27 November 2012
Queenco Leisure International Ltd.
(The "Group" or "QLI"),
Financial Results for the 9 months ended 30 September 2012
Queenco Leisure International Ltd., the emerging markets developer
and operator of casinos and entertainment centers, is pleased to report its
financial results for the 9 months ended 30 September 2012.
Operating and Business Highlights
- The Greek economic crisis has been prolonged although a new
government was elected in September 2012:
- The uncertainty further exacerbates the gaming results at
Loutraki and Rodos.
- A lower minimum wage and renegotiation of employees' collective
benefit agreements, may contribute to the Group's cost reduction scheme.
- The Group (i.e., the Company and its subsidiaries and associated
companies) has ended its involvement in Casino Palace following the dilution
of its holdings in the Romanian asset and subsequent insolvency proceedings:
- The dilution formed part of the Group's decision to strategically
move away from Europe, towards South East Asia where the opportunities remain
more lucrative.
- The Group's strategy to diverse revenue mix is progressing:
- Queenco Casino in Sihanoukville, Cambodia soft launched during
the period, giving us a strong platform for the future.
- Exploring online gaming in areas where the Group already operates
continues to progress well.
- Developments in future South East Asia projects form part of our
long term strategy.
- The Tender Offer by Y.Z. Queenco Ltd. for newly issued shares in
Y.Z. Queenco Ltd. listed on TASE did not enjoy enough support from our
shareholders, but the Board continues to explore other options to return
greater value to our shareholders.
- Up until and including the Company's 2011 financial statements,
the results of operations of Club Hotel Loutraki ("CHL"), which holds the
Loutraki and Belgrade casinos, were proportionally consolidated into the
Company's consolidated financial statements, by virtue of it being controlled
by a chain of holding companies, in which the Company has a joint controlling
interest, in accordance with IAS 31 - Interests in Joint Ventures.
As a result of various disagreements between the major shareholders
of these holding companies, an exceptional situation exists where the Company
has the power to express its joint control in the holding companies but not in
CHL, and therefore, its joint control in CHL has effectively ceased.
Consequently, as of such time, the Company's share in CHL can no longer be
proportionally consolidated and has to be presented under the Equity Method as
prescribed by IAS 28 - Investments in Associates.
The proportional consolidation of CHL ceased commencing on 31
March, 2012. Accordingly, the Company's consolidated statements of
comprehensive income (loss) include the proportionally consolidated profit and
loss of CHL for the three months ended 31 March, 2012, while the Company's
consolidated statements of financial position as at 31 March, 2012 include the
investment in CHL under the equity method.
- On 12 November 2012 the Company held an extraordinary general
meeting of shareholders, which resolved to increase the authorized share
capital of the Company from NIS 500,000,000, consisting of 500,000,000
ordinary shares, each having a nominal value of NIS 1.00, to NIS 800,000,000
consisting of 800,000,000 ordinary shares, each having a nominal value of NIS
1.00.
- On 19 November 2012 the Company completed a rights issue,
pursuant to which it issued 257,057,276 ordinary shares, par value NIS 1.00
each, of the Company (including through an over-subscription mechanism), for a
total consideration of Euro 4,112,916. The new shares issued include shares
represented by new 4,886,758 global depositary receipts (GDRs), each
representing 10 ordinary shares, par value 1.00 each, of the Company. The new
GDRs commenced trading on the London Stock Exchange shortly after consummation
of the rights issue.
Following the rights issue, the issued share capital of the Company is
610,511,030 ordinary shares with a nominal value of NIS 1.00 each.
Financial Highlights for the Nine months ended 30 September 2012
- Gross revenues were €36.9 million (2011: €82.7 million)
- Net Revenues were €26.9 million (2011: €57.8 million)
- EBITDA was negative €5.2 million (2011: negative €2.2 million)
- Profit for the period was €14.5 million (2011: Loss of €17.2
million)
- Cash and cash equivalents were €7.9 million as of 30 September
2012
Haim Assayag, Executive Chairman of QLI, commented on the results:
"We have witnessed some progress in Greece, which in the long term
will hopefully allow Greece to turn a corner, but uncertainty remains as to
the terms of the country's bailout conditions, which prevents Loutraki and
Rodos from generating strong returns. The reduction in the minimum wage and
renegotiation of employees' collective benefit agreements is allowing us to
reduce the cost base in these casinos, and to a degree we are able to lower
headcount, but more needs to be done.
"Following the dilution of our holdings in Casino Palace, Romania,
the casino is being liquidated, allowing us to reduce the losses we have
incurred, while at the same time shift our strategic focus towards South East
Asia and away from Europe. The opening of Queenco Casino and Hotel in
Sihanoukville, Cambodia, has shown some very promising signs and we remain
excited by what we can achieve in Asia in the future.
"Despite the decision to cancel the Tender Offer from Y.Z. Queenco
we will continue to explore ways of generating returns for shareholders, as
well as reduce the expense and complexity of operating two listed companies.
"Finally, I would like to thank the shareholders and GDR holders
who participated in our recent rights issue".
For further information about the Company please visit
www.queenco.com or contact:
Queenco Leisure International Ltd.
Haim Assayag, Executive Chairman T: +972 (0)3 756 6555
Tal Taragan, CEO
Chief Executive's Review
Introduction
The Greek economic crisis has been prolonged by no firm decision
from the Greece Government on the European bailout package, and this is
creating yet further uncertainty, which is expected to adversely affect the
gaming results at Loutraki and Rodos. The Greek Government's decision to lower
the National minimum wage is welcome and will alleviate some of the burden on
costs throughout the Greek operations, in addition to the successful
renegotiation of employees' collective benefit agreements. That said, the
terms of the country's European bailout package have yet to be finalised and
this is likely to prolong the situation further.
As we reported during the period, the Group ended its involvement
in Casino Palace following the dilution of its holdings, and subsequently the
operation has closed until further notice. The Romania court has approved the
commencement of bankruptcy proceedings, which are is currently in progress.
The dilution formed part of the Group's decision to strategically move away
from Europe towards South East Asia, in order to decrease the losses we had
previously incurred. The strategy to diverse revenue mix remains on course
having successfully soft launched Queenco Casino in Sihanoukville, Cambodia,
among other things.
Summary of financial performance
Results for the nine months ended 30 September 2012
Gross revenues were €36.9 million (2011: €82.7 million), a decrease
of 55.4% whilst net revenues decreased by 53.6% to €26.9 million (2011: €57.8
million), a decrease of €31 million, which is mainly due to the -consolidation
of the Loutraki results for the 2011 2nd and 3rd quarters in the amount of
€25.5 million and to the decrease in win per visit and number of visits in
2012. Revenues continue to be suppressed by the prolonged economic crisis in
Greece where the Group generates 80.8% of its gross revenue from its principal
assets, Casino Loutraki and Casino Rodos. The decrease in win per visit and
number of visits is putting pressure on EBITDA which remains negative at €5.2
million (2011: negative €2.2 million). The company's net profit during the
period amounts to €14.5 million (2011: Net loss €17.2 million).
