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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Atia Grp | LSE:ATIA | London | Ordinary Share | IL0005410118 | ORD ILS1.0 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 5.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 6235C
Atia Group Limited
03 September 2008
NOTE 3 * CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The accounting estimates and assumptions used in the preparation of the financial statements are assessed on a regular basis and are based
on past experience and other factors, including future events, the occurrence of which is expected to occur with a reasonable degree of
certainty, in view of the current circumstances. The Group makes assumptions and estimates regarding future occurrences. By their very
nature, it is rare that the accounting estimates will be identical with actual results. The estimates and assumptions that contain the
greatest exposure to material changes in amount of assets and liabilities in the subsequent fiscal year are as follows:
A. Taxes on income and deferred taxes
§ The Group is taxed in a larger number of jurisdictions and, accordingly, it has to use a significant amount of
discretion in order to determine its total provision for income taxes. The Group conducts many transactions, the final tax liability thereof
is uncertain. The Group records provisions in its books based on its assessments regarding the probability that it will have to make
additional tax payments in respect of these transactions. When the final tax liability determined by the tax authority is different than the
tax liability recorded in the books in prior periods, the difference will be carried to the profit and loss accounts in the period in which
the final tax assessment is made by the tax authorities.
§ The Group records deferred tax assets and liabilities on the basis of the differences between the carrying values of
the assets and liabilities and their amounts taken into account for tax purposes. Group Management regularly assesses the recoverability of
the deferred tax assets included in its accounts, on the basis of historical taxable revenues, forecasted taxable revenues, the timing of
the expected reversal of the temporary differences and the implementation of tax planning strategy.
B. Provision for contingent liabilities
Provisions for contingent liabilities in respect of litigation are recorded on the books of the Group, on the basis of the
assessment of the Group's legal counsel and the discretion of Group Management regarding the probability that cash flows will be used to
settle liabilities, and on the basis of the estimate made by Management in respect of the present value of the expected cash flows that will
be required to settle the existing liabilities.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 3 * CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS (cont.)
C. Investment real estate
Investment real estate assets are measured at fair value that reflects market conditions at each balance sheet date. Changes in
fair value are carried to the profit and loss accounts. The fair value of investment real estate assets is based on valuations performed by
independent outside appraisers who possess recognized professional experience and extensive experience in connection with investment real
estate of this type. The economic valuations are based on a method of comparing the market value of the assets against similar assets having
similar characteristics in similar transactions.
D. Provision for decrease in value of inventory of buildings under construction
The inventory of buildings under construction is presented at the lower of cost or estimated net usage value. Cost includes direct
identifiable costs, subcontracting costs, joint indirect costs and capitalized credit costs. Joint indirect costs were allocated to work in
progress on the basis of various allocation keys. The net usage value is the estimated sale price during the normal course of business, less
the estimated costs to completion and the estimated costs of carrying out the sale.
In cases in which a loss is expected on buildings under construction, a provision for the entire amount of the expected loss is
recorded at the date the loss is already forecasted, based on the best estimate of Management regarding the expected loss, based on, among
other things, a comparison of the market price of the inventory of buildings under construction against similar assets having similar
characteristics in similar transactions, proximate to the date of the valuation.
NOTE 4 * NON-COMPLIANCE WITH THE PRESERVATION RULES OF THE TEL AVIV STOCK EXCHANGE
On 14 January 2008, the Company was notified by the Tel Aviv Stock Exchange (hereinafter * "TASE") that, based on data from 31 December
2007, it was not in compliance with the preservation rules, due to the fact that the percentage of shares of the Company held by the public
as at 31 December 2007 amounted to 9.5%, lower than the required 15%.
The Company was given notice as to its non-compliance with the preservation rules and was granted an extension of 6 months, until 30 June
2008, to comply with the rules.
On 30 July 2007, the TASE notified the Company that in view of the improvement in Company data, the board of directors of the TASE did not
deliberate on the transfer of the Company to the preservation list.
NOTE 5 * SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
A. Investment agreement with Trafalgar
In January 2008, the Company entered into a Committed Equity Facility agreement with an international investment fund, Trafalgar
Capital Specialized Investment Fund (hereinafter * *Trafalgar*) (hereinafter * the *Investment Agreement* or "CEF"), whereby Trafalgar
undertook to invest in the capital of the Company an amount of up to NIS 45,685 thousand over a three-year period, in return for an
allotment of ordinary shares of the Company. The major principles of the agreement were as follows:
1. The investment in the capital of the Company by Trafalgar will be done in stages, as required by the Company from time to time.
2. Against every amount invested by Trafalgar, the Company will allot to Trafalgar ordinary shares of the Company at a price equal to
94% of the average stock market price of the shares of the Company during the five days following the demand notification of the Company
that it requires funds pursuant to the investment agreement.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 5 * SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (cont.)
A. Investment agreement with Trafalgar (cont.)
3. Unless agreed upon otherwise with Trafalgar, every amount invested shall be limited in such a way that the aggregate investment
amount during any given calendar week does not exceed the lower of the following: (1) an amount that grants Trafalgar an allotment of shares
equal to 15% of the market trading volume in the Company's shares during the five consecutive trading day period preceding the investment
amount demanded by the Company; or (2) an amount that grants Trafalgar an allotment of the quantity of shares equal to 2.99% of the total
number of shares issued as of that date.
4. In return for its commitment to invest in the Company pursuant to the CEF, Trafalgar is entitled to a payment of $1,500 thousand,
to be paid by way of an allotment of shares (hereinafter * the "Remuneration Shares"), to be carried out in stages, as detailed below:
Part of the remuneration shares will be allotted to ATW Holdings Ltd. (hereinafter * "ATW") which acted as a broker in the
transaction between the Company and Trafalgar.
Out of the remuneration shares, a quantity of 69,375,000 shares will be allotted on the basis of the market share price at the
date of the signing of the investment agreement (the "Proposed Shares").
The value of the proposed shares constitutes 45% - 55% of the total value of the remuneration shares to which Trafalgar is
entitled. Of these shares, a quantity of up to 50,454,546 shares will be allotted to Trafalgar and a quantity of 18,920,454 shares will be
allotted to ATW, subject to receipt of approvals and at the dates set out below.
The balance of the remuneration shares will be allotted between Trafalgar and ATW as set out in the investment agreement,
piecemeal, according to the timetable and subject to the terms set out in the investment agreement, as detailed below. The Company will
issue an immediate filing regarding the allotment to Trafalgar and/or ATW which will be done on account of the remuneration shares, as
above.
According to the investment agreement, remuneration shares will be allotted to Trafalgar and ATW as a commission, in a total
amount of $1,500 thousand, at prices and at dates as follows:
- ATW will be allotted shares of the Company at an amount equal to 15% of the commission (i.e., $225 thousand), at a weighted average
market share price on the date of the signing of the investment agreement * NIS 0.04 per share;
- At the earliest possible time, Trafalgar will be allotted shares of the Company at an amount equal to 20% of the commission (i.e., $300
thousand), at a weighted average market share price on the date of the signing of the investment agreement * NIS 0.04 per share. These
shares are scheduled to be sold to Emvelco, pursuant to an agreement signed between Emvelco and Trafalgar, as described below:
At the date of approval of the issuance of a shelf prospectus by the Company, Trafalgar will be allotted shares of the Company at an
amount equal to 20% of the commission (i.e., $300 thousand), at a weighted average market share price on the date of the signing of the
investment agreement * NIS 0.04 per share. However, if the Company does not receive approval for the issuance of the shelf prospectus,
whereby Trafalgar will be permitted to sell its shares without restriction, it will be allotted at the beginning of May 2008 half of the
quantity of shares as above (i.e., shares at a value of $150 thousand at a share price of NIS 0.04). These shares are also scheduled to be
sold to Emvelco pursuant to the agreement between Emvelco and Trafalgar, as described below. Upon the approval of the issuance of a shelf
prospectus, Trafalgar will be immediately allotted the second half of the aforementioned shares;
Within 6 months of the later of the date of the signing of the investment agreement or the receipt of approval of the issuance of the
shelf prospectus, Trafalgar will be allotted shares of the Company at a value equal to 10% of the amount of the commission (i.e., $150
thousand), at a weighted average market price of the share during the week that preceded the date of the allotment. However, if the Company
does not obtain approval for the issuance of a shelf prospectus whereby Trafalgar will be permitted to sell its shares without restriction,
it will be allotted at the beginning of August 2008 half of the quantity of shares as above (i.e., shares at a value of $75 thousand at the
aforementioned share price). These shares are also scheduled to be sold to Emvelco pursuant to the agreement between Emvelco and Trafalgar,
as described below. Upon the approval of the issuance of a shelf prospectus, Trafalgar will be immediately allotted the second half of the
aforementioned shares;
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 5 * SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (cont.)
