Alon Holdings Blue Square - Israel Ltd. Announces Financial Results for the First Nine Months and Third Quarter of 2011
ROSH HA-AYIN, Israel, November 28, 2011 /PRNewswire/ --
Alon Holdings Blue Square-Israel Ltd. (NYSE and TASE: BSI) today announced its financial results for the first nine months and third quarter ended September 30, 2011.
Highlights:
- As a result of the inclusion of the results of Dor Alon, and the creation of the largest retail group in Israel, the Company's sales in the first nine months of 2011 amounted to NIS 9,443 million (U.S. $2,544 million) (increase of 71%) and the operating profit amounted to NIS 270 million (U.S. $72.8 million) (increase of 40% compared to the comparable period last year).
- In the Supermarket segment the same store sales (SSS) decreased in the first nine months of 2011 by 0.8% compared to the comparable period last year. In the third quarter of 2011 the same store sales decreased by 6.6%1 compared to the comparable quarter last year mainly due to the public protest in Israel that commenced at the end of the second quarter this year caused a decrease in selling prices to consumers and decrease in demands and due to the timing of the Tishrey Holidays2, the effect of which was reflected in the third and fourth quarter this year and were fully included in the third quarter last year. Dor Alon's operating profit increased by 7% in the third quarter of 2011 compared to the comparable quarter last year. Effective September, marketing margin was eroded as a result of the government decision.
- As a result of an investment in option for the purchase of 49% of Diners Israel, The Company recorded in the first half of 2011 financial income from revaluation of the option. In the third quarter, once the agreement came into force and the option was exercised, the Company recorded a tax benefit.
- The net income in the first nine months of 2011 amounted to NIS 150 million (U.S. $40.4 million) (increase of 145%).
1. Gross sales in stores that operated fully in both periods.
2. Tishrey Holidays – are the holidays during the first month of the Jewish calendar.
KEY FIGURES for the nine months and the third quarter compared to the comparable periods last year (the statements of Dor Alon were consolidated for the first time in the fourth quarter of 2010):
The The
rate of rate of
Data in NIS (millions) 1-9 2010 1-9 2011 change 7-9/2010 7-9/2011 change
Net revenues 5,520 9,443 71.1% 1,921 3,227 68%
Gross profit 1,573 2,226 41.5% 546 745 36.4%
Rate of gross profit 28.5% 23.6% 28.4% 23.1%
Operating income
(before other gains
and losses and changes
in fair value of
investment property) 192 270 40.6% 57 72 26.3%
Rate of operating
income 3.5% 2.9% 3.0% 2.2%
Financial expenses,
net 107 135 26.2% 51 79 54.9%
Net income for the
period 61 150 145.9% 3 40 1,233%
Results for the First Nine Months of 2011[3]
Gross revenues
Revenues (including government levies) for the first nine months of 2011 were NIS 11,555.6 million(U.S. $3,113.0 million), compared to NIS 5,520.3 million in the comparable period last year - an increase of 109.3 %. The main increase in revenues was due to the inclusion of the results of Dor Alon. Dor Alon's revenues in the first nine months, including government levies of NIS 2,112.4 million (U.S. $569.1 million) amounted to NIS 6,138.4 million (U.S. $1,653.7 million).
Revenues from sales, net
Supermarkets segment revenues, net - in the first nine months of 2011 amounted to NIS 5,076.1 million (U.S. $1,367.5 million) as opposed to NIS 5,155.0 million in the comparable period last year, a decrease of 1.5%. (Decrease in sales of SSS stores of 1.2% and decrease in the contribution of non SSS branches (8 openings less 4 closures during the last 12 months)). The main decrease was due to the public protest in Israel that commenced at the end of the second quarter this year that caused a decrease in selling prices to consumers and decrease in demands and impaired the sales in the Supermarkets segment due to the timing of the Tishrey Holidays, the effect of which was reflected in the third and fourth quarter this year and were fully included in the third quarter last year.
Revenues of the Commercial and Fueling sites segment in the first nine months of 2011 amounted to NIS 4,002.1 million (U.S. $1,078.1 million) as compared to NIS 3,177.6 million in the first nine months of 2010[4], an increase of 25.9%. The main increase stems from increase in the quantitative sales as a result of opening new fueling sites, an increase in sales in the convenience stores and an increase in the price of petrol between the periods.
Non-food segment - a decrease in revenues of approximately 1.3% from NIS 347.3 million in the first nine months of 2010 to NIS 342.9 million (U.S. $92.4 million) in the first nine months of 2011. The decrease in revenues was mainly due to a decrease in sales to franchisees stemming from increased competition in the sector and the relocation of the Naaman storage utilities to the new logistic center.
Real estate segment -increase in revenues of approximately 21.7% from NIS 18 million in the first nine months of 2010 to NIS 21.9 million (U.S. $5.9 million) in the first nine months of 2011. The increase in revenues is mainly due to the increase in leased premises and from the effect of the increase of CPI.
Gross Profit in the first nine months of 2011 amounted to approximately NIS 2,226.3 million (U.S. $ 599.8 million) (approximately 23.6% of revenues) compared to gross profit of approximately NIS 1,572.8 million (28.5% of revenues) in the first nine months of 2010. Excluding the effect of Dor Alon's results, the gross profit decreased by NIS 18.4 million (U.S. $4.9 million). The decrease in the gross profit is mainly due to a decrease in sales of the supermarkets segment (the gross operating profit amounted to 27.9% in the first nine months of 2011 compared to 27.6% in the first nine months of 2010) and a decrease in sales and the gross profit margin in the non food segment that was partly offset by an increase in revenues from the real estate segment.
Selling, general, and administrative expenses in the first nine months of 2011 amounted to approximately NIS 1,956.6 million (U.S. $ 527.1 million) compared to NIS 1,380.6 million in the comparable period last year, an increase of 41.7%.
Excluding the effect of Dor Alon's results the selling, general and administrative expenses increased by NIS 30.3 million (U.S. $8.2 million)(2.2%). The main increase was recorded in the supermarkets segment and was mainly due to an increase in rental fees affected by the change in CPI and updated lease agreements, an increase in municipal taxes and an increase in payroll expenses that was partly offset by a decrease in advertising expenses.
Operating profit (before other gains and losses and increase in the fair value of investment property) in the first nine months of 2011 amounted to approximately NIS 269.7 million (U.S $ 72.6 million) compared to operating income of NIS 192.2 million in the comparable period last year, an increase of 40.3%.
