1st Quarter Results

RNS Number : 1227N

MTI Wireless Edge Limited

14 May 2015

 



14 May 2015

MTI Wireless Edge Ltd

("MTI" or the "Company")

Financial results for the three months ended 31 March 2015

MTI Wireless Edge Ltd., (MWE) ("MTI" or the "Company"), a market leader in the manufacture of flat panel antennas for fixed wireless broadband, today announces its unaudited results for the three months ended 31 March 2015.

Highlights

·     Continued increase in revenue and operational profit.

·     Revenue increased by 1% to US$3.54m (Q1 2014: US$3.51m).

·     Operational profit increased by 62% to US$141k (Q1 2014: US$87k).

·     Dividend of US 0.68 cent per share paid on 2 April 2015.

·     Shareholder's equity of US$17.9m (at December 31 2014: US$17.9m), equivalent to 22.4 pence per share.

·     Acquisition of Mottech is progressing and closing is expected before end of May 2015.

Dov Feiner, Chief Executive Officer, commented:

"I am pleased to announce that during this quarter the Company continued to increase its revenue and profits. We are especially pleased with the growth in our RFID line of products, which is driven by fleet management and toll roads solutions. We also continue to see interest and demand for our 80GHz line of products. However, we note some of our customers are suffering delays in implementing their solution into the market, but we remain confident in the long-term market opportunity for these multi-gigabit wireless internet backhaul solutions.

"As announced on the 28 April 2015, the Company has entered into a conditional agreement to acquire Mottech, a provider of wireless control products and services. We expect to complete the acquisition within the next 30 days and the management team is planning the integration process. An announcement will be made when the acquisition completes."

For further information please contact:

MTI Wireless Edge Dov Feiner, CEO Moni Borovitz, Financial Director	http://www.mtiwe.com/ [phone]
Allenby Capital Limited Nick Naylor Alex Price	[phone]

About MTI Wireless Edge

MTI is engaged in the development, production and marketing of High Quality, Low Cost, Flat Panel Antennas for Commercial & for Military applications. Commercial applications such as: WiMAX, Wireless Networking, RFID readers & Broadband Wireless Access. With over 40 years' experience, supplying antennas 100KHz to 90GHz including directional antennas and Omni directional for outdoor and indoor deployments including Smart Antennas for WiMAX, Wi-Fi, Public Safety, RFID and for Base Stations and Terminals  - Utility Market. Military applications includes a wide range of broadband, tactical and specialized communications antennas, antenna systems and DF arrays installed on numerous airborne, ground and naval, including submarine, platforms worldwide.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three months ended  March 31				Year ended December 31
	2015		2014		2014
	U.S. $ in thousands
	Unaudited				Audited
Revenues	3,542		3,512		14,341
Cost of sales	2,272		2,162		9,201
Gross profit	1,270		1,350		5,140
Research and development expenses	322		297		1,230
Distribution expenses	411		505		1,815
General and administrative expenses	396		461		1,755
Profit from operations	141		87		340
Finance expense	99		60		281
Finance income	3		24		94
Profit before income tax	45		51		153
Income tax benefit	(30)		(67)		(116)
Profit or loss	75		118		269
Other comprehensive income (net of tax effect):
Items not to be reclassified to profit or loss in subsequent periods:
Re-measurement of defined benefit plans	-		-		(29)
Total comprehensive income	75		118		240
Profit or loss Attributable to:
Owners of the parent	70		124		247
Non-controlling interest	5		(6)		22
	75		118		269
Total comprehensive income Attributable to:
Owners of the parent	70		124		218
Non-controlling interest	5		(6)		22
	75		118		240
Earnings per share (dollars per share)
Basic and Diluted	0.0014		0.0024		0.0048
Weighted average number of shares outstanding
Basic and Diluted	51,571,990		51,571,990		51,571,990

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

INTERIM CONSOLIDATEDSTATEMENT OF

CHANGES IN EQUITY

For the three months period ended March 31 2015:

	Attributed to owners of the parent
	Share capital		Additional paid-in capital		Capital Reserve for share-based payment transactions		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
Balance at January 1 2015 (Audited)	109		14,945		286		2,287		17,627		216		17,843
Changes during the three months      ended March 31 2015 (Unaudited):
Comprehensive income for the period	-		-		-		70		70		5		75
Share based payment	-		-		6		-		6		-		6
Balance at March 31 2015 (Unaudited)	109		14,945		292		2,357		17,703		221		17,924

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

INTERIM CONSOLIDATEDSTATEMENT OF

CHANGES IN EQUITY

For the three months period ended March 31 2014:

	Attributed to owners of the parent
	Share capital		Additional paid-in capital		Capital Reserve for share-based payment transactions		Retained earnings		Total attributable to owners of the  parent		Non-controlling interest		Total equity
	U.S. $ in thousands
Balance at January 1 2014 (Audited)	109		14,945		259		2,420		17,733		194		17,927
Changes during the three months      ended March 31 2014 (Unaudited):
Comprehensive income (loss) for the period	-		-		-		124		124		(6)		118
Share based payment	-		-		6		-		6		-		6
Balance at March 31 2014 (Unaudited)	109		14,945		265		2,544		17,863		188		18,051

The ac companying notes form an integral part of the financial statements.

