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Document and Entity Information
 12 Months Ended
Dec. 31, 2018
shares
Document and Entity Information [Abstract]  
Entity Registrant Name FORMULA SYSTEMS (1985) LTD
Entity Central Index Key 0001045986
Trading Symbol FORTY
Amendment Flag false
Current Fiscal Year End Date --12-31
Document Type 20-F
Document Period End Date Dec. 31, 2018
Document Fiscal Year Focus 2018
Document Fiscal Period Focus FY
Entity Well-known Seasoned Issuer No
Entity Voluntary Filers No
Entity Current Reporting Status Yes
Entity Filer Category Accelerated Filer
Entity Emerging Growth Company false
Entity Ex Transition Period false
Entity Shell Company false
Entity Common Stock, Shares Outstanding 14,750,338
Consolidated Statements of Financial Position - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
CURRENT ASSETS:    
Cash and cash equivalents $ 268,492 $ 245,947
Short-term deposits 16,881 735
Marketable securities 9,913 14,138
Trade receivables (net of allowances for doubtful accounts of $6,051 and $5,195 as of December 31, 2017 and 2018, respectively) 441,468 385,778
Prepaid expenses and other accounts receivable 40,397 44,904
Inventories 3,882 3,299
Total current assets 781,033 694,801
LONG-TERM ASSETS:    
Deferred taxes 14,214 15,878
Prepaid expenses and other accounts receivable 23,121 16,581
Total long-term assets 37,335 32,459
INVESTMENTS IN COMPANIES ACCOUNTED FOR AT EQUITY METHOD 25,710 25,315
PROPERTY, PLANTS AND EQUIPMENT, NET 29,182 29,807
INTANGIBLE ASSETS, NET 150,046 163,983
GOODWILL 640,855 617,272
Total assets 1,664,161 1,563,637
CURRENT LIABILITIES:    
Credit from banks and others 71,180 70,819
Debentures 55,822 4,826
Trade payables 118,786 95,339
Deferred revenues 59,509 58,905
Employees and payroll accrual 114,904 111,707
Other accounts payable 53,969 53,145
Dividend payable 5,015
Liabilities in respect of business combinations 5,602 6,811
Put options of non-controlling interests 40,926 31,395
Total current liabilities 525,713 432,947
LONG-TERM LIABILITIES:    
Loans from banks and others 139,527 135,616
Debentures 114,902 133,739
Other long-term liabilities 8,734 7,244
Deferred taxes 34,800 36,605
Deferred revenues 4,906 9,340
Liability in respect of business combinations 5,625 4,711
Put options of non-controlling interests 15,673 21,481
Employee benefit liabilities 8,884 9,032
Total long-term liabilities 333,051 357,768
COMMITMENTS AND CONTINGENCIES
Share capital:    
Ordinary shares of NIS 1 par value - Authorized: 25,000,000 shares at December 31, 2017 and 2018; Issued: 15,307,402 and 15,318,958 at December 31, 2017 and 2018, respectively; Outstanding: 14,738,782 and 14,750,338 at December 31, 2017 and 2018, respectively 4,190 4,187
Additional paid-in capital 98,008 98,040
Retained earnings 262,557 239,156
Accumulated other comprehensive income 3,134 18,078
Treasury shares (568,620 shares as of December 31, 2017 and 2018) (259) (259)
Total equity attributable to Formula Systems (1985) Ltd.'s shareholders 367,630 359,202
Non-controlling interests 437,767 413,720
Total equity 805,397 772,922
Total liabilities and equity $ 1,664,161 $ 1,563,637
Consolidated Statements of Financial Position (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Statement of Financial Position [Line Items]    
Allowances for doubtful accounts $ 5,195 $ 6,051
Ordinary shares, authorized 25,000,000 25,000,000
Ordinary shares, issued 15,318,958 15,307,402
Ordinary shares, outstanding 14,750,338 14,738,782
Number of treasury shares 568,620 568,620
NIS [Member]    
Statement of Financial Position [Line Items]    
Ordinary shares, par value $ 1 $ 1
Consolidated Statements of Profit or Loss - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenues:      
Proprietary software products and related services $ 370,027 $ 341,350 $ 273,235
Software services 1,122,961 1,013,789 835,386
Total revenues 1,492,988 1,355,139 1,108,621
Cost of revenues:      
Proprietary software products and related services 207,859 201,302 149,244
Other software products and related services 951,817 857,014 700,596
Total cost of revenues 1,159,676 1,058,316 849,840
Gross profit 333,312 296,823 258,781
Research and development expenses, net 41,223 39,853 22,328
Selling, marketing, general and administrative expenses 182,472 184,164 147,953
Operating income 109,617 72,806 88,500
Financial expenses 15,852 29,870 17,594
Financial income 7,562 8,751 6,008
Pre-tax income before share of profits of companies accounted for at equity, net 101,327 51,687 76,914
Taxes on income 24,301 13,371 21,163
Share of profits of companies accounted for at equity, net 369 1,124 349
Net income 77,395 39,440 56,100
Attributable to:      
Equity holders of the Company 32,365 10,352 22,445
Non-controlling interests 45,030 29,088 33,655
Net income $ 77,395 $ 39,440 $ 56,100
Net earnings per share attributable to equity holders of The Company      
Basic earnings per share $ 2.2 $ 0.72 $ 1.58
Diluted earnings per share $ 2.14 $ 0.68 $ 1.49
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement of comprehensive income [abstract]      
Net income $ 77,395 $ 39,440 $ 56,100
Amounts that will not be reclassified subsequently to profit or loss:      
Actuarial gain (loss) from defined benefit plans 387 (898) (2,696)
Share in other comprehensive income of joint venture 58 104  
Amounts that will be or that have been reclassified to profit or loss when specific conditions are met:      
Unrealized gain (loss) on debt instruments at fair value through other comprehensive income, net (37) 144 30
Amounts transferred to the statement of profit or loss for sale of debt instruments at fair value through other comprehensive income, net   (94) 16
Foreign exchange differences on translation of foreign operations (30,395) 42,389 1,668
Total other comprehensive income (loss), net of tax (29,987) 41,645 (982)
Total Comprehensive income 47,408 81,085 55,118
Total comprehensive income attributable to:      
Equity holders of the Company 17,610 30,354 21,948
Non-controlling interests 29,798 50,731 33,170
Total comprehensive income $ 47,408 $ 81,085 $ 55,118
Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Share Capital
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury shares (cost)
Non-controlling interests
Total
Beginning balance at Dec. 31, 2015 $ 4,184 $ 98,946 $ 230,256 $ (3,228) $ (259) $ 375,380 $ 705,279
Beginning balance, Shares at Dec. 31, 2015 14,728,782            
Net income     22,445     33,655 56,100
Foreign currency translation reserve       828   840 1,668
Actuarial gain loss from defined benefit plans     (1,348)     (1,348) (2,696)
Unrealized gain loss on debt instruments at fair value through other comprehensive income, net       15   15 30
Realized gain loss on debt instruments at fair value through other comprehensive income, net       8   8 16
Total other comprehensive income (loss)     (1,348) 851   (485) (982)
Total comprehensive income (loss)     21,097 851   33,170 55,118
Cost of share-based payment (Note 17)   772       3,622 4,394
Dividend to Formula's shareholders     (17,085)       (17,085)
Dividend to non-controlling interests in subsidiaries           (22,229) (22,229)
Transactions with non-controlling interests due to holding changes, including exercise of employees stock options   1,200       (559) 641
Acquisition of non-controlling interests   (740)       (1,809) (2,549)
Settlement of put options over non-controlling interests   393       (26,352) (25,959)
Non-controlling interests arising from initially consolidated companies           26,232 26,232
Ending balance at Dec. 31, 2016 $ 4,184 100,571 234,268 (2,377) (259) 387,455 723,842
Ending balance, Shares at Dec. 31, 2016 14,728,782            
Net income     10,352     29,088 39,440
Foreign currency translation reserve       20,325   22,064 42,389
Actuarial gain loss from defined benefit plans     (453)     (445) (898)
Unrealized gain loss on debt instruments at fair value through other comprehensive income, net       70   74 144
Realized gain loss on debt instruments at fair value through other comprehensive income, net       (44)   (50) (94)
Share in other comprehensive income of joint venture       104     104
Total other comprehensive income (loss)     (453) 20,455   21,643 41,645
Total comprehensive income (loss)     9,899 20,455   50,731 81,085
Issuance of restricted shares to employees $ 3 (3)          
Issuance of restricted shares to employees, shares 10,000            
Cost of share-based payment (Note 17)   1,058       2,976 4,034
Dividend to Formula's shareholders     (5,011)       (5,011)
Dividend to non-controlling interests in subsidiaries           (27,645) (27,645)
Transactions with non-controlling interests due to holding changes, including exercise of employees stock options   (1,306)       4,553 3,247
Acquisition of non-controlling interests   3       3 6
Non-controlling interests due to expiration of put options           2,440 2,440
Settlement of put options over non-controlling interests   (2,283)       (6,821) (9,104)
Non-controlling interests arising from initially consolidated companies           28 28
Ending balance at Dec. 31, 2017 $ 4,187 98,040 239,156 18,078 (259) 413,720 $ 772,922
Ending balance, Shares at Dec. 31, 2017 14,738,782           14,738,782
Impact of the adoption of IFRS 15     874     941 $ 1,815
Balance as of January 1, 2018 (Including the impact of the adoption of IFRS 15) $ 4,187 98,040 240,030 18,078 (259) 414,661 774,737
Balance as of January 1, 2018 (Including the impact of the adoption of IFRS 15), Shares 14,738,782            
Net income     32,365     45,030 77,395
Foreign currency translation reserve       (14,983)   (15,412) (30,395)
Actuarial gain loss from defined benefit plans     189     198 387
Unrealized gain loss on debt instruments at fair value through other comprehensive income, net       (19)   (18) (37)
Share in other comprehensive income of joint venture       58     58
Total other comprehensive income (loss)     189 (14,944)   (15,232) (29,987)
Total comprehensive income (loss)     32,554 (14,944)   29,798 47,408
Issuance of restricted shares to employees $ 3 (3)          
Issuance of restricted shares to employees, shares 10,000            
Issuance of shares upon conversion of convertible debentures [1] 64         64
Issuance of shares upon conversion of convertible debentures, shares 1,556            
Cost of share-based payment (Note 17)   234       3,747 3,981
Dividend to Formula's shareholders     (10,027)       (10,027)
Dividend to non-controlling interests in subsidiaries           (31,316) (31,316)
Dilution in Formula's share in Magic due to issuance of Magic's ordinary shares   2,682       22,722 25,404
Transactions with non-controlling interests due to holding changes, including exercise of employees stock options   (526)       1,731 1,205
Acquisition of non-controlling interests   (590)       (1,325) (1,915)
Non-controlling interests due to expiration of put options   498       855 1,353
Settlement of put options over non-controlling interests   (2,391)       (3,933) (6,324)
Non-controlling interests arising from initially consolidated companies           827 827
Ending balance at Dec. 31, 2018 $ 4,190 $ 98,008 $ 262,557 $ 3,134 $ (259) $ 437,767 $ 805,397
Ending balance, Shares at Dec. 31, 2018 14,750,338           14,750,338
[1] Less than one thousand U.S. dollar
Consolidated Statements of Other Comprehensive Income - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement Of Others Comprehensive Income [Abstract]      
Reserve from debt instruments at fair value through other comprehensive income $ 358 $ 377 $ 351
Foreign currency translation reserve 4,829 19,812 (513)
Reserve from derivatives 4 4 4
Share in other comprehensive loss of companies accounted for at equity, net (2,057) (2,115) (2,219)
Accumulated other comprehensive income (loss) $ 3,134 $ 18,078 $ (2,377)
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:      
Net income $ 77,395 $ 39,440 $ 56,100
Adjustments to reconcile net income to net cash provided by operating activities:      
Share of profits of companies accounted for at equity, net (369) (1,124) (349)
Depreciation and amortization 48,734 43,646 32,370
Changes in value of debentures, net (3,025) 5,277 1,371
Increase (decrease) in employee benefit liabilities 565 752 (1,656)
Loss (gain) from sale of property, plants and equipment 1 26 (3,147)
Stock-based compensation expenses 3,981 4,552 4,394
Changes in value of short-term and long term loans from banks and others and deposits, net (2,296) 6,731 500
Changes in deferred taxes, net (5,743) (12,819) 211
Change in liability in respect of business combinations 666 1,531 2,023
Loss (gain) from sale and increase in value of marketable securities classified as trading (53) 149 (136)
Amortization of premium and accrued interest on debt instruments at fair value through other comprehensive income 189 716 (260)
Realized loss (gain) from sale of debt instruments at fair value through other comprehensive income (94) 16
Change in non-controlling interests' put option 1,779
Change in value of dividend preference derivative in TSG (333) (260)
Working capital adjustments:      
Decrease (increase) in inventories (1,024) 1,037 923
Increase in trade receivables (66,069) (38,223) (30,086)
Decrease (increase) in other current and long-term accounts receivable (5,768) 755 (513)
Increase in trade payables 19,955 6,086 5,423
Increase in other accounts payable and employees and payroll accrual 12,781 7,199 8,673
Increase (decrease) in deferred revenues 3,008 15,718 (2,681)
Net cash provided by operating activities 82,595 81,095 74,955
Cash flows from investing activities:      
Payments for business acquisitions, net of cash acquired (Appendix C) (49,069) (119,103) (44,832)
Cash paid in conjunction with deferred payments and contingent liabilities related to business combinations (8,288) (8,817) (2,944)
Purchase of intangible assets (180) (391)
Purchase of property and equipment (11,625) (9,573) (9,137)
Proceeds from maturity and sale net of investment in debt instruments at fair value through other comprehensive income or loss, net 4,000 40,622 8,450
Proceeds from sale of property, plants and equipment 440 2,347
Investment in and loans to affiliates and other companies 26 (25) (25,813)
Change in restricted cash in other accounts receivable 362 (544)
Change in short-term and long-term deposits, net (17,292) (888) 2,665
Capitalization of software development and other costs (8,826) (9,338) (9,769)
Net cash used in investing activities (90,452) (107,122) (79,968)
Cash flows from financing activities:      
Exercise of employees stock options in subsidiaries 1,206 3,240 931
Issuance of Magic's ordinary shares, net 25,404
Dividend paid to non-controlling interests (34,103) (31,231) (24,131)
Dividend to Formula's shareholders (5,012) (12,081) (10,014)
Short-term bank credit, net (20,741) (21,176) 20,720
Repayment of long-term loans from banks and others (42,884) (46,065) (37,415)
Receipt of long term loans 83,478 52,734 49,582
Proceeds from issuance of debentures, net 45,356 78,229
Repayment of long-term liabilities to office of the chief scientist (220) (502) (510)
Repayment of debentures (9,383) (3,656)
Purchase of non-controlling interests (1,992) (3,166)
Repayment of capital lease (480) (443)
Cash paid due to exercise of put option by non-controlling interests (142)
Distribution to ultimate parent for a business acquisition under common control (1,440)
Net cash provided by (used in) financing activities 40,967 19,012 (5,886)
Effect of exchange rate changes on cash and cash equivalents (10,565) 12,912 (81)
Increase (decrease) in cash and cash equivalents 22,545 5,897 (10,980)
Cash and cash equivalents at beginning of year 245,947 238,161 249,141
Cash and cash equivalents at end of year 268,492 245,947 238,161
Cash paid (received) in respect of:      
Interest paid 9,061 6,448 6,770
Interest received (680) (145) (2,334)
Taxes paid (received), net 23,295 19,680 19,176
Non-cash activities:      
Dividend payable to Formula's shareholders 5,015 7,070
Purchase of property and equipment 76 2,260
Deferred payment related to business combinations 200 962
Dividend payable to non-controlling interests 692
Disposal of property 155
Issuance of Formula's ordinary shares as a result of conversion of debentures $ 64
Consolidated Statements of Cash Flows (Parenthetical) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Assets and liabilities of subsidiaries consolidated as of acquisition date:      
Working capital (other than cash and cash equivalents) $ 2,889 $ 9,631 $ (2,938)
Property and equipment (547) (1,332) (3,494)
Goodwill and intangible assets (63,819) (148,085) (92,878)
Other long-term assets (103) (125)
Liabilities to banks and others 38 281 3,391
Long-term liabilities 421
Deferred tax liability, net 5,590 17,911 10,130
Liability to formerly shareholders 2,053
Deferred payments and contingent consideration 3,582 2,616 11,997
Non-controlling interests at acquisition date 827 28,960
Total $ (49,069) $ (119,103) $ (44,832)
General
 12 Months Ended
Dec. 31, 2018
General [Abstract]  
GENERAL

NOTE 1:- GENERAL

 

a.General:

 

Formula Systems (1985) Ltd. (“Formula” or the “Company”) was incorporated in Israel and began its business operations in 1985. Since 1991, Formula’s ordinary shares, par value NIS 1.0 per share, have been traded on the Tel-Aviv Stock Exchange (“TASE”), and, in 1997, began trading through American Depositary Shares (“ADSs”) under the symbol “FORTY” on the NASDAQ Global Market in the United States until January 3, 2011, at which date the listing of Formula’s ADSs was transferred to the NASDAQ Global Select Market (“NASDAQ”). Each ADS represents one ordinary share of Formula. The Company is considered an Israeli resident. The controlling shareholder of the Company is Asseco Poland S.A. (“Asseco”), a Polish public company, traded on the Warsaw Stock Exchange.

 

b.Formula, through its investees (collectively, the “Group”) is engaged in providing software services, proprietary and non-proprietary software solutions, software product marketing and support, computer infrastructure and integration solutions and training and integration. The Group operates through five directly held subsidiaries; Matrix IT Ltd. (“Matrix”); Magic Software Enterprises Ltd. (“Magic”), Sapiens International Corporation N.V (“Sapiens”), Insync Staffing Solutions, Inc. (“Insync”) and Michpal Micro Computers (1983) Ltd. (“Michpal”), and one jointly controlled entity: TSG IT Advanced Systems Ltd. (“TSG”).

 

c.The following table presents the ownership of Formula’s directly held investees as of the dates indicated (the list consists only of active companies):

 

   Percentage of ownership 
   December 31, 
   2018   2017 
Name of Investee        
         
Matrix   49.21    49.50 
Magic   45.21    47.12 
Sapiens   48.08    48.14 
Insync   90.09    90.09 
Michpal(1)   100    100 
TSG(2)   50.00    50.00 

 

1)Michpal’s results of operations are consolidated in the Company’s results of operations commencing January 1, 2017.

 

2)TSG’s results of operations are reflected in the Company’s results of operations using the equity method of accounting commencing May 9, 2016.

 

d.Definitions:

 

In these financial statements:

 

The Company - Formula Systems (1985) Ltd.
     
The Group - Formula Systems (1985) Ltd. and its investees.
     
Subsidiaries - Companies that are controlled by the Company (as defined in IFRS 10) and whose accounts are consolidated with those of the Company.
     
Jointly controlled entities - Companies owned by various entities that have a contractual arrangement for joint control and are accounted for using the equity method of accounting.
     
Associates - Companies over which the Company has significant influence and that are not subsidiaries. The Company’s investment therein is included in the financial statements using the equity method of accounting.
     
Investees - Subsidiaries, jointly controlled entities and associates.
     
Interested parties and controlling shareholder - As defined in the Israeli Securities Regulations (Annual Financial Statements), 2010.
     
Related parties - As defined in IAS 24.
Significant Accounting Policies
 12 Months Ended
Dec. 31, 2018
Significant Accounting Policies [Abstract]  
SIGNIFICANT ACCOUNTING POLICIES

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

 

The following accounting policies have been applied consistently in the financial statements for all periods presented, unless otherwise stated.

 

1)Basis of presentation of the financial statements

 

These financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

 

The financial statements for the year ended December 31, 2016 were the Group’s first consolidated financial statements prepared in accordance with IFRS. The date of transition to IFRS was January 1, 2015. For all periods up to and including the year ended December 31, 2015, the Group prepared its financial statements in accordance with United States generally accepted accounting principles (“U.S. GAAP”). Accordingly, the Group’s first consolidated financial statements that comply with IFRS are applicable as of December 31, 2016, together with the comparative period data for the year ended December 31, 2015.

 

The Company’s financial statements have been prepared on a cost basis, except for certain assets and liabilities such as: financial assets measured at fair value through other comprehensive income; contingent liabilities related to business combination and other financial assets and liabilities (including derivatives) which are presented at fair value through profit or loss.

 

The Company has elected to present the profit or loss items using the function of expense method.

 

2)Use of judgments, estimates and assumptions:

 

The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that have an effect on the application of the accounting policies and on the reported amounts of assets, liabilities, revenues and expenses in the financial statements. The Company’s management believes that the estimates and assumptions used are reasonable based upon information available at the time they are made. These estimates and underlying assumptions are reviewed regularly. Actual results could differ from those estimates. Changes in accounting estimates are reported in the period of the change in estimate.

 

The judgments, estimates and assumptions which have the most significant effect on the amounts recognized in the financial statements are employed in determining values of goodwill and identifiable intangible assets and their subsequent impairment analysis, revenue recognition, timing of commitment to execution of transactions, tax assets and tax positions, legal contingencies, research and development capitalization, classification of leases, contingent consideration related to acquisitions, determining the fair value of put options of non-controlling interests, pension and other post-employment benefits and share-based compensation costs. These judgements, estimates and assumptions also impact the Company’s assessment as to whether it has effective control over companies in which it holds less than the majority of the voting rights.

 

3)Consolidated financial statements:

 

The consolidated financial statements comprise the financial statements of companies that are controlled by the Company (subsidiaries). Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Potential voting rights are considered when assessing whether an entity has control. The consolidation of the financial statements commences on the date on which control is obtained and ends when such control ceases.

 

Effective control:

 

In a situation where the Company holds less than a majority of voting power in a given entity, but that power is sufficient to enable the Company to unilaterally direct the relevant activities of such entity, then the control is exercised. When assessing whether voting rights held by the Company are sufficient to give it power, the Company considers all facts and circumstances, including: the amount of those voting rights relative to the amount and dispersion of other vote holders; potential voting rights held by the Company and other shareholders or parties; rights arising from other contractual arrangements; significant personal ties; and any additional facts and circumstances that may indicate that the Company has, or does not have the ability to direct the relevant activities when decisions need to be made, inclusive of voting patterns observed at previous meetings of shareholders.

 

The Company’s management has concluded that despite the lack of absolute majority of voting power at the general meetings of shareholders of Matrix, Sapiens and Magic, in accordance with IFRS 10, these investees are controlled by the Company. The conclusion regarding the existence of control during the years ended December 31, 2016, 2017 and 2018 with respect to Matrix, Sapiens and Magic, in accordance with IFRS 10, was made in accordance with the following factors:

 

Sapiens:

 

i)Governing bodies of Sapiens:

 

Decisions of Sapiens’ shareholders general meeting are taken by a simple majority of votes represented at the general meeting. The annual (ordinary) general meeting adopts resolutions to appoint individual directors, choose Sapiens’ independent auditors for the next year, as well as approve the company’s financial statements and the management’s report on operations.

 

In accordance with Sapiens’ articles of association, the board of directors of Sapiens is responsible for managing its current business operations and is authorized to take substantially all decisions which are not specifically reserved to Sapiens’ shareholders by its articles of association, including the decision to pay out dividends. Sapiens’ board of directors is composed of 6 members, 4 of whom are independent directors. For the last 8 years, the Company has consistently reappointed the same members of the board of directors. Likewise, the previous composition of the board of directors was re-elected during the general meeting that was held in December 2018.

 

ii)Shareholders structure of Sapiens:

 

Sapiens’ shareholders structure is dispersed because, apart from the Company, just two financial institution held more than 5% of the voting rights at the general meeting (representing 5.1%, and 6.5%, of the votes, respectively). There is no evidence that any shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Sapiens’ general meetings were attended by shareholders representing in total between 70% and 80% of the total voting power (including the Company’s share power and bearing in mind that the Company presently holds approximately 48.08% of total voting rights). This means that the level of activity of Sapiens’ other shareholders is relatively moderate or low. As of December 31, 2018, the attendance from shareholders would have to be higher than 96.2% in order to deprive the Company of an absolute majority of votes at the general meeting.

 

In accordance with voting patterns at Sapiens’ shareholders’ meetings in recent years, it is the Company’s management’s belief that achieving such a high attendance seems unlikely.

 

Magic:

 

i)Governing bodies of Magic:

 

Decisions of Magic’s shareholders’ general meeting are taken by a simple majority of votes represented at the general meeting. The annual (ordinary) general meeting adopts resolutions to elect individual directors, appoint Magic’s independent auditors for the next year, as well as to approve Magic’s financial statements and the management’s report on operations.

 

In accordance with the Magic’s articles of association, the board of directors of Magic is responsible for managing Magic’s current business operations and is authorized to take substantially all decisions which are not specifically reserved to Magic shareholders by its articles of association, including the decision to pay out dividends. Magic’s board of directors is composed of 5 members, 3 of whom are independent directors. In recent years, the Company has consistently reappointed mostly the same members of the board of directors. The only exception was the appointment of Mr. Avi Zakaya, who has replaced Mr. Yechezkel Zeira after nine years of service.

 

ii)Shareholders structure of Magic:

 

Magic’s shareholders’ structure is dispersed because, apart from the Company, as of December 31, 2018, there were just four financial institutions holding more than 5% of Magic’s voting power (representing 7.4%, 6.0%, 5.9% and 5.6% of the votes, respectively). There is no evidence that any of the shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Magic’s general meetings were attended by shareholders representing not more than 70% of total voting rights (including the Company’s share power and bearing in mind that the Company presently holds approximately 45.21% of total voting power). This means that the level of activity of Magic’s other shareholders is relatively moderate or low. As of December 31, 2018, the attendance by shareholders would have to be higher than 90.4% in order to deprive the Company of an absolute majority of votes at the general meeting. In accordance with voting patterns at Magic’s shareholders’ meetings in recent years, it is the Company’s management belief that achieving such a high attendance seems unlikely.

 

Matrix:

 

i)Governing bodies of Matrix:

 

Decisions of Matrix’s shareholders general meeting are taken by a simple majority of votes represented at the general meeting. The annual (ordinary) general meeting adopts resolutions to elect individual directors, appoint Matrix’s independent auditors for the next year, as well as approve the company’s financial statements and management’s report on operations. In accordance with Matrix’s articles of association, the board of directors of Matrix is responsible for managing its current business operations and is authorized to take substantially all decisions which are not specifically reserved to Matrix’s shareholders by its articles of association, including the decision to pay out dividends. Matrix’s board of directors is composed of 5 members, 3 of whom are independent directors. For the last 5 years (i.e., 2014-2018), the Company has consistently reappointed mostly the same members of the board of directors. The only exceptions were the appointment of Ms. Yafit Keret, who has replaced Ms. Michal Leshem after nine years of service as an external director in accordance with the Companies Law, 5759-1999 and the retirement of Mr. Pinchas Grinfeld.

 

ii)Shareholders’ structure of Matrix:

 

Matrix’s shareholders structure is dispersed because, apart from the Company, as of December 31, 2018 there was just one financial institution holding more than 5% of Matrix’s voting power (9.0% of the votes). There is no evidence that any of the shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Matrix’s general meetings were attended by shareholders representing not more than between 75% and 82% of total voting rights (including the Company’s share power and bearing in mind that the Company presently holds approximately 49.21% of total voting power). This means that the level of activity of Matrix’s other shareholders is relatively moderate or low. As of December 31, 2018, the attendance by shareholders would have to be higher than 98.4% in order to deprive the Company of an absolute majority of votes at the general meeting. In accordance with voting patterns at Matrix’s shareholders’ meetings in recent years, it is the Company’s management’s belief that achieving such a high attendance seems unlikely.

 

The financial statements of the Company and of the investees, after being adjusted to comply with IFRS, are prepared for the same reporting period and using consistent accounting treatment of similar transactions and economic activities. Any discrepancies in the applied accounting policies are eliminated by making appropriate adjustments. Significant intragroup balances and transactions and gains or losses resulting from intragroup transactions are eliminated in full in the consolidated financial statements.

 

Non-controlling interests in subsidiaries represent the equity in subsidiaries not attributable, directly or indirectly, to a parent. Non-controlling interests are presented in equity separately from the equity attributable to the equity holders of the Company. Profit or loss and components of other comprehensive income are attributed to the Company and to non-controlling interests. Losses are attributed to non-controlling interests even if they result in a negative balance of non-controlling interests in the consolidated statement of financial position.

 

Changes in the share interest in a subsidiary that do not result in a loss of control are recognized as a change in equity, by adjusting the balance of the non-controlling interests against the equity attributable to the equity holders of the Company, and net of the consideration paid or received.

 

4)Business combinations and goodwill:

 

Business combinations are accounted for by applying the acquisition method. The cost of the acquisition is measured at the fair value of the consideration transferred on the acquisition date with the addition of non-controlling interests in the acquiree. In each business combination, the Company determines whether to measure the non-controlling interests in the acquiree based on their fair value on the acquisition date or at their proportionate share in the fair value of the acquiree’s net identifiable assets.

 

Direct acquisition costs are carried to the statement of profit or loss as incurred.

 

In a business combination achieved in stages, equity interests in the acquiree that had been held by the acquirer prior to obtaining control are measured at the acquisition date fair value while recognizing a gain or loss resulting from the revaluation of the prior investment on the date of achieving control.

 

Contingent consideration is recognized at fair value on the acquisition date and classified as a financial asset or liability in accordance with IFRS 9, “Financial Instruments”. Subsequent changes in the fair value of the contingent consideration are recognized in profit or loss. If the contingent consideration is classified as an equity instrument, it is measured at fair value on the acquisition date without subsequent remeasurement.

 

Goodwill is initially measured at cost which represents the excess of the acquisition consideration and the amount of non-controlling interests over the net identifiable assets acquired and liabilities assumed. If the resulting amount is negative, the acquirer recognizes the resulting gain on the acquisition date without subsequent measurement.

 

5)Investment in joint arrangements:

 

Joint arrangements are arrangements in which the Company has joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

 

i.Joint ventures:

 

In joint ventures the parties that have joint control of the arrangement have rights to the net assets of the arrangement. A joint venture is accounted for by using the equity method.

 

ii.Joint operations:

 

In joint operations the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement. The Company recognizes in relation to its interest its share of the assets, liabilities, revenues and expenses of the joint operation.

 

6)Investments in associates:

 

Associates are companies in which the Group has significant influence over the financial and operating policies without having control. The investment in an associate is accounted for using the equity method.

 

7)Investments accounted for using the equity method:

 

The Group’s investments in associates and joint ventures are accounted for using the equity method. Under the equity method, the investment in the associate or in the joint venture is presented at cost with the addition of post-acquisition changes in the Group’s share of net assets, including other comprehensive income of the associate or the joint venture. Gains and losses resulting from transactions between the Group and the associate or the joint venture are eliminated to the extent of the interest in the associate or in the joint venture.

  

Goodwill relating to the acquisition of an associate or a joint venture is presented as part of the investment in the associate or the joint venture, measured at cost and not systematically amortized. Goodwill is evaluated for impairment as part of the investment in the associate or in the joint venture as a whole.

 

The financial statements of the Company and of the associate or joint venture are prepared as of the same dates and periods. The accounting policies applied in the financial statements of the associate or the joint venture are uniform and consistent with the policies applied in the financial statements of the Group.

 

Upon the acquisition of an associate or a joint venture achieved in stages when the former investment in the acquiree was accounted for pursuant to the provisions of IFRS 9, the Group adopts the principles of IFRS 3 regarding business combinations achieved in stages. Consequently, equity interests in the acquiree that had been held by the Group prior to achieving significant influence or joint control are measured at fair value on the acquisition date and are included in the acquisition consideration while recognizing a gain or loss resulting from the fair value measurement.

 

The equity method is applied until the loss of significant influence in the associate or loss of joint control in the joint venture or classification as investment held for sale.

 

On the date of loss of significant influence or joint control, the Group measures any remaining investment in the associate or the joint venture at fair value and recognizes in profit or loss the difference between the fair value of any remaining investment plus any proceeds from the sale of the investment in the associate or the joint venture and the carrying amount of the investment on that date.

 

8)Functional currency, presentation currency and foreign currency:

 

i.Functional currency and presentation currency:

 

The presentation currency of the financial statements is the U.S dollars (the “dollar”). The Group determines the functional currency of each investee, including companies accounted for at equity. The currency of the primary economic environment in which the operations of Formula and certain of its investees are conducted is the dollar, thus, the dollar is the functional and reporting currency of Formula and certain of its investees.

 

Assets, including fair value adjustments upon acquisition, and liabilities of an investee which is a foreign operation, are translated at the closing rate at each reporting date. Profit or loss items are translated at average exchange rates for all periods presented. The resulting translation differences are recognized in other comprehensive income (loss).

 

Intragroup loans for which settlement is neither planned nor likely to occur in the foreseeable future are, in substance, a part of the investment in the foreign operation and, accordingly, the exchange rate differences from these loans (net of the tax effect) are recorded in other comprehensive income (loss).

 

Upon the full or partial disposal of a foreign operation resulting in loss of control in the foreign operation, the cumulative gain (loss) from the foreign operation which had been recognized in other comprehensive income is transferred to profit or loss. Upon the partial disposal of a foreign operation which results in the retention of control in the subsidiary, the relative portion of the amount recognized in other comprehensive income is reattributed to non-controlling interests.

 

ii.Transactions, assets and liabilities in foreign currency:

 

Transactions denominated in foreign currency are recorded upon initial recognition at the exchange rate at the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are translated at each reporting date into the functional currency at the exchange rate at that date. Exchange rate differences, other than those capitalized to qualifying assets or accounted for as hedging transactions in equity, are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currency and measured at cost are translated at the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are translated into the functional currency using the exchange rate prevailing at the date when the fair value was determined.

 

9)Cash equivalents:

 

Cash equivalents are considered highly liquid investments, including unrestricted short-term bank deposits with an original maturity of three months or less from the date of investment or with a maturity of more than three months, but which are redeemable on demand without penalty and which form part of the Group’s cash management. Cash and cash equivalent includes amounts held primarily in New-Israeli Shekel, dollars, Euro, Japanese Yen, Indian Rupee and British Pound.

 

10)Short-term and restricted deposits:

 

Short-term bank deposits are deposits with an original maturity of more than three months from the date of investment and which do not meet the definition of cash equivalents. The deposits are presented according to their terms of deposit. Restricted deposits include deposits used to secure certain subsidiaries’ ongoing projects and credit lines from banks, as well as security deposits with respect to leases, and are classified under other short-term and long-term receivables.

 

11)Allowance for doubtful accounts (applied until December 31, 2017 is as follows):

 

The allowance for doubtful accounts is determined in respect of specific trade receivables whose collection, in the opinion of the Group’s management, is doubtful. The Group did not recognize an allowance in respect of groups of trade receivables that are collectively assessed for impairment due to immateriality. Impaired receivables are derecognized when they are assessed as uncollectible.

 

The bad debt expense, net for the years ended December 31, 2016 and 2017 was $652 and $1,373, respectively. Bad debt expense, net for the year ended December 31, 2018 was $1,723 under the new guidance (see Note 22).

 

12)Inventories:

 

Inventories are measured at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase and costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. Inventories are mainly comprised of purchased merchandise and products which consist of educational software kits, computers, peripheral equipment and spare parts. Cost is determined on the “first in - first out” basis.

 

The Group periodically evaluates the condition and aging of its inventories and makes provisions for impairment of slow moving inventories accordingly. No such impairments have been recognized in any period presented.

 

13)Revenue recognition:

 

IFRS 15, “Revenue from Contracts with Customers” (the “Standard”), issued by the IASB in May 2014, supersedes IAS 11 ‘Construction Contracts’, IAS 18 ‘Revenue from contracts with customers’ and related Interpretations and applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards.

 

The accounting policy for revenue recognition applied until December 31, 2017, is as follows:

 

Revenues are recognized in profit or loss when the revenues can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Group and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenues are measured at the fair value of the consideration less any trade discounts, volume rebates and returns.

 

The following are the specific revenue recognition criteria which must be met before revenue is recognized by the Company and its subsidiaries:

 

i.Revenues from software solutions and services:

 

a)Revenues from contracts based on actual inputs. Revenues from master agreements based on actual inputs are recognized based on actual labor hours.

 

b)Outsourcing - These agreements are similar in nature to agreements that are based on actual labor hours. The Group allocates employees to projects that are generally managed by the customers at their charge based on the pricing of labor hours. Revenues are recognized based on actual labor hours.

 

ii.Revenues from sales, distribution and support of software products:

 

The Group recognizes revenues from the sale of software (i) only after the significant risks and rewards of ownership of the software have been transferred to the buyer for which a necessary condition is delivery of the software, either physically or electronically, or providing the right to use or permission to make copies of the software, (ii) the Group does not retain any continuing management involvement that is associated with ownership and does not retain the effective control of the sold software, (iii) the amount of revenues can be measured reliably, (iv) it is probable that the economic benefits associated with the transaction will flow to the Group and (v) the costs incurred or to be incurred in respect of the transaction can be measured reliably. The Group reports income on a gross basis since it acts as a principal and bears the risks and rewards derived from the transaction.

 

Revenue from third-party sales is recorded at a gross or net amount according to certain indicators. The application of these indicators for gross and net reporting of revenue depends on the relative facts and circumstances of each sale and requires significant judgment.

 

Revenues from sale agreements that do not provide a general right of return and consist of multiple elements such as hardware, service and support agreements are split into different accounting units which are separately recognized. An element only represents a separate accounting unit if and only if it has stand-alone value for the customer. Moreover, there should be reliable and objective evidence of the fair value of all the elements in the agreement or of the fair value of undelivered elements. Revenues from the various accounting units are recognized when the revenue recognition criteria are met with respect to all the elements of the accounting unit based on their specific type and only up to the amount of the consideration that is not contingent on completion or performance of the other elements in the contract.

 

Maintenance and support includes annual maintenance contracts providing for unspecified upgrades for new versions and enhancements on a when-and-if-available basis for an annual fee. The right for unspecified upgrades for new versions and enhancements on a when-and-if-available basis does not specify the features, functionality and release date of future product enhancements for the customer to know what will be made available and the general timeframe in which it will be delivered. Revenues from maintenance services are recognized on a straight-line basis at the relative portion of the maintenance contract that is determined for each reporting year. Revenues that have been received before the respective service has been provided are carried to deferred income. Maintenance and support revenue included in multiple element arrangements is deferred and recognized on a straight-line basis over the term of the maintenance and support agreement.

 

iii.Revenues from training and implementation services:

 

Revenues from trainings and implementations are recognized when providing the service. Revenues from training services in respect of courses conducted over a period of up to 3 months will be recognized over the period of the course. Revenues from training services in respect of courses ordered in advance and long-term or short term (for a period of up to a year) retraining courses will be recognized over the period of the course. Revenues from projects which are usually ordered by organizations will be recognized under the actual inputs by using the basis of hours actually invested in the project.

 

iv.Revenues from hardware products and infrastructure solutions:

 

Revenues from hardware products and infrastructure solutions are recognized after all the significant risks and rewards of ownership of the products have been transferred to the buyer. The Group does not retain any continuing management involvement that is associated with ownership and does not retain the effective control of the sold products, the amount of revenues can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Group and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

The accounting policy for revenue recognition applied commencing from January 1, 2018, is as follows:

 

As described in Note 2 (30)(A) regarding the initial adoption of IFRS 15, the Group elected to adopt the provisions of the Standard using the modified retrospective method with the application of certain practical expedients and without restatement of comparative data.

 

The new standard establishes a five-step model to account for revenue arising from contracts with customers and requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers:

 

Step 1: Identify the contract with a customer, including reference to contract combination and accounting for contract modifications.

 

Step 2: Identify the separate performance obligations in the contract.

 

Step 3: Determine the transaction price, including reference to variable consideration, significant financing components, non-cash consideration and any consideration payable to the customer.

 

Step 4: Allocate the transaction price to the distinct performance obligations on a relative stand-alone selling price basis using observable information, if it is available, or using estimates and assessments.

 

Step 5: Recognize revenue when a performance obligation is satisfied, either at a point in time or over time.

 

Under IFRS 15, revenues are recognized when control of the promised goods or services are transferred to the customers in an amount that reflects the consideration that the Group expects to receive in exchange for those goods or services.

 

The Group enters into contracts that can include various combinations of products and software, IT services and hardware, as detailed below, which are generally capable as being distinct from each other and accounted for as separate performance obligations.

 

For contracts with customers that contain multiple performance obligations, the Group accounts for each individual performance obligation separately, if they are distinct from each other. The transaction price is allocated to the separate performance obligations on a relative stand-alone selling price basis.

 

Stand-alone selling prices of software sales are typically estimated using the residual approach due to the lack of selling software licenses on a stand-alone basis. Stand-alone selling prices of software services are typically determined by considering several external and internal factors including but not limited to, observable transactions when these services are sold on a stand-alone basis.

 

The following is a description of principal activities from which the Group generates its revenues:

 

i.Sale of proprietary licenses without significant related services

 

In the event in which the sale of a proprietary license (perpetual or term-based) is distinct from other significant modification or implementation services, and thereby it constitutes a separate performance obligation, the Group considers whether this performance obligation in granting the license is to provide the customer with either:

 

●a right to access the entity’s intellectual property in the form in which it exists throughout the licensing period; or
   
●a right to use the entity’s intellectual property in the form in which it exists at the time of granting the license

 

The vast majority of licenses sold separately by the Group (thus representing a separate performance obligation) are intended to provide the customer with a right to use the intellectual property, which means that revenues from the sale of such licenses are recognized at the point in time at which control of the license is transferred to the customer.

 

The Group recognizes revenue from software licensing transactions over time when the Group provides the customer a right to access the Group’s intellectual property throughout the license period.

 

ii.Sale of proprietary licenses with significant related services

 

Revenues from contracts that include the sale of proprietary licenses with significant related services (for example, modifications, implementation or customization to customer-specific specifications) are generally accounted by the Group as performance obligations satisfied over time. In such contracts the Group is normally committed to provide the customer with a functional IT system and the customer can only benefit from such functional system, being the final product that would normally be comprised of proprietary licenses and significant related services. The Group considers that a commitment to sell a license under such performance obligation does not satisfy the criteria of being distinct, because the transfer of the license is only part of a larger performance obligation. The Group recognizes revenue from such contracts using cost based input methods, which recognizes revenue and gross profit as the work is performed based on a ratio between actual costs incurred compared to the total estimated costs for the contract. This is because, in accordance with IFRS 15, revenues may be recognized over the course of transferring control of the supplied goods and services, as long as the entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date throughout the duration of the contract. Provisions for estimated losses on uncompleted contracts are made during the period in which such losses are first determined, in the amount of the estimated loss for the entire contract.

  

When appropriate, the Group also applies a practical expedient permitted under IFRS 15 whereby if the Group has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Group’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided), the Group may recognize revenue in the amount it is entitled to invoice. Deferred revenues, which represent a contract liability, include unearned amounts received under maintenance and support (mainly) and amounts received from customers for which revenues have not yet been recognized.

 

iii.Maintenance services and warranties

 

Post-contract support includes annual maintenance contracts providing for unspecified upgrades for new versions and enhancements on a when-and-if-available basis for an annual fee. The right for an unspecified upgrade for new versions and enhancements on a when-and-if-available basis do not specify the features, functionality and release date of future product enhancements for the customer to know what will be made available and the general timeframe in which it will be delivered.

 

The accounting policy regarding the recognition of post-contract support remained unchanged after the adoption of IFRS 15, as such services, in principle, constitute a separate performance obligation where the customer consumes the benefits of goods and services as they are delivered by the provider, as a consequence of which revenues are recognized over time during the service performance period.

 

The Group considers the post-contract support performance obligation as a distinct performance obligation that is satisfied over time, and as such, it recognizes revenue for post-contract support on a straight-line basis over the period for which technical support is contractually agreed to be provided for the software, typically twelve (12) months.

 

In certain cases, the Group also provides a warranty for goods and services sold (i.e. extended warranties that the scope of which is broader than just an assurance to the customer that the product/service complies with agreed-upon specifications). The Group has ascertained that such warranties granted by the Group meet the definition of service. The conclusion regarding the extended nature of a warranty is made whenever the Group contractually undertakes to repair any errors in the delivered software within a strictly specified time limit and/or when such warranty is more extensive than the minimum required by law. Under IFRS 15, the fact of granting an extended warranty indicates that the Group actually provides an additional service. As such, the Group recognizes an extended warranty as a separate performance obligation and allocates a portion of the transaction price to such service. In all cases where an extended warranty is accompanied by a maintenance service, which is even a broader category than an extended warranty itself, revenues are recognized over time because the customer consumes the benefits of such service as it is performed by the provider. If this is the case, the Group continues to allocate a portion of the transaction price to such maintenance service. Likewise, in cases where a warranty service is provided after the project completion and is not accompanied by any maintenance service, then a portion of the transaction price and analogically recognition of a portion of contract revenues will have to be deferred until the warranty service is actually fulfilled.

 

iv.Sale of third-party licenses and services

 

Third-party licenses and services includes revenues from the sale of third-party licenses as well as from the provision of services which, due to technological or legal reasons, must be carried out by subcontractors (this applies to hardware and software maintenance and outsourcing services provided by their manufacturers). Revenues from the sale of third-party licenses are accounted for as sales of goods, which means that such revenues are recognized at the point in time at which control of the license is transferred to the customer. Concurrently, revenues from third-party services, including primarily third-party maintenance services, are recognized over time when such services are provided to the customer.

 

Whenever the Group is involved in the sale of third-party licenses or services, it will consider whether the Group acts as a principal or an agent; however, in most cases the conclusion is that the Group is the main party required to satisfy a performance obligation and therefore the resulting revenues are recognized in the gross amount of consideration.

 

v.Sale of hardware

 

Sale of hardware includes revenues from contracts with customers for the supply of infrastructure. In this category, revenues are recognized basically at the point in time at which control of the equipment is transferred. This does not apply to contracts in which the hardware is not delivered separately from services provided alongside, in such case the sale of hardware is part of a performance obligation involving the supply of a comprehensive system. However, such comprehensive projects are a rare practice in the Group as the sale of hardware is predominantly performed on a distribution basis.

 

vi.Variable consideration

 

In accordance with IFRS 15, if a contract consideration encompasses any amount that is variable, the Group shall estimate the amount of consideration to which it will be entitled in exchange for transferring promised goods or services to the customer, and shall include a portion or the whole amount of variable consideration in the transaction price but only to the extent that it is highly probable a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

 

vii.Significant financing component

 

When contracts involve a significant financing component, the Group adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or implicitly) provide the customer with a significant benefit of financing.

 

The Group has elected to apply the practical expedient allowed by IFRS 15 according to which it does not separate the financing component in transactions whose credit terms are less than one year and will recognize revenue in the amount of the consideration stated in the contract even if the customer pays for the goods or services subsequent to their receipt.

 

viii.Costs of contracts with customers

 

Costs of obtaining a contract

 

Costs of obtaining a contract are those incremental costs incurred by the Group in order to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Group recognizes such costs as an asset if it expects to recover those costs. Such capitalized costs of obtaining a contract shall be amortized over the period when the Group satisfies the performance obligations arising from the contract. Amortization expenses related to costs of obtaining or fulfilling a contract are included in sales and marketing expenses in the consolidated statements of profit or loss.

 

Commissions to sales and marketing and certain management personnel that are paid based on their attainment of certain predetermined sales or profit goals, are considered by the Group as incremental costs of obtaining a contract with a customer, and are deferred and amortized on a systematic basis, consistent with the transfer of the related performance obligations to the customer. As such, sales commissions paid for initial contracts, which are not commensurate with additional commissions paid for renewal of such contracts, are capitalized and amortized over the expected period of benefit (including expected renewals periods). Sales commissions on initial contracts, which are commensurate with additional commissions paid for the renewal of such contracts, are capitalized and then amortized correspondingly to the recognized revenue of the related initial contracts (not including expected renewals periods). Sales commissions for renewal of such initial contracts are capitalized and then amortized on a straight line basis over the related contractual renewal period. As a practical expedient, if the expected amortization period is one-year or less, the commission fee is expensed as incurred.

 

Costs to fulfill a contract

 

Costs to fulfill a contract are the costs incurred in fulfilling a contract with a customer. The Group recognizes such costs as an asset if they are not within the scope of another standard (for example, IAS 2 ‘Inventories’, IAS 16 ‘Property, Plant and Equipment’ or IAS 38 ‘Intangible Assets’) and if those costs meet all of the following criteria:

 

i)the costs relate directly to a contract or to an anticipated contract with a customer,

 

ii)the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future, and

 

iii)the costs are expected to be recovered.

 

14)Government grants:

 

Government grants are recognized when there is reasonable assurance that the grants will be received and the Group will comply with the attached conditions. Government grants received from the Office of the Israel Innovation Authority (“IIA”), formerly the Office of the Chief Scientist (“OCS”), are recognized upon receipt as a liability if future economic benefits are expected from the research project that will result in royalty-bearing sales.

 

A liability for the loan is first measured at fair value using a discount rate that reflects a market rate of interest. The difference between the amount of the grant received and the fair value of the liability is accounted for as a Government grant and recognized as a reduction of research and development expenses. After initial recognition, the liability is measured at amortized cost using the effective interest method. Royalty payments are treated as a reduction of the liability. If no economic benefits are expected from the research activity, the grant receipts are recognized as a reduction of the related research and development expenses. In that event, the royalty obligation is treated as a contingent liability in accordance with IAS 37.

 

In each reporting date, the Group evaluates whether there is reasonable assurance that the liability recognized, in whole or in part, will not be repaid (since the Group will not be required to pay royalties) based on the best estimate of future sales and using the original effective interest method, and if so, the appropriate amount of the liability is derecognized against a corresponding reduction in research and development expenses. Amounts paid as royalties are recognized as settlement of the liability.

 

15)Debentures:

 

The Group accounts for outstanding principal amount of debentures as long-term liability, in accordance with IFRS 9, with current maturities classified as short-term liabilities. The Group identifies and separates equity components contains in convertible debentures by first determining the liability component, in accordance with IAS 32, based on the fair value of an equivalent non-convertible liability. The conversion component valued is being determined to be the residual amount. Debt issuance costs are capitalized and reported as deferred financing costs, which are amortized over the life of the debentures using the effective interest rate method.

 

16)Taxes on income:

 

Current or deferred taxes are recognized in profit or loss, except to the extent that they relate to items which are recognized in other comprehensive income or equity.

 

●Current taxes:

 

The current tax liability is measured using the tax rates and tax laws that have been enacted or substantively enacted by the reporting date as well as adjustments required in connection with the tax liability in respect of previous years.

 

●Deferred taxes:

 

Deferred taxes are computed in respect of temporary differences between the carrying amounts in the financial statements and the amounts attributed for tax purposes. Deferred taxes are measured at the tax rate that is expected to apply when the asset is realized or the liability is settled, based on tax laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is not probable that they will be utilized. Deductible carryforward losses and temporary differences for which deferred tax assets had not been recognized are reviewed at each reporting date and a respective deferred tax asset is recognized to the extent that their utilization is probable.

 

Taxes that would apply in the event of the disposal of investments in investees have not been taken into account in computing deferred taxes, as long as the disposal of the investments in investees is not probable in the foreseeable future. Also, deferred taxes that would apply in the event of distribution of earnings by investees as dividends have not been taken into account in computing deferred taxes, since the distribution of dividends does not involve an additional tax liability or since it is the Group’s policy not to initiate distribution of dividends from a subsidiary that would trigger an additional tax liability.

