Delek Group Announces Consolidated Results for the First Nine Months of 2012
TEL AVIV, Israel, November 29, 2012 /PRNewswire/ –
Delek Group Ltd. (TASE: DLEKG, OTCQX: DGRLY) (hereinafter: “Delek Group” or “The
Group”) announced today its results for the three and nine month period ended September
30, 2012. The full financial statements will be available in English on Delek Group’s
website at: http://www.delek-group.com.
First Nine Months 2012 Highlights
- Group operating profit of NIS 2.3 billion, an increase of 10% compared with NIS 2.1 billion in the same period last year; - Net income reached NIS 243 million for the nine month period and NIS 93 million for the third quarter; - Delek Group sold shares amounting to 13.9% of its subsidiary Delek US and totalling NIS 815 million - Delek Group announced a dividend of NIS 65 million for the third quarter of 2012.
Group revenues for the first nine months of 2012 were NIS 53.5 billion, a 26% increase
compared with NIS 42.3 billion in the first nine months of 2011. The increase was
primarily due to the Lion Oil refinery operations which were consolidated in the
corresponding period last year for only five months. In addition the increase in revenues
was also due to the rise in fuel prices, which led to an increase in refinery revenues as
well as an increased contribution from the downstream energy assets; Delek Europe, Delek
Israel and Delek US. In the third quarter of 2012, group revenues were NIS 18.9 billion, a
24% increase compared with NIS 15.2 billion in the third quarter of 2011.
Net income in the first nine months of 2012 totaled NIS 243 million compared with a
net income of NIS 451 million in the first nine months of 2011. In the first nine months
of 2011, net income included NIS 348 million in capital gains from the sale of Noble
Energy shares. Net income in the third quarter of 2012 totaled NIS 93 million compared
with NIS 140 million in the third quarter of 2011.
Group total assets as of September 30, 2012, amounted to NIS 120 billion, compared
with NIS 108 billion as of December 31, 2011.
Commented Mr. Bartfeld, CEO of Delek Group, “Our net profit for the third quarter
together with the gain from the sale of our holdings in Delek US, which increased our
shareholders’ equity totaled to NIS 301 million. Delek US shares sold in addition to Delek
US shares sold in the fourth quarter have greatly improved the cash levels at the Company.
These transactions are proof of our financial flexibility and our ability to realize the
inherent value in our assets. As of September 30, 2012, the Group has more than NIS 2.4
billion in Cash and cash equivalents”
Main Business Highlights
Contribution of Principal Operations to Net Income* (NIS millions)
FY Q3 Q3 9M 9M 2011 2011 2012 2011 2012 378 193 232 408 546 US Fuel Sector Operations 199 68 (31) 165 (6) Oil and Gas Exploration 12 17 26 19 66 Delek Europe 9 (2) 15 16 13 Israeli Fuel Sector Operations (23) 8 8 (13) 1 Road services in the UK (48) (4) 46 3 61 Insurance and Finance Operations 19 (39) (1) 9 27 Automotive Operations 2,064 (101) (202) (156) (465) Capital Gains & Others Net Income attributed Group's 2,610 140 93 451 243 shareholders
* Parts of the above table have been extracted from Delek Group’s First Nine Months
2012 Directors Report.
Please review the full report available on the Group’s website
http://www.delek-group.com to view the notes for each of the items above.
Energy & Infrastructure
Oil and Gas Exploration Sector Highlights. The activities in Israel are carried out
mainly through Delek Energy Ltd., Delek Drilling LP & Avner Oil Exploration LP, of which
Delek Group has a controlling share.
Yam Tethys; A significant decline in natural gas production due to the depletion of
the “Mari B” reservoir continued. However, its impact was minimised in the third quarter
of 2012, through the increasing natural gas production from the Noa and Pinnacles
reservoirs. Yam Tethys’ project operator, Noble Energy Mediterranean, is producing natural
gas from the “Mari B” at a rate of production that is designed to continuously maintain
the reservoir production capacity, while maintaining the integrity of the production
facilities of the Yam Tethys project.
