Willi-Food(WILC) - 2023 Q4 - Annual Report

Financial Performance - Revenues for fiscal year 2023 increased by 9.0% to NIS 543.3 million (USD 149.8 million) from NIS 498.3 million (USD 137.4 million) in fiscal year 2022[168] - Cost of sales for fiscal year 2023 increased by 19.0% to NIS 422.6 million (USD 116.5 million), representing 77.8% of revenues, compared to 71.2% of revenues in fiscal year 2022[169] - Gross profit for fiscal year 2023 decreased by 15.7% to NIS 120.6 million (USD 33.3 million), or 22.2% of revenues, down from 28.7% of revenues in fiscal year 2022[170] - Operating profit for fiscal year 2023 decreased by 54.9% to NIS 20.4 million (USD 5.6 million), or 3.7% of revenues, compared to 9.0% of revenues in fiscal year 2022[173] - Net profit for fiscal year 2023 decreased by 23.8% to NIS 31.7 million (USD 8.7 million), or NIS 2.28 (USD 0.63) per share, down from NIS 3.00 (USD 0.83) per share in fiscal year 2022[176] Cash and Receivables - Cash and cash equivalents as of December 31, 2023, were NIS 137.5 million (USD 37.9 million), down from NIS 150.6 million (USD 41.5 million) as of December 31, 2022[178] - Net cash from operating activities for fiscal year 2023 was approximately NIS 33.7 million (USD 9.3 million), compared to NIS 14.1 million (USD 3.9 million) in fiscal year 2022[180] - The Company's trade receivable balance as of December 31, 2023, was NIS 160.4 million (USD 44.2 million), down from NIS 165.8 million (USD 45.7 million) as of December 31, 2022[184] Economic Indicators - The annual rate of inflation in Israel during the year ended December 31, 2023, was 3.4%[186] - The GDP growth rate in Israel is projected to be 2.8% in 2023 and 3.5% in 2024, driven by increased private consumption and export activity[193] - The unemployment rate decreased from 4.3% at the end of 2022 to 3.3% at the end of 2023[194] - The annual inflation rate in Israel for 2023 was 3.4%, which is lower than in most developed countries[195] - The government budget deficit increased to 4.2% of GDP in 2023, up from 0.6% in 2022, with an expected rise to 6.6% in 2024[196] - The Bank of Israel maintained an interest rate of 4.75% in the second half of 2023, reducing it to 4.5% at the beginning of 2024[197] Executive Compensation - The total compensation for the five highest-paid executives in 2023 amounted to NIS 8.31 million (approximately USD 2.3 million)[212] - The maximum annual measurable bonus for co-chairmen is capped at NIS 2.5 million (approximately USD 0.69 million), contingent on achieving a minimum operating profit of NIS 30 million (approximately USD 8.27 million)[218] - The aggregate compensation paid to the Company's directors and officers for fiscal year 2023 was approximately NIS 6.8 million (USD 1.9 million), excluding bonuses of approximately NIS 2.9 million (USD 0.8 million) paid to key executives[235] - The maximum annual bonus for the Chairman/CEO is capped at NIS 2.4 million (USD 661.7 thousand)[228] - The Company's Compensation Policy was last approved by shareholders on March 14, 2023, emphasizing performance-based compensation and the retention of skilled executives[236] Corporate Governance - The Company is classified as a "Controlled Company" under Nasdaq rules, exempting it from certain independence requirements[247] - The Company is required to have at least two external directors on its Board, with specific qualifications in financial and accounting expertise[248] - The audit committee consists of three independent directors, ensuring oversight of the Company's accounting and reporting practices[240] - The terms of service and employment for key executives, including bonuses based on operating profit, are subject to approval by the Company's board and shareholders[245] - The Company has a fiduciary duty to disclose any personal interest related to transactions, ensuring transparency in operations[263] Risk Management and Compliance - The Company is subject to various risks, including market competition, changes in consumer preferences, and potential cyber-attacks[25] - The Company is required to maintain regulatory qualifications for its products, which may impact operations[25] - The Company has established a system of internal controls to mitigate operational risks[25] Employee and Labor Relations - The Company complies with all legal requirements related to labor, including wages, hours, and social benefits[280] - The Company has a pension insurance contribution structure where employees contribute 6% of their insured salary, while the Company contributes between 12.5% and 14.83%[282] - The Company's contributions to the pension fund cover 72% to 100% of its severance liability towards employees, depending on the contribution level[282] - As of December 31, 2023, the Company employed a total of 207 persons, including 7 in management, 43 in accounting and importing, 44 in sales and marketing, and 113 in logistics networks[277] Insurance and Indemnification - The Company has undertaken to indemnify and insure its directors and senior officers against certain liabilities incurred in connection with their duties[253] - The Company decided not to renew the insurance policy for directors and officers for the years 2022-2023[258] - The Company shareholders approved an insurance policy for Messrs. Zwi Williger and Joseph Williger for a three-year period on the same terms as other directors and officers[257] Shareholder Matters - As of March 21, 2024, there are 141,500 ordinary shares available for issuance under the 2022 Share Award Plan[285] - The Options Plan aims to attract and retain personnel by providing incentives through share options and other awards[284] - The Company has a significant concentration of shares held by one shareholder, which may affect governance and decision-making[25]