Good morning, ladies and gentlemen, and welcome to the MTI Wireless Edge Limited full year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, I would like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to CEO Moni Borovitz at Moni.
Good morning, sir.
Good morning, Jake. Thank you, and thank you, everybody, for joining the call today discussing our 2023 year results. I will start with a small reminder about the markets that we operate in and are the growth engine for our future. Our largest division is in wireless water management solution. I'm sure we are all aware about the scarcity around the world coming with the global warming. So there is no doubt in my mind that systems like ours will be needed more and more in coming years. The second activity we operate in is antennas for the backhaul of cellular market, the high-capacity part of it. As we all consume more data and use the phone more and more, the backbone needs the capacity to support this, and this is where the second operation of our business. The third one is in the defense market.
As you all are aware, since two years ago when the war between Russia and Ukraine started, European countries decided to increase the budget on defense, and we now start to see more and more work coming towards us. We usually work with the system integrators of the world, the system houses, both locally in Israel and outside of Israel, and via them sell our solutions. Macroeconomics changed in the last year. We see high inflation and high interest rates. I think we are very well positioned to deal with it, first of all because we have almost a debt-free balance sheet. We have no financial debt, and we have actually quite a lot of cash. Secondly, because most of our solutions are based on innovation, we're able to pass most of the cost increases into the prices of the customers.
I'm sure we are all aware of the terror attack on October 7th here in Israel. What we see is that such events usually take minutes or hours, and then they are done. In our case, we are already five months after the attack, and we still have 134 hostages. This means that the country still did not start the recovery process that is so needed in order to return to normal life. If I look in the micro about MTI itself, we have two employees that lost a parent that day that they were killed under the attack. We have another five employees that were hiding for hours with their family for very long hours until in shelters until they were safely secured. Then we have another ten employees that were recruited, called up for military service immediately. Some of them released just in recent days.
So overall, the manpower in Israel reduced by about 20% throughout the last quarter. Nevertheless, I'm very proud about the other employees that showed a lot of solidarity and took themselves more work and were able to generate what we did. In our international subsidiaries, they felt nothing because logistics was quite fluent in and out of Israel, and all of them are working outside of Israel, so this continued very well. At the same time, the attack had massive destruction within Israel, both in commercial areas and in military areas and, of course, also communication towers. So immediately we were asked to support and help refurbish, reinstall, and now we need to restore and rebuild some of the systems. So we got significant orders, and we see ahead of us quite large business opportunities.
In Mottech, our irrigation solutions, we irrigate most of the agriculture around Gaza, the Israeli part, of course. Many of the controllers were either cannibalized or stolen, so we immediately helped them, put some kind of an ad hoc solution in order to continue and irrigate, and now we see more orders coming into it. So if I look at 2024 and a little bit farther down the road, we know that we need to be ready for longer military service by our people, and we are already up to it. We know the defense budget, both here in Israel but also internationally, are increasing, so we will have more opportunities in this area. We know that we will have a lot of reconstruction to do here in Israel, both in the north and in the south, both in agriculture and in landscape irrigation due to the attack.
If I look at 2023 overall, for me, it's a very strong result. We were more or less flat revenue-wise, part of it because of the strengthening of the shekel against the dollar. But we were able to improve margins, and this was very important for us. So we ended up with PBT 12% over last year and earnings per share 9% growth year-on-year. At the same time, we continue to generate cash as we usually do, and we have a net cash of $8.1 million at the end of the year. Business-wise, defense business grew, not related to the conflict here that started only in the last quarter, but this was due to successful penetration to system houses, as I mentioned, both here in Israel and international, and the defense budget are growing.
In the water management solution, we see more and more demand coming from many countries in Europe as everybody sees and understands the scarcity. And in 2023 was the first year that we even installed the system in Sweden. Talking about 5G, we are, based in India, as everybody knows, in manufacturing. And in order to compete in the Indian market, which is supposed to be very big, you have to be local to compete price-wise. I'm happy to say that we are very well positioned. One of two other competitors that we have in this market was disqualified by at least one cellular operator because of the quality of the product. And I can say that our product is considered to be the best in terms of its operational activity.
