Alon Blue Square Israel Ltd. (NYSE: BSI) Announces The Financial Results For The Second Quarter And The First Half Of 2014 - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Alon Blue Square Israel Ltd. (NYSE: BSI) Announces The Financial Results For The Second Quarter And The First Half Of 2014

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SOURCE Alon Blue Square Israel Ltd.

YAKUM, Israel, Aug. 27, 2014 /PRNewswire/ --

*        Net cash flows provided by operating activities amounted to NIS 193.3 million in this quarter compared to NIS 140.9 million in the first quarter of this year and NIS 193.9 million in the corresponding quarter last year.

*        Operating profit amounted to NIS 40.6 million in this quarter, an increase of 290% compared to the first quarter of this year and an increase of 123% compared to the corresponding quarter last year.

*        Adjusted EBITDA amounted to NIS 108.1 million in this quarter compared to NIS 84.8 million in the first quarter of this year and NIS 103.2 million in the corresponding quarter last year.

*        In the Fueling and Commercial sites segment- operating profit has improved and amounted to NIS 36.9 million compared to NIS 26.7 million in the first quarter this year and NIS 32.7 million in the corresponding quarter last year.

*        In the Supermarkets segment- the Company continues to exercise the strategic plan, which includes the conversion of branches into You, the HD chain of the Company, while during the conversion of the branches they were partly closed thereby affecting the results of the Company and adjustments of Mega in Town and cessation of operation of branches that are not designated to be converted to You chain.  Operating profit in this quarter amounted to NIS 17 million compared to NIS 3.7 million in the first quarter of this year and NIS 23.1 million in the corresponding quarter last year.   

*        In the Real Estate segment – an increase of approximately 42.3% in operating profit in this quarter compared to the corresponding quarter last year resulting from an increase in rented spaces to external parties. BSRE completed in this quarter two material projects, the logistic center in Kibbutz Eyal and the Givon parking lot in Tel Aviv as well as other projects which will contribute to the segment's profitability in the coming quarters.

*        In the Houseware and textile segment - transition into operating profit of NIS 1.6 million in this quarter compared to operating loss of NIS 7.3 million in the corresponding quarter last year following the completion of measures in Na'aman and Vardinon which produce positive results. 

*         Other segments

  • Diners – net income of approximately NIS 7.0 million in this quarter compared to NIS 11.0 million in the corresponding quarter last year.
  • You Phone – continues to maintain its status as the largest MVNO in Israel and continues its marketing and takes actions to increase the brand awareness. An improvement in operating loss of 63% in this quarter compared to the corresponding quarter last year. 

Segment Profits:


2014

2013

Operating Profit[1] in millions of NIS

Q2

Q1

Q2

Fueling and Commercial sites

36.9

26.7

32.7

Supermarkets

17.0

3.7

23.1

Houseware and textile [2]

1.6

5.8

(7.3)

Real Estate

6.9

5.2

4.9

Adjusted EBITDA

108.1

84.8

103.2

 

 



2014

2013

Operating Profit in millions of NIS

H1

H1

Fueling and Commercial sites

63.6

69.2

Supermarkets

20.7

35.1

Houseware and textile

7.4

2.6

Real Estate

12.1

9.6

Adjusted EBITDA

192.9

215.4

Comments of Management
Mrs. Limor Ganot, co-CEO

"Alon Blue Square presents during 2014 an improvement in all operating segments. Like the entire market in Israel, we have seen a decrease in consumption alongside an increased competition and despite that, we have been able to take correct measures, which together with the Passover timing that occurred in the second quarter of this year, had an impact on most of the Group companies.

"BSRE continues to grow and promotes projects so as to realize the great potential of existing assets such as the project for the establishment of 3,000 residential units, public areas and development plans in Seattle which was approved by a U.S. court, residential project above the branch in Yehuda Maccabi street in Tel Aviv, completing the logistic center in Kibbutz Eyal and completing the construction of Givon parking lot in Tel Aviv consisting of 1,000 parking spaces adjacent to the wholesale market project in Tel Aviv as well as other projects.

"Mega continues to implement the strategic plan and discount chain, YOU, is a success.  The conversion of branches to the discount chain, YOU, has an impact on the results of these branches, which were partly closed throughout the conversion period. At the same time, adjustments are made in Mega in Town and the process of discontinuance of the activity of losing branches is implemented in the current format, after the balance sheet date Mega signed agreement in principle to transfer the activity of 8 branches with a total area of 25,000 sq.m. The agreement allows the purchaser to use the purchasing and supply services of Mega for the branches in respect of the transferred activity while utilizing the advantage of size and creating a win-win situation for both parties.

"Dor Alon continues to grow in the convenience stores segment and the fuel quantities sold. This increase alongside an effective and stringent management and decrease in inventory losses assisted in dealing with the increased competition and present an impressive growth in profitability compared to the first quarter of this year and compared to the corresponding period last year.

"We are pleased with the results of Na'aman and Vardinon, which took significant measures and positive results start to show in the sales of SSS and profitability.  

"Diners continues to show good results and plans to take several actions so as to provide a significant value to the card from the standpoint of the customer as well as activities to increase the honoring of the card among business establishments.

"YouPhone maintains its status as the largest MVNO in Israel and has won the product of the year award in the communication segment and as a cellular company providing the best service. The company increases customer loyalty in Mega and Dor Alon chains and contributes to the companies' profitability. In addition, the company takes action to launch other services and products.  

"In the course of 'Tzuk Eitan' operation which started after the end of the quarter, the group companies were harnessed for the benefit of the soldiers in Gaza and we are proud of the group employees who continued to provide service to our customers in this difficult period. We expect that the war period will have an impact on our results in the third quarter but it is not yet possible to quantify or assess the impact." 

Results for the second quarter of 20143

Gross revenues
Revenues (including government levies) in the second quarter of 2014 amounted to NIS 3,643.2 million (U.S. $1,059.7 million) as compared to revenues of NIS 3,695.1 million in the comparable quarter last year, a decrease of 1.4% mainly from decrease in sales of Dor Alon from decrease in fuel prices.  

Revenues from sales, net

Revenues of the Fueling and Commercial sites segment – amounted in this quarter to NIS 1,247.0 million (U.S. $362.7 million) as compared to NIS 1,267.5 million in the corresponding quarter last year, a decrease of 1.6%. The main decrease was due to decrease in fuel prices and the transition by customers to the use of natural gas which price is lower and was partly offset by an increase in retail sales from the timing of the Passover holiday that occurred in the second quarter of this year and last year occurred in the first quarter and from increase in quantitative sales.

Revenues of the Supermarkets segment – amounted in this quarter to NIS 1,419.6 million (U.S. $412.9 million) as compared to NIS 1,456.2 million in the corresponding quarter last year, a decrease of 2.5%. The decrease in sales mainly derived from increased competition, decrease in consumption, conversion of branches to YOU chain which were partly closed during their conversion period and was partly offset by the Passover timing that occurred this year in the second quarter and last year occurred in the first quarter. The segment's revenues do not include branches which were resolved to cease their operations in their current layout and therefore are not included in the segment. Comparative figures were adjusted accordingly. 

Revenues of the Houseware and textile segment – amounted in this quarter to NIS 71.5 million (U.S. $20.8 million) as compared to NIS 50.5 million in the corresponding quarter last year, an increase of 41.6%. The main increase derived from the Passover timing that occurred this year in the second quarter and last year occurred in the first quarter.

Revenues of the Real Estate segment – increase in rental income of 23.2% from NIS 9.9 million in the second quarter of 2013 to NIS 12.2 million (U.S. $3.5 million)  in this quarter. The increase in rental income in this quarter mainly derives from increase in rented spaces to external parties compared to corresponding period last year. 

Gross profit in the second quarter of 2014 amounted to NIS 644.2 million (U.S. $187.4 million) (22.3% of revenues) as compared to gross profit of NIS 631.0 million (21.4% of revenues) in the comparable quarter last year. The increase in the gross profit compared to the corresponding quarter last year was mainly due to the increase in the gross profit in the Houseware and textile segment.

In the Fueling and Commercial sites segment, gross profit amounted to NIS 202.0 million (U.S. $58.8 million), (16.2% of revenues) compared to NIS 196.8 million in the comparable quarter last year (15.5% of revenues), increase of 2.6%. The main increase derives from lower inventory losses in this quarter, increased quantities and was partly offset by increased competition.

