TIDMBAGR
RNS Number : 7027N
Bagir Group Ltd
26 September 2019
26 September 2019
Bagir Group Ltd.
("Bagir", the "Group" or the "Company")
Interim Results
for the six months ended 30 June 2019
Bagir (AIM: BAGR), a designer, creator and provider of
innovative tailoring is pleased to announce its results for the six
months ended 30 June 2019.
H1 Trading Highlights
-- Steady trading period reflected in a 32% increase in revenues
to $32.8m (H1 2018 $24.8m) driven by increased sale orders from
existing customers and sales to 19 September 2019 were $46.0m with
an order backlog of $20.1m
-- Improvement in adjusted EBITDA* to $1.0m (H1 2018: loss of
$1.7m) and gross margin of 11.9% (2018: H1 6.7%)
-- General and administrative expenses decreased to $1.1m in H1 2019 (H1 2018: $1.5m)
-- Reduced loss before tax of $1.05m (H1 2018: loss before tax of $3.6m)
-- Cash and cash equivalents of $1.6m as at 30 June 2019
-- On 19 June 2019, a new unconditional completion date, of 31
March 2020, was announced for Shandong Ruyi to make the remaining
cash payment of $13.2m and complete the proposed transaction
-- Appointment of Micha Ronen as CEO, well known to the business
having previously held the roles of CFO and Deputy CEO of the
Group
-- Operational focus on providing innovative products to major
apparel clients in the US and the UK alongside expanding the
Group's uniform division
* The adjusted 'EBITDA' is a non-IFRS measure that the Company
uses to measure its performance. It is defined as Earnings Before
Interest, Taxation, Depreciation and Amortisation and non-cash
share-based compensation and excluding company share is lossesgains
of affiliated companies. In June 2019 the Adjusted EBITDA figure,
excluding $0.01m other expenses (in June 2018 the Adjusted EBITDA
figure, excludes $0.2M other expenses attributed to restructuring
activities, and $1m one-off capital gain attributable to the
acquisition in Ethiopia, net of other expenses).
Outlook
-- In addition to the cost reductions achieved in 2018,
targeting further cost savings from the operational base during H2
2019 of approximately $0.8 m per annum
-- Commenced trial in Vietnam for a large Shandong Ruyi retail
client with the potential to result in a significant suit order for
2020 and beyond
-- Company on track to generate revenues in 2019 of around $59m (2018: $56.4m)
Micha Ronen, CEO of Bagir, said:
"Despite the challenging retail and political backdrop, Bagir
has succeeded in delivering improvements in all operational
parameters. We expect the market to continue to be challenging and
we are in the process of taking all necessary steps to adjust our
organization to the market conditions and to better leverage our
advantages in the market.
We have agreed a new date for completion of the transaction with
Shandong Ruyi and we are collaborating together to support
potentially one of their clients with a large production order from
Vietnam. At the same time we are focused on developing the Group on
a standalone basis, operationally we see greater opportunities to
exploit our innovative product ranges and to expand further into
the tailored uniform market alongside the Group's core business of
manufacturing tailored garments to major apparel clients in the US
and UK."
For further information, please contact:
Bagir Group Ltd. via Novella on:
Tessa Laws, Non-Executive Chair +44 (0) 20 3151 7008
Micha Ronen, Chief Executive Officer
Dotan Levy, Chief Financial Officer
N+1 Singer
Mark Taylor
James Moat +44 (0) 20 7496 3000
Novella
Tim Robertson
Fergus Young +44 (0) 20 3151 7008
For more information about Bagir, please visit the Company's
website: http://www.bagir.com
Chairman's statement
Introduction
I am pleased to report a steady trading performance for the
first six months of the year. Demand for the Group's tailored
products increased significantly, reflected in the 32% rise in
revenues for the period. This, together with an improvement in
gross margin to 11.9%, led to the Group recording a positive
adjusted EBITDA performance of $1.0m. There were, however,
operational delays and increased production costs which held the
business back and are key areas of focus for our management team
under new CEO Micha Ronen who is also setting out a new strategy
for taking the business forward.
Micha Ronen is well known to the Company and has already been
instrumental in invigorating the marketing team and re-focusing the
business on specific market opportunities.
On 19 June 2019, a new unconditional completion date, of 31
March 2020, was announced for Shandong Ruyi to make the remaining
cash payment of $13.2m and complete the proposed transaction.