The second part of the backhaul, our cellular solution that we are developing, is what we call the ABS Antenna, the automatic beam steering antenna solution, which allows the antenna to move a little bit, actually the feed of the antenna, in order to compensate the link budgets and to compensate in terms of the mast movement due to changes in temperature or wind load. We completed the development of the product, and we are now taking it into pre-production. We have at least two tier-one customers, OEMs, that are very excited about the solution. A little bit more info about each of the divisions. So in the wireless irrigation business, we are working with collaboration for many years with Motorola. Most of the hardware is coming from Motorola, but we add some hardware by ourselves. And of course, our key IP here is the software that manages those controllers.
We work all around the globe, and this business has a very nice chunk of business coming from recurring revenue from the service and maintenance that we do. It's about 20% of the business, and it continues to grow. The bottom line of this business is that we save water quite a lot if you use the smart systems. If I focus on the progress on 2023, first of all, we were able to complete what we started towards the end of 2022 and increase the service renewal and increase the prices of the service agreement in the municipalities in Israel. Some of the increased pricing would continue onwards in the next few years as it was scaling up prices. We announced about a year ago about a new niche market that we open, which is fountain control and management.
I'm happy to say that we just now completed the first project. It contains over 40 fountains in one municipality in Israel, and we give them end-to-end so encrypted solution to manage the fountains remotely. At least here in Israel, it is very important because they treat the fountains as public pools, as in some instances, kids get into the fountains. Therefore, you need to measure and manage everything. I can say that it's a nice project. We already showed it to several other potential customers in Israel, and we are quite confident that we do at least 1 or 2 projects like this year in Israel, and then we will take it elsewhere in the world. It is also a recurring revenue generator because after the first if of warranty, the municipalities immediately request that you will service and maintain.
We continue to have very good business in Italy and in France. I remind you that in France, we are working mostly in the vineyard market. We are selling the software into water consortiums and then the controllers themselves into the farms who are using those to get the allocation of water. We penetrated more water consortiums and see good demand for that. In Italy, we do water distribution, agriculture, and landscape irrigation. We won several new customers there, and we are very excited about the potential in Italy going forward. We added two new types of products to our solution. One of them is Internet of Things sensors that were so much required. It allows to connect to our system and get more information and let monitor remotely.
We launched the Autopilot, the sensor that fills the level of the water at the roots into the landscape market. It was fairly used mainly in agriculture. We found that there is a nice market for that in the landscape irrigation. We did some trials in 2023. They were very successful. And in 2024, we will take it more robust to the market. Moving into our antenna business, I remind you that we do antennas for both commercial and military use. In military, we do everything from airborne to submarine, where our key strength is in conformal antennas that are actually sitting as part of the body of the vehicle that it is on. And in the commercial market, which is the larger part of the antenna business, we do antennas for fixed broadband wireless access.
We do antennas for RFID radio frequency identification, mainly in asset management and toll roads. We are still waiting for the airport application to move forward, and this means that on the tag on the suitcase, you will have an RFID tag, and we are doing the RFID readers. And then if a suitcase gets lost, you immediately being notified where did it lose. The key market for us in the commercial is, of course, the 5G backhaul. The 5G backhaul market for us is made out of six key customers, which are the leading OEMs in the market. It used to be 7, but one was acquired by the other. We are working with them, and we are very proud in the positioning in the market. I spoke about the ABS antenna solution, and we are expecting this year to see some more progress there.
The second type of solution that we're bringing is the multiband or dual-band antenna that gives you an automatic redundancy if the higher capacity is not operating well enough. And we think we have a very robust solution, and we, we see the market starting to develop. One of the biggest markets is, as I mentioned, India, and we are very well positioned to enjoy that as well. Moving into the military antenna market, we had a very successful year in 2023, one of the biggest we had in revenue. And this was based mainly on several new customers that we gained in the last two years. It was system houses coming mainly from Europe, North America, and one more in Israel. We see a lot of opportunities ahead of us, really nice number of opportunities.
