Blue Square - Israel Ltd. Announces Financial Results for the First Quarter of 2010
ROSH HA'AYIN, Israel, May 12, 2010 /PRNewswire-FirstCall/ -- The company presents in the first quarter continued improvement in the business results and the operating indices.
These results reflect the successful implementation of key parts of the strategic plan.
- The operating profit amounted to 4% of the sales - an
increase of 20.6% in operating income compared to the corresponding
quarter last year.
- The EBITDA rate amounted to 6.4% of the sales.
- The increase in the revenues of the supermarket segment
amounted to 3.8% and 1.2% in sales of same stores.
Blue Square-Israel Ltd. (NYSE and TASE: BSI) today announced its financial results for the first quarter ended March, 31, 2010.
KEY FIGURES
Q1 Q1 1-12
Data in NIS (millions) 2010 2009 2009
Sales 1,830.8 1,764.8 7,349.1
Gross profit 513.8 503.1 2,058.1
% Gross profit 28.1% 28.5% 28.0%
Operating income (before other
gains and losses net and gain
from adjustment of investment
property to fair value) 72.6 60.2 241.0
% Operating income (before other
gains and losses net and gain
from adjustment of investment
property to fair value) 4.0% 3.4% 3.3%
EBITDA 117.7 102.6 418.3
% EBITDA 6.4% 5.8% 5.7%
Financial expenses, net 14.4 12.0 112.7
Net income for the period 37.1 32.3 97.8
Results for the first quarter of the year 2010[1]
Revenues for the first quarter of 2010 were NIS 1,830.8 million (U.S.(1) $493.1 million), an increase of 3.7 % compared to revenues of NIS 1,764.8 million in the first quarter of 2009.
Supermarket segment - an increase in revenues of 3.8% from NIS 1,627.6 million in the first quarter of 2009 to NIS 1,689.9 million (U.S $455.1 million) in the current quarter.
The increase in revenues mainly derived from the opening of seven new stores, net, during the last 12-month period, an increase in the same store sales (SSS) at a rate of 1.2% and from the timing of the Passover holiday occurring this year mainly in the first quarter and last year occurred in the second quarter.
Non- Food segment -an increase in revenues of 2.6% from NIS 131.9 million in the first quarter of 2009 to NIS 135.5 million (U.S. $36.5 million) in the current quarter. The increase mainly derived from the timing of the Passover holiday, as described above.
Real Estate segment - increase in revenues of 3.8% from rental fees from external parties from NIS 5.3 million in the first quarter of 2009 to NIS 5.4 million (U.S. $1.5 million) in the current quarter. The increase derives from the increase of the CPI in the last 12 month period.
Gross Profit of the first quarter of 2010 amounted to NIS 513.8 million (U.S. $ 138.4 million) (28.1% of revenues), an increase of 2.1% compared to gross profit of NIS 530.1 million (28.5% of revenues) in the first quarter of 2009. The increase in the gross profit mainly derives from the increase in the gross profit of the Supermarket segment, offsetting a decrease in the gross profit of the Non Food segment. The gross profit margin decreased from 28.5% in the first quarter of 2009 to 28.1% in the current quarter. The decrease in the gross profit margin mainly derived from an increase in the sales of HD formats ("Mega Bool" and "Shefa Shuk") over the formats characterized by higher gross profit ("Mega" "Mega in Town" and "Eden Teva Market") and from the effect of the increase in the use of gift certificates in the supermarket branches in the current quarter compared to the first quarter of 2009, due to the Passover timing. Furthermore, the high gross profit margin in the first quarter of 2009 was affected by one time participation of suppliers in the launching of the Mega Bool chain.
Selling, General and Administrative Expenses for the first quarter of 2010 amounted to NIS 441.2 million (U.S. $ 118.8 million) (24.1% of revenues) compared to NIS 442.9 million (25.1% of revenues) in the first quarter of 2009, a decrease of 0.4%. The decrease in expenses is mainly due to efficiency measures taken by the Company in the Supermarket segment. Part of the decrease was offset by an increase in the expenses from an addition of 7 new supermarket stores, net, and the Passover timing that caused, along with the increased sales, to an increase in advertising, marketing and other variable expenses.
Operating Profit (before other gains and losses and changes in fair value of investment property) in the first quarter of 2010 amounted to NIS 72.6 million (U.S $ 19.5 million) (4.0% of revenues) compared to the operating income of NIS 60.2 million (3.4% of revenues) in the first quarter of 2009, an increase of 20.6%. The improvement in the operating income was gained mainly from the improvement of the operating income of the Supermarket segment, following an increase in sales, which contributed to an increase in the gross profit and due to the efficiency measures in the Supermarket segment that led to a decrease in selling, general and administrative expenses.