The Company has made use of the opportunity offered by Shandong
Ruyi to acquire 335,000 meters of wool and wool blend fabrics worth
$3.0m with payment not due until 30 March 2020 thereby creating an
excellent commercial opportunity.
In the announcement made on 19 June 2019, the Company confirmed
that Shandong Ruyi had committed to deliver the manufacturing
equipment to the Company's Ethiopian manufacturing site by the end
of September 2019. As at the date of this report, the manufacturing
equipment has not yet been shipped to the Company's Ethiopian
manufacturing site, and there is real concern that the
manufacturing equipment will not be delivered by the above stated
date. The Company continues to have conversations with senior
management at Shandong Ruyi, however a new date for the delivery of
the machinery has not been agreed. The Company will provide further
updates on the discussions as and when there is more clarity on a
delivery date.
Financial review
Revenue for the six months ended 30 June 2019 increased to
$32.8m (H1 2018: $24.8m) and sales continued strongly post period
end with revenue to 19 September 2019 of $46.0m supported by an
order backlog of $20.1m and with another month during which the
Company can secure orders for completion in the current year.
The gross margin for the six months ended 30 June 2019 was
11.8%, compared with 6.7% for the first half of 2018. Largely as a
result of the cost reduction program the Company completed in 2018.
The Company made an operating gain of $0.2m (H1 2018: loss of
$2.7m) and had positive cash flows from operating activities of
$0.3m (H1 2018: negative cash flow of $6.7m).
As a result of the corresponding improvement in revenues and
lower costs detailed above, adjusted EBITDA for the first half of
2019 was $1.0m profit compared with a $1.7m loss in H1 2018.
General and administrative expenses have decreased to $1.1m in
H1 2019 (H1 2018: $1.5m), reflecting the lower operating cost base
following the cost reduction plan implemented in 2018.
In addition, the Company is targeting further fixed cost savings
of $0.8m per annum which have already started and are planned to be
completed by the end of 2019.
Cash and cash equivalents at 30 June 2019 amounted to $1.6m, (31
December 2018 $3.1m).
Trade payables include $1.5m for fabric purchased from Shandong
Ruyi which is payable on 31 March 2020 (as at 25 September
$3.0m).
Strategic Vision
Under Micha Ronen the Company is evolving its strategic vision
for 2020 and beyond and we look forward to providing more detail in
the Group's full year results announcement.
Our objective is to deliver consistently high quality,
innovatively tailored apparel, efficiently and cost effectively to
our global customer base. Since the outset the Company has built
its reputation on innovation across all areas of tailored garment
development and this continues to be true today. Reflecting the
activities of modern life, garments created by Bagir incorporate
fresh new styles and fabrics which transform the feel, weight and
look of clothes. The Company's core customer focus is on the
tailored garment market with a growing business in manufacturing
uniforms for large corporates, an area which it believes there is
significant potential to expand. While the retail market continues
to be competitive and challenging, there is undoubted demand for
our range of innovative apparel.
Over the last three years the Group has worked effectively to
focus on three core manufacturing geographies in Vietnam, Egypt and
Ethiopia. These three manufacturing facilities, in particular
Ethiopia, over the medium-longer term, give the Group a competitive
advantage in the production of textiles for export to the EU and
US. This competitive advantage is centered on the facilities
benefiting from duty free status for sales into the EU and US
(except from Vietnam), highly competitive production costs and
local government support for the textile industry.
The current geopolitical environment has meant garment
manufacturing in China is looking to move production outside the
domestic market in order to avoid potential US sanctions. As a
result, there has been a significant rise in interest from China in
our Vietnamese based production creating an opportunity for Bagir
and the Company is progressing a range of potential manufacturing
contracts from China.
Currently the Company is collaborating with Shandong Ruyi over a
potential production contract out of Vietnam for one of their
retail clients.
Operational Review
Operationally, the Group continues to focus on reducing costs
where practical and is planning to make further reductions to the
operational cost base during H2 2019. Our Ethiopian manufacturing
site is producing 3,500 trousers per day and is on track to
increase output to 4,000 trousers per day by the end of 2019. The
Company has increased its focus on its wholly owned manufacturing
site in Egypt as well as increasing production capacity in
Vietnam.
On 19 June 2019, the Company announced that it had agreed to a
further extension of the unconditional completion date, for
Shandong Ruyi's proposed $16.5 million investment to acquire a
53.7% shareholding in Bagir, to 31 March 2020. The Company has no
reason to believe that this intention has changed.
