Alon Holdings Blue Square - Israel Ltd. Announces Financial Results for the Third Quarter and First Nine Months of 2010
The Company Presents Continued Improvement in the Operating Indices Despite the Increase in Competition and the Expenses Incurred by the Bee Group
ROSH HA'AYIN, Israel, November 24, 2010 /PRNewswire-FirstCall/ -- After the balance sheet date, the Company completed its 80% acquisition of Dor Alon in consideration for the issue of 20.3 million shares valued at NIS 966 million. Dor Alon's results will be consolidated with the Company's in the fourth quarter (1).
- THE SAME STORE SALES IN THE SUPERMARKET SEGMENT INCREASED BY
0.2% THIS QUARTER COMPARED TO A DECREASE OF 2.5% IN THE COMPARABLE
QUARTER LAST YEAR.
- THE OPERATING PROFIT BEFORE OTHER GAINS AND LOSSES AND
CHANGES IN FAIR VALUE OF INVESTMENT PROPERTY IN THE FIRST NINE MONTHS OF
2010 INCREASED TO 3.5% OF SALES AS COMPARED TO 3.2% IN THE COMPARABLE
PERIOD LAST YEAR.
- DURING THE THIRD QUARTER EDEN TEVA MARKET COMMENCED THE
SUCCESSFUL IMPLEMENTATION OF THE SECOND STAGE OF ITS STRATEGIC
DEVELOPMENT INCLUDING THE CONCEPT OF OPENING EDEN BRIUT STORES WITHIN A
MEGA STORE.
- CONTINUATION OF THE STRATEGIC STEPS IN THE BEE GROUP
INCLUDING THE MOVE OF SOME OF THE COMPANIES TO A SINGLE MODERN LOGISTICS
CENTER LEAD TO ONE-OFF EXPENSES OF NIS 10 MILLION IN THE QUARTER.
Alon Holdings Blue Square-Israel Ltd. (NYSE and TASE: BSI) today announced its financial results for the first nine months and the third quarter ended September, 30, 2010.
KEY FIGURES
Data in NIS (millions) 1-9 1-9 Q3 Q3 1-12
2010 2009 2010 2009 2009
Sales 5,520.3 5,534.2 1,920.8 1,925.5 7,349.1
Gross profit 1,572.8 1,538.0 546.1 533.2 2,058.1
% Gross profit 28.5% 27.8% 28.4% 27.7% 28.0%
Operating income (before
changes in fair value of
investment property and
other gains and losses)
for the period 192.2 179.6 57.1 58.7 241.0
%Operating income (before
changes in fair value of
investment property and
other gains and losses)
for the period 3.5% 3.2% 3.0% 3.1% 3.3%
EBITDA 333.9 311.9 107.6 106.6 418.4
%EBITDA 6.0% 5.6% 5.6% 5.5% 5.7%
Financial expenses, net 107.5 92.0 50.8 44.7 112.7
Net income for the period 61.3 79.4 3.0 29.6 97.8
(1) The quarterly financial statements of Dor Alon in English can be viewed at http://www.bsi.co.il/
Results for the third quarter of the year 2010
Revenues for the third quarter of 2010 were NIS 1,920.8 million (U.S. $524.1 million) compared to revenues of approximately NIS 1,925.5 million in the comparable quarter last year, a decrease of 0.2 %.
The decrease in the revenues compared to the comparable quarter last year is mainly due to the decrease in sales in the "Non-Food" segment partially offset by an increase in Same Store Sales (SSS) and an increase in revenues in the Real Estate segment.
Revenues of the Supermarket segment -an increase in revenues of 0.2% from NIS 1,786.8 million in the third quarter of 2009 to NIS 1,790.5 million (U.S $488.5 million) in the current quarter. The increase in revenues was mainly due to the net opening of 7 stores from the beginning of the third quarter of year 2009 with a total area of 6,100 square meters and the increase in SSS at a rate of 0.2%.
Revenues of the Non- Food segment -a decrease in revenues of 7.5% from NIS 133.1 million in the third quarter of 2009 to NIS 123.1 million (U.S. $33.6 million) in the current quarter. The decrease mainly derived from the "home area" as a result of the difficulties in the move and the deliveries from the new logistics center.
Revenues of the Real Estate segment-rental fees from external parties of NIS 5.6 million in the third quarter of 2009 compared to NIS 7.2 million (U.S. $2.0 million) in the current quarter. The increase in revenues was mainly the result of an increase in rented area.
Gross Profit for the third quarter of 2010 amounted to approximately NIS 546.1 million (U.S. $149.0 million) (approximately 28.4% of revenues) compared to gross profit of approximately NIS 533.2 million (27.7% of revenues) in the comparable quarter of 2009. The increase in the gross profit mainly derives from the improvement in the gross profit in the Supermarket segment as a result of the sales of the private label goods which made up approximately 9% of the sales and as a result of the improvement of the terms of trade with suppliers. This increase was partially set off by the decrease in gross profit in the "Non-Food" segment, as a result of a decrease of sales in this segment.
Selling, General and Administrative Expenses in the third quarter of 2010 amounted to NIS 489.0 million (U.S. $133.4 million) (25.5% of revenues) compared to approximately NIS 474.4 million (24.6% of revenues) in the comparable quarter, an increase of approximately 3.1%. The increase is due to the net increase of new stores, from the increase in advertising expenses in the Real Estate segment due to commencement of building and development projects, mainly the wholesale market.
Operating Profit (before other gains and losses and increases in the fair value of investment property) in the third quarter of 2010 amounted to NIS 57.15 million (U.S$ 15.6 million) (3.0% of revenues) compared to NIS 58.7 million (3.1% of revenues) in the third quarter of 2009, a decrease of 2.8%.
Increase in the Fair Value of Investment Property in the third quarter of 2010, the Company recorded gains from appreciation of investment property in the amount of NIS 5.7 million (U.S$ 1.5 million) compared to NIS 6.7 million in the comparable quarter last year.
Other Gains and (Losses), Net In the third quarter of 2010 the Company recorded other expenses, net of NIS 4.1 million (U.S. $1.1 million), compared to net expenses of NIS 4.9 million in the comparable quarter. The expenses this quarter included costs of certain companies in the Bee Group related to the transfer of the Bee Group companies to the new logistic center in Beer Tuvia, which is expected to serve the Non Food segment, the removal of property and equipment in the Supermarket segment as a result of the closure of branches and the replacement of the cash registers to Windows based cash registers.
Operating Profit before financing expenses, net amounted to approximately NIS 58.7 million (U.S. $16.0 million) (3.1% of revenues) compared to operating profit of NIS 60.5 million (3.1% of revenues) in the third quarter of 2009.
