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Osem Investments Limited

Financial Statements

June 30, 2015

INVESTMENTS LTD

Contents

Page

The Board of Directors' Report on the Company Business

for the Six Month Period ending 30 June 2015 A-I

Condensed Interim Consolidated Financial Statements as at 30 June 2015 (Unaudited)

Auditors' review report 1

Condensed Interim Consolidated Statement of Financial Position 2

Condensed Interim Consolidated Statement of Profit and Loss 4

Condensed Interim Consolidated Statement of Comprehensive Income and Expenses 5

Condensed Interim Consolidated Statement on Changes in Shareholders Equity 6

Condensed Interim Consolidated Statement of Cash Flows 8

Notes to the Condensed Interim Consolidated Financial Statements 9

Condensed Interim Separate Financial Statements as at 30 June 2015 (Unaudited)

Auditors' review report 12

Condensed Interim Information on Seperate Financial Position 13

Condensed Interim Information on Seperate Profit and Loss 15

Condensed Interim Information on Seperate Comprehensive Income and Expenses 16

Condensed Interim Information on Seperate Cash Flows 17

Additional Information 18

Report on the effectiveness of the internal control over the interim consolidated financial reporting

A

27 August 2015

The Board of Directors' Report on the Company Business for the Three Month Period ending 30 June2015

The Board of Directors of Osem Investments Ltd. (hereinafter: (hereinafter – “the Company”) is honored to present to

the shareholders the Board of Directors Report for the six month period ending 30 June 2015, in accordance with

Securities Regulations (periodic and immediate reports) -1970. The figures appearing in the Report of the Board of

Directors are based on the Consolidated and Audited Financial Statements as at 30 June 2015. The financial figures and

the results of activities of the Company are influenced by the financial figures and the results of activities of its subsidiary

companies The Company and its subsidiaries shall be referred to collectively as "the Group" or the "Osem Group".

In certain cases, details will be presented, describing events which occurred after the date of the financial statements and

shortly before the publication of the report, as well as additional figures at Company level only.

This report has been prepared taking into consideration that the reader of the report has at his disposal the Board of

Directors' Report on the Company as at 31 December 2014.

A. The explanations of the Board on the Company state of affairs

Key figures from the Description of the Corporation's Business

Business environment - Osem Investments Ltd. is the parent company incorporating the Osem Group of

companies. The Group focuses on the manufacturing and marketing of Food products and ranks among the largest

food manufacturers and marketers in Israel. The Group produces more than 2,000 different food items currently

manufactured in eleven production plants in Israel and overseas and marketed through regional distribution centers.

The Group also exports its products to various countries, primarily to Europe and the USA.

Strategic alliance with Nestle. Nestle is the largest shareholder of Osem and holds about 63.7% of the Company.

The Company has exclusive agreements of cooperation with the Nestle Group in Switzerland, to market and

distribute Nestle's products in Israel by Osem’s marketing and sales systems. There is also an agreement on possible

manufacturing of some of Nestle's products locally. In addition the Company has exclusive agreements with the

Nestle Group for the use of intellectual property, knowhow and Nestle trademarks in which Nestle owns the rights.

In addition, Osem receives technical assistance in R&D and has extensive right of use of Nestle know-how for the

use of the Osem Group. This know-how includes among others technical, scientific, marketing, logistic and sales,

production, IT and financial knowledge and expertise. The Group receives IT and computer services from Nestle as

part of Nestle's GLOBE Template Solution.

AAA Credit Rating for Osem. In March 2015, Midroug Company extended the AAA rating Osem had received

and gave a stable rating outlook. Osem is the first and only industrial company in Israel, which is not a government

enterprise, to ever receive an AAA rating. This rating attests to the strong financial liquidity level of the Group.

B

Legislation in the food industry - In March 2014 the Law for the Promotion of Competition in the Food Industry

was approved which deals with, among others, the regulation of suppliers and wholesalers and the geographical

competition among wholesalers, this being based on the recommendations of the Food Committee. The law took

effect on 15 January 2015 and was associated with, among others, the changes in the method of relationship with

the large retailers and the adjustment of commercial activities as required by the law. Consequently, the agreements

were modified so that payments made in the past for services received from large retailers were converted to

discounts in invoices. This change has no effect on operating and net income.

Change in structure - for the purpose of improving planning procedures for the short, medium and long term and

for the efficiency of different processes within the organization, the decision was made to set up a new unit under the

leadership of the deputy to the CEO. This unit will unite all the planning functions existing within the various

departments and will take control of cross organizational processes, in all the topics related to strategy and business

development, economics, control and budget, long term factory planning, Group marketing including the handling of

innovation, readiness for the new consumer in the digital age and responsibility over the computer department which

will support the building of these processes. The change became effective in April 2015.

Creditors arrangement with Mega - One of the main customers of the Group in Israel, Mega Retail Chain Ltd.,

submitted a request for a creditors arrangement to the District Court in Lod, according to section 350 of the

companies Law 5759 - 1999. Following discussions and following the balance sheet date, the Court approved the

creditors arrangement which included debt restructuring of banks and suppliers and obligation of the owners of Mega

to input funds and guarantees. As part of the arrangement with the suppliers, among them, the Osem Group, it was

agreed on the deferral for a period of two years of 30% of the balance due (existing at the time of submittal of the

request) following this, commencing 15 July 2017 the amount will be repaid in 36 equal monthly payments including

interest. The balance of the debt (70%) will be repaid in four weekly installments, the first of which being on 31 July

2015 or at the original payment date, the later of the two. In accordance with the policy of the Group whereby it acts

to insure of the majority of debts of its customers in Israel, therefore the debt of Mega to Osem at the request date is

fully insured by credit insurance except for the deductible amount, for which accrual have been recorded in previous

periods. In light of the above mentioned, there was no need to increase the allowance for bad debts in the second

quarter regarding Mega.

C

Financial situation

The liquid financial assets (cash and cash equivalents, and other investments) of the Group as at the Balance Sheet

date amounted to the sum of NIS 486,677 thousand compared to the sum of NIS 635,745 thousand at the end of the

previous year, a decline of NIS 149,068 thousand.

The decline is mainly the result of distribution of dividend in the amount of NIS 150,000 thousand, investments in fixed

assets, and supplementing of advance tax payments.

The assets (fixed assets and intangible assets) amounted to the sum of NIS 2,089,521 thousand, compared to the sum of

NIS 2,137,898 thousand at the end of the previous year. The gross investments during the period of reporting totaled the

sum of NIS 30,864 thousand.

the Groups investments were mainly for the expansion of factories and the acquisition of production lines.

Total equity as at the Balance Sheet date amounted to the sum of NIS 2,525,753 thousand compared to the sum of NIS

2,501,698 thousand at the end of the previous year. The increase in the shareholders equity derives mainly from the

accumulation of current profits totaling NIS 191,836 thousand. Which was partially offset against dividend paid in the

amount of NIS 150,000 thousand. The shareholders equity constitutes 63.9% of the total of the balance sheet.

