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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Elron Ventures Ltd (CE) | USOTC:ELRNF | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.28 | 0.00 | 01:00:00 |
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1.
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On April 11, 2016 , an application to approve a distribution in accordance with Section 303 of the Israeli Companies Law, 1999 was filed in the District Court of Tel Aviv.
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2.
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The total shareholders' equity of the Company is $158,207,000
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3.
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The aggregate amount which the Company is requesting to distribute: $15,000,000
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4.
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The amount which the Company is requesting to distribute not out of retained earnings: $15,000,000
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5.
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The last date for filing objections to approval of the distribution: May 11, 2016
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6.
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The place where and times at which the documents relating to the subject matter of the report may be examined: Menachem Begin 132, Azrieli Center 3, Triangle Building, 42nd Floor, Tel Aviv. Sunday to Thursday, 09:00 to 17:00
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7.
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Attached is the notice to creditors in accordance with Section 3 of the Companies Regulations (Approval of Distribution).
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8.
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Attached is a disclosure regarding the forecasted cashflow in accordance with Regulation 31(i)(3) of the Securities Regulations (Periodic and Immediate Reports) – 1970.
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ELRON ELECTRONIC INDUSTRIES LTD.
(Registrant)
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By:
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/s/ Yaron Elad | |
Yaron Elad
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VP & CFO
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Notice to Creditors of Elron Electronic Industries Ltd.
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CPA Yuval Zilberstein
March 13, 2016
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This expert opinion was prepared solely for the Client's use. No other use is allowed without the Firm's prior written consent. We hereby consent that this expert opinion may be part of and/or may be mentioned as part of the this Capital Reduction documentation required for the purpose of submitting to economic district court or any other relevant parties. Similarly, we agree that this expert opinion may be become public as part of the Company's public reports and announcements.
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The expert opinion relies upon financial and other information (including prospective information and assumptions, the realization of which is not certain) obtained among others from the Company and/or anyone on their behalf (the “
Information
”). The Information may relate to external factors such as potential competition and the state of the economy as well as to forward looking information as defined in the Israeli 1968 Securities Law. The Firm assumed that the Information is credible and did not perform an independent audit of the Information. Therefore this expert opinion does not constitute a verification of the Information’s correctness, completeness and accuracy and the Firm is not liable for such flaws in the Information, if any, although nothing suggesting that the Information may be unreasonable has come to the Firm's attention.
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This expert opinion did not involve performing audits and/or accounting procedures. The Firm is not liable for the manner of the accounting presentation of the Company's financial statements and nor is it liable for the accuracy and completeness of the data presented in such statements and the implications of that presentation, if any.
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The Firm reserves the right to update the Report in the case that the Information turns out to be materially flawed. To avoid doubt, this expert opinion is only valid as of its execution date.
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This document includes a description of main procedures carried out as part of the work. The description does not constitute a complete and detailed description of the Company and its business environment.
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The Firm hereby confirms that it is independent of the Company and that it has no personal interest in the Company, its controlling stakeholders and in the results of this expert opinion (apart from receiving fees for this work, that are not contingent upon the results of the work).
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The Report does not constitute or replace a due diligence. In addition, the Report is not intended to determine value for a specific investor. Nothing in this Report constitutes a legal advice and/or a legal opinion and/or an offer or a recommendation or an opinion regarding the purchase of securities.
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The Firm and any entity controlled by it directly and/or indirectly as well as any controlling shareholder, officer and employee in any such entity, are not liable for any damage, loss of profit or expense of any kind, direct and/or indirect, which may stem from relying on this expert opinion, in whole or in part. The Company shall not be entitled to receive from the Firm, whether due to contract or damages, in accordance with the law or otherwise, any sum due to loss of profits, data or reputation, or due to any damage, random or indirect, or as special or punitive damages regarding any lawsuits resulting from or related to services provided by the Firm whether the likeliness of such damage has been expected or not, all unless the Firm has acted without malice.
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The Firm hereby confirms that id did not receive an indemnity letter from the Company in connection with this expert opinion.
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Since its foundation date, the Firm has, from time to time, provided the Company with financial consulting service. The total fees for these services are immaterial in comparison to the firms overall revenues (less than 1%).
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The conclusions of this expert opinion stem from an independent analysis of complex body of materials and data provided to us by the Company, and they are not based solely on one specific item of information.
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Unless otherwise stated, all financial figures and facts relate to the Company's draft financial statements as of December 31, 2015.
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Figures presented in this expert opinion are rounded. Therefore, slight differences may occur upon summing or multiplying of figures presented.
