Exhibit 1
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NEWS |
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For Release: IMMEDIATE |
Hadera Paper Ltd.
Reports Financial Results for the Second Quarter and Six Months
Announces Intention for Public Placement of Debentures
Announces Israeli Antitrust Authority Approval for Carmel Transaction
Hadera, Israel, August 11, 2008
Hadera Paper Ltd. (AMEX:AIP) (the Company or Hadera Paper)
today reported financial results for the second quarter and first six months ended June
30, 2008. The Company, its subsidiaries and associated companies is referred to
hereinafter as the Group.
Since the Companys share in the
earnings of associated companies constitutes a material component in the Companys
statement of income (primarily on account of its share in the earnings of Mondi Hadera
Paper Ltd. (Mondi Hadera) and Hogla-Kimberly Ltd. (H-K)),
before the presentation of the consolidated data below, the aggregate data which include
the results of all the companies in the Hadera Paper Group (including the associated
companies whose results appear in the financial statements under earnings from
associated companies) is being presented, without considering the rate of holding
therein and net of mutual sales.
As a result of the transition to
reporting according to IFRS standards, the Company presented its financial statements for
the reported period, as well as the comparison figures for the corresponding period last
year and for the year ended December 31, 2007 according to IFRS.
Aggregate sales amounted to NIS
1,618.6 million during the reported period (six month period- January-June 2008), as
compared with NIS 1,492.8 million in the corresponding period last year.
Aggregate sales in the second quarter
this year amounted to NIS 771.0 million, as compared with NIS 740.0 million in the
corresponding period last year, and as compared with NIS 847.6 million in the first
quarter of the year.
Aggregate operating profit totaled
NIS 111.3 million during the reported period, as compared with NIS 70.7 million in the
corresponding period last year. The significant improvement in the aggregate operating
profit is attributed to the performance improvement in Israel on the one hand, coupled
with the continuing trend of lowering the operating loss in Turkey on the other hand.
Aggregate operating profit totaled
NIS 51.5 million in the second quarter of the year, as compared with NIS 41.7 million in
the corresponding quarter last year, and as compared with NIS 59.8 million in the first
quarter of the year.
The Consolidated Data set forth
below excluding the results of operation of the associated companies: Mondi Hadera, H-K
and Carmel Containers Systems Ltd. (Carmel)
Consolidated sales during the
reported period amounted to NIS 275.8 million and were similar to the sales in the
reported period last year that amounted to approximately NIS 277.8 million.
Operating
profit totaled NIS 30.1 million during the reported period, as compared with NIS 30.4
million in the corresponding period last year.
Net profit totaled NIS 39.3 million
during the reported period, as compared with net profit of NIS 6.3 million in the
corresponding period last year. Net profit was affected by the improvement in the
Groups profitability in Israel, coupled with the significant reduction of the
Companys share in the losses of the operations in Turkey (KCTR).
Net profit for the second quarter
this year amounted to NIS 18.0 million, as compared with a net profit of NIS 10.2 million
in the corresponding quarter last year. The net profit in the second quarter last year
appears net of our share (49.9%) in the amortization of the tax asset in Turkey (KCTR) in
the sum of NIS 6.0 million.
Basic earnings per share amounted to
NIS 7.77 per share ($2.32 per share) in the reported period, as compared with NIS 1.57 per
share ($0.38 per share) in the corresponding period last year.
Basic earnings per share
amounted to NIS 3.56 per share ($1.06 per share) in the second quarter of the year, as
compared with earnings of NIS 2.53 per share ($0.59 per share) in the corresponding
quarter last year.
The inflation rate during the
reported period amounted to 2.3%, as compared with an inflation rate of 1% in the
corresponding period last year.
Mr.
Avi Brener, Chief Executive Officer of the Company said that The import
volumes of fine paper and packaging paper from Europe have recently grown and
the company is working to preserve its market share and quantitative sales,
while dealing with a certain erosion of selling prices. The sharp change in the
currency exchange rates that took place in the reported period as the
shekel grew stronger vis-à-vis the US dollar and the euro is
working in the benefit of the Company in terms of the imported inputs, while
eroding the selling prices in those areas in the Company whose prices are
denominated in US dollars. The portfolio of the Hadera Paper Group
including the associated companies is relatively balanced and the
companys exposure to sharp fluctuations in currency exchange rates is
consequently low.
In the reported period, KCTR
continued to implement its strategic plan formulated together with its international
partner, Kimberly Clark. The plan is intended to introduce Kimberly Clarks global
brands to Turkey, on the basis of local manufacturing. If fully implemented, KCTR will
grow to become a dominant and profitable company by 2015, with annual sales in the area of
$300 million.
Financial expenses during the
reported period amounted to NIS 11.1 million, as compared with NIS 11.7 million in the
corresponding period last year.
The companys share in the
earnings (losses) of associated companies totaled NIS 25.8 million during the reported
period, as compared with a loss of NIS (5.1) million in the corresponding period last
year.
The following principal changes were
recorded in the Companys share in the earnings of associated companies, in relation
to the corresponding period last year:
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The
Companys share in the net profit of Mondi Hadera (49.9%) increased by approximately
NIS 4 million. Most of the change in profit originated primarily from Mondis
highly improved operating profitability, which recorded an increase
from operating profit of NIS 13.8 million last year to an operating
profit of NIS 17.7 million this year primarily as a result of
the raising of selling prices in relation to last year that led to an
improved gross margin. The net profit also increased as a result of
the sharp decrease in financial expenses this year in relation to
last year, primarily on account of the impact of the revaluation of
the NIS against the dollar. |
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The
Companys share in the net profit of Hogla-Kimberly Israel (49.9%) increased by
approximately NIS 8.1 million. Hoglas operating profit grew from NIS 67.6 million
to NIS 85.1 million this year. The improved operating profit originated from a
quantitative increase in sales, improved selling prices net of the impact of higher raw
material prices, the continuing implementation of efficiency measures and the continuing
trend of raising the proportion of some of the premium products out of the products
basket. |
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The
Companys share in the losses of KCTR (formerly: Ovisan) (49.9%)
decreased by NIS 25.6 million. The significant decrease in the loss is attributed to the
growth in the volumes of operation that led to a significant reduction in the operating
loss, from NIS 46.2 million last year to approximately NIS 20.9 million this year. In the
corresponding period last year, a non-recurring loss of approximately NIS 6 million ($1.5
million) was included on account of the termination of trade agreements with distributors
due to the transition to distribution by Unilever, of which our share was approximately
NIS 3 million. Moreover, the tax asset that was recorded in previous years in Turkey, in
the sum of approximately NIS 12 million (approximately $3 million) was reduced, of which
our share is NIS 6.0 million. Moreover, due to the increase in the shareholders
equity of KCTR through a financial influx from Hogla, the bank loans were repaid, while
significantly reducing the financial expenses thereby leading to an additional reduction
in the net loss. |
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The
Companys share in the loss of Carmel (36.21%) increased by NIS 2 million. Net off
one time losses from hedging transactions, operating profit increased in the reported
period by NIS 1.9 million, of which the Companys share amounted to NIS 0.7 million.
The aforesaid growth occurred despite of the damages caused by the eroded profitability
at Carmel originated from the impact of the cold spell in agriculture that decreased
demands in the agriculture market as aforesaid. Carmel also recorded a loss of NIS 7.5
million in the reported period on account of hedging transactions for affixing exchange
rate, of which the Companys share amounted to approximately NIS 1.9 million. |
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The
Companys share in the earnings of associated companies from current operations in
Israel (excluding Turkey) grew by NIS 5.3 million this year and amounted to NIS 36.3
million. |
Pursuant to the shelf prospectus
published by the Company on May 26, 2008, the Company completed the offering on
July 16, 2008 of two debenture series in the total sum of NIS 308,060 thousands.
Net of offering expenses, the Company received net proceeds of approximately NIS 306,609
thousands.
On July 1, 2008, pursuant to approval
by the Registrar of Companies, the Company changed its name from American Israeli Paper
Mills Ltd. to Hadera Paper Ltd.
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On July 6, 2008, the Maalot Rating
Company (Standard and Poors) announced a rating of AA-/Negative Outlook for the
Companys debenture series.
On July 10, 2008, the General Meeting
approved the appointment of Ms. Atalia Arad as an external director of the Company.
On July 10, 2008, an agreement was
signed whereby the Company acquired the shares of Carmel held by Robert Kraft, the
principal shareholder in Carmel, as well as by several other shareholders, in
consideration of a total of $20.77 million, to be paid in a single installment upon
closing of the transaction. The shares will be acquired As Is. The completion
of the transaction is contingent upon the approval of the Anti-Trust Supervisor and any
other approval required by law. In the event that the transaction is completed, the
Company will hold approximately 89.3% of the Carmel shares and consequently, upon
completion of the transaction, the financial statements of Carmel and those of Frenkel-CD
Ltd. will be consolidated with the Companys financial statements. The expected
impact of this transaction if an when completed on the Companys
financial statements, will consist primarily of the anticipated growth in the
Companys turnover as a result of the said consolidation. The transaction will be
financed using the Companys internal resources.
In other Company news, the Company
announced that the Companys Board of Directors resulted, following the shelf
prospectus that was published by the Company on May 26, 2008, and following the public
placement of debentures (series 4) dated July 16, 2008 according to the shelf offering
report dated July 14, 2008, to authorize the Companys management to carry out an
additional raise of up to a total amount of approximately NIS 50 million by way of a
public placement, by expanding a series of debentures(series 4)(additional
debentures).The additional debentures, as long as offered to the public, shall bear
identical terms to the current debentures in Companys income turnover (series 4).
The issuance of the additional
debentures shall be executed by a uniformed offer (at a tender regarding units price)
according to a shelf offering report, detailing the conditions of the issuance, to be
approved by the Companys Board of Directors and subordinate to the Tel Aviv Stock
Exchanges approval for listing the additional debentures for trade.
It should be noted, that there is no
certainty as to the actual execution of the raise, its extent and its timing.
In other matter, following the
Companys announcements dated July 2, 2008, July 8, 2008 and July 13, 2008 regarding
the signing of an agreement for the acquisition of Carmel Container Systems Ltd.
(Carmel, an affiliated company) shares, held currently by Mr. Robert Kraft,
the principal shareholder of Carmel, and by a number of additional shareholders in Carmel,
the Company also announced today that the approval of the Israeli Antitrust Authority to
the transaction, which the completion of the transaction was conditioned upon, was
received.
As aforesaid in the previous reports,
as to the date of this report the Company holds approximately 36% of Carmel shares. Shall
the transaction be completed the Company will hold approximately 89.3% of Carmels
shares.
This report contains various
forward-looking statements based upon the Board of Directors present expectations
and estimates regarding the operations and plans of the Group and its business
environment. The Company does not guarantee that the future results of operations will
coincide with the forward-looking statements and these may in fact differ considerably
from the present forecasts as a result of factors that may change in the future, such as
changes in costs and market conditions, failure to achieve projected goals, failure to
achieve anticipated efficiencies and other factors which lie outside the control of the
Company as well as certain other risks detailed from time to time in the Companys
filings with the Securities and Exchange Commission. The Company undertakes no obligation
for publicly updating the said forward-looking statements, regardless of whether these
updates originate from new information, future events or any other reason.
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HADERA PAPER LTD.
SUMMARY OF RESULTS
(UNAUDITED)
except per share amounts
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Six months ended June 30,
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NIS IN THOUSANDS (1)
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2008
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2007
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Net sales |
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| 275,786 |
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| 277,823 |
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Net earnings | | |
| 39,302 |
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| 6,342 |
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Basic net earnings per share | | |
| 7.77 |
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| 1.57 |
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Fully diluted earnings per share | | |
| 7.76 |
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| 1.57 |
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Three months ended June 30,
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NIS IN THOUSANDS (1)
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2008
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2007
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Net sales |
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| 133,267 |
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| 141,185 |
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Net earnings | | |
| 18,032 |
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| 10,219 |
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Basic net earnings per share | | |
| 3.56 |
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| 2.53 |
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Fully diluted earnings per share | | |
| 3.55 |
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| 2.52 |
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(1) |
The
representative exchange rate at June 30, 2008 was N.I.S. 3.352=$1.00. |
Contact:
Lea Katz, Adv.
Corporate Secretary and Chief of Legal Department
Hadera Paper Ltd. Group
Tel:+972-4-6349408
Leak@aipm.co.il
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Exhibit 2
Translation from Hebrew
Hadera Paper Ltd.
Update to Chapter I
(Description of the Corporations Business) of the Information
Presented in the
Companys Periodical Report Dated Dec-31-2007
Details in accordance with Regulation
39a of the Securities Regulations (Periodic and Immediate Reports), 1970.
1. |
Update
to Section 5, Chapter A Equity Investments in the Company |
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Pursuant
to the shelf prospectus published by the Company on May 26, 2008, the Company completed
the offering on July 16, 2008 of two debenture series in the total sum of
NIS 308,060 thousands. Net of offering expenses, the Company received net proceeds of
approximately NIS 306, 609 thousands. |
2. |
Update
to Section 1 Chapter A Introduction |
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On
July 1, 2008, pursuant to approval by the Registrar of Companies, the Company changed
its name from American Israeli Paper Mills Ltd. to Hadera Paper Ltd. |
3. |
Update
to Section 14 Chapter D Finance |
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On
July 6, 2008, the Maalot Rating Company (Standard and Poors) announced a rating of
AA-/Negative Outlook for the Companys debenture series. |
4. |
Update
to Section D Additional Details Regarding the Company, Regulation
26, Appendix G |
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On
July 10, 2008, the General Meeting approved the appointment of Ms. Atalia Arad as an
external director of the Company. |
5. |
Update
to Section 9.1.4, Chapter C, General information regarding the paper and
recycling operating activity |
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In
March 2008, as part of the construction of the new packaging paper manufacturing network,
the Company completed the signing of central agreements for the purchasing of the main
equipment for the said manufacturing network, from Italian company Voith, while
complementary parts are acquired from Finnish company Metso for a total sum of
approximately 48.4 million euro. |
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6. |
Update
to Section 22.4.1, Chapter D, Investments in Associated Companies |
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On
July 10, 2008, an agreement was signed whereby the Company acquired the shares of Carmel
Container Systems Ltd. (Carmel) held by Robert Kraft, the principal
shareholder in Carmel, as well as by several other shareholders, in consideration of a
total of $20.77 million, to be paid in a single installment upon closing of the
transaction. The shares will be acquired As Is. The completion of the
transaction is contingent upon the approval of the Anti-Trust Supervisor and any other
approval required by law. |
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In
the event that the transaction is completed, the Company will hold approximately 89.3% of
the Carmel shares and consequently, upon completion of the transaction, the financial
statements of Carmel and those of Frenkel-CD Ltd. will be consolidated with the Companys
financial statements. |
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The
expected impact of this transaction if an when completed on the Companys
financial statements, will consist primarily of the anticipated growth in the Companys
turnover as a result of the said consolidation. The transaction will be financed using
the Companys internal resources. |
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Translation from Hebrew
August 10, 2008
MANAGEMENT DISCUSSION
We are honored to present the
consolidated financial statements of the Hadera Paper Group Ltd. (Hadera Paper
or The Company) (formerly American Israeli Paper Mills
AIPM) for the first six months of 2008. The Company, its consolidated
subsidiaries and its associated companies hereinafter: The Group.
