Attached files
file | filename |
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EX-99.7 - EX-99.7 - Primo Water Corp /CN/ | d195919dex997.htm |
EX-99.6 - EX-99.6 - Primo Water Corp /CN/ | d195919dex996.htm |
EX-99.4 - EX-99.4 - Primo Water Corp /CN/ | d195919dex994.htm |
EX-99.3 - EX-99.3 - Primo Water Corp /CN/ | d195919dex993.htm |
EX-99.2 - EX-99.2 - Primo Water Corp /CN/ | d195919dex992.htm |
EX-99.1 - EX-99.1 - Primo Water Corp /CN/ | d195919dex991.htm |
8-K - FORM 8-K - Primo Water Corp /CN/ | d195919d8k.htm |
Exhibit 99.5
Interim Consolidated Balance Sheets as of 31 March 2016 and 31 December 2015
in 000
Notes | 31/03/2016 unaudited |
31/12/2015 unaudited |
||||||||
ASSETS |
||||||||||
Current assets |
||||||||||
Cash and cash equivalents |
18,020 | 12,524 | ||||||||
Trade receivablesnet |
66,061 | 68,105 | ||||||||
Income tax receivable |
2,536 | 2,224 | ||||||||
Receivable from related parties |
137 | 115 | ||||||||
Prepaid and other assets |
14,516 | 7,767 | ||||||||
Inventories |
18,707 | 17,944 | ||||||||
Financial asset at fair value through profit or loss |
11,580 | | ||||||||
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|
|
|
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131,557 | 108,679 | |||||||||
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|
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Non-current assets |
||||||||||
Property. plant and equipment |
86,979 | 82,360 | ||||||||
Goodwill |
171,957 | 164,511 | ||||||||
Other intangible assets |
90,806 | 91,055 | ||||||||
Deferred tax assets |
17,371 | 15,956 | ||||||||
Other non-current assets |
2,913 | 2,332 | ||||||||
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|
|
|
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370,026 | 356,214 | |||||||||
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Total assets |
501,583 | 464,893 | ||||||||
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LIABILITIES |
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Current liabilities |
||||||||||
Borrowings |
5 | 4,253 | 4,767 | |||||||
Trade accounts payable |
38,724 | 36,805 | ||||||||
Current tax liability |
4,462 | 4,626 | ||||||||
Other current liabilities |
42,931 | 44,651 | ||||||||
Customer deposits and prepaid income |
32,798 | 33,534 | ||||||||
Provisions |
1,381 | 2,208 | ||||||||
Payable to parent company |
75 | 75 | ||||||||
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|
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124,624 | 126,666 | |||||||||
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Non-current liabilities |
||||||||||
Deferred tax liabilities |
21,268 | 19,178 | ||||||||
Borrowings |
5 | 341,601 | 298,616 | |||||||
Other non-current liabilities |
56 | 52 | ||||||||
Provisions |
986 | 1,026 | ||||||||
Liability for employee rights |
5,225 | 5,250 | ||||||||
Borrowing from shareholder and related parties |
58,557 | 57,394 | ||||||||
Derivatives financial instruments |
5,638 | 5,201 | ||||||||
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433,331 | 386,717 | |||||||||
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Total liabilities |
557,955 | 513,383 | ||||||||
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EQUITY |
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Capital and reserves attributable to the Companys equity holders |
||||||||||
Share capital |
| | ||||||||
Share premium |
13,430 | 13,430 | ||||||||
Other Reserves |
(371 | ) | (371 | ) | ||||||
Cumulative translation adjustment |
9,317 | 9,649 | ||||||||
Accumulated deficit |
(78,924 | ) | (71,352 | ) | ||||||
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(56,548 | ) | (48,644 | ) | |||||||
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Non controlling interests in Equity |
176 | 154 | ||||||||
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|
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Total deficit |
(56,372 | ) | (48,490 | ) | ||||||
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|
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Total liabilities and equity |
501,583 | 464,893 | ||||||||
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|
The accompanying notes are an integral part of these interim condensed consolidated financial statements
F-197
Interim Consolidated Statements of Comprehensive Loss as of 31 March 2016 and 31 March 2015
in 000
For the 3 months ended 31/03/2016 unaudited |
For the 3 months ended 31/03/2015 unaudited |
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Revenues |
83,508 | 82,306 | ||||||
Cost of goods sold |
(27,376 | ) | (28,173 | ) | ||||
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|
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Gross profit |
56,132 | 54,133 | ||||||
Service expenses |
(32,066 | ) | (32,194 | ) | ||||
Sales & Marketing expenses |
(8,544 | ) | (8,497 | ) | ||||
General and administration expenses |
(6,483 | ) | (6,428 | ) | ||||
Amortization of customer portfolio and trademarks |
(2,791 | ) | (2,608 | ) | ||||
Other operating Expensesnet |
(3,494 | ) | (4,678 | ) | ||||
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Income from operations |
2,754 | (272 | ) | |||||
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Financial income |
911 | 2,012 | ||||||
Financial expenses |
(10,676 | ) | (10,414 | ) | ||||
