Primo Water (PRMW) 8-K Cott Announces Intention to Offer €450 Million of Senior Notes

Exhibit 99.3

INDEPENDENT AUDITOR’S REPORT

To the shareholders of

HYDRA DUTCH HOLDINGS 2 B.V.

We have audited the accompanying consolidated financial statements of Hydra Dutch Holdings 2 B.V. which comprise the consolidated statements of financial position as at December 31, 2015 and 2014, and the consolidated statements of comprehensive Loss, changes in deficit and cash flows for the years ended on those dates and the related summary of accounting policies and other explanatory notes.

Owner’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of those consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements, that are free from material misstatement, whether due to fraud or error.

Auditor responsibilities

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conduct our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and preform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves preforming procedures to obtain audit evidence about amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hydra Dutch Holdings 2 B.V. and its subsidiaries as at December 31, 2015 and 2014 and their financial performance and cash flows for the year ended December 31, 2015 and 2014 in accordance with International Financial Reporting standards (IFRS).

	/s/ Kesselman & Kesselman
Tel-Aviv, Israel	Kesselman & Kesselman,
March 31, 2016	Certified Public Accountants (Isr.)
	A member firm of Pricewaterhouse Coopers International Limited

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel,P.O. Box 50005 Tel-Aviv 6150001 Telephone: +972 -3- 7954555, Fax: +972 -3- 7954556, www.pwc.com/il

F-109

Hydra Dutch Holdings 2 B.V.

Consolidated Balance Sheets

in ‘000 €

	Notes	31.12.2015			31.12.2014
ASSETS
Current assets
Cash and cash equivalents	5		12,524			17,741
Trade receivables—net	6		68,105			60,088
Income tax receivable			2,224			1,165
Receivable from related parties	22		115			93
Prepaid and other assets	7		7,767			10,841
Inventories	8		17,944			14,446
			108,679			104,374
Non-current assets
Property, plant and equipment	9		82,360			71,970
Goodwill	10		164,511			135,789
Other intangible assets	10		91,055			88,114
Deferred tax assets	14		15,956			14,360
Other non-current assets			2,332			2,437
			356,214			312,670
Total assets			464,893			417,044
LIABILITIES
Current liabilities
Borrowings	16		4,767			55,116
Trade accounts payable			36,805			33,083
Current tax liability			4,626			4,921
Other current liabilities	11		44,651			36,127
Customer deposits and prepaid income	12		33,534			30,707
Provisions	13		2,208			3,826
Payable to parent company	22		75			75
			126,666			163,855
Non-current liabilities
Deferred tax liabilities	14		19,178			18,347
Borrowings	16		298,616			204,870
Other non current liabilities			52			69
Provisions	13		1,026			1,128
Liability for employee rights	15		5,250			5,240
Borrowings from shareholders and other related parties	22		57,394			47,792
Derivative financial instruments	17		5,201			5,420
			386,717			282,866
Total liabilities			513,383			446,721
DEFICIT
Share capital	20		—			—
Share premium			13,430			13,430
Other reserves	21		(371	)		(1,038	)
Currency translation adjustment			9,649			(1,222	)
Accumulated deficit			(71,352	)		(40,935	)
			(48,644	)		(29,765	)
Non controlling interests in equity			154			88
Total deficit			(48,490	)		(29,677	)
Total liabilities net of deficit			464,893			417,044

The accompanying notes are an integral part of these consolidated financial statements

Raanan Zilberman Chief Executive Officer	Itamar Eder Chief Financial Officer	Stephane Parised Group Financial Controller
/s/ Raanan Zilberman	/s/ Itamar Eder	/s/ Stephane Parised

F-110

Hydra Dutch Holdings 2 B.V.

Consolidated Statements of Comprehensive Loss

in ‘000 €

	Notes	2015			2014
Revenue			355,816			283,144
Cost of goods sold			(118,349	)		(99,093	)
Gross profit			237,467			184,051
Service expenses			(135,390	)		(106,800	)
Sales & marketing expenses			(35,909	)		(25,933	)
General and administration expenses			(26,446	)		(19,467	)
Amortization of customer relations and tradenames	10		(11,209	)		(8,041	)
Other operating expenses	24		(21,940	)		(16,711	)
Income from operations			6,573			7,099
Financial income	26		3,492			4,701
Financial expenses	26		(40,344	)		(36,882	)
Net financial expenses			(36,852	)		(32,181	)
Loss before taxes on income			(30,279	)		(25,082	)
Taxes on income	27		(72	)		(2,818	)
Net loss			(30,351	)		(27,900	)
Other comprehensive income (loss)—net of taxes:
Items that may be subsequently reclassified to profit or loss:
Currency translation differences			10,871			(475	)
Items that will not be reclassified to profit or loss:
Remeasurements of post employment benefit obligations, net of taxes			667			(888	)
Total other comprehensive income (loss)—net of taxes			11,538			(1,363	)
TOTAL COMPREHENSIVE LOSS			(18,813	)		(29,263	)
Net loss attributable to:
Equity holders of the company			(30,417	)		(27,946	)
Non controlling interest			66			46
			(30,351	)		(27,900	)
Total comprehensive loss attributable to:
Equity holders of the company			(18,879	)		(29,309	)
Non controlling interest			66			46
TOTAL COMPREHENSIVE LOSS			(18,813	)		(29,263	)

The accompanying notes are an integral part of these consolidated financial statements

F-111

Hydra Dutch Holdings 2 B.V.

Consolidated Statements of Cash Flows

in ‘000 €

	Notes	31.12.2015			31.12.2014
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxes on income			(30,279	)		(25,082	)
Adjustment for:
Depreciation and amortization			34,667			26,391
Amortization of capitalized financial costs			5,780			12,761
Financial expenses net, included in loss before taxes on income			30,325			16,122
Loss / (gain) on disposal of property, plant and equipment			(175	)		169
Derivative financial instruments			(219	)		3,297
Result from release of customer deposits			(89	)		(24	)
Other operating items			584			(104	)
Operating cash flow before working capital changes			40,594			33,530
Changes in operating working capital
Decrease (Increase) in Trade receivables			(5,307	)		114
Increase in inventories			(1,974	)		(1,599	)
Decrease in Prepaid and other assets			4,869			815
Increase in Trade accounts payable			993			6,326
Increase (Decrease) in Other current liabilities and Provisions			(3,322	)		165
Balances with related parties and shareholders			820			422
Cash flows generated from operating activities			36,673			39,773
Income tax paid			(4,199	)		(3,695	)
Net cash flows generated from operating activities			32,474			36,078
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (PPE) and software			(24,676	)		(17,239	)
Proceeds from sale of PPE			1,976			1,180
Acquisition of subsidiaries	29		(40,021	)		(40,820	)
Loan to others, net			140			—
Interest received			129			10
Net cash used in investing activities			(62,452	)		(56,869	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings (net of borrowing costs)			142,096			251,092
Repayment of long term borrowings			(104,275	)		(165,907	)
Repayment of other liabilities			(334	)		(349	)
Borrowings from Shareholders			5,200
Repayment to Shareholders including accumulated interests of 3.6 million			—			(44,800	)
Prepaid borrowing costs			—			(1,978	)
Interest paid			(20,570	)		(14,148	)
Net cash provided by financing activities			22,117			23,910
Net increase of cash			(7,861	)		3,119
Effect of exchange rate changes			486			51
Cash and cash equivalents at beginning of year			17,741			14,571
Cash, cash equivalents and bank overdraft at end of period			10,366			17,741

The accompanying notes are an integral part of these consolidated financial statements

F-112

Hydra Dutch Holdings 2 B.V.

Consolidated Statements of Changes in Deficit

in ‘000 €

	Attributable to equity holders of the Company															Total deficit
	Share Capital		Share Premium		Currency translation adjustment			Other reserve			Accumulated Deficit			Non controlling Interest		Total
Balance at January 1, 2014		—		13,430		(747	)		(150	)		(13,035	)		42		(460	)
Change in 2014
Comprehensive Loss:
Remeasurement of post employment obligations		—		—		—			(888	)		—			—		(888	)
Currency translation adjustment		—		—		(475	)		—			—			—		(475	)
Loss		—		—		—			—			(27,900	)		46		(27,854	)
Total comprehensive loss for the period		—		—		(475	)		(888	)		(27,900	)		46		(29,217	)
Balance at 31 December 2014		—		13,430		(1,222	)		(1,038	)		(40,935	)		88		(29,677	)
Balance at January 1, 2015		—		13,430		(1,222	)		(1,038	)		(40,935	)		88		(29,677	)
Change in 2015
Comprehensive income:
Remeasurement of post employment obligations		—		—		—			667			—			—		667
Currency translation adjustment		—		—		10,871			—			—			—		10,871
Loss		—		—		—			—			(30,417	)		66		(30,351	)
Total comprehensive loss for the period		—		—		10,871			667			(30,417	)		66		(18,813	)
Balance at 31 December 2015		—		13,430		9,649			(371	)		(71,352	)		154		(48,490	)

The accompanying notes are an integral part of these consolidated financial statements

F-113

Hydra Dutch Holdings 2 B.V.

Notes to the Consolidated Financial Statements 2015

in ‘000 €

1. General information

Hydra Dutch Holdings 2 B.V. (hereafter—the Company) has been established on 16 May 2013 as Rhone Capital IV LP’s indirect wholly-owned investment vehicle. On the 14th of June 2013 the Company signed an agreement with Eden Springs BV to acquire the entire shareholding and control of the direct wholly-owned subsidiaries of Eden Springs B.V.: Eden Springs Europe B.V. and the Israeli subsidiaries. On 23 October 2013 the transaction was completed and Company entered as a new 100% shareholder of Eden Springs Europe B.V. and Israeli activities.

Since the closing of the acquisition in October 2013 and the recent acquisition of Nestle Water Direct, the Company and its subsidiaries (together—the Group) is active in 19 countries and is 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. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

2.1. Basis of preparation

The Consolidated Financial statements are presented in Euros (€), which is the Group’s functional and presentation currency.