Excluding the effect of Dor Alon's results the operating profit (before other gains and losses and increase in fair value of investment property) decreased by NIS 48.7 million (U.S. $13.1 million). The decrease in the operating profit was mainly due decrease in sales in the non-food and supermarkets and non-food segments and due to an increase in selling, general and administrative expenses mainly in the supermarkets segment.
Increase in fair value of investment property in the first nine months of 2011, the Company recorded profit from the increase in the value of investment property in the amount of NIS 28.1 million (U.S $ 7.6 million) including NIS 18.1 million (U.S $ 4.9 million) from revaluation of property in Kiryat Hasharon, Netanya, half of which was sold and NIS 7.0 million (U.S $ 1.9 million) from revaluation of "Hadar mall" in Jerusalem in the first nine months of 2010 the Company recorded a gain from increase in value of investment property in the amount of NIS 18.9 million.
Other income and expenses, net in the first nine months of 2011 the Company recorded other expenses, net in the amount of NIS 7.1 million (U.S $ 1.9 million) compared to net expenses of NIS 11.2 million in the comparable period last year. These expenses included costs relating to the relocation of part of the BEE group companies to the logistic center in Beer Tuvia and disposal of property and equipment.
Operating profit in the first nine months of 2011 was NIS 290.7 million (U.S. $ 78.3 million) compared to operating profit of NIS 199.8 million in the comparable period last year, an increase of 45.5%. Excluding the effect of Dor Alon's results the operating profit decreased by NIS 35.4 million (U.S. $ 9.5 million).
Financial Expenses, Net for the first nine months of 2011 were NIS 134.9 million (U.S. $36.3 million) compared to financial expenses, net of NIS 107.5 million in the comparable period last year. Excluding the effect of the results of Dor Alon the finance expenses decreased by NIS 24.5 million (U.S. $6.6 million). The decrease was mainly a result of finance income from the revaluation of the option to purchase shares of Diners and capitalization of borrowing costs of projects under construction in the real estate segment that was partly offset by an increase in the Company's indebtedness following the purchase of Dor Alon and the increase of the Israeli CPI (the CPI increased in first nine months of 2011 by 2.75% compared to increase of 1.62% in the comparable period last year).
Taxes on Income for the first nine months of 2011 were approximately NIS 12.1 million (U.S. $3.3 million) (7.5% effective tax rate compared to a statutory tax rate of 24%) compared to NIS 30.4 million (effective tax rate of 33% compared to a statutory tax rate of 25%) in the comparable period last year. The decrease in tax expenses in this period derives from recording liability for deferred income taxes in the statements of operations in the amount of NIS 37 million in the third quarter of this year with the consummation of the Diners transaction.
Net Income in first nine months of 2011 was NIS 149.8 million (U.S. $ 40.3 million) compared to net income of NIS 61.3 million in the comparable period last year. The increase in net income in this period compared to the corresponding period last year mainly derives from including Dor Alon's results, the impact of the option revaluation of Diners and tax benefit on exercising the option. The net income for the first nine months of 2011 attributable to the equity holders of the company was NIS 128.8 million (U.S. $34.7 million), or NIS 1.96 per share (U.S. $ 0.53), while the portion attributable to the non-controlling interests was NIS 20.9 million (U.S. $5.6 million).
Cash Flows in the First Nine Months of 2011
Cash Flows from Operating Activities: Net cash flows deriving from operating activities in the first nine months of 2011 amounted to NIS 486.2 million (U.S. $131.0 million) compared to cash flows from operating activities of NIS 204.7 million in the first nine months of 2010. The inclusion of Dor Alon's results contributed to the cash flow from operating activities in the first nine months of 2011 the amount of NIS 88.4 million.
The increase in cash flows from operating activities is mainly due to a decrease in working capital in the Supermarket segment, from advancing receipts from credit card companies and from the increase in advances from purchasers of apartments of NIS 98.3 million (U.S $26.5 million).
Cash Flows from Investing Activities: Net Cash flows used in investing activities in the first nine months of 2011 amounted to approximately NIS 477.4 million (U.S. $128.6 million) compared to net cash flows of NIS 463.2 million used in investing activities in the first nine months of 2010. 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 (U.S $ 73.5 million), the grant of long term loans of NIS 155.1 million, ($ 41.8 million), mainly to controlling shareholders and investment in restricted deposits in the amount of NIS 98.3 million (U.S $ 26.5 million), and an investment in an associate (Diners) of NIS 36.4 million (U.S $ 9.8 million). Cash flows used in investing activities in the first nine months 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 229.5 million, a net investment in marketable securities of NIS 220.7 million and the grant of a loan of NIS 27.4 million to a proportionally consolidated company.
Cash Flows from Financing Activities: Net Cash flows used in financing activities in the first nine months of 2011 amounted to NIS 16.8 million (U.S $4.5 million) compared to net cash flow used in financing activities of NIS 82.4 million in the first nine months of 2010. Cash flows used in financing activities in the first nine months of 2011 included mainly repayment of bonds in the amount of NIS 140.7 million (U.S $37.9 million), repayment of loans in the amount of NIS 181.7 million (U.S $48.9 million), and payments of interest in the amount of NIS 170.0 million (U.S $45.8 million), this was offset by an increase in short term bank credit in the amount of NIS 373.1 million (U.S $100.5 million) and receiving loans in the amount of NIS 132.5 million (U.S $35.7 million), . Net Cash flows used in financing activities in the first nine months of 2010 included mainly repayment of long term loans of NIS 99.6 million, the payment of interest of NIS 99.6 million, payment of dividends of NIS 75 million to the Company's shareholders and NIS 17.6 million to the non-controlling interests and acquisition of treasury shares of NIS 4.3 million. This was offset by issue of debentures in the amount of NIS 108.6 million and an increase in short term credit net in the amount of NIS 100.3 million.
Comments of Management
Mr. David Weisman Active Chairman and Chief Business manager - "the results of the first nine months of the year are characterized by a positive contribution of the organizational change in which the food chain "Mega", "Eden Teva" and the fuel company "Dor Alon" operate under one "umbrella". Another contribution is to the profitability is the exercise of the option into a full holding of 49% in Diners, which among others, strengthens the customers' club YOU which already has over one million customers and is doing it successfully.
In September of this year, the fuel administration, in a disproportionate action, reduced the marketing margin on supervised fuels in self service and full service by 18.4 and 11.5 Agorot per liter, respectively; this reduction may adversely and significantly affect the business results of Dor Alon.
