UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021.
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report ____________
Commission File No. 000-29256
G. WILLI-FOOD INTERNATIONAL LTD.
(Exact name of Registrant as specified in its charter
and translation of Registrant’s name into English)
Israel
(Jurisdiction of incorporation or organization)
4 Nahal Harif St., Northern Industrial Zone, Yavne 81106, Israel
(Address of principal executive offices)
Yitschak Barabi, Chief Financial Officer | ||||
4 Nahal Harif St., Northern Industrial Zone, | ||||
Yavne 81106, Israel | ||||
Tel: 972-8-932-1000 | ||||
(Name, Telephone, E-mail and/or Facsimile number and Address of Registrant's Contact Person) |
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Ordinary Shares, NIS 0.10 par value per share | WILC | Nasdaq Capital Market |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
The registrant had 13,867,017 ordinary shares, NIS 0.10 nominal value per share, as of December 31, 2021.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ⌧
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ⌧
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:
Yes ⌧ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files):
Yes ⌧ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.:
| Large accelerated filer ☐ |
| Accelerated filer ☐ | |
| Emerging growth company ☐ |
| Non-accelerated filer ⌧ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued by the International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow:
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
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PART I | ||
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PART II | ||
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63 |
• | payment default by, or loss of, one or more of our principal clients; the loss of one or more of our key personnel; |
• | termination of, or changes in, arrangements with our key customers; |
• | market risks of our portfolio of marketable securities, such as changes affecting currency exchange rates; |
• | termination of arrangements with our suppliers; |
• | increasing levels of competition in Israel and other markets in which we do business; |
• | increase or decrease in global purchase prices of food products; |
• | our inability to accurately predict consumption of our products or changes in consumer preferences; |
• | product liability claims and other litigation matters; |
• | interruption to our storage facilities; |
• | our insurance coverage may not be sufficient; |
• | our operating results may be subject to variations from quarter to quarter; |
• | our inability to successfully compete with nationally branded products; |
• | our inability to successfully integrate our acquisitions; |
• | our inability to protect our intellectual property rights; |
• | significant concentration of our shares are held by one shareholder; |
• | we are controlled by and have business relations with Willi-Food Investments Ltd. and its management; |
• | the price of our ordinary shares may be volatile; |
• | our inability to meet the Nasdaq Capital Market (“Nasdaq”) and the TASE listing requirements; |
• | our inability to maintain an effective system of internal controls; |
• | cyber-attacks on the Company's information systems; |
• | 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; |
• | economic conditions in Israel; |
• | changes in political, economic and military conditions in Israel, including, in particular, economic conditions in the Company’s core markets; |
• | our international operations may be adversely affected by risks associated with international business; and |
• | the ongoing COVID-19 pandemic. |
- | The ongoing COVID-19 pandemic may adversely affect our business, revenues, results of operations and financial condition. |
- | The ongoing Russia-Ukraine war may adversely affect our business, revenues, results of operations and financial condition. |
A. | HISTORY AND DEVELOPMENT OF THE COMPANY |
B. | BUSINESS OVERVIEW |
• | to promote the “Willi-Food” brand name and other brand names used by the Company (such as " Euro European Dairies") and to increase market penetration of products through marketing efforts and advertising campaigns; |
• | to expand our current food product lines and diversify into additional product lines, as well as to respond to market demand; |
• | to enter new fields of activity/operating segments; |
• | to expand the Company's activity in the international food markets; and |
• | utilizing management’s expertise in identifying market demand and preferences, as well as its supplier sourcing abilities to: |
o | continue to locate, develop and distribute additional food products, some of which may be new to Israeli consumers; |
o | penetrate new food segments within Israel through the establishment of food manufacturing factories or the establishment of business relationships and cooperation with existing Israeli food manufacturers; |
o | 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 | further expand into international food markets, mainly in the U.S. and Europe, by purchasing food distribution companies, increasing cooperation with local existing distributors and/or exporting products directly to customers; and |
o | penetrate new markets in other countries through the establishment of business relationships and cooperation with representatives in such markets, subject to a positive political climate. |
• | Canned Vegetables and Pickles: including mushrooms (whole and sliced), artichoke (hearts and bottoms), beans, asparagus, capers, corn kernels, baby corn, palm hearts, vine leaves (including vine leaves stuffed with rice), sour pickles, mixed pickled vegetables, pickled peppers, an assortment of olives, garlic, roasted eggplant sun and dried tomatoes. These products are imported primarily from China, Greece, Thailand, Turkey, India, and the Netherlands. |
• | Canned Fish: including tuna (in oil or water), sardines, anchovies, smoked and pressed cod liver, herring, fish paste and salmon. These products are primarily imported from the Philippines, Thailand, Greece, Germany and Sweden. |
• | Canned Fruit: including pineapple (sliced or pieces), peaches, apricots, pears, mangos, cherries, litchis and fruit cocktail. These products are primarily imported from China, Monaco, the Philippines, Thailand, Greece and Europe. |
• | Edible Oils: including olive oil, regular and enriched sunflower oil, soybean oil, corn oil and rapeseed oil. These products are primarily imported from Belgium, Turkey, Italy, the Netherlands and Spain. |
• | Dairy and Dairy Substitute Products: including hard and semi-hard cheeses (parmesan, edam, kashkaval, gouda, havarti, cheddar, pecorino, manchego, maasdam, rossiysky, iberico and emmental), molded cheeses (Brie, Camembert and Bloose), feta, Bulgarian cubes, goat cheese, fetina, butter, butter spreads, margarine, melted cheese, cheese alternatives, condensed milk, whipped cream, yogurt, frozen pizza and others. These products are primarily imported from Greece, France, Lithuania, Denmark, Germany, Italy and the Netherlands. |
• | Dried Fruit, Nuts and Beans: including figs, apricots and organic apricots, chestnuts organic chestnuts, sunflower seeds, walnuts, pine nuts, cashews, banana chips, pistachios and peanuts. These products are primarily imported from Greece, Turkey, India, China, Thailand and the United States. |
• | Other Products: including, among others, instant noodle soup, frozen edamame soybeans, freeze dried instant coffee, bagels, breadstick, coffee creamers, lemon juice, halva, Turkish delight, cookies, vinegar, sweet pastry and crackers, sauces, corn flour, rice, rice sticks, pasta, organic pasta, spaghetti and noodles, breakfast cereals, corn flakes, rusks, rusks, tortilla, dried apples snacks, deserts (such as tiramisu and pastries), ice cream and light and alcoholic beverages. These products are primarily imported from the Netherlands, Germany, Italy, Greece, Belgium, the United States, Scandinavia, Switzerland, China, Thailand, Turkey, India, and South America. |
• | large retail supermarket chains, |
• | small retail supermarket chains, and |
• | other customers, including small private grocery shops, government institutions, wholesalers, restaurants, hotels, and hospitals. |
Percentage of Total Sales Year Ended December 31 | ||||||||||||
Customer Group | 2021 | 2020 | 2019 | |||||||||
Large retail supermarket chains | 50 | % | 53 | % | 50 | % | ||||||
Other customers | 50 | % | 47 | % | 50 | % | ||||||
100 | % | 100 | % | 100 | % |
C. | ORGANIZATIONAL STRUCTURE |
• | W.F.D. (Import, Marketing and Trading) Ltd. ("WFD") |
• | W. Capital Ltd. (“W. Capital”) |
• | Euro European Dairies Ltd. |
D. | PROPERTY, PLANTS AND EQUIPMENT |
A. | RESULTS OF OPERATIONS |
Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||
Revenues | 454,213 | 454,094 | ||||||
Cost of Sales | 315,920 | 308,717 | ||||||
Gross Profit | 138,293 | 145,377 | ||||||
Selling Expenses | 65,869 | 65,990 | ||||||
General and Administrative Expenses | 23,299 | 21,918 | ||||||
Other Income | (230 | ) | (108 | ) | ||||
Operating profit | 49,355 | 57,577 | ||||||
Financial Income, Net | 8,465 | 10,095 | ||||||
Profit before taxes on income | 57,820 | 67,672 | ||||||
Taxes on income | (12,719 | ) | (15,463 | ) | ||||
Net Income | 45,101 | 52,209 |
B. | LIQUIDITY AND CAPITAL RESOURCES. |
C. | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES |
A. | Not applicable. |
D. | TREND INFORMATION |
E. | CRITICAL ACCOUNTING ESTIMATES AND INDICATE |
A. | DIRECTORS AND SENIOR MANAGEMENT |
Name | Age | Position with the Company |
Joseph Williger | 65 | Director, Co-Chairman of the Board |
Zwi Williger | 67 | Director, Co-Chairman of the Board |
Victor Bar (1) (2) | 57 | Director |
Erez Winner | 53 | Acting Chief Executive Officer |
Yitschak Barabi | 37 | Chief Financial Officer |
Ran Asulin | 38 | Chief Trade and Selling Officer |
Einav Brar (1) (2) | 50 | External Director |
Idan Ben-Shitrit (1) (2) | 47 | External Director |
(1) (2) | Member of the Audit Committee Member of the Compensation Committee |
B. | COMPENSATION |
Name and Principal Position | Salary (1) | Management Fees (2) | Bonus (3) | Total |
NIS thousands | ||||
Zwi Williger (4) Co-Chairman of the Board | - | 1,516 | 2,237 | 3,753 |
Joseph Williger (4) Co-Chairman of the Board | - | 1,437 | 2,237 | 3,674 |
Yitschak Barabi Chief Financial Officer | 628 | - | 110 | 738 |
Ran Asulin Chief Trade and Selling Officer | 603 | - | 110 | 713 |
Erez Winner Acting CEO | 545 | - | 110 | 658 |
(1) | Includes car and mobile phone benefits. |
(2) | Includes tax gross-up payments. |
(3) | Represents annual bonuses granted to the Covered Executive based on formulas set forth in the Company's compensation policy approved by shareholders in June 2021 (the "Amended Compensation Policy") and the agreements with each of the Covered Executives. |
• | Salary – monthly salary of NIS 47,000 (currently approximately USD 15,113) (“Monthly Payment”). |
• | Vehicle –a leased vehicle, the value of which will not exceed the amount of NIS 200,000 (currently approximately USD 64,308). The Company will cover all the operating expenses of the Company car (excluding fines). Mr. Winner will bear all related taxes (known in Hebrew as ‘Shovi Rechev’); |
• | Profit Related Bonus – an annual bonus subject to the Company achieving a certain minimum operating profit. |
C. | BOARD PRACTICES |
• | The Chairman of the board of directors; |
• | A controlling shareholder or his relative; |
• | Any director employed by or who provides services to the company on a regular basis. |
• | Any director employed by the controlling shareholder or by any corporation controlled by the controlling shareholder or who provides services to the controlling shareholder on a regular basis; and |
• | Any director whose principal livelihood comes from the controlling shareholder. |
• | Recommending the board of directors, the compensation policy for the company's office holders to be adopted by the company and to recommend to the board of directors, once every three years, regarding any extension or modification of the current compensation policy which had been approved for a period of more than three years; |
• | From time to time, recommending to the board of directors regarding updates required to the compensation policy and examining the implementation thereof; |
• | Determining whether to approve the company’s office holders’ terms of office and employment in situations that require the approval of the compensation committee in accordance with the Israeli Companies Law; and |
1) | the compensation committee and the board of directors have taken into consideration the mandatory considerations and criteria which are specified in the Israeli Companies Law for a compensation policy and the respective employment terms include such mandatory considerations and criteria; and |
2) | the company's shareholders approved such terms of employment, subject to a special majority requirement. |
1) | both the compensation committee and the board of directors re-discussed the transaction and decided to approve it despite the shareholders' objection, based on detailed reasons; and |
2) | the Israeli company is not a "Public Pyramid Held Company", which is a public company controlled by another public company (including by a company that only issued debentures to the public), which is also controlled by another public company (including a company that only issued debentures to the public) that has a controlling shareholder. |
• | extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest; and |
• | the terms of an engagement by the company, directly or indirectly, with a controlling shareholder or a controlling shareholder’s relative (including through a corporation controlled by a controlling shareholder), regarding the company’s receipt of services from the controlling shareholder, and if such controlling shareholder is also an office holder of the company, regarding his or her terms of employment. |
• | the majority of the shares of the voting shareholders who have no personal interest in the transaction must vote in favor of the proposal (shares held by abstaining shareholders shall not be considered); or |
• | the total shareholdings of those who have no personal interest in the transaction and who vote against the transaction must not represent more than 2% of the aggregate voting rights in the company. |
1) | such majority includes a majority of the total votes of shareholders who have no personal interest in the approval of the transaction (and in case of a CEO, who are not a controlling shareholder) and who participate in the voting, in person, by proxy or by written ballot, at the meeting (abstentions not taken into account); or |
2) | the total number of votes of shareholders mentioned above that vote the transaction do not represent more than 2% of the total voting rights in the company. |
• | any amendment to the articles of association; |
• | an increase in the company’s authorized share capital; |
• | a merger; or |
• | approval of actions and transactions that require shareholder approval. |
D. | EMPLOYEES |
E. | SHARE OWNERSHIP |
• | each person known by the Company to beneficially own more than 5% of the outstanding shares of ordinary shares; |
• | each of the Company’s named executive officers and directors; and |
• | all of the Company’s named executive officers and directors as a group. |
Name and Address | Number of Ordinary Shares Beneficially Owned | Percentage of Ordinary Shares | ||||||
Willi-Food Investments Ltd. | 8,200,542 | 59.1 | % | |||||
B.S.D. Crown Ltd. (1) | 8,971,617 | 64.7 | % | |||||
Joseph and Zwi Williger (2) | 9,605,677 | 69.3 | % | |||||
Brian Gaines (3) | 838,284 | 6.0 | % | |||||
The Phoenix Holdings Ltd. (4) | 1,215,042 | 8.8 | % |
(1) | Includes (i) 8,200,542 Ordinary Shares held by Willi-Food, and (ii) 771,075 Ordinary Shares held by B.S.D. Crown Ltd. ("BSD"). Willi-Food is controlled by its majority shareholder, BSD, and BSD may be deemed to beneficially own all of the shares owned by Willi-Food. |
(2) | As of the date hereof, JW directly owns though a wholly-owned company 12,000 Ordinary Shares and ZW directly owns though a wholly-owned company 622,060 Ordinary Shares. JW and ZW together own 100% of B.S.D shares and each be deemed to beneficially own 9,605,677 Ordinary Shares (comprised of 8,200,542 Ordinary Shares held directly by WIL, 771,075 Ordinary Shares held directly by B.S.D, 12,000 Ordinary Shares held directly by JW and 622,060 Ordinary Shares held directly by ZW), or approximately 69.3% of the outstanding Ordinary Shares. Thus, as of the date hereof, each of JW and ZW may be deemed to have the shared power to vote, or direct the voting of, and the shared power to dispose of, or direct the disposition of, all such shares. |
(3) | Based on a Schedule 13G filed February 11, 2022, this amount consists of 669,734 Ordinary Shares (representing approximately 5.6% of our total shares outstanding) directly held by Springhouse Capital (Master), L.P. (the "Fund"), and 128,959 Ordinary Shares owned by Mr. Gaines for his own account and an additional 39,951 Ordinary Shares held by immediate family members in accounts Mr. Gaines controls, and that Mr. Gaines may be deemed to beneficially own (in total representing approximately 1.2% of our total shares outstanding). Mr. Gaines serves as managing member of Springhouse Capital Management G.P., LLC ("Springhouse") and as a director of Springhouse Asset Management, Ltd. (the "General Partner") and, as a result, may be deemed to beneficially own shares owned by the Fund. Springhouse is the general partner of Springhouse Capital Management, L.P. ("Management") and, as a result, may be deemed to beneficially own shares owned by the Fund. Management is the investment manager of the Fund and as a result, may be deemed to beneficially own shares owned by the Fund. The General Partner is the general partner of the Fund, and, as a result, may be deemed to beneficially own shares owned by the Fund. |
(4) | Based on a Schedule 13G filed February 6, 2022, these shares are beneficially owned by various direct or indirect, majority or wholly-owned subsidiaries of the Phoenix Holdings Ltd. (the “Subsidiaries”). The Subsidiaries manage their own funds and/or the funds of others, including for holders of exchange-traded notes or various insurance policies, members of pension or provident funds, unit holders of mutual funds, and portfolio management clients. Each of the Subsidiaries operates under independent management and makes its own independent voting and investment decisions. |
B. | RELATED PARTY TRANSACTIONS |
C. | INTERESTS OF EXPERTS AND COUNSEL |
A. | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION |
B. | SIGNIFICANT CHANGES |
A. | OFFER AND LISTING DETAILS |
B. | PLAN OF DISTRIBUTION |
C. | MARKETS |
D. | SELLING SHAREHOLDERS |
E. | DILUTION |
F. | EXPENSES ON THE ISSUE |
A. | SHARE CAPITAL |
B. | MEMORANDUM AND ARTICLES OF ASSOCIATION |
C. | MATERIAL CONTRACTS |
• | financial institutions or insurance companies; |
• | real estate investment trusts, regulated investment companies or grantor trusts; |
• | dealers or traders in securities or currencies; |
• | tax-exempt entities; |
• | certain former citizens or long-term residents of the United States; |
• | persons that received our shares as compensation for the performance of services; |
• | persons that will hold our shares as part of a “hedging” or “conversion” transaction or as a position in a “straddle” for United States federal income tax purposes; |
• | holders that will hold our shares through a partnership or other pass-through entity; |
• | U.S. Holders (as defined below) whose “functional currency” is not the U.S. Dollar; or |
• | holders that own directly, indirectly or through attribution 10.0% or more, of the voting power or value, of our shares. |
• | a citizen or resident of the United States; |
• | a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia; |
• | an estate the income of which is subject to United States federal income taxation regardless of its source; or |
• | a trust if such trust has validly elected to be treated as a United States person for United States federal income tax purposes or if (1) a court within the United States is able to exercise primary supervision over its administration and (2) one or more United States persons have the authority to control all of the substantial decisions of such trust. |
• | such gain is effectively connected with your conduct of a trade or business in the United States; or |
• | you are an individual and have been present in the United States for 183 days or more in the taxable year of such sale or exchange and certain other conditions are met. |
• | at least 75% of its gross income is “passive income”; or |
• | at least 50% of the average value of its gross assets (which may be determined, in part, by the market value of our ordinary shares, which is subject to change) is attributable to assets that produce “passive income” or are held for the production of passive income. |
F. | DIVIDENDS AND PAYING AGENTS |
G. | STATEMENTS BY EXPERTS |
H. | DOCUMENTS ON DISPLAY |
I. | SUBSIDIARY INFORMATION |
Gain (loss) from exchange rate change NIS thousands | Fair net NIS thousands | Gain (loss) from exchange rate change NIS thousands | |||
Change in exchange rate USD | (10%) (2,587) | (5%) (1,293) | 22,614 | 5% 1,281 | 10% 2,496 |
Change in exchange rate EURO | (10%) (20,353) | (5%) (10,432) | (1,834) | 5% 9,409 | 10% 17,172 |
Gain (loss) from interest change NIS thousands | Fair value NIS thousands | Gain (loss) from interest change NIS thousands | |||
Change in Interest as % of interest rate | (10%) | (5%) | 5% | 10% | |
Increase\decrease in financial Income | (9,198) | (4,599) | 91,978 | 4,599 | 9,198 |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
ITEM16A. -- | AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. -- | CODE OF ETHICS |
ITEM 16C. -- | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
NIS 2021 | USD 2021 | NIS 2020 | USD 2020 | |
Audit Fees and Tax Fees (1)(2) | 343,715 | 110,520 | 340,000 | 105,754 |
All Other Fees (3) | 3,110 | 1,000 | 17,404 | 5,413 |
TOTAL | 346,825 | 111,520 | 357,404 | 111,167 |
ITEM 16D. -- | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. -- | PURCHASES OF EQUITY SECURITIES BY THE COMPANY AND AFFILIATED PURCHASERS |
ITEM 16F. -- | CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT |
ITEM 16G. -- | CORPORATE GOVERNANCE |
• | Executive Sessions – Under Nasdaq rules, U.S. domestic listed companies, must have a regularly scheduled meeting at which only independent directors are present. We do not have such executive sessions. |
• | Compensation of Officers - Under Nasdaq rules, the Company must adopt a formal written compensation committee charter addressing the scope of the compensation committee's responsibilities, including structure, processes and membership requirements, among others. We do not have such a formal written charter. |
• | Nominations of Directors - Under Nasdaq rules, U.S. domestic listed companies, must have a nominations committee comprised solely of independent directors and must have director nominees selected or recommended by a majority of its independent directors. Our directors are not nominated in this manner. |
• | Nominations Committee Charter or Board Resolution - Under Nasdaq rules, U.S. domestic listed companies, must adopt a formal written charter or board resolution, as applicable, addressing the nominations process and such related matters as may be required under the federal securities laws. We do not have such a formal written charter or board resolution. |
• | Quorum - Under Nasdaq rules, U.S. domestic listed company's by-laws provide for a quorum of at least 33 1/3 percent of the outstanding shares of the company’s common voting stock. According to our articles our quorum should be at least 25 percent of the outstanding shares of our common voting stock. |
• | Review of Related Party Transactions: Under Nasdaq Listing Rules, domestic listed companies must conduct an appropriate review and oversight of all related party transactions for potential conflict of interest situations on an ongoing basis by the company’s audit committee or another independent body of the board of directors. Although Israeli law requires us to conduct an appropriate review and maintain oversight of all related-party transactions similar to the Nasdaq Listing Rules, we follow the definitions and requirements of the Companies Law in determining the kind of approval required for a related-party transaction, which tend to be more rigorous than the Nasdaq Listing Rules. |
• | Shareholder Approval of Certain Equity Compensation: Under Nasdaq Listing Rules, shareholder approval is required prior to an issuance of securities in connection with equity-based compensation of officers, directors, employees or consultants. The Company has indicated that it will receive shareholder approval as required by Israeli law, including upon issuance of options to directors or to controlling shareholders. |
Exhibit Number | Description | ||
2.1 | Specimen of Certificate for ordinary shares (1) | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||
101.INS | XBRL Instance Document |
† | Informal English translations from Hebrew original. | |
(1) | Incorporated by reference to the Company’s Registration Statement on Form F-1, File No. 333-6314. | |
(2) | Incorporated by reference to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2005. | |
(3) | Incorporated by reference to the Company’s Registration Statement on Form F-3, File No. 333-138200. | |
(4) | Incorporated by reference to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2013. | |
(5) | Incorporated by reference to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2019. | |
(6) (*) | Incorporated by reference to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2020. Filed Herewith |
G. WILLI-FOOD INTERNATIONAL LTD. By: /s/ Erez Winner Erez Winner Acting Chief Executive Officer |
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
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F-11 - F-43 |
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Report of Independent Registered Public Accounting Firm | |
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Shareholders and Board of Directors of G. Willi-Food International Ltd. Yavne, Israel |
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of G. Willi-Food International Ltd (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income and comprehensive income, changes in equity, and cash flows for each of the three years in the period ended, December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with International Financial Reporting standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
F - 2
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Critical Audit Matters |
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Ziv Haft
Ziv Haft
Certified Public Accountants (Isr)
BDO Member Firm
Tel Aviv, Israel
March 15, 2022
We have served as the Company's auditor since 2018.