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS). They have been prepared on a historical cost basis except for the following:

• Derivative instrument measured at fair value.

• Defined Benefit Pension Plans—Plan assets measured at fair value.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

2.1.1. Accounting policy and disclosures

a. New standards, amendments and interpretations adopted by the Group

The following amendment has been adopted for the first time for the financial year beginning on or after 1 January 2015:

• IFRS 8—requires disclosure of the judgments made by management in aggregating operating segments and clarifies that a reconciliation of segment assets must only be disclosed if segment assets are reported. The company applied for the first time amendment to IFRS 8 prospectively. Its application had no material effect on the financial statements.

F-114

b. Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group

The following standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2016 or later periods but the Group has not early adopted them:

• IFRS 9—“Financial Instruments” (hereafter—IFRS 9) , addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of FRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the „hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. Currently, the Group is assessing the impact of IFRS 9.

• IFRS 15, „Revenue from contracts with customers’ deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue misrecognized when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. Currently, the Group is assessing the impact of IFRS 15.

• In January 2016, the IASB issued IFRS 16—Leases which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract and replaces the previous leases standard, IAS 17—Leases. IFRS 16 eliminates the classification of leases for the lessee as either operating leases or finance leases as required by IAS 17 and instead introduces a single lessee accounting model whereby a lessee is required to recognize assets and liabilities for all leases with a term that is greater than 12 months, unless the underlying asset is of low value, and to recognize depreciation of leases assets separately from interest on lease liabilities in the income statement. As IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17, a lessor will continue to classify its leases as operating leases or finance leases and to account for those two types of leases differently. IFRS 16 is effective from January 1, 2019 with early adoption allowed only if IFRS 15—Revenue from Contracts with Customers is also applied. Currently, the Group is assessing the impact of IFRS 16.

2.1.2. Consolidation

The consolidated financial statements are a consolidation of the financial statements of the Company and its Subsidiaries. The list of the companies included in these consolidated financial statements is presented in appendix A.

Subsidiaries and business combinations

1. Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the

F-115

ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

2. The Group accounts for business combinations using the acquisition method. The consideration transferred for the acquisition of a subsidiary (hereinafter—  the acquiree) is calculated as a total of fair values of the assets transferred by the group and the liabilities that the Group incurs to the previous owners of the acquiree and the equity rights issued by the Group in a business combination. The consideration transferred includes the fair value of all asset or liability arising from the contingent consideration arrangement. Costs associated with the purchase are recognized in income or loss as incurred.

3. Contingent consideration recognised in a business combination is measured at fair value as of the date of the business combination. Subsequent changes in the fair value of liability for the contingent consideration are recognized in profit or loss.

4. Identifiable assets acquired and liabilities and contingent liabilities assumed by the Group in a business combination (excluding certain exceptions detailed in IFRS 3 “Business Combinations” (hereinafter—IFRS 3R) are initially measured at fair values on the date of acquisition. In each business combination, the Group determines whether to recognize non-controlling interest in the acquiree at fair value or proportionally to the rate of non-controlling interest at the fair value of net identifiable assets of the acquiree. This determination is done for each transaction separately.

5. The excess of transferred consideration, the amount of non-controlling interest in the acquiree and the fair value as of the date of acquisition of any previous interest in the interest of the acquiree beyond the net amount, at the date of acquisition, of identifiable assets acquired and liabilities assumed, all measured as above, as goodwill (see also f. below).

6. Inter-company balances and unrealized gains on transactions between Group companies are eliminated.

7. The accounting policy applied by subsidiaries was changed as needed to ensure consistency with the accounting policy adopted by the group.

2.2. Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Euro (€), which is the Company’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions.

Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses are presented in the income statement within “Financial Income” or “Financial Expenses”.

Foreign exchange gains and losses with respect to financial assets and liabilities that are classified as financial instruments at fair value through profit and loss, are recognized in the statement of income as part of the gain or loss relating to changes in fair value.

F-116

Group companies

The results and financial position of all the Group entities—none of which has the currency of a hyperinflationary economy—that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each income statement are translated at periodic average exchange rates; and

(iii) all resulting exchange differences are recognised first in Other Comprehensive Income and then accumulated as a separate component of equity. On consolidation, exchange differences arising from the transaction of any net investment in Foreign entities are recognised in other comprehensive income until the related foreign investment is disposed of (sold, liquidated, abandoned, repayment of share capital, etc.).

Goodwill and fair value adjustments arising on the acquisition of a subsidiary with a functional currency other than the Euro, are treated as assets and liabilities of the subsidiary and translated at the closing rate of each balance sheet presented.

2.3. Property, plant and equipment

a. An item of property, plant and equipment is measured at cost upon its initial recognition, which includes its purchase price (including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates), costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management).

b. The Group elected the cost method as its accounting policy for the measurement of its property, plant and equipment subsequent to initial recognition.

c. The depreciable amount of each asset is allocated on a systematic basis over its useful life using the straight-line method.

The Group depreciates separately each portion of property, plant and equipment that represents a significant part of the total cost of the item. The estimated useful lives are as follows:

	Years
Buildings		5 - 40 years
Plant, machinery		10 -14 years
Water coolers and containers and bottles		4 - 11 years
Dishwashers, coffee and food machines		7 - 10 years
Computers		3 - 4 years
Office equipment		4 - 17 years
Vehicles		5 - 7 years

Leasehold improvements are amortized by the straight-line method over the term of the lease, which is shorter than the estimated useful life of the improvements.

d. At each financial year-end, the Group reviews the residual value, the useful life and the depreciation method it uses. If there have been significant changes in the expected residual value, the useful life or significant change in the expected pattern of consumption of the future economic benefits embodied in the asset that may indicate that a change in the depreciation method is required, such changes are treated as changes in accounting estimates. In the reported periods, no material changes, as above, have taken place with any material effect on these consolidated financial statements.

F-117

2.4. Intangible assets

a) Goodwill

Goodwill represents the excess of the consideration in a business combination over the Group’s portion of the fair value of the investee underlying net assets, liabilities and contingent liabilities at the date of acquisition, and it is included at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill is tested for impairment once a year, or more frequently, in the presence of events or circumstances indicating a possible impairment in the value of such assets. The carrying value of the cash generating unit (CGU) containing the goodwill is compare to the recoverable amount. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

b) Customer relations

Customer relations have definite useful lives and are stated at cost, less accumulated amortization and impairment losses. Amortization is calculated using the straight-line method based on the estimated useful lives of customer relations.

c) Tradenames

Tradename were acquired in a business combination and are recognized at fair value at the acquisition date.

Tradenames are presented at cost less accumulated amortization, and are amortized over their estimated useful lives, using the straight line method.

d) Computer software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives.

Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

- it is technically feasible to complete the software product so that it will be available for use;

- management intends to complete the software product and use or sell it;

- there is an ability to use the software product;

- it can be demonstrated how the software product will generate probable future economic benefits;

- adequate technical, financial and other resources to complete the development and to use or sell the software product is available

- The expenditure attributable to the software product during its development can be reliably measured.

Direct attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other software development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

F-118

Computer software development costs recognised as assets are amortised over their estimated useful lives, which does not exceed four years.

2.5. Impairment of non-monetary assets

Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-monetary assets other than goodwill that have been impaired are reviewed for possible reversal of the impairment at each reporting date.

2.6. Current and deferred income tax

a. The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operates and generate taxable income. The Group’s management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

b. The Group fully recognizes deferred taxes, using the liability method, on temporary differences arising between the carrying amounts in the consolidated financial statements of assets and liabilities and their tax bases. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

c. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

d. Deferred income taxes are not provided on temporary differences arising on investments in subsidiaries, since the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

e. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.7. Revenue recognition

The Group’s revenues are measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and when specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

F-119

a) Sale of goods

Revenue from sale of goods is recognized when all the following conditions have been satisfied, which generally occurs when goods are delivered to the customer : (a) the significant risks and rewards of ownership of the goods have been transferred to the buyer; (b) the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue can be measured reliably; (d) it is probable that the economic benefits associated with the transaction will flow to the Group; and (e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Group’s products are sometimes sold on quantity discount terms. Sale revenues are recognized on the basis of the price stated in the contract after deduction of an estimate as of the date of the sale of the quantity discount. The Group’s accumulated experience serves to facilitate the determination of estimates and provisions in relation to discounts. The estimation of quantity discounts is based on the degree of expected sales for the year.

b) Revenue from rental of water coolers and coffee machines

Revenue from rental of water coolers and coffee machines are recognized rateably over the rental period.

2.8. Financial assets

The group classifies its financial assets in the following categories:loans and receivables

Cash and cash equivalents include cash in hand, short-term bank deposits, other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within bank borrowings among current liabilities on the balance sheet.

Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand and deposits held at call with banks.

Trade receivables are carried at original invoice amount less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the income statement within general and administrative expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against general and administrative expenses in the statements of comprehensive income.

2.9. Inventories

Inventories are valued at the lower of cost or net realization value.

The cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. The Group allocates fixed production overheads to the cost of conversion based on the normal capacity of the production facilities.

The cost of inventories is determined as follows:

- Raw materials, auxiliary supplies, packaging materials and spare parts: on the weighted average basis.

- Finished products: on the basis of production costs.

F-120

- Raw material and auxiliary supplies: on the weighted average basis.

- Labor and indirect expenses: on the weighted average basis.

- Purchased products: on the “first-in, first-out” basis.

- Spare parts: on the weighted average basis.

2.10. Share capital

Ordinary shares are classified as equity.

Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction from the issuance proceeds.

2.11. Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.12. Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the amounts initially recognised and the redemption value is recognized in the income statement over the term of the borrowings using the effective interest method.

