RNS Number : 9720G MTI Wireless Edge Limited 21 November 2022 21 November 2022 MTI Wireless Edge Ltd ("MTI", the "Company" or the "Group") Q3 2022 Financial Results MTI Wireless Edge Ltd (AIM: MWE), the technology group focused on comprehensive communication and radio frequency solutions across multiple sectors, is pleased to announce its financial results for the nine-month period ended 30 September 2022 (the "Period"). Financial highlights · Strong trading during the Period with revenue growth of 8% to $34.8m (2021: $32.1m) · Increased EBITDA, up 14% to $4.58m (2021: $4.03m) · One-off acquisition and depreciation costs led to net profit of $2.74m (2021: $2.70m) · Earnings per share increased to 2.99 US cents (2021: 2.95 US cents) · Company remains ungeared with net cash of $5.2m as at 30 September 2022 · Final dividend anticipated to be declared in MTI's full year results announcement Operational highlights · A strong trading quarter across all business divisions, all grew and all were profitable · MTI Summit had a good quarter and is enjoying another successful year o The division is benefitting from: i) new contract wins; ii) successful integration of PSK; and iii) the 3 year strategic agreement signed last year with a significant defence customer resulting in increased sales o PSK (51% stake acquired in January 2022) secured the Group's largest ever contract in July 2022, expected to be worth $10m over the next 7 years, providing services and maintenance support, to the Israeli Ministry of Defence · Antenna division continues to expand its presence in the 5G market o The division is working with 5 out of the 7 leading Original Equipment Manufacturers and, through the new ABS antenna solution, is now working with nearly all of the Tier 1 OEMs o 5G in India shows substantial potential in coming years, with Q4 already expected to benefit from sales into this market · Mottech continued to perform well o Good level of renewals with key municipality customers coupled to successful price increases, the effect of such is to be seen starting in 2023 o Potential for further growth in fountain management o Good progress in Italy and successful launch of the ICC Pro Autopilot, the first AgroGation system Moni Borovitz, Chief Executive Officer of MTI Wireless Edge, said: "Q3 2022 represented an excellent performance compared to Q3 2021, showing double digit growth in revenue and profits all the way to EPS. We remain very focused on providing radio frequency solutions across our three divisions, each targeting specific markets where there is significant need for our services. Demand, as shown by the increase in sales, remains strong and our markets are nearly back to normal with shipment costs reduced relatively to the high cost during COVID-19, and microchip shortages also reducing. Overall, the Company is in a strong position, with net cash of $5.2m and no borrowings, to continue to grow both organically and by acquisition. "Our antenna division is well positioned within the evolving 5G market. The main growth from 5G is still yet to come so we are positioning ourselves with most of the major players and demonstrating the strength of our solutions. India, a key market, where we have a physical presence, recently completed a 5G auction. This is leading to rapidly increasing demand and the forecasts for the number of new Eband towers is substantial. "PSK has proven to be a strong addition to the Group. Since the Company acquired 51% of PSK in January 2022, the company has won significant orders primarily from within the defence sector. "The summer just ended was one of the driest on record, accentuating the need to address the growing problem of water scarcity. There remains substantial unnecessary wastage of water, however, there is increasing awareness of solutions like Mottech's, where around 35% of the volume of water previously used can now be saved. "Going into the final quarter of this year, the Company is well placed to deliver a good result for the year." Moni Borovitz, Chief Executive Officer, will provide a live investor presentation relating to the financial results for the nine-month period ended 30 September 2022 via the Investor Meet Company ("IMC") platform today at 09.30 am UK time. Investors can sign up for free