F - 3
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(NIS in thousands)
December 31, | |||||||||
Note | 2 0 2 1 | 2 0 2 0 | 2 0 2 1 (*) | ||||||
NIS | NIS | US Dollars | |||||||
| |||||||||
Assets | |||||||||
| |||||||||
Current assets | |||||||||
Cash and cash equivalents | 12 | 195,718 | 201,822 | 62,932 | |||||
Financial assets at fair value through profit or loss | 3 | 154,090 | 154,700 | 49,546 | |||||
Loans to others | 13 | 0- | 18,707 | 0- | |||||
Trade receivables, Net | 14 | 134,017 | 131,301 | 43,092 | |||||
Other receivables and prepaid expenses | 15 | 4,939 | 6,667 | 1,588 | |||||
Inventories | 16 | 59,528 | 59,514 | 19,141 | |||||
Current tax assets | 10 | 5,780 | 3,965 | 1,859 | |||||
Total current assets | 554,072 | 576,676 | 178,158 | ||||||
| |||||||||
Non-current assets | |||||||||
Property, plant, and equipment | 87,245 | 83,105 | 28,053 | ||||||
Less -accumulated depreciation | 48,431 | 46,460 | 15,573 | ||||||
17 | 38,814 | 36,645 | 12,480 | ||||||
| |||||||||
Right of use asset | 18 | 4,088 | 2,866 | 1,314 | |||||
Financial assets at fair value through profit or loss | 3 | 31,056 | 13,700 | 9,986 | |||||
Goodwill | 36 | 36 | 12 | ||||||
Total non-current assets | 73,994 | 53,247 | 23,792 | ||||||
| |||||||||
Total assets | 628,066 | 629,923 | 201,950 |
(*) Convenience Translation into US Dollars.
The accompanying notes are an integral part of the financial statements.
F - 4
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(NIS in thousands)
(Cont.)
December 31, | |||||||||
Note | 2 0 2 1 | 2 0 2 0 | 2 0 2 1 (*) | ||||||
NIS | NIS | US Dollars | |||||||
Equity and liabilities | |||||||||
| |||||||||
Current liabilities | |||||||||
Current maturities of lease liabilities | 18 | 1,136 | 1,393 | 365 | |||||
Trade payables | 20 | 20,386 | 23,474 | 6,555 | |||||
Employees Benefits | 21 | 3,442 | 3,437 | 1,107 | |||||
Financial liabilities at fair value through profit or loss | 3 | 13,960 | 0- | 4,489 | |||||
Other payables and accrued expenses | 22 | 11,216 | 11,611 | 3,606 | |||||
Total current liabilities | 50,140 | 39,915 | 16,122 | ||||||
| |||||||||
Non-current liabilities | |||||||||
Lease liabilities | 18 | 3,062 | 1,592 | 985 | |||||
Deferred taxes | 10 | 2,017 | 768 | 648 | |||||
Retirement benefit obligation | 21 | 1,615 | 1,905 | 519 | |||||
Total non-current liabilities | 6,694 | 4,265 | 2,152 | ||||||
| |||||||||
Shareholders' equity | |||||||||
Share capital | 23 | 1,490 | 1,490 | 479 | |||||
Additional paid in capital | 170,760 | 170,760 | 54,907 | ||||||
Capital fund | 247 | 247 | 79 | ||||||
Treasury shares | (628 | ) | (628 | ) | (202 | ) | |||
Retained earnings | 400,322 | 415,196 | 128,721 | ||||||
Re-measurement of the net liability in respect of defined benefit | (959 | ) | (1,322 | ) | (308 | ) | |||
Equity attributable to Shareholders' of the Company | 571,232 | 585,743 | 183,676 | ||||||
| |||||||||
Total equity and liabilities | 628,066 | 629,923 | 201,950 |
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(*) | Convenience Translation into US Dollars. |
The accompanying notes are an integral part of the financial statements.
The financial statements were approved by the board of directors of the company on March 15, 2022.
F - 5
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF INCOME
(NIS in thousands)
| Year ended December 31, | ||||||||||
Note | 2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 (*) | |||||||
NIS | NIS | NIS | US Dollars | ||||||||
| |||||||||||
Revenue | 454,213 | 454,094 | 395,637 | 146,049 | |||||||
Cost of sales | 5 | 315,920 | 308,717 | 271,784 | 101,582 | ||||||
Gross profit | 138,293 | 145,377 | 123,853 | 44,467 | |||||||
| |||||||||||
Operating costs and expenses | |||||||||||
Selling expenses | 6 | 65,869 | 65,990 | 55,490 | 21,180 | ||||||
General and administrative expenses | 7 | 23,299 | 21,918 | 21,067 | 7,491 | ||||||
Other Income | (230 | ) | (108 | ) | 0- | (74 | ) | ||||
88,938 | 87,800 | 76,557 | 28,597 | ||||||||
| |||||||||||
Operating profit | 49,355 | 57,577 | 47,296 | 15,870 | |||||||
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Finance Income | 9 | 28,957 | 11,348 | 20,966 | 9,311 | ||||||
Finance expense | 9 | 20,492 | 1,253 | 3,016 | 6,589 |
| |||||
Finance Income, net | 8,465 | 10,095 | 17,950 | 2,722 | |||||||
| |||||||||||
Profit before taxes on Income | 57,820 | 67,672 | 65,246 | 18,592 | |||||||
Taxes on Income | 10 | 12,719 | 15,463 | 13,735 | 4,090 | ||||||
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Net Income | 45,101 | 52,209 | 51,511 | 14,502 | |||||||
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Earnings per share: | |||||||||||
Basic/diluted earnings per share | 3.25 | 3.89 | 3.90 | 1.05 | |||||||
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Shares used in computation of basic/diluted EPS | 13,867,017 | 13,433,684 | 13,217,017 | 13,867,017 | |||||||
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Actual number of shares | 13,867,017 | 13,867,017 | 13,217,017 | 13,867,017 |
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(*) | Convenience Translation into US Dollars. |
The accompanying notes are an integral part of the financial statements.
F - 6
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(NIS in thousands)
Year ended December 31, | |||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 (*) | ||||||
NIS | NIS | NIS | US Dollars | ||||||
| |||||||||
Net Income | 45,101 | 52,209 | 51,511 | 14,502 | |||||
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Other comprehensive Income (Expenses) | |||||||||
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Re-measurement of net liabilities with respect to a defined benefit which will not be classified in the future as profit or loss, net of tax | 363 | (293 | ) | (406 | ) | 117 | |||
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Other comprehensive Income (Expenses) for the year | 363 | (293 | ) | (406 | ) | 117 | |||
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Total comprehensive Income for the year | 45,464 | 51,916 | 51,105 | 14,619 |
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(*) | Convenience Translation into US Dollars. |
The accompanying notes are an integral part of the financial statements.
F - 7
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(NIS in thousands)
Share capital | Additional paid in capital | Measurement of the net liability in respect of defined benefit | Capital fund | Retained earnings | Treasury shares | Total shareholders' equity | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Balance – January 1, 2019 | 1,425 | 128,354 | (623 | ) | 247 | 311,476 | 0- | 440,879 | ||||||||||||||||||||
Profit for the year | - | - | - | - | 51,511 | - | 51,511 | |||||||||||||||||||||
Measurement of the net liability in respect of defined benefit | - | - | (406 | ) | - | - | - | (406 | ) | |||||||||||||||||||
Total comprehensive Income for the year | - | - | (406 | ) | - | 51,511 | - | 51,105 | ||||||||||||||||||||
Purchase of treasury shares | - | - | - | - | - | (628 | ) | (628 | ) | |||||||||||||||||||
| ||||||||||||||||||||||||||||
Balance – December 31, 2019 | 1,425 | 128,354 | (1,029 | ) | 247 | 362,987 | (628 | ) | 491,356 | |||||||||||||||||||
Profit for the year | - | - | - | - | 52,209 | - | 52,209 | |||||||||||||||||||||
Measurement of the net liability in respect of defined benefit | - | - | (293 | ) | - | - | - | (293 | ) | |||||||||||||||||||
Total comprehensive Income for the year | - | - | (293 | ) | - | 52,209 | - | 51,916 | ||||||||||||||||||||
Issue of shares | 65 | 42,406 | - | - | - | - | 42,471 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Balance - December 31, 2020 | 1,490 | 170,760 | (1,322 | ) | 247 | 415,196 | (628 | ) | 585,743 | |||||||||||||||||||
Profit for the year | - | - | - | - | 45,101 | - | 45,101 | |||||||||||||||||||||
Measurement of the net liability in respect of defined benefit | - | - | 363 | - | - | - | 363 | |||||||||||||||||||||
Total comprehensive Income for the year | - | - | 363 | - | 45,101 | - | 45,464 | |||||||||||||||||||||
Dividend distribution | - | - | - | - | (59,975 | ) | - | (59,975 | ) | |||||||||||||||||||
Balance – December 31, 2021 | 1,490 | 170,760 | (959 | ) | 247 | 400,322 | (628 | ) | 571,232 |
The accompanying notes are an integral part of the financial statements.
F - 8
G. WILLI-FOOD INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(NIS in thousands)
|
| Year ended December 31, |
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| 2 0 2 1 |
| 2 0 2 0 |
| 2 0 1 9 |
| 2 0 2 1 (*) |
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| NIS |
| NIS |
| NIS |
| US Dollars |
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CASH FLOWS – OPERATING ACTIVITIES |
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|
|
|
| |
Profit from continuing operations | 45,101 | 52,209 | 51,511 | 14,502 |
| ||||
Adjustments to reconcile net profit to net cash used in (used to) continuing operating activities (Appendix A) | 416 | 11,967 | (51,948 | ) | 133 | ||||
|
| ||||||||
Net cash from/ (used in) continuing operating activities | 45,517 | 64,176 | (437 | ) | 14,635 |
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Cash flows – investing activities |
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Acquisition of property plant and equipment | (6,209 | ) | (2,903 | ) | (1,791 | ) | (1,996 | ) | |
Proceeds from sale of property plant and Equipment | 230 | 108 | 0- | 74 |
| ||||
Loans granted to others | 0- | (20,000 | ) | (43,650 | ) | 0- | |||
Proceeds from loans granted to others | 18,707 | 18,943 | 26,000 | 6,015 |
| ||||
Proceeds from sale (purchase) of marketable securities, net | 2,718 | (20,739 | ) | 11,336 | 874 | ||||
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Net cash used in investing activities | 15,446 | (24,591 | ) | (8,105 | ) | 4,967 | |||
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Cash flows – financing activities |
| ||||||||
Lease liability payments | (2,169 | ) | (1,819 | ) | (1,128 | ) | (697 | ) | |
Shares issue | 0- | 42,471 | 0- | 0- |
| ||||
Dividend distribution | (59,975 | ) | 0- | 0- | (19,285 | ) | |||
Acquisition of treasury shares | 0- | 0- | (628 | ) | 0- |
| |||
|
| ||||||||
Net cash from (used in) financing activities | (62,144 | ) | 40,652 | (1,756 | ) | (19,982 | ) | ||
|
| ||||||||
Increase (decrease) in cash and cash equivalents | (1,181 | ) | 80,237 | (10,298 | ) | (380 | ) | ||
Cash and cash equivalents at the beginning of the financial year | 201,822 | 121,860 | 134,287 | 64,895 |
| ||||
Exchange (losses)/gains on cash and cash equivalents | (4,923 | ) | (275 | ) | (2,129 | ) | (1,583 | ) | |
Cash and cash equivalents of the end of the financial year | 195,718 | 201,822 | 121,860 | 62,932 |
|
(*) Convenience Translation into US Dollars.
The accompanying notes are an integral part of the financial statements.
