REG - MTI Wireless Edge - 3rd Quarter Results <Origin Href="QuoteRef">MWEE.L</Origin> - Part 1

MTI Wireless EdgeAnnouncement

14/11/2016 07:06

RNS Number : 0306P
MTI Wireless Edge Limited
14 November 2016
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR)
14 November 2016
MTI Wireless Edge Ltd 
("MTI" or the "Company")
Financial results for the nine months ended 30 September 2016
MTI Wireless Edge Ltd. (AIM: 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 nine months ended 30 September 2016 (the "Period").
Highlights: 
 Revenue increased by 31 per cent. year-on-year in the Period to US$17.6m (nine months to 30 September 2015: US$13.4m), primarily due to the acquisition of Mottech.
 Gross profit increased by 22 per cent. year-on-year to US$6.5m (nine months to 30 September 2015: US$5.4m). 
 Operating profit of approximately US$1.0m in the Period, in line with nine months to 30 September 2015. 
 Cash flow generated from operations tripled to US$1.5m (nine months to 30 September 2015: US$0.5m).
 Dividend of US 1.1 cent per share for the year ended 31 December 2015 paid on 1 April 2016.
 Shareholders' equity of US$18.6m (at 30 September 2015: US$17.9m) after payment of dividend, equivalent to 28.9 pence per share.
Dov Feiner, the Company's Chief Executive Officer, commented: 
"I am happy to report on another excellent quarter for Mottech and its contribution to revenue growth and profit. Our antenna business is continuing to make a good progress in the third quarter, with another military contract win, as announced in August, which provides us with longer-term visibility. The RFID business has experienced a very good year to date and together with the continued development of the 60 - 80 GHz line we continue to be confident about the long-term future of the antenna business. At Mottech, we continue to see a variety of opportunities over many continents, all of which makes us believe that the combined business will continue to grow and be successful in 2016 and beyond". 
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 (Nominated adviser and broker)
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 include 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's 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's 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 

Nine months 
ended September 30,

Year ended December 31,

2016

2015

2015

U.S. $ in thousands

Unaudited

Audited
Revenues
17,582

13,405

19,579
Cost of sales
11,040

8,041

11,870






Gross profit
6,542

5,364

7,709
Research and development expenses
828

962

1,216
Distribution expenses
2,570

1,693

2,408
General and administrative expenses
2,129

1,656

2,323






Profit from operations
1,015

1,053

1,762
Finance expense
307

234

432
Finance income
55

9

44






Profit before income tax
763

828

1,374
Income tax expense 
136

74

110






Profit 
627

754

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





Items that will not be reclassified to profit or loss:





Re-measurement of defined benefit plans
-

-

(42)

-

-

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





Adjustment arising from translation of financial statements of foreign operations
202

(67)

(77)

202

(67)

(77)
Total other comprehensive income (loss)
202

(67)

(119)






Total comprehensive income 
829

687

1,145






Profit Attributable to:





Owners of the parent
585

710

1,222
Non-controlling interest
42

44

42







627

754

1,264
Total comprehensive income Attributable to:





Owners of the parent
787

643

1,103
Non-controlling interest
42

44

42







829

687

1,145






Earnings per share(dollars)





Basic 
0.0113

0.0138

0.0237
Diluted
0.0111

0.0138

0.0235






Weighted average number of shares outstanding





Basic 
51,657,245

51,571,990

51,571,990
Diluted
52,657,327

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 nine months period ended September 30, 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 nine months
 ended September 30, 2016 (Unaudited):







Comprehensive income






Profit for the period
-
-
-
-
585
585
42
627
Other comprehensive income






Translation differences
-
-
-
202
-
202
-
202







Total comprehensive income for the period
-
-
-
202
585
787
42
829
Share issuance to non-controlling interest in subsidiary
-
(10)
-
-
-
(10)
10
-
Exercise of options to share capital
*
23
(1)
-
-
22
-
22
Dividend paid
-
-
-
-
(568)
(568)
-
(568)
Share based payment
-
-
14
-
-
14
-
14
Balance at September 30, 2016 (Unaudited)
109
14,958
317
125
3,133
18,642
318
18,960
(*) less than 1 thousand dollar 
The accompanying notes form an integral part of the financial statements.
INTERIM CONSOLIDATEDSTATEMENT OF 
CHANGES IN EQUITY
For the nine months period ended September 30, 2015:

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, 2015 (Audited)
109
14,945
286
-
2,287
17,627
216
17,843





Changes during the nine months 
 ended September 30, 2015 (Unaudited):








comprehensive income








Profit for the period 
-
-
-
-
710
710
44
754
Other comprehensive income





Translation differences
-
-
-
(67)
-
(67)
-
(67)









Total comprehensive income for the period
-
-
-
(67)
710
643
44
687
Non-controlling Interest of newly purchased subsidiary
-
-
-
-
-
-
8
8
Dividend paid
-
-
-
-
(351)
(351)
-
(351)
Share based payment 
-
-
19
-
-
19
-
19
Balance at September 30, 2015 (Unaudited)
109
14,945
305
(67)
2,646
17,938
268
18,206