Outlook
The management team has a renewed focus under incoming CEO Micha
Ronen and has a good pipeline of customer opportunities to further
improve the Group's operational performance in 2020.
Tessa Laws
Chairman
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 31 December
---------------- -----------
2019 2018 2018
------- ------- -----------
Unaudited Audited
---------------- ------------
U.S. dollars in thousands
------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,598 2,815 3,061
Short-term deposit 130 129 127
Trade receivables 8,753 4,045 9,141
Other receivables 3,013 2,845 3,510
Inventories 10,791 8,632 8,866
------- ------- -----------
24,285 18,466 24,705
------- ------- -----------
NON-CURRENT ASSETS:
Finance lease receivable 372 - 406
Property, plant and equipment 9,221 8,747 9,509
Goodwill 5,775 5,775 5,775
Other intangible assets 1,815 2,425 2,114
Deferred taxes 76 181 132
------- ------- -----------
17,259 17,128 17,936
------- ------- -----------
41,544 35,594 42,641
======= ======= ===========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
30 June 31 December
------------------ -----------
2019 2018 2018
-------- -------- -----------
Unaudited Audited
------------------ ------------
U.S. dollars in thousands
--------------------------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term credit and current maturities
of long-term loan from bank 9,292 3,630 9,995
Trade payables 9,845 8,571 7,794
Advance on account for share purchase - 1,650 -
Other payables 3,891 3,995 4,742
23,028 17,846 22,531
-------- -------- -----------
NON-CURRENT LIABILITIES:
Loan from bank 329 - 476
Employee benefit liabilities, net 343 311 298
Payable for acquisition of subsidiary 1,363 1,909 1,646
Lease liabilities 1,450 324 1,557
Deferred taxes 1,156 1,138 1,147
-------- --------
4,641 3,682 5,124
-------- -------- -----------
EQUITY:
Share capital 3,284 3,284 3,284
Share premium 86,322 86,322 86,322
Capital reserve for share-based payment
transactions 1,849 1,788 1,825
Capital reserve for transactions with
shareholders 10,165 10,165 10,165
Adjustments arising from translation
of foreign operations (9,624) (9,624) (9,624)
Receipts on account of shares 3,136 - 3,136
Reserve from transactions with non-controlling
interests 438 - 438
Accumulated deficit (83,203) (79,815) (82,068)
-------- -------- -----------
EQUITY ATRIBUTABLE TO EQUITY HOLDERS
OF THE COMPANY 12,367 12,120 13,478
Non-controlling interests 1,508 1,946 1,508
-------- -------- -----------
Total equity 13,875 14,066 14,986
-------- -------- -----------
41,544 35,594 42,641
======== ======== ===========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
25 September 2019
-------------------- --------------- ----------- ----------------
Date of approval Tessa Rebecca Micha Ronen Dotan Levy
of the Laws
financial statements Chairman of the CEO CFO and Director
Board
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
------------------ ------------
2019 2018 2018
-------- -------- ------------
Unaudited Audited
------------------ -------------
U.S. dollars in thousands
---------------------------------
Revenues from sales 32,772 24,798 56,413
Cost of sales 28,880 23,129 50,894
-------- -------- ------------
Gross profit 3,892 1,669 5,519
Selling and marketing expenses 2,291 2,289 4,763
General and administrative expenses 1,079 1,459 2,608
Development costs 399 432 800
Other income (86) - -
Other expenses - 189 1,103
-------- --------
Operating income (loss) 209 (2,700) (3,755)
Finance income 19 9 20
Finance expenses (1,278) (890) (2,040)
Loss before taxes on income (1,050) (3,581) (5,775)
Tax expense (85) (13) (72)
-------- -------- ------------
Net loss for the period and total comprehensive
loss (1,135) (3,594) (5,847)
======== ======== ============
Loss per share attributable to equity
holders of the Company
Basic and diluted loss per share (0.004) (0.01) (0.02)
======== ======== ============
Weighted average number of Ordinary
shares for basic and diluted loss per
share (in thousands) 310,543 310,543 310,543
======== ======== ============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
------------------------------------------------------------------------------------------------------------
Reserve
Capital Capital from Adjustments
reserve reserve transaction arising Receipts
for for with from on
share-based transactions non-controlling translation account
Share Share payment with interests of foreign of Accumulated Non-controlling Total
capital premium transactions shareholders operations shares deficit Total interests equity
-------- ------- ------------ ------------ ---------------- ----------- --------- ----------- ------- ---------------- -------
Unaudited
-------------------------------------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
-------------------------------------------------------------------------------------------------------------------------------------------
Balance at 1 January
