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Osem Investments Limited
Financial Statements
June 30, 2015
INVESTMENTS LTD
Contents
Page
The Board of Directors' Report on the Company Business
for the Six Month Period ending 30 June 2015 A-I
Condensed Interim Consolidated Financial Statements as at 30 June 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 June 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
27 August 2015
The Board of Directors' Report on the Company Business for the Three Month Period ending 30 June2015
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 six month period ending 30 June 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 June 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.,
submitted a request for a creditors arrangement to the District Court in Lod, according to section 350 of the
companies Law 5759 - 1999. 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%) will be repaid in four weekly installments, the first of which being on 31 July
2015 or at the original payment date, the later of the two. 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 have been recorded in previous
periods. In light of the above mentioned, there was no need to increase the allowance for bad debts in the second
quarter regarding Mega.
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 486,677 thousand compared to the sum of NIS 635,745 thousand at the end of the
previous year, a decline of NIS 149,068 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 assets (fixed assets and intangible assets) amounted to the sum of NIS 2,089,521 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 30,864 thousand.
the Groups investments were mainly for the expansion of factories and the acquisition of production lines.
Total equity as at the Balance Sheet date amounted to the sum of NIS 2,525,753 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 191,836 thousand. Which was partially offset against dividend paid in the
amount of NIS 150,000 thousand. The shareholders equity constitutes 63.9% of the total of the balance sheet.
The total of the balance sheet amounted to the sum of NIS 3,953,762 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 June 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 long and short term 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 six months of the year 2015 maintained stability and amounted to NIL 2,094,792
thousand compared to NIS 2,095,517 thousand in the corresponding period last year, this in spite of the initial
implementation of the food law commencing January 2015 and consequently, commercial agreements with large retailers
were modified and payments that in the past which were paid for services (and recorded under selling expenses) have
been converted to discounts that reduce net sales. After offsetting this effect, sales increased by a rate of 1.2%.
Sales turnover for the three months of the second quarter 2015 amounted to the sum of NIS 1,014,693 thousand compared
to NIS 1,027,326 thousand in the corresponding period last year, a decline of 1.2%. This decline results from the
conversion certain expenses from selling expenses to discounts which reduce net sales as mentioned above. after
offsetting this effect the sales in the second quarter maintained their level in comparison to the corresponding quarter last
year.
Sales to the local market for the first six months of the year amounted to the sum of NIS 1,756,163 thousand compared
to the sum of NIS 1,759,008 thousand in the corresponding period last year, a decline of 0.2%.
As mentioned, the decline in sales is the result of 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. After offsetting this
effect, sales to the local market increased by a rate of 1.3%.
The Groups overseas sales for the first six months of the year amounted to the sum of NIS 338,629 thousand compared
to the sum of NIS 336,509 thousand in the corresponding period last year, a growth of 0.6%.
The increase in overseas sales were achieved as a result of the increase in sales in the USA which were partially offset as
a result of decline in sales to Europe which were mainly affected by weakening of the Euro, and cessation of losing
activity in the USA.
The gross profit of the Group in the first six months of the year 2015 amounted to the sum of NIS 848,877 thousand
compared to NIS 879,447 thousand in the corresponding year, a decline of 3.5%.
The gross profit of the Group in the three months of the second quarter of the year 2015 amounted to the sum of NIS
413,904 thousand compared to NIS 429,756 thousand in the corresponding year, a decline of 3.7%.
The decline in gross profit results from increase in discounts and promotions to customers, due to the implementation of
the food law as mentioned above.
The Operating Profit of the Group before other income and expenses for the first six months of the year amounted to
NIS 266,864 thousand compared to NIS 264,841 thousand in the corresponding period last year, a growth of 0.8%.
The Operating Profit of the Group before other income and expenses for the three months of the second quarter of the
year 2015 amounted to NIS 125,660 thousand compared to NIS 125,176 thousand in the corresponding period last year, a
growth of 0.4%.
E
The Operating Profit of the Group in the first six months of the year amounted to the sum of NIS 263,247 thousand
compared to NIS 262,285 thousand in the corresponding year, a growth of 0.4%.
The operating profit of the Group in the three months of the second quarter of the year 2015 amounted to the sum of NIS
124,574 thousand compared to NIS 124,806 thousand in the corresponding year, a decline of 0.2%.
