Blue Square - Israel Ltd. Announces Financial Results for the Fourth Quarter and for the Year of 2009
The Company Presents in the Fourth Quarter an Improvement in the Business Results and the Operating Indices:
3.5% Increase in Sales
1.6% Increase in Same Store Sales
39% Increase in Operating Profit Amounting to NIS 61.4 Million, Constituting 3.4% of the Sales Turnover.
In 2009, Blue Square Israel Implemented a Material Part of its Strategic Plan That Included the Launch of 'Mega Bool' Chain, Launch of a Private Brand and the 'You' Customer Club.
In the Fourth Quarter These Actions Start Bearing Fruit.
ROSH HA'AYIN, Israel, March 15, 2010 /PRNewswire-FirstCall/ -- Blue Square-Israel Ltd. (NYSE and TASE: BSI) today announced its financial results for the fourth quarter and the year ended December, 31 2009.
KEY FIGURES
Q4 Q4 1-12 1-12
Data in NIS (millions) 2009 2008 2009 2008
====================== ==== ==== ==== ====
Sales 1,814.9 1,753.3 7,349.1 7,429.1
Gross profit 520.1 490.1 2,058.1 2,060.0
% Gross profit 28.7% 28.0% 28.0% 27.7%
Operating income (before changes
in fair value of investment
property and other gains and
losses) 61.4 44.3 241.0 265.2
% Operating income (before
changes in fair value of
investment property and other
gains and losses) 3.4% 2.5% 3.3% 3.6%
EBITDA 106.6 83.2 418.3 427.3
% EBITDA 5.9% 4.7% 5.7% 5.8%
Financial expenses, net 20.7 7.0 112.7 105.6
Net income for the period 18.4 18.1 97.8 132.4
Results for the fourth quarter of the year 2009 (1)
Sales for the fourth quarter of 2009 were NIS 1,814.9 million (U.S.(A) $480.8 million), compared to NIS 1,753.3 million in the corresponding quarter of 2008 - an increase of 3.5 %. The increase in sales was recorded in the three operating segments, while the majority of the increase was recorded in the Supermarket segment derived from an increase in the same store sales (SSS) at a rate of 1.6% and from the opening of nine new stores during the last 12-month period.
Gross Profit of the fourth quarter of 2009 amounted to NIS 520.1 million (U.S. $ 137.8 million) (28.7% of revenues) compared to gross profit of NIS 490.1 million (28.0% of revenues) in the corresponding quarter of 2008. The increase in the gross profit margin derived mainly from an increase in the gross profit of the Supermarket segment while maintaining the same gross profit margin due to an improvement of trade agreements and supplier discounts and from the contribution of the private brand of "Mega", which already accounts for 6.5% of total sales of the Supermarket segment despite the increasing competition in the market and the expansion of the HD market department. In addition, the improvement in the gross profit margin derived from an increase in non food segment sales, which enjoy a higher gross profit margin than the Supermarket segment.
Selling, General, and Administrative Expenses for the fourth quarter of 2009 amounted to NIS 458.7 million (U.S. $ 121.5 million) (25.3% of revenues) compared to NIS 445.9 million (25.4% of revenues) in the corresponding period, an increase of 2.9%. The increase reflects higher expenses in the Supermarket segment as follows: 1) increased expenses associated with the net addition of nine new supermarket stores, including the expenses associated with the opening of four branches of the "Eden Teva Market" format during the last twelve months 2) enrollment costs of a new phase of the "You" club 3) costs derived from the increase in the selling expenses of the private brand, and 4) increase of the CPI, which affects expenses of rental fees and municipal taxes. The increase in the expenses was offset by a decrease in the expenses of the same store and headquarters expenses resulting from efficiency measures that led to decrease in payroll and related expenses.
Operating Profit (before changes in fair value of investment property and other gains and losses) in the fourth quarter of 2009 amounted to NIS 61.4 million (U.S. $ 16.3 million) (3.4% of revenues) compared to the operating income of NIS 44.3 million (2.5% of revenues) in the corresponding period in 2008, an increase of 39%. The improvement in the operating income was gained from the improvement of the operating income in the Supermarket segment following the efficiency measures and the increase in sales of the Non Food segment and the improvement of the gross profit margin and the operating profit in the Non Food segment.
Changes in Fair Value of Investment Property: In the fourth quarter of 2009, the Company recorded gain from appreciation of investment property in the amount of NIS 12.4 million (U.S. $ 3.3 million) compared to NIS 1.1 million in the corresponding period. The increase was derived from the economic improvement of the market and from a decrease in interest rates for capitalization used for calculating the value of the assets.
Other Gains and Losses, Net: In the fourth quarter of 2009, the Company recorded other expenses, net of NIS 22.5 million (U.S. $ 6.0 million), compared to net expenses of NIS 11.8 million ( U.S. $ 3.1 million) in the corresponding quarter. The expenses this quarter mainly included impairment losses of property and equipment of NIS 16.1 million (U.S. $ 4.26 million) in the supermarket segment and reorganization expenses in the Non Food segment in the amount of NIS 5.3 million (U.S. $ 1.4 million). The expenses in the corresponding quarter were derived mainly from expenses in respect of the efficiency plan and a capital loss from property and equipment in the Supermarket segment.
Operating Profit before financing expenses, net in the fourth quarter of 2009 was NIS 51.2 million (U.S. $ 13.6 million) (2.8% of revenues) compared to operating profit of NIS 33.6 million (1.9% of revenues) in the fourth quarter of 2008, an increase of 52.6%.
