Announcement PDF RNS Number : 0529Z MTI Wireless Edge Limited 19 May 2021 19 May 2021 MTI Wireless Edge Ltd ("MTI", the "Company" or the "Group") Q1 2021 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 three-month period ended 31 March 2021. Financial highlights · Solid revenue growth, up by 4% to $9.95m (2020: $9.55m) · Increase in profit from operations, up 14% to $0.96m (2020: $0.84m), reflecting the benefit of increasing scale on profit margins · Significant increase in profit before tax, up 25% to $0.9m (2020: $0.72m) · Earnings per share increased by 20% to 0.80 US cents (2020: 0.67 US cents) · Strong cash generation with net cash up 10% to $9.5m on 31 March 2021 (31 March 2020: $8.6m), despite having paid a 2020 dividend of $2.2m in March 2021 (compared to payment of the 2019 dividend in April 2020). Operational highlights by division Antennas · A one stop shop for the sale of 'off the shelf' flat and parabolic antennas, combined with the provision of custom-developed antenna solutions to a range of commercial and military customers, with a growing focus on providing 5G backhaul antenna solutions to support mobile phone operators as they roll-out their 5G networks. · In Q1 2021, the leading mobile phone companies are now incorporating 5G connectivity in mobile devices as standard. As a result, network operators are responding by rolling out higher bandwidth 5G services increasing demand for MTI's backhaul antenna solutions, although the legacy antenna market (FBWA) was slower as implementation of projects delayed due to COVID-19. Water Control & Management · Operates under the Mottech brand and provides wireless control systems to manage irrigation and water distribution for agriculture, municipal authorities and commercial entities. · Solutions reduce water and power usage, whilst providing customers with higher revenue from accurate irrigation, leading to more and higher quality crops and plants being grown. · In Q1 2021, Mottech continued to perform well, opening a new office in Alberta Canada, securing new contract wins and retaining its long-term client base including one of Mottech's largest clients, a leading Israeli municipality which extended its contract worth up to $2.5 million for another 2-4 years. Distribution & Professional Consulting Services · Operates under the MTI Summit Electronics brand and represents approximately 40 international suppliers of radio frequency/microwave components and sells these products to Israeli customers. · Expert knowledge of both the international suppliers and customers further enables MTI to act as a consultant to all parties and assist with devising complete radio frequency/microwave solutions. · In Q1 2021, MTI Summit had another strong period, benefitting from consistent demand across its core customer base in the defence and technology sector based in Israel and the ongoing success of its Russian office. · MTI Summit's tethered balloon project continued to generate good revenues and demand for future design solutions remains high, which bodes well for the outlook for this division. Moni Borovitz, Chief Executive Officer of MTI Wireless Edge, said: "We have enjoyed a good start to the year. The majority of our markets are functioning well, with our home market, Israel, largely back to normal as far as COVID-19 is concerned. Trading is still likely to be disrupted in some areas but overall, given the experience gained last year when operating under the Covid-19 restrictions, we are confident in the ability of our teams to trade effectively. "The Group's financial performance over Q1 was encouraging. Of particular note, is the continued growth in revenue, combined with the sharper growth in profitability as we benefit from our economies of scale, which translated into a 25% improvement in profit before tax. Cash generation was also positive, showing an increase in our net cash position of 10% to $9.5m as at 31 March 2021 ($8.6m 31 March 2020), despite having paid the 2020 dividend ($2.2m) in March 2021 (compared to the payment of the 2019 dividend of $1.8m in April 2020). The Company is therefore, we believe, in good financial health. "Each division is showing clear progress against their respective growth strategies. In 2020 the Covid-19 pandemic emphasised to the world the importance of mobile connectivity and this has accelerated the global roll-out of 5G. As a result, take-up of our 5G backhaul solution is moving ahead positively. Similarly, water scarcity remains a key issue amongst governments worldwide and Mottech's water management solutions are benefiting from the need to reduce water wastage and the cost savings associated with efficient irrigation. Our distribution and professional consulting services business, MTI Summit, has over the last three years established a track record of consistent growth, boosted by increases in defence spending and in particular increased reliance on wireless technologies across the sector. "Looking ahead, we believe the Company's clear focus on providing radio frequency solutions coupled to being diversified across several markets positions