Tamar, a 9.7 TCF natural gas discovery off the coast of Israel remains on track for
production in the first half of 2013. Following the implementation of the requested
changes by the Public Utility & Electricity Antitrust Authority, the Tamar partners have
signed amendments to the agreements with the Israel Electric Company as well as many of
the other natural gas consumers in Israel including Hadera Paper, Ramat Negev Energy,
Ashdod Energy and Dalia Power Energies. In addition, the partners signed a take or pay
agreement to supply natural gas to Dorad Energy of up to a total of 11.2 BCM. In August
2012, all conditions were met to enable the Group’s gas subsidiaries to begin withdrawal
of the $800 million project financing facility.
Leviathan, a 16.7 TCF natural gas discovery off the coast of Israel. The Ensco 5006
rig completed the planned work for sealing the Leviathan 2 evaluation drill. The estimated
total cost of the work thus far was $85 million (at 100% of the rights). There was also an
additional cost of $23 million (100%) for surveying and monitoring. It should be noted
that the partnerships are covered with control of well insurance which includes all the
above work with a limited liability of up to $200 million per case. The Leviathan partners
have received a refund from the insurance companies for the work implemented so far.
The Leviathan #4 appraisal well started in November and is expected to last for
approximately 4 months at an estimated budget of $110 million (100%). The Leviathan
natural gas field is spread over a wide area and therefore it requires a number of
appraisal wells. It should also be noted that Leviathan 4 is expected to be used in future
for production drilling, as part of the future development plan of Leviathan. The expected
depth of the well is approximately 1,600 meters, and the planned final drilling depth is
approximately 5,300 meters beneath sea level.
Finally, as part of the Leviathan strategic process, a proposal to acquire 30% of the
rights in Leviathan was received in September from Woodside Petroleum Ltd. It should be
noted that this offer together with the other offers received are subject to, among other
things, various conditions such as due diligence and additional information that may be a
basis for negotiation.
Karish 1 Prospect; In November, the partners announced a new 2 TCF prospect at the
“Karish 1″ area in the Alon C license. A seismic survey by Netherland Sewell & Associates
Ltd. gave a best estimate of the unrisked gross prospective gas resource of 2.02 TCF with
a 50% geologic probability of success. The low estimate is 1.07 TCF (90% geologic
probability of success) and the high estimate is 3.38 TCF (10% geologic probability of
Liquefied Natural Gas Project; In November, the Pre-FEED stage of the Tamar and Dalit
floating liquefied natural gas project (FLNG) was completed. The Tamar partners began the
second FEED phase. LNG production is expected to be up to 3 Million Metric Tonne Per Annum
(MMTPA). Daewoo Shipbuilding & Marine Engineering Co. Ltd. (DSME) signed an agreement with
Levant LNG Marketing and Pangea LNG BV for the completion of the FEED stage. DSME will
carry out the costs of FEED and the Tamar partners will contribute a total amount of $15
million (100%). The agreement is for two years, or until the date of the final investment
decision of the FLNG project, whichever is earlier.
Gas ProductionSummary; During the first 9 months of 2012, revenues from the sale of
oil and gas reached NIS 611 million compared with NIS 572 million in the same period, last
year. The increase in revenues was due primarily to the consolidation of Avner starting
from the first quarter in 2012.
Net loss from the sector for the first nine months of 2012 was NIS 6 million, as
compared to a net income of NIS 165 million in the same period during of 2011. The decline
in profit during the reporting period compared to last year was due to the above-mentioned
decline at the “Mari B” reservoir. However, this moderated in the third quarter as natural
gas supply increased from the Noa and Pinnacles reservoirs. In addition, depreciation and
amortization expenses relating to the development of these assets were recorded in the
third quarter for the first time.
Delek US (NYSE: DK; Delek Group holds 53% end-Q3 2012): Revenues in the first nine
months of 2012 were NIS 25.3 billion compared with NIS 18.3 billion in the first nine
months of 2011. The growth was due to the consolidation of the Lion Oil refinery in El
Dorado, as well as due to the increase in the price of oil which affected sales in both
the refining and marketing segment, and in fuelling stations. The results of the third
quarter also benefited from a benchmark Gulf Coast 5-3-2 crack spread that averaged $29.96
per barrel during the third quarter 2012. This was similar to third quarter 2011 and an
improvement from $25.42 during the second quarter 2012.
