G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
------- ------- ------- -------
2 0 0 7 2 0 0 6 2 0 0 7 (*) 2 0 0 6 (*)
------- ------- ------- -------
NIS US DOLLARS
-------------------- --------------------
I N T H O U S A N D S
----------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 59,441 91,398 13,989 21,511
Marketable securities 32,515 13,945 7,652 3,282
Trade receivables 67,094 48,163 15,790 11,335
Other receivables and prepaid expenses 4,206 4,499 990 1,059
Inventories 31,377 19,101 7,385 4,495
------- ------- ------- -------
TOTAL CURRENT ASSETS 194,633 177,106 45,806 41,682
------- ------- ------- -------
FIXED ASSETS
Cost 53,513 49,213 12,594 11,582
Less: accumulated depreciation and
amortization 7,191 6,442 1,692 1,516
------- ------- ------- -------
46,322 42,771 10,902 10,066
------- ------- ------- -------
OTHER ASSETS, NET 3,399 94 800 22
======= ======= ======= =======
244,354 219,971 57,508 51,770
======= ======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term loan 6,374 - 1,500 -
Trade payables 29,123 20,137 6,854 4,739
Related parties 3,707 5,677 872 1,336
Other payables and accrued expenses 6,563 6,969 1,545 1,640
------- ------- ------- -------
TOTAL CURRENT LIABILITIES 45,767 32,783 10,771 7,715
------- ------- ------- -------
LONG TERM LIABILITIES
Accrued severance pay 400 347 94 82
------- ------- ------- -------
WARRANTS TO ISSUE SHARES OF SUBSIDIARY - 348 - 82
------- ------- ------- -------
MINORITY INTEREST 16,976 14,754 3,995 3,472
------- ------- ------- -------
SHAREHOLDERS' EQUITY
Ordinary shares NIS 0.10 par value
(authorized - 50,000,000 shares, issued and
outstanding - 10,267,893 shares) 1,113 1,113 262 262
Additional paid-in capital 61,350 61,350 14,439 14,439
Foreign currency translation reserve 70 - 16 -
Retained earnings 118,678 109,276 27,931 25,718
------- ------- ------- -------
181,211 171,739 42,648 40,419
======= ======= ======= =======
244,354 219,971 57,508 51,770
======= ======= ======= =======
(*) Convenience translation into U.S. dollars.
F - 2
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS THREE MONTHS SIX MONTHS
-------------------------- -------------------------- --------------------------
ENDED JUNE 30, ENDED JUNE 30,
---------------------------------------------------------- --------------------------
2 0 0 7 2 0 0 6 2 0 0 7 2 0 0 6 2 0 0 7 (*) 2 0 0 6 (*)
---------- ---------- ---------- ---------- ---------- ----------
NIS US DOLLARS
---------------------------------------------------------- --------------------------
(IN THOUSANDS ,EXCEPT PER SHARE AND SHARE DATA)
------------------------------------------------------------------------------------------
Sales 127,216 97,745 55,771 43,200 29,940 23,004
Cost of sales 92,996 71,910 42,342 31,783 21,886 16,924
---------- ---------- ---------- ---------- ---------- ----------
GROSS PROFIT 34,220 25,835 13,429 11,417 8,054 6,080
---------- ---------- ---------- ---------- ---------- ----------
Selling expenses 13,930 9,866 7,315 4,711 3,278 2,322
General and
administrative expenses 7,523 7,709 3,446 2,885 1,771 1,814
---------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses 21,453 17,575 10,761 7,596 5,049 4,136
---------- ---------- ---------- ---------- ---------- ----------
OPERATING INCOME 12,767 8,260 2,668 3,821 3,005 1,944
Financial income, net 2,354 1,380 1,478 767 554 325
Other income 9 19,113 9 - 2 4,498
---------- ---------- ---------- ---------- ---------- ----------
Income before taxes on
income 15,130 28,753 4,155 4,588 3,561 6,767
Taxes on income 3,529 2,687 372 1,218 831 632
---------- ---------- ---------- ---------- ---------- ----------
Income after taxes on
income 11,601 26,066 3,783 3,370 2,730 6,135
Minority interest 2,199 735 894 735 517 173
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME 9,402 25,331 2,889 2,635 2,213 5,962
========== ========== ========== ========== ========== ==========
Earnings per share data:
Earnings per share:
Basic 0.92 2.94 0.28 0.31 0.22 0.69
========== ========== ========== ========== ========== ==========
Diluted 0.92 2.90 0.28 0.30 0.22 0.68
========== ========== ========== ========== ========== ==========
Shares used in computing
basic and diluted
earnings per ordinary
share: 10,267,893 8,615,000 10,267,893 8,615,000 10,267,893 8,615,000
========== ========== ========== ========== ========== ==========
(*) Convenience translation into U.S. dollars.
