G. Willi-Food International (WILC) 20-F/A 2018 FY Annual report (foreign) (amended)

          

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F/A

(Amendment No. 1)

☐ 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, 2018

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, Finance Manager

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 class	Name of each exchange on which registered
Ordinary Shares, NIS 0.10 par value per share	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

The registrant had 13,240,913 ordinary shares, NIS 0.10 nominal value per share as of December 31, 2018.

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 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 be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period 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. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

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 which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐

International Financing 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  ☒

EXPLANATORY STATEMENT

This Amendment No. 1 on Form 20-F/A (the “Amendment”) to the annual report on Form 20-F for the fiscal year ended December 31, 2018, filed on March 27, 2019 (the “Original Filing”),  is being filed by G. Willi-Food International Ltd. (the “Company”) solely to (i) correct a typographical error in Item 18 regarding the date of the Report of Independent Registered Public Accounting Firm of Ziv Haft, BDO Member Firm (the “Audit Report”) in the Original Filing and (ii) add language to the Audit Report clarifying that the Company is not required to have an audit of its internal control over financial reporting and so the Audit Report does not express an opinion regarding such internal control over financial reporting.

In addition to the revised Audit Report, the Company is filing with this Amendment (i) the unchanged consolidated financial statements of the Company to which the revised Audit Report relates, and (ii) currently dated certifications of our principal executive officer and our principal financial officer pursuant to Rule 12b-15 under the Securities and Exchange Act of 1934, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.

This Amendment speaks as of the date of the Original Filing. Other than as described above, this Amendment does not, and does not purport to, amend, update or restate any information in the Original Filing, including the previously reported consolidated financial statements of the Company, or reflect any events that have occurred after the date of the Original Filing.

PART III

ITEM 18.   FINANCIAL STATEMENTS

The financial statements required by this item are found at the end of this Amendment, beginning on page F-1.

ITEM 19.   EXHIBITS

The following exhibits are filed as a part of this Amendment:

Exhibit Number	Description
12.1	Certification of CEO of the Company pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)
12.2	Certification of CFO of the Company pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)
13.1	Certification of CEO of the Company pursuant to Rule 13a-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*)
13.2	Certification of CFO of the Company pursuant to Rule 13a-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*)

  (*)   Filed Herewith

G. WILLI-FOOD INTERNATIONAL LTD.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2018

G. WILLI-FOOD INTERNATIONAL LTD.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2018

TABLE OF CONTENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2 - F-3
Financial Statements:
Statements of financial position	F-4 - F-5
Statements of Income	F-6
Statements of comprehensive Income	F-7
Statements of Changes in Equity	F-8
Statements of Cash Flows	F-9 - F-10
Notes to the Financial Statements	F-11 - F-56

Report of Independent Registered Public Accounting Firm

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 sheet of G. Willi-Food International Ltd (the “Company”) and subsidiaries as of December 31, 2018, and the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for the year, ended, December 31, 2018, 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, 2018, and the results of their operations and their cash flows for the year, ended December 31, 2018, in conformity with International Financial Reporting standards as issued by the International Accounting Standards Board.

Without qualifying our opinion, we draw attention to Note 21(c) of the financial statements describing a Plea Agreement served under an amended indictment against former controlling shareholders of the Company. Under the Plea Agreement, the former controlling shareholders were convicted. Similarly, we draw attention to Note 21(f) of the financial statements describing ongoing lawsuit, against the Company's former directors and former officers.

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 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.

/s/ Ziv Haft

Ziv Haft

Certified Public Accountants (Isr)

BDO Member Firm

We have served as the Company's auditor since 2018.

Tel Aviv, Israel

March 27, 2019

F - 2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF

G. Willi-Food International Ltd. 

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of G. Willi-Food International Ltd. and subsidiaries (the "Company") as of December 31, 2017 and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2017, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Without qualifying our opinion, we draw attention to Note 21(b) of the financial statements describing an indictment served against former controlling shareholders of the Company. According to the indictment, the defendants fraudulently transferred USD 3 million from a bank account of a subsidiary of the Company in favor of an investment in bonds of a European company, while the investment was used to secure the repayment of a loan extended to companies affiliated with the defendants. Similarly, we draw attention to Note 21(d) of the financial statements describing a motion to certify a derivative action which was filed in February 2016 against the Company's directors and officers. 

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. 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 audit 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 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Brightman Almagor Zohar & Co.

Certified Public Accountants

Member of Deloitte Touche Tohmatsu Limited

Tel Aviv, Israel

April 29, 2018

We began serving as the Company’s auditor in 1994. In 2018, we became the predecessor auditor.

F - 3

G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(NIS in thousands)

			December 31,
	Note		2 0 1 8		2 0 1 7		2 0 1 8 (*)
			NIS		NIS		US Dollars
Assets
Current assets
Cash and cash equivalents		4a		134,287		113,062		35,829
Financial assets at fair value through profit or loss		4b		137,904		143,514		36,794
Trade receivables		4c		98,017		85,943		26,152
Other receivables and prepaid expenses		4d		3,744		5,996		999
Inventories		4e		49,289		39,899		13,151
Current tax assets				862		6,760		230
Total current assets				424,103		395,174		113,155
Non-current assets
Property, plant and equipment				79,611		78,598		21,241
Less -accumulated depreciation				40,219		37,389		10,731
		6		39,392		41,209		10,510
Goodwill		7		36		36		10
Deferred taxes		10c		2,882		503		769
Total non-current assets				42,310		41,748		11,289
Total assets				466,413		436,922		124,444

(*)          Convenience Translation into US Dollars.

The accompanying notes are an integral part of the financial statements.

F - 4

G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(NIS in thousands)

(Cont.)

			December 31,
	Note		2 0 1 8			2 0 1 7			2 0 1 8 (*)
			NIS			NIS			US Dollars
Equity and liabilities
Current liabilities
Trade payables		8a		16,239			12,800			4,333
Employees Benefits		9b		2,577			2,147			688
Other payables and accrued expenses		8b		5,882			5,246			1,569
Total current liabilities				24,698			20,193			6,590
Non-current liabilities
Retirement benefit obligation		9b		836			1,148			223
Total non-current liabilities				836			1,148			223
Shareholders' equity		12
Share capital				1,425			1,425			380
Additional paid in capital				128,354			128,354			34,246
Capital fund				247			247			66
Retained earnings				311,476			286,509			83,105
Capital Fund measurement of the net liability in respect of defined benefit				(623	)		(954	)		(166	)
Equity attributable to Shareholders' of the Company				440,879			415,581			117,631
Total equity and liabilities				466,413			436,922			124,444

(*)          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 27, 2019.

F - 5

G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(NIS in thousands)

			Year ended December 31,
	Note		2 0 1 8			2 0 1 7			2 0 1 6			2 0 1 8 (*)
			NIS			NIS			NIS			US Dollars
Revenue		13a		338,245			311,978			294,202			90,247
Cost of sales		13b		240,032			237,645			217,585			64,043
Gross profit				98,213			74,333			76,617			26,204
Operating costs and expenses
Selling expenses		13c		43,823			42,090			39,405			11,692
General and administrative expenses		13d		16,686			15,839			14,577			4,452
Other Income		14		(69	)		(361	)		(112	)		(18	)
				60,440			57,568			53,870			16,126
Operating profit				37,773			16,765			22,747			10,078
Finance Income		15a		(7,212	)		17,937			(3,425	)		(1,924	)
Finance expense		15b		(2,256	)		3,769			3,143			(602	)
Finance Income (expense), net				(4,956	)		14,168			(6,568	)		(1,322	)
Profit before taxes on Income				32,817			30,933			16,179			8,756
Taxes on Income		10a		(7,850	)		(5,910	)		(5,327	)		(2,094	)
Net Income				24,967			25,023			10,852			6,662
Earnings per share:
Basic earnings per share				1.89			1.89			0.82			0.50
Diluted earnings per share				1.89			1.89			0.82			0.50
Shares used in computation of basic EPS				13,240,913			13,240,913			13,240,913			13,240,913
Shares used in computation of diluted EPS				13,240,913			13,240,913			13,240,913			13,240,913

(*)          Convenience Translation into US Dollars.

The accompanying notes are an integral part of the financial statements.

F - 6

G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(NIS in thousands)

	Year ended December 31,
	2 0 1 8		2 0 1 7			2 0 1 6			2 0 1 8 (*)
	NIS		NIS			NIS			US Dollars
Net Income		24,967		25,023			10,852			6,662
Other comprehensive Income (Expenses)
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		331		(446	)		(311	)		88
Other comprehensive Income for the year		331		(446	)		(311	)		88
Total comprehensive Income for the year		25,298		24,577			10,541			6,750

(*)          Convenience Translation into US Dollars.

The accompanying notes are an integral part of the financial statements.

F - 7

G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES

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			Total shareholders' equity
Balance - January 1, 2016		1,425		128,354		(197	)		247		269,883			399,712
Profit for the year		-		-		-			-		10,852			10,852
Measurement of the net liability in respect of defined benefit		-		-		(311	)		-		-			(311	)
Total comprehensive Income for the year		-		-		(311	)		-		10,852			10,541
Dividend distribution		-		-		-			-		(19,249	)		(19,249	)
Balance - December 31, 2016		1,425		128,354		(508	)		247		261,486			391,004
Profit for the year		-		-		-			-		25,023			25,023
Measurement of the net liability in respect of defined benefit		-		-		(446	)		-		-			(446	)
Total comprehensive Income for the year		-		-		(446	)		-		25,023			24,577
Balance - December 31, 2017		1,425		128,354		(954	)		247		286,509			415,581
Profit for the year		-		-		-			-		24,967			24,967
Measurement of the net liability in respect of defined benefit		-		-		331			-		-			331
Total comprehensive Income for the year		-		-		331			-		24,967			25,298
Balance - December 31, 2018		1,425		128,354		(623	)		247		311,476			440,879

The accompanying notes are an integral part of the financial statements.

F - 8

G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(NIS in thousands)

	Year ended December 31,
	2 0 1 8			2 0 1 7			2 0 1 6			2 0 1 8 (*)
	NIS			NIS			NIS			US Dollars
Profit from operations		24,967			25,023			10,852			6,662
Adjustments to reconcile net profit to net cash from operating activities (Appendix A)		2,074			(10,584	)		6,500			552
Net cash from operating activities		27,041			14,439			17,352			7,214
Cash flows - investing activities
Acquisition of property plant and equipment		(2,143	)		(2,650	)		(1,915	)		(572	)
Proceeds from sale of property plant and Equipment		415			361			190			111
Redemption (acquisition) of non-current financial assets		3,970			2,168			(8,504	)		1,060
Proceeds from short term deposit		-			-			20,288			-
Proceeds from (used in) purchase of marketable securities, net		(8,058	)		(30,833	)		42,010			(2,150	)
Net cash from (used in) investing activities		(5,816	)		(30,954	)		52,069			(1,551	)
Cash flows - financing activities
Dividend distribution		-			-			(19,249	)		-
Short-term bank debt		-			-			(16	)		-
Net cash from (used in) financing activities		-			-			(19,265	)		-
Increase (decrease) in cash and cash equivalents		21,225			(16,515	)		50,156			5,663
Cash and cash equivalents  at the beginning of the financial year		113,062			129,577			79,421			30,166
Cash and cash equivalents of the end of the financial year		134,287			113,062			129,577			35,829

(*)          Convenience Translation into US Dollars.