The total of the balance sheet amounted to the sum of NIS 3,953,762 thousand compared to the sum of NIS 3,985,526

thousand at the end of the previous year,

The structure of the balance sheet as at 30 June 2015 indicates continued expansion in the business activity which is

manifested by an increase in the gross investments in the fixed assets and current assets while at the same time reduction

in long and short term liabilities, growth in the equity,and expansion which allowed over time the reduction in short term

bank credit and the repayment of all long term loans from the banks and attests to continued financial strength.

D

Results of Activities

Total sales turnover for the first six months of the year 2015 maintained stability and amounted to NIL 2,094,792

thousand compared to NIS 2,095,517 thousand in the corresponding period last year, this in spite of the initial

implementation of the food law commencing January 2015 and consequently, commercial agreements with large retailers

were modified and payments that in the past which were paid for services (and recorded under selling expenses) have

been converted to discounts that reduce net sales. After offsetting this effect, sales increased by a rate of 1.2%.

Sales turnover for the three months of the second quarter 2015 amounted to the sum of NIS 1,014,693 thousand compared

to NIS 1,027,326 thousand in the corresponding period last year, a decline of 1.2%. This decline results from the

conversion certain expenses from selling expenses to discounts which reduce net sales as mentioned above. after

offsetting this effect the sales in the second quarter maintained their level in comparison to the corresponding quarter last

year.

Sales to the local market for the first six months of the year amounted to the sum of NIS 1,756,163 thousand compared

to the sum of NIS 1,759,008 thousand in the corresponding period last year, a decline of 0.2%.

As mentioned, the decline in sales is the result of the initial implementation of the food law commencing January 2015. In

the framework of the law, commercial agreements were modified with the large retailers, and payments made in the past

for services (which were recorded under selling expenses) were converted to discounts in invoices. After offsetting this

effect, sales to the local market increased by a rate of 1.3%.

The Groups overseas sales for the first six months of the year amounted to the sum of NIS 338,629 thousand compared

to the sum of NIS 336,509 thousand in the corresponding period last year, a growth of 0.6%.

The increase in overseas sales were achieved as a result of the increase in sales in the USA which were partially offset as

a result of decline in sales to Europe which were mainly affected by weakening of the Euro, and cessation of losing

activity in the USA.

The gross profit of the Group in the first six months of the year 2015 amounted to the sum of NIS 848,877 thousand

compared to NIS 879,447 thousand in the corresponding year, a decline of 3.5%.

The gross profit of the Group in the three months of the second quarter of the year 2015 amounted to the sum of NIS

413,904 thousand compared to NIS 429,756 thousand in the corresponding year, a decline of 3.7%.

The decline in gross profit results from increase in discounts and promotions to customers, due to the implementation of

the food law as mentioned above.

The Operating Profit of the Group before other income and expenses for the first six months of the year amounted to

NIS 266,864 thousand compared to NIS 264,841 thousand in the corresponding period last year, a growth of 0.8%.

The Operating Profit of the Group before other income and expenses for the three months of the second quarter of the

year 2015 amounted to NIS 125,660 thousand compared to NIS 125,176 thousand in the corresponding period last year, a

growth of 0.4%.

E

The Operating Profit of the Group in the first six months of the year amounted to the sum of NIS 263,247 thousand

compared to NIS 262,285 thousand in the corresponding year, a growth of 0.4%.

The operating profit of the Group in the three months of the second quarter of the year 2015 amounted to the sum of NIS

124,574 thousand compared to NIS 124,806 thousand in the corresponding year, a decline of 0.2%.

The Net Profit of the Osem Group for the first six months of the year amounted to NIS 191,836 thousand compared to

NIS 197,693 thousand in the corresponding period last year, a decline of 3.0%.

The net profit for the period of the Group in the three months of the second quarter of the year 2015 also declined and

amounted to the sum of NIS 88,312 thousand compared to NIS 98,158 thousand in the corresponding year, a decline of

10.0%.

The decline in net profit is the result of increase in net finance expense.

Selling, marketing and distribution expenses for the first six months of the year declined from the level of NIS 476,809

thousand to the level of NIS 443,042 thousand and represented 21.1% of the turnover compared to 22.8% in the

corresponding period last year. The decline in selling expenses results from the commencement of the implementation of

the food law in January 2015 and in consequently selling and marketing expenses declined in favor of the increase in

discounts and promotions included under net sales.

General and administrative expenses for first six months of the year represented 6.6% of the turnover, no change from

the corresponding period last year.

Other expenses net for the first six months of the year totaled the sum of NIS 3,617 thousand compared to the sum of

NIS 2,556 thousand in the corresponding period last year.

Net financing expense of the Group for first six months of the year increased and amounted to the sum of NIS 9,121

thousand compared to NIS 1,089 thousand in corresponding period last year.

The increase in finance expense mainly results from the fact that last year were included finance income from return of

obligations from authorities which bore interest and decreased finance expense last year.

Liquidity and financing sources

The current ratio as at the balance sheet date is 1.86

The quick ratio as at the balance sheet date is 1.43

The high liquidity ratio and liquidity reserve funds of the Group have constituted the main financing sources for further

expansion of the Group business activities in different product categories, expansion of production lines, and this is

accompanied by foreign financing if necessary.

The cash flow for first six months of the year from current operations amounted to the sum of NIS 93,888 thousand

compared to the sum of NIS 207,838 thousand in the previous year. The cash flow from operating activities from

supplementing of advance tax payments and from the effect of the initial implementation of the food law according to

which bonus to chains is paid currently in current invoices and not after the end of the year as was done in the past.

As a result, in cash flow terms, during the first half of the year 2015 both the current bonuses for year 2015 and the total

yearly bonuses for year 2014 were paid.

F

Analysis of the Groups business results according to operating segments

Culinary segment - for the first six months of the year sales amounted to NIS 459,697 thousand compared to NIS

474,810 thousand in the corresponding period last year a decrease of 3.2%. The profit declined from a level of NIS

52,894 thousand to a level of NIS 51,847 thousand

In the second quarter of the year sales decreased from NIS 228,747 thousand to NIS 219,544 thousand, a decline of 4.0%.

The profit increased from a level of NIS 27,998 thousand to a level of NIS 30,284 thousand.

The decline in sales results, among others, from payments made in the past as part of selling expenses and following the

food law were converted to discounts which decrease net sales.

Bakery, beverages, snacks and breakfast cereals segment - for the first six months of the year sales amounted to NIS

574,216 thousand compared to NIS 564,408 thousand in the corresponding period last year an increase of 1.7%. The

profit increased from a level of NIS 128,148 thousand to a level of NIS 135,494 thousand. In the second quarter of the

year sales increased from NIS 257,548 thousand to NIS 261,624 thousand, an increase of 1.6%. The profit increased from

a level of NIS 55,928 thousand to a level of NIS 66,583 thousand

The increase in sales and profit result from, among others, innovation and launching of new products mainly in the

snacks, cereals and bakery area.

International segment - for the first six months of the year sales amounted to NIS 335,759 thousand compared to NIS

333,937 thousand in the corresponding period last year an increase of 0.5%. The profit declined from a level of NIS

33,883 thousand to a level of NIS 22,579 thousand


The profit declined from a level of NIS 12,209 thousand to a loss of NIS 1,719 thousand

In the first six months of the year sales of the international division in the USA increased by 11.8% - mainly due to the

launching of new products (the Swirl category in the salads segment). These sales were offset against a decline of 8.4%

sales in Europe, due to the weakening of the Euro, and cessation of losing activity in the USA.. The decline in profit

results from the increase in campaigns and sales promotions due to the launching of new products.