The Company filed a petition with the high court of justice seeking to suspend and even cancel the reduction of the marketing margin. The court resolved to remand the case for hearing at the ministry of infrastructures and allotted a three month period to render a decision in this case. Until such decision is made, the reduction shall remain in force.
Dor Alon acts to reduce the effect on its profitability following the reduction of the marketing margin.
BSRE continues to expand its operations and presents an increase of approximately 12% in income from rental fees and an improvement in NOI of approximately 12.1% in the first nine months of 2011 compared to the corresponding period last year.
Currently, we continue our preparations to launch a virtual operator (MVNO) and act to install and assimilate computerized system (billing). We intend to commence deployment in the fourth quarter in points of sale and service in Mega and Dor Alon branches and offer the customer club members of the Company a unique range of services and mobile phones. The launch of the network is expected to take place in the second quarter of 2012."
In regards to the supermarket and non-food segments, Mr. Zeev Vurembrand, CEO, said: "Deepening competition and the public protest were two trends that significantly impacted the retail food segment in the first nine months of the year. Deepening competition was reflected in accelerated opening of commercial spaces and converting branches into hard discount formats. The public protest impacted consumption habits, in general, and food consumption, in particular, which is shown in decline of sales in the supermarkets segment in the third quarter. In addition, the increase in expenses related to minimum wages and rental fees caused an erosion of the operating income in the supermarkets segment.
The Company commenced taking efficiency measures cutting back on headquarters expenses and selling expenses including downsizing personnel in the headquarters and other expenses. These measures are taken as part of the Company's response to the new competitive situation.
We intend to open under the multi annual development plan, that was presented earlier this year, approximately 15 branches in a total area of some 18 thousand sq.m until the end of 2012, where most of the branches are in "Mega in Town" format.
Eden Teva shall conclude at the beginning of 2012 the second stage of the chain's deployment which shall consist 20 branches - 11 independent branches and 9 Eden branches in Mega. In 2011, we shall bring Eden Teva to operating balance and in 2012, we expected to show operating profitability.
The private brand represents a major step in the Company's operations and its sales will reach at the end of the year 14% of the total chain's sales. The private brand Mega confers upon us flexibility and dynamics in prices and product range and we intend to continue developing new, innovative and breakthrough products."
Results for the third quarter of the year 2011
Gross Revenues (including government levies) for the third quarter of 2011 were NIS 3,956.1 million(U.S. $1,065.8 million) compared to revenues of approximately NIS 1,920.8 million in the comparable quarter last year, an increase of 106.0 %. The majority of the increase in revenues derives from including the results of Dor Alon. Excluding the effect of Dor Alon's results the revenues this quarter decreased by NIS 118.9 million (U.S. $ 32.0 million) (6.1%) compared to the comparable quarter last year.
The decrease in the revenues compared to the comparable quarter last year is mainly due to the public protest in Israel that commenced at the end of the second quarter this year and caused a decrease in selling prices to consumers and a decrease in demand and impaired the sales in the supermarkets segment and due to the timing of the Tishrey Holidays, the sales of which were mainly included in the third and fourth quarter this year and were fully included in the third quarter of last quarter.
Supermarket segment revenues, net -a decrease in revenues of 6.5% from NIS 1,790.5 million in the third quarter of 2010 to NIS 1,673.1 million (U.S $450.7 million) in the current quarter. The decrease in revenues was mainly due to a decrease in same store sales (SSS) at a rate of 6.7%, as explained above.
Revenues of the Commercial and Fueling sites segment for the third quarter of 2011 amounted to NIS 1,425.6 million (U.S. $384.0 million) as compared to NIS 1,107.5 million in the comparable quarter of 2010[5]. The increase in revenues derives from the same reasons described in the analysis of the first nine months of 2011 results.
Non - Food segment revenues - a decrease in revenues of 1.3% from NIS 123.1 million in the third quarter of 2010 to NIS 121.5 million (U.S. $32.7 million) in the current quarter. The decrease mainly derived from the reasons described in the analysis of the results for the first nine months of 2011.
Real Estate segment revenues - rental fees from external parties of NIS 7.2 million in the third quarter of 2010 compared to NIS 7.2 million (U.S. $1.9 million) in the current quarter, with no change.
Gross Profit of the third quarter of 2011 amounted to approximately NIS 744.8 million (U.S. $ 200.6 million) compared to gross profit of approximately NIS 546.1 million in the comparable quarter of 2010. Excluding the effect of Dor Alon's results, gross profit decreased by NIS 31.8 million (U.S. $ 8.6 million). The decrease in the gross profit derives from a decrease in sales of the supermarkets and non - food segments and was partly offset by an increase in the gross profit rate mainly in the Supermarkets segments due to the a different mixture in sales among the formats "Mega Boo"l and "Zol Beshefa" compared "Mega in Town" and "Eden" (the gross profit rate amounted to 28.1% in the current quarter compared to gross profit rate of 27.7% in the comparable quarter last year).
Selling, General and Administrative Expenses in the third quarter of 2011 amounted to NIS 672.9 million (U.S. $ 181.2 million) compared to approximately NIS 489.0 million in the comparable quarter, an increase of approximately 37.6%. Excluding the effect of Dor Alon's results, selling, general and administrative expenses decreased by NIS 1.9 million (U.S. $ 0.5 million).
Operating Profit (before other gains and losses and increases in the fair value of investment property) in the third quarter of 2011 amounted to NIS 71.9 million (U.S $ 19.3 million) compared to NIS 57.1 million in the third quarter of 2010, an increase of 25.9%. Excluding the effect of Dor Alon's results, Operating Profit (before other gains and losses and increases in the fair value of investment property) decreased by NIS 29.9 million (U.S $ 8.0 million). The decrease is explained mainly from the same reasons described above in the analysis of the first nine months of 2011 results.
Increase in the Fair Value of Investment Property In the third quarter of 2011, the Company recorded gain from appreciation of investment property in the amount of NIS 8.7 million (U.S $ 2.3 million). The majority of the profit stems from revaluation of "Hadar Mall", in Jerusalem . In the third quarter of 2010, the Company recorded a gain from increase in value of investment property amounting to NIS 5.7 million.
Other income and expenses, Net In the third quarter of 2011, the Company recorded other expenses, net of NIS 1.5 million (U.S. $ 0.4 million), compared to net expenses of NIS 4.1 million in the comparable quarter. The expenses this quarter included costs relating to the transfer of certain BEE Group companies to the new logistic center in Beer Tuvia and the disposal of the property and equipment.
