TIDMBSD
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AS OF 30 JUNE 2015
UNAUDITED
IN U.S. DOLLARS
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AS OF 30 JUNE 2015
UNAUDITED
IN U.S. DOLLARS
INDEX
Page
Report on Review of Interim Condensed Consolidated Financial 2
Statements
Interim Condensed Consolidated Statements of Financial Position 3-4
Interim Condensed Consolidated Statements of Profit or Loss and 5
Other Comprehensive Income
Interim Condensed Consolidated Statements of Changes in Equity 6-8
Interim Condensed Consolidated Statements of Cash Flows 9-10
Notes to Interim Condensed Consolidated Financial Statements 11-20
Report on Review of Interim Condensed Consolidated Financial Statements
To the Shareholder and Board of Directors of
B.S.D CROWN LTD.
Introduction:
We have reviewed the accompanying interim condensed consolidated statement of
financial position of B.S.D CROWN LTD. and its subsidiaries ("the Group") as of
30 June 2015 and the related interim condensed consolidated statements of
profit or loss and other comprehensive income, changes in equity and cash flows
for the six and three month period then ended and explanatory notes. Management
is responsible for the preparation and presentation of those interim condensed
consolidated financial statements in accordance with IAS 34, "Interim Financial
Reporting ("IAS 34"). Our responsibility is to express a conclusion on these
interim condensed consolidated financial statements based on our review.
The Group`s financial statements as of 30 June 2014 and for the six and three
months then ended reviewed by another auditor who expressed an unqualified
opinion on those statements on August 28, 2014.
Scope of review:
We conducted our review in accordance with International Standard on Review
Engagements 2410, Review of Interim Financial Information Performed by the
Independent Auditor of the Entity. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion:
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying interim condensed consolidated financial
statements are not prepared, in all material respects, in accordance with IAS
34.
Brightman Almagor Zohar & Co.
Certified Public Accountants
A member firm of Deloitte Touche Tohmatsu Limited
Tel-Aviv 31 August ,2015
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 31 December
2015 2014 2014
Unaudited Audited
U.S. dollars in thousands
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 26,000 31,589 25,325
Short-term deposits 51,032 46,225 54,196
Deposits held in trust 3,507 - -
Financial assets at fair value through profit or 38,478 62,573 42,724
loss
Trade receivables 23,472 27,993 22,301
Other receivables and prepaid expenses 2,425 3,107 3,484
Investment in a fund designated at fair value 2,880 4,415 3,582
through profit or loss
Inventories
12,462 11,318 12,502
Total current assets
160,256 187,220 164,114
NON-CURRENT ASSETS:
Property, plant and equipment, net 13,870 14,917 13,923
Prepaid expenses - 15 -
Intangible assets:
Customer relationships 5,150 6,493 5,415
Supplier relationships 2,699 3,805 3,016
Brands 1,350 1,767 1,448
Non-competition agreements 1,239 1,383 1,222
Goodwill
- 25,515 22,556
Total non-current assets
24,308 53,895 47,580
Total assets
184,564 241,115 211,694
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 31 December
2015 2014 2014
Unaudited Audited
U.S. dollars in thousands
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term debt 1 70 -
Current maturities of debentures 3,499 3,729 3,472
Trade payables 4,695 5,129 4,191
Dividend payable to non-controlling interests 2,035 - -
Other accounts payable and deferred revenues 4,108 3,326 4,006
Employee benefit liabilities, net 861 804 789
Financial liability for non - controlling interest
put option 485 6,240 7,217
Total current liabilities
15,684 19,298 19,675
NON-CURRENT LIABILITIES:
Financial liability for non-current liabilities 337 - -
Debentures - 4,008 -
Employee benefit liabilities, net 196 218 199
Liability for non- competition payments 1,480 1,573 1,425
Deferred taxes
2,585 4,457 3,242
