zk1517241.htm

FOR IMMEDIATE RELEASE

G. WILLI-FOOD REPORTS Q2 2015 FINANCIAL RESULTS

YAVNE, Israel - August 18, 2015 - 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 second quarter and the six-months ended June 30, 2015.

Second Quarter Fiscal 2015 Highlights (income statement highlights compared to same period last year):

Sales decreased 10.1% from second quarter of 2014 to NIS 71.2 million (US$ 18.9 million)

Gross profit decreased 24.7% from second quarter of 2014 to NIS 15.5 million (US$ 4.1 million), or 21.8% of sales

Operating income decreased 42.1% from second quarter of 2014 to NIS 3.2 million (US$ 0.9 million), or 4.5% of sales

Net loss of NIS 0.2 million (US$ 0.04 million), or 0.2% of sales

Loss per share of NIS 0.01 (US$ 0.003)

Cash and securities balance (net of short-term bank debt) of NIS 229.8 million (US$ 61.0 million) as of June 30, 2015

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

Second Quarter Fiscal 2015 Summary

Sales for the second quarter of 2015 decreased by 10.1% to NIS 71.2 million (US$ 18.9 million) from NIS 79.2 million (US$ 21.0 million) recorded in the second quarter of 2014. Sales decreased in the second quarter of 2015 primarily due to overall market decline in food product consumption by the Israeli consumer.

Gross profit for the second quarter of 2015 decreased by 24.7% to NIS 15.5 million (US$ 4.1 million) compared to NIS 20.6 million (US$ 5.5 million) recorded in the second quarter of 2014. Second quarter gross margin was 21.8% compared to gross margin of 26.0% for the same period in 2014. The decrease in gross profit and gross margin in the second quarter of 2015 was primarily due to reductions in the prices of certain of our products as a result of continued expectations from our customers for us to reduce prices and to certain expense shifting from selling expenses to gross margin, as a result of government regulations that became effective in January 2015.

Willi-Food’s operating income for the second quarter of 2015 decreased by 42.1% to NIS 3.2 million (US$ 0.9 million) compared to NIS 5.6 million (US$ 1.5 million) recorded in the second quarter of 2014. Selling expenses decreased by 14.3% from the comparable quarter of 2014, primarily due to a decrease in promotion expenses mainly due to the shifting of certain related expenses to gross margin as mentioned above, and a decrease in vehicle and transport expenses as a result of adjusting expenses in light of lower sales. Selling expenses as a percentage of sales decreased in the second quarter of 2015 to 12.5% compared to 13.1% in the second quarter of 2014.

General and administrative expenses increased by 19.5% from the second quarter of 2014 mainly due to a NIS 1.7 million (US$ 0.5 million) write-off recorded with respect to the Company’s estimated exposure to Mega Retail Ltd. and Eden Briut Teva Market Ltd. debts. See below.

Willi-Food’s loss before taxes for the second quarter of 2015 was NIS 0.2 million (US$ 0.04 million) compared to income before taxes of NIS 5.7 million (US$ 1.5 million) recorded in the second quarter of 2014.

Willi-Food's net loss in the second quarter of 2015 was NIS 0.2 million (US$ 0.04 million), or NIS 0.01 (US$ 0.005) per share, compared to NIS 4.4 million (US$ 1.2 million), or NIS 0.34 (US$ 0.09) per share, recorded in the second quarter of 2014.

Willi-Food ended the second quarter of 2015 with NIS 229.8 million (US$ 61.0 million) in cash and securities net of short-term bank debt. Net cash from operating activities for 2015 second quarter was NIS 16.8 million (US$ 4.5 million). Willi-Food's shareholders' equity at the end of June 2015 was NIS 392.5 million (US$ 104.1 million).

First Half Fiscal 2015 Highlights (compared to same period last year)

Sales decreased 9.7% to NIS 157.4 million (US$ 41.7 million);

Gross profit decreased 22.4% to NIS 32.6 million (US$ 8.6 million), or 20.7% of sales;

Operating income decreased 55.9% to NIS 5.3 million (US$ 1.4 million), or 3.4% of sales;

Net income decreased 78.5% to NIS 2.5 million (US$ 0.7 million), or 1.6% of sales; and

Earning per share of NIS 0.19 (US$ 0.05).