A. Investment agreement with Trafalgar (cont.)
4. (cont.)
Within 10 months of the later of the date of the signing of the investment agreement or the receipt of approval of the issuance of the
shelf prospectus, Trafalgar will be allotted shares of the Company at a value equal to 10% of the amount of the commission (i.e., $150
thousand), at a weighted average market price of the share during the week that preceded the date of the allotment. However, if the Company
does not obtain approval for the issuance of a shelf prospectus whereby Trafalgar will be permitted to sell its shares without restriction,
it will be allotted at the beginning of August 2008 half of the quantity of shares as above (i.e., shares at a value of $75 thousand at the
aforementioned share price). These shares are also scheduled to be sold to Emvelco pursuant to the agreement between Emvelco and Trafalgar,
as described below. Upon the approval of the issuance of a shelf prospectus, Trafalgar will be immediately allotted the second half of the
aforementioned shares;
At the end of each month during the 10 month period commencing from the date of the signing of the investment agreement, ATW will be
allotted shares of the Company at a value equal to 25% of the amount of the commission (i.e., $375 thousand), at a weighted average market
price of the share during the week that preceded the date of the allotment. However, if the Company does not obtain approval for the
issuance of a shelf prospectus whereby ATW will be permitted to sell its shares without restriction, it will be allotted over the period
half of the quantity of shares as above (i.e., shares at a value of $187.5 thousand at the aforementioned share price). These shares are
also scheduled to be sold to Emvelco pursuant to the agreement between Emvelco and Trafalgar, as described below. Upon the approval of the
issuance of a shelf prospectus, ATW will be immediately allotted the second half of the aforementioned shares;
5. The Company undertook to obtain all of the approvals for the allotment, as required by law, including for purposes of registering
the allotted shares for trade.
6. Trafalgar will be entitled to receive from the Company a commission of 4% of all investment amounts demanded from it by the
Company, which commission shall be deducted from any investment amount transferred to the Company pursuant to the agreement.
7. A condition for the performance of any investment by Trafalgar is that the Company issue a shelf-prospectus whereby Trafalgar is
entitled to sell the shares it is allotted under the agreement during the course of trading on the stock market. The Company intends on
taking the steps to issue a shelf-prospectus on the basis of its 31 December 2007 financial statements. Trafalgar entered into an agreement
with Emvelco Corporation, one of the controlling shareholders of the Company, whereby in the event that the Company is unable to issue a
shelf-prospectus, Emvelco will sell Trafalgar shares from the available-for-trading shares held by Emvelco, of a quantity that is identical
to the quantity of the shares to be allotted to Trafalgar, against the shares to be allotted to Trafalgar which will be transferred to the
ownership of Emvelco.
8. Notwithstanding the above, it was agreed between the parties that, in the event that the shelf-prospectus is issued by the Company
no later than 30 June 2008, the discount rate to which Trafalgar will be entitled from the price of the share (as mentioned in 2 above) will
be 5% (instead of 6%) and the commission rate due Trafalgar as per item 6 above will be 3% (instead of 4%).
9. Trafalgar undertakes not to sell the shares of the Company short.
Concurrent with the signing of the investment agreement, as above, the Company entered into a loan agreement with Trafalgar
whereby Trafalgar would lend the Company an amount of $500 thousand, bearing interest at an annual rate of 8.5% to be repaid in installments
in the form of an allotment of shares in accordance with the mechanism set out in the investment agreement described above, until 30 April
2009. Alternatively, the amount of the loan will be repaid in equal installments commencing in July 2008 through April 2009. Trafalgar shall
be entitled to a commission of 10% of each amount of the loan that is repaid in cash. The Company has the right to repay part of the loan in
cash and the rest of the loan in shares, in accordance with the CEF.
In January 2008, the Company received the aforementioned loan.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 5 * SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (cont.)
A. Investment agreement with Trafalgar (cont.)
Further to the signing of the investment agreement with Trafalgar, the board of directors of the Company decided to allot
Trafalgar 69,375,000 ordinary shares of the Company, no par value each (the "offered shares") which, following the allotment, will
constitute 5.22% of the capital rights and voting rights in the Company, both immediately following the allotment and fully diluted.
The offered shares will be allotted piecemeal, at the following dates:
18,920,454 shares will be allotted immediately following receipt of approval of the stock exchange to the listing for trade of the
offered shares.
25,227,273 of the offered shares will be allotted immediately following receipt of the approval of the shelf prospectus by the
Israel Securities Authority. However, in the event that such approval is not forthcoming by the beginning of May 2008, Trafalgar will be
allotted at that date only 12,613,636 shares.
On 29 April 2008, the agreement between Emvelco and Trafalgar was revised, with the consent of both parties, whereby the share
sale agreement will not apply to the 69,375,000 ordinary shares offered to Trafalgar and to ATW.
25,227,273 of the offered shares will be allotted immediately following receipt of all of the necessary approvals in order for the
offered shares to be swapped on 30 April 2008 against a quantity of shares equal to those held by Emvelco Corp. at that same date.
In respect of the commitment of the Company to allot shares in a quantity that has not yet been determined (in consideration of
$625 thousand), the Company recorded a liability in its financial statements as at 30 June 2008 in an amount of NIS 2,221 thousand against a
reduction in shareholders' equity in the same amount.
As at the date of the preparing of the financial statements, no shares have been allotted to Trafalgar.
In view of the technical difficulties involved in the allotment of the Trafalgar shares, the Company and Trafalgar signed an
amendment to the agreement on 27 August 2008, whereby the parties admit the failure to allot the shares to Trafalgar and, therefore, the
loan received by the Company in an amount of $500 thousand will be repaid by 30 September 2008.
T.A.S. Holdings Limited (hereinafter * *TAS*), a third party that has business dealings with Emvelco Corp., will pay compensation
of $250 thousand in respect of the cancellation of the allotment of shares to Trafalgar. After repayment of the loan to Trafalgar and the
payment by TAS, the liability presented in the balance sheet as at 30 June 2008 will be written off directly against shareholders' equity.
B. The sub-prime crisis and the replanning of the Las Vegas project
The financing of the construction project of the Verge subsidiary is contingent upon the future impact of the sub-prime crisis on
the financial institutions operating in the U.S. The sub-prime crisis may have an impact on the ability of the Verge subsidiary to procure
the financing required to complete its construction project and on the terms of the financing, if procured, and it may also impact in the
ability of the customers of the Company to procure mortgages, if necessary, and on the terms under which the mortgages will be obtained.
In the second quarter of 2008, the Verge subsidiary, together with the management company of the project, carried out an
engineering re-assessment of the project. As a result of the re-assessment, the architect of the project was replaced and part of the plans
were changed (including restricting the number of apartments and changes regarding the issue of parking). As a result of these changes,
Verge decided to submit a request to the Municipality for approval.
Since Verge will not be able to complete the project and transfer title of the apartments to the purchasers at the original target
date set in the agreement with the purchasers (24 months after receipt of the advance from the purchasers), Verge agreed to cancel some of
the agreements and refund the advance paid by the purchasers. By 30 June 2008, 39 agreements were cancelled and advances of $797 thousand
were refunded to the purchasers.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 5 * SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (cont.)
B. The sub-prime crisis and the replanning of the Las Vegas project (cont.)
In view of the uncertainty regarding the ability of Verge to raise the necessary funding for the project, Verge estimates that its
chances of raises the funding for the project are less than probable. Therefore, it decided to set up a provision for a decline in value of
the project, down to the realizable value of the property as vacant property. Verge estimates that the value of the project as vacant
property as at 30 June 2008, based on a comparison of the market value of the property against similar assets having similar characteristics
in similar transactions, proximate to the performance of the valuation, is $3.8 million (NIS 12,738 thousand).
A provision for decline in value in an amount of NIS 8,196 thousand was carried to the profit and loss accounts of the second
quarter of 2008.