F - 9
G. WILLI-FOOD INTERNATIONAL LTD.
APPENDICES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
(NIS in thousands)
| Year ended December 31, |
| |||||||
| 2 0 2 1 |
| 2 0 2 0 |
| 2 0 1 9 |
| 2 0 2 1 (*) |
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| NIS |
| NIS |
| NIS |
| US Dollars |
| |
Cash flows from/(used in) operating activities |
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|
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A. Adjustments to reconcile net profit to net cash from operating activities | |||||||||
| |||||||||
Decrease (Increase) in deferred income taxes | 1,249 | 1,586 | 2,064 | 402 | |||||
Unrealized loss (gain) on marketable securities | (19,464 | ) | (6,115 | ) | (14,972 | ) | (6,258 | ) | |
Loss of financial liabilities at fair value through profit or loss | 13,960 | 0- | 0- | 4,489 | |||||
Depreciation and amortization | 6,200 | 5,690 | 4,815 | 1,993 | |||||
Capital gain on disposal of property plant and equipment | (230 | ) | (108 | ) | 0- | (74 | ) | ||
Exchange (losses)/gains on cash and cash equivalents | 4,923 | 275 | 2,129 | 1,583 | |||||
| |||||||||
Changes in assets and liabilities: | |||||||||
Decrease (increase) in trade receivables and other receivables | 10,190 | 22,029 | (29,776 | ) | 3,277 | ||||
Decrease (Increase) in inventories | (14 | ) | 12,034 | (22,259 | ) | (5 | ) | ||
Increase (decrease) in trade and other payables, and other current liabilities | (3,405 | ) | (1,861 | ) | 16,050 | (1,096 | ) | ||
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Cash generated from operations | 13,409 | 33,530 | (41,949 | ) | 4,311 | ||||
| |||||||||
Income tax paid | (12,993 | ) | (21,563 | ) | (9,999 | ) | (4,178 | ) | |
| |||||||||
Net cash flows from operating activities | 416 | 11,967 | (51,948 | ) | 133 |
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(*) | Convenience Translation into US Dollars. |
The accompanying notes are an integral part of the financial statements.
F - 10
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NIS in thousands)
Note 1 – Basis of preparation
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out in note 27. The policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements are presented in New Israeli Shekels (NIS), which is also the Company functional currency.
The conversion from New Israeli Shekels (NIS) into U.S. dollars was made at the exchange rate as of December 31, 2021, on which USD 1.00 equaled NIS 3.11 The use of USD is solely for the convenience of the reader.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and International Accounting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively IFRSs).
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Company management to exercise judgment in applying the Company's accounting policies. The areas where significant judgments and estimates have been made in preparing the consolidated financial statements and their effect are disclosed in note 2.
Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except for the following items (refer to individual accounting policies for details):
-
Financial instruments – fair value through profit or loss
-
Net defined benefit liability
-
Contingent consideration
Note 2 – Critical accounting estimates and assumptions
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
F - 11
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 2 – Critical accounting estimates and assumptions (continued)
Estimates and assumptions:
-
Revenue recognition – provision of rights to return goods
-
Defined benefit scheme – actuarial assumptions
-
The determination of the incremental borrowing rate used to measure lease liabilities
-
Legal proceedings – estimates of claims and legal processes
-
Inventory – provision of slow moving inventory
-
Fair value measurement
several assets and liabilities included in the Company’s financial and non-financial assets and liabilities utilizes market observables inputs and data as far as possible. Inputs used in determining fair value measurement are categorized into different levels based on how observable the inputs used in the valuation technique utilized are (the 'fair value hierarchy'):
•
Level 1: Quoted priced in active markets for identical items (unadjusted)
•
Level 2: Observable direct or indirect inputs other than level 1 inputs.
•
Level 3: Unobservable inputs (i.e., not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognized in the period they occur
The Company measures several items at fair value:
-
Current financial assets at fair value through profit or loss (see note 3)
-
Non-current financial assets at fair value through profit or loss (see note 3)
-
Financial liabilities at fair value through profit or loss (see note 3)
For more detailed information in relation to the fair value measurement of the items above, please refer to the applicable notes.
Note 3 – Financial instruments risk management
The Company is exposed through its operations to the following financial risks:
-
Credit risk
-
Other market price risk
-
Foreign exchange risk
-
Global changes in raw-material prices
F - 12
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 3 – Financial instruments risk management (continued)
In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Company's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
(i) Principal financial instruments
The principal financial instruments used by the Company, from which financial instrument risk arises, are as follows:
-
Cash and cash equivalents
-
Loans to others
-
Trade receivables
-
Financial assets at fair value through profit or loss
-
Trade payables
-
Financial liabilities at fair value through profit or loss
(ii) Financial instruments by category
Financial assets:
Fair value through profit or loss | Amortized cost | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
NIS in thousands | ||||||||||||||||
Cash and cash equivalents | 0- | 0- | 195,718 | 201,822 | ||||||||||||
Financial assets at fair value through profit or loss | 185,146 | 168,400 | 0- | 0- | ||||||||||||
Loans to others | 0- | 0- | 0- | 18,707 | ||||||||||||
Trade and other receivables | 0- | 0- | 138,956 | 137,968 | ||||||||||||
Total financial assets | 185,146 | 168,400 | 334,674 | 358,497 |
F - 13
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 3 – Financial instruments risk management (continued)
(ii) Financial instruments by category (continued)
Financial liabilities:
Fair value through profit or loss | Amortized cost | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
NIS in thousands | ||||||||||||||||
Trade payables | 0- | 0- | 20,386 | 23,474 | ||||||||||||
Financial liabilities at fair value through profit or loss | 13,960 | 0- | 0- | 0- | ||||||||||||
Total financial liabilities | 13,960 | 0- | 20,386 | 23,474 |
up to 30 days | Between 1 and 6 months. | Between 7 and 12 months. | Total | Present value | |||||||||||||||
forward exchange contracts | 2,280 | 10,505 | 1,471 | 14,256 | 13,960 |
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, loans to others, trade and other receivables and trade payables.
Due to their short-term nature, the carrying value of cash and cash equivalents, loans to others, trade and other receivables, and trade payables approximates their fair value.
(iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below
Level 1 | Level 2 | Level 3 | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||
NIS in thousands | ||||||||||||||||||
Financial assets at fair value through profit or loss | 154,090 | 154,700 | 0- | 0- | 31,056 | 13,700 | ||||||||||||
Financial liabilities at fair value through profit or loss | 0- | 0- | 0- | 0- | 13,960 | 0- |
There were no transfers between levels during the period.
The valuation techniques and significant unobservable inputs used in determining the fair value
There were no changes to the valuation techniques during the period.
F - 14
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 3 – Financial instruments risk management (continued)
(iv) Financial instruments measured at fair value (continued)
The reconciliation of the opening and closing fair value balance of financial instruments is provided below:
Financial assets at fair value through profit or loss: | Level 1 | Level 3 | ||||||
NIS in thousands | ||||||||
January 1, 2021 | 154,700 | 13,700 | ||||||
Purchases | 47,251 | 15,754 | ||||||
Disposals | (65,724 | ) | 0- | |||||
Gain | 17,863 | 1,602 | ||||||
December 31, 2021 | 154,090 | 31,056 |
Financial liabilities at fair value through profit or loss: | Level 1 | Level 3 | ||||||
NIS in thousands | ||||||||
January 1, 2021 | 0- | 0- | ||||||
loss | 0- | (13,960 | ) | |||||
December 31, 2021 | 0- | (13,960 | ) |
The fair value measurement of the forward exchange contracts using the "Monte Carlo" model is based on significant unobservable inputs and thus represent a level 3 measurement within the fair value hierarchy. changes in fair value are recognized in financial expenses.
"Monte Carlo" simulation was used to calculate the forward exchange contracts value using the Forward Options method, which is a stochastic model used in currency exchange scenarios.
General objectives, policies and processes
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is mainly exposed to credit risk from credit sales. It is Company policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices.
The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company's standard payment and delivery terms and conditions are offered. The Company's review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, which represents the maximum open amount.
F - 15
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 3 – Financial instruments risk management (continued)
Other market price risk
The Company is exposed to price risks of shares, certificate of participation in mutual fund and bonds, which are classified as financial assets carried at fair value through profit or loss.
The effect of a 10% increase in the value of the portfolio securities investment held at the reporting date would, if all other variables held constant, have resulted in an increase in the fair value through profit or loss and net assets of NIS 18,565 thousand (2020: NIS 16,840 thousand). A 10% decrease in their value would, on the same basis, have decreased the fair value through other profit or loss reserve and net assets by the same amount.
Foreign exchange risk
Foreign exchange risk arises when the Company enters into transactions denominated in a currency other than its functional currency. The company buys its inventories mostly in USD and EURO and sells its products in NIS. Foreign exchange exposures are managed within utilizing forward foreign exchange contracts.
As of 31 December, the Company's net exposure to foreign exchange risk was as follows:
2021 | 2020 | |||||
Net foreign currency financial assets/(liabilities) | NIS in thousands | |||||
USD | 22,614 | 10,942 | ||||
EURO | (1,834 | ) | (4,786 | ) | ||
Total net exposure | 20,780 | 6,156 |
The following table details the Company'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 opposite impact on the profit and other equity, and the balances below would be negative.
USD | EURO | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
NIS in thousands | ||||||||||||||||
10% increase | 2,496 | 1,094 | 17,172 | (479 | ) | |||||||||||
10% decrease | (2,587 | ) | (1,094 | ) | (20,353 | ) | 479 |
F - 16
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 3 – Financial instruments risk management (continued)
Global changes in raw-material prices
Raw material prices are mainly affected by extreme weather fluctuations affecting agricultural crops, crude oil prices, accelerated growth and growing demand in China and India affecting world consumption, rise in living standards mainly in developing countries and speculative transaction in the commodity market. A possible rise in the price of raw materials may lead to higher prices for products by suppliers. Sharp price increases in commodity prices may have a material adverse effect on the Company's operations and business results.
Note 4 – segment information
The Company has one reportable segment:
-
Import-export, marketing and distribution of food products.
Factors that management used to identify the Company's reportable segments
The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different marketing strategies.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, and the co-chairman of the board of directors.
F - 17
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 4 – segment information (continued)
The table below shows the Company's revenues from major groups of products that contributed 10% or more to the Company's total revenues in the years 2019 to 2021:
Year ended December 31, | ||||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | USD | |||||||||||||
Canned Vegetables and Pickles | 59,844 | 67,275 | 63,674 | 19,242 | ||||||||||||
| ||||||||||||||||
Dairy and Dairy Substitute Products | 196,589 | 188,675 | 154,303 | 63,212 | ||||||||||||
| ||||||||||||||||
Canned Fish | 56,064 | 53,547 | 49,179 | 18,027 | ||||||||||||
| ||||||||||||||||
Cereals, rice and pastas | 62,712 | 63,514 | 48,813 | 20,165 | ||||||||||||
| ||||||||||||||||
Non-banking credit | 276 | 719 | 930 | 89 | ||||||||||||
| ||||||||||||||||
Other | 78,728 | 80,364 | 78,738 | 25,314 | ||||||||||||
| ||||||||||||||||
454,213 | 454,094 | 395,637 | 146,049 |
Revenues from main customers of the Import segment
The Company has one customer who represent more than 10% of the total sales which amounted to NIS 60,701 thousand (2020: NIS 64,582 thousand).