Regarding the Israeli defense budget, which is about to increase dramatically, we already know that there are some projects that are being planned where we are the sole source for those solutions. So we are expecting this to increase as well. Our third division is the distribution and special consulting services, where we have here the distribution of RF/microwave components that we are the largest one in Israel, representing over 40 companies bringing their solution to the Israeli market. I remind you that it's not only directly in Israel because Israel is a hub for development for many of the wireless companies in the world. And once we do the design win, we get rewarded when it sells worldwide. We also offer tethered balloon. You can see at the bottom right a picture. We help selling those systems into the markets.
We represent TCOM, the balloon manufacturer, and we many time teach the end customer how to manage those systems, both in Israel and outside of Israel. The last part of the business is PSK that we acquired two years ago. PSK is doing only defense work and has a lot on the table at the moment. We immediately after the attack got a lot of requests for immediate support and a lot of help to be done, with our government. At the same time, PSK has the business of, shelter building and integration solutions. Unfortunately, we had two projects that were not calculated, good enough, and the customer was too difficult. So we had written a loss. We announced about it in the first six months results. And I think that the learning curve and, that we had to pay, we paid.
We have few more projects that are looking much more successful, and we are very optimistic about the future of this business. As mentioned before, MTI is very much focused on innovation. We think that this is where is the added value that bring we bring to the market. We invest quite a lot via our internal funds into R&D, some with grants that we get from the Israel Innovation Authority here in Israel. We expense everything. We don't capitalize it into the P&L. And we use a lot of collaboration, either with the principals that we represent or Motorola irrigation business or third parties, in order to be innovative solution because this helps you in times of inflation. Regarding the sustainability, we continue to focus on the same six metrics that we found before that we have the biggest impact.
I am very proud to say that even though it was a difficult year in Israel, and it is still difficult, we were able to invest a lot in the education of our technician and engineer. At the same time, we are very proud that 30% of our employees are from the third age. I think they have a lot of know-how, a lot of contribution to the company, and vice versa, where I think we should and working on improve is the number of women working for us. We are always looking for M&As. It is true that since October, we did not really focus on that. We were focusing more on stabilizing the company and making sure the operation continues. I think that we are ready now, to look again at acquisition. I believe there would be, better opportunities at the moment, due to the macroeconomics.
But at the same time, we will stick to our guidance always, guidance that we are on a better safe than sorry mode, and we will do only profit-enhancing acquisitions. Back to the figures a little bit. So defense increased this year. It was 37% last year, and this year it ended at 44% of our revenue. All the divisions are making money and profitable. I think that the diversity is very important. Sometimes this market is up and the other is down. It is true vertically and geographically. We continue to have very loyal customer base, as you can see at the bottom left. And we are always focused on growing the earnings per share, as you can see at the bottom right. Regarding our global reach, we had a slight change. Americas were a little down and Europe up.
Israel remained more or less the same. It's important to say again that at least one-third from what we sell in Israel is ending as indirect export. Our revenue was flat, as I mentioned, but the profits were bigger and better. We had an impairment of goodwill that affected the operating profit. It was relating to the PSK acquisition where we decided to reject the goodwill. Other than that, we had a much better operating profit. At the end of the day, the EPS and the profit before tax grew very nicely. We have a very strong shareholder base, including my family, our partner, the Bear family, and of course, Premier Michael and Harald, who are long-time investors in the companies. We, as always, continued with the dividend policy and increased the dividend again.
This time, we decided also to go on a stronger buyback program. We extended the buyback from GBP 200,000 to GBP 700,000, so we added about GBP 500,000 to the program. So if I may summarize, I think it was a good year in a very challenging environment. I think that we have very good growth engines. It's the defense budget going everywhere in the world, the scarcity of water, and the need for data consumption in cellular market. We are positioned very well with strong balance sheets, and we will continue to look for M&As in a better, safer, saner mode. And I think that the key is that we started 2024 very strong, with lots of orders in the backlog and lots of pipeline of opportunities. I thank you for your time, and I'll be happy to take any questions.