Cash and cash equivalents amounted to €7.9 million as of September
30, 2012. The Company's management is of the opinion that the Company has good
chances of executing a major portion of its plans on a timely manner.
Accordingly the Company's management is of the opinion that its existing cash
and the expected inflow of cash through the successful execution of the its
plans, will enable the Company to meet the needed cash levels required for the
Group's operations and the payment of its obligations when due.
Basic profit per share was 3.3¢ (2011: Loss (3.2¢)) and profit per
GDR (each GDR representing 10 ordinary shares) were 33¢ (2011: Loss (32¢)).
Operational Review
Results by casino for the nine months ended 30 September 2012 and 2011:
Casino Gross Net EBITDA Visits Gross Win QLI's
Gaming Revenue (EURm) (000's) per Visit Economic
Revenue (EURm) (EUR) Interest
(EUR m)
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
Loutraki 78.2 104.8 57.8 74.6 (5.7) (0.6) 565 695 128 151 38.5%
Rodos 15.5 19.3 11.3 14.3 (0.04) (1.5) 118 119 132 163 91.6%
Belgrade 5.9 7.3 5.5 6.8 0.2 0.2 171 200 39 38 34.6%
Sasazu - - 3.2 2.9 0.04 (0.4) - - - - 100%
Cambodia 0.9 - 0.8 - (0.6) - 14 - 62 - 70%
Results by Casino for the three months ended 30 September 2012 and 2011
Casino Gross Net Revenue EBITDA Visits Gross Win QLI's
Gaming (EUR m) (EUR m) (000's) per Visit Economic
Revenue (EUR) Interest
(EUR m)
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
Loutraki 24.1 33.4 18.6 24.9 1.7 1.8 181 230 133 145 38.5%
Rodos 7.1 7.9 5.3 6.2 1.3 2.0 55 51 128 163 91.6%
Belgrade 1.9 2.1 1.8 1.5 0.2 (0.2) 49 59 39 36 34.7%
Sasazu - - 0.9 0.8 (0.2) (0.2) - - - - 100%
Cambodia 0.4 - 0.4 - (0.2) - 7 - 51 - 70%
Club Hotel Casino Loutraki ("CHL")
Results for the nine months ended 30 September 2012
Gross gaming revenues for the nine months ended 30 September 2012
were €78.2 million (2011: €104.8 million), while net revenues were €57.8
million (2011: €74.6 million). Over the course of the nine month Casino
Loutraki generated negative EBITDA of €5.7 million (2011: negative €0.6
million EBIDTA), reflecting the continued distress in the Greek economy which
is putting pressure on customers' disposable income, visitor numbers and
subsequently win per visit.
Until the situation in the Eurozone is resolved, the effects on our
customers, as well as our business are likely to remain challenging.
Up until and including the Company's 2011 financial statements, the
results of operations of CHL (which includeCasino Beograd results) were
proportionally consolidated into the Company's consolidated financial
statements, by virtue of it being controlled by a chain of holding companies,
in which the Company has a joint controlling interest. As a result of various
disagreements between the major shareholders of these holding companies, an
exceptional situation exists where the Company has the power to express its
joint control in the holding companies but not in CHL, and therefore, its
joint control in CHL has effectively ceased. Consequently, commencing on March
31, 2012, CHL's results are presented under the Equity Method as prescribed by
IAS 28.
The Company's consolidated statements of comprehensive income
(loss) include the proportionally consolidated profit and loss of CHL for the
three months ended 31 March, 2012; and the results for the 2nd and 3rd quarter
2012 are presented in share of results of an associated company in the amount
of (€3.5) million.
Casino Beograd
Results for the nine months ended 30 September 2012
Gross gaming revenues for the nine months ended 30 September 2012
were €5.9 million (2011: €7.3 million), whilst net revenues were €5.5 million
(2011: €6.8 million). This decrease in revenues reflects the economic
deterioration which is spreading throughout Europe and affecting other gaming
markets including Serbia. Cost cutting measures have been implemented at
Casino Beograd to improve efficiencies and to try and counteract the impact
of
the Eurozone crisis.
Casino Rodos
Results for the nine months ended 30 September 2012
As would be expected, revenues at Casino Rodos, the only casino
located on the holiday island of Rhodes, continue to be impacted by the
uncertainty in the Eurozone and the pending Greek decision on their bailout
conditions. Gross gaming revenues amounted to €15.5 million (2011: €19.3
million) and net revenues amounted to €11.3 million (2011: €14.3 million)
mainly due to a reduction in wins per visit which is attributed to visitors'
lower disposable income. EBITDA generated for the nine month was negative at
€0.04 million compared to a negative EBITDA of €1.5 million for the previous
period last year. Casino Rodos incurred a net loss during the period of €1.9
million (2011: loss of €0.9 million).
SaSaZu (Prague)
Results for the nine months ended 30 September 2012
During the period, the gross revenue at SaSaZu increased by 11.1%,
and amounted to €3.2 million (2011: €2.9 million), and the Group is pleased to
report a positive EBITDA of €0.04 million compared to negative EBITDA of €0.4
million reflecting the successful marketing initiative the Group has
implemented. Due to the success of the concept in the Czech Republic, the
Group has planned to export the brand to other QLI operations, however due to
the current economic climate in Europe, the Group is currently considering
ways to implement the expansion.
Queenco Casino, Sihanoukville
During the period the Queenco Casino in Sihanoukville has gone through a soft
launch and we are encouraged by the revenue generation that the Casino is
currently creating for the Group. This further confirms our strategy to move
away from European gaming markets and further explore the opportunities that
South East Asia has to offer.
As previously reported the Group has decided not to enter new developments in
Europe but will continue to explore online gaming opportunities in the
countries where it operates.
Outlook
The Greek economy remains stagnant and opportunities in Eastern
Europe have also decreased since we first entered these markets, hence our
decision to move away from European markets. We have begun to diversify our
revenue mix in South East Asia with the opening of Queenco Casino in
Sihanoukville and we will continue to explore opportunities there and in
online gaming.