Fees paid for a credit facility is recognized as transaction costs that are attributable to the relevant loan if it is probable that part or all the facility will be utilized. In such case, the recognition of fee is deferred until money is actually drawn from the facility. If no evidence exist that part or all of the loan facility is utilized, the fee is capitalized as prepayment for financing services, and is depreciated over the period of the relevant loan facility.

An exchange between an existing borrower and lender of debt instruments with substantially different terms shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability at fair value. Similarly, a substantial modification of the terms of an existing debt instrument or part thereof is accounted for as an extinguishment of the original financial liability and recognition of a new financial liability.

If the modification or exchange does not cause a material change of the liability, the treatment applied is a change of the terms of the existing liability without an immediate impact of profit or loss but spread throughout the remaining life of the liability.

Terms are substantially different if the discounted present value of the cash flows under the new instrument is at least 10% different from that of the remaining cash flows of the original financial liability.

2.13. Employee benefits

a) Pension and retirement benefit obligations

Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has both defined benefit and defined contribution plans.

Defined contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

F-121

Group purchases insurance policies and contributes to pension benefit funds against the obligation to pay pension benefits. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due.

Defined benefit plans

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income (loss) in the period in which they arise.

Past service costs are recognized immediately in income.

Amounts funded for retirement benefits are measured at fair value. These amounts funded represent “plan assets”, as defined by IAS 19, and therefore deduced from the balance of retirement benefit obligation for balance sheet presentation.

b) Vacation and recreation benefits

Employees in Israel are legally entitled to vacation and recreation benefits, both computed on an annual basis. The Group accumulates a liability and expense due to vacation and recreation pay, based on the benefits that have been accumulated for each employee.

c) Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer.

d) Profit-sharing and bonus plans

The Group recognises a liability and an expense for bonuses and profit-sharing. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.14. Share-based payment

With respect to equity-settled grants to employees, the value of the labor services received from them in return, is measured on the date of grant, based on the fair value of the equity instruments granted to the employees. The value of the transactions, measured as aforesaid, is expensed over the period during which the employee’s right to exercise or receive the underlying equity instruments vests; commensurate with every periodic recognition of the expense, a corresponding increase is recorded as a capital surplus, included under the Group’s equity. Non-

F-122

market performance and service conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the Company revises it estimates of the number of options that are expected to vest. The Company recognizes the impact of the revision to original estimate, if any, in the statements of operations, with a corresponding adjustment to equity or liability, as applicable.

2.15. Provisions

Provisions are recognised when:

- the Group has a present legal or constructive obligation as a result of past events;

- it is probable that an outflow of resources will be required to settle the obligation;

- and the amount has been reliably estimated.

Restructuring provisions comprise lease termination penalties and employee termination payments; they are recognised in the period in which the Group becomes legally or constructively committed to payment. Employee termination benefits are recognised only after either an agreement is in place with the appropriate employees representatives specifying the terms of redundancy and the number of employees affected, or after individual employees have been advised of the specific terms.

Provisions are not recognized for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

2.16. Derivatives financial instruments

Derivative instruments are recognised in the balance sheet at fair value. The derivative instruments utilized by the Group mitigate the exposures to variability in cash flows associated with variable rate borrowings. Since these derivative instruments have not been designated as hedging instruments for accounting purposes, periodic changes in their fair value are recognized in the consolidated statement of income.

2.17. Leases

The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other non-current liabilities. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each lease period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

When the Group is a lessor in an operating lease, the leased assets are included in the statements of financial position based on their nature, and are depreciated over their estimated useful lives. Rental income is recognized ratable over the lease term.

F-123

2.18. Customer deposits

The Group receives deposits from customers at the initiation of a contract and during the contractual period. Such deposits are disclosed in the balance sheet as current liabilities in “Customer deposits”.

Unclaimed customer deposits in respect of water containers and coolers are derecognised from the balance sheet and recorded in the income statement in “Other Operating Income” on a customer by customer basis, when the client is legally released from the primary responsibility for the liability, by law or by the customer.

2.19. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief executive officer.

3. Financial instruments and risk management

The Group’s activities expose it to a variety of financial risks: foreign currency exchange risk, cash flow interest rates risk, credit risk and liquidity risk. The Group’s 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.

3.1 Financial risk management

a. Market risks

1. Foreign currency exchange risk (FX)

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the following currencies: Swedish Kroner, Danish Kroner, Norwegian Kroner, Polish Zloty, British Pound, Swiss Franc, US Dollar, Russian Rouble and Israeli new shekel. The Israeli activity is also exposed mainly to foreign currency exchange risk on imported goods and on charges to other companies within the Group for IT services.

The company has certain investments in foreign operations, whose net assets are exposed to currency translation risk—currency changes would affect the book value of assets and liabilities, with corresponding effect equity through the currency translation account. The following companies are concerned: Sweden, Denmark, Poland, United Kingdom, Norway, Switzerland, Russia and Israel. Management has set up a policy to require Group companies to have local borrowings in their local currency and hence these positions, at consolidated level, are not sensitive to changes in exchange rates.

At 31 December 2015, there are a number of intercompany loans between companies with different functional currencies. The table below details the Group’s sensitivity to a 10% decrease/increase in the currency pairs involved in the intercompany loans.

31.12.2015 Currency pairs	Effect on profit of + movements			Effect on profit of - movements
SEK / EUR		(370	)		370
CHF / EUR		(948	)		948
EUR / GBP		(4,042	)		4,042
PLN / EUR		(776	)		776
ILS / EUR		(1,701	)		1,701
EUR/RUB		(427	)		427
Total		(8,264	)		8,264

F-124

b. Cash flow interest rate risk

As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest rate risk arises from long-term borrowings and finance leases. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. During 2015, the Group’s borrowings amounting to 191 million were at variable rates (Prime linked rates, and mainly EURIBOR) and were denominated mainly in EUR.

The sensitivity analysis calculates the impact from changes in interest rates for liabilities that represent the major interest-bearing positions. The computation is not intended to represent actual gains or losses to be incurred by the Group. The Company cannot predict actual future movements in such market rates and it does not claim that these results are indicative of future movements in such market rates or to be representative of any actual impact that future changes in market rates may have on the Company’s future results of operations or financial position.

At 31 December 2015, if interest rates had been 1% higher/lower with all other variables held constant, post-tax profit for the period would have been lower/higher by € 145 on EUR denominated borrowings (taking into account the effect of the hedging instrument), as a result of higher/lower interest expense on floating rate borrowings.

At 31 December 2015, if the SWAP rates negotiated on the markets had been 1% higher/lower, with the same variables than the signed swap, the fair value of the instrument would have been € 4 854 higher/lower but would still be disclosed as a liability.

c. Credit risk

Credit risk arises from credit exposure to customers, including outstanding receivables and committed transactions. The Group has no significant concentration of credit risk other than from its key distributor Jafora Tabori, see below. The Group deals only with a limited number of banks with secure credit ratings and has policies that limit the amount of credit exposure to any one financial institution. In the HOD business there is a high number and diversity of customers, with policies in place to ensure that sales of products and services are made to customers with an appropriate credit history.

The Company’s maximum exposure for net credit is with Jafora Tabori Ltd. (hereafter—Jafora), the Group’s key distributor (less the amounts that the Company owes to Jafora), which amounted to € 6,475 as of 31 December 2015. Jafora does not put up collateral against the credit it receives.

d. Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit lines available.

Management monitors rolling forecasts of the Group’s liquidity reserve (comprising undrawn borrowing facility) and cash on the basis of expected cash flow.

F-125

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.

The Group has a regular number of customers making deposits as a guarantee of the rental equipment at the customer premises. The rental contracts have no contractual maturity dates and it is impractical to calculate a maturity analysis.

Financial liabilities	Less than 1 year			Between 1 and 2 years			Between 2 and 5 years			More than 5 years			Total
At 31 December 2015
Borrowings		22,277			22,121			334,978			—			379,376
Capital leases		1,203			1,144			1,956			138			4,441
Trade accounts payables		36,805			—			—			—			36,805
Customer deposits		16,383			—			—			3,189			19,572
Borrowing and Payable to related parties and shareholder		—			—			84,543			—			84,543
Other current liabilities		44,651			—			—			—			44,651
Total		121,319			23,265			421,477			3,327			569,388
Financial liabilities	Less than 1 year			Between 1 and 2 years			Between 2 and 5 years			More than 5 years			Total
At 31 December 2014
Borrowings		70,731			17,531			233,566			—			321,828
Capital leases		1,218			959			2,344			315			4,836
Trade accounts payables		33,083			—			—			—			33,083
Customer deposits		14,373			—			—			3,139			17,512
Borrowing and Payable to related parties and shareholder		—			—			—			76,291			76,291
Other current liabilities		38,720			—			—			—			38,720
Total		158,125			18,490			235,910			79,745			492,270
Interest rate Swaps	Less than 6 months			Between 6 and 12 months			Between 1 and 2 years			Between 2 and 5 years			Total
At 31 December 2015
Outflow		(798	)		(798	)		(1,521	)		(1,721	)		(4,838	)
Inflow		(111	)		(111	)		(211	)		(239	)		(672	)
Interest rate Swaps	Less than 6 months			Between 6 and 12 months			Between 1 and 2 years			Between 2 and 5 years			Total
At 31 December 2014
Outflow		(798	)		(798	)		(1,596	)		(3,242	)		(6,434	)
Inflow		66			66			133			270			535

e. Capital Risk Management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

F-126

The Group monitors its capital structure on the basis of a leverage ratio, defined as: net debt divided by operating EBITDA. Net debt is calculated as the total of the consolidated short-term and long-term borrowings, less cash and cash equivalents. Operating EBITDA is calculated as earnings before other operating expenses, interest, taxes, depreciation and amortization paid to shareholders.

f. Fair value estimation

At 31 December 2015, the carrying value less impairment provision of all financial assets and liabilities approximate their fair values.

Following is an analysis of the financial instruments measured at fair value, by valuation methods. The different levels have been defined as follow:

- 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).