The accompanying notes are an integral part of the financial statements.

F - 9

G. WILLI-FOOD INTERNATIONAL LTD. AND SUBSIDIARIES

APPENDICES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

(NIS in thousands)

	Year ended December 31,
	2 0 1 8			2 0 1 7			2 0 1 6			2 0 1 8 (*)
	NIS			NIS			NIS			US Dollars
Cash flows from operating activities
A.         Adjustments to reconcile net profit to net cash from operating activities
Decrease (Increase) in deferred income taxes		(2,379	)		1,851			1,260			(635	)
Unrealized loss (gain) on marketable securities		13,673			(7,760	)		(1,924	)		3,647
Depreciation and amortization		3,614			3,682			3,762			964
Capital gain on disposal of property plant and equipment		(69	)		(361	)		(112	)		(18	)
Loss (gain) from non - tradable financial assets (see note 21b)		-			(5,368	)		7,734			-
Changes in assets and liabilities:
Increase (Decrease) in trade receivables and other receivables		(7,898	)		(5,034	)		2,120			(2,107	)
Decrease (Increase) in inventories		(9,390	)		1,978			(7,360	)		(2,505	)
Decrease in trade and other payables, and other current and non-current liabilities		4,523			428			1,020			1,206
		2,074			(10,584	)		6,500			552
B.         Significant non-cash transactions:
Supplemental cash flow information:
Income tax paid		7,711			5,926			8,126			1,906

(*)          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 -        DESCRIPTION OF BUSINESS AND GENERAL

A.         Description of Business:

G. Willi-Food International Ltd. ("the Company") was incorporated in Israel in January 1994 and is engaged in the import, export, marketing and distribution of food products. Since May 1997, the Company's shares are listed on the NASDAQ Capital Market.

On November 14 2018, the Board of Directors of the Company decided to take steps in order to enter the non-bank credit field (“credit extension activity”). This activity will be carried out and managed through W.F.D (Import, Marketing and Trading) a wholly-owned and controlled subsidiary of the Company. The activity will be funded from the Group’s own resources and will be carried out in parallel to the existing activity of importing, marketing and distributing food products.

The Company is a subsidiary of Willi-Food Investments Ltd. ("the Parent Company"). The shares of the Parent Company are registered for trade on the Tel-Aviv Stock Exchange.

B. Definitions:

The Company -          G. WILLI‑FOOD INTERNATIONAL LTD.

The Group -          The Company and its Subsidiaries, a list of which is presented in Note 5.

Subsidiaries - Companies that are controlled by the Company (as defined in IAS 27) and whose accounts are consolidated with those of the Company.

Related Parties - As defined in IAS 24.

NIS - New Israeli Shekel.

CPI - The Israeli consumer price index.

US Dollars or $ - The U.S. dollar.

Euro - The United European currency.

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Applying international accounting standards (IFRS):

Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The significant accounting policies detailed in the continuation were applied on a consistent basis for all reporting periods presented in the financial statements, except for changes in accounting policies that were due to the application of standards, amendments to standards and interpretations that took effect on the date of the financial statements, and the application of standards, amendments to standards and interpretations that are not in effect and were adopted in early adoption by the Group, as detailed in Note 2U below.

F - 11

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2     -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

B. Format for presentation of Statement of Financial Position:

The Group presents assets and liabilities in the Statement of Financial Position divided into current and non-current items.

C. Format for analysis recognized in Income Statement:

(1) Format for analysis of expenses recognized in Income statement:

The Group's expenses in the Income statement are presented based on the nature of the activity of the expenses in the entity.

(2)        The Group's operating cycle is 12 months.

D. Basis of preparation:

The financial statements were prepared on the basis of the historical cost, except for: assets and liabilities measured by fair value: financial assets measured by fair value recorded directly as profit or loss. Inventories are stated at the lower of cost and net realizable value. Property, plant and equipment and intangibles assets are presented at the lower of the cost less accumulated amortizations and the recoverable amount. Liabilities to employees as described in Note 9.

E. Foreign currencies:

(1) Translation of foreign currency transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (New Israeli Shekel (NIS)) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. (Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined). Non-monetary items that are measured in terms of historical cost In a foreign currency are not retranslated.

(2) Recognition of exchange differences

Exchange differences are recognized in profit or loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive Income and reclassified from equity to profit or loss on disposal of the net investment.

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional, currency’). The consolidated financial statements are presented in ‘NIS’, which is the company’s functional and the group’s reporting currency.

F - 12

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

E. Foreign currencies: (Cont.)

(3)        Convenience translation

The balance sheet as of December 31, 2018 and statement of Income, statement of other comprehensive Income and statement of cash flows for the year then ended have been translated into US Dollar using the representative exchange rate as of that date (US Dollar 1.0 = NIS 3.748). Such translation was made solely for the convenience of the U.S. readers. The dollar amounts so presented in these financial statements and in their accompanying notes should not be construed as representing amounts receivable or payable in US Dollars or convertible into US Dollars but only a convenience translation of reported NIS amounts into US Dollars, unless otherwise indicated. The convenience translation supplementary financial data is unaudited and is not presented in accordance with IFRSs.

F. 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.

G.         Basis of consolidation:

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive Income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, Income and expenses are eliminated in full on consolidation.

H. Goodwill:

Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and Contingent liabilities of the subsidiary or jointly controlled entity 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.

F - 13

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

I. 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.

The annual depreciation and amortization rates are:

	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.

J. Inventories:

Inventories are assets held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Inventories are stated at the lower of cost and net realizable value. Cost of inventories includes all the cost of purchase, direct labor, fixed and variable production over heads and other cost that are incurred, in bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Cost determined as finished products, on the basis of standard cost which approximates actual production cost (materials, labor and indirect manufacturing costs).

F - 14

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

K. Financial assets:

(1) Accounting treatment through December 31, 2017:

(1.1) General

All financial assets are recognized and derecognized on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned.

Investments in financial assets are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition:

· Financial assets ‘at fair value through profit or loss’ (FVTPL)

· Loans and receivables

(1.2) Financial assets at FVTPL

Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if:

· It has been acquired principally for the purpose of selling in the near future; or

· it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

· It is a derivative that is not designated and effective as a hedging instrument.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset.

(1.3) Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest method, less any impairment. Interest Income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

F - 15

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

K. Financial assets: (Cont.)

(1) Accounting treatment through December 31, 2017: (Cont.)

(1.4) Impairment of financial assets

Financial assets, except for those classified as financial assets at fair value through profit and loss, are tested at the end of the reported period for any impairment indicator. Such impairment arises when there is objective evidence that an impairment has been incurred as a result of one or more events that occurred after the initial recognition of the asset and that event (or events) had an adverse impact on the estimated future cash flows of the investment.

In respect of all other financial instruments, including receivables in respect of finance lease, impairment indicators may include:

· Significant financial difficulties of the borrower;

· Default on current principal or interest payments;

· Probability that the borrower will enter bankruptcy or financial reorganization;

In respect of certain financial assets, such as receivables for which no impairment indicators have been identified, the Group assesses whether impairment has been incurred on a Group basis, based on past experience with groups of receivables with similar characteristics, change in the number of delayed payments and economic changes attributable to the industry and the economic environment in which they operate.

As for financial assets which are presented at amortized cost, the impairment is recognized as the difference between the carrying amount of the financial assets and the present value of estimated future cash flows discounted at their original effective interest rate.

If in a subsequent period the amount of the impairment loss of a financial asset decreases and that decrease can be related objectively to an event occurring after the impairment was recognized, all or part of the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

The carrying amount of a financial asset is reduced by the impairment loss directly for all financial assets except trade receivables, whose carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.

F - 16

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

K. Financial assets: (Cont.)

(2) Accounting treatment through December 31, 2018:

(2.1) General

IFRS 9 – “Financial Instrument” is applicable to reporting periods starting on January 1, 2018. Comparative figures in respect of the years ended December 31, 2017 and 2016 are presented in accordance with the provisions of IAS 39, which was in force before the application of IFRS 9.

The first-time application of the standard did not have a material effect on the financial assets.

Financial assets are recognized in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument, using settlement date accounting.

Financial assets were classified in the categories detailed below based on the Company’s business model for managing the financial assets and based on the contractual cash flow characteristics of the financial asset:

· Financial assets at fair value through profit or loss; and

· Debt instruments at amortized cost.

(2.2) Financial assets at fair value through profit or loss:

All other financial assets, including debt instruments that were designated to fair value through profit or loss upon initial recognition in order to eliminate or significantly reduce measurement or recognition inconsistency, were initially measured at fair value and any changes in fair value subsequent to initial recognition were recognized in profit or loss. Transaction costs directly attributable to those assets were recognized in profit or loss as incurred.

(2.3) Debt instruments at amortized cost

Debt instruments at amortized cost - debt instruments held according to a business model whose objective is achieved by collecting the contractual cash flows and whose contractual terms give rise to cash flows that are solely payments of principal and interest, were initially measured at fair value plus directly attributable transaction costs, except for receivables that were initially measured at their transaction price. Subsequent to initial recognition, these assets were measured at amortized cost.

When, and only when, the Company changes its business model for managing financial assets it shall reclassify assets between categories.

(2.4) Impairment of financial assets:

The Company recognized impairment loss allowance for expected credit losses in respect of contracts with customers. Expected credit losses are the weighted average of credit losses with the respective risks of a default occurring as the weights

The impairment loss allowance reduces the carrying amount of the asset.

F - 17

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

K. Financial assets: (Cont.)

(2) Accounting treatment through December 31, 2018: (Cont.)

(2.4) Impairment of financial assets: (Cont.)

The Company measures the expected credit losses such that they reflect an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes and reasonable and supportable information which is reasonably available at the reporting date without undue cost or effort including information about past events, current conditions and forecasts of future economic conditions. The Company update the provision for impairment at the end of each reporting period and changes in the recognition are recognized in profit or loss as impairment gain or loss.

The Company measured credit losses at the amount of the lifetime expected credit losses of the instrument in respect of receivables. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.

The Company measured expected credit losses at the amount of the lifetime expected credit losses of the instrument in respect of receivables, assets arising from contracts with customers and lease receivables on a collective basis. The Company aggregates receivables and assets in respect of contracts with customers according to shared credit risk characteristics.

The Company derecognizes all or a portion of the gross carrying amount of a financial asset when it no longer reasonably expects to recover the asset.

