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Report No. : |
351680 |
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Report Date : |
01.12.2015 |
IDENTIFICATION DETAILS
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Name : |
ARAD MEASURING TECHNOLOGIES LTD. |
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Registered Office : |
P.O. Box 537 (2069206), 4 Hamada Street, Yoqneam Industrial
Zone, Yoqneam Illit 2066718 |
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Country : |
Israel |
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Financials (as on) : |
31.12.2014 |
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Date of Incorporation : |
07.12.1999 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Developers, manufacturers,
exporters and marketers of wireless Automatic Meter Reading (AMR) systems and
Advanced Metering Infrastructure (AMI) technologies (including software,
hardware, applications and technological equipment) which are integrated into
the water meters manufactured by the ARAD Group and used (besides in water
systems) also for gas and electricity networks. |
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No. of Employees : |
825 |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Good |
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Payment Behaviour : |
No Complaints |
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Litigation : |
Clear |
NOTES:
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31, 2015
|
Country Name |
Previous Rating (31.12.2014) |
Current Rating (31.03.2015) |
|
Israel |
B1 |
B1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
ISRAEL - ECONOMIC OVERVIEW
Israel has a technologically advanced market economy. Cut
diamonds, high-technology equipment, and pharmaceuticals are among the leading
exports. Its major imports include crude oil, grains, raw materials, and
military equipment. Israel usually posts sizable trade deficits, which are
covered by tourism and other service exports, as well as significant foreign
investment inflows. Between 2004 and 2013, growth averaged nearly 5% per year,
led by exports. The global financial crisis of 2008-09 spurred a brief recession
in Israel, but the country entered the crisis with solid fundamentals,
following years of prudent fiscal policy and a resilient banking sector.
Israel's economy also has weathered the Arab Spring because strong trade ties
outside the Middle East have insulated the economy from spillover effects.
Slowing demand domestically and internationally and reduced investment due to
uncertainties caused by the Gaza conflict in summer 2014 have reduced GDP
growth to about 2% during 2014. Natural gas fields discovered off Israel's
coast since 2009 have brightened Israel's energy security outlook. The Tamar
and Leviathan fields were some of the world's largest offshore natural gas
finds this past decade. The massive Leviathan field is expected to come online
no sooner than 2017, but production from Tamar provided a one percentage point
boost to Israel's GDP in 2013 and a 0.5% boost in 2014. In mid-2011, public
protests arose around income inequality and rising housing and commodity
prices. Israel's income inequality and poverty rates are among the highest of
OECD countries and there is a broad perception among the public that a small
number of "tycoons" have a cartel-like grip over the major parts of
the economy. The government formed committees and has started splitting up the
oligopolies to address some of the grievances but has maintained that it will
not engage in deficit spending to satisfy populist demands. Over the long term,
Israel faces structural issues, including low labor participation rates for its
fastest growing social segments - the ultra-orthodox and Arab-Israeli
communities. Also, Israel's progressive, globally competitive, knowledge-based
technology sector employs only 9% of the workforce, with the rest employed in
manufacturing and services - sectors which face downward wage pressures from
global competition.
|
Source
: CIA |
ARAD MEASURING
TECHNOLOGIES LTD.
(Also known as
ARAD TECHNOLOGIES)
Telephone 972 4 993 52 22
Fax 972 4 993 52 27
Email: yair@arad.co.il
P.O. Box 537 (2069206)
4 Hamada Street
Yoqneam Industrial Zone
Yoqneam Illit
2066718 Israel
A private limited
company, incorporated as per file No. 51-286531-2 on the 07.12.1999, as part of
ARAD Group, founded in 1941.
Authorized share
capital NIS 38,000.00, divided into -
38,000
ordinary shares of NIS 1.00 each,
of which 13,100
shares amounting to 13,100.00 were issued.
Subject is a fully
owned subsidiary of ARAD LTD, a public limited company, whose shares are traded
on the Tel Aviv Stock Exchange, controlled by:
1. Kibbutz Ramot Menashe,
27.14%, a cooperative society, operating communal agricultural settlement,
2. Kibbutz Dalia, 27.14%, a
cooperative society, operating communal agricultural settlement,
3. MILESTONES WATER METERING AND
MANAGEMENT SYSTEMS (SPC)
LTD., 15.51%, of MILESTONES UPGRADING & INDUSTRIES Group, controlled
by the heirs of the Late Bill Davidson of the USA, and Oded Tira and his son,
Ron Tira.
