TIDMMTT
RNS Number : 9428O
Metal-Tech Ltd
26 September 2011
26 September 2011
Metal-Tech Ltd.
("Metal-Tech" or "the Company")
Results for the six months ended 30 June 2011
Metal-Tech, the producer and recycler of speciality metals such
as Tungsten and Molybdenum, announces results for the six months
ended 30 June 2011.
Financial Summary:
-- Revenue increased 40% to US$29.9m (H1 2010: US$21.3m),
reflecting increased prices of Tungsten
-- Gross profit increased to US$3.9m in (H1 2010: US$0.3m loss),
due to tight cost control measures and an increase in Tungsten
prices
-- Net Profit of US$2.5m (H1 2010: US$5.4m loss)
-- Income incurred by deconsolidation of a subsidiary that
ceased being consolidated, Shim-Technology Co. Ltd. ("Shim-Tech"),
the Company's Mongolian subsidiary, of US$3.5m (H1 2010: US$1.4
loss) presented in discontinued operations
-- Operating expenses as a percentage of revenue reduced to 13%
(H1 2010: 16%)
-- Bank debt was US$20.7m at 30 June 2011 (31 December 2010:
US$21.9m after neutralisation of US$6.7m loan of non consolidated
subsidiary)
-- Cash, cash deposits and restricted cash balance at 30 June
2011 were US$6.4m (31 December 2010: US$7.3m). The restricted cash
at 30 June 2011 was US$5.6m (31 December 2010: US$5.1m)
-- Positive cash flow from operating activities US$1.5m (31
December 2010: negative US$1.0m)
Operational Summary:
-- Average selling Tungsten prices increased 64% compared with
the same period last year
-- On 31 March 2011, a four-month industrial pilot phase for the
validation of the Company's novel molybdenum extraction technology
was completed satisfactorily under the supervision of a major
publicly-traded international Chilean copper/molybdenum company.
Negotiations regarding the implementation of the project have
started, however it is currently difficult to assess if or when and
what type of project will be implemented and any associated
financial outcome to the Company
-- Tightly managed costs and cash flow to improve efficiency
while maintaining strong focus on R&D in strategic areas
-- The Company's arbitration case against the Republic of
Uzbekistan is ongoing, alleging that the country's treatment of
Metal-Tech's 50% investment in Uzmetal Technology is unlawful
Commenting on the results, Aik Rosenberg, Executive Chairman and
CEO of the Company, said: "We are pleased to report a period of
continued progress in the first half of 2011. Strong demand for
Tungsten led to sales of the metal at higher prices compared with
the same period last year. The Company also remained committed to
tightly managing its costs and finance whilst driving the business
forward by increasing its recycling and production activities."
Enquiries:
Metal-Tech Ltd. +972 544 215454
Ariel (Aik) Rosenberg
Panmure Gordon +44 20 7459 3600
Aubrey Powell
Hannah Woodley / Charles Leigh-Pemberton
Corfin Public Relations +44 20 7596 2860
Harry Chathli, Alexis Gore
Operating Review
Metal-Tech is pleased to report strong revenue growth and an
improved operational performance in the first half of 2011. Revenue
increased by 40% to US$29.9m (H1 2010: US$21.3m), reflecting
increased sales prices. Tungsten prices were up 64% compared with
the same period last year.
Metal-Tech achieved a gross profit of US$3.9m in H1 2011
compared with a gross loss of US$0.3m the first half of 2010, due
to tight cost control measures and higher Tungsten prices.
As previously stated, the Company has taken steps to increase
its recycling and production capacity in Israel by preparing and
submitting an investment program to the Israel Ministry of Trade
and Industry as well as seeking other international opportunities
for co-production. The Israel Ministry of Trade has now approved
the Company's investment program of US$10 million, which provides a
grant of 24% from the investment. While a proportion of the
investment has been made from Metal-Tech's available cash resources
including operating cash flow, further finance will be required to
complete the program. Such funding would assist Metal-Tech's plans
to increase its production capacity.
Focus on R&D
Investment in R&D continued in the first half of 2011 to be
directed to the validation of the Company's novel molybdenum
extraction technology and is expected to yield attractive returns
in the short to medium term.
