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Delek Group Announces Consolidated Results for the First Quarter of 2011

May 30, 2011

TEL AVIV, Israel, May 30, 2011 /PRNewswire-FirstCall/ — Delek Group Ltd.
(TASE: DLEKG , OTCQX: DGRLY) (hereinafter: “Delek Group” or “The Group”)
announced today its results for the three month period ending March 31, 2011.
The full financial statements will be available in English on Delek Group’s
website at: http://www.delek-group.com.

First Quarter 2011 Highlights

– First quarter net income of NIS 210 million compared with net income of
NIS 205 million in the first quarter of last year;

– First quarter operating profit grew to NIS 579 million, a 113% increase
compared with NIS 280 million in the first quarter of last year

– Delek Group distributed a dividend of NIS 105 million in the quarter;

– Completed purchase of remaining shares of Roadchef and Delek US
acquired control of Lion Oil following quarter-end;

– Recorded a capital gain of NIS 177 million from the sale of 1.2% of the
shares in Noble Energy out of a total holding of 2.7% of Noble Energy.

Group revenues for the first quarter of 2011 were NIS 13.1 billion, a 27%
increase compared with NIS 10.3 billion in the first quarter of 2010. The
increase was primarily due to the contribution from the downstream energy
assets; Delek Europe, Delek Israel and Delek US. The revenues in the quarter
do not include the contribution of the automotive holdings which has ceased
to be consolidated following the sale of the Company’s majority stake at the
end of last year.

Net income for the first quarter of 2011 totaled NIS 210 million,
compared with a net income of NIS 205 million in the first quarter of 2010.
Net income increased due to an improvement at the Delek US oil refinery as
well as the Oil and Gas exploration and production activities.

Group total assets as of March 31, 2011, amounted to NIS 96 billion,
compared with NIS 92 billion as of December 31, 2010.

Commented Mr. Bartfeld, CEO of Delek Group, “In the first quarter we
continued to advance our long-term strategy by consolidating and expanding
our holdings. We completed the purchase of the remaining shares of 75% of
shares in Roadchef, the motorway service station business in the UK. We also
completed the purchase of shares in Lion Oil, an 80,000 barrel per day, high
complexity refinery located in Texas. This brings Delek US’ holdings in Lion
Oil to 88% of the outstanding shares. This follows our recent transaction in
Europe of the BP gas stations in France. The expansion of our investments is
a core element of our strategy and we will continue to focus our efforts on
identifying business opportunities, particularly in energy and
infrastructure, that can enhance the synergies among the activities of our
subsidiaries.”

Continued Mr. Bartfeld, “The long-term success of this strategy is clear
from the significant shareholder value we have created, as well as the large
dividend distributions we issued to shareholders over the past year. We
continue to work diligently to realize the value in our existing assets,
particularly on further developing and bringing to market the natural gas in
the Tamar and Leviathan wells, while continuing further exploration of the
licenses.”

    Main Business Highlights
    Contribution of Principal Operations to Net Income* (NIS millions)

                                               FY      Q1     Q1

                                             2010    2010   2011
    Oil and Gas Exploration                    64      30     79
    US Fuel Sector Operations                (213)    (42)    64
    Delek Europe                               69      16     (5)
    Israeli Fuel Sector Operations             48      24     12
    UK Service Station Sector                   -       -    (22)
    Insurance and Finance Operations          188      95     75
    Automotive operations                     195      94     32
    Others and Capital Gains                1,350     (12)   (25)
    Net Income                              1,701     205    210

* Parts of the above table have been extracted from Delek Group’s First
Quarter 2011 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

The Oil and Gas Exploration, and Gas Production sector. The activities in
Israel are carried out through Delek Drilling LP and Avner Oil Exploration LP
which are partners in “Yam Tethys” (together with Delek Investments LP),
“Tamar”, “Dalit” and “Leviathan” as well as holding additional exploration
licenses in Israel.

Yam Tethys; Following the end of the quarter, a number of additional
contracts for the Yam Tethys gas was signed; approximately $350 million with
Oil Refineries Ltd. (“ORL”) for the supply of 1.2 BCM of natural gas,
approximately $63 million to supply Hadera Paper with an additional 0.21 BCM
of natural gas, and a continuation agreement with Delek Ashkelon. Note that
the above mentioned estimated amounts are based oil and natural gas prices on
the date of signing, which may change.