At the end of every reporting period, the Company assesses whether the credit risk of a financial asset has significantly increased since the date of initial recognition by comparing the risk of a default event as of reporting date to the risk of a default event as of the date of initial recognition. The Company considers a default event to have taken place when it is expected that the debtor will not pay the full amount of the debt to the Company or when contractual payments are more than 90 days overdue. In order to make such an assessment the Company takes into account supportable information (quantitative and qualitative), which is reasonably available, that may be obtained without undue cost or effort, including past experience and forward-looking information. Among other things, the Company takes into account the following information:

· Internal and external credit ratings;

· Significant changes in external market indicators of credit risk in respect of a particular financial instrument;

· Existing or forecast adverse changes in business, financial or economic conditions or in the regulatory, economic or technological environment that are expected to cause a significant change in a borrower’s ability to meet its debt obligations, such as an actual or expected increase in interest rates or an actual or expected significant increase in unemployment rates.

· Existing or forecast significant change in the borrower’s operating results;

· Significant increase of the credit risks of other financial instruments of the same borrower;

F - 18

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

K. Financial assets: (Cont.)

(2) Accounting treatment through December 31, 2018: (Cont.)

(2.4) Impairment of financial assets: (Cont.)

Furthermore, the Company assumes that the credit risk of a financial instrument has not increased significantly since the date of initial recognition if the Company determined at the end of the reporting period that the financial instrument has low credit risk, i.e., the financial instrument has a low default risk, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and if adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the borrower’s ability to pay those obligations.

L. Financial liabilities and equity instruments issued by the Group:

(1) Classification as a financial liability or as an equity instrument

Liabilities and equity instruments issued by the Group are classified as financial liabilities or as equity instruments in accordance with the nature of the contractual arrangements and the definition of a financial liability and an equity instrument.

(2) Equity instruments

An equity instrument is any contract that evidences a residual interest in the Group’s assets after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received net of expenses that are directly attributable to the issuance of these instruments.

A purchase of the Group’s equity instruments by the Group is recognized and deducted directly in equity. No gain or loss is recognized upon purchase, sale, issuance or cancellation of the Group’s equity instruments.

(3) Financial liabilities

Financial liabilities are presented and measured based on the following classification:

· Financial liabilities at fair value through profit or loss.

· Financial liabilities at amortized cost.

Financial liabilities at fair value through profit or loss

A financial liability is classified at fair value through profit or loss if it is either held for trade or designated as a financial liability at fair value through profit or loss.

A financial liability is classified as held for trade, if:

· It was incurred principally for the purpose of selling or repurchasing it in the near term; or

· on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

· It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

F - 19

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

L. Financial liabilities and equity instruments issued by the Group: (Cont.)

(3) Financial liabilities (Cont.)

A financial liability, except for a financial liability held for trade or contingent consideration from a business combination that is not classified as equity, is classified as a financial liability at fair value through profit or loss upon initial recognition, when:

· Such designation eliminates or significantly reduces measurement or recognition inconsistency that would have otherwise arisen had it not been for this designation; or

· The financial liability is part of a group of financial liabilities or financial assets and financial liabilities and is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy of the Group, and information about the group is provided internally on that basis to the Group’s key management personnel; or

· It is part of a contract containing one or more embedded derivatives and the Group may designate the entire hybrid contract (asset or liability) as at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are stated at fair value. Any gain or loss arising on remeasurement of fair value is recognized in profit or loss. The net gain or loss recognized in the statement of profit or loss incorporates interest paid on financial liabilities and is included in the finance expenses item within the statement of profit or loss.

(4) Treasury shares:

The cost of Company shares held by the Company or its consolidated companies is deducted from shareholders’ equity as a separate component.

M. Derivative financial instruments

The Group uses a variety of derivative financial instruments to manage the exposures exchange rate fluctuations. Among others, the Group buys foreign exchange forward contracts.

Derivative financial instruments are initially recognized at the date the derivatives are entered into and are subsequently remeasured to their fair value at the end of each reporting period. Remeasurement of derivative financial instruments is generally recorded in the statement of profit or loss.

N. Revenue recognition:

Accounting treatment through December 31, 2017

Revenue is measured at the fair value of the consideration received and/or the consideration that the Group is entitled to receive for revenue from sale of goods in the ordinary course of business. Revenue is presented net of estimated returns, discounts, etc.

F - 20

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

N. Revenue recognition: (Cont.)

(1) Revenue from sale of goods

Revenue from sale of goods is recognized when all the following conditions are satisfied:

· The Group transferred to the buyer the significant risks and rewards of ownership of the goods;

· the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

· the amount of revenue can be reliably measured,

· it is probable that future economic benefits will flow to the Group: and

· The costs incurred or to be incurred in respect of the transaction can be measured reliably;

· Revenue from the sale of goods are recognized on the date on which they are delivered and legal ownership is transferred.

(2) Interest revenue

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

(3) Dividend revenue

Dividend revenue from investments is recognized when the shareholder’s right to receive payment has been established.

Accounting treatment through December 31, 2018

IFRS 15 – “Revenue from Contracts with Customers” is mandatory for reporting periods starting on January 1, 2018. The Comparative figures relating to the year ended December 31 2017 and 2016 are presented in accordance with the provisions of IAS 18 which was effective prior to the application of IFRS 15.

The first-time application of the standard had no impact on the financial statements.

The standard determines a five-step model for the application of the standard. In accordance with the model, revenues from contracts with customers are recognized in the statement of comprehensive income when control over the goods or services is transferred to the customer. Revenue is measured and recognized at the fair value of the consideration receivable according to the terms of the contract, net of amounts collected in favor of third parties (such as taxes). Revenue is recognized in the consolidated statements of profit or loss to the extent that it is probable that the economic benefits will flow to the Group and the revenue and costs, if relevant, can be measured reliably.

F - 21

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

N. Revenue recognition: (Cont.)

Accounting treatment through December 31, 2018 (Cont.)

Recognition of revenue from sale of goods:

The Company is mainly engaged in the sale of food products in the Israeli market. Revenue from sale of goods is recognized when control of the goods has transferred to the buyer, being when the goods arrived to the buyer’s specific location. Upon receipt of the goods, the buyer has full discretion over the distribution channels and price to sell the goods; the buyer has principal responsibility upon sale of the goods and it bears the risks of obsolescence and/or loss of the goods. After delivery of the goods, the Company recognizes receivables in respect of the sale since as of that point in time the consideration is unconditional. 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. Accordingly, the Company recognizes a provision for return of goods against a decrease in revenues and a corresponding inventory asset against the right to return the goods. The amount of the asset is determined based on the lower of cost of net realizable value. Past experience is used by the Company to estimate the number of returns. Based on past experience, the Company estimates, with a high level of probability that no significant portion of revenue recognized in respect of sale of goods will be reversed.

O. Leasing:

(1) General:

Leases are classified as finance leases whenever the terms of the lease transfer all the significant risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

(2) Lease of land and vehicles by the Group

Finance lease:

In finance lease transactions in which the Group leases properties from another entity, the Group recognizes at the inception of the lease an asset at the lower of its fair value and the present value of the minimum lease payments. The liability to transfer the minimum lease payments to the lessor is included in the statement of financial position as a finance lease obligation. In subsequent periods, the current payments for the finance lease are allocated between the finance element and the liability element so as to achieve a constant rate of interest on the remaining liability. The portion that was allocated to the finance element is recognized in the statement of profit or loss.

Lease of land (other than investment property at fair value) from the Israel Land Administration for which all lease payments have been fully paid in advance are classified as finance leases. Deferred lease payments that have been paid at the inception of the lease are presented in the statement of financial position under the “property, plant and equipment” item and are recognized on a straight-line basis over the remaining lease term, while eliminating the extension option.

F - 22

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

O. Leasing: (Cont.)

Operating lease:

Operating lease payments are recognized on a straight-line basis over the lease term. In lease agreements where lease payments are not paid at the inception of the lease or where the lease payments are reduced, and additional benefits are received from the lessor, the Group recognizes the expenses on a straight-line basis over the lease term.

As to the publication of a new standard on leases – IFRS 16 “Leases”, see Note 2U.

P. Provisions:

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation.

Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Q. Taxation:

Income tax expense represents the sum of the tax currently payable and deferred tax.

(1) Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Income statement because it excludes items of Income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

(2) Deferred tax

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

F - 23

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Q. Taxation: (Cont.)

(2) Deferred tax (Cont.)

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax

Consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to Income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

R. Employee benefits:

(1) Post-Employment Benefits

Pursuant to Israeli labor laws and agreements and as practiced by the Group, Group companies are required to pay severance pay to employees dismissed or retiring in certain other circumstances and under certain conditions also to employees who resign.

Company’s severance pay obligation pursuant to Section 14 of the Severance Pay Law is treated as a defined contribution plan. The Company recognizes the cost of the benefit as an expense, unless it was included in the cost of an asset, according to the amount to be deposited commensurate with receipt of work services from the employee.

Company’s severance pay obligation to those employees for whom the provisions of Section 14 of the Severance Pay Law do not apply are accounted for as a defined benefit plan.

Group’s post-employment benefits include defined benefit plans.

The Group's post-employment benefits include: benefits to retirees and liabilities for severance benefits. The Group's post-employment benefits are classified as Defined Benefit Plans.

Expenses in respect of a Defined Benefit Plan are carried to the Income statement in accordance with the Projected Unit Credit Method, while using actuarial estimates that are performed at each balance sheet date. The current value of the Group's obligation in respect of the defined benefit plan is determined by discounting the future projected cash flows from the plan by the market yields on high quality corporate bonds (see Accounting Staff Position number 21-1 of the Israeli Securities Authority: Maintaining a Deep Market in High Quality Corporate Bonds in Israel Including Accounting Treatment of the Transfer from a Capitalization Rate Appropriate for Government Bonds Market Yields to a Capitalization Rate Appropriate for Market Yields of High Quality Corporate Bonds as of December 31, 2014), denominated in the currency in which the benefits in respect of the plan will be paid, and whose redemption periods are approximately identical to the projected settlement dates of the plan. According to the Group’s accounting policy, the net cost of interest is included in finance expenses/ general and administrative expenses/ cost of sale in the statement of income or loss and other comprehensive income.

F - 24

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

R. Employee benefits: (Cont.)

(1) Post-Employment Benefits (Cont.)

Actuarial gains and losses that are carried to other comprehensive income as incurred will not be subsequently recycled to profit or loss.

The Group's liability in respect of the Defined Benefit Plan which is presented in the Group's balance sheet includes the current value of the obligation in respect of the defined benefit, net of the fair value of the Defined Benefit Plan assets.

The net asset arising from such a calculation is limited to the amount of the future economic benefits available to the Group in the form of reducing future contributions or a financial refund, whether directly to the Group or indirectly to cover other plan’s deficits (hereafter – the “Ceiling Amount”). The excess of the net asset arising from the aforesaid calculation over the Ceiling Amount is carried to other comprehensive income and will not be subsequently recycled to profit or loss.

(2) Short term employee benefits

Short term employee benefits are benefits which it is anticipated will be utilized or which are to be paid during a period that does not exceed 12 months from the end of the period in which the service that creates entitlement to the benefit was provided.

Short term company benefits include the company’s liability for short term absences, payment of grants, bonuses and compensation. These benefits are recorded to the statement of operations when created. The benefits are measured on a non-capitalized basis. The difference between the amount of the short term benefits to which the employee is entitled and the amount paid is therefore recognized as an asset or liability.