Changes in Fair Value of Investment Property: In the first quarter of 2010, the Company recorded gain from appreciation of investment property in the amount of NIS 2.3 million (U.S $ 0.6 million). In the first quarter of 2009, no change in value of investment property was recorded.
Other Gains and Losses, Net: In the first quarter of 2010, the Company recorded other expenses, net of NIS 1.2 million (U.S. $ 0.3 million), compared to net gains of NIS 2.2 million in the first quarter of 2009. The expenses this quarter mainly included costs of certain companies of Bee Group related to the relocation of Bee Group companies to the new logistic center in Beer Tuvia, which is expected to serve the Non Food segment, in the amount of NIS 0.9 million (U.S $ 0.2 million). Other income in the first quarter of 2009 included an income of NIS 2.5 million in respect of the purchase of 8% of Naamam shares held by the non controlling interest.
Operating Profit before financing expenses, net, in the first quarter of 2010 was NIS 73.6 million (U.S. $ 19.8 million) (4.0% of revenues) compared to operating profit of NIS 62.3 million (3.5% of revenues) in the first quarter of 2009, an increase of 18.1%.
Financial Expenses, net, for the first quarter of 2010 were NIS 14.4 million (U.S. $3.9 million) compared to financial expenses, net, of NIS 12.0 million in the first quarter of 2009. The increase in financial expenses, net, in this quarter compared to the first quarter of 2009 was derived mainly from forward contracts (NIS/CPI), which contributed an expense of NIS 2.3 million (U.S. $0.6 million) in this quarter compared to a financial income of NIS 5.9 million in the first quarter of 2009. The increase in the financial expenses was offset mainly from an increase this quarter compared to the corresponding quarter last year in financial income from securities of NIS 3.7 million (U.S. $1.0 million) and from a decrease in financial expenses this quarter compared to the corresponding quarter last year from revaluation of financial instruments of NIS 3.0 million (U.S. $0.8 million).
Taxes on Income for the first quarter of 2010, amounted to NIS 21.5 million (U.S. $5.8 million) (effective tax rate of 36.7% compared to a statutory tax rate of 25%) compared tax expenses of NIS 17.9 million (effective tax rate of 35.6% compared to a statutory tax rate of 26%) in the corresponding quarter.
The effective tax rate derived from losses and some expenses for which no deferred taxes were recorded 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 first quarter of 2010 was NIS 37.1 million (U.S. $ 10.0 million) compared to a net income of NIS 32.3 million in the first quarter of 2009. The increase in the net income in this quarter compared to the corresponding quarter last year derived from increase in sales, 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 first quarter of 2010 attributable to equity holders of the Company, was NIS 28.8 million (U.S. $7.7 million), or NIS 0.65 per ADS (U.S. $ 0.18), while the portion attributable to the share of to non-controlling interest was NIS 8.3 million (U.S. $2.2 million).
Cash Flows in the first quarter of 2010
Cash Flows from Operating Activities: Net cash flows provided by operating activities in the first quarter of 2010 amounted to NIS 21.5 million (U.S. $ 5.8 million) compared to cash flows provided by operating activities amounted to NIS 30.1 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 decrease in the balances of trade receivables in this quarter mainly from the timing of payment dates to suppliers and increase in the scope of import.
Cash Flows used in Investing Activities: Net Cash flows used in investing activities in the first quarter of 2010 amounted to NIS 49.5 million (U.S. $13.6 million) compared to net cash flows of NIS 51.1 in investing activities in the corresponding quarter of the previous year. The cash flows used in investing activities in the first quarter of 2010 mainly included the purchase of property and equipment, intangible assets and investment property in a total amount of NIS 38.7 million (U.S. $10.4 million) and net investment in marketable securities of NIS 16.2 million (U.S. $4.4 million) net of interest received amounting to NIS 5.4 million (U.S. $1.5 million). Cash used in investing activities in the first quarter of 2009 mainly included the purchase of property and equipment, intangible assets and investment property in a total amount of NIS 59.7 million.
