G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, JUNE 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 95,250 78,749 24,305 20,094
Financial assets carried at fair value through profit or loss 12,150 9,367 3,100 2,390
Trade receivables 82,383 79,599 21,021 20,311
Other receivables and prepaid expenses 4,230 3,987 1,079 1,017
Current tax assets 351 2,456 90 627
Inventories 20,513 34,417 5,234 8,782
-------- -------- -------- --------
TOTAL CURRENT ASSETS 214,877 208,575 54,829 53,221
-------- -------- -------- --------
FIXED ASSETS
Cost 56,056 55,574 14,304 14,181
Less: accumulated depreciation and amortization 15,069 13,467 3,845 3,436
-------- -------- -------- --------
40,987 42,107 10,459 10,745
-------- -------- -------- --------
Prepaid expenses 12,975 12,539 3,311 3,199
Goodwill 3,829 3,829 977 977
Intangible assets 4,961 5,181 1,266 1,322
Deferred taxes 454 1,111 116 283
-------- -------- -------- --------
TOTAL NON-CURRENT ASSETS 63,206 64,767 16,129 16,526
======== ======== ======== ========
278,083 273,342 70,958 69,747
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term bank credit 16,498 17,562 4,210 4,481
Trade payables 46,568 53,728 11,883 13,710
Accruals 5,328 6,197 1,360 1,581
Current tax liabilities 2,054 1,050 524 268
Other payables and accrued expenses 6,607 4,971 1,685 1,268
Employees Benefits 2,384 2,544 608 649
-------- -------- -------- --------
TOTAL CURRENT LIABILITIES 79,439 86,052 20,270 21,957
-------- -------- -------- --------
NON-CURRENT LIABILITIES
Long-term bank loans 144 267 37 68
Deferred taxes 259 442 66 113
Warrants to issue shares - 5 - 1
Employees Benefits 1,005 994 256 254
-------- -------- -------- --------
TOTAL LONG TERM LIABILITIES 1,408 1,708 359 436
-------- -------- -------- --------
SHAREHOLDERS' EQUITY
Share capital NIS 0.10 par value (authorized - 50,000,000
shares, issued and outstanding - 10,267,893 shares 1,113 1,113 284 284
Premium 59,056 59,056 15,069 15,069
Capital fund 247 247 63 63
Foreign currency translation reserve 324 369 83 94
Retained earnings 122,942 111,447 31,371 28,438
Noncontrolling interest 13,554 13,350 3,459 3,406
-------- -------- -------- --------
197,236 185,582 50,329 47,354
======== ======== ======== ========
278,083 273,342 70,958 69,747
======== ======== ======== ========
(*) Convenience translation into U.S. dollars
F - 2
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS THREE MONTHS SIX MONTHS
------------------------- ------------------------- -------------------------
ENDED JUNE 30, ENDED JUNE 30,
------------------------------------------------------- -------------------------
2 0 0 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 179,328 185,481 83,758 79,036 45,758 47,328
Cost of sales 139,674 138,659 65,893 62,271 35,640 35,381
---------- ---------- ---------- ---------- ---------- ----------
GROSS PROFIT 39,654 46,822 17,865 16,765 10,118 11,947
---------- ---------- ---------- ---------- ---------- ----------
Selling expenses 15,427 17,538 7,462 8,436 3,936 4,475
General and administrative
expenses 10,887 13,901 5,463 7,752 2,778 3,547
Other (income) expense (1,333) 1,981 (1,238) 1,981 (340) 505
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 24,981 33,420 11,687 18,169 6,374 8,527