A. |
Description
of the Companys Business |
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Hadera
Paper deals in the manufacture and sale of packaging paper, in the recycling of paper
waste and in the marketing of office supplies through subsidiaries. The Company
also holds associated companies that deal in the manufacture and marketing of fine paper,
in the manufacture and marketing of household paper products, hygiene products,
disposable diapers and complementary kitchen products, corrugated board containers and
packaging for consumer goods. |
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The
companys securities are traded on the Tel Aviv Stock Exchange and on the American
Stock Exchange, AMEX. |
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As
a result of the transition to reporting according to IFRS, the Company presented its
financial statements for the reported period, as well as the comparison figures for the
corresponding period last year and for the year ended December 31, 2007 according to
IFRS. Accordingly, the data appearing in the Management Discussion and the comparison
figures are presented according to IFRS. As to the material impacts regarding the
transition to IFRS see Section H, below. |
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b. |
Principles
Current Operations |
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During
the reported period (January-June 2008), the global financial crisis and its economic
repercussions that have manifested themselves in the United States and in Europe
are affecting the level of demand in many areas and are causing a slowdown in
investments in light of the global credit crunch. The growth rate of the Israeli economy
is gradually slowing down in relation to the past several years, and the Israeli exports
are suffering from the slowdown in the aforementioned markets. |
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In
parallel, the rise in input prices has continued during the reported period in terms of
energy, fibers, chemicals and food and is exacerbating the rate of inflation globally and
in Israel. |
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No
significant slowdown in demand has been identified in the global paper market in the
reported period. |
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The
import volumes of fine paper and packaging paper from Europe have recently grown and the
company is working to preserve its market share and quantitative sales, while dealing
with a certain erosion of selling prices. |
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The
sharp change in the currency exchange rates that took place in the reported period as
the shekel grew stronger vis-à-vis the US dollar and the euro is working in
the benefit of the Company in terms of the imported inputs, while also eroding the
selling prices in those areas in the Company whose prices are denominated in US dollars. |
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The
portfolio of the Hadera Paper Group including the associated companies is
relatively balanced and the companys exposure to sharp fluctuations in currency
exchange rates is consequently low. |
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The
above information pertaining to trends in the paper market constitutes forward-looking
information as defined in the securities law, based on the companys estimates at
the date of this report. These estimates may not materialize in whole or in part
or may materialize in a different manner, inter alia on account of factors that lie
outside the control of the company, such as changes in global raw material prices and
changes in the supply and demand of global paper products. |
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The
sharp rise in global fuel prices is not materially affecting the Company due to its
transition to the use of natural gas instead of fuel oil in its manufacturing processes,
starting with the fourth quarter last year. This fact serves to improve the Groups
competitive capabilities in relation to competitors in Europe. |
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Electricity
prices have increased by approximately 22% in relation to electricity prices in the
corresponding period last year, although their overall impact is approximately NIS 8
million, however the overall influence on the Companys results is low, given the
fact that the Company generates approximately 50% of its electrical consumption
independently and based on natural gas, in a long-term agreement with Tethys Sea Group. |
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The
inflation rate during the reported period amounted to 2.3%, as compared with an inflation
rate of 1% in the corresponding period last year. |
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The
erosion in the US dollar exchange rate against the NIS grew more severe in the first half
of the year, along with considerable volatility. The US dollar exchange rate fell by
12.8% in the first half of the year, in addition to a 9% decrease in 2007. |
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2. |
Principles
Current Operations |
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The
aggregate sales turnover of most of the Groups subsidiaries and associated
companies (hereinafter: Group Companies) continued to grow during the
reported period, while raising prices across part of the areas of operation, in parallel
to the successful implementation of efficiency measures in relation to the corresponding
period last year. |
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3. |
Implementation
and Assimilation of Organization-Wide Processes |
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In
the course of the reported period, the Group companies continued to implement and
assimilate organization-wide processes that are intended to empower Group operations and
support continued growth and increased profitability in organizational development, Group
purchasing, B2B marketing, development and innovation. |
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In
parallel to the ongoing operations, the Company is working to successfully implement the
strategic plans that are intended to lead to continued growth in operations and improved
profitability over the coming years: |
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1. |
Expanding
the recycled packaging paper manufacturing network |
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The
investment budget in the project for the construction of the new manufacturing network,
totaling NIS 690 million was approved on October 15, 2007 by the Companys Board of
Directors. The Company has selected the most highly advanced technologies in this area,
from the leading suppliers in the activity, in order to amplify its competitive advantage
and potential for profitability in the long term. |
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The
implementation of the project is advancing as planned and the Company has completed the
signing of central agreements for the purchasing of the main manufacturing equipment. |
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In
parallel, the Amnir Recycling Industries Ltd. (Amnir), a Companys
subsidiary is continuing preparations for the expansion of the collection of cardboard
and newspaper waste and is continuing to accumulate inventories toward the planned
operation of the new machine in the second half of 2009. |
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As
part of the preparations for financing the project, additional capital of approximately
NIS 211 million was raised in November 2007, by way of a private placement of shares to
the controlling shareholders and to institutional investors. During July, the Company
raised a sum of approximately NIS 306 million, less offering expenses, by way of issuing
bonds to institutional investors and the public, to serve as payment for the suppliers of
equipment for Machine 8. In addition to the above measures, the Company is continuing to
explore additional ways to complete the project financing. |
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The
project for the new power plant, that is intended to provide steam and electricity for the
manufacturing operations in Hadera and to sell surplus electricity to Israel Electric
Company and/or private customers, is in progressive examination stages of configuration
and feasibility studies on the basis of the license for a 230 mega-watts (MW) power
station, to be constructed on an 80 dunam plot of land that was acquired for this purpose,
in immediate proximity to the Companys site in Hadera. |
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The
Company plans for the said power plant to consume natural gas that will be provided by
EMG, on the basis of the principles agreement that was signed in May last year. The
closing of the detailed agreement with EMG in the next several months will render it
possible to launch the project. |
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c. |
The
Strategic Investment in Turkey |
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In
the reported period, Kimberly Clark Turkey, KCTR, a wholly-owned Hogla Kimberly
subsidiary (49.9% of which is held by the Company) continued to implement its
strategic plan GBP (Global Business Plan) that was formulated together with the
international partner, Kimberly Clark Worldwide. The plan is intended to introduce
Kimberly Clarks global brands to Turkey, on the basis of local manufacturing. If
fully implemented, KCTR will grow to become by 2015 a company with annual sales in the
area of approximately $300 million. In the first six months of the year, KCTRs
sales turnover amounted to approximately $55.6 million, as compared with $23.0 million in
the corresponding period last year and $63.0 million in all of 2007. |
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In
the second quarter of the year, the Company continued to develop products and launched
new product lines under the Huggies® and Pedo® brands. These products are
produced at the Companys advanced manufacturing site, that currently serves as a
regional Kimberly Clark manufacturing center, whose products are exported to various
countries in Europe and to South Africa. The company also launched advanced KOTEX® products
(feminine hygiene) that were well-received by the market. |
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The
companys continuing marketing and advertising operations are being felt in the
gradual strengthening of the brands, as expressed by consumer studies that are being
conducted regularly, alongside the growth in sales, while curtailing the operating loss
and significant reduction in the companys net loss. |
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As
part of the strategic plan, the company intends to continue its marketing and sales
promotion efforts, while launching new products that will support the establishment of
the brands and the creation of customer loyalty. |
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In
the course of the reported period, the company continued to promote the collaboration
with Unilever and expanded the number of points of sale in the Turkish market that sell
KCTR brands. |
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The
continuing high level of competition in the markets where the company is working to
penetrate and empower its brands calls for regular and significant investments in
advertising and sales promotion. |
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All
of the expenses detailed above associated with the penetration of products, advertising,
expansion of the distribution network and more are regularly recorded as
expenditure in the KCTR statements of income. KCTR recorded an operating loss of
approximately NIS 20.9 million (approximately $6.2 million) in the reported period, as
compared with NIS 46.2 million (approximately $11.1 million) in the reported period last
year and approximately NIS 74 million (approximately $18 million) in all of 2007. |
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The
implementation of the strategic business plan, along with the strengthening brands and
the gradual growth of the Unilever sales and distribution platform, coupled with the
reduction of costs at the diaper plant, enabled the Company to maintain the trend of
improving gross profitability in the current half of the year, as aforesaid. |
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The
above information pertaining to the KCTR business plans and their implementation
constitutes forward-looking information as defined in the securities law, based on the
companys estimates at the date of this report. These estimates may not materialize
in whole or in part or may materialize in a different manner, inter alia on
account of factors that lie outside the control of the company, such as market
conditions, legislation and various costs. |
B. |
Analysis
of the Companys Financial Situation |
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The
cash and cash equivalents item decreased from NIS 57.4 million on June 30, 2007 to NIS
5.6 million on June 30, 2008. The decrease in the cash balance, along with additional
balances that originated from the private placement totaling NIS 67.1 million
were deposited in euro-linked deposits and are intended to serve as payment for
the construction of the packaging paper manufacturing network and are presented under the
item Designated Cash. |
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The
accounts receivable item for packaging paper and recycling decreased from NIS 150.7
million on June 30, 2007 to NIS 119.3 million on June 30, 2008. This decrease is
primarily attributed to the impact of lower prices in NIS terms as a result of the lower
dollar exchange rate and from the timing of collection set date, occurring on Saturday
and thus led to the postponement of the collection of approximately NIS 10 million to
July. Accounts receivable for the office supplies marketing activity rose from NIS 36.8
million as at June 30, 2007 to NIS 39.9 million as at June 30, 2008. |
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The
other accounts receivable item for packaging paper and recycling activity rose from NIS
82.6 million on June 30, 2007 to NIS 85.8 million on June 30, 2008. Other receivables for
the office supplies marketing activity decreased from NIS 11.9 million on June 30, 2007
to NIS 11.3 million on June 30, 2008. |
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The
inventories item for packaging paper and recycling activity increased from NIS 49.1
million on June 30, 2007 to NIS 51.1 million on June 30, 2008. This increase originates
primarily from an increase in the paper waste inventories, due to Amnirs
preparations in anticipation of the new packaging paper machine (see also A.2.b.1.3,
above). In the office supplies marketing activity, the Inventories item increased from
NIS 15.6 million on June 30, 2007, to NIS 18.1 million on June 30, 2008, primarily as a
result of the increase in the proportion of products imported from East Asia so as to
improve profitability. |
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Investments
in associated companies increased from NIS 346.2 million on June 30, 2007 to NIS 351.2
million on June 30, 2008. The principal components responsible for this growth were the
Companys share in the net earnings of associated companies during the reported
period, net of the impact of the Companys share in a capital reserve from
translation differences at an associated company and net of the Companys share in a
capital reserve from the hedging of cash flows at associated companies. |
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Short-term
credit decreased from NIS 225.2 million on June 30, 2007 to NIS 106.3 million on June 30,
2008. The decrease in this item is primarily attributed to repayment of credit from
proceeds obtained from the private placement to shareholders in November last year,
coupled with the positive cash flows from operating activities, net of investments in
fixed assets. |
|
|
The
other accounts payables item for packaging paper and recycling activity grew from NIS
60.9 million on June 30, 2007 to NIS 77.8 million on June 30, 2008. The growth originates
primarily from growth in provisions to institutions on account of employees, coupled with
the fair value of liabilities of future transactions for hedging the payments to the
suppliers of Machine 8, as a result of the sharp drop in the euro exchange rate during
the reported period. Other accounts payable for the office supplies marketing activity
increased from NIS 4.7 million on June 30, 2007 to NIS 5.1 million on June 30, 2008. |
|
|
The
companys shareholders equity increased from NIS 434.6 million on June 30,
2007 to NIS 690.5 million on June 30, 2008. The change is primarily attributed to the net
proceeds from the issue of shares by private placement to controlling shareholders and
institutional investors in November 2007 in the sum of NIS 211.6 million, coupled with
the net profit between the periods of NIS 64.5 million, net of the increase of the
debitory capital reserve from translation differences at an associated company in the sum
of approximately NIS 18.5 million and net of the Companys share in a capital
reserve from the hedging of cash flows at associated companies, in the sum of
approximately NIS 3.1 million. |
|
1. |
Investments
in Fixed Assets |
|
Investments
in fixed assets amounted to approximately NIS 128.2 million in the reported period, as
compared with NIS 42.1 million in the corresponding period last year. The investments
this year consisted primarily of payments on account of purchasing from equipment vendors
for the new packaging paper manufacturing network (Machine 8), in the sum of
approximately NIS 107.2 million. The Company also made current investments in
environmental issues (effluent treatment) and current investments in equipment renewal,
means of transportation and in the maintenance of buildings at the Hadera site. |
8
|
The
long-term liabilities (including current maturities) amounted to NIS 290.1 million as at
June 30, 2008, as compared with NIS 288.4 million as at June 30, 2007. The long-term
liabilities remained at a similar level as a result of the repayment of debentures on the
one hand, coupled with long-term NIS loans assumed, intended for financing the payments
for Machine 8, on the other hand. The long-term liabilities totaled NIS 261.7 million on
December 31, 2007. |
|
The
long-term liabilities include primarily two series of debentures and the following
long-term bank loans: |
|
Series
1: NIS 7.3 million, for repayment until 2009 by private placement to institutional
investors. |
|
Series
2: NIS 187.2 million, for repayment until 2013 by private placement to
institutional investors. |
|
Long-term
loans from banks: NIS 64.1 million. |
|
The
outstanding short-term credit from banks totaled NIS 106.3 million as at June 30, 2008,
as compared with NIS 225.2 million as at June 30, 2007 and NIS 143.0 million as at
December 31, 2007. |
|
After
balance date, during July, the Company raised approximately NIS 306 million, net of
offering expenses, by way of issuing bonds to institutional investors and the public, to
serve as payment for the suppliers of equipment for Machine 8. |
|
Since
the Companys share in the earnings of associated companies constitutes a material
component in the Companys statement of income (primarily on account of its share in
the earnings of Mondi Hadera PaperLtd. [Mondi Hadera] and Hogla-Kimberly Ltd.),
before the presentation of the consolidated data below, the aggregate data which include
the results of all the companies in the Hadera Paper Group (including the associated
companies whose results appear in the financial statements under earnings from
associated companies) is being presented, without considering the rate of holding
therein and net of mutual sales. |
|
Regarding
the consolidated data, see Section (4) below. |
|
The
aggregate sales amounted to NIS 1,618.6 million during the reported period, as compared
with NIS 1,492.8 million in the corresponding period last year, representing growth of
8.4%. |
|
The
aggregate sales in the second quarter this year amounted to NIS 771.0 million, as
compared with NIS 740.0 million in the corresponding period last year, representing
growth of 4.2% and as compared with NIS 847.6 million in the first quarter of the year. |
|
The
aggregate operating profit totaled NIS 111.3 million during the reported period, as
compared with NIS 70.7 million in the corresponding period last year, representing growth
of 57.4%. The significant improvement in the aggregate operating profit is attributed to
the performance improvement in Israel on the one hand, coupled with the continuing trend
of lowering the operating loss in Turkey on the other hand. |
9
|
The
aggregate operating profit totaled NIS 51.5 million in the second quarter of the year, as
compared with NIS 41.7 million in the corresponding quarter last year, representing
growth of 23.5% and as compared with NIS 59.8 million in the first quarter of the year. |
|
For
the operations in Turkey see Section C7 below Companys share in the
earnings of associated companies. |
|
2. |
Net
Profit and Earnings Per Share |
|
The
net profit totaled NIS 39.3 million during the reported period, as compared with net
profit of NIS 6.3 million in the corresponding period last year. |
|
The
net profit in the reported period was affected by the improvement in the Groups
profitability in Israel, coupled with the significant reduction of the Companys
share in the losses of the operations in Turkey (KCTR), amounting to NIS 25.6 million
(from a share in the loss of NIS 36.1 million last year to NIS 10.5 million this year),
as compared with the corresponding period last year (see Strategic Investment in Turkey,
above, and Section C7, below). |
|
The
net profit for the second quarter this year amounted to NIS 18.0 million, as compared
with a net profit of NIS 10.2 million in the corresponding quarter last year. The net
profit in the second quarter last year appears net of our share (49.9%) in the
amortization of the tax asset in Turkey (KCTR) in the sum of NIS 6.0 million. |
|
Basic
earnings per share amounted to NIS 7.77 per share ($2.32 per share) in the reported
period, as compared with NIS 1.57 per share ($0.38 per share) in the corresponding period
last year. |
|
The
diluted earnings per share amounted to NIS 7.76 per share ($2.31 per share) in the
reported period, as compared with NIS 1.57 per share ($0.38 per share) in the
corresponding period last year. |
|
Basic
earnings per share amounted to NIS 3.56 per share ($1.06 per share) in the second quarter
of the year, as compared with earnings of NIS 2.53 per share ($0.59 per share) in the
corresponding quarter last year. |
|
The
diluted earnings per share amounted to NIS 3.55 per share ($1.06 per share) in the second
quarter of the year, as compared with earnings of NIS 2.52 per share ($0.59 per share) in
the corresponding quarter last year. |
|
3. |
Analysis
of Operations and Profitability |
|
The
analysis set forth below is based on the consolidated data. |
|
The
consolidated sales during the reported period amounted to NIS 275.8 million and were
similar to the sales in the reported period last year that amounted to approximately NIS
277.8 million. Sales of the packaging and recycling activity amounted to NIS 216.5
million in the reported period, as compared with NIS 221.4 million in the corresponding
period last year. |
10
|
The
decrease in the sales turnover of the packaging paper and recycling activity originated
primarily from the erosion of selling prices as a result of the revaluation of the NIS
vis-à-vis the US dollar in relation to last year. (The activity sales are affected
by dollar-denominated import prices). |
|
The
sales of the Office Supplies Marketing activity during the reported period amounted to
NIS 59.3 million, as compared with NIS 56.5 million last year, representing growth of
7.9% that originated from the continuing trend of growth in operating volumes in this
activity. |
|
The
aggregate sales in the second quarter of the year totaled NIS 133.3 million, as compared
with NIS 141.2 million in the corresponding quarter last year, representing reduction of
approximately 5.6% and as compared with first quarter sales of NIS 142.5 million,
representing reduction of approximately 6.5%. |
|
Sales
of the packaging and recycling activity amounted to NIS 107.1 million in the second
quarter of the year, as compared with NIS 114.1 million in the corresponding quarter last
year primarily due to the changes in exchange rate and from the impact of the cold spell
in agriculture that affected export in the agriculture market in the reported period. |
|
Sales
of the office supplies marketing activity amounted to NIS 26.1 million in the second
quarter of the year, as compared with NIS 27.0 million in the corresponding quarter last
year, resulting from Passover orders in both periods. |
|
The
cost of sales amounted to NIS 208.9 million or 75.8% of sales during the
reported period, as compared with NIS 214.1 million or 77.1% of sales in
the corresponding period last year. |
|
The
gross profit totaled NIS 66.8 million during the reported period (approximately 24.2% of
sales), as compared with NIS 63.7 million (approximately 22.9% of sales) in the
corresponding period last year, representing growth of 4.9% in relation to the
corresponding period last year. |
|
The
increase in profitability and in the gross profit originated primarily from continuing
efficiency and the transition to manufacturing using natural gas, which more than
compensated for the reduction in quantitative sales on the local market, primarily as a
result of the cold spell, along with the 22% rise in electricity prices, as compared with
the corresponding period last year. |
11
|
The
labor wages within the cost of sales amounted to NIS 63.3 million during the reported
period (22.9% of sales), as compared with NIS 56.9 million last year (20.5% of sales). |
|
The
labor wages within the general and administrative expenses amounted to NIS 31.1 million
during the reported period (11.3% of sales), nearly identical to the sum of NIS 31.1
million last year (11.2% of sales). |
|
The
change in payroll costs in relation to the corresponding period last year reflects a
certain increase in personnel, especially at Amnir and in packaging paper activity, as
part of the preparations and implementation for increasing cardboard and newspaper waste
collection in anticipation of the future operation of the new packaging paper
manufacturing network, along with a nominal increase of approximately 4% in the wages. |
|
The
cost of labor wages also includes growth on account of options to executives, as detailed
in Section 3, above. |
|
3. |
Selling,
General and Administrative and Others |
|
The
selling, general and administrative (including wages) and others amounted to NIS 36.8
million in the reported period or 13.3% of sales as compared with NIS 33.3
million or 12.0% of sales in the corresponding period last year. |
|
The
increase in selling, general and administrative and others originated primarily from
growth in the Labor Wages section as a result of the recording of wage expenses on
account of options to senior executives, as approved in January this year, in the sum of
NIS 2.0 million, coupled with growth in other expenses on account of the valuation of a
PUT option by Mondi in the sum of NIS 1.3 million, according to IFRS. Net of the
aforesaid expenses selling, general and administrative and others amounted to NIS 33.5
million, similar to the corresponding period last year. |
|
The
operating profit totaled NIS 30.1 million during the reported period (10.9% of sales), as
compared with NIS 30.4 million (10.9% of sales) in the corresponding period last year,
representing reduction of 1.0%. |
|
The
operating profit of the paper and recycling activity totaled NIS 28.7 million during the
reported period, as compared with NIS 31.6 million in the corresponding period last year,
primarily as a result of the impact of the exchange rate on which selling prices are
presented as mentioned above, and from the impact of the cold spell on agriculture export
demands. |
|
The
operating profit of the office supplies activity amounted to NIS 1.4 million, as compared
with NIS -1.1 million in the corresponding period last year. |
12
|
The
operating profit amounted to NIS 12.6 million in the second quarter of the year, as
compared with NIS 13.9 million in the corresponding quarter last year and as compared
with NIS 17.5 million in the first quarter this year as mentioned above due to the
erosion of the dollar exchange rate and from the impact of the cold spell in agriculture
that affected export in the agriculture market. |
|
The
operating profit of the paper and recycling activity amounted to NIS 11.9 million in the
second quarter of the year, as compared with NIS 14.5 million in the corresponding
quarter last year, representing a decrease of 17.9%. |
|
The
operating profit of the office supplies activity amounted to approximately NIS 0.8
million, as compared with operating loss in the amount of NIS -0.6 million in the
corresponding quarter last year. |
|
The
financial expenses during the reported period amounted to NIS 11.1 million, as compared
with NIS 11.7 million in the corresponding period last year, representing a decrease of
5.1%. |
|
The
total average of the Companys net, interest-bearing liabilities decreased by an
average of approximately NIS 132 million between the periods 2007 and 2008. The decrease
is primarily attributed to the proceeds from the private placement last year and the
positive cash flows from operating activities between the periods, net of investments in
fixed assets. |
|
The
interest on the short-term credit decreased by NIS 2.7 million, both as a result of the
decrease in the balance of short-term credit and as a result of the lower interest rate
between the two periods. Expenses related to the interest on long-term, CPI-linked
liabilities (debentures) decreased somewhat as a result of the decrease in the debentures
balances on account of the repayment to debentures holders, despite the rise in hedging
costs of CPI-linked bonds as opposed to the rise in the CPI that rose by 2.6% per year in
2008, as compared with 1.3% in 2007. |
|
Moreover,
financial expenses of NIS 1.1 million were recorded, primarily on account of the impact
of the revaluation against the dollar this year in the rate of 12.8%, as compared with a
devaluation of 1.0% in the corresponding period last year on the
dollar-denominated asset balances. |
|
Taxes
on income amounted to NIS 5.4 million in the reported period, as compared with NIS 7.2
million in the corresponding period last year. The decrease of approximately NIS 1.8
million originates primarily from the fact that the corresponding period last year
included tax expenses of NIS 0.9 million on account of final tax assessments for the
years 2002 through 2005, coupled with a reduction in the current tax rate this year, in
relation to last year. |
13
|
7. |
Companys
Share in Earnings of Associated Companies |
|
The
companies whose earnings are reported under this item (according to Hadera Papers
holdings therein), include primarily: Mondi Hadera, Hogla-Kimberly and Carmel Container
Systems Ltd. (Carmel). |
|
The
companys share in the earnings (losses) of associated companies totaled NIS 25.8
million during the reported period, as compared with a loss of NIS (5.1) million in the
corresponding period last year. |
|
The
following principal changes were recorded in the Companys share in the earnings of
associated companies, in relation to the corresponding period last year: |
|
|
The
Companys share in the net profit of Mondi Hadera (49.9%) increased by approximately
NIS 4 million. Most of the change in profit originated primarily from Mondis highly
improved operating profitability, which recorded an increase from operating profit of NIS
13.8 million last year to an operating profit of NIS 17.7 million this year primarily
as a result of the raising of selling prices in relation to last year that led to an
improved gross margin. This improvement is the result of the said trend in the European
paper industry. |
|
The
net profit also increased as a result of the sharp decrease in financial expenses this
year in relation to last year, primarily on account of the impact of the revaluation of
the NIS against the dollar. |
|
|
The
Companys share in the net profit of Hogla-Kimberly Israel (49.9%) increased by
approximately NIS 8.1 million. Hoglas operating profit grew from NIS 67.6 million
to NIS 85.1 million this year. The improved operating profit originated from a
quantitative increase in sales, improved selling prices net of the impact of higher raw
material prices, the continuing implementation of efficiency measures and the continuing
trend of raising the proportion of some of the premium products out of the products
basket. |
|
The
Companys share in the losses of KCTR (formerly: Ovisan) (49.9%)
decreased by NIS 25.6 million. The significant decrease in the loss is attributed to the
growth in the volumes of operation (see above Strategic Investment in Turkey)
that led to a significant reduction in the operating loss, from NIS 46.2 million last
year to approximately NIS 20.9 million this year. In the corresponding period last year,
a non-recurring loss of approximately NIS 6 million ($1.5 million) was included on
account of the termination of trade agreements with distributors due to the transition to
distribution by Unilever, of which our share was approximately NIS 3 million. Moreover,
the tax asset that was recorded in previous years in Turkey, in the sum of approximately
NIS 12 million (approximately $3 million) was reduced, of which our share is NIS 6.0
million. Moreover, due to the increase in the shareholders equity of KCTR through a
financial influx from Hogla, the bank loans were repaid, while significantly reducing the
financial expenses thereby leading to an additional reduction in the net loss. |
|
|
The
Company's share in the loss of Carmel (36.21%) increased by NIS 2 million. Net
off one time losses from hedging transactions, operating profit increased in
the reported period by NIS 1.9 million, of which the Companys share
amounted to NIS 0.7 million. The aforesaid growth occurred despite of the
damages caused by the eroded profitability at Carmel originated from the impact
of the cold spell in agriculture that decreased demands in the agriculture
market as aforesaid. Carmel also recorded a loss of NIS 7.5 million in the
reported period on account of hedging transactions for affixing exchange rate,
of which the Companys share amounted to approximately NIS 1.9 million. |
|
The
Companys share in the earnings of associated companies from current operations in
Israel (excluding Turkey) grew by NIS 5.3 million this year and amounted to NIS 36.3
million. |
14
|
The
cash flows from operating activities totaled approximately NIS 56.7 million during the
reported period, as compared with NIS 17.4 million in the corresponding period last year.