Total non-current liabilities
4,598 10,256 4,866
EQUITY:
Share capital 416 416 416
Share premium 469,935 469,930 469,935
Treasury shares (76,962) (76,962) (76,962)
Reserve from transactions with non- controlling (1,030) (208) (998)
interests
Foreign currency translation reserve (7,392) 458 (9,936)
Accumulated deficit
(282,578) (256,077) (259,700)
Equity attributable to Company's equity holders 102,389 137,557 122,755
Non- controlling interests
61,893 74,004 64,398
Total equity
164,282 211,561 187,153
Total liabilities and equity
184,564 241,115 211,694
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
31 August, 2015
Date of approval of Gregory Gurtovoy Israel Yossef Schneorson Emil Budilovsky
the
financial Chairman of the Joint CEO and Vice Chairman Joint
statements Board of the Board CEO,CFO,Director
and Company
Secretary
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Six months ended Three months ended Year ended
30 June 30 June 31 December
2015 2014 2015 2014 2014
U.S. dollars in thousands
Unaudited Unaudited Audited
Revenues 41,101 16,007 18,613 15,979 58,505
Cost of sales
(32,407) (11,967) (14,577) (11,939) (44,310)
Gross profit
8,694 4,040 4,036 4,040 14,195
Research and development 566 693 305 376 1,263
Selling expenses 5,393 2,239 2,531 2,239 8,001
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General and administrative 4,669 4,714 1,701 3,246 13,000
expenses
Other (income) loss
21,623 - 22,400 - (1,975)
Total operating expenses
32,251 7,646 26,937 5,861 20,289
Operating loss (23,557) (3,606) (22,901) (1,821) (6,094)
Financial income 1,650 2,442 874 1,531 4,680
Financial expense
(1,361) (323) (1,317) (311) (3,220)
Loss before taxes on income (23,268) (1,487) (23,344) (601) (4,634)
Taxes on income
121 (175) 236 (175) (429)
Loss for the period
(23,147) (1,662) (23,108) (776) (5,063)
Other comprehensive income (loss)
to be reclassified to profit or
loss in subsequent periods :
Gain (loss) from - 25 - - 25
available-for-sale financial
assets
Reclassification adjustment for - (148) - (148) (148)
gain on available- for- sale
financial assets included in
profit or loss
Adjustments arising from 4,598 925 7,909 925 (18,351)
translation of financial
statements of foreign operations
Other comprehensive income (loss)
not to be reclassified to profit
or loss in subsequent periods :
Remeasurement loss from defined
benefit plans 8 - 8 - 10
Total other comprehensive income
(loss) 4,606 802 7,917 777 (18,464)
Total comprehensive income (loss)
(18,541) (860) (15,191) 1 (23,527)
Loss attributable to:
Equity holders of the Company (22,878) (1,888) (22,745) (1,029) (5,515)
Non- controlling interests
(269) 226 (363) 253 452
Loss for the period
(23,147) (1,662) (23,108) (776) (5,063)
Total comprehensive income (loss) (20,334) (1,553) (18,606) (719) (15,570)
attributable to: Equity holders
of the Company
Non- controlling interests
1,793 693 3,415 720 (7,957)
Total comprehensive income (loss)
(18,541) (860) (15,191) 1 (23,527)
Basic and diluted net earnings per share attributable to Company's equity
holders (in U.S dollars):
Net loss per share
(0.21) (0.02) (0.21) (0.01) (0.05)
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
Share Share Treasury Reserve from Foreign Accumulated Total Non-controlling Total
capital premium shares transactions currency deficit interests equity
with translations
non-controlling reserve
interest
U.S. dollars in thousands
Unaudited
Balance as of 1 January 2015 416 469,935 (76,962) (998) (9,936) (259,700) 122,755 64,398 187,153
Loss for the period - - - - - (22,878) (22,878) (269) (23,147)
Other comprehensive income (loss):
Adjustments arising from - - - - 2,544 - 2,544 2,054 4,598
translation of financial
statements of foreign operations
Remeasurement loss from defined
benefit plans - - - - - - - 8 8
Total comprehensive loss
- - - - 2,544 (22,878) (20,334) 1,793 (18,541)
Transaction with non-controlling - - - 114 - - 114 (2,409) (2,295)
interest purchase share of
subsidiary
Subsidiary's dividends declaration - - - - - - - (2,035) (2,035)
to non-controlling interests