F - 3
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
FOREIGN
NUMBER OF ADDITIONAL CURRENCY TOTAL
ORDINARY SHARE PAID-IN TRANSLATION RETAINED SHAREHOLDERS'
SHARES CAPITAL CAPITAL ADJUSTMENTS EARNINGS EQUITY
---------- ---------- ---------- ---------- ---------- ----------
NIS
--------------------------------------------------------------------------
(IN THOUSANDS)
--------------------------------------------------------------------------
BALANCE - JANUARY 1, 2006 8,615,000 948 20,258 - 80,661 101,867
Private placement 1,652,893 165 41,092 - - 41,257
Net income for the year - - - - 28,615 28,615
---------- ---------- ---------- ---------- ---------- ----------
BALANCE - DECEMBER 31, 2006 10,267,893 1,113 61,350 - 109,276 171,739
Foreign currency translation reserve - - - 70 - 70
Net income for the period - - - - 9,402 9,402
---------- ---------- ---------- ---------- ---------- ----------
BALANCE - JUNE 30, 2007 10,267,893 1,113 61,350 70 118,678 181,211
========== ========== ========== ========== ========== ==========
F - 4
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTH THREE MONTHS SIX MONTH
--------------------- --------------------- ---------------------
ENDED JUNE 30, ENDED JUNE 30,
------------------------------------------------- ---------------------
2 0 0 7 2 0 0 6 2 0 0 7 2 0 0 6 2 0 0 7(*) 2 0 0 6(*)
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NIS US DOLLARS
------------------------------------------------- ---------------------
(IN THOUSANDS)
-----------------------------------------------------------------------------
CASH FLOWS - OPERATING ACTIVITIES
Net income 9,402 25,331 2,889 2,635 2,213 5,962
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 819 612 538 301 192 144
Deferred income taxes (69) 95 111 112 (16) 22
Gain on disposition of fixed assets (9) - (9) - (2) -
Unrealized gain on marketable securities (813) (376) (860) (354) (191) (88)
Gain from IPO of subsidiary - (19,113) - - - (4,498)
Minority interest 2,199 735 894 735 517 173
CHANGES IN ASSETS AND LIABILITIES:
Decrease (Increase) in:
Trade accounts receivable (13,662) (729) 5,189 3,034 (3,215) (172)
Receivables and other current assets 512 2,278 2,998 1,989 120 536
Inventory (3,950) 12,090 8,442 15,956 (930) 2,845
Increase (Decrease) in:
Trade accounts payable 12,460 (1,888) (1,365) (3,319) 2,932 (444)
Payables and other current liabilities (2,491) 749 1,569 1,369 (586) 176
warrants to issue shares of subsidiary (348) - - - (82) -
Accrued severance pay, net 53 - 22 (16) 12 -
------- ------- ------- ------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,103 19,784 20,418 22,442 964 4,656
------- ------- ------- ------- ------- -------
(*) Convenience translation into U.S. dollars.
