osem investments limited · 2015-11-22 · development, economics, control and budget, long term...

Osem Investments Limited

Financial Statements

September 30, 2015

INVESTMENTS LTD

Contents

Page

The Board of Directors' Report on the Company Business

for the nine Month Period ending 30 September 2015 A-J

Condensed Interim Consolidated Financial Statements as at 30 September 2015 (Unaudited)

Auditors' review report 1

Condensed Interim Consolidated Statement of Financial Position 2

Condensed Interim Consolidated Statement of Profit and Loss 4

Condensed Interim Consolidated Statement of Comprehensive Income and Expenses 5

Condensed Interim Consolidated Statement on Changes in Shareholders Equity 6

Condensed Interim Consolidated Statement of Cash Flows 8

Notes to the Condensed Interim Consolidated Financial Statements 9

Condensed Interim Separate Financial Statements as at 30 September 2015 (Unaudited)

Auditors' review report 12

Condensed Interim Information on Seperate Financial Position 13

Condensed Interim Information on Seperate Profit and Loss 15

Condensed Interim Information on Seperate Comprehensive Income and Expenses 16

Condensed Interim Information on Seperate Cash Flows 17

Additional Information 18

Report on the effectiveness of the internal control over the interim consolidated financial reporting

A

19 November 2015

The Board of Directors' Report on the Company Business for the Nine Month Period ending 30 September 2015

The Board of Directors of Osem Investments Ltd. (hereinafter: (hereinafter – “the Company”) is honored to present to the

shareholders the Board of Directors Report for the Nine month period ending 30 September 2015, in accordance with

Securities Regulations (periodic and immediate reports) -1970. The figures appearing in the Report of the Board of

Directors are based on the Consolidated and Audited Financial Statements as at 30 September 2015. The financial figures

and the results of activities of the Company are influenced by the financial figures and the results of activities of its

subsidiary companies The Company and its subsidiaries shall be referred to collectively as "the Group" or the "Osem

Group".

In certain cases, details will be presented, describing events which occurred after the date of the financial statements and

shortly before the publication of the report, as well as additional figures at Company level only.

This report has been prepared taking into consideration that the reader of the report has at his disposal the Board of

Directors' Report on the Company as at 31 December 2014.

A. The explanations of the Board on the Company state of affairs

Key figures from the Description of the Corporation's Business

Business environment - Osem Investments Ltd. is the parent company incorporating the Osem Group of companies.

The Group focuses on the manufacturing and marketing of Food products and ranks among the largest food

manufacturers and marketers in Israel. The Group produces more than 2,000 different food items currently

manufactured in eleven production plants in Israel and overseas and marketed through regional distribution centers.

The Group also exports its products to various countries, primarily to Europe and the USA.

Strategic alliance with Nestle. Nestle is the largest shareholder of Osem and holds about 63.7% of the Company. The

Company has exclusive agreements of cooperation with the Nestle Group in Switzerland, to market and distribute

Nestle's products in Israel by Osem’s marketing and sales systems. There is also an agreement on possible

manufacturing of some of Nestle's products locally. In addition the Company has exclusive agreements with the Nestle

Group for the use of intellectual property, knowhow and Nestle trademarks in which Nestle owns the rights. In

addition, Osem receives technical assistance in R&D and has extensive right of use of Nestle know-how for the use of

the Osem Group. This know-how includes among others technical, scientific, marketing, logistic and sales, production,

IT and financial knowledge and expertise. The Group receives IT and computer services from Nestle as part of Nestle's

GLOBE Template Solution.

AAA Credit Rating for Osem. In March 2015, Midroug Company extended the AAA rating Osem had received and

gave a stable rating outlook. Osem is the first and only industrial company in Israel, which is not a government

enterprise, to ever receive an AAA rating. This rating attests to the strong financial liquidity level of the Group.

B

Legislation in the food industry - In March 2014 the Law for the Promotion of Competition in the Food Industry was

approved which deals with, among others, the regulation of suppliers and wholesalers and the geographical

competition among wholesalers, this being based on the recommendations of the Food Committee. The law took effect

on 15 January 2015 and was associated with, among others, the changes in the method of relationship with the large

retailers and the adjustment of commercial activities as required by the law. Consequently, the agreements were

modified so that payments made in the past for services received from large retailers were converted to discounts in

invoices. This change has no effect on operating and net income.

Change in structure - for the purpose of improving planning procedures for the short, medium and long term and for

the efficiency of different processes within the organization, the decision was made to set up a new unit under the

leadership of the deputy to the CEO. This unit will unite all the planning functions existing within the various

departments and will take control of cross organizational processes, in all the topics related to strategy and business

development, economics, control and budget, long term factory planning, Group marketing including the handling of

innovation, readiness for the new consumer in the digital age and responsibility over the computer department which

will support the building of these processes. The change became effective in April 2015.

Creditors arrangement with Mega - One of the main customers of the Group in Israel, Mega Retail Chain Ltd.

(hereinafter "Mega"), submitted a request for a creditors arrangement to the district court in Lod, according to section

350 of the companies Law 5759 - 1999. In the Month of July 2015 the court approved the creditors arrangement which

included debt rescheduling to banks and suppliers and obligation on the part of the Mega owners to infuse funds and

guarantees. As part of the arrangement with the suppliers, among them, the Osem Group, it was agreed on the deferral

for a period of two years of 30% of the balance due (existing at the time of submittal of the request) following this,

commencing 15 July 2017 the amount will be repaid in 36 equal monthly payments including interest. The balance of

the debt (70%) in four weekly installments, the first of which being on 31 July 2015 or at the original payment date, the

later of the two. As at the financial statement approval date the full balance of the debt (70%) was repaid. In

accordance with the policy of the Group whereby it acts to insure of the majority of debts of its customers in Israel,

consequently, the debt of Mega to Osem at the request date is fully insured by credit insurance except for the

deductible amount, for which accrual for doubtful debts has been recorded in periods previous to the creditors

agreement. In the evaluation of company management, taking into account the mentioned credit insurance, there is a

suitable accrual in the accounts of the company for the Mega liability.

C

Financial situation

The liquid financial assets (cash and cash equivalents, and other investments) of the Group as at the Balance Sheet

date amounted to the sum of NIS 552,621 thousand compared to the sum of NIS 635,745 thousand at the end of the

previous year, a decline of NIS 83,124 thousand.

The decline is mainly the result of distribution of dividend in the amount of NIS 150,000 thousand, investments in fixed

assets, and supplementing of advance tax payments.

The fixed assets and intangible assets amounted to the sum of NIS 2,093,118 thousand, compared to the sum of NIS

2,137,898 thousand at the end of the previous year. The gross investments during the period of reporting totaled the sum of

NIS 57,878 thousand.

The Groups investments were mainly for the expansion of factories and the acquisition of production lines, mainly in the

Sderot, Yokneam and Kiryat Gat (Bonjour) factories.

Total equity as at the Balance Sheet date amounted to the sum of NIS 2,637,432 thousand compared to the sum of NIS

2,501,698 thousand at the end of the previous year. The increase in the shareholders equity derives mainly from the

accumulation of current profits totaling NIS 293,743 thousand. Which was partially offset against dividend paid in the

amount of NIS 150,000 thousand. The shareholders equity constitutes 65.7% of the total of the balance sheet.

The total of the balance sheet amounted to the sum of NIS 4,014,304 thousand compared to the sum of NIS 3,985,526

thousand at the end of the previous year,

The structure of the balance sheet as at 30 September 2015 indicates continued expansion in the business activity which

is manifested by an increase in the gross investments in the fixed assets and current assets while at the same time reduction

in liabilities, growth in the equity,and expansion which allowed over time the reduction in short term bank credit and the

repayment of all long term loans from the banks and attests to continued financial strength.