INTERIM CONSOLIDATEDSTATEMENT OF

CHANGES IN EQUITY

For the year ended 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
	U.S. $ in thousands
	Audited
Balance 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
Other comprehensive income	-		-		-		(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

The ac companying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

	31.03.2015		31.03.2014		31.12.2014
	U.S. $ in thousands
	Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	3,275		687		2,918
Other current financial assets	2,872		5,753		3,728
Trade receivables	5,145		5,382		5,012
Other receivables	857		562		771
Current tax receivables	138		164		143
Inventories	2,844		3,139		2,941
	15,131		15,687		15,513
NON-CURRENT ASSETS:
Long-term prepaid expenses	10		32		12
Property, plant and equipment	5,127		5,330		5,209
Investment property	1,230		1,265		1,240
Deferred tax assets	404		293		368
Goodwill	406		406		406
	7,177		7,326		7,235
Total assets	22,308		23,013		22,748

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

INTERIM CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

	31.03.2015		31.03.2014			31.12.2014
	U.S. $ In thousands
	Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities and short term  Loans	270		562		270
Trade payables	1,682		1,682		1,906
Other accounts payables	784		777		1,019
	2,736		3,021		3,195
NON- CURRENT LIABILITIES:
Loans from banks	1,276		1,529		1,345
Employee benefits	372		330		365
Provisions	-		82		-
	1,648		1,941		1,710
Total liabilities	4,384		4,962		4,905
EQUITY
Equity attributable to owners of the parent
Share capital	109		109		109
Additional paid-in capital	14,945		14,945		14,945
Capital reserve from share-based payment transactions	292		265		286
Retained earnings	2,357		2,544		2,287
	17,703		17,863		17,627
Non-controlling interest	221		188		216
Total equity	17,924		18,051		17,843
Total equity and liabilities	22,308		23,013		22,748

May 10 2015
Date of approval of financial statements		Moshe Borovitz Finance Director	Dov Feiner Chief Executive Officer	Zvi Borovitz Non-executive Chairman

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

INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

			Three months ended  March 31						Year ended December 31
		2015			2014			2014
		U.S. $ in thousands
		Unaudited						Audited
Cash Flows from Operating Activities:
Profit for the period		75			118		269
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		127			112		451
Loss (Gain) from short-term investments		22			(22)		(37)
Equity settled share-based payment expense		6			6		27
Finance expenses, net		20			23		87
Income tax		(30)			(67)		(116)
Changes in operating assets and liabilities:
Decrease (increase) in inventories		97			(48)		150
Decrease (increase) in trade receivables		(133)			(23)		347
Increase in other accounts receivables and prepaid expenses		(84)			(7)		(196)
Increase (decrease) in trade and other accounts payables		(468)			(261)		162
Increase in employee benefits, net		7			14		20
Decrease in provisions		-			(30)		(40)
Interest paid		(20)			(23)		(87)
Income tax received (paid)		(1)			1		(4)
Net cash generated in operating activities		(382)			(207)		1,033

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

 INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

			Three months ended  March 31					Year ended December 31
			2015			2014		2014
			U.S. $ in thousands
				Unaudited				Audited
Cash Flows From Investing Activities:
Sale (purchase) of short-term investment, net			833			22		2,053
Purchase of property, plant and equipment			(26)			(54)		(276)
Net cash generated (used in) investing activities			807			(32)		1,777
Cash Flows From Financing Activities:
Short-term Loan paid			-			-		(292)
Long-term Loan received			-			-		31
Dividend paid to the owners of the parent			-			-		(351)
Repayment of long-term loan from banks			(68)			(66)		(272)
Net cash used in financing activities			(68)			(66)		(884)
Increase (decrease) in cash and  cash equivalents during the period			357			(305)		1,926
Cash and cash equivalents  at the beginning of the period			2,918			992		992
Cash and cash equivalents  at the end of the period			3,275			687		2,918

Appendix A - Non-cash transactions:

			Three months ended March 31				Year ended December 31
			2015		2014		2014
			U.S. $ in thousands
		Unaudited					Audited
Purchase of property and equipment against trade payables		20			40		11

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

Note 1 - General:

A.            Corporate information:

M.T.I Wireless Edge Ltd. (hereafter - the "Company") is an Israeli corporation. It was incorporated under the Companies Act in Israel on December 31 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 London's AIM Market.

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.

