As filed with the Securities and Exchange Commission on November __, 2009
Registration No. 333-________
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM F-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
G. WILLI-FOOD INTERNATIONAL LTD.
(Translation of Registrant's name into English)
ISRAEL 5141 N/A
---------------------------- ----------------- ---------------
(State or other jurisdiction (Primary Standard I.R.S. Employer
of incorporation or Classification Code Identification Number)
organization) Number)
4 NAHAL HARIF ST.
NORTHERN INDUSTRIAL ZONE
YAVNE 81224 ISRAEL
+ 972 (8) 932-1000
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(Address and telephone number of Registrant's principal executive offices)
PUGLISI & ASSOCIATES
850 LIBRARY AVENUE, SUITE 204
NEWARK, DELAWARE 19711
---------------------------------------------------------
(Name, address and telephone number of agent for service)
COPIES TO:
ERICK RICHARDSON, ESQ. GREGORY SICHENZIA, ESQ.
RICHARDSON & PATEL LLP THOMAS A. ROSE, ESQ.
10900 WILSHIRE BOULEVARD, SUITE 500 SICHENZIA ROSS FRIEDMAN FERENCE LLP
LOS ANGELES, CALIFORNIA 90211 61 BROADWAY, 32ND FLOOR
NEW YORK, NY 10006
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a registration statement pursuant to General Instruction I.C. or
a post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [_]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.C. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box. [_]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE (1)(2) REGISTRATION FEE(3)
--------------------------- --------------------- -------------------
Ordinary Shares, NIS 0.10 par value $23,000,000 $1,640
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(1) Includes all ordinary shares initially offered and sold outside the United
States that may be resold from time to time in the United States either as
part of the distribution or within 40 days after the later of the effective
date of this registration statement and the date the securities are first
bona fide offered to the public.
(2) Includes shares to be sold upon exercise of the underwriter's
over-allotment option. See "Underwriting."
(3) Calculated pursuant to Rule 457(o) based on an estimate of the proposed
maximum aggregate offering price.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
ii
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER __, 2009
 |
G. WILLI-FOOD INTERNATIONAL LTD.
UP TO $20,000,000 OF ORDINARY SHARES
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We are offering up to $20,000,000 of ordinary shares. The number of shares that
we will offer will be determined based on the public offering price per ordinary
share. Our ordinary shares are listed on the Nasdaq Capital Market under the
symbol "WILC". On November 17, 2009, the last reported market price of our
ordinary shares was US $6.00.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE RISK FACTORS BEGINNING
ON PAGE 6.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE ORDINARY SHARES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PER ORDINARY SHARE TOTAL
------------------ -------
Public offering price US$ US$ [ ]
Underwriting discount US$ US$ [ ]
Proceeds, before expenses, to us US$ US$ [ ]
The underwriter has an option exercisable within 45 days from the date of
this prospectus to purchase up to $[ ] of additional ordinary shares from us at
the public offering price less the underwriting discount solely to cover
over-allotments. The ordinary shares issuable upon exercise of the underwriter
over-allotment option have been registered under the registration statement of
which this prospectus forms a part.
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The underwriter expects to deliver the ordinary shares against payment in
U.S. dollars in New York, New York on or about , 2009.
RODMAN & RENSHAW, LLC
____________________
Prospectus dated ______________, 2009
iii
iv
PRESENTATION OF INFORMATION vi
PRESENTATION OF FINANCIAL AND SHARE INFORMATION vi
PROSPECTUS SUMMARY 1
RISK FACTORS 6
FORWARD LOOKING STATEMENTS 17
USE OF PROCEEDS 18
PRICE RANGE OF ORDINARY SHARES 18
CAPITALIZATION 19
DILUTION 19
EXCHANGE RATE INFORMATION 21
ENFORCEMENT OF CIVIL LIABILITIES 22
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINACNIAL
CONDITION AND RESULTS OF OPERATIONS 25
OUR BUSINESS 34
REGULATION 47
MANAGEMENT 48
PRINCIPAL SHAREHOLDERS 48
RELATED PARTY TRANSACTIONS 48
DESCRIPTION OF SECURITIES 48
SHARES ELIGIBLE FOR FUTURE SALE 48
UNDERWRITING 48
EXPENSES OF THE OFFERING 49
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 57
LEGAL MATTERS 58
EXPERTS 58
WHERE YOU CAN FIND MORE INFORMATION 58
INDEX TO CONSLIDATED FINANCIAL STATEMENTS F-1
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THROUGH AND INCLUDING , 2009 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO A DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING
AS AN UNDERWRITER AND WITH RESPECT TO AN UNSOLD ALLOTMENT OR SUBSCRIPTION.
----------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.
v
PRESENTATION OF INFORMATION
In this Prospectus, references to the "Company", "we" and "us" refer to G.
Willi-Food International Ltd. and its consolidated subsidiaries.
We present our consolidated financial statements in New Israeli Shekels,
the currency of the State of Israel. Unless otherwise specified or the context
otherwise requires, references to "$", "US$", "Dollars", "USD" and "U.S.
Dollars" are to the United States Dollars and references to "NIS" are to New
Israeli Shekels.
Solely for the convenience of the reader, this Prospectus contains
translations of certain NIS amounts into U.S. Dollars at specified rates. These
translations should not be construed as representations that the translated
amounts actually represent such dollar or NIS amounts, as the case may be, or
could be converted into U.S. Dollars or NIS as the case may be, at the rates
indicated or at any other rate. Therefore, unless otherwise stated, the
translations of NIS into U.S. Dollars have been made at the rate that
corresponds to the financial statements.
PRESENTATION OF FINANCIAL AND SHARE INFORMATION
Unless otherwise indicated, the share information in this prospectus is
based on 10,267,893 ordinary shares outstanding as of November 17, 2009.
We prepare our consolidated financial statements in accordance with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB"). The financial statements for
the year ended December 31, 2008 are our first annual consolidated financial
statements that were prepared in accordance with IFRS as issued by the IASB and
following the provisions of IFRS 1-"First Time Adoption of International
Financial Reporting Standards". Until and including our financial statements for
the year ended December 31, 2007, we prepared our consolidated financial
statements in accordance with Israeli GAAP. The influence of the transition to
IFRS (from financial statements prepared in accordance with Israeli GAAP) on our
financial statements for the year ended December 31, 2007 and our results of
operations for that year, is detailed in note 31 to our consolidated annual
financial statements included elsewhere in the financial statements of our
registration statement. Following our adoption of IFRS, as issued by the IASB,
we are no longer required to reconcile our financial statements prepared in
accordance with IFRS to U.S. GAAP.
vi
PROSPECTUS SUMMARY
THIS PROSPECTUS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS. YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE
DETAILED INFORMATION REGARDING OUR COMPANY AND THE SHARES BEING SOLD IN THIS
OFFERING, WHICH INFORMATION APPEARS ELSEWHERE IN THIS PROSPECTUS AND IN OTHER
DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION THAT WE HAVE
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
THE COMPANY
We are an Israeli-based company engaged, directly and through our
subsidiaries, in the development, import, export, manufacturing, marketing and
distribution of a wide variety of over 1,000 food products world-wide. Most of
our sales are made in Israel with widespread demand in the Israeli marketplace,
as well as products which cater to more select groups.
We purchase food products from over 250 suppliers located in Israel and
throughout the world, including from the Far East (China, India, the Philippines
and Thailand), Eastern Europe (Hungary, Poland, Latvia and Bulgaria), South
America (Argentina, Ecuador and Costa Rica), the United States, Western and
Northern Europe (The Netherlands, Belgium, Germany, Sweden, Denmark and France)
and Southern Europe (Spain, Portugal, Italy, Turkey, Greece and Cyprus).
However, our subsidiary Shamir Salads (2006) Ltd. ("Shamir Salads"), is
manufacturing its Chilled Salads in its logistics center.
In addition, we actively maintain contact with approximately 150 suppliers
worldwide through which we assess, on an on-going basis, world market trends,
fluctuations in prices, international trends, and other issues relevant to its
business. Our management and personnel visit food trade fairs worldwide on a
regular basis and endeavor to create new business relationships with potential
suppliers. In addition, we distribute some of our products on an exclusive
basis.
We are not dependent on any given supplier for the supply of a majority of
our products. We purchase most of our products from several suppliers. We are
dependent on one source of supply - Arla from Denmark - with respect to a large
part of our dairy and dairy substitute products - a part of the import segment.
Our products are marketed and sold to over 1,500 customers in Israel and
around the world, including supermarket chains, wholesalers and institutional
consumers. We market most of the products under the brand name "Willi-Food," our
chilled salads under the name "Shamir Salads" and some of our chilled and frozen
products under the brand name "Gold Frost." Certain products are marketed under
brand names of the manufacturers or under other brand names.
We have acquired controlling interests in several businesses and have
formed joint ventures with other businesses during the last three years. In
certain cases, we were not successful in our acquisitions, and subsequently sold
them at prices similar to our original acquisition prices. We continue to
re-evaluate our strategic position and consider other business opportunities. As
part of this re-evaluation, we are also considering forming strategic alliances
with or entering into different lines of business. We have no current plans,
arrangements or agreements with respect to any mergers, acquisitions, or
additional financing.
As of November 17, 2009, our principal shareholder, Willi-Food Investments
Ltd ("Willi-Food"), holds approximately 69.65% of our outstanding share capital.
Willi Food's securities are traded on the Tel Aviv Stock Exchange.
Our business strategy is to promote the "Willi-Food" and "Shamir Salads"
brand names and to increase market penetration of products that are currently
sold by us through, among other things, marketing efforts and advertising
campaigns. In addition, we aim to expand our current food product lines and
diversify into additional product lines, as well as to respond to market demand.
We also intend to expand our activity in the international food markets, mainly
in the U.S. and Europe.
The mailing address and telephone number of our principal executive offices
is 4 Nahal Harif St., Northern Industrial Zone, Yavne 81106 Israel,
+972-8-932-1000.
2
THE OFFERING
The following assumes that the underwriters do not exercise their option to
purchase up to ____________ additional ordinary shares in the offering, unless
otherwise indicated.
Ordinary Shares in the Offering:
Ordinary Shares outstanding after
the Offering:
Nasdaq symbol: WILC
Option to purchase additional
ordinary shares We have granted to the underwriter an
option, exercisable within 45 days
from the date of this prospectus, to
purchase up to an additional _______
ordinary shares solely to cover
over-allotments.
Timing and settlement for
ordinary shares The ordinary shares are expected to
be delivered against payment on
___________, 2009.
Use of proceeds: We estimate that we will receive net
proceeds from this offering of
approximately US$18.5 million, after
deducting underwriting discounts and
the estimated offering expenses
payable by us and based upon an
assumed initial offering price of US
$ per ordinary share (the mid-point
of the estimated public offering
price range shown on the front cover
of this prospectus). We currently
intend to use the net proceeds to
fund working capital and for other
general corporate purposes.
3
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The following summary consolidated financial data, have been derived from
our audited consolidated financial statements as of December 31, 2008 and 2007
and for the years then ended included elsewhere in this prospectus, and from our
unaudited condensed consolidated financial statements as of September 30, 2009
and for the nine and three months ended September 30, 2009 and 2008 included
elsewhere in the prospectus. The consolidated financial statements are prepared
and presented in accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board ("IASB"). Our
results of operations in any period may not necessarily be indicative of the
results that may be expected for any future period. See "Risk Factors" beginning
on page 6 of this prospectus. The summary consolidated financial information for
those periods and as of those dates should be read in conjunction with those
consolidated financial statements and accompanying notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
beginning on page 25 of this prospectus.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
2009 2009 2008 2008 2007
-------- -------- -------- -------- --------
USD NIS NIS NIS NIS
-------- -------- -------- -------- --------
(in thousands except per share)
SUMMARY STATEMENT OF OPERATION DATA:
Sales 59,527 223,704 218,122 289,068 201,617
Gross profit 15,883 59,689 55,064 60,229 45,555
Operating income 7,186 27,005 15,469 9,720 13,127
Net income 6,265 23,545 8,855 267 4,639
Net income (loss) attributable to shareholders 6,020 22,624 6,697 (786) 2,342
Net income (loss) attributable per ordinary
share, basic 0.59 2.20 0.65 (0.08) 0.23
Net income (loss) attributable per ordinary
share, diluted 0.59 2.20 0.65 (0.08) 0.23
FOR THE NINE MONTHS ENDED SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
2009 2009 2008 2008 2007
------- ------- ------- ------- -------
USD NIS NIS NIS NIS
------- ------- ------- ------- -------
(in thousands)
SUMMARY STATEMENT OF CASH FLOW DATA:
Net cash provided by continuing operating
activities 6,400 24,055 11,771 15,534 11,238
Net cash provided by (used in) continuing
investing activities 1,085 4,079 (22,022) (3,048) (43,918)
Net cash provided by (used in) continuing
financing activities (407) (1,531) 2,756 3,637 -
4
AS OF SEPTEMBER 30, AS OF DECEMBER 31,
2009 2009 2008 2007
------- ------- ------- -------
USD NIS NIS NIS
------- ------- ------- -------
(in thousands)
SUMMARY BALANCE SHEET DATA:
Cash and securities 29,394 110,461 88,116 92,916
Total assets 72,587 272,780 273,342 239,452
Retained earnings 35,676 134,071 111,447 112,233
Shareholders' equity 52,826 198,518 185,582 190,607
Equity to total assets attributable to shareholders 72% 72% 63% 72%
Working capital 37,296 140,157 122,523 142,645
Current ratio 2.9 2.9 2.4 4.0
Quick ratio 2.5 2.5 2.0 3.3
5
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW
BEFORE MAKING AN INVESTMENT DECISION. IF ANY OF THE FOLLOWING RISKS ACTUALLY
OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD BE
MATERIALLY HARMED. THIS COULD CAUSE THE TRADING PRICE OF OUR ORDINARY SHARES TO
DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
RISKS RELATED TO OUR BUSINESS AND INDUSTRY
OUR RESULTS OF OPERATIONS MAY BE IMPACTED BY MONETARY RISK. OUR PORTFOLIO OF
MARKETABLE SECURITIES IS SUBJECT TO VARIOUS MARKET RISKS.
We are exposed to fluctuations in the rate of the United States Dollar and
Euro versus the NIS. Most of our income is in NIS, whereas most of our purchases
are in United States Dollars and in Euros. In addition, a significant portion of
our short term bank borrowings, when needed, are in United States Dollars and/or
in Euros. A significant depreciation in the NIS vis-a-vis the United States
Dollar and/or Euro could have a material adverse effect on our results of
operations and financial condition.
We strive to minimize market risks arising from exchange rate fluctuations
and the cost of imported goods, especially by opening wide documentary credits
for suppliers abroad, holding foreign currency reserves and initiating forward
transactions and foreign currency options.
As a method of investing cash reserves, we hold from time to time a
portfolio of marketable securities traded on the Tel Aviv Stock Exchange as well
as other stock exchanges and certain bonds traded abroad. This portfolio of
marketable securities is subject to various market risks resulting from
fluctuations in interest rates and foreign currency, exchange rates, price
fluctuations and other market risks in Israel and abroad. We do not utilize
derivative securities for trading purposes, enter into swap arrangements or
otherwise hedge our currency in a manner that we believe could expose us to
significant market risk.
Our financial instruments consist mainly of cash and cash equivalents,
current accounts receivable, short-term borrowings, current accounts payable and
accruals. In view of their nature, the fair value of the financial instruments,
included in working capital, is usually identical or close to their book value.
OUR BUSINESS MAY BE MATERIALLY AFFECTED IF ANY OF OUR MAJOR CLIENTS DEFAULTS ON
ITS PAYMENT TO US.
Financial instruments that potentially subject us to concentrations of
credit risk consist principally of trade receivables. Despite our large number
of clients (over 1,500 in Israel and abroad), a major and significant part of
our sales is made to a limited number of customers (mainly the organized
market). Our two largest customers, Shufersal Ltd., and Blue Square - Israel
Ltd., accounted for 20% of our sales in 2008. We generally do not require and do
not receive collateral from those customers, although we do require and receive
collateral from most of the remainder of our clients in Israel to ensure
security of collecting payments. We maintain an allowance for doubtful debts
based upon factors surrounding the credit risk of specific customers, historical
trends and other information which our management believes adequately covers all
anticipated losses in respect of trade receivables. There can be no assurance
that this allowance will be adequate. In the event that a major client defaults
on its payment obligations to us, we will not possess sufficient security to
collect the entire debt.
6
WE DEPEND ON A SMALL NUMBER OF PRINCIPAL CLIENTS WHO HAVE IN THE PAST BOUGHT OUR
PRODUCTS IN LARGE VOLUMES. WE CANNOT ASSURE THAT THESE CLIENTS OR ANY OTHER
CLIENT WILL CONTINUE TO BUY OUR PRODUCTS IN THE SAME VOLUMES, ON THE SAME TERMS
OR AT ALL.
Despite our wide dispersion of clients, we have two major clients,
including Shufersal Ltd. and Blue Square - Israel Ltd., supermarket chains, who
accounted for approximately 20% of our revenue during 2008. We do not have long
term purchase contracts with our clients, and our sales arrangements with our
clients do not have minimum purchase requirements. We cannot assure that our
major clients will continue to buy our products at all or in the same volumes or
on the same terms as they have in the past. Their failure to do so may
significantly reduce our sales. Losing one or more of them may adversely affect
our business results. In addition, we cannot assure that we will be able to
attract new customers.
WE ARE DEPENDENT ON OUR KEY PERSONNEL. THE LOSS OF ANY OF OUR KEY PERSONNEL
COULD HAVE A MATERIAL EFFECT ON OUR BUSINESS.
We depend on a small number of technical staff, managers and directors,
including management services provided to us by Zwi Williger and Joseph
Williger, through management companies that they control, each of whom holds
senior management positions with us. We do not have any key-man life insurance
policy on either man. The loss of one or more of them could have a material
adverse effect on our business and operations.
WE ARE DEPENDENT ON ARLA FOODS AMBA, OR "ARLA", AND WE ALSO WORK WITH A LIMITED
NUMBER OF OTHER KEY SUPPLIERS. IF THESE SUPPLIERS RAISE PRICES OR TERMINATE
THEIR ENGAGEMENT WITH US, OUR OPERATING RESULTS COULD BE ADVERSELY AFFECTED.
We are dependent on Arla, which supplies a high percentage (9.7% in 2008)
of our dairy and dairy substitute products, although we are not dependent on any
single supplier in respect of a majority of our products. Terminating the
engagement with any supplier, in particular Arla, or a material change in the
engagement terms for purchasing products from those suppliers may have an
adverse affect on our results of operations. We have a distribution agreement
with Arla pursuant to which we serve as Arla's sole agent and distributor in
Israel of certain products for a five-year period beginning in March 2005. In
July 2007, the agreement was amended and the exclusivity period was extended to
ten years from March 2005. If this supplier raises its prices, our operating
results may be adversely affected. We believe that there are alternative
suppliers for purchasing our products; however, we cannot be assured that the
products of the alternative suppliers will become immediately available and that
the terms of purchase will be similar to the current ones.
WE MAY NOT BE ABLE TO SUCCESSFULLY COMPETE WITH LARGER COMPETITORS WHO HAVE
GREATER OPERATIONS, OR GREATER FINANCIAL, MARKETING, LABOR AND OTHER RESOURCES
THAN WE HAVE.
The food distribution business in Israel is highly competitive. We face
competition from existing competitors in respect of imported as well as locally
manufactured food products. Local producers are not subject to the financial
risks of importing food products or to governmental policies regarding taxation
of imported food products to which we are subject. We may also face competition
from potential newcomers to the food business as well as from existing importers
and/or manufacturers not currently involved in the same lines of products as us.
In addition, in the event we further expand our activity in the international
food markets, we will face also competition from manufacturers and/or
distributors from the locations in which we expand our activity. Certain of our
current and potential competitors are substantially more established, benefit
from substantially greater market recognition and have greater financial,
marketing, labor and other resources than we have. If any of our competitors
materially reduces prices, we may be required to reduce our prices in order to
remain competitive. Such reductions, if effected, could have a material adverse
effect on our financial condition and results of operations.
7
INCREASES OR DECREASES IN GLOBAL PRODUCT PRICES HAVE IN THE PAST, AND IN THE
FUTURE MAY CONTINUE TO, HAVE A MATERIAL ADVERSE EFFECT ON OUR PROFITABILITY.
In 2007, a number of our suppliers increased their product prices to us due
to increases in milk, wheat, corn and rice prices. This reduced our
profitability during 2007. The cost of food commodities and other food products
is subject to cyclical and other market factors and may fluctuate significantly.
As a result, our cost in securing these products is subject to substantial
increases and decreases over which we have no control. In addition, fuel costs,
which represent the most significant factor affecting utility costs at our
production facilities and our transportation costs are subject to wide
fluctuations. We cannot assure that we will be able to pass on to customers the
increased costs associated with the procurement of these products. Moreover,
there has in the past been, and there may in the future be, a time lag between
the incurrence of such increased costs and the transfer of such increases to
customers. To the extent that increases in the prices of our products cannot be
passed on to customers or there is a delay in passing on the increased costs to
customers, we are likely to experience an increase in our costs which may
materially reduce our margin of profitability.
In 2008, the global purchase prices of a number of our key products
decreased sharply due to the global recession. This reduced our profitability
during 2008 because of the sharp decrease in the selling prices of our products
that we had previously purchased or committed to purchase at higher prices.
Because we purchase many of our products from outside Israel, there is a lag of
time from when we purchase inventory from our suppliers (or commit to purchase
inventory from our suppliers) until the time we sell this inventory to our
customers in Israel. To the extent that the sales price of products that we
purchase decreases from the time that we purchase our inventory (or commit to
purchase our inventory) until the time we sell the inventory to our customers,
our margin of profitability may be materially reduced if we are not able to sell
our products at prices exceeding the market price.
OUR RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED IF WE DO NOT ACCURATELY
PREDICT THE RATE OF CONSUMPTION OF OUR PRODUCTS.
We hold inventory of basic foodstuffs (such as preserved food, oils and
rice) and other food products, and we accumulate inventories of these products
based on our prediction of the consumption of these products. If actual
consumption does not meet the prediction, and the shelf life of such products
expire or we cannot otherwise sell such products, this may materially and
adversely affect our financial condition and results of operations. On the other
hand, to the extent we do not have adequate inventory of these critical products
(due, for example, to an emergency situation), we will not be able to meet the
needs of our customers and our potential revenues may be adversely affected.
WE MAY NOT SUCCESSFULLY INTEGRATE OUR RECENT ACQUISITIONS.
In light of our recent acquisition of Shamir Salads (2006) Ltd., our
success will depend in part on our ability to manage the combined operations of
this company, to integrate the operations and personnel of this company together
with our other subsidiaries into a single organizational structure, and to
replace those subsidiary managers who have departed or may in the future leave
our employ. There can be no assurance that we will be able to effectively
integrate the operations of our subsidiaries and our acquired businesses into a
single organizational structure. Integration of this operation could also place
additional pressures on our management as well as on our key personnel. The
failure to successfully manage this integration could have an adverse material
effect on our results of operations.
8
WE MAY BE UNABLE TO ANTICIPATE CHANGES IN CONSUMER PREFERENCES, WHICH MAY RESULT
IN DECREASED DEMAND FOR OUR PRODUCTS.
Our success depends in part on our ability to anticipate the tastes and
eating habits of consumers and to offer products that appeal to their
preferences. Consumer preferences change from time to time and our failure to
anticipate, identify or react to these changes could result in reduced demand
for our products, which would adversely affect our operating results and
profitability.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS FOR MISBRANDED, ADULTERATED,
CONTAMINATED OR SPOILED FOOD PRODUCTS.
We sell food products for human consumption, which involve risks such as
product contamination or spoilage, misbranding, product tampering, and other
adulteration of food products. Consumption of a misbranded, adulterated,
contaminated or spoiled product may result in personal illness or injury. We
could be subject to claims or lawsuits relating to an actual or alleged illness
or injury, and we could incur liabilities that are not insured or that exceed
our insurance coverage. Even if product liability claims against us are not
successful or fully pursued, these claims could be costly and time consuming and
may require management to spend time defending the claims rather than operating
our business. A product that has been actually or allegedly misbranded or
becomes adulterated could result in: product withdrawals, product recalls,
destruction of product inventory, negative publicity, temporary plant closings,
and substantial costs of compliance or remediation. Any of these events,
including a significant product liability judgment against us, could result in a
loss of confidence in our food products, which could have an adverse effect on
our financial condition, results of operations or cash flows.
WE MAY BE ADVERSELY AFFECTED BY ANY INTERRUPTION TO OUR STORAGE FACILITIES.
We store most of our products in two main locations - a logistics center
warehouse situated in Yavne, Israel and a factory and logistics center situated
in Barkan, Israel, used for products being distributed to customers. Any
interruption to these storage facilities, whether by power failure, flooding or
other event, would have a material impact on our ability to trade in the
ordinary course.
OUR INSURANCE COVERAGE MAY NOT BE SUFFICIENT TO COVER OUR LOSSES IN THE EVENT
OUR PRODUCTS ARE SUBJECT TO PRODUCT LIABILITY CLAIMS OR OUR PRODUCTS ARE SUBJECT
TO RECALL. IN SUCH EVENT, IT WOULD HAVE A MATERIAL ADVERSE EFFECT ON US.
Our products may become the subject of product liability claims, and there
can be no assurance that our property insurance coverage limits will be adequate
or that all such claims will be covered by insurance. A product recall or a
product liability claim, even one without merit or for which we have substantial
coverage, could result in significant expenses, including legal defense costs,
thereby increasing our expenses, lowering our earnings and, depending on
revenues, potentially resulting in additional losses. A successful product
liability claim or other judgment against us in excess of our insurance coverage
could have a material adverse effect on us and our reputation.
OUR OPERATING RESULTS MAY BE SUBJECT TO VARIATIONS FROM QUARTER TO QUARTER.
Our operating results may be subject to variations from quarter to quarter
depending on, among other things, the timing of sales campaigns and special
events initiated by both us and our customers, the major Jewish holidays (such
as the Jewish New Year and Passover), our ability to manage future inventory
levels in line with business opportunities and anticipated customers' demand,
competitive developments in the market, changes in the rates of inflation in
Israel and fluctuations in NIS/Dollar exchange rates. There can be no assurance
that our sales or net income (if any) in any particular quarter will not be
lower than the preceding and/or comparable quarter or that its sales or net
income (if any) in a particular quarter will be indicative of our results of
operations for the entire year. The trading prices of our ordinary shares may
fluctuate significantly in response to variations in our operating results.
9
OUR BRANDED PRODUCTS MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH NATIONALLY
BRANDED PRODUCTS.
For sales of our branded products to retailers, the principal competitive
factors are price, product quality and quality of service. For sales of branded
products to consumers, the principal competitive factors are price and product
quality. In many cases, competitors with nationally branded products may have a
competitive advantage over our products primarily due to name recognition.
Competition to obtain shelf space for our branded products with retailers
is primarily based on the expected or historical performance of our product
sales relative to our competitors. The principal competitive factors for sales
of our branded products to consumers are brand recognition and loyalty, product
quality and price. Most of our branded competitors have significantly greater
resources and brand recognition than we do.
Competitive pressures or other factors could cause us to lose market share,
which may require us to lower prices, increase marketing expenditures, or
increase the use of discounting or promotional programs, each of which would
adversely affect our margins and could result in a decrease in our operating
results and profitability.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR COMPETITIVE
POSITION COULD BE COMPROMISED.
We market certain products under the trademarks "Willi-Food", "Shamir
Salads", "Pizza Top", "Gold Food", "Donna Rozza", "Manchow", "Bloose",
"Krisponim", "Bubles" and "Gold Frost". Although we have registered trademarks
for these brands, we cannot assure that the degree of protection these and other
trademarks offer will be sufficient to protect our rights in these marks.
IF OUR ORDINARY SHARES ARE DELISTED FROM NASDAQ, THE LIQUIDITY AND PRICE OF OUR
ORDINARY SHARES AND OUR ABILITY TO ISSUE ADDITIONAL SECURITIES MAY BE
SIGNIFICANTLY REDUCED.
We may in the future fail to comply with the Nasdaq Capital Market
regulations and listing requirements as to minimum net income, minimum number of
shareholders and public float and other requirements, and as a result Nasdaq may
initiate procedures to delist our ordinary shares from the Nasdaq Capital
Market.
Since the beginning of 2009, our stock price has been trading in a range
from $0.86 to $6.00 per share. Under Nasdaq's Marketplace Rule 5450(a)(2),
("Rule") any company whose share has a closing bid price less than $1.00 for 30
consecutive business days may be subject to a delisting proceeding instigated by
the Nasdaq. Due to the current extraordinary market conditions, on October 16,
2008, NASDAQ filed an immediately effective rule change with the SEC providing
that companies will be deemed to be in compliance with the continuing listing
standards related to bid price or market value of publicly held shares. We have
now satisfied this requirement as our stock price is well above $1.00 per share.
If we fail to meet the continued listing criteria defined under the Rule
following the expiration of the relief, our ordinary shares may be delisted from
trading on the Nasdaq Global Market.
Delisting from the Nasdaq Global Market could have an adverse effect on our
business and on the trading of our ordinary shares. If a delisting of our
ordinary shares were to occur, our shares would trade on the OTC Bulletin Board
or on the "pink sheets". The OTC Bulletin Board and "pink sheets" are generally
considered to be less efficient markets, and this could diminish investors'
interest in our ordinary shares as well as significantly impact our share price
and the liquidity of our ordinary shares. Any such delisting may also severely
complicate trading of our shares by our shareholders, or prevent them from
re-selling their shares at/or above the price they paid. Furthermore, our
relatively low trading volumes may make it difficult for shareholders to trade
shares or initiate any other transactions. Delisting may also make it more
difficult for us to issue additional securities or secure additional financing.
10
In July 2003 and in November 2004, we received letters from the Nasdaq
Stock Market informing us that we had failed to meet a continued listing
requirement, that we have 500,000 publicly held shares, and that our ordinary
shares were therefore subject to delisting from the Nasdaq Capital Market,
unless a proper plan for complying with the requirement was presented. Following
the receipt of the November 2004 letter, Willi Food Investments Ltd. and Mr.
Joseph Williger sold 75,000 of our shares to the public and at the same time we
distributed a one to one stock dividend to our shareholders. As a result of
these actions, we then complied with the abovementioned listing requirements and
the threat of delisting was removed.
ONE SHAREHOLDER OWNS A LARGE PERCENTAGE OF OUR SHARES.
As of the date of this Registration Statement, Willi-Food owned
approximately 69.65% of our ordinary shares. Mr. Joseph Williger, who serves as
Chief Executive Officer and director of our company, and serves as Chairman of
the Board of Willi-Food, holds approximately 25.53% of the outstanding shares of
Willi-Food (approximately 25.89% on a fully-diluted basis). Mr. Zwi Williger,
who serves as Chief Operating Officer and Chairman of the Board of our company,
and serves as a director and Chief Executive Officer of Willi-Food, holds
approximately 40.21% of the outstanding shares of Willi-Food (approximately
40.78% on a fully-diluted basis).
Our Articles of Association do not provide for cumulative voting rights
with respect to the election of directors and every resolution of the company in
the general meeting of shareholders is deemed duly passed if passed by a simple
majority of the shareholders present and voting unless another majority is
required by the Israeli Companies Law or by our Articles of Association.
OUR MANAGEMENT COULD LOSE A MAJOR AMOUNT OF ITS INDIRECT OWNERSHIP OF OUR COMMON
STOCK THROUGH LITIGATION.
In 2008, Mr. Arcadi Gaydamak ("Gaydamak") borrowed approximately NIS 76
million (US $20 million) from companies owned by Messrs. Zwi Williger and Joseph
Williger (the "Williger Brothers"). These loans were secured by Gaydamak's
equity securities of Willi-Food, the parent company to G. Willi Food ("Parent").
The loans included a provision whereby the Willlger Brothers had a call option
to acquire the Parent equity if Gaydamak defaulted under the loans. On September
2008 Gaydamak defaulted under these loans and accordingly the Williger Brothers
increased their ownership of Parent by exercising their call option to acquire
such interests ; Zwi Williger by 21.65% and Joseph Williger by 21.65%,.
Gaydamak has now filed a lawsuit in September 2009 in Israel against the
Williger Brothers and others, claiming, among other things, that the Williger
Brothers did not rightfully exercise the call option. The Company is not a party
to the lawsuit. The Williger Brothers have informed us that their legal counsel
has advised them that the lawsuit is without merit, and that they intend to
vigorously contest the dispute. The Williger Brothers indicated that their
attorneys advised that, according to all the information and documents presented
to them, that the Williger Brothers exercised the call options in a rightful and
bona fide manner. We have been further advised that the loan agreements were
breached by Gaydamak and, at the time of the breach, Gaydamak also declared that
he had no intention of paying his debts to the Williger Brothers. At the same
time, other creditors submitted significant claims against the assets of
Gaydamak and placed attachments on his assets, and therefore a real risk arose
that the Willi-Food securities would also be attached. Under these
circumstances, in addition to the breach of the loan agreement, by not
presenting all the required securities and other breaches, there was also a
definite anticipatory breach of the loan payment and a real risk to the
securities. Under these circumstances, management believes that the Williger
Brothers clearly had the full right to exercise the call option and the lawsuit
is without merit.
11
There are also currently criminal proceedings pending against Gaydamak in
Israel for money laundering. Gaydamak left Israel a year ago and management
believes he resides in Russia. According to the judge in these proceedings, it
is probable that he will not return to Israel. He was also convicted of a crime
in France and was sentence to 6 years in prison. Israel has an extradition
treaty with France while Russia does not. Therefore, if he were to return to
Israel he could face criminal penalties in Israel and France. The Williger
Brothers have indicated to us that their lawyers advised them that if Gaydamak
does not return to Israel to testify in the lawsuit, there's a very good chance
that the lawsuit will be rejected by the court since Gaydamak failed to testify.
Again, according to the Williger Brothers' legal counsel, such lawsuit is
presumably baseless and has a very low chance of success.
However, in the event the lawsuit is ruled against the Williger Brothers,
their ownership interest in Willi-Food would be reduced (Zwi Williger from
approximately 40.21% to approximately 18.56% and Joseph Williger from
approximately 25.53% to approximately 3.88%) and Gaydamak would own a
significant indirect interest in our company.
WE ARE CONTROLLED BY AND HAVE BUSINESS RELATIONS WITH WILLI-FOOD AND ITS
MANAGEMENT.
Willi-Food, our controlling shareholder, is a holding company whose main
asset is the ordinary shares it owns in our company. Willi-Food currently does
not directly conduct any material business.
Willi-Food, Mr. Zwi Williger, a 40.21% shareholder of Willi-Food, the
Chairman of our Board of Directors and our Chief Operating Officer and a
director and Chief Executive Officer in Willi-Food, and Mr. Joseph Williger, a
25.53% shareholder of Willi-Food, a director and our Chief Executive Officer and
the chairman of the Board of Directors of Willi-Food, have been and continue in
certain cases to be party to certain agreements and arrangements relating to our
operations. Such transactions include service and employment arrangements
between each of Messrs. Joseph and Zwi Williger together with us, and a service
agreement we have with Willi-Food. All such transactions include consideration.
In addition, certain of our key personnel also serve in management
positions in Willi-Food. By serving in dual capacities, these persons may
experience conflicts of interest involving the two companies. Israeli law
imposes procedures, including, for certain material transactions, a requirement
of shareholder approval, as a precondition to entering into interested party
transactions. These procedures may apply to transactions between Willi-Food and
us. However, we cannot assure that we will be able to avoid the possible
detrimental effects of any such conflicts of interest by complying with the
procedures mandated by Israeli law.
RISKS RELATED TO THIS OFFERING.
AS THE PUBLIC OFFERING PRICE IS SUBSTANTIALLY HIGHER THAN THE PRO FORMA NET
TANGIBLE BOOK VALUE PER SHARE, YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL
DILUTION.
If you purchase ordinary shares in this offering, you will pay more for
your ordinary shares than the amount paid by existing shareholders for their
ordinary shares on a per ordinary share basis. As a result, you will experience
immediate and substantial dilution of approximately NIS (US $ ) per ordinary
share, representing the difference between our pro forma net tangible book value
per ordinary share as of , 2009, after giving effect to this offering and the
public offering price of US $ per ordinary share. See "Dilution" for a more
complete description of how the value of your investment in our ordinary shares
will be diluted upon the completion of this offering.
12
WE MAY USE THESE PROCEEDS FROM THIS OFFERING IN WAYS WITH WHICH YOU MAY NOT
AGREE.
We have not determined a specific use of the net proceeds of this offering,
other than to fund working capital and for other general corporate purposes. Our
management will have considerable discretion in the application of these
proceeds received by us. You will not have the opportunity, as part of your
investment decision, to assess whether the proceeds are being used
appropriately. You must rely on the judgment of our management regarding the
application of the net proceeds of this offering. The net proceeds may be used
for corporate purposes that do not improve our profitability or increase our
ordinary share price. The net proceeds from this offering may also be placed in
investments that do not produce income or lose value.
THE SALE OR AVAILABILITY FOR SALE OF SUBSTANTIAL AMOUNTS OF OUR ORDINARY SHARES
COULD ADVERSELY AFFECT THEIR MARKET PRICE.
Sales of substantial amounts of our ordinary shares in the public market
after the completion of this offering, or the perception that these sales could
occur, could adversely affect the market price of our ordinary shares and could
materially impair our future ability to raise capital through offerings of our
ordinary shares.
VOLATILITY IN THE PRICE OF OUR ORDINARY SHARES MAY RESULT IN SHAREHOLDER
LITIGATION THAT COULD IN TURN RESULT IN SUBSTANTIAL COSTS AND A DIVERSION OF OUR
MANAGEMENT'S ATTENTION AND RESOURCES.
The market price of our ordinary shares has fluctuated significantly and
may be affected by our operating results, changes in our business, changes in
the products we market and distribute, and general market and economic
conditions which are beyond our control. In addition, the stock markets in
general have, from time to time, experienced significant price and volume
fluctuations that are unrelated or disproportionate to the operating performance
of individual companies. These fluctuations have affected stock prices of many
companies without regard to their specific operating performance. The price of
our ordinary shares may fluctuate significantly in the future.
Also, the financial markets in the Unites States and other countries have
experienced significant price and volume fluctuations, and market prices of
public companies have been and continue to be extremely volatile. Volatility in
the price of our ordinary shares may be caused by factors outside of our control
and may be unrelated or disproportionate to our results of operations. In the
past, following periods of volatility in the market price of a public company's
securities, shareholders have frequently instituted securities class action
litigation against that company. Litigation of this kind could result in
substantial costs and a diversion of our management's attention and resources.
IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY BE
UNABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR PREVENT FRAUD, AND INVESTOR
CONFIDENCE AND THE MARKET PRICE OF OUR ORDINARY SHARES MAY BE ADVERSELY
AFFECTED.
Our reporting obligations as a public company will place a significant
strain on our management, operational and financial resources and systems for
the foreseeable future. We are a relatively young company with limited
accounting personnel and other resources with which to address our internal
controls and procedures. In addition, we must implement financial and disclosure
control procedures and corporate governance practices that enable us to comply,
on a stand alone basis, with the Sarbanes-Oxley Act of 2002 and related
Securities and Exchange Commission, or the SEC, rules. For example, we will need
to further develop accounting and financial capabilities, including the
establishment of an internal audit function and development of documentation
related to internal control policies and procedures. Failure to quickly
establish the necessary controls and procedures would make it difficult to
comply with SEC rules and regulations with respect to internal control and
financial reporting. We will need to take further actions to continue to improve
our internal controls. If we are unable to implement solutions to any weaknesses
in our existing internal controls and procedures, or if we fail to maintain an
effective system of internal controls in the future, we may be unable to
accurately report our financial results or prevent fraud and investor confidence
and the market price of our ordinary shares may be adversely impacted.
13
Our auditors will be required to attest to our evaluation of internal
controls over financial reporting. Unless we successfully design and implement
changes to our internal controls and management systems, or if we fail to
maintain the adequacy of these controls as such standards are modified or
amended from time to time, we may not be able to comply with Section 404 of the
Sarbanes-Oxley Act of 2002. As a result, our auditors may be unable to attest to
the effectiveness of our internal controls over financial reporting. This could
subject us to regulatory scrutiny and result in a loss of public confidence in
our management, which could, among other things, adversely affect the price of
our ordinary shares and our ability to raise additional capital.
ALL OF OUR ASSETS ARE PLEDGED TO CREDITORS
We have pledged substantially all of our assets to Bank Leumi Le'Israel,
Bank Mizrahi-Tefahot Ltd. and Bank Hapoalim Ltd. in order to secure credit lines
from each of these banks. If we were to utilize these credit lines, we expect
that the proceeds from the sale of any of these assets may be used to prepay the
principal amount owed on the credit lines secured by these pledges. As a result
of these arrangements, our ability to dispose of pledged assets may require the
consent of these banks, and our ability to incur further debt (whether secured
or unsecured) is limited.