MILESTONES Group
purchased shares in ARAD in November 2007, investing NIS 90 million (for 18% of
the shares), according to a value of NIS 515 million.
1.
Dr. Hugo Chaupan, Chairman of ARAD Group,
2.
Ronny Barnir,
3.
Gavri Bar Gil,
4.
Ishay Tzelinker,
5.
Ron Tira.
Gavriel (Gabi)
Yankowitz, also General Manager of ARAD.
Developers,
manufacturers, exporters and marketers of wireless Automatic Meter Reading (AMR)
systems and Advanced Metering Infrastructure (AMI) technologies (including
software, hardware, applications and technological equipment) which are
integrated into the water meters manufactured by the ARAD Group and used
(besides in water systems) also for gas and electricity networks.
In 2014 AMR
segment comprised 72% of ARAD Group's sales (69% in 2013).
Some 80% of sales
are exports, mostly to the U.S.A (51%), and Europe (17%).
ARAD Group,
jointly with TELEMATICS WIRELESS, developed a digital technology in water
meters, which allows on-line remote monitoring and control of the meters
reading.
Among
Group's clients are municipalities and water corporation worldwide, MEKOROT
WATER CO. (Israel's national water carrier), MADEY VERED,
and many private companies.
Among foreign
clientele: SOUTHERN WATER (UK), DELHI JAL BOARD (India).
Among suppliers:
TELEMATICS WIRELESS, R.H ELECTRONICS, AVROT INDUSTRIES, UNIQUE GROUP.
Among foreign
suppliers: FABRICACIONES ESPECIALIZADAS.
Operating
from rented offices, development and manufacturing facilities, on an area of
2,050 sq. meters in 4 Hamada Street, Yoqneam Industrial Zone, Yoqneam Illit
(also renting additional 379 sq. meters warehouse in Yoqneam Illit).
ARAD Group also operates from plants and offices in
China, Canada, USA, Mexico and Spain.
Having 825
employees in ARAD Group (of which 418 employees in Israel), as of end of 2014.
ARAD LTD. current market value US$ 214.3 million.
There are no
charges registered on the company’s assets.
Financial data is
included in the consolidated B/S of parent company, ARAD LTD., which shows:
US$
(thousands)
31.12.2014 30.09.2015
ASSETS
Current assets
Cash and cash equivalents 17,119 20,573
Other financial assets 7,872 6,915
Customers 33,517 36,900
Other debtors and assets 3,964 3,819
Stock 53,003 55,831
115,475 124,038
Non-current assets
Fixed assets, net 20,630 20,752
Intangible assets & goodwill 15,791 13,828
Other assets 6,972 7,957
43,393 42,537
158,868 166,575
======= ======
LIABILITIES
Current liabilities 45,511 52,329
Non-current liabilities 25,490 24,600
Equity 87,867 89,646
158,868 166,575
======= =======
ARAD's AMR/AMI applications revenues (which subject is part of):
2012 revenues were US$ 92,747,000. Subject ended 2012
with a net profit of US$ 10,773,000.
2013 revenues were US$ 107,839,000. Subject ended 2013
with a net profit of US$ 10,887,000.
2012 revenues were US$ 120,409,000. Subject ended 2014
with a net profit of US$ 9,216,000.
ARAD
LTD.
US$
(thousands)
Year
ended 31.12
2012 2013 2014
Sales 135,251 156,066 167,763
Gross profit 50,612 57,999 63,188
Operating income 15,193 17,388 18,496
Profit before
taxes on income 15,314 17,061 17,864
Net income 12,882 15,312 15,476
====== ====== =======
Consolidated sales for the first 9 months of
2015 were US$ 124,450,000 (2.4% decrease compared to the parallel period of
2014), making a gross profit of
US$ 46,900,000, an operating profit US$
14,763,000 and a net profit of
US$ 12,717,000.
CONTADORES DE AGUA
DE ZARAGOZA S.A, 100%, Spain, manufactures of an electronic measuring device
integrated in subject's information systems.
ARAD LTD., parent company,
developers, manufacturers, exporters and marketers of precision water meters
for applications such as domestic, waterworks, irrigation and water management.