us well to continue to grow and expand through a mix of acquisition led and organic growth." Moni Borovitz, Chief Executive Officer, will provide a live investor presentation relating to the financial results for the three-month period ended 31 March 2021 alongside a brief case study on MTI Summit Electronics Ltd, the Group's Distribution and Professional Consulting Services Division, via the Investor Meet Company ("IMC") platform today at 10.00 am UK time. Investors can sign up for free via: https://www.investormeetcompany.com/mti-wireless-edge-ltd/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 Brearley (Corporate Finance) Amrit Nahal/David Johnson (Sales and Corporate Broking) Peterhouse Capital Limited (Joint Broker) +44 20 7469 0930 Lucy Williams Eran Zucker Novella (Financial PR) +44 20 3151 7008 Tim Robertson Fergus Young 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 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 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 Year ended Three month period ended December March 31, 31, 2021 2020 2020 U.S. $ in thousands Unaudited Revenues Cost of sales Gross profit Research and development expenses Distribution expenses General and administrative expenses Loss (profit) from sale of property, plant and equipment 9,949 6,783 9,556 6,441 40,893 27,816 3,166 3,115 13,077 283 250 889 907 1,039 1,108 1,029 3,579 4,379 )4( 8 14 959 842 4,076 75 )15( 140 )15( 275 )255( 899 157 717 124 4,056 564 742 593 3,492 - - 42 Items that may be reclassified to profit or loss: Adjustment arising from translation of financial statements of foreign operations )113( )278( 253 Total other comprehensive income (loss) )113( )278( 295 Total comprehensive income 629 315 3,787 705 37 585 8 3,373 119 742 593 3,492 592 37 307 8 3,668 119 962 315 3,787 Basic 0.0080 0.0067 0.0383 Diluted 0.0080 0.0066 0.0383 Basic 88,538,724 87,873,946 88,093,025 Diluted 88,538,724 88,035,747 88,093,025 Profit from operations Finance expenses Finance income Profit before income tax Tax expenses Profit Other comprehensive income (loss) net of tax: Items that will not be reclassified to profit or loss: Re-measurement of defined benefit plans Profit attributable to: Owners of the parent Non-controlling interests Total comprehensive (loss) attributable to: Owners of the parent income Non-controlling interests Earnings per share (dollars) Weighted average shares outstanding number of 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 three month period ended March 31, 2021 (Unaudited): Attributed to owners of the parent Capital reserve Total for shareattributable Additional based to owners NonShare paid-in payment Translation Retained of the controlling capital capital transactions differences earnings parent interest Total equity U.S. $ in thousands Balance at January 1, 2021 209 23,167 - 191 999 24,566 987 25,553 Comprehensive income Profit for the period Other comprehensive loss - - - - 705 705 37 742 Translation differences - - - (113) - (113) - (113) - - - (113) 705 592 37 622 - - - - (2,213) (2,213) - (2,213) 209 23,167 - 78 (509) 22,945 1,024 23,969 Changes during the three month period ended March 31, 2021: Total comprehensive income (loss) for the period Dividend Balance at March 31, 2021 The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONT.) For the three month period ended March 31, 2020 (Unaudited): Attributed to owners of the parent Capital reserve Total for shareattributable Additional based to owners NonShare paid-in payment Translation Retained of the controlling capital capital transactions differences earnings parent interest Total equity U.S. $ in thousands Balance at January 1, 2020 207 22,868 52 )62( )658( 22,407 883 23,290 Comprehensive income Profit for the period Other comprehensive loss - - - - 585 585 8 593 Translation differences - - - (278) - (278) - (278) - - - (278) 585 307 8 315 Changes during the three month period ended March 31, 2020: Total comprehensive income (loss) for the period Profit from acquisition and disposal of treasury shares (note 5B) - 8 - - - 8 - 8 Exercise of options to share capital 1 - 24 - (4) 1 - - 21 1 - 21 1 208 22,900 49 (340) (73) 22,744 891 23,635 Share based payment Balance at March 31, 2020 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, 2020 : Attributable to owners of the parent Capital Reserve Total from shareattributable Additional based to owners NonShare paid-in payment Translation Accumulated of the controlling capital capital transactions differences losses parent interests Total equity U.S. $ in thousands Balance as at January 1, 2020 207 22,868 52 (62) (658) 22,407 883 23,290 Changes during 2020: Comprehensive income Profit for the year Other comprehensive income Re measurements on defined benefit plans - - - - 3,373 3,373 119 3,492 Translation differences - - - 253 42 - 42 253 - 42 253 Total comprehensive income (loss) for - - - 253 3,415 3,668 119 3,787 the year Dividend - - - - )1,758( )1,758( - )1,758( Exercise of options to share capital Acquisition of the non-controlling interest in subsidiary (note 21 B) Profit from acquisition and disposal