The significant change in the cash flows from operating activities during the reported
period, originated primarily from the sharp improvement in net profit, coupled with the
reduction in working capital in the reported period, that amounted to NIS 11.3 million,
as compared with growth of NIS 10.8 million last year. The decrease in working capital
during the reported period originated primarily from the reduction in the accounts
receivable balance as a result of the lower dollar exchange rate that is affecting the
selling prices in NIS, especially as regards packaging paper and recycling activity. |
|
See
Section B2 - Financial Liabilities. |
F. |
Exposure
and Management of Market Risks |
|
The
Company conducts periodical discussions regarding market risks and exposure to exchange
rate and interest rate fluctuations, with the participation of the relevant factors, so
as to reach decisions in this matter. The individual responsible for the implementation
of market risk management policy at the Company is Israel Eldar, the Companys
Comptroller. |
|
2. |
Market
Risks to which the Company is Exposed |
|
Description
of Market Risks |
|
The
market risks reflect the risk of changes in the value of financial instruments affected
by changes in the interest rate, in the Consumer Price Index and in foreign currency
exchange rates. |
|
Approximately
half of the Companys sales are denominated in US dollars, whereas a significant
share of its expenses and liabilities are in NIS. The Company is therefore exposed to
fluctuations in the exchange rate of the NIS vis-à-vis the US dollar. This
exposure includes economic exposure (on account of surplus proceeds on payments in
foreign currency or linked thereto) and accounting exposure (on account of a surplus of
dollar-linked assets over foreign-currency-denominated liabilities). |
15
|
The
Company periodically reexamines the need for hedging on account of this exposure. True to
June 30, 2008, the Company entered into sale and purchase transactions in the sum of 20
million euro, in order to hedge the cash flows for the acquisition of fixed assets from
equipment vendors for Machine 8. |
|
Consumer
Price Index Risks |
|
The
Company is exposed to changes in the Consumer Price Index, pertaining to the debentures
issued by the Company, in the total sum of NIS 194.5 million. |
|
In
early 2008, the Company entered into hedging transactions for a period of one year, to
protect itself against a rise in the CPI, in the amount of NIS 190 million, pursuant to
previous transactions that were made in December 2006 and January 2007 and terminated at
the end of 2007. |
|
The
Company is exposed to changes in interest rates, primarily on account of debentures, in
the sum of NIS 194.5 million. |
|
Most
of the Groups sales are made in Israel to a large number of customers and the
exposure to customer-related credit risks is consequently generally limited. The Group
regularly analyzes through credit committees that operate within the various
companies the quality of the customers, their credit limits and the relevant
collateral required, as the case may be. |
|
The
financial statements include provisions for doubtful debts, based on the existing risks
on the date of the statements. |
|
Sensitivity
Analysis Tables for Sensitive Instruments, According to Changes in Market Elements |
Sensitivity of -linked instruments to changes in the exchange rate
|
Sensitive Instruments
|
Profit (loss) from changes
|
Fair value
As at
Jun-30-08
|
Profit (loss) from changes
|
|
Revaluation of
10%
|
Revaluation
5%
|
Devaluation of
10%
|
Devaluation of
5%
|
In NIS thousands
|
|
|
|
|
|
|
Transaction with |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
supplier- Alstom | | |
| (138 |
) |
| (69 |
) |
| 1,379 |
|
| 69 |
|
| 138 |
|
Designated deposits | | |
| 6,706 |
|
| 3,353 |
|
| 67,055 |
|
| (3,353 |
) |
| (6,706 |
) |
16
|
Below
are the balance sheet items, according to linkage bases, as at June 30, 2008: |
NIS millions
|
Unlinked
|
CPI-linked
|
In foreign
currency, or
linked thereto
(primarily US$)
|
Non-Monetary
Items
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | |
Cash and cash equivalents | | |
| 1.3 |
|
| |
|
| 4.3 |
|
| |
|
| 5.6 |
|
Short-term deposits and investments | | |
| |
|
| |
|
| 67.1 |
|
| |
|
| 67.1 |
|
Other Accounts Receivable | | |
| 242.0 |
|
| 0.3 |
|
| 12.4 |
|
| 1.4 |
|
| 256.1 |
|
Inventories | | |
| |
|
| |
|
| |
|
| 69.2 |
|
| 69.2 |
|
Current tax assets | | |
| 5.5 |
|
| |
|
| |
|
| |
|
| 5.5 |
|
Investments in Associated Companies | | |
| 52.2 |
|
| |
|
| 2.7 |
|
| 296.3 |
|
| 351.2 |
|
Deferred taxes on income | | |
| |
|
| |
|
| |
|
| 21.0 |
|
| 21.0 |
|
Fixed assets, net | | |
| |
|
| |
|
| |
|
| 527.2 |
|
| 527.2 |
|
Other assets | | |
| |
|
| |
|
| |
|
| 37.3 |
|
| 37.3 |
|
Assets on account of employee benefits | | |
| 1.2 |
|
| |
|
| |
|
| |
|
| 1.2 |
|
Total Assets | | |
| 302.2 |
|
| 0.3 |
|
| 86.5 |
|
| 952.4 |
|
| 1,341.4 |
|
|
| |
| |
| |
| |
| |
| | |
Liabilities | | |
Short-term credit from banks | | |
| 106.3 |
|
| |
|
| |
|
| |
|
| 106.3 |
|
Other Accounts Payable | | |
| 179.1 |
|
| |
|
| 12.4 |
|
| |
|
| 191.5 |
|
Deferred taxes on income | | |
| |
|
| |
|
| |
|
| 42.6 |
|
| 42.6 |
|
Long-term loans, including current maturities | | |
| 64.1 |
|
| |
|
| |
|
| |
|
| 64.1 |
|
Notes (bonds) including current maturities | | |
| |
|
| 194.0 |
|
| |
|
| |
|
| 194.0 |
|
Liabilities on account of employee benefits | | |
| 20.4 |
|
| |
|
| |
|
| |
|
| 20.4 |
|
Other liabilities | | |
| 32.0 |
|
| |
|
| |
|
| |
|
| |
|
Equity, funds and reserves | | |
| |
|
| |
|
| |
|
| 690.5 |
|
| 690.5 |
|
Total liabilities and equity | | |
| 401.9 |
|
| 194.0 |
|
| 12.4 |
|
| 733.1 |
|
| 1,341.4 |
|
|
| |
| |
| |
| |
| |
| | |
Surplus financial assets (liabilities) as at | | |
June 30, 2008 | | |
| (99.7 |
) |
| (193.7 |
) |
| 74.1 |
|
| 219.3 |
|
| |
|
| | |
Surplus financial assets (liabilities) as at | | |
December 31, 2007 | | |
| (80.9 |
) |
| (195.1 |
) |
| 170.0 |
|
| 106.0 |
|
| |
|
|
*
As to hedging transactions associated with surplus CPI-linked liabilities, see Section
F(2), above. |
|
Hadera
Paper is exposed to various risks associated with operations in Turkey, where
Hogla-Kimberly is active through its subsidiary, KCTR. These risks originate from
concerns regarding the economic instability, high devaluation and elevated inflation
rates that have characterized the Turkish economy in the past and that may recur and harm
the KCTR operations. |
g. |
Forward-Looking
Statements |
|
This
report contains various forecasts that constitute forward-looking statements, as defined
in the Securities Law, based upon the Board of Directors present expectations and
estimates regarding the operations of the Group and its business environment. The Company
does not guarantee that the future results of operations will coincide with the
forward-looking statements and these may in fact differ considerably from the present
forecasts as a result of factors that may change in the future, such as changes in costs
and market conditions, failure to achieve projected goals, failure to achieve anticipated
efficiencies and other factors which lie outside the control of the Company. The Company
undertakes no obligation to publicly update such forward-looking statements, regardless
of whether these updates originate from new information, future events or any other
reason. |
17
h. |
Significant
Influences as a Result of the Transition to IFRS |
|
As
at June 30, 2007, no significant impact was recorded on the financial situation, results
of operations, liquidity and sources of finance of the company as a result of the
transition to IFRS, except for that stated in the update to Chapter A (Description of the
Corporate Business) of the Companys Periodical Report dated December 31, 2007 and
that stated below. As to the overall accounting implications and adjustments as a result
of the transition to IFRS, see Note 10 to the Companys financial statements as at
June 30, 2008. |
|
1. |
Put
option on an associated company |
|
As
part of an agreement dated November 21, 1999 with Mondi Business Paper (hereinafter MBP,
formerly Neusiedler AG) Mondi Hadera acquired the Groups operation in fine paper
and issued MBP 50.1% of its shares. |
|
As
part of this agreement, MBP was granted the option to sell its holdings in Mondi Hadera
to the Company at a price 20% lower than its value (as defined in the agreement), or $20
million, less 20% the higher of the two. According to oral understandings that
were reached in proximity to the signing of the agreement, between elements at the
company and elements at MBP, MBP can exercise the option only in the most exceptional
circumstances, such as those that paralyze production in Israel for long periods of time. |
|
Due
to the extended period of time that has passed since these understandings were reached
and in view of recent changes in the management of MBP, the Company has decided to adopt
a conservative approach in this respect and to reflect the economic value of the option
as part of the transition to IFRS. According to Israeli GAAP, it is not necessary to
valuate a PUT option. The value of the option was calculated according to IFRS and was
recognized as a liability that is measured at fair value, with changes in fair value
being allocated to the statement of income in accordance with IAS 39. |
|
As
at January 1, 2007, the liability on account of the Put option on the associated company
shares is presented in the sum of approximately NIS 1,612 thousand. |
|
As
at June 30, 2007, the liability on account of the Put option on the subsidiary company
shares is presented in the sum of approximately NIS 1,791 thousand. |
|
As
at December 31, 2007, the liability on account of the Put option on the subsidiary
company shares is presented in the sum of approximately NIS 3,901 thousand. |
|
As
a result of the valuation of the option, other expenses grew by approximately NIS 179 and
approximately NIS 326 thousand for the period of three months and six months that
ended on June 30, 2007, respectively, and grew by a sum of approximately NIS 2,289
thousand for the year ended December 31, 2007. |
18
|
In
accordance with generally accepted accounting principles in Israel, the Companys
liability for severance pay is calculated based on the last salary of the employee
multiplied by the number of years of employment. |
|
Pursuant
to International Standards, the provision for severance pay is calculated according to an
actuarial basis taking into account the anticipated duration of employment, the value of
time, the expected salary increases until retirement and the possible retirement under
conditions not entitling severance pay. |
|
In
addition, under Israeli GAAP, deposits made with regular policies or directorsinsurance
policies which are not in the employees name, but in the name of the employer, were
also deducted from the companys liability. |
|
Most
of the Groups employees are covered according to Section 14 of the Compensation
Law. Employee deposits are not reflected in the companys financial statements and
accordingly, no provision is necessary in the books. |
|
However,
the Company is required to pay employees differences for pension and unutilized vacation
pay. These liabilities are computed in accordance with the actuarys assessment
based on an estimate of their utilization and redemption, respectively. |
|
In
addition, net liabilities in respect of post-retirement employee benefits, which relate
to defined benefit plans, are measured based on actuarial estimates and discounted
amounts. |
|
Under
IFRS, regular policies or directors insurance policies as aforesaid, which do not
meet the definition of plan assets under IAS 19, will be presented in the balance sheet
under a separate item and will not be deducted from the employers liability. |
|
According
to the Companys adopted policy, actuarial earnings are allocated to retained
earnings, although on account of immateriality, they were allocated fully to the
statements of income. |
|
Consequently,
as at January 1, 2007, a net increase of NIS 5,563 thousand was created in liabilities on
account of employee benefit plans, in addition to an increase of NIS 1,391 thousand in
deferred tax assets. |
|
As
at June 30, 2007, a net increase of NIS 5,766 thousand was created in liabilities on
account of employee benefit plans, in addition to an increase of NIS 1,442 thousand in
deferred tax assets. |
|
As
at December 31, 2007, a net increase of NIS 5,762 thousand was created in liabilities on
account of employee benefit plans, in addition to an increase of NIS 1,436 thousand in
deferred tax assets. |
|
Labor
wage expenses decreased by a sum of approximately NIS 334 thousand and approximately NIS
667 thousand for the six-month and three-month periods ended June 30, 2007, respectively,
and increased by a sum of approximately NIS 199 thousand for the year ended December 31,
2007. Moreover, tax expenses decreased by a sum of approximately NIS 52 thousand and
increased by approximately NIS 32 thousand for the six-month and three-month periods
ended June 30, 2007, respectively, and decreased by a sum of approximately NIS 46
thousand for the year ended December 31, 2007. |
|
Moreover,
Assets on account of employee benefits were reclassified from Other Payables to
Non-Current Assets. Sums of NIS 1,132 thousand, NIS 1,146 thousand and NIS 1,179 thousand
for the dates January1, 2007, June 30, 2007 and December 31, 2007, respectively. |
19
i. |
Detailed
processes undertaken by the Companys supreme supervisors, prior to the
approval of the financial statements |
|
The
Companys Board of Directors has appointed the Companys Audit Committee to
serve as a Balance Sheet Committee and to supervise the completeness of the financial
statements and the work of the CPAs and to offer recommendations regarding the approval
of the financial statements and the discussion thereof prior to said approval. The
Committee consists of three directors, of which two possess accounting and financial
expertise. The meetings of the Balance Sheet Committee, as well as the board meetings
during which the financial statements are discussed and approved, are attended by the
companys auditing CPAs, who are instructed to present the principal findings if
there are any that surfaced during the audit or review process, as well as by the
Internal Auditor. |
|
The
Committee conducts its examination via detailed presentations from company executives and
others, including: General Manager Avi Brenner; CFO Shaul Glicksberg. The
material issues in the financial reports, including any extraordinary transactions if
any, the material assessments and critical estimates implemented in the financial
statements, the reasonability of the data, the financial policy implemented and the
changes therein, as well as the implementation of proper disclosure in the financial
statements and the accompanying information. The Committee examines various aspects of
risk assessment and control, as reflected in the financial statements (such as reporting
of financial risks), as well as those affecting the reliability of the financial
statements. In case necessary, the Committee demands to receive comprehensive reviews of
matters with especially relevant impact, such as the implementation of international
standards. |
|
The
approval of the financial statements involves several meetings, as necessary: The first,
held several days before the approval date of the financial statements, is held to
discuss the material reporting issues in depth and at great length, whereas the second,
held in proximity to the approval date, is held by the board of directors, to discuss the
actual results. As to the supreme supervision regarding the impact of the transition to
international financial reporting standards, the Committee held a detailed discussion
regarding the said disclosure and the accounting policy implemented in its respect. |
|
|
|
|
|
|
|
|
|
|
|
|
Tzvika Livnat |
Avi Brenner |
Chairman of the Board of Directors |
General Manager |
20
Exhibit 3
HADERA PAPER LTD
UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF JUNE 30 , 2008
HADERA PAPER LTD
UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF JUNE 30 , 2008
TABLE OF CONTENTS
F - 1
HADERA PAPER LTD
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(NIS in thousands)
|
June 30,
|
December 31,
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
| |
|
| |
|
| |
|
Cash and cash equivalents | | |
| 5,553 |
|
| 57,426 |
|
| 167,745 |
|
Designated deposits | | |
| 67,055 |
|
| - |
|
| - |
|
Trade receivables | | |
| 159,224 |
|
| 187,517 |
|
| 178,553 |
|
Other receivables | | |
| 97,011 |
|
| 94,515 |
|
| 94,415 |
|
Current tax assets | | |
| 5,478 |
|
| - |
|
| - |
|
Inventories | | |
| 69,201 |
|
| 64,682 |
|
| 69,607 |
|
|
| |
| |
| |
| | |
| 403,522 |
|
| 404,140 |
|
| 510,320 |
|
|
| |
| |
| |
| | |
Non-Current Assets | | |
Property plant and equipment, net | | |
| 527,165 |
|
| 388,133 |
|
| 405,231 |
|
Investments in associated companies | | |
| 351,221 |
|
| 346,211 |
|
| 346,403 |
|
Deferred tax assets | | |
| 21,037 |
|
| 20,622 |
|
| 20,622 |
|
Deferred expenses | | |
| 35,797 |
|
| 32,661 |
|
| 34,900 |
|
Other non-current assets | | |
| 1,503 |
|
| 1,922 |
|
| 1,578 |
|
Employee benefit assets | | |
| 1,187 |
|
| 1,146 |
|
| 1,179 |
|
|
| |
| |
| |
| | |
| 937,910 |
|
| 790,695 |
|
| 809,913 |
|
|
| |
| |
| |
| | |
| 1,341,432 |
|
| 1,194,835 |
|
| 1,320,233 |
|
|
| |
| |
| |
Current Liabilities | | |
Credit from banks and others | | |
| 106,276 |
|
| 225,202 |
|
| 143,015 |
|
Current maturities of long-term notes and | | |
long term loans | | |
| 50,984 |
|
| 41,770 |
|
| 42,775 |
|
Trade payables | | |
| 103,501 |
|
| 107,515 |
|
| 108,409 |
|
Other payables and accrued expenses | | |
| 82,874 |
|
| 65,642 |
|
| 73,230 |
|
Other financial liabilities | | |
| 31,990 |
|
| - |
|
| - |
|
Financial liabilities at fair value through profit and loss | | |
| 5,196 |
|
| 1,791 |
|
| 3,901 |
|
Current tax liabilities | | |
| - |
|
| 10,039 |
|
| 908 |
|
|
| |
| |
| |
| | |
| 380,821 |
|
| 451,959 |
|
| 372,238 |
|
|
| |
| |
| |
Non-Current Liabilities | | |
Loans from banks and others | | |
| 51,617 |
|
| 30,840 |
|
| 28,127 |
|
Notes | | |
| 155,487 |
|
| 183,758 |
|
| 158,134 |
|
Other financial liabilities | | |
| - |
|
| 31,990 |
|
| 31,210 |
|
Deferred tax liabilities | | |
| 42,566 |
|
| 41,164 |
|
| 40,515 |
|
Employee benefit liabilities | | |
| 20,398 |
|
| 20,554 |
|
| 20,038 |
|
|
| |
| |
| |
| | |
| 270,068 |
|
| 308,306 |
|
| 278,024 |
|
|
| |
| |
| |
Capital and reserves | | |
Issued capital | | |
| 125,267 |
|
| 125,257 |
|
| 125,267 |
|
Reserves | | |
| 289,687 |
|
| 98,069 |
|
| 308,267 |
|
Retained earnings | | |
| 275,589 |
|
| 211,244 |
|
| 236,437 |
|
|
| |
| |
| |
| | |
| 690,543 |
|
| 434,570 |
|
| 669,971 |
|
|
| |
| |
| |
| | |
| 1,341,432 |
|
| 1,194,835 |
|
| 1,320,233 |
|
|
| |
| |
| |
|
|
|
Z. Livnat Chairman of the Board of Directors |
A. Brener Chief Executive Officer |
S. Gliksberg Chief Financial and Business Development Officer
|
Approval date of the interim
financial statements: August 10, 2008.
