G. Willi-Food Reports First Quarter 2017 Results

YAVNE, Israel, May 25, 2017 /PRNewswire/ -- G. Willi-Food International Ltd. (NASDAQ: WILC) (the "Company" or "Willi-Food"), a global company that specializes in the development, marketing and international distribution of kosher foods, today announced its unaudited financial results for the first quarter ended March 31, 2017.

First Quarter Fiscal 2017 Highlights

• Sales increased by 0.8% year-over-year to NIS 83.3 million (US$ 22.9 million)
• Gross profit increased by 6% year-over-year to NIS 22.0 million (US$ 6.1 million)
• Gross margin increased by 5.1% year-over-year to 26.4% of sales
• Net profit was NIS 4.3 million (US$ 1.2 million), or 5.2% of sales, a decrease of 9.3% versus the first quarter of 2016, mainly due to increased marketing activities under the Company's budget to increase the Company's market share
• Earning per share of NIS 0.32(US$ 0.1)

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.

Management Comment

Iram Graiver, President of Willi-Food, commented, "We are pleased with our first quarter 2017 results. We continue to place focus on ensuring sales of a more profitable product mix and our results reflect the success of this strategy. We have also recently invested additional efforts in our sales and marketing strategy in order to improve  consumer perception of our products within Israel, which will enable us to broaden our sales over the long-term. In addition, we look to expand our product lines and  increase market share while expanding into new markets. Combined with ongoing tight control over our corporate expenses, we expect 2017 to be a positive year for Willi-Food."

Continued Mr. Graiver, "Our overall goal is to build a strong, stable and profitable company, with the aim of maximizing long-term value for our shareholders."

First Quarter Fiscal 2017 Summary

Sales for the first quarter of 2017 increased by 0.8% to NIS 83.3 million (US$ 22.9 million) from NIS 82.6 million (US$ 22.7 million) recorded in the first quarter of 2016. Sales increased in the first quarter of 2017 primarily due to effective marketing campaign activities carried out in the first quarter and the Passover holiday, which occurred during the reporting period in the first quarter, while in 2016 the holiday occurred between the first and the second quarter.

Gross profit for the first quarter of 2017 increased by 6% to NIS 22 million (US$ 6.1 million) compared to NIS 20.8 million (US$ 5.7 million) recorded in the first quarter of 2016. First quarter gross margin increased by 5.1% to 26.4% compared to gross margin of 25.1% for the same period in 2016. The increase in gross margin was the result of the Company's continued strategic focus on selling a favorable mix of products, which generate a higher gross margin.

Willi-Food's operating income for the first quarter of 2017 decreased by 16.3% to NIS 6.7 million (US$ 1.8 million) compared to NIS 7.9 million (US$ 2.1 million) in the first quarter of 2016. Selling expenses increased by 31.5% 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 approved by the Company's board of directors and related to a nationwide campaign which was launched in the second half of 2016 and continued in the first quarter 2017 aimed at broadening market awareness of Willi-Food's brands and products. Selling expenses as a percentage of sales were 14.2%, compared to 10.9% as in first quarter of 2016.

General and administrative expenses were NIS 3.5 million (US$ 0.9 million) in the first quarter of 2017, a decrease of 6.6% compared to NIS 3.8 million (US$ 1.0 million) in first quarter of 2016. This was primarily due to a decrease of legal fees and a decrease in the measurable bonus paid to management.

Willi-Food's income before taxes for the first quarter of 2017 was NIS 5.8 million (US$ 1.6 million) compared to income before taxes of NIS 6.3 million (US$ 1.7 million) recorded in the first quarter of 2015.

Willi-Food's net profit in the first quarter of 2017 was NIS 4.3 million (US$ 1.2 million), or NIS 0.32(US$ 0.09) per share, compared to NIS 4.7 million (US$ 1.3 million), or NIS 0.36(US$ 0.10) per share, recorded in the first quarter of 2016.

Willi-Food ended the first quarter of 2017 with NIS 192.9 million (US$ 53.1 million) in cash and securities net of short-term bank debt. Net cash to operating activities for 2017 first quarter was NIS 42.5 million (US$ 11.7 million). Willi-Food's shareholders' equity at the end of March 2017 was NIS 395.3 million (US$ 108.8 million).

Note regarding the conference call

As previously announced, on May 21, 2017, the Company will host a conference call on Thursday, May 25, 2017 at 10am Eastern Time. 

To participate in the conference call, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, try the international dial-in number.