Transaction with non-controlling - - - 1,011 - - 1,011 (1,011) -
interest purchase share of
subsidiary by company
Additional non-controlling - - - (943) - - (943) 943 -
interest relating to outstanding
share-based payment transaction of
subsidiary
Transactions with non-controlling
interests - cost of share based - - - (214) - - (214) 214 -
payment in subsidiary
Balance as of 30 June 2015
416 469,935 (76,962) (1,030) (7,392) (282,578) 102,389 61,893 164,282
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
Total
Share Share Treasury Available-for-sale Reserve from Foreign Accumulated Total Non-controlling equity
capital premium shares reserve transactions currency deficit interests
with translations
non-controlling reserve
interest
U.S. dollars in thousands
Unaudited
Balance as of 1January 2014 416 469,925 (76,962) 123 - - (254,189) 139,313 (413) 138,900
(audited)
Net income (loss) - - - - - - (1,888) (1,888) 226 (1,662)
Other comprehensive income
(loss):
Gain from available for sale - - - 25 - - - 25 - 25
financial assets
Reclassification adjustment for - - - (148) - - - (148) - (148)
gain on available- for- sale
financial assets included in
profit or loss
Adjustments arising from - - - - - 458 - 458 467 925
translation of financial
statements of foreign operations
Total comprehensive income (loss) - - - (123) - 458 (1,888) (1,553) 693 (860)
Cost of share based payment - 5 - - - - - 5 - 5
Transactions with non-controlling - - - - (208) - - (208) 208 -
interests - cost of share based
payment in subsidiary
Non- controlling interests
arising from initially - - - - - - - - 73,516 73,516
consolidated company
Balance as of 30 June 2014
416 469,930 (76,962) - (208) 458 (256,077) 137,557 74,004 211,561
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
Share Share Treasury Available Reserve from Foreign Accumulated Total Non-controlling Total
capital premium shares for sale transactions currency deficit interests equity
reserve with translations
non-controlling reserve
interest
U.S. dollars in thousands
Balance as of 1 January 2014 416 469,925 (76,962) 123 - - (254,189) 139,313 (413) 138,900
Non- controlling interests arising - - - - - - - - 73,516 73,516
from initially consolidated
company
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Net (loss) income - - - - - - (5,515) (5,515) 452 (5,063)
Other comprehensive (loss) income: - - -
Gain from available for sale - - - 25 - - - 25 - 25
financial assets
Reclassification adjustment for - - - (148) - - - (148) - (148)
gain on available- for- sale
financial assets included in
profit or loss
Remeasurement of net defined - - - - - - 4 4 6 10
benefit obligation
Adjustments arising from
translation of financial - - - - - (9,936) - (9,936) (8,415) (18,351)
statements of foreign operations
Total comprehensive loss
- - - (123) - (9,936) (5,511) (15,570) (7,957) (23,527)
Cost of share based payment - 10 - - - - - 10 - 10
Transactions with non-controlling - - - - (857) - - (857) 857 -
interests - cost of share based
payment in subsidiary
Transactions with non-controlling
interest purchase of shares in - - - - (141) - - (141) (1,605) (1,746)
subsidiary
Balance as of 31 December 2014
416 469,935 (76,962) - (998) (9,936) (259,700) 122,755 64,398 187,153
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
2015 2014 2014
Unaudited Audited
U.S. dollars in thousands
Cash flows from operating activities:
Loss for the period
(23,147) (1,662) (5,063)
Adjustments to reconcile loss from continuing
operations to net cash provided by (used in)
operating activities :
Depreciation and amortisation 1,343 562 1,878
Goodwill and other assets amortisation 23,751 - -
Loss (gain) on disposal of fixed assets (57) 10 10
Decrease employee benefit liabilities, net (9) (39) (41)
Cost of share-based payment 333 297 1,172
Change in financial assets at fair value through 334 211 2,589
profit or loss
Change in investment fund designated at fair (222) - 319
value through profit or loss
Interest income (973) (684) (1,627)
Interest expense on short-term loan - 7 7
Decrease in deferred tax (742) (229) (706)
