BSD.L Regulatory News (BSD)

B.S.D Crown Ltd. (LSE:BSD) ("BSD" or "the Company") Management Statement Tel Aviv, Israel, 29 August, 2014 Management Statement and Half Yearly Financial Statements During the period commencing 1 January 2014 and ending on 30 June 2014 (the"Relevant Period"), the Company has undergone several events and transactions.A summary of the material events and transactions that have taken place duringthe Relevant Period are set out below: Highlights - Revenues amounted to $ 16,007 thousand for the period of six (6) monthsending 30 June 2014 (H1.2013: $1,065 thousand). The balance of cash and cashequivalent, short term investments and deposits (Including investment in afund designated at fair value through profit or loss), as of 30 June 2014 was$144,802 thousand (31 December 2013: $159,823 thousand). The total assets, asof 30 June 2014 were $241,115 thousand (31 December 2013: $160,442 thousand).The significant change is due to the purchase of the controlling stake in theshare capital of Willi-Food Investments Ltd as explained below. - The total issued share capital of the Company as at 28 August 2014 was140,578,154 of which 109,990,252 ordinary shares are outstanding and30,587,902 shares are held in treasury. - In August 2013, a consortium of investors led by the Company announced itsintention to acquire a controlling stake in IDB Holding Corporation Ltd., oneof Israel's largest holding companies, in consideration of an aggregatepayment of NIS1,580 million. As such proposed transaction was classified as areverse takeover under the listing rules made by the UK Listing Authority("UKLA") pursuant to Part VI of the Financial Services and Markets Act 2000(as amended) ("FSMA") (the "Listing Rules"), trading in the Company's shareswas suspended on 15 August 2013 and restored on 9 January 2014, following theIsraeli District Court decision to uphold a competing offer. (See Company announcements dated 6 January 2014 and 9 January 2014) - On 24 December 2013, BGI Investments (1961) Ltd. ("BGI") and B.G. Alpha Ltd.(together, the "BGI Group") made a tender offer (the "Offer") to holders ofthe Company's ordinary shares to acquire 5% of the voting rights in theCompany at a price per share equal to £0.75. On 28 January 2014 the Offer wassuccessfully completed and the BGI Group purchased an additional 5% of thevoting rights in the Company. (See Company announcements dated 13 January 2014, 16 January 2014, 24 January2014 and 29 January 2014) - Following the success of the Offer, the BGI Group together with Israel 18B.V., BGI's parent company (together, the "Extended BGI Group"), is entitledto exercise call options it has acquired. Upon the exercise of said calloptions, the Extended BGI Group will own shares, representing approximately44.1% of the Company's Capital. In the meantime, following the grant ofproxies made by Mr. Naftali Shani and Fortissimo Capital Management Ltd,amongst others, to Israel 18 and pursuant to the shareholders agreementbetween the members of Extended BGI Group, BGI is entitled to vote the sharesrepresenting the Options not yet exercised, representing 13.55% of theCompany's Capital. (See Company announcements dated 11 February 2014, 14 February 2014, 20February 2014, 24 February 2014, 21 March 2014, 27 March 2014 and 29 April2014) - Mr. Amnon Ben-Shay, who was appointed as a director of the Company on 14August 2013, submitted his resignation from the board of directors of theCompany (the "Board") on 12 January, 2014, due to other commitments preventinghim from fulfilling the requirements of his position as a director. (See Company announcements dated 13 January 2014) - On 2 March 2014, the Company entered into an agreement to acquire from ZwiWilliger ("ZW") and Joseph Williger ("JW" and, together with ZW, the"Sellers") a controlling stake in the share capital of Willi-Food InvestmentsLtd. ("WFI"), a company listed on the Tel Aviv Stock Exchange, which in turnowns approximately 58% of G Willi-Food International Ltd ("WFINT" and togetherwith WFI, "Willi-Food"), a company listed on NASDAQ. Under the agreement, theCompany: (i) acquired the Sellers' entire shareholdings in WFI (part of whichwas acquired through a special tender offer as set out below), amounting inaggregate to 58% of the shares of WFI (or approximately 55% on a fully dilutedbasis); and (ii) published a special tender offer (the "Special Tender Offer")addressed to all shareholders of WFI (including the Sellers) in accordancewith Israeli Companies Law in order to acquire additional shares carrying 5%of the voting rights in WFI. The Special Tender Offer was completed on 1 May2014 and the transaction completed on 4 May 2014 (the "Completion Date").Following such completion, the Company acquired in aggregate 61.65% of theissued share capital of WFI (62.21% of its voting rights), for aggregateconsideration of NIS284.7 million (U.S. $82.3 million). (See Company announcements dated 3 March 2014, 7 April 2014, 28 April 2014, 1May 2014 and 7 May 2014 and Company prospectus published on 29 July, 2014) Under the WFI Agreement, the Sellers agreed to continue to be engaged by WFINTas chairman of the board of WFINT (in respect of ZW) and president of WFINT(in respect of JW), or as joint chief executive officers of WFI, for anadditional period three (3) years commencing upon the Completion Date (May2014). On 21st August 2014, the extension of the agreements between theparties for another period of three (3) years (until 21st August 2017) wasapproved at WFINT's annual general meeting. Subject to further agreementbetween the parties and to applicable law, the Sellers may continue theirrespective engagement following such period. In addition, each of the Sellersis prohibited from competing against Willi-Food in any material way, subjectto certain agreed exceptions described below, for an additional periodcommencing on the termination of his respective engagement with WFINT andterminating on the later of two years from such termination, or four yearsfrom completion of the Acquisition but not longer than six (6) years from thecompletion date. In consideration of such non-compete undertakings, each ofthe Sellers is entitled to an additional annual payment of NIS1.5 million(approximately £0.25 million) per year following termination of his respectiveengagement, to be paid by the Company and subject to applicable law. Under the WFI Agreement, each of the Sellers shall have the rights to bereleased from his engagement with WFINT where: (i) Willi-Food's accounts willinclude a `going concern' provision as a result of any activity which is notwithin the Willi-Food's business operations in the field of import, export,marketing and distribution of food products (the "Current Business Activity");(ii) the board of directors of WFI, WFINT or any other member of theWilli-Food group materially disrupts Zvi Williger or Joseph Williger's abilityto operate in the Current Business Activity as part of said engagement; (iii)Zvi Williger or Joseph Williger are not reappointed as directors of WFI orWFINT during said engagement period; (iv) WFI or the Company, as the case maybe, have not voted, as shareholders of WFINT, in favour or extending ZviWilliger and Joseph Williger's service contracts; (v) Zvi Williger or JosephWilliger's engagements were terminated for unreasonable reasons by WFI orWFINT; (vi) there occurs a sale of control in the Current Business Activity,WFI or WFINT to a third party; (vii) there occurs an introduction of a thirdparty as a partner in the Current Business Activity or in the control in WFIor WFINT unless previously approved by the Sellers, such approval not to beunreasonably withheld; or (viii) Zvi Williger or Joseph Williger areincapacitated, in which case (except in the case of (viii) above) thenon-compete undertaking referred to above shall cease to apply in relation tohim. (See Company prospectus published on 29 July, 2014) Trading The acquisition of the abovementioned stake in WFI is deemed a reversetakeover under the Listing Rules and trading in the Company's shares wasaccordingly suspended on 3 March, 2014. Following the publication of aprospectus by the Company on 29 July, 2014 in connection with the requirementon it to re-apply for the listing of its shares following completion of thetransaction, such suspension was lifted on 4 August 2014 and the Company'sshares were re-admitted to