Alon Holdings Blue Square - Israel Ltd. Announces Financial Results for the First Half and Second Quarter of 2010
The Company Presents Continued Improvement in the Business Results and the Operating Indices in the First Half and Second Quarter of 2010
- The operating profit in the first half of 2010 grew to 3.8% of
the sales as compared to 3.3% in the comparable half last year.
- The operating profit in the supermarket segment was 3.9% in the
first half and 4.2% in the second quarter of 2010.
- The strategic steps in the bee group including the move to a single
modern logistics center and the merger of the corporate headquarters
lead to one-off expenses in the first half.
- The net income for the first half increased by 16.7%.
Alon Holdings Blue Square-Israel Ltd. (NYSE and TASE: BSI) today
announced its financial results for the first half and second quarter ended
June, 30, 2010.
KEY FIGURES
1-6 1-6 Q2 Q2 1-12
Data in NIS (millions) 2010 2009 2010 2009 2009
Sales 3,599.5 3,608.7 1,768.7 1,844.0 7,349.1
Gross profit 1,026.7 1,004.8 513.0 501.7 2,058.1
% Gross profit 28.5% 27.8% 29.0% 27.2% 28.0%
Operating income
(before changes in fair value
of investment property and
other gains and losses) 135.1 120.9 62.5 60.7 241.0
% Operating income
(before changes in fair value
of investment property and
other gains and losses) 3.8% 3.3% 3.5% 3.3% 3.3%
EBITDA 226.3 206.2 108.6 103.6 418.4
% EBITDA 6.3% 5.7% 6.1% 5.6% 5.7%
Financial expenses, net 56.7 47.2 42.3 35.2 112.7
Net income for the period 58.2 49.9 21.1 17.5 97.8
Results for the First Half of 2010[1]
Revenues for the first half of 2010 were NIS 3,599.5 million (U.S.(A) $928.9 million), compared to NIS 3,608.7 million in the first half of 2009 - a decrease of 0.3 %.
Supermarkets segment - an increase in revenues of 0.2% from NIS 3,359.0 million in the first half of 2009 to NIS 3,364.5 million (U.S. $868.3 million) in the first half of 2010. The main reason for the increase was the net opening of 12 stores from the beginning of 2009, with an area of 15,400 square meters, partly offset by a decrease of approximately 2.1% in same store sales (SSS).
Non-food segment - a decrease in revenues of approximately 6.2% from NIS 239.1 million in the first half of 2009 to NIS 224.2 million (U.S. $57.9 million) in the first half of 2010. The decrease in revenues was mainly due to a decrease in the houseware sector offset by an increase in the leisure sector.
Real estate segment - an increase in revenues of approximately 1.1% in the rental fee income from NIS 10.6 million in the first half of 2009 to NIS 10.8 million (U.S. $2.8 million) in the first half of 2010. The increase is due to the increase in the Israeli CPI during the last 12 months.
Gross Profit of the first half of 2010 amounted to approximately NIS 1,026.7 million (U.S. $ 265.0 million) (approximately 28.5% of revenues) compared to gross profit of approximately NIS 1,004.8 million (27.8% of revenues) in the first half of 2009, an increase of NIS 21.9 million (U.S. $ 5.7 million). The increase in the gross profit margin mainly derives from the supermarket segment as a result of the increase in the sales of private label goods, which made up more than 7.5% of sales and an improvement in the terms of trade with suppliers and was partly offset by a decrease in the gross profit in the non-food segment as a result of the decrease in sales in that segment.
Selling, General, and Administrative Expenses for the first half of 2010 amounted to approximately NIS 891.6 million (U.S. $ 230.1 million) (24.8% of revenues) compared to NIS 884.0 million (24.5% of revenues) in the first half of 2009, an increase of 0.9%. The main increase was recorded in the supermarkets segment due to the opening of net 12 new stores from the start of 2009, an increase in advertising and marketing expenses and an increase in rental fees as a result of the change in the Israeli CPI and renewal of rental agreements which was partly offset by a decrease in electricity expenses due to the reduction in the tariffs, efficiency measures and a decrease in wage and salary costs due to efficiency measures. In the real estate segment there was an increase in expenses as a result of the start of construction and development projects, mainly the wholesale market and Seattle.
Operating Income (before other gains and losses and increase in the fair value of investment property) in the first half of 2010 amounted to approximately NIS 135.1 million (U.S $ 34.9 million) (3.8% of revenues) compared to operating income of NIS 120.9 million (3.3% of revenues) in the first half of 2009. The increase in the operating income was due to the increase in the gross profit partly offset by an increase in selling, general and administrative expenses.
Appreciation of Investment Property: In the first half of 2010, the Company recorded gains from the appreciation of investment property in the amount of NIS 13.2 million (U.S $ 3.4 million) compared to NIS 1.7 million in the first half of 2009.
Other Gains and losses, Net: In the first half of 2010 the Company recorded other expenses, net of NIS 7.1 million (U.S. $ 1.8 million), compared to other expenses, net of NIS 0.6 million in the first half of 2009. In the first half of 2010 the other expenses included mainly expenses relating to the transfer of the companies in the BEE group to the new logistics center in Beer Tuvia and the removal of property and equipment in the supermarket segment because of the closure of stores and changing to Windows based cash registers.
Operating Income before financing in the first half of 2010 was NIS 141.1 million (U.S. $ 36.4 million) (3.9% of revenues) compared to operating income of NIS 122.0 million (3.4% of revenues) in the first half of 2009.
Financial Expenses, Net for the first half of 2010 were NIS 56.7 million (U.S. $14.6 million) compared to financial expenses, net of NIS 47.2 million in the first half of 2009, an increase in net financial expenses of NIS 9.5 million (U.S. $ 2.5 million). The increase in net finance expenses mainly derived from a reduction in finance income of NIS 17.9 million (U.S. $ 4.6 million) net of a decrease in finance expenses in the amount of NIS 8.4 million (U.S. $ 2.2 million).
The decrease in finance income mainly derived from a reduction in finance income from hedging transactions on the Israeli CPI of NIS 17.9 million (U.S. $ 4.6 million), a reduction in the income from revaluation of the conversion component of financial instruments in the amount of NIS 6.1 million (U.S. $ 1.6 million) net of an increase in an income from securities in the amount of NIS 7.0 million (U.S. $ 1.8 million). The decrease in finance expenses mainly derived from the revaluation of the conversion component of the Company's debentures and from capitalization of borrowing costs in construction projects.
Taxes on Income for the first half of 2010 were approximately NIS 25.7 million (U.S. $6.6 million) (30.6% effective tax rate compared to a statutory tax rate of 25%) compared to NIS 24.8 million (effective tax rate of 33.2% compared to a statutory tax rate of 26%) in the first half of 2009. The decrease in the effective tax rate is mainly due to the reduction in finance expenses from the revaluation of the conversion component of the Company's convertible debentures for which the Company does not record deferred taxes. The high effective tax rate compared to the statutory rate is due to the recording of deferred taxes at the tax rate expected to apply when the taxes are utilized, which is lower than the statutory rate and from losses in some of the Group companies for which no deferred tax assets were recorded.