Financial Expenses, net, for the third quarter of 2010 were NIS 50.8 million (U.S. $13.9 million) compared to financial expenses, net of NIS 44.7 million in the comparable quarter last year. The increase in financial expenses, net in this quarter compared to the same quarter last year was mainly due to changes in the value of hedging contracts of the Israeli CPI, which contributed a gain of NIS 0.9 million (U.S. $0.2 million) in this quarter compared to again of NIS 3.2 million in the comparable quarter last year and from the change in the value of the conversion component of the convertible debentures which caused an expense of NIS 4.0 million (U.S. $1.1 million) in the quarter compared to income of NIS 3.3 million in the comparable period last year. On the other hand, the increase in financial expenses, net was compensated by an increase in financial income from the revaluation of the Diners option in the amount of NIS 4.2 million (U.S. $1.1 million).
Taxes on Income for the third quarter of 2010 amounted to NIS 4.8 million (U.S. $1.3 million) (effective tax rate of 61% compared to a statutory tax rate of 25%) compared to a tax benefit of NIS 13.9 million (after neutralizing the tax benefit from the change in the tax rate of NIS 14.2 million the effective tax rate was 2% compared to a statutory tax rate of 26%) in the corresponding quarter. The high effective tax rate as compared to the statutory rate is due to the recording of financial expenses relating to the revaluation of the embedded option of the convertible debentures which are not allowed for tax purposes and the non-creation of deferred tax assets for losses in some of the Group companies.
Net Profit for the third quarter of 2010 amounted to NIS 3.0 million (U.S. $0.8 million) compared to a net income of NIS 29.6 million in the third quarter of 2009. The decrease in the net income in this quarter compared to the corresponding quarter last year derived from the decrease in operating income, the increase in financial expenses and the increase in tax expense as discussed above. The net income for the third quarter of 2010 attributable to equity holders of the Company, was NIS 2.1 million (U.S. $0.6 million), or NIS 0.03 per share (U.S. $ 0.01), while the portion attributable to the non-controlling interests was NIS 0.9 million (U.S. $0.3 million).
Cash Flows in the third quarter of 2010
Cash Flows from Operating Activities Net cash flows provided by operating activities amounted to NIS 154.9 million (U.S. $42.3 million) in the third quarter of 2010 before the acquisition of real estate inventories in the real estate segment in the amount of NIS 36.0 million (U.S. $9.8 million) compared to NIS 169.3 million in the comparative period last year. The decrease in cash flows from operating activities before the acquisition of real estate inventories was mainly due to the timing of the holidays which affected the timing of payments to suppliers net of the receipt of tax returns.
Cash Flows used in Investing Activities Net Cash flows used in investing activities in the third quarter of 2010 amounted to NIS 86.3 million (U.S. $23.5 million) compared to net cash flows of NIS 307.2 million from investing activities in the corresponding quarter of the previous year. The cash flows 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 (U.S. $21.4 million), net investment in marketable securities of NIS 3.7 million (U.S. $1.0 million) and the grant of a loan to a proportionally consolidated company of NIS 8.4 million (U.S. $2.3 million) net of interest received amounting to NIS 3.9 million (U.S. $1.1 million). Cash used in investing activities in the third quarter of 2009 mainly included the proceeds from the realization of a restricted deposit of NIS 389.3 million net of purchases of property and equipment, intangible assets and investment property in a total amount of approximately NIS 72.5 million and the net investment in marketable securities of NIS 12.2 million.
Cash Flows from Financing Activities Net Cash flows used in financing activities amounted to NIS 24.1 million (U.S $6.6 million) in the third quarter of 2010 as compared to net cash used in financing activities of NIS 163.1 million in the corresponding period last year. Cash flows from 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 (U.S. $18.0 million), the repayment of long term loans amounting to NIS 26.2 million (U.S $ 7.1 million), interest paid of NIS 41.1 million (U.S. $11.2 million) net of the consideration for the issue of debentures amounting to NIS 108.6 million (U.S. $29.6 million). The cash flows used in financing activities in the third quarter of 2009 included mainly reduction in short-term credit net of NIS 380.3 million, repayment of long-term loans of NIS 31.9 million, dividend paid to non-controlling interests of subsidiaries of NIS 3 million, conversion of convertible debentures of NIS 13.3 million and interest paid amounting to NIS 35.2 million net of the receipt of long-term loans of NIS 301.0 million.
Comments of Management
Commenting on the financial results, Mr. Zeev Vurembrand, Alon Holdings Blue Square - Israel's President and CEO, said:
"The Company presents an improvement in the rate of operating profits and in the rate of change in SSS compared to the corresponding periods last year. These improvements were made despite the increases in the level of competition in the food retail market.
The material improvement in the results of the Mega Bool chain allow for the continuation of the spread of the chain, which counts 52 branches at the date of publication of these financial statements, nationwide. We intend to continue to extend the spread of the chain so that at the end of 2011 the chain will count 58 branches with a nationwide spread.
Eden Teva Market became Israel's largest health food retail chain, both with regard to the speed of market penetration and with regard to the recognition of the brand name. As a result, Stage Two of its strategic development, including the spread to seven Eden within Mega stores to the end of 2011, was accelerated. During the third quarter we completed the first branch in this format and the indicators, to date, point to very good results. The next branches using this format will be in Rechovot, Modi'in and Jerusalem.
In the Bee Group we are in the process of a strategic restructuring. The Group completed the merger of the head offices and is in the process, from the third quarter, of transferring to the new modern logistics center which will serve the Group for the delivery of non-food items. This transfer leads to expenses, some of them one-off items, which are evidenced in this quarter.
Mega on the Internet doubled its sales in 2010 and, for the first time, passed 1% of the Company's sales. We will continue to invest in this distribution channel whilst intending to show similar growth rates in 2011 as well.
The Company intends to enter the cellular communication area, through the operation of a virtual provider (MVNO). The Company applied for a license to the Ministry of Communications and intends to become a strong player in this area."
Results for the First Nine months of 2010[1]
Revenues for the first nine months of 2010 were NIS 5,520.3 million (U.S.(A) $1,506.2 million), compared to NIS 5,534.2 million in the first nine months of 2009 - a decrease of 0.3 %.
Revenues of the Supermarkets segment - an increase in revenues of 0.2% from NIS 5,145.7 million in the first nine months of 2009 to NIS 5,155.0 million (U.S. $1,406.6 million) in the first nine months of 2010. The main reason for the increase was the net opening of 13 stores from the beginning of 2009, with an area of 15,900 square meters, offset by a 1.3% decrease in same store sales (SSS).
Revenues of the Non-food segment - a decrease in revenues of approximately 6.7% from NIS 372.3 million in the first nine months of 2009 to NIS 347.3 million (U.S. $94.8 million) in the first nine months of 2010. The decrease in revenues was mainly due to a decrease in sales in the infants and houseware sectors offset by an increase in sales in the leisure sector.
Revenues of the Real estate segment - an increase in revenues of approximately 11.1% in the rental income from NIS 16.2 million in the first nine months of 2009 to NIS 18.0 million (U.S. $4.9 million) in the first nine months of 2010. The increase is due to the increase leased area.
