RNS Number:9583I
Sadot Research & DevelopmentFund Ld
19 March 2003
Sadot Research and Development Fund Ltd.
Preliminary announcement of results.
Year Ended 31 December 2002
Chairman's statement
Equity markets have continued to be difficult during 2002. This year markets and
investors' confidence have been severely impacted by the threat of world
terrorism, numerous accounting scandals and economic recession. Investors have
withdrawn from the equity markets, particularly from younger and less
well-established technology companies. The deterioration in investors'
confidence made it very difficult for smaller unquoted companies to attract new
funding when required.
This very difficult environment led us to focus on monitoring and enhancing the
existing investments while being more selective in investing in new
opportunities. Some of the portfolio companies did not perform well due to their
markets not developing as expected and this has been reflected in the provision
for loss of $ 4,563,000 in 7 of our portfolio companies as detailed in the
Operational and Financial Review.
Background
Sadot Research and Development Fund Ltd. ("the Company" or "Sadot") is a venture
capital fund specialising in investments in hi-tech companies. Incorporated in
1992 under the Laws of the State of Israel, our shares have been listed on the
Tel Aviv Stock Exchange ("TASE") since November 1992 and on the London Stock
Exchange since January 2001. The Company's investments are managed by Sadot
Venture Capital Management (1992) Ltd. ("Sadot VCM" or the "Investment
Manager"), a private company also incorporated under the Laws of the State of
Israel.
Strategy
Sadot identifies companies that have products with potential for success in
international markets. It then evaluates these companies against certain
criteria. In assessing investment opportunities, it aims to achieve significant
returns and to realise its investment within four to five years from its initial
investment, either by way of a trade sale or the flotation of the investee
company.
Investment Portfolio
The technology market has continued to face difficulties over the last 12
months. Smaller companies are finding it increasingly difficult to attract
equity finance and valuations have fallen. We have supported a number of
companies in the portfolio with additional investments but there have been
several disappointments caused by the downturn in the technology sector and
their failure to secure adequate funding for their future plans.
In the reported period, provisions have been made amounting to $4,563,000. This
comprises a provision of $339,000 for one investment listed on the Nasdaq stock
exchange and $4,224,000 for 6 unlisted investments.
During 2002, Sadot invested a total of $1.4 million, all of which was associated
with follow on investments.
More information about the investment portfolio's performance is included in the
Operational and Financial Review.
Board
The terms of Mr. Yaacov Sadeh and Mr. Shamai Mittelman as external directors
expired under the Israeli Companies Law. We would like to thank them for their
considerable contribution to the Company, and welcome the newly nominated
External Directors Mrs. Michal Zukerman-Schori and Mrs. Ariella Zochovitzky.
Future Prospects
The economic and market outlook remain challenging. Although there is still
uncertainty as to the short-term outlook of the equity markets we hold the view
that investments made during this difficult period will provide considerable
upside potential on a market recovery. Sadot will continue to selectively seek
new investments and support the portfolio companies which we believe have
considerable potential for success.
Jack Elaad
Chairman
19 March 2003
Operational Review
Management of the fund
Sadot's business and investments are managed by Sadot VCM (the "Investment
Manager"). The relationship between Sadot and the Investment Manager is governed
by an agreement dated 23 November 1992 (subsequently amended on 25 April 1994,
23 July 1997 and 20 March 2001), which is regulated by the laws of the State of
Israel (the "Management Contract"). The agreement ends in November 2007.
The Investment Manager investigates, appraises and manages all the fund's
investments. Under the Management Contract and following the amendment of March
2001, the Investment Manager incurs all the costs of running the fund excluding
fees, expenses and charges which either statutorily are determined and payable
by the Company or are not related to the ordinary business of the Company (and
except for other certain specific costs that are set out in Sadot's Listing
Particulars (December 2000)).
An annual management fee is payable by Sadot to the Investment Manager equal to
3.5% of the funds raised by Sadot subsequent to 23 July 1997 (4.5% on funds
raised prior to that date). From 25 November 2002, the management fee is a fixed
rate of 3.5% of all funds raised as at that date. A fixed agreed amount is
deducted from the management fee pursuant to the March 2001 amendment.