2019 3,284 86,322 1,825 10,165 438 (9,624) 3,136 (82,068) 13,478 1,508 14,986
-------- ------- ------------ ------------ ---------------- ----------- --------- ----------- ------- ---------------- -------
Total loss and
comprehensive
loss - - - - - - - (1,135) (1,135) - (1,135)
Cost of
share-based
payment - - 24 - - - - - 24 - 24
-------- ------- ------------ ------------ ---------------- ----------- --------- ----------- ------- ---------------- -------
Balance at 30 June
2019 3,284 86,322 1,849 10,165 438 (9,624) 3,136 (83,203) 12,367 1,508 13,875
======== ======= ============ ============ ================ =========== ========= =========== ======= ================ =======
Attributable to equity holders of the Company
-------------------------------------------------------------------------------
Capital Capital Adjustments
reserve reserve arising
for for from
share-based transactions translation
Share Share payment with of foreign Accumulated Non-controlling Total
capital premium transactions shareholders operations deficit Total interests equity
------- ------- ------------ ------------ ----------- ----------- ------- --------------- -------
Unaudited
---------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
---------------------------------------------------------------------------------------------------------
Balance at 1
January 2018 3,284 86,322 1,741 10,165 (9,624) (76,221) 15,667 1,946 17,613
------- ------- ------------ ------------ ----------- ----------- ------- --------------- -------
Total loss and
comprehensive
loss - - - - - (3,594) (3,594) - (3,594)
Cost of
share-based
payment - - 47 - - - 47 - 47
------- ------- ------------ ------------ ----------- ----------- ------- --------------- -------
Balance at 30
June 2018 3,284 86,322 1,788 10,165 (9,624) (79,815) 12,120 1,946 14,066
======= ======= ============ ============ =========== =========== ======= =============== =======
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Attributable to equity holders of the Company
----------------------------------------------------------------------------------------------------------
Capital Capital Reserve Adjustments
reserve reserve from arising Receipts
for for transaction from on
share-based transactions with translation account
Share Share payment with non-controlling of foreign of Accumulated Non-controlling Total
capital premium transactions shareholders interests operations shares deficit Total interests equity
------- ------- ------------ ------------ --------------- ----------- -------- ----------- ------- --------------- -------
Audited
------------------------------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
------------------------------------------------------------------------------------------------------------------------------------
Balance at 1
January
2018 3,284 86,322 1,741 10,165 - (9,624) - (76,221) 15,667 1,946 17,613
Loss and other
comprehensive
loss for the
year - - - - - - - (5,847) (5,847) - (5,847)
------- ------- ------------ ------------ --------------- ----------- -------- ----------- ------- --------------- -------
Advance payment
in
respect of
share-capital
issuance, net of
related
expenses (Note
1e) - - - - - - 3,136 - 3,136 - 3,136
Reduction of
non-controlling
interests - - - - 438 - - - 438 (438) -
Cost of
share-based
payment - - 84 - - - - - 84 - 84
------- ------- ------------ ------------ --------------- ----------- -------- ----------- ------- --------------- -------
Balance at 31
December
2018 3,284 86,322 1,825 10,165 438 (9,624) 3,136 (82,068) 13,478 1,508 14,986
======= ======= ============ ============ =============== =========== ======== =========== ======= =============== =======
*) Less than $1 thousands.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
------------------------- ------------
2019 2018 2018
---------------- ------- ------------
Unaudited Audited
---------------- ------- -----------------
U.S. dollars in thousands
--------------------------------------------
Cash flows from operating activities:
Net loss (1,135) (3,594) (5,847)
---------------- ------- ------------
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Depreciation and amortization 841 784 1,602
Change in employee benefit liabilities 46 30 17
Cost of share-based payment 24 47 84
Loss from sale of property, plant and
equipment and other assets 17 2 7
Finance expenses, net 968 825 1,859
Deferred taxes, net 66 10 68
Income tax expense, net 19 2 4
1,981 1,700 3,641
---------------- ------- ------------
Changes in asset and liability items:
Decrease (increase) in trade receivables 388 (842) (3,870)
Decrease (increase) in other receivables 504 125 (547)
Increase in inventories (1,925) (1,923) (2,157)
Increase in trade payables 2,051 3,638 2,861
Increase (decrease) in other payables (735) (68) 646
---------------- ------- ------------
283 930 (3,067)
---------------- ------- ------------
Cash paid during the period for:
Interest paid (833) (586) (1,397)
Taxes paid (21) (3) (4)
(854) (589) (1,401)
