HADERA PAPER LTD.
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(Registrant) | |||
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By:
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/s/ Yael Nevo | |
Name: Yael Nevo | |||
Title: Corporate Secretary | |||
Exhibit No.
1.
2.
3.
4.
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Description
Press release dated November 16, 2011.
Registrant's management discussion.
Registrant's unaudited condensed consolidated financial statements.
Unaudited condensed interim consolidated financial statements of Hogla- Kimberly Ltd. and subsidiaries.
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NEWS
For Release: IMMEDIATE
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-
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The Company's share in the net profit of H-K in Israel (49.9%) during the Reported Period amounted to NIS 35.2 million, as compared with NIS 56.0 million in the corresponding period last year. The decrease in the sum of NIS 20.8 million, originated primarily from the decrease in operating profit that fell from NIS 147.3 million to NIS 93.1 million this year. The sharp decrease in the operating profit is primarily attributed to the erosion of selling prices in certain segments of operation as a result of escalating competition in the market, that grew even worse towards the end of the second quarter as a result of the parallel import of Huggies diapers, coupled with non-recurring expenditures associated with compensation of consumers on account of complaints related to leaks in a new brand of diapers in the first quarter of the year, coupled with a rise in the prices of principal raw materials. These were offset by efficiency measures that were implemented across the company and the lowering of purchasing expenditures in view of the decrease in the average dollar exchange rate by approximately 6.4%. These factors served to reduce the erosion in profit during the Reported Period.
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-
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The Company's share in the losses of KCTR Turkey (49.9%) during the Reported Period amounted to NIS 65.9 million, as compared with NIS 5.5 million in the corresponding period last year, representing an increase of approximately NIS 60.4 million. The greater loss, originated primarily as a result of a NIS 58.8 million provision recorded by the company following the decisions of the Court in Turkey concerning appeals filed by KCTR pertaining to a demand for tax payment in Turkey, coupled with an increase in the operating loss, from NIS 10.5 million in the corresponding period last year, to NIS 12.5 million during the Reported Period.
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2011
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2010
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|||||||
Net sales
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1,541,733 | 784,626 | ||||||
Net earnings (loss) attributed to the Company's shareholders
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(35,704 | ) | 65,354 | |||||
Basic net earnings(loss) per share attributed to the Company's shareholders
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(7.02 | ) | 12.88 | |||||
Fully diluted earnings(loss)per share attributed to the Company's shareholders
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(7.02 | ) | 12.77 |
2011
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2010
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|||||||
Net sales
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519,491 | 295,435 | ||||||
Net earnings(loss) attributed to the Company's shareholders
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(43,560 | ) | 23,026 | |||||
Basic net earnings (loss)per share attributed to the Company's shareholders
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(8.56 | ) | 4.53 | |||||
Fully diluted earnings(loss)per share attributed to the Company's shareholders
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(8.56 | ) | 4.5 |
(1)
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The representative exchange rate at September 30, 2011 was N.I.S. 3.712=$1.00.
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1.
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Update to Chapter A, Section 5: "Equity investments in the Company and transactions in its shares"
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2.
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Update to Chapter B, Section 7 "The General Environment and Impact of External Factors on the Company"
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3.
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Update to Chapter B, Section 7 "The General Environment and Impact of External Factors on the Company"
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4.
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Update to Chapter D, Section 12 - Fixed Assets, Real Estate and Facilities
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5.
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Update to Chapter D, Section 17: "Environmental Protection"
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6.
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Update to Chapter D, Section 12 - Fixed Assets, Real Estate and Facilities
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7.
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Update to Chapter D, Section 13: "Human Resources"
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8.
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Update to Chapter D, Section 13: "Human Resources"
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9.
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Update to Chapter D, Section 13: "Human Resources"
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10.
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Update to Chapter D, Section 13: "Human Resources"
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11.
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Update to Chapter D, Section 15: "Finance"
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12.
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Update to Chapter D, Section 19: "Legal Proceedings"
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13.
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Update to Chapter D, Section 19: "Material Agreements"
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14.
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Update to Chapter D, Section 24: " Investments in Associated Companies"
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November 15, 2011
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A.
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Description of the Corporation’s Business
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1.
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Company Description
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2.
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General
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2.1.
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Business Environment
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2.2.
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Impact of the Business Environment on Company Operations
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B.
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Explanation of the Results of Operation
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1.
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Analysis of Operations and Profitability
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1.1.
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Sales
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1.2.
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Cost of Sales
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1.3.
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Selling, General and Administrative and Other Expenses
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1.4.
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Operating Profit
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1.5.
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Financial expenses
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1.6.
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Taxes on Income
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1.7.
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Company’s Share in Profits of Associated Companies
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-
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The Company's share in the net profit of Hogla Kimberly in Israel (49.9%) during the reported period amounted to NIS 35.2 million, as compared with NIS 56.0 million in the corresponding period last year. The decrease in the sum of NIS 20.8 million, originated primarily from the decrease in operating profit that fell from NIS 147.3 million to NIS 93.1 million this year. The sharp decrease in the operating profit is primarily attributed to the erosion of selling prices in certain segments of operation as a result of escalating competition in the market, that grew even worse towards the end of the second quarter as a result of the parallel import of Huggies diapers, coupled with non-recurring expenditures associated with compensation of consumers on account of complaints related to leaks in a new brand of diapers in the first quarter of the year, coupled with a rise in the prices of principal raw materials. These were offset by efficiency measures that were implemented across the company and the lowering of purchasing expenditures in view of the decrease in the average dollar exchange rate by approximately 6.4%. These factors served to reduce the erosion in profit during the reported period. See also the social protest impact, section 2.1 above
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-
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The Company's share in the losses of KCTR Turkey (49.9%) during the reported period amounted to NIS 65.9 million, as compared with NIS 5.5 million in the corresponding period last year, representing an increase of approximately NIS 60.4 million. The greater loss, originated primarily - as mentioned above - as a result of a NIS 58.8 million provision recorded by the company following the decisions of the Court in Turkey concerning appeals filed by KCTR pertaining to a demand for tax payment in Turkey. For additional details, see Section E below - Associated Companies, as well as Note 4k to the financial statements dated September 30, 2011, coupled with an increase in the operating loss, from NIS 10.5 million in the corresponding period last year, to NIS 12.5 million during the reported period.
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1.8.
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The Net Profit and the Earnings Per Share Attributed to the Company's Shareholders
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2.
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Analysis of the Company’s Financial Situation
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·
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The cash and cash equivalents item rose from NIS 161.8 million on September 30, 2010, to NIS 161.9 million on September 30, 2011. The cash and cash equivalents balance originates primarily from funds that were raised at the beginning of the third quarter as an expansion of bond series 5, for the repayment of bank loans and bond series that were raised in order to finance Machine 8, as well as to acquire control over Hadera Paper Printing. The cash balance includes the cash consolidated during the reported period from Hadera Paper Printing, in the sum of NIS 7.8 million.
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·
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The designated deposits in the sum of NIS 9.0 million on September 30, 2010, were utilized entirely in the course of 2010 for payments on account of the construction of Machine 8.
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·
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The increase in the accounts receivable item is primarily attributed to the consolidation of the accounts receivable balances of the Hadera Paper Printing segment, that amounted to approximately NIS 215.6 million as at September 30, 2011. In the packaging paper and recycling sector, an increase was recorded from NIS 108.3 million on September 30, 2010, to NIS 154.4 million on September 30, 2011. This increase is attributed both to quantitative growth in activity while recording a change in the distribution of sales in the form of an expansion in the local market at the expense of export markets, that led to an increase in the days of credit, coupled with an increase in selling prices between the two periods. In the packaging and cardboard products sector, an increase was recorded in the accounts receivable item, from NIS 186.2 million on September 30, 2010, to NIS 194.0 million on September 30, 2011, as a result of growth in the sales of the sector in light of the increase in the selling prices. Accounts receivable for the office supplies marketing sector rose from NIS 63.4 million as at September 30, 2010, to NIS 66.3 million, as at September 30, 2011, as a result of the continuing growth in the volume of operations.
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·
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Other receivables relating to the packaging paper and recycling segment decreased from NIS 114.6 million as at September 30, 2010, to NIS 65.8 million as at September 30, 2011. This decrease is primarily attributed to the lower credit/debit balances of group companies, as a result of the consolidation of the Hadera Paper Printing segment on December 31, 2010. An additional factor was the other receivables balance that was consolidated on September 30, 2011 and amounted to NIS 1.6 million. Additionally, the decrease was also attributed to revenues to collect that were recorded last year on account of the sale of real estate in Bnei-Brak. Other receivables relating to the packaging products and board sector increased from NIS 4.4 million as at September 30, 2010, to NIS 4.5 million as at September 30, 2011. Other receivables relating to the marketing of office supplies segment decreased from NIS 5.2 million as at September 30, 2010 to NIS 4.1 million as at September 30, 2011.
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·
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The increase in the inventories item originates from the consolidation of the Hadera Paper Printing inventories in the amount of approximately NIS 138.5 million, as at September 30, 2011. In the packaging paper and recycling sector a decrease was recorded from NIS 80.8 million as at September 30, 2010, to NIS 78.0 million as at September 30, 2011. This decrease is primarily attributed to the consumption of paper waste inventories in light of the full operation of the new packaging paper machine in June last year, that was offset as a result of the growth in packaging paper inventories in order to meet the growth in the volume of operations. Inventories of the packaging products and board sector increased from NIS 85.9 million as at September 30, 2010, to NIS 92.9 million as at September 30, 2011. The increase is primarily attributable to an increase in raw material prices, coupled with forecasts in the sector regarding higher demand in the fourth quarter from agriculture, as compared with the corresponding period last year. Inventories in the office supplies marketing segment increased from NIS 25.7 million as at September 30, 2010, to NIS 36.5 million as at September 30, 2011, primarily on account of the continued growth in operations, coupled with the need to manage inventories in two warehouses, in light of the relocation of the company to the logistic center in Modi'in.
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·
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The investment in associated companies decreased from NIS 349.3 million on September 30, 2010, to a sum of NIS 167.1 million on September 30, 2011. The principal components of the decrease in investment between the reported periods, include the consolidation of Hadera Paper Printing for the first time on December 31, 2010, which led to a decrease in investments of NIS 117.6 million, coupled with the company share in the dividend distributed in the amount of NIS 29.9 million from associated companies, as well as the company share in the losses of associated companies in the sum of NIS 29.1 million, that is primarily attributed to a provision for taxes in Turkey, as mentioned in Section 1.7, above.
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·
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Short-term credit increased from NIS 73.8 million on September 30, 2010, to NIS 195.8 million on September 30, 2011. The growth in this item originates primarily as a result of the consolidation of the credit balances of Hadera Paper Printing, in the amount of NIS 136.4 million as at September 30, 2011, that were offset as a result of the repayment of credit.
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·
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The decrease in the other payables item was recorded despite the consolidation of the Hadera Paper Printing balances, in the amount of NIS 5.6 million, as at September 30, 2011. The packaging paper and recycling sector recorded a decrease from NIS 98.1 million as at September 30, 2010, to NIS 87.0 million as at September 30, 2011. The decrease is primarily attributed to a decrease in expenses payable and employee institutions, coupled with a decrease in the recording of advanced revenues from the sale of real estate and expenses payable between the reported periods. Other accounts payable of the packaging products and board sector increased from NIS 12.1 million as at September 30, 2010, to NIS 12.7 million as at September 30, 2011. The other payables item at the office supplies marketing segment decreased from NIS 5.0 million on September 30, 2010, to NIS 3.9 million on September 30, 2011. This decrease is primarily attributed to the decrease in expenses to pay.
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·
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The company’s shareholders' equity decreased from NIS 931.9 million as at September 30, 2010, to NIS 903.3 million as at September 30, 2011. This change is primarily attributed to an increase in a capital reserve from translation differences, in the amount of approximately NIS 24.5 million, between the reported periods.
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3.
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Investments in Fixed Assets
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4.
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Financial Liabilities
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·
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The balance of short-term credit, as at September 30, 2011, amounted to NIS 195.8 million, as compared with NIS 73.8 million as at September 30, 2010. Most of the growth originates from the consolidation of the Hadera Paper Printing balances in the amount of NIS 136.4 million, that were offset as a result of the repayment of credit.
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·
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The net debt as at September 30, 2011, net of the balance of deposits and cash, amounted to NIS 1,054.3 million. Net of the net debt originating from the consolidation of Hadera Paper Printing, in the amount of NIS 138.6 million, the net debt totals a sum of NIS 915.7 million, as compared with net debt of NIS 914.1 million as at September 30, 2010.
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·
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On July 4, 2011, the company expanded bond series 5 and raised a gross sum of NIS 218 million from institutional investors and from the public. Part of the proceeds will serve the company primarily for reinforcing its liquidity and for the recycling of the debt.
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5.
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Financial liabilities at fair value through the statement of income
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C.
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Liquidity
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Cash Flows
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D.
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Details of Operations in the Various Sectors
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1.
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Hogla-Kimberly (Household Products)
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2.
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Hadera Paper - Printing and Writing Paper (Formerly Mondi Hadera Paper)
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3.
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Carmel Container Systems - Packaging and Board Products
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4.
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Packaging Paper and Recycling
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5.
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Graffiti - Office Supplies Marketing
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E.
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Exposure and Management of Market Risks
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1.
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General
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2.
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Market Risks to which the Company is Exposed
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Sensitivity to Interest Rates
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||||||||||||||||||||
Sensitive Instruments
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Profit (loss) from changes
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Fair value as at
Sept-30-11
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Profit (loss) from changes
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|||||||||||||||||
Interest rise
10%
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Interest rise
5%
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Interest decrease
5%
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Interest decrease
10%
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|||||||||||||||||
In NIS thousands
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||||||||||||||||||||
Debentures - Series 2
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502 | 252 | (110,199 | ) | (253 | ) | (507 | ) | ||||||||||||
Debentures - Series 3
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2,200 | 1,106 | (166,927 | ) | (1,118 | ) | (2,248 | ) | ||||||||||||
Debentures - Series 4
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1,380 | 693 | (171,355 | ) | (698 | ) | (1,400 | ) | ||||||||||||
Debentures - Series 5
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6,160 | 3,096 | (437,994 | ) | (3,129 | ) | (6,290 | ) | ||||||||||||
Loan A - fixed interest
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35 | 17 | (10,642 | ) | (17 | ) | (35 | ) | ||||||||||||
Loan B - fixed interest
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939 | 472 | (86,190 | ) | (476 | ) | (957 | ) | ||||||||||||
Loan C - fixed interest
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132 | 66 | (22,328 | ) | (66 | ) | (133 | ) |
Sensitivity to the Consumer Price Index
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||||||||||||||||||||
Sensitive Instruments
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Profit (loss) from changes
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Fair value as at Sept-30-11
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Profit (loss) from changes
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|||||||||||||||||
Rise in CPI
2%
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Rise in CPI
1%
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Decrease in CPI
1%
|
Decrease in CPI
2%
|
|||||||||||||||||
In NIS thousands
|
||||||||||||||||||||
Debentures - Series 2
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(2,204 | ) | (1,102 | ) | (110,199 | ) | 1,102 | 2,204 | ||||||||||||
Debentures - Series 3
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(3,339 | ) | (1,669 | ) | (166,927 | ) | 1,669 | 3,339 | ||||||||||||
Other accounts receivable
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23 | 12 | 1,162 | (12 | ) | (23 | ) | |||||||||||||
Accounts Payable
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(145 | ) | (73 | ) | (7,270 | ) | 73 | 145 | ||||||||||||
Linked loans
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(238 | ) | (119 | ) | (11,911 | ) | 119 | 238 | ||||||||||||
See Note 19 d to the financial statements dated December 31, 2010.
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Sensitivity to the Euro Exchange Rate
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||||||||||||||||||||
Sensitive Instruments
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Profit (loss) from changes
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Fair value as at Sept-30-11
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Profit (loss) from changes
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|||||||||||||||||
Rise in €
10%
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Rise in €
5%
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Decrease in €
5%
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Decrease in €
10%
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|||||||||||||||||
In NIS thousands
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||||||||||||||||||||
Cash and cash equivalents
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391 | 195 | 3,907 | (195 | ) | (391 | ) | |||||||||||||
Other accounts receivable
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1,352 | 676 | 13,522 | (676 | ) | (1,352 | ) | |||||||||||||
NIS-€options
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62 | 25 | - | - | - | |||||||||||||||
Accounts Payable
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(3,846 | ) | (1,923 | ) | (38,460 | ) | 1,923 | 3,846 |
Sensitivity to the US Dollar Exchange Rate
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||||||||||||||||||||
Sensitive Instruments
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Profit (loss) from changes
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Fair value as at Sept-30-11
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Profit (loss) from changes
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|||||||||||||||||
Revaluation of $
10%
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Revaluation of $
5%
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Devaluation of $
5%
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Devaluation of $
10%
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|||||||||||||||||
In NIS thousands
|
||||||||||||||||||||
Cash and cash equivalents
|
2,527 | 1,263 | 25,267 | (1,263 | ) | (2,527 | ) | |||||||||||||
Other accounts receivable
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4,655 | 2,328 | 46,555 | (2,328 | ) | (4,655 | ) | |||||||||||||
Accounts Payable
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(14,084 | ) | (7,042 | ) | (140,844 | ) | 7,042 | 14,084 | ||||||||||||
NIS/US$ forward transaction
|
118 | 62 | (7 | ) | (49 | ) | (105 | ) | ||||||||||||
NIS- US$ option
|
140 | 85 | 29 | - | - | |||||||||||||||
Loans from others
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(63 | ) | (31 | ) | (626 | ) | 31 | 63 |
Other accounts receivable reflect primarily short-term customer debts
|
Sensitivity to the exchange rate of the yen
|
||||||||||||||||||||
Sensitive Instruments
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Profit (loss) from changes
|
Fair value as at Sept-30-11
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Profit (loss) from changes
|
|||||||||||||||||
Rise in the yen
10%
|
Rise in the yen
5%
|
Decrease in the yen
5%
|
Decrease in the yen
10%
|
|||||||||||||||||
In NIS thousands
|
||||||||||||||||||||
Accounts Payable
|
(183 | ) | (92 | ) | (1,832 | ) | 92 | 183 |
Sensitivity to other currencies (GBP)
|
||||||||||||||||||||
Sensitive Instruments
|
Profit (loss) from changes
|
Fair value as at Sept-30-11
|
Profit (loss) from changes
|
|||||||||||||||||
Rise of
10%
|
Rise of
5%
|
Decrease of
5%
|
Decrease of
10%
|
|||||||||||||||||
In NIS thousands
|
||||||||||||||||||||
Other accounts receivable
|
51 | 25 | 507 | (25 | ) | (51 | ) |
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Linkage Base Report
|
In NIS millions
|
Unlinked
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CPI-linked
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In foreign currency, or linked thereto (primarily US$)
|
€-linked
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Non-
Monetary
Items
|
Total
|
||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Cash and cash equivalents
|
132.7 | 25.3 | 3.9 | 161.9 | ||||||||||||||||||||
Other accounts receivable
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633.6 | 1.2 | 47.1 | 13.5 | 10.9 | 706.3 | ||||||||||||||||||
Inventories
|
345.9 | 345.9 | ||||||||||||||||||||||
Investments in associated companies
|
19.2 | 147.9 | 167.1 | |||||||||||||||||||||
Deferred taxes on income
|
2.9 | 2.9 | ||||||||||||||||||||||
Fixed assets, net
|
1,328.3 | 1,328.3 | ||||||||||||||||||||||
Investment property (real estate)
|
26.3 | 26.3 | ||||||||||||||||||||||
Intangible Assets
|
24.6 | 24.6 | ||||||||||||||||||||||
Financial assets available for sale
|
2.7 | 2.7 | ||||||||||||||||||||||
Other assets
|
1.1 | 1.1 | ||||||||||||||||||||||
Assets on account of employee benefits
|
0.7 | 0.7 | ||||||||||||||||||||||
Total Assets
|
786.2 | 1.2 | 72.4 | 17.4 | 1,890.6 | 2,767.8 | ||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Short-term credit from banks
|
195.8 | 195.8 | ||||||||||||||||||||||
Accounts Payable
|
328.8 | 7.3 | 142.7 | 38.5 | 0.1 | 517.4 | ||||||||||||||||||
Current tax liabilities
|
13.7 | 13.7 | ||||||||||||||||||||||
Deferred taxes on income
|
42.5 | 42.5 | ||||||||||||||||||||||
Long-Term Loans
|
188.1 | 12.0 | 0.6 | 200.7 | ||||||||||||||||||||
Notes (debentures) – including current maturities
|
558.5 | 261.1 | 819.6 | |||||||||||||||||||||
Liabilities on account of employee benefits
|
45.7 | 45.7 | ||||||||||||||||||||||
Put option to holders of non-controlling interests
|
29.1 | 29.1 | ||||||||||||||||||||||
Shareholders’ equity, reserves and retained earnings
|
903.3 | 903.3 | ||||||||||||||||||||||
Total liabilities and equity
|
1,359.7 | 280.4 | 143.3 | 38.5 | 945.9 | 2,767.8 | ||||||||||||||||||
Surplus financial assets (liabilities) as at Sept-30-11
|
(573.5 | ) | (279.2 | ) | (70.9 | ) | (21.1 | ) | 944.7 | 0.0 | ||||||||||||||
Surplus financial assets (liabilities) as at Dec-31-10
|
(624.4 | ) | (296.1 | ) | (45.4 | ) | (48.2 | ) | 1,014.1 | 0.0 |
|
F.
|
Forward-Looking Statements
|
|
G.
|
Corporate Governance Issues
|
|
1.
|
External Directors
|
|
2.
|
Internal Auditing - SOX
|
|
3.
|
Detailed processes undertaken by the company's supreme supervisors, prior to the approval of the financial statements
|
1.
|
On February 8, 2011, the Board of Directors of the company authorized the Audit Committee to also serve as a committee for the examination of the financial statements. It was resolved that it would be called the balance sheet and audit committee and would be charged - on behalf of the Board of Directors - to oversee the completeness of the financial statements and the work of the auditing CPAs and to make recommendations regarding the ratification of the financial statements and a discussion thereof prior to such ratification.
|
2.
|
The members of the committee are as follows:
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Name
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External / independent director
|
Possessing accounting and financial expertise / able to read financial statements
|
Skills, education and experience
|
Provided an affidavit
|
Atalia Arad
|
External Director
|
Capable of reading and
understanding financial statements
|
Her education and professional experience (see chapter D, Appendix G of the 2010 periodical report).
|
P
|
Aliza Rotbard
|
External Director
|
Possesses accounting and
financial qualifications
|
Holds a Bachelor's degree (BSC) in Mathematics and Physics, from the Hebrew University in Jerusalem.