S. Earnings (loss) per share:

Basic earnings (loss) per share is computed with regard to Income or loss attributable to the Company's ordinary shareholders, and is calculated for Income (loss) from continuing operations attributable to the ordinary shareholders of the reported entity, should such be presented. Basic earnings per share is to be computed by dividing Income(loss) attributed to Owners of the Company (numerator), by the weighted average of the outstanding ordinary shares (denominator) during the period.

In the computation of diluted earnings per share, the Company adjusted its Income (loss) attributable to its ordinary shareholders by multiplying their diluted EPS and the weighted average of the outstanding shares for the effects of all the dilutive potential ordinary shares of the Company.

F - 25

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

T. Exchange Rates and Linkage Basis

(1) Balances in foreign currency or linked thereto are included in the financial statements based on the representative exchange rates, as published by the Bank of Israel that were prevailing at the balance sheet date.

(2) Following are the changes in the representative exchange rate of the US dollars vis-a-vis the NIS and in the Israeli CPI:

	Representative exchange rate			Representative exchange rate			CPI “in
	of the Euro			of the dollar			respect of”
	(NIS per €1)			(NIS per $1)			(in points)
As of:
December 31, 2018		4.29			3.75			101.2
December 31, 2017		4.15			3.47			100.4
December 31, 2016		4.04			3.84			100.0
Increase (decrease) during the:	%			%			%
Year ended:
December 31, 2018		3.37			8.07			0.80
December 31, 2017		2.72			(9.64	)		0.40
December 31, 2016		(4.78	)		(1.46	)		(0.2	)

U. New Financial reporting standards, interpretations published and amendments to existing standards:

IFRS 16 – “Lease”:

The new Standard supersedes IAS 17 "Leases" and the related interpretations, and sets out the rules for recognition, measurement, presentation and disclosure of leases in relation to both parties to the transaction, i.e., the customer ('lessee') and the supplier (lessor'). The Standard does not change the current accounting treatment applied in the lessor’s books of accounts.

In terms of lessee accounting, the new Standard eliminates the existing distinction between operating and financial leases and sets out a uniform accounting model relating to all the types of leases. According to the new model, for every leased asset, the lessee is required to recognize a right-of use asset on the one hand, and a financial lease liability in respect of the lease fees on the other hand.

The provisions for recognizing the asset and liability as described above shall not apply to assets leased for a period of up to 12 months and in relation to leases of low-value assets (such as personal computers).

In view of the above, leases of the Company’s vehicles, which are currently accounted for as operating leases shall be accounted for as assets and liabilities in the Group’s statement of financial position upon application of the standard.

IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019.

Manner of first-time application

As a rule, the standard will be applied retrospectively, but entities will have the option to opt for certain adjustments under the standard’s transitional provisions regarding its application to previous reporting periods.

F - 26

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

U. New Financial reporting standards, interpretations published and amendments to existing standards: (Cont.)

IFRS 16 – “Lease”: (Cont.)

The anticipated quantitative effects:

The Company estimates that it will opt not to retrospectively adjust the comparative figures. Comparative figures relating to the years ended December 31, 2018 and 2017 will be presented in accordance with the provisions of IAS 17 and its related interpretations.

The Group estimates that it will opt to apply the standard while applying the reliefs available pursuant to the standard’s transitional provisions, as follows:

a. The will not reassess whether the contract is a lease or includes a lease as of the application date. Therefore, agreements that are currently accounted for as operating leases shall be accounted for in accordance with the provisions of the new standard, whereas the accounting treatment of agreements previously accounted for as service contracts shall not change.

b. The Group expects to use a single discount rate for a portfolio of leases with similar characteristics.

c. The Group expects that it will not apply the provisions of the standard to leases whose term ends within 12 months from the date of first-time application.

d. The Group expects that it will not include direct initial costs when measuring the right of use asset upon first-time application.

Set forth below are the principal expected effects as of the date of first-time application, as estimated by Group’s management:

Principal effects on the Company’s statement of financial position as of January 1, 2019:

The leased asset	Right of use asset		Lease liability
	NIS in thousands
Vehicles		1,675		(1,675	)
Total		1,675		(1,675	)

The discount rates used in the aforementioned calculations are based on the lessee’s incremental borrowing rate which varies according to the lease’s amount and average duration and the nature of the leased asset. The discount rate range between 2.5% to 3%.

Principal effects on the Company’s statement of profit or loss as of January 1, 2019:

The leased asset	Decrease in lease expenses pursuant to IAS 17			Increase in depreciation expenses pursuant to IFRS 16		Total increase in income from operating activities		Increase in finance expenses pursuant to IFRS 16		Decrease in tax expenses pursuant to IFRS 16		Total decrease in income for the year
	NIS in thousands
Vehicles		(808	)		780		28		44		4		(12	)
Total		(808	)		780		28		44		4		(12	)

F - 27

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 3 -        SIGNIFICANT ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION

A. General:

In the application of the Group's accounting policies, which are described in Note 2 above, the Group management is required, in certain cases, to make broad accounting judgments regarding estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on past experience and other factors that are considered to be relevant. Actual results could differ from these estimates.

Management reviews the estimates and underlying assumptions on an ongoing basis. Changes in accounting estimates are only recognized in the period in which the estimate is changed if the change affects only that period or in the period of change and future periods if the change affects both current and future periods.

The Company is a basic trader of goods, mostly in the Israeli food markets. All the sales are made in accordance with delivery notes, agreed price lists and invoices. The major assumptions are based on contractual commitments where sensitivity is insignificant. In addition, in the process of applying the Group's accounting policies, management makes various judgments, apart from those involving estimations, that can significantly affect the amounts recognized in the financial statements.

Other estimates\assumptions used in our allowances are based on the Company's rich experience in the food market. Any sensitivity analysis of the effect of changes in critical estimates and assumptions would show negligible effect on the Company's financial position or results of operations.

F - 28

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 3 -        SIGNIFICANT ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION (Cont.)

B. Significant judgments in applying accounting policies:

The following are the significant judgments that the management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognized in financial statements.

Revenue recognition - the Group has recognized in revenues amounted to NIS 338,245 thousands in the year ended December 31, 2018 (NIS 311,978 thousands in the year ended December 31, 2017) for selling food products. Although, in general, the Group does not grant rights of return, its enable for certain customers from time to time to return products. The Group assesses the expected customer returns according to specific information in its possession and its past experience in similar cases. As a result, the revenues that company has recognized includes provisions to returns.

Slow moving inventory - The group 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.

Contingent liabilities and legal proceedings- In estimating the likelihood of the outcome of legal claims filed against the Company and its investees, management considers the facts and circumstances, as well as the opinion of company's legal counsel. These estimates are based on professional judgment, taking into account, inter alia, the stage of proceedings and legal precedents in respect of the different issues. Since the outcome of the claims will be determined in courts, the results could differ from these estimates.

Employee benefits - The present value of the Group's liability for retirement and pension plan to its employees is based on a large number of inputs, which are determined on the basis of an actuarial valuation, while using a large number of assumptions, including discount rate. Changes in the actuarial assumptions may affect the carrying amount of the Group's liabilities for retirement and pension payments. The Group estimates the discount rate once a year, based on the discount rate of highly rated corporate bonds with similar terms and similar conditions. Other key assumptions are determined based on market conditions and the Group's past experience. For additional information about the assumptions used by the Group, see Note 9.

F - 29

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 4 -        CURRENT ASSETS

A. Cash and cash equivalents - composition:

	December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Cash in bank		54,699		12,962		14,594
Short-term bank deposits		79,588		100,100		21,235
		134,287		113,062		35,829

B. Financial assets at fair value through profit or loss:

	December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Financial assets carried at fair value through profit or loss (FVTPL):
Shares		32,931		44,494		8,786
Governmental loan and other bonds		98,187		87,905		26,197
Certificate of participation in mutual fund		6,786		11,115		1,811
		137,904		143,514		36,794

C. Trade receivables:

(1) Composition

		December 31,
		2 0 1 8		2 0 1 7		2 0 1 8
		NIS		NIS		US Dollars
	��
Trade receivables(*)			100,387		88,324		26,784
Less – provisions for impairment of trade recivables.			2,370		2,381		632
			98,017		85,943		26,152

(*) Less provision for returns in the sum of NIS 2,273 (as of December 31, 2017 - NIS 1,841).

Management of the credit risk by the Group

Before accepting any new customer, the Group assesses the potential customer's credit quality and defines credit limits by customer. Credit limits are examined periodically based on the Company's collection experience with each customer and additional external information.

In order to minimize customer credit risk, the Company insures and takes various guarantees (personal, promissory notes and bank guarantees). However, it should be noted that in relation to the majority of the large food marketing chains, the company does not have any collateral whatsoever.

From total trade receivables balances as of December 31, 2018, the sum of NIS 10,271 Thousands is with respect to debt owed by significant customers. The Group does not have additional customers whose purchase from the Company exceeds 10% of the Revenues for the year ended December 31, 2018 (in 2017 - NIS 7,932 Thousands).

The average credit period on sales of goods for 2018 is 88 days.

F - 30

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 4 -        CURRENT ASSETS (Cont.)

C. Trade receivables: (Cont.)

(2) Changes in the allowance for doubtful debts:

	December 31,
	2 0 1 8			2 0 1 7		2 0 1 8
	NIS			NIS		US Dollars
Balance at beginning of the year		2,381			2,155		635
Change in allowance doubtful debts		(11	)		226		(3	)
Balance at end of the year		2,370			2,381		632

D. Other receivables and prepaid expenses:

	December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Prepaid expenses		730		688		195
Income receivables		429		-		114
Advances to suppliers		1,051		339		280
Government authorities		-		953		-
Receivables in respect of investment in a non-current financial asset (See note 21b)		-		3,970		-
Others		1,534		46		410
		3,744		5,996		999

E. Inventories

	December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Finished products		44,183		32,690		11,789
Merchandise in transit		5,106		7,209		1,362
		49,289		39,899		13,151

The inventories are presented net of slow moving inventory provision in the amount of NIS 1,681 thousand and NIS 1,834 thousand on fiscal 2018 and fiscal 2017, respectively.