RISKS RELATED TO OUR LOCATION IN ISRAEL
WE ARE SUBJECT TO REGULATIONS AND OTHER POLICIES OF THE ISRAELI GOVERNMENT AND
OF OTHER COUNTRIES INTO WHICH WE IMPORT AND EXPORT. IF WE ARE UNABLE TO OBTAIN
AND MAINTAIN REGULATORY QUALIFICATIONS OR APPROVALS FOR OUR PRODUCTS, OUR
BUSINESS MAY BE ADVERSELY AFFECTED.
REGULATORY, LICENSING AND QUOTAS: The import, export, storage, marketing,
manufacturing, distribution and labeling of food products are subject to
extensive regulation and licensing by various Israeli government and municipal
agencies, principally the Ministry of Health, the Ministry of Trade and
Industry, the Ministry of Agriculture and the Ministry of Finance. To the extent
that we have imported and exported, or will import and export, food products
outside of Israel, we may be subject to quotas and other import and export laws
and regulations which may limit our ability to sell certain of our food products
into these countries. We are required to maintain our distribution processes in
conformity with all applicable laws and regulations. In the event that such laws
and regulations change, or we fail to comply with such laws and regulations, we
may be prevented from trading within Israel or another part of the world.
TARIFFS: The Ministry of Finance and the Ministry of Trade and Industry of
the State of Israel may increase the levels of tariffs on importing goods. This
would have a direct impact on us and our financial performance by increasing our
costs which we may not be able to pass on to our customers.
KOSHER LICENSES: Under kosher regulations, we are required to ascertain
that the foodstuffs which we offer for sale bear kosher certification approved
by certain authorities such as the Chief Rabbinate of Israel. There is a risk
that the relevant authorities in Israel or other areas of the world responsible
for issuing kosher licenses may change the criteria for obtaining such licenses.
In such circumstances, we may be prohibited from obtaining kosher licenses for
various products that we sell into the various kosher markets. Failure to comply
with such applicable laws and regulations in relation to kosher licenses could
subject us to civil sanctions, including fines, injunctions, recalls or
seizures, as well as potential criminal sanctions, any of which could have a
material adverse effect on us and our financial performance.
14
ECONOMIC CONDITIONS IN ISRAEL AFFECT OUR FINANCIAL PERFORMANCE.
A major part of our sales are made in Israel, and consequently our
financial performance is dependent to a significant extent on the economy of
Israel. In recent quarters, the global economic instability and economic
uncertainty have negatively impacted economic conditions in Israel. A recession
has started in Israel, and the unemployment rates have increased. This has
resulted in our customer base, both in the retail and in the wholesale markets,
reducing their purchases from us, both in quantities and by purchasing lower
cost food products. A deterioration of the economic situation in Israel may
erode the real wages and lower the buying power of our potential customers. This
in turn may adversely affect our activities and business results.
WE MAY BE AFFECTED BY POLITICAL, ECONOMIC AND MILITARY CONDITIONS IN ISRAEL AND
THE MIDDLE EAST.
Political, economic and military conditions in Israel have a direct
influence on us because our operations are located there. Any hostilities
involving Israel or the interruption or curtailment of trade between Israel and
its present trading partners could materially and adversely affect our
operations. Several Arab countries still restrict business with Israeli
companies and these restrictions may have an adverse impact on our operating
results, financial condition or the expansion of our business. We could be
adversely affected by restrictive laws or policies directed towards Israel and
Israeli businesses. The establishment in 2006 of a government in the Palestinian
Authority by representatives of the Hamas militant group has created additional
unrest and uncertainty in the area. In December 2008, Israel was engaged in an
armed conflict with Hamas in the Gaza Strip, in the southern region of Israel.
During the summer of 2006, Israel was engaged in an armed conflict with
Hezbollah, a Lebanese Islamic Shiite militia group, which disrupted most daily
civilian activity in northern Israel. These events have at times caused
considerable damage to the Israeli economy. As a result of the political and
military situation, Israel's economy has at times suffered considerably. Ongoing
or revived hostilities related to Israel may have a material adverse effect on
our business and on our share price.
Many of our executive officers and employees in Israel are obligated to
perform annual military reserve duty in the Israeli Defense Forces and may be
called to active duty under emergency circumstances at any time. If a military
conflict or war arises, these individuals could be required to serve in the
military for extended periods of time. Our operations could be disrupted by the
absence for a significant period of one or more of our executive officers or key
employees or a significant number of our other employees due to reserve duty.
Any disruption in our operations may harm our business.
Additionally, boycotts of products, prompted by political, religious or
other factors, may affect our financial condition and results of operations. For
example, the recent war on Gaza and the United Nations fact-finding mission on
the Gaza conflict at the start of 2009, commonly known as the "Goldstone
Report," have found evidence that both Israeli forces and Palestinian militants
committed serious war crimes and breaches of humanitarian law, which may amount
to crimes against humanity. The Goldstone Report and the Gaza conflict has
resulted in grass root boycott movements all over the world on Israeli products
or boycotts on products that are distributed by Jews. If such boycott movements
were to become widespread, it could have a significant impact on our revenues.
15
IT WILL BE EXTREMELY DIFFICULT TO ACQUIRE JURISDICTION AND ENFORCE LIABILITIES
AGAINST OUR OFFICERS AND DIRECTORS WHO ARE BASED IN ISRAEL.
The majority of our officers and present directors reside outside of the
United States and most of our operations at the time of the filing of this
registration statement are located outside the United States. As a result, it
may not be possible for United States investors to enforce their legal rights,
to effect service of process upon our directors or officers or to enforce
judgments of United States courts predicated upon civil liabilities and criminal
penalties of our directors and officers under Federal securities laws. Moreover,
we have been advised that Israel does not have treaties providing for the
reciprocal recognition and enforcement of judgments of courts with the United
States. Further, it is unclear if extradition treaties now in effect between the
United States and Israel would permit effective enforcement of criminal
penalties of the Federal securities laws.
INITIATION AND ENFORCEMENT OF LEGAL ACTION IN ISRAEL.
We are organized under the laws of the State of Israel. Most of our
executive officers and Directors and some of the experts named in this
Prospectus are non-residents of the United States, and a substantial portion of
our assets and the assets of these persons are located outside the United
States. Therefore, it may be difficult to enforce a judgment obtained in the
United States against us or any of those persons. It may also be difficult to
enforce civil liabilities under United States federal securities laws in actions
initiated in Israel.
OUR INTERNATIONAL OPERATIONS MAY BE ADVERSELY AFFECTED BY RISKS ASSOCIATED WITH
INTERNATIONAL BUSINESS.
We purchase food products from over 250 suppliers located around the world.
Therefore, we are subject to certain risks that are inherent in an international
business. These include, but are not limited to:
o varying regulatory restrictions on sales of our products to certain
markets and unexpected changes in regulatory requirements;
o tariffs, customs, duties, quotas and other trade barriers;
o difficulties in managing foreign operations and foreign distribution
partners;
o longer payment cycles and problems in collecting accounts receivable;
o fluctuations in currency exchange rates;
o political risks;
o foreign exchange controls which may restrict or prohibit repatriation
of funds;
o export and import restrictions or prohibitions, and delays from
customs brokers or government agencies;
o seasonal reductions in business activity in certain parts of the
world; and
o potentially adverse tax consequences.
Depending on the countries involved, any or all of the foregoing factors
could materially harm our business, financial condition and results of
operations.
16
FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this prospectus that are not
historical facts are statements of future expectations or statements that are
based on management's current views and assumptions and involve known and
unknown risks and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in such statements.
Actual results, performance or events may differ materially from those in such
statements due to, without limitation:
o changes affecting currency exchange rates, including the NIS/U.S.
Dollar exchange rate;
o the loss of one of more of our key personnel;
o 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;
o termination of arrangements with our suppliers, in particular Arla
Foods amba;
o payment default by, or loss of, one or more of our principal clients;
o increasing levels of competition in Israel and other markets in which
we do business;
o our inability to accurately predict consumption of our products;
o product liability claims and other litigation matters;
o our inability to meet the Nasdaq listing requirements;
o changes in political, economic and military conditions in Israel,
including, in particular; economic conditions in our core markets;
o increase or decrease in global purchase prices of food products;
o inability to successfully integrate our prior acquisitions;
o interruption to our storage facilities;
o our insurance coverage may not be sufficient;
o variations from quarter to quarter;
o inability to maintain an effective system of internal controls;
o our inability to protect our intellectual property rights;
o initiation and enforcement of legal action in Israel;
o significant concentration of our shares are held by one shareholder;
o we are controlled by and have business relations with Willi-Food and
its management;
o all of our assets are pledged to creditors;
o our international operations may be adversely affected by risks
associated with international business; and
o our ordinary share price may be volatile.
We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information or for any other reason.
17
USE OF PROCEEDS
We estimate that we will receive net proceeds from this offering of
approximately US$18.5 million, after deducting underwriting discounts and the
estimated offering expenses payable by us and based upon an assumed initial
offering price of US $ per ordinary share (the mid-point of the estimated public
offering price range shown on the front cover of this prospectus). A US$1.00
increase (decrease) in the assumed public offering price of US $ per ordinary
share would increase (decrease) the net proceeds of this offering by US $
million, assuming the sale of ordinary shares at US $ per ordinary share, the
midpoint of the range shown on the front cover page of this prospectus and after
deducting underwriting discounts and commissions and the estimated offering
expenses payable by us.
The principal purposes of this offering are to create a public market for
our ordinary shares for the benefit of all shareholders, retain talented
employees by providing them equity incentives, fund working capital and raise
capital for general corporate purposes. Other than as set forth in the preceding
sentence, as of the date of this prospectus, we have not allocated any specific
portion of the net proceeds of this offering for any particular purpose.
PRICE RANGE OF ORDINARY SHARES
Our ordinary shares have been listed on the Nasdaq Stock Market under the
trading symbol "WILCF" since May 19, 1997. On March 15, 2006, the ticker symbol
of our ordinary shares was changed to "WILC". Information regarding the market
price of our ordinary shares is located in our Form 20-F for the year ended
December 31, 2008 filed with the Securities and Exchange Commission, or the
Commission, on June 26, 2009. Additional information regarding the market price
of our ordinary shares is listed below.
ORDINARY SHARES
CALENDAR PERIOD 2009. HIGH LOW
--------------------- ---- ----
Fourth Quarter (though November 17, 2009) 6.00 4.32
Third Quarter 4.50 2.22
Second Quarter 2.29 1.26
November 2009 (through November 17, 2009) 6.00 5.12
October 2009 5.54 4.32
September 2009 4.50 3.90
August 2009 4.18 3.14
July 2009 3.27 2.22
June 2009 2.29 2.00
May 2009 2.13 1.50
April 2009 1.54 1.26
The last reported sale price of our ordinary shares on the Nasdaq Capital
Market on November 17, 2009 was $6.00 per share. As of November 17, 2009, we had
20 holders of record of our ordinary shares.
18
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
September 30, 2009:
o on an actual basis; and
o on an as adjusted basis to reflect the public offering of _____
ordinary shares at a price of $_____ per share.
You should read this table in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our consolidated
financial statements and related notes included elsewhere in this prospectus.
The information presented below is unaudited.
AS OF SEPTEMBER 30, 2009
ACTUAL AS ADJUSTED
UNAUDITED UNAUDITED
------- -------
(IN THOUSANDS)
Shareholders' equity:
Ordinary shares, par value NIS 0.10 per share: 49,893,520 shares
authorized, actual and as adjusted; 10,267,893 shares issued and
outstanding, actual; 106,480 shares issued and outstanding, as adjusted $ 296 $
Preferred shares, par value NIS 0.10 per share: 106,780 shares authorized
and no shares issued and outstanding, actual and as adjusted 0 0
Additional paid-in capital 15,715
Capital Fund 66 66
-------
Foreign currency translation reserve 176 176
-------
Retained earnings 35,676 35,676
-------
Noncontrolling interest 897 897
------- -------
Total shareholders' equity 52,826
------- -------
Total capitalization $ $
======= =======
DILUTION
If you invest in our ordinary shares, your interest will be diluted to the
extent of the difference between the public offering price per ordinary share
and our net tangible book value per ordinary share after this offering. Dilution
results from the fact that the public offering price per ordinary share is
substantially in excess of the book value per ordinary share attributable to the
existing shareholders for our presently outstanding ordinary shares.
Our net tangible book value as of September 30, 2009 was approximately NIS
180.2 million (US$47.9 million), or NIS 17.5 (US$4.7) per ordinary share
outstanding at that date. Net tangible book value is determined by subtracting
the value of our intangible assets and total liabilities from our total assets.
Dilution is determined by subtracting net tangible book value per ordinary share
from the assumed public offering price per ordinary share, which is the
mid-point of the estimated public offering price range shown on the front cover
of this prospectus.
19
Without taking into account any other changes in such net tangible book
value after _______ , other than to give effect to our sale of the ordinary
shares offered in this offering at the assumed public offering price of US$____
per ordinary share, with estimated net proceeds of US$___ million after
deducting underwriting discounts and commissions and estimated offering
expenses, our pro forma net tangible book value at NIS ____ million (US$____
million) would have been NIS ___ million (US$___ million), NIS ___ (US$____ )
per outstanding ordinary share. This represents an immediate increase in pro
forma net tangible book value of NIS ___ (US$____) per ordinary share to
existing shareholders and an immediate dilution in pro forma net tangible book
value of NIS ____ (US$___) per ordinary share to new investors in this offering.
The following table illustrates this per share dilution:
NIS US$
---------- -----------
Assumed public offering price per ordinary share
Net tangible book value per ordinary share at NIS (US $)
Increase in net tangible book value per ordinary share
attributable to this offering
Net tangible book value per ordinary share as of June 30, 2009 after giving
effect to the offering
Dilution in net tangible book value per ordinary share to new investors in the
offering
The following table summarizes on a pro forma basis the differences as of
September 30, 2009 between the shareholders at our most recent fiscal year end
and the new investors with respect to the number of ordinary shares purchased
from us, the total consideration paid and the average price per ordinary share
paid. The total ordinary shares do not include ordinary shares issuable if the
underwriter exercises its option to purchase additional ordinary shares.
SHARES HELD TOTAL INVESTMENT
----------------------- -----------------------------------------------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF AVERAGE COST
NUMBER THE COMPANY VOTING RIGHTS AMOUNT INVESTMENT PER SHARE
------ ----------- ------------- ------ ---------- ---------
(In millions, except percentages and per share amounts)
Existing
Shareholders
New Investors
Total
A US$1.00 increase (decrease) in the assumed public offering price of US $ per
ordinary share would increase (decrease) our adjusted net tangible book value
after giving effect to the offering by NIS million (US $ million), the adjusted
net tangible book value per ordinary share after giving effect to this offering
by NIS (US $ ) per ordinary share and the dilution in adjusted net tangible book
value per ordinary share, assuming no change to the number of ordinary shares
offered by us as set forth on the cover page of this prospectus, and after
deducting underwriting discounts and commissions and estimated offering expenses
payable by us.
20
EXCHANGE RATE INFORMATION
We conduct our business in Israel and substantially all of our revenues are
denominated in New Israeli Shekels (NIS). However, periodic reports made to
shareholders will be expressed in U.S. dollars using the then current exchange
rates. This prospectus contains translations of NIS amounts into U.S. dollars at
specified rates solely for the convenience of the reader.
These translations should not be construed as representations that the
translated amounts actually represent such dollar or NIS amounts, as the case
may be, or could be converted into U.S. Dollars or NIS as the case may be, at
the rates indicated or at any other rate. Therefore, unless otherwise stated,
the translations of NIS into U.S. Dollars have been made at the rate that
corresponds to the financial statements.
The following table sets forth information concerning exchange rates
between the NIS and the U.S. dollar for the periods indicated.
NIS PER U.S. DOLLAR REPRESENTATIVE EXCHANGE RATE
AVERAGE(1) HIGH LOW PERIOD-END
---------- ---- --- ----------
2009
October 3.726 3.780 3.690 3.746
September 3.766 3.807 3.729 3.758
August 3.832 3.931 3.743 3.811
July 3.892 3.987 3.781 3.790
June 3.943 4.005 3.887 3.919
May 4.092 4.169 3.958 3.958
April 4.196 4.256 4.125 4.163
March 4.159 4.245 4.024 4.188
February 4.103 4.191 4.012 4.162
January 3.913 4.065 3.783 4.065
Year ended December 31, 2008 3.568 4.022 3.230 3.802
Year ended December 31, 2007 4.085 4.342 3.830 3.846
SOURCE BANK OF ISRAEL
(1) Annual averages are calculated from month-end rates. Monthly and interim
period averages are calculated using the average of the daily rates during
the relevant period.
21
ENFORCEMENT OF CIVIL LIABILITIES
We are registered under the laws of Israel as our headquarters and our
operations are located there. However, Israel has a lesser developed body of
securities laws as compared to the United States and provides protections for
investors to a significantly lesser extent. In addition to the below, please
refer to the section "Risk Factors" for additional information regarding risks
associates with our operations in Israel.
Substantially all of our assets are located outside the United States. In
addition, a majority of our directors and officers are nationals or residents of
jurisdictions other than the United States and all or a substantial portion of
their assets are located outside the United States. As a result, it may be
difficult for investors to effect service of process within the United States
upon us or these persons, or to enforce against us or them judgments obtained in
United States courts, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any state in the
United States. It may also be difficult to enforce in U.S. courts judgments
obtained in U.S. courts based on the civil liability provisions of the U.S.
federal securities laws against us, our officers and directors.
We have appointed Puglisi & Associates, 850 Library Avenue, Suite 204,
Newark, Delaware 19711, as our agent to receive service of process with respect
to any action brought against us in the United States District Court for the
Southern District of New York under the federal securities laws of the United
States or of any state in the United States or any action brought against us in
the Supreme Court of the State of New York in the County of New York under the
securities laws of the State of New York.
M. Firon & Co., our counsel as to Israeli law, have advised us that there
is uncertainty as to whether the courts of Israel would, respectively, (1)
recognize or enforce judgments of United States courts obtained against us or
our directors or officers predicated upon the civil liability provisions of the
securities laws of the United States or any state in the United States, or (2)
entertain original actions brought in Israel against us or our directors or
officers predicated upon the securities laws of the United States or any state
in the United States.
M. Firon & Co. has informed us that the uncertainty with regard to Israeli
law relates to whether a judgment obtained from the U.S. courts under civil
liability provisions of the securities law will be determined by the courts of
Israel. The courts of Israel may not recognize or enforce such judgments against
an Israeli company, and because such a determination has not yet been made by a
court of Israel, it is uncertain whether such civil liability judgments from
U.S. courts would be enforceable in Israel. M. Firon & Co. has further advised
us that the courts of Israel would recognize a final and conclusive judgment in
the federal or state courts of the United States under which a sum of money is
payable (other than a sum of money payable in respect of multiple damages, taxes
or other charges of a like nature or in respect of a fine or other penalty) and
would give a judgment based thereon provided that (1) the judgment was rendered
by a court which was, according to the foreign country's law, competent to
render it; (2) the judgment is no longer appealable; (3) the obligation in the
judgment is enforceable according to the rules relating to the enforceability of
judgments in Israel and the substance of the judgment is not contrary to public
policy in Israel; and (4) the judgment can be executed in the state in which it
was given.
22
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected consolidated balance sheet data as of September 2009 and as of
December 31, 2008 and 2007 have been prepared in accordance with IFRS and
interpretations as issued by the IASB, and such accounting policies have been
applied retrospectively to our financial statements as of September 2009 and as
of December 31, 2008 and 2007 and for the year then ended.
The selected consolidated balance sheet data as of December 31, 2008 and
2007 and the selected consolidated statements of operations data for each of the
two years in the period ended December 31, 2008 and 2007 have been derived from
financial statements audited by Brightman Almagor Zohar & Co., an independent
registered public accounting firm, and a Member Firm of Deloitte Touche
Tohmatsu. The selected consolidated balance sheet data as of September 30, 2009
and 2008 and the selected consolidated statements of operations data for each of
the periods in the nine months ended September 30, 2009 and 2008 have been
derived from condensed financial statements for those periods. Historical
financial results may not be indicative of our future performance and interim
results may not be reflective of the results for the fiscal year.
INCOME STATEMENT DATA:
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------------ ------------------------------
2009 2009 2008 2007
---------- ---------- ---------- ----------
NIS USD NIS NIS
---------- ---------- ---------- ----------
(in thousands, except per share data)
Sales 223,704 59,527 289,068 201,617
Cost of sales 164,015 43,644 228,839 156,062
Gross profit 59,689 15,883 60,229 45,555
Sales and Marketing 23,056 6,135 31,800 20,602
General and administrative 14,940 3,976 16,863 12,280
Other (income) expense (5,312) (1,414) 1,846 (454)
Total Operating expenses 32,684 8,697 50,509 32,428
Operating Income 27,005 7,186 9,720 13,127
Financial Income (Expenses), Net 702 187 (4,840) 2,434
Profit before tax 27,707 7,373 4,880 15,561
Income taxes 4,515 1,201 1,117 2,174
Income from continuing operations 23,192 6,172 3,763 13,387
Income (loss) from discontinued operations 353 93 (3,496) (8,748)
Net Income 23,545 6,265 267 4,639
Attributable to shareholders of the Company 22,624 6,020 (786) 2,342
Earnings per Share Basic - from
continuing operations 2.20 0.59 0.30 1.14
Earnings per Share Basic - from
discontinued operations - - (0.38) (0.91)
Shares Used in Computing Earnings per Share 10,267,893 10,267,893 10,267,893 10,267,893
23
SUMMARY BALANCE SHEET DATA:
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30 DECEMBER 31
----------------------- -----------------------
2009 2009 2008 2007
------- ------ ------- -------
NIS USD NIS NIS
------- ------ ------- -------
Cash and securities 110,461 29,394 88,116 92,916
Total assets 272,780 72,587 273,342 239,452
Retained earnings 134,071 35,676 111,447 112,233
Shareholders' equity 198,518 52,826 185,582 190,607
Working capital 140,157 37,296 122,523 142,645
Equity to total assets attributable to shareholders 72% 72% 63% 72%
Current ratio 2.9 2.9 2.4 4.0
Quick ratio 2.5 2.5 2.0 3.3
24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
We are an Israeli-based company engaged, directly and through our
subsidiaries, in the design, import, manufacturing, marketing and distribution
of a broad range of food products purchased from over 120 suppliers worldwide
and marketed throughout Israel and abroad. The products imported or manufactured
by us are marketed in Israel and sold to over 1,500 customers, including
supermarket chains, mini-markets, wholesalers, manufacturers and institutional
consumers. We also sell our products outside Israel to a variety of customers
world-wide (such as in the U.S., England, Belgium, France, Switzerland, Russia
Etc.).
We were incorporated in Israel in January 1994 and commenced operations in
February 1994.
Our operating divisions include Willi-Food in Israel, Gold Frost, a
wholly-owned subsidiary that is a designer, developer and distributor of branded
kosher dairy food products, and Shamir Salads, an Israeli manufacturer and
distributor of Mediterranean style salads. As we previously reported on July 27,
2009, we now hold 100% of the shares of Gold Frost following completion of our
tender offer for Gold Frost shares. In June 2009, Gold Frost sold all of its 51%
interest in a Danish dairy distributor. In addition, on September 2, 2009 we
signed an agreement to sell all of our holdings in Y.L.W Baron International
Trading Ltd. ("Baron"), kosher food exporters located in Israel, and to assign
all of our rights and obligations under the founders agreement from February
2007 to a private company owned by the Baron family, who held, as of the date of
the agreement, the remaining shares in Baron.
The financial information below reflects our operations and our
subsidiaries' operations on a consolidated basis.
NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2008
SALES
Sales for the nine-month period ended September 30, 2009, increased by 2.6%
to NIS 223.7 million (US $59.5 million) compared to sales of NIS 218.1 million
(US $58.0 million) in the first nine-month period ended September 30, 2008. The
increase in sales was a continued effort to maintain our market share although
the recession that effected our customer base, mainly by expanding product lines
that we had launched (approximately 50 new products) and by increasing sales of
existing products to new (approximately 70 new customers) and existing
customers.
GROSS PROFIT
Gross profit for the nine-month period ended September 30, 2009, increased
by 8.4% to NIS 59.7 million (US $15.9 million), or 26.7% of sales, compared to
gross profit of NIS 55.1 million (US $14.7 million) for the nine-month period
ended September 30, 2008, or 25.2% of sales. The increase in gross profit was
primarily attributed to the continued devaluation of the US dollar compared to
the New Israeli Shekel (NIS) in the second and third quarter of 2009 and to
increased sales of higher margin products as well as new products that we have
recently added to our product lines (for example: a new line of canned
vegetables, pastry and snacks products, energy drinks and a variety of dairy
products).
25
SELLING AND MARKETING EXPENSES
Sales and marketing expenses for the nine-month period ended September 30,
2009, decreased 4.4% to NIS 23.1 million (US $6.1 million) compared to NIS 24.1
million (US $6.4 million) in the nine-month period ended September 30, 2008. The
decrease was attributed to the initiatives that our management took in early
2009 to reduce our expenses. The main reduce was in the vehicles' expenses - NIS
0.7 million (US $0.2 million) and in the advertising and promotion expenses -
NIS 0.9 million (US $0.2 million) in the nine-month period ended September 30,
2009 compare to the nine-month period ended September 30, 2008.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the nine-month period ended
September 30, 2009, increased by 10.2% to NIS 14.9 million (US $4.0 million)
compared to NIS 13.6 million (US $3.6 million) in the nine-month period ended
September 30, 2008. The increase was mainly due to the payment of a management
bonus that was linked to our financial results - NIS 3.1 million (US $0.8
million) in the nine-month period of 2009 compared to NIS 1.3 million (US $0.3
million) in the nine-month period of 2008. Excluding the management bonus, the
General and Administrative expenses for the nine-month period ended September
30, 2009, decreased by 4.1% compared to the same period last year, mainly as a
result of decrease in the Professional fees expenses of NIS 0.7 million (US $0.2
million) in the nine-month period ended September 30, 2009 compare to the
nine-month period ended September 30, 2008.
OTHER EXPENSES (INCOME)
Other income for the nine-month period ended September 30, 2009, was mainly
attributed to a capital gain resulting from the completion of the tender offer
for Gold Frost's shares in July 2009 in the amount of NIS 5.3 million (US $1.4
million). Other expenses for the nine-month period ended September 30, 2008,
were due to a final arbitration award entered against us for damages in the
amount of NIS 1.9 million ($0.5 million) in connection with a dispute with
Vitarroz Corp.
OPERATING INCOME
Operating income for the nine-month period ended September 30, 2009
increased by 74.6% to NIS 27.0 million (US $7.2 million) from NIS 15.5 million
(US $4.1 million) reported in the nine-month period ended September 30, 2008.
FINANCIAL INCOME (EXPENSE), NET
Financial income, net, for the nine-month period ended September 30, 2009,
was NIS 0.7 million (US $0.2 million) compared to financial expense, net, of NIS
1.6 million (US $0.4 million) in the nine-month period ended September 30, 2008.
Financial income, net, for the nine-month period ended September 30, 2009,
included unrealized gain on marketable securities in the amount of NIS 2.0
million (US $0.5 million) and income from short-term bank deposits in the amount
of NIS 0.4 million (US $0.1 million), which was offset by foreign currency
differences in the amount of NIS 1.1 million (US $0.3 million) and debit
interest expense in the amount of NIS 0.7 million (US $0.2 million). Financial
expense, net, for the nine-month period ended September 30, 2008, included
foreign currency differences in the amount of NIS 1.9 million (US $0.5 million),
bank fees in the amount of NIS 1.0 million (US $0.3 million) and unrealized loss
on marketable securities in the amount of NIS 1.3 million (US $0.4 million)
offset by decrease in values of warrants to issue shares in the amount of NIS
1.0 million (US $0.3 million) and income from Short-term bank deposits in the
amount of NIS 1.1 million (US $0.3 million).
26
TAXES ON INCOME
Taxes on income for the nine-month period ended September 30, 2009,
amounted to NIS 4.5 million (US $1.2 million) compared to NIS 3.1 million (US
$0.8 million) in the nine-month period ended September 30, 2008.
INCOME (EXPENSE) FROM DISCONTINUED OPERATIONS
Income from discontinued operations for the nine-month period ended
September 30, 2009, amounted to NIS 0.4 million (US $0.1 million) compared to
expense from discontinued operations of NIS 1.9 million (US $0.5 million) in the
nine-month period ended September 30, 2008. The discontinued operations include
our export segment comprised of Baron, the Danish company and WF (Laish).
NET INCOME
Net income for the nine-month period ended September 30, 2009, increased by
165.9% to NIS 23.5 million (US $6.3 million), or 10.5% of sales, from NIS 8.9
million (US $2.4 million), or 4.1% of sales, for the nine-month period ended
September 30, 2008.
NET INCOME ATTRIBUTABLE TO THE OWNERS OF OUR COMPANY
Net income attributable to the owners of our Company for the nine-month
period ended September 30, 2009, increased by 337.8% to NIS 22.6 million (US
$6.0 million), or 10.1% of sales, from NIS 6.7 million (US $1.8 million), or
3.1% of sales, for the nine-month period ended September 30, 2008.
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
Net income attributable to non-controlling interests for the nine-month
period ended September 30, 2009, decreased by 57.3% to NIS 0.9 million (US $0.2
million), from NIS 2.2 million (US $0.6 million), for the nine-month period
ended September 30, 2008. The decrease was mainly due to our acquisition of Gold
Frost minority shares on July 2009. The net income attributable to
non-controlling interests in 2009 refers to the minority shareholders in Shamir
Salads and the minority shareholders of Gold Frost until the acquisition.
LIQUIDITY AND CAPITAL RESOURCES
For the nine-month period ended September 30, 2009, cash and cash
equivalents increased from approximately NIS 78.7 million (US $21.0 million) at
December 31, 2008, to approximately NIS 105.6 million (US $28.1 million) as of
September 30, 2009.
For the nine-month period ended September 30, 2009, we generated a positive
cash flow from operating activities of approximately NIS 24.1 million (US $6.4
million) compared to NIS 11.8 million (US $3.1 million) generated in the
nine-month period ended September 30, 2008. This increase was mainly due to a
decrease in inventory of approximately NIS 6.3 million (US $1.7 million)
(compared to an increase in inventory of NIS 3.8 million (US $1.0 million) in
the nine-month period ended September 30, 2008) and by an increase in trade
accounts receivable of approximately NIS 4.5 million (US $1.2 million) (compared
to an increase in trade accounts receivable of NIS 1.8 thousand (US $0.5
million) in the nine-month period ended September 30, 2008).
During the nine-month period ended September 30, 2009, we generated a cash
flow from investing activities of NIS 4.1 million (US $1.1 million) (compared to
utilizing cash of NIS 22.0 million (US $5.9 million) in the nine-month period
ended September 30, 2008). This increase was mainly due to the proceeds from
realization of marketable securities in the total amount of NIS 6.6 million (US
$1.7 million) in the nine-month period ended September 30, 2009 (compared to a
purchase of marketable securities in the total amount of NIS 2.0 million (USD
0.5 million) in the nine-month period ended September 30, 2008, and the purchase
of subsidiaries and of additional shares in Gold Frost in the total amount of
NIS 16.4 million (USD 4.4 million) in the nine-month period ended September 30,
2008).
27
During the nine-month period ended September 30, 2009, we utilized cash of
NIS 1.5 million (US $0.4 million) from financing activities (compared to
generating cash of NIS 2.8 million (US $0.7 million) in the nine-month period
ended September 30, 2008) mainly due to repayment of loans of NIS 0.6 million
(US $0.2 million), (compared to NIS 6.0 million (US $1.6 million) in the
nine-month period ended September 30, 2008) and due to short-term bank credit,
net of NIS 0.7 million (US $0.2 million).
THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 2008
SALES
Sales for the three-month period ended September 30, 2009, decreased by
1.1% to NIS 68.6 million (US $18.3 million) compared to sales of NIS 69.4
million (US $18.5 million) in the three-month period ended September 30, 2008.
GROSS PROFIT
Gross profit for the three-month period ended September 30, 2009, increased
58.7% to NIS 22.2 million (US $5.9 million), or 32.3% of sales, compared to
gross profit of NIS 14.0 million (US $3.7 million) for the three-month period
ended September 30, 2008, or 20.1% of sales. The increase in gross profit was
primarily attributed to the continued devaluation of the US dollar compared to
the NIS and to increased sales of higher margin products as well as successful
penetration of new profitable products.
SELLING AND MARKETING EXPENSES
Sales and marketing expenses for the three-month period ended September 30,
2009, decreased by 4.7% to NIS 7.8 million (US $2.1 million) compared to NIS 8.2
million (US $2.2 million) in the three-month period ended September 30, 2008.
This decrease was attributed to the actions taken by our management in early
2009 to reduce our expenses. The main reduction was in the vehicles' expenses -
NIS 0.2 million (US $0.05 million) and in the advertising and promotion expenses
- NIS 0.2 million (US $0.05 million) in the three-month period ended September
30, 2009 compare to the three-month period ended September 30, 2008.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the three-month period ended
September 30, 2009, amounted to NIS 5.4 million (US $1.4 million) compared to
NIS 4.4 million (US $1.2 million) in the three-month period ended September 30,
2008. The increase was mainly due to the payment of a management bonus that was
linked to the third quarter financial results - NIS 1.5 million (US $0.4
million) in the third quarter of 2009 compared to NIS 0.04 million (US $0.01
million) in the third quarter of 2008. Excluding the management bonus, the
General and Administrative expenses for the three-month period ended September
30, 2009 decreased by 11.4% compared to the three-month period ended September
30, 2008, mainly as a result of decrease in the Professional fees expenses of
NIS 0.5 million (US $0.1 million) in the three-month period ended September 30,
2009 compare to the three-month period ended September 30, 2008.
28
OTHER EXPENSE (INCOME)
Other income for the three-month period ended September 30, 2009, was
mainly attributable to a capital gain resulting from the completion of the
tender offer for Gold Frost's shares in July 2009.
OPERATING INCOME (EXPENSE)
Operating income for the three-month period ended September 30, 2009,
amounted NIS 14.2 million (US $3.8 million) compared to operating expense of NIS
1.4 million (US $0.4 million) reported in the three-month period ended September
30, 2008.
FINANCIAL INCOME (EXPENSE), NET
Financial income, net, for the three-month period ended September 30, 2009
was NIS 0.4 million (US $0.1 million) compared to financial expense, net, of NIS
0.4 million (US $0.1 million) in the three-month period ended September 30,
2008. Financial income, net, for the three-month period ended September 30,
2009, included an unrealized gain on marketable securities in the amount of NIS
0.4 million (US $0.1 million). Financial expense, net, for the three-month
period ended September 30, 2008, included an unrealized gain on marketable
securities of NIS 1.0 million (US $0.3 million), offset by income from
short-term bank deposits in the amount of NIS 0.5 million (US $0.1 million).
TAXES ON INCOME
Taxes on income for the three-month period ended September 30, 2009,
amounted to NIS 1.7 million (US $0.5 million) compared to an income tax benefit
of NIS 0.4 million (US $0.1 million) in the three-month period ended September
30, 2008.
EXPENSES FROM DISCONTINUED OPERATIONS
Expenses from discontinued operations for the three-month period ended
September 30, 2009, amounted to NIS 1.4 million (US $0.4 million) compared to
expenses from discontinued operations of NIS 0.7 million (US $0.2 million) in
the three-month period ended September 30, 2008. The discontinued operations
include our export segment comprised of Baron, the Danish company and WF
(Laish).
NET INCOME
Net income for the three-month period ended September 30, 2009, amounted to
NIS 11.5 million (US $3.1 million), compared to net income of NIS 0.6 million
(US $0.2 million) for the three-month period ended September 30, 2008.
NET INCOME ATTRIBUTABLE TO THE OWNERS OF OUR COMPANY
Net income attributable to the owners of our Company for the three-month
period ended September 30, 2009, increased by 12,545% to NIS 11.1 million (US
$2.9 million), or 16.2% of sales, from NIS 0.1 million (US $0.02 million), or
0.1% of sales, for the three-month period ended September 30, 2008.
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
Net income attributable to non-controlling interests for the three-month
period ended September 30, 2009, decreased by 39.2% to NIS 0.3 million (US $0.1
million), from NIS 0.6 million (US $0.1 million), for the three-month period
ended September 30, 2008. The decrease was mainly due to our acquisition of Gold
Frost minority shares through a tender offer on July 2009.
29
LIQUIDITY AND CAPITAL RESOURCES
For the three-month period ended September 30, 2009, we generated a
positive cash flow from operating activities of approximately NIS 4.6 million
(US $1.2 million) compared to NIS 7.3 million (US $1.9 million) in the
three-month period ended September 30, 2008. The decrease was mainly due to an
increase in trade accounts payables of approximately NIS 2.8 million (US $0.7
million) (compared to a increase of NIS 3.8 million (US $1.0 million) in the
three-month period ended September 30, 2008), offset by an unrealized gain on
marketable securities of approximately NIS 0.4 million (US $0.1 million)
(compared to unrealized loss of approximately NIS 1.0 million (US $0.3 million)
in the three-month period ended September 30, 2008).
During the three-month period ended September 30, 2009, we generated cash
flow of NIS 7.3 million (US $1.9 million) from investing activities (compared to
utilized cash flow of NIS 1.5 million (US $0.4 million) from investing
activities in the three-month period ended September 30, 2008), mainly due to
the realization of marketable securities, net of NIS 7.7 million (US $2.0
million) (compared to purchase of marketable securities, net of NIS 0.6 million
(US $0.2 million) in the three-month period ended September 30, 2008).
During the three-month period ended September 30, 2009, we utilized cash
flow of NIS 1.5 million (US $0.4 million) from financing activities (compared to
generated cash flow of NIS 1.5 million (US $0.4 million) from financing
activities in the three-month period ended September 30, 2008) mainly due to
proceeds of loans of NIS 4.0 million (US $1.0 million) in the three-month period
ended September 30, 2008.
YEAR ENDED DECEMBER 31, 2008 COMPARED WITH YEAR ENDED DECEMBER 31, 2007
SALES
Sales for the year ended December 31, 2008 increased by approximately NIS
87.5 million (US$23.0 million), or 43.37%, to approximately NIS 289.1 million
(US $76.0 million) from NIS 201.6 million (US $53.0 million) for the year ended
December 31, 2007. This increase in sales was attributed to (i) consolidation of
Shamir Salads that contributed NIS 70.4 million and (ii) internal growth that
contributed NIS 17.1million.
COST OF SALES
Cost of Sales for the year ended December 31, 2008 increased to
approximately NIS 228.8 million (US $60.2 million), or 79.16% of sales, from
approximately NIS 156.1 million (US $41.0 million), or 77.41% of sales, for the
year ended December 31, 2007. The increase in Cost of Sales was mainly due to
the strengthening of the U.S. dollar versus the NIS (devaluation of 13% in the
second half of 2008) and due to the sharp decrease in the global purchase prices
of food products in the fourth quarter of 2008.
GROSS PROFIT
Gross profit for the year ended December 31, 2008 increased to NIS 60.2
million (US $15.8 million), or 20.84% of sales, in the year ended December 31,
2008, as compared to a gross profit of approximately NIS 45.6 million (US $12.0
million), or 22.59% of sales, in the year ended December 31, 2007. The decrease
in the gross profit margin was due to the strengthening of the U.S. dollar
versus the NIS (devaluation of 13% in the second half of 2008) and due to the
sharp decrease in the fourth quarter of 2008 in the global purchase prices of
food products, resulting in the sharp decrease in the selling prices of our
products as well. Because our commitments to purchase food products were based
on higher prices from its vendors, the immediate consequence was a decline in
the gross margin in the fourth quarter of 2008.
30
SALES AND MARKETING EXPENSES
Sales and marketing expenses for the year ended December 31, 2008 increased
to approximately NIS 31.8 million (US $8.4 million), or 11.00% of sales, from
approximately NIS 20.6 million (US $5.4 million), or 10.22% of sales, for the
year ended December 31, 2007. This increase in sales and marketing expenses was
mainly due to the sales and marketing expenses of our new subsidiary, Shamir
Salads.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the year ended December 31, 2008
increased to approximately NIS 16.9 million (US $4.4 million), or 5.83% of
sales, from approximately NIS 12.3 million (US $3.2 million), or 6.09% of sales,
for the year ended December 31, 2007. This increase of general and
administrative expenses was due to the general and administrative expenses of
our subsidiary, Shamir Salads, whose results were consolidated with our results
starting in 2008.
OTHER EXPENSE (INCOME)
Other expense for the year ended December 31, 2008 amounted to NIS 1.8
million (US $0.5 million) as compared to other income of NIS 0.5 million (US
$0.1 million) for the year ended December 31, 2007. Other expense for the year
ended December 31, 2008, was mainly due to a final arbitration award entered
against us for damages in the amount of NIS 2.0 million (US $0.5 million) in
connection with a dispute with Vitarroz Corp.
OPERATING PROFIT
Operating profit for the year ended December 31, 2008 amounted to NIS 9.7
million (US $2.6 million) as compared to NIS 13.1 million (US $3.5 million) for
the year ended December 31, 2007.