Director at several different companies.
|
P
|
Amos Mar-Haim
|
Possesses accounting and
financial qualifications
|
His education and professional experience (see chapter D, Appendix G of the 2010 periodical report).
|
P
|
3.
|
On November 10, 2011, the Balance Sheet and Audit Committee met to discuss the financial statements of the company for the third quarter of 2011 ("The Financial Statements") and for the purpose of formulating recommendations for the Board of Directors of the company.
|
4.
|
The position holders, interested parties, family members and/or anyone on their behalf present in the meeting of the committee, include:
|
5.
|
It should be noted that the auditing CPA also attended the meeting and presented the audit and review process that he performed in relation to the financial statements.
|
6.
|
In the course of the meeting, the committee examined the material issues related to the financial statements, the crucial estimates and critical valuations implemented in the financial statements, the plausibility of the data, the accounting policy that was implemented and changes therein, and the implementation of the proper disclosure principal in the financial statements and regarding any accompanying information.
|
7.
|
The said recommendations were forwarded to the members of the Board of Directors approximately 5 days before the date that was set for the discussion and ratification of the financial statements, excluding one issue that remained open for examination and further discussion, the recommendation of which was handed by the committee during the Board of Directors' meeting.
|
8.
|
The Board of Directors of the company believes that the recommendations of the committee were transferred to it within a reasonable time, prior to the discussion by the Board of Directors, taking into consideration the scope and complexity of the issues to be discussed in the recommendations. The Board of Directors of the company has accepted the recommendations of the Balance Sheet and Audit Committee regarding the approval of the financial statements.
|
|
4.
|
Procedure for classifying transactions as negligible
|
|
H.
|
Disclosure Directives Related to the Financial Reporting of the Corporation
|
|
1.
|
Events Subsequent to the Balance Sheet Date
|
|
I.
|
Dedicated Disclosure to Debenture Holders
|
1.
|
Financing Sources
|
|
J.
|
Dedicated Disclosure to Debenture Holders - Continued
|
2.
|
Debentures for institutional investors and the public
|
Series
|
Issue Date
|
Name of Rating Company
|
Rating at time of issue and at report date
|
Total par value at issue date
|
Interest type
|
Stated Interest
|
Registered for trade on stock exchange (Yes/No)
|
Interest payment dates
|
Par value Nominal as at Sept-30-11
|
Book value of bond balances as at
Sept-30-11
|
Book value of interest payable as at Sept-30-11
|
Fair value as at Sept-30-11
|
Material series
|
In NIS millions
|
|||||||||||||
Series 2
|
12.2003
|
Maalot
|
A+
|
200,000,000
|
Fixed
|
5.65%
|
No
|
Annual interest
December 21
In the years 2004-2013
|
85.7
|
103.8
|
4.6
|
110.2
|
Yes
|
Series 3
|
7.2008
|
Maalot
|
A+
|
187,500,000
|
Fixed
|
4.65%
|
Yes
|
Annual interest
On July 10
In the years 2009-2018
|
145.8
|
161.0
|
1.7
|
166.9
|
Yes
|
Series 4
|
7-8.2008
|
Maalot
|
A+
|
235,557,000
|
Fixed
|
7.45%
|
Yes
|
Semi-annual interest
On January 10 and July 10
In the years 2009-2015
|
157.0
|
158.3
|
2.7
|
171.3
|
Yes
|
Series 5
|
5.2010
& 7.2011
|
Maalot
|
A+
|
401,519,000
|
Fixed
|
5.85%
|
Yes
|
Semi-annual interest
On November 30 and May 31 of the years 2010-2017
|
401.5
|
396.7
|
8.0
|
438.0
|
Yes
|
|
1.
|
Series 2 - Linked to the Consumer Price Index (CPI). Principal repaid in 7 annual installments, between Dec-21-2007 and Dec-21-2013.
|
|
2.
|
Series 3 - Linked to the Consumer Price Index (CPI). Principal repaid in 9 annual installments, between July 2010 and July 2018.
|
|
3.
|
Series 4 - Principal repaid in 6 annual installments, between July 2010 and July 2015.
|
|
4.
|
Series 5 - Principal repaid in 5 annual installments, between November 2013 and November 2017.
|
|
5.
|
The trustee of the debentures (Series 2) is Bank Leumi Le-Israel Trust Corporation Ltd. The responsible contact person on behalf of Bank Leumi Le-Israel Trust Corporation Ltd. is Ms. Idit Teuzer (telephone: 03-5170777).
|
|
6.
|
The trustee of the public debentures (Series 3, 4) is Hermetic Trust Corporation (1975) Ltd. The responsible contact people on behalf of Hermetic Trust Corporation (1975) Ltd. are Mr. Dan Avnon and /or Ms. Merav Ofer-Oren (telephone: 03-5272272).
|
|
7.
|
The trustee of the public debentures (Series 5) is Strauss Lazar Trust Corporation (1992) Ltd. The responsible contact person at Strauss Lazar Trust Corporation (1992) Ltd. in the matter of the public debentures is Mr. Uri Lazar (telephone: 03-6237777).
|
|
8.
|
As at the date of the report, the Company has met all of the terms and undertakings of the trust notes and there exist no terms that constitute just cause for demanding the immediate repayment of the debentures.
|
Zvika Livnat, Chairman of the Board of Directors
|
Ofer Bloch, CEO
|
Page
|
|
Condensed Interim Consolidated Financial Statements (unaudited)
|
|
F-2-F-3
|
|
F-4
|
|
F-5
|
|
F-6-F-10
|
|
F-11-F-12
|
|
F-13-F-28
|
September 30 | December 31 | |||||||||||||||
Note | 2011 | 2010 | 2010 | |||||||||||||
(Unaudited) | ||||||||||||||||
Assets
|
||||||||||||||||
Current Assets
|
||||||||||||||||
Cash and cash equivalents
|
161,885 | 161,826 | 120,992 | |||||||||||||
Designated deposits
|
- | 9,022 | - | |||||||||||||
Trade receivables
|
630,320 | 357,947 | 564,929 | |||||||||||||
Account receivables
|
76,033 | 124,180 | 57,059 | |||||||||||||
Inventory
|
345,872 | 192,419 | 343,519 | |||||||||||||
Total Current Assets
|
1,214,110 | 845,394 | 1,086,499 | |||||||||||||
Non-Current Assets
|
||||||||||||||||
Fixed assets, net
|
5 | 1,328,273 | 1,207,822 | 1,358,619 | ||||||||||||
Investments in associated companies
|
167,079 | 349,346 | 237,498 | |||||||||||||
Deferred tax assets
|
2,913 | * 2,008 | 2,165 | |||||||||||||
Prepaid expenses in respect of an operating lease
|
4j | - | 24,964 | 24,836 | ||||||||||||
Other intangible assets
|
24,619 | 24,266 | 35,714 | |||||||||||||
Investment property
|
2c | 26,300 | 24,500 | 24,500 | ||||||||||||
Financial assets - available for sale
|
2,726 | - | 1,646 | |||||||||||||
Other assets
|
1,054 | 2,158 | 1,364 | |||||||||||||
Employee benefit assets
|
725 | 730 | 793 | |||||||||||||
Total Non-Current Assets
|
1,553,689 | 1,635,794 | 1,687,135 | |||||||||||||
Total Assets
|
2,767,799 | 2,481,188 | 2,773,634 |
September 30 | December 31 | |||||||||||||||
Note | 2011 | 2010 | 2010 | |||||||||||||
(Unaudited) | ||||||||||||||||
Liabilities and Equity
|
||||||||||||||||
Current Liabilities
|
||||||||||||||||
Credit from banks and others
|
195,770 | 73,752 | 144,622 | |||||||||||||
Current maturities of long-term bonds and long term loans
|
158,019 | 165,917 | 175,936 | |||||||||||||
Trade payables
|
408,208 | 267,426 | 370,065 | |||||||||||||
Account payables
|
109,180 | 115,214 | 172,295 | |||||||||||||
Employee benefit liabilities
|
28,019 | 20,494 | 27,586 | |||||||||||||
Financial liability at fair value through profit and loss
|
2d | - | 13,700 | - | ||||||||||||
Current tax liabilities
|
13,694 | 6,617 | 19,951 | |||||||||||||
Total Current Liabilities
|
912,890 | 663,120 | 910,455 | |||||||||||||
Non-Current Liabilities
|
||||||||||||||||
Loans from banks and others
|
139,673 | 250,932 | 251,283 | |||||||||||||
Bonds
|
722,673 | 594,372 | 562,348 | |||||||||||||
Deferred tax liabilities
|
42,474 | * 26,057 | 45,302 | |||||||||||||
Employee benefit liabilities
|
17,639 | 14,829 | 19,132 | |||||||||||||
Financial liability with respect to Put option granted to the non-controlling interests
|
2d | 29,137 | - | 31,512 | ||||||||||||
Total Non-Current Liabilities
|
951,596 | 886,190 | 909,577 | |||||||||||||
Capital and reserves
|
||||||||||||||||
Issued capital
|
125,267 | 125,267 | 125,267 | |||||||||||||
Reserves
|
287,213 | 310,621 | 298,258 | |||||||||||||
Retained earnings
|
471,835 | 469,627 | 506,445 | |||||||||||||
Capital and reserves attributed to shareholders
|
884,315 | 905,515 | 929,970 | |||||||||||||
Non-controlling interests
|
18,998 | 26,363 | 23,632 | |||||||||||||
Total capital and reserves
|
903,313 | 931,878 | 953,602 | |||||||||||||
Total Liabilities and Equity
|
2,767,799 | 2,481,188 | 2,773,634 |
Z. Livnat
|
O. Bloch
|
S. Gliksberg
|
||
Chairman of the Board of Directors
|
Chief Executive Officer
|
Chief Financial and Business
Development Officer
|
Note | Nine months ended
September 30
|
Three months ended
September 30
|
Year ended
December 31
|
|||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2010 | ||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||
Revenues
|
1,541,733 | 784,626 | 519,491 | 295,435 | 1,121,008 | |||||||||||||||||||
Cost of sales
|
1,361,315 | 661,045 | 463,665 | 254,697 | 945,422 | |||||||||||||||||||
Gross profit
|
180,418 | 123,581 | 55,826 | 40,738 | 175,586 | |||||||||||||||||||
Selling, marketing, general and administrative expenses
|
||||||||||||||||||||||||
Selling and marketing expenses
|
112,457 | 63,532 | 38,388 | 22,878 | 87,201 | |||||||||||||||||||
General and administrative expenses
|
53,879 | 43,897 | 18,510 | 14,922 | 59,603 | |||||||||||||||||||
Other expenses (income), net
|
4h | (31,756 | ) | (16,584 | ) | 8,430 | (17,226 | ) | (32,513 | ) | ||||||||||||||
Total expenses
|
134,580 | 90,845 | 65,328 | 20,574 | 114,291 | |||||||||||||||||||
Profit from ordinary operations
|
45,838 | 32,736 | (9,502 | ) | 20,164 | 61,295 | ||||||||||||||||||
Finance income
|
7,168 | 5,231 | 915 | 2,611 | 9,314 | |||||||||||||||||||
Finance expenses
|
68,840 | 33,662 | 26,451 | 20,263 | 54,079 | |||||||||||||||||||
Finance expenses, net
|
61,672 | 28,431 | 25,536 | 17,652 | 44,765 | |||||||||||||||||||
Profit (Loss) after financial expenses
|
(15,834 | ) | 4,305 | (35,038 | ) | 2,512 | 16,530 | |||||||||||||||||
Share in profit (loss) of associated companies, net
|
(29,100 | ) | 58,546 | (16,384 | ) | 18,490 | 81,132 | |||||||||||||||||
Profit (Loss) before taxes on income
|
(44,934 | ) | 62,851 | (51,422 | ) | 21,002 | 97,662 | |||||||||||||||||
Taxes on income
|
6 | (4,605 | ) | (2,461 | ) | (6,028 | ) | (2,085 | ) | (2,950 | ) | |||||||||||||
Profit (loss) for the period
|
(40,329 | ) | 65,312 | (45,394 | ) | 23,087 | 100,612 | |||||||||||||||||
Attributed to: | ||||||||||||||||||||||||
Company shareholders
|
(35,704 | ) | 65,354 | (43,560 | ) | 23,026 | 100,728 | |||||||||||||||||
Non-controlling interests
|
(4,625 | ) | (42 | ) | (1,834 | ) | 61 | (116 | ) | |||||||||||||||
(40,329 | ) | 65,312 | (45,394 | ) | 23,087 | 100,612 |
NIS
|
||||||||||||||||||||||||
Earnings (loss) for regular share of NIS 0.01 par value | ||||||||||||||||||||||||
Primary earnings (loss) per share attributed to Company shareholders
|
(7.02 | ) | 12.88 | (8.56 | ) | 4.53 | 19.84 | |||||||||||||||||
Fully diluted earnings (loss) per share attributed to company shareholders
|
(7.02 | ) | 12.77 | (8.56 | ) | 4.50 | 19.68 | |||||||||||||||||
Weighted average number of share used to compute the earning per share
|
||||||||||||||||||||||||
Primary
|
5,089,272 | 5,075,922 | 5,089,811 | 5,082,028 | 5,078,156 | |||||||||||||||||||
Fully diluted
|
5,089,272 | 5,116,355 | 5,089,811 | 5,114,456 | 5,118,416 |
Nine months ended
|
Three months ended
|
Year ended
|
||||||||||||||||||
September 30
|
September 30
|
December 31
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2010
|
||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Profit (Loss) for the period
|
(40,329 | ) | 65,312 | (45,394 | ) | 23,087 | 100,612 | |||||||||||||
Other Comprehensive Income (loss), net
|
||||||||||||||||||||
Profit (loss) on cash flow hedges, net
|
- | 1,213 | - | 2,184 | 1,044 | |||||||||||||||
Actuarial profit in respect of defined benefit plan, net
|
(223 | ) | 32 | (79 | ) | 111 | 115 | |||||||||||||
Profit from fair value adjustment of financial asset available for sale, net
|
864 | - | 174 | - | - | |||||||||||||||
Share in Other Comprehensive Income (loss) of associated companies, net
|
(11,726 | ) | 964 | (3,757 | ) | 4,203 | (11,711 | ) | ||||||||||||
Share in Other Comprehensive Income of associated companies, which allocated to the income statements, net
|
347 | 315 | 347 | 8 | 446 | |||||||||||||||
Total Other Comprehensive Income (loss) for the period, net
|
(10,738 | ) | 2,524 | (3,315 | ) | 6,506 | (10,106 | ) | ||||||||||||
Total Comprehensive Income (loss) for the period
|
(51,067 | ) | 67,836 | (48,709 | ) | 29,593 | 90,506 | |||||||||||||
Attributed to:
Company shareholders
|
(46,433 | ) | 67,857 | (46,866 | ) | 29,470 | 90,605 | |||||||||||||
Non-controlling interests
|
(4,634 | ) | (21 | ) | (1,843 | ) | 123 | (99 | ) | |||||||||||
(51,067 | ) | 67,836 | (48,709 | ) | 29,593 | 90,506 |
Share capital
|
Share Premium
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise
of employee options
|
Capital reserve from revaluation from step acquisition
|
Cash Flows Hedging reserves
|
Foreign currency translation reserves
|
Capital reserve from revaluation of financial asset - available for sale
|
Retained earnings
|
Total for Company shareholders
|
Non-controlling interests
|
Total
|
|||||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||||||||||
Balance - January 1, 2011
|
125,267 | 306,851 | 7,988 | 3,397 | 12,420 | 1,123 | (33,521 | ) | - | 506,445 | 929,970 | 23,632 | 953,602 | |||||||||||||||||||||||||||||||||||
For the Nine months
ended September 30, 2011:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Exchange differences arising on
translation of foreign
operations
|
- | - | - | - | - | - | (12,415 | ) | - | - | (12,415 | ) | - | (12,415 | ) | |||||||||||||||||||||||||||||||||
Cash flow hedges transactions
|
- | - | - | - | - | 1,036 | - | - | - | 1,036 | - | 1,036 | ||||||||||||||||||||||||||||||||||||
Actuarial loss from defined
benefit plan
|
- | - | - | - | - | - | - | - | (214 | ) | (214 | ) | (9 | ) | (223 | ) | ||||||||||||||||||||||||||||||||
Profit from fair value adjustment
of financial asset
available for sale
|
- | - | - | - | - | - | - | 864 | - | 864 | - | 864 | ||||||||||||||||||||||||||||||||||||
Loss for the period
|
- | - | - | - | - | - | - | - | (35,704 | ) | (35,704 | ) | (4,625 | ) | (40,329 | ) | ||||||||||||||||||||||||||||||||
Total Comprehensive
Income (loss) for
the period
|
- | - | - | - | - | 1,036 | (12,415 | ) | 864 | (35,918 | ) | (46,433 | ) | (4,634 | ) | (51,067 | ) | |||||||||||||||||||||||||||||||
Depreciation of capital
from revaluation from
step acquisition to
retained earnings
|
- | - | - | - | (1,308 | ) | - | - | - | 1,308 | - | - | - | |||||||||||||||||||||||||||||||||||
Share based payment
|
- | - | 778 | - | - | - | - | - | - | 778 | - | 778 | ||||||||||||||||||||||||||||||||||||
Conversion of employee
options into shares
|
*- | 1,694 | (1,694 | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Balance – September
30, 2011
|
125,267 | 308,545 | 7,072 | 3,397 | 11,112 | 2,159 | (45,936 | ) | 864 | 471,835 | 884,315 | 18,998 | 903,313 |
Share capital
|
Share Premium
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise
of employee options
|
Capital reserve from revaluation from step acquisition
|
Cash Flows Hedging reserves
|
Foreign currency translation reserves
|
Retained earnings
|
Total for Company shareholders
|
Non-controlling interests
|
Total
|
||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||||||
Balance - January 1, 2010
|
125,267 | 301,695 | 10,531 | 3,397 | 14,164 | 517 | (22,872 | ) | 402,936 | 835,635 | 26,384 | 862,019 | ||||||||||||||||||||||||||||||||
For the Nine months
ended September
30, 2010:
|
||||||||||||||||||||||||||||||||||||||||||||
Exchange differences
arising on translation
of foreign operations
|
- | - | - | - | - | - | 1,476 | - | 1,476 | - | 1,476 | |||||||||||||||||||||||||||||||||
Cash flow hedges
transactions
|
- | - | - | - | - | 998 | - | - | 998 | 18 | 1,016 | |||||||||||||||||||||||||||||||||
Actuarial loss from
defined benefit plan
|
- | - | - | - | - | - | - | 29 | 29 | 3 | 32 | |||||||||||||||||||||||||||||||||
Profit (Loss) for
the period
|
- | - | - | - | - | - | 65,354 | 65,354 | (42 | ) | 65,312 | |||||||||||||||||||||||||||||||||
Total Comprehensive
Income (loss)
for the period
|
- | - | - | - | - | 998 | 1,476 | 65,383 | 67,857 | (21 | ) | 67,836 | ||||||||||||||||||||||||||||||||
Depreciation of capital
from revaluation from
step acquisition to
retained earnings
|
- | - | - | (1,308 | ) | - | - | 1,308 | - | - | - | |||||||||||||||||||||||||||||||||
Share based payment
|
- | - | 2,023 | - | - | - | - | - | 2,023 | - | 2,023 | |||||||||||||||||||||||||||||||||
Conversion of
employee options
into shares
|
*- | 5,106 | (5,106 | ) | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Balance – September 30, 2010
|
125,267 | 306,801 | 7,448 | 3,397 | 12,856 | 1,515 | (21,396 | ) | 469,627 | 905,515 | 26,363 | 931,878 |
*
|
Represents an amount less than NIS 1,000.