In the Supermarkets segment, gross profit amounted to NIS 360.2 million (U.S. $104.8 million), (25.4% of revenues) compared to NIS 368.2 million in the second quarter of 2013 (25.3% of revenues), a decrease of 2.2%. The decrease in gross profit mainly derives from decrease in sales, as aforesaid.

In the Houseware and textile segment, gross profit amounted to NIS 42.1 million (U.S. $12.1 million), (58.8% of revenues) compared to NIS 28.2 million in the second quarter of 2013 (56.0% of revenues), an increase of 49.3%. The increase in gross profit mainly derives from a increase in sales due to the Passover timing and improvement in gross profit rate.   

Selling, general and administrative expenses in the second quarter of 2014 amounted to NIS 619.1 million (U.S. $180.1 million) (21.4% of revenues), compared to expenses of NIS 617.9 million (20.9% of revenues) in the comparable quarter last year. 

In the Fueling and Commercial sites segment, selling, general and administrative expenses amounted to NIS 165.1 million (U.S. $48.0 million) compared to NIS 164.1 million in the second quarter of 2013, an increase of 0.6%, mainly from opening new sites.

In the Supermarkets segment, selling, general and administrative expenses amounted to NIS 343.2 million (U.S. $99.8 million) compared to expenses of NIS 345.1 million in the second quarter of 2013, a decrease of 0.6% in expenses that mainly derives from decrease in expenses due to efficacy measures and was partly offset from increase in expenses following the launch of the YOU chain.

In the Houseware and textile segment, selling, general and administrative expenses amounted to NIS 40.5 million (U.S. $11.8 million) compared to NIS 35.5 million in the second quarter of 2013, an increase of 14.1% in expenses that mainly derives from increase in sales.

In the Real Estate segment, selling, general and administrative expenses amounted to NIS 5.3 million (U.S. $1.5 million) compared to NIS 5.0 million in the second quarter of 2013.

Operating profit (before other gains and losses and increase in fair value of real estate) in the second quarter of 2014 amounted to NIS 25.1 million (U.S. $7.3 million) (0.9% of revenues) as compared to operating profit of NIS 13.1 million (0.4% of revenues) in the comparable quarter last year, an increase of 91.6%. The increase in the operating profit mainly derives from improved operating profit in the Houseware and textile and Fueling and Commercial Sites segments. 

In the Fueling and Commercial sites segment, operating profit in this quarter amounted to NIS 36.9 million (U.S. $10.7 million) compared to NIS 32.7 million in the corresponding quarter, an increase of 12.8%. The increase in operating profit mainly derives from lower inventory losses in this quarter compared to the corresponding quarter last and from the Passover timing.

In the Supermarkets segment, operating profit amounted to NIS 17.0 million (U.S. $4.9 million) compared to operating profit of NIS 23.1 million in the comparable quarter last year and operating profit of NIS 3.7 million in the first quarter of this year, a decrease of 26.4% compared to the corresponding period and an increase of 360% compared to the first quarter of this year.

In the Houseware and textile segment, operating profit amounted to NIS 1.6 million (U.S. $0.5 million) as compared to an operating loss of NIS 7.3 million in the comparable quarter. The transition into operating profit derives from increase in sales and was partly offset from increase in selling, general and administrative expenses.

In the Real Estate segment, the operating profit in this quarter amounted to NIS 6.9 million (U.S. $2.0 million) compared to NIS 4.9 million in the second quarter of 2013, an increase of 40.8%. The increase in the operating profit derives from increase in rental income and was partly offset from increase in selling, general and administrative expenses.

Changes in fair value of investment property in this quarter the Company recorded a profit in the amount of NIS 6.8 million (U.S. $2.0 million) compared to a profit of NIS 5.7 million in the second quarter of 2013.

Other expenses, net other expenses in this quarter amounted to NIS 3.4 million (U.S. $1.0 million) compared to other expenses of NIS 4.0 million in the second quarter of 2013.

Share in gains of associates in this quarter amounted to NIS 12.1 million (U.S. $3.5 million) compared to a share in gains of NIS 3.3 million in the corresponding quarter last year. The increase mainly derived from the revaluation of Tel Aviv mall.

Operating profit in this quarter amounted to NIS 40.6 million (U.S. $11.8 million) (1.4% of revenues) as compared to operating profit of NIS 18.2 million (0.6% of revenues) in the second quarter of 2013, an increase of 123.1%. The increase in operating profit derives mainly from improvement in operating profit and an increase in the Company's share in earnings of associates.

Finance costs, net in this quarter amounted to NIS 62.8 million (U.S. $18.3 million) as compared to net finance costs of NIS 74.9 million in the second quarter of 2013. The decrease in finance costs, net derives from a decrease in the prime interest rate and decrease in the CPI.

Taxes on income tax benefit in this quarter amounted to NIS 3.1 million (U.S. $0.9 million) as compared to tax benefit of NIS 10.9 million in the second quarter of 2013.

Net loss, the loss amounted in this quarter to NIS 19.1 million (U.S. $5.6 million) compared to a loss of NIS 53.8 million in the second quarter of 2013. The loss in this quarter attributed to the Company's shareholders amounted to NIS 28.8 million (U.S. $8.2 million) or NIS 0.44 per share (U.S. $0.13) and the income attributed to non-controlling interests amounted to NIS 9.7 million (U.S. $2.8 million).

Cash flows for the second quarter of 2014

Cash flows from operating activities: Net cash flows provided by operating activities amounted to NIS 193.3 million (U.S. $56.2 million) in the second quarter of 2014 compared to NIS 193.9 million provided by operating activities in the comparable quarter last year.

Cash flows used in investing activities: Net cash flows used in investing activities amounted to NIS 23.2 million (U.S. $6.7 million) in this quarter as compared to net cash flows used in investing activities of NIS 41.7 million in the comparable quarter. Cash flows used in investing activities in this quarter mainly included the purchase of investment property, property and equipment and intangible assets of total NIS 76.7 million (U.S. $22.3 million), offset by proceeds from realization of investment property of NIS 6.5 million (U.S. $1.9 million), proceeds from marketable securities, net, of NIS 33.3 million (U.S. $9.7 million) and interest received of NIS 3.4 million (U.S. $1.0 million). In the second quarter of 2013 the cash flows used in investing activities mainly included the purchase of investment property, property and equipment and intangible assets of NIS 60.6 million, and was offset by proceeds from realization of investment property of NIS 6.2 million, and interest received of NIS 4.2 million.  

Cash flows used in financing activities: Net cash flows used in financing activities amounted to NIS 49.2 million (U.S. $14.3 million) in this quarter as compared to net cash flows used in financing activities of NIS 59.3 million in the corresponding quarter last year. The cash flows used in financing activities this quarter mainly included interest payment of NIS 70.6 million (U.S. $20.5 million) the repayment of debentures of NIS 142.2 million (U.S. $41.3 million), the repayment of long term loans of NIS 68.1 million (U.S. $19.8 million), and changes in short term bank credit of NIS 45.8 million (U.S. $13.3 million) offset by issuance of debentures of NIS 154.4 million (U.S. $44.9 million). The net cash flows used in financing activities in the second quarter of 2013 included mainly interest payments of NIS 66.3 million, repayment of debentures of NIS 141.2 million, repayment of long term loans of NIS 60.9 million, a dividend payment to non-controlling interests of NIS 15.2 million and was partly offset by issuance of debentures of NIS 87.9 million and increase in short term credit of NIS 51.1 million.

Results for the first six months of 2014

Gross revenues
Revenues (including government levies) in the first half of 2014 amounted to NIS 7,091.7  million (U.S. $2,062.7 million) as compared to revenues of NIS 7,487.9 million in the comparable period last year, a decrease of 5.3%  mainly in the Supermarkets and Fueling and Commercial Sites Segments.

Revenues from sales, net

Revenues of the Fueling and Commercial sites segment – amounted in the first half of 2014 to NIS 2,441.2 million (U.S. $710.1 million) as compared to NIS 2,605.0 million in the corresponding period last year, a decrease of 6.3%. The main decrease was due to decrease in fuel prices and was partly offset from an increase in quantitative sales.

Revenues of the Supermarkets segment – amounted in the first half of 2014 to NIS 2,733.6 million (U.S. $795.1 million) as compared to NIS 2,931.3 million in the corresponding period last year, a decrease of 6.7%. The decrease in sales derived from decrease in selling spaces resulting from closing branches, decreasing selling spaces and conversion of 15 branches into YOU chain, which during the conversion period were partly closed, from increased competition and decrease in private consumption. The segment's revenues do not include branches which were resolved to cease their operations in their current layout and therefore are not included in the segment. Comparative figures were adjusted accordingly.    

