Alon Holdings Blue Square - Israel Ltd.(NYSE:BSI) Announces the Financial Results for the Third Quarter and the First Nine Months of 2012
ROSH HA'AYIN, Israel, November 27, 2012 /PRNewswire/ --
- Net Sales this quarter amounted to NIS 3,313 million, an increase of 2.6%.
- Increase in cash flow from operating activities to NIS 156 million this quarter.
- Increase in EBITDA[1] to NIS 143 million in this quarter.
- In the Commercial and Fueling sites: Taking efficacy measures and expanding the activity in the convenience stores sector despite the reduction of marketing margins in September 2011, resulted in operating profit of NIS 55.6 million similar to the operating profit in the corresponding quarter last year.
- In the Supermarkets segment:
- Same Store Sales decreased this quarter by 0.4% compared to a 6.4% decrease in the comparable quarter.
- The operating profit rate in the third quarter amounted to 2.4% compared to 2.0% in the corresponding quarter (increase of 17%) and 1.1% and 2.0% in the first and second quarter of this year. The major improvement mainly derived from implementing efficacy measures and adjusting the expense structure.
- Mega commenced the implementation of a strategic maneuver in 30 branches of the chain that shall include completing the exit from 11 branches until the end of the year launching new HD chain in national deployment of 20 branches in 2013.
The Operating Profit rate excluding these branches is 3.9% in the third quarter of the year compared to 3.4% in the second quarter.
- In the Real Estate segment: BSRE continues the development momentum and inaugurated during this quarter the commercial center in Kiryat Hasharon, Netanya, a project it exclusively initiated. The wholesale market project in Tel Aviv is progressing ahead of schedule. The Comverse Building in Ra'anana is in construction and an additional four projects are in construction stages.
- In the the Non Food segment: a decrease in the operating loss in this quarter compared to the corresponding quarter.
Segment Results:
Data in millions of NIS Q3 2012 Q3 2011
Commercial and Fueling sites 55.5 55.2
Supermarkets 41.7 34.0
Non-Food (6.5) (6.5)
Real Estate 1.9 12.8
Results for the third quarter of 2012[2]
Gross revenues
Revenues (including government levies) in the third quarter of 2012 amounted to NIS 4,077.6 million (U.S. $1,042.3 million) as compared to revenues of NIS 3,956.1 million in the comparable quarter last year, an increase of 3.1%. The main increase in revenues was due to an increase in the revenues of Dor Alon compared to the corresponding quarter last year.
Revenues from sales, net
Revenues of the Commercial and Fueling sites segment - amounted in this quarter to NIS 1,493.9 million (U.S. $381.9 million) as compared to NIS 1,425.6 million in the corresponding quarter last year, an increase of 4.8%. The main increase was due to an increase in the price of petrol and an increase in quantitative sales in the convenience stores compared to the corresponding quarter last year.
Revenues of the Supermarkets segment - amounted in this quarter to NIS 1,685.0 million (U.S. $430.7 million) as compared to NIS 1,673.1 million in the corresponding quarter last year, an increase of 0.7%. The increase in revenues derives from opening 9 new branches and was partly offset by closing 6 branches in the last 12 months and reduction in the same store sales (SSS) at a rate of 0.4% which was mainly due to the increasing competition and opening of commercial areas and erosion in sale prices.
Revenues of the Non-Food segment - an increase in revenues by 2.4% from NIS 121.5 million in the third quarter of 2011 to NIS 124.4 million (U.S. $31.8 million) in the current quarter. The increase in revenues is mainly due to an increase in sales in the home segment and in stores transferred from franchise to self-operation.
Revenues of the Real Estate segment - an increase in rental income of 5.8% from NIS 7.2 million in the third quarter of 2011 to NIS 7.6 million (U.S. $2.0 million) in the current quarter, mainly due to an increase in leased space, following the opening of the commercial center in Kiryat Hasharon, Netanya, toward the end of the quarter.
Gross profit in the third quarter of 2012 amounted to NIS 754.0 million (U.S. $192.7 million) (22.8% of revenues) as compared to gross profit of NIS 744.8 million (23.1% of revenues) in the comparable quarter last year. The increase in the gross profit compared to the corresponding quarter last year was mainly due to the increase in the gross profit in the commercial and fueling segment.
In the Commercial and Fueling sites segment, gross profit amounted to NIS 240.9 million (U.S. $61.6 million), (16.1% of revenues) compared to NIS 230.6 million in the comparable quarter last year (16.2% of revenues). The increase of 4.4% in the gross profit compared to the corresponding quarter last year mainly derived from convenience stores and was partly offset from the reduction of marketing margin of supervised gasoline.
In the Supermarkets segment, gross profit amounted to NIS 465.3 million (U.S. $118.9 million), (27.6% of revenues) compared to NIS 467.7 million in the third quarter of 2011 (27.9% of revenues), a decrease of 0.5% stemming from increasing competition resulting in price reductions.
In the Non Food segment, gross profit amounted to NIS 45.3 million (U.S. $11.6 million), (36.4% of revenues) compared to NIS 39.3 million in the comparable quarter last year (32.3% of revenues). The increase in gross profit and gross profit rate mainly drives from decrease in sales to franchisees and increase in retail sales, as aforementioned.
Selling, general and administrative expenses in the third quarter of 2012 amounted to NIS 688.5 million (U.S. $176.0 million) (20.8% of revenues), compared to expenses of NIS 672.9 million (20.8% of revenues) in the comparable quarter last year, an increase of 2.3%. The main increase was recorded in the Commercial and Fueling sites segment and from launching Alon Cellular activity that was partly offset by a decrease in these expenses in the Supermarkets segment.
In the Commercial and Fueling sites segment, these expenses amounted to NIS 185.2 million (U.S. $47.3 million) compared to NIS 175.4 million in the third quarter of 2011, an increase of 5.6%, mainly deriving from opening new fueling sites and was partly offset by efficiency measures taken starting from the fourth quarter of 2011.
In the Supermarkets segment, selling, general and administrative expenses amounted to NIS 425.7 million (U.S. $108.8 million) compared to expenses of NIS 433.8 million in the comparable quarter in 2011. The main decrease derives from decrease in salary expenses and other headquarters expenses following efficacy measures and was partly offset by an increase in electricity and municipal taxes expenses.
In the Non Food segment, these expenses amounted to NIS 49.0 million (U.S. $12.5 million) (an increase of 17.1%) compared to NIS 41.8 million in the comparable quarter in 2011. The increase derives from an increase in the retail activity and the transition from franchise into self-operated stores.
In the Real Estate segment, these expenses amounted to NIS 4.8 million (U.S. $1.2 million) compared to NIS 3.1 million in the comparable quarter in 2011. The increase mainly derives from increase in salary expenses and increase in professional fees paid to consultants as a result of an increase and expanding the activity in various projects.
Operating profit (before other gains and losses and changes in fair value of investment property) in the third quarter of 2012 amounted to NIS 65.5 million (U.S. $16.7 million) (2.0% of revenues) as compared to NIS 71.9 million (2.2% of revenues) in the comparable quarter last year, a decrease of 9.0%. The decrease in the operating profit was mainly due to expenses from launching Alon Cellular activity.
In the Commercial and Fueling sites segment, operating profit in this quarter amounted to NIS 55.7 million (U.S. $14.2 million) similar to the operating profit of NIS 55.2 million in the corresponding quarter.
In the Supermarkets segment, operating profit increased from NIS 33.9 million in the comparable quarter last year to NIS 39.6 million (U.S. $10.1 million) due to increase in sales and decrease in selling, general and administrative expenses as mentioned above.
In the Non Food segment, operating loss of NIS 5.5 million in the comparable quarter in 2011 as compared to operating loss of NIS 3.7 million (U.S. $0.9 million) due to decrease in sales to franchisees and closing stored by franchisees.
In the Real Estate segment, a decrease from operating profit of NIS 4.1 million in the comparable quarter in 2011 to NIS 2.8 million (U.S. $0.7 million) due to increase in selling administrative and general expenses as aforementioned.
Changes in fair value of investment property in the third quarter of 2012 the Company recorded loss in the amount of NIS 1.0 million (U.S. $0.2 million) compared to a profit of NIS 8.7 million in the comparable quarter last year.
Other income (expenses), net other expenses in the third quarter of 2012 amounted to NIS 3.4 million (U.S. $0.9 million) compared to other expenses of NIS 0.8 million in the comparable quarter last year.
Operating profit amounted to NIS 61.1 million (U.S. $15.6 million) (1.8% of revenues) as compared to operating profit of NIS 79.8 million (2.5% of revenues) in the comparable quarter last year, a decrease of 23.4%.