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Loss before taxes |
(7,011 | ) | (8,674 | ) | ||||
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Taxation |
(539 | ) | (499 | ) | ||||
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Net loss |
(7,550 | ) | (9,173 | ) | ||||
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Other comprehensive income: |
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Items that may be reclassified subsequently to profit or loss: |
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Currency translation adjustment |
(332 | ) | 23,504 | |||||
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|
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Total comprehensive (loss) income |
(7,882 | ) | 14,331 | |||||
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Net loss attributable to: |
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Equity holders of the company |
(7,572 | ) | (9,176 | ) | ||||
Non controlling interest |
22 | 3 | ||||||
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(7,550 | ) | (9,173 | ) | |||||
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Total comprehensive (loss) income attributable to: |
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Equity holders of the company |
(7,904 | ) | 14,328 | |||||
Non controlling interest |
22 | 3 | ||||||
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(7,882 | ) | 14,331 | ||||||
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The accompanying notes are an integral part of these interim condensed consolidated financial statements
F-198
Interim Consolidated Statements of Cash Flows as of 31 March 2016 and 31 March 2015
in 000
31/03/2016 unaudited |
31/03/2015 unaudited |
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CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Loss before taxes on income |
(7,011 | ) | (8,674 | ) | ||||
Adjustment for: |
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Depreciation and amortization |
8,585 | 8,156 | ||||||
Amortization of capitalized financial costs |
790 | 1,761 | ||||||
Financial expenses net, included in loss before taxes on income |
8,538 | 6,446 | ||||||
Gain on disposal of property, plant and equipment |
196 | 33 | ||||||
Derivative financial instruments |
437 | 195 | ||||||
Other operating items |
(219 | ) | 24 | |||||
Change in fair value of financial asset through profit or loss |
(485 | ) | | |||||
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Operating cash flow before working capital changes |
10,831 | 7,941 | ||||||
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Changes in operating working capital |
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(Increase) Decrease in Trade receivables |
3,161 | (1,980 | ) | |||||
Increase in inventories |
(475 | ) | (1,356 | ) | ||||
Increase in Prepaid and other assets |
(4,890 | ) | (2,794 | ) | ||||
Increase (Decrease) in Trade accounts payable |
3,764 | (1,532 | ) | |||||
Increase (Decrease) in Other current liabilities and Provision |
(4,517 | ) | 1,315 | |||||
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Cash flows generated from operating activities |
7,874 | 1,594 | ||||||
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Income tax paid |
(1,017 | ) | (864 | ) | ||||
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Net cash flows generated from operating activities |
6,857 | 730 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of property, plant and equipment (PPE) and software |
(5,687 | ) | (6,400 | ) | ||||
Proceeds from sale of PPE |
404 | 472 | ||||||
Acquisition of subsidiaries |
(18,472 | ) | (39,617 | ) | ||||
Deposit on escrow account |
| (28,912 | ) | |||||
Purchase of financial asset at fair value through profit or loss |
(11,095 | ) | | |||||
Interest received |
57 | 9 | ||||||
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Net cash used in investing activities |
(34,793 | ) | (74,448 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Repayment of long term borrowings |
| (54,150 | ) | |||||
Proceeds from long-term borrowings (net of borrowing costs) |
42,500 | 121,197 | ||||||
Repayment of other liabilities |
(588 | ) | ||||||
Borrowings from Shareholders |
| 5,200 | ||||||
Interest paid |
(8,377 | ) | (3,846 | ) | ||||
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Net cash provided by financing activities |
33,535 | 68,401 | ||||||
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Net increase (decrease) of cash |
5,599 | (5,317 | ) | |||||
Effect of exchange rate changes |
531 | 950 | ||||||
Cash and cash equivalent at beginning of year |
9,929 | 17,741 | ||||||
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Cash, cash equivalents and bank overdrafts at end of period |
16,059 | 13,374 | ||||||
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The accompanying notes are an integral part of these interim condensed consolidated financial statements
F-199
Interim Consolidated Statements of Changes in Deficit
in 000
Attributable to equity holders of the Company | Total Equity |
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Share capital |
Share premium |
Other reserves |
Cumulative translation adjustment |
Accumulated deficit |
Non controlling interests |
Total | ||||||||||||||||||||||||
Balance at 1 January 2016 |
(unaudited) | | 13,430 | (371 | ) | 9,649 | (71,352 | ) | 154 | (48,490 | ) | |||||||||||||||||||