Operating Profit amounted to approximately NIS 79.8 million (U.S. $ 21.5 million) compared to operating profit of NIS 58.7 million in the third quarter of 2010. Excluding the effect of Dor Alon's results, Operating Profit decreased by NIS 23.6 million (U.S $ 6.4 million).
Financial Expenses, net, for the third quarter of 2011 were NIS 79.0 million (U.S. $21.3 million) compared to financial expenses, net of NIS 50.8 million in the comparable quarter last year. Excluding the effect of Dor Alon, the financial expenses decreased by NIS 5.3 million (U.S. $1.4 million). The decrease in net financial expenses this quarter compared with comparable quarter last year derives mainly from decrease of the CPI (the CPI increased in the third quarter of 2011 by 0.58% compared to an increase of 1.23% in the comparable period last year) and from capitalization of financial costs in the real estate segment and was partially offset from an increase in the Company's indebtedness from the purchase of Dor Alon.
Taxes on Income for the third quarter of 2011 tax benefit amounted to NIS 34.7 million (U.S. $ 9.3 million) compared to tax expenses of NIS 4.8 million (effective tax rate of 61% compared to a statutory tax rate of 25%) in the comparable quarter last year. The decrease in tax expenses this quarter derived from recording liability for deferred income taxes in the statements of income of NIS 37 million (U.S. $ 10.0 million) in the third quarter this year with the consummation of the Diners transaction.
Net Income for the third quarter of 2011 amounted to NIS 40.3 million (U.S. $ 10.8 million) compared to a net income of NIS 3.0 million in the third quarter of 2010. The increase in the net income in this quarter compared to the corresponding quarter last year derived mainly from including the results of Dor Alon and the effect of Diners option on tax revenues in the taxes on income. The net income for the third quarter of 2011 attributable to equity holders of the Company, was NIS 33.8 million (U.S. $9.1 million), or NIS 0.54 per share (U.S. $ 0.14), while the portion attributable to the non-controlling interests was NIS 6.4 million (U.S. $1.7 million).
Cash Flows in the third quarter of 2011
Cash Flows from Operating Activities: Net cash flows deriving from operating activities, amounted to NIS 50.0 million (U.S. $ 13.5 million) in the third quarter of 2011 compared to NIS 118.9 million in the comparable quarter last year. The decrease in cash flows from operating activities was mainly due to a decrease in sales in the supermarkets segment and decrease in working capital and was partly offset from the inclusion of Dor Alon results that contributed in the quarter NIS 31.2 million (U.S $ 8.4 million) and from advancing proceeds from credit card companies.
Cash Flows from Investing Activities: Net Cash flows used in investing activities in the third quarter of 2011 amounted to NIS 177.0 million (U.S. $47.7 million) compared to net cash flows of NIS 86.3 million from investing activities in the corresponding quarter of last year. The cash flows used in investing activities in the third quarter of 2011 mainly included the purchase of property and equipment, intangible assets investment property of NIS 96.2 million (U.S. $25.9 million), investments in restricted deposits of NIS 2.9 million (U.S. $0.8 million), investment in short term deposits, net in the amount of NIS 8.2 million (U.S. $2.2 million) and investment in affiliate of NIS 36.4 million (U.S. $13.6 million) and was offset by proceeds received from realizing investment property amounting to NIS 50.6 million (U.S. $13.6 million). Cash used in investing activities in the third 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 78.5 million and net investment in marketable securities of NIS 3.7 million and grant of loans to a proportionally consolidated company of NIS 8.4 million net of interest received amounting to NIS 3.9 million.
Cash Flows used in Financing Activities: Net Cash flows deriving from financing activities amounted to NIS 108.2 million (U.S $ 29.6 million) in the third quarter of 2011 as compared to net cash used in financing activities of NIS 24.1 million in the comparable quarter last year. Cash flows deriving from financing activities in the third quarter of 2011 included mainly long term loans received of NIS 23.0 million (U.S. $6.1 million), change in short term credit of NIS 203.0 million (U.S. $54.7 million) and was offset by repayment of bonds of NIS 2.2 million (U.S. $0.6 million), repayment of long term loans of NIS 55.6 million (U.S. $14.9 million) and interest paid of NIS 59.6 million (U.S. $16.1 million). Cash flows used in financing activities in the third quarter of 2010 included mainly a decrease in short term credit net in the amount of NIS 66.0 million, repayment of long term loans amounting to NIS 26.2 million, interest paid of NIS 41.1 million net of consideration for the issue of debentures amounting to NIS 108.6 million.
Additional Information
1. As of September 30, 2011, the Company operated 211 supermarkets divided as follows: Mega In Town -119; Mega Bool - 69; Zol BeShefa - 12 and Eden Teva Market -16 of which 5 Eden within Mega. Dor Alon operated 193 fueling stations and 195 convenience stores in various formats and in the Non-food segment, the Company operated 253 branches (most are franchised).
2. EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)[6] in the first nine months of 2011 was NIS 476.0 million (U.S. $ 128.2 million) (5.0% of revenues) compared to NIS 333.9 million (6.0% of revenues) in the first nine months of 2010.
EBITDA in the third quarter of 2011 was NIS 140.5 million (U.S. $ 37.8 million) (4.4 % of revenues) compared to NIS 107.6 million (5.6% of revenues)in the comparable quarter of 2010.
3. Diners transaction
In May 2011, Alon Holdings and Dor Alon (thereafter - the buyers) and Cal (thereafter - Cal) signed an exercise of the agreement to purchase 49% of Diners held by Cal in exchange for a loan granted by Cal to the buyers.
In July, the Company completed the conditions and the buyers paid the loan in the amount of NIS 36 million which Cal granted them.
Alon Holdings and Dor Alon handled their financial statements by an agreement to buy Diners as option for purchasing stock options and recorded in the period income before taxes from revaluation of approximately NIS 102 million (U.S. $ 27.5 million). In the third quarter, upon the consummation of the purchase, the Company recorded in the statements of income liability in respect of deferred income taxes of NIS 37 million (U.S $ 9.7 million) attributed to the revaluation gains from the option.
As of the date of this report, the Company has not yet completed the attribution of the purchase cost to the portion purchased in identifiable assets and liabilities of Diners. The attribution of the purchase cost, as above, was performed on the basis of an initial recognition and therefore, in the following reporting periods some adjustments may be necessary for this attribution.