Net profit in the first nine months of 2012 was NIS 842 million compared with a net
profit of NIS 603 million in the first nine months of 2011. The improved profitability was
due to the increased gross margins in the El Dorado refinery as well as the operation of
the Tyler Refinery at the peak capacity of over 60,000 barrels per day during the third
On July 12, Delek US’s wholly-owned subsidiary, Delek Logistics Partners, LP, filed a
registration statement with the SEC relating to a proposed initial public offering. On
November 4, Delek Logistics Partners, LP, issued the pricing of its initial public
offering of 8,000,000 common units in addition to 1,200,000 common units for the
over-allotment, representing limited partner interests in Delek Logistics at $21.00 per
unit. The common units began trading on the New York Stock Exchange on November 2, 2012
under the ticker symbol DKL. Delek Logistics was formed by Delek US to own, operate,
acquire and construct crude oil and refined products logistics and marketing assets.
Following the offering Delek US’s stake in Delek Logistic is 37.6%.
During the third quarter, Delek Group sold approximately 10.2% of the outstanding
shares of Delek US in two tranches of 3 million shares, for a total of approximately
US$147.6 million. Following the sale the Group held approximately 57% of the outstanding
shares of Delek US.
The excess of the carrying value of the investment cost (net of the related tax effect
of approximately NIS 64 million) in the amount of approximately NIS 208 million was
recorded in the third quarter of 2012 as an increase in shareholders’ equity attributable
to shareholders of the Company.
In November, the Company sold an additional 2.2 million shares or 3.7% of the Delek US
for approximately $57 million. Following this sale, Delek Group holds approximately 53% of
The excess of the carrying value of the investment cost (net of related tax effect of
approximately NIS 26 million) was in the amount of approximately NIS 78 million and will
be recorded in the fourth quarter of 2012 as an increase in shareholders’ equity
attributable to shareholders of the Company.
Delek – the Israel Fuel Company Ltd. (TASE: DLKIS.TA; Delek Group holds 87% end-Q3
2012): Revenues in the first nine months of 2012 were NIS 5.0 billion compared with NIS
4.7 billion in the same period last year, representing an increase of 5%. This increase
was due to the rise in the average price of gasoline during the period compared with that
of last year, an increase in sales of the direct marketing segment and an increase in
sales at the Menta convenience store.
Net income in the first nine months of 2012 was NIS 24 million, compared with a net
income of NIS 25 million in the first nine months of 2011. Delek Israel’s results were
impacted by the lowering of fuel marketing margins between the comparable reporting
periods. Delek Israel has and continues to take steps in order to mitigate the effects.
Delek Europe (Delek Group holds 80% end-Q3 2012) Revenues in the first nine months of
2012 were NIS 12.3 billion compared with NIS 11.9 billion in the same period last year, an
increase of 3.4%. Net income in the first nine months of 2012 was NIS 68 million, compared
with a net income of NIS 20 million in the first nine months of 2011. The increase was due
to the increased price of gasoline compared with that of last year, as well as increased
sales at its convenience stores however this was offset by a decrease in the quantity of
Roadchef (fully held by Delek Group). Roadchef’s revenue in the first nine months of
2012 was NIS 1.042 billion versus NIS 909 million in the first nine months of last year,
an increase of 15%. Net profit for Roadchef was NIS 1 million in the first nine months of
2012 versus a net loss NIS 13 million in the first nine months of last year.
Insurance and Financial Services
The activities of this segment are primarily conducted through two insurance
companies; Israeli insurance company, Phoenix Holdings Ltd. (TASE: PHOE) of which Delek
Group holds 55%, and general US insurer, Republic Companies, Inc. that is a wholly owned
The insurance and financial services sector contributed NIS 61 million to the Group’s
net income in the first nine months 2012, compared to a contribution of NIS 3 million in
the same period last year.
Phoenix reported net profit amounting to NIS 114 million in the first nine months of
2012, compared to NIS 127 million last year. This improvement was due to improved equity
market returns in the reported period compared to last year.
