ALON BLUE SQUARE ISRAEL LTD
Alon Blue Square Israel Ltd.
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
May 27, 2015 - Yakum
The Company's revenues, net of government fess, in the first quarter of 2015 amounted to NIS 2.5 billion compared to NIS 2.7 billion in the first quarter of 2014. The decrease in revenues between periods mainly derived from a decrease in fuel prices in the Fueling and Commercial sites segment.
Operating profit in the first quarter of 2015 amounted to NIS 1.4 million compared to a loss of NIS 74.9 million in the fourth quarter of 2014 and a profit of NIS 10.5 million in the first quarter of 2014.
Cash flow from operating activities amounted to NIS 171.1 million compared to NIS 140.9 million in the corresponding quarter last year and NIS 27.5 million in the fourth quarter of
2014. The main increase in cash flows derived from changes in the working capital in the amount of NIS 33.7 million. Adjusted EBITDA amounted to NIS 81.3 million in the first quarter of 2015 compared to
NIS 84.8 million in the first quarter of 2014 and NIS 68.8 million in the fourth quarter of 2014. In the Fueling and Commercial sites segment- in the first quarter of 2015, the results of this segment amounted to NIS 22.9 million compared to NIS 27.1 million in the first quarter of
2014. This quarter included higher inventory losses by more than NIS 9 million following the decrease in fuel prices compared to the corresponding quarter last year. In the Supermarkets segment- in the first quarter of 2015, the results of this segment amounted to a loss of NIS 24.6 million compared to a loss of NIS 29.4 million (including a profit from asset realization of NIS 10 million) in the fourth quarter of 2014, the decrease in loss derived from an increase in sales of YOU chain. In the corresponding quarter last year, the results of the segment amounted to a loss of NIS 6.5 million. The increase in the loss compared to the corresponding quarter derived from a decrease in the gross profit
margin following the completion of YOU chain deployment.1
In the Real Estate segment - in the first quarter of 2015, the results of this segment amounted to NIS 26.1 million compared to NIS 44.0 million in the fourth quarter of 2014 and NIS 24.0 million in the first quarter of 2014. The fourth quarter of 2014 included higher revaluation profits due to lowering the discounting interest.
In the Houseware and textile segment - in the first quarter of 2015, results amounted to NIS 7.3 million compared to NIS 5.8 million in the first quarter of 2014. The increase in the results mainly derived from the Passover holiday timing.
Others segment
- Diners - the Company's share in the net income of Diners amounts to NIS 4.4 million in the first quarter of 2015 compared to NIS 5.9 million in the corresponding quarter last year.- You Phone - a decrease in operating loss in the period at the rate of 62% compared to the corresponding period last year.
The net aggregate loss of the Company in the first quarter of 2015 amounted to NIS 30.5 million compared to a net loss of NIS 339.1 million in the fourth quarter of 2014 (which included amortization of tax asset in amount of NIS 141 million) and a loss of NIS 21.8 million in the first quarter of 2014.
Consolidated profit and loss2015 | 4112 | ||||
Consolidated profit and loss, NIS in millions | Q1 | Q4 | Q3 | Q2 | Q1 |
Revenues from sales, net | 482,4 | 485,4 | 48,,,,5 | 48,,8,2 | 48,12,2 |
Gross profit | 521,2 | 543,, | 851,3 | 822,4 | 811,, |
Operating profit (loss) before financing | 1,2 | ),2,2( | ,1,1 | 21,8 | 11,5 |
Net income (loss) | )31,5( | )322,1( | 14,1 | )12,1( | )41,,( |
Adjusted EBITDA | ,1,3 | 8,,, | 138,5 | 111,2 | ,2,, |
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Segment results:2015 | 4112 | ||||
Segment results, NIS in millions | Q1 | Q4 | Q3 | Q2 | Q1 |
Fueling and Commercial sites | 44,2 | 31,8 | 22,2 | 3,,2 | 4,,1 |
Supermarkets * | )42,8( | )42,2( | 52,5 | 15,, | )8,8( |
Houseware and textile | ,,3 | 1,1 | 3,1 | 1,, | 5,, |
Real Estate | 48,1 | 22,1 | 14,1 | 44,5 | 42,1 |
* The third quarter of 2014 included a gain of NIS 28 million from realizing part of the logistic center complex in Rishon Lezion. The fourth quarter of 2014 included a gain of NIS 10 from realization of assets.