FINANCING INCOME (COSTS), NET
Financing costs, net, for the year ended December 31, 2008 was
approximately NIS 4.9 million (US $1.3 million) compared with financing income,
net, for the year ended December 31, 2007 of approximately NIS 2.4 million (US
$0.6 million). The financing costs for the year ended December 31, 2008 mainly
included losses from marketable securities of NIS 4.8 million (US $1.3 million)
as compared to losses from marketable securities of NIS 0.07 million (US $0.02
million) in the year ended December 31, 2007, and expenses due to rate exchanges
of NIS 1.6 million (US $0.4 million) in the year ended December 31, 2008 as
compared to expenses due to rate exchanges of NIS 0.5 million (US $0.1 million)
in the year ended December 31, 2007. The financing income for the year ended
December 31, 2008 mainly included interest income from short-term bank deposits
of NIS 1.5 million (US $0.4 million) as compared to NIS 2.3 million (US $0.6
million) in the year ended December 31, 2007.
31
PRE-TAX INCOME
Income before taxes for the year ended December 31, 2008 decreased by
approximately NIS 10.7 million (US $2.8 million), or by 68.64%, to approximately
NIS 4.9 million (US $1.3 million) from NIS 15.6 million (US $4.1 million) for
the year ended December 31, 2007.
TAXES ON INCOME
Taxes on income for the year ended December 31, 2008 decreased to
approximately NIS 1.1 million (US $0.3 million) from approximately NIS 2.2
million (US $0.6 million) in the year ended December 31, 2007. The decrease in
taxes on income in 2008 as compared to 2007 was attributable to the decrease in
income before taxes.
EXPENSES FROM DISCONTINUED OPERATIONS
Expenses from discontinued operations for the year ended December 31, 2008
amounted to NIS 3.5 million (US $0.9 million) compared to expenses from
discontinued operations of NIS 8.7 million (US $2.3 million) in the year ended
December 31, 2007. The expenses from discontinued operations for the year ended
December 31,2008 include our export segment comprised of Baron, the Danish
company and WF (Laish) while the expenses from discontinued operations for the
year ended December 31,2007 include Baron and WF (Laish).
NET INCOME (LOSS) ATTRIBUTABLE TO THE OWNERS OF OUR COMPANY
Net loss attributable to the owners of our Company for the year ended
December 31, 2008, amounted NIS 0.8 million (US $0.2 million) compared to net
income attributable to the owners of our company of NIS 2.3 million (US $0.6
million), or 1.2% of sales, for the year ended December 31, 2007.
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
Net income attributable to non-controlling interests for the year ended
December 31, 2008, amounted NIS 1.1 million (US $0.3 million), compared to NIS
2.3 million (US $0.6 million), for the year ended December 31, 2007. The
decrease was mainly due to the decrease in net income.
NET INCOME
Net income for the year ended December 31, 2008 decreased by approximately
NIS 4.4 million (US $1.1 million), or 94.25%, to approximately NIS 0.3 million
(US $0.1 million), or 0.08% of sales, from approximately NIS 4.6 million (US
$1.2 million), equal to 2.30% of sales for the year ended December 31, 2007.
LIQUIDITY AND CAPITAL RESOURCES
Our operations are funded mainly through equity and cash flows from
operating activities. Our bank indebtedness is secured by certain liens on its
share capital, goodwill and certain other assets.
For the year ended December 31, 2008, cash and cash equivalents increased
from approximately NIS 61.6 million (US $16.2 million) at December 31, 2007 to
approximately NIS 78.7 million (US $20.7 million) at December 31, 2008.
During the year ended December 31, 2008, marketable securities decreased to
NIS 9.4 million (US $2.5 million) from NIS 31.3 million (US $8.2 million) at
December 31, 2007.
For the year ended December 31, 2008, we generated a positive cash flow
from continuing operating activities of approximately NIS 15.5 million (US $4.1
million) as compared to positive cash flow from continuing operating activities
of approximately NIS 11.2 million (US $3.0 million) in the year ended December
31, 2007, primarily as a result of an increase in trade and other payables, and
accrued expenses of approximately NIS 11.0 million (US $2.9 million) and of
unrealized loss on marketable securities of approximately NIS 5.2 million (US$
1.4 million) which was offset by an increase in trade receivables and other
receivables of approximately NIS 4.7 million (US $1.2 million).
For the year ended December 31, 2007, we generated a positive cash flow
from continuing operating activities of approximately NIS 11.2 million (US $3.0
million), primarily as a result of an increase in trade and other payables, and
accrued expenses of approximately NIS 4.0 million (US $1.1 million) which was
offset by an increase in trade receivables and other receivables of
approximately NIS 1.4 million (US $0.4 million). Our trade receivables and other
receivables increased primarily due to the increase in trade receivables.
During the year ended December 31, 2008, we utilized cash flow of NIS 3.0
million (US $0.8 million) for continuing investing activities, mainly for a
purchase of the subsidiaries (Shamir Salads) and purchase of additional shares
of Gold Frost in the total amount of NIS 14.9 million (US $3.9 million) and for
additions to fixed assets of NIS 3.1 million (US $0.8 million), which was offset
by proceeds from realization of marketable securities, net, in the amount of NIS
16.7 million (US $4.4 million).
32
During the year ended December 31, 2007, we utilized cash flow of NIS 43.9
million (US $11.6 million) for continuing investing activities, mainly for a
purchase of subsidiary and purchase of additional shares of Gold Frost in the
total amount of NIS 15.6 million (US $4.1 million), for the purchase of
marketable securities, net, in the amount of NIS 17.4 million (US $4.6 million),
and for additions to fixed assets of NIS 10.9 million (US $2.9 million),
consisting mostly of the investments in our new logistics center.
During the year ended December 31, 2008, we generated cash flow from
continuing financing activities of NIS 3.6 million (US $1.0 million) mainly due
to short term bank borrowings.
Our cash requirements, net, during the years ended December 31, 2008 and
2007 were met primarily through its working capital. As of December 31, 2008, we
had working capital of approximately NIS 122.5 million (US $32.2 million)
compared with working capital of NIS 142.6 million (US $37.5 million) as of
December 31, 2007. We believe that our working capital is sufficient for our
present requirements.
Our trade receivables balance as of December 31, 2008 was NIS 79.6 million
(US $20.9 million) as compared to a trade receivables balance as of December 31,
2007 in the amount of NIS 63.8 million (US $16.8 million). The average time
period within which our accounts receivable were paid was 81 days for 2008,
compared with 95 days for 2007.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The following table of our material contractual obligations as of December
31, 2008 summarizes the aggregate effect that these obligations are expected to
have on our cash flows in the periods indicated:
Payments due by period
---------------------------------------------------------------------------------
Contractual Obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years
----------------------- ----- ---------------- --------- --------- -----------------
(in thousands)
Open purchase orders NIS 19,215 NIS 19,215
(USD 5,054) (USD 5,054) -- -- --
Loans from banks (1) NIS 17,246 NIS 17,246
(USD 4,536) (USD 4,536) -- -- --
Lease agreements (2) NIS 584 NIS 317 NIS 267
(USD 153) (USD 83) (USD 70) -- --
Total NIS 37,045 NIS 36,778 NIS 267
(USD 9,743) (USD 9,673) (USD 70) -- --
(1) Does not include interest. The interest rates are as follows:
Overdraft in the amount of NIS 5.837 million (US$1.535 million) bears
interest at an annual rate of prime+1% through prime+6.65%.Short term bank
loans linked to the Israeli CPI in the amount of NIS 0.456 million
(US$0.120 million) bears annual interest of 5.91%.
Short term bank loans in the US dollar in the amount of NIS 3.296 million
(US$0.867 million) bears annual interest of Libor+1%.
Short term bank loans in the amount of NIS 7.657 million (US$2.014 million)
bears annual interest of prime+1% through 6.95%.
(2) Does not include interest. The annual interest rates are between 3.75% and
9.81%.
33
As of December 31, 2008, we had unused credit facilities in the amount of
approximately NIS 80 million. Shamir Salads had total used facilities of
approximately NIS 14.0 million of which approximately NIS 11.4 million were bank
on-call and the remainder were short and long term loans as detailed below:
LIABILITY AS OF
INTEREST DECEMBER 31, 2008
LOAN RATE FINAL DUE DATE IN NIS THOUSAND
----------- ---------- ------------------------ -----
CPI linked 5.91 July 2009 456
Not linked 6.95 / P+2.4 June 2010 - January 2012 794
In US dollars 2.5 September 2010 757
Car leasing 3.55 - 9.81 July 2009 - October 2009 584
=====
TOTAL 2,591
Because Shamir Salads is not in compliance with one of its bank covenants the
bank loans are classified as short-term loans.
OUR BUSINESS
OVERVIEW
We are an Israeli-based company engaged, directly and through our
subsidiaries, in the development, import, export, manufacturing, marketing and
distribution of a wide variety of over food products world-wide. Most of our
sales are made in Israel with widespread demand in the Israeli marketplace, as
well as products which cater to more select groups.
We purchase food products from over 250 suppliers located in Israel and
throughout the world, including from the Far East (China, India, the Philippines
and Thailand), Eastern Europe (Hungary, Poland, Latvia and Bulgaria), South
America (Argentina, Ecuador and Costa Rica), the United States, Western and
Northern Europe (The Netherlands, Belgium, Germany, Sweden, Denmark and France)
and Southern Europe (Spain, Portugal, Italy, Turkey, Greece and Cyprus).
Our products are marketed and sold to over 1,500 customers in Israel and
around the world (for example - to the United States, England, Belgium, France,
Switzerland, Russia etc.), including supermarket chains, wholesalers and
institutional consumers. We market most of the products under the brand name
"Willi-Food," our chilled salads under the name "Shamir Salads" and some of our
chilled and frozen products under the brand name "Gold Frost." Certain products
are marketed under brand names of the manufacturers or under other brand names.
In addition, we distribute some of our products on an exclusive basis, as
described further below.
We have acquired controlling interests in several businesses and have
formed joint ventures with other businesses during the last three years. Some of
these businesses were not successful and, accordingly, we sold them at prices
similar to our original acquisition costs. We continue to re-evaluate our
strategic position and consider other business opportunities. As part of this
re-evaluation, we are also considering forming strategic alliances with or
entering into different lines of business. We have no current plans,
arrangements or agreements with respect to any mergers, acquisitions, or
additional financing.
34
BUSINESS STRATEGY
Our business strategy is:
o to promote the "Willi-Food" and "Shamir Salads" brand names and
to increase market penetration of products that we currently sell
through, among other things, marketing efforts and advertising
campaigns;
o to expand its current food product lines and diversify into
additional product lines, as well as to respond to market demand;
and
o to expand our activity in the international food markets, mainly
in the U.S. and Europe.
Utilizing management's expertise in identifying market demand and
preferences, as well as its sourcing abilities, we intend:
o to continue to locate, develop and distribute additional food
products, some of which may be new to Israeli consumers;
o to increase its inventory levels from time to time both to
achieve economies of scale on its purchases from suppliers and to
more fully meet its customers' demands;
o to further expand the international food markets, mainly in the
U.S. and Europe, by purchasing additional food distribution
companies and/or increasing cooperation with local existing
distributors and/or exporting products directly to the customer;
and
o to penetrate new markets within the Middle East through the
establishment of business relationships and cooperation with
representatives in such markets subject to a positive political
climate.
We have developed certain trade relationships locally, as well as in areas
administered by the Palestinian Authority, although current sales volumes to the
Palestinian administered areas are low.
In addition, we have:
o promoted the value of the "Willi-Food" brand and introduced
additional food products to the Israeli marketplace under the
brand name "Willi-Food";
o initiated sales in the U.S. and Europe; and
o entered into arrangements with recognized manufacturers to market
their products under their respective brand names, in addition to
brand names under which we currently market our products.
SEGMENTS
We import, manufacture, market and distribute two kinds of line segments: import
segment and manufacturing segment.
35
IMPORT SEGMENT
We import, market and distribute a broad variety of over 600 food products.
Sales of import segment products accounted for approximately 76% of our sales in
2008. These products are sold by us and by Gold Frost.
We aim to broaden the variety of products we import. We expect to launch
additional new products into our product lines in the near future while
continuing to develop new and innovative food products.
The principal products in the import segment product line are as follows:
CANNED VEGETABLES AND PICKLES: including okra, mushrooms (whole and sliced)
and terfess, artichoke (hearts and bottoms), beans, asparagus, capers, corn
kernels, baby corn, palm hearts, bamboo shoots, vine leaves (including vine
leaves stuffed with rice), sour pickles, mixed pickled vegetables, pickled
peppers, an assortment of black and green olives, sun dried tomatoes and edamame
soybeans. These products are primarily imported from China, Spain, Greece,
Thailand, South America, Turkey, France, India, Poland, Morocco and The
Netherlands.
CANNED FISH: including tuna (in oil or in water), sardines, anchovies,
smoked and pressed cod liver, herring, fish paste and salmon. These products are
primarily imported from the Philippines, Thailand, Portugal, Canada, Spain,
Greece and Sweden.
CANNED FRUIT: including pineapple (sliced or pieces), peaches, apricot,
pears, cherries, mangos, litchies and fruit cocktail. These products are
primarily imported from the Philippines, Thailand, Greece and Europe.
EDIBLE OILS: including olive oil, sunflower oil, soybean oil, corn oil and
rapeseed oil. These products are primarily imported from Belgium, Argentina,
Turkey, Italy and Spain.
DAIRY AND DAIRY SUBSTITUTE PRODUCTS: including hard and semi-hard cheeses
(parmesan, edam, kashkaval and emmental), molded cheeses (brie, camembert and
danablu) feta, Bulgarian cheese, butter, butter spreads, margarine, melted
cheese, cheese alternatives, condensed milk and others. These products are
primarily imported from Greece, Denmark, Bulgaria, Italy, The Netherlands and
the United States.
DRIED FRUIT, NUTS AND BEANS: including figs, apricots, prunes, papaya,
pineapple, sunflower seeds, walnuts, pine nuts, cashew nuts and peanuts. These
products are primarily imported from Greece, Turkey, India, China, Thailand and
the United States.
OTHER PRODUCTS: including, among others, instant noodle soups, coffee
creamers, Lemon juice, halva, Turkish delight, cookies, vinegar, sweet pastry
and crackers, sauces, corn flour, pastes, rice, rice sticks, pasta, spaghetti
and noodles, breakfast cereals, corn flakes, instant coffee, rusks, coconut
milk, and ouzo. These products are primarily imported from the Netherlands,
Germany, Romania, Italy, Greece, Belgium, the United States, Scandinavia, China,
Thailand, Turkey, India, South America, including Argentina.
MANUFACTURING SEGMENT
We manufacture, market and distribute a broad line of over 400
Mediterranean style chilled salads. The products are manufactured in our
logistics center at the industrial zone in Barkan and are distributed across the
country and to several clients abroad. Sales of manufacturing segment products
accounted for approximately 24% of our sales in 2008. These products are sold in
a variety of sizes and types of receptacles and are intended for use by the
individual consumer as well as by the institutional consumer food markets.
36
We aim to broaden the variety of manufacturing products we distribute.
The principal products in the manufacturing segment product line are
Chilled Salads: including hummus, tehina, avocado, eggplant, potato, carrot,
tomato, egg, red beet, hot pepper, cabbage, olive, tuna, mushrooms, cherub,
coleslaw and ikra salads.
The products (import and manufacturing segment) that generated the largest
sales volume for the year ended December 31, 2008 were chilled salads (24% of
sales), dairy and dairy substitute products (17% of sales) and canned vegetables
(16% of sales).
The products (import and manufacturing segment) that generated the largest
sales volume for the year ended December 31, 2007 were dairy and dairy
substitute products (17% of sales), canned vegetables (16% of sales), canned
fish (10% of sales) and edible oils (9% of sales).
Most of the products that we import and market are approved as Kosher by,
and/or under the supervision of, various supervisory institutions including the
Chief Rabbinate of Israel, Chug Chatam Sofer, certain Jewish organizations
administering Kashrut procedures and certifications (such as the Union of the
Orthodox Jewish Congregation of America (referred to as OU), Badatz Igud
Harabanim Manchester, OK, Circle K and Triangle K) and rabbis of local Jewish
congregations abroad. See "Government Regulation".
Our products are packaged by various manufacturers and suppliers abroad and
labeled with Hebrew, English and, in certain cases, Arabic and Russian labels,
in accordance with our instructions and requirements and in accordance with
applicable law. See "Government Regulation".
EXPORT SEGMENT
We recently shut down our export segment after selling our holdings in
Baron and selling Gold Frost's holding in a Danish dairy distributor. See "Our
Business - Recent Developments". The operating data of the export segment is
presented as a discontinued operation in our financial statements.
SUPPLIERS
IMPORT SEGMENT
We are not a manufacturer in the import segment and purchases final food
products only. We purchase food products from over 250 suppliers, including
suppliers located in Israel, the Far East (China, India, the Philippines and
Thailand), Eastern Europe (Hungary, Poland, Latvia and Bulgaria), South America
(Argentina, Ecuador and Costa Rica), the United States and in Western, Northern
and Southern Europe (Sweden, Denmark, Greece, The Netherlands, Italy, Portugal,
Spain, Belgium, Germany, France, Turkey and Cyprus).
In addition, we actively maintain contact with approximately 150 suppliers
worldwide through which it assesses, on an on-going basis, world market trends,
fluctuations in prices, international trends, and other issues relevant to our
business. Our management and personnel visit food trade fairs worldwide on a
regular basis and endeavor to create new business relationships with potential
suppliers.
37
Certain of the import segment products we import are seasonal agricultural
products, such as artichokes, cherries, mushrooms and peaches. In order to
assure ourselves a continued supply of these seasonal items, we generally make
arrangements with the producers of such products at the beginning of the season
for the terms of purchase of such items for the upcoming year.
A substantial portion of our purchases from suppliers in the import segment
is made in US Dollars (such as purchases from the Far East, the United States,
South America and certain European countries) with the remaining purchases
usually made in Euros and other foreign currencies (e.g., Swedish Kronas).
Supply is generally made to us against letters of credit for a period of up to
90 days.
MANUFACTURING SEGMENT
In the case of the manufacturing segment, Shamir Salads manufactures all of
the chilled salads. In the manufacturing segment we purchase raw ingredients
from over 30 non-exclusive local suppliers to manufacture the chilled salads.
Most of those purchases are denominated in NIS.
GENERAL
We are not dependent on any given supplier for the supply of a majority of
our products. We purchase most of our products from several suppliers. We are
dependent on one source of supply - Arla from Denmark - with respect to a large
part of our dairy and dairy substitute products - a part of the import segment.
A distribution agreement between us and Arla grants us exclusive and
non-transferable right to market and distribute cheese and butter products
manufactured by Arla and its affiliated companies in Israel. Our exclusivity is
subject to our purchase of certain minimum quotas of products. The agreement was
signed in March 2005 for a period of 5 years. In July 2007, the agreement was
extended for a period of 10 years from March 2005 and is renewable automatically
for a further period of five years, unless notice of termination is provided by
either party. Arla has the right to terminate the agreement on three months
notice in certain circumstances, including in the case of the death or permanent
incapacity of Zwi Williger or his ceasing to be involved in our business or if
we fail to satisfy its minimum purchase requirements under the agreement.
Although we are not dependent on any one supplier with respect to most of
our products, termination of our business relationships with certain suppliers
and/or a material adverse change in the terms at which we purchase such products
from such suppliers could have a material adverse effect on our financial
results. There can be no assurance that alternative sources for such products,
if required, will be readily available nor can we assure the terms of purchase
of such products from such alternative sources.
We do not generally enter into written agency or other agreements with our
suppliers. However, we have written agreements with 16 foreign suppliers from
the import segment that confirms our exclusive appointment as the sole agent
and/or distributor of such suppliers either with respect to a specific product
or with respect to a line of products, within the State of Israel. These
exclusivity rights have generally been granted for a period of 12-24 months and
are automatically extendable unless terminated by either party upon notice, and
in certain cases are conditioned upon our compliance with certain minimum
purchase requirements. The suppliers from which we received such letters of
confirmation accounted for 24% of our purchases in 2008 and in 2007. In a few
instances we did not fulfill our commitment to the minimum purchase
requirements, but since the commencement of our activities, no supplier has
terminated its agreement with us due to our failure to comply with the minimum
purchase requirements. Our purchases are not motivated by a desire to meet
minimum purchase requirements, and the considerations in purchasing products
from these suppliers are identical to those for purchasing from other suppliers.
38
In the years 2008 and 2007, no supplier accounted for more than 10% of our
total purchases.
The average volume of our credit balance with its suppliers amounted in
2008 to NIS 48.6 million (US$12.8 million) consisting of 62 days of suppliers
credit on average, and in 2007 to NIS 31.0 million (US$8.2 million) consisting
of 58 days of suppliers credit on average.
CUSTOMERS
Our products (import and manufacturing segments) are marketed and sold to
over 1,500 customers throughout Israel and outside of Israel.
Our customers generally fall within one of the following two groups:
o large retail supermarket chains in the organized market, and
o private supermarket chains, mini-markets, wholesalers,
manufactures, institutional customers and the customers in the
Palestinian Authority referred herein as the "private sector."
The first major group includes the largest Israeli supermarket chains in
the organized market in Israel, including: (i) Shufersal Ltd. (including the
chains: Shufersal Deal, Shufersal Big, Shufersal Sheli, Shufersal, Yesh and
Katif); (ii) Blue Square Israel Ltd. (which also includes MegaCenter, MegaBool
and Shefa Shuk); and (iii) Co-Op Israel (which also includes Co-Op Jerusalem,
Mister Zol, Pashut Zol and M.M.N). We contract with the supermarket chains in
the organized market through the buyers in the head office of the supermarket
chain, and then we receive orders from the logistic center or directly from
their stores. Merchandise is then delivered directly to each branch or to the
supermarket's chain distribution center.
The second major group includes private supermarket chains, mini-markets,
wholesalers, food manufacturers, institutional consumers, such as catering
halls, hotels, hospitals and food service companies and food producers, and
customers in the Palestinian Authority.
Our sales, by customer group, for the years ended December 31, 2008 and
2007 are as follows:
PERCENTAGE OF TOTAL SALES
YEAR ENDED DECEMBER 31
-------- --------
CUSTOMER GROUPS 2008 2007
--------------- -------- --------
Supermarket Chains in the organized market 23% 24%
Private Supermarket Chains, mini-markets,
wholesalers, manufacturers, institutional
consumers and the customers in the
Palestinian Authority 77% 76%
100% 100%
39
Our largest customer (a supermarket chain in the organized market)
accounted for 16% of our sales both in 2008 and 2007.
The loss of this major customer would have a material adverse effect on our
financial condition and results of operations. We are seeking to expand our
operations in other areas so as to reduce our dependence on any single
significant customer.
We agreed to pay the large supermarket retail chains in the organized
market incentives calculated as a fixed percentage of the annual sales to such
customer. Other incentives include penetration discounts for sales of our new
products, limited discounts for opening of new branches that sell our products
and payments for participation in our product advertisements. The above
mentioned incentives vary among customers and are usually awarded as part of a
written annual framework agreement.
These incentives typically range from 5% to 8.5% of our annual sales to
such customers and are generally paid at the beginning of each year with respect
to the previous year's sales. These arrangements also generally include specific
exclusions, such as direct or joint importing of products that are not
considered for purposes of such incentives. Certain of these commitments are not
evidenced in written agreements. For the years ended December 31, 2008 and 2007,
we paid and/or are obligated to pay approximately NIS 4.7 million (US $1.2
million) and NIS 3.8 million (US $1.0 million), respectively, with respect of
such incentives.
Our engagement with private sector customers is not subject to any
exclusivity provisions or framework agreement, and they have no specific term.
Prior to any engagement with a potential private sector customer, we examine the
financial stability of such potential customer and determine the extent of the
credit and period for which credit would be granted. Most of the private sector
customers are required to deposit securities as collateral (personal and/or bank
guarantees as well as post-dated checks). Some of the customers of this sector
(mainly private supermarket chains and wholesalers) are also awarded incentives
based on the increase in volume of sales to such customers in excess of a
certain agreed amount, or incentives calculated as a fixed percentage of the
annual sales to such customer. The extent of such incentives varies between
0.5%-4.5% of the increase in volume of sales to such customers in excess of a
certain agreed amount or of the annual sales turnover of each relevant customer
(depending on the agreement with each customer).
The average aggregate debit balance of our customers with us amounted in
2008 to NIS 83.3 million (US $21.9 million) and the average time period within
which our accounts receivable were paid was 81 days and in 2007 the average
aggregate debit balance of our customers with us amounted to NIS 67.6 million
(US$ 17.8 million) and the average time period within which our accounts
receivable were paid was 95 days.
In the event that a client does not respect its financial commitments, we
may elect to foreclose on the collateral or the promissory note given by
customers in the private sector. In 2006-2008, no significant use of this means
was implemented.
We strive to minimize our credit risks by constantly reviewing the credit
we extend to customers versus the security we receive. As a result, we have
ceased selling products to certain customers and considerably reduced sales to
other customers, and may continue to do so.
Our bad debt expenses for the years ended December 31, 2008 and 2007
amounted to NIS 3.2 million (US $0.83 million) and NIS 2.3 million (US $0.6
million), respectively.
40
DISTRIBUTION, MARKETING AND SALES
We primarily distribute and market our products on our own. We market our
products via internal sales agents, though in cases of sales of certain products
to clients situated in different areas of Israel, we distribute products through
external distributors, with whom we do not have exclusivity agreements. Sales by
these distributors are not significant.
We generally have no written agreements with our customers, nor are our
arrangements with our customers on an exclusive or binding basis. We generally
extend our customers approximately 60-90 days credit beginning at the end of the
month in which the sale took place. The supermarket chains in the organized
market generally effect payment by wire transfers or cash payments on the due
date, while other customers are generally required to provide post-dated
promissory notes at least one month prior to the date of the expected payment.
We generally do not require the supermarket chains in the organized market to
provide any kind of security for payments; however, other customers may be
required to provide security, including personal guarantees.
Sales are made by the placement of customers' orders (except for part of
the dairy and dairy substitute products), which are directed to our regional
office and placed by the sales personnel or directly by the customers. Orders
are delivered by our transport network (including, as of the date of this
prospectus, 15 refrigeration trucks, eight regular trucks and four combined
trucks) and by independent transporters. In certain cases, we transport products
directly from port to customers, utilizing the services of independent
transporters. In some instances, we transfer the merchandise to the logistic
centers of the supermarket chains, and the supermarket chains themselves are
responsible for the distribution of the merchandise to their chain stores for a
commission charged to us.
The sale of part of the dairy and dairy substitute products is performed by
"van sale" sales agents using small terminals. The sales agents supply these
products immediately from the stock of products in the refrigeration trucks in
which they travel.
Some of the marketing and distribution to institutional clients in the
private sector (such as hotels, police, prisons, and the Ministry of Defense and
"Kibbutz" collective settlements) is done by winning tenders or direct
distribution or by wholesalers.
In the import segment, we generally hold an inventory of products which we
believe to be sufficient to meet market requirements for a period of up to 45
days. Occasionally, we may take advantage of low priced merchandise and purchase
larger amounts than usual of a product with long shelf life. In those cases, the
inventory quantities may be even higher than 70 days. Products ordered by
customers in full container loads are generally forwarded directly to the
customers' facilities without being stored in our facilities. In the
manufacturing segment, we generally hold an inventory of products which we
believe to be sufficient to meet market requirements for a period of up to 20
days. We do not regularly maintain significant backlog of orders from customers;
orders received by customers are generally filled within one week.
Our inventory as of December 31, 2008 amounted to NIS 34.4 million (US$9.1
million) compared with NIS 31.0 million (US$8.2 million) as of December 31,
2007.
We also participate in various sales campaigns within the supermarket
chains that are intended to stimulate sales volume. Among such campaigns are
food festivals initiated by the supermarket chains and certain importers,
including us, in which the import and marketing of products from a specific
country or region are celebrated and promoted. Such festivals typically involve
increased display space as well as enhanced promotional activities, both with
respect to the festival itself and the products. Such activities are sponsored
by the supermarkets in collaboration with the importers participating in the
festival. Within the framework of these festivals, we imports a wide variety of
products which include pastries, vegetables, jams, cheese, fish, and dairy
products, as well as certain articles typical to the culture and/or cuisine of
each specific festival.
41
We maintain close contact with our consumer markets in an effort to be
attentive to market needs, market trends, demand for certain products and their
value to the market. We also regularly gather information on new products
manufactured worldwide, including by attending food exhibitions and maintaining
close relations with manufacturers and suppliers worldwide.
We are responsible for the products we market in Israel under the Israeli
Law of Defective Products of 1980, and we have also purchased an insurance
policy for product liability.
SEASONALITY
Each year as the Passover and Rosh Hashana festivals approach, we usually
increase our inventories in order to provide a fast response to the market's
demand. Usually there is an increase in our sales prior to the Rosh Hashanah
holiday (celebrated in September-October) and the Pesach (Passover) holiday
(celebrated in March-April). Despite the impact of the holiday season on our
activities, our quarterly sales are not materially affected as a result of these
holiday seasons.
COMPETITION
The food distribution business in Israel is highly competitive with respect
to imported, as well as locally manufactured, food products. We believe that it
presently faces direct competition from both local manufacturers, as well as
from a number of importers of food products. The food market in Israel is very
price sensitive.
For each of the categories of products we distribute, there exists
competition by dozens of local manufacturers as well as from other importers.
The barriers to entry in the food market are low, and new potential competitors
are constantly joining the market. We believe that we may also face competition
from potential new-comers to the food business, as well as from existing
importers and/or manufacturers currently not involved in the same lines of
products as us.
For example, certain of the products imported by us such as canned fish,
corn, edible oils, certain pickles, olives, pasta, cereal, sweet pastry and
crackers and certain dairy products are also produced by local manufacturers in
Israel. Local producers are not subject to the financial risks of importing food
products or to governmental policies regarding taxation of imported food
products to which we are subject.
To our knowledge, several of our competitors (Shemen, Tet-Bet and Solbar
with respect to edible oils, Fodor (Starkist and Yona), Posidon and Williger of
the Neto Group, Filtuna and Shastowits with respect to fish products, Pri
HaGalil-Vita, Yachin-Zan laKol, Williger of the Neto Group, Alaska and Johnson
with respect to canned vegetable and canned fruits products, Osem, Barila, Pri
HaGalil-Vita, Williger of the Neto Group and Tomer with respect to pasta
products, Tnuva, Tara, Strauss, Siman, Machlvot Gad and Meshek Zuriel with
respect to dairy and dairy substitute products, Strauss, Osem, Miki's salads and
Yad-Hamelech salads with respect to chilled salads, for example) are
substantially more established, have greater market recognition and have greater
financial, marketing, human and other resources than those of our company. If
any of our major competitors materially reduces prices, we would experience
significantly more competitive pressure and a decrease in profitability. We
cannot predict whether it could successfully compete with these pressures and,
if it were unable to do so, our business would be adversely impacted.
42
Our management does not have precise information regarding the extent of
the import of food products to Israel. However, management believes that it is
currently one of the leading companies in Israel in our line of products.
We endeavor to compete by reacting to the availability of products, their
prices, offers for performing transactions and business opportunities, while
diversifying sources of supply as well as following the selling prices of
competing products and setting our product prices according to changing market
conditions.
INTELLECTUAL PROPERTY RIGHTS
We market certain products under the trademark "Willi-Food," which was
approved for registration in Israel in May 1997 for certain uses relating to the
food industry. In 2001, the trademark's validity was extended for an additional
fourteen years (until 2015). We market certain products under the trademark
"Gold-Frost," which was registered in Israel in February 2002. We also market
certain products under the trademark "Shamir Salads," which was registered in
Israel in January 1995.
We also market cheeses and cheese substitute for pizza under the trademark
"Pizza Top" which was registered in Israel in September 2002. On February 16,
2006, we entered into an agreement with Gold Frost under which we assigned to
Gold Frost all our rights, title and interest in and to the trademark "Pizza
Top".
We also market certain products under the trademark "Gold Food", which was
registered in Israel in November 2002 for different uses in the food industry.
We also market cheeses and cheese substitute under the trademark "Bloose,"
which was registered in Israel in October 2007, market breakfast cereals under
the trademark "Bubles," which was registered in Israel in December 2006, market
snacks under the trademark "Krisponim," which was registered in Israel in
January 2007, and market edamame soybeans under the trademark "Manchow," which
was registered in Israel in June 2007.
We also market pasta and sauces under the trademark "Donna Rozza," which
was registered in Israel in August 2005 for different uses in the food industry.
Other products marketed by us under their original brand name are "Completa",
"Raskas", "Puck", "Nobeleza Gaucha", "Hazer Baba", "Sera", "Daawat", "Zanetti",
"Ferro", "Hahne", "Brillo", "Arla" and "Lurpak". We import several products for
the Supersol chain under the brand name "Supersol".
There can be no assurances as to the degree of protection registration of
our trademarks will afford. In 2008 and 2007, we applied for two new trademarks
and in relation to one of them we received some objections. There is no
certainty that these trademarks will be registered as we requested.
We also own four trademarks which are not currently used. Our investment in
registering these trademarks was insignificant.
LEGAL PROCEEDINGS
CLASS ACTION LITIGATION
On April 16, 2009 we were served with a purported class action lawsuit
alleging that we misled our customers by illegally marking a product that we
import and sell as "sugar free", according to the Israeli Consumer Protection
Law, 1981.
43
The group which the lawsuit desires to represent are any Israeli resident
who bought this product due to such person's preference for a sugar free or a
reduced sugar product (the "Group"). According to the plaintiff, the Group
consists of 2,000 customers. The plaintiff appraises our own damages at NIS
2,000 (approximately US$510) and the damages of the entire Group to be NIS 4
million (approximately US$1 million).
On October 12, 2009 a preliminary hearing was held. In the beginning of the
hearing, the judge mentioned to the plaintiff's attorney that the lawsuit does
not meet a procedure of a purported class action and asked both parties to reach
for a settlement within 30 days. We received an offer from the plaintiff
attorney to settle the lawsuit for NIS 30,000 (approximately US$8,000). We are
currently examining the offer with our legal counsel.
SHAMIR AGREEMENT
On May 14, 2009 we received a notice from the minority shareholders of
Shamir Salads (the "Sellers"), with whom we had entered into a January 2, 2008
agreement to purchase approximately 51% of the shares of Shamir Salads (the
"Shamir Agreement"), cancelling the Shamir Agreement due to an alleged violation
of the Agreement by us. In addition, on May 18, 2009, the Sellers notified us
that the board of directors and the shareholders of Shamir Salads had convened
without our board and shareholder representatives and resolved to cancel the
Shamir Agreement, change Shamir Salads' board composition and signatory rights,
and replace the articles of association of Shamir Salads depriving us of our
board representation and signatory rights in Shamir Salads.
Our position is that the Sellers' actions referred to above are illegal,
violate the Shamir Agreement and Shamir Salads' articles of association, and did
not constitute a proper corporate action of Shamir Salads. We believe that the
actions taken by the Sellers are in response to the claim by us that the Sellers
return a portion of the advance payment made by us to the Sellers in connection
with the acquisition of shares in Shamir Salads. We have claimed that the
Sellers made false representations to us as to the 2007 financial results of
Shamir Salads, inflating the amount of the advance payment made by us, and the
Sellers have not responded to this claim.
We submitted an urgent application to the district court in Tel Aviv
requesting, among other things, a declaratory judgement that the Shamir
Agreement is in full force and effect and various injunctions against the
Sellers.
On May 27, 2009, the district court in Tel Aviv issued a temporary
injunction against the Sellers. Pursuant to the injunction issued by the court,
the Sellers are prohibited from taking any action not in accordance with the
signatory rights in Shamir Salads in effect prior to May 18, 2009, performing
any disposition of the shares of Shamir Salads held by the Company, taking any
action not in accordance with the articles of association of Shamir Salads as in
effect prior to May 18, 2009, and/or interfering with the functions of Shamir
Salads' board of directors as composed prior to May 18, 2009. In addition,
pursuant to the injunction, the Sellers are prohibited from interfering with the
functions of the co-CEO of Shamir Salads nominated by us and/or from preventing
the deputy CFO of Shamir Salads from participating in the discussions to approve
the financial statements of Shamir Salads.
On June 17, 2009, the Sellers petitioned the district court in Tel Aviv for
temporary relief against us and others, a declaratory judgment and other relief
in connection with an alleged fundamental breach by us of the Shamir Agreement
and for the return of the shares in Shamir Salads and the consideration paid
therefore.
44
On June 22, 2009, in a hearing which took place before the Hon.
Vice-President of the District Court, Judge Y. Zaft, it was agreed to (i)
suspend the proceedings between the parties, (ii) to appoint the arbitrator in
all aspects of the dispute which is the subject of these proceedings, (iii) to
hear any claim that either of the parties has against the other, in anything
concerning and emanating from the contractual relations between them, as well as
their status in our company, and to decide any dispute concerning the conduct of
the parties as our shareholders, including temporary relief, and (iv) that the
application for temporary relief that was filed by the Sellers be struck out.
The temporary injunction against the Sellers will remain in effect until the
arbitration procedures will end.
In the framework of these proceedings we submitted a claim for declaratory
reliefs in the matter so that the Seller's notice of cancellation of the
agreement was given unlawfully and is void, as well as for an advance that was
paid in excess and of additional damages that were caused us in a sum of
approximately NIS 3.9 million.
In the framework of the arbitration being conducted between the parties, on
August 4, 2009, the Sellers submitted a counterclaim against us and others for
declaratory orders determined in proceedings that were submitted to the court,
as well as for payment to Sellers of a sum of NIS 6.97 million for non-payment
of the consideration in the agreement and tarnishing the Sellers' reputation and
good name, and a sum of NIS 3.5 million to the Shamir Salads for damages that we
allegedly caused it and our reputation, as well as a petition to split relief.
Claims for additional relief against additional defendants (but not including
our company) were also included in the framework of the claim.
On September, 22, 2009, filing of the complaints and primary evidence
declarations on behalf of the parties was completed.
On October 20, 2009, a preliminary meeting was held in the chambers of the
Hon. arbitrator, during which the manner of hearing the witnesses and evidence
in the claim was arranged. The evidentiary stage of the arbitration proceedings
commenced on November 3, 2009.
On November 15, 2009, the Sellers allegedly filed a complaint with the
Israeli police against the Williger Brothers as well as against other members of
our management team and against the legal counsel representing us. The complaint
was not filed against the Company. In their alleged complaint the Sellers
accused the Williger Brothers of an alleged fabrication and forgery of corporate
documents, alleged abstraction of justice and alleged harassment of witness. It
should be noted that this information was brought to the Company's knowledge
through an article published on the Internet. Furthermore, until now, the
Israeli police have not approached the Williger brothers or the Company in
connection with this matter. To the Company's best judgment, according to all
the information and documents presented to us, these alleged claims are similar
to the claims raised by the Sellers in the arbitration and that there is no
substantiated legal basis for such allegations. The Company estimates that this
alleged complaint is another desperate attempt by the Sellers to improve their
condition in the arbitration.
EMPLOYEES
Since December 31, 2008, we, including our subsidiaries, employed a total
of 246 persons (most of them are located in Israel), 21 of whom were in
management, 32 of whom were in accounting and importing positions, 45 of whom
were involved in our sales and marketing departments, and 148 of whom were
employed in logistics networks (manufacturing, warehousing and transportation).
This compares with 135 employees as of December 31, 2007, 18 of whom were in
management, 22 of whom were in accounting and importing positions, 37 of whom
were involved in our sales and marketing departments, and 58 of whom were
employed in logistics networks (warehousing and transportation).
Since December 31, 2008, 79 additional employees (stewards and sales
people) were engaged on an hourly basis, as compared to 24 as of December 31,
2007. Other employees were supplied by temporary manpower companies.
The increase in the number of employees in all of the departments is mainly
due to the expansion of the Group with the addition of two new subsidiaries,
Shamir and Kirkeby.
Most of our employees are party to written employment contracts. We
currently have management services agreements with companies controlled by
Messrs. Joseph and Zwi Williger, pursuant to which Messrs. Joseph and Zwi
Williger provide management services on behalf of such companies to us.
45
We believe that our working relations with our employees are satisfactory.
Israeli labor laws are applicable to most of our employees, as are certain
provisions of the collective bargaining agreements between the Histadrut
(General Federation of Labor in Israel) (the "Histadrut") and the Coordination
Bureau of Economic Organizations (including the Manufacturers' Association of
Israel) (the "MAI"), by order of the Israeli Ministry of Labor. These
provisions, along with the Israeli labor laws, principally concern the length of
the work day, minimum daily wages for professional employees, paid annual sick
leave, prohibition of discrimination, insurance for work-related accidents,
social security, procedures for termination of employment by dismissal,
entitlement to and calculation of severance pay and other terms of employment.
In addition, Israeli employers, including us, are required to provide
certain escalations in wages in relation to the increase in the Israeli CPI. The
specific formula for such escalation varies according to agreements between the
Government of Israel, the MAI and the Histadrut.