Finance costs, net in the third quarter of 2012 amounted to NIS 76.3 million (U.S. $19.5 million) as compared to net finance costs of NIS 79.0 million in the comparable quarter last year. The decrease in finance costs, net derives from a sharp devaluation of the NIS exchange rate in the third quarter of 2011 and was partly offset by an increase in finance expenses this quarter on CPI linked long term loans.
Taxes on income in the third quarter of 2012 amounted to NIS 1.3 million (U.S. $0.3 million) as compared to tax benefit of NIS 34.7 million in the comparable quarter last year. Tax benefit in the comparable quarter derived mainly from closing deferred taxes at realization of option to purchase Diners share.
Net loss for the third quarter of 2012 amounted to NIS 12.6 million (U.S. $3.2 million) compared to a net income of NIS 40.3 million in the third quarter of 2011, the difference derives mainly from taxes as explained above. The net loss this quarter attributed to the Company's shareholders amounted to NIS 17.8 million (U.S. $4.5 million) or NIS 0.27 per share (U.S. $0.07) and the income attributed to non -controlling interests amounted to NIS 5.2 million (U.S. $1.3 million).
Cash flows for the third quarter of 2012
Cash flows from operating activities: Net cash flow provided by operating activities amounted to NIS 155.7 million (U.S. $39.8 million) in the third quarter of 2012 compared to NIS 51.6 million from operating activities in the comparable quarter last year. The increase derives from a decrease in working capital needs in the amount of NIS 26 million (U.S. $6.6 million), and tax returns, net amounting to NIS 10.8 million (U.S $2.7 million) in the third quarter of 2012 compared to tax paid, net amounting to NIS 20.4 million in the comparable quarter last year.
Cash flows used in investing activities: Net cash flows used in investing activities amounted to NIS 94.5 million (U.S. $24.2 million) in the third quarter of 2012 as compared to net cash used in investing activities of NIS 177.0 million in the comparable quarter. Cash flows used in investing activities in the third quarter of 2012 mainly included the purchase of investment property, property and equipment and intangible assets of total NIS 65.4 million (U.S. $16.7 million), the grant of long term loans of NIS 27.1 million (U.S. $6.9 million) mainly to an affiliate and was offset by proceeds from realization of property and equipment of NIS 7.3 million (U.S. $1.9 million), and interest received of NIS 8.6 million (U.S. $2.2 million).
In the third quarter of 2011 the cash flows used in investing activities mainly included the purchase of property and equipment, intangible assets and investment property of NIS 96.2 million, investment in restricted deposits of NIS 2.9 million, investment in short term deposits, net in the amount of NIS 8.2 million and investment in affiliate of NIS 36.4 million and was offset by proceeds received from realizing investment property amounting to NIS 50.6 million.
Cash flows from financing activities: Net cash flows used in financing activities amounted to NIS 18.1 million (U.S. $4.6 million) in the third quarter of 2012 as compared to net cash flows deriving from financing activities of NIS 108.2 million in the corresponding quarter last year. The cash flows used in financing activities in the third quarter of 2012 mainly included interest payments of NIS 73.9 million (U.S. $18.9 million), repayment of loans of NIS 61.7 million (U.S. $15.8 million) and debentures repayment of NIS 85.0 million (U.S. $21.7 million) and was partly offset by issuance of debentures of NIS 93.4 million (U.S. $23.9 million) and receiving loans of NIS 45.6 million (U.S. $11.6 million). The net cash flows deriving from financing activities in the third quarter of 2011 included mainly long term loans received of NIS 23.0 million, change in short term credit of NIS 203.0 million and was offset by repayment of debentures of NIS 2.2 million, repayment of long term loans of NIS 55.6 million and interest paid of NIS 59.6 million.
Comments of Management
Mr. David Weissman, Chairman of the Board of Directors and Chief Business Officer -
"The third quarter marks a continuous improvement in each of the operating segments alongside a momentum in the business development.
Dor Alon continues to grow, alongside with an adequate coping with the regulation which returned the Company to strong profitability.
BSRE starts to enjoy an income production from assets initiated by the Company such as Kiryat Hasharon mall that was completed and opened to the public. The wholesale market complex in Tel Aviv is progressing as planned. Until now, about 85% of the apartments were sold and construction is advancing ahead of schedule. The same situation applies to the Comverse building in Ra'anana, which is in construction stages and an additional four projects that are in completion stages.
These days, the Company launched, with a great success, the cellular activity.This activity reinforces the synergy between the various activity arms of the group and materially advances increased the augmented purchase baskets in Mega and Dor Alon in addition to the successful You Club and Diners.
On this occasion, I wish to thank Mr. Zeev Vurembrand for his contribution to the Company in the last five years and I wish much success to Mr. Motti Keren who was appointed as the CEO of Mega Retail. Zeev received a chain facing complex tasks in volatile times and he leaves a leading innovative retail chain for the coming years".
Regarding the Supermarkets segment Mr. Zeev Vurembrand, CEO, said: "The Supermarkets segment presents a considerable improvement in the operating profit margin in the corresponding quarter last year and in the last three quarters and that is despite the increasing competition.
The improvement in the business results stems from implementing efficacy measures performed by us in the prior quarters of this year. A further improvement is expected in the business results starting in the fourth quarter simultaneously with completing the exit from 11 losing branches.
Mega shall complete, until the end of the year, the deployment of the self-stewarding formation in all of the branches excluding the beverages and dairy categories that shall be deployed in the first half of 2013. This maneuver shall enable a more adequate and economical management of the chain's shelves similar to foreign chains and is expected to contribute to the Company's operating profitability.
In the third quarter of 2012, the Company operated 216 branches, of which 185 branches present operating profit of 3.9%, the remaining 31 branches present operating loss of approximately 6.1% where we shall exit from 11 losing branches until the end of the year and 20 losing branches will be addressed under the strategic plan".
Results for the first nine months of 2012
Gross revenues
Revenues (including government levies) in the first nine months of 2012 amounted to NIS 12,064.5 million (U.S. $3,083.9 million) as compared to revenues of NIS 11,555.6 million in the comparable period last year, an increase of 4.4%. The increase in revenues was mainly due to an increase in the revenues of Dor Alon compared to the corresponding period last year.
Revenues from sales, net
Revenues of the Commercial and Fueling sites segment - in the first nine months of 2012 amounted to NIS 4,500.0 million (U.S. $1,150.3 million) as compared to NIS 4,002.1 million in the first nine months of 2011, an increase of 12.4%. The main increase was due to an increase in the prices of petrol, quantity sales and increase in retail revenues in the convenience stores.
Revenues of the Supermarkets segment - amounted in the first nine months of 2012 to NIS 4,964.5 million (U.S. $1,269.0 million) as compared to NIS 5,076.1 million in the corresponding period last year, a decrease of 2.2%. The decrease in revenues was due to a reduction in the same store sales (SSS) at a rate of 3.5% and was partly offset by the net opening of 3 new branches in the last 12 months.
Revenues of the Non-Food segment - amounted in the first nine months of 2012 to NIS 335.0 million (U.S. $85.6 million) compared to NIS 342.9 million in the first nine months of 2011 a decrease of 2.3%. The decrease in revenues is mainly due to a decrease in sales to franchisees and from closing stores by franchisees which was partly offset by an increase in the houseware sector and in stores transferred from franchise to self-operation.
Revenues of the Real Estate segment - an increase in rental income of 12.5% from NIS 21.9 million in the first nine months of 2011 to NIS 24.7 million (U.S. $6.3 million) in the first nine months of 2012, due to an increase in leased space and increase of CPI.
Gross profit in the first nine months of 2012 amounted to NIS 2,173.4 million (U.S. $555.6 million) (22.1% of revenues) as compared to gross profit of NIS 2,226.3 million (23.6% of revenues) in the comparable period last year. The decrease in the gross profit was mainly due to the decrease in sales of the Supermarkets segment.
In the Commercial and Fueling sites segment, gross profit amounted to NIS 680.5 million (U.S. $174.0 million), (15.1% of revenues) compared to NIS 672.0 million in the comparable period last year (16.8% of revenues). An increase in gross profit of 1.3% compared to the corresponding period last year deriving from an increase in the activity of convenience stores and an increase in quantitative sales net of the impact of changes in the petrol prices on the value of inventory and the marketing margins reduction.
In the Supermarkets segment, gross profit amounted to NIS 1,347.7 million (U.S. $344.5 million), (27.1% of revenues) compared to NIS 1,406.1 million in the corresponding period last year (27.7% of revenues), a decrease of 4.2% stemming from decrease in the sales of SSS stores and due to the public protest and the increasing competition.