Note 5 – Cost of sales
Year ended December 31, | ||||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
| ||||||||||||||||
Purchases | 269,888 | 272,730 | 269,876 | 86,781 | ||||||||||||
Marine transportation | 20,701 | 10,466 | 9,657 | 6,656 | ||||||||||||
Transportation | 3,063 | 2,938 | 2,186 | 985 | ||||||||||||
Depreciation and amortization | 2,180 | 2,246 | 2,335 | 701 | ||||||||||||
Maintenance | 8,714 | 7,905 | 4,893 | 2,802 | ||||||||||||
Other costs and expenses | 5,529 | 3,467 | 2,226 | 1,778 | ||||||||||||
310,075 | 299,752 | 291,173 | 99,703 | |||||||||||||
Change in finished goods | 5,845 | 8,965 | (19,389 | ) | 1,879 | |||||||||||
315,920 | 308,717 | 271,784 | 101,582 |
F - 18
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 6 – Selling expenses
Year ended December 31, | ||||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
| ||||||||||||||||
Salaries and related expenses | 22,597 | 21,514 | 18,798 | 7,266 | ||||||||||||
Transportation and maintenance | 19,589 | 20,132 | 15,128 | 6,299 | ||||||||||||
Vehicles | 3,165 | 3,330 | 3,377 | 1,018 | ||||||||||||
Advertising and promotion | 9,225 | 9,461 | 8,032 | 2,966 | ||||||||||||
Depreciation and amortization | 2,899 | 2,565 | 1,861 | 932 | ||||||||||||
Others | 8,394 | 8,988 | 8,294 | 2,699 | ||||||||||||
65,869 | 65,990 | 55,490 | 21,180 |
Note 7 – General and administrative expenses
Year ended December 31, | ||||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
| ||||||||||||||||
Salaries and related expenses | 15,992 | 16,185 | 13,557 | 5,141 | ||||||||||||
Office maintenance | 1,589 | 1,591 | 1,455 | 511 | ||||||||||||
Professional fees | 2,658 | 2,571 | 2,921 | 855 | ||||||||||||
Vehicles | 431 | 322 | 330 | 139 | ||||||||||||
Depreciation and amortization | 1,124 | 880 | 620 | 361 | ||||||||||||
Bad and doubtful debts | (599 | ) | (1,308 | ) | 847 | (193 | ) | |||||||||
Communication | 109 | 82 | 75 | 35 | ||||||||||||
Other | 1,995 | 1,595 | 1,262 | 642 | ||||||||||||
23,299 | 21,918 | 21,067 | 7,491 |
Note 8 – Employee benefit expenses
Employee benefit expenses (not including directors remuneration) comprise:
Year ended December 31, | ||||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
Salary | 33,263 | 31,865 | 28,585 | 10,695 | ||||||||||||
Bonus | 5,326 | 5,834 | 3,770 | 1,713 | ||||||||||||
38,589 | 37,699 | 32,355 | 12,408 |
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including the directors of the company, Chief executive officer, Chief finance officer, Chief operation officer and Chief sales officer.
F - 19
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 8 – Employee benefit expenses (continued)
Key management personnel expenses comprise:
Year ended December 31, | ||||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
Salary and management fees | 5,039 | 5,013 | 6,158 | 1,620 | ||||||||||||
Bonus | 4,840 | 5,434 | 3,520 | 1,556 | ||||||||||||
Directors remuneration | 345 | 403 | 550 | 111 | ||||||||||||
10,224 | 10,850 | 10,228 | 3,287 |
Note 9 – Finance income and expenses
Finance Income: | Year ended December 31, | |||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
| ||||||||||||||||
Interest from Short-term bank deposits | 408 | 99 | 845 | 131 | ||||||||||||
Interest Income of debentures held for trading | 3,757 | 4,222 | 4,321 | 1,209 | ||||||||||||
Other interest | 121 | 0- | 0- | 39 | ||||||||||||
Changes in fair value of financial assets at fair values | 19,464 | 6,115 | 14,972 | 6,258 | ||||||||||||
Dividends | 5,207 | 750 | 389 | 1,674 | ||||||||||||
Income from forward transaction | 0- | 162 | 439 | 0- | ||||||||||||
Total finance income | 28,957 | 11,348 | 20,966 | 9,311 |
Finance expenses: | Year ended December 31, | |||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
| ||||||||||||||||
Foreign currency differences | 1,174 | 560 | 2,121 | 377 | ||||||||||||
Expenses from forward transaction | 17,867 | 0- | 0- | 5,745 | ||||||||||||
Bank fees | 409 | 312 | 330 | 132 | ||||||||||||
Portfolio management fees | 950 | 283 | 500 | 305 | ||||||||||||
Other | 92 | 98 | 65 | 30 | ||||||||||||
Total finance expenses | 20,492 | 1,253 | 3,016 | 6,589 |
F - 20
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 10 – Tax expenses
Tax balances presented in the statement of financial position:
Year ended December 31, | ||||||||||||
2021 | 2020 | 2021 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Current tax assets | 5,780 | 3,965 | 1,859 | |||||||||
Deferred tax assets (liabilities) | (2,017 | ) | (768 | ) | (648 | ) |
January 1, | December 31, | December 31, | ||||||||||||||
2021 | Change | 2021 | 2021 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
Deferred taxes arise from the following: | ||||||||||||||||
Financial assets carried at fair value through profit or loss | (2,254 | ) | (4,257 | ) | (6,511 | ) | (2,094 | ) | ||||||||
Financial liabilities carried at fair value through profit or loss | 0- | 3,210 | 3,210 | 1,032 | ||||||||||||
Employees benefits | 691 | (92 | ) | 599 | 193 | |||||||||||
Allowance for doubtful accounts | 436 | (120 | ) | 316 | 102 | |||||||||||
Carry forward tax losses | 359 | 10 | 369 | 119 | ||||||||||||
(768 | ) | (1,249 | ) | (2,017 | ) | (648 | ) |
January 1, | December 31, | December 31, | ||||||||||||||
2020 | Change | 2020 | 2020 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
Deferred taxes arise from the following: | ||||||||||||||||
Financial assets carried at fair value through profit or loss | (1,118 | ) | (1,136 | ) | (2,254 | ) | (725 | ) | ||||||||
Employees benefits | 511 | 180 | 691 | 222 | ||||||||||||
Allowance for doubtful accounts | 736 | (300 | ) | 436 | 140 | |||||||||||
Carry forward tax losses | 689 | (330 | ) | 359 | 116 | |||||||||||
818 | (1,586 | ) | (768 | ) | (247 | ) |
Taxes on income recognized in profit or loss: | Year ended December 31 | |||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
Current taxes: | ||||||||||||||||
Current taxes | 11,470 | 13,877 | 11,671 | 3,688 | ||||||||||||
11,470 | 13,877 | 11,671 | 3,688 | |||||||||||||
| ||||||||||||||||
Deferred taxes | 1,249 | 1,586 | 2,064 | 402 | ||||||||||||
12,719 | 15,463 | 13,735 | 4,090 |
F - 21
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 10 – Tax expenses (continued)
Reconciliation of the statutory tax rate to the effective tax rate:
Year ended December 31, | |||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | ||||||||||||
NIS | NIS | NIS | US Dollars | ||||||||||||
| |||||||||||||||
Income before Income taxes | 57,820 | 67,672 | 65,246 | 18,592 | |||||||||||
Statutory tax rate | 23 | % | 23 | % | 23 | % | 23 | % | |||||||
Tax computed by statutory tax rate | 13,299 | 15,565 | 15,006 | 4,276 | |||||||||||
| |||||||||||||||
Tax increments (savings) due to: | |||||||||||||||
Non-deductible expenses | 97 | 39 | 16 | 31 | |||||||||||
Tax exempt Income | (1,202 | ) | (153 | ) | (38 | ) | (386 | ) | |||||||
Profit or loss for tax for which deferred taxes were not provided | 12 | 0- | (1,047 | ) | 3 | ||||||||||
Temporary differences for which deferred taxes were not provided | 0- | (100 | ) | ||||||||||||
Other | 513 | 12 | (102 | ) | 166 | ||||||||||
12,719 | 15,463 | 13,735 | 4,090 |
The tax rate applicable to the Company for the years 2018 – 2020 is 23%.
Note 11 – Earning per share
Year ended December 31, | ||||||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 1 9 | 2 0 2 1 | |||||||||||||
NIS | NIS | NIS | US Dollars | |||||||||||||
| ||||||||||||||||
Basic and diluted earnings per share: | ||||||||||||||||
Earnings used in the calculation of basic and diluted earnings per share | 45,101 | 52,209 | 51,511 | 14,502 | ||||||||||||
| ||||||||||||||||
Weighted average number of shares used in computing basic and diluted earnings per share | 13,867,017 | 13,433,684 | 13,217,017 | 13,867,017 |
In September 2020, the Company announced the completion of a private placement to classified institutional investors in Israel of 650,000 ordinary shares for NIS 66 per share and of stock option (not listed for trading) for the purchase of up to 650,000 ordinary shares of the Company for a period of twelve months from the allotment date at an exercise price of 73 NIS. The issue of shares was taken in to account for calculation of the basic and diluted earnings per share. The share options expired in September 2021.
F - 22
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 12 – Cash and cash equivalents
December 31, | ||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Cash in bank | 72,965 | 51,179 | 23,461 | |||||||||
Short-term bank deposits | 122,753 | 150,643 | 39,471 | |||||||||
195,718 | 201,822 | 62,932 |
Note 13 – Loans to others
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Opening balance | 18,707 | 17,650 | 6,015 | |||||||||
Loans granted to others (*) | 0- | 20,000 | 0- | |||||||||
Payment of loans granted to others | (18,707 | ) | (18,943 | ) | (6,015 | ) | ||||||
Closing balance | 0- | 18,707 | 0- |
(*) The interest rate given varies from 5%-8%. Interest income from loans granted to others amounted in 2021 to NIS 276 thousand (2020: NIS 719 thousand).
Note 14 – Trade receivables
Composition:
December 31, | ||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Open accounts | 121,272 | 120,700 | 38,994 | |||||||||
Credit cards | 211 | 161 | 68 | |||||||||
Checks receivables | 17,160 | 17,468 | 5,518 | |||||||||
Less – provision for return of goods | (3,252 | ) | (5,131 | ) | (1,046 | ) | ||||||
Less – estimated credit loss | (1,374 | ) | (1,897 | ) | (442 | ) | ||||||
134,017 | 131,301 | 43,092 |
The table below shows the trade receivables balance for December 31, 2021 segmented by the due date.
Trade receivables- days past due | ||||||||||||||||||||||||
Nis in thousands | ||||||||||||||||||||||||
As of: | Not past due | <30 | 31-60 | 61-90 | >90 | Total | ||||||||||||||||||
December 31, 2021 | 115,699 | 4,842 | 509 | 96 | 126 | 121,272 | ||||||||||||||||||
December 31, 2020 | 112,882 | 6,374 | 79 | 130 | 1,235 | 120,700 |
F - 23
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 14 – Trade receivables (continued)
Changes in the allowance of credit loss
December 31, | ||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Balance at beginning of the year | 1,897 | 3,200 | 610 | |||||||||
Bad debts | 0- | (1,937 | ) | 0- | ||||||||
Changes in allowance for doubtful debts | (523 | ) | 634 | (168 | ) | |||||||
Balance at end of the year | 1,374 | 1,897 | 442 |
Note 15 – Other receivables and prepaid expenses
December 31, | ||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Prepaid expenses | 368 | 233 | 118 | |||||||||
Income receivables | 8 | 38 | 3 | |||||||||
Advances to suppliers | 2,263 | 2,826 | 727 | |||||||||
Government authorities | 261 | 364 | 84 | |||||||||
Forward transaction | 0- | 158 | 0- | |||||||||
Others | 2,039 | 3,048 | 656 | |||||||||
4,939 | 6,667 | 1,588 |
Note 16 – Inventories
December 31, | ||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Finished products | 50,498 | 56,348 | 16,237 | |||||||||
Inventory in transit | 9,969 | 6,167 | 3,206 | |||||||||
Less – Provision of slow-moving inventory | (939 | ) | (3,001 | ) | (302 | ) | ||||||
59,528 | 59,514 | 19,141 |
The Company records a provision for slow moving inventory in respect of inventory items estimated by management not to be realized due to expiration date. The slow-moving inventory is based on the historic realization rate of the respective item as well as on management's estimate with respect to its future realization rate.