Tal Taragan
Chief Executive's, Queenco Leisure International Limited
27 November 2012
QUEENCO LEISURE INTERNATIONAL LTD
Interim condensed consolidated financial statements
for the interim periods ended 30 September 2012
(Unaudited)
QUEENCO LEISURE INTERNATIONAL LTD
Interim condensed consolidated financial statements
Page
Statements of comprehensive income (loss) 1
Statements of financial position 2-3
Statements of changes in equity 4-6
Cash flow statements 7
Notes to the interim condensed consolidated financial statements 8-19
Consolidated statements of comprehensive income (loss)
(In thousands of €)
3 Months Ended 9 Months Ended Year ended
September 30, September 30, December 31,
2 0 1 2 2 0 1 1 2 0 1 2 2 0 1 1 2 0 1 1
Unaudited Unaudited Unaudited Unaudited
Revenues 6,579 20,200 26,864 57,840 75,322
Operating costs
Cost of revenues (4,293) (14,366) (23,946) (45,719) (58,890)
Selling and marketing
expenses (1,398) (3,582) (6,362) (11,753) (15,937)
General and administrative
expenses (1,264) (3,307) (6,597) (11,800) (15,331)
Other operating expenses (18) (1,136) (1,596) (2,837) (2,851)
Share of result of an
associated Company (1,078) - (3,507) - -
Profit on deem disposal
of subsidiary (Note 7) - - 33,580 - -
Operating profit (loss) (1,472) (2,191) 18,436 (14,269) (17,687)
Investment income 74 74 140 219 343
Finance costs (441) (552) (1,460) (1,495) (2,096)
Foreign exchange gain 641 1,195 835 1,371 1,252
Profit (loss) before tax (1,198) (1,474) 17,951 (14,174) (18,188)
Tax 30 (37) 154 775 1,024
Discontinued operations (*) - (1,491) (3,597) (3,838) (6,054)
Profit (loss) for the
period (1,168) (3,002) 14,508 (17,237) (23,218)
Other comprehensive
income (loss):
Realization of translation
reserve due to the disposal
and deem disposal of
subsidiaries (Notes 6 and 7) - - 11,107 - -
Exchange differences (620) (383) (1,118) (1,553) (1,001)
Total comprehensive profit
(loss) for the period (1,788) (3,385) 24,497 (18,790) (24,219)
Profit (loss) for the period
attributable to:
Equity holders of the parent (1,131) (2,472) 15,913 (15,082) (20,403)
Minority interests (37) (530) (1,405) (2,155) (2,815)
(1,168) (3,002) 14,508 (17,237) (23,218)
Total comprehensive profit
(loss) for the period
attributable to:
Equity holders of the parent (1,471) (2,673) 26,287 (16,057) (20,956)
Minority interests (317) (712) (1,790) (2,733) (3,263)
(1,788) (3,385) 24,497 (18,790) (24,219)
Profit (loss) per share (*)
Profit (loss) per share from
continued operations (¢) (0.2) (0.2) 4.0 (2.5) (3.1)
Loss per share from
discontinued operations (¢) - (0.3) (0.7) (0.7) (1.1)
(0.2) (0.5) 3.3 (3.2)
(4.2)
(*) Restated in order to reflect issuance of rights (see note 9.13)
Consolidated statements of financial position
(In thousands of €)
As at
September 30, December 31,
2 0 1 2 2 0 1 1 2 0 1 1
Unaudited Unaudited
Non-current assets
Intangible assets 2,140 8,887 8,579
Property, plant and equipment 38,374 109,430 107,988
Investment in an associated company (Note 7) 65,629 - -
Deferred tax asset 1,080 3,301 3,280
Other long term receivables 6,267 6,827 7,369
Total non-current assets 113,490 128,445 127,216
Current assets
Inventories 337 584 649
Investments 7 304 77
Trade and other receivables 2,067 3,310 3,906
Cash and cash equivalents 7,948 18,002 14,052
10,359 22,200 18,684
Assets related to discontinued operations - 4,285 2,511
Non - current assets held for sale 3,078 3,078 3,078
Total current assets 13,437 29,563 24,273
Total assets 126,927 158,008 151,489
Current liabilities
Accounts payable (1,475) (4,666) (4,232)
Current tax liabilities (1,740) (3,232) (2,599)
Other current liabilities (12,257) (17,210) (18,412)
Short-term bank credit (1,010) (19,508) (19,509)
(16,482) (44,616) (44,752)
Liabilities related to discontinued operations - (2,663) (2,626)
Total current liabilities
(16,482) (47,279)
(47,378)
Net current (liabilities) assets (3,045) (17,716)
(23,105)
Total assets less current liabilities 110,445 110,729 104,111
Non-current liabilities
Long-term bank loans (6,246) (7,339) (6,725)
Other long-term liabilities (5,482) (9,791) (9,185)
Deferred tax (96) (1,805) (1,679)
Provision for retirement benefits (1,091) (6,499) (6,469)
Total non-current liabilities (12,915) (25,434) (24,058)
Net assets 97,530 85,295 80,053
Consolidated statements of financial position (cont.)