Gross Profit of the first half of 2010 amounted to approximately NIS 1,572.8 million (U.S. $ 429.1 million) (approximately 28.5% of revenues) compared to gross profit of approximately NIS 1,538.0 million (27.8% of revenues) in the first half of 2009, an increase of NIS 34.8 million (U.S. $ 9.5 million). The increase in the gross profit margin mainly derives from the reasons described above, in the analysis of the third quarter's results.
Selling, General, and Administrative Expenses for the first nine months of 2010 amounted to approximately NIS 1,380.6 million (U.S. $ 376.7 million) (25.0% of revenues) compared to NIS 1,358.4 million (24.5% of revenues) in the first nine months of 2009, an increase of 1.6%. The main increase was recorded in the supermarkets segment due to the opening of net 13 new stores from the start of 2009, an increase in advertising and marketing expenses and an increase in rental fees as a result of the increase in the Israeli CPI and renewal of rental agreements. This increase was partly set off by a decrease in electricity expenses as a result of efficiency measures and a decrease in the rates. In the real estate segment there was an increase in expenses as a result of the start of construction and development projects, mainly the wholesale market.
Operating Income (before other gains and losses and increase in the fair value of investment property) in the first nine months of 2010 amounted to approximately NIS 192.2 million (U.S $ 52.4 million) (3.5% of revenues) compared to operating income of NIS 179.6 million (3.2% of revenues) in the first nine months of 2009. The increase in the operating income was due to the increase in the gross profit partly offset by an increase in selling, general and administrative expenses, as discussed.
Appreciation of Investment Property In the first nine months of 2010 the Company recorded gains from the appreciation of investment property in the amount of NIS 18.9 million (U.S $ 5.1 million) compared to NIS 8.4 million in the first nine months of 2009. The main increase was recorded for assets that the Company is in the process of building.
Other Gains and losses, Net In the first nine months of 2010 the Company recorded other expenses, net of NIS11.2 million (U.S. $ 3.1 million), compared to other expenses, net of NIS 5.6 million in the first nine months of 2009. In the first nine months of 2010 the other expenses included mainly expenses relating to the transfer of the companies in the Bee group to the new logistics center in Beer Tuvia, the removal of property and equipment in the supermarket segment because of the closure of stores and changing to Windows based cash registers.
Operating Income before financing in the first nine months of 2010 was NIS 199.8 million (U.S. $ 54.5 million) (3.6% of revenues) compared to operating income of NIS 182.4 million (3.3% of revenues) in the first nine months of 2009.
Financial Expenses, Net for the first nine months of 2010 were NIS 107.5 million (U.S. $29.3 million) compared to financial expenses, net of NIS 92.0 million in the first nine months of 2009, an increase of NIS 15.5 million(U.S. $ 4.2 million).
The increase in net finance expenses mainly derived from a reduction in the revaluation to fair value of hedging transactions on the CPI of NIS 20.7 million (U.S. $ 5.6 million) net of an increase in income from investments of NIS 8.0 million (U.S. $2.2 million) and a decrease in finance expenses in the amount of NIS 4.3 million (U.S. $ 1.2 million) resulting from the decrease in the rate of inflation between the periods despite the increase in the long-term debt.
Taxes on Income for the first nine months of 2010 were approximately NIS 30.4 million (U.S. $8.3 million) (33% effective tax rate compared to a statutory tax rate of 25%) compared to NIS 10.9 million (after neutralizing the tax benefit of the change in tax rates of NIS 14.2 million the effective tax rate was 28% compared to a statutory tax rate of 26%) in the first nine months of 2009. The high effective tax rate compared to the statutory rate is due to losses in some of the Group companies for which no deferred tax assets were recorded and expenses which are not allowed for tax purposes.
Net Income for the first nine months of 2010 was NIS 61.3 million (U.S. $ 16.7 million) compared to net income of NIS 79.4 million in the first nine months of 2009. The decrease in the net income in the first nine months of 2010 compared to the first nine months of 2009 mainly derives from an increase in financial expenses and tax expenses partly set of by an increase in operating profit described above. The net income for the first nine months of 2010 attributable to the equity holders of the company was NIS 49.8 million (U.S. $13.6 million), or NIS 1.12 per share (U.S. $ 0.31), while the portion attributable to the non-controlling interests was NIS 11.4 million (U.S. $ 3.1 million).
Cash Flows in the First Nine months of 2010
Cash Flows from Operating Activities Net cash flows deriving from operating activities in the first nine months of 2010 amounted to NIS 362.4 million (U.S. $98.9 million) before the acquisition of real estate inventories in the amount of NIS 157.7 million (U.S. $43.0 million) in the real estate segment compared to NIS 331.7 million in the first nine months of 2009. The increase in cash flows from operating activities before acquisition of real estate inventories derives from the improvement in the operating profit and a tax refund.
Cash Flows from Investing Activities Net Cash flows used in investing activities in the first nine months of 2010 amounted to NIS 463.2 million (U.S. $126.4 million) compared to net cash flows of NIS 171.3 million used in investing activities in the first nine months of 2009. 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 (U.S. $62.2 million) and a net investment in marketable securities of NIS 220.7 million (U.S. $60.2 million), the grant of a loan of NIS 27.4 million (U.S. $7.4 million) to a proportionally consolidated company offset by interest income of NIS 13.8 million (U.S. $3.8 million). Cash flows used in investing activities in the first nine months of 2009 included mainly the purchase of property and equipment, intangible assets and investment property amounting to NIS 172.6 million net investment of NIS 9.4 million in marketable securities and the acquisition of a subsidiary for NIS 4.8 million net of interest receipts in the amount of NIS 8.5 million and proceeds from the realization of property and equipment and investment property in the amount of NIS 7.7 million.
Cash Flows from Financing Activities Net Cash flows used in financing activities in the first nine months of 2010 amounted to NIS 82.4 million (U.S $22.4 million) compared to net cash flow from financing activities of NIS 200.7 million in the first nine months of 2009. 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 (U.S $ 27.2 million) and the payment of interest of NIS 99.6 million (U.S $ 27.2 million), payment of dividends of NIS 75 million (U.S. $20.4 million) to the Company's shareholders and NIS 17.6 million (U.S. $4.8 million) to the non-controlling interests and acquisition of treasury shares of NIS 4.3 million (U.S. $1.2 million). This was offset by the issue of debentures in the amount of NIS 108.6 million (U.S. $29.6 million) and an increase in short term credit net in the amount of NIS 100.3 million (U.S. $27.4 million). Net Cash flows from financing activities in the first nine months of 2009 included mainly the receipt of long term loans of NIS 307.5 million and the increase in short term credit, net of NIS 96.2 million net of the repayment of long term loans of NIS 98.2 million, interest paid of NIS 81 million, redemption of convertible debentures of NIS 13.3 million and dividends paid to non-controlling interests of NIS 13.5 million.
Additional Information
1. On July 15, 2010, the Company announced that as a result of the approval in the shareholders' general meeting of June 28, 2010, and the approval of the Register of Companies in Israel the Company's name had been changed to "Alon Holdings Blue Square - Israel Ltd."