C. Agreement for the management of the project in Las Vegas
In January 2008, the subsidiary, Verge, entered into an agreement with TWG Consultants LLC (a third party, unrelated to the
Company), a project management company operating in Las Vegas (hereinafter * *TWG*), whereby TWG will provide management, consultancy,
representation and control services in connection with the Verge project in Las Vegas (hereinafter * the *Project*), during the entire
duration of the project, including handling the various aspects involving the general contractor, professional consultants, and the
authorities, will cost the project and will supervise the performance of its budget, monitor the project timetables, supervise the carrying
out of various tasks involving the project and assist in the bookkeeping of the project.
In return for the services to be provided by TWG under the agreement, it will be entitled to the following amounts:
1. Reimbursement of expenses, including the salary of an engineer and/or supervisor as required and an administrative employee in a
part-time position (at a total cost estimated at $12,500 a month) and reimbursement of office overhead expenses up to an amount of $20,000 a
month.
2. A monthly payment of $24,750.
3. An additional bonus of the higher of $1,000,000 or 5% of the earnings before taxes, depreciation and amortization (EBTDA). The
bonus will be paid on the basis of the progress of the work, commencing on the date that the accompanying loan is granted to the project,
with the final amount to be paid upon receipt of the temporary approvals for occupancy of 85% of the units in the project.
The term of the agreement was set at the earlier of 5 years or 6 months prior to the completion of the project. Notwithstanding
the above, each of the parties is entitled to terminate the agreement for any reason whatsoever, upon advance notice of 30 days.
D. Consolidation of share capital
On 6 April 2008, it was decided to convene a special meeting of the shareholders of the Company for 14 May 2008. On the agenda of
the meeting was a decision to consolidate and redivide the share capital of the Company such that each 100 existing shares of the Company's
registered and issued capital of the Company will be consolidated into one share. At the special meeting which took place on 14 May 2008, it
was resolved to consolidate the share capital and it was further decided that the effective date of the consolidation is 21 May 2008 and
that commencing from 22 May 2008, the shares would be traded as the consolidated shares, as above.
E. Receipt of loan from third party
On 21 June 2008, the Verge subsidiary signed a promissory note in an amount of $1.66 million, to AFG, an unrelated third party. The
promissory note bears interest of 15% and is repayable on 21 June 2009. The promissory note is secured by a first degree pledge on Verge's
property in Las Vegas.
Part of the funds received against the promissory note were used to repay loans received in the past from Emvelco Corp., the controlling
shareholder in the Company, which was granted in the past a first-degree pledge on Verge's property.
Emvelco Corp. notified the Company that Emvelco would bear interest of 3% (out of the 15%) in respect of the aforementioned promissory note
that replaced the loan received from Emvelco in the past.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 5 * SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (cont.)
F. Litigation
Verge, a subsidiary of the Company, has been conducting legal proceedings against three different parties, as follows:
1. In December 2007, American LLC (hereinafter - "American"), which served as the company listing agent, filed a complaint in
Bankruptcy Court (as American entered in 2007 into Chapter 11 in the Nevada Bankruptcy Court) and an Order to Show Cause to Require Turnover
of Funds.
In January 2008, Verge filed an answer denying wrong doing as well as a counterclaim. On 23 May 2008, Verge entered into a
settlement and release of claims agreement and was approved by the court, whereby Verge will pay American an amount of $125 thousand. This
amount was presented in the consolidated balance sheet of the Company under the heading "accounts payable and credit balances".
2. On 21 November 2007, LM Construction filed a demand for an arbitration proceeding against Verge in connection with amounts
allegedly due for general contracting services provided by them during the construction of Verge's Sales Center. Verge agreed to enter into
arbitration, denied any wrong doing and filed a counterclaim for damages.
The amount of the suit is approximately $68 thousand and as part of the Group's conservative approach is included in accounts
payable and credit balances in the consolidated balance sheet.
3. On 25 April 2008, a former consultant of Verge who was disengaged by Verge recorded liens on the property in an amount of over $1.2
million without submitting documentation to prove his demands. On 7 May 2008, the consultant notified Verge about his intention to record
additional liens amounting to $7.35 million. Verge's position is that by recording the liens, the said consultant caused damages that might
jeopardize the entire project, and therefore, on 18 June 2008, Verge filed a complaint with the Nevada State Board of Architecture against
the consultant for clouding title as well as damages. Upon the filing, the board notified Verge that the consultant is under its
investigation.
NOTE 6 * INTERESTED PARTIES
A. Balances of interested parties
Convenience translation
into £ (Note 2)
30 June 31 December 30 June
2008 2007 2007 2008
NIS* 000 NIS* 000 NIS* 000 £* 000
(Unaudited) (Audited) (Unaudited)
Accounts payable and credit 574 - 160 86
balances
______ ______ ______ ______
______ ______ ______ ______
Loans received from interested 8,511 43,756 7,454 1,275
parties (*)
______ ______ ______ ______
______ ______ ______ ______
(*) The balance of loans from interested parties as at 30 June 2008 is comprised of the following two components:
1. A loan in an amount of $695 thousand (NIS 2,329 thousand) granted by Emvelco Corporation, the controlling shareholder in the
Company. The balance is net of part of the loan that was repaid to the controlling shareholder of the Company during the quarter, using
funds received from a third party. See Note 5E above.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 6 * INTERESTED PARTIES (cont.)
A. Balances of interested parties (cont.)
(*) 1. (cont.)
As of 31 December 2007, the balance of the loan payable of Verge to Emvelco amounted to $773 thousand. The two parties agreed to
an extension of the loan agreement between them, until Verge is able to repay Emvelco, with the target date being 31 December 2008. Interest
continues to accrue on the loan at a rate of 12% per annum.
2. A loan in an amount of Kuna 8,417 thousand (NIS 6,182 thousand), received from Shalom Atia, a controlling shareholder in the
Company, does not bear interest and is Kuna * denominated. The repayment date has not yet been determined.
B. Transactions with interest parties
Convenience
translation
into £ (Note
2)
Six month period Three month period ended 30 June Year ended Six month period Three month
period
ended 30 June 31 ended 30 June ended 30
June
December
2008 2007 2008 2007 2007 2008
2008
NIS* 000 NIS* 000 NIS* 000 NIS* 000 NIS* 000 £* 000 £*
000
(Unaudited) (Unaudited) (Audited)
(Unaudited)
Management fees to interested 414 - 201 - 160 62
30
parties
______ ______ ______ ______ ______ ______
______
______ ______ ______ ______ ______ ______
______
Exchange rate differences 831 - 379 - 243 125
57
(expense) in respect of loans
to consolidated companies
______ ______ ______ ______ ______ ______
______
______ ______ ______ ______ ______ ______
______
Interest expense in respect of 894 1,751 314 1,001 3,740 134
47
loans from interested parties
(part of which was capitalized
to the inventory of buildings
under construction)
______ ______ ______ ______ ______ ______
______
______ ______ ______ ______ ______ ______
______
C. Benefits to interested parties
Convenience translation
into £ (Note 2)
Number ofindividuals Six month period Three month period ended 30 June Year ended Six month
period Three month period
in ended 30 June 31 ended 30
June ended 30 June
December
2008 2008 2007 2008 2007 2007
2008 2008
NIS* 000 NIS* 000 NIS* 000 NIS* 000 NIS* 000 £*
000 £* 000
(Unaudited) (Unaudited) (Audited)
(Unaudited)
Interested parties who render
services to the Company (*):
Vice President and director 1 207 - 100 - 80
31 15
CEO and director 1 207 - 101 - 80
31 15
Fees of directors who are not 2 9 - 9 - 41
1 1
employed by the Company
(*) Including through management companies owned by them.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 7 * GEOGRAPHIC SEGMENTS
Consolidated
1. Profit and loss data
Six month period ended 30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Segmental results (1,460) (9,182) (663) (11,305)
Financing income 9 - - 9
Financing expenses (1,004) - - (1,004)
Tax benefit - - 133 133
______ ______ ______ ______
Loss for the period (2,455) (9,182) (530) (12,167)
______ ______ ______ ______
______ ______ ______ ______
Three month period ended 30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Segmental results (799) (8,193) (613) (9,605)
Financing expenses (735) - - (735)
Tax benefit - - 123 123
______ ______ ______ ______
Loss for the period (1,534) (8,193) (490) (10,217)
______ ______ ______ ______
______ ______ ______ ______
Convenience translation
Six month period ended 30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
£* 000 £* 000 £* 000 £* 000
Segmental results (219) (1,376) (99) (1,694)
Financing income 1 - - 1
Financing expenses (150) - - (150)
Tax benefit - - 20 20
______ ______ ______ ______
Loss for the period (368) (1,376) (79) (1,823)
______ ______ ______ ______
______ ______ ______ ______
Convenience translation
Three month period ended 30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
£* 000 £* 000 £* 000 £* 000
Segmental results (120) (1,228) (91) (1,439)
Financing expenses (110) - - (110)
Tax benefit - - 18 18
______ ______ ______ ______
Loss for the period (230) (1,228) (73) (1,531)
______ ______ ______ ______
______ ______ ______ ______
(1) Management and head office
(2) Constitutes a real estate promotion segment
(3) Constitutes an investment real estate segment
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 7 * GEOGRAPHIC SEGMENTS (cont.)