MASTER METER INC, 100%, a plant in the
U.S.A, fully owns MASTER METER SYSTEMS INC, USA, and MASTER METER PRODUCTS OF
CANADA INC. operating US and Canada
activities.
ARAD METERING TECHNOLOGIES WUHAN CO. LTD.,
100%, China, distributing subject's products in China.
ARAM WATER METERS SERVICES LTD., 100%, water
meters renovations of water systems in rural localities.
MEDIDORES DELAUNET
S.A.P.I. DE C.V., 51%, Mexico, operating in the water measuring field.
Bank Leumi
Le'Israel Ltd., Haifa Main Branch (No. 876), Haifa.
Bank Hapoalim
Ltd., Kikar Paris Branch (No. 736), Haifa.
Note: Since we could
not speak to subject's officials, we could not verify a/m bank data – mainly
branches data.
Nothing
unfavorable learned on subject itself.
In 2008 the
Anti-trust Authority started to investigate allegations that ARAD (including a
subsidiary and senior officials), its competitor MADEY VERED LTD. and other 4 firms have a binding arrangement between them in the
local market for water meters (in October 2009 the investigation went public).
In December 2011 an indictment was filed to the Jerusalem District Court in
suspicion of forming a cartel, led by ARAD, as the largest player (see below) during the years
2004-2009 in tenders for municipal and local authorities.
The case is currently pending, as well as in parallel under arbitration.
In September 2013
the Jerusalem District court convicted Gabi Yankowitz (subject's and ARAD's
General Manager), sentencing him to 70 days in prison (to be served in
community service), conditional imprisonment of 12 months and a NIS 175,000
fine. Matter against ARAD is still pending. In Its 2013 annual report ARAD
estimated the chance of conviction to be over 50%. However ARAD cannot estimate
the amount it may be fined.
In September 2013 an additional file for a class action lawsuit was filed
to the Lod District Court against ARAD, its subsidiary, senior employees and
other companies in the water measuring regarding the a/m matter.
The class action lawsuit are halted until final court decision regarding
the Anti-trust
matter.
It should be noted that in January 2005 the Court for Trade Restrictions
had already objected a merger between subject and MADEY VERED. The Court ruled that the compromise creates a binding arrangement,
practically a monopoly between the two largest companies in the local water
meters field.
Despite our efforts, we were unable to speak with subject's officials,
as they were always unavailable. We left messages which so far remain
unanswered.
Since 2003 ARAD is
a declared monopoly in the local market in the water meters field. In 2014 ARAD
Group had 70% of local market share.
Estimated world
market share is 6%, USA market share is 9% and Spanish market share (via AGUA
DE ZARAGOZA) is estimated at 25%.
According to
economist estimations from 2006, ARAD Group was considered the 6th
largest in the world in the water meters field.
All ARAD products
meet worldwide standards of quality and performance including ISO, AWWA, MOC,
and FCC standards. Our quality system is certified ISO 9001:2000 and our
products hold the CE mark.
Kibbutz Ramot
Menashe was founded in 1948 and has some 270 members.
Both Kibbutz Dalia
and Kibbutz Ramot Menashe are agricultural cooperative societies, engaged in
various agricultural branches, including cultivating large areas of field
crops, cotton, fruit plantation, as well as operate dairy farming, etc.
Kibbutz Dalia, a
financially solid entity, was founded in 1939 and has some 430 members. Besides
subject, it is also owner of ZOHAR DALIA ACS LTD., manufacturers, marketers and
exporters of detergents intermediates, soaps and cleaning products.
MILESTONES Group,
which purchased shares in parent company in November 2007, is controlled by the heirs of the Late Jewish-American Glass tycoon, Bill Davidson
(passed away in March 2009). Mr. Davidson owned GUARDIAN, the American glass
manufacturer, the 2nd largest in the world, and was the owner of
American basketball team Detroit Pistons. He was also involved in other local
ventures and donations. He was ranked among the U.S. 70 wealthiest persons.
Oded Tira is a
known figure, a former President of the Israel Manufacturers’ Association.
In December 2007,
it was reported that HAREL IT will perform an IT data storage and backup
project for subject, in volume of NIS 1 million.