4. Legislative amendments
Reduction of marketing margin on supervised fuels: In September of this year, the fuel administration reduced the marketing margin on supervised fuels by 11.5 - 18.4 Agorot per liter; this reduction is expected to adversely and significantly affect the business results of Dor Alon.
5. Proposals for legislative amendments
a. Amendments in Corporate tax rates
At the beginning of November 2011, a memorandum of law for economic and social change was published (legislative amendments) (taxes) - 2011 (the memo of law). Under this memo of law, it is proposed, inter alia, to cancel effective 2012 the reduction outline of corporate taxes. It is also proposed to raise the corporate tax to 25% in 2012. In view of the proposal to raise the corporate tax rates to 25% in 2012, the tax rates on capital gain and real appreciation shall be raised respectively. The deferred tax balances included in the financial statements as of September 30, 2011, are calculated according to the tax rates in effect as of the date of the financial statements and do not take into account the effects that may derive from the memo of law. Said effects shall be included in the financial statements to be published effective with the date on which the law will be substantively enacted. The Company estimates that based on the deferred tax balances as of September 30, 2011, the effect on income following the memo of law shall be reflected by a decrease of NIS 19 million (U.S $ 5.1 million), the decrease attributed to the Company's shareholders would amount to NIS 13 million (U.S $ 3.5 million) and the portion attributed to non controlling interests would amount to NIS 6 million (U.S $ 1.3 million). The effect on the capital reserve shall be reflected by a decrease of NIS 6 million (U.S $ 1.6 million), attributed to the Company's shareholders, an amount that may decrease or increase according to the approval of the memo of law.
b. Recommendations submitted to the government
On September 26, 2011, the committee for economic and social change, aiming to review and propose solutions for the high cost of living in Israel, submitted its recommendations for the government's review, the essence of which as to fueling sites and direct trade and marketing of Liquefied petroleum gas relating to the Company.
The encouragement of competition in the fueling and commercial sites.
- To initiate legislative procedures that will release immediately private gas stations from exclusivity agreements with the retail fuel companies.
- To give priority, by planning procedures for individuals, to entities that are not one of the large four retail fuel companies and instruct the planning bodies to plan plots of land for 40 new fueling stations within 2 years and market them to individuals.
- To expedite applying universal fueling device standards.
- To implement immediate supervision on diesel fuel at the door of refineries and fueling stations.
- To impose on the national infrastructures ministry to map geographic areas in which the competition is low and oblige sale of stations in these areas to individuals to encourage competition.
The encouragement of competition in the area of direct marketing of Liquefied petroleum gas.
- To supervise the price at the door of the refinery and the price for the consumer.
- To reform the area of securing free access for carriers to increase competition.
It is indicated that the implementation of legislative amendments and the proposal for legislative amendments may have an adverse effect in part, on the business results of per Alon at this stage it is impossible to estimate the extent of the effect.
6. Blue square Real Estate - Givon Parking , Tel Aviv
On October 11, 2011, BSRE received a notice from Tel Aviv municipality (the municipality and the notice) pursuant to which, all of the conditions to approve the BOT agreement of "Givon Parking" in Tel Aviv were fulfilled, in which BSRE shall hold in equal parts with its partners in the wholesale market companies. "Givon Parking" will be composed of approximately 1,000 parking lots adjacent to the wholesale market project. On November 13, 2011, the authority for use of property was delivered for the purpose of construction work. As per BSRE, construction works shall commence in the coming weeks. In return for constructing the parking lot, BSRE and its partners shall be entitled to operate and collect rental fees for parking for a period of 23 years from delivering the authority for use of property. The total establishment cost of the parking lot including related costs is estimated at NIS 144 million (U.S $ 38.8 million), the share of BSRE is approximately NIS 72 million (U.S $ 19.4 million).
7. Naaman
In November 2011, BEE group issued a full tender offer to purchase 4.8 million shares of Naaman that are not held by the group for NIS 6.53 (U.S $ 1.8) per share. The last date for accepting the tender offer was on November 22, 2011, and up to date, an acceptance notice of 1.48 million shares (10.2%) was received in return for NIS 9.7 million (U.S $ 2.6 million). As of the date of this report, BEE group holds 77% of Naaman.
8. Dividend distribution
On November 28, 2011 the Board of directors of the Company decided on interim dividend distribution for the year 2011, in the amount of NIS 75 million (U.S $20.2 million), NIS 1.13 per share (U.S.$ 0.30 per share/ADS). The ex-div date for this dividend distribution is on December 15, 2011 and the dividend will be payable on or about December 29, 2011.
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, 2011: U.S. $1.00 equals NIS 3.712. 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 211 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 78.38% 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 193 petrol stations and 195 convenience stores in different formats in Israel. In its Real Estate segment, Alon Holdings, through its TASE traded 78.26% 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, uncertaintiesand 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, 2010. 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.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2011
Convenience
translation(A)
Dec 31 September 30, September 30,
2010 2010 2011 2011
Audited Unaudited
NIS U.S. dollars
In thousands
Assets
CURRENT ASSETS:
Cash and cash
equivalents 125,956 270,823 101,063 27,226
Investment in
securities 310,237 439,335 286,041 77,058
Short-term
deposits 98,084 - 103,449 27,869
Trade
receivables 1,731,747 908,026 1,856,038 500,010
