We intend to open under the multi annual development plan, that was presented earlier this year, approximately 15 branches in a total area of some 18 thousand sq.m until the end of 2012, where most of the branches are in "Mega in Town" format.
Eden Teva shall conclude at the beginning of 2012 the second stage of the chain's deployment which shall consist 20 branches - 11 independent branches and 9 Eden branches in Mega. In 2011, we shall bring Eden Teva to operating balance and in 2012, we expected to show operating profitability.
The private brand represents a major step in the Company's operations and its sales will reach at the end of the year 14% of the total chain's sales. The private brand Mega confers upon us flexibility and dynamics in prices and product range and we intend to continue developing new, innovative and breakthrough products."
Results for the third quarter of the year 2011Gross Revenues (including government levies) for the third quarter of 2011 were NIS 3,956.1 million(U.S. $1,065.8 million) compared to revenues of approximately NIS 1,920.8 million in the comparable quarter last year, an increase of 106.0 %. The majority of the increase in revenues derives from including the results of Dor Alon. Excluding the effect of Dor Alon's results the revenues this quarter decreased by NIS 118.9 million (U.S. $ 32.0 million) (6.1%) compared to the comparable quarter last year. The decrease in the revenues compared to the comparable quarter last year is mainly due to the public protest in Israel that commenced at the end of the second quarter this year and caused a decrease in selling prices to consumers and a decrease in demand and impaired the sales in the supermarkets segment and due to the timing of the Tishrey Holidays, the sales of which were mainly included in the third and fourth quarter this year and were fully included in the third quarter of last quarter. Supermarket segment revenues, net -a decrease in revenues of 6.5% from NIS 1,790.5 million in the third quarter of 2010 to NIS 1,673.1 million (U.S $450.7 million) in the current quarter. The decrease in revenues was mainly due to a decrease in same store sales (SSS) at a rate of 6.7%, as explained above. Revenues of the Commercial and Fueling sites segment for the third quarter of 2011 amounted to NIS 1,425.6 million (U.S. $384.0 million) as compared to NIS 1,107.5 million in the comparable quarter of 2010 . The increase in revenues derives from the same reasons described in the analysis of the first nine months of 2011 results. Non - Food segment revenues - a decrease in revenues of 1.3% from NIS 123.1 million in the third quarter of 2010 to NIS 121.5 million (U.S. $32.7 million) in the current quarter. The decrease mainly derived from the reasons described in the analysis of the results for the first nine months of 2011. Real Estate segment revenues - rental fees from external parties of NIS 7.2 million in the third quarter of 2010 compared to NIS 7.2 million (U.S. $1.9 million) in the current quarter, with no change. Gross Profit of the third quarter of 2011 amounted to approximately NIS 744.8 million (U.S. $ 200.6 million) compared to gross profit of approximately NIS 546.1 million in the comparable quarter of 2010. Excluding the effect of Dor Alon's results, gross profit decreased by NIS 31.8 million (U.S. $ 8.6 million). The decrease in the gross profit derives from a decrease in sales of the supermarkets and non - food segments and was partly offset by an increase in the gross profit rate mainly in the Supermarkets segments due to the a different mixture in sales among the formats "Mega Boo"l and "Zol Beshefa" compared "Mega in Town" and "Eden" (the gross profit rate amounted to 28.1% in the current quarter compared to gross profit rate of 27.7% in the comparable quarter last year). Selling, General and Administrative Expenses in the third quarter of 2011 amounted to NIS 672.9 million (U.S. $ 181.2 million) compared to approximately NIS 489.0 million in the comparable quarter, an increase of approximately 37.6%. Excluding the effect of Dor Alon's results, selling, general and administrative expenses decreased by NIS 1.9 million (U.S. $ 0.5 million). Operating Profit (before other gains and losses and increases in the fair value of investment property) in the third quarter of 2011 amounted to NIS 71.9 million (U.S $ 19.3 million) compared to NIS 57.1 million in the third quarter of 2010, an increase of 25.9%. Excluding the effect of Dor Alon's results, Operating Profit (before other gains and losses and increases in the fair value of investment property) decreased by NIS 29.9 million (U.S $ 8.0 million). The decrease is explained mainly from the same reasons described above in the analysis of the first nine months of 2011 results. Increase in the Fair Value of Investment Property In the third quarter of 2011, the Company recorded gain from appreciation of investment property in the amount of NIS 8.7 million (U.S $ 2.3 million). The majority of the profit stems from revaluation of "Hadar Mall", in Jerusalem . In the third quarter of 2010, the Company recorded a gain from increase in value of investment property amounting to NIS 5.7 million. Other income and expenses, Net In the third quarter of 2011, the Company recorded other expenses, net of NIS 1.5 million (U.S. $ 0.4 million), compared to net expenses of NIS 4.1 million in the comparable quarter. The expenses this quarter included costs relating to the transfer of certain BEE Group companies to the new logistic center in Beer Tuvia and the disposal of the property and equipment. Operating Profit amounted to approximately NIS 79.8 million (U.S. $ 21.5 million) compared to operating profit of NIS 58.7 million in the third quarter of 2010. Excluding the effect of Dor