The Net Profit of the Osem Group for the first six months of the year amounted to NIS 191,836 thousand compared to
NIS 197,693 thousand in the corresponding period last year, a decline of 3.0%.
The net profit for the period of the Group in the three months of the second quarter of the year 2015 also declined and
amounted to the sum of NIS 88,312 thousand compared to NIS 98,158 thousand in the corresponding year, a decline of
10.0%.
The decline in net profit is the result of increase in net finance expense.
Selling, marketing and distribution expenses for the first six months of the year declined from the level of NIS 476,809
thousand to the level of NIS 443,042 thousand and represented 21.1% of the turnover compared to 22.8% in the
corresponding period last year. The decline in selling expenses results from the commencement of the implementation of
the food law in January 2015 and in consequently selling and marketing expenses declined in favor of the increase in
discounts and promotions included under net sales.
General and administrative expenses for first six months of the year represented 6.6% of the turnover, no change from
the corresponding period last year.
Other expenses net for the first six months of the year totaled the sum of NIS 3,617 thousand compared to the sum of
NIS 2,556 thousand in the corresponding period last year.
Net financing expense of the Group for first six months of the year increased and amounted to the sum of NIS 9,121
thousand compared to NIS 1,089 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 1.86
The quick ratio as at the balance sheet date is 1.43
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 six months of the year from current operations amounted to the sum of NIS 93,888 thousand
compared to the sum of NIS 207,838 thousand in the previous year. The cash flow from operating activities from
supplementing of advance tax payments 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 in the past.
As a result, in cash flow terms, during the first half of the year 2015 both the current bonuses for year 2015 and the total
yearly bonuses for year 2014 were paid.
F
Analysis of the Groups business results according to operating segments
Culinary segment - for the first six months of the year sales amounted to NIS 459,697 thousand compared to NIS
474,810 thousand in the corresponding period last year a decrease of 3.2%. The profit declined from a level of NIS
52,894 thousand to a level of NIS 51,847 thousand
In the second quarter of the year sales decreased from NIS 228,747 thousand to NIS 219,544 thousand, a decline of 4.0%.
The profit increased from a level of NIS 27,998 thousand to a level of NIS 30,284 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.
Bakery, beverages, snacks and breakfast cereals segment - for the first six months of the year sales amounted to NIS
574,216 thousand compared to NIS 564,408 thousand in the corresponding period last year an increase of 1.7%. The
profit increased from a level of NIS 128,148 thousand to a level of NIS 135,494 thousand. In the second quarter of the
year sales increased from NIS 257,548 thousand to NIS 261,624 thousand, an increase of 1.6%. The profit increased from
a level of NIS 55,928 thousand to a level of NIS 66,583 thousand
The increase in sales and profit result from, among others, innovation and launching of new products mainly in the
snacks, cereals and bakery area.
International segment - for the first six months of the year sales amounted to NIS 335,759 thousand compared to NIS
333,937 thousand in the corresponding period last year an increase of 0.5%. The profit declined from a level of NIS
33,883 thousand to a level of NIS 22,579 thousand
In the second quarter of the year sales decreased from NIS 160,040 thousand to NIS 158,048 thousand, a decline of 1.2%.
The profit declined from a level of NIS 12,209 thousand to a loss of NIS 1,719 thousand
In the first six months of the year sales of the international division in the USA increased by 11.8% - mainly due to the
launching of new products (the Swirl category in the salads segment). These sales were offset against a decline of 8.4%
sales in Europe, due to the weakening of the Euro, and cessation of losing activity in the USA.. The decline in profit
results from the increase in campaigns and sales promotions due to the launching of new products.
Infant nutrition segment - for the first six months of the year sales amounted to NIS 164,869 thousand compared to
NIS 167,051 thousand in the corresponding period last year an decline of 1.3%. The profit increased from a level of NIS
26,281 thousand to a level of NIS 30,386 thousand.
In the second quarter of the year sales decreased from NIS 75,997 thousand to NIS 70,820 thousand, a decline of 6.8%.
The profit increased from a level of NIS 8,468 thousand to a level of NIS 8,973 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.
Professional market and Assamim Gift Packages segment - for the first six months of the year sales amounted to NIS
201,201 thousand compared to NIS 206,427 thousand in the corresponding period last year a decline of 2.5%. The profit
declined from a level of NIS 14,165 thousand to a level of NIS 11,236 thousand
In the second quarter of the year sales decreased from NIS 99,647 thousand to NIS 93,870 thousand, a decline of 5.8%.