In September 2008,
sister U.S. company MASTER METER received an order for AMR systems from the
Water Authority of Kingsport city (TN), in value of US$ 4.7 million (and option
to expand the order by 50%).
In June 2009 ARAD announced
that ARAM WATER METERS SERVICES completed the sale of its water management
activities for NIS 2.5 million.
In July 2009 ARAD
reported it will supply AMR systems to MEYMEY HANEGEV Association for NIS 20
million through the next 5 years.
In December 2009
ARAD acquired 51% of CONTADORES DE AQUA DE ZARAGOZA S.A. (CONTAZARA), of Spain
for € 8.1 million. In May 2013 ARAD realized it option and acquired the
remaining 49% for € 4.3 million.
According to
reports in December 2009 ARAD entered the markets of China, India, Russia and
Brazil with AMR pilots.
In January 2010
ARAD Group received 2 orders to supply AMR system to 2 companies in India (part
of the Mumbai water project) for a total sum of
US$ 7.3 million.
In February 2010
ARAD signed an agreement to supply AMR systems to SOUTHERN WATER of England for
£ 36 million (5 years contract, £ 7.1 million a year), subject’s largest
contract ever.
In May 2015 a/m
contract was lengthened for additional 5 years, to acquire AMR systems in
volume of £ 10 million.
In November 2011
subject's Spanish subsidiary won a tender of € 7 million in Madrid.
In April 2012 ARAD
established a Chinese subsidiary ARAD METERING TECHNOLOGIES WUHAN CO.
In April 2013
subject won 2 tenders (together with local Indian partner) to supply AMR
systems to DELHI JAL BOARD. First tender in volume of US$ 16.3 million and the
2nd in volume of US$ 1.6 million.
In July 2013 AVROT
INDUSTRIES's painting plant completed the test-run, and will serve as ARAD
Group's painting plant, in volume of NIS 2.5 million per year.
In December 2013
ARAD reported it won a tender to supply AMR systems to Nazareth Illit, Afula
and Migdal Hae'emek municipalities for 5.5 years, in volume of NIS 27 million
(following a successful pilot).
In January 2014
ARAD won a tender to supply measuring systems to a water company in Northern
Israel in volume of up to NIS 27 million.
In April 2014 ARAD
acquired 51% of MEDIDORES DELAUNET, a Mexican water measuring company, for US$
2 million. ARAD has an option for the remaining 49%.
In September 2014
it was reported that ARAD signed a collaboration agreement with SILVER SPRING
of the USA (operating in the gas and electricity fields), to develop AMR
systems for these fields.
In March 2015 CONTAZARA
won a tender to supply systems to Madrid, Spain, in volume of € 1.8 million.
In April 2015
CONTAZARA won a tender to supply systems to Seville, Spain In volume of € 1.2
million, and 2 tenders of Malaga, Spain, in total volume of € 2.4 million.
The global water
measuring field is estimated at US$ 2.3 billion annually (of which US$ 800
million in the USA and US$ 800 million in Europe), with an expected annual
growth rate of 5%. The AMR field is estimated at US$ 1 billion (mostly in the
USA), with an expected annual growth rate of 10%.
The Export
Institute reported that export by the local water-related industries reached
US$ 2 billion in 2013 (in a global US$ hundred billion market), with new
companies and startups in this field join the trend of the growing demand for
drinking water. Israel is considered as pioneer in the field and in its
reputation for water management capabilities.
Notwithstanding
the lack of updated data form subject's officials, considered good for trade
engagements.
Maximum unsecured
credit recommended US$ 500,000.
Note: Since February
2013 Israel Post has started using a new area code method of 7 digits (the old
method of 5 digits is no longer valid).
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.66.81 |
|
|
1 |
Rs.100.36 |
|
Euro |
1 |
Rs.70.68 |
|
ILS |
1 |
Rs.17.20 |
Note :
Above are approximate rates obtained from sources believed to be correct
INFORMATION DETAILS
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Analysis Done by
: |
DIV |
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Report Prepared
by : |
TPT |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
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|
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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-- |
NB |
New Business |
-- |
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This score serves as a reference to assess
SC’s credit risk and to set the amount of credit to be extended. It is
calculated from a composite of weighted scores obtained from each of the major sections
of this report. The assessed factors and their relative weights (as indicated
through %) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend (10%) Operational size
(10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.