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FORM 6-K


SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Report of Foreign Private Issuer


Pursuant to Rule 13a-16 or 15d-16


of the Securities Exchange Act of 1934


For the Month of August 2018


FORMULA SYSTEMS (1985) LTD.

(Translation of Registrant's Name into English)


5 HaPlada st., Or-Yehuda, Israel

(Address of Principal Executive Offices)



Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F


Form 20-F

...X...

Form 40-F

.......


Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.


Yes

.....

No

..X..


If "Yes" is marked indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ....................


Attached to Registrant's Form 6-K for the month of May 2018 and incorporated by reference herein is the Registrant's immediate report dated  August 16, 2018.


SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to signed on its behalf by the undersigned, thereunto duly authorized.


FORMULA SYSTEMS (1985) LTD.

(Registrant)


By:/s/ Guy Bernstein

Guy Bernstein CEO

dated:

August 16, 2018

PRESS RELEASE

Formula Systems Reports the Results of the Second Quarter and First Half of 2018 with Double-Digit Growth in All Major Financial Indicators

Formula’s revenues for the first half increased 15% year over year to $736.9 million and operating income for the first half increased 63% year over year to $50.6 million


Or Yehuda, Israel, August 16, 2018 – Formula Systems (1985) Ltd. (NASDAQ: FORTY), a global information technology holding company engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products, today announced its results for the second quarter and first half ended June 30, 2018, in accordance with International Financial Reporting Standards (IFRS).


Financial Highlights for the Second Quarter Ended June 30, 2018

Consolidated revenues for the second quarter increased by 10.4% to $363.5 million, compared to $329.1 million in the same period last year.

Consolidated operating income for the second quarter increased by 66.5% to $24.8 million, compared to $14.9 million in the same period last year.   

Consolidated net income attributable to Formula’s shareholders for the second quarter was $7.6 million, or $0.51 per fully diluted share, compared to $0.3 million, or $0.01 per fully diluted share, in the same period last year.    


Financial Highlights for the Six-Month Period Ended June 30, 2018

Consolidated revenues for the first half of 2018 increased by 15.1% to $736.9 million, compared to $640.0 million in the same period last year.

Consolidated operating income for the first half of 2018 increased by 62.6% to $50.6 million, compared to $31.1 million in the same period last year.   

Consolidated net income attributable to Formula’s shareholders for the first half of 2018 was $14.9 million, or $0.99 per fully diluted share, compared to $0.8 million, or $0.06 per fully diluted share, in the same period last year.    

As of June 30, 2018, Formula held 49.18%, 48.25%, 47.12%, 100%, 50% and 90.09% of the outstanding ordinary shares of Matrix IT Ltd., Sapiens International Corporation N.V, Magic Software Enterprises Ltd., Michpal Micro Computers (1983) Ltd., TSG IT Advanced Systems Ltd. and Insync Staffing Solutions, Inc., respectively.

Consolidated cash, short-term investments in marketable securities and bank deposits totaled to approximately $251.8 million as of June 30, 2018.  

Total consolidated equity as of June 30, 2018, was $772.9 million (representing 49.3% of the total balance sheet).

As of June 30, 2018, Formula was in compliance with all of its financial covenants under the debentures issued by Formula and under loans granted from other financial institutions.


Comments of Management


Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, “We are very pleased to report significant growth in all major financial indices across our entire portfolio.

"In the second quarter and first half of 2018, Matrix achieved double-digit growth across all its key financial indicators. Matrix reported revenues of NIS 762.2 million in the second quarter of 2018, operating income of NIS 50.1 million, and net income attributable to Matrix shareholders of NIS 32.7 million, reflecting an increase of 14%, 22.1% and 43.3% respectively, year over year.

“The increase in Matrix's revenues can be credited to the strategic deals that it won over the past year, including establishing a credit database for the Bank of Israel, significant deals in the field of cyber and other successful business initiatives. In the US, Matrix is beginning to reap the benefits of its acquisitions and continues to see the US market as a strategic market for its continued growth.

“Matrix also continued to focus on high-profit activities and on developing new models in the field of employee training and placement well as in the integration and infrastructure solutions sector, which continues to expand and enjoy increased demand.