Tamar; “Tamar” remains on track for production at the beginning of 2013.

Leviathan; On May 15, the partners provided an update. During the
drilling at the “Leviathan 2″ well, a flow of water was identified in the
bore hole. Due to a possible impact on the integrity and stability of the
drilling systems, the Operator decided that the particular well is not
suitable as a production well and ceased drilling. It is important to note
that the operator did not identify any hydrocarbons in the flow and believes
that the flow has no bearing on the resources of the Leviathan discovery.
Noble Energy plans to move the rig from the “Leviathan 2″ well to a nearby
location to drill an alternate appraisal well and estimates that the drilling
of the new well will commence within a month and will last about 3 months.

Gas Production Summary; During the quarter, revenues from the sale of oil
and gas reached NIS 146 million compared with NIS 103 million in the sales
period, last year. The growth was due to an increase in sales price as well
as quantity of gas sold to the Israel Electric Company.

Net income from the sector for first quarter of 2011 was NIS 79 million,
as compared to a net loss of NIS 30 million in the first quarter of 2010.

Delek US (NYSE: DK; Delek Group holds 74% end-Q1 2011): Revenues in the
first quarter of 2011 were NIS 4.1 billion compared with NIS 3.3 billion in
the first quarter of 2010. The growth was due to an increase in the average
number of barrels sold per day as well as the increase in the price of oil
during the quarter.

Net profit in the first quarter of 2011 was NIS 89 million compared with
a net loss of NIS 58 million in the first quarter of 2010.

The Gulf Coast 5-3-2 crack spread averaged $17.54 per barrel during the
first quarter 2011, versus $6.62 per barrel in the first quarter 2010. The
average Gulf Coast 5-3-2 crack spread reported in the first quarter 2011
represented the highest level reached by the benchmark since the second
quarter 2007. In Delek US’ retail segment, same-store merchandise sales
increased on a year-over-year basis for a seventh consecutive quarter, as
food service and private label sales initiatives continued to gain momentum.

In March 2011, Delek US increased their holdings to 88.3% of Lion Oil,
and assumed operational control and management of the Lion Oil refinery. Lion
Oil owns and operates an 80,000 barrel per day, 9.0 complexity refinery
located in El Dorado, Arkansas, as well as crude oil transportation systems
and associated product pipelines, and three light product distribution
terminals located in Memphis and Nashville, Tennessee and El Dorado,
Arkansas
. Lion Oil also owns and operates an asphalt distribution terminal
located in El Dorado, Arkansas.

Delek – the Israel Fuel Company Ltd. (TASE: DLKIS.TA; Delek Group holds
77% end-Q1 2011): Revenues in the first quarter of 2011 were NIS 1.4 billion
compared with NIS 1.2 billion in the first quarter of last year, representing
an increase of 17%. This increase was due primarily to the increased price of
gasoline compared with that of last year, as well as an increase in sales of
gasoline for commercial enterprises, an increase in sales at convenience
stores and an increase as a result of the consolidation for the first time of
the direct marketing segment. The increase was partially offset by the
discontinuation of the consolidation of a subsidiary’s results, following its
sale on January 1, 2011.

Net income in the first quarter of 2011 amounted to NIS 13 million
compared with a net income of NIS 33 million in the same period in 2010. The
reduction in net income was mainly due to a comparative increase in financial
expenses. In the first quarter of 2010, Delek Israel received a one-time
financial income of NIS 20 million following its sale of Haifa Basic Oils
Company.

Delek Europe. Revenues in the first quarter of 2011 were NIS 4.4 billion
compared with NIS 2.78 billion in the same period last year. The results of
the first quarter 2010 do not include the activities of Delek France which
only started contributing in the fourth quarter in 2010, and contributed NIS
1.1 billion
in revenue in the quarter. Apart from the inclusion of Delek
France in the quarter, the increase in revenues were also due to the
increased price of gasoline compared with that of last year as well as
increased sales at its convenience stores. The increase was partially
balanced through the fall in average value of the Euro versus the Shekel in
the quarter.

Net loss in the quarter was NIS 5 million, compared with a net income of
NIS 16 million in the first quarter of 2010. The reduction in net income
compared with last year, was due to an increase in operating expenses due to
the increased number of gas stations operated by the company as well as the
above-mentioned weakening of the Euro versus the Israel shekel and some
one-time expenses.