The Investment Manager and/or its shareholders are entitled to acquire up to 15%
of any investment in an investee company made by Sadot after 23 July 1997 and
until the earlier of: 25 November 2007, an exit by Sadot out of the investment,
or five years from the date of investment. The Investment Manager pays an
amount based on original cost to Sadot, as adjusted for inflation in accordance
with Israeli GAAP, for any shares or options it acquires under this entitlement.
Funds Invested in 2002
During the year ended 31 December 2002 the Company invested some $1.4 million in
follow on investments. The following accounts for substantially all of Sadot's
investments in 2002:
$ '000
Tav-Tech Ltd. (see note 6 to the Investment Portfolio Review) 500
LevRam Ltd. (see note 8 to the Investment Portfolio Review) 250
Connect One Ltd. (see note 11 to the Investment Portfolio Review) 475
Coovi, Inc. (see note 12 to the Investment Portfolio Review) 150
1,375
Performance of the investment portfolio in 2002
The last year has been characterised by weakening economic conditions and poor
performance by the technology sector, accompanied by high volatility in the
capital markets.
As at 31 December 2002, the Company's portfolio comprised investments at a cost
net of write-down of $11.5 million and fair value of $11.5 million, compared to
$15.7 million and $22.8 million respectively, as at 31 December 2001. Fair value
of unlisted investments was determined taking into account that most of the
third party funding in the investment portfolio took place prior to the second
quarter of 2001 and thus such funding does not represent fair value in the
present economic and technology conditions (see note 8 to the financial
statements - Fair value of investments).
Financial review
Sadot has one wholly owned subsidiary, Sadot Securities (1997) Ltd.
The audited financial statements of Sadot and Sadot Securities (1997) Ltd. ("the
Group") have been prepared in accordance with UK Generally Accepted Accounting
Principles ("UK GAAP") and contain, as a footnote, a reconciliation to the
Group's results reported under Israeli GAAP.
Loss before tax
In the year ended 31 December 2002, the Group recorded a loss before tax of
$4,051,000, compared with a loss before tax of $4,144,000 for the corresponding
period.
A summary of the Group's financial results in the period is given below:
- Profit from sale of investments was $nil, compared with a profit of
$1,368,000 in 2001.
- Net financing income of $2,611,000, compared with $1,847,000 for the
corresponding period.
- Administrative expenses of $6,662,000 of which $4,563,000 relates to
a net increase in provision against fixed asset investments, and $1,877,000
relates to the management fee payable to the Investment Manager. This
compared with administrative expenses of $7,359,000 for the corresponding
period, of which $5,054,000 related to a net increase in the provision
against fixed asset investments and $1,998,000 related to the management
fee.
Taxation
Sadot is subject to the Israeli Income Tax Law (Adjustments Due to Inflation)
1985 ("the Inflationary Adjustments Law"), pursuant to which the results for tax
purposes are measured on a real basis. The various adjustments required under
the above law are designed to reflect the inflationary accounting adjustments
required under Israeli GAAP.
These adjusted profits of Sadot are then subject to corporate tax under the
Israeli Income Tax Ordinance (New Version) 1968, at a rate of 36%.
In the reported period the Company signed a tax assessment agreement with the
Israeli Tax Authority with respect to tax years 1997 through 1999 pursuant to
which the tax loss carryforward of the company for tax year 1999 was reduced by
NIS 1 million ($211,000) to NIS 808,000 ($171,000).
Pursuant to an arrangement with the VAT authorities in Israel regarding venture
capital funds, Sadot can reclaim 25% of the VAT it pays to suppliers.
Balance sheet
As at 31 December 2002, the Group's total assets amounted to $40,181,000,
compared with $48,572,000 as at 31 December 2001. The decrease in total assets
is due in part to exchange rate differences in the amount of $3,291,000.
Consolidated shareholders' equity as at 31 December 2002 amounted to
$39,434,000, compared with $46,691,000 as at 31 December 2001. The decrease in
consolidated shareholders' equity is due in part to exchange rate differences in
the amount of $3,163,000.
As at 31 December 2002, the Group's current assets totalled $28,662,000,
including $28,013,000 in bank deposits, compared with $32,883,000 and
$28,568,000, respectively, as at 31 December 2001. The decrease in current
assets and in bank deposits is due in part to exchange rate differences in the
amount of $2,228,000 and $1,936,000, respectively.
