REG - MTI Wireless Edge - Replacement - Final Results <Origin Href="QuoteRef">MWEE.L</Origin> - Part 1
18/02/2016 10:00
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RNS Number : 4601P
MTI Wireless Edge Limited
18 February 2016
18 February 2016
The following amendment has been made to the "Financial results for the year ended 31 December 2015" announcement released
on 17 February 2016 at 07:00 under RNS no. 2616P.
The dividend record date has been amended to 11 March 2016. All other dates remain the same. This amended ex-dividend date
appears in the Chairman's statement and the highlights section. All other details remain unchanged.
MTI Wireless Edge Ltd
("MTI" or the "Company")
Financial results for the year ended 31 December 2015
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, announces its audited full year results for the year ended 31 December 2015.
2015 Highlights:
· Completed the acquisition of Mottech Water Solution - profit enhancing acquisition
· Revenues increased by 36% to $19.6m (2014: $14.3m)
· Gross profit increased by 50% to $7.7m (2014: $5.14m)
· Profit from operations increased five times to $1.76m (2014: $340K)
· Earnings per share of $2.37 cents (2014: $0.48 cents)
· Shareholder's equity grew to $18.4m (31 December 2014: $17.6m)
· Dividend of $1.1 cent per share declared - to be paid on 1 April 2016 to shareholders on the register at close of
trading on 11 March 2016.
Zvi Borovitz, Non-Executive Chairman of MTI Wireless, commented:
"I am pleased to report on our audited results for the financial year ended 31 December 2015, during which we made
significant change in our business. The acquisition of Mottech Water Solutions moved us up the food chain providing a full
solution with better margins and recurring revenue model for services and maintenance. We continue to develop this wireless
irrigation segment with our software based solution and Motorola IRRiNet products and look forward to growing this business
as water is becoming a critical nature resource and its management becoming essential.
In parallel we continued to develop our antenna segment and achieved good progress in our 60-80 GHz products range,
penetrating to more customers, the benefit of which we expect to see in the future."
For further information please contact:
MTI Wireless Edge
Dov Feiner, CEO http://www.mtiwe.com
Moni Borovitz, Financial Director +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
and for military applications. Commercial applications such as: WiMAX, wireless networking, RFID readers &, broadband
wireless access. With over 40 years' experience supplying 100KHz to 90GHz antennas including directional antennas and
omni-directional anntenas 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 specialised communications antennas, antenna systems and DF arrays installed on numerous airborne, ground and
naval platforms worldwide, including submarines.
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 utilises over 25 years' experience in providing its customers with remote control and management
systems which ensure constant, reliable and accurate water usage, while reducing operational costs and costly maintenance
expenses. Mottech activities are focused in the market segments of agriculture, water distribution, municipal and
commercial landscape and wastewater and storm water reuse.
Chairman's Statement
Dear Shareholders,
I am pleased to report on our audited results for the financial year ended 31 December 2015, during which we made
significant change in our business. The acquisition of Mottech Water Solutions moved us up the food chain providing a full
solution with better margins and recurring revenue model for services and maintenance. We continue to develop this wireless
irrigation segment with our software based solution and Motorola IRRiNet products and look forward to growing this
business, as water is becoming a critical nature resource and its management is becoming essential. Our offices on
different continents (including representatives around the world) provide enormous opportunity for this.
In parallel we continued to develop our antenna segment and achieved good progress in our 60-80 GHz products range, selling
to more customers, the benefit of which we expect to see in the future. We continue to believe that the market demand for
our products, as part of the increasing demand for broadband, will strengthen in the coming years.
We are happy with our progress in RFID. In 2015 we were able to penetrate numerous applications and projects and we believe
that RFID, together with the 60-80 GHz markets, are where our future growth lies in the antenna segment.
Our military antenna business remained healthy in 2015 and, based on the current backlog in the military segment, we
believe that we will maintain a similar level of business in this segment in the current year.
Our overall ability to increase revenue via the acquisition of Mottech, manage our costs and leverage overheads helped us
increase our operational profitability in 2015 by five times. I would like to thank our management team for its continued
hard work and dedication, which has helped us in the smooth integration of Mottech and increased our profitability.
We enter 2016 with confidence in the growth prospects of our business and its ability to increase its profitability and
generate cash. The underlying drivers of our business, such as continued growth in data usage and increasing subscriber
numbers, are part of long-term trends that we expect to continue for the foreseeable future. This, together with the
requirement for efficient water management and our current order backlog of $6.7m, provides us with confidence in both the
Company's short and long-term growth prospects.