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
Audited






Balance as at January 1, 2015
109
14,945
286
-
2,287
17,627
216
17,843








Changes during 2015:








Comprehensive income

Profit for the year 
-
-
-
-
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 
FINANCIAL POSITION 

30.9.2016

30.9.2015

31.12.2015

U.S. $ in thousands

Unaudited

Audited
ASSETS





CURRENT ASSETS:





Cash and cash equivalents 
5,100

3,054

2,634
Restricted cash
-

170

-
Other current financial assets
-

2,051

2,086
Trade receivables
7,886

7,721

8,074
Other receivables
1,169

1,392

1,296
Currenttax receivables
393

74

139
Inventories
3,943
4,239

4,426







18,491
18,701

18,655












NON-CURRENT ASSETS:





Long term prepaid expenses
52

21

28
Property, plant and equipment
5,545

5,130

5,643
Investment property
635

1,212

656
Deferred tax assets
564

336

393
Intangible assets
348

456

429
Goodwill 
573
573

573







7,717
7,728

7,722














Total assets
26,208
26,429

26,377






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


INTERIM CONSOLIDATED STATEMENT OF 
FINANCIAL POSITION 

30.9.2016

30.9.2015

31.12.2015

U.S. $ In thousands

Unaudited

Audited
LIABILITIES AND EQUITY





CURRENT LIABILITIES:





Current maturities and short term bank credit and loans
811

790

792
Trade payables
2,239

2,392

1,772
Other accounts payables
1,702

1,777

2,098
Currenttax payables
100

170

192







4,852

5,129

4,854






NON- CURRENTLIABILITIES:





Loans from banks, net of current maturities
1,870

2,578

2,381
Employee benefits
434

424

387
Other liabilities
92

92

92







2,396

3,094

2,860






Total liabilities
7,248

8,223

7,714






EQUITY 





Equity attributable to owners of the parent





Share capital 
109

109

109
Additional paid-in capital
14,958

14,945

14,945
Capital reserve from share-based payment transactions
317

305

304
Translation differences
125

(67)

(77)
Retained earnings
3,133

2,646

3,116







18,642

17,938

18,397






Non-controlling interest
318

268

266






Total equity 
18,960

18,206

18,663









Total equity and liabilities
26,208

26,429

26,377






November 13, 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

Nine months 
ended September 30,

Year ended December 31,


2016

2015

2015


U.S. $ in thousands


Unaudited

Audited
Cash Flows from Operating Activities:






Profitfor the period

627

754

1,264
Adjustments for:






Depreciation and amortization

385

428

593
Loss (gain) from investments in financial assets

7

(1)

(36)
Equity settled share-based payment expense

14

19

18
Finance expenses, net

79

74

113
Income tax expense 

136

74

110
Changes in operating assets and liabilities:






Decrease in inventories 

534

269

90
Decrease (increase) in trade receivables

315

(763)

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

126

(418)

(326)
Increase (decrease) in trade and other accounts payables

9

202

(98)
Increase (decrease) in employee benefits, net

47

25

(54)
Interest paid

(79)

(74)

(113)
Income taxpaid

(658)

(77)

(214)







Net cash provided by (used in) operating activities

1,542

512

211














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


INTERIM CONSOLIDATED STATEMENTS OF 
CASH FLOWS


Nine months 
ended September 30,

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

2,142

1,639

1,639
Acquisition of subsidiary, net of cash acquired

-

(3,042)

(3,042)
Increase in restricted cash

-

(170)

-
Purchase of property, plant and equipment

(171)

(195)

(297)







Net cash provided by (used in) investing activities

1,971

(1,768)

(1,700)














Cash Flows From Financing Activities:






Exercise of share options

22

-

-
Long term loan received from banks

27

2,090

2,090
Dividend paid to the owners of the parent

(568)

(351)

(351)
Repayment of long-term loan from banks

(582)

(331)

(526)







Net cash provided by (used in) financing activities

(1,101)

1,408

1,213














Increase (decrease) in cash and 
cash equivalents during the period 

2,412

152

(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

54

(16)

(8)







Cash and cash equivalents
at the end of the period 

5,100

3,054

2,634







Appendix A - Non-cash transactions:


Nine months 
ended September 30,

Year ended December 31,


2016

2015

2015


U.S. $ in thousands


Unaudited

Audited







Purchase of property, plant and equipment 
 against trade payables

27

17

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", 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 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. Since September 11, 2015 via its subsidiary, Mottech Water solutions, MTI 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.
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 September 30, 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.
Note 3 - operating SEGMENTS:
The following tables present revenue and profit information regarding the Group's operating segments for the nine months ended September 30, 2016 and 2015, respectively and for the year ended December 31, 2015.
Nine monthsended September 30, 2016 (Unaudited)








Antennas

Water Solutions

Total


U.S. $ in thousands
Revenue






External

8,324

9,258

17,582







Total

8,324

9,258

17,582














Segment income 

(305)