F - 24
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 17 – Property, plant and equipment
Machinery | Computers | |||||||||||||||||||||||
Land and | and | Motor | and | Office | ||||||||||||||||||||
Building | equipment | Vehicles | equipment | Furniture | Total | |||||||||||||||||||
Consolidated Cost: | ||||||||||||||||||||||||
Balance - January 1, 2020 | 55,438 | 5,705 | 13,002 | 5,434 | 1,823 | 81,402 | ||||||||||||||||||
Changes during 2020: | ||||||||||||||||||||||||
Additions | 684 | 1,199 | 130 | 860 | 30 | 2,903 | ||||||||||||||||||
Dispositions | 0- | 0- | (1,200 | ) | 0- | 0- | (1,200 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Balance – December 31, 2020 | 56,122 | 6,904 | 11,932 | 6,294 | 1,853 | 83,105 | ||||||||||||||||||
Changes during 2021: | ||||||||||||||||||||||||
Additions | 1,343 | 2,273 | 1,594 | 888 | 111 | 6,209 | ||||||||||||||||||
Dispositions | 0- | 0- | (2,069 | ) | 0- | 0- | (2,069 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Balance – December 31, 2021 | 57,465 | 9,177 | 11,457 | 7,182 | 1,964 | 87,245 | ||||||||||||||||||
| ||||||||||||||||||||||||
Accumulated depreciation: | ||||||||||||||||||||||||
Balance – January 1, 2020 | 22,432 | 4,565 | 11,476 | 4,387 | 1,021 | 43,881 | ||||||||||||||||||
Changes during 2020: | ||||||||||||||||||||||||
Additions | 1,928 | 578 | 822 | 381 | 70 | 3,779 | ||||||||||||||||||
Dispositions | 0- | 0- | (1,200 | ) | 0- | 0- | (1,200 | ) | ||||||||||||||||
Balance – December 31, 2020 | 24,360 | 5,143 | 11,098 | 4,768 | 1,091 | 46,460 | ||||||||||||||||||
Changes during 2021: | ||||||||||||||||||||||||
Additions | 2,012 | 379 | 1,070 | 559 | 20 | 4,040 | ||||||||||||||||||
Dispositions | 0- | 0- | (2,069 | ) | 0- | 0- | (2,069 | ) | ||||||||||||||||
Balance – December 31, 2021 | 26,372 | 5,522 | 10,099 | 5,327 | 1,111 | 48,431 | ||||||||||||||||||
| ||||||||||||||||||||||||
Net book value: | ||||||||||||||||||||||||
December 31, 2021 | 31,093 | 3,655 | 1,358 | 1,855 | 853 | 38,814 | ||||||||||||||||||
December 31, 2020 | 31,762 | 1,761 | 834 | 1,526 | 762 | 36,645 | ||||||||||||||||||
| ||||||||||||||||||||||||
Net book value (USD in thousands): | ||||||||||||||||||||||||
December 31, 2021 | 9,998 | 1,175 | 437 | 596 | 274 | 12,480 | ||||||||||||||||||
December 31, 2020 | 10,213 | 566 | 268 | 491 | 245 | 11,783 |
F - 25
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 18 – Leases
All leases are accounted for by recognizing a right-of-use asset and a lease liability except for leases for low value assets and leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate of borrowing rate on commencement of the lease is used.
Right of use assets are initially measured at the amount of the lease liability.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortized on a straight-line basis over the shorter period of the remaining term of the lease or over the remaining economic life of the asset.
Nature of leasing activities
The Company enters into agreements for the lease of trucks and private vehicles for periods of 5 and 3 years respectively. The Company's lease payment liability is secured by the lessor’s legal ownership of the assets.
Right to use asset
December 31 | ||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
Cost: | ||||||||||||
Opening balance | 5,930 | 5,013 | 1,907 | |||||||||
Dispositions | (2,166 | ) | 0- | (698 | ) | |||||||
Additions | 3,569 | 917 | 1,148 | |||||||||
Closing balance | 7,333 | 5,930 | 2,357 | |||||||||
| ||||||||||||
Accumulated depreciation: | ||||||||||||
Opening balance | 3,064 | 1,153 | 985 | |||||||||
Dispositions | (1,983 | ) | - | (638 | ) | |||||||
Depreciation | 2,164 | 1,911 | 696 | |||||||||
Closing balance | 3,245 | 3,064 | 1,043 | |||||||||
| ||||||||||||
Net book value | 4,088 | 2,866 | 1,314 |
F - 26
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 18 – Leases (continued)
Leases liabilities
December 31 | ||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Opening balance | 2,985 | 3,887 | 960 | |||||||||
Additions | 3,569 | 917 | 1,147 | |||||||||
Dispositions | (187 | ) | 0- | (60 | ) | |||||||
Payments | (2,169 | ) | (1,819 | ) | (697 | ) | ||||||
Closing balance | 4,198 | 2,985 | 1,350 |
Amounts recognized in profit or loss
For the year ended December 31 | ||||||||||||
2 0 2 1 | 2 0 2 0 | 2 0 2 1 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Depreciation expense on right-of-use assets | 2,164 | 1,911 | 696 | |||||||||
Interest expense on lease liabilities | 96 | 94 | 31 | |||||||||
Cancellation of rental expenses | (2,264 | ) | (1,911 | ) | (728 | ) | ||||||
(4 | ) | 94 | (1 | ) |
Note 19 – Subsidiaries
The principal subsidiaries of G. Willi-Food International Ltd, all of which have been included in these consolidated financial statements, are as follows:
Subsidiary | Country of incorporation and principal place of business | Proportion of ownership interest at 31 December | ||||||||
December 31, | ||||||||||
2 0 2 1 | 2 0 2 0 | |||||||||
Euro European Dairies (Goldfrost) Ltd. | Israel | 100 | % | 100 | % | |||||
W.F.D. (Import, Marketing and Trading) Ltd. | Israel | 100 | % | 100 | % | |||||
W. Capital Ltd. | Israel | 100 | % | 100 | % |
Note 20 – Trade payables
December 31, | ||||||||||||
2021 | 2020 | 2021 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Open accounts | 20,131 | 22,378 | 6,473 | |||||||||
Checks payables | 255 | 1,096 | 82 | |||||||||
20,386 | 23,474 | 6,555 |
F - 27
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 21 – Employee benefit liabilities
Liabilities for employee benefits comprise:
December 31, | ||||||||||||
2021 | 2020 | 2021 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Defined benefit schemes (note 25) | 1,615 | 1,905 | 519 | |||||||||
Employee benefit | 2,452 | 2,338 | 785 | |||||||||
Accrual for annual leave | 990 | 1,099 | 318 | |||||||||
5,057 | 5,342 | 1,622 |
Estimates and assumptions
The costs, assets and liabilities of the defined benefit schemes operating by the Company are determined using methods relying on actuarial estimates and assumptions. Details of the key assumptions are set out in note 24. The Company takes advice from independent actuaries relating to the appropriateness of the assumptions. Changes in the assumptions used may have a significant effect on the consolidated statement of comprehensive income and the consolidated statement of financial position.
Note 22 – Other payables and accrued expenses:
December 31, | ||||||||||||
2021 | 2020 | 2021 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Customer advances | 1,861 | 1,787 | 598 | |||||||||
Accrued expenses | 9,039 | 9,617 | 2,906 | |||||||||
Other payables | 316 | 207 | 102 | |||||||||
11,216 | 11,611 | 3,606 |
Note 23 – Share capital
Composition
December 31 | ||||||
2 0 2 1 | 2 0 2 0 | |||||
| ||||||
Ordinary shares of NIS 0.1 each | 50,000,000 | 50,000,000 | ||||
| ||||||
Issued and outstanding | 13,867,017 | 13,867,017 |
(*) On September 15, 2020 the Company announced on completion of private allocation to institutional and classified investors in Israel of 650,000 ordinary shares in exchange of NIS 66 per share and option (not listed for trading) for the purchase of up to 650,000 ordinary shares of the company that can be exercised for a period of 12 months from the day of allocation at an exercise price of NIS 73.The total proceeds from the private allocation amounted to NIS 42.9 million, not including the proceeds from the exercise of the options. The share options expired in September 2021.
F - 28
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 24 - Defined benefit scheme
Defined benefit plans – General
According to labor laws and the Severance Pay Law in Israel, the Company is required to pay compensation to an employee upon dismissal or retirement (including employees who quit their job under other specific circumstances). The computation of the employee benefit liability is made according to the current employment contract based on the employee's latest salary which, in the opinion of management, establishes the entitlement to receive the compensation and considering the employment term.
The current legal retirement age is 62 for women, 65 for women was born after January 1960 and 67 for men. Therefore, according to the plan, an employee who has been employed by the Company for at least one consecutive year (and under circumstances defined by law) and is dismissed after the said period is entitled to severance pay. The rate of compensation stipulated in the Law is the employee's last salary for each year of employment.
As part of the plan, the Company and its subsidiaries are obligated to deposit amounts, at a rate to be determined by law, in order to secure the accrual of severance pay. As stipulated in the Extension Order (Consolidated Version) of compulsory pension under the laws in Israel (hereinafter: "the Extension Order"). In the reporting year, the Company's rate of provisions for severance pay is 6.5%, to be deposited in a pension fund / insurance fund.
The actuary is not employed by the Company and is not dependent thereon. The present value of the defined benefit obligation and the relating costs of current and past services is calculated as the present value (without deducting the plan’s assets) of the future payments expected to settle the liability, in consideration for the current and past services rendered by the employee.
The plan detailed above exposes the Company to the following risks: "investment risk", i.e., the risk that the program assets will bear a negative yield and thus reduce the plan's assets in a way that does not suffice to cover the obligation. i.e., risk of actuarial assumptions regarding the expected increase in wages will be underestimated Compared with the actual wage increases, thereby exposing the Company to the risk that the obligation will increase accordingly.
The current value of the Company's post-employment benefits obligation is based on an actuarial estimation. The actuarial estimation was performed by external actuary, member of Israel Association of Actuaries.
F - 29
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 24 - Defined benefit scheme (continued)
The principal assumptions used for the purposes of the actuarial valuations were as follows:
Valuation at | ||||||||
2 0 2 1 | 2 0 2 0 | |||||||
% | % | |||||||
| ||||||||
Discount rate | 2.05 | 1.73 | ||||||
Expected return on the plan assets | 2.05 | 1.73 | ||||||
| ||||||||
Rate of increase in compensation | 4 | 4 | ||||||
| ||||||||
Expected rate of termination: | ||||||||
0-1 years | 35 | 35 | ||||||
1-2 years | 30 | 30 | ||||||
2-3 years | 25 | 25 | ||||||
3-4 years | 15 | 15 | ||||||
4-5 years | 15 | 15 | ||||||
5 years and more | 7.5 | 7.5 |
The assumptions regarding future mortality rates are based on mortality tables published and approved by the Ministry of Finance. The mortality rate of an active participant at retirement age (67 for men, 62 for women and 65 for women born after January 1960.), is 0.6433% for men and 0.3574% for women.
The provisions of Standard 19 stipulate that interest used to capitalize assets and liabilities should reflect risk free interest that is interest on highly rated corporate bonds with similar maturity periods and terms. Until November 2014, absent quality data and information about bonds of this type, what was utilized was the interest on long-term index linked government bonds (index linked Galil)/or long-term shackle government bonds (NIS Dawn - “Shachar”). Following a decision by the Securities Authority, according to which there is a deep market for corporate bonds, and according to the publication of Accounting Staff Position number 12-1, as of this report, the capitalization interest is that of high quality corporate bonds. Use of a quality curve as stated above, is published by quoting companies which specialize in this field. The nominal interest rate for the capitalization appropriate for corporate bonds with high rankings as aforesaid, as of December 31, 2021, is 2.05% per year.