(In thousands of €)
As at
30 September 31 December
2 0 1 2 2 0 1 1 2 0 1 1
unaudited unaudited
Shareholders' equity
Share capital 62,530 62,530 62,530
Share premium 131,196 131,196 131,196
Translation reserve 12,852 2,056 2,478
Reserve for the waiver of options
by as controlling shareholder 2,739 -
2,739
Other reserves (14,319) (14,080) (14,080)
Accumulated deficit (109,199) (117,164) (125,037)
Equity attributable to equity 85,799
59,826
holders of the parent 64,538
Minority interest 11,731 20,757 20,227
Total equity 97,530 85,295 80,053
The financial statements were approved by the board of directors and
authorised for issue on 26 November, 2012. They were signed on its behalf by:
Haim Asayag Tal Taragan Arie Haviv
Executive Chairman of the Chief Executive Officer Controller
Board
27 November, 2012
Consolidated statements of changes in equity
(In thousands of €)
Reserve
for the
waiver of
share
options
by a
Share Share Translation controlling Other Accumulated Minority Total
Capital Premium reserve shareholder reserve deficit Parent Interest Equity
For the nine months
ended September
30, 2012 (unaudited)
Balance as at 1 2,478 20,227
January 2012 62,530 131,196 2,739 (14,080) (125,037) 59,826 80,053
Translation differences - - (733) - - - (733) (385) (1,118)
Expense resulting from
grant of share options - - - - - (75) (75) - (75)
Share issuance to
minority shareholder - - - - (239) - (239) 239 -
Deem disposal of
interest in a jointly 7,526 (6,882) 644
controlled entity
(Note 7) - - - - - 7,526
Disposal of interest
in a subsidiary 3,581 323
(Note 6) - - - - - 3,581 3,904
Profit share due to
the municipality of - (386)
Loutraki - - - - - - (386)
Net profit (loss) for - (1,405)
the period - - - - 15,913 15,913 14,508
Balance as at 30
September, 2012 62,530 131,196 12,852 2,739 (14,319) (109,199) 85,799 11,731 97,530
For the nine months
ended September
30, 2011 (unaudited)
Balance as at 1
January 2011 62,512 130,998 3,031 - (14,080) (101,973) 80,488 23,855 104,343
Realization of share
options 18 198 - - - (216) - - -
Translation differences
(*) - - (975) - - - (975) (578) (1,553)
Expense resulting from
grant of share options - - - - - 107 107 - 107
Profit share due to the
municipality of Loutraki - - - - - - - (365) (365)
Net loss for the period - - - - - (15,082) (15,082) (2,155) (17,237)
Balance as at
30 September, 2011 62,530 131,196 2,056 - (14,080) (117,164) 64,538 20,757 85,295
Consolidated statements of changes in equity
(In thousands of €)
Reserve
for the
waiver of
share
options
by a
Share Share Translation controlling Other Accumulated Minority Total
Capital Premium reserve shareholder reserve deficit Parent Interest Equity
For the three months
ended September
30, 2012 (unaudited)
Balance as at July
1, 2012 62,530 131,196 13,192 2,739 (14,319) (108,068) 87,270 12,048 99,318
Translation differences - - (340) - - - (340) (280) (620)
Expense resulting from
grant of share options - - - - - - - - -
Net loss for the period - - - - -
(1,131) (1,131) (37) (1,168)
Balance as at
September 30, 2012 62,530 131,196 12,852 2,739 (14,319) (109,199) 85,799 11,731 97,530
For the three months
ended September 30,
2011 (unaudited)
Balance as at July
1, 2011 62,530 131,196 2,257 - (14,080) (114,739) 67,164 21,469 88,633
Translation differences - - )201( - - - (201) (182) (383)
Expense resulting from
grant of share options - - - - - 47 47 - 47
Net loss for the period - - - - - (2,472) (2,472) (530) (3,002)
Balance as at September
30, 2011 62,530 131,196 2,056 - (14,080) (117,164) 64,538 20,757 85,295
Consolidated statements of changes in equity (cont.)
(In thousands of €)
Reserve
for the
waiver
of share
options
by a
Share Share Translation controlling Other Accumulated Minority Total
capital premium reserve shareholder
reserves deficit Parent interest equity
Balance as at 1 3,031 23,855
January 2011 62,512 130,998 - (14,080) (101,973) 80,488 104,343
Realization of share options 18 198 - - - (216) - - -
Translation differences - - (553) - - - (553) (448) (1,001)
Expense resulting from grant of -
-
share options - - - - 294 294 294
Waiver of options by a - -
controlling
shareholder - - 2,739 - (2,739) - -
Profit share due to the - (365)
Municipality of Loutraki - - - - - - (365)
Net loss for the year - - - - - (20,403) (20,403) (2,815) (23,218)
Balance as at 31 2,478 20,227
December 2011 62,530 131,196 2,739 (14,080) (125,037) 59,826 80,053
Consolidated cash flow statements
(In thousands of €)
3 Months Ended 9 Months Ended Year ended
30 September 30 September 31 December
2 0 1 2 2 0 1 1 2 0 1 2 2 0 1 1 2 0 1 1
Notes Unaudited Unaudited Unaudited Unaudited
Net cash from (used in)
operating activities 3 1,595 3,348 (1,101) (707) (2,142)
Investing activities
Interest received 73 87 139 234 350
Purchases of property, plant
and equipment (138) (844) (845) (2,445) (3,871)
Proceeds on sale of property,
plant and equipment - 10 27 63 107
Purchase of other intangibles - (1) (1) (6) (7)
Instalments for the acquisition
of a subsidiary (181) - (586) - (904)
Realisation of trading 1,887
investments - 1,018 71 1,719
Decrease in deposits - - - - (843)
Deem disposal of interest in - (5,729) -
subsidiary (see note 7) - -
Disposal of interest in - (586) -
subsidiary (see note 6) - -
Repayment of other long term
receivables - 1,165 - 1,165 1,165
Net cash used in investing (2,116)
activities (246) 1,435 (7,510) 730
Financing activities
Repayments of borrowings (500) - (515) - (500)
Receipt of loan from parent
company 797 - 3,640 3,656 3,656
Share of profits paid to
Municipality of Loutraki - - (386) (365) (365)
Increase in (decrease)
short-term bank credit, net - (135) - 976 977
Net cash from (used in)
financing activities 297 (135) 2,739 4,267 3,768
Net decrease in cash and cash
equivalents 1,646 4,648 (5,872) 4,290 (490)
Effect of foreign exchange rate
(1,181)
changes (510) (1,382) (818)
(2,130)
Cash and cash equivalents at
beginning of period 6,812 15,203 14,638 16,309
16,309
Cash and cash equivalents at
end of period 7,948 18,469 7,948 18,469
14,638
Cash and cash equivalents
attributable to discontinued
operation - 467 - 467
(586)
Cash and cash equivalents at
end of period 7,948 18,002 7,948 18,002 14,052
Tax cash flow (28) (1,023) (113) (2,158) (2,824)
Interest paid (133) (437) (818) (1,003) (1,260)
NOTE 1 - BASIS OF PREPARATION
Queenco Leisure International Ltd (the "Company" or "QLI") was
incorporated in Israel on September 9, 2002. The Company's main activity is
investment, through Israeli and foreign companies (together, "the Group") in
tourist projects, including casinos and hotels, currently mainly in Greece,
Serbia, the Czech Republic and Cambodia. The activities in Greece are in the
city of Loutraki and Rhodes Island. The activities in Serbia are in the city
of Belgrade. The activities in the Czech Republic are in the city of Prague.
The activities in Cambodia (a casino, a 60 room hotel and a restaurant) are in
the city of Sihanoukville. The Company provides advisory services to a part of
the projects. See note 6 regarding the disposal of the operations in Romania.
The Group's activities in the past years have been adversely
affected by the global economic crisis in general and the economic crisis in
Greece in particular. The abovementioned, along with the Company's inability
to execute its rights in CHL due to disagreements with B.A.T. (see Note 9.1)
and CAIH's unwillingness to withstand its contractual obligations to transfer
Euro 49.5 million to PBS, have brought the Group to operating losses and
negative cash flows from its continued operations, amounting, for the nine
months ended September 30, 2012, to approximately Euro 1.1 million, and
resulting in a decrease in the Group's net working capital to a negative
amount of approximately Euro 3 Million and the Company's net working capital
to a negative amount of approximately Euro 5 million as at September 30, 2012.