In the Non Food segment, gross profit amounted to NIS 129.7 million (U.S. $33.1 million), (38.7% of revenues) compared to NIS 126.3 million in the first nine months of 2011 (36.8% of revenues). The increase in gross profit mainly derives from an increase in retail sales and was offset by a decrease in sales to franchisees.
Selling, general and administrative expenses in the first nine months of 2012 amounted to NIS 2,016.0 million (U.S. $515.3 million) (20.5% of revenues), compared to expenses of NIS 1,956.6 million (20.7% of revenues) in the first nine months of 2011, an increase of 3.0%. The main increase was recorded in the Commercial and Fueling sites segment due to opening new fueling sites and from costs relating to launching "You Phone" activity.
In the Commercial and Fueling sites segment, these expenses amounted to NIS 537.1 million (U.S. $137.3 million) compared to NIS 515.8 million in the first nine months of 2011, an increase of 4.1%, mainly deriving from opening new fueling sites and was partly offset by efficiency measures beginning from the fourth quarter of 2011.
In the Supermarkets segment, selling, general and administrative expenses amounted to NIS 1,258.4 million (U.S. $321.7 million) compared to expenses of NIS 1,254.6 million in the first nine months of 2011, an increase of 0.3% that resulted from net opening 3 new branches and increase in electricity and municipal taxes expenses and was partly offset by a decrease in the salary and other operating expenses.
In the Non Food segment, these expenses amounted to NIS 135.7 million (U.S. $34.7 million) (an increase of 9.7%) compared to NIS 123.7 million in the first nine months of 2011. The increase derives from an increase in rental fees expenses, increase in salary expenses as a result of an increase in the number of self operated stores.
In the Real Estate segment - these expenses amounted to NIS 21.5 million (U.S. $5.5 million) compared to NIS 11.6 million in the comparable period last year. The increase in expenses derives from recording a provision for management fees in the mall company which builds the mall in the wholesale market complex.
Operating profit (before other gains and losses and changes in fair value of investment property) in the first nine months of 2012 amounted to NIS 157.4 million (U.S. $40.2 million) (1.6% of revenues) as compared to NIS 269.7 million (2.9% of revenues) in the comparable period last year, a decrease of 41.6%. The decrease in the operating profit was mainly due to a decrease in sales in the Supermarkets segment and from expenses in Alon Cellular in connection with the commencement of its activity.
In the Commercial and Fueling sites segment, operating profit decreased from NIS 156.1 million in the comparable period to NIS 143.4 million (U.S. $36.6 million) in the reported period due to the reduction of marketing margin and the impact of petrol prices on the value of inventory and reducing the marketing margin and was partly offset by efficacy measures.
In the Supermarkets segment, operating profit decreased from NIS 151.5 million in the comparable period last year to NIS 89.2 million (U.S. $22.8 million) in the reported period due to decrease in sales as mentioned above.
In the Non Food segment, operating loss decreased from NIS 7.1 million in the comparable period to operating loss of NIS 6.0 million (U.S. $1.5 million) in the reported period.
In the Real Estate segment, operating profit decreased from NIS 10.4 million in the comparable period to operating profit of NIS 3.2 million (U.S. $0.8 million) in the current period due to an increase in the selling, general and administrative expenses as mentioned above.
Changes in fair value of investment property in the first nine months of 2012 the Company recorded profit of NIS 83.4 million (U.S. $21.3 million) compared to NIS 28.1 million in the comparable period last year. The profit in the first nine months of 2012 includes NIS 95 million from revaluation of the commercial section in the wholesale market complex in Tel Aviv.
Other income (expenses), net in the first nine months of 2012, amounted to NIS 14.2 million (U.S. $3.6 million) compared to other expenses of NIS 7.1 million in the corresponding period last year. Income in the reported period includes profit from decrease in holding rate and loss of control in the residential company in the wholesale market complex in Tel Aviv in the amount of NIS 19.6 million.
Operating profit in the first nine months of 2012 amounted to NIS 254.9 million (U.S. $65.2 million) as compared to operating profit of NIS 290.7 million in the comparable period last year, a decrease of 12.3%.
Finance costs, net in the first nine months of 2012 amounted to NIS 215.2 million (U.S. $55.0 million) as compared to net finance costs of NIS 134.9 million in the first nine months of 2011. The increase in finance costs, net derives from decrease in finance income, this period compared to the corresponding period which included revenues from revaluation of Diners option.
Taxes on income in the first nine months of 2012 totaled NIS 9.8 million (U.S. $2.5 million) (an effective tax rate of 20.0% as compared to the statutory rate of 25%) as compared to tax expenses totaled NIS 12.1 million in the comparable period last year (an effective tax rate of 7.5% as compared to the statutory rate of 24%). The effective tax rate in this period was affected by profit from a decrease in holding rate in respect of which, the Company did not record deferred taxes.
Net income for the first nine months of 2012 amounted to NIS 38.6 million (U.S. $9.8 million) compared to a net income of NIS 149.8 million in the first nine months of 2011. The income in the reported period attributable to the Company's shareholders amounted to NIS 4.6 million (U.S. $1.2 million) or NIS 0.07 per share (U.S. $0.02) and the profit attributable to the non-controlling interests amounted to NIS 34 million (U.S. $8.7 million).
Cash flows for the first nine months of 2012
Cash flows from operating activities: Net cash flow from operating activities amounted to NIS 176.7 million (U.S. $45.2 million) in the first nine months of 2012 compared to NIS 486.2 million from operating activities in the comparable period last year. The decrease mainly derives from purchase of real estate inventory by BSRE of NIS 248.1 million (U.S $63.4 million) compared to purchase of real estate inventory of NIS 4.9 million in the comparable period last year, increase in working capital needs mainly due to increase in petrol prices and decrease in operating profit of approximately NIS 112.3 million (U.S $28.7 million) net of tax returns received, net amounting to NIS 27.1 million (U.S $6.9 million) in the first nine months of 2012 compared to tax paid, net amounting to NIS 61.1 million in the comparable period last year.
Cash flows used in investing activities: Net cash flows used in investing activities amounted to NIS 514.5 million (U.S. $131.5 million) in the first nine months of 2012 as compared to net cash used in investing activities of NIS 477.4 million in the comparable period last year. Cash flows used in investing activities in the first nine months of 2012 mainly included the purchase of property and equipment, investment property and intangible assets of total NIS 371.9 million (U.S. $95.1 million) as well as the grant of long term loans of NIS 65.7 million (U.S. $16.8 million) mainly to the controlling shareholders, investment in restricted deposits of NIS 69.9 million (U.S. $17.8 million) and investment in securities of NIS 143.9 million (U.S. $36.8 million), net of proceeds from realization of securities of NIS 120.8 million (U.S. $30.9 million) and receiving a dividend in the amount of NIS 11 million (U.S. $2.8 million).
Cash flows used in investing activities in the first nine months of 2011 included mainly purchases of property and equipment, investment property and intangible assets, in a total amount of NIS 272.9 million, the grant of long term loans of NIS 155.1 million, mainly to controlling shareholders and investment in restricted deposits in the amount of NIS 98.3 million and an investment in an associate of NIS 36.4 million.
Cash flows from financing activities: Net cash flows from financing activities amounted to NIS 519.5 million (U.S. $132.8 million) in the first nine months of 2012 as compared to net cash flows used in financing activities of NIS 16.8 million in the corresponding period last year. The cash flows from financing activities in the first nine months of 2012 mainly included issuance of debentures of NIS 388.9 million (U.S. $99.4 million), receiving long term loans of NIS 543.9 million (U.S. $139.0 million) and an increase in short term bank credit of NIS 208.3 million (U,S, $53.2 million) that was offset by interest payments of NIS 191.3 million (U.S. $48.9 million), repayment of loans of NIS 249.8 million (U.S. $63.9 million) and debentures repayment of NIS 177.2 million (U.S. $45.3 million). The net cash flows used in financing activities in the first nine months of 2011 included mainly repayment of debentures in the amount of NIS 140.7 million, repayment of loans in the amount of NIS 181.7 million, and payments of interest in the amount of NIS 170.0 million, this was offset by an increase in short term bank credit in the amount of NIS 373.1 million and receiving long term loans in the amount of NIS 132.5 million.
Additional Information
- As of September 30, 2012, the Company operated 214 supermarkets divided as follows: Mega In Town - 119; Mega Bool - 69; Zol Beshefa - 15; Eden Teva Market - 20 of which 9 Eden within Mega, Dor Alon operated - 202 fueling stations and 209 convenience stores and the Bee Group operates 238 branches (of which 104 franchised).
- EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)3 In the third quarter of 2012 EBITDA was NIS 142.7 million (U.S. $36.5 million) (4.3% of revenues) compared to NIS 140.5 million (4.4% of revenues) in the comparable quarter of 2011.
In the first nine months of 2012 EBITDA was NIS 373.7 million (U.S. $95.5 million) (3.8% of revenues) compared to NIS 476.0 million (5.0% of revenues) in the comparable period of 2011.
Events during the reporting period
General
- Effective January 2012, the Company applies the amendment to IAS 12, Taxes on Income - deferred taxes on investment property. The adoption of the standard was made retrospectively. The effect of the above change on the presented comparative figures are decrease in provisions for deferred taxes of NIS 3 million and increase in accumulated earnings of NIS 2.4 million and increase in non-controlling interests of NIS 0.6 million. The above amendment had no material effect on the statement of income.
- During the second quarter of 2012, the Company launched its operations in the cellular activity under the brand name "You Phone" and commenced to provide services to its customers.
Commercial and Fueling sites segment
a. Commitment for establishing a power plant:
On February 8, 2012, a corporation controlled by Dor Alon (55% held) entered into a detailed agreement with Sugat Sugar Refineries Ltd. (Sugat) under which the corporation shall establish a power plant on its premises with total capacity of up to 124 Mega Watt. At the first stage, the plant capacity shall be 64 Mega Watt. Under the agreement, the power plant shall provide the energy needs of Sugat for 24 years and 11 months and in addition, the corporation may sell steam and electricity to third parties.
It was further agreed that in the stage preceding the first stage, the corporation shall connect the Sugat plant to the natural gas transmission systems, shall convert the existing energy plant of Sugat to a dual system enabling the operation by fuel oil and natural gas and shall operate and maintain for Sugat its existing energy plant, all as determined in the detailed agreement.
On March 1, 2012, the corporation entered into an agreement with Israel Natural Gas Lines Ltd. ("INGL") to connect Sugat to the national transmission system for natural gas and to provide natural gas transmission services by INGL (the agreement).
Pursuant to the agreement, INGL shall establish the infrastructures that include, inter alia, the transmission piping and the facilities necessary to connect the Sugat plant to natural gas and shall install the infrastructures necessary for natural gas transmission to the power plant which is planned to be built by the corporation on the Sugat plant premises.
The agreement is for a period until July 31, 2029 with a renewal option of five additional years.
Pursuant to the agreement, the corporation shall bear the connecting expenses to the transmission system which is estimated at NIS 15 million. In addition the corporation is committed to pay the current annual payments to INGL for transmission services until the end of the agreement term in an immaterial amount, regardless of whether the corporation uses the transmission services or not.
b. On May 31, 2012, the Water and Energy Ministry updated the supervised marketing margin of gasoline 95 such that the marketing margin for self-service was increased by 4.7 Agorot per litter (before VAT) and the addition for full service was reduced by 3.8 Agorot per litter (before VAT).
c. On June 28, 2012, the Palestinian authority informed Dor Alon on discontinuing the commitment with the company regarding the supply of fuels to Gaza strip effective October 1, 2012. There is no material effect on the financial results of the Commercial and Fuling sites in 2012.
Supermarkets segment
- As of September 30, 2012, the Company operated branches in a total area of 380,700 sq.m. The sales per meter amounted in the third quarter of 2012 to NIS 4,430 (U.S. $1,132) compared to NIS 4,524 in the corresponding quarter last year.
Sales per meter in the first nine months of 2012 amounted to NIS 13,004 (U.S. $3,324) compared to NIS 13,691 in the corresponding period last year.
In the period of nine months ended September 30, 2012, 9 branches were opened in a total area of 11,700 sq.m and 6 branches were closed in a total area of 8,600 sq.m.
- According to the strategy of the Company for treating losing branches, the subsidiary, Mega Retail, in July and August 2012, signed agreements with third parties under which the Company transferred the lease rights and sold the equipment attributed to nine of its branches for a total consideration of NIS 26 million. As of the date of the Financial Statements' approval, the Company delivered 5 branches.
Non-Food segment
On April 18, 2012, Bee Group informed that it had reached an agreement with a franchisee (which operates together with others 24 stores in the non-food segment - hereafter the franchisee) which experiences financial difficulties. Based on the franchise terms with the franchisee and the said agreement, Bee Group will take over the majority of the stores and the inventory in exchange for the debt. Following the agreement and based on the value of the assets that Bee Group will assume, the Company recorded a provision for doubtful accounts in the statements of financial position for the year ended December 31, 2011 in the amount of NIS 11.2 million.
Real Estate segment
- Comverse Building
On May 13, 2012, BSRE signed a memorandum of understanding with a third party (the lessee), pursuant to which the Company agreed to erect a 23,000 square-meter office building on real property it owns in Ra'anana and also to construct a 2,300 square-meter basement (the structure), both of which will be leased to the lessee for 10 years for monthly rental fees of NIS 1,660 thousand linked to the CPI with a renewal option for an additional 5 years. The rental fees in this period shall increase by 7.5%. BSRE has undertaken to erect a surrounding structure at estimated cost of NIS 200 million and to perform all of the finishing work, as far as requested by the lessee, which is estimated at a cost NIS 75 million. BSRE will be entitled to receive from the lessee a payment equal to 7.5% of the cost of the finishing work in addition to monthly rental fees if BSRE will perform the finishing work.
BSRE has undertaken to finish the construction work and to transfer the building at the end of the final quarter of 2014. BSRE and the lessee have determined acceptable compensation mechanisms. As of the reporting date, BSRE obtained building permits to erect the building and the construction work has begun. Following the earthwork in the project, in September 2012, the Company entered into an agreement with another contractor who commenced the construction work.
b. The wholesale market complex
- On May 31, 2012, Tel Aviv Lev Towers Ltd. and the Tel Aviv City Mall Ltd. in which BSRE held to that date indirectly 50% together with Gindi Investments 1 Ltd and a corporation controlled by Moshe and Yigal Gindi, ("Gindi"), completed the purchase of lease rights for the period ended on August 31, 2099 for a part of the wholesale market complex in Tel Aviv. The Purchasers paid the Sellers the balance of the consideration in the aggregate amount of approximately NIS 730 million plus VAT.
In order to pay the Balance of Consideration, the Purchasers received loans of NIS 730 million from a bank. The Loans were extended for 18 months where the principal shall be paid in one payment at the end of the period and the interest payments are payable quarterly. In addition to this loan, the Bank provided the Purchasers with an additional loan for two months in the amount of NIS 120 million to pay the VAT. To secure the loan, BSRE recorded a charge in favor of the Bank on the shares of Tel Aviv Lev Towers Ltd. and Tel Aviv City Mall Ltd. Furthermore, the land was charged in favor of the Bank. - During the third quarter, the excavation and reinforcement works in the project were completed and the performance of skeleton work has commenced. On July 3, 2012, the purchasers signed an agreement with a performing contractor (the contractor) to perform all skeleton work of the parking lots, the commercial part, public structures and other finishing work. The purchasers shall pay the contractor for the work an estimated amount of NIS 286 million (BSRE portion amounts to NIS 143 million). The agreement sets forth schedules and milestones for performing this work where the contractor committed to complete the work in 19 months from receiving the work commencement order. Under the agreement, the contractor committed to provide the purchasers with guarantees and the agreement further determines agreed compensation in the event of material breach by the contractor. In addition, the agreement set forth a mechanism to calculate a bonus or penalties should the contractor performs the work earlier than the schedules or deviate from the schedules. The work commencement order was delivered to the contractor on July 4, 2012.
- On June 29, 2011, BSRE and Gindi entered into an agreement constituting an appendix (the Appendix) to the Memorandum of Understandings dated April 15, 2010, (MOU) that regulates the relations between the company and Gindi in all that concerns the wholesale market complex in Tel Aviv. According to the Appendix, Tel Aviv Lev Towers allocated to Gindi one additional share of NIS 1 par value for NIS 300 thousand such that after the allocation, Gindi holds (by chaining) in 50.5% of the issued and outstanding share capital of Tel Aviv Lev Towers and BSRE (by chaining) holds 49.5% of the issued and outstanding share capital. On June 29, 2012, the parties completed the above allocation.