---------- ---------- ---------- ---------- ---------- ----------
OPERATING INCOME (EXPENSE) 14,673 13,402 6,178 (1,404) 3,744 3,420
Financial income 935 (1,514) 263 (771) 239 (386)
Financial expense 646 (75) (69) (1,042) 165 (19)
---------- ---------- ---------- ---------- ---------- ----------
Income (expense) before taxes
on income 14,962 11,963 6,510 (1,133) 3,818 3,053
Taxes on income 2,883 3,750 1,189 312 736 957
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) AFTER TAXES ON
INCOME 12,079 8,213 5,321 (1,445) 3,082 2,096
========== ========== ========== ========== ========== ==========
RELATED TO:
Company Shareholders' 11,495 6,609 5,319 (1,986) 2,933 1,687
Minority interest 584 1,604 2 541 149 409
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) 12,079 8,213 5,321 (1,445) 3,082 2,096
========== ========== ========== ========== ========== ==========
Earnings per share data:
Earnings per share:
Basic 1.12 0.64 0.52 (0.19) 0.29 0.16
========== ========== ========== ========== ========== ==========
Diluted 1.12 0.64 0.52 (0.19) 0.29 0.16
========== ========== ========== ========== ========== ==========
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 - 3
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
FOREIGN
CURRENCY
SHARE SHARE CAPITAL TRANSLATION RETAINED GROSS NONCONTROLLING
CAPITAL PREMIUM 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 - - - (45) - (45) 90 45
Dividend paid to noncontrolling
interests - - - - - - (101) (101)
Disposal of subsidiary - - - - - - (369) (369)
Net income for the period - - - - 11,495 11,495 584 12,079
------- ------- ------- ------- ------- ------- ------- -------
BALANCE - JUNE 30, 2009 1,113 59,056 247 324 122,942 183,682 13,554 197,236
======= ======= ======= ======= ======= ======= ======= =======
F - 4
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS THREE MONTHS SIX MONTHS
---------------------- ---------------------- ----------------------
ENDED JUNE 30, ENDED JUNE 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 12,079 8,213 5,321 (1,445) 3,082 2,096
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 2,332 2,266 1,166 1,173 595 578
Deferred expenses 462 166 287 82 118 42
Deferred income taxes 474 496 (300) 334 121 127
Capital Gain on disposal of property
plant and equipment (107) - (12) - (27) -
Capital Gain on disposal of subsidiary (1,226) - (1,226) - (313) -
Unrealized loss (gain) on marketable
securities (1,604) 306 (527) (204) (409) 78
Revaluation of loans from banks and others 52 31 (39) 158 13 8
Change in value of warrants to issue
shares (5) (939) - (626) (1) (240)
Employees benefit, net 11 84 (34) 66 3 21
CHANGES IN ASSETS AND LIABILITIES:
Decrease (Increase) in:
Trade accounts receivable (4,122) (18) 8,222 22,018 (1,052) (6)
Receivables and other current assets 2,786 (368) (687) 1,219 711 (94)
Inventory 13,521 (3,996) 13,530 16,870 3,450 (1,019)
Increase (Decrease) in:
Trade accounts payable (5,857) (3,647) 2,450 (10,444) (1,495) (930)
Payables and other current liabilities 1,870 3,815 1,971 (3,653) 477 974
-------- -------- -------- -------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 20,666 6,409 30,122 25,548 5,273 1,635
-------- -------- -------- -------- -------- --------
(*) Convenience translation into U.S. dollars.