via: https://www.investormeetcompany.com/mti-wireless-edgeltd/register-investor For further information please contact: MTI Wireless Edge Ltd +972 3 900 8900 Moni Borovitz, CEO http://www.mtiwirelessedge.com Allenby Capital Limited (Nomad and Joint Broker) +44 20 3328 5656 Nick Naylor/Alex Finance) Brearley/Piers Shimwell (Corporate Amrit Nahal/David Johnson (Sales and Corporate Broking) Shore Capital (Joint Broker) +44 20 7408 4090 Toby Gibbs/John More (Corporate Advisory) Fiona Conroy (Corporate Broking) Novella (Financial PR) Tim Robertson/Safia Colebrook +44 20 3151 7008 About MTI Wireless Edge Ltd. ("MTI") Headquartered in Israel, MTI is a technology group focused on comprehensive communication and radio frequency solutions across multiple sectors through three core divisions: Antenna Division MTI is a world leader in the design, development and production of high quality, state-of-the-art, and costeffective 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 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. Water Control & Management Division Via its subsidiary, Mottech Water Solutions Ltd ("Mottech"), MTI 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's solutions ensure constant, reliable and accurate water usage, while reducing operational and maintenance costs. Mottech's activities are focused in the market segments of agriculture, water distribution, municipal and commercial landscape as well as wastewater and storm-water reuse. Distribution & Professional Consulting Services Division Via its subsidiary, MTI Summit Electronics Ltd., MTI offers consulting, representation and marketing services to foreign companies in the field of RF and Microwave solutions and applications including engineering services (including design and integration) in the field of aerostat systems and the ongoing operation of Platform subsystems, SIGINT, RADAR, communication and observation systems which is performed by the Company. MTI WIRELESS EDGE LTD. (An Israeli Corporation) INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Nine month period ended September 30, 2022 2021 Year ended December 31, 2021 U.S. $ in thousands )Except per share data( Unaudited Revenues 34,783 32,062 43,184 Cost of sales 23,927 22,108 29,685 10,856 9,954 13,499 Gross profit Research and development expenses 789 725 965 Distribution expenses 2,855 2,647 3,686 General and administrative expenses Loss (profit) from sale of property, plant and equipment 3,719 3,270 4,448 8 )16( 25 3,485 3,328 4,425 Finance expenses 350 252 454 Finance income )108( )30( )67( 3,243 3,106 4,038 Tax expenses 505 406 329 Profit Other comprehensive income (loss) net of tax: Items that will not be reclassified to profit or loss: 2,738 2,700 3,709 Re-measurement of defined benefit plans - - 22 Items that may be reclassified to profit or loss: Adjustment arising from translation of financial statements of foreign operations )365( )106( )19( Total other comprehensive income (loss) )365( )106( 3 2,373 2,594 3,712 2,643 95 2,612 88 3,598 111 2,738 2,700 3,709 2,278 2,506 95 88 3,601 111 2,373 2,594 3,712 0.0299 0.0295 0.0407 Profit from operations Profit before income tax Total comprehensive income Profit attributable to: Owners of the parent Non-controlling interests Total comprehensive attributable to: income Owners of the parent Non-controlling interests Earnings per share (dollars) Basic and Diluted (dollars per share) Weighted average number of shares outstanding 88,494,239 Basic and Diluted (dollars per share) 88,509,740 88,516,849 The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the nine-month period ended September 30, 2022 (Unaudited): Attributable to owners of the parent Additional paid-in capital Share capital Translation differences Retained earnings Total attributab to owners the pare U.S. $ in thousands Balance at January 1, 2022 209 23,126 172 2,406 25,913 - - - 2,643 2,643 Translation differences - - (365) - (365) Total comprehensive income for the period - - 2,643 Acquisition and disposal of treasury shares - (87) - (365) - 2,278 (87) 209 23,039 Changes during the nine-month period ended September 30, 2022: Comprehensive income Profit for the period Other comprehensive income Dividend Balance at September 30, 2022 - (2,479) (2,479) (193) 2,570 25,625 