The residential company ceased to exist under joint control in the financial statements in the second quarter of BSRE and therefore the investment in the residential company was recorded on equity method of accounting. BSRE recorded in the statements of operations a gain of NIS 19.6 million for the difference between the fair value of the Company's investment in the residential company upon losing control, and the investment balance as included in the books at this time. - As of June 30, 2012, BSRE recorded in its financial statements for the second quarter a gain of NIS 95 million from appreciation before taxes stemming from revaluation of real estate in the Tel Aviv City Mall Company.
c. Hadar Mall
On June 5, 2012, BSRE entered into a loan agreement to receive finance from a group of institutional companies in order to build an addition to the extension to the Hadar Mall in Jerusalem, in which BSRE holds 50% of the rights. The lenders will extend an amount of NIS 125 million over a period of 10 years during which an aggregate of NIS 42.5 million will be repaid in 17 bi-annual payments commencing on the 18th month subsequent to the date of the loan, and the remaining sum will be repaid in a one-time payment at the end of the loan term. BSRE has the option to obtain an additional loan of NIS 40 million upon the completion of the construction. The loan is linked to the CPI and bears annual interest of 4.1%. As collateral for the repayment of the loan, BSRE placed a charge on its rights in Hadar Mall in Jerusalem.
d. Eyal Logistic center
On July 12, 2012, Eyal Baribua Ltd. (Eyal Baribua) a company held at rate of 50% by BSRE, entered into a financing agreement with a bank to provide credit line of NIS 90 million to Eyal Baribua to establish the logistic center in Kibbutz Eyal. The credit line shall be extended for the establishment period and after the completion of the construction and Mega's entry into the logistic center, the credit line shall be converted into a loan where NIS 63 million shall be repaid in quarterly payments over 14 years and the balance at the end of the loan term. The credit line and the loan shall bear variable annual interest rate linked to the Prime. As collateral for the loan repayment, the real estate rights shall be charged and for the establishment period a guarantee of Eyal Baribua shareholders was granted as well.
In September 2012, Eyal Baribua received a building permit to construct the logistic center and work was commenced according to the permit following the earthwork in the project.
e. Commercial center project- Kiryat Hasharon, Netanya
In September 2012, the commercial center in Kiryat Hasharon, Netanya was opened to the public. The commercial center was established by BSRE and Harel Insurance Company. BSRE and Harel hold equally the real estate and the commercial center.
Issuance of bonds
- On January 4, 2012, the bonds series of BSRE (Series D) was expanded by a private offering of NIS 150 million par value of bonds (Series D) to institutional investors for 98.5% of their par value, reflecting a return of 5.8%.
- On January 25, 2012, Midroog announced on lowering its rating on bonds (series A and C) issued by the Company, from A1 to A2 with stable outlook. In addition, Midroog granted A2 rating with stable outlook for bonds up to NIS 200 million par value the Company intends to issue by expanding Series C or by issuance of new Series with a duration up to 6 years.
- On February 15, 2012, the bonds series of Dor Alon (Series D) was expanded by a private offering of NIS 119.9 million par value of bonds (Series D) to institutional investors for 100.95% of their par value, reflecting a return of 6.9%.
- On April 11, 2012, the bonds series of the Company (Series C) was expanded by a private offering of NIS 35 million par value of bonds (Series C) to institutional investors for 89.5% of their par value, reflecting a return of 5.7%.
- On May 23, 2012, Midroog announced that it had assigned a "P-1" rating to commercial paper of up to NIS 170 million nominal value, which may be issued in the future by the Company. As of the reporting date NIS 71 million were issued and are repayable at the request of the holder every 3 months.
- On August 20, 2012, the bonds series of Dor Alon (Series D) was expanded by a private offering of NIS 46 million par value of bonds (Series D) to institutional investors for 101.08% of their par value, reflecting a return of 6.9%.
- On August 28, 2012, the bonds series of BSRE (Series D) was expanded by a private offering of NIS 49 million par value of bonds (Series D) to an institutional investor for 98.0% of their par value, reflecting a return of 6.0%.
- During the third quarter, the Company's subsidiaries acquired NIS 18.1 million par value of bonds of Series C of the Company such that as of September 30, 2012, the subsidiaries hold 14.3% of bonds Series C. Following the acquisitions, the Company recorded finance income of NIS 3.1 million in the results for the nine months of 2012.
Post balance sheet events
- On November 19, 2012, the Company's CEO, Mr. Zeev Vurembrand, announced the termination of his service at the end of February 2013.
- On November 19, 2012, the bonds series of BSRE (Series D) was expanded by a private offering of NIS 110 million par value of bonds (Series D) to institutional investor for 107.0% of their par value, reflecting a return of 4.8%.
- On November 22, 2012, the Company announced that Mr. Motti Keren has been appointed as CEO of Mega Retail.
- On November 26, 2012, the Supreme Court sitting as the High Court of Justice rejected the petition of Dor Alon and the other fueling companies on the issue of reducing the supervised marketing margin.
- On November 27, 2012, Mr. David Weissman was appointed as CEO of the Company and Mr. Itzhak Bader was appointed as the chairman of the Company. The appointments are in effect as of January 1, 2013, without changes in the terms of employment.
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 September 30, 2012: U.S. $1.00 equals NIS 3.912. The translation was made solely for the convenience of the reader.
Alon Holdings Blue Square- Israel Ltd. (hereinafter: "Alon Holdings") is the leading retail company in the State of Israel and operates in four reporting segments: In its supermarket segment, Alon Holdings, through its 100% subsidiary, Mega Retail Ltd., currently operates 214 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 100% 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 the Commercial and Fueling Sites segment, through its 78.43% subsidiary, which is listed on the Tel Aviv stock exchange ("TASE"), Dor Alon Energy in Israel (1988) Ltd is one of the four largest fuel retail companies in Israel based on the number of petrol stations and a leader in the field of convenience stores. Dor Alon operates a chain of 202 petrol stations and 209 convenience stores in different formats in Israel. In its Real Estate segment, Alon Holdings, through its TASE traded 78.22% subsidiary Blue Square Real Estate Ltd., owns, leases and develops yield generating commercial properties and projects.
Forward-looking statements
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 low-priced 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, 2011. You are cautioned not to place undue reliance on these forward-looking statements, which speak only 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.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2012
(UNAUDITED)
Convenience translation
December 31, September 30, September 30,
_______________________
2011 2011 2012 2012
___________ ___________ ___________ ________________
NIS U.S. dollars
____________________________________________________
In thousands
____________________________________________________
Assets
CURRENT ASSETS:
Cash and cash equivalents 76,451 101,063 258,817 66,160
Investment in securities 300,053 286,041 317,715 81,215
Short-term bank deposits 103,942 103,449 120,025 30,681
Trade receivables 1,576,150 1,856,038 1,697,136 433,828
Other accounts receivable
including current
maturities of loans
receivable 291,790 494,777 546,555 139,712
Derivative financial
instruments 2,543 5,165 - -
Assets classified as held
for sale 3,610 3,610 65,403 16,719
Income taxes receivable 125,789 110,795 84,560 21,616
Inventories 676,590 682,463 703,561 179,847
__________ _________ _________ _________
3,156,918 3,643,401 3,793,772 969,778
__________ _________ _________ _________
NON-CURRENT ASSETS:
Investments in associates 202,653 203,050 311,501 79,627
Derivative financial
instruments 896 1,124 265 68
Real estate inventories 100,035 95,470 108,572 27,754
Payments on account of
real estate 191,600 180,786 - -
Investments in securities 33,159 25,618 34,273 8,761
Loans receivable, net of
current maturities 182,654 147,471 197,506 50,487
Property and equipment,
net 2,942,487 2,959,410 2,917,077 745,674
Investment property 576,093 554,656 926,104 236,734
Intangible assets, net 1,461,070 1,462,555 1,443,305 368,943
Other long-term receivables 142,331 155,627 34,796 8,895
Deferred taxes 104,321 79,919 120,940 30,915
__________ _________ _________ _________
5,937,299 5,865,686 6,094,339 1,557,858
__________ _________ _________ _________
Total assets 9,094,217 9,509,087 9,888,111 2,527,636
========== ========= ========= =========
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2012
(UNAUDITED)
Convenience translation
December 31, September 30, September 30,
_______________________
2011 2011 2012 2012
___________ ___________ ___________ ________________
NIS U.S. dollars
____________________________________________________
In thousands
____________________________________________________
Liabilities and
shareholders' equity
CURRENT LIABILITIES:
Credit and loans from
banks and others 1,036,928 828,642 1,191,403 304,551
Current maturities of
debentures and convertible
debentures 212,726 213,781 520,206 132,977
Current maturities of
long-term loans from banks 311,642 336,768 251,519 64,294
Trade payables 1,243,914 1,474,970 1,495,613 382,314
Other accounts payable and
accrued expenses 730,985 948,844 837,135 213,991
Customers' deposits 27,733 28,097 27,633 7,064
Derivative financial
instruments 2,814 1,249 13,283 3,396
Income taxes payable 6,311 4,809 3,762 962
Provisions for other
liabilities 78,266 75,983 75,468 19,291
__________ _________ _________ _________
3,651,319 3,913,143 4,416,022 1,128,840
__________ _________ _________ _________
NON CURRENT LIABILITIES:
Long-term loans from banks
and others, net of current
maturities 1,240,487 1,262,632 1,366,387 349,281
Convertible debentures,
net of current maturities 118,826 119,305 91,208 23,315
Debentures, net of current
maturities 2,034,047 2,071,174 2,013,009 514,573
Other liabilities 264,597 265,415 153,135 39,145
Derivative financial
instruments 16,701 15,520 9,458 2,418
Liabilities in respect of
employee benefits, net of
amounts funded 62,245 52,429 62,679 16,022
Deferred taxes *159,769 *106,790 173,749 44,414
__________ _________ _________ _________
3,896,672 3,893,265 3,869,625 989,168
__________ _________ _________ _________
Total liabilities 7,547,991 7,806,408 8,285,647 2,118,008
__________ _________ _________ _________
EQUITY:
Equity attributed to
equity holders of the
Company:
Ordinary shares of NIS 1
par value 79,881 79,881 79,881 20,419
Additional paid-in capital 1,219,279 1,219,279 1,219,279 311,677
Other reserves (9,672) (20,362) (3,772) (964)
Accumulated deficit *(106,434) * 41,601 (93,833) (23,986)
__________ _________ _________ _________
1,183,054 1,320,399 1,201,555 307,146
Non-controlling interests *363,172 *382,280 400,909 102,482
__________ _________ _________ _________
Total equity 1,546,226 1,702,679 1,602,464 409,628
__________ _________ _________ _________
Total liabilities and
equity 9,094,217 9,509,087 9,888,111 2,527,636
========== ========= ========= =========
* Retroactive application, see events during the reporting
period
ALON HOLDINGS BLUE SQUARE-ISRAEL LTD.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER 30, 2012
(UNAUDITED)
Convenience
translation
for the
nine months
Year ended Nine months Three months ended
December ended ended September
31, September 30, September 30, 30,
___________________ ________________
2011 2011 2012 2011 2012 2012
___________ ________ _________ _______ _______ ___________
U.S.