Infant nutrition segment - for the first six months of the year sales amounted to NIS 164,869 thousand compared to

NIS 167,051 thousand in the corresponding period last year an decline of 1.3%. The profit increased from a level of NIS

26,281 thousand to a level of NIS 30,386 thousand.


The profit increased from a level of NIS 8,468 thousand to a level of NIS 8,973 thousand.

The decline in sales results, among others, from payments made in the past as part of selling expenses and following the

food law were converted to discounts which decrease net sales.

Professional market and Assamim Gift Packages segment - for the first six months of the year sales amounted to NIS

201,201 thousand compared to NIS 206,427 thousand in the corresponding period last year a decline of 2.5%. The profit

declined from a level of NIS 14,165 thousand to a level of NIS 11,236 thousand


The profit declined from a level of NIS 3,669 thousand to a level of NIS 3,298 thousand

The decline in sales and profit results from , among others, decline in inbound tourism which affects the professional

market activity.

G

Other Activities segment - for the first six months of the year sales amounted to NIS 382,355 thousand compared to

NIS 370,612 thousand in the corresponding period last year an increase of 3.2%. The profit amounted to the sum of NIS

18,476 thousand compared to the sum of NIS 12,909 thousand last year,

In the second quarter of the year sales increased from NIS 215,881 thousand to NIS 221,803 thousand, an increase of

2.7%. The profit increased from a level of NIS 18,289 thousand to a level of NIS 19,376 thousand.

The increase in sales results from, among others, innovation and launching of new products, mainly in pet foods and

Nestea (Carbonated Nestea). The improvement in profit results from, among others, increase in sales and efficiency in ice

cream.

H

B. Exposure to and management of market risks

During the statement period there were no significant changes in the exposure of the Company and the method of

their market risks management in relation to the Company's reports on this subject for the year ending 31 December

2014.

C. Provisions on disclosure related to the Corporation's financial reporting

Critical estimates

No significant changes were made during the first quarter of the year 2015 in relation to critical accounting

estimations which the Company uses for the financial reports.

Financial date related to the parent company

In accordance with regulation 38d of the Securities Regulations (periodic and immediate reports) An appendix is

attached to the Board of Directors report, separate financial statements of the Company (“Solo Report”), with the

examining auditor’s opinion attached.

Dividends

On 3 March 2015, the Company distributed a dividend for the sum of NIS 150 million.

D. Corporate Governance Aspects

Disclosure regarding the procedure of approval of the financial statements

A. The organs in charge of the super control include the members of the board, the CEO, and the Deputy CEO of

Finance. The identity of the organs is specified in the Periodic Report in Regulation 26 and 26(A) in Chapter D

of the Periodic Report.

B. The Balance Sheet Committee for the examination of the financial statements

General: The Company board of directors has decided to establish a Balance Sheet Committee which will

examine the financial statements of the Company and which will make recommendations with regard to the

approval of the financial statements, after the Committee has discussed the financial statements prior to making

recommendations. A representative of the Company external auditor attends the meetings of the Committee for

the examination of the financial statements and the Internal Auditor of the Company attends these meetings as

well. The Balance Sheet Committee for the examination of the financial statements also act as members of the

Audit Committee

Members of the Balance Sheet Committee: The Committee comprises four members (who also hold the office

of directors in the Company) - Dr. Liora Meridor (Public Director), Gaby Hake Adv., Yaki Yerushalmi (Public

Director) and Yossi Alsheich (independent director). Dr. Liora Meridor presides as the Committee Chair. The

appointment of the Committee members was made based on their skills, including their professional

experience, their qualifications and additional institutions or boards in which they hold office, as the case may

be, based on their classification by the Company Board of Directors (prior to their appointment as directors of

the Company), and based on their accounting and financial skills and also based on their declaration (which

was submitted prior to their appointment) and based on their ability to read and understand financial statements

(see Section 26 in Chapter D of the Periodic Report).

I

The discussions of the Balance Sheet Committee: On 23 August 2015 the Committee discussed material reporting

issues in the financial statements and formulated its recommendations to the Board on the procedure for approving

the financial statements. The Committee recommended to the Board that the financial statements be approved. In

addition to the Committee members a representative of the External auditor, the Company CEO, the Deputy CEO of

Finance and the Chief Accountant of the Company, and the Company Internal Auditor attended the Committee

meeting. In the framework of its meetings, for the purpose of forming its recommendation, the Committee

examined the material issues related to financial reporting and examined among other issues the material estimates

and valuations that were made in relation to the financial statements, the internal controls related to the financial

reporting, the integrity and diligence of the financial reporting from all its relevant aspects, the accounting policies

which were adopted and the accounting treatment applied on material affairs of the Company. In addition, the

certified accountants of the External Auditor have given their view on the issues that were presented. To make its

recommendations, the Company CEO and the Deputy CEO of Finance gave an overview to the Committee members

on the situation of the Company, its financial results and on the other issues the Committee discussed, as specified

above, and answered the questions of the Committee Members At the end of the meeting the Committee

recommended to the Board of the Company to approve the financial statements.

The Board of Directors wish to thank the management and the employees for the efforts they have invested and the

achievements they have attained and express their hope for further cooperation on both sides.

Dan Propper Itzik Saig

Chairman of the Board of Directors CEO

Somekh Chaikin Telephone 972 3 684 8000

KPMG Millennium Tower Fax 972 3 684 8444

17 Ha'arba'a Street, PO Box 609 Internet www.kpmg.co.il

Tel Aviv 6100601 Israel

Somekh Chaikin, an Israeli partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (“KPMG

International”), a Swiss entity.

Review Report to the Shareholders of Osem Investments Limited

Introduction

We have reviewed the accompanying financial information of Osem Investments Limited and its subsidiaries

(hereinafter – “the Group”) comprising of the condensed consolidated interim statement of financial position as of

June 30, 2015 and the related condensed consolidated interim statements of income, comprehensive income,

changes in equity and cash flows for the six and three month periods then ended. The Board of Directors and

Management are responsible for the preparation and presentation of this interim financial information in accordance

with IAS 34 “Interim Financial Reporting”, and are also responsible for the preparation of financial information for

this interim periods in accordance with Section D of the Securities Regulations (Periodic and Immediate Reports),

1970. Our responsibility is to express a conclusion on this interim financial information based on our review.

We did not review the condensed interim financial information of certain consolidated subsidiaries whose assets

constitute 13.4% of the total consolidated assets as of June 30, 2015, and whose revenues constitute 16.1% and

16.2% of the total consolidated revenues for the six and three month periods then ended, respectively. The

condensed interim financial information of those companies was reviewed by other auditors whose review reports

thereon were furnished to us, and our conclusion, insofar as it relates to amounts emanating from the financial

information of such companies, is based solely on the said review reports of the other auditors.