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, 2021 (Unaudited): Attributed to owners of the parent Share capital Capital reserve for shareAdditional based paid-in payment Translation capital transactions differences Retained earnings U.S. $ in thousands Balance at January 1, 2021 209 23,167 - 191 999 Changes during the nine month period ended September 30, 2021: Comprehensive income Profit for the period - - - - 2,612 Translation differences - - - (106) - Total comprehensive income (loss) for the period - - - 2,612 Profit from acquisition of treasury shares - 5 - - (106) - 209 23,172 - Other comprehensive loss Dividend Balance at September 30, 2021 - (2,213) 85 1,398 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, 2021 : Attributable to owners of the parent Share capital Additional paid-in Translation capital differences Retained earnings Tota attribu to own of th pare U.S. $ in thousands Balance as at January 1, 2021 209 23,167 191 999 24,5 Changes during 2021: Comprehensive income Profit for the year Other comprehensive income Re measurements on defined benefit plans - - - 3,598 3,59 Translation differences - - )19( 22 - 22 )19 Total comprehensive income (loss) for the year - - )19( 3,620 3,60 Dividend - )41( - )2,213( - )2,21 )41 209 23,126 172 2,406 25,9 Acquisition and disposal of treasury shares Balance as at December 31, 2021 The accompanying notes form an integral part of the financial statement. MTI WIRELESS EDGE LTD. (An Israeli Corporation) INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 30.09.2022 30.09.2021 31.12.2021 U.S. $ in thousands Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents 5,280 9,323 12,567 Trade and other receivables 13,798 11,168 10,628 Unbilled revenue 2,760 2,700 2,794 Current tax receivables 444 6,745 482 5,985 518 6,849 29,027 29,658 33,356 Inventories NON-CURRENT ASSETS: Long term prepaid expenses Property, plant and equipment Deferred tax assets Intangible assets Total assets 40 38 26 5,801 5,570 5,548 1,113 3,928 744 1,027 994 1,014 10,882 7,379 7,582 39,909 37,037 40,938 The accompanying notes form an integral part of the financial statements. MTI WIRELESS EDGE LTD. (An Israeli Corporation) INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 30.09.2022 30.09.2021 31.12.2021 U.S. $ In thousands Unaudited LIABILITIES AND EQUITY CURRENT LIABILITIES: Current maturities and short term bank credit and loans Trade payables Other accounts payable Current tax payables NON- CURRENT LIABILITIES: Contingent consideration Lease liabilities Loans from banks, net of current maturities Employee benefits, net 17 20 23 6,080 5,282 5,346 3,827 439 4,425 82 6,895 322 10,363 9,809 12,586 1,432 - - 401 438 465 37 858 17 834 8 868 Total liabilities 2,728 1,289 1,341 13,091 11,156 13,927 EQUITY Equity attributable to owners of the parent Share capital 209 209 209 Additional paid-in capital 23,039 23,172 23,126 Translation differences (193) 2,570 85 1,398 172 2,406 25,625 24,864 25,913 1,193 1,075 1,098 Total equity 26,818 25,939 27,011 Total equity and liabilities 39,909 37,037 40,938 Retained earnings Non-controlling interest November 20, 2022 Date of approval of financial statements Moshe Borovitz Chief Executive Officer Elhanan Zeira Controller Zvi Borovitz Non-executive Chairman of the Board The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS Nine month period ended September 30, 2022 2021 Year ended December 31, 2021 U.S. $ in thousands Unaudited Cash Flows from Operating Activities: Profit for the period 2,378 2,700 3,709 1,090 702 976 - 47 (25) Adjustments for: Depreciation and amortization Loss (Gain) from sale of property, plant and equipment Finance (income) expenses, net (95) 24 53 Tax expenses 505 406 329 (35) 357 (479) (2,607) (15) 604 receivables (440) (382) (448) Decrease (increase) in unbilled revenues 34 (492) (476) 172 376 2,803 (114) 8 64 1,248 3,731 7,110 Changes in operating assets and liabilities: Decrease (increase) in inventories Decrease (increase) in trade receivables Decrease (increase) in other accounts Increase (decrease) in trade and other accounts payables Increase (decrease) in employee benefits, net Cash from operations Interest received Interest paid Income tax paid Net cash provided activities by operating - 3 52 (41) (848) (30) (511) (88) (481) 359 3,193 6,593 The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.) Nine month period ended September 30, 2022 2021 Year ended December 31, 2021 U.S. $ in thousands Unaudited Cash Flows From Investing Activities: Proceeds from sale of property, plant and equipment - 77 153 (1,427) - - (2,785) - - (421) (54) (766) (54) (835) (4,633) (743) (736) Dividend (2,479) (2,213) (2,213) Payments of lease liabilities (429) (324) (449) received from banks 34 - - Treasury shares acquired (87) 5 (41) - - - (7) (111) (117) (2,968) (2,643) (2,820) (7,242) (193) 3,037 12,567 9,577 9,577 (45) (61) (47) Acquisition of subsidiary, net of cash acquired Net cash from sale of previously consolidated subsidiaries Change (payment) of contingent consideration regarding business acquisition Purchase of property, plant and equipment Net cash activities used in investing Cash Flows From Financing Activities: Short-term loans and credit line Treasury shares sold Repayment of long-term loans from banks Net cash activities used in financing (Decrease)/Increase in cash and cash equivalents during the period Cash and cash equivalents at the beginning of the period Exchange differences on balances of cash and cash equivalents Cash and cash equivalents at the end of the period 5,280 9,323 12,567 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, including engineering services in the field of aerostat 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, 2021 was approved by the board on March 6, 2022. The report of the auditors on those financial statements was unqualified. The interim consolidated financial statements as of September 30, 2022 have not been audited. The interim consolidated financial information should be read in conjunction with the annual financial statements as of December 31, 2021 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, 2021 are applied consistently in these interim consolidated financial statements. NOTE 3 - ACQUISITION OF SUBSIDIARY: On 3 January 2022 the Company, via its wholly-owned subsidiary, MTI Summit Electronics Ltd. ("MTI Summit"), entered into a share purchase agreement, which included both a purchase of existing shares in and the making of a new equity investment into P.S.K. WIND Technologies Ltd. ("PSK"), after which MTI Summit owns 51% of PSK (the "Acquisition"). The initial consideration for the Acquisition was approximately US$1.2 million, with an earn out payment, subject to performance, of up to approximately US$2.56 million. In addition, MTI Summit has made a loan to PSK of US$0.8 million and is party to an option agreement in relation to the acquisition of the remaining 49% of PSK. The initial consideration paid by MTI, to acquire 51% of the equity in PSK, comprised: a) the purchase of existing shares in PSK for NIS 700,000 (approximately US$225,000); and b) a subscription of NIS 3,000,000 (approximately US$ 972,000) for new shares in PSK. In addition, there is an earn out mechanism under which further consideration may be payable, as described in the contingent consideration section below (the "Earn Out"). MTI Summit's loan to PSK of NIS 2,500,000 (approximately US$800,000) is a term loan which is to be repaid on 1 January 2024. The loan is not convertible and bears interest of 3.26% per annum. In addition to the Acquisition, MTI Summit has an option to purchase and the vendors of PSK have an option to sell to MTI Summit the remaining 49% of PSK (the "Option") starting from 2027, subject to the terms described below. Cash outflow on the Acquisition totalled to US$ 1,427,000. Acquisition cost of PSK at the date of Acquisition: Fair value $'000 Unaudited Cash paid 1,197 Contingent consideration liability Put option liability 56 1,376 Total acquisition cost 2,629 NOTE 3 - ACQUISITION OF SUBSIDIARY (CONT'): Set forth below are the assets and liabilities of PSK at the date of Acquisition: Fair value $'000 Unaudited Trade receivables 671 Other receivables 213 Inventories 65 Property, plant and equipment 256 Intangible assets 1,710 Bank loans (230) Trade payables (522) Deferred tax liability (394) Other liabilities Employee benefits, net (436) (104) Net identifiable assets Goodwill arising on acquisition 1,229 1,400 Total purchase cost 2,629 The results of PSK were consolidated