2. As of September 30, 2010, the Company operated 207 supermarkets divided as follows: Mega In Town -121; Mega Bool - 51; Mega - 9; Shefa Shuk - 16; Eden Teva Market -10 and the Bee Group operates 281 branches.
3. EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)[2]in the first nine months of 2010 was NIS 333.9 million (U.S. $ 91.1 million) (6.0 % of revenues) compared to NIS 311.9 million (5.6% of revenues) in the corresponding period of 2009. EBITDA for the third quarter of 2010 amounted to NIS 107.6 million (U.S. $29.3 million) (5.6 % of revenues) compared to NIS 106.6 million (5.5% of revenues) in the corresponding period of last year.
The Company's board of directors resolved, based on the changes and the developments in the Company since 2003, to update the manner of calculating the ratio of net debt to EBITDA for dividend distribution. As of September 30, 2010, the Company meets the new ratio.
4. On June 3, 2010, after receiving all legal approvals, Blue Square Real Estate (BSRE) signed agreements to purchase, along with Gindi Investments 1 Ltd. and an additional corporation controlled by Moshe and Yigal Gindi (hereafter - the acquirers), in equal parts (BSRE's share 50%), leasehold rights for a period ending August 31, 2099 allowing the building on 97,460 square meters in part of the wholesale market complex in Tel Aviv, from the Tel Aviv Municipality and The Wholesale Company for Agricultural Produce in Tel Aviv Ltd. (the sellers) for a basic consideration of NIS 950 million together with the liability to pay additional consideration in certain circumstances. At September 30, 2010 the acquirers had completed the first payment of NIS 258.7 million (U.S. $70.6 million) (BSRE's part - 60%).
On August 18, 2010 BSRE notified Gindi (as defined above) that the Company exercises its option, through a 100% subsidiary, to enter into an agreement to issue 50% of the share capital of Tel Aviv car parks Ltd., a joint venture of Gindi Investments 1 Ltd and an additional corporation controlled by Moshe and Yigal Gindi (hereafter Gindi), that won the auction of the Tel Aviv municipality to build operate and transfer (B.O.T.) the Giv'on car park in Tel Aviv that contains approximately 1,000 car park spaces on four underground levels below an open urban square for a period of 23 years (including the building period).
5. On July 12, 2010, BSRE completed its NIS 110 million Series 'D' Debenture issue in accordance with a shelf prospectus. The Debentures are linked to the Israeli CPI and bear fixed interest of 4.5%. The Debenture principal will be redeemed in four equal annual payments, which will be paid on June 30 in each of the years 2017 to 2020 (inclusive). The Debenture interest will be paid in semi-annual payments on June 30 of each of the years 2011 to 2020 (inclusive) and December 31 of each of the years 2010 to 2019 (inclusive).
6. On August 10, 2010, the Company received a rating of A1 from Midroog for the Debentures up to par value NIS 500 million that the Company will issue. The rating was granted subject to a number of conditions which are detailed in Midroog's report. On September 15, 2010, Midroog affirmed the A1 rating also for the Series A and B Debentures.
Post balance sheet events
1. On October 3, 2010 the Company acquired from its controlling shareholder all its 80% shareholding in Dor Alon Energy in Israel (1988) Ltd. (hereafter - Dor Alon), a company listed on the Tel-Aviv stock exchange. In return for the shares in Dor Alon, the Company issued 20,327,710 shares to Alon in such a way that each share held by Alon in Dor Alon was exchanged for 1.8 shares in the Company. According to the outline of the acquisition, on October 18, 2010 the Company made a dividend distribution of NIS 800 million by way of a capital reduction. The Company received all the legally required approvals for the acquisition and the dividend distribution.
2. On October 11, 2010 the non-controlling interests holders of Bee Group exercised their Put option and sold the remaining 15% of Bee Group to the Company for a total consideration of approximately NIS 24.5 million.
3. During the month of October 2010, the Company raised CPI linked loans of NIS 400 million from Israeli banks. The debt bears annual interest of 2.7% - 2.8%. The debt will be redeemed in ten annual installments so that the first nine payments will amount to 7.5% of the loans and the remainder will be repaid in the tenth installment.
4. On November 9, 2010, following the filing of a Shelf Offering Report, the Company completed its public tender of Series C par value NIS 100 million CPI linked debentures bearing annual fixed interest of 2.5% payable in two semi-annual payments on May 4 and November 4 in each of the years 2011 to 2022. The principal will be repaid in 12 equal payments on November 4 of each of the years 2011 to 2022 (inclusive). The debentures were issued at a discount of 3.2% and for a consideration of NIS 96.8 million. The debentures were rated A1 by the rating agency Midroog.
5. During the month of October 2010 Series B convertible debentures of the Company with a par value of 4.6 million were converted to 761,223 shares. As at November 23, 2010, the par value balance of the convertible debentures which had not yet been converted was NIS 2.8 million.
6. On April 26, 2010 Standard & Poors Maalot entered the rating for the debentures of the Company and BSRE of ilA+ into Credit Watch with negative outlook, due to the Wholesale Market transaction of BSRE. On October 26, 2010, Standard & Poors Maalot reduced the rating for the Company's debentures from ilA+ to ilA-. Also, on this date, the Company and BSRE announced they would terminate their rating agreements with Standard & Poors Maalot. From that date, Midroog (a subsidiary of Moody's) will be the rating agency that will continue to rate the Company's and BSRE's debentures.
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, 2010 - U.S. $1.00 equals NIS 3.665. The translation was made solely for the convenience of the reader.
Alon Holdings Blue Square- Israel Ltd. (hereinafter: "Alon Holdings") operates in three reporting segments: In its supermarket segment, Alon Holdings is the second largest food retailer in the State of Israel. As pioneer of modern food retailing in the region, Alon Holdings, through its 100% subsidiary, Mega Retail Ltd., currently operates 206 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 addition, Alon Holdings holds 79.6% of Dor Alon, a subsidiary listed on the Tel Aviv stock exchange, one of the four largest petrol companies and a leader in the field of convenience stores. Dor Alon operates a chain of 186 petrol stations and 175 convenience stores in different formats in Israel. In its Real Estate segment, Alon Holdings, through its TASE traded 78.39% subsidiary Blue Square Real Estate Ltd., owns, leases and develops yield generating commercial properties.
