REG - MTI Wireless Edge - 1st Quarter Results <Origin Href="QuoteRef">MWEE.L</Origin> - Part 1

MTI Wireless EdgeAnnouncement

11/05/2016 07:05

RNS Number : 8538X
MTI Wireless Edge Limited
11 May 2016
11 May 2016
MTI Wireless Edge Ltd 
("MTI" or the "Company")
Financial results for the three months ended 31 March 2016
MTI Wireless Edge Ltd. (MWE), a market leader in the manufacture of flat panel antennas for fixed wireless broadband and a wireless irrigation solution provider, today announces its unaudited results for the three months ended 31 March 2016.
Highlights: 
 Revenue increased by 48% year-on-year in the first quarter to US$5.25m (Q1 2015: US$3.54m) due to the acquisition of Mottech. The Company's antenna business saw a decrease in turnover of 34%, mainly due to de stocking of a key customer. The Board expects revenues from this customer to return to normal in Q2 2016.Gross profit increased by 40% year-on-year to US$1.8m (Q1 2015: US$1.3m). 
 Operating loss of US$0.1m in the quarter (Q1 2015: profit of $US0.1m) due to low revenue levels in the antenna business. 
 Cash flow generated from operation of $US0.76m (Q1 2015: cash use of $US0.4m)
 Dividend of US 1.1 cent per share for the year ended 31 December 2015 paid on 1 April 2016.
 Shareholder's equity of US$18.5m (at December 31, 2015: US$18.4m), equivalent to 24.4 pence per share.
 The board remains confident in the outcome for the year to 31 December 2016.
Dov Feiner, Chief Executive Officer, commented: 
"I am delighted with the integration of Mottech into our company and its contribution to revenue and profit growth. Mottech has made strong progress in the irrigation business in the first quarter of 2016 and we expect this to continue throughout 2016. This growth was offset by slow antenna revenues in the quarter which was mainly due to the fact that our key customer in the antenna sector destocked its antenna inventory in the first quarter. We anticipate a much better performance with this customer for the reminder of the year as their market recovered and they fulfill a backlog of orders. This, together with positive signs in the 80GHz product line and the pipe line of opportunities we see makes us believe that the combined business will continue to grow and continue to be successful in 2016". 
For further information please contact:
MTI Wireless Edge
Dov Feiner, CEO
Moni Borovitz, Financial Director
http://www.mtiwe.com/
+972 3 900 8900
Allenby Capital Limited
Nick Naylor
Alex Brearley
+44 20 3328 5656
About MTI Wireless Edge
MTI is engaged in the development, production and marketing of High Quality, Low Cost, Flat Panel Antennas for Commercial & for Military applications. Commercial applications such as: WiMAX, Wireless Networking, RFID readers &, Broadband Wireless Access. With over 40 years experience, supplying antennas 100KHz to 90GHz including directional antennas and Omni directional for outdoor and indoor deployments including Smart Antennas for WiMAX, Wi-Fi, Public Safety, RFID and for Base Stations and Terminals - Utility Market. Military applications includes a wide range of broadband, tactical and specialized communications antennas, antenna systems and DF arrays installed on numerous airborne, ground and naval, including submarine, platforms worldwide. 
Via its subsidiary, Mottech Water Solutions Ltd ("Mottech"), MTI is also a leading provider of remote control solutions for water and irrigation applications based on Motorola IRRInet state of the art control, monitoring and communication technologies. Mottech, headquartered in Israel, is the global prime distributor of Motorola for the IRRInet remote control solutions serving its customers worldwide through its subsidiaries and a global network of local distributers and representatives.It utilizes over 25 years of experience in providing its customers with remote control and management systems which ensure constant, reliable and accurate water usage, while reducing operational costs and maintenance costly expenses. Mottech activities are focused in the market segments of agriculture, water distribution, Municipal and Commercial Landscape and Wastewater and Storm water Reuse.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three months ended
March 31,
Year ended December 31,
2016
2015
2015
U.S. $ in thousands
Unaudited
Audited
Revenues
5,253

3,542

19,579
Cost of sales
3,472

2,272

11,870






Gross profit
1,781

1,270

7,709
Research and development expenses
322

322

1,216
Distribution expenses
918

411

2,408
General and administrative expenses
630

396

2,323






Profit (Loss) from operations
(89)

141

1,762
Finance expense
148

99

432
Finance income
21

3

44






Profit (Loss) before income tax
(216)

45

1,374
Tax on income (tax benefit)
(60)

(30)

110






Profit (Loss)
(156)

75

1,264
Other comprehensive income (net of tax effect):





Items that will not to be reclassified to profit or loss:





Re-measurement of defined benefit plans
-

-

(42)
-

-

(42)
Items that will be reclassified to profit or loss:





Adjustment arising from translation of financial statements of foreign operations
261

-

(77)
261

-

(77)
Total other comprehensive loss
261

-

(119)






Total comprehensive income
105

75

1,145






Profit (Loss)Attributable to:




Owners of the parent
(150)

70

1,222
Non-controlling interest
(6)

5

42






(156)

75

1,264
Total comprehensive income (loss) Attributable to:




Owners of the parent
111

70

1,103
Non-controlling interest
(6)

5

42






105

75

1,145






Earnings per share (dollars per share)




Basic
(0.0029)

0.0014

0.0237
Diluted
(0.0029)

0.0014

0.0235






Weighted average number of shares outstanding




Basic
51,580,836

51,571,990
51,571,990
Diluted
52,664,393

51,571,990
51,897,027






The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATEDSTATEMENT OF
CHANGES IN EQUITY
For the three months period ended March 31, 2016:
Attributed to owners of the parent
Share capital
Additional paid-in capital
Capital Reserve
for share-based
payment
transactions
Adjustment arising from translation of financial statements of foreign operations
Retained earnings
Total attributable to owners of the parent
Non-controlling interest
Total equity
U.S. $ in thousands









Balance at January 1, 2016 (Audited)
109
14,945
304
(77)
3,116
18,397
266
18,663






Changes during the three months
 ended March 31, 2016 (Unaudited):







Comprehensive income






Loss for the period
-
-
-
-
(150)
(150)
(6)
(156)
Other comprehensive income






Translation differences
-
-
-
261
-
261
-
261







Total comprehensive income for the period
-
-
-
261
(150)
111
(6)
105
Share issuance to non-controlling interests in subsidiary
-
(10)
-
-
-
(10)
10
-
Exercise of options to share capital
-
6
(1)
-
-
5
-
5
Share based payment
-
-
2
-
-
2
-
2
Balance at March 31, 2016 (Unaudited)
109
14,941
305
184
2,966
18,505
270
18,775
The accompanying notes form an integral part of the financial statements.
INTERIM CONSOLIDATEDSTATEMENT OF CHANGES IN EQUITY
For the three months period ended March 31, 2015:
Attributed to owners of the parent
Share capital
Additional paid-in capital
Capital Reserve
for share-based
payment
transactions
Retained earnings
Total attributable to owners of the parent
Non-controlling interest
Total equity
U.S. $ in thousands
Balance at January 1, 2015 (Audited)
109

14,945

286

2,287

17,627

216

17,843










Changes during the three months
 ended March 31, 2015 (Unaudited):












Comprehensive income for the period 
-

-

-

70

70

5

75
Share based payment 
-
-

6

-

6

-

6
Balance at March 31, 2015 (Unaudited)
109
14,945

292

2,357

17,703

221

17,924
The accompanying notes form an integral part of the financial statements.
INTERIM CONSOLIDATEDSTATEMENT OF
CHANGES IN EQUITY
For the year ended December 31, 2015 :
Attributable to owners of the parent
Share capital
Additional paid-in capital
Capital Reserve from share-based payment transactions
Adjustment arising from translation of financial statements of foreign operations
Retained earnings
Total attributable to owners of the parent
Non-controlling interest
Total equity
U.S. $ in thousands
Balance as at January 1, 2015
109
14,945
286
-
2,287
17,627
216
17,843



Changes during 2015:
Comprehensive income

Income for the period
-
-
-
-
1,222
1,222
42
1,264
Other comprehensive income








Re measurements on defined benefit plans
-
-
-
-
(42)
(42)
-
(42)
Translation differences
-
-
-
(77)
-
(77)
-
(77)








Total comprehensive income for the year
-
-
-
(77)
1,180
1,103
42
1,145
Non-controlling Interest of newly purchased subsidiary
-
-
-
-
-
-
8
8
Dividend paid
-
-
-
-
(351)
(351)
-
(351)
Share based payment
-
-
18
-
-
18
-
18
Balance as at December 31, 2015
109
14,945
304
(77)
3,116
18,397
266
18,663





The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF
FINANCIALPOSITION
31.03.2016
31.03.2015
31.12.2015
U.S. $ in thousands
Unaudited
Audited
ASSETS





CURRENT ASSETS:





Cash and cash equivalents 
3,144

3,275

2,634
Other current financial assets
2,109

2,872

2,086
Trade receivables
7,751

5,145

8,074
Other receivables
879

857

1,296
Currenttax receivables
183

138

139
Inventories
3,950
2,844

4,426







18,016
15,131
18,655












NON-CURRENT ASSETS:





Long term prepaid expenses
36

10

28
Property, plant and equipment
5,578

5,127

5,643
Investment property
646

1,230

656
Deferred tax assets
502

404

393
Intangible assets
402

-

429
Goodwill
573
406

573







7,737
7,177
7,722









Total assets
25,753
22,308

26,377






The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF
FINANCIAL POSITION 
31.03.2016
31.03.2015
31.12.2015
U.S. $ In thousands
Unaudited
Audited
LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Current maturities and short term Loans
812

270

792
Trade payables
1,648

1,682

1,772
Other accounts payables
1,620

784

2,098
Current tax payables
194

-

192






4,274

2,736

4,854






NON- CURRENTLIABILITIES:





Loans from banks, net of current maturities
2,209

1,276

2,381
Employee benefits
403

372

387
Other liabilities
92

-

92






2,704

1,648

2,860






Total liabilities
6,978

4,384

7,714






EQUITY 





Equity attributable to owners of the parent





Share capital
109

109

109
Additional paid-in capital
14,941

14,945

14,945
Capital reserve from share-based payment transactions
305

292

304
Translation differences
184

-

(77)
Retained earnings
2,966

2,357

3,116






18,505

17,703

18,397






Non-controlling interest
270

221

266






Total equity 
18,775

17,924

18,663









Total equity and liabilities
25,753

22,308

26,377






May 10, 2016
Date of approval of financial statements
Moshe Borovitz Finance Director
Dov Feiner
Chief Executive Officer
Zvi Borovitz
Non-executive Chairman
The accompanying notes form an integral part of the financial statements.
INTERIM CONSOLIDATED STATEMENTS OF 
CASH FLOWS
Three months ended
March 31,
Year ended December 31,
2016
2015
2015
U.S. $ in thousands
Unaudited
Audited
Cash Flows from Operating Activities:













Profit (loss) for the period

(156)

75

1,264
Adjustments for:






Depreciation and amortization

162

127

593
Loss (gain) from investments in financial assets

39

22

(36)
Equity settled share-based payment expense

2

6

18
Finance expenses, net

32

20

113
Income tax expense (benefit)

(60)

(30)

110
Changes in operating assets and liabilities:






Decrease in inventories 

481

97

90
Decrease (increase) in trade receivables

579

(133)

(1,136)
Decrease (increase) in other accounts receivables and prepaid expenses

410

(84)

(326)
Decrease in trade and other accounts payables

(620)

(468)

(98)
Increase (decrease) in employee benefits, net
16
7
(54)
Interest paid
(32)
(20)
(113)
Income tax paid
(92)
(1)
(214)







Net cashprovided by (used in) operating activities

761

(382)

211







The accompanying notes form an integral part of the financial statements.


INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOWS
Three months ended
March 31,
Year ended December 31,
2016
2015
2015
U.S. $ in thousands
Unaudited
Audited
Cash Flows From Investing Activities:






Sale of investments in financial assets, net

-

833

1,639
Acquisition of subsidiary, net of cash acquired

-

-

(3,042)
Purchase of property, plant and equipment
(46)
(26)
(297)
Net cash provided by (used in) investing activities
(46)
807
(1,700)
Cash Flows From Financing Activities:






Exercise of share options

5

-

-
Long term loan received from banks

-

-

2,090
Dividend paid to the owners of the parent

-

-

(351)
Repayment of long-term loan from banks
(214)
(68)
(526)
Net cash provided by (used in) financing activities
(209)
(68)
1,213
Increase (decrease) in cash and
cash equivalents during the period 
506

357

(276)
Cash and cash equivalents
at the beginning of the period
2,634
2,918
2,918
Exchange differences on balances of cash and
 cash equivalents
4
-
(8)
Cash and cash equivalents
at the end of the period
3,144
3,275
2,634
Appendix A - Non-cash transactions:


Three months
ended March 31,
Year ended December 31,
2016
2015
2015
U.S. $ in thousands
Unaudited
Audited
Purchase of property and equipment
 against trade payables