NOTE 5 -        INVESTMENTS IN SUBSIDIARIES

The consolidated financial statements include the financial statements of the following Subsidiaries:

Subsidiary	Location	Jurisdiction of Organization	Company's Ownership Interest
			December 31,
			2 0 1 8			2 0 1 7
Gold Frost Ltd. ("Goldfrost")	Israel	Israel		100.00	%		100.00	%
W.F.D. (Import, Marketing and Trading) Ltd.	Israel	Israel		99.00	%		99.00	%
W.Capital Ltd. (Former: B.H.W.F.I Ltd.)	Israel	Israel		100.00	%		100.00	%

F - 31

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands) 

NOTE 6 -        PROPERTY PLANT AND EQUIPMENT

Composition:

			Machinery					Computers
	Land and		and		Motor			and		Office
	Building		equipment		Vehicles			equipment		Furniture		Total
Consolidated Cost:
Balance -January 1, 2017		54,477		4,388		12,392			4,584		1,363		77,204
Changes during 2017:
Additions		10		705		1,419			196		320		2,650
Dispositions		-		-		(1,256	)		-		-		(1,256	)
Balance - December 31, 2017		54,487		5,093		12,555			4,780		1,683		78,598
Changes during 2018:
Additions		592		407		815			264		65		2,143
Dispositions		-		-		(1,130	)		-		-		(1,130	)
Balance - December 31, 2018		55,079		5,500		12,240			5,044		1,748		79,611
Accumulated depreciation:
Balance - January 1, 2017		17,038		2,850		10,582			3,649		844		34,963
Changes during 2017:
Additions		1,663		894		821			260		44		3,682
Dispositions		-		-		(1,256	)		-		-		(1,256	)
Balance - December 31, 2017		18,701		3,744		10,147			3,909		888		37,389
Changes during 2018:
Additions		1,826		404		1,079			241		64		3,614
Dispositions		-		-		(784	)		-		-		(784	)
Balance  - December 31, 2018		20,527		4,148		10,442			4,150		952		40,219
Net book value:
December 31, 2018		34,552		1,352		1,798			894		796		39,392
December 31, 2017		35,786		1,349		2,408			871		795		41,209
Net book value (Dollars in thousands):
December 31, 2018		9,219		361		480			239		212		10,510
December 31, 2017		9,548		360		642			232		212		10,994

NOTE 7 -        GOODWILL

Annual test for impairment:

By the end of the year 2018 the amount of goodwill was NIS 36 thousand, based on the materiality estimate, the Group determined that no test for impairment of goodwill was necessary.

F - 32

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 8 -         DETAILS OF CURRENT LIABILITIES

A. Trade payables

	December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Open accounts		14,661		12,446		3,912
Checks payables		1,578		354		421
		16,239		12,800		4,333

The average credit period on purchases of certain goods is approximately 24 days.

B. Other payables and accrued expenses

	December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Customer advances		1,267		1,223		338
Accrued expenses		4,226		3,985		1,128
Others payables		389		38		103
		5,882		5,246		1,569

NOTE 9 -         EMPLOYEE BENEFITS

A. Defined benefit plans - General:

According to labor laws and the Severance Pay Law in Israel, the Group 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 and 67 for men. Therefore, according to the plan, an employee who has been employed by the Group 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 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 Group'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 - 33

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 9 -  EMPLOYEE BENEFITS (Cont.)

A. Defined benefit plans - General: (Cont.)

The principal assumptions used for the purposes of the actuarial valuations were as follows:

	Valuation at
	2 0 1 8		2 0 1 7
	%		%
Discount rate		3.30		2.55
Expected return on the plan assets		3.30		2.55
Rate of increase in compensation		4		4
Expected rate of termination:
0-1 years		35		35
1-2 years		30		30
2-3 years		20		20
3-4 years		15		15
4-5 years		10		10
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), 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, 2018, is 3.30% per year.

The main actuarial assumptions as of the date of the statement of financial position:

In the reported year, The Company recognized a decrease in the net defined benefit plan liability, mainly due to changes in actuarial assumptions in respect of Section 14 of the Severance Pay Law, and an increase in the discounting rate from 2.55% to 3.3%.

B. Composition:

	December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Post-Employment Benefits:
Benefits to retirees		836		1,148		223
Short term employee benefits:
Accrued payroll and related expenses		1,954		1,575		521
Short term absence compensation		623		572		167
		2,577		2,147		688

F - 34

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 9 -         EMPLOYEE BENEFITS (Cont.)

C. Defined benefit plans:

 Changes in the present value of the defined benefit obligation in the current period were as follows:

	Year ended December 31,
	2 0 1 8			2 0 1 7			2 0 1 8
	NIS			NIS			US Dollars
Opening defined benefit obligation		5,133			4,748			1,370
Current service cost		481			768			128
Interest cost		118			162			31
Actuarial losses arising from experience adjustments		(221	)		370			(59	)
Actuarial gains arising from changes in financial assumptions		(614	)		12			(164	)
Benefits paid		(581	)		(927	)		(155	)
Closing defined benefit obligation		4,316			5,133			1,151

 Changes in the fair value of the defined benefit assets in the current period were as follows:

	Year ended December 31,
	2 0 1 8			2 0 1 7			2 0 1 8
	NIS			NIS			US Dollars
Opening defined benefit assets		3,985			3,899			1,063
Expected return on the plan assets		84			139			22
Changes in financial assumptions		(505	)		(63	)		(135	)
Employer contribution		421			803			112
Benefits paid		(495	)		(814	)		(131	)
Interest losses on severance payment allocated to remuneration benefits		(10	)		21			(3	)
Closing defined benefit assets		3,480			3,985			928

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,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Present value of funded liability		4,316		5,133		1,151
Fair value of plan assets - accumulated deposit in executive insurance		3,480		3,985		928
Net liability deriving from defined benefit obligation		836		1,148		223

F - 35

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 9 -         EMPLOYEE BENEFITS (Cont.)

C. Defined benefit plans: (Cont.)

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 increased / decreased by NIS 147 thousand (US Dollars 39 thousand).

If the rate hikes expected salaries would have increased (small) by 0.5%, the defined benefit obligation would have increased / decreased by NIS 138 thousand (US Dollars 37 thousand).

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Payroll, payroll and social benefits		1,954		1,575		521
Entitlement to compensation for short-term absences and recovery		623		572		167
		2,577		2,147		688

D. Short term employee benefits:

(1) 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 Group'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 Group’s vacation provision for December 31, 2018, as NIS 493 thousands (NIS 422 thousands, as of December 31, 2017).

(2) 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 - 36

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 10 -      INCOME TAXES

A. Composition:

	Year ended December 31
	2 0 1 8			2 0 1 7		2 0 1 6		2 0 1 8
	NIS			NIS		NIS		US Dollars
Current taxes:
Current taxes		10,069			3,918		4,067		2,686
Taxes in respect of prior years		160			141		-		43
		10,229			4,059		4,067		2,729
Deferred taxes		(2,379	)		1,851		1,260		(635	)
		7,850			5,910		5,327		2,094

B. Reconciliation of the statutory tax rate to the effective tax rate:

	Year ended December 31,
	2 0 1 8			2 0 1 7			2 0 1 6			2 0 1 8
	NIS			NIS			NIS			US Dollars
Income before Income taxes		32,817			30,933			16,179			8,756
Statutory tax rate		23	%		24	%		25	%		23	%
Tax computed by statutory tax rate		7,548			7,424			4,044			2,014
Tax increments (savings) due to:
Non-deductible expenses		4			51			70			1
Tax exempt Income		(163	)		(343	)		(33	)		(43	)
Profit or loss for tax for which deferred taxes were not provided		368			(1,196	)		1,198			98
Changes in tax rates		-			-			88			-
Temporary differences for which deferred taxes were not provided		-			(132	)		-			-
Previous year taxes		162			141			-			42
Other		(69	)		(35	)		(40	)		(18	)
		7,850			5,910			5,327			2,094

F - 37

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 10  -     INCOME TAXES (Cont.)

C. Deferred Taxes:

	January						December		December
	1, 2018			Change			31, 2018		31, 2018
	NIS			NIS			NIS		US Dollars
Deferred taxes arise from the following:
Financial assets carried at fair value through profit or loss		(775	)		2,776			2,001		534
Employees benefits		395			(59	)		336		90
Allowance for doubtful accounts		548			(3	)		545		145
		168			2,714			2,882		769
Carry forward tax losses		335			(335	)		-		-
		503			2,379			2,882		769

	January					December			December
	1, 2017		Change			31, 2017			31, 2017
	NIS		NIS			NIS			US Dollars
Deferred taxes arise from the following:
Financial assets carried at fair value through profit or loss		67		(842	)		(775	)		(207	)
Employees benefits		352		43			395			105
Allowance for doubtful accounts		516		32			548			146
		935		(767	)		168			44
Carry forward tax losses		1,419		(1,084	)		335			89
		2,354		(1,851	)		503			133

D. Additional Information:

(1) The tax rate applicable to the Company are as follows: in 2016 – 25%; 2017 – 24%; 2018 – 23%.

(2) The Law for the Amendment to the Income Tax Ordinance (No. 216), 2016 was published in the official gazette in January 2016; the said law stipulated the reduction of the rate of corporate tax by 1.5% from 26.5% to 25% commencing tax year 2016.

(3) The Economic Efficiency Law (Legislative Amendments for the Achievement of Budgetary Goals for 2017 and 2018), 2016, which was published in the official gazette in December 2016, stipulated that the corporate tax rate will be reduced by 1% in 2017 and by 2% as from 2018 and thereafter, such that the tax rate in 2017 will be 24% and as from 2018 the tax rate will be 23%, instead of 25% in 2016.

(4) The Company and its subsidiaries have been issued with final tax assessments through tax year 2013.

F - 38

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 11  -     COMMITMENTS AND CONTINGENT LIABILITIES

(1) 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.

(2) On October 17, 2017, a General Meeting of the Shareholders of the company approved management services agreements pursuant to which Messrs. Yoseph Williger and Zwi Williger are to serve as active co-chairmen of the Board of Directors. (The said approval was granted after the management services agreements were approved by the company's Compensation Committee and Board of Directors, as required by law). The said agreements were signed between the Company and companies under the ownership and control of Messrs. Yoseph Williger and Zwi Williger (hereinafter – “the Management Services Agreements” “the Management Companies” and Messrs. Williger”, respectively). The main provisions of Management Services Agreements are described below:

According to the Management Services Agreements, each of the co-Chairmen are to serve as an active co-Chairman of the Board of Directors on a part-time basis (60% of a full-time position), over a period of three years from the date of their appointment. Messrs. Yoseph Williger and Zwi Williger will each be entitled to monthly management fees of NIS 60,000 plus VAT (hereinafter – “the Monthly Management Fees”) and to annual remuneration and remuneration for participation in meetings of the Board of Directors and/or its committees according the “minimum amount” as set forth in the Israeli Companies Regulations (Rules Regarding Compensation and Expenses of an External Director), 5760-2000 (the “Compensation Regulations”) in addition to the Monthly Management Fees.

Messrs. Yoseph Williger and Zwi Williger will each be entitled to annual bonus at a total amount that will not exceed NIS 720 thousand plus VAT, provided that the annual operating profit will not be less than NIS 15 million, on the basis of the mechanism set out below: (a) a bonus of up to 2% for the initial NIS 10 million of operating profit; (b) a bonus of up to 3% of operating profit in excess of NIS 10 million and up to and including NIS 15 million; (c) a bonus of up to 4% of operating profit in excess of NIS 15 million and up to and including NIS 20 million; (d) a bonus of up to 5% of operating profit in excess of NIS 20 million.

The Management Services Agreements include an advance notice period and a retirement grant of 3-6 months (according to the period that has elapsed since the date of entering into the engagement and according to the identity of person/entity who terminated the engagement).

Messrs. Yoseph Williger and Zwi Williger will be included in the Company's insurance policy, including directors and office holders policy (if any), and they will also be entitled to an exemption and indemnification letter from the Company in accordance with the exemption and indemnification letters that were adopted and/or will be adopted by the company with regard to all of its office holders.