Total comprehensive loss |
| | | (332 | ) | (7,572 | ) | 22 | (7,882 | ) | ||||||||||||||||||||
Balance at 31 March 2016 |
(unaudited) | | 13,430 | (371 | ) | 9,317 | (78,924 | ) | 176 | (56,372 | ) |
Attributable to equity holders of the Company | Total Equity |
|||||||||||||||||||||||||||||
Share capital |
Share premium |
Other reserves |
Cumulative translation adjustment |
Accumulated deficit |
Non controlling interests |
Total | ||||||||||||||||||||||||
Balance at 1 January 2015 |
(unaudited) | | 13,430 | (1,222 | ) | (1,038 | ) | (40,935 | ) | 88 | (29,677 | ) | ||||||||||||||||||
Total comprehensive loss |
| | | 23,504 | (9,176 | ) | 3 | 14,331 | ||||||||||||||||||||||
Balance at 31 March 2015 |
(unaudited) | | 13,430 | (1,222 | ) | 22,466 | (50,111 | ) | 91 | (15,346 | ) |
The accompanying notes are an integral part of these interim condensed consolidated financial statements
F-200
Notes to the Interim Condensed Consolidated Financial Statements
in 000
1 General Information
Hydra Dutch Holdings 2 BV (hereafter the Company), a Limited Liability Company incorporated in Amsterdam, The Netherlands, and its subsidiaries (hereafter the Group), are active in 18 countries and mainly engaged in Home & Office Delivery (HOD) of water cooler bottles. Additionally, the Group offers customers in most markets a range of direct-marketing products such as water filters and Lavazza coffee products.
2 Basis of preparation of financial statements
2.1 Statement of compliance
These financial statements are the interim condensed consolidated financial statements (hereafter the interim financial statements) of the Group for the three month period ended 31 March 2016. They are prepared in accordance with and comply with the International Accounting Standard 34, Interim Financial Reporting.
The interim financial statements include the operations of Hydra Dutch Holdings 2 B.V. and its controlled subsidiaries where control is defined as the power to govern the financial and operating policies of the enterprise so to obtain benefits from its activities. These interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2015. These interim financial statements are not audited.
2.2 Accounting policies
The accounting policies used in the preparation of these interim financial statements are consistent with those used in the annual consolidated financial statements for the year ended 31 December 2015.
The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Groups accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the period from 1 January, 2015 to 31 December 2015. Regarding financial asset at fair value through profit or loss, see note 3.2.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.
2.3 Business Combination
In 2016 acquired business contributed revenues of 1498 since the acquisition dates. If the acquisitions had occurred on 1 January 2016, the acquired business, for the period would have contributed revenues of 2,246.
F-201
Details of net assets acquired and intangibles are as follows:
NWD Poland 31/03/2016 |
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Purchase consideration: |
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Cash consideration |
18,472 | |||
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|
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Total Purchase Consideration |
18,472 | |||
Fair Value of Net Assets Acquired |
(8,329 | ) | ||
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Goodwill |
10,143 |
NWD Poland 31/03/2016 |
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Provisional fair values(1) |
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Trade receivables |
1,879 | |||
Prepaid and other current assets |
83 | |||
Inventories |
321 | |||
Property, plant and equipment |
5,665 | |||
Customer portfolio and Trademarks |
3,279 | |||
Other intangible assets |
57 | |||
Trade payables |
(539 | ) | ||
Other current liabilities |
(1,793 | ) | ||
Deferred income tax liabilities |
(623 | ) | ||
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Total identifiable net assets |
8,329 | |||
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Goodwill |
10,143 | |||
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18,472 | ||||
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(1) | Based on a preliminary purchase price allocation conducted |
3 Financial risk management and financial instruments
3.1 Financial risk factors
The Groups activities expose it to a variety of financial risks: foreign currency exchange risk, cash flow interest rates risk, credit risk and liquidity risk. The Groups overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group.
The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the groups annual financial statements as at 31 December 2015.
3.2 Fair value estimation
The table below presents financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
| Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). |
| Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). |
F-202
| Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). |
Level 2 | ||||||||
Liabilities |
31.03.2016 | 31.12.2015 | ||||||
Derivatives financial instruments |
(5,638 | ) | (5,201 | ) |
Changes in fair value are classified in other operating expenses net, and amounted to EUR 485 in the three months ended March 31, 2016.