The profit declined from a level of NIS 3,669 thousand to a level of NIS 3,298 thousand
The decline in sales and profit results from , among others, decline in inbound tourism which affects the professional
market activity.
G
Other Activities segment - for the first six months of the year sales amounted to NIS 382,355 thousand compared to
NIS 370,612 thousand in the corresponding period last year an increase of 3.2%. The profit amounted to the sum of NIS
18,476 thousand compared to the sum of NIS 12,909 thousand last year,
In the second quarter of the year sales increased from NIS 215,881 thousand to NIS 221,803 thousand, an increase of
2.7%. The profit increased from a level of NIS 18,289 thousand to a level of NIS 19,376 thousand.
The increase in sales results from, among others, innovation and launching of new products, mainly in pet foods and
Nestea (Carbonated Nestea). The improvement in profit results from, among others, increase in sales and efficiency in ice
cream.
H
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).
I
The discussions of the Balance Sheet Committee: On 23 August 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 a representative of the 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
June 30, 2015 and the related condensed consolidated interim statements of income, comprehensive income,
changes in equity and cash flows for the six 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 13.4% of the total consolidated assets as of June 30, 2015, and whose revenues constitute 16.1% and
16.2% of the total consolidated revenues for the six 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.)
1
Condensed Interim Consolidated Statement of Financial Position
As at June 30 As at June 30 As at December 31
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands
Assets
Cash and cash equivalents 390,499 315,143 471,197
Bank deposits and other investments 96,178 1,231 164,548
Accounts receivable - customers 826,479 774,241 693,674
Debtors and debit balances 42,126 26,826 27,578
Income tax 18,538 8,970 10,694
Inventory 407,266 379,972 398,972
Total current assets 1,781,086 1,506,383 1,766,663
Employee benefits 396 195 379
Fixed assets 1,069,073 1,116,969 1,110,855
Intangible assets 1,020,448 969,073 1,027,043
Prepaid expenses 30,240 43,712 33,539
Deferred taxes 52,519 37,204 47,047
Total non-current assets 2,172,676 2,167,153 2,218,863
Total assets 3,953,762 3,673,536 3,985,526
Dan Propper - Chairman of the Board
Itzik Saig - CEO
Pinhas Kimelman - Deputy CEO, Finance
Date of approval of financial statements: 27 August 2015
INVESTMENTS LTD
As at June 30 As at June 30 As at December 31
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands
Liabilities
Loans and short term credit from banks 9,431 28,955 7,845
Accounts payable - suppliers 703,209 669,922 756,676
Other creditors 241,230 245,030 224,462
Income tax 6,090 4,320 10,895Dividend declared - - -
Total current liabilities 959,960 948,227 999,878
Liability for acquisition of non-controlling interest in subsidiary 354,483 330,610 372,902
Employee benefits 17,364 6,182 17,819
Deferred taxes 96,202 91,278 93,229
Total non-current liabilities 468,049 428,070 483,950
Total liabilities 1,428,009 1,376,297 1,483,828
Equity
Share capital 176,772 176,772 176,772
Premium on shares 444,212 444,212 444,212
Capital reserves (81,574) (71,680) (63,793)
Retained earnings 1,985,124 1,746,593 1,943,149
Total equity attributable to equity holders of the company 2,524,534 2,295,897 2,500,340
Non-Controlling interests 1,219 1,342 1,358
Total equity 2,525,753 2,297,239 2,501,698
Total liabilities and equity 3,953,762 3,673,536 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 six months ending For the three months ending For the year ending
As at June 30 As at June 30 As at June 30 As at June 30 December 31
2015 2014 2015 2014 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands
Sales 2,094,792 2,095,517 1,014,693 1,027,326 4,256,620
Cost of sales 1,245,915 1,216,070 600,789 597,570 2,475,319
Gross profit 848,877 879,447 413,904 429,756 1,781,301
Selling, marketing and distribution expenses 443,042 476,809 226,550 242,018 970,635
General and administrative expenses 138,971 137,797 61,694 62,562 268,325
Operating profit before other expenses 266,864 264,841 125,660 125,176 542,341
Other expenses, net 3,617 2,556 1,086 370 10,772
Operating profit 263,247 262,285 124,574 124,806 531,569
Finance expenses (10,899) (9,686) (9,088) (6,224) (24,880)
Finance income 1,778 8,597 483 8,504 21,131
Financing costs, net (9,121) (1,089) (8,605) 2,280 (3,749)
Profit before taxes on income 254,126 261,196 115,969 127,086 527,820
Taxes on income 62,290 63,503 27,657 28,928 131,264
Profit for the period 191,836 197,693 88,312 98,158 396,556
Attributed to:
Equity holders of the company 191,975 197,480 88,511 98,177 396,324
Non-Controlling interests (139) 213 (199) (19) 232
Profit for the period 191,836 197,693 88,312 98,158 396,556
Earnings per NIS 1 par value ordinary shares
Primary and fully diluted (in NIS) 1.74 1.78 0.80 0.89 3.58
The accompanying notes to the condensened interim financial statements are an integral part of them.