Cash Flows used in Financing Activities: Net Cash flows used in financing activities in the first quarter of 2010 amounted to NIS 63.0 million (U.S $ 17.0 million) compared to net cash used in financing activities of NIS 9.5 million in the corresponding period last year. Cash flows used in financing activities in the first quarter of 2010 included repayment of long term loans amounting to NIS 38.6 million (U.S $ 10.4 million), dividend distributed of NIS 75 million (U.S $ 20.2 million), dividend paid to non controlling interest in associates of NIS 14.3 million (U.S $ 3.9 million), purchase of Company's shares by the Company in the amount of NIS 4.3 million (U.S $ 1.2 million) interest paid in the amount of NIS 38.6 million (U.S $ 10.4 million), net of increase in short term credit of NIS 107.7 million (U.S $ 29.0 million). Cash flows used in financing activities in the first quarter of 2009 mainly included repayment of long term loans of NIS 30.5 million, and interest paid in the amount of NIS 35.4 million, net of increase in short term credit of NIS 59.4.
Comments of Management
Commenting on the financial results, Mr. Zeev Vurembrand, Blue Square's President and CEO, said: "the results of the first quarter of 2010 reflect the implementation of the key parts of the strategic plan as well as the results of the efficiency plan implemented by the Company in 2009.
"You" Club, with over 650 thousand members reached the identified revenue turnover rate of the club of 60% of Mega format sales, compared to 15% in the corresponding quarter last year. In the current quarter, the Company launched a new members club for the Shefa Shuk format, which mainly targets the Ultra Orthodox segment and offers a wide range of relevant content worlds. As of the date of publishing the financial statements, the club has over 40,000 members. The company has an additional club that targets the customers of the Eden Teva Market format and offers content world of health and organic food. This club with 70,000 members constitutes 70% of the chain's revenue.
The Company continues to open new supermarkets in accordance with the multi-annual plan. In this quarter, the Mega Bool format opened 2 branches, now reaching 49 branches. Furthermore, we opened the 120th branch of the Mega in Town format. The Mega in Town format will continue to lead the values of freshness, service and convenience in the neighborhood and city center branches.
The Company took several efficiency measures in 2009 where some of the results were reflected in 2009 and are shown more significantly in the results of the first quarter of 2010.
The Eden Teva Market format operated 9 branches during the first quarter and for the first time it presents an operating balance along with an impressive increase in sales and in the sales of same store sales.
These results were achieved despite the competition in the food retail market which is expected to continue in the foreseeable future, however, we believe that our preparedness and the tools at our disposal will enable us to continue and successfully deal with the existing market conditions.
Additional Information
1) As of March 31, 2010, the Company operated 206 supermarkets in the following formats: Mega In Town -120; Mega Bool - 49; Mega - 11; Shefa Shuk - 17; Eden Teva Market - 9.
2) Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA[2])
In the first quarter of 2010, the EBITDA was NIS 117.7 million (U.S. $ 31.7 million) (6.4 % of revenues) compared to NIS 102.6 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 March 31, 2010, the Company meets the new ratio.
3) 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.
4) 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.
5) In the first quarter of 2010, the issued and outstanding capital of the Company was increased by NIS 13 million (U.S 3.5 million) following the conversion of convertible debentures to 288,844 shares and exercise of options granted to the Company's managers into 630,000 shares.
6) On April 15, 2010, Blue Square Real Estate (BSRE) executed minutes, which was contingent upon the approval of the general meeting of BSRE shareholders, to enter into agreements to purchase, along with Gindy Investments 1 Ltd. and an additional corporation controlled by Moshe and Yigal Gindy, leasehold rights in a land of 97,460 sq.m for a period ending August 31, 2099 in part of the wholesale market complex in Tel Aviv, from Tel Aviv Municipality and The Wholesale Company for Agricultural Produce in Tel Aviv Ltd. (the sellers) for a total consideration of NIS 950 million. The general meeting of BSRE was summoned to convene in order to approve the transaction on June 2, 2010.
7) On April 26, 2010, Standard & Poors Maalot entered the rating of ilA+ for the debentures of the Company to Credit Watch with negative ramifications, due to the wholesale market transaction of BSRE.
8) The Company considers acquiring Dor Alon Energy Israel (1988) Ltd. (Dor Alon) from its controlling shareholder Alon Fuel Co. Israel (Alon). Under such acquisition, the Company will acquire from Alon all its holdings, approximately 80% in Dor Alon. In return for Dor Alon shares, the Company will issue to Alon shares that will significantly increase the issued and outstanding share capital of the Company. According to the outline of the acquisition, the Company considers dividend distribution by way of capital reduction. At this stage, the terms were not yet agreed upon and there is no assurance that this transaction will be consummated. The acquisition and the capital reduction are subject to approvals, as required by law.
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 March 31, 2010: U.S. $1.00 equals NIS 3.713. 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 207 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.