 

Taxes on income that relate to distributions of an equity instrument and to transaction costs of an equity transaction are accounted for pursuant to IAS 12.

 

Deferred taxes are offset if there is a legally enforceable right to offset a current tax asset against a current tax liability and the deferred taxes relate to the same taxpayer and the same taxation authority.

 

17)Leases:

 

The criteria for classifying leases as finance or operating leases depend on the substance of the agreements and are made at the inception of the lease in accordance with the following principles as set out in IAS 17.

 

The Group as lessee:

 

i.Financial leases:

 

A lease that transfers substantially all the risks and rewards incidental to ownership of the leased asset to the Group is classified as a finance lease. At the commencement of the lease term, the leased asset is measured at the lower of the fair value of the leased asset or the present value of the minimum lease payments. The leased asset is depreciated over the shorter of its useful life and the lease term.

 

ii.Operating leases:

 

Leases in which substantially all the risks and rewards of ownership of the leased asset are not transferred to the Group are classified as operating leases. Lease payments are recognized as an expense in profit or loss on a straight-line basis over the lease term.

 

18)Property, plant and equipment, net:

 

Property, plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation, accumulated impairment losses and any related investment grants and excluding day-to-day servicing expenses. Cost includes spare parts and auxiliary equipment that are used in connection with plant and equipment. The cost of an item of property, plant and equipment comprises the initial estimate of the costs of dismantling and removing the item and restoring the site on which the item is located.

 

Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:

 

    %
     
Computers, software and peripheral equipment   20-33 (mainly 33)
Office furniture and equipment   6-33 (mainly 7)
Motor vehicles   15
Buildings   2-4

 

Leasehold improvements are amortized using the straight-line method over the term of the lease (including option terms that are deemed to be reasonably assured) or the estimated useful life of the improvements, whichever is shorter.

 

The useful life, depreciation method and residual value of an asset are reviewed at least each year-end (at the end of the year) and any changes are accounted for prospectively as a change in accounting estimate. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized. For impairment testing of property, plant and equipment, see Note 2(21) below.

 

19)Research and development costs:

 

Research expenditures incurred in the process of software development are recognized in profit or loss when incurred. An intangible asset arising from a software development project or from the development phase of an internal project is recognized if the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale; the Group’s intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate future economic benefits; the availability of adequate technical, financial and other resources to complete the intangible asset; and the ability to measure reliably the respective expenditure asset during its development. The Group establishes technological feasibility upon completion of a detailed program design or working model.

 

Research and development costs incurred between completion of the detailed program design and the point at which the product is ready for general release, have been capitalized.

 

Capitalized software costs are measured at cost less any accumulated amortization and any accumulated impairment losses on a product by product basis. Amortization of capitalized software costs begin when development is complete and the product is available for use. The Group considers a product to be available for use when the Group completes its internal validation of the product that is necessary to establish that the product meets its design specifications including functions, features, and technical performance requirements. Internal validation includes the completion of coding, documentation and testing that ensure bugs are reduced to a minimum. The internal validation of the product takes place a few weeks before the product is made available to the market. In certain instances, The Group enters into a short pre-release stage, during which the product is made available to a select number of customers as a beta program for their own review and familiarization. Subsequently, the release is made generally available to customers. Once a product is considered available for use, the capitalization of costs ceases and amortization of such costs to “cost of sales” begins.

 

Capitalized software costs are amortized on a product by product basis by the straight-line method over the estimated useful life of the software product (between 5-7 years).

 

Research and development costs incurred in the process of developing product enhancements are generally charged to expenses as incurred.

 

The Group assesses the recoverability of its capitalized software costs on a regular basis by assessing the net realizable value of these intangible assets based on the estimated future gross revenues from each product reduced by the estimated future costs of completing and disposing of it, including the estimated costs of performing maintenance and customer support over its remaining economical useful life using internally generated projections of future revenues generated by the products, cost of completion of products and cost of delivery to customers over its remaining economical useful life.

 

During the years ended December 31, 2016, 2017 and 2018, no such unrecoverable amounts were identified.

 

20)Other intangible assets:

 

Separately-acquired intangible assets are measured on initial recognition at cost, including directly attributable costs. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Expenditures relating to internally generated intangible assets, excluding capitalized development costs, are recognized in profit or loss when incurred.

 

According to management’s assessment, intangible assets with a finite useful life are amortized over their useful life and reviewed for impairment whenever there is an indication that the asset may be impaired. The amortization period and the amortization method for an intangible asset are reviewed at least at each year end. Other intangible assets are comprised mainly of customer-related intangible assets, backlogs, brand names, capitalized courses development costs, non-compete agreements and acquired technology and patent, and are amortized over their useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up. The useful life of intangible assets is as follows:

 

    Years
Customer relationship and backlog   1-15
Acquired technology   2-8
Brand names and patents   5-10

 

Gains or losses arising from the derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss.

 

The useful life of these assets is reviewed annually to determine whether their indefinite life assessment continues to be supportable. If the events and circumstances do not continue to support the assessment, the change in the useful life assessment from indefinite to finite is accounted for prospectively as a change in accounting estimate, and on that date the asset is tested for impairment. Commencing from that date, the asset is amortized systematically over its useful life.

 

21)Impairment of non-financial assets:

 

The Group evaluates the need to record an impairment of non-financial assets (property, plant and equipment, capitalized software costs and other intangible assets, goodwill, investments in joint venture) whenever events or changes in circumstances indicate that the carrying amount is not recoverable.

 

If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in profit or loss.

 

An impairment loss of an asset, other than goodwill, is reversed only if there have been changes in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. Reversal of an impairment loss, as above, shall not be increased above the lower of the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years and its recoverable amount. The reversal of impairment loss of an asset presented at cost is recognized in profit or loss.

 

The following criteria are applied in assessing impairment of these specific assets:

 

i.Goodwill in respect of subsidiaries:

 

For the purpose of impairment testing, goodwill acquired in a business combination is allocated, at the acquisition date, to each of our cash-generating units that are expected to benefit from the synergies of the combination.

 

The Group reviews goodwill for impairment once a year, on December 31, or more frequently if events or changes in circumstances indicate that there is an impairment.

 

Goodwill is tested for impairment by assessing the recoverable amount of the cash-generating unit (or group of cash-generating units) to which the goodwill has been allocated. An impairment loss is recognized if the recoverable amount of the cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is less than the carrying amount of the cash-generating unit (or group of cash-generating units). Any impairment loss is allocated first to goodwill. Impairment losses recognized for goodwill cannot be reversed in subsequent periods.

 

ii.Investment in associate or joint venture using the equity method:

 

After application of the equity method, the Group determines whether it is necessary to recognize any additional impairment loss with respect to the investment in associates or joint ventures. The Group determines at each reporting date whether there is objective evidence that the carrying amount of the investment in the associate or the joint venture is impaired. The test of impairment is carried out with reference to the entire investment, including the goodwill attributed to the associate or the joint venture.

 

During the years ended December 31, 2016, 2017 and 2018, no impairment indicators were identified.

 

22)Financial instruments:

 

As described in Note 2 (30)(B) regarding the initial adoption of IFRS 9, “Financial Instruments” (the “Standard”), the Group elected to adopt the provisions of the Standard retrospectively without restatement of comparative data.

 

The accounting policy for financial instruments applied until December 31, 2017 is as follows:

 

A.Financial assets:

 

Financial assets within the scope of IAS 39 are initially recognized at fair value plus directly attributable transaction costs, except for financial assets measured at fair value through profit or loss in respect of which transaction costs are recorded in profit or loss. After initial recognition, the accounting treatment of financial assets is based on their classification as follows:

 

i.Financial assets at fair value through profit or loss:

 

This category includes financial assets held for trading and a dividend preference derivative in TSG (for a description of the TSG derivative, see Note 8).

 

ii.Loans and receivables:

 

Loans and receivables are investments with fixed or determinable payments that are not quoted in an active market. After initial recognition, loans are measured based on their terms at amortized cost plus directly attributable transaction costs using the effective interest method and less any impairment losses. Short-term borrowings are measured based on their terms, normally at face value.

 

iii.Available-for-sale financial assets:

 

Available-for-sale financial assets are (non-derivative) financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Gains or losses from fair value adjustments, except for interest, exchange rate differences that relate to debt instruments and dividends from an equity instrument, are recognized in other comprehensive income. When the investment is disposed of or in case of impairment, the other comprehensive income (loss) is transferred to profit or loss.

 

B.Financial liabilities:

 

Financial liabilities are initially recognized at fair value. Loans and other liabilities measured at amortized cost are presented less direct transaction costs. After initial recognition, the accounting treatment of financial liabilities is based on their classification as follows:

 

i.Financial liabilities at amortized cost:

 

After initial recognition, loans and other liabilities are measured based on their terms at amortized cost less directly attributable transaction costs using the effective interest method.

 

ii.Financial liabilities at fair value through profit or loss:

 

Financial liabilities at fair value through profit or loss include financial liabilities classified as held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Derivatives, including separated embedded derivatives, are classified as held for trading unless they are designated as effective hedging instruments.

 

C.Offsetting financial instruments:

 

Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position if there is a legally enforceable right to set off the recognized amounts and there is an intention either to settle on a net basis or to realize the asset and settle the liability simultaneously.

 

The right of set-off must be legally enforceable not only during the ordinary course of business of the parties to the contract but also in the event of bankruptcy or insolvency of one of the parties. In order for the right of set-off to be currently available, it must not be contingent on a future event, there may not be periods during which the right is not available, or there may not be any events that will cause the right to expire.

 

D.Compound financial instruments:

 

i.Convertible debentures which contain both an equity component and a liability component are separated into two components. This separation is performed by first determining the liability component based on the fair value of an equivalent non-convertible liability. The value of the conversion component is determined to be the residual amount. Directly attributable transaction costs are apportioned between the equity component and the liability component based on the allocation of proceeds to the equity and liability components.

 

ii.Convertible debentures that are denominated in foreign currency contain two components: the conversion component and the debt component. The liability conversion component is initially recognized as a financial derivative at fair value. The balance is attributed to the debt component. Directly attributable transaction costs are allocated between the liability conversion component and the liability debt component based on the allocation of the proceeds to each component.

 

E.Embedded derivatives:

 

The Group assesses the existence of an embedded derivative and whether it is required to be separated from a host contract when the Group first becomes party to the contract. Reassessment of the need to separate an embedded derivative only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

 

F.Put option granted to non-controlling interests:

 

When the Group grants to non-controlling interests a put option to sell part or all of their interests in a subsidiary, during a certain period, even if such purchase obligation is conditional on the counterparty’s exercise of its contractual right to cause such redemption, if the put option agreement does not transfer to the Group any benefits incidental to ownership of the equity instrument (i.e. the Group does not have a present ownership in the shares concerned), then at the end of each reporting period the non-controlling interests (to which a portion of net profit attributable to non-controlling interests is allocated) are classified as a financial liability, as if such put-able equity instrument was redeemed on that date. The difference between the non-controlling interests carrying amount at the end of the reporting period and the present value of the liability is recognized directly in equity of the Group, under “Additional paid-in capital”.

 

The Group remeasures the financial liability at the end of each reporting period based on the estimated present value of the consideration to be transferred upon the exercise of the put option.

 

If the option is exercised in subsequent periods, the consideration paid upon exercise is treated as settlement of the liability. If the option expires, the liability is settled and it is a portion of the investment in the subsidiary disposed of, without loss of control therein.

 

If the Group has present ownership in the shares concerned, these non-controlling interests are accounted for as if they are held by the Group and changes in the amount of the liability are carried to profit or loss.

 

G.Derecognition of financial instruments:

 

i.Financial assets:

 

A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or the Group has transferred its contractual rights to receive cash flows from the financial asset or assumes an obligation to pay the cash flows in full without material delay to a third party, and, in addition it has transferred substantially all the risks and rewards of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

 

A transaction involving factoring of accounts receivable and credit card vouchers is derecognized when the above-mentioned conditions are met.

 

If the Group transfers its rights to receive cash flows from an asset and neither transfer nor retains substantially all the risks and rewards of the asset nor transfers control of the asset, a new asset is recognized to the extent of the Group’s continuing involvement in the asset. When continuing involvement takes the form of guaranteeing the transferred asset, the extent of the continuing involvement is the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required to repay. As of December 31, 2017, the Group has no open factoring transactions.

 

ii.Financial liabilities:

 

A financial liability is derecognized when it is extinguished, that is when the obligation is discharged or cancelled or expires. A financial liability is extinguished when the debtor (the Group) discharges the liability by paying in cash, other financial assets, goods or services or is legally released from the liability.

 

H.Impairment of financial assets:

 

The Group assesses at the end of each reporting period whether there is any objective evidence of impairment of a financial asset or group of financial assets as follows:

 

i.Financial assets carried at amortized cost:

 

Objective evidence of impairment exists when one or more events that have occurred after initial recognition of the asset have a negative impact on the estimated future cash flows. The amount of the loss recorded in profit or loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred) discounted at the financial asset’s original effective interest rate. If the financial asset has a variable interest rate, the discount rate is the current effective interest rate. In a subsequent period, the amount of the impairment loss is reversed if the recovery of the asset can be related objectively to an event occurring after the impairment was recognized. The amount of the reversal, up to the amount of any previous impairment, is recorded in profit or loss.

 

ii.Available-for-sale financial assets:

 

For equity instruments classified as available-for-sale financial assets, evidence of impairment includes a significant or prolonged decline in the fair value of the asset below its cost and evaluation of changes in the technological, economic or legal environment or in the market in which the issuer of the instrument operates. The determination of a significant or prolonged impairment depends on the circumstances at each reporting date. In making such a determination, historical volatility in fair value is considered, as well as a decline in fair value of 20% or more, or a decline in fair value whose duration is six months or more. Where there is evidence of impairment, the cumulative loss recorded in other comprehensive income is reclassified to profit or loss. In subsequent periods, any reversal of the impairment loss is recognized in other comprehensive income.

 

During 2016 and 2017 the Group did not recognize an impairment charge over its investments in available-for-sale marketable securities.

 

The accounting policy for financial instruments applied commencing from January 1, 2018, is as follows:

 

A.Financial assets:

 

Financial assets within the scope of the Standard, are measured at the date of initial recognition at their fair value, plus transaction costs that can be directly attributed to the acquisition of the financial asset, except in the case of a financial asset measured at fair value through profit or loss, in respect of which, transaction costs are charged to profit or loss.

 

The Group classifies and measures the debt instruments in its financial statements on the basis of the following criteria:

 

●the Group’s business model for the management of financial assets; and

 

●the contractual cash flow characteristics of the financial asset.

 

i.The Group measures debt instruments at amortized cost when:

 

The Group’s business model is the holding of financial assets in order to collect contractual cash flows, and the contractual terms of the financial asset provide entitlement on defined dates to cash flows, that are only principal and interest payments in respect of the amount of the principal, that has not yet been repaid. Subsequent to initial recognition, instruments in this group shall be presented at their cost at cost plus transaction costs directly using the amortized cost method. In addition, on the date of initial recognition, an entity may irrevocably designate a debt instrument at fair value through profit or loss, if such designation eliminates or significantly reduces inconsistencies in measurement or recognition, for example, if the related financial liabilities, are also measured at fair value through profit or loss.

 

ii.The Group measures debt instruments at fair value through other comprehensive income when:

 

The Group’s business model is the holding of financial assets in order to collect contractual cash flows and the sale of the financial assets, and the contractual terms of the financial asset provide entitlement on defined dates to cash flows that are only principal and interest payments in respect of the amount of the principal that has not yet been repaid. Subsequent to initial recognition, instruments in this group are measured at fair value. Gains or losses arising from adjustments to fair value, other than interest and exchange rate differentials, are recognized in other comprehensive income.

 

iii.The Group measures debt instruments at fair value through profit or loss when:

 

A financial asset which is a debt instrument does not meet the criteria for measurement at amortized cost or at fair value through other comprehensive income. After initial recognition, the financial asset is measured at fair value and gains or losses from fair value adjustments are recognized in profit or loss.

 

B.Impairment of financial assets:

 

The Group examines at each reporting date the provision for loss in respect of financial debt instruments that are not measured at fair value through profit or loss. The Group distinguishes between two situations of recognition of a provision for loss:

 

i.Debt instruments for which there has been no significant deterioration in the quality of their credit since the initial recognition or in cases where the credit risk is low – in this situation, the provision for loss recognized for this debt instrument will take into account expected credit losses in a period of 12 months after the reporting date;

 

ii.Debt instruments whose credit quality has deteriorated significantly since their initial recognition and for which the credit risk is not low – in this situation, the provision for a loss to be recognized will take into account projected credit losses - over the remaining life of the instrument.

 

The Group has financial assets with short credit periods, such as customers, for which it applies the relief prescribed in the model. In other words, the Group measures the provision for loss in an amount equal to expected credit losses throughout the life of the instrument.

 

Impairment in respect of debt instruments measured at amortized cost, will be carried to profit or loss against provision, while impairment in respect of debt instruments measured at fair value through other comprehensive income, will be carried to profit or loss against other comprehensive income, and will not reduce the book value of the financial asset in the statement of financial position.

 

The Group implements the relief prescribed in the Standard, according to which it assumes that the credit risk of a debt instrument that did not increase significantly from the date of initial recognition if it was determined at the reporting date that the instrument has a low credit risk, for example when the instrument has an external rating of “investment grade”.

 

C.Derecognition of financial assets:

 

The Group derecognizes a financial asset when and only when:

 

i.The contractual rights to the cash flows from the financial asset expire; or

 

ii.The Group transfers substantially all the risks and rewards deriving from the contractual rights to receive the cash flows from the financial asset or when some of the risks and rewards of transferring the financial asset remain with the entity but it may be said that it transferred control over the asset; or

 

iii.The Group retains the contractual rights to receive the cash flows arising from the financial asset but assumes a contractual obligation to pay these cash flows in full to a third party, without material delay.

 

D.Financial liabilities:

 

i.Financial liabilities measured at amortized cost:

 

Financial liabilities are initially recognized at fair value less transaction costs that are directly attributable to the issue of the financial liability. After initial recognition, the Group measures all financial liabilities at amortized cost using the effective interest rate method, except for:

 

●Financial liabilities at fair value through profit or loss, such as derivatives;

 

●Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies;

 

●Financial guarantee contracts;

 

●Contingent consideration recognized by an acquirer in a business combination as to which IFRS 3 applies.

 

ii.Financial liabilities measured at fair value through profit or loss:

 

At initial recognition, the Group measures financial liabilities that are not measured at amortized cost at fair value. Transaction costs are recognized in profit or loss. After initial recognition, changes in fair value are recognized in profit or loss.

 

E.Derecognition of financial liabilities:

 

A financial liability is derecognized when it is extinguished, that is, when the obligation is discharged or cancelled or expires. A financial liability is extinguished when the debtor discharges the liability by paying in cash, other financial assets, goods or services or is legally released from the liability.

 

When there is a modification in the terms of an existing financial liability, the Group evaluates whether the modification is substantial.

 

If the terms of an existing financial liability are substantially modified, such modification is accounted for as an extinguishment of the original liability and the recognition of a new liability. The difference between the carrying amounts of the above liabilities is recognized in profit or loss.

 

If the modification is not substantial, the Group recalculates the carrying amount of the liability by discounting the revised cash flows at the original effective interest rate and any resulting difference is recognized in profit or loss.

 

When evaluating whether the modification in the terms of an existing liability is substantial, the Group considers both quantitative and qualitative factors

 

F.Offsetting financial instruments:

 

Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position if there is a legally enforceable right to set off the recognized amounts and there is an intention either to settle on a net basis or to realize the asset and settle the liability simultaneously.

 

The right of set-off must be legally enforceable not only during the ordinary course of business of the parties to the contract but also in the event of bankruptcy or insolvency of one of the parties. In order for the right of set-off to be currently available, it must not be contingent on a future event, there may not be periods during which the right is not available, or there may not be any events that will cause the right to expire.

 

G.Put option granted to non-controlling interests:

 

When the Group grants to non-controlling interests a put option to sell part or all of their interests in a subsidiary, during a certain period, even if such purchase obligation is conditional on the counterparty’s exercise of its contractual right to cause such redemption, if the put option agreement does not transfer to the Group any benefits incidental to ownership of the equity instrument (i.e. the Group does not have a present ownership in the shares concerned) then at the end of each reporting period the non-controlling interests (to which a portion of net profit attributable to non-controlling interests is allocated) are classified as a financial liability, as if such put-able equity instrument was redeemed on that date. The difference between the non-controlling interests carrying amount at the end of the reporting period and the present value of the liability is recognized directly in equity of the Group, under “Additional paid-in capital”.

 

The Group remeasures the financial liability at the end of each reporting period based on the estimated present value of the consideration to be transferred upon the exercise of the put option.

 

If the option is exercised in subsequent periods, the consideration paid upon exercise is treated as settlement of the liability. If the option expires, the liability is settled and it is a portion of the investment in the subsidiary disposed of, without loss of control therein.

 

If the Group has present ownership of the non-controlling interests, these non-controlling interests are accounted for as if they are held by the Group, and changes in the amount of the liability are carried to profit or loss.

 

23)Fair value measurement:

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on the assumption that the transaction will take place in the asset’s or the liability’s principal market, or in the absence of a principal market, in the most advantageous market.

 

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

 

All assets and liabilities measured at fair value or for which fair value is disclosed are categorized into levels within the fair value hierarchy based on the lowest level input that is significant to the entire fair value measurement:

 

  Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
       
  Level 2 - inputs other than quoted prices included within Level 1 that are observable directly or indirectly.
       
  Level 3 - inputs that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data).

 

24)Treasury shares:

 

Company shares held by the Company and/or subsidiaries are recognized at cost of purchase and presented as a deduction from equity. Any gain or loss arising from a purchase, sale, issue or cancellation of treasury shares is recognized directly in equity.

 

25)Provisions:

 

A provision in accordance with IAS 37 is recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are measured according to the estimated future cash flows discounted using a pre-tax interest rate that reflects the market assessments of the time value of money and, where appropriate, those risks specific to the liability. When the Group expects part or all of the expense to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense is recognized in the statement of profit or loss net of any reimbursement.

 

Following are the types of provisions included in the financial statements:

 

i.Legal claims:

 

A provision for claims is recognized when the Group has a present legal or constructive obligation as a result of a past event, it is more likely than not that an outflow of resources embodying economic benefits will be required by the Group to settle the obligation and a reliable estimate can be made of the amount of the obligation.

 

ii.Contingent liability recognized in a business combination:

 

A contingent liability in a business combination is measured at fair value upon initial recognition. In subsequent periods, it is measured at the higher of the amount initially recognized less, when appropriate, cumulative amortization, and the amount that would be recognized at the end of the reporting period in accordance with IAS 37.

 

26)Derivative financial instruments and hedging:

 

The Group enters into contracts for derivative financial instruments such as forward currency contracts and options contracts to hedge risks associated with foreign exchange rates resulting from international activities and interest rate fluctuations. The derivative instruments primarily hedge or offset exposures to Euro, Japanese Yen and New Israeli Shekel (“NIS”) exchange rate fluctuations.

 

The Group’s options and forward contracts do not qualify for hedging accounting. Any gains or losses arising from changes in the fair values of the derivatives are recorded immediately in profit or loss as financial income or expense.

 

27)Employee benefit liabilities:

 

The Group has several employee benefit plans:

 

i.Short-term employee benefits:

 

Short-term employee benefits are benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services. These benefits include salaries, paid annual leave, paid sick leave, recreation and social security contributions and are recognized as expenses as the services are rendered. A liability in respect of a cash bonus or a profit-sharing plan is recognized when the Group has a legal or constructive obligation to make such payment as a result of past service rendered by an employee and a reliable estimate of the amount can be made.

 

ii.Post-employment benefits:

 

The plans are normally financed by contributions to insurance companies and classified as defined contribution plans or as defined benefit plans.

 

Formula’s and its Israeli investees’ (as defined with respect to their Israeli employee contribution plans pursuant to section 14 of Israel’s Severance Pay Law, 1963 (the “Severance Pay Law”)) pay fixed contributions to those plans and will have no legal or constructive obligation to pay further contributions if the fund into which those contributions are paid does not hold sufficient amounts to pay all employee benefits relating to employee service in the current and prior periods. Contributions to the defined contribution plan in respect of severance or retirement pay are recognized as an expense when contributed concurrently with performance of the employee’s services.

 

Formula and its Israeli investees also operate a defined benefit plan in respect of severance pay to their Israeli employees pursuant to the Severance Pay Law. According to the Severance Pay Law, employees are entitled to severance pay upon dismissal or retirement. The liability for termination of employment is measured using the projected unit credit method. The actuarial assumptions include rates of employee turnover and future salary increases based on the estimated timing of payment. The amounts are presented based on discounted expected future cash flows using a discount rate determined by reference to market yields at the reporting date on high quality corporate bonds that are linked to Israel’s Consumer Price Index with a term that is consistent with the estimated term of the severance pay obligation.

 

In respect of its severance pay obligation to certain of its employees, the Group makes current deposits in pension funds and insurance companies (the “plan assets”). Plan assets comprise assets held by a long-term employee benefit fund or qualifying insurance policies. Plan assets are not available to the Group’s own creditors and cannot be returned directly to the Group.

 

The liability for employee benefits shown in the statement of financial position reflects the present value of the defined benefit obligation, less the fair value of the plan assets. Remeasurements of the net liability are recognized in other comprehensive income in the period in which they occur.

 

Total expenses in respect of employee benefit liabilities for the years 2016, 2017 and 2018 were $29,557, $35,036 and $30,941, respectively.

 

28)Earnings per share:

 

Earnings per share are calculated by dividing the net income attributable to equity holders of the Company by the weighted number of ordinary shares outstanding during the period. Potential ordinary shares are included in the computation of diluted earnings per share when their conversion decreases earnings per share from continuing operations. Potential ordinary shares that are converted during the period are included in diluted earnings per share only until the conversion date and from that date in basic earnings per share. The Company’s share of earnings of investees is included based on its share of earnings per share of the investees multiplied by the number of shares held by the Company.

  

29)Concentration of credit risk:

 

Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash and cash equivalents, short-term bank deposits, restricted cash, trade receivables, marketable securities and foreign currency derivative contracts.

 

The majority of the Group’s cash and cash equivalents, bank deposits and marketable securities are invested with major banks in Israel, the United States and Europe. Management believes that these financial instruments are held in financial institutions with high credit standing, and accordingly, minimal credit risk exists with respect to these investments. Cash and cash equivalents and short-term deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Generally, these banks deposits may be redeemed upon demand and therefore bear minimal risk.

 

The Group’s marketable securities include investments in commercial and government bonds and foreign banks. The Group’s marketable securities are considered to be highly liquid and have a high credit standing. In addition, managements of the Group’s investees limit the amount that may be invested in any one type of investment or issuer, thereby reducing credit risk concentrations and consider their portfolios in foreign banks to be well-diversified (also refer to Note 5).

 

The Group’s trade receivables are generally derived from sales to large organizations located mainly in Israel, North America, Europe and Asia Pacific. The Group performs ongoing credit evaluations of its customers and to date has not experienced any material losses. In certain circumstances, Formula and its investees may require letters of credit, other collateral or additional guarantees. From time to time, the Group’s subsidiaries sell certain of its accounts receivable to financial institutions, within the normal course of business.

 

The Group maintains an allowance for doubtful accounts receivable based upon management’s experience and estimate of collectability of each outstanding invoice. The allowance for doubtful accounts is determined with respect to specific debts or which collection is doubtful. The risk of collection associated with accounts receivable is mitigated by the diversity and number of customers.

 

From time to time, the Group enters into foreign exchange forward and option contracts intended to protect against the changes in value of forecasted non-dollar currency cash flows. These derivative instruments are designed to offset a portion of the Group’s non-dollar currency exposure (see Note 2 (26) above).

 

30)Changes in accounting policies - initial adoption of new financial reporting and accounting standards:

 

A.First time implementation of IFRS 15 – Revenue from Contracts with Costumers:

 

The Group adopted IFRS 15 (or the “Standard”) on January 1, 2018 and elected to apply the modified retrospective approach with the cumulative effect recognized as an adjustment to the opening retained earnings balance of $874 as of January 1, 2018. The Group applied a practical expedient allowed under IFRS 15 and exempt from the restatement of comparable data. This means that financial data reported for reporting periods prior to December 31, 2017 has been prepared on the basis of the following standards: IAS 18 ‘Revenue’, IAS 11 ‘Construction Contracts’ as well as interpretations related to revenue recognition that were applicable before the effective date of IFRS 15. Results for reporting periods beginning after January 1, 2018 are presented in accordance with IFRS 15.

 

The effects of the initial application of the new Standard on the Group’s financial statements are as follows:

 

i)Term license - under the legacy revenue standard, the Group recognized both the revenue from sale of term license (which does not involve significant customization) and post-contract support revenues ratably over the contract period whereas upon application of the provisions of the new Standard, term license revenues are recognized up front, upon delivery, and the associated post-contract support revenues are recognized over the contract period. As a result, under the provisions of the new standard, the Group recognizes these revenues in earlier period than the period these revenues were recognized under the old Standard.

 

ii)Incremental costs incurred to obtain contracts (mainly due to sales commissions) - under the legacy revenue standard, the Group recognized these costs in selling and marketing expenses when incurred, whereas upon application of the provisions of the new Standard, these costs are recognized as an asset and amortized over the period when the Group satisfies the performance obligations defined in the specific contract which exceeds one year. As a result, under the provisions of the new Standard, the Group recognizes these costs as expenses in periods later than the period these costs were recognized under the old standard.

 

The effects of the above changes on the consolidated statements of financial position are as follows:

 

As of January 1, 2018    
   As
previously
reported		   The change   According to
IFRS 15		 
Current Assets            
Trade receivables   385,778    20    385,798 
Prepaid expenses and other accounts receivable   44,904    629    45,533 
                
Current Liabilities               
Deferred revenues   58,905    (1,397)   57,508 
                
Long-term Liabilities               
Other long-term liabilities   7,244    231    7,475 
                
Equity               
Retained earnings   239,156    874    240,030 
Non-controlling interests   413,720    941    414,661 

 

As of December 31, 2018            
   According to
the previous
accounting
policy		   The change   As
presented
in these
financial
statements		 
Current Assets            
Trade receivables   439,685    1,783    441,468 
Prepaid expenses and other accounts receivable   41,668    (1,271)   40,397 
                
Long-term Assets               
Prepaid expenses and other accounts receivable   21,475    1,646    23,121 
                
Current Liabilities               
Deferred revenues   64,062    (4,553)   59,509 
Other accounts payable   53,707    262    53,969 
                
Current Liabilities               
Other long-term liabilities   8,628    106    8,734 
                
Equity               
Retained earnings   259,538    3,019    262,557 
Non-controlling interests   434,443    3,324    437,767 

 

The effects of the above changes on the consolidated statements of profit or loss are as follows:

 

Year ended December 31, 2018:            
   According to
the previous
accounting
policy		   The change   As
presented
in these
financial
statements		 
             
Revenues   1,488,378    4,610    1,492,988 
Selling, marketing, general and administrative expenses   182,527    (55)   182,472 
                
Taxes on income   24,164    137    24,301 
Net income attributable to equity holders of the Company   30,220    2,145    32,365 
Net income attributable to non-controlling interests   42,647    2,383    45,030 

 

Remaining performance obligations represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. The Group elected to apply a practical expedient permitted under IFRS 15 whereby it does not disclose the aggregate amount of consideration allocated to unsatisfied or partially unsatisfied performance obligations that are part of contracts that have an original expected duration of less than one year. In addition, the Group has elected to apply a practical expedient permitted under IFRS 15 whereby it does not disclose the aggregate amount of consideration allocated to unsatisfied or partially unsatisfied performance obligations for which the Group has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Group’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided).

 

As such, the aggregate amount of consideration allocated to performance obligations either not satisfied or partially unsatisfied from fixed price projects and post contract support services was approximately $94,433 as of December 31, 2018. The Group expects to recognize approximately 58% in 2019 from remaining performance obligations as of December 31, 2018 and the remainder thereafter. Remaining performance obligations include the remaining non-cancelable, committed and fixed portion of these contracts for their entire duration.

 

Contract balances:

 

The following table provides information about trade receivables, contract assets (unbilled receivables) and contract liabilities (deferred revenues) from contracts with customers (in thousands):

 

   December 31, 
   2018   2017 
Trade receivables  $362,853   $322,325 
Unbilled receivables   78,615    63,453 
Long-term trade receivables(*)   3,932    950 
Advances and deferred revenues   (59,509)   (58,905)
Long-term deferred revenues   (4,906)   (9,340)

 

(*)Included in long-term prepaid expenses and other accounts receivable

 

Trade receivable are recorded when the right to consideration becomes unconditional, and an invoice is issued to the customer. Unbilled receivables relate to the Group’s contractual right to consideration for services performed and not yet invoiced.

 

Billing terms and conditions generally vary by contract type. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual milestones.

 

No impairment loss was recognized in respect of the Group’s outstanding contract assets during the year ended December 31, 2018.

 

Deferred revenues represent contract liabilities, and include unearned amounts received under contracts with customers and not yet recognized as revenues.

 

B.First time implementation of IFRS 9 – Financial Instruments

 

In July 2014, the IASB issued the final and complete version of IFRS 9 - Financial Instruments (“IFRS 9”), which replaces IAS 39 - Financial Instruments: Recognition and Measurement. IFRS 9 mainly changes the provisions of the classification and measurement of financial assets and applies to all financial assets within the scope of IAS 39. The new standard is first implemented in these financial statements. The new standard is applied retrospectively without restatement of comparative figures.

 

After examining the implications of implementing the new standard, Group has determined that its implementation did not have a material effect on the Group’s financial statements.

 

31)Certain amounts in the prior years’ financial statements have been reclassified to conform to the current year’s presentation.
New Standards, Interpretations and Amendments Adopted By The Group
 12 Months Ended
Dec. 31, 2018
Disclosure of expected impact of initial application of new standards or interpretations [abstract]  
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS ADOPTED BY THE GROUP

NOTE 3:- NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS ADOPTED BY THE GROUP

 

1.Amendments to IFRS 10 and IAS 28 regarding sale or transfer of assets between an investor and its associate or joint venture:

 

In September 2014, the IASB adopted amendments to IFRS 10 and IAS 28 (which we refer to as the Amendments) regarding the accounting treatment of the sale or transfer of assets (an asset, a group of assets or a subsidiary) between an investor and its associate or joint venture.

 

Under the Amendments, when an investor loses control of a subsidiary or a group of assets that are not a business in a transaction with its associate or joint venture, the gain will be partially eliminated such that the gain to be recognized is the gain from the sale to the other investors in the associate or joint venture. According to the Amendments, if the remaining rights held by the investor represent a financial asset as defined in IFRS 9, the gain will be recognized in full.

 

If the transaction with an associate or joint venture involves loss of control of a subsidiary or a group of assets that are a business, the gain will be recognized in full.

 

The Amendments are to be applied prospectively. A mandatory effective date has not yet been determined by the IASB, but early adoption is permitted.

 

2.IFRS 16, "Leases":

 

In January 2016, the IASB issued IFRS 16, "Leases" (which we refer to as IFRS 16). According to IFRS 16, a lease is a contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration.

 

Under IFRS 16:

 

-Lessees are required to recognize an asset and a corresponding liability in the statement of financial position in respect of all leases (except in certain cases) similar to the accounting treatment of finance leases according to the existing IAS 17, "Leases". Lessees are required to initially recognize a lease liability for the obligation to make lease payments and a corresponding right-of-use asset. Lessees will also recognize interest and depreciation expense separately.

 

-Variable lease payments that are not dependent on changes in the Consumer Price Index, or CPI, or interest rates, but are based on performance or use (such as a percentage of revenues) are recognized as an expense by the lessees as incurred and recognized as income by the lessors as earned.

 

-In the event of change in variable lease payments that are CPI-linked, lessees are required to remeasure the lease liability and the effect of the remeasurement is an adjustment to the carrying amount of the right-of-use asset.

 

-IFRS 16 includes two exceptions according to which lessees are permitted to elect to apply a method similar to the current accounting treatment for operating leases. These exceptions are leases for which the underlying asset is of low value and leases with a term of up to one year.

 

-The accounting treatment by lessors remains substantially unchanged, namely classification of a lease as a finance lease or an operating lease.

 

IFRS 16 is effective for annual periods beginning on or after January 1, 2019, and the Group expects its adoption to have a material impact on its consolidated statements of financial position.

 

IFRS 16 permits lessees to use one of the following approaches:

 

1.Full retrospective approach - according to this approach, a right-of-use asset and the corresponding liability will be recorded in the statement of financial position as if they had always been measured according to the provisions of IFRS 16, with the effect of the adoption at the beginning of the earliest period presented will be recorded in equity.

 

2.Modified retrospective approach - this approach does not require restatement of comparative data. The balance of the liability as of the date of initial application of IFRS 16 will be calculated using the lessee's incremental borrowing rate of interest on the date of the initial application of IFRS 16. As for the measurement of the right-of-use asset, the Group may choose, on a lease-by-lease basis, to apply one of the two following alternatives:

 

i)Recognize an asset in an amount equal to the lease liability, with certain adjustments.
ii)Recognize an asset as if IFRS 16 had always been applied.

 

The Group believes that it will apply the modified retrospective approach upon the initial adoption of IFRS 16, whereby the right-of-use asset in certain real-estate leases will be measured as if the new standard had always been applied, while the right-of-use assets in respect of other leases will be measured at an amount equal to the lease liability, as measured on the transition date.

 

The Group has leases mainly of real estate and vehicles in a significant amount. In assessing the impact of IFRS 16 on the financial statements, the Group is evaluating the following matters:

 

Options to extend the lease - In accordance with IFRS 16, the non-cancellable periods of leases include periods that are covered by options to extend the leases if the lessees are reasonably certain to exercise the option. The Group is reviewing whether such options exist in its lease agreements and whether it is reasonably certain that it will exercise the options. As part of its assessment, the Group is evaluating all relevant facts and circumstances that create an economic incentive to exercise the options, including significant leasehold improvements that have been or are expected to be undertaken, the importance of the underlying assets to the Group's operations and past experience in connection with the exercise of such options.

 

Separation of contract components - In accordance with IFRS 16, all lease components within a contract should be accounted for separately from non-lease components. A lessee is allowed a practical expedient according to which it can elect, by class of underlying asset, not to separate non-lease components from lease components, and instead account for them as a single lease component. The Group is reviewing whether such non-lease components, such as management and maintenance services, exist in its current lease contracts and whether the above practical expedient should be applied to each class of underlying asset.

 

Interest on capitalization - the Group is estimating the incremental interest rate to be used for measuring its lease liabilities and right-of-use assets on the date of initial adoption of IFRS 16, based on the leases' terms and nature of the leased assets.

 

The Group is also evaluating the need for making adjustments to its information systems, internal controls, policies and procedures that will be necessary in order to apply the provisions of IFRS 16.

 

The Group estimates that the effect of the initial implementation of IFRS 16 as of January 1, 2019 is expected to result in an increase in the Group's total assets in an amount of approximately $108,800 ​​ an increase in the Group's total liabilities in an amount of approximately $111,100​ and a decrease in the balance of the Company's shareholders' equity in an amount of $2,300.

 

The Group estimates that the implementation of the new standard will not have an impact on the Group's compliance with the financial covenants under the Group's outstanding debenture series.

 

The above quantitative disclosure relates to the known effects to the Company and its subsidiaries as at that date and in accordance with the existing lease contracts in effect as of January 1, 2019.
Business Combination, Significant Transaction and Sale of Business
 12 Months Ended
Dec. 31, 2018
Business Combination, Significant Transaction and Sale of Business [Abstract]  
BUSINESS COMBINATION, SIGNIFICANT TRANSACTION AND SALE OF BUSINESS

NOTE 4:- BUSINESS COMBINATION, SIGNIFICANT TRANSACTION AND SALE OF BUSINESS

 

i.Formula

 

a.Acquisition of TSG IT Advanced Systems Ltd.

 

On May 9, 2016, Formula and Israel Aerospace Industries (IAI) concluded the joint purchase of TSG – a subsidiary and the military arm of Ness Technologies, engaged in the fields of command and control systems, intelligence, homeland security and cyber security. The total purchase price in the transaction amounted to $51,532 in cash, with each of IAI and Formula acquiring 50% of TSG for $25,766. TSG is a leading provider of core command and control systems to Israel's defense organization, including the Israeli Defense Forces and the Israeli Police.

 

As TSG is jointly controlled by both Formula and IAI, its results of operations are reflected in the Company's profit or loss using the equity method of accounting commencing May 9, 2016.

 

The following table summarizes the estimated fair values of the acquired assets and assumed liabilities by the Company at the date of acquisition:

 

Net assets  $1,824 
Intangible assets   13,693 
Backlog   2,221 
Deferred tax liability   (3,948)
Dividend preference derivative   2,140 
Goodwill   9,836 
      
Total assets acquired, net of acquired cash  $25,766 

 

b.Acquisition of Michpal Micro Computers (1983) Ltd.

 

On January 3, 2017, the Company directly acquired all of the share capital of Michpal, an Israeli-based company that develops, sells and supports a proprietary on-premise payroll software solution for processing traditional payroll stubs to Israeli enterprise and payroll service providers, for cash consideration of NIS 85,000 (approximately $22,106), composed of the following:

 

Net assets  $139 
Intangible assets   11,329 
Deferred tax liability   (2,606)
Goodwill   13,244 
      
Total assets acquired net of acquired cash  $22,106 

 

ii.Sapiens

 

a.Acquisition of Maximum Processing Inc.

 

On May 26, 2016, Sapiens entered into an agreement to purchase the entire share capital of Maximum Processing Inc.'s (MaxPro) for consideration of $4,278 (of which $1,490 was deposited at closing in escrow). In addition, the seller may be entitled to receive has performance-based payments relating to achievement of revenue and profitability targets over three years (2016-2018) of up to $2,500. Such payments are also subject to continued employment, and, therefore, are not part of the purchase price. MaxPro specializes in providing business and technology solutions across the insurance industry. Acquisition-related costs were immaterial.

 

The following table summarizes the estimated fair values of the acquired assets and assumed liabilities, with reference to the acquisition as of the acquisition date:

 

Net assets  $(240)
Intangible assets   1,859 
Goodwill   2,659 
      
Net assets acquired  $4,278 

 

b.Acquisition of 4Sight Business Intelligence Inc

 

On June 7, 2016, Sapiens entered into an agreement to purchase 100% of the total outstanding shares of 4Sight Business Intelligence Inc. (4Sight). 4Sight's system provides analytics software for the insurance industry. Sapiens paid the acquisition consideration in cash, consisting of $330. In addition, the seller may be entitled to performance-based payment relating to achievement of revenue and profitability targets over three years (2016-2018) of up to $2,200. Such payments entitlements are also subject to continued employment, and, therefore, are not part of the purchase price. Acquisition–related costs were immaterial.

 

The following table summarizes the estimated fair values of the acquired assets and assumed liabilities, with reference to the acquisition as of the acquisition date:

 

Net assets  $(145)
Intangible assets   279 
Deferred taxes   (112)
Goodwill   308 
      
Net assets acquired  $330 

 

c.Acquisition of StoneRiver, Inc

 

On February 28, 2017, Sapiens completed the acquisition of all of the outstanding shares of StoneRiver, Inc. ("StoneRiver"), a provider of technology solutions and services to the insurance industry for cash consideration of $101,351. Sapiens-related acquisition costs of $1,348 are presented in general and administrative expenses. The acquisition of StoneRiver and Adaptik (as detailed below) expanded Sapiens' presence and scale in the North American insurance market and allows Sapiens to offer its customers and partners a more extensive product portfolio in the industry. The acquisition was accounted for under the purchase method and, accordingly, the purchase price has been allocated according to the estimated fair value of the acquired assets and assumed liabilities of StoneRiver. The results of StoneRiver's operations have been included in the consolidated financial statements since February 28, 2017.

 

The following table summarizes the estimated fair values of the acquired assets and assumed liabilities assumed:

 

Current assets  $16,785 
Property and equipment   1,088 
Intangible assets   38,145 
Goodwill   77,014 
Other long-term assets   78 
      
Total assets acquired  $133,110 
      
Current liabilities  $10,595 
Deferred revenues   5,742 
Deferred tax liabilities   15,071 
Other long-term liabilities   351 
      
Total liabilities acquired  $31,759 
      
Total purchase price  $101,351 

 

The following table sets forth the components of intangible assets associated with the acquisition and their annual amortization rates:

 

   Fair value 
Developed technology  $34,039 
Customer relationships   3,333 
Backlog   773 
      
Total intangible assets  $38,145 

 

Revenues of StoneRiver for the period since the acquisition date through December 31, 2017, which are included in the consolidated financial statements, amounted to $67,805.

 

d.Acquisition of KnowledgePrice.com:

 

On December 27, 2017, Sapiens signed a definitive agreement for the acquisition of all of the outstanding shares of KnowledgePrice.com's ("KnowledgePrice"), a Latvian company, which specializes in digital insurance services and consulting. The fair value of the total consideration amounted to $6,029, including cash consideration of $4,068 (out of this amount $3,758 was paid in December 2017 and $310 was paid in January 2018), and a contingent obligation valued at $1,961 at the acquisition date. In addition, the seller may be entitled to performance based payment relating to achievement of revenue and profitability targets over three years (2018-2020) and a retention payment of up to $1,116 as of December 31, 2017, which are subject to continued employment and therefore not part of the purchase price. According to a preliminary purchase price allocation, the purchase price has been allocated according to the estimated fair value of the assets acquired and assumed liabilities of KnowledgePrice.

 

The following table summarizes the estimated provisional fair values of the acquired assets and assumed liabilities, with reference to the acquisition as of the acquisition date:

 

Net assets   780 
Intangible assets   2,417 
Deferred taxes   (363)
Goodwill   3,195 
      
Net assets acquired  $6,029 

 

e.Acquisition of Adaptik Corporation

 

On March 7, 2018 (the "acquisition date"), Sapiens completed the acquisition of all outstanding shares of Adaptik Corporation ("Adaptik"), a New-Jersey company based in Pennsylvania engaged in the development of software solutions for P&C insurers, (including policy administration, rating, billing, customer and task management and product design), for total cash consideration of $18,179 (of which $17,979 was paid in March 2018 and $200 will be paid in March 2022). In addition, the seller may be entitled to performance based payments relating to achievement of revenue targets over three years (2018-2020) of up to $3,700. Such payment entitlements are subject to continued employment and therefore were not included in the purchase price. Acquisition-related costs were approximately $300. An amount of $339 which was deposited in escrow at closing, was recognized in short-term prepaid expenses and other accounts receivable, as the Group expects to receive this amount during the following year. The result of Adaptik's operations have been included in the consolidated financial statements since March 2018.

 

The following table summarizes the estimated fair values of the acquired assets and assumed liabilities as of the acquisition date:

 

Net liabilities excluding cash acquired  $(2,817)
Intangible assets   12,936 
Deferred taxes   (3,528)
Goodwill   11,468 
      
Total assets acquired, net of acquired cash  $18,059 

 

iii.Magic

 

a.Acquisition of Comblack IT Ltd.

 

On April 14, 2015 Magic acquired a 70% interest in Comblack IT Ltd. ("Comblack"), an Israeli-based company that specializes in software professional and outsourced management services mainly for mainframes and complex large-scale environments, for a total consideration of $1,821, of which $1,523 was paid upon closing and $298 was payable contingent upon the acquired business meeting certain operational targets in 2015. Magic and the seller hold mutual call and put options respectively for the remaining 30% interest in Comblack. Due to the put option, the Group recorded a financial liability in an amount of $989 as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Comblack was recorded at a value of $8,191. Acquisition-related costs were immaterial. The acquisition was accounted for under the purchase method.

 

The results of operations were included in the consolidated financial statements of the Group commencing April 1, 2015.

 

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

 

Net assets, excluding cash acquired  $(405)
Non-controlling interests   (989)
Intangible assets   1,249 
Goodwill   1,966 
      
Total assets acquired, net of acquired cash  $1,821 

 

In March 2016, Magic paid the seller the remaining contingent payments for meeting the 2015 operational targets.

 

b.Acquisition of Infinigy Solutions LLC

 

On June 30, 2015 Magic acquired a 70% interest in Infinigy Solutions LLC ("Infinigy"), a US-based services company focused on expanding the development and implementation of technical solutions throughout the telecommunications industry with offices across the US, providing nationwide coverage and support for wireless engineering, deployment services, surveying, environmental service and project management, for total consideration of $6,527, of which $5,600 was paid upon closing and $927 is payable contingent upon the acquired business meeting certain operational targets in 2016 and 2017. Magic and the seller hold mutual call and put options respectively for the remaining 30% interest in Infinigy. Due to the put option, the Group recorded a financial liability in an amount of $3,590 as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Infinigy was recorded at a value of $5,234. Acquisition-related costs were immaterial. The acquisition was accounted for under the purchase method.

 

The results of operations were included in the consolidated financial statements of the Group commencing July 1, 2015.

 

The following table summarizes the estimated fair values of the assets acquired and liabilities at the date of acquisition:

 

Net assets, excluding cash acquired  $1,182 
Non-controlling interests   (3,590)
Intangible assets   3,675 
Goodwill   5,260 
      
Total assets acquired, net of acquired cash  $6,527 

 

In July 2016, Magic paid the seller $534 with respect to the acquired business meeting certain of its 2016 operational targets. In 2017, the acquired business did not meet its operational targets and therefore as of December 31, 2017, the seller is not entitled to any additional contingent payments.

 

c.Acquisition of Roshtov Software Industries Ltd.

 

On July 11, 2016 Magic acquired a 60% interest in Roshtov Software Industries Ltd. ("Roshtov"), an Israeli-based software company that is a market leader in Israel in patient record information systems, for a total cash consideration of $20,550, which was paid upon closing. The purchaser and the seller hold mutual call and put options respectively for the remaining 40% interest in Roshtov. Due to the put option, the Group recorded a financial liability in an amount of $14,012 as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Rosh-Tov was recorded an amount of $14,408. Acquisition-related costs were immaterial. The acquisition was accounted for under the purchase method.

 

The results of operations were included in the consolidated financial statements of the Group commencing July 2016.

 

The following table summarizes the estimated fair values of the assets acquired and assumed liabilities at the date of acquisition:

 

Net assets, excluding cash acquired  $15 
Non-controlling interests   (14,012)
Intangible assets   22,439 
Deferred tax liabilities   (5,610)
Goodwill   17,718 
      
Total assets acquired, net of acquired cash  $20,550 

  

d.Acquisition of Shavit Software (2009) Ltd.

 

On October 31, 2016 Magic acquired a 100% equity interest in Shavit Software (2009) Ltd., an Israeli-based company that specializes in software professional and outsourced management services, for total consideration of $6,836, of which $4,699 was paid upon closing, $2,137 (measured based on present value) was allocated to a deferred payment and contingent payment upon the acquired business meeting certain operational targets in 2017. Magic's management believes the acquisition will broaden its professional service offering to its existing and new customers in Israel. Acquisition-related costs were immaterial. The acquisition was accounted for under the purchase method.

 

The results of operations were included in the consolidated financial statements of the Group commencing November 1, 2016.