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
F - 2
HADERA PAPER LTD
CONDENSED INTERIM
CONSOLIDATED INCOME STATEMENTS
(NIS in thousands)
|
Six months ended
June 30,
|
Three months ended
June 30,
|
Year ended
December 31,
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
| 275,786 |
|
| 277,823 |
|
| 133,267 |
|
| 141,185 |
|
| 583,650 |
|
| | |
Cost of sales | | |
| 208,937 |
|
| 214,149 |
|
| 102,958 |
|
| 109,682 |
|
| 441,381 |
|
|
| |
| |
| |
| |
| |
| | |
Gross profit | | |
| 66,849 |
|
| 63,674 |
|
| 30,309 |
|
| 31,503 |
|
| 142,269 |
|
|
| |
| |
| |
| |
| |
| | |
Selling and marketing expenses | | |
| 15,653 |
|
| 14,853 |
|
| 7,765 |
|
| 7,157 |
|
| 31,367 |
|
| | |
General and administrative expenses | | |
| 19,670 |
|
| 18,232 |
|
| 9,546 |
|
| 10,125 |
|
| 36,377 |
|
| | |
Other income , net | | |
| 1,445 |
|
| 179 |
|
| 378 |
|
| 326 |
|
| 4,467 |
|
|
| |
| |
| |
| |
| |
| | |
Total expenses | | |
| 36,768 |
|
| 33,264 |
|
| 17,689 |
|
| 17,608 |
|
| 72,211 |
|
|
| |
| |
| |
| |
| |
| | |
Profit from ordinary operations | | |
| 30,081 |
|
| 30,410 |
|
| 12,620 |
|
| 13,895 |
|
| 70,058 |
|
|
| |
| |
| |
| |
| |
| | |
Finance income | | |
| 3,530 |
|
| 4,492 |
|
| 1,636 |
|
| 3,217 |
|
| 10,648 |
|
| | |
Finance expenses | | |
| 14,660 |
|
| 16,237 |
|
| 5,959 |
|
| 8,378 |
|
| 31,766 |
|
|
| |
| |
| |
| |
| |
| | |
Finance expenses, net | | |
| 11,130 |
|
| 11,745 |
|
| 4,323 |
|
| 5,161 |
|
| 21,118 |
|
|
| |
| |
| |
| |
| |
Profit after financial expenses | | |
| 18,951 |
|
| 18,665 |
|
| 8,297 |
|
| 8,734 |
|
| 48,940 |
|
| | |
Share in profit (loss) of associated | | |
companies, net | | |
| 25,771 |
|
| (5,116 |
) |
| 11,138 |
|
| 5,379 |
|
| 856 |
|
|
| |
| |
| |
| |
| |
Profit before taxes on income | | |
| 44,722 |
|
| 13,549 |
|
| 19,435 |
|
| 14,113 |
|
| 49,796 |
|
| | |
Taxes on income | | |
| 5,420 |
|
| 7,207 |
|
| 1,403 |
|
| 3,894 |
|
| 18,261 |
|
|
| |
| |
| |
| |
| |
| | |
Profit for the period | | |
| 39,302 |
|
| 6,342 |
|
| 18,032 |
|
| 10,219 |
|
| 31,535 |
|
|
| |
| |
| |
| |
| |
| | |
Earning for share: | | |
| | |
Primary | | |
| 7.77 |
|
| 1.57 |
|
| 3.56 |
|
| 2.53 |
|
| 7.63 |
|
|
| |
| |
| |
| |
| |
| | |
Fully diluted | | |
| 7.76 |
|
| 1.57 |
|
| 3.55 |
|
| 2.52 |
|
| 7.62 |
|
|
| |
| |
| |
| |
| |
| | |
Number of share used to compute the | | |
primary earnings per share | | |
| 5,060,774 |
|
| 4,039,700 |
|
| 5,060,774 |
|
| 4,044,614 |
|
| 4,132,728 |
|
|
| |
| |
| |
| |
| |
| | |
Number of share used to compute the | | |
fully diluted earnings per share | | |
| 5,067,954 |
|
| 4,046,389 |
|
| 5,073,967 |
|
| 4,051,304 |
|
| 4,139,533 |
|
|
| |
| |
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
F - 3
HADERA PAPER LTD
CONDENSED INTERIM
CONSOLIDATED STATEMENT
OF RECOGNIZED INCOME AND EXPENSES
(NIS in thousands)
|
Six months ended
|
Three months ended
|
Year ended
|
|
June 30,
|
June 30,
|
December 31,
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences arising on translation |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
of foreign operations | | |
| (17,945 |
) |
| 4,362 |
|
| 2,063 |
|
| 4,960 |
|
| 3,810 |
|
Profit (loss) on cash flow hedges | | |
| (4,544 |
) |
| 282 |
|
| (3,993 |
) |
| 432 |
|
| (917 |
) |
Taxes on income in respect of income and | | |
expense recognized to equity | | |
| 360 |
|
| (83 |
) |
| 216 |
|
| (125 |
) |
| 265 |
|
Actuarial profit (loss) and defined | | |
benefit plans | | |
| (150 |
) |
| - |
|
| (150 |
) |
| - |
|
| - |
|
|
| |
| |
| |
| |
| |
Net income recognized directly in equity | | |
| (22,279 |
) |
| 4,531 |
|
| (2,084 |
) |
| 5,255 |
|
| 3,151 |
|
|
| |
| |
| |
| |
| |
Transfer to profit or loss from equity on cash flow | | |
hedges, net | | |
| 1,088 |
|
| 74 |
|
| 593 |
|
| 29 |
|
| 17 |
|
Profit for the period | | |
| 39,302 |
|
| 6,342 |
|
| 18,032 |
|
| 10,219 |
|
| 31,535 |
|
|
| |
| |
| |
| |
| |
Total recognized income and expense for the period | | |
| 18,111 |
|
| 10,977 |
|
| 16,761 |
|
| 15,515 |
|
| 34,710 |
|
|
| |
| |
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
F - 4
HADERA PAPER LTD
CONDENSED INTERIM
CONSOLIDATED CASH FLOWS STATEMENTS
(NIS in thousands)
|
Six months ended
|
Three months ended
|
Year ended
December 31,
|
|
June 30,
|
June 30,
|
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
Cash flows - operating activities |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Operating profit for the period | | |
| 39,302 |
|
| 6,342 |
|
| 18,032 |
|
| 10,221 |
|
| 31,535 |
|
Taxes on income recognized in profit and | | |
loss | | |
| 5,420 |
|
| 7,207 |
|
| 1,403 |
|
| 3,894 |
|
| 18,261 |
|
Finance expenses recognized in profit and loss | | |
| 11,130 |
|
| 11,745 |
|
| 4,323 |
|
| 5,161 |
|
| 21,118 |
|
Capital loss on disposal of property, plant and | | |
equipment | | |
| 150 |
|
| (126 |
) |
| 158 |
|
| (79 |
) |
| 1,403 |
|
Capital loss on sale of investment in | | |
associated company | | |
| - |
|
| 28 |
|
| - |
|
| - |
|
| 28 |
|
Share in loss (profit) of associated | | |
companies, net | | |
| (25,771 |
) |
| 5,116 |
|
| (11,138 |
) |
| (5,379 |
) |
| (856 |
) |
Depreciation and amortization | | |
| 22,273 |
|
| 17,381 |
|
| 11,188 |
|
| 8,767 |
|
| 36,138 |
|
Share based payments expense | | |
| 1,997 |
|
| - |
|
| 1,274 |
|
| - |
|
| - |
|
|
| |
| |
| |
| |
| |
| | |
| 54,501 |
|
| 47,693 |
|
| 25,240 |
|
| 22,585 |
|
| 107,627 |
|
|
| |
| |
| |
| |
| |
| | |
Changes in assets and liabilities: | | |
Decrease (Increase) in trade and other | | |
receivables | | |
| 17,197 |
|
| (17,473 |
) |
| 4,863 |
|
| (6,238 |
) |
| (5,416 |
) |
Decrease (Increase) in inventories | | |
| 406 |
|
| (2,573 |
) |
| (354 |
) |
| 1,084 |
|
| (7,498 |
) |
Increase (Decrease) in trade payables and other | | |
payables | | |
| (6,292 |
) |
| 9,262 |
|
| (8,504 |
) |
| 2,494 |
|
| 24,631 |
|
Increase (decrease) in other long term | | |
liabilities | | |
| 352 |
|
| 179 |
|
| 735 |
|
| (989 |
) |
| 268 |
|
|
| |
| |
| |
| |
| |
| | |
| 11,663 |
|
| (10,605 |
) |
| (3,260 |
) |
| (3,649 |
) |
| 11,985 |
|
|
| |
| |
| |
| |
| |
| | |
Tax Payments | | |
| (9,500 |
) |
| (19,659 |
) |
| (5,754 |
) |
| (4,111 |
) |
| (27,755 |
) |
|
| |
| |
| |
| |
| |
Net cash generated by | | |
(used in) operating activities | | |
| 56,664 |
|
| 17,429 |
|
| 16,226 |
|
| 14,825 |
|
| 91,857 |
|
|
| |
| |
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
F - 5
HADERA PAPER LTD
CONDENSED INTERIM
CONSOLIDATED CASH FLOWS STATEMENTS
(NIS in thousands)
|
Six months ended
June 30,
|
Three months ended
June 30,
|
Year ended
December 31,
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows - investing activities |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Acquisition of property plant and equipment | | |
| (128,188 |
) |
| (42,111 |
) |
| (70,203 |
) |
| (30,940 |
) |
| (83,363 |
) |
Proceeds from disposal of Property | | |
plant and equipment | | |
| 184 |
|
| 30,811 |
|
| 39 |
|
| 294 |
|
| 31,415 |
|
Investment in designated deposits, net | | |
| (73,026 |
) |
| - |
|
| 40,288 |
|
| - |
|
| - |
|
Interest received | | |
| 2,424 |
|
| 516 |
|
| 2,219 |
|
| 503 |
|
| 1,716 |
|
Prepaid leasing expenses | | |
| (1,397 |
) |
| - |
|
| (228 |
) |
| - |
|
| (2,596 |
) |
Associated companies: | | |
Granting of loans | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (318 |
) |
Collection of loans | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 2,893 |
|
Proceeds from sale of investment of | | |
associated companies | | |
| - |
|
| 27,277 |
|
| - |
|
| - |
|
| 27,277 |
|
|
| |
| |
| |
| |
| |
Net cash used in investing activities | | |
| (200,003 |
) |
| 16,493 |
|
| (27,885 |
) |
| (30,143 |
) |
| (22,976 |
) |
|
| |
| |
| |
| |
| |
| | |
Cash flows - financing activities | | |
Proceeds gain from private share allocating | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 211,645 |
|
Short-term bank credit | | |
| (36,739 |
) |
| 22,199 |
|
| 23,303 |
|
| 22,965 |
|
| (59,988 |
) |
Borrowings received from banks | | |
| 35,000 |
|
| - |
|
| - |
|
| - |
|
| - |
|
Repayment of borrowings from banks | | |
| (4,916 |
) |
| (2,586 |
) |
| (3,586 |
) |
| (1,298 |
) |
| (5,212 |
) |
Deferred issuance expenses | | |
| (247 |
) |
| - |
|
| (247 |
) |
| - |
|
| - |
|
Interest Paid | | |
| (4,759 |
) |
| (7,008 |
) |
| (2,582 |
) |
| (4,162 |
) |
| (24,994 |
) |
Redemption of notes | | |
| (7,192 |
) |
| (4,528 |
) |
| (7,192 |
) |
| (4,528 |
) |
| (37,167 |
) |
|
| |
| |
| |
| |
| |
Net cash generated by | | |
(used in) financing activities | | |
| (18,853 |
) |
| 8,077 |
|
| 9,696 |
|
| 12,977 |
|
| 84,284 |
|
|
| |
| |
| |
| |
| |
Increase in cash and cash equivalents | | |
| (162,192 |
) |
| 41,999 |
|
| (1,963 |
) |
| (2,341 |
) |
| 153,165 |
|
Cash and cash equivalents - beginning of period | | |
| 167,745 |
|
| 13,621 |
|
| 7,330 |
|
| 58,022 |
|
| 13,621 |
|
Net foreign exchange difference | | |
| - |
|
| 1,806 |
|
| 186 |
|
| 1,745 |
|
| 959 |
|
|
| |
| |
| |
| |
| |
Cash and cash equivalents - end of period | | |
| 5,553 |
|
| 57,426 |
|
| 5,553 |
|
| 57,426 |
|
| 167,745 |
|
|
| |
| |
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
F - 6
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 1 |
|
DESCRIPTION OF BUSINESS AND GENERAL |
|
A. |
Description
Of Business |
|
Hadera
Paper Limited (former American Israeli Paper Mills Limited) and its subsidiaries
(hereafter the Company) are engaged in the production and sale of paper packaging,
in paper recycling activities and in the marketing of office supplies. The Company also
has holdings in associated companies that are engaged in the productions and sale of
paper and paper products including the handling of solid waste (the Company and its
investee companies hereafter the Group). Most of the Groups sales are
made on the local (Israeli) market. For segment information, see note 8. |
|
|
|
|
|
The Company |
- |
Hadera Paper Limited. |
|
|
|
The Group |
- |
the Company and its Subsidiaries. |
|
|
|
Subsidiaries |
- |
companies in which the Company control, (as defined by IAS 27) directly or indirectly, and whose financial statements are fully consolidated with those of the Company. |
|
|
|
Affiliated Companies |
- |
companies in which the Group has significant influence, and the Group investments in them, directly or indirectly are included in the financial statements using the equity method. |
|
|
|
Related Parties |
- |
as defined by IAS 24. |
|
|
|
Interested Parties |
- |
as defined in the Israeli Securities Regulations (Presentation of Financial Statements), 1993. |
|
|
|
Controlling Shareholder |
- |
as defined in the Israeli Securities law and Regulations 1968. |
|
|
|
NIS |
- |
New Israeli Shekel. |
|
|
|
CPI |
- |
the Israeli consumer price index. |
|
|
|
Dollar |
- |
the U.S. dollar. |
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
A. |
Applying
International Accounting Standards (IFRS) |
|
The
condensed interim financial statements have been prepared using accounting policies
consistent with International Financial Reporting Standards and in accordance with
International Accounting Standard (IAS) 34 Interim Financial Reporting.
The principal accounting policies described in the following notes were applied in
accordance to the IFRS, in a manner consistent with previous reporting periods presented
in these condensed interim financial statements and in accordance to the opening balance
sheet. |
F - 7
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
A. |
Applying
International Accounting Standards (IFRS) (Cont.) |
|
(1) |
Basis
of preparation (Cont.) |
|
The
unaudited condensed interim consolidated financial statements as of March 31, 2008 and
for the three months then ended (interim financial statements) of the Company
and subsidiaries should be read in conjunction with the audited consolidated financial
statements of the Company and subsidiaries as of December 31, 2007 and for the year then
ended, including the notes thereto including the note regarding the adoption of IFRS. |
|
(2) |
First
term IFRS standards adoption |
|
According
to standard No. 29 Adoption of International Financial Reporting Standards IFRS
(standard No. 29), the Company applies International Financial Reporting
Standards and interpretations of the committee of the International Accounting Standard
Board (IASB) Starting January 1, 2008. |
|
In
compliance with the abovementioned, the condensed interim financial statements, as of
March 31, 2008 and for the three months then ended, including all previous reporting
periods have been prepared under accounting policies consistent with International
Financial Reporting Standards and interpretations published by the International
Accounting Standard Board (IASB) and in accordance with International Accounting Standard
(IAS) 34 Interim Financial Reporting. |
|
In
these condensed interim financial statements the Company applied IFRS 1 First
time Adoption of International Financial Reporting Standards (IFRS No. 1),
which determines instructions for first time implementation of IFRS. |
|
According
to IFRS No. 1 the effective date for implementing IFRS standards is commencing January 1,
2007. |
|
The
Company has applied in a retroactive manner the IFRS standards for all reporting periods
presented in the condensed interim financial statements. The Company implemented the IFRS
standards which have been published as of the preparation date of the condensed interim
Financial Statements and expected to be affective as of December 31, 2008. |
|
In
implementing the transitional rules as above, the Group elected to apply the following
concessions permitted by IFRS 1: |
|
The
rules of IFRS 2, which deals with share based payments, were not retroactively applied
with regard to capital instruments which had been granted prior to November 7, 2002 and
vested before the transition date. |
|
2. |
Translation
differences |
|
The
company elected to desist from retroactively applying the rules of IAS 21 for translation
differences accumulated as of January 1, 2007 with respect to foreign operations. As a
result, accumulated translation differences have not been included in the Opening Balance
Sheet. |
F - 8
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
A. |
Applying
International Accounting Standards (IFRS) (Cont.) |
|
(2) |
First
term IFRS standards adoption (cont.) |
|
3. |
Deemed
cost for items of fixed assets |
|
IFRS
1 permits the measurement of items of fixed assets as of the transition date to the IFRS,
or at an earlier date, on the basis of a revaluation executed according to previously
applied generally accepted accounting principles, as deemed cost as of the date of the
revaluation, if, in general, the revaluation was comparable to cost or undepreciated cost
according to the IFRS, adjusted for changes such as changes in the index of prices. |
|
Through
December 31, 2007, the company adjusted its financial statements to changes in the rate
of exchange of the dollar, in accordance with the rules of Accounting Opinion 36 of the
Institute of Certified Public Accountants. For purposes of the transition to reporting
pursuant to the IFRS, the company chose to apply the concession in IFRS 1 as above and to
measure the items of its fixed assets acquired or constructed through December 31, 2003
at deemed cost as of that date, based on their amounts, as adjusted to changes in the
rate of exchange of the dollar up to that date. |
|
Prior
to the adoption of the IFRS, the Group prepared its financial statements according to
accounting principles generally accepted in Israel. The latest annual financial
statements of the company according to accounting principles generally accepted in Israel
were prepared as of December 31, 2007 and for the year ended on that date. Comparative
figures for that period were restated in these financial statements pursuant to the IFRS. |
|
See
Note 10 with respect to the material differences between reporting pursuant to the IFRS
and reporting according to Israeli generally accepted accounting principles, as they are
relevant to the Group. |
|
B. |
The
condensed Financial Statements were prepared in accordance with section D of
the Israeli Securities Regulations (Periodic and Immediate Reports), 1970. |
|
Until
December 31, 2003, Israel was considered a country in which hyper-inflation conditions
exist. Therefore, non-monetary balances in the balance sheet were presented on the
historical nominal amount and were adjusted to changes in the exchange rate of the U.S.
dollar. As of December 31, 2003 when the economy ceases to be hyper-inflationary and the
Company no longer adjusted its financial statements to the U.S. dollar, the adjusted
amounts as of this date were used as the historical costs. The financial statements were
edited on the basis of the historical cost, except for: |
|
|
Derivative
financial instruments measured by fair value. |
|
|
Inventories
are stated at the lower of cost and net realizable value. |
|
|
Property,
plant and equipment and intangibles assets are presented at the lower of the cost less
accumulated amortizations and the recoverable amount. |
|
|
Liabilities
to employees as described in note 2S below. |
F - 9
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
The
individual financial statements of each Group entity are presented in the currency of the
primary economic environment in which the entity operates (its functional currency). For
the purpose of the consolidated financial statements, the results and financial position
of each entity are expressed in the New Israeli Shekel (NIS), which is the
functional currency of the Company and the presentation currency for the consolidated
financial statements, see note 2U (3) as follows with regard to the exchange rate and the
changes in them during the reported period. |
|
In
preparing the financial statements of the individual entities, transactions in currencies
other than the entitys functional currency (foreign currencies) are recorded at the
rates of exchange prevailing at the dates of the transactions. At each balance sheet
date, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing at the date
when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated. |
|
Exchange
differences are recognised in profit or loss in the period which they were created,
except for exchange differences on transactions entered into in order to hedge certain
foreign currency risks. Hedge accounting details are set out in Note 2M below. |
|
For
the purpose of presenting consolidated financial statements, the assets and liabilities
of the Groups foreign operations of affiliated company (mainly because of its
investment in a subsidiary company that presents its financial statements in
foreign currency) are expressed in NIS using exchange rates prevailing at the balance
sheet date. Income and expense items are translated at the average exchange rates for the
period, unless exchange rates fluctuated significantly during that period, in which case
the exchange rates at the dates of the transactions are used. |
|
Goodwill
and fair value adjustments arising on the acquisition of a foreign operation are treated
as assets and liabilities of the foreign operation and translated at the closing rate. |
|
E. |
Basis
of consolidation |
|
The
consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company (its subsidiaries). Control is achieved where the
Company has the power to govern the financial and operating policies of an entity so as
to obtain benefits from its activities. |
|
The
results of subsidiaries acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition or up to the
effective date of disposal, as appropriate. |
|
Where
necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by other members of the Group. |
|
All
intra-group transactions, balances, income and expenses are eliminated in full on
consolidation. |
|
For
the effect of the issuance of IAS 27 (revised) Consolidated and Separate Financial
Statements see note 2V below. |
F - 10
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
F. |
Investments
in associated companies |
|
An
associated company is an entity over which the Group has significant influence and that
is neither a subsidiary nor an interest in joint venture. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but
is not control or joint control over those policies. |
|
The
financial statements of the consolidated companies adopted to the accounting policies of
the group. |
|
The
results and assets and liabilities of associates are incorporated in these financial
statements using the equity method of accounting. Under the equity method, investments in
associates are carried in the consolidated balance sheet at cost as adjusted for
post-acquisition change in the Groups share of the net assets of the associate,
less any impairment in the value of individual investments. Losses of an associate in
excess of the Groups interest in that associate (which includes any long-term
interest that, in substance, form part of the Groups net investment in the
associate) are recognized only to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate. With regard to the
groups examination for impairment in the investment in affiliated companies in
accordance to IAS 36 see note 2I below. |
|
Where
a group entity transacts with an associate of the Group material, profits and losses are
eliminated to the extent of the Groups interest in the relevant associate. |
|
G. |
Property,
plant and equipment |
|
Property,
plant and equipments are tangible items, which are held for use in the manufacture or
supply of goods or services, or leased to others, which are predicted to be used for more
than one period. The Company presents its property, plant and equipments items according
to the cost model. |
|
Under
the cost method a property, plant and equipment are presented at the balance sheet
at cost (net of any investment grants), less any accumulated depreciation and any
accumulated impairment losses. The cost includes the cost of the assets acquisition
as well as costs that can be directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the manner intended by
management. |
|
Spare
parts which are not used on a current basis are designated for use in the context of
specific items of fixed assets, where necessary. The reason for holding them is to
prevent delays in the manufacturing process and to avoid a shortage in spare parts in the
future. The spare parts that are not used on a current basis have not been installed on
items of fixed assets and are, therefore, not available for use in their present state.