Financial Expenses, net for the fourth quarter of 2009 were NIS 20.7 million (U.S. $5.5 million) compared to financial expenses, net of NIS 7.0 million in the corresponding quarter of the previous year. The increase in financial expenses in this quarter compared to the corresponding quarter last year was derived mainly from financial expenses on long term loans and debentures, which contributed an expense of NIS 30 million (U.S. $7.9 million) in this quarter compared to financial expenses of NIS 20.9 million in the corresponding quarter last year due to an increase in a financial debt and from financial expenses in respect of the conversion option on debenture of BSI in the amount of NIS 2.0 million (U.S. $0.5 million) in this quarter compared to financial income of NIS 19.5 million in the corresponding quarter last year. The increase in the financial expenses was offset mainly from an increase in financial income as a result of a gain from revaluation of financial instruments that contributed in this quarter an income of NIS 17.0 million (U.S. $4.5 million) compared to an income of NIS 1.6 million in the corresponding quarter last year.
Taxes on Income for the fourth quarter 2009, amounted to NIS 12.2 million (U.S. $3.2 million) (effective tax rate of 40.0% compared to a statutory tax rate of 26%) compared tax expenses of NIS 8.4 million (effective tax rate of 31.6% compared to a statutory tax rate of 27%) in the corresponding quarter.
The increase in the effective tax rate derived from losses for which no deferred taxes were recorded in the Non Food segment and from the effect of the difference between the statutory tax rates and the tax rates, pursuant to which, the Company provided for deferred taxes in respect of expenses, the recognition date of which for tax purposes in the future, shall result in lower tax rates.
Net Profit for the fourth quarter of 2009 was NIS 18.4 million (U.S. $ 4.9 million) compared to net income of NIS 18.1 million in the fourth quarter of 2008. The increase in the net income in this quarter compared to the corresponding quarter last year derived from improving operating income (before changes in fair value of investment property and other gains and losses) and appreciation of investment property and was offset by the increase in other expenses, financial expenses and taxes, as mentioned above. The net income for the fourth quarter of 2009 attributable to equity holders of the Company, was NIS 12.4 million (U.S. $3.3 million), or NIS 0.28 per ADS (U.S. $ 0.07), while the portion attributable to the share of Minority interests was NIS 5.9 million (U.S. $1.6 million).
(1) The Company operates in three segments: Supermarkets, Non Food and Real Estate. A segment information report is included later in this report.
Cash Flows in the fourth quarter of 2009
Cash Flows from (Used in) Operating Activities: Net cash flows used in operating activities in the fourth quarter of 2009 amounted to NIS 71.3 million (U.S. $ 18.9 million) compared to cash flows deriving from operating activities amounted to NIS 60.2 million in the corresponding quarter last year. The decrease in cash flows from operating activities in this quarter compared to the corresponding quarter last year derived mainly from changes in the balances of trade receivables and receivables due to the timing of the Jewish high holidays and from the earlier collection of credit card company proceeds in September of this year.
Cash Flows from Investing Activities: Net Cash flows used in investing activities in the fourth quarter of 2009 amounted to NIS 58.5 million (U.S. $15.5 million) compared to net cash flows of NIS 242.6 million used in investing activities in the corresponding quarter last year. Net cash flows used in investing activities in the fourth quarter of 2009 mainly included the purchase of property and equipment, intangible assets and investment property in a total amount of NIS 61.4 million (U.S. $16.3 million) and net investment in marketable securities of NIS 2.7 million (U.S. $0.7 million) net of interest received amounting to NIS 3.5 million (U.S. $0.9 million). Cash used in investing activities in the fourth quarter of 2008 mainly included the purchase of property and equipment, intangible property and investment property in a total amount of NIS 103.7 million and the purchase of minority shares in Mega Retail in the amount of NIS 151.0 million.
Cash Flows from Financing Activities: Net Cash flows provided by financing activities in the fourth quarter of 2009 amounted to NIS 297.3 million (U.S. $ 78.8 million) compared to net cash used in financing activities of NIS 56.7 million in the corresponding period last year. Cash flows provided by financing activities in the fourth quarter of 2009 included mainly proceeds from the issuance of debentures in a subsidiary in the amount of NIS 294.3 million (U.S. $ 78.0 million) and receipt of long term loans amounting to NIS 80.2 million (U.S. $ 21.2 million), net of repayment of long term loans amounting to NIS 40.8 million (U.S. $ 10.8 million), a decrease in short term credit, net, in the amount of NIS 20 million (U.S. $ 5.3 million), and interest paid in the amount of NIS 12.9 million (U.S. $ 3.4 million). Cash flows used in financing activities in the fourth quarter of 2008 mainly included payment of dividend of NIS 150.0 million, repayment of long term loans of NIS 28.0 million, decrease in short term bank credit of NIS 25.9 million and interest paid in the amount of NIS 18.8 million, net of proceeds from issuance of debentures in the amount of NIS 121.3 million and receipt of long term loans in the amount of NIS 45.2 million.
Comments of Management
Commenting on the financial results, Mr. Zeev Vurembrand, Blue Square's President and CEO, said: "In 2009, we implemented expeditiously and with precision measures that, already in the fourth quarter of the year, resulted in a material improvement of the business results including sales and operating profitability.
In the course of the third quarter we expanded the enrollment circles of "You" Club, with already over 600 thousand members in the credit track as well as in the club card track. The identified revenue turnover rate of the club members passed during the fourth quarter the 55% threshold, thereby enabling us to develop loyalty from our customers and provide them with more valuable and focused offers.
In the private label "Mega" we launched hundreds of products and to the end of the year the sales turnover of the private label accounts for 6.5% from total sales. As of the end of 2010 the private label will include about 1,000 products and will accounts for approximately 10% from the sales turnover of the Supermarket segment.
In 2010, we will continue to implement the strategic measures by assimilating core systems in the trade areas, category management, supply chain and branch operation. These tools will enable, already at the end of 2010, to manage with more precision the array of products in the stores that will result in the improvement of trade terms on one hand, and the improvement of operating efficiency, on the other hand.