Roadchef (Delek Motorway Services in the UK). The company is a fully
consolidated subsidiary of the Group and holds the 100% of the shares of
RoadChef Ltd., an operator 19 motorway services areas across the UK. During
the first quarter, Delek Motorway Services, a fully owned subsidiary of Delek
Group, acquired the remaining 75% of Roadchef’s shares that it did not
already own. Following the close, Roadchef’s results became fully
consolidated into the Company’s results.

Roadchef’s revenue in the first quarter of 2011 was NIS 244 million
versus NIS 247 million in the first quarter a year ago. Net loss for Roadchef
was NIS 22 million in the first quarter versus a net loss NIS 31 million in
the first quarter 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), and general US insurer, Republic Companies, Inc. that is a wholly
owned subsidiary.

The insurance and financial services sector contributed NIS 75 million to
the Group’s net income in the quarter, compared to a contribution to net
income of NIS 95 million in the same period last year.

Phoenix reported net profit amounting to NIS 112 million in the first
quarter of 2011, compared to NIS 127 million last year. Republic Companies
reported net profit amounting to US$ 3 million in the first quarter of 2011,
compared with US$ 6 million, in the first quarter of last year.

Dividend Distribution

On May 30, 2011, the Board of Directors of Delek Group declared a cash
dividend distribution for first quarter of 2011 in the amount of
approximately NIS 105 million (approximately NIS 9.2 per share) to the
shareholders on record as of June 15, 2011. The ex-date is June 16, 2011 and
the dividend will be paid on June 30, 2011.

Conference Call Details

The Company will be hosting a conference call in English on Tuesday, May
31, 2011
. 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 number.

                        US Dial-in Number: 1-866-860-9642

                        UK Dial-in Number: 0-800-917-9141

                       ISRAEL Dial-in Number: 03-918-0664

                  INTERNATIONAL Dial-in Number: +972-3-918-0664

                                       At:

             8:30am Eastern Time, 1:30pm UK Time, 3:30pm Israel Time

On the call, CEO Asaf Bartfeld, CFO Barak Mashraki and Head of Investor
Relations, Dalia Black, will review and discuss the results, and will be
available to answer your questions.

About The Delek Group

Delek Group is the leading energy & infrastructure group based out of
Israel with investments in upstream & downstream energy, water desalination
and power plants globally. In addition, Delek is the number one importer &
distributor of vehicles in Israel and owns insurance assets in Israel and the
US. Earlier this year, Delek Group, through its subsidiaries, discovered
significant quantities of high quality natural gas off the coast of Israel.
Delek Group sales reached approximately 45 billion Israeli shekels in 2010.

For more information on Delek Group please visit
http://www.delek-group.com.

    Delek Group Income Statement (NIS Millions)

                                                Q1       Q1     Full Year

                                               2011     2011      2010

    Revenue                                 13,121    10,274     44,567
    Cost of revenue                         11,198     8,752     37,980
    Gross profit                             1,923     1,522      6,587

    Sales, marketing and operating expenses
    - gas stations                             963       833      3,502
    General and administrative expenses        446       396      1,772
    Other income (expenses), net                83       (13)       (88)
    Profit from operating activities           597       280      1,225

    Financing income, net                      228       156        271
    Financial expenses, net                   (468)     (269)    (1,655)
    Profit (loss) after financing              357       167       (159)

    Profit from realization of investments      (1)        -         (4)
    in associates and others, net
    Group's equity in profits (losses) of       84        69        156
    associates and partnerships, net
    Profit (loss) before income tax            440       236         (7)

    Income tax (tax benefit)                   129        56        178
    Profit (loss) from continuing operations   311       180       (185)
    Profit (loss) from discontinued
    operations                                   -       164      2,139
    Profit (loss)                              311       344      1,954

    Attributable to:
    Company shareholders                       210       205      1,701
    Non-controlling interest                   101       139        253
                                               311       344      1,954

The notes are an integral part of the financial statement and can be
found at http://www.delek-group.com

    Contact

    Dalia Black

    Head of Investor Relations
    Delek Group
    Tel: +972-9-863-8444
    Email: black_d@delek.co.il

    Kenny Green / Ehud Helft
    International Investor Relations
    GK Investor Relations
    Tel: (US) +1-646-201-9246
    E-mail: delek-group-ir@gkir.com

SOURCE Delek Group Ltd


Source: newswire



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