Net Income for the first half of 2010 was NIS 58.2 million (U.S. $ 15 million) compared to net income of NIS 49.9 million in the first half of 2009. The increase in the net income in the first half of 2010 compared to the first half of 2009 mainly derives from an increase in operating profit and from an increase in the appreciation of investment property value offset by an increase in finance expenses. The net income for the first half of 2010 attributable to the equity holders of the company was NIS 47.7 million (U.S. $12.3 million), or NIS 1.08 per share (U.S. $ 0.28), while the portion attributable to the non-controlling interests was NIS 10.5 million (U.S. $2.7 million).
Cash Flows in the First Half of 2010
Cash Flows from Operating Activities: Net cash flows deriving from operating activities in the first half of 2010 amounted to NIS 207.5 million (U.S. $53.5 million) before the acquisition of real estate inventories in the amount of NIS 121.7 million (U.S. $31.4 million) in the real estate segment compared to NIS 167.9 million in the first half of 2009. The increase in cash flows from operating activities before acquisition of real estate inventories derives from the improvement in the operating profit and a decrease in tax payments.
Cash Flows from Investing Activities: Net Cash flows used in investing activities in the first half of 2010 amounted to NIS 376.9 million (U.S. $97.3 million) compared to net cash flows of NIS 485.5 million used in investing activities in the first half of 2009. Cash flows used in investing activities in the first half of 2010 included mainly purchases of property and equipment, intangible assets, investment property and payments on account of real estate in a total amount of NIS 151.0 million (U.S. $39.0 million) and a net investment in marketable securities of NIS 216.9 million (U.S. $56.0 million), the grant of a loan of NIS 18.9 million (U.S. $4.9 million) to a proportionally consolidated company offset by interest income of NIS 9.9 million (U.S. $2.5 million). Cash flows used in investing activities in the first half of 2009 included mainly the investment of NIS 470 million in a restricted deposit, the purchase of property and equipment, intangible assets and investment property amounting to NIS 104.9 million net of proceeds of NIS 80.0 million from the realization of the restricted short term deposit and proceeds from the realization of property and equipment and investment property in the amount of NIS 7.2 million.
Cash Flows from Financing Activities: Net Cash flows used in financing activities in the first half of 2010 amounted to NIS 58.2 million (U.S $15.0 million) compared to net cash flow from financing activities of NIS 365.2 million in the corresponding period last year. Cash flows used in financing activities in the first half of 2010 included mainly repayment of long term loans of NIS 73.4 million (U.S $ 18.9 million), the payment of interest of NIS 58.5 million (U.S $ 15.1 million), payment of dividends of NIS 75 million (U.S. $19.4 million) to the Company's shareholders and NIS 17.6 million (U.S. $4.5 million) to the non-controlling interests and acquisition of treasury shares of NIS 4.3 million (U.S. $1.1 million). This was offset by an increase in short term credit, net in the amount of NIS 166.3 million (U.S. $42.9 million). Net Cash flows from financing activities in the first half of 2009 included mainly an increase in short term credit, net of NIS 476.6 million net of the repayment of long term loans of NIS 66.4 million and interest paid of NIS 45.9 million.
Comments of Management
Commenting on the financial results, Mr. Zeev Vurembrand, Alon Holdings Blue Square - Israel's President and CEO, said: The results of the second quarter were affected by the timing of the Passover holiday as compared to the comparable quarter last year. The non-food segment as a whole, and especially the houseware sector, were especially materially affected by this seasonality.
In reviewing the results of the first half, a continuing improvement in operating profits can be identified, which is an outcome, among others of the strategic changes the company has undertaken in the last year and a half. The supermarket segment can point to operating profits of 4.2% of sales and 3.9% in the second quarter and in the first half, respectively.
Eden Teva market's nine stores operated fully during the first half for the first time and continued to lead the healthy supermarket market. In the coming year we will continue the second stage of the development with the opening of approximately five new Eden in Mega stores and the completion of the opening of two stores in Beer Sheva and the YOO Center complex in Tel Aviv. We expect that Eden Teva market will show a break-even operating result in 2010 and operating profits in 2011.
We are still in the process of significant investments in the main IT operating systems. These moves have a long term impact and include installation of new modern cash-registers and upgrading the trading and the chain of delivery management systems.
In the non-food segment there were one-off costs apart from the seasonal impact of the timing of the Passover holiday. The one-off costs resulted from the transfer to the new non-food segment group logistics center and the consolidation of the BEE group center and move to single new offices.
We will continue with the implementation of the main elements of the Company's strategic plan. In our opinion, these steps will lead to an improvement in the business and operating results of the Company in the medium to long term.
Results for the second quarter of the year 2010
Revenues for the second quarter of 2010 were NIS 1,768.7 million (U.S. $456.4 million) compared to revenues of approximately NIS 1,844 million in the comparable quarter last year, a decrease of 4.1 %.
The decrease in the revenues compared to the comparable quarter last year is mainly due to the timing of the Passover holiday, which fell this year on March 29 as compared to April 8 last year. The Passover sales in the Non-Food and Supermarket segment were mainly included in the first quarter this year and last year they were mainly included in the second quarter. The Non-Food segment was affected more strongly by the timing of the holiday.
Supermarket segment - a decrease in revenues of 3.3% from NIS 1,731.4 million in the second quarter of 2009 to NIS 1,674.6 million (U.S $432.2 million) in the current quarter. The decrease in revenues was mainly due to a reduction in same store sales (SSS) at a rate of 5.2% as discussed because of the timing of the Passover holiday and partly offset by the opening of net 7 new stores from the beginning of the second quarter of 2009 with an area of 10,400 square meters.
Non-Food segment - a decrease in revenues of 17.3% from NIS 107.2 million in the second quarter of 2009 to NIS 88.7 million (U.S. $22.9 million) in the current quarter. The decrease mainly derived from the timing of the Passover holiday which affected this segment even more strongly than the Supermarket segment.
Real Estate segment - rental fees from external parties of NIS 5.4 million in the second quarter of 2009 compared to NIS 5.3 million (U.S. $1.4 million) in the current quarter.
Gross Profit of the second quarter of 2010 amounted to approximately NIS 513.0 million (U.S. $ 132.4 million) (approximately 29.0% of revenues) compared to gross profit of approximately NIS 501.7 million (27.2% of revenues) in the comparable quarter of 2009. The increase in the gross profit mainly derives from the same reasons detailed above for the half year results.
Selling, General and Administrative Expenses in the second quarter of 2010 amounted to NIS 450.5 million (U.S. $ 116.3 million) (25.5% of revenues) compared to approximately NIS 441.1 million (23.9% of revenues) in the comparable quarter, an increase of approximately 2.1%. The increase is due to the expenses related to the net increase of new stores and from an increase in the advertising expenses.