The Company was not able to meet its original obligations to repay
loans and credits received from Y.Z. Queenco and from a previous shareholder
in Dasharta, from whom the Company purchased residual shares in said company
in 2008. So far, the Company has succeeded in reaching understandings with
Y.Z. Queenco and the abovementioned previous shareholder regarding a
rescheduling of the repayment schedules such that they will coincide with the
Company's payment abilities, and the Company's management is of the opinion
that they will succeed in doing so in the future, if needed.
The Group is continuing in the implementation of its cost savings
plans and is in the process of expanding their scope, mainly in Rhodes, due to
the decrease in revenues caused by the economic situation. The Group is also
in a process of realization of excess assets (the Company's airplane which was
sold during October 2012 and properties in Bulgaria). In addition, the Company
completed a rights issue during November 2012 (see note 9.13).
and is examining options of bringing in strategic partners at
different levels of activity.
The timing and scope of the success in the execution of some of
these abovementioned actions depend on agreements with third parties and/or
are affected by processes and other factors which are not under the Company's
control. Nonetheless, the Company's management is of the opinion that the
Company has good chances of executing at least a major portion of its plans in
a timely manner. Accordingly, the Company's management is of the opinion that
its existing cash and the expected inflow of cash through the successful
execution of the above mentioned plans, will enable the Company to meet the
needed cash levels required for its operations and the payment of obligations
when due.
The unaudited Interim Condensed Consolidated Financial Statements
("Interim Consolidated Financial Statements") for the three and nine month
periods ended September 30 2012 have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting" and on a
basis consistent with the accounting policies set out in the Financial
Statements for the year ended December 31 2011 published on the Company's
website on April 5 2012 (the "2011 Financial Statements"). The Interim
Consolidated Financial Statements should therefore be read in conjunction with
the 2011 Financial Statements.
NOTE 1 - BASIS OF PREPARATION (Cont.)
The Interim Consolidated Financial Statements for the three and
nine month periods ended September 30 2012, were approved by the Board of
directors on November 26 2012. The information relating to the year ended
December 31 2011 is an extract from the 2011 Financial Statements.
The preparation of the Interim Consolidated Financial Statements
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the balance sheet date, and the reported amounts of revenue and
expenses during the reporting period. Actual results could vary from these
estimates. The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period or
in the period of the revision and future periods if the revision affects both
current and future periods.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
2.1 The condensed financial statements have been prepared under the historical
cost convention,except for the revaluation of certain properties and financial
instruments.
The same accounting policies, presentation and methods of
computation have been followed in these interim financial statements as were
applied in the preparation of the 2011 Financial Statements, as applicable
(see notes 6 and 7).
At the date of authorisation of these financial statements, the
following Amendments which have not been applied in these financial statements
were in issue but not yet effective:
- Amendments to IAS 34 - Interim Financial Reporting
- Amendments to IAS 1(R) - Presentation of Financial Statements
- Amendments to IAS 16 - Property Plant and Equipment
- Amendments to IAS 32 - Financial Instruments: Presentation
The directors anticipate that the adoption of these Amendments in
future periods will have no material impact on the financial statements of the
Group.
Note 3 - notes to the CONSOLIDATED cashflow statementS
3 months ended 9 months ended Year ended
September 30 September 30 31 December
2 0 1 2 2 0 1 1 2 0 1 2 2 0 1 1 2 0 1 1
Unaudited Unaudited Unaudited Unaudited
Profit (loss) for the period (1,168) (3,002) 14,508 (17,237) (23,218)
Adjustments for:
Depreciation of property, plant and equipment
871 2,670 4,436 8,362 11,237
Increase (decrease) in provisions (18) (159) (13) 367 520
Loss (gain) on sale of property, plant and
equipment and disposals 13 (11) 792 4 19
Amortisation of intangible assets 1 202
195 769 984
Impairments - - 556 1,700 3,541
Investment income (74) (77) (140) (226) (350)
Finance costs 441 568 1,460 1,536 2,171
Gain on deem disposal of subsidiary - - (33,580) - -
Loss on discontinued operation - - 3,597 - -
Share of results of associated company 1,078 -
3,507 - -
Foreign exchange gain (641) (1,150) (835) (1,310) (1,536)
Share based payments - 47 (75) 107 294
Operating cash flows before movements in working
capital 503 (912) (5,592) (5,928) (6,338)
Decrease in inventories 45 122 74 230 158
Decrease (increase) in receivables (108) 202 (115) 514 182
Increase (decrease) in payables 1,316 5,396 5,463 7,638 7,940
Cash generated by (used in) operations 1,756 4,808
(170) 2,454 1,942
Income taxes paid (28) (1,023) (113) (2,158) (2,824)
Interest paid (133) (437) (818) (1,003) (1,260)
Net cash - operating activities 1,595 3,348 (1,101) (707) (2,142)
NOTE 4 - Income tax charge
No deferred tax assets were recorded with regard to losses of the
Company in a total amount of € 19.6 million at September 30 2012 (Euro 21
million and Euro 20 million at December 31 2011 and at September 30, 2011).
NOTE 5 - Property, plant and equipment
During the nine month period ended September 30 2012, the Group
spent approximately € 845 thousand on capital expenditures (mainly for
renovations and equipment).
NOTE 6 - Discontinued operation in Romania
In August 2011, due to ongoing losses, the Group's management
decided to dispose its controlling interest in the operating segment in
Romania.
As a result, in January, 2012 Tempotest (QLI's subsidiary and the
parent company of Queen Investments) signed an agreement with an unrelated
investor for the issuance of newly issued shares to the investor (representing
a 51% controlling interest in Queen Investments) for a total consideration of
€ 700 thousand of which € 400 thousand have yet not been paid (see below).
The transaction has been accounted for as a disposal of the
operating segment in Romania effective January 1 2012 (due to the immaterial
effect of the operating segment in Romania on the Group's results of
operations during the three month period ended 31 March).
NOTE 6 - Discontinued operation in Romania (Cont.)
The investment carrying amount in the Group's consolidated
financial statements as at September 30 2012 is zero.
(1) The results of the discontinued operation for the relevant periods were as
follows:
3 months ended 9 months ended Year ended
September 30, September 30, December 31,
2 0 1 2 2 0 1 1 2 0 1 2 2 0 1 1 2 0 1 1
Unaudited Unaudited Unaudited Unaudited
Revenues - 1,722 - 8,604 10,718
Operating costs - (3,053) - (11,301) (14,097)
Finance costs, net - (58) - (95) 216
Other expenses - (10) - (332) (*)(2,141)
Loss before tax - (1,349) - (3,124) (5,304)
Income tax - (142) - (714) (750)
Loss for the period - (1,491) - (3,838) (6,054)
Loss on disposal
of operations - - (3,597) - -
in Romania
- (1,491) (3,597) (3,838) (6,054)
(*) Including impairment in the amount of € 1,662 thousand related to the
discontinued operation.