This press release contains forward-looking statements within the meaning of safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, plans or projections about our business and our future revenues, expenses and profitability. Forward-looking statements may be, but are not necessarily, identified by the use of forward-looking terminology such as "may," "anticipates," "estimates," "expects," "intends," "plans," "believes," and words and terms of similar substance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual events, results, performance, circumstance and achievements to be materially different from any future events, results, performance, circumstance and achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the following: the effect of the recession in Israel on the sales in our stores and on our profitability; our ability to compete effectively against 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 shelf offering report filed in Israel, portions of which were submitted to the SEC on Form 6-K on November 8, 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.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2010
Convenience
translation(A)
December 31, September 30, September
------------
30,
2009 2009 2010 2010
--------- ------- ------- ------------
Audited Unaudited
--------- --------------------------------------
NIS U.S. dollars
------------------------------------- ------------
In thousands
----------------------------------------------------
A s s e t s
CURRENT ASSETS:
Cash and cash
equivalents 612,227 445,085 270,823 73,894
Short-term bank
deposit 67 864 - -
Investment in
securities 212,912 ** 203,909 439,335 119,873
Trade receivables 809,783 798,286 908,026 247,755
Other accounts
receivable 69,504 292,066 195,438 53,326
Derivative financial
instruments 9,690 1,513 8,559 2,335
Income taxes
receivable 84,274 84,520 54,911 14,983
Inventories 514,858 534,628 523,179 142,750
--------- --------- --------- -------
2,313,315 2,360,871 2,400,271 654,916
--------- --------- --------- -------
NON-CURRENT ASSETS:
Property and
equipment, net 1,956,914* 1,961,346* 1,990,441 543,094
Real estate
inventories - - 83,733 22,847
Payments on account of
real estate
inventories and
investment property - - 156,465 42,692
Investment property 421,188* 416,868** 460,791 125,727
Intangible assets, net 409,194 402,775 412,294 112,495
Investments in
associates 4,878 4,787 4,303 1,174
Derivative financial
instruments 12,691 21,106 17,885 4,880
Other long-term
receivables 1,326 1,394 28,916 7,890
Deferred taxes 45,991 42,124 40,201 10,969
--------- --------- --------- -------
2,852,182 2,850,400 3,195,029 871,768
--------- --------- --------- -------
Total assets 5,165,497 5,211,271 5,595,300 1,526,684
--------- --------- --------- ---------
*) Retroactive application, see note 2
**) Reclassified
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2010
Convenience
translation(A)
September 30,
December
31,
September 30,
----------------
2009 2009 2010 2010
-------- ------ ------ --------
NIS U.S. dollars
-------------------------------- ------------
Audited Unaudited
----------------- ------------------------------
In thousands
-------------------------------------------------
Liabilities and equity
CURRENT LIABILITIES:
Credit and loans from banks
and others 274,598 309,643 360,675 98,411
Current maturities of
debentures and convertible
debentures 76,698 75,811 19,724 5,382
Trade payables 917,585 1,199,366 1,026,533 280,091
Other accounts payable and
accrued expenses 494,147 615,873 689,522 188,135
Income taxes payable 6,051 4,061 77 21
Provisions 51,298 42,920 60,435 16,490
--------- --------- --------- -------
1,820,377 2,247,674 2,156,966 588,530
--------- --------- --------- -------
NON CURRENT LIABILITIES:
Long-term loans from banks,
net of current maturities 596,721 542,400 521,157 142,198
Convertible debentures, net
of current maturities 142,021 141,004 117,205 31,980
Debentures, net of current
maturities 1,251,333 953,256 1,466,570 400,156
Derivative financial
instruments 7,591 8,361 7,909 2,158
Liabilities in respect of
employee benefits, net of
amount funded 47,249 48,757 46,855 12,784
Other liabilities 16,202 19,434 13,026 3,554
Deferred taxes 57,279* 44,137 56,289 15,359
--------- --------- --------- ---------
2,118,396 1,757,349 2,229,011 608,189
--------- --------- --------- ---------
Total liabilities 3,938,773 4,005,023 4,385,977 1,196,719
--------- --------- --------- ---------
EQUITY:
Equity attributable to
equity holders of the
Company
Ordinary shares of NIS 1
par value 57,438 57,438 58,486 15,958
Additional paid-in capital 1,030,259 1,030,259 1,042,364 284,410
Other reserves 5,676 10,904 6,978 1,904
Accumulated deficit *(61,049) *(78,697) (85,679) (23,378)
--------- --------- --------- ---------
1,032,324 1,019,904 1,022,149 278,894
Non - controlling interests *194,400 *186,344 187,174 51,071
--------- --------- --------- ---------
Total equity 1,226,724 1,206,248 1,209,323 329,965
--------- --------- --------- ---------
Total liabilities and
equity 5,165,497 5,211,271 5,595,300 1,526,684
--------- --------- --------- ---------
*) Retroactive application, see note 2
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2010
For the For the
Nine months Three months
ended September 30, ended September 30,
------------------- ---------------------
Year ended
December
31,
2009
-------
2009 2010 2009 2010
------- -------- -------- ----------
Audited Unaudited
------- -------------------------------------------
NIS
-------------------------------------------
In thousands (except share and per share data)
------------------------------------------------------
Revenues 7,349,076 5,534,212 5,520,276 1,925,473 1,920,789
Cost of sales 5,291,012 3,996,225 3,947,497 1,392,320 1,374,722
--------- --------- --------- --------- ---------
Gross profit 2,058,064 1,537,987 1,572,779 533,153 546,067
Selling,
general and
administrative
expenses 1,817,099 1,358,401 1,380,598 474,420 488,957
--------- --------- --------- --------- ---------
Operating
profit before
other gains
and losses and
changes in
fair value of
investment
property 240,965 179,586 192,181 58,733 57,110
Other gains 4,699 4,464 1,892 - 89
Other losses 32,803 10,029 13,086 4,927 4,175
Changes in
fair value of
investment
property, net 20,775 8,390 18,857 6,650 5,670
--------- --------- --------- --------- ---------
Operating
profit 233,636 182,411 199,844 60,456 58,694
Finance income 64,780 46,689 28,791 18,405 9,742
Finance
expenses (177,454) (138,649) (136,325) (63,138) (60,566)
Share in
losses of
associates (37) (128) (575) (40) -
--------- --------- --------- --------- ---------
Income before
taxes on
income 120,925 90,323 91,735 15,683 7,870
Taxes on
income 23,124 10,893 30,478 (13,887) 4,821
--------- --------- --------- --------- ---------
Net income for
the period 97,801 79,430 61,257 29,570 3,049
--------- --------- --------- --------- ---------
Attributable
to:
Equity holders
of the Company 77,163 64,720 49,838 25,114 2,113
--------- --------- --------- --------- ---------
Non -
controlling
interests 20,638 14,710 11,419 4,456 936
--------- --------- --------- --------- ---------
Net income per
Ordinary share
or ADS
attributed to
Company
shareholders:
Basic 1.77 1.49 1.12 0.57 0.05
--------- --------- --------- --------- ---------
Fully diluted 1.77 1.49 1.11 0.49 0.05
--------- --------- --------- --------- ---------
Weighted
average number
of shares or
ADSs used for
computation of
income per
share:
Basic 43,558,614 43,505,219 44,405,095 43,717,058 44,642,633
---------- ---------- ---------- ---------- ----------
Fully diluted 43,558,614 43,505,219 44,892,827 44,597,479 44,905,901
---------- ---------- ---------- ---------- ----------
Table continued.