 

The following table summarizes the estimated fair values of the assets acquired and assumed liabilities at the date of acquisition:

 

Net assets, excluding cash acquired  $533 
Intangible assets   3,489 
Deferred tax liabilities   (871)
Goodwill   3,685 
      
Total assets acquired net of acquired cash  $6,836 

 

During the years ended December 31, 2017 and 2018, Magic paid the seller $924 and $2,535, respectively, with respect to deferred and contingent payments as mutually agreed between the parties.

 

e.Other acquisitions by Magic in 2016, 2017 and 2018

 

During each of the years ended December 31, 2016, 2017 and 2018, Magic acquired additional activities whose influence on the financial statements of the Group was immaterial, for total consideration of $8,884, $1,050 and $588, respectively.

 

The following table summarizes the provisional estimated fair values of the assets acquired and assumed liabilities at the date of acquisition:

 

   December 31, 
   2018   2017   2016 
             
Net assets, excluding cash acquired  $306   $(1,822)  $2,174 
Non-controlling interests   -    -    (1,209)
Intangible assets   23    1,149    2,370 
Deferred tax liabilities   -    -    (493)
Goodwill   259    1,723    6,042 
                
Total assets acquired net of acquired cash  $588   $1,050   $8,884 

 

 

iv.Matrix

 

a.Acquisition of Programa Logistics Systems Ltd.

 

On March 30, 2016, Matrix acquired a 60% interest in Programa Logistics Systems Ltd. ("Programa"), for total consideration of NIS 7,295 (approximately $1,937). In addition, the sellers may be eligible for future consideration valued, on the acquisition date, at NIS 1,144 ($304) which is contingent upon the acquired business meeting certain operational targets in the years 2016-2018. Programa, an Israeli company, is a provider of advisory services and design and development of solutions in supply chain, production and logistics. Matrix and the seller hold mutual options to purchase and sell (respectively) the remaining 40% interest in Programa. Due to the put option, the Group recorded a financial liability in an amount of $2,471 as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Programa was recorded at a value of $2,588. Acquisition-related costs were immaterial. The acquisition was accounted for under the purchase method.

 

The following table summarizes the estimated fair values of the assets acquired and assumed liabilities at the date of acquisition:

 

Net assets  $267 
Non-controlling interests   (2,471)
Intangible assets   1,216 
Goodwill   3,229 
      
Total assets acquired  $2,241 

 

b.Acquisition of Network Infrastructure Technologies Inc.

 

On October 4, 2016, Exzac Inc. a wholly owned subsidiary of Matrix, completed the acquisition of a 60% interest in Network Infrastructure Technologies Inc. ("NIT") for a cash consideration of $6,750. NIT, a U.S based company, mainly provides IT help desk services to the healthcare and finance sectors for managing their information systems. Matrix and the seller hold mutual call and put options respectively for the remaining 40% interest in NIT. Due to the put option, the Group recorded a financial liability in an amount of $3,968 as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in NIT was recorded at a value of $4,799. Acquisition-related costs were immaterial. The acquisition was accounted for under the purchase method.

 

The following table summarizes the estimated fair values of the assets acquired and assumed liabilities at the date of acquisition:

 

Net assets   $391 
Non-controlling interests   (3,968)
Intangible assets   2,138 
Deferred tax liabilities   (855)
Goodwill   9,044 
      
Total assets acquired  $6,750 

 

c.Acquisition of Second to none solutions Inc.

 

On November 8, 2016, Xtivia Technologies Inc., a wholly owned subsidiary of Matrix, completed the acquisition of a 55% interest in Second to none solutions Inc. ("Stons") for a consideration of $287 paid in cash. Stons is a certified distributer of IBM products to U.S federal and enterprise customers. Matrix and the seller hold mutual options to purchase and sell (respectively) additional 30% interest in Stons. Due to the put option, the Group recorded a financial liability in an amount of $2,184 on the acquisition date. In addition, the sellers may be eligible for future consideration valued, on the acquisition date, at $514 which is contingent upon the acquired business meeting certain operational targets in the years 2017-2019. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Stons was recorded at a value of $1,880. Acquisition-related costs were immaterial. The acquisition was accounted for under the purchase method.

 

The following table summarizes the estimated fair values of the assets acquired and assumed liabilities at the date of acquisition:

 

Intangible assets  $909 
Non-controlling interests   (2,184)
Deferred tax liabilities   (311)
Goodwill   2,387 
      
Total assets acquired  $801 

 

d.Acquisition of Aviv Management Engineering Systems Ltd.

 

On December 27, 2016, Matrix completed the acquisition of an 85% interest in Aviv Management Engineering Systems Ltd. ("Aviv") for cash consideration of NIS 19,699 (approximately $5,123). In addition, the sellers may be eligible for future consideration valued, on the acquisition date, at NIS 1,200 (approximately $313), which is contingent upon the acquired business meeting certain operational targets in the years 2017-2019. Aviv provides management consulting and multidisciplinary engineering consulting focusing in four areas of expertise: environmental planning, project management, urban and physical planning and management consulting. Matrix and the seller hold mutual options to acquire and sell (respectively) the remaining 15% interest in Aviv. Due to the put option, the Group recorded a financial liability of NIS 5,714 (approximately $1,486) on the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Aviv was recorded at value of $2,034. Acquisition-related costs were immaterial. The acquisition was accounted for under the purchase method.

 

The following table summarizes the estimated fair values of the assets acquired and assumed liabilities at the date of acquisition:

 

Net assets  $(1,338)
Non-controlling interests   (1,486)
Intangible assets   2,051 
Deferred tax liabilities   (472)
Goodwill   6,681 
      
Total assets acquired  $5,436 

 

e.Acquisition of Alius Group Inc

 

In January 2018, Matrix acquired 50.1% of the share capital of Alius consulting group, a U.S.-based company headquartered in New York, for an advance payment of approximately $3,268 in cash ($2,564 net of acquired cash), plus an additional $3,000 to be paid in two years. Under the terms of the acquisition, Matrix and the seller held mutual options to purchase and sell (respectively) the remaining shares within two years following the closing date under the agreement. In November 2018, Matrix acquired the remaining 49.9% of the share capital of Alius for additional and final consideration of $13,802. Alius is a global consulting financial firm that provides advisory services in the area of regulatory, risk and compliance in the U.S financial markets.

 

The following table summarizes the estimated fair values of the acquired assets and assumed liabilities, with reference to the acquisition as of the acquisition date:

 

Net assets  $(4)
Intangible assets   2,986 
Deferred taxes   (806)
Goodwill   14,190 
      
 Total assets acquired net of acquired cash  $16,366 

 

f.Acquisition of Pleasant Valley Business Solutions, LLC.

 

In March 2018 Matrix acquired 100% of the share capital of Pleasant Valley Business Solutions, or PVBS, a U.S company, for cash consideration of approximately $7,590 (or $5,489 net of acquired cash). In addition, the seller may be entitled to receive performance-based payments, estimated on the date of the transaction at $2,819, relating to achievement of profitability targets over three years (2018-2020) and up to $6,500. The estimated fair value of the contingent consideration as of the acquisition date was $2,828. PVBS is engaged in the implementation and assimilation of ERP systems for U.S government suppliers.

 

The following table summarizes the estimated fair values of the assets acquired and assumed liabilities, with reference to the acquisition as of the acquisition date:

 

Net assets  $(834)
Intangible assets   1,867 
Deferred taxes   (507)
Goodwill   7,791 
      
Total assets acquired net of acquired cash  $8,317 

 

g.Acquisition of Cambium (2014) Ltd.

 

In July, 2018, Matrix acquired 55% of the share capital of Cambium (2014) Ltd. for NIS 3,022 in cash (approximately $830) or NIS 2,625 net of acquired cash (approximately $721 net of acquired cash). Matrix and the seller hold mutual options to purchase and sell (respectively) 15% of the remaining share capital of Cambium. Due to the put option, the Group recorded a financial liability in an amount of NIS 870 (approximately $239) as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Cambium was recorded at a value of $291.

 

The following table summarizes the estimated provisional (1) fair values of the acquired assets and assumed liabilities, with reference to the acquisition as of the acquisition date:

 

Net assets  $(8)
Intangible assets   282 
Deferred taxes   (65)
Non-controlling interests   (239)
Goodwill   751 
      
Total assets acquired net of acquired cash  $721 

  

(1)The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2018 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. The Group's management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. The Group expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period.

 

h.Acquisition of Integrity Software 2011 Ltd.

 

In July, 2018, Matrix acquired 65% of the share capital of Integrity Software 2011 Ltd., an Israeli based company providing software solutions to the enterprise sector in Israel in the fields of software security, IT infrastructure and virtualization, for approximately NIS 9,000 (approximately $2,454) in cash or NIS 4,881 (approximately $1,330) net of acquired cash. In addition, the seller may be entitled to performance-based payment capped at NIS 4,000 (approximately $1,091), estimated on the date of the transaction at NIS 823 (approximately $224), relating to achievement of certain profitability targets for the years 2019-2021. Matrix and the seller hold mutual options to purchase and sell (respectively) 10% of the remaining share capital of Integrity. Due to the put option, the Group recorded a financial liability in an amount of NIS 1,167 (approximately $318) as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Integrity was recorded at a value of $333.

 

The following table summarizes the estimated provisional (1) fair values of the acquired assets and assumed liabilities, with reference to the acquisition as of the acquisition date:

 

Net assets  $(1,131)
Intangible assets   1,316 
Deferred taxes   (303)
Non-controlling interests   (318)
Goodwill   1,990 
      
Total assets acquired net of acquired cash  $1,554 

 

(1)The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2018 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. The Group's management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. The Group expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period.

 

i.Acquisition of Noah Technologies Ltd.

 

In November 2018, Matrix acquired 100% of the share capital of Noah Technologies Ltd, an Israeli based company providing engineering solutions, computerized catalogs and IT professional services, for approximately NIS 6,000 (approximately $1,626) in cash or NIS 4,161 (approximately $1,127) net of acquired cash. In addition, the seller may be entitled to performance-based payments capped at NIS 4,000 (approximately $1,084), estimated on the date of the transaction at NIS 1,216 (approximately $330), relating to achievement of certain profitability targets for the years 2019-2021.

 

The following table summarizes the estimated provisional (1) fair values of the acquired assets and assumed liabilities, with reference to the acquisition as of the acquisition date:

 

Net assets  $(473)
Intangible assets   580 
Deferred taxes   (133)
Goodwill   1,485 
      
Total assets acquired net of acquired cash  $1,459 

 

(1)The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2018 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. The Group's management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. The Group expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period.

 

v.Michpal

 

a.Acquisition of Effective Solutions Ltd.

 

In November 2018, Michpal acquired 80% of the share capital of Effective Solutions Ltd., an Israeli based service provider of consulting services in the fields of operational cost savings and procurement, as well as salary control and monitoring. The aggregate purchase price for the 80% interest was NIS 24,000 (approximately $6,516) in cash. In addition, Michpal and the seller hold mutual call and put options, respectively, for the remaining 20% interest in Effective Solutions. Due to the put option, the Group recorded a financial liability in an amount of NIS 2,841 (approximately $758) as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Effective Solutions remained at value of $758.

 

The results of operations were included in the consolidated financial statements of the Group commencing November 1, 2018.

 

The following table summarizes the provisional (1) estimated fair values of the assets acquired and liabilities at the date of acquisition:

 

Net assets  $439 
Non-controlling interests   (269)
Intangible assets   739 
Deferred tax liability   (170)
Goodwill   5,434 
      
Total assets acquired net of acquired cash  $6,173 

 

(1)The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2018 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. The Group's management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. The Group expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period.
Marketable Securities
 12 Months Ended
Dec. 31, 2018
Marketable Securities [Abstract]  
MARKETABLE SECURITIES

NOTE 5:- MARKETABLE SECURITIES

 

The Group invests in marketable debt instruments which were measured at fair value through profit or loss, and in marketable debt instruments, which are measured at fair value through other comprehensive income. The following is a summary of the Group’s marketable securities:

 

a.Composition:

  

   December 31, 
   2018   2017 
Short-term:        
Fair value through profit or loss (1)   1,156    1,209 
Fair value through other comprehensive income   8,757    12,929 
Total short-term marketable securities  $9,913   $14,138 
           
Total marketable securities  $9,913   $14,138 

 

(1)The Group recognized gains (losses) from marketable securities classified as held for trading (until December 31, 2017) or debt instruments measured at fair value through profit or loss (commencing from January 1, 2018) in amounts of $136, ($149) and $53 during the years ended December 31, 2016, 2017 and 2018, respectively.

 

b.The following is a summary of debt instruments which the Group measures at fair value through other comprehensive income:

 

   December 31, 
   2018   2017 
   Amortized
cost		   Unrealized
losses		   Unrealized
Gains		   Market
value		   Amortized cost   Unrealized
losses		   Unrealized
gains		   Market
Value		 
Commercial bonds  $8,851   $(94)   -   $8,757   $12,987   $(58)  $-   $12,929 

 

In 2016, 2017 and 2018, the Group received proceeds from sales and maturity of debt instruments at fair value through other comprehensive income of $16,541, $39,594 and $4,000 and recorded related net gains (losses) of ($16), $94 and $0 in profit or loss under financial income (expenses), respectively.

 

The amortized costs of debt instruments at fair value through other comprehensive income as of December 31, 2018, by contractual maturities, are shown below:

 

   Amortized   Unrealized gains (losses)   Market 
   cost   Gains   Losses   value 
                 
Due within one year   $3,326   $-   $(21)  $3,305 
Due after one year through three years  $5,525   $-   $(73)  $5,452 
   $8,851   $-   $(94)  $8,757 

 

The following is the change in the gross other comprehensive income from marketable securities during 2017 and 2018:

  

   Other
comprehensive
income		 
     
Other comprehensive income from debt instruments at fair value through other comprehensive income as of January 1, 2017   167 
      
Unrealized gain from available-for-sale securities   188 
Realized gain reclassified into profit or loss   (94)
Other comprehensive income from debt instruments at fair value through other comprehensive income as of December 31, 2017  $261 
      
Unrealized loss from debt instruments at fair value through other comprehensive income   (37)
      
Other comprehensive income from debt instruments at fair value through other comprehensive income as of December 31, 2018  $224 
Prepaid Expenses and Other Accounts Receivable
 12 Months Ended
Dec. 31, 2018
Other Accounts Receivable and Prepaid Expenses [Abstract]  
PREPAID EXPESNES AND OTHER ACCOUNTS RECEIVAVABLE

NOTE 6:- PREPAID EXPESNES AND OTHER ACCOUNTS RECEIVAVABLE

 

   December 31, 
   2018   2017 
Government departments  $12,318   $16,494 
Employees   426    619 
Prepaid expenses and advances to suppliers   25,161    26,597 
Restricted deposits   408    11 
Related Parties   197    273 
Receivables in respect of an embedded derivative transaction   354    - 
Other   1,533    910 
Total  $40,397   $44,904 
Fair Value Measurement
 12 Months Ended
Dec. 31, 2018
Fair Value Measurement [Abstract]  
FAIR VALUE MEASUREMENT

Note 7:- Fair value measurement

 

In determining fair value, the Group utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

 

The Group's financial assets and liabilities measured at fair value on a recurring basis, including accrued interest components, consisted of the following types of instruments as of December 31, 2017 and 2018:

 

   Fair value measurements 
   December 31, 2018 
   Level 1   Level 2   Level 3   Total 
Assets:                
Marketable debt securities designated at fair value through profit or loss (Note 5):  $-   $1,156   $-   $1,156 
Marketable debt securities measured at fair value through other comprehensive income (Note 5):   -    8,757    -    8,757 
Receivables in respect of an embedded derivative transaction   -    -    354    354 
Dividend preference derivative in TSG (1)   -    -    2,733    2,733 
                     
Total financial assets  $-   $9,913   $3,087   $13,000 
                     
Liabilities:                    
Put options of non-controlling interests (2)  $-   $-   $56,599   $56,599 
Contingent consideration (2)   -    -    7,047    7,047 
                     
Total financial liabilities  $-   $-   $63,646   $63,646 

 

   Fair value measurements 
   December 31, 2017 
   Level 1   Level 2   Level 3   Total 
Assets:                
Marketable debt securities designated at fair value through profit or loss (Note 5):  $-   $1,209   $-   $1,209 
Marketable debt securities measured at fair value through other comprehensive income (Note 5):   -    12,929    -    12,929 
Dividend preference derivative in TSG(1) (Note 8):    -    -    2,400    2,400 
                     
Total financial assets  $-   $14,138   $2,400   $16,538 
                     
Liabilities:                    
Put options of non-controlling interests (2)  $-   $-   $52,876   $52,876 
Contingent consideration (2)   -    -    6,345(*)   6,345(*)
                     
Total financial liabilities  $-   $-   $59,221(*)  $59,221(*)

 

(1)The fair value of dividend preference derivative in TSG was estimated using the Monte-Carlo simulation technique.
(2)The fair value of put options of non-controlling interests and contingent consideration was determined based on the present value of the future expected cash flow.

 

(*)Adjustment to comparative data
Investments in Companies Accounted for at Equity Method
 12 Months Ended
Dec. 31, 2018
Investments in Companies Accounted for at Equity Method [Abstract]  
INVESTMENTS IN COMPANIES ACCOUNTED FOR AT EQUITY METHOD

Note 8:- Investments in companies accounted for at equity METHOD

 

a.The following is a summary of the Group's investments in companies accounted for at equity:

 

   December 31, 
   2018   2017 
         
Affiliated company   27    55 
           
Joint venture – TSG (see Note 4(i)(a))   25,683    25,260 
           
    25,710    25,315 

 

b.The Company holds a 50% share in TSG, a joint venture engaged in the fields of command and control systems, intelligence, homeland security and cyber security. The Company's interest in TSG is accounted for using the equity method in the consolidated financial statements.

 

The following is the composition of the Company's investment in TSG:

 

   December 31, 
   2018   2017 
Shares   18,014    17,591 
Capital notes   7,669    7,669 
    25,683    25,260 
           
Dividend preference derivative in TSG (1)   2,733    2,400 
           
Goodwill   9,836    9,836 

 

(1)Dividend preference derivative in TSG is included in Group's long term prepaid expenses and other accounts receivable and is accounted for at fair value through to profit or loss.

 

c.The following table summarizes activity related to the Company's investment in TSG:

 

January 1, 2016  $- 
Acquisition of shares   16,004 
Investment in capital notes   7,669 
Company's share of profit   349 
December 31, 2016  $24,022 
      
Company's share of profit   1,134 
Company's share of other comprehensive income   104 
December 31, 2017  $25,260 
      
Company's share of profit   365 
Company's share of other comprehensive income   58 
December 31, 2018  $25,683 

 

d.Summarized financial information of TSG:

 

(i)Summarized statement of financial position as of December 31, 2017 and 2018 (as presented in TSG's financial statements):

 

   December 31, 
   2018   2017 
Current assets   39,101    34,137 
Noncurrent assets (1)   1,498    1,746 
Current liabilities   (22,152)   (20,311)
Noncurrent liabilities   (3,750)   (4,426)
Equity   14,697    11,146 
Company's share in TSG   50%   50%
    7,349    5,573 
Excess cost of intangible assets net of deferred tax   8,498    9,851 
Goodwill   9,836    9,836 
Company's carrying amount of the investment in TSG   25,683    25,260 

 

(1)Not including balance of goodwill in an amount of $19,006 as of December 31, 2017 and 2018.

 

(ii)Summarized operating results of TSG for the years ended December 31, 2017 and 2018 (as presented in TSG's financial statements):

 

   Year ended
December 31,		 
   2018   2017   2016 
             
Revenues   66,154    66,816    38,648 
Net income   3,437    4,938    2,744 
Other comprehensive income   116    208    - 
                
Total comprehensive income   3,553    5,146    2,744 
                
Company's share in TSG   50%   50%   50%
Company's share of total comprehensive income before amortization of excess cost of intangible assets net of tax   1,776    2,573    1,372 
Amortization of excess cost of intangible assets net of tax   (1,353)   (1,335)   (1,023)
Company's share of total comprehensive income   423    1,238    349 
                
Company's share of other comprehensive income   58    104    - 
Company's share of profit   365    1,134    349 
    423    1,238    349 
Property, Plants and Equipment, Net
 12 Months Ended
Dec. 31, 2018
Property, plant and equipment [abstract]  
PROPERTY, PLANTS AND EQUIPMENT, NET

NOTE 9:- PROPERTY, PLANTS AND EQUIPMENT, NET

 

a.Composition:

 

   December 31, 
   2018   2017 
Cost:        
Computers, software, furniture and equipment  $86,122   $80,888 
Motor vehicles   1,631    1,659 
Buildings   1,833    1,833 
Leasehold improvements   23,975    22,080 
    113,561    106,460 
Accumulated depreciation:          
Computers, software, furniture and equipment  $70,401   $64,604 
Motor vehicles   765    636 
Buildings   217    70 
Leasehold improvements   12,996    11,343 
    84,379    76,653 
           
Depreciated cost  $29,182   $29,807 

 

b.Depreciation expenses totaled $7,880, $9,598, and $10,480 for the years ended December 31, 2016, 2017 and 2018, respectively.
Intangible Assets, Net
 12 Months Ended
Dec. 31, 2018
Intangible Assets, Net [Abstract]  
INTANGIBLE ASSETS, NET

NotE 10:- Intangible Assets, Net

 

a.Intangible assets, net, are comprised of the following as of the below dates:

 

   December 31, 
   2018   2017 
Original amounts:        
Capitalized Software costs  $197,685   $196,523 
Customer relationship   138,480    133,220 
Acquired technology   84,245    75,672 
Backlog and non-compete agreement   6,781    6,063 
Other intangibles   4,171    4,510 
Patent   1,280    1,385 
    432,642    417,373 
Accumulated amortization:          
Capitalized Software costs   148,845    142,019 
Customer relationship   78,470    65,705 
Acquired technology   44,831    35,466 
Backlog and non-compete agreement   6,105    5,837 
Other intangibles   3,779    3,890 
Patent   566    473 
    282,596    253,390 
           
Total  $150,046   $163,983 
           

 

b.Amortized expenses totaled $24,490, $34,048 and $38,254 for the years ended December 31, 2016, 2017 and 2018, respectively.
Goodwill
 12 Months Ended
Dec. 31, 2018
Goodwill [Abstract]  
GOODWILL

Note 11:- Goodwill

 

The changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2018 were as follows:

 

Balance as of January 1, 2017  $495,362 
      
Acquisition of subsidiaries   94,851 
Classifications   1,105 
Foreign currency translation adjustments   25,954 
      
Balance as of December 31, 2017   617,272 
Acquisition of subsidiaries   43,394 
Classifications   (18)
Foreign currency translation adjustments   (19,793)
      
Balance as of December 31, 2018  $640,855 

 

The Company performed annual impairment tests during the fourth quarter of 2018 and did not identify any impairment losses (see Note 2(21)).
Short Term Liabilities to Banks and Others
 12 Months Ended
Dec. 31, 2018
Short Term Liabilities to Banks and Others [Abstract]  
SHORT TERM LIABILITIES TO BANKS AND OTHERS

Note 12:- short term Liabilities to banks and others

 

   December 31,       
   2018           
   Interest rate     December 31, 
   %  Currency  2018   2017 
               
Bank credit  2-3.1  NIS  $736   $947 
Bank credit  US Prime -0.2  USD   2,362    2,125 
Short-term bank loans  1.7-2.5  NIS   1,068    22,910 
Current maturities of long-term loans from banks and other financial institutions (Note 14)  2.5-5.81  NIS   65,453    42,839 
Current maturities of long-term loans from banks (Note 14)  Libor +2.2  NIS (Linked to USD)   836    862 
Short-term interest on long-term loans from other financial institutions(1)  2.6-5.5  NIS   725    1,136 
Total         $71,180   $70,819
Other Accounts Payable
 12 Months Ended
Dec. 31, 2018
Other Accounts Payable [Abstract]  
OTHER ACCOUNTS PAYABLE

Note 13:- other accounts payable

 

   December 31, 
   2018   2017 
Government institutions  $29,485   $29,816 
Accrued royalties to the IIA (see Note 19f)   843    276 
Accrued expenses and other current liabilities   23,641    23,053 
Total  $53,969   $53,145 
Long Term Liabilities to Banks and Others
 12 Months Ended
Dec. 31, 2018
Long Term Liabilities to Banks and Others [Abstract]  
LONG TERM LIABILITIES TO BANKS AND OTHERS

Note 14:- Long term Liabilities to Banks and Others

 

a.Composition:

 

Interest rate  Currency  Long-term liabilities   Current maturities   Total long-term liabilities net of current maturities   Total long-term liabilities net of current maturities 
%     December 31, 2018   December 31, 2017 
                    
2.5-5.81  NIS (Unlinked)  $203,150    65,453    137,697   $132,753 
Libor +2.2  NIS (Linked to USD)   2,666    836    1,830    2,863 
      $205,816    66,289    139,527   $135,616 

 

i)

In November 2016, Magic obtained a loan in an amount of $31,356, linked to the New Israel Shekel, from an Israeli financial institution. The principal amount is payable in seven equal annual installments, with the final payment due on November 2, 2023, and bears a fixed interest rate of 2.60% per annum, payable in two semi-annual payments. Under the terms of the loan with the Israeli financial institution, Magic has undertaken to maintain certain financial covenants (see note 19 (c)(4)).

 

ii)

On February 28, 2017, Sapiens (via its wholly-owned subsidiary, Sapiens Americas Corporation) entered into a secured credit agreement, with HSBC Bank USA, National Association, for the acquisition of StoneRiver. Pursuant to the credit agreement, Sapiens borrowed $40 million for a five-year term, at the rate of LIBOR plus 1.85%. Upon Sapiens' consummation of a public offering and private placement of Sapiens' Series B Debentures in September 2017, Sapiens utilized the proceeds

 

iii)received from the sale of the debentures for repayment of the entire outstanding term loan amount (including accrued interest) under the credit agreement with HSBC.

 

b.Maturity dates:

 

   December 31, 
   2018   2017 
First year (current maturities)  $66,289   $43,701 
Second year   47,731    53,645 
Third year   33,893    34,270 
Fourth year   30,776    19,066 
Fifth year and thereafter   27,127    28,635 
Total  $205,816   $179,317 

 

c.Details of liens, guarantees and credit facilities are described in Note 19.
Debentures
 12 Months Ended
Dec. 31, 2018
Debentures [Abstract]  
DEBENTURES

NOTE 15:- DEBENTURES

 

The Group's liabilities under debentures are attributable to debentures issued by Formula in September 2015, as well as debentures issued by Sapiens in September 2017.

 

a.Composition:

 

   Effective Interest rate  Currency  Par Value   Unamortized debt premium (discount) and  issuance costs, net   Current maturities   Total long-term debentures, net of current maturities   Short-term accrued interest   Total short-term and long-term debentures 
   %     December 31, 2018 
Formula's Series A
Secured Debentures (2.8%)		  2.4  NIS (Unlinked)  $54,769    684    9,128    46,325    758    56,211 
                                     
Formula's Series B
Convertible Debentures (2.74%)		  3.65  NIS (Linked to fix rate of USD)   31,812    (79)   31,812    -    2,971    34,704 
                                     
Sapiens' Series B Debentures (3.37%)  3.69  NIS (Linked to fix rate of USD)   79,185    (710)   9,898    68,577    1,334    79,809 
                                     
         $165,766    (105)   50,838    114,902    5,063    170,724 

 

   Effective Interest rate  Currency  Par Value   Unamortized debt premium (discount) and  issuance costs, net   Current maturities   Total long-term debentures, net of current maturities   Short-term accrued interest   Long-term accrued interest   Total short-term and long-term debentures 
   %     December 31, 2017 
Formula's Series A
Secured Debentures (2.8%)		  3.07  NIS (Unlinked)  $25,810    (209)   3,687    

21,914

    357    -    25,958 
                                          
Formula's Series B
Convertible Debentures (2.74%)		  3.65  NIS (Linked to fix rate of USD)   31,871    (400)   -    31,471    -    2,073    33,544 
                                          
Sapiens' Series B Debentures (3.37%)  3.69  NIS (Linked to fix rate of USD)   79,185    (904)   -    78,281    782    -    79,063 
                                          
         $136,866    (1,513)   3,687    

131,666

    1,139    2,073    138,565 

 

During the years ended December 31, 2017 and 2018, the Group recorded $2,441 and $5,165, respectively, of interest expenses, and $391 and $289, respectively, as amortization of debt premium, discount and issuance costs, net in respect of the Group's debentures.

 

b.Aggregate principal annual payments of the debentures:

 

   Repayment amount 
2019 (1)   30,376 
2020   19,026 
2021   19,026 
2022   19,026 
2023 and thereafter   57,850 
Total   145,304 

 

(1)

Based on the remaining outstanding Series B Convertible Debentures in the amount of $11,350, which were not converted prior to their maturity on March 26, 2019 (see Note 23(f)).

 

c.Formula's debentures

 

On September 16, 2015, Formula concluded a public offering in Israel on the Tel-Aviv Stock Exchange (the "TASE") of (i) NIS 102.3 million par value of Series A Secured Debentures (the "Series A Secured Debentures") and (ii) NIS 125 million par value of Series B Convertible Debentures that are linked to the US Dollar (based on the exchange rate on September 8, 2015 of 3.922) (the " Series B Convertible Debentures"). Formula's debentures were offered and sold pursuant to a shelf prospectus filed with the Israeli Securities Authority (the "ISA") and TASE on August 6, 2015, amended thereafter on September 3, 2015 and which term was extended in July 2017 until August 6, 2018. The public offering of the debentures was made only in Israel and not to U.S. persons (as defined in Rule 902(k) under the Securities Act of 1933, as amended (the "Securities Act")), in an overseas directed offering (as defined in Rule 903(b)(i)(ii) under the Securities Act), and was exempt from registration under the Securities Act pursuant to the exemption provided by Regulation S thereunder. The sale of the debentures was not registered under the Securities Act, and the debentures may not be offered or sold in the United States and/or to U.S. persons without registration under the Securities Act or an applicable exemption from the registration requirements of the Securities Act.

 

In accordance with the indenture for the Series A Secured Debentures and Series B Convertible Debentures, Formula has undertaken to maintain a number of conditions and limitations on the manner in which it operates its business, including limitations on its ability to undergo a change of control, distribute dividends, incur a floating charge on the Company's assets, or undergo an asset sale or other change that results in a fundamental change in the Company's operations, and to meet certain financial covenants (see Notes 19a and 19c(ii)).

 

i)Formula's Series A Secured Debentures

 

The Series A Secured Debentures were issued at a purchase price equal to 100% of their par value and bear fixed annual interest at a rate of 2.8% (which may vary based on the credit rating of the debentures), payable semi-annually. The proceeds of the offering, before early commitment commission valued at $129 with respect to the units for which the qualified investors have committed to subscribe, and issuance costs of $190, amounted to NIS 102,260 (approximately $26,295). The principal of the Series A Secured Debentures, are denominated in NIS (not linked to any currency or index) and will be paid to holders in eight equal annual installments commencing on July 2, 2017. Formula may redeem the Series A Secured Debentures or any part thereof at its discretion after 60 days from their issuance date subject to certain conditions. In accordance with the terms of the indenture related to the Series A Secured Debentures, the collateral will consist of a certain number of shares of the Company's subsidiaries: Matrix, Magic and Sapiens (see Note 19a).

 

On January 31, 2018, the Company consummated a private placement to qualified investors in Israel, of an additional, aggregate NIS 150 million par value of Series A Secured Debentures at a price of NIS 1,034.7 for each NIS 1,000 principal amount. The aggregate gross proceeds totaled NIS 155,205 (approximately $45,581), excluding issuance costs of $225. As a result of the private placement, the total outstanding principal amount of the Series A Secured Debentures increased to approximately NIS 239,478 million (approximately $70,331). The terms of the Series A Secured Debentures sold in the private placement are identical in all respects to those of the Series A Secured Debentures sold in Formula's September 2015 public offering.

 

ii)Formula's Series B Convertible Debentures

 

Formula's Series B Convertible Debentures were issued at a purchase price equal to 102% of their par value and bear fixed annual interest at a rate of 2.74% (which may vary based on the credit rating of the debentures), and are to be repaid in one installment of principal and interest upon maturity of the debentures on March 26, 2019 (at which time the accrued interest will constitute 10% of the principal amount of Formula's Series B Convertible Debentures, in the aggregate). The proceeds of the offering, before early commitment commission valued at $131 with respect to the units for which the qualified investors committed to subscribe, and issuance costs of $236 amounted to NIS 127,500 (approximately $32,785). The principal of the Series B Convertible Debentures is subject to adjustment based on changes in the exchange rate between the NIS and the dollar relative to the exchange rate on September 8, 2015 (3.922), and will be repaid on March 26, 2019.

 

Formula's Series B Convertible Debentures are convertible, at the election of each holder, into Formula's ordinary shares, from the date of issuance and until March 10, 2019, at a conversion price of, as of the date of the issuance, NIS 157 par value of convertible debentures per one share, adjusted in the event that the Company effects a share split or reverse share split, a rights offering, a distribution of bonus shares or a cash dividend. As of December 31, 2017 and 2018, the adjusted conversion price to one share was NIS 150.27542 par value and 147.54176 par value, respectively, following cash dividend distributions.

 

In compliance with IAS 32, the Group identified and separated an equity component contained in Formula's Series B Convertible Debentures, valued at $1,248 (included in additional paid in capital). Debt discount and issuance costs (approximately $367) were allocated to the Formula's Series B Convertible Debentures discount and are amortized as financial expenses over the term of these debentures due in 2019. Formula may not redeem the Series B Convertible Debentures or any part thereof at its discretion.

 

As a result of conversions that were effected during 2018 and mainly 2019, prior to the maturity of the Series B Convertible Debentures in March 2019, holders of Series B Convertible Debentures converted an aggregate principal par value amount of NIS 80,484 (of which NIS 231.7 were converted in 2018) into 545,485 ordinary shares (of which 1,556 ordinary shares were issued in 2018), constituting 3.57% of Formula's issued and outstanding share capital (following those conversions). The remaining outstanding Series B Convertible Debentures matured on March 26, 2019, and the remaining outstanding principal of NIS 44,516 (or $11,350) and interest on those debentures of $1,135 were paid on that date.

 

iii)Formula's Series C Secured Debentures

 

On March 31, 2019, Formula consummated a public offering in Israel of a new series of secured debentures - Series C Secured Debentures— in an aggregate NIS 300,000 par value amount, at a price of NIS 1,000 for each unit of NIS 1,000 principal amount. The aggregate gross proceeds from the public offering totaled NIS 298,500 (approximately $82,186). For further information, see Note 24 (a).

 

d.Sapiens' Series B Debentures

 

In September 2017, Sapiens issued its unsecured Series B Debentures in an aggregate principal amount of NIS 280,000 (approximately $79,186), linked to US dollars, payable in eight equal annual payments of $9,898 on January 1 of each of the years 2019 through 2026. The outstanding principal amount of Sapiens' Series B Debentures will bear a fixed interest rate of 3.37% per annum, payable on January 1 and July 1 of each of the years 2018 through 2025, with one final interest payment on January 1, 2026. Debt discount and issuance costs were approximately $956, allocated to Sapiens' Series B Debentures discount and are amortized as financial expenses over the term of the Series B Debentures due in 2026. The first installment, in an amount of $9,898, was paid on January 1, 2019.

 

Sapiens' Series B Debentures are listed for trading on the TASE. Sapiens' Series B Debentures are unsecured and non-convertible. The interest rate payable on Sapiens' Series B Debentures may be increased in the event that the debentures' rating is downgraded below a certain level.

 

In accordance with the indenture for the Sapiens Series B Debentures, Sapiens has undertaken to maintain a number of conditions and limitations on the manner in which it operates its business, including limitations on its ability to undergo a change of control, distribute dividends, incur a floating charge on Sapiens' assets, or undergo an asset sale or other change that results in a fundamental change in Sapiens' operations and to meet certain financial covenants (see Note 19c(iii)).
Related Parties Transactions
 12 Months Ended
Dec. 31, 2018
Related party transactions [abstract]  
RELATED PARTIES TRANSACTIONS

Note 16:- RELATED PARTies TRANSACTIONS

 

a)Acquisition of Insseco

 

On August 18, 2015, Sapiens completed the acquisition from Asseco, the parent company of Formula, of all issued and outstanding shares of Insseco. Under the share purchase agreement for that acquisition, Asseco committed to assign all customer contracts to Insseco that relate to the intellectual property that Sapiens acquired as part of the acquisition. In the event that Asseco cannot obtain the consent of any customer to the assignment of its contract to Insseco, Asseco will hold that customer's contract in trust for the benefit of Insseco. Under that arrangement, in 2016, Insseco invoiced Asseco in a back-to-back manner for all invoices issued by Asseco on Insseco's behalf to customers under those contracts that were not yet assigned by Asseco to Insseco. During the years ended December 31, 2016, 2017 and 2018, Asseco provided back office and professional services and fixed assets to Insseco in amounts totaling approximately $1,900, $1,600 and $980, respectively.

 

b)Services obtained from Asseco

 

During the years ended December 31, 2017 and 2018, Asseco provided back-office services, professional services and fixed assets to Sapiens' wholly-owned subsidiary, Sapiens Poland, in amounts totaling approximately $1,600 and $980, respectively.

 

c)Services provided to Asseco

 

During 2017 and 2018, Sapiens Poland performed services as a sub-contractor on behalf of Asseco for clients of Asseco in total amounts of approximately $8,250 and $3,200, respectively. For historic reasons, Asseco issues invoices to those clients and then Sapiens in turn invoices Asseco on a back-to-back basis.

 

d)During 2017 Matrix performed services as a sub-contractor on behalf of Asseco Denmark A.S., a subsidiary of Asseco, in an amount totaling approximately €0.5 million ($564).

 

e)Fees paid for board services in affiliates

 

Sapiens paid the Company approximately $28.6 and $25.0 in respect of its share of the director's fees of Mr. Guy Bernstein, its Chairman and the Company's chief executive officer, for the years ended December 31, 2017 and 2018, respectively.

 

Matrix paid the Company approximately $30.0 and $29.0 in respect of its share of the director's fees of Mr. Guy Bernstein, its Chairman and the Company's chief executive office, for the years ended December 31, 2017 and 2018 respectively.

 

f)Other Transactions

 

From time to time, in the Group's ordinary course of business, the Group engages in non-material transactions between its subsidiaries and affiliates where the amount involved in, and the nature of, the transactions are not material to any party to the transaction. The Group believes that these transactions are made on an arms' length basis upon terms and conditions no less favorable to the Group, its subsidiaries and affiliates, as it could obtain from unaffiliated third parties. If Group engages with its subsidiaries and affiliates in transactions which are not in the ordinary course of business, the Group receives the approvals required under the Companies Law. These approvals include audit committee approval, board approval and, in certain circumstances, shareholder approval.

 

g)

As of December 31, 2017 and 2018, the Group had trade payable balances due from its transactions with Asseco, as detailed above, in amounts of approximately $150 and $0, respectively. In addition, as of December 31, 2017 and 2018, the Group had trade receivables balances due from its transactions with Asseco, as detailed above, in amounts of approximately $1,038 and $955, respectively.
Employee Option Plans
 12 Months Ended
Dec. 31, 2018
Employee Option Plans [Abstract]  
EMPLOYEE OPTION PLANS

Note 17:- Employee Option Plans

 

a)Formula and its subsidiaries grant, from time to time, options to their officers and employees to purchase shares in the respective companies. In general, the options expire ten years after grant. The following table sets forth the breakdown of share-based compensation expense resulting from stock options grants, as included in the consolidated statements of profit or loss:

 

   Year ended December 31, 
   2018   2017   2016 
             
Cost of revenues  $2   $7   $15 
Research and development expenses   4    8    17 
Selling and marketing expenses   4    -    71 
General and administrative expenses   3,971    4,019    4,291 
Total share-based compensation expense  $3,981   $4,034   $4,394 

 

b)Formula:

 

(i)In March 2011, Formula's shareholders approved the adoption of Formula's 2011 Employee and Officer Share Incentive Plan (the "2011 plan"). Pursuant to the 2011 plan, Formula may grant from time to time to Formula's and its investees' employees and officers (which are not Formula's controlling shareholders) ordinary shares, restricted shares or options to purchase up to 545,000 ordinary shares of Formula. The 2011 plan is administered by Formula's board of directors. The 2011 plan provides that share based compensation may be granted, from time to time, to such grantees to be determined by the board, at an exercise price and under such terms to be determined at its sole and absolute discretion. Share based compensation may be granted under the 2011 plan through March 2021. In 2012, Formula's shareholders approved the increase of the amount of ordinary shares reserved for issuance under the 2011 plan by 1,200,000 options.

 

(ii)In March 2011, concurrently with the amendment and extension of Formula's chief executive officer's service agreement, Formula approved a grant of options to its chief executive officer, exercisable for an additional 543,840 ordinary shares. The options vested in equal quarterly installments, over a four-year period that commenced on December 31, 2011 and concluded on December 31, 2015. The exercise price of the options was NIS 0.01 per share. In May 2011, the chief executive officer exercised all of these options for redeemable restricted shares, for which the Company's redemption right was to lapse in accordance with the remaining vesting schedule for the unvested options from which they arose. Total fair value of the grant was calculated based on the Formula share price on the grant date and totaled $9,055 ($16.65 per share).

 

In December 2011, at which time Formula was negotiating an amendment and an extension of its chief executive officer's service agreement, it redeemed all of the above-described 543,840 shares for no consideration.

 

In March 2012, concurrently with the amendment and extension of its chief executive officer's service agreement, the board of directors of Formula awarded him with a new share option incentive plan, following the redemption of the 543,840 redeemable ordinary shares, which were granted to him in March 2011 and which were not yet vested in their redemption date. Under the 2011 plan, the chief executive officer of Formula was granted options exercisable for 1,122,782 ordinary shares of Formula (the "new grant"), as long as he continues to serve as (i) a director of Formula and/or (ii) a director of each of the directly held subsidiaries of Formula; provided that if he fails to meet the foregoing requirement (A) due to the request of the board of directors of either Formula or any of its directly held subsidiaries (other than a request which is based on actions or omissions by the chief executive officer that would constitute "cause" under his service agreement with Formula), (B) because the chief executive officer is prohibited under the governing law or charter documents of the relevant company or the stock exchange rules and regulations applicable to such company from being a director of such company (other than due to his actions or omissions) or (C) notwithstanding the chief executive officer's willingness to be so appointed (but provided that neither (A) nor (B) applies); then, in each of (A), (B) and (C), the chief executive officer will be deemed to have complied with clauses (i) or (ii) above. The options vest, i.e., Formula's redemption right with respect to the options and the underlying ordinary shares issuable upon exercise lapses, in equal quarterly installments over an eight-year period that commenced in March 2012 and concludes on December 31, 2019. Notwithstanding the foregoing, if a change of control of the Company occurs, then all unvested options and/or restricted shares will immediately become vested. The exercise price of the options is NIS 0.01 per share. The new grant is accounted for as a modification to the March 2011 grant to the chief executive officer. Total fair value of the grant was calculated based on the share price on the grant date and totaled $18,347 ($16.34 per share). In accordance with the terms of the options grant, the shares issuable upon exercise of the options will be deposited with a trustee and Formula's chief executive officer will not be permitted to vote or dispose of them until the shares are released from the trust. In June 2013 all options were exercised into shares however they have been deposited with a trustee and Formula's chief executive officer was not permitted to vote or dispose of them until the shares are released from the trust. All shares participate in dividends and have the right to vote, however for so long as the shares are held by the trustee (even if they have vested) the voting rights may only be exercised by the trustee. In accordance with the guidelines of Formula incentive plan, as long as the shares underlying any grant under the plan are being held by the trustee they will be voted by the trustee in the same proportion as the results of the shareholder meeting. Only those shares for which the vesting period has expired may be collected from the trustee.

 

On August 3, 2017 and on August 22, 2017 Asseco sold 2,356,605 and 589,151, respectively, of Formula's ordinary shares, in the aggregate representing 20% of Formula outstanding share capital to eleven (11) Israeli financial institutions and to the Company's chief executive officer, respectively, in privately negotiated sales transactions. The sales resulted in Asseco's share interest in Formula decreasing from 46.3% to 26.3% and to its loss of control of the Company. In accordance with Mr. Bernstein's share based award plan, such loss of control in the Company resulted in the immediate acceleration of all of his unvested shares, which amounted to 350,869 shares as of such date.

 

(iii)

In November 2014, Formula's board of directors awarded its chief financial officer with 10,000 restricted shares under the 2011 plan (the "restricted shares"). These restricted shares vest on a quarterly basis over a four-year period, commencing on November 13, 2014 and concluding on November 13, 2018, provided that during such time the chief financial officer will continue to serve as (i) an officer of the Company and/or (ii) an officer in one of the directly held affiliates, except that if he fail to meet the service condition due to the request of the board of directors of either Formula or any of its directly held affiliates (other than a termination of his provision of services which is based on actions or omissions by him that will constitute "cause" under his grant agreement with Formula); then, the chief financial officer will be deemed to have complied with clauses (i) or (ii) above. Notwithstanding the foregoing, if a change of control of the Company occurs, then all unvested restricted shares will immediately become vested. Total fair value of the grant was calculated based on the Formula share price on the grant date and equaled $239 ($23.9 per share).

 

In accordance with the Company's chief financial officer's share based award plan, Asseco's loss of control in the Company resulted in the immediate acceleration of all of his unvested shares under the grant of November 2014, which amounted to 3,125 shares.

 

In August 2017, Formula's board of directors awarded its chief financial officer additional 10,000 restricted shares under the 2011 plan (the "new restricted shares"). These new restricted shares vest on a quarterly basis over a three-year period, commencing on August 17, 2017 and concluding on August 17, 2020, provided that during such time the chief financial officer will continue to serve as (i) an officer of the Company and/or (ii) an officer in one of the directly held affiliates, except that if he fails to meet the service condition due to the request of the board of directors of either Formula or any of its directly held affiliates (other than a termination of his provision of services which is based on actions or omissions by him that will constitute "cause" under his grant agreement with Formula), then, the chief financial officer will be deemed to have complied with clauses (i) or (ii) above. Notwithstanding the foregoing, if a change of control of the Company occurs, then all unvested new restricted shares will immediately become vested. Total fair value of the grant was calculated based on the Formula share price on the grant date and equaled to $371 ($37.1 per share).

 

The total compensation expense that the Company recorded in its statement of profit or loss for the year ended December 31, 2018 in respect of its chief financial officer (constituting his equity compensation for all of 2018) was $209.

 

As of December 31, 2018, all 10,000 new restricted shares granted in August 2017 were deposited with the trustee. These shares included 3,333 ordinary shares constituting the then currently vested portion of the 10,000 new restricted shares that Formula granted to its chief financial officer.

 

(iv)In November 2018, Formula's board of directors awarded its chief operational officer 10,000 restricted shares under the 2011 plan (the "restricted shares"). These restricted shares vest on an annual basis over a four-year period, commencing on November 19, 2018 and concluding on November 19, 2022, provided that during such time the chief operational officer will continue to serve as (i) an officer of the Company and/or (ii) an officer in one of the directly held affiliates. Total fair value of the grant was calculated based on the Formula share price on the grant date and equaled $382 ($38.2 per share).

 

The total compensation expense that the Company recorded in its statement of profit or loss for the year ended December 31, 2018 in respect of its chief operational officer (constituting her equity compensation for all of 2018) was $23.

 

As of December 31, 2018, all 10,000 new restricted shares granted in November 2018 were deposited with the trustee. None of these shares were then currently vested.

 

c)Matrix:

 

In October, 2015 Matrix approved an agreement with Revava Management Company Ltd. through which Mr. Moti Gutman provides services to Matrix as a chief executive officer, and persunat to which among other things, Matrix granted Mr. Gutman 225,000 restricted share units (RSU) exercisable into 225,000 ordinary shares of Matrix without an exercise price. The RSU vested in three equal shares portions of 75,000 RSU units, each at December 31 of each year under the agreement, but not before the publication of Matrix's financial statements for the past year, and subject to certain conditions. In 2018, 75,000 restricted share units (RSU) were vested and exercised. As of December 31, 2018, Mr. Gutman does not hold any restricted share units (RSU) from this grant.

 

In December, 2017 Matrix extended its agreement with Revava Management Company Ltd. for additional five years' term starting on January 1, 2018. As part of the new agreement Matrix awarded Mr. Gutman additional 256,890 (RSUs), which vest on an annual basis over a five-year period, commencing on January 1, 2018 and concludes on December 31, 2022, but not before the publication of Matrix's financial statements for each respective year, and subject to certain conditions.

 

In April 2015, the board of directors of Matrix approved, following the approval by Matrix's compensation committee, the grant of 1,850,000 options which are exercisable into up to 1,850,000 ordinary shares of Matrix of NIS 1 par value each to 19 senior officers of Matrix or of corporations controlled by it. The exercise price of the options was NIS 19.485 at the date of their grant, subject to adjustments, including upon the distribution of dividends. Half of the options vested on April 1, 2017, a quarter of the options vested on January 1, 2018, and the rest vested on January 1, 2019. When the actual exercise will take place, shares will be allotted, according to a net exercise mechanism. Matrix will not get paid in cash.

 

In June, 2015, the general shareholder meeting of Matrix approved, after obtaining the approval of Matrix's compensation committee and the Matrix board the grant 300,000 options exercisable for 300,000 ordinary shares of Matrix of NIS 1 par value, without compensation, to the President and Vice Chairman of the Matrix board. The exercise price of the options was NIS 21.39 at the date of their grant, subject to adjustments, including upon the distribution of dividends. Half of the options vested on June 4, 2017, and the equal parts of the remaining options vested on January 1, 2018 and January 1, 2019. The fair value of the options was estimated on the date of grant using the Binomial model based on the terms which are: risk-free interest rate is 0.08% -1.31%, early exercise factor is 30% and expected volatility is 19% -22%. The contractual life of the options is 5 years from the date of grant.

 

The following table is a summary of employee option activity in Matrix, as of December 31, 2018 and during the year ended December 31, 2018:

 

  

Number

of options

   Weighted average exercise price  

Weighted average remaining contractual term

(in years)

   Aggregate intrinsic value 
Outstanding at January 1, 2018   1,100,000    4.33    2.19    9,152 
Exercised   587,500    4.06    -    4,578 
Granted   256,890    -    5    3,247 
Outstanding at December 31, 2018   769,390    2.61    2.19    6,823 
Exercisable at December 31, 2018   51,378    -    -    567 

 

The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the option holders had all option holders exercised their options on the respective dates. This value would change based on the change in the market value of Matrix' ordinary shares and the change in the exchange rate between the New Israeli Shekel and dollar. As of December 31, 2018, there was $1,930 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Matrix equity incentive plan.

 

d)Sapiens:

 

The following table is a summary of employee option activity in Sapiens as of December 31, 2018 and during the year ended December 31, 2018:

 

   Year ended December 31, 2018 
   Amount of options  

Weighted

average

exercise

price

   Weighted average remaining contractual life
(in years)		   Aggregate intrinsic value 
Outstanding at January 1, 2018   2,107,413    9.67    4.25    4,084 
Granted   317,000    10.20           
Exercised   (223,570)   4.40           
Expired and forfeited   (145,661)   10.79           
                     
Outstanding at December 31, 2018   2,055,182    9.86    3.80    2,594 
                     
Exercisable at December 31, 2018   829,133    8.31    2.47    2,134 

 

In 2016, 2017 and 2018, Sapiens granted 310,000, 920,910 and 317,000 stock options to its employees and directors to purchase its shares, respectively. The weighted average grant date fair values of the options granted during the years ended December 31, 2016, 2017 and 2018 were $4.30, $4.17 and $3.43, respectively. The total intrinsic value of options exercised during the years ended December 31, 2016, 2017 and 2018, was $2,304, $5,739 and $1,641, respectively.