Taxes on income 870 404 1,135
Exchange rate differences on deposit and 60 (1,256) (1,800)
short-term loan
Gain from sale of available for sale financial - (214) (214)
assets
Financial expenses (income) from debentures (80) (25) 56
Financial expenses on financial liabilities
46 29 147
24,654 (927) 2,925
Changes in asset and liability items:
Decrease (increase) in inventories 440 4,218 1,552
Decrease in trade receivables (392) 2,731 5,241
Decrease (increase) in receivables and prepaid 1,266 (1,000) (587)
expenses
Increase (decrease) in trade payables, other
payables and accrued expenses 869 (1,054) (948)
2,183 4,895 5,258
Cash received (paid) during the period:
Interest received 1,030 163 700
Interest paid - (164) (275)
Income taxes paid
(1,175) (698) (1,706)
(145) (699) (1,281)
Net cash provided by (used in) operating
activities 3,545 1,607 1,839
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
B.S.D CROWN LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
2015 2014 2014
Unaudited Audited
U.S. dollars in thousands
flows from investing activities:
Proceeds from sale of property and equipment 140 65 65
Purchase of property and equipment (580) (647) (1,820)
Maturing of (investment in) short-term deposits, 3,268 (29,983) (37,954)
net
Withdrawal of (investment in) deposit held in (3,454) 122,404 122,404
trust
Proceeds from sale of investment in fund 1,018 - -
designated at fair value through profit or loss
Proceeds from sale of financial assets at fair 5,066 297 7,134
value through profit or loss
Proceeds from sale of financial assets at fair - (2,936) 304
value through profit or loss and available for
sale financial assets
Acquisition of subsidiary
- (62,088) (62,088)
Net cash provided by (used in) investing
activities from continuing operations 5,458 27,112 28,045
Cash flows from financing activities:
Repurchase of shares from non-controlling (2,295) - (1,746)
interest by subsidiary
Bank overdraft, net 1 (763) (820)
Repurchase of shares from non-controlling (713) - -
interest of subsidiary by company
Decrease in financial liability for (6,052) - -
non-controlling interest put option
Redemption of debentures
- - (3,397)
Net cash used in financing activities from
continuing operations (9,059) (763) (5,963)
Exchange differences on balances of cash and
cash equivalents 731 676 (1,553)
Net increase in cash and cash equivalents 675 28,632 22,368
Cash and cash equivalents at the beginning of the
period 25,325 2,957 2,957
Cash and cash equivalents at the end of the
period 26,000 31,589 25,325
a. Non-cash transactions:
Repayment of short-term loan from deposit - (18,727) (18,727)
held in trust
Purchase of property, plant and equipment on - - 160
credit
Dividend declaration by subsidiary 2,035 - -
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
NOTE 1 - GENERAL
a. B.S.D Crown Ltd. ("B.S.D" or the "Company") is a corporation registered in
Israel.
In August 2014 the Company effected a change of its name from Emblaze Ltd. to
B.S.D Crown Ltd.
a. For change of control in the ultimate controlling shareholder of the
company see Note 8.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a. Basis of preparation of the interim consolidated financial statements:
The interim condensed consolidated financial statements for six and three month
periods ended 30 June 2015 have been prepared in accordance with IAS 34,
Interim Financial Reporting, as adopted by the European Union. The interim
condensed consolidated financial statements do not include all the information
and disclosures required in the annual financial statements, and should be read
in conjunction with the Group's annual financial statements as at 31 December
2014.
b. Income tax:
The Group calculates the period's income tax expense using the tax rate that
would be applicable to the expected total annual earnings. In order to
calculate the average annual effective income tax, the company reduces tax
losses in which no deferred tax assets were recognized in respect to them, and
it expects them to reduce the annual current taxable profit.