D

Results of Activities

Total sales turnover for the first nine months of the year 2015 amounted to the sum of NIS 3,170,027 thousand

compared to NIS 3,224,393 thousand in the corresponding period last year, a decline of 1.7%. This mainly due to

increase in discounts which are partially the result of the implementation of the food law in January 2015 this effected

changes to commercial agreements with large retailers and payments made in the past for services (recorded as selling

expenses) were converted to discounts and reduced net sales.

All this does not effect the quantity sales which increased in the nine months by 3.2% from the level of 190,938 tons to

the level of 197,136 tons and this mainly from innovation in products, change in product mix (a larger increase in sales

of high weight products such as Nestea and pet food) and expansion of sales promotions and discounts representing

decrease in Osem product prices to the public.

Sales turnover for the three months of the third quarter 2015 amounted to the sum of NIS 1,075,235 thousand compared

to NIS 1,128,876 thousand in the corresponding period last year, a decline of 4.8%. This decline is the result of increase

in discounts which in part resulted from the conversion of certain expenses from selling expenses to discounts that reduce

the net sales following the food Law as mentioned above.

All this does not effect the quantity sales which increased in the third quarter by 1.2% from the level of 67,966 tons to the

level of 68,769 tons and this mainly due to innovation in products, change in product mix (a larger increase in sales of

high weight products such as Nestea and pet food) and expansion of sales promotions and discounts representing decrease

in Osem product prices to the public.

The growth rate in sales during the third quarter is lower than the growth rate during the first nine months of the year this

being in light of the fact that the third quarter was negatively affected by the timing of the High Holidays (less selling

days compared to last year) and as a result of the cessation of loss making sales of a group of products in the USA.

Sales to the local market for the first nine months of the year amounted to the sum of NIS 2,678,664 thousand compared

to the sum of NIS 2,724,208 thousand in the corresponding period last year, a decline of 1.7%.

As mentioned, the decline in sales is the result of increased discounts, resulting from the initial implementation of the

food law commencing January 2015. In the framework of the law, commercial agreements were modified with the large

retailers, and payments made in the past for services (which were recorded under selling expenses) were converted to

discounts in invoices.

The Groups overseas sales for the first nine months of the year amounted to the sum of NIS 491,363 thousand compared

to the sum of NIS 500,185 thousand in the corresponding period last year, a decline of 1.8%.

The decline in overseas sales is mainly results from the cessation of loss making sales of a group of products in the USA

in the meat substitute category which was active under the "Veggie Patch" brand.

The gross profit of the Group in the first nine months of the year 2015 amounted to the sum of NIS 1,286,852 thousand

compared to NIS 1,353,903 thousand in the corresponding year, a decline of 5.0%.

The gross profit of the Group in the three months of the third quarter of the year 2015 amounted to the sum of NIS

437,975 thousand compared to NIS 474,456 thousand in the corresponding year, a decline of 7.7%.

E

The decline in gross profit results from, among others, the increase in discounts partially due to selling expenses which

were converted into discounts reducing sales turnover and gross profit this following the initial implementation of the

food law as mentioned above.

The Operating Profit of the Group before other income and expenses for the first nine months of the year amounted

to NIS 411,601 thousand compared to NIS 409,268 thousand in the corresponding period last year, a growth of 0.6%.

The Operating Profit of the Group before other income and expenses for the three months of the third quarter of the

year 2015 amounted to NIS 144,737 thousand compared to NIS 144,427 thousand in the corresponding period last year, a

growth of 0.2%.

Due to the initial implementation of the food law expenses previously recorded as selling expenses were converted to

discounts. This change has no effect on the operating profit which maintained steady in comparison to the corresponding

period last year. The stability in operating profit was maintained thanks to the reduction in advertising and administrative

expenses and by directing the resources for the benefit of sales promotions and discounts which were expressed in price

reductions to consumers.

F

The operating profit of the Group in the first nine months of the year amounted to the sum of NIS 403,492 thousand

compared to NIS 399,314 thousand in the corresponding year, a growth of 1.0%.

The operating profit of the Group in the three months of the third quarter of the year 2015 amounted to the sum of NIS

140,245 thousand compared to NIS 137,029 thousand in the corresponding year, an increase of 2.3%.

The Profit of the Group for the first nine months of the year amounted to NIS 293,743 thousand compared to NIS

299,703 thousand in the corresponding period last year, a decline of 2.0%.

The profit profit of the Group in the three months of the third quarter of the year 2015 amounted to the sum of NIS

101,907 thousand compared to NIS 102,010 thousand in the corresponding year, a decline of 0.1%.

The decline in net profit is the result of, among others, the increase in net finance expense.

Selling, marketing and distribution expenses for the first nine months of the year declined from the level of NIS

735,002 thousand to the level of NIS 673,017 thousand and represented 21.2% of the turnover compared to 22.8% in the

corresponding period last year. The decline in selling expenses results from the decline in advertising expenses and from

commencement of the implementation of the food law in January 2015 and consequently selling and marketing expenses

declined by NIS 40.5 million in favor of the increase in discounts and promotions included under net sales.

General and administrative expenses for first nine months of the year, decreased and represented 6.4% of the turnover,

compared to 6.5% in the corresponding period last year.

Other expenses, net for the first nine months of the year totaled the sum of NIS 8,109 thousand compared to the sum of

NIS 9,954 thousand in the corresponding period last year.

Net financing expense of the Group for first nine months of the year increased and amounted to the sum of NIS 11,457

thousand compared to NIS 2,292 thousand in corresponding period last year.

The increase in finance expense mainly results from the fact that last year were included finance income from return of

obligations from authorities which bore interest and decreased finance expense last year.

Liquidity and financing sources

The current ratio as at the balance sheet date is 2.00

The quick ratio as at the balance sheet date is 1.60

The high liquidity ratio and liquidity reserve funds of the Group have constituted the main financing sources for further

expansion of the Group business activities in different product categories, expansion of production lines, and this is

accompanied by foreign financing if necessary.

The cash flow for first nine months of the year from current operations amounted to the sum of NIS 183,795 thousand

compared to the sum of NIS 430,663 thousand in the previous year. The cash flow from operating activities from

supplementing of advance tax payments, deferral of 30% of the Mega obligation in accordance with the creditors

agreement and from the effect of the initial implementation of the food law according to which bonus to chains is paid

currently in current invoices and not after the end of the year as was done previously. As a result of this, in cash flow

terms, for the first nine months of the year 2015 both current bonuses relating to year 2015 and the total yearly bonuses

for year 2014 were paid.

G

Analysis of the Groups business results according to operating segments

Culinary segment - for the first nine months of the year sales amounted to NIS 681,925 thousand compared to NIS

727,039 thousand in the corresponding period last year a decrease of 6.2%. The profit declined from a level of NIS

77,818 thousand to a level of NIS 66,338 thousand

In the third quarter of the year sales decreased from NIS 252,229 thousand to NIS 222,228 thousand, a decline of 11.9%.

The profit declined from a level of NIS 24,924 thousand to a level of NIS 14,491 thousand

The decline in sales results, among others, from increased competition, from payments made in the past as part of selling

expenses and following the food law were converted to discounts which decrease net sales. The sales and profit in the

third quarter were also negatively affected by the timing of the High Holidays.