Moreover, we are in a process of establishing two additional logistic centers to supplement the deployment of the supply chain system of the group for the coming years. One logistic center will be established for handling the entire supply for the non food segment and will provide services to the Mega stores and BEE Group. Another logistic center will be established for fruit and vegetables department. These measures both in the core systems and in the area of the chain of supply, will enable the Company to be prepared in 2011 for the realization of the independent shelf arrangement in the chain's branches.
In BEE Group we completed two significant actions in the course of the recent quarter. The first action was about the operating focus of the group in three segments: the world of house ware and textile, the world of leisure and toys and the world of infants. The second action dealt with the managerial focus of the group by establishing headquarter that will centralize all of the financial activities, import, logistics and the information systems of the entire group companies.
Eden Teva Market completed Stage A of its strategic plan, deployment of 10 stores until mid 2010. In the beginning of 2010, Eden Teva Market commenced to implement the second stage of the strategic plan, establishing 5 stores within Mega formats. Today, Eden Teva Market leads the organic food retail market in Israel in its unique model and concept of a healthy supermarket. We anticipate that these measures will bring Eden Teva Market to an operating balance in 2010".
Additional Information
1. As of December 31, 2009, the Company operated 203 supermarkets in the following formats: Mega In Town -119; Mega Bool – 47; Mega – 11; Shefa Shuk – 17; Eden Teva Market – 9.
2. Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA(2))
In the fourth quarter of 2009, the EBITDA was NIS 106.6 million (U.S. $ 28.2 million) (5.9 % of revenues) compared to NIS 83.2 million (4.7% of revenues) in the corresponding period of last year.
In 2009, amounted to NIS 418.3 million (U.S. $ 110.8 million) (5.7 % of revenues) compared to NIS 427.3 million (5.8% of revenues) in the corresponding period of last year.
The Company's board of directors resolved, based on the changes and the developments in the Company from 2003, to update the manner of calculating the ratio of net debt to EBITDA for dividend distribution. As of December 31, 2009, the Company meets the new ratio.
3. On October 1, 2009, Standard & Poors Maalot ratified the rating of ilA+ for the debentures Series A and B of the company and updated the rating forecast to negative from stable.
4. On January 14, 2010, the board of directors declared on dividend distribution of NIS 75 million (NIS 1.7043 per share). The dividend was paid to the shareholders on February 25, 2010. Convertible debentures – after dividend distribution, the conversion ratio of the company's convertible debentures issued in August 2003 was adjusted due to the dividend, as above mentioned. Following the adjustment, every NIS 18.39 par value of convertible debentures may be convertible to one ordinary share of the company.
5. In February 2010 Blue Square Israel published a shelf prospectus that allows the company to issue marketable securities in Israel during the next two years.
(2) Use of financial measures that are not in accordance with Generally Accepted Accounting Principles
EBITDA is a measure that is not in accordance with Generally Accepted Accounting Principles (Non- GAAP) and is defined as income before financial income (expenses) net, other gain (losses) net, changes in fair value of investment property taxes, depreciation and amortization. It is presented because it is a measure commonly used in the retail industry and is presented as an additional performance measure, since it enables comparisons of operating performances between periods and companies while neutralizing potential differences resulting from changes in capital structures, taxes, age of property and equipment and its related depreciation expenses. EBITDA, however, should not be considered as an alternative to operating income or income for the year as an indicator of our operating performance. Similarly, EBITDA should not be considered as an alternative to cash flow from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under Generally Accepted Accounting Principles (GAAP) and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of our historic operating results nor is it meant to be predictive of potential future results. Reconciliation between our income for the period and EBITDA is presented in the attached condensed financial reports.
Results for the year 2009
Sales in the year 2009 were NIS 7,349.1 million (U.S. $1,946.8 million), compared to NIS 7,429.1 million in 2008 - a decrease of 1.1 %. Supermarket same store sales (SSS) for the period decreased by 3.9% due to the recession and increased competition and erosion of prices in HD chains. On the other hand, the decrease in sales was offset by the net addition of nine new stores during the 12-month period of approximately 10,500 square meters and from an increase in sales from the Non Food and Real Estate segments.
Gross Profit in the year 2009 amounted to NIS 2,058.1 million (U.S. $ 545.2 million) (28.0 % of revenues) compared to gross profit of NIS 2,060 million (27.7% of revenues) in 2008. The increase in the gross profit derived from an increase in sales of Non Food segment characterized with relatively higher gross profit margins relative to the accepted gross profit in the Supermarkets segment. In addition, the gross profit increased from trade agreements, some of which relate to the establishment of Mega Bool chain that offset the effect of the planned erosion in the gross profit margin as a result of establishing the chain.
Selling, General and Administrative Expenses in the year 2009 amounted to NIS 1,817.1 million (U.S. $ 481.4 million) (24.7% of revenues) compared to NIS 1,794.7 million (24.2% of revenues) in the in 2008, an increase of 1.2%. The majority of the increase in expenses derives from 1) the net addition of nine new supermarket stores, part of which relate to accelerated opening of four branches of the "Eden Teva Market" during the last 12 months 2) costs associated with launch of "Mega Bool" chain. 3) Re-launch costs of the "You" club and 4) increase of the CPI, which affects expenses of rental fees and municipal taxes. On the other hand, the Company took efficiency measures which resulted in decrease in payroll and related expenses.
Operating Profit (before changes in fair value of investment property and other gains and losses) in the year 2009 amounted to NIS 241.0 million (U.S. $ 63.8 million) (3.3% of revenues) compared to the operating profit of NIS 265.3 million (3.6% of revenues) in 2008. The decrease in operating profit was affected by the decrease in sales and increase in selling and administrative expenses, as mentioned above.