F - 5
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS THREE MONTHS SIX MONTHS
---------------------- ---------------------- ----------------------
ENDED JUNE 30, ENDED JUNE 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 (1,179) (1,452) 617 (1,823) (300) (371)
Purchase of additional shares in
subsidiary - (9,250) - - - (2,360)
Purchase of subsidiaries - (7,108) - (880) - (1,814)
Disposal of subsidiary (7) - (7) - (2) -
Acquisition of property plant and
equipment (1,223) (1,714) (185) (723) (312) (437)
Additions to intangible assets (7) (50) - (50) (2) (13)
Additions to prepaid expenses (997) (1,001) (820) (477) (254) (255)
Long term deposit, net (3) (35) (21) 13 (1) (9)
Proceeds from sale of property plant and
Equipment 205 - 110 - 52 -
-------- -------- -------- -------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (3,211) (20,610) (306) (3,940) (819) (5,259)
-------- -------- -------- -------- -------- --------
CASH FLOWS - FINANCING ACTIVITIES
Dividend paid to noncontrolling interests (101) - (101) - (25) -
Short-term bank credit, net (618) - (2,722) (140) (158) -
Repayment of loans (991) (2,403) (435) (2,041) (253) (613)
Proceeds of loans 615 1,951 185 1,198 157 498
-------- -------- -------- -------- -------- --------
NET CASH USED IN FINANCING ACTIVITIES (1,095) (452) (3,073) (983) (279) (115)
-------- -------- -------- -------- -------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 16,360 (14,653) 26,743 20,625 4,175 (3,739)
-------- -------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE FINANCIAL PERIOD 78,749 61,649 68,563 26,189 20,094 15,730
NET FOREIGN EXCHANGE DIFFERENCE ON CASH
AND CASH EQUIVALENTS 140 (284) (57) (102) 35 (72)
======== ======== ======== ======== ======== ========
CASH AND CASH EQUIVALENTS OF THE END OF
THE FINANCIAL PERIOD 95,249 46,712 95,249 46,712 24,304 11,919
======== ======== ======== ======== ======== ========
(*) Convenience translation into U.S. dollars.
F - 6
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The unaudited Condensed Interim Consolidated Financial Statements should be
read in conjunction with the audited consolidated financial statements and
notes for the year ended December 31, 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 April 16, 2009 the Company was served with a purported class action
lawsuit which 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 "suger 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 suger free or
a reduced suger 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 510) and the damages of the entire Group to
be NIS 4 million (approximately USD 1 million).
On July 13, 2009 the Company filed its statement of response. Given the
early stage of these proceedings, the Company is unable at this point to
assess the risks involved.
F - 7
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL EVENTS (CONT.)
2. 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.
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 the Company and others, a declaratory judgement
and other relief in connection with an alleged fundamental breach by the
Company of the Shamir Agreement and for the return of the shares in Shamir
Salads and the consideration paid therefor. On June 22, 2009, an arbitrator
was chosen to address all disputes between the parties. As part of the
arbitration proceeding, the Sellers and the Company each submitted a
complaint against the other for damages on August 4, 2009. The Company
intends to vigorously defend its rights in this matter. The temporary
injunction against the Sellers will remain in effect until the arbitration
procedures will end.
3. 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.
F - 8
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - SUBSEQUENT EVENTS
1. Following a tender offer for shares and/or depositary interests of 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.
2. 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.
F - 9
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The Company is an Israeli-based company engaged, directly and through
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 to a much lesser extent, the areas
administered by the Palestinian Authority. The products imported by the Company
are marketed in Israel and sold to over 1,500 customers, including supermarket
chains in the organized market, private supermarket chains, mini-markets,
wholesalers, manufacturers and institutional consumers. The Company also sells
its products outside Israel to a variety of customers around the world (U.S.,
Canada, England, Belgium, France, Switzerland, Australia, South America, Mexico,
Argentina and Chile).
The Company was incorporated in Israel in January 1994 and commenced operations
in February 1994.
The Company's 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 distributor and
manufacturer of Mediterranean style salads. As previously reported by the
Company on July 27, 2009, the Company now holds 100% of the shares of Gold Frost
following completion of its tender offer for Gold Frost shares. In addition, on
September 2, 2009 the Company 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 held, as of the date of the Agreement the remaining shares
in Baron. In June 2009, Gold Frost sold all of its 51% interest in a Danish
dairy distributor.
The financial information below reflects the operations of the Company and its
subsidiaries on a consolidated basis. The convenience translation of New Israeli
Shekels (NIS) into U.S. dollars was made at the rate of exchange prevailing on
June 30, 2009, which was NIS 3.919 per U.S. $1.00. The translation was made
solely for the convenience of the reader.