Convenience
translation(A)
for the
Nine months
ended September 30,
2010
---------------------
Unaudited
---------------------
U.S. dollars
---------------------
In thousands (except
share and per share
data)
---------------------
Revenues 1,506,214
Cost of sales 1,077,080
---------------
Gross profit 429,134
Selling, general and administrative expenses 376,698
---------------
Operating profit before other gains and losses 52,436
and changes in fair value of investment property
Other gains 516
Other losses 3,571
Changes in fair value of investment property, net 5,145
---------------
Operating profit 54,526
Finance income 7,856
Finance expenses (37,194)
Share in losses of associates (157)
---------------
Income before taxes on income 25,031
Taxes on income 8,316
---------------
Net income for the period 16,715
---------------
Attributable to:
Equity holders of the Company 13,599
---------------
Non - controlling interests 3,166
---------------
Net income per Ordinary share or ADS
attributed to Company shareholders:
Basic 0.31
---------------
Fully diluted 0.30
---------------
Weighted average number of shares or ADSs
used for computation of income per share:
Basic 44,405,095
---------------
Fully diluted 44,892,827
---------------
For the For the Convenience
Nine months Three months Translation (A)
ended ended for the
September 30, September 30, Nine Months
--------------- -------------- Ended
Year ended September 30,
December
31,
2009
------- 2009 2010 2009 2010 2010
-------- -------- -------- ------
Audited Unaudited Unaudited
------- ---------------------------------- -------------
NIS U.S. dollars
---------------------------------- -------------
In thousands
------------------------------------------- -------------
CASH FLOWS
FROM
OPERATING
ACTIVITIES:
Net cash
provided by
operating
activities(a) 298,445 368,260 203,720 171,167 109,292 55,421
Income tax
paid, net (38,101) (36,610) 1,594 (1,835) 9,566 435
Net cash
provided by
operating
activities 260,344 331,650 204,720 169,332 118,858 55,856
CASH FLOWS
FROM
INVESTING
ACTIVITIES:
Purchase of
property and
equipment (203,889)(155,653) (122,156) (63,214) (41,566) (33,330)
Proceeds from
sale of
property and
equipment 2,581 1,965 556 428 504 152
Purchase of
investment
property (9,435) (8,039) (7,600) (4,732) (3,960) (2,074)
Payments on
account of
real estate
inventories
and
investment
property - - (77,729) - (24,263) (21,208)
Proceeds from
sale of
investment
property 5,700 5,700 - - - -
Investment in
restricted
deposit (470,000)(470,000) - - - -
Proceeds from
collection of
restricted
deposit 470,000 470,000 - 390,015 - -
Purchase of
intangible
assets (20,738) (8,928) (22,049) (4,525) (8,707) (6,016)
Proceeds from
collection of
short-term
bank
deposits, net 139 (657) 67 (672) - 18
Proceeds from
sale of
securities 101,867 64,564 127,310 7,385 10,970 34,737
Investment in
securities (113,966) (73,917) (347,993) (19,578) (14,701) (94,950)
Acquisition
of
subsidiaries
(b) (4,789) (4,789) - - - -
Grant of
loans to
jointly
controlled
companies - - (27,389) - (8,456) (7,473)
Interest
received 11,948 8,464 13,780 2,135 3,920 3,760
Net cash
provided by
(used in)
investing
activities (230,582) (171,290) (463,203) 307,242 (86,259) (126,384)
CASH FLOWS
FROM
FINANCING
ACTIVITIES:
Repayment of
convertible
debentures (13,297) (13,297) (27) (13,269) - (7)
Dividends
paid to
shareholders - (75,000) - - (20,464)
Issuance of
debentures 294,280 108,550 - 108,550 29,618
Dividends
paid to non-
controlling
interests (16,491) (13,523) (17,619) (2,989) - (4,807)
Additional
investment in
subsidiaries
by purchasing
non -
controlling
interests *(8,020) *(8,020) - - - -
Purchase of
treasury
shares - - (4,295) - - (1,172)
Proceeds from
realization
of investment
in subsidiary *10,912 *10,074 - - - -
Receipt of
long-term
loans 387,700 307,500 5,500 301,000 1,000 1,501
Repayment of
long-term
loans (139,060) (98,225) (99,597) (31,864)(26,187) (27,175)
Repayment of
long term
credit from
trade
payables (1,740) (1,305) (1,305) (435) (435) (356)
Proceeds from
exercise of
options in a
subsidiary 2,306 2,306 - - - -
Short-term
credit from
banks and
others, net 76,144 96,214 100,290 (380,346) (65,983) 27,364
Proceeds from
exercise of
options - - 759 - 43 207
Interest paid (93,900) (81,049) (99,609) (35,170) (41,123) (27,178)
Net cash
provided by
(used in)
financing
activities 498,834 200,675 (82,352) (163,073) (24,135) (22,469)
INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS
AND BANK
OVERDRAFTS 528,596 361,035 (340,835) 313,501 8,464 (92,997)
BALANCE OF
CASH AND CASH
EQUIVALENTS
AND BANK
OVERDRAFTS AT
BEGINNING OF
PERIOD 83,138 83,138 611,734 130,672 262,517 166,912
Translation
differences
on cash and
cash
equivalents - - (76) - (156) (21)
BALANCE OF
CASH AND CASH
EQUIVALENTS
AND BANK
OVERDRAFTS AT
END OF PERIOD 611,734 444,173 270,823 444,173 270,823 73,894
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2010
Convenience
translation(A)
For the For the for the
Year ended Nine months Three months Nine months
December 31, ended ended ended
September 30 September 30 September 30
--------------- ------------------
2009 2009 2010 2009 2010 2010
------ ------ ------ ------ ------ ------
Audited Unaudited Unaudited
------- -------------------------------- ------------
NIS U.S. dollars
-------------------------------- ------------
In thousands
(a) Net cash
provided by
operating
activities:
Income
before taxes
on income 120,925 90,323 91,735 15,683 7,870 25,031
Adjustments
for:
Depreciation
and
amortization 165,248 123,814 136,367 45,048 49,075 37,208
Increase in
fair value
of
investment
property,
net (20,775) (8,390)(18,857) (6,650) (5,670) (5,145)
Share in
losses of
associates 37 128 575 40 - 157
Share based
payment 12,166 8,472 5,302 2,853 1,435 1,447
Loss from
sale and
disposal of
property and
equipment
net 3,299 1,573 1,649 1,566 782 450
Provision
for
impairment
of property
and
equipment,
net 19,981 2,410 532 221 163 145
Loss (gain)
from changes
in fair
value of
derivative
financial
instruments (21,250) (24,965) 1,855 (7,013) 1,299 506
Linkage
differences
on monetary
assets,
debentures,
loans and
other long
term
liabilities 52,347 48,189 36,651 31,832 26,025 10,000
Capital loss
from changes
in holdings
in
subsidiaries 911 393 - - - -
Accrued
severance
pay, net 144 (1,154) (671) (862) (877) (183)
Decrease
(increase)
in value of
investment
in
securities,
deposits and
long-term
receivables,
net (4,468) 7,931 (3,055) 868 (1,488) (834)
Interest
paid, net 81,952 72,585 85,829 33,036 37,202 23,418
Changes in
operating
assets and
liabilities:
Investment
in real
estate
inventories - - (87,308) - (4,823) (23,822)
Payments on
account of
real estate
inventories - - (70,352) - (31,164) (19,196)
Increase in
trade
receivables
and other
accounts
receivable (65,468) (276,601) (225,255) (221,189)(218,554) (61,461)
Decreased
(increase)
in
inventories (17,224) (36,985) (8,321) 155 14,162 (2,270)
Increase
(decrease)
in trade
payables and
other
accounts
payable (29,380) 360,537 256,450 275,579 233,855 69,970
-------- ------- ------- ------- ------- ------
298,445 368,260 203,720 171,167 109,292 55,421
-------- ------- ------- ------- ------- ------
* Reclassified
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2010
For the For the
Year ended Nine months Three months
December ended September ended
September
31, 30, 30
---------- ---------------- ------------
2009 2009 2010 2009 2010
---------- ------- ------- ------ -----
Audited Unaudited
---------- -----------------------------
NIS
------------------------------------------
In thousands
------------------------------------------
(b) Acquisition of subsidiaries:
Assets and liabilities at date of
acquisition:
Working capital (excluding cash
and cash equivalents) 2,350 2,350 - - -
Property and equipment, net (297) (297) - - -
Deferred taxes, net (453) (453) - - -
Intangible assets (6,389) (6,389) - - -
------- ------- ----- ------ -----
(4,789) (4,789) - - -
------- ------- ------ ------ -----
(c) Supplementary information on
investing and financing
activities not involving cash
flows:
Conversion of convertible 12,198 12,198 12,394 12,198 -
------- ------- ------ ------ ------
debentures of the company
Purchasing property and equipment
on credit 174 10,201 53,143 10,201 53,143
------- ------- ------ ------ ------
Table continued.