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The Company's audited financial statements as of fiscal years 2012 – 2015
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Financial statements of investees of the Company
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The Company's February 29, 2016 trial balance sheet ("the
Trial Balance Sheet
")
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A status report as to lawsuits against the Company as of 2.3.2016 provided by the Shnitzer Gotlieb Samet & Co, the Company's law firm (the "
Lawsuit Status Report
")
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Additional information provided by the Company upon the Firm's request
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Financial data from the Bloomberg database
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Public information about the Company appearing on the internet, including press articles
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Discussions with the Company's management ("
Management
")
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As notes above, it is the Company's intent to carry out a $15M capital reduction for purpose of dividend distribution
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The Company's financial rations (according to its balance sheet) show that the Company is not at all leverages and that it is funded from Equity with no creditors
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Based on the Company's Dec. 31, 2015 (unaudited) financial statements, the net cash and cash equivalents is $76M (and $70M based on the Feb. 29, 2015 Trial Balance Sheet). According to this information, we conclude that the $15M capital reduction planned by the Company is not expected to create a deficit in the Company’s cash balance even after paying off all its liabilities.
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Despite the clear conclusions mentioned above, a cash flow projection was also prepared to further strengthen the Solvency Test. This cash flow projections was done under the conservative premises that no dividends shall be received by the Company from any of its subsidiaries and that none of its holdings will be realized during the forecast period
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The Company's Dec. 31, 2015 (draft) financials draw the following picture:
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ü
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Net financial assets are $76M
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ü
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Accounts receivable are $0.4M and trade receivables are $3M
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ü
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The Company holds a $63M net asset (net of an investment in certain wholly owned headquarters corporations) on account of its investees, in addition to a $19M asset measured in fair value on account of investments in other companies.
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ü
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The Company has no external financial liabilities (either long term or short) and no long term liabilities, except for an intercompany liability (cancelled in consolidated balance sheet) to its wholly owned subsidiary – Elbit Ltd. (no connection with Elbit Systems apart for their share history).
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ü
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The Company has a $158M positive Equity accounting for 67% of its balance sheet. We emphasize that upon netting out the intercompany asset and liability related to Elbit Ltd, the Company's $158M Equity accounts for 98% of its balance sheet.
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ü
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According to Management, and based on the Trial Balance Sheet (un-audited), no significant changes took place in the Company's financial status between Dec. 31, 2015 and Feb. 29, 2016.
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000'$ – Assets
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Dec-31, 2015 (Draft)
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Dec-31, 2014 (Audited)
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Dec-31, 2013 (Audited)
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Dec-31, 2012 (Audited)
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Current Assets
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Cash and Cash Equivalents
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13,895 | 33,330 | 19,686 | 25,097 | ||||||||||||
Short Term Bank Deposits
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39,145 | 60,360 | - | - | ||||||||||||
Other Investments in Securities
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23,115 | - | - | - | ||||||||||||
Accounts Receivable
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406 | 261 | 376 | 2,757 | ||||||||||||
Investment in associate is classified as held for sale
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- | - | 89,175 | - | ||||||||||||
76,561 | 93,951 | 109,237 | 27,854 | |||||||||||||
Non-Current Assets
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Net Investments in Investees
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136,783 | 111,272 | 106,079 | 193,296 | ||||||||||||
Investments in other companies measured at fair value
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19,107 | 27,271 | 26,012 | 23,287 | ||||||||||||
Long term receivables
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2,303 | - | - | 183 | ||||||||||||
Fixed assets
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10 | 26 | 38 | 45 | ||||||||||||
Deferred taxes
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- | - | 28,994 | - | ||||||||||||
158,203 | 138,569 | 161,123 | 216,811 | |||||||||||||
Total Assets
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234,764 | 232,520 | 270,360 | 244,665 | ||||||||||||
$'000 - Liabilities & Equity
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Dec-31, 2015 (Draft)
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Dec-31, 2014 (Audited)
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Dec-31, 2013 (Audited)
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Dec-31, 2012 (Audited)
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Current Liabilities
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Bank Loans
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- | - | 4,000 | - | ||||||||||||
Trade payables
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87 | 53 | 79 | 95 | ||||||||||||
Accounts payable
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2,910 | 2,776 | 2,797 | 1,633 | ||||||||||||
2,997 | 2,829 | 6,876 | 1,728 | |||||||||||||
Non-Current Liabilities
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Bank Loans
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- | - | - | 4,000 | ||||||||||||
Other Long Term Liabilities
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73,560 | 73,812 | 82,701 | 76,897 | ||||||||||||
73,560 | 73,812 | 82,701 | 80,897 | |||||||||||||
Equity
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158,207 | 155,879 | 180,783 | 162,040 | ||||||||||||
Total Liabilities & Equity
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234,764 | 232,520 | 270,360 | 244,665 |
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Equity
: The Company has a $158M positive Equity accounting for 67% of its balance sheet. We emphasize that upon netting out the intercompany asset and liability related to Elbit Ltd, the Company's $158M Equity accounts for 98% of its balance sheet.