Bakery, beverages, snacks and breakfast cereals segment - for the first nine months of the year sales amounted to NIS

864,087 thousand compared to NIS 871,114 thousand in the corresponding period last year a decrease of 0.8%. The profit

increased from a level of NIS 198,231 thousand to a level of NIS 198,695 thousand In the third quarter of the year sales

decreased from NIS 306,706 thousand to NIS 289,871 thousand, a decline of 5.5%. The profit declined from a level of

NIS 70,083 thousand to a level of NIS 63,201 thousand

The decline in sales results, among others, from payments made in the past as part of selling expenses and following the

food law were converted to discounts which decrease net sales. The sales and profit in the third quarter were also

negatively affected by the timing of the High Holidays.

International segment - for the first nine months of the year sales amounted to NIS 487,791 thousand compared to NIS

496,627 thousand in the corresponding period last year a decrease of 1.8%. The profit declined from a level of NIS

41,900 thousand to a level of NIS 30,988 thousand

In the third quarter of the year sales decreased from NIS 162,690 thousand to NIS 152,032 thousand, a decline of 6.6%.

The profit increased from a level of NIS 8,017 thousand to a level of NIS 8,409 thousand.

In the first nine months of the year sales of salads of the international division in the USA increased by 17.6% - mainly

due to the launching of new products (the Swirl category in the salads segment). These sales were offset against a decline

of 9.1% sales in Europe due to, among others, weakening of the Euro and from cessation of loss making sales of a group

of products in the USA in the meat substitute category which was active under the "Veggie Patch" brand.

Infant nutrition segment - for the first nine months of the year sales amounted to NIS 253,081 thousand compared to

NIS 260,995 thousand in the corresponding period last year an decline of 3.0%. The profit increased from a level of NIS

39,351 thousand to a level of NIS 48,342 thousand.

In the third quarter of the year sales decreased from NIS 93,944 thousand to NIS 88,212 thousand, a decline of 6.1%. The

profit increased from a level of NIS 13,070 thousand to a level of NIS 17,956 thousand.

The decline in sales results, among others, from payments made in the past as part of selling expenses and following the

food law were converted to discounts which decrease net sales. The increase in profit results from, among others, one

time income from damages claim.

Professional market and Assamim Gift Packages segment - for the first nine months of the year sales amounted to NIS

304,516 thousand compared to NIS 309,154 thousand in the corresponding period last year a decline of 1.5%. The profit

declined from a level of NIS 20,061 thousand to a level of NIS 16,833 thousand

In the third quarter of the year sales increased from the level of NIS 102,727 thousand to the level of NIS 103,315

thousand, an increase of 0.6%. The profit declined from a level of NIS 5,896 thousand to a level of NIS 5,597 thousand

The decline in sales and profit results from, among others, from the decline in inbound tourism which affects the

professional market activity.

H

Other Activities segment - for the first nine months of the year sales amounted to NIS 614,198 thousand compared to

NIS 593,165 thousand in the corresponding period last year an increase of 3.5%. The profit amounted to the sum of NIS

55,065 thousand compared to the sum of NIS 36,750 thousand last year,

In the third quarter of the year sales increased from the level of NIS 222,553 thousand to the level of NIS 231,843

thousand, an increase of 4.2%. The profit increased from a level of NIS 23,841 thousand to a level of NIS 36,589

thousand.

The increase in sales and profit are the result of, among others, improvements in ice cream in light of the fact that last

year, at the height of the season, the category suffered from the effects of the "Tzuk Eitan" campaign and also from the

improvement due to innovation and the launching of new products especially in the pet foods field.

I

B. Exposure to and management of market risks

During the statement period there were no significant changes in the exposure of the Company and the method of

their market risks management in relation to the Company's reports on this subject for the year ending 31 December

2014.

C. Provisions on disclosure related to the Corporation's financial reporting

Critical estimates

No significant changes were made during the first quarter of the year 2015 in relation to critical accounting

estimations which the Company uses for the financial reports.

Financial date related to the parent company

In accordance with regulation 38d of the Securities Regulations (periodic and immediate reports) An appendix is

attached to the Board of Directors report, separate financial statements of the Company (“Solo Report”), with the

examining auditor’s opinion attached.

Dividends

On 3 March 2015, the Company distributed a dividend for the sum of NIS 150 million.

D. Corporate Governance Aspects

Disclosure regarding the procedure of approval of the financial statements

a. The organs in charge of the super control include the members of the board, the CEO, and the Deputy CEO of

Finance. The identity of the organs is specified in the Periodic Report in Regulation 26 and 26(A) in Chapter D

of the Periodic Report.

b. The Balance Sheet Committee for the examination of the financial statements

General: The Company board of directors has decided to establish a Balance Sheet Committee which will

examine the financial statements of the Company and which will make recommendations with regard to the

approval of the financial statements, after the Committee has discussed the financial statements prior to making

recommendations. A representative of the Company external auditor attends the meetings of the Committee for

the examination of the financial statements and the Internal Auditor of the Company attends these meetings as

well. The Balance Sheet Committee for the examination of the financial statements also act as members of the

Audit Committee

Members of the Balance Sheet Committee: The Committee comprises four members (who also hold the office

of directors in the Company) - Dr. Liora Meridor (Public Director), Gaby Hake Adv., Yaki Yerushalmi (Public

Director) and Yossi Alsheich (independent director). Dr. Liora Meridor presides as the Committee Chair. The

appointment of the Committee members was made based on their skills, including their professional

experience, their qualifications and additional institutions or boards in which they hold office, as the case may

be, based on their classification by the Company Board of Directors (prior to their appointment as directors of

the Company), and based on their accounting and financial skills and also based on their declaration (which

was submitted prior to their appointment) and based on their ability to read and understand financial statements

(see Section 26 in Chapter D of the Periodic Report).

J

The discussions of the Balance Sheet Committee: On 12 November 2015 the Committee discussed material

reporting issues in the financial statements and formulated its recommendations to the Board on the procedure for

approving the financial statements. The Committee recommended to the Board that the financial statements be

approved. In addition to the Committee members the Company's External Auditor, the Company CEO, the Deputy

CEO of Finance and the Chief Accountant of the Company, and the Company Internal Auditor attended the

Committee meeting. In the framework of its meetings, for the purpose of forming its recommendation, the

Committee examined the material issues related to financial reporting and examined among other issues the material

estimates and valuations that were made in relation to the financial statements, the internal controls related to the

financial reporting, the integrity and diligence of the financial reporting from all its relevant aspects, the accounting

policies which were adopted and the accounting treatment applied on material affairs of the Company. In addition,

the certified accountants of the External Auditor have given their view on the issues that were presented. To make

its recommendations, the Company CEO and the Deputy CEO of Finance gave an overview to the Committee

members on the situation of the Company, its financial results and on the other issues the Committee discussed, as

specified above, and answered the questions of the Committee Members At the end of the meeting the Committee

recommended to the Board of the Company to approve the financial statements.

The Board of Directors wish to thank the management and the employees for the efforts they have invested and the

achievements they have attained and express their hope for further cooperation on both sides.

Dan Propper Itzik Saig

Chairman of the Board of Directors CEO

Somekh Chaikin Telephone 972 3 684 8000

KPMG Millennium Tower Fax 972 3 684 8444

17 Ha'arba'a Street, PO Box 609 Internet www.kpmg.co.il

Tel Aviv 6100601 Israel

Somekh Chaikin, an Israeli partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (“KPMG

International”), a Swiss entity.