|
Share capital
|
Share Premium
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise
of employee options
|
Capital reserve from revaluation from step acquisition
|
Cash Flows Hedging reserves
|
Foreign currency translation reserves
|
Capital reserve from revaluation of financial asset - available for sale
|
Retained earnings
|
Total for Company shareholders
|
Non-controlling interests
|
Total
|
|||||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||||||||||
Balance - July 1, 2011
|
125,267 | 308,545 | 7,039 | 3,397 | 11,548 | 1,410 | (41,777 | ) | 690 | 515,029 | 931,148 | 20,841 | 951,989 | |||||||||||||||||||||||||||||||||||
For the Three
months ended September
30, 2011:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Exchange differences
arising on translation of
foreign operations
|
- | - | - | - | - | - | (4,159 | ) | - | - | (4,159 | ) | - | (4,159 | ) | |||||||||||||||||||||||||||||||||
Cash flow hedges
transactions
|
- | - | - | - | - | 749 | - | - | - | 749 | - | 749 | ||||||||||||||||||||||||||||||||||||
Actuarial loss from
defined benefit plan
|
- | - | - | - | - | - | - | - | (70 | ) | (70 | ) | (9 | ) | (79 | ) | ||||||||||||||||||||||||||||||||
Profit from fair
value adjustment of
financial asset
available for sale
|
- | - | - | - | - | - | - | 174 | - | 174 | - | 174 | ||||||||||||||||||||||||||||||||||||
Loss for the period
|
- | - | - | - | - | - | - | - | (43,560 | ) | (43,560 | ) | (1,834 | ) | (45,394 | ) | ||||||||||||||||||||||||||||||||
Total Comprehensive
Income (loss)
for the period
|
- | - | - | - | - | 749 | (4,159 | ) | 174 | (43,630 | ) | (46,866 | ) | (1,843 | ) | (48,709 | ) | |||||||||||||||||||||||||||||||
Depreciation of capital
from revaluation from
step acquisition
to retained earnings
|
- | - | - | - | (436 | ) | - | - | - | 436 | - | - | - | |||||||||||||||||||||||||||||||||||
Share based payment
|
- | - | 33 | - | - | - | - | - | - | 33 | - | 33 | ||||||||||||||||||||||||||||||||||||
Balance – September
30, 2011
|
125,267 | 308,545 | 7,072 | 3,397 | 11,112 | 2,159 | (45,936 | ) | 864 | 471,835 | 884,315 | 18,998 | 903,313 |
Share capital
|
Share Premium
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise
of employee options
|
Capital reserve from revaluation from step acquisition
|
Cash Flows Hedging reserves
|
Foreign currency translation reserves
|
Retained earnings
|
Total for Company shareholders
|
Non-controlling interests
|
Total
|
||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||||||
Balance - July 1, 2010
|
125,267 | 306,801 | 6,858 | 3,397 | 13,292 | (415 | ) | (25,810 | ) | 446,065 | 875,455 | 26,240 | 901,695 | |||||||||||||||||||||||||||||||
For the Three
months ended
September 30, 2010:
|
||||||||||||||||||||||||||||||||||||||||||||
Exchange differences
arising on translation
of foreign operations
|
- | - | - | - | - | - | 4,414 | - | 4,414 | - | 4,414 | |||||||||||||||||||||||||||||||||
Cash flow hedges
transactions
|
- | - | - | - | - | 1,930 | - | - | 1,930 | 51 | 1,981 | |||||||||||||||||||||||||||||||||
Actuarial profit from
defined benefit plan
|
- | - | - | - | - | - | - | 100 | 100 | 11 | 111 | |||||||||||||||||||||||||||||||||
Profit for
the period
|
- | - | - | - | - | - | - | 23,026 | 23,026 | 61 | 23,087 | |||||||||||||||||||||||||||||||||
Total Comprehensive
Income for
the period
|
- | - | - | - | - | 1,930 | 4,414 | 23,126 | 29,470 | 123 | 29,593 | |||||||||||||||||||||||||||||||||
Depreciation of capital
from revaluation from
step acquisition
to retained earnings
|
- | - | - | - | (436 | ) | - | - | 436 | - | - | - | ||||||||||||||||||||||||||||||||
Share based payment
|
- | - | 590 | - | - | - | - | - | 590 | - | 590 | |||||||||||||||||||||||||||||||||
Balance – September
30, 2010
|
125,267 | 306,801 | 7,448 | 3,397 | 12,856 | 1,515 | (21,396 | ) | 469,627 | 905,515 | 26,363 | 931,878 |
Share capital
|
Capital reserves
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise of employee options
|
Capital reserve from revaluation from step acquisition
|
Cash Flows Hedging reserves
|
Foreign currency translation reserves
|
Retained earnings
|
Total for Company shareholders
|
Non-controlling interests
|
Total
|
||||||||||||||||||||||||||||||||||
Balance - January
1, 2010
|
125,267 | 301,695 | 10,531 | 3,397 | 14,164 | 517 | (22,872 | ) | 402,936 | 835,635 | 26,384 | 862,019 | ||||||||||||||||||||||||||||||||
Exchange differences
arising on translation
of foreign operations
|
- | - | - | - | - | - | (10,649 | ) | - | (10,649 | ) | - | (10,649 | ) | ||||||||||||||||||||||||||||||
Cash flow hedges
transactions
|
- | - | - | - | - | 606 | - | - | 606 | 18 | 624 | |||||||||||||||||||||||||||||||||
Actuarial loss from
defined benefit
plans, net
|
- | - | - | - | - | (80 | ) | (80 | ) | (1 | ) | (81 | ) | |||||||||||||||||||||||||||||||
Profit (loss)
for the year
|
- | - | - | - | - | - | 100,728 | 100,728 | (116 | ) | 100,612 | |||||||||||||||||||||||||||||||||
Total Comprehensive
Income (loss)
for the Year
|
- | - | - | - | - | 606 | (10,649 | ) | 100,648 | 90,605 | (99 | ) | 90,506 | |||||||||||||||||||||||||||||||
Share purchase from
non-controlling
interests in subsidiary
|
- | - | - | - | - | - | - | 1,117 | 1,117 | (17,498 | ) | (16,381 | ) | |||||||||||||||||||||||||||||||
Entry into consolidation
|
- | - | - | - | - | - | - | - | - | 14,845 | 14,845 | |||||||||||||||||||||||||||||||||
Depreciation of capital
from revaluation from
step acquisition to
retained earnings
|
- | - | - | - | (1,744 | ) | - | - | 1,744 | - | - | - | ||||||||||||||||||||||||||||||||
Share based payment
|
- | - | 2,613 | - | - | - | - | - | 2,613 | - | 2,613 | |||||||||||||||||||||||||||||||||
Conversion of employee
options into shares
|
*- | 5,156 | (5,156 | ) | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Balance – December
31, 2010
|
125,267 | 306,851 | 7,988 | 3,397 | 12,420 | 1,123 | (33,521 | ) | 506,445 | 929,970 | 23,632 | 953,602 |
*
|
Represents an amount less than NIS 1,000.
|
Nine months ended
|
Three months ended
|
Year ended
|
||||||||||||||||||
September 30
|
September 30
|
December 31
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2010
|
||||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||||||
Cash flows – operating activities
|
||||||||||||||||||||
Profit (Loss) for the period
|
(40,329 | ) | 65,312 | (45,394 | ) | 23,087 | 100,612 | |||||||||||||
Taxes on income recognized in profit and loss
|
(4,605 | ) | (2,461 | ) | (6,028 | ) | (2,085 | ) | (2,950 | ) | ||||||||||
Finance expenses, net recognized in profit and loss
|
61,672 | 28,431 | 25,536 | 17,652 | 44,765 | |||||||||||||||
Capital profit on disposal of fixed assets
|
(37,482 | ) | (19,444 | ) | (23 | ) | (17,973 | ) | (19,556 | ) | ||||||||||
Gain from revaluation of prior holding at fair value due to achieving control
|
- | - | - | - | (5,760 | ) | ||||||||||||||
Share in loss (profit) of associated company
|
29,100 | (58,546 | ) | 16,384 | (18,490 | ) | (81,132 | ) | ||||||||||||
Dividend received from associated company
|
17,465 | 52,854 | - | 22,914 | 70,319 | |||||||||||||||
Depreciation and amortization
|
94,131 | 64,224 | 37,447 | 25,412 | 88,047 | |||||||||||||||
Income from fair value adjustment of investment property
|
(94 | ) | (151 | ) | (94 | ) | (151 | ) | (151 | ) | ||||||||||
Share based payments expenses
|
679 | 1,623 | 9 | 481 | 2,104 | |||||||||||||||
120,537 | 131,842 | 27,837 | 50,847 | 196,298 | ||||||||||||||||
Changes in assets and liabilities:
|
||||||||||||||||||||
Increase in trade and other receivables
|
(70,373 | ) | (40,935 | ) | (31,279 | ) | (26,064 | ) | (51,546 | ) | ||||||||||
Increase in inventory
|
(6,164 | ) | (16,475 | ) | (9,584 | ) | (1,241 | ) | (5,926 | ) | ||||||||||
Increase in trade payables and account payables
|
32,458 | 54,130 | 27,076 | 41,751 | 47,999 | |||||||||||||||
Increase (Decrease) in financial liability
|
(2,375 | ) | 1,718 | (266 | ) | (328 | ) | 872 | ||||||||||||
Increase (Decrease) in employee benefit liabilities
|
(1,479 | ) | (2,371 | ) | (2,944 | ) | (1,550 | ) | 6,678 | |||||||||||
(47,933 | ) | (3,933 | ) | (16,997 | ) | 12,568 | (1,923 | ) | ||||||||||||
Payments Taxes
|
(4,603 | ) | (1,149 | ) | (1,382 | ) | - | (1,293 | ) | |||||||||||
Net cash generated by operating activities
|
68,001 | 126,760 | 9,458 | 63,415 | 193,082 |
Nine months ended
|
Three months ended
|
Year ended
|
||||||||||||||||||||||
September 30
|
September 30
|
December 31
|
||||||||||||||||||||||
Note
|
2011
|
2010
|
2011
|
2010
|
2010
|
|||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||||||
Cash flows – investing activities
|
||||||||||||||||||||||||
Acquisition of fixed assets and Prepaid expenses in respect of a financing lease
|
5 | (59,213 | ) | (175,417 | ) | (23,646 | ) | (60,226 | ) | (219,124 | ) | |||||||||||||
Acquisition of subsidiary
|
4f | (48,506 | ) | - | - | - | 13,111 | |||||||||||||||||
Acquisition of other assets
|
(186 | ) | (1,223 | ) | - | (3 | ) | (2,956 | ) | |||||||||||||||
Proceeds from disposal of fixed assets and from sale of assets under an operating lease
|
4j | 57,944 | 8,656 | 528 | 6,102 | 18,277 | ||||||||||||||||||
Decrease in designated deposits
|
- | 116,334 | - | 1,777 | 127,600 | |||||||||||||||||||
Interest received
|
3,647 | 1,317 | 1,171 | 594 | 1,829 | |||||||||||||||||||
Granting of loans to an associated company
|
- | (978 | ) | - | (162 | ) | (978 | ) | ||||||||||||||||
Net cash used in investing activities
|
(46,314 | ) | (51,311 | ) | (21,947 | ) | (51,918 | ) | (62,241 | ) | ||||||||||||||
Cash flows – financing activities
|
||||||||||||||||||||||||
Proceeds from issuing bonds (less issuance
expenses)
|
216,326 | 179,886 | 216,326 | - | 179,886 | |||||||||||||||||||
Short-term bank credit – net
|
51,148 | (57,820 | ) | 1,583 | (349 | ) | (79,802 | ) | ||||||||||||||||
Long term loans received
|
626 | 83,500 | 626 | 6,200 | 93,500 | |||||||||||||||||||
Repayment of Long term loans
|
(132,151 | ) | (43,240 | ) | (49,975 | ) | (16,904 | ) | (56,804 | ) | ||||||||||||||
Interest Paid
|
(49,005 | ) | (40,319 | ) | (24,151 | ) | (22,599 | ) | (58,538 | ) | ||||||||||||||
Repayment of bonds
|
(62,358 | ) | (61,322 | ) | (62,358 | ) | (61,322 | ) | (94,994 | ) | ||||||||||||||
Dividend paid to non-controlling interests
|
(4,273 | ) | - | - | - | - | ||||||||||||||||||
Share purchase from non-controlling interests in subsidiary
|
(702 | ) | - | - | - | (15,703 | ) | |||||||||||||||||
Net cash generated by (used in) financing activities
|
19,611 | 60,685 | 82,051 | (94,974 | ) | (32,455 | ) | |||||||||||||||||
Increase (Decrease) in cash and cash equivalents
|
41,298 | 136,134 | 69,562 | (83,477 | ) | 98,386 | ||||||||||||||||||
Cash and cash equivalents – beginning of period
|
120,992 | 26,261 | 91,534 | 245,875 | 26,261 | |||||||||||||||||||
Net foreign exchange difference
|
(405 | ) | (569 | ) | 789 | (572 | ) | (3,655 | ) | |||||||||||||||
Cash and cash equivalents – end of period
|
161,885 | 161,826 | 161,885 | 161,826 | 120,992 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
|
A.
|
Description Of Business
|
B.
|
For further information read these concise reports in connection with the Company's annual financial statements as of December 31, 2010 and the year then ended, as were published in the shelf prospectus on May 26, 2011, and the accompanying notes.
|
A.
|
Basis of preparation
|
B.
|
The consolidated concise financial statements were prepared in accordance with the disclosure provisions of Section D of the Securities Regulations (Periodic and Immediate Reports), 1970.
|
C.
|
Measuring fair value of investment property in the interim financial statements
|
D.
|
Taxes on income in the interim financial statements
|
E.
|
Exchange Rates and Linkage Basis
|
(1)
|
Foreign currency balance, or balances linked to foreign currency are included in the financial statements according to the exchange rate announced by the Bank of Israel on the end of the reporting period.
|
(2)
|
Balances linked to the CPI are presented according to index of the last month of the reporting period.
|
(3)
|
Following are the changes in the representative exchange rates of the Euro and the U.S. dollar vis-a-vis the NIS and in the Israeli Consumer Price Index (“CPI”):
|
As of:
|
Representative exchange rate of the dollar
(NIS per $1)
|
Representative exchange rate of the Euro
(NIS per €1)
|
CPI
“in respect of”
(in points) (*)
|
|||||||||
September 30, 2011
|
3.712 | 5.044 | 216.27 | |||||||||
September 30, 2010
|
3.665 | 4.987 | 210.11 | |||||||||
December 31, 2010
|
3.549 | 4.738 | 211.67 |
Increase (decrease) during the:
|
%
|
%
|
%
|
|||||||||
Three months ended September 30, 2011
|
8.70 | 2.01 | 0.00 | |||||||||
Three months ended September 30, 2010
|
(5.42 | ) | 4.82 | 1.23 | ||||||||
Nine months ended September 30, 2011
|
4.59 | 6.46 | 2.17 | |||||||||
Nine months ended September 30, 2010
|
(2.94 | ) | (8.36 | ) | 1.90 | |||||||
Year ended December 31, 2010
|
(5.99 | ) | (12.94 | ) | 2.70 |
|
(*) Based on the CPI for the month ending at the end of each reporting period, on an average basis of 100=1993.
|
A.
|
New standards and interpretations that are effective and that do not have a material effect on the reporting period and/or previous reporting periods:
|
A.
|
New standards and interpretations that are effective and that do not have a material effect on the reporting period and/or previous reporting periods: (cont.)
|
§
|
IAS 34 Revised "Interim Financial Reporting"
|
§
|
For information regarding the standards, interpretations and amendments to the standards set forth below, see notes 3b and 3c to the Company's financial statements for the year ended December 31, 2010.
|
|
§
|
Amendment to IFRS 3 (Revised) "Business Combinations" (regarding measurement of non-controlling interests).
|
|
§
|
Amendment to IAS27 (Revised) "Consolidated and Separated Financial Statements".
|
|
§
|
Amendment to IFRS 7 "Financial Instruments: Disclosure" (regarding the nature and extent of risks arising from financial instruments).
|
B.
|
New Standards and Interpretations that have been Published but not yet Become Effective, and have not been Adopted by the Group in Early Adoption, which expected or may have an impact on future periods:
|
§
|
Amendment to IAS 12 "Taxes on Income"
|
§
|
IFRS 10 "Consolidated Financial Statements"
|
|
§
|
The existence of control by one entity in another entity is to be determined on the basis of a uniform model, which is independent of whether the other entity is "a special purpose entity". In this capacity, the interpretation of SIC 12 "Consolidation of entities for special purposes" has been cancelled.
|
B.
|
New Standards and Interpretations that have been Published but not yet Become Effective, and have not been Adopted by the Group in Early Adoption, which expected or may have an impact on future periods: (cont.)
|
§
|
IFRS 10 "Consolidated Financial Statements"(cont.)
|
|
§
|
Control by an investor in another entity (hereinafter: "The investee entity") exists where the investor has power in relation to the investee entity, it has an exposure to the variable returns from its involvement in the investee entity and the ability to make use of its power in order to affect the level of the return.
|
|
§
|
The standard determines provisions for testing for the existence of "practical control" where the entity holds less than half of the voting rights in another entity. For this purpose, inter alia, the investor's holding rate in the investee entity, the extent of the public's holdings and the degree to which they are dispersed are all to be examined.
|
|
§
|
Potential voting rights in the investee entity are to be taken into account for the purpose of the determination of the existence of control where their terms afford a real ability to direct the relevant activities of the entity in the present.
|
|
§
|
The new standard does not contain a change in the procedures in respect of the consolidation of the financial statements.
|
§
|
IFRS 12 "Disclosure of interests in other entities"
|
§
|
IAS 28 (2011) "Investments in associates and joint ventures"
|
|
§
|
The equity method of accounting is to be implemented in respect of both affiliated companies and joint ventures.
|
|
§
|
Where the investment in a joint venture is classified as an investment in an affiliated company, or vice-versa, no re-measurement is to be made of the entity's rights in the investee entity.
|
B.
|
New Standards and Interpretations that have been Published but not yet Become Effective, and have not been Adopted by the Group in Early Adoption, which expected or may have an impact on future periods: (cont.)
|
§
|
IAS 28 (2011) "Investments in associates and joint ventures" (cont.)
|
|
§
|
When there is a decrease in the holding rate in a joint venture or an affiliated company, which does not cause the discontinuation of the implementation of the equity method of accounting, the investor is only to reclassify the proportionate amounts that were previously recognized under other comprehensive income to the statement of income.
|
|
§
|
The part of the investments that is treated under the equity method of accounting is to be classified as a non-current asset that is held for sale, on the assumption that this element meets the conditions for such classification.
|
§
|
Amendment to IAS 1 (Revised) "Presentation of financial statements (on the subject of the presentation of elements of other comprehensive income in the statements of comprehensive income)
|
|
§
|
Items that are to be classified in the future to the statement of income.
|
|
§
|
Items that are not to be classified in the future to the statement of income.
|
§
|
For information regarding commencement dates, transitional provisions and the expected impact on the Company from the standards, amendments to standards and interpretations detailed below see note 3C to the annual financial statements of the Company as of December 31, 2010 and the year then ended:
|
§
|
IFRS 9: "Financial instruments".
|
C.
|
New standards amendments and interpretations which have been published but not yet become effective and have not been adopted by the Group in early adoption, and are not expected to affect the Group's financial statements:
|
§
|
IFRS 11 "Joint arrangements"
|
|
§
|
Activity under joint control is a joint arrangement between the parties that exercise joint control, which affords them rights to the assets and undertakings in respect of the liabilities of the activity. An entity that holds joint control in activity under joint control is to recognize its share of the assets, the liabilities, the revenues and the expenses of the activity in its consolidated financial statements.
|
|
§
|
A joint venture is a joint arrangement between parties having joint control in an arrangement, who hold rights in the net assets of the venture. An entity that holds joint control in a joint venture is to present its investment therein under the equity method of accounting in accordance with IAS 28 (2011) "Investments in associates and joint ventures".
|
§
|
IFRS 13 "Fair value measurement"
|
C.
|
New standards amendments and interpretations which have been published but not yet become effective and have not been adopted by the Group in early adoption, and are not expected to affect the Group's financial statements: (cont.)
|
§
|
IAS 19 (2011) "Employee benefits"
|
|
§
|
Actuarial gains or losses are to be reflected under other comprehensive income and are not to be classified to the statement of income at a later stage. Accordingly, the alternatives of the reflection of the actuarial gains or losses to the statement of income immediately or in accordance with the strip method have been cancelled.
|
|
§
|
Income from interest in respect of plan assets for a defined benefit plan are to be recognized on the basis of discount rate of the commitment and not in accordance with the expected return on the asset.
|
|
§
|
Short-term employee benefits are to include benefits that are expected to be fully cleared within 12 months from the end of the year in which the service that entitles the employee to the benefit was provided.
|
|
§
|
Benefits in respect of severance pay as the result of a proposal to encourage voluntary termination are to be recognized as a commitment at the time at which the reporting entity has no possibility of reneging on the proposal.
|
§
|
For information regarding commencement dates and the transitional provisions of the standards, amendments and interpretations detailed below, see note 3D to the annual financial statements of the Company as of December 31, 2010 and the year then ended:
|
§
|
Amendment to IFRS 7 "Financial Instruments: Disclosure" (regarding disclosure on the transfer of financial assets).
|
a.
|
On January 31, 2011 a dividend in cash, in the amount of NIS 4.6 million, that was declared on December 30, 2010, was received from a former associated company that was first consolidated on 31 December, 2010.
|
b.
|
On February 23, 2011, an associated company declared a distribution of a dividend in the amount of approximately NIS 30 million out of the retained earnings accumulated as of December 31, 2010. The dividend was paid on June 30, 2011. The Company’s share in the dividend is approximately NIS 15 million.
|
|
c.
|
On March 24, 2011 an associated company paid a dividend that was declared on July 27, 2010, in the amount of NIS 5 million. The Company’s share in the dividend is approximately NIS 2.5 million.
|
|
d.
|
On July 26, 2011 an associated company declared the distribution of a dividend in the amount of approximately NIS 30 million from the retained earnings for June 30, 2011. The dividend will be paid during the fourth quarter of 2011. The Company’s share in the dividend is approximately NIS 15 million.
|
|
e.
|
On May 27, 2011 the Company published a shelf prospectus that was amended on June 19, 2011 by which the Company issued on July 4, 2011, debentures (Series 5) of the Company, by way of extending a series issued on May 23, 2010. The Company has offered an amount of NIS 220,000 thousands par value of debentures (Series 5) issued in return for NIS 218,020 thousands bearing an interest rate of 5.85%. The principal is payable in five annual equal payments, each on November 30th of the years 2013-2017. The interest is payable half annually each on May 31st and November 30th of the years 2011-2017. The net proceed of the offering net of issue expenses is NIS 216,326 thousands.
|
|
f.
|
On January 5, 2011, the Company paid the entire consideration in the amount of NIS 48.5 million in respect of the acquisition of shares in Hadera Paper –Printing and Writing Paper on December 31, 2010. For additional details see Note 17 in the Company's financial statements as of December 31, 2010
|
|
g.
|
On January 30, 2011 the Ministry for the Protection of the Environment (hereinafter: "the Ministry") held a hearing for the Company regarding suspicion of pollution of water by discharging low quality waste water into the Hadera Stream.