1,320

1,015














Finance expense, net





(252)







Profit before income tax





763







Other






Depreciation and amortization

347

38

385







Nine monthsended September 30, 2015 (Unaudited)








Antennas*

Water Solutions**

Total


U.S. $ in thousands
Revenue






External

10,297

3,108

13,405







Total

10,297

3,108

13,405














Segment income 

648

405

1,053














Finance expense, net





(225)







Profit before income tax





828







Other






Depreciation and amortization

408

20

428







(*) Reclassified.
(**) Results for four month ending on September 30, 2015.
Yearended December 31, 2015 (audited)




Antennas

Water Solutions*

Total


U.S. $ in thousands
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 AND BALANCES WITH RELATED PARTIES: 
The following transactions occurred with the Parent Company and other related parties: 


Nine monthsended 
 September 30,

Year ended December 31,


2016

2015

2015


U.S. $ in thousands


Unaudited

Audited
Purchased Goods

221

218

328
Management Fee

320

314

410
Services Fee

187

159

212
Leaseincome

(54)

(86)

(104)
Compensation of key management personnel of the Group:


Nine monthsended 
 September 30,

Year ended December 31,


2016

2015

2015


U.S. $ in thousands


Unaudited

Audited
Short-term employee benefits *)

584

560

738







*) Including Management fees for the CEO, Directors Executive Management and other related parties
All Transactions were made at market value. 
Balances with related parties:

As at

30.9.2016

30.9.2015

31.12.2015

U.S. $ in thousands

Unaudited

Audited
Other receivables (Other accounts payables)
(113)

(17)

50






Amendment to Service Agreement with controlling shareholder:
Following the receipt of recommendations of both the remuneration committee and the board of directors of the Company, an amendment to the service agreement between the Company and the controlling shareholders (via their management company) was approved at a shareholders' meeting held on May 18, 2016. According to the amendment, the agreement is in place for 3 years starting September 1, 2016, after which it will be renewed for periods of 3 years in accordance to the relevant rules and regulations. Nevertheless the agreement can be terminated by either party by providing 90 days' notice. The agreement includes remuneration (per month) of:
1. 25,000 NIS to Mr. Zvi Borovitz (raised from 20,000 NIS prior to this approval) for his service as a chairman of the board of the Company in capacity of at least 25% and
2. 65,000 NIS to Mr. Moni Borovitz (raised from 60,000 NIS prior to this approval) for his service as CFO of the Company in capacity of at least 80%.
All amounts are prior to VAT which will be added to the invoices and are linked to the increase in the consumer price index.
In addition to the above, and in accordance with the remuneration policy adopted by the Company, as required under rule 20 to the Israeli Companies Law, a bonus scheme was granted to each of the managers. The bonus scheme states that Zvi Borovitz and Moni Borovitz will be entitled (each one of them) to a bonus amounting 2.5% of the company's net profit exceeding US$400,000 per year (raised from US$250,000 prior to this approval), prior to any bonuses grant in the Company. In case of a loss in a year the bonus for the next year will be for a net profit exceeding US$400,000 above the loss made in the previous year. In addition Mr. Moni Borovitz shall be entitled to a bonus equal to two months management fee, based on the meeting of targets specified by the remuneration committee at the beginning of each year. 
A ceiling to the bonuses was set at 8 months management fees for Mr. Moni Borovitz and US$100,000 for Mr. Zvi Borovitz. 
The agreement also states that the Company shall reimburse the management of the Company for any expense made in performance of the manager's duty. The Company shall also provide each of the managers with a car and phones and will be responsible for all its related expenses, including all relevant taxes. 
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 first half of 2016 several employees exercised options over 167.5 thousand shares in exchange for an approximately of US$22,000.
c. On April 1, 2016 the company paid a dividend of 1.1 US cents per share totaling approximately $568,000. 
d. 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.
e. A new option scheme for key Employees was approved at the Company's Annual General Meeting on May 18, 2016. Under the plan, options to purchase 800,000 ordinary shares were granted (with each option being over one ordinary share). This represents approximately 1.5% of the Company's current issued and voting share capital on a fully diluted basis. The vesting period of the options shall be as follows: 2 years for 50% of the options, 3 years for additional 25% of the options and 4 years for the reminder of the options. Unexercised options expire nine years after date of the grant, after which they will be void. Options are forfeited when the employee leaves the Company. There is no cash settlement of the options.
The weighted average fair value of the options as at the grant date is 6 pence (approximately 9US cents) per option, which was estimated using a Black and Scholes option pricing model based on the following significant data and assumptions:
Share price - 19.88 pence (representing approximately 29 US cents) 
Exercise price - 27 pence (representing approximately 39 US cents) 
Expected volatility - 45.34% 
Risk-free interest rate - 0.85% 
And expected average life of options 4.375 years
The volatility measured at the standard deviation of expected share price returns is based on the historical volatility of the Company's share price. The options were granted as part of a plan that was adopted in accordance with the provision of section 102 of the Israeli Income Tax Ordinance.

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