Scope of Review

We conducted our review in accordance with Standard on Review Engagements 1, "Review of Interim Financial

Information Performed by the Independent Auditor of the Entity" of the Institute of Certified Public Accountants in

Israel. A review of interim financial information consists of making inquiries, primarily of persons responsible for

financial and accounting matters, and applying analytical and other review procedures. A review is substantially

less in scope than an audit conducted in accordance with generally accepted auditing standards in Israel and

consequently does not enable us to obtain assurance that we would become aware of all significant matters that

might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review and the review reports of other auditors, nothing has come to our attention that causes us to

believe that the accompanying financial information was not prepared, in all material respects, in accordance with

IAS 34.

In addition to that mentioned in the previous paragraph, based on our review and the review reports of other

auditors, nothing has come to our attention that causes us to believe that the accompanying interim financial

information does not comply, in all material respects, with the disclosure requirements of Section D of the

Securities Regulations (Periodic and Immediate Reports), 1970.

Somekh Chaikin

Certified Public Accountants (Isr.)

1

Condensed Interim Consolidated Statement of Financial Position

As at June 30 As at June 30 As at December 31

2015 2014 2014

(Unaudited) (Unaudited) (Audited)

NIS thousands NIS thousands NIS thousands

Assets

Cash and cash equivalents 390,499 315,143 471,197

Bank deposits and other investments 96,178 1,231 164,548

Accounts receivable - customers 826,479 774,241 693,674

Debtors and debit balances 42,126 26,826 27,578

Income tax 18,538 8,970 10,694

Inventory 407,266 379,972 398,972

Total current assets 1,781,086 1,506,383 1,766,663

Employee benefits 396 195 379

Fixed assets 1,069,073 1,116,969 1,110,855

Intangible assets 1,020,448 969,073 1,027,043

Prepaid expenses 30,240 43,712 33,539

Deferred taxes 52,519 37,204 47,047

Total non-current assets 2,172,676 2,167,153 2,218,863

Total assets 3,953,762 3,673,536 3,985,526

Dan Propper - Chairman of the Board

Itzik Saig - CEO

Pinhas Kimelman - Deputy CEO, Finance

Date of approval of financial statements: 27 August 2015

INVESTMENTS LTD


2015 2014 2014



Liabilities

Loans and short term credit from banks 9,431 28,955 7,845

Accounts payable - suppliers 703,209 669,922 756,676

Other creditors 241,230 245,030 224,462

Income tax 6,090 4,320 10,895Dividend declared - - -

Total current liabilities 959,960 948,227 999,878

Liability for acquisition of non-controlling interest in subsidiary 354,483 330,610 372,902

Employee benefits 17,364 6,182 17,819

Deferred taxes 96,202 91,278 93,229

Total non-current liabilities 468,049 428,070 483,950

Total liabilities 1,428,009 1,376,297 1,483,828

Equity

Share capital 176,772 176,772 176,772

Premium on shares 444,212 444,212 444,212

Capital reserves (81,574) (71,680) (63,793)

Retained earnings 1,985,124 1,746,593 1,943,149

Total equity attributable to equity holders of the company 2,524,534 2,295,897 2,500,340

Non-Controlling interests 1,219 1,342 1,358

Total equity 2,525,753 2,297,239 2,501,698

Total liabilities and equity 3,953,762 3,673,536 3,985,526

The accompanying notes to the condensened interim financial statements are an integral part of them.

3

INVESTMENTS LTD

Condensed Interim Consolidated Statement of Profit and Loss

For the six months ending For the three months ending For the year ending

As at June 30 As at June 30 As at June 30 As at June 30 December 31

2015 2014 2015 2014 2014

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)

NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands

Sales 2,094,792 2,095,517 1,014,693 1,027,326 4,256,620

Cost of sales 1,245,915 1,216,070 600,789 597,570 2,475,319

Gross profit 848,877 879,447 413,904 429,756 1,781,301

Selling, marketing and distribution expenses 443,042 476,809 226,550 242,018 970,635

General and administrative expenses 138,971 137,797 61,694 62,562 268,325

Operating profit before other expenses 266,864 264,841 125,660 125,176 542,341

Other expenses, net 3,617 2,556 1,086 370 10,772

Operating profit 263,247 262,285 124,574 124,806 531,569

Finance expenses (10,899) (9,686) (9,088) (6,224) (24,880)

Finance income 1,778 8,597 483 8,504 21,131

Financing costs, net (9,121) (1,089) (8,605) 2,280 (3,749)

Profit before taxes on income 254,126 261,196 115,969 127,086 527,820

Taxes on income 62,290 63,503 27,657 28,928 131,264

Profit for the period 191,836 197,693 88,312 98,158 396,556

Attributed to:

Equity holders of the company 191,975 197,480 88,511 98,177 396,324

Non-Controlling interests (139) 213 (199) (19) 232


Earnings per NIS 1 par value ordinary shares

Primary and fully diluted (in NIS) 1.74 1.78 0.80 0.89 3.58


4

INVESTMENTS LTD

Condensed Interim Statement of Comprehensive Income and Expenses

For the three months ending For the year ending

June 30 June 30 June 30 June 30 December 31

2015 2014 2015 2014 2014




Other comprehensive income (loss)

Amounts to be transferred to profit or loss

after specific requirements are met

(17,781) (3,327) (2,347) (4,715) 4,560

Amounts that will not be transferred to profit or loss

Actuarial gains from defined benefit plan - - - - (3,117)

Income tax on components of other comprehensive income - - - - 826

Other comprehensive income (loss) for period,

net of tax (17,781) (3,327) (2,347) (4,715) 2,269

Total comprehensive income for

the period 174,055 194,366 85,965 93,443 398,825

Attributed to:

Equity holders of the company 174,194 194,153 86,164 93,462 398,596

Non-Controlling interests (139) 213 (199) (19) 229


the period 174,055 194,366 85,965 93,443 398,825


Foreign currency translation differences for foreign operations

For the six months ending

5

INVESTMENTS LTD.

Notes to the Financial Statements as at 30 June 2015 (unaudited)

6

Condensed Consolidated Reports on Changes in Shareholders' Equity

Capital reserve

from acquisition

Non

Total

of rights not

conferring

control

Total Equity

Controlling

Interest

Company's

equity holders

Retained

earnings

Other Reserves in consolidated

subsidiary

Translation

reserve fund

Premium on

Shares Share Capital

NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands

For the six month period ending

30 June 2015 (unaudited)

2,501,698 1,358 2,500,340 1,943,149 5,694 (41,675) (27,812) 444,212 176,772 Balance as at 1 January 2015 (audited)

(17,781) - (17,781) - - - (17,781) - - Foreign currency exchange difference

191,836 (139) 191,975 191,975 - - - - - Net earnings for the period

174,055 (139) 174,194 191,975 - - (17,781) - - Total recognized comprehensive income for the period

(150,000) - (150,000) (150,000) - - - Dividend paid

2,525,753

1,219

2,524,534

1,985,124

5,694

(41,675)

(45,593)

444,212

176,772

Balance as at 30 June 2015

For the six month period ending


2,252,873 1,129 2,251,744 1,699,113 5,694 (41,675) (32,372) 444,212 176,772 Balance as at 1 January 2014 (audited)


197,693 213 197,480 197,480 - - - - - Net earnings for the period

194,366 213 194,153 197,480 - - (3,327) - - Total recognized comprehensive income for the period

(150,000) - (150,000) (150,000) - - Dividend paid

2,297,239

1,342

2,295,897

1,746,593

5,694

(41,675)

(35,699)

444,212

176,772


The accompanying notes are an integral part of these

consolidated financial statements.