Appreciation of Investment Property: in the year 2009, the Company recorded gain from appreciation of investment property of NIS 20.8 million (U.S. $ 5.5 million) compared to NIS 19.1 million in 2008.
Other Gains and Losses, Net: in the year 2009, the Company recorded other expenses, net of NIS 28.1 million (U.S. $ 7.4 million), compared to other expenses, net, of NIS 2.5 million in 2008. The expenses included, in 2009, a provision for the impairment of property and equipment and other assets mainly in the supermarket segment in the amount of NIS 20.0 million (U.S. $ 5.2 million), expenses for the reorganization in the Non Food segment in the amount of NIS 7.0 million (U.S. $ 1.9 million) and capital losses in the amount of NIS 4.8 million (U.S. $ 1.3 million) and were offset by a capital gain in the amount of NIS 1.5 million (U.S. $ 0.4 million) and capital gain from changes in control rates in investees in the amount of NIS 3.2 million (U.S. $ 0.8 million). In 2008, other expenses included a provision for the efficiency plan in the amount of NIS 6.0 million and capital losses in the amount of NIS 6.0 million mainly in the supermarket segment, the expenses were offset mainly from a gain of NIS 9.0 million from a decrease in holding rate in companies held by Bee group due to the reorganization.
Operating Income before financing in the year 2009, was NIS 233.6 million (U.S. $ 61.9 million) (3.2% of revenues) compared to operating income of NIS 281.8 million (3.8% of revenues) in the year 2008.
Financial Expenses, net in the year 2009 were NIS 112.7 million (U.S. $29.9 million) compared to financial expenses, net of NIS 105.6 million in 2008. The increase in financial expenses in 2009 derived mainly from an increase in the financial net debt, of the Company compared to 2008, which resulted in increase in financial expenses for debentures and loans in the amount of NIS 12.2 million (U.S. $3.2 million) and a decrease in income on deposits by NIS 7.6 million (U.S. $2.0 million). In addition, a change in the value of conversion component on debentures in 2009 contributed financial expenses of NIS 11.7 million (U.S. $3.1 million) compared to an income of NIS 32.7 million in 2008. The increase in the financial expenses was partly offset from financial income from forward contracts (CPI \ NIS) this year in the amount of NIS 21.3 million (U.S. $5.6 million) compared to expenses of NIS 11.6 million in 2008 and from an increase in financial income from financial instruments in the amount of NIS 16.2 million (U.S. $4.3 million) in 2009 compared to 2008.
Taxes on Income in the year 2009 were NIS 23.1 million (U.S. $6.1 million) (19.1% effective tax rate compared to a statutory tax rate of 26%) compared to NIS 43.8 million (effective tax rate of 24.9% compared to a statutory tax rate of 27%) in 2008. The decrease in the effective tax rate in this year compared to 2008 derived mainly from recording tax benefit due to a change in tax rates, as a result of the legislation of the Law for Economic Efficiency (Legislation Amendments for the Implementation of Economic Plan for 2009- 2010) 5769 – 2009, which prescribed, among others, the gradual decrease of corporate tax rate down to 18% in the 2016 tax year and onwards.
The implications of the change in the tax rates were reflected in the results of this period by decrease in deferred taxes and recording tax benefit in the amount of NIS 14.2 million (U.S. $ 3.8 million) out of which the portion attributed to the company's shareholders is NIS 9.1 million (U.S. $ 2.4 million).
Net Profit for the year 2009 was NIS 97.8 million (U.S. $ 25.9 million) compared to net income of NIS 132.4 million in 2008. The decrease in the Net profit this year compared to 2008 derived from a decrease in operating income and an increase in financial expenses net of decrease in tax expenses, as mentioned above. The net income for 2009, attributable to shareholders, was NIS 77.2 million (U.S. $20.4 million), or NIS 1.77 per ADS (U.S. $ 0.47), while the portion attributable to the share of minority interests was NIS 20.6 million (U.S. $5.5 million).
Cash Flows in the year 2009
Cash Flows from Operating Activities: Net cash flows deriving from operating activities in 2009 amounted to NIS 260.3 million (U.S. $ 69.0 million) compared to NIS 409.8 million in 2008. The decrease in cash flows from operating activities derived mainly from an increase in trade receivables balance at the end of the year compared to decrease in trade receivables balance in 2008, which was due to an improvement in the Company's operations in the fourth quarter of this year compared to 2008 and from decrease in operating income, and part of which was offset from the decrease in net taxes paid compared to 2008.
Cash Flows from Investing Activities: Net Cash flows used in investing activities in the year 2009 amounted to NIS 227.7 million (U.S. $60.3 million) compared to net cash flows of NIS 354.4 million used in investing activities in 2008. Cash flows used in investing activities in the year 2009 included mainly the purchase of property and equipment, investment property and intangible assets of NIS 238.9 (U.S. $ 63.3 million). In 2008, cash flows used in investing activities included mainly the purchase of property and equipment, investment property and intangible assets amounting to NIS 311.7 million, and the purchase of minority shares in subsidiaries in the amount of NIS 186.4 million, net of proceeds from realization short term deposit of NIS 102.5 million.
Cash Flows from Financing Activities: Net Cash flows deriving from financing activities in the year 2009 amounted to NIS 495.9 million (U.S. $ 131.4 million) compared to net cash used in financing activities of NIS 25.3 million in 2008.