BLUE SQUARE - ISRAEL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF MARCH 31, 2010
(UNAUDITED)
Convenience
translation(a)
December
31 March 31, March 31,
2009 2009 2010 2010
(Unaudited)
NIS U.S. dollars
In thousands
A s s e t s
CURRENT ASSETS:
Cash and cash
equivalents 612,227 58,433 523,489 140,988
Investment in
securities 212,912 193,105 226,783 61,078
Short term bank
deposits 67 207 - -
Restricted deposit - 470,000 - -
Trade receivables 809,783 834,361 854,229 230,064
Other accounts
receivable 69,504 300,210** 328,472 88,465
Derivative financial
instruments 9,690 - 7,391 1,991
Income taxes receivable 84,274 72,347 51,629 13,905
Inventories 514,858 581,049 550,948 148,384
_________ _________ _________ _________
2,313,315 2,509,712 2,542,941 684,875
_________ _________ _________ _________
NON-CURRENT ASSETS:
Investment in
associates 4,878 4,831 4,303 1,159
Derivative financial
instruments 12,691 4,908 16,976 4,572
Other long term
receivables 1,326 1,395 5,926 1,596
Property and equipment,
net 1,956,914* 1,929,607* 1,954,758 526,463
Investment property 421,188* 411,547* 423,804 114,141
Intangible assets and
deferred charges 409,194 406,366 410,527 110,565
Deferred taxes 45,991 48,413 41,901 11,285
_________ _________ _________ _________
2,852,182 2,807,067 2,858,195 769,781
_________ _________ _________ _________
Total assets 5,165,497 5,316,779 5,401,136 1,454,656
_________ _________ _________ _________
*) Restatement, see note 2
**) Reclassified
Convenience
translation(a)
March 31,
December
31, March 31,
2009 2009 2010 2010
(Unaudited)
NIS U.S. dollars
In thousands
Liabilities and equity
CURRENT LIABILITIES:
Credit and loans from banks
and others 274,598 735,062 371,890 100,159
Current maturities of
debentures and convertible
debentures 76,698 28,334 75,234 20,262
Trade payables 917,585 1,110,030 938,421 252,739
Other accounts payable and
accrued expenses 494,147* 668,770** 704,689 189,791
Income taxes payable 6,051 7,861 3,905 1,052
Provisions 51,298 41,003 45,676 12,302
_________ _________ _________ _________
Total current liabilities 1,820,377 2,591,060 2,139,815 576,304
_________ _________ _________ _________
NON-CURRENT LIABILITIES:
Loans from banks, net of
current maturities 596,721 313,665 568,428 153,091
Convertible debentures, net
of current maturities 142,021 129,351 135,245 36,425
Debentures, net of current
maturities 1,251,333 980,230 1,244,196 335,092
Other liabilities 16,202* 39,322* 16,118 4,341
Derivatives financial
instruments 7,591 15,800 5,845 1,574
Liabilities in respect of
employee benefits, net of
amounts funded 47,249 49,923 48,584 13,085
Deferred taxes 57,279 67,365 58,864 15,853
_________ _________ _________ _________
Total long - term
liabilities 2,118,396 1,595,656 2,077,280 559,461
_________ _________ _________ _________
Total liabilities 3,938,773 4,186,716 4,217,095 1,135,765
_________ _________ _________ _________
EQUITY:
Share capital -
Ordinary shares of NIS 1 par
value 57,438 57,094 58,357 15,717
Additional paid-in capital 1,030,259 1,018,405 1,042,364 280,734
Other reserves 5,676 5,647 4,896 1,319
Accumulated deficit (61,049) (121,584) (109,797) (29,571)
_________ _________ _________ _________
1,032,324 959,562 995,820 268,199
Non - controlling interest 194,400 170,501 188,221 50,692
_________ _________ _________ _________
Total equity 1,226,724 1,130,063 1,184,041 318,891
_________ _________ _________ _________
5,165,497 5,316,779 5,401,136 1,454,656
_________ _________ _________ _________
*) Restatement, see note 2
BLUE SQUARE - ISRAEL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS PERIODS
ENDED MARCH 31, 2010
(UNAUDITED)
Convenience
translation
For the
Year Three months three months
Ended Ended March
December 31, Ended March 31, 31,
2009 2009 2010 2010
(Unaudited)
(U.S.