Consolidated (cont.)
2. Other data
30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Segmental assets 82 25,237 71,602 96,921
______ ______ ______ ______
______ ______ ______ ______
Segmental liabilities 5,481 23,725 50,526 79,732
______ ______ ______ ______
______ ______ ______ ______
Convenience translation
30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
£* 000 £* 000 £* 000 £* 000
Segmental assets 12 3,782 10,731 14,525
______ ______ ______ ______
______ ______ ______ ______
Segmental liabilities 821 3,556 7,572 11,949
______ ______ ______ ______
______ ______ ______ ______
Six month period ended 30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Unallocated purchase cost of - - 5,210 5,210
long-term general assetsin
continued operations
______ ______ ______ ______
______ ______ ______ ______
Depreciation and amortization - 21 - 21
______ ______ ______ ______
______ ______ ______ ______
Three month period ended 30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Unallocated purchase cost of - - 4,813 4,813
long-term general assetsin
continued operations
______ ______ ______ ______
______ ______ ______ ______
Depreciation and amortization - 10 - 10
______ ______ ______ ______
______ ______ ______ ______
(1) Management and head office
(2) Constitutes a real estate promotion segment
(3) Constitutes an investment real estate segment
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 7 * GEOGRAPHIC SEGMENTS (cont.)
Consolidated (cont.)
2. Other data (cont.)
Convenience translation
Six month period ended 30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
£* 000 £* 000 £* 000 £* 000
Unallocated purchase cost of - - 781 781
long-term general assetsin
continued operations
______ ______ ______ ______
______ ______ ______ ______
Depreciation and amortization - 3 - 3
______ ______ ______ ______
______ ______ ______ ______
Convenience translation
Three month period ended 30 June 2008 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
£* 000 £* 000 £* 000 £* 000
Unallocated purchase cost of - - 721 721
long-term general assetsin
continued operations
______ ______ ______ ______
______ ______ ______ ______
Depreciation and amortization - 1 - 1
______ ______ ______ ______
______ ______ ______ ______
1. Profit and loss data
Year ended 31 December 2007 (audited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Change in fair value of - - 18,294 18,294
investment real estate
______ ______ ______ ______
______ ______ ______ ______
Segmental results (964) (31,199) 17,813 (14,350)
Financing income 33 - - 33
Financing expenses (109) (1,722) - (1,831)
Taxes on income - - (3,541) (3,541)
______ ______ ______ ______
Income (loss) for the year (1,040) (32,921) 14,272 (19,689)
______ ______ ______ ______
______ ______ ______ ______
(1) Management and head office
(2) Constitutes a real estate promotion segment
(3) Constitutes an investment real estate segment
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 7 * GEOGRAPHIC SEGMENTS (cont.)
Consolidated (cont.)
2. Other data
31 December 2007 (audited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Segmental assets 1,155 44,600 69,414 115,169
______ ______ ______ ______
______ ______ ______ ______
Segmental liabilities 850 31,859 50,524 83,233
______ ______ ______ ______
______ ______ ______ ______
Year ended 31 December 2007 (audited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Unallocated purchase cost of - 42 8,022 8,064
long-term general assetsin
continued operations
______ ______ ______ ______
______ ______ ______ ______
Depreciation and amortization - 45 - 45
______ ______ ______ ______
______ ______ ______ ______
1. Profit and loss data
Six month period ended 30 June 2007 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Change in fair value of - - 18,294 18,294
investment for real estate
______ ______ ______ ______
______ ______ ______ ______
Segmental results - (20,326) 18,294 (2,032)
Financing expenses - (1,013) - (1,013)
Taxes on income - - (3,499) (3,499)
______ ______ ______ ______
Income (loss) for the period - (21,339) 14,795 (6,544)
______ ______ ______ ______
______ ______ ______ ______
Three month period ended 30 June 2007 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Change in fair value of - - 18,294 18,294
investment for real estate
______ ______ ______ ______
______ ______ ______ ______
Segmental results - (15,209) 18,294 3,085
Financing expenses - (1,013) - (1,013)
Taxes on income - - (3,499) (3,499)
______ ______ ______ ______
Income (loss) for the period - (16,222) 14,795 (1,427)
______ ______ ______ ______
______ ______ ______ ______
(1) Management and head office
(2) Constitutes a real estate promotion segment
(3) Constitutes an investment real estate segment
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 7 * GEOGRAPHIC SEGMENTS (cont.)
Consolidated (cont.)
2. Other data
30 June 2007 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Segmental assets - 39,575 69,382 108,957
______ ______ ______ _______
______ ______ ______ _______
Segmental liabilities - 63,598 47,435 111,033
______ ______ ______ _______
______ ______ ______ _______
Six month period ended 30 June 2007 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Unallocated purchase cost of - - 6,746 6,746
long-term general assetsin
continued operations
______ ______ ______ ______
______ ______ ______ ______
Depreciation and amortization - 30 - 30
______ ______ ______ ______
______ ______ ______ ______
Three month period ended 30 June 2007 (unaudited)
Israel(1) USA(2) Croatia(3) Total Consolidated
NIS* 000 NIS* 000 NIS* 000 NIS* 000
Unallocated purchase cost of - - 6,746 6,746
long-term general assetsin
continued operations
______ ______ ______ ______
______ ______ ______ ______
Depreciation and amortization - 20 - 20
______ ______ ______ ______
______ ______ ______ ______
(1) Management and head office
(2) Constitutes a real estate promotion segment
(3) Constitutes an investment real estate segment
NOTE 8 * SUBSEQUENT EVENTS
A. Agreement for the allotment of shares of the Sitnica subsidiary
In July 2008, the Company, Sitnica and Atia Projekt D.o.o. (hereinafter * *Atia Projekt*), the former parent company of Sitnica
and a company controlled by Mr. Shalom Atia, one of the controlling shareholders of the Company, signed an agreement with Austrian companies
from the Porr Group (hereinafter * *Porr*). Pursuant to the agreement, Porr will be allotted shares in Sitnica, granting it 50% of the
post-allotment issued share capital of Sitnica, in return for an amount of 10,888,500 Croation Kuna (EUR1.5 million) to be invested by Porr
in the capital of Sitnica. At the end of July 2008, the allotment of shares to Porr was executed and an amount of EUR1.5 million was
channeled to the shareholders' equity of Sitnica.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 8 * SUBSEQUENT EVENTS (cont.)
A. Agreement for the allotment of shares of the Sitnica subsidiary (cont.)
According to the agreement, the Company is entitled to a payment of EUR1.5 million from Sitnica in respect of services rendered in
connection with the investment of Porr in Sitnica, including the preparation and development of the Samobor project. The payment will be
made to the Company as a dividend, out of the distributable income of Sitnica, to the extent that Sitnica will have such income.
Accordingly, the agreement contained a provision whereby, in addition to the right of the Company to the dividend on the basis of its
relative share in the issued capital of Sitnica, the Company will be entitled to an additional dividend (the "Additional Dividend") in an
amount of EUR1.5 million, which would have been distributed to Porr if not for the aforementioned provision.
Immediately following Sitinica's signing of a bank financing agreement and the registration of the property in the name of
Sitnica, Sitnica will place at the disposal of the Company a loan in an amount of EUR1.5 million. To the extent that it is legally possible,
the loan will not bear interest and Sitnica will bear any tax consequence deriving from the loan.