 

The options outstanding under Sapiens' stock option plans as of December 31, 2018 have been separated into ranges of exercise price as follows:

 

                   Weighted 
   Options   Weighted       Options   Average 
   outstanding   Average   Weighted   Exercisable   Exercise 
   as of   remaining   average   as of   price of 
Ranges of  December 31,   contractual   exercise   December 31,   Options 
exercise price  2018   Term   price   2018   Exercisable 
$      (Years)   $       $ 
                     
0.88-1.48   25,703    1.18    1.08    25,703    1.08 
4.12-5.67   103,000    0.83    5.62    103,000    5.62 
6.32-6.91   45,750    1.47    6.67    38,250    6.74 
7.82   300,000    2.34    7.82    300,000    7.82 
8.67-9.18   95,000    3.48    9.10    40,000    9.18 
9.33-9.8   413,229    4.33    9.53    157,180    9.44 
10.18-10.81   217,500    3.45    10.46    112,500    10.40 
11.43-12.53   810,000    4.78    11.54    33,750    12.27 
12.62-13.5   45,000    3.78    12.91    18,750    12.80 
                          
    2,055,182    3.80    9.86    829,133    8.31 

 

The total equity-based compensation expense related to all of Sapiens' equity-based awards, recognized for the years ended December 31, 2016, 2017 and 2018, after being adjusted to comply with IFRS, was $1,981, $2,201 and $2,009, respectively. As of December 31, 2018, there was $3,761 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a period of up to four years.

 

During 2017, 29,500 of the 88,500 restricted shares of Sapiens Decision, the Company's majority-owned subsidiary which were granted to one of the former shareholders of KPI in 2014, vested, thereby reducing the Company's percentage ownership of Sapiens Decision from 94.25% to 92.89%. During 2017, Sapiens Decision granted 122,730 options to certain of its employees to purchase shares of Sapiens Decision.

 

e)Magic:

 

A summary of employee option activity under the Magic plans as of December 31, 2018 and during the year ended December 31, 2018 are as follows:

 

  

Number

of options

   Weighted average exercise price  

Weighted average remaining contractual term

(in years)

   Aggregate intrinsic value 
Outstanding at January 1, 2018   309,309    4.38    3.97    1,237 
Granted   37,500    -           
Exercised   (104,167)   2.99           
Forfeited   (21,875)   6.89           
                     
Outstanding at December 31, 2018   220,767    3.83    3.81    1,684 
                     
Exercisable at December 31, 2018   190,767    4.43    2.92    1,456 

 

The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the option holders had all option holders exercised their options on the respective dates. This value would change based on the change in the market value of Magic's ordinary shares. Total intrinsic value of options exercised during the years ended December 31, 2016, 2017 and 2018, was $112, $502 and $617, respectively. As of December 31, 2018, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under Magic's plans.

 

The options outstanding as of December 31, 2018, have been separated into ranges of exercise price categories, as follows:

 

Ranges of
Exercise price		 

Options outstanding

  

 

Weighted average remaining contractual life

   Weighted average exercise price  

Options exercisable

  

Weighted average exercise price of exercisable

options

 
$      (Years)   $       $ 
0-1   30,000    9.49    -    -    - 
2.01-3   66,000    1.26    2.32    66,000    2.32 
3.01-4   73,517    2.77    4.00    73,517    4.00 
5.01-6   6,250    4.61    6.00    6,250    6.00 
8.01-9   45,000    5.35    8.01    45,000    8.01 
    220,767    3.81    3.83    190,767    4.43 
Employee Benefit Liabilities
 12 Months Ended
Dec. 31, 2018
Disclosure of defined benefit plans [abstract]  
EMPLOYEE BENEFIT LIABILITIES

Note 18:- EMPLOYEE BENEFIT LIABILITIES

 

Employee benefits consist of post-employment benefits, other long-term benefits and termination benefits.

 

a)Post-employment benefits:

 

According to the labor laws and Severance Pay Law in Israel, the Israeli companies in the Group are required to pay compensation to an employee upon dismissal or retirement or to make current contributions in defined contribution plans pursuant to section 14 to the Severance Pay Law, as specified below. These liabilities are accounted for as a post-employment benefit. The computation of the Group's employee benefit liability is made according to the current employment contract based on an employee's salary and employment term which establish the entitlement to receive the compensation.

 

The post-employment employee benefits are normally financed by contributions classified as a defined benefit plan or as a defined contribution plan, as detailed below.

 

1)Defined contribution plans:

 

Section 14 of the Severance Pay Law, 1963 applies to part of the compensation payments, pursuant to which the fixed contributions paid by the Group into pension funds and/or policies of insurance companies release the Group from any additional liability to employees for whom said contributions were made. These contributions and contributions for benefits represent defined contribution plans.

 

2)Defined benefit plans:

 

The Group accounts for that part of the payment of compensation that is not covered by contributions in defined contribution plans, as above, as a defined benefit plan for which an employee benefit liability is recognized and for which the Group deposits amounts in central severance pay funds and in qualifying insurance policies.

 

3)Other long-term benefits:

 

According to Matrix's agreements with one of its senior officers, he is entitled to an adaptation bonus in an amount of 12 salaries. This liability has been recognized as a defined benefit.

 

b)Composition of defined benefit plans is as follows:

 

   December 31, 
   2018   2017 
Defined benefit obligation   81,556    87,316 
Fair value of plan assets   (72,672)   (78,284)
Net defined benefit liability   8,884    9,032
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2018
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

Note 19:- Commitments and Contingencies

 

a)Liens:

 

1)

A lien has been incurred by Formula over a certain portion of its investments in outstanding shares of Matrix, Magic and Sapiens, pursuant to a credit agreement with a financial institution entered into in January 2014, and in connection with the issuance of Formula's Series A Secured Debentures, issued by Formula in September 2015 on the TASE (see Notes 14 and 15).

 

2)

Composition of pledged shares of Matrix, Magic and Sapiens owned by Formula as of December 31, 2018 is as follows:

 

   December 31, 2018 
   Financial institution credit agreement   Formula's Series A Secured Debentures 
Matrix ordinary shares, par value NIS 1.0 per share   5,263,615    4,128,865 
Magic ordinary shares, par value NIS 0.1 per share   2,117,143    5,825,681 
Sapiens common shares, par value €0.01 per share   1,410,533    1,260,266 

 

3)In January 2018, following the private placement of additional NIS 150,000 par value Series A Secured Debentures, Formula pledged additional 1,692,954 shares of Matrix and 3,487,198 shares of Magic (see Note 15).

 

4)In January 2019, the Company unpledged, in accordance with the financial institution's credit agreement, 3,694,517 shares of Matrix, 1,356,820 shares of Magic and 898,613 shares of Sapiens.

 

5)In March 2019, following the offering of Formula's new Series C Secured Debentures of NIS 300,000 par value, Formula pledged 6,031,761 shares of Matrix, 2,411,474 shares of Magic and 2,957,590 shares of Sapiens (see Note 15).

 

b)Guarantees:

 

As of December 31, 2018, the Group provided performance bank guarantees in an amount of approximately $27,800 as security for its subsidiaries' performance of various contracts with customers and suppliers. As of December 31, 2018, the Group provided bank guarantees in an aggregate amount of approximately $4,700 as security for its subsidiaries' rent to be paid for its leased offices. As of December 31, 2018, the Group had restricted bank deposits of $800 in favor of the bank guarantees.

 

c)Covenants:

 

In connection with the Group's debentures and credit facility agreements with banks and other financial institutions, as of December 31, 2018, the Group committed to the following:

 

1)Formula

 

i)Liability to Financial Institution

 

In the context of Formula's credit facility obtained from a financial institution, Formula has undertaken to maintain the following financial covenants, as they will be expressed in its financial statements, as described:

 

a.Formula shareholders' equity (not including minority interests) shall not be less than $160 million at all times.

 

b.The ratio of Formula shareholders' equity (not including minority interests) to total consolidated assets will not be less than 20%.

 

c.The ratio of Company's financial debts less cash, short-term deposits and short-term marketable securities to the annual EBITDA will not exceed 3.5 (all based on the Company's consolidated financial statements).

 

d.The ratio of Company's financial debts less cash, short-term deposits and short-term marketable securities to the total assets will not exceed 30% (all based on the Company's consolidated financial statements).

 

e.Formula's financial liabilities in its stand-alone balance sheet shall not be higher than NIS 450 million (approximately $130 million).

 

f.Formula will not create any pledge on all or part of its property and assets in favor of any third party and will not provide any guarantee to secure any third party's debts without the financial institution's consent.

 

g.Formula will not sell and/or transfer all or part of its assets to others in any manner whatsoever without the financial institution's advance written consent, unless it is done in the ordinary course of business.

 

h.Formula committed not to distribute dividends except for if the ratio of the Company's unpaid principal amount of the loan to the fair market value of its collaterals will not exceed 50%, and if the distribution will not cause its cash, short-term deposits and short-term marketable securities to be less than NIS 45 million (approximately $13 million), or if the dividend will not exceed 75% of accumulated profits accrued from the date of which the loan was granted until the distribution.

 

ii)Formula's Debentures

 

In accordance with Formula's indenture for its Series A Secured Debentures and Series B Convertible Debentures, Formula has undertaken to maintain the following financial covenants and obligations:

 

a.A covenant not to distribute dividends unless (i) Formula shareholders' equity (not including minority interests) shall not be less than $250 million, (ii) Formula's net financial indebtedness (financial indebtedness net of cash, marketable securities, deposits and other liquid financial instruments) shall not exceed 65% of net CAP (which is defined financial indebtedness, net, plus shareholders' equity), and (iii) the amount of the distributions shall be equal to profits for the years ended December 31, 2014 and 2015 and 75% of profits accrued from January 1, 2016 until the distribution and (iv) no event of default shall have occurred; and

 

b.Financial covenants, including (i) the equity attributable to the shareholders of Formula, as reported in Formula's annual or quarterly financial statements, shall not be less than $160 million, (ii) Formula's net financial indebtedness (financial indebtedness net of cash, marketable securities, deposits and other liquid financial instruments) shall not exceed 65% of net CAP (which is defined as financial indebtedness, net, plus shareholders equity) and (iii) at all times, Formula's cash balance will not be less than the annual interest payment (compounded) for the unpaid principal amount of the Series B debentures.

 

c.Standard events of default including among others:

 

1.Suspension of trading of the debentures on the TASE over a period of 60 days;
   
2.If the rating of the debentures is less than BBB- by Standard and Poors Maalot or equivalent rating of other rating agencies;
   
3.Failure to have the debentures rated over a period of 60 days;
   
4.If there is a change in control without consent of the rating agency; and
   
5.If Formula fails to continue to control any of its subsidiaries.

 

2)Matrix

 

In the context of Matrix's engagements with banks for receiving credit facilities, Matrix has undertaken to maintain the following financial covenants, as they are expressed in its financial statements, as described:

 

(i)The total rate of Matrix debts and liabilities to banks with the addition of debts in respect of debentures that have been and/or will be issued by it and shareholders' loans that have been and/or will be provided by it (collectively, the "debts") will not exceed 40% of its total balance sheet.

 

(ii)The ratio of Matrix debts less cash to the annual EBITDA will not exceed 3.5.

 

(iii)Matrix equity shall not be lower than NIS 275 million (approximately $73.4 million) at all times. As of December 31, 2018, Matrix's equity was approximately NIS 714 million (approximately $190.5 million).

 

(iv)Matrix balances of cash and short-term investments in its balance sheet shall not be lower than NIS 50 million (approximately $13.3 million).

 

(v)In the event that Formula ceases to hold 30% of Matrix share capital or is no longer the largest shareholder in Matrix, the credit may be placed for immediate repayment.

 

(vi)Matrix has committed that the rate of ownership and control of Matrix IT-Systems shall never be below 50.1%.

 

(vii)Matrix will not create any pledge on all or part of its property and assets in favor of any third party and will not provide any guarantee to secure any third party's debts as they are today and as they will be without the banks' consent (except for a first rate fixed pledge on an asset which acquisition will be financed by a third party and which the pledge will be in his favor).

 

(viii)Matrix will not sell and/or transfer all or part of its assets to others in any manner whatsoever without the banks' advance written consent, unless it is done in the ordinary course of business.

 

3)Sapiens

 

In accordance with the indenture for Sapiens' Series B Debentures, Sapiens has undertaken to maintain a number of conditions and limitations on the manner in which it can operate its business, including limitations on its ability to undergo a change of control, distribute dividends, incur a floating charge on its assets, or undergo an asset sale or other change that results in fundamental change in its operations. Sapiens Series B Debentures deed of trust also requires it to comply with certain financial covenants, as described below. A breach of the financial covenants for more than two successive quarters or a substantial downgrade in the rating of the debentures (below BBB-) could result in the acceleration of Sapiens' obligation to repay the debentures. The deed of trust includes the following provisions:

 

(i)a negative pledge, subject to certain exceptions;

 

(ii)a covenant not to distribute dividends unless (i) Sapiens shareholders' equity (not including minority interests) shall not be less than $160 million, (ii) Sapiens net financial indebtedness (financial indebtedness net of cash, marketable securities, deposits and other liquid financial instruments) does not exceed 65% of net CAP (which is defined as financial indebtedness, net, plus shareholders equity, including minority interest), (iii) the amount of the dividend does not exceed Sapiens profits for the year ended December 31, 2016 and the first three quarters of the year ended December 31, 2017, plus 75% of Sapiens profits as of September 1, 2017 and up to the date of distribution, and (iv) no event of default shall have occurred.

 

(iii)financial covenants, including (i) the equity attributable to the shareholders of Sapiens (not including minority interests), as reported in its annual or quarterly financial statements, will not be less than $120 million, and (ii) Sapiens' net financial indebtedness (financial indebtedness net of cash, marketable securities deposits and other liquid financial instruments) shall not exceed 65% of net CAP (which is defined as financial indebtedness, net, plus shareholders equity, including deposits and other liquid financial instruments).

 

4)Magic

 

Under the terms of the loan with an Israeli financial institution, Magic has undertaken to maintain the following financial covenants, as they will be expressed in its consolidated financial statements (in accordance with US GAAP), as described below:

 

(i)Total equity attributable to Magic' shareholders shall not be lower than $100,000 at all times;

 

(ii)Magic's consolidated cash and cash equivalents and marketable securities available for sale shall not be less than $10,000.

 

(iii)The ratio of Magic's consolidated total financial debts to consolidated total assets will not exceed 50%.

 

(iv)The ratio of Magic's total financial debts less cash, short-term deposits and short-term marketable securities to the annual EBITDA will not exceed 3.25 to 1; and

 

(v)Magic shall not create any pledge on all of its property and assets in favor of any third party without the financial institution's consent.

 

As of December 31, 2018, each of Formula, Matrix, Sapiens and Magic is in compliance with all of its financial covenants.

 

d)Legal proceedings:

 

1)

In September 2016, an Israeli software company, which was previously involved in an arbitration proceeding with Magic in 2015 and won damages from it for $2.4 million, filed a lawsuit seeking damages of NIS 34,106 against Magic and one of its subsidiaries. This lawsuit was filed as part of an arbitration proceeding. In the lawsuit, the software company claimed that warning letters that Magic sent to its clients in Israel and abroad, warning those clients against the possibility that the conversion procedure offered by the software company may amount to an infringement of Magic's copyrights (the "Warning Letters"), as well as other alleged actions, have caused the software company damages resulting from loss of potential business. The lawsuit is based on rulings given in the 2015 arbitration proceeding in which it was allegedly ruled that the Warning Letters constituted a breach of a non-disclosure agreement (NDA) signed between the parties. Magic rejects the claims by the Israeli software company and moved to dismiss the lawsuit entirely. At this point, all the relevant motions have been filed and all witnesses deposed. The Group is unable to make a reasonably reliable estimate of its chances of successfully defending this lawsuit.

 

2)In February 2018, Comm-IT Ltd., a subsidiary of Magic, commenced an action against a customer for payment of an overdue amount in the Supreme Court of the State of New York, New York County. In April 2018, the customer filed an answer in the action that included counterclaims asserting causes of action for breach of contract, fraud, and trespass to chattel. In May 2018, Comm-IT filed a reply to the counterclaims. The parties have agreed to participate in a mediation before a neutral mediator in March 2019. While it appears that the allegations against Comm-IT probably do not have merit, it is difficult to predict at this point whether Comm-IT's liability is remote or probable.

 

In addition to the above-described legal proceedings, from time to time, Formula and/or its subsidiaries and affiliates are subject to legal, administrative and regulatory proceedings, claims, demands and investigations in the ordinary course of business, including claims with respect to intellectual property, contracts, employment and other matters. The Group accrues a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in the determination of both the probability and as to whether a loss is reasonably estimable. These accruals are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. The Group intends to defend itself vigorously against the above claims, and it generally intends to vigorously defend any other legal claims to which it is subject. While for most litigations, the outcome is difficult to determine, to the extent that there is a reasonable possibility that the losses to which the Group may be subject could exceed the amounts (if any) that it has already accrued, the Group attempts to estimate such additional loss, if reasonably possible, and disclose it (or, if it is an immaterial amount, indicate accordingly). The aggregate provision that the Group has recorded for all other legal proceedings (other than the particular material proceedings described above) is not material.

 

e)Operating lease commitments:

 

The following are details of the Group's future minimum lease commitments for facilities and equipment, office space and motor vehicles under non-cancelable operating leases as of December 31, 2018:

 

2019   28,262 
2020   20,125 
2021   15,783 
2022   10,064 
2023 and Thereafter   24,778 
    99,012 

 

Rent expenses for the years 2016, 2017 and 2018 were approximately $25,411, $28,343 and $30,023 respectively.

 

Certain subsidiaries have leases motor vehicles under cancelable lease agreements, with an option to be released from those lease agreements, which may result in penalties ranging between one and three times lease monthly cost.

 

f)Royalty commitments:

 

Sapiens Technologies (1982) Ltd. ("Sapiens Technologies"), a wholly owned subsidiary of Sapiens incorporated in Israel, was partially financed under programs sponsored by the Israel Innovation Authority ("IIA"), formerly the Office of the Chief Scientist ("OCS") for the support of certain research and development activities conducted in Israel. In exchange for participation in the programs by the IIA, Sapiens Technologies agreed to pay 3.5% of total net consolidated license and maintenance revenue and 0.35% of the net consolidated consulting services revenue related to the software developed within the framework of these programs based on an understanding with IIA reached in January 2012. The royalties will be paid up to a maximum amount equaling 100%-150% of the grants provided by the IIA, linked to the dollar, and for grants received after January 1, 1999, bear annual interest at a rate based on LIBOR.

 

As of December 31, 2018, the estimated amount due to IIA amounted to $1,714. As of December 31, 2018, the Group had a contingent liability to pay royalties of $6,204.

 

g)Insurance:

 

The Company and its subsidiaries and affiliates insure themselves in bodily injury and property damage insurance policies, including third party, professional liability and employer's liability insurance policies. Formula, Sapiens and Magic directors and officers (D&O) are insured under an "umbrella" policy for insurance of directors and officers including D&O side A DIC policy (another layer of protection for officers) acquired by the Company for itself and its subsidiaries, for a period of 12 months from December 18, 2018.
Equity
 12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
EQUITY

Note 20:- equity

 

The composition of the Company's share capital is as follows:

 

   December 31, 2018   December 31, 2017 
   Authorized   Issued   Outstanding   Authorized   Issued   Outstanding 
                               
Ordinary shares, NIS 1 par value each   25,000,000    15,318,958    14,750,338    25,000,000    15,307,402    14,738,782 

 

a.

Formula's ordinary shares, par value NIS 1 per share, are traded on the TASE, and Formula's ADSs, each representing one ordinary share, are traded on the NASDAQ.

 

b.Formula holds 568,620 of its ordinary shares.

 

c.In January 2016, Formula declared a cash dividend of approximately $5,008 (or $0.34 per share) to shareholders of record on January 20, 2016 that was paid on February 4, 2016.

 

d.In June 2016, Formula declared a cash dividend of approximately $5,008 (or $0.34 per share) to shareholders of record on July 13, 2016 that was paid on July 28, 2016.

 

e.In December 2016, Formula declared a cash dividend of approximately $7,070 (or $0.48 per share) to shareholders of record on December 30, 2016 that was paid on January 12, 2017.

 

f.In September 2017, Formula declared a cash dividend of approximately $5,011 million (or $0.34 per share) to shareholders of record on October 17, 2017 that was paid on November 2, 2017.

 

g.In May 2018, Formula declared a cash dividend of approximately $5,012 million (or $0.34 per share) to shareholders of record on June 5, 2018 that was paid on June 20, 2018.

 

h.In December 2018, Formula declared a cash dividend of approximately $5,015 million (or $0.34 per share) to shareholders of record on December 31, 2018 that was paid on January 16, 2019.

 

i.For information concerning Formula's employees and officers share-based plans, see Note 17.

 

j.For information concerning Formula's issuance of shares as a result of conversions prior to maturity of Formula's Series B Convertible Debentures, see Note 17.
Taxes on Income
 12 Months Ended
Dec. 31, 2018
Taxes on Income [Abstract]  
TAXES ON INCOME

Note 21:- Taxes ON INCOME

 

a.Israeli taxation:

 

1)Corporate tax rate in Israel:

 

The Israeli corporate income tax rate was 25% in 2016, 24% in 2017 and 23% in 2018.

 

In December 2016, the Israeli Knesset (parliament)approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years) - 2016, which reduced the corporate income tax rate to 24% (instead of 25%) effective from January 1, 2017 and to 23% effective from January 1, 2018.

 

2)Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (the "Investment Law"):

 

Certain of Sapiens' Israeli subsidiaries have been granted "Approved Enterprise" Status under the Investment Law. The above Israeli subsidiaries have elected the alternative benefits program, waiver of grants in return for tax exemptions. Pursuant thereto, the income of the subsidiaries derived from the "Approved Enterprise" program is tax-exempt for two years and may enjoy a reduced tax rate of 10%-25% for up to a total of eight years (subject to an adjustment based upon the foreign investors' ownership in Sapiens). Under the terms of the Approved Enterprise program, income that is attributable to one of Sapiens' Israeli subsidiaries was exempt from income tax for a period of two years commencing in 2014. If a dividend is distributed out of tax exempt profits, as above, Sapiens will become liable for tax at the rate applicable to its profits from the approved enterprise in the year in which the income was earned, as if it was not under the Approved Enterprise track. Sapiens' policy is not to distribute such a dividend.

 

Entitlement to the above benefits is conditional upon the fulfilling the conditions stipulated by the above law, regulations published thereunder and the letters 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 Sapiens may be required to refund the amount of the benefits, in whole or in part, including interest and CPI linkage.

 

On December 29, 2010, the Knesset approved an amendment to the Investment Law for the Encouragement of Capital Investments, 1959 ("2011 Amendment"). According to the 2011 Amendment, a reduced uniform corporate tax rate for exporting industrial enterprises (over 25%) was established. The reduced tax rate will not be program dependent and will apply to the "Preferred Enterprise's" (as such term is defined in the Investment Law) entire income. Pursuant to the 2011 Amendment, a "Preferred Enterprise" is entitled to a reduced corporate tax rate of 16%. The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings as above will be subject to tax at a rate of 20%.

 

In 2011, Magic and one of its Israeli subsidiaries filed a notice to the Israeli tax authorities to apply for the new benefits under the 2011 Amendment, and therefore were subjected to the amended tax rate of 16% for the tax years 2011-2016.

 

In 2015, certain of Sapiens' Israeli subsidiaries filed a notice to the Israeli tax authorities to apply for the new benefits under the 2011 Amendment, and therefore were subjected to the amended tax rate of 16% for the tax years 2014-2016.

 

New Amendment - Preferred Technology Enterprise

 

In December 2016, the Israeli Knesset passed Amendment 73 to the Investment Law which included a number of changes to the Investments Law regimes. Certain changes were scheduled to come into effect beginning January 1, 2017, provided that regulations are promulgated by the Finance Ministry to implement the "Nexus Principles" based on OECD guidelines recently published as part of the Base Erosion and Profit Shifting (BEPS) project. The regulations were approved on May 1, 2017 and accordingly, these changes have come into effect. Applicable benefits under the new regime include:

 

Introduction of a benefit regime for "Preferred Technology Enterprises" granting a 12% tax rate in central Israel – on income deriving from intellectual property, subject to a number of conditions being fulfilled, including a minimal amount or ratio of annual R&D expenditure and R&D employees, as well as having at least 25% of annual income derived from exports. Preferred Technology Enterprise ("PTE") is defined as an enterprise which meets the aforementioned conditions and for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion.

 

A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more.

 

A withholding tax rate of 20% for dividends paid from PTE income (with an exemption from such withholding tax applying to dividends paid to an Israeli company). Such rate may be reduced to 4% on dividends paid to a foreign resident company, subject to certain conditions regarding percentage of foreign ownership of the distributing entity.

 

Starting 2017, certain of the Group's subsidiaries' taxable income in Israel is entitled to a preferred 12% tax rate under Amendment 73 to the Investment Law.

 

3)Tax benefits under the Israeli Law for the Encouragement of Industry (Taxes), 1969:

 

It is Formula's management's belief that certain of its Israeli investees currently qualify as an "Industrial Company," within the meaning of the Law for the Encouragement of Industry (Taxes), 1969 (the "Industrial Encouragement Law"). That Industrial Encouragement Law defines an "Industrial Company" as a company that is resident in Israel and that derives at least 90% of its income in any tax year, other than income from defense loans, capital gains, interest and dividends, from an enterprise whose major activity in a given tax year is industrial production. Under the Industrial Encouragement Law, these Israeli subsidiaries are entitled to amortization of the cost of purchased know-how and patents over an eight-year period for tax purposes as well as accelerated depreciation rates on equipment and buildings. Eligibility for the benefits under the Industrial Encouragement Law is not subject to receipt of prior approval from any governmental authority.

 

4)Foreign Exchange Regulations:

 

Under the Foreign Exchange Regulations, certain Israeli subsidiaries of the Group calculate their tax liability in dollars according to certain orders. The tax liability, as calculated in dollars is translated into NIS according to the exchange rate as of December 31 of each year.

 

5)Structural changes in Matrix:

 

In November 2018, a tax ruling was signed determining that effective December 31, 2017 as part of a merger process, two subsidiaries of Matrix will transfer all their assets and liabilities subject to the provisions of section 104 of the Income Tax Ordinance.

  

b.Non-Israeli investees:

 

Non-Israeli subsidiaries are taxed according to the tax laws in their respective country of residence. Deferred income taxes were provided in relation to undistributed earnings of non-Israeli subsidiaries, which the Group intends to distribute in the near future.

 

The Group intends to permanently reinvest undistributed earnings in the foreign subsidiaries in which earnings arose, in the vast majority of its subsidiaries. If the earnings, for which deferred taxes were not provided, were distributed in the form of dividends or otherwise, the Group would be subject to additional Israeli income taxes (subject to an adjustment for foreign tax credits) and non-Israeli withholding taxes.

 

The amount of undistributed earnings of foreign subsidiaries that are considered to be reinvested as of December 31, 2018 was $73,651. However, a determination of the amount of the unrecognized deferred tax liability for temporary difference related to those undistributed earnings of foreign subsidiaries is not practicable due to the complexity of the structure of our group of investees for tax purposes and the difficulty of projecting the amount of future tax liability.

 

The amount of cash and cash equivalents that were held by the Group's investees outside of Israel and would have been subject to income taxes if distributed as dividend as of December 31, 2017 and 2018 was $48,628 and $50,817, respectively.

 

c.Tax Reform- United States of America

 

The U.S. Tax Cuts and Jobs Act of 2017 ("TCJA") was approved by US Congress on December 20, 2017 and signed into law by US President Donald J. Trump on December 22, 2017. This legislation makes complex and significant changes to the U.S. Internal Revenue Code. Such changes include a reduction in the corporate tax rate and limitations on certain corporate deductions and credits, among other changes.

 

The TCJA reduces the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018. In addition, the TCJA makes certain changes to the depreciation rules and implements new limits on the deductibility of certain expenses and deduction.

 

Except for one US subsidiary which has a share interest in a subsidiary in India, all of the other Group's subsidiaries in the United States do not have any foreign subsidiaries and, therefore, the remaining provisions of the TCJAhave no material impact on the Group's results of operations.

 

The Group re-measured its U.S. deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future. The estimated tax benefit recorded related to the re-measurement of the provisional net deferred taxes was approximately $ 4,228 for the year ended December 31, 2017.

 

d.Net operating loss carried forward:

 

As of December 31, 2018, Formula and its subsidiaries have cumulative losses for tax purposes totaling approximately $152,107, of which $136,397 was in respect of Israeli subsidiaries and approximately $15,710 of which was in respect of subsidiaries abroad.

 

1)Formula

 

As of December 31, 2018, Formula stand-alone had cumulative carry forward tax losses in Israel totaling approximately NIS 257,460 (approximately $68,693), which can be carried forward and offset against taxable income in the future for an indefinite period.

 

2)Matrix

 

As of December 31, 2018, certain subsidiaries of Matrix had operating carry-forward tax losses totaling approximately NIS 119,431 (approximately $31,865), which can be carried forward and offset against taxable income in the future for an indefinite period.

 

3)Magic

 

As of December 31, 2018, certain subsidiaries of Magic had operating carry forward tax losses totaling approximately $14,418, which can be carried forward and offset against taxable income in the future for an indefinite period.

 

4)Sapiens

 

As of December 31, 2018, certain subsidiaries of Sapiens had carry-forward tax losses totaling approximately $26,250. Most of these carry-forward tax losses have no expiration date.

 

5)Insync

 

As of December 31, 2018 Insync did not have any carry forward tax losses.

 

6)Michpal

 

As of December 31, 2018 Michpal did not have any carry forward tax losses.

 

e.Income tax assessments:

 

Formula and its subsidiaries are routinely examined by various tax authorities. Below is a summary of the income tax assessments of Formula and its subsidiaries:

 

1)Formula

 

Formula has received final tax assessments (or assessments that are deemed final) through the tax year 2013.

 

2)Matrix

 

Matrix and its subsidiaries have received final tax assessments (or assessments that are deemed final) through the tax year 2013.

 

3)Magic

 

Magic and its Israeli subsidiaries have received final tax assessments (or assessments that are deemed final) through the year 2013.

 

4)Sapiens

 

Tax assessments filed by some of Sapiens' Israeli subsidiaries through the year 2012 are considered to be final.

 

f.Deferred tax liabilities, net:

 

1)Presentation in consolidated statements of financial position:

 

   December 31, 
   2018   2017 
Deferred taxes assets  $14,214   $15,878 
Deferred tax liabilities   (34,800)   (36,605)
   $(20,586)  $(20,727)

 

2)Composition:

 

   December 31, 
   2018   2017 
Net operating losses carried forward  $4,579   $8,081 
Intangibles and fixed assets   (32,895)   (35,834)
Differences in measurement basis (cash basis for tax purposes)   (1,571)   (4,298)
Other   9,301    11,324 
   $(20,586)  $(20,727)

 

g.Pre-tax income:

 

  

Year ended

December 31,

 
   2018   2017   2016 
             
Domestic (Israel)  $81,317   $38,204   $51,552 
Foreign   20,379    14,607    25,711 
                
Total  $101,696   $52,811   $77,263 

 

h.Taxes on income (tax benefit) consist of the following:

 

  

Year ended

December 31,

 
   2018   2017   2016 
             
Current taxes  $30,302   $22,375   $20,952 
Deferred taxes   (6,001)   (9,004)   211 
                
Total  $24,301   $13,371   $21,163 

 

i.Theoretical tax:

 

The following table presents reconciliation between the theoretical tax expense, assuming that all income was taxed at statutory tax rates, and the actual income tax expense, as recorded in the Group's consolidated statements of profit or loss:

 

  

Year ended

December 31,

 
   2018   2017   2016 
             
Income before income taxes, as per the statement of operations  $101,696   $52,811   $77,263 
                
Statutory tax rate in Israel   23%   24%   25%
                
Tax computed at the statutory tax rate   23,390    12,675    19,316 
                
Non-deductible expenses (non-taxable income) net and tax-deductible costs not included in the accounting costs   1,393    1,522    978 
Effect of different tax rates   379    843    (1,143)
Effect of "Approved, Beneficiary or Preferred Enterprise" status   (1,233)   (252)   (1,338)
Group's share of profits of companies accounted for at equity   (86)   (270)   (87)
Deferred taxes on current losses (utilization of carry forward losses) and temporary differences for which a valuation allowance was provided, net   (796)   4,695    1,442 
Effect of change in tax rates   -    (5,796)   112 
Taxes in respect of prior years   (485)   (227)   1,718 
Uncertain tax positions   2,703    342    (234)
Other   (964)   (439)   399 
                
Taxes on income  $24,301   $13,371   $21,163 

 

j.Uncertain tax positions:

 

A reconciliation of the beginning and ending amount of total unrecognized tax benefits in Formula's subsidiaries is as follows:

 

Balance as of December 31, 2015   2,492 
      
Increase due to consolidation in a subsidiary   227 
Decrease related to prior years' tax positions   (286)
Increase related to current year tax positions   847 
      
Balance as of December 31, 2016   3,280 
      
Increase due to consolidation in a subsidiary   66 
Decrease related to prior years' tax positions   (135)
Increase related to current year tax positions   813 
      
Balance as of December 31, 2017   4,024 
      
Decrease related to prior years' tax positions   (198)
Increase related to current year tax positions   2,775 
      
Balance as of December 31, 2018   6,601 

 

Although the Group believes that it has adequately provided for any reasonably foreseeable outcomes related to tax audits and settlement, there is no assurance that the final tax outcome of its tax audits will not be different from that which is reflected in the Group's income tax provisions. Such differences could have a material effect on the Group's income tax provision, cash flow from operating activities and net income in the period in which such determination is made.

 

The entire balance of unrecognized tax benefits, if recognized, would reduce the Group's annual effective tax rate.
Supplementary Financial Statement Information
 12 Months Ended
Dec. 31, 2018
Supplementary Financial Statement Information [Abstract]  
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

Note 22:- Supplementary Financial Statement Information

 

a.Non-controlling interest in material partially owned subsidiaries:

 

   December 31, 
   2018   2017 
Matrix and its subsidiaries  $106,667   $104,750 
Sapiens and its subsidiaries   193,832    193,973 
Magic and its subsidiaries   137,158    114,925 
Other   110    72 
   $437,767   $413,720 

 

b.Financial income and expenses:

 

  

Year ended

December 31,

 
   2018   2017   2016 
Financial expenses:               
Financial expenses related to liabilities in respect of business combinations  $1,108   $765   $2,602 
Interest expenses on loans and borrowings   6,891    7,700    6,061 
Financial costs related to Debentures   5,479    2,832    1,959 
Bank charges, negative foreign exchange differences and other financial expenses   2,374    18,573    6,972 
    15,852    29,870    17,594 
Financial income:               
Income from marketable securities and embedded derivative   832    138    865 
Interest income from deposits, positive foreign exchange differences and other financial income   6,730    8,613    5,143 
    7,562    8,751    6,008 
                
Total  $8,290   $(21,119)  $(11,586)

 

c.Geographical information:

 

1)The Group's property and equipment is located as follows:

 

   December 31, 
   2018   2017 
         
Israel  $22,401   $22,615 
United States   4,033    4,369 
Europe   1,307    1,412 
Japan   282    302 
Other   1,159    1,109 
           
Total  $29,182   $29,807 

 

i)Revenues:

 

The Group's revenues classified by geographic area (based on the location of customers) are as follows:

 

  

Year ended

December 31,

 
   2018   2017   2016 
Israel  $893,605   $846,298   $663,341 
International:               
United States   418,148    322,892    283,297 
Europe   141,316    131,025    115,444 
Africa   13,726    24,370    2,296 
Japan   11,053    15,763    38,310 
Other (mainly Asia pacific)   15,140    14,791    5,933 
Total  $1,492,988   $1,355,139   $1,108,621 

 

d.Earnings per share:

 

The following table presents the computation of basic and diluted net earnings per share for the Group:

 

  

Year ended

December 31,

 
   2018   2017   2016 
             
Numerator:               
Basic earnings per share – net income attributable to equity holders of the Company  $32,365   $10,352   $22,455 
Diluted earnings per share - net income attributable to equity holders of the Company  $33,376   $10,085   $23,207 
Denominator:               
Basic earnings per share - weighted average shares outstanding   14,740    14,437    14,214 
Effect of dilutive securities   831    295    1,311 
                
Diluted earnings per share – adjusted weighted average shares outstanding   15,571    14,732    15,525 
                
Basic net earnings per share   2.20    0.72    1.58 
                
Diluted net earnings per share   2.14    0.68    1.49 
Operating Segments
 12 Months Ended
Dec. 31, 2018
Operating Segments [Abstract]  
OPERATING SEGMENTS

Note 23:- operating segments

 

a.General:

 

The Group is engaged through five directly held subsidiaries; Matrix; Magic; Sapiens; Insync and Michpal; and one jointly controlled entity: TSG, in providing software services, proprietary and non-proprietary software solutions, software product marketing and support, computer infrastructure and integration solutions and training and integration.

 

Matrix

 

Matrix IT Ltd. is Israel's leading IT services company. Matrix provides software solutions and services, software development projects, outsourcing, integration of software systems and services – all in accordance with its customers' specific needs. Matrix also provides upgrading and expansion of existing software systems.

 

Matrix operates through its directly and indirectly held subsidiaries in the following segments: (1) Information Technology (IT) Software solutions and services, Consulting & Management in Israel; (2) Information Technologies (IT) Software solutions and services in the U.S; (3) Training and integration; (4) Computer infrastructure and integration solutions; and, (5) Software product marketing and support.

 

Information Technologies (IT) Software solutions and services, Consulting & Management in Israel:

 

The software solutions and services in Israel provided by Matrix consist mainly of providing tailored software solutions and upgrading and expanding existing software systems. These services include, among others, developing customized software, adapting software to the customer's specific needs, implementing software and modifying it based on the customer's needs, outsourcing, project management, software testing and QA and integrating all or part of the above elements. The scope of work invested in each element varies from one customer to the other. In 2018, activity in Software solutions and value added services in Israel accounted for approximately 61% of Matrix's revenues for approximately 45% of its operating income, respectively.

 

Information Technologies (IT) Software solutions and services in the U.S:

 

Matrix activities in this segment are primarily providing software solutions and services of Governance Risk and Compliance ("GRC") experts, including activities on the following topics: risk management, management and prevention of fraud, Anti-Money Laundering and securing compliance with the regulations on these issues, through Matrix-IFS (formerly Exzac Inc.), a wholly owned subsidiary of Matrix, as well as providing solutions and specialized technological services in areas such as: portals, BI (Business Intelligence) DBA (Data Base Administration), CRM (Customer Relation Management) and EIM (Enterprise Information Management), and in addition, the activity in this segment includes IT help desk services specializing in healthcare and software product distribution services particularly IBM products. The activity in this segment is performed mostly through Matrix IFS and Xtivia Technologies Inc., wholly owned subsidiaries of Matrix. In 2018, activity in the U.S accounted for approximately 12% of Matrix's revenues and for approximately 26% of its operating income, because of higher operating gross margin in the U.S.

  

Training and integration:

 

Matrix's activities in this segment consist of operating a network of high-tech training and instruction centers which provide application courses, professional training courses and advanced professional studies in the high-tech industry, courses of soft skills and management training and provision of training and implementation of computer systems. In 2018, activity in training and integration accounted for approximately 5% of Matrix's revenues and for approximately 8% of its operating income, respectively.

 

Computer infrastructure and integration solutions:

 

Matrix's activities in this segment is primarily providing computer solutions to computer and communications infrastructures, marketing and sale of computers and peripheral equipment to business customers, providing related services, and cloud computing solutions (through the business specializing unit of the Company - Cloud Zone) and a myriad of services regarding Database services and Big data services (through the specialized business unit Data zone). In 2018, activity in Computer infrastructure and integration solutions accounted for approximately 17% of Matrix's revenues and for approximately 11% of its operating income, respectively.

 

Software product marketing and support:

 

Matrix's activities in this segment include marketing, distributing and support for various software products, the principal of which are CRM, computer systems management infrastructures, web world content management, database and data warehouse mining, application integration, database and systems, data management and software development tools. In 2018, activity in software product marketing and support accounted for about 5% of Matrix's revenues and for approximately 10% of its operating income, respectively.

 

Sapiens

 

Sapiens is a leading global provider of software solutions for the insurance industry. Sapiens' extensive expertise is reflected in its innovative software platforms, suites, solutions and services for property & casualty (P&C); life, pension & annuity (L&A); reinsurance; financial and compliance (F&C); workers' compensation (WC); and financial markets. Sapiens offers a full digital suite that facilitates an innovative, holistic and seamless digital experience for carriers, agents, customers and assorted insurance personnel, across multiple devices and technologies. Sapiens' offerings enable its customers to effectively manage their core business functions, including policy administration, claims and billing, and to offer support during an insurer's journey to becoming a digital insurer. Sapiens' portfolio also covers underwriting, illustration and electronic application.

 

Sapiens also supplies a complete reinsurance offering for providers and a decision management platform tailored to a variety of financial services providers, so that business users can quickly deploy business logic and comply with policies and regulations across their organizations.

 

Magic

 

Magic is a global provider of: (i) proprietary application development and business process integration platforms; (ii) selected packaged vertical software solutions; as well as (iii) a vendor of software services and IT outsourcing software services.

 

Magic technology is used by customers to develop, deploy and integrate on-premise, mobile and cloud-based business applications quickly and cost effectively. In addition, its technology enables enterprises to accelerate the process of delivering business solutions that meet current and future needs and allow customers to dramatically improve their business performance and return on investment. To complement its software products and to increase its traction with customers, Magic also offers a vast portfolio of professional services in the areas of infrastructure design and delivery, application development, technology consulting planning and implementation services, support services, cloud computing for deployment of highly available and massively-scalable applications and API's and supplemental outsourcing services.

 

In addition, Magic offers, through certain of its subsidiaries, a variety of proprietary comprehensive packaged software solutions for (i) revenue management and monetization solutions in mobile, wireline, broadband and mobile virtual network operator/enabler, or MVNO/E ("Leap"); (ii) enterprise management systems for both hubs and traditional air cargo ground handling operations from physical handling and cargo documentation through customs, seamless electronic data interchange, or EDI communications, dangerous goods, special handling, track and trace, security to billing ("Hermes"); (iii) enterprise human capital management, or HCM, solutions, to facilitate the collection, analysis and interpretation of quality data about people, their jobs and their performance, to enhance HCM decision making ("HR Pulse"); (iv) comprehensive systems for managing broadcast channels in the area of TV broadcast management through cloud-based on-demand service or on-premise solutions; and (vi) enterprise-wide and fully integrated medical platform ("Clicks"), specializing in the design and management of patient-file oriented software solutions for managed care and large-scale health care providers. This platform allows providers to securely access an individual's electronic health record at the point of care, and it organizes and proactively delivers information with potentially real time feedback to meet the specific needs of physicians, nurses, laboratory technicians, pharmacists, front- and back-office professionals and consumers.

 

Magic solutions are used by customers to develop, deploy and integrate on-premise, mobile and cloud-based business applications quickly and cost effectively. In addition, its technology enables enterprises to accelerate the process of delivering business solutions that meet current and future needs and allow customers to dramatically improve their business performance and return on investment. Its software solutions include application platforms for developing and deploying specialized and high-end large-scale business applications (Magic xpa application platform, formerly branded uniPaaS and Appbuilder), an integration platform that allows the integration and interoperability of diverse solutions, applications and systems in a quick and efficient manner (Magic xpi business and process integration platform, formerly branded iBOLT) and a hybrid integration platform as a service (IPaaS), which enables customers to accelerate digital transformation on the cloud, on-premises or on both (Magic xpc). These solutions enable Magic customers to improve their business performance and return on investment by supporting the affordable and rapid delivery and integration of business applications, systems and databases.

 

Magic products and services are available through a global network of regional offices, independent software vendors, system integrators, distributors and value added resellers as well as original equipment manufacturers and consulting partners in approximately 50 countries.

 

Insync

 

InSync is a U.S based national supplier of employees to Vendor Management Systems (VMS) Workforce Management Program accounts. Insync specializes in providing professionals in the following areas; Accounting and Finance, Administrative, Customer Service, Clinical, Scientific and Healthcare, Engineering, Manufacturing and Operations, Human Resources, IT Technology, LI/MFG, and Marketing and Sales. InSync currently supports more than 30 VMS program customers with employees in over 40 states.

 

Michpal

 

Michpal, an Israeli registered company, is a developer of proprietary, on-premise payroll software solution for processing traditional payroll stubs to Israeli enterprises and payroll service providers. Michpal also developed several complementary modules such as attendance reporting, which are sold to its customers for additional fees. As of December 31, 2018, Michpal serves approximately 8,000 customers, most of which are long-term customers.

 

TSG

 

TSG is a global high technology company engaged in high-end technical solutions for protecting the safety of national borders, improving data gathering mechanisms, and enhancing communications channels for military, homeland security and civilian organizations.

 

TSG operates primarily in the defense and homeland security arenas. The nature of military and homeland security actions in recent years, including low intensity conflicts and ongoing terrorist activities, as well as budgetary pressures to focus on leaner but more technically advanced forces, have caused a shift in the defense and homeland security priorities for many of TSG's major customers. As a result, TSG believes there is a continued demand in the areas of command, control, communications, computer and intelligence (C4I) systems, intelligence, surveillance and reconnaissance (ISR) systems, intelligence gathering systems, border and perimeter security systems, cyber-defense systems. There is also a continuing demand for cost effective logistic support and training and simulation services. TSG believes that its synergistic approach of finding solutions that combine elements of its various activities positions it to meet evolving customer requirements in many of these areas.

 

TSG tailors and adapts its technologies, integration skills, market knowledge and operationally-proven systems to each customer's individual requirements in both existing and new platforms. By upgrading existing platforms with advanced technologies, TSG provides customers with cost-effective solutions, and its customers are able to improve their technological and operational capabilities within limited budgets.

 

TSG markets its systems and products either as a prime contractor or as a subcontractor to various governments and defense and homeland security contractors worldwide. In Israel, TSG sells its defense, intelligence and homeland security systems and products mainly to the IMOD, which procures all equipment for the Israeli Defense Force (IDF).

 

b)Consolidated Goodwill in material partially owned subsidiaries:

 

   December 31, 
   2018   2017 
Matrix and its subsidiaries  $215,428   $200,440 
Sapiens and its subsidiaries   311,489    303,955 
Magic and its subsidiaries   95,006    98,189 
Michpal and its subsidiaries   18,932    14,688 
   $640,855   $617,272 

 

c)Reporting on operating segments:

 

The operating segments are identified on the basis of information that is reviewed by the chief operating decision maker ("CODM") to make decisions about resources to be allocated and assess its performance. The CODM have been identified as Formula's CEO. The CODM assess the performance of the Group based on each of the Group's directly held investees' operating income (or loss). Headquarters and finance expenses of Formula are allocated proportionally among the investees.

 

   Matrix   Sapiens   Magic   Other   Adjustments   Total 
                         
Year ended December 31, 2018:                              
Revenues from external customers   878,188    289,707    282,205    109,041    (66,153)   1,492,988 
Inter-segment revenues   2,869    -    2,170    80    (5,119)   - 
Revenues   881,057    289,707    284,375    109,121    (71,272)   1,492,988 
Unallocated corporate expenses   -    -    -    -    (2,113)   (2,113)
Depreciation and amortization   8,554    26,249    12,562    5,081    (3,712)   48,734 
Operating income   61,264    16,799    31,698    4,210    (4,354)   109,617 
Financial expenses, net                            (8,290)
Group's share of profits of companies accounted for at equity, net                            369 
Taxes on income                            (24,301)
Net income                            77,395 
                               
Year ended December 31, 2017:                              
Revenues from external customers   790,946    269,194    256,207    105,608    (66,816)   1,355,139 
Inter-segment revenues   3,679    -    1,933    200    (5,812)   - 
Revenues   794,625    269,194    258,140    105,808    (72,628)   1,355,139 
Unallocated corporate expenses   -    -    -    -    (3,472)   (3,472)
Depreciation and amortization   6,855    21,969    13,611    4,935    (3,724)   43,646 
Operating income (loss)   54,337    (5,053)   25,956    3,670    (6,104)   72,806 
Financial expenses, net                            (21,119)
Group's share of profits of companies accounted for at equity, net                            1,124 
Taxes on income                            (13,371)
Net income                            39,440 
                               
Year ended December 31, 2016:                              
Revenues from external customers   660,012    216,190    198,096    72,585    (38,262)   1,108,621 
Inter-segment revenues   2,578    -    3,550    -    (6,128)   - 
Revenues   662,590    216,190    201,646    72,585    (44,390)   1,108,621 
Unallocated corporate expenses   -    -    -    -    (2,713)   (2,713)
Depreciation and amortization   6,513    14,227    11,608    3,314    (3,292)   32,370 
Operating income   48,776    20,636    21,087    2,198    (4,197)   88,500 
Financial expenses, net                            (11,586)
Group's share of profits of companies accounted for at equity, net                            349 
Taxes on income                            (21,163)
Net income                            56,100 
Subsequent Events
 12 Months Ended
Dec. 31, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 24:- SUBSEQUENT EVENTS

 

a)On January 1, 2019 Matrix's board of directors approved, following the approval by Matrix compensation committee, the grant of 1,440,000 options which are exercisable into up to 1,440,000 ordinary shares of Matrix of NIS 1 par value each to 20 senior officers of Matrix or of corporations controlled by it. The exercise price of the options was NIS 41.70 at the date of their grant, and it is subject to adjustments, including upon the distribution of dividends. Half of the options will vest on January 1, 2021, quarter of the options will vest on January 1, 2022, and the rest vested on January 1, 2023. When the actual exercise will take place, shares will be allotted in the net exercise mechanism. Matrix will not get paid in cash.

 

b)On February 6, 2019 Matrix concluded the acquisition of 80% of the share capital of Dana Engineering Ltd., an Israeli based company providing project management services in the field of national infrastructure in Israel, for total cash consideration of NIS 52,000 (approximately $14,370). Matrix and the seller hold mutual options to purchase and sell (respectively) the remaining 20% interest in Dana Engineering which may be exercised following the second year anniversary of the acquisition.

 

c)In March, 2019 Matrix concluded the acquisition of 100% of the share capital of MedaTech Ltd., an Israeli company and the leading business partner of Priority ERP with over 1,000 customers in a variety of verticals, for cash consideration of approximately NIS 85,000 approximately $23,600.

 

d)In March 2019 Magic concluded the acquisition of 100% of the share capital of Powwow Inc. a US based company and the creator of SmartUX™, a leading Low-Code development platform for mobilizing and modernizing enterprise apps which allow enterprises to rapidly transform any Windows or web application, workflow or data source into a full responsive and secure app that runs anywhere and on any device, with no disruption to the business.