B.            Foreign currencies:

Henceforth are the details of the main foreign currency information and the changes in the exchange rate percentage in the reporting period:

	March 31			December 31
	2015		2014	2014
NIS (in Dollar per 1 NIS)	0.251		0.287	0.257

	Three months ended March 31			Year ended December 31
	2015		2014	2014
	%		%	%
NIS	(2.29)		(0.45)	(10.72)

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 2014 was approved by the board on February 19 2015. The report of the auditors on those financial statements was unqualified. The interim consolidated financial statements as of March 31 2015 have not been audited.

The interim consolidated financial information should be read in conjunction with the annual financial statements as of 31 December 2014 and for the year ended on that date and with the notes thereto. The significant accounting policies applied in the annual financial statements of the Company as of December 31 2014 are applied consistently in these interim consolidated financial statements.

Note 3 - operating SEGMENTS:

The following table's present revenue and profit information regarding the Company's operating segments for the Three months ended March 31, 2015 and 2014, respectively, and for the year ended December 31 2014.

Three months ended March 31 2015 (Unaudited)
		Commercial		Military		Total
		$'000
Revenue
External		2,700		842		3,542
Total		2,700		842		3,542
Segment income		64		77		141
Finance expense, net						(96)
Profit before income tax						45
Other
Depreciation and other non-cash expenses		111		16		127

Three months ended March 31 2014 (Unaudited)
		Commercial		Military		Total
		$'000
Revenue
External		2,662		850		3,512
Total		2,662		850		3,512
Segment income (loss)		24		63		87
Unallocated corporate expenses
Finance expense, net						(36)
Profit before income tax						51
Other
Depreciation and other non-cash expenses		99		8		112

Note 3- operating SEGMENTS (CONT.):

Year ended December 31 2014 (audited)
		Commercial		Military		Total
		$'000
Revenue
External		11,323		3,018		14,341
Total		11,323		3,018		14,341
Segment profit		171		140		311
Unallocated corporate expenses
Unallocated income						29
Finance expense, net						(187)
Profit before income tax						153
Other
Depreciation		394		57		451

Note 4 -TRANSACTIONS WITH RELATED PARTIES:

The Parent Company and other related parties provide certain services to the Group as follows:

		Three  months ended      March 31				Year ended December 31
		2015		2014			2014
		U.S. $ in thousands
		Unaudited					Audited
Purchased Goods		31		95			301
Management Fee		91		99			387
Services Fee		53		52			208
Lease income		(30)		(30)			(120)

Compensation of key management personnel of the Group:

		Three  months ended      March 31				Year ended December 31
		2015		2014			2014
		U.S. $ in thousands
		Unaudited					Audited
Short-term employee benefits *)		179		173			717

*) Including Management fees for the CEO, Director executive management and other related parties.

All Transactions are made at market value.

	31.03.2015		31.03.2014			31.12.2014
	U.S. $ In thousands
	Unaudited				Audited
Related parties	34		32		25

Note 5 - SIGNIFICANT EVENTS:

a.    On April 4 2015, the Company paid a dividend of 0.68 cents per share totalling approximately US$351,000.

b.    On April 28 2015 the Company announced that it has entered into a conditional share purchase agreement to acquire 100% of Mottech, a provider of wireless control products and services, for a consideration of up to 18.55 million New Israeli Shekels ("NIS") (approximately US$4.75 million) from which 15.5 million NIS (US$4 million) will be paid upon closing and the remainder by April 2018 based on the financial performance of Mottech in 2016 and 2017 (the "Acquisition").

Mottech is a global distributor and integrator of Motorola's wireless control solutions, which includes a portfolio of radio-enabled sensors and switches managed by control software. Mottech primarily operates in the water-management sector and has developed proprietary wireless management solutions for commercial irrigation, municipal water authorities and water distributors. A typical solution reduces costs for the client, for example Mottech provides a commercial farm irrigation system that monitors the local environment, weather and soil sensors in real-time and Mottech's propriety software automatically operates irrigation and fertilizer pump stations to optimize these critical costs for the farm.

Mottech was set up in May 2014 and acquired its business and assets at the same time from the Israeli court. The assets had been placed in the Israeli court following the previous owner going into administration as result of business failure at a subsidiary which is not part of Mottech or its business today.

During the period from May to December 2014 Mottech's audited accounts show revenue of 26.5 million NIS (US$6.6 million) from distributing Motorola's wireless control products, system integration and management and  maintenance services. Mottech is headquartered in Israel, and has 60 employees worldwide, including subsidiaries in South Africa, Australia and the US. Subject to satisfaction of the relevant conditions, the Acquisition is scheduled to complete in May 2015.

The Acquisition is conditional, inter alia on:

• The approval of Israeli antitrust controller;

• The receipt of Motorola approval for the Acquisition;

• The warranties given by Mottech and its owners to the Company in respect of the Mottech business remaining true and accurate as at completion of the Acquisition;

• There being no material adverse change in the financial and trading position or prospects of the Mottech business before completion of the Acquisition; and

• The approval of Mottech's banks.

The Acquisition is to be funded out of MTI's existing cash resources and new bank facilities to be put in place. 

 

END

 

 

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