There were no transfers between Levels 1 and 2 during the period, and there were no changes in valuation techniques during the periods
3.3 Valuation techniques used to derive Level 2 fair values
Level 2 trading derivatives comprise interest rate swaps. Interest rate swaps are fair valued using forward interest rates extracted from observable yield curves. The effects of discounting are generally insignificant for Level 2 derivatives.
3.4 Fair value of financial assets and liabilities measured at amortized cost
The fair value of the senior secured notes as of March 31, 2016 is EUR 294.2 million.
The fair value of the following financial assets and liabilities approximate their carrying amount:
| Borrowing from shareholders and related parties |
| Trade and other receivables |
| Other current financial assets |
| Cash and cash equivalents |
| Trade payables and other current liabilities |
4 Seasonality
The HOD business, in the same way as all other water businesses, is seasonal. The period from May to September represents the peak period for sales and revenues, due to increased consumption of water during the summer months.
5 Borrowings
31/03/2016 | 31/12/2015 | |||||||
Non-Current |
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Senior secured notes and bank borrowings, net |
338,668 | 295,378 | ||||||
Finance lease liabilities |
2,933 | 3,238 | ||||||
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341,601 | 298,616 | |||||||
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Current |
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Bank borrowings, net |
1,961 | 2,158 | ||||||
Finance lease liabilities |
1,154 | 1,203 | ||||||
Other borrowings |
1,138 | 1,406 | ||||||
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4,253 | 4,767 | |||||||
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Total borrowings |
345,854 | 303,383 | ||||||
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|
F-203
On 29 January 2015, the Company successfully issued EUR 160 million of 8% Senior Secured Notes due 15 April 2019 comprising of EUR 35 million of Exchange Notes of the existing EUR 210 million Floating Rate Senior Secured Notes due 2019 and EUR 125 million of New Cash Notes to finance the acquisition of the Nestle Waters Direct water solutions businesses in Germany, the Netherlands, Portugal, Russia and Poland from Nestle Waters as well as repaying in full the utilization of the Bridge facility.
The Notes are redeemable by the Company at any time prior to their maturity, based on prices and terms stipulated in the Notes agreement which include a make-whole call premium if the Notes are redeemed prior to 1 February 2017.
Therefore, on 29 January 2015, the Company used the first portion of the proceeds from the New Cash Notes to repay EUR 53.2 million of the Bridge Facility that was partially drawn on 28 November 2014 in connection with the first stage of the acquisition of three of the five Nestle Waters Direct water solutions businesses from Nestle Waters. The closing date for the acquisition of the businesses in the Netherlands, Portugal and Germany occurred on 1 December 2014.
On 2 February 2015, the Company used a second portion of the proceeds from the New Cash Notes to settle the purchase price for the acquisition of Nestle Waters Direct water solution business in Russia. The remainder of the proceeds from the New Cash Notes was deposited into an Escrow Account held with the Escrow Agent in the name of the Company pursuant to an Escrow Agreement. This remainder of the proceeds from the New Cash Notes was to be used to pay the purchase price for the acquisition of Nestle Waters Direct water solution business in Poland.
As the acquisition of Nestle Water Direct Poland did not occur on or prior to 31 October 2015 (the Polish NWDE Closing Date) the Company redeemed EUR 34.9 million in aggregate principal amount of EUR 160 million 8% Senior Secured Notes due 2019 (the Notes) at a price equal to 101% of that aggregate principal amount of the Notes plus accrued but unpaid interest on 9 November 2015 (the Redemption Date). Following the Redemption Date, the outstanding principal amount of the Notes is EUR 125.1 million.
On 30 October 2015 the Company secured an increase of the existing Revolving Credit Facility Agreement (the RCF) that was entered on 15 April 2014. The RCF increased from an aggregate amount of EUR 45 million to EUR 65 million.
On 1 February 2016, the Company used additional RCF proceeds to settle the purchase price of Nestle Water Poland that was drawn on 29 January 2016. The total RCF proceeds as of 31 March 2016 is EUR 50 million.
6 Segment information
General
The chief operating decision maker of the Group (hereinafterCODM). The CODM reviews internal reports of the Group to assess performance and for resource allocation. Group management identified operating segments based on those reports.