Revenues of the Houseware and textile segment – amounted in the first half of 2014 to NIS 142.5 million (U.S. $41.4 million) compared to NIS 142.3 million in the corresponding period last year, an increase of 0.1%.

Revenues of the Real Estate segment – amounted in first half of 2014 to NIS 22.5 million (U.S. $6.5 million) compared to NIS 19.3 million in the corresponding period last year, an increase of 16.6%. The increase in revenues in this period mainly derives from increase in rented spaces to external parties.

Gross profit in the first half of 2014 amounted to NIS 1,246.0 million (U.S. $362.4 million) (22.2% of revenues) as compared to gross profit of NIS 1,275.6 million (21.1% of revenues) in the comparable period last year, a decrease of 2.3%. The decrease in the gross profit compared to the corresponding period last year was mainly due to the decrease in the gross profit in the Supermarkets segment.

In the Fueling and Commercial sites segment, gross profit amounted to NIS 392.1 million (U.S. $114.0 million), (16.1% of revenues) compared to NIS 386.8 million in the comparable period last year (14.8% of revenues). The main increase in the gross profit mainly derived from lower inventory losses in this period and increase in quantitative sales. This increase was partly offset from the increased competition in the fuel segment compared to the corresponding period last year.

In the Supermarkets segment, gross profit amounted to NIS 698.4 million (U.S. $203.1 million), (25.5% of revenues) compared to NIS 734.9 million the comparable period last year (25.1% of revenues), a decrease of 5.0%. The decrease in the gross profit is due to decrease in sales, as aforesaid.

In the Houseware and textile segment, gross profit amounted to NIS 86.3 million (U.S. $25.1 million), (60.6% of revenues) compared to NIS 82.3 million the comparable period last year (57.8% of revenues), an increase of 4.9%. 

Selling, general and administrative expenses in the first half of 2014 amounted to NIS 1,221.5 million (U.S. $355.3 million) (21.8% of revenues), compared to expenses of NIS 1,242.1 million (20.6% of revenues) in the comparable period last year, a decrease of 1.7%. 

In the Fueling and Commercial sites segment, these expenses amounted to NIS 328.6 million (U.S. $95.6 million) compared to NIS 317.5 million the comparable period last year, an increase of 3.5%. The main increase derives from opening new sites and from decrease in the provision for doubtful accounts recorded the comparable period last year.

In the Supermarkets segment, selling, general and administrative expenses amounted to NIS 677.7 million (U.S. $197.1 million) compared to expenses of NIS 699.8 million in the first half of 2013, a decrease of 3.2% in expenses that mainly derives from decrease in selling spaces and efficacy measures and was partly offset from costs resulting from launching YOU chain and other real price increases.

In the Houseware and textile segment, these expenses amounted to NIS 78.9 million (U.S. $22.9 million) compared to NIS 79.7 million in the first half of 2013, a decrease of 1.0%.

In the Real Estate segment, these expenses amounted to NIS 10.4 million (U.S. $3.0 million) compared to NIS 9.7 million in the first half of 2013, an increase of 7.2%. The increase in costs derives mainly from costs relating to property maintenance and operation.  

Operating profit (before other gains and losses) in the first half of 2014 amounted to NIS 24.5 million (U.S. $7.1 million) (0.4% of revenues) as compared to NIS 33.5 million (0.6% of revenues) in the comparable period last year, a decrease of 26.9%. The decrease in the operating profit was mainly due to decrease in operating profit of the Supermarkets segment and Fueling and Commercial Sites segments.

In the Fueling and Commercial sites segment, operating profit in this period amounted to NIS 63.6 million (U.S. $18.5 million) compared to operating profit of NIS 69.2 million in the first half of 2013, a decrease of 8.1%. The decrease in operating profit derives from increased competition and was partly offset from an increase of fuel quantities sold in this period. 

In the Supermarkets segment, operating profit in the period amounted to NIS 20.7 million (U.S. $6.0 million) compared to operating profit of NIS 35.2 in the first half of 2013. The decrease in operating profit derives from decrease in sales and was partly offset from decrease in expenses due to the efficacy measures taken, as mentioned above.

In the Houseware and textile segment, operating profit amounted to NIS 7.4 million (U.S. $2.2 million) as compared to an operating profit of NIS 2.6 million in the first half of 2013, an increase of 185%. The increase in operating profit derived from increase in sales, increase in gross profit and decrease in selling, general and administrative expenses.

In the Real Estate segment, the operating profit in this period amounted to NIS 12.1 million (U.S. $3.5 million) compared to NIS 9.6 million in the first half of 2013. The increase in the operating profit derives from increase in rental income.

Changes in fair value of investment property in the first half of 2014 the Company recorded a profit in the amount of NIS 17.3 million (U.S. $5.0 million) compared to a profit of NIS 11.2 million in the corresponding period last year. 

Other expenses, net other expenses in the first half of 2014 amounted to NIS 12.1 million (U.S. $3.5 million) and included costs relating to reducing the selling spaces in Supermarkets segment compared to other expenses of NIS 10.2 million in the first half of 2013.

Share in gains of associates in this period amounted to NIS 21.4 million (U.S. $6.2 million) compared to NIS 2.9 million in the corresponding period last year. The main increase derives from real estate revaluation along with progress of construction of the Tel Aviv mall in the wholesale market project.

Operating profit amounted to NIS 51.1 million (U.S. $14.9 million) (0.9% of revenues) in the first half of 2014 as compared to operating profit of NIS 37.4 million (0.6% of revenues) in the first half of 2013, an increase of 36.6%. The increase in operating profit in this quarter compared to the corresponding period last year mainly derives from increase in the Company's share in the gains of associates, as aforesaid.

Finance costs, net in the first half of 2014 amounted to NIS 95.5 million (U.S. $27.8 million) as compared to net finance costs of NIS 128.7 million in the first half of 2013. The decrease in finance costs, net derives from the impact of the CPI on the Company's financial liabilities some of which were CPI linked. In this period, CPI decreased at a rate of 0.2% compared to an increase of 0.7% in the corresponding period last year and from a decrease in the prime rate.  

Taxes on income tax benefit in the first half of 2014 amounted to NIS 6.5 million (U.S. $1.9 million) as compared to tax benefit of NIS 13.5 million in the first half of 2013.

Loss from continuing operation in the first half of 2014 loss amounted to NIS 37.9 million (U.S. $11.0 million) compared to a loss of NIS 77.8 million in the first half of 2013. The loss from continuing operations in the first half of 2014 attributed to the Company's shareholders amounted to NIS 57.0 million (U.S. $16.6 million) or NIS 0.86 per share (U.S. $0.25) and the income from continuing operations attributed to non-controlling interests amounted to NIS 19.0 million (U.S. $5.5 million).

Net loss from discontinued operation in this period amounted to NIS 3.1 million (U.S. $0.9 million) or NIS 0.05 per share (U.S. $0.01) compared to a loss of NIS 10.0 million in the first half of 2013, which attributed in its entirely to the Company's shareholders.

Cash flows for the first half of 2014

Cash flows from operating activities: Net cash flow provided by operating activities amounted to NIS 334.2 million (U.S. $97.2 million) in the first half of 2014 compared to NIS 503.5 million from operating activities in the comparable period last year. The main decrease derives from a decrease in changes in working capital in the amount of NIS 101.4 million (U.S. $29.5 million), from measures taken by Dor Alon to reduce customer credit days and inventories and tax refunds of NIS 43.3 received in the comparable period last year.

Cash flows used in investing activities: Net cash flows used in investing activities amounted to NIS 136.9 million (U.S. $39.8 million) in this period as compared to net cash used in investing activities of NIS 88.9 million in the first half of 2013. Cash flows used in investing activities in this period mainly included the purchase of investment property, property and equipment and intangible assets of total NIS 158.3 million (U.S. $46.0 million), grant of long term loans, net of NIS 40.8 million (U.S. $11.9 million) and was offset by proceeds from realization of marketable securities, net of NIS 45.3 million (U.S. $13.2 million), and interest received of NIS 8.9 million (U.S. $2.6 million). In the first half of 2013 the cash flows used in investing activities mainly included the purchase of property and equipment, investment property and intangible assets of NIS 111.0 million, investment in marketable securities, net in the amount of NIS 31.7 million, net, grant of long term loans, net of NIS 5.8 million, and was offset by proceeds from realization of investment property of NIS 51.3 million and interest received of NIS 12.9 million.

