REG - MTI Wireless Edge - Results for the nine months to 30 September 2018

MTI Wireless EdgeAnnouncement

19/11/2018 07:05

RNS Number : 6921H
MTI Wireless Edge Limited
19 November 2018
 


Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR)
 
19 November 2018                     
MTI Wireless Edge Ltd
("MTI" or the "Company")
Financial results for the nine months ended 30 September 2018
 
MTI Wireless Edge Ltd. (AIM: MWE), the technology group focused on comprehensive communication and radio frequency solutions across multiple sectors, today announces its unaudited results for the nine months ended 30 September 2018.
The merger (the "Merger") between the Company and MTI Computers and Software Services (1982) Ltd. ("MTIC") completed on 20 August 2018. Therefore, the Company is presenting its financial results as if the Merger was in effect throughout the entire reporting period and has also provided comparative financial information in respect of both the pre and post-Merger results for the nine month period ended 30 September 2017.
 
Highlights for the nine month period ended 30 September 2018:
·     Revenues increased by 32% year-on-year to $25.9m due to the Merger and 2% organically (nine months ended 30 September 2017: $19.6m* and $25.5m** respectively)
·     Operating profit increased 66% year-on-year to $1.9m due to the Merger and 7% organically (nine months ended 30 September 2017: $1.15m* and $1.8m** respectively)
·     Net profit increased 67% year-on-year to $1.57m due to the Merger and 7% organically (nine months ended 30 September 2017: $0.94m* and $1.48m respectively**)
·     Earnings per share increased 8% year-on-year to 1.81 US cents due to the Merger and 10% organically (nine months ended 30 September 2017: 1.67 US cents* and 1.65 US cents** respectively)
·     Shareholder's equity grew during the period to $19.9m (31 December 2017: $19.6m), equivalent to 17.8 pence per share (converted at 1.285 US dollar/1 British Pound).
 
* These figures represent the relevant financial results of the Company (only) for the nine months ended 30 September 2017.
** These figures represent the relevant financial results of the Company for the nine months ended 30 September 2017.aggregated with that of MTIC for the same period.
 
Zvi Borovitz, Chairman of MTI Wireless, commented:
"We are very pleased to have completed the Merger, which we feel has immediately demonstrated a benefit to the Company, by increasing its range of solution offerings, revenue and profits - in the third quarter of this year we had a 100% increase in EPS over the third quarter of 2017, while operating profit increased by 58%. As explained in the announcements made during the Merger process, we believed that the Merger would lead to costs savings and efficiencies and we are happy to have achieved enhanced profits from the Merger, including at the earning per share level. We remain excited about the opportunities for the enlarged group, as we continue to see good progress in meeting our internal goals in all areas of the business".
 
For further information please contact:
 
MTI Wireless Edge Ltd                                                                +972 3 900 8900
Dov Feiner, CEO                                                                  
Moni Borovitz, Financial Director
 
Allenby Capital Limited (Nomad and Joint Broker)               +44 20 3328 5656
Nick Naylor
Alex Brearley
 
Peterhouse Capital Limited (Joint Broker)                              +44 20 7469 0930
Lucy Williams
Eran Zucker
 
 
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
 




 



Nine month period ended
 September 30,



 



Year ended December 31,





 



2018



 



2017*



 



2017*





 



U.S. $ in thousands





 



Unaudited



 


 




 


 


 


 


 


 




Revenues


25,892


 


25,503


 


34,653




Cost of sales



17,153



 



17,219



 



23,430





Gross profit


8,739


 


8,284


 


11,223




Research and development expenses


813


 


675


 


927




Distribution expenses


3,102


 


3,067


 


4,085




General and administrative expenses


2,949


 


2,766


 


3,795




Loss from sale of property, plant and equipment



-



 



-



 



6





 


 


 


 


 


 




Profit from operations


1,875


 


1,776


 


2,410




Finance expenses


223


 


355


 


249




Finance income



(38)



 



(406)



 



(287)





 


 


 


 


 


 




Profit before income tax


1,690


 


1,827


 


2,448




Tax expenses



119



 



343



 



440





 


 


 


 


 


 




Profit



1,571



 



1,484



 



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



(203)



 



(10)



 



61





 


 


 


 


 


 




Total other comprehensive income (loss)



(203)



 



(10)



 



114





 


 


 


 


 


 




Total comprehensive income



1,368



 



1,474



 



2,122





 


 


 


 


 


 




Profit attributable to:


 


 


 


 


 




Owners of the parent


1,563


 


1,405


 