Other accounts
receivable including
current maturities
of long term loans
granted 162,599 195,438 494,777 133,291
Derivative
financial instruments - 8,559 5,165 1,391
Assets classified
as held for sale - - 3,610 973
Income taxes
receivable 64,094 54,911 110,795 29,848
Inventories 680,296 523,179 682,463 183,853
3,173,013 2,400,271 3,643,401 981,519
NON-CURRENT
ASSETS:
Investments in
associates 6,012 4,303 203,050 54,701
Derivative
financial
instruments 56,078 17,885 1,124 303
Real estate
inventories 83,337 83,733 95,470 25,719
Payments on account
of real estate 164,132 156,465 180,786 48,703
Investments in
securities 30,327 - 25,618 6,901
Loans receivable,
net of current
maturities 176,043 - 147,471 39,728
Property and
equipment, net 2,928,515 1,990,441 2,959,410 797,255
Investment
property 546,870 460,791 554,656 149,422
Intangible
assets, net 1,486,744 412,294 1,462,555 394,007
Other long-term
receivables 47,098 28,916 155,627 41,925
Deferred taxes 66,018 40,201 79,919 21,530
5,591,174 3,195,029 5,865,686 1,580,194
Total assets 8,764,187 5,595,300 9,509,087 2,561,713
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2011
Convenience
translation(A)
December 31, September 30, September 30,
2010 2010 2011 2011
Audited Unaudited
NIS U.S. dollars
In thousands
Liabilities and equity
CURRENT LIABILITIES:
Credit and loans from
banks and others 470,284 242,883 828,642 223,233
Current maturities
of debentures and
convertible
debentures 202,769 19,724 213,781 57,592
Current maturities
of long-term loans
from banks 297,771 117,792 336,768 90,724
Trade payables 1,342,763 1,026,533 1,474,970 397,352
Other accounts
payable and
accrued expenses 686,447 689,522 948,844 255,615
Customers' deposits 30,405 - 28,097 7,569
Derivative financial
instruments 7,700 - 1,249 336
Income taxes payable 7,431 77 4,809 1,295
Provisions 71,870 60,435 75,983 20,469
3,117,440 2,156,966 3,913,143 1,054,185
NON CURRENT LIABILITIES:
Long-term loans
from banks and
others, net of
current
maturities 1,399,159 521,157 1,262,632 340,149
Convertible
debentures, net
of current
maturities 117,801 117,205 119,305 32,140
Debentures, net
of current
maturities 2,183,093 1,466,570 2,071,174 557,967
Other
liabilities 199,983 13,026 265,415 71,502
Derivative
financial
instruments 9,151 7,909 15,520 4,181
Liabilities in
respect of employee
benefits, net of
amounts funded 51,492 46,855 52,429 14,124
Deferred taxes 103,929 56,289 106,790 28,769
4,064,608 2,229,011 3,893,265 1,048,832
Total liabilities 7,182,048 4,385,977 7,806,408 2,103,017
EQUITY:
Equity attributable
to equity holders
of the Company:
Ordinary shares
of NIS 1 par value 79,712 58,486 79,878 21,519
Additional
paid-in capital 1,218,409 1,042,364 1,219,282 328,470
Other reserves (12,539) 6,978 (20,362) (5,485)
Accumulated
earnings (deficit) (85,760) (85,679) 41,601 11,207
1,199,822 1,022,149 1,320,399 355,711
Non-controlling
interests 382,317 187,174 382,280 102,985
Total equity 1,582,139 1,209,323 1,702,679 458,696
Total liabilities
and equity 8,764,187 5,595,300 9,509,087 2,561,713
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2011
Convenience
translation
(A) for the
Year For the For the nine months
ended nine months three months ended
December 31, ended September 30, ended September 30, September 30,
2010 2010 2011 2010 2011 2011
Audited Unaudited Unaudited
NIS U.S. dollars
In thousands (except per share data)
Revenues 9,227,453 5,520,276 11,155,604 1,920,789 3,956,136 3,113,040
Less -
government
levies 723,709 - (2,112,439) - (728,554) (569,084)
Net revenues 8,503,744 5,520,276 9,443,165 1,920,789 3,227,582 2,543,956
Cost of sales 6,192,352 3,947,497 7,216,831 1,374,722 2,482,719 1,944,189
Gross profit 2,311,392 1,572,779 2,226,334 546,067 744,863 599,767
Selling, general
and administrative
expenses 2,069,970 1,380,598 1,956,614 488,957 672,924 527,105
Operating
profit before
other gains
and losses and
changes in fair
value of
investment
property 241,422 192,181 269,720 57,110 71,939 72,662
Other gains 3,258 1,892 1,637 89 637 441
Other losses (28,188) (13,086) 8,752 (4,175) (1,468) (2,358)
Increase in
fair value of
investment
property, net 32,917 18,857 28,132 5,670 8,687 7,579
Operating profit 249,409 199,844 290,737 58,694 79,795 78,324
Finance income 85,852 28,791 145,889 9,742 14,575 39,302
Finance
expenses (235,847) (136,325) (280,858) (60,566) (93,593) (75,663)
Finance
expenses, net (149,995) (107,534) (134,969) (50,824) 79,018 (36,361)
Share of loss
of associates (518) 575 6,153 - 4,836 1,658
Income before
taxes on income 98,896 91,735 161,921 7,870 5,613 43,621
Taxes on income 36,287 30,478 12,135 4,821 (34,670) 3,269
Net income 62,609 61,257 149,786 3,049 40,283 40,352
Attributable to:
Equity holders
of the Company 47,839 49,838 128,796 2,113 33,849 34,697
Non - controlling
interests 14,770 11,419 20,990 936 6,434 5,655
Earnings per
ordinary share
or ADS attributed
to equity holders
of the Company
Basic 0.96 1.12 1.95 0.05 0.51 0.53
Fully diluted 0.96 1.11 1.84 0.05 0.42 0.50
Weighted
average number
of shares or
ADSs used for
computation of
income per share:
Basic 49,590 44,405 65,935 44,643 65,954 65,935
Fully diluted 49,814 44,893 66,202 44,906 66,072 66,202
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2011
Convenience
translation(A)
Year For the For the for the nine
ended nine months three months months
December 31, ended September 30, ended September 30, ended September 30,
2010 2010 2011 2010 2011 2011
Audited Unaudited
NIS U.S. dollars
In thousands
CASH FLOWS FROM
OPERATING ACTIVITIES:
Income before
taxes on income 98,896 91,735 161,921 7,870 5,613 43,621
Income tax (paid)
received, net 5,741 1,594 (61,053) 9,566 (20,427) (16,447)
Adjustments
for cash
generated from
operations (a) 101,192 111,391 385,287 101,422 66,459 103,794
Net cash
provided by
operating
activities 205,829 204,720 486,155 118,858 51,465 130,968
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of
property and
equipment (193,474) (122,156) (214,259) (41,566) (78,947) (57,721)
Purchase of
investment
property (20,720) (7,600) (42,466) (3,960) (9,607) (11,440)
Purchase of
intangible
assets (34,133) (22,049) (16,156) (8,707) (7,680) (4,352)
Proceeds from
collection
(realization)
of short-term
deposits and
other receivables,
net 12,401 67 (5,365) - (8,246) (1,445)
Proceeds from
sale of property
and equipment 1,306 556 12,592 504 1,209 3,393
Proceeds from
sale of investment
property - - 50,600 - 50,600 13,361
Investment in
restricted deposits - - (98,309) - (2,903) (26,484)
Proceeds from
sale of marketable
securities 373,040 127,310 77,404 10,970 28,980 20,852
