IDB Holding Corp. Ltd. (TASE:IDBH) unit Clal Finance Batucha Ltd. (TASE:CLFN), held through Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) will again have to restate its full-year financial report for 2008. The company made an error by "not depreciating the balance of goodwill attributable to the company's investment in Clal Finance Underwriting Ltd. in the amount of NIS 16.8 million."
Clal Finance made the write-down after it obtained an external assessment for Clal Finance Underwriting, which valued the company at the same amount as its shareholders' equity, which was NIS 68 million at the end of 2008. Clal Finance booked the value of the subsidiary at NIS 85 million, which was the baseline for the write-down.
The assessor concluded that Clal Finance Underwriting was worth no more than its shareholders' equity. The reasons for this conclusion are not known, since Clal Finance declines to publish the report. This raises the question whether the Israel Securities Authority should compel the company to disclose the report, given the size of the write off as a proportion of its own shareholders' equity.
As a result of the write-off, Clal Finance, run by CEO Shuki Abramovich, will have to restate its financial report for 2008, which will further exacerbate the company's losses from the previously reported NIS 310.5 million to NIS 327.3 million. The company will published its revised financial report for 2008 two weeks after publishing its financial report for the first quarter of 2009.
This is not the first time that Clal Finance is restating its financial report, after previously making an NIS 8 million write-off.
In November 2008, after Clal Finance published its financial report for the third quarter, the Securities Authority ordered the company to write off NIS 80 million from its shareholders equity for the Ilanot mutual funds, which it acquired from Israel Discount Bank (TASE: DSCT) two years earlier.
Errors were also reported in January and March 2008.
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009