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The following table presents the Group’s assets and liabilities that are measured at fair value:

	2015			2014
	Level 2			Level 2
Liabilities
Derivatives Financial Instruments:
Hedging derivatives		(5,201	)		(5,420	)
Total Liabilities		(5,201	)		(5,420	)

3.2. Financial instruments by category

The Group’s accounting policy with respect to financial instruments was applied in relation to the following categories:

3.2. Financial instruments at 31 December 2015 by category

	December 31, 2015		December 31, 2014
Loans and receivables
Assets:
Trade and other receivables excluding prepayments		76,127		69,431
Cash and cash equivalents		12,524		17,741
Total		88,651		87,172

F-127

At 31 December 2015	Liability at fair value through profit and loss			Other financial liability at amortized cost			Total
Liabilities:
Borrowings					(303,383	)		(303,383	)
Derivative financial instruments		(5,201	)					(5,201	)
Accounts payable and others					(81,583	)		(81,583	)
Deposits from customers					(19,572	)		(19,572	)
Borrowings from shareholders and other related parties					(62,161	)		(62,161	)
Total		(5,201	)		(466,699	)		(471,900	)

At 31 December 2014	Liability at fair value through profit and loss			Other financial liability at amortized cost			Total
Liabilities:
Borrowings					(259,986	)		(259,986	)
Derivative financial instruments		(5,420	)					(5,420	)
Accounts payable and others					(71,873	)		(71,873	)
Deposits from customers					(17,512	)		(17,512	)
Borrowings from shareholders and other related parties					(47,774	)		(47,774	)
Total		(5,420	)		(397,145	)		(402,565	)

4. Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. Estimates and judgments are continually evaluated, and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.5. The recoverable amounts of cash generating units have been determined based on fair value less costs to sell calculations. These calculations require the use of estimate.

Purchase price allocation

Purchase price allocations conducted by the Group with respect to business combinations entered into, require the use of significant estimates pertaining to the calculation of the fair value of assets acquired and liabilities assumed, primarily identifiable intangible assets.

Deferred tax assets

The Group is subject to income tax in numerous jurisdictions. Significant judgment is required in determining the portion of tax losses carried forward which can be offset against future taxable profit. In order to assess if there is any future benefit, forecasts are made of the future taxable profits by legal entity. Actual tax outcomes could vary significantly from the amounts that were initially recorded. Such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made (Note 14).

F-128

Useful lives of depreciable and amortizable assets

Group management estimates the useful asset lives and the related depreciation and amortization costs in respect of all its fixed assets and intangible assets. The estimate is based on the expected life cycle of the Group’s products. Estimates may vary significantly commensurate with changes in customer installations and quits and other technological changes.

Provision for contingencies

Estimating provisions management considers the likelihood that cash resources will indeed be diverted towards a settlement of the liabilities, and also considers its estimate of the present value of the cash flows expected to be required for the settlement of existing liabilities.

5. Cash and Cash equivalents

	31.12.2015		31.12.2014
Cash at bank and in hand		10,482		17,741
Short term deposits (less than 3 months)		2,042		—
		12,524		17,741

Cash and cash equivalents include the following for the purposes of the statement of cash flows:

	31.12.2015			31.12.2014
Cash and cash equivalents		12,524			17,741
Bank overdrafts		(2,158	)		—
		10,366			17,741

6. Trade receivables—net

	31.12.2015			31.12.2014
Trade receivables		73,774			65,469
Check receivable and credit card		3,365			3,094
Provision for impairment		(9,034	)		(8,475	)
Net trade receivables		68,105			60,088

Trade receivables that are less than three months past due are not considered impaired. As of 31 December 2015, trade receivables amounting to € 16,418 were past due but not impaired. These relate to a number of customers for whom there is no recent history of default. The ageing of these receivables is as follows:

Age analysis of trade receivables past due but not impaired

	31.12.2015		31.12.2014
0 - 90 days		10,956		9,738
90 - 180 days		2,552		2,049
180 - 360 days		1,476		1,231
> 360 days		1,434		811
Trade receivables—past due but not impaired		16,418		13,829

F-129

The creation and usage of provision for impaired receivables have been included in “General and administrative expenses” in the statement of comprehensive income. Movements of the group provision for impairment of trade receivables are as follows:

Movements on the provision for impairment of trade receivables

	31.12.2015			31.12.2014
Provision amount at January 1		(8,475	)		(8,990	)
Provision for receivables impairment		(828	)		(1,883	)
Receivables written off during the year as uncollectible		506			2,438
Other movements		(33	)		(615	)
Unused amounts reversed		222			616
Currency translation adjustments		(426	)		(41	)
Provision amount at December 31		(9,034	)		(8,475	)

7. Prepaid and other assets

	31.12.2015		31.12.2014
Prepaid and deferred expenses		2,192		2,103
Accrued income		868		1,148
Advances to suppliers and guarantee deposits		890		559
Restricted cash		456		60
VAT receivable		183		424
Other current assets		3,178		6,547
		7,767		10,841

8. Inventories

	31.12.2015			31.12.2014
Raw materials (caps, labels)		1,513			1,017
Spare parts		4,031			2,869
Auxiliary and packaging materials		4,718			4,327
Finished goods (water, coffee machines)		7,324			5,904
Other Inventories		426			367
Total Gross Inventories		18,012			14,484
Provision for impairment		(68	)		(38	)
		17,944			14,446

F-130

9. Property, Plant and Equipment

	Land & buildings			Vehicles			Plant, machinery			Distribution equipment			Office equipment			Leasehold improvement			Total
At 01.01.2014		10,934			4,819			16,013			30,503			1,963			1,780			66,012
Business combinations		900			288			104			5,080			594			—			6,966
Currency translation adjustments		46			76			226			231			27			22			628
Additions		97			1,885			728			12,219			809			544			16,282
Purchase price allocation adjustment		(549	)		—			—			—			—			—			(549	)
Transfers		(175	)		(125	)		(298	)		478			120			—
Disposals		—			(135	)		(16	)		(1,064	)		(115	)		—			(1,330	)
Depreciation		(560	)		(1,334	)		(1,890	)		(10,924	)		(976	)		(355	)		(16,039	)
Net book amount at 31.12.2014		10,693			5,474			14,867			36,523			2,422			1,991			71,970
At 31.12.2014
Cost		11,387			7,097			17,297			50,173			3,637			2,431			92,022
Accumulated depreciation		(694	)		(1,623	)		(2,430	)		(13,650	)		(1,215	)		(440	)		(20,052	)
Net book amount		10,693			5,474			14,867			36,523			2,422			1,991			71,970

	Land & buildings			Vehicles			Plant, machinery			Distribution equipment			Office equipment			Leasehold improvement			Total
At 01.01.2015		10,693			5,474			14,867			36,523			2,422			1,991			71,970
Business combinations (note 29)		910			1,884			332			2,350			133			—			5,609
Currency translation adjustments		630			510			1,456			1,141			103			220			4,060
Additions		481			1,011			1,792			19,432			1,200			248			24,164
Transfers		94			—			140			(160	)		(74	)		—
Disposals		(498	)		(76	)		(4	)		(1,481	)		(129	)		—			(2,188	)
Depreciation		(696	)		(2,119	)		(2,125	)		(14,569	)		(1,304	)		(441	)		(21,254	)
Net book amount at 31.12.2015		11,614			6,684			16,458			43,235			2,351			2,018			82,360
At 31.12.2015
Cost		13,004			10,426			21,013			71,454			4,870			2,899			123,666
Accumulated depreciation		(1,390	)		(3,742	)		(4,555	)		(28,219	)		(2,519	)		(881	)		(41,306	)
Net book amount		11,614			6,684			16,458			43,235			2,351			2,018			82,360

Total depreciation expense for the year ended December 31, 2015 amounts to € 21,254 and is allocated as follows: € 16,833 in costs of goods sold, € 4,069 in sales, marketing and service expenses, € 310 in general and administration expenses and € 42 in other operating expenses.

Total depreciation expense for the year ended December 31, 2014 amounts to € 16,039 and is allocated as follows: € 12,788 in costs of goods sold, € 2,578 in sales, marketing and service expenses, € 596 in general and administration expenses and € 77 in other operating expenses.

F-131

10. Goodwill and other intangible assets

	Goodwill		Customers relations			Tradenames			Other			Total
At 01.01.2014		103,000		64,707			13,564			4,311			185,582
Business combinations		31,359		12,426			177			2,209			46,171
Amortization		—		(6,897	)		(1,144	)		(2,311	)		(10,352	)
Currency translation adjustments		1,431		881			120			70			2,502
Net book amount at 31.12.2014		135,790		71,117			12,717			4,279			223,903
At 31.12.2014
Cost		135,790		79,105			14,075			7,110			236,080
Accumulated amortization and impairment		—		(7,988	)		(1,358	)		(2,831	)		(12,177	)
Net book amount		135,790		71,117			12,717			4,279			223,903

	Goodwill			Customers relations			Tradenames			Other			Total
At 01.01.2015		135,790			71,117			12,717			4,279			223,903
Business combinations (note 29)		25,814			8,173			1,980			81			36,048
Additions		412			180			—			2,090			2,682
Decrease		(295	)		(374	)		—			(109	)		(778	)
Transfers		(485	)		485			126			(126	)
Amortization		—			(9,077	)		(2,080	)		(2,255	)		(13,412	)
Currency translation adjustments		3,275			2,774			627			447			7,123
Net book amount at 31.12.2015		164,511			73,278			13,370			4,407			255,566
At 31.12.2015
Cost		164,511			90,343			16,808			9,493			281,155
Accumulated amortization and impairment		—			(17,065	)		(3,438	)		(5,086	)		(25,589	)
Net book amount		164,511			73,278			13,370			4,407			255,566

Goodwill Impairment Test 2015

During the fourth quarter the Group conducted its annual goodwill impairment test. Following the impairment test, the Group recorded no impairment charge. An operating segment-level summary of the goodwill allocation is presented below:

Valuation of recoverable amounts

The recoverable amount of all CGUs has been determined based on fair value less cost to disposed calculations (“income approach”, using the DCF method). This method uses post-tax cash flow projections based on a five-year business plan approved by management. Cash flows beyond the five-year plan are extrapolated using long-term growth rates.