---------------- ------- ------------
Net cash provided by (used in) operating
activities 275 (1,553) (6,674)
---------------- ------- ------------
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Six months ended Year ended
30 June 31 December
------------------------- ------------
2019 2018 2018
------------------ ----- ------------
Unaudited Audited
------------------ ----- ------------
U.S. dollars in thousands
---------------------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (218) (494) (672)
Addition to intangible assets - - (29)
Collection of finance receivable 48 44 86
Net cash used in investing activities (170) (450) (615)
------------------ ----- ------------
Cash flows from financing activities:
Repayment of lease liabilities (345) (372) (710)
Receipt (payment) of short-term credit
from others (725) 1,336 5,432
Receipt (payment) of long-term loan
from bank, net (98) - 688
Receipts on account of shares, net of
related expenses - 1650 3,136
Payment of liability for acquisition
of subsidiary (400) (400) (800)
Net cash provided by (used in) financing
activities (1,568) 2,214 7,746
------------------ ----- ------------
Increase (decrease) in cash and cash
equivalents (1,463) 211 457
Cash and cash equivalents at the beginning
of the period 3,061 2,604 2,604
------------------ ----- ------------
Cash and cash equivalents at the end
of the period 1,598 2,815 3,061
================== ===== ============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATMENTS
NOTE 1:- GENERAL
a. Company description:
Bagir Group Ltd. ("the Company") is registered in Israel. The
Company and its subsidiaries ("the Group") specialize in the
manufacturing and marketing of men's and women's tailored fashion.
The Company's Headquarter is located in Kiryat Gat, Israel. The
Group's products are manufactured by subsidiaries in Egypt and
Ethiopia and subcontractors. The Group's products are marketed in
U.S, Europe (mainly in the UK) and in other countries. As for
additional details, see Note 3.
b. The interim condensed consolidated financial statements for
the six months ended 30 June 2019 were approved for issue in
accordance with a resolution of the Board of Directors on 25
September 2019.
c. Micha Ronen was appointed the new CEO of the Company as of 26 June 2019.
d. In the six months ended 30 June 2019, the Group continued to
incur losses and recorded a net loss of $ 1.1 million. In order to
address the above circumstances, the Group has undertaken a
rationalization of its operations, focussing on fewer production
sites and a reduction in the Group's operational cost base.
The Board of Directors has considered the principal risks and
uncertainties of the business, the trading forecasts prepared by
management (including the projected effects of the remedial actions
described above) covering a twelve-month period following the
approval of the interim consolidated financial statements and the
resources available to meet the Group's obligations for the
aforementioned period. After taking all of the above factors into
consideration, the Group believes it has sufficient liquidity based
on the cash and cash equivalents as of 30 June 2019, and the
expected cash to be generated from operations to meet its financial
obligations as they fall due for at least the twelve months
following the date of approval of the interim consolidated
financial statements. Accordingly, the Board of Directors has
concluded that it is appropriate to apply the going concern basis
of accounting in preparing the interim consolidated financial
statements.
e. In November 2017, the Company signed a strategic Share
Purchase Agreement with a global textile manufacturer, Shandong
Ruyi Technology Group Co,Ltd (the Investor). According to the
agreement, the Investor has committed to make an investment of
$16.5 million in the Company in consideration for the issuance by
the Company of 359,560,310 Ordinary shares that will represent 54%
(fully diluted- 51%) of the Company's enlarged issued share
capital. The price per Ordinary share is approximately 3.5 pence
per share.
The transaction was subject to, among others, the approval of
the Company's shareholders and to the completion of various Chinese
foreign exchange and other regulatory requirements by the date of
closing.
Pursuant to the agreement, in January 2018 the Company received
from the Investor a down payment of $1.65 million, which according
to the purchase agreement is non-refundable in the event that the
Investor fails to secure Chinese regulatory consent. In July 2018
the Company received an additional down payment of $1.65 million
which Group management has determined based, among others, on the
opinion of its attorneys, that this down payment is also
non-refundable in the event that the Investor fails to secure
regulatory consent. The down payments in the aggregate amount of $
3.3 million have been recorded in equity (net of expenses of $ 0.2
million) as receipts on account of shares.
NOTE 1:- GENERAL (Cont.)