NIS dollars
___________________________________________________ ___________
In thousands (except per share data)
__________________________________________________________________
Revenues 15,296,255 11,555,604 12,064,483 3,956,136 4,077,628 3,083,968
Less -
government
levies 2,813,671 2,112,439 2,238,043 728,554 764,801 572,097
___________ _________ _________ _________ _________ _________
Net revenues 12,482,584 9,443,165 9,826,440 3,227,582 3,312,827 2,511,871
Cost of sales 9,566,876 7,216,831 7,653,012 2,482,719 2,558,812 1,956,291
___________ _________ _________ _________ _________ _________
Gross profit 2,915,708 2,226,334 2,173,428 744,863 754,015 555,580
Selling,
general and
administrative
expenses 2,638,845 1,956,614 2,016,045 672,924 688,531 515,349
___________ _________ _________ _________ _________ _________
Operating
profit before
other gains and
losses and
changes in fair
value of
investment
property 276,863 269,720 157,383 71,939 65,484 40,231
Other gains 1,358 1,637 22,057 637 2,212 5,638
Other losses (19,577) (8,752) (7,846) (1,468) (5,651) (2,005)
Increase in
fair value of
investment
property, net 41,913 28,132 83,368 8,687 (966) 21,311
___________ _________ _________ _________ _________ _________
Operating
profit 300,557 290,737 254,962 79,795 61,079 65,175
Finance income 156,837 145,889 57,867 14,575 20,515 14,792
Finance
expenses (332,839) (280,858) (273,076) (93,593) (96,777) (69,805)
___________ _________ _________ _________ _________ _________
Finance
expenses, net (176,002) (134,969) (215,209) (79,018) (76,262) (55,013)
Share in gains
of associates 5,746 6,153 8,669 4,836 3,865 2,216
___________ _________ _________ _________ _________ _________
Income (loss)
before taxes on
income 130,301 161,921 48,422 5,613 (11,318) 12,378
Taxes on income 46,588 12,135 9,797 (34,670) 1,273 2,504
___________ _________ _________ _________ _________ _________
Net income
(loss) for the
period 83,713 149,786 38,625 40,283 (12,591) 9,874
=========== ========= ========= ========= ========= =========
Attributable
to:
Equity holders
of the Company 59,513 128,796 4,609 33,849 (17,873) 1,179
___________ _________ _________ _________ _________ _________
Non-controlling
interests 24,200 20,990 34,016 6,434 5,282 8,695
___________ _________ _________ _________ _________ _________
Earnings per
ordinary share
or ADS
attributable to
equity holders
of the company
Basic 0.90 1.95 0.07 0.51 (0.27) 0.02
___________ _________ _________ _________ _________ _________
Fully diluted 0.79 1.84 0.07 0.42 (0.27) 0.02
___________ _________ _________ _________ _________ _________
Weighted
average number
of shares or
ADSs used for
computation of
earnings per
share:
Basic 65,940 65,935 65,954 65,954 65,954 65,954
___________ _________ _________ _________ _________ _________
Fully diluted 66,167 66,202 65,954 66,072 65,954 65,954
___________ _________ _________ _________ _________ _________
ALON HOLDINGS BLUE SQUARE-ISRAEL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER 30, 2012
(UNAUDITED)
Convenience
translation
for the
nine
months
Nine months Three months ended
Year ended ended ended September
December 31, September 30, September 30, 30,
_____________ _______________ ______________
2011 2011 2012 2011 2012 2012
_____________ ______ _______ ______ ______ __________
U.S.
dollars
in
NIS in thousands thousands
________________________________________________ __________
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Income (loss)
before taxes on
income 130,301 161,921 48,422 5,613 (11,318) 12,378
Income tax
received
(paid), net (79,368) (61,053) 27,066 (20,427) 10,799 6,919
Adjustments for
cash generated
from operations 576,664 385,287 101,291 66,459 156,192 25,891
__________ _________ ________ _______ _______ _________
Net cash
provided (used
in) by
operating
activities 627,597 486,155 176,779 51,645 155,673 45,188
__________ _________ ________ _______ _______ _________
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Purchase of
property and
equipment (261,101) (214,259) (162,047) (78,947) (40,696) (41,423)
Purchase of
investment
property (55,524) (42,466) (171,992) (9,607) (21,974) (43,965)
Purchase of
intangible
assets (30,717) (16,156) (37,928) (7,680) (2,703) (9,695)
Proceeds from
collection of
(investment in)
short-term bank
deposits, net (5,858) (5,365) (16,083) (8,246) (18,414) (4,111)
Proceeds from
sale of
property and
equipment 12,864 12,592 9,044 1,209 7,262 2,312
Proceeds from
sale of
investment
property 50,600 50,600 3,610 50,600 - 923
Investment in
restricted
deposits (102,603) (98,309) (69,910) (2,903) - (17,871)
Proceeds from
sale of
marketable
securities 118,957 77,404 120,885 28,980 11,078 30,901
Investment in
marketable
securities (122,646) (71,399) (143,937) (24,599) (10,052) (36,794)
Dividend
received - - 11,000 - - 2,812
Acquisition of
equity
accounted
investee (36,415) (36,405) - (36,405) - -
Grant of loans
to jointly
controlled
companies (200) (200) (29,300) (200) (26,000) (7,490)
Grant of loans
to controlling
shareholders (144,962) (155,163) (36,416) (92,821) (1,148) (9,309)
Payments on
account of real
estate (9,187) (1,117) (19,099) (1,117) (2,752) (4,882)
Collection of
long-term loans 22,885 6,838 12,807 1,724 2,246 3,274
Net outflow
from
realization of
proportionately
consolidated
company - - (3,085) - - (789)
Interest
received 16,552 16,030 17,965 2,948 8,602 4,592
__________ _________ ________ _______ _______ _________
Net cash used
in investing
activities (547,355) (477,375) (514,486) (177,064) (94,551) (131,515)
__________ _________ ________ _______ _______ _________
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER 30, 2012
(UNAUDITED)
Convenience
translation
for the
nine
Year Three months months
ended Nine months ended ended ended
December September
31, September 30, September 30, 30,
____________________ __________________
2011 2011 2012 2011 2012 2012
_________ _________ _________ _________ _______ ________
U.S.