22
20

8
The accompanying notes form an integral part of the financial statements.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General:
Corporate information:
M.T.I Wireless Edge Ltd. (hereafter - the Company) 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 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, MTI is also a leading provider of remote control solutions for water and irrigation applications based on Motorola IRRInet state of the art control, monitoring and communication technologies.
On April 28, 2015 the Company signed an agreement for the purchase of 100% of the share capital of Mottech Water Solutions ltd ("Mottech"), a provider of wireless control products and services, for a consideration of approximately US$ 4 million (15.5 million New Israeli Shekels) plus an additional contingent payment based on performance which could rich up to about US$ 750 thousand (3 million New Israeli Shekels). The acquisition was completed on June 11, 2015 and funded by long-term bank loan and independent sources. 
Mottech is a global distributor and integrator of Motorola's wireless control solutions, which includes a portfolio of radio-enabled sensors and switches managed by control software. Mottech primarily operates in the water management sector and has developed proprietary wireless management solutions for commercial irrigation, municipal water authorities and water distributors. A typical solution reduces costs for the client, for example Mottech provides a commercial farm irrigation system that monitors the local environment, weather and soil sensors in real-time and Mottech's propriety software automatically operates irrigation and fertilizer pump stations to optimize these critical costs for the farm. 
Mottech was set up in May 2014 and acquired its business and assets at the same time from the Israeli court. The assets had been placed in the Israeli court following the previous owner going into administration as result of business failure of a subsidiary which is not part of Mottech or its business today.
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, 2015 was approved by the board on February 16, 2016. The report of the auditors on those financial statements was unqualified. The interim consolidated financial statements as of March 31, 2016 have not been audited.
The interim consolidated financial information should be read in conjunction with the annual financial statements as of 31 December, 2015 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, 2015 are applied consistently in these interim consolidated financial statements, except for the impact of the adoption of the Standards and Interpretations described below.
Note 3 - operating SEGMENTS:
Following the acquisition of the new operation the Group's chief operating decision maker examines operating segments differently from the past and therefore commencing the current financial statements the following table's present revenue and profit information regarding the Group's operating segments for the three months ended March 31, 2016 and 2015, respectively and for the year ended December 31, 2015.
Three monthsended March 31,2016(Unaudited)
Antennas
Water Solutions
Total
$'000
Revenue






External
2,321
2,932
5,253
Total
2,321
2,932
5,253
Segment income
(400)
311
(89)

Finance expense, net
(127)
Profit before income tax
(216)


Other






Depreciation and other non-cash expenses
150
12
162
Three monthsended March 31,2015(Unaudited)
Antennas*
Water Solutions
Total
$'000
Revenue






External
3,542
-
3,542
Total
3,542
-
3,542
Segment income
 141
-
 141

Finance expense, net
(96)
Profit before income tax
45


Other






Depreciation and other non-cash expenses
127
-
127
(*) Reclassified
Yearended December 31,2015(audited)
Antennas
Water Solutions*
Total
$'000
Revenue






External
13,305
6,274
19,579
Total
13,305
6,274
19,579
Segment profit
859
903
1,762
Unallocated corporate expenses
Finance expense, net
(388)
Profit before income tax
1,374
Other






Depreciation and amortization
561
32
593
(*) Results for seven month ending December 31, 2015:
Note 4 -TRANSACTIONS WITH RELATED PARTIES:
The Parent Company and other related parties provide certain services to the Group as follows:
Three monthsended
 March 31,
Year ended December 31,
2016
2015
2015
U.S. $ in thousands
Unaudited
Audited
Purchased Goods

34
31

328
Management Fee

94
91

410
Services Fee

62
53

212
Lease
income

(18)
(30)

(104)
Compensation of key management personnel of the Group:
Three monthsended
 March 31,
Year ended December 31,

2016
2015
2015
U.S. $ in thousands

Unaudited
Audited
Short-term employee benefits *)

178
179

738
*) Including Management fees for the CEO, Director executive management and other related parties.
All Transactions are made at market value.
31.03.2016
31.03.2015
31.12.2015
U.S. $ In thousands
Unaudited
Audited
Related parties
108
34
50
Note 5 - SIGNIFICANT EVENTS:
a. On January 12, 2016, following the approval of its shareholders, the Company adopted a change to its article of association allowing the Company the ability to pay dividends by way of scrip, meaning the board would be able to announce a dividend which could be paid in cash or through the issue of new shares in the Company (the "Scrip Dividend Policy").Under the Scrip Dividend Policy, shareholders could, in the future, be given the option to elect to receive dividends in new shares of the Company rather than in cash. The default arrangement will be for the payment of dividends in cash, and if the shareholder prefers to receive their dividends in new shares of the Company, then they would have to make an election. There would be no ability to make mixed elections and each shareholder would be able to choose either cash or new shares but not both. The decision to offer shareholders a scrip dividend alternative for future dividend payments will be at the sole discretion of the Board.
b. During the quarter several employees exercised options to 35 thousand shares in exchange for an approximately of $5 thousand.
Note 6 - SUBSEQUENT EVENTS:
a. On April 1, 2016 the company paid a dividend of 1.1 cents per share totaling approximately $567 thousand.
b. On April 2016, an employee exercised options to 40 thousand shares in exchange for an approximately of $5 thousand.
c. On May 2, 2016 shares in Mottech Water Management (Pty) Ltd. in South Africa ("Mottech SA") were allotted to its general manager. Following this allotment the Company owns 85% of Mottech SA.

This information is provided by RNS
The company news service from the London Stock Exchange
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