The major components of income tax expense in the interim condensed statement
of profit or loss are: Current income tax expense, Deferred income tax expense
relating to origination and reversal of temporary Differences except to the
extent that the tax arises from transactions which recognized directly in
equity and business combinations.
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NOTE 3 - DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THE
ADOPTION
a. IFRS 13 Fair Value Measurement:
The amendment is applied prospectively and clarifies that the portfolio
exception in IFRS 13 can be applied not only to financial assets and financial
liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39,
as applicable). This amendment has no impact on the financial statements.
b. Amendments to IAS 19 Defined Benefit Plans: Employee Contributions
IAS 19 requires an entity to consider contributions from employees or third
parties when accounting for defined benefit plans. Where the contributions are
linked to service, they should be attributed to periods of service as a
negative benefit. These amendments clarify that, if the amount of the
contributions is independent of the number of years of service, an entity is
permitted to recognise such contributions as a reduction in the service cost in
the period in which the service is rendered, instead of allocating the
contributions to the periods of service. This amendment is effective for annual
periods beginning on or after 1 July 2014. These amendments have no impact on
the financial statements.
c. An amendment to IAS 24 "Related Party Disclosures" (regarding key
management personnel)
The amendment clarifies that a management company providing key management
personnel services to the reporting entity is a "related party" of the
reporting entity. The amendment is applied retrospectively for annual reporting
periods beginning on or after July 1, 2014 or thereafter.
NOTE 4 - SUPPLEMENTARY INFORMATION
a. Loan agreement to controlling shareholder:
On 24 February, 2015, Israel 18, Israel 180 Ltd. ("Israel 180") and Orot Israel
18 Ltd. ("Orot Israel" and together, the "Israel 18 Group") entered into a loan
agreement (the "Loan Agreement") for a loan to be provided by Zwi Williger ("ZW
") and Joseph Williger ("JW" and together, the "Willigers"), either in their
personal capacities or through companies under their control (the "Lenders"),
pursuant to which Israel 18 was to borrower a sum of NIS 83 million
(approximately USD 20.9 million) (the "Loan Amount").
The Loan Amount was to be used, among others, for the purposes of exercising
the call options in respect of a further 19.09 per cent of the Company's shares
(the "Options").
Following the failure by the parties to the Loan Agreement to reach completion
thereof The Loan Amount was returned to the Willigers on 7 May, 2015.
b. Put options over Company shares:
(1) On 4 March, 2015, ZW, a director of Willi-Food Investments Ltd. ("WFI
") and the chairman of the board of directors of G. Willi-Food International
Ltd. ("WFINT") and JW, the president of WFINT and chairman of the board of
directors of WFI, each, exercised options over 66,667 shares of WFINT (the "
Williger Shares"). In consideration for the Williger Shares, each of ZW and JW
paid the amount of USD 433 thousand to WFI, reflecting an exercise price of USD
6.5 per each of the Williger Shares.
(2) Following ZW's and JW's exercise of the abovementioned Williger
Shares, on 24 March 2015, the Company paid an amount of USD 800 thousand to
each of ZW and JW and acquired 66,667 shares of WFINT from each of ZW and JW,
reflecting an exercise price of USD 12 per share of WFINT.
(3) Following a further exercise by ZW of part of his put options in
respect of 166,666 shares of WFINT, on 7 May, 2015, the Company paid an
aggregate total amount of USD 2 million and acquired an aggregate of 166,666
shares of WFINT.
(4) On 26 May and 30 June, 2015 the Company has paid the aggregate amount
of USD 1 million and USD 3 million respectively to ZW in consideration for the
WFINT Put Option in relation to 337,741 shares in WFINT.
c. During June 2015, WFI acquired 139,386 ordinary shares of NIS 0.1 per
share in the amount of approximately USD 2,295 thousand. As a result of these
acquisitions, WFI increased its holdings in WFINT shares to 62.39%.