Review Report to the Shareholders of Osem Investments Limited

Introduction

We have reviewed the accompanying financial information of Osem Investments Limited and its

subsidiaries (hereinafter – “the Group”) comprising of the condensed consolidated interim statement

of financial position as of September 30, 2015 and the related condensed consolidated interim

statements of income, comprehensive income, changes in equity and cash flows for the nine and three

month periods then ended. The Board of Directors and Management are responsible for the

preparation and presentation of this interim financial information in accordance with IAS 34 “Interim

Financial Reporting”, and are also responsible for the preparation of financial information for this

interim periods in accordance with Section D of the Securities Regulations (Periodic and Immediate

Reports), 1970. Our responsibility is to express a conclusion on this interim financial information

based on our review.

We did not review the condensed interim financial information of certain consolidated subsidiaries

whose assets constitute 13.8% of the total consolidated assets as of September 30, 2015, and whose

revenues constitute 16.3% and 17.3% of the total consolidated revenues for the nine and three month

periods then ended, respectively. The condensed interim financial information of those companies

was reviewed by other auditors whose review reports thereon were furnished to us, and our

conclusion, insofar as it relates to amounts emanating from the financial information of such

companies, is based solely on the said review reports of the other auditors.

Scope of Review

We conducted our review in accordance with Standard on Review Engagements 1, "Review of

Interim Financial Information Performed by the Independent Auditor of the Entity" of the Institute of

Certified Public Accountants in Israel. A review of interim financial information consists of making

inquiries, primarily of persons responsible for financial and accounting matters, and applying

analytical and other review procedures. A review is substantially less in scope than an audit

conducted in accordance with generally accepted auditing standards in Israel and consequently

does not enable us to obtain assurance that we would become aware of all significant matters that

might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review and the review reports of other auditors, nothing has come to our attention that

causes us to believe that the accompanying financial information was not prepared, in all material

respects, in accordance with IAS 34.

In addition to that mentioned in the previous paragraph, based on our review and the review reports

of other auditors, nothing has come to our attention that causes us to believe that the accompanying

interim financial information does not comply, in all material respects, with the disclosure

requirements of Section D of the Securities Regulations (Periodic and Immediate Reports), 1970.

Somekh Chaikin

Certified Public Accountants (Isr.)

November 19, 2015

1

Condensed Interim Consolidated Statement of Financial Position

As at September 30 As at September 30 As at December 31

2015 2014 2014

(Unaudited) (Unaudited) (Audited)

NIS thousands NIS thousands NIS thousands

Assets

Cash and cash equivalents 455,889 511,035 471,197

Bank deposits and other investments 96,732 1,187 164,548

Accounts receivable - customers 844,910 765,294 693,674

Debtors and debit balances 28,652 15,841 27,578

Income tax 16,595 6,508 10,694

Inventory 367,420 348,536 398,972

Total current assets 1,810,198 1,648,401 1,766,663

Employee benefits 252 195 379

Fixed assets 1,068,696 1,108,442 1,110,855

Intangible assets 1,024,422 978,334 1,027,043

Prepaid expenses 51,027 38,248 33,539

Deferred taxes 59,709 43,361 47,047

Total non-current assets 2,204,106 2,168,580 2,218,863

Total assets 4,014,304 3,816,981 3,985,526

Dan Propper - Chairman of the Board

Itzik Saig - CEO

Pinhas Kimelman - Deputy CEO, Finance

Date of approval of financial statements: 19 November 2015

2

INVESTMENTS LTD


2015 2014 2014



Liabilities

Loans and short term credit from banks 9,819 31,750 7,845

Accounts payable - suppliers 688,908 714,489 756,676

Other creditors 201,444 230,823 224,462

Income tax 3,378 8,286 10,895Dividend declared - - -

Total current liabilities 903,549 985,348 999,878

Liability for acquisition of non-controlling interest in subsidiary 358,681 333,369 372,902

Employee benefits 17,274 6,105 17,819

Deferred taxes 97,368 89,215 93,229

Total non-current liabilities 473,323 428,689 483,950

Total liabilities 1,376,872 1,414,037 1,483,828

Equity

Share capital 176,772 176,772 176,772

Premium on shares 444,212 444,212 444,212

Capital reserves (71,802) (67,985) (63,793)

Retained earnings 2,086,876 1,848,477 1,943,149

Total equity attributable to equity holders of the company 2,636,058 2,401,476 2,500,340

Non-Controlling interests 1,374 1,468 1,358

Total equity 2,637,432 2,402,944 2,501,698

Total liabilities and equity 4,014,304 3,816,981 3,985,526

The accompanying notes to the condensened interim financial statements are an integral part of them.

3

INVESTMENTS LTD

Condensed Interim Consolidated Statement of Profit and Loss

For the nine months ending For the three months ending For the year ending

As at September 30 As at September 30 As at September 30 As at September 30 December 31

2015 2014 2015 2014 2014

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)

NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands

Sales 3,170,027 3,224,393 1,075,235 1,128,876 4,256,620

Cost of sales 1,883,175 1,870,490 637,260 654,420 2,475,319

Gross profit 1,286,852 1,353,903 437,975 474,456 1,781,301

Selling, marketing and distribution expenses 673,017 735,002 229,975 258,193 970,635

General and administrative expenses 202,234 209,633 63,263 71,836 268,325

Operating profit before other expenses 411,601 409,268 144,737 144,427 542,341

Other expenses, net 8,109 9,954 4,492 7,398 10,772

Operating profit 403,492 399,314 140,245 137,029 531,569

Finance expenses (13,452) (11,226) (2,553) (1,540) (24,880)

Finance income 1,995 8,934 217 337 21,131

Financing costs, net (11,457) (2,292) (2,336) (1,203) (3,749)

Profit before taxes on income 392,035 397,022 137,909 135,826 527,820

Taxes on income 98,292 97,319 36,002 33,816 131,264

Profit for the period 293,743 299,703 101,907 102,010 396,556

Attributed to:

Equity holders of the company 293,727 299,364 101,752 101,884 396,324

Non-Controlling interests 16 339 155 126 232


Earnings per NIS 1 par value ordinary shares

Primary and fully diluted (in NIS) 2.65 2.71 0.92 0.92 3.58


4

INVESTMENTS LTD

Condensed Interim Statement of Comprehensive Income and Expenses

For the three months ending For the year ending

September 30 September 30 September 30 September 30 December 31

2015 2014 2015 2014 2014




Other comprehensive income (loss)

Amounts to be transferred to profit or loss

after specific requirements are met

(8,009) 368 9,772 3,695 4,560

Amounts that will not be transferred to profit or loss

Actuarial gains from defined benefit plan - - - - (3,117)

Income tax on components of other comprehensive income - - - - 826

Other comprehensive income (loss) for period,

net of tax (8,009) 368 9,772 3,695 2,269

Total comprehensive income for

the period 285,734 300,071 111,679 105,705 398,825

Attributed to:

Equity holders of the company 285,718 299,732 111,524 105,579 398,596

Non-Controlling interests 16 339 155 126 229


the period 285,734 300,071 111,679 105,705 398,825


Foreign currency translation differences for foreign operations

For the nine months ending

5

INVESTMENTS LTD.