A general practice in Israel, which is followed by us, is the maintenance
of a pension plan to the benefit of our employees (the "Pension Plan"). Each
month, both we and our employees allocate sums to the Pension Plan. Types of
Pension Plans may vary, while a commonly used Pension Plan is known as
"Manager's Insurance". Pension Plans provide a combination of savings plan,
insurance and severance pay benefits to participating employees. Some of the
sums allocated monthly by us to the employees' Pension Plans are on account of
Severance Pay to which the employees may be entitled, upon termination of
employment. Each month the employee contributes an amount which equals 5% to
7.5% of his or her insured salary, and we contribute an additional sum of 13.3%
to 15.83% of his or her insured salary. In addition, Israeli law generally
requires payment of severance pay upon the retirement or death of an employee or
termination of employment without due cause. Furthermore, Israeli employees and
employers are required to pay predetermined sums to the National Insurance
Institute (which is similar, to some extent, to the United States Social
Security Administration). The payments thereto amount to 7.35% to 17.43% of
wages; the employee's share being 3.5% to 12% (depending on the marginal level
of wages) and the employer's share being 3.85% to 5.43%.
RECENT DEVELOPMENTS
GOLD FROST
In June 2009, Gold Frost Ltd. ("Gold Frost"), our wholly-owned subsidiary,
executed an agreement to sell Gold Frost's 51% interest in a Danish dairy
distributor ("Distributor") to the Distributor and/or to the Distributor's other
shareholder ("Other Shareholder") for $400,000. Gold Frost acquired this 51%
interest from the Other Shareholder in February 2008 for the same amount.
According to the terms of the agreement, an amount equal to the balance of
outstanding invoices owed by Gold Frost to the Distributor will be deducted as a
down payment, and the rest will be paid by deduction in the purchase price by a
pre-determined amount for each shipment of goods that Gold Frost will purchase
from the Distributor or from the Other Shareholder, and the balance of the
consideration, if any, will be paid in April 2011.
Gold Frost was granted the exclusive right to distribute all of the
products of the Distributor and the Other Shareholder in Israel until April
2012, as long as Gold Frost purchases a minimum quantity of products from the
Distributor or from the Other Shareholder at fair market prices and that meet
specified quality standards.
46
Following a tender offer for shares and/or depositary interests of Gold
Frost, that we commenced on February 5, 2009 and which had expired, we commenced
a second tender offer on June 22, 2009 to purchase from the holders of shares
and/or depositary interests of Gold Frost all of the issued and outstanding
share capital of Gold Frost not already held by us for a price of 7 pence per
share or per depositary interest in cash On July 27, 2009 we announced that we
had successfully completed the tender offer. In accordance with Israeli law, we
purchased all of the issued and outstanding Gold Frost shares and depositary
interests that had not been owned by us at the time of the tender offer
(including those not tendered in the tender offer) at the tender offer price and
paid an aggregate amount of approximately (pound)370,430 for all such shares and
depositary interests.
SALE OF BARON
On September 2, 2009 we signed an agreement ("Agreement") to sell all of
our holdings in Y.L.W. Baron International Trading Ltd. ("Baron"), kosher food
exporters located in Israel, and to assign all of our rights and obligations
under the founders agreement from February 2007 to a private company owned by
the Baron Family, who hold, as of the date of the Agreement the remaining shares
in Baron.
In exchange for the sale of shares and the assignment of rights and
obligations, the Baron Family agreed to pay US $937,500, which was paid to us on
the date of execution of the Agreement.
With the consummation of the sale of Baron, our export segment was
effectively discontinued. We re-cast our financial statements to display the
export segment as discontinued operations.
REGULATION
The import, export, storage, distribution, manufacturing, marketing and
labeling of food products is subject to extensive regulation and licensing by
various Israeli government and municipal agencies, principally the Ministry of
Health, the Ministry of Finance and the Ministry of Trade and Industry. We are
required to maintain our distribution processes, as well as the products
imported and manufactured by us, in conformity with all applicable laws and
regulations. Failure to comply with these applicable laws and regulations could
subject us to civil sanctions, including fines, injunctions, recalls or
seizures, as well as potential criminal sanctions, any of which could have a
material adverse effect on us. We believe that we comply in all material
respects with the above-mentioned requirements. To the extent that we have
imported, or will import, food products outside of Israel, we may be subject to
quotas and other import laws and regulations which may limit our ability to sell
certain of our food products into these countries.
In 1978, the Israeli government issued the free import decree, which
exempts the import of most food products from the requirement to acquire a
license. However, preliminary permits from the Ministry of Health or the
Ministry of Agriculture are still required. These preliminary permits are
granted based on laboratory analysis reports and other data.
Customs duties and charges are levied on a portion of our products. Israeli
government policy in favor of exposing the local market to certain imported
products has directly impacted our operations since September 1991, when certain
customs duties levied by category, formerly levied on products, including those
imported by us, were canceled.
We are required to obtain import licenses for the import of certain food
products from the Ministry of Trade and Industry of the State of Israel. We have
obtained the necessary import licenses for the products imported by it as
required by the import authorities. We have also obtained the necessary
authorization required by the Ministry of Health (Food Authority) for the import
of all of our food products to Israel. Our products are packaged by various
manufacturers and suppliers abroad and labeled in Hebrew, English and, in
certain cases, Arabic and Russian, according to our instructions and the
requirements of the Israeli authorities. Since the beginning of our activities,
we have been found to have mislabeled packages four times, as a result of which
we were required to pay an immaterial amount of fines.
47
Most of the products which we import and market in the import segment are
approved as Kosher by and/or under the supervision of various supervisory
institutions including, the Chief Rabbinate of Israel, Chug Chatam Sofer,
certain Jewish organizations administering Kashrut procedures and certifications
(such as the Union of the Orthodox Jewish Congregation of America (OU), Badatz
Igud Harabanim Manchester, OK, Circle K, Triangle K, etc.) and rabbis of local
Jewish congregations abroad. Such procedures include, in certain cases, personal
supervision by a Kashrut supervisor sent by such institutions to the
manufacturing facilities from which we purchase products, who is present at the
plant during the processing of the product. Under Israeli law, we are required
to ascertain that the kosher foodstuffs which it offers for sale bear kosher
certification approved by certain authorities, such as the Chief Rabbinate of
Israel, and also bear the name of the individual authorized to certify such
product. Not all products marketed by we have been so certified, although they
do bear certain kosher certification from other certification bodies. The
expenses for obtaining the Kashrut approval are relatively low.
Most of the products which we manufacture in the manufacturing segment are
approved as Kosher by and/or under the supervision of Badaz Ha'eda Hacharedit
(except for "Kosher to Passover" products) and the Chief Rabbinate of Israel.
MANAGEMENT
This information is incorporated by reference to other documents previously
filed with the Commission. Please see "Incorporation of Certain Documents by
Reference" on page 58.
PRINCIPAL SHAREHOLDERS
This information is incorporated by reference to other documents previously
filed with the Commission. Please see "Incorporation of Certain Documents by
Reference" on page 58.
RELATED PARTY TRANSACTIONS
This information is incorporated by reference to other documents previously
filed with the Commission. Please see "Incorporation of Certain Documents by
Reference" on page 58.
DESCRIPTION OF SECURITIES
This information is incorporated by reference to other documents previously
filed with the Commission. Please see "Incorporation of Certain Documents by
Reference" on page 58.
SHARES ELIGIBLE FOR FUTURE SALE
This information is incorporated by reference to other documents previously
filed with the Commission. Please see "Incorporation of Certain Documents by
Reference" on page 58.
48
UNDERWRITING
We and the underwriter named below has entered into an underwriting
agreement, dated as of [o], 2009, with respect to the ordinary shares being
offered. Subject to the terms of the underwriting agreement, the underwriter has
agreed to purchase the number of ordinary shares indicated in the following
table. is the representative of the underwriter. The representative's address
is .
UNDERWRITER NUMBER OF ORDINARY SHARES
----------- -------------------------
TOTAL
The underwriter is committed to purchase all of the ordinary shares being
offered, if any are purchased, other than the ordinary shares covered by the
option described below unless and until this option is exercised.
The underwriter has an option to buy up to ______________ additional
ordinary shares from us at the offering price less the underwriting discount.
They may exercise that option for 45 days solely to cover over-allotments. If
any ordinary shares are purchased pursuant to this option, the underwriter will
severally purchase ordinary shares in approximately the same proportion as set
forth in the table above.
The following table shows the per ordinary share and total underwriting
discounts and commissions to be paid to the underwriter by us.
PAID BY US
--------------------------------------------------------------------------------
----------------
PER ORDINARY SHARE US$
TOTAL US$
Total underwriting discounts and commissions to be paid to the underwriter
represent 7% of the total amount of the offering.
Ordinary shares sold by the underwriter to the public will initially be
offered at the public offering price set forth on the cover of this prospectus.
Any ordinary shares sold by the underwriter to securities dealers may be sold at
a discount of up to US $ per ordinary share from the public offering price. If
all the ordinary shares are not sold at the public offering price, the
representative may change the offering price and the other selling terms. Any
such securities dealers may resell any shares purchased from the underwriter to
certain other brokers or dealers at a discount up to US $ per share from the
public offering price.
We have agreed to pay all fees and expenses we incur in connection with
this offering. All costs and expenses incurred by the underwriter in connection
with the marketing of this offering will be borne by the underwriter.
The underwriter is expected to make offers and sales both inside and
outside the United States through its selling agents. Any offers and sales in
the United States will be conducted by broker-dealers registered with the SEC.
________ is expected to make offers and sales in the United States through its
SEC-registered selling agent, _______.
49
The underwriter has entered into an agreement in which they agree to
restrictions on where and to whom they and any dealer purchasing from them may
offer ordinary shares, as a part of the distribution of the ordinary shares. The
underwriter also has agreed that they may sell ordinary shares among themselves.
We have agreed with the underwriter that we will not, without the prior
consent of the representative, for a period of 180 days following the date of
this prospectus, offer, sell, contract to sell, pledge, grant any option to
purchase, purchase any option or contract to sell, right or warrant to purchase,
make any short sale, file a registration statement with respect to any of our
ordinary shares or any securities that are convertible into or exercisable or
exchangeable for our ordinary shares, or otherwise transfer or dispose of
(including entering into any swap or other agreement that transfers to any other
entity, in whole or in part, any of the economic consequences of ownership
interest): (1) our ordinary shares and depositary shares representing our
ordinary shares; (2) shares of our subsidiaries or controlled affiliates and
depositary shares representing those shares; and (3) securities that are
substantially similar to such shares or depositary shares. We have also agreed
to cause our subsidiaries and controlled affiliates to abide by the restrictions
of the lock-up agreement. In addition, each of our directors and executive
officers will abide by similar 180-day lock-up agreement with respect to our
ordinary shares, depositary shares representing our ordinary shares and
securities that are substantially similar to our ordinary shares or depositary
shares representing our ordinary shares, subject to customary exceptions for
transfers among affiliates. The restrictions of our lock-up agreement do not
apply to: (1) the issuance of securities pursuant to our employee share
incentive plan outstanding on the date of this prospectus of which the
underwriters have been advised in writing and which is described in this
prospectus, and (2) a transfer by us to our affiliate, provided that such
transfer is not a disposition for value and that such affiliate agrees to be
bound in writing by the restrictions set forth in the lock-up agreement to which
we are subject.
The 180-day restricted period described in the preceding paragraph will be
automatically extended if: (1) during the last 17 days of the 180-day restricted
period, we issue an earnings release or announce material news or a material
event; or (2) prior to the expiration of the 180-day restricted period, we
announce that we will release earnings results during the 16-day period
beginning on the last day of the 180-day period, in which case the restrictions
described in the preceding paragraph will continue to apply until the expiration
of the 18-day period beginning on the date of the earnings release or the
announcement of the material news or material event.
The public offering price of the ordinary shares has been determined by
agreement between us and the representative. Among the factors considered in
determining the public offering price of the ordinary shares, in addition to
prevailing market conditions, were our historical performance, estimates of our
business potential and earnings prospects, an assessment of our management and
the consideration of the above factors in relation to market valuation of
companies in related businesses.
Our ordinary shares are quoted on the Nasdaq Capital Markets under the
symbol "WILC".
In connection with the offering, the underwriter may purchase and sell our
ordinary shares in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriter of a greater number of
ordinary shares than they are required to purchase in the offering. "Covered"
short sales are sales made in an amount not greater than the underwriter's
option to purchase additional ordinary shares from us in this offering. The
underwriter may close out any covered short position by either exercising their
option to purchase additional ordinary shares or purchasing ordinary shares in
the open market. In determining the source of ordinary shares to close out the
covered short position, the underwriter will consider, among other things, the
price of ordinary shares available for purchase in the open market as compared
to the price at which they may purchase additional ordinary shares pursuant to
the option granted them. "Naked" short sales are any sales in excess of such
option. The underwriter must close out any naked short position by purchasing
ordinary shares in the open market. A naked short position is more likely to be
created if the underwriter is concerned that there may be downward pressure on
the price of our ordinary shares in the open market after pricing that could
adversely affect investors who purchase in the offering. Stabilizing
transactions consist of various bids for, or purchases of, ordinary shares made
by the underwriter in the open market prior to the completion of the offering.
50
The underwriter may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriter a portion of the underwriting
discount received by it because the representative has repurchased ordinary
shares sold by, or for the account of, such underwriter in stabilizing or short
covering transactions.
Purchases to cover a short position and stabilizing transactions, as well
as other purchases by the underwriter for its own accounts, may have the effect
of preventing or retarding a decline in the market price of the ordinary shares,
and together with the imposition of the penalty bid, may stabilize, maintain or
otherwise affect the market price of the ordinary shares. As a result, the price
of the ordinary shares may be higher than the price that otherwise might exist
in the open market. If these activities are commenced, they may be discontinued
at any time. These transactions may be effected on the Nasdaq Capital Markets.
No offer of ordinary shares has been made or will be made to the public in
the United Kingdom within the meaning of Section 102B of the Financial Services
and Markets Act 2000, as amended, or FSMA, except to legal entities which are
authorized or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to invest in
securities or otherwise in circumstances which do not require the publication by
us of a prospectus pursuant to the Prospectus Rules of the Financial Services
Authority, or FSA. Each underwriter: (i) has only communicated or caused to be
communicated and will only communicate or cause to be communicated an invitation
or inducement to engage in investment activity (within the meaning of Section 21
of FSMA) to persons who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 or in circumstances in which Section
21 of FSMA does not apply to us; and (ii) has complied with, and will comply
with all applicable provisions of FSMA with respect to anything done by it in
relation to the ordinary shares in, from or otherwise involving the United
Kingdom.
In relation to each member state of the European Economic Area which has
implemented the Prospectus Directive, which we refer to as a Relevant Member
State, with effect from and including the date on which the Prospectus Directive
is implemented in that Relevant Member State, which we refer to as the Relevant
Implementation Date, no offer of ordinary shares has been made and or will be
made to the public in that Relevant Member State prior to the publication of a
prospectus in relation to the ordinary shares which has been approved by the
competent authority in that Relevant Member State or, where appropriate,
approved in another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the Prospectus
Directive, except that, with effect from and including the Relevant
Implementation Date, an offer of ordinary shares may be made to the public in
that Relevant Member State at any time: (a) to legal entities which are
authorized or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to invest in
securities; (b) to any legal entity which has two or more of (i) an average of
at least 250 employees during the last financial year; (ii) a total balance
sheet of more than (euro)43,000,000 and (iii) an annual net turnover of more
than (euro)50,000,000, as shown in its last annual or consolidated accounts; or
(c) in any other circumstances which do not require the publication by us of a
prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes
of this provision, the expression an "offer of ordinary shares to the public" in
relation to any ordinary shares in any Relevant Member State means the
communication in any form and by any means of sufficient information on the
terms of the offer and the ordinary shares to be offered so as to enable an
investor to decide to purchase or subscribe the ordinary shares, as the same may
be varied in that Relevant Member State by any measure implementing the
Prospectus Directive in that Relevant Member State and the expression Prospectus
Directive means Directive 2003/71/ EC and includes any relevant implementing
measure in each Relevant Member State.
51
Any offer or solicitation of ordinary shares within Germany must be in full
compliance with the German Securities Prospectus Act (Wertpapierprospektgesetz
- WpPG). The offer and solicitation of securities to the public in Germany
requires the approval of the prospectus by the German Federal Financial Services
Supervisory Authority (Bundesanstalt fur Finanzdienstleistungsaufsicht -
BaFin). This prospectus has not been and will not be submitted for approval to
the BaFin. This prospectus does not constitute a public offer under the German
Securities Prospectus Act (Wertpapierprospektgesetz). This prospectus and any
other document relating to the ordinary shares, as well as any information
contained therein, must therefore not be supplied to the public in Germany or
used in connection with any offer for subscription of the ordinary shares to the
public in Germany, any public marketing of the ordinary shares or any public
solicitation for offers to subscribe for or otherwise acquire the ordinary
shares. The prospectus and other offering materials relating to the offer of the
ordinary shares are strictly confidential and may not be distributed to any
person or entity other than the designated recipients hereof.
This prospectus has not been approved by the Hellenic Capital Markets
Commission or another EU equivalent authority and consequently is not addressed
to or intended for use, in any way whatsoever, by Greek residents. The ordinary
shares have not been offered or sold and will not be offered, sold or delivered
directly or indirectly in Greece, except to (i) "qualified investors" (as
defined in article 2(f) of Greek Law 3401/2005) and/or to (ii) less than 100
individuals or legal entities, who are not qualified investors (article 3,
paragraph 2(b) of Greek Law 3401/2005), or otherwise in circumstances which will
not result in the offer of the new common stock being subject to the Greek
Prospectus requirements of preparing a filing a prospectus (under articles 3 and
4 of Greek Law 3401/2005).
This offering of the ordinary shares has not been cleared by Consob, the
Italian Stock Exchanges regulatory agency of public companies, pursuant to
Italian securities legislation and, accordingly, no ordinary shares may be
offered, sold or delivered, nor may copies of this prospectus or of any other
document relating to the ordinary shares be distributed in Italy, except (1) to
professional investors (operatori qualificati); or (2) in circumstances which
are exempted from the rules on solicitation of investments pursuant to Decree
No. 58 and Article 33, first paragraph, of Consob Regulation No. 11971 of May
14, 1999, as amended. Any offer, sale or delivery of the common stock or
distribution of copies of this prospectus or any other document relating to the
common stock in Italy under (1) or (2) above must be (i) made by an investment
firm, bank or financial intermediary permitted to conduct such activities in
Italy in accordance with the Decree No. 58 and Legislative Decree No. 385 of
September 1, 1993, or the Banking Act; and (ii) in compliance with Article 129
of the Banking Act and the implementing guidelines of the Bank of Italy, as
amended from time to time, pursuant to which the issue or the offer of
securities in Italy may need to be preceded and followed by an appropriate
notice to be filed with the Bank of Italy depending, inter alia, on the
aggregate value of the securities issued or offered in Italy and their
characteristics; and (iii) in compliance with any other applicable laws and
regulations.
The underwriter has agreed that (i) it will not be providing from or within
Cyprus any "Investment Services", "Investment Activities" and "Non-Core
Services" (as such terms are defined in the Investment Firms Law 144(I) of 2007,
(the "IFL") in relation to the ordinary shares, or will be otherwise providing
Investment Services, Investment Activities and Non-Core Services to residents or
persons domiciled in Cyprus. Each underwriter has agreed that it will not be
concluding in Cyprus any transaction relating to such Investment Services,
Investment Activities and Non-Core Services in contravention of the IFL and/or
applicable regulations adopted pursuant thereto or in relation thereto; and (ii)
it has not and will not offer any of the ordinary shares other than in
compliance with the provisions of the Public Offer and Prospectus Law, Law
114(I)/2005.
52
This document does not constitute a prospectus within the meaning of Art.
652a of the Swiss Code of Obligations. The ordinary shares may not be sold
directly or indirectly in or into Switzerland except in a manner which will not
result in a public offering within the meaning of the Swiss Code of Obligations.
Neither this document nor any other offering materials relating to the ordinary
shares may be distributed, published or otherwise made available in Switzerland
except in a manner which will not constitute a public offer of the ordinary
shares of in Switzerland.
This prospectus has not been approved or disapproved by, or registered
with, the Oslo Stock Exchange, the Norwegian Financial Supervisory Authority
(Kredittilsynet) nor the Norwegian Registry of Business Enterprises, and the
ordinary shares are marketed and sold in Norway on a private placement basis and
under other applicable exceptions from the offering prospectus requirements as
provided for pursuant to the Norwegian Securities Trading Act.
We hereby represent and warrant that we have not offered for sale or sold,
and will not offer or sell, directly or indirectly the ordinary shares to the
public in the Republic of Botswana, and confirms that the offering will not be
subject to any registration requirements as a prospectus pursuant to the
requirements and/or provisions of the Companies Act, 2003 or the Listing
Requirements of the Botswana Stock Exchange.
The ordinary shares may not be offered or sold by means of any document
other than (i) in circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or
(ii) to "professional investors" within the meaning of the Securities and
Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or
(iii) in other circumstances which do not result in the document being a
"prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong
Kong), and no advertisement, invitation or document relating to the ordinary
shares may be issued or may be in the possession of any person for the purpose
of issue (in each case whether in Hong Kong or elsewhere), which is directed at,
or the contents of which are likely to be accessed or read by, the public in
Hong Kong (except if permitted to do so under the laws of Hong Kong) other than
with respect to ordinary shares which are or are intended to be disposed of only
to persons outside Hong Kong or only to "professional investors" within the
meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong)
and any rules made thereunder.
This prospectus has not been registered as a prospectus with the Monetary
Authority of Singapore. Accordingly, this prospectus and any other document or
material in connection with the offer or sale, or invitation for subscription or
purchase, of the ordinary shares may not be circulated or distributed, nor may
the ordinary shares be offered or sold, or be made the subject of an invitation
for subscription or purchase, whether directly or indirectly, to persons in
Singapore other than (i) to an institutional investor under Section 274 of the
Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a
relevant person, or any person pursuant to Section 275(1A), and in accordance
with the conditions, specified in Section 275 of the SFA or (iii) otherwise
pursuant to, and in accordance with the conditions of, any other applicable
provision of the SFA. Where the ordinary shares are subscribed or purchased
under Section 275 by a relevant person which is: (a) a corporation (which is not
an accredited investor) the sole business of which is to hold investments and
the entire share capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the trustee is not an
accredited investor) whose sole purpose is to hold investments and each
beneficiary is an accredited investor, shares, debentures and units of shares
and debentures of that corporation or the beneficiaries' rights and interest in
that trust shall not be transferable for 6 months after that corporation or that
trust has acquired the ordinary shares under Section 275 except: (i) to an
institutional investor under Section 274 of the SFA or to a relevant person, or
any person pursuant to Section 275(1A), and in accordance with the conditions,
specified in Section 275 of the SFA; (ii) where no consideration is given for
the transfer or (iii) by operation of law.
53
The ordinary shares have not been and will not be registered under the
Securities and Exchange Law of Japan, or the Securities and Exchange Law, and
ordinary shares will not be offered or sold, directly or indirectly, in Japan or
to, or for the benefit of, any resident of Japan (which term as used herein
means any person resident in Japan, including any corporation or other entity
organized under the laws of Japan), or to others for re-offering or resale,
directly or indirectly, in Japan or to a resident of Japan, except pursuant to
an exemption from the registration requirements of, and otherwise in compliance
with, the Securities and Exchange Law and any other applicable laws, regulations
and ministerial guidelines of Japan.
This prospectus has not been and will not be circulated or distributed in
the PRC, and ordinary shares may not be offered or sold, and will not be offered
or sold to any person for re-offering or resale, directly or indirectly, to any
resident of the PRC except pursuant to applicable laws and regulations of the
PRC. For the purpose of this paragraph only, the PRC does not include Taiwan and
the special administrative regions of Hong Kong and Macau.
This Prospectus does not constitute an offer to sell the ordinary shares to
the public in Israel or a prospectus under the Israeli Securities Law, 5728-1968
and the regulations promulgated thereunder, or the Israeli Securities Law, and
has not been filed with or approved by the Israel Securities Authority. In
Israel, pursuant to an exemption afforded under the Israeli Securities Law, this
Prospectus may be distributed only to, and may be directed only at, investors
listed in the first addendum to the Israeli Securities Law, or the Addendum,
consisting primarily of certain mutual trust and provident funds, or management
companies thereto, banks, as defined under the Banking (Licensing) Law,
5741-1981, except for joint service companies purchasing for their own account
or for clients listed in the Addendum, insurers, as defined under the
Supervision of Financial Services Law (Insurance), 5741-1981, portfolio managers
purchasing for their own account or for clients listed in the Addendum,
investment advisers purchasing for their own account, Tel Aviv Stock Exchange
members purchasing for their own account or for clients listed in the Addendum,
underwriters purchasing for their own account, venture capital funds, certain
corporations which primarily engage in the capital market and fully-owned by
investors listed in the Addendum and corporations whose equity exceeds NIS 250
Million, collectively referred to as institutional investors. Institutional
investors may be required to submit written confirmation that they fall within
the scope of the Addendum.
This document has not been reviewed, approved or licensed by the Central
Bank of the United Arab Emirates (the "UAE"), Emirates Securities and
Commodities Authority or any other relevant licensing authority in the UAE
including any licensing authority incorporated under the laws and regulations of
any of the free zones established and operating in the territory of the UAE, in
particular the Dubai International Financial Services Authority (the "DFSA"), a
regulatory authority of the Dubai International Financial Centre (the "DIFC").
The issue of ordinary shares does not constitute a public offer of securities in
the UAE, DIFC and/or any other free zone in accordance with the Commercial
Companies Law, Federal Law No. 8 of 1984 (as amended), DFSA Offered Securities
Rules and the Dubai International Financial Exchange Listing Rules, accordingly,
or otherwise. The ordinary shares may not be offered to the public in the UAE
and/or any of the free zones including, in particular, the DIFC. The ordinary
shares may be offered and this document may be issued, only to a limited number
of investors in the UAE or any of its free zones (including, in particular, the
DIFC) who qualify as sophisticated investors under the relevant laws and
regulations of the UAE or the free zone concerned. Management of the company,
and the representatives represent and warrant that the ordinary shares will not
be offered, sold, transferred or delivered to the public in the UAE or any of
its free zones including, in particular, the DIFC.
54
For the attention of the residents of Oman:
The information contained in this memorandum neither constitutes a public
offer of securities in the Sultanate of Oman ("Oman") as contemplated by the
Commercial Companies Law of Oman (Sultani Decree 4/74) or the Capital Market Law
of Oman (Sultani Decree 80/98), nor does it constitute an offer to sell, or the
solicitation of any offer to buy non-Omani securities in Oman as contemplated by
Article 6 of the Executive Regulations to the Capital Market Law of Oman (issued
vide Ministerial Decision No 4/2001), and nor does it constitute a distribution
of non-Omani securities in Oman as contemplated under the Rules for Distribution
of Non-Omani Securities in Oman issued by the Capital Market Authority of Oman
("CMA"). Additionally, this memorandum is not intended to lead to the conclusion
of any contract of whatsoever nature within the territory of Oman.
This memorandum has been sent at the request of the investor in Oman, and
by receiving this memorandum, the person or entity to whom it has been issued
and sent understands, acknowledges and agrees that this memorandum has not been
approved by the CMA or any other regulatory body or authority in Oman, nor has
any authorization, license or approval been received from the CMA or any other
regulatory authority in Oman, to market, offer, sell, or distribute the ordinary
shares within Oman.
No marketing, offering, selling or distribution of any financial or
investment products or services has been or will be made from within Oman and no
subscription to any securities, products or financial services may or will be
consummated within Oman. The underwriter is neither a company licensed by the
CMA to provide investment advisory, brokerage, or portfolio management services
in Oman, nor a bank licensed by the Central Bank of Oman to provide investment
banking services in Oman. The underwriter does not advise persons or entities
resident or based in Oman as to the appropriateness of investing in or
purchasing or selling securities or other financial products.
Nothing contained in this memorandum is intended to constitute Omani
investment, legal, tax, accounting or other professional advice. This memorandum
is for your information only, and nothing herein is intended to endorse or
recommend a particular course of action. You should consult with an appropriate
professional for specific advice on the basis of your situation.
Any recipient of this memorandum and any purchaser of the ordinary shares
pursuant to this memorandum shall neither market, distribute, resell, or offer
to resell the ordinary shares within Oman without complying with the
requirements of applicable Omani law, nor copy or otherwise distribute this
memorandum to others.
No action may be taken in any jurisdiction other than the United States
that would permit a public offering of the ordinary shares or the possession,
circulation or distribution of this prospectus in any jurisdiction where action
for that purpose is required. Accordingly, the ordinary shares may not be
offered or sold, directly or indirectly, and neither the prospectus nor any
other offering material or advertisements in connection with the ordinary shares
may be distributed or published in or from any country or jurisdiction except
under circumstances that will result in compliance with any applicable rules and
regulations of any such country or jurisdiction.
A prospectus in electronic format will be made available on the websites
maintained by one or more of the underwriter or one or more securities dealers.
One or more of the underwriter may distribute prospectus electronically. The
underwriter may agree to allocate a number of ordinary shares for sale to their
online brokerage account holders. Ordinary shares to be sold pursuant to an
Internet distribution will be allocated on the same basis as other allocations.
In addition, ordinary shares may be sold by the underwriter to securities
dealers who resell ordinary shares to online brokerage account holders.
55
The underwriter does not expect sales to discretionary accounts to exceed
five percent of the total number of ordinary shares offered.
We estimate that our share of the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately US $100,000.
We have agreed to indemnify the underwriter against certain liabilities,
including liabilities under the Securities Act.
This prospectus may be used by the underwriter and other dealers in
connection with offers and sales of the ordinary shares, including the ordinary
shares initially sold by the underwriter in the offering being made outside of
the United States, to persons located in the United States.
The underwriter and its affiliates from time to time has performed, and may
in the future perform, financial advisory and investment banking and other
services for us, our officers or our directors for which they received or will
receive customary fees and expenses.
EXPENSES OF THE OFFERING
We estimate the registration expenses to be approximately $ 100,000, which
include the following categories of expenses (all amounts are estimated except
the SEC registration fee and FINRA fee):
SEC registration fee $ 1,800
FINRA fee 2,800
Printing and engraving expenses 2,000
Legal fees and expenses 70,000
Accounting fees and expenses 23,400
--------
Total $100,000
========
56
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" into this prospectus
the information we file with them, which means that we can disclose important
information to you by referring you to these documents. We hereby incorporate by
reference the following:
(1) The description of our ordinary shares contained in our registration
statement on Form 8-A, as filed with the Commission on May 6, 1997;
(2) Our Annual Report on Form 20-F for the year ended December 31, 2008,
as filed with the Commission on June 29, 2009;
(3) Our Report on Form 6-K, as submitted on July 27, 2009;
(4) Our Report on Form 6-K, as submitted on July 30, 2009;
(5) Our Report on Form 6-K, as submitted on August 27, 2009;
(6) Our Report on Form 6-K, as submitted on September 3, 2009;
(7) Our Report on Form 6-K, as submitted on September 30, 2009;
(8) Our Report on Form 6-K, as submitted on October 29, 2009;
(9) Our Report on Form 6-K, as submitted on November 4, 2009;
(10) Our Report on Form 6-K, as submitted on November 12, 2009; and
(11) Our Report on Form 6-K, as submitted on November 16, 2009.
You may request a copy of any document incorporated by reference in this
prospectus at no cost. To receive a copy, write or call us at:
G. Willi-Food International Ltd.
4 Nahal Harif St.
Yavne 81106 Israel
Attention: Ms. Ety Sabach
+ 972-8-932-1000
You may also find a copy of any document incorporated by reference in this
prospectus on our Web site under "Investor's Info" at www.willi-food.co.il.
57
You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have not authorized anyone else
to provide you with different information. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front page of those documents.
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the ordinary shares offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of its date.
LEGAL MATTERS
The Company is represented by Richardson & Patel LLP with respect to legal
matters of United States U.S. federal securities law. Certain legal matters in
connection with this offering will be passed upon for the underwriter by
Sichenzia Ross Friedman Ference LLP. The validity of the ordinary shares offered
in this offering and legal matters as to Israeli law will be passed upon for the
Company by M. Firon & Co. Richardson & Patel LLP may rely upon M. Firon & Co.
with respect to matters governed by Israeli law.
EXPERTS
The financial statements for the year ended December 31, 2008 included in
this Prospectus, have been audited by Brightman Almagor Zohar & Co. a member of
Deloitte Touche Tohmatsu, an independent registered public accounting firm, as
stated in their report appearing herein. Such financial statements have been
included herein in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Commission a registration statement on Form F-1
under the Securities Act, with respect to the ordinary shares offered hereby.
This prospectus, which is part of the registration statement, does not contain
all of the information in the registration statement. Certain items of the
registration statement are contained in exhibits and schedules as permitted by
the rules and regulations of the Commission. Statements made in this prospectus
as to the contents of any contract, agreement or other document referred to are
not necessarily complete; you should read any such contract, agreement or other
document filed as an exhibit to the registration statement for a more complete
description of the matter involved, and any discussion of such exhibits is
qualified in its entirety by reference to the exhibits
We are subject to the informational requirements of the Exchange Act and
file reports and other information with the Commission. Reports and other
information which we file with the Commission, including the registration
statement on Form F-1 of which this prospectus is a part, may be inspected and
copied at the public reference facilities of the Commission at 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information regarding the operation
of the public reference room by calling the Commission at 1-800-SEC-0330. In
addition, the Commission maintains a web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission at http://www.sec.gov. Our Internet address
is www.willi-food.co.il. Information contained on our website does not
constitute a part of this prospectus.
58
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008
59
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008
TABLE OF CONTENTS
PAGE
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F - 1
FINANCIAL STATEMENTS:
Balance Sheets F - 2
Statements of Operations F - 3
Statements of Changes in Shareholders' Equity F - 4
Statements of Cash Flows F - 5 - F - 6
Notes to the Financial Statements F - 7 - F - 65
 |
Brightman Almagor Zohar 1 Azrieli Center Tel Aviv 67021 P.O.B. 16593, Tel Aviv 61164 Israel Tel: +972 (3) 608 5555 Fax: +972 (3) 609 4022 info@deloitte.co.il www.deloitte.com |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND
SHAREHOLDERS OF G. WILLI-FOOD INTERNATIONAL LTD.
We have audited the accompanying consolidated balance sheets of G. WILLI-FOOD
INTERNATIONAL LTD. ("the Company") and its subsidiaries as of December 31, 2008
and 2007 and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the two years in the period ended December 31,
2008. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provide a reasonable
basis for our opinion.
In our opinion, such the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company and its subsidiaries as of December 31, 2008 and 2007 and the
consolidated results of their operations and their consolidated cash flows for
each of the two years in the period ended December 31, 2008, in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board (IASB).
/s/ BRIGHTMAN ALMAGOR ZOHAR & CO.
-------------------------------------
BRIGHTMAN ALMAGOR ZOHAR & CO.
CERTIFIED PUBLIC ACCOUNTANTS
A MEMBER FIRM OF DELOITTE TOUCHE TOMHATSU
Tel-Aviv, Israel
April 30, 2009 (except for notes 26 and 27 to which the date is November 19, 2009)
F - 1
G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(NIS IN THOUSANDS)
DECEMBER 31,
-----------------------------------
NOTE 2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
-----------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 4a 78,749 61,649 20,713
Financial assets carried at fair value through profit or loss 4b 9,367 31,267 2,464
Trade receivables 4c 79,599 63,798 20,936
Other receivables 4d 3,987 1,612 1,049
Current tax assets 2,456 908 646
Inventories 4e 34,417 31,020 9,052
-------- -------- --------
Total current assets 208,575 190,254 54,860
-------- -------- --------
NON-CURRENT ASSETS
Property, plant and equipment 55,574 44,569 14,617
Less - accumulated depreciation 13,467 8,355 3,542
-------- -------- --------
7 42,107 36,214 11,075
-------- -------- --------
Prepaid expenses 12,539 10,815 3,298
Goodwill 8a 3,829 1,795 1,007
Intangible assets, net 9a 5,181 103 1,362
Deferred taxes 1,111 271 292
-------- -------- --------
Total non-current assets 64,767 49,198 17,034
======== ======== ========
TOTAL ASSETS 273,342 239,452 71,894
======== ======== ========
EQUITY AND LIABILITIES
CURRENT LIABILITIES
Short-term bank credit 11a 17,562 5,978 4,619
Trade payables 10a 53,728 34,330 14,132
Accruals 6,197 308 1,630
Current tax liabilities 1,050 593 276
Other payables and accrued expenses 10b 4,971 4,992 1,308
Employees Benefits 13a 2,544 1,408 669
-------- -------- --------
Total current liabilities 86,052 47,609 22,634
-------- -------- --------
NON-CURRENT LIABILITIES
Long-term bank loans 267 - 70
Deferred taxes 442 33 116
Warrants to issue shares 5 1,040 1
Employees Benefits 994 163 261
-------- -------- --------
Total non-current liabilities 1,708 1,236 448
-------- -------- --------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 1,113 1,113 293
Additional paid in capital 59,056 59,056 15,533
Capital fund 247 - 65
Foreign currency translation reserve 369 (414) 97
Retained earnings 111,447 112,233 29,313
Noncontrolling interest 13,350 18,619 3,511
-------- -------- --------
185,582 190,607 48,812
======== ======== ========
TOTAL EQUITY AND LIABILITIES 273,342 239,452 71,894
======== ======== ========
(*) Convenience Translation into U.S. Dollars.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
F - 2
G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(NIS IN THOUSANDS)
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
NOTE 2 0 0 8 2 0 0 7 2 0 0 8(*)
------ ----------- ----------- -----------
NIS US DOLLARS
--------------------------------- -----------
(IN THOUSANDS)
-------------------------------------------------------
Revenue 19a 289,068 201,617 76,031
Cost of sales 19b 228,839 156,062 60,189
----------- ----------- -----------
GROSS PROFIT 60,229 45,555 15,842
----------- ----------- -----------
OPERATING COSTS AND EXPENSES
Selling expenses 19c 31,800 20,602 8,364
General and administrative expenses 19d 16,863 12,280 4,435
Other (income) expenses 20 1,846 (454) 486
----------- ----------- -----------
50,509 32,428 13,285
=========== =========== ===========
OPERATING PROFIT 9,720 13,127 2,557
Finance income 21a (4,167) 2,111 (1,096)
Finance expense 21b 673 (323) 177
----------- ----------- -----------
Finance income (expense), net (4,840) 2,434 (1,273)
=========== =========== ===========
PROFIT BEFORE TAXES ON INCOME 4,880 15,561 1,284
Taxes on income 14a 1,117 2,174 294
----------- ----------- -----------
PROFIT FROM CONTINUING OPERATIONS 3,763 13,387 990
LOSS FROM DISCONTINUED OPERATIONS 14a (3,496) (8,748) (919)
----------- ----------- -----------
PROFIT FOR THE YEAR 267 4,639 71
=========== =========== ===========
ATTRIBUTABLE TO:
Owners of the Company 22a (786) 2,342 (206)
Noncontrolling interest 1,053 2,297 277
----------- ----------- -----------
NET INCOME 267 4,639 71
=========== =========== ===========
EARNINGS (LOSS) PER SHARE - (IN NIS) 22
Basic from continuing operations 0.30 1.14 0.08
Basic from discontinued operations (0.38) (0.91) (0.10)
BASIC EARNINGS (LOSS) PER SHARE (0.08) 0.23 (0.02)
Diluted from continuing operations 0.30 1.14 0.08
Diluted from discontinued operations (0.38) (0.91) (0.10)
DILUTED EARNINGS (LOSS) PER SHARE (0.08) 0.23 (0.02)
Shares used in computation of basic EPS 10,267,893 10,267,893 10,267,893
=========== =========== ===========
Shares used in computation of diluted EPS 10,267,893 10,267,893 10,267,893
=========== =========== ===========
(*) Convenience translation into U.S. Dollars.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
F - 3
G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(NIS IN THOUSANDS)
FOREIGN
ADDITIONAL CURRENCY TOTAL
SHARE PAID IN CAPITAL TRANSLATION RETAINED GROSS NONCONTROLLING SHAREHOLDERS'
CAPITAL CAPITAL FUND ADJUSTMENTS EARNINGS AMOUNT INTEREST EQUITY
-------- -------- -------- -------- -------- -------- -------- --------
BALANCE - JANUARY 1, 2007 1,113 59,056 - - 109,891 170,060 14,750 184,810
Noncontrolling interests in newly acquired
subsidiary - - - - - - 1,919 1,919
Purchase of noncontrolling interest - - - - - - (146) (146)
Currency translation differences - - - (414) - (414) (201) (615)
Profit for the year - - - - 2,342 2,342 2,297 4,639
-------- -------- -------- -------- -------- -------- -------- --------
BALANCE - DECEMBER 31, 2007 1,113 59,056 - (414) 112,233 171,988 18,619 190,607
Noncontrolling interests in newly acquired
subsidiary - - - - - - 3,350 3,350
Purchase of noncontrolling interest - - 247 - - 247 (9,362) (9,115)
Currency translation differences - - - 783 - 783 (41) 742
Dividend paid to noncontrolling interests - - - - - - (269) (269)
Profit for the year - - - - (786) (786) 1,053 267
-------- -------- -------- -------- -------- -------- -------- --------
BALANCE - DECEMBER 31, 2008 1,113 59,056 247 369 111,447 172,232 13,350 185,582
======== ======== ======== ======== ======== ======== ======== ========
F - 4
G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(NIS IN THOUSANDS)
YEAR ENDED DECEMBER 31,
-------------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
------------------------- -------
(IN THOUSANDS)
-------------------------------------------
CASH FLOWS - OPERATING ACTIVITIES
Profit from continuing operations 3,763 13,387 990
Adjustments to reconcile net profit to net cash from continuing operating
activities(Appendix A) 11,771 (2,149) 3,095
------- ------- -------
NET CASH FROM CONTINUING OPERATING ACTIVITIES 15,534 11,238 4,085
------- ------- -------
NET CASH FROM (USED IN) DISCONTINUED OPERATING ACTIVITIES 3,346 (3,296) 880
------- ------- -------
CASH FLOWS - INVESTING ACTIVITIES
Acquisition of property plant and equipment (3,109) (10,855) (818)
Proceeds from sale of property plant and Equipment 165 16 43
Additions to intangible assets (300) - (79)
Additions to prepaid expenses (1,579) - (415)
Long term deposit, net (25) (119) (7)
Proceeds from realization (purchase) of marketable securities, net 16,714 (17,378) 4,396
Purchase of additional shares in subsidiary (9,250) (182) (2,433)
Purchase of subsidiaries (5,664) (15,400) (1,489)
------- ------- -------
NET CASH USED IN CONTINUING INVESTING ACTIVITIES (3,048) (43,918) (802)
------- ------- -------
NET CASH USED IN DISCONTINUED INVESTING ACTIVITIES (36) (416) (9)
------- ------- -------
CASH FLOWS - FINANCING ACTIVITIES
Short-term bank credit, net (1,797) - (473)
Repayment of loans (1,369) - (360)
Proceeds of loans 6,803 - 1,789
------- ------- -------
NET CASH FROM CONTINUING FINANCING ACTIVITIES 3,637 - 956
------- ------- -------
NET CASH FROM (USED IN) DISCONTINUED FINANCING ACTIVITIES (2,312) 6,781 (607)
======= ======= =======
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,121 (29,611) 4,503
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 61,649 91,398 16,215
NET FOREIGN EXCHANGE DIFFERENCE ON CASH AND CASH EQUIVALENTS FROM
DISCONTINUED ACTIVITIES (21) (138) (5)
------- ------- -------
CASH AND CASH EQUIVALENTS OF THE END OF THE FINANCIAL YEAR 78,749 61,649 20,713
======= ======= =======
(*) Convenience Translation into U.S. Dollars.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
F - 5
G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES
APPENDICES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
(NIS IN THOUSANDS)
YEAR ENDED DECEMBER 31,
--------------------------------------------
2008 2007 2008(*)
------- ------- -------
NIS US DOLLARS
------------------------- -------
(IN THOUSANDS)
--------------------------------------------
A. ADJUSTMENTS TO RECONCILE NET PROFIT TO NET CASH FROM OPERATING ACTIVITIES
Revaluation of loans from banks and others 106 - 28
Deferred income taxes (505) (433) (133)
Unrealized loss on marketable securities 5,186 56 1,364
Depreciation and amortization 5,022 2,432 1,321
Capital gain on disposal of property
plant and equipment (85) (16) (22)
Employees benefit, net 545 (122) 143
Change in value of warrants to issue shares (1,035) (767) (272)
CHANGES IN ASSETS AND LIABILITIES:
Increase in trade receivables and other receivables (4,684) (1,374) (1,232)
Increase in inventories (3,789) (5,920) (997)
Increase in trade and other payables, and other current liabilities 11,010 3,995 2,895
------- ------- -------
11,771 (2,149) 3,095
======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid 835 104 220
Income tax paid 3,736 7,645 983
(*) Convenience Translation Into U.S. Dollars.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
F - 6
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 1 - DESCRIPTION OF BUSINESS AND GENERAL
A. DESCRIPTION OF BUSINESS
G. Willi-Food International Ltd. ("the Company") was incorporated in
Israel in January 1994 and is engaged in the import, export, marketing
and distribution of food products.