4
INVESTMENTS LTD
Condensed Interim Statement of Comprehensive Income and Expenses
For the three months ending For the year ending
June 30 June 30 June 30 June 30 December 31
2015 2014 2015 2014 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands
Profit for the period 191,836 197,693 88,312 98,158 396,556
Other comprehensive income (loss)
Amounts to be transferred to profit or loss
after specific requirements are met
(17,781) (3,327) (2,347) (4,715) 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 (17,781) (3,327) (2,347) (4,715) 2,269
Total comprehensive income for
the period 174,055 194,366 85,965 93,443 398,825
Attributed to:
Equity holders of the company 174,194 194,153 86,164 93,462 398,596
Non-Controlling interests (139) 213 (199) (19) 229
Total comprehensive income for
the period 174,055 194,366 85,965 93,443 398,825
The accompanying notes to the condensened interim financial statements are an integral part of them.
Foreign currency translation differences for foreign operations
For the six months ending
5
INVESTMENTS LTD.
Notes to the Financial Statements as at 30 June 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 six month period ending
30 June 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)
(17,781) - (17,781) - - - (17,781) - - Foreign currency exchange difference
191,836 (139) 191,975 191,975 - - - - - Net earnings for the period
174,055 (139) 174,194 191,975 - - (17,781) - - Total recognized comprehensive income for the period
(150,000) - (150,000) (150,000) - - - Dividend paid
2,525,753
1,219
2,524,534
1,985,124
5,694
(41,675)
(45,593)
444,212
176,772
Balance as at 30 June 2015
For the six month period ending
30 June 2014 (unaudited)
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)
(3,327) - (3,327) - - - (3,327) - - Foreign currency exchange difference
197,693 213 197,480 197,480 - - - - - Net earnings for the period
194,366 213 194,153 197,480 - - (3,327) - - Total recognized comprehensive income for the period
(150,000) - (150,000) (150,000) - - Dividend paid
2,297,239
1,342
2,295,897
1,746,593
5,694
(41,675)
(35,699)
444,212
176,772
Balance as at 30 June 2014
The accompanying notes are an integral part of these
consolidated financial statements.
INVESTMENTS LTD.