Cash flows deriving from financing activities in 2009 included mainly the receipt of long and short term loans of NIS 463.8 million (U.S.. $ 122.9 million), issuance of debentures in the amount of NIS 294.3 million (U.S. $ 78.0 million) net of cash flows used for repayment of long term loans in the amount of NIS 139.1 million (U.S. $ 36.8 million) and interest paid in the amount of NIS 93.9 million (U.S. $ 24.9 million). In 2008, cash flows used in financing activities mainly included a dividend payment in the amount of NIS 150 million, repayment of long term loans in the amount of NIS 130.6 million and paid interest in the amount of NIS 89.2 million, net of receipt of long and short term loans of NIS 247.1 million and issuance of debentures of NIS 121.3 million.
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 December 31, 2009: U.S. $1.00 equals NIS 3.775. The translation was made solely for the convenience of the reader.
Blue Square is a leading retailer in Israel. A pioneer of modern food retailing in the region, Blue Square currently operates 206 supermarkets under different formats, each offering varying levels of service and pricing.
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 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 to 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, 2008 and under the heading "Risk Factors" in our shelf prospectus filed in Israel, portions of which were submitted to the SEC on Form 6-K on February 18, 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.
Contact: |
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Blue Square-Israel Ltd. |
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Dror Moran, CFO |
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Toll-free telephone from U.S. and Canada: 888-572-4698 |
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Telephone from rest of world: 972-3-928-2220 |
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Fax: 972-3-928-2299 |
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Email: [email protected] |
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BLUE SQUARE – ISRAEL LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2009
(Unaudited)
Convenience
translation
December 31, December
------------------------ 31,
2008 2009 2009
--------- ----------- ----------
(Audited) (Unaudited) (Unaudited)
--------- ----------- ----------
U.S.
NIS dollars
------------------------ ----------
In thousands
------------------------------------
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents 95,325 612,227 162,179
Short-term bank deposit 206 67 18
Financial assets 186,849* 212,912 56,400
Trade receivables 729,970 809,783 214,512
Other accounts receivable 87,624 69,504 18,412
Derivative financial instruments - 9,690 2,567
Income taxes receivable 74,446 84,274 22,324
Inventories 497,080 514,858 136,386
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Total current assets 1,671,500 2,313,315 612,798
--------- --------- -------
NON-CURRENT ASSETS:
Investments in associates 4,915 4,878 1,292
Derivative financial instruments 5,248 12,691 3,362
Prepaid expenses in respect of
operating leases 192,426 193,228 51,186
Other long-term receivables 1,554 1,326 351
Property, plant and equipment,
net 1,701,222 1,757,718 465,621
Investment property 419,232* 424,936 112,566
Intangible assets 404,422 409,194 108,396
Deferred taxes 44,508 45,991 12,183
------ ------ ------
Total non-current assets 2,773,527 2,849,962 754,957
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Total assets 4,445,027 5,163,277 1,367,755
========= ========= =========
BLUE SQUARE – ISRAEL LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2009
(Unaudited)
Convenience
translation
December 31, December
------------------------ 31,
2008 2009 2009
--------- ----------- ----------
(Audited) (Unaudited) (Unaudited)
--------- ----------- ----------
U.S.
NIS dollars
------------------------ ----------
In thousands
------------------------------------
Liabilities and equity
CURRENT LIABILITIES:
Credit and loans from banks
and others 210,901 274,598 72,741
Current maturities of debentures
and convertible debentures 25,999 76,698 20,317
Trade payables 1,006,386 917,585 243,069
Other accounts payable and
accrued expenses * 426,217 494,929 131,107
Income taxes payable 6,933 6,051 1,603
Provisions 43,397 51,298 13,588
------ ------ ------
Total current liabilities 1,719,833 1,821,159 482,425
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LONG-TERM LIABILITIES:
Long-term loans from banks,
net of current maturities 341,586 596,721 158,072
Convertible debentures, net
of current maturities 130,525 142,021 37,621
Debentures, net of current
maturities 985,844 1,251,333 331,479
Other liabilities 39,925 19,168 5,078
Derivatives financial instruments * 21,074 7,591 2,011
Liabilities in respect of
employee benefits, net of
amounts founded 49,911 47,249 12,516
Deferred taxes 60,327 56,205 14,889
------ ------ ------
Total long-term liabilities 1,629,192 2,120,288 561,666
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Total liabilities 3,349,025 3,941,447 1,044,091
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EQUITY:
Equity attributed to equity
holders of the company:
Ordinary shares of NIS 1 par value 57,094 57,438 15,215
Additional paid-in capital 1,018,405 1,030,259 272,916
Other reserves (261) 5,676 1,504
Accumulated deficit (154,719) (64,964) (17,208)
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920,519 1,028,409 272,427
Minority interest 175,483 193,421 51,237
------- ------- ------
Total equity 1,096,002 1,221,830 323,664
--------- --------- -------
Total liabilities and equity 4,445,027 5,163,277 1,367,755
========= ========= =========
*) Reclassified.
BLUE SQUARE – ISRAEL LTD.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR AND THREE MONTH PERIODS ENDED DECEMBER 31, 2009
(Unaudited)
Convenience
translation
For the three for the
Year ended months ended year ended
December 31, December 31, December
--------------------- --------------------- 31,
2008 2009 2008 2009 2009
--------- --------- --------- --------- -----------
(Audited) (Unaudited) (Unaudited)
--------- --------------------------------- -----------
U.S.