(2) The cash flows of the discontinued operation for the relevant periods were
as follows:
3 months ended 9 months ended Year ended
September 30, September 30, December 31,
2 0 1 2 2 0 1 1 2 0 1 2 2 0 1 1 2 0 1 1
Unaudited Unaudited Unaudited Unaudited
Net cash used in
operating activities - (1,346) - (2,619) (2,827)
Net cash from (used
in) investing activities - 4 - (35) (57)
(3) Translation differences from discontinued operation for the
relevant periods were as follows:
3 months ended 9 months ended Year ended
September 30, September 30, December 31,
2 0 1 2 2 0 1 1 2 0 1 2 2 0 1 1 2 0 1 1
Unaudited Unaudited Unaudited Unaudited
Change during the
period - (22) - 106 176
Accumulated translation
differences from
disposal of
operations in
Romania - - 3,581 - -
NOTE 6 - Discontinued operation in Romania (Cont.)
(4) The balance of the discontinued operation was as followed:
December 31,
2 0 1 1
Unaudited
Non-current assets
Intangible assets 66
Property, plant and equipment 573
Investment property 201
Other long term receivables 188
Total non-current assets 1,028
Current assets
Inventories 184
Trade and other receivables 713
Cash and cash equivalents 586
1,483
Total assets 2,511
Current liabilities
Accounts payable (803)
Current tax liabilities (265)
Other current liabilities (1,406)
Total current liabilities (2,474)
Non-current liabilities
Deferred tax (121)
Provision for retirement benefits (31)
Total non-current liabilities (152)
Total liabilities (2,626)
Net liabilities disposed of (115)
Consideration received, net (192)
Transfer to profit and loss of translation
reserve 3,581
Disposal of minority interest 323
Loss on disposal 3,597
On 4 April, 2012 Queen Investments was notified by the Romanian
Gambling Commission that its license to operate the casino had been cancelled
and the casino had been shut down due to a debt to the Romanian tax
authorities. The Company, together with its Romanian legal counsel, appealed
the foregoing decision of the Gambling Commission.
On 5 April 2012 the Romanian court ordered to reopen the casino
until September 2012, when a hearing on this matter was to be conducted.
Immediately foregoing the order, the casino was reopened to the public.
On 27 April 2012 the Company was informed by Queen Investments of
the shutdown of the casino until further notice. To the Company's best
knowledge, the shutdown of the casino was due to economic and cash flow
reasons. The Company's management estimates that the shutdown will not have a
material effect on the Group's financial results.
NOTE 6 - Discontinued operation in Romania (Cont.)
On 3 May, 2012 the Company received a notice from the investor
stating that he has no intention to transfer the additional 400,000 Euro he
was obligated to pay according to the agreement with him and that he had a
number of doubts regarding the transaction.
On 24 May 2012, the Romanian court authorized a bankruptcy
procedure for Queen Investments and appointed a special court appointed
manager in order to convene a creditors meeting and to corporate of all the
company's assets. Queen Investments is currently undergoing bankruptcy
proceedings.
NOTE 7 - Investment in An associated COMPANY
Up until and including the Company's 2011 financial statements, the
financial information of CHL was proportionally consolidated in the Company's
consolidated financial information in accordance with IAS 31 - Interests in
Joint Ventures, based on the joint control the Company has in Vasanta and the
direct and indirect control of Vasanta in a chain of companies, ultimately
controlling CHL.
During the first quarter of 2012, due to changes made in CHL's BOD
without the ability of PBS and the Company to object and in which PBS and the
Company were not a part, the Company is of the opinion that PBS has lost
control in CHL (resulting in the loss of the Company's indirect joint control
in CHL). As result, and since March 31, 2012, PBS's holding in CHL (and
indirectly also the Company's holding in CHL) is accounted for under the
Equity Method, as prescribed in IAS 28 - Investments in Associates.
The Company's consolidated statements of comprehensive income
(loss) include the results of operations of CHL under the proportionate
consolidation method only for the three months ended 31 March, 2012.
As part of the transaction, the group recorded a negative cash flow
of 5,729 thousand Euro in investing activities in its cash flow statements,
equivalent to 50 percent of CHL's cash and cash equivalents at the date of the
transaction.
The loss of control in CHL and transition to the Equity Method was
treated as a deem disposal of CHL's net assets and the recognition of the
Company's interest in CHL under the equity method of accounting, at fair
value, as at the date of loss of control. In addition, the translation reserve
regarding the company's holdings in CHL was transferred to profit and loss.
The abovementioned, resulted in a profit of Euro 33,580 thousand, recognized
in the Group's consolidated statements of comprehensive income under "Profit
on deem disposal of subsidiary."
NOTE 7 - Investment in An associated COMPANY (Cont.)
(1) The balance of the associated company at the date of loss of control was
as follows:
As at
March 31
2 0 1 2
unaudited
Non-current assets
Intangible assets 4,080
Property, plant and equipment 126,650
Deferred tax asset 5,768
Other long term receivables 2,561
Total non-current assets 139,059
Current assets
Inventories 486
Trade and other receivables 3,157
Cash and cash equivalents 11,458
Total current assets 15,101
Total assets 154,160
Current liabilities
Accounts payable (4,981)
Current tax liabilities (1,563)
Other current liabilities (29,641)
Bank overdraft and loans (37,000)
Total current liabilities (73,185)
Non-current liabilities
Other long-term liabilities (6,035)
Deferred tax (1,680)
Provision for retirement benefits (10,696)
Total non-current liabilities (18,411)
Total equity 62,564
(2) The profit on deem disposal of the subsidiary was as follows:
Net assets disposed of (31,282)
Disposal of surplus on investment (3,836)
Investment in associate acquired 69,342
Transfer to profit and loss of translation reserve (7,526)
Disposal of minority interest
6,882
Profit on deem disposal 33,580
NOTE 8 - SEGMENT INFORMATION
The Group adopted IFRS 8 Operating Segments with effect from 1
January 2009. IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are regularly reviewed
by the chief operating decision maker in order to allocate resources to the
segment and to assess its performance. The Group consolidates its business
segments into one reporting segment based on the provisions of IFRS 8.
