SHL discloses write offs and extraordinary items for full year results 2016

• Income Tax: As already reported, SHL has received in November 2016 a final judgement regarding previous years' income tax assessment. The additional financial tax liability to be recognized in 2016 is USD 4.7m.
• Sales wages and commissions: SHL decided to change its accounting policy in this regard to be in line with IFRS 15 which will be effective starting 1 January 2018. This will require a retroactive adjustment of USD 3.8m, comprised of a write-off of USD 3.4m in the 2015 equity opening balance, plus additional expenses of USD 0.4m in 2015. The impact due to the change in accounting policy in 2016 will be marginal.
• Adjustments in fixed assets: SHL will correct a technical error in the fixed assets roll forward schedule, and will record an impairment on old devices, resulting in an adjustment of its fixed assets of USD 2.6m out of which a net amount of USD 1.6m as of 31 December 2016 will be treated as a restatement in previous years.
• Capitalization of development costs: SHL decided to write-off certain obsolete assets and impair certain other assets in view of technology advancements and SHL's projections for its global operations, resulting in an adjustment of its intangible assets of USD 1.7m.
• Cost savings in Germany: On the positive side, SHL informed in May 2017 that it had generated an income of EUR 5.3m from cost savings delivered under a Chronic Disease Management Services contract in Germany, relating to the year 2015. This income will be recognized as revenue in 2016.

These extraordinary items along with other items such as adjustment of deferred taxes in Israel and of inventories will negatively impact SHL's equity to the amount of approximately USD 9.3m.

SHL's Committee for the Examination of Financial Statements will make its recommendations to the Board, which, together with the final results and after the completion of the annual audit, will be discussed and then approved by the Board pursuant to Israeli law. Therefore, the above information and numbers are not final yet. The audited annual results for 2016 are scheduled to be finalized and disclosed by 31 July 2017 as per the extended deadline granted by SIX Exchange Regulation for the publication of SHL's 2016 Annual Report.

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