INVESTMENTS LTD.

Notes to the Financial Statements as at 30 June 2015 (unaudited)

7

Condensed Consolidated Reports on Changes in Shareholders' Equity (Cont.)

Capital reserve

from acquisition

Non

Total

of rights not

conferring

control

Total Equity

Controlling

Interest

Company's

equity holders

Retained

earnings

Other Reserves in consolidated

subsidiary

Translation

reserve fund

Premium on

Shares Share Capital

NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands NIS thousands

For the three month period ending


2,439,788 1,418 2,438,370 1,896,613 5,694 (41,675) (43,246) 444,212 176,772 Balance as at 1 April 2015




2,525,753

1,219

2,524,534

1,985,124

5,694

(41,675)

(45,593)

444,212

176,772


For the three month period ending


2,203,796 1,361 2,202,435 1,648,416 5,694 (41,675) (30,984) 444,212 176,772 Balance as at 1 April 2014




2,297,239

1,342

2,295,897

1,746,593

5,694

(41,675)

(35,699)

444,212

176,772


For the year ending 31 December 2014 (audited)

2,252,873 1,129 2,251,744 1,699,113 5,694 (41,675) (32,372) 444,212 176,772 Balance as at 1 January 2014

4,560 - 4,560 - - - 4,560 - - Foreign currency exchange difference

(2,291) (3) (2,288) (2,288) - - - - - Actuarial losses (net after tax)

396,556 232 396,324 396,324 - - - - - Net earnings for the year 2014

398,825 229 398,596 394,036 - - 4,560 - - Total recognized comprehensive income for the period

(150,000) - (150,000) (150,000) - - - - - Dividend paid

2,501,698

1,358

2,500,340

1,943,149

5,694

(41,675)

(27,812)

444,212

176,772

Balance as at 31 December 2014 (audited)

The accompanying notes are an integral part of these consolidated

financial statements.

INVESTMENTS LTD

Condensed Interim Consolidated Statement of Cash Flows

For the three months ending For the year ending


2015 2014 2015 2014 2014



CASH FLOWS FROM OPERATING ACTIVITIES

Profit for period 191,836 197,693 88,312 98,158 396,556

Adjustments:

Depreciation 61,703 59,807 30,966 29,984 121,337

Amortization of intangible assets and prepaid expenses 10,963 18,971 4,372 8,076 36,918

Loss from sale of fixed assets, net 565 312 537 495 3,023

Finance costs, net 9,121 1,089 8,605 (2,280) 3,749

Tax expenses on income 62,290 63,503 27,657 28,928 131,264

Changes in derivatives (2,020) 458 (1,199) 304 (9,749)

Changes in inventory (11,472) 9,668 (22,267) 1,783 (4,463)

Changes in accounts receivable and other debtors (153,723) (90,412) 9,700 49,511 7,527

Changes in accounts payable and other creditors (37) (5,251) (1,017) (35,119) 32,073

Changes in employee benefits (472) 1,830 (190) 1,864 10,166

Income taxes paid, net (74,866) (49,830) (28,118) (21,469) (109,522)

Net cash flows arising from operating activities 93,888 207,838 117,358 160,235 618,879

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of fixed assets (44,440) (45,618) (16,727) (19,722) (86,117)

Proceeds from sale of fixed assets 470 845 144 373 1,309

Deposits in banks and other investments, net 67,408 5,823 47,631 42 (157,505)

Investment in intangible assets and prepaid expenses (5,431) (17,045) (1,721) (6,071) (25,942)

Interest received 385 8,785 195 7,967 9,336

Net cash flows arising from (used in) investing activities 18,392 (47,210) 29,522 (17,411) (258,919)

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid (11,314) (1,238) (2,609) (1,421) (10,552)

Credit from banking institutions and others, net 1,826 - 1,886 (10) (24,885)

Repayment of other liabilities (29,494) (21,973) (19,815) (19,718) (32,887)

Dividend paid (150,000) (150,000) - (150,000) (150,000)

(188,982) (173,211) (20,538) (171,149) (218,324)

Change in cash and cash equivalents (76,702) (12,583) 126,342 (28,325) 141,636

Cash and cash equivalents at beginning of period 471,197 328,059 264,553 343,993 328,059

Effect of fluctuations in exchange rate

on cash balances (3,996) (333) (396) (525) 1,502

Cash and cash equivalents at end of period 390,499 315,143 390,499 315,143 471,197


Net cash used in financing activities


8

INVESTMENTS LTD.

Notes to the Financial Statements as at 30 June 2015

9

Note 1 – The Reporting Entity

Osem Investments Ltd. (hereinafter: the "Company") is a company residing in Israel. The consolidated

financial statements of the Group as at 30 June 2015 include the statements of the Company and its investee

companies (hereinafter: "the Group").

The controlling party in the Company is Nestlé S.A. Switzerland. The Group is engaged in the manufacturing

and marketing of food products.

The securities of the Company are listed for trading on the Tel Aviv Stock Exchange.

Note 2 – The basis for the preparation of the Financial Statements

The condensed consolidated interim statements have been prepared in accordance with IAS 34 – Interim

Financial Reporting – and do not include all the information required in the full annual reports. The summary

should be read together with the financial statements for the year which ended on 31 December 2014

(hereinafter –“ yearly financial statements”). Also, these reports were prepared in accordance with part 4 of

the Securities and Exchange Commission standards (periodic and immediate reports) 5740-1970.The use of

estimates and judgement and for the preparation of the interim financial statements, were consistent with

those used for the preparation of the year end financial statements.

Note 3 – Main Principles of Accounting Policy

The accounting policy of the Group as it relates to these condensed consolidated interim financial statements,

is the policy applied in the yearly financial statements.

Note 4 – Seasonality

The Group’s sales are affected by the timing of Jewish Holidays with an emphasis on New Year and

Passover. The annual seasons also have an affect on certain groups of products. The seasons of Winter and

Autumn are characterized by greater consumption of soups, casseroles and soup almonds as compared to the

Summer and Spring seasons which are characterized by higher consumption of ice cream and concentrates as

compared to the seasons of Winter and Autumn.

Note 5 – Segment Activity

six months ending For the

10December 20 Bakery Professional

30 June 2015 (unaudited) Beverages Infant And Gift Adjustment to

Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated

NIS NIS NIS NIS NIS NIS NIS NIS

Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands

Segment sales 459,697 574,216 335,759 164,869 201,201 382,355 (23,305) 2,094,792

Segment results 51,847 135,494 22,579 30,386 11,236 18,476 (3,154) 266,864

Expenses not allocated (3,617)

Financing costs, net (9,121)

Profit before taxes on income

254,126

INVESTMENTS LTD.