trading on the Standard List of the main market ofthe London Stock Exchange. In accordance with a resolution passed at the Company's annual general meetingheld on 3 July 2014, the Company's name was changed from Emblaze Ltd. to B.S.DCrown Ltd., with effect from 5 August 2014. On 12 August 2014 the change ofname to B.S.D Crown Ltd. became effective on the London Stock Exchange.Accordingly, the Company's TIDM (ticker symbol) has also changed to BSD. Management On 15 August 2014, the Company published a notice of extraordinary generalmeeting to be held on 8 September, 2014 and at which the Company'sshareholders will be asked to approve the terms of service of Mr Israel JossefSchneorson (which will be subjected to the approval of BGI Investments (1961)Ltd. ("BGI") shareholders, such shareholder approval being capable of beingoverruled in special circumstances), the terms of employment of Mr EyalMerdler and an agreement between the Company and BGI (the "BGI ManagementAgreement") pursuant to which the Company will provide certain services toBGI, including the services of a chief executive officer, chief financialofficer, controller, bookkeeper and administrative services. Subject to the BGI Management Agreement receiving necessary approvals andbeing entered into, the Company will pay BGI a one-off fee of USD 660,000 inrelation to the services provided to the Company by the chief executiveofficer and chief financial officer between 14 August 2013 and 31 August 2014and services provided to the Company by the corporate secretary, controller,bookkeeping and certain administrative staff of BGI between 1 January 2014 and31 August 2014, net of expenses or amounts owing from BGI to the company as atthe date of such payment. Subject to the BGI Management Agreement receiving necessary approvals andbeing entered into, the Company will provide BGI with the services of thechief executive officer (subject to the approval by BGI of the Company's chiefexecutive officer's terms of service), chief financial officer, corporatesecretary, controller, bookkeeping and certain administrative staff to BGI inconsideration of a monthly fee equal to NIS 35,000 (approximately USD 10,000)or NIS 28,000 (approximately USD 8,000) in the event that the Company's chiefexecutive officer's terms of service are bit approved by BGI. Intellectual Property In July 2010, BSD filed a complaint against Apple Inc. ("Apple") forinfringement of the Company's U.S. Patent No. 6,389,473 through Apple's HTTPLive Streaming protocol used in Apple products such as iPhones and iPads. On11 July, 2014 and the jury found that BSD's U.S. Patent Number 6,389,473 isvalid, but also found that Apple Inc. did not infringe the patent. On 8 August 2014 the Company filed motions with the original judge hearing theclaim (i) for a judgment as a matter of law that, contrary to the jury'sverdict of 14 July 2014, the Company's U.S. Patent Number 6,389,473 for mediastreaming was infringed; or, alternatively, (ii) for a new trial. Also on 8 August, 2014, Apple filed a motion for a judgment as a matter of lawthat, if the court grants the judgment as a matter of law filed by BSD or themotion for new trial filed by BSD, then Apple also requests that the courtgrant a judgment as a matter of law that the asserted claims of the Company'sU.S. Patent Number 6,389,473 for media streaming are invalid and/or grant anew trial on the invalidity of the asserted claims. BSD expects the court to rule on these motions in October 2014. (See Company announcements dated 8 July 2014, 14 July 2014, 11 August, 2014and 12 August, 2014). In October 2012, the Company filed a complaint for patent infringement againstMicrosoft Corporation ("Microsoft"). The complaint asserts that Microsoft'sIIS Smooth Streaming system infringes BSD's U.S. patent No. 6,389,473 formedia streaming technology. Legal proceedings in these cases are ongoing. Jossef Schneorson, CEO, commented: "We believe that the new B.S.D Crown Ltd.will have maximised value for its shareholders. We believe that theacquisition of WFI will be a good and solid investment for B.S.D Crown Ltd.shareholders and the results of the Company will be positive and continue toimprove." A copy of the half yearly financial statements will also be available forinspection on the Company's website, www.bsd-c.com and will be sent forpublication at the Financial Conduct Authority's National Storage Mechanismwhich can be accessed at www.morningstar.co.uk/uk/NSM. Enquiries:Eyal Merdler Eyal@bsd-c.com B.S.D Crown Ltd.B.S.D Crown Ltd. is traded on the London Stock Exchange (LSE: BSD) since 1996.www.bsd-c.com B.S.D CROWN LTD. (FORMERLY- EMBLAZE LTD.) INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 JUNE 2014 UNAUDITED IN U.S. DOLLARS INDEX Page Report on Review of Interim Condensed Consolidated FinancialStatements 2 Interim Condensed Consolidated Statements of Financial Position 3 - 4 Interim Condensed Consolidated Statements of Profit or Loss andOther Comprehensive Income 5 Interim Condensed Consolidated Statements of Changes in Equity 6 - 7 Interim Condensed Consolidated Statements of Cash Flows 8 - 9 Notes to Interim Condensed Consolidated Financial Statements 10 - 26 - - - - - - - - - - - - - - - Kost Forer Gabbay & Tel:Kasierer +972-8-6261300 21 Shazar Blvd., Noam Fax:Bldg. +972-3-5633428 Be'er Sheva 8489411, ey.comIsrael Report on Review of Interim Condensed Consolidated Financial Statements Board of Directors B.S.D Crown Ltd. (Formerly - Emblaze Ltd.) Introduction We have reviewed the accompanying interim condensed consolidated statement offinancial position of B.S.D Crown Ltd. (Formerly - Emblaze Ltd.) and itssubsidiaries (the "Group") as of 30 June 2014 and the related interimcondensed consolidated statements of profit or loss and other comprehensiveincome, changes in equity and cash flows for the six month and three monthperiods then ended and explanatory notes. Management is responsible for thepreparation and presentation of these interim condensed consolidated financialstatements in accordance with IAS 34, "Interim Financial Reporting" ("IAS34"), as adopted by the European Union. Our responsibility is to express aconclusion on these interim condensed consolidated financial statements basedon our review. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements 2410, Review of Interim Financial Information Performed by theIndependent Auditor of the Entity. A review of interim financial informationconsists of making inquiries, primarily of persons responsible for financialand accounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordancewith International Standards on Auditing and consequently does not enable usto obtain assurance that we would become aware of all significant matters thatmight be identified in an audit. Accordingly, we do not express an auditopinion. Conclusion Based on our review, nothing has come to our attention that causes us tobelieve that the accompanying interim condensed consolidated financialstatements are not prepared, in all material respects, in accordance with IAS34, as adopted by the European Union. Beer-Sheva, Israel KOST FORER GABBAY & KASIERER A Member of Ernst & Young28 August, 2014 GlobalINTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 30 June 31 December 2014 2013 2013 Unaudited Audited U.S. dollars in thousands ASSETS CURRENT ASSETS:Cash and cash equivalents 31,589 6,337 2,957Short-term deposits 46,225 112,299 16,242Short-term deposits held in trust - - 140,418Financial assets at fair value through profit or loss 62,573 24,362 -Available for sale financial assets - 205 206Trade receivables 27,993 4 30Other receivables and prepaid expenses 3,107 1,606 522Investment in a fund designatedat fair value through profit or loss 4,415 - -Inventories 11,318 - - Total current assets 187,220 144,813 160,375 NON-CURRENT ASSETS:Property, plant and equipment, net 14,917 62 67Prepaid expenses 15 - -Intangible assets:Customer relationships 6,493 - -Supplier relationships 3,805 - -Brands 1,767 - -Non-competition agreements 1,383 - -Goodwill 25,515 - - Total non-current assets 53,895 62 67 Total assets 241,115 144,875 160,442The accompanying notes are an integral part of the interim condensedconsolidated financial statements. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 30 June 31 December 2014 2013 2013 Unaudited Audited U.S. dollars in thousandsLIABILITIES AND EQUITY CURRENT LIABILITIES:Short-term debt 70 - 18,813Current maturities of debentures 3,729 - -Trade payables 5,129 289 699Other accounts payable and deferred revenues 3,326 2,966 1,708Employee benefit liabilities, net 804 497 282Financial liability for non - controlling interestput option 6,240 - - Total current liabilities 19,298 3,752 21,502 NON-CURRENT LIABILITIES: Employee benefit liabilities, net 218 24 40Liability for non- competition payments 1,573 - -Debentures 4,008 - -Deferred taxes 4,457 - - 10,256 24 40EQUITY:Share capital 416 416 416Share premium 469,930 469,931 469,925Treasury shares (76,962) (76,962) (76,962)Available for sale reserve - 122 123Reserve from transactions with non-controlling interest (208) - -Foreign currency translation reserve 458 - -Accumulated deficit (256,077) (252,035) (254,189) Equity attributable to Company's equity holders 137,557 141,472 139,313Non- controlling interests 74,004 (373) (413) Total equity 211,561 141,099 138,900 Total liabilities and equity 241,115 144,875 160,442The accompanying notes are an integral part of the interim condensedconsolidated financial statements. 28 August, 2014Date of approval of Abraham Wolff Israel Jossef Eyal Merdler the Schneorsonfinancial statements Chairman of the CEO and Vice CFO Board Chairman of the Board INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHERCOMPREHENSIVE INCOME Year ended Six months ended Three months ended 31 30 June 30 June December 2014 2013 2014 2013 2013 Unaudited Audited U.S. dollars in thousands (except earnings (loss) per share) Revenues 16,007 1,065 15,979 465 1,882Cost of sales 11,967 272 11,939 156 449Gross profit 4,040 793 4,040 309 1,433 Research and development 693 761 376 323 1,562Selling expenses 2,239 134 2,239 14 134General and administrativeexpenses 4,714 1,549 3,246 897 7,095Total operating expenses 7,646 2,444 5,861 1,237 8,791 Operating loss (3,606) (1,651) (1,821) (925) (7,358) Financial income 2,442 883 1,531 325 5,208Financial expense (323) (110) (311) (79) (846)Loss before taxes on income (1,487) (878) (601) (679) (2,996)Taxes on income (175) - (175) - -Loss from continuingoperations (1,662) (878) (776) (679) (2,996)Income (loss) fromdiscontinued operations, net - 160 - (107) 181Net loss (1,662) (718) (776) (786) (2,815) Other comprehensive income (loss) to be reclassifiedto profit or loss in subsequent periods :Gain (loss) from available-for-sale financial assets 25 (10) - (10) (9)Reclassification adjustment for gain on available-for-sale financial assets included in profit or loss (148) - (148) - -Adjustments arising from translation of financialstatements of foreign operations 925 - 925 - - Other comprehensive income (loss) not to bereclassified to profit or loss in subsequent periods:Remeasurement loss fromdefined benefit plans - - - - (97) Total other comprehensiveincome (loss) 802 (10) 777 (10) (106) Total comprehensive income(loss) (860) (728) 1 (796) (2,921) Net income (loss) attributable to:Equity holders of the Company (1,888) (689) (1,029) (774) (2,746)Non- controlling interests 226 (29) 253 (12) (69) Net loss (1,662) (718) (776) (786) (2,815)Total comprehensive income(loss) attributable to:Equity holders of theCompany (1,553) (699) (719) (784) (2,852)Non- controlling interests 693 (29) 720 (12) (69) Total comprehensive income(loss) (860) (728) 1 (796) (2,921)Basic and diluted net earningsper share attributable toCompany's equity holders (inU.S dollars):Loss from continuingoperations (0.02) (0.01) (0.01) (0.01) (0.03)Income from discontinuedoperations - (* - (* (* Net loss per share (0.02) (0.01) (0.01) (0.01) (0.03)*) Less than USD 0.01 per share. The accompanying notes are an integral part of the interim condensedconsolidated financial statements. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Attributable to equity holders of the Company Reserve from transactions Foreign Available with non- currency Accum- Non- Share Share Treasury for sale controlling translations ulated controlling Total capital premium shares reserve interest reserve deficit Total interests equity U.S. dollars in thousands Unaudited Balance as of 416 469,925 (76,962) 123 - - (254,189) 139,313 (413) 138,9001 January 2014 Non- controlling - - - - - - - - 73,516 73,516interestsarisingfrom initiallyConsolidatedcompany Net income - - - - - - (1,888) (1,888) 226 (1,662)(loss)Othercomprehensiveincome (loss):Gain from - - - 25 - - - 25 - 25availablefor salefinancial assetsReclassification - - - (148) - - - (148) - (148)adjustmentfor gain onavailable-for- salefinancialassets includedin profit orlossAdjustments - - - - - 458 - 458 467 925arising fromtranslation offinancialstatements offoreignoperationsTotal - - - (123) - 458 (1,888) (1,553) 693 (860)comprehensiveincome (loss) Cost of share - 5 - - - - - 5 - 5basedpaymentTransactions - - - - (208) - - (208) 208 -with non-controllinginterests- cost of sharebased payment insubsidiary Balance as of 416 469,930 (76,962) - (208) 458 (256,077) 137,557 74,004 211,56130 June 2014 Attributable to equity holders of the Company Non- Share Share Treasury Available for Accumulated controlling Total capital premium shares sale reserve deficit Total interests equity U.S. dollars in thousands Unaudited Balance asof 1 January 2013 416 469,911 (76,275) 132 (251,346) 142,838 (344) 142,494Net loss - - - - (689) (689) (29) (718)Loss from availablefor salefinancial assets - - - (10) - (10) - (10)Total comprehensiveloss - - - (10) (689) (699) (29) (728) Cost of share basedpayment - 20 - - - 20 - 20Purchase of treasuryshares - - (687) - - (687) - (687) Balance as of 30 June2013 416 469,931 (76,962) 122 (252,035) 141,472 (373) 141,099The accompanying notes are an integral part of the interim condensedconsolidated financial statements. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Attributable to equity holders of the Company Available Non- Share Share Treasury for Accumulated controlling Total capital premium shares sale reserve deficit Total interests equity U.S. dollars in thousands Audited Balance as of1 January 2013 416 469,911 (76,275) 132 (251,346) 142,838 (344) 142,494 Net loss - - - - (2,746) (2,746) (69) (2,815)Remeasurement lossfrom defined benefitplan - - - - (97) (97) - (97)Loss from availablefor sale- financialassets - - - (9) - (9) - (9) Total comprehensiveloss - - - (9) (2,843) (2,852) (69) (2,921) Cost of share- basedpayment - 14 - - - 14 - 14Purchase of treasurystock - - (687) - - (687) - (687) Balance asof 31 December 2013 416 469,925 (76,962) 123 (254,189) 139,313 (413) 138,900 The accompanying notes are an integral part of the interim condensedconsolidated financial statements. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended Year ended 30 June 31 December 2014 2013 2013 Unaudited Audited U.S. dollars in thousands Cash flows from operating activities: Net loss (1,662) (718) (2,815)Less - income from discontinued operations - 160 181 Loss from continuing operations (1,662) (878) (2,996) Adjustments to reconcile loss from continuingoperations to net cash provided by (used in)operating activities :Depreciation and amortisation 562 16 31Loss on disposal of fixed assets 10 - -Employee benefit liabilities, net (39) - -Cost of share-based payment 297 20 14Change in financial assets at fair value throughprofit or loss 211 328 432Interest income (684) - (1,863)Interest expense on short-term loan 7 (1,148) 86Decrease in deferred tax (229) - -Taxes on income 404Exchange rate differences on deposit andshort-term loan (1,256) - (3,438)Gain from sale of available for sale financial assets (214) - -Financial income from debentures (25) - -Finance expenses on financial liabilities 29 - - (927) (784) (4,738) Changes in asset and liability items:Decrease in inventories 4,218 - -Decrease in trade receivables 2,731 - -Decrease (increase) in receivables and prepaidexpenses (1,000) 109 494Decrease in trade payables, other payablesand accrued expenses (1,054) (580) (1,468) 4,895 (471) (974) Cash received (paid) during the period:Interest received 163 1,411 2,450Interest paid (164) - -Taxes paid (698) - - (699) 1,411 2,450 Net cash provided by (used in) operatingactivities from continuing operations 1,607 (722) (6,258)Net cash used in operating activities fromdiscontinued operations - (146) (189) Net cash provided by (used in) operating activities 1,607 (868) (6,447)The accompanying notes are an integral part of the interim condensedconsolidated financial statements. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended Year ended 30 June 31 December 2014 2013 2013 Unaudited Audited U.S. dollars in thousands Cash flows from investing activities: Proceeds from sale of property and equipment 65 - - Purchase of property and equipment (647) (11) (31) Maturing of (investment in) short-term deposits, net (29,983) 9,900 105,953 Withdrawal of (investment in) deposit held in trust 122,404 - (118,253) Purchase of financial assets at fair value through profit or loss (2,936) (12,712) (13,352) Proceeds from sale of financial assets at fair value through profit or loss and available for sale financial assets 297 1,382 26,441 Acquisition of subsidiary (a) (62,088) - - Net cash provided by (used in) investing activities from continuing operations 27,112 (1,441) 758 Cash flows from financing activities: Bank overdraft, net (763) - - Purchase of treasury shares - (687) (687) Net cash used in financing activities from continuing operations (763) (687) (687) Exchange differences on balances of cash and cash equivalents 676 - - Net increase (decrease) in cash and cash equivalents 28,632 (2,996) (6,376) Cash and cash equivalents at the beginning of the period 2,957 9,333 9,333 Cash and cash equivalents at the end of the period 31,589 6,337 2,957 (a) Acquisition of subsidiary: The subsidiary's assets and liabilities at date of acquisition: Working capital (excluding cash and cash equivalents) (98,429) - - Property, plant and equipment (14,480) - - Intangible assets (13,666) - - Goodwill (25,367) - - Prepaid expenses (9) - - Deferred taxes 4,661 - - Non-current liabilities 4,186 - - Financial liability for non- controlling interest put option 5,945 - - Liability for non- competition payment 1,555 - - Non-controlling interests 73,516 - - (62,088) - - (b) Non-cash transactions: Proceeds of short-term loan invested in deposit held in trust - - 18,393 Repayment of short-term loan from deposit held in trust (18,727) - - The accompanying notes are an integral part of the interim condensedconsolidated financial statements. NOTE 1:- GENERAL a. B.S.D Crown Ltd. ("B.S.D" or "the Company") is a corporation registered inIsrael. On 5 August 2014 the Company changed its name from Emblaze Ltd. to B.S.D CrownLtd. b. In May 2014 the Company completed the acquisition of a controlling stake(approximately 62%) of Willi-Food Investments Ltd. ("WFI") for an aggregatecash consideration of USD 82.3 million. WFI and its subsidiaries operate inimport, marketing and distribution of a several hundred food products, mainlyin Israel. See Note 3 for further details of the Acquisition. The financialstatements of WFI and its group (the "WFI Group") have been consolidated inthese interim condensed consolidated financial statements from the date of thecompletion of the Acquisition. Due to the extent of the trading activities of WFI that were acquired inrelation to the then existing activities of the B.S.D Group, the Acquisitionwas deemed a reverse takeover under the listing rules of the UK ListingAuthority ("UKLA"), and trading in the Company's shares was accordinglysuspended on 3 March 2014 (the date the Company entered into the agreement forthe Acquisition). On 29 July 2014 the Company published a prospectus in connection with itsreapplication for the listing of its entire issued share capital on theStandard segment of the Official List of the UKLA and for admission to tradingon the London Stock Exchange main market for listed securities. The admissionbecame effective on 4 August 2014. The Company's shares are presently listedfor trading under the symbol BSD. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES a. Basis of preparation of the interim consolidated financialstatements: The interim condensed consolidated financial statements for the six monthsended 30 June 2014 have been prepared in accordance with IAS 34, InterimFinancial Reporting, as adopted by the European Union. The interim condensedconsolidated financial statements do not include all the information anddisclosures required in the annual financial statements, and should be read inconjunction with the Group's annual financial statements as at 31 December2013. b. Accounting policies adopted by the B.S.D Group as a consequence of theacquisition of the WFI Group: The accounting policies adopted in the preparation of the interim condensedconsolidated financial statements are consistent with those followed in thepreparation of the B.S.D Group's consolidated annual financial statements forthe year ended 31 December 2013. As a consequence of the initial consolidationof the financial statements of the WFI Group, the following accountingpolicies relating to the activities of the WFI Group have been adopted: NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) b. Accounting policies adopted by the B.S.D Group as a consequence of theacquisition of the WFI Group: (Cont.) - Functional currency and presentation currency: The presentation currency of the financial statements is the US dollar. The Group determines the functional currency of each Group entity, includingcompanies accounted for at equity. Assets, including fair value adjustments upon acquisition, and liabilities ofan investee which is a foreign operation, are translated at the closing rateat each reporting date. Profit or loss items are translated at averageexchange rates for all periods presented. The resulting translationdifferences are recognised in other comprehensive income (loss). Intragroup loans for which settlement is neither planned nor likely to occurin the foreseeable future are, in substance, a part of the investment in theforeign operation and, accordingly, the exchange rate differences from theseloans (net of the tax effect) are recorded, net of the tax effect, in othercomprehensive income (loss). Upon the full or partial disposal of a foreign operation resulting in loss ofcontrol in the foreign operation, the cumulative gain (loss) from the foreignoperation which had been recognised in other comprehensive income istransferred to profit or loss. Upon the partial disposal of a foreignoperation which results in the retention of control in the subsidiary, therelative portion of the amount recognised in other comprehensive income isreattributed to non-controlling interests. - Business combinations and goodwill: Business combinations are accounted for by applying the acquisition method.The cost of the acquisition is measured at the fair value of the considerationtransferred on the acquisition date with the addition of non-controllinginterests in the acquiree. In each business combination, the Company chooseswhether to measure the non-controlling interests in the acquiree based ontheir fair value on the acquisition date or at their proportionate share inthe fair value of the acquiree's net identifiable assets. Direct acquisition costs are carried to the statement of profit or loss asincurred. In a business combination achieved in stages, equity interests in the acquireethat had been held by the acquirer prior to obtaining control are measured atthe acquisition date fair value while recognising a gain or loss resultingfrom the revaluation of the prior investment on the date of achieving control. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) b. Accounting policies adopted by the B.S.D Group as a consequence of theacquisition of the WFI Group (Cont.): - Business combinations and goodwill (Cont.): Contingent consideration is recognised at fair value on the acquisition dateand classified as a financial asset or liability in accordance with IAS 39.Subsequent changes in the fair value of the contingent consideration arerecognised in profit or loss or in the statement of comprehensive income. Ifthe contingent consideration is classified as an equity instrument, it ismeasured at fair value on the acquisition date without subsequentremeasurement. Goodwill is initially measured at cost which represents theexcess of the acquisition consideration and the amount of non-controllinginterests over the net identifiable assets acquired and liabilities assumed.If the resulting amount is negative, the acquirer recognises the resultinggain on the acquisition date. - Allowance for doubtful accounts: The allowance for doubtful accounts is determined in respect of specific debtswhose collection, in the opinion of the Company's management, is doubtful. - Inventories: Inventories are measured at the lower of cost and net realisable value. Thecost of inventories comprises costs of purchase and costs incurred in bringingthe inventories to their present location and condition. Net realisable valueis the estimated selling price in the ordinary course of business lessestimated costs of completion and estimated selling costs. The Companyperiodically evaluates the condition and age of inventories and makesprovisions for slow moving inventories accordingly. Cost of inventories is determined as follows: Purchased merchandise and products - using the weighted average cost method. - Revenue recognition: Revenues are recognised in profit or loss when the revenues can be measuredreliably, it is probable that the economic benefits associated with thetransaction will flow to the Company and the costs incurred or to be incurredin respect of the transaction can be measured reliably. When the Company actsas a principal and is exposed to the risks associated with the transaction,revenues are presented on a gross basis. When the Company acts as an agent andis not exposed to the risks and rewards associated with the transaction,revenues are presented on a net basis. Revenues are measured at the fair valueof the consideration less any trade discounts, volume rebates and returns. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) b. Accounting policies adopted by the B.S.D Group as a consequence of theacquisition of the WFI Group (Cont.): - Revenue recognition (Cont.): Following are the specific revenue recognition criteria which must be metbefore revenue is recognised: Revenues from the sale of goods: Revenues from the sale of goods are recognised when all the significant risksand rewards of ownership of the goods have passed to the buyer and the sellerno longer retains continuing managerial involvement. The delivery date isusually the date on which ownership passes. - Leases: The criteria for classifying leases as finance or operating leases depend onthe substance of the agreements and are made at the inception of the lease inaccordance with the following principles as set out in IAS 17. The Group as lessee: 1. Finance leases: Finance leases transfer to the Group substantially all the risks and benefitsincidental to ownership of the leased asset. At the commencement of the leaseterm, the leased assets are measured at the lower of the fair value of theleased asset or the present value of the minimum lease payments. The leased asset is amortised over the shorter of its useful life or the leaseterm. 2. Operating leases: Lease agreements are classified as an operating lease if they do not transfersubstantially all the risks and benefits incidental to ownership of the leasedasset. Lease payments are recognised as an expense in profit or loss on astraight-line basis over the lease term. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) b. Accounting policies adopted by the B.S.D Group as a consequence of theacquisition of the WFI Group (Cont.): - Property, plant and equipment: Property, plant and equipment are measured at cost, including directattributable costs, less accumulated depreciation, accumulated impairmentlosses and excluding day-to-day servicing expenses. Cost includes spare partsand auxiliary equipment that are used in connection with plant and equipment. A part of an item of property, plant and equipment with a cost that issignificant in relation to the total cost of the item is depreciatedseparately using the component method. The cost of an item of property, plant and equipment comprises the initialestimate of the costs of dismantling and removing the item and restoring thesite on which the item is located. Depreciation is calculated on a straight-line basis over the useful life ofthe assets at annual rates as follows: % Mainly % Land 2Buildings 4Motor vehicles 15-20 20Office furniture and equipment 6-15 15Computers 20-33 33Mechanical equipment 10The useful life, depreciation method and residual value of an asset arereviewed at least each year-end and any changes are accounted forprospectively as a change in accounting estimate. Depreciation of an assetceases at the earlier of the date that the asset is classified as held forsale and the date that the asset is derecognised. - Intangible assets: Separately acquired intangible assets are measured on initial recognition atcost including directly attributable costs. Intangible assets acquired in abusiness combination are measured at fair value at the acquisition date.Expenditures relating to internally generated intangible assets, excludingcapitalised development costs, are recognised in profit or loss when incurred. Intangible assets with a finite useful life are amortised over their usefullife and reviewed for impairment whenever there is an indication that theasset may be impaired. The amortisation period and the amortisation method foran intangible asset are reviewed at least at each year end. Intangible assets with indefinite useful lives are not systematicallyamortised and are tested for impairment annually or whenever there is anindication that the intangible asset may be impaired. The useful life of theseassets is reviewed annually to determine whether their indefinite lifeassessment continues to be supportable. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) b. Accounting policies adopted by the B.S.D Group as a consequence of theacquisition of the WFI Group (Cont.): If the events and circumstances do not continue to support the assessment, thechange in the useful life assessment from indefinite to finite is accountedfor prospectively as a change in accounting estimate and on that date theasset is tested for impairment. Commencing from that date, the asset isamortised systematically over its useful life. The intangible assets are amortised over their estimated useful life asfollows: Customer relationships 9 years Supplier relationships 5 years Brands 7 years Non-competition agreements 2 years (starting 2017, see Note 3 (c)) - Impairment of non-financial assets: The Company evaluates the need to record an impairment of non-financial assetswhenever events or changes in circumstances indicate that the carrying amountis not recoverable. If the carrying amount of non-financial assets exceeds their recoverableamount, the assets are reduced to their recoverable amount. The recoverableamount is the higher of fair value less costs of sale and value in use. Inmeasuring value in use, the expected future cash flows are discounted using apre-tax discount rate that reflects the risks specific to the asset. Therecoverable amount of an asset that does not generate independent cash flowsis determined for the cash-generating unit to which the asset belongs.Impairment losses are recognised in profit or loss. An impairment loss of an asset, other than goodwill, is reversed only if therehave been changes in the estimates used to determine the asset's recoverableamount since the last impairment loss was recognised. Reversal of animpairment loss, as above, shall not be increased above the lower of thecarrying amount that would have been determined (net of depreciation oramortisation) had no impairment loss been recognised for the asset in prioryears and its recoverable amount. The reversal of impairment loss of an assetpresented at cost is recognised in profit or loss. The following criteria are applied in assessing impairment of these specificassets: Goodwill in respect of subsidiaries: The Company reviews goodwill for impairment once a year, on December 31, ormore frequently if events or changes in circumstances indicate that there isan impairment. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) b. Accounting policies adopted by the B.S.D Group as a consequence of theacquisition of the WFI Group (Cont.): - Impairment of non-financial assets: (Cont.) Goodwill is tested for impairment by assessing the recoverable amount of thecash-generating unit (or group of cash-generating units) to which the goodwillhas been allocated. An impairment loss is recognised if the recoverable amountof the cash-generating unit (or group of cash-generating units) to whichgoodwill has been allocated is less than the carrying amount of thecash-generating unit (or group of cash-generating units). Any impairment lossis allocated first to goodwill. Impairment losses recognised for goodwillcannot be reversed in subsequent periods. - Share-based payment transactions: The Company accounts for share-based compensation in accordance with IFRS 2,"Share-Based Payment". The main impact of IFRS 2 on the Company is theexpensing of employees' and directors' share options (equity-settledtransactions). The cost of equity-settled transactions with employees is measured at the fairvalue of the equity instruments granted at grant date. The fair value isdetermined by using the Binomial method option-pricing model taking intoaccounts the terms and conditions upon which the instruments were granted. The cost of equity-settled transactions is recognised, together with acorresponding increase in equity, over the period in which the performanceand/or service conditions are fulfilled, ending on the date on which therelevant employees become fully entitled to the award (the "vesting date").The cumulative expense recognised for equity-settled transactions at eachreporting date until the vesting date reflects the extent to which the vestingperiod has expired and the Company's best estimate of the number of equityinstruments that will ultimately vest. The expense or income recognised inprofit or loss represents the change between the cumulative expense recognisedat the end of the reporting period and the cumulative expense recognised atthe end of the previous reporting period. Cash-settled transactions: The cost of cash-settled transactions is measured at fair value on the grantdate using an acceptable option pricing model. The fair value is recognised asan expense over the vesting period and a corresponding liability isrecognised. The liability is remeasured at each reporting date until settledat fair value with any changes in fair value recognised in profit or loss. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) c. Adoption of new standards and interpretations effective as of 1 January2014 The nature and the impact of each new standard or amendment adopted aredescribed below: Offsetting Financial Asses and Financial Liabilities - Amendments to IAS 32 These amendments clarify the meaning of "currently has a legally enforceableright to set-off" and the criteria for non-simultaneous settlement mechanismsof clearing houses to qualify for offsetting. These amendments have no impacton the Company. d. Disclosure of new IFRS standards in the period prior to their adoption: (1) IFRS 15, "Revenue from Contracts with Customers": IFRS 15 ("the Standard") was issued by the IASB in May 2014. IFRS 15 replaces IAS 18, "Revenue", IAS 11, "Construction Contracts, and therelated Interpretations: IFRIC 13, "Customer Loyalty Programs", IFRIC 15,"Agreements for the Construction of Real Estate", IFRIC 18, "Transfers ofAssets from Customers" and SIC-31, "Revenue- Barter Transactions InvolvingAdvertising Services". The Standard introduces the following five-step model that applies to revenuefrom contracts with customers: Step 1: Identify the contract(s) with a customer, including reference tocontract consolidation and accounting for contract modifications. Step 2: Identify the distinct performance obligations in the contract Step 3: Determine the transaction price, including reference to variableconsideration, financing components that are significant to the contract,non-cash consideration and any consideration payable to the customer. Step 4: Allocate the transaction price to the separate performance obligationson a relative stand-alone selling price basis using observable information, ifit is available, or by making estimates and assessments. Step 5: Recognise revenue when (or as) the entity satisfies a performanceobligation over time or at a point in time. IFRS 15 also establishes the accounting treatment of incremental costsinvolving obtaining a contract and the costs directly related to fulfilling acontract. The Standard will apply retrospectively to annual periods beginning on orafter January 1, 2017. Early adoption is permitted. The Standard may beapplied to existing contracts beginning with the current period andthereafter. No restatement of the comparative periods will be required as longas comparative disclosures about the current period's revenues under existingIFRS are included. The Company is evaluating the possible impact of the adoption of IFRS 15 butis presently unable to assess its effect, if any, on the financial statements. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) d. Disclosure of new IFRS standards in the period prior to their adoption:(Cont.) (2) IFRS 9, "Financial Instruments": In connection with Note 4 to the annual financialstatements as of December 31, 2013 regarding disclosure of new IFRS Standardsin the period prior to their adoption in the issue of IFRS 9, in July 2014,the IASB issued the final and complete version of IFRS 9, "FinancialInstruments" ("the final Standard") which includes the following elements:classification and measurement, impairment and hedge accounting. The main changes between the final Standard and thepreviously published phases of the Standard are: Classification and measurement: The final version of IFRS 9 includes another category forthe classification and measurement of financial assets that represent debtinstruments. Financial assets classified in this category will be measured atfair value through other comprehensive income ("FVOCI") and the differencespreviously carried to other comprehensive income as above will be reclassifiedto profit or loss under specific conditions such as when the asset isderecognised. Finance income, exchange rate differences and impairment losseson financial assets, however, will be recognised in profit or loss. Theclassification in this category is allowed for debt instruments that meet thefollowing tests on a cumulative basis: - Based on the financial asset's contractual terms and onspecific dates, the entity is entitled to receive cash flows that representsolely principal payments and interest payments on the principal balance. - The asset is held in the context of a business modelwhose aim is both to collect the contractual cash flows generated from theasset and to dispose of the asset. Impairment: The Final Standard addresses the issue of impairment offinancial assets by introducing the expected credit loss impairment model toreplace the incurred loss model prescribed in IAS 39. The expected credit lossmodel applies to debt instruments measured at amortised cost or at FVOCI andto trade receivables. The model introduces a simpler and economic approach formeasuring impairment: - General approach - credit losses due to default which areexpected to occur in the subsequent 12-month period will be recognisedprovided that there has not been a significant increase in credit risk sincethe date of initial recognition of the instrument. On the other hand, if therehas been a significant increase in credit risk since the date of initialrecognition of the instrument, a provision should be recognised for creditlosses that are expected to occur over the remaining life of the exposure inrespect of said instrument. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) d. Disclosure of new IFRS standards in the period prior to their adoption:(Cont.) (2) IFRS 9, "Financial Instruments": (Cont.) - A simpler approach (applies in certain cases and forcertain groups of assets only, including trade receivables) - according tothis approach, the credit losses that are expected to occur over the remaininglife of the exposure in respect of said instrument should be recognised,regardless of the occurrence of credit risk changes since the date of initialrecognition of said instrument. The Final Standard will be applied retrospectively, subjectto certain exemptions stipulated therein, in the financial statements forannual periods beginning on or after January 1, 2018. Earlier application ispermitted. The Company is evaluating the possible impact of theadoption of IFRS 9 but is presently unable to assess its effect, if any, onthe financial statements. (3) Amendments to IAS 16 and IAS 38 regarding acceptablemethods of depreciation and amortisation: In May 2014, the IASB issued Amendments to IAS 16 and IAS38 (the "Amendments") regarding the use of a depreciation and amortisationmethod based on revenue. According to the Amendments, a revenue-based methodis not considered to be an appropriate manifestation of