Under the Management Service Agreement, the Company will provide each of Messrs. Yoseph Williger and Zwi Williger a personal vehicle and means of communication (mobile and landline phone and home internet). The company shall bear all the expenses relating to the provision of the above, including grossing up the related tax in connection therewith.

F - 39

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 11  -     COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

(2) (Cont.)

On February 11, 2019 and February 17, 2017, respectively, the Company’s Remuneration Committee decided to approve changes to the remuneration policy, remuneration terms and scope of position of the joint chairpersons for a three-year period starting on January 1, 2019. In order to approve the changes, the Company sent to its shareholder a notice to convene a General Meeting of the Company’s shareholders. The meeting is scheduled for on April 3, 2019. The recommended changes are expected to increase the scope of the joint chairpersons’ position from 60% to 100%; as a result of the said changes, each of the joint chairpersons will be entitled to monthly management fees of NIS 100,00 plus VAT. The changes also include an increase of the maximum annual bonus payable to each of the joint chairpersons to NIS 1.5 million (plus VAT).

Furthermore, as part of the meeting to be held of April 3, 2019, the Company’s shareholders will be asked to approve the amendment of the management services agreement whereby as from January 1, 2019 and for a three-year period as from that date, the measurable bonus will be paid subject to meeting an operating profit target of at least NIS 20 million (before bonuses).

(3) On April 1, 1997, the parent Company and the Company entered into an agreement for the provision of management, administration, bookkeeping, secretarial and controllership services. This agreement was updated on October 2, 2017. 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. This agreement will be effective for a 3-year period through August 21, 2020.

NOTE 12  -     SHAREHOLDERS' EQUITY

Composition:

	Ordinary shares
	of NIS 0.1 par value each
	December 31
	2 0 1 8		2 0 1 7
Authorized share capital		50,000,000		50,000,000
Issued and outstanding		13,240,913		13,240,913

F - 40

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 13  -     SELECTED CONSOLIDATED STATEMENTS OF OPERATIONS DATA

A. Revenues:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
Sale of products		338,245		311,978		294,202		90,247

B. Cost of sales:

	Year ended December 31,
	2 0 1 8			2 0 1 7		2 0 1 6			2 0 1 8
	NIS			NIS		NIS			US Dollars
Purchases		240,998			222,351		220,088			64,300
Transportation		1,966			1,579		1,523			525
Depreciation and amortization		2,314			2,323		2,287			617
Maintenance		4,175			5,202		3,881			1,114
Other costs and expenses		1,910			2,062		1,278			510
		251,363			233,517		229,057			67,066
Change in finished goods		(11,331	)		4,128		(11,472	)		(3,023	)
		240,032			237,645		217,585			64,043

C. Selling expenses:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
Salaries and related expenses		15,058		14,316		12,969		4,016
Transportation and maintenance		12,541		11,619		9,555		3,346
Vehicles		3,908		3,564		3,833		1,043
Advertising and promotion		4,766		5,472		6,694		1,272
Depreciation and amortization		804		784		821		215
Others		6,746		6,335		5,533		1,800
		43,823		42,090		39,405		11,692

D. General and administrative expenses:

	Year ended December 31,
	2 0 1 8			2 0 1 7		2 0 1 6			2 0 1 8
	NIS			NIS		NIS			US Dollars
Salaries and related expenses		10,442			8,922		9,126			2,786
Office maintenance		1,411			1,182		1,106			376
Professional fees		2,432			3,436		3,230			649
Vehicles		545			713		602			145
Depreciation and amortization		552			599		652			147
Bad and doubtful debts		(59	)		226		(1,292	)		(16	)
Communication		60			136		116			16
Other		1,303			625		1,037			349
		16,686			15,839		14,577			4,452

F - 41

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 13  -     SELECTED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (Cont.)

E. Employees benefit costs:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
Payroll (without payment to related parties)		21,148		21,131		20,144		5,642
		21,148		21,131		20,144		5,642

F. Depreciation and amortization:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
Depreciation of fixed assets (see note 6)		3,614		3,682		3,762		964

NOTE 14  -     OTHER INCOME

Composition:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
Capital gain on fixed assets realization		69		361		112		18
		69		361		112		18

NOTE 15  -     FINANCE INCOME AND EXPENSES

A. Financing Income:

	Year ended December 31,
	2 0 1 8			2 0 1 7		2 0 1 6			2 0 1 8
	NIS			NIS		NIS			US Dollars
Interest Income:
Short-term bank deposits		357			30		333			95
Interest Income of debentures held for trading		4,603			3,274		1,791			1,228
Other		27			16		(11	)		7
Total interest Income		4,987			3,320		2,113			1,330
Other:
Changes in fair value of financial assets at fair values		(13,697	)		7,760		1,924			(3,654	)
Gain (loss) from non-tradable financial assets (see note 21b).		-			5,368		(7,734	)		-
Dividends		1,498			1,489		272			400
Total financing Income		(7,212	)		17,937		(3,425	)		(1,924	)

F - 42

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 15  -     FINANCE INCOME AND EXPENSES (Cont.)

B. Financing expenses:

	Year ended December 31,
	2 0 1 8			2 0 1 7		2 0 1 6		2 0 1 8
	NIS			NIS		NIS		US Dollars
Other:
Foreign currency differences		(2,867	)		2,708		2,222		(768	)
Bank fees		499			599		449		134
Management fees for investment houses		112			462		300		32
Other		-			-		172		-
Total financing costs		(2,256	)		3,769		3,143		(602	)

NOTE 16  -     EARNING PER SHARE

Composition:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
A.        Basic earnings per share:
Earnings used in the calculation of basic earnings per share to equity holders of the parent		24,967		25,023		10,852		6,662
B.        Diluted earnings per share:
Profit used to compute diluted earnings per share from continuing operations		24,967		25,023		10,852		6,662
Weighted average number of shares used in computing basic earnings per share from continuing operations		13,240,913		13,240,913		13,240,913		13,240,913
Weighted average number of shares used in computing diluted earnings per share from continuing operations		13,240,913		13,240,913		13,240,913		13,240,913

NOTE 17  -     FINANCIAL INSTRUMENTS

A. Significant accounting policies:

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which Income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.

F - 43

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 17  -     FINANCIAL INSTRUMENTS (Cont.)

B. Categories of financial instruments:

	As of December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Financial assets
Financial assets at fair value through profit or loss		137,904		143,514		36,794
Cash and cash equivalents		134,287		113,062		35,829
		272,191		256,576		72,623

C. Objectives of managing financial risks:

The finance departments of the Group provide services to the business activity, enable access to local and international financial markets, supervise and manage the financial risks relating to the Group's activities using internal report that analyze the extent of the risk exposure according to degree and intensity. These risks include market risks (including currency risk, fair value risk in respect of the interest rates, price risk and cash flow risk in respect of the interest rates), credit risk and liquidity risk.

The Group reduces the impact of the aforesaid risks from time to time by using derivative financial instruments in order to hedge the risk exposures; such derivatives are not designated as hedges for accounting purposes. Derivatives are used according to the Group's policy, which was approved by the boards of directors. The policy prescribes principles regarding: management of currency risk, interest rate risk, credit risk, the use of derivatives and of non-derivative financial instruments, and investment of liquidity surplus. The compliance with policy and the exposure levels are reviewed by the internal auditor on a continuing basis.

The financial management departments of the Group report to the investment committee of the Group and to the board of directors of the Company about the risks and about implementation of the assimilated policy in order to minimize the risk exposures.

D. Market risk:

The Group's activity exposes it mainly to financial risks of fluctuations in the exchange rates of foreign currency and/or changes in the prices of the imported products and/or changes in the interest rates. The Group purchases forward foreign-currency swap contracts, as needed, opens documentary credit to suppliers, and carries out orders for imported goods.

During the report period, no change occurred in the exposure to market risks or in the way by which the Group manages or measures the risk.

F - 44

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 17  -     FINANCIAL INSTRUMENTS (Cont.):

E. Other price risks:

The Group 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 carrying amount of the investments exposed to price risks of shares, certificate of participation in mutual fund and bonds is NIS 137,914 thousands (US Dollars 36,794 thousands).

Sensitive analysis in respect to exposure relating to price risks of shares, certificate of participation in mutual fund and bonds.

The sensitivity analysis includes only shares, certificate of participation in mutual fund and bonds at the period end for a 10% change in its prices. A positive number below indicates an increase in profit and other equity where the prices strengthen 10% against the actual prices. For a 10% weakening of the prices against the actual prices, there would be an equal and opposite impact on the profit and other equity, and the balances below would be negative.

	2 0 1 8		2 0 1 7
	NIS		NIS
Profit or loss		13,791		14,351

F. Credit risk:

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. Once a month the Group performs credit evaluation of the finance condition of its receivables.

Aging of impaired trade receivables are 88 days in the year 2018 (86 days in the year 2017).

G. Liquidity risk management:

The following table presents the Group's outstanding contractual maturity profile for its non-derivative financial liabilities. The analysis presented is based on the undiscounted contractual maturities of the Group's financial liabilities, including any interest that will accrue. Non-interest bearing financial liabilities which are due to be settled in less than 12 months from maturity equal their carrying values since the impact of the time value of money is immaterial over such a short duration.

F - 45

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 17  -     FINANCIAL INSTRUMENTS (Cont.):

G. Liquidity risk management: (Cont.):

Non derivatives financial instruments

The following table presents the Group's maturity profile for its non-derivatives financial instruments based on their contractual maturity. These financial instruments include interest relating to these assets, except for cases when the Group anticipates that the cash flow will occur on a different period.

	1 month		2-3 Months		4-12 Months		1-5 Years		More than5 Years		Total
	NIS		NIS		NIS		NIS		NIS		NIS
2018
Financial instruments which bear interest		10		371		4,332		27,990		65,484		98,187
Financial instruments which do not bear interest		174,004		-		-		-		-		174,004
		174,014		371		4,332		27,990		65,484		272,191
2017
Financial instruments which bear interest		608		728		3,471		13,832		69,266		87,905
Financial instruments which do not bear interest		168,671		-		-		-		-		168,671
		169,279		728		3,471		13,832		69,266		256,576

The Financial instruments in the non-derivatives financial instruments consist of:

	December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
Cash and cash equivalents		134,287		113,062		35,829
Financial assets at fair value through profit or loss		137,904		143,514		36,794
		272,191		256,576		72,623

F - 46

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 17  -     FINANCIAL INSTRUMENTS (Cont.):

H. Exchange rate risk:

The Group undertakes certain transactions denominated in foreign currencies leading to exposures to exchange rate fluctuations. Exchange rate exposures are managed within approved policy parameters utilizing forward foreign exchange contracts.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at reporting date are as follows:

	Assets				Liabilities
	2 0 1 8		2 0 1 7		2 0 1 8		2 0 1 7
	NIS		NIS		NIS		NIS
US Dollars		22,292		38,034		3,485		1,944
EUR		8,082		1,299		5,677		3,568

The Group is mainly exposed to US Dollars and EUR.

