G. Willi-Food Reports Fiscal 2016 Year End Financial Results

YAVNE, Israel, March 28, 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 financial results for the fiscal year ended December 31, 2016.

Fiscal 2016 Highlights 

• Operating income increased by 224% from fiscal 2015 to NIS 22.7 million (US$ 5.9 million), or 7.7% of sales in fiscal 2016.
• Sales decreased by 5.9% from fiscal 2015 to NIS 294.2 million (US$ 76.5 million) in fiscal 2016.
• Gross margin increased by 8.3% from fiscal 2015 to 26% of sales, or NIS 76.6 million (US$ 19.5 million),  in fiscal 2016.
• Net income increased by 58.6% from fiscal 2015 to NIS 10.9 million (US$ 2.8 million), or 3.7% of sales in fiscal 2016.
• Earning per share increased  to NIS0.82  (US$ 0.21) in fiscal 2016.
• Net cash from operating activities increased by 20.6% from fiscal 2015 to NIS 17.3 million (US$ 5.5 million) in fiscal 2016.
• Cash and securities balance of NIS 234.5 million (US$ 61 million) as of December 31, 2016.

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 2016 results, which represent a strong improvement for Willi-Food. In particular, during the year we placed strong focus on, and succeeded in, significantly improving profitability. Specifically, we focused on products with higher margins, which enabled us to improve gross profit even given a lower level of sales. Moreover, combined with tight control over our corporate expenses, we more than doubled our net profits over those of 2015. Towards the end of 2016, we launched a dividend program, sharing our profits and bringing increased value to our shareholders."

Continued Mr. Graiver, "Looking ahead to 2017, we will continue to work hard in keeping our expenses low and maintaining a favorable product mix. In addition, we look to expand our product lines, increase product sales with existing customers while growing into new customers. We have also started the process of exmaining M&A oppurtunities to further increase our market presence. Our overall goal is to build a strong, stable and profitable company, with the aim of maximizing long-term value for our shareholders."

Fiscal 2016 Summary

Sales for fiscal 2016 decreased by 5.9% to NIS 294.2 million (US$ 76.5 million) from NIS 312.5 million (US$ 81.3 million) in fiscal 2015. Sales decreased in 2016 due to; (i) the change in the Company's strategic focus to higher gross margin products which, while causing a decrease in the volume of sales, it enabled an increased level of gross profit as compared to fiscal 2015; (ii) the impact of shortage of inventories in the third quarter 2016 due to the strike at the Israeli Ministry of Health in July-August 2016, which significantly delayed the release of the Company's products from customs, and (iii) overall market decline in food product consumption by the Israeli consumer.

Gross profit for fiscal 2016 increased by 2.1% to NIS 76.6 million (US$ 19.9 million) compared to NIS 75.1 million (US$ 19.5 million) recorded in fiscal 2015. Gross margins for fiscal 2016 increased by 8.3 % to 26.0% compared to gross margins of 24.0% for fiscal 2015. The increase in gross margin was the result of the Company's strategic focus on selling a favorable mix of products, which generated a higher gross margin in addition to successful negotiations with suppliers for improved commercial terms.

Operating income for fiscal 2016 increased by 224% to NIS 22.7 million (US$ 5.9 million) compared to NIS 7 million (US$ 1.8 million) recorded in fiscal 2015. The most significant expense, which affected operating income, and in particular general and administrative expenses in fiscal 2015, was the cost related to the termination agreement with companies controlled by Messrs. Zwi and Joseph Williger, the Company's former Chairman and President, as described below.

Selling expenses increased by 5.7% from fiscal 2015, primarily due to an increase of 58% in promotional expenses  that included an approximate NIS 3 million (US$ 0.8 million) expense related to a nationwide campaign launched in the second half of 2016 aimed at broadening awareness of Willi-Food's brands and products. Selling expenses as a percentage of sales were 13.4%, compared to 11.9% as in fiscal 2015.

General and administrative expenses decreased by 56% from fiscal 2015 to NIS 14.6 million (US$ 3.8 million) compared to NIS 32.9 million (US$ 8.6 million). This was mainly due to the significant decrease in the costs of management salaries to Mr. Zwi Williger, the Company's former Co-Chairman of the Board of Directors and president, and Mr. Joseph Williger, a former director and president of the Company, which totaled NIS 13 million (US$ 3.4 million). In addition, in fiscal 2015, a NIS 1.7 million (US$ 0.4 million) write-off was recorded, with respect to the Company's estimated exposure to Mega Retail Ltd. and Eden Briut Teva Market Ltd. debts.

Willi-Food's income before taxes for fiscal 2016 increased by 136% to NIS 16.1 million (US$ 4.2 million) compared to NIS 9.4 million (US$ 2.4 million) recorded in fiscal 2015.

Willi-Food's net income for fiscal 2016 increased by 142% to NIS 16.6 million (US$ 4.3 million), or NIS 0.82(US$ 0.21) per share, from NIS 6.8 million (US$ 1.8 million), or NIS 0.52(US$ 0.14) per share, recorded in fiscal 2015.

Willi-Food ended fiscal 2016 with NIS 234.5 million (US$ 61 million) in cash and securities with no short-term debt. Net cash from operating activities in fiscal 2016 was NIS 17.2 million (US$ 4.5 million).Willi-Food's shareholders' equity at the end of December 2016 was NIS 391 million (US$ 101.7 million).

Note regarding the convening of an annual meeting of shareholders

The Company's Board of directors  has scheduled the convening of an annual meeting of shareholders, to be held on June 20, 2017 following submission by the Company of its Annual Report on Form 20-F. 

Note regarding the conference call

As previously announced, on March 7, 2017, the Company will host a conference call on Tuesday, March 28, 2017starting at 1.30pm Eastern Time.  Management will host the call and will be available to answer questions after presenting the results.

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:   1-888-281-1167
Israel:  03- 918-0685
International:   +972-3- 918-0685

At: 1.30pm Eastern Time, 10.30am Pacific Time, 6.30pm UK Time, 8.30pm 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 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 December 31, 2016, U.S. $1.00 equals NIS 3.845. The translation was made solely for the convenience of the reader.

NOTE B: IFRS

The Company's consolidated financial results for fiscal year ended December 31, 2016 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, 2015, filed with the Securities and Exchange Commission on April 28, 2016. 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.

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

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

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

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

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

Investor Relations Contact:
GK Investor and Public Relations
Ehud Helft / Gavriel Frohwein
(646) 688-3559
willifood@gkir.com

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SOURCE G Willi Food International