10

Note 5 – Segment Activity (Cont.)

six months ending For the


June 2014 (unaudited)30 Beverages Infant And Gift Adjustment to

Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated



Segment sales 474,810 564,408 333,937 167,051 206,427 370,612 (21,728) 2,095,517

Segment results 52,894 128,148 33,883 26,281 14,165 12,909 (3,439) 264,841




261,196

three months ending For the


(unaudited) 5201 ne30 Ju Beverages Infant And Gift Adjustment to Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated



Segment sales 219,544 261,624 158,048 70,820 93,870 221,803 (11,016) 1,014,693

Segment results 30,284 66,583 (1,729) 8,973 3,298 19,376 (1,125) 125,660

Expenses not allocated 1,086

Financing costs, net 8,605


115,969

three months ending For the


(unaudited) 4201 30 June

Beverages Infant And Gift Adjustment to Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated



Segment sales 228,747 257,548 160,040 75,997 99,647 215,881 (10,534) 1,027,326

Segment results 27,998 55,928 12,209 8,468 3,669 18,289 (1,385) 125,176

Income not allocated (370)

Financing costs, net 2,870


127,086

year ending For the Bakery Professional

(audited) 431 December 201 Beverages Infant And Gift Adjustment to Culinary Snacks Cereals International Nutrition Packages Others Consolidated Consolidated



Segment sales 972,696 1,135,363 672,032 358,480 416,777 747,438 (46,166) 4,256,620

Segment results 114,973 258,570 53,767 62,395 27,639 31,958 (6,961) 542,341




527,820

INVESTMENTS LTD.


11

Note 6 – Financial Instruments.

The Company has forward hedge transactions and options on exchange rates on supplier foreign

currency balances as at 30 June 2015 total face value of the transactions amounts to the sum of NIS

167,262 thousand, the fair value of the asset is NIS 4,893 thousand.

The futures contracts are disclosed according to fair value as assets at Level 2: observable data, either

directly or indirecty, which are not included in Level 1 (quoted prices, not adjusted, on an active

market for similar instruments).

Note 7 – Events During the Financial Statement Period.

A. On 15 January 2015 the Law for the Promotion of Competition in the Food Sector took effect. The

law deals with, among others, the arrangement of activities between suppliers and retailers and in

geographic competition between retailers, this based on recommendations of the food committee. In

accordance with the decrees of the law, it is forbidden to transfer payments in money or money

equivalents from a supplier to a large retailer under certain circumstances and the manufacturers were

constrained to certain activities which were practiced until the implementation of the law. The

implementation of the law involves, among others, also changes in the method of connection with the

large retailers in order to adjust the commercial activities as required by the law. In the framework of

these adjustments, amounts paid in the past to retailers for separate services, today are expressed as a

discount to the selling price. In accordance with the above-mentioned, amounts which were classified

in the past under marketing and selling expenses in the profit and loss statement, are recorded as of this

quarter in the framework of the reduction in income.

B. One of the main customers of the Group in Israel, Mega Retail Chain Ltd., submitted a request for a

creditors arrangement to the district court in Lod, according to section 350 od the companies Law 5759

- 1999. Following discussions and following the balance sheet date, the court approved the creditors

arrangement which included debt restructuring of banks and suppliers and obligation of the owners of

Mega to input funds and guarantees. As part of the arrangement with the suppliers, among them, the

Osem Group, it was agreed on the deferral for a period of two years of 30% of the balance due (existing

at the time of submittal of the request) following this, commencing 15 July 2017 the amount will be

repaid in 36 equal monthly payments including interest. The balance of the debt (70%) will be repaid in

four weekly installments, the first of which being on 31 July 2015 or at the original payment date, the

later of the two. In accordance with the policy of the Group whereby it acts to insure of the majority of

debts of its customers in Israel, therefore the debt of Mega to Osem at the request date is fully insured

by credit insurance except for the deductible amount, for which accrual have been recorded in previous

periods. In light of the above mentioned, there was no need to increase the allowance for bad debts in

the second quarter regarding Mega.


Separate Financial Statements

June 30, 2015

Somekh Chaikin Telephone 972 3 684 8000

KPMG Millennium Tower Fax 972 3 684 8444

17 Ha'arba'a Street, PO Box 609 Internet www.kpmg.co.il

Tel Aviv 6100601 Israel

Somekh Chaikin, an Israeli partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (“KPMG

International”), a Swiss entity.

August 27, 2015

To:

The shareholders of Osem Investments Limited

Subject: Special auditors’ report on separate interim financial information according to Regulation 38D of

the Securities Regulations (Periodic and Immediate Reports) – 1970

Introduction

We have reviewed the separate interim financial information presented in accordance with Regulation 38D of the

Securities Regulations (Periodic and Immediate Reports) – 1970 Osem Investments Limited (hereinafter – the

Company) as of June 30, 2015 and for the six and three month periods then ended. The separate interim financial

information is the responsibility of the Company’s Board of Directors and of its Management. Our responsibility is

to express a conclusion on the separate interim financial information based on our review.

We did not review the separate interim financial information of investee companies the investments in which

amounted to NIS 441,846 thousand as of June 30, 2015, and the loss from these investee companies amounted to

NIS 9,060 thousand and NIS 9,033 thousand for the six and three month periods then ended, respectively. The

financial statements of those companies were reviewed by other auditors whose review reports thereon were

furnished to us, and our conclusion, insofar as it relates to amounts emanating from the financial statements of such

companies, is based solely on the said review reports of the other auditors.

Scope of Review

We conducted our review in accordance with Standard on Review Engagements 1, "Review of Interim Financial

Information Performed by the Independent Auditor of the Entity" of the Institute of Certified Public Accountants in

Israel. A review of separate interim financial information consists of making inquiries, primarily of persons

responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with generally accepted auditing

standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all

significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review and the review reports of other auditors, nothing has come to our attention that causes us to

believe that the accompanying separate interim financial information was not prepared, in all material respects, in

accordance with Regulation 38D of the Securities Regulations (Periodic and Immediate Reports) – 1970.

Somekh Chaikin

Certified Public Accountants (Isr.)

August 27, 2015

12

INVESTMENTS LTD

Condensed Interim Information on Separate Financial Position


2015 2014 2014



Assets

Cash and cash equivalents 289,012 192,711 329,037

Bank deposits and other investments 85,799 1,231 153,945

Debtors and debit balances 8,816 8,517 10,948

Income tax 2,012 - -

Inventory 119,970 93,960 134,165

Total current assets 505,609 296,419 628,095

Balances related to subsidiary companies 1,809,142 1,677,215 * 1,784,338

Loans to subsidiary companies 50,477 62,322 52,533

Fixed assets 643,053 667,802 658,960

Intangible assets 570,991 530,539 571,731

Prepaid expenses 12,160 13,369 12,823

Total non-current assets 3,085,823 2,951,247 3,080,385

Total assets 3,591,432 3,247,666 3,708,480

Dan Propper - Chairman of the Board

Itzik Saig - CEO

Pinhas Kimelman - Deputy CEO, Finance

Date of approval of financial statements: 27 August 2015

13

INVESTMENTS LTD


2015 2014 2014



Liabilities

Accounts payable - suppliers 311,283 280,922 354,234

Other creditors 309,949 265,417 * 384,329

Income tax - 2,372 9,568

Total current liabilities 621,232 548,711 748,131

Liability for acquisition of non-controlling interest in subsidiary 354,483 330,610 372,902

Employee benefits 17,230 6,063 17,673

Deferred taxes 73,953 66,385 69,434

Total non-current liabilities 445,666 403,058 460,009

Total liabilities 1,066,898 951,769 1,208,140

Equity

Share capital 176,772 176,772 176,772

Premium on shares 444,212 444,212 444,212

Capital reserves (81,574) (71,680) (63,793)