Notes to the Financial Statements as at 30 September 2015 (unaudited)

6

Condensed Consolidated Reports on Changes in Shareholders' Equity

Capital reserve

from acquisition

Non

Total

of rights not

conferring

control

Total Equity

Controlling

Interest

Company's

equity holders

Retained

earnings

Other Reserves in consolidated

subsidiary

Translation

reserve fund

Premium on

Shares Share Capital

NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands

For the nine month period ending

30 September 2015 (unaudited)

2,501,698 1,358 2,500,340 1,943,149 5,694 (41,675) (27,812) 444,212 176,772 Balance as at 1 January 2015 (audited)

(8,009) - (8,009) - - - (8,009) - - Foreign currency exchange difference

293,743 16 293,727 293,727 - - - - - Net earnings for the period

285,734 16 285,718 293,727 - - (8,009) - - Total recognized comprehensive income for the period

(150,000) - (150,000) (150,000) - - - Dividend paid

2,637,432

1,374

2,636,058

2,086,876

5,694

(41,675)

(35,821)

444,212

176,772

Balance as at 30 September 2015

For the nine month period ending


2,252,873 1,129 2,251,744 1,699,113 5,694 (41,675) (32,372) 444,212 176,772 Balance as at 1 January 2014 (audited)

368 - 368 - - - 368 - - Foreign currency exchange difference


300,071 339 299,732 299,364 - - 368 - - Total recognized comprehensive income for the period

(150,000) - (150,000) (150,000) - - Dividend paid

2,402,944

1,468

2,401,476

1,848,477

5,694

(41,675)

(32,004)

444,212

176,772


The accompanying notes are an integral part of these

consolidated financial statements.

INVESTMENTS LTD.

Notes to the Financial Statements as at 30 September 2015 (unaudited)

7

Condensed Consolidated Reports on Changes in Shareholders' Equity (Cont.)

Capital reserve

from acquisition

Non

Total

of rights not

conferring

control

Total Equity

Controlling

Interest

Company's

equity holders

Retained

earnings

Other Reserves in consolidated

subsidiary

Translation

reserve fund

Premium on

Shares Share Capital

NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands

For the three month period ending


2,525,753 1,219 2,524,534 1,985,124 5,694 (41,675) (45,593) 444,212 176,772 Balance as at 1 July 2015

9,772 - 9,772 - - - 9,772 - - Foreign currency exchange difference


111,679 155 111,524 101,752 - - 9,772 - - Total recognized comprehensive income for the period

2,637,432

1,374

2,636,058

2,086,876

5,694

(41,675)

(35,821)

444,212

176,772


For the three month period ending


2,297,239 1,342 2,295,897 1,746,593 5,694 (41,675) (35,699) 444,212 176,772 Balance as at 1 July 2014




2,402,944

1,468

2,401,476

1,848,477

5,694

(41,675)

(32,004)

444,212

176,772


For the year ending 31 December 2014 (audited)

2,252,873 1,129 2,251,744 1,699,113 5,694 (41,675) (32,372) 444,212 176,772 Balance as at 1 January 2014


(2,291) (3) (2,288) (2,288) - - - - - Actuarial losses (net after tax)

396,556 232 396,324 396,324 - - - - - Net earnings for the year 2014


(150,000) - (150,000) (150,000) - - - - - Dividend paid

2,501,698

1,358

2,500,340

1,943,149

5,694

(41,675)

(27,812)

444,212

176,772

Balance as at 31 December 2014 (audited)

The accompanying notes are an integral part of these consolidated

financial statements.

INVESTMENTS LTD

Condensed Interim Consolidated Statement of Cash Flows

For the three months ending For the year ending


2015 2014 2015 2014 2014



CASH FLOWS FROM OPERATING ACTIVITIES

Profit for period 293,743 299,703 101,907 102,010 396,556

Adjustments:

Depreciation 94,593 90,009 32,890 30,202 121,337

Amortization of intangible assets, prepaid and other expenses 13,762 28,829 2,799 9,858 36,918

Loss from sale of fixed assets, net 574 3,671 9 3,359 3,023

Finance costs, net 11,457 2,292 2,336 1,203 3,749

Tax expenses on income 98,292 97,319 36,002 33,816 131,264

Changes in derivatives 76 380 2,096 (78) (9,749)

Changes in inventory 30,339 43,094 41,811 33,426 (4,463)

Changes in accounts receivable and other debtors (170,115) (63,059) (16,392) 27,353 7,527

Changes in accounts payable and other creditors (75,396) 7,498 (75,359) 12,749 32,073

Changes in employee benefits (418) 1,753 54 (77) 10,166

Income taxes paid, net (113,112) (80,826) (38,246) (30,996) (109,522)

Net cash flows arising from operating activities 183,795 430,663 89,907 222,825 618,879

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of fixed assets (66,216) (65,697) (21,776) (20,079) (86,117)

Proceeds from sale of fixed assets 632 966 162 121 1,309

Deposits in banks and other investments, net 66,849 5,865 (559) 42 (157,505)

Investment in intangible assets and prepaid expenses (7,252) (21,909) (1,821) (4,864) (25,942)

Interest received 472 9,116 87 331 9,336

Net cash flows used in investing activities (5,515) (71,659) (23,907) (24,449) (258,919)

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid (11,531) (3,101) (217) (1,863) (10,552)

Credit from banking institutions and others, net 1,906 653 80 653 (24,885)

Repayment of other liabilities (31,623) (24,297) (2,129) (2,324) (32,887)

Dividend paid (150,000) (150,000) - - (150,000)

(191,248) (176,745) (2,266) (3,534) (218,324)

Change in cash and cash equivalents (12,968) 182,259 63,734 194,842 141,636

Cash and cash equivalents at beginning of period 471,197 328,059 390,499 315,143 328,059

Effect of fluctuations in exchange rate

on cash balances (2,340) 717 1,656 1,050 1,502

Cash and cash equivalents at end of period 455,889 511,035 455,889 511,035 471,197


Net cash used in financing activities


8

INVESTMENTS LTD.

Notes to the Financial Statements as at 30 September 2015

9

Note 1 – The Reporting Entity

Osem Investments Ltd. (hereinafter: the "Company") is a company residing in Israel. The consolidated

financial statements of the Group as at 30 September 2015 include the statements of the Company and its

investee companies (hereinafter: "the Group").

The controlling party in the Company is Nestlé S.A. Switzerland. The Group is engaged in the manufacturing

and marketing of food products.

The securities of the Company are listed for trading on the Tel Aviv Stock Exchange.

Note 2 – The basis for the preparation of the Financial Statements

The condensed consolidated interim statements have been prepared in accordance with IAS 34 – Interim

Financial Reporting – and do not include all the information required in the full annual reports. The summary

should be read together with the financial statements for the year which ended on 31 December 2014

(hereinafter –“ yearly financial statements”). Also, these reports were prepared in accordance with part 4 of

the Securities and Exchange Commission standards (periodic and immediate reports) 5740-1970.The use of

estimates and judgement and for the preparation of the interim financial statements, were consistent with

those used for the preparation of the year end financial statements.

Note 3 – Main Principles of Accounting Policy

The accounting policy of the Group as it relates to these condensed consolidated interim financial statements,

is the policy applied in the yearly financial statements.

Note 4 – Seasonality

The Group’s sales are affected by the timing of Jewish Holidays with an emphasis on New Year and

Passover. The annual seasons also have an affect on certain groups of products. The seasons of Winter and

Autumn are characterized by greater consumption of soups, casseroles and soup almonds as compared to the

Summer and Spring seasons which are characterized by higher consumption of ice cream and concentrates as

compared to the seasons of Winter and Autumn.

Note 5 – Segment Activity

months ending nineFor the

10December 20 Bakery Professional

30 September 2015 (unaudited) Beverages Infant And Gift Adjustment to

Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated

NIS NIS NIS NIS NIS NIS NIS NIS

Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands

Segment sales 681,925 864,087 487,791 253,081 304,516 614,198 (35,571) 3,170,027

Segment results 66,338 198,695 30,988 48,342 16,833 55,065 (4,660) 411,601

Expenses not allocated (8,109)

Financing costs, net (11,457)

Profit before taxes on income

392,035

INVESTMENTS LTD.