Six-Month Results

Willi-Food’s sales for the six-month period ending June 30, 2015 decreased by 9.7% to NIS 157.4 million (US$ 41.7 million) compared to sales of NIS 174.2 million (US$ 46.2 million) in the first half of 2014. Gross profit for the period decreased by 22.4% to NIS 32.6 million (US$ 8.6 million) compared to gross profit of NIS 42.0 million (US$ 11.1 million) for the first half of 2014. First half 2015 gross margins were 20.7% compared to gross margins of 24.1% in the same period of 2014.

Operating income for the first half of 2015 decreased by 55.9% to NIS 5.3 million (US$ 1.4 million) from NIS 12.0 million (US$ 3.2 million) reported in the comparable period of last year. First half 2015 income before taxes decreased by 76.3% to NIS 3.7 million (US$ 1.0 million) compared to NIS 15.5 million (US$ 4.1 million) recorded in the first half of 2014. Net income for the first half of 2015 decreased by 78.5% to NIS 2.5 million (US$ 0.7 million), or NIS 0.19 (US$ 0.05) per share, from NIS 11.5 million (US$ 3.0 million), or NIS 0.88 (US$ 0.23) per share, recorded in the first half of 2014.

Note regarding the Company’s exposure to losses due to the arrangement of debts of Mega Retail Ltd. and the stay of proceedings of its subsidiary Eden Briut Teva Market Ltd.:

Further to the Company's announcement on July 1, 2015 - the results for the second quarter of 2015 include a one-time reserve of NIS 1.7 million (US$ 0.5 million) reflecting the Company’s estimate of the losses it will experience due to the plan of recovery and arrangement of debts of Mega Retail Ltd. (“Mega”), Israel’s second largest supermarket chain, and the stay of proceedings of its subsidiary Eden Briut Teva Market Ltd. ("Eden").

On July 15, 2015, the District Court in Lod, Israel approved the plan of recovery and arrangement of debts submitted by Mega on June 29, 2015, under Section 350 of the Israeli Companies Law - 1999, due among other things to Mega's debt obligations owed to financial debtors, suppliers, service providers and lessors (the "Arrangement").

Under the Arrangement, 30% of the existing debt to large suppliers, such as Willi-Food, would be deferred for two years until June 30, 2017, with the deferred amounts repayable thereafter in 36 equal monthly installments with 3% annual interest without linkage to the CPI (2% annual interest without linkage to CPI during two-year period of deferral) ("Deferred Debt"). The balance of payments due to suppliers would be paid in four equal weekly installments beginning July 31, 2015 or, if later, the original payment date in the case of large suppliers. In addition, the Arrangement provides that large suppliers would be given the option to convert the Deferred Debt into ordinary shares of Alon Blue Square Israel Ltd., the parent company of Mega, under the conditions stipulated in the Arrangement. The Company’s accounts receivable related to Mega, as of June 30, 2015, total approximately NIS 5.6 million (US$ 1.5 million). This sum includes Value Added Tax of approximately NIS 0.9 million (US$ 0.24) which, if not paid, would be returned to the Company by the Israel Tax Authority. As of July 31, 2015, the Company has received payments from Mega in accordance with the Arrangement.

Additionally, on July 15, 2015, the District Court in Lod, Israel approved an extension for a stay of proceedings filed on July 9, 2015 for Mega's subsidiary, Eden ("Stay of Proceedings"). As part of the Stay of Proceedings, the court appointed a trustee for Eden who is charged with, among other things, management of Eden during the Stay of Proceedings, and the negotiation and auction for the sale of Eden's assets. According to reports published by Tiv Taam Holdings 1 Ltd. ("Tiv Taam"), on August 16, 2015, the court appproved the sale of Eden's assets for consideration of NIS 29.25 million to Tiv Taam. According to the reports, Tiv Taam has also committed to purchase Eden's non-expired inventory at cost. The Company’s accounts receivable related to Eden, as of the date of the Stay of Proceedings, total approximately NIS 0.6 million (US$ 0.16 million). This sum includes Value Added Tax.

In estimating the amount of the reserve and its estimated losses, the Company has assumed that it will be able to recover approximately 70% of the amounts owed to it from Mega and will not be able to recover amounts owed to it from Eden. In addition, it has taken into account the reduction of income taxes that will accrue as a result of the write-off.

Business Outlook

Mr. Zwi Williger, Co-Chairman of Willi-Food, commented, “Second quarter sales and profit margins were negatively affected by continued cautious buying paterns demonstrated by our customers, and the increasingly competitive Israel food retail sector. In light of Mega and Eden's recently reported challenges, we expect the Israeli food retail sector to continue its trend towards lower retail prices due primarily to decreased overall consumer spending. Our principal challenge will be in managing expenses in order to offer our products at the low prices our customers expect”.