 

e)On March 26, 2019, the remaining outstanding Series B Convertible Debentures of the Company matured, and the Company repaid the holders of those debentures the entire remaining outstanding principal amount of NIS 44.5 million ($11.4 million), together with interest of $1.1 million, due under the debentures. That remaining principal amount had been reduced previously due to conversions of Series B Convertible Debentures that were effected during 2018 and 2019. Upon the Company's final repayment, all outstanding Series B Convertible Debentures were retired, and no such debentures are outstanding as of the date of this financial statements (see note 15(ii)).

 

f)On March 31, 2019, Formula consummated a public offering in Israel of a new series of secured debentures - Series C Secured Debentures— in an aggregate NIS 300,000 par value amount, at a price of NIS 1,000 for each unit of NIS 1,000 principal amount. The aggregate gross proceeds from the public offering totaled NIS 298,500 (approximately $82,186). The Series C Secured Debentures are secured by liens on the shares of Formula's subsidiaries, and are listed for trading only on the TASE (6,031,761 shares of Matrix; 2,411,474 shares of Magic and 2,957,590 shares of Sapiens). Each Series C Debenture unit bears interest at a fixed annual rate equal to 2.29%, which interest will be paid out on a semi-annual basis. The principal amount of the Series C Debentures will be payable by Formula in seven annual installments from December 1, 2020 through December 1, 2026, the first five of which will each constitute 11% of the principal, and the final two of which will each constitute 22.5% of the principal.
Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2018
Significant Accounting Policies [Abstract]  
Basis of presentation of the financial statements

1)Basis of presentation of the financial statements

 

These financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

 

The financial statements for the year ended December 31, 2016 were the Group’s first consolidated financial statements prepared in accordance with IFRS. The date of transition to IFRS was January 1, 2015. For all periods up to and including the year ended December 31, 2015, the Group prepared its financial statements in accordance with United States generally accepted accounting principles (“U.S. GAAP”). Accordingly, the Group’s first consolidated financial statements that comply with IFRS are applicable as of December 31, 2016, together with the comparative period data for the year ended December 31, 2015.

 

The Company’s financial statements have been prepared on a cost basis, except for certain assets and liabilities such as: financial assets measured at fair value through other comprehensive income; contingent liabilities related to business combination and other financial assets and liabilities (including derivatives) which are presented at fair value through profit or loss.

 

The Company has elected to present the profit or loss items using the function of expense method.
Use of judgments, estimates and assumptions

2)Use of judgments, estimates and assumptions:

 

The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that have an effect on the application of the accounting policies and on the reported amounts of assets, liabilities, revenues and expenses in the financial statements. The Company’s management believes that the estimates and assumptions used are reasonable based upon information available at the time they are made. These estimates and underlying assumptions are reviewed regularly. Actual results could differ from those estimates. Changes in accounting estimates are reported in the period of the change in estimate.

 

The judgments, estimates and assumptions which have the most significant effect on the amounts recognized in the financial statements are employed in determining values of goodwill and identifiable intangible assets and their subsequent impairment analysis, revenue recognition, timing of commitment to execution of transactions, tax assets and tax positions, legal contingencies, research and development capitalization, classification of leases, contingent consideration related to acquisitions, determining the fair value of put options of non-controlling interests, pension and other post-employment benefits and share-based compensation costs. These judgements, estimates and assumptions also impact the Company’s assessment as to whether it has effective control over companies in which it holds less than the majority of the voting rights.
Consolidated financial statements

3)Consolidated financial statements:

 

The consolidated financial statements comprise the financial statements of companies that are controlled by the Company (subsidiaries). Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Potential voting rights are considered when assessing whether an entity has control. The consolidation of the financial statements commences on the date on which control is obtained and ends when such control ceases.

 

Effective control:

 

In a situation where the Company holds less than a majority of voting power in a given entity, but that power is sufficient to enable the Company to unilaterally direct the relevant activities of such entity, then the control is exercised. When assessing whether voting rights held by the Company are sufficient to give it power, the Company considers all facts and circumstances, including: the amount of those voting rights relative to the amount and dispersion of other vote holders; potential voting rights held by the Company and other shareholders or parties; rights arising from other contractual arrangements; significant personal ties; and any additional facts and circumstances that may indicate that the Company has, or does not have the ability to direct the relevant activities when decisions need to be made, inclusive of voting patterns observed at previous meetings of shareholders.

 

Sapiens:

 

i)Governing bodies of Sapiens:

 

Decisions of Sapiens’ shareholders general meeting are taken by a simple majority of votes represented at the general meeting. The annual (ordinary) general meeting adopts resolutions to appoint individual directors, choose Sapiens’ independent auditors for the next year, as well as approve the company’s financial statements and the management’s report on operations.

 

In accordance with Sapiens’ articles of association, the board of directors of Sapiens is responsible for managing its current business operations and is authorized to take substantially all decisions which are not specifically reserved to Sapiens’ shareholders by its articles of association, including the decision to pay out dividends. Sapiens’ board of directors is composed of 6 members, 4 of whom are independent directors. For the last 8 years, the Company has consistently reappointed the same members of the board of directors. Likewise, the previous composition of the board of directors was re-elected during the general meeting that was held in December 2018.

 

ii)Shareholders structure of Sapiens:

 

Sapiens’ shareholders structure is dispersed because, apart from the Company, just two financial institution held more than 5% of the voting rights at the general meeting (representing 5.1%, and 6.5%, of the votes, respectively). There is no evidence that any shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Sapiens’ general meetings were attended by shareholders representing in total between 70% and 80% of the total voting power (including the Company’s share power and bearing in mind that the Company presently holds approximately 48.08% of total voting rights). This means that the level of activity of Sapiens’ other shareholders is relatively moderate or low. As of December 31, 2018, the attendance from shareholders would have to be higher than 96.2% in order to deprive the Company of an absolute majority of votes at the general meeting.

 

In accordance with voting patterns at Sapiens’ shareholders’ meetings in recent years, it is the Company’s management’s belief that achieving such a high attendance seems unlikely.

 

Magic:

 

i)Governing bodies of Magic:

 

Decisions of Magic’s shareholders’ general meeting are taken by a simple majority of votes represented at the general meeting. The annual (ordinary) general meeting adopts resolutions to elect individual directors, appoint Magic’s independent auditors for the next year, as well as to approve Magic’s financial statements and the management’s report on operations.

 

In accordance with the Magic’s articles of association, the board of directors of Magic is responsible for managing Magic’s current business operations and is authorized to take substantially all decisions which are not specifically reserved to Magic shareholders by its articles of association, including the decision to pay out dividends. Magic’s board of directors is composed of 5 members, 3 of whom are independent directors. In recent years, the Company has consistently reappointed mostly the same members of the board of directors. The only exception was the appointment of Mr. Avi Zakaya, who has replaced Mr. Yechezkel Zeira after nine years of service.

 

ii)Shareholders structure of Magic:

 

Magic’s shareholders’ structure is dispersed because, apart from the Company, as of December 31, 2018, there were just four financial institutions holding more than 5% of Magic’s voting power (representing 7.4%, 6.0%, 5.9% and 5.6% of the votes, respectively). There is no evidence that any of the shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Magic’s general meetings were attended by shareholders representing not more than 70% of total voting rights (including the Company’s share power and bearing in mind that the Company presently holds approximately 45.21% of total voting power). This means that the level of activity of Magic’s other shareholders is relatively moderate or low. As of December 31, 2018, the attendance by shareholders would have to be higher than 90.4% in order to deprive the Company of an absolute majority of votes at the general meeting. In accordance with voting patterns at Magic’s shareholders’ meetings in recent years, it is the Company’s management belief that achieving such a high attendance seems unlikely.

 

Matrix:

 

i)Governing bodies of Matrix:

 

Decisions of Matrix’s shareholders general meeting are taken by a simple majority of votes represented at the general meeting. The annual (ordinary) general meeting adopts resolutions to elect individual directors, appoint Matrix’s independent auditors for the next year, as well as approve the company’s financial statements and management’s report on operations. In accordance with Matrix’s articles of association, the board of directors of Matrix is responsible for managing its current business operations and is authorized to take substantially all decisions which are not specifically reserved to Matrix’s shareholders by its articles of association, including the decision to pay out dividends. Matrix’s board of directors is composed of 5 members, 3 of whom are independent directors. For the last 5 years (i.e., 2014-2018), the Company has consistently reappointed mostly the same members of the board of directors. The only exceptions were the appointment of Ms. Yafit Keret, who has replaced Ms. Michal Leshem after nine years of service as an external director in accordance with the Companies Law, 5759-1999 and the retirement of Mr. Pinchas Grinfeld.

 

ii)Shareholders’ structure of Matrix:

 

Matrix’s shareholders structure is dispersed because, apart from the Company, as of December 31, 2018 there was just one financial institution holding more than 5% of Matrix’s voting power (9.0% of the votes). There is no evidence that any of the shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Matrix’s general meetings were attended by shareholders representing not more than between 75% and 82% of total voting rights (including the Company’s share power and bearing in mind that the Company presently holds approximately 49.21% of total voting power). This means that the level of activity of Matrix’s other shareholders is relatively moderate or low. As of December 31, 2018, the attendance by shareholders would have to be higher than 98.4% in order to deprive the Company of an absolute majority of votes at the general meeting. In accordance with voting patterns at Matrix’s shareholders’ meetings in recent years, it is the Company’s management’s belief that achieving such a high attendance seems unlikely.

 

The financial statements of the Company and of the investees, after being adjusted to comply with IFRS, are prepared for the same reporting period and using consistent accounting treatment of similar transactions and economic activities. Any discrepancies in the applied accounting policies are eliminated by making appropriate adjustments. Significant intragroup balances and transactions and gains or losses resulting from intragroup transactions are eliminated in full in the consolidated financial statements.

 

Non-controlling interests in subsidiaries represent the equity in subsidiaries not attributable, directly or indirectly, to a parent. Non-controlling interests are presented in equity separately from the equity attributable to the equity holders of the Company. Profit or loss and components of other comprehensive income are attributed to the Company and to non-controlling interests. Losses are attributed to non-controlling interests even if they result in a negative balance of non-controlling interests in the consolidated statement of financial position.

 

Changes in the share interest in a subsidiary that do not result in a loss of control are recognized as a change in equity, by adjusting the balance of the non-controlling interests against the equity attributable to the equity holders of the Company, and net of the consideration paid or received.
Business combinations and goodwill
4)Business combinations and goodwill:

 

Business combinations are accounted for by applying the acquisition method. The cost of the acquisition is measured at the fair value of the consideration transferred on the acquisition date with the addition of non-controlling interests in the acquiree. In each business combination, the Company determines whether to measure the non-controlling interests in the acquiree based on their fair value on the acquisition date or at their proportionate share in the fair value of the acquiree's net identifiable assets.

 

Direct acquisition costs are carried to the statement of profit or loss as incurred.

 

In a business combination achieved in stages, equity interests in the acquiree that had been held by the acquirer prior to obtaining control are measured at the acquisition date fair value while recognizing a gain or loss resulting from the revaluation of the prior investment on the date of achieving control.

 

Contingent consideration is recognized at fair value on the acquisition date and classified as a financial asset or liability in accordance with IFRS 9, "Financial Instruments". Subsequent changes in the fair value of the contingent consideration are recognized in profit or loss. If the contingent consideration is classified as an equity instrument, it is measured at fair value on the acquisition date without subsequent remeasurement.

 

Goodwill is initially measured at cost which represents the excess of the acquisition consideration and the amount of non-controlling interests over the net identifiable assets acquired and liabilities assumed. If the resulting amount is negative, the acquirer recognizes the resulting gain on the acquisition date without subsequent measurement.
Investment in joint arrangements

5)Investment in joint arrangements:

 

Joint arrangements are arrangements in which the Company has joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

 

i.Joint ventures:

 

In joint ventures the parties that have joint control of the arrangement have rights to the net assets of the arrangement. A joint venture is accounted for by using the equity method.

 

ii.Joint operations:

 

In joint operations the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement. The Company recognizes in relation to its interest its share of the assets, liabilities, revenues and expenses of the joint operation.
Investments in associates

6)Investments in associates:

 

Associates are companies in which the Group has significant influence over the financial and operating policies without having control. The investment in an associate is accounted for using the equity method.
Investments accounted for using the equity method
7)Investments accounted for using the equity method:

 

The Group’s investments in associates and joint ventures are accounted for using the equity method. Under the equity method, the investment in the associate or in the joint venture is presented at cost with the addition of post-acquisition changes in the Group’s share of net assets, including other comprehensive income of the associate or the joint venture. Gains and losses resulting from transactions between the Group and the associate or the joint venture are eliminated to the extent of the interest in the associate or in the joint venture.

 

Goodwill relating to the acquisition of an associate or a joint venture is presented as part of the investment in the associate or the joint venture, measured at cost and not systematically amortized. Goodwill is evaluated for impairment as part of the investment in the associate or in the joint venture as a whole.

 

The financial statements of the Company and of the associate or joint venture are prepared as of the same dates and periods. The accounting policies applied in the financial statements of the associate or the joint venture are uniform and consistent with the policies applied in the financial statements of the Group.

 

Upon the acquisition of an associate or a joint venture achieved in stages when the former investment in the acquiree was accounted for pursuant to the provisions of IFRS 9, the Group adopts the principles of IFRS 3 regarding business combinations achieved in stages. Consequently, equity interests in the acquiree that had been held by the Group prior to achieving significant influence or joint control are measured at fair value on the acquisition date and are included in the acquisition consideration while recognizing a gain or loss resulting from the fair value measurement.

 

The equity method is applied until the loss of significant influence in the associate or loss of joint control in the joint venture or classification as investment held for sale.

 

On the date of loss of significant influence or joint control, the Group measures any remaining investment in the associate or the joint venture at fair value and recognizes in profit or loss the difference between the fair value of any remaining investment plus any proceeds from the sale of the investment in the associate or the joint venture and the carrying amount of the investment on that date.
Functional currency, presentation currency and foreign currency
8)Functional currency, presentation currency and foreign currency:

 

i.Functional currency and presentation currency:

 

The presentation currency of the financial statements is the U.S dollars (the “dollar”). The Group determines the functional currency of each investee, including companies accounted for at equity. The currency of the primary economic environment in which the operations of Formula and certain of its investees are conducted is the dollar, thus, the dollar is the functional and reporting currency of Formula and certain of its investees.

 

Assets, including fair value adjustments upon acquisition, and liabilities of an investee which is a foreign operation, are translated at the closing rate at each reporting date. Profit or loss items are translated at average exchange rates for all periods presented. The resulting translation differences are recognized in other comprehensive income (loss).

 

Intragroup loans for which settlement is neither planned nor likely to occur in the foreseeable future are, in substance, a part of the investment in the foreign operation and, accordingly, the exchange rate differences from these loans (net of the tax effect) are recorded in other comprehensive income (loss).

  

Upon the full or partial disposal of a foreign operation resulting in loss of control in the foreign operation, the cumulative gain (loss) from the foreign operation which had been recognized in other comprehensive income is transferred to profit or loss. Upon the partial disposal of a foreign operation which results in the retention of control in the subsidiary, the relative portion of the amount recognized in other comprehensive income is reattributed to non-controlling interests.

 

ii.Transactions, assets and liabilities in foreign currency:

 

Transactions denominated in foreign currency are recorded upon initial recognition at the exchange rate at the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are translated at each reporting date into the functional currency at the exchange rate at that date. Exchange rate differences, other than those capitalized to qualifying assets or accounted for as hedging transactions in equity, are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currency and measured at cost are translated at the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are translated into the functional currency using the exchange rate prevailing at the date when the fair value was determined.
Cash equivalents

9)Cash equivalents:

 

Cash equivalents are considered highly liquid investments, including unrestricted short-term bank deposits with an original maturity of three months or less from the date of investment or with a maturity of more than three months, but which are redeemable on demand without penalty and which form part of the Group's cash management. Cash and cash equivalent includes amounts held primarily in New-Israeli Shekel, dollars, Euro, Japanese Yen, Indian Rupee and British Pound.
Short-term and restricted deposits

10)Short-term and restricted deposits:

 

Short-term bank deposits are deposits with an original maturity of more than three months from the date of investment and which do not meet the definition of cash equivalents. The deposits are presented according to their terms of deposit. Restricted deposits include deposits used to secure certain subsidiaries’ ongoing projects and credit lines from banks, as well as security deposits with respect to leases, and are classified under other short-term and long-term receivables.
Allowance for doubtful accounts (applied until December 31, 2017 is as follows)

11)Allowance for doubtful accounts (applied until December 31, 2017 is as follows):

 

The allowance for doubtful accounts is determined in respect of specific trade receivables whose collection, in the opinion of the Group's management, is doubtful. The Group did not recognize an allowance in respect of groups of trade receivables that are collectively assessed for impairment due to immateriality. Impaired receivables are derecognized when they are assessed as uncollectible.

 

The bad debt expense, net for the years ended December 31, 2016 and 2017 was $652 and $1,373, respectively. Bad debt expense, net for the year ended December 31, 2018 was $1,723 under the new guidance (see Note 22).
Inventories

12)Inventories:

 

Inventories are measured at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase and costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. Inventories are mainly comprised of purchased merchandise and products which consist of educational software kits, computers, peripheral equipment and spare parts. Cost is determined on the "first in - first out" basis.

 

The Group periodically evaluates the condition and aging of its inventories and makes provisions for impairment of slow moving inventories accordingly. No such impairments have been recognized in any period presented.
Revenue recognition

13)Revenue recognition:

 

IFRS 15, "Revenue from Contracts with Customers" (the "Standard"), issued by the IASB in May 2014, supersedes IAS 11 'Construction Contracts', IAS 18 'Revenue from contracts with customers' and related Interpretations and applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards.

 

The accounting policy for revenue recognition applied until December 31, 2017, is as follows:

 

Revenues are recognized in profit or loss when the revenues can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Group and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenues are measured at the fair value of the consideration less any trade discounts, volume rebates and returns.

 

The following are the specific revenue recognition criteria which must be met before revenue is recognized by the Company and its subsidiaries:

 

i.Revenues from software solutions and services:

 

a)Revenues from contracts based on actual inputs. Revenues from master agreements based on actual inputs are recognized based on actual labor hours.

 

b)Outsourcing - These agreements are similar in nature to agreements that are based on actual labor hours. The Group allocates employees to projects that are generally managed by the customers at their charge based on the pricing of labor hours. Revenues are recognized based on actual labor hours.

 

ii.Revenues from sales, distribution and support of software products:

 

The Group recognizes revenues from the sale of software (i) only after the significant risks and rewards of ownership of the software have been transferred to the buyer for which a necessary condition is delivery of the software, either physically or electronically, or providing the right to use or permission to make copies of the software, (ii) the Group does not retain any continuing management involvement that is associated with ownership and does not retain the effective control of the sold software, (iii) the amount of revenues can be measured reliably, (iv) it is probable that the economic benefits associated with the transaction will flow to the Group and (v) the costs incurred or to be incurred in respect of the transaction can be measured reliably. The Group reports income on a gross basis since it acts as a principal and bears the risks and rewards derived from the transaction.

 

Revenue from third-party sales is recorded at a gross or net amount according to certain indicators. The application of these indicators for gross and net reporting of revenue depends on the relative facts and circumstances of each sale and requires significant judgment.

 

Revenues from sale agreements that do not provide a general right of return and consist of multiple elements such as hardware, service and support agreements are split into different accounting units which are separately recognized. An element only represents a separate accounting unit if and only if it has stand-alone value for the customer. Moreover, there should be reliable and objective evidence of the fair value of all the elements in the agreement or of the fair value of undelivered elements. Revenues from the various accounting units are recognized when the revenue recognition criteria are met with respect to all the elements of the accounting unit based on their specific type and only up to the amount of the consideration that is not contingent on completion or performance of the other elements in the contract.

 

Maintenance and support includes annual maintenance contracts providing for unspecified upgrades for new versions and enhancements on a when-and-if-available basis for an annual fee. The right for unspecified upgrades for new versions and enhancements on a when-and-if-available basis does not specify the features, functionality and release date of future product enhancements for the customer to know what will be made available and the general timeframe in which it will be delivered. Revenues from maintenance services are recognized on a straight-line basis at the relative portion of the maintenance contract that is determined for each reporting year. Revenues that have been received before the respective service has been provided are carried to deferred income. Maintenance and support revenue included in multiple element arrangements is deferred and recognized on a straight-line basis over the term of the maintenance and support agreement.

 

iii.Revenues from training and implementation services:

 

Revenues from trainings and implementations are recognized when providing the service. Revenues from training services in respect of courses conducted over a period of up to 3 months will be recognized over the period of the course. Revenues from training services in respect of courses ordered in advance and long-term or short term (for a period of up to a year) retraining courses will be recognized over the period of the course. Revenues from projects which are usually ordered by organizations will be recognized under the actual inputs by using the basis of hours actually invested in the project.

 

iv.Revenues from hardware products and infrastructure solutions:

 

Revenues from hardware products and infrastructure solutions are recognized after all the significant risks and rewards of ownership of the products have been transferred to the buyer. The Group does not retain any continuing management involvement that is associated with ownership and does not retain the effective control of the sold products, the amount of revenues can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Group and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

The accounting policy for revenue recognition applied commencing from January 1, 2018, is as follows:

 

As described in Note 2 (30)(A) regarding the initial adoption of IFRS 15, the Group elected to adopt the provisions of the Standard using the modified retrospective method with the application of certain practical expedients and without restatement of comparative data.

 

The new standard establishes a five-step model to account for revenue arising from contracts with customers and requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers:

 

Step 1: Identify the contract with a customer, including reference to contract combination and accounting for contract modifications.

 

Step 2: Identify the separate performance obligations in the contract.

 

Step 3: Determine the transaction price, including reference to variable consideration, significant financing components, non-cash consideration and any consideration payable to the customer.

 

Step 4: Allocate the transaction price to the distinct performance obligations on a relative stand-alone selling price basis using observable information, if it is available, or using estimates and assessments.

 

Step 5: Recognize revenue when a performance obligation is satisfied, either at a point in time or over time.

 

Under IFRS 15, revenues are recognized when control of the promised goods or services are transferred to the customers in an amount that reflects the consideration that the Group expects to receive in exchange for those goods or services.

 

The Group enters into contracts that can include various combinations of products and software, IT services and hardware, as detailed below, which are generally capable as being distinct from each other and accounted for as separate performance obligations.

 

For contracts with customers that contain multiple performance obligations, the Group accounts for each individual performance obligation separately, if they are distinct from each other. The transaction price is allocated to the separate performance obligations on a relative stand-alone selling price basis.

 

Stand-alone selling prices of software sales are typically estimated using the residual approach due to the lack of selling software licenses on a stand-alone basis. Stand-alone selling prices of software services are typically determined by considering several external and internal factors including but not limited to, observable transactions when these services are sold on a stand-alone basis.

 

The following is a description of principal activities from which the Group generates its revenues:

 

i.Sale of proprietary licenses without significant related services

 

In the event in which the sale of a proprietary license (perpetual or term-based) is distinct from other significant modification or implementation services, and thereby it constitutes a separate performance obligation, the Group considers whether this performance obligation in granting the license is to provide the customer with either:

 

●a right to access the entity's intellectual property in the form in which it exists throughout the licensing period; or
   
●a right to use the entity's intellectual property in the form in which it exists at the time of granting the license

 

The vast majority of licenses sold separately by the Group (thus representing a separate performance obligation) are intended to provide the customer with a right to use the intellectual property, which means that revenues from the sale of such licenses are recognized at the point in time at which control of the license is transferred to the customer.

 

The Group recognizes revenue from software licensing transactions over time when the Group provides the customer a right to access the Group's intellectual property throughout the license period.

 

ii.Sale of proprietary licenses with significant related services

 

Revenues from contracts that include the sale of proprietary licenses with significant related services (for example, modifications, implementation or customization to customer-specific specifications) are generally accounted by the Group as performance obligations satisfied over time. In such contracts the Group is normally committed to provide the customer with a functional IT system and the customer can only benefit from such functional system, being the final product that would normally be comprised of proprietary licenses and significant related services. The Group considers that a commitment to sell a license under such performance obligation does not satisfy the criteria of being distinct, because the transfer of the license is only part of a larger performance obligation. The Group recognizes revenue from such contracts using cost based input methods, which recognizes revenue and gross profit as the work is performed based on a ratio between actual costs incurred compared to the total estimated costs for the contract. This is because, in accordance with IFRS 15, revenues may be recognized over the course of transferring control of the supplied goods and services, as long as the entity's performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date throughout the duration of the contract. Provisions for estimated losses on uncompleted contracts are made during the period in which such losses are first determined, in the amount of the estimated loss for the entire contract.

 

When appropriate, the Group also applies a practical expedient permitted under IFRS 15 whereby if the Group has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Group's performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided), the Group may recognize revenue in the amount it is entitled to invoice. Deferred revenues, which represent a contract liability, include unearned amounts received under maintenance and support (mainly) and amounts received from customers for which revenues have not yet been recognized.

 

iii.Maintenance services and warranties

 

Post-contract support includes annual maintenance contracts providing for unspecified upgrades for new versions and enhancements on a when-and-if-available basis for an annual fee. The right for an unspecified upgrade for new versions and enhancements on a when-and-if-available basis do not specify the features, functionality and release date of future product enhancements for the customer to know what will be made available and the general timeframe in which it will be delivered.

 

The accounting policy regarding the recognition of post-contract support remained unchanged after the adoption of IFRS 15, as such services, in principle, constitute a separate performance obligation where the customer consumes the benefits of goods and services as they are delivered by the provider, as a consequence of which revenues are recognized over time during the service performance period.

 

The Group considers the post-contract support performance obligation as a distinct performance obligation that is satisfied over time, and as such, it recognizes revenue for post-contract support on a straight-line basis over the period for which technical support is contractually agreed to be provided for the software, typically twelve (12) months.

 

In certain cases, the Group also provides a warranty for goods and services sold (i.e. extended warranties that the scope of which is broader than just an assurance to the customer that the product/service complies with agreed-upon specifications). The Group has ascertained that such warranties granted by the Group meet the definition of service. The conclusion regarding the extended nature of a warranty is made whenever the Group contractually undertakes to repair any errors in the delivered software within a strictly specified time limit and/or when such warranty is more extensive than the minimum required by law. Under IFRS 15, the fact of granting an extended warranty indicates that the Group actually provides an additional service. As such, the Group recognizes an extended warranty as a separate performance obligation and allocates a portion of the transaction price to such service. In all cases where an extended warranty is accompanied by a maintenance service, which is even a broader category than an extended warranty itself, revenues are recognized over time because the customer consumes the benefits of such service as it is performed by the provider. If this is the case, the Group continues to allocate a portion of the transaction price to such maintenance service. Likewise, in cases where a warranty service is provided after the project completion and is not accompanied by any maintenance service, then a portion of the transaction price and analogically recognition of a portion of contract revenues will have to be deferred until the warranty service is actually fulfilled.

 

iv.Sale of third-party licenses and services

 

Third-party licenses and services includes revenues from the sale of third-party licenses as well as from the provision of services which, due to technological or legal reasons, must be carried out by subcontractors (this applies to hardware and software maintenance and outsourcing services provided by their manufacturers). Revenues from the sale of third-party licenses are accounted for as sales of goods, which means that such revenues are recognized at the point in time at which control of the license is transferred to the customer. Concurrently, revenues from third-party services, including primarily third-party maintenance services, are recognized over time when such services are provided to the customer.

 

Whenever the Group is involved in the sale of third-party licenses or services, it will consider whether the Group acts as a principal or an agent; however, in most cases the conclusion is that the Group is the main party required to satisfy a performance obligation and therefore the resulting revenues are recognized in the gross amount of consideration.

 

v.Sale of hardware

 

Sale of hardware includes revenues from contracts with customers for the supply of infrastructure. In this category, revenues are recognized basically at the point in time at which control of the equipment is transferred. This does not apply to contracts in which the hardware is not delivered separately from services provided alongside, in such case the sale of hardware is part of a performance obligation involving the supply of a comprehensive system. However, such comprehensive projects are a rare practice in the Group as the sale of hardware is predominantly performed on a distribution basis.

 

vi.Variable consideration

 

In accordance with IFRS 15, if a contract consideration encompasses any amount that is variable, the Group shall estimate the amount of consideration to which it will be entitled in exchange for transferring promised goods or services to the customer, and shall include a portion or the whole amount of variable consideration in the transaction price but only to the extent that it is highly probable a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

 

vii.Significant financing component

 

When contracts involve a significant financing component, the Group adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or implicitly) provide the customer with a significant benefit of financing.

 

The Group has elected to apply the practical expedient allowed by IFRS 15 according to which it does not separate the financing component in transactions whose credit terms are less than one year and will recognize revenue in the amount of the consideration stated in the contract even if the customer pays for the goods or services subsequent to their receipt.

 

viii.Costs of contracts with customers

 

Costs of obtaining a contract

 

Costs of obtaining a contract are those incremental costs incurred by the Group in order to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Group recognizes such costs as an asset if it expects to recover those costs. Such capitalized costs of obtaining a contract shall be amortized over the period when the Group satisfies the performance obligations arising from the contract. Amortization expenses related to costs of obtaining or fulfilling a contract are included in sales and marketing expenses in the consolidated statements of profit or loss.

 

Commissions to sales and marketing and certain management personnel that are paid based on their attainment of certain predetermined sales or profit goals, are considered by the Group as incremental costs of obtaining a contract with a customer, and are deferred and amortized on a systematic basis, consistent with the transfer of the related performance obligations to the customer. As such, sales commissions paid for initial contracts, which are not commensurate with additional commissions paid for renewal of such contracts, are capitalized and amortized over the expected period of benefit (including expected renewals periods). Sales commissions on initial contracts, which are commensurate with additional commissions paid for the renewal of such contracts, are capitalized and then amortized correspondingly to the recognized revenue of the related initial contracts (not including expected renewals periods). Sales commissions for renewal of such initial contracts are capitalized and then amortized on a straight line basis over the related contractual renewal period. As a practical expedient, if the expected amortization period is one-year or less, the commission fee is expensed as incurred.

 

Costs to fulfill a contract

 

Costs to fulfill a contract are the costs incurred in fulfilling a contract with a customer. The Group recognizes such costs as an asset if they are not within the scope of another standard (for example, IAS 2 'Inventories', IAS 16 'Property, Plant and Equipment' or IAS 38 'Intangible Assets') and if those costs meet all of the following criteria:

 

i)the costs relate directly to a contract or to an anticipated contract with a customer,

 

ii)the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future, and

 

iii)the costs are expected to be recovered.
Government grants

14)Government grants:

 

Government grants are recognized when there is reasonable assurance that the grants will be received and the Group will comply with the attached conditions. Government grants received from the Office of the Israel Innovation Authority ("IIA"), formerly the Office of the Chief Scientist ("OCS"), are recognized upon receipt as a liability if future economic benefits are expected from the research project that will result in royalty-bearing sales.

 

A liability for the loan is first measured at fair value using a discount rate that reflects a market rate of interest. The difference between the amount of the grant received and the fair value of the liability is accounted for as a Government grant and recognized as a reduction of research and development expenses. After initial recognition, the liability is measured at amortized cost using the effective interest method. Royalty payments are treated as a reduction of the liability. If no economic benefits are expected from the research activity, the grant receipts are recognized as a reduction of the related research and development expenses. In that event, the royalty obligation is treated as a contingent liability in accordance with IAS 37.

 

In each reporting date, the Group evaluates whether there is reasonable assurance that the liability recognized, in whole or in part, will not be repaid (since the Group will not be required to pay royalties) based on the best estimate of future sales and using the original effective interest method, and if so, the appropriate amount of the liability is derecognized against a corresponding reduction in research and development expenses. Amounts paid as royalties are recognized as settlement of the liability.
Debentures

15)Debentures:

 

The Group accounts for outstanding principal amount of debentures as long-term liability, in accordance with IFRS 9, with current maturities classified as short-term liabilities. The Group identifies and separates equity components contains in convertible debentures by first determining the liability component, in accordance with IAS 32, based on the fair value of an equivalent non-convertible liability. The conversion component valued is being determined to be the residual amount. Debt issuance costs are capitalized and reported as deferred financing costs, which are amortized over the life of the debentures using the effective interest rate method.
Taxes on income
16)Taxes on income:

 

Current or deferred taxes are recognized in profit or loss, except to the extent that they relate to items which are recognized in other comprehensive income or equity.

 

●Current taxes:

 

The current tax liability is measured using the tax rates and tax laws that have been enacted or substantively enacted by the reporting date as well as adjustments required in connection with the tax liability in respect of previous years.

 

●Deferred taxes:

 

Deferred taxes are computed in respect of temporary differences between the carrying amounts in the financial statements and the amounts attributed for tax purposes. Deferred taxes are measured at the tax rate that is expected to apply when the asset is realized or the liability is settled, based on tax laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is not probable that they will be utilized. Deductible carryforward losses and temporary differences for which deferred tax assets had not been recognized are reviewed at each reporting date and a respective deferred tax asset is recognized to the extent that their utilization is probable.

  

Taxes that would apply in the event of the disposal of investments in investees have not been taken into account in computing deferred taxes, as long as the disposal of the investments in investees is not probable in the foreseeable future. Also, deferred taxes that would apply in the event of distribution of earnings by investees as dividends have not been taken into account in computing deferred taxes, since the distribution of dividends does not involve an additional tax liability or since it is the Group’s policy not to initiate distribution of dividends from a subsidiary that would trigger an additional tax liability.

 

Taxes on income that relate to distributions of an equity instrument and to transaction costs of an equity transaction are accounted for pursuant to IAS 12.

 

Deferred taxes are offset if there is a legally enforceable right to offset a current tax asset against a current tax liability and the deferred taxes relate to the same taxpayer and the same taxation authority.
Leases
17)Leases:

 

The criteria for classifying leases as finance or operating leases depend on the substance of the agreements and are made at the inception of the lease in accordance with the following principles as set out in IAS 17.

 

The Group as lessee:

 

i.Financial leases:

 

A lease that transfers substantially all the risks and rewards incidental to ownership of the leased asset to the Group is classified as a finance lease. At the commencement of the lease term, the leased asset is measured at the lower of the fair value of the leased asset or the present value of the minimum lease payments. The leased asset is depreciated over the shorter of its useful life and the lease term.

 

ii.Operating leases:

 

Leases in which substantially all the risks and rewards of ownership of the leased asset are not transferred to the Group are classified as operating leases. Lease payments are recognized as an expense in profit or loss on a straight-line basis over the lease term.
Property, plant and equipment, net

18)Property, plant and equipment, net:

 

Property, plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation, accumulated impairment losses and any related investment grants and excluding day-to-day servicing expenses. Cost includes spare parts and auxiliary equipment that are used in connection with plant and equipment. The cost of an item of property, plant and equipment comprises the initial estimate of the costs of dismantling and removing the item and restoring the site on which the item is located.

 

Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:

 

    %
     
Computers, software and peripheral equipment   20-33 (mainly 33)
Office furniture and equipment   6-33 (mainly 7)
Motor vehicles   15
Buildings   2-4

 

Leasehold improvements are amortized using the straight-line method over the term of the lease (including option terms that are deemed to be reasonably assured) or the estimated useful life of the improvements, whichever is shorter.

 

The useful life, depreciation method and residual value of an asset are reviewed at least each year-end (at the end of the year) and any changes are accounted for prospectively as a change in accounting estimate. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized. For impairment testing of property, plant and equipment, see Note 2(21) below.
Research and development costs

19)Research and development costs:

 

Research expenditures incurred in the process of software development are recognized in profit or loss when incurred. An intangible asset arising from a software development project or from the development phase of an internal project is recognized if the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale; the Group's intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate future economic benefits; the availability of adequate technical, financial and other resources to complete the intangible asset; and the ability to measure reliably the respective expenditure asset during its development. The Group establishes technological feasibility upon completion of a detailed program design or working model.

 

Research and development costs incurred between completion of the detailed program design and the point at which the product is ready for general release, have been capitalized.

 

Capitalized software costs are measured at cost less any accumulated amortization and any accumulated impairment losses on a product by product basis. Amortization of capitalized software costs begin when development is complete and the product is available for use. The Group considers a product to be available for use when the Group completes its internal validation of the product that is necessary to establish that the product meets its design specifications including functions, features, and technical performance requirements. Internal validation includes the completion of coding, documentation and testing that ensure bugs are reduced to a minimum. The internal validation of the product takes place a few weeks before the product is made available to the market. In certain instances, The Group enters into a short pre-release stage, during which the product is made available to a select number of customers as a beta program for their own review and familiarization. Subsequently, the release is made generally available to customers. Once a product is considered available for use, the capitalization of costs ceases and amortization of such costs to "cost of sales" begins.

 

Capitalized software costs are amortized on a product by product basis by the straight-line method over the estimated useful life of the software product (between 5-7 years).

 

Research and development costs incurred in the process of developing product enhancements are generally charged to expenses as incurred.

 

The Group assesses the recoverability of its capitalized software costs on a regular basis by assessing the net realizable value of these intangible assets based on the estimated future gross revenues from each product reduced by the estimated future costs of completing and disposing of it, including the estimated costs of performing maintenance and customer support over its remaining economical useful life using internally generated projections of future revenues generated by the products, cost of completion of products and cost of delivery to customers over its remaining economical useful life.

 

During the years ended December 31, 2016, 2017 and 2018, no such unrecoverable amounts were identified.
Other intangible assets

20)Other intangible assets:

 

Separately-acquired intangible assets are measured on initial recognition at cost, including directly attributable costs. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Expenditures relating to internally generated intangible assets, excluding capitalized development costs, are recognized in profit or loss when incurred.

 

According to management's assessment, intangible assets with a finite useful life are amortized over their useful life and reviewed for impairment whenever there is an indication that the asset may be impaired. The amortization period and the amortization method for an intangible asset are reviewed at least at each year end. Other intangible assets are comprised mainly of customer-related intangible assets, backlogs, brand names, capitalized courses development costs, non-compete agreements and acquired technology and patent, and are amortized over their useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up. The useful life of intangible assets is as follows:

 

    Years
Customer relationship and backlog   1-15
Acquired technology   2-8
Brand names and patents   5-10

 

Gains or losses arising from the derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss.

 

The useful life of these assets is reviewed annually to determine whether their indefinite life assessment continues to be supportable. If the events and circumstances do not continue to support the assessment, the change in the useful life assessment from indefinite to finite is accounted for prospectively as a change in accounting estimate, and on that date the asset is tested for impairment. Commencing from that date, the asset is amortized systematically over its useful life.
Impairment of non-financial assets
21)Impairment of non-financial assets:

 

The Group evaluates the need to record an impairment of non-financial assets (property, plant and equipment, capitalized software costs and other intangible assets, goodwill, investments in joint venture) whenever events or changes in circumstances indicate that the carrying amount is not recoverable.

 

If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in profit or loss.

 

An impairment loss of an asset, other than goodwill, is reversed only if there have been changes in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. Reversal of an impairment loss, as above, shall not be increased above the lower of the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years and its recoverable amount. The reversal of impairment loss of an asset presented at cost is recognized in profit or loss.

 

The following criteria are applied in assessing impairment of these specific assets:

 

i.Goodwill in respect of subsidiaries:

 

For the purpose of impairment testing, goodwill acquired in a business combination is allocated, at the acquisition date, to each of our cash-generating units that are expected to benefit from the synergies of the combination.

 

The Group reviews goodwill for impairment once a year, on December 31, or more frequently if events or changes in circumstances indicate that there is an impairment.

 

Goodwill is tested for impairment by assessing the recoverable amount of the cash-generating unit (or group of cash-generating units) to which the goodwill has been allocated. An impairment loss is recognized if the recoverable amount of the cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is less than the carrying amount of the cash-generating unit (or group of cash-generating units). Any impairment loss is allocated first to goodwill. Impairment losses recognized for goodwill cannot be reversed in subsequent periods.

 

ii.Investment in associate or joint venture using the equity method:

 

After application of the equity method, the Group determines whether it is necessary to recognize any additional impairment loss with respect to the investment in associates or joint ventures. The Group determines at each reporting date whether there is objective evidence that the carrying amount of the investment in the associate or the joint venture is impaired. The test of impairment is carried out with reference to the entire investment, including the goodwill attributed to the associate or the joint venture.

 

During the years ended December 31, 2016, 2017 and 2018, no impairment indicators were identified.
Financial instruments

22)Financial instruments:

 

As described in Note 2 (30)(B) regarding the initial adoption of IFRS 9, “Financial Instruments” (the “Standard”), the Group elected to adopt the provisions of the Standard retrospectively without restatement of comparative data.

 

The accounting policy for financial instruments applied until December 31, 2017 is as follows:

 

A.Financial assets:

 

Financial assets within the scope of IAS 39 are initially recognized at fair value plus directly attributable transaction costs, except for financial assets measured at fair value through profit or loss in respect of which transaction costs are recorded in profit or loss. After initial recognition, the accounting treatment of financial assets is based on their classification as follows:

 

i.Financial assets at fair value through profit or loss:

 

This category includes financial assets held for trading and a dividend preference derivative in TSG (for a description of the TSG derivative, see Note 8).

 

ii.Loans and receivables:

 

Loans and receivables are investments with fixed or determinable payments that are not quoted in an active market. After initial recognition, loans are measured based on their terms at amortized cost plus directly attributable transaction costs using the effective interest method and less any impairment losses. Short-term borrowings are measured based on their terms, normally at face value.

 

iii.Available-for-sale financial assets:

 

Available-for-sale financial assets are (non-derivative) financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Gains or losses from fair value adjustments, except for interest, exchange rate differences that relate to debt instruments and dividends from an equity instrument, are recognized in other comprehensive income. When the investment is disposed of or in case of impairment, the other comprehensive income (loss) is transferred to profit or loss.

 

B.Financial liabilities:

 

Financial liabilities are initially recognized at fair value. Loans and other liabilities measured at amortized cost are presented less direct transaction costs. After initial recognition, the accounting treatment of financial liabilities is based on their classification as follows:

 

i.Financial liabilities at amortized cost:

 

After initial recognition, loans and other liabilities are measured based on their terms at amortized cost less directly attributable transaction costs using the effective interest method.

 

ii.Financial liabilities at fair value through profit or loss:

 

Financial liabilities at fair value through profit or loss include financial liabilities classified as held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Derivatives, including separated embedded derivatives, are classified as held for trading unless they are designated as effective hedging instruments.

 

C.Offsetting financial instruments:

 

Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position if there is a legally enforceable right to set off the recognized amounts and there is an intention either to settle on a net basis or to realize the asset and settle the liability simultaneously.

 

The right of set-off must be legally enforceable not only during the ordinary course of business of the parties to the contract but also in the event of bankruptcy or insolvency of one of the parties. In order for the right of set-off to be currently available, it must not be contingent on a future event, there may not be periods during which the right is not available, or there may not be any events that will cause the right to expire.

 

D.Compound financial instruments:

 

i.Convertible debentures which contain both an equity component and a liability component are separated into two components. This separation is performed by first determining the liability component based on the fair value of an equivalent non-convertible liability. The value of the conversion component is determined to be the residual amount. Directly attributable transaction costs are apportioned between the equity component and the liability component based on the allocation of proceeds to the equity and liability components.

 

ii.Convertible debentures that are denominated in foreign currency contain two components: the conversion component and the debt component. The liability conversion component is initially recognized as a financial derivative at fair value. The balance is attributed to the debt component. Directly attributable transaction costs are allocated between the liability conversion component and the liability debt component based on the allocation of the proceeds to each component.

 

E.Embedded derivatives:

 

The Group assesses the existence of an embedded derivative and whether it is required to be separated from a host contract when the Group first becomes party to the contract. Reassessment of the need to separate an embedded derivative only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

 

F.Put option granted to non-controlling interests:

 

When the Group grants to non-controlling interests a put option to sell part or all of their interests in a subsidiary, during a certain period, even if such purchase obligation is conditional on the counterparty’s exercise of its contractual right to cause such redemption, if the put option agreement does not transfer to the Group any benefits incidental to ownership of the equity instrument (i.e. the Group does not have a present ownership in the shares concerned), then at the end of each reporting period the non-controlling interests (to which a portion of net profit attributable to non-controlling interests is allocated) are classified as a financial liability, as if such put-able equity instrument was redeemed on that date. The difference between the non-controlling interests carrying amount at the end of the reporting period and the present value of the liability is recognized directly in equity of the Group, under “Additional paid-in capital”.

 

The Group remeasures the financial liability at the end of each reporting period based on the estimated present value of the consideration to be transferred upon the exercise of the put option.

 

If the option is exercised in subsequent periods, the consideration paid upon exercise is treated as settlement of the liability. If the option expires, the liability is settled and it is a portion of the investment in the subsidiary disposed of, without loss of control therein.

 

If the Group has present ownership in the shares concerned, these non-controlling interests are accounted for as if they are held by the Group and changes in the amount of the liability are carried to profit or loss.

 

G.Derecognition of financial instruments:

 

i.Financial assets:

 

A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or the Group has transferred its contractual rights to receive cash flows from the financial asset or assumes an obligation to pay the cash flows in full without material delay to a third party, and, in addition it has transferred substantially all the risks and rewards of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

 

A transaction involving factoring of accounts receivable and credit card vouchers is derecognized when the above-mentioned conditions are met.

 

If the Group transfers its rights to receive cash flows from an asset and neither transfer nor retains substantially all the risks and rewards of the asset nor transfers control of the asset, a new asset is recognized to the extent of the Group’s continuing involvement in the asset. When continuing involvement takes the form of guaranteeing the transferred asset, the extent of the continuing involvement is the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required to repay. As of December 31, 2017, the Group has no open factoring transactions.

 

ii.Financial liabilities:

 

A financial liability is derecognized when it is extinguished, that is when the obligation is discharged or cancelled or expires. A financial liability is extinguished when the debtor (the Group) discharges the liability by paying in cash, other financial assets, goods or services or is legally released from the liability.

 

H.Impairment of financial assets:

 

The Group assesses at the end of each reporting period whether there is any objective evidence of impairment of a financial asset or group of financial assets as follows:

 

i.Financial assets carried at amortized cost:

 

Objective evidence of impairment exists when one or more events that have occurred after initial recognition of the asset have a negative impact on the estimated future cash flows. The amount of the loss recorded in profit or loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred) discounted at the financial asset’s original effective interest rate. If the financial asset has a variable interest rate, the discount rate is the current effective interest rate. In a subsequent period, the amount of the impairment loss is reversed if the recovery of the asset can be related objectively to an event occurring after the impairment was recognized. The amount of the reversal, up to the amount of any previous impairment, is recorded in profit or loss.

 

ii.Available-for-sale financial assets:

 

For equity instruments classified as available-for-sale financial assets, evidence of impairment includes a significant or prolonged decline in the fair value of the asset below its cost and evaluation of changes in the technological, economic or legal environment or in the market in which the issuer of the instrument operates. The determination of a significant or prolonged impairment depends on the circumstances at each reporting date. In making such a determination, historical volatility in fair value is considered, as well as a decline in fair value of 20% or more, or a decline in fair value whose duration is six months or more. Where there is evidence of impairment, the cumulative loss recorded in other comprehensive income is reclassified to profit or loss. In subsequent periods, any reversal of the impairment loss is recognized in other comprehensive income.

 

During 2016 and 2017 the Group did not recognize an impairment charge over its investments in available-for-sale marketable securities.

 

The accounting policy for financial instruments applied commencing from January 1, 2018, is as follows:

 

A.Financial assets:

 

Financial assets within the scope of the Standard, are measured at the date of initial recognition at their fair value, plus transaction costs that can be directly attributed to the acquisition of the financial asset, except in the case of a financial asset measured at fair value through profit or loss, in respect of which, transaction costs are charged to profit or loss.

 

The Group classifies and measures the debt instruments in its financial statements on the basis of the following criteria:

 

●the Group’s business model for the management of financial assets; and

 

●the contractual cash flow characteristics of the financial asset.

 

i.The Group measures debt instruments at amortized cost when:

 

The Group’s business model is the holding of financial assets in order to collect contractual cash flows, and the contractual terms of the financial asset provide entitlement on defined dates to cash flows, that are only principal and interest payments in respect of the amount of the principal, that has not yet been repaid. Subsequent to initial recognition, instruments in this group shall be presented at their cost at cost plus transaction costs directly using the amortized cost method. In addition, on the date of initial recognition, an entity may irrevocably designate a debt instrument at fair value through profit or loss, if such designation eliminates or significantly reduces inconsistencies in measurement or recognition, for example, if the related financial liabilities, are also measured at fair value through profit or loss.

 

ii.The Group measures debt instruments at fair value through other comprehensive income when:

 

The Group’s business model is the holding of financial assets in order to collect contractual cash flows and the sale of the financial assets, and the contractual terms of the financial asset provide entitlement on defined dates to cash flows that are only principal and interest payments in respect of the amount of the principal that has not yet been repaid. Subsequent to initial recognition, instruments in this group are measured at fair value. Gains or losses arising from adjustments to fair value, other than interest and exchange rate differentials, are recognized in other comprehensive income.

 

iii.The Group measures debt instruments at fair value through profit or loss when:

 

A financial asset which is a debt instrument does not meet the criteria for measurement at amortized cost or at fair value through other comprehensive income. After initial recognition, the financial asset is measured at fair value and gains or losses from fair value adjustments are recognized in profit or loss.

 

B.Impairment of financial assets:

 

The Group examines at each reporting date the provision for loss in respect of financial debt instruments that are not measured at fair value through profit or loss. The Group distinguishes between two situations of recognition of a provision for loss:

 

i.Debt instruments for which there has been no significant deterioration in the quality of their credit since the initial recognition or in cases where the credit risk is low – in this situation, the provision for loss recognized for this debt instrument will take into account expected credit losses in a period of 12 months after the reporting date;

 

ii.Debt instruments whose credit quality has deteriorated significantly since their initial recognition and for which the credit risk is not low – in this situation, the provision for a loss to be recognized will take into account projected credit losses - over the remaining life of the instrument.

 

The Group has financial assets with short credit periods, such as customers, for which it applies the relief prescribed in the model. In other words, the Group measures the provision for loss in an amount equal to expected credit losses throughout the life of the instrument.

 

Impairment in respect of debt instruments measured at amortized cost, will be carried to profit or loss against provision, while impairment in respect of debt instruments measured at fair value through other comprehensive income, will be carried to profit or loss against other comprehensive income, and will not reduce the book value of the financial asset in the statement of financial position.

 

The Group implements the relief prescribed in the Standard, according to which it assumes that the credit risk of a debt instrument that did not increase significantly from the date of initial recognition if it was determined at the reporting date that the instrument has a low credit risk, for example when the instrument has an external rating of “investment grade”.

 

C.Derecognition of financial assets:

 

The Group derecognizes a financial asset when and only when:

 

i.The contractual rights to the cash flows from the financial asset expire; or

 

ii.The Group transfers substantially all the risks and rewards deriving from the contractual rights to receive the cash flows from the financial asset or when some of the risks and rewards of transferring the financial asset remain with the entity but it may be said that it transferred control over the asset; or

 

iii.The Group retains the contractual rights to receive the cash flows arising from the financial asset but assumes a contractual obligation to pay these cash flows in full to a third party, without material delay.

 

D.Financial liabilities:

 

i.Financial liabilities measured at amortized cost:

 

Financial liabilities are initially recognized at fair value less transaction costs that are directly attributable to the issue of the financial liability. After initial recognition, the Group measures all financial liabilities at amortized cost using the effective interest rate method, except for:

 

●Financial liabilities at fair value through profit or loss, such as derivatives;

 

●Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies;

 

●Financial guarantee contracts;

 

●Contingent consideration recognized by an acquirer in a business combination as to which IFRS 3 applies.