Cash flows used in financing activities: Net cash flows used in financing activities amounted to NIS 51.9 million (U.S. $15.1 million) in this period as compared to net cash flows used in financing activities of NIS 157.3 million in the corresponding period last year. The cash flows used in financing activities this period mainly included repayment of long term loans of NIS 107.2 million (U.S. $31.2 million), repayment of debentures of NIS 144.6 million (U.S. $42.0 million), interest payments of NIS 112.4 million (U.S. $32.7 million) and a dividend payment to non-controlling interests of NIS 40.3 million (U.S. $11.7 million) and was offset by receiving long term loans of NIS 223.0 million (U.S. $64.9 million) and issuance of debentures of NIS 154.4 million (U.S. $44.9 million).

The net cash flows used in financing activities in the first half of 2013 included mainly repayment of debentures of NIS 143.5 million, interest payments of NIS 128.8 million, decrease in short term bank credit, net of NIS 121.1 million, dividend payment to non-controlling interests of NIS 15.2 million and was offset by issuance of debentures of NIS 240.2 million and receipt of long term loans of NIS 86.8 million.

Additional Information

Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)[4] in the first half of 2014 adjusted EBITDA was NIS 192.9 million (U.S. $56.1 million) (3.4% of revenues) compared to NIS 215.4 million (3.6% of revenues) in the comparable period of 2013.

In the second quarter of 2014 adjusted EBITDA was NIS 108.1 million (U.S. $31.4 million) (3.7% of revenues) compared to NIS 103.2 million (3.5% of revenues) in the second quarter of 2013 and compared to NIS 84.8 million in the first quarter of this year (3.1% of revenues).

Events during the reporting period

Fueling and Commercial sites segment

a.  As of June 30, 2014, Dor Alon operated 209 fueling stations and 215 convenience stores in various formats.

b.  In February 2014, in a joint company owned in equal shares by Dor Alon and a third party, an allocation of land was approved in the southern industrial region of Herzliya, which allows, under the approved urban building scheme, the establishment of a project at a scope of 52,000 square meters, a main area designated for employment. The allocation is subject to several conditions including a payment of capitalized lease fees. The joint company acts to submit an objection on the capitalization fee amount and the continued completion of the transaction with the Land Administration Office.

Supermarkets segment

a.  As of June 30, 2014, Mega operated 211 supermarkets under different formats. The results of branches which were resolved to cease their operations in their current layout are included in the adjustments of segment reporting.

b.  As of June 30, 2014, the Company operated branches in a total area of 347,700 sq.m. During the first half of 2014, three branches with a total area of 6,500 sq.m were closed and two branches with a total area of 3,800 sq.m were opened. In addition, during the first half, commercial spaces in branches at a total area of 9,500 sq.m were reduced.

Sales per square meter in the Supermarkets segment in the second quarter of 2014 amounted to NIS 4,823 (U.S. $1,402) compared to NIS 4,780 in the corresponding quarter last year.
Sales per square meter in the Supermarkets segment in the first half of 2014 amounted to NIS 9,264 (U.S. $2,695) compared to NIS 9,636 in the corresponding period last year.

c.  In the reporting period, the Company classified costs of purchasing inventory and supply chain from selling, general and administrative expenses to cost of sales. Comparative figures were classified accordingly.

d.  Following the strategic plan, Mega signed after the balance sheet date, agreement in principle to transfer the activity of 8 branches with a total area of 25,000 sq.m. Under the agreement, the purchaser will have the option to use the purchasing and supply services of Mega for the branches in respect of the transferred activity and Mega has the option to repurchase these branches at the end of the period defined in the MOU.  

Houseware and textile segment

As of June 30, 2014, the Company operates 114 stores (of which 11 franchised) according to the following breakdown: Na'aman – 66 stores, Vardinon – 48 stores.

Real Estate segment

a.  On February 23, 2014, an ordinary purchase offer of BSRE was completed for the purchase of 7.8% of its issued and outstanding share capital for NIS 160 million.  The purchase offer was responded by 99.2% of BSRE shareholders including the Company. The Company's share in the purchase offer's consideration was NIS 120 million and the balance of NIS 40 million was paid to non-controlling interests and was included in the statements of cash flows used in financing activities under the line item "dividend paid to non-controlling interests". The holding rate of the Company in BSRE, after the purchase offer, is 74.71%.

b.  Wholesale market complex

Sale agreements with apartment purchasers

On or about the date of issuing the report, the residence company entered into commitment for 684 sale agreements with a scope of NIS 1,690 million (including VAT) and received advances of NIS 1,065 million (including VAT).

Commercial spaces in the mall

As of June 30, 2014, lease agreements were signed or are to be signed for 40% of the commercial spaces.

c.  On March 31, 2014, BSRE entered into an agreement with Harel Investments, Insurance and Financial Services Ltd. for obtaining a credit of up to NIS 105 million to finance the BSRE's share in the establishment of the office building in Ra'nana. The amounts used from the credit line will be considered as a loan and will bear variable interest linked to the prime rate. The loan principal is payable in 15 years effective from May 2015. To secure the loan, BSRE pledged its rights in the office building including related rights. The agreement prescribed terms allowing the lenders to put up the loan for immediate repayment, including financial covenants with respect to the project.

d.  Logistic center in Kibbutz Eyal

In June 2014, the construction of the logistic center in Kibbutz Eyal was completed with an area of 28,000 sq.m.

The logistic center was established by a company jointly controlled by BSRE and a third party. At the beginning of July 2014 Mega commenced the operation of the logistic center according to the lease agreement between them.

e.  Point Wells

On April 10, 2014, the Supreme Court of Washington State approved for BSRE's subsidiary a vested right to develop real estate according to "Urban Center" zoning in a scope of 3,000 residential units, public areas and development plans.

f.  Givon Parking Lot – Tel Aviv

The parking lot was established by BSRE and a third party via a jointly controlled company and it includes 1,000 parking spaces. The parking lot obtained a temporary form 4 and is expected to open in the third quarter of this year.

General

Cash balances deposit agreement between the Company and BSRE

In April 2014, monetary balances agreement for three years between the Company and BSRE was approved. Under the agreement, the Company may receive or deposit in BSRE up to NIS 150 million on ON-CALL terms. The Company will provide BSRE, as collateral, a fixed charge on BSRE shares owned by the Company such that the total value of collaterals will not fall below 2. If the rating of the Company's bonds will be lowered by three rating levels, the maximum loan amount that BSRE may deposit in the Company will be reduced.

Sale of Kfar Hasha'shuim

In February 2014, BEE group completed the sale of 65% of its holdings in Kfar Hasha'shuim ,which was classified as discontinued operations, for NIS 13 million which will be payable under the terms of the agreement. BEE group granted the purchaser an option to purchase in two years from consummating the transaction its remaining holdings in Kfar and the purchaser granted an option to sell him the remaining investment at the end of the two years and for six months.

The Company will continue to provide in favor of Bank Hapoalim a comfort letter for the balance of the credit facility of Kfar Hasha'shuim and at the same time the purchaser signed the collateral in respect of the account. In addition, the purchaser committed to decrease every year the debt to the bank and upon the completion of the purchase of all shares by the purchaser, the comfort letter in favor of the bank will expire.

Following is the Company's share in the results of Kfar until the consummation date of the transaction. No gain or loss resulted to the Company from the realization of operations.


Operating results
until the
consummation date of
the transaction

Six months
ended
June 30

Year
ended
December 31


2014

2013

2013


NIS in thousands

Sales

22,155

61,040

114,837

Gross profit

3,329

13,003

23,829

Operating income (loss)

(2,092)

(472)

(8,375)

Loss included in loss from discontinued
   operation in profit and loss

(3,065)

(10,000)

(29,994)

Cash flows used in sale of Kfar:


NIS in thousands

Investments accounted for using equity method

(7,000)

Other long-term receivables

(9,000)

Assets of disposal groups classified as held for sale

93,680

Liabilities of disposal groups classified as held for sale

(79,769)

Cash flows used in sale of Kfar

(2,089)

New Director Appointments

Alon Blue Square announced the appointment of Dan Weiss, Yonel Cohen and Oded Rubinstein  to its board of directors effective today.