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Results for the first quarter of 20151
Gross revenuesRevenues (including government levies) in the first quarter of 2015 amounted to NIS 3,230.2 million (U.S. $888.6 million) as compared to revenues of NIS 3,448.3 million in the comparable quarter last year, a decrease of 6.3% which mainly derives from a decrease in fuel prices between periods resulting in a decline in Dor Alon sales.
Revenues from sales, net Revenues of the Fueling and Commercial sites segment - amounted in this quarter to NIS967.3 million (U.S. $243.0 million) as compared to NIS 1,194.2 million in the corresponding quarter last year, a decrease of 19.0%. The main decrease was due to decrease in fuel prices and was partly offset by the increase in fuel quantities sold.
Revenues of the Supermarkets segment 2- amounted in this quarter to NIS 8,369.3 million (U.S. $344.0 million) as compared to NIS 1,314.1 million in the corresponding quarter last year, an increase of 4.2%. The increase derives mainly from increase in YOU stores and the Passover holiday timing that occurred this year at the beginning of April while last year it occurred in the middle of April, increase in the sales of SSS stores in this quarter compared to the corresponding quarter last year which amounted to 3.2%. Revenues of the Houseware and textile segment - amounted in this quarter to NIS 89.8 million (U.S. $22.6 million) compared to NIS 80.4 million in the corresponding quarter last year, an increase of 11.7%. The increase in revenues derives from the Passover holiday timing that occurred this year at the beginning of April while last year it occurred in the middle of April. Revenues of the Real Estate segment - increase in rental fees of 75.7% in the first quarter of
2014 from NIS 10.3 million to NIS 18.1 million (U.S. $4.5 million) in this quarter. The increase in revenues in this quarter mainly derives from increase in rented spaces to external parties compared to the corresponding period last year.
1 The Company operates in 4 reportable segments: fueling and commercial sites, supermarkets, houseware and textile and real estate. Segment reporting is included in this report below.
2 The segment revenues do not include branches which were resolved to cease their operations and therefore are not included in the segment.
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Gross profit in the first quarter of 2015 amounted to NIS 591.9 million (U.S. $148.7 million) (23.8% of revenues) as compared to gross profit of NIS 601.8 million (22.2% of revenues) in the comparable quarter last year, a decrease of 1.6%. The decrease in the gross profit compared to the corresponding quarter last year was mainly due to the decrease in gross profit in the Fueling and Commercial sites segment. In the Fueling and Commercial sites segment, gross profit amounted to NIS 186.4 million (U.S. $46.8 million), (19.3% of revenues) compared to NIS 190.2 million in the comparable quarter last year (15.9% of revenues), a decrease of 2%. The main decrease in the gross profit mainly derived from higher inventory losses in this quarter compared to the corresponding quarter last year of NIS 9 million. Said decrease was partly offset by an increase in fuel quantities sold and sales of convenience stores. In the Supermarkets segment, gross profit amounted to NIS 335.6 million (U.S. $84.3 million), (24.5% of revenues) compared to NIS 338.3 million in the first quarter of 2014 (25.7% of revenues), a decrease of 0.8% deriving from an increase in sales of the YOU discount format and from price reduction. In the Houseware and textile segment, gross profit amounted to NIS 48.9 million (U.S.$12.3 million), (59.4% of revenues) compared to NIS 44.2 million in the first quarter of 2014 (62.3% of revenues), an increase of 10.6% which was derived from the increase in gross profit rate in the houseware segment and was partly offset from a decrease in gross profit rate in the textile segment.
Selling, general and administrative expenses in the first quarter of 2015 amounted to NIS598.7 million (U.S. $150.4 million) (24.1% of revenues), compared to expenses of NIS 602.4 million (22.2% of revenues) in the comparable quarter last year.