On February 8, 2011 the Company received the summary of the hearing in which it was found, inter alia, that the Company had a duty to improve the quality of the waste water, and a duty of reporting weekly to the Ministry regarding the quality of the treated waste water. The Company has taken and takes actions which resulted in a significant improvement, in the quality of the treated waste water discharged into the river. The company cannot at this stage estimate the impact of the above.
|
|
h.
|
On February 28, the Audit Committee approved and on March 6, 2011 the Board of Directors approved the agreement entered into by the Company, whereby the Company would lease to CLAL PV Projects Ltd. ("CLAL PV"), a private company indirectly held and controlled by CLAL Industries and Investments Ltd. ("CLAL"), the parent company, roofs of buildings at the Company facility in Hadera, with a total area of up to 19,200 m2, of which the Company has the option, which has been exercised by it, not to lease part of this space with an area of up to 14,300 m2 - for construction of power generating facilities using photo-voltaic technology and its transmission to the power grid during the lease term, pursuant to a generation license to be granted to CLAL PV. The rent would range between NIS 90 thousand and NIS 230 thousand per year, and shall be determined based on the tariff per generated kilowatt/hour of power as set for CLAL PV in its generation license. The agreement also specifies that the Company would be paid additional rent up to NIS 70 thousand per year, with respect to excess power generated (if any), as per provisions of the agreement. The lease term runs from the date of taking possession of the leased property through the 20th anniversary of commercial operation of the leased property (as defined in the agreement); CLAL PV was granted an option to extend the lease, provided that the total lease term would not exceed 24 years and 11 months. The agreement includes customary provisions with regard to circumstances under which the parties may terminate the agreement, and the Company was granted the option to terminate the agreement should it announce its desire to use the leased property for its own operations which do not allow operation of the facility in the leased property; in such case, CLAL PV committed to vacate the leased property within the time specified, in return for payment of the economic value of the generation facility based on an independent economic valuation. The agreement is subject to certain suspending conditions being met within 15 months from its signing date, including, inter alia, obtaining approvals, permits and licenses for construction of the facility, obtaining approval of the General Meeting of Company shareholders to be convened to approve this contract and other conditions. On March 15, 2011 the aforementioned agreement was signed, and on April 21, 2011 the General Meeting of the company's shareholders approved the contract.
|
|
i.
|
On March 6, 2011, the Board of Directors of the Company approved incorporation of a foreign entity (hereinafter: "the foreign entity"), wholly-owned by the Company, which is to be incorporated for entering into agreement with an overseas business partner (an unrelated third party) for operations in removal of paper and cardboard waste and recycling operations overseas under a Joint Venture (hereinafter: "JV"). During the second quarter of 2011, The Company recorded the foreign company as aforesaid, and then signed the mentioned agreement with the overseas business partner. The Company's share of this operation is 65%. This operation requires an initial investment, to be made in stages based on JV needs, amounting to USD 5.2 million, by way of owners' loan or guarantee, 80% of which would be invested by the Company. As of the date of the financial statements the company has invested a total amount of NIS 2.5 million by owners' loan.
The agreement includes restrictions on partner rights to transfer their JV shares, grants the foreign entity the right to appoint two thirds of the JV Board members as well as its CEO, grants the Company the right to purchase up to 75% of the paper and cardboard waste collected by JV at market prices, and includes certain non-compete provisions. The JV began to operate in the third quarter of 2011 and is consolidated within the financial statements of the company as at September 30, 2011.
|
|
j.
|
On March 27, the sale of a plot of land in the Totseret Ha'Aretz Street in Tel-Aviv has been fulfilled according to agreement that the company signed with Gev-Yam land corporation Ltd ("Gev-Yam"), a company indirectly controlled by IDB Development Company Ltd., The controlling shareholder of the Company, and with Amot Investments Ltd. As a result of the closing transaction, the Company recorded subject to the agreement, during the reporting period, capital gain, of approximately NIS 35.8 million (net of tax - approximately NIS 28 million).
|
|
k.
|
During the year of 2009, as part of a formal tax inspection of the Turkish Tax Authorities, the Financial Reports for the years 2004-2008 of KCTR the Turkish subsidiary ("KCTR") of the associated company Hogla- Kimberly Ltd, held by 49.9% were examined.
On February 16, 2010, KCTR received a tax inspection report, following the aforementioned inspection, according to which KCTR is required to an additional tax payment for two matters audited, on the total amount of YTL 153 million (approximately USD 82.4 million) including interest, fines and VAT refund offset.
Regarding one of the matters, which is the essential part of the tax demand (tax on capital injection from Hogla- Kimberly to KCTR), KCTR has filed, based on its tax consultant opinion in Turkey, in 2010, appeals to the court against the demand of the tax authorities.
|
k.
|
(cont.)
|
l.
|
On May 2, 2011 petition was filed against Hogla-Kimberly Ltd an associated company, for the approval of a class action. According to the petition, the plaintiff claimed that Huggies diapers, marketed by Hogla-Kimberly Ltd, which she purchased, did not absorb as was expected due to a fault in the diapers production line. The plaintiff estimates the scope of the class action to be approximately NIS 1.2 billion.
|
|
m.
|
On May 15, 2011 the company announced that an agreement for purchase of natural gas was signed between the company and the partners in the Yam Tethys projects ("The Agreement"). Pursuant to the agreement, the term of the agreement signed between the companies on July 29, 2005 for the purchase of natural gas ("The Original Agreement"), will be extended by an additional 2 years, until June 30, 2013.
The formula for the price of gas set in the agreement is based on the price of petroleum (Brent barrel) and includes a minimum price for the price of gas. It should be noted, that following the sharp rise in fuel prices that took place since the signing of the original agreement, the price of gas in the agreement is significantly higher than the maximum price that was set in the original agreement.
This fact could potentially have an impact on the price of gas for the company, as compared with the cost according to the original agreement, by an additional sum of approximately USD 19.4 million per annum (according to the calculation of the formula at the date of signing the agreement, in terms of gross cost, prior to tax shield). The Company is preparing for a cost-cutting and efficiency plan accordingly.
The actual cost of the gas is dependent upon numerous factors, primarily changes in global petroleum prices. The remaining terms of the original agreement would remain in force, with the necessary changes.
The overall financial volume of the agreement in its signature date was estimated at approximately USD 63 million (according to the calculation of the formula at the date of signing the agreement). It should be clarified that the actual volume may change over time as a result of changes in global petroleum prices.
|
|
n.
|
In light of indications of impairment that rose as a result of the results of the Carmel cash-generating unit, the Company commissioned an external and independent appraiser to examine the need for a provision for impairment. The evaluation was made on the basis of its use value, based on the capitalized cash flows that are expected to be generated by the company, using a discount rate of 9.5% and it was found that the value of Carmel is lower than its book value by approximately NIS 6,988 thousands. The company consequently recognized a loss on account of impairment that was charged to other expenses, against the write off of a surplus in accounts receivable in the amount of NIS 8,761 thousands and a decrease in the balance of the tax reserve on account of this surplus cost, in the sum of NIS 1,773 thousands.
As part of the valuation, the valuator relied on the tax rates as determined in the government ratification, dated October 30, 2011, of the recommendations of the Taxation Chapter by the Trachtenberg Committee, where it was resolved to cease the lowering of income tax rates for individuals and for corporate taxes, as determined in the Law for Economic Encouragement of 2009. Starting with the tax year 2012, the corporate tax rate would be increased to 25%. Accordingly, the valuator utilized a tax rate of 25%.
|
|
o.
|
In light of indications that rose as a result of the results of the Printing and Writing papers cash-generating unit, the Company commissioned an external and independent appraiser to examine the need for a provision for impairment. The evaluation was made on the basis of its use value, based on the capitalized cash flows that are expected to be generated by the company, using a discount rate of 9.5% and it was found that the value of Printing and Writing papers is actually higher than its book value and no recognition is necessary of a loss on account of impairment.
As part of the valuation, the valuator relied on the tax rates as determined in the government ratification, dated October 30, 2011, of the recommendations of the Taxation Chapter by the Trachtenberg Committee, where it was resolved to cease the lowering of income tax rates for individuals and for corporate taxes, as determined in the Law for Economic Encouragement of 2009. Starting with the tax year 2012, the corporate tax rate would be increased to 25%. Accordingly, the valuator utilized a tax rate of 25%.
|
a.
|
General
|
b.
|
Analysis of incomes and results according to operating segments:
|
Nine months
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NIS in thousands
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Packaging Paper and recycling
|
Marketing of
office supplies
|
Packaging and cardboard products
|
Hogla Kimberly
|
Printing and
writing paper*
|
Adjustments to consolidation
|
Total
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Jan-September
2011
|
Jan- September
2010
|
Jan- September
2011
|
Jan- September
2010
|
Jan- September
2011
|
Jan- September
2010
|
Jan- September
2011
|
Jan- September
2010
|
Jan- September
2011
|
Jan- September
2010
|
Jan- September
2011
|
Jan- September
2010
|
Jan- September
2011
|
Jan- September
2010
|
|||||||||||||||||||||||||||||||||||||||||||
Sales to external
customers
|
435,637 | 261,070 | 138,094 | 125,450 | 395,414 | 351,157 | 1,194,350 | 1,282,330 | 526,258 | 525,531 | (1,194,350 | ) | (1,807,861 | ) | 1,495,403 | 737,677 | ||||||||||||||||||||||||||||||||||||||||
Sales between Segments
|
116,951 | 80,410 | 1,571 | 1,731 | 17,029 | 13,979 | 4,701 | 4,068 | 27,696 | 27,934 | (121,618 | ) | (81,173 | ) | 46,330 | 46,949 | ||||||||||||||||||||||||||||||||||||||||
Total sales
|
552,588 | 341,480 | 139,665 | 127,181 | 412,443 | 365,136 | 1,199,051 | 1,286,398 | 553,954 | 553,465 | (1,315,968 | ) | (1,889,034 | ) | 1,541,733 | 784,626 | ||||||||||||||||||||||||||||||||||||||||
Segment results
|
**60,420 | 26,790 | (2,535 | ) | 2,397 | 2,018 | 3,926 | 80,251 | 136,730 | (13,106 | ) | 30,409 | (81,210 | ) | (167,516 | ) | 45,838 | 32,736 | ||||||||||||||||||||||||||||||||||||||
Finance expenses, net
|
61,672 | 28,431 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share in profit (loss) of associated companies, net
|
(29,100 | ) | 58,546 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit (loss) before taxes on income
|
(44,934 | ) | 62,851 |
* As of December 31, 2010 the Company consolidates Printing and writing segment in its financial statements.
|
** Segment results include a one - time income in the amount of NIS 35,765 thousands for the sale of real estate. See note 4h above.
|
b.
|
Analysis of incomes and results according to operating segments: (cont.)
|
Three months
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NIS in thousands
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Packaging Paper and recycling
|
Marketing of
office supplies
|
Packaging and cardboard products
|
Hogla Kimberly
|
Printing and
writing paper*
|
Adjustments to consolidation
|
Total
|
||||||||||||||||||||||||||||||||||||||||||||||||||
July- September
2011
|
July - September
2010
|
July - September
2011
|
July - September
2010
|
July - September
2011
|
July - September
2010
|
July - September
2011
|
July - September
2010
|
July - September
2011
|
July - September
2010
|
July - September
2011
|
July - September
2010
|
July - September
2011
|
July - September
2010
|
|||||||||||||||||||||||||||||||||||||||||||
Sales to external customers
|
155,546 | 119,396 | 48,372 | 43,203 | 125,983 | 118,125 | 360,946 | 425,815 | 175,147 | 185,994 | (360,946 | ) | (611,809 | ) | 505,048 | 280,724 | ||||||||||||||||||||||||||||||||||||||||
Sales between Segments
|
36,763 | 32,609 | 467 | 488 | 5,834 | 5,167 | 927 | 1,687 | 9,591 | 10,011 | (39,139 | ) | (35,251 | ) | 14,443 | 14,711 | ||||||||||||||||||||||||||||||||||||||||
Total sales
|
192,309 | 152,005 | 48,839 | 43,691 | 131,817 | 123,292 | 361,873 | 427,502 | 184,738 | 196,005 | (400,085 | ) | (647,060 | ) | 519,491 | 295,435 | ||||||||||||||||||||||||||||||||||||||||
Segment results
|
(5,165 | ) | 18,750 | 151 | 277 | (1,684 | ) | 1,001 | 20,408 | 43,597 | (3,209 | ) | 7,219 | (20,003 | ) | (50,680 | ) | (9,502 | ) | 20,164 | ||||||||||||||||||||||||||||||||||||
Finance expenses, net
|
25,536 | 17,652 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share in profit (loss) of associated companies, net
|
(16,384 | ) | 18,490 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit (Loss) before taxes on income
|
(51,422 | ) | 21,002 |
* As of December 31, 2010 the Company consolidates Printing and writing segment in its financial statements.
|
b.
|
Analysis of incomes and results according to operating segments: (cont.)
|
Year ended December 31, 2010
|
||||||||||||||||||||||||||||
NIS in thousands
|
||||||||||||||||||||||||||||
Packaging Paper and recycling
|
Marketing of
office supplies
|
Packaging and cardboard products
|
Hogla Kimberly
|
Printing and
writing paper*
|
Adjustments to consolidation
|
Total
|
||||||||||||||||||||||
Sales to external customers
|
393,439 | 176,580 | 489,543 | 1,691,918 | 691,069 | (2,382,986 | ) | 1,059,563 | ||||||||||||||||||||
Sales between Segments
|
117,927 | 2,267 | 20,102 | 5,591 | 37,633 | (122,075 | ) | 61,445 | ||||||||||||||||||||
Total sales
|
511,366 | 178,847 | 509,645 | 1,697,509 | 728,702 | (2,505,061 | ) | 1,121,008 | ||||||||||||||||||||
Segment results
|
50,159 | 5,127 | 7,105 | 186,603 | 31,072 | (218,771 | ) | 61,295 | ||||||||||||||||||||
Finance expenses, net
|
(44,765 | ) | ||||||||||||||||||||||||||
Share in profit of associated companies, net
|
81,132 | |||||||||||||||||||||||||||
Profit before taxes on income
|
97,662 |
*
|
As of December 31, 2010 the Company consolidates Printing and writing segment in its financial statements.
|
|
a)
|
On October 17, 2011 the board of directors of the associated company Hogla-Kimberly ltd. approved an issuance of a corporate guarantee in favor of corporate bank (HSBC) up to the amount of 31.7 million YTL (approximately USD 17.7 million) plus interest and other expenses, to the assurance of future payment by KCTR to Turkish tax authorities if and as ever this payment will be required. See note 4k.
|
|
b)
|
Pursuant to the efficiency and cost-cutting measures implemented by the company, and as part thereof, the Board of Directors of the company approved an agreement signed by the company on November 10, 2011, with the union of company employees and with the New General Histadrut Union in the Hadera region (“The Agreement”), within whose framework it will be agreed, inter alia, to update the collective employment agreements, along with an early retirement plan of an approximately 70 employees of the Company, before December 31, 2011.
|
As of September 30, 2010
|
||||||||||||
As was classified
in the past
|
The change
|
As classified in
these statements
|
||||||||||
NIS in thousands
|
||||||||||||
Deferred tax assets
|
45,403 | (43,395 | ) | 2,008 | ||||||||
Deferred tax liabilities
|
69,452 | (43,395 | ) | 26,057 |
Re:
|
Financial Valuation of the operations of Hadera Paper - Printing and Writing Paper Ltd.
|
-
|
Financial statements of Hadera Paper Printing for the years 2008-2010 and for the period between 1-9/11;
|
-
|
Public announcements made by Hadera Paper;
|
-
|
Information and clarifications received from the management of Hadera Paper Printing and from the management of Hadera Paper;
|
-
|
Sector-specific information.
|
Chapter
|
Page
|
||
1.
|
Background
|
1
|
|
a.
|
General
|
1
|
|
b.
|
Macro-Economic Environment
|
3
|
|
2.
|
Business Environment
|
11
|
|
a.
|
Products and competition
|
11
|
|
b.
|
Customers
|
13
|
|
c.
|
Raw Materials and Suppliers
|
15
|
|
d.
|
Production and distribution
|
18
|
|
e.
|
SWOT Analysis
|
19
|
|
3.
|
Financial Analysis
|
21
|
|
a.
|
Revenues and Profitability
|
22
|
|
b.
|
The Financial Situation
|
25
|
|
c.
|
Working capital requirements
|
25
|
|
d.
|
Investments and depreciation
|
26
|
|
e.
|
Operating assets
|
26
|
|
4.
|
Estimation of the Enterprise Value
|
27
|
|
a.
|
Methodology
|
27
|
|
b.
|
Model assumptions
|
28
|
|
c.
|
Estimation of the Enterprise Value
|
34
|
Appendix A -
|
Additional information pursuant to Securities Regulations (Periodic and immediate reports), 1970
|
1.
|
Background
|
|
a.
|
General
|
2007
|
2008
|
2009
|
2010
|
Jan-Sept/10
|
Jan-Sept/11
|
|||||||||||||||||||
NIS millions
|
||||||||||||||||||||||||
Revenues
|
770 | 732 | 669 | 728 | 554 | 554 | ||||||||||||||||||
Gross Profit
|
82 | 83 | 91 | 88 | 74 | 29 | ||||||||||||||||||
Operating Profit
|
34 | 34 | 40 | 31 | 30 | (13 | ) | |||||||||||||||||
Rate of change in revenues
|
8.2 | % | (4.9 | )% | (8.6 | )% | 8.8 | % | ||||||||||||||||
Gross margin
|
10.6 | % | 11.3 | % | 13.6 | % | 12.1 | % | 13.4 | % | 5.2 | % | ||||||||||||
Operating margin
|
4.4 | % | 4.7 | % | 6.0 | % | 4.3 | % | 5.4 | % | (2.3 | )% |
|
b.
|
Macro-Economic Environment
|
For the purpose of the preparation of the following professional opinion, it was assumed that a slow improvement in the economic situation would continue over the next several years, both globally and in Israel.
It was further assumed that despite nominal interest rate changes anticipated in the years ahead, there will not be any significant change in the real interest rate environment in the economy.
|
2.
|
Business Environment
|
|
a.
|
Products and competition
|
|
b.
|
Customers
|
|
-
|
Printing Sector
Marketing of fine paper manufactured by Hadera Paper Printing and imported coated paper. The paper is usually supplied to this sector in large sheets or rolls.
|
|
-
|
Office supplies retailers
Marketing and sale of writing paper for private and office uses (mainly A4 sheets) to office supplies retailers. Hadera Paper Printing's customers include the three largest office supplies retailers in Israel: Office Depot, Kravitz and Graffiti3, smaller marketers and large commercial and institutional customers, such as government offices, banks, etc.
|
|
-
|
Independent distributors
Hadera Paper Printing markets its products to small customers through independent distributors.
|
|
-
|
Paper product manufacturers
In this segment, Hadera Paper Printing markets fine paper to manufacturers of paper products: Envelopes, notebooks and writing pads, and to businesses specializing in digital printing (office stationery, greeting cards, etc).
|
|
c.
|
Raw Materials and Suppliers
|
|
d.
|
Production and distribution
|
|
e.
|
SWOT Analysis
|
|
-
|
Only manufacturer of fine paper in Israel.
|
|
-
|
The required capital investment constitutes a high entry barrier for paper manufacturers and consequently, the probability of establish an additional fine paper plant in Israel is slim.
|
|
-
|
Mondi, one of the leading global manufacturers of fine paper, holds 25% of the shares of Hadera Paper Printing, thereby providing access to the know-how and purchasing systems of Mondi around the world.
|
|
-
|
Hadera Paper Printing products are well known as high-quality products, that meet stringent quality requirements.
|
|
-
|
A diverse products mix.
|
|
-
|
Full utilization of output capacity, increasing production above the potential lies in the optimization of the production process and requires investments in the paper machine.
|
|
-
|
The main raw material – pulp - is not produced in Israel. The chances of significantly expanding the plant or acquiring a new paper machine for the plant in Israel, are slim.
|
|
-
|
Dependence upon a local supplier of chalk.
|
|
-
|
Exposure to prices of raw materials, exchange rates and energy prices.
|
|
-
|
Company dependence upon exogenous factors such as fine paper prices and pulp prices globally (SPI Index).
|
|
-
|
Additional expansion of output capacity through optimization of the process at a small investment.
|
|
-
|
Development and manufacture of unique / niche products, primarily for exports, while considerably improving the company's profitability.
|
|
-
|
Expansion of the "green" product line and relying upon the Mondi R&D in order to reduce their manufacturing costs.
|
|
-
|
Competing imports of surplus manufacturing from Europe at dumping prices.
|
|
-
|
Deepening of the economic crisis, including a reduction in paper for business needs.
|
|
-
|
Deterioration of the security / political situation in the region could adversely impact direct exports.
|
|
-
|
Erosion of SPI globally as a result of the economies of scale of the new plants, while harming the profitability of the old plants.
|
3.