 

ii.Financial liabilities measured at fair value through profit or loss:

 

At initial recognition, the Group measures financial liabilities that are not measured at amortized cost at fair value. Transaction costs are recognized in profit or loss. After initial recognition, changes in fair value are recognized in profit or loss.

 

E.Derecognition of financial liabilities:

 

A financial liability is derecognized when it is extinguished, that is, when the obligation is discharged or cancelled or expires. A financial liability is extinguished when the debtor discharges the liability by paying in cash, other financial assets, goods or services or is legally released from the liability.

 

When there is a modification in the terms of an existing financial liability, the Group evaluates whether the modification is substantial.

 

If the terms of an existing financial liability are substantially modified, such modification is accounted for as an extinguishment of the original liability and the recognition of a new liability. The difference between the carrying amounts of the above liabilities is recognized in profit or loss.

 

If the modification is not substantial, the Group recalculates the carrying amount of the liability by discounting the revised cash flows at the original effective interest rate and any resulting difference is recognized in profit or loss.

 

When evaluating whether the modification in the terms of an existing liability is substantial, the Group considers both quantitative and qualitative factors

 

F.Offsetting financial instruments:

 

Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position if there is a legally enforceable right to set off the recognized amounts and there is an intention either to settle on a net basis or to realize the asset and settle the liability simultaneously.

 

The right of set-off must be legally enforceable not only during the ordinary course of business of the parties to the contract but also in the event of bankruptcy or insolvency of one of the parties. In order for the right of set-off to be currently available, it must not be contingent on a future event, there may not be periods during which the right is not available, or there may not be any events that will cause the right to expire.

 

G.Put option granted to non-controlling interests:

 

When the Group grants to non-controlling interests a put option to sell part or all of their interests in a subsidiary, during a certain period, even if such purchase obligation is conditional on the counterparty’s exercise of its contractual right to cause such redemption, if the put option agreement does not transfer to the Group any benefits incidental to ownership of the equity instrument (i.e. the Group does not have a present ownership in the shares concerned) then at the end of each reporting period the non-controlling interests (to which a portion of net profit attributable to non-controlling interests is allocated) are classified as a financial liability, as if such put-able equity instrument was redeemed on that date. The difference between the non-controlling interests carrying amount at the end of the reporting period and the present value of the liability is recognized directly in equity of the Group, under “Additional paid-in capital”.

 

The Group remeasures the financial liability at the end of each reporting period based on the estimated present value of the consideration to be transferred upon the exercise of the put option.

 

If the option is exercised in subsequent periods, the consideration paid upon exercise is treated as settlement of the liability. If the option expires, the liability is settled and it is a portion of the investment in the subsidiary disposed of, without loss of control therein.

 

If the Group has present ownership of the non-controlling interests, these non-controlling interests are accounted for as if they are held by the Group, and changes in the amount of the liability are carried to profit or loss.
Fair value measurement
23)Fair value measurement

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on the assumption that the transaction will take place in the asset’s or the liability’s principal market, or in the absence of a principal market, in the most advantageous market.

 

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

 

All assets and liabilities measured at fair value or for which fair value is disclosed are categorized into levels within the fair value hierarchy based on the lowest level input that is significant to the entire fair value measurement:

 

  Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
       
  Level 2 - inputs other than quoted prices included within Level 1 that are observable directly or indirectly.
       
  Level 3 - inputs that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data).
Treasury shares

24)Treasury shares:

 

Company shares held by the Company and/or subsidiaries are recognized at cost of purchase and presented as a deduction from equity. Any gain or loss arising from a purchase, sale, issue or cancellation of treasury shares is recognized directly in equity.
Provisions

25)Provisions:

 

A provision in accordance with IAS 37 is recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are measured according to the estimated future cash flows discounted using a pre-tax interest rate that reflects the market assessments of the time value of money and, where appropriate, those risks specific to the liability. When the Group expects part or all of the expense to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense is recognized in the statement of profit or loss net of any reimbursement.

 

Following are the types of provisions included in the financial statements:

 

i.Legal claims:

 

A provision for claims is recognized when the Group has a present legal or constructive obligation as a result of a past event, it is more likely than not that an outflow of resources embodying economic benefits will be required by the Group to settle the obligation and a reliable estimate can be made of the amount of the obligation.

 

ii.Contingent liability recognized in a business combination:

 

A contingent liability in a business combination is measured at fair value upon initial recognition. In subsequent periods, it is measured at the higher of the amount initially recognized less, when appropriate, cumulative amortization, and the amount that would be recognized at the end of the reporting period in accordance with IAS 37.
Derivative financial instruments and hedging

26)Derivative financial instruments and hedging:

 

The Group enters into contracts for derivative financial instruments such as forward currency contracts and options contracts to hedge risks associated with foreign exchange rates resulting from international activities and interest rate fluctuations. The derivative instruments primarily hedge or offset exposures to Euro, Japanese Yen and New Israeli Shekel ("NIS") exchange rate fluctuations.

 

The Group's options and forward contracts do not qualify for hedging accounting. Any gains or losses arising from changes in the fair values of the derivatives are recorded immediately in profit or loss as financial income or expense.
Employee benefit liabilities

27)Employee benefit liabilities:

 

The Group has several employee benefit plans:

 

i.Short-term employee benefits:

 

Short-term employee benefits are benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services. These benefits include salaries, paid annual leave, paid sick leave, recreation and social security contributions and are recognized as expenses as the services are rendered. A liability in respect of a cash bonus or a profit-sharing plan is recognized when the Group has a legal or constructive obligation to make such payment as a result of past service rendered by an employee and a reliable estimate of the amount can be made.

 

ii.Post-employment benefits:

 

The plans are normally financed by contributions to insurance companies and classified as defined contribution plans or as defined benefit plans.

 

Formula's and its Israeli investees' (as defined with respect to their Israeli employee contribution plans pursuant to section 14 of Israel's Severance Pay Law, 1963 (the "Severance Pay Law")) pay fixed contributions to those plans and will have no legal or constructive obligation to pay further contributions if the fund into which those contributions are paid does not hold sufficient amounts to pay all employee benefits relating to employee service in the current and prior periods. Contributions to the defined contribution plan in respect of severance or retirement pay are recognized as an expense when contributed concurrently with performance of the employee's services.

 

Formula and its Israeli investees also operate a defined benefit plan in respect of severance pay to their Israeli employees pursuant to the Severance Pay Law. According to the Severance Pay Law, employees are entitled to severance pay upon dismissal or retirement. The liability for termination of employment is measured using the projected unit credit method. The actuarial assumptions include rates of employee turnover and future salary increases based on the estimated timing of payment. The amounts are presented based on discounted expected future cash flows using a discount rate determined by reference to market yields at the reporting date on high quality corporate bonds that are linked to Israel's Consumer Price Index with a term that is consistent with the estimated term of the severance pay obligation.

 

In respect of its severance pay obligation to certain of its employees, the Group makes current deposits in pension funds and insurance companies (the "plan assets"). Plan assets comprise assets held by a long-term employee benefit fund or qualifying insurance policies. Plan assets are not available to the Group's own creditors and cannot be returned directly to the Group.

 

The liability for employee benefits shown in the statement of financial position reflects the present value of the defined benefit obligation, less the fair value of the plan assets. Remeasurements of the net liability are recognized in other comprehensive income in the period in which they occur.

 

Total expenses in respect of employee benefit liabilities for the years 2016, 2017 and 2018 were $29,557, $35,036 and $30,941, respectively.
Earnings per share

28)Earnings per share:

 

Earnings per share are calculated by dividing the net income attributable to equity holders of the Company by the weighted number of ordinary shares outstanding during the period. Potential ordinary shares are included in the computation of diluted earnings per share when their conversion decreases earnings per share from continuing operations. Potential ordinary shares that are converted during the period are included in diluted earnings per share only until the conversion date and from that date in basic earnings per share. The Company's share of earnings of investees is included based on its share of earnings per share of the investees multiplied by the number of shares held by the Company.
Concentration of credit risk

29)Concentration of credit risk:

 

Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash and cash equivalents, short-term bank deposits, restricted cash, trade receivables, marketable securities and foreign currency derivative contracts.

 

The majority of the Group's cash and cash equivalents, bank deposits and marketable securities are invested with major banks in Israel, the United States and Europe. Management believes that these financial instruments are held in financial institutions with high credit standing, and accordingly, minimal credit risk exists with respect to these investments. Cash and cash equivalents and short-term deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Generally, these banks deposits may be redeemed upon demand and therefore bear minimal risk.

 

The Group's marketable securities include investments in commercial and government bonds and foreign banks. The Group's marketable securities are considered to be highly liquid and have a high credit standing. In addition, managements of the Group's investees limit the amount that may be invested in any one type of investment or issuer, thereby reducing credit risk concentrations and consider their portfolios in foreign banks to be well-diversified (also refer to Note 5).

 

The Group's trade receivables are generally derived from sales to large organizations located mainly in Israel, North America, Europe and Asia Pacific. The Group performs ongoing credit evaluations of its customers and to date has not experienced any material losses. In certain circumstances, Formula and its investees may require letters of credit, other collateral or additional guarantees. From time to time, the Group's subsidiaries sell certain of its accounts receivable to financial institutions, within the normal course of business.

 

The Group maintains an allowance for doubtful accounts receivable based upon management's experience and estimate of collectability of each outstanding invoice. The allowance for doubtful accounts is determined with respect to specific debts or which collection is doubtful. The risk of collection associated with accounts receivable is mitigated by the diversity and number of customers.

 

From time to time, the Group enters into foreign exchange forward and option contracts intended to protect against the changes in value of forecasted non-dollar currency cash flows. These derivative instruments are designed to offset a portion of the Group's non-dollar currency exposure (see Note 2 (26) above).
Changes in accounting policies - initial adoption of new financial reporting and accounting standards

30)Changes in accounting policies - initial adoption of new financial reporting and accounting standards:

 

A.First time implementation of IFRS 15 – Revenue from Contracts with Costumers:

 

The Group adopted IFRS 15 (or the "Standard") on January 1, 2018 and elected to apply the modified retrospective approach with the cumulative effect recognized as an adjustment to the opening retained earnings balance of $874 as of January 1, 2018. The Group applied a practical expedient allowed under IFRS 15 and exempt from the restatement of comparable data. This means that financial data reported for reporting periods prior to December 31, 2017 has been prepared on the basis of the following standards: IAS 18 'Revenue', IAS 11 'Construction Contracts' as well as interpretations related to revenue recognition that were applicable before the effective date of IFRS 15. Results for reporting periods beginning after January 1, 2018 are presented in accordance with IFRS 15.

 

The effects of the initial application of the new Standard on the Group's financial statements are as follows:

 

i)Term license - under the legacy revenue standard, the Group recognized both the revenue from sale of term license (which does not involve significant customization) and post-contract support revenues ratably over the contract period whereas upon application of the provisions of the new Standard, term license revenues are recognized up front, upon delivery, and the associated post-contract support revenues are recognized over the contract period. As a result, under the provisions of the new standard, the Group recognizes these revenues in earlier period than the period these revenues were recognized under the old Standard.

 

ii)Incremental costs incurred to obtain contracts (mainly due to sales commissions) - under the legacy revenue standard, the Group recognized these costs in selling and marketing expenses when incurred, whereas upon application of the provisions of the new Standard, these costs are recognized as an asset and amortized over the period when the Group satisfies the performance obligations defined in the specific contract which exceeds one year. As a result, under the provisions of the new Standard, the Group recognizes these costs as expenses in periods later than the period these costs were recognized under the old standard.

 

The effects of the above changes on the consolidated statements of financial position are as follows:

 

As of January 1, 2018    
   As
previously
reported		   The change   According to
IFRS 15		 
Current Assets            
Trade receivables   385,778    20    385,798 
Prepaid expenses and other accounts receivable   44,904    629    45,533 
                
Current Liabilities               
Deferred revenues   58,905    (1,397)   57,508 
                
Long-term Liabilities               
Other long-term liabilities   7,244    231    7,475 
                
Equity               
Retained earnings   239,156    874    240,030 
Non-controlling interests   413,720    941    414,661 

 

As of December 31, 2018            
   According to
the previous
accounting
policy		   The change   As
presented
in these
financial
statements		 
Current Assets            
Trade receivables   439,685    1,783    441,468 
Prepaid expenses and other accounts receivable   41,668    (1,271)   40,397 
                
Long-term Assets               
Prepaid expenses and other accounts receivable   21,475    1,646    23,121 
                
Current Liabilities               
Deferred revenues   64,062    (4,553)   59,509 
Other accounts payable   53,707    262    53,969 
                
Current Liabilities               
Other long-term liabilities   8,628    106    8,734 
                
Equity               
Retained earnings   259,538    3,019    262,557 
Non-controlling interests   434,443    3,324    437,767 

 

The effects of the above changes on the consolidated statements of profit or loss are as follows:

 

Year ended December 31, 2018:            
   According to
the previous
accounting
policy		   The change   As
presented
in these
financial
statements		 
             
Revenues   1,488,378    4,610    1,492,988 
Selling, marketing, general and administrative expenses   182,527    (55)   182,472 
                
Taxes on income   24,164    137    24,301 
Net income attributable to equity holders of the Company   30,220    2,145    32,365 
Net income attributable to non-controlling interests   42,647    2,383    45,030 

 

Remaining performance obligations represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. The Group elected to apply a practical expedient permitted under IFRS 15 whereby it does not disclose the aggregate amount of consideration allocated to unsatisfied or partially unsatisfied performance obligations that are part of contracts that have an original expected duration of less than one year. In addition, the Group has elected to apply a practical expedient permitted under IFRS 15 whereby it does not disclose the aggregate amount of consideration allocated to unsatisfied or partially unsatisfied performance obligations for which the Group has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Group's performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided).

 

As such, the aggregate amount of consideration allocated to performance obligations either not satisfied or partially unsatisfied from fixed price projects and post contract support services was approximately $94,433 as of December 31, 2018. The Group expects to recognize approximately 58% in 2019 from remaining performance obligations as of December 31, 2018 and the remainder thereafter. Remaining performance obligations include the remaining non-cancelable, committed and fixed portion of these contracts for their entire duration.

 

Contract balances:

 

The following table provides information about trade receivables, contract assets (unbilled receivables) and contract liabilities (deferred revenues) from contracts with customers (in thousands):

 

   December 31, 
   2018   2017 
Trade receivables  $362,853   $322,325 
Unbilled receivables   78,615    63,453 
Long-term trade receivables(*)   3,932    950 
Advances and deferred revenues   (59,509)   (58,905)
Long-term deferred revenues   (4,906)   (9,340)

 

(*)Included in long-term prepaid expenses and other accounts receivable

 

Trade receivable are recorded when the right to consideration becomes unconditional, and an invoice is issued to the customer. Unbilled receivables relate to the Group's contractual right to consideration for services performed and not yet invoiced.

 

Billing terms and conditions generally vary by contract type. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual milestones.

 

No impairment loss was recognized in respect of the Group's outstanding contract assets during the year ended December 31, 2018.

 

Deferred revenues represent contract liabilities, and include unearned amounts received under contracts with customers and not yet recognized as revenues.

 

B.First time implementation of IFRS 9 – Financial Instruments

 

In July 2014, the IASB issued the final and complete version of IFRS 9 - Financial Instruments ("IFRS 9"), which replaces IAS 39 - Financial Instruments: Recognition and Measurement. IFRS 9 mainly changes the provisions of the classification and measurement of financial assets and applies to all financial assets within the scope of IAS 39. The new standard is first implemented in these financial statements. The new standard is applied retrospectively without restatement of comparative figures.

 

After examining the implications of implementing the new standard, Group has determined that its implementation did not have a material effect on the Group's financial statements.
Financial statements have been reclassified
31)Certain amounts in the prior years’ financial statements have been reclassified to conform to the current year’s presentation.
General (Tables)
 12 Months Ended
Dec. 31, 2018
General [Abstract]  
Schedule of information ownership investees of Formula's
  Percentage of ownership 
   December 31, 
   2018   2017 
Name of Investee        
         
Matrix   49.21    49.50 
Magic   45.21    47.12 
Sapiens   48.08    48.14 
Insync   90.09    90.09 
Michpal(1)   100    100 
TSG(2)   50.00    50.00 

 

1)Michpal's results of operations are consolidated in the Company's results of operations commencing January 1, 2017.

 

2)TSG's results of operations are reflected in the Company's results of operations using the equity method of accounting commencing May 9, 2016.
Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2018
Significant Accounting Policies [Abstract]  
Schedule of straight-line basis over the useful life of the assets at annual rates
  %
     
Computers, software and peripheral equipment   20-33 (mainly 33)
Office furniture and equipment   6-33 (mainly 7)
Motor vehicles   15
Buildings   2-4
Schedule of useful life of intangible assets
  Years
Customer relationship and backlog   1-15
Acquired technology   2-8
Brand names and patents   5-10
Schedule of financial statements
As of January 1, 2018    
   As
previously
reported		   The change   According to
IFRS 15		 
Current Assets            
Trade receivables   385,778    20    385,798 
Prepaid expenses and other accounts receivable   44,904    629    45,533 
                
Current Liabilities               
Deferred revenues   58,905    (1,397)   57,508 
                
Long-term Liabilities               
Other long-term liabilities   7,244    231    7,475 
                
Equity               
Retained earnings   239,156    874    240,030 
Non-controlling interests   413,720    941    414,661 

 

As of December 31, 2018            
   According to
the previous
accounting
policy		   The change   As
presented
in these
financial
statements		 
Current Assets            
Trade receivables   439,685    1,783    441,468 
Prepaid expenses and other accounts receivable   41,668    (1,271)   40,397 
                
Long-term Assets               
Prepaid expenses and other accounts receivable   21,475    1,646    23,121 
                
Current Liabilities               
Deferred revenues   64,062    (4,553)   59,509 
Other accounts payable   53,707    262    53,969 
                
Current Liabilities               
Other long-term liabilities   8,628    106    8,734 
                
Equity               
Retained earnings   259,538    3,019    262,557 
Non-controlling interests   434,443    3,324    437,767 

 

Year ended December 31, 2018:            
   According to
the previous
accounting
policy		   The change   As
presented
in these
financial
statements		 
             
Revenues   1,488,378    4,610    1,492,988 
Selling, marketing, general and administrative expenses   182,527    (55)   182,472 
                
Taxes on income   24,164    137    24,301 
Net income attributable to equity holders of the Company   30,220    2,145    32,365 
Net income attributable to non-controlling interests   42,647    2,383    45,030 
Schedule of contracts with customers
  December 31, 
   2018   2017 
Trade receivables  $362,853   $322,325 
Unbilled receivables   78,615    63,453 
Long-term trade receivables(*)   3,932    950 
Advances and deferred revenues   (59,509)   (58,905)
Long-term deferred revenues   (4,906)   (9,340)

 

(*)Included in long-term prepaid expenses and other accounts receivable
Business Combination, Significant Transaction and Sale of Business (Tables)
 12 Months Ended
Dec. 31, 2018
TSG IT Advanced Systems Ltd. [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net assets  $1,824 
Intangible assets   13,693 
Backlog   2,221 
Deferred tax liability   (3,948)
Dividend preference derivative   2,140 
Goodwill   9,836 
      
Total assets acquired, net of acquired cash  $25,766 
Michpal Micro Computers (1983) Ltd. [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net assets  $139 
Intangible assets   11,329 
Deferred tax liability   (2,606)
Goodwill   13,244 
      
Total assets acquired net of acquired cash  $22,106 
Maximum Processing Inc. [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net assets  $(240)
Intangible assets   1,859 
Goodwill   2,659 
      
Net assets acquired  $4,278 
4Sight Business Intelligence Inc [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net assets  $(145)
Intangible assets   279 
Deferred taxes   (112)
Goodwill   308 
      
Net assets acquired  $330 
Stoneriver, Inc [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Current assets  $16,785 
Property and equipment   1,088 
Intangible assets   38,145 
Goodwill   77,014 
Other long-term assets   78 
      
Total assets acquired  $133,110 
      
Current liabilities  $10,595 
Deferred revenues   5,742 
Deferred tax liabilities   15,071 
Other long-term liabilities   351 
      
Total liabilities acquired  $31,759 
      
Total purchase price  $101,351 
Schedule of intangible assets associated with acquisition and annual amortization rates

   Fair value 
Developed technology  $34,039 
Customer relationships   3,333 
Backlog   773 
      
Total intangible assets  $38,145 
Knowledge Price [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net assets   780 
Intangible assets   2,417 
Deferred taxes   (363)
Goodwill   3,195 
      
Net assets acquired  $6,029 
Adaptik Corporation [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net liabilities excluding cash acquired  $(2,817)
Intangible assets   12,936 
Deferred taxes   (3,528)
Goodwill   11,468 
      
Total assets acquired, net of acquired cash  $18,059 
Comblack It Ltd [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net assets, excluding cash acquired  $(405)
Non-controlling interests   (989)
Intangible assets   1,249 
Goodwill   1,966 
      
Total assets acquired, net of acquired cash  $1,821 
Infinigy Solutions Llc [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net assets, excluding cash acquired  $1,182 
Non-controlling interests   (3,590)
Intangible assets   3,675 
Goodwill   5,260 
      
Total assets acquired, net of acquired cash  $6,527 
Roshtov Software Industries Ltd [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net assets, excluding cash acquired  $15 
Non-controlling interests   (14,012)
Intangible assets   22,439 
Deferred tax liabilities   (5,610)
Goodwill   17,718 
      
Total assets acquired, net of acquired cash  $20,550 
Shavit Software Ltd [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net assets, excluding cash acquired  $533 
Intangible assets   3,489 
Deferred tax liabilities   (871)
Goodwill   3,685 
      
Total assets acquired net of acquired cash  $6,836 
Other Acquisitions By Magic [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
  December 31, 
   2018   2017   2016 
             
Net assets, excluding cash acquired  $306   $(1,822)  $2,174 
Non-controlling interests   -    -    (1,209)
Intangible assets   23    1,149    2,370 
Deferred tax liabilities   -    -    (493)
Goodwill   259    1,723    6,042 
                
Total assets acquired net of acquired cash  $588   $1,050   $8,884 
Programa Logistics Systems Ltd [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net Assets  $267 
Non-controlling interests   (2,471)
Intangible assets   1,216 
Goodwill   3,229 
      
Total assets acquired  $2,241 
Network Infrastructure Technologies Inc [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net Assets  $391 
Non-controlling interests   (3,968)
Intangible assets   2,138 
Deferred tax liabilities   (855)
Goodwill   9,044 
      
Total assets acquired  $6,750 
Second To None Solutions Inc [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Intangible assets  $909 
Non-controlling interests   (2,184)
Deferred tax liabilities   (311)
Goodwill   2,387 
      
Total assets acquired  $801 
Aviv Management Engineering Systems Ltd [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net assets  $(1,338)
Non-controlling interests   (1,486)
Intangible assets   2,051 
Deferred tax liabilities   (472)
Goodwill   6,681 
      
Total assets acquired  $5,436 
Alius Group Inc [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net assets  $(4)
Intangible assets   2,986 
Deferred taxes   (806)
Goodwill   14,190 
      
 Total assets acquired net of acquired cash  $16,366 
Pleasant Valley Business Solutions, LLC [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net assets  $(834)
Intangible assets   1,867 
Deferred taxes   (507)
Goodwill   7,791 
      
Total assets acquired net of acquired cash  $8,317 
Cambium (2014) Ltd. [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net assets  $(8)
Intangible assets   282 
Deferred taxes   (65)
Non-controlling interests   (239)
Goodwill   751 
      
Total assets acquired net of acquired cash  $721 
Integrity Software 2011 Ltd. [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net assets  $(1,131)
Intangible assets   1,316 
Deferred taxes   (303)
Non-controlling interests   (318)
Goodwill   1,990 
      
Total assets acquired net of acquired cash  $1,554 
Noah Technologies Ltd. [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities

Net assets  $(473)
Intangible assets   580 
Deferred taxes   (133)
Goodwill   1,485 
      
Total assets acquired net of acquired cash  $1,459 
Michpal [Member]  
Disclosure of detailed information about business combination [line items]  
Schedule of estimated fair values of the assets acquired and liabilities
Net assets  $439 
Non-controlling interests   (269)
Intangible assets   739 
Deferred tax liability   (170)
Goodwill   5,434 
      
Total assets acquired net of acquired cash  $6,173 
Marketable Securities (Tables)
 12 Months Ended
Dec. 31, 2018
Marketable Securities [Abstract]  
Schedule of marketable securities
  December 31, 
   2018   2017 
Short-term:        
Fair value through profit or loss (1)   1,156    1,209 
Fair value through other comprehensive income   8,757    12,929 
Total short-term marketable securities  $9,913   $14,138 
           
Total marketable securities  $9,913   $14,138 

 

(1)The Group recognized gains (losses) from marketable securities classified as held for trading (until December 31, 2017) or debt instruments measured at fair value through profit or loss (commencing from January 1, 2018) in amounts of $136, ($149) and $53 during the years ended December 31, 2016, 2017 and 2018, respectively.
Summary of debt instruments
  December 31, 
   2018   2017 
   Amortized
cost		   Unrealized
losses		   Unrealized
Gains		   Market
value		   Amortized cost   Unrealized
losses		   Unrealized
gains		   Market
Value		 
Commercial bonds  $8,851   $(94)   -   $8,757   $12,987   $(58)  $-   $12,929 
Schedule of amortized costs of debt instruments
  Amortized   Unrealized gains (losses)   Market 
   cost   Gains   Losses   value 
                 
Due within one year   $3,326   $-   $(21)  $3,305 
Due after one year through three years  $5,525   $-   $(73)  $5,452 
   $8,851   $-   $(94)  $8,757 
Schedule of other comprehensive income from available-for-sale securities
   Other comprehensive income 
     
Other comprehensive income from debt instruments at fair value through other comprehensive income as of January 1, 2017   167 
      
Unrealized gain from available-for-sale securities   188 
Realized gain reclassified into profit or loss   (94)
Other comprehensive income from debt instruments at fair value through other comprehensive income as of December 31, 2017  $261 
      
Unrealized loss from debt instruments at fair value through other comprehensive income   (37)
      
Other comprehensive income from debt instruments at fair value through other comprehensive income as of December 31, 2018  $224 
Prepaid Expenses and Other Accounts Receivable (Tables)
 12 Months Ended
Dec. 31, 2018
Other Accounts Receivable and Prepaid Expenses [Abstract]  
Summary of prepaid expenses and other accounts receivable
   December 31, 
   2018   2017 
Government departments  $12,318   $16,494 
Employees   426    619 
Prepaid expenses and advances to suppliers   25,161    26,597 
Restricted deposits   408    11 
Related Parties   197    273 
Receivables in respect of an embedded derivative transaction   354    - 
Other   1,533    910 
Total  $40,397   $44,904 
Fair Value Measurement (Tables)
 12 Months Ended
Dec. 31, 2018
Fair Value Measurement [Abstract]  
Schedule of financial assets and liabilities measured at fair value on a recurring basis
  Fair value measurements 
   December 31, 2018 
   Level 1   Level 2   Level 3   Total 
Assets:                
Marketable debt securities designated at fair value through profit or loss (Note 5):  $-   $1,156   $-   $1,156 
Marketable debt securities measured at fair value through other comprehensive income (Note 5):   -    8,757    -    8,757 
Receivables in respect of an embedded derivative transaction   -    -    354    354 
Dividend preference derivative in TSG (1)   -    -    2,733    2,733 
                     
Total financial assets  $-   $9,913   $3,087   $13,000 
                     
Liabilities:                    
Put options of non-controlling interests (2)  $-   $-   $56,599   $56,599 
Contingent consideration (2)   -    -    7,047    7,047 
                     
Total financial liabilities  $-   $-   $63,646   $63,646 

 

   Fair value measurements 
   December 31, 2017 
   Level 1   Level 2   Level 3   Total 
Assets:                
Marketable debt securities designated at fair value through profit or loss (Note 5):  $-   $1,209   $-   $1,209 
Marketable debt securities measured at fair value through other comprehensive income (Note 5):   -    12,929    -    12,929 
Dividend preference derivative in TSG(1) (Note 8):    -    -    2,400    2,400 
                     
Total financial assets  $-   $14,138   $2,400   $16,538 
                     
Liabilities:                    
Put options of non-controlling interests (2)  $-   $-   $52,876   $52,876 
Contingent consideration (2)   -    -    6,345(*)   6,345(*)
                     
Total financial liabilities  $-   $-   $59,221(*)  $59,221(*)

 

(1)The fair value of dividend preference derivative in TSG was estimated using the Monte-Carlo simulation technique.
(2)The fair value of put options of non-controlling interests and contingent consideration was determined based on the present value of the future expected cash flow.

 

(*)Adjustment to comparative data
Investments in Companies Accounted for at Equity Method (Tables)
 12 Months Ended
Dec. 31, 2018
Investments in Companies Accounted for at Equity Method [Abstract]  
Schedule of group's investments in companies accounted for at equity
  December 31, 
   2018   2017 
         
Affiliated company   27    55 
           
Joint venture – TSG (see Note 4(i)(a))   25,683    25,260 
           
    25,710    25,315 
Schedule of investment in TSG equity method

    December 31,  
    2018     2017  
Shares     18,014       17,591  
Capital notes     7,669       7,669  
      25,683       25,260  
                 
Dividend preference derivative in TSG (1)     2,733       2,400  
                 
Goodwill     9,836       9,836  

 

(1) Dividend preference derivative in TSG is included in Group’s long term prepaid expenses and other accounts receivable and is accounted for at fair value through to profit or loss.
Schedule of activity related to the company's investment in TSG

January 1, 2016   $ -  
Acquisition of shares     16,004  
Investment in capital notes     7,669  
Company’s share of profit     349  
December 31, 2016   $ 24,022  
         
Company’s share of profit     1,134  
Company’s share of other comprehensive income     104  
December 31, 2017   $ 25,260  
         
Company’s share of profit     365  
Company’s share of other comprehensive income     58  
December 31, 2018   $ 25,683  
Schedule of financial information of TSG

    December 31,  
    2018     2017  
Current assets     39,101       34,137  
Noncurrent assets (1)     1,498       1,746  
Current liabilities     (22,152 )     (20,311 )
Noncurrent liabilities     (3,750 )     (4,426 )
Equity     14,697       11,146  
Company’s share in TSG     50 %     50 %
      7,349       5,573  
Excess cost of intangible assets net of deferred tax     8,498       9,851  
Goodwill     9,836       9,836  
Company’s carrying amount of the investment in TSG     25,683       25,260  

 

(1) Not including balance of goodwill in an amount of $19,006 as of December 31, 2017 and 2018.
Schedule of operating results of TSG
   Year ended
December 31,		 
   2018   2017   2016 
             
Revenues   66,154    66,816    38,648 
Net income   3,437    4,938    2,744 
Other comprehensive income   116    208    - 
                
Total comprehensive income   3,553    5,146    2,744 
                
Company's share in TSG   50%   50%   50%
Company's share of total comprehensive income before amortization of excess cost of intangible assets net of tax   1,776    2,573    1,372 
Amortization of excess cost of intangible assets net of tax   (1,353)   (1,335)   (1,023)
Company's share of total comprehensive income   423    1,238    349 
                
Company's share of other comprehensive income   58    104    - 
Company's share of profit   365    1,134    349 
    423    1,238    349
Property, Plants and Equipment, Net (Tables)
 12 Months Ended
Dec. 31, 2018
Property, plant and equipment [abstract]  
Schedule of property, plants and equipment

   December 31, 
   2018   2017 
Cost:        
Computers, software, furniture and equipment  $86,122   $80,888 
Motor vehicles   1,631    1,659 
Buildings   1,833    1,833 
Leasehold improvements   23,975    22,080 
    113,561    106,460 
Accumulated depreciation:          
Computers, software, furniture and equipment  $70,401   $64,604 
Motor vehicles   765    636 
Buildings   217    70 
Leasehold improvements   12,996    11,343 
    84,379    76,653 
           
Depreciated cost  $29,182   $29,807 
Intangible Assets, Net (Tables)
 12 Months Ended
Dec. 31, 2018
Intangible Assets, Net [Abstract]  
Schedule of intangible assets, net
  December 31, 
   2018   2017 
Original amounts:        
Capitalized Software costs  $197,685   $196,523 
Customer relationship   138,480    133,220 
Acquired technology   84,245    75,672 
Backlog and non-compete agreement   6,781    6,063 
Other intangibles   4,171    4,510 
Patent   1,280    1,385 
    432,642    417,373 
Accumulated amortization:          
Capitalized Software costs   148,845    142,019 
Customer relationship   78,470    65,705 
Acquired technology   44,831    35,466 
Backlog and non-compete agreement   6,105    5,837 
Other intangibles   3,779    3,890 
Patent   566    473 
    282,596    253,390 
           
Total  $150,046   $163,983
Goodwill (Tables)
 12 Months Ended
Dec. 31, 2018
Goodwill [Abstract]  
Schedule of carrying amount of goodwill
Balance as of January 1, 2017  $495,362 
      
Acquisition of subsidiaries   94,851 
Classifications   1,105 
Foreign currency translation adjustments   25,954 
      
Balance as of December 31, 2017   617,272 
Acquisition of subsidiaries   43,394 
Classifications   (18)
Foreign currency translation adjustments   (19,793)
      
Balance as of December 31, 2018  $640,855 
Short Term Liabilities to Banks and Others (Tables)
 12 Months Ended
Dec. 31, 2018
Short Term Liabilities to Banks and Others [Abstract]  
Schedule of short term liabilities to banks and others
  December 31,       
   2018           
   Interest rate     December 31, 
   %  Currency  2018   2017 
               
Bank credit  2-3.1  NIS  $736   $947 
Bank credit  US Prime -0.2  USD   2,362    2,125 
Short-term bank loans  1.7-2.5  NIS   1,068    22,910 
Current maturities of long-term loans from banks and other financial institutions (Note 14)  2.5-5.81  NIS   65,453    42,839 
Current maturities of long-term loans from banks (Note 14)  Libor +2.2  NIS (Linked to USD)   836    862 
Short-term interest on long-term loans from other financial institutions(1)  2.6-5.5  NIS   725    1,136 
Total         $71,180   $70,819 
Other Accounts Payable (Tables)
 12 Months Ended
Dec. 31, 2018
Other Accounts Payable [Abstract]  
Schedule of other accounts payable
   December 31, 
   2018   2017 
Government institutions  $29,485   $29,816 
Accrued royalties to the IIA (see Note 19f)   843    276 
Accrued expenses and other current liabilities   23,641    23,053 
Total  $53,969   $53,145 
Long Term Liabilities to Banks and Others (Tables)
 12 Months Ended
Dec. 31, 2018
Long Term Liabilities to Banks and Others [Abstract]  
Schedule of long term liabilities to banks and others composition

Interest rate  Currency  Long-term liabilities   Current maturities   Total long-term liabilities net of current maturities   Total long-term liabilities net of current maturities 
%     December 31, 2018   December 31, 2017 
                    
2.5-5.81  NIS (Unlinked)  $203,150    65,453    137,697   $132,753 
Libor +2.2  NIS (Linked to USD)   2,666    836    1,830    2,863 
      $205,816    66,289    139,527   $135,616 
Schedule of long term liabilities to banks and others maturity dates

   December 31, 
   2018   2017 
First year (current maturities)  $66,289   $43,701 
Second year   47,731    53,645 
Third year   33,893    34,270 
Fourth year   30,776    19,066 
Fifth year and thereafter   27,127    28,635 
Total  $205,816   $179,317 
Debentures (Tables)
 12 Months Ended
Dec. 31, 2018
Debentures [Abstract]  
Schedule of debentures
   Effective Interest rate  Currency  Par Value   Unamortized debt premium (discount) and  issuance costs, net   Current maturities   Total long-term debentures, net of current maturities   Short-term accrued interest   Total short-term and long-term debentures 
   %     December 31, 2018 
Formula's Series A
Secured Debentures (2.8%)		  2.4  NIS (Unlinked)  $54,769    684    9,128    46,325    758    56,211 
                                     
Formula's Series B
Convertible Debentures (2.74%)		  3.65  NIS (Linked to fix rate of USD)   31,812    (79)   31,812    -    2,971    34,704 
                                     
Sapiens' Series B Debentures (3.37%)  3.69  NIS (Linked to fix rate of USD)   79,185    (710)   9,898    68,577    1,334    79,809 
                                     
         $165,766    (105)   50,838    114,902    5,063    170,724 

 

   Effective Interest rate  Currency  Par Value   Unamortized debt premium (discount) and  issuance costs, net   Current maturities   Total long-term debentures, net of current maturities   Short-term accrued interest   Long-term accrued interest   Total short-term and long-term debentures 
   %     December 31, 2017 
Formula's Series A
Secured Debentures (2.8%)		  3.07  NIS (Unlinked)  $25,810    (209)   3,687    

21,914

    357    -    25,958 
                                          
Formula's Series B
Convertible Debentures (2.74%)		  3.65  NIS (Linked to fix rate of USD)   31,871    (400)   -    31,471    -    2,073    33,544 
                                          
Sapiens' Series B Debentures (3.37%)  3.69  NIS (Linked to fix rate of USD)   79,185    (904)   -    78,281    782    -    79,063 
                                          
         $136,866    (1,513)   3,687    

131,666

    1,139    2,073    138,565
Schedule of aggregate principal annual payments of debentures
  Repayment amount 
2019 (1)   30,376 
2020   19,026 
2021   19,026 
2022   19,026 
2023 and thereafter   57,850 
Total   145,304 

 

(1)

Based on the remaining outstanding Series B Convertible Debentures in the amount of $11,350, which were not converted prior to their maturity on March 26, 2019 (see Note 23(f)).
Employee Option Plans (Tables)
 12 Months Ended
Dec. 31, 2018
Employee Option Plans [Line Items]  
Schedule of stock-based compensation expense resulting from stock options grants
  Year ended December 31, 
   2018   2017   2016 
             
Cost of revenues  $2   $7   $15 
Research and development expenses   4    8    17 
Selling and marketing expenses   4    -    71 
General and administrative expenses   3,971    4,019    4,291 
Total share-based compensation expense  $3,981   $4,034   $4,394 
Matrix [Member]  
Employee Option Plans [Line Items]  
Schedule of employee option activity
  

Number

of options

   Weighted average exercise price  

Weighted average remaining contractual term

(in years)

   Aggregate intrinsic value 
Outstanding at January 1, 2018   1,100,000    4.33    2.19    9,152 
Exercised   587,500    4.06    -    4,578 
Granted   256,890    -    5    3,247 
Outstanding at December 31, 2018   769,390    2.61    2.19    6,823 
Exercisable at December 31, 2018   51,378    -    -    567 
Sapiens [Member]  
Employee Option Plans [Line Items]  
Schedule of employee option activity

   Year ended December 31, 2018 
   Amount of options  

Weighted

average

exercise

price

   Weighted average remaining contractual life
(in years)		   Aggregate intrinsic value 
Outstanding at January 1, 2018   2,107,413    9.67    4.25    4,084 
Granted   317,000    10.20           
Exercised   (223,570)   4.40           
Expired and forfeited   (145,661)   10.79           
                     
Outstanding at December 31, 2018   2,055,182    9.86    3.80    2,594 
                     
Exercisable at December 31, 2018   829,133    8.31    2.47    2,134 
Schedule of options outstanding under stock option plans separated into ranges of exercise price
                  Weighted 
   Options   Weighted       Options   Average 
   outstanding   Average   Weighted   Exercisable   Exercise 
   as of   remaining   average   as of   price of 
Ranges of  December 31,   contractual   exercise   December 31,   Options 
exercise price  2018   Term   price   2018   Exercisable 
$      (Years)   $       $ 
                     
0.88-1.48   25,703    1.18    1.08    25,703    1.08 
4.12-5.67   103,000    0.83    5.62    103,000    5.62 
6.32-6.91   45,750    1.47    6.67    38,250    6.74 
7.82   300,000    2.34    7.82    300,000    7.82 
8.67-9.18   95,000    3.48    9.10    40,000    9.18 
9.33-9.8   413,229    4.33    9.53    157,180    9.44 
10.18-10.81   217,500    3.45    10.46    112,500    10.40 
11.43-12.53   810,000    4.78    11.54    33,750    12.27 
12.62-13.5   45,000    3.78    12.91    18,750    12.80 
                          
    2,055,182    3.80    9.86    829,133    8.31
Magic Software [Member]  
Employee Option Plans [Line Items]  
Schedule of employee option activity

  

Number

of options

   Weighted average exercise
price		  

Weighted average remaining contractual term

(in years)

   Aggregate intrinsic value 
Outstanding at January 1, 2018   309,309    4.38    3.97    1,237 
Granted   37,500    -           
Exercised   (104,167)   2.99           
Forfeited   (21,875)   6.89           
                     
Outstanding at December 31, 2018   220,767    3.83    3.81    1,684 
                     
Exercisable at December 31, 2018   190,767    4.43    2.92    1,456 
Schedule of options outstanding under stock option plans separated into ranges of exercise price

Ranges of Exercise price 

Options outstanding

  

 

Weighted average remaining contractual life

   Weighted average exercise
price		  

Options exercisable 

  

Weighted average exercise price

of exercisable

options

 
$      (Years)   $       $ 
0-1   30,000    9.49    -    -    - 
2.01-3   66,000    1.26    2.32    66,000    2.32 
3.01-4   73,517    2.77    4.00    73,517    4.00 
5.01-6   6,250    4.61    6.00    6,250    6.00 
8.01-9   45,000    5.35    8.01    45,000    8.01 
    220,767    3.81    3.83    190,767    4.43 
Employee Benefit Liabilities (Tables)
 12 Months Ended
Dec. 31, 2018
Disclosure of defined benefit plans [abstract]  
Schedule of defined benefit plans

    December 31,  
    2018     2017  
Defined benefit obligation     81,556       87,316  
Fair value of plan assets     (72,672 )     (78,284 )
Net defined benefit liability     8,884       9,032  
Commitments and Contingencies (Tables)
 12 Months Ended
Dec. 31, 2018
Commitments and Contingencies [Abstract]  
Schedule of composition of pledged shares

    December 31, 2018  
    Financial institution credit agreement     Formula's Series A Secured Debentures  
Matrix ordinary shares, par value NIS 1.0 per share     5,263,615       4,128,865  
Magic ordinary shares, par value NIS 0.1 per share     2,117,143       5,825,681  
Sapiens common shares, par value €0.01 per share     1,410,533       1,260,266  
Schedule of future minimum lease commitments
2019   28,262 
2020   20,125 
2021   15,783 
2022   10,064 
2023 and Thereafter   24,778 
    99,012
Equity (Tables)
 12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Schedule of share capital

   December 31, 2018   December 31, 2017 
   Authorized   Issued   Outstanding   Authorized   Issued   Outstanding 
                               
Ordinary shares, NIS 1 par value each   25,000,000    15,318,958    14,750,338    25,000,000    15,307,402    14,738,782 
Taxes on Income (Tables)
 12 Months Ended
Dec. 31, 2018
Taxes on Income [Abstract]  
Schedule of deferred tax liabilities, net

1)Presentation in consolidated statements of financial position:

 

   December 31, 
   2018   2017 
Deferred taxes assets  $14,214   $15,878 
Deferred tax liabilities   (34,800)   (36,605)
   $(20,586)  $(20,727)

 

2)Composition:

 

   December 31, 
   2018   2017 
Net operating losses carried forward  $4,579   $8,081 
Intangibles and fixed assets   (32,895)   (35,834)
Differences in measurement basis (cash basis for tax purposes)   (1,571)   (4,298)
Other   9,301    11,324 
   $(20,586)  $(20,727)
Schedule of pre-tax income
  

Year ended

December 31,

 
   2018   2017   2016 
             
Domestic (Israel)  $81,317   $38,204   $51,552 
Foreign   20,379    14,607    25,711 
                
Total  $101,696   $52,811   $77,263 
Schedule of taxes on income (tax benefit)

   

Year ended

December 31,

  
    2018     2017     2016  
                   
Current taxes   $ 30,302     $ 22,375     $ 20,952  
Deferred taxes     (6,001 )     (9,004 )     211  
                         
Total   $ 24,301     $ 13,371     $ 21,163  
Schedule of theoretical tax expense

   

Year ended

December 31,

  
    2018     2017     2016  
                   
Income before income taxes, as per the statement of operations   $ 101,696     $ 52,811     $ 77,263  
                         
Statutory tax rate in Israel     23 %     24 %     25 %
                         
Tax computed at the statutory tax rate     23,390       12,675       19,316  
                         
Non-deductible expenses (non-taxable income) net and tax-deductible costs not included in the accounting costs     1,393       1,522       978  
Effect of different tax rates     379       843       (1,143 )
Effect of "Approved, Beneficiary or Preferred Enterprise" status     (1,233 )     (252 )     (1,338 )
Group's share of profits of companies accounted for at equity     (86 )     (270 )     (87 )
Deferred taxes on current losses (utilization of carry forward losses) and temporary differences for which a valuation allowance was provided, net     (796 )     4,695       1,442  
Effect of change in tax rates     -       (5,796 )     112  
Taxes in respect of prior years     (485 )     (227 )     1,718  
Uncertain tax positions     2,703       342       (234 )
Other     (964 )     (439 )     399  
                         
Taxes on income   $ 24,301     $ 13,371     $ 21,163  

 
Schedule of total unrecognized tax benefits

Balance as of December 31, 2015     2,492  
         
Increase due to consolidation in a subsidiary     227  
Decrease related to prior years' tax positions     (286 )
Increase related to current year tax positions     847  
         
Balance as of December 31, 2016     3,280  
         
Increase due to consolidation in a subsidiary     66  
Decrease related to prior years' tax positions     (135 )
Increase related to current year tax positions     813  
         
Balance as of December 31, 2017     4,024  
         
Decrease related to prior years' tax positions     (198 )
Increase related to current year tax positions     2,775  
         
Balance as of December 31, 2018     6,601  
Supplementary Financial Statement Information (Tables)
 12 Months Ended
Dec. 31, 2018
Supplementary Financial Statement Information [Abstract]  
Schedule of non-controlling interest in material partially owned subsidiaries

    December 31,  
    2018     2017  
Matrix and its subsidiaries   $ 106,667     $ 104,750  
Sapiens and its subsidiaries     193,832       193,973  
Magic and its subsidiaries     137,158       114,925  
Other     110       72  
    $ 437,767     $ 413,720  

 
Schedule of financial income and expenses
  

Year ended

December 31,

 
   2018   2017   2016 
Financial expenses:               
Financial expenses related to liabilities in respect of business combinations  $1,108   $765   $2,602 
Interest expenses on loans and borrowings   6,891    7,700    6,061 
Financial costs related to Debentures   5,479    2,832    1,959 
Bank charges, negative foreign exchange differences and other financial expenses   2,374    18,573    6,972 
    15,852    29,870    17,594 
Financial income:               
Income from marketable securities and embedded derivative   832    138    865 
Interest income from deposits, positive foreign exchange differences and other financial income   6,730    8,613    5,143 
    7,562    8,751    6,008 
                
Total  $8,290   $(21,119)  $(11,586)
Schedule of property and equipment located

    December 31,  
    2018     2017  
             
Israel   $ 22,401     $ 22,615  
United States     4,033       4,369  
Europe     1,307       1,412  
Japan     282       302  
Other     1,159       1,109  
                 
Total   $ 29,182     $ 29,807  
Schedule of revenues classified by geographic area (based on the location of customers)

   

Year ended

December 31,

  
    2018     2017     2016  
Israel   $ 893,605     $ 846,298     $ 663,341  
International:                        
United States     418,148       322,892       283,297  
Europe     141,316       131,025       115,444  
Africa     13,726       24,370       2,296  
Japan     11,053       15,763       38,310  
Other (mainly Asia pacific)     15,140       14,791       5,933  
Total   $ 1,492,988     $ 1,355,139     $ 1,108,621  
Schedule of computation basic and diluted net earnings per share

   

Year ended

December 31,

  
    2018     2017     2016  
                   
Numerator:                        
Basic earnings per share – net income attributable to equity holders of the Company   $ 32,365     $ 10,352     $ 22,455  
Diluted earnings per share - net income attributable to equity holders of the Company   $ 33,376     $ 10,085     $ 23,207  
Denominator:                        
Basic earnings per share - weighted average shares outstanding     14,740       14,437       14,214  
Effect of dilutive securities     831       295       1,311  
                         
Diluted earnings per share – adjusted weighted average shares outstanding     15,571       14,732       15,525  
                         
Basic net earnings per share     2.20       0.72       1.58  
                         
Diluted net earnings per share     2.14       0.68       1.49  
Operating Segments (Tables)
 12 Months Ended
Dec. 31, 2018
Operating Segments [Abstract]  
Schedule of goodwill in material partially owned subsidiaries

    December 31,  
    2018     2017  
Matrix and its subsidiaries   $ 215,428     $ 200,440  
Sapiens and its subsidiaries     311,489       303,955  
Magic and its subsidiaries     95,006       98,189  
Michpal and its subsidiaries     18,932       14,688  
    $ 640,855     $ 617,272  
Schedule of reporting on operating segments
   Matrix   Sapiens   Magic   Other   Adjustments   Total 
                         
Year ended December 31, 2018:                              
Revenues from external customers   878,188    289,707    282,205    109,041    (66,153)   1,492,988 
Inter-segment revenues   2,869    -    2,170    80    (5,119)   - 
Revenues   881,057    289,707    284,375    109,121    (71,272)   1,492,988 
Unallocated corporate expenses   -    -    -    -    (2,113)   (2,113)
Depreciation and amortization   8,554    26,249    12,562    5,081    (3,712)   48,734 
Operating income   61,264    16,799    31,698    4,210    (4,354)   109,617 
Financial expenses, net                            (8,290)
Group's share of profits of companies accounted for at equity, net                            369 
Taxes on income                            (24,301)
Net income                            77,395 
                               
Year ended December 31, 2017:                              
Revenues from external customers   790,946    269,194    256,207    105,608    (66,816)   1,355,139 
Inter-segment revenues   3,679    -    1,933    200    (5,812)   - 
Revenues   794,625    269,194    258,140    105,808    (72,628)   1,355,139 
Unallocated corporate expenses   -    -    -    -    (3,472)   (3,472)
Depreciation and amortization   6,855    21,969    13,611    4,935    (3,724)   43,646 
Operating income (loss)   54,337    (5,053)   25,956    3,670    (6,104)   72,806 
Financial expenses, net                            (21,119)
Group's share of profits of companies accounted for at equity, net                            1,124 
Taxes on income                            (13,371)
Net income                            39,440 
                               