“Sapiens’ improved margins and profitability in the second quarter and first half of 2018 reflect its success in making significant strides to getting back on track, including cost-cutting programs and the effective leveraging of its global assets. In the second quarter, Sapiens’ revenues totaled $72.2 million up 4.5% compared to last year, its operating margin improved to 6.8% and its non-GAAP1 operating margin was 13.2% up from (4.3%) and 4.7% respectively, year over year.

“Sapiens updated its guidance and forecasts that its non-GAAP revenues will be in the range of $285 to $290 million up from $280 to 285 million and the non-GAAP full year operating margins will be in the range of 13.0% and 13.2% up from 12.0% to 13.0%.

“Sapiens continues to advance towards its key objectives of expanding its P&C business in EMEA, and North America, while improving profitability. Sapiens’ enhanced digital insurance offering along with its proven products and personnel are winning new business, particularly with its P&C platforms, and is expanding its business with new and existing clients and building its pipeline for future growth. This quarter’s results demonstrate Sapiens’ ability to expand market leadership, particularly in the areas with the greatest client demand in the insurance market: digitalization, data analytics, and legacy transformation.

“Magic’s record-breaking financial results for the second quarter and first half of 2018 demonstrate that Magic is continuing its impressive forward momentum across all of its markets and regions, confirming that its strategic business initiatives are paying off. The results for the second quarter were at all-time highs with revenues of $70.2 million, operating income of $8.0 million and non-GAAP2 operating income of $9.8 million, up 7%, 26% and 9% respectively, year over year, driven exclusively by organic growth.

“TSG is expanding its partnerships to execute additional strategic projects in Israel and around the world.

“Lastly, we are excited by Michpal's continuing growth, with revenues for the first half of 2018 increasing by more than 25% year over year, mainly as a result of the successful January 2018 official launch of its new product and new service line – "Michpal Pension" and "Michpal PensionPlus”. Over 1,500 existing Michpal customers have already adopted this new business line, which is the first step in our business strategy to expand Michpal’s offerings. We expect that Michpal’s strong financial position, coupled with its activities towards promoting and growing its business organically and through M&As, will continue the company's momentum through 2018 and beyond.”


About Formula

Formula Systems (1985) Ltd. is a global information technology company engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products.

For more information, visit www.formulasystems.com.

Press Contact:

Formula Systems (1985) Ltd.

+972-3-5389487

ir@formula.co.il

Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Formula's most recent annual report and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.



FORMULA SYSTEMS (1985) LTD.

 

 

 

 

 

 

 

 

 

CONSOLIDATED CONDENSED STATEMENTS OF PROFIT OR LOSS

 

 

 

 

 

 

U.S. dollars in thousands (except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

Three months ended

 

June 30,

 

 

June 30,

 

 

2018

 

2017

 

 

2018

 

2017

 

 

Unaudited

 

 

Unaudited

 

Revenues

736,858

 

639,971

 

 

363,483

 

329,093

 

Cost of revenues

572,616

 

501,154

 

 

282,581

 

256,605

 

Gross profit

164,242

 

138,817

 

 

80,902

 

72,488

 

Research and development costs, net

21,448

 

19,383

 

 

10,502

 

11,572

 

Selling, general and administrative expenses

92,215

 

88,320

 

 

45,635

 

46,040

 

Operating income

50,579

 

31,114

 

 

24,765

 

14,876

 

Financial income (expenses), net

(3,261)

 

(13,435)

(*)

(1,290)

 

(6,408)

(*)

Income before taxes on income

47,318

 

17,679

(*)

23,475

 

8,468

(*)

Taxes on income

11,723

 

6,330

 

 

5,605

 

3,397

 

Income after taxes

35,595

 

11,349

(*)

17,870

 

5,071

(*)

Equity in gains (losses) of affiliated companies, net

(63)

 

410

 

 

(133)

 

198

 

Net income

35,532

 

11,759

(*)

17,737

 

5,269

(*)

Net income attributable to redeemable non-controlling interests

3,111

 

1,176

(*)

1,582

 

569

(*)

Net income attributable to non-controlling interests

17,571

 

9,784

(*)

8,544

 

4,446

(*)

Net income attributable to Formula Systems' shareholders

14,850

 

