
=========
Other
Depreciation and amortization 267 29 296
======== =============== =========
Six month period ended June 30, 2017 (Unaudited)
Antennas Water Solutions Total
-------- --------------- ---------
U.S. $ in thousands
------------------------------------
Revenues
External 6,579 6,179 12,758
-------- --------------- ---------
Total 6,579 6,179 12,758
======== =============== =========
Segment profit 175 704 879
======== ===============
Finance income, net 104
---------
Profit before income tax 983
=========
Other
Depreciation and amortization 298 28 326
======== =============== =========
Year ended December 31, 2017
Antennas Water Solutions Total
--------- --------------- ---------
U.S. $ in thousands
-------------------------------------
Revenue
External 13,267 13,109 26,376
--------- --------------- ---------
Total 13,267 13,109 26,376
========= =============== =========
Segment profit 67 1,536 1,603
========= ===============
Unallocated corporate expenses
Finance expense, net 26
---------
Profit before income tax 1,629
=========
Other
Depreciation and amortization 586 51 637
========= =============== =========
Note 5 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES:
The following transactions occurred with the Parent Company and
other related parties:
Year ended
Six month period ended December
June 30, 31,
------------------------ ------------------
2018 2017 2017
----------- ----------- ------------
U.S. $ in thousands
----------------------------------------------
Unaudited
------------------------
Purchased Goods 102 103 252
Management Fee 231 221 498
Services Fee 143 130 259
Lease income (36) (36) (72)
Compensation of key management personnel of the Group:
Year ended
Six month period ended December
June 30, 31,
------------------------ ------------------
2018 2017 2017
----------- ----------- ------------
U.S. $ in thousands
----------------------------------------------
Unaudited
------------------------
Short-term employee benefits *) 471 417 920
=========== =========== ============
*) Including Management fees for the CEO, Directors, Executive
Management and other related parties.
All Transactions were made at market value.
Balances with related parties:
30.06.2018 30.06.2017 31.12.2017
---------- ---------- ----------
U.S. $ in thousands
----------------------------------
Unaudited
---------------------- ----------
Other accounts payables 293 293 467
========== ========== ==========
Note 6 - SIGNIFICANT AND SUBSEQUENT EVENTS:
A. During March 2018 the Company announced that it is in
preliminary discussions with its majority shareholder, MTI
Computers & Software Services (1982) Ltd ("MTIC"), regarding a
potential merger between the two companies (the "Proposed
Transaction"). MTIC, whose shares are listed on the Tel Aviv Stock
Exchange, currently holds 53.2% of the Company's issued ordinary
shares. Following the announcement on March 2018, on May 1, 2018
the Company announced that it had entered into a merger agreement
(the "Merger Agreement") with its majority shareholder, MTIC and
the Company together being the "Merging Companies", according to
which, and in accordance with the provisions of Sections 350-351 of
the Israeli Companies Law, 5759-1999 (the "Companies Law"), as a
court approved scheme of arrangement between the Company, MTIC and
their shareholders (the "Scheme of Arrangement"), MTIC will be
merged into the Company in a statutory merger, so that MTIC will be
dissolved and all of its activities, assets and liabilities,
subject to certain qualifications, will be transferred to the
Company in consideration for the allotment of new ordinary shares
of the Company and the transfer of MTIC's existing holdings in the
Company, to all of MTIC's shareholders (the "Merger").
As consideration for the Merger, the Company will allocate to
the shareholders of MTIC 31,600,436 new ordinary shares in the
Company, subject to a Conversion Ratio Mechanism (as defined
below). In addition, MTIC's existing holdings in the Company will
also be transferred to all of the shareholders in MTIC, pro rata to
their holdings of shares in MTIC.
On the date of record for the Merger the Company will allocate
to the shareholders of MTIC (the "Date of Record for the Merger"
and the "Shareholders of MTIC" respectively) 31,600,436 new
ordinary shares in the Company, according to the Conversion Ratio
(as defined below) as of the date of the Merger Agreement, subject
to the Conversion Ratio Mechanism (as defined below) (the "Allotted
Shares") and will transfer them, together with MTIC's Holdings in
the Company (the "Sold Shares"), to all of the shareholders in
MTIC, pro rata to their holdings of shares in MTIC on the Date of
Record for the Merger, according to the Conversion Ratio. With
respect to the Merger Agreement, the "Conversion Ratio" - a ratio
of 5.2689055 Sold Shares for each share in MTIC as of the date of
entry into the Merger Agreement, which has been determined
according to a valuation of the business activities of MTIC and the
Company, on the basis of the consolidated and audited financial
statements for the year ended 31 December 2017 of each company as
valued by an independent appraiser (the "Appraiser"), which is
subject to updates, as necessary, according to the Conversion Ratio
Mechanism (as defined below). According to the aforesaid valuation,
which constitutes part of the Merger Agreement (the "Valuation"),
the equity ratio as of 31 December 2017, between the value of MTIC
excluding MTIC's holdings in the Company (approximately US$ 10.7
million as of 31 December 2017) when compared with the value of the
Company (approximately US$18.8 million as at 31 December 2017) is
approximately 1.75: in favor of the Company. Following completion
of the Merger, assuming the Conversion Ratio is not adjusted in
accordance with the Conversion Ratio Mechanism (5.26891) and
provided none of the options granted by the Company are exercised,
the issued share capital of the Company will be 87,038,724 ordinary
shares.
The Merger was completed on August 20, 2018.
B. On April 5, 2018 the Company paid a dividend of US 2 cents
per share totaling approximately US$ 396,000 and in addition
1,813,970 new ordinary shares were issued to qualifying
shareholders that chose the scrip dividend alternative.
-ENDS-
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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