Investment in
marketable
securities (365,091) (347,993) (71,399) (14,701) (24,599) (19,235)
Acquisition of
subsidiaries 87,219 - - - - -
Acquisition
of equity
accounted
investees - - (36,405) - (36,405) (9,808)
Grant of loans
to jointly
controlled
companies (31,442) (27,389) (200) (8,456) (200) (54)
Grant of loans
to controlling
shareholders - - (155,163) - (92,821) (41,800)
Payments on
account of
real estate (76,884) (77,729) (1,117) (24,263) (1,117) (301)
Collection of
long-term loans
receivable 1,565 - 6,838 - 1,724 1,842
Interest
received 18,331 13,780 16,030 3,920 2,948 4,318
Net cash
provided by
(used in)
investing
activities (227,882) (463,203) (477,375) (86,259) (177,064) (128,604)
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2011
Convenience
translation(A)
for the nine
Year ended For the For the months
December nine months three months ended September 30,
31, ended September 30, ended September 30 2011
2010 2010 2011 2010 2011
Audited Unaudited
NIS U.S. dollars
CASH FLOWS FROM
FINANCING ACTIVITIES:
Purchase of
treasury shares (4,295) (4,295) (4,035) - - (1,087)
Dividend paid
to Company
shareholders (875,000) (75,000) - - - -
Dividend paid
to non-controlling
interests (17,619) (17,619) (16,821) - - (4,531)
Repayment of
debentures (2,155) (27) (140,749) - (2,190) (37,917)
Transactions with
non-controlling
interests without
loss of control 17,195 - - - - -
Issuance of
debentures 205,035 108,550 - 108,550 - -
Receipt of
long-term loans 470,600 5,500 132,547 1,000 23,000 35,708
Repayment of
long-term loans (165,014) (99,597) (181,714) (26,187) (55,604) (48,953)
Repayment of
long term credit
from payables (1,740) (1,305) (1,285) (435) (415) (346)
Short-term
credit from
banks and
others, net (52,404) 100,290 373,058 (65,983) 203,068 100,500
Receipt of loans
from controlling
shareholders 90,000 - - - - -
Proceeds from
exercise of
options in the
Company and a
subsidiary 759 759 140 43 - 38
Acquisition of
shares from
non- controlling
interests (24,557) - (7,927) - - (2,136)
Settlement of
forward contracts 21,248 - - - - -
Interest paid (147,532) (99,609) (169,972) (41,123) (59,624) (45,789)
Net cash provided
by (used in)
financing
activities (485,479) (82,352) (16,758) (24,135) 108,235 (4,513)
INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS AND
BANK OVERDRAFTS (507,532) (340,835) (7,978) 8,464 (17,184) (2,149)
Translation
differences on
cash and cash
equivalents (71) (76) 2 (158) 4 -
BALANCE OF CASH
AND CASH EQUIVALENTS
AND BANK OVERDRAFTS
AT BEGINNING OF
PERIOD 611,734 611,734 104,131 262,517 113,335 28,053
BALANCE OF CASH
AND CASH EQUIVALENTS
AND BANK OVERDRAFTS
AT END OF PERIOD 104,131 270,823 96,155 270,823 96,155 25,904
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2011
Convenience
translation(A)
Year For the For the for the
ended nine months three months nine months
December 31, ended September 30, ended September 30, ended September 30,
2010 2010 2011 2010 2011 2011
Audited Unaudited
NIS U.S. dollars
Net cash provided
by operating
(a) activities:
Adjustment for:
Depreciation and
amortization 206,945 136,367 203,588 49,075 67,716 54,846
Increase in
fair value of
investment
property, net (32,917) (18,857) (28,132) (5,670) (8,687) (7,579)
Share in gains
(losses) of
associates, net
of dividends
received 518 575 (5,716) - (4,836) (1,540)
Share based
payment 6,834 5,302 2,688 1,435 810 724
Loss from
sale and
disposal of
property and
equipment, net 5,962 1,649 129 782 (483) 35
Provision for
impairment of
property and
equipment, net 946 532 1,341 163 36 361
Loss (gain)
from changes
in fair value
of derivative
financial
instruments (8,029) 1,855 (112,906) 1,299 (9,381) (30,416)
Linkage
differences
on monetary
assets,
debentures,
loans and
other long term
liabilities 57,626 36,651 80,379 26,025 10,952 21,654
Employee benefit
liability, net 2,371 (671) 501 (877) (817) 135
Decrease
(increase) in
value of
investment in
securities,
deposits and
long-term
receivables,
net (15,013) (3,055) 3,264 (1,488) 911 879
Interest
paid, net 118,311 85,829 135,537 37,202 51,427 36,513
Changes in
operating
assets and
liabilities:
Investment in
real estate
inventories (87,092) (87,308) (4,917) (4,823) (817) (1,325)
Payments on
account of
real estate
inventories (71,564) (70,352) (6,367) (31,164) (2,693) (1,715)
Decrease
(increase)
in trade
receivables
and other
accounts
receivable (53,264) (225,255) (397,789) (218,554) (261,759) (107,163)
Decrease
(increase) in
inventories (49,910) (8,321) (2,167) 14,162 2,521 (584)
Increase in
advances from
purchasers of
apartments - - 98,309 - 2,903 26,484
Increase
(decrease) in
trade payables
and other
accounts
payable 19,468 256,450 417,545 233,855 218,656 112,485
101,192 111,391 385,287 101,422 66,459 103,794
Supplementary
information
on investing
and financing
activities
not involving
(b) cash flows:
Issuance of
shares upon
conversion of
convertible
debentures of
the Company 43,895 12,394 901 - - 243
Purchase of
property and
equipment and
investment
properties on
credit 37,084 53,143 11,588 53,143 11,588 3,122
Advances from
customers
deposited in
restricted
use deposit 22,428 - 465 - 465 125
Issue of
shares against
acquisition
of shares in
subsidiary 965,770 - - - - -
Exercise of
options to
purchase shares
in equity
accounted investee - - 154,434 - 154,434 41,604
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
RECONCILIATION BETWEEN NET INCOME FOR THE PERIOD TO EBITDA
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2011
(UNAUDITED)
Convenience
translation(A)
Year For the For the for the
ended nine months three months nine months
December ended September ended September ended September
31, 30, 30 30,
2010 2010 2011 2010 2011 2011
NIS U.S. dollars
In thousands
Net income for
the period 62,609 61,257 149,786 3,049 40,283 40,352
Taxes on
income 36,287 30,478 12,135 4,821 (34,670) 3,269
Share in
losses of
associates 518 576 (6,153) - (4,836) (1,658)
Finance
expenses,
net 149,995 107,533 134,969 50,824 79,018 36,361
Other
losses, net 24,930 11,194 7,115 4,086 831 1,917
Increase in
fair value of
investment
property (32,917) (18,857) (28,132) (5,670) (8,687) (7,579)
Depreciation
and
amortization 206,945 136,367 203,588 49,075 67,717 54,846
Share based
payment 6,834 5,302 2,688 1,435 810 1,540
EBITDA 455,201 333,850 475,996 107,620 140,466 128,232
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2011
(UNAUDITED)
Note 1 - Segment reporting
The Company includes segment information according to IFRS 8. Company's management has set the operating segments based on the internal reports.