799

(*)

7,611

 

254

(*)

 

 

 

 

 

 

 

 

 

 

Earnings per share (basic)

1.01

 

0.06

(*)

0.52

 

0.02

(*)

Earnings per share (diluted)

0.99

 

0.06

(*)

0.51

 

0.01

(*)

 

 

 

 

 

 

 

 

 

 

Number of shares used in computing earnings per share (basic)

14,730,449

 

14,320,595

 

 

14,730,865

 

14,338,451

 

Number of shares used in computing earnings per share (diluted)

15,568,811

 

14,711,056

 

 

15,569,517

 

14,711,079

 

 

 

 

 

 

 

 

 

 

 

*) Adjustment to comparative data

 

 

 

 

 

 

 

 

 



FORMULA SYSTEMS (1985) LTD.

 

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

 

U.S. dollars in thousands

 

 

 

 

 

June 30,

 

December 31,

 

 

2018

 

2017

 

 

(Unaudited)

 

 

 ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

238,774

 

245,936

 

Marketable securities

11,919

 

14,138

 

Short-term deposits

1,111

 

735

 

Trade receivables

380,706

 

385,778

 

Other accounts receivable and prepaid expenses

48,576

 

44,915

 

Inventories

3,587

 

3,299

Total current assets

684,673

 

694,801

 

 

 

 

 

LONG-TERM ASSETS:

 

 

 

 

Deferred taxes

15,330

 

15,878

 

Prepaid expenses and other accounts receivables

20,121

 

16,581

Total  long-term assets

35,451

 

32,459

 

 

 

 

 

INVESTMENTS IN COMPANIES ACCOUNTED

 

 

 

   FOR AT EQUITY METHOD

25,248

 

25,315

 

 

 

 

 

PROPERTY, PLANTS AND EQUIPMENT, NET

29,668

 

29,807

 

 

 

 

 

NET INTANGIBLE ASSETS AND GOODWILL

793,863

 

781,255

 

 

 

 

 

TOTAL  ASSETS

1,568,903

 

1,563,637

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Liabilities to banks and others

108,948

 

70,819

 

Debentures

53,418

 

4,826

 

Trade payables

77,778

 

95,339

 

Deferred revenue and customer advances

69,490

 

58,905

 

Employees and payroll accrual  

100,689

 

111,707

 

Other accounts payable

48,118

 

53,145

 

Liabilities related to business combinations

5,061

 

6,811

 

Redeemable non-controlling interests

36,686

 

31,395

Total current liabilities

500,188

 

432,947

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

Liabilities to banks and others

92,482

 

135,616

 

Other long-term liabilities

7,315

 

7,244

 

Debentures, net of current maturities

116,154

 

133,739

 

Deferred taxes

34,477

 

36,605

 

Deferred revenues

6,763

 

9,340

 

Liabilities related to business combinations

8,380

 

4,711

 

Redeemable non-controlling interests

21,376

 

21,481

 

Employee benefit liabilities

8,836

 

9,032

Total long-term liabilities

295,783

 

357,768

 

 

 

 

 

EQUITY

 

 

 

 

Equity attributable to Formula Systems' shareholders

359,458

 

359,202

 

Non-controlling interests

413,474

 

413,720

Total equity

772,932

 

772,922

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

1,568,903

 

1,563,637


FORMULA SYSTEMS (1985) LTD.

 

 

 

 

STANDALONE FINANCIAL DATA HIGHLIGHTS

 

 

 

 

U.S. dollars in thousands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

2018

 

2017

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Debentures

 

91,194

 

59,503

 

 

 

 

 

 

 

Other financial liabilities

 

24,854

 

38,911

 

 

 

 

 

 

 

Formula shareholders' equity

 

359,458

 

359,202

 

 

 

 

 

 

 

Cash, cash equivalents and short-term marketable securities

 

38,293

 

14,842

 

 

 

 

 

 

 

Fair market value of equity holdings in publicly traded subsidiaries

732,485

 

835,400

 

 

 

 

 

 


Footnotes

1 Non-GAAP measures as detailed in Sapiens’ press release from August 7, 2018

2 Non-GAAP measures as detailed in Magic Software Enterprises’ press release from August 8, 2018