Convenience
translation(A)
for the
Nine months
ended September 30,
2010
-------------------
Unaudited
-------------------
U.S. dollars
-------------------
In thousands
-------------------
(b) Acquisition of subsidiaries:
Assets and liabilities at date of acquisition:
Working capital (excluding cash -
and cash equivalents)
Property and equipment, net -
Deferred taxes, net -
Intangible assets -
----------------
-
----------------
(c) Supplementary information on investing and
financing activities not involving cash flows:
Conversion of convertible debentures of the company 3,382
----------------
Purchasing property and equipment on credit 14,500
----------------
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
SELECTED OPERATING DATA
FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER 30, 2010
(UNAUDITED)
For the Nine Convenience
months ended translation(A)for
September 30 the Three months
ended
September 30
For the Three
months ended
September 30
2009 2010 2009 2010 2010
------- ------ ------ ------ ---------
NIS U.S. dollars
---------------------------------- ------------
Sales (in millions) 5,534 5,520 1,925 1,921 524
Operating profit
before other gains
and losses and
changes in fair
value of investment
property (in
millions) 180 192 59 57 16
EBITDA (in millions) 312 334 107 108 29
EBITDA margin 5.6% 6.0% 5.5% 5.6% NA
Increase (decrease)
in same store sales
(S.S.S) (5.5%) (1.3%) (2.5%) (0.2%) NA
Number of stores at
end of period 203 207 203 207 NA
Stores opened during
the period 10 5 3 1 NA
Stores closed during
the period 1 1 - 0 NA
Total square meters
selling area at end
of period 364,300 370,400 364,300 370,400 NA
Square meters added
(decreased) during
the period, net 9,900 5,500 2,000 500 NA
Sales per square
meter 14,568 13,998 4,896 4,898 1,336
Sales per employee
(in thousands) 759 753 259 252 69
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
RECONCILIATION BETWEEN THE NET INCOME FOR THE PERIOD TO EBITDA
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010
(UNAUDITED)
Convenience
translation(A)
For the For the for the
Year
ended Nine months Three months Nine months
ended ended ended
December 31 September 30, September 30 September 30,
------------ ------------
2009 2009 2010 2009 2010 2010
-------- ------ ------ ------ ----- --------
NIS U.S. dollars
--------------------------------------- ------------
In thousands
----------------------------------------------------
Net income for the
period 97,801 79,430 61,257 29,570 3,049 16,715
Taxes on income 23,124 10,893 30,478 (13,887) 4,821 8,3616
Finance expenses,
net 112,674 91,960 107,533 44,733 50,824 29,338
Share in losses of
associates 37 128 576 40 - 157
Other losses, net 28,104 5,565 11,194 4,927 4,086 3,055
Increase in fair
value of
investment property (20,775) (8,390)(18,857) (6,650) (5,670) (5,145)
Depreciation and
amortization 165,248 123,814 136,367 45,048 49,075 37,208
Share based payment 12,166 8,472 5,302 2,853 1,435 1,447
------- ------- ------- ------- ------- ------
EBITDA 418,379 311,872 333,850 106,634 107,620 91,091
------- ------- ------- ------- ------- ------
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010
(UNAUDITED)
Note 1 - Segment reporting
The Company includes segment information according to IFRS 8. The Company presents three reportable segments: Supermarkets, Non-food (Retail and Wholesale) and Real estate.
Company's three operating segments consist of the following:
(1) Supermarkets -The Company operates the second largest food retail chain in Israel. Through its subsidiary, Mega Retail Ltd. ("Mega Retail"), which operates Supermarket branches,the Company offers a wide range of food and beverage products and "Non-food" items, such as houseware, toys, small electrical appliances, computers and computer accessories, entertainment and leisure products and textile products and "Near-Food" products, such as health and beauty aids, products for infants, cosmetics and hygiene products. As of September 30, 2010, Mega Retail operated 207 supermarkets. This segment also includes properties owned through Blue Square Real Estate ("BSRE"), in connection with the supermarket operation of our stores (including warehouses and offices).
(2) Non-food (Retail and Wholesale)-Through our subsidiary, Bee Group Retail Ltd. ("Bee Group"), Bee group operates as retailer and wholesaler in the Non Food segment.As of September 30, 2010, Bee Group operated 281 non-food Retail outlets, mostly through franchisees, with specialties in houseware and home textile, toys, leisure, and infant.
(3) Real Estate -Through our subsidiary BSRE the Company is engaged in the yield generation from investment properties: mainly commercial centers,logistics centers and offices and land for the purpose of capital appreciation and deriving long-term yield. In addition, BSRE is a partner in the Wholesale market project in Tel Aviv.