|
Financial Analysis
|
2007
|
2008
|
2009
|
2010
|
Jan-Sept/10
|
Jan-Sept/11
|
|||||||||||||||||||
NIS millions
|
||||||||||||||||||||||||
Revenues
|
770 | 732 | 669 | 728 | 554 | 554 | ||||||||||||||||||
Cost of Revenues
|
688 | 650 | 578 | 640 | 480 | 525 | ||||||||||||||||||
Gross Profit
|
82 | 83 | 91 | 88 | 74 | 29 | ||||||||||||||||||
Selling and marketing expenses
|
38 | 38 | 40 | 43 | 32 | 37 | ||||||||||||||||||
General & Administrative Expenses
|
11 | 10 | 11 | 14 | 12 | 5 | ||||||||||||||||||
Other Income (Expenses)
|
- | (1 | ) | - | - | - | - | |||||||||||||||||
Operating profit (loss)
|
34 | 34 | 40 | 31 | 30 | (13 | ) | |||||||||||||||||
Financial expenses, net
|
8 | 8 | 11 | 2 | 2 | 9 | ||||||||||||||||||
Pre-tax income (expenses)
|
25 | 26 | 29 | 29 | 28 | (22 | ) | |||||||||||||||||
Tax expenses (income)
|
7 | 7 | 1 | 7 | 7 | (5 | ) | |||||||||||||||||
Net Income (loss)
|
18 | 19 | 28 | 22 | 21 | (17 | ) | |||||||||||||||||
EBITDA
|
44 | 46 | 52 | 43 | 39 | (4 | ) | |||||||||||||||||
Rate of change in revenues
|
8.2 | % | (4.9 | )% | (8.6 | )% | 8.8 | % | ||||||||||||||||
Gross margin
|
10.6 | % | 11.3 | % | 13.6 | % | 12.1 | % | 13.4 | % | 5.2 | % | ||||||||||||
Operating margin
|
4.4 | % | 4.7 | % | 6.0 | % | 4.3 | % | 5.4 | % | (2.3 | )% | ||||||||||||
Net margin
|
2.3 | % | 2.6 | % | 4.2 | % | 3.0 | % | 3.8 | % | (3.1 | )% | ||||||||||||
EBITDA %
|
5.8 | % | 6.2 | % | 7.8 | % | 5.9 | % | 7.0 | % | (0.7 | )% | ||||||||||||
Effective tax rate
|
28.6 | % | 26.8 | % | 3.4 | % | 24.1 | % | 25.0 | % | 22.7 | % |
31/12/10
|
30/9/11
|
31/12/10
|
30/9/11
|
||||||||||||||
NIS millions
|
NIS millions
|
||||||||||||||||
Cash and cash equivalents
|
13 | 8 |
Short-term bank credit
|
93 | 136 | ||||||||||||
Accounts receivable
|
176 | 216 |
Current maturities of long-term credit
|
4 | 3 | ||||||||||||
Other accounts receivable
|
6 | 2 |
Suppliers and service providers
|
120 | 122 | ||||||||||||
Inventories
|
162 | 138 |
Debt to Hadera Paper, net
|
54 | 52 | ||||||||||||
Others
|
29 | 25 | |||||||||||||||
Declared dividend
|
9 | - | |||||||||||||||
Total current assets
|
357 | 364 |
Total current liabilities
|
309 | 338 | ||||||||||||
Long-term deferred income tax
|
22 | 17 | |||||||||||||||
Long-term credit net of current maturities
|
9 | 7 | |||||||||||||||
Intangible Assets
|
3 | 3 |
Liabilities in respect of employees, net
|
3 | 2 | ||||||||||||
Total long-term investments
|
3 | 3 |
Total long-term liabilities
|
34 | 26 | ||||||||||||
Fixed assets, net
|
146 | 143 |
Shareholders' equity
|
163 | 146 | ||||||||||||
Total Assets
|
506 | 510 |
Total Capital and Liabilities
|
506 | 510 |
|
a.
|
Revenues and Profitability
|
2007
|
2008
|
2009
|
2010
|
Jan-Sept/10
|
Jan-Sept/11
|
|||||||||||||||||||
NIS millions
|
||||||||||||||||||||||||
Revenues from manufacturing operations
|
580 | 570 | 531 | 570 | 432 | 400 | ||||||||||||||||||
Rate of change
|
9 | % | (2 | )% | (7 | )% | 7 | % | (8 | )% | ||||||||||||||
Revenues from commercial operations
|
190 | 163 | 138 | 158 | 122 | 154 | ||||||||||||||||||
Rate of change
|
7 | % | (14 | )% | (15 | )% | 14 | % | 27 | % | ||||||||||||||
Total revenues
|
770 | 732 | 669 | 728 | 554 | 554 | ||||||||||||||||||
Weight of manufacturing operations
|
75 | % | 78 | % | 79 | % | 78 | % | 78 | % | 72 | % |
2007
|
2008
|
2009
|
2010
|
Jan-Sept/10
|
Jan-Sept/11
|
|||||||||||||||||||
NIS millions
|
||||||||||||||||||||||||
Materials
|
383 | 373 | 292 | 392 | 295 | 280 | ||||||||||||||||||
Cost of labor
|
41 | 43 | 44 | 47 | 36 | 37 | ||||||||||||||||||
Energy
|
58 | 49 | 48 | 43 | 32 | 35 | ||||||||||||||||||
Other manufacturing costs
|
33 | 39 | 34 | 29 | 22 | 21 | ||||||||||||||||||
Changes in inventories
|
(13 | ) | (8 | ) | 32 | (12 | ) | (14 | ) | 7 | ||||||||||||||
Depreciation
|
10 | 12 | 11 | 11 | 9 | 8 | ||||||||||||||||||
Cost of purchased products
|
176 | 142 | 117 | 130 | 101 | 136 | ||||||||||||||||||
Total cost of revenues
|
688 | 650 | 578 | 640 | 480 | 525 | ||||||||||||||||||
% materials*
|
64 | % | 64 | % | 61 | % | 67 | % | 65 | % | 72 | % | ||||||||||||
% purchased products
|
92 | % | 87 | % | 85 | % | 82 | % | 83 | % | 88 | % | ||||||||||||
% Change in cost of labor
|
7 | % | 5 | % | 3 | % | 7 | % | 4 | % | ||||||||||||||
% other manufacturing costs
|
11.8 | % | 12.1 | % | 12.3 | % | 9.9 | % | 9.8 | % | 10.2 | % | ||||||||||||
* Including changes in inventories
|
2007
|
2008
|
2009
|
2010
|
Jan-Sept/10
|
Jan-Sept/11
|
|||||||||||||||||||
NIS millions
|
||||||||||||||||||||||||
Cost of labor
|
19 | 20 | 20 | 20 | 15 | 16 | ||||||||||||||||||
Packaging, transportation and shipping
|
8 | 8 | 10 | 12 | 9 | 10 | ||||||||||||||||||
Maintenance and rent
|
8 | 8 | 8 | 9 | 6 | 11 | ||||||||||||||||||
Others
|
3 | 2 | 2 | 2 | 2 | 1 | ||||||||||||||||||
Total selling and marketing expenses
|
38 | 38 | 40 | 43 | 32 | 37 | ||||||||||||||||||
Cost of labor
|
4 | 4 | 4 | 5 | 4 | 3 | ||||||||||||||||||
Provision for doubtful debts
|
0 | 1 | 3 | 4 | 4 | (1 | ) | |||||||||||||||||
Others
|
7 | 5 | 4 | 5 | 4 | 3 | ||||||||||||||||||
Total general and administrative expenses
|
11 | 10 | 11 | 14 | 12 | 5 | ||||||||||||||||||
% Change in cost of labor
|
2.2 | % | 1.3 | % | 0.8 | % | 4.2 | % | (1.7 | )% | ||||||||||||||
% variable expenses
|
1.4 | % | 1.4 | % | 1.8 | % | 1.9 | % | 2.0 | % | 1.9 | % | ||||||||||||
% change fixed costs*
|
10.3 | % | (12.7 | )% | (12.2 | )% | 21.7 | % | 38.2 | % | ||||||||||||||
* Net of cost of labor
|
|
b.
|
The Financial Situation
|
30/9/11
|
||||
NIS millions
|
||||
Short-term bank credit
|
136 | |||
Financial debt to Hadera Paper*
|
13 | |||
Long term credit
|
10 | |||
Long-term deferred income tax**
|
22 | |||
Liabilities in respect of employees, net
|
3 | |||
Total financial liabilities
|
184 | |||
Net of cash and cash equivalents.
|
8 | |||
Net financial debt
|
176 | |||
* Included in debt to Hadera Paper, net
|
||||
** Deferred tax for valuation purposes was calculated assuming corporate tax rate in 2012 and thereafter would be 25%. See Taxation Assumptions in Section 4b, below.
|
|
c.
|
Working capital requirements
|
31/12/10
|
30/9/11
|
|||||||
NIS millions
|
||||||||
Accounts receivable
|
176 | 216 | ||||||
Inventories
|
162 | 138 | ||||||
Suppliers and service providers
|
120 | 122 | ||||||
Commercial debt to Hadera Paper*
|
41 | 39 | ||||||
Operating working capital, net
|
177 | 193 | ||||||
Percentage of revenues
|
24.2 | % | 26.5 | % | ||||
* Included in debt to Hadera Paper, net
|
|
d.
|
Investments and depreciation
|
2007
|
2008
|
2009
|
2010
|
Jan-Sept/10
|
Jan-Sept/11
|
|||||||||||||||||||
NIS millions
|
||||||||||||||||||||||||
Investments
|
9 | 11 | 4 | 10 | 3 | 5 | ||||||||||||||||||
Depreciation
|
11 | 12 | 12 | 12 | 9 | 9 | ||||||||||||||||||
Investment to depreciation ratio
|
84 | % | 95 | % | 33 | % | 83 | % | 33 | % | 56 | % |
|
e.
|
Operating assets
|
30/9/11
|
||||
NIS millions
|
||||
Operating working capital, net
|
193 | |||
Other receivables and payables, net
|
(23 | ) | ||
Intangible Assets*
|
12 | |||
Fixed assets, net
|
143 | |||
Total operating assets, net
|
325 | |||
* Including intangible assets on account of Hadera Paper Printing in the Hadera Paper books.
|
4.
|
Estimation of the Enterprise Value
|
|
a.
|
Methodology
|
|
ke
|
=
|
Cost of shareholders' equity;
|
|
kd
|
=
|
Cost of external capital;
|
|
T
|
=
|
Corporate tax rate;
|
|
D
|
=
|
Estimated value of net financial debt;
|
|
E
|
=
|
Estimated value of shareholders' equity;
|
|
Rf
|
=
|
Risk-free interest rate;
|
|
Rm-Rf
|
=
|
Market risk-free premium on account of a share that forms part of the market portfolio;
|
|
β
|
=
|
Correlation coefficient of share return with market portfolio return; |
|
δ |
=
|
Specific risk premium reflecting the unique risks of the company. In this professional opinion, the risk premium was estimated on the basis of historical differences in the returns of companies possessing a relative low market cap in the American market.
|
|
b.
|
Model assumptions
|
2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||
18 | % | 20 | % | 21 | % | 22 | % | 23 | % | 24 | % |
In view of the government resolution dated October 30, 2011, to cancel the tax reduction described above and to raise the corporate tax rate to 25% in the year 2012, inter alia, due to the social protests mentioned in Section 1b, above, it was assumed that the corporate tax rate that will be effective in the economy from the year 2012 and thereafter, shall be equal to 25%. Hadera Paper Printing was recently recognized as an "Approved Enterprise" for tax purposes, subject to meeting certain conditions, as stipulated in Section 3a, above. Due to uncertainty regarding the dates when the conditions of this approval will be met, for the purpose of performing the valuation, it was assumed that the effective tax rate during the term of the forecast will be similar to the statutory tax rate.
|
|
c.
|
Estimation of the Enterprise Value
|
2009
|
2010
|
2011E* |
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Representative
year
|
||||||||||||||||||||||||||||
Actual
|
Forecast
|
|||||||||||||||||||||||||||||||||||
NIS millions
|
||||||||||||||||||||||||||||||||||||
Revenues
|
669 | 728 | 728 | 755 | 769 | 781 | 792 | 804 | 816 | |||||||||||||||||||||||||||
Cost of Revenues
|
578 | 640 | 689 | 691 | 699 | 695 | 694 | 695 | 706 | |||||||||||||||||||||||||||
Gross Profit
|
91 | 88 | 39 | 64 | 70 | 85 | 99 | 109 | 111 | |||||||||||||||||||||||||||
Selling and marketing expenses
|
40 | 43 | 48 | 49 | 50 | 50 | 51 | 52 | 53 | |||||||||||||||||||||||||||
General & Administrative Expenses
|
11 | 14 | 7 | 9 | 9 | 10 | 10 | 10 | 10 | |||||||||||||||||||||||||||
Operating Profit
|
40 | 31 | (16 | ) | 6 | 11 | 25 | 38 | 47 | 48 | ||||||||||||||||||||||||||
Rate of change in revenues
|
(8.6 | )% | 8.8 | % | 0.0 | % | 3.7 | % | 1.9 | % | 1.5 | % | 1.5 | % | 1.5 | % | 1.5 | % | ||||||||||||||||||
Gross margin
|
13.6 | % | 12.1 | % | 5.4 | % | 8.5 | % | 9.1 | % | 10.9 | % | 12.4 | % | 13.5 | % | 13.5 | % | ||||||||||||||||||
Operating margin
|
6.0 | % | 4.3 | % | (2.2 | )% | 0.8 | % | 1.5 | % | 3.2 | % | 4.8 | % | 5.9 | % | 5.9 | % | ||||||||||||||||||
* Based on 12 months ended Sept-30-11, with necessary adjustments.
|
1.
|
The engagement for performing the valuation was commissioned by the VP of Finance and Business Development of Hadera Paper Ltd., on September 19, 2011.
|
2.
|
Following below is the summarized information regarding Section 8b(i) to the regulations
|
Regulation No.
|
Information required by regulation
|
8b. (i)(1)
|
The aim of the valuation is to examine the enterprise value (EV) of Hadera Paper Printing in order to examine the need for impairment in the financial statements of Hadera Paper, in accordance with International Accounting Standard IAS 36 - Asset Impairment for the purpose of accounting reporting.
|
8b. (i)(2)
|
The valuation is as at September 30, 2011.
|
8b. (i)(3) and (4)
|
The enterprise value of Hadera Paper Printing as at September 30, 2011, lies in the range between NIS 366-373 million, as compared with net operating assets as at that date, in the sum of NIS 325 million.
|
8b. (i)(5)
|
The valuation was performed by Vadim Portnoy, CPA, of Vadim Portnoy Business Consulting Ltd., Following below are the highlights of the education and professional experience of the valuator:
Undergraduate degree from Hebrew University, Jerusalem in Economics and Accounting (1994), CPA (since 1997), MBA from Hebrew University, Jerusalem (1998).
Thirteen years of experience in business and financial consulting, including examination and performance of valuations and professional financial opinions including for companies operating in the industrial sector. My professional experience includes, inter alia, positions with the Israel Securities Authority and with Swari Eichman Ltd., and as independent consultant since 2004. In recent years, I have provided valuations for companies such as: Henson Ltd., Careline Group, Ormat Industries Ltd., Hadera Paper Ltd., Cellcom Israel Ltd., Paz Oil Ltd., Hot Communication Systems Ltd., Israel Discount Bank Ltd. and others.
Since 2000 I have been a lecturer in courses on the subject of company valuations at the School of Business Administration of the Hebrew University of Jerusalem.
I have no personal interest in the shares of Hadera Paper and those of companies controlled / owned thereby, nor in interested parties in the Company, and there is no dependency between me, the Company, companies controlled / owned thereby, and interested parties in the Company.
It should be noted that in the context of our engagement to carry out a valuation of Hadera Paper Printing, my liability was limited, in respect of damage of any kind or type excluding damage caused negligently and/or maliciously and/or willfully, to the amount of the fee paid in respect of the engagement. I have also received from you indemnification for any amount I shall be required to pay to any third party by finalized verdict with respect to preparation of this opinion, as well as for any reasonable legal expenses - unless it would be determined that I have acted negligently and/or maliciously and/or intentionally with regard to this opinion.
|
8b. (i)(6) and (7)
|
The valuation was performed using the DCF model.
The real-term Weighted Average Cost of Capital (WACC) that was used in the valuation lies in the range of 9.25%-9.75% per annum.
The residual value percentage from the enterprise value of Hadera Paper Printing is equal to an average of 66%.
|
3.
|
Following below is a summary of information regarding Section 5 to the third addendum of the regulations:
|
1.
|
General
|
4
|
1.1.
|
Objective of the opinion
|
4
|
1.2.
|
Cash generating unit
|
4
|
1.3.
|
About the valuated activity
|
4
|
1.4.
|
Source of information
|
5
|
1.5.
|
Summary of the opinion
|
5
|
2.
|
Limitation of responsibility
|
6
|
3.
|
Structure of the operations and the business environment
|
8
|
3.1.
|
Description of the Company and its operations
|
8
|
3.2.
|
Products and services
|
9
|
3.3.
|
Manufacturing capacity
|
10
|
3.4.
|
Customers
|
11
|
3.5.
|
Marketing and distribution
|
12
|
3.6.
|
Seasonality
|
12
|
3.7.
|
Fixed assets and facilities
|
12
|
3.8.
|
Raw materials and suppliers
|
12
|
3.9.
|
Business environment
|
13
|
4.
|
S.W.O.T. Analysis
|
17
|
5.
|
Financial Analysis
|
19
|
5.1.
|
Income statements
|
19
|
5.2.
|
Balance sheets
|
20
|
6.
|
Methodology
|
22
|
6.1.
|
Summary of the provisions of IAS No. 36, Testing for Impairment of Goodwill
|
22
|
6.2.
|
Stages of testing for impairment of goodwill
|
22
|
6.3.
|
Cash generating unit
|
22
|
6.4.
|
Allocating goodwill to cash generating units
|
23
|
6.5.
|
Fair value less costs of sale and value in use
|
23
|
6.6.
|
Assets and liabilities of the unit which have to be taken into consideration when comparing to comparing to recoverable value
|
23
|
7.
|
Valuation
|
24
|
7.1.
|
General
|
24
|
7.2.
|
Major assumptions used in preparing the cash flow
|
24
|
7.3.
|
Summary and conclusions of the opinion
|
29
|
1.
|
General |
1.1.
|
Objective of the opinion
|
1.2.
|
Cash generating unit
|
1.3.
|
About the valuated activity
|
1.4.
|
Source of information
|
●
|
The audited and reviewed financial statements of Hadera Paper, including the reports of the board of directors and the reports of the description of the business of the company.
|
●
|
Financial and other data of public companies that hold operations that are similar to the operations being valuated.
|
●
|
Other supplementary information gathered by us from open sources such as Internet websites.
|
●
|
The audited financial statements of Carmel for the years 2007 – 2010.
|
●
|
The reviewed financial statements of Carmel as of September 30, 2010 and September 30, 2011.
|
●
|
Depreciation reports as of December 31, 2010 and September 30, 2011.
|
●
|
The Company’s 2011 budget (hereinafter – “Original Budget”).
|
●
|
The updated 2011 budget of the Company, based on the results of operations of the first five months of the year (hereinafter – the “Updated Budget”).
|
●
|
The efficiency plan of the corrugated carton division (Carmel) that was approved by the board of directors of Hadera Paper.
|
●
|
The forecast for the investment in fixed assets and the depreciation forecast of the cash generating unit for the period 2011 – 2017.
|
●
|
Assessments and estimates furnished by Mr. Avishai Ali, Carmel’s CFO.
|
●
|
Meetings or telephone conversations with the following functionaries at the Company: Mr. Shaul Gliksberg, CFO of Hadera Paper, Mr. Shmuel Molad, the controller of Hadera Paper and Mr. Avishai Ali, CFO of Carmel.
|
1.5.
|
Summary of the opinion
|
Since the balance of the operating assets and liabilities that are connected to the cash generating unit, as of September 30, 2011, amounts to NIS 237.8 million and since this value is higher than the recoverable value of the activity as valued by us, we believe that there was an impairment in the carrying value of the cash generating unit on the books of Hadera Paper by an amount of NIS 8.76 million. |
2.
|
Limitation of responsibility
|
3.
|
Structure of the operations and the business environment
|
3.1.
|
Description of the Company and its operations
|
●
|
Frenkel CD Ltd. is an industrial company and one of the leading companies involved in the planning, manufacture and marketing of packaging materials for consumer goods. The Company is engaged in the area of shelf-packaging using compressed cardboard. Frenkel offers unique packaging solutions, tailored to the needs of many customers in the fields of industry, agriculture, food & beverages, cosmetics, pharmaceuticals, and the know-how intensive industry.
Frenkel was the result of a merger between CD Packaging Systems Ltd. and Frenkel & Sons Ltd. in January 2006. Immediately prior to the transaction, CD Packaging Systems Ltd. was jointly owned by Hadera Paper (50%) and Carmel (50%), while Frenkel & Sons Ltd. was controlled by a third party. After the merger, Hadera Paper and the Company each hold 28.92% of the shares of Frenkel, and Frenkel & Sons Ltd. holds the remaining 42.16%. The objective of the merger was to combine the operations in this field and create a very significant factor in the competitive market, while integrating the advantages of the two companies and realizing the potential for cost savings as a result of the synergy between the operations.
|
●
|
Tri-Wall Containers (Israel) Ltd., a wholly-owned subsidiary of Carmel, was acquired in 1988 from Koor Foods Ltd. Tri-Wall is an industrial company engaged in the planning, manufacture and marketing of special containers made from three-ply corrugated cardboard (produced by Carmel), together with other materials such as plywood, cardboard surfaces, etc. These products are designed for the packaging and shipment of products, mainly in various hi-tech areas, bulk shipments, etc. In addition, Tri-Wall manufactures wooden pallets for the local and export markets.
During 2010, Tri-Waal started providing outsourced services by setting up an operation to manufacture packaging materials using a production line installed on the premises of its customers.