As at 31 December 2002, total liabilities of the Group amounted to $747,000,
compared to $1,881,000 as at 31 December 2001. The decrease in total liabilities
is due in part to exchange rate differences in the amount of $127,000.
Currency risk management
The monetary assets and liabilities of Sadot are linked to foreign currencies
(principally the US $), the Israeli Consumer Price Index ("Index") or are
unlinked, as follows:
Linked to
foreign Linked to the
currency Index Unlinked Total
$'000 $'000 $'000 $'000
Monetary assets
Cash - - 12 12
Deposits 9,522 - 18,491 28,013
Marketable securities - - 595 595
Debtors - 26 16 42
Total monetary assets 9,522 26 19,114 28,662
Monetary liabilities
Payables and credit balances - 653 94 747
Total monetary liabilities - 653 94 747
Total excess of monetary assets, 9,522 (627) 19,020 27,915
net
Mr. Ben-Zion Israel is responsible for the Group's risk management in accordance
with guidelines set by the Company's Board of Directors from time to time.
The Group has identified the following financial risks to which it is exposed:
1. Fluctuations of the U.S. Dollar and Euro exchange rate - the Group is
engaged in venture capital investments which are Dollar denominated.
2. Fluctuations in NIS, U.S. Dollar and Euro interest rates and in the
Israeli Consumer Price Index, that affect the yield on the Group's liquidity.
To manage financial risks, the Group invests a substantial portion of its
liquidity in unlinked shekel deposits, shekel deposits linked to the Index,
Dollar and Euro deposits with a term to maturity of less than three months and
NIS mutual funds.
Investment Portfolio
Investments held at cost within Sadot's investment portfolio as at 31 December
are as follows:
Cost net Cost net of
Write-down of write- write-down
for impairment down
Holding percentage Cost Prior Current
Years year
at 31 December, at 31 December, at 31 December,
2002 2002 2002 2002 2002 2001
Direct Fully $'000 $'000 $'000 $'000 $'000
Diluted
% %
Phonetic Systems Limited 7.98 6.03 2,513 - - 2,513 2,696
Surf Communication Solutions Limited 5.02 4.42 1,890 - - 1,890 1,950
Scopus Network Technologies Limited 9.9 7.33 1,839 - - 1,839 1,972
Mainsoft Corporation 5.04 4.75 1,064 - - 1,064 1,142
Silentium Limited 26.03 25.54 982 - - 982 1,053
Tav-Tech Limited 16.31 31.55 922 - - 922 455
Radwin Limited 3.24 2.98 902 - - 902 955
LevRam Medical Systems Limited 20.87 19.05 1,302 - 612 690 1,129
Personeta, Inc. 6.20 5.01 524 - - 524 562
Radview Software Limited * 1,284,315 shares - 1,396 864 339 193 571
Connect One Limited 16.20 35.70 1,896 694 1,202 - 779
Coovi, Inc. 24.95 22.63 1,413 632 781 - 678
Interlink Computer Communications 21.47 19.95 1,254 627 627 - 673
Limited
Skyline Software Systems Limited 4.36 3.97 650 - 650 - 697
Elemental Software Limited (New 7.33 5.56 352 - 352 - 377
Channel)
18,899 2,817 4,563 11,519 15,689
*Quoted shares
Fair value of investments:
See note 1 to the financial statements - Valuation of investments. As most of
the rounds of third party funding in investments took place prior to the second
quarter of 2001, the Company's management estimates that, in view of the
situation prevailing in the technology market, such third party rounds of
funding fail to reflect the fair value of investments in companies under current
market conditions. Therefore, fair values of unlisted investments as at 31
December 2002 are estimated at cost of the respective investment less any
permanent diminution in value.