of treasury shares (note 23) 2 306 )54( - - 254 - 254 - )15( - - - )15( )15( )30( - 8 - - - 8 - 8 - - 2 - - 2 - 2 209 23,167 - 191 999 24,566 987 25,553 Share based payment Balance as at December 31, 2020 The accompanying notes form an integral part of the financial statements. MTI WIRELESS EDGE LTD. (An Israeli Corporation) INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 31.03.2021 31.03.2020 31.12.2020 U.S. $ in thousands Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents 9,585 8,985 9,577 Trade and other receivables 9,244 8,378 10,653 Unbilled revenue 2,389 3,305 2,318 Current tax receivables 489 5,631 555 5,695 557 6,399 27,338 26,918 29,509 Inventories NON-CURRENT ASSETS: Long term prepaid expenses 27 46 44 Property, plant and equipment 5,312 5,165 4,818 Deferred tax assets 689 1,053 655 1,103 696 1,065 7,081 6,969 6,623 34,419 33,887 36,132 Intangible assets Total assets The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 31.03.2021 31.03.2020 31.12.2020 U.S. $ In thousands Unaudited LIABILITIES AND EQUITY CURRENT LIABILITIES: Current maturities and short term bank credit and loans 36 292 105 Trade payables 4,157 4,237 5,098 Other accounts payable 4,762 142 4,288 203 4,094 213 9,097 9,020 9,510 Current tax payables NON- CURRENT LIABILITIES: Contingent consideration 49 69 51 Lease liabilities 464 282 155 Loans from banks, net of current maturities 30 810 65 816 37 826 1,353 1,232 1,069 10,450 10,252 10,579 Employee benefits, net Total liabilities EQUITY Equity attributable to owners of the parent Share capital Additional paid-in capital 209 208 209 23,167 22,900 23,167 Capital reserve from share-based payment transactions - 49 - 78 (509) (340) (73) 191 999 22,945 22,744 24,566 1,024 891 987 Total equity 23,969 23,635 25,553 Total equity and liabilities 34,419 33,887 36,132 Translation differences Retained earnings Non-controlling interest May 18, 2021 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. MTI WIRELESS EDGE LTD. (An Israeli Corporation) INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS Three month period ended March 31, 2021 2020 U.S. $ in thousands Unaudited Cash Flows from Operating Activities: Year ended December 31, 2020 Profit for the period 742 593 3,492 221 256 1,009 13 8 13 Adjustments for: Depreciation and amortization Loss (Gain) from sale of property, plant and equipment Equity settled share-based payment expense - 1 2 (24) (24) 69 157 124 564 729 (143) (557) 1,457 1,327 (1,053) Finance (income) expenses, net Tax expenses Changes in operating assets and liabilities: Decrease (increase) in inventories Decrease (increase) in trade receivables Decrease (increase) in other accounts receivables (112) 15 255 Increase in unbilled revenues (71) (439) 548 (369) (397) 140 Increase (decrease) in trade and other accounts payables Increase (decrease) in employee benefits, net Cash from operations (16) (27) 25 2,727 1,294 4,507 Interest received (10) 19 28 Interest paid 5 (155) (4) (31) (43) (494) 2,567 1,278 3,998 Income tax paid Net cash provided by operating activities The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.) Three month period ended March 31, 2021 2020 Year ended December 31, 2020 U.S. $ in thousands Unaudited Cash Flows From Investing Activities: Proceeds from sale of property, plant and equipment Payment of consideration Net cash used in investing activities Flows 21 28 (151) (129) (21) (454) (128) (108) (447) regarding business acquisition Purchase of property, plant and equipment Cash 23 contingent From Financing Activities: Dividend (2,213) - (1,758) Payments of lease liabilities (103) (102) (493) Treasury shares acquired - (155) (155) Treasury shares sold - 163 163 Exercise of share options - 21 254 - - (30) Acquisition of the non- controlling interest in subsidiary Repayment of long-term loans from banks (82) (86) (308) Net cash used in financing activities (2,398) (159) (2,327) 41 1,011 1,224 9,577 8,140 8,140 (33) (166) 213 9,585 8,985 9,577 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 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. In these financial statements, the Company included the results of its aerostat system division in its representation and consulting services division, as it deems this appropriate given the nature of the consulting services provided in both segments and the respective size of these segments. 