consumption sincerevenue generated by an activity that includes the use of an asset generallyreflects factors other than the consumption of the economic benefits embodiedin the asset. As for intangible assets, the revenue-based amortisationmethod can only be applied under certain circumstances such as when it can bedemonstrated that revenue and the consumption of economic benefits of theintangible asset are highly correlated. The Amendments will be applied prospectively in the financial statements forannual periods beginning on or after January 1, 2016. Earlier application ispermitted. The Company believes the effect on the financial statements of the adoption ofthe Amendments will be immaterial. NOTE 3:- ACQUSITION OF WILI-FOOD INVESTMENT LTD. Share purchase agreement 1. On 2 March 2014, the Company entered into an agreement (the "WFIAgreement") to acquire from Zwi Williger ("ZW") and Joseph Williger ("JW" and,together with ZW, the "Sellers") a controlling stake in the share capital ofWilli-Food Investments Ltd. ("WFI"), a company listed on the Tel Aviv StockExchange, which in turn owns approximately 58% of G. Willi-Food InternationalLtd ("WFINT" and together with WFI, "Willi-Food"), a company listed on NASDAQ(the "Acquisition"). WFI operates in import, marketing and distribution ofseveral hundred food products mainly in Israel. Under the WFI Agreement, theCompany: (i) acquired the Sellers' entire shareholdings in WFI (part of whichwas acquired through a special tender offer as set out below), amounting inaggregate to 58% of the shares of WFI (or approximately 55% on a fully dilutedbasis); and (ii) published a special tender offer (the "Special Tender Offer")addressed to all shareholders of WFI (including the Sellers) in accordancewith Israeli Companies Law in order to acquire shares carrying 5% of thevoting rights in WFI. NOTE 3:- ACQUSITION OF WILI-FOOD INVESTMENT LTD. (Cont.) Share purchase agreement. (Cont.) The Special Tender Offer was completed on 1 May 2014 and the Acquisitioncompleted on 4 May 2014. Following such completion, the Company acquired inaggregate 61.65% of the issued share capital of WFI (62.27% of its votingrights on a fully diluted basis), for aggregate cash consideration of NIS284.7 million (USD 82.3 million). Upon the Acquisition, the Company nominateddirectors which comprise the majority of the board of directors of both WFIand WFINT. 2. Under the WFI Agreement, the Company granted the Sellers a put option tosell all or some of their shares in WFINT (whether held (3.89%) on the date ofthe WFI Agreement or those which they may hold following the exercise ofemployee options in WFINT) which amount to a further approximately 7% of theshares of WFINT on a fully diluted basis (the "WFINT Put Option Shares" andthe "WFINT Put Option" respectively). The WFINT Put Option is exercisable bythe Sellers for a period of four years and one month commencing eleven monthsfrom completion of the Acquisition, at a price of USD 12 per share. The putoption exercise price is subject to adjustment for dividends bonus, shares andrights issues by WFINT. The Company was granted a power of attorney whichenables it to procure the Sellers to sell their WFINT shares to a third partyat a price per share not below USD 12, subject to compliance with applicablelaws, during the WFINT Put Option exercise period. The power of attorney maybe cancelled by the Sellers at any time during that period, although suchcancellation would lead to the immediate cancellation of the WFINT Put Optionin respect of such WFINT Put Option Shares. The Sellers granted the Company anirrevocable proxy with respect to their holdings in WFINT, so as to allow theCompany to vote such shares at shareholders' meetings of WFINT during theperiod commencing on completion of the Acquisition and expiring on theexercise or expiry of the WFINT Put Option. As part of the consideration for the acquisition, the Company recorded aliability for the WFINT Put Option, see 4(a) below. The WFI Agreement modified the terms of the unvested employee options held bythe Sellers, by ensuring the sale price of the shares which will derive fromthe exercise of the unvested employee options. On the date of the Acquisition,the fair value of the modification for the entire vesting period (three years)of the options amounted to USD 1.4 million, based on a calculation prepared byan independent valuation specialist. In the six months and three months ended 30 June 2014, the Company recorded inprofit or loss share-based payment expense of USD 215 thousand (in addition tothe expense recorded in WFI in the amount of USD 83 thousand. As of 30 June2014, the liability recorded in the statement of financial position for theput option in respect of the vested portion of these employee options amountedto USD 298 thousand. 3. Under the WFI Agreement, the Sellers agreed to continue to be engaged byWFINT as chairman of the board of WFINT (in respect of Zvi Williger) andpresident of WFINT (in respect of Joseph Williger), or as joint chiefexecutive officers of WFI, for an additional period of three years commencingupon completion of the Acquisition (May 2014). On 21st August 2014, theextension of the agreements between the parties for another period of three(3) years (until 21st August 2017) was approved at WFINT's annual generalmeeting. Subject to further agreement between the parties and to applicablelaw, the Sellers may continue their respective engagement following suchperiod. In addition, each of the Sellers is prohibited from competing againstWilli-Food in any material way, subject to certain agreed exceptions, for anadditional period commencing on the termination of his respective engagementwith WFINT and terminating on the later of two years from such termination, orfour years from completion of the Acquisition, but not longer than five (5)years from the completion date. It should be noted that the Company haswithdrawn its application regarding the approval of the Israeli Anti-trustAuthorities to extend the non-competition period to six years from thecompletion date, under all scenarios. In consideration of such non-competeundertakings, each of the Sellers is entitled to an additional annual paymentof NIS 1.5 million (approximately USD 0.4 million) following termination ofhis respective engagement, to be paid by the Company and subject to applicablelaw. NOTE 3:- ACQUSITION OF WILI-FOOD INVESTMENT LTD. (Cont.) Share purchase agreement. (Cont.) 4. Business Combination The Company accounted for the Acquisition as a business combination and beganconsolidating the financial statements of WFI from the completion date of theAcquisition on 4 May 2014. a. Consideration for Acquisition U.S. Dollars in thousandsCash paid 82,342Liability for non-controlling interest put option(a) 5,945Liability for non-competition payments (b) 1,555 89,842 (a) As described in 2 above the Company has granted Sellers a put option tosell up to 504,407 shares of WFINT. The put option is exercisable for a periodof four years and one month, commencing eleven months after the completion ofthe Acquisition at a price of USD 12 per share. The liability reflects thepresent value of the amount payable assuming exercise at the earliestpermissible date of all the shares subject to the put option discounted at anannual rate of 2%. (b) The liability for non-competition payment reflects the present value of anannual payment of NIS 1.5.million (USD 0.4 million to each of the two formercontrolling shareholders of WFI), for a period of two years subsequent to thetermination of their service agreements with the Group. (c) Cash outflow/inflow on the acquisition: U.S. Dollars in thousands Cash and cash equivalents acquired with theacquiree at the acquisition date 20,254Cash paid (82,342) Net cash (62,088)Transaction costs of approximately USD 170 thousand that are directlyattributable to the Acquisition were recorded in profit or loss. b. The Company has elected to measure the non- controlling interests in WFI atfair value. The fair value of the non- controlling interest in WFI is based onthe quoted market price of the shares of WFI and WFINT on the completion date. The fair value adjustments detailed below are based on a purchase priceallocation study prepared by an independent valuation specialist as of thedate of the Acquisition. The purchase price allocation was prepared on thebasis of an