F - 5
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTH THREE MONTHS SIX MONTH
--------------------- --------------------- ---------------------
ENDED JUNE 30, ENDED JUNE 30,
------------------------------------------------- ---------------------
2 0 0 7 2 0 0 6 2 0 0 7 2 0 0 6 2 0 0 7(*) 2 0 0 6(*)
------- ------- ------- ------- ------- -------
NIS US DOLLARS
------------------------------------------------- ---------------------
(IN THOUSANDS)
-----------------------------------------------------------------------------
CASH FLOWS - INVESTING ACTIVITIES
Proceeds from realization (purchase) of
marketable securities, net (17,757) (2,914) (15,731) (2,890) (4,179) (686)
Purchase of subsidiary (15,400) - (804) - (3,624) -
Additions to fixed assets (9,068) (8,497) (1,787) (5,684) (2,134) (2,000)
Proceeds on disposition of fixed assets 9 - 9 - 2 -
------- ------- ------- ------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (42,216) (11,411) (18,313) (8,574) (9,935) (2,686)
------- ------- ------- ------- ------- -------
CASH FLOWS - FINANCING ACTIVITIES
Dividend - (4,754) - - - (1,119)
Short-term bank borrowings, net 6,374 - 141 - 1,500 -
Proceeds from public listing of subsidiary - 32,402 - - - 7,626
------- ------- ------- ------- ------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,374 27,648 141 - 1,500 6,507
------- ------- ------- ------- ------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS IN SUBSIDIARY (218) - (66) - (51) -
======= ======= ======= ======= ======= =======
Net change in cash and cash equivalents (31,957) 36,021 2,180 13,868 (7,522) 8,477
Cash and cash equivalents at beginning of year 91,398 30,431 57,261 52,584 21,511 7,162
------- ------- ------- ------- ------- -------
Cash and cash equivalents at end of year 59,441 66,452 59,441 66,452 13,989 15,639
======= ======= ======= ======= ======= =======
(*) Convenience translation into U.S. dollars.
F - 6
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The unaudited Condensed Interim Consolidated Financial Statements
should be read in conjunction with the audited consolidated financial
statements and notes for the year ended December 31, 2006 included in
the Company's Annual Report on Form 20-F.
NOTE 2 - DIFFERENCES BETWEEN ISRAELI AND U.S. GAAP
A. In accordance with Israeli GAAP, the Company's financial statements
are denominated through December 31, 2003 in adjusted amounts and as
of January 1, 2004 in "reported amounts" (also see Note 2). Such
accounting principle is considered a more meaningful presentation than
financial reporting based on nominal historical cost. Accordingly, the
Company is not required to eliminate the effect of historic price
level changes in a reconciliation to U.S. GAAP.
B. In accordance with U.S. GAAP, SFAS No. 115, changes in trading
securities should be presented in the statement of cash flows as part
of the operating activities. The following table provides a
reconciliation of the Statements of Cash flows for the six and three
month periods ended June 30, 2007 and June 30, 2006 in accordance with
U.S. GAAP:
SIX MONTH THREE MONTHS SIX MONTH
--------------------- --------------------- ---------------------
ENDED JUNE, 30 ENDED JUNE, 30 ENDED JUNE, 30
--------------------- --------------------- ---------------------
2 0 0 7 2 0 0 6 2 0 0 7 2 0 0 6 2 0 0 7 (*) 2 0 0 6 (*)
------- ------- ------- ------- ------- -------
NIS US DOLLARS US DOLLARS
------------------------------------------------- ------- -------
(IN THOUSANDS)
-----------------------------------------------------------------------------
Net cash provided by operating
activities before adjustment 4,103 19,784 20,418 22,442 964 4,656
Adjustment (17,757) (2,914) (15,731) (2,890) (4,179) (686)
------- ------- ------- ------- ------- -------
Net cash provided by (used in)
operating activities after
adjustment (13,654) 16,870 4,687 19,552 (3,215) 3,970
======= ======= ======= ======= ======= =======
Net cash used in investing
activities before adjustment (42,216) (11,411) (18,313) (8,574) (9,935) (2,686)
Adjustment 17,757 2,914 15,731 2,890 4,179 686
------- ------- ------- ------- ------- -------
Net cash used in investing
activities before adjustment (24,459) (8,497) (2,582) (5,684) (5,756) (2,000)
======= ======= ======= ======= ======= =======
(*) Convenience translation into U.S. dollars
F - 7
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The Company is engaged in the design, import, marketing and distribution of a
broad range of food products purchased from over 90 suppliers worldwide and
marketed throughout Israel, and to a much lesser extent, the areas administered
by the Palestinian Authority. The products imported by the Company are marketed
in Israel and sold to over 1,000 customers, including supermarket chains in the
organized market, private supermarket chains, mini-markets, wholesalers,
manufacturers and institutional consumers. The Company was incorporated in
Israel in January 1994 and commenced operations in February 1994.
Since the beginning of this year, the Company has taken steps to expand its
business outside of Israel. In January 2007, the Company acquired the operations
and assets of Laish Israeli Food Products Ltd., a U.S. importer and distributor
of kosher food products, and in February 2007, we formed with the Baron family,
kosher food exporters located in Israel, a joint global kosher trade and export
company, of which we hold a 50.1% interest.
The financial information below reflects the operations of the Company and its
subsidiaries on a consolidated basis.