F - 30
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 24 - Defined benefit scheme (continued)
Changes in the present value of the defined benefit obligation in the current period were as follows:
Year ended December 31, | ||||||||||||
2021 | 2020 | 2021 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Opening defined benefit obligation | 6,010 | 5,527 | 1,933 | |||||||||
Current service cost | 581 | 585 | 187 | |||||||||
Interest cost | 102 | 98 | 33 | |||||||||
Actuarial losses arising from experience adjustments | (130 | ) | 122 | (42 | ) | |||||||
Actuarial losses/(gains) arising from changes in financial assumptions | 213 | 15 | 68 | |||||||||
Benefits paid | (335 | ) | (337 | ) | (108 | ) | ||||||
Closing defined benefit obligation | 6,441 | 6,010 | 2,071 |
Changes in the fair value of the defined benefit assets in the current period were as follows:
Year ended December 31, | ||||||||||||
2021 | 2020 | 2021 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Opening defined benefit assets | 4,105 | 4,041 | 1,320 | |||||||||
Expected return on the plan assets | 72 | 72 | 23 | |||||||||
Changes in financial assumptions | 446 | (157 | ) | 144 | ||||||||
Employer contribution | 321 | 380 | 103 | |||||||||
Benefits paid | (115 | ) | (227 | ) | (37 | ) | ||||||
Interest losses on severance payment allocated to remuneration benefits | (3 | ) | (4 | ) | (1 | ) | ||||||
Closing defined benefit assets | 4,826 | 4,105 | 1,552 |
Adaption of the current value of defined benefit plan liability and the fair value of the plan's assets to the assets and liabilities recognized in the Balance Sheets:
Year ended December 31, | ||||||||||||
2021 | 2020 | 2021 | ||||||||||
NIS | NIS | US Dollars | ||||||||||
| ||||||||||||
Present value of funded liability | 6,441 | 6,010 | 2,071 | |||||||||
Fair value of plan assets - accumulated deposit in executive insurance | 4,826 | 4,105 | 1,552 | |||||||||
Net liability deriving from defined benefit obligation | 1,615 | 1,905 | 519 |
F - 31
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 24 - Defined benefit scheme (continued)
Sensitivity analyzes principal actuarial assumptions:
The sensitivity analyzes below have been determined based on reasonably possible changes in actuarial assumptions at the end of the reporting period. Sensitivity analysis does not account for any existing inter dependence between assumptions:
If the discount rate were increased / decreased by 0.5%, the defined benefit obligation would have decreased / increased by NIS 232 thousand (USD 75 thousand).
If the rate hikes expected salaries would have increased / decreased by 0.5%, the defined benefit obligation would have increased / decreased by NIS 224 thousand (USD 72 thousand).
If the resignation rate would have increased / decreased by 10%, the defined benefit obligation would have increased / decreased by NIS 162 thousand (USD 52 thousand).
Short term employee benefits:
Paid Annual Leave
In accordance with the Annual Leave Law, 1951, Company employees are entitled to several leave days per each working year. According to the above law (and addendums determined in personal contracts between the Company and several employees), the leave days due to an employee during the year is established based on the number of years of employment of that employee.
The employee may use leave days based on the employee's needs and with the Company's consent and to accumulate the remaining unused leave days based on the employee's personal employment contract. An employee who ceases employment before using the balance of leave days is entitled to payment for the above balance of leave days.
The balance of the Company's vacation provision is in accordance with the leave entitlement of each individual employee, according to his individual agreement with the company to which the employee belongs and in accordance with the employee's salary. The balance of the Company's vacation provision for December 31, 2021, as NIS 831 thousand (NIS 915 thousand, as of December 31, 2020).
Paid Sick Leave
In accordance with the Sick Pay Law, 1976, the Company's employees are entitled to 18 sick days per year (1.5 sick days per month). Sick days may be used only with a medical confirmation of an employee's illness. Employee who ceases employment before using the sick days due to the employee is not entitled to payment for the above balance of sick days and, therefore, such provision is not recorded in the Company's books.
F - 32
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 25 - Contingent liabilities and commitments
-
The Company has an obligation to pay incentives to several customers that are not subject to the Food Law, 5744-2014, which came into effect on January 15, 2015. Some of those incentives are payable as a rate of total annual sales to those customers, and some of those incentives are payable as a rate of acquisitions in excess of an agreed upon annual volume of activities. The incentives are calculated specifically for each customer.
-
On June 4, 2020, a General Meeting of the Shareholders of the Company approved management services agreements pursuant to which Messrs. Joseph Williger and Zwi Williger are to serve as active co-chairmen of the Board of Directors. For further details, see note 26 to the financial report of 2020.
-
On April 1, 1997, the parent Company, Willi-Food Investments Ltd., and the Company entered into an agreement for the provision of management, administration, bookkeeping, secretarial and controllership services. Pursuant to the said agreement, the parent company shall pay the Company a monthly amount of NIS 10,000 plus VAT for the said services and for external services that are provided at the same time to the parent Company and to the subsidiary by the same third party, such as legal services, auditing services, etc., but excluding unique and specific services that are provided to the parent Company or to the company.
-
On February 24, 2016, a motion to certify a derivative action (hereinafter - the “Motion”) was received at the parent Company’s offices. The Motion was filed with the District Court (Economic Department) in Tel Aviv by Yaad Peer Management Services Ltd. (hereinafter - the “Applicant”), that holds shares of the parent Company. The motion was filed against all directors and office holders in the Company. The parent Company and the Company were added as respondents to the Motion. The Motion deals with the Applicant’s claim for damages suffered by the parent Company, which is estimated by the Applicant, as of the filing of the Motion, at approximately $ 3 million, due to an alleged violation of the directors’ and officers’ fiduciary duty, duty of care and duty of expertise towards the parent Company in connection with a $3 million investment in a company registered in the Czech Republic and which holds an inactive hotel in the Czech Republic. According to the Applicant, the investment is not related in any way to the activity of the Company and is probably used to assist the controlling shareholder of the parent Company in other matters or to cover his other obligations.
On August 16 2018, the Company filed a notice whereby it intends to lodge a lawsuit against the office holders in connection with the events which are the subject matter of the motion and therefore it is no longer needed to discuss the motion to approve a derivative action. In view of Company's notice, the said motion was stricken out and by a court ruling on October 4, 2018 and the case was closed. on November 4, 2018 the Company filed a NIS 4,183,208 lawsuit against the Company’s former controlling shareholder – Mr. Gregory Gurtovoy and against five (former) Company directors and senior office holder - Israel Joseph Schneerson, Pavel Buber, Iram Ephraim Graiver. Ilan Menachem Admon and Zalman Vigler (hereafter jointly: the “Defendants”). According to the Company, the Defendants conspired to cause the use of millions of NIS of the Company funds as collaterals to loans extended to foreign private companies related to the Company’s controlling shareholders on dates which are relevant to the lawsuit without obtaining the required approvals from the Company’s directors and without issuing the required report to Company’s shareholders. The lawsuit is based on the claim that an agreement signed by the Company, whereunder it has allegedly invested in the bonds of a Czech company, is not a genuine agreement; rather, it is claimed, the purpose of the agreement was to assist the then controlling shareholders (Gregory Gurtovoy and others) to secure private loans extended by the Austrian bank Meinl, while using the company's funds for their concealed and inappropriate purposes. The Company demands that the Defendants compensate it for the funds that were not refunded to the Company (in NIS values) plus a compensation at the rate of the alternative yield and a compensation equal to the amounts paid by the Company to enable the refund of the funds. On January 24, 2019, the Defendants filed statements of defense, various motions (to dismiss in limine and/or delay the proceedings) and a counterclaim against willi-food and against the Company as part of this proceeding. In their counterclaim the Defendants claims that they are entitled for funding of their legal defense and/or for indemnification and exemption from the Company in respect of the lawsuit and request the Court to order the Company to fund their legal defense against the Company’s lawsuit. Since the Defendants are accused of breaching their fiduciary duty to the Company, Company’s management is of the opinion that their claims on this matter will be rejected. On December 25, 2019, the Court issued a resolution which approves an application to give a Court ruling status to a compromise agreement signed between G. Willi-Food and Mr. Ilan Admon; according to the said compromise agreement, the mutual claims lodged on behalf of the parties in this filed were rejected without issuing an order for court costs. The proceedings relating to the other defendants shall continue as planned. A pre-trial hearing was set to April 7, 2022. In view of the above, Company’s management is of the opinion that the disclosure in the Consolidated financial statements and in the notes thereto is sufficient.
F - 33
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 25 - Contingent liabilities and commitments (continued)
-
On July 23, 2017, Mr. Iram Graiver, former CEO of the Company and Willi-Food (hereinafter - “Mr. Graiver”) filed a lawsuit to the Regional Labor Court in Tel Aviv Jaffa (hereinafter - “the Labor Court”) claiming payment of social rights and different compensations at the total amount of NIS 2,377,305. On November 26, 2017, the Company filed a statement of defense. On July 27, 2017, the Company filed a lawsuit to the Labor Court against Mr. Graiver, demanding that he repays funds that he has taken unlawfully from the Company, amounting to NIS 1,694,325. According to the Company, throughout his term of employment as an office holder in the Company, the defendant has unlawfully taken from the Company salary, bonus in respect of 2016 and reimbursement of expenses. According to the Company, Mr. Graiver has done so while breaching his fiduciary duty and his duty of care towards the Company as well as the cogent provisions of the Companies Law, 5759-1999, whereby it is mandatory that payments of the type taken from the Company by Mr. Graiver are approved by the General Meeting of the Company’s shareholders; according to the Company, Mr. Graiver has not obtained such an approval. On November 2, 2017, a resolution was issued to join the hearings pertaining to the two proceedings described above. On November 26 2017 statements of defense were filed by the Company and Mr. Graiver and on March 7 2018 a preliminary hearing was held. The parties are in the process of document discovery and review. Proof hearing was held on January 15 2020. Second Proof hearing was held on June 7 2020. Third Proof hearing (and last) held on October 31 2021 and deadlines were set for submitting summaries by Mr. Graiver and the Company on March 1, 2022 and May, 8 2022, respectively. In view of the above, Company’s management is of the opinion that the disclosure regarding the proceedings in the Consolidated financial statements and in the notes thereto is sufficient.
-
A lawsuit and a motion to approve it as class action was filed on May 7, 2020, against the Company and 2 other respondents to the central district court. The applicant claimed that the company marketed several products as products approved by the chief rabbinate of Israel before the actual rabbinate approval was obtained. Thus, the applicant alleges a violation of various laws. On February 27, 2022 the position of Chief Rabbinate was submitted to the court. On February 28, 2022, a decision was made according to which the State Attorney's Office must clarify whether the position given is also in the opinion of the Ministry of Religious Affairs. At this early stage, the company and its legal counsel are unable to assess the chances of this lawsuit.
-
A lawsuit and a motion to approve it as class action was filed on June 24, 2020, against the Company, Euro European Dairies, and another respondent to the Haifa District Court. The applicant claimed that the Company marketed several products with misleading captions and contrary to the provisions of the law and the relevant regulations. On October 4, 2021, a hearing was held in which it was determined that the applicant will withdrawal from the request for approval and each party will submit its claims regarding the compensation and fees. A hearing is scheduled for May 10, 2022, in which the compensation and fees will be determined. From the Company’s and its legal counsel experience, in the event of withdrawal and determination of compensation and fees for the applicant, the amount expected to be paid are immaterial to the Company.