The Company is a subsidiary of Willi-Food Investments Ltd. ("the
parent company"). The shares of the parent company are registered for
trade on the Tel-Aviv Stock Exchange.
The financial statements are prepared in accordance with the Israeli
Securities Regulations (Preparation of Annual Financial Statements),
1993.
B. DEFINITIONS:
THE COMPANY - G. WILLI-FOOD INTERNATIONAL LTD.
THE GROUP - the Company and its Subsidiaries, a list
of which is presented in Note 5.
SUBSIDIARIES - companies in which the Company exercises
control (as defined by IAS 27), and whose
financial statements are fully
consolidated with those of the Company.
RELATED PARTIES - as defined by IAS 24.
INTERESTED PARTIES - as defined in the Israeli Securities law
and Regulations, 1968.
CONTROLLING SHAREHOLDER - as defined in the Israeli Securities law
and Regulations, 1968.
NIS - New Israeli Shekel.
CPI - the Israeli consumer price index.
DOLLAR - the U.S. dollar.
EURO - the United European currency.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. APPLYING INTERNATIONAL ACCOUNTING STANDARDS (IFRS)
(1) STATEMENT OF COMPLIANCE
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRSs") as issued by the International Accounting Standards
Board ("IASB").
(2) FIRST TIME IFRS STANDARDS ADOPTION
According to standard No. 29 "Adoption of International Financial
Reporting Standards" - IFRS ("standard No. 29"), the Company
applies International Financial Reporting Standards and
interpretations of the committee of the International Accounting
Standard Board (IASB) Starting January 1, 2008.
F - 7
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
A. APPLYING INTERNATIONAL ACCOUNTING STANDARDS (IFRS) (CONT.)
(2) FIRST TIME IFRS STANDARDS ADOPTION (CONT.)
According to standard No. 29 "Adoption of International Financial
Reporting Standards" - IFRS ("standard No. 29"), the Company
applies International Financial Reporting Standards and
interpretations of the committee of the International Accounting
Standard Board (IASB) Starting January 1, 2008.
In compliance with the mentioned above, the financial statements,
as of December 31, 2008 and for the year then ended, including
all previous reporting periods have been prepared in accordance
with International Financial Reporting Standards and
interpretations published by the International Accounting
Standard Board (IASB).
In these financial statements the Company applied IFRS 1 "First
time Adoption of International Financial Reporting Standards"
("IFRS No. 1"), which determines instructions for first time
implementation of IFRS.
According to IFRS No. 1 the transition date for the purpose of
implementing IFRS standards commenced January 1, 2007.
The Company has applied in a retroactive manner the IFRS
standards for all reporting periods presented in the financial
statements. The Company implemented the IFRS standards which have
been published as of the preparation date of the Financial
Statements and expected to be effective as of December 31, 2008.
While applying the said transition instructions the Company chose
to apply two relieves allowed under IFRS 1. See note 31.
Until the adoption of IFRS the Company conducted the Financial
Reporting in accordance with the Israeli GAAP. The annual
financial statements as of December 31, 2007 and for the periods
then ended were prepared under the Israeli GAAP standards. The
comparative financial statements were represented in the
financial statements in accordance to the IFRS standards. See
note 30 for the relevant material adjustments between the Israeli
GAAP and the IFRS.
B. BASIS OF PREPARATION
Until December 31, 2003, Israel was considered a country in which
hyper-inflation conditions exist. Therefore, non-monetary balances in
the balance sheet were presented on the historical nominal amount and
were adjusted to changes in the CPI. As of December 31, 2003 when the
economy ceased to be hyper-inflationary and the Company no longer
adjusted its financial statements to the ISRAELI CPI, the adjusted
amounts as of this date were used as the historical costs. The
financial statements were edited on the basis of the historical cost,
except for:
o Assets and liabilities measured by fair value: financial assets
measured by fair value recorded directly as profit or loss.
o Non-current assets are measured at the lower of their previous
carrying amount and fair value less costs of sale.
o Inventories are stated at the lower of cost and net realizable
value.
o Property, plant and equipment and intangibles assets are
presented at the lower of the cost less accumulated amortizations
and the recoverable amount.
o Liabilities to employees as described in note 12.
F - 8
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
C. FOREIGN CURRENCIES
The individual financial statements of each group entity are presented
in New Israeli Shekel the currency of the primary economic environment
in which the entity operates (its functional currency). The
consolidated financial statements are also presented in the New
Israeli Shekel ("NIS"), which is the functional currency of the
Company and the presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual entities,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the rates of exchange prevailing
at the dates of the transactions. At each balance sheet date, monetary
items denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date. (Non-monetary items carried at
fair value that are denominated in foreign currencies are retranslated
at the rates prevailing at the date when the fair value was
determined). Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in
which they accrue.
(1) FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each of the group's
entities are measured using the currency of the primary economic
environment in which the entity operates (`the functional,
currency'). The consolidated financial statements are presented
in `NIS', which is the company's functional and the group's
presentation currency.
(2) TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are remeasured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when
deferred in equity as qualifying cash flow hedges and qualifying
net investment hedges.
D. CASH AND CASH EQUIVALENTS
Cash equivalents include unrestricted liquid deposits, maturity period
of which, as at the date of investments therein, does not exceed three
months.
F - 9
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
E. BASIS OF CONSOLIDATION
(1) GENERAL
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). Control is achieved where the Company has the
power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
Where necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
those used by other members of the Group.
All intra-group transactions, balances, income and expenses are
eliminated in full.
For the effect of the issuance of IAS 27 (revised) "Consolidated
and Separate Financial Statements" see note 2Y below.
(2) NONCONTROLLING INTEREST
In instances that the Group acquires noncontrolling interest, the
excess of cost of acquired interest over the carrying value is
recognized as goodwill. In cases of excess of carrying value over
the cost, such amount is recorded in earnings.
When the Group interest is reduced, without loss of control
(either by sale or by issuance of shares by the subsidiary) the
differences between the consideration received and the book value
of the Group's sold is recognized in income statements.
The group applies a policy of treating transactions with
noncontrolling interests as transactions with parties external to
the group. Disposals to noncontrolling interests result in gains
and losses for the group and are recorded in the income
statement. Purchases from noncontrolling interests result in
goodwill, being the difference between any consideration paid and
the relevant share acquired of the carrying value of net assets
of the subsidiary.
F. BUSINESS COMBINATION
Acquisitions of subsidiaries and businesses are accounted for using
the purchase method. The cost of the business combination is measured
as the aggregate of the fair values (at the date of exchange) of
assets given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree, plus any
costs directly attributable to the business combination. The
acquiree's identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS 3 Business
Combinations are recognised at their fair values at the acquisition
date, except for non-current assets (or disposal groups) that are
classified as held for sale in accordance with IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations, which are recognised
and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair value
of the identifiable assets, liabilities and contingent liabilities
recognised. If, after reassessment, the Group's interest in the net
fair value of the acquiree's identifiable assets, liabilities and
contingent liabilities exceeds the cost of the business combination,
the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially
measured at the minority's proportion of the net fair value of the
assets, liabilities and contingent liabilities recognised.
F - 10
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
G. GOODWILL
Goodwill arising on the acquisition of a subsidiary represents the
excess of the cost of acquisition over the Group's interest in the net
fair value of the identifiable assets, liabilities and contingent
liabilities of the subsidiary or jointly controlled entity recognised
at the date of acquisition. Goodwill is initially recognised as an
asset at cost and is subsequently measured at cost less any
accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each
of the Group's cash-generating units expected to benefit from the
synergies of the combination. Cash-generating units to which goodwill
has been allocated are tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the cash-generating unit is less than the
carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and
then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
H. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipments are tangible items, which are held for
use in the manufacture or supply of goods or services, or leased to
others, which are predicted to be used for more than one period. The
Company presents its property, plant and equipments items according to
the cost model.
Under the cost method - a property, plant and equipment are presented
at the balance sheet at cost (net of any investment grants), less any
accumulated depreciation and any accumulated impairment losses. The
cost includes the cost of the assets acquisition as well as costs that
can be directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner
intended by management.
Depreciation is calculated using the straight-line method at rates
considered adequate to depreciate the assets over their estimated
useful lives. Amortization of leasehold improvements is computed over
the shorter of the term of the lease, including any extention period,
where the Company intends to exercise such option, or their useful
life.
The annual depreciation and amortization rates are:
%
-----
construction 4
Motor vehicles 15-20 (mainly 20%)
Office furniture and equipment 6-15 (mainly 15%)
Computers 20-33 (mainly 33%)
Machinery and equipment 10
The gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between
the sales proceeds and the carrying amount of the asset and is
recognized in the income statement.
F - 11
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
I. INTANGIBLE ASSETS ACQUIRED IN A BUSINESS COMBINATION
An intangible asset is an identifiable non-monetary asset without
physical substance. Intangible assets acquired in a business
combination are identified and recognised separately from goodwill
where they satisfy the definition of an intangible asset and their
fair values can be measured reliably. The cost of such intangible
assets is their fair value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in a
business combination are reported at cost less accumulated
amortization and accumulated impairment losses, on the same basis as
intangible assets acquired separately.
An intangible asset with an indefinite useful life shall not be
amortized.
In accordance with IAS 36, an entity is required to test an intangible
asset with an indefinite useful life for impairment by comparing its
recoverable amount with its carrying amount:
(a) annually, and
(b) whenever there is an indication that the intangible asset may be
impaired.
Intangible assets with a finite useful life are stated at cost less
accumulated amortization and accumulated impairment losses.
Amortization is charged according to the straight-line method over
their estimated useful life. See also Note 9
Useful lives of Intangible assets:
YEARS
-----
INTANGIBLE ASSETS ACQUIRED IN A BUSINESS COMBINATION:
Technology knowledge 10
Customers relationship 15
Trade name 25
OTHER INTANGIBLE ASSET:
Trade name 7
J. IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL
At each balance sheet date, the Group reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if
any). Where it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. Where a reasonable
and consistent basis of allocation can be identified, corporate assets
are also allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating units for
which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets
not yet available for use are tested for impairment annually, and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
F - 12
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
J. IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL
(CONT.)
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount of
the asset (cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of
the asset (cash-generating unit) is increased to the revised estimate
of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset (cash-generating
unit) in prior years. A reversal of an impairment loss is recognised
immediately in profit or loss.
K. INVENTORIES
Inventories are assets held for sale in the ordinary course of
business, in the process of production for such sale or in the form of
materials or supplies to be consumed in the production process or in
the rendering of services.
Inventories are stated at the lower of cost and net realizable value.
Cost of inventories includes all the cost of purchase, direct labor,
fixed and variable production over heads and other cost that are
incurred, in bringing the inventories to their present location and
condition.
Net realizable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
Cost determined as follows:
Raw material, components and packaging - by the "first-in,
first-out" method;
Processing goods - cost of materials plus
labor
finished products - on the basis of standard
cost which approximates
actual production cost
(materials, labor and
indirect manufacturing
costs).
Products - weighted average method
L. FINANCIAL ASSETS
(1) GENERAL
Investments are recognized and derecognized on trade date where
the purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured
at fair value, plus transaction costs, except for those financial
assets classified as fair value through profit or loss, which are
initially measured at fair value.
Financial assets are classified into the following specified
categories:
o Financial assets 'at fair value through profit or loss'
(FVTPL)
o Loans and receivables
F - 13
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
L. FINANCIAL ASSETS (CONT.)
(2) FINANCIAL ASSETS AT FVTPL
Financial assets are classified as at FVTPL where the financial
asset is either held for trading or it is designated as at FVTPL.
A financial asset is classified as held for trading if:
o it has been acquired principally for the purpose of selling
in the near future; or
o it is a part of an identified portfolio of financial
instruments that the Group manages together and has a recent
actual pattern of short-term profit-taking; or
o it is a derivative that is not designated and effective as a
hedging instrument.
Financial assets at FVTPL are stated at fair value, with any
resultant gain or loss recognized in profit or loss. The net gain
or loss recognized in profit or loss incorporates any dividend or
interest earned on the financial asset.
(3) LOANS AND RECEIVABLES
Trade receivables, loans, and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and receivables
are measured at amortized cost using the effective interest
method, less any impairment. Interest income is recognized by
applying the effective interest rate, except for short-term
receivables when the recognition of interest would be immaterial.
(4) IMPAIRMENT OF FINANCIAL ASSETS
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence
that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future
cash flows of the investment have been impacted.
For all other financial assets, an objective evidence of
impairment could include:
o Significant financial difficulty of the issuer or
counterparty; or
o Default or delinquency in interest or principal payments; or
o It becoming probable that the borrower will enter bankruptcy
or financial re-organization.
For financial assets carried at amortized cost, the amount of the
impairment is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted
at the financial asset's original effective interest rate.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account.
When a trade receivable is considered uncollectible, it is
written off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the
allowance account are recognized in profit or loss.
In a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized, the previously
recognized impairment loss is reversed through profit or loss to
the extent that the carrying amount of the investment at the date
the impairment is reversed does not exceed what the amortized
cost would have been had the impairment not been recognized.
F - 14
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
M. FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS ISSUED BY THE GROUP
(1) CLASSIFICATION AS DEBT OR EQUITY
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recorded
at the proceeds received, net of direct issue costs.
Financial liabilities are classified as either financial
liabilities 'at FVTPL' or 'other financial liabilities'.
(2) CONVERTIBLE DEBENTURES
The component parts of convertible debentures are classified
separately as financial liabilities and equity in accordance with
the substance of the contractual arrangement. At the date of
issue, the fair value of the liability component is estimated
using the prevailing market interest rate for a similar
non-convertible instrument. This amount is recorded as a
liability on an amortized cost basis until extinguished upon
conversion or at the instrument's maturity date. The equity
component is determined by deducting the amount of the liability
component from the fair value of the convertible debentures as a
whole. This is recognized and included in equity and is not
subsequently remeasured.
(3) CONSUMER PRICE INDEX FINANCIAL LIABILITIES
The Company has Consumer Price Index ("CPI")-linked financial
liabilities that are not measured at fair value through profit or
loss. For those liabilities, the Company determines the effective
interest rate as a real rate plus linkage differences according
to the actual changes in the CPI up to the balance sheet date.
N. DERIVATIVE FINANCIAL INSTRUMENTS
The Group enters into a certain derivative financial instruments to
manage its exposure to interest rate and foreign exchange rate risk,
including foreign exchange forward contracts, interest rate swaps and
cross currency swaps.
Further details of derivative financial instruments are disclosed in
note 25.
Derivatives are initially recognized at fair value at the date a
derivative contract is entered into and are subsequently remeasured to
their fair value at each balance sheet date. The resulting gain or
loss is recognized in profit or loss immediately unless the derivative
is designated and effective as a hedging instrument, in which event
the timing of the recognition in profit or loss depends on the nature
of the hedge relationship. The Group designates certain derivatives as
either hedges of the fair value of recognized assets or liabilities or
firm commitments (fair value hedges), hedges of highly probable
forecast transactions or hedges of foreign currency risk of firm
commitments(cash flow hedges), or hedges of net investments in foreign
operations.
A derivative is presented as a non-current asset or a non-current
liability if the remaining maturity of the instrument is more than 12
months and it is not expected to be realized or settled within 12
months. Other derivatives are presented as current assets or current
liabilities.
F - 15
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
O. EMBEDDED DERIVATIVES
Derivatives embedded in other financial instruments or other host
contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of the host contracts
and the host contracts are not measured at fair value with changes in
fair value recognized in profit or loss.
P. FORWARDS
Changes in the fair value of forwards transactions are recorded in
profit or loss immediately as they occurred.
Q. REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or
receivable. Revenue is reduced for estimated customer returns, rebates
and other similar allowances.
(1) SALE OF GOODS
Revenue from the sale of goods is recognised when all the
following conditions are satisfied:
o The Group has transferred to the buyer the significant risks
and rewards of ownership of the goods;
o The Group retains neither continuing managerial involvement
to the degree usually associated with ownership nor
effective control over the goods sold
o The amount of revenue can be measured reliably;
o It is probable that the economic benefits associated with
the transaction will flow to the entity; and
o The costs incurred or to be incurred in respect of the
transaction can be measured reliably.
(2) INTEREST REVENUE
Interest revenue is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
(3) DIVIDEND REVENUE
Dividend revenue from investments is recognised when the
shareholder's right to receive payment has been established.
F - 16
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
R. LEASING
(1) GENERAL
Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
(2) THE GROUP AS LESSEE
Assets held under finance leases are initially recognised as
assets of the Group at their fair value at the inception of the
lease or, if lower, at the present value of the minimum lease
payments. The corresponding liability to the lessor is included
in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and
reduction of the lease obligation so as to achieve a constant
rate of interest on the remaining balance of the liability.
Finance charges are charged directly to profit or loss, unless
they are directly attributable to qualifying assets, in which
case they are capitalised in accordance with the Group's general
policy on borrowing costs.
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term, except where another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
Contingent rentals arising under operating leases are recognised
as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a liability.
The aggregate benefit of incentives is recognised as a reduction
of rental expense on a straight-line basis, except where another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
S. PROVISIONS
Provisions are recognized when the Group has a present obligation
(legal or constructive) as a result of a past event, it is probable
that the Group will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the
consideration required to settle the present obligation at the balance
sheet date, taking into account the risks and uncertainties
surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle
the present obligation, its carrying amount is the present value of
those cash flows.
When some or all of the economic benefits to settle a provision are
expected to be recovered from a third party, the receivable is
recognized as an asset if it is virtually certain that reimbursement
will be received and the amount of the receivable can be measured
reliably.
F - 17
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
T. SHARE-BASED PAYMENTS
Equity-settled share-based payments to employees and others providing
similar services are measured at the fair value of the equity
instruments at the grant date.
The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the
vesting period, based on the Group's estimate of equity instruments
that will eventually vest.
At each balance sheet date, the Group revises its estimate of the
number of equity instruments expected to vest. The impact of the
revision of the original estimates, if any, is recognised in profit or
loss over the remaining vesting period, with a corresponding
adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with other parties are
measured at the fair value of the goods or services received, except
where the fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the counterparty
renders the service.
For cash-settled share-based payments, a liability equal to the
portion of the goods or services received is recognized at the current
fair value determined at each balance sheet date.
Through the liability settlement, the Company shall re-measure the
fair value of the liability at each reporting date and at the date of
settlement, with any changes in the fair value is to be recognized in
profit or loss for the period.
U. TAXATION
Income tax expense represents the sum of the tax currently payable and
deferred tax.
(1) CURRENT TAX
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.
(2) DEFERRED TAX
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit, and are accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences, and deferred tax assets are
generally recognised for all deductible temporary differences to
the extent that it is probable that taxable profits will be
available against which those deductible temporary differences
can be utilised. Such assets and liabilities are not recognised
if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
F - 18
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
U. TAXATION (CONT.)
(2) DEFERRED TAX (CONT.)
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply in the period in which the liability
is settled or the asset realised, based on tax rates (and tax
laws) that have been enacted or substantively enacted by the
balance sheet date. The measurement of deferred tax liabilities
and assets reflects the tax consequences that would follow from
the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
(3) CURRENT AND DEFERRED TAX FOR THE PERIOD
Current and deferred tax are recognized as an expense or income
in profit or loss, except when they relate to items credited or
debited directly to equity, in which case the tax is also
recognized directly in equity, or where they arise from the
initial accounting for a business combination. In the case of a
business combination, the tax effect is taken into account in
calculating goodwill or in determining the excess of the
acquirer's interest in the net fair value of the acquirer's
identifiable assets, liabilities and contingent liabilities over
the cost of the business combination.
V. EMPLOYEE BENEFITS
(1) POST-EMPLOYMENT BENEFITS
The Group's POST-EMPLOYMENT BENEFITS include: benefits to
retirees and liabilities for severance benefits. The Group's
post-employment benefits are classified as DEFINED BENEFIT PLANS.
Expenses in respect of a DEFINED BENEFIT PLAN are carried to the
income statement in accordance with the PROJECTED UNIT CREDIT
METHOD, while using actuarial estimates that are performed at
each balance sheet date. The current value of the Group's
obligation in respect of the defined benefit plan is determined
by discounting the future projected cash flows from the plan by
the market yields on government bonds, denominated in the
currency in which the benefits in respect of the plan will be
paid, and whose redemption periods are approximately identical to
the projected settlement dates of the plan.
Actuarial profits and losses are recognized in earning when
incurred.
The Group's liability in respect of the DEFINED BENEFIT PLAN
which is presented in the Group's balance sheet, includes the
current value of the obligation in respect of the defined
benefit, net of the fair value of the DEFINED BENEFIT PLAN
assets.
(2) SHORT TERM EMPLOYEE BENEFITS
Short term employee benefits are benefits which it is anticipated
will be utilized or which are to be paid during a period that
does not exceed 12 months from the end of the period in which the
service that creates entitlement to the benefit was provided.
Short term company benefits include the company's liability for
short term absences, payment of grants, bonuses and compensation.
These benefits are recorded to the statement of operations when
created. The benefits are measured on a non capitalized basis.
The difference between the amount of the short term benefits to
which the employee is entitled and the amount paid is therefore
recognized as an asset or liability.
F - 19
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
W. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed with regard to income or
loss attributable to the Company's ordinary shareholders, and is
calculated for income (loss) from continuing operations attributable
to the ordinary shareholders of the reported entity, should such be
presented. Basic earnings per share is to be computed by dividing
income(loss) attributed to holders of ordinary shares of the Company
(numerator), by the weighted average of the outstanding ordinary
shares (denominator) during the period.
In the computation of diluted earnings per share, the Company adjusted
its income (loss) attributable to its ordinary shareholders for its
share in income (loss) of investees by multiplying their diluted EPS
by the Company's holding in the investees including its holding in
dilutive potential ordinary share of the investee and the weighted
average of the outstanding shares for the effects of all the dilutive
potential ordinary shares of the Company.
X. ECHANGE RATES AND LINKAGE BASIS
(1) Balances in foreign currency or linked thereto are included in
the financial statements based on the representative exchange
rates, as published by the Bank of Israel, that were prevailing
at the balance sheet date.
(2) Following are the changes in the representative exchange rate of
the U.S. dollar vis-a-vis the NIS and in the Israeli CPI:
REPRESENTATIVE REPRESENTATIVE
EXCHANGE RATE EXCHANGE RATE OF CPI
OF THE EURO THE DOLLAR "IN RESPECT OF"
AS OF: (NIS PER €1) (NIS PER $1) (IN POINTS)
---------- ---------- ----------
December 31, 2008 5.2973 3.802 110.44
December 31, 2007 5.6592 3.846 106.40
INCREASE (DECREASE) DURING THE: % % %
---------- ---------- ----------
Year ended December 31, 2008 (6.4) (1.14) 3.8
Year ended December 31, 2007 1.71 (8.97) 3.4
Y. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
(1) STANDARDS AND INTERPRETATIONS WHICH ARE EFFECTIVE AND HAVE BEEN
APPLIED IN THESE FINANCIAL STATEMENTS.
Three Interpretations issued by the International Financial Reporting
Interpretations Committee are effective for the current period, these
are:
o IFRIC 11 IFRS 2: Group and Treasury Share Transactions
(effective 1 March 2007);
o IFRIC 12 Service Concession Arrangements (effective 1 January
2008);
o IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction
(effective 1 January 2008).
The adoption of the Interpretations has not led to any changes in the
Group's accounting policies.
F - 20
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Y. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (CONT.)
(2) STANDARDS AND INTERPRETATIONS WHICH HAVE NOT BEEN APPLIED IN
THESE FINANCIAL STATEMENTS WERE IN ISSUE BUT NOT YET
EFFECTIVE (CONT.)
At the date of authorization of these financial statements, other
than the Standards and Interpretations adopted by the Group in
advance of their effective dates the following Interpretations
were in issue but not yet effective:
IAS 1 (AMENDED) "PRESENTATION OF FINANCIAL STATEMENTS"
The standard stipulates the presentation required in the
financial statements, and itemizes a general framework for the
structure of the financial statements and the minimal contents
which must be included in the context of the report. Changes have
been made to the existing presentation format of the financial
statements, and the presentation and disclosure requirements for
the financial statements have been broadened, including the
presentation of an additional report in the framework of the
financial statements known as the "report of comprehensive
income", and the addition of a balance sheet as of the beginning
of the earliest period that was presented in the financial
statements, in cases of changes in accounting policy by means of
retroactive implementation, in cases of restatement and in cases
of reclassifications.
The standard will be effective for reporting periods beginning
from January 1, 2009. The standard permits earlier application.
At this stage, the management of the Group is examining the
influence of this standard on the Company's financial statements.
IAS 23 (AMENDED) "BORROWING COSTS"
The standard stipulates the accounting treatment of borrowing
costs. In the context of the amendment to this standard, the
possibility of immediately recognizing borrowing costs related to
assets with an uncommon period of eligibility or construction in
the statement of operations was cancelled. The standard will
apply to borrowing costs that relate to eligible assets as to
which the capitalization period began from January 1, 2009. The
standard permits earlier implementation. At this stage, the
management of the Group estimated that the implementation of the
standard is not expected to have any influence on the financial
statements of the Group.
IAS 27 (AMENDED) "CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS"
The standard prescribes the rules for the accounting treatment of
consolidated and separate financial statements. Among other
things, the standard stipulates that transactions with minority
shareholders, in the context of which the company holds control
of the subsidiary before and after the transaction, will be
treated as capital transactions. In the context of transactions,
subsequent to which the company loses control in the subsidiary,
the remaining investment is to be measured as of the date that
control is lost, at fair value, with the difference as compared
to book value to be recorded to the statement of operations. The
noncontrolling interest in the losses of a subsidiary, which
exceed its share in shareholders' equity, will be allocated to it
in every case, while ignoring its obligations and ability to make
additional investments in the subsidiary.
The provisions of the standard apply to annual financial
reporting periods which start on January 1, 2010 and thereafter.
Earlier adoption is permitted, on the condition that it will be
done simultaneous with early adoption of IFRS 3 (amended). The
standard will be implemented retrospectively, excluding a number
of exceptions, as to which the provisions of the standard will be
implemented prospectively. At this stage, the management of the
Group estimated that the implementation of the standard is not
expected to have any influence on the financial statements of the
Group.
F - 21
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Y. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS (CONT.)
(2) STANDARDS AND INTERPRETATIONS WHICH HAVE NOT BEEN APPLIED IN
THESE FINANCIAL STATEMENTS WERE IN ISSUE BUT NOT YET EFFECTIVE
IFRS 3 (AMENDED) "BUSINESS COMBINATIONS"
The new standard stipulates the rules for the accounting
treatment of business combinations. Among other things, the
standard determines measurement rules for contingent
consideration in business combinations which is to be measured as
a derivative financial instrument. The transaction costs directly
connected with the business combination will be recorded to the
statement of operations when incurred. Noncontrolling interests
will be measured at the time of the business combination to the
extent of their share in the fair value of the assets, including
goodwill, liabilities and contingent liabilities of the acquired
entity, or to the extent of their share in the fair value of the
net assets, as aforementioned, but excluding their share in
goodwill.
As for business combinations where control is achieved after a
number of acquisitions (acquisition in stages), the earlier
purchases of the acquired company will be measured at the time
that control is achieved at their fair value, while recording the
difference to the statement of operations.
The standard will apply to business combinations that take place
from January 1, 2010 and thereafter. Earlier adoption is
possible, on the condition that it will be simultaneous with
early adoption of IAS 27 (amended).
At this stage, the management of the Group estimated that the
implementation of the standard is not expected to have any
influence on the financial statements of the Group.
IFRIC 13, CUSTOMER LOYALTY PROGRAMS
The clarification stipulates that transactions for the sale of
goods and services, for which the company confers reward grants
to its customers, will be treated as multiple component
transactions and the payment received from the customer will be
allocated between the different components, based upon the fair
value of the reward grants. The consideration attributed to the
grant will be recognized as revenue when the reward grants are
redeemed and the company has made a commitment to provide the
grants.
The directives of the clarification apply to annual reporting
periods commencing on January 1, 2009. Earlier implementation is
permissible.
At this stage, the management of the Group estimated that the
implementation of the standard is not expected to have any
influence on the financial statements of the Group.
AMENDMENT TO IAS 32, FINANCIAL INSTRUMENTS: PRESENTATION, AND IAS
1, PRESENTATION OF FINANCIAL STATEMENTS
The amendment to IAS 32 changes the definition of a financial
liability, financial asset and capital instrument and determines
that certain financial instruments, which are exercisable by
their holder, will be classified as capital instruments.
The provisions of the standard apply to annual financial
reporting periods which start on January 1, 2009 and thereafter.
Earlier adoption is permitted.
At this stage, the management of the Group estimated that the
implementation of the standard is not expected to have any
influence on the financial statements of the Group.
IFRS 1 "FIRST TIME ADOPTION OF IFRS" AND IAS 27 "CONSOLIDATED AND
SEPARATE FINANCIAL STATEMENTS"
The amendment states, among other things, the method in which the
measurement of the investments in subsidiaries, associated
entities and joint control entities should be applied at first
time adopting IFRS, and the method in which income from dividends
received should be recognized.
The amendment is effective for annual periods commencing January
1, 2009.
At this stage, the management of the Group estimated that the
implementation of the standard is not expected to have any
influence on the financial statements of the Group.
F - 22
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 3 - SIGNIFICANT ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION
A. GENERAL
In the application of the Group's accounting policies, which are
described in Note 2, the management is required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period
in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the
revision affects both current and future periods.
B. SIGNIFICANT JUDGMENTS IN APPLYING ACCOUNTING POLICIES
The following are the significant judgments, apart from those
involving estimations (see below), that the management have made in
the process of applying the entity's accounting policies and that have
the most significant effect on the amounts recognized in financial
statements.
o Useful lives of property, plant and equipment - As described at
2H above, the Group reviews the estimated useful lives of
property, plant and equipment at the end of each annual reporting
period.
o Impairment of goodwill - Determining whether goodwill is impaired
requires an estimation of the value in use of the cash-generating
units to which goodwill has been allocated. The value in use
calculation requires the management to estimate the future cash
flows expected to arise from the cash-generating unit and a
suitable discount rate in order to calculate present value.
The carrying amount of goodwill at the balance sheet date was NIS
3,829 thousand (USD 1,007 thousand).
o Deferred taxes- the company recognizes deferred tax assets for
all of the deductible temporary differences up to the amount as
to which it is anticipated that there will be taxable income
against which the temporary difference will be deductible. During
each period, for purposes of calculation of the utilizable
temporary difference, management uses estimates and
approximations as a basis which it evaluates each period.
o Measurement of obligation for employee benefits.
NOTE 4 - CURRENT ASSETS
A. CASH AND CASH EQUIVALENTS - COMPOSITION
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Cash in bank 6,611 11,343 1,739
Short-term bank deposits 72,138 50,306 18,974
-------- -------- --------
Total cash 78,749 61,649 20,713
======== ======== ========
F - 23
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 4 - CURRENT ASSETS (CONT.)
B. OTHER FINANCIAL ASSETS
CURRENT
----------------------------------
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
FINANCIAL ASSETS CARRIED AT FAIR VALUE THROUGH PROFIT OR
LOSS (FVTPL)
Non-derivative financial assets designated as at FVTPL
Shares 882 3,726 232
Governmental loan and other bonds 1,526 11,475 401
Certificate of participation in mutual fund 6,959 16,066 1,831
DERIVATIVES 77 - 20
-------- -------- --------
9,444 31,267 2,484
-------- -------- --------
C. TRADE RECEIVABLES
(1) COMPOSITION
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Open accounts 56,655 42,488 14,901
Credit cards company 97 261 26
Checks receivable 24,005 23,731 6,314
-------- -------- --------
80,757 66,480 21,241
Less - allowance for doubtful accounts 1,158 2,682 305
-------- -------- --------
79,599 63,798 20,936
======== ======== ========
The average credit period on sales of goods is 81 days. Trade
receivables are provided for based on estimated irrecoverable
amounts from the sale of goods, determined by reference to past
default experience.
Before accepting any new customer, the Group asses the potential
customer's credit quality and defines credit limits by customer.
Of the trade receivables balance at the end of the year, NIS 8.3
million (2007: NIS 7.2 million) is due from Company A, the
Group's largest customer. There are no other customers who
represent more than 10% of the total balance of trade
receivables.
Included in the Group's trade receivable balance are debtors with
a carrying amount of NIS 0.7 million which are past due at the
reporting date for which the Group has not provided allowance for
doubtful accounts as there has not been a significant change in
credit quality and the amounts are still considered recoverable.
The Group does not hold any collateral over these balances.
F - 24
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 4 - CURRENT ASSETS (CONT.)
C. TRADE RECEIVABLES (CONT.)
(2) AGING OF PAST DUE BUT NOT IMPAIRED
DECEMBER 31,
-----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
-----------------------------------
0-120 days 587 447 154
120-150 days 137 395 36
150 days and above - 2,882 -
-------- -------- --------
Total 724 3,724 190
======== ======== ========
(3) MOVEMENT IN THE ALLOWANCE FOR DOUBTFUL DEBTS
DECEMBER 31,
-----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
-----------------------------------
Balance at beginning of the year 2,682 206 705
Increase relating to subsidiary consolidated for
the first time 164 - 43
Amounts written off as uncollectible (2,482) - (652)
Change in allowance doubtful debts 794 2,476 209
-------- -------- --------
Balance at end of the year 1,158 2,682 305
======== ======== ========
D. OTHER RECEIVABLES
DECEMBER 31,
-----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
-----------------------------------
Prepaid expenses 438 647 116
Income receivables 377 41 99
Derivatives at fair value 77 - 20
Government authorities 613 554 161
Advances to suppliers 597 370 157
Others 1,885 - 496
-------- -------- --------
3,987 1,612 1,049
======== ======== ========
E. INVENTORIES
DECEMBER 31,
-----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
-----------------------------------
Raw and auxiliary materials 2,573 - 677
Finished products and goods in process 29,082 29,166 7,649
-------- -------- --------
31,655 29,166 8,326
======== ======== ========
Advances to suppliers 2,762 1,854 726
======== ======== ========
34,417 31,020 9,052
======== ======== ========
The inventories are presented net of impairment provision.
F - 25
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 4 - CURRENT ASSETS (CONT.)
F. OTHER RECEIVABLES
BREAKDOWN BASED ON LINKAGE CONDITIONS:
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
MONETARY ITEMS:
CPI linked 5,349 9,489 1,407
Linked or denominated in foreign currency 22,339 25,051 5,876
Not linked 145,435 123,731 38,252
-------- -------- --------
173,123 158,271 45,535
-------- -------- --------
NON-MONETARY ITEMS 35,452 31,983 9,325
208,575 190,254 54,860
======== ======== ========
NOTE 5 - INVESTMENTS IN SUBSIDIARIES
CONSOLIDATED SUBSIDIARIES
The consolidated financial statements as of December 31, 2008, include the
financial statements of the following Subsidiaries:
OWNERSHIP AND CONTROL
------------------
AS OF DECEMBER 31,
2 0 0 8
------------------
%
------------------
Gold Frost Ltd ("GOLDFROST") 89.99
Shamir Salads (2006) Ltd ("SHAMIR SALADS") 51.00
WF Kosher Food Distributors Ltd. ("WF") 100.00
Y.L.W. Baron international trading Ltd. ("BARON") 50.10
W.F.D. Ltd. 100.00
Willi-food frozen products Ltd. 100.00
Goldfrost's subsidiary
Dairy distributor in Denmark ("THE DISTRIBUTOR") 51.00
NOTE 6 - PREPAID LONG-TERM LEASE
The Company entered into a long term lease agreement with the ILA with
respect to a parcel of land which its facilities were constructed. The
prepaid lease payments amounted to NIS 10,741 in thousands, and are
amortized over the lease period.