31.12.2015

CGU	UK		France		Poland		Swiss		Spain		NL		Nordics		Baltics		Israel		Russia		Germany		Portugal
Carrying amounts		53,341		35,018		23,264		22,857		8,827		13,189		17,449		4,971		53,639		35,483		21,795		2,555
CGU	UK		France		Poland		Swiss		Spain		NL		Nordics		Baltics		Israel		Russia		Germany		Portugal
Recoverable amounts		72,269		48,638		27,175		42,716		18,228		18,662		25,737		5,694		56,659		38,511		26,310		3,978

F-132

31.12.2014

CGU	UK		France		Poland		Swiss		Spain		NL		Nordics		Baltics		Israel
Carrying amounts		51,791		35,589		25,385		21,337		9,650		3,143		16,907		4,866		53,283
CGU	UK		France		Poland		Swiss		Spain		NL		Nordics		Baltics		Israel
Recoverable amounts		59,362		41,646		25,665		27,206		13,476		6,915		21,046		4,898		58,939

Key assumptions

The key assumptions used for calculating the recoverable amounts during the 2015 test are as follows:

31.12.2015

Key assumptions

CGU	UK			France			Poland			Swiss			Spain			NL			Nordics			Baltics			Israel			Russia			Germany			Portugal
Long term growth rates		2.0	%		2.0	%		1.5	%		1.5	%		1.5	%		1.5	%		1.3	%		1.5	%		2.0	%		1.5	%		1.5	%		1.5	%
Post tax discount rates		13.0	%		12.0	%		12.5	%		11.0	%		12.5	%		12.0	%		12.0	%		12.0	%		13.0	%		16.0	%		11.5	%		13.5	%

31.12.2014

Key assumptions

CGU	UK			France			Poland			Swiss			Spain			NL			Nordics			Baltics			Israel
Long term growth rates		2.0	%		2.0	%		2.0	%		2.0	%		2.0	%		2.0	%		1.5	%		1.0	%		2.0	%
Post tax discount rates		13.5	%		12.5	%		13.0	%		12.0	%		14.0	%		15.0	%		13.0	%		14.0	%		13.0	%

Growth rates—weighted average growth rates are based on management assumptions for each specific CGU and are consistent with forecasts included in industry reports.

Discount rates—the expected net cash flows are discounted by using specific post-tax discount rates for each market. Discount rates reflect the risk factors specific to each relevant CGU.

The fair value of the CGU is level 3 measurement.

Acquisition of Goodwill and Customer Portfolio

During 2015, the Group made 2 acquisitions which explains the increase of the Goodwill and the Customer Relations. The purchase price is provisional.

Nestlé Water Direct Russia LLC (RUS):100% of the shares were acquired on 02.02.2015 for a cash consideration of € 40,498. The customer base comprises of water customers. The goodwill of € 25,814 arises from expected synergies.

Water Company (SWE):On March 1st, 2015, the water customer base was acquired for a cash consideration of € 180. No goodwill was recorded.

F-133

11. Other current liabilities

	31.12.2015		31.12.2014
VAT and other taxes		5,157		3,904
Employees, Social security and related payables		14,340		11,653
Liabilities arising from acquisitions		113		1,134
Accrued expenses		21,973		16,961
Others		3,069		2,475
		44,651		36,127

12. Customer deposits and prepaid income

	31.12.2015		31.12.2014
Customer deposits		19,572		17,512
Prepaid Income		13,961		13,195
		33,534		30,707

13. Provisions

	Litigation			Integration and restructuring			Retail incentive			Others			Total
At 01.01.2015		1,148			341			3,017			448			4,954
Acquisition of subsidiaries (note 29)		—			—			—			—			—
Additional provisions		—			940			1,320			98			2,358
Unused amounts reversed		(337	)		(8	)		—			(12	)		(357	)
Used during year		(5	)		(721	)		(3,306	)		—			(4,032	)
Currency translation adjustments		(2	)		2			309			2			311
At 31.12.2015		804			554			1,340			536			3,234

Provisions for litigation

See Note 18.

Provisions for integration and restructuring

The provision for integration and restructuring includes mainly severance costs for employees in Germany and Netherlands whose contracts have been terminated. The litigation refers to a dispute with a former landlord in France, the former employee in Poland and in Germany. The Retail incentive include provision for retail incentives, which arose in the ordinary course of the business of the Israeli activities.

14. Deferred income taxes

	31.12.2015			31.12.2014
Deferred income tax asset to be recovered after more than 12 months		(13,813	)		(13,157	)
Deferred income tax asset to be recovered within 12 months		(2,143	)		(1,203	)
Deferred income tax assets:		(15,956	)		(14,360	)
Deferred income tax liability to be recovered after more than 12 months		19,049			18,289
Deferred income tax liability to be recovered within 12 months		129			58
Deferred income tax liabilities:		19,178			18,347
Deferred income tax liabilities (net)		3,222			3,987

F-134

	2015			2014
The gross movement on the deferred tax account for the period is as follows:
Beginning of the year		3,987			4,476
Currency translation adjustments		195			6
Business Combination (note 29)		1,941			628
Charged to other comprehensive income		176			(1,587	)
Credited to income statement (Note 27)		(3,077	)		463
End of year		3,222			3,986

At December 31, 2015 the Group had losses carried forward of € 160.6 million for which € 48.9 million deferred tax asset was recognized. € 149.3 million have no expiration term; the remaining € 11.3 million losses carried forward will expire in years 2016 to 2024. No tax losses have been considered for Hydra Dutch Holdings 2 B.V. The movement in deferred income tax assets and liabilities during the period is as follows:

Taxable temporary differences (Deductible temporary differences)

	Accelerated Tax Depreciation			Intangibles			Others			Total
At 01.01.2014		3,037			17,413			77			20,527
Charged (credited) to income statement		(32	)		(1,394	)		165			(1,261	)
Charged (credited) to equity		—			(1,050	)		—			(1,050	)
Business Combination		—			637			—			637
Exchange differences		(60	)		171			(617	)		(506	)
At 31 December 2014		2,945			15,777			(375	)		18,347

	Provisions			Tax losses			Others			Total
At 01.01.2014		(888	)		(14,370	)		(793	)		(16,051	)
Credited (charged) to income statement		(186	)		2,425			(512	)		1,726
Credited (charged) to equity		2			(12	)		(528	)		(538	)
Business Combination		(10	)		—			—			(10	)
Transfer		—			—			—			—
Exchange differences		10			(93	)		596			513
At 31 December 2014		(1,072	)		(12,050	)		(1,237	)		(14,360	)

	Accelerated Tax Depreciation			Intangibles			Others			Total
At 01.01.2015		2,640			15,477			230			18,347
Credited to income statement		(1,092	)		(461	)		33			(1,520	)
Business Combination		189			1,752			—			1,941
Transfer		276			(403	)		—			(127	)
Currency translation adjustments		53			512			(28	)		537
At 31 December 2015		2,066			16,877			235			19,178

	Provisions			Tax losses			Others			Total
At 01.01.2015		(1,078	)		(11,702	)		(1,580	)		(14,360	)
Credited (charged) to income statement		51			(2,125	)		517			(1,557	)
Credited to other comprehensive income		—			—			176			176
Business Combination		96			—			(96	)		—
Transfer		—			127			—			127
Currency translation adjustments		(119	)		(85	)		(138	)		(342	)
At 31 December 2015		(1,050	)		(13,785	)		(1,121	)		(15,956	)

F-135

15. Employee rights

A.The Group contributes to retirement benefit schemes in conformity with the laws and usual practices of countries where the Group operates. As a result of contributions paid under such schemes to private or state sponsored pension funds, the companies have no significant actuarial liability, with the exception of Switzerland and Israel.

B.The Israeli companies’ pension and severance pay obligation to its employees in Israel under section 14 to the Israel Severance Pay Law is covered by regular contributions to defined contribution plans. The amounts funded as above are not reflected in the balance sheet.

C.The Israeli companies have the obligation to pay severance pay to their employees, constituting defined benefit plans. In respect of this obligation, the companies have amounts funded and retirement insurance coverage (known in Israel as senior employees insurance) to which subsidiaries contribute. The amount of netseverance pay obligation, as presented in the balance sheets for December 31, 2015, reflects the difference between the obligation for severance pay and the severance pay plan asset.

D. Management Equity Plan

On October 23, 2013, the closing date of the acquisition of Eden Holdings, certain management members (“Grantees”) were allotted shares in Hydra Luxembourg Holdings S.a.r.l. (“Hydra Luxembourg”), who indirectly controls the Company which was invested by the Grantees in the share capital of Hydra Luxembourg (the “Management Investment”). The initial allotment is 11% of the share capital of Hydra Luxembourg, with an additional one percent to be allotted to the Grantees if minimum EBITDA targets would be met over a pre defined period following the date of grant. The agreement also defines the method of calculation of the returns the allotted shares would be entitled to out of the total returns of Hydra Luxembourg.

The plan prescribes a graded vesting schedule which ends after five years from the date of grant. Under the plan, the Grantees would be entitled to receive a cash consideration upon leaving the Company, which would be determined based on whether the shares have vested and whether they would meet the definition of a “good leaver” in the plan. Grantees who leave the Company in the future would receive a cash consideration equal to the fair value for their vested shares, provided the definition of a “good leaver” is met. Otherwise, a leaver would receive a cash consideration equal to the lower of his initial investment and fair value of the shares allotted to him.

The Company has accounted for the transaction under the provisions of IFRS 2, Share Based Payment. Since the fair value of the allotted shares approximated the Management Investment amount, the fair value of the granted benefit was calculated to approximate zero and, thus, no compensation expenses are to be recognized in the Company’s consolidated financial statements.