(NIS) dollars)
In thousands (except share and per share data)
Sales 7,349,076 1,764,788 1,830,824 493,085
Cost of sales 5,291,012 1,261,701 1,317,070 354,719
_________ _________ _________ _________
Gross profit 2,058,064 503,087 513,754 138,366
Selling, general and
administrative expenses 1,817,099 442,919 441,170 118,818
_________ _________ _________ _________
Operating profit before
other gains and losses,
net and gain from
adjustment of investment
property to fair value 240,965 60,168 72,584 19,548
Other gains 4,699 2,725 956 257
Other losses (32,803) (563) (2,187) (589)
Net gain from adjustment
of investment property
to fair value 20,775 - 2,274 612
_________ _________ _________ _________
Operating profit 233,636 62,330 73,627 19,828
Finance income 64,780 10,979 14,955 4,028
Finance expenses (177,454) (22,977) (29,379) (7,910)
Losses of associates (37) (84) (576) (155)
_________ _________ _________ _________
Income before taxes on
income 120,925 50,248 58,627 15,791
Taxes on income 23,124 17,900 21,533 5,800
_________ _________ _________ _________
Net income for the
period 97,801 32,348 37,094 9,991
_________ _________ _________ _________
Attributable to:
Equity holders of the
company 77,163 26,535 28,756 7,746
_________ _________ _________ _________
Non - controlling
interest 20,638 5,813 8,338 2,245
_________ _________ _________ _________
Net income per Ordinary
share attributed to
Company shareholders or
ADS:
Basic 1.77 0.61 0.65 0.18
_________ _________ _________ _________
Fully diluted earnings 1.77 0.61 0.65 0.18
_________ _________ _________ _________
Weighted average number
of shares or ADS used
for computation of
income per share:
Basic 43,558,614 43,372,819 43,986,924 43,986,924
_________ _________ _________ _________
Fully diluted 43,558,614 43,372,819 44,505,439 44,505,439
_________ _________ _________ _________
BLUE SQUARE - ISRAEL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW FOR
THE THREE MONTHS ENDED MARCH 31, 2010
(UNAUDITED)
Convenience
translation
for the
Three
Year Three months months
Ended
December Ended March
31, Ended March 31, 31,
2009 2009 2010 2010
(Unaudited)
NIS U.S dollars
In thousands
CASH FLOWS FROM OPERATING
ACTIVITIES:
Income before taxes on income 120,925 50,248 58,627 15,791
Income tax received (paid) (38,101) (15,133) 15,712 4,232
Adjustments to reflect the
cash flows from operating
activities (a) 177,520 (4,981) (52,822) (14,230)
_________ _________ _________ _________
Net cash provided by operating
activities 260,344 30,134 21,517 5,793
_________ _________ _________ _________
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property, plant
and equipment (203,889) (53,331) (31,261) (8,419)
Purchase of investment
property (9,435) (2,329) (342) (92)
Purchase of intangible assets (25,527) (4,013) (7,119) (1,917)
Investment in restricted
deposit (470,000) - - -
Proceeds from collection of
restricted deposit 470,000 - - -
Proceeds from collection of
short-term bank deposits, net 139 - 67 18
Proceeds from sale of
property, plant and equipment 2,581 501 - -
Proceeds from investment
property 5,700 5,700 - -
Proceeds from marketable
securities 101,867 34,203 44,449 11,971
Investment in marketable
securities (113,966) (33,393) (60,686) (16,344)
Interest received 11,948 1,583 5,420 1,460
Net cash used in investing _________ _________ _________ _________
activities (230,582) (51,079) (49,471) (13,323)
_________ _________ _________ _________
CASH FLOWS FROM FINANCING
ACTIVITIES:
Dividend paid to shareholders - - (75,000) (20,199)
Dividend paid to non-
controlling interest (16,491) - (14,298) (3,951)
Purchase of Company's shares
by the Company - - (4,295) (1,157)
Purchase of non - controlling
interest (8,020)* (6,607)* - -
Issuance of debentures 294,280 - - -
Receipt of long-term loans 387,700 4,000 - -
Repayment of long-term loans (139,060) (30,488) (38,637) (10,406)
Repayment of long term credit
from trade payables (1,740) (435) (435) (117)
repayment of convertible
debentures (13,297) - - -
Short-term credit from banks
and others, net 76,144 59,418 107,691 29,004
Proceeds from exercise of
options in a subsidiary 2,306 - - -
Proceeds from realization of
investment in subsidiary 10,912* - - -
Proceeds from exercise of
stock options granted to
employees - - 630 170
Interest paid (93,900) (35,384) (38,646) (10,408)
_________ _________ _________ _________
Net cash provided by (used in)