The loan will be repaid in the form of an offset of the right of Sitnica in the loan, against the right of the Company to the
additional dividend. Notwithstanding, it was stipulated in the agreement that in the event that the offset cannot be carried out due to a
lack of distributable income or to an insufficient amount of the dividend, the Company will have to repay the loan to Sitnica.
In the event that the bank financing agreement is not signed by August 30, 2008, and a similar agreement for external financing of
the Samobor project is not signed, both the Company and Porr will be granted the right to demand that the Company purchase from Porr all of
Porr's share in the issued capital of Sitnica, for an amount of EUR1.5 million.
It was further stipulated in the agreement that in the event that Sitnica is not registered as the owner of the property by 31
December 2008, or if the outline plan for the project is not approved by that date, Porr will have the right to demand that the Company
purchase from Porr its entire share in the issued capital of Sitnica for an amount of EUR1.5 million.
The agreement stipulated that under certain circumstances (such as a breach of payment or the insolvency of one of the parties),
one of the parties will purchase the shares of the other shareholder in Sitnica for an amount equal to the fair market value, to be
determined by an independent accountant, the identity of which will be determined in accordance with a mechanism set out in the agreement.
The Company is a guarantor toward Porr, in an amount of up to EUR1.5 million, for the fulfillment of the commitments of the
Company and of Sitnica to Porr under the agreement, for the payment of the consideration of the shares in the event that any of Porr's
rights are exercised, and in the event that the agreement is cancelled in accordance with its provisions.
Upon the closing of the agreement, in July 2008, the Company recorded a gain on the issuance to a third party in an amount of
EUR0.3 million (NIS 1.6 million).
Notwithstanding the above, since under certain conditions (the failure to sign a bank financing agreement, the failure to
publicize a new Municipal Building Plan for the property in the Samobor project, and the failure to register the property in the name of
Sitnica at the Croatia land registry office), Porr jas the right to sell the shares of Sitnica to the Company for an amount of EUR1.5
million ( a PUT option). The profit from the allotment of the shares to Porr will be deferred until the fulfillment of all of the conditions
that will result in the cancellation of the PUT option granted to Porr in connection with the sale of the shares of Sitnica to the Company.
It was further agreed that the financing of the completion of the purchase of the property and the construction of the Samobor
project, will, in addition to the shareholders' equity of Sitnica, take the form of a loan with a principal amount of EUR26 million that a
commercial bank will lend to Sitnica. The Company believes that the commercial bank will make the loan to Sitnica during September 2008.
From the proceeds of that loan, Sitnica is aupposed to pay the owners of the property the balance of the debts in respect of the purchase of
the property, as set out below.
As at the date of the drafting of the financial statements, Sitnica has paid the full amount of the debt to the sellers of the
property pursuant to the purchase agreement, in respect of payments of the past, out of the shareholders' equity of Sitnica, including the
Porr investment in the aforementioned shareholders' equity.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 8 * SUBSEQUENT EVENTS (cont.)
A. Agreement for the allotment of shares of the Sitnica subsidiary (cont.)
To the best of the knowledge of the Company and Sitnica, Sitnica has no exposure in connection with meeting the timetables set in
the purchase agreements with the owners of the property, subject to the receipt of the aforementioned loan from the commercial bank.
As at the date of the drafting of the financial statements, the total liability of Sitnica to the sellers of the property amounted
to EUR6.7 million.
B. Change in the control structure of the Company
According to the agreements signed in August 2008 among Emvelco Corp., C. Properties Ltd., and KDS Pacific LLC, a company
incorporated in the US and wholly-owned and controlled by Joseph Atia and his wife, through a family trust, Emvelco Corp. ceased being the
controlling shareholder in the Company and Joseph Atia became the direct controlling shareholder of the Company (while previously, he was
the controlling shareholder through his control over Emvelco Corp.).
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS)
In accordance with Note 2A, the interim condensed consolidated financial statements of the Group as at 30 June 2008 and for the six and
three-month periods then ended (hereinafter * the *Interim Financial Statements*) are presented in accordance with IFRS, as per the
provisions of International Accounting Standard 34, Interim Financial Reporting. The transition date for implementation of IFRS is 1 January
2007 and the balance sheet as at that date is the opening balance sheet.
The consolidated financial statements of the Group for the fiscal year ended December 31, 2008 will be the first annual financial statements
of the Group presented in accordance with IFRS. These interim financial statements ate the first financial statements of the Company
presented in accordance with IFRS, as per the provisions of IAS 34.
For purposes of the initial implementation of IFRS, the Group applied IFRS 1, Initial Adoption of IFRS.
We present below a reconciliation of reporting under accounting principles generally accepted in Israel and reporting under IFRS:
The data according to IFRS presented in these financial statements and in this note are different in certain items from those presented in
the adjustment note to IFRS which was included in the Company's financial statements for 2007. The following are the major changes:
§ A correction to the Group's income for 2007 as a result of the recording of a liability to pay real estate agents as of 31 December 2007
in an amount of NIS 9,191 thousand, and the recording of additional selling expenses in an amount of NIS 9,823 thousand. The difference of
NIS 632 thousand was carried to a capital reserve for translation differences.
§ The splitting up of the financing component into financing income and financing expenses in the profit and loss accounts.
§ A correction to the Group's 2007 income as a result of the inclusion of the Company's solo activity data commencing only from the date of
the allotment of the shares to Verge.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (cont.)
Reconciliation between reporting under accounting principles generally accepted in Israel and reporting under IFRS
Balance sheets and shareholders' equity (deficit) as at 1 January 2007, 30 June 2007 and 31 December 2007
1 January 2007 30 June 2007
31 December 2007
Israeli GAAP Impact of transition IFRS Israeli GAAP Impact of transition IFRS
Israeli GAAP Impact of transition IFRS
Note NIS* 000 NIS* 000 NIS* 000 NIS* 000 NIS* 000 NIS* 000
NIS* 000 NIS* 000 NIS* 000
(Audited) (Unaudited)
(Audited)
A S S E T S
Current Assets
Cash and cash equivalents A - 131 131 - 16 16
1,249 - 1,249
Accounts receivable and debit A - 1,082 1,082 - 1,470 1,470
842 - 842
balances
Restricted cash - 12,394 12,394
17,306 - 17,306
Buildings under construction A, C, D - 21,480 21,480 - 25,549 25,549
53,010 (26,484) 26,526
Assets attributed to A 37,710 (37,710) - 38,387 (38,387) -
- - -
discontinued operations
_______ _______ _______ _______ _______ _______
_______ _______ _______
37,710 (15,017) 22,693 38,387 1,042 39,429
72,407 (26,484) 45,923
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
Non-Current Assets
Fixed assets, net A - 42 42 - 55 55
47 - 47
Intangible assets A - 97 97 - 107 107
78 - 78
Real estate for investment - - - - 69,366 69,366
69,121 - 69,121
_______ _______ _______ _______ _______ _______
_______ _______ _______
- 139 139 - 69,528 69,528
69,246 - 69,246
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
_______ _______ _______ _______ _______ _______
_______ _______ _______
Total Assets 37,710 (14,878) 22,832 38,387 70,570 108,957
141,653 (26,484) 115,169
_______ _______ _______ _______ _______ _______
_______ _______ _______
_______ _______ _______ _______ _______ _______
_______ _______ _______
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (cont.)
Reconciliation between reporting under accounting principles generally accepted in Israel and reporting under IFRS (cont.)
Balance sheets and shareholders' equity (deficit) as at 1 January 2007, 30 June 2007 and 31 December 2007 (cont.)