The fair value of investments as at 31 December is as follows:
31 December, 31 December,
2002 2001
$'000 $'000
Phonetic Systems Limited 2,513 6,290
Surf Communication Solutions Limited 1,890 1,950
Scopus Network Technologies Limited 1,839 4,000
Mainsoft Corporation 1,064 1,242
Silentium Limited 982 1,535
Tav-Tech Limited 922 835
Radwin Limited 902 955
LevRam Medical Systems Limited 690 1,129
Personeta, Inc. 524 562
Radview Software Limited * 193 642
Connect One Limited - 779
Coovi, Inc. - 678
Interlink Computer Communications Limited - 673
Skyline Software Systems Limited - 1,158
Elemental Software Limited (New Channel) - 377
11,519 22,805
* Quoted shares
Consolidated profit and loss account for the year ended 31 December 2002
Note 2002 2001
$'000 $'000
Profit from sale of fixed asset investments 2 - 1,368
Administrative expenses:
- Provisions against fixed asset investments (4,563) (5,054)
- Other (2,099) (2,305)
(6,662) (7,359)
Operating loss 3 (6,662) (5,991)
Net interest receivable and other income 4 2,611 1,847
Loss on ordinary activities before taxation (4,051) (4,144)
Taxation from ordinary activities 5 2 44
Loss on ordinary activities after taxation (4,049) (4,100)
Dividends (including non-equity) - -
Retained loss for the year 16 (4,049) (4,100)
Loss per share 6
Basic and diluted (10.1c) (10.2c)
_______ _______
Note 2002 2001
$'000 $'000
Consolidated statement of total
recognised gains and losses
Loss for the financial year (4,049) (4,100)
Translation differences (3,163) (4,685)
Unrealised (deficit)/surplus on revaluation
of current asset investments 15 (45) 38
Total recognised losses for the year (7,257) (8,747)
Note of historical cost profits and losses
Reported loss on ordinary
activities before taxation (4,051) (4,144)
Realisation of current asset investment
revaluations of prior periods 34 204
Historical cost loss on ordinary
activities before taxation (4,017) (3,940)
Retained historical cost loss for
the year after taxation, minority
interest and dividends (4,015) (3,896)
Note 2002 2001
$'000 $'000 $'000 $'000
ASSETS
Fixed assets
Investments 8 11,519 15,689
Current assets
Investments 9 595 3,916
Debtors 10 42 46
Bank deposits 11 28,013 28,568
Cash at bank and in hand 12 353
28,025 28,921
28,662 32,883
TOTAL ASSETS 40,181 48,572
LIABILITIES
Creditors: amounts falling due
within one year 12 747 1,881
Capital and reserves
Called up share capital 14 9,904 9,904
Share premium account 15 34,302 34,302
Capital reserve 15 2,447 2,447
Revaluation reserve 15 - 79
Profit and loss account 15 (7,219) (41)
Equity shareholders' funds 39,434 46,691
TOTAL LIABILITIES 40,181 48,572
The financial statements were approved by the Board on 19 March 2003.
Jack Elaad
Chairman
Note 2002 2001
$'000 $'000 $'000 $'000
ASSETS
Fixed assets
Investments 8 11,530 15,700
Current assets
Investments 9 595 3,402
Debtors 10 348 556
Bank deposits 11 27,506 28,560
Cash at bank and in hand 12 2
27,518 28,562
28,461 32,520
TOTAL ASSETS 39,991 48,220
LIABILITIES
Creditors: amounts falling due
within one year 12 747 1,748
Capital and reserves
Called up share capital 14 9,904 9,904
Share premium account 15 34,302 34,302
Capital reserve 15 2,447 2,447
Revaluation reserve 15 - 51
Profit and loss account 15 (7,409) (232)
Equity shareholders' funds 39,244 46,472
TOTAL LIABILITIES 39,991 48,220
Note 2002 2001
$'000 $'000 $'000 $'000
Net cash outflow from operating activities 19 (4,610) (9,208)
Returns on investments and
servicing of finance
Interest received 2,134 1,935
Taxation
Israeli corporation tax (140) -
Cash outflow before management of liquid
resources and financing (2,616) (7,273)
Management of liquid resources
Cash placed on bank deposits (22,984) (12,455)
Cash withdrawn from bank deposits 22,404 20,264
Purchase of current asset investments (1,760) (2,712)
Sale of current asset investments 4,622 2,493
2,282 7,590
Financing
Refund of stamp duty related to issuance of
shares - 270
Cash inflow from financing - 270
Increase (decrease) in cash in the year 21 (334) 587
1 Accounting policies
There have been no material changes to the accounting policies of the Group as
set in the financial statements for the year ended 31 December 2001.