acquisition of 100% of the net assets of WFI Group. Deferred taxliability is recorded in respect of those fair value adjustments that resultin taxable temporary differences. NOTE 3:- ACQUSITION OF WILI-FOOD INVESTMENT LTD. (Cont.) Share purchase agreement. (Cont.) 4. Business Combination (Cont.) U.S. Dollars in thousands Total consideration 89,842 Fair value of net assets acquired 137,991Non-controlling interests (73,516) 64,475Goodwill 25,367The fair value of the identifiable assets and liabilities of WFI near theacquisition date: U.S. Dollars in thousands Cash and cash equivalents 20,254Financial assets at fair value through profit or loss 59,481Trade receivables 30,538Other receivables and prepaid expenses 1,004Investment in a fund designated at fair value throughprofit or loss 4,390Inventories 15,479Property, plant and equipment, net 14,480Prepaid expenses 9Intangible assets:Customer relationships 6,577Supplier relationships 3,914Brands 1,800Non-competition agreements (*) 1,375 159,301 Short-term bank debt 834Current maturities of debentures 3,707Trade payables 6,311Other accounts payable and deferred revenues 862Income tax liability 129Employee benefit liabilities, net- short term 620Employee benefit liabilities, net- long term 175Debentures 4,011Deferred taxes 4,661 21,310 137,991(*) The fair value of the non-competition agreements was based on anon-competition period of two years commencing three years after theAcquisition date as the individuals subject to the non-competition agreementshave management service agreements with WFI Group (subject to shareholderapproval) for a period of three years from the date of the Acquisition. Thenon-competition agreements are not amortised while the individuals subject tothese agreements are providing services to the WFI Group due to the fact thataccording to their agreements and the Israeli Companies Law, they areprohibited from competing with WFI's business while serving as officers ofWFI. NOTE 3:- ACQUSITION OF WILI-FOOD INVESTMENT LTD. (Cont.) Share purchase agreement. (Cont.) 4. Business Combination (Cont.) c. Fair value adjustment on acquisition: U.S. Dollars in thousands Property plant and equipment 2,371Customer relationship 6,577Supplier relationship 3,914Brands 1,800Non- competition agreements 1,375Good will 25,367Debentures (337)Deferred taxes (4,161) 36,906The intangible assets are amortised over their estimated useful life (see Note2(b)). d. From the date of Acquisition, WFI has contributed USD 15.9 million ofrevenue and USD 620 thousands (after fair value adjustments) to the net incomeof the B.S.D Group. If the Acquisition had taken place at the beginning of theyear 2014, consolidated revenues would have been USD 50.6 million and the netincome would have been USD 1.3 million. NOTE 4:- FINANCIAL INSTRUMENTS Financial instruments that are not measured at fair value: Except as detailed in the following table, the Group believes that thecarrying amount of financial assets and liabilities that are presented atamortised cost in the financial statements approximates their fair value. Financial liabilities: Carrying amount Fair value 30 June 30 June 2014 2014 Unaudited U.S. Dollars in thousands Debentures and interest payable 7,759 7,585Below are details of the Group's financial assets that are measured in theCompany's statement of financial position at fair value by levels: Financial assets at fair value: 30 June 2014 Unaudited Level 1 Level 2 Total U.S. Dollars in thousands Marketable securities 61,279 1,294 62,573Investment in fund - 4,415 4,415 Total 61,279 5,709 66,988NOTE 5:- OPERATING SEGMENTS a. General: Upon the completion of the Acquisition of WFI in May 2014, the Group's mainactivity and its sole operating segment is import, marketing and distributionof food products to retail chains, supermarkets, wholesalers, and institutionsmainly in Israel. An operating segment is identified on the basis of information that isreviewed by the chief operating decision maker ("CODM") to make decisionsabout resources to be allocated and assess its performance. b. Reporting segments: Six months Three months ended 30 June ended 30 June 2014 Unaudited U.S. Dollars in thousandsRevenuesImport marketing and distribution offoodproducts 15,942 15,942Other 65 37 16,007 15,979Segment income (loss)Import marketing and distribution of 607food products 607Other (*) (4,213) (2,428) Operating loss (3,606) (1,821) Financial income, net 2,119 1,220 Loss before taxes (1,487) (601)(*) Other includes mainly unallocated corporate general and administrativeexpenses and expenses relating to research and development activities. Seasonality WFI Group operating results may be subject to variations from quarter toquarter depending, among others, the timing of sales campaigns and majorJewish holidays. Therefore, the operating results of WFI Group in the periodended 30 June 2014 are not necessarily indicative of its operating results forthe year. c. Revenues from major customers that contributed 10% or more to the Grouprevenues (as percentage of the total revenue): Six and three months ended 30 June 2014 Unaudited % Customer A 15 NOTE 5:- OPERATING SEGMENTS (Cont.) The revenues from the following products contributed 10% or more tothe Group revenues (as percentage of the total segment revenue): Six and three months ended 30 June 2014 Unaudited % Canned vegetables 17Dairy and dairy substitute products 26Dried fruit, nuts and beans 18 NOTE 6:- SUBSEQUENT EVENTS a. As described in Note 13(a) to the financial statements as of 31 December2013 the Company filed claims against two companies (the "Respondents") fordirect and indirect damages caused by infringement of patents it developed andregistered. In 11 July 2014 the district court in United State ofAmerica reached a decision regarding one of the claims, and found that theCompany's patent is valid but found that the Respondents did not infringe thepatent. In response, the Company filed motions with the originaljudge hearing the claim for a contrary judgment to the jury's verdict or for anew trial. The Respondents have also filed motions with the original judgehearing the claim for a contrary judgment to the jury's verdict in respect ofthe validity of the Company's patent. The Company expects the court to rule onthese motions in October, 2014. In addition, the Company filed its objections to the bill ofcosts filed by Apple Inc. In the aggregate amount of USD 328 thousands. b. On 15 August 2014, the Company published a notice of extraordinary generalmeeting to be held on 8 September, 2014 and at which the Company'sshareholders will be asked to approve the terms of service of Mr Israel JossefSchneorson (which will be subjected to the approval of BGI Investments (1961)Ltd. ("BGI") shareholders, such shareholder approval being capable of beingoverruled in special circumstances), the terms of employment of Mr EyalMerdler and an agreement between the Company and BGI Investments (1961) Ltd.(the "BGI Management Agreement") pursuant to which the Company will providecertain services to BGI, including the services of a chief executive officer,chief financial officer, controller, bookkeeper and administrative services. Subject to the BGI Management Agreement receiving necessary approvals andbeing entered into, the Company will pay BGI a one-off fee of USD 660thousands in relation to the services provided to the Company by the chiefexecutive officer and chief financial officer between 14 August 2013 and 31August 2014 and services provided to the Company by the corporate secretary,controller, bookkeeping and certain administrative staff of BGI between 1January 2014 and 31 August 2014, net of expenses or amounts owing from BGI tothe company as at the date of such payment . Subject to the BGI Management Agreement receiving necessary approvals andbeing entered into, the Company will provide BGI with the services of thechief executive officer (subject to the approval by BGI of the Company's chiefexecutive officer's terms of service), chief NOTE 6:- SUBSEQUENT EVENTS (Cont.) financial officer, corporate secretary, controller, bookkeeping and certainadministrative staff to BGI in consideration of a monthly fee equal to NIS35,000 (approximately USD 10,000) or NIS 28,000 (approximately USD 8,000) inthe event that the Company's chief executive officer's terms of service arebit approved by BGI. - - - - - - - - - - - - - - - - -