The CODM reviews the business activity based on geographical regions, and this serves management to assess performance of geographical regions and to allocate resources. European regions have been aggregated since they bear similar economic characteristics and are similar in the nature of products and production processes, types of customers and distribution methods
As of March 31, 2016, the CODM reviews the performance of operating segments in the year ended on that date based on measuring income before financing expenses, financing income, tax, depreciation, amortization, other expenses and income (loss) (operating EBITDA).
F-204
Information related to geographical segments:
For the three months ended March 31, 2016:
Europe | Israel | Total | ||||||||||
Segment income |
61,918 | 21,590 | 83,508 | |||||||||
Operating EBITDA |
12,369 | 2,464 | 14,833 | |||||||||
Capex |
3,562 | 1,721 | 5,283 |
For the three months ended March 31, 2015:
Europe | Israel | Total | ||||||||||
Segment income |
62,041 | 20,265 | 82,306 | |||||||||
Operating EBITDA |
10,888 | 1,674 | 12,562 | |||||||||
Capex |
4,263 | 2,137 | 6,400 |
For the 3 months ended 31/03/2016 |
For the 3 months ended 31/03/2015 |
|||||||
Operating EBITDA of reporting segments |
14,833 | 12,562 | ||||||
Depreciation and amortization |
(8,585 | ) | (8,156 | ) | ||||
Other expensesnet |
(3,494 | ) | (4,678 | ) | ||||
|
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Operating income |
2,754 | (272 | ) | |||||
Financing income |
911 | 2,012 | ||||||
Financing expenses |
(10,676 | ) | (10,414 | ) | ||||
Taxes on income |
(539 | ) | (499 | ) | ||||
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|
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Net loss |
(7,550 | ) | (9,173 | ) | ||||
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The following is a breakdown of revenue from external customers of the Groups products:
For the 3 months ended 31/03/2016 |
For the 3 months ended 31/03/2015 |
|||||||
Water |
66,039 | 64,727 | ||||||
Coffee |
17,469 | 17,579 | ||||||
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83,508 | 82,306 | |||||||
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7 Contingent liabilities and Commitments
The French, German, Israeli and Polish subsidiaries are involved in legal actions in the ordinary course of business. The total amount thereof is approximately 714. A total provision of 714 is recorded as of 31 March 2016.
On 25 February 2015 a request for a class action was filed against Mey Eden BarFirst Class Service Ltd, (MEB) in the sum of NIS 444 million (approx. E 103.6 million). The plaintiffs claim is that the UV light in the companys water bars marketed by MEB did not function as it was supposed to. At this stage, the probabilities of the claim being accepted and that financial resources will be required to discharge the claim, could not be estimated by the company and the companys lawyers.
On 29 September, 2014 a request for a class action was filed against Mey Eden BarFirst Class Service Ltd. (MEB) by a former HOD customer. The plaintiff claims that MEB raised the prices of the HOD dispensers without a proper prior notice, that the total amount of the raises was unreasonably high and that the in some of the raises the notice of the raise was not in line with the actual raise. The plaintiff estimated the total damages to all MEB customers in the sum of NIS 67 million (approx. E 15.6 million) On April 6, 2016 the parties signed a
F-205
settlement agreement in which an expert will be appointed to examine past price increases and check if they were legally carried out. MEB will than compensate its customers in the sum equal to 40% of the total sums that will be found by the expert (Total COMPENSATION) plus the plaintiff compensation and legal fees in the amount equal to 20% of the total compensation fee. The agreement was submitted to court for its approval on April 18, 2016. At this stage, the company and the companys lawyers estimate that the probability that financial resources will be required for the discharge of the liability underlying the claim, in addition to the Total Compensation set forth in the Agreement, is lower than the probability that no such resources will be required.
8 Subsequent events
On 1 February 2016, the Group completed the third stage of the acquisition of the Nestle Waters Direct (NWD) business in Poland. Due to anti-trust regulations and competition law in Poland we were able to acquire a portion of the NWD Polish business. The remaining assets that were not purchased by us were transferred to a third party company named GetFresh Sp, z o.o. (GetFresh). The overall purchase consideration for the assets transferred to us and the assets transferred to GetFresh amounts to EUR 32.7 million including a recoverable VAT amount of EUR 5.7 million. GetFresh remitted the purchase price by issuing EUR 11.1 million bonds in favor of Eden Springs Europe B.V. The EUR 18.2 million purchase price for the assets transferred to us has been preliminarily assigned to the fair values of assets acquired and liabilities assumed. This third step of the NWD acquisition was entirely funded using borrowings under the revolving credit facility agreement.
On 31 May 2016, Hydra Dutch Holding 2 B.V. had no subsequent event leading to a material modification of the financial statements.
F-206