1,949




Non-controlling interests



8



 



79



 



59





 


 


 


 


 


 




 



1,571



 



1,484



 



2,008





Total comprehensive income attributable to:


 


 


 


 


 




Owners of the parent


1,360


 


1,395


 


2,063




Non-controlling interests



8



 



79



 



59





 



1,368



 



1,474



 



2,122





 


 


 


 


 


 




Earnings per share (dollars)


 


 


 


 


 




Basic



0.0181



 



0.0167



 



0.0231





Diluted



0.0180



 



0.0166



 



0.0230





 


 


 


 


 


 




Weighted average number of shares outstanding


 


 


 


 


 




Basic



86,405,168



 



84,186,375



 



84,466,788





Diluted



86,845,032



 



84,811,608



 



84,909,632





 


 


 


 


 


 




 
(*) comparative numbers were adjusted to reflect the merger, refer to note 5
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 nine month period ended September 30, 2018 (Unaudited):
 




 



Attributed to owners of the parent



 


 




 



Share capital




Additional paid-in capital



Capital reserve
for share-based
payment

transactions




Translation differences




Retained earnings




Total attributable to owners of the  parent




Non-controlling interest




Total equity





 


U.S. $ in thousands




 


 


 


 


 


 


 


 


 




Balance at January 1, 2018*


200


21,716


352


105


(2,781)


19,592


383


19,975




 


 


 


 


 


 


 


 


 




Changes during the nine month period
    ended September 30, 2018:


 


 


 


 


 


 


 


 




Comprehensive income


 


 


 


 


 


 


 


 




Profit for the period


-


-


-


-


1,563


1,563


8


1,571




Other comprehensive loss


 


 


 


 


 


 


 


 




Translation differences



-




-




-




(203)




-




(203)




-




(203)





 


 


 


 


 


 


 


 


 




Total comprehensive income (loss) for the period


-


-


-


(203)


1,563


1,360


8


1,368




Dividend


5


672


-


-


(1,773)


(1,096)


-


(1,096)




Share based payment



-




-




11




-




-




11




-




11





 


 


 


 


 


 


 


 


 




Balance at September 30, 2018



205




22,388




363




(98)




(2,991)




19,867




391




20,258





 


 


 


 


 


 


 


 


 




(*) comparative numbers were adjusted to reflect the merger, refer to note 5
The accompanying notes form an integral part of the financial statements.
 
 
 
INTERIM CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY (CONT.)
 
For the nine month period ended September 30, 2017 (Unaudited)**:
 




 



Attributed to owners of the parent



 


 




 



Share capital




Additional paid-in capital



Capital Reserve
for share-based
payment

transactions




Translation differences




Retained earnings




Total attributable to owners of the  parent




Non-controlling interest




Total equity





 


U.S. $ in thousands




 


 


 


 


 


 


 


 


 




Balance at January 1, 2017


195


21,337


323


44


(3,865)


18,034


324


18,358




 


 


 


 


 


 


 


 


 




Changes during the nine month period
    ended September 30, 2017:


 


 


 


 


 


 


 


 




Comprehensive income


 


 


 


 


 


 


 


 




Profit for the period


-


-


-


-


1,405


1,405


79


1,484




Other comprehensive loss


 


 


 


 


 


 


 


 




Translation differences



-




-




-




(10)




-




(10)




-




(10)





 


 


 


 


 


 


 


 


 




Total comprehensive income (loss) for the period


-


-


-


(10)


1,405


1,395


79


1,474




Exercise of options to share capital


2


99


(*)


-


-


101


-


101




Dividend


3


280


-


-


(918)


(635)


-


(635)




Share based payment



-




-




22




-




-




22




-




22





 


 


 


 


 


 


 


 


 




Balance at September 30, 2017



200




21,716




345




34




(3,378)




18,917




403




19,320





 


 


 


 


 


 


 


 


 




(*) less than one thousand dollars
(**) comparative numbers were adjusted to reflect the merger, refer to note 5
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



 




 



Share capital




Additional paid-in capital




Capital Reserve from share-based payment transactions




Translation differences




Retained earnings




Total attributable to owners of the  parent




Non-controlling interest




Total equity





 



U.S. $ in thousands





 


 


 


 


 


 


 


 


 




Balance as at January 1, 2017


195


21,337


323


44


(3,865)


18,034


324


18,358




 


 


 


 


 


 


 


 


 




Changes during 2017:


 


 


 


 


 


 


 


 




Comprehensive income


 


 


 


 


 


 


 