SIX MONTHS ENDED JUNE 30, 2009
SALES
Revenues for the six-month period ended June 30, 2009 decreased 3.3% to NIS
179.3 million (US $45.8 million) compared to revenues of NIS 185.5 million (US
$47.3 million) in the six-month period ended June 30, 2008. The decrese in
revenues was due to the cessation of the operations of the Company's U.S.
subsidiary, WF Kosher Food Distributors Ltd. - Laish Israeli ("WF Laish"),during
July 2008, as reported by the Company on July 14, 2008 offset by an increase in
revenues due to expanded product lines that the Company launched and due to
increased sales of existing products to new and existing customers.
GROSS PROFIT
Gross profit for the six-month period ended June 30, 2009 decreased 15.3% to NIS
39.7 million (US $10.1 million), or 22.1% of sales, compared to gross profit of
NIS 46.8 million (US $11.9 million) for the six-month period ended June 30,
2008, or 25.2% of sales. The decrease in Gross Profit as a percentage of sales
was mainly due to the results for the first quarter of 2009 that were affected
by the sharp decrease in global purchase prices of food products during the
fourth quarter of 2008, resulting in the sharp decrease in the sale prices of
the Company's products. Because the Company's commitments to purchase food
products from its vendors were based on higher prices, the immediate consequence
was a decline in the gross margin in the fourth quarter of 2008 and further
decline in the first quarter of 2009. During the first quarter, the Company
completed the sale of the inventory that it had acquired from vendors at the
higher prices. The decrease in gross margin in the first quarter of 2009
compared to the gross margin in the first quarter of 2008 was also affected by
the strengthening of the U.S. dollar versus the NIS (a depreciation of more than
10% of the value of the NIS during the first quarter of 2009) and the general
effects of the global economic recession.
SELLING AND MARKETING EXPENSES
Sales and marketing expenses for the six-month period ended June 30, 2009
decreased 12.0% to NIS 15.4 million (US $3.9 million) compared to NIS 17.5
million (US $4.5 million) in the six-month period ended June 30, 2008. The
decrease was mainly due to the cessation of the operations of the Company's U.S.
subsidiary, WF Laish, during July 2008, and due to the actions taken by the
Company's management during the first quarter of 2009 to reduce the Company's
expenses.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the six-month period ended June 30, 2009
decreased 21.7% to NIS 10.9 million (US $2.8 million) compared to NIS 13.9
million (US $3.5 million) in the six-month period ended June 30, 2008. The
decrease was mainly due to the actions taken by the Company's management during
the first quarter of 2009 to reduce the Company's expenses and due to the
transitional activities related to the closing down of WF Laish, in the amount
of approximately NIS 2.6 million (US $0.7 million) in the six-month period ended
June 30, 2008.
OTHER EXPENSE (INCOME)
Other income for the six-month period ended June 30, 2009 was mainly due to a
capital gain on disposal of subsidiary in the amount of NIS 1.2 million (US $0.3
million). Other expense for the six-month period ended June 30, 2008 was due to
a final arbitration award entered against the Company for damages in the amount
of NIS 2.0 million ($0.5 million) in connection with a dispute with Vitarroz.
OPERATING INCOME
Operating income for the six-month period ended June 30, 2009 increased 9.5% to
NIS 14.7 million (US $3.7 million) from NIS 13.4 million (US $3.4 million)
reported in the six-month period ended June 30, 2008.
FINANCIAL INCOME (EXPENSE), NET
Financial income, net, for the six-month period ended June 30, 2009 was NIS 0.3
million (US $0.07 million) compared to financial expense, net, of NIS 1.4
million (US $0.4 million) in the six-month period ended June 30, 2008. Financial
income, net for the six-month period ended June 30, 2009 included mainly
unrealized gain on marketable securities in the amount of NIS 1.6 million (US
$0.4 million) and income from short-term bank deposits in the amount of NIS 0.3
million (US $0.08 million), which was offset by foreign currency differences in
the amount of NIS 1.0 million (US $0.3 million) and interest expense in the
amount of NIS 0.5 million (US $0.13 million). Financial expense, net, for the
six-month period ended June 30, 2008 included mainly foreign currency
differences in the amount of NIS 2.1 million (US $0.5 million), bank fees in the
amount of NIS 0.8 million (US $0.2 million) and unrealized loss on marketable
securities in the amount of NIS 0.3 million (US $0.08 million) offset by
decrease in values of warrants to issue shares in the amount of NIS 0.9 million
(US $0.2 million) and income from Short-term bank deposits in the amount of NIS
0.6 million (US $0.2 million).