Operating Profit (before other gains and losses and increases in the fair value of investment property) in the second quarter of 2010 amounted to NIS 62.5 million (U.S $ 16.1 million) (3.5% of revenues) compared to NIS 60.7 million (3.3% of revenues) in the second quarter of 2009, an increase of 3%.
Increase in the Fair Value of Investment Property - In the second quarter of 2010, the Company recorded gains from appreciation of investment property in the amount of NIS 10.9 million (U.S $ 2.8 million) compared to NIS 1.7 million in the comparable quarter last year.
Other Gains and Losses, Net - In the second quarter of 2010, the Company recorded other expenses, net of NIS 5.9 million (U.S. $ 1.5 million), compared to net expenses of NIS 2.8 million in the comparable quarter. The expenses this quarter included costs of certain companies in the BEE Group related to the transfer of the BEE Group companies to the new logistic center in Beer Tuvia, which is expected to serve the Non-Food segment and the removal of the property and equipment as described above in first half analyses.
Operating Profit before financing expenses, net amounted to approximately NIS 67.5 million (U.S. $ 17.4 million) (3.8% of revenues) compared to operating profit of NIS 59.6 million (3.2% of revenues) in the second quarter of 2009.
Financial Expenses, net, for the second quarter of 2010 were NIS 42.3 million (U.S. $10.9 million) compared to financial expenses, net of NIS 35.2 million in the comparable quarter last year. The increase in financial expenses, net in this quarter compared to the same quarter last year was mainly due to changes in the value of hedging contracts of the Israeli CPI, which contributed a gain of NIS 2.6 million (U.S. $0.7 million) in this quarter compared to a gain of NIS 12.7 million in the comparable quarter last year.
The increase in the financial expenses was offset mainly by an increase in financial income from securities which contributed NIS 5.5 million (U.S. $1.4 million) this quarter compared to income of NIS 2.2 million in the comparable period last year.
Taxes on Income for the second quarter of 2010 amounted to NIS 4.1 million (U.S. $1.1 million) (effective tax rate of 16.3% compared to a statutory tax rate of 25%) compared to tax expenses of NIS 6.9 million (effective tax rate of 28.2% compared to a statutory tax rate of 26%) in the corresponding quarter. The low effective tax rate as compared to the statutory rate is due to the provision of deferred tax liabilities during the quarter at the rate of tax that is expected to apply on realization, which is lower than the statutory rate.
Net Profit for the second quarter of 2010 amounted to NIS 21.1 million (U.S. $ 5.4 million) compared to a net income of NIS 17.5 million in the second quarter of 2009. The increase in the net income in this quarter compared to the corresponding quarter last year derived from the increase in operating income and decrease in tax expense as discussed above. The net income for the second quarter of 2010 attributable to equity holders of the Company, was NIS 19.0 million (U.S. $4.9 million), or NIS 0.42 per share (U.S. $ 0.11), while the portion attributable to the non-controlling interests was NIS 2.1 million (U.S. $0.6 million).
Cash Flows in the second quarter of 2010
Cash Flows from Operating Activities: Net cash flows provided by operating activities, before the acquisition of real estate inventories by the real estate segment in the amount of NIS 121.7 million (U.S. $31.4 million) amounted to NIS 186.0 million (U.S. $ 48.0 million) in the second quarter of 2010 compared to NIS 133.4 million in the comparative period last year. The increase in cash flows from operating activities before the acquisition of real estate inventories was mainly due to the increase in the balance of trade payables mainly as a result of the timing of payments.
Cash Flows used in Investing Activities: Net Cash flows used in investing activities in the second quarter of 2010 amounted to NIS 327.5 million (U.S. $84.5 million) compared to net cash flows of NIS 35.5 million from investing activities in the corresponding quarter of the previous year. The cash flows used in investing activities in the second quarter of 2010 mainly included the purchase of property and equipment, intangible assets investment property and payments on account of real estate in a total amount of NIS 112.3 million (U.S. $29.0 million), net investment in marketable securities of NIS 200.7 million (U.S. $51.8 million) and the grant of a loan to a proportionally consolidated company of NIS 18.9 million (U.S. $4.9 million) net of interest received amounting to NIS 4.4 million (U.S. $1.1 million). Cash used in investing activities in the second quarter of 2009 mainly included the proceeds from the realization of a restricted deposit of NIS 80.0 million net of purchases of property and equipment, intangible assets and investment property in a total amount of approximately NIS 52.3 million.
Cash Flows from Financing Activities: Net Cash flows from financing activities amounted to NIS 4.8 million (U.S $ 1.2 million) in the second quarter of 2010 as compared to net cash used in financing activities of NIS 91.0 million in the corresponding period last year. Cash flows from financing activities in the second quarter of 2010 included mainly an increase in short term credit net in the amount of NIS 58.8 million (U.S. $15.1 million) net of the repayment of long term loans amounting to NIS 34.8 million (U.S $ 9.0 million) and interest paid of NIS 19.8 million (U.S. $5.1 million). The cash flows used in financing activities in the second quarter of 2009 included mainly repayment of long term loans of NIS 35.9 million, dividend paid to non-controlling interests of subsidiaries of NIS 6.2 million, interest paid amounting to 10.5 million and a net reduction in short term credit of NIS 52.8 million.
Additional Information
1. As of June 30, 2010, the Company operated 206 supermarkets in the
following formats: Mega In Town -120; Mega Bool - 49; Mega - 11; Shefa
Shuk - 17; Eden Teva Market - 9.
2. EBITDA (Earnings before Interest, Taxes, Depreciation, and
Amortization) [2] in the first half of 2010 was NIS 226.3 million
(U.S. $ 58.4 million) (6.3 % of revenues) compared to NIS 206.2
million (5.7% of revenues) in the corresponding period of 2009.
In the second quarter of 2010 amounted to NIS 108.6 million
(U.S. $ 28.0 million) (6.1 % of revenues) compared to NIS 103.6
million (5.6% of revenues) in the corresponding period of last year.
The Company's board of directors resolved, based on the changes and
the developments in the Company since 2003, to update the manner of
calculating the ratio of net debt to EBITDA for dividend distribution.
As of June 30, 2010, the Company meets the new ratio.
3. On April 15, 2010, Blue Square Real Estate (BSRE) executed minutes,
which were contingent upon the approval of the general meeting of BSRE
shareholders, to enter into agreements to purchase, along with Gindi
Investments 1 Ltd. and an additional corporation controlled by Moshe
and Yigal Gindi, leasehold rights in land of 97,460 square meters for
a period ending August 31, 2099 in part of the wholesale market
complex in Tel Aviv, from the Tel Aviv Municipality and The Wholesale
Company for Agricultural Produce in Tel Aviv Ltd. (the sellers) for a
total consideration of NIS 950 million. The general meeting of BSRE
approved the transaction on June 2, 2010. The final agreements, which
were signed on June 3, 2010, were subject to the approval of the
Minister of the Interior, which was received on July 11, 2010.