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, 2020 was approved by the board on February 28, 2021. The report of the auditors on those financial statements was unqualified. The interim consolidated financial statements as of March 31, 2021 have not been audited. The interim consolidated financial information should be read in conjunction with the annual financial statements as of December 31, 2020 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, 2020 are applied consistently in these interim consolidated financial statements. NOTE 3 - REVENUES: Three month period ended March 31, Year ended December 31, 2021 2020 2020 U.S. $ in thousands Unaudited Revenues arise from: Sale of goods* 7,879 7,856 33,788 Rendering of services** 1,444 963 Projects** 626 9,949 737 9,556 4,863 2,242 40,893 (*) at the point of time (**) over time NOTE 4 - OPERATING SEGMENTS: The following tables present revenue and profit information regarding the Group's operating segments for the three month period ended March 31, 2021 and 2020 respectively and for the year ended December 31, 2020. Three month period ended March 31, 2021 (Unaudited) Antennas Water Solutions Distribution & Consultation Adjustment & Elimination Total U.S. $ in thousands Revenues External Internal Total Segment profit 2,802 - 4,161 - 2,986 23 (23) 9,949 - 2,802 4,161 3,009 (23) 9,949 63 396 393 107 959 Finance expense, net Tax expenses 60 157 Profit 742 Antennas Water Solutions Distribution & Consultation Adjustment & Elimination Total U.S. $ in thousands Segment assets 14,863 9,030 7,861 2,936 2,976 3,702 - Unallocated assets Segment liabilities 31,754 2,665 9,614 Unallocated liabilities 836 Three month period ended March 31, 2020 (Unaudited) Antennas Water Solutions Distribution & Consultation Adjustment & Elimination Total U.S. $ in thousands Revenues External Internal Total Segment profit 2,940 2 3,680 - 2,936 20 (22) 9,556 - 2,942 3,680 2,956 (22) 9,556 41 342 394 65 842 Finance expense, net Tax expenses 125 124 Profit 593 Antennas Water Solutions Distribution & Consultation Adjustment & Elimination Total U.S. $ in thousands Segment assets 15,094 8,441 7,319 - Unallocated assets Segment liabilities Unallocated liabilities 30,854 3,033 2,966 2,243 4,041 - 9,250 1,005 Year ended December 31, 2020 Antennas Distribution & Consultation Water Solutions Adjustment & Elimination Total U.S. $ in thousands Revenues External Inter-segment Total Segment profit 11,187 16,121 13,585 - - - 144 (144) 40,893 - 11,187 16,121 13,729 (144) 40,893 158 1,928 1,614 376 4,076 Finance expense, net 20 Tax expenses 564 Profit 3,492 Year ended December 31, 2020 Antennas Water Solutions Distribution & Consultation Adjustment & Elimination Total U.S. $ in thousands Segment assets 14,531 11,194 8,429 - Unallocated assets Segment liabilities 34,154 1,978 3,511 3,133 3,621 Unallocated liabilities - 10,265 314 NOTE 5 - SIGNIFICANT EVENTS: A. On 28 February 2021, the Board of directors declared a cash dividend of 2.5 US cents per share, representing approximately $2,213,000, in total. This dividend was paid on 31 March 2021 to shareholders on the register at the close of trading on 19 March 2021. 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"). On 25 January 2021, the Company announced that the board of directors of the Company and the board of directors of MTI Engineering had decided to continue with the Programme for another six months until 26 July 2021. As at 31 March 2021, no Ordinary Shares were held in treasury under the Programme. C. On 4 February 2021, the Company's subsidiary Mottech Water Solutions Ltd registered and opened a fully owned subsidiary in Canada and is working on establishing its activities in Canada. D. Outbreak of COVID-19 and Business Continuity - In December 2019, the COVID-19 pandemic broke out in China, and the virus has spread to many countries around the world. In January 2020, the World Health Organization announced the outbreak of the Coronavirus as a global health emergency, and in March 2020, the World Health Organization declared the pandemic to be a global pandemic. The spread of the virus is an unusual event on its scale and is dynamic and emergent. Policymakers around the world were forced to take unprecedented steps to curb the pandemic, including the isolation of civilians and establishing strict regulations and rules to create social distancing, to reduce the chances of infection. This included restricting inbound and outbound flights. Along with the dangerous impacts on human lives as a result of the outbreak, significant global and local business impacts have been recorded. While the Group's offices were partially and/or temporarily closed (depending on country of operations) during 2020, the Group was able to maintain good levels of operation using remote work procedures and a sufficient level of production in its production facilities while assuring the health of employees. As of the date of this report the Group has resumed operations in all of its facilities (still under health requirements and regulations), although the facility in India has recently been operating under stricter conditions as there are still significant challenges in that territory. All aspects of the Group's supply chain are 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. The introduction of vaccines, and their fast adoption in Israel and consequences, does provide hope that the recovery will start worldwide in the near term, but there is still uncertainty regarding the duration for which vaccines will be efficacious. NOTE 6 - SUBSEQUENT EVENTS: On 19 April 2021 at an extra ordinary shareholders meeting, Mrs. Lihi Elimelech Bechor was re-elected at as external director for another three year term. This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com. 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