Alon's results, Operating Profit decreased by NIS 23.6 million (U.S $ 6.4 million). Financial Expenses, net, for the third quarter of 2011 were NIS 79.0 million (U.S. $21.3 million) compared to financial expenses, net of NIS 50.8 million in the comparable quarter last year. Excluding the effect of Dor Alon, the financial expenses decreased by NIS 5.3 million (U.S. $1.4 million). The decrease in net financial expenses this quarter compared with comparable quarter last year derives mainly from decrease of the CPI (the CPI increased in the third quarter of 2011 by 0.58% compared to an increase of 1.23% in the comparable period last year) and from capitalization of financial costs in the real estate segment and was partially offset from an increase in the Company's indebtedness from the purchase of Dor Alon. Taxes on Income for the third quarter of 2011 tax benefit amounted to NIS 34.7 million (U.S. $ 9.3 million) compared to tax expenses of NIS 4.8 million (effective tax rate of 61% compared to a statutory tax rate of 25%) in the comparable quarter last year. The decrease in tax expenses this quarter derived from recording liability for deferred income taxes in the statements of income of NIS 37 million (U.S. $ 10.0 million) in the third quarter this year with the consummation of the Diners transaction. Net Income for the third quarter of 2011 amounted to NIS 40.3 million (U.S. $ 10.8 million) compared to a net income of NIS 3.0 million in the third quarter of 2010. The increase in the net income in this quarter compared to the corresponding quarter last year derived mainly from including the results of Dor Alon and the effect of Diners option on tax revenues in the taxes on income. The net income for the third quarter of 2011 attributable to equity holders of the Company, was NIS 33.8 million (U.S. $9.1 million), or NIS 0.54 per share (U.S. $ 0.14), while the portion attributable to the non-controlling interests was NIS 6.4 million (U.S. $1.7 million). Cash Flows in the third quarter of 2011 Cash Flows from Operating Activities: Net cash flows deriving from operating activities, amounted to NIS 50.0 million (U.S. $ 13.5 million) in the third quarter of 2011 compared to NIS 118.9 million in the comparable quarter last year. The decrease in cash flows from operating activities was mainly due to a decrease in sales in the supermarkets segment and decrease in working capital and was partly offset from the inclusion of Dor Alon results that contributed in the quarter NIS 31.2 million (U.S $ 8.4 million) and from advancing proceeds from credit card companies. Cash Flows from Investing Activities: Net Cash flows used in investing activities in the third quarter of 2011 amounted to NIS 177.0 million (U.S. $47.7 million) compared to net cash flows of NIS 86.3 million from investing activities in the corresponding quarter of last year. The cash flows used in investing activities in the third quarter of 2011 mainly included the purchase of property and equipment, intangible assets investment property of NIS 96.2 million (U.S. $25.9 million), investments in restricted deposits of NIS 2.9 million (U.S. $0.8 million), investment in short term deposits, net in the amount of NIS 8.2 million (U.S. $2.2 million) and investment in affiliate of NIS 36.4 million (U.S. $13.6 million) and was offset by proceeds received from realizing investment property amounting to NIS 50.6 million (U.S. $13.6 million). Cash used in investing activities in the third quarter of 2010 mainly included the purchase of property and equipment, intangible assets investment property and payments on account of real estate in a total amount of NIS 78.5 million and net investment in marketable securities of NIS 3.7 million and grant of loans to a proportionally consolidated company of NIS 8.4 million net of interest received amounting to NIS 3.9 million. Cash Flows used in Financing Activities: Net Cash flows deriving from financing activities amounted to NIS 108.2 million (U.S $ 29.6 million) in the third quarter of 2011 as compared to net cash used in financing activities of NIS 24.1 million in the comparable quarter last year. Cash flows deriving from financing activities in the third quarter of 2011 included mainly long term loans received of NIS 23.0 million (U.S. $6.1 million), change in short term credit of NIS 203.0 million (U.S. $54.7 million) and was offset by repayment of bonds of NIS 2.2 million (U.S. $0.6 million), repayment of long term loans of NIS 55.6 million (U.S. $14.9 million) and interest paid of NIS 59.6 million (U.S. $16.1 million). Cash flows used in financing activities in the third quarter of 2010 included mainly a decrease in short term credit net in the amount of NIS 66.0 million, repayment of long term loans amounting to NIS 26.2 million, interest paid of NIS 41.1 million net of consideration for the issue of debentures amounting to NIS 108.6 million. Additional Information 1. As of September 30, 2011, the Company operated 211 supermarkets divided as follows: Mega In Town -119; Mega Bool - 69; Zol BeShefa - 12 and Eden Teva Market -16 of which 5 Eden within Mega. Dor Alon operated 193 fueling stations and 195 convenience stores in various formats and in the Non-food segment, the Company operated 253 branches (most are franchised). 2. EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)  in the first nine months of 2011 was NIS 476.0 million (U.S. $ 128.2 million) (5.0% of revenues) compared to NIS 333.9 million (6.0% of revenues) in the first nine months of 2010. EBITDA in the third quarter of 2011 was NIS 140.5 million (U.S. $ 37.8 million) (4.4 % of revenues) compared to NIS 107.6 million (5.6% of revenues)in the comparable quarter of 2010. 3. Diners transaction
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