4. On April 26, 2010, Standard & Poors Maalot entered the rating for the
debentures of the Company of ilA+ into Credit Watch with negative
outlook, due to the wholesale market transaction of BSRE.
5. On June 28, 2010 the shareholders' general meeting approved the
acquisition of Dor Alon Energy Israel (1988) Ltd. (Dor Alon) from its
controlling shareholder Alon Israel Oil Company Ltd. (Alon). Under
such acquisition, the Company will acquire from Alon all its holdings,
approximately 80%, in Dor Alon. In return for the Dor Alon shares,
the Company will issue 20,327,710 shares to Alon that will
significantly increase the issued and outstanding share capital of the
Company in such a way that each Dor Alon share held by Alon will be
exchanged into 1.8 shares of the Company. According to the outline of
the acquisition, the Company will pay a dividend distribution in an
amount of NIS 800 million by way of a capital reduction. The Company
has filed for approval of the distribution to the district court.
However, the court has not yet given its decision.
6. On July 15, 2010, the Company announced that as a result of
the approval in the shareholders' general meeting of June 28, 2010 and
the approval of the Register of Companies in Israel the Company's name
would be changed to "Alon Holdings Blue Square - Israel Ltd".
7. On August 10, 2010, the Company received a rating of A1 from Midroog
for the Debentures up to par value NIS 500 million that the Company
will issue. The rating is subject to a number of conditions which are
detailed in Midroog's report.
8. On July 12, 2010 BSRE completed its capital raising of NIS
110 million of debentures.
---------------------------------
[1] The Company operates in three segments: Supermarkets, Non-Food and
Real Estate. Segmental information is included in this report in
Note 1.
[2] Use of financial measures that are not in accordance with Generally
Accepted Accounting Principles
EBITDA is a measure that is not in accordance with Generally Accepted
Accounting Principles (Non-GAAP) and is defined as income before
financial income (expenses) net, other gains (losses) net, changes in
fair value of investment property, taxes, depreciation and amortization.
It is presented because it is a measure commonly used in the retail
industry and is presented as an additional performance measure, since it
enables comparisons of operating performances between periods and
companies while neutralizing potential differences resulting from
changes in capital structures, taxes, age of property and equipment and
its related depreciation expenses. EBITDA, however, should not be
considered as an alternative to operating income or income for the year
as an indicator of our operating performance. Similarly, EBITDA should
not be considered as an alternative to cash flow from operating
activities as a measure of liquidity. EBITDA is not a measure of
financial performance under Generally Accepted Accounting Principles
(GAAP) and may not be comparable to other similarly titled measures for
other companies. EBITDA may not be indicative of our historic operating
results nor is it meant to be predictive of potential future results. A
reconciliation between our income for the period and EBITDA is presented
in the attached condensed financial reports.
NOTE A: Convenience Translation to Dollars
The convenience translation of New Israeli Shekel (NIS) into U.S. dollars was made at the exchange rate prevailing at June 30, 2010: U.S. $1.00 equals NIS 3.875. The translation was made solely for the convenience of the reader.
Alon Holdings Blue Square - Israel Ltd. (hereinafter: "Alon Holdings") operates in three reporting segments: In its supermarket segment, Alon Holdings is the second largest food retailer in the State of Israel. As pioneer of modern food retailing in the region, Alon Holdings, through its 100% subsidiary, Mega Retail Ltd., currently operates 207 supermarkets under different formats, each offering a wide range of food products, "Near Food" products and "Non-Food" products at varying levels of service and pricing. In its "Non-Food" segment, Alon Holdings, through its 85% subsidiary Bee Group Retail Ltd., operates specialist outlets in self operation and franchises and offers a wide range of "Non-Food" products as retailer and wholesaler. In its Real Estate segment, Alon Holdings, through its TASE traded 78.35% subsidiary Blue Square Real Estate Ltd., owns, leases and develops yield generating commercial properties.
This press release contains forward-looking statements within the meaning of safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, plans or projections about our business and our future revenues, expenses and profitability. Forward-looking statements may be, but are not necessarily, identified by the use of forward-looking terminology such as "may," "anticipates," "estimates," "expects," "intends," "plans," "believes," and words and terms of similar substance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual events, results, performance, circumstance and achievements to be materially different from any future events, results, performance, circumstance and achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the following: the effect of the recession in Israel on the sales in our stores and on our profitability; our ability to compete effectively against discount supermarkets and other competitors; quarterly fluctuations in our operating results that may cause volatility of our ADS and share price; risks associated with our dependence on a limited number of key suppliers for products that we sell in our stores; the effect of an increase in the minimum wage in Israel on our operating results; the effect of any actions taken by the Israeli Antitrust Authority on our ability to execute our business strategy and on our profitability; the effect of increases in oil, raw material and product prices in recent years; the effects of damage to our reputation or to the reputation of our store brands due to reports in the media or otherwise; and other risks, uncertainties and factors disclosed in our filings with the U.S. Securities and Exchange Commission (SEC), including, but not limited to, risks, uncertainties and factors identified under the heading "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2009. You are cautioned not to place undue reliance on these forward-looking statements, which are only relevant as of the date of this press release. Except for our ongoing obligations to disclose material information under the applicable securities laws, we undertake no obligation to update the forward-looking information contained in this press release.
