The balance sheet is stable, but a little help from above wouldn't hurt.
It's a bit surprising to find the acronym BSD ("with the help of heaven", used by Orthodox Jews when writing documents) in the upper corner of a board of directors report for a kibbutz-controlled company, but the Hofit Kibbutz Kinneret board of directors apparently feels a need to preserve good relations with heaven, especially in view of the company’s losses in 2002. Hofit, which manufactures storage tanks and other means of storage, faced growing competition, which reduced its sales 6% to NIS 45.9 million last year. The company’s net loss was NIS 3.4 million, compared with a negligible NIS 500,000 profit the preceding year. The company’s gross profit margin in 2002 was 25%, down from 29% the preceding year, indicating intensifying competition and the effect of the recession.
At the same time, Hofit’s balance sheet is stable. The company’s NIS 34.8 million equity is 76% of its balance sheet total, and its working capital amounted to NIS 28 million. Furthermore, the company’s NIS 4.2 million allowance for doubtful debts should also be taken into account. NIS 1.2 million of this was apparently due to a transaction conducted by a company employee who exceeded his authority, without company knowledge, and in contravention of its rules. Most of the write-off was in the first quarter; the company did not lose money in the fourth quarter, although it did no more than break even. As a result of the company losses, the kibbutz’s management fees totaled only NIS 900,000, while rent amounted to NIS 2 million. Directors and general managers salary costs amounted to NIS 548,000.
Published by Globes [online] - www.globes.co.il - on 28 April 2003