Mr. Weiss has been a faculty member at the Faculty of Management of Tel Aviv University since 2003 and is a certified CPA. He received a B.Sc.I.E. in Industrial Engineering and Management from Technion – Israel Institute of Technology, an MBA from Tel Aviv University, and a PhD in managerial economics from Tel Aviv University.

Mr. Cohen was Group Chief Executive Officer of Migdal Insurance and Financial Holdings Ltd. from 2008 until 2013 and holds a Bachelor of Sciences in Mathematics and Computer Sciences from Tel-Aviv University.

Mr. Rubinstein Oded serves as Chief Executive Officer of the Mishkey Hanegev Aguda Shitufit Merkazit l'haklaut ltd. and holds a Bachelor in economics and management from Ruppin Academic Center and MBA from Ben Gurion- Beer Sheva University. 

Issuance of bonds

a.  On January 27, 2014, BSRE completed the exchange of NIS 200 million par value of bonds (Series B) (recorded in the books at a liability value of NIS 238 million) pursuant to a partial exchange tender offer against an expansion of bonds (Series E) at a par value of NIS 265 million. The exchange had no effect on the statement of profit or loss.   

b.  On March 18, 2014, Midroog ratified the rating of P-1 for commercial securities of the Company and also lowered the rating of bonds Series A and C of the Company to A3 stable. In addition, Midroog approved for the Company the issuance of bonds at a scope of NIS 150 million by expanding Series C or a new series.

c.  On April 3, 2014, bonds (Series C of the Company) were expanded by way of a private placement of NIS 150 million par value of bonds (Series C) to institutional investors at a price of 101.3% of their par value, reflecting a return of 3.8%.  

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 June 30, 2014: U.S. $1.00 equals NIS 3.438. The translation was made solely for the convenience of the reader.

Alon Blue Square Israel Ltd. (hereinafter: "Alon Blue Square") operates in four reportable operating segments and is the largest retail company in the State of Israel. In the Fueling and Commercial Sites segment, Alon Blue Square through its 78.43% subsidiary, which is listed on the Tel Aviv stock exchange ("TASE"), Dor Alon Energy in Israel (1988) Ltd is one of the four largest fuel retail companies in Israel based on the number of petrol stations and a leader in the field of convenience stores operating a chain of 209 petrol stations and 215 convenience stores in different formats in Israel. In its supermarket segment, Alon Blue Square, as a pioneer in the modern food retail, through its 100% subsidiary, Mega Retail Ltd., currently operates 211 supermarkets under different formats, each offering a wide range of food products, "Near Food" products and "Non-Food" products at varying levels of service and pricing. In its "Housware and textile" segment, Alon Blue Square, through its TASE traded 77.51% subsidiary, Na'aman Group (NV) Ltd. operates specialist outlets in self-operation and franchises and offers a wide range of "Non-Food" products as retailer and wholesaler. In the Real Estate segment, Alon Blue Square, through its TASE traded 74.71% subsidiary Blue Square Real Estate Ltd., owns, leases and develops income producing commercial properties and projects. In addition, Alon Blue Square through its 100% subsidiary, Alon Cellular Ltd, operates an MVNO network in Israel, through Diners Club Israel Ltd., an associate held at 49%, which operates in the sector of issuance and clearance of YOU credit cards to the customer club members of the group and through Dr. Baby Marketing and Distribution 888 Ltd.  100 % held subsidiary as a retailer and wholesaler in the baby products sector. 

Forward-looking statements

This press release contains forward-looking statements within the meaning of safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements may include, but are not limited to, plans or projections about our business, 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 economic conditions in Israel on the sales in our stores and of our products and on our profitability; our ability to compete effectively against low-priced supermarkets, large fuel companies and our other competitors; enactment of new laws and regulations, including the enactment of recommendations of governmental appointed committees and regulations with respect to the procurement of petroleum products by fuel companies and the price of petroleum products that are subject to regulation; quarterly fluctuations in our operating results that may cause volatility of our ADS and share price; fluctuations in the price of petroleum products and increases in excise tax rates imposed on the sale of petroleum products in Israel; 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; government policies with respect to residential building may have a negative impact on our operations in residential building, 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, 2013.  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.

1 Operating profit (before other gains and losses, changes in fair value of investment property and share in gains of associates) (hereinafter - Operating profit before gains and losses).

2 Effective from this quarter, the Company presents in Houseware and textile segment Na'aman Group's houseware and textile activity. Other activities which were included in this segment are presented in others. Comparative figures were classified accordingly.

3 The Company operates in four reportable segments: Fueling and Commercial sites, Supermarkets, Houseware and textile and Real Estate. Segmental information is included in this report below.

4 Use of financial measures that are not in accordance with Generally Accepted Accounting Principles

Adjusted 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, share in gains of associates, depreciation and amortization in addition to share in adjusted EBITDA of equity accounted investees and share in EBITDA of branches which were resolved to cease their operation under their current layout. It is an accepted ratio in the retail industry. It is presented as an additional performance measure, since it enables comparisons of operating performances between periods and companies while neutralizing potential differences resulting from changes in capital structures, taxes, age of property and equipment and its related depreciation expenses. Adjusted EBITDA, however, should not be related to as a single measure or as an alternative to operating income, another performance indicator and to cash flow information, which are prepared using Generally Accepted Accounting Principles (GAAP) as indicators of profit or liquidity. Adjusted EBITDA does not take the costs of servicing debt and other liabilities into account, including capital expenditures and therefore it does not necessarily indicate the amounts that may be available to the use of the company and in addition Adjusted EBITDA should not be compared to other indicators with similar names reported by other companies because of differences in the calculation of these indicators. See the reconciliation between our net income and Adjusted EBITDA which is presented in this press release.

 

Contact:
Alon Blue Square Israel Ltd.
Limor Ganot, co-CEO
Yehuda van der Walde, CFO
Toll-free telephone from U.S. and Canada: 888-572-4698
Telephone from rest of world: 972-9-961-8504
Fax: 972-9-961-8636
Email: cfo@bsi.co.il

 

ALON BLUE SQUARE ISRAEL LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2014

(UNAUDITED)










Convenience
translation


December 31,

June 30,

June 30,


2013

2013

2014

2014


NIS

U.S. dollars


In thousands

A s s e t s










CURRENT ASSETS:





Cash and cash equivalents

322,579

524,828

468,382

136,237

Investment in securities

498,779

360,270

454,586

132,224

Short-term bank deposits

93,803

95,533

86,074

25,036

Trade receivables

1,221,932

1,306,080

1,187,824

345,499

Other accounts receivable including current
  maturities of loans receivable

286,661

294,515

400,438

116,474

Derivative financial instruments

792

-

801

233

Assets classified as held for sale

-

45,600

8,706

2,532

Assets of disposal groups classified as held for sale

99,166

127,517

-

-

Income taxes receivable

25,223

28,525

9,579

2,786

Inventories

602,013

576,442

569,651

165,692


3,150,948

3,359,310

3,186,041

926,713






NON-CURRENT ASSETS:





Investments accounted for using equity method

962,767

949,806

992,799

288,772

Derivative financial instruments

5,517

3,401

6,503

1,892

Real estate inventories

106,780

106,557

109,750

31,923

Investments in securities

60,259

47,582

62,746

18,251

Loans receivable, net of current maturities

166,926

200,083

127,549

37,100

Property and equipment, net

2,535,084

2,578,213

2,517,319

732,204

Investment property

770,490

603,010

817,595

237,811

Intangible assets, net

1,203,725

1,230,702

1,182,103

343,834

Other long-term receivables

32,612

35,735

29,111

8,467

Deferred taxes

167,376

146,212

202,563

58,919


6,011,536

5,901,301

6,048,038

1,759,173

Total assets

9,162,484

9,260,611

9,234,079

2,685,886






 

 


ALON BLUE SQUARE ISRAEL LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2014

(UNAUDITED)










Convenience
translation


December 31,

June 30,

June 30,


2013

2013

2014

2014


NIS

U.S. dollars


In thousands

Liabilities and shareholders' equity










CURRENT LIABILITIES:





Credit and loans from banks and others

829,812

1,007,909

801,619

233,164

Current maturities of debentures and
  convertible debentures

610,354

590,234

548,083

159,419

Current maturities of long-term loans from banks

251,089

253,612

284,351

82,708

Trade payables

1,235,627

1,353,150

1,305,380

379,691

Other accounts payable and accrued expenses

637,258

644,094

719,424

209,255

Customers' deposits

28,469

28,455

27,881

8,110

Derivative financial instruments

6,484

8,414

9,261

2,694

Income taxes payable

3,199

4,552

6,353

1,848

Provisions

59,190

57,697

51,619

15,014

Liabilities of disposal groups classified as
  held for sale

85,556

88,284

-

-


3,747,038

4,036,401

3,753,971

1,091,903






NON CURRENT LIABILITIES:





Long-term loans from banks and others, net of
  current maturities

1,273,571

1,107,182

1,345,346

391,316

Convertible debentures, net of current maturities

61,486

90,578

60,748

17,670

Debentures, net of current maturities

2,208,228

2,133,100

2,284,158

664,386

Other liabilities

129,292

139,826

122,291

35,570

Derivative financial instruments

2,847

3,510

1,737

505

Liabilities in respect of employee benefits, net of
  amounts funded

71,304

69,484

58,483

17,011

Deferred taxes

183,703

155,476

199,413

58,003


3,930,431

3,699,156

4,072,176

1,184,461

Total liabilities

7,677,469

7,735,557

7,826,147

2,276,364






EQUITY:










Ordinary shares of NIS 1 par value

79,881

79,881

79,881

23,235

Additional paid-in capital

1,219,279

1,219,279

1,219,279

354,648

Other reserves

34,575

28,444

35,086

10,205

Accumulated deficit

(279,611)

(227,333)

(339,650)

(98,792)


1,054,124

1,100,271

994,596

289,296

     Non-controlling interests

430,891

424,783

413,336

120,226

Total equity

1,485,015

1,525,054

1,407,932

409,522

Total liabilities and equity

9,162,484

9,260,611

9,234,079

2,685,886
















 

 

ALON BLUE SQUARE ISRAEL LTD.
CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX AND THREE MONTH PERIOD ENDED JUNE 30, 2014

(UNAUDITED)












Convenience





translation for


Year ended
December 31,

Six months
ended June 30
,

Three months
ended June 30
,

the six months
ended June  30
,


2013

2013

2014

2013

2014

2014


NIS

U.S. dollars


In thousands (except per share data)

Revenues

14,860,869

7,487,944

7,091,650

3,695,142

3,643,232

2,062,725

Less – government levies

2,974,529

1,448,577

1,489,929

745,043

756,382

433,371

Net revenues

11,886,340

6,039,367

5,601,721

2,950,099

2,886,850

1,629,354

Cost of sales

* 9,312,832

* 4,763,764

4,355,697

* 2,319,088

2,242,651

1,266,927

Gross profit

2,573,508

1,275,603

1,246,024

631,011

644,199

362,427

Selling, general and administrative expenses

 *2,472,855

 *1,242,112

1,221,539

* 617,888

619,107

355,306

Operating profit before other gains and losses and changes in
  fair value of investment property

100,653

33,491

24,485

13,123

25,092

7,121

Other gains

3,049

111

4,748

81

692

1,381

Other losses

(24,567)

(10,347)

(16,866)

(4,043)

(4,069)

(4,905)

Increase in fair value of investment property, net

47,589

11,246

17,332

5,687

6,781

5,041

Share in gains of associates

27,211

2,919

21,361

3,308

12,058

6,213

Operating  profit

153,935

37,420

51,060

18,156

40,554

14,851

Finance income

78,168

37,117

33,256

20,328

17,170

9,673

Finance expenses

(332,184)

(165,852)

(128,766)

(95,213)

(79,949)

(37,454)

Finance expenses, net

(254,016)

(128,735)

(95,510)

(74,885)

(62,779)

(27,781)

Loss  before taxes on income

(100,081)

(91,315)

(44,450)

(56,729)

(22,225)

(12,930)

Taxes  benefit

(12,667)

(13,508)

(6,522)

(10,870)

(3,090)

(1,897)








Loss from continued operations

(87,414)

(77,807)

(37,928)

(45,859)

(19,135)

(11,033)

Loss from discontinued operation

(29,994)

(10,000)

(3,065)

(7,982)

-

(892)


(117,408)

(87,807)

(40,993)

(53,841)

(19,135)

(11,925)

Attributable to:







Equity holders of the Company

(145,695)

(97,513)

(60,040)

(55,858)

(28,801)

(17,463)

Non-controlling interests

28,287

9,706

19,047

2,017

9,666

5,540








Loss per ordinary share or ADS attributable to equity
  holders of the company







Basic and fully diluted







Continuing operations

(1.75)

(1.33)

(0.86)

(0.73)

(0.44)

(0.25)

Discontinued operations

(0.45)

(0.15)

(0.05)

(0.12)

-

(0.01)


(2.20)

(1.48)

(0.91)

(0.85)

(0.44)

(0.26)

Weighted average number of shares or ADSs used
  for  computation of earnings per share:







Basic and fully diluted

65,954

65,954

65,954

65,954

65,954

65,954








* Reclassified – see event during the reporting period in Supermarkets segment.


 

 


ALON BLUE SQUARE ISRAEL LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX AND THREE MONTH PERIOD ENDED JUNE 30, 2014

(UNAUDITED)












Convenience






translation


Year  ended

Six months ended

Three months ended

for the six 
months ended


December 31,

June  30,

June  30,

June  30,


2013

2013

2014

2013

2014

2014


NIS

U.S. dollars


In thousands

CASH FLOWS FROM OPERATING
  ACTIVITIES:







Loss  before  taxes  on  income from
  continuing operations

(100,081)

(91,315)

(44,450)

(56,729)

(22,225)

(12,930)

Net loss from discontinued operation (before taxes)

(29,994)

(10,000)

(3,065)

(7,982)

-

(892)

Income tax  received, net

44,258

43,303

3,775

475

8,260

1,098

Adjustments for cash generated from
  operations

690,511

561,509

377,958

258,158

207,221

109,935

Net cash provided by operating activities

604,694

503,497

334,218

193,922

193,256

97,211

CASH FLOWS FROM INVESTING
  ACTIVITIES:







Purchase of property and equipment

(140,007)

(55,764)

(107,543)

(31,572)

(55,449)

(31,281)

Purchase of investment property

(91,041)

(46,558)

(41,341)

(25,696)

(14,638)

(12,025)

Purchase of intangible assets

(12,556)

(8,704)

(9,433)

(3,370)

(6,600)

(2,744)

Proceeds from collection of short-term bank
  deposits, net

2,343

613

7,729

7,954

8,302

2,248

Proceeds from sale of property and equipment

21,186

2,174

631

360

276

184

Proceeds from sale of investment property

51,279

51,279

6,500

6,189

6,500

1,891

Proceeds from sale of  marketable securities

220,264

114,842

120,840

80,762

85,487

35,148

Investment in marketable securities

(379,150)

(146,501)

(75,550)

(78,832)

(52,224)

(21,975)

Investment and loans to associates

(36,685)

(7,366)

(4,696)

(5,134)

(4,005)

(1,366)

Grant of long term loans

(24,258)

(22,840)

(64,287)

(5)

(38)

(18,699)

Collection of long-term loans

99,435

16,996

23,497

3,483

5,731

6,834

Discontinuance of consolidation

-

-

(2,089)

-

-

(608)

Interest received

18,923

12,905

8,879

4,171

3,449

2,583

Net cash used in investing activities

(270,267)

(88,924)

(136,863)

(41,690)

(23,209)

(39,810)








 

 

ALON BLUE SQUARE ISRAEL LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX AND THREE MONTH PERIOD ENDED JUNE 30, 2014

(UNAUDITED)












Convenience






translation


Year ended

Six months ended

Three months ended

for the six
months ended


December 31,

June  30,

June  30,

June  30,


2013

2013

2014

2013

2014

2014


NIS

U.S. dollars


In thousands

CASH FLOWS FROM FINANCING
  ACTIVITIES:







Dividend paid to non-controlling interests

(30,723)

(15,218)

(40,286)

(15,218)

-

(11,717)

Issuance of debentures

732,185

240,180

154,397

87,917

154,397

44,909

Repayment of debentures

(601,147)

(143,534)

(144,568)

(141,157)

(142,162)

(42,050)

Receipt of long-term loans

392,000

86,853

223,014

46,200

123,014

64,867

Repayment of long-term loans

(263,151)

(114,678)

(107,176)

(60,871)

(68,092)

(31,174)

Short-term credit from banks and others, net

(301,789)

(121,059)

(24,938)

51,097

(45,792)