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2010
Convenience
translation(A)
December 31, June 30, June 30,
------------------------
2009 2009 2010 2010
----------- ----------- ------------ --------------
Audited Unaudited
----------- ---------------------------------------
NIS U.S. dollars
------------------------------------ --------------
In thousands
---------------------------------------------------
Assets
CURRENT ASSETS:
Cash and cash
equivalents 612,227 137,241 262,517 67,746
Short-term bank deposit 67 207 - -
Investment in securities 212,912 **188,726 431,786 111,429
Restricted deposit - 440,015 - -
Trade receivables 809,783 773,892 795,925 205,400
Other accounts receivable 69,504 96,308 83,406 21,524
Embedded derivatives 9,690 - 9,051 2,336
Income taxes receivable 84,274 87,635 69,994 18,063
Inventories 514,858 527,798 537,341 138,669
----------- ----------- ------------ ------------
2,313,315 2,251,822 2,190,020 565,167
----------- ----------- ------------ ------------
NON-CURRENT ASSETS:
Property and equipment,
net *1,956,914 *1,935,643 1,975,758 509,873
Real estate inventories - - 83,342 21,508
Investment property *421,188 *,**414,743 447,517 115,488
Intangible assets, net 409,194 404,934 410,593 105,959
Investments in associates 4,878 4,827 4,302 1,110
Embedded derivatives 12,691 19,381 13,818 3,566
Long-term receivables 1,326 1,356 117,605 30,349
Deferred taxes 45,991 46,504 40,541 10,462
----------- ----------- ------------ ------------
2,852,182 2,827,388 3,093,476 798,315
----------- ----------- ------------ ------------
Total assets 5,165,497 5,079,210 5,283,496 1,363,482
=========== =========== ============ ============
*) Restated, see note 2
**) Reclassified
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2010
Convenience
translation(A)
December 31, June 30, June 30,
------------------------
2009 2009 2010 2010
----------- ----------- ------------ --------------
Audited Unaudited
----------- ---------------------------------------
NIS U.S. dollars
------------------------------------ --------------
In thousands
---------------------------------------------------
Liabilities and equity
CURRENT LIABILITIES:
Credit and loans from
banks and others 274,598 725,528 427,787 110,397
Current maturities of
debentures and
convertible debentures 76,698 29,064 76,235 19,674
Trade payables 917,585 1,025,728 960,840 274,959
Other accounts payable
and accrued expenses *494,147 *491,895 499,513 128,904
Income taxes payable 6,051 3,449 24 6
Provisions 51,298 42,457 44,273 11,425
----------- ----------- ------------ ------------
1,820,377 2,318,121 2,008,672 518,365
----------- ----------- ------------ ------------
NON CURRENT LIABILITIES:
Long-term loans from
banks, net of current
maturities 596,721 289,885 541,528 139,749
Convertible debentures,
net of current maturities 142,021 128,070 132,334 34,151
Debentures, net of
current maturities 1,251,333 1,001,537 1,261,208 325,473
Derivative financial
instruments 7,591 8,725 6,241 1,611
Liabilities in respect
of employee benefits,
net of amount funded 47,249 49,619 47,728 12,317
Other liabilities *16,202 *41,280 22,526 5,813
Deferred taxes *57,279 *67,428 56,345 14,541
----------- ----------- ------------ ------------
2,118,396 1,586,544 2,067,910 533,655
----------- ----------- ------------ ------------
Total liabilities 3,938,773 3,904,665 4,076,582 1,052,020
----------- ----------- ------------ ------------
EQUITY:
Equity attributable to
equity holders of the
Company
Ordinary shares of
NIS 1 par value 57,438 57,438 58,443 15,082
Additional paid-in
capital 1,030,259 1,030,259 1,056,986 272,771
Other reserves 5,676 8,183 8,024 2,071
Accumulated deficit *(61,049) *(105,796) (103,740) (26,772)
----------- ----------- ------------ ------------
1,032,324 990,084 1,019,713 263,152
Non-controlling
interests *194,400 *184,461 187,201 48,310
----------- ----------- ------------ ------------
Total equity 1,226,724 1,174,545 1,206,914 311,462
----------- ----------- ------------ ------------
Total liabilities and
equity 5,165,497 5,079,210 5,283,496 1,363,482
=========== =========== ============ ============
*) Restated, see note 2
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX AND THREE MONTHS PERIODS ENDED JUNE 30, 2010
For the
Year ended Six months
December 31, Ended June 30,
--------------------------
2009 2009 2010
------------ ------------ ------------
Audited Unaudited
------------ --------------------------
NIS
----------------------------------------
In thousands (except share and per share data)
----------------------------------------------
Revenues 7,349,076 3,608,739 3,599,487
Cost of sales 5,291,012 2,603,905 2,572,775
------------ ------------ ------------
Gross profit 2,058,064 1,004,834 1,026,712
Selling, general and
administrative expenses 1,817,099 883,981 891,642
------------ ------------ ------------
Operating profit before
other gains and losses and
changes in fair value of
investment property 240,965 120,853 135,070
Other gains 4,699 4,464 1,419
Other losses (32,803) (5,102) (8,528)
Changes in fair value of
investment property, net 20,775 1,740 13,187
------------ ------------ ------------
Operating profit 233,636 121,955 141,148
Finance income 64,780 37,995 20,078
Finance expenses (177,454) (85,222) (76,786)
Share in losses of associates (37) (88) (576)
------------ ------------ ------------
Income before taxes on
income 120,925 74,640 83,863
Taxes on income 23,124 24,780 25,656
------------ ------------ ------------
Net income 97,801 49,860 58,207
============ ============ ============
Attributable to:
Equity holders of the Company 77,163 39,606 47,725
------------ ------------ ------------
Non-controlling interests 20,638 10,254 10,482
------------ ------------ ------------
Net income per Ordinary
share or ADS attributed to
Company shareholders:
Basic 1.77 0.91 1.08
------------ ------------ ------------
Fully diluted 1.77 0.91 1.06
------------ ------------ ------------
Weighted average number of
shares or ADSs used for
computation of income per
share:
Basic 43,558,614 43,397,543 44,282,052
------------ ------------ ------------
Fully diluted 43,558,614 43,397,543 44,834,944
------------ ------------ ------------
(continued)
Convenience
translation(A)
For the for the
Three months six months
Ended June 30, ended June 30,
--------------------------
2009 2010 2010
-------------------------- -------------
Unaudited Unaudited
-------------------------- -------------
NIS U.S. dollars
-------------------------- -------------
In thousands (except share and per share data)
----------------------------------------------
Revenues 1,843,951 1,768,663 928,900
Cost of sales 1,342,204 1,255,705 663,942
------------ ------------ ------------
Gross profit 501,747 512,958 264,958
Selling, general and
administrative expenses 441,062 450,472 230,101
------------ ------------ ------------
Operating profit before other gains
and losses and changes in fair
value of investment property 60,685 62,486 34,857
Other gains 1,739 463 366
Other losses (4,539) (6,341) (2,201)
Changes in fair value of investment
property, net 1,740 10,913 3,403
------------ ------------ ------------
Operating profit 59,625 67,521 36,425
Finance income 27,016 14,764 5,181
Finance expenses (62,246) (57,050) (19,814)
Share in losses of associates (4) - (149)
------------ ------------ ------------
Income before taxes on income 24,391 25,236 21,643
Taxes on income 6,879 4,123 6,621
------------ ------------ ------------
Net income 17,512 21,113 15,022
============ ============ ============
Attributable to:
Equity holders of the Company 13,071 18,969 12,317
Non-controlling interests 4,441 2,144 2,705
------------ ------------ ------------
Net income per Ordinary
share or ADS attributed to
Company shareholders:
Basic 0.30 0.43 0.28
------------ ------------ ------------
Fully diluted 0.30 0.42 0.27
------------ ------------ ------------
Weighted average number of shares
or ADSs used for computation of
income per share:
Basic 43,421,996 44,589,741 44,282,052
------------ ------------ ------------
Fully diluted 43,421,996 44,975,642 44,834,944
------------ ------------ ------------
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX AND THREE MONTHS PERIODS ENDED JUNE 30, 2010
Convenience
translation
(A)
Year for the
ended For the For the six months
December Six months Three months ended
31, ended June 30, ended June 30 June 30,
2009 2009 2010 2009 2010 2010
--------- --------- --------- --------- --------- ---------
Audited Unaudited Unaudited
--------- --------------------------------------- ---------
U.S.