During 2010, the Company implemented efficiency measures, the objective of which was to improve the Company’s short-term profitability. The major processes implemented by the Company as part of these efficiency measures were as follows:
|
|
-
|
Continued reduction in manpower
|
|
-
|
Increase in selling prices, the objective of which is to offset the increase in prices of inputs
|
|
-
|
Development of packaging manufacturing activity at an industrial plant in the north of the country
|
|
-
|
Upgrading of information system and renewing computer equipment
|
|
-
|
Focusing on specific industries with a high profit potential
|
3.2.
|
Products and services
|
3.2.1.
|
Carmel
|
1.
|
“Standard” packaging containers – corrugated carton, boxes manufactured in different sizes. Such boxes are closed by taping up the corners and the bottoms;
|
2.
|
Containers and boxes – in various shapes that can be set up by manually folding the cardboard without having to paste the boxes, or mechanized folding using hot glue. These products are sold mainly to machine-intensive industries that work at very fast speeds, such as the soft drink industry;
|
3.
|
Boxes for agriculture – trays that are set up using only special machines with suitable molds. In 2010, the Company purchased a 7-colored printing and cutting machine for NIS 25 million, which provides the company with a qualitative edge over the competition and allows the Company to better contend with the demands during the busy months as a result of the increased processing capability.
|
3.2.2.
|
Frenkel
|
3.2.3.
|
Tri-Wall
|
●
|
Packaging made from triple wall cardboard, used mainly for the export of heavy and voluminous products such as chemicals, electronic equipment, hi-tech equipment, medical equipment, security equipment, etc.
|
●
|
Compound packaging, mainly for the export of hi-tech products made of wood, pressed wood, triple wall cardboard, upholstery material, metals, etc.
|
●
|
Regular and unique wooden pallets used as, among other things, a base for the aforementioned packaging and wooden pallets for transportation.
|
3.3.
|
Manufacturing capacity
|
3.4.
|
Customers
|
●
|
The industrial sector – including customers in the fields of food, soft drinks, dairies, textiles, etc.
|
●
|
The agricultural sector – including customer who are farmers, packing houses, and marketing organizations, with the produce being directed to both the local and the export markets
|
●
|
Cardboard processors – small plants for the processing of corrugated carton in small production runs
|
●
|
Digital printing customers – including mainly advertising agencies
|
●
|
Others – cellular operators, government ministries, and banks.
|
3.5.
|
Marketing and distribution
|
3.6.
|
Seasonality
|
3.7.
|
Fixed assets and facilities
|
3.8.
|
Raw materials and suppliers
|
3.9.
|
Business environment2
|
2
|
Source of information: the review of the Bank of Israel, publications of the Central Bureau of Statistics and data from the 2010 periodic report of Hadera Paper.
|
3
|
The growth data for the paper and paper goods industry are taken from the publication of the Israel Industrialists Association “Israeli Industry – Status Report, Trends and Forecasts for 2011”.
|
4
|
Data regarding export of goods and services from the publication of the Central Bureau of Statistics: “Preliminary Estimates of National Accounts for 2010”.
|
4.
|
S.W.O.T. Analysis
|
●
|
Goodwill and much knowledge-how in the area of manufacturing packaging products
|
●
|
High quality products, availability and good customer service are important success factors in the area of activity and contribute to customer preservation and increasing the number of customers
|
●
|
A varied basket of products, commencing with small specialty packaging, through manufacturing of series of corrugated cardboard packaging and concluding with the manufacture of large packaging of multi-layered corrugated cardboard by specific order
|
●
|
The customers of Carmel represent industries of basic economic activity: agriculture, food, beverages, etc. which have a relatively lower exposure to the risks of economic crisis
|
●
|
The relatively low entry threshold to the packaging production activity (as opposed to the manufacture of corrugated cardboard products) causes stiff competition for each customer.
|
●
|
A competitive market (four large players); affected mainly by the gap between supply and demand due to the cost structure (high capital investment made in stages)
|
●
|
Taking advantage of the synergy deriving from the acquisition of control in Carmel and strengthening the holding in Frenkel on the one hand, and on the other hand, the transition of Carmel to Kraft substitutes manufactured by Hadera Paper may lower the cost of raw materials and improve Carmel’s profitability.
|
●
|
Development of the field of printing on packaging and creation of a qualitative and quantitative advantage over the competition, deriving from the purchase of a new printing machine.
|
●
|
Increasing the quantity of production and the ability to meet peak demand, as a result of the purchase of a new processing machine.
|
●
|
The agriculture industry, especially export of agricultural produce is one of the largest consumers corrugated cardboard packaging products in the economy. A cutback in water ceilings for agriculture may reduce agricultural yields and as a direct result, may reduce demand for packaging products.
|
●
|
A transition to the use of multi-use plastic packaging instead of paper and corrugated cardboard packaging as part of a "green" trend will reduce demand for Carmel’s products.
|
●
|
Carmel is exposed to changes in exchange rates due to the fact that 50% of the consumption of packaging paper is imported from abroad which the prices of products are shekel denominated.
|
●
|
Increases in raw material prices and in the price of paper will have a negative impact on the Company’s profitability in the short term due to the time gap in “rolling over ” additional costs to the customers of the Company.
|
5.
|
Financial Analysis
|
5.1.
|
Income statements
|
●
|
Revenues – In the first nine months of 2011, there was a 14.1% increase in the Company’s sales turnover versus the same period last year. The increase in turnover derived both from the increase in quantities and in the increase in selling prices. In addition, there was an increase in the sales turnover of the Tri-Wall subsidiary as a result of the efficiency measures taken by the subsidiary in 2010 and during 2011.
|
●
|
Gross profit – The decrease in the gross profit during the first nine months of 2011 versus the same period last year derived from the fact that the increase in raw material prices was only partially offset by the increase in selling prices.
|
●
|
Operating profit – The decrease in operating profit during the first nine months of 2011 versus the same period last year derived mainly from the 2.5% decrease in gross profit which was partially offset by the 12.7% decrease in general and administrative expenses versus the same period last year, due to the efficiency measures taken by the Company and the subsidiary.
|
5.2.
|
Balance sheets
|
|
·
|
Summary of the financial ratios and working capital items
|
|
-
|
In the first nine months of 2011, there was a decrease in the current ratio and the quick ratio versus 2010, mainly due to the increase in current liabilities and a smaller increase in current assets. The main increase in current liabilities derives from the transition to long-term credit to short-term credit and from the increase in trade accounts payable and other accounts payable and credit balances.
|
|
-
|
In the first nine months of 2011, there was an improvement in the ratio of working capital to sales versus the end of 2010, mainly due to the significant increase in sales and the relative stability in working capital items. Please note that the improvement in the ratio of working capital to sales also continued in the third quarter of 2011 when compared with the first half of 2011.
|
|
-
|
In addition, in the first nine months of 2011, there was an improvement in customer days when compared with the average data of 2010.
|
●
|
Loans and credit from banking institutions – During the first half of 2011, there was a transition from long-term loans from banking institutions to use of short-term credit.
|
●
|
Shareholders' equity – In the first nine months of 2011, shareholders' equity decreased by NIS 14.1 million versus the end of 2010. The decrease derived from the distribution of a dividend in an amount of NIS 10 million and from the loss for the period in an amount of NIS 4.1 million.
|
6.
|
Methodology
|
6.1.
|
Summary of the provisions of IAS No. 36, Testing for Impairment of Goodwill
|
6.2.
|
Stages of testing for impairment of goodwill
|
●
|
Obtaining a definition of the cash generating unit from the Company
|
●
|
Measuring the recoverable value of the unit
|
●
|
Allocating various assets and liabilities to the unit, including goodwill
|
●
|
Comparing the recoverable value and the carrying value of the unit
|
●
|
In the event that the carrying value of the unit is higher than its recoverable value, there has been an impairment of the goodwill allocated to the unit
|
6.3.
|
Cash generating unit
|
7
|
Cash generating unit is defined in IAS36 (section 6) as: "A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets".
|
6.4.
|
Allocating goodwill to cash generating units
|
1.
|
Shall represent the lowest level in the entity in which there is a monitoring of the goodwill for internal management purposes;
|
2.
|
Shall not be larger than an activity segment.
|
6.5.
|
Fair value less costs of sale and value in use
|
6.6.
|
Assets and liabilities of the unit which have to be taken into consideration when comparing to recoverable value
|
7.
|
Valuation
|
7.1.
|
General
|
7.2.
|
Major assumptions used in preparing the cash flow
|
7.2.1.
|
General
|
●
|
A change in the quantities sold and in the selling prices
|
●
|
An improvement in the rate of waste of paper (in order to reduce the impact of an increase in raw material prices)
|
●
|
Handling the issue of the quantity of manpower, overtime hours, shift work and weekend work, and utilization of vacations
|
●
|
Implementing a plan for saving operating costs and a change in operating benchmarks
|
●
|
Stopping investments in view of, among other things, the purchase of two new and sophisticated machine in 2010
|
●
|
Reducing general and administrative expenses
|
7.2.2.
|
Revenues
|
●
|
An increase in prices of 13%, which the Company intended on implementing commencing in the fourth quarter of 2010. The increase in prices forecasted by the Company is part of the industry-wide trend and is a direct result of the increase in raw material costs.
|
●
|
Growth of 4% in the quantity of cardboard to be sold, similar to the expected growth of the Israeli GDP.
|
●
|
A purchase of a new machine for processing and printing was made in 2010 and was supposed to increase production output (allowing the Company to meet demand in peak months) and to expand the product lines of the Company to premium products sold at prices that are more expensive than those of the basic products.
|
7.2.3.
|
Cost of sales
|
7.2.4.
|
Selling, marketing, general and administrative expenses
|
7.2.5.
|
Operating profit
|
7.2.6.
|
Taxes on income
|
9
|
Source: Damodaran Online. As part of this, 27 companies in the industry were studied.
|
7.2.7.
|
Depreciation and amortization
|
7.2.8.
|
Investment in fixed assets
|
7.2.9.
|
Working capital
|
7.2.10.
|
WACC (weighted average cost of capital)
|
7.2.11.
|
Summary of the valuation of the activity
|
7.3.
|
Summary and conclusions of the opinion
|
Since the balance of the operating assets and liabilities that are connected to the cash generating unit, as of September 30, 2011, amounts to NIS 237.8 million and since this value is higher than the recoverable value of the activity as valued by us, we believe that there was an impairment in the carrying value of the cash generating unit on the books of Hadera Paper by an amount of NIS 8.76 million. |
●
|
Risk free interest (Rf) – A risk free rate of 2.46% was used, based on the rate of return of Israeli government bonds, linked to the ICPI (Galil 5904)11.
|
●
|
Market risk premium (Rm-Rf) – The average risk premium of the market was determined on the basis of the risk premium that characterizes the Israeli market – 6%.
Beta (β) - Beta reflects the effect of market risk upon the systematic risk of a specific entity, and is influenced by the entity's level of leverage. We estimated the beta by using the data of the leveraged beta of companies in the industry in which the Company operates12. The leveraged beta was estimated at 1.17.
|
●
|
ARP – Additional risk premium - In our opinion the Company risk should be higher in comparison to public companies considered for purposes of beta calculation, mainly because it is smaller in relation to such public companies. On the basis of our experience and in view of the above, we estimate that it is necessary to add an additional risk premium of 3%13 to the calculation of the Re.
|
10
|
The rate of leverage in this report is defined using the formula D/(D+E), where D is the net financial debt of the Company and E is the capital of the Company.
|
11
|
Source: www.bloomberg.com
|
12
|
Source: Damodaran Online. As part of this, 27 companies in the industry were studied.
|
13
|
Source: Ibbotson 2011
|
|
A.
|
Recognizing the object that needs evaluating - Impairment Testing for impairment of the assets of the Carmel Container Systems Ltd. activity in accordance with IAS 36, as of 30 September, 2011.
|
|
B.
|
Appraiser - The valuation was performed by the staff under the management of Mr. Shlomi Bartov CPA, CEO of Fahn Kanne Consultants.
|
|
C.
|
Client - Mr. Shaul Gliksberg, CFO of Hadera Papers Ltd.
|
|
D.
|
Date of contact between appraiser and client - Mr. Shaul Gliksberg approved the commencement of work during September 2011.
|
|
E.
|
Reasons for contact - The valuation was performed in order to testing for impairment of the assets of the Carmel Container Systems Ltd. activity in accordance with IAS 36
|
|
F.
|
Details of the Appraiser - Please see the curriculum vitae in Appendix C.
|
|
G.
|
The value that was established - For a detailed report, please see Chapter 7 in the valuation report.
|
|
H.
|
Date of value - September 30, 2011.
|
|
I.
|
Method of valuation - For a detailed report, please see Chapter 7 in the valuation report.
|
|
J.
|
Other reports that were performed for the Company - In August 2011, we performed an impairment test of the operating assets of Carmel Container Systems Ltd. as of June 30, 2011, according to International accounting standards IAS 36.
|
Page
|
|
P - 3
|
|
P - 4
|
|
P - 5 - P - 6
|
Nine months
ended September 30
|
Three months
ended September 30
|
Year ended
December 31
|
||||||||||
2 0 1 0
|
2 0 1 0
|
2 0 1 0
|
||||||||||
(Unaudited)
|
||||||||||||
Revenues
|
1,305,948 | 479,828 | 1,806,210 | |||||||||
Cost of sales
|
1,106,485 | 416,896 | 1,539,247 | |||||||||
Gross profit
|
199,463 | 62,932 | 266,963 | |||||||||
Selling, marketing, general and administrative expenses
|
||||||||||||
Selling and marketing expenses
|
95,096 | 34,245 | 130,455 | |||||||||
General and administrative expenses
|
57,959 | 18,530 | 76,714 | |||||||||
Other income, net
|
(16,221 | ) | (16,898 | ) | (31,185 | ) | ||||||
Total expenses
|
136,834 | 35,877 | 175,984 | |||||||||
Profit from ordinary operations
|
62,629 | 27,055 | 90,979 | |||||||||
Finance income
|
4,903 | 3,104 | 11,563 | |||||||||
Finance expenses
|
38,517 | 20,739 | 61,328 | |||||||||
Finance expenses, net
|
33,614 | 17,635 | 49,765 | |||||||||
Profit after financial expenses
|
29,015 | 9,420 | 41,214 | |||||||||
Share in profit of associated companies, net
|
48,135 | 15,504 | 70,059 | |||||||||
Profit before taxes on income
|
77,150 | 24,924 | 111,273 | |||||||||
Taxes on income
|
4,474 | 24 | 4,336 | |||||||||
Profit for the year
|
72,676 | 24,900 | 106,937 | |||||||||
Attributed to: | ||||||||||||
Company shareholders
|
67,502 | 23,343 | 101,505 | |||||||||
Non-Controlling interests
|
5,174 | 1,557 | 5,432 | |||||||||
72,676 | 24,900 | 106,937 | ||||||||||
Earning for regular share of NIS 0.01 par value
|
NIS
|
|||||||||||
Primary attributed to Company shareholders
|
13.30 | 4.59 | 19.99 | |||||||||
Fully diluted attributed to company shareholders
|
13.19 | 4.56 | 19.83 | |||||||||
Number of share used to compute the primary earnings per share
|
5,075,922 | 5,082,028 | 5,078,156 | |||||||||
Number of share used to compute the fully diluted earnings per share
|
5,116,355 | 5,114,456 | 5,118,416 |
Z. Livnat
|
O. Bloch
|
S. Gliksberg
|
||
Chairman of the Board of Directors
|
Chief Executive Officer
|
Chief Financial and Business
Development Officer
|
Approval date of the Consolidated Income Statements Proforma: November 15, 2011
|
The accompanying notes are an integral part of the consolidated financial statements
|
Nine months
ended
September 30
|
Three months
ended
September 30
|
Year
ended
December 31
|
||||||||||
2 0 1 0
|
2 0 1 0
|
2 0 1 0
|
||||||||||
(Unaudited)
|
||||||||||||
Profit for the period
|
72,676 | 24,900 | 106,937 | |||||||||
Other Comprehensive Income
|
||||||||||||
Profit on cash flow hedges, net
|
1,213 | 2,184 | 1,044 | |||||||||
Actuarial loss from defined benefit plans, net
|
32 | 111 | (4 | ) | ||||||||
Share in Other Comprehensive Income (loss) of associated companies, net
|
964 | 4,203 | (11,652 | ) | ||||||||
Share in other comprehensive income of associated companies, which allocated to the income statements, net
|
315 | 8 | 446 | |||||||||
Total Other Comprehensive Income (Loss) for the period, net
|
2,524 | 6,506 | (10,166 | ) | ||||||||
Total Comprehensive Income for the period
|
75,200 | 31,406 | 96,771 | |||||||||
Attributed to: | ||||||||||||
Company shareholders
|
70,005 | 29,787 | 91,292 | |||||||||
Non-Controlling interests
|
5,195 | 1,619 | 5,479 | |||||||||
75,200 | 31,406 | 96,771 |
|
The proforma consolidated statements of income of the Company are prepared in accordance with the provisions of Regulation 38b to the Securities Regulations (Immediate and Periodic Reports), 1970.
|
|
a.
|
Pro-forma information was compiled based on financial information for Hadera Paper Ltd. and Hadera Paper - Printing and Writing Paper Ltd. (former Mondi Hadera Paper Ltd). The pro-forma information reflects the operating results, on consolidated basis, had Hadera Paper - Printing and Writing Paper Ltd. been acquired on January 1, 2008.
|
|
b.
|
The gain realized by the Company, amounting to NIS 5,760 thousand result from the acquisition, was not included on the pro-forma consolidated statements, as it was of a non-recurring nature.
|
|
c.
|
Financing expenses on the pro-forma consolidated statements including financing cost, which were calculated based on 5.85% interest with respect to financing obtained for this acquisition.
|
|
d.
|
Excess acquisition cost over carrying amount as of the acquisition date, amounting to NIS 12,282 thousand, was classified under goodwill
|
|
e.
|
Other revenues include annual adjustment of the financial liability with respect to put option granted to non-controlling interests for the present value of the expected future payment with respect there to, assuming it would not be exercisable for three years. Profit and loss resulting from settled put options has been reversed.
|
|
f.
|
Inter-company transactions and balances were reversed for the consolidation. Inter-company unrealized gain was not reversed, as it was not material.
|
Page
|
|
Separate Financial Statements
|
|
S - 3
|
|
S - 4
|
|
S - 4
|
|
S - 5 - S - 7
|
|
S - 8 - S - 9
|
|
S - 10 - S - 13
|
September 30
|
December 31
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
NIS in thousands
|
||||||||||||
(Unaudited)
|
||||||||||||
Current Assets
|
||||||||||||
Cash and cash equivalents
|
148,634 | 110,586 | 43,738 | |||||||||
Designated deposits
|
- | 9,022 | - | |||||||||
Trade receivables
|
2,037 | 2,282 | 942 | |||||||||
Associated companies, net
|
352,467 | 172,193 | 264,368 | |||||||||
Total Current Assets
|
503,138 | 294,083 | 309,048 | |||||||||
Non-Current Assets
|
||||||||||||
Investment in associated companies
|
853,012 | 868,403 | 970,874 | |||||||||
Loans to associated companies
|
500,907 | 665,714 | 580,615 | |||||||||
Fixed assets
|
81,009 | 88,647 | 85,647 | |||||||||
Investment Property
|
26,300 | 24,500 | 24,500 | |||||||||
Prepaid expenses in respect of an operating lease
|
- | 24,964 | 24,837 | |||||||||
Financial assets - available for sale
|
2,726 | - | 1,646 | |||||||||
Other assets
|
224 | 272 | 323 | |||||||||
Deferred tax assets
|
2,883 | 11,831 | 12,536 | |||||||||
Total Non-Current Assets
|
1,467,061 | 1,684,331 | 1,700,978 | |||||||||
Total Assets
|
1,970,199 | 1,978,414 | 2,010,026 | |||||||||
Current Liabilities
|
||||||||||||
Credit from banks and others
|
129 | 19,303 | - | |||||||||
Current maturities of long term bonds and long term loans
|
125,610 | 138,859 | 142,079 | |||||||||
Trade payables
|
9,732 | 5,656 | 9,731 | |||||||||
Account payables and accrued expenses
|
79,868 | 89,301 | 130,527 | |||||||||
Financial liabilities at fair value through profit and loss
|
- | 13,700 | - | |||||||||
Short term employee benefit liabilities
|
3,404 | 3,086 | 3,411 | |||||||||
Current tax liabilities
|
7,004 | 2,458 | 2,078 | |||||||||
Total Current Liabilities
|
225,747 | 272,363 | 287,826 | |||||||||
Non-Current Liabilities
|
||||||||||||
Loans from banks and others
|
104,423 | 202,527 | 193,490 | |||||||||
Bonds
|
722,673 | 594,372 | 562,348 | |||||||||
Employee benefit liabilities
|
3,904 | 3,637 | 4,880 | |||||||||
Put option granted to the non controlling interests
|
29,137 | - | 31,512 | |||||||||
Total Non-Current Liabilities
|
860,137 | 800,536 | 792,230 | |||||||||
Capital and reserves
|
884,315 | 905,515 | 929,970 | |||||||||
Total Liabilities and Equity
|
1,970,199 | 1,978,414 | 2,010,026 |
Z. Livnat
|
O. Bloch
|
S. Gliksberg
|
||
Chairman of the Board of Directors
|
Chief Executive Officer
|
Chief Financial and Business
Development Officer
|
Nine months ended
September 30
|
Three months ended
September 30
|
Year ended
December 31
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2010
|
||||||||||||||||
NIS in thousands
|
||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Income
|
||||||||||||||||||||
Revenues from services, net
|
12,342 | 8,909 | 3,408 | 1,530 | 12,478 | |||||||||||||||
Other income
|
39,800 | 1,540 | 307 | 1,540 | 11,271 | |||||||||||||||
Share in profits of associated companies – net
|
- | 69,195 | - | 27,339 | 94,363 | |||||||||||||||
Finance income
|
38,592 | 16,828 | 12,752 | 11,349 | 28,115 | |||||||||||||||
Total income
|
90,734 | 96,472 | 16,467 | 41,758 | 146,227 | |||||||||||||||
Cost and expenses
|
||||||||||||||||||||
Share in losses of associated companies – net
|
(66,930 | ) | - | (43,191 | ) | - | - | |||||||||||||
Other expenses
|
- | (1,810 | ) | - | (1,090 | ) | - | |||||||||||||
Finance expenses
|
(50,189 | ) | (28,647 | ) | (17,388 | ) | (18,520 | ) | (43,627 | ) | ||||||||||
Total cost and expenses
|
(117,119 | ) | (30,457 | ) | (60,579 | ) | (19,610 | ) | (43,627 | ) | ||||||||||
Profit (Loss) before taxes on income
|
(26,385 | ) | 66,015 | (44,112 | ) | 22,148 | 102,600 | |||||||||||||
Tax incomes (expenses) on the income
|
(9,319 | ) | (661 | ) | 552 | 878 | (1,872 | ) | ||||||||||||
Profit (Loss) for the period
|
(35,704 | ) | 65,354 | (43,560 | ) | 23,026 | 100,728 |
Nine months ended
September 30
|
Three months ended
September 30
|
Year ended
December 31
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2010
|
||||||||||||||||
NIS in thousands
|
||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Profit (Loss) for the period
|
(35,704 | ) | 65,354 | (43,560 | ) | 23,026 | 100,728 | |||||||||||||
Other Comprehensive Income ,net
|
||||||||||||||||||||
Actuarial loss from defined benefit plans, net
|
- | - | - | - | (228 | ) | ||||||||||||||
Profit from fair value adjustment of financial asset available for sale, net
|
864 | - | 174 | - | - | |||||||||||||||
Share in other comprehensive income (loss) of associated companies, net
|
(11,593 | ) | 2,503 | (3,480 | ) | 6,444 | (9,895 | ) | ||||||||||||
Total other comprehensive income (loss) for the period
|
(10,729 | ) | 2,503 | (3,306 | ) | 6,444 | (10,123 | ) | ||||||||||||
Total comprehensive income (loss) for the period
|
(46,433 | ) | 67,857 | (46,866 | ) | 29,470 | 90,605 |
Share capital
|
Share Premium
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise of employee options
|
Capital reserve from revaluation from step acquisition
|
Capital reserve from revaluation of financial asset - available for sale
|
Cash Flows Hedging reserves
|
Foreign currency translation reserves
|
Retained earnings
|
Total for Company shareholders
|
|||||||||||||||||||||||||||||||
NIS in thousands
|
||||||||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Balance - January 1, 2011
|
125,267 | 306,851 | 7,988 | 3,397 | 12,420 | - | 1,123 | (33,521 | ) | 506,445 | 929,970 | |||||||||||||||||||||||||||||
For the Nine months ended September 30, 2011:
|
||||||||||||||||||||||||||||||||||||||||
Exchange differences arising on translation of foreign operations
|
- | - | - | - | - | - | - | (12,415 | ) | - | (12,415 | ) | ||||||||||||||||||||||||||||
Cash flow hedges transactions
|
- | - | - | - | - | - | 1,036 | - | - | 1,036 | ||||||||||||||||||||||||||||||
Profit from fair value adjustment of financial asset available for sale, net
|
- | - | - | - | - | 864 | - | - | - | 864 | ||||||||||||||||||||||||||||||
Actuarial loss from defined benefit plan
|
- | - | - | - | - | - | - | - | (214 | ) | (214 | ) | ||||||||||||||||||||||||||||
Loss for the period
|
- | - | - | - | - | - | - | - | (35,704 | ) | (35,704 | ) | ||||||||||||||||||||||||||||
Total comprehensive income (loss) for the period
|
- | - | - | - | - | 864 | 1,036 | (12,415 | ) | (35,918 | ) | (46,433 | ) | |||||||||||||||||||||||||||
Depreciation of capital from revaluation from step acquisition to retained earnings
|
- | - | - | - | (1,308 | ) | - | - | - | 1,308 | - | |||||||||||||||||||||||||||||
Share based payment
|
- | - | 778 | - | - | - | - | - | - | 778 | ||||||||||||||||||||||||||||||
Conversion of employee options into shares
|
*- | 1,694 | (1,694 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
Balance – September 30, 2011
|
125,267 | 308,545 | 7,072 | 3,397 | 11,112 | 864 | 2,159 | (45,936 | ) | 471,835 | 884,315 | |||||||||||||||||||||||||||||
Balance - January 1, 2010
|
125,267 | 301,695 | 10,531 | 3,397 | 14,164 | - | 517 | (22,872 | ) | 402,936 | 835,635 | |||||||||||||||||||||||||||||
For the Nine months ended September 30, 2010:
|
||||||||||||||||||||||||||||||||||||||||
Exchange differences arising on translation of foreign operations
|
- | - | - | - | - | - | - | 1,476 | - | 1,476 | ||||||||||||||||||||||||||||||
Cash flow hedges transactions
|
- | - | - | - | - | - | 998 | - | - | 998 | ||||||||||||||||||||||||||||||
Actuarial profit from defined benefit plan
|
- | - | - | - | - | - | - | - | 29 | 29 | ||||||||||||||||||||||||||||||
Profit for the period
|
- | - | - | - | - | - | - | - | 65,354 | 65,354 | ||||||||||||||||||||||||||||||
Total comprehensive income for the period
|
- | - | - | - | - | - | 998 | 1,476 | 65,383 | 67,857 | ||||||||||||||||||||||||||||||
Depreciation of capital from revaluation from step acquisition to retained earnings
|
- | - | - | - | (1,308 | ) | - | - | - | 1,308 | - | |||||||||||||||||||||||||||||
Share based payment
|
- | - | 2,023 | - | - | - | - | - | - | 2,023 | ||||||||||||||||||||||||||||||
Conversion of employee options into shares
|
* - | 5,106 | (5,106 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
Balance – September 30, 2010
|
125,267 | 306,801 | 7,448 | 3,397 | 12,856 | - | 1,515 | (21,396 | ) | 469,627 | 905,515 |
*
|
Represents an amount less than NIS 1,000.