As stated previously, the Company made a breakthrough on 31
March 2011 when the four-month industrial pilot phase for the
validation of the novel molybdenum extraction technology was
completed under the supervision of a major publicly-traded
international Chilean coppermolybdenum company. The process and
equipment were proven to operate continuously at high efficiency
and with low operating expense, and produced high quality
molybdenum and rhenium from low grade molybdenum concentrate.
This success may lead to the implementation of this technology
by the Chilean company as well as others. However, although the
parties are currently in negotiations regarding the implementation
of the project, the Company does not have any information on when
and what type of project will be implemented, and the financial
impact of this development which may include an element of required
funding by the Company.
Update on Mongolian Operations
As stated on 28 June 2011, the Company was informed that the
court in Erdenet has declared Shim-Tech, the Company's Mongolian
subsidiary, bankrupt and ordered relevant authorities to freeze its
accounts and seize its assets. As a result, the Company is no
longer in control of Shim-Tech and therefore ceased to consolidate
the financial statements of Shim-Tech. As previously stated,
Metal-Tech is taking all necessary actions in Mongolia to attain a
fair and just result for the Company, including the submission of
its claims as creditor of Shim-Tech.
Update on Uzbekistan Action
As announced in January 2010, Metal-Tech filed a Request for
Arbitration against the Republic of Uzbekistan, alleging that the
country's treatment of Metal-Tech's 50% investment in
UzMetal-Technology, a joint venture to produce high-quality
molybdenum products, is unlawful. The Request for Arbitration,
filed with the International Centre for Settlement of Investment
Disputes (ICSID) based in Washington, D.C., alleged Uzbekistan's
breach of the Israel-Uzbekistan Bilateral Investment Treaty, as
well as violations of various standards of treatment under
international law and Uzbek legislation.
The current position is that an Arbitral Tribunal, comprising a
nominee of the Republic of Uzbekistan, a nominee of the Company and
an independent but mutually agreed nominee as the Chair, has been
appointed. To date, both parties have filed their respective
submissions before the Tribunal, including the Company's statement
of claim. The parties have completed their respective documents and
the Company submitted its final rejoinder, all in accordance with
the procedural calendar. The Tribunal has already held sessions in
which, inter alia, the agenda for the proceedings was presented and
the process is expected to take up to 18 months to complete.
Financial Review
Income statement
Revenues for the six months ending 30 June 2011 were US$29.9m,
an increase from US$21.3m in H1 2010. Profit attributed to equity
holders was US$2.7m, down from a loss of US$5.4m in H1 2010. Net
profit includes income incurred by discontinued operation of
Shim-Technology Co. Ltd. (Shim-Tech), the Company's Mongolian
subsidiary US$3.5m (H1 2010: US$1.4 loss).
Gross profit increased to US$3.9m in (H1 2010: US$0.3m loss) due
to tight cost control measures and an increase in Tungsten
prices.
Throughout the first half the Company continued to reduce
operating expenses across all business functions. The Company
maintained its focus on cash generation including the reduction of
inventory levels. Inventory decreased by US$3.7m from US$21.1m at
31 December 2010.
General and Administrative expenses increased to US$2.1m in the
first half of 2011 compared with US$1.7m in equivalent period in
2010. This increase was the result of several factors, including
increased investment in new business development activity. The
increase in this expenses (in NIS Currency) was due to decrease of
dollar average rate and also due to increase in Legal expenses
related to Uzbekistan arbitration.
Balance sheet statement
The Company reduced its debt levels with a reduction of bank
debt from US$21.9m at 31 December 2011 to US$20.7m at 30 June 2011.
Inventory decreased by $3.7m from $21.1m at 31 December 2010.
At 30 June 2011, the cash, cash equivalents and restricted cash
balance of the Company was US$6.4m compared to US$7.3m at 31
December 2010 and US$8.2m at 30 June 2010. The Company believes
this is sufficient to meet Metal-Tech's current financing costs and
expected operating expenses. The Company will continue to prudently
manage its affairs in order to maintain sufficient operating cash
flow.
The Group has a positive working capital position at 30 June
2011 compared to working capital deficiency at 31 December
2010.
Outlook
Metal-Tech has entered the second half with continued solid
demand for Tungsten and expects revenues for FY 2011 to be higher
than in 2010. Global macro-economic conditions continue to impact
the Tungsten industry, with demand outstripping supply and a high
price which is expected to remain at the same level, resulting in
increased revenues for the Company.