NIS dollars
--------------------------------------------- -----------
In thousands (except share and per share data)
----------------------------------------------------------
Sales 7,429,121 7,349,076 1,753,324 1,814,864 1,946,775
Cost of sales 5,369,149 5,291,012 1,263,214 1,294,787 1,401,593
--------- --------- --------- --------- ---------
Gross profit 2,059,972 2,058,064 490,110 520,077 545,182
Selling, general
and
administrative
expenses 1,794,720 1,817,099 445,855 458,699 481,351
--------- --------- ------- ------- -------
Operating profit
before other
gains and losses
and net gain from
adjustment of
investment
property to
fair value 265,252 240,965 44,255 61,378 63,831
Other gains 12,233 4,699 329 235 1,245
Other losses 14,716 32,803 12,110 22,774 8,690
Changes in fair
value of
investment
property, net 19,067 20,775 1,097 12,385 5,503
------ ------ ----- ------ -----
Operating profit 281,836 233,636 33,571 51,224 61,889
Finance income 60,700 64,780 32,631 20,762 17,160
Finance expenses (166,295) (177,454) (39,663) (41,476) (47,006)
Share in gain
(losses) of
associates (33) (37) (15) 91 (10)
--- --- --- --- ---
Income before
taxes on income 176,208 120,925 26,524 30,601 32,033
Taxes on income 43,806 23,124 8,391 12,231 6,125
------ ------ ----- ------ -----
Net income for
the period 132,402 97,801 18,133 18,370 25,908
======= ====== ====== ====== ======
Attributable to:
Equity holders
of the
Company 104,586 77,163 10,437 12,441 20,441
------- ------ ------ ------ ------
Minority
interests 27,816 20,638 7,696 5,929 5,467
------ ------ ----- ----- -----
Earnings per
ordinary share of
ADS attributable
to equity holders
of the company
Basic 2.41 1.77 0.24 0.28 0.47
---- ---- ---- ---- ----
Fully diluted 1.62 1.77 0.19 0.28 0.47
---- ---- ---- ---- ----
Weighted average
number of
shares or ADS
used for
computation of
income per
share:
Basic 43,372,819 43,558,614 43,372,819 43,717,058 43,558,614
---------- ---------- ---------- --------- ---------
Fully
diluted 45,037,692 43,558,614 45,037,692 43,828,241 43,558,614
---------- ---------- ---------- ---------- ----------
(Continued - 1)
BLUE SQUARE – ISRAEL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW FOR
FOR THE YEAR AND THREE MONTH ENDED DECEMBER 31, 2009
Convenience
translation
for the
For the three year ended
Year ended months ended December
December 31, December 31, 31,
2008 2009 2008 2009 2009
--------- -------- ------- --------- -----------
(Audited) (Unaudited) (Unaudited)
--------- ---------------------------- -----------
U.S.
NIS in thousands dollars
--------------------------------------- -----------
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Income before
taxes on income 176,208 120,925 26,524 30,601 32,033
Income tax paid (94,212) (38,101) (12,439) (1,490) (10,093)
Adjustments
required to
reflect the
cash flows
from operating
activities (a) 327,777 177,520 46,102 (100,418) 47,023
------- ------- ------ -------- ------
Net cash
provided by
(used in)
operating
activities 409,773 260,344 60,187 (71,307) 68,963
------- ------- ------ ------- ------
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Purchase of
property,
plant and
equipment (211,646) (203,889) (48,624) (48,236) (54,010)
Purchase of
investment
property (69,749) (9,435) (33,369) (1,396) (2,499)
Purchase of
minority
shares in
subsidiaries (186,403) (8,020) (151,003) - (2,125)
Purchase of
intangible
assets (30,372) (25,527) (21,754) (11,810) (6,762)
Proceeds from
collection of
short-term
bank deposits,
net 102,531 139 1,516 797 37
Investment in
restricted
deposit - (470,000) - - (124,503)
Proceeds from
collection of
restricted
deposit - 470,000 - - 124,503
Proceeds from
sale of
property,
plant and
equipment 1,559 2,581 877 616 684
Proceeds from
sale of
investment
property 6,567 5,700 - - 1,510
Proceeds from
sale of
marketable
securities 185,104 101,867 42,470 37,303 26,985
Investment in
marketable
securities (169,747) (113,966) (38,203) (40,049) (30,190)
Proceeds from
sale of
subsidiary
share to the
minority - 10,912 838 2,891
Interest
received 17,778 11,948 5,517 3,484 3,165
------ ------ ----- ----- -----
Net cash used
in investing
activities (354,378) (227,690) (242,573) (58,453) (60,314)
-------- -------- -------- ------- -------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Dividend paid to
shareholders (150,000) - (150,000) -
Issuance of
debentures 121,259 294,280 121,259 294,280 77,955
Dividend paid
to minority
shareholders of
subsidiaries (22,077) (16,491) - (2,968) (4,368)
Receipt of
long-term
loans 231,398 387,700 45,177 80,200 102,702
Repayment of
long-term
loans (130,571) (139,060) (28,007) (40,835) (36,837)
Repayment of
other long term
liabilities (1,740) (1,740) (435) (435) (461)
Repayment of
convertible
debentures - (13,297) - - (3,522)
Short-term
credit from
banks and
others, net 15,689 76,144 (25,914) (20,070) 20,171
Proceeds from
exercise of
options in a
subsidiary - 2,306 - - 611
Interest paid (89,244) (93,900) (10,294) (12,851) (24,874)
------- ------- ------- ------- -------
Net cash
provided by
(used in)
financing
activities (25,286) 495,942 (48,214) 297,321 131,377
------- ------- ------- ------- -------
INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS
AND BANK
OVERDRAFT 30,109 528,596 (230,600) 167,561 140,026
BALANCE OF CASH
AND CASH
EQUIVALENTS
AND BANK
OVERDRAFT AT
BEGINNING OF
PERIOD 53,029 83,138 313,738 444,173 22,023
------ ------ ------- ------- ------
BALANCE OF CASH
AND CASH
EQUIVALENTS
AND BANK
OVERDRAFT AT
END OF PERIOD 83,138 611,734 83,138 611,734 162,049
====== ======= ====== ======= =======
(Continued - 2)
BLUE SQUARE – ISRAEL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW FOR
FOR THE YEAR AND THREE MONTH ENDED DECEMBER 31, 2009
Convenience
translation
For the three for the
Year ended months ended year ended
December 31, December 31, December
------------------- -------------------- 31,
2008 2009 2008 2009 2009
--------- -------- --------- --------- --------
(Audited) (Unaudited) (Unaudited)
--------- ------------------------------ --------
U.S.