TAXES ON INCOME
Taxes on income for the six-month period ended June 30, 2009 amounted to NIS 2.9
million (US $0.7 million) compared to NIS 3.8 million (US $1.0 million) in the
six-month period ended June 30, 2008.
NET INCOME
Net income for the six-month period ended June 30, 2009 increased 47.1% to NIS
12.1 million (US $3.1 million), or 6.7% of sales, from NIS 8.2 million (US $2.1
million), or 4.4% of sales, for the six-month period ended June 30, 2008.
LIQUIDITY AND CAPITAL RESOURCES
For the six-month period ended June 30, 2009 cash and cash equivalents increased
from approximately NIS 78.7 million (US $20.1 million) at December 31, 2008 to
approximately NIS 95.3 million (US $24.3 million) as of June 30, 2009.
For the six-month period ended June 30, 2009, the Company generated a positive
cash flow from operating activities of approximately NIS 20.7 million (US $5.3
million) compared to NIS 6.4 million (US $1.6 million) in the six-month period
ended June 30, 2008. This increase was mainly due to a decrease in inventory of
approximately NIS 13.5 million (US $3.5 million) (compared to increase in
inventory of NIS 4.0 million (US $1.0 million) in the six-month period ended
June 30, 2008) and was offset by an increase in trade accounts receivable of
approximately NIS 4.1 million (US $1.1 million) (compared to increase in trade
accounts receivable of NIS 18.0 thousand (US $6.0 thousand) in the six-month
period ended June 30, 2008).
During the six-month period ended June 30, 2009, the Company utilized a cash
flow of NIS 3.2 million (US $0.8 million) from investing activities (compared to
NIS 20.6 million (US $5.3 million) in the six-month period ended June 30, 2008).
This decrease was mainly due to the purchase of subsidiaries and of additional
shares in Gold Frost in the total amount of NIS 16.4 million (USD 4.2 million)
in the six-month period ended June 30, 2008.
During the six-month period ended June 30, 2009, the Company utilized a cash
flow of NIS 1.1 million (US $0.3 million) from financing activities mainly due
to repayment of loans of NIS 1.0 million (US $0.3 million), (compared to NIS 2.4
million (US $0.6 million) in the six-month period ended June 30, 2008) and due
to short-term bank credit, net of NIS 0.6 million (US $0.2 million).
THREE MONTHS ENDED JUNE 30, 2009
SALES
Revenues for the three-month period ended June 30, 2009 increased 6.0% to NIS
83.8 million (US $21.4 million) compared to revenues of NIS 79.0 million (US
$20.2 million) in the three-month period ended June 30, 2008. The increase in
revenues was mainly due to expanded product lines that the Company had launched
and due to increased sales of existing products to new and existing customers.
GROSS PROFIT
Gross profit for the three-month period ended June 30, 2009 increased 6.6% to
NIS 17.9 million (US $4.6 million), or 21.3% of sales, compared to gross profit
of NIS 16.8 million (US $4.3 million) for the three-month period ended June 30,
2008, or 21.2% of sales.
SELLING AND MARKETING EXPENSES
Sales and marketing expenses for the three-month period ended June 30, 2009
decreased 11.5% to NIS 7.5 million (US $1.9 million) compared to NIS 8.4 million
(US $2.2 million) in the three-month period ended June 30, 2008. Part of this
decrease was attributed to the actions taken by the Company's management during
the first quarter of 2009 to reduce the Company's expenses.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the three-month period ended June 30,
2009 amounted to NIS 5.5 million (US $1.4 million) compared to NIS 7.8 million
(US $2.0 million) in the three-month period ended June 30, 2008. Part of this
decrease was attributed to the actions taken by the Company's management during
the first quarter of 2009 to reduce the Company's expenses.