The Company continues to maintain tight control of cash and
cost, whilst driving the business forward by increasing its
recycling and production activities.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
Unaudited Audited
---------------- ---------
December
June 30, 31,
---------------- ---------
2011 2010 2010
------- ------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 790 4,655 2,243
Restricted cash 5,631 3,493 5,104
Trade receivables 11,281 10,110 11,076
Other accounts receivable 1,462 3,475 1,201
Inventories 17,441 22,398 21,131
------- ------- ---------
36,605 44,131 40,755
------- ------- ---------
NON-CURRENT ASSETS:
Property, plant and equipment 10,194 25,795 9,739
------- ------- ---------
Total assets 46,799 69,926 50,494
======= ======= =========
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share data)
Unaudited Audited
------------------- ---------
December
June 30, 31,
------------------- ---------
2011 2010 2010
--------- -------- ---------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit 4,354 3,609 3,762
Short-term loans and current maturities 15,973 11,203 17,636
Loan related to suspended plant - 6,757 6,787
Trade payables 7,128 8,359 8,620
Other trade payables related to suspended
plant - 2,972 3,334
Income taxes payable 5,529 6,700 5,319
Other accounts payable 4,674 4,561 4,507
--------- -------- ---------
37,658 44,161 49,965
--------- -------- ---------
NON-CURRENT LIABILITIES:
Long-term loans 414 5,081 487
Employee benefit obligations 387 453 506
Other liabilities 436 - 468
Provision for losses in excess of
investment in investee 69 - 69
--------- -------- ---------
1,306 5,534 1,530
--------- -------- ---------
Total liabilities 38,964 49,695 51,495
--------- -------- ---------
EQUITY:
Equity attributable to the equity holders
of the Company:
Issued capital 2,399 2,399 2,399
Share premium 23,892 23,892 23,892
Other reserves 1,066 758 878
Accumulated deficit (19,522) (6,818) (22,249)
--------- -------- ---------
7,835 20,231 4,920
Non- controlling interests - - (5,921)
--------- -------- ---------
Total equity (deficit) 7,835 20,231 (1,001)
--------- -------- ---------
Total liabilities and equity 46,799 69,926 50,494
========= ======== =========
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. dollars in thousands (except share and per share data)
Unaudited Audited
---------------------------- -----------------------
Year ended December
Six months ended June 30, 31,
---------------------------- -----------------------
2011 2010 2010
------------- ------------- -----------------------
Revenues 29,900 21,317 45,878
Cost of sales 26,035 (* 21,623 45,471
------------- ------------- -----------------------
Gross profit (loss) 3,865 (306) 407
------------- ------------- -----------------------
Research and
development expenses
,net 473 415 778
Selling and marketing
expenses 1,238 ( * 1,332 3,119
General and
administrative
expenses 2,078 1,632 3,798
------------- ------------- -----------------------
Total operating
expenses 3,789 3,379 7,695
------------- ------------- -----------------------
Operating profit
(loss) 76 (3,685) (7,288)
Finance costs (1,260) (766) (1,962)
Finance income 197 471 157
Other income
(expense), net 20 (6) 3
Company's share of
loss of company
accounted for at
equity - - (202)
------------- ------------- -----------------------
Loss before tax (967) (3,986) (9,292)
Income tax benefit
(expense) (4) - 2,201
------------- ------------- -----------------------
loss from continuing
operations (971) (3,986) (7,091)
------------- ------------- -----------------------
Income (loss) from
discontinued
operations, net 3,564 (1,414) (19,661)
------------- ------------- -----------------------
Total comprehensive
income (loss) 2,593 (5,400) (26,752)
============= ============= =======================
Total comprehensive
income (loss)
attributable to:
Equity
holders of
the
Company 2,727 (5,400) (20,831)
Minority
interests (134) - (5,921)
------------- ------------- -----------------------
2,593 (5,400) (26,752)
============= ============= =======================
Basic and diluted loss
per share
attributable to
Ordinary equity
holders of the
Company from
continuing operation (0.03) (0.10) (0.18)
============= ============= =======================
Basic and diluted loss
per share
attributable to
Ordinary equity
holders of the
Company from
discontinuing
operation 0.1 (0.04) (0.36)
============= ============= =======================
Weighted average
number of shares used
in computing basic
and diluted net loss
per share
attributable to
Ordinary equity
holders of the
Company 38,376,923 38,376,923 38,376,923