SIX MONTHS ENDED JUNE 30, 2007
SALES
Revenues for the six-month period ended June 30, 2007 increased 30% to NIS 127.2
million (US $29.9 million) compared to revenues of NIS 97.7 million (US $23.0
million) in the six-month period ended June 30, 2006. The increase in revenues
was driven by the Company's international expansion and addition of new business
units.
GROSS PROFIT
Gross profit for the six-month period ended June 30, 2007 increased 33% to NIS
34.2 million (US $8.1 million), or 26.9% of sales, compared to gross profit of
NIS 25.8 million (US $6.1 million) for the six-month period ended June 30, 2006,
or 26.4% of sales.
SELLING AND MARKETING EXPENSES
Sales and marketing expenses for the six-month period ended June 30, 2007
increased 41% to NIS 13.9 million (US $3.3 million) compared to NIS 9.9 million
(US $2.3 million) in the six-month period ended June 30, 2006. The increase was
mainly due to the consolidation of our new business units and due to one-time
expenses related to the transition to the new logistics center.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the six-month period ended June 30, 2007
amounted to NIS 7.5 million (US $1.8 million) compared to NIS 7.7 million (US
$1.8 million) in the six-month period ended June 30, 2006. General and
administrative expenses remained stable due to the decrease in management bonus
compared to first six-month of 2006, offset by an increase in expenses in 2007
due to our new business units.
OPERATING INCOME
Operating income for the six-month period ended June 30, 2007 increased 55% to
NIS 12.8 million (US $3.0 million) from NIS 8.3 million (US $1.9 million)
reported in the six-month period ended June 30, 2006.
FINANCIAL INCOME
Financial Income for the six-month period ended June 30, 2007 increased 71% to
NIS 2.4 million (US $0.6 million) compared to NIS 1.4 million (US $0.3 million)
in the six-month period ended June 30, 2006. The increase in financial income
was mainly due to an increase in the profit from marketable securities.
OTHER INCOME
Other Income for the six-month period ended June 30, 2007 amounted to NIS 9
thousand (US $2 thousand) compared to of NIS 19 million (US $4.5 million) in the
six-month period ended June 30, 2006. The Other Income for the six-month period
ended June 30, 2006 included an unrealized capital gain resulting from the
commencement of the trading of shares of the Company's majority-owned
subsidiary, Gold Frost Ltd., on London's AIM market on March 9, 2006.
TAXES ON INCOME
Taxes on income for the six-month period ended June 30, 2007 amounted to NIS 3.5
million (US $0.8 million) compared to NIS 2.7 million (US $0.6 million) in the
six-month period ended June 30, 2006.
NET INCOME
Net income for the six-month period ended June 30, 2007 decreased 63% to NIS 9.4
million (US $2.2 million), or 7.4% of sales, from NIS 25.3 million (US $6.0
million), or 25.9% of sales, for the six-month period ended June 30, 2006.
LIQUIDITY AND CAPITAL RESOURCES
For the six-month period ended June 30, 2007 cash and cash equivalents decreased
from approximately NIS 91.4 million (US $21.5 million) at December 31, 2006 to
approximately NIS 59.4 million (US $14.0 million) as of June 30, 2007.
For the six-month period ended June 30, 2007, the Company generated a positive
cash flow from operating activities of approximately NIS 4.1 million (US $1.0
million) compared to NIS 19.8 million (US $4.7 million) in the six-month period
ended June 30, 2006. This decrease was mainly due to increase in inventory of
approximately NIS 4.0 million (US $0.9 million) (compared to decrease in
inventory of approximately NIS 12.1 million (US $2.8 million) in the six-month
period ended June 30, 2006).
During the six-month period ended June 30, 2007, the Company utilized a cash
flow of NIS 42.2 million (US $9.9 million) from investing activities (compared
to NIS 11.4 million (US $2.7 million) in the six-month period ended June 30,
2006), mainly from the purchase of marketable securities, net of NIS 17.8
million (US $4.2 million) (compared to NIS 2.9 million (US $0.7 million) in the
six-month period ended June 30, 2006) and due to purchase of Laish Israeli Food
Products Ltd. in the amount of NIS 15.4 million (US $3.6 million).
