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Willi-Food’s operating divisions include Willi-Food, a distributor of a broad variety of kosher foods, and its wholly-owned Gold Frost, a designer, developer and distributor of branded kosher innovative dairy food products.

 

 

·	Gross profit decreased 32.2% year-over-year to NIS 14.6 million (US$ 4.2 million).

·	Operating loss of NIS 1.6 million (US$ 0.4 million), or -2.2% of sales, compered to operating profit of NIS 7.9 million in the comparable quarter of 2016.

·	Net profit was NIS 1.6 million (US$ 0.4 million), or 2.1% of sales, a decrease of 79.7% versus the second quarter of 2016.

·	Net cash from operating activities of NIS 7 million (US$ 2 million).

·	Cash and securities balance of NIS 199.7 million (US$ 57.1 million) as of June 30, 2017.

·	Earnings per share of NIS 0.12 (US$ 0.03).

 

 

Sales for the second quarter of 2017 remained substantially unchanged year-over-year, with a decrease of sales of 0.2% to NIS 76.4 million (US$ 21.8 million) from NIS 76.6 million (US$ 21.9 million) recorded in the second quarter of 2016.

Gross profit for the second quarter of 2017 decreased by 32.2% to NIS 14.6 million (US$ 4.2 million) compared to NIS 21.5 million (US$ 6.1 million) recorded in the second quarter of 2016. Second quarter 2017 gross margin decreased by 32% to 19.1% compared to gross margin of 28.1% for the same period in 2016. The decrease in gross margin was primarily due to reductions in the prices of certain of our products as a result of continued expectations from our customers for reduced prices and from the impact of the massive inventory increase.

 

Willi-Food’s operating income for the second quarter of 2017 decreased by 120.9% to an operating loss of NIS 1.6 million (US$ 0.4 million) compared to operating income of NIS 7.9 million (US$ 2.2 million) in the second quarter of 2016. Selling expenses increased by 15.9% from the comparable quarter of 2016 primarily due to a sharp increase in promotional expenses that included an approximately NIS 1.5 million (US$ 0.4 million) expense that was part of the annual budget and related to a nationwide campaign aimed at broadening market awareness of Willi-Food's brands and products. Selling expenses as a percentage of sales were 14.4%, compared to 12.4% in the second quarter of 2016.

General and administrative expenses were NIS 5.4 million (US$ 1.3 million) in the second quarter of 2017, an increase of 32.6% compared to NIS 4.1 million (US$ 1.1 million) in second quarter of 2016, mainly due to an increase of the reserve for doubtful debts.

Willi-Food’s income before taxes for the second quarter of 2017 was NIS 1 million (US$ 0.3 million) compared to income before taxes of NIS 10.3 million (US$ 2.9 million) recorded in the second quarter of 2016.

Willi-Food's net profit in the second quarter of 2017 was NIS 1.6 million (US$ 0.4 million), or NIS 0.12 (US$ 0.03) per share, compared to NIS 7.7 million (US$ 2.2 million), or NIS 0.58 (US$ 0.16) per share, recorded in the second quarter of 2016.

Willi-Food ended the second quarter of 2017 with NIS 199 million (US$ 57 million) in cash and securities. Net cash from operating activities for 2017 second quarter was NIS 7 million (US$ 2 million). Willi-Food's shareholders' equity at the end of June 2017 was NIS 397.8 million (US$ 117.9 million).

·

Sales increased 0.3% to NIS 159.7 million (US$ 45.7 million).

·

Gross profit decreased 13.5% to NIS 36.6 million (US$ 10.4 million), or 22.9% of sales.

·

Operating income decreased 68.4% to NIS 5 million (US$ 1.4 million), or 3.1% of sales.

·

Net income decreased 53% to NIS 5.8 million (US$ 1.6 million), or 3.7% of sales.

·

Earning per share of NIS 0.44 (US$ 0.13).

 

Willi-Food’s sales for the six-month period ending June 30, 2017 decreased by 0.3% to NIS 159.7 million (US$ 45.7 million) compared to sales of NIS 159.2 million (US$ 45.5 million) in the first half of 2016.  Gross profit for the period decreased by 13.5% to NIS 36.6 million (US$ 10.4 million) compared to gross profit of NIS 42.3 million (US$ 12.1 million) for the first half of 2016. First half 2017 gross margin was 22.9% compared to a gross margin of 26.6% for the same period in 2016.

Operating income for the first half of 2017 decreased by 68.4% to NIS 5 million (US$ 1.4 million) from NIS 15.8 million (US$ 4.5 million) reported in the comparable period of last year primarily due to the decrease of gross profit and increase of selling expenses.  First half 2017 income before taxes decreased by 59% to NIS 6.8 million (US$ 1.9 million) compared to NIS 16.7 million (US$ 4.8 million) recorded in the first half of 2016. Net income for the first half of 2017 decreased by 53% to NIS 5.8 million (US$ 1.6 million), or NIS 0.44 (US$ 0.13) per share, from NIS 12.5 million (US$ 3.5 million), or NIS 0.94 (US$ 0.27) per share, recorded in the first half of 2016.

 

As previously announced, on February 17, 2016, a search was conducted in the offices of the Company, the Parent Company, BSD Crown Ltd., and B.G.I Investments Ltd. (collectively, the “Group”), by the Israeli Securities Authority (the “ISA”), during which various documents and computers were taken from the Group's offices. A number of executives in the Group were investigated by the ISA, and Mr. Gregory Gurtovoy, a former member of the Company's board of directors and the former indirect controlling shareholder, was detained for interrogation by the ISA for three days, after which, he was placed under house arrest for a period of two weeks, on the suspicion of the crimes of fraudulent acquisitions under aggravating circumstances, falsifying corporate documents, fraud, breach of fiduciary duty in a corporation, money laundering, as well as misleading reporting.