Following a review of the business, the Board decided to declare a final dividend of $1.1 cents per share. We strongly
believe it is in the interest of shareholders to receive a yearly yield on their investment, while at the same time the
Company manages its earnings and cash generation. This level of dividend represents a balance between the Company's current
ongoing earnings and the stability that we like to show our shareholders. The dividend will be paid on 1 April 2016 to
shareholders on the register at close of trading on 11 March 2016.
I would like to compliment our employees on their contribution to the Company and thank each and every one for their
dedication and creativity, which has enabled us to achieve our results. I would also like to acknowledge with thanks the
employees' families for their continued support.
Zvi Borovitz, Non-Executive Chairman
Chief Executive's Review
I am happy to report that during 2015 we made a profit enhancing acquisition that has enabled MTI to step up the
value-chain and provide wireless control solutions and services. We continued our positive momentum and were able to grow
the business and increase our profitability and margins. The increase in revenue, together with our hard work on
controlling our costs, enabled us, once again, to improve our margins and, with the addition of Mottech into the business,
we were able to further increase profitability.
In the antenna military segment we continued to see good demand and were able to maintain the business level at $3m, which
we believe should continue in the near term as the current backlog and order pipe-line in the military segment are strong.
The RFID market, currently in its initial stages, continued to grow modestly in 2015 and we remain positive on this
sector's potential as we see more demand for various applications. Our plan is to ensure that MTI remains well positioned
in this market and to maximise the benefits of RFID technology continuing its world-wide growth.
In broadband wireless access we had a revenue decrease in 2015 primarily in the 60-80 GHz product line - we see this
decrease as temporary due to technological problem at one key customer (not relating to the antenna) and slow capital
investment in a specific geographic area in which some of our customers work. Nevertheless, 2015 brought new significant
potential for this product line with new customer wins and an increase in other customer deployment. We are confident that
this will be part of MTI's growth in the near future.
Our wireless controller segment integrated well into the Company and we are happy with the progress made in this segment,
which included the returning of some key employees and the reactivation of our representative offices in different areas in
the world. We see many opportunities to grow this business and remain focused on building our offering for various markets
in the water management segment.
To achieve future growth, the Company aims to expand its leadership in the antenna markets for broadband wireless
communication as well as its military capabilities and product portfolio. We are continuing to develop our 60-80GHz range
of antennas and customer base, to strengthen our positioning in the market (including investment in new technologies) and
the continuous initiation of new patents (when applicable). In parallel we will further develop Mottech's control software
to make sure we continue to lead the offering in this market and bring our customer added value.
I would like to end my review by thanking our employees and their families for their hard work, dedication and support
during the past year. It is their creativity, perfectionism and dedication that have led MTI to its position in the market
and we see them as the key to our ongoing success.
Dov Feiner,
Chief Executive Officer
M.T.I Wireless Edge Ltd.
Consolidated Statements of Comprehensive Income
For the year ended December 31,
2015 2014
Note $'000 $'000
Revenues 3, 5 19,579 14,341
Cost of sales 11,870 9,201
Gross profit 7,709 5,140
Research and development expenses 1,216 1,230
Distribution expenses 2,408 1,815
General and administrative expenses 2,323 1,755
Profit from operations 4 1,762 340
Finance expense 6 432 281
Finance income 6 44 94
Profit before income tax 1,374 153
Income tax expense (benefit) 7 110 (116)
Profit 1,264 269
Other comprehensive income (net of tax):
Items that will not to be reclassified to profit or loss:
Re measurements on defined benefit plans (42) (29)
(42) (29)
Items that will be reclassified to profit or loss:
Adjustment arising from translation of financial statements of foreign operations (77) -
(77) -
Total other comprehensive loss (119) (29)
Total comprehensive income 1,145 240
profit attributable to:
Owners of the parent 1,222 247
Non-controlling interest 42 22
1,264 269
Total comprehensive income attributable to:
Owners of the parent 1,103 218
Non-controlling interest 42 22
1,145 240
Earnings per share (dollars)
Basic 8 0.0237 0.0048
Diluted 8 0.0235 0.0048
0.0048
Diluted
8
0.0235
0.0048
The accompanying notes form an integral part of these financial statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Changes in Equity
For the year ended 31 December 31, 2014:
Attributable to owners of the parent
Share capital Additional paid-in capital Capital Reserve from share-based payment transactions Retained earnings Total attributable to owners of the parent Non-controlling interest Total equity
$'000
Balance as at January 1, 2014 109 14,945 259 2,420 17,733 194 17,927
Changes during 2014:
Income for the year - - - 247 247 22 269
Re measurements on defined benefit plans - - - (29) (29) - (29)
Total comprehensive income for the year - - - 218 218 22 240
Dividend paid - - - (351) (351) - (351)
Share based payment - - 27 - 27 - 27
Balance as at December 31, 2014 109 14,945 286 2,287 17,627 216 17,843
109
14,945
286
2,287
17,627
216
17,843
The accompanying notes form an integral part of these financial statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements 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
$'000
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
(77)
3,116
18,397
266
18,663
The accompanying notes form an integral part of these financial statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Financial Position
As at December 31, As at December 31,
2015 2015 2014 2014
Note $'000 $'000 $'000 $'000
ASSETS
Non-current assets:
Property, plant and equipment 10 5,643 5,209
Investment property 11 656 1,240
Goodwill 573 406
Intangible assets 2 429 -
Deferred tax assets 12 393 368
Long-term prepaid expenses 28 12
Total non-current assets 7,722 7,235
Current assets:
Inventories 13 4,426 2,941
Currenttax receivables 139 143
Trade and other receivables 14 9,370 5,783
Other current financial assets 2,086 3,728
Cash and cash equivalents 15 2,634 2,918
Total current assets 18,655 15,513
TOTAL ASSETS 26,377 22,748
LIABILITIES
Non-current liabilities:
Loans from banks 16 2,381 1,345
Employee benefits 17 387 365
Other liabilities 18 92 -
Total Non-current liabilities 2,860 1,710
Current Liabilities:
Currenttax payables 192 -
Trade and other payables 19 3,870 2,925
Current maturities and short term Loans 20 792 270
Total current liabilities 4,854 3,195
TOTAL LIABILITIES 7,714 4,905
TOTAL NET ASSETS 18,663 17,843
17,843
The accompanying notes form an integral part of these financial statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Financial Position (Cont.)
As at December 31, As at December 31,
2015 2015 2014 2014
Note $'000 $'000 $'000 $'000
Capital and reserves attributable to owners of the parent 22
Share capital 109 109
Additional paid-in capital 14,945 14,945
Capital reserve from share-based payment transactions 304 286
Translation differences (77) -
Retained earnings 3,116 2,287
18,397 17,627
Non-controlling interests 266 216
TOTAL EQUITY 18,663 17,843
17,843
The financial statements on pages 4 to 46 were approved by the Board of Directors and authorised for issue on February 16,
2016, and were signed on its behalf by:
February 16, 2016
Date of approval Moshe Borovitz Dov Feiner Zvi Borovitz
of financial statements Chief Finance Director Chief Executive Officer Non-executive Chairman
The accompanying notes form an integral part of these financial statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Cash Flows
For the year ended December 31, For the year ended December 31,
2015 2015 2014 2014
$'000 $'000 $'000 $'000
Operating Activities:
Profit for the year 1,264 269
Adjustments for:
Depreciation and amortization 593 451
Gain from other current financial assets (36) (37)
Equity settled share-based payment expense 18 27
Finance expense 113 87
Income tax expense (benefit) 110 (116)
Changes in working capital and provisions 2,062 681
Decrease in inventories 90 150
Decrease (increase) in trade receivables (1,136) 347
Increase in other accounts receivables (326) (196)
Increase (decrease) in trade and other payables (98) 162
Increase (decrease) in employee benefits (54) 20
Decrease in provisions - (40)
Interest paid (113) (87)
Income tax paid (214) (4)
(1,851) 352
Net cash provided by operating activities 211 1,033
The accompanying notes form an integral part of these financial statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Cash Flows (Cont.)
For the year ended December 31, For the year ended December 31,
2015 2015 2014 2014
$'000 $'000 $'000 $'000
Investing Activities:
Sale of investments in financial assets, net 1,639 2,053
Acquisition of subsidiary, net of cash acquired (3,042) -
Purchase of Property, plant and equipment (297) (276)
Net cash provided by (used in) investing activities (1,700) 1,777
Financing Activities:
Short term Loan repayment - (292)
Long term loan received from banks 2,090 31
Dividend paid to the owners of the parent (351) (351)
Repayment of long-term loans from banks (526) (272)
Net cash provided by (used in) financing activities 1,213 (884)
Increase (decrease) in cash and cash equivalents (276) 1,926
Cash and cash equivalents at the beginning of the year 2,918 992
Exchange differences on balances of cash and cash equivalents (8) -
Cash and cash equivalents at the end of the year 2,634 2,918
Appendix A - Non-cash transactions:
For the year ended December 31,
2015 2014
$'000 $'000
Purchase of Property, plant and equipment with credit 8 11
11
The accompanying notes form an integral part of these financial statements.
M.T.I Wireless Edge Ltd.
