Gavriel Frohwein - GK, IR Ilan Admon - Chairman Iram Graiver - President Pavel Buber - CFO

Ladies and gentlemen, thank your standing by. Welcome to the G Willi-Food Internationals First Quarter 2017 Results Conference Call. All participants are present in a listen-only mode. Following managements formal presentation, instructions will be given with the question and answer session. As a reminder, this conference is being recorded. You should have all received by now the Company's press release. If you have not received it, please contact Willi-Food Investor Relations team at GK Investor and Public Relation at 1646-688-3559, or view in the news section of the Company's website www.willifood.com. I would now like to hand the call over to Mr. Gavriel Frohwein of GK Investor Relations. Mr. Frohwein would you like to begin please.

Welcome all of you to Willi-Food conference call to discuss the first quarter 2017 results. I would like thank Willi-Food management for hosting this conference call. With me today on the call are Mr. Ilan Admon, Chairman; Mr. Iram Graiver, President; and Mr. Pavel Buber, CFO. Iram will begin with the summary of the results followed by Pavel with the summary of the financial. We will then open the call for the question-and-answer session. This conference call contains forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 related to future events and or the future performance such as statements regarding trends, demand for our products and expected sales operating results and earnings. Forward-looking statements involved known and unknown risk, uncertainties and other factors that may cause our actual results, level the activity performance or achievement to be materially different from any future results levels of activity performance or achievements expressed or implied in the forward-looking statements. These risk and uncertainties and other factors include but are not limited to summarize under the heading Risk Factors in the Company's Annual Report from Form-20-F, for the year-ended December 31, 2016, filed with the Securities and Exchange Commission on April 27, 2017. We do not assume any obligation to update the forward-looking information discussed on today's call and we cannot guarantee the future results, levels of activity performance or achievements. And now, Iram would like to please begin.

Thank you. Hi, everybody. I would like to welcome all of you to our call to discuss our results for the first quarter. This is the second time we have now hosted an investor conference call and we do hope this really now become regular quarterly [indiscernible], in line with the being much more open and best of friendly company. Overall, we are pleased with our results. Revenues were slightly ahead of those -- of the first quarter last year at NIS83 million which is about $23 million. The first quarter including the sales for the possible early days, which is all the seasonally higher than the rest of the year. Most tweaking about the current result is the continuing improvement in gross margin, which grew to 26.4% from 25.2% last year in the lower to improve our gross profit by 6% percent, despite turn which were in the similar of -- similar level to last year. This is a very much in line with our strategy of all brand improvement in the Willi-Food business. We continue to rationalize the product portfolio focusing on the selling a favorable mix of products and as you can see our efforts of producing results. Our marketing and sales expenses were 31% higher amounting to NIS11.9 million in the quarter versus NIS9 million in the first quarter of last year. The most significant structure causing this increase was advertising promotion complaint we launched in the second half of last year. That was part of any annual budget approved by the Company, but the Company's Board of Directors spent NIS2.2 million in Q1 versus only NIS700,000 in the first quarter of last year. Looking at the next quarter in the remainder of 2017, we expect our quarterly sale and marketing peso to be similar to current level. The marketing campaign is geared towards improving the public perception of our product and improvement consumer acceptance of our brands. It is also designed to promote and increase product sales with existing customers while expanding into new customers. We believe this will help us grow market share and the cautious we do marketing these risks. Therefore, we see it is a long-term investment in our future. In addition, another reason to a higher level of operating peso was increased growth of special inventories, which we had the Passover holiday in the quarter, which lead to some increase extra projects and quarter related debt. With regard to our remaining operating expenses, we continue to keep tight control over the G&A expenses which were 7% lower versus last year at NIS3.2 million in Q1 versus NIS3.8 million in Q1 last year. Another negative effecting the quarter was large non-cash financing expenses related to the sharp foreign exchange movement in the quarter. Our financing expense in Q1 excluding this impact was a net of NIS0.8 million. Despite our large cash position, our net expenses were due to the sharp strengthening of the shekel versus other currency. Much of our large cash position is held in foreign currency mostly U.S. dollar than euro. The value of our foreign currency volume was reduced in shekel terms in the quarter because of the sharp currency movement; however, I note it is a non-cash charge to the financial expenses on the profit. Despite the higher preventing expenses, we remain profitable and cash generating. On the bottom line, we reported an income of NIS4.3 million versus NIS4.7 million in the first quarter last year. In summary, we are pleased with our overall project. We continue to make and the business is moving into right direction. Looking ahead, we will continue to work hard in keeping our expenses tight while maintaining a favorable product mix. As I said last quarter, our overall goal is to build a strong, stable and profitable company while maximizing long-term value for the shareholders. We now hand the call over to Pavel for the financial review, Pavel please.

Good morning and afternoon everybody. I'll now review the first quarter 2017 results. I would like to remind everyone that the Company reports in accordance to international financial reporting standards or IFRS. I also remind you that as a manager of this company, our results are reported in New Israeli Shekels, all shekels [indiscernible]. I will cover our results in shekels only and you can review the press release issued today to see the U.S. dollar equivalent. We also mentioned the exchange rate between shekel and the U.S. dollars in the end of the first quarter was 3.632 to the dollar. First quarter 2017 sales increased by 0.8% to NIS83.3 million compared to sales of NIS82.6 million in the first quarter of 2016. The gross profits increased by 6% to NIS22 million in first quarter compared to gross profit of NIS20.8 million in the first quarter of 2016. Gross margins improved to 26.4% in the first quarter of 2017 compared to 25.2% in the first quarter of 2016. Operating expenses in the quarter were NIS15.4 million and 20% [indiscernible] versus NIS12.8 million in the first quarter of the last year. The main increase was due to advertising and the promotional expenses as well as [indiscernible] expenses related to low housing and commercializing. This was because of the tighter level of the venture rate we held in the first quarter specifically for the Passover holiday. Operating income in the quarter was NIS6.6 million, 70% lower compared with NIS8 million in the first quarter of the last year. Financial expenses net of the non-cash items are NIS80,000 to NIS71,000 compared with NIS1.6 million in the first quarter of last year. As Ilan mentioned, our financial expenses included a large NIS3 million non-cash expense relating to the strengthening of the shekel in quarter versus the context in which our cash holdings are denominated. Net income for the first quarter of 2017 decreased by 10% to NIS4.3 million compared with NIS4.7 million in the first quarter of last year. Earnings per share for the first quarter of 2017 were $32 compared to $36 in the first quarter of 2016. Net cash used in operating activities for the quarter was NIS43.3 million. This was mainly due to the increase in venturing in the Q1 for the Passover holidays. And as effect to affecting the increase was with regards to compliance litigations on a daily product in first quarter. We expect that to the upcoming quarters, our cash flow will turn positive with [indiscernible] in level inventory. In addition, there was an increase in trade receivables in the sum of NIS6 million mainly due to our brand increase of sales for larger supermarket chain, which have more improved days, trade days than the smaller thing. Turning to the balance sheet, at the end of first quarter of 2017, Willi-Food will have cash and equivalence and fair value financial assets NIS193 million in cash and securities. Net of long-term debt currently accounted at NIS377 and NIS395 million in equity. And with that, I would like to open the call for questions and answers. Operator?

On behalf of the management of Willi-Food, I would like to thank you our shareholders for their interest and continued support of our business. I look forward to speaking with you next quarter. Have a good day.

Thank you. This concludes the G Willi-Food International first quarter 2017 results conference call. Thank you for your participation. You may go ahead and disconnect.