(7,254)

Transactions with non-controlling interests
  in subsidiary without loss of control

50,338

48,711

-

48,711

-

-

Settlement of forward contracts

(9,768)

(9,717)

-

(9,717)

-

-

Interest paid

(250,417)

(128,801)

(112,396)

(66,306)

(70,610)

(32,692)

Net cash used in financing activities

(282,472)

(157,263)

(51,953)

(59,344)

(49,245)

(15,111)

 

INCREASE  IN CASH AND CASH 
  EQUIVALENTS AND BANK OVERDRAFTS

51,955

257,310

145,402

92,888

120,802

42,290

Translation differences on cash and cash
  equivalents

(9)

(1)

(1)

1

(6)

-

BALANCE OF CASH AND CASH EQUIVALENTS
  AND BANK OVERDRAFTS AT BEGINNING OF
  PERIOD

259,045

259,045

310,991

423,465

335,596

90,458

BALANCE OF CASH AND CASH EQUIVALENTS
  AND BANK OVERDRAFTS AT END OF PERIOD

310,991

516,354

456,392

516,354

456,392

132,748

 

ALON BLUE SQUARE ISRAEL LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX AND THREE MONTH PERIOD ENDED JUNE 30, 2014

(UNAUDITED)












Convenience






translation






for the six


Year ended

Six months

Three months

months ended


December 31,

ended June 30,

ended June 30,

June 30,


2013

2013

2014

2013

2014

2014


NIS

U.S. dollars


In thousands









(a)

 Net cash provided by operating activities:








Adjustments for:








Depreciation and amortization

269,141

135,109

134,427

67,827

68,213

39,100


Increase in fair value of investment
  property, net

(47,589)

(11,246)

(17,332)

(5,687)

(6,781)

(5,041)


Share in profit of associates

(27,211)

(2,919)

(21,360)

(3,308)

(12,057)

(6,213)


Dividend received

10,030

4,519

6,184

400

3,459

1,799


Share based payment

(151)

(151)

-

-

-

-


Loss (gain) from sale and disposal of property
  and equipment, net

(2,631)

5,732

2,497

5,579

(811)

726


Provision for impairment of property
  and equipment, net

20,912

6,412

-

6,412

-

-


Loss (gain) from changes in fair value of 
  derivative financial instruments

(8,675)

(3,437)

1,631

133

3,358

474


Linkage differences on monetary assets, debentures,
  loans and other long term liabilities

59,929

21,633

(8,988)

19,770

11,962

(2,614)


Employee benefit liability, net

(7,631)

68

(9,363)

(131)

238

(2,723)


Decrease (increase)  in value of investment in
  securities, deposits and long-term receivables, net

(11,265)

(644)

978

(557)

505

284


Interest paid, net

224,462

115,434

99,659

59,408

67,161

28,987


Changes in operating assets and liabilities:








Investment in real estate inventories

(2,717)

(1,022)

(1,771)

(467)

(1,199)

(515)


Decrease in trade receivables and other accounts

169,936

68,574

14,041

402,475

242,023

4,084


Increase (decrease) in trade payables
and other accounts payable

(9,850)

154,726

141,899

(327,995)

(252,191)

41,274


Decrease  in inventories

53,821

68,721

35,456

34,299

83,341

10,313



690,511

561,509

377,958

258,158

207,221

109,935










(b) Supplementary information on investing and
  financing activities not involving cash flows:








Purchase of property and equipment
  on credit

48,249

14,255

8,842

14,255

8,842

2,572









ALON BLUE SQUARE ISRAEL LTD.

NET LIABILITIES

(UNAUDITED)








Convenience




translation


December 31,

June 30,

June 30,


2013

2013

2014

2014


NIS

U.S. dollars


In thousands


Alon Blue Square*






Cash and cash equivalence

36,974

4,414

191,615

55,734

Investment in securities

135,322

68,674

133,812

38,921

Total assets

172,296

73,088

325,427

94,655

Short term and Long-term debt:





Short term loans from banks

167,748

169,381

117,676

34,228

Current maturities of debentures

112,641

92,801

130,011

37,816

Commercial papers

120,403

132,611

120,377

35,014

Long term loans from banks

141,894

157,756

141,604

41,188

Debentures

226,147

182,811

361,798

105,235

Total debt

768,833

735,360

871,466

253,481

Equity:





Equity attributable to equity holders of
  the company:

1,054,124

1,100,271

994,596

289,296

Total debt, net

(596,537)

(662,272)

(546,039)

(158,826)






* Net of grant of loans or loans received from subsidiaries

 

ALON BLUE SQUARE ISRAEL LTD.

RECONCILIATION BETWEEN NET INCOME FOR THE PERIOD AND ADJUSTED EBITDA

FOR THE SIX AND THREE MONTH PERIOD ENDED JUNE 30, 2014

(UNAUDITED)


















Convenience






translation


Year ended

Six months

Three months

for the six
months ended


December 31,

ended June 30,

ended June 30,

June 30,


2013

2013

2014

2013

2014

2014


NIS in thousands

U.S. dollars
in thousands








Net loss from continuing operations

(87,414)

(77,807)

(37,928)

(45,859)

(19,135)

(11,033)

Tax benefit

(12,667)

(13,508)

(6,522)

(10,870)

(3,090)

(1,897)

Share in gains of associates

(27,211)

(2,919)

(21,361)

(3,308)

(12,058)

(6,213)

Share in adjusted EBITDA of equity
  accounted investees

51,125

28,772

22,125

14,732

12,024

6,435

Share in EBITDA of branches which were
  resolved to cease their operation under their
  current layout

29,460

18,141

11,860

7,526

2,752

3,450

Finance expenses, net

254,016

128,735

95,510

74,885

62,779

27,781

Other losses, net

21,518

10,236

12,118

3,962

3,377

3,524

Changes in fair value of investment property

(47,589)

(11,246)

(17,332)

(5,687)

(6,781)

(5,041)

Depreciation and amortization

269,141

135,109

134,427

67,827

68,213

39,100

Share based payment

(151)

(151)

-

-

-

-

Adjusted EBITDA

450,228

215,362

192,897

103,208

108,081

56,106

ALON BLUE SQUARE ISRAEL LTD.
FOR THE THREE AND SIX MONTH PERIOD ENDED JUNE 30, 2014
(UNAUDITED)

Note 1 - Segment reporting

The Company includes segment information according to IFRS 8. The reporting is based on the Company's organizational structure, the internal reporting, the allocation of resources and the decision-making process. The Company presents four reporting segments: Supermarkets – food retail, Fueling and Commercial sites, Houseware and textile, Real Estate in addition to other segment which includes mainly Cellular activity, the Company's share in the issuance and clearance activity of credit cards and the baby products sector. The segments' results, as reviewed by the Chief Operating Decision Maker (CODM) include the operating profit before financial expenses from continuing operations, including the company's share in gains of associates and excluding impairment of goodwill. The segments' results for prior periods were adjusted in order to reflect the segment's results and the adjustment to the results in the consolidated report for those periods from continuing operations.

The Company's operating segments consist of the following:

(1)      Fueling and commercial sites – Through its subsidiary Dor-Alon the Company is engaged in the development, construction and operation of vehicle fueling stations, adjacent commercial centers and independent convenience stores, marketing of fuel products and other products through the fueling stations and convenience stores and direct marketing of distillates to customers. The fueling and commercial sites segment is presented according to the published financial statements of Dor-Alon, with reclassification of credit card fees and with the amortization of the excess of cost arising at the time of acquisition allocated to the reconciliation between the operating profit of the segment and the consolidated operating profit.

(2)      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 June 30, 2014, Mega Retail operated 211 supermarkets including branches which were resolved to cease their operation under their current layout. This segment also includes properties owned through Blue Square Real Estate ("BSRE"), in connection with the supermarket operation of Mega Retail's stores (including warehouses and offices). The results of branches which were resolved to cease their operation under their current layout including comparative figures that were restated are included in the adjustments of segment results to consolidated profit or loss since the CODM reviews the Supermarkets segment without these branches. The allocation of costs attributed to the branches which were resolved to cease their operation under their current layout was made based on direct costs and joint expenses that will be saved.

(3)      Houseware and textile –through its subsidiary, Na'aman Group (NV) Ltd. ("Na'aman), the Company is engaged as retailer and wholesaler in houseware and textile activities. As of June 30, 2014, Na'aman operated 114 stores, some through franchisees. Effective from this quarter, the Company presents in Houseware and textile segment Na'aman Group's houseware and textile activity. Other activities which were included in this segment are presented in others. Comparative figures were classified accordingly.

