Maytronics writes off water disinfectant co Adamant

The asset reduction will lower Maytronics' net profit in 2011 by NIS 20 million.

A month ago, Maytronics Ltd., which produces electronic robots for cleaning swimming pools, announced to the TASE that negotiations for its acquisition by a leading company in the swimming pool industry for NIS 345 million (a 27% premium to market price) had been halted due to objections by its owner, Kibbutz Yizreel.

Maytronics made another announcement yesterday that did not bring much joy to its investors: Maytronics will halt investment in product development of its subsidiary, Adamant, writing off NIS 29 million from the company's market cap. The asset reduction will lower Maytronics' net profit in 2011 by NIS 20 million.

Adamant was founded in 2005 as a start-up that developed technology for "green" water disinfection. The company began selling disinfection systems for private swimming pools in 2007, and it currently has hundreds of customers in Europe. Adamant also develops water disinfectant systems for the food industry, a field that requires substantial financial investment.

Maytronics owns 24.65% of Adamant directly, as well as 48.3% through its public French subsidiary, MGI, which also owns 38.8% of Adamant directly. In 2010 and 2011, Maytronics invested NIS 22 million.

Maytronics also says that it will also close operations at Adamant, and that Maytronics is preparing to support customers that have purchased disinfectant systems.

Kibbutz Yizreel owns 67.2% of Maytronics, which has a market cap of NIS 240 million. The company operates in three areas: the production of robots to clean private swimming pools, the production of robots to clean public swimming pools, and MGI, which produces and markets alarm systems for swimming pools, drowning prevention systems, and pool covers, as well as water disinfectant systems.

In the first nine months of 2011, Maytronics had NIS 241.4 million in revenue, a 12% rise compared with the corresponding period, and net profit was NIS 37 million, a 6% rise over the same period last year.

"The president will also be hurt"

Other than Maytronics' shareholders, Maytronics president Ofer Shahar will also be hurt by the reduction in valuation. Maytronics announced that Shahar will retire this coming May, and will receive a NIS 291,000 adjustment grant (which is three months of salary plus other benefits).

Shahar is also entitled to a yearly bonus which is set by company revenue and profits, as well as by his personal goals. However, due to the expected fall in profits, Shahar's bonus will also shrink.

Published by Globes [online], Israel business news - - on March 13, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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