Year ended December 31, 2016:                              
Revenues from external customers   660,012    216,190    198,096    72,585    (38,262)   1,108,621 
Inter-segment revenues   2,578    -    3,550    -    (6,128)   - 
Revenues   662,590    216,190    201,646    72,585    (44,390)   1,108,621 
Unallocated corporate expenses   -    -    -    -    (2,713)   (2,713)
Depreciation and amortization   6,513    14,227    11,608    3,314    (3,292)   32,370 
Operating income   48,776    20,636    21,087    2,198    (4,197)   88,500 
Financial expenses, net                            (11,586)
Group's share of profits of companies accounted for at equity, net                            349 
Taxes on income                            (21,163)
Net income                            56,100 
General (Details)
Dec. 31, 2018
Dec. 31, 2017
Matrix [Member]    
Disclosure Of Information About Investees [Line Items]    
Percentage of ownership 49.21% 49.50%
Magic [Member]    
Disclosure Of Information About Investees [Line Items]    
Percentage of ownership 45.21% 47.12%
Sapiens [Member]    
Disclosure Of Information About Investees [Line Items]    
Percentage of ownership 48.08% 48.12%
Insync [Member]    
Disclosure Of Information About Investees [Line Items]    
Percentage of ownership 90.09% 90.09%
Michpal [Member]    
Disclosure Of Information About Investees [Line Items]    
Percentage of ownership [1] 100.00% 100.00%
TSG [Member]    
Disclosure Of Information About Investees [Line Items]    
Percentage of ownership [2] 50.00% 50.00%
[1] Michpal's results of operations are consolidated in the Company's results of operations commencing January 1, 2017.
[2] TSG's results of operations are reflected in the Company's results of operations using the equity method of accounting commencing May 9, 2016.
General (Details Textual)
Dec. 31, 2018
$ / shares
Formula's [Member] | NIS [Member]  
General (Textual)  
Ordinary shares, par value $ 1.0
Significant Accounting Policies (Details)
 12 Months Ended
Dec. 31, 2018
Computers, software and peripheral equipment [Member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 33.00%
Computers, software and peripheral equipment [Member] | Bottom of range [member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 20.00%
Computers, software and peripheral equipment [Member] | Top of range [member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 33.00%
Office furniture and equipment [Member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 7.00%
Office furniture and equipment [Member] | Bottom of range [member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 6.00%
Office furniture and equipment [Member] | Top of range [member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 33.00%
Motor vehicles [Member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 15.00%
Buildings [member] | Bottom of range [member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 2.00%
Buildings [member] | Top of range [member]  
Statement Line Items [Line Items]  
Useful life of the assets at annual rates 4.00%
Significant Accounting Policies (Details 1)
 12 Months Ended
Dec. 31, 2018
Customer relationship and backlog [Member] | Bottom of range [Member]  
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]  
Useful life of intangible assets 1 year
Customer relationship and backlog [Member] | Top of range [Member]  
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]  
Useful life of intangible assets 15 years
Acquired technology [Member] | Bottom of range [Member]  
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]  
Useful life of intangible assets 2 years
Acquired technology [Member] | Top of range [Member]  
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]  
Useful life of intangible assets 8 years
Brand names and patents [Member] | Bottom of range [Member]  
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]  
Useful life of intangible assets 5 years
Brand names and patents [Member] | Top of range [Member]  
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]  
Useful life of intangible assets 10 years
Significant Accounting Policies (Details 2) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Current Assets    
Trade receivables $ 441,468 $ 385,778
Prepaid expenses and other accounts receivable 40,397 44,904
Long-term Assets    
Prepaid expenses and other accounts receivable 23,121 16,581
Current Liabilities    
Deferred revenues 59,509 58,905
Other accounts payable 53,969 53,145
Long-term Liabilities    
Other long-term liabilities 8,734 7,244
Equity    
Retained earnings 262,557 239,156
Non-controlling interests 437,767 413,720
The change [Member]    
Current Assets    
Trade receivables 1,783 20
Prepaid expenses and other accounts receivable (1,271) 629
Long-term Assets    
Prepaid expenses and other accounts receivable 1,646  
Current Liabilities    
Deferred revenues (4,553) (1,397)
Other accounts payable 262  
Long-term Liabilities    
Other long-term liabilities 106 231
Equity    
Retained earnings 3,019 874
Non-controlling interests 3,324 941
According to IFRS 15 [Member]    
Current Assets    
Trade receivables   385,798
Prepaid expenses and other accounts receivable   45,533
Current Liabilities    
Deferred revenues   57,508
Long-term Liabilities    
Other long-term liabilities   7,475
Equity    
Retained earnings   240,030
Non-controlling interests   $ 414,661
According to the previous accounting policy [Member]    
Current Assets    
Trade receivables 439,685  
Prepaid expenses and other accounts receivable 41,668  
Long-term Assets    
Prepaid expenses and other accounts receivable 21,475  
Current Liabilities    
Deferred revenues 64,062  
Other accounts payable 53,707  
Long-term Liabilities    
Other long-term liabilities 8,628  
Equity    
Retained earnings 259,538  
Non-controlling interests $ 434,443  
Significant Accounting Policies (Details 3) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement Line Items [Line Items]      
Revenues $ 1,492,988 $ 1,355,139 $ 1,108,621
Selling, marketing, general and administrative expenses 182,472 184,164 147,953
Taxes on income 24,301 13,371 21,163
Net income attributable to equity holders of the Company 32,365 10,352 22,445
Net income attributable to non-controlling interests 45,030 $ 29,088 $ 33,655
According to the previous accounting policy [Member]      
Statement Line Items [Line Items]      
Revenues 1,488,378    
Selling, marketing, general and administrative expenses 182,527    
Taxes on income 24,164    
Net income attributable to equity holders of the Company 30,220    
Net income attributable to non-controlling interests 42,647    
The change [member]      
Statement Line Items [Line Items]      
Revenues 4,610    
Selling, marketing, general and administrative expenses (55)    
Taxes on income 137    
Net income attributable to equity holders of the Company 2,145    
Net income attributable to non-controlling interests $ 2,383    
Significant Accounting Policies (Details 4) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Significant Accounting Policies [Abstract]    
Trade receivables $ 362,853 $ 322,325
Unbilled receivables 78,615 6,453
Long-term trade receivables 3,932 950
Advances and deferred revenues (59,509) (58,905)
Long-term deferred revenues $ (4,906) $ (9,340)
Significant Accounting Policies (Details Textual) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure Of Information About Investees [Line Items]      
Bad debt expenses $ 1,723 $ 1,373 $ 652
Total expense of employee benefit liabilities $ 30,941 $ 35,036 $ 29,557
Percentage of decline in fair value of financial assets 20.00%    
Revenues from training services, terms 3 months    
Adjustment to the opening retained earnings $ 874    
Magic [Member]      
Disclosure Of Information About Investees [Line Items]      
Description of voting rights The Company, as of December 31, 2018 there were just four financial institutions holding more than 5% of Magic's voting power (each representing 7.4%, 6.0%, 5.9% and 5.6% of votes respectively). There is no evidence that any of the shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Magic's general meetings were attended by shareholders representing not more than 70% of total voting rights (including the Company's share power and bearing in mind that the Company presently holds approximately 45.21% of total voting power). This means that the level of activity of Magic's other shareholders is relatively moderate or low. As of December 31, 2018, the attendance from shareholders would have to be higher than 90.4% in order to deprive the Company of an absolute majority of votes at the general meeting.    
Description of governing bodies Magic's board of directors is composed of 5 members, 3 of whom are independent directors. In recent years, the Company has consistently reappointed mostly the same members of the board of directors.    
Sapiens [Member]      
Disclosure Of Information About Investees [Line Items]      
Description of voting rights The Company, just two financial institution held more than 5% of the voting rights at the general meeting (representing 5.1%, and 6.5%, of the votes, respectively). There is no evidence that any shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Sapiens’ general meetings were attended by shareholders representing in total between 70% and 80% of the total voting power (including the Company’s share power and bearing in mind that the Company presently holds approximately 48.08% of total voting rights). This means that the level of activity of Sapiens’ other shareholders is relatively moderate or low. As of December 31, 2018, the attendance from shareholders would have to be higher than 96.2% in order to deprive the Company of an absolute majority of votes at the general meeting.    
Description of governing bodies Sapiens' board of directors is composed of 6 members, 4 of whom are independent directors. For the last 8 years, the Company has consistently reappointed the same members of the board of directors.    
Matrix [Member]      
Disclosure Of Information About Investees [Line Items]      
Description of voting rights The Company, as of December 31, 2018 there were just four financial institutions holding more than 5% of Magic's voting power (each representing 7.4%, 6.0%, 5.9% and 5.6% of votes respectively). There is no evidence that any of the shareholders have or had granted to any other shareholder a voting proxy at the general meeting. Over the last five years from 2014 to 2018, Magic's general meetings were attended by shareholders representing not more than 70% of total voting rights (including the Company's share power and bearing in mind that the Company presently holds approximately 45.21% of total voting power). This means that the level of activity of Magic's other shareholders is relatively moderate or low. As of December 31, 2018, the attendance from shareholders would have to be higher than 90.4% in order to deprive the Company of an absolute majority of votes at the general meeting.    
Description of governing bodies Matrix's board of directors is composed of 5 members, 3 of whom are independent directors. For the last 5 years (i.e., 2014-2018), the Company has consistently reappointed mostly the same members of the board of directors.    
Computer software [member]      
Disclosure Of Information About Investees [Line Items]      
Useful life of intangible assets, years 5-7 years    
New Standards, Interpretations and Amendments Adopted By The Group (Details)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
USD ($)
Disclosure of expected impact of initial application of new standards or interpretations [abstract]  
Increase in total assets $ 108,800
Increase in total liabilities 111,100
Decrease in shareholders' equity $ 3,000
Business Combination, Significant Transaction and Sale of Business (Details) - Tsg It Advanced Systems Ltd [Member]
$ in Thousands
May 09, 2016
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets $ 1,824
Intangible assets 13,693
Backlog 2,221
Deferred tax liability 3,948
Dividend preference derivative 2,140
Goodwill 9,836
Total assets acquired net of acquired cash $ 25,766
Business Combination, Significant Transaction and Sale of Business (Details 1) - Michpal Micro Computers (1983) Ltd. [Member]
$ in Thousands
Jan. 03, 2017
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets $ 139
Intangible assets 11,329
Deferred tax liability 2,606
Goodwill 13,244
Total assets acquired net of acquired cash $ 22,106
Business Combination, Significant Transaction and Sale of Business (Details 2) - Maximum Processing Inc. [Member]
$ in Thousands
May 26, 2016
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets $ (240)
Intangible assets 1,859
Goodwill 2,659
Net assets acquired $ 4,278
Business Combination, Significant Transaction and Sale of Business (Details 3) - Four Sight Business Intelligence Inc [Member]
$ in Thousands
Jun. 07, 2016
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets $ (145)
Intangible assets 279
Deferred taxes (112)
Goodwill 308
Net assets acquired $ 330
Business Combination, Significant Transaction and Sale of Business (Details 4) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Feb. 28, 2017
Disclosure of detailed information about business combination [line items]      
Current liabilities $ 5,602 $ 6,811  
Stoneriver, Inc [Member]      
Disclosure of detailed information about business combination [line items]      
Current assets     $ 16,785
Property and equipment     1,088
Intangible assets     38,145
Goodwill     77,014
Other long-term assets     78
Total assets acquired     133,110
Current liabilities     10,595
Deferred revenues     5,742
Deferred tax liabilities     15,071
Other long-term liabilities     351
Total liabilities acquired     31,759
Total purchase price     $ 101,351
Business Combination, Significant Transaction and Sale of Business (Details 5) - Stoneriver, Inc [Member]
$ in Thousands
Feb. 28, 2017
USD ($)
Disclosure of detailed information about business combination [line items]  
Developed technology $ 34,039
Customer relationships 3,333
Backlog 773
Total intangible assets $ 38,145
Business Combination, Significant Transaction and Sale of Business (Details 6) - Knowledge Price [Member]
$ in Thousands
Dec. 31, 2017
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets $ 780
Intangible assets 2,417
Deferred taxes (363)
Goodwill 3,195
Net assets acquired $ 6,029
Business Combination, Significant Transaction and Sale of Business (Details 7) - Adaptik Corporation [Member]
$ in Thousands
Mar. 07, 2018
USD ($)
Disclosure of detailed information about business combination [line items]  
Net liabilities excluding cash acquired $ (2,817)
Intangible assets 12,936
Deferred taxes (3,528)
Goodwill 11,468
Total assets acquired, net of acquired cash $ 18,059
Business Combination, Significant Transaction and Sale of Business (Details 8) - Comblack It Ltd [Member] - USD ($)
$ in Thousands
Dec. 31, 2018
Apr. 14, 2015
Disclosure of detailed information about business combination [line items]    
Net assets, excluding cash acquired   $ (405)
Non-controlling interests $ 5,234 (989)
Intangible assets   1,249
Goodwill   1,966
Total assets acquired net of acquired cash   $ 1,821
Business Combination, Significant Transaction and Sale of Business (Details 9) - Infinigy Solutions Llc [Member] - USD ($)
$ in Thousands
Dec. 31, 2018
Jun. 30, 2015
Disclosure of detailed information about business combination [line items]    
Net assets, excluding cash acquired   $ 1,182
Non-controlling interests $ 14,408 (3,590)
Intangible assets   3,675
Goodwill   5,260
Total assets acquired net of acquired cash   $ 6,527
Business Combination, Significant Transaction and Sale of Business (Details 10) - Roshtov Software Industries Ltd [Member]
$ in Thousands
Jul. 11, 2016
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets, excluding cash acquired $ 15
Non-controlling interests (14,012)
Intangible assets 22,439
Deferred tax liabilities 5,610
Goodwill 17,718
Total assets acquired net of acquired cash $ 20,550
Business Combination, Significant Transaction and Sale of Business (Details 11) - Acquisition of Shavit Software (2009) Ltd. [Member]
$ in Thousands
Nov. 01, 2016
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets, excluding cash acquired $ 533
Intangible assets 3,489
Deferred tax liabilities 871
Goodwill 3,685
Total assets acquired net of acquired cash $ 6,836
Business Combination, Significant Transaction and Sale of Business (Details 12) - Other acquisitions by Magic [Member] - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure of detailed information about business combination [line items]      
Net assets, excluding cash acquired $ 306 $ (1,822) $ 2,174
Non-controlling interests   (1,209)
Intangible assets 23 1,149 2,370
Deferred tax liabilities   493
Goodwill 259 1,723 6,042
Total assets acquired net of acquired cash $ 588 $ 1,050 $ 8,884
Business Combination, Significant Transaction and Sale of Business (Details 13) - Programa Logistics Systems Ltd [Member]
$ in Thousands
Mar. 30, 2016
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets $ 267
Redeemable non-controlling interests (2,471)
Intangible assets 1,216
Goodwill 3,229
Total assets acquired $ 2,241
Business Combination, Significant Transaction and Sale of Business (Details 14) - Estimated fair values of assets acquired and liabilities [Member]
$ in Thousands
Oct. 04, 2016
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets $ 391
Non-controlling interests (3,968)
Intangible assets 2,138
Deferred tax liabilities (855)
Goodwill 9,044
Total assets acquired $ 6,750
Business Combination, Significant Transaction and Sale of Business (Details 15) - Second To None Solutions Inc [Member] - USD ($)
$ in Thousands
Dec. 31, 2018
Nov. 08, 2016
Disclosure of detailed information about business combination [line items]    
Intangible assets   $ 909
Non-controlling interests $ 1,880 (2,184)
Deferred tax liabilities   (314)
Goodwill   2,387
Total assets acquired   $ 801
Business Combination, Significant Transaction and Sale of Business (Details 16) - Aviv Management Engineering Systems Ltd [Member] - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 27, 2016
Disclosure of detailed information about business combination [line items]    
Net assets   $ (1,338)
Non-controlling interests $ 2,034 (1,486)
Intangible assets   2,051
Deferred tax liabilities   (472)
Goodwill   6,681
Total assets acquired   $ 5,436
Business Combination, Significant Transaction and Sale of Business (Details 17) - Alius Group Inc [Member]
$ in Thousands
Jan. 31, 2018
USD ($)
Disclosure of detailed information about business combination [line items]  
Net assets $ (4)
Intangible assets 2,986
Deferred tax (806)
Goodwill 14,190
Total assets acquired net of acquired cash $ 16,366
Business Combination, Significant Transaction and Sale of Business (Details 18) - Pleasant Valley Business Solutions, LLC [Member]
$ in Thousands
Mar. 31, 2018
USD ($)
Statement Line Items [Line Items]  
Net assets $ (834)
Intangible assets 1,867
Deferred taxes (507)
Goodwill 7,791
Total assets acquired net of acquired cash $ 8,317
Business Combination, Significant Transaction and Sale of Business (Details 19) - Cambium (2014) Ltd. [Member]
$ in Thousands
Jul. 31, 2018
USD ($)
 [1]
Statement Line Items [Line Items]  
Net assets $ (8)
Intangible assets 282
Deferred taxes (65)
Non-controlling interests (239)
Goodwill 751
Total assets acquired net of acquired cash $ 721
[1] The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2018 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. Matrix management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. Magic expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period.
Business Combination, Significant Transaction and Sale of Business (Details 20) - Integrity Software 2011 Ltd. [Member]
$ in Thousands
Jul. 31, 2018
USD ($)
Statement Line Items [Line Items]  
Net assets $ (1,131) [1]
Intangible assets 1,316 [1]
Deferred taxes (303)
Non-controlling interests (318) [1]
Goodwill 1,990 [1]
Total assets acquired net of acquired cash $ 1,554 [1]
[1] The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2018 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. Matrix management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. Magic expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period.
Business Combination, Significant Transaction and Sale of Business (Details 21) - Noah Technologies Ltd [Member]
$ in Thousands
Nov. 30, 2018
USD ($)
 [1]
Statement Line Items [Line Items]  
Net assets $ (473)
Intangible assets 580
Deferred tax (133)
Goodwill 1,485
Total assets acquired net of acquired cash $ 1,459
[1] The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2018 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. Matrix management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. Magic expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period.
Business Combination, Significant Transaction and Sale of Business (Details 22) - Michpal [Member]
$ in Thousands
Nov. 30, 2018
USD ($)
Statement Line Items [Line Items]  
Net assets $ 439
Non-controlling interests (269)
Intangible assets 739
Deferred tax liability (170)
Goodwill 5,434
Total assets acquired net of acquired cash $ 6,173
Business Combination, Significant Transaction and Sale of Business (Details Textual)
₪ in Thousands, $ in Thousands
Dec. 31, 2018
USD ($)
shares
Dec. 31, 2017
shares
Jan. 03, 2017
USD ($)
Jan. 03, 2017
ILS (₪)
May 09, 2016
USD ($)
Business Combination, Significant Transaction and Sale of Business (Textual)          
Ordinary shares issued | shares 15,318,958 15,307,402      
Financial liability $ 8,191        
Michpal Micro Computers (1983) Ltd. [Member]          
Business Combination, Significant Transaction and Sale of Business (Textual)          
Total assets acquired net of acquired cash     $ 22,106    
Michpal Micro Computers (1983) Ltd. [Member] | NIS [Member]          
Business Combination, Significant Transaction and Sale of Business (Textual)          
Total assets acquired net of acquired cash | ₪       ₪ 85,000  
TSG IT Advanced Systems Ltd [Member]          
Business Combination, Significant Transaction and Sale of Business (Textual)          
Total purchase price         $ 51,532
Percentage of assets acquired         50.00%
Total assets acquired net of acquired cash         $ 25,766
Business Combination, Significant Transaction and Sale of Business (Details Textual 1) - USD ($)
$ in Thousands
Jun. 07, 2016
May 26, 2016
Acquisition of 4Sight Business Intelligence Inc [Member]    
Business Combination, Significant Transaction and Sale of Business (Textual)    
Total assets acquired net of acquired cash $ 330  
Percentage of subsidiary outstanding shares 100.00%  
Estimated fair value of contingent payment $ 330  
Revenue and profitability targets over three years (2016-2018) $ 2,200  
Acquisition of Maximum Processing Inc. [Member]    
Business Combination, Significant Transaction and Sale of Business (Textual)    
Total assets acquired net of acquired cash   $ 4,278
Deposited at closing in escrow   1,490
Revenue and profitability targets over three years (2016-2018)   $ 2,500
Business Combination, Significant Transaction and Sale of Business (Details Textual 2) - USD ($)
$ in Thousands
 1 Months Ended 12 Months Ended
May 07, 2018
Oct. 31, 2016
Jun. 30, 2015
Apr. 14, 2015
Dec. 31, 2018
Dec. 27, 2017
Feb. 28, 2017
Jul. 31, 2016
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Mar. 07, 2018
Nov. 01, 2016
Jul. 11, 2016
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Revenue                 $ 1,492,988 $ 1,355,139 $ 1,108,621        
Acquisition of in Shavit Software (2009) Ltd [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash                           $ 6,836  
Estimated fair value of contingent payment   $ 4,699                          
Percentage of ownership   100.00%                          
Acquisition of in Shavit Software (2009) Ltd [Member] | Software professional and outsourced management services [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash   $ 6,836                          
Acquisition of StoneRiver, Inc [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash             $ 101,351                
Revenue             67,805                
General and administrative expense             $ 1,348                
Acquisition of Comblack IT Ltd [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash       $ 1,821                      
Percentage of assets acquired       70.00%                      
Estimated fair value of contingent payment       $ 1,523 $ 927             $ 298      
Redeemable non-controlling interests       $ (989) 5,234       5,234            
Percentage of remaining assets acquired       30.00%                      
Acquisition of Infinigy Solutions LLC [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash     $ 6,527                        
Percentage of assets acquired     70.00%                        
Estimated fair value of contingent payment     $ 5,600               927        
Redeemable non-controlling interests     $ (3,590)   14,408       14,408            
Percentage of remaining assets acquired     30.00%                        
Operational targets               $ 534 14,408 2,198          
Acquisition Of Knowledgeprice [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash           $ 4,068                  
Estimated fair value of contingent payment           1,961                  
Fair value of total consideration           $ 6,029                  
Description of business combination           The seller has performance based payments relating to achievements of revenue and profitability targets over three years (2018-2020) and retention payment of up to $1,116 as of December 31, 2017, that are subject to continued employment, and therefore not part of the purchase price.                  
Acquisition Of Knowledgeprice [Member] | January 2018 [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash           $ 310                  
Acquisition Of Knowledgeprice [Member] | December 2017 [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash           $ 3,758                  
Other acquisitions by Magic in 2015, 2016 and 2017 [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash         588       588 1,050 8,884        
Estimated fair value of contingent payment                   1,050 8,884        
Deferred payment                     493        
Redeemable non-controlling interests                 $ (1,209)        
Acquisition of Roshtov Software Industries Ltd [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash                             $ 20,550
Percentage of assets acquired                             60.00%
Deferred payment                             $ 5,610
Redeemable non-controlling interests                             $ (14,012)
Percentage of remaining assets acquired                             40.00%
Adaptik Corporation [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Total assets acquired net of acquired cash                         $ 18,059    
Total cash consideration $ 18,179                            
Paid amount 17,979                            
Revenue targets over three years (2018-2020) 3,700                            
Deposited at closing in escrow 339                            
Adaptik Corporation [Member] | March 2022 [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Paid amount $ 200                            
Magic [Member] | Acquisition of in Shavit Software (2009) Ltd [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Estimated fair value of contingent payment   $ 2,137                          
Parties [Member] | Acquisition of in Shavit Software (2009) Ltd [Member]                              
Business Combination, Significant Transaction and Sale of Business (Textual)                              
Deferred payment         $ 2,535       $ 2,535 $ 924          
Business Combination, Significant Transaction and Sale of Business (Details Textual 3)
€ in Thousands, ₪ in Thousands, $ in Thousands
 1 Months Ended
Apr. 01, 2015
USD ($)
Nov. 30, 2018
USD ($)
Jul. 31, 2018
USD ($)
Mar. 31, 2018
USD ($)
Jan. 31, 2018
USD ($)
Dec. 31, 2018
USD ($)
Jul. 31, 2018
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Dec. 27, 2016
USD ($)
Dec. 27, 2016
EUR (€)
Nov. 08, 2016
USD ($)
Oct. 04, 2016
USD ($)
Mar. 30, 2016
USD ($)
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Allocated to goodwill           $ 640,855   $ 617,272 $ 640,184          
Acquisition of Aviv Management Engineering Systems Ltd. [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired                   85.00% 85.00%      
Total assets acquired net of acquired cash                   $ 5,436        
Percentage of remaining assets acquired                   15.00% 15.00%      
Allocated to deferred taxes                   $ 472        
Redeemable non-controlling interests           2,034       (1,486)        
Acquisition of Network Infrastructure Technologies Inc [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired                         60.00%  
Percentage of remaining assets acquired                         40.00%  
Allocated to deferred taxes                 (31,029)          
Total consideration                         $ 6,750  
Redeemable non-controlling interests                         $ 3,968  
Acquisition of Programa Logistics Systems Ltd [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired                           60.00%
Total assets acquired net of acquired cash                           $ 2,241
Percentage of remaining assets acquired                           40.00%
Total consideration                           $ 1,937
Eligible for future consideration                           304
Redeemable non-controlling interests                           (2,471)
Acquisition of Programa Logistics Systems Ltd [Member] | NIS [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total consideration                           7,295
Eligible for future consideration                           $ 1,144
Acquisition of Tiltan Systems Engineering Ltd [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Consequently recognized loss $ 142                          
Acquisition of Tiltan Systems Engineering Ltd [Member] | NIS [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Consequently recognized loss $ 565                          
Acquisition of Hydus Inc [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Eligible for future consideration                 $ 1,739          
Acquisition of Second to none solutions Inc. [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired                       55.00%    
Total assets acquired net of acquired cash                       $ 801    
Percentage of remaining assets acquired                       30.00%    
Allocated to deferred taxes                       $ 314    
Total consideration                       287    
Eligible for future consideration                       514    
Redeemable non-controlling interests           1,880           $ (2,184)    
Alius Group Inc [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash         $ 16,366                  
Pleasant Valley Business Solutions, LLC [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash       $ 8,317                    
Integrity Software 2011 Ltd. [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash [1]     $ 1,554                      
Redeemable non-controlling interests [1]     $ (318)                      
Noah Technologies Ltd. [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash [1]   $ 1,459                        
Michpal [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash   6,173                        
Redeemable non-controlling interests   $ (269)                        
Description of business combination   Michpal acquired 80% of the share capital of Effective Solutions Ltd., an Israeli based service provider of consulting services in the fields of operational cost savings and procurement, as well as salary control and monitoring. The aggregate purchase price for the 80% interest was NIS 24,000 (approximately $6,516) in cash. In addition, Michpal and the seller hold mutual call and put options, respectively, for the remaining 20% interest in Effective Solutions. Due to the put option, the Group recorded a financial liability in an amount of NIS 2,841 (approximately $758) as of the acquisition date. As of December 31, 2018, the financial liability due to the put option granted to non-controlling interests in Effective Solutions remained at value of $758.                        
Matrix [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash         $ 2,564                  
Allocated to goodwill           215,428   $ 200,440            
Matrix [Member] | Acquisition of Aviv Management Engineering Systems Ltd. [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total consideration                   5,213        
Eligible for future consideration                   313        
Redeemable non-controlling interests                   $ (1,486)        
Matrix [Member] | Acquisition of Aviv Management Engineering Systems Ltd. [Member] | NIS [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total consideration | €                     € 19,699      
Eligible for future consideration | €                     1,200      
Redeemable non-controlling interests | €                     € 5,714      
Matrix [Member] | Acquisition of Network Infrastructure Technologies Inc [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Redeemable non-controlling interests           2,588                
Matrix [Member] | Acquisition of Programa Logistics Systems Ltd [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Redeemable non-controlling interests           2,588                
Matrix [Member] | Alius Group Inc [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired         5010.00%                  
Total assets acquired net of acquired cash         $ 3,268                  
Percentage of remaining assets acquired         4990.00%                  
Assets acquired remaining balance         $ 3,000                  
Allocated to deferred taxes         $ 826                  
Total consideration   $ 13,802                        
Description of business combination         The terms of the acquisition, Matrix and the seller held mutual options to purchase and sell (respectively) the remaining shares within two years following the closing date under the agreement.                  
Matrix [Member] | Pleasant Valley Business Solutions, LLC [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired       10000.00%                    
Total assets acquired net of acquired cash       $ 5,489                    
Allocated to goodwill       2,828                    
Total consideration       7,590                    
Operational targets       $ 6,500                    
Matrix [Member] | Cambium (2014) Ltd. [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired     5500.00%       5500.00%              
Total assets acquired net of acquired cash | ₪             ₪ 721              
Percentage of remaining assets acquired     1500.00%       1500.00%              
Total consideration     $ 830                      
Redeemable non-controlling interests     $ 239                      
Matrix [Member] | Cambium (2014) Ltd. [Member] | Israel [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash | ₪             ₪ 2,625              
Total consideration | ₪             3,022              
Redeemable non-controlling interests | ₪             ₪ 870              
Matrix [Member] | Integrity Software 2011 Ltd. [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired     6500.00%       6500.00%              
Total assets acquired net of acquired cash     $ 1,330                      
Assets acquired remaining balance     1,091                      
Total consideration     2,454                      
Eligible for future consideration     $ 823                      
Redeemable non-controlling interests           333                
Description of business combination     Estimated on the date of the transaction at NIS 823 (approximately $224), relating to achievement of certain profitability targets for the years 2019-2021. Matrix and the seller hold mutual options to purchase and sell (respectively) 10% of the remaining share capital of Integrity.                      
Matrix [Member] | Integrity Software 2011 Ltd. [Member] | Israel [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash     $ 4,881                      
Assets acquired remaining balance     4,000                      
Total consideration     9,000                      
Eligible for future consideration     $ 224                      
Matrix [Member] | Noah Technologies Ltd. [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Percentage of assets acquired   10000.00%                        
Total assets acquired net of acquired cash   $ 1,127                        
Assets acquired remaining balance   1,084                        
Allocated to goodwill   (170)                        
Total consideration   1,626                        
Eligible for future consideration   $ 330                        
Description of business combination   estimated on the date of the transaction at NIS 1,216 (approximately $330), relating to achievement of certain profitability targets for the years 2019-2021.                        
Matrix [Member] | Noah Technologies Ltd. [Member] | Israel [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Total assets acquired net of acquired cash   $ 4,161                        
Assets acquired remaining balance   4,000                        
Total consideration   6,000                        
Eligible for future consideration   $ 1,216                        
Acquisition of Network Infrastructure Technologies Inc [Member]                            
Business Combination, Significant Transaction and Sale of Business (Textual)                            
Redeemable non-controlling interests           $ 4,799                
[1] The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2018 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. Matrix management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. Magic expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period.
Marketable Securities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Short-term:    
Fair value through profit or loss [1] $ 1,156 $ 1,209
Fair value through other comprehensive income 8,757 12,929
Total short-term marketable securities 9,913 14,138
Total marketable securities $ 9,913 $ 14,138
[1] The Group recognized gains (losses) from marketable securities classified as held for trading (until December 31, 2017) or debt instruments measured at fair value through profit or loss (commencing from January 1, 2018) in amounts of $136, ($149) and $53 during the years ended December 31, 2016, 2017 and 2018, respectively.
Marketable Securities (Details 1) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Available-for-sale:    
Amortized cost $ 8,851  
Unrealized losses (94)  
Unrealized Gains  
Market value 8,757  
Commercial bonds [Member]    
Available-for-sale:    
Amortized cost 8,851 $ 12,987
Unrealized losses (94) (58)
Unrealized Gains
Market value $ 8,757 $ 12,929
Marketable Securities (Details 2)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
USD ($)
Amortized cost  
Amortized cost due within one year $ 3,326
Amortized cost due after one year through three years 5,525
Amortized cost 8,851
Unrealized gains  
Marketable securities unrealized gain due within one year
Marketable securities unrealized gain due after one year through three years
Unrealized Gains
Unrealized Losses  
Marketable securities unrealized gain due within one year (21)
Marketable securities unrealized losses due after one year through three years (73)
Unrealized losses (94)
Market Value  
Marketable securities market value due within one year 3,305
Marketable securities market value due after one year through three years 5,452
Market value $ 8,757
Marketable Securities (Details 3) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Marketable Securities [Abstract]      
Other comprehensive income from available-for-sale securities $ 261    
Unrealized gain from available-for-sale securities (37) $ 144 $ 30
Realized gain reclassified into profit or loss   (94) $ 16
Other comprehensive income from available-for-sale securities $ 224 $ 261  
Marketable Securities (Details Textual) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Marketable Securities [Abstract]      
Loss (gain) from sale and increase in value of marketable securities classified as trading $ (53) $ 149 $ (136)
Proceeds from sale and maturity of available-for-sale marketable securities 4,000 39,594 16,541
Financial income (expenses) $ 0 $ 94 $ (16)
Disclosure - Prepaid Expenses and Other Accounts Receivable (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Other Accounts Receivable and Prepaid Expenses [Abstract]    
Government departments $ 12,318 $ 16,494
Employees 426 619
Prepaid expenses and advances to suppliers 25,161 26,597
Restricted deposits 408 11
Related Parties 197 273
Receivables in respect of an embedded derivative transaction 354
Other 1,533 910
Total $ 40,397 $ 44,904
Fair Value Measurement (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Assets:    
Marketable debt securities designated at fair value through profit or loss (Note 5): [1] $ 1,156 $ 1,209
Marketable debt securities measured at fair value through other comprehensive income (Note 5): 8,757 12,929
Foreign currency derivative contracts 354 2,400
Dividend preference derivative in TSG [2] 2,733  
Total financial assets 1,664,161 1,563,637
Liabilities:    
Put options of non-controlling interests [3] 56,599 52,876
Contingent consideration [3] 7,047 6,345 [4]
Total financial liabilities 63,646 59,221 [4]
Fair value measurements, Level 1 [Member]    
Assets:    
Marketable debt securities designated at fair value through profit or loss (Note 5):
Marketable debt securities measured at fair value through other comprehensive income (Note 5):
Foreign currency derivative contracts
Dividend preference derivative in TSG [2]
Total financial assets
Liabilities:    
Put options of non-controlling interests [3]
Contingent consideration [3]
Total financial liabilities
Fair value measurements, Level 2 [Member]    
Assets:    
Marketable debt securities designated at fair value through profit or loss (Note 5): 1,156 1,209
Marketable debt securities measured at fair value through other comprehensive income (Note 5): 8,757 12,929
Foreign currency derivative contracts  
Dividend preference derivative in TSG [2]
Total financial assets 9,913 14,138
Liabilities:    
Put options of non-controlling interests [3]
Contingent consideration [3]
Total financial liabilities
Fair value measurements, Level 3 [Member]    
Assets:    
Marketable debt securities designated at fair value through profit or loss (Note 5):
Marketable debt securities measured at fair value through other comprehensive income (Note 5):
Foreign currency derivative contracts 354  
Dividend preference derivative in TSG [2] 2,733 2,400
Total financial assets 3,087 2,400
Liabilities:    
Put options of non-controlling interests [3] 56,599 52,876
Contingent consideration [3] 7,047 6,345 [4]
Total financial liabilities $ 63,646 $ 59,221 [4]
[1] The Group recognized gains (losses) from marketable securities classified as held for trading (until December 31, 2017) or debt instruments measured at fair value through profit or loss (commencing from January 1, 2018) in amounts of $136, ($149) and $53 during the years ended December 31, 2016, 2017 and 2018, respectively.
[2] The fair value of dividend preference derivative in TSG was estimated using the Monte-Carlo simulation technique.
[3] The fair value of put options of non-controlling interests and contingent consideration was determined based on the present value of the future expected cash flow.
[4] Adjustment to comparative data
Investments in Companies Accounted for at Equity Method (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Investments in Companies Accounted for at Equity Method [Abstract]      
Affiliated company $ 27 $ 55  
Joint venture - TSG 25,683 25,260  
Total $ 25,710 $ 25,315 $ 24,022
Investments in Companies Accounted for at Equity Method (Details 1) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Investments in Companies Accounted for at Equity Method [Abstract]    
Shares $ 18,014 $ 17,591
Capital notes 7,669 7,669
Total 25,683 25,260
Dividend preference derivative in TSG [1] 2,733 2,400
Goodwill $ 9,836 $ 9,836
[1] Dividend preference derivative in TSG is included in Group's long term prepaid expenses and other accounts receivable and is accounted for at fair value through to profit or loss.
Investments in Companies Accounted for at Equity Method (Details 2) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Investments in Companies Accounted for at Equity Method [Abstract]      
Beginning balance $ 25,315 $ 24,022  
Acquisition of shares    
Investment in capital notes     16,004
Company's share of profit 365 1,134 7,669
Company's share of other comprehensive income 58 104 349
Ending balance $ 25,710 $ 25,315 $ 24,022
Investments in Companies Accounted for at Equity Method (Details 3) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Disclosure of detailed information about investment property [line items]        
Current assets $ 781,033 $ 694,801    
Noncurrent assets 37,335 32,459    
Current liabilities 525,713 432,947    
Noncurrent liabilities 333,051 357,768    
Equity 805,397 772,922 $ 723,842 $ 705,279
Goodwill 640,855 617,272 640,184  
Company's carrying amount of the investment in TSG 25,710 25,315 $ 24,022  
TSG [Member]        
Disclosure of detailed information about investment property [line items]        
Current assets 39,101 34,137    
Noncurrent assets [1] 1,498 1,746    
Current liabilities (22,152) (20,311)    
Noncurrent liabilities (3,750) (4,426)    
Equity $ 14,697 $ 11,146    
Company's share in TSG 50.00% 50.00%    
Working capital $ 7,349 $ 5,573    
Excess cost of intangible assets net of deferred tax 8,498 9,851    
Goodwill 9,836 9,836    
Company's carrying amount of the investment in TSG $ 25,683 $ 24,022    
[1] Not including balance of goodwill in an amount of $19,006 as of December 31, 2017 and 2018.
Investments in Companies Accounted for at Equity Method (Details 4) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure of detailed information about investment property [line items]      
Revenues $ 1,492,988 $ 1,355,139 $ 1,108,621
Net income 77,395 39,440 56,100
Other comprehensive income (29,987) 41,645 (982)
Total comprehensive income 47,408 81,085 55,118
Company's share of other comprehensive income 58 104  
Company's share of profit 369 1,124 349
TSG [Member]      
Disclosure of detailed information about investment property [line items]      
Revenues 66,154 [1] 66,816 38,648
Net income 3,437 [1] 4,938 2,744
Other comprehensive income 116 [1] 208
Total comprehensive income $ 3,553 [1] $ 5,146 $ 2,744
Company's share in TSG 50.00% 50.00% 5000.00%
Company's share of total comprehensive income before amortization of excess cost of intangible assets net of tax $ 1,776 [1] $ 2,573 $ 1,372
Amortization of excess cost of intangible assets net of tax (1,353) [1] (1,335) (1,023)
Company's share of total comprehensive income 423 [1] 1,238 349
Company's share of other comprehensive income 58 [1] 104
Company's share of profit 365 [1] 1,134 349
Operating results total $ 423 $ 1,238 $ 349
[1] From May 1, 2016.
Investments in Companies Accounted for at Equity Method (Details Textual) - TSG [Member] - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Disclosure of detailed information about investment property [line items]    
Percentage of share holds by group 50.00%  
Goodwill $ 19,006 $ 19,006
Property, Plants and Equipment, Net (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure of detailed information about property, plant and equipment [line items]      
Cost   $ 106,460 $ 113,561
Accumulated depreciation   76,653 $ 84,379
Property, plant and equipment $ 29,182 29,807  
Leasehold improvements [Member]      
Disclosure of detailed information about property, plant and equipment [line items]      
Cost 23,975 22,080  
Accumulated depreciation 12,996 11,343  
Computers, software, furniture and equipment [Member]      
Disclosure of detailed information about property, plant and equipment [line items]      
Cost 86,122 80,888  
Accumulated depreciation 70,401 64,604  
Buildings [Member]      
Disclosure of detailed information about property, plant and equipment [line items]      
Cost 1,833 1,833  
Accumulated depreciation 217 70  
Motor vehicles [Member]      
Disclosure of detailed information about property, plant and equipment [line items]      
Cost 1,631 1,659  
Accumulated depreciation $ 765 $ 636  
Property, Plants and Equipment, Net (Details Textual) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Property, plants and equipment, net (Textual)      
Depreciation expenses $ 7,880 $ 9,598 $ 7,880
Intangible Assets, Net (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Intangible Assets [Line Items]    
Original amounts $ 432,642 $ 417,373
Accumulated amortization 282,596 253,390
INTANGIBLE ASSETS, NET 150,046 163,983
Capitalized Software costs [Member]    
Intangible Assets [Line Items]    
Original amounts 197,685 196,523
Accumulated amortization 148,845 142,019
Customer relationship [Member]    
Intangible Assets [Line Items]    
Original amounts 138,480 133,220
Accumulated amortization 78,470 65,705
Acquired technology [Member]    
Intangible Assets [Line Items]    
Original amounts 84,245 75,672
Accumulated amortization 44,831 35,466
Backlog and non-compete agreement [Member]    
Intangible Assets [Line Items]    
Original amounts 6,781 6,063
Accumulated amortization 6,105 5,837
Other intangibles [Member]    
Intangible Assets [Line Items]    
Original amounts 4,171 4,510
Accumulated amortization 3,779 3,890
Patent [Member]    
Intangible Assets [Line Items]    
Original amounts 1,280 1,385
Accumulated amortization $ 566 $ 473
Intangible Assets, Net (Details Textual) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Intangible Assets, Net [Abstract]      
Amortized expenses $ 24,490 $ 34,048 $ 38,254
Goodwill (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Goodwill [Abstract]    
Balance beginning $ 617,272 $ 640,184
Acquisition of subsidiaries 43,394 94,851
Classifications (18) 1,105
Foreign currency translation adjustments (19,793) 25,954
Balance ending $ 640,855 $ 617,272
Short Term Liabilities to Banks and Others (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Disclosure of detailed information about borrowings [line items]    
Short term liabilities to banks and others $ 71,180 $ 70,819
Bank credit [Member]    
Disclosure of detailed information about borrowings [line items]    
Interest rate % 2-3.1  
Currency NIS  
Short term liabilities to banks and others $ 736 947
Bank credit 1 [Member]    
Disclosure of detailed information about borrowings [line items]    
Interest rate % US Prime -0.2  
Currency USD  
Short term liabilities to banks and others $ 2,362 2,125
Short-term bank loans [Member]    
Disclosure of detailed information about borrowings [line items]    
Interest rate % 1.7-2.5  
Currency NIS  
Short term liabilities to banks and others $ 1,068 22,910
Current maturities of long-term loans from banks and other financial institutions [Member]    
Disclosure of detailed information about borrowings [line items]    
Interest rate % 2.5-5.81  
Currency NIS  
Short term liabilities to banks and others $ 65,453 42,839
Current maturities of long-term loans from banks [Member]    
Disclosure of detailed information about borrowings [line items]    
Interest rate % Libor +2.2  
Currency NIS (Linked to USD)  
Short term liabilities to banks and others $ 836 862
Short-term interest on long-term loans from other financial institutions [Member]    
Disclosure of detailed information about borrowings [line items]    
Interest rate % 2.6-5.5  
Currency NIS  
Short term liabilities to banks and others $ 725 $ 1,136
Other Accounts Payable (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Disclosure of detailed information about borrowings [line items]    
Other accounts payable $ 53,969 $ 53,145
Government institutions [Member]    
Disclosure of detailed information about borrowings [line items]    
Other accounts payable 29,485 29,816
Accrued royalties to the IIA [Member]    
Disclosure of detailed information about borrowings [line items]    
Other accounts payable 843 276
Accrued expenses and other current liabilities [Member]    
Disclosure of detailed information about borrowings [line items]    
Other accounts payable $ 23,641 $ 23,053
Long Term Liabilities to Banks and Others (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Long Term Liabilities To Banks And Others [Line Items]    
Long-term liabilities $ 205,816 $ 179,317
Current maturities 66,289 43,701
Total long-term liabilities net of current maturities $ 139,527 135,616
NIS (Unlinked) [Member]    
Long Term Liabilities To Banks And Others [Line Items]    
Currency NIS (Unlinked)  
Long-term liabilities $ 203,150  
Current maturities 65,453  
Total long-term liabilities net of current maturities $ 137,697 132,753
NIS (Unlinked) [Member] | Minimum [Member]    
Long Term Liabilities To Banks And Others [Line Items]    
Interest rate 2.50%  
NIS (Unlinked) [Member] | Maximum [Member]    
Long Term Liabilities To Banks And Others [Line Items]    
Interest rate 5.81%  
NIS (Linked to USD) [Member]    
Long Term Liabilities To Banks And Others [Line Items]    
Interest rate, description Libor +2.2  
Currency NIS (Linked to USD)  
Long-term liabilities $ 2,666  
Current maturities 836  
Total long-term liabilities net of current maturities $ 1,830 $ 2,863
Long Term Liabilities to Banks and Others (Details 1) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Long Term Liabilities to Banks and Others [Abstract]    
First year (current maturities) $ 66,289 $ 43,701
Second year 47,731 53,645
Third year 33,893 34,270
Fourth year 30,776 19,066
Fifth year and thereafter 27,127 28,635
Total $ 205,816 $ 179,317
Long Term Liabilities to Banks and Others (Details Textual) - USD ($)
$ in Thousands
 1 Months Ended
Feb. 28, 2017
Nov. 30, 2016
Long Term Liabilities to Banks and Others (Textual)    
Loan amount   $ 31,356
Interest rate 1.85% 2.60%
Payment due date   November 2, 2023
Borrowed amount $ 40,000  
Debt maturity term 5 years  
Debentures (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Feb. 28, 2017
Nov. 30, 2016
Disclosure Of Analysis Of Debentures By Item Line Items [Line Items]        
Effective Interest rate     1.85% 2.60%
Par Value $ 165,766 $ 136,866    
Unamortized debt premium (discount) and issuance costs, net (105) (1,513)    
Current maturities 55,822 4,826    
Total long-term debentures, net of current maturities 114,902 133,739    
Short-term accrued interest 5,063 1,139    
Long-term accrued interest   2,073    
Total short-term and long-term debentures $ 170,724 $ 138,565    
Formula's Series A Secured Debentures (2.8%) [Member]        
Disclosure Of Analysis Of Debentures By Item Line Items [Line Items]        
Effective Interest rate 2.40% 3.07%    
Currency NIS (Unlinked) NIS (Unlinked)    
Par Value $ 54,769 $ 25,810    
Unamortized debt premium (discount) and issuance costs, net 684 (209)    
Current maturities 9,128 3,687    
Total long-term debentures, net of current maturities 46,325 21,914    
Short-term accrued interest 758 357    
Long-term accrued interest      
Total short-term and long-term debentures $ 56,211 $ 25,958    
Formula's Series B Convertible Debentures (2.74%) [Member]        
Disclosure Of Analysis Of Debentures By Item Line Items [Line Items]        
Effective Interest rate 3.65% 3.65%    
Currency NIS (Linked to fix rate of USD) NIS (Linked to fix rate of USD)    
Par Value $ 31,812 $ 31,871    
Unamortized debt premium (discount) and issuance costs, net (79) (400)    
Current maturities 31,812    
Total long-term debentures, net of current maturities 31,471    
Short-term accrued interest 2,971    
Long-term accrued interest   2,073    
Total short-term and long-term debentures $ 34,704 $ 33,544    
Sapiens' Series B Debentures (3.37%) [Member]        
Disclosure Of Analysis Of Debentures By Item Line Items [Line Items]        
Effective Interest rate 3.69% 3.69%    
Currency NIS (Linked to fix rate of USD) NIS (Linked to fix rate of USD)    
Par Value $ 79,185 $ 79,185    
Unamortized debt premium (discount) and issuance costs, net (710) (904)    
Current maturities 9,898    
Total long-term debentures, net of current maturities 68,577 78,281    
Short-term accrued interest 1,334 782    
Long-term accrued interest      
Total short-term and long-term debentures $ 79,809 $ 79,063    
Debentures (Details 1)
$ in Thousands
Dec. 31, 2018
USD ($)
Debentures [Abstract]  
2018 $ 30,376 [1]
2019 19,026
2020 19,026
2021 19,026
2022and thereafter 57,850
Total $ 145,304
[1] Based on the remaining outstanding Series B Convertible Debentures in the amount of $11,350, which were not converted prior to their maturity on March 26, 2019 (see Note 23(f)).
Debentures (Details Textual)
₪ in Thousands, $ in Thousands
 1 Months Ended 12 Months Ended
Sep. 16, 2015
Sep. 30, 2017
Dec. 31, 2018
USD ($)
Dec. 31, 2018
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2018
ILS (₪)
Feb. 28, 2017
Nov. 30, 2016
Debentures (Textual)                  
Interest expenses     $ 5,165   $ 2,441        
Amortization of debt premium, discount and issuance costs, net     289   391        
Public offering, description Formula concluded a public offering in Israel on the Tel-Aviv Stock Exchange (the "TASE") of (i) NIS102.3 million par value of Series A Secured Debentures (the "Formula's Series A Secured Debentures") and of (ii) NIS125 million par value of Series B Convertible Debentures that are linked to the US Dollar based on the exchange rate on September 8, 2015 of 3.922 (the "Formula's Series B Convertible Debentures"). Formula's Debentures were offered and sold pursuant to a shelf prospectus filed with the Israeli Securities Authority (the "ISA") and TASE on August 6, 2015, amended thereafter on September 3, 2015 and which term was extended in July 2017 until August 6, 2018.                
Convertible debentures         78,229        
Interest rate               1.85% 2.60%
Debentures amount     $ 45,356   $ 78,229      
Sapiens' Series B Debentures [Member]                  
Debentures (Textual)                  
Description of debentures   Sapiens issued its unsecured Series B Debentures in the aggregate principal amount of NIS 280,000 (approximately $79,186), linked to US dollars, payable in eight equal annual payments of $9,898 on January 1 of each of the years 2019 through 2026. The outstanding principal amount of Sapiens' Series B Debentures will bear a fixed interest rate of 3.37% per annum, payable on January 1 and July 1 of each of the years 2018 through 2025, with one final interest payment on January 1, 2026. Debt discount and issuance costs were approximately $956, allocated to Sapiens' Series B Debentures discount and are amortized as financial expenses over the term of the Series B Debentures due in 2026. The first installment, in the amount of $9,898, was paid in January 1, 2019.              
Series A Secured Debentures [Member]                  
Debentures (Textual)                  
Issued purchase price, percentage     100.00%       100.00%    
Commission     $ 129            
Issuance costs     $ 190            