Consolidated Statements of Cash Flows (Cont.)
Appendix B - Acquisition of subsidiary, net of cash acquired:
For the year ended December 31, For the year ended December 31,
2015 2015 2014 2014
$'000 $'000 $'000 $'000
Working capital (excluding cash and cash equivalents) 2,530 -
Property, plant and equipment 95 -
Intangible assets 483 -
Goodwill 167 -
Deferred taxes (66) -
Non-current liabilities (67) -
The subsidiaries' assets (excluding cash and cash equivalents) and liabilities at date of acquisition 3,142 -
Non-controlling interests (8) -
Contingent consideration (92) -
Total 3,042 -
-
The accompanying notes form an integral part of these financial statements.
1. Accounting policies
General
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), commenced operations on July 1, 2000 and since March 2006, the Company's shares are
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 Ltd., 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.
Certain operational and administrative services are provided by the Parent Company.
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies
have been consistently applied to all the years presented, unless otherwise stated.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS). The financial statements have been prepared under the historical cost convention, as modified by the measurement of
Employee benefit assets and certain financial assets and financial liabilities at fair value through profit or loss.
The Company has elected to present the statement of comprehensive income using the function of expense method.
Details of the changes in foreign currency:
Henceforth are the details of the foreign currency of the main currency and the changes in the reporting period:
December 31,
2015 2014
NIS (in Dollar per 1 NIS) 0.256 0.257
0.257
Year ended December 31,
2015 2014
% %
NIS 0.003 (10.72%)
0.003
(10.72%)
Estimates and assumptions
The preparation of the financial statements requires management to make estimates and assumptions that have an effect on
the application of the accounting policies and on the reported amounts of assets, liabilities, revenues and expenses. These
estimates and underlying assumptions are reviewed regularly. Changes in accounting estimates are reported in the period of
the change in estimate.
The key assumptions made in the financial statements concerning uncertainties at the end of the reporting period and the
critical estimates used by the the Company and its subsidiaries (hereafter - the Group) that may result in a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
- Deferred tax assets: Deferred tax assets are recognized for unused carryforward tax losses and deductible temporary
differences to the extent that it is probable that taxable profit will be available against which the losses can be
utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be
recognized, based upon the estimated timing and level of future taxable profits together with future tax planning
strategies.
Revenue recognition
Revenues are recognized in profit or loss when the revenues can be measured reliably, it is probable that the economic
benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of
the transaction can be measured reliably. In cases where the Company acts as an agent or as a broker without being exposed
to the risks and rewards associated with the transaction, its revenues are presented on a net basis. Revenues are measured
at the fair value of the consideration received or receivables less any trade discounts, volume rebates and returns.
Following are the specific revenue recognition criteria which must be met before revenue is recognized:
1. Revenues from services are recognized as follows:
- Provided the amount of revenue can be measured reliably and it is probable that the Group will receive any
consideration, revenue for services is recognised in the period in which they are rendered.
- In fixed fee contracts - according to IAS 11 "Construction Contracts" pursuant to which 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 project is anticipated, a provision is made in the period in which it first becomes evident, for the
entire loss anticipated, as assessed by the Group's management.
2. Revenues from the sale of goods are recognized when all the significant risks and rewards of ownership of the goods
have passed to the buyer and the seller no longer retains continuing managerial involvement. The delivery date is usually
the date on which risks and rewards pass.
Customer discounts
Customer discounts given at year end in respect of which the customer is not obligated to comply with certain targets, are
recognized in the financial statements as the sales entitling the customer to said discounts are made.
Customer discounts for which the customer is required to meet certain targets, such as a minimum amount of annual purchases
(either quantitative or monetary), an increase in purchases compared to previous periods, etc. are recognized in the
financial statements in proportion to the purchases made by the customer during the year that qualify for the target,
provided that it is expected that the targets will be achieved and the amount of the discount can be reasonably estimated.
Basis of consolidation
The Group controls an investee if and only if the Group has:
- Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee)
- Exposure, or rights, to variable returns from its involvement with the investee, and
- The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power over an investee, including: The contractual arrangement with the
other vote holders of the investee, the rights arising from other contractual arrangements, The Group's voting rights and
potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control over the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the
Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent
and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All
intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it (i) derecognises the assets (including goodwill) and liabilities of the
subsidiary, the carrying amount of any non-controlling interests and the cumulative translation differences recorded in
equity. (ii) Recognises the fair value of the consideration received, recognises the fair value of any investment retained
and recognises any surplus or deficit in profit or loss. (iii) reclassifies the parent's share of components previously
recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Company had directly
disposed of the related assets or liabilities.
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