financing activities 498,834 (9,496) (62,990) (16,964)
_________ _________ _________ _________
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS AND BANK
OVERDRAFT 528,596 (30,441) (90,944) (24,494)
BALANCE OF CASH AND CASH
EQUIVALENTS AND BANK OVERDRAFT
AT BEGINNING OF PERIOD 83,138 83,138 611,734 164,755
_________ _________ _________ _________
BALANCE OF CASH AND CASH
EQUIVALENTS AND BANK OVERDRAFT
AT END OF PERIOD 611,734 52,697 520,790 140,261
_________ _________ _________ _________
BLUE SQUARE - ISRAEL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
THE THREE MONTHS ENDED MARCH 31, 2010 (CONTINUED)
(UNAUDITED)
Convenience
translation
for the
Year Three months Three months
Ended
December Ended March
31, Ended March 31, 31,
2009 2009 2010 2010
(Unaudited)
NIS U.S dollars
In thousands
(a) Adjustments for:
Income and expenses
not involving cash
flows:
Depreciation and
amortization 165,248 39,774 43,205 11,636
Net gain from
adjustment of
investment property
to fair value (20,775) - (2,274) (612)
Share in profits
losses of associates 37 84 576 155
Share - based payment 12,166 2,685 1,901 512
Loss (gain) from sale
and disposal of
property, plant and
equipment 3,299 (358) 148 40
Loss from impairment
of property, plant
and equipment and
intangible assets,
net 19,981 - 124 33
Loss (gain) from
changes in fair value
of derivative
financial instruments (21,250) (2,556) 3,023 814
Linkage differences
on monetary assets,
long-term loans and
other liabilities,
net 52,347 (7,310) (12,063) (3,249)
Capital loss (gain)
from changes in
holding in
subsidiaries 911 (2,544) - -
Increase (decrease)
in liabilities for
employee rights, net 144 12 1,335 359
Decrease (increase)
in value of
investment in
securities, deposit
and long-term
receivables, net (4,468) 2,296 629 169
Interest paid, net 81,953 33,801 33,226 8,948
Changes in operating
assets and
liabilities:
Increase in trade
receivables and other
accounts receivable (65,468) (320,642)** (308,014) (82,956)
Increase in
inventories (17,224) (83,969) (36,090) (9,720)
Increase (decrease)
in trade payables and
other accounts
payable (29,381) 333,746** 221,452 59,642
_________ _________ _________ _________
177,520 ( 4,981) (52,822) (14,230)
_________ _________ _________ _________
* Reclassification- section 42a to IAS 7 prescribes that cash flows deriving from changes in ownership rights in a subsidiary with results that are not loss of control, will be classified as cash flows from financing activities. IAS 7 determines that an entity will apply these changes in annual period effective January 1, 2009 and thereafter.
** Reclassified
BLUE SQUARE - ISRAEL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
THE THREE MONTHS ENDED MARCH 31, 2010 (CONTINUED)
(UNAUDITED)
Convenience
translation
for the
Year Three months Three months
Ended
December
31, Ended March 31, Ended March 31,
2009 2009 2010 2010
Unaudited
NIS U.S dollars
In thousands
Supplementary information on
investing and financing
activities not involving
cash flows:
Conversion of convertible
debentures into shares of
the company 12,198 - 12,394 3,338
_________ _________ _______ _________
Purchase of property, plant
and equipment on credit 438 15,707 3,678 990
_________ _________ _______ _________
Restricted deposit against
receipt of a short term loan - 470,000 - -
_________ _________ _______ _________
Dividend declared to
minority in subsidiary - 3,667 - -
_________ _________ _______ _________
BLUE SQUARE - ISRAEL LTD.
SELECTED OPERATING DATA FOR THE THREE MONTHS
ENDED MARCH 31, 2010
(UNAUDITED)
Convenience
translation
for the
Year Three months Three months
Ended
December Ended March
31, Ended March 31, 31,
2009 2009 2010 2010
Unaudited
U.S dollars
Sales (in
millions) 7,349.1 1,764.8 1,830.8 493.1
Operating
income
before other
income
(expenses)
and increase
in fair
value of
investment
property (in
millions) 240.9 60.2 72.6 19.5
EBITDA (in
millions) 418.3 102.6 117.7 31.7
EBITDA
margin 5.7% 5.8% 6.4% N.A
Increase
(decrease)
in same
store sales* (3.9%) %(7.1) 1.2% N.A
Number of
stores at
end of
period 203 199 206 N.A
Stores
opened
during the
period 11 5 3 N.A
Stores
closed
during the
period 2 - - N.A
Total square
meters at
end of
period 365,000 359,500 370,700 N.A
Square
meters added
during the
period, net 10,500 5,000 5,700 N.A
Sales per
square meter 19,023 4,562 4,578 1,232.9
Sales per
employee (in
thousands) 997 232 248 66.8
BLUE SQUARE - ISRAEL LTD.