2 Loss before tax and net assets
Loss before tax and net assets relate to the Group's principal activity which is
primarily carried out within Israel.
3 Operating loss
A. Comprise:
2002 2001
$'000 $'000
This is arrived at after charging/(crediting):
Directors fees (see B. below) 76 97
Profit on sale of current asset investments 16 -
Provisions against fixed asset investments 4,563 5,054
Management fees 1,877 1,998
Auditors' remuneration for the Group in 2002 amounted to $78,000 (2001-
$80,000).
3 Operating loss (Continued)
B. Directors' remuneration:
2002 2001
Total fees and expenses paid in respect of $ $
individual directors were as follows:
Jack Elaad, Chairman - -
Joshua Maor 12,000 4,000
Graham Woolfman 25,000 24,000
Shamai Mittelman 12,000 16,000
Yaacov Sadeh 6,000 15,000
Jossef Barath 15,000 17,000
Michal Zukerman-Schori 6,000 -
Jack Elaad, Chairman of the Board was indirectly a shareholder in the Investment
Manager and held certain rights under the Management Contract (see note 18).
The Group does not employ any staff.
4 Net interest receivable and other income
2002 2001
$'000 $'000
Profit on sale of current asset investments 16 -
Interest from bank deposits 2,884 2,199
Deficits on current asset investments (224) (365)
Profit from financial instruments 16 20
Other (81) (7)
2,611 1,847
5 Taxation from ordinary activities
2002 2001
$'000 $'000
Corporation tax at 36% on profit for the year - -
_______ _______
Deferred taxes - 44
_______ _______
Taxes in respect of prior year 2 -
_______ _______
5 Taxation from ordinary activities (Continued)
The tax assessed for the period is different from the standard rate of
corporation tax in Israel. The differences are explained below:
2002 2001
$ $
Loss on ordinary activities before tax (4,051) (4,144)
Loss on ordinary activities at the standard rate of corporation tax in
Israel of 36% (31 December 2001 - 36%) (1,458) (1,492)
Effect of:
UK-Israel GAAP differences (note 22) (743) (50)
Losses for which deferred tax assets were not created 2,201 1,542
Current tax credit/(charge) for period - -
6 Loss per share
Loss per share has been calculated on the following basis:
2002 2001
$ $
Basic and diluted loss per share
Loss after taxation (4,049,000) (4,100,000)
Basic and diluted loss per share
Weighted average number of shares - basic and diluted 40,018,555 40,018,555
There are no potentially dilutive shares in issue.
7 Loss for the financial year
The Company has not presented its own profit and loss account in these financial
statements. The Group's loss for the year includes a loss after tax of $
(4,062,000) (2001 - loss of ($4,073,000)) which is dealt with in the financial
statements of the parent company.
8 Fixed asset investments
Group Listed Unlisted
investments investments Total
$'000 $'000 $'000
Cost
At 1 January 2002 1,498 22,707 24,205
Translation differences (102) (1,538) (1,640)
Additions - 1,456 1,456
Disposals - - -
At 31 December 2002 1,396 22,625 24,021
Provisions
At 1 January 2002 927 7,589 8,516
Translation differences (63) (514) (577)
Provided in the year 339 4,224 4,563
At 31 December 2002 1,203 11,299 12,502
Net book value
At 31 December 2002 193 11,326 11,519
At 31 December 2001 571 15,118 15,689
8 Fixed asset investments (Continued)
Company
Subsidiary Listed Unlisted
undertaking investments investments Total
$'000 $'000 $'000 $'000
Cost
At 1 January 2002 11 1,498 22,707 24,216
Translation differences - (102) (1,538) (1,640)
Additions - - 1,456 1,456
Disposals - - - -
At 31 December 2002 11 1,396 22,625 24,032
Provisions
At 1 January 2002 - 927 7,589 8,516
Translation differences - (63) (514) (577)
Provided in the year - 339 4,224 4,563
At 31 December 2002 - 1,203 11,299 12,502
Net book value
At 31 December 2002 11 193 11,326 11,530