============= ============= =======================
*) Reclassified - see note 3
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Attributable to equity holders of the Company
------------------------------------------------------------
Non
Share Share Other Accumulated controlling Total
capital premium reserves deficit Total interest equity
-------- -------- --------- ------------ ----------- ------------ ----------
Unaudited
----------------------------------------------------------------------------------------
Balance as of January 1, 2011
(Unaudited) 2,399 23,892 878 (22,249) 4,920 (5,921) (1,001)
Total comprehensive loss - - - 2,727 2,727 (134) 2,593
Deconsolidation of company
that ceased being consolidated - - - - - 6,055 6,055
Share based payment - - 188 - 188 - 188
-------- -------- --------- ------------ ----------- ------------ ----------
Balance as of June 30, 2011 2,399 23,892 1,066 (19,552) 7,835 - 7,835
======== ======== ========= ============ =========== ============ ==========
Attributable to equity holders of the Company
------------------------------------------------------------
Non
Share Share Other Accumulated controlling Total
capital premium reserves deficit Total interest equity
-------- -------- ------------ ------------ ----------
Unaudited
----------------------------------------------------------------------------------------
Balance as of January 1, 2010
(Unaudited) 2,399 23,892 714 (1,418) 25,587 - 25,587
Total comprehensive loss - - - (5,400) (5,400) - (5,400)
Share based payment 44 44 44
-------- -------- --------- ------------ ----------- ------------ ----------
Balance as of June 30, 2010 2,399 23,892 758 (6,818) 20,231 - 20,231
======== ======== ========= ============ =========== ============ ==========
Attributable to equity holders of the Company
------------------------------------------------------------
Non
Share Share Other Retained controlling Total
capital premium reserves earnings Total interest equity
-------- -------- --------- ------------ ----------- ------------ ----------
Audited
----------------------------------------------------------------------------------------
Balance as of January 1, 2010
(Audited) 2,399 23,892 714 (1,418) 25,587 - 25,587
Total comprehensive loss - - - (20,831) (20,831) (5,921) (26,752)
Share based payment - - 164 - 164 - 164
Balance as of December 31, 2010 2,399 23,892 878 (22,249) 4,920 (5,921) (1,001)
======== ======== ========= ============ =========== ============ ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Unaudited Audited
------------------------ -----------
Year ended
Six months ended June December
30, 31,
------------------------ -----------
2011 2010 2010
----------- ----------- -----------
Cash flows from operating activities:
Net income (loss) 2,593 (5,400) (26,752)
----------- ----------- -----------
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Adjustments to the profit or loss
items:
Depreciation 558 515 1,099
Income (loss) from discontinued
operations, net (3,564) 1,414 19,661
Gain on marketable securities - (14) (13)
Capital gain from sale of property,
plant and equipment - 3 (4)
Employee benefit obligations (119) 148 201
Accrued interest and foreign exchange
differences on
short and long-term liabilities, net 529 26 1,078
Cost of share based payments 188 44 164
Company's share of loss of company
accounted for at equity - - 202
Income tax expenses (benefit) 4 - (2,201)
----------- ----------- -----------
(2,404) 2,136 20,187
----------- ----------- -----------
Changes in operating asset and
liability items:
Increase in trade receivables, net (205) (358) (1,324)
Decrease in other accounts receivable (261) (1,540) (475)
Decrease in inventory 3,690 4,141 4,696
Increase (decrease) in trade payables (1,415) 2,692 3,132
Increase in related parties, net - (25) (68)
Increase (decrease) in other accounts
payable (43) (395) 1,022
----------- ----------- -----------
1,766 4,515 6,983
----------- ----------- -----------
Cash paid and received during the year
for:
Interest received 15 - 23
Interest paid (380) (319) (1,101)
Income tax received - - 232
Income tax paid (7) (3) (97)
----------- ----------- -----------
(372) (322) (943)
----------- ----------- -----------
Net cash provided by (used in)
continuing operating activities 1,583 929 (525)
----------- ----------- -----------
Net cash used in discontiuning
operating activities (97) (225) (481)
----------- ----------- -----------
Net cash provided by (used in)
operating activities 1,486 704 (1,006)
----------- ----------- -----------
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Unaudited Audited