Following the above mentioned transactions, the Company now directly holds
4.87% of the shares of WFINT and indirectly holds a further approximately
41.66% of the shares of WFINT through WFI.
d. Claim against former controlling shareholder:
On 24 February, 2015, Public Joint Stock Company Alfa Bank ("Alfa"), a
Ukrainian banking entity, submitted a request to the Tel Aviv District Court
(the "Court") to attach certain assets as well as direct and indirect holdings
of the Company's ultimate former controlling shareholder, Oleksandr Granovskyi.
This request was submitted as part of a claim filed by Alfa against Mr
Granovskyi and others with respect to alleged debts owing by them to Alfa. On
11 April, 2015, Alfa and Mr Granovskyi entered into a settlement agreement,
following which the Court cancelled all interim measures previously ordered by
it in the course of the relevant proceedings.
NOTE 4 - SUPPLEMENTARY INFORMATION (Cont.)
e. On 1 April 2015 the Company appointed Mr. Oleksandr Granovskyi, as the
chairman of the board of directors in replacement of Abraham Wolff who was
appointed as a director of the Company and as a the chairman of its board of
directors, on 14 August 2013. Mr. Wolff announced on the same day, his
resignation as a director of the Company.
For details regarding changes in the ultimate controlling shareholder and
members of the Company's Board after the Reporting Period, see Note 8(a) and
(c).
f. Microsoft settlement
Further to the Company's disclosures with respect to its claim against
Microsoft Corporation ("Microsoft") with reference to BSD's U.S. patent no.
6,389,473 for media streaming technology (the "patent"), the Company executed,
on June 18th, 2015 a final settlement with Microsoft on all claims (the "
Agreement") with full mutual releases and license, covenant not to sue, and
waivers. In accordance with the Settlement Agreement, Microsoft paid the
Company the agreed amount. The Agreement shall remain in full force and effect
until the expiration of the Patent's Term. The net effect of the settlement is
presented in the Company's profit or loss statement in "Other income (loss)"
item
g. WFI supplementary information
1. During September 2014, WFINT and Goldfrost ("Goldfrost"), a subsidiary
company fully owned by WFINT, have filed a lawsuit against the property tax and
compensation fund administration (the "Authorities") according to property tax
and compensation fund regulations 2014, for indirect damages that they have
endured following operation "Protective Shield" for the overall sum of about 6
million NIS (approximately USD 1.6 million). On 21 December, 2014, WFINT and
the Authorities have signed a settlement agreement for the total amount of NIS
2,792 thousands (approximately USD 0.7 million) without any of the sides
renouncing their claims and/or accepting the claims made by the other side. The
sum has been fully received during the month of January, 2015.
During the month of January 2015, Goldfrost has received a total sum of
NIS 1.3 million (approximately USD 0.3 million) and in June 2015 an additional
sum of NIS 1 million (approximately USD 0.3 million), as advanced payments. On
20 July, 2015, Goldfrost and the Authorities have signed a compromise agreement
for NIS 2 million (approximately USD 0.5 million), without any of the sides
renouncing their claims and/or accepting the claims made by the other side. As
a result, during the month of July 2015, Goldfrost has returned to the
Authorities the excess of advanced payments along with linkage and interest.
2. On 22 June, 2015, the WFI's board of directors has approved a dividend
distribution for NIS 20 million. The dividend has been paid in cash on 12 July,
2015.The Company received on 12 July, 2015 approximately NIS 12.3 million
(approximately USD 3.3 million) upon distribution of the dividend by WFI.
3. On 14 July, 2015, the district court in Lod, Israel (the "Court") has
approved the request which has been submitted by Mega Retailers Ltd. on 29
June, 2015, for an arrangement with creditors according to section 350 to the
Israeli Companies Law - 1999, following the financial difficulties which Mega
Retailers Ltd. has been suffering (herein after: "Mega", the "Request for
arrangement" or the "Arrangement", accordingly).
As part of the Request for Arrangement, it has been determined that Mega will
pay its creditors, including WFINT, for its debts up to and including 30 June,
2015 - an amount equal to 70% of the remainder of its debts to the creditors
divided to 12 weekly payments starting 31 July, 2015, and the remaining 30%
will be paid starting 30 June, 2017 in 36 equal monthly payments (herein after:
the "Deferred debt").