At 31 December 2001 11 571 15,118 15,700
8 Fixed asset investments (Continued)
Fixed asset investments held at cost within Sadot's investment portfolio are as
follows:
Cost net Cost net of
Write-down of write- write-down
for impairment down
Holding percentage Cost Prior Current
Years year
at 31 December, at 31 December, at 31 December,
2002 2002 2002 2002 2002 2001
Direct Fully $'000 $'000 $'000 $'000 $'000
Diluted
% %
Phonetic Systems Limited 7.98 6.03 2,513 - - 2,513 2,696
Surf Communication Solutions Limited 5.02 4.42 1,890 - - 1,890 1,950
Scopus Network Technologies Limited 9.9 7.33 1,839 - - 1,839 1,972
Mainsoft Corporation 5.04 4.75 1,064 - - 1,064 1,142
Silentium Limited 26.03 25.54 982 - - 982 1,053
Tav-Tech Limited 16.31 31.55 922 - - 922 455
Radwin Limited 3.24 2.98 902 - - 902 955
LevRam Medical Systems Limited 20.87 19.05 1,302 - 612 690 1,129
Personeta, Inc. 6.20 5.01 524 - - 524 562
Radview Software Limited * 1,284,315 shares - 1,396 864 339 193 571
Connect One Limited 16.20 35.70 1,896 694 1,202 - 779
Coovi, Inc. 24.95 22.63 1,413 632 781 - 678
Interlink Computer Communications 21.47 19.95 1,254 627 627 - 673
Limited
Skyline Software Systems Limited 4.36 3.97 650 - 650 - 697
Elemental Software Limited (New 7.33 5.56 352 - 352 - 377
Channel)
18,899 2,817 4,563 11,519 15,689
* Quoted shares
8 Fixed asset investments (Continued)
Fair value of investments:
See note 1 to the financial statements - Valuation of investments. As most of
the rounds of third party funding in investments took place prior to the second
quarter of 2001, the Company's management estimates that, in view of the
situation prevailing in the technology market, such third party rounds of
funding fail to reflect the fair value of investments in companies under current
market conditions. Therefore, fair values of unlisted investments as at 31
December 2002 are estimated at cost of the respective investment less any
permanent diminution in value.
The fair value of investments as at 31 December is as follows:
31 December, 31 December,
2002 2001
$'000 $'000
Phonetic Systems Limited 2,513 6,290
Surf Communication Solutions Limited 1,890 1,950
Scopus Network Technologies Limited 1,839 4,000
Mainsoft Corporation 1,064 1,242
Silentium Limited 982 1,535
Tav-Tech Limited 922 835
Radwin Limited 902 955
LevRam Medical Systems Limited 690 1,129
Personeta, Inc. 524 562
Radview Software Limited * 193 642
Connect One Limited - 779
Coovi, Inc. - 678
Interlink Computer Communications Limited - 673
Skyline Software Systems Limited - 1,158
Elemental Software Limited (New Channel) - 377
11,519 22,805
* Quoted shares
8 Fixed asset investments (Continued)
The Investment Manager and/or its shareholders hold the rights to acquire up to
15 per cent of any fixed asset investment acquired by the Company (or which the
Company has the right to acquire) after 23 July 1997 at their original cost
(adjusted for inflation based on Israel Consumer Price Index). This right is
subject to certain time restrictions:
* Investments acquired pre 23 July 1997 over which the Investment Manager
holds no rights.
* Investment acquired partially before 23 July 1997. The Investment Manager
holds no rights over shares in investments acquired before this date.
As at 31 December 2002 the Investment Manager had exercised their right to
acquire 15 per cent of the rights of the Company in Radview Software Limited and
Enfocus Software NV (an investment sold in the past).
All investments are unlisted securities with the exception of Radview Software
Limited which has been listed on NASDAQ since August 2000.
Descriptions of the principal investments made by the Group are included in the
Investment Portfolio section of the Operational and Financial Review.