On 3 September 2018, after receiving the required information
from the Investor for publication of a circular to the Company's
shareholders and to convene an Extraordinary General Meeting for
the approval of the transaction, the Company published the circular
to its shareholders. An Extraordinary General Meeting was held on 9
October 2018 in which the shareholders approved the
transaction.
The Investor informed the Company that additional time is
necessary to receive Chinese Government approval for the investment
in the Company. As a consequence, the Company agreed a new
unconditional completion date for the transaction of 30 May 2019 by
which time the Investor was required to pay the remaining cash
balance of $ 13.2 million. All other conditions relating to the
transaction had been completed by the Company.
During the reporting period, the Company has agreed to a further
extension of the unconditional completion date to 31 March
2020.
Following discussions with senior management from both
companies, the Board of the Company has been persuaded of the
Investor's intention to complete the transaction and commitment to
provide valuable operational support to the Company on the run up
to the extended completion date and as previously agreed.
The Investor committed to provide suit jacket manufacturing
equipment, with an estimated market value of approximately $1.3
million, for exclusive and indefinite use in Bagir's Ethiopian
manufacturing facility, free of landed costs, for nil
consideration. The Investor has reconfirmed its commitment to
deliver this manufacturing equipment to the Company's Ethiopian
manufacturing site by the end of September 2019.
The Investor also granted an extension of its usual credit
payment terms on the acquisition of up to 500,000 meters of wool
and wool blend fabrics at market value, of which the Company has
purchased 335,066 meters with a value of $3.0 million as of the
date of the approval of the interim consolidated financial
statements (as of 30 June 2019 in the amount of $1.5 million which
is included in the trade payable balance). The extension of the
credit payment terms was previously until 30 June 2019, which the
Investor has now extended until the new completion date of 31 March
2020. This will enable the Company to acquire the remaining 165,000
meters of wool and wool blend fabrics on advantageous credit
terms.
The extension of the unconditional completion date to 31 March
2020 is conditional on the Investor providing to the Company all
fabrics and the manufacturing equipment by the end of September
2019.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation of the interim consolidated financial
statements:
The interim condensed consolidated financial statements for the
six months ended 30 June 2019 have been prepared in accordance with
IAS 34, Interim Financial Reporting, as adopted by the European
Union. The interim condensed consolidated financial statements do
not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with
the Group's annual consolidated financial statements as at 31
December 2018.
The accounting policies applied in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's consolidated
annual financial statements for the year ended 31 December
2018.
NOTE 3:- ADDITIONAL INFORMATION ON OPERATIONS
Revenues by geographical area:
Six months ended Year ended
30 June 31 December
-------------------------- ------------
2019 2018 2018
------------------ ------ ------------
Unaudited Audited
------------------ ------ ------------
U.S. dollars in thousands
----------------------------------------
U.S. 23,868 17,762 41,572
Europe (mainly UK) 7,230 6,114 14,353
Other 1,674 922 488
------------------ ------ ------------
Total 32,772 24,798 56,413
================== ====== ============
NOTE 4:- EVENTS IN THE REPORTING PERIOD
In the reporting period a legal dispute has arisen between the
local authorities and a subsidiary in Ethiopia over 21,126 square
meters of the 48,584 square meters of the land that is designated
for the development of additional manufacturing at the subsidiary's
manufacturing site. The local authorities argue that 21,126 square
meters of the land has not been used for development as expected.
The carrying amount of the land in the property, plant and
equipment account is $1.6 million and related deferred taxes
liability in the amount of $ 0.2. The subsidiary is conducting
discussions with the local authorities and, although the final
outcome cannot be predicted with certainty, it is presently
believed that the dispute can be resolved favorably.
NOTE 5:- OTHER INFORMATION
As of 30 June 2019, the Company performed an indicative update
of the fair value of the Group cash generating unit (CGU) conducted
on 31 December 2018 (see Note 14c in the annual consolidated
financial statements). The valuation implemented Market approach
and Income approach methods. The valuation reflects assumptions
that market participants would consider when assessing fair value
including the assumptions about the various financing options
available to the Company and related risks. The updated recoverable
amount calculated exceeds the CGU carrying amount as of 30 June
2019. The calculation is subject to a high degree of sensitivity to
changes in assumptions as to financing risks.
- - - - - - - - - - - - - - - - -
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END
IR UVOWRKVAKUAR
(END) Dow Jones Newswires
September 26, 2019 02:01 ET (06:01 GMT)
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