NOTE 4 - SUPPLEMENTARY INFORMATION (Cont.)
g. WFI supplementary information (Cont.)
According to the arrangement, the Deferred debt will accumulate an annual
interest for 2% until 30 June, 2017 and an annual interest of 3% until the
final payment of the Deferred debt. Furthermore, as part of the Arrangement,
the creditors have been given the option to convert the Deferred debt to shares
of Alon Ribua Kakhol Ltd, Mega's parent company, under the conditions set in
the Arrangement.
At the time of the report, Mega's remaining debt to WFINT is NIS 5.6 million
(including VAT) (approximately USD 1.5 million).
On 9 July , 2015, Mega has submitted to the Court a stay of proceedings to Eden
Natural Health Market Ltd. ("Eden"), Mega's subsidiary, ("Stay of proceedings
"). As part of the Stay of proceedings, the court has appointed a trustee for
Eden.
To the best knowledge of the Company, on 16 August, 2015 the Court approved the
selling of eight of Eden branches operated under the brand name "Eden Teva
Market" to a third party, subject to fulfillment of certain preconditions.
Eden's remaining debt in WFINT's books at the time of the making of the
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report and the time of the stay of proceedings is about NIS 0.6 million
(including VAT) (approximately USD 0.2 million).
In light of the uncertainty in the payment of the Deferred debt by Mega
and in light of Eden's stay of proceedings, WFINT has provided during the
second quarter of 2015 a total amount of NIS 1.7 million (approximately USD 0.5
million) for doubtful debts. The total influence on the WFI's net profit for
the time of the report, after taxes and the minority share, was a total amount
of about NIS 0.7 million (approximately USD 0.2 million).
Mega constitutes the second largest retailer in Israel, after Shufersal Ltd.,
and it had, at the time of the request for arrangement, about 182 branches.
WFINT's scope of sales to Mega constituted about 5% of WFINT's sales in the
months of January-June 2015 and about 6% of WFINT's sales for 2014. At the time
of the publication of this report, the WFI is unable to estimate the influence
of the difficulties Mega and Eden have fallen into and/or the legal proceedings
that are conducted in their cases and the WFI's business outcomes.
NOTE 5 - FINANCIAL INSTRUMENTS
Financial instruments that are not measured at fair value:
Except as detailed in the following table, the Group believes that the carrying
amount of financial assets and liabilities that are presented at amortised cost
in the financial statements approximates their fair value.
Financial liabilities:
Carrying amount Fair value Carrying Fair
amount value
30 June 30 June 31 December
2015 2014 2015 2014 2014
Unaudited Audited
U.S. dollars in thousands
Debentures and
interest payable 3,508 7,759 3,432 7,585 3,295 3,310
Below are details of the Group's financial assets that are measured in the
Company's statement of financial position at fair value by levels:
NOTE 5 - FINANCIAL INSTRUMENTS (Cont.)
Financial assets at fair value:
30 June 2015
Unaudited
Level 1 Level 2 Total
U.S. dollars in thousands
Financial assets at fair value through
profit or loss:
Financial asset at fair value through 37,958 520 38,478
profit or loss
Investment in a fund designated at fair
value through profit or loss - 2,880 2,880
37,958 3,400 41,358
30 June 2014
Unaudited
Level 1 Level 2 Total
U.S. dollars in thousands
Financial assets at fair value through 61,279 1,294 62,573
profit or loss
Investment in a fund designated at fair
value through profit or loss - 4,415 4,415
61,279 5,709 66,988
31 December 2014
Audited
Level 1 Level 2 Total
U.S. dollars in thousands
Financial assets at fair value through
profit or loss:
Financial asset at fair value through profit 41,579 1,145 42,724
or loss
Investment in a fund designated at fair
value through profit or loss - 3,582 3,582
41,579 4,727 46,306
NOTE 6 - OPERATING SEGMENTS
a. General:
Upon the completion of the Company's acquisition of WFI in May 2014, the
Group's main activity and its sole operating segment are import, marketing and
distribution of food products to retail chains, supermarkets, wholesalers, and
institutions mainly in Israel.