10

Note 5 – Segment Activity (Cont.)

months ending nineFor the


September 2014 (unaudited)30 Beverages Infant And Gift Adjustment to

Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated



Segment sales 727,039 871,114 496,627 260,995 309,154 593,165 (33,701) 3,224,393

Segment results 77,818 198,231 41,900 39,351 20,061 36,750 (4,843) 409,268




397,022

three months ending For the


(unaudited) 5201 September30 Beverages Infant And Gift Adjustment to Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated



Segment sales 222,228 289,871 152,032 88,212 103,315 231,843 (12,266) 1,075,235

Segment results 14,491 63,201 8,409 17,956 5,597 36,589 (1,506) 144,737




137,909

three months ending For the


naudited)(u 4201 September30

Beverages Infant And Gift Adjustment to Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated



Segment sales 252,229 306,706 162,690 93,944 102,727 222,553 (11,973) 1,128,876

Segment results 24,924 70,083 8,017 13,070 5,896 23,841 (1,404) 144,427

Income not allocated (7,398)



135,826

year ending For the Bakery Professional

(audited) 431 December 201 Beverages Infant And Gift Adjustment to Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated



Segment sales 972,696 1,135,363 672,032 358,480 416,777 747,438 (46,166) 4,256,620

Segment results 114,973 258,570 53,767 62,395 27,639 31,958 (6,961) 542,341




527,820

INVESTMENTS LTD.


11

Note 6 – Financial Instruments.

The Company has forward hedge transactions and options on exchange rates on supplier foreign

currency balances as at 30 September 2015 total face value of the transactions amounts to the sum of

NIS 213,424 thousand, (as at 30 September 2014 NIS 138,122 thousand) the fair value of the asset is

NIS 1,447 thousand (as at 30 September 2014 NIS 5,676 thousand).

The futures contracts are disclosed according to fair value as assets at Level 2: observable data, either

directly or indirecty, which are not included in Level 1 (quoted prices, not adjusted, on an active

market for similar instruments).

Note 7 – Events During the Financial Statement Period.

A. On 15 January 2015 the Law for the Promotion of Competition in the Food Sector took effect. The

law deals with, among others, the arrangement of activities between suppliers and retailers and in

geographic competition between retailers, this based on recommendations of the food committee. In

accordance with the decrees of the law, it is forbidden to transfer payments in money or money

equivalents from a supplier to a large retailer under certain circumstances and the manufacturers were

constrained to certain activities which were practiced until the implementation of the law. The

implementation of the law involves, among others, also changes in the method of connection with the

large retailers in order to adjust the commercial activities as required by the law. In the framework of

these adjustments, amounts paid in the past to retailers for separate services, today are expressed as a

discount to the selling price. In accordance with the above-mentioned, amounts which were classified

in the past under marketing and selling expenses in the profit and loss statement, are recorded as of this

quarter in the framework of the reduction in income.

B. One of the main customers of the Group in Israel, Mega Retail Chain Ltd. (hereinafter "Mega"), submitted

a request for a creditors arrangement to the district court in Lod, according to section 350 of the companies

Law 5759 - 1999. In the Month of July 2015 the court approved the creditors arrangement which included

debt rescheduling to banks and suppliers and obligation on the part of the Mega owners to infuse funds and

guarantees. Following discussions and following the balance sheet date, the court approved the creditors

arrangement which included debt restructuring of banks and suppliers and obligation of the owners of Mega

to input funds and guarantees. As part of the arrangement with the suppliers, among them, the Osem Group,

it was agreed on the deferral for a period of two years of 30% of the balance due (existing at the time of

submittal of the request) following this, commencing 15 July 2017 the amount will be repaid in 36 equal

monthly payments including interest. The balance of the debt (70%) in four weekly installments, the first of

which being on 31 July 2015 or at the original payment date, the later of the two. As at the financial

statement approval date the full balance of the debt (70%) was repaid. In accordance with the policy of the

Group whereby it acts to insure of the majority of debts of its customers in Israel, therefore the debt of Mega

to Osem at the request date is fully insured by credit insurance except for the deductible amount, for which

accrual for doubtful debts has been recorded in periods previous to the creditors agreement. In the

evaluation of company management, taking into account the mentioned credit insurance, there is a suitable

accrual in the accounts of the company for the Mega liability.

Osem Investments Limited

Separate Financial Statements

September 30, 2015

Somekh Chaikin Telephone 972 3 684 8000

KPMG Millennium Tower Fax 972 3 684 8444

17 Ha'arba'a Street, PO Box 609 Internet www.kpmg.co.il

Tel Aviv 6100601 Israel

Somekh Chaikin, an Israeli partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (“KPMG

International”), a Swiss entity.

To:

The shareholders of Osem Investments Limited

Subject: Special auditors’ report on separate interim financial information according to

Regulation 38D of the Securities Regulations (Periodic and Immediate Reports) – 1970

Introduction

We have reviewed the separate interim financial information presented in accordance with

Regulation 38D of the Securities Regulations (Periodic and Immediate Reports) – 1970 Osem

Investments Limited (hereinafter – the Company) as of September 30, 2015 and for the nine and

three month periods then ended. The separate interim financial information is the responsibility of the

Company’s Board of Directors and of its Management. Our responsibility is to express a conclusion

on the separate interim financial information based on our review.

We did not review the separate interim financial information of investee companies the investments

in which amounted to NIS 443,375 thousand as of September 30, 2015, and the loss from these

investee companies amounted to NIS 12,489 thousand and NIS 3,483 thousand for the nine and three

month periods then ended, respectively. The financial statements of those companies were reviewed

by other auditors whose review reports thereon were furnished to us, and our conclusion, insofar as it

relates to amounts emanating from the financial statements of such companies, is based solely on the

said review reports of the other auditors.

Scope of Review

We conducted our review in accordance with Standard on Review Engagements 1, "Review of

Interim Financial Information Performed by the Independent Auditor of the Entity" of the Institute of

Certified Public Accountants in Israel. A review of separate interim financial information consists of

making inquiries, primarily of persons responsible for financial and accounting matters, and applying

analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with generally accepted

auditing standards in Israel and consequently does not enable us to obtain assurance that we would

become aware of all significant matters that might be identified in an audit. Accordingly, we do not

express an audit opinion.

Conclusion

Based on our review and the review reports of other auditors, nothing has come to our attention that

causes us to believe that the accompanying separate interim financial information was not prepared,

in all material respects, in accordance with Regulation 38D of the Securities Regulations (Periodic

and Immediate Reports) – 1970.

Somekh Chaikin

Certified Public Accountants (Isr.)