Notes to the Financial Statements as at 30 June 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
30 June 2015 (unaudited)
2,439,788 1,418 2,438,370 1,896,613 5,694 (41,675) (43,246) 444,212 176,772 Balance as at 1 April 2015
(2,347) - (2,347) - - - (2,347) - - Foreign currency exchange difference
88,312 (199) 88,511 88,511 - - - - - Net earnings for the period
85,965 (199) 86,164 88,511 - - (2,347) - - Total recognized comprehensive income for the period
2,525,753
1,219
2,524,534
1,985,124
5,694
(41,675)
(45,593)
444,212
176,772
Balance as at 30 June 2015
For the three month period ending
30 June 2014 (unaudited)
2,203,796 1,361 2,202,435 1,648,416 5,694 (41,675) (30,984) 444,212 176,772 Balance as at 1 April 2014
(4,715) - (4,715) - - - (4,715) - - Foreign currency exchange difference
98,158 (19) 98,177 98,177 - - - - - Net earnings for the period
93,443 (19) 93,462 98,177 - - (4,715) - - Total recognized comprehensive income for the period
2,297,239
1,342
2,295,897
1,746,593
5,694
(41,675)
(35,699)
444,212
176,772
Balance as at 30 June 2014
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
4,560 - 4,560 - - - 4,560 - - Foreign currency exchange difference
(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
398,825 229 398,596 394,036 - - 4,560 - - Total recognized comprehensive income for the period
(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
June 30 June 30 June 30 June 30 December 31
2015 2014 2015 2014 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for period 191,836 197,693 88,312 98,158 396,556
Adjustments:
Depreciation 61,703 59,807 30,966 29,984 121,337
Amortization of intangible assets and prepaid expenses 10,963 18,971 4,372 8,076 36,918
Loss from sale of fixed assets, net 565 312 537 495 3,023
Finance costs, net 9,121 1,089 8,605 (2,280) 3,749
Tax expenses on income 62,290 63,503 27,657 28,928 131,264
Changes in derivatives (2,020) 458 (1,199) 304 (9,749)
Changes in inventory (11,472) 9,668 (22,267) 1,783 (4,463)
Changes in accounts receivable and other debtors (153,723) (90,412) 9,700 49,511 7,527
Changes in accounts payable and other creditors (37) (5,251) (1,017) (35,119) 32,073
Changes in employee benefits (472) 1,830 (190) 1,864 10,166
Income taxes paid, net (74,866) (49,830) (28,118) (21,469) (109,522)
Net cash flows arising from operating activities 93,888 207,838 117,358 160,235 618,879
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (44,440) (45,618) (16,727) (19,722) (86,117)
Proceeds from sale of fixed assets 470 845 144 373 1,309
Deposits in banks and other investments, net 67,408 5,823 47,631 42 (157,505)
Investment in intangible assets and prepaid expenses (5,431) (17,045) (1,721) (6,071) (25,942)
Interest received 385 8,785 195 7,967 9,336
Net cash flows arising from (used in) investing activities 18,392 (47,210) 29,522 (17,411) (258,919)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid (11,314) (1,238) (2,609) (1,421) (10,552)
Credit from banking institutions and others, net 1,826 - 1,886 (10) (24,885)
Repayment of other liabilities (29,494) (21,973) (19,815) (19,718) (32,887)
Dividend paid (150,000) (150,000) - (150,000) (150,000)
(188,982) (173,211) (20,538) (171,149) (218,324)
Change in cash and cash equivalents (76,702) (12,583) 126,342 (28,325) 141,636
Cash and cash equivalents at beginning of period 471,197 328,059 264,553 343,993 328,059
Effect of fluctuations in exchange rate
on cash balances (3,996) (333) (396) (525) 1,502
Cash and cash equivalents at end of period 390,499 315,143 390,499 315,143 471,197
The accompanying notes to the condensened interim financial statements are an integral part of them.
Net cash used in financing activities
For the six months ending
8
INVESTMENTS LTD.
Notes to the Financial Statements as at 30 June 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 June 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
six months ending For the
10December 20 Bakery Professional
30 June 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 459,697 574,216 335,759 164,869 201,201 382,355 (23,305) 2,094,792
Segment results 51,847 135,494 22,579 30,386 11,236 18,476 (3,154) 266,864
Expenses not allocated (3,617)
Financing costs, net (9,121)
Profit before taxes on income
254,126
INVESTMENTS LTD.
Notes to the Financial Statements as at 30 June 2015
10
Note 5 – Segment Activity (Cont.)
six months ending For the
10December 20 Bakery Professional
June 2014 (unaudited)30 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 474,810 564,408 333,937 167,051 206,427 370,612 (21,728) 2,095,517
Segment results 52,894 128,148 33,883 26,281 14,165 12,909 (3,439) 264,841
Expenses not allocated (2,556)
Financing costs, net (1,089)
Profit before taxes on income
261,196
three months ending For the
10December 20 Bakery Professional
(unaudited) 5201 ne30 Ju 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 219,544 261,624 158,048 70,820 93,870 221,803 (11,016) 1,014,693
Segment results 30,284 66,583 (1,729) 8,973 3,298 19,376 (1,125) 125,660
Expenses not allocated 1,086
Financing costs, net 8,605
Profit before taxes on income
115,969
three months ending For the
10December 20 Bakery Professional
(unaudited) 4201 30 June
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 228,747 257,548 160,040 75,997 99,647 215,881 (10,534) 1,027,326
Segment results 27,998 55,928 12,209 8,468 3,669 18,289 (1,385) 125,176
Income not allocated (370)
Financing costs, net 2,870
Profit before taxes on income
127,086
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
NIS NIS NIS NIS NIS NIS NIS NIS
Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands
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
Expenses not allocated (10,772)
Financing costs, net (3,749)
Profit before taxes on income
527,820
INVESTMENTS LTD.