NIS dollars
------------------------------------------------- ---------
In thousands
-----------------------------------------------------------
CASH FLOWS
FROM
OPERATING
ACTIVITIES:
Net cash
provided by
operating
activities(a) 298,445 202,666 93,834 153,045 88,029 24,217
Income tax
paid, net (38,101) (34,775) (7,972) (19,642) (23,684) (2,057)
--------- --------- --------- --------- --------- ---------
Net cash
provided by
operating
activities 260,344 167,891 85,862 133,403 64,345 22,160
--------- --------- --------- --------- --------- ---------
CASH FLOWS
FROM INVESTING
ACTIVITIES:
Purchase of
property and
equipment (203,889) (99,424) (80,590) (46,092) (49,329) (20,797)
Proceeds
from sale of
property and
equipment 2,581 1,537 52 1,036 52 13
Purchase of
investment
property (9,435) (3,307) (3,641) (978) (3,299) (940)
Payments on
account of real
estate for
investment
property - - (53,466) - (53,466) (13,798)
Proceeds
from sale of
investment
property 5,700 5,700 - - - -
Investment in
restricted
deposit (470,000) (470,000) - - - -
Proceeds from
collection of
restricted
deposit 470,000 79,985 - 79,985 - -
Purchase of
intangible
assets (20,738) (4,405) (13,341) (5,181) (6,222) (3,443)
Proceeds from
collection of
short-term
bank deposits,
net 139 - 67 - - 17
Proceeds
from sale of
securities 101,867 57,179 116,340 22,976 71,891 30,023
Investment in
securities (113,966) (54,339) (333,292) (20,946) (272,606) (86,011)
Acquisition of
subsidiaries(b) (4,789) (4,789) - - - -
Grant of loans
to jointly
controlled
companies - - (18,933) - (18,933) (4,886)
Interest
received 11,948 6,330 9,860 4,747 4,439 2,544
--------- --------- --------- --------- --------- ---------
Net cash
provided by
(used in)
investing
activities (230,582) (485,533) (376,944) 35,547 (327,473) (97,278)
--------- --------- --------- --------- --------- ---------
CASH FLOWS
FROM
FINANCING
ACTIVITIES:
Repayment of
convertible
debentures (13,297) - (27) (27) (7)
Dividend
paid to
shareholders - - (75,000) - - (19355)
Issuance of
debentures 294,280 - - - - -
Dividend
paid to non-
controlling
interests (16,491) (10,534) (17,619) (6,181) (3,321) (4,547)
Purchase of
non-controlling
interests *(8,020) *(6,607) - - - -
Purchase of
Company's
shares by
the Company - - (4,295) - - (1,108)
Proceeds from
realization of
investment
in
subsidiary *10,912 *10,074 - *10,074 - -
Receipt of
long-term
loans 387,700 6,500 4,500 2,500 4,500 1,161
Repayment of
long-term
loans (139,060) (66,389) (73,409) (35,901) (34,773) (18,944)
Repayment of
long term
credit from
trade
payables (1,740) (870) (870) (435) (435) (225)
Proceeds from
exercise of
options in a
subsidiary 2,306 2,306 - 2,306 - -
Short-term
credit from
banks and
others, net 76,144 476,575 166,273 (52,843) 58,583 42,909
Proceeds from
exercise of
options - - 716 - 86 185
Interest paid (93,900) (45,879) (58,486) (10,495) (19,840) (15,093)
--------- --------- --------- --------- --------- ---------
Net cash
provided by
(used in)
financing
activities 498,834 365,176 (58,217) (90,975) 4,773 (15,024)
--------- --------- --------- --------- --------- ---------
INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS
AND BANK
OVERDRAFTS 528,596 47,534 (349,299) 77,975 (258,355) (90,142)
BALANCE OF
CASH AND CASH
EQUIVALENTS
AND BANK
OVERDRAFTS
AT BEGINNING
OF PERIOD 83,138 83,138 611,734 52,697 520,790 157,867
Exchange gains
on cash and cash
equivalents - - 82 - 82 21
--------- --------- --------- --------- --------- ---------
BALANCE OF
CASH AND CASH
EQUIVALENTS
AND BANK
OVERDRAFTS
AT END OF
PERIOD 611,734 130,672 262,517 130,672 262,517 67,746
========= ========= ========= ========= ========= =========
* Restated
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX AND THREE MONTHS PERIODS ENDED JUNE 30, 2010
Convenience
translation
(A)
Year for the
ended For the For the six months
December Six months Three months ended
31, ended June 30, ended June 30 June 30,
2009 2009 2010 2009 2010 2010
--------- --------- --------- --------- --------- ---------
Audited Unaudited Unaudited
--------- --------------------------------------- ---------
U.S.
NIS dollars
------------------------------------------------- ---------
In thousands
-----------------------------------------------------------
(a) Net cash
provided by
operating
activities:
Income before
taxes on
income 120,925 74,640 83,863 24,391 25,236 21,643
Adjustments for:
Depreciation
and
amortization 165,248 79,766 87,291 39,992 44,086 22,527
Increase in
fair value of
investment
property, net (20,775) (1,740) (13,187) (1,740) (10,913) (3,403)
Share in
losses of
associates 37 88 576 4 - 149
Share based
payment 12,166 5,619 3,901 2,933 2,000 1,007
Loss from
sale and
disposal of
property and
equipment, net 3,299 7 867 365 719 224
Provision for
impairment of
property and
equipment, net 19,981 2,189 369 2,189 245 95
Loss (gain)
from changes
in fair
value of
derivative
financial
instruments (21,250) (17,952) 556 (15,396) (2,468) 143
Linkage
differences
on monetary
assets,
debentures,
loans and
other long term
liabilities 52,347 16,358 10,626 23,668 22,690 2,742
Capital loss
(gain) from
changes in
holdings in
subsidiaries 911 (1,022) - 1,522 - -
Accrued
severance
pay, net 144 (292) 206 (304) (1,128) 53
Decrease
(increase)
in value of
investment
in securities,
deposits and
long-term
receivables,
net (4,468) 7,064 (1,567) 4,768 (2,195) (404)
Interest
paid, net 81,952 39,550 48,626 5,748 15,401 12,549
Changes in
operating
assets and
liabilities:
Investment
in real
estate
inventories - - (82,485) - (82,485) (21,286)
Payments on
account of
real estate
inventories - - (39,188) - (39,188) (10,113)
Decrease
(increase)
in trade
receivables
and other
accounts
receivable (65,468) (56,412) (6,733) 290,230 301,282 (1,737)
Decreased
(increase) in
inventories (17,224) (30,155) (22,483) 53,814 13,607 (5,802)
Increase
(decrease)
in trade
payables and
other accounts
payable (29,380) 84,958 22,595 (279,139) (198,858) 5,830
--------- --------- --------- --------- --------- ---------
298,445 202,666 93,834 153,045 88,029 24,217
========= ========= ========= ========= ========= =========
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX AND THREE MONTHS PERIODS ENDED JUNE 30, 2010
Convenience
translation
(A)
Year for the
ended For the For the six months
December Six months Three months ended
31, ended June 30, ended June 30 June 30,
--------- ------------------- --------- --------- ---------
2009 2009 2010 2009 2010 2010
--------- --------- --------- --------- --------- ---------
Audited Unaudited Unaudited
--------- --------------------------------------- ---------
U.S.