November 19, 2015

12

INVESTMENTS LTD

Condensed Interim Information on Separate Financial Position


2015 2014 2014



Assets

Cash and cash equivalents 355,675 348,635 329,037

Bank deposits and other investments 86,332 1,187 153,945

Debtors and debit balances 9,394 3,682 10,948

Income tax 813 - -

Inventory 114,504 94,298 134,165

Total current assets 566,718 447,802 628,095

Balances related to subsidiary companies 1,887,060 1,742,276 * 1,784,338

Loans to subsidiary companies 52,953 62,544 52,533

Fixed assets 644,184 663,705 658,960

Intangible assets 570,619 529,916 571,731

Prepaid expenses 11,891 12,870 12,823

Total non-current assets 3,166,707 3,011,311 3,080,385

Total assets 3,733,425 3,459,113 3,708,480

Dan Propper - Chairman of the Board

Itzik Saig - CEO

Pinhas Kimelman - Deputy CEO, Finance

Date of approval of financial statements: 19 November 2015

13

INVESTMENTS LTD


2015 2014 2014



Liabilities

Accounts payable - suppliers 300,120 307,699 354,234

Other creditors 346,237 334,709 * 384,329

Income tax - 8,537 9,568

Total current liabilities 646,357 650,945 748,131

Liability for acquisition of non-controlling interest in subsidiary 358,681 333,369 372,902

Employee benefits 17,138 6,048 17,673

Deferred taxes 75,191 67,275 69,434

Total non-current liabilities 451,010 406,692 460,009

Total liabilities 1,097,367 1,057,637 1,208,140

Equity

Share capital 176,772 176,772 176,772

Premium on shares 444,212 444,212 444,212

Capital reserves (71,802) (67,985) (63,793)

Retained earnings 2,086,876 1,848,477 1,943,149

Total equity 2,636,058 2,401,476 2,500,340

Total liabilities and equity 3,733,425 3,459,113 3,708,480

(*) Reclassified


14

INVESTMENTS LTD

Condensed Interim Separate Information on Profit and Loss

For the three months ending

For the year

ending


2015 2014 2015 2014 2014



Sales 1,024,037 1,029,498 326,233 347,095 1,377,171

Cost of sales 550,390 535,932 179,057 182,857 714,126

Gross profit 473,647 493,566 147,176 164,238 663,045

Selling, marketing and distribution expenses 196,999 217,608 * 68,713 74,895 * 286,744

General and administrative expenses 64,914 62,534 19,078 21,996 81,272

Operating profit before other income 211,734 213,424 59,385 67,347 295,029

Other income, net 8,050 7,516 3,259 2,696 10,982

Operating profit 219,784 220,940 62,644 70,043 306,011

Finance expenses (10,555) (10,440) (1,847) (3,136) (14,781)

Finance income 1,940 9,969 207 1,125 12,063

Financing costs, net (8,615) (471) (1,640) (2,011) (2,718)

Profit from subsidiaries 140,486 137,169 * 57,955 52,532 * 174,145

Profit before taxes on income 351,655 357,638 118,959 120,564 477,438

Taxes on income 57,928 58,274 * 17,207 18,680 * 81,114


(*) Reclassified



15

INVESTMENTS LTD

Condensed Interim Information on Seperate Comprehensive Income and Expenses


For the year

ending


2015 2014 2015 2014 2014




Other comprehensive income (loss)

Amounts to be transferred to profit or loss

after specific requirements are met

(8,009) 368 9,772 3,695 4,550

Amounts that will not be transferred to profit or loss

Actuarial gains from defined benefit plan - - - - (3,099)

Income tax on components of other comprehensive income - - - - 821

Other comprehensive income (loss) for period,

net of tax (8,009) 368 9,772 3,695 2,272


the period 285,718 299,732 111,524 105,579 398,596



Comprehensive income from subsidiary companies

16

INVESTMENTS LTD

Condensed Interim Information on Seperate Cash Flows


For the year

ending


2015 2014 2015 2014 2014



CASH FLOWS FROM OPERATING ACTIVITIES

Net profit for period 293,727 299,364 101,752 101,884 396,324

Adjustments:

Company's share in profits of subsidiaries (140,486) (137,169) * (57,955) (52,532) * (174,145)

Depreciation 48,652 47,815 16,436 15,972 63,692

Amortization of intangible assets and prepaid expenses 2,540 10,929 1,044 1,453 11,767Loss (profit) from sale of fixed assets, net 404 582 (8) (13) 603Finance costs, net 8,615 471 1,640 2,011 2,718Tax expenses on income 57,928 58,274 * 15,174 18,680 * 81,114Changes in derivatives 76 380 2,096 (78) (1,549)Changes in inventory 19,661 12,512 5,466 (338) (27,355)

2,755 8,927 (1) 6,752 217Changes in accounts payable and other creditors (69,436) 47,586 * 28,324 101,503 * 151,896Changes in employee benefits (535) 1,717 (92) (15) 10,243Income taxes paid , net (98,751) (58,065) (31,907) (27,519) (83,203)

Net cash flows arising from operating activities 125,150 293,323 81,969 167,760 432,322

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (35,193) (31,852) (12,247) (9,653) (38,723)Proceeds from sale of fixed assets 117 107 18 14 183Net cash from subsidiary investment activities - - - - 10,142Investment in intangible assets and prepaid expenses (496) (2,243) (403) (331) (3,332)Interest received 462 8,935 97 382 9,431Other investments, net 66,646 126 (538) 42 (152,641)Dividend received from subsidiaries 52,045 36,309 - - 36,309

83,581 11,382 (13,073) (9,546) (138,631)

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid (234) (133) (77) 34 (284)Repayment of other liabilities (31,623) (24,297) (2,129) (2,324) (32,887)Credit from banking institutions and others, net - - - - -Dividend paid (150,000) (150,000) - - (150,000)

(181,857) (174,430) (2,206) (2,290) (183,171)

Change in cash and cash equivalents 26,874 130,275 66,690 155,924 110,520

Cash and cash equivalents at beginning of period 329,037 218,379 289,012 192,711 218,379

Effect of fluctuations in exchange rate

on cash balances (236) (19) (27) - 138

Cash and cash equivalents at end of period 355,675 348,635 355,675 348,635 329,037

(*) Reclassified


Changes in debtors and debit balances (including intercompany

balances)

Net cash flows arising from (used in) investing activities

Net cash used in financing activities


17

INVESTMENTS LTD.

Additional Information

18

1. General

The interim separate financial information is disclosed in accordance with regulation 38d of the securities regulations

(Periodic and Immediate Reports), -1970 relating to separate financial information for the company. It should be read

along with the Separate financial Information for the year ending 31 December 2014 and together with Condensed

Consolidated Interim Financial Statements as at 30 September 2015 (Heinafter – “the consolidated financial

statements”).

Included in this separate financial information is:

1. The Company – Osem Investments Ltd.

2. Consolidated Companies – companies, including partnerships, whose financial statements are fully

consolidated , directly or indirectly with the company’s financial statements.

3. Held companies – Consolidated subsidaries which the investment in them is included, directly or indirectly, in

the financial stetements on the basis of the balance sheet value.

Report for the third quarter of the year 2015 on the effectiveness of

the internal control over the financial reporting and over the

disclosure according to

Regulation 38C

Please find enclosed herewith the report for the third quarter of the year 2015

regarding the effectiveness of the internal control over the financial reporting

and over the disclosure according to Regulation 38C(a).

The management, with the supervision of the Board of Directors of Osem

Investments Ltd. (hereinafter - the corporation), is responsible for the

establishment and running of adequate internal control mechanism over the

financial reporting and over the disclosure in the corporation.

For this purpose, the management members are:

1. Itzik Saig - CEO

2. Pinhas Kimelman - Deputy CEO of Finance

3. Meir Imber - Deputy CEO of Operations

4. Ofer Green - Deputy CEO and CEO of Noga Ice Cream

5. Nizan Goldberg –CEO of Osem Group Commerce

6. Hagit Adler – CEO of ONP

7. Ori Ben Shai – CEO of Snacks, Bakery, Beverages & Cereal Division

8. Zahava Martonovits – CEO of Culinary Division

9. Billy Yanko – CEO of Bonjour

10. Barak Strozberg – VP of Human Resources

11. Nili Zur – Deputy CEO and CEO of International Division

12. Tzippi Hammer – CEO of New Business Division

13. Avi Ben-Assayag – Deputy CEO. Responsible for the areas of strategy and

business development, finance and budget control, demand planning, long-

term enterprises design, excellence unit, information systems and corporate

marketing.