In the light of this, spare parts that are not being used currently are presented with
fixed assets and are depreciated beginning from the date that they are installed on the
items of fixed assets for which they were purchased. |
|
Depreciation
is calculated using the straight-line method at rates considered adequate to depreciate
the assets over their estimated useful lives. The depreciation starts once the asset is
ready for use and takes into consideration of the anticipated scrap value at the end of
the assets useful lives. |
F - 11
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
G. |
Property,
plant and equipment (Cont.) |
|
The annual depreciation and amortization rates are: |
% |
|
|
|
|
Buildings |
10-50 |
|
Machinery and equipment |
7-20 |
|
Motor vehicles |
5-7 |
|
Office furniture and equipment |
3-17 |
|
Scrap
value, depreciation method and the assets useful lives are being reviewed by management
in the end of every financial year. Changes are handled as a change of estimation and are
applied from here on. |
|
The
gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognized in income statement. |
|
Borrowing
costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are assed to the costs of those assets, until such time
as the assets are substantially ready for their intended use or sale. |
|
Investment
income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalization. The rest of the borrowing costs are recognized in profit or loss. |
|
For
the effect of the issuance of IAS 23 (revised) Borrowing costs see Note 2V
below. |
|
I. |
Impairment
of tangible assets |
|
At
each balance sheet date, the Group reviews the carrying amounts of its tangible assets to
determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss, if any. Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate assets are
also allocated to individual cash-generating units, or otherwise they are allocated to
the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified. |
F - 12
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
I. |
Impairment
of tangible assets (cont.) |
|
Recoverable
amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted. |
|
If
the recoverable amount of an asset (or cash-generating unit) is estimated to be less than
its carrying amount, the carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is recognised immediately in profit
or loss. |
|
Where
an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. |
|
Inventories
are assets held for sale in the ordinary course of business, in the process of production
for such sale or in the form of materials or supplies to be consumed in the production
process or in the rendering of services. |
|
Inventories
are stated at the lower of cost and net realizable value. Cost of inventories includes
all the cost of purchase, direct labor, fixed and variable production over heads and
other cost that are incurred, in bringing the inventories to their present location and
condition. |
|
Net
realizable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale. |
|
Inventories
that purchased on differed settlement terms, which contains a financing element, are
stated in purchase price for normal credit terms. The difference between the purchase
price for normal credit terms and the amount paid is recognized as interest expense over
the period of the financing. |
|
|
|
|
Cost determined as follows: |
|
|
|
|
Raw, auxiliary materials and others |
Based on weighted-average basis. |
|
|
|
Finished products |
Based on overhead absorption costing. |
|
|
|
Products |
Based on weighted-average basis. |
|
The
spare parts that are in continuous use, are not associated with the specific fixed
assets. Some of these spare parts are even sold to the Groups affiliated companies,
as needed, and are part of the inventory. Based on the experience accumulated by the
Company, these spare parts are held for no longer than 12 months. In light of the above,
the spare parts that are in continuous use are presented in inventory clause, and
recognized in the profit and loss report when used. |
F - 13
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
Investments
are recognized and derecognized on trade date where the purchase or sale of an investment
is under a contract whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at fair value, plus
transaction costs, except for those financial assets classified as at fair value through
profit or loss, which are initially measured at fair value. |
|
Financial
assets are classified into loans and receivables and to financial assets through profit
and loss. The classification of this category arises from the reason of the financial
assets holding and it is determined at its initial recognition. |
|
(2) |
Loans
and receivables |
|
Trade
receivables, loans, and other receivables that have fixed or determinable payments that
are not quoted in an active market are classified as loans and receivables. Loans and
receivables are measured at amortized cost using the effective interest method, less any
impairment. Interest income is recognized by applying the effective interest rate, except
for short-term receivables when the recognition of interest would be immaterial. |
|
(3) |
Financial
assets at FVTPL |
|
Financial
assets are classified as at FVTPL where the financial asset is either held for trading or
it is designated as at FVTPL. |
|
A
financial asset is classified as held for trading if: |
|
|
it
has been acquired principally for the purpose of selling in the near future; or |
|
|
it
is a part of an identified portfolio of financial instruments that the Group manages
together and has a recent actual pattern of short-term profit-taking; or |
|
|
it
is a derivative that is not designated and effective as a hedging instrument. |
|
Financial
assets at FVTPL are stated at fair value, with any resultant gain or loss recognized in
profit or loss. The net gain or loss recognized in profit or loss incorporates any
dividend or interest earned on the financial asset. |
|
(4) |
Impairment
of financial assets |
|
Financial
assets, are assessed for indicators of impairment at each balance sheet date. Financial
assets are impaired where there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been impacted. |
|
Objective
evidence of impairment could include: |
|
|
significant
financial difficulty of the issuer or counterparty; or |
|
|
default
or delinquency in interest or principal payments; or |
|
|
it
becoming probable that the borrower will enter bankruptcy or financial re-organization. |
F - 14
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
K. |
Financial
assets (Cont.) |
|
(4) |
Impairment
of financial assets (Cont.) |
|
For
certain financial assets, such as customers as to which no indications of value
impairment have been identified, the company evaluates value impairment on a specific
basis, in reliance on past experience and changes in the level of delinquency in
payments, as well as economic changes related to the sector and the economic environment
in which it operates. |
|
The
carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. |
|
When
a trade receivable is considered uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognized
in profit or loss. |
|
L. |
Financial
liabilities and equity instruments issued by the Group |
|
(1) |
Classification
as debt or equity |
|
Debt
and equity instruments are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement. |
|
An
equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the Group are
recorded at the proceeds received, net of direct issue costs. |
|
Financial
liabilities are classified as either financial liabilities at FVTPL or Other
financial liabilities for the published IAS 32 (amended), financial instruments:
present an IAS-1: presentation of financial statements see note 2V as follows. |
|
(2) |
Options
to sell sales of an investee |
|
The
company has an obligation that is derived from an option that it gave for the sale of
shares of an investee, which provide the holder thereof with the right to sell its
holdings in the investee in consideration of a variable amount of cash. |
|
The
value of the option was computed according to the economic value of the option and is
presented with non current liabilities, and classified as a liability at fair value
through operations. |
|
Any
gain or loss that results from changes in the fair value of the option is recognized in
operations. |
|
See
Note 10 E (4) below for further details on the conditions of the option. |
F - 15
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
L. |
Financial
liabilities and equity instruments issued by the Group (Cont.) |
|
(3) |
Other
financial liabilities |
|
Other
financial liabilities (capital note issued to an investee), are initially measured at
fair value, net of transaction costs. Other financial liabilities are subsequently
measured at amortized cost using the effective interest method.
The effective interest
method is a method of calculating the amortized cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments through the expected life of
the financial liability, or, where appropriate, a shorter period.
For the treatment at
CPI-linked other financial liabilities see note 2L(4) below. |
|
(4) |
CPI-linked
liabilities |
|
The
Company has liabilities that are linked to the Consumer Price Index (hereinafter the
CPI), which are not measured at fair value under the statement of income. The Company
determines the effective interest rate in respect of these liabilities as a real rate
with the addition of linkage differences in line with actual changes in the CPI until the
balance sheet date. This is also the approach used under generally accepted accounting
principles in Israel. |
|
The
vast majority of loans and long-term and medium-term financing arrangements in Israel are
linked to the CPI. Therefore, the Israeli Institute for Accounting Standards has
submitted a request to the International Financial Reporting Interpretation Committee
(IFRIC) to clarify the applicable method in the measurement of the effective interest
rate of such assets and liabilities under IFRS. |
|
The
Committees response in this matter and the implications thereof cannot be reliably
predicted. If the Committees response indicates that the method used in Israel and
which was implemented in these financial statements is not appropriate in accordance with
IFRS, the Company will have to change the method of measurement of these assets and
liabilities and it may have to do so by way of restating its financial statements. Under
the present circumstances, the Company is unable to reliably measure the potential impact
on its financial statements in such a case. |
F - 16
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
M. |
Derivative
financial instruments |
|
The
Group enters into a variety of derivative financial instruments to manage its exposure to
foreign exchange rate risk, including foreign exchange forward contracts on exchange
rate, options on exchange rate and contracts on the CPI due to notes. |
|
Derivatives
are initially recognized at fair value at the date a derivative contract is entered into
and are subsequently remeasured to their fair value at each balance sheet date. The
resulting gain or loss is recognized in profit or loss immediately unless the derivative
is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship. The Group
designates certain derivatives as hedges of highly probable forecast transactions or
hedges of foreign currency risk of firm commitments (cash flow hedges). |
|
A
derivative is presented as a non-current asset or a non-current liability if the
remaining maturity of the instrument is more than 12 months and it is not expected to be
realised or settled within 12 months. Other derivatives are presented as current assets
or current liabilities. |
|
The
Group designates certain hedging instruments, which include derivatives, and
non-derivatives in respect of foreign currency risk, as cash flow hedges. |
|
At
the inception of the hedge relationship, the entity documents the relationship between
the hedging instrument and the hedged item, along with its risk management objectives and
its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Group documents whether the hedging instrument
that is used in a hedging relationship is highly effective in offsetting changes in fair
values or cash flows of the hedged item. |
|
The
company implements a cash flow hedge accounting in respect of future transaction for the
acquisition of foreign currency and option transactions that are intended to secure
payments for the acquisition of fixed assets linked to foreign currency. |
|
The
effective portion of changes in the fair value of derivatives that are designated and
qualify as cash flow hedges are deferred in capital fund. Since the hedge is for expected
acquisition of fixed assets, the company chose to add the capital fund to the initial
cost of the hedges item immediately. The gain or loss relating to the ineffective portion
is recognised immediately in profit or loss, and is included in the finance income or
finance expenses lines of the income statement. Amounts deferred in equity
are recycled in profit or loss in the periods when the hedged item is recognised in
profit or loss, in the same line of the income statement as the recognised hedged item.
However, when the forecast transaction that is hedged results in the recognition of a
non-financial asset or a non-financial liability, the gains and losses previously
deferred in equity are transferred from equity and included in the initial measurement of
the cost of the asset or liability. |
F - 17
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
M. |
Derivative
financial instruments (Cont.) |
|
(2) |
Hedge
accounting (Cont.) |
|
Hedge
accounting is discontinued when the Group revokes the hedging relationship, the hedging
instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. Any cumulative gain or loss deferred in fixed assets at that time remains in
fixed assets and is recognised when the forecast transaction is ultimately recognised in
profit or loss. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was deferred in equity is recognised immediately in profit
or loss. |
|
Revenue
is measured at the fair value of the consideration received or receivable. Revenue is
reduced for estimated customer returns, rebates and other similar allowances. |
|
Revenue
from the sale of goods is recognised when all the following conditions are satisfied: |
|
|
The
Group has transferred to the buyer the significant risks and rewards of ownership of the
goods; |
|
|
The
Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold |
|
|
The
amount of revenue can be measured reliably; |
|
|
It
is probable that the economic benefits associated with the transaction will flow to the
entity; and |
|
|
The
costs incurred or to be incurred in respect of the transaction can be measured reliably. |
|
Interest
revenue is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that assets
net carrying amount. |
|
Revenue
is recognized when the Groups right to receive the payment is established. |
|
(4) |
Reporting
of revenues on a gross basis or a net basis |
|
The
Companys revenues as an agency or intermediary from providing electricity, water,
steam, and logistical services to the Group without bearing the risks and returns that
derive from the transaction, are presented on a net basis. |
F - 18
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
Leases
are classified as finance leases whenever the term of the lease transfer substantially
all the risks and rewands of ownership to the lessee. All other leases are classified as
operating leases. |
|
Leases
of land from the Israel Lands Administration |
|
Leases
of land from the Israel Lands Administration are classified as operating leases. The
deferred lease payments that were made on the date of the start of the lease are
presented in the balance sheet with long term receivables, and are amortized
on the straight line basis over the balance of the lease period, including the extension
option. |
|
The
company has land lease rights from the Municipality of Tel Aviv which comply with the
definition of investment real estate, and, pursuant to IAS 40, have been classified as
operating leases and not as investment real estate. |
|
Provisions
are recognized when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation. The
amount recognized as a provision is the best estimate of the consideration required to
settle the present obligation at the balance sheet date, taking into account the risks
and uncertainties surrounding the obligation. |
|
Where
a provision is measured using the cash flows estimated to settle the present obligation,
its carrying amount is the present value of those cash flows. |
|
When
some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognized as an asset if it is virtually
certain that reimbursement will be received and the amount of the receivable can be
measured reliably. |
|
Q. |
Share
Based payments |
|
In
accordance with IFRS 2 and IFRIC 11, equity-settled share based payments to employees and
others providing similar services are measured at the fair value of the equity
instruments at the grant date. The Company determines the fair value of equity-settled
share-based transaction according to the Black-Scholes model. Details regarding the
determination of the fair value of share-based transactions are set out in note 6. |
|
The
fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Groups
estimate of equity instruments that will eventually vest. At each balance sheet date, the
Group revises its estimate of the number of equity instruments expected to vest. The
impact of the revision of the original estimates, if any, is recognized in profit or loss
over the remaining vesting period, with a corresponding adjustment to the equity-settled
employee benefits reserve. |
F - 19
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
Q. |
Share
Based payments (Cont.) |
|
For
the effect of the issuance of amendment to IFRS 2 Share Based Payment- Vesting and
Revocation Conditions, see note 2V below. |
|
Income
tax expense represents the sum of the tax currently payable and change in deferred tax
excluding deferred tax as result of transaction that was attribute directly to the equity. |
|
The
tax currently payable is based on taxable profit for the year. Taxable profit differs
from profit as reported in the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Groups liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the balance sheet date. |
|
Deferred
tax is recognised on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences, and
deferred tax assets are generally recognised for all deductible temporary differences to
the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit. |
|
The
carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered. |
|
Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively enacted by the balance sheet date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities. |
F - 20
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis. |
|
(1) |
Benefits
after termination of employment |
|
Company
benefits after the termination of employment include mainly benefits to pensioners (Most
of the employees of the company fall under Section 14 of the Severance Pay Law).
Actuarial gains and losses recognized when incurred are recorded to the statement of
income and expenses. Past service cost is recognized immediately in the companys
statements of operations up to the extent that the benefit has vested. Unvested past
service cost is amortized over the average vesting period under the date of vesting. |
|
(2) |
Other
long term employee benefits |
|
Other
long term employee benefits are benefits which it is anticipated will be utilized or
which are to be paid during a period that exceeds 12 months from the end of the period in
which the service that creates entitlement to the benefit was provided.
Other employee
benefits of the company include liabilities for vacation pay. These liabilities are
recorded to operations in accordance with the projected unit credit method, through the
use of actuarial estimates which are performed at each balance sheet date. The present
value of the companys obligation for vacation pay was determined by means of the
capitalization of anticipated future cash flows from the program at market yields of
government bonds, denominated in the currency in which the benefits for vacation will be
paid and having redemption dates nearly identical to the forecasted payment dates of the
vacation pay. |
|
Gains
and losses are recorded to the statement of operations at the time that they are created.
Past service cost is immediately recognized in the financial statements of the company. |
|
(3) |
Short
term employee benefits |
|
Short
term employee benefits are benefits which it is anticipated will be utilized or which are
to be paid during a period that does not exceed 12 months from the end of the period in
which the service that creates entitlement to the benefit was provided. |
F - 21
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
S. |
Retirement
benefit costs (cont.) |
|
(3) |
Short
term employee benefits (Cont.) |
|
Short
term company benefits include the companys liability for short term absences,
payment of grants, bonuses and compensation. These benefits are recorded to the statement
of operations when created. The benefits are measured on a non capitalized basis. The
difference between the amount of the short term benefits to which the employee is
entitled and the amount paid is therefore recognized as an asset or liability. |
|
The
computation of basic net income per share is generally based on earnings available for
distribution to holders of ordinary shares, divided by the weighted average number of
ordinary shares outstanding during the period. |
|
In
computing diluted net incomeper share, the weighted average number of shares to be
issued, assuming that all dilutive potential shares are converted into shares, is to be
added to the average number of ordinary shares used in the computation of the basic
income (loss) per share. Potential shares are taken into account, as above, only when
their effect is dilutive (reducing net income per share from continuing activities). |
|
U. |
Exchange
Rates and Linkage Basis |
|
(1) |
Foreign
currency balance, or balances linked to foreign currency are included in
the financial statements according to the exchange rate announced by the
Bank of Israel on the balance sheet date. |
|
(2) |
Balances
linked to the CPI are presented according to index of the last month of
the report period (the index of the month of the financial reports). |
|
(3) |
Following
are the changes in the representative exchange rates of the Euro and the
U.S. dollar vis-a-vis the NIS and in the Israeli Consumer Price Index (CPI): |
|
As of:
|
Representative exchange rate of the Euro (NIS per 1)
|
Representative exchange rate of the dollar (NIS per $1)
|
CPI
"in respect of"
(in points)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008 |
|
|
| 5.285 |
|
| 3.352 |
|
| 195.62 |
|
|
June 30, 2007 | | |
| 5.713 |
|
| 4.249 |
|
| 186.67 |
|
|
December 31, 2007 | | |
| 5.659 |
|
| 3.846 |
|
| 191.15 |
|
|
Increase (decrease) during the:
|
%
|
%
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2008 |
|
|
| (5.9 |
) |
| (5.6 |
) |
| 2.2 |
|
|
Three months ended June 30, 2007 | | |
| 3.2 |
|
| 2.3 |
|
| 1.2 |
|
|
Six months ended June 30, 2008 | | |
| (6.6 |
) |
| (12.8 |
) |
| 2.3 |
|
|
Six months ended June 30, 2007 | | |
| 2.7 |
|
| 0.6 |
|
| 1.0 |
|
|
Year ended December 31, 2007 | | |
| 1.7 |
|
| (9.0 |
) |
| 3.4 |
|
F - 22
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
V. |
Adoption
of new and revised Standards and interpretations |
|
Standards,
Amended Standards and Clarifications that have been Published but not yet Become Effective,
and have not been Adopted by the Company in Early Adoption |
|
IAS
1 (Amended) Presentation of Financial Statements |
|
The
standard stipulates the presentation required in the financial statements, and itemizes a
general framework for the structure of the financial statements and the minimal contents
which must be included in the context of the report. Changes have been made to the
existing presentation format of the financial statements, and the presentation and
disclosure requirements for the financial statements have been broadened, including the
presentation of an additional report in the framework of the financial statements known
as the report of comprehensive income, and the addition of a balance sheet as
of the beginning of the earliest period that was presented in the financial statements,
in cases of changes in accounting policy by means of retroactive implementation, in cases
of restatement and in cases of reclassifications. |
|
The
standard will be effective for reporting periods beginning from January 1, 2009. The
standard permits earlier application.
At this stage, the management of the Group is
unable to assess the effect of the standard on the financial statements. |
|
IAS
23 (Amended) Borrowing Costs |
|
The
standard stipulates the accounting treatment of borrowing costs. In the context of the
amendment to this standard, the possibility of immediately recognizing borrowing costs
related to assets with an uncommon period of eligibility or construction in the statement
of operations was cancelled. The standard will apply to borrowing costs that relate to
eligible assets as to which the capitalization period began from January 1, 2009. The
standard permits earlier implementation. |
|
At
this stage, the management of the Group is unable to assess the effect of the standard on
its financial condition and operating results. |
|
IFRS
8, Operating Segments |
|
The
standard, which replaces IAS 14, details how an entity must report on data according to
segments in the annual financial statements. The standard, among other things, stipulates
that segmental reporting of the company will be based on the information that management
of the company uses for purposes of evaluating performance of the segments, and for
purposes of allocating resources to the various operating segments. The standard will
apply to annual reporting periods commencing on January 1, 2009, with restatement of
comparative figures for prior reporting periods. The standard permits earlier adoption.
At this stage, the management of the Group estimated that the implementation of the
standard is not expected to have any influence on the financial statements of the Group. |
F - 23
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
V. |
Adoption
of new and revised Standards and interpretations (cont.) |
|
Standards,
Amended Standards and Clarifications that have been Published but not yet Become Effective,
and have not been Adopted by the Company in Early Adoption (cont.) |
|
IAS
27 (Amended) Consolidated and Separate Financial Statements |
|
The
standard prescribes the rules for the accounting treatment of consolidated and separate
financial statements. Among other things, the standard stipulates that transactions with
minority shareholders, in the context of which the company holds control of the
subsidiary before and after the transaction, will be treated as capital transactions. In
the context of transactions, subsequent to which the company loses control in the
subsidiary, the remaining investment is to be measured as of the date that control is
lost, at fair value, with the difference as compared to book value to be recorded to the
statement of operations. The minority interest in the losses of a subsidiary, which
exceed its share in shareholders equity, will be allocated to it in every case,
while ignoring its obligations and ability to make additional investments in the
subsidiary. |
|
The
provisions of the standard apply to annual financial reporting periods which start on
January 1, 2010 and thereafter. Earlier adoption is permitted, on the condition that it
will be done simultaneous with early adoption of IFRS 3 (amended). The standard will be
implemented retrospectively, excluding a number of exceptions, as to which the provisions
of the standard will be implemented prospectively. At this stage, the management of the
Group estimated that the implementation of the standard is not expected to have any
influence on the financial statements of the Group. |
|
IFRS
3 (Amended) Business Combinations |
|
The
new standard stipulates the rules for the accounting treatment of business combinations.
Among other things, the standard determines measurement rules for contingent
consideration in business combinations which is to be measured as a derivative financial
instrument. The transaction costs directly connected with the business combination will
be recorded to the statement of operations when incurred. Minority interests will be
measured at the time of the business combination to the extent of their share in the fair
value of the assets, including goodwill, liabilities and contingent liabilities of the
acquired entity, or to the extent of their share in the fair value of the net assets, as
aforementioned, but excluding their share in goodwill. |
|
As
for business combinations where control is achieved after a number of acquisitions
(acquisition in stages), the earlier purchases of the acquired company will be measured
at the time that control is achieved at their fair value, while recording the difference
to the statement of operations. |
|
The
standard will apply to business combinations that take place from January 1, 2010 and
thereafter. Earlier adoption is possible, on the condition that it will be simultaneous
with early adoption of IAS 27 (amended). |
|
At
this stage, the management of the Group is unable to assess the effect of the standard on
its financial condition and operating results. |
F - 24
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
V. |
Adoption
of new and revised Standards and interpretations (cont.) |
|
Standards,
Amended Standards and Clarifications that have been Published but not yet Become Effective,
and have not been Adopted by the Company in Early Adoption (cont.) |
|
IFRIC
13, Customer Loyalty Programs |
|
The
clarification stipulates that transactions for the sale of goods and services, for which
the company confers reward grants to its customers, will be treated as multiple component
transactions and the payment received from the customer will be allocated between the
different components, based upon the fair value of the reward grants. The consideration
attributed to the grant will be recognized as revenue when the reward grants are redeemed
and the company has made a commitment to provide the grants. |
|
The
directives of the clarification apply to annual reporting periods commencing on January
1, 2009. Earlier implementation is permissible.