In the Fueling and Commercial sites segment,these expenses amounted to NIS 165.7 million (U.S. $41.6 million) compared to NIS 163.4 million in the first quarter of 2014, an increase of 1.4% deriving from opening new sites. In the Supermarkets segment, selling, general and administrative expenses amounted to NIS
356.1 million (U.S. $89.5 million) compared to expenses of NIS 334.5 million in the first
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quarter of 2014, an increase of 6.5% deriving mainly from launching YOU chain and increase in real expenses.
compared to NIS 5.2 million in the first quarter of 2014.
Increase in fair value of investment property in this quarter, the Company recorded a profit in the amount of NIS 14.8 million (U.S. $3.7 million) compared to a profit of NIS 10.5 million in the corresponding period last year. Other expenses, net other expenses in this quarter amounted to NIS 10.8 million (U.S. $2.7 million) compared to other expenses of NIS 8.7 million in the first quarter of 2014. Share in gains of associates in this quarter amounted to NIS 4.2 million (U.S. $1.1 million)compared to NIS 9.3 million in the corresponding quarter last year.
Operating loss before financing amounted to NIS 1.4 million (U.S. $0.4 million) (0.1% of revenues) in this quarter as compared to operating profit of NIS 10.5 million (0.4% of revenues) in the first quarter of 2014. The decrease derived mainly from the Supermarkets segment. In the Fueling and Commercial sites segment, operating profit in this quarter amounted to NIS 22.9 million (U.S. $5.8 million) (2.4% of revenues) as compared to operating profit of NIS 27.1 million in the first quarter of 2014, a decrease of 15.5%. The main decrease in operating profit derived mainly from decrease in revenues. In the Supermarkets segment, operating loss in this quarter amounted to NIS 25.0 million (U.S. $6.3 million) (1.8% of revenues) as compared to operating loss of NIS 6.5 million in the first quarter of 2014. The increase in operating loss derived from erosion of gross profit and
increase in selling, administrative and general expenses.
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$0.19) and the income attributed to non-controlling interests amounted to NIS 20.1 million
(U.S. $5.1 million).
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Cash flows for the first quarter of 2015
Cash flows from operating activities: Net cash flow provided by operating activities amounted to NIS 171.1 million (U.S. $43.0 million) in the first quarter of 2015 compared to net cash flow provided by operating activities of NIS 140.9 million in the comparable quarter last year. The main increase in cash flow provided by operating activities in this quarter compared to the corresponding quarter last year derives from changes in working capital in the amount of NIS 33.7 million (U.S. $8.5 million), which was offset from an increase in operating loss of NIS 7.4 million (U.S. $ 1.9 million) and from taxes paid in the amount of NIS11.3 million (U.S. $2.3 million).
Cash flows used in investing activities: Net cash flows provided by investing activities amounted to NIS 131.7 million (U.S. $33.1 million) in this quarter as compared to net cash flows used in investing activities of NIS 113.7 million in the comparable quarter last year. Cash flows provided by investing activities in this quarter mainly included the proceeds from realization of property of NIS 85.2 million (U.S. $21.4 million), repayment of loans granted to interested parties and others of NIS 49.1 million (U.S. $ 12.3 million) and proceeds from realization of marketable securities, net, in the amount of NIS 67.9 million (U.S. $ 17.1 million) offset by the purchase of investment property, property and equipment and intangible assets of total NIS 52.2 million (U.S. $13.1 million). In the first quarter of 2014 the cash flows used in investing activities mainly included the purchase of investment property, property and equipment, and intangible assets of NIS 81.6 million, grant of long term loans of NIS 46.5 million, net of proceeds from marketable securities in the amount of NIS 12.0 million, and interest received of NIS 5.4 million. Cash flows used in financing activities: Net cash flows used in financing activities amounted to NIS 44.6 million (U.S. $11.2 million) in this quarter as compared to net cash flows used in financing activities of NIS 2.7 million in the corresponding quarter last year. The cash flows used in financing activities this quarter mainly included repayment of long term loans of NIS
67.9 million (U.S. $17.1 million), repayment of commercial papers of NIS 17.2 million (U.S.