NIS dollars
------------------------------------------------- ---------
In thousands
-----------------------------------------------------------
(b) Acquisition of
subsidiaries:
Assets and
liabilities at date
of acquisition:
Working capital
(excluding cash
and cash
equivalents) 2,350 2,350 - - - -
Property and
equipment, net (297) (297) - - - -
Deferred taxes,
net (453) (453) - - - -
Intangible
assets (6,389) (6,389) - - - -
--------- --------- --------- --------- --------- ---------
(4,789) (4,789) - - - -
========= ========= ========= ========= ========= =========
(c) Supplementary
information on
investing and
financing activities
not involving cash
flows:
Conversion of
convertible
debentures of
the company 12,198 12,198 12,394 12,198 - 3,198
========= ========= ========= ========= ========= =========
Restricted
deposit against
receipt of a
short term loan - 50,000 - 50,000 - -
========= ========= ========= ========= ========= =========
Purchasing property
and equipment on
credit 174 10,153 12,338 10,153 12,338 3,184
========= ========= ========= ========= ========= =========
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
SELECTED OPERATING DATA
FOR THE SIX AND THREE MONTH PERIOD ENDED JUNE 30, 2010
(UNAUDITED)
Convenience
translation(A)
For the six For the three for the three
months ended months ended months ended
June 30 June 30 June 30
--------------- ---------------
2009 2010 2009 2010 2010
------- ------- ------- ------- --------------
NIS U.S.$
------------------------------- --------------
Sales (in millions) 3,609 3,600 1,844 1,769 456
Operating profit before
other gains and losses
and changes in fair value
of investment property
(in millions) 121 135 61 62 16
EBITDA (in millions) 206 226 104 109 28
EBITDA margin 5.7% 6.3% 5.6% 6.1% NA
Decrease in same store
sales (S.S.S) (6.8%) (2.1%) (6.1%) (5.2%) NA
Number of stores at end
of period 200 206 200 206 NA
Stores opened during the
period 7 4 2 1 NA
Stores closed during the
period 1 1 1 1 NA
Total square meters
selling area at end of
period 362,300 369,900 362,300 369,900 NA
Square meters added
(decreased) during the
period, net 7,800 4,900 2,800 (800) NA
Sales per square meter 9,366 9,102 4,624 4,525 1,167
Sales per employee (in
thousands) 484 498 244 242 62
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
RECONCILIATION BETWEEN PROFIT FOR THE PERIOD TO EBITDA
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2010
(UNAUDITED)
Convenience
translation
(A)
Year for the
ended For the For the six months
December Six months Three months ended
31, ended June 30, ended June 30 June 30,
--------- ------------------- --------- ---------
2009 2009 2010 2009 2010 2010
--------- --------------------------------------- ---------
U.S.
NIS dollars
------------------------------------------------- ---------
In thousands
-----------------------------------------------------------
Net income
for the
period 97,801 49,860 58,207 17,512 21,114 15,022
--------- --------- --------- --------- --------- ---------
Taxes on
income 23,124 24,780 25,656 6,879 4,123 6,621
Finance
expenses, net 112,674 47,227 56,708 35,230 42,286 14,633
Share in
losses of
associates 37 88 576 4 - 149
Other losses,
net 28,104 638 7,109 2,800 5,878 1,835
Increase in
fair value of
investment
property (20,775) (1,740) (13,187) (1,740) (10,913) (3,403)
Depreciation
and
amortization 165,248 79,766 87,291 39,992 44,086 22,527
Share based
payment 12,166 5,619 3,901 2,933 2,000 1,007
--------- --------- --------- --------- --------- ---------
EBITDA 418,379 206,238 226,261 103,610 108,574 58,389
========= ========= ========= ========= ========= =========
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
Note 1 - Segment reporting
The Company includes segment information according to IFRS 8. The
Company presents three reportable segments: Supermarkets, Non-Food
(Retail and Wholesale) and Real estate.
Company's three operating segments consist of the following:
(1) Supermarkets - The Company operates the second largest food retail
chain in Israel. Through its subsidiary, Mega Retail Ltd. ("Mega
Retail"), which operates Supermarket branches, the Company offers a
wide range of food and beverage products and "Non-Food" items, such
as houseware, toys, small electrical appliances, computers and
computer accessories, entertainment and leisure products and textile
products and "Near-Food" products, such as health and beauty aids,
products for infants, cosmetics and hygiene products. As of June 30,
2010, Mega Retail operated 206 supermarkets. This segment also
includes properties owned through Blue Square Real Estate
("BSRE"), in connection with the supermarket operation of our stores
(including warehouses and offices).
(2) Non-Food (Retail and Wholesale) -Through our subsidiary, Bee Group
Retail Ltd. ("Bee Group"), Bee group operates as retailer and
wholesaler in the Non-Food segment. As of June 30, 2010, Bee Group
operated 270 non-food Retail outlets, mostly through franchisees,
with specialties in houseware and home textile, toys, leisure, and
infant.
(3) Real Estate - Through our subsidiary BSRE the Company is engaged in
the yield generation from investment properties: mainly commercial
centers, logistics centers and offices and land for the purpose of
capital appreciation and deriving long-term yield.