RECONCILIATION BETWEEN PROFIT FOR THE PERIOD TO EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2010
(UNAUDITED)
Convenience
translation
for the
Year Three months Three months
Ended
December 31, Ended March 31, Ended March 31,
2009 2009 2010 2010
Unaudited
NIS U.S dollars
In thousands
Income for the period 97,801 32,348 37,094 9,991
Taxes on income 23,124 17,900 21,534 5,800
Finance expenses, net 112,674 11,998 14,424 3,882
Share in losses of associates 37 84 576 155
Other expenses (income), net 28,104 (2,162) 1,231 332
Net gain from adjustment of
investment property to fair value (20,775) - (2,274) (612)
Depreciation and amortization 165,248 39,774 43,205 11,636
Benefit component in grant of
options 12,166 2,685 1,901 512
_______ _______ _______ _______
EBITDA 418,379 102,627 117,691 31,696
_______ _______ _______ _______
BLUE SQUARE - ISRAEL LTD.
FOR THE THREE MONTHS ENDED MARCH 31, 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, 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 March 31, 2010, Mega Retail operated 206 supermarkets. This segment also includes properties owned through Blue Square Real Estate ("BSRE"), in connection with the supermarket operation of our stores (including warehouses and offices).
(2) Non-food (Retail and Wholesale) -Through our subsidiary, Bee Group Retail Ltd. ("Bee Group"), Bee group operates as retailer and wholesaler in the non food segment. As of March 31, 2010, Bee Group operated 266 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 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.
BLUE SQUARE - ISRAEL LTD.
FOR THE THREE MONTHS ENDED MARCH 31, 2010 (UNAUDITED)
Note 1 - Segment reporting (continued):
Segment analyses for the first quarter ended March 31, 2010:
Three months ended March 31, 2010 (unaudited)
Non-food Real Total
Supermarkets Retail estate Adjustments consolidated
NIS in thousands
Net segment
sales 1,689,895 135,515 5,414 - 1,830,824
Inter
segment
sales - 16,755 - (16,755) -
_________ _________ _________ _________ _________
Depreciation
and
amortization 39,434 3,771 - - 43,205
Operating
profit
before other
gains and
losses net
and gain
from
adjustment
of
investment
property to
fair value 59,617 18,505 970 (1,223) 77,869
Rate of
operating
profit
before other
gains and
losses net
and gain
from
adjustment
of
investment
property to
fair value 3.5% 12.2% 17.9% - 4.3%
Segment 58,363 18,529 3,243 (1,223) 78,912
profit
Unallocated
corporate
expenses (5,285)
________
Operating
profit 73,627
_________
Three months ended March 31, 2009 (unaudited)
Non-food Real Total
Supermarkets Retail estate Adjustments consolidated
NIS in thousands
Net segment
sales 1,627,577 131,931 5,280 - 1,764,788
Inter
segment
sales - 20,809 - (20,809) -
_________ _________ _________ _________ _________
Depreciation
and
amortization 36,652 3,122 - - 39,774
Operating
profit
before other
gains and
losses net
and gain
from
adjustment
of
investment
property to
fair value 44,528 18,219 2,404 (362) 64,789
Rate of
operating
profit
before other
gains and
losses net
and gain
from
adjustment
of
investment
property to
fair value 2.7% 11.9% 45.5% 3.7%
Segment
profit 44,447 17,918 2,404 (362) 64,407
Unallocated
corporate
expenses (4,621)
Unallocated
corporate
gains
(losses) due
to decrease
in holdings 2,544
Operating _______
profit 62,330
_______
Year ended December 31, 2009 (unaudited)
Non-food Real Total
Supermarkets Retail estate Adjustments consolidated
NIS in thousands
Net segment 6,863,020 464,266 21,790 - 7,349,076
sales
Inter
segment
sales - 58,874 - (58,874) -
_________ _________ _________ _________ _________
Depreciation
and
amortization 153,347 11,901 - - 165,248
Operating
profit
before other
gains and
losses net
and gain
from
adjustment
of
investment
property to
fair value 211,120 34,321 12,145 720 258,306
Rate of
operating
profit
before other
gains and
losses net
and gain
from
adjustment
of
investment
property to
fair value 3.1% 6.6% 55.7% - 3.5%
Segment 190,882 23,245 32,920 720 247,767
profit
Unallocated (17,341)
corporate
expenses
Unallocated
corporate
gains due to
decrease in
holdings 3,210
Operating ________
profit 233,636
________
BLUE SQUARE - ISRAEL LTD.