Notes to the Financial Statements as at 30 June 2015
11
Note 6 – Financial Instruments.
The Company has forward hedge transactions and options on exchange rates on supplier foreign
currency balances as at 30 June 2015 total face value of the transactions amounts to the sum of NIS
167,262 thousand, the fair value of the asset is NIS 4,893 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., submitted a request for a
creditors arrangement to the district court in Lod, according to section 350 od the companies Law 5759
- 1999. 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%) will be repaid in
four weekly installments, the first of which being on 31 July 2015 or at the original payment date, the
later of the two. 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 have been recorded in previous
periods. In light of the above mentioned, there was no need to increase the allowance for bad debts in
the second quarter regarding Mega.
Osem Investments Limited
Separate Financial Statements
June 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.
August 27, 2015
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 June 30, 2015 and for the six 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 441,846 thousand as of June 30, 2015, and the loss from these investee companies amounted to
NIS 9,060 thousand and NIS 9,033 thousand for the six 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.)
August 27, 2015
12
INVESTMENTS LTD
Condensed Interim Information on Separate Financial Position
As at June 30 As at June 30 As at December 31
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands
Assets
Cash and cash equivalents 289,012 192,711 329,037
Bank deposits and other investments 85,799 1,231 153,945
Debtors and debit balances 8,816 8,517 10,948
Income tax 2,012 - -
Inventory 119,970 93,960 134,165
Total current assets 505,609 296,419 628,095
Balances related to subsidiary companies 1,809,142 1,677,215 * 1,784,338
Loans to subsidiary companies 50,477 62,322 52,533
Fixed assets 643,053 667,802 658,960
Intangible assets 570,991 530,539 571,731
Prepaid expenses 12,160 13,369 12,823
Total non-current assets 3,085,823 2,951,247 3,080,385
Total assets 3,591,432 3,247,666 3,708,480
Dan Propper - Chairman of the Board
Itzik Saig - CEO
Pinhas Kimelman - Deputy CEO, Finance
Date of approval of financial statements: 27 August 2015
13
INVESTMENTS LTD
As at June 30 As at June 30 As at December 31
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands
Liabilities
Accounts payable - suppliers 311,283 280,922 354,234
Other creditors 309,949 265,417 * 384,329
Income tax - 2,372 9,568
Total current liabilities 621,232 548,711 748,131
Liability for acquisition of non-controlling interest in subsidiary 354,483 330,610 372,902
Employee benefits 17,230 6,063 17,673
Deferred taxes 73,953 66,385 69,434
Total non-current liabilities 445,666 403,058 460,009
Total liabilities 1,066,898 951,769 1,208,140
Equity
Share capital 176,772 176,772 176,772
Premium on shares 444,212 444,212 444,212
Capital reserves (81,574) (71,680) (63,793)
Retained earnings 1,985,124 1,746,593 1,943,149
Total equity 2,524,534 2,295,897 2,500,340
Total liabilities and equity 3,591,432 3,247,666 3,708,480
(*) Reclassified
The accompanying notes to the condensened interim financial statements are an integral part of them.
14
INVESTMENTS LTD
Condensed Interim Separate Information on Profit and Loss
For the three months ending
For the year
ending
June 30 June 30 June 30 June 30 December 31
2015 2014 2015 2014 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands
Sales 697,804 682,403 318,193 314,566 1,377,171
Cost of sales 371,333 353,075 165,982 166,794 714,126
Gross profit 326,471 329,328 152,211 147,772 663,045
Selling, marketing and distribution expenses 128,286 142,713 * 66,582 69,359 * 286,744
General and administrative expenses 45,836 40,538 18,968 16,393 81,272
Operating profit before other income 152,349 146,077 66,661 62,020 295,029
Other income, net 4,791 4,820 1,367 1,850 10,982
Operating profit 157,140 150,897 68,028 63,870 306,011
Finance expenses (8,708) (7,304) (1,693) (2,463) (14,781)
Finance income 1,733 8,844 467 8,450 12,063
Financing costs, net (6,975) 1,540 (1,226) 5,987 (2,718)
Profit from subsidiaries 82,531 84,638 * 40,274 44,936 * 174,145
Profit before taxes on income 232,696 237,075 107,076 114,793 477,438
Taxes on income 40,721 39,595 * 18,565 16,616 * 81,114
Profit for the period 191,975 197,480 88,511 98,177 396,324
(*) Reclassified
The accompanying notes to the condensened interim financial statements are an integral part of them.