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, 2015, U.S. $1.00 equals NIS 3.769. The translation was made solely for the convenience of the reader.

NOTE B: IFRS

The Company’s consolidated financial results for the three-month and six-month periods ended June 30, 2015 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, 2013, filed with the Securities and Exchange Commission on April 30, 2015. 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}

G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,						December 31,			June 30,						December 31,
	2 0 1 5			2 0 1 4			2 0 1 4			2 0 1 5			2 0 1 4			2 0 1 4
	NIS									US dollars (*)
	(in thousands)
ASSETS

Current assets
Cash and cash equivalents		86,178			58,559			82,902			22,864			15,537			21,996
Financial assets carried at fair value through profit or loss		124,416			158,654			122,733			33,010			42,094			32,564
Short term deposit		19,235			-			19,445			5,103			-			5,159
Trade receivables		87,682			96,099			86,690			23,265			25,497			23,001
Other receivables and prepaid expenses		2,485			6,329			3,700			659			1,679			982
Inventories		46,932			38,875			48,586			12,452			10,314			12,891
Current tax assets		2,463			-			1,372			653			-			364
Total current assets		369,391			358,516			365,428			98,006			95,121			96,957

Non-current assets
Property, plant and equipment		74,798			69,143			73,826			19,845			18,345			19,587
Less -Accumulated depreciation		30,235			26,726			28,579			8,022			7,091			7,583
		44,563			42,417			45,247			11,823			11,254			12,004

Other receivables and prepaid expenses		146			51			133			39			13			35
Goodwill		36			36			36			10			10			10
Deferred taxes		1,725			133			505			459			34			135
Total non-current assets		46,470			42,637			45,921			12,331			11,311			12,184

		415,861			401,153			411,349			110,337			106,432			109,141

EQUITY AND LIABILITIES

Current liabilities
Short-term bank debt		4			-			-			1			-			-
Trade payables		17,072			14,888			15,518			4,530			3,950			4,117
Employees Benefits		2,265			2,135			2,120			601			566			564
Current tax liabilities		-			9			-			-			2			-
Other payables and accrued expenses		3,432			5,992			7,010			911			1,590			1,860
Total current liabilities		22,773			23,024			24,648			6,043			6,108			6,541

Non-current liabilities
retirement benefit obligation		594			614			635			157			163			168
Total non-current liabilities		594			614			635			157			163			168

Shareholders' equity
Share capital NIS 0.1 par value (authorized - 50,000,000 shares, issued and outstanding – 13,107,579 shares at June 30, 2015; 12,974,245 shares at December 31, 2014)		1,420			1,407			1,407			377			373			373
Additional paid in capital		125,378			120,228			121,430			33,265			31,899			32,218
Capital fund		247			247			247			65			65			66
Remeasurement of the net liability in respect of defined benefit		(57	)		(33	)		(57	)		(15	)		(9	)		(15	)
Retained earnings		265,506			255,666			263,039			70,445			67,833			69,790
Equity attributable to owners of the Company		392,494			377,515			386,066			104,137			100,161			102,432

		415,861			401,153			411,349			110,337			106,432			109,141

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

G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Six months						Three months					Six months
	ended June 30,						ended June 30,					ended June 30,
	2 0 1 5			2 0 1 4			2 0 1 5			2 0 1 4		2 0 1 5			2 0 1 4
	NIS											U.S. dollars (*)
	In thousands (except per share and share data)

Sales		157,350			174,178			71,174			79,209		41,748			46,213
Cost of sales		124,792			132,209			55,679			58,644		33,110			35,078

Gross profit		32,558			41,969			15,495			20,565		8,638			11,135

Selling expenses		19,227			20,420			8,867			10,353		5,101			5,418
General and administrative expenses		10,211			9,684			5,532			4,628		2,709			2,569
Other income		(2,179	)		(147	)		(2,135	)		-		(578	)		(39	)

Total operating expenses		27,259			29,957			12,264			14,981		7,232			7,948

Operating income		5,299			12,012			3,231			5,584		1,406			3,187

Financial income		1,228			4,156			(632	)		659		325			1,103
Financial expense		2,864			684			2,761			522		760			181

Total financial (lost) income		(1,636	)		3,472			(3,393	)		137		(435	)		922

Income (lost) before taxes on income		3,663			15,484			(162	)		5,721		971			4,109

Taxes on income		1,196			4,003			(10	)		1,347		317			1,062

Profit (lost) for the period		2,467			11,481			(152	)		4,374		654			3,047

Earnings per share:
Earnings per share
Basic earnings per share		0.19			0.88			(0.01	)		0.34		0.05			0.23