1 January 2007 30 June 2007
31 December 2007
Israeli GAAP Impact of transition IFRS Israeli GAAP Impact of transition IFRS
Israeli GAAP Impact of transition IFRS
Note NIS* 000 NIS* 000 NIS* 000 NIS* 000 NIS* 000 NIS* 000
NIS* 000 NIS* 000 NIS* 000
(Audited) (Unaudited)
(Audited)
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current Liabilities
Loans from interested parties A - - - - 43,756 43,756
7,454 - 7,454
Sellers of land - - - - 43,185 43,185
42,570 - 42,570
Suppliers and service - - - - - -
2,519 - 2,519
providers
Accounts payable and credit A - 1,931 1,931 - 1,831 1,831
1,158 - 1,158
balances
Provision for real estate - - - - 6,208 6,208
9,191 - 9,191
agents
Advances from purchasers of - - - - 12,394 12,394
17,306 - 17,306
apartments
Liabilities attributed to A 80,231 (80,231) - 83,424 (83,424) -
- - -
discontinued operations
_______ _______ _______ _______ _______ _______
_______ _______ _______
80,231 (78,300) 1,931 83,424 23,950 107,374
80,198 - 80,198
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
Long-term Liabilities
Loans from interested parties A - 23,064 23,064 - - -
- - -
Deferred taxes - - - - 3,659 3,659
3,035 - 3,035
_______ _______ _______ _______ _______ _______
_______ _______ _______
- 23,064 23,064 - 3,659 3,659
3,035 - 3,035
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
Shareholders' Equity (Deficit)
Share capital and premium 113,890 (113,045) 845 113,890 (108,154) 5,736
172,356 (118,087) 54,269
Capital reserves 327 (327) - 327 (327) -
327 (327) -
Capital reserve from - - - - - -
396 (396) -
transactions with controlling
shareholders
Translation differences in - - - - 1,740 1,740
(1,165) 1,529 364
respect of activities abroad
Accumulated deficit (156,738) 153,730 (3,008) (159,254) 149,702 (9,552)
(113,494) 90,797 (22,697)
_______ _______ _______ _______ _______ _______
_______ _______ _______
Total Shareholders' Equity A, C, D (42,521) 40,358 (2,163) (45,037) 42,961 (2,076)
58,420 (26,484) 31,936
(Deficit)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
_______ _______ _______ _______ _______ _______
_______ _______ _______
Total Liabilities and 37,710 (14,878) 22,832 38,387 70,570 108,957
141,653 (26,484) 115,169
Shareholders' Equity(Deficit)
_______ _______ _______ _______ _______ _______
_______ _______ _______
_______ _______ _______ _______ _______ _______
_______ _______ _______
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (cont.)
Reconciliation between reporting under accounting principles generally accepted in Israel and reporting under IFRS (cont.)
Balance sheets and shareholders' equity (deficit) as at 1 January 2007, 30 June 2007 and 31 December 2007 (cont.)
Convenience translation into £
1 January 2007 30 June 2007
31 December 2007
Israeli GAAP Impact of transition IFRS Israeli GAAP Impact of transition IFRS
Israeli GAAP Impact of transition IFRS
Note £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
£ 000 £ 000 £ 000
(Audited) (Unaudited)
(Audited)
A S S E T S
Current Assets
Cash and cash equivalents A - 19 19 - 2 2
187 - 187
Accounts receivable and debit A - 162 162 - 220 220
126 - 126
balances
Restricted cash - - - - 1,857 1,857
2,594 - 2,594
Buildings under construction A, C, D - 3,220 3,220 - 3,829 3,829
7,944 (3,969) 3,975
Assets attributed to A 5,651 (5,651) - 5,753 (5,753) -
- - -
discontinued operations
_______ _______ _______ _______ _______ _______
_______ _______ _______
5,651 (2,250) 3,401 5,753 155 5,908
10,851 (3,969) 6,882
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
Non-Current Assets
Fixed assets, net A - 6 6 - 8 8
7 - 7
Intangible assets A - 15 15 - 16 16
12 - 12
Real estate for investment - - - - 10,395 10,395
10,359 - 10,359
_______ _______ _______ _______ _______ _______
_______ _______ _______
- 21 21 - 10,419 10,419
10,378 - 10,378
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
_______ _______ _______ _______ _______ _______
_______ _______ _______
Total Assets 5,651 (2,229) 3,422 5,753 10,574 16,327
21,229 (3,969) 17,260
_______ _______ _______ _______ _______ _______
_______ _______ _______
_______ _______ _______ _______ _______ _______
_______ _______ _______
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (cont.)
Reconciliation between reporting under accounting principles generally accepted in Israel and reporting under IFRS (cont.)
Balance sheets and shareholders' equity (deficit) as at 1 January 2007, 30 June 2007 and 31 December 2007 (cont.)
Convenience translation into £
1 January 2007 30 June 2007
31 December 2007
Israeli GAAP Impact of transition IFRS Israeli GAAP Impact of transition IFRS
Israeli GAAP Impact of transition IFRS
Note £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
£ 000 £ 000 £ 000
(Audited) (Unaudited)
(Audited)
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current Liabilities
Loans from interested parties A - - - - 6,557 6,557
1,117 - 1,117
Sellers of land - - - - 6,472 6,472
6,380 - 6,380
Suppliers and service - - - - - -
378 - 378
providers
Accounts payable and credit A - 289 289 - 274 274
174 - 174
balances
Provision for real estate - - - - 930 930
1,377 - 1,377
agents
Advances from purchasers of - - - - 1,857 1,857
2,594 - 2,594
apartments
Liabilities attributed to A 12,022 (12,022) - 12,502 (12,502) -
- - -
discontinued operations
_______ _______ _______ _______ _______ _______
_______ _______ _______
12,022 (11,733) 289 12,502 3,588 16,090
12,020 - 12,020
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
Long-term Liabilities
Loans from interested parties A - 3,456 3,456 - - -
- - -
Deferred taxes - - - - 548 548
455 - 455
_______ _______ _______ _______ _______ _______
_______ _______ _______
- 3,456 3,456 - 548 548
455 - 455
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
Shareholders' Equity (Deficit)
Share capital and premium 17,068 (16,941) 127 17,069 (16,209) 860
25,830 (17,697) 8,133
Capital reserves 49 (49) - 49 (49) -
49 (49) -
Capital reserve from - - - - - -
59 (59) -
transactions with controlling
shareholders
Translation differences in - - - - 261 261
(175) 229 54
respect of activities abroad
Accumulated deficit (23,488) 23,038 (450) (23,867) 22,435 (1,432)
(17,009) 13,607 (3,402)
_______ _______ _______ _______ _______ _______
_______ _______ _______
Total Shareholders' Equity A, C, D (6,371) 6,048 (323) (6,749) 6,438 (311)
8,754 (3,969) 4,785
(Deficit)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
_______ _______ _______ _______ _______ _______
_______ _______ _______
Total Liabilities and 5,651 (2,229) 3,422 5,753 10,574 16,327
21,229 (3,969) 17,260
Shareholders' Equity(Deficit)
_______ _______ _______ _______ _______ _______
_______ _______ _______
_______ _______ _______ _______ _______ _______
_______ _______ _______
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (cont.)
Reconciliation between reporting under accounting principles generally accepted in Israel and reporting under IFRS (cont.)
Profit and loss accounts
Six month period ended Three month period ended
Year ended
30 June 2007 30 June 2007
31 December 2007
Israeli GAAP Impact of transition IFRS Israeli GAAP Impact of transition IFRS
Israeli GAAP Impact of transition IFRS
Note NIS* 000 NIS* 000 NIS* 000 NIS* 000 NIS* 000 NIS* 000
NIS* 000 NIS* 000 NIS* 000
(Unaudited) (Unaudited)
(Audited)
Change in fair value of - 18,294 18,294 - 18,294 18,294
18,294 - 18,294
investment real estate
--------- --------- --------- --------- --------- ---------
--------- --------- ---------
Selling and marketing expenses A, C - 19,060 19,060 - 14,575 14,575
106 29,515 29,621
General and administrative A - 1,266 1,266 - 634 634
2,175 848 3,023
expenses
______ ______ ______ ______ ______ ______
______ ______ ______
- 20,326 20,326 - 15,209 15,209
2,281 30,363 32,644
--------- --------- --------- --------- --------- ---------
--------- --------- ---------
______ ______ ______ ______ ______ ______
______ ______ ______
Operating income (loss) before - (2,032) (2,032) - 3,085 3,085
16,013 (30,363) (14,350)
financing
Financing income G - - - - - -
45 (12) 33
Financing expenses A, D, G - (1,013) (1,013) - (1,013) (1,013)
(794) (1,037) (1,831)
______ ______ ______ ______ ______ ______
______ ______ ______
Operating income (loss) after - (3,045) (3,045) - 2,072 2,072
15,264 (31,412) (16,148)
financing and before taxes on
income
Taxes on income - (3,499) (3,499) - (3,499) (3,499)
(3,541) - (3,541)
______ ______ ______ ______ ______ ______
______ ______ ______
Income (loss) from continuing - (6,544) (6,544) - (1,427) (1,427)
11,723 (31,412) (19,689)
operations
Income from discontinued (2,516) (2,516) - (587) 587 -
31,521 (31,521) -
operations and from creditors
arrangement
______ ______ ______ ______ ______ ______
______ ______ ______
Net income (loss) for the A (2,516) (4,028) (6,544) (587) (840) (1,427)
43,244 (62,933) (19,689)
period
______ ______ ______ ______ ______ ______
______ ______ ______
______ ______ ______ ______ ______ ______
______ ______ ______
Basic earnings (loss) per (1.40) 0.55 (0.85) (0.33) 0.16 (0.17)
11.15 (13.34) (2.19)
share (*)
Diluted earnings (loss) per (1.40) 0.55 (0.85) (0.33) 0.16 (0.17)
11.15 (13.34) (2.19)
share (*)
(*) The calculation was made retroactively after taking into consideration the consolidation of the share capital that was conducted on
21 May 2008. See also Note 5D.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (cont.)
Reconciliation between reporting under accounting principles generally accepted in Israel and reporting under IFRS (cont.)