US:                      1-866-744-5399
Israel:                   03-918-0664
International:       +972-3-918-0664

At: 10am Eastern Time, 7am Pacific Time, 3pm UK Time, 5pm Israel Time

For those unable to participate, the teleconference will be available for replay on the company's website at http://willi-food.com/ beginning 24 hours after the call for a period of 30 days.

Note regarding Israeli Securities Authority Investigation 

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, member of the Company's board of directors and the 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 (which has since ended), 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.

To Company management's knowledge, the investigation by the ISA relates to an investment of approximately US$ 2.25 million (the "Investment") made during January 2016  in the form of bonds of a European company, which allegedly served as a collateral to a loan obtained by the controlling shareholder or another individual, and which was unrelated to the Company's operations.

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 ("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 that was to be paid until February 15, 2017.  Similarly, as part of the terms 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 $5 million (as stated above, an amount of US$ 2.25 million was invested in the past).

On March 21, 2017, a first payment in the amount of US$200 thousands was received. As of the financial results reporting date, due to uncertainty related to the collection of the remaining US$1.6 million debt, the company made non-cash provision in the amount of the unpaid debt.

Note regarding our controlling shareholder, B.S.D. Crown Ltd.

As previously announced, on May 8, 2017, Willi Food Investments Ltd. ("WIL"), reported announcements made by WIL's own controlling shareholder, B.S.D. Crown Ltd. (formerly known as Emblaze Ltd.) ("B.S.D."), and by BGI Investments (1961) Ltd. ("BGI"), a shareholder of BSD.

B.S.D. announced the results of its extraordinary general meeting of shareholders with respect to the election of directors, among other things.

BGI announced that the director nominees supported by BGI were not elected at the shareholders meeting of B.S.D., and as a result BGI does not have any representation on the board of directors of B.S.D.  BGI further announced that pursuant to a recent court ruling in Israel, it no longer sees itself as a controlling shareholder of B.S.D., and to the extent B.S.D. would have classified BGI as a non-controlling shareholder, the external directors supported by BGI would have been elected as director of B.S.D. BGI said it is studying the results of the shareholders meeting and it will reserve its rights.

The Company also announced that, in furtherance of the announcement by BGI, the Company received a letter from Mr. Joseph Williger addressed to the Company and to WIL claiming that he is the controlling shareholder of B.S.D., and as a result, a controlling shareholder of WIL and the Company, commencing from the date of the shareholders meeting of B.S.D.

On May 18, 2017, B.S.D. filed an urgent motion for relief against the Company, WIL and the directors serving in WIL, requesting that the Court order the convening of a meeting of the WIL's shareholders to replace the members of the WIL's Board of Directors, and instruct that this meeting be convened by June 11, 2017, in order to enable the new Board of Directors to be appointed to vote at the Company's shareholders' meeting scheduled for June 20, and immediately will change the control in WIL and the Company. The hearing on the request was set for May 29, 2017.

On May 24, 2007, WIL and the Company filed their response, requesting the Court to outright reject B.S.D.'s motion and charging B.S.D. with the Company's and WIL's legal expenses in respect of the proceeding.

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 March 31, 2017, U.S. $1.00 equals NIS 3.632 The translation was made solely for the convenience of the reader.

NOTE B: IFRS

The Company's consolidated financial results for the three-month period ended March 31, 2017 are presented in accordance with International Financial Reporting Standards ("IFRS").

About G. Willi-Food International Ltd.:

G. Willi-Food International Ltd. (http://www.willi-food.com) is an Israeli-based company specializing in high-quality, great-tasting kosher food products. Willi-Food is engaged directly and through its subsidiaries in the design, import, marketing and distribution of over 600 food products worldwide. As one of Israel's leading food importers, Willi-Food markets and sells its food products to over 1,500 customers in Israel and around the world including large retail and private supermarket chains, wholesalers and institutional consumers. The company's operating divisions include Willi-Food in Israel and Gold Frost, a wholly owned subsidiary who designs, develops and distributes branded kosher, dairy-food products.

FORWARD LOOKING STATEMENT

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.

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 (*)    Convenience translation into U.S. dollars.

(*)     Convenience translation into U.S. dollars.

(*)     Convenience Translation into U.S. Dollars.

(*)     Convenience Translation into U.S. Dollars.

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

Company Contact:
G. Willi - Food International Ltd.
Pavel Buber, Chief Financial Officer
(+972) 8-932-1000
pavel@willi-food.co.il

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SOURCE G Willi Food International