F - 34
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 25 - Contingent liabilities and commitments (continued)
-
A lawsuit and a motion to approve it as class action was filed on September 8, 2020, against Euro European Dairies to the Haifa district court. The applicant claimed that Euro European Dairies violated its obligations to import and market Gaude cheese in the quantities and prices it undertook as part of duty-free tenders. The applicant claims that he and the members of the group suffered damages in the amount of NIS 57 million. A response to the request for approval was submitted on February 1, 2021 and a pre-trial hearing was set for December 28, 2021. A hearing to examine the decision on the request for disclosure of documents is scheduled for May 1, 2022. At this early stage, the Company and its legal counsel are unable to assess the chances of the class action.
-
A lawsuit and a motion to approve it as class action was filed on August 2, 2021, against G. Willi-Food and another 5 respondents to the District Court. The applicant claimed that the Company marketed several products with misleading captions and contrary to the provisions of the law and the relevant regulations. The applicant claims that he and the members of the group suffered financial damages in amount of NIS 100 million and Non-financial damages in amount of NIS 384 million. A response to the request for approval was submitted and a pre-trial was set for July 3, 2022. At this early stage, the company and its legal counsel are unable to assess the chances of the class action.
-
A lawsuit and a motion to approve it as class action was filed on November 8, 2021, against the Company to the District Court. The applicant claimed that the Company marketed several products with misleading captions and contrary to the provisions of the law and the relevant regulations. The applicant claims that he and the members of the group suffered damages in amount of NIS 57 million. A response to the request for approval was submitted and a pre-trial was set for May 26, 2022. At this early stage, the company and its legal counsel are unable to assess the chances of the class action.
-
A lawsuit and a motion to approve it as class action was filed on January 4, 2022, against the Company to the District Court. The applicant claimed that the Company marketed several products with misleading captions and contrary to the provisions of the law and the relevant regulations. The applicant claims that he and the members of the group suffered damages in amount of NIS 8.3 million. At this early stage, the company and its legal counsel are unable to assess the chances of the class action.
F - 35
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 25 - Contingent liabilities and commitments (continued)
-
A lawsuit and a motion to approve it as class action was filed on February 15, 2022, against the Company to the District Court. The applicant claimed that the Company marketed product with misleading captions and contrary to the provisions of the law and the relevant regulations. The applicant claims that he and the members of the group suffered damages in amount of NIS 2.7 million. At this early stage, the company and its legal counsel are unable to assess the chances of the class action.
Note 26 - Events during and after the reporting period
-
COVID 19 - In the first quarter of 2020, the corona virus began to spread around the world, an event declared by the World Health Organization as a global pandemic (the "crisis"). As part of dealing with the crisis, many countries around the world, including Israel, have imposed restrictions on various activities in the economy, including movement and gatherings restrictions. The crisis and the restrictions imposed and still pose challenges that were reflected in an unprecedented decline in business activity, both in terms of its intensity and in terms of the speed with which it occurred. In December 2020, the US Food and Drug Administration approved, for the first time, the use of the vaccine to prevent the corona pandemic. In mid-December, an extensive vaccination campaign began in Israel, and as of the date of the report, a significant proportion of the population has been immunized. The year 2021 was still marked by the corona crisis and steps to emerge from it taken by the world and Israeli economies - both in the medical aspect, which is reflected in vaccinations and disease reduction, and in the economic aspect, which is reflected, among other things, in opening the economy and helping victims of the crisis. Most of the restrictions in Israel have been removed, but the Israeli economy and the world economy are still in the process of recovery, with epidemiological developments and various waves of illness slowing down from time to time. The various guidelines and restrictions in Israel are updated from time to time, in accordance with changes in the level of morbidity and infection.
The Company purchases its goods from about 135 suppliers around the world, including the Far East, Europe, the United States, South America and Israel. The rate of exit from the crisis varies from country to country so that different restrictions on the production of products by some of the company's suppliers may apply, which may make it difficult for it to import goods in sufficient quantities from those suppliers. The company is also facing an increase in the prices of the raw materials it purchases, the unavailability of containers in the world and significant increases in sea freight costs, which, in the company's estimation, are due to the corona crisis in the world. The company works to the best of its ability to maintain the rate of receipt of goods on a regular basis in order to reduce the effects of the situation on sales to its customers. At this stage the company is unable to estimate when this situation will change due to the recurring waves of illness, so the current time is still characterized by uncertainty. This is a variable event whose scope and period of duration are not under the control of the Company and therefore it is unable to assess the full extent of the economic effects on its activity.
F - 36
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 26 - Events during and after the reporting period (continued)
-
In February 2022, a military confrontation began between Russia and Ukraine (the "confrontation"), which led, among other things, to the imposition of sanctions on Russia and various reactions in the capital markets in Israel and around the world. At this stage it is difficult to estimate all the effects of the conflict - global and local, in the short and long term. Russia is one of the three largest oil producers in the world and Europe's main source of gas, and as a result of this situation, oil prices have risen to over $ 100 per barrel. The Company anticipates that the conflict will not have a direct impact on it in the short future but is unable to assess the nature and extent of future impacts, in any event, on the environment in which it and its suppliers operate.
-
On January 22, 2020, the Company announced that Mr. Michael Luboschitz submitted notice of his resignation as CEO of the Company for personal reasons, effective as of March 2, 2020.
-
On January 27, 2020, the Company announced that its Board of Directors had approved the appointment of Mrs. Einat Peled Shapira as the Company’s new CEO, effective as of March 10, 2020. On March 2, 2021, Mrs. Einat Peled Shapira submitted notice of her resignation as CEO of the Company, effective as of April 1, 2021.
-
On May 12, 2021, the Company announced that its Board of Directors had approved the appointment of Mr. Erez Winner as the Company’s active CEO.
-
On June 15, 2020 the Company Ordinary Shares began trading for dual listing on the Tel-Aviv Stock Exchange. The Company's ordinary shares continues to be traded on the Nasdaq Capital Market.
-
On September 2020, the Company announced the completion of a private placement to classified institutional investors in Israel of 650,000 ordinary shares for NIS 66 per share and of stock option (not listed for trading) for the purchase of up to 650,000 ordinary shares of the Company exercisable for a period of twelve months from the allotment date at an exercise price of 73 NIS. On September 2021 the stock options expired.
-
On September 16, 2021, the Company’s Board of Directors announced a dividend distribution of NIS 60 million (NIS 4.33 per share).
F - 37
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 26 - Events during and after the reporting period (continued)
-
On August 2021, the Company’s Board of Directors decided to exit the non-banking credit segment, after three years of activity, in light of the small number of transactions made and high managerial attention required. Thus, starting with the Company's consolidated financial statements for the third quarter of 2021, the Company has ceased to present the segment of providing the non-banking credit as a separate accounting segment.
Note 27 - Accounting policies
Revenue
Performance obligations and timing of revenue recognition:
The majority of the Company's revenue is derived from selling food products in the Israeli market with revenue recognized in a point in time when control of the goods has transferred to the customer. This is generally when the goods are delivered to the customer. However, for export sales, control might also be transferred when delivered either to the port of departure or port of arrival, depending on the specific terms of the contract with a customer. There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the Company no longer has physical possession, usually will have a present right to payment and retains none of the significant risks and rewards of the goods in question.
Determining the transaction price:
Most of the Company's revenue is derived from pre-set prices with its customers, therefore the amount of revenue to be earned from each transaction is determined by reference to those prices agreed with the customers. An exception to this principal is that in most cases, the Company enables specific customers to return products which they have not sold, despite that there is no agreement between the Company and its customers regarding such returns and the Company does not have such policy. Historical experience enables the Company to estimate reliably the value of good that will be returned and restrict the amount of revenue that is recognized such that it is highly probable that there will not be a reversal of previously recognized revenue when goods are return.
Inventories
Inventories are initially recognized at cost, and subsequently at the lower of cost and net realizable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Weighted average cost is used to determine the cost of the inventories.
F - 38
G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 27 - Accounting policies (continued)
Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
Cash and Cash equivalents
Cash and cash equivalents include demand deposits and term deposits in banks that are not restricted as to usage, with an original period to maturity of not more than three months.
Deposits that are restricted as to usage are classified as pledged deposits.
Deposits with an original period to maturity exceeding three months, which as of the statement of financial position do not exceed one year, are classified as short-term investments
Leases
The majority of the Company's accounting policies for leases are set out in note 19.
Identifying leases
The Company accounts for a contract as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:
-
There is an identified asset;
-
The Company obtains substantially all the economic benefits from use of the asset; and
-
The company has the right to direct use of the asset
The Company considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease.
In determining whether the Company obtains substantially all the economic benefits from use of the asset, the Company considers only the economic benefits that arise use of the asset, not those incidental to legal ownership or other potential benefits.
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G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 27 - Accounting policies (continued)
In determining whether the Company has the right to direct use of the asset, the Company considers whether it directs how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset, the Company considers whether it was involved in the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Company applies other applicable IFRSs rather than IFRS 16.
Property, plant and equipment
Property, plant and equipment 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 equipment 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 extension period, where the Company intends to exercise such option, or their useful life.
Useful life (Years) | % | |||
| ||||
Land | 50 | 2 | ||
Construction | 25 | 4 | ||
Motor vehicles | 5 | 15-20 | (Mainly 20%) | |
Office furniture and equipment | 6 | 6-15 | (Mainly 15%) | |
Computers | 3 | 20-33 | (Mainly 33%) | |
Machinery and equipment | 10 | 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.
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G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 27 - Accounting policies (continued)
Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Company's interest in the net fair value of the identifiable assets, liabilities and Contingent liabilities of the subsidiary or jointly controlled entity recognized at the date of acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company 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.
Deferred taxes
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilized.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Defined benefit schemes
Defined benefit scheme surpluses and deficits are measured at:
-
The fair value of plan assets at the reporting date; less
-
Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate bonds that have maturity dates approximating to the terms of the liabilities and are denominated in the same currency as the post-employment benefit obligations; less
-
The effect of minimum funding requirements agreed with scheme trustees.
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G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 27 - Accounting policies (continued)
Remeasurements of the net defined obligation are recognized directly within equity. The remeasurements include:
-
Actuarial gains and losses.
-
Return on plan assets (interest exclusive).
-
Any asset ceiling effects.
Service costs are recognized in profit or loss, and include current and past service costs as well as gains and losses on curtailments.
Net interest expense (income) is recognized in profit or loss, and is calculated by applying the discount rate used to measure the defined benefit obligation (asset) at the beginning of the annual period to the balance of the net defined benefit obligation (asset), considering the effects of contributions and benefit payments during the period. Gains or losses arising from changes to scheme benefits or scheme curtailment are recognized immediately in profit or loss.
Settlements of defined benefit schemes are recognized in the period in which the settlement occurs.
Share capital
Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.
The Company's ordinary shares are classified as equity instruments.
Impairment of non-financial assets
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e., the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ('CGUs'). Goodwill is allocated on initial recognition to each of the Company's CGUs that are expected to benefit from a business combination that gives rise to the goodwill.
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G. WILLI-FOOD INTERNATIONAL LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(NIS in thousands) |
(Cont.) |
|
Note 27 - Accounting policies (continued)
Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognized in other comprehensive income. An impairment loss recognized for goodwill is not reversed.
Financial assets and liabilities
The Company classifies its financial assets and liabilities into one of the categories discussed below, the Company's accounting policy for each category is as follows:
Fair value through profit or loss-
Financial assets and liabilities at fair value through profit or loss are measured at fair value at the end of each reporting period They are carried in the statement of financial position at fair value with changes in fair value recognized in the consolidated statement of income in the finance income or expense line.
Amortized cost-
The Company's financial assets (liabilities) measured at amortized cost comprise trade and other receivables, loans to others, cash and cash equivalents and trade payables in the consolidated statement of financial position.
Impairment provisions for trade receivables are recognized based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables.
Treasury shares
The cost of Company shares held by the Company or its consolidated companies is deducted from shareholders’ equity as a separate component.
F - 43