At this stage, the management of
the Group is unable to assess the effect of the standard on its financial condition and
operating results. |
|
Amendment
to IFRS 2, Share Based Payment- Vesting and Revocation Conditions |
|
The
amendment to the standard stipulates the conditions under which the measurement of fair
value must be considered on the date of the grant of a share based payment and explains
the accounting treatment of instruments without terms of vesting and revocation. The
provisions of the standard apply to annual financial reporting periods which start on
January 1, 2009 and thereafter. Earlier adoption is permitted. |
|
At
this stage, the management of the Group is unable to assess the effect of the standard on
its financial condition and operating results. |
|
Amendment
to IAS 32, Financial Instruments: Presentation, and IAS 1, Presentation of Financial
Statements |
|
The
amendment to IAS 32 changes the definition of a financial liability, financial asset and
capital instrument and determines that certain financial instruments, which are
exercisable by their holder, will be classified as capital instruments. |
|
The
provisions of the standard apply to annual financial reporting periods which start on
January 1, 2009 and thereafter. Earlier adoption is permitted.
At this stage, the
management of the Group is unable to assess the effect of the standard on its financial
condition and operating results. |
F - 25
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
V. |
Adoption
of new and revised Standards and interpretations (cont.) |
|
Standards,
Amended Standards and Clarifications that have been Published but not yet Become Effective,
and have not been Adopted by the Company in Early Adoption (cont.) |
|
Improvement
to International Financial Reporting Standards (IFRS) 2008 |
|
In
May 2008 the IASB published a series of improvements for IFRS: |
|
Improvements
include amendments to some of the standards, which change the manner of presentation,
recognition and measurement of different items in the financial statements. In addition,
amendments have been made to terms that have a negligible impact, if any, on the
financial statements. |
|
Most
of the amendments will become effective as of the annual reporting period commencing
January 1, 2009 or thereafter, with an option for early adoption. The implementation of
most amendments will be carried out by retrospective adjustment of comparative figures.
Some of the amendments to the standards are expected, under relevant circumstances, to
have a material impact on the financial statements. The prominent amendments are the new
or amended requirements with respect to the following: |
|
|
Amendment
to IAS 28 Investments in Associated Companies, which stipulates that the
impairment of investment in an associated company shall be treated as an impairment of a
single asset and that the amount of impairment can be cancelled in subsequent periods.
The amendment will apply to annual periods commencing on January 1, 2009. This amendment
allows for the early implementation while implementing the amendments relating to Section
4 in IAS 32 Financial Instruments: Presentation, Section 1 in IAS 21 Rights
in Joint Transactions and Section 3 in IFRS 7 Financial Instruments:
Disclosure. The amendments can be applied retrospectively. |
|
At
this stage the Groups management cannot assess the effect of implementation of the
amendment on its financial statements. |
|
|
Amendment
IAS 38 Intangible Assets, which stipulates that payments in respect of
advertising and sales promotion activities will be recognized as an asset until the date
in which the entity has the right to access the acquired goods or in the event of a
receipt of services, the date of receipt of the services. |
|
The
amendment will apply to annual periods commencing on January 1, 2009 and shall be carried
out retroactively. The amendment allow for early adoption.
The Groups management
estimates that the effect of implementing the amendment on the Groups financial
statements is immaterial. |
F - 26
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 2 |
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|
V. |
Adoption
of new and revised Standards and interpretations (cont.) |
|
Standards,
Amended Standards and Clarifications that have been Published but not yet Become Effective,
and have not been Adopted by the Company in Early Adoption (cont.) |
|
Improvement
to International Financial Reporting Standards (IFRS) 2008 (Cont.) |
|
|
IFRIC
15 "Agreements for the Construction of Real Estate" |
|
The
interpretation establishes the accounting treatment of revenues and related expenses of
entities that build real estate independently or through subcontractors, and the
provision of goods or services that are included under agreements for the construction of
real estate.
The interpretation deals with the question: is an agreement for the
construction of real estate covered by IAS 11 construction contracts or by
IAS 18 revenue. Revenues from agreements, which, in accordance with the
provisions of the interpretation, are covered by IAS 11, shall be recognized in
accordance with the percentage of completion method of accounting. Revenues from
agreements which, in accordance with the provisions of the interpretation, constitute
agreements for the sale of goods will be recognized on the date of transfer of the risks
and benefits to the buyer, while revenues from agreements for the rendering of services
will be recognized by reference to the stage of completion of the transaction at the
balance sheet date. |
|
The
provisions of the interpretation apply to annual reporting periods commencing on January
1, 2009. An early adoption is permitted.
The Groups management estimates that the
implementation of the interpretation will not have any impact on the financial statements
of the Group. |
|
|
IFRIC
16 "Hedges of a Net Investment in a Foreign Operation" |
|
This
interpretation establishes the nature of the hedged risk and the amount of the hedged
item under the hedges of a net investment in a foreign operation. In addition, the
interpretation stipulates that the hedging instrument may be held by any entity within
the group, and the amount to be reclassified from equity to profit or loess when the
entity disposes of the foreign operation, for which the accounting method of hedges of a
net investment in a foreign operation has been implemented. |
|
The
provisions of the interpretation apply to annual reporting periods commencing on January
1, 2009. An early adoption is permitted.
The Groups management estimates that the
implementation of the interpretation will not have any impact on the financial statements
of the Group. |
|
|
Amendment
of IFRS 1 First-time adoption of International Financial Reporting Standards and
IAS 27 Consolidated and Separate Financial Statements |
|
This
amendment stipulates, inter alia, the method of measurement of investments in
subsidiaries, companies under joint control and associated companies on the date of the
first-time adoption of IFRS and the method of recognition of revenue from dividends
received from said companies. The provisions of the amendment apply to the separate
financial statements of the entity. |
|
The
provisions of the amendment apply to annual reporting periods commencing on January 1,
2009. An early adoption is permitted.
At this stage the Groups management cannot
assess the effect of implementation of the amendment on its financial position and
operating results. |
F - 27
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 3 |
|
CRITICAL
ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
|
In
the application of the Groups accounting policies, which are described in Note 2,
management is required to make judgments, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these estimates. |
|
The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future periods if
the revision affects both current and future periods. |
|
B. |
Critical
judgments in applying accounting policies |
|
The
following are the critical judgments, apart from those involving estimations (see below),
that the management have made in the process of applying the entitys accounting
policies and that have the most significant effect on the amounts recognized in financial
statements: |
|
|
Deferred
taxes the company recognizes deferred tax assets for all of the deductible temporary
differences up to the amount as to which it is anticipated that there will be taxable
income against which the temporary difference will be deductible. During each period, for
purposes of calculation of the utilizable temporary difference, management uses estimates
and approximations as a basis which it evaluates each period. |
|
|
Approximation
of length of life of items of fixed assets- each period, the companys management
evaluates salvage values, depreciation methods and length of useful lives of the fixed
assets. |
|
|
Measuring
provisions and contingent liabilities and contingent liabilities see C(1) below. |
|
|
Measuring
obligation for defined benefits and employee benefits see C(2) below. |
|
|
Measuring
share based payments see Note 6 below. |
|
|
Measuring
the fair value of financial instruments see C(3) below. |
|
|
Measuring
the fair value of an option to sell shares of an associated company see C (4)
below. |
|
C. |
Key
sources of estimation uncertainty. |
|
1. |
Provisions
for legal proceeding |
|
Against
the company and its subsidiaries there are 4 claims pending and open in a total amount of
approximately NIS 5,524 thousands (June 30, 2007: NIS 15,124 thousands, December 31,
2007: NIS 23,154 thousands), in respect of them a provision not required (March 31, 2007:
NIS 300 thousands, December 31, 2007: NIS 300 thousands was recorded). For purposes of
evaluating the legal relevance of these claims, as well as determining the reasonableness
that they will be realized to its detriment, the companys management relies on the
opinion of legal and professional advisors. After the companys advisors expound
their legal position and the probabilities of the company as regards the subject of the
claim, whether the company will have to bear its consequences or whether it is will be
able to rebuff it, the company approximates the amount which it must record in the
financial statements, if at all. |
F - 28
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 3 |
|
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Cont.) |
|
C. |
Key
sources of estimation uncertainty (Cont.) |
|
An
interpretation that differs from that of the legal advisors of the company as to the
existing legal situation, a varying understanding by the companys management of the
contractual agreements as well as changes derived from relevant legal rulings or the
addition of new facts may influence the value of the overall provision with respect to
the legal proceedings that are pending against the company and, thus affect the companys
financial condition and operating results. |
|
The
present value of the companys obligation for the payment of benefits to pensioners
and severance pay to employees that are not covered under Section 14 to the Severance Pay
Law is based upon a great amount of data, which are determined on the basis of an
actuarial estimation, through the utilization of a large number of assumptions, including
the capitalization rate. Changes in the actuarial assumptions could affect the book value
of the obligation of the company for employees benefits. The company approximates
the capitalization rate once annually, on the basis of the capitalization rate of
government bonds. Other key assumptions are determined on the basis of conditions present
in the market, and on the basis of the cumulative past experience of the company. |
|
3. |
Fair
value of financial instruments |
|
The
companys management exercised discretion in the selection of proper valuation
techniques for financial instruments, which do not have a quoted market price in an
active market. The valuation techniques used by the companys management are those
implemented by market participants. The fair value of other financial instruments is
established based on he discounted cash flows expected to flow from them, based on
assumptions supported by anticipated market prices and rates. The estimated fair value of
financial instruments not listed for trading in an active market includes several
assumptions that are not supported by anticipated market prices and rates. The book value
of the financial instruments that are estimated through valuation techniques as of June
30, 2008 amounts to NIS 872 thousand and as of December 31, 2007 amounts to NIS 4,416
thousand. |
|
4. |
Fair
value of an option to sell shares of an associated company |
|
As
stated in note 2L (2), the company has a liability that arises from an option to sell
shares of an associated company, which is classified as a fair value liability through
profit or loss. In establishing the fair value of the option, the company bases its
decision on the valuation of an independent external expert with the required expertise
and experience. This valuation is carried out once a quarter. |
|
The
company strives to establish a fair value that is as objective as possible, but at the
same time the process of establishing the fair value includes some objective elements,
since changes in the assumptions used in determining the fair value can have a material
impact on the financial situation and operating results of the company. |
F - 29
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 4 |
|
SEGNIFICANT
TRANSACTIONS AND EVENTS |
|
|
During
the first quarter of the year, the company signed material agreements with various
suppliers in connection with the construction of a new production system for packaging
paper (Machine 8). |
|
|
On
January 14, 2008, the Board of Directors of the company decided to approve the issuance
of options to executive employees, see Note 6 below. |
|
|
On
May 20, 2008 an affiliated company, Hogla-Kimberly Ltd received from the Israeli tax
authority compensation in the amount of about NIS 4,500 thousands. The compensation is
due to loss of earnings during a security situation that occurred in July 2006 in
northern Israel and caused the affiliated company to partially stop its manufacturing
activity in its Naharia plant. The affiliated company will record a pre tax income for
the second quarter of 2008. The Companys share in the compensation mention above is
approximately NIS 2,250 thousands. |
|
Acquisition
of items of fixed assets |
|
During
the period of six months and three months ended June 30, 2008 the company became
committed in agreements to purchase fixed assets at a cost of approximately NIS 128,188
thousands and NIS 70,203 thousands, respectively. |
|
During
the period of six months and three months ended June 30, 2007 the company became
committed in agreements to purchase fixed assets at a cost of approximately NIS 42,111
thousands and NIS 30,940 thousands, respectively. |
|
Most
of the acquisitions of the fixed assets during the first half of the year in sum of NIS
107,200 thousand were made for Machine 8- a machine for the new packaging paper system.
The total fixed assets acquired for suppliers credit amounted to NIS 3,443
thousands as of June 30, 2008. |
|
During
June 2008, the Company agreed with the tax authorities for payment of a betterment levy
in the amount of NIS 3,782 thousands in respect of change of land use, which is designed
for the construction of a new production line for the manufacture of packaging papers.
This cost was added to the land cost of machine 8 project. |
NOTE 6 |
|
SHARE
BASED PAYMENT |
|
In
January 2008, the Board of Directors of the Company approved a program for the allotment,
for no consideration, of non marketable options to the CEO of the company, to employees
and officers of the company and investees. In the context of the program, an allotment of
285,750 options was approved, of which 40,250 options were to the CEO of the company,
135,500 to management of the subsidiaries and 74,750 to management of the affiliates. |
|
On
May 11, 2008, the board of directors of the company approved the allotment to a
trustee of the balance of the options that had not been allotted through that date, in
the amount of 32,250 options as a pool for the future grant to officers and employees of
investees, subject to the approval of the board of directors. |
F - 30
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 6 |
|
SHARE
BASED PAYMENT (Cont.) |
|
Each
option is exercisable into one ordinary share of the company with NIS 0.01 par value
against the payment of an exercise increment in the amount of NIS 223.965. The options
will vest in installments as follows: 25% of the total options will be exercisable from
January 14, 2009; 25% of the total options will be exercisable from January 14, 2010; 25%
of the total options will be exercisable from January 14, 2011; and 25% of the total
options will be exercisable from January 14, 2012. The vested options are exercisable
through January 14, 2012, 2013, 2014 for the first and second, third and fourth portions,
respectively. |
|
The
cost of the benefit embedded in the allotted options as above, on the basis of the fair
value as of the date they are granted, was approximated to be the amount of approximately
NIS 13.5 million. This amount will be charged to the statement of operations over the
vesting period. The debt for the grant to officers of the affiliates will be paid in cash. |
|
The
fair value of the options granted as aforementioned was estimated by applying the Black
and Scholes model. In this context, the effect of the terms of vesting will not taken
into account by the company, other than the market condition of fair value of the capital
instruments granted. |
|
The
parameters which were used for implementation of the model are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price (NIS) |
217.10-245.20 |
|
Exercise price (NIS) |
223.965 |
|
Anticipated volatility (*) |
27.04% |
|
Length of life of the options (years) |
3-5 |
|
Non risk interest rate |
5.25% |
|
(*)
The anticipated volatility is determined on the basis of historical
fluctuations of the share price of the company. The average length of life of
the option was determined in accordance with managements forecast as to
the holding period by the employees of options granted to them, in
consideration of their functions in the company and past experience of the
company with employees leaving. |
NOTE 7 |
|
INCOME
TAX CHARGE |
|
On
February 26, 2008, the Knesset ratified the third reading of the Income Tax Law (Inflation
Adjustments) (Amendment 20) (Limitation of Term of Validity) 2008
(hereinafter: The Amendment), pursuant to which the application of the
inflationary adjustment law will terminate in tax year 2007 and as of tax year 2008, the
law will no longer apply, other than transition regulations whose intention it is to
prevent distortions in tax calculations. |
|
According
to the amendment, in tax year 2008 and thereafter, the adjustment of revenues for tax
purposes will no longer be considered a real-term basis for measurement. Moreover, the
linkage to the CPI of the depreciated sums of fixed assets and carryover losses for tax
purposes will be discontinued, in a manner whereby these sums will be adjusted until the
CPI at the end of 2007 and their linkage to the CPI will end as of that date. |
F - 31
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 8 |
|
SEGMENT
INFORMATION |
|
|
Six months
|
|
|
(Unaudited)
|
|
|
Paper and recycling
|
Marketing of office supplies
|
Total
|
|
|
Jan-Jun
|
Jan-Jun
|
Jan-Jun
|
Jan-Jun
|
Jan-Jun
|
Jan-Jun
|
|
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
| 216,470 |
|
| 221,356 |
|
| 59,316 |
|
| 56,467 |
|
| 275,786 |
|
| 277,823 |
|
|
|
| |
| |
| |
| |
| |
| |
|
Segment results | | |
| 28,717 |
|
| 31,591 |
|
| 1,364 |
|
| (1,088 |
) |
| 30,081 |
|
| 30,410 |
|
|
|
| |
| |
| |
| |
| |
| |
|
|
Three months
|
|
|
(Unaudited)
|
|
|
Paper and recycling
|
Marketing of office supplies
|
Total
|
|
|
Apr-Jun
|
Apr-Jun
|
Apr-Jun
|
Apr-Jun
|
Apr-Jun
|
Apr-Jun
|
|
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
| 107,123 |
|
| 114,141 |
|
| 26,144 |
|
| 27,044 |
|
| 133,267 |
|
| 141,185 |
|
|
|
| |
| |
| |
| |
| |
| |
|
Segment results | | |
| 11,851 |
|
| 14,515 |
|
| 769 |
|
| (620 |
) |
| 12,620 |
|
| 13,895 |
|
|
|
| |
| |
| |
| |
| |
| |
|
|
Year ended December 31, 2007
|
|
|
Paper and recycling
|
Marketing of office supplies
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
| 464,653 |
|
| 118,997 |
|
| 583,650 |
|
|
|
| |
| |
| |
|
Segment results | | |
| 69,594 |
|
| 464 |
|
| 70,058 |
|
|
|
| |
| |
| |
F - 32
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 9 |
|
CHANGES
IN EQUITY |
|
Share capital
|
Capital reserves
|
Share based payments reserves
|
Capital reserves resulting from tax benefit on exercise of employee options
|
Hedging reserves
|
Foreign currency translation reserves
|
Retained earnings
|
Total
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
June 30, 2008 (unaudited) | | |
| | |
Balance - January 1, 2008 | | |
| 125,267 |
|
| 301,695 |
|
| - |
|
| 3,397 |
|
| (635 |
) |
| 3,810 |
|
| 236,437 |
|
| 669,971 |
|
Exchange differences arising on | | |
translation of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (17,945 |
) |
| - |
|
| (17,945 |
) |
Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (3,096 |
) |
| - |
|
| - |
|
| (3,096 |
) |
Actuarial profits and losses recorded in | | |
retained earnings | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (150 |
) |
| (150 |
) |
Share based payment | | |
| - |
|
| - |
|
| 2,461 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 2,461 |
|
Profit for the period | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 39,302 |
|
| 39,302 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
Balance - June 30, 2008 | | |
| 125,267 |
|
| 301,695 |
|
| 2,461 |
|
| 3,397 |
|
| (3,731 |
) |
| (14,135 |
) |
| 275,589 |
|
| 690,543 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
F - 33
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 9 |
|
CHANGES
IN EQUITY (Cont.) |
|
Share capital
|
Capital reserves
|
Capital reserves resulting from tax benefit on exercise of employee options
|
Hedging reserves
|
Foreign currency translation reserves
|
Retained earnings
|
Total
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
June 30, 2007 (unaudited) | | |
| | |
Balance - January 1, 2007 | | |
| 125,257 |
|
| 90,060 |
|
| 2,414 |
|
| - |
|
| - |
|
| 204,902 |
|
| 422,633 |
|
Exchange differences arising on | | |
translation of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 4,362 |
|
| - |
|
| 4,362 |
|
Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| 273 |
|
| - |
|
| - |
|
| 273 |
|
Exercise of employee option into shares | | |
| - |
|
| - |
|
| 960 |
|
| - |
|
| - |
|
| - |
|
| 960 |
|
Profit for the period | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 6,342 |
|
| 6,342 |
|
|
| |
| |
| |
| |
| |
| |
| |
Balance - June 30, 2007 | | |
| 125,257 |
|
| 90,060 |
|
| 3,374 |
|
| 273 |
|
| 4,362 |
|
| 211,244 |
|
| 434,570 |
|
|
| |
| |
| |
| |
| |
| |
| |
F - 34
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 9 |
|
CHANGES
IN EQUITY |
|
Share capital
|
Capital
reserves
|
Share based
payments
reserves
|
Capital reserves
resulting from
tax benefit on
exercise of
employee options
|
Hedging
reserves
|
Foreign
currency
translation
reserves
|
Retained
earnings
|
Total
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
June 30, 2008 (unaudited) | | |
| | |
Balance - April 1, 2008 | | |
| 125,267 |
|
| 301,695 |
|
| 723 |
|
| 3,397 |
|
| (547 |
) |
| (16,198 |
) |
| 257,707 |
|
| 672,044 |
|
Exchange differences arising on | | |
translation of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 2,063 |
|
| - |
|
| 2,063 |
|
Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (3,184 |
) |
| - |
|
| - |
|
| (3,184 |
) |
Actuarial profits and losses recorded in | | |
retained earnings | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (150 |
) |
| (150 |
) |
Share based payment | | |
| - |
|
| - |
|
| 1,738 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 1,738 |
|
Profit for the period | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 18,032 |
|
| 18,032 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
Balance - June 30, 2008 | | |
| 125,267 |
|
| 301,695 |
|
| 2,461 |
|
| 3,397 |
|
| (3,731 |
) |
| (14,135 |
) |
| 275,589 |
|
| 690,543 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
F - 35
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 9 |
|
CHANGES
IN EQUITY |
|
Share capital
|
Capital
reserves
|
Capital reserves
resulting from tax
benefit on
exercise of
employee options
|
Hedging
reserves
|
Foreign
currency
translation
reserves
|
Retained
earnings
|
Total
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
June 30, 2007 (unaudited) | | |
| | |
Balance - April 1, 2007 | | |
| 125,257 |
|
| 90,060 |
|
| 2,673 |
|
| (63 |
) |
| (598 |
) |
| 201,025 |
|
| 418,354 |
|
Exchange differences arising on | | |
translation of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 4,960 |
|
| - |
|
| 4,960 |
|
Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| 336 |
|
| - |
|
| - |
|
| 336 |
|
Exercise of employee option into shares | | |
| - |
|
| - |
|
| 701 |
|
| - |
|
| - |
|
| - |
|
| 701 |
|
Profit for the period | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 10,219 |
|
| 10,219 |
|
|
| |
| |
| |
| |
| |
| |
| |
Balance - June 30, 2007 | | |
| 125,257 |
|
| 90,060 |
|
| 3,374 |
|
| 273 |
|
| 4,362 |
|
| 211,244 |
|
| 434,570 |
|
|
| |
| |
| |
| |
| |
| |
| |
F - 36
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 9 |
|
CHANGES
IN EQUITY (Cont.) |
|
Share capital
|
Capital reserves
|
Foreign currency translation reserves
|
Capital reserves resulting from tax benefit on exercise of employee options
|
Hedging reserves
|
Retained earnings
|
Total
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | |
Balance - January 1, 2007 | | |
| 125,257 |
|
| 90,060 |
|
| - |
|
| 2,414 |
|
| - |
|
| 204,902 |
|
| 422,633 |
|
Issuance of shares (deduction of cost issuance in the | | |
amount of NIS 1,581 thousands) | | |
| 10 |
|
| 211,635 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 211,645 |
|
Exchange differences arising on translation of | | |
foreign operations | | |
| - |
|
| - |
|
| 3,810 |
|
| - |
|
| - |
|
| - |
|
| 3,810 |
|
Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (635 |
) |
| - |
|
| (635 |
) |
Exercise of employee options into shares | | |
| - |
|
| - |
|
| - |
|
| 983 |
|
| - |
|
| - |
|
| 985 |
|
Profit for the year | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 31,535 |
|
| 31,535 |
|
|
| |
| |
| |
| |
| |
| |
| |
Balance - December 31, 2007 | | |
| 125,267 |
|
| 301,695 |
|
| 3,810 |
|
| 3,397 |
|
| (635 |
) |
| 236,437 |
|
| 669,971 |
|
|
| |
| |
| |
| |
| |
| |
| |
F - 37
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS |
|
Following
the publication of Accounting Standard No. 29, the Adoption of International
Financial Reporting Standards (IFRS) in July 2006, the Company adopted IFRS
starting January 1, 2008. |
|
Pursuant
to the provisions of IFRS1, which deals with the first-time adoption of IFRS, and
considering the date in which the Company elected to adopt these standards for the first
time, the financial statements which the Company must draw up in accordance with IFRS
rules, are the consolidated financial statement as of December 31, 2008, and for the year
ended on that date. The date of transition of the Company to reporting under IFRS, as it
is defined in IFRS 1, is January 1, 2007 (hereinafter: the transition date),
with an opening balance sheet as of January 1, 2007 (hereinafter: Opening Balance).