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010
(UNAUDITED)
Note 1 - Segment reporting(continued):
Segment analysis for the third quarter and the nine months ended
September 30, 2010:
Three months ended September 30, 2010
----------------------------------------------------------
Non - Total
food
Supermarkets retail Real estate Adjustments Consolidated
and
wholesale
------------ -------------------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 1,790,491 123,070 7,228 - 1,920,789
Inter segment
sales - 11,297 - (11,297) -
------------ -------- ---------- ---------- ----------
Depreciation
and
amortization 49,018 3,057 - - 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) 61,703
Rate of
operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 3.3% 9.7% 9.7% - 3.2%
Segment profit 57,645 (1,974) 6,371 (1,246) 63,288
Unallocated
corporate
expenses (4,593)
----------
Operating 58,695
profit
----------
Three months ended September 30, 2009
----------------------------------------------------------
Non - Total
food
Supermarkets retail Real estate Adjustments Consolidated
and
wholesale
------------ -------------------- ----------- -----------
NIS in thousands
---------------------------------------------------------
Segment sales 1,786,766 133,134 5,573 - 1,925,473
Inter segment
sales - 19,788 - (19,788) -
------------ -------- ---------- ---------- ---------
Depreciation
and
amortization 42,322 2,726 - - 45,048
Operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 49,224 11,802 725 (702) 63,412
Rate of
operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 2.9% 7.7% 13.0% - 3.3%
Segment profit 47,655 10,807 7,375 (702) 65,135
Unallocated
corporate
expenses (4,686)
Gains due to
decrease in
holdings 6
--------
Operating
profit 60,456
--------
Nine months ended September 30, 2010
----------------------------------------------------------
Non - Total
food
Supermarkets retail Real estate Adjustments Consolidated
and
wholesale
------------ -------------------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 5,155,019 347,276 17,981 - 5,520,276
Inter segment
sales - 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 1,331 208,988
Rate of
operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 3.7% 3.4% 28.1% - 3.8%
Segment profit 183,979 7,439 23,902 1,331 216,651
Unallocated
corporate
expenses (16,807)
----------
Operating
profit 199,844
----------
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010
(UNAUDITED)
Note 1 - Segment reporting(continued):
Nine months ended September 30, 2009
----------------------------------------------------------
Non - Total
food
Supermarkets retail Real estate Adjustments Consolidated
and
wholesale
------------ -------------------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 5,145,731 372,268 16,213 - 5,534,212
Inter segment
sales - 50,913 - (50,913) -
------------ -------- ---------- ---------- ----------
Depreciation
and
amortization 115,401 8,413 - - 23,814
Operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 152,849 33,742 6,556 (378) 192,769
Rate of
operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 3.0% 8.0% 40.4% - 3.5%
Segment profit 149,201 28,743 14,946 (378) 192,512
Unallocated
corporate
expenses (13,183)
Gains due to
decrease in
holdings 3,082
----------
Operating
profit 182,411
----------
Year ended December 31, 2009
----------------------------------------------------------
Non - Total
food
Supermarkets retail Real estate Adjustments Consolidated
and
wholesale
------------ -------------------- ----------- ------------
NIS in thousands
----------------------------------------------------------
Segment sales 6,863,020 464,266 21,790 - 7,349,076
Inter segment
sales - 58,874 - (58,874) -
------------ -------- ---------- ---------- ----------
Depreciation
and
amortization 153,347 11,901 - - 165,248
Operating 211,120 34,321 12,145 720 258,306
profit before
other gains
and losses net
and changes in
fair value of
investment
property 211,120 34,321 12,145 720 258,306
Rate of
operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 3.1% 6.6% 55.7% - 3.5%
Segment profit 190,882 23,245 32,920 720 247,767
Unallocated
corporate
expenses (17,341)
Gains due to
decrease in
holdings 3,210
----------
Operating
profit 233,636
----------
Nine months ended September 30, 2010
----------------------------------------------------------
Non - Total
food
Supermarkets retail Real estate Adjustments Consolidated
and
wholesale
------------ -------------------- ----------- ------------
Convenience translation to U.S dollar in thousands
----------------------------------------------------------
Segment sales 1,406,553 94,755 4,906 1,506,214
Inter segment - 10,616 - (10,616) -
sales
------------ -------- ---------- ---------- ----------
Depreciation
and
amortization
Operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 51,667 3,616 1,376 363 57,022
Rate of
operating
profit before
other gains
and losses net
and changes in
fair value of
investment
property 3.7% 3.4% 28.1% - 3.8%
Segment profit 50,198 2,029 6,522 363 59,113
Unallocated
corporate
expenses (4,586)
----------
Operating
profit 54,527
----------
ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.
(FORMERLY BLUE SQUARE - ISRAEL LTD.)
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2010
(UNAUDITED)
Note 2: Effect of initial adoption of the new standards in the reported period -
Effective January 1, 2010, an amendment to IAS 17 came into effect dealing with leases, classification of land and buildings ("the amendment")
The amendment represents part of the annual improvement project of the IASB which was published in April 2009. The amendment cancels the specific directives relating to the classification of land leases, by canceling the inconsistency with the general directives for classifying leases. Under the amendment, the unequivocal determination included in the past in IAS 17, under which a lease of land in which the ownership is not expected to be transferred to the lessee at the end of the lease period will be classified as operating lease was omitted. Under the amendment, the Company will assess the land classification as financial lease or operating lease under the general directives in IAS 17 for classifying leases. The amendment is applicable retroactively for annual periods beginning January 1, 2010 or thereafter. The Company applies the above amendment to IAS 17 effective January 1, 2010 retroactively.
As a result of the application of the amendment, amounts paid in respect of leased land that were classified in the past as operating leases and thus were presented as prepaid expenses, were reclassified as finance leases and accordingly are included within the property and equipment, net.
As a result of the retroactive application, the prepaid expenses balances as of December 31, 2009 and September 30, 2010 were decreased by NIS 193,228 thousand and NIS 189,526 thousand, respectively, and the property and equipment balances were increased by NIS 199,196 thousand and NIS 195,493 thousand, respectively. The balances of NIS 3,915 thousand and NIS 979 thousand, resulting from a change in the computation of the annual expenses were carried to accumulated deficit and non-controlling interests, respectively. The effect on the net income for the six month and annual periods ended September 30, 2009 and December 31, 2009, was immaterial.
[1] The Company operates in three segments: Supermarkets, Non Food and Real Estate. Segmental information is included in this report in Note 1.
[2]Use of financial measures that are not in accordance with Generally Accepted Accounting Principles
EBITDA is a measure that is not in accordance with Generally Accepted Accounting Principles (Non-GAAP) and is defined as income before financial income (expenses) net, other gains (losses) net, changes in fair value of investment property, taxes, depreciation and amortization. It is presented because it is a measure commonly used in the retail industry and is presented as an additional performance measure, since it enables comparisons of operating performances between periods and companies while neutralizing potential differences resulting from changes in capital structures, taxes, age of property and equipment and its related depreciation expenses. EBITDA, however, should not be considered as an alternative to operating income or income for the year as an indicator of our operating performance. Similarly, EBITDA should not be considered as an alternative to cash flow from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under Generally Accepted Accounting Principles (GAAP) and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of our historic operating results nor is it meant to be predictive of potential future results. A reconciliation between our income for the period and EBITDA is presented in the attached condensed financial reports.
Contact:
Alon Holdings Blue Square-Israel Ltd.
Dror Moran, CFO (Email: [email protected])
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
SOURCE Alon Holdings Blue Square Israel Ltd
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