dollars in
NIS in thousands thousands
___________________________________________________ ________
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Purchase of
treasury shares (4,035) (4,035) - - - -
Dividends paid (75,000) - - - - -
Dividend paid
to
non-controlling
interests (30,669) (16,821) - - - -
Issuance of
debentures - - 388,942 - 93,375 99,423
Repayment of
debentures (174,955) (140,749) (177,191) (2,190) (85,035) (45,294)
Transactions
with
non-controlling
interests in
subsidiary
without loss of
control (15,217) - - - - -
Receipt of
long-term loans 213,648 132,547 543,899 23,000 45,640 139,033
Repayment of
long-term loans (382,557) (181,714) (249,833) (55,604) (61,726) (63,863)
Repayment of
long term
credit from
trade
payables (1,750) (1,285) - (415) - -
Short-term
credit from
banks and
others,
net 582,503 373,058 208,318 203,068 66,177 53,251
Proceeds from
issue of shares
relating to
share based
payments in the
company and a
subsidiary 143 140 - - - -
Acquisition of
shares from
non-controlling
interests - (7,927) (467) - 215 (119)
Settlement of
forward
contracts - - (2,808) - (2,808) (718)
Interest paid (222,771) (169,972) (191,352) (59,624) (73,944) (48,914)
_________ ________ _________ ________ ________ ________
Net cash
provided by
(used in)
financing
activities (110,660) (16,758) 519,508 108,235 (18,106) 132,799
_________ ________ _________ ________ ________ ________
INCREASE
(DECREASE)IN
CASH AND CASH
EQUIVALENTS AND
BANK OVERDRAFTS (30,418) (7,978) 181,801 (17,184) 43,016 46,472
Translation
differences on
cash and cash
equivalents 37 2 46 4 23 12
BALANCE OF CASH
AND CASH
EQUIVALENTS AND
BANK OVERDRAFTS
AT BEGINNING OF
PERIOD 104,131 104,131 73,750 113,335 212,558 18,853
_________ ________ _________ ________ ________ ________
BALANCE OF CASH
AND CASH
EQUIVALENTS AND
BANK OVERDRAFTS
AT END OF
PERIOD 73,750 96,155 255,597 96,155 255,597 65,337
========= ======== ========= ======== ======== ========
(a)
Net cash
provided by
operating
activities:
Adjustments
for:
Depreciation
and
amortization 273,746 203,588 215,037 67,716 76,675 54,968
Increase in
fair value of
investment
property, net (41,913) (28,132) (83,368) (8,687) 966 (21,311)
Gain from
decrease in
holding rate in
proportionately
consolidated
company - - (19,622) - - (5,016)
Share in gains
of associates (5,309) (5,716) (8,669) (4,836) (3,865) (2,217)
Share based
payment 3,270 2,688 1,322 810 595 338
Loss (gain) from
sale and disposal
of property and
equipment, net 2,448 129 1,051 (483) (167) 269
Provision for
impairment of
property and
equipment, net 7,815 1,341 - 36 - -
Loss (gain)
from changes in
fair value of
derivative
financial
instruments (107,553) (112,906) 9,161 (9,381) 8,395 2,342
Linkage
differences on
monetary
assets,
debentures,
loans and other
long term
liabilities 71,465 80,379 52,679 10,952 22,883 13,466
Employee
benefit
liability, net 177 501 434 (817) 2,030 111
Decrease
(increase) in
value of
investment in
securities,
deposits and
long-term
receivables,
net 1,190 3,264 (4,717) 911 (2,375) (1,206)
Interest paid,
net 184,963 135,537 161,828 51,427 65,717 41,367
Changes in
operating
assets and
liabilities:
Investment in
real estate
inventories (5,637) (4,917) (248,132) (817) (329) (63,429)
Payments on
account of real
estate
inventories (8,852) (6,367) (11,692) (2,693) - (2,989)
Decrease
(increase) in
trade
receivables and
other accounts 104,743 (397,789) (360,842) (261,759) (200,032) (92,240)
Increase in
advances from
purchasers of
apartments 102,603 98,309 69,910 2,903 - 17,871
Increase
(decrease) in
trade payables
and other
accounts
payable (10,198) 417,545 353,882 218,656 203,359 90,461
Decrease
(increase) in
inventories 3,706 (2,167) (26,971) 2,521 (17,660) (6,894)
_________ ________ _________ ________ ________ ________
576,664 385,287 101,291 66,459 156,192 25,891
========= ======== ========= ======== ======== ========
(b)
Supplementary
information
on investing
and financing
activities
not involving
cash flows:
Issue of
shares upon
conversion of
convertible
debentures 896 901 - - - -
========= ======== ========= ======== ======== ========
Purchase of
property and
equipment on
credit 10,769 11,588 20,375 11,588 20,375 5,208
========= ======== ========= ======== ======== ========
Advances from
customers
deposited in
restricted
use deposit - 465 - 465 - -
========= ======== ========= ======== ======== ========
Issue of
shares
against
acquisition
of shares in
subsidiary 154,433 154,433 - 154,433 - -
========= ======== ========= ======== ======== ========
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
NET LIABILITIES
(UNAUDITED)
Convenience
translation
December September
31, September 30, 30,
______________
2011 2011 2012 2012
_________ _______ ________ __________
NIS U.S. dollars
_____________________________ __________
In thousands
__________________________________________
Alon Holdings *
__________________________________________
Cash and cash equivalence 1,909 2,576 1,811 463
Investment in securities 64,657 63,082 67,198 17,177
__________ _______ _______ ________
Total assets 66,566 65,658 69,009 17,640
========== ======= ======= ========
Short term and Long-term debt:
Short term loans from banks and
others 195,764 145,526 336,336 85,976
Long term loans from banks 171,555 189,073 175,213 44,789
Debentures 232,341 240,456 172,564 44,111
__________ _______ _______ ________
Total long-term debt 599,660 575,055 684,113 174,876
========== ======= ======= ========
Equity:
Equity attributable to equity
holders of the company: 1,183,054 1,320,399 1,201,555 307,146
__________ _______ ________ ________
Total debt, net (533,094) (509,397) (615,104) (157,236)
========== ======== ======== ========
*Net of grant of loans or loans received from subsidiaries
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
RECONCILIATION BETWEEN NET INCOME FOR THE PERIOD AND EBITDA
FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER 30, 2012
(UNAUDITED)
Convenience
translation
for the
nine
Year months
ended Nine months Three months ended
December ended September ended September September
31, 30, 30, 30,
_______________ _______________
2011 2011 2012 2011 2012 2012
________ ______ _______ ______ _______ ___________
U.S.
dollars in
NIS in thousands thousands
___________________________________________ ___________
Net income (loss)
for the period 83,713 149,786 38,625 40,283 (12,591) 9,874
Taxes on income 46,588 12,135 9,797 (34,670) 1,273 2,504
Share in gains of
associates (5,746) (6,153) (8,669) (4,836) (3,865) (2,216)
Finance expenses,
net 176,002 134,969 215,209 79,018 76,262 55,013
Other losses
(gains), net 18,219 7,115 (14,211) 831 3,439 (3,633)
Changes in fair
value of
investment
property (41,913) (28,132) (83,368) (8,687) 966 (21,311)
Depreciation and
amortization 273,746 203,588 215,037 67,717 76,675 54,968
Share based
payment 3,270 2,688 1,322 810 595 338
________ _______ _______ _______ _______ ________
EBITDA 553,879 475,996 373,742 140,466 142,754 95,537
======== ======= ======= ======= ======= ========
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
FOR THE THREE AND NINE MONTH PERIOD ENDED SEPTEMBER 30, 2012
(UNAUDITED)
Note 1 - Segment reporting
The Company includes segment information according to IFRS 8. The reporting is based on the Company's organizational structure, the internal reporting, the allocation of resources and the decision-making process. The Company presents four segments: Supermarkets, Commercial and Fueling sites, Non-Food Retail and Wholesale and Real Estate.
The Company's four operating segments consist of the following:
- Commercial and Fueling sites - Through its subsidiary Dor-Alon the Company is engaged in the development, construction and operation of vehicle fueling stations, adjacent commercial centers and independent convenience stores, marketing of fuel products and other products through the fueling stations and convenience stores and direct marketing of distillates to customers. The commercial and fueling sites segment is presented according to the published financial statements of Dor-Alon, with reclassification of credit card fees and with the amortization of the excess of cost arising at the time of acquisition allocated to the reconciliation between the operating profit of the segment and the total operating profit.
- 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 September 30, 2012, Mega Retail operated 214 supermarkets. This segment also includes properties owned through Blue Square Real Estate ("BSRE"), in connection with the supermarket operation of Mega Retail's stores (including warehouses and offices).