The following table details the Group's sensitivity to a 10% increase and decrease in the NIS against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and other equity where the NIS strengthens 10% against the relevant currency. For a 10% weakening of the NIS against the relevant currency, there would be an equal and opposite impact on the profit and other equity, and the balances below would be negative.

	US Dollars Impact		EUR Impact
	2 0 1 8		2 0 1 8
	NIS		NIS
Profit or loss		1,881		240

	US Dollars Impact		EUR Impact
	2 0 1 7		2 0 1 7
	NIS		NIS
Profit or loss		3,609		(227	)

The increase in the Group's sensitivity to a 10% increase and decrease in the NIS against the relevant foreign currencies is mainly attributable to the decrease in balances with foreign customers relating to the disposal of the export operation, and to decrease in forward foreign exchange contracts.

F - 47

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 17  -     FINANCIAL INSTRUMENTS (Cont.):

I. Fair value of financial instruments:

The financial instruments of the Group consist of derivative and non-derivative assets and liabilities. Non-derivative assets include cash and cash equivalents, receivables and other current assets. Non-derivative liabilities include short-term bank credit, trade payables, other current liabilities and long-term loans from banks and others. Derivative assets and liabilities include mainly foreign exchange forward contracts.  Due to the nature of these financial instruments, their fair value, generally, is identical or close to the value at which they are presented in the financial statements, unless stated otherwise.

The fair value of the long-term loans approximates their carrying value since they bear interest at rates close to the prevailing market rates.

Quoted market prices

The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices (includes listed redeemable notes, bills of exchange, debentures and perpetual notes).

Derivatives

Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts.

Fair value of financial instruments carried at amortized cost

The management of the Group considers that the carrying amounts of financial assets and financial liabilities recognized at amortized cost in the financial statements approximate their fair values.

Fair value measurements recognized in the statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is

· Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e. derived from prices).

· Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

F - 48

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 17  -     FINANCIAL INSTRUMENTS (Cont.):

I. Fair value of financial instruments: (Cont.)

	December 31, 2018
	Level 1		Level 2		Level 3		Total
	NIS		NIS		NIS		NIS
financial assets ‘at fair value through profit or loss’ (FVTPL)
Marketable securities and derivatives		137,904		-		-		137,904

	December 31, 2017
	Level 1		Level 2		Level 3		Total
	NIS		NIS		NIS		NIS
financial assets ‘at fair value through profit or loss’ (FVTPL)
Marketable securities and derivatives		143,514		-		-		143,514

NOTE 18  -     SEGMENT INFORMATION

A. General:

The Group has adopted IFRS 8 Operating Segments with effect from January 1, 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.

Since 2012, the Group's operating segment under IFRS 8 is only the import segment. The import segment earns its revenues from importing and marketing food products to retail chains and, supermarkets, among others.

On November 14 2018, the Board of Directors of the Company decided to take steps in order to enter the non-bank credit field (“credit extension activity”). This activity will be carried out and managed through W.F.D (Import, Marketing and Trading) a wholly-owned and controlled subsidiary of the Company. The activity will be funded from the Group’s own resources and will be carried out in parallel to the existing activity of importing, marketing and distributing food products. As of balance sheet date, the Company has not yet commenced its non-bank credit activities.

B. Revenues from the main customers of the Import segment:

The following is an analysis of the Group's customers who represent more than 10% of the total sales:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
Customer A		50,439		50,053		46,171		13,458

F - 49

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 18  -     SEGMENT INFORMATION (Cont.)

B. Revenues from the main customers of the Import segment: (Cont.)

 Revenues from major groups of products that contributed 10% or more to the Group's total revenues in 2016-2018 are as follows:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
Canned Vegetables and Pickles		57,333		53,839		59,028		15,297
Dairy and Dairy Substitute Products		116,083		102,372		87,803		30,972
Canned Fish		52,573		50,579		45,073		14,027
Cereals, rice and pastas		47,064		41,218		38,843		12,557
Other		65,192		63,970		63,455		17,394
		338,245		311,978		294,202		90,247

NOTE 19   -    RELATED PARTIES

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below:

A. Transactions with Related Parties:

	Year ended December 31,
	2 0 1 8		2 0 1 7		2 0 1 6		2 0 1 8
	NIS		NIS		NIS		US Dollars
Sales of goods to the Parent Company		-		93		208		-
Participation in expenses with Parent Company		-		95		296		32
Salary management fees, and bonus to related parties		4,352		2,281		2,190		1,161
Salary and bonus to key management personal		2,643		2,734		3,091		705
Car expenses		433		498		383		116

B. Balances with Related Parties:

	Year ended December 31,
	2 0 1 8			2 0 1 7			2 0 1 8
	NIS			NIS			US Dollars
Due to officers		(267	)		24			(71	)
Parent Company		186			(6	)		50

F - 50

G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 20  -     GUARANTEES AND PLEDGES

The Company's liabilities to banks with respect to overdrafts, on-call loans, documentary credit and bank guaranteed supplier credit as of December 31, 2017, is in the sum of NIS 7,106 thousands (NIS 6,502 thousand as of the end of 2016). These liabilities are for importation of food products and are guaranteed by floating charges [pledges] on the share capital, goodwill, and property of the Company, as well as the insurance rights.

Secured liabilities of the Group:

	As of December 31,
	2 0 1 8		2 0 1 7		2 0 1 8
	NIS		NIS		US Dollars
	(in thousands)
Bank letters of credit		957		2,979		255
		957		2,979		255

NOTE 21  -     SIGNIFICANT EVENTS DURING AND AFTER THE REPORTING PERIOD

a. On January 1, 2018, Mr. Michael Luboschitz was appointed as the CEO of the parent Company and of the Company.

b. On January 18, 2018, the Tel Aviv District Attorney’s Office (Taxation and Economics) served indictments against Alexander Granovskyi and Gregory Gurtovoy, former (indirect) controlling shareholders and office holders of the parent Company and of companies under its control and against Joseph Schneerson, former officer holder of the parent Company and of companies under its control (hereinafter jointly: “the Defendants”).   The Defendants are accused of offenses of theft by manager, fraudulent receipt of goods or services under aggravated circumstances, fraud and breach of trust in a corporation, false registration in corporate documents, reporting offenses under the Securities Law, non-compliance with the provisions of the Securities Regulations with the intent of misleading a reasonable investor and offenses under Section 4 of the Prohibition on Money Laundering Law.

As mentioned above, the Defendants were former (indirect) controlling shareholders through their control in B.G.I or senior office holders in, among others, BGI and B.S.D., the parent Company and the company. Under the pretext of depositing the said companies’ funds with different banks abroad, the Defendants agreed with the said banks that the companies’ funds shall be used to secure loans to be extended to foreign private companies related to the Defendants. Under the indictment, approximately $60 million of the said companies’ funds (mostly BGI and B.S.D) were extracted in this manner. A total of $3 million out of the said amount was transferred in January 2016 from a company controlled by the company to an investment that was recorded in the Company’s accounts as an investment in bonds of a hotel in the Czech Republic, while the investment was actually used to secure the repayment of a loan extended to a company, which is related to Granovskyi and Gurtovoy.

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G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 21  -     SIGNIFICANT EVENTS DURING AND AFTER THE REPORTING PERIOD (Cont.)

b. (Cont.)

The Investment was carried out by W. Capital Ltd. (Former: "B.H.W.F.I. Ltd"), a wholly owned subsidiary of the Company (“W. Capital”), pursuant to subscription forms to purchase 300 bonds (225 actually purchased) with a nominal value of USD 10,000 each (“Subscription Forms”). The Bonds bear an annual interest rate of 6%, payable semi-annually on June 30 and December 31 of each year as of the issue date until the final maturity date of December 31, 2018. The issuer has the right to repay the Bonds with prior notice of 30 days without penalty. On June 30, 2016, the Issuer paid the first interest on account of the bond actually purchased by W. Capital in accordance with the terms thereof.

On December 30, 2016, W. Capital and the Issuer signed an agreement (the “Agreement”) for an early redemption of the bonds for a total of USD 1.8 million that was to be paid by February 15, 2017.  Similarly, as part of the terms of the Agreement, the Issuer waived all its claims against W. Capital, including an alleged obligation to make an additional investment in bonds up to an aggregate amount of USD 5 million (as stated above, an amount of USD 2.25 million was invested in the past).

On March 21, 2017, a first payment in the amount of USD 200 thousand was received. In view of the uncertainty relating to the collection of the remaining balance of the debt, the Company recorded a loss of USD 1.6 million in the financial statements for the year 2016.

On July 6, 2017, a second payment in the amount of USD 400 thousand was received and therefore the Company recorded in its financial statements a finance income at an amount equal to the amount of the Second Payment.

On March 26, 2018, a third payment in the amount of USD 1,145 thousand was received by the Company, and therefore, the Company recorded in its financial statements a finance income at an amount equal to the amount of the third Payment.

c. Further to the above, on January 7, 2019, the Court was served with a plea agreement under an amended indictment (hereafter – the “Plea Agreement"), which was approved by the Tel Aviv-Jaffa District Court. Under the Plea Agreement, Gregory Gurtovoy and Joseph Schneerson were convicted of offenses of aiding theft by manager, fraud and breach of trust in a corporation, false registration in corporate documents, multiple offenses pursuant to Section 423 of the Penal Law, non-compliance with the provisions of Section 36 of the Securities Law, 1968 (hereafter – the “Securities Law”), the annual reports regulations and the immediate reports regulations; fraudulent receipt of goods or services under aggravated circumstances pursuant to Section 415 of the Penal Law and offenses of managers in a corporation. Furthermore, the Plea Agreement includes a 36-month imprisonment to Joseph Schneerson and 31-month imprisonment to Gregory Gurtovoy. Furthermore, Gregory Gurtovoy will also pay a fine of NIS 1.2 million.

d. 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.   As a result of the investigation that was conducted by the Securities Authority (the "Authority"), inter alia, regarding matters that have arisen as part of this litigation, restrictions were imposed as part of this investigation that prevent the former parent Company office holders, who are respondents to the Motion, from conversing with the attorneys of the parent Company. As part of the Motion – the date for submission of the parent Company’s response to the Motion has been postponed. On September 27, 2016, the Authority filed a notice updating the Court, in which it requested that the restrictions that it imposed remain in effect for further 6 months. On October 5, 2016, the parent Company filed a response to the Authority's update notice, in which it requested an extension of the deadline for submission of the parent Company's response to the Motion to 60 days after the restrictions imposed by the Authority are removed. On January 22, 2017, the Court ruled that in light of the restrictions placed by the Authority, at this stage, the deadline for filing of the parent Company's response must be postponed. On May 10, 2017 after the court re-considered the Applicant's claim, the Court decided that the deadline for filing of the parent Company’s response will be at least 60 days from the date on which the restrictions imposed by the Authority are removed. On July 2 2017, the Authority informed the Court that the restrictions have not yet been removed. On July 3, 2017, the Court ruled that the Authority will file a further update to its notice until September 15, 2017. On September 14, 2017, the Authority filed an update notice to the Court, to the effect that the restrictions had not yet been removed. On September 14, 2017, the Court ruled that the Authority would file an additional update to the Court until December 7, 2017.