During the six-month period ended June 30, 2007, the Company generated cash flow
from financing activities of NIS 6.4 million (US $1.5 million) mainly due to
short term bank borrowing. During the six-month period ended June 30, 2006, the
Company generated cash flow from financing activities of NIS 27.6 million (US
$6.5 million), which included the proceeds from the public listing of Goldfrost
in the amount of NIS 32.4 million (US $7.6 million) and a cash dividend in the
amount of NIS 4.8 million (US $1.1 million).
THREE MONTHS ENDED JUNE 30, 2007
SALES
Revenues for the three-month period ended June 30, 2007 increased 29% to NIS
55.8 million (US $13.1 million) compared to revenues of NIS 43.2 million (US
$10.2 million) in the three-month period ended June 30, 2006. The increase in
revenues was driven by the Company's international expansion and addition of new
business units.
GROSS PROFIT
Gross profit for the three-month period ended June 30, 2007 increased 18% to NIS
13.4 million (US $3.2 million), or 24.1% of sales, compared to gross profit of
NIS 11.4 million (US $2.7 million) for the three-month period ended June 30,
2006, or 26.4% of sales. The global increase in the prices of raw food materials
overall, and in particular goods related to milk and dairy products, had a
negative impact on gross profit for the period.
SELLING AND MARKETING EXPENSES
Sales and marketing expenses for the three-month period ended June 30, 2007
increased 55% to NIS 7.3 million (US $1.7 million) compared to NIS 4.7 million
(US $1.1 million) in the three-month period ended June 30, 2006. The increase is
mainly due to the consolidation of our new business units and due to one-time
expenses related to the transition to the new logistics center.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the three-month period ended June 30,
2007 amounted to NIS 3.4 million (US $0.8 million) compared to NIS 2.9 million
(US $0.7 million) in the three-month period ended June 30, 2006. The increase
was mainly due to the consolidation of our new business units.
OPERATING INCOME
Operating income for the three-months period ended June 30, 2007 decreased 30%
to NIS 2.7 million (US $0.6 million) from NIS 3.8 million (US $0.9 million)
reported in the three-month period ended June 30, 2006.
FINANCIAL INCOME
Financial Income for the three-month period ended June 30, 2007 increased 93% to
NIS 1.5 million (US $0.3 million) compared to NIS 0.8 million (US $0.2 million)
in the three-month period ended June 30, 2006. The increase in financial income
was mainly due to an increase in the profit from marketable securities
TAXES ON INCOME
Taxes on income for the three-month period ended June 30, 2007 amounted to NIS
0.4 million (US $0.1 million) compared to NIS 1.2 million (US $0.3 million) in
the three-month period ended June 30, 2006.
NET INCOME
Net income for the three-month period ended June 30, 2007 increased 10% to NIS
2.9 million (US $0.7 million), or 5.2% of sales, from NIS 2.6 million (US $0.6
million), or 6% of sales, for the three-month period ended June 30, 2006.
LIQUIDITY AND CAPITAL RESOURCES
For the three-month period ended June 30, 2007, the Company generated a positive
cash flow from operating activities of approximately NIS 20.4 million (US $4.8
million) compared to NIS 22.4 million (US $5.3 million) in the three-month
period ended June 30, 2006. The decrease was mainly due to a decrease in
inventory of approximately NIS 8.4 million (US $2.0 million) (compared to
decrease in inventory of approximately NIS 16.0 million (US $3.8 million) in the
three-month period ended June 30, 2006), offset by a decrease in trade accounts
receivables of approximately NIS 5.2 million (US $1.2 million) (compared to
decrease in trade accounts receivables of approximately NIS 3.0 million (US $0.7
million) in the three-month period ended June 30, 2006) and by a decrease in
trade accounts payables of approximately NIS 1.4 million (US $0.3 million)
(compared to decrease in trade accounts payables of approximately NIS 3.3
million (US $0.8 million) in the three-month period ended June 30, 2006).
During the three-month period ended June 30, 2007, the Company utilized a cash
flow of NIS 18.3 million (US $4.3 million) from investing activities (compared
to NIS 8.6 million (US $2.0 million) in the three-month period ended June 30,
2006), mainly from purchase of marketable securities, net of NIS 15.7 million
(US $3.7 million) (compared to NIS 2.9 million (US $0.7 million) in the
three-month period ended June 30, 2006), offset by lower investment in fixed
assets from NIS 5.7 million (US $1.3 million) in the three-month period ended
June 30, 2006 to NIS 1.8 million (US $0.4 million) in the three-month period
ended June 30, 2007.