Internal control over the financial reporting and over the disclosure includes

controls and procedures existing in the corporation, which were planned by the

CEO and the most senior office holder in the financial section or under their

supervision, or by someone who actually performs the above mentioned roles,

with the supervision of the board of directors of the corporation, which are

designed to provide a reasonable degree of assurance as to the credibility of

the financial reporting and on the preparation of the financial statements in

accordance with the Law, and to ensure that the information that the

Corporation is required to disclose in the reports published is in accordance

with the law, that it was collected, processed, summarized and reported in a

timely manner and in the format prescribed by the law.

The internal control includes, inter alia, controls and procedures that have

been planned to ensure that the information the corporation is required to

disclose is accumulated and sent to management of the Corporation, including

the CEO and the senior official on the Financial Section or to someone who

actually performs the above mentioned roles, so as to enable the making of

decisions in a timely manner, with regard to the disclosure requirements

Due to its structural limitations, the internal control over the financial

reporting and the disclosure is not designated to provide absolute assurance

that any misleading presentation or omission of information in the statements

will be prevented or will be discovered.

In the Quarterly Report on the effectiveness of the internal control over the

financial reporting and over the disclosure, which was enclosed with the

interim report for the period ended on 30 June 2015 (hereinafter - the last

quarterly report on the internal control), the internal control was found to be

effective.

Until the date of the report, the Board of Directors and the Corporation

management were not made aware of any event or matter where there is cause

to change the evaluation of the effectiveness of the internal control, as set out

in the last quarterly report relating to internal control.

As of date of the report, based on the statement in the last quarterly report on

the internal control, and based on information that has been brought to the

attention of management and the board of directors as mentioned above, the

internal control is effective.

Management statements

(a) Statement of the CEO according to Regulation 38C(d)(1):

Management Statement

Statement of the CEO

I, Itzik Saig, declare that:

1. I have evaluated the quarterly report of Osem Investments Ltd. (hereinafter:

the corporation) for the third quarter of the year 2015 (hereinafter: the reports).

2. To my knowledge, the reports do not include any incorrect presentation of a

material fact and they do not lack any presentation of a material fact that is

required, so that the presentations included in them, in light of the

circumstances in which these presentations have been included, are not

misleading with regard to the period of the reports

3. To my knowledge, the financial statements and the other financial information

included in the reports properly reflect, from every material aspect, the

financial situation, results of activities and cash flow of the Corporation as of

the dates and for the periods to which the reports refer

4. I have revealed to the auditing accountant of the Corporation, the Board of

Directors and the Audit Committee of the BOD of the Corporation, based on

my most current evaluation of the internal control over financial reporting and

disclosure:

A. All the significant lacks in control and material weaknesses in the

determinations or activation of the internal control mechanism, relating

to the financial reporting and disclosure that might reasonably be

expected to negatively influence the capability of the Corporation to

collect, process, summarize or report the financial information in a

manner that might leave room for doubt as to the credibility of the

financial reporting and the preparation of the financial statements in

accordance with the provisions of the law; and that –

B. Any fraud, whether material or not material, involving the general

manager or anyone directly subordinate to him or involving other

employees who have a significant position in the internal control over

the financial reporting and disclosure.

5. I, alone or together with others in the Corporation:

A. Have determined controls and procedures, or verified the

determination and the existence of controls and procedures under my

supervision, that are designed to ensure, that material information that

refers to the Corporation, including its consolidated companies, as

defined in the Securities Regulations (Preparation of Annual Financial

Reports) - 2010, is brought to my notice by others in the Corporation

and in the consolidated companies, especially during the period of the

preparation of the reports; and that –

B. Have determined controls and procedures, or verified the

determination and existence of controls and procedures under my

supervision, that are designed to ensure in a reasonable manner, the

credibility of the financial reporting and preparation of the financial

reports in accordance with the provisions of the law, and in accordance

with the accepted accounting regulations

C. Have not been informed of any event or matter that has occurred

during the period, between the date of the last quarterly report as of 30

June 2015 and the date of this report, that might be such as to change

the conclusion of the Board of Directors and management with regard

to the effectiveness of the internal control over the financial reporting

and disclosure of the corporation.

The above does not derogate from my responsibility or the responsibility of anyone

else according to the law.

19 November 2015 Signature - Itzik Saig

CEO

(b) Declaration of the most senior office holder in Finance, as

per Regulation 38C(d)(2)

Management Statement

Declaration of the most senior office holder in Finance

I, Pinhas Kimelman, declare that:

1. I have evaluated the interim financial statements and other financial

information included in the interim reports of Osem Investments Ltd.

(hereinafter: the corporation) for the third quarter of the year 2015

(hereinafter: the reports or the interim period reports).

2. To my knowledge, the interim financial statements and the other financial

information included in the reports of the interim periods, do not include any

incorrect presentation of a material fact and they do not lack any presentation

of a material fact that is required, so that the presentations included in them, in

light of the circumstances in which these presentations have been included, are

not misleading with regard to the period of the reports.

3. To my knowledge, the interim financial statements and the other financial

information included in the reports for the interim period, properly reflect,

from every material aspect, the financial situation, results of activities and

cash flow of the Corporation as of the dates and for the periods to which the

reports refer.

4. I have revealed to the auditing accountant of the corporation, the Board of

Directors and the Audit Committee of the BOD of the Corporation, based on

my most current evaluation of the internal control over financial reporting and

disclosure:

A. All the significant lacks in control and material weaknesses in the

determinations or activation of the internal control mechanism, relating

to the financial reporting and disclosure, as it relates to the interim

financial statements and the other financial information included in the

interim reports, that might reasonably be expected to negatively

influence the capability of the Corporation to collect, process,

summarize or report the financial information in a manner that might

leave room for doubt as to the credibility of the financial reporting and

the preparation of the financial statements in accordance with the

provisions of the law; and that –

B. Any fraud, whether material or not material, involving the general

manager or anyone directly subordinate to him or involving other

employees who have a significant position in the internal control over

the financial reporting and disclosure.

5. I, alone or together with others in the Corporation:

A. Have determined controls and procedures, or verified the

determination and the existence of controls and procedures under my

supervision, that are designed to ensure, that material information that

refers to the Corporation, including its consolidated companies as

defined in the Securities Regulations (Preparation of Annual Financial

Reports) 2010, is brought to my notice by others in the Corporation

and the consolidated companies, especially during the period of the

preparation of the reports; and that –

B. Have determined controls and procedures, or verified the

determination and existence of controls and procedures under my

supervision, that are designed to ensure in a reasonable manner, the

credibility of the financial reporting and preparation of the financial

reports in accordance with the provisions of the law, and in accordance

with the accepted accounting regulations

C. Have not been informed of any event or matter that has occurred

during the period, between the date of the last quarterly report as of 30

June 2015 and the date of this report, that relates to the interim

financial statements and any other financial information included in the

interim period reports, that might be such as to change, in my opinion,

the conclusion of the Board of Directors and management with regard

to the effectiveness of the internal control over the financial reporting

and disclosure of the corporation.

The above does not derogate from my responsibility or the responsibility of anyone

else according to the law.

19 November 2015 Signature - Pinhas Kimelman

Deputy CEO of Finance

osem investments limited · 2015-11-22 · development, economics, control and budget, long term...

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