F - 26
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 7 - PROPERTY PLANT AND EQUIPMENT
OFFICE
FURNITURE,
MACHINERY COMPUTERS
AND MOTOR LEASEHOLD AND
BUILDING EQUIPMENT VEHICLES IMPROVEMENTS EQUIPMENT TOTAL
-------- -------- -------- -------- -------- --------
CONSOLIDATED
COST:
Balance - January 1, 2007 27,485 755 6,784 311 3,137 38,472
Changes during 2007
Additions 3,431 255 1,891 - 744 6,321
Dispositions - - (105) (311) - (416)
Balances relating to subsidiary
consolidated for the first time - - - - 208 208
Effect of foreign currency exchange
differences - - - - (16) (16)
-------- -------- -------- -------- -------- --------
Balance - December 31, 2007 30,916 1,010 8,570 - 4,073 44,569
Changes during 2008:
Additions 610 1,934 487 8 276 3,315
Dispositions - - (583) - (265) (848)
Balances relating to subsidiary
consolidated for the first time - 6,142 1,696 348 358 8,544
Effect of foreign currency exchange
differences - - (6) - - (6)
-------- -------- -------- -------- -------- --------
Balance - December 31, 2008 31,526 9,086 10,164 356 4,442 55,574
-------- -------- -------- -------- -------- --------
ACCUMULATED DEPRECIATION:
Balance - January 1, 2007 - - 4,104 307 2,031 6,442
Changes during 2007:
Additions 842 64 1,048 4 371 2,329
Dispositions - - (105) (311) - (416)
-------- -------- -------- -------- -------- --------
Balance - December 31, 2007 842 64 5,047 - 2,402 8,355
Changes during 2008:
Additions 1,420 763 1,362 36 621 4,202
Dispositions - - (304) - (8) (312)
Balances relating to subsidiary
consolidated for the first time - 830 251 2 129 1,212
Effect of foreign currency exchange
differences - - 10 - - 10
-------- -------- -------- -------- -------- --------
Balance - December 31, 2008 2,262 1,657 6,366 38 3,144 13,467
======== ======== ======== ======== ======== ========
Net book value:
December 31, 2008 29,264 7,429 3,798 318 1,298 42,107
======== ======== ======== ======== ======== ========
December 31, 2007 30,074 946 3,523 - 1,671 36,214
======== ======== ======== ======== ======== ========
Net book value (Dollars in thousands):
December 31, 2008 7,697 1,954 999 84 341 11,075
======== ======== ======== ======== ======== ========
F - 27
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 8 - GOODWILL
A. COMPOSITION
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
COST
Balance at beginning of year 4,884 - 1,284
Additional amounts recognised from business combinations
occurring during the year 3,101 4,848 815
Additional amounts recognized from acquiring additional
shares in subsidiary - 36 -
-------- -------- --------
BALANCE AT END OF YEAR 7,985 4,884 2,099
-------- -------- --------
ACCUMULATED IMPAIRMENT LOSSES
Balance at beginning of year 3,089 - 812
Impairment losses recognized in the year 1,067 3,054 280
Effect of foreign currency exchange differences - 35 -
-------- -------- --------
Balance at end of year 4,156 3,089 1,092
-------- -------- --------
CARRYING AMOUNT
At the beginning of the year 1,795 - 472
-------- -------- --------
At the end of the year 3,829 1,795 1,007
======== ======== ========
B. ANNUAL TEST FOR IMPAIRMENT
During 2008, the Group assessed the recoverability of goodwill, and
determined that goodwill associated with the Group's overseas
marketing of refrigerated products activity was not recoverable and
was written off in the amount of NIS 1,067 thousands. There were no
other impairments to any of the other cash-generating units in the
year 2008.
C. ALLOCATION OF GOODWILL TO CASH-GENERATING UNITS
Goodwill has been allocated for impairment testing purposes to the
following cash-generating units:
o Export activity ( Baron that was acquired in the year 2007).
o Export activity (WF that was acquired in the year 2007).
o Salad production and marketing activity (Shamir Salads that was
acquired in the year 2008).
o Overseas marketing of refrigerated products activity (The
distributor that was acquired in the year 2008).
Before recognition of impairment losses, the carrying amount of
goodwill was allocated to the following cash-generating units:
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Marketing activity of chilled and frozen products
(Goldfrost) 36 36 9
Export activity (Baron) 1,893 1,759 498
Export activity (WF) 3,089 3,089 812
Salad production and marketing activity (Shamir salads) 1,900 - 500
Overseas marketing of refrigerated products activity
(the Distributor) 1,067 - 280
F - 28
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 8 - GOODWILL (CONT.)
D. ALLOCATION OF GOODWILL TO CASH-GENERATING UNITS
EXPORT ACTIVITY (BARON)
The recoverable amount of this cash-generating unit was determined
based on the projected cash flow forecast approach for the coming
years, which is based on the activity's budget for the years
2009-2012. The key assumptions used in calculating the usage value
are:
o Operating profit rate - the operating profit during the years
2009-2012 should increase by 5% per annum. This assessment is
based on an increase in the turnover, while the operating
expenses should remain essentially at the same level. During the
subsequent period, and during a period of another 15 years, the
operating profit should increase by 3% per annum.
o Changes in the working capital - the working capital at the end
of each year should represent 7% of the annual operating profit.
o Fixed assets and depreciation - the periodic investments in fixed
assets should approximate the aggregate of the depreciation
costs.
o The period of the estimate - 20 years. The residual value at the
end of that period should approximate the present value of the
working capital at that time.
o The capitalization rate - the following risk factors were taken
into account in the determination of the capitalization rate -
the competition from local manufacturers in the United States,
which benefit from the advantage of proximity to the market; the
Jewish population in the United States, which constitutes the
activity's principal customer base, grew at a very slow pace,
while the ultra-orthodox Jewish population in the United States
(to which the activity also sells) increased at a rapid pace,
however, this community has its own rabbis, who do not always
trust the kashrut supervision in Israel; as well as a significant
dependence on the existing management. The composition of the
financing was also taken into account - 65% equity and 35%
external financing. According to these assumptions, the weighted
average interest rate that was taken into account in respect of
the cash flow is 17%.
EXPORT ACTIVITY (WF)
The recoverable amount of this cash-generating unit was determined
based on the projected cash flow forecast approach for the coming
years, which is based on the activity's budget for the years
2008-2012. The key assumptions used in calculating the usage value
are:
o Total sales - the assumption was that in 2008, the sales would
increase by 25% compared with 2007, by 5% during the years 2009 -
2012, by 3% during the subsequent five years, while regarding an
additional ten-year period, a fixed cash flow was assumed at the
height of the cash flow in 2017.
o Operating profit rate - the operating profit rate during the
years 2009-2012 should be negligible (from a negative rate of
1.1% in 2008 up to a positive rate of 1.4% in 2012). As of the
year 2013, an operating profit rate of 4% was assumed. This
assessment is based on an increase in the turnover, while the
operating expenses should remain essentially at the same level.
During the subsequent period, and for an additional period of 15
years, the operating profit should increase by 3% per annum.
o Changes in the working capital - the assumption is that the
working capital should increase each year at the same rate as the
rate of the increase in the turnover.
o Fixed assets and depreciation - the fixed assets of this activity
are immaterial, and no significant investments are anticipated in
the future; therefore, the assumption is that the total
depreciation costs should be similar to the total periodic
purchase costs.
F - 29
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 8 - GOODWILL (CONT.)
D. ALLOCATION OF GOODWILL TO CASH-GENERATING UNITS (CONT.)
EXPORT ACTIVITY (WF) (Cont.)
o The period of the estimate - 20 years. The residual value at the
end of that period should approximate the present value of the
working capital at that time.
o The capitalization rate - the following risk factors were taken
into account in the determination of the capitalization rate -
the Management's forecast involves significant uncertainty,
including with regard to the rate of the increase in the volume
of activity, and the pace of the improvement to profitability. In
addition, in 2007, the activity suffered heaving losses.
Furthermore, the sector in which it operates - trade in kosher
food - is subject to stiff competition, and it is unclear whether
the activity has a relevant advantage over its competitors,
especially since the ultra-orthodox population, which the
activity also targets, is counseled by its own rabbis, and this
community could have its own marketing channels. In terms of the
financing structure - the assumption was that the long-term
financing structure of the activity should include 50%
shareholders' equity and 50% bank loans. Accordingly, the
weighted average interest rate that was taken into account
(excluding the residual value) was 15%. A capitalization rate of
7% was taken into account in relation to the residual value,
considering the chance that the activity can be realized as a
going concern.
o It should be noted that the goodwill in respect of this activity
was written off in its entirety in 2007. The impairment is mainly
due to unsatisfying financial results and inconsistency with
management's expectations. As a result, the operations of WF was
abandoned during 2009.
SALAD PRODUCTION AND MARKETING ACTIVITY (SHAMIR SALADS)
The recoverable amount of this cash-generating unit was determined
based on the projected cash flow forecast approach for the coming
years, which is based on the activity's budget for the year 2009. The
key assumptions used in calculating the usage value are:
o The sales turnover - the sales turnover was calculated based on
the activity's budgeted sales turnover for 2009, with an annual
increment at the rate of 2.5% during the years 2010-2011, which
represents mainly the expected increase in the population during
this period, and 3.5% as of the year 2012 and the subsequent
years, according to the anticipated long-term rise in the
standard of living.
o Operating profit rate - the operating profit rate was calculated
based on the operating profit rate budgeted for 2009, which is
likely to increase concurrent with the increase in the turnover,
mainly due to the significant proportion of fixed expenses out of
the total operating expenses. Nonetheless, the competition in the
sector could lead to a slow improvement in the operating profit.
o Changes in the working capital - the assumption is that the
working capital should increase during the coming years at the
same rate as the rate of the increase in the turnover.
o Fixed assets and depreciation - this activity has material fixed
assets, the majority being comprised of machinery, equipment and
vehicles. The assumption is that in the coming years the need for
significant investments in fixed assets should diminish. The
assumptions adopted in relation thereto are that the sums of the
investments in fixed assets will be NIS 1,200 thousand during the
years 2009 and 2010, while in subsequent years, the total
investment should increase by some 3% per annum. The balance of
the activity's fixed assets as on December 31, 2008 shall be
amortized at equal annual sums over the next seven years. The
average depreciation in respect of purchases subsequent to
January 1, 2009 should be at the rate of 12.5% per annum.
o The period of the estimate - 20 years. The residual value at the
end of that period should approximate the present value of the
working capital at that time.
F - 30
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 8 - GOODWILL (CONT.)
D. ALLOCATION OF GOODWILL TO CASH-GENERATING UNITS (CONT.)
SALAD PRODUCTION AND MARKETING ACTIVITY (SHAMIR SALADS) (CONT.)
o The capitalization rate - the following risk factors were taken
into account in the determination of the capitalization rate -
the competition in the sector, which is liable to have an impact
on the profitability; the significant deficit in the Company's
working capital; and its problematic liquidity situation. The
composition of the financing was also taken into account - as of
December 31, 2008, 75% of the Company's financing is from bank
credit. The assessment is that financing will not continue at
this ratio in the long term, so that, the financing from bank
credit in the long-term should be 50% of the activity's total
financial means. According to these assumptions, the weighted
average interest rate taken into account in respect of the cash
flow, including the residual value, is 14%.
OVERSEAS MARKETING OF REFRIGERATED PRODUCTS ACTIVITY
The recoverable amount of this cash-generating unit was determined
based on the projected cash flow forecast approach for the coming
years, which is based on the activity's budget for the year 2009. The
key assumptions used in calculating the usage value are:
o The sales turnover - the sales turnover was calculated based on
the activity's budgeted sales turnover for 2009, with an annual
increment at the rate of 3%, which represents mainly the expected
increase in the population that generates the demand for the
activity's products.
o Operating profit rate - the operating profit rate was calculated
based on the operating profit rate budgeted for 2009, which is
likely to increase concurrent with the increase in the turnover,
mainly due to the significant proportion of fixed expenses out of
the total operating expenses. Nonetheless, the competition in the
sector could lead to a slow improvement in the operating profit.
o Fixed assets and depreciation - the fixed assets of this activity
are immaterial, and no significant investments are anticipated in
the future; therefore, the assumption is that the total annual
investments in fixed assets will be similar to the total annual
depreciation expenses.
o The period of the estimate - 20 years. The residual value at the
end of that period should approximate the present value of the
working capital at that time.
o The capitalization rate - the following risk factors were taken
into account in the determination of the capitalization rate -
the competition in the sector, which is liable to have an impact
on the profitability; the operating results during the report
year, which indicates poor profitability. The composition of the
financing was also taken into account, and it was decided that in
the long-term the basic financing structure of the activity
should be 60% shareholders' capital and 40% external credit.
According to these assumptions, the weighted average interest
rate that was taken into account in respect of the cash flow
(excluding the residual value) is 17.5%. The capitalization rate
of 12% was taken into account in relation to the residual value.
F - 31
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 9 - INTANGIBLE ASSETS
A. COMPOSITION:
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
COST
Suppliers relationship 120 120 32
Customers relationship 1,404 40 369
Brand name 3,570 - 938
technological know-how 439 - 115
-------- -------- --------
5,533 160 1,454
-------- -------- --------
ACCUMULATED AMORTIZATION AND IMPAIRMENT
Suppliers relationship 34 17 9
Customers relationship 131 40 34
Brand name 143 - 38
technological know-how 44 - 11
-------- -------- --------
352 57 92
-------- -------- --------
AMORTIZED COST 5,181 103 1,362
======== ======== ========
B. AMORTIZATION RATES - see note 2J.
NOTE 10 - DETAILS OF CURRENT LIABILITIES
A. TRADE PAYABLES
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Open accounts 39,206 30,539 10,312
Accrued expenses 832 369 219
Checks payables 13,690 3,422 3,601
-------- -------- --------
53,728 34,330 14,132
======== ======== ========
(*) Average days of credit for trade payables are 62 days.
B. OTHER PAYABLES AND ACCRUED EXPENSES
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Derivatives at fair value - 166 -
Government authorities 297 - 78
Customer advances 169 188 45
Deferred income 346 - 91
Related parties 1,690 3,945 445
Accrued expenses 1,958 292 515
Other 511 401 134
-------- -------- --------
4,971 4,992 1,308
======== ======== ========
F - 32
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 10 - DETAILS OF CURRENT LIABILITIES (CONT.)
C. CURRENT LIABILITIES - BREAKDOWN BASED ON LINKAGE CONDITIONS:
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Monetary commitments:
CPI linked 456 - 120
Linked or denominated in foreign currency 36,652 28,651 9,640
Not linked 48,429 18,770 12,738
-------- -------- --------
85,537 47,421 22,498
======== ======== ========
Non-monetary commitments: 515 188 136
======== ======== ========
86,052 47,609 22,634
======== ======== ========
NOTE 11 - BANK LOANS AND OTHER CREDIT PROVIDERS
A. Loans and other credits Comprised as follows:
LIABILITIES
--------------------------------------------------
INTEREST RATE CURRENT NON-CURRENT TOTAL
--------------- ---------------------- ---------------------- ----------------------
AS OF DECEMBER 31, 2008 AS OF DECEMBER 31, AS OF DECEMBER 31, AS OF DECEMBER 31,
--------------- ---------------------- ---------------------- ----------------------
ANNUAL 2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7
--------------- -------- -------- -------- -------- -------- --------
% NIS IN THOUSAND NIS IN THOUSAND NIS IN THOUSAND
--------------- ---------------------- ---------------------- ----------------------
Banks:
Overdraft P+1-P+6.65 5,837 - - - 5,837 -
Loans:
CPI linked 5.91 456 - - - 456 -
In U.S dollars L+1 3,296 5,978 - - 3,296 5,978
Not linked P+1-6.95 7,657 - - - 7,657 -
Others:
CPI linked 3.75-9.81 316 - 267 - 583 -
-------- -------- -------- -------- -------- --------
17,562 5,978 267 - 17,829 5,978
======== ======== ======== ======== ======== ========
B. DUE DATES AS OF DECEMBER 31, 2008
THOUSAND NIS
-----
First year - Current portion 2,324
-----
Second year 267
-----
Total 2,591
=====
F - 33
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 12 - LIABILITIES UNDER FINANCE LEASE ARRANGEMENTS
A. CAPITAL LEASES:
(1) GENERAL
The Company's subsidiary entered into several finance leasing
arrangements of cars for time periods varies between 3 - 3.33
years with a purchase possibility for a total amount of NIS 81 in
thousand. The group's commitment for lease payments is assured by
the legal ownership of the lessor.
(2) CAPITAL LEASE ASSETS:
NET BOOK VALUE OF THE COMPANY'S CAPITAL LEASE ASSETS:
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Vehicles 734 - 193
-------- -------- --------
734 - 193
======== ======== ========
NOTE 13 - EMPLOYEE BENEFITS
A. COMPOSITION
DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
POST EMPLOYMENT BENEFITS:
Benefits to retirees 994 163 261
======== ======== ========
SHORT TERM EMPLOYEE BENEFITS:
Accrued payroll and related expenses 1,989 1,160 523
Liability for vacation pay 555 248 146
-------- -------- --------
2,544 1,408 669
======== ======== ========
F - 34
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 13 - EMPLOYEE BENEFITS (CONT.)
B. DEFINED BENEFIT PLANS
The principal assumptions used for the purposes of the actuarial
valuations were as follows:
VALUATION AT
--------------------------
2 0 0 8 2 0 0 7
---------- ----------
Discount rate 4.2%-4.7% 5.8%
Expected return on the plan assets 1.75%-4.7% 2.6%-5.8%
Rate of increase in compensation 4% 4%
Expected rate of termination:
0-1 years 35%-60% 30%
1-2 years 30% 20%
2-3 years 20% 15%
3-4 years 10%-15% 5%
4-5 years 10% 5%
5 years and more 7.5% 5%
Amounts recognized in profit or loss in respect of these defined
benefit plans are as follows:
YEAR ENDED DECEMBER 31,
------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
------------------------------------
Current service cost 961 502 252
Interest cost 126 85 33
Expected return on the plan assets (111) (76) (29)
Employer contribution (841) (446) (221)
Interest losses on severance payment allocated to
remuneration benefits 25 - 7
Actuarial losses (gains) recognized in the year 478 (80) 126
Benefit paid during the year (93) (107) (25)
-------- -------- --------
545 (122) 143
======== ======== ========
The expense included in the P&L is as follows:
YEAR ENDED DECEMBER 31,
------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
------------------------------------
Cost of sales 155 - 41
Selling expenses 224 (60) 59
General and administrative expenses 166 (62) 43
-------- -------- --------
545 (122) 143
======== ======== ========
F - 35
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 13 - EMPLOYEE BENEFITS (CONT.)
B. DEFINED BENEFIT PLANS (CONT.)
Movements in the present value of the defined benefit obligation in
the current period were as follows:
YEAR ENDED DECEMBER 31,
------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
------------------------------------
Opening defined benefit obligation 1,521 1,002 400
Current service cost 961 502 252
Interest cost 126 85 33
Actuarial gains (losses) (138) 175 (36)
Benefits paid (268) (243) (71)
Change relating to subsidiary consolidated
for the first time 604 - 159
-------- -------- --------
Closing defined benefit obligation 2,806 1,521 737
======== ======== ========
Movements in the fair value of the defined benefit assets in the
current period were as follows:
YEAR ENDED DECEMBER 31,
------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
------------------------------------
Opening defined benefit assets 1,358 717 357
Expected return on the plan assets 111 76 29
Actuarial gains (losses) (616) 255 (162)
Employer contribution 841 446 221
Benefits paid (175) (136) (46)
Acquisition of subsidiary consolidated for
the first time 318 - 84
Interest losses on severance payment allocated to
remuneration benefits (25) - (7)
-------- -------- --------
Closing defined benefit assets 1,812 1,358 476
======== ======== ========
F - 36
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 14 - INCOME TAXES
A. COMPOSITION
YEAR ENDED DECEMBER 31,
------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
------------------------------------
Current taxes 1,622 2,945 427
Taxes in respect of prior years - (338) -
Deferred taxes (D. below) (505) (433) (133)
-------- -------- --------
1,117 2,174 294
======== ======== ========
B. RECONCILIATION OF THE STATUTORY TAX RATE TO THE EFFECTIVE TAX RATE
YEAR ENDED DECEMBER 31,
---------------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
-------------------------- -------
(IN THOUSANDS)
---------------------------------------------
Income before income taxes 4,880 15,561 1,284
======= ======= =======
Statutory tax rate 27% 29% 27%
Tax computed by statutory tax
rate 1,318 4,513 347
TAX INCREMENTS (SAVINGS) DUE TO:
Non-deductible expenses 1,180 130 310
Deferred tax in respect of losses for which valuation
allowance was provided 1,110 - 292
Tax exempt income (367) (182) (96)
Permanent differences 36 - 9
Temporary differences for which deferred taxes were not
provided (1,977) (535) (520)
Effect of decrease in tax rate on deferred taxes assets 5 (13) 1
Differences in the definition of capital and non-monetary
items for tax purposes and financial reporting purposes (22) (1,227) (6)
Previous year taxes - (338) -
Other (166) (174) (43)
------- ------- -------
1,117 2,174 294
======= ======= =======
F - 37
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 14 - INCOME TAXES (CONT.)
C. DEFERRED TAXES
YEAR ENDED DECEMBER 31,
------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
---------------------- --------
(IN THOUSANDS)
------------------------------------
Balance as of beginning of year 238 (195) 62
Charged to the consolidated income statements 510 420 134
Tax rate changes (5) 13 (1)
Change relating to subsidiary consolidated
for the first time (74) - (19)
-------- -------- --------
Balance as of end of year 669 238 176
======== ======== ========
DEFERRED TAXES ARISE FROM THE FOLLOWING:
Allowance for doubtful accounts 294 104 77
Employees benefits 391 190 103
Carry forward tax losses 747 - 196
Depreciable fixed assets (893) - (234)
Unrealized profits - 32 -
Financial assets carried at fair value
through profit or loss 130 (88) 34
-------- -------- --------
669 238 176
======== ======== ========
For 2008 - Deferred taxes were computed at rates between 26%-25%,
primarily - 26%.
D. REDUCTION OF CORPORATE TAX RATES
In July 2005, the Israeli Knesset passed the Law for Amending the
Income Tax Ordinance (No. 147), 2005, according to which commencing in
2006 the corporate income-tax rate would be gradually reduced, for
which a 31% tax rate was established, through 2010, in respect of
which a 25% tax rate was established..
E. The Company and its subsidiaries were not assessed for Income Taxes.
According to section 145 of the Tax Ordinance assessments for the
years 2001 and backward are considered final.
F. On February 26, 2008, the Knesset ratified the third reading of the
Income Tax Law ("Inflation Adjustments") (Amendment 20) (Limitation of
Term of Validity) - 2008 (hereinafter: "The Amendment"), pursuant to
which the application of the inflationary adjustment law will
terminate in tax year 2007 and as of tax year 2008, the law will no
longer apply, other than transition regulations whose intention is to
prevent distortions in tax calculations.
According to the amendment, in tax year 2008 and thereafter, the
adjustment of revenues for tax purposes will no longer be considered a
real-term basis for measurement. Moreover, the linkage to the CPI of
the depreciated sums of fixed assets and carryover losses for tax
purposes will be discontinued, in a manner whereby these sums will be
adjusted until the CPI at the end of 2007 and their linkage to the CPI
will end as of that date.
F - 38
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 15 - COMMITMENTS AND CONTINGENT LIABILITIES
1. Commitments
a. The Company has agreed to pay the large supermarket retail chains
in the organized market and to cretin of the customers in the
private sector incentives calculated as a fixed percentage of the
annual sales to such customer or incentives based on the increase
in volume of sales to such customers in excess of a certain
agreed amount with respect to the year 2008. The extent of such
incentives varies between 0.5%-8.5% of the annual sales turnover
of each relevant customer (depending on the agreement with each
customer) and are usually awarded as part of a written annual
framework agreement.
b. As of June 1, 1998, the Company entered into certain management
services agreements with certain companies controlled by each of
Messrs. Joseph and Zwi Williger, respectively (collectively, the
"Williger Management Companies"), pursuant to which Messrs.
Joseph and Zwi Williger are to provide management services on
behalf of the Williger Management Companies to the Company (the
"Management Services Agreements").
The Management Services Agreements were for a period of four
years commencing on June 1, 1998 (the "Management Services
Period"), were automatically renewed on June 1, 2002 for two
years and were automatically renewed for an additional period of
two years in June 2004.
Each of the Management Services Agreements provided for monthly
services fees equal to $24,500 (excluding VAT) and an annual
bonus at a rate of 3% of the Company's consolidated pre-tax
annual profits, if such profits are equal to or less than NIS 3.0
million (approximately USD 0.8 million), or at a rate of 5% if
such profits exceed such level.
On May 4, 2005 the Company's Audit Committee and Board of
Directors decided to amend the terms of the abovementioned
agreements, mainly extending the management services period for
an unlimited period, with an option to terminate them by the
Company's advance notice of 18 months and the Management
Companies' advance notice of 180 days. The General Meeting of the
Company's shareholders ratified these amendments on July 20,
2005.
On February 15, 2006 the Company's board of directors resolved,
in light of the expressed position of the Israeli Securities
Authority, to set those agreements for a five-year period
following ratification by the Company's shareholders General
Meeting, i.e., until July 19, 2010.
On January 2, 2008 the Audit Committee and the Board of Directors
unanimously approved the amendment of the Management Services
Agreements with Messrs. Zwi Williger and Joseph Williger. In
accordance to the new Management Services Agreements the terms
were amended as follows:
(1) The current monthly services fees according to the
Management Services Agreements will cease to be linked to
the US Dollar and will be translated to NIS 102,900
(excluding VAT) linked to changes in the Israeli consumer
price index.
(2) The terms of the Management Services Agreements are to be
extended indefinitely, subject to clause (3) below; provided
however that in the event the Williger Management Company
provides the management services to the Company without the
presence of Messrs. Zwi Williger or Joseph Williger, as the
case may be, and/or in the case of the death and/or
permanent disability of Messrs. Zwi Williger or Joseph
Williger, the Company will be entitled to terminate the
Management Services Agreement immediately.
F - 39
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 15 - COMMITMENTS AND CONTINGENT LIABILITIES (CONT.)
1. Commitments
b. Cont.
(3) Each of the parties to the Management Services Agreements
may terminate the agreement at any time, and for any reason,
by prior written notice which will be delivered to the other
party as follows:
The Company may terminate the agreement at any time, and for
any reason, by prior written notice of at least 36 months.
The Williger Management Company may terminate the agreement
at any time, by prior written notice of at least 180 days.
(4) If a Williger Management Company is to terminate the
Management Services Agreement, the Williger Management
Company would be entitled to receive the management fees for
a period of twelve (12) months, which would begin after the
prior notice period, whether or not it provides the Company
with any management services during such twelve-month
period.
In addition, the Management Services Agreements contain
provisions entitling each of Messrs. Zwi Williger and Joseph
Williger to 30 vacation days per year, during which days the
applicable Williger Management Company will not provide
management services to the Company. Unused vacation days may
be accumulated and paid for in lieu of taking such days as
vacation.
c. On April 1, 1997, the Company entered into an agreement to
provide the Parent Company administrative services pursuant to
which the Company may provide office facilities leased by the
parent company for a monthly fee of NIS 5,480 (USD 1,441) to be
adjusted annually for changes in the Israeli CPI.
d. The Company does not generally enter into written agency or other
agreements with its suppliers. However, the Company has written
agreements with sixteen foreign suppliers that confirm the
exclusive appointment of the Company as the sole agent and/or
distributor of such suppliers either with respect to a specific
product or with respect to a line of products, within the State
of Israel.
e. Shamir Salads signed distribution agreements with 25
distributors, that distributes Shamir Salads products all over
Israel for a commission that range between 6% to 16% of the
distributor sales, depending of the customer. Shamir Salads has
no commitment to any of those distributors for ongoing
relationship.
f. Shamir Salads leases two joined buildings for its operation
(factory, logistics and head office) - the first is 2,512 squared
meters, the monthly rent is NIS 40,432 (linked to the CPI from
December 2005) and the lease ends on January 2012. The second is
2,192 squared meters, the monthly rent is NIS 41,141 (linked to
the CPI from December 2005) and the lease ends on January 2012.
F - 40
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 15 - COMMITMENTS AND CONTINGENT LIABILITIES (CONT.)
2. Contingent liabilities
1. On November 24, 2003 the Israeli custom issued the Company and
Gold Frost a notice for total payment of NIS 381 thousand
claiming that the tariff on a certain product imported by the
Company was wrong. The Company and Gold Frost didn't agree to the
notice and on November 25, 2004 they filed a lawsuit against the
state of Israel to have the notice be declared void. The
summaries from both sides have been submitted and the Company is
waiting for the verdict of the court. A reserve of NIS 308
thousand is included in the Company's 2008 financial statements.
2. A lawsuit was filed in December 2001 against 29
importers/producers of food products, including the Company, for
an amount totalling NIS 500 million. Concurrently, the plaintiffs
filed a request for an exemption from the court fee. Following
the court's rejection of the plaintiffs' request for the noted
fee exemption and their failure to pay such fee, the court
dismissed the case. In January 2004 the abovementioned plaintiffs
filed a new lawsuit against the 29 noted importers/producers for
NIS 1 billion. Again, a request was made concurrently for an
exemption from the court fee. This request was rejected by the
registrar of the court, and the action was dismissed without
prejudice in November 2006.
The plaintiffs then filed an appeal with the District court of
the registrar's November 2006 decision. This request was rejected
by the registrar of the District court. The plaintiffs then filed
an appeal with the Supreme Court, and requested an exemption from
the court fee for the appeal and from the requisite security
deposit. The next hearing in this appeal is scheduled for June
15, 2009.
Although the proceedings are still at a preliminary stage, the
Company's management and legal counsel believe that the
plaintiffs' likelihood of success in the proceedings is low.
3. In or about October, 2005, Vitarroz Corp. commenced an action in
the Superior Court of the State of New Jersey, against Willi USA
Holdings, Inc. (a subsidiary of the Company), the Company and Zwi
Williger (collectively, the "Defendants") due to a dispute
concerning a press release announcing the termination of the
proposed acquisition of the Vitarroz business by the Company On
September 2005, the Company removed the matter from the Superior
Court of New Jersey to the United States District Court for the
District of New Jersey. The complaint was subsequently amended
and, as amended, alleged, inter alia, breach of contract,
defamation, breach of covenants of good faith and fair dealing,
fraudulent inducement and tortious interference with contractual
relations and prospective economic advantage. Defendants did not
respond to the complaint as an agreement was reached to arbitrate
all disputes between the parties and certain third parties. Not
only did the parties agree to submit the claims which are the
subject of the amended complaint to binding arbitration but they
agreed to submit to arbitration (i) claims that defendants have
against plaintiff and related third parties, and (ii) claims
which the Company asserted against Vitarroz in an action that was
then pending in Israel regarding the alleged breach of an
agreement executed by the Company and Vitarroz, pursuant to which
Vitarroz was to supply food products to the Company. Although
there was no discovery taken in the then pending Court matters,
Vitarroz claimed in correspondence to the District Court that it
sustained, inter alia, damage: to its financial reputation; that
suppliers refused to extend favorable credit and delivery terms;
that there were lost profits of approximately USD 500,000; and
that its sale to IDT realized a sales price of approximately USD
3 million less than what was expected; and that there are
additional damages resulting from defendants' actions which are
claimed to exceed USD 3.5 million.. During the course of
discovery, Vitarrozz submitted the reports of its financial
expert claiming damages in excess of USD 6.6 million. The Company
has submitted the report of its financial expert claiming damages
in excess of $10 million. The attributing hearings were in May
2008 and the on August 25 2008, the arbitration panel has granted
an award against the Company in the amount of approximately USD
0.6 million). Among other things, the panel found that the press
release issued by the Company announcing the termination of the
proposed acquisition of the Vitarroz business by the Company
constituted a breach of contract and violation of the covenant of
good faith and fair dealing. In addition, the panel rejected the
Company's counterclaims. On October 13, 2008 the Company filed a
motion to the Superior Court of the State of New Jersey New to
vacate the award. A reserve on the full award is included in the
Company's 2008 financial statements.
F - 41
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 15 - COMMITMENTS AND CONTINGENT LIABILITIES (CONT.)
2. Contingent liabilities (Cont.)
4. On February 21, 2007, a lawsuit was filed against Gold Frost by
Cukierman & Co. Investment House Ltd. in the Tel Aviv-Jaffa
Magistrates Court in the amount of NIS 273,852, claiming non
payment of fees for professional services rendered. A statement
of defense was filed. Given the early stage of these proceedings,
the Company is unable at this point to assess the risks involved.
5. In September 2007, Thurgeman Construction Co. Ltd. ("Thurgeman")
filed a claim against the Company in the District Court of Tel
Aviv the amount of NIS 4,449,340 (plus VAT) regarding a dispute
in connection with the construction of the Company's logistics
center in Yavne (the "Project") pursuant to a contract between
the parties, dated as of September 9, 2005. Under the terms of
the contract, Thurgeman was to serve as the operating contractor
for the construction of the frame and the surrounding portions
for the construction of the Project.
During the course of construction on the Project, the parties
raised several claims against each other in connection with the
progress of construction on the Project. The Company claimed that
Thurgeman grossly violated the terms of the contract by
continuous delays in the completion of the Project, and by
performing the construction work in a negligent and
unprofessional manner and with inferior quality. Thurgeman
counterclaimed that it performed the construction work according
to the terms of the contract and that any delays in the work were
not caused through any fault of Thurgeman. Furthermore, Thurgeman
claimed that the Company withheld certain payments to which
Thurgeman was entitled for additional work on the Project,
causing Thurgeman damages.
At the end of November 2007, the Company filed a statement of
defense, which included a counterclaim against Thurgeman and its
executive, Dotan Thurgeman, which contained among other things, a
claim of defamation, a claim for damages caused by the delay in
delivery of the completed Project, and damages caused by
Thurgeman's poor and careless work on the Project. The sum of the
damages claimed by the Company in the counterclaim was NIS 5
million. In February 2008, Thurgeman filed a response to the
counter claim. The parties started performing the preliminary
proceedings.
At the current preliminary stage of the dispute, the Company's
management and legal counsel cannot assess the chances of the
parties.
6. On June 18, 2006, the Company filed a claim against Filiz and
Ash-Bar in the amount of NIS 4,473,878 for breach of contract.
The complaint was served on filiz and Ash-Bar through Ash-Bar's
chief executive officer. Filiz then filed a request to cancel the
complaint, claiming that Ash-Bar is not authorized to accept
service of process on its behalf. The request was denied by the
court's registrar.
On November 4, 2007, Filiz filed an appeal of the registrar's
decision and requested an extension for filing its defense to the
complaint pending a decision on the appeal. The appeal was denied
and the service of process was accepted by the court.
Notwithstanding the fact that the proceedings are still at a
preliminary stage, the Company's legal counsel believes that the
complaint is based on sound legal arguments, and that there is a
reasonable possibility that a not insignificant portion of the
arguments will be sustained by the court.
F - 42
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 15 - COMMITMENTS AND CONTINGENT LIABILITIES (CONT.)
2. Contingent liabilities (Cont.)
7. On July 7, 2008, WF filed a lawsuit in the Supreme Court of the
State of New York, Country of New York, against Laish Israeli
Food Ltd., Laish Dairy Ltd., 860 Nostrand Associates Llc., Arie
Steiner, Eli Biran (WF's former CEO) and others. The plaintiffs
assert claims, inter alia, of fraud, conversion and breach of
contract against the seller and former principal of Laish Israeli
Food and related parties. Certain defendants have filed motions
to dismiss the claim. On August 27, 2008, 860 Nostrand Associates
Llc. Filed a lawsuit against the Company claiming that the
defendant is liable to it as a guarantor of a certain lease that
was supposedly signed by WF. Damages are being sought. These
matters are in the early stage of discovery.
8. On September 22, 2008, a lawsuit was filed against the Company,
WF and one of the Company's officers by several Israeli's WF's
vendors in the Tel Aviv-Jaffa Magistrates Court in the amount of
NIS 1,349,899, claiming non payment of WF for food products that
they allegedly supplied to WF. A statement of defense was filed.
Even at the early stage of these proceedings, the Company's
management and legal counsel believe that the lawsuit against
Company and the Company's officer are without merit, and they
intend to vigorously defend against such claims.
9. On November 2008, a purported class action lawsuit had been filed
by an individual against Shamir Salads. The complaint, which has
not been recognized as a class action, alleges that Shamir Salads
misled its customers by writing on certain of its products that
such products were "home production" while those products were
manufactured in Shamir Salad's industrial factory. The complaint
alleges damages of approximately NIS 7.45 million. Shamir Salads
believes that the complaint is without merit and intends to
vigorously defend against the litigation.
NOTE 16 - RECLASSIFICATION
The Group reclassified the sum of NIS 1,854 thousand (USD 488 thousand)
from the "Other receivables" item to the "Inventory" item. This
reclassification derives from an adjustment of the comparative figures to
the manner by which certain transactions are presented in the Group's
financial statements as on December 31, 2008.
The Group reclassified the sum of NIS 369 thousand (USD 97 thousand) from
the "Other payables and accrued expenses" item to the "Trade payables"
item. This reclassification derives from an adjustment of the comparative
figures to the manner by which certain transactions are presented in the
Group's financial statements as on December 31, 2008.
The Group reclassified the sum of NIS 238 thousand (USD 63 thousand) from
the "Other payables and accrued expenses" item and the sum of NIS 70
thousand (USD 18 thousand) from the "Trade receivables" item to the
"Accruals" item. This reclassification derives from an adjustment of the
comparative figures to the manner by which certain transactions are
presented in the Group's financial statements as on December 31, 2008.
The Group reclassified the sum of NIS 1,408 thousand (USD 370 thousand)
from the "Other payables and accrued expenses" item to the "Employees
benefits" item. This reclassification derives from an adjustment of the
comparative figures to the manner by which certain transactions are
presented in the Group's financial statements as on December 31, 2008.
The Group reclassified the sum of NIS 593 thousand (USD 156 thousand) from
the "Other payables and accrued expenses" item to the "Current tax
liabilities" item. This reclassification derives from an adjustment of the
comparative figures to the manner by which certain transactions are
presented in the Group's financial statements as on December 31, 2008.
F - 43
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 16 - RECLASSIFICATION (CONT.)
AS REPORTED
AS PREVIOUSLY IN CURRENT
REPORTED MODIFICATION STATEMENTS
-------- -------- --------
AS OF DECEMBER 31, 2007
Trade receivables 63,728 70 63,798
Other receivables 4,374 (1,854) 2,520
Inventory 29,166 1,854 31,020
Trade payables 33,961 369 34,330
Other payables and accrued expenses 7,600 (2,608) 4,992
Accruals - 308 308
Employees benefits - 1,408 1,408
Current tax liabilities - 593 593
NOTE 17 - SHAREHOLDERS' EQUITY
COMPOSITION:
ORDINARY SHARES
OF NIS 0.1 PAR VALUE EACH
-------------------------
DECEMBER 31
-------------------------
2 0 0 8 2 0 0 7
---------- ----------
Authorized share capital 50,000,000 50,000,000
Issued and outstanding 10,267,893 10,267,893
NOTE 18 - OPTIONS PLANS
On January 2005 the Parent Company's audit committee and Board of Directors
adopted a Stock Incentive Plan. The Parent Company was authorized to grant
up to 138,000 options to 9 of the Group's employees (93,000 of the options
to the Company's employees). The issuance of the options was ratified by
the Parent Company's Board of Directors and the audit committee on February
27, 2005.
The options granted vest in three equal annual installments commencing
January 2006 and will expire in 2.5, 3.5 and 4.5 years, respectively. The
purchase price per share payable upon exercise of an option is NIS 14 (USD
3.7) per share, linked to the changes in the Consumer Price Index, and
subject to adjustments.
F - 44
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 18 - OPTIONS PLANS (CONT.)
A summary of the status of the Company's stock option plans as of December
31, 2008, 2007 and changes during the years then ended, is presented below:
NUMBER OF OPTIONS
-----------------------------------------------
YEAR ENDED DECEMBER 31
-----------------------------------------------
2 0 0 8 2 0 0 7
--------------------- ---------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE
-------- -------- -------- --------
(NIS) (NIS)
-------- --------
Balance at the beginning of the year 27,000 13.43 42,000 13.55
Exercised - 11,000 13.10
Forfeited 8,000 4,000
-------- -------- --------
Balance at the end of the year 19,000 14.04 27,000 13.43
======== ======== ========
Options exercisable at the year end 19,000 8,000
======== ======== ========
NOTE 19 - SELECTED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
A. REVENUES
YEAR ENDED DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Sale of products manufactured by the group 70,248 - 18,477
Sale of other products 218,625 201,617 57,503
Income from services provided 52 - 14
Commissions 143 - 37
-------- -------- --------
289,068 201,617 76,031
======== ======== ========
B. COST OF SALES
YEAR ENDED DECEMBER 31,
------------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
------------------------- --------
(IN THOUSANDS)
------------------------------------------
Purchases 198,787 154,087 52,285
Materials consumed 9,123 - 2,400
Salaries and related expenses 5,673 - 1,492
Loss on firmly committed orders 3,500 - 921
Transportation 2,031 1,511 534
Depreciation and amortization 2,567 963 675
Maintenance and rent 7,911 3,208 2,080
Other manufacturing costs
and expenses 2,169 2,273 570
-------- -------- --------
231,761 162,042 60,957
Change in raw materials (986) - (259)
Change in finished goods and in
goods in process, (1,936) (5,980) (509)
-------- -------- --------
228,839 156,062 60,189
======== ======== ========
F - 45
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 19 - SELECTED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONT.)