 




Profit for the year


-


-


-


-


1,949


1,949


59


2,008




Other comprehensive income


 


 


 


 


 


 


 


 




Re measurements on defined benefit plans


-


-


-


-


53


53


-


53




Translation differences



-




-




-




61




-




61




-




61





 


 


 


 


 


 


 


 


 




Total comprehensive income for the year


-


-


-


61


2,002


2,063


59


2,122




Exercise of options to share capital


2


99


(*)


-


-


101


-


101




Dividend


3


280


-


-


(918)


(635)


-


(635)




Share based payment



-




-




29




-




-




29




-




29





Balance as at December 31, 2017



200




21,716




352




105




(2,781)




19,592




383




19,975





 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 




(*) less than one thousand dollars
(**) comparative numbers were adjusted to reflect the merger, refer to note 5
The accompanying notes form an integral part of the financial statements.
 
 
 
MTI WIRELESS EDGE LTD.
 (An Israeli Corporation)
 
INTERIM CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
 




 



30.09.2018



 



30.09.2017*



 



31.12.2017*





 



U.S. $ in thousands





 



Unaudited



 



 





ASSETS


 


 


 


 


 




CURRENT ASSETS:


 


 


 


 


 




Cash and cash equivalents


5,348


 


6,022


 


3,508 




Other current financial assets


-


 


-


 


2,011 




Trade receivables


11,282


 


10,708


 


11,027




Other receivables


737


 


858


 


979




Current tax receivables


494


 


700


 


619




Inventories



5,363




 




4,584



 



5,481





 


 


 


 


 


 




 



23,224




 




23,142



 



23,625





 


 


 


 


 


 




 


 


 


 


 


 




NON-CURRENT ASSETS:


 


 


 


 


 




Long term prepaid expenses


34


 


57


 


45




Property, plant and equipment


4,244


 


4,153


 


4,211




Deferred tax assets


495


 


634


 


600




Intangible assets



912




 




1,022



 



995





 


 


 


 


 


 




 



5,685




 




5,856



 



5,851





 


 


 


 


 


 




 



 




 




 



 



 





 


 


 


 


 


 




Total assets



28,909




 




28,998



 



29,476





 


 


 


 


 


 




(*) comparative numbers were adjusted to reflect the merger, refer to note 5
The accompanying notes form an integral part of the financial statements.
 
 
 
MTI WIRELESS EDGE LTD.
(An Israeli Corporation)
 
INTERIM CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
 




 



30.09.2018



 



30.09.2017*



 



31.12.2017*





 



U.S. $ In thousands





 



Unaudited



 


 




LIABILITIES AND EQUITY


 


 


 


 


 




CURRENT LIABILITIES:


 


 


 


 


 




Current maturities and short term bank credit and loans


998


 


988


 


869




Trade payables


3,860


 


4,067


 


4,186




Other accounts payables


2,511


 


2,364


 


2,520




Current tax payables



18



 



336



 



237





 


 


 


 


 


 




 



7,387



 



7,755



 



7,812





 


 


 


 


 


 




NON- CURRENT LIABILITIES:


 


 


 


 


 




Loans from banks, net of current maturities


511


 


1,161


 


955




Employee benefits, net



753



 



762



 



734





 


 


 


 


 


 




 



1,264



 



1,923



 



1,689





 


 


 


 


 


 




Total liabilities



8,651



 



9,678



 



9,501





 


 


 


 


 


 




EQUITY


 


 


 


 


 




Equity attributable to owners of the parent


 


 


 


 


 




Share capital


205


 


200


 


200




Additional paid-in capital


22,388


 


21,716


 


21,716




Capital reserve from share-based payment transactions


363


 


345


 


352




Translation differences


(98)


 


34


 


105




Retained earnings



(2,991)



 



(3,378)



 



(2,781)





 


 


 


 


 


 




 


19,867


 


18,917


 


19,592




 


 


 


 


 


 




Non-controlling interest



391



 



403



 



383





 


 


 


 


 


 




Total equity



20,258



 



19,320



 



19,975





 


 


 


 


 


 




Total equity and liabilities



28,909



 



28,998



 



29,476





 


 


 


 


 


 



 
 
 
 
 
 
 



(*) comparative numbers were adjusted to reflect the merger, refer to note 5
 





November 18, 2018




 




 




 





Date of approval of financial statements


Moshe Borovitz
Chief Finance Director


Dov Feiner
Chief Executive Officer


Zvi Borovitz
Non-executive Chairman 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
 




 