Geographical information:
The carrying amounts of non-current assets (fixed assets, investment property
and intangible assets), included in the Group's financial statements, in the
Company's country of domicile (Israel) and in foreign countries based on the
location of the assets are as follows:
September 30, December 31,
2 0 1 2 2 0 1 1 2 0 1 1
Unaudited
Israel 913 1,073 1,056
Greece 21,301 80,689 79,519
Romania - - -
Serbia - 17,639 16,505
Cambodia 14,004 13,036 14,215
Czech Republic 4,296 5,880 5,272
40,514 118,317 116,567
Revenues reported in the financial statements which derive from the Company's
country of domicile (Israel) and foreign countries based on the location of
the revenues, are as follows:
3 months ended 9 months ended Year ended
September 30, September 30, December 31,
2 0 1 2 2 0 1 1 2 0 1 2 2 0 1 1 2 0 1 1
Unaudited Unaudited Unaudited Unaudited
Israel 43 18 127 126 170
Greece 5,293 18,642 21,707 51,597 66,021
Serbia - 758 978 3,158 4,414
Cambodia 366 - 814 - -
Czech Republic 865 781 3,210 2,889 4,702
Other foreign countries 12 1 28 70 15
6,579 20,200 26,864 57,840 75,322
NOTE 9 - other information
1. The Company encountered certain disagreements with the co-shareholder of
50% in Vasanta ("B.A.T"). Such disagreements resulted in, inter alia, the
frequent and lengthy convening of shareholders meetings and board meetings of
the companies directly and indirectly controlled by Vasanta, as well as the
non-performance of various resolutions adopted at such meetings and
disagreements as to the substance and interpretation of various resolutions
adopted at such meetings (some of which affect the decision making process at
CHL See also note 7).
NOTE 9 - other information (Cont.)
1. (Cont)
The above mentioned disagreements were reflected in, among other
ways, various legal proceedings initiated by each of the parties, which may
affect the structure of the boards of directors of some of the companies
directly and indirectly controlled by Vasanta, the decision making process at
such boards of directors, the flow of information to the shareholders of the
companies and the distribution of dividends by such companies to their
respective shareholders.
The said have resulted in several legal proceedings served against
the Company as well as proceedings initiated by the Company against B.A.T and
(to the best knowledge of the Company), B.A.T's ultimate controlling
shareholder, Mr. Moshe Bublil, and other disputes such as:
(a) A dispute related to the amendment of the article of association of CHL
upon which all board resolutions passed by simple majority and according to
the Company was improperly adopted. For more information please see note 9
(8).
(b) A dispute as to the presence of Vasanta`s representative in the
board of directors of PBS. The Company believes that this resolution was never
duly passed.
The main changes regarding the dispute with the co-shareholder in Vasanta are
as follows:
CHL's Board of Directors ("BOD") is comprised of 5 directors of
which PBS (a company formed in Spain which holds 78% of the share capital of
CHL) is entitled to nominate 4 and one is nominated by CHL's other
shareholders. To the best of the Company's knowledge, beginning March 2012, 3
out of the 5 directors in CHL act, directly or indirectly, on behalf of Mr.
Moshe Bublil. Since then, there has been an adverse effect on the Company's
ability to obtain on-going information and financial data from CHL's
management.
To the Company's best knowledge, decisions and discussions
regarding major events are raised at CHL's BOD at the time such events occur
and the director that through PBS acts on behalf of the Company, is invited
and attends all BOD meetings so that all issues on the agenda of these BOD
meetings are known to the Company. At the date of the approval of these
interim financial statements, the Company evaluates that there is no material
data or information that is yet un-known to the Company or that the Company
has not yet received and which needs to be disclosed to the public, regarding
CHL's activities.
For additional information, see note 33 to the Group's 2011
Financial Statements.
2. On January 31, 2010 the Company, QLI Management and Mr. Zilkha,
the controlling shareholder of the Company and the representative of QLI
Management in its capacity as a director of Agastia, a company indirectly
controlled by Vasanta ("Agastia") were served with a motion to approve a
derivative claim, along with a copy of the derivative claim, to be filed by
Agastia, filed with the Tel Aviv District Court by B.A.T.
The remedies requested in the claim include declaratory remedies
and a US$ 53.5 million monetary remedy. The claim relates to the acquisition
of land in Cambodia. B.A.T claims that the Company took advantage of a
business opportunity that was intended to be offered to Agastia and that the
Company did not reveal to Agastia that it had received an offer for the
purchase of an asset held by it in Cambodia, and therefore is seeking a
monetary remedy that will reflect the damages that have allegedly been
incurred by Agastia.
NOTE 9 - other information (Cont.)
2. (Cont)
The Company rejects the forgoing claims and filed an opposition on
March 21, 2010, stating that the claim has no legal ground due to various
reasons including: (1) the Company and Mr. Zilkha have operated in the gaming
industry many years prior to their joint holding of Agastia; (2) the Company
and Mr. Zilkha have operated casinos other than through Agastia; and (3) there
are no restrictions on competition between the Company, Mr. Zilkha and
Agastia.
As for B.A.T.'s additional claim, the Company stated that it had
received no such purchase offer.
According to the Company's legal counsels' opinion, due to the
strength of the Company's arguments, the likelihood of an unfavourable outcome
against the Company is less than 50%.
On 7 July, 2012 the sides agreed to unite this case with three other similar
cases.
3. On 8 April 2012 the motion to unite nine claims relating to the
dispute between the Company, on the one hand, and Mr. Moshe Bublil, Club Hotel
Investments (C.H.) Ltd. and other third parties, on the other hand, was
rejected by the Israeli Supreme Court, in light of the timing of the motion
and the fact that two of the nine underlying claims are in advanced stages.
Nevertheless, the Supreme Court noted that it does not deny the possibility
that, following resolution in the claims that are currently in their final
stages, there may be good reason to unite the procedures relating to the other
claims. On 17 July 2012, the parties to four of these claims agreed to file a
request to unite their claims.
4. CHL incurred a net loss of €19.3 million during the period ended
September 30, 2012, and as of that date, CHL's current liabilities exceeded
its current assets by Euro 59.7 million (of which Euro 37 million are
unsecured credit to Bank Piraeus, which can be called up at any time by the
bank).
CHL's management does not expect that existing cash reserves
together with cash generated from the operations will be sufficient to repay
the total credit facility if it is called up.
As to the best of the Company's knowledge, CHL's management
believes that the ongoing negotiations with Piraeus Bank regarding this credit
facility will have a positive outcome in terms of a prolonged schedule of
repayment. Furthermore, CHL's management continues its efforts towards severe
cost cutting in 2012. In addition, CHL has unsecured assets which can be used
to secure future debt financing, if needed.
The information with respect to CHL contributes a significant
portion to the Group's consolidated financial information. However, the Group
has other activities.
In addition, the Company is not obligated to provide a capital
injection to CHL, or to cover its liabilities and to the best of the Company's
knowledge, PBS's current cash position is approximately € 8.4 million.