into the financial statements of the Group from the beginning of the year. The cost of the Acquisition was allocated to tangible assets, intangible assets and liabilities which were acquired based on their fair value at the time of the acquisition. The intangible assets recognized include order backlog and customer relations in the total amount of US$ 111 thousands and US$ 1,599 thousands respectively, deferred taxes in the total amount of US$ 394 thousands and goodwill in the total amount US$ 1,400 thousands. The intangible assets associated with customer relations are amortized over an useful life of up to 15 years. The goodwill arising on Acquisition is attributed to the expected benefits from the synergies of the combination of the activities of the Company and PSK. The goodwill recognized is not expected to be deductible for income tax purposes. All transaction costs have been recorded in General and administrative expenses. Contingent consideration: As part of the purchase agreement with the owners of PSK, it was agreed that the sellers, who retain a 49% holding in PSK would be entitled to further consideration to be paid pursuant to an earn out mechanism dependent on PSK's actual revenues in 2022 and 2024 versus certain agreed targets in each of those years and is capped at a maximum of NIS 8,000,000 (approximately US$2.56m), to be paid in cash. NOTE 3 - ACQUISITION OF SUBSIDIARY (CONT'): Put Option liability: MTI Summit has an option to purchase and the vendors of PSK have an option to sell to MTI Summit the remaining 49% of PSK (the "Option") starting from 2027. The value of PSK under the Option is to be calculated on the basis of eight times the average EBITDA level of PSK in 2025 and 2026, with MTI being required to pay 49% of this value upon exercise. If the Option is to be exercised at any time after the preparation of PSK's financial results for the first quarter of 2027, the calculation will be based on PSK's average EBITDA for the last eight quarters. The Option will remain in place until exercised. As at the Acquisition date, the fair value of the contingent consideration was estimated at US$ 56 thousand and the Option at US$ 1.376 million. The significant non-observable data used in measuring the fair value of the liability in respect of the contingent consideration and the Put Option liability are as follows: Discount rate: 15.5% A significant increase (or decrease) in the estimated amount of the acquired company's pre-tax income will result in a significant increase (decrease) in the fair value of the liability in respect of the contingent consideration whereas a significant increase (decrease) in the discount rate and default risk rate will result in a decrease (an increase) in the fair value of the liability. NOTE 4 - REVENUES: Nine month period ended September 30, 2022 2021 Year ended December 31, 2021 U.S. $ in thousands Unaudited Revenues arise from: Sale of goods* 26,573 26,484 35,308 Rendering of services** 5,603 3,900 Projects** 2,607 34,783 1,678 32,062 5,729 2,147 43,184 (*) at the point in time (**) over time NOTE 5 - OPERATING SEGMENTS: The following tables present revenue and profit information regarding the Group's operating segments for the nine month period ended September 30, 2022 and 2021 respectively and for the year ended December 31, 2021. Nine month period ended September 30, 2022 (Unaudited): Antennas Water Solutions Distribution & Consultation Services Adjustment & Elimination Total U.S. $ in thousands Revenues External 8,627 - 13,743 - 12,413 252 (252) 34,783 - Total 8,627 13,743 12,665 (252) 34,783 Segment profit 254 1,282 1,814 135 3,485 Internal Finance expense, net Tax expenses 242 505 Profit 2,738 As of 30 September, 2022: Antennas Water Solutions Distribution & Consultation Services Adjustment & Elimination Total U.S. $ in thousands Segment assets 14,923 11,805 10,650 - Unallocated assets Segment liabilities 37,378 2,531 3,070 4,316 4,762 - Unallocated liabilities 12,147 944 Nine month period ended September 30, 2021 (Unaudited): Antennas Water Solutions Distribution & Consultation Services Adjustment & Elimination Total U.S. $ in thousands Revenues External 8,591 - 13,049 - 10,422 105 (105) 32,062 - Total 8,591 13,049 10,527 (105) 32,062 Segment profit 425 1,417 1,297 