Retained earnings 1,985,124 1,746,593 1,943,149

Total equity 2,524,534 2,295,897 2,500,340

Total liabilities and equity 3,591,432 3,247,666 3,708,480

(*) Reclassified


14

INVESTMENTS LTD

Condensed Interim Separate Information on Profit and Loss

For the three months ending

For the year

ending


2015 2014 2015 2014 2014



Sales 697,804 682,403 318,193 314,566 1,377,171

Cost of sales 371,333 353,075 165,982 166,794 714,126

Gross profit 326,471 329,328 152,211 147,772 663,045

Selling, marketing and distribution expenses 128,286 142,713 * 66,582 69,359 * 286,744

General and administrative expenses 45,836 40,538 18,968 16,393 81,272

Operating profit before other income 152,349 146,077 66,661 62,020 295,029

Other income, net 4,791 4,820 1,367 1,850 10,982

Operating profit 157,140 150,897 68,028 63,870 306,011

Finance expenses (8,708) (7,304) (1,693) (2,463) (14,781)

Finance income 1,733 8,844 467 8,450 12,063

Financing costs, net (6,975) 1,540 (1,226) 5,987 (2,718)

Profit from subsidiaries 82,531 84,638 * 40,274 44,936 * 174,145

Profit before taxes on income 232,696 237,075 107,076 114,793 477,438

Taxes on income 40,721 39,595 * 18,565 16,616 * 81,114


(*) Reclassified



15

INVESTMENTS LTD

Condensed Interim Information on Seperate Comprehensive Income and Expenses


For the year

ending


2015 2014 2015 2014 2014




Other comprehensive income (loss)

Amounts to be transferred to profit or loss

after specific requirements are met

(17,781) (3,327) (2,347) (4,715) 4,550

Amounts that will not be transferred to profit or loss

Actuarial gains from defined benefit plan - - - - (3,099)

Income tax on components of other comprehensive income - - - - 821

Other comprehensive income (loss) for period,

net of tax (17,781) (3,327) (2,347) (4,715) 2,272


the period 174,194 194,153 86,164 93,462 398,596



Comprehensive income from subsidiary companies

16

INVESTMENTS LTD

Condensed Interim Information on Seperate Cash Flows


For the year

ending


2015 2014 2015 2014 2014



CASH FLOWS FROM OPERATING ACTIVITIES

Net profit for period 191,975 197,480 88,511 98,177 396,324

Adjustments:

Company's share in profits of subsidiaries (82,531) (84,638) * (40,274) (44,936) * (174,145)

Depreciation 32,216 31,843 16,148 15,906 63,692

Amortization of intangible assets and prepaid expenses 1,496 9,476 996 3,114 11,767Loss (profit) from sale of fixed assets, net 412 595 486 523 603Finance costs, net 6,975 (1,540) 1,226 (5,987) 2,718Tax expenses on income 42,754 39,595 * 20,598 16,616 * 81,114Changes in derivatives (2,020) 458 (1,523) 304 (1,549)Changes in inventory 14,195 12,850 7,438 8,340 (27,355)

2,756 2,175 957 2,070 217Changes in accounts payable and other creditors (97,760) (53,917) * 35,160 29,646 * 151,896Changes in employee benefits (443) 1,732 (176) 1,764 10,243Income taxes paid , net (66,844) (30,546) (24,240) (7,618) (83,203)

Net cash flows arising from operating activities 43,181 125,563 105,307 117,919 432,322

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (22,946) (22,199) (9,510) (10,522) (38,723)Proceeds from sale of fixed assets 99 93 21 93 183Net cash from subsidiary investment activities - - - - 10,142Investment in intangible assets and prepaid expenses (93) (1,912) - (469) (3,332)Interest received 365 8,553 207 8,133 9,431Other investments, net 67,184 84 47,742 42 (152,641)Dividend received from subsidiaries 52,045 36,309 37,045 36,309 36,309

96,654 20,928 75,505 33,586 (138,631)

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid (157) (167) (69) (132) (284)Repayment of other liabilities (29,494) (21,973) (19,815) (19,718) (32,887)Credit from banking institutions and others, net - - - - -Dividend paid (150,000) (150,000) - (150,000) (150,000)

(179,651) (172,140) (19,884) (169,850) (183,171)

Change in cash and cash equivalents (39,816) (25,649) 160,928 (18,345) 110,520

Cash and cash equivalents at beginning of period 329,037 218,379 128,085 211,064 218,379

Effect of fluctuations in exchange rate

on cash balances (209) (19) (1) (8) 138

Cash and cash equivalents at end of period 289,012 192,711 289,012 192,711 329,037

(*) Reclassified


Changes in debtors and debit balances (including intercompany

balances)

Net cash flows arising from (used in) investing activities

Net cash used in financing activities


17

INVESTMENTS LTD.

Additional Information

18

1. General

The interim separate financial information is disclosed in accordance with regulation 38d of the securities regulations

(Periodic and Immediate Reports), -1970 relating to separate financial information for the company. It should be read

along with the Separate financial Information for the year ending 31 December 2014 and together with Condensed

Consolidated Interim Financial Statements as at 30 June 2015 (Heinafter – “the consolidated financial statements”).

Included in this separate financial information is:

1. The Company – Osem Investments Ltd.

2. Consolidated Companies – companies, including partnerships, whose financial statements are fully

consolidated , directly or indirectly with the company’s financial statements.

3. Held companies – Consolidated subsidaries which the investment in them is included, directly or indirectly, in

the financial stetements on the basis of the balance sheet value.


Report for the second quarter of the year 2015 on the effectiveness

of the internal control over the financial reporting and over the

disclosure according to

Regulation 38C

Please find enclosed herewith the report for the second quarter of the year

2015 regarding the effectiveness of the internal control over the financial

reporting and over the disclosure according to Regulation 38C(a).

The management, with the supervision of the Board of Directors of Osem

Investments Ltd. (hereinafter - the corporation), is responsible for the

establishment and running of adequate internal control mechanism over the

financial reporting and over the disclosure in the corporation.

For this purpose, the management members are:

1. Itzik Saig - CEO

2. Pinhas Kimelman - Deputy CEO of Finance

3. Meir Imber - Deputy CEO of Operations

4. Ofer Green - Deputy CEO and CEO of Noga Ice Cream

5. Nizan Goldberg –CEO of Osem Group Commerce

6. Hagit Adler – CEO of ONP

7. Ori Ben Shai – CEO of Snacks, Bakery, Beverages & Cereal Division

8. Zahava Martonovits – CEO of Culinary Division

9. Billy Yanko – CEO of Bonjour

10. Barak Strozberg – VP of Human Resources

11. Nili Zur – Deputy CEO and CEO of International Division

12. Tzippi Hammer – CEO of New Business Division

13. Avi Ben-Assayag – Deputy CEO. Responsible for the areas of strategy and

business development, finance and budget control, demand planning, long-

term enterprises design, excellence unit, information systems and corporate

marketing.