(4)      Real Estate – Through its subsidiary BSRE the Company is engaged in generating yield from commercial centers, logistics centers and offices, land for the purpose of capital appreciation and deriving long-term yield as well as in the development of the "Wholesale Market" residency project.

(5)      Others – Alon Blue Square through its 100% subsidiary, Alon Cellular Ltd, operates an MVNO network in Israel and through Diners Club Israel Ltd., an associate held at 49%, which operates in the sector of issuance and clearance of YOU credit cards to the customer club members of the group, by Dr. Baby Marketing and Distribution 888 Ltd.  100 % held subsidiary as a retailer and wholesaler in the baby products sector and by Bee Group Ltd 100% held subsidiary which operates the logistic center in Beer Tuvia.

ALON BLUE SQUARE ISRAEL LTD.

FOR THE THREE AND SIX MONTH PERIOD ENDED JUNE 30, 2014

(UNAUDITED)



Note 1 - Segment reporting (continued):




Three months ended June 30, 2014







Adjustments



Fueling and
Commercial
sites

Supermarkets

Houseware
and textile

Real
Estate

Others

Branches
resolved to
cease their
operation in
their current
layout

Other
adjustments

Total
consolidated


NIS in thousands










Net segment revenues

1,246,961

1,419,560

71,544

12,232

30,189

106,364

-

2,886,850

Inter segment revenues

11,265

-

3,174

-

942

-

(15,381)

-

Gross profit (loss)

201,973

360,166

42,066

12,232

1,691

25,344

727

644,199

Depreciation and amortization

22,523

35,253

1,700

-

2,591

4,044

2,102

68,213

Operating profit (loss) before
  other gains and losses net, share
  in gains (losses) of associates and 
  changes in fair value of investment
  property

36,864

16,976

1,589

6,949

(7,610)

(6,796)

(8,430)

39,542

Segment profit

38,400

15,754

1,739

22,467

(3,257)

(9,555)

(10,544)

55,004

Unallocated corporate expenses








(14,450)

Financial expenses, net








(62,779)

Loss before taxes on income








(22,225)





























Three months ended June 30, 2013







Adjustments



Fueling and
Commercial
sites

Supermarkets

Houseware
and textile

Real
Estate

Others

Branches
resolved to
cease their
operation in
their current
layout

Other
adjustments

Total
consolidated


NIS in thousands










Net segment revenues

1,267,522

1,456,199

50,459

9,900

26,157

139,862

-

2,950,099

Inter segment revenues

9,503

-

5,599

-

-

-

(15,102)

-

Gross profit (loss)

196,785

 *368,187

28,247

9,900

(1,783)

29,749

(74)

631,011

Depreciation and amortization

21,947

35,437

1,382

-

2,711

4,599

1,751

67,827

Operating profit (loss) before
  other gains and losses net, share
  in gains (losses) of associates and
  changes in fair value of investment
  property

32,684

23,126

(7,285)

4,881

(12,165)

(12,124)

(8,398)

20,719

Segment profit

34,847

21,313

(7,685)

6,260

(5,790)

(12,379)

(10,817)

25,749

Unallocated corporate expenses








(7,593)

Financial expenses, net








(74,885)

Loss before taxes on income








(56,729)










* Reclassified – see events during the reporting period in Supermarkets segment.




 

 

ALON BLUE SQUARE ISRAEL LTD.

FOR THE THREE AND SIX MONTH PERIOD ENDED JUNE 30, 2014

(UNAUDITED)




Six months ended June 30, 2014







Adjustments



Fueling and
Commercial
sites

Supermarkets

Houseware
and textile

 

Real
Estate

Others

Branches
resolved to
cease their
operation in
their current
layout

Other
adjustments

Total
consolidated


NIS in thousands










Net segment revenues

2,441,161

2,733,619

142,502

22,519

57,757

204,163

-

5,601,721

Inter segment revenues

18,621

-

12,600

-

2,044

-

(33,265)

-

Gross profit (loss)

392,145

698,421

86,304

22,519

(1,184)

47,758

61

1,246,024

Depreciation and amortization

44,013

69,896

3,111

-

5,209

7,995

4,203

134,427

Operating profit (loss) before
   other gains and losses net, share 
   in gains (losses) of associates and 
   changes in fair value of investment
   property

63,588

20,733

7,381

12,082

(20,877)

(19,854)

(17,766)

45,287

Segment profit

65,485

9,218

7,531

46,506

(9,767)

(25,118)

(21,993)

71,862

Unallocated corporate expenses








(20,802)

Financial expenses, net








(95,510)

Loss before taxes on income








(44,450)











Six months ended June 30, 2013







Adjustments



Fueling and
Commercial
sites

Supermarkets

Houseware
and textile

Real
Estate

Others

Branches
resolved to
cease their
operation in
their current
layout

Other
adjustments

Total
consolidated


NIS in thousands










Net segment revenues

2,604,972

2,931,266

142,294

19,347

49,068

292,420

-

6,039,367

Inter segment revenues

16,514

-

12,463

-

-

-

(28,977)

-

Gross profit (loss)

386,821

 *734,943

82,289

19,347

(5,875)

57,849

229

1,275,603

Depreciation and amortization

43,426

70,960

2,839

-

5,357

9,016

3,511

135,109

Operating profit (loss) before
   other gains and losses net, share
   in gains (losses) of associates and 
   changes in fair value of investment
   property

69,247

35,108

2,593

9,611

(26,929)

(27,156)

(16,773)

45,701

Segment profit

71,958

28,826

2,065

13,234

(16,022)

(28,027)

(22,404)

49,630

Unallocated corporate expenses








(12,210)

Financial expenses, net








(128,735)

Loss before taxes on income








(91,315)










* Reclassified – see events during the reporting period in Supermarkets segment.





 

 

ALON BLUE SQUARE ISRAEL LTD.

FOR THE THREE AND SIX MONTH PERIOD ENDED JUNE 30, 2014

(UNAUDITED)



Note 1 - Segment reporting (continued):




Year ended December 31, 2013







Adjustments



Fueling and
Commercial
sites

Supermarkets

Houseware
and textile

Real
Estate

Others

Branches
resolved to
cease their
operation in
their current
layout

Other
adjustments

Total
consolidated


NIS in thousands










Net segment revenues

5,140,486

5,773,632

273,084

38,369

104,932

555,837

-

11,886,340

Inter segment revenues

39,385

-

27,467

-

2,577

-

(69,429)

-

Gross profit (loss)

788,619

 1,481,685*

158,163

38,369

(13,408)

119,010

1,070

2,573,508

Depreciation and amortization

88,142

138,930

5,935

-

10,436

18,675

7,023

269,141

Operating profit (loss) before
  other gains and losses net, share
  in gains (losses) of associates and 
  changes in fair value of investment
  property

134,751

108,572

(1,065)

18,604

(54,258)

(48,135)

(33,792)

124,677

Segment profit

138,566

99,245

(1,955)

75,015

(31,029)

(55,308)

(46,575)

177,959

Unallocated corporate expenses








(24,024)

Financial expenses, net








(254,016)

Loss before taxes on income








(100,081)



















 


Six months ended June 30, 2014







Adjustments



Fueling and
Commercial
sites

Supermarkets

Houseware
and textile

Real
Estate

Others

Branches
resolved to
cease their
operation in
their current
layout

Other
adjustments

Total
consolidated


U.S dollars in thousands










Net segment revenues

710,053

795,119

41,449

6,550

16,799

59,384

-

1,629,354

Inter segment revenues

5,416

-

3,665

-

595

-

(9,676)

-

Gross profit (loss)

114,062

203,147

25,103

6,550

(344)

13,891

18

362,427

Depreciation and amortization

12,802

20,330

905

-

1,515

2,326

1,222

39,100

Operating profit (loss) before
  other gains and losses net, share
  in gains (losses) of associates and 
  changes in fair value of investment
  property

18,496

6,031

2,147

3,514

(6,073)

(5,775)

(5,169)

13,171

Segment profit

19,047

2,681

2,191

13,527

(2,842)

(7,306)

(6,397)

20,901

Unallocated corporate expenses








(6,050)

Financial expenses, net








(27,781)

Loss before taxes on income








(12,930)










* Reclassified – see events during the reporting period in Supermarkets segment.




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