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Financial Assets (
Short Term Bank Deposits
,
Cash and Cash Equivalents, Other Investments in Securities): As of Dec. 31, 2015, the Company has liquid financial assets with a total value of approximately $ 76 million. Compared to the balances as of Dec. 31, 2014, this figure represents a decrease of $ 17.5 million resulting primarily from investment activities during 2015. According to the unaudited Trial Balance Sheet, as of Feb., 29, 2016, the Company has liquid financial assets amounting to $ 70 million.
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Net Investments in Investees
, Asset:
The balance sheet records this significant $ 137 million asset as of Dec., 31, 2015. Of this amount, $ 63 million are due to holdings in held companies, that in some of which the Company has material control, and $ 74 million are an intercompany asste (netted out later by a liability of the same size) attributed to Elbit ltd.
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Other Investemnts measured at Fair Value, Asset
: This asset is on account of Elron's investment in three additional companies (Notal Vision, Atlantium Technologies Ltd. And Aqwise smart water technologies Ltd) totaling $19 million. The approximately $ 8 million value reduction in this asset in 2015 results from the sale of the share capital of Jordan Valley Semiconductors Ltd. ("Jordan Valley") during October 2015 for a total consideration of $ 53 million (Elron's share in the proceeds is c. 14 million plus $2 million as contingent consideration) allowing it to recognize a $ 4 million profit.
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Accounts Payable (Liability)
: As of Dec. 31, 2015, the Company has a liability of $ 2.9 million that consists primarily of a provision in the amount of $ 0.5 million for claims against the company (for details see "off-balance sheet liabilities" below) and the amount of $ 1.1 million for employees.
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Other Long Term Liabilities
: The Company has long-term liabilities consist of the balance liability of a wholly owned subsidiary of Elbit Ltd. (no connection to Elbit Systems apart for a shared history), which is part of a Elron's unique activity cluster. Elron Ltd. Merged with the company in May, 2002.
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Off Balance Sheet Liabilities
: as part of this expert opinion we explored the possibility that the Company may have off balance sheet liabilities.
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$'000
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Dec-31, 2015 (Draft)
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Dec-31, 2014 (Audited)
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Dec-31, 2013 (Audited)
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Dec-31, 2012 (Audited)
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Cash and Cash Equivalents
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13,895 | 33,330 | 19,686 | 25,097 | ||||||||||||
Short Term Bank Deposits
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39,145 | 60,360 | - | - | ||||||||||||
Other Investments in Securities
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23,115 | - | - | |||||||||||||
Total Financial Assets
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76,155 | 93,690 | 19,686 | 25,097 | ||||||||||||
Bank Loans
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- | - | 4,000 | 4,000 | ||||||||||||
Total Financial Liabilities
1
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- | - | 4,000 | 4,000 | ||||||||||||
Net financial Assets
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76,155 | 93,690 | 15,686 | 21,097 |
2015
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2014
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2013
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2012
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$'000
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(Draft)
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(Audited)
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(Audited)
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(Audited)
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Financial Income
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899 | 8,875 | 261 | 892 | ||||||||||||
General & Administrative
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4,608 | 5,086 | 5,449 | 3,873 | ||||||||||||
Financial Expenses
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101 | 54 | 5,767 | 3,455 | ||||||||||||
Other Expenses (Income)
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43 | 5 | (3,484 | ) | 159 | |||||||||||
Operating Income
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(3,853 | ) | 3,730 | (7,471 | ) | (6,595 | ) | |||||||||
Profits from Share sales ("Exits") and changes in holdings percentages
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14,674 | 114,764 | 4,443 | 10,006 | ||||||||||||
The Company's share in investees' gains (losses)
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(8,370 | ) | (3,228 | ) | (8,031 | ) | 946 | |||||||||
Pre-Tax Profit (Loss)
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2,451 | 115,266 | (11,059 | ) | 4,357 | |||||||||||
Tax benefits (payments)
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- | (29,772 | ) | 28,994 | - | |||||||||||
Net Income
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2,451 | 85,494 | 17,935 | 4,357 |
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Financial Income and Expenses:
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General and Administrative Expenses:
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Gain on sale or revaluation of subsidiaries and changes in holdings
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Dividends
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General and administrative expenses
- it was assumed that the annual expenditure will amount to $ 5.4 million – based on the highest annual expenditure on this item in 2012-2015.
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Capital expenditures (CAPEX)
- negligible CAPEX was assumed based on historical actual results during 2012 – 2015.