Moni, that's great. If I may just jump back in there before we move to questions.
Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. Just while the company takes a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Moni, as you can see there in the Q&A tab, we have received a number of questions that were both pre-submitted ahead of today's event as well as those that have made their way through during your presentation this morning as well. Firstly, thank you to all of those on the call for taking the time to submit their questions.
Moni, if I may, sir, just hand back to you to read out those questions and give your responses where it's appropriate to do so. Then I'll pick up from you at the end. Thank you.
Yes. Thank you, Jake. So the first question is, what effect will the Israeli have on the business? I believe that it was meant to be the Israeli conflict. I think it was pretty much covered in the presentation. We are working fine and operating well. The second question is, please explain to what extent the current shareholder value has been and will be diluted by the execution of the option to directors and associated parties. So first of all, I think that it's very important to have an incentive program for management. And I think that one of the most successful one is the one that is putting together the interest of the shareholders and the management. And this is options if they are above the market price. We have not done it for a long time, and we decided to do that this year.
I think that if the managers are able to exercise the option at some point, it means that the value of the shares is up, and it's in line with shareholder expectation. The third question is, will you have an opportunity to buy the remaining 49% of PSK? Yes. The agreement that we have with the owners of PSK is that we can force them to sell us, and they can force us to buy them. There is a mechanism. I think we elaborated it about how it would work. It will become effective only based on the result of 2025 and 2026, so it can start only in 2027. And this is why we have also the contingent liability on our balance sheet. The next question is, can you run through sales processes for water management business, and what can be done to grow this?
Is this revenue repeating annually or more one-off sales? Yeah. First of all, it depends if we are selling to a new customer or to existing customer. To a new customer, we need to have some kind of boots on the ground. It can be us by our subsidiaries around the world, and we have a few, or it can be by a value-added reseller that is already trained in the system. It's not an easy system that it's a plug-and-play and you forget. You need to operate it. You need to know what you do. And we, in many cases, help the end customer to plan how to put those controllers in order for that to be the most efficient way. If it's an existing customer, he just buys one more unit and adds it to the system, that it's fairly easy, and he knows it.
We have value-added resellers all around the globe in every continent where we do not have our subsidiaries. We have the people, and we train them to be able to sell. In the areas where we have our own subsidiary, we focus on recurring revenue. And I mentioned that 20% of the entire wireless irrigation business is recurring revenue. This is coming mainly today from Israel, Australia, and South Africa, and we are looking to extend it elsewhere. There is a question. With the share buyback, is share cancellation a possibility? At the moment, we are buying it for treasury. I think that we will hold it for quite some time. I think it's a good opportunity for the company to use its cash and not only distribute it but take it for the longer period of time.
Next question is, Sunning, with the expansion of the buyback, how are you looking to balance the capital structure of the business versus future growth in its equity and liquidity in the shares? So first of all, the buyback is supposed to help liquidity because we are not canceling the shares. We will bring them back to the market at appropriate time. And I think that over the years, we have shown that we know how to manage the balance of the capital structure. We have a very strong working capital. We usually generate cash out of the profits. And the reason that we don't cancel the share immediately is that if we need, we can sell the shares and get the cash back at some point of time.
There is a question: how is the business going in China as the Chinese economy seems to be experiencing difficulties at the moment? So first, we have a very minimal business in China. It's really a low percentage of our business. It's mostly in the wireless irrigation business. I agree that it was slow in the last several years. I think that we also need to improve some things in the product in order to meet the Chinese requirement, and we are working on that. But I am not the best expert to say anything about the Chinese economy because we're, it's not a big market for us. I think we have covered them all.
Moni, absolutely. Thank you very much, indeed, for being so generous of your time then addressing all of those questions that came in from investors. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But Moni, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself, and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great.
Yeah. Thank you, everybody, for joining the call today. We are very much excited about 2024. I think we have very good growth engine. I anticipate to meet you all again in the future.
Mani, that's great. Thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure it's greatly valued by the company. On behalf of the management team of MTI Wireless Edge Limited, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.