$4.4 million), decrease in short term credit of NIS 106.8 million (U.S. $26.8 million) and interest payments of NIS 33.3 million (U.S. $8.4 million), and were offset by receiving long term loans of NIS 95.0 million (U.S. $23.9 million), purchase of shares in subsidiaries by non- controlling interest in the amount of NIS 88 million (U.S. $22.1 million). The net cash flows used in financing activities in the first quarter of 2014 included mainly repayment of long term loans of NIS 39.1 million, interest payments of NIS 41.8 million and a payment of dividend to non-controlling interest of NIS 40.3 million, and was offset by receipt of long term loan of NIS
100.0 million and increase in short term bank credit of NIS 20.8 million, net.
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Additional Information
Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)3
In the first quarter of 2015 adjusted EBITDA was NIS 81.3 million (U.S. $20.4 million) (3.3% of revenues) compared to NIS 84.8 million (3.1% of revenues) in the first quarter of
2014.
Events during the reporting period
Fueling and Commercial sites segment
As of March 31, 2015, Dor Alon operated 212 fueling stations and 219 convenience stores in various formats.
Supermarkets segment
a. As of March 31, 2015, Mega operated 192 supermarkets under different formats.
b. As of March 31, 2015, the Company operated branches in a total area of 292,000 sq.m.
In the first quarter of 2015, 5 branches with a total area of 6,000 sq.m were closed and commercial spaces in branches at a total area of 5,000 sq.m were reduced.
Sales per square meter in the Supermarkets segment in the first quarter of 2015 amounted to NIS 4,746 (U.S. $1,192) compared to NIS 4,312 in the corresponding
quarter last year.
3 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 and accumulated revaluation profits of real estate properties that were realized in the period and capital gains from realizing real estate properties that were self-used. 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.
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Houseware and textile segment
As of March 31, 2015, the Company operates 113 stores (of which 11 franchised)
according to the following breakdown: Na'aman - 65 stores, Vardinon - 48 stores.
Real Estate segment
a. On March 16, 2015, BSRE declared a dividend distribution of NIS 30 million that was paid on
April 15, 2015. The Company's share was NIS 19.1 million (U.S. $ 4.9 million).
b.
c. Wholesale market complexSale agreements with apartment purchasers
On or about the date of issuing the report, the residence company entered into commitment for 699 sale agreements with a scope of NIS 1,760 million (including VAT) and received advances of NIS 1,210 million (including VAT). In addition, with respect to 15 additional units, purchase requests were signed which are in various stages of commercial and/or legal negotiations where some of them may develop into signing sales agreements.
Commercial spaces in the mall
As of March 31, 2015, lease agreements were signed or are to be signed for 61% of the commercial spaces.
d. 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 was opened to the public in April 2015. The development of the square is scheduled to be completed in the second
quarter of 2015.
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General
1 .Sale of BSRE shares
a. On February 8, 2015, the Company sold 5% of BSRE shares for NIS 72.3 million.
After the sale the Company held 64.71% of BSRE share capital.
b. On February 26, 2015, the Company sold 1% of BSRE shares for NIS 15.4 million.
After the sale the Company holds 63.71% of BSRE share capital. The sale was carried out so as to increase the public holding in the share as defined in the stock exchange directive, over 35% on the next examination date effective February 28, 2015 and by that increase the weight of BSRE share according to indicators calculated by the stock exchange.
bonds and lowered to P2 the rating of the Company's commercial papers.
3. The Company has committed to provide additional funding to support Mega in an aggregate amount not to exceed NIS 240 million to assist Mega Retail if peak temporary liquidity needs arise and if the disposal of the operations of stores is not effectuated in accordance with the schedule provided in the recovery plan.Subsequent events
a. On April 1, 2015, Midroog lowered the rating of the Company's series C bonds from A3 to Baa1 and put the rating under review with negative -neutral implications. In addition, the rating of the Company's commercial papers remained P2 under review.
b. On May 20, 2015, Midroog lowered the rating from Baa1 to Baa2 and left the rating under review with uncertain implications.
c. In May 2015, the Company completed the repayment of the commercial papers.
d. On May 20, 2015, BSRE declared a dividend distribution of NIS 30 million that will be paid on June 11, 2015.
e. On May 27, 2015, Dor Alon completed the sale of a part of its treasury shares in amount of NIS 50.4 million. As a result, the Company's share in Dor Alon decreased to
71.17%.
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