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Investment in 2016
- Elron is obliged to make further investments during 2016 totaling $ 7.6 million in the portfolio companies Notal Vision Inc., Ltd., Coramaze Technologies and Brainsgate Ltd. It should be noted that historically, the Company has made investments in the amount of 20-30 million annually. However, making investments is in the sole discretion of Elron and any investment decision is be based on Elron's estimates about achieving a positive return on such an investment. It should be noted that in our forecast, we assumed no investments other than the $ 7.6 million mentioned above.
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Proceeds from the sale of Jordan Valley
– According the agreements, Elron is expected to receive a $1.3 million in 2017 (a sum that was deposited in a trust account).
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A one-time provision in respect of a lawsuit
- as mentioned above, the company is a party to legal proceedings. According to the company attorneys' estimate, Elron has set aside $500,000 in its draft 2015 financial statement
.
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Working capital
- the Company's activity does not call for investment in working capital
.
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Tax
- as the forecast we have prepared only shows losses, we included no taxes. It bears mention that the company also has a tax shield due to a significant amount of carry forward losses for tax purposes.
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$ thousands
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2018
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2017
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2016
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General and Administrative (net of depreciation and amortization)
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5,449 | 5,449 | 5,449 | |||||||||
CAPEX
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4 | 4 | 4 | |||||||||
Operating Cash Flow
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5,453 | 5,453 | 5,453 | |||||||||
Cash and Cash Equivalents Opening Balance
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42,150 | 47,603 | 76,155 | |||||||||
Net Negative cash flow from operations
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5,453 | 5,453 | 5,453 | |||||||||
Investments in portfolio companies
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- | - | 7,600 | |||||||||
One-time provision for lawsuit
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- | - | 500 | |||||||||
Proceeds from the sale of Jordan Valley
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- | 1,300 | - | |||||||||
One-time capital reduction
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- | - | 15,000 | |||||||||
Cash and Cash Equivalents Closing Balance
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37,998 | 43,450 | 47,603 |
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(*) to keep the forecast conservative, it does not include financing income from interest on the Company's deposits.
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·
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In addition to the Company’s cash balances and liquid financial assets, which amount to $76 million as of Dec. 31, 2015, Elron has an additional safety cushion, in its holdings in its investees,
amounting to a net $63 million in total
. In recent years, the Company has managed to record significant profits from realizing its investments in portfolio companies. As mentioned in earlier sections, in 2014 the company has recorded a $
107 million profit as a result of havin
g sold Given Imaging, and has further recorded a $4 million profit from the sale of Jordan Valley in 2015 and a $8.7 million profit from the sale of Kyma in September 2015. In light of the company’s past success and its current rich portfolio of companies, there is potential for additional significant realizations.
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Except for a recognized a $0.5 million liability in the Company's financial statements as of 31.12.2015 and an obligation to make further investments during 2016 in the portfolio companies Notal Vision Inc., Brainsgate Ltd. and Coramaze Technologies in a total of $ 7.6 million, the Company has no significant off-balance sheet liabilities as of the date of the expert opinion, and in particular, the Company has no liabilities off-balance sheet tax-related liabilities, Chief Scientist related liabilities, liens or guarantees to other companies and in particular investee companies.
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$'000
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Dec. 31, 2015
Post Capital Reduction
|
Capital Reduction
|
Dec. 31, 2015
Pre-Capital Reduction
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Current Assets
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||||||||||||
Cash and Cash Equivalents
|
13,895 | 13,895 | ||||||||||
Short Term Bank Deposits
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24,145 | 15,000 | 39,145 | |||||||||
Other Investments in Securities
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23,115 | 23,115 | ||||||||||
Accounts Receivable
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406 | 406 | ||||||||||
61,561 | 15,000 | 76,561 | ||||||||||
Non-Current Assets
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||||||||||||
Net Investments in Investees
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136,783 | 136,783 | ||||||||||
Investments in other companies measured at fair value
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19,107 | 19,107 | ||||||||||
Long term receivables
|
2,303 | 2,303 | ||||||||||
Fixed assets
|
10 | 10 | ||||||||||
158,203 | 158,203 | |||||||||||
Total Assets
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219,764 | 15,000 | 234,764 | |||||||||
Liabilities & Equity
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||||||||||||
Current Liabilities
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Trade payables
|
87 | 87 | ||||||||||
Accounts payable
|
2,910 | 2,910 | ||||||||||
2,997 | 2,997 | |||||||||||
Non-Current Liabilities
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Other Long Term Liabilities
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73,560 | 73,560 | ||||||||||
73,560 | 73,560 | |||||||||||
Equity
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143,207 | 15,000 | 158,207 | |||||||||
Total Liabilities & Equity
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219,764 | 15,000 | 234,764 |
1 Year Elron Ventures (CE) Chart |
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