C. SELLING EXPENSES
YEAR ENDED DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------ ------ ------
NIS US DOLLARS
-------------------- ------
(IN THOUSANDS)
----------------------------------
Salaries and related expenses 12,877 9,533 3,387
Sales commissions 4,623 - 1,216
Maintenance and rent 3,700 3,348 973
Vehicles 5,144 3,711 1,353
Advertising and promotion 2,195 1,793 577
Depreciation and amortization 1,544 812 406
Others 1,717 1,405 452
------ ------ ------
31,800 20,602 8,364
====== ====== ======
D. GENERAL AND ADMINISTRATIVE EXPENSES
YEAR ENDED DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------ ------ ------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Salaries and related expenses 8,305 6,045 2,184
Office maintenance 1,279 1,181 336
Professional fees 3,653 2,905 961
Vehicles 509 72 134
Depreciation and amortization 911 657 240
Bad and doubtful debts 702 129 185
Communication 308 296 81
Other 1,196 995 314
------ ------ ------
16,863 12,280 4,435
====== ====== ======
E. EMPLOYEES BENEFIT COSTS
YEAR ENDED DECEMBER 31,
--------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
---------------------- -------
(IN THOUSANDS)
--------------------------------------
Payroll 26,310 15,700 6,920
Employee Benefit Plan expenses 545 (122) 143
------- ------- -------
26,855 15,578 7,063
======= ======= =======
F. DEPRECIATION AND AMORTIZATION
YEAR ENDED DECEMBER 31,
-------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
----- ----- -----
NIS US DOLLARS
------------------ -----
(IN THOUSANDS)
-------------------------------
Depreciation of fixed assets 4,134 2,298 1,088
Amortization of Intangible assets 278 - 73
Amortization of prepaid rental expenses 610 134 160
----- ----- -----
5,022 2,432 1,321
===== ===== =====
F - 46
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 20 - OTHER INCOME AND EXPENSES
A. OTHER INCOME
YEAR ENDED DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Capital gain on fixed assets realization 85 16 22
Other 50 438 13
-------- -------- --------
135 454 35
======== ======== ========
B. OTHER EXPENSES
YEAR ENDED DECEMBER 31,
----------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
-------- -------- --------
NIS US DOLLARS
--------------------- --------
(IN THOUSANDS)
----------------------------------
Loss from statutory suit 1,981 - 521
-------- -------- --------
1,981 - 521
======== ======== ========
NOTE 21 - FINANCE INCOME AND EXPENSES
YEAR ENDED DECEMBER 31,
------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------ ------ ------
NIS US DOLLARS
--------------------- ------
(IN THOUSANDS)
------------------------------------
A. FINANCING INCOME:
Interest income:
Short-term bank deposits 1,474 2,251 387
Changes in value of debentures held for trading 348 193 92
Other 198 77 52
------ ------ ------
Total interest income 2,020 2,521 531
Other:
Changes in fair value of financial assets at fair values (4,836) (68) (1,272)
Realized gain on derivatives 243 - 64
Foreign currency differences (1,602) (518) (421)
Dividends 8 176 2
------ ------ ------
TOTAL FINANCING INCOME (4,167) 2,111 (1,096)
------ ------ ------
B. FINANCING EXPENSES:
Interest expenses:
Bank credit 343 - 90
Short-term loans 226 - 59
long-term loans 130 - 34
Lease obligations 52 - 14
Other 82 104 22
------ ------ ------
TOTAL INTEREST EXPENSE 833 104 219
------ ------ ------
Other:
Decrease in values of warrants to issue shares (1,035) (767) (272)
Realized loss on derivatives - 102 -
Foreign currency differences 286 (38) 75
Bank fees 584 272 154
Other 5 4 1
------ ------ ------
TOTAL OTHER COSTS (160) (427) (42)
====== ====== ======
TOTAL FINANCING COSTS 673 (323) 177
====== ====== ======
F - 47
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 22 - EARNING PER SHARE
A. BASIC EARNINGS PER SHARE
YEAR ENDED DECEMBER 31,
---------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
----------------------- -------
(IN THOUSANDS)
---------------------------------------
Profit for the year from continuing operations
attributable to equity holders of the parent 3,156 11,739 830
Profit for the year from discontinued operations
attributable to equity holders of the parent (3,942) (9,397) (1,036)
------- ------- -------
Earnings used in the calculation of basic earnings per
share from continuing operations (786) 2,342 (206)
======= ======= =======
B. DILUTED EARNINGS PER SHARE
AS OF DECEMBER 31,
---------------------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
----------- ----------- -----------
NIS US DOLLARS
------------------------------- -----------
(IN THOUSANDS)
---------------------------------------------------
Profit used to compute basic earning per share from
continuing operations 3,156 11,739 830
Profit used to compute diluted earning per share
from continuing operations 3,156 11,739 830
Profit used to compute basic earning per share from
discontinued operations (3,942) (9,397) (1,036)
Profit used to compute diluted earning per share
from discontinued operations (3,942) (9,397) (1,036)
Weighted average number of shares used in computing
basic earnings per share from continuing operations 10,267,893 10,267,893 10,267,893
Weighted average number of shares used in computing
diluted earnings per share from continuing operations 10,267,893 10,267,893 10,267,893
Weighted average number of shares used in computing
basic earnings per share from discontinued operations 10,267,893 10,267,893 10,267,893
Weighted average number of shares used in computing
diluted earnings per share from discontinued
operations 10,267,893 10,267,893 10,267,893
=========== =========== ===========
C. The following potential ordinary shares are not dilutive and are
therefore excluded from the weighted average number of ordinary shares
for the purposes of diluted earnings per share:
561,982 as of December 31, 2008 and 2007.
F - 48
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 23 - ACQUISITION OF SUBSIDIARIES
A. SUBSIDIARIES ACQUIRED
PROPORTION OF
DATE OF SHARES COST OF
PRINCIPAL ACTIVITY ACQUISITION ACQUIRED ACQUISITION
------------------------------ --------- -------- --------
2008
Shamir salads Producing and marketing salads 1/1/2008 51% 5,000
The Distributor Marketing food products 1/1/2008 51% 1,454
2007
Baron Marketing food products 13/2/2007 50.1% -
WF Marketing food products 19/1/2007 100% 15,400
B. ANALYSIS OF ASSETS AND LIABILITIES ACQUIRED
SHAMIR SALADS
------------------------------------
FAIR VALUE ON FAIR VALUE ON
BOOK VALUE ADJUSTMENT ACQUISITION
------- ------- -------
CURRENT ASSETS:
Cash & cash equivalents 31 - 31
Trade & other receivables 15,651 - 15,651
Inventories 3,099 - 3,099
NON-CURRENT ASSETS:
Property, Plant & equipment 7,331 - 7,331
Prepaid expenses 818 - 818
Intangible assets - 3,373 3,373
CURRENT LIABILITIES:
Bank credit and short term loan (10,225) - (10,225)
Trade & other payables (13,640) - (13,640)
NON-CURRENT LIABILITIES:
Deferred tax liabilities (74) - (74)
Severance pay, net (286) - (286)
------- ------- -------
2,705 3,373 6,078
NONCONTROLLING INTEREST (2,978)
GOODWILL ON ACQUISITION 1,900
-------
TOTAL 5,000
=======
THE
DISTRIBUTOR
BOOK VALUE
------
CURRENT ASSETS:
Cash & cash equivalents 759
------
NONCONTROLLING INTEREST (372)
GOODWILL ON ACQUISITION 1,067
------
TOTAL 1,454
======
F - 49
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 23 - ACQUISITION OF SUBSIDIARIES (CONT.)
B. ANALYSIS OF ASSETS AND LIABILITIES ACQUIRED (CONT.)
WF KOSHER FOOD DISTRIBUTORS LTD
--------------------------------------
FAIR VALUE ON FAIR VALUE ON
BOOK VALUE ADJUSTMENT ACQUISITION
------- ------- -------
CURRENT ASSETS:
Trade & other receivables 5,402 - 5,402
Inventories 8,142 - 8,142
NON-CURRENT ASSETS:
Property, Plant & equipment 208 - 208
Prepaid expenses 89 - 89
CURRENT LIABILITIES:
Trade & other payables (1,530) - (1,530)
------- ------- -------
12,311 - 12,311
GOODWILL ON ACQUISITION 3,089
------- ------- -------
TOTAL 12,311 - 15,400
======= ======= =======
C. FAIR VALUES DETERMINED ON A PROVISIONAL BASIS
A valuation was performed for the purpose of allocating the
acquisition cost of Shamir Salads and of the Danish company. The
valuation determined, inter alia, that the entire excess cost in the
acquisition of the Danish company should be allocated to goodwill (the
goodwill was written off entirely in examination of its
recoverability), while the acquisition cost of Shamir Salads was
allocated as follows - the value of NIS 1,570 thousand was allocated
to the brand name, the value of NIS 1,364 thousand was allocated to
customer relations, and the value of NIS 439 thousand was allocated to
technological know-how. The value of the goodwill was determined
accordingly - NIS 1,900 thousand.
D. COST OF ACQUISITION
The cost of the joint establishment of the Danish distribution company
was paid in cash. The acquisition cost of Shamir Salads was contingent
upon the sum of the audited net profit, after neutralizing capital
gains that Shamir Salads shall present in its audited financial
statements for the year 2008, being multiplied by 2.55. As of December
31, 2008, and according to the total net profit that Shamir Salads
presented for the year ended December 31, 2008, the sum of the
compensation was calculated on the sum of the advance.
E. NET CASH OUTFLOW ON ACQUISITION
YEAR ENDED DECEMBER 31,
------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
---------------------- -------
(IN THOUSANDS)
------------------------------------
Total purchase consideration 6,454 15,400 1,698
Compensation paid in cash 6,454 15,400 1,698
Less: cash and cash equivalent balances acquired (790) - (208)
------- ------- -------
5,664 15,400 1,490
======= ======= =======
F - 50
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 23 - ACQUISITION OF SUBSIDIARIES (CONT.)
F. GOODWILL ARISING ON ACQUISITION
Goodwill was recognized during the acquisition of Shamir Salads,
because the compensation that was paid within the scope of the
business combination includes sums relating to the expected benefits
from the synergy (cooperation), income growth, and future developments
that are anticipated in the markets of both companies. These benefits
are not recognized separately from the goodwill, since the future
economic benefits deriving from them cannot be reliably measured.
Furthermore, the compensation includes sums relating to benefits
expected from Shamir Salad's experienced manpower; meaning, the costs
that Shamir Salads saved (and that Willi-Food saved indirectly) due to
the fact that Shamir Salads has existing manpower, which eliminated
the need for a general recruitment of employees and job training
(assembled workforce).
Goodwill was recognized during the acquisition of the Danish
distribution company because the compensation that was paid within the
scope of the business combination includes sums relating to the
expected benefits from the synergy (cooperation), increased export
income, and the receipt of licenses to export to the United States.
NOTE 24 - NON-CASH TRANSACTION
During 2008 the group has made a commitment to pay royalties for a brand
name in the amount of NIS 2,000 in thousands over a three years period. As
of December 31, 2008 the amount not yet paid in cash is NIS 1,700 in
thousands.
NOTE 25 - FINANCIAL INSTRUMENTS
A. SIGNIFICANT ACCOUNTING POLICIES
Details of the significant accounting policies and methods adopted,
including the criteria for recognition, the basis of measurement and
the basis on which income and expenses are recognized, in respect of
each class of financial asset, financial liability and equity
instrument are disclosed in note 2 to the financial statements.
B. CATEGORIES OF FINANCIAL INSTRUMENTS
AS OF DECEMBER 31,
-------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
---------------------- -------
(IN THOUSANDS)
-------------------------------------
FINANCIAL ASSETS
Held for trading 9,444 31,267 2,484
Trade and other receivables
(including cash and cash equivalents) 163,679 127,004 43,051
FINANCIAL LIABILITIES
Held for trading 5 1,206 1
Amortized cost 85,804 47,255 22,568
C. OBJECTIVES OF MANAGING FINANCIAL RISKS
The finance departments of the Group provide services to the business
activity, enable access to local and international financial markets,
supervise and manage the financial risks relating to the Group's
activities using internal report that analyze the extent of the risk
exposure according to degree and intensity. These risks include market
risks (including currency risk, fair value risk in respect of the
interest rates, price risk and cash flow risk in respect of the
interest rates), credit risk and liquidity risk.
The Group reduces the impact of the aforesaid risks from time to time
by using derivative financial instruments in order to hedge the risk
exposures, such derivatives are not designated as hedges for
accounting purposes. Derivatives are used according to the Group's
policy, which was approved by the boards of directors. The policy
prescribes principles regarding: management of currency risk, interest
rate risk, credit risk, the use of derivatives and of non-derivative
financial instruments, and investment of liquidity surplus. The
compliance with policy and the exposure levels are reviewed by the
internal auditor on a continuing basis.
F - 51
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 25 - FINANCIAL INSTRUMENTS (CONT.)
C. OBJECTIVES OF MANAGING FINANCIAL RISKS (CONT.)
The financial management departments of the Group report to the
investment committee of the Group and to the board of directors of the
Company about the risks and about implementation of the assimilated
policy in order to minimize the risk exposures.
D. MARKET RISK
The Group's activity exposes it mainly to financial risks of
fluctuations in the exchange rates of foreign currency and/or changes
in the prices of the imported products and/or changes in the interest
rates. The Group purchases forward foreign-currency swap contracts, as
needed, opens documentary credit to suppliers, and carries out orders
for imported goods.
During the report period, no change occurred in the exposure to market
risks or in the way by which the Group manages or measures the risk
E. LIQUIDITY RISK MANAGEMENT
The following table presents the Group's outstanding contractual
maturity profile for its non-derivative financial liabilities. The
analysis presented is based on the undiscounted contractual maturities
of the Group's financial liabilities, including any interest that will
accrue. Non-interest bearing financial liabilities which are due to be
settled in less than 12 months from maturity equal their carrying
values, since the impact of the time value of money is immaterial over
such a short duration.
MATURITY PROFILE OF OUTSTANDING FINANCIAL LIABILITIES'
1 YEAR 1-5 YEARS TOTAL
------- ------- -------
2008
Interest free 65,813 2,166 67,979
Lease agreement liability 333 271 604
Instruments bearing variable interest 17,322 - 17,322
------- ------- -------
Total 83,468 2,437 85,905
======= ======= =======
2007
Interest free 40,565 1,752 42,317
Instruments bearing variable interest - 5,978 5,978
------- ------- -------
Total 40,565 7,730 48,295
======= ======= =======
F. EXCHANGE RATE RISK
The Group undertakes certain transactions denominated in foreign
currencies. Hence, exposures to exchange rate fluctuations arise.
Exchange rate exposures are managed within approved policy parameters
utilizing forward foreign exchange contracts.
The carrying amounts of the Group's foreign currency denominated
monetary assets and monetary liabilities at reporting date are as
follows:
LIABILITIES ASSETS
-------------------- --------------------
2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7
------ ------ ------ ------
NIS NIS NIS NIS
------ ------ ------ ------
USD 30,464 27,683 17,465 21,400
EUR 2,347 968 870 3,650
DKK 3,841 - 4,004 -
Other - - - 1
F - 52
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 25 - FINANCIAL INSTRUMENTS (CONT.)
F. EXCHANGE RATE RISK (CONT.)
The Group is mainly exposed to USD and EUR.
The following table details the Group's sensitivity to a 10% increase
and decrease in the NIS against the relevant foreign currencies. 10%
is the sensitivity rate used when reporting foreign currency risk
internally to key management personnel and represents management's
assessment of the reasonably possible change in foreign exchange
rates. The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their translation at
the period end for a 10% change in foreign currency rates. A positive
number below indicates an increase in profit and other equity where
the NIS strengthens 10% against the relevant currency. For a 10%
weakening of the NIS against the relevant currency, there would be an
equal and opposite impact on the profit and other equity, and the
balances below would be negative.
USD IMPACT EUR IMPACT
------ ------
2008 2008
------ ------
NIS NIS
------ ------
Profit or loss (1) 1,300 148
USD IMPACT EUR IMPACT
------ ------
2007 2007
------ ------
NIS NIS
------ ------
Profit or loss (1) 629 (269)
(1) This is mainly attributable to the exposure outstanding on
receivables, cash and payables at year end in the Group, and
forward foreign exchange contracts.
FORWARD FOREIGN EXCHANGE CONTRACTS
The Group enters into forward foreign exchange contracts to manage the
risk associated with anticipated sales and purchase transactions,
which are treated as non hedging instruments. The resulting gain or
loss is recognized in profit or loss immediately.
The following table details the forward foreign currency (FC)
contracts outstanding as at reporting date:
AVERAGE EXCHANGE RATE FOREIGN CURRENCY CONTRACT VALUE FAIR VALUE
--------------------- -------------------- -------------------- --------------------
2008 2007 2008 2007 2008 2007 2008 2007
------ ------ ------ ------ ------ ------ ------ ------
CURRENCY CURRENCY NIS NIS NIS NIS
NIS NIS THOUSANDS THOUSANDS THOUSANDS THOUSANDS THOUSANDS THOUSANDS
------ ------ ------ ------ ------ ------ ------ ------
CASH FLOWS HEDGES
PURCHASE OF USD SELL NIS 3.5878 4.1081 900 6,000 3,349 23,261 77 (184)
PURCHASE OF EUR SELL NIS 5.2585 5.6243 - 300 - 1,680 - 18
------ ------
77 (166)
====== ======
G. FAIR VALUE OF FINANCIAL INSTRUMENTS
The financial instruments of the Group consist of derivative and non
derivative assets and liabilities. Non-derivative assets include cash
and cash equivalents, receivables and other current assets.
Non-derivative liabilities include short-term bank credit, trade
payables, other current liabilities and long-term loans from banks and
others. Derivative assets and liabilities include mainly foreign
exchange forward contracts (2007 - also included index swap
contracts). Due to the nature of these financial instruments, their
fair value, generally, is identical or close to the value at which
they are presented in the financial statements, unless stated
otherwise.
The fair value of the long-term loans approximates their carrying
value, since they bear interest at rates close to the prevailing
market rates.
F - 53
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 26 - DISCONTINUED OPERATIONS
A. DISPOSAL OF EXPORT OPERATION
During 2009, Gold Frost Ltd. ("Gold Frost") signed an agreement to
sell Gold Frost's 51% interest in a Danish dairy distributor
("Distributor") to the Distributor and/or to the Distributor other
shareholder ("Other Shareholder") for $400,000. Gold Frost acquired
its 51% interest from the Other Shareholder in February 2008.
According to the terms of the agreement, an amount equal to the
balance of outstanding invoices owed by Gold Frost to the Distributor
will be deducted as a downpayment, and the rest will be paid by
deduction in the purchase price by a pre-determined amount for each
shipment of goods that Gold Frost will purchase from the Distributor
or from the Other Shareholder, and the balance of the consideration,
if any, will be paid in April 2011.
Gold Frost was granted the exclusive right to distribute all of the
products of the Distributor and the Other Shareholder in Israel until
April 2012, as long as Gold Frost purchases a minimum quantity of
products from the Distributor or from the Other Shareholder at fair
market prices and that meet specified quality standards.
On September 2, 2009 the Company had signed an agreement ("Agreement")
to sell all of its holdings in Y.L.W Baron International Trading Ltd.
("Baron"), kosher food exporters located in Israel, and to assign all
of its rights and obligations under the founders agreement from
February 2007 to a private company owned by the Baron Family, who
hold, as of the date of the Agreement the remaining shares in Baron.
In exchange for the sale of shares and the assignment of rights and
obligations, the Baron Family agreed to pay US$ 937,500, which was
paid to the Company on the date of execution of the Agreement.
The disposals of Baron and the Danish dairy distributor carried out
all of the Group's export operation.
B. ANALYSIS OF PROFIT FOR THE YEAR FROM DISCONTINUED OPERATIONS
The profits and cash flows from discontinued operation have been
re-presented to include this operation classified as discontinued in
the presented years ended December 31, 2008 and 2007.
The results of the discontinued operation (i.e. export operation)
included in the income statement are set out below.
YEAR ENDED DECEMBER 31,
---------------------------------------
2008 2007 2008
------- ------- -------
NIS US DOLLARS
----------------------- -------
PROFIT FOR THE YEAR FROM DISCONTINUED OPERATIONS
Revenue 63,442 50,316 16,686
Expenses 66,601 58,587 17,517
------- ------- -------
Loss before tax (3,159) (8,271) (831)
Attributable income tax expense 337 477 88
------- ------- -------
(3,496) (8,748) (919)
======= ======= =======
Loss for the year from discontinued operations (attributable
to owners of the Company) (3,942) (9,397) (1,036)
======= ======= =======
The disposal of Baron and Danish dairy together with previously abandoned
operations of WF construed the exit of the export operations. As such, the
results of Baron, Danish dairy and WF has been presented as discontinued
operations. These financial statements have been recasted to show these
operations as discontinued in all periods presented.
F - 54
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 27 - BUSINESS AND GEOGRAPHIC SEGMENTS
A. ADOPTION OF IFRS 8 OPERATING SEGMENTS
The Group has adopted IFRS 8 Operating Segments with effect from
January 1, 2009. IFRS 8 requires operating segments to be identified
on the basis of internal reports about components of the Group that
are regularly reviewed by the chief operating decision maker in order
to allocate resources to the segments and to assess their performance.
In contrast, the predecessor Standard (IAS 14 Segment Reporting)
required an entity to identify two sets of segments (business and
geographical), using a risks and returns approach, with the entity's
`system of internal financial reporting to key management personnel'
serving only as the starting point for the identification of such
segments. As a result, following the adoption of IFRS 8, the
identification of the Group's reportable segments has changed.
In prior years, segment information reported externally was analysed
on the basis of the types of goods supplied and services provided by
the Group's operating divisions (i.e. types of products the Group
sells which are Preserved and Non-preserved products). However,
information reported to the Group's chief operating decision maker for
the purposes of resource allocation and assessment of segment
performance is more specifically focussed on the types of operations.
The principal of operations are import, manufacturing and export. The
Group's reportable segments under IFRS 8 are therefore as follows:
IMPORT SEGMENTS- derive its revenues from importing and marketing food
products to grocery stores, supermarkets and grocery retail chains.
MANUFACTURING SEGMENT- derive its revenues from manufacturing and
marketing food products to grocery stores, supermarkets and grocery
retail chains.
EXPORT SEGMENT (discontinued- see note 26) - derived its revenues from
exporting and marketing food products to grocery stores, supermarkets
and grocery retail chains. These financial statements have been
recasted to give the effect of adoption of IFRS8 to all period
presented.
The segment information reported on the next pages does not include
any amounts for the discontinued export operation, which is described
in more detail in note 26.
Information regarding the Group's reportable segments for years ended
December 31, 2008 and 2007, which is presented below, has been
restated to conform to the requirements of IFRS 8.
B. DATA REGARDING BUSINESS SEGMENTS
YEAR ENDED DECEMBER 31, 2008
IMPORT MANUFACTURING ADJUSTMENTS TOTAL
------- ------- ------- -------
YEAR ENDED DECEMBER 31, 2008:
Revenues from external customers 218,820 70,248 - 289,068
Revenues from subsidiaries 379 143 (522) -
------- ------- ------- -------
TOTAL REVENUES 219,199 70,391 (522) 289,068
======= ======= ======= =======
PROFIT BEFORE INCOME TAXES 3,645 1,235 - 4,880
Income taxes 750 367 - 1,117
------- ------- ------- -------
PROFIT FROM CONTINUING OPERATIONS 2,895 868 - 3,763
======= ======= ======= =======
F - 55
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 27 - BUSINESS AND GEOGRAPHIC SEGMENTS (CONT.)
B. DATA REGARDING BUSINESS SEGMENTS (CONT.)
DISCONTINUED EXPORT
IMPORT MANUFACTURING OPERATIONS ADJUSTMENTS TOTAL
-------- -------- -------- -------- --------
DECEMBER 31, 2008:
TOTAL SEGMENT ASSETS 216,205 39,948 18,237 (1,048) 273,342
SEGMENT LIABILITIES (42,914) (31,102) (14,792) (1,048) (87,760)
YEAR ENDED DECEMBER 31, 2007 (*)
IMPORT ADJUSTMENTS TOTAL
------- ------- -------
YEAR ENDED DECEMBER 31, 2007:
Revenues from external customers 201,617 - 201,617
Revenues from subsidiaries - - -
------- ------- -------
TOTAL REVENUES 201,617 - 201,617
======= ======= =======
PROFIT BEFORE INCOME TAXES 15,561 - 15,561
Income taxes 2,174 - 2,174
------- ------- -------
PROFIT FROM CONTINUING OPERATIONS 13,387 - 13,387
======= ======= =======
(*) THE MANUFACTURING OPERATION WAS ACQUIRED IN 2008 THROUGH THE
ACQUISITION OF SHAMIR SALADS. SEE NOTE 23.
DISCONTINUED EXPORT
IMPORT OPERATIONS ADJUSTMENTS TOTAL
-------- -------- -------- --------
DECEMBER 31, 2007:
TOTAL SEGMENT ASSETS 229,497 22,168 (12,213) 239,452
SEGMENT LIABILITIES (33,172) (27,886) 12,213 (48,845)
F - 56
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 27 - BUSINESS AND GEOGRAPHIC SEGMENTS (CONT.)
B. DATA REGARDING GEOGRAPHICAL SEGMENTS (CONT.)
REVENUES BY GEOGRAPHICAL MARKETS
-------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
---------------------- -------
(IN THOUSANDS)
-------------------------------------
Israel 282,053 199,064 74,186
North America 2,749 2,553 723
Europe 4,250 - 1,118
Others 16 - 4
------- ------- -------
289,068 201,617 76,031
======= ======= =======
PURCHASE COST OF SEGMENT
(TANGIBLE AND INTANGIBLE) ASSETS
-------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
---------------------- -------
(IN THOUSANDS)
-------------------------------------
Israel 64,623 48,621 16,997
North America - 577 -
Europe 144 - 37
------- ------- -------
64,767 49,198 17,034
======= ======= =======
SEGMENT ASSETS
-------------------------------------
DECEMBER 31,
-------------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
---------------------- -------
(IN THOUSANDS)
-------------------------------------
Israel 269,084 230,546 70,774
North America 46 8,906 12
Europe 4,212 - 1,108
------- ------- -------
273,342 239,452 71,894
======= ======= =======
F - 57
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 28 - RELATED PARTIES
Transactions between the Company and its subsidiaries, which are related
parties of the Company, have been eliminated on consolidation and are not
disclosed in this note. Details of transactions between the group and other
related parties are disclosed below:
A. TRANSACTIONS WITH RELATED PARTIES
YEAR ENDED DECEMBER 31,
---------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
-------------------- -------
(IN THOUSANDS)
---------------------------------
Purchases of goods 586 1,568 154
======= ======= =======
Participation in expenses 70 67 18
======= ======= =======
Management fees 2,650 2,404 697
======= ======= =======
Bonus 75 762 20
======= ======= =======
B. BALANCES WITH RELATED PARTIES
YEAR ENDED DECEMBER 31,
---------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
-------------------- -------
(IN THOUSANDS)
---------------------------------
Due to officers 223 844 59
======= ======= =======
Parent company 1,467 3,101 386
======= ======= =======
F - 58
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 29 - BORROWINGS
SECURED LIABILITIES
AS OF DECEMBER 31,
-------------------------------
2 0 0 8 2 0 0 7 2 0 0 8(*)
------- ------- -------
NIS US DOLLARS
------------------- -------
(IN THOUSANDS)
-------------------------------
Bank credit 4,514 - 1,187
Bank loans 8,871 - 2,333
Liability relating to Lease agreement 584 - 154
------- ------- -------
13,969 - 3,674
======= ======= =======
NOTE 30 - SUBSEQUENT EVENTS
1. The Company the commenced a tender offer on February 5, 2009 (that was
extended on March 5, 2009) to purchase from the holders of shares
and/or depositary interests of Gold Frost all of the issued and
outstanding share capital of Gold Frost not already held by the
Company for a price of 5 pence per share or per depositary interest in
cash has expired. The tender offer had been subject to the condition
that the number of shares and depositary interests duly tendered
constitute, upon expiration of the offer period and together with the
shares held by the Company at such time, more than 95 per cent of the
issued and outstanding share capital of Gold Frost. Such condition was
not met. As a result, the Company will not purchase any of the Gold
Frost shares that have been tendered.
2. On April 16, 2009 a purported class action lawsuit had been filed
against the Company. The complaint alleges that the Company misled its
customers by illegal marking of a product that the Company imports and
sells as "sugar free", according to The Israeli Consumer Protection
Law, 1981.
The group, which the lawsuit desires to represent are any Israeli
resident who bought this product due to such person's preference for a
sugar free or a reduced sugar product (the "GROUP"). According to the
plaintiff, the Group consists of 2,000 customers. The plaintiff
appraises its own damages at NIS 2,000 (approximately USD 500) and the
damages of the entire Group to be NIS 4 million (approximately USD 1
million).
At this preliminary stage, the Company is examining the plaintiff's
alleged claims, and it will respond and relate to the allegations, to
the extent necessary, after its examination and after consulting with
its legal advisors.
F - 59
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 31 - TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS'S)
A. GENERAL
Following the publication of Accounting Standard No. 29, "the Adoption
of International Financial Reporting Standards (IFRS)" in July 2006,
the Company adopted IFRS starting January 1, 2008.
Pursuant to the provisions of IFRS 1, which deals with the first-time
adoption of IFRS, and considering the date in which the Company
elected to adopt these standards for the first time, the financial
statements which the Company must draw up in accordance with IFRS
rules, are the consolidated financial statement as of December 31,
2008, and for the year ended on that date. The date of transition of
the Company to reporting under IFRS, as it is defined in IFRS 1, is
January 1, 2007 (hereinafter: "the transition date"), with an opening
balance sheet as of January 1, 2007 (hereinafter: "Opening Balance").
Under the opening balance sheet, the Company performed the following
reconciliations:
o Recognition of all assets and liabilities whose recognition is
required by IFRS.
o De-recognition of assets and liabilities if IFRS do not permit
such recognition.
o Classification of assets, liabilities and components of equity
according to IFRS.
o Application of IFRS in the measurement of all recognized assets
and liabilities.
IFRS 1 states that all IFRS shall be adopted retroactively for the
opening balance sheet. At the same time, IFRS 1 includes 14 relieves,
in respect of which the mandatory retroactive implementation does not
apply. The Company chose to implement two relieves. See note 31f.
Changes in the accounting policy which the Company implemented
retroactively in the opening balance sheet under IFRS, compared to the
accounting policy in accordance with Generally Accepted Accounting
Principles in Israel, were recognized directly under Retained Earnings
or another item of Shareholders' Equity, as the case may be.
This note is formulated on the basis of International Financial
Reporting Standards and the notes thereto as they stand today, that
have been published and entered into force or that may be adopted
earlier as at the Group's first annual reporting date according to
IFRS, December 31, 2008.
Listed below are the Company's consolidated balance sheets as of
January 1, 2007, and December 31, 2007, and the consolidated statement
of income and the shareholders' equity for the year ended on December
31, 2007 prepared in accordance with International Accounting
Standards. In addition, the table presents the material
reconciliations required for the transition from reporting under
Israeli GAAP to reporting under IFRS.
F - 60
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 31 - TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS'S) (CONT.)
B. RECONCILIATION OF BALANCE SHEETS FROM ISRAELI GAAP TO IFRS
DECEMBER 31, 2007 JANUARY 1, 2007
------------------------------------------ ------------------------------------------
EFFECT OF EFFECT OF
ISRAELI TRANSITION TO ISRAELI TRANSITION TO
GAAP IFRS IFRS GAAP IFRS IFRS
-------- -------- -------- -------- -------- --------
NIS IN THOUSANDS NIS IN THOUSANDS
------------------------------------------ ------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 61,649 61,649 91,398 91,398
Marketable securities 31,267 31,267 13,945 13,945
Trade receivables 63,798 63,798 48,233 48,233
Other receivables 2,776 (256) 2,520 2,585 2,585
Inventories 31,020 31,020 21,015 21,015
-------- -------- -------- -------- -------- --------
Total current assets 190,510 (256) 190,254 177,176 177,176
-------- -------- -------- -------- -------- --------
NON-CURRENT ASSETS
Property, plant and
equipment 55,310 (10,741) 44,569 49,213 (10,741) 38,472
Less -Accumulated
depreciation 8,355 8,355 6,442 6,442
-------- -------- -------- -------- -------- --------
46,955 (10,741) 36,214 42,771 (10,741) 32,030
Goodwill 1,795 1,795 - -
Intangible assets 103 103 - -
Prepaid rental expenses 208 10,607 10,815 - 10,741 10,741
Deferred taxes 115 156 271 94 (94) -
-------- -------- -------- -------- -------- --------
Total non-current assets 49,176 22 49,198 42,865 (94) 42,771
======== ======== ======== ======== ======== ========
TOTAL ASSETS 239,686 (234) 239,452 220,041 (94) 219,947
======== ======== ======== ======== ======== ========
EQUITY AND LIABILITIES
CURRENT LIABILITIES
Short-term bank credit 5,978 5,978 - - -
Trade payables 34,330 34,330 20,772 - 20,772
Other payables and accrued
expenses 7,013 288 7,301 12,081 (3) 12,078
-------- -------- -------- -------- -------- --------
Total current liabilities 47,321 288 47,609 32,853 (3) 32,850
-------- -------- -------- -------- -------- --------
NON-CURRENT LIABILITIES
Employees Benefits 460 (297) 163 347 (62) 285
Warrants to issue shares - 1,040 1,040 348 1,459 1,807
Deferred taxes - 33 33 - 195 195
-------- -------- -------- -------- -------- --------
Total non-current
liabilities 460 776 1,236 695 1,592 2,287
-------- -------- -------- -------- -------- --------
Noncontrolling interest 18,613 (18,613) - 14,754 (14,754) -
-------- -------- -------- -------- -------- --------
CAPITAL AND RESERVES
Share capital 1,113 1,113 1,113 1,113
Premium 61,350 (2,294) 59,056 61,350 (2,294) 59,056
Foreign currency
translation reserve (414) (414) - -
Retained earnings 111,243 990 112,233 109,276 615 109,891
Noncontrolling interest - 18,619 18,619 - 14,750 14,750
-------- -------- -------- -------- -------- --------
173,292 17,315 190,607 171,739 13,071 184,810
======== ======== ======== ======== ======== ========
TOTAL EQUITY AND LIABILITIES 239,686 (234) 239,452 220,041 (94) 219,947
======== ======== ======== ======== ======== ========
F - 61
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 31 - TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS'S) (CONT.)
C. RECONCILIATION OF INCOME STATEMENTS FROM ISRAELI GAAP TO IFRS
YEAR ENDED DECEMBER 31, 2007
------------------------------------------
EFFECT OF
ISRAELI GAAP TRANSITION TO IFRS IFRS
-------- -------- --------
NIS IN THOUSANDS
------------------------------------------
Revenue 201,617 - 201,617
Cost of sales 155,928 134 156,062
-------- -------- --------
GROSS PROFIT 45,689 134 45,555
-------- -------- --------
OPERATING COSTS AND EXPENSES
Selling expenses 20,743 (141) 20,602
General and administrative expenses 12,374 (94) 12,280
Other (income) expenses - (454) (454)
-------- -------- --------
33,117 (689) 32,428
-------- -------- --------
OPERATING PROFIT 12,572 555 13,127
Finance income 2,016 95 2,111
Finance expenses - (323) (323)
Other income 454 (454) -
-------- -------- --------
PROFIT BEFORE TAX 15,042 519 15,561
Income tax charge 2,040 134 2,174
-------- -------- --------
PROFIT FROM CONTINUING OPERATIONS 13,002 385 13,387
-------- -------- --------
PROFIT FROM DISCONTINUED OPERATIONS (8,748) - (8,748)
-------- -------- --------
PROFIT FOR THE PERIOD 4,254 385 4,639
======== ======== ========
Attributable to:
Equity holders of the Company 1,967 375 2,342
Noncontrolling interest 2,287 10 2,297
-------- -------- --------
NET INCOME 4,254 385 4,639
======== ======== ========
F - 62
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 31 - TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS'S) (CONT.)
D. EQUITY RECONCILIATION
FOREIGN CURRENCY
SHARE TRANSLATION RETAINED
CAPITAL PREMIUM RESERVE EARNINGS TOTAL
-------- -------- -------- -------- --------
YEAR ENDED DECEMBER 31, 2007
ISRAELI GAAP 1,113 61,350 (414) 111,243 173,292
======== ======== ======== ======== ========
EFFECT OF TRANSITION TO IFRS
UNDER IFRS RULES - (2,294) - 990 (1,304)
======== ======== ======== ======== ========
BALANCE - JANUARY 1, 2007
ISRAELI GAAP 1,113 61,350 - 109,276 171,739
======== ======== ======== ======== ========
EFFECT OF TRANSITION TO IFRS
UNDER IFRS RULES - (2,294) - 615 (1,679)
======== ======== ======== ======== ========
E. ADDITIONAL INFORMATION
1. DEFERRED TAXES
In accordance with generally accepted accounting principles in
Israel, deferred tax assets or liabilities were classified as
current or non-current assets or liabilities depending on the
classification of the assets or liabilities in respect of which
they were created.
Pursuant to IAS 1, deferred tax assets or liabilities are
classified as non-current assets or liabilities, respectively.
Consequently, amounts of NIS 289 thousand and NIS 94 thousand
which were previously presented under accounts payable and under
non-current assets, respectively, were reclassified to deferred
taxes under non-current liabilities as of January 1, 2007.
As of December 31, 2007, amounts of NIS 256 thousand and NIS 133
thousand which were previously presented under accounts
receivable and under accounts payable, respectively, were
reclassified to deferred taxes under non-current liabilities in
the amount of NIS 33 thousand and to deferred taxes under
non-current assets in the amount of NIS 271 thousand.
2. LEASE FROM THE ISRAELI LAND AUTHORITY ("ILA")
Leasehold rights In accordance with Previous GAAP: Though
December 31, 2006, leasehold rights were presented under
property, plant and equipments.
In accordance with IFRSs: Leasehold rights are presented within
prepaid expenses.
The effect on the balance sheet as of January 1, 2007 was an
increase in prepaid expenses of NIS 10,741 thousand against
decrease of NIS 10,741 thousand in property, plant and
equipments.
The effect on the balance sheet as of December 31, 2007 was an
increase in prepaid expenses of NIS 10,607 thousand and decrease
in property, plant and equipment in the amount of NIS 10,741
thousand. The change in the year 2007 of NIS 134 thousand has
been attributed to the P&L in Cost of sales.
F - 63
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 31 - TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS'S) (CONT.)
E. ADDITIONAL INFORMATION (Cont.)
3. WARRANTS TO ISSUE SHARES
Under Israeli GAAP warrants with exercise price linked to the CPI
can be treated as permanent equity.
Under IFRS IAS 32, if terms of a derivative financial instrument
are such that it is not settled by the issuer exchanging a fixed
amount of cash or another financial asset for a fixed number of
its own equity instruments it should be classified as liability,
carried at fair value with changes in fair values recorded in
earnings.
Hence, warrants with exercise price linked to the CPI with fair
values of NIS 1,459 and NIS 1,040 as of January 1, 2007 and
December 31, 2007 respectively has been recognized as liability.
As a result of that classification changes in fair values of NIS
2,294 were recorded in retained earnings balance as of January 1,
2007 and changes in fair values of NIS 419 were recorded in
earnings for the year ended December 31, 2007.
4. NONCONTROLLING INTEREST
In accordance with Previous GAAP: Noncontrolling interest was
presented in the balance sheet between the liabilities and
shareholders' equity as a quasi- equity item.
The minority share in results of subsidiary was presented as
income (expense) within the Group's consolidated income
statements.
In accordance with IFRSs: Noncontrolling interest is presented
within the shareholders' equity. The Minority share in result of
subsidiaries is not included in the consolidated income
statements as income (expense) but rather the total profit (loss)
is attributed to the Company and the minority.
The effect on the balance sheet as of January 1, 2007 was an
increase in Shareholders' equity of NIS 13,071 thousand against
decrease of NIS 14,750 thousand in liabilities.
The effect on the balance sheet as of December 31, 2007 was an
increase in Shareholders' equity of NIS 17,315 thousand and
decrease in liabilities in the amount of NIS 18,619 thousand.
F - 64
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS IN THOUSANDS)
NOTE 31 - TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS'S) (CONT.)
E. ADDITIONAL INFORMATION (CONT.)
5. EMPLOYEES BENEFITS
In accordance with generally accepted accounting principles in
Israel, the Company's liability for severance pay is calculated
based on the recent salary of the employee multiplied by the
number of years of employment.
Pursuant to IAS 19, the provision for severance pay is calculated
according to an actuarial basis taking into account the
anticipated duration of employment, the value of time, the
expected salary increases until retirement and the possible
retirement under conditions not entitling severance pay.
Discount rate used in the calculations was based on yields on
governmental bonds as the Company believes that there is no deep
market for high quality corporate bonds. The issue of deep market
is still under consideration and the decision regarding deep
market may be changed. The use of market yields on highly rated
corporate bond would have the effect of decreasing the Company's
obligation since the discount rate would have been higher than
the governmental bond yields used under the assumption of no deep
market.
As of December 31, 2007, the nominal discount rate used in the
calculations was 5.8% and was determined in reference to Shachar
governmental bond.
