Alon Holdings Blue Square - Israel Ltd.(NYSE:BSI) Announces the Financial Results for the Third Quarter and the First Nine

  Alon Holdings Blue Square - Israel Ltd.(NYSE:BSI) Announces the Financial
       Results for the Third Quarter and the First Nine Months of 2012

PR Newswire

ROSH HA'AYIN, Israel, November 27, 2012

ROSH HA'AYIN, Israel, November 27, 2012 /PRNewswire/ --

  oNet Sales this quarter amounted to NIS 3,313 million,an increase of 2.6%.
  oIncrease in cash flow from operating activities to NIS 156 million this
    quarter.
  oIncrease in EBITDA^[1]to NIS 143 million in this quarter.

  oIn theCommercialandFuelingsites: Taking efficacy measures and
    expanding the activity in the convenience stores sector despite the
    reduction of marketing margins in September 2011, resulted in operating
    profit of NIS 55.6 million similar to the operating profit in the
    corresponding quarter last year. 
  oIn the Supermarkets segment:

       oSame Store Sales decreased this quarter by 0.4% compared to a 6.4%
         decrease in the comparable quarter.
       oThe operating profit rate in the third quarter amounted to 2.4%
         compared to 2.0% in the corresponding quarter (increase of 17%) and
         1.1% and 2.0% in the first and second quarter of this year. The major
         improvement mainly derived from implementing efficacy measures and
         adjusting the expense structure.
       oMega commenced the implementation