For the six months ending
15
INVESTMENTS LTD
Condensed Interim Information on Seperate Comprehensive Income and Expenses
For the three months ending
For the year
ending
June 30 June 30 June 30 June 30 December 31
2015 2014 2015 2014 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands
Profit for the period 191,975 197,480 88,511 98,177 396,324
Other comprehensive income (loss)
Amounts to be transferred to profit or loss
after specific requirements are met
(17,781) (3,327) (2,347) (4,715) 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 (17,781) (3,327) (2,347) (4,715) 2,272
Total comprehensive income for
the period 174,194 194,153 86,164 93,462 398,596
The accompanying notes to the condensened interim financial statements are an integral part of them.
For the six months ending
Comprehensive income from subsidiary companies
16
INVESTMENTS LTD
Condensed Interim Information on Seperate Cash Flows
For the three months ending
For the year
ending
June 30 June 30 June 30 June 30 December 31
2015 2014 2015 2014 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit for period 191,975 197,480 88,511 98,177 396,324
Adjustments:
Company's share in profits of subsidiaries (82,531) (84,638) * (40,274) (44,936) * (174,145)
Depreciation 32,216 31,843 16,148 15,906 63,692
Amortization of intangible assets and prepaid expenses 1,496 9,476 996 3,114 11,767Loss (profit) from sale of fixed assets, net 412 595 486 523 603Finance costs, net 6,975 (1,540) 1,226 (5,987) 2,718Tax expenses on income 42,754 39,595 * 20,598 16,616 * 81,114Changes in derivatives (2,020) 458 (1,523) 304 (1,549)Changes in inventory 14,195 12,850 7,438 8,340 (27,355)
2,756 2,175 957 2,070 217Changes in accounts payable and other creditors (97,760) (53,917) * 35,160 29,646 * 151,896Changes in employee benefits (443) 1,732 (176) 1,764 10,243Income taxes paid , net (66,844) (30,546) (24,240) (7,618) (83,203)
Net cash flows arising from operating activities 43,181 125,563 105,307 117,919 432,322
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (22,946) (22,199) (9,510) (10,522) (38,723)Proceeds from sale of fixed assets 99 93 21 93 183Net cash from subsidiary investment activities - - - - 10,142Investment in intangible assets and prepaid expenses (93) (1,912) - (469) (3,332)Interest received 365 8,553 207 8,133 9,431Other investments, net 67,184 84 47,742 42 (152,641)Dividend received from subsidiaries 52,045 36,309 37,045 36,309 36,309
96,654 20,928 75,505 33,586 (138,631)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid (157) (167) (69) (132) (284)Repayment of other liabilities (29,494) (21,973) (19,815) (19,718) (32,887)Credit from banking institutions and others, net - - - - -Dividend paid (150,000) (150,000) - (150,000) (150,000)
(179,651) (172,140) (19,884) (169,850) (183,171)
Change in cash and cash equivalents (39,816) (25,649) 160,928 (18,345) 110,520
Cash and cash equivalents at beginning of period 329,037 218,379 128,085 211,064 218,379
Effect of fluctuations in exchange rate
on cash balances (209) (19) (1) (8) 138
Cash and cash equivalents at end of period 289,012 192,711 289,012 192,711 329,037
(*) Reclassified
The accompanying notes to the condensened interim financial statements are an integral part of them.
Changes in debtors and debit balances (including intercompany
balances)
Net cash flows arising from (used in) investing activities
Net cash used in financing activities
For the six months ending
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 June 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.
Osem Investments Limited
Report for the second 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 second 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 31 March 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 second 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 31
March 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.
27 August 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 second 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 31
March 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.
27 August 2015 Signature - Pinhas Kimelman
Deputy CEO of Finance