Final Results -2
March 20 2009 - 2:00AM
UK Regulatory
In meetings held on 25 January 2006 and 16 February 2006, the board of
directors and the shareholders, respectively, of the parent company of DBI,
Delek Real Estate Ltd. ("DRE"), approved an agreement between DBI and RG Naor
Management Services Ltd. ("Naor").
Naor is wholly-owned by the son-in-law of the Company's controlling
shareholder. Pursuant to the agreement, Naor was granted 416,818 share
appreciation rights ("SARS") whereby Naor will become entitled to an annual cash
payment by DBI over a period of five years commencing from 1 June 2006, based on
the increase in the
market price of DRE's shares over the prices specified in the agreement. The
agreement specifies a price for each of the five years and these prices are
subject to adjustments under certain circumstances. The SARS are granted on
condition that Naor continues providing consulting services in respect of real
estate activities of the Group over the five-year period.
The SARS are exercisable from the date of vesting and until 31 December 2010.
The fair value of the SARS granted to Naor is calculated each period based on
the Black-Scholes option pricing model. As at 31 December 2008 the total value
of the SARS was NIS 5.4 million (2007 - NIS 18 million).
During 2006 Naor received NIS 5 million with respect to the first portion of the
SARS and during 2007 Naor received NIS 5.5 million with respect to the second
portion of the SARS. No payments were made during 2008.
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
As the services are provided by Naor in respect of the Company's activities, the
Company records an expense in the income statement equal to the fair value of
the SARS until the liability is settled by DBI with a corresponding increase
recognised in equity as a contribution from DBI.
In meetings held on 30 May 2006 of the board of directors and the shareholders
of the parent company of DBI, DRE has granted the CFO of the Company 741,018
share options. The options are exercisable from the date of vesting until 31
December 2010. The options are exercisable in 5 equal portions. The exercise
price of each option is calculated as the difference between the exercise price
at the date of the grant and the aggregate dividend per share distributed
between the date of the grant and the date of vesting. Between the grant date
and 31 December 2008 none of the options were exercised. The exercise price
range for vested options as at 31 December 2008 was between NIS 21.0 and NIS
22.1 per option before deduction of the dividend.
During 2008, the Company recorded a total income resulting from all options of
GBP278 thousand (2007 - expense GBP274 thousand).
Phantom option plan:
The Phantom Option Plan as outlined in the Admission Document was not
effected.
4. Regarding acquisition of investments from DBI - see Note 1b.
5. On 29 September 2008 the company gave a short term loan of GBP6 million (the
"loan") to Delek Belron International Ltd. The loan is repayable at the latest
by 31 March 2009 and carries an interest rate of 10.0% per annum, payable when
the loan itself is repaid.
The loan, interest and cost are secured by the bank guarantee up to GBP6.5
million.
b. Balances:
+------------------------------------------+-+------------+--+------------+
| | | 31 December |
+------------------------------------------+-+----------------------------+
| | | 2008 | | 2007 |
+------------------------------------------+-+------------+--+------------+
| | | | | |
+------------------------------------------+-+------------+--+------------+
| Current assets - accounts | | 292 | | 292 |
| receivable (1) | | | | |
+------------------------------------------+-+------------+--+------------+
| | | | | |
+------------------------------------------+-+------------+--+------------+
| Current assets - Loan to | | 6,302 | | - |
| parent company (2) | | | | |
+------------------------------------------+-+------------+--+------------+
| | | | | |
+------------------------------------------+-+------------+--+------------+
| Loans made to associates (3) | | 23,383 | | 23,968 |
+------------------------------------------+-+------------+--+------------+
| | | | | |
+------------------------------------------+-+------------+--+------------+
| Loans from associates and | | 12,161 | | 13,287 |
| related parties (4) | | | | |
+------------------------------------------+-+------------+--+------------+
| | | | | |
+------------------------------------------+-+------------+--+------------+
| Current liabilities - | | - | | 380 |
| accounts payable (3) | | | | |
+------------------------------------------+-+------------+--+------------+
| | | | | |
+------------------------------------------+-+------------+--+------------+
| Current liabilities - amounts | | 848 | | 3,416 |
| payable to parent company | | | | |
| and related parties (1) | | | | |
+------------------------------------------+-+------------+--+------------+
| | | | | |
+------------------------------------------+-+------------+--+------------+
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
1. The balances are with DBI and subsidiaries of DBI and they do not bear interest.
All amounts are repayable within the next 12 months.
(2) For terms and conditions in relation to the loan to parent company refer to
Note 17a5
(3) For terms in conditions relating to loans made to associates refer to
Note 4c.
(4) The balances do not bear interest and repayment dates have not yet been
determined.
On admission of the company to AIM, DBI converted all of the outstanding
intra-group loans made by it to the company to equity (Note 14c).
c. Transactions:
+-----------------------------------------+--+------------+--+------------+
| | | Year ended 31 December |
+-----------------------------------------+--+----------------------------+
| | | 2008 | | 2007 |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Rental income (17a(2)) | | 63 | | 59 |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Management fees (17a(1)) | | 910 | | 583 |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Share-based compensation | | (278) | | 274 |
| (17a(3)) | | | | |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Finance expenses | | 151 | | - |
+-----------------------------------------+--+------------+--+------------+
d. Key management personnel
In 2008, the company paid short term benefits to key management personnel
including the CFO, COO and CEO an amount of GBP960 thousand (2007: since IPO
only GBP721thousand)
Non-executive directors.
During the year the non executive directors received an annual fixed fee of
GBP40 thousand which increased from 2007 entitlement of GBP3 thousand per
meeting with a minimum of GBP25 thousand each.
The Chairman received remuneration during the year ended 31 December 2007 of
GBP85 thousand per annum and GBP110 thousand per annum for the year ended 31
December 2008.
Key management personnel receive no post employment, other long term or
termination benefits
NOTE 18:- LOANS FROM MINORITY SHAREHOLDERS
The loans were received from minority shareholders of subsidiaries, with no
fixed maturities. Long term loans equivalent to GBP9.5 million (2007: GBP11.8
million) are non-interest bearing and long term loans equivalent to GBP10.9
million (2007: GBP10.3 million) are interest bearing at interest rates ranging
between 4.0% and 10.0% (2007: 6.0% and 10.0%).
NOTE 19:- LIENS AND CONTINGENT LIABILITIES
Liens
Liabilities to banks are secured by fixed first priority liens on
income-producing real estate properties, on rental income derived there from and
on bank accounts, and floating charges on all other assets and rights of
subsidiaries and associates.
+--------------------------------------------+--+-----------+--------+--------------+
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