Internal control over the financial reporting and over the disclosure includes

controls and procedures existing in the Corporation, which were planned by

the CEO and the most senior office holder in the financial section or under

their supervision, or by someone who actually performs the above mentioned

roles, with the supervision of the Board of Directors of the Corporation, which

are designed to provide a reasonable degree of assurance as to the credibility

of the financial reporting and on the preparation of the financial statements in

accordance with the Law, and to ensure that the information that the

Corporation is required to disclose in the reports published is in accordance

with the law, that it was collected, processed, summarized and reported in a

timely manner and in the format prescribed by the law.

The internal control includes, inter alia, controls and procedures that have

been planned to ensure that the information the Corporation is required to

disclose is accumulated and sent to management of the Corporation, including

the CEO and the senior official on the Financial Section or to someone who

actually performs the above mentioned roles, so as to enable the making of

decisions in a timely manner, with regard to the disclosure requirements

Due to its structural limitations, the internal control over the financial

reporting and the disclosure is not designated to provide absolute assurance

that any misleading presentation or omission of information in the statements

will be prevented or will be discovered.

In the Quarterly Report on the effectiveness of the internal control over the

financial reporting and over the disclosure, which was enclosed with the

interim report for the period ended on 31 March 2015 (hereinafter - the last

quarterly report on the internal control), the internal control was found to be

effective.

Until the date of the report, the Board of Directors and the Corporation

management were not made aware of any event or matter where there is cause

to change the evaluation of the effectiveness of the internal control, as set out

in the last quarterly report relating to internal control.

As of date of the report, based on the statement in the last quarterly report on

the internal control, and based on information that has been brought to the

attention of management and the board of directors as mentioned above, the

internal control is effective.

Management statements

(a) Statement of the CEO according to Regulation 38C(d)(1):

Management Statement

Statement of the CEO

I, Itzik Saig, declare that:

1. I have evaluated the quarterly report of Osem Investments Ltd. (hereinafter:

the corporation) for the second quarter of the year 2015 (hereinafter: the

reports).

2. To my knowledge, the reports do not include any incorrect presentation of a

material fact and they do not lack any presentation of a material fact that is

required, so that the presentations included in them, in light of the

circumstances in which these presentations have been included, are not

misleading with regard to the period of the reports

3. To my knowledge, the financial statements and the other financial information

included in the reports properly reflect, from every material aspect, the

financial situation, results of activities and cash flow of the Corporation as of

the dates and for the periods to which the reports refer

4. I have revealed to the auditing accountant of the Corporation, the Board of

Directors and the Audit Committee of the BOD of the Corporation, based on

my most current evaluation of the internal control over financial reporting and

disclosure:

A. All the significant lacks in control and material weaknesses in the

determinations or activation of the internal control mechanism, relating

to the financial reporting and disclosure that might reasonably be

expected to negatively influence the capability of the Corporation to

collect, process, summarize or report the financial information in a

manner that might leave room for doubt as to the credibility of the

financial reporting and the preparation of the financial statements in

accordance with the provisions of the law; and that –

B. Any fraud, whether material or not material, involving the general

manager or anyone directly subordinate to him or involving other

employees who have a significant position in the internal control over

the financial reporting and disclosure.

5. I, alone or together with others in the Corporation:

A. Have determined controls and procedures, or verified the

determination and the existence of controls and procedures under my

supervision, that are designed to ensure, that material information that

refers to the Corporation, including its consolidated companies, as

defined in the Securities Regulations (Preparation of Annual Financial

Reports) - 2010, is brought to my notice by others in the Corporation

and in the consolidated companies, especially during the period of the

preparation of the reports; and that –

B. Have determined controls and procedures, or verified the

determination and existence of controls and procedures under my

supervision, that are designed to ensure in a reasonable manner, the

credibility of the financial reporting and preparation of the financial

reports in accordance with the provisions of the law, and in accordance

with the accepted accounting regulations

C. Have not been informed of any event or matter that has occurred

during the period, between the date of the last quarterly report as of 31

March 2015 and the date of this report, that might be such as to change

the conclusion of the Board of Directors and management with regard

to the effectiveness of the internal control over the financial reporting

and disclosure of the corporation.

The above does not derogate from my responsibility or the responsibility of anyone

else according to the law.

27 August 2015 Signature – Itzik Saig

CEO

(b) Declaration of the most senior office holder in Finance, as

per Regulation 38C(d)(2)

Management Statement

Declaration of the most senior office holder in Finance

I, Pinhas Kimelman, declare that:

1. I have evaluated the interim financial statements and other financial

information included in the interim reports of Osem Investments Ltd.

(hereinafter: the corporation) for the second quarter of the year 2015

(hereinafter: the reports or the interim period reports).

2. To my knowledge, the interim financial statements and the other financial

information included in the reports of the interim periods, do not include any

incorrect presentation of a material fact and they do not lack any presentation

of a material fact that is required, so that the presentations included in them, in

light of the circumstances in which these presentations have been included, are

not misleading with regard to the period of the reports.

3. To my knowledge, the interim financial statements and the other financial

information included in the reports for the interim period, properly reflect,

from every material aspect, the financial situation, results of activities and

cash flow of the Corporation as of the dates and for the periods to which the

reports refer.

4. I have revealed to the auditing accountant of the corporation, the Board of

Directors and the Audit Committee of the BOD of the Corporation, based on

my most current evaluation of the internal control over financial reporting and

disclosure:

A. All the significant lacks in control and material weaknesses in the

determinations or activation of the internal control mechanism, relating

to the financial reporting and disclosure, as it relates to the interim

financial statements and the other financial information included in the

interim reports, that might reasonably be expected to negatively

influence the capability of the Corporation to collect, process,

summarize or report the financial information in a manner that might

leave room for doubt as to the credibility of the financial reporting and

the preparation of the financial statements in accordance with the

provisions of the law; and that –

B. Any fraud, whether material or not material, involving the general

manager or anyone directly subordinate to him or involving other

employees who have a significant position in the internal control over

the financial reporting and disclosure.

5. I, alone or together with others in the Corporation:

A. Have determined controls and procedures, or verified the

determination and the existence of controls and procedures under my

supervision, that are designed to ensure, that material information that

refers to the Corporation, including its consolidated companies as

defined in the Securities Regulations (Preparation of Annual Financial

Reports) 2010, is brought to my notice by others in the Corporation

and the consolidated companies, especially during the period of the

preparation of the reports; and that –

B. Have determined controls and procedures, or verified the

determination and existence of controls and procedures under my

supervision, that are designed to ensure in a reasonable manner, the

credibility of the financial reporting and preparation of the financial

reports in accordance with the provisions of the law, and in accordance

with the accepted accounting regulations

C. Have not been informed of any event or matter that has occurred

during the period, between the date of the last quarterly report as of 31

March 2015 and the date of this report, that relates to the interim

financial statements and any other financial information included in the

interim period reports, that might be such as to change, in my opinion,

the conclusion of the Board of Directors and management with regard

to the effectiveness of the internal control over the financial reporting

and disclosure of the corporation.

The above does not derogate from my responsibility or the responsibility of anyone

else according to the law.

27 August 2015 Signature - Pinhas Kimelman

Deputy CEO of Finance

Documents

Osem Investments Limited › tm-content › uploads › 2015 › 11 › ... · development, economics, control and budget, long term factory planning, Group marketing including the