- Non-Food (Retail and Wholesale) - Some through its subsidiary, BEE Group Retail Ltd. ("BEE Group"), the Company is engaged in non-food retail and wholesale activities. As of September 30, 2012, the Company operated 238 non-food retail outlets, some through franchisees, with specialties in houseware and home textile, toys, leisure, and infant. This segment also includes properties owned through Blue Square Real Estate ("BSRE") which are used by the segment.
- Real Estate - Through its subsidiary BSRE the Company is engaged in generating yield from commercial centers, logistics centers and offices, land for the purpose of capital appreciation and deriving long-term yield as well as in the development of the "Wholesale Market" residency project.
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
FOR THE THREE AND NINE MONTH PERIOD ENDED SEPTEMBER 30, 2012
(UNAUDITED)
Note 1 - Segment reporting (continued)
Three months ended September 30, 2012
_________________________________________________________________________
Commercial
and
Fueling Real Total
sites Supermarkets Non-Food Estate Others Adjustments consolidated
_______ ____________ ________ ______ ______ ___________ ____________
NIS in thousands
_________________________________________________________________________
Net segment
sales 1,493,893 1,685,006 124,408 7,649 1,871 - 3,312,827
Inter
segment
sales 12,447 - 8,832 - - (21,279) -
Gross profit
(loss) 240,862 465,282 45,335 7,649 (4,044) (1,069) 754,015
Depreciation
and
amortization 24,337 45,331 2,903 - - 4,104 76,675
Operating
profit
(loss)
before other
gains and
losses net
and changes
in fair
value of
investment
property 55,664 39,619 (3,669) 2,847 (9,517) (12,833) 72,111
Segment
profit 55,463 41,688 (6,502) 1,881 (9,517) (15,307) 67,706
Unallocated
corporate
expenses (6,627)
Financial
expenses,
net (76,262)
Share in
gains of
associates,
net 3,865
________
Income
before taxes
on income (11,318)
========
Three months ended September 30, 2011
_________________________________________________________________________
Commercial
and
Fueling Real Total
sites Supermarkets Non-Food Estate Others Adjustments consolidated
_______ ____________ ________ ______ ______ ___________ ____________
NIS in thousands
_________________________________________________________________________
Net segment
sales 1,425,661 1,673,149 121,545 7,227 - - 3,227,582
Inter
segment
sales 9,248 - 7,514 - - (16,762) -
Gross profit 230,601 467,714 39,321 7,227 - - 744,863
Depreciation
and
amortization 23,454 40,233 2,528 - - 1,501 67,716
Operating
profit
(loss)
before other
gains and
losses net
and changes
in fair
value of
investment
property 55,168 33,942 (5,516) 4,084 (2,399) (7,415) 77,864
Segment
profit 55,205 34,023 (6,466)12,772 (2,399) (7,415) 85,720
Unallocated
corporate
expenses (5,925)
Financial
expenses,
net (79,018)
Share in
gains of
associates,
net 4,836
________
Income
before taxes
on income 5,613
========
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
FOR THE THREE AND NINE MONTH PERIOD ENDED SEPTEMBER 30, 2012
(UNAUDITED)
Note 1 - Segment reporting (continued)
Nine months ended September 30, 2012
_________________________________________________________________________
Commercial
and
Fueling Real Total
sites Supermarkets Non-Food Estate Others Adjustments consolidated
_______ ____________ ________ ______ ______ ___________ ____________
NIS in thousands
_________________________________________________________________________
Net segment
sales 4,500,001 4,964,534 334,962 24,690 2,253 - 9,826,440
Inter
segment
sales 29,682 - 26,049 - - (55,731) -
Gross profit
(loss) 680,500 1,347,675 129,703 24,690 (8,071) (1,069) 2,173,428
Depreciation
and
amortization 71,807 127,538 8,330 - - 7,362 215,037
Operating
profit
(loss)
before other
gains and
losses net
and changes
in fair
value of
investment
property 143,409 89,233 (5,977) 3,240 (20,236) (33,036) 176,633
Segment
profit 143,431 90,011 (9,714)106,230 (20,236) (35,510) 274,212
Unallocated
corporate
expenses (19,250)
Financial
expenses,
net (215,209)
Share in
gains of
associates,
net 8,669
________
Income
before taxes
on income 48,422
========
Nine months ended September 30, 2011
_________________________________________________________________________
Commercial
and
Fueling Real Total
sites Supermarkets Non-Food Estate Others Adjustments consolidated
_______ ____________ ________ ______ ______ ___________ ____________
NIS in thousands
_________________________________________________________________________
Net segment
sales 4,002,158 5,076,148 342,919 21,940 - - 9,443,165
Inter
segment
sales 23,856 - 27,881 - - (51,737) -
Gross profit 671,988 1,406,146 126,260 21,940 - - 2,226,334
Depreciation
and
amortization 69,272 120,414 9,399 - - 4,503 203,588
Operating
profit
(loss)
before other
gains and
losses net
and changes
in fair
value of
investment
property 156,141 151,543 (7,138) 10,388 (3,535) (20,098) 287,301
Segment
profit 156,113 150,310 (12,993) 38,520 (3,535) (20,098) 308,317
Unallocated
corporate
expenses (17,580)
Financial
expenses,
net (134,969)
Share in
gains of
associates,
net 6,153
________
Income
before taxes
on income 161,921
========
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
FOR THE THREE AND NINE MONTH PERIOD ENDED SEPTEMBER 30, 2012
(UNAUDITED)
Note 1 - Segment reporting (continued)
Year ended December 31, 2011
_________________________________________________________________________
Commercial
and
Fueling Real Total
sites Supermarkets Non-Food Estate Others Adjustments consolidated
_______ ____________ ________ ______ ______ ___________ ____________
NIS in thousands
_________________________________________________________________________
Net segment
sales 5,301,865 6,723,845 425,853 31,021 - - 12,482,584
Inter
segment
sales 36,087 - 31,810 - - (67,897) -
Gross profit 876,040 1,850,764 157,883 31,021 - - 2,915,708
Depreciation
and
amortization 96,130 159,601 12,011 - - 6,004 273,746
Operating
profit
(loss)
before other
gains and
losses net
and changes
in fair
value of
investment
property 173,681 177,346 (34,915) 15,395 (5,698) (26,235) 299,574
Segment
profit 173,578 169,697 (45,382) 57,307 (5,698) (26,235) 323,267
Unallocated
corporate
expenses (22,710)
Financial
expenses,
net (176,002)
Share in
gains of
associates,
net 5,746
________
Income
before taxes
on income 130,301
========
Nine months ended September 30, 2012
_________________________________________________________________________
Commercial
and
Fueling Real Total
sites Supermarkets Non-Food Estate Others Adjustments consolidated
__________ ____________ ________ ______ ______ ___________ _____________
U.S. dollars in thousands
_________________________________________________________________________
Net segment
sales 1,150,307 1,269,053 85,624 6,311 576 - 2,511,871
Inter
segment
sales 7,588 - 6,659 - - (14,247) -
Gross profit
(loss) 173,952 344,498 33,155 6,311 (2,063) (273) 555,580
Depreciation
and
amortization 18,356 32,602 2,129 - - 1,881 54,968
Operating
profit
(loss)
before other
gains and
losses net
and changes
in fair
value of
investment
property 36,659 22,810 (1,528) 828 (5,173) (8,445) 45,151
Segment
profit 36,664 23,009 (2,483) 27,155 (5,173) (9,077) 70,095
Unallocated
corporate
expenses (4,920)
Financial
expenses,
net (55,013)
Share in
gains of
associates,
net 2,216
________
Income
before taxes
on income 12,378
========
--------------------------------------------------
1. EBITDA is a measure that is not in accordance with Generally Accepted Accounting Principles (Non-GAAP), reconciliation between net income for the period and EBITDA, see below.
2. The Company operates in four segments: Supermarkets, Commercial and Fueling sites, Non Food retail and wholesale and Real Estate. Segmental information is included in this report below.
3. 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 an accepted ratio in the retail industry. It 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 related to as a single measure or as an alternative to operating income, another performance indicator and to cash flow information, which are prepared using Generally Accepted Accounting Principles (GAAP) as indicators of profit or liquidity. EBITDA does not take the costs of servicing debt and other liabilities into account, including capital expenditures and therefore it does not necessarily indicate the amounts that may be available to the use of the company and in addition EBITDA should not be compared to other indicators with similar names reported by other companies because of differences in the calculation of these indicators. See the reconciliation between our net income and EBITDA which is presented in this press release.
Contact:
Alon Holdings Blue Square-Israel Ltd.
Dror Moran, CFO
Toll-free telephone from U.S. and Canada: 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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