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
Note 1 - Segment reporting (continued):
Segment analysis for the first half and the second quarter ended June 30,
2010:
Six months ended June 30, 2010
----------------------------------------------------------
Non-food Real Total
Supermarkets Retail estate Adjustments Consolidated
------------ ---------- --------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 3,364,527 224,206 10,754 - 3,599,487
Inter segment
sales - 27,610 - (27,610) -
---------- ---------- --------- ----------- ------------
Depreciation
and amortization 80,278 7,013 - - 87,291
Operating profit
before other gains
and losses net and
changes in fair
value of investment
property 130,234 12,792 4,343 (85) 147,284
Rate of operating
profit before
other gains and
losses net and
changes in fair
value of investment
property 3.9% 5.1% 40.4% - 4.1%
Segment profit 126,333 9,583 17,531 (85) 153,362
Unallocated
corporate expenses (12,214)
------------
Operating profit 141,148
============
Six months ended June 30, 2009
----------------------------------------------------------
Non-food Real Total
Supermarkets Retail estate Adjustments Consolidated
------------ ---------- --------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 3,358,964 239,134 10,641 - 3,608,739
Inter segment
sales - 31,125 - (31,125) -
---------- ---------- --------- ----------- ------------
Depreciation
and amortization 70,502 9,264 - - 79,766
Operating profit
before other
gains and
losses net
and changes
in fair value
of investment
property 101,262 22,588 5,831 (324) 129,357
Rate of operating
profit before
other gains and
losses net and
changes in fair
value of
investment
property 3.0% 8.4% 54.8% - 3.6%
Segment profit 101,546 18,584 7,571 (324) 127,377
Unallocated
corporate
expenses (8,504)
Gains due to
decrease in
holdings 3,082
------------
Operating profit 121,955
============
Three months ended June 30, 2010
----------------------------------------------------------
Non-food Real Total
Supermarkets Retail estate Adjustments Consolidated
------------ ---------- --------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 1,674,632 88,691 5,340 - 1,768,663
Inter segment
sales - 10,855 - (10,855) -
Depreciation
and amortization 39,888 4,198 - - 44,086
Operating profit
(loss) before
other gains and
losses net and
changes in fair
value of
investment
property 70,617 (5,713) 3,373 1,138 69,415
Rate of operating
profit before other
gains and losses
net and changes
in fair value of
investment
property 4.2% (5.7%) 63.2% - 3.9%
Segment profit 67,971 (8,946) 14,287 1,138 74,450
Unallocated
corporate expenses (6,929)
------------
Operating profit 67,521
============
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
Note 1 - Segment reporting (continued):
Three months ended June 30, 2009
----------------------------------------------------------
Non-food Real Total
Supermarkets Retail estate Adjustments Consolidated
------------ ---------- --------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 1,731,387 107,203 5,361 - 1,843,951
Inter segment
sales - 10,316 - (10,316) -
Depreciation
and amortization 33,850 6,142 - - 39,992
Operating profit
before other
gains and losses
net and changes
in fair value of
investment
property 56,734 4,369 3,426 38 64,567
Rate of operating
profit before
other gains and
losses net and
changes in fair
value of investment
property 3.3% 3.7% 63.9% - 3.5%
Segment profit 57,099 666 5,166 38 62,969
Unallocated
corporate expenses (3,882)
Gains due to
decrease in
holdings 538
------------
Operating profit 59,625
============
Year ended December 31, 2009
----------------------------------------------------------
Non-food Real Total
Supermarkets Retail estate Adjustments Consolidated
------------ ---------- --------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 6,863,020 464,266 21,790 - 7,349,076
Inter segment
sales - 58,874 - (58,874) -
Depreciation
and amortization 153,347 11,901 - - 165,248
Operating
profit
before other
gains and
losses net
and changes
in fair
value of
investment
property 211,120 34,321 12,145 720 258,306
Rate of operating
profit before
other gains and
losses net and
changes in fair
value of investment
property 3.1% 6.6% 55.7% - 3.5%
Segment profit 190,882 23,245 32,920 720 247,767
Unallocated
corporate expenses (17,341)
Gains due to
decrease in holdings 3,210
------------
Operating profit 233,636
============
Six months ended June 30, 2010
----------------------------------------------------------
Non-food Real Total
Supermarkets Retail estate Adjustments Consolidated
------------ ---------- --------- ----------- ------------
Convenience translation to U.S. dollar in thousands
----------------------------------------------------------
Segment sales 868,265 57,860 2,775 - 928,900
Inter segment
sales - 7,125 - (7,125) -
Depreciation
and
amortization 20,717 1,810 - - 22,527
Operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 33,609 3,301 1,121 (22) 38,009
Rate of
operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 3.9% 5.1% 40.4% - 4.1%
Segment profit 32,602 2,473 4,524 (22) 39,577
Unallocated
corporate expenses (3,152)
------------
Operating profit 36,425
============
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
Note 2: Effect of initial adoption of the new standards in the
reported period
Effective January 1, 2010, an amendment to IAS 17 came into effect dealing with leases, classification of land and buildings ("the amendment")
The amendment represents part of the annual improvement project of the IASB which was published in April 2009. The amendment cancels the specific directives relating to the classification of land leases, by canceling the inconsistency with the general directives for classifying leases. Under the amendment, the unequivocal determination included in the past in IAS 17, under which a lease of land in which the ownership is not expected to be transferred to the lessee at the end of the lease period will be classified as operating lease was omitted. Under the amendment, the Company will assess the land classification as financial lease or operating lease under the general directives in IAS 17 for classifying leases. The amendment is applicable retroactively for annual periods beginning January 1, 2010 or thereafter. The Company applies the above amendment to IAS 17 effective January 1, 2010 retroactively.
The following is the effect of the change in the accounting policy due to the initial adoption of the amendment to IAS 17 on the comparative figures presented in the financial information for the interim period:
As reported in
As previously The effect of the interim
reported retroactive financial
implementation information
------------- -------------- ----------------
NIS in thousands
Statement of financial
position as of June 30,
2009
The effect on assets and
liabilities:
Prepaid expenses for
operating leases 190,605 (190,605) -
============= ============== ================
Property and equipment, net 1,739,071 196,572 1,935,643
============= ============== ================
Investment property 420,386 (5,643) 414,743
============= ============== ================
Liabilities to Israel
Land Administration(*) 5,643 (5,643) -
============= ============== ================
Deferred taxes 66,354 1,074 67,428
============= ============== ================
The effect on equity:
Shareholders equity
attributed to the
company's shareholders :
Accumulated deficit (109,711) 3,915 (105,796)
============= ============== ================
Non-controlling interests 183,482 979 184,461
============= ============== ================
Total equity 1,169,652 4,893 1,174,545
============= ============== ================
Statement of financial
position as of December
31, 2009
The effect on assets and
liabilities:
Prepaid expenses for
operating leases 193,228 (193,228) -
Property and equipment, net 1,757,718 199,196 1,956,914
============= ============== ================
Investment property 424,936 (3,748) 421,188
============= ============== ================
Liabilities to Israel
Land Administration(*) 3,748 (3,748) -
============= ============== ================
Deferred taxes 56,205 1,074 57,279
============= ============== ================
The effect on equity:
Shareholders equity
attributed to the
company's shareholders :
Accumulated deficit (64,964) 3,915 (61,049)
============= ============== ================
Non-controlling interests 193,421 979 194,400
============= ============== ================
Total equity 1,221,831 4,893 1,226,724
============= ============== ================
(*) Included in "Other accounts payable and accrued expenses" and "Other
non current liabilities".
Contact:
Alon Holdings Blue Square-Israel Ltd.
Dror Moran, CFO
Toll-free telephone from U.S. and Canada: +1-888-572-4698
Telephone from rest of world: +972-3-928-2220
Fax: 972-3-928-2299
Email: [email protected]
SOURCE Alon Holdings Blue Square Israel Ltd
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