Subsidiary undertaking
The following subsidiary undertaking at the end of the year has been included in
the consolidated financial statements:
Proportion of voting
rights and ordinary
Country of share capital held
Incorporation
Name And registration Nature of business
Sadot Securities Limited Israel 100% Investment company
9 Current asset investments
Group
2002 2001
$'000 $'000
Cost of listed investments 1,275 4,248
Market value 595 3,916
Included within current assets investments are shares in the Company
held as short-term marketable securities. These shares have a cost of
$1,275,000 (2001 - $1,275,000) and a market value of $595,000 (2001 - $880,000).
Other current asset investments are made up of listed mutual funds certificates
and other listed securities.
Company
2002 2001
$'000 $'000
Cost of listed investments 1,275 3,740
Market value 595 3,402
Current asset investments are held at current cost on the balance sheet.
10 Debtors
Group Company
2002 2001 2002 2001
$'000 $'000 $'000 $'000
Amount due from subsidiary undertaking - - 306 510
Other debtors 42 46 42 46
42 46 348 556
All amounts fall due for payment within one year.
11 Bank deposits
Bank deposits, all of which mature within one year, earn interest based on
floating rates.
12 Creditors: amounts falling due within one year
Group Company
2002 2001 2002 2001
$'000 $'000 $'000 $'000
Bank overdrafts - 7 - 7
Other creditors 94 1,233 94 1,231
Corporation tax 653 641 653 510
747 1,881 747 1,748
The Group's policy is to invest primarily in its functional currency (the NIS)
as well as in dollar currency and thereby reduce its foreign currency exposure.
Further details of the Group's policy in respect of managing foreign currency
exposure is included on page 8.
13 Provisions for liabilities and charges
Group Company
2002 2001 2002 2001
$'000 $'000 $'000 $'000
Deferred tax provision
Deferred taxation - - - -
The Group has not provided deferred tax assets in respect of cumulative tax
losses in the amount of approximately $10,401,000 due to the uncertainty of
realization thereof.
14 Share capital
2002 2001 2002 2001
Number Number $'000 $'000
Authorised
Ordinary shares of $0.2111 each 79,570,000 79,570,000 19,691 19,691
2002 2001 2002 2001
Number Number $'000 $'000
Allotted, called up and fully paid
Ordinary shares of $0.2111 each 40,018,555 40,018,555 9,904 9,904
15 Reserves
Share Capital Profit
premium Revaluation redemption and loss
account reserve reserve account
$'000 $'000 $'000 $'000
Group
At 1 January 2002 34,302 79 2,447 (41)
Translation differences - - - (3,163)
Loss for the year - - - (4,049)
Transfers to profit and loss - (34) - 34
reserve on sale
Deficit on previously revalued
current asset investments - (45) - -
At 31 December 2002 34,302 - 2,447 (7,219)
Company
At 1 January 2002 34,302 51 2,447 (232)
Translation differences - - - (3,149)
Loss for the year - - - (4,062)
Transfers to profit and loss - (34) - 34
reserve on sale
Deficit on previously revalued
current asset investments - (17) - -
At 31 December 2002 34,302 - 2,447 (7,409)
15 Reserves (Continued)
The revaluation of current asset investments in 2001 and 2002 produced
unrealised losses of $539,000 and $224,000, respectively, less a deferred tax
provision (credit) of $(91,000) and $nil respectively. Unrealised gains have
been credited to the revaluation reserve in 2001. Of this revaluation reserve,
$nil relates to the revaluation of the Company's own shares held as current
asset investments.
16 Reconciliation of movements in shareholders' funds
Group Company
2002 2001 2002 2001
$'000 $'000 $'000 $'000
Loss for the year (4,049) (4,100) (4,062) (4,073)
Other net recognized gains and losses
relating to the year (45) 38 (17) 172
Translation differences (3,163) (4,685) (3,149) (4,650)
Refund of stamp duty - 270 - 270
Net addition (reduction) to shareholders' funds (7,257) (8,477) (7,228) (8,281)
Opening shareholders' funds 46,691 55,168 46,472 54,753
Closing shareholders' funds 39,434 46,691 39,244 46,472
17 Commitments and contingent liabilities
As at 31 December 2002, the Group has commitments under its management contract
- see note 18.
18 Related party transactions
Sadot's business and investments are managed by the Investment Manager. The
relationship between Sadot and the Investment Manager is governed by an
agreement dated 23 November 1992 (subsequently amended on 25 April 1994, 23 July
1997 and 20 March 2001), which is regulated by the laws of the State of Israel
(the "Management Contract"). The agreement ends in November 2007.
