Financing expenses clouded the recovery in sales and profit and deepened the net loss of Kopix, controlled by Rami Levy, to NIS 8 million.
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The company, which operates 37 supermarkets under the Super Kopix and Rami Levy brands in the neighborhood, as well as 68 coffee branches, recorded a 5.3% increase in sales, which amounted to NIS 303.4 million. This is due to an 8.3% increase in supermarket sales, which was recorded following the opening of 4 new stores and the conversion of a branch that operated under the Super Kopix brand to the Rami Levy brand in the neighborhood, which was offset by the closure of 2 Super Kopix branches operating in malls.
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Rami Levy against the background of the Kopix branch
(Photo: Ohad Zweigenberg, Press Kopix)
The growth in supermarkets was offset by a 21.3% decrease in cafe sales, following a change in the accounting method, to one in which the supplier is conducted directly with the franchisee of the cafe and the company is rewarded by the supplier with a commission on the franchisees’ purchases.
An increase in gross profit at a rate similar to that of an increase in sales maintained gross profit at 30.2% of sales. The improvement in gross profit was mainly recorded in the activity of cafes, which rose to 30.6% of sales, compared with 23.1% in 2020, in parallel with the erosion of the gross profitability of supermarkets, which eroded to 30.2% of mines, compared with 30.9% in 2020.
The improvement in the coffee shops’ profitability was achieved by stabilizing the chain’s operations and recruiting new customers who purchase the chain’s products directly from the company’s Marlog. Self-operating coffee shop branches as part of a streamlining and savings process that has been accelerated as a result of the economic impact of the outbreak and spread of the corona virus.
The administrative and general expenses of the supermarket arm jumped by 35% to NIS 5.8 million, following an increase in the amount of participation in the group’s headquarters expenses. Kopix recorded a jump of 68.5% in other expenses, following the deduction of property assets of 2 supermarket branches that were closed during the year and expenses of converting branches to the Levy Rami brand in the neighborhood, as well as one-time expenses incurred this year from levies.
Kopix recorded a jump of 68.5% in other expenses, among other things due to the loss of property assets of 2 supermarket branches that closed during the year
The company was also forced to make a provision for impairment of NIS 1.8 million, on an owner loan of $ 2.5 million, given by the cafe arm (Urban Kopix), to Kopix Global, a Cypriot private company in which Urban Kopix owns 42.2%, and which owns a Russian company It concentrates the activity of cafes in Russia.
The owner’s loans were made in dollars and it was determined that she would repay in dollars. However, in light of the fact that most of the Cypriot company’s consolidated revenues come from the Russian company operating in Russia, whose revenues are in rubles, which fell by 66% compared to last December – there was doubt about Kopix Global’s ability to repay some of the owners’ loans. Impairment provision.
The company’s reports also show that Super Kopix did not meet the debt coverage ratio for a loan it received from a banking corporation last year. In the background, a loan of NIS 10 million that the company took from a banking corporation. The company repaid the loan last January and signed a first-degree floating lien in favor of the bank, all the assets, funds, property and rights it has and will have in the future, as well as a fixed lien and a first-class lien on all its share capital and goodwill.
In addition, the Rami Levy chain sent the Bank a letter of convenience in which it stated that it would act to the best of its ability so that the subsidiaries Urban Kopix and Super Kopix would fulfill all its obligations to the bank, so that the subsidiary would meet its obligations to the bank in full and on time.
Super Kopix has undertaken to meet the financial ratio of debt service coverage, according to which, from the financial statements for the summary of 2020 onwards, the ratio between the accounting profit and current liabilities of long-term debt plus reported financing expenses will not be less than 1.5. However, according to the company’s financial statements for the summary of 2021, the debt service coverage ratio was 1 and therefore Super Kopix did not meet the conditions.
Super Kopix did not meet the debt coverage ratio for a loan it received from a banking corporation last year. In the background, a loan of NIS 10 million that the company took from a banking corporation
Last week, the bank informed the company that it agrees on a one-time basis not to take action due to non-compliance with the debt service coverage ratio, provided that Super Kopix fulfills the said obligation regarding the debt service coverage ratio from the annual financial statements to 2022 onwards.
The company intends to increase the range of products and services in cafes, in order to increase their sales and after stabilizing the profitability of operations, expand the number of points of sale. The company also intends to expand its worldwide cafes and penetrate more countries through Kopix Global.
The company, which received approval from the shareholders’ meeting to oblige the supermarket chain to pay a franchise fee of 1.5% of sales in branches to be converted from Copix to Rami Levy in the neighborhood, intends to improve its trading activity and increase the range of Rami’s private label products in branches. The salary cost of 5 company executives in 2021 amounted to NIS 2 million.