Profit and loss accounts
Convenience translation into £
Six month period ended Three month period ended
Year ended
30 June 2007 30 June 2007
31 December 2007
Israeli GAAP Impact of transition IFRS Israeli GAAP Impact of transition IFRS
Israeli GAAP Impact of transition IFRS
Note £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
£ 000 £ 000 £ 000
(Unaudited) (Unaudited)
(Audited)
Change in fair value of - 2,742 2,742 - 2,742 2,742
2,742 - 2,742
investment real estate
--------- --------- --------- --------- --------- ---------
--------- --------- ---------
Selling and marketing expenses A, C - 2,856 2,856 - 2,184 2,184
16 4,423 4,439
General and administrative A - 190 190 - 95 95
326 127 453
expenses
______ ______ ______ ______ ______ ______
______ ______ ______
- 3,046 3,046 - 2,279 2,279
342 4,550 4,892
--------- --------- --------- --------- --------- ---------
--------- --------- ---------
______ ______ ______ ______ ______ ______
______ ______ ______
Operating income (loss) before - (304) (304) - 463 463
2,400 (4,550) (2,150)
financing
Financing income G - - - - - -
7 (2) 5
Financing expenses A, D, G - (152) (152) - (152) (152)
(119) (156) (275)
______ ______ ______ ______ ______ ______
______ ______ ______
Operating income (loss) after - (456) (456) - 311 311
2,288 (4,708) (2,420)
financing and before taxes on
income
Taxes on income - (524) (524) - (524) (524)
(531) - (531)
______ ______ ______ ______ ______ ______
______ ______ ______
Income (loss) from continuing - (980) (980) - (213) (213)
1,757 (4,708) (2,951)
operations
Income from discontinued (377) 377 - (88) 88 -
4,724 (4,724) -
operations and from creditors
arrangement
______ ______ ______ ______ ______ ______
______ ______ ______
Net income (loss) for the A (377) (603) (980) (88) (125) (213)
6,481 (9,432) (2,951)
period
______ ______ ______ ______ ______ ______
______ ______ ______
______ ______ ______ ______ ______ ______
______ ______ ______
Basic earnings (loss) per (0.21) 0.08 (0.13) (0.05) 0.02 (0.03)
1.67 (2.00) (0.33)
share (*)
Diluted earnings (loss) per (0.21) 0.08 (0.13) (0.05) 0.02 (0.03)
1.67 (2.00) (0.33)
share (*)
(*) The calculation was made retroactively after taking into consideration the consolidation of the share capital that was conducted on
21 May 2008. See also Note 5D.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS) (cont.)
Notes to the adjustments to the balance sheets as at 1 January 2007, 30 June 2007 and 31 December 2007 and to the profit and loss accounts
for the six and three-month periods ended 30 June 2007 and for the year ended 31 December 2007:
A. Reverse acquisition
In the financial statements presented in accordance with accounting principles generally accepted in Israel, the principles of reverse
acquisition were applied to a business combination transaction that occurred during 2007, as follows:
- The assets and liabilities of the accounting purchaser (the Verge subsidiary) were recorded in the consolidated financial statements at
their book values immediate prior to the reverse acquisition transaction.
- In view of the fact that the accounting acquiree (the Company) constituted a stock market shell as at the date of acquisition, no
goodwill or original difference was generated in respect thereof.
- The retained earnings and other equity items of the consolidated entity following the merger remained those of the Company, with the
effect of the recording of the net assets and liabilities of the accounting acquirer being reflected in an increase to share capital and
premium on shares.
- The comparative amounts of the merged entity remained those that were publicized in the past as part of the financial statements of the
Company, and accordingly, the former activity of the Company was presented as discontinued operations in accordance with Accounting Standard
No. 8 of the Israel Accounting Standards Board.
In implementing IFRS, in accordance with the principles of IFRS 3, there is no change in the economic concept * Verge was identified as the
accounting acquirer and, therefore, the principles of reverse acquisition were applied. Accordingly, the assets and liabilities of Verge,
the accounting acquirer, were recorded in the consolidated financial statements on the basis of their value in the books of the accounting
acquirer immediately prior to the reverse acquisition transaction. According to IFRS 3, consolidated financial statements prepared after the
reverse acquisition are described as the continuation of the financial statements of the legal acquired company (the accounting acquirer)
and therefore, the following differences exist between the accounting treatment and the treatment used under accounting principles generally
accepted in Israel:
- Retained earnings and other equity items of the consolidated entity following the merger are those of the accounting acquirer, which is
the legal subsidiary, Verge, immediately prior to the business combination (although the legal capital structure, i.e., type and number of
shares, remains that of the legal parent company, the Company).
- Comparative amounts of the merged entity are those of the legal subsidiary, Verge. Accordingly, there is no expression given to the
former activity of the Company as part of the financial statements.
Based on the above, and in view of the fact that the business combination transaction in 2007, as part of which the Company was purchased by
the Verge subsidiary by way of reverse acquisition, was carried out in accordance with the principles of IFRS 3, the balance sheet of the
Company as of 1 January 2007, which is presented in the financial statements presented in accordance with IFRS, is based on the balance
sheets of the accounting acquirer, Verge, as at 1 January 2007.
In this content, please note that, due to the fact that the financial statements of the Company as at 1 January 2007 (the statement of net
liquidated assets as at 31 December 2006), which were presented in accordance with accounting principles generally accepted in Israel, were
presented at realization values in accordance with accounting principles of businesses in liquidation, no change would be needed in these
financial statements were they required to be presented in accordance with IFRS.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS) (cont.)
Notes to the adjustments to the balance sheets as at 1 January 2007, 30 June 2007 and 31 December 2007 and to the profit and loss accounts
for the six and three-month periods ended 30 June 2007 and for the year ended 31 December 2007 (cont.):
A. Reverse acquisition (cont.)
In the balance sheets as at 1 January 2007 and 30 June 2007 presented in accordance with IFRS, changes occurred in the following items in
view of the fact that Verge's balance sheet items were included therein as from 1 January 2007 and not from the date of purchase:
- An increase in cash and cash equivalents the amount of NIS 131 thousand as at 1 January 2007.
- An increase in accounts receivable and debit balances in amounts of NIS 1,082 thousand and NIS 1,470 thousand, respectively.
- An increase in restricted cash in the amount of NIS 12,394 thousand as at 30 June 2007.
- An increase in buildings under construction in amounts of NIS 21,480 thousand and NIS 25,549 thousand, respectively.
- A decrease in assets attributed to discontinued operations in amounts of NIS 37,710 thousand and NIS 38,387 thousand, respectively.
- An increase in net fixed assets, net, in amounts of NIS 42 thousand and NIS 55 thousand, respectively.
- An increase in intangible assets in amounts of NIS 97 thousand and NIS 107 thousand, respectively.
- An increase in accounts payable and credit balances in amounts of NIS 1,931 thousand and NIS 1,831 thousand, respectively.
- An increase in short-term loans from interested parties in amounts of NIS 43,163 as at 30 June 2007.
- An increase in provision for real estate agents in the amount of NIS 6,208 thousand as at 30 June 2007.
- An increase in advances from purchasers of apartments in the amount of NIS 12,394 thousand as at 30 June 2007.
- A decrease in liabilities attributed to discontinued operations in amounts of NIS 80,231 thousand and NIS 83,424 thousand,
respectively.