 

The Investment was carried out by B.H.W.F.I Ltd., a wholly owned subsidiary of the Company (“BHWFI”), pursuant to subscription forms to purchase 300 bonds with a nominal value of US$ 10,000 each (the “Subscription Forms”). The Bonds bear an annual interest rate of 6%, payable semi-annually on June 30 and December 31 of each year as of the issue date until the final maturity date of 31 December 2018. The issuer has the right to repay the Bonds with prior notice of 30 days without penalty.

On December 30, 2016, BHWFI and the issuer signed an agreement (the “Agreement”) for an early redemption of the bonds for a total of US$ 1.8 million to be paid by February 15, 2017.  As part of the Agreement, the issuer waived all its claims against BHWFI, including an alleged obligation to make an additional investment in bonds up to an aggregate amount of US$ 5 million (as stated above, an amount of US$ 2.25 million was invested in the past).

On March 21, 2017, a first payment in the amount of US$ 200 thousand was received and on July 6, 2017, a second payment in the amount of US$ 400 thousand was received.

 As of the financial results reporting date, due to uncertainty related to the collection of the remaining US$1.5 million debt, the company kept a non-cash provision in the amount of the unpaid debt.

On May 5, 2017, following a court proceeding in the District Court of Tel-Aviv in which the court permitted the trustee to vote the B.S.D Trustee Shares independently at his discretion, a special meeting of the shareholders of B.S.D appointed three directors to the Board of Directors of B.S.D as nominated by Yoseph Williger and the termination of the term of office of all then current directors of B.S.D other than the external director who remained in office. After such appointments, Yoseph Williger gained effective control of the Board of Directors of B.S.D. The trustee did not vote the B.S.D Trustee Shares at such meeting. There is currently an ongoing court proceeding to determine whether the trustee has a permanent right to vote the B.S.D Trustee Shares at his discretion.

On June 11, 2017, following a court proceeding in the District Court of Tel-Aviv in which the court ordered that a shareholders meeting be held in the parent company prior to the convening of a shareholders meeting of the Company, a special meeting of the parent company shareholders approved the appointment of the following B.S.D nominated directors: Mr. Zwi Williger, Mr. Yoseph Williger, Mr. Kobi Navon and Mr. Benzi Sao; and the termination of the term of office of all then current directors of the parent company (Mr. Gregory Gurtovoy, Mr. Ilan Admon, Ms. Shalhevet Hasdiel, Mr. Eli Arad and Arik Safran) other than the external directors of the parent company (Mrs. Ronit Zalman Malach and Mr. Ziv Ironi) who remained in office.

On June 20, 2017, an Annual and Special Meeting of Shareholders of the Company approved the appointment of the following directors: Mr. Yoseph Williger, Mr. Zwi Williger, Mr. Gil Hochboim and Mr. David Donin. and the termination of the term of office of all then current directors of the company (Mr. Gregory Gurtovoy, Mr. Ilan Admon, Mr. Ilan Cohen, and Mr. Emil Bodilovski) other than the external directors of the parent company (Mrs. Sigal Grinboim and Mr. Menashe Arnon) who remained in office.

 

On june 20, 2017 the board of directors aprproved the appointment of Mr. Victor Bar as a director.

NOTE A: Convenience Translation to Dollars

The convenience translation of New Israeli Shekels (NIS) into U.S. dollars was made at the rate of exchange prevailing on June 30, 2017, U.S. $1.00 equals NIS 3.496. The translation was made solely for the convenience of the reader.

NOTE B: IFRS

The Company’s consolidated financial results for the six-month period ended June 30, 2017 are presented in accordance with International Financial Reporting Standards (“IFRS”).

 

ABOUT G. WILLI-FOOD INTERNATIONAL LTD.:

 

This press release contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to future events or our future performance, such as statements regarding trends, demand for our products and expected sales, operating results, and earnings. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in those forward-looking statements. These risks and other factors include but are not limited to: monetary risks including changes in marketable securities or changes in currency exchange rates- especially the NIS/U.S. Dollar exchange rate, payment default by any of our major clients, the loss of one of more of our key personnel, changes in laws and regulations, including those relating to the food distribution industry, and inability to meet and maintain regulatory qualifications and approvals for our products, termination of arrangements with our suppliers, in particular Arla Foods, loss of one or more of our principal clients, increase or decrease in global purchase prices of food products, increasing levels of competition in Israel and other markets in which we do business, changes in economic conditions in Israel, including in particular economic conditions in the Company's core markets, our inability to accurately predict consumption of our products and changes in consumer preferences, our inability to protect our intellectual property rights, our inability to successfully integrate our recent acquisitions, insurance coverage not sufficient enough to cover losses of product liability claims and risks associated with product liability claims. We cannot guarantee future results, levels of activity, performance or achievements. The matters discussed in this press release also involve risks and uncertainties summarized under the heading "Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2016, filed with the Securities and Exchange Commission on April 27, 2017. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking information contained in this press release.

{FINANCIAL TABLES TO FOLLOW}

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

CASH FLOWS - OPERATING ACTIVITIES:

 

 

		Six months								Three months								Six months
		ended								ended								ended
		June 30,								June 30,								June 30,
		2 0 1 7				2 0 1 6				2017				2016				2 0 1 7				2 0 1 6
		NIS																US dollars (*)
		(in thousands)
Purchase of property, plant and equipment			-				-				-				-				-				-
Supplemental cash flow information:
Income tax paid			3,719				4,734				1,069				2,361				1,063				1,354

 

 

 

This information is intended to be reviewed in conjunction with the Company’s filings with the Securities and Exchange Commission.

 

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SOURCE: G. Willi-Food International Ltd.

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