Republic Companies reported a net income amounting to US$1 million in the first nine
months of 2012, compared with a net loss of US$ 25 million, in the first nine months of
last year. Republic’s results were affected by adverse weather conditions including hail
storms in the States in which Republic operates. However, Republic recorded gains from
sale of financial investments for a total of US$ 21.5 million in the first nine months of
2012, compared with profits totalling insignificant amounts in the same period last year.
On November 28, 2012, the Board of Directors of Delek Group declared a cash dividend
distribution for the third quarter of 2012 in the amount of approximately NIS 65 million
(approximately NIS 5.7131 per share) to the shareholders on record as of December 12, 2012
and the dividend will be paid on December 24, 2012.
Conference Call Details
The Group will be hosting a conference call in English on December 2, 2012 at 5:30pm
Israel time, 3:30pm UK time and 10:30am Eastern Time. Management will also be available to
answer investor questions.
To participate, please call one of the following teleconferencing numbers. Please
begin placing your calls at least 5 minutes before the conference call commences. If you
are unable to connect using the toll-free numbers, please try the international dial-in
US Dial-in Number: 1 866 860 9642
UK Dial-in Number: 0800 404 8418
ISRAEL Dial-in Number: 03 918 0687
INTERNATIONAL Dial-in Number: +972 3 918 0687
10:30am Eastern Time, 3:30pm UK Time, 5:30pm Israel Time
On the call, CEO Asaf Bartfeld, CFO Barak Mashraki will review and discuss the
results, and will be available to answer your questions.
About The Delek Group
The Delek Group, Israel’s dominant integrated energy company, is the pioneering leader
of the natural gas exploration and production activities that are transforming the Eastern
Mediterranean’s Levant Basin into one of the energy industry’s most promising emerging
regions. Having discovered Tamar and Leviathan, two of the world’s largest natural gas
finds since 2000, Delek and its partners are now developing a balanced, world-class
portfolio of exploration, development and production assets with total gross natural gas
resources discovered since 2009 of approximately 33 TCF.
Delek is Israel’s largest and sole domestic supplier of natural gas. In addition,
Delek has built an extensive network of global downstream assets, including 1,900 gas
stations and convenience stores in the U.S., Europe and Israel; petroleum refineries in
the U.S. with 140,000 barrel per day of nameplate production; and pipelines and storage
facilities in the US, Europe and Israel. Delek also holds significant interests in leading
water desalination, power generation, insurance and automotive companies.
For more information on Delek Group please visit http://www.delek-group.com.
Delek Group Income Statement (NIS Millions)
Q1-Q3 Q1-Q3 2012 2011 Q3 2012 Q3 2011 FY 2011 Revenue 53,513 42,362 18,867 15,215 59,159 Cost of revenue 46,540 35,841 16,246 12,759 50,903 Gross profit 6,973 6,521 2,621 2,456 8,256 Sales, marketing and operating expenses - gas stations 3,096 3,040 1,067 1,071 4,157 General and administrative expenses 1,567 1,406 528 452 1,884 Other income (expenses), net (11) 27 17 (56) (602) Profit from operating activities 2,299 2,102 1,043 877 1,613 Financing income 231 484 54 57 626 Financial expenses (1,479) (1,454) (523) (456) (1,951) Profit (loss) after financing 1,051 1,132 574 478 288 Profit (Loss) from realization of investments in associates and others, net 30 60 (4) 62 3,749 Group's equity in profits (losses) of associates and partnerships, net 109 66 (2) (17) (223) Profit (loss) before income tax 1,190 1,258 568 523 3,814 Income tax 583 467 331 245 558 Profit 607 791 237 278 3,256 Attributable to: Company shareholders 243 451 93 140 2,610 Non-controlling interest 364 340 144 138 646 607 791 237 278 3,256
The notes are an integral part of the financial statement and can be found at
Contact Dalia Black / Dina Vince Delek Group Tel: +972-9-863-8444 Email: email@example.com Ehud Helft / Kenny Green CCG Investor Relations Tel: (US) +1-646-201-9246 E-mail: firstname.lastname@example.org
SOURCE Delek Group Ltd