5. On 1 September, 2012, the Company filed a lawsuit in Greece
against CHL to determine that CHL is committed to transfer its financial
information according to IFRS standards in a timely manner when due, at the
Company's request and without charging a fee for the preparation of such
financial statements. The Company also asked the court to determine that CHL
immediately return to the Company all payments in respect of audits of its
financial statements which the Company previously paid under protest and lack
of choice. A hearing was set for March 26, 2015.
NOTE 9 - other information (Cont.)
5. (Cont)
On 19 September 2012 the Company filed a lawsuit against Vasanta
and Dasharta requiring for their consolidated financial statements to be
provided in a timely manner when due. On 12 November 2012 the parties reached
a partial agreement stating, inter alia, that; a decision would be drafted in
PBS regarding the approval of its financial statements and B.A.T.would
cooperate with the preparation of Vasanta and Dasharta's financial statements
and their provision to the Company. In addition it was agreed that the Company
would bear the additional costs relating to the preparation of said financial
statements. An additional hearing was set for 23 December 2012.
6. On 20 April 2012, the Company received a Tender Offer from Y.Z.
Queenco to purchase from the Company's shareholders, all of the issued and
outstanding share capital of the Company not already held by the Y.Z. Queenco
or its wholly owned subsidiary Shahar Hamillenium Limited, in a total of
128,453,574 shares, representing approximately 36.3 per cent, in exchange for
newly issued Ordinary Shares of Y.Z. Queenco which is listed on the Tel Aviv
Stock Exchange.
The consideration offered by Y.Z. Queenco for the tendered Company
shares were Y.Z. Queenco shares in an amount representing 95% of the holding
percentage in the issued and outstanding share capital of the Company
immediately prior to the consummation of the tender offer.
On 22 May 2012, Y.Z. Queenco informed the Company that the period
for tendering shares and GDRs pursuant to the terms of the tender offer has
expired without the conditions for completion of the tender offer being met
and that as a result, the tender offer is cancelled.
7. During May 2012, employees of CHL went on strike on a number of
different occasions and for 24 hours each time. To the best of the Company's
knowledge, the strikes were made by the employees as part of the process of
discussions of a collective labour agreement for the year 2012. During June,
2012 the collective labour agreement between the union of employees and CHL
was signed.
8. The Company filed a declatory claim at the commercial court of
Barcelona against a member of PBS's board of directors, stating that the
defendant overreached the powers granted to him in the representation of PBS
at the shareholders meeting of CHL on November 3, 2011. On 1 October, 2012,
the Barcelona court ruled in the Company's favour and declared that amendments
to CHL's articles of association, which were approved at the 30 November, 2011
BOD meeting and which terminated the requirement for unanimous consent for the
adoption of certain material actions in CHL, are invalid. In addition, the
Company filed an additional declatory claim against PBS to declare
unenforceable, on the grounds of nullity and void ability, all the resolutions
adopted by the BOD of PBS in its meeting of April 12, 2011. The claim was
dismissed in December 2011 and was appealed on January 25, 2012. To date, the
Appeal Court has not yet resolved on the appeal.
9. During the period, the Company incurred an impairment loss of
app. € 0.6 million regarding land held as fixed assets in Loutraki.
10. On 24 October 2012 the Company announced, that "Testeroco
Tourism Enterprise Limited",a indirectly, fully owned subsidiary of the
Company completed the sale of its jet to a third party in consideration for an
aggregate net amount of approximately USD 2,150,000 (excluding commissions and
other expenses).
11. On August 29, 2012, Queenco Leisure International Ltd. ("QLI")
entered into a binding memorandum of understanding ("MOU") with an unrelated
third party (the "Investor"), for the investment in QLI's operations in
Prague, which includes a restaurant named SASAZU and a club (the "Joint
Operations"). Pursuant to the MOU:
NOTE 9 - other information (Cont.)
11. (Cont)
1) The investor undertakes to transfer to the Joint Operations, until
September 30, 2013, Euro 1,500,000 (the "Fixed Consideration"), of which Euro
150,000 shall be transferred within 14 days from the date of the MOU's
execution, and Euro 350,000 shall be transferred by December 31, 2012. Upon
completion of the transfer of the Fixed Consideration, the Investor shall be
issued 50% of the issued and paid-for share capital of the Joint Operations;
2) In addition to the Fixed Consideration, the Investor shall transfer to QLI,
to the extent QLI shall be entitled thereto, additional amounts, which shall
be calculated based on four times the average of the annual EBITDA of the
Joint Operations for the period commencing on September 30, 2012 and ending on
September 30, 2015 (the 3 years EBITDA average times four), all in accordance
with the mechanism set forth in the MOU;
3) Within 60 days from the date of the MOU's execution, the parties shall
execute a definitive agreement, which shall fully set forth the understanding
between the parties;
4) QLI is entitled, at its sole discretion and for any reason whatsoever, to
terminate the MOU and/or the definitive agreement to be executed thereunder,
until December 31, 2012, in which case the Investor shall be entitled to a
full refund of its investment;
5) The definitive agreement shall include provisions for the management of the
Joint Operations and a bring along, tag along and BMBY mechanisms;
On 29 of October that as of the date hereof, payments due under the
MOU were not transferred to the Prague operations by the Investor. The Company
and the Investor continue their negotiations regarding a definitive agreement
and the Company is considering its future actions.
12. On 12 November 2012 the Company held an extraordinary general meeting of
shareholders, to increase the authorized share capital of the Company from NIS
500,000,000, consisting of 500,000,000 ordinary shares, each having a nominal
value of NIS 1.00, to NIS 800,000,000 consisting of 800,000,000 ordinary
shares, each having a nominal value of NIS 1.00. the resolution was duly
passed.
13. On 19 November 2012 the Company completed a rights issue of up to
257,057,276 ordinary shares, par value NIS 1.00 each, of the Company ("New
Shares") pursuant to the terms of the Rights Issue Memorandum dated 29
October, 2012.
The completion of the Rights Issue resulted in 257,057,276 New Shares
subscribed for (including through an over-subscription mechanism as detailed
in the Rights Issue Memorandum) a total consideration of approximately Euro
4.1 million (including approximately Euro 2.9 million from the Company's
controlling shareholders, contributed by virtue of a conversion of part of the
Company's outstanding loans, to equity).
Dealings on the London Stock Exchange in new global depositary receipts (GDRs)
representing 48,867,580 New Shares commence trading shortly after completion
of the rights issue.
Following the rights issue, the issued share capital of the Company was
increased to 610,511,030 ordinary shares with a nominal value of NIS 1.00
each.