|
Share capital
|
Share Premium
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise of employee options
|
Capital reserve from revaluation from step acquisition
|
Capital reserve from revaluation of financial asset - available for sale
|
Cash Flows Hedging reserves
|
Foreign currency translation reserves
|
Retained earnings
|
Total for Company shareholders
|
|||||||||||||||||||||||||||||||
NIS in thousands
|
||||||||||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Balance - July 1, 2011
|
125,267 | 308,545 | 7,039 | 3,397 | 11,548 | 690 | 1,430 | (41,777 | ) | 515,029 | 931,148 | |||||||||||||||||||||||||||||
For the Three months ended September 30, 2011:
|
||||||||||||||||||||||||||||||||||||||||
Exchange differences arising on
translation of foreign operations
|
- | - | - | - | - | - | - | (4,159 | ) | - | (4,159 | ) | ||||||||||||||||||||||||||||
Profit from fair value adjustment of
financial asset available for sale, net
|
- | - | - | - | - | 174 | - | - | - | 174 | ||||||||||||||||||||||||||||||
Cash flow hedges transactions
|
- | - | - | - | - | - | 749 | - | - | 749 | ||||||||||||||||||||||||||||||
Actuarial loss from defined benefit plan
|
- | - | - | - | - | - | - | - | (70 | ) | (70 | ) | ||||||||||||||||||||||||||||
Loss for the period
|
- | - | - | - | - | - | - | - | (43,560 | ) | (43,560 | ) | ||||||||||||||||||||||||||||
Total comprehensive income (loss) for the period
|
- | - | - | - | - | 174 | 749 | (4,159 | ) | (43,630 | ) | (46,866 | ) | |||||||||||||||||||||||||||
Depreciation of capital from revaluation
from step acquisition to retained earnings
|
- | - | - | - | (436 | ) | - | - | - | 436 | - | |||||||||||||||||||||||||||||
Share based payment
|
- | - | 33 | - | - | - | - | - | - | 33 | ||||||||||||||||||||||||||||||
Balance – September 30, 2011
|
125,267 | 308,545 | 7,072 | 3,397 | 11,112 | 864 | 2,159 | (45,936 | ) | 471,835 | 884,315 | |||||||||||||||||||||||||||||
Balance - July 1, 2010
|
125,267 | 306,801 | 6,858 | 3,397 | 13,292 | - | (415 | ) | (25,810 | ) | 446,065 | 875,455 | ||||||||||||||||||||||||||||
For the Three months ended September 30, 2010:
|
||||||||||||||||||||||||||||||||||||||||
Exchange differences arising on
translation of foreign operations
|
- | - | - | - | - | - | - | 4,414 | - | 4,414 | ||||||||||||||||||||||||||||||
Cash flow hedges transactions
|
- | - | - | - | - | - | 1,930 | - | - | 1,930 | ||||||||||||||||||||||||||||||
Actuarial profit from defined benefit plan
|
- | - | - | - | - | - | - | - | 100 | 100 | ||||||||||||||||||||||||||||||
Profit for the period
|
- | - | - | - | - | - | - | - | 23,026 | 23,026 | ||||||||||||||||||||||||||||||
Total comprehensive income for the period
|
- | - | - | - | - | - | 1,930 | 4,414 | 23,126 | 29,470 | ||||||||||||||||||||||||||||||
Depreciation of capital from revaluation
from step acquisition to retained earnings
|
- | - | - | - | (436 | ) | - | - | - | 436 | - | |||||||||||||||||||||||||||||
Share based payment
|
- | - | 590 | - | - | - | - | - | - | 590 | ||||||||||||||||||||||||||||||
Balance – September 30, 2010
|
125,267 | 306,801 | 7,448 | 3,397 | 12,856 | - | 1,515 | (21,396 | ) | 469,627 | 905,515 |
Share capital
|
Share Premium
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise of employee options
|
Capital reserve from revaluation from step acquisition
|
Cash flows Hedging reserves
|
Foreign currency translation reserves
|
Retained earnings
|
Total for Company shareholders
|
||||||||||||||||||||||||||||
NIS in thousands
|
||||||||||||||||||||||||||||||||||||
(Audited)
|
||||||||||||||||||||||||||||||||||||
Balance - January 1, 2010
|
125,267 | 301,695 | 10,531 | 3,397 | 14,164 | 517 | (22,872 | ) | 402,936 | 835,635 | ||||||||||||||||||||||||||
Exchange differences arising on
translation of foreign operations
|
- | - | - | - | - | (10,649 | ) | - | (10,649 | ) | ||||||||||||||||||||||||||
Cash flow hedges transactions
|
- | - | - | - | - | 606 | - | - | 606 | |||||||||||||||||||||||||||
Actuarial loss from defined benefit plan
|
- | - | - | - | - | (80 | ) | (80 | ) | |||||||||||||||||||||||||||
Profit for the year
|
- | - | - | - | - | - | - | 100,728 | 100,728 | |||||||||||||||||||||||||||
Total comprehensive income (loss) for the Year
|
- | - | - | - | - | 606 | (10,649 | ) | 100,648 | 90,605 | ||||||||||||||||||||||||||
Acquisition of additional shares in subsidiary
|
- | - | - | - | - | - | - | 1,117 | 1,117 | |||||||||||||||||||||||||||
Depreciation of capital from revaluation from step acquisition to retained earnings
|
- | - | - | - | (1,744 | ) | - | - | 1,744 | - | ||||||||||||||||||||||||||
Conversion of employee options into shares
|
- | 5,156 | (5,156 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||
Share based payment
|
* - | - | 2,613 | - | - | - | - | - | 2,613 | |||||||||||||||||||||||||||
Balance – December 31, 2010
|
125,267 | 306,851 | 7,988 | 3,397 | 12,420 | 1,123 | (33,521 | ) | 506,445 | 929,970 |
*
|
Represents an amount less than NIS 1,000.
|
Nine months ended
September 30
|
Three months ended
September 30
|
Year ended December 31
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2010
|
||||||||||||||||
NIS in thousands
|
||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Cash flows – operating activities
|
||||||||||||||||||||
Profit (Loss) for the period
|
(35,704 | ) | 65,354 | (43,560 | ) | 23,026 | 100,728 | |||||||||||||
Tax expenses (incomes) recognized in profit and loss
|
9,319 | 661 | (552 | ) | (878 | ) | 1,872 | |||||||||||||
Financial expenses, net recognized in profit and loss
|
11,597 | 11,819 | 4,636 | 7,171 | 15,512 | |||||||||||||||
Share in loss (profit) of associated companies, net
|
66,930 | (69,195 | ) | 43,191 | (27,339 | ) | (94,363 | ) | ||||||||||||
Dividend received
|
31,721 | 52,854 | 10,000 | 22,914 | 70,319 | |||||||||||||||
Capital profit on disposal of fixed assets
|
(36,803 | ) | (1,387 | ) | - | - | (1,394 | ) | ||||||||||||
Depreciation and amortization
|
2,417 | 5,158 | 731 | 1,397 | 3,313 | |||||||||||||||
Gain from revaluation of prior holding at fair value due to achieving control
|
- | - | - | - | (5,760 | ) | ||||||||||||||
Income from revaluation of investment property
|
(94 | ) | (151 | ) | (94 | ) | (151 | ) | (151 | ) | ||||||||||
Share based payments expenses (incomes)
|
168 | 833 | (124 | ) | 253 | 1,086 | ||||||||||||||
49,551 | 65,946 | 14,228 | 26,393 | 91,162 | ||||||||||||||||
Changes in assets and liabilities:
|
||||||||||||||||||||
Increase (decrease) in associated companies and other receivables
|
56,655 | (132,268 | ) | (7,702 | ) | (45,904 | ) | (134,380 | ) | |||||||||||
Increase in trade and account payables
|
7,763 | 25,299 | 6,480 | 33,936 | 23,707 | |||||||||||||||
Increase (Decrease) in financial liabilities
|
(2,375 | ) | 1,718 | (266 | ) | (328 | ) | 872 | ||||||||||||
Decrease in employee benefits and provisions
|
(1,070 | ) | (2,445 | ) | (574 | ) | (136 | ) | (1,186 | ) | ||||||||||
110,524 | (41,750 | ) | 12,166 | 13,961 | (19,825 | ) | ||||||||||||||
Receivables (Payments) Taxes
|
4,554 | (1,323 | ) | 118 | - | (1,323 | ) | |||||||||||||
Net cash generated by (used in) financing activities
|
115,078 | (43,073 | ) | 12,284 | 13,961 | (21,148 | ) |
The accompanying notes are an integral part of the separate financial statements.
|
Nine months ended
September 30
|
Three months ended
September 30
|
Year ended
December 31
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2010
|
||||||||||||||||
NIS in thousands
|
||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Cash flows – investing activity
|
||||||||||||||||||||
Acquisition of fixed assets
|
(3,046 | ) | (8,197 | ) | (1,003 | ) | (7,222 | ) | (13,493 | ) | ||||||||||
Acquisition of subsidiaries
|
(49,298 | ) | - | - | - | (15,703 | ) | |||||||||||||
Acquisition of other assets and financial assets
|
(6 | ) | - | - | - | (1,724 | ) | |||||||||||||
Proceeds from disposal of fixed assets and assets under an operating lease
|
56,400 | 1,483 | - | - | 1,483 | |||||||||||||||
Redemption of designated deposits, net
|
- | 116,334 | - | 1,777 | 127,600 | |||||||||||||||
Interest received
|
3,543 | 1,176 | 1,163 | 541 | 1,718 | |||||||||||||||
Granting of loans to an associated companies
|
(25,470 | ) | - | (25,470 | ) | - | - | |||||||||||||
Net cash generated by (used in) investing activity
|
(17,877 | ) | 110,796 | (25,310 | ) | (4,904 | ) | 99,881 | ||||||||||||
Cash flows – financing activities
|
||||||||||||||||||||
Proceeds from issuing notes
|
216,326 | 179,886 | 216,326 | - | 179,886 | |||||||||||||||
Short-term credit – net
|
129 | (83,143 | ) | 129 | (20,714 | ) | (102,446 | ) | ||||||||||||
Borrowings received
|
- | 70,000 | - | - | 70,000 | |||||||||||||||
Repayment of borrowings
|
(107,078 | ) | (25,461 | ) | (42,230 | ) | (11,228 | ) | (31,644 | ) | ||||||||||
Interest Paid
|
(38,954 | ) | (37,432 | ) | (20,033 | ) | (21,279 | ) | (53,896 | ) | ||||||||||
Repayment of bonds
|
(62,358 | ) | (61,322 | ) | (62,358 | ) | (61,322 | ) | (94,994 | ) | ||||||||||
Net cash generated by (used in) financing activities
|
8,065 | 42,528 | 91,834 | (114,543 | ) | (33,094 | ) | |||||||||||||
Increase (decrease) in cash and cash equivalents
|
105,266 | 110,251 | 78,808 | (105,486 | ) | 45,639 | ||||||||||||||
Cash and cash equivalents – beginning of period
|
43,738 | 363 | 69,590 | 216,100 | 363 | |||||||||||||||
Net foreign exchange difference
|
(370 | ) | (28 | ) | 236 | (28 | ) | (2,264 | ) | |||||||||||
Cash and cash equivalents – end of period
|
148,634 | 110,586 | 148,634 | 110,586 | 43,738 |
The accompanying notes are an integral part of the separate financial statements.
|
A.
|
General
|
B.
|
Definitions:
|
|
The Company
|
-
|
Hadera Paper Limited.
|
|
Associated Companies
|
-
|
As defined by note 1b of the conciliated financial statement of the company as of December 31, 2010.
|
C.
|
Accounting policy:
|
|
a.
|
On May 2, 2011 petition was filed against Hogla-Kimberly Ltd an associated company, for the approval of a class action. According to the petition, the plaintiff claimed that Huggies diapers, marketed by Hogla-Kimberly Ltd, which she purchased, did not absorb as was expected due to a fault in the diapers production line. The plaintiff estimates the scope of the class action to be approximately NIS 1.2 billion.
At this early stage, Hogla-Kimberly's legal advisor opinion is that the probability of the request for approval of a class action lawsuit will be rejected is higher than the probability that it will be approved, and therefore no provision was created in the financial statements as at September 30, 2011, on account of this matter.
|
|
b.
|
During the year of 2009, as part of a formal tax inspection of the Turkish Tax Authorities, the Financial Reports for the years 2004-2008 of KCTR the Turkish subsidiary ("KCTR") of the associated company Hogla- Kimberly Ltd, held by 49.9% were examined.
On February 16, 2010, KCTR received a tax inspection report, following the aforementioned inspection, according to which KCTR is required to an additional tax payment for two matters audited, on the total amount of YTL 153 million (approximately USD 82.4 million) including interest, fines and VAT refund offset.
Regarding one of the matters, which is the essential part of the tax demand (tax on capital injection from Hogla- Kimberly to KCTR), KCTR has filed, based on its tax consultant opinion in Turkey, in 2010, appeals to the court against the demand of the tax authorities. On July 28, 2011, on August 4, 2011 and On November 1, 2011, the court handed down its decisions regarding some of the appeals (which reflected 43.9% of the claim's principal amount), pursuant to which KCTR is required to make payments to the tax authorities amounting to YTL 14.5 million, amounting to - with the addition of interest, fines and before VAT asset offset (as at the date of the decision) – approximately YTL 58.2 million (approximately $31.4 million).The amount for payment (if and when will be paid) net after offsetting Vat asset, amount to approximately YTL 52.3 million (approximately $28.1 million).
KCTR appealed the decisions of the court in Turkey, based on the expert opinion of its legal consultants, in spite of the said court's decision, claiming that KCTR possesses valid claims against the requirement and that the chances of success in the said appeal are greater than 50%. In addition, KCTR applied to the Supreme Court to delay implementation of the verdict until the Supreme Court ruling on appeals submitted by KCTR.
|
b.
|
(cont.)
|
|
c.
|
On May 27, 2011 the Company published a shelf prospectus that was amended on June 19, 2011 by which the Company issued on July 4, 2011, debentures (Series 5) of the Company, by way of extending a series issued on May 23, 2010. The Company has offered an amount of NIS 220,000 thousands par value of debentures (Series 5) issued in return for NIS 218,020 thousands bearing an interest rate of 5.85%. The principal is payable in five annual equal payments, each on November 30th of the years 2013-2017. The interest is payable half annually each on May 31st and November 30th of the years 2011-2017.
The net proceed of the offering net of issue expenses is NIS 216,326 thousands.
|
|
d.
|
On July 18, 2011 the Company granted to a subsidiary a short-term loan (on call) in the amount of NIS 23 million, carries a variable rate of prime less 0.8%. The loan is for a period of seven days. Renewal of the loan (in whole or in part) for further periods of seven days at a time is subject to the consent of the parties and subject to payment of accrued interest until the date of repayment.
|
|
e.
|
On March 6, 2011, the Board of Directors of the Company approved incorporation of a foreign entity (hereinafter: "the foreign entity"), wholly-owned by the Company, which is to be incorporated for entering into agreement with an overseas business partner (an unrelated third party) for operations in removal of paper and cardboard waste and recycling operations overseas under a Joint Venture (hereinafter: "JV"). During the second quarter of 2011, The Company recorded the foreign company as aforesaid, and then signed the mentioned agreement with the overseas business partner. The Company's share of this operation is 65%. This operation requires an initial investment, to be made in stages based on JV needs, amounting to USD 5.2 million, by way of owners' loan or guarantee, 80% of which would be invested by the Company. As of the date of the financial statements the company has invested a total amount of NIS 2.5 million by owners' loan.
|
|
e.
|
(cont.)
|
|
f.
|
In light of indications of impairment that rose as a result of the results of the Carmel cash-generating unit, the Company commissioned an external and independent appraiser to examine the need for a provision for impairment. The evaluation was made on the basis of its use value, based on the capitalized cash flows that are expected to be generated by the company, using a discount rate of 9.5% and it was found that the value of Carmel is lower than its book value by approximately NIS 6,988 thousands. The company consequently recognized a loss on account of impairment in the amount of NIS 6,988 thousands.
|
|
g.
|
In light of indications that rose as a result of the results of the Printing and Writing papers cash-generating unit, the Company commissioned an external and independent appraiser to examine the need for a provision for impairment. The evaluation was made on the basis of its use value, based on the capitalized cash flows that are expected to be generated by the company, using a discount rate of 9.5% and it was found that the value of Printing and Writing papers is actually higher than its book value and no recognition is necessary of a loss on account of impairment.
|
|
a.
|
On October 17, 2011 the board of directors of the associated company Hogla-Kimberly ltd. approved an issuance of a corporate guarantee in favor of a bank (HSBC) up to the amount of 31.7 million YTL (approximately USD 17.7 million) plus interest and other expenses, to the assurance of future payment by KCTR to Turkish tax authorities if and as ever this payment will be required. See note 2b.
|
b.
|
Pursuant to the efficiency and cost-cutting measures implemented by the company, and as part thereof, the Board of Directors of the company approved an agreement signed by the company on November 10, 2011, with the union of company employees and with the New General Histadrut Union in the Hadera region (“The Agreement”), within whose framework it will be agreed, inter alia, to update the collective employment agreements, along with an early retirement plan of an approximately 70 employees of the Company, before December 31, 2011.
|
-
|
Hogla-Kimberly Ltd.
|
Page
|
|
K-1
|
|
Condensed Interim Consolidated Financial Statements:
|
|
K-2
|
|
K-3
|
|
K-4
|
|
K-5 -K-7
|
|
K-8 - K-9
|
|
K-10 - K-14
|
Report on review of interim Financial Information to the shareholders of Hogla-Kimberly Ltd.
|
1.