OTHER EXPENSE (INCOME)
Other income for the three-month period ended June 30, 2009 was mainly due to a
capital gain on disposal of subsidiary in the amount of NIS 1.2 million (US $0.3
million). Other expense for the three-month period ended June 30, 2008 was due
to a final arbitration award entered against the Company for damages in the
amount of NIS 2.0 million ($0.5 million).
OPERATING INCOME (EXPENSE)
Operating income for the three-month period ended June 30, 2009 amounted NIS 6.2
million (US $1.6 million) compared to operating expense of NIS 1.4 million (US
$0.4 million) reported in the three-month period ended June 30, 2008.
FINANCIAL INCOME (EXPENSE), NET
Financial income, net, for the three-month period ended June 30, 2009 was NIS
332.0 thousand (US $84.7 thousand) compared to financial income, net, of NIS
271.0 thousand (US $69.2 thousand) in the three-month period ended June 30,
2008. Financial income, net, for the three-month period ended June 30, 2009
included mainly unrealized gain on marketable securities in the amount of NIS
527.0 thousand (US $134.0 thousand), which was offset by interest expense in the
amount of NIS 223.0 thousand (US $57.0 thousand). Financial income, net, for the
three-month period ended June 30, 2008 included mainly realized gain on
derivatives of NIS 1.1 million (US $0.3 million) and decrease in values of
warrants to issue shares in the amount of NIS 0.6 million (US $0.2 million),
offset by foreign currency differences in the amount of NIS 1.6 million (US $0.4
million).
TAXES ON INCOME
Taxes on income for the three-month period ended June 30, 2009 amounted to NIS
1.2 million (US $0.3 million) compared to NIS 0.3 million (US $0.1 million) in
the three-month period ended June 30, 2008.
NET INCOME (LOSS)
Net income for the three-month period ended June 30, 2009 amounted to NIS 5.3
million (US $1.4 million), compared to net loss of NIS 1.4 million (US $0.4
million) for the three-month period ended June 30, 2008.
LIQUIDITY AND CAPITAL RESOURCES
For the three-month period ended June 30, 2009, the Company generated a positive
cash flow from operating activities of approximately NIS 30.1 million (US $7.7
million) compared to NIS 25.5 million (US $6.5 million) in the three-month
period ended June 30, 2008. The increase was mainly due to an increase in trade
accounts payables of approximately NIS 2.5 million (US $0.6 million) (compared
to a decrease of NIS 10.4 million (US $2.7 million) in the three-month period
ended June 30, 2008), and by an increase in payables and other current
liabilities of approximately NIS 2.0 million (US $0.5 million) (compared to
decrease of approximately NIS 3.7 million (US $0.9 million) in the three-month
period ended June 30, 2008), offset by an increase in trade accounts receivable
of approximately NIS 8.2 million (US $2.1 million) (compared to approximately
NIS 22.0 million (US $5.6 million) in the three-month period ended June 30,
2008.
During the three-month period ended June 30, 2009, the Company utilized cash
flow of NIS 0.3 million (US $0.1 million) from investing activities (compared to
NIS 3.9 million (US $1.0 million) in the three-month period ended June 30,
2008), mainly from the realization of marketable securities, net of NIS 0.6
million (US $0.2 million) (compared to purchase of marketable securities, net of
NIS 1.8 million (US $0.5 million) in the three-month period ended June 30,
2008).
During the three-month period ended June 30, 2009, the Company utilized cash
flow of NIS 3.1 million (US $0.8 million) from financing activities (compared to
NIS 1.0 million (US $0.3 million) in the three-month period ended June 30, 2008)
mainly due to short-term bank credit, net of NIS 2.7 million (US $0.7 million)
(compared to NIS 0.1 million (US $0.04 million) in the three-month period ended
June 30, 2008).