In addition, under Israeli GAAP, deposits made with regular
policies or directors' insurance policies which are not in the
employee's name, but in the name of the employer, were also
deducted from the Company's liability.
Under IFRS, regular policies or directors' insurance policies as
aforesaid, which do not meet the definition of plan assets under
IAS 19, will be presented in the balance sheet under a separate
item and will not be deducted from the employer's liability.
The impact of the aforesaid on the balance sheet is decrease
employee benefit obligation in the amounts of NIS 62 thousand and
NIS 297 thousand as of January 1, 2007 and December 31, 2007,
respectively.
The Company adopted a policy to recognize actuarial gains and
losses immediately in earnings.
F. RELIEFS WITH RESPECT TO THE RETROACTIVE IMPLEMENTATION OF IFRS ADOPTED
BY THE COMPANY
IFRS 1 includes several reliefs, in respect of which the mandatory
retroactive implementation does not apply. The Company elected to
adopt in its opening balance sheet under IFRS as of January 1, 2007
(hereinafter: "the opening balance sheet") the reliefs with regards
to:
Business Combinations, in accordance to the relief, the Company chose
not to retroactively implement the provisions of IFRS 3 regarding to
business combination which occurred before January 1, 2007.
Consequently goodwill and adjustments due to fair value of
subsidiaries that where acquired before January 1, 2007 are treated in
accordance to generally accepted accounting principles in Israel.
F - 65
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2009
60
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
------- ------- ------- -------
2 0 0 9 2 0 0 8 2 0 0 9 2 0 0 8
------- ------- ------- -------
NIS US DOLLARS (*)
--------------------- ---------------------
(IN THOUSANDS)
-------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 105,618 78,749 28,105 20,955
Financial assets carried at fair value through
profit or loss 4,843 9,367 1,289 2,493
Trade receivables 71,750 79,599 19,093 21,181
Other receivables and prepaid expenses 3,163 3,987 841 1,061
Current tax assets - 2,456 - 653
Inventories 27,512 34,417 7,321 9,158
------- ------- ------- -------
TOTAL CURRENT ASSETS 212,886 208,575 56,649 55,501
------- ------- ------- -------
FIXED ASSETS
Cost 56,005 55,574 14,903 14,788
Less: accumulated depreciation 16,002 13,467 4,258 3,583
------- ------- ------- -------
40,003 42,107 10,645 11,205
------- ------- ------- -------
Prepaid expenses 12,853 12,539 3,420 3,337
Goodwill 1,935 3,829 515 1,019
Intangible assets, net 4,779 5,181 1,272 1,379
Deferred taxes 324 1,111 86 295
------- ------- ------- -------
TOTAL NON-CURRENT ASSETS 59,894 64,767 15,938 17,235
======= ======= ======= =======
272,780 273,342 72,587 72,736
======= ======= ======= =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Short-term bank credit 14,950 17,562 3,978 4,673
Trade payables 45,161 53,728 12,017 14,297
Accruals 78 6,197 21 1,649
Current tax liabilities 2,817 1,050 750 279
Other payables and accrued expenses 7,205 4,971 1,917 1,323
Employees Benefits 2,518 2,544 670 677
------- ------- ------- -------
TOTAL CURRENT LIABILITIES 72,729 86,052 19,353 22,898
------- ------- ------- -------
NON-CURRENT LIABILITIES
Long-term bank loans 23 267 6 71
Deferred taxes 464 442 124 118
Warrants to issue shares - 5 - 1
Employees Benefits 1,046 994 278 265
------- ------- ------- -------
TOTAL LONG TERM LIABILITIES 1,533 1,708 408 455
------- ------- ------- -------
SHAREHOLDERS' EQUITY
Share capital NIS 0.10 par value
(authorized - 50,000,000 shares, issued
and outstanding - 10,267,893 shares) 1,113 1,113 296 296
Additional paid in capital 59,056 59,056 15,715 15,715
Capital fund 247 247 66 66
Foreign currency translation reserve 660 369 176 98
Retained earnings 134,071 111,447 35,676 29,656
Noncontrolling interest 3,371 13,350 897 3,552
------- ------- ------- -------
198,518 185,582 52,826 49,383
======= ======= ======= =======
272,780 273,342 72,587 72,736
======= ======= ======= =======
(*) Convenience translation into U.S. dollars
F - 1
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS THREE MONTHS NINE MONTHS
---------------------------- ---------------------------- ----------------------------
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------------------------------------------- ----------------------------
2 0 0 9 2 0 0 8 2 0 0 9 2 0 0 8 2 0 0 9 2 0 0 8
---------- ---------- ---------- ---------- ---------- ----------
NIS US DOLLARS (*)
---------------------------------------------------------------- ----------------------------
I N T H O U S A N D S (EXCEPT PER SHARE AND SHARE DATA)
----------------------------------------------------------------------------------------------------
Sales 223,704 218,122 68,628 69,424 59,527 58,042
Cost of sales 164,015 163,058 46,435 55,443 43,644 43,390
---------- ---------- ---------- ---------- ---------- ----------
GROSS PROFIT 59,689 55,064 22,193 13,981 15,883 14,652
---------- ---------- ---------- ---------- ---------- ----------
Selling expenses 23,056 24,126 7,813 8,201 6,135 6,420
General and administrative
expenses 14,940 13,553 5,367 4,445 3,976 3,606
Other (Income)
Expense (5,312) 1,916 (5,208) (65) (1,414) 510
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 32,684 39,595 7,972 12,581 8,697 10,536
---------- ---------- ---------- ---------- ---------- ----------
OPERATING INCOME 27,005 15,469 14,221 1,400 7,186 4,116
Financial income 1,677 (1,588) 752 (74) 446 (423)
Financial expense 975 (15) 387 312 259 (4)
---------- ---------- ---------- ---------- ---------- ----------
Income before taxes on income 27,707 13,896 14,586 1,014 7,373 3,697
Taxes on income 4,515 3,106 1,710 (350) 1,201 827
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS 23,192 10,790 12,876 1,364 6,172 2,870
INCOME FROM DISCONTINUED
OPERATIONS 353 (1,935) (1,410) (722) 93 (514)
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME 23,545 8,855 11,466 642 6,265 2,356
========== ========== ========== ========== ========== ==========
ATTRIBUTABLE TO:
Owners of the company 22,624 6,697 11,129 88 6,020 1,782
Non - controlling interests 921 2,158 337 554 245 574
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME 23,545 8,855 11,466 642 6,265 2,356
========== ========== ========== ========== ========== ==========
Earnings per share data:
Earnings per share:
Basic from continuing
operations 2.20 0.88 1.23 0.08 0.59 0.23
========== ========== ========== ========== ========== ==========
Basic from discontinued
operations - (0.23) (0.15) (0.07) - (0.06)
========== ========== ========== ========== ========== ==========
BASIC 2.20 0.65 1.08 0.01 0.59 0.17
========== ========== ========== ========== ========== ==========
Diluted from continuing
operations 2.20 0.88 1.23 0.08 0.59 0.23
========== ========== ========== ========== ========== ==========
Diluted from discontinued
operations - (0.23) (0.15) (0.07) - (0.06)
========== ========== ========== ========== ========== ==========
DILUTED 2.20 0.65 1.08 0.01 0.59 0.17
========== ========== ========== ========== ========== ==========
Shares used in computing basic
and diluted earnings per
ordinary share: 10,267,893 10,267,893 10,267,893 10,267,893 10,267,893 10,267,893
========== ========== ========== ========== ========== ==========
(*) Convenience translation into U.S. dollars
F - 2
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
FOREIGN
ADDITIONAL CURRENCY
SHARE PAID IN CAPITAL TRANSLATION RETAINED GROSS NONCONTROLLING
CAPITAL CAPITAL FUND ADJUSTMENTS EARNINGS AMOUNT INTEREST TOTAL
-------- -------- -------- -------- -------- -------- -------- --------
NIS
-------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
BALANCE - JANUARY 1, 2008 1,113 59,056 - (414) 112,233 171,988 18,619 190,607
Currency translation differences - - - 783 - 783 (41) 742
Noncontrolling interests in newly acquired subsidiary - - - - - - 3,350 3,350
Purchase of noncontrolling interest - - 247 - - 247 (9,362) (9,115)
Dividend paid to noncontrolling interests - - - - - - (269) (269)
Net income for the period - - - - (786) (786) 1,053 267
-------- -------- -------- -------- -------- -------- -------- --------
BALANCE - DECEMBER 31, 2008 1,113 59,056 247 369 111,447 172,232 13,350 185,582
Currency translation differences - - - 60 - 60 13 73
Dividend paid to noncontrolling interests - - - - - - (101) (101)
Disposal of subsidiary - - - 231 - 231 (10,812) (10,581)
Net income for the period - - - - 22,624 22,624 921 23,545
-------- -------- -------- -------- -------- -------- -------- --------
BALANCE - SEPTEMBER 30, 2009 1,113 59,056 247 660 134,071 195,147 3,371 198,518
======== ======== ======== ======== ======== ======== ======== ========
F - 3
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS THREE MONTHS NINE MONTHS
---------------------- ---------------------- ----------------------
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------------------------------- ----------------------
2 0 0 9 2 0 0 8 2 0 0 9 2 0 0 8 2 0 0 9(*) 2 0 0 8(*)
-------- -------- -------- -------- -------- --------
NIS US DOLLARS
-------------------------------------------------- ----------------------
(IN THOUSANDS)
------------------------------------------------------------------------------
CASH FLOWS - OPERATING ACTIVITIES
Profit for the period from continuing
operations 23,192 10,790 12,876 1,364 6,172 2,870
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY CONTINUING OPERATING
ACTIVITIES:
Depreciation and amortization 3,451 3,161 1,150 1,109 918 841
Deferred expenses 766 266 304 100 204 71
Deferred income taxes 809 157 335 (339) 215 42
Capital Gain on disposal of property
plant and equipment (67) (16) 40 (16) (18) (4)
Capital Gain on purchase of additional
shares in subsidiary (5,245) - (5,245) - (1,396) -
Unrealized loss (gain) on marketable
securities (2,033) 1,332 (429) 1,026 (541) 355
Revaluation of loans from banks and others 27 58 (25) 27 7 15
Change in value of warrants to issue
shares (5) (982) - (43) (1) (261)
Employees benefit, net 52 114 41 30 14 30
CHANGES IN ASSETS AND LIABILITIES:
Decrease (Increase) in:
Trade accounts receivable (4,501) (1,782) 2,755 (886) (1,198) (474)
Receivables and other current assets 3,124 (1,237) 1,049 (864) 831 (329)
Inventory 6,311 (3,826) (7,338) 3,193 1,679 (1,018)
Increase (Decrease) in:
Trade accounts payable (394) 1,409 2,813 3,821 (105) 375
Payables and other current liabilities (1,432) 2,327 (3,771) (1,212) (381) 619
-------- -------- -------- -------- -------- --------
NET CASH PROVIDED BY CONTINUING OPERATING
ACTIVITIES 24,055 11,771 4,555 7,310 6,400 3,132
-------- -------- -------- -------- -------- --------
NET CASH PROVIDED BY DISCONTINUED
OPERATING ACTIVITIES 1,293 4,011 127 2,063 344 1,067
-------- -------- -------- -------- -------- --------
(*) Convenience translation into U.S. dollars.
F - 4
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS THREE MONTHS NINE MONTHS
---------------------- ---------------------- ----------------------
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------------------------------- ----------------------
2 0 0 9 2 0 0 8 2 0 0 9 2 0 0 8 2 0 0 9(*) 2 0 0 8(*)
-------- -------- -------- -------- -------- --------
NIS US DOLLARS
-------------------------------------------------- ----------------------
(IN THOUSANDS)
------------------------------------------------------------------------------
CASH FLOWS - INVESTING ACTIVITIES
Proceeds from realization (purchase) of
marketable securities, net 6,557 (2,029) 7,736 (632) 1,745 (540)
Purchase of additional shares in
subsidiary (2,314) (9,250) (2,314) - (616) (2,461)
Purchase of subsidiaries - (7,164) - - - (1,906)
Disposal of subsidiary 2,185 - 2,192 - 581 -
Acquisition of property plant and
equipment (1,423) (2,165) (216) (499) (379) (576)
Additions to intangible assets - (175) - (125) - (47)
Additions to prepaid expenses (1,117) (1,243) (120) (242) (297) (331)
Long term deposit, net (65) (12) (62) (10) (17) (3)
Proceeds from sale of property plant and
Equipment 256 16 51 16 68 4
-------- -------- -------- -------- -------- --------
NET CASH FROM (USED IN) CONTINUING
INVESTING ACTIVITIES 4,079 (22,022) 7,267 (1,492) 1,085 (5,860)
-------- -------- -------- -------- -------- --------
NET CASH USED IN DISCONTINUED INVESTING
ACTIVITIES (23) (360) - (224) (6) (96)
-------- -------- -------- -------- -------- --------
CASH FLOWS - FINANCING ACTIVITIES
Short-term bank credit, net (695) (2,159) (1,077) (2,159) (185) (575)
Repayment of loans (1,423) (1,043) (460) (345) (378) (277)
Proceeds of loans 587 5,958 - 4,007 156 1,585
-------- -------- -------- -------- -------- --------
NET CASH FROM (USED IN) CONTINUING
FINANCING ACTIVITIES (1,531) 2,756 (1,537) 1,503 (407) 733
-------- -------- -------- -------- -------- --------
NET CASH FROM (USED IN) DISCONTINUED
FINANCING ACTIVITIES (990) (2,137) 111 (432) (263) (568)
-------- -------- -------- -------- -------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 26,883 (5,981) 10,523 8,728 7,153 (1,592)
-------- -------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE FINANCIAL PERIOD 78,749 61,649 95,249 46,712 20,955 16,405
NET FOREIGN EXCHANGE DIFFERENCE ON CASH
AND CASH OPERATION (14) (277) (154) (49) (3) (74)
======== ======== ======== ======== ======== ========
CASH AND CASH EQUIVALENTS OF THE END OF
THE FINANCIAL PERIOD 105,618 55,391 105,618 55,391 28,105 14,739
======== ======== ======== ======== ======== ========
(*) Convenience translation into U.S. dollars.
F - 5
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, 2008 included in the Company's Annual
Report on Form 20-F.
The Company's consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRSs") as
issued by the International Accounting Standards Board ("IASB").
The unaudited condensed consolidated financial statements of which these
notes are a part, have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for annual financial statements. In the
opinion of our management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation of the
financial information as of and for the periods presented have been
included.
ACCOUNTING POLICIES
The significant accounting policies followed in the preparation of these
interim financial statements are identical to those applied in the
preparation of the latest annual financial statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
RECLASSIFICATION
Certain amounts in prior years' financial statements have been reclassified
in order to conform to 2009 presentation.
NOTE 2 - MATERIAL EVENTS
1. On May 14, 2009 the Company received a notice from the minority
shareholders of Shamir Salads (2006) Ltd. ("Shamir Salads" and the
"Sellers", respectively), with whom the Company had entered into a January
2, 2008 agreement to purchase approximately 51% of the shares of Shamir
Salads (the "Shamir Agreement"), cancelling the Shamir Agreement due to an
alleged violation of the Agreement by the Company. In addition, on May 18,
2009, the Sellers notified the Company that the board of directors and the
shareholders of Shamir Salads had convened without the Company's board and
shareholder representatives and resolved to cancel the Shamir Agreement,
change Shamir Salads' board composition and signatory rights, and replace
the articles of association of Shamir Salads depriving the Company of its
board representation and signatory rights in Shamir Salads.
The Company's position is that the Sellers' actions referred to above are
illegal, violate the Shamir Agreement and Shamir Salads' articles of
association and were not properly authorized by Shamir Salads. The Company
believes that the actions taken by the Sellers are in response to the claim
by the Company that the Sellers return a portion of the advance payment
made by the Company to the Sellers in connection with the acquisition of
shares in Shamir Salads. The Company has claimed that the Sellers made
false representations to the Company as to the 2008 financial results of
Shamir Salads, inflating the amount of the advance payment made by the
Company, and the Sellers have not responded to this claim.
F - 6
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL EVENTS (CONT.)
The Company submitted an urgent application to the district court in Tel
Aviv requesting, among other things, a declaratory judgement that the
Shamir Agreement is in full force and effect and various injunctions
against the Sellers.
On May 27, 2009, the district court in Tel Aviv issued a temporary
injunction against the Sellers. Pursuant to the injunction issued by the
court, the Sellers are prohibited from taking any action not in accordance
with the signatory rights in Shamir Salads in effect prior to May 18, 2009,
performing any disposition of the shares of Shamir Salads held by the
Company, taking any action not in accordance with the articles of
association of Shamir Salads as in effect prior to May 18, 2009, and/or
interfering with the functions of Shamir Salads' board of directors as
composed prior to May 18, 2009. In addition, pursuant to the injunction,
the Sellers are prohibited from interfering with the functions of the
co-CEO of Shamir Salads nominated by the Company and/or from preventing the
deputy CFO of Shamir Salads from participating in the discussions to
approve the financial statements of Shamir Salads.
On June 17, 2009, the Sellers petitioned the district court in Tel Aviv for
temporary relief against us and others, a declaratory judgement and other
relief in connection with an alleged fundamental breach by us of the Shamir
Agreement and for the return of the shares in Shamir Salads and the
consideration paid therefore.
On June 22, 2009, in a hearing which took place before the Hon.
Vice-President of the District Court, Judge Y. Zaft, it was agreed to (i)
suspend the proceedings between the parties, (ii) to appoint the Hon. Judge
Eliyahu Vinograd (ret.) as arbitrator in all aspects of the dispute which
is the subject of these proceedings, (iii) to hear any claim that either of
the parties has against the other, in anything concerning and emanating
from the contractual relations between them, as well as their status in the
company, and to decide any dispute concerning the conduct of the parties as
shareholders in the company, including temporary relief, and (iv) that the
application for temporary relief that was filed by the Sellers be struck
out. The temporary injunction against the Sellers will remain in effect
until the arbitration procedures will end.
In the framework of these proceedings the Company submitted a claim for
declaratory reliefs in the matter so that the Seller's notice of
cancellation of the agreement was given unlawfully and is void, as well as
for an advance that was paid in excess and of additional damages that were
caused us in a sum of approximately NIS.3.9 million.
F - 7
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL EVENTS (CONT.)
In the framework of the arbitration being conducted between the parties, on
August 4, 2009, the Sellers submitted a counterclaim against us and others
for declaratory orders determined in proceedings that were submitted to the
court, as well as for payment to Sellers of a sum of NIS.6.97 million for
non-payment of the consideration in the agreement and tarnishing the
Sellers' reputation and good name, and a sum of NIS.3.5 million to the
Shamir Salads for damages that the Company allegedly caused it and its
reputation, as well as a petition to split relief. Claims for additional
relief against additional defendants (not the Company) were also included
in the framework of the claim.
On September, 22, 2009, filing of the complaints and primary evidence
declarations on behalf of the parties was completed.
On October 20, 2009, a preliminary meeting was held in the chambers of the
Hon. arbitrator, during which the manner of hearing the witnesses and
evidence in the claim was arranged.
The evidentiary stage of the arbitration proceedings commenced on November
3, 2009.
2. Following a tender offer for shares and/or depositary interests of Gold
Frost Ltd. ("Gold Frost"), that the Company commenced on February 5, 2009
(see note 29(1) to the financial statements of the Company for the year
ended December 31, 2008) and which had expired, the Company commenced a
second tender offer on June 22, 2009 to purchase from the holders of shares
and/or depositary interests of Gold Frost all of the issued and outstanding
share capital of Gold Frost not already held by the Company (which at the
time of the tender offer held approximately 89.99 per cent of the issued
and outstanding share capital of Gold Frost) for a price of 7 pence per
share or per depositary interest in cash. The tender offer was subject to
the condition that the number of shares and depositary interests duly
tendered constitute, together with the shares held by the Company at such
time, more than 95 per cent of the issued and outstanding share capital of
Gold Frost.
On July 27, 2009 the Company announced that it had successfully completed
the tender offer. As of the time of expiration of the tender offer, an
aggregate of 2,706,388 Gold Frost shares and depositary interests were duly
tendered. Such shares and depositary interestes constituted, together with
the shares held by the Company, more than 95 per cent of the issued and
outstanding share capital of Gold Frost. In accordance with Israeli law,
the Company purchased all of the issued and outstanding Gold Frost shares
and depositary interests that had not been owned by it at the time of the
tender offer (including those not tendered in the tender offer) at the
tender offer price and will pay an aggregate amount of approximately
(pound)370,430 for all such shares and depositary interests.
NOTE 3 - DISCONTINUED OPERATIONS
A. DISPOSAL OF EXPORT OPERATION
During 2009, Gold Frost signed an agreement to sell Gold Frost's 51%
interest in a Danish dairy distributor ("Distributor") to the Distributor
and/or to the Distributor other shareholder ("Other Shareholder") for
$400,000. Gold Frost acquired its 51% interest from the Other Shareholder
in February 2008. According to the terms of the agreement, an amount equal
to the balance of outstanding invoices owed by Gold Frost to the
Distributor will be deducted as a downpayment, and the rest will be paid by
deduction in the purchase price by a pre-determined amount for each
shipment of goods that Gold Frost will purchase from the Distributor or
from the Other Shareholder, and the balance of the consideration, if any,
will be paid in April 2011.
Gold Frost was granted the exclusive right to distribute all of the
products of the Distributor and the Other Shareholder in Israel until April
2012, as long as Gold Frost purchases a minimum quantity of products from
the Distributor or from the Other Shareholder at fair market prices and
that meet specified quality standards.
On September 2, 2009 the Company had signed an agreement ("Agreement") to
sell all of its holdings in Y.L.W Baron International Trading Ltd.
("Baron"), kosher food exporters located in Israel, and to assign all of
its rights and obligations under the founders agreement from February 2007
to a private company owned by the Baron Family, who hold, as of the date of
the Agreement the remaining shares in Baron.
F - 8
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - DISCONTINUED OPERATIONS (CONT).
In exchange for the sale of shares and the assignment of rights and
obligations, the Baron Family agreed to pay US$ 937,500, which was paid to
the Company on the date of execution of the Agreement.
The disposals of Baron and the Danish dairy distributor carried out all of
the Group's export segment.
B. ANALYSIS OF PROFIT FOR THE YEAR FROM DISCONTINUED OPERATIONS
The profits and cash flows from discontinued operation have been
re-presented to include this operation classified as discontinued in the
presented years ended December 31, 2008 and 2007.
The results of the discontinued operation (i.e. export segment) included in
the income statement are set out below.
NINE MONTHS THREE MONTHS NINE MONTHS
---------------------- ---------------------- ----------------------
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------------------------------- ----------------------
2 0 0 9 2 0 0 8 2 0 0 9 2 0 0 8 2 0 0 9(*) 2 0 0 8(*)
-------- -------- -------- -------- -------- --------
NIS US DOLLARS
-------------------------------------------------- ----------------------
(IN THOUSANDS)
------------------------------------------------------------------------------
PROFIT FOR THE PERIOD FROM DISCONTINUED
OPERATIONS
Revenue 30,533 48,772 3,566 9,890 8,125 12,978
Expenses 30,066 50,409 4,940 10,607 8,001 13,413
-------- -------- -------- -------- -------- --------
Profit (loss) before tax 467 (1,637) (1,374) (717) 124 (435)
Attributable income tax expense 114 298 36 5 31 79
-------- -------- -------- -------- -------- --------
353 (1,935) (1,410) (722) 93 (514)
Profit (loss) for the period from
discontinued operations (attributable to
owners of the Company) 24 (2,324) (1,465) (748) 6 (618)
F - 9
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - SEGMENT INFORMATION
A. ADOPTION OF IFRS 8 OPERATING SEGMENTS
The Group has adopted IFRS 8 Operating Segments with effect from January 1,
2009. IFRS 8 requires operating segments to be identified on the basis of
internal reports about components of the Group that are regularly reviewed
by the chief operating decision maker in order to allocate resources to the
segments and to assess their performance. In contrast, the predecessor
Standard (IAS 14 Segment Reporting) required an entity to identify two sets
of segments (business and geographical), using a risks and returns
approach, with the entity's `system of internal financial reporting to key
management personnel' serving only as the starting point for the
identification of such segments. As a result, following the adoption of
IFRS 8, the identification of the Group's reportable segments has changed.
In prior years, segment information reported externally was analysed on the
basis of the types of goods supplied and services provided by the Group's
operating divisions (i.e. types of products the Group sells which are
Preserved and Non-preserved products). However, information reported to the
Group's chief operating decision maker for the purposes of resource
allocation and assessment of segment performance is more specifically
focussed on the types of operations.
The principal of operations are import, manufacturing and export. The
Group's reportable segments under IFRS 8 are therefore as follows:
IMPORT SEGMENTS- derive its revenues from importing and marketing food
products to end-customers, supermarkets and grocery retail chains.
MANUFACTURING SEGMENT- derive its revenues from manufacturing and marketing
food products to end-customers, supermarkets and grocery retail chains.
EXPORT SEGMENT (discontinued- see below)- derived its revenues from
exporting and marketing food products to end-customers, supermarkets and
grocery retail chains.
The segment information reported on the next pages does not include any
amounts for the discontinued export operation, which is described in more
detail in note 3.
Information regarding the Group's reportable segments is presented below.
Amounts reported for the prior year have been restated to conform to the
requirements of IFRS 8
F - 10
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - SEGMENT INFORMATION (CONT.)
B. DATA REGARDING BUSINESS SEGMENTS
NINE MOUNTHS ENDED SEPTEMBER 30, 2009
IMPORT MANUFACTURING ADJUSTMENTS TOTAL
-------- -------- -------- --------
Revenues from external customers 168,671 55,033 - 223,704
Revenues from subsidiaries 104 - (104) -
-------- -------- -------- --------
TOTAL REVENUES 168,775 55,033 (104) 223,704
======== ======== ======== ========
Profit (loss) before income taxes 27,750 (43) - 27,707
Income taxes 4,493 22 - 4,515
-------- -------- -------- --------
PROFIT FROM CONTINUING OPERATIONS 23,257 (65) - 23,192
======== ======== ======== ========
THREE MOUNTHS ENDED SEPTEMBER 30, 2009
IMPORT MANUFACTURING ADJUSTMENTS TOTAL
-------- -------- -------- --------
Revenues from external customers 49,812 18,816 - 68,628
Revenues from subsidiaries - - - -
-------- -------- -------- --------
TOTAL REVENUES 49,812 18,816 - 68,628
======== ======== ======== ========
Profit before income taxes 13,812 774 - 14,586
Income taxes 1,506 204 - 1,710
-------- -------- -------- --------
PROFIT FROM CONTINUING OPERATIONS 12,306 570 - 12,876
======== ======== ======== ========
NINE MOUNTHS ENDED SEPTEMBER 30, 2008
IMPORT MANUFACTURING ADJUSTMENTS TOTAL
-------- -------- -------- --------
Revenues from external customers 164,081 54,041 - 218,122
Revenues from subsidiaries 590 - (590) -
-------- -------- -------- --------
TOTAL REVENUES 164,671 54,041 (590) 218,122
======== ======== ======== ========
Profit before income taxes 10,902 2,994 - 13,896
Income taxes 2,556 550 - 3,106
-------- -------- -------- --------
PROFIT FROM CONTINUING OPERATIONS 8,346 2,444 - 10,790
======== ======== ======== ========
THREE MOUNTHS ENDED SEPTEMBER 30, 2008
IMPORT MANUFACTURING ADJUSTMENTS TOTAL
-------- -------- -------- --------
Revenues from external customers 49,998 19,426 - 69,424
Revenues from subsidiaries 386 - (386) -
-------- -------- -------- --------
TOTAL REVENUES 50,384 19,426 (386) 69,424
======== ======== ======== ========
Profit before income taxes (40) 1,054 - 1,014
Income taxes (350) - - (350)
-------- -------- -------- --------
PROFIT FROM CONTINUING OPERATIONS 310 1,054 - 1,364
======== ======== ======== ========
F - 11
Sample Kosher Products
Dried Fruit,
Mixed Nuts, Halva
& Turkish Delight
Chilled &
Frozen Goods
Pasta, Rice
& Noodles
Canned Fruit
& Vegetables
Oils, Lemon
Juice & Vinegar
Pickled Goods
Canned Fish
Pastry & Cereals
Coffee Whitener
& Tea
Mediterranean styled
hummus, dips and
spreads
Mushrooms
Cheese, Butter
& Margarine
61
|
|
G. WILLI-FOOD
ORDINARY SHARES
PROSPECTUS
Through and including , 2009 (the 25th day after the date of this
offering), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to a dealer's obligation to deliver a prospectus when acting
as an underwriter and with respect to an unsold allotment or subscription.
62
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
EXEMPTION OF OFFICE HOLDERS UNDER THE ISRAELI COMPANIES LAW
The Israeli Companies Law of 1999, or the Companies Law, provides that an
Israeli company cannot exculpate an office holder from liability with respect to
a breach of his duty of loyalty, but may exculpate in advance an office holder
from his liability to the company, in whole or in part, with respect to a breach
of his duty of care (except in connection with distributions), provided the
articles of association of the company allow it to do so. Our Articles of
Association allow us to do so.
The Companies Law was amended to permit indemnification of reasonable
litigation expenses as well, including attorneys' fees, expended by the office
holder as a result of an investigation or proceeding instituted against him by a
competent authority, provided that such investigation or proceeding concluded
without the filing of an indictment against him and either (A) concluded without
the imposition of any financial liability in lieu of criminal proceedings or (B)
concluded with the imposition of a financial liability in lieu of criminal
proceedings but relates to a criminal offense that does not require proof of
criminal intent.
The amendment to the Companies Law also provides that an undertaking by a
company to indemnify an office holder must be limited to events which its board
of directors deems to be foreseeable in light of our actual operations at the
time of the undertaking and limited to a sum or criterion that the board of
directors determines to be reasonable under the circumstances, and the
undertaking must delineate those events and such sum or criterion which the
board determined to be reasonable. This amendment to the Companies Law imposes
these conditions only on undertakings to indemnify an office holder for
financial liabilities imposed by judgments but not for litigation expenses.
The Companies Law provides that a company may not indemnify an office
holder for, nor enter into an insurance contract that would provide coverage for
any monetary liability incurred as a result of any of the following:
o a breach by the office holder of his duty of loyalty unless the office
holder acted in good faith and had a reasonable basis to believe that
the act would not prejudice the company;
o a breach by the office holder of his duty of care if such breach was
done intentionally or recklessly; excluding mere negligence;
o any act or omission done with the intent to derive an illegal personal
benefit; or
o any fine levied against the office holder as a result of a criminal
offense.
REQUIRED APPROVALS
In addition, pursuant to the Companies Law, indemnification of and
procurement of insurance coverage for our office holders must be approved by its
audit committee and board of directors and, for indemnification and insurance
for directors, also by its shareholders.
II - 1
INSURANCE AND INDEMNIFICATION OF DIRECTORS AND OFFICERS UNDER OUR ARTICLES OF
ASSOCIATION
On May 4, 2005, the Audit Committee of the Board of Directors and the Board
of Directors approved and on July 20, 2005 the General Meeting of shareholders
approved, the complete restatement of our Articles of Association in order to
conform our Articles of Association to the revised provisions of the Israeli
Companies Law. Subject to the provisions of the Israeli Companies Law, under our
amended Articles of Association, the Company is permitted to exempt in advance
any director or officer from any liability to the Company attributed to damage
or loss caused by breach of the director's or officer's duty of care owed to the
Company, except for such breach of duty of care in distribution (as defined by
the Companies Law). Subject to the provisions of the Companies Law, the Company
may procure directors' and officer's liability insurance for the following:
o breach of duty of care by any director or officer owed to the Company
or any other person;
o breach of fiduciary duty by any director or officer owed to the
Company, provided that such director or officer acted in good faith
and had a reasonable basis to assume that the action would not harm
the interests of the Company; or
o a monetary liability imposed on the director or officer in favor of a
third party due to activities carried out in his capacity as a
director or officer of the Company.
Subject to the provisions of the Companies Law, the Company may undertake
retroactively to indemnify a director or company officer in respect of a
liability or expense imposed on him or incurred by him as a result of an act
carried out in his capacity as a director of officer of the company. Such
indemnity may be issued in respect of a liability or expense as follows:
o a monetary liability imposed on the director or officer in favor of a
third party under a judgment, including a judgment by way of
compromise of a judgment of an arbitrator approved by a court;
o reasonable litigation expenses, including attorneys' fees, incurred by
the director or officer due to an inquiry he was under or a proceeding
filed against him by an authority, that ended without filing a charge
sheet and without having incurred any monetary liability as an
alternative to the criminal proceedings, or that ended without filing
a charge sheet but with an imposition of a monetary liability as an
alternative to the criminal proceedings in an offense not requiring
proof of criminal intent; or
o reasonable litigation expenses, including attorneys' fees, incurred by
the director or officer charged to him by the court, in a proceeding
filed against him by or on behalf of the Company or by any other
person, or for a criminal charge from which he was acquitted or for a
criminal charge in which he was found guilty of an offense not
requiring proof of criminal intent.
Subject to the provisions of the Companies Law, the Company may undertake
in advance to indemnify a director or officer in respect of a liability or
expense imposed on him as a result of an act carried out in his capacity as a
director or officer, provided that the undertaking will be limited as follows:
o a monetary liability imposed on the director or officer in favor of a
third party under a judgment, including a judgment by way of
compromise or a judgment of an arbitrator approved by a court.
However, such undertaking will be limited to the kinds of events that
in the Board's opinion are foreseeable at the time of the issue of the
undertaking and will be limited to the amount fixed by the Board as
reasonable under the circumstances, and that the kinds of events and
the amounts will be mentioned in such undertaking in writing;
II - 2
o reasonable litigation expenses, including attorney's fees incurred by
the director or officer due to an inquiry he was under or a proceeding
filed against him by an authority, that ended without filing a charge
sheet and without having incurred any monetary liability as an
alternative to the criminal proceedings, or that ended without filing
a charge sheet but with an imposition of a monetary liability as an
alternative to the criminal proceedings, in an offense not requiring
proof of criminal intent; and
o reasonable litigation expenses, including attorney's fees, incurred by
the director or officer or charged to him by the court, in a
proceeding filed against him by or on behalf of the company or by any
other person, or for a criminal charge from which he was acquitted or
for a criminal charge in which he was found guilty of an offense not
requiring proof of criminal intent.
On May 4, 2005, the Audit Committee of the Board of Directors and the Board
of Directors also approved an exemption in advance to any Director or Officer
from any liability to the Company attributed to damage or loss caused by breach
of the director's or officer's duty of care owed to the Company, except for such
breach of duty of care in distribution (as such term is defined in the Israeli
Companies Law).
Also, the Audit Committee of the Board of Directors and the Board of
Directors approved an irrevocable indemnification of the officers by the Company
with respect to any liability or expense paid for by the officer or that the
officer may be obligated to pay. On July 20, 2005, the aforementioned exemption
and the aforementioned irrevocable indemnification were approved by the
shareholders of the Company.
ITEM 7. RECENT SALE OF UNREGISTERED SECURITIES
On October 5, 2006, we completed a private placement of our ordinary shares
pursuant to a Securities Purchase Agreement entered into between us and certain
accredited investors on September 20, 2006. Pursuant to the terms of this
purchase agreement, these investors purchased from us an aggregate of 1,652,893
ordinary shares at a price of $6.05 per share and warrants to purchase 495,866
ordinary shares with an exercise price of $8.00 per share. The warrants have
since expired without exercise.
We issued these ordinary shares and warrants to purchase our ordinary
shares in reliance upon an exemption from registration pursuant to Regulation D
promulgated under the Securities Act of 1933, as amended.
ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See the Exhibit Index on the page immediately preceding the exhibits for a
list of exhibits filed as part of this registration statement on Form F-1, which
Exhibit Index is incorporated herein by reference.
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
II - 3
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
PROVIDED, HOWEVER, that paragraphs (1)(i), (1)(ii) and (1)(iii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrants pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) To file a post-effective amendment to the Registration Statement to
include any financial statements required by Item 8.A of Form 20-F at the start
of any delayed offering or throughout a continuous offering. A post-effective
amendment need not be filed to include financial statements and information
required by Section 10(a)(3) of the Securities Act or Rule 3-19 of this chapter
if such financial statements and information are contained in periodic reports
filed with or furnished to the commission by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Form F-1.
(5) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
II - 4
(6) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
(7) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against the
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II - 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Yavne, State of Israel, on the 19th day of November,
2009.
G. WILLI-FOOD INTERNATIONAL LTD.
By: /s/ JOSEPH WILLIGER
-----------------------
Joseph Williger
Chief Executive Officer
By: /s/ ZWI WILLIGER
-----------------------
Zwi Williger
Chief Operating Officer
and Chairman
POWER OF ATTORNEY
We, the undersigned directors and/or officers of G. Willi-Food
International Ltd. (the "Company"), hereby severally constitute and appoint
Joseph Williger and Zwi Williger, and each of them singly, our true and lawful
attorneys, with full power to any of them, and to each of them singly, to sign
for us and in our names in the capacities indicated below the registration
statement on Form F-1 filed herewith, and any and all pre-effective and
post-effective amendments to said registration statement, and any registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, in connection with the registration under the Securities Act of 1933,
as amended, of equity securities of the Company, and to file or cause to be
filed the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as each of them might or could do in
person, and hereby ratifying and confirming all that said attorneys, and each of
them, or their substitute or substitutes, shall do or cause to be done by virtue
of this Power of Attorney.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ JOSEPH WILLIGER Chief Executive Officer and Director November 19, 2009
------------------- (principal executive officer)
Joseph Williger
/s/ ZWI WILLIGER Chief Operating Officer and Chairman November 19, 2009
-------------------
Zwi Williger
/s/ ETY SABACH Chief Financial Officer November 19, 2009
-------------------
Ety Sabach
/s/ RACHEL BAR-ILAN Director November 19, 2009
-------------------
Rachel Bar-Ilan
/s/ ARIEL HERZFELD Director November 19, 2009
-------------------
Ariel Herzfeld
/s/ ETTI COHEN Director November 19, 2009
-------------------
Etti Cohen
Pursuant to the requirements of the Securities Act of 1933, as amended, the
undersigned, the duly authorized representative in the United States of G.
Willi-Food International Ltd. has signed this registration statement on the 19th
of November, 2009.
PUGLISI & ASSOCIATES
By: /s/ DONALD J. PUGLISI
-------------------------
Donald J. Puglisi
Managing Director
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
+1.1 Memorandum of Association of the Company, as amended (1)
1.2 Articles of Association of the Company, as amended (4)
2.1 Form of Underwriting Agreement**
2.2 Specimen of Certificate for ordinary shares (2)
4.1 Share Option Plan (2)
+4.2 Management Agreement between the Company and Yossi Willi Management
Investments Ltd., dated June 1, 1998 (3)
+4.3 Amendment to the Management Agreement between the Company and Yossi
Willi Management Investments Ltd., dated August 1, 2005 (4)
+4.4 Management Agreement between the Company and Zwi W. & Co. Ltd., dated
June 1, 1998 (3)
+4.5 Amendment to the Management Agreement between the Company and Zwi W. &
Co., Ltd., dated August 1, 2005 (4)
+4.6 Lease of Company's premises with Titanic Food Ltd., dated November 23,
1998 (3)
+4.7 Services Agreement between the Company and Willi Food, dated April 1,
1997 (3)
+4.8 Transfer Agreement between the Company and Gold Frost dated February
16, 2006 (4)
+4.9 Lease agreement for Logistics Center between the Company and Gold
Frost dated February 16, 2006 (4)
4.10 Securities Purchase Agreement, dated as of October 25, 2006, among the
Company and the investors identified on the signature pages thereto.
(5)
4.11 Registration Rights Agreement, dated as of October 25, 2006, among the
Company and the investors signatory thereto. (5)
4.12 Asset Purchase Agreement, dated as of January 19, 2007, by and among
the Company, WF Kosher Food Distributors, Ltd., Laish Israeli Food
Products Ltd. and Arie Steiner.(6)
+4.13 Agreement, dated January 2, 2008, between the Company and Mr. Jacob
Ginsberg, Mr. Amiram Guy and Shamir Salads 2006 Ltd. (6)
5.1** Opinion of M. Firon & Co.
8.1 Subsidiaries of the Company (6)
23.1** Consent of Israeli counsel (included in Exhibit 5.1)
23.2* Consent of Brightman Almagor Zohar & Co.
24.1* Power of Attorney (included on signature page)
----------
+ English translations from Hebrew original.
(1) Incorporated by Reference to the Registrant's Annual Report on Form 20-F
for the Fiscal year ended December 31, 1997.
(2) Incorporated by reference to our Registration Statement on Form F-1, File
No. 333-6314.
(3) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
year ended December 31, 2001.
(4) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
year ended December 31, 2005.
(5) Incorporated by reference to our Registration Statement on Form F-3, File
No. 333-138200.
(6) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
year ended December 31, 2007.
* Filed Herewith
** To be Filed by Amendment