The Companys interim financial statements for 2008 will also be drawn up in
accordance with IFRS, and shall include comparative figures for the year. |
|
Under
the opening balance sheet, the Company performed the following reconciliations: |
|
|
Recognition
of all assets and liabilities whose recognition is required by IFRS. |
|
|
De-recognition
of assets and liabilities if IFRS do not permit such recognition. |
|
|
Classification
of assets, liabilities and components of equity according to IFRS. |
|
|
Application
of IFRS in the measurement of all recognized assets and liabilities. |
|
IFRS
1 states that all IFRS shall be adopted retroactively for the opening balance sheet. At
the same time, IFRS 1 includes 14 reliefs, in respect of which the mandatory retroactive
implementation does not apply. As to the reliefs implemented by the Company, see section
F below. |
|
Changes
in the accounting policy which the Company implemented retroactively in the opening
balance sheet under IFRS, compared to the accounting policy in accordance with Generally
Accepted Accounting Principles in Israel, were recognized directly under Retained
Earnings or another item of Shareholders Equity, as the case may be. |
|
This
note is formulated on the basis of International Financial Reporting Standards and the
notes thereto as they stand today, that have been published and shall enter into force or
that may be adopted earlier as at the Groups first annual reporting date according
to IFRS, December 31, 2008. Pursuant to the above, the Companys management has made
assumptions regarding the anticipated financial reporting regulations that are expected
to be implemented when the first annual financial statements are prepared according to
IFRS, for the year ended December 31, 2008. |
|
The
IFRS standards that will be in force or that may be adopted in the financial
statements for the year ended December 31, 2008 are subject to changes and the
publication of additional clarifications. Consequently, the financial reporting
standards that shall be applied to the represented periods will be determined finally
only upon preparation of the first financial statements according to IFRS, as at December
31, 2008. |
|
Listed
below are the Companys consolidated balance sheets as of January 1, 2007, March 31,
2007 and December 31, 2007, the consolidated statement of income and the shareholders equity
for the year ended on December 31, 2007 and the three months ended March 31, 2007
prepared in accordance with International Accounting Standards. In addition, the table
presents the material reconciliations required for the transition from reporting under
Israeli GAAP to reporting under IFRS. |
F - 38
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS: |
|
|
June 30, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
| |
|
| |
|
| |
|
Cash and cash equivalents | | |
| | |
| 57,426 |
|
| - |
|
| 57,426 |
|
Trade receivables | | |
| | |
| 187,739 |
|
| (222 |
) |
| 187,517 |
|
Other current assets | | |
E1 | | |
| 105,758 |
|
| (11,243 |
) |
| 94,515 |
|
Inventories | | |
| | |
| 64,682 |
|
| - |
|
| 64,682 |
|
|
|
| |
| |
| |
| | |
| | |
| 415,605 |
|
| (11,465 |
) |
| 404,140 |
|
|
|
| |
| |
| |
Non-Current Assets | | |
Property, plant and equipment | | |
E2 | | |
| 425,944 |
|
| (37,811 |
) |
| 388,133 |
|
Investment in associated companies | | |
E8 | | |
| 343,801 |
|
| 2,410 |
|
| 346,211 |
|
Deferred tax assets | | |
E1 | | |
| 6,490 |
|
| 14,132 |
|
| 20,622 |
|
Lease receivables | | |
E2 | | |
| - |
|
| 32,661 |
|
| 32,661 |
|
Other assets | | |
| | |
| - |
|
| 1,922 |
|
| 1,922 |
|
Employee benefit assets | | |
| | |
| - |
|
| 1,146 |
|
| 1,146 |
|
|
|
| |
| |
| |
| | |
| | |
| 776,235 |
|
| 14,460 |
|
| 790,695 |
|
|
|
| |
| |
| |
| | |
| | |
| 1,191,840 |
|
| 2,995 |
|
| 1,194,835 |
|
|
|
| |
| |
| |
Current Liabilities | | |
Credit from banks and others | | |
| | |
| 225,202 |
|
| - |
|
| 225,202 |
|
Current maturities to long term notes and term loans | | |
| | |
| 41,770 |
|
| - |
|
| 41,770 |
|
Trade payables | | |
| | |
| 107,515 |
|
| - |
|
| 107,515 |
|
Other payables and accrued expenses | | |
E4, E3 | | |
| 89,323 |
|
| (23,681 |
) |
| 65,642 |
|
Financial liabilities at fair value through | | |
Profit and loss | | |
E4 | | |
| - |
|
| 1,791 |
|
| 1,791 |
|
Current tax liabilities | | |
| | |
| - |
|
| 10,039 |
|
| 10,039 |
|
|
|
| |
| |
| |
| | |
| | |
| 463,810 |
|
| (11,851 |
) |
| 451,959 |
|
|
|
| |
| |
| |
Non-Current Liabilities | | |
Loans from banks and others | | |
| | |
| 30,840 |
|
| - |
|
| 30,840 |
|
Notes | | |
| | |
| 183,758 |
|
| - |
|
| 183,758 |
|
Other non-current liabilities | | |
| | |
| 32,770 |
|
| (780 |
) |
| 31,990 |
|
Deferred tax liabilities | | |
E1 | | |
| 41,164 |
|
| - |
|
| 41,164 |
|
Employee benefit liabilities | | |
E3 | | |
| - |
|
| 20,554 |
|
| 20,554 |
|
|
|
| |
| |
| |
| | |
| | |
| 288,532 |
|
| 19,774 |
|
| 308,306 |
|
|
|
| |
| |
| |
| | |
Capital and reserves | | |
| | |
| 439,498 |
|
| (4,928 |
) |
| 434,570 |
|
|
|
| |
| |
| |
| | |
| | |
| 1,191,840 |
|
| 2,995 |
|
| 1,194,835 |
|
|
|
| |
| |
| |
F - 39
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS (Cont.) |
|
|
December 31, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
| |
|
| |
|
| |
|
Cash and cash equivalents | | |
| | |
| 167,745 |
|
| - |
|
| 167,745 |
|
Trade receivables | | |
| | |
| 178,771 |
|
| (218 |
) |
| 178,553 |
|
Other current assets | | |
E1 | | |
| 105,109 |
|
| (10,694 |
) |
| 94,415 |
|
Inventories | | |
| | |
| 69,607 |
|
| - |
|
| 69,607 |
|
|
|
| |
| |
| |
| | |
| | |
| 521,232 |
|
| (10,912 |
) |
| 510,320 |
|
|
|
| |
| |
| |
Non-Current Assets | | |
Property, plant and equipment | | |
E2 | | |
| 445,566 |
|
| (40,335 |
) |
| *405,231 |
|
Investment in associated companies | | |
E8 | | |
| 346,186 |
|
| 217 |
|
| 346,403 |
|
Deferred tax assets | | |
E1 | | |
| 6,083 |
|
| 14,539 |
|
| 20,622 |
|
Lease receivables | | |
E2 | | |
| - |
|
| 34,900 |
|
| *34,900 |
|
Other assets | | |
| | |
| - |
|
| 1,578 |
|
| 1,578 |
|
Employee benefit assets | | |
| | |
| - |
|
| 1,179 |
|
| 1,179 |
|
|
|
| |
| |
| |
| | |
| | |
| 797,835 |
|
| 12,078 |
|
| 809,913 |
|
|
|
| |
| |
| |
| | |
| | |
| 1,319,067 |
|
| 1,166 |
|
| 1,320,233 |
|
|
|
| |
| |
| |
Current Liabilities | | |
Credit from banks and others | | |
| | |
| 143,015 |
|
| - |
|
| 143,015 |
|
Current maturities to long term notes and term loans | | |
| | |
| 42,775 |
|
| - |
|
| 42,775 |
|
Trade payables | | |
| | |
| 108,409 |
|
| - |
|
| 108,409 |
|
Other payables and accrued expenses | | |
E4, E3 | | |
| 87,235 |
|
| (14,005 |
) |
| 73,230 |
|
Financial liabilities at fair value through | | |
Profit and loss | | |
| | |
| - |
|
| 3,901 |
|
| 3,901 |
|
Current tax liabilities | | |
E4 | | |
| - |
|
| 908 |
|
| 908 |
|
|
|
| |
| |
| |
| | |
| | |
| 381,434 |
|
| (9,196 |
) |
| 372,238 |
|
|
|
| |
| |
| |
Non-Current Liabilities | | |
Loans from banks and others | | |
| | |
| 28,127 |
|
| - |
|
| 28,127 |
|
Notes | | |
| | |
| 158,134 |
|
| - |
|
| 158,134 |
|
Other non-current liabilities | | |
| | |
| 32,770 |
|
| (1,560 |
) |
| 31,210 |
|
Deferred tax liabilities | | |
E1 | | |
| 40,515 |
|
| - |
|
| 40,515 |
|
Employee benefit liabilities | | |
E3 | | |
| - |
|
| 20,038 |
|
| 20,038 |
|
|
|
| |
| |
| |
| | |
| | |
| 259,546 |
|
| 18,478 |
|
| 278,024 |
|
|
|
| |
| |
| |
| | |
Capital and reserves | | |
| | |
| 678,087 |
|
| (8,116 |
) |
| 669,971 |
|
|
|
| |
| |
| |
| | |
| | |
| 1,319,067 |
|
| 1,166 |
|
| 1,320,233 |
|
|
|
| |
| |
| |
* Amount
of NIS 5,609 thousands was reclassified from fixed assets to lease receivables.
F - 40
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
C. |
Reconciliation
of Income Statements from Israeli GAAP to IFRS |
|
Six months ended
|
Three months ended
|
Year ended
|
|
June 30, 2007
|
June 30, 2007
|
December 31, 2007
|
|
Note
|
Israeli
GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
Israeli
GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
Israeli
GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
|
NIS in thousands
|
NIS in thousands
|
NIS in thousands
|
|
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
| 277,823 |
|
| - |
|
| 277,823 |
|
| 141,185 |
|
| - |
|
| 141,185 |
|
| 583,650 |
|
| - |
|
| 583,650 |
|
Cost of sales | | |
| | |
| 214,171 |
|
| (22 |
) |
| 214,149 |
|
| 110,105 |
|
| (423 |
) |
| 109,682 |
|
| 440,854 |
|
| 527 |
|
| 441,381 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Gross profit | | |
| | |
| 63,652 |
|
| 22 |
|
| 63,674 |
|
| 31,080 |
|
| 423 |
|
| 31,503 |
|
| 142,796 |
|
| (527 |
) |
| 142,269 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Operating costs and expenses | | |
Selling expenses | | |
| | |
| 14,853 |
|
| - |
|
| 14,853 |
|
| 7,157 |
|
| - |
|
| 7,157 |
|
| 31,367 |
|
| - |
|
| 31,367 |
|
General and administrative expenses | | |
| | |
| 18,222 |
|
| 10 |
|
| 18,232 |
|
| 10,214 |
|
| (89 |
) |
| 10,125 |
|
| 36,060 |
|
| 317 |
|
| 36,377 |
|
Other expenses, net | | |
E6 | | |
| - |
|
| 179 |
|
| 179 |
|
| - |
|
| 326 |
|
| 326 |
|
| 2,178 |
|
| 2,289 |
|
| 4,467 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Operating profit | | |
| | |
| 30,577 |
|
| (167 |
) |
| 30,410 |
|
| 13,709 |
|
| 186 |
|
| 13,895 |
|
| 73,191 |
|
| (3,133 |
) |
| 70,058 |
|
| | |
Finance income | | |
E5 | | |
| 5,984 |
|
| (1,492 |
) |
| 4,492 |
|
| 4,709 |
|
| (1,492 |
) |
| 3,217 |
|
| 10,648 |
|
| - |
|
| 10,648 |
|
Finance expenses | | |
E5 | | |
| 16,411 |
|
| (174 |
) |
| 16,237 |
|
| 8,942 |
|
| (564 |
) |
| 8,378 |
|
| 30,206 |
|
| 1,560 |
|
| 31,766 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Finance expenses, net | | |
| | |
| 10,427 |
|
| 1,318 |
|
| 11,745 |
|
| 4,233 |
|
| 928 |
|
| 5,161 |
|
| 19,558 |
|
| 1,560 |
|
| 21,118 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Profit after financial expenses | | |
| | |
| 20,150 |
|
| (1,485 |
) |
| 18,665 |
|
| 9,476 |
|
| (742 |
) |
| 8,734 |
|
| 53,633 |
|
| (4,693 |
) |
| 48,940 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Share of profit (loss) of | | |
associated companies-net | | |
E8 | | |
| (9,487 |
) |
| 4,371 |
|
| (5,116 |
) |
| 1,311 |
|
| 4,068 |
|
| 5,379 |
|
| (2,884 |
) |
| 3,740 |
|
| 856 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Profit before tax | | |
| | |
| 10,663 |
|
| 2,886 |
|
| 13,549 |
|
| 10,787 |
|
| 3,326 |
|
| 14,113 |
|
| 50,749 |
|
| (953 |
) |
| 49,796 |
|
Taxes on income | | |
| | |
| 7,602 |
|
| (395 |
) |
| 7,207 |
|
| 4,199 |
|
| (305 |
) |
| 3,894 |
|
| 19,307 |
|
| (1,046 |
) |
| 18,261 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Profit for the period | | |
| | |
| 3,061 |
|
| 3,281 |
|
| 6,342 |
|
| 6,588 |
|
| 3,631 |
|
| 10,219 |
|
| 31,442 |
|
| 93 |
|
| 31,535 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
F - 41
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
D. |
Reconciliation
of Income Statements from Israeli GAAP to IFRS (Cont.) |
|
Six months ended
|
Three months ended
|
Year ended
|
|
June 30, 2007 |
June 30, 2007 |
December 31, 2007
|
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
NIS in thousands
|
NIS in thousands
|
NIS in thousands
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | |
Primary | | |
| 0.76 |
|
| 0.81 |
|
| 1.57 |
|
| 1.63 |
|
| 0.90 |
|
| 2.53 |
|
| 7.61 |
|
| 0.02 |
|
| 7.63 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
Fully diluted | | |
| 0.76 |
|
| 0.81 |
|
| 1.57 |
|
| 1.63 |
|
| 0.89 |
|
| 2.52 |
|
| 7.60 |
|
| 0.02 |
|
| 7.62 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
Number of share used to compute the | | |
primary earnings per share | | |
| 4,039,700 |
|
| 4,039,700 |
|
| 4,039,700 |
|
| 4,044,614 |
|
| 4,044,614 |
|
| 4,044,614 |
|
| 4,132,728 |
|
| 4,132,728 |
|
| 4,132,728 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
Number of shares used to compute the | | |
fully diluted earnings per share | | |
| 4,046,389 |
|
| 4,046,389 |
|
| 4,046,389 |
|
| 4,051,304 |
|
| 4,051,304 |
|
| 4,051,304 |
|
| 4,139,533 |
|
| 4,139,533 |
|
| 4,139,533 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
F - 42
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
D. |
Capital
and Reserves Reconciliation (cont.) |
|
Share Capital
|
Premium on
shares
|
Capital surplus
Share-based payment
(in respect of options
of employee options)
|
Hedging
reserves
|
Capital
surplus from
translation
differences
|
Retained
Earnings
|
Total
|
|
NIS thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
(unaudited) | | |
| | |
Israeli GAAP | | |
| 125,257 |
|
| 90,060 |
|
| 3,374 |
|
| - |
|
| (3,706 |
) |
| 224,513 |
|
| 439,498 |
|
| | |
Effect of Transition to IFRS: | | |
Adjustments of investment in associated companies by the equity method | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 3,970 |
|
| 3,970 |
|
Classification of adjustments deriving from translations | | |
of financial statements of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 8,341 |
|
| (8,341 |
) |
| - |
|
Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| 273 |
|
| (273 |
) |
| - |
|
| - |
|
Amortization of pre-paid expenses in respect of lease of land | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,841 |
) |
| (1,841 |
) |
Employee benefits net of tax effects | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (4,324 |
) |
| (4,324 |
) |
Put option on affiliated Company | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,791 |
) |
| (1,791 |
) |
Financial expenses on capital note from affiliated Company | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (780 |
) |
| (780 |
) |
Effect of classifying a doubtful debt provision as | | |
specific after being classified as general | | |
| - |
|
| - |
|
| - |
|
| |
|
| |
|
| (162 |
) |
| (162 |
) |
|
| |
| |
| |
| |
| |
| |
| |
Under IFRS rules | | |
| 125,257 |
|
| 90,060 |
|
| 3,374 |
|
| 273 |
|
| 4,362 |
|
| 211,244 |
|
| 434,570 |
|
|
| |
| |
| |
| |
| |
| |
| |
F - 43
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
D. |
Capital
and Reserves Reconciliation (cont.) |
|
Share Capital
|
Premium on
shares
|
Capital surplus
Share-based
payment (in
respect of
options to
employees)
|
Hedging
reserves
|
Capital surplus
from translation
differences
|
Retained
Earnings
|
Total
|
|
NIS thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Israeli GAAP | | |
| 125,267 |
|
| 301,695 |
|
| 3,397 |
|
| - |
|
| (5,166 |
) |
| 252,894 |
|
| 678,087 |
|
| | |
Effect of Transition to IFRS: | | |
Adjustments of investment in associated companies by the equity method | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 3,338 |
|
| 3,338 |
|
Classification of adjustments deriving from | | |
translations of financial statements of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 8,341 |
|
| (8,341 |
) |
| - |
|
Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| (635 |
) |
| 635 |
|
| - |
|
| - |
|
Amortization of pre-paid expenses in respect of lease of land | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,508 |
) |
| (1,508 |
) |
Benefits to employees net of tax effects | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (4,326 |
) |
| (4,326 |
) |
Put option on affiliated Company | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (3,901 |
) |
| (3,901 |
) |
Financial expenses on capital note from affiliated Company | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,560 |
) |
| (1,560 |
) |
Effect of classifying a doubtful debt provision as | | |
specific after being classified as general | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (159 |
) |
| (159 |
) |
|
| |
| |
| |
| |
| |
| |
| |
Under IFRS rules | | |
| 125,267 |
|
| 301,695 |
|
| 3,397 |
|
| (635 |
) |
| 3,810 |
|
| 236,437 |
|
| 669,971 |
|
|
| |
| |
| |
| |
| |
| |
| |
F - 44
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
E. |
Additional
information |
|
In
accordance with generally accepted accounting principles in Israel, deferred tax assets
or liabilities were classified as current assets or liabilities depending on the
classification of the assets in respect of which they were created. |
|
Pursuant
to IAS 1, deferred tax assets or liabilities are classified as non-current assets or
liabilities, respectively. |
|
Consequently,
amounts of NIS 7,856 thousands, NIS 9,361 thousands and NIS 9,116 thousands which were
previously presented under accounts receivable were reclassified to deferred taxes under
non-current taxes as of January 1, 2007, June 30, 2007 and December 31, 2007 respectively. |
|
(2) |
Land
leased from the Israel Land Administration |
|
In
accordance with generally accepted accounting principles in Israel, land leased from the
Israel Land Administration, was classified as property, plant and equipment and included
in the amount of the capitalized leasing fees that were paid. The amount paid was not
depreciated. |
|
Pursuant
to IAS 17, Lease, land lease arrangements, whereunder at the end of the
leasing period, the land is not transferred to the lessor, are classified as operating
lease arrangements. As a result, the Companys lands in Hadera and in Naharia which
were leased from the Israel Land Administration, shall be presented in the Companys
balance sheet as lease receivables in respect of lease, and amortized over the remaining
period of the lease. |
|
The
company has lease rights in land from the Tel Aviv Municipality conforming to the
definition of investment real estate, that have been classified as operating leases and
not as investment real estate pursuant to IAS 40. |
|
As
a result, as of January 1, 2007, the balance of prepaid expenses with respect to the
operating lease grew by the amount of approximately NIS 30,023 thousands and the balance
of fixed assets declined by the amount of approximately NIS 34,814 thousands. The change
was recorded in part to retained earnings, the amount of approximately NIS 1,867
thousands, and, in part, against deferred taxes in the amount of approximately NIS 2,923
thousands. |
|
As
of June 30, 2007, the balance of prepaid expenses with respect to the operating lease
grew by the amount of approximately NIS 29,648 thousands and the balance of fixed assets
declined by the amount of approximately NIS 34,756 thousands. The change was recorded in
part to retained earnings, the amount of approximately NIS 1,841 thousands, and, in part,
against deferred taxes in the amount of approximately NIS 3,268 thousands. |
F - 45
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
E. |
Additional
information (cont.) |
|
(2) |
Land
leased from the Israel Land Administration (cont.) |
|
As
of December 31, 2007, the balance of prepaid expenses with respect to the operating lease
grew by the amount of approximately NIS 29,263 thousands and the balance of fixed assets
declined by the amount of approximately NIS 34,701 thousands. The change was recorded in
part to retained earnings, the amount of approximately NIS 1,508 thousands, and, in part,
against deferred taxes in the amount of approximately NIS 3,927 thousands. |
|
The
amortization of the lease fees is reflected in the increase of general and administrative
expenses in the amount of approximately NIS 318 thousands and NIS 160 thousands for the
period of six months and three months ended June 30, 2007, respectively, and in an
increase of approximately 644 NIS thousands for the year ended December 31, 2007 in
addition, tax expenses decreased in the amount of approximately 346 thousands and 338
thousands for the period of six months and of three months ended on June 30, 2007
respectively, and decreased by the amount of approximately NIS 1,004 thousands for the
year ended December 31, 2007. |
|
In
accordance with generally accepted accounting principles in Israel, the Companys
liability for severance pay is calculated based on the recent salary of the employee
multiplied by the number of years of employment. |
|
Pursuant
to IAS 19, the provision for severance pay is calculated according to an actuarial basis