Description of debentures     On January 31, 2018, the Company consummated a private placement to qualified investors in Israel, of an additional, aggregate NIS 150 million par value of Series A Secured Debentures at a price of NIS 1,034.7 for each NIS 1,000 principal amount. The aggregate gross proceeds totaled NIS 155,205 (approximately $45,581), excluding issuance costs of $225. As a result of the private placement, the total outstanding principal amount of the Series A Secured Debentures increased to approximately NIS 239,478 million (approximately $70,331). The terms of the Series A Secured Debentures sold in the private placement are identical in all respects to those of the Series A Secured Debentures sold in Formula’s September 2015 public offering. On January 31, 2018, the Company consummated a private placement to qualified investors in Israel, of an additional, aggregate NIS 150 million par value of Series A Secured Debentures at a price of NIS 1,034.7 for each NIS 1,000 principal amount. The aggregate gross proceeds totaled NIS 155,205 (approximately $45,581), excluding issuance costs of $225. As a result of the private placement, the total outstanding principal amount of the Series A Secured Debentures increased to approximately NIS 239,478 million (approximately $70,331). The terms of the Series A Secured Debentures sold in the private placement are identical in all respects to those of the Series A Secured Debentures sold in Formula’s September 2015 public offering.          
Series A Secured Debentures [Member] | Fixed annual interest rate [Member]                  
Debentures (Textual)                  
Interest rate     2.80%       2.80%    
Series A Secured Debentures [Member] | NIS [Member]                  
Debentures (Textual)                  
Debentures amount | ₪       ₪ 102,260          
Series B Convertible Debentures [Member]                  
Debentures (Textual)                  
Conversion component valued     $ 1,248            
Convertible debentures     $ 32,364            
Issued purchase price, percentage     102.00%       102.00%    
Commission     $ 131            
Issuance costs     236            
Debt discount and issuance costs     367            
Bonds amounted     $ 32,785            
Principal amount of convertible bonds, percentage     10.00% 10.00%          
Exchange rate, description     The principal of the Bonds is subject to adjustment based on changes in the exchange rate between the NIS and the U.S. Dollar relative to the exchange rate on September 8, 2015 (3.922), and will be repaid on March 26, 2019. The principal of the Bonds is subject to adjustment based on changes in the exchange rate between the NIS and the U.S. Dollar relative to the exchange rate on September 8, 2015 (3.922), and will be repaid on March 26, 2019.          
Conversion price, description     Formula's ordinary shares, from the date of issuance and until March 10, 2019, at conversion price of, as of the date of the issuance, NIS 157 par value of Convertible Debentures per one share, adjusted for events that the Company effects a share split or reverse share split, a rights offering or a distribution of bonus shares or a cash dividend. As of December 31, 2017 and 2018, the adjusted conversion price to one share was NIS 150.27542 par value and 147.54176 par value, respectively, following cash dividend distributions. Formula's ordinary shares, from the date of issuance and until March 10, 2019, at conversion price of, as of the date of the issuance, NIS 157 par value of Convertible Debentures per one share, adjusted for events that the Company effects a share split or reverse share split, a rights offering or a distribution of bonus shares or a cash dividend. As of December 31, 2017 and 2018, the adjusted conversion price to one share was NIS 150.27542 par value and 147.54176 par value, respectively, following cash dividend distributions.          
Result of conversions effected, description     As a result of conversions that were effected during 2018 and mainly 2019, prior to the maturity of the Series B Convertible Debentures in March 2019, holders of Series B Convertible Debentures converted an aggregate principal par value amount of NIS 80,484 (of which NIS 231.7 were converted in 2018) into 545,485 ordinary shares (of which 1,556 ordinary shares were issued in 2018), constituting 3.57% of Formula's issued and outstanding share capital (following those conversions). The remaining outstanding Series B Convertible Debentures matured on March 26, 2019, and the remaining outstanding principal of NIS 44,516 (or $11,350) and interest on those debentures of $1,135 were paid on that date. As a result of conversions that were effected during 2018 and mainly 2019, prior to the maturity of the Series B Convertible Debentures in March 2019, holders of Series B Convertible Debentures converted an aggregate principal par value amount of NIS 80,484 (of which NIS 231.7 were converted in 2018) into 545,485 ordinary shares (of which 1,556 ordinary shares were issued in 2018), constituting 3.57% of Formula's issued and outstanding share capital (following those conversions). The remaining outstanding Series B Convertible Debentures matured on March 26, 2019, and the remaining outstanding principal of NIS 44,516 (or $11,350) and interest on those debentures of $1,135 were paid on that date.          
Series B Convertible Debentures [Member] | Fixed annual interest rate [Member]                  
Debentures (Textual)                  
Interest rate     2.74%       2.74%    
Series B Convertible Debentures [Member] | NIS [Member]                  
Debentures (Textual)                  
Bonds amounted | ₪             ₪ 127,500    
Series C Secured Debentures [Member]                  
Debentures (Textual)                  
Description of debentures     On March 31, 2019, Formula consummated a public offering in Israel of a new series of secured debentures - Series C Secured Debentures' in an aggregate NIS 300,000 par value amount, at a price of NIS 1,000 for each unit of NIS 1,000 principal amount. The aggregate gross proceeds from the public offering totaled NIS 298,500 (approximately $82,186). For further information, see Note 24 (a). On March 31, 2019, Formula consummated a public offering in Israel of a new series of secured debentures - Series C Secured Debentures' in an aggregate NIS 300,000 par value amount, at a price of NIS 1,000 for each unit of NIS 1,000 principal amount. The aggregate gross proceeds from the public offering totaled NIS 298,500 (approximately $82,186). For further information, see Note 24 (a).          
Related Parties Transactions (Details)
€ in Thousands, $ in Thousands
 12 Months Ended
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2018
EUR (€)
Disclosure of transactions between related parties [line items]        
Back office and professional services amount $ 980 $ 1,600 $ 1,900  
Trade payable balances due to related parties 0 150    
Trade receivables balances due from related parties 955 1,038 $ 1,865  
Sapiens [Member]        
Disclosure of transactions between related parties [line items]        
Services obtained from Asseco 980 1,600    
Services provided to Asseco 3,200 8,250    
Fees paid for board services in affiliates 25,000 28,600    
Matrix [Member]        
Disclosure of transactions between related parties [line items]        
Services provided to Asseco 564      
Fees paid for board services in affiliates $ 29,000 $ 30,000    
Matrix [Member] | EUR [Member]        
Disclosure of transactions between related parties [line items]        
Services provided to Asseco | €       € 500
Employee Option Plans (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure of terms and conditions of share-based payment arrangement [line items]      
Total stock-based compensation expense $ 3,981 $ 4,034 $ 4,394
Cost of revenues [Member]      
Disclosure of terms and conditions of share-based payment arrangement [line items]      
Total stock-based compensation expense 2 7 15
Research and development expenses [Member]      
Disclosure of terms and conditions of share-based payment arrangement [line items]      
Total stock-based compensation expense 4 8 17
Selling and marketing expenses [Member]      
Disclosure of terms and conditions of share-based payment arrangement [line items]      
Total stock-based compensation expense 4 71
General and administrative expenses [Member]      
Disclosure of terms and conditions of share-based payment arrangement [line items]      
Total stock-based compensation expense $ 3,971 $ 4,019 $ 4,291
Employee Option Plans (Details 1) - Matrix [Member] - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Apr. 30, 2015
Number of options      
Outstanding at beginning of year 1,100,000    
Exercised 587,500    
Granted 256,890    
Outstanding at end of year 769,390 1,100,000  
Exercisable at end of year 51,378   1,850,000
Weighted average exercise price      
Outstanding at beginning of year $ 4.33    
Exercised 4.06    
Granted    
Outstanding at end of year 2.61 $ 4.33  
Exercisable at end of year    
Weighted average remaining contractual term (in years)      
Outstanding   2 years 2 months 8 days  
Granted 5 years    
Exercisable at end of year 2 years 2 months 8 days    
Aggregate intrinsic value      
Outstanding at beginning of year $ 9,152    
Exercised 4,578    
Granted 3,247    
Outstanding at end of year 6,823 $ 9,152  
Exercisable at end of year $ 567    
Employee Option Plans (Details 2) - Sapiens [Member] - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Amount of options      
Granted 317,000 920,910 310,000
Exercised (223,570)    
Expired and forfeited (145,661)    
Outstanding at end of year 2,055,182    
Exercisable at end of year 829,133    
Weighted average exercise price      
Granted $ 10.2    
Exercised 4.4    
Expired and forfeited 10.79    
Outstanding at end of year 9.86    
Exercisable at end of year $ 8.31    
Weighted average remaining contractual term (in years)      
Outstanding 3 years 9 months 18 days    
Exercisable at end of year 2 years 5 months 20 days    
Aggregate intrinsic value      
Outstanding at beginning of year $ 4,084    
Outstanding at end of year 2,594 $ 4,084  
Exercisable at end of year $ 2,134    
Employee Option Plans (Details 3) - Sapiens [Member]
 12 Months Ended
Dec. 31, 2018
$ / shares
shares
Disclosure of range of exercise prices of outstanding share options [line items]  
Options outstanding | shares 2,055,182
Weighted Average remaining contractual Term (In Years) 3 years 9 months 18 days
Weighted average exercise price $ 9.86
Options Exercisable | shares 829,133
Weighted Average Exercise price of Options Exercisable $ 8.31
Exercise Price Range 0.88-1.48 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price, lower limit 0.88
Ranges of exercise price, upper limit $ 1.48
Options outstanding | shares 25,703
Weighted Average remaining contractual Term (In Years) 1 year 2 months 5 days
Weighted average exercise price $ 1.08
Options Exercisable | shares 25,703
Weighted Average Exercise price of Options Exercisable $ 1.08
Exercise Price Range 4.12-5.67 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price, lower limit 4.12
Ranges of exercise price, upper limit $ 5.67
Options outstanding | shares 103,000
Weighted Average remaining contractual Term (In Years) 9 months 29 days
Weighted average exercise price $ 5.62
Options Exercisable | shares 103,000
Weighted Average Exercise price of Options Exercisable $ 5.62
Exercise Price Range 6.32-6.91 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price, lower limit 6.32
Ranges of exercise price, upper limit $ 6.91
Options outstanding | shares 45,750
Weighted Average remaining contractual Term (In Years) 1 year 5 months 20 days
Weighted average exercise price $ 6.67
Options Exercisable | shares 38,250
Weighted Average Exercise price of Options Exercisable $ 6.74
Exercise Price Range 7.82 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price $ 7.82
Options outstanding | shares 300,000
Weighted Average remaining contractual Term (In Years) 2 years 4 months 2 days
Weighted average exercise price $ 7.82
Options Exercisable | shares 300,000
Weighted Average Exercise price of Options Exercisable $ 7.82
Exercise Price Range 8.67-9.18 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price, lower limit 8.67
Ranges of exercise price, upper limit $ 9.18
Options outstanding | shares 95,000
Weighted Average remaining contractual Term (In Years) 3 years 5 months 23 days
Weighted average exercise price $ 9.1
Options Exercisable | shares 40,000
Weighted Average Exercise price of Options Exercisable $ 9.18
Exercise Price Range 9.33-9.8 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price, lower limit 9.33
Ranges of exercise price, upper limit $ 9.8
Options outstanding | shares 413,229
Weighted Average remaining contractual Term (In Years) 4 years 3 months 29 days
Weighted average exercise price $ 9.53
Options Exercisable | shares 157,180
Weighted Average Exercise price of Options Exercisable $ 9.44
Exercise Price Range 10.18-10.81 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price, lower limit 10.18
Ranges of exercise price, upper limit $ 10.81
Options outstanding | shares 217,500
Weighted Average remaining contractual Term (In Years) 3 years 5 months 12 days
Weighted average exercise price $ 10.46
Options Exercisable | shares 112,500
Weighted Average Exercise price of Options Exercisable $ 10.4
Exercise Price Range 11.43-12.53 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price, lower limit 11.43
Ranges of exercise price, upper limit $ 12.53
Options outstanding | shares 810,000
Weighted Average remaining contractual Term (In Years) 4 years 9 months 11 days
Weighted average exercise price $ 11.54
Options Exercisable | shares 33,750
Weighted Average Exercise price of Options Exercisable $ 12.27
Exercise Price Range 12.62-13.5 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of exercise price, lower limit 12.62
Ranges of exercise price, upper limit $ 13.5
Options outstanding | shares 45,000
Weighted Average remaining contractual Term (In Years) 3 years 9 months 11 days
Weighted average exercise price $ 12.91
Options Exercisable | shares 18,750
Weighted Average Exercise price of Options Exercisable $ 12.8
Employee Option Plans (Details 4) - Magic Plans [Member] - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Number of options    
Outstanding at beginning of year 309,309  
Granted 37,500  
Exercised (104,167)  
Forfeited (21,875)  
Outstanding at end of year 220,767 309,309
Exercisable at end of year 190,767  
Weighted average exercise price    
Outstanding at beginning of year $ 4.38  
Granted  
Exercised 2.99  
Forfeited 6.89  
Outstanding at end of year 3.83 $ 4.38
Exercisable at end of year $ 4.43  
Weighted average remaining contractual term (in years)    
Outstanding 3 years 9 months 22 days 3 years 11 months 19 days
Exercisable at end of year 2 years 11 months 1 day  
Aggregate intrinsic value    
Outstanding at beginning of year $ 1,237  
Outstanding at end of year 1,684 $ 1,237
Exercisable at end of year $ 1,456  
Employee Option Plans (Details 5) - Magic [Member]
 12 Months Ended
Dec. 31, 2018
$ / shares
shares
Disclosure of range of exercise prices of outstanding share options [line items]  
Options outstanding | shares 220,767
Weighted average remaining contractual life (Years) 3 years 9 months 22 days
Weighted average exercise price $ 3.83
Options Exercisable | shares 190,767
Weighted Average Exercise price of Options Exercisable $ 4.43
Exercise Price Range 0-1 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of Exercise price, lower limit 0
Ranges of Exercise price, upper limit $ 1
Options outstanding | shares 30,000
Weighted average remaining contractual life (Years) 9 years 5 months 27 days
Weighted average exercise price
Options Exercisable | shares
Weighted Average Exercise price of Options Exercisable
Exercise Price Range 2.01-3 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of Exercise price, lower limit 2.01
Ranges of Exercise price, upper limit $ 3
Options outstanding | shares 66,000
Weighted average remaining contractual life (Years) 1 year 3 months 4 days
Weighted average exercise price $ 2.32
Options Exercisable | shares 66,000
Weighted Average Exercise price of Options Exercisable $ 2.32
Exercise Price Range 3.01-4 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of Exercise price, lower limit 3.01
Ranges of Exercise price, upper limit $ 4
Options outstanding | shares 73,517
Weighted average remaining contractual life (Years) 2 years 9 months 7 days
Weighted average exercise price $ 4
Options Exercisable | shares 73,517
Weighted Average Exercise price of Options Exercisable $ 4
Exercise Price Range 5.01-6 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of Exercise price, lower limit 5.01
Ranges of Exercise price, upper limit $ 6
Options outstanding | shares 6,250
Weighted average remaining contractual life (Years) 4 years 7 months 10 days
Weighted average exercise price $ 6
Options Exercisable | shares 6,250
Weighted Average Exercise price of Options Exercisable $ 6
Exercise Price Range 8.01-9 [Member]  
Disclosure of range of exercise prices of outstanding share options [line items]  
Ranges of Exercise price, lower limit 8.01
Ranges of Exercise price, upper limit $ 9
Options outstanding | shares 45,000
Weighted average remaining contractual life (Years) 5 years 4 months 6 days
Weighted average exercise price $ 8.01
Options Exercisable | shares 45,000
Weighted Average Exercise price of Options Exercisable $ 8.01
Employee Option Plans (Details Textual)
$ / shares in Units, $ in Thousands
 1 Months Ended 12 Months Ended
Dec. 31, 2017
shares
Aug. 31, 2017
USD ($)
$ / shares
shares
Aug. 22, 2017
shares
Aug. 03, 2017
shares
Oct. 31, 2015
shares
Jun. 30, 2015
$ / shares
shares
Apr. 30, 2015
$ / shares
shares
Nov. 30, 2014
USD ($)
$ / shares
shares
Mar. 31, 2012
USD ($)
$ / shares
shares
Mar. 31, 2011
USD ($)
$ / shares
shares
Dec. 31, 2018
USD ($)
years
$ / shares
shares
Dec. 31, 2017
USD ($)
$ / shares
shares
Dec. 31, 2016
USD ($)
$ / shares
shares
Employee Option Plans (Textual)                          
Ordinary shares 14,738,782                   14,750,338 14,738,782  
Options expire periods                     10 years    
Matrix [Member]                          
Employee Option Plans (Textual)                          
Exercisable for ordinary shares             1,850,000       51,378    
Description of options vest             Half of the options vested on April 1, 2017, quarter of the options vested on January 1, 2018, and the rest vested on January 1, 2019.            
Ordinary shares             1,850,000            
Unrecognized compensation costs | $                     $ 1,930    
Fair value options, exercise factor                     30.00%    
Fair value options, contractual life | years                     5    
Matrix [Member] | NIS [Member]                          
Employee Option Plans (Textual)                          
Exercise price of options per share | $ / shares             $ 19.485            
Ordinary shares, par value | $ / shares             $ 1            
Matrix [Member] | Minimum [Member]                          
Employee Option Plans (Textual)                          
Fair value options, risk-free interest rate                     0.08%    
Fair value options, expected volatility                     19.00%    
Matrix [Member] | Maximum [Member]                          
Employee Option Plans (Textual)                          
Fair value options, risk-free interest rate                     1.31%    
Fair value options, expected volatility                     22.00%    
Matrix [Member] | General Assembly [Member]                          
Employee Option Plans (Textual)                          
Exercisable for ordinary shares           300,000              
Description of options vest           Half of the options vested on June 4, 2017, and the equal parts of the remaining options vested on January 1, 2018 and January 1, 2019.              
Ordinary shares           300,000              
Matrix [Member] | General Assembly [Member] | NIS [Member]                          
Employee Option Plans (Textual)                          
Exercise price of options per share | $ / shares           $ 21.39              
Ordinary shares, par value | $ / shares           $ 1              
Sapiens [Member]                          
Employee Option Plans (Textual)                          
Options to purchase of ordinary shares                       122,730  
Exercisable for ordinary shares                     829,133    
Number of restricted shares 88,500                     88,500  
Ordinary shares 29,500                     29,500  
Options expire periods                     4 years    
Unrecognized compensation costs | $                     $ 3,761    
Intrinsic value of options exercised | $                     $ 1,641 $ 5,739 $ 2,304
Granted stock options                     317,000 920,910 310,000
Weighted average grant date fair values of options | $ / shares                     $ 3.43 $ 4.17 $ 4.30
Total equity-based compensation expense | $                     $ 2,009 $ 2,201 $ 1,981
Sapiens [Member] | Minimum [Member]                          
Employee Option Plans (Textual)                          
Proportion of ownership interest in subsidiary                     92.89%    
Sapiens [Member] | Maximum [Member]                          
Employee Option Plans (Textual)                          
Proportion of ownership interest in subsidiary                     94.25%    
Magic [Member]                          
Employee Option Plans (Textual)                          
Intrinsic value of options exercised | $                     $ 617 $ 502 $ 112
2011 Plan [Member]                          
Employee Option Plans (Textual)                          
Options to purchase of ordinary shares                   545,000      
Ordinary shares reserved for issuance                   1,200,000      
Exercisable for ordinary shares                 1,122,782 543,840      
Description of options vest   These new restricted shares vest on a quarterly basis over a three-year period, commencing on August 17, 2017 and concludes in August 17, 2020           These restricted shares vest on a quarterly basis over a four-year period, commencing on November 13, 2014 and concludes in November 13, 2018 The options vest, i.e., Formula's redemption right with respect to the options and the underlying ordinary shares issuable upon exercise lapses, in equal quarterly installments over an eight year period that commenced in March 2012 and concludes on December 31, 2019. The options vest in equal quarterly installments, over a four year period that commences in December 31, 2011 and concludes in December 31, 2015.      
Total fair value of grant | $   $ 371           $ 239          
Fair value of grant share price per share | $ / shares   $ 37.1           $ 23.9          
Redeemable ordinary shares                 543,840        
Number of restricted shares 10,000 10,000           10,000       10,000  
Ordinary shares 833                     833  
Vested portion of restricted shares 10,000                     10,000  
Total equity-based compensation expense | $   $ 928                   $ 131  
Asseco sale of ordinary shares   20 589,151 2,356,605                  
Unvested shares   350,869           3,125          
2011 Plan [Member] | NIS [Member]                          
Employee Option Plans (Textual)                          
Exercise price of options per share | $ / shares                 $ 0.01 $ 0.01      
Total fair value of grant | $                 $ 18,347 $ 9,055      
Fair value of grant share price per share | $ / shares                 $ 16.34 $ 16.65      
2011 Plan [Member] | Minimum [Member]                          
Employee Option Plans (Textual)                          
Options expire periods                         5 years
Percentage of share interest decreased   26.30%                      
2011 Plan [Member] | Maximum [Member]                          
Employee Option Plans (Textual)                          
Options expire periods                         10 years
Percentage of share interest decreased   46.30%                      
2011 Plan [Member] | Trustee One [Member]                          
Employee Option Plans (Textual)                          
Number of restricted shares                         10,000
Ordinary shares                         5,000
Vested portion of restricted shares                         10,000
2011 Plan [Member] | Trustee [Member]                          
Employee Option Plans (Textual)                          
Number of restricted shares                         1,122,782
Ordinary shares                         701,739
Vested portion of restricted shares                         1,122,782
Mr. Moti Gutman [Member] | Matrix [Member]                          
Employee Option Plans (Textual)                          
Exercisable for ordinary shares         225,000                
Description of options vest Matrix extended its agreement with Revava Management Company Ltd. for additional five years' term starting on January 1, 2018. As part of the new agreement Matrix awarded Mr. Gutman with additional 256,890 restricted share units (RSU) vesting on an annual basis over a five-year period, commencing on January 1, 2018 and concludes on December 31, 2022, but not before the publication of Matrix's financial statements for each respective year, and subject to certain conditions.       The RSU vest in three equal shares portions of 75,000 RSU units, each portion at December 31 of each year agreement, but not before the issuance of Matrix's financial statements for the past year                
Number of restricted shares         225,000           75,000    
Vested portion of restricted shares                     75,000    
Employee Benefit Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Disclosure of defined benefit plans [abstract]    
Defined benefit obligation $ 81,556 $ 87,316
Fair value of plan assets (72,672) (78,284)
Net defined benefit liability $ 8,884 $ 9,032
Commitments and Contingencies (Details)
Dec. 31, 2018
₪ / shares
shares
Dec. 31, 2018
€ / shares
shares
Matrix [Member]    
Commitments and Contingencies [Line Items]    
Financial institution credit agreement 5,263,615 5,263,615
Formula's Series A Secured Debentures 4,128,865 4,128,865
Matrix [Member] | NIS [Member]    
Commitments and Contingencies [Line Items]    
Ordinary shares, par value | ₪ / shares ₪ 0.1  
Magic [Member]    
Commitments and Contingencies [Line Items]    
Financial institution credit agreement 2,117,143 2,117,143
Formula's Series A Secured Debentures 5,825,681 5,825,681
Magic [Member] | NIS [Member]    
Commitments and Contingencies [Line Items]    
Ordinary shares, par value | ₪ / shares ₪ 0.1  
Sapiens [Member]    
Commitments and Contingencies [Line Items]    
Financial institution credit agreement 1,410,533 1,410,533
Formula's Series A Secured Debentures 1,260,266 1,260,266
Sapiens [Member] | EUR [Member]    
Commitments and Contingencies [Line Items]    
Ordinary shares, par value | € / shares   € 0.01
Commitments and Contingencies (Details 1)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
USD ($)
Commitments and Contingencies [Line Items]  
Operating lease commitments $ 99,012
2019 [Member]  
Commitments and Contingencies [Line Items]  
Operating lease commitments 28,262
2020 [Member]  
Commitments and Contingencies [Line Items]  
Operating lease commitments 20,125
2021 [Member]  
Commitments and Contingencies [Line Items]  
Operating lease commitments 15,783
2022 [Member]  
Commitments and Contingencies [Line Items]  
Operating lease commitments 10,064
2023 and Thereafter [Member]  
Commitments and Contingencies [Line Items]  
Operating lease commitments $ 24,778
Commitments and Contingencies (Details Textual)
₪ in Thousands, $ in Thousands
 1 Months Ended 12 Months Ended
Jan. 31, 2018
ILS (₪)
shares
Sep. 30, 2016
USD ($)
Sep. 30, 2016
ILS (₪)
Dec. 31, 2018
USD ($)
shares
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2018
ILS (₪)
Commitments and Contingencies [Line Items]              
Rent expenses       $ 30,023 $ 28,343 $ 25,411  
Estimated amount due to OCS       1,714      
Contingent liability       6,204      
Guarantees [Member] | Customers and suppliers [Member]              
Commitments and Contingencies [Line Items]              
Bank guarantees amount       27,800      
Guarantees [Member] | Offices [Member]              
Commitments and Contingencies [Line Items]              
Bank guarantees amount       4,700      
Guarantees [Member] | Contracts with customers [Member]              
Commitments and Contingencies [Line Items]              
Restricted bank deposits       $ 800      
Series A Secured Debentures [Member] | NIS [Member]              
Commitments and Contingencies [Line Items]              
Issued additional private placement of par value | ₪ ₪ 150,000            
Series C Secured Debentures [Member] | NIS [Member] | March 2019 [Member]              
Commitments and Contingencies [Line Items]              
Issued pledged shares par value | ₪ ₪ 300,000            
Matrix [Member]              
Commitments and Contingencies [Line Items]              
Percentage of total balance sheet will not exceed by debt       40.00%      
Ratio of debts       The ratio of Matrix debts less cash to the annual EBITDA will not exceed 3.5.      
Percentage of matrix share capital       30.00%      
Balances of cash and short-term investments       $ 50,000      
Percentage of shareholder's interest       50.10%      
Description of equity level       Matrix equity shall not be lower than NIS 275 million (approximately $73.4 million) at all times. As of December 31, 2018, Matrix's equity was approximately NIS 714 million (approximately $190.5 million).      
Matrix [Member] | January 2019 [Member]              
Commitments and Contingencies [Line Items]              
Issued unpledged shares to financial institution's | shares       3,694,517      
Matrix [Member] | NIS [Member]              
Commitments and Contingencies [Line Items]              
Balances of cash and short-term investments | ₪             ₪ 13,300
Matrix [Member] | Series A Secured Debentures [Member]              
Commitments and Contingencies [Line Items]              
Issued pledged additional shares | shares 1,692,954            
Matrix [Member] | Series C Secured Debentures [Member] | March 2019 [Member]              
Commitments and Contingencies [Line Items]              
Issued pledged shares | shares 6,031,761            
Legal Proceedings [Member]              
Commitments and Contingencies [Line Items]              
Payment of plaintiffs amount   $ 2,400          
Legal Proceedings [Member] | NIS [Member]              
Commitments and Contingencies [Line Items]              
Software company filed a lawsuit amount | ₪     ₪ 34,106        
Formula [Member]              
Commitments and Contingencies [Line Items]              
Ratio of debts       The ratio of Company's financial debts less cash, short-term deposits and short-term marketable securities to the annual EBITDA will not exceed 3.5 (all based on the Company's consolidated financial statements).      
Percentage of shareholder's interest       20.00%      
Shareholders' equity not including minority interests amount       $ 160,000      
TASE over a period       60 days      
Financial liabilities       $ 130,000      
Percenatge of short term deposits and short term marketable securities to total assets       30.00%     30.00%
Distribute dividends except, description       Formula committed not to distribute dividends except for if the ratio of the Company's unpaid principal amount of the loan to the fair market value of its collaterals will not exceed 50%, and if the distribution will not cause its cash, short-term deposits and short-term marketable securities to be less than NIS 45 million (approximately $13 million), or if the dividend will not exceed 75% of accumulated profits accrued from the date of which the loan was granted until the distribution.      
Formula [Member] | NIS [Member]              
Commitments and Contingencies [Line Items]              
Financial liabilities | ₪             ₪ 450,000
Formula [Member] | Series B Convertible Debentures [Member]              
Commitments and Contingencies [Line Items]              
Shareholders' equity not including minority interests amount       $ 160      
Percentage of financial indebtedness       65.00%      
Formula [Member] | Series A Secured Debentures [Member]              
Commitments and Contingencies [Line Items]              
Shareholders' equity not including minority interests amount       $ 250,000      
Percentage of financial indebtedness       65.00%      
Profits distributions, description       The amount of the distributions shall be equal to profits for the years ended December 31, 2014 and 2015 and 75% of profits accrued from January 1, 2016 until the distribution and (iv) no event of default shall have occurred.      
Sapiens Technologies [Member]              
Commitments and Contingencies [Line Items]              
Royalty commitments, description       In exchange for participation in the programs by the IIA, Sapiens Technologies agreed to pay 3.5% of total net consolidated license and maintenance revenue and 0.35% of the net consolidated consulting services revenue related to the software developed within the framework of these programs based on an understanding with IIA reached in January 2012. The royalties will be paid up to a maximum amount equaling 100%-150% of the grants provided by the IIA, linked to the dollar, and for grants received after January 1, 1999, bear annual interest at a rate based on LIBOR.      
Sapiens Technologies [Member] | Covenant [Member]              
Commitments and Contingencies [Line Items]              
Shareholders' equity not including minority interests amount       $ 160      
Percentage of financial indebtedness       65.00%      
Profits distributions, description       The amount of the dividend does not exceed Sapiens profits for the year ended December 31, 2016 and the first three quarters of the year ended December 31, 2017, plus 75% of Sapiens profits as of September 1, 2017 and up to the date of distribution.      
Sapiens Technologies [Member] | Covenant One [Member]              
Commitments and Contingencies [Line Items]              
Shareholders' equity not including minority interests amount       $ 120,000      
Percentage of financial indebtedness       65.00%      
Magic [Member]              
Commitments and Contingencies [Line Items]              
Percentage of total balance sheet will not exceed by debt       50.00%      
Ratio of debts       The ratio of Magic's total financial debts less cash, short-term deposits and short-term marketable securities to the annual EBITDA will not exceed 3.25 to 1.      
Balances of cash and short-term investments       $ 10      
Shareholders' equity not including minority interests amount       $ 100      
Magic [Member] | January 2019 [Member]              
Commitments and Contingencies [Line Items]              
Issued unpledged shares to financial institution's | shares       898,613      
Magic [Member] | Series A Secured Debentures [Member]              
Commitments and Contingencies [Line Items]              
Issued pledged additional shares | shares 3,487,198            
Magic [Member] | Series C Secured Debentures [Member] | March 2019 [Member]              
Commitments and Contingencies [Line Items]              
Issued pledged shares | shares 2,411,474            
Sapiens [Member] | January 2019 [Member]              
Commitments and Contingencies [Line Items]              
Issued unpledged shares to financial institution's | shares       1,356,820      
Sapiens [Member] | Series C Secured Debentures [Member] | March 2019 [Member]              
Commitments and Contingencies [Line Items]              
Issued pledged shares | shares 2,957,590            
Equity (Details) - $ / shares
Dec. 31, 2018
Dec. 31, 2017
Disclosure of classes of share capital [line items]    
Authorized 25,000,000 25,000,000
Issued 15,318,958 15,307,402
Outstanding 14,750,338 14,738,782
NIS [Member]    
Disclosure of classes of share capital [line items]    
Ordinary shares, par value $ 1 $ 1
Equity (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands
 1 Months Ended
Dec. 31, 2018
May 31, 2018
Sep. 30, 2017
Dec. 31, 2016
Jun. 30, 2016
Jan. 31, 2016
Dec. 31, 2017
Disclosure of classes of share capital [line items]              
Ordinary shares hold 568,620           568,620
Amount of cash dividend $ 5,015 $ 5,012 $ 5,011 $ 7,070 $ 5,008 $ 5,008  
Cash dividend per share $ 0.34 $ 0.34 $ 0.34 $ 0.48 $ 0.34 $ 0.34  
Dividend payable, record date Dec. 31, 2018 Jun. 05, 2018 Oct. 17, 2017 Dec. 30, 2016 Jul. 13, 2016 Jan. 20, 2016  
Dividend payable, paid date Jan. 16, 2019 Jun. 20, 2018 Nov. 02, 2017 Jan. 12, 2017 Jul. 28, 2016 Feb. 04, 2016  
NIS [Member]              
Disclosure of classes of share capital [line items]              
Ordinary shares, par value $ 1           $ 1
Taxes on Income (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Taxes on Income [Abstract]    
Deferred taxes assets $ 14,214 $ 15,878
Deferred tax liabilities 34,800 36,605
Total $ (20,586) $ (20,727)
Taxes on Income (Details 1) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Taxes on Income [Abstract]    
Net operating losses carried forward $ 4,579 $ 8,081
Intangibles and fixed assets (32,895) (35,834)
Differences in measurement basis (cash basis for tax purposes) (1,571) (4,298)
Other 9,301 11,324
Total $ (20,586) $ (20,727)
Taxes on Income (Details 2) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure of geographical areas [line items]      
Total $ 101,696 $ 52,811 $ 77,263
Domestic (Israel) [Member]      
Disclosure of geographical areas [line items]      
Total 81,317 38,204 51,552
Foreign [Member]      
Disclosure of geographical areas [line items]      
Total $ 20,379 $ 14,607 $ 25,711
Taxes on Income (Details 3) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Taxes on Income [Abstract]      
Current taxes $ 30,302 $ 22,375 $ 20,952
Deferred taxes (6,001) (9,004) 211
Total $ 24,301 $ 13,371 $ 21,163
Taxes on Income (Details 4) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Taxes on Income [Abstract]      
Income before income taxes, as per the statement of operations $ 101,696 $ 52,811 $ 77,263
Statutory tax rate in Israel 23.00% 24.00% 25.00%
Tax computed at the statutory tax rate $ 23,390 $ 12,675 $ 19,316
Non-deductible expenses (non-taxable income) net and tax-deductible costs not included in the accounting costs 1,393 1,522 978
Effect of different tax rates 379 843 (1,143)
Effect of "Approved, Beneficiary or Preferred Enterprise" status (1,233) (252) (1,338)
Group's share of profits of companies accounted for at equity (86) (270) (87)
Deferred taxes on current losses (utilization of carry forward losses) and temporary differences for which a valuation allowance was provided, net (796) 4,695 1,442
Effect of change in tax rates (5,796) 112
Taxes in respect of prior years (485) (227) 1,718
Uncertain tax positions 2,703 342 (234)
Other (964) (439) 399
Taxes on income $ 24,301 $ 13,371 $ 21,163
Taxes on Income (Details 5) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Taxes on Income [Abstract]      
Beginning Balance $ 4,024 $ 3,280 $ 2,492
Increase due to consolidation in a subsidiary   66 227
Decrease related to prior years' tax positions (198) (135) (286)
Increase related to current year tax positions 2,775 813 847
Ending Balance $ 6,601 $ 4,024 $ 3,280
Taxes on Income (Details Textual)
₪ in Thousands, $ in Thousands
 12 Months Ended
Dec. 29, 2010
Dec. 31, 2018
USD ($)
Dec. 31, 2018
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
Taxes on Income (Textual)          
Statutory tax rate in Israel   23.00% 23.00% 24.00% 25.00%
Corporate income tax rate, description   The Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years) - 2016, which reduces the corporate income tax rate to 24% (instead of 25%) effective from January 1, 2017 and to 23% effective from January 1, 2018. The Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years) - 2016, which reduces the corporate income tax rate to 24% (instead of 25%) effective from January 1, 2017 and to 23% effective from January 1, 2018.    
Reduced tax rate   10%-25% 10%-25%    
Description of income taxes The Knesset approved an amendment to the Investment Law for the Encouragement of Capital Investments, 1959 ("2011 Amendment"). According to the 2011 Amendment, a reduced uniform corporate tax rate for exporting industrial enterprises (over 25%) was established. The reduced tax rate will not be program dependent and will apply to the "Preferred Enterprise's" (as such term is defined in the Investment Law) entire income. Pursuant to the 2011 Amendment, a "Preferred Enterprise" is entitled to a reduced corporate tax rate of 16%. The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings as above will be subject to tax at a rate of 20%.        
Applicable tax rate   16.00% 16.00%    
Filed notice, description   In 2011, Magic and one of its Israeli subsidiaries filed a notice to the Israeli tax authorities to apply for the new benefits under the 2011 Amendment, and therefore were subjected to the amended tax rate of 16% for the tax years 2011-2016. In 2015, certain of Sapiens' Israeli subsidiaries filed a notice to the Israeli tax authorities to apply for the new benefits under the 2011 Amendment, and therefore were subjected to the amended tax rate of 16% for the tax years 2014-2016. In 2011, Magic and one of its Israeli subsidiaries filed a notice to the Israeli tax authorities to apply for the new benefits under the 2011 Amendment, and therefore were subjected to the amended tax rate of 16% for the tax years 2011-2016. In 2015, certain of Sapiens' Israeli subsidiaries filed a notice to the Israeli tax authorities to apply for the new benefits under the 2011 Amendment, and therefore were subjected to the amended tax rate of 16% for the tax years 2014-2016.    
Industrial encouragement law, description   It is Formula's management's belief that certain of its Israeli investees currently qualify as an "Industrial Company," within the meaning of the Law for the Encouragement of Industry (Taxes), 1969 (the "Industrial Encouragement Law"). That Industrial Encouragement Law defines an "Industrial Company" as a company that is resident in Israel and that derives at least 90% of its income in any tax year, other than income from defense loans, capital gains, interest and dividends, from an enterprise whose major activity in a given tax year is industrial production. Under the Industrial Encouragement Law, these Israeli subsidiaries are entitled to amortization of the cost of purchased know-how and patents over an eight-year period for tax purposes as well as accelerated depreciation rates on equipment and buildings. Eligibility for the benefits under the Industrial Encouragement Law is not subject to receipt of prior approval from any governmental authority. It is Formula's management's belief that certain of its Israeli investees currently qualify as an "Industrial Company," within the meaning of the Law for the Encouragement of Industry (Taxes), 1969 (the "Industrial Encouragement Law"). That Industrial Encouragement Law defines an "Industrial Company" as a company that is resident in Israel and that derives at least 90% of its income in any tax year, other than income from defense loans, capital gains, interest and dividends, from an enterprise whose major activity in a given tax year is industrial production. Under the Industrial Encouragement Law, these Israeli subsidiaries are entitled to amortization of the cost of purchased know-how and patents over an eight-year period for tax purposes as well as accelerated depreciation rates on equipment and buildings. Eligibility for the benefits under the Industrial Encouragement Law is not subject to receipt of prior approval from any governmental authority.    
Undistributed earnings of foreign subsidiaries and affiliates   $ 73,651      
Income taxes distributed as dividend   $ 50,817   $ 48,628  
Federal corporate income tax rate, description   The TCJA reduces the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018. The TCJA reduces the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018.    
Preferred Technology Enterprise [Member]          
Taxes on Income (Textual)          
Description of new amendment tax rate   Introduction of a benefit regime for "Preferred Technology Enterprises" granting a 12% tax rate in central Israel - on income deriving from Intellectual Property, subject to a number of conditions being fulfilled, including a minimal amount or ratio of annual R&D expenditure and R&D employees, as well as having at least 25% of annual income derived from exports. Preferred Technology Enterprise ("PTE") is defined as an enterprise which meets the aforementioned conditions and for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more. Introduction of a benefit regime for "Preferred Technology Enterprises" granting a 12% tax rate in central Israel - on income deriving from Intellectual Property, subject to a number of conditions being fulfilled, including a minimal amount or ratio of annual R&D expenditure and R&D employees, as well as having at least 25% of annual income derived from exports. Preferred Technology Enterprise ("PTE") is defined as an enterprise which meets the aforementioned conditions and for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more.    
Tax rate for dividends paid from income   20.00% 20.00%    
Reduced to dividends paid to foreign resident company   4.00% 4.00%    
Subsidiaries' taxable income tax rate   12.00% 12.00%    
Formula [Member]          
Taxes on Income (Textual)          
Cumulative losses for tax purposes   $ 68,693      
Income tax assessments, description   Formula has received final tax assessments (or assessments that are deemed final) through the tax year 2013. Formula has received final tax assessments (or assessments that are deemed final) through the tax year 2013.    
Formula [Member] | NIS [Member]          
Taxes on Income (Textual)          
Cumulative losses for tax purposes | ₪     ₪ 257,460    
Matrix [Member]          
Taxes on Income (Textual)          
Cumulative losses for tax purposes   $ 31,865      
Income tax assessments, description   Matrix and its subsidiaries have received final tax assessments (or assessments that are deemed final) through the tax year 2013. Matrix and its subsidiaries have received final tax assessments (or assessments that are deemed final) through the tax year 2013.    
Matrix [Member] | NIS [Member]          
Taxes on Income (Textual)          
Cumulative losses for tax purposes | ₪     ₪ 119,431    
Magic [Member]          
Taxes on Income (Textual)          
Cumulative losses for tax purposes   $ 14,418      
Income tax assessments, description   Magic and its Israeli subsidiaries have received final tax assessments (or assessments that are deemed final) through the year 2013. Magic and its Israeli subsidiaries have received final tax assessments (or assessments that are deemed final) through the year 2013.    
Sapiens [Member]          
Taxes on Income (Textual)          
Cumulative losses for tax purposes   $ 26,250      
Income tax assessments, description   Tax assessments filed by part of Sapiens' Israeli subsidiaries through the year 2012 are considered to be final. Tax assessments filed by part of Sapiens' Israeli subsidiaries through the year 2012 are considered to be final.    
Supplementary Financial Statement Information (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
NonControllingInterestInMaterialPartiallyLineItems [Line Items]    
Non-controlling interest $ 437,767 $ 413,720
Matrix [Member]    
NonControllingInterestInMaterialPartiallyLineItems [Line Items]    
Non-controlling interest 106,667 104,750
Sapiens [Member]    
NonControllingInterestInMaterialPartiallyLineItems [Line Items]    
Non-controlling interest 193,832 193,973
Magic [Member]    
NonControllingInterestInMaterialPartiallyLineItems [Line Items]    
Non-controlling interest 137,158 114,925
Other [Member]    
NonControllingInterestInMaterialPartiallyLineItems [Line Items]    
Non-controlling interest $ 110 $ 72
Supplementary Financial Statement Information (Details 1) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Financial expenses:      
Financial expenses related to liabilities in respect of business combinations $ 1,108 $ 765 $ 2,602
Interest expenses on short-term and long-term loans 6,891 7,700 6,061
Financial costs related to Debentures 5,479 2,832 1,959
Bank charges, negative foreign exchange differences and other financial expenses 2,374 18,573 6,972
Financial expenses 15,852 29,870 17,594
Financial income:      
Income from marketable securities and embedded derivative 832 138 865
Interest income from deposits, positive foreign exchange differences and other financial income 6,730 8,613 5,143
Financial income 7,562 8,751 6,008
Total $ (8,290) $ (21,119) $ (11,586)
Supplementary Financial Statement Information (Details 2) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Disclosure of geographical areas [line items]    
Property and equipment $ 29,182 $ 29,807
Israel [Member]    
Disclosure of geographical areas [line items]    
Property and equipment 22,401 22,615
United States [Member]    
Disclosure of geographical areas [line items]    
Property and equipment 4,033 4,369
Europe [Member]    
Disclosure of geographical areas [line items]    
Property and equipment 1,307 1,412
Japan [Member]    
Disclosure of geographical areas [line items]    
Property and equipment 282 302
Other [Member]    
Disclosure of geographical areas [line items]    
Property and equipment $ 1,159 $ 1,109
Supplementary Financial Statement Information (Details 3) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure of geographical areas [line items]      
Revenues $ 1,492,988 $ 1,355,139 $ 1,108,621
Israel [Member]      
Disclosure of geographical areas [line items]      
Revenues 893,605    
United States [Member]      
Disclosure of geographical areas [line items]      
Revenues 418,148    
Europe [Member]      
Disclosure of geographical areas [line items]      
Revenues 141,316    
Africa [Member]      
Disclosure of geographical areas [line items]      
Revenues 13,726    
Japan [Member]      
Disclosure of geographical areas [line items]      
Revenues 11,053    
Other (mainly Asia pacific) [Member]      
Disclosure of geographical areas [line items]      
Revenues $ 109,121 $ 105,808 $ 72,585
Supplementary Financial Statement Information (Details 4) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Numerator:      
Net income basic earnings per share - income available to shareholders $ 32,365 $ 10,352 $ 22,455
Amount for diluted earnings per share - income available to shareholders $ 33,376 $ 10,085 $ 23,207
Denominator:      
Basic earnings per share - weighted average shares outstanding 14,740 14,437 14,214
Effect of dilutive securities 831 295 1,311
Diluted earnings per share - adjusted weighted average shares outstanding 15,571 14,732 15,525
Basic net earnings per share $ 2.2 $ 0.72 $ 1.58
Diluted net earnings per share $ 2.14 $ 0.68 $ 1.49
Operating Segments (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure of operating segments [line items]      
Goodwill $ 640,855 $ 617,272 $ 640,184
Matrix [Member]      
Disclosure of operating segments [line items]      
Goodwill 215,428 200,440  
Sapiens [Member]      
Disclosure of operating segments [line items]      
Goodwill 311,489 303,955  
Magic [Member]      
Disclosure of operating segments [line items]      
Goodwill 95,006 98,189  
Michpal [Member]      
Disclosure of operating segments [line items]      
Goodwill $ 18,932 $ 14,688  
Operating Segments (Details 1) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disclosure of operating segments [line items]      
Revenues from external customers $ 1,492,988 $ 1,355,139 $ 1,108,621
Inter-segment revenues
Revenue 1,492,988 1,355,139 1,108,621
Unallocated corporate expenses (2,113) (3,472) (2,713)
Depreciation and amortization 48,734 43,646 32,370
Operating income (loss) 109,617 72,806 88,500
Financial expenses, net (8,290) (21,119) (11,586)
Group's share of profits of companies accounted for at equity, net 369 1,124 349
Taxes on income 24,301 13,371 21,163
Net income 77,395 39,440 56,100
Adjustments [Member]      
Disclosure of operating segments [line items]      
Revenues from external customers (66,153) (66,816) (38,262)
Inter-segment revenues (5,119) (5,812) (6,128)
Revenue (71,272) (72,628) (44,390)
Unallocated corporate expenses (2,113) (3,472) (2,713)
Depreciation and amortization (3,712) (3,724) (3,292)
Operating income (loss) (4,354) (6,104) (4,197)
Matrix [Member]      
Disclosure of operating segments [line items]      
Revenues from external customers 878,188 790,946 660,012
Inter-segment revenues 2,869 3,679 2,578
Revenue 881,057 794,625 662,590
Unallocated corporate expenses
Depreciation and amortization 8,554 6,855 6,513
Operating income (loss) 61,264 54,337 48,776
Sapiens [Member]      
Disclosure of operating segments [line items]      
Revenues from external customers 289,707 269,194 216,190
Inter-segment revenues
Revenue 289,707 269,194 216,190
Unallocated corporate expenses
Depreciation and amortization 26,249 21,969 14,227
Operating income (loss) 16,799 (5,053) 20,636
Magic [Member]      
Disclosure of operating segments [line items]      
Revenues from external customers 282,205 256,207 198,096
Inter-segment revenues 2,170 1,933 3,550
Revenue 284,375 258,140 201,646
Unallocated corporate expenses
Depreciation and amortization 12,562 13,611 11,608
Operating income (loss) 31,698 25,956 21,087
Other [Member]      
Disclosure of operating segments [line items]      
Revenues from external customers 109,041 105,608 72,585
Inter-segment revenues 80 200
Revenue 109,121 105,808 72,585
Unallocated corporate expenses
Depreciation and amortization 5,081 4,935 3,314
Operating income (loss) $ 4,210 $ 3,670 $ 2,198
Operating Segments (Details Textual)
 12 Months Ended
Dec. 31, 2018
Information Technologies (IT) Software solutions and services, Consulting & Management in Israel [Member]  
Disclosure of operating segments [line items]  
Description of factors used to segments In 2018, activity in Software solutions and value added services in Israel accounted for approximately 61% of Matrix's revenues for approximately 45% of its operating income.
Information Technologies (IT) Software solutions and services in the U.S [Member]  
Disclosure of operating segments [line items]  
Description of factors used to segments In 2018, activity in the U.S accounted for approximately 12% of Matrix's revenues and for approximately 26% of its operating income, because of higher operating gross margin in the U.S.
Training and integration [Member]  
Disclosure of operating segments [line items]  
Description of factors used to segments In 2018, activity in training and integration accounted for approximately 5% of Matrix's revenues and for approximately 8% of its operating income.
Computer infrastructure and integration solutions [Member]  
Disclosure of operating segments [line items]  
Description of factors used to segments In 2018, activity in Computer infrastructure and integration solutions accounted for approximately 17% of Matrix's revenues and for approximately 11% of its operating income.
Software product marketing and support [Member]  
Disclosure of operating segments [line items]  
Description of factors used to segments In 2018, activity in Software product marketing and support accounted for about 5% of Matrix's revenues and for approximately 10% of its operating income.
Magic [Member]  
Disclosure of operating segments [line items]  
Description of factors used to segments Magic products and services are available through a global network of regional offices, independent software vendors, system integrators, distributors and value added resellers as well as original equipment manufacturers and consulting partners in approximately 50 countries.
Insync [Member]  
Disclosure of operating segments [line items]  
Description of factors used to segments InSync is a U.S based national supplier of employees to Vendor Management Systems (VMS) Workforce Management Program accounts. Insync specializes in providing professionals in the following areas; Accounting and Finance, Administrative, Customer Service, Clinical, Scientific and Healthcare, Engineering, Manufacturing and Operations, Human Resources, IT Technology, LI/MFG, and Marketing and Sales. InSync currently supports more than 30 VMS program customers with employees in over 40 states.
Michpal [Member]  
Disclosure of operating segments [line items]  
Description of factors used to segments As of December 31, 2018, Michpal serves approximately 8,000 customers, most of which are long-term customers.
Subsequent Events (Details) - USD ($)
$ in Thousands
 1 Months Ended 12 Months Ended
Feb. 06, 2019
Jan. 01, 2019
Mar. 31, 2019
Mar. 26, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Subsequent Events (Textual)              
Series A Secured Debentures increased         $ 45,356 $ 78,229
Events After Reporting [Member]              
Subsequent Events (Textual)              
Description of public offering     Formula consummated a public offering in Israel of a new series of secured debentures - Series C Secured Debentures— in an aggregate NIS 300,000 par value amount, at a price of NIS 1,000 for each unit of NIS 1,000 principal amount. The aggregate gross proceeds from the public offering totaled NIS 298,500 (approximately $82,186). The Series C Secured Debentures are secured by liens on the shares of Formula’s subsidiaries, and are listed for trading only on the TASE (6,031,761 shares of Matrix; 2,411,474 shares of Magic and 2,957,590 shares of Sapiens). Each Series C Debenture unit bears interest at a fixed annual rate equal to 2.29%, which interest will be paid out on a semi-annual basis. The principal amount of the Series C Debentures will be payable by Formula in seven annual installments from December 1, 2020 through December 1, 2026, the first five of which will each constitute 11% of the principal, and the final two of which will each constitute 22.5% of the principal.        
Description of acquisition Matrix concluded the acquisition of 80% of the share capital of Dana Engineering Ltd., an Israeli based company providing project management services in the field of national infrastructure in Israel, for total cash consideration of NIS 52,000 (approximately $14,370). Matrix and the seller hold mutual options to purchase and sell (respectively) the remaining 20% interest in Dana Engineering which may be exercised following the second year anniversary of the acquisition.   Matrix concluded the acquisition of 100% of the share capital of MedaTech Ltd., an Israeli company and the leading business partner of Priority ERP with over 1,000 customers in a variety of verticals, for cash consideration of approximately NIS 85,000 approximately $23,600.        
Description of compensation   Matrix’s board of directors approved, following the approval by Matrix compensation committee, the grant of 1,440,000 options which are exercisable into up to 1,440,000 ordinary shares of Matrix of NIS 1 par value each to 20 senior officers of Matrix or of corporations controlled by it. The exercise price of the options was NIS 41.70 at the date of their grant, and it is subject to adjustments, including upon the distribution of dividends. Half of the options will vest on January 1, 2021, quarter of the options will vest on January 1, 2022, and the rest vested on January 1, 2023. When the actual exercise will take place, shares will be allotted in the net exercise mechanism. Matrix will not get paid in cash.          
Description of debt       The remaining outstanding Series B Convertible Debentures of the Company matured, and the Company repaid the holders of those debentures the entire remaining outstanding principal amount of NIS 44.5 million ($11.4 million), together with interest of $1.1 million, due under the debentures.      
Events After Reporting [Member] | Magic [Member]              
Subsequent Events (Textual)              
Percentage of share capital     100.00%