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G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 21    -   SIGNIFICANT EVENTS DURING AND AFTER THE REPORTING PERIOD (Cont.)

d. (Cont.)

At the beginning of January 2018, the Authority filed a notice stating that the respondents to the Motion may reply to the Motion, provided that no meetings will be held with the attorneys that are attended by more than one person who is subject to restrictions as part of the criminal proceedings. On January 11 2018, the Court instructed the respondents to reply to the Motion within 60 days, i.e., no later than March 20, 2018.

On January 15, 2018, the Authority served indictments against Alexander Granovskyi, Gregory Gurtovoy and Joseph Schneerson.

On February 18, 2018, some of the respondents filed an application for stay of proceedings relating to the Motion, until the finalization of the criminal proceedings, and alternatively until all restrictions, which were placed on the respondents by the Authority are removed.

On February 26, 2018, the said respondents filed an application for deferral of the date of filing the reply to the Motion to 60 days after the issuance of a ruling in the application for stay of proceedings or after removal of all restrictions placed by the Authority as described above.

In its ruling from February 26, 2018, the court granted the extension as above.

On March 4, 2018, the Company filed a notice stating that it does not oppose to the motion and that the Court should rule according to its discretion.

On April 12, 2018, the Authority filed a notice stating that it has decided not to express its opinion regarding the Motion.

e. 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 derivative action 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.

f. Further to what is described in legal section e above, 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 organs 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.

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G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 21   -     SIGNIFICANT EVENTS DURING AND AFTER THE REPORTING PERIOD (Cont.)

f. (Cont.)

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.

A preliminary hearing was held on January 31, 2019 at the Central District Court. During the hearing, the parties were given procedural directives and a further preliminary hearing was scheduled for May 13, 2019.

On 24.1.2019 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. In view of the preliminary stages of the proceedings the company’s chances of prevailing in the lawsuit could not be assessed.

g. 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 (USD 634 thousand). 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 (USD 452 thousand). 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 26, 2017, Mr. Graiver filed a statement of defense. On November 2, 2017, a resolution was issued to join the hearings pertaining to the two proceedings described above. A preliminary hearing was held on March 7, 2018. The parties are in the process of document discovery and review. Proof hearings were held for December 18, 2019 and January 15, 2020. At this preliminary stage of the proceedings, it is not yet possible to assess the result of the proceedings.

h. A lawsuit and a motion to approve it as class action was filed on January 3, 2018, against the company and another company to the Tel Aviv District Court for allegedly not complying with the food labelling regulations in connection with one of its products thereby misleading its customers. At this stage the amount of the lawsuit is NIS 2.7 million, since the plaintiff does not have sufficient data regarding the amount of the damage. The Company and the plaintiff reached a compromise agreement whereby the plaintiff will withdraw the lawsuit and it will be stricken out at a cost which is immaterial to the Company. On July 18, 2018, the Court approved the compromise agreement and struck out the lawsuit.

i. A lawsuit and a motion to approve it as class action was filed on March 26, 2018 against the company to the Tel Aviv District Court for allegedly breaching some of its consumer protection duties in connection with one of its products, thereby misleading its customers. At this stage, the amount of the lawsuit is NIS 2.7 million, since the plaintiff does not have sufficient data regarding the amount of the damage. A preliminary hearing was scheduled for December 19, 2018. In view of the preliminary stage of the proceedings, it is not yet possible to assess the result of the lawsuit.

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G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 21   -     SIGNIFICANT EVENTS DURING AND AFTER THE REPORTING PERIOD (Cont.)

j. A lawsuit and a motion to approve it as class action was filed on July 22, 2018, against Gold Frost Ltd (through the company.) (hereafter – “Gold Frost”) and eight other companies to the Jerusalem District Court for allegedly not complying with the food labelling regulations in connection with one of its products and thereby misleading consumers. At this stage the amount of the lawsuit is NIS 4 million, since the plaintiff does not have sufficient data regarding the amount of the damage. On November 16 2018, the plaintiff filed a motion to withdraw the lawsuit, including payment compensation and attorneys’ fees at amounts that are immaterial to the Company. As of the date of this report, the Court has not yet issued a ruling approving the withdrawal of the lawsuit.

k. In January 2015, a lawsuit was lodged in the court of first instance in Valencia, Spain against Gold Frost Ltd. (hereinafter – “Gold Frost”) and against the Company (hereinafter – “the Companies”) by a Spanish food manufacturer (hereinafter – “the Plaintiff”), with whom the Companies entered into an agreement for the production of Kosher food products in Spain and for the sale of these products by Gold Frost. The lawsuit was lodged in connection with a financial dispute in respect of a debt which was allegedly not paid to the Plaintiff; the Plaintiff also demands that the Companies compensate it for products it had produced and which, according to the statement of claim, were not collected by the Companies, and as a result the Plaintiff had to destroy them.

On July 7, 2015, the Companies were served by post with judicial documents in the Spanish language. These judicial documents pertained to service of a legal procedure in the court of first instance in Valencia.

A further service of process was carried out in December 2015. In this case as well, the judicial documents were in the Spanish language.

On March 3, 2016, the court of first instance in Valencia, Spain approved the lawsuit against the Companies in an ex parte proceeding and ruled payment by the Companies of app. Euro 530 thousand (hereinafter – “Spanish Ruling”).

In April 2016, the Companies received the Spanish Ruling in the Spanish language as well as a translation of the Spanish Ruling into English. In December 2017, an enforcement order in the Spanish language was received at the Company’s offices. In the order, which was issued on November 22, 2017, the Companies are asked to provide details of assets and/or bank accounts for the purpose of enforcing the ruling in Spain.

On October 1 2018, the parties signed a compromise agreement whereby Gold Frost shall pay a total of Euro 150 thousand in consideration for the withdrawal of all of the Plaintiff’s claims against it. In October 22 2018, the court of first instance in Valencia approved the compromise agreement as a Court ruling.

l. On June 4 2018, the independent auditors of Willi Food parent company B.S.D, and the company – the accounting firm Deloitte (Brightman Almagor) - announced the termination of its work as the independent auditor of the company, following the decision of the Board of Directors of B.S.D to file a lawsuit against the independent auditor of the company and others in a motion to approve a derivative action that was filed in July 2016 by shareholders of B.S.D against B.S.D, the former controlling shareholders, executives and directors in B.S.D and against B.S.D’s independent auditor. According to the notice issued by the independent auditor, such a legal dispute undermines the independent auditor’s independence.

m. On October 21, 2017, the Company announced that Gold Frost Ltd., a wholly owned subsidiary of the Company (hereinafter – “Gold Frost”) received a notice from Arla Foods Amba (hereinafter - "Arla"), a material supplier of the Group in the field of dairy and dairy substitute products (hereinafter – “the Supplier”), whereby the Supplier decided not to renew the exclusive distribution agreement with Gold Frost, which is expected to expire on December 31, 2017. The end of the engagement with this distributor may have a material negative impact on the Group’s operating results.

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G. WILLI-FOOD INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(NIS in thousands)

NOTE 21   -     SIGNIFICANT EVENTS DURING AND AFTER THE REPORTING PERIOD (Cont.)

           l.        (Cont.)

Representatives of Gold Frost and the Supplier have met and reached agreements to the effect that the Supplier will continue supplying to Gold Frost products that will be sold by Gold Frost until October 2018.

Further to this announcement, the Company entered into engagements with several European dairies for the supply of a range of dairy products that will replace the products that were supplied by Arla. In August 2018, the Company launched a line of dairy products under independent brand “Euro Diary Europe”.

n. On November 14, 2018, G. Willi-Food’s Board of Directors decided to enter into the field of non-bank credit (“extending credit”). The company's Board of Directors has instructed the company management to obtain a license to act as non-bank credit provider according to the Supervision of Financial Services (Regulated Financial Services) Law, 2016.

The Company is of the opinion that the credit extension activity will be funded from the company own resources and the credit extension activity will be carried out in addition to the Company’s existing activities of importing, marketing and distributing food products.

In February 2019, the company extended a first loan totaling NIS 18 million through W.F.D (Import, Marketing and Trading) its wholly-owned and controlled subsidiary, which is expected to be charged with the credit extension activity.

o. On October 29, 2009, the Company and the subsidiary Gold-Frost Ltd. (hereafter – the “Companies”) filed to the Rishon-LeZion Magistrates Court a lawsuit demanding the refund of import permit fees at the total amount of approximately NIS 1.3 million. The fees were paid to the Ministry of Health in respect of early registration for food import permits with the national food service between the years 2002-2009; the Companies claim that those fees were collected unlawfully.

In a ruling issued on May 13 2015, the Rishon-LeZion Magistrates Court accepted the position of the Companies to the effect that the fees in respect of early registration for food import permits were collected unlawfully and that the Companies and other food importers have an independent cause to demand the repayment of the fees that were paid, by virtue of the Unjust Enrichment Law, 1979 (hereafter – the “Law”). In addition, a partial exemption from refund was determined in accordance with Section 2 of the Law in respect of an amount equivalent to 30% of the amounts of fees claimed and proven, due to the Ministry of Health’s mechanism for regulating imported food, which granted the Companies protection from criminal and civil lawsuits in respect of damage caused to consumers from damaged imported food. As a result of the ruling, the Company received in 2015 a total of approximately NIS 1.1 million.

After the Ministry of Health appealed against the ruling, on 19.4.17 a partial ruling was issued that upholds the rulings of the Magistrates Court unchanged in connection with the refund of fees and the rate of fees to be refunded; however, the question relating to the threshold for proving the damage remained outstanding.

On November 15 2015, the Companies filed a second lawsuit against the Ministry of Health for the refund of early registration fees for food import permits at the total amount of approximately NIS 2 million, which were paid by the Companies in 2009-2016. This lawsuit is pending until the appeal against the ruling in the first lawsuit is resolved.

On December 1 2013, the Companies filed to the Rishon-LeZion Magistrates Court a lawsuit against the Ministry of Health, demanding the refund of customs clearance fees at the total amount of approximately NIS 2.1 million. The fees were paid to the Ministry of Health in respect of clearance of food products from the port, which, according to the Companies, was in effect carried out by the Customs Authorities and therefore the fees were collected unlawfully.

The parties agreed to enter into a mediation process on all issues included in the appeal and the three pending lawsuits. In December, the mediator sent to the parties a suggested compromise plan. As of the date of publication of this report, the Companies are negotiating the compromise according to the plan issued by the mediator together with other importers of food products, which lodged lawsuits against the Ministry of Health in respect of the issue in question.

In the opinion of the Companies legal advisors, even if a compromise is not reached by the parties as part of the mediation process, the Companies’ chances of prevailing in the lawsuit are higher than 50%.

As of the date of this report, the Company did not recognize a contingent asset in its financial statements regarding the lawsuits aforementioned.

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F/A and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	G. WILLI-FOOD INTERNATIONAL LTD.
	By:	/s/ Michael Luboschitz
		Michael Luboschitz
		CEO
Date:  November, 04, 2019