The Company presents four reportable segments: Supermarkets, Commercial and fueling sites, Non-food (Retail and Wholesale) and Real estate
The Company's four 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 September 30, 2011, Mega Retail operated 211 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).
2. 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.
3. Non-food (Retail and Wholesale) -Mostly through its subsidiary, BEE Group Retail Ltd. ("BEE Group"), the Company is engaged in non-food retail and wholesale activities. As of September 30, 2011, the Company operated 253 non-food retail outlets, mostly 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.
4. 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 in Tal Aviv.
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2011
(UNAUDITED)
Note 1 - Segment reporting (continued):
Supermarkets Non-food Commercial
Retail and
and Real fueling Total
wholesale estate sites Adjustments consolidated
NIS in thousands
Nine months ended
September 30, 2011:
Net segment
revenues 5,076,148 342,919 21,940 4,002,158 - 9,443,165
Inter segment
revenues - 27,881 - 23,856 (51,737) -
Depreciation and
amortization 120,414 9,399 - 69,272 4,503 203,588
Operating
profit (loss)
before other
gains and losses
net and changes
in fair value,
of investment
property 151,543 (7,138) 10,388 156,141 (23,633) 287,301
Segment profit 150,310 (12,993) 38,520 156,113 (23,633) 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
Non-food Commercial
Retail and Total
and Real fueling
Supermarkets wholesale estate sites Adjustments consolidated
NIS in thousands
Nine months
ended September
30, 2010:
Net segment
revenues 5,155,019 347,276 17,981 - - 5,520,276
Inter segment
revenues - 38,907 - - (38,907) -
Depreciation
and amortization 126,297 10,070 - - - 136,367
Operating profit
before other
gains and
losses net
and changes
in fair value
of investment
property 189,360 13,253 5,045 - 1,331 208,989
Segment profit 183,979 7,439 23,902 - 1,331 216,651
Unallocated
corporate
expenses (16,807)
Financial
expenses, net (107,534)
Share in
losses of
associates, net (575)
Income before
taxes on income 91,735
Non-food Commercial
Retail and Total
and Real fueling
Supermarkets wholesale estate sites Adjustments consolidated
NIS in thousands
Three months
ended September
30, 2011:
Net segment
revenues 1,673,149 121,545 7,227 1,425,661 - 3,227,582
Inter segment
revenues - 7,514 - 9,248 (16,762) -
Depreciation and
amortization 40,233 2,528 - 23,454 1,501 67,716
Operating
profit (loss)
before other
gains and losses
net and changes in
fair value of
investment
property 33,942 (5,516) 4,084 55,168 (9,814) 77,864
Segment profit 34,023 (6,466) 12,772 55,205 (9,814) 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 NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2011
(UNAUDITED)
Non-food Commercial
Retail and
and Real fueling Total
Supermarkets wholesale estate sites Adjustments Consolidated
NIS in thousands
Three months
ended September
30, 2010:
Net segment
revenues 1,790,491 123,070 7,228 - - 1,920,789
Inter segment
sales - 11,297 - - (11,297) -
Depreciation
and
amortization 45,523 3,552 - - - 49,075
Operating
profit (loss)
before other
gains and losses
net and changes
in fair value of
investment
property 59,126 631 701 - 1,246 61,704
Segment
profit 57,645 (1,974) 6,371 - 1,246 63,288
Unallocated
corporate
expenses (4,594)
Financial
expenses, net (50,824)
Share in gains of
associates, net -
Income before
taxes on income 7,870
Non-food Commercial
Retail and
and Real fueling Total
Supermarkets wholesale estate sites Adjustments Consolidated
NIS in thousands
Year ended
December 31, 2010:
Net segment
revenues 6,894,978 438,623 25,162 1,144,981 - 8,503,744
Inter segment
revenues - 43,444 - 8,339 (51,783) -
Depreciation
and
amortization 163,020 15,156 - 27,328 1,441 206,945
Operating
profit (loss)
before other
gains and
losses net
and changes
in fair value of
investment
property 241,942 (7,189) (4,843) 42,936 (9,424) 263,422
Segment profit 232,944 (19,519) 28,073 39,335 (9,424) 271,409
Unallocated
corporate
expenses (22,000)
Financial
expenses, net (149,995)
Share in
losses of
associates, net (518)
Income before
taxes on income 98,896
Non-food Commercial
Retail and
and Real fueling Total
Supermarkets wholesale estate sites Adjustments Consolidated
Convenience translation to U.S dollar in thousands
Nine months
ended September
30, 2011:
Net segment
revenues 1,367,497 92,381 5,911 1,078,168 - 2,543,957
Inter segment
revenues - 7,511 - 6,427 (13,938) -
Depreciation
and
amortization 32,439 2,532 - 18,662 1,213 54,846
Operating
profit (loss)
before other
gains and
losses net
and changes
in fair value of
investment
property 40,825 (1,932) 2,798 42,064 (6,367) 77,397
Segment profit 40,493 (3,500) 10,377 42,056 (6,367) 83,059
Unallocated
corporate
expenses (4,736)
Financial
expenses, net (36,361)
Share of losses of
associates, net 1,658
Income before
taxes on income 43,621
1. Gross sales in stores that operated fully in both periods.
2. Tishrey Holidays - are the holidays during the first month of the Jewish calendar.
3. 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.
4. The results of Dor Alon were included effective October 3, 2010 in the results of Alon Holdings. The data for the first nine months of 2010 were included in this report in order to enable analysis and trends of the segment performance.
5. The results of Dor Alon were included effective with October 3, 2010 with the results of Alon Holdings. The data for the third quarter of 2010 were included in this report in order to enable analysis capability and trends in segment performance.
6. 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: cfo@bsi.co.il
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