|
Note 3D to the financial statements with regards to the demand of the Turkish Tax Authorities from KCTR, to the court's decisions regarding some of the appeals that were filed to the Tax court against the demand and to the appeals that were filed to the supreme court in Turkey.
|
2.
|
Note 3E to the financial statements with regards to petition that was filed against the company for the approval of class action.
|
As of
September 30,
|
As of
December 31,
|
|||||||||||
2 0 1 1
|
2 0 1 0
|
2 0 1 0
|
||||||||||
(Unaudited)
|
||||||||||||
Current Assets
|
||||||||||||
Cash and cash equivalents
|
18,614 | 19,702 | 16,732 | |||||||||
Trade receivables
|
294,063 | 316,205 | 289,094 | |||||||||
Inventories
|
252,718 | 252,758 | 241,803 | |||||||||
Current tax asset
|
- | - | 54 | |||||||||
Other current assets
|
10,841 | 8,211 | 7,178 | |||||||||
576,236 | 596,876 | 554,861 | ||||||||||
Non-Current Assets
|
||||||||||||
VAT Receivable
|
35,253 | 53,093 | 51,223 | |||||||||
Property plant and equipment
|
368,471 | 340,752 | 350,560 | |||||||||
Goodwill
|
14,970 | 18,887 | 17,033 | |||||||||
Employee benefit assets
|
582 | 645 | 639 | |||||||||
Deferred tax assets
|
3,641 | 4,827 | 3,864 | |||||||||
Land lease
|
1,541 | 1,669 | 1,637 | |||||||||
Other Non-current assets
|
400 | - | - | |||||||||
424,858 | 419,873 | 424,956 | ||||||||||
1,001,094 | 1,016,749 | 979,817 | ||||||||||
Current Liabilities
|
||||||||||||
Borrowings
|
96,467 | 38,537 | 36,640 | |||||||||
Trade payables
|
322,023 | 348,967 | 329,916 | |||||||||
Employee benefit obligations
|
13,798 | 13,721 | 12,810 | |||||||||
Current tax liabilities
|
8,482 | 9,260 | 22,583 | |||||||||
Dividend payables
|
30,000 | 40,000 | 5,000 | |||||||||
Tax provision
|
104,544 | - | - | |||||||||
Other payables and accrued expenses
|
47,307 | 49,992 | 44,054 | |||||||||
622,621 | 500,477 | 451,003 | ||||||||||
Non-Current Liabilities
|
||||||||||||
Borrowings
|
- | 13,784 | 6,941 | |||||||||
Employee benefit obligations
|
7,586 | 7,493 | 7,899 | |||||||||
Deferred tax liabilities
|
36,714 | 35,310 | 35,370 | |||||||||
44,300 | 56,587 | 50,210 | ||||||||||
Capital and reserves
|
||||||||||||
Issued capital
|
265,246 | 265,246 | 265,246 | |||||||||
Reserves
|
(105,141 | ) | (57,594 | ) | (82,338 | ) | ||||||
Retained earnings
|
174,068 | 252,033 | 295,696 | |||||||||
334,173 | 459,685 | 478,604 | ||||||||||
1,001,094 | 1,016,749 | 979,817 |
G. Calvo Paz
|
O. Lux
|
O. Bloch
|
||
Chairman of the Board of Directors
|
Chief Financial Officer
|
Director
|
Nine months ended
|
Three months ended
|
Year ended
|
||||||||||||||||||
September 30,
|
September 30,
|
December 31,
|
||||||||||||||||||
2 0 1 1
|
2 0 1 0
|
2 0 1 1
|
2 0 1 0
|
2 0 1 0
|
||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Revenues
|
1,199,051 | 1,286,398 | 361,873 | 427,502 | 1,697,509 | |||||||||||||||
Cost of sales
|
838,319 | 873,491 | 250,399 | 295,432 | 1,165,219 | |||||||||||||||
Gross profit
|
360,732 | 412,907 | 111,474 | 132,070 | 532,290 | |||||||||||||||
Operating costs and expenses
|
||||||||||||||||||||
Selling and marketing expenses
|
226,502 | 231,061 | 72,741 | 71,639 | 288,061 | |||||||||||||||
General and administrative expenses
|
54,052 | 48,247 | 18,398 | 16,834 | 62,357 | |||||||||||||||
Other Income
|
(73 | ) | (3,131 | ) | (73 | ) | - | (4,731 | ) | |||||||||||
Operating profit
|
80,251 | 136,730 | 20,408 | 43,597 | 186,603 | |||||||||||||||
Finance expenses
|
(5,856 | ) | (5,789 | ) | (2,566 | ) | (2,532 | ) | (8,110 | ) | ||||||||||
Finance income
|
1,527 | 3,950 | (1,700 | ) | 2,797 | 12,104 | ||||||||||||||
Profit before tax
|
75,922 | 134,891 | 16,142 | 43,862 | 190,597 | |||||||||||||||
Income taxes charge
|
137,550 | 33,861 | 123,527 | 11,692 | 45,904 | |||||||||||||||
Profit (Loss) for the period
|
(61,628 | ) | 101,030 | (107,385 | ) | 32,170 | 144,693 |
Nine months ended
|
Three months ended
|
Year ended
|
||||||||||||||||||
September 30,
|
September 30,
|
December 31,
|
||||||||||||||||||
2 0 1 1
|
2 0 1 0
|
2 0 1 1
|
2 0 1 0
|
2 0 1 0
|
||||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||||||
Profit (Loss) for the period
|
(61,628 | ) | 101,030 | (107,385 | ) | 32,170 | 144,693 | |||||||||||||
Exchange differences arising on
translation of foreign operations
|
(24,879 | ) | 2,955 | (8,333 | ) | 8,842 | (21,341 | ) | ||||||||||||
Cash flow hedges
|
1,816 | (1,368 | ) | 1,515 | (563 | ) | (2,315 | ) | ||||||||||||
Transfer to profit or loss from equity on
cash flow hedge
|
919 | 842 | 460 | 21 | 1,192 | |||||||||||||||
Income tax relating to components of
other comprehensive income
|
(659 | ) | 133 | (474 | ) | 136 | 282 | |||||||||||||
Other comprehensive income for the
period (net of tax)
|
(22,803 | ) | 2,562 | (6,832 | ) | 8,436 | (22,182 | ) | ||||||||||||
Total comprehensive income for the period
|
(84,431 | ) | 103,592 | (114,217 | ) | 40,606 | 122,511 |
Share capital
|
Capital reserves
|
Foreign currency translation reserve
|
Cash flow hedges
|
Retained earnings
|
Total
|
|||||||||||||||||||
Nine months ended
|
||||||||||||||||||||||||
September 30, 2011 (unaudited)
|
||||||||||||||||||||||||
Balance - January 1, 2011
|
29,638 | 235,608 | (81,569 | ) | (769 | ) | 295,696 | 478,604 | ||||||||||||||||
Loss for the period
|
- | - | - | - | (61,628 | ) | (61,628 | ) | ||||||||||||||||
Exchange differences arising on
translation of foreign operations
|
- | - | (24,879 | ) | - | - | (24,879 | ) | ||||||||||||||||
Cash flow hedges
|
- | - | - | 2,076 | - | 2,076 | ||||||||||||||||||
Dividend
|
- | - | - | - | (60,000 | ) | (60,000 | ) | ||||||||||||||||
Balance - September 30, 2011
|
29,638 | 235,608 | (106,448 | ) | 1,307 | 174,068 | 334,173 | |||||||||||||||||
Nine months ended
|
||||||||||||||||||||||||
September 30, 2010 (unaudited)
|
||||||||||||||||||||||||
Balance - January 1, 2010
|
29,638 | 235,608 | (60,228 | ) | 72 | 251,003 | 456,093 | |||||||||||||||||
Profit for the period
|
- | - | - | - | 101,030 | 101,030 | ||||||||||||||||||
Exchange differences arising on
translation of foreign operations
|
- | - | 2,955 | - | - | 2,955 | ||||||||||||||||||
Cash flow hedges
|
- | - | - | (393 | ) | - | (393 | ) | ||||||||||||||||
Dividend
|
- | - | - | - | (100,000 | ) | (100,000 | ) | ||||||||||||||||
Balance - September 30, 2010
|
29,638 | 235,608 | (57,273 | ) | (321 | ) | 252,033 | 459,685 |
Share capital
|
Capital reserves
|
Foreign currency translation reserve
|
Cash flow hedges
|
Retained earnings
|
Total
|
|||||||||||||||||||
Three months ended
|
||||||||||||||||||||||||
September 30, 2011 (unaudited)
|
||||||||||||||||||||||||
Balance - June 30, 2011
|
29,638 | 235,608 | (98,115 | ) | (194 | ) | 311,453 | 478,390 | ||||||||||||||||
Loss for the period
|
- | - | - | - | (107,385 | ) | (107,385 | ) | ||||||||||||||||
Exchange differences arising on
translation of foreign operations
|
- | - | (8,333 | ) | - | - | (8,333 | ) | ||||||||||||||||
Cash flow hedges
|
- | - | - | 1,501 | - | 1,501 | ||||||||||||||||||
Dividend
|
- | - | - | - | (30,000 | ) | (30,000 | ) | ||||||||||||||||
Balance - September 30, 2011
|
29,638 | 235,608 | (106,448 | ) | 1,307 | 174,068 | 334,173 | |||||||||||||||||
Three months ended
|
||||||||||||||||||||||||
September 30, 2010 (unaudited)
|
||||||||||||||||||||||||
Balance - June 30, 2010
|
29,638 | 235,608 | (66,115 | ) | 85 | 259,863 | 459,079 | |||||||||||||||||
Profit for the period
|
- | - | - | - | 32,170 | 32,170 | ||||||||||||||||||
Exchange differences arising on
translation of foreign operations
|
- | - | 8,842 | - | - | 8,842 | ||||||||||||||||||
Cash flow hedges
|
- | - | - | (406 | ) | - | (406 | ) | ||||||||||||||||
Dividend
|
- | - | - | - | (40,000 | ) | (40,000 | ) | ||||||||||||||||
Balance - September 30, 2010
|
29,638 | 235,608 | (57,273 | ) | (321 | ) | 252,033 | 459,685 |
Share capital
|
Capital reserves
|
Foreign currency translation reserve
|
Cash flow hedges
|
Retained earnings
|
Total
|
|||||||||||||||||||
Year ended December 31, 2010
|
||||||||||||||||||||||||
Balance - January 1, 2010
|
29,638 | 235,608 | (60,228 | ) | 72 | 251,003 | 456,093 | |||||||||||||||||
Profit for the year
|
- | - | - | - | 144,693 | 144,693 | ||||||||||||||||||
Exchange differences arising on
translation of foreign operations
|
- | - | (21,341 | ) | - | - | (21,341 | ) | ||||||||||||||||
Cash flow hedges
|
- | - | - | (841 | ) | - | (841 | ) | ||||||||||||||||
Dividend
|
- | - | - | - | (100,000 | ) | (100,000 | ) | ||||||||||||||||
Balance - December 31, 2010
|
29,638 | 235,608 | (81,569 | ) | (769 | ) | 295,696 | 478,604 |
Nine months ended
|
Three months ended
|
Year ended
|
||||||||||||||||||
September 30,
|
September 30,
|
December 31,
|
||||||||||||||||||
2 0 1 1
|
2 0 1 0
|
2 0 1 1
|
2 0 1 0
|
2 0 1 0
|
||||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||||||
Cash flows – operating activities
|
||||||||||||||||||||
Profit (Loss) for the period
|
(61,628 | ) | 101,030 | (107,385 | ) | 32,170 | 144,693 | |||||||||||||
Adjustments to reconcile operating profit
to net cash provided by operating
activities (Appendix A)
|
104,407 | (43,625 | ) | 141,478 | (3,801 | ) | (22,424 | ) | ||||||||||||
Net cash generated by
|
||||||||||||||||||||
operating activities
|
42,779 | 57,405 | 34,093 | 28,369 | 122,269 | |||||||||||||||
Cash flows – investing activities
|
||||||||||||||||||||
Acquisition of property plant and
equipment
|
(55,296 | ) | (37,276 | ) | (29,591 | ) | (13,433 | ) | (62,564 | ) | ||||||||||
Proceeds from disposal of Property plant
and equipment
|
62 | 109 | - | 87 | 168 | |||||||||||||||
Proceeds from realization of trademark
|
- | 3,131 | - | - | 3,131 | |||||||||||||||
Interest received
|
7 | 114 | 4 | 17 | 2,532 | |||||||||||||||
Net cash
used in investing activities
|
(55,227 | ) | (33,922 | ) | (29,587 | ) | (13,329 | ) | (56,733 | ) | ||||||||||
Cash flows – financing activities
|
||||||||||||||||||||
Dividend paid
|
(35,000 | ) | (100,000 | ) | - | (40,000 | ) | (135,000 | ) | |||||||||||
Borrowings paid
|
(19,952 | ) | (18,845 | ) | (6,746 | ) | (6,372 | ) | (25,307 | ) | ||||||||||
Short-term bank credit
|
75,918 | 11,212 | 10,251 | 2,162 | 9,975 | |||||||||||||||
Interest paid
|
(5,391 | ) | (2,779 | ) | (2,408 | ) | (1,231 | ) | (4,048 | ) | ||||||||||
Net cash provided by (used in) financing activities
|
15,575 | (110,412 | ) | 1,097 | (45,441 | ) | (154,380 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents
|
3,127 | (86,929 | ) | 5,603 | (30,401 | ) | (88,844 | ) | ||||||||||||
Cash and cash equivalents – beginning of period
|
16,732 | 106,996 | 13,432 | 49,543 | 106,996 | |||||||||||||||
Effects of exchange rate changes on the
balance of cash held in foreign currencies
|
(1,245 | ) | (365 | ) | (421 | ) | 560 | (1,420 | ) | |||||||||||
Cash and cash equivalents - end of period
|
18,614 | 19,702 | 18,614 | 19,702 | 16,732 |
Nine months ended
|
Three months ended
|
Year ended
|
||||||||||||||||||
September 30,
|
September 30,
|
December 31,
|
||||||||||||||||||
2 0 1 1
|
2 0 1 0
|
2 0 1 1
|
2 0 1 0
|
2 0 1 0
|
||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
A. Adjustments to reconcile profit for
the period to net cash generated
by operating activities
|
||||||||||||||||||||
Finance expenses paid adjustment
to profit
|
5,384 | 2,665 | 2,404 | 1,214 | 1,516 | |||||||||||||||
Taxes on income recognized in profit
and loss
|
137,550 | 33,861 | 123,527 | 11,692 | 45,904 | |||||||||||||||
Depreciation and amortization
|
24,302 | 22,748 | 8,407 | 8,048 | 31,195 | |||||||||||||||
Capital loss on disposal of
property, plant and equipment
|
730 | 940 | 33 | 50 | 991 | |||||||||||||||
Capital gain from realization of trademark
|
- | (3,131 | ) | - | - | (3,131 | ) | |||||||||||||
Changes in assets and liabilities:
|
||||||||||||||||||||
Decrease (Increase) in trade
receivables
|
(35,432 | ) | (36,436 | ) | 23,275 | (5,505 | ) | (13,419 | ) | |||||||||||
Increase in other current assets
|
(3,774 | ) | (2,441 | ) | (512 | ) | (346 | ) | (1,485 | ) | ||||||||||
Decrease (Increase) in inventories
|
(21,180 | ) | (70,460 | ) | 7,714 | (23,187 | ) | (68,657 | ) | |||||||||||
Increase (decrease) in trade payables
|
(1,804 | ) | 57,802 | (34,628 | ) | 21,327 | 33,914 | |||||||||||||
Net change in balances with related
parties
|
25,621 | 20,843 | 16,920 | 824 | 27,266 | |||||||||||||||
Increase (decrease) in other payables
and accrued expenses
|
7,419 | (16,105 | ) | 8,897 | (4,081 | ) | (21,357 | ) | ||||||||||||
Increase in other long term assets
|
(2,877 | ) | (5,215 | ) | (3,025 | ) | (2,228 | ) | (8,795 | ) | ||||||||||
Change in employee benefit
obligations, net
|
1,216 | 666 | (1,255 | ) | (313 | ) | 507 | |||||||||||||
137,155 | 5,737 | 151,757 | 7,495 | 24,449 | ||||||||||||||||
Income taxes received
|
- | 67 | - | - | 7,273 | |||||||||||||||
Income taxes paid
|
(32,748 | ) | (49,429 | ) | (10,279 | ) | (11,296 | ) | (54,146 | ) | ||||||||||
104,407 | (43,625 | ) | 141,478 | (3,801 | ) | (22,424 | ) |
A.
|
Description Of Business
|
B.
|
Definitions:
|
|
The Company
|
-
|
Hogla-Kimberly Ltd.
|
|
The Group
|
-
|
the Company and its Subsidiaries.
|
|
Subsidiaries
|
-
|
companies in which the Company control, (as defined by IAS 27) directly or indirectly, and whose financial statements are fully consolidated with those of the Company.
|
|
Related Parties
|
-
|
as defined by IAS 24.
|
|
Interested Parties
|
-
|
as defined in the Israeli Securities Regulations (Annual Financial Statements), 2010.
|
|
Controlling Shareholder
|
-
|
as defined in the Israeli Securities law and Regulations 1968.
|
|
NIS
|
-
|
New Israeli Shekel.
|
|
CPI
|
-
|
the Israeli consumer price index.
|
|
Dollar
|
-
|
the U.S. dollar.
|
|
YTL
|
-
|
the Turkish New Lira.
|
C.
|
These financial statements includes summary of significant accounting policies and are attached to the financial statements of a related party.
|
A.
|
Applying International Accounting Standards (IFRS)
|
B.
|
Significant accounting policies
|
C.
|
Standards and Improvements issued but are not yet effective.
|
·
|
Amendments to IAS 1 – Presentation of Financial Statements
|
·
|
IFRS 10 – Consolidated Financial Statements
|
·
|
IFRS 12 – Disclosure of Interests in other Entities
|
D.
|
Exchange Rates and Linkage Basis
|
As of:
|
Turkish Lira exchange rate vis-a-vis the Israel NIS
(TL’000 per NIS1)
|
Representative exchange rate of the dollar
(NIS per $1)
|
CPI
“in respect of”
(in points)
|
|||||||||
September 30, 2011
|
1,999 | 3.712 | 120.61 | |||||||||
September 30, 2010
|
2,523 | 3.665 | 116.95 | |||||||||
December 31, 2010
|
2,275 | 3.549 | 117.82 |
Increase (decrease) during the:
|
%
|
%
|
%
|
|||||||||
Nine months ended
September 30, 2011
|
(12.13 | ) | 4.59 | 2.36 | ||||||||
Three months ended
September 30, 2011
|
(5.03 | ) | 8.67 | 0.19 | ||||||||
Nine months ended
September 30, 2010
|
1.28 | (2.91 | ) | 1.89 | ||||||||
Three months ended
September 30, 2010
|
3.74 | (5.42 | ) | 1.23 | ||||||||
Year ended December 31, 2010
|
(8.67 | ) | (5.99 | ) | 2.66 |
A.
|
Following the June Board decision from July 27, 2010 to distribute a dividend in the amount of NIS 40 million from unapproved enterprise earnings, an amount of NIS 35 million was paid on November 29, 2010 and the other NIS 5 million was paid on March 24, 2011.
|
B.
|
On February 23, 2011 the board of directors declared dividend distribution of NIS 30 million from the unapproved enterprise retained earnings. The dividend was paid on June 30, 2011.
|
C.
|
On July 26, 2011 the board of directors declared dividend distribution of NIS 30 million from the unapproved enterprise retained earnings. Actual payment will take place at Q4/2011.
|
D.
|
During the year of 2009, as part of a formal tax inspection of the Turkish Tax Authorities, KCTR's Financial Reports for the years 2004-2008 were examined.
|
E.
|
On May 2, 2011 a petition was filed against the company, for the approval of a class action. According to the petition, the plaintiff claimed that Huggies diapers, marketed by the company, which she purchased, did not absorb as was expected due to a fault in the diapers production line. The plaintiff estimates the scope of the class action to be approximately NIS 1.2 billion. At this early stage the company's legal advisor opinion is that the probability of the request for approval of a class action lawsuit will be rejected is higher than the probability that it will be approved, and therefore no provision was created in the financial statements as of September 30,2011on account of this matter.
|
A.
|
Balances with Related Parties
|
As of
September 30,
|
As of
December 31,
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
(Unaudited)
|
||||||||||||
Trade receivables
|
5,932 | 24,689 | 27,968 | |||||||||
Other receivables
|
48,580 | 1,540 | 3,228 | |||||||||
Trade payables
|
54,512 | 77,788 | 84,629 |
B.
|
Transactions with Related Parties
|
Nine months ended September 30,
|
Three months ended September 30,
|
Year ended December 31,
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2010
|
||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Sales to related parties
|
73,201 | 166,233 | 6,873 | 69,525 | 222,018 | |||||||||||||||
Cost of sales
|
198,460 | 228,108 | 43,717 | 75,969 | 328,466 | |||||||||||||||
Royalties to the shareholders
|
22,014 | 22,030 | 7,188 | 7,429 | 29,780 | |||||||||||||||
General and administrative
expenses
|
8,650 | 7,863 | 3,039 | 3,346 | 9,707 |
1.
|
On October 17, 2011 the board of directors approved an issuance of a corporate guarantee in favor of corporate bank (HSBC) up to the amount of 31.7 million YTL (approximately $17.7 million) plus interest and other expenses, to the assurance of future payment by KCTR to Turkish tax authorities if required. |
2.
|
On November 14, 2011 as part of the efficiency and cost-cutting measures implemented by the company, the Board of Directors approved an agreement that was signed by Hadera Paper Ltd. on November 10, 2011 with the union of the employees and with the New General Histadrut Union in the Hadera region (“The Agreement”), within whose framework it will be agreed, inter alia, to update the collective employment agreements, along with an early retirement plan of employees of the Company, before December 31, 2011. Along with the assimilation of the items in the agreement, the company is expected to make provisions in its financial statements during the fourth quarter, to account for the expected retirement costs, amounting to a total of approximately NIS 10.1 million, on account of the employees that will be opting for early retirement.
|