-------------------- -----------
Year ended
Six months, ended December
June 30, 31,
-------------------- -----------
2011 2010 2010
--------- --------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (1,013) (880) (2,138)
Investment in company accounted for at
equity - - (133)
Participation in the purchase of property,
plant and equipment - - 150
Proceeds from sale of property, plant
and equipment - 7 7
Proceeds from of investments in previously
consolidated subsidiaries (a) - - -
Realization of marketable securities - 100 99
Increase in restricted cash (527) (10) (1,112)
--------- --------- -----------
Net cash used in investing activities (1,540) (783) (3,127)
--------- --------- -----------
Cash flows from financing activities:
Proceeds (repayment) from short -term
loans, net (615) (2,659) 6,002
Repayment of long-term loans (1,376) (1,759) (3,352)
Proceeds of long-term loans - 5,507 -
Increase (decrease) in short-term bank
credit, net 592 (2,234) (2,153)
--------- --------- -----------
Net cash used in financing activities (1,399) (1,145) 497
--------- --------- -----------
Decrease in cash and cash equivalents (1,453) (1,224) (3,636)
Cash and cash equivalents at the beginning
of the year 2,243 5,879 5,879
--------- --------- -----------
Cash and cash equivalents at the end
of the period 790 4,655 2,243
========= ========= ===========
Unaudited Audited
-------------------- -----------
Year ended
Six months, ended December
June 30, 31,
-------------------- -----------
2011 2010 2010
------------ ------ -----------
a. Proceeds from investments in
previously consolidated
subsidiaries:
Working capital (excluding cash and cash 10,692 - -
equivalents)
Non-current liabilities (597) - -
Non-controlling interests (6,055) - -
Gain from previously consolidated (4,040) - -
subsidiaries
------------ ------ -----------
- - -
============ ====== ===========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 1 - GENERAL:
The interim financial statement as of 30 June 2011 and for the
six month period then ended (hereafter - the interim statements)
were prepared in condensed form in accordance with IAS 34 -
"Interim Financial Reporting".
The accounting policies applied in preparation of the interim
financial statements are consistent with those used in the 2010
annual financial statements but have not been audited or reviewed
by the auditors. Nevertheless, the interim statements do not
include all the information and explanations required for annual
financial statements, and should be read in conjunction with the
2010 annual financial statements.
Costs incurred unevenly during the year are brought forward or
deferred, for interim reporting purposes if, and only if, such
costs may be brought forward or deferred in the annual
reporting.
NOTE 2 - REVENUES BY GEOGRAPHICAL SECTOR
Revenues classified by geographical destinations based on the
customer location:
Unaudited Audited
------------------- -----------
Year ended
Six month, ended December
June 30, 31,
------------------- -----------
2011 2010 2010
--------- -------- -----------
United States 10,561 10,472 21,017
Europe 11,589 5,722 12,382
South Africa 4,700 3,963 9,932
India 1,806 - -
Japan 729 108 338
Israel 137 890 1,552
Others 378 162 657
--------- -------- -----------
29,900 21,317 45,878
========= ======== ===========
NOTE 3 - RECLASSIFICATION:
The Company determined that certain expenditures relating to
transportation and shipping should be classified as selling and
marketing expenses and not cost of sales in order to better reflect
the nature of the expenditures. Accordingly comparative data for
the six month period ended June 2010 amounting to $696 (thousand)
has been reclassified.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 4 -INVESTMENTS IN PREVIOSLY CONSOLIDATED SUBSIDIARIES:
Shim Technology Co. Ltd. ("Shim-Tech"):
As stated on 28 June 2011, the Company was informed that the
court in Erdenet (Mongolia) has declared Shim-Tech bankrupt and
ordered to freeze its accounts and seize its assets. As a result
the Company no longer controls Shim-Tech and therefore ceased to
consolidate the financial statements of Shim-Tech. Metal-Tech is
taking all necessary actions in Mongolia to attain a fair and just
result for the Company, including the submission of its claims as
creditor of Shim-Tech.
As a result of the deconsolidation of Shim-Tech, the Company
recorded an income of $3,564 (1H 2010: loss of $ 1,414) (figures in
thousands). This is presented in the accounts on a net basis as
income (loss) from discontinued operations.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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