NIS dollars
----------------------------------------- --------
In thousands
---------------------------------------------------
(a) Adjustments
required to
reflect the cash
flows from
operating
activities:
Adjustments for:
Depreciation and
amortization 153,882 165,248 36,078 41,434 43,774
Increase in fair
value of
investment
property, net (19,067) (20,775) (1,097) (12,385) (5,503)
Share in gain
(losses) of
associated
company 33 37 15 (91) 10
Share based
payment 8,175 12,166 2,922 3,694 3,223
Loss from sale
and disposal of
property, plant
and equipment 6,424 3,299 6,545 2,316 874
Loss (gain) from
provision for
impairment of
property, plant
and equipment,
net (435) 19,981 (435) 16,981 5,293
Gain (losses)
from changes in
fair value of
derivative
financial
instruments (19,247) (21,250) (10,969) 469 (5,629)
Linkage
differences on
debentures,
loans and other
long term
liabilities 61,228 57,392 (596) 6,061 15,203
Linkage
differences on
short term
liabilities (1,559) (5,045) (933) (1,904) (1,336)
Capital loss
(gain) from
realization of
investments in
subsidiaries (9,801) 911 254 3,999 242
Liability in
respect of
employee
benefit, net 263 144 541 1,297 38
Decrease in value
of financial
assets deposit
and long-term
receivables, net 11,169 (4,468) (1,835) (12,399) (1,184)
Interest paid,
net 71,466 81,953 4,777 9,368 21,709
Changes in operating
assets and liabilities:
Decrease
(increase) in
trade
receivables and
other accounts
receivable 59,967 (65,468) 369,113 211,133 (17,343)
Decrease
(increase) in
inventories (43,136) (17,224) 14,675 19,761 (4,563)
Increase
(decrease) in
trade payables
and other
accounts payable 48,415 (29,381) (372,953) (390,152) (7,785)
------ ------- -------- -------- ------
327,777 177,520 46,102 (100,418) 47,023
======= ======= ====== ======== ======
(Concluded - 3)
BLUE SQUARE – ISRAEL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW FOR
FOR THE YEAR AND THREE MONTH ENDED DECEMBER 31, 2009
Convenience
translation
For the three for the
Year ended months ended year ended
December 31, December 31, December
------------------ --------------- 31,
2008 2009 2008 2009 2009
--------- ------- ------- ------- ----------
(Audited) (Unaudited) (Unaudited)
--------- ----------------------- ----------
U.S.
NIS dollars
---------------------------------- ----------
In thousands
---------------------------------------------
(b) Supplementary information
on investing and financing
activities not involving
cash flows:
Conversion of convertible
debentures of the company - 12,198 - - 3,231
=== ====== === === =====
Conversion of convertible
debentures of subsidiaries 6,655 - 268 - -
===== === === === ===
Purchasing property, plant
and equipment on credit 14,797 438 14,797 438 116
====== === ====== === ===
BLUE SQUARE - ISRAEL LTD.
SELECTED OPERATING DATA
FOR THE TWELVE MONTH AND THREE MONTH PERIOD
ENDED DECEMBER 31, 2009
(UNAUDITED)
Convenience
translation(a)
for the three
For the three months
Year ended months ended ended
December 31 December 31 December
------------------- ----------------- 31
2008 2009 2008 2009 2009
NIS U.S.$
-------------------------------------- ---------
(Unaudited)
-------------------------------------------------
Sales (in millions) 7,429.1 7,349.1 1,753.3 1,814.9 480.8
Operating profit before
changes in fair value
of investment property
and other gains and
losses 265.3 240.9 44.3 61.4 16.3
EBITDA (in millions) 427.3 418.3 83.2 106.6 28.2
EBITDA margin 5.8% 5.7% 4.7% 5.9% N.A
Increase (decrease) in
same store sales 1.1% (3.9%) (4.5%) 1.6% N.A
Number of stores at end
of period 194 203 194 203 N.A
Stores opened during the
period 10 11 1 1 N.A
Stores closed during the
period 1 2 1 1 N.A
Total square meters at
end of period 354,500 365,000 354,500 365,000 N.A
Square meters added
during the period, net 11,800 10,500 (1,500) 600 N.A
Sales per square meter 19,911 19,023 4,691 4,713 1,248.5
Sales per employee (in
thousands) 954 997 230 253 67.0
BLUE SQUARE - ISRAEL LTD.
RECONCILIATION BETWEEN INCOME FOR THE PERIOD TO EBITDA
FOR THE TWELVE AND THREE MONTHS PERIODS ENDED DECEMBER 31, 2009
(UNAUDITED)
Convenience
translation(a)
for the
For the For the Three year
Year ended months ended ended
December 31, December 31, December
----------------- --------------- 31,
2008 2009 2008 2009 2009
-------- ------- ------ ------- --------
Unaudited
--------------------------------------------
U.S.
NIS dollars
---------------------------------- ---------
In thousands
--------------------------------------------
Net income for the period 132,402 97,801 18,133 18,370 25,908
Taxes on income 43,806 23,124 8,391 12,231 6,125
Finance expenses, net 105,595 112,674 7,032 20,714 29,846
Other losses, net 2,483 28,104 11,781 22,539 7,445
Changes in fair value of
investment property (19,067) (20,775) (1,097) (12,385) (5,503)
Depreciation and amortization 153,882 165,248 36,078 41,434 43,774
Benefit component in grant of
employee options 8,175 12,166 2,922 3,694 3,223
----- ------ ----- ----- -----
EBITDA 427,276 418,342 83,240 106,597 110,818
======= ======= ====== ======= =======
Segment reporting
The Company includes segment information, according to IFRS 8 based on the Company's organization structure, internal reporting, resource allocation and decision making. The Company presents three reportable segments: Supermarkets, Non-food Retail and Wholesale and Real estate.
