Regarding the Manafim service, CPA Barnea noted that according to data received from Danan, she was credited with only 26% of labor expenses in this regard. According to his calculations, labor expenses should be increased to 30% and additional costs should be added, in a way that brings the gross profit rate to 50% (instead of 74%), while noting that in Danan's audited reports, the gross profit is 15%. The expert found that to these should be added administrative and general expenses (at a rate of 10% rather than 12% as in its reports) and financing costs of 1%, and a net profit loss of 39%[11] of revenues should be obtained.
- To complete the picture, it should be noted that Lehavot's expert, CPA Strashnov, expressed his position that the head of the damage caused by the hood regulations amounts to "zero", i.e., balance. According to him, to the extent that the gross profit rate in the installation of hoods is 7%, as Danan claims, after deducting management expenses and financing expenses that together amount to 12%, as required by him, this component will amount to a loss, regardless of the alleged income (M/125; p. 11 of the 2022 opinion, paragraph 3.4). Regarding the service of hoods, the expert on behalf of Lehavot believes that the basis for calculating the compensation should be the cost of a technician's workday in the amount of ILS 1,823 (instead of ILS 1,300) with an average of 5 site visits per day (and not 6). According to his opinion, administrative and general expenses at the rate of 11% and financing expenses at the rate of 1% should be added (for the calculations of the opinion relating to three periods, see M/125; p. 11 of the opinion, paragraph 3.3).
- Danan has data for 2017 that details profit by sector, hoods and buses, which it did not present in the proceeding, and its reasons with it. see p. 334, s. 7 - p. 335, s. 24; Including: "Q: [...] If you were interested in inserting the data here regarding Danan's profit during the period when it had exclusivity in the hoods, you could have done it, you would have had these data, right? A: Most likely, yes" (Labor appeal also: "I in the company do a monthly audit of all the departments every month, I know how much money each department put in, how much money it put in, how much money it paid to contractors, how much it paid consultants or cranes, and so on, and I see the level of profitability, it gives us the tools to decide further"; p. 308, s. 29 - p. 309, s. 4).
The witness was presented with a difficulty in this matter: "I expect that when a company claims lost profits from a certain activity, it will come and say that this was our profit during the period when there is no dispute that we had this activity, from this profit that we made we expect that in the future we would have done more, we would have done less, why would we have done more, why would we have done less, but the basis will be what profit you made during the period in which you had this activity. Why isn't this figure found either in the financial statements or in the statement of claim?" (p. 336, paras. 7-17). The response given: "Because it is irrelevant" was not sufficient. It is possible that, as Danan argues, in the preparation of the financial statements, a non-sectoral reference is appropriate to the activity that has been discontinued, but in the context of a claim, the petitioner for the incumbent relief must bring the concrete data regarding the component for which he is demanding payment. If we refrain from doing so, it raises a question. It should be noted that this is a person who testifies about himself: "I don't give up money for nothing" (p. 325, s. 22; and see: "I'm terribly miserly, I like to get everything I deserve," ibid., s. 22-23), "and with money you don't argue with me, that's my job, it's my job. I know how much I received" (p. 304, 1-2).
- The investigation of the agreed expert on the matter of profits focused to a large extent on the question of the type of profit to be taken into account (raw or net) and hardly touched on concrete profit rates, and certainly on the hoods. The expert examined each issue on its merits. It did not take the net profit rates mentioned in financial statements, but rather took into account the characteristics of sectors, and even set profit rates higher than those set in the reports. Danan did not provide data in its possession regarding profit by sector. Regarding the requirement for administrative and general expenses, see above. I did not find justification for interfering with the expert's conclusion regarding the rate of profit.
Hoods - Conclusion
- It appears from the aggregate that income from sales or services made other than through the assessee or from distributors whose exclusion was agreed, in the period from the beginning of 2017 to January 16, 2018, and less income for which countercharges were issued, are revenues that were avoided in the field of hoods.
A rate of 39% of revenue related to the service of hoods constitutes a loss of profit in this area. Regarding the installation of hoods, there is no finding of profit.