E. Swiss Defined Benefit Plans

Apart from the social security plans fixed by the law, the Swiss entities (Eden Springs (Switzerland) SA and Eden Springs International SA sponsor two independent pension plans.

All employees are covered by these plans, which are defined benefit plans. Liabilities and assets are revised periodically by an independent actuary.

F-136

F. Pension benefits

The amounts recognised in the balance sheet are determined as follows:

	31.12.2015			31.12.2014
Present Value of funded obligations		21,958			19,206
Fair value of plan assets		(16,709	)		(13,966	)
Liability in the balance sheet		5,250			5,240

The amounts recognised in the income statement are as follows:

	2015			2014
Current service cost		1,644			1,268
Interest cost		168			159
Others		(1,135	)		(904	)
Total		677			523

Split of the total charges:

	2015		2014
Cost of goods sold		57		62
Selling and Marketing expenses		356		257
Selling expenses		90		152
Administrative expenses		75		(41	)
Finance expenses		99		93
		677		523

The main assumptions used for the calculation of the pension liabilities and the defined benefit obligation for the year 2015 are the following:

	2015	2014
	%	%
Discount rate	1.00 - 4.80	2.30 - 5.30
Expected return on plan asset	4.00 - 4.70	3.90 - 5.20
Future salary increases	0.50 - 3.50	1.00 - 3.50
Future pension increase	0.25 - 0.50	0.20 - 0.50
	%	%
Turnover	0% - 64%	0% - 64%
Inflation rate	1.70% - 2.80%	1.70% - 2.80%

F-137

16. Borrowings

	31.12.2015		31.12.2014
Non-Current
Senior secured notes and bank borrowings, net		295,378		201,252
Finance lease liabilities		3,238		3,618
		298,616		204,870
Current
Bank borrowings, net		2,158		1,000
Finance lease liabilities		1,203		1,218
Loan from minority, net of minority debt		—		319
Other borrowings		1,406		52,579
		4,767		55,116
Total borrowings		303,383		259,986

On 29 April 2014, Hydra Dutch Holdings 2 BV successfully issued a Floating Rate Senior Secured Notes of EUR 210 million traded on the Luxembourg Stock exchange, as well as a Revolving Credit Facility of EUR 45 mio. At the same time the existing bank financing facilities were repaid.

The Senior Secured Note is issued with a 3-months EURIBOR plus 5.5% per annum, reset quarterly. Payments are quarterly in arrears and maturity is on 15 April 2019. The proceeds were used to repay the existing bank loan, repay related party loans of €50 million and pay the transactions fees. The Company may redeem prior to 15 April 2015—all or part—at a ‘make-whole’ premium equal the net present value of the remaining interest payments to 15 April 2015 plus 1% margin, between 15 April 2015 and 15 April 2016 at 101% and at a 100% thereafter. The Notes and Guarantees will be secured by first-ranking security interests over all the capital stock of the Company and certain of its subsidiaries, intercompany receivables, bank accounts and intellectual property and certain of its subsidiaries and substantially all assets of certain subsidiaries.

The Revolving Credit Facility is issued with an initial 3.5% margin plus EURIBOR and the maturity is on 29 January 2019. The Company may make a voluntary prepayment or cancellation at any time without penalty on 5 or 3 Business days respectively. The security securing the Notes will also secure on a ‘super senior’ basis the Company’s obligations under the Revolving Credit Facility and certain hedging obligations.

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.

F-138

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.

	31.12.2015			31.12.2014
The maturity of the borrowings are as follow:
6 months or less		4,297			54,606
6-12 months		470			510
1-7 years		298,616			204,870
		303,383			259,986
Current effective interest on Senior secured notes at the company		8.1	%		7.6	%
Current effective interest on Long term bank credit at Israeli activities		N/A			3.8	%

	31.12.2015		31.12.2014
The Group borrowings are denominated in the following currencies:
Euro		298,588		254,909
New Israeli Shekels		3,438		4,068
Polish Zloty		926		498
Swiss Franc		431		498
Other currencies		—		13
		303,383		259,986

The fair value of current liabilities approximates their carrying amount, as the impact of discounting is not significant. Consequently the fair values have not been separately disclosed.

The fair value of long-term bank liabilities approximates their carrying value, since they bear interest at variable market rates.

17. Derivative Financial instruments

	31.12.2015		31.12.2014
	Liabilities		Liabilities
Non current interest rate SWAP derivative		5,201		5,240

The Group uses interest rate swaps (hereafter—IRS) to manage its exposure to interest rate risks resulting from financial arrangements. These derivative instruments are floating-to-fixed interest rate swaps which have the economic effect converting borrowings from floating rates to fixed rates.

F-139

In the course of 2014, following the issuance of EUR 210 million floating rate Notes, the Group adapted its hedging coverage structure through the combination of existing and new interest rate swaps (pay fixed, receive variable) in order to reduce the exposure from the risk of variability in cash flows associated with recognized liabilities. Therefore, Swaps duration was extended to match the underlying financing instrument maturity of 15 April 2019 and the outstanding IRS amount was increased to reach 80% of the floating rate senior secured notes financing amortizing over the years.

In January 2015, as part of the EUR 160 million issuance of 8% senior secured notes, a portion of EUR 35 million of the existing EUR 210 million floating rate senior secured notes has been exchanged into the EUR 160 million fixed 8% senior secured notes. Therefore, the EUR 210 million aggregate principal of floating rate senior secured notes was reduced to EUR 175 million. As a consequence, the IRS coverage mechanically increased from 80% to 96% of the floating rate senior secured notes.

Gains and losses were recognised in the Income Statement.

18. Commitments and Contingent liabilities

A. Commitments

Operating lease commitments

The Group has operating lease agreements for the rental of warehouses, office spaces and distribution centers in various locations for periods ending in 2016 through 2020. The annual rental payments under such leases are mainly linked to the CPI. In addition, The Group has operating lease agreements for the vehicles they use, for periods ending in 2016 through 2021. The annual rental payments under such leases are linked to the CPI (=Consumer Price Index).

The Group place deposits with several leasing companies to secure the payment of rental for the last months of the lease. The future aggregate minimum lease payments under operating leases as of December 31, 2015 are as follows:

	31.12.2015		31.12.2014
2015		—		9,922
2016		11,193		7,882
2017		8,602		6,172
2018		6,145		4,519
2019		3,901		5,206
Later than 2019		5,027		—
		34,868		33,701

Other commitments

1.) Mey Eden Marketing (2000) Ltd., an Israeli subsidiary (hereafter—MEM) has entered into a distribution agreements with Jafora Tabori Ltd. (hereafter—Main agreement and Tabori, respectively). Pursuant to the Main agreement, Tabori is to serve as the exclusive distributor of all the small-packs of mineral water products that are produced and/or imported by the group and/or that are marketed under the brand name “Mey Eden”, including future products, in all areas of Israel with the exception of the city of Eilat and the Palestinian Authority. In consideration for the distribution rights, MEM shall pay Tabori a fixed distribution commission. Tabori is to purchase the products for distribution from MEM at the price to retailers, net of the aforementioned distribution commission. The Main agreement is for a period of 10 years. At the end of this period, the Main agreement will be automatically renewed for an additional 10-year periods. Either party is entitled to call for the termination of the Main agreement at any time after the first 10 years period, subject to 36 months’ prior notice. If an exemption

F-140

from the need to obtain an authorization for an agreement in restraint of trade is not received from the antitrust commissioner for a part of the first period or subsequent periods, the period of the Main agreement is to be cut short in accordance with the authorized periods of exemption.

In June 30, 2004, the Commissioner approved a 5-year exemption from the need to obtain authorization for an agreement in restraint of trade, commencing from the date of the approval. On March 28 2010, the Commissioner extended the authorization for 5 years commencing this date.

On December 2014 MEM requested a renewal of the exemption from the antitrust commissioner which was received on September 2015 for another 5 years.

2.) On November 2013 Mey Eden Bar—First Class Services Ltd., and Israeli subsidiary (hereafter—MEB) and Tabori entered into a distribution agreement regarding distribution of Tabori products (soft drinks bottles) by MEB in Eilat in its surroundings (hereafter—Eilat Agreement). The Eilat Agreement is materially a mirror like agreement to the Main Agreement. The period of the Eilat Agreement is linked to the Main Agreement. In consideration for the distribution rights, Tabori shall pay MEB a fixed distribution commission. The parties requested an exemption from the antitrust commissioner regarding the Eilat Agreement, which was received on September 2015 for another 5 years.

3.) On November 9, 2015 Mey Eden Bar—First Class Services Ltd. (hereafter—MEB) entered into an agreement with Electra Consumer Products (1951) Ltd. regarding the sale of Electra’s activities in the field of water coolers.

Under the agreement, Electra will sell and transfer all their activity including the inventory of water coolers, spare parts, rights and obligations in accordance with customer agreements, intellectual property rights; agreements with manufacturers and licenses; all as specified in the agreement.

The Closing is subject to fulfillment of conditions precedent stipulated in the agreement, including the approval of the Antitrust Commissioner, approval from the manufacturers to assign their agreements with Electra to MEB, and the absence of a critical finding, as defined in the agreement in the due diligence that will be performed by MEB.

For the sale of all the operations (except inventory), MEB will pay NIS 21,3 million (approximately € 5.0 million) plus VAT, subject to the payment adjustment mechanism stipulated in the agreement in relation to the findings of the due diligence. Half of the consideration will be paid upon closing and the rest will be paid (without interest or linkage carry) in monthly installments for the period and the manner prescribed in the agreement. In addition, in exchange for the acquired inventory, MEB will pay the cost of inventory acquired less a deduction amount stipulated in the agreement.

B. Contingencies

1) The French, Polish, Israeli and German subsidiaries are involved in legal actions in the ordinary course of business. The total amount thereof is approximately € 968 thousand. A total provision of € 804 thousand is recorded as of 31 December 2015.