FOR THE THREE MONTHS ENDED MARCH 31, 2010 (UNAUDITED)
Note 1 - Segment reporting (continued):
Three months ended March 31, 2010 (unaudited)
Non-food Real Total
Supermarkets Retail estate Adjustments consolidated
Convenience translation to U.S dollar in thousands
Net segment
sales 455,129 36,498 1,458 - 493,085
Inter segment
sales - 4,512 - (4,512) -
_________ _________ _________ _________ _________
Depreciation
and
amortization 10,620 1,016 - - 11,636
Operating
profit before
other gains
and losses net
and gain from
adjustment of
investment
property to
fair value 16,055 4,984 261 (329) 20,971
Rate of
operating
profit before
other gains
and losses net
and gain from
adjustment of
investment
property to
fair value 3.5% 12.2% 17.9% - 4.3%
Segment profit 15,716 4,990 874 (329) 21,251
Unallocated
corporate
expenses (1,423)
________
Operating
profit 19,828
________
BLUE SQUARE - ISRAEL LTD.
FOR THE THREE MONTHS ENDED MARCH 31, 2010 (UNAUDITED)
Note 2: the effect of initial adoption of the new standards in the reported period -
Effective January 1, 2010, the amendment to IAS 17 came into effect, leases, classification of land and buildings ("the amendment").
The Above amendment represents part of the annual improvement project of IASB which was published in April 2009. This amendment cancels the specific directives relating to the classification of land lease, in order to cancel the inconsistency with the general directives for classifying leases. Under the amendment, the unequivocal determination that was in the past in IAS 17, was omitted, under which lease of land in which the ownership of such land is unpredictable to be transferred to the lessee at the end of the lease period - will be classified as operating lease. Under the amendment, the Company will assess the land classification as financial lease or operating lease under the general directives in IAS 17 for classifying leases. The amendment is applicable retroactively for annual periods beginning January 1, 2010 or thereafter. The Company applies the above amendment to IAS 17 effective January 1, 2010 retroactively.
The following is the effect in the accounting policy due to the initial adoption of the amendment to IAS 17 on the comparative figures presented under the financial information for the interim period:
As previously The effect of As reported in
reported retroactive the interim
implementation financial
statements
NIS in thousands
Statement of financial
position as of March 31,
2009
The effect on assets and
liabilities:
Prepaid expenses for
operating leases 191,515 (191,515) -
_________ _________ _________
Property plant and
equipment, net 1,732,124 197,483 1,929,607
_________ _________ _________
Investment property 417,668 (6,121) 411,547
_________ _________ _________
Liabilities to Israel 6,121 (6,121) -
_________ _________ _________
Land Administration (*)
Deferred taxes 66,291 1,074 67,365
_________ _________ _________
The effect on equity:
Shareholders equity
attributed to the
company's shareholders :
Accumulated deficit (125,499) 3,915 (121,584)
_________ _________ _________
Non - controlling 169,522 979 170,501
_________ _________ _________
interest
Total equity 1,125,169 4,893 1,130,062
_________ _________ _________
Statement of financial
position as of December
31, 2009
The effect on assets and
liabilities:
Prepaid expenses for
operating leases 193,228 (193,228) -
_________ _________ _________
Property and equipment,
net 1,757,718 199,196 1,956,914
_________ _________ _________
Investment property 424,936 (3,748) 421,188
_________ _________ _________
Liabilities to Israel
Land Administration(*) 3,748 (3,748) -
_________ _________ _________
Deferred taxes 56,205 1,074 57,279
_________ _________ _________
The effect on equity:
Shareholders equity
attributed to the
company's shareholders :
Accumulated deficit (64,964) 3,915 (61,049)
_________ _________ _________
Non - controlling
interest 193,421 979 194,400
_________ _________ _________
Total equity 1,221,831 4,893 1,226,724
_________ _________ _________
(*) Included in "Other accounts payable and accrued expenses" and "Other liabilities".
---------------------------------
[1] The Company operates in three segments: Supermarkets, Non Food and Real Estate. A segment information report 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 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.
Contact:
Blue Square-Israel Ltd.
Dror Moran, CFO
Toll-free telephone from U.S. and Canada: +1-888-572-4698
Telephone from rest of world: +972-3-928-2220
Fax: +972-3-928-2299
Email: [email protected]
SOURCE Blue Square Israel Ltd
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