taking into account the anticipated duration of employment, the value of time, the
expected salary increases until retirement and the possible retirement under conditions
not entitling severance pay. |
|
In
addition, under Israeli GAAP, deposits made with regular policies or directorsinsurance
policies which are not in the employees name, but in the name of the employer, were
also deducted from the companys liability. |
|
Under
IFRS, regular policies or directors insurance policies as aforesaid, which do not
meet the definition of plan assets under IAS 19, will be presented in the balance sheet
under a separate item and will not be deducted from the employers liability. |
|
Most
of the Groups employees are covered according to Section 14 of the Compensation
Law. Employee deposits are not reflected in the Companys financial statements and
accordingly, no provision is necessary in the books. |
|
However,
the Company is required to pay employees differences from entitlement to severance pay
and unutilized vacation pay. These liabilities are computed in accordance with the actuarys
assessment based on an estimate of their utilization and redemption. |
F - 46
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
E. |
Additional
information (Cont.) |
|
(3) |
Employee
Benefits (cont.) |
|
In
addition, net liabilities in respect of benefits to employees after retirement, which
relate to defined benefit plans, are measured based on actuarial estimates and discounted
amounts. |
|
According
to the international standards, a policy or executive insurance as above, which does not
conform to the definition of plan assets as per IAS 19, will be presented separately in
the balance sheet and not offset from the liabilities of the employer. |
|
According
to the policy adopted by the Company, actuarial profits are recorded to retained earnings
but, due to lack of materiality, they have been recorded in full to operations. |
|
As
a result, as of January 1, 2007, an increase in the net liabilities for employeesbenefit
plans in the amount of NIS 5,563 thousands was created, and in addition, an increase in
the deferred tax asset was created in the amount of NIS 1,391 thousands. |
|
As
of June 30, 2007, an increase in the net liabilities for employees benefit plans in
the amount of NIS 5,766 thousands was created, and in addition, an increase in the
deferred tax asset was created in the amount of NIS 1,442 thousands |
|
As
of December 31, 2007, an increase in the net liabilities for employees benefit
plans in the amount of NIS 5,762 thousands was created, and in addition, an increase in
the deferred tax asset was created in the amount of NIS 1,436 thousands. |
|
Payroll
expenses grew by the amount of approximately NIS 334 and Nis 667 thousands for the period
of six months and three months ended on June 30, 2007 respectively and increased by the
amount of approximately 199 thousands for the year ended December 31, 2007, in addition,
tax expenses decreased by the amount of approximately NIS 52 thousands and increase by
the amount of a approximately Nis 32 thousands for the period of six months and three
months ended on June 31, 2007 respectively and decreased by the amount of approximately
46 thousands for the year ended December 31, 2007. |
|
Moreover,
assets with regard to employee benefits were classified from other current liabilities to
non current assets. The amount of approximately NIS 1,132 thousands, NIS 1,146 thousands
and NIS 1,179 thousands as of January 1, 2007, June 30, 2007 and December 31, 2007. |
F - 47
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
E. |
Additional
information (Cont.) |
|
(4) |
Put
option for investee |
|
As
part of an agreement dated November 21, 1999 with Mondi Business Paper (hereafter MBP,
formerly Neusiedler AG), Mondi Hadera purchased the operations of the Group in the area
of writing and typing paper and issued 50.1% of its shares to MBP. |
|
As
part of this agreement, MBP was granted an option to sell its holdings in Mondi Hadera to
the company, at a price 20% lower than its value (as defined in the agreement) or $ 20
million less 20%, whichever is higher. According to oral understandings between persons
in the company and persons in MBP, which were formulated in proximity to signing the
agreement, MBP will exercise the option only in extremely extraordinary circumstances,
such as those which obstruct manufacturing activities in Israel over a long period. |
|
In
view of the extended period which has passed since the date of such understandings and
due to changes in the management of MBP, occurring recently, the company has chosen to
take a conservative approach, and, accordingly, to reflect the economic value of the
option in the context of the transition to reporting according to international
standards. Under accounting principles generally accepted in Israel, it was not required
to give a value to the PUT option. According to the international standards, the value of
the option was computed and recognized as a liability, measured according to fair value,
with changes in fair value being recorded to operations in accordance with IAS 39. |
|
As
of January 1, 2007, a liability with respect to the option for sale of the shares of the
investee in the amount of approximately NIS 1,612 thousands was presented. |
|
As
of June 30, 2007, a liability with respect to the option for sale of the shares of the
subsidiary in the amount of approximately NIS 1,791 thousands was presented. |
|
As
of December 31, 2007, a liability with respect to the option for sale of the shares of
the subsidiary in the amount of approximately NIS 3,901 thousands was presented. |
|
Other
expenses declined by the amount of approximately NIS 179 and NIS 326 thousands for the
period of six months and three months ended June 30, 2007, respectively and rose in the
amount of approximately NIS 2,289 thousands for the year ended December 31, 2007. |
|
(5) |
Financial
Income and Expenses |
|
In
accordance with generally accepted accounting principles in Israel, financing income and
expenses are presented under the statement of income in one amount. |
|
Pursuant
to IAS 1, financing income and expenses should be presented separately. |
|
Consequently,
financing expenses in the amounts of NIS 16,237 thousands and NIS 8,378 thousands and
financing income in the amounts of NIS 4,492 thousands and NIS 3,217 thousands were
presented in the income statements for the six months and the three moths ended June 30,
respectively, financing expenses in the amount of NIS 31,766 thousands and financing
income in the amount of NIS 10,648 thousands were presented in the income statements for
the year ended December 31, 2007 |
F - 48
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
E. |
Additional
information (Cont.) |
|
(6) |
Other
Income and Expenses |
|
In
accordance with generally accepted accounting principles in Israel, other income and
expenses are presented in the income statements after the Operating profit. |
|
Pursuant
to IAS 1, other income and expenses should be presented as a part of Gross profit or /
and as a part of Operating costs and expenses. |
|
Consequently,
other expenses in the amounts of NIS 2,178 thousands were classified at the profit from
ordinary operations in the income statements for the year ended December 31, 2007. |
|
In
accordance with generally accepted accounting principles in Israel, current tax assets or
liabilities were classified as other current assets or liabilities. |
|
Pursuant
to IAS 1, current tax assets or liabilities are classified as separate balance in the
balance sheet. |
|
Consequently,
amounts of NIS 19,824 thousands, NIS 10,039 thousands and NIS 908 thousands which were
previously presented under other current assets were reclassified to current tax assets
as of January 1, 2007, June 30, 2007 and December 31, 2007 respectively. |
|
(8) |
Investment
in Associated Companies |
|
In
the course of the second quarter, of 2007 Carmel, an associated company, made a
repurchase of its own shares, held by some of its minority shareholders.As a
result of this repurchase, the Companys holdings in Carmel rose from 26.25% to
reach 36.21%.This increase in the holding rate led to a negative cost surplus of
NIS 4,923 thousands for the Company. According to Standard 20 (amended), this was
allocated to non-monetary items and will be realized in accordance with the realization
rate of these items. |
|
The
Company included a sum of NIS 1,246 in earnings from affiliated companies, for the
periods of six months and of three months ended on June 30, 2007 and a sum of NIS 2,439
thousands in earnings from associated companies for the year ended at December 31, 2007,
as a result of the realization of these items.According to the directives of IAS
28 regarding the equity method of accounting, the balance of the negative cost surplus in
the amount of NIS 4,923 thousands will be allocated to the Companys share in
earnings of associated companies, thereby increasing the Companys earnings for the
periods of six months and of three months ended on June 30, 2007 in amount of NIS 3,677
thousands and for the year ended on December 31, 2007 by a sum of NIS 2,484 thousands.The
Investments in Associated Companies item in the balance sheet will also grow by the said
sum. |
F - 49
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
E. |
Additional
information (Cont.) |
|
(9) |
Provision
for doubtful debts |
|
Under
generally accepted accounting principles in Israel, the provision for doubtful debts is
calculated both by means of a general provision on the basis of approximations and past
experience, ascertained by the company in accordance with the structure and nature of the
customers in the various companies, and also on the basis of a specific provision for
customers where the likelihood of collection was low in reliance on indicators in the
hand of the company and was made in a specific manner. |
|
According
to international standards, the provision for doubtful debts is calculated solely on the
basis of a specific provision. |
|
As
a result, the amount of the provision for doubtful debts increased as of January 1, 2007
by the amount of NIS 218 thousands and deferred taxes decreased by NIS 63 thousands. |
|
The
amount of the provision for doubtful debts increased as of June 30, 2007 by the amount of
NIS 222 thousands and deferred taxes decreased by NIS 60 thousands. |
|
The
amount of the provision for doubtful debts increased as of December 31, 2007 by the
amount of NIS 218 thousands and deferred taxes decreased by NIS 59 thousands. |
|
(10) |
Capital
note issued to an investee |
|
The
companys balance sheet includes a capital note that was issued to an investee. Due
to the fact that no repayment date was set for the capital note, and in view of the fact
that the company is not a controlling interest in the investee, the capital note was
presented under Israeli standards at its nominal value, and financial expenses in respect
of same were not recorded in the statement of operations. |
|
In
accordance with the directives of the international standards, the capital note was
classified as a financial liability under IAS 39. Therefore, the capital note will be
measured at unamortized cost, while using the effective interest method. |
|
In
accordance with understandings reached between the company and the investee, that the
capital note will not be repayable prior to January 1, 2009, the unamortized cost of the
capital note in the financial statements of the company prepared according to the
directives of the international standards will be considered as if it were repayable on
such date. |
F - 50
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 10 |
|
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
|
F. |
Reliefs
with respect to the retroactive implementation of IFRS adopted by the Company |
|
IFRS
1 includes several reliefs, in respect of which the mandatory retroactive implementation
does not apply. The Company elected to adopt in its opening balance sheet under IFRS as
of January 1, 2007 (hereinafter: the opening balance sheet) the reliefs with
regards to: |
|
The
provisions of IFRS 2, which deals with share-based payments, have not been retroactively
implemented with respect to equity instruments granted before November 7, 2002 and which
have vested prior to the transition date. |
|
(2) |
Translation
Differences |
|
The
Company chose not to retroactively implement the provisions of IAS 21 regarding
translation differences accumulated as of January 1, 2007, with respect to overseas
operations. Consequently, the opening balance sheet does not include cumulative
translation differences in respect of overseas operations. |
|
(3) |
Deemed
Cost For Items Of Fixed Assets |
|
IFRS
1 allows to measure fixed assets, as of the transition date, or before it, based on
revaluation that was carried out in accordance to prior accounting principles, as deemed
cost, on the time of the revaluation, if the revaluation was comparable in general, to
the cost or to the cost net of accumulated depreciation according to the IFRS standards,
adjusted to changes such as changes in the CPI. |
|
Until
December 31, 2003 the Company adjusted its financial statements to the changes in foreign
rate of the U.S dollar, in accordance with opinion No. 36 of the institute of Certified
Accountancy in Israel. |
|
For
the purpose of adapting the IFRS standards, the Company chose to implement the above said
relief allowed under IFRS 1, and to measure fixed assets items that were purchased or
established up to December 31, 2003 according to the affective cost for that date, based
on their adjusted value to the foreign exchange rate of the U.S dollar up to that date. |
F - 51
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
NOTE 11 |
|
SUBSEQUENT EVENTS |
|
A. |
On
July 10, 2008 the Company has signed an agreement for the acquisition of
shares of Carmel Container Systems Ltd. (Carmel, an affiliated
company) from the principal shareholder of Carmel, Mr. Robert Kraft and a
number of additional shareholders in Carmel, on an as is basis,
for the total consideration of approximately $20.77 million, to be paid
upon closing of the transaction. |
|
The
completion of the transaction is conditional upon receiving approval as required by law,
including the approval of the Israeli Antitrust Authority. |
|
The
Company currently holds approximately 36.2% of Carmel and upon completion of the
transaction the Company will hold approximately 89.3% of the Carmel shares. |
|
Subsequent
to the transaction, if completed, the Company shall consolidate the financial statements
of Carmel and Frenkel C.D. Ltd. (an affiliated company of the Company and Carmel). The
principal result of the consolidation will consist of an anticipated increase in the
Companys sales. The acquisition will be financed from the Companys own
resources. |
|
B. |
On
July 14, 2008 the Company contemplated a public offering pursuant to the
shelf prospectus published by the Company in Israel on May 26, 2008 of two
new series of debentures. The Company has offered an aggregate principal
amount of NIS 187,500 thousands of Series 3 debentures issued in return
for approximately NIS 187,500 thousands bearing an interest rate of 7.45%.
In addition the company has offered an aggregate principal amount of NIS
120,560 thousands of Series 4 debentures issued in return for
approximately NIS 120,560 thousands bearing an interest rate of 4.65%. The
net proceeds of the offering net of issue expenses are NIS 306,000
thousands. |
F - 52
HADERA PAPER LTD
NOTES TO UNAUDITED
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2008
Schedule
Details of Subsidiaries and
Associated Companies
At June 30, 2008
|
Percentage of direct and
indirect holding in shares
conferring equity and
voting rights
|
|
%
|
|
|
|
|
|
|
Main subsidiaries: |
|
|
| |
|
| | |
Amnir Recycling Industries Limited | | |
| 100.00 |
|
Graffiti Office Supplies and Paper Marketing Ltd. | | |
| 100.00 |
|
Attar Marketing Office Supplies Ltd. | | |
| 100.00 |
|
American Israeli Paper Mills Paper Industry (1995) Ltd. | | |
| 100.00 |
|
| | |
Main associated companies: | | |
Hogla-Kimberly Ltd. | | |
| 49.90 |
|
Subsidiaries of Hogla-Kimberly Ltd.: | | |
Hogla-Kimberly Marketing Limited | | |
| 49.90 |
|
Molett Marketing Limited | | |
| 49.90 |
|
Shikma For Personal Comfort Ltd. | | |
| 49.90 |
|
Turketim Mallari Sanayi ve Ticaret A.S (KCTR) | | |
| 49.90 |
|
Mondi Hadera Paper Ltd. | | |
| 49.90 |
|
Subsidiary of Mondi Hadera Paper Ltd.: | | |
Mondi Hadera Paper Marketing Ltd. | | |
| 49.90 |
|
Carmel Container Systems Limited | | |
| 36.21 |
|
Frenkel C.D. Limited** | | |
| 27.85 |
|
|
* |
Not
including dormant companies. |
|
** |
Frenkel
C.D. Limited is partly held through Carmel Container Systems Limited (an associated
company); the holding in voting shares of C.D. Packaging Systems Limited is 27.79%. |
F - 53
Enclosed please find the financial
reports of the following associated companies:
|
|
Mondi
Business Paper Hadera Ltd. |
|
|
Carmel
Containers Systems Ltd. |
Hadera-Paper LTD group
Meizer st' Industrial Zone,
P.O.B 142 Hadera 38101,Israel
Tel: 972-4-6349402
Fax: 972-4-6339740
hq@hadera-paper.co.il
www.hadera-paper.co.il
Exhibit 4
MONDI HADERA PAPER LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF JUNE 30, 2008
MONDI HADERA PAPER LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF JUNE 30, 2008
TABLE OF CONTENTS
The Board of Directors of
MONDI HADERA PAPER LTD.
Re: |
Review
of Unaudited Condensed Interim Consolidated Financial
Statements for the Six and Three Months Ended June 30, 2008 |
Gentlemen:
At your request, we have reviewed the
condensed interim consolidated financial statements (interim financial
statements) of Mondi Business Paper Hadera Ltd. (the Company) and its
subsidiaries, as follows:
|
Balance
sheet as of June 30, 2008. |
|
Statement
of operations for the six and three months ended June 30, 2008. |
|
Statement
of changes in shareholders equity for the six and three months ended June 30, 2008. |
|
Statement
of cash flows for the six and three months ended June 30, 2008. |
Our review was conducted in
accordance with procedures prescribed by the Institute of Certified Public Accountants in
Israel. The procedures included, inter alia, reading the aforementioned interim financial
statements, reading the minutes of the shareholders meetings and meetings of the
board of directors and its committees, and making inquiries with the persons responsible
for financial and accounting affairs.
Since the review that was performed
is limited in scope and does not constitute an audit in accordance with generally accepted
auditing standards, we do not express an opinion on the aforementioned interim financial
statements.
In performing our review, nothing
came to our attention, which indicates that material adjustments are required to the
aforementioned interim financial statements for them to be deemed financial statements
prepared in conformity with international accounting standard No. 34 Interim
Financial Reporting and in accordance with Section D of the Israeli Securities
Regulations (Periodic and Immediate Reports), 1970.
Brightman Almagor &
Co.
Certified Public Accountants
A Member Firm of
Deloitte Touche Tohmatsu
August 5, 2008
M - 1
MONDI HADERA PAPER LTD. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(NIS in thousands)
|
June 30,
|
December 31,
|
|
2008
|
2007
|
2007
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
| |
|
| |
|
| |
|
| | |
Current assets | | |
Cash and cash equivalents | | |
| 9,140 |
|
| 681 |
|
| 323 |
|
Trade receivables | | |
| 186,693 |
|
| 192,384 |
|
| 190,935 |
|
Other receivables | | |
| 2,604 |
|
| 3,715 |
|
| 2,395 |
|
Inventories | | |
| 116,737 |
|
| 111,151 |
|
| 143,366 |
|
|
| |
| |
| |
Total current assets | | |