2) On March 13, 2011, a lawsuit filed by Comite Interprofessionnel du Vin de Champagne (CIVC) to the Tel Aviv District Court and against the Company, Mr. Raanan Zilberman, Mey Eden Production, Mey Eden Bar, Mey Eden Marketing, Mey Eden Ltd and Mr. Eyal Carmi, the former CEO of the Israeli subsidiaries. The lawsuit is related to the Israeli subsidiaries activity. The lawsuits main argument is that marketing and advertising products under the symbol of “Mey Eden—nature’s champagne”, allegedly violating CIVC intellectual property rights. On May 19 2015, the District Court issued a judgment in favor of the CIVC. The Court determined that the slogan “Mey Eden—Nature’s Champagne” infringes the CHAMPAGNE Registered Appellation of Origin that the use of the slogan amounts to Passing-Off and Dilution of the goodwill in Champagne. The Court rejected CIVC causes of action of Trademark Infringement, unjust enrichment and infringement of Geographical Indication. Following the judgement, The Group paid a total sum of NIS 710 thousand (approximately € 167 thousand) (which includes damages, attorney fees and court fees and expenses, as ruled by the district court).

F-141

3) On 29 September 2014 a request for a class action was filed against Mey Eden Bar—First Class Services Ltd. (hereafter—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 (approximately € 15.8 million) . 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 company’s lawyers.

4) On 25 February 2015 a request for a class action was filed against Mey Eden Bar—First Class Services Ltd. (hereafter—MEB) in the sum of NIS 444 million (approximately € 104 million) . The plaintiff’s claim is that the UV light in the company’s 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 company’s lawyers.

5) On July 20, 2015, a request for a class action was filed against Manufacturing in the sum of NIS 7 million (approximately € 1.6 million). The plaintiff’s claim is that the components markings on the company’s water containers produced by Manufacturing are deviating from an Israeli standard, because it is printed on the back part of the external wrapping of the water containers. On January 16 2016, the court approved the dismissal of the request for a class action after Manufacturing agreed to pay attorney’s fee and compensation in the amount of NIS 20 thousand (approximately € 5 thousand).

19. Guarantees given and pledged assets

Description /Type of Asset	31.12.2015
Real estate in Hamilton (production, warehouse and offices)		1,364

The above amount corresponds to the net book value of the building. This guarantee relates to the long-term mortgage in the UK.

For the senior secured notes and the revolving credit facility, the following companies have been nominated as guarantors:

- Eden Springs Europe B.V.

- Eden Springs Nederland B.V.

- Eden Springs Sp. z o.o.

- Eden Springs (Europe) S.A.

- Eden Springs (Norway) AS

- Eden Springs (Sweden) AB

- Eden Springs (Switzerland) S.A.

- SEMD S.A.

- Eden Springs International S.A.

- Eden Springs UK Limited - Kafevend Holdings Limited - Kafevend Group Limited - Eden Water & Coffee Deutschland GmbH

- LLC Eden Springs

20. Share Capital

The issued capital amount is € 1 (one euro). The total issued number of share is 1, with a par value of € 1. The share issued is fully paid.

F-142

21. Other reserves

	OCI Pension Fund 2015			OCI Pension Fund 2014
01.01.2015		(1,038	)		(150	)
Remeasurement of post employment benefit obligation		667			(888	)
Balance at 31 December 2015		(371	)		(1,038	)

22. Related-parties

The following transactions were carried out with related parties:

	2015		2014
Purchases of goods and services
Management fees and transaction related costs		1,601		3,439
Key management compensation
Salaries and short-term employee benefits		2,979		2,892
Post-employment benefits		436		452
Total Key management compensation		3,415		3,344
Interests paid to related parties		4,403		4,195
Shareholders borrowing and payable to parent company
	31.12.2015		31.12.2014
Borrowings from related party*		57,394		47,792
	31.12.2015		31.12.2014
Receivables from related parties		115		93
Payable to related parties (short-term)		75		75

* On October 2013 the Company entered into a loan agreement with the parent Company Hydra Dutch Holdings 1 BV. The loan bears an interest of 8.1576%. Unpaid interest is added to the principal. The duration of the loan is 7 years.

On November 2014 the Company entered into loan agreement facility with the parent Company Hydra Dutch Holdings 1 BV for an amount of Euro 15.3 million of which Euro 5.2 million and Euro 5.2 million were utilized on November 2014 and February 2015, respectively. The loan bears an interest rate of 8%. Unpaid interest is added to the principal.

23. Expenses by nature

	2015		2014
Depreciation and amortization (9 and 10)		34,666		26,336
Employee benefit expense (Note 25)		116,799		85,662
Raw materials and consumables used		78,876		63,844
Transportation costs		9,278		7,942
Vehicles expenses		20,147		17,329
Commissions (dealers)		23,207		18,723
Maintenance and rent		15,371		12,548
Communication		2,240		1,792
Professional fees		6,878		5,017
Travel and entertainment		2,353		2,184
Advertising and promotion		5,901		5,193
Office expenses		3,391		2,452
Other expenses		8,198		10,312
Total		327,303		259,334

F-143

24. Other Operating Expenses

	2015		2014
Acquisition and integration costs		12,258		5,175
Other		9,682		11,536
		21,940		16,711

25. Employee benefit expense

The following staff expenses are included in the Statement of Comprehensive Income (Cost of Goods sold, Service expenses, Selling expenses, General and Administration Expenses and Other operational expenses):

	2015		2014
Salaries		88,462		63,946
Social charges		14,316		11,966
Defined contributions plans		3,725		2,984
Pension benefit plans (Note 15)		5,229		3,239
Others		5,067		3,527
Total salaries and related expenses		116,799		85,662

26. Financial income / (expenses)

	2015			2014
Foreign exchange gain		2,813			4,554
Interest income		128			(26	)
Other Income		551			174
Total Financial income		3,492			4,702
Foreign exchange loss		4,891			980
Interest expense		24,742			18,094
Interest expense with related parties		4,403			4,595
Amortization of capitalised financial costs		5,780			12,761
Other expenses		528			452
Total Financial expenses		40,344			36,882
Total Financial income		3,492			4,702
Total Financial expenses		(40,344	)		(36,882	)
Net Financial expenses		(36,852	)		(32,180	)

27. Taxation

	2015			2014
Current taxes		(3,634	)		(2,063	)
Deferred taxes (Note 14)		3,077			(463	)
Previous years		907			188
Other tax		(422	)		(480	)
		(72	)		(2,818	)

F-144

The tax on the group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to losses of the consolidated entities as follows:

Profit / Loss before tax	(30,279	)	(25,082	)
Tax calculated at domestic tax rates applicable to profits in the respective countries	8,308		6,386
Tax losses for which no deferred tax asset was recognized	(10,251	)	(13,260	)
Expenses not deductible for tax purposes	517		(221	)
Income not subject to tax	1,033		1,252
Revenues subject to Income tax at lower rate	—		—
Tax credits or special allowances	—		—
Adjustments in respect of prior years	907		289
First time recognition of deferred tax asset on losses carried forward	—		(266	)
Change in valuation of deferred tax assets	—		—
Utilization of previously unrecognised tax losses	—		3,108
Effect of changes in tax rate on opening deferred tax balances	20		52
Other	(605	)	(158	)
Tax benefit	(72	)	(2,818	)

The weighted average applicable tax rate was 25%.

a. Taxation of companies resident in Israel:

1) Results measurements for tax purposes

Measurement of results for tax purposes under the Income Tax (Inflationary Adjustments) Law, 1985 (hereafter—the inflationary adjustments law) Under the inflationary adjustments law, results for tax purposes till the end of the 2007 tax year were measured in real terms, having regard to the changes in the CPI.

The Group was taxed under this law. In accordance with the provisions of the Income Tax (Inflationary Adjustments) (Amendment No. 20) Law, 2008 (“the amendment”), the Group will no longer be subject to the provisions of the inflationary adjustments law as from the 2008 tax year. In accordance with the provisions of the amendment, transitional regulations have been promulgated with respect to the cessation of applicability of the provisions of the inflationary adjustments law.

2) Tax rates

On December 6, 2011, the Israeli Parliament (the Knesset) passed the Law for Tax Burden Reform (Legislative Amendments), 2011 (“the Law”) which, among others, cancels effective from 2012, the scheduled progressive reduction in the corporate tax rate. The Law also increases the corporate tax rate to 25% in 2012, and thereafter.

On August 5, 2013, the Law of Change in National Priorities (Legislative Achieve Budget for the Years 2013 and 2014), 2013, was published, which provided, inter alia, raising the corporate tax rate to a rate of 26.5% from 2014 and thereafter.