Diluted earnings per share		0.19			0.88			(0.01	)		0.34		0.05			0.23

Shares used in computation of basic EPS		13,014,245			12,974,245			13,974,245			12,974,245		13,014,245			12,974,245

(*)	Convenience translation into U.S. dollars

G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months						Three months						Six months
	ended June 30,						ended June 30,						ended June 30,
	2 0 1 5			2 0 1 4			2 0 1 5			2 0 1 4			2 0 1 5			2 0 1 4
	NIS												U.S. dollars (*)
	In thousands (except per share and share data)
Cash flows - operating activities
Profit from operations		2,467			11,481			(152	)		4,374			654			3,045
Adjustments to reconcile net income to net cash from operating activities (Appendix)		456			(8,199	)		16,998			16,503			121			(2,175	)

Net cash from operating activities		2,923			3,282			16,846			20,877			775			870

Cash flows - investing activities
Acquisition of property plant and equipment		(2,232	)		(4,004	)		(712	)		(2,175	)		(592	)		(1,062	)
Proceeds from sale of property plant and Equipment		560			970			428			225			148			257
Proceeds from Loan carried at fair value through profit or loss		-			65,400			-			-			-			17,353
Proceeds from purchase of marketable securities, net		(1,435	)		(43,268	)		(6,905	)		(11,104	)		(381	)		(11,480	)

Net cash from (used in) investing activities		(3,107	)		19,098			(7,189	)		(13,054	)		(825	)		5,068

Cash flows - financing activities
Exercise of options into shares		3,456			-			-			-			917			-
Short-term bank debt		4			(18	)		(22	)		(2,644	)		1			(5	)

Net cash from (used in) financing activities		3,460			(18	)		(22	)		(2,644	)		918			(5	)

Increase in cash and cash equivalents		3,276			22,362			9,635			5,179			868			5,933

Cash and cash equivalents at the beginning of the financial year		82,902			36,197			76,543			53,380			21,996			9,604

Cash and cash equivalents of the end of the financial year		86,178			58,559			86,178			58,559			22,864			15,537

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

G. WILLI-FOOD INTERNATIONAL LTD.

APPENDIX TO CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months						Three months						Six months
	ended june 30,						ended june 30,						Ended June 30,
	2 0 1 5			2 0 1 4			2 0 1 5			2 0 1 4			2 0 1 5			2 0 1 4
	NIS												U.S. dollars (*)
	In thousands (except per share and share data)

Cash flows from operating activities:

A. Adjustments to reconcile net profit to net cash from operating activities
Decrease in deferred income taxes		(1,220	)		(632	)		(1,512	)		(432	)		(324	)		(168	)
Unrealized gain from Short term deposit		210			-			889			-			56			-
Unrealized loss (gain) on marketable securities		(248	)		(2,522	)		1,838			486			(66	)		(669	)
Depreciation and amortization		1,980			1,779			1,003			889			525			472
Capital gain on disposal of property plant and equipment		(220	)		(188	)		(176	)		-			(58	)		(50	)
Stock based compensation reserve		505			947			220			471			134			251
Unrealized Gain of loan carried at fair value through profit or loss		-			(100	)		-			-			-			(26	)
Net foreign exchange gain		-			(786	)		-			(786	)		-			(208	)

Changes in assets and liabilities:
Decrease (increase) in trade receivables and other receivables		(881	)		(16,803	)		11,832			6,810			(234	)		(4,458	)
Decrease (increase) in inventories		1,654			15,126			4,701			14,625			439			4,013
Increase (decrease) in trade and other payables, and other current liabilities		(1,324	)		(5,020	)		(1,797	)		(5,560	)		(351	)		(1,331	)

		456			(8,199	)		16,998			16,503			121			(2,175	)

B. Significant non-cash transactions:
Purchase of property, plant and equipment		(596	)		4,667			15			2,220			(158	)		1,238
Supplemental cash flow information:
Income tax paid		4,584			4,667			2,394			2,220			1,216			1,238

(*) 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.

Gil Hochboim, CEO and CFO

(+972) 8-932-1000

gil@willi-food.co.il

###

SOURCE: G. Willi-Food International Ltd.

	G. WILLI-FOOD INTERNATIONAL LTD.
Dated: August 18, 2015
	By:	/s/ Gil Hochboim
		Name: Gil Hochboim Title: Chief Executive Officer and Chief Financial Officer