- An increase in long-term loans from interested parties in amounts of NIS 23,064 as at 1 January 2007.
- A decrease in shareholders' deficit in amounts of NIS 40,358 thousand and NIS 21,014 thousand, respectively.
In the profit and loss accounts for the six and three month periods ended 30 June 2007 and for the year ended 31 December 2007 presented in
accordance with IFRS, there were changes in the following items, in view of the fact that the results of Verge were presented in them from
the beginning of the year and not from the date of acquisition:
- An increase in selling and marketing expenses in amounts of NIS 19,060 thousand, NIS 14,575 thousand and NIS 547 thousand,
respectively.
- An increase in general and administrative expenses in amounts of NIS 1,266 thousand, NIS 634 thousand and NIS 1,401 thousand,
respectively.
- An increase in financing expenses for the six and three month periods ended 30 June 2007 in an amount of NIS 1,013 thousand and for the
year ended 31 December 2007 in an amount of NIS 3,173 thousand.
- Erasure of a loss from discontinued operations in an amount of NIS 2,516 thousand and NIS 587 thousand and erasure of income from
discontinued operations and from creditors arrangement in an amount of NIS 31,521 thousand.
The above amounts are before the effect of items C and D below.
In addition, the results of the Company (solo) for the year ended 31 December 2007 were taken into consideration only after the date of
purchase. The impact of the above was a reduction in general and administrative expenses in an amount of NIS 556 thousand and a reduction in
financing income in an amount of NIS 7 thousand for the year ended 31 December 2007.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS) (cont.)
Notes to the adjustments to the balance sheets as at 1 January 2007, 30 June 2007 and 31 December 2007 and to the profit and loss accounts
for the six and three-month periods ended 30 June 2007 and for the year ended 31 December 2007 (cont.):
B. Combinations of businesses under common control
In the financial statements presented under accounting principles generally accepted in Israel, the transaction as part of which the Company
acquired the Sitnica subsidiary was treated in accordance with Israel Securities Authority Decision 2-10 dated April 2007, The Treatment of
Transactions of Combinations of Businesses under Common Control. According to the decision of the authority, combinations of businesses
under common control are to be handled in accordance with a method that is similar to the Pooling of Interests method.
According to this method, in the financial statements of the Company, the assets and liabilities of Sitnica were recorded at their book
value in Sitnica's financial statements and the financial statements were presented in order to reflect the financial position and results
of operations of the Company and of Sitnica (after the effect of the treatment of the reverse acquisition as per "A" above) as if the
transaction had been conducted on the same day that the businesses came under the same control.
IFRS 3, Business Combinations, excludes combinations of businesses under common control. Moreover, there is no other international standard
that deals with the issue. On the basis of the preference order for accounting treatment under international standards, in the absence of an
international standard or interpretation, the Company implemented the pooling of interests method even though the financial statements are
presented in accordance with IFRS. The source for this method is the U.S. body of standards, and it is also the common practice under
international standards. Therefore, the transition to IFRS had no impact on the Company's accounting treatment of the aforementioned
transaction.
C. Capitalization of costs directly to buildings under construction
According to accounting principles generally accepted in Israel, general and administrative expenses and selling and marketing expenses that
can be specifically attributed to a specific building project constitute direct costs of the project and are carried to the cost of the
project. According to IFRS, these costs are expensed when incurred. The impact of the transition to IFRS as at 1 January 2007 and 31
December 2007 is a decrease in the inventory of buildings under construction in an amount of NIS 2,742 thousand and NIS 30,230 thousand,
respectively, against a decrease in retained earnings. In addition, in the profit and loss accounts for the year ended 31 December 2007,
there was an increase in selling and marketing expenses of NIS 28,968 thousand.
D. Capitalization of credit costs
According to Accounting Standard No. 3 of the Israel Accounting Standards Board, Capitalization of Credit Costs, credit costs can be
capitalized in respect of assets, the period of construction of which exceeds three years or the period of construction of which or volume
of investment in which deviates from the accepted construction period or accepted volume of investment in respect of assets of this type in
the same business. In connection with real estate assets, the commencement of capitalization is from the earlier of the date of submission
of the request to obtain a building permit or the date of commencement of work.
Under IFRS, capitalization of credit costs is treated in accordance with IAS 23 whereby it is possible to capitalize credit costs which are
directly attributed to the acquisition or construction of a qualifying asset. A qualifying asset is an asset, in respect of which the period
of time required for preparation for its intended use or sale is significant. The capitalization period will start when expenses were
incurred in respect of the asset, credit costs were incurred in respect of the asset and the steps necessary for preparation of the asset
for its intended use or for sale were taken.
Upon the transition to IFRS, credit costs that could not previously be capitalized were capitalized. Accordingly, the Company recorded an
increase to the inventory of buildings under construction as at 1 January 2007 and 31 December 2007 in an amount of NIS 1,204 thousand and
NIS 3,119 thousand, respectively, against an increase in retained earnings and a decrease in financing expenses in the profit and loss
accounts for 2007 in an amount of NIS 2,162 thousand.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS) (cont.)
Notes to the adjustments to the balance sheets as at 1 January 2007, 30 June 2007 and 31 December 2007 and to the profit and loss accounts
for the six and three-month periods ended 30 June 2007 and for the year ended 31 December 2007 (cont.):
E. Functional currency of the Company and its investees
The accounting treatment for the effects of changes in foreign currency exchange rates under IFRS is pursuant to IAS 21, whereby the Company
has to assess the functional currency of every component of the Company (on the basis of the Company and each component separately *
subsidiary, branch, or other activity that constitutes part of any unit of the consolidated entity). The Company should measure the results
of its operations and financial position or the results of its component on the basis of this currency. The functional currency is the
currency of the major economic environment in which the Company or its component operates (the major economic environment from which the
Company is influenced) and it constitutes the major currency in which the Company (or the component) generates and expends its cash flows.
After assessing the criteria, it was determined that the functional currency of the Company is the New Israeli shekel and the functional
currency of the subsidiaries is the currency of the local environment in which those companies operate. Therefore, the transition to
international standards had no impact.
F. Recognition of revenues from the sale of apartments
Under IFRS, recognition of revenues from the sale of constructed buildings is pursuant to IAS 18, whereby the revenue will be recognized
only when the work has been completed (the completed work method) and the rest of the conditions for revenue recognition have been met (all
of the risks have been transferred to the buyer). According to accounting principles generally accepted in Israel, recognition of revenues
from the sale of buildings is done pursuant to the percentage of completion method, but not before the proceeds from the sale of the project
constitute at least 50% of the total expected revenues from the project and the percentage completed has reached at least 25%.
The construction of the Verge subsidiary's construction project as at 31 December 2007 has not commenced and, therefore, no revenues have
been recognized in respect thereof in the profit and loss accounts that were presented in accordance with accounting principles generally
accepted in Israel. Accordingly, there was no impact of the transition to IFRS.
G. Presentation of financing income and expenses
In accordance with accounting principles generally accepted in Israel, financing income and expense are presented in one net amount in the
profit and loss accounts. According to international standards, financing income and financing expenses have to be presented separately in
statement of operations.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
PREPARED ACCORDING TO IFRS (cont.)
NOTE 9 * ADJUSTMENT NOTE FURTHER TO THE ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS) (cont.)
Notes to the adjustments to the balance sheets as at 1 January 2007, 30 June 2007 and 31 December 2007 and to the profit and loss accounts
for the six and three-month periods ended 30 June 2007 and for the year ended 31 December 2007 (cont.):
H. The following table presents the impact of the above adjustments on the se of the Company:
As at As at As at
1 January 30 June 31 December
2007 2007 2007
NIS'000 NIS'000 NIS'000
(audited) (unaudited) (audited)
Cancellation of the shareholders' equity 42,451 45,037 -
in the Company prior to the allotment of
shares to Verge (reverse acquisition)
Inclusion of shareholders' equity of (2,163) (2,076) -
Verge instead of that of the Company
(reverse acquisition)
Cancellation of the capitalization of - - (29,599)
direct costs to the inventory of
buildings under construction (mainly
selling and marketing expenses)
Capitalization of the credit costs to - - 3,115
the inventory of buildings under
construction
_______ _______ _______
Total adjustments to shareholders' 40,358 42,961 (26,484)
equity
_______ _______ _______
_______ _______ _______
===========================
This information is provided by RNS
The company news service from the London Stock Exchange
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