189 3,328 Internal Finance expense, net Tax expenses 222 406 Profit 2,700 NOTE 5 - OPERATING SEGMENTS (CONT.): As of 30 September, 2021: Antennas Water Solutions Distribution & Consultation Services Adjustment & Elimination Total U.S. $ in thousands Segment assets 15,069 10,894 8,307 - Unallocated assets Segment liabilities Unallocated liabilities 34,270 2,825 3,169 3,926 3,130 - 10,225 931 Year ended December 31, 2021 Antennas Water Solutions Distribution & Consultation Services Adjustment & Elimination Total U.S. $ in thousands Revenues External Inter-segment Total Segment profit 11,294 - 17,606 - 14,284 174 (174) 43,184 - 11,294 17,606 14,458 (174) 43,184 282 2,074 1,845 224 4,425 Finance expense, net Tax expenses 387 329 Profit 3,709 31 December, 2021: Antennas Water Solutions Distribution & Consultation Services Adjustment & Elimination Total U.S. $ in thousands Segment assets 14,399 11,100 11,999 - Unallocated assets Segment liabilities 37,498 3,440 3,090 3,626 6,282 - Unallocated liabilities 12,998 929 NOTE 6 - SALE OF PREVIOUSLY CONSOLIDATED SUBSIDIARIES: On 22 March 2022, the Company announced that it had disposed of its Russian operations and sold its entire holding in M.T.I Summit SPB ltd. ("SPB") for a de minimis amount, with this sale not having any significant profit/loss impact on the Company. The effect of the sale on the financial position of the Group is as follows: $'000 Unaudited Other receivables (417) Inventories (6) Current tax receivables (10) Cash and cash equivalents Other trade payables Net assets and liabilities Consideration received, satisfied in cash Cash and cash equivalents disposed of Net cash outflows (2,785) 3,218 (2,785) (2,785) NOTE 7 - SIGNIFICANT EVENTS: A. On 6 March 2022, the Board of directors declared a cash dividend of 2.8 US cents per share, representing approximately $2,479,000, in total. This dividend was paid on 31 March 2022 to shareholders on the register at the close of trading on 18 March 2022. B. On 24 January 2019, the Company announced a share repurchase program to conduct market purchases of ordinary shares of par value 0.01 Israeli Shekels each ("Ordinary Shares") in the Company up to a maximum value of £150,000 (the "Programme"). Thereafter, the board of directors of the Company and the board of directors of MTI Engineering decided to continue with the Programme for several further periods. On 13 April 2022, the Company announced that it would extend the Programme until 31 March 2023, with the Programme having an increased maximum value of up to £200,000 and with the Programme being managed by Shore Capital Stockbrokers Limited pursuant to the terms as announced. As at 30 September 2022, 200,000 Ordinary Shares were held in treasury under the Programme. C. On 9 March 2022 at an extraordinary shareholders meeting, Mr. Luke Ahern was elected as an external director for three year term. At the same meeting approval for the extension of an updated Remuneration Policy for a period of three years or for a longer period, to the extent prescribed in the provisions of the Israeli Companies Law, was granted as well as the extension of an updated management services agreement (the "Management Services Agreement"), between the Company and Mokirei Aya Management (2003) Ltd. (the "Management Company") for the provision of the services of the Chairman NOTE 7 - SIGNIFICANT EVENTS (CONT.): and CEO of the Company for a further three years or for a longer period, to the extent prescribed in the provisions of the Israeli Companies Law with effect from 1 March 2022. D. Business Continuity - Since March 2022 most of the Group's operations have returned to a normal level of activity, but aspects of the Group's supply chain are still working slower, and the Company's industry has been affected on the operational level, along with the rest of the world economy as it faces the risk of a global recession where the ability to predict the timing of a recovery is uncertain. Inflation in the countries where the Group operates, as measured by the consumer price index, is currently increasing which is driving broad based cost increases, including increases in wages. This together with rising components prices and shortages, may have an impact on the Group's underlying cost base and profitabilit