Company's three operating segments consist of the following:
- Supermarkets – The Company operates the second largest food retail chain in Israel. Through its subsidiary, Mega Retail Ltd. ("Mega Retail"), which operates Supermarket branches, 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, infants products, cosmetics and hygiene products. As of December 31, 2009, Mega Retail operated 203 supermarkets. This segment also includes properties owned through Blue Square Real Estate ("BSRE"), in connection with the supermarket operation of our stores (including warehouses and offices).
- Non-food (Retail and Wholesale) –Through our subsidiary, Bee Group Retail Ltd. ("Bee Group"), Bee group operates as retailer and wholesaler in the non food segment. As of December 31, 2009, Bee Group operated 260 non- food Retail outlets, mostly through franchisees, with specialties in houseware and home textile, toys, leisure, and infant.
- Real Estate - Through our subsidiary BSRE the Company engaged in yield from lease investment properties mainly commercial centers, logistics centers and offices and land for the purpose of capital appreciation and deriving long-term yield.
Segment analyses for the fourth quarter and the year ended December 31, 2009:
Three months ended December 31, 2009 (unaudited)
-------------------------------------------------
Non - Total
food Real consol-
Supermarkets Retail estate Adjustments idated
------------ ------ ------ ----------- -------
NIS in thousands
-------------------------------------------------
Net segment sales 1,717,290 91,998 5,576 - 1,814,864
Inter segment sales - 7,961 - (7,961) -
Operating profit before
other gains and losses
and net gain from
adjustment of investment
property to fair value 60,637 579 3,219 (3,057) 61,378
Rate of operating profit
before other gains and
losses and net gain from
adjustment of investment
property to fair value 3.5% 0.6% 57.7% - 3.4%
Segment profit 44,050 (5,498) 15,604 1,098 55,254
Unallocated corporate
expenses (4,152)
Unallocated corporate
gains due to decrease in
holdings 122
---
Operating profit 51,224
=====
Three months ended December 31, 2008 (unaudited)
------------------------------------------------
Non - Total
food Real consol-
Supermarkets Retail estate Adjustments idated
------------ ------ ------ ----------- -------
NIS in thousands
------------------------------------------------
Net segment sales 1,662,386 85,743 5,195 - 1,753,324
Inter segment sales - 6,590 - (6,590) -
Operating profit before
other gains and losses
and net gain from
adjustment of investment
property to fair
value 57,143 (5,572) 2,765 (10,081) 44,255
Rate of operating profit
before other gains and
losses and net gain
from adjustment of
investment property
to fair value 3.4% (6.0%) 53.2% - 2.5%
Segment profit 45,516 (5,628) 3,862 (1,015) 42,735
Unallocated corporate
expenses (9,064)
Unallocated corporate
gains (losses) due
to decrease in
holdings (100)
----
Operating profit 33,571
======
Year ended December 31, 2009 (unaudited)
------------------------------------------------
Non - Total
food Real consol-
Supermarkets Retail estate Adjustments idated
------------ ------ ------ ----------- -------
NIS in thousands
------------------------------------------------
Net segment sales 6,863,020 464,266 21,790 - 7,349,076
Inter segment sales - 58,874 - (58,874) -
Operating profit
before other gains
and losses and net
gain from adjustment
of investment property
to fair value 211,122 34,321 12,145 (16,623) 240,965
Rate of operating profit
before other gains and
losses and net gain
from adjustment of
investment property
to fair value 3.1% 6.6% 55.7% - 3.3%
Segment profit 190,882 23,245 32,920 720 247,767
Unallocated corporate
expenses (17,341)
Unallocated corporate
gains due to decrease
in holdings 3,210
-----
Operating profit 233,636
=======
Year ended December 31, 2008 (unaudited)
------------------------------------------------
Non - Total
food Real consol-
Supermarkets Retail estate Adjustments idated
------------ ------ ------ ----------- -------
NIS in thousands
------------------------------------------------
Net segment sales 6,966,839 442,130 20,152 - 7,429,121
Inter segment sales - 55,393 - (55,393) -
Operating profit before
other gains and losses
and net gain from
adjustment of investment
property to fair value 258,168 29,269 7,378 (29,563) 265,252
Rate of operating
profit before other
gains and losses and
net gain from
adjustment of
investment property
to fair value 3.7% 5.9% 36.0% - 3.6%
Segment profit 246,096 29,077 26,445 (2,957) 298,661
Unallocated corporate
expenses (26,606)
Unallocated corporate
gains due to decrease
in holdings 9,781
-----
Operating profit 281,836
=======
Year ended December 31, 2009 (unaudited)
------------------------------------------------
Non - Total
food Real consol-
Supermarkets Retail estate Adjustments idated
------------ ------ ------ ----------- -------
U.S. Dollars in thousands
------------------------------------------------
Net segment sales 1,818,019 122,984 5,772 - 1,946,775
Inter segment sales - 15,596 - (15,596) -
Operating profit before
other gains and losses
and net gain from
adjustment of investment
property to fair value 55,926 9,092 3,217 (4,404) 63,831
Rate of operating profit
before other gains and
losses and net gain from
adjustment of investment
property to fair value 3.1% 6.6% 55.7% - 3.3%
Segment profit 50,565 6,158 8,720 191 65,634
Unallocated corporate
expenses (4,594)
Unallocated corporate
gains due to decrease in
holdings 850
---
Operating profit 61,890
======
SOURCE Blue Square-Israel Ltd.
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