I accept the position at hand that the calculation in this matter is not supposed to rely on the actual income of Flames from the said activity (as the expert did). These are subsistence damages intended to place a party to the agreement where the agreement would have been fulfilled as it should have been. In the matter of buses, an agreed price list of amounts to be paid for each action was determined. The calculation should be made accordingly.
Type and Rate of Profit
- As explained above, net profit should be taken into account.
Danan referred only to gross profit, which she estimated at 71% in bus installations and 68% in service (paragraphs 48 and 51 of the summaries). The CPA expert, Barnea, estimated the net profit rate at 10%, noting that this is much higher than the net profit rate mentioned in Danan's reports. The expert wrote that he does not accept the argument of the representatives in this case that the profit rates regarding the service to the buses are higher than their rate in respect of the regulation, due to expenses such as trips that must be taken into account in this matter (paragraph 3.6.5 of the opinion). The expert on behalf of Lehavot, whose opinion was later submitted, supported the assessment of CPA Barnea (M/125, p. 12, paragraphs 3.6-3.5[12]).
- The above in the context of the profit rate in the field of hoods is very good here as well. In the aforementioned rule, the agreed expert's interrogation focused to a large extent on the question of whether gross or net profit should be taken into account, and the question of concrete profit rates was rarely addressed. The expert did not take into account the net profit rates mentioned in the financial statements, but rather took into account the characteristics of the sector, although the available data regarding the profit rate in the bus sector for most of 2017 were not presented. Regarding the requirement for administrative and general expenses, including the actual investment of many resources, see above. I did not find justification for interfering with the expert's conclusion regarding the rate of profit.
- In the context of the additional costs, please note, Because the testimonies have shown that providing service to buses, especially dealing with malfunctions, can be a non-profitable and even loss-making move. There were cases in which Danan refused to respond to bus service calls for economic reasons (see below). Danan was aware in advance that she would have to provide service throughout the country. The CEO at the time testified: "It's a field of bus shit, as if he is rightly [the CEO of Lehavot - Tel Aviv. Wanted to get rid of it, it's not a sexy field or that, a very difficult field, a very difficult market. Once again, as a company that deals with this on a daily basis, which inspects pumps, inspects fire extinguishers, checks sprinklers from every corner of the country, so anything like that would be complementary. The technician who goes to check the 'Elbit' Ness Ziona will check the fire extinguisher on the bus that is stuck nearby. It was us in deployment. This is the business logic" (p. 378, paras. 12-18).
Buses - Conclusion
- It emerges from the aggregate that with regard to the bus sector, the activities carried out by Lehavot during the relevant period (January 2017 to January 2018) should be taken into account, and they should be multiplied by the list prices that were agreed. The resulting result will be used as the amount of revenue withheld, of which 10% constitutes a loss of profit in this area.
Note: In the statement of claim, where the calculation of the buses was based on data from the Central Bureau of Statistics, Danan noted that for toll purposes, its requirements regarding regulations and start-ups relate only to buses that entered Israel in the years 2017 - half of 2018 "and did not take into account all the existing buses from 2012 that are required to be installed under the law." At the stage of evidence and summaries, which were based on flaming data, the requirements do not separate buses that entered during the aforementioned period from buses that entered earlier in the context of installation and starting. The parties disagree on the question of whether Danan is entitled to do so. It is possible that in light of the findings and determinations in this judgment, the significance of this dispute has been reduced.