In January 2016 the corporate tax rate from 2016 and thereafter was reduced to 25% according to a law that was approved in January 2016. Had the law been approved at December 31, 2015, the deferred tax asset as of December 31, 2015 would have decreased in the amount of approximately EUR 34 thousand, with corresponding decrease in deferred tax income in the income statement.

b. Subsidiaries resident overseas

Subsidiaries incorporated in Europe are subject to the taxing statutes of their respective countries of residence. The principal tax rates applicable to the principal overseas-resident subsidiaries are as follows:

Companies incorporated in the Netherlands—25.5%;

F-145

Companies incorporated in the United Kingdom—23.25%;

Companies incorporated in France—33.34%;

Companies incorporated in Poland—19%;

Companies incorporated in Switzerland—22.64%;

Companies incorporated in Russia—20.00%

As a general rule, inter-company transactions between Israel-resident companies and European subsidiaries are subject to the reporting provisions of the Income Tax (Determination of Market Conditions) Regulations, 2006.

c. The Israeli Encouragement Laws:

1) Tax benefits under the Capital Investments Encouragement Law, 1959

Under the provisions of the Capital Investments Encouragement Law, 1959 (“the law”), certain subsidiaries are entitled to various tax benefits by virtue of the status of approved enterprise accorded to the qualifying operations of those subsidiaries, as follows:

a) Reduced tax rates

During the period of benefits—commencing in the first year in which the companies earn taxable income from the approved enterprise—such income will be tax exempt for ten years, as follows: Tax exemption for ten years on income from expansion of a certain approved enterprise, for which it had previously opted for the “alternative benefits” track (involving the waiver of investment grants); the period of benefits for this expansion has not yet began. In the event of the distribution of cash dividend out of income that was tax exempt, the Companies would have to pay the 25% in respect of the amount distributed.

b) Accelerated depreciation

The Companies are entitled to claim accelerated depreciation as provided by law, commencing in the first year of operation of each asset, in respect of machinery and equipment used by the approved enterprise.

c) Benefit-related conditions

The entitlement to the above benefits is conditional upon the Companies fulfilling the conditions stipulated by the law, regulations published thereunder and the instruments of approval for the specific investments in approved enterprises. In the event of failure to comply with these conditions, the benefits may be cancelled and the Companies may be required to refund the amount of the benefits, in whole or in part, with the addition of interest. Company’s management is on the opinion that the Companies meet the conditions stipulated in the instrument of approval.

2) Industry (Taxes) Encouragement Law, 1969

Some of the Group’s companies are an “industrial company”, as defined by this law. As such, the companies are entitled to claim depreciation at increased rates, as stipulated by regulations published under the inflationary adjustments law.

d. Tax assessments

Final tax assessments have been raised on two subsidiaries for tax years up to and including the 2011 tax year. Self-assessment filed by Israeli Subsidiaries for the tax years up to 2008, are considered to be final.

F-146

28. Subsequent events

On 1 February 2016, the Group completed the third stage of the acquisition of the Nestlé 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 10.9 million bonds in favor of Eden Springs Europe B.V. The EUR 18.2 million purchase price for the assets transferred to us has yet to be allocated, and will be preliminarily assigned to the fair values of assets acquired and liabilities assumed, during the quarter ending 31 March 2016 when disclosure of such provisional amounts will be provided. This third step of the NWD acquisition was entirely funded using borrowings under the revolving credit facility agreement.

On 30 March 2016, date of approval of the accounts Hydra Dutch Holdings 2 B.V. had no subsequent event leading to a modification of the financial statements.

29. Business combinations

In 2014 acquired business contributed revenues of €4'788 since the acquistion dates. If the acquisitions had occurred on 1 January 2014, the acquired businesses, for the period would have contributed revenues of €40'983.

Details of net assets acquired and intangibles are as follows:

Purchase consideration:	Nestle NL			Nestle PT			Nestle Germany			Others			Total
	31.12.2014			31.12.2014			31.12.2014			31.12.2014			31.12.2014
Cash consideration		12,266			(1,881	)		23,557			3,947			37,890
Total Purchase Consideration		12,266			(1,881	)		23,557			3,947			37,890
Fair Value of Net Assets Acquired		(2,573	)		1,976			(2,794	)		(3,140	)		(6,531	)
Goodwill		9,693			96			20,763			808			31,359

The total fair values of the assets and liabilities in the acquiree's financial statements are as follows:

	31.12.2014
Purchase consideration settled in cash		43,469
Cash in Subsidiaries Acquired		(2,649	)
Cash Outflow on Acquisition		40,820
Adjustment for cash consideration not paid at period end and cash paid related to prior year acquisition		—
Net Cash Flow impact from Acquisitions		40,820

F-147

Detail of assets acquired and liabilities assumed

	Nestle NL			Nestle PT			Nestle Germany			Others			Total
Provisional fair values	31.12.2014			31.12.2014			31.12.2014			31.12.2014			31.12.2014
Cash and cash equivalents		2,551			298			(200	)		—			2,649
Trade receivables		771			2,035			2,189			99			5,094
Prepaid and other current assets		153			429			245			—			827
Inventories		65			261			233			45			604
Property, plant and equipment		328			4,155			2,315			167			6,965
Customer portfolio and Trademarks		2,300			270			6,700			3,333			12,603
Other intangible assets		—			—			—			—			—
Other non-current assets		—			—			—			—			—
Deferred income tax assets		—			—			—			—			—
Trade payables		(304	)		(1,236	)		(1,243	)		—			(2,783	)
Other current liabilities		(2,716	)		(1,728	)		(7,445	)		(325	)		(12,214	)
Borrowings		—			(6,398	)		—			—			(6,398	)
Other non-current liabilities		—			—			—			—			—
Deferred income tax liabilities		(575	)		(62	)		—			—			(637	)
Total identifiable net assets		2,573			(1,976	)		2,794			3,319			6,710
Goodwill		9,693			96			20,763			808			31,359
		12,266			(1,881	)		23,557			4,127			38,069

In 2015 acquired business contributed revenues of € 20,371 since the acquisition dates. If the acquisitions had occurred on 1 January 2015, the acquired businesses, for the period would have contributed revenues of € 21,822. The Nestlé Waters Direct Russia entity is consolidated as of February 1st, 2015.

Details of net assets acquired and intangibles are as follows:

Purchase consideration :	Nestlé RUS
	31.12.2015
Cash consideration		40,498
Total Purchase Consideration		40,498
Fair Value of Net Assets Acquired		(14,684	)
Goodwill		25,814

The total fair values of the assets and liabilities in the acquiree’s financial statements are as follows:

	31.12.2015
Purchase consideration settled in cash		40,498
Cash in subsidiaries acquired		(1,116	)
Cash paid prior year acquisitions		639
Net Cash Flow impact from Acquisitions		40,021

F-148

Detail of assets acquired and liabilities assumed

	Nestlé RUS
Provisional fair values	31.12.2015
Cash and cash equivalents		1,116
Trade receivables		830
Prepaid and other current assets		1,050
Inventories		470
Property, plant and equipment		5,609
Customer portfolio and Trademarks		10,153
Other intangible assets		81
Trade payables		(447	)
Other current liabilities		(2,425	)
Borrowings(2)		188
Other non-current liabilities		—
Deferred income tax liabilities		(1,941	)
Total identifiable net assets		14,684
Goodwill		25,814
		40,498

(1) Based on a preliminary purchase price allocation conducted. The purchase price allocation is to be completed in first quarter 2016.

(2) Borrowings are presented net of intercompany loan which was acquired as part of Nestlé Waters Direct Russia acquisition.

On 28 October 2015 the Company has signed an amendment to the SAPA with Nestlé Waters SAS in which the Long Stop Date for the NWDE Poland Closing is extended to 31 January 2016.

30. Segment information

General

The chief operating decision maker of the Group (hereinafter—CODM). 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 December 31, 2015, 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).

The Company has aggregated the European operating segments into one reportable segment, given the similarity in the Group’s products and their production process, customer types and distribution methods, as well as in long term profit margins.

F-149

Information related to geographical segments:

	Europe		Israel		Total
Segment income		261,698		94,118		355,816
Operating EBITDA		52,297		10,883		63,180
Capex		16,449		6,251		22,700

	31.12.2015			31.12.2014
Operating EBITDA of reporting segments		63,180			50,201
Depreciation and amortization		(34,667	)		(26,391	)
Other expenses—net		(21,940	)		(16,711	)
Operating income		6,573			7,099
Financing income		3,492			4,701
Financing expenses		(40,344	)		(36,882	)
Taxes on income		(72	)		(2,818	)
Net loss		(30,351	)		(27,900	)

The following is a breakdown of revenue from external customers of the Group’s products:

	31.12.2015		31.12.2014
Water		285,411		221,492
Coffee		70,405		61,652
		355,816		283,144

F-150

31. Consolidated companies at 31 December 2015

Country	Entities	% of control
Cyprus	Valspar Investments Ltd.		100.0	%
Denmark	Eden Springs (Denmark) AS		100.0	%
Estonia	Eden Springs Estonia OÜ		100.0	%
Finland	Eden Springs Finland OY		100.0	%
France	Chateaud’eau SA		100.0	%
Germany	Eden Springs (Deutschland) GmbH		100.0	%
	Eden Springs Water & Coffee GmbH		100.0	%
Greece	Eden Springs Hellas SA		100.0	%
Israel	Mey Eden Ltd.		100.0	%
	Mey Eden Bar—First Class Services Ltd.		100.0	%
	Mey Eden Production (2007) Ltd.		100.0	%
	Mey Eden Marketing (2000) Ltd.		100.0	%
	Espresso Café—Italia Ltd.		100.0	%
	Pauza Coffee Services Ltd.		96.0	%
	Dispensing Coffee Club (IAI 2003) Ltd.		100.0	%
Latvia	Eden Springs Latvia SIA		100.0	%
Lithuania	UAB Eden Springs Lietuva		100.0	%
Luxembourg	HorseLux Sàrl		100.0	%
Netherlands	Eden Springs Nederland BV		100.0	%
	Eden Springs Europe BV		100.0	%
Norway	Eden Springs (Norway) AS		100.0	%
Poland	Eden Springs Sp. Zo.o		100.0	%
	Eden Dystrybucja sp. z o.o.		100.0	%
Portugal	Eden Springs Portugal S.A.		100.0	%
Russia	LLC Eden Springs		100.0	%
Spain	Eden Springs Espana SA		100.0	%
	Eden Integracion S.L.U.		100.0	%
	Eden Centro Especial de Empleo S.L.U.		100.0	%
Sweden	Eden Springs Scandinavia AB		100.0	%
	Eden Springs (Sweden) AB		100.0	%
	Eden Springs Porla AB		100.0	%
Switzerland	Eden Springs (Europe) SA		100.0	%
	Eden Springs International SA		100.0	%
	Eden Springs (Switzerland) SA		100.0	%
	SEMD SA		100.0	%
United Kingdom	Eden Springs UK Ltd		100.0	%
	Kafevend Holdings Ltd.		100.0	%

F-151