An operating segment is identified on the basis of information that is reviewed
by the chief operating decision maker ("CODM") to make decisions about
resources to be allocated and assess its performance.
b. Reporting segments:
Six months ended Year ended 31
30 June December
Unaudited Audited
U.S. dollars in thousands
2015 2014 2014
Revenues
Import marketing and distribution of 40,271 15,942 58,210
food products
Other
830 65 295
41,101 16,007 58,505
Segment income (loss)
Import marketing and distribution of (23,506) 607 2,230
food products (**)
Other *)
(51) (4,213) (8,234)
Operating loss
(23,557) (3,606) (6,094)
Financial income, net
289 2,119 1,460
Loss before taxes
(23,268) (1,487) (4,634)
(*) Other includes mainly unallocated corporate general and administrative
expenses and expenses relating to research and development activities.
(**) For recognition of impairment losses see Note 7.
Seasonality
The operating results of WFI and its subsidiaries (the "WFI Group") may be
subject to variations from quarter to quarter depending, among others, the
timing of sales campaigns and major Jewish holidays. Therefore, the operating
results of WFI Group in the period ended 30 June 2015 are not necessarily
indicative of its operating results for the year.
NOTE 6 - OPERATING SEGMENTS (Cont.)
c. Revenues from major customers that contributed 10% or more to the
Company's group (the "Group") revenues (as percentage of the total revenue):
Six months ended 30 June Year ended 31
December
2 0 1 5 2 0 1 4 2 0 1 4
Unaudited Audited
U.S. % U.S. % U.S. %
dollars in dollars in dollars in
thousands thousands thousands
Customer A
6,692 16 5,523 15 9,322 16
The revenues from the following products contributed 10% or more to the Group
revenues (as percentage of the total segment revenue):
Six months ended 30 June Year ended 31
December
2015 2014 2014
Unaudited Audited
U.S. % U.S. % U.S. %
dollars in dollars in dollars in
thousands thousands thousands
Canned vegetables
6,748 17 8,852 17 9,985 17
Dairy and dairy
substitute 13,696 34 12,181 26 15,277 26
products
Dried fruit, nuts
and beans 3,938 10 8,291 18 6,248 11
NOTE 7 - IMPAIRMENT IN WFI GOODWILL AND OTHER ASSETS
During the reporting period the Company examined the recoverable amount of food
import marketing and distribution activity ("Food activity") of WFI through its
subsidiaries. The recoverable value as of 30 June 2015 was estimated at
approximately NIS 191.3 million (approximately USD 50.8 million) as compare to
book value as of 30 June 2015 of NIS 280.8 million (approximately USD 74.5
million). As a result, the Company recorded a loss from impairment of value of
Food activity in the amount of NIS 89.5 million (approximately USD 23.8
million) which was included in the Profit or Loss statement as Other (income)
loss and allocated to the shareholders of the Company and the non-controlling
interests in accordance with their respective holdings.
The loss from impairment is attributed, based on the economic valuation
performed by an independent appraiser, mainly due to the following reasons:
a. WFI results fell short of its forecasts due to, among other, deteriorating
effects that occurred and grew stronger during the reporting period in the
Israeli food industry, as detailed below and are not deemed as one-time
events. In addition the Company came to conclusion that the differences
between the results and the forecasts are not only a matter of timing
differences, as a result of which WFI updated its forecasts.
b. Structural and other changes in the Israeli food industry, including (1)
debt restructuring settlement of Mega and court ordered Stay of proceedings
by Eden all as detailed in Note 4(g) above; (2) deteriorating trade terms
between the food suppliers and the Israeli food
NOTE 7 - IMPAIRMENT IN WFI GOODWILL AND OTHER ASSETS (Cont.)
retailers emphasised by the conflict between Shufersal (the largest Israeli
food retailer) and Unilever (one of the leading food suppliers in Israel); (3)
development of private label by the Israeli food retailers such as Shufersal,
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