The Investment Manager investigates, appraises and manages all of the fund's
investments. Under the Management Contract, following the amendment of March
2001 the Investment Manager incurs all the costs of running the fund excluding
fees, expenses and charges which either statutorily are determined and payable
by the Company or are not related to the ordinary business of the Company (and
except for other certain specific costs that are set out in Sadot's Listing
Particulars (December 2000)).
An annual management fee is payable by Sadot to the Investment Manager equal to
3.5% of the funds raised by Sadot up to 23 July 1997 (4.5% on funds raised prior
to that date). From 25 November 2002, the management fee is a fixed rate of 3.5%
of all funds raised as at that date. A fixed agreed amount is deducted from the
management fee pursuant to the March 2001 amendment.
Fees in respect of management services (following the March 2001 amendment) of
$1,877,000 (2001 - $1,998,000) have been paid to the Investment Manager. No
balance was owed in respect of these fees at either period end. In addition,
under the Management Contract the Investment Manager and/or its shareholders
have the right to acquire up to 15 per cent of the rights the Group has to any
fixed assets investments it holds (see note 8). The Investment Manager has
exercised such rights with regard to certain companies (see note 8).
19 Reconciliation of operating loss to net cash outflow from operating
activities
2002 2001
$'000 $'000
Operating loss (6,662) (5,991)
Increase (decrease) in fixed asset investments 3,107 (2,175)
Decrease in debtors - (26)
Decrease in creditors (1,055) (1,016)
Net cash outflow from operating activities (4,610) (9,208)
20 Reconciliation of net cash inflow to movement in net debt
2002 2001
$'000 $'000
(Decrease) increase in cash in the year (334) 587
Cash (inflow)/outflow from decrease/(increase) in liquid resources (2,282) (7,590)
Change in net debt resulting from cash flows (2,616) (7,003)
Revaluation of current assets investments (210) (599)
Accrual of interest on bank deposits 801 -
Profit on sale of current asset investments 16 121
Translation differences (2,201) (3,346)
Movement in net debt in the year (4,210) (10,827)
Net debt at start of year 32,830 43,657
Net debt at end of year 28,620 32,830
21 Analysis of net debt
At At
1 January Cash Translation Other 31 December
2002 flow differences movements 2002
$'000 $'000 $'000 $'000 $'000
Cash at bank and in hand 353 (341) - - 12
Bank loans and overdrafts (7) 7 - - -
346 (334) - - 12
Current asset investments 3,916 (2,862) (265) (194) 595
Bank deposits 28,568 580 (1,936) 801 28,013
32,484 (2,282) (2,201) 607 28,608
Total 32,830 (2,616) (2,201) 607 28,620
22 Profit and loss reconciliations
The table below reconciles the loss on ordinary activities after taxation as
reported in the financial statements under Israeli GAAP and using the Israeli
currency ("NIS"), and the results under UK GAAP as included above.
2002 2001
NIS currency NIS'000 NIS'000
Loss on ordinary activities after taxation
under Israeli GAAP (28,959) (18,719)
Dollar currency $'000 $'000
Dollar currency loss on ordinary activities after taxation
under Israeli GAAP (6,113) (4,239)
Removal of inflationary accounting adjustments 2,243 704
Removal of unrealised gains on current asset investments and addition
of unrealised losses on own shares (179) (565)
Reported loss on ordinary activities after taxation
under UK GAAP (4,049) (4,100)
24 Shareholders' funds reconciliation
The table below reconciles shareholders' funds as reported in the financial
statements under Israeli GAAP and in the NIS currency, and the shareholders'
funds under UK GAAP as included above.
2002 2001
NIS currency NIS'000 NIS'000
Shareholders' funds under Israeli GAAP 187,664 203,408
Dollar currency $'000 $'000
Dollar currency shareholders' funds under Israeli GAAP 39,617 46,062
Removal of inflationary accounting adjustments (778) (251)
Cost of own shares 1,275 1,275
Revaluation of own shares (680) (395)
Shareholders' funds under UK GAAP 39,434 46,691
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UKUNROAROAAR