Nine month period  ended
 September 30,



 



Year ended December 31,



 




 


 



2018



 



2017*



 



2017*





 


 



U.S. $ in thousands



 




 


 



Unaudited



 


 




Cash Flows from Operating Activities:


 


 


 


 


 


 


 




Profit for the period


 


1,571


 


1,484


 


2,008


 




Adjustments for:


 


 


 


 


 


 


 




Depreciation and amortization


 


428


 


471


 


623


 




Loss (gain) from investments in financial assets


 


(29)


 


125


 


89


 




Gain from sale of property, plant and equipment


 


(3)


 


(14)


 


(1)


 




Equity settled share-based payment expense


 


11


 


22


 


29


 




Finance (income) expenses, net


 


(17)


 


82


 


99


 




Income tax expense


 


119


 


343


 


440


 




Changes in operating assets and  liabilities:


 


 


 


 


 


 


 




Decrease (increase) in inventories


 


37


 


274


 


(294)


 




Increase in trade receivables


 


(357)


 


(189)


 


(502)


 




Decrease (increase) in other accounts receivables and prepaid expenses


 


247


 


(51)


 


(152)


 




Increase (decrease) in trade and other accounts payables


4


(353)


 


(14)


 


252


 




Increase in employee benefits, net


 



19



 



97



 



122



 




 


 


 


 


 


 


 


 




Cash from operations


 


1,673


 


2,630


 


2,713


 




 


 


 


 


 


 


 


 




Interest received


 


40


 


-


 


-


 




Interest paid


 


(46)


 


(82)


 


(110)


 




Income tax paid


 



(112)



 



(247)



 



(326)



 




 


 


 


 


 


 


 


 




Net cash provided by operating activities


 



1,555



 



2,301



 



2,277



 




 


 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 



(*) comparative numbers were adjusted to reflect the merger, refer to note 5
The accompanying notes form an integral part of the financial statements.
 
 
 
INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOWS (cont.)
 




 


 



Nine month period  ended
 September 30,



 



Year ended December 31,





 


 



2018



 



2017*



 



2017*





 


 



U.S. $ in thousands





 


 



Unaudited



 


 


 




Cash Flows From Investing Activities:


 


 


 


 


 


 




Sell (Purchase) of investments in financial assets, net


 


2,040


 


-


 


(2,000)




Proceeds from sale of property, plant and equipment


 


28


 


81


 


150




Purchase of property, plant and equipment


 



(348)



 



(174)



 



(454)





 


 


 


 


 


 


 




Net cash used in investing activities


 



1,720



 



(93)



 



(2,304)





 


 


 


 


 


 


 




 


 


 


 


 


 


 




Cash Flows From Financing Activities:


 


 


 


 


 


 




Exercise of share options


 


-


 


101


 


101




Dividend


 


(1,096)


 


(635)


 


(635)




Short term loan from banks


 


264


 


63


 


(42)




Long term loan received from banks


 


112


 


19


 


37




Repayment of long-term loan from banks


 



(668)



 



(645)



 



(847)





 


 


 


 


 


 


 




Net cash used in financing activities


 



(1,388)



 



(1,097)



 



(1,386)





 


 


 


 


 


 


 




 


 


 


 


 


 


 




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


 


1,887


 


1,111


 


(1,413)




Cash and cash equivalents
 at the beginning of the period


 


3,508


 


4,887


 


4,887




Exchange differences on balances of cash and  
     cash equivalents


 



(47)



 



24



 



34





 


 


 


 


 


 


 




Cash and cash equivalents
 at the end of the period


 



5,348



 



6,022



 



3,508





 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 



Appendix A - Non-cash transactions:




 


 



Nine month period  ended
 September 30,



 



Year ended December 31,



 




 


 



2018



 



2017*



 



2017*



 




 


 



U.S. $ in thousands



 




 


 



Unaudited



 


 




 


 


 


 


 


 


 


 




Purchase of property, plant and equipment
  against trade payables


 



84



 



20



 



3



 




Scrip dividend (Note 6 B)


 



677



 



283



 



283



 




 


 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 



 (*) comparative numbers were adjusted to reflect the merger, refer to note 5
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, 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 and its subsidiaries are engaged in the following areas:
-     Development, design, manufacture and marketing of antennas for the military and civilian sectors.
-     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.
-     Providing consulting, representation and marketing services to foreign companies in the field of RF and Microwave.
-     Providing engineering services in the field of floating systems and system engineering services.
 
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 September 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:
(a)  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.
(b)  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:




 
 


 



Nine month period  ended 
    September 30,



 



Year ended December 31,



 




 


 



2018



 



2017



 



2017





 


 



U.S. $ in thousands





 


 



Unaudited



 


 




Revenues arises from:


 


 


 


 


 


 




Sale of goods


 


21,318


 


22,237


 


27,661




Rendering of services


 


1,974


 


1,815


 


4,379




Projects


 



2,600



 



1,451



 



2,613





 


 



25,892



 



25,503



 



34,653





 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 



 
Note 4 - operating SEGMENTS:
The following table's present revenue and profit information regarding the Group's operating segments for the nine month period ended September 30, 2018 and 2017 respectively and for the year ended December 31, 2017.
Nine month period ended September 30, 2018 (Unaudited)





 




Antennas




Water Solutions




Representation




System Engineering




Adjustment & elimination




Total





 


U.S. $ in thousands




Revenues


 


 


 


 


 


 




External


9,360


10,567


4,973


992


-


25,892




Internal



-




-




189




-




(189)




-





 


 


 


 


 


 


 




Total


9,360


10,567


5,162


992


(189)


25,892




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Segment profit (loss)



403




971




425




20




56




1,875





 


 


 


 


 


 


 




Finance expense, net


 


 


 


 


 


185




Tax expenses


 


 


 


 


 



119





 


 


 


 


 


 


 




Profit


 


 


 


 


 



1,571





 


 


 


 


 


 


 




 
Nine month period ended September 30, 2017 (Unaudited)





 




Antennas




Water Solutions




Representation




System Engineering




Adjustment & elimination




Total





 


U.S. $ in thousands




Revenues


 


 


 


 


 


 




External


9,984


9,626


4,683


1,210


-


25,503




Internal



-




-




285




-




(285)




-





 


 


 


 


 


 


 




Total



9,984




9,626




4,968




1,210




(285)




25,503





 


 


 


 


 


 


 




 


 


 


 


 


 


 




Segment profit (loss)



(43)




1,185




371




110




153




1,776





 


 


 


 


 


 


 




Finance expense, net


 


 


 


 


 


51




Tax expenses


 


 


 


 


 



343





 


 


 


 


 


 


 




Profit


 


 


 


 


 



1,484





 


 


 


 


 


 


 




 
 
Year ended December 31, 2017





 




Antennas




Water Solutions




Representation




System Engineering




Adjustment & elimination




Total





 


U.S. $ in thousands




Revenues


 


 


 


 


 


 




External


13,267


13,109


6,707


1,570


-


34,653




Internal



-




-




382




-




(382)




-





 


 


 


 


 


 


 




Total



13,267




13,109




7,089




1,570




(382)




34,653





 


 


 


 


 


 


 




 


 


 


 


 


 


 




Segment profit



67




1,536




529




129




149




2,410





 


 


 


 


 


 


 




Finance expense, net


 


 


 


 


 


38




Tax expenses


 


 


 


 


 



440





 


 


 


 


 


 


 




Profit


 


 


 


 


 



2,008





 


 


 


 


 


 


 




 
Note 5 - SIGNIFICANT EVENTS:
A.  During March 2018 the Company announced that it was 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 were listed on the Tel Aviv Stock Exchange, at that point held 53.2% of the Company's issued ordinary shares. Following the announcement in March 2018, on 1 May , 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 was to be merged into the Company in a statutory merger, so that MTIC would be dissolved and all of its activities, assets and liabilities, subject to certain qualifications, would 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").
The Merger does not constitute a business combination within the scope of IFRS 3 and accordingly is treated by the Company in the financial statements as a pooling of interest. According to this method, the Company prepared its financial statements in order to reflect as if the Merger was in effect as of the establishment of the Company, while making the adjustments as follows:
The capital balance of the transferred activities was classified in the statement of changes in equity as part of the additional paid-in capital. Dividend distribution to the owners prior to the date of the Merger was classified to the statement of changes in equity as retained earnings.
As consideration for the Merger, the Company was to 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 were also to 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 was to 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 was to 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, was 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"), was subject to updates, as necessary, according to the Conversion Ratio Mechanism (as defined below). According to the aforesaid valuation, which constituted 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) was 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 was to be 87,038,724 ordinary shares.
The Merger was completed on 20 August, 2018.
B.   On 5 April, 2018 the Company paid a dividend of 2 US cents per ordinary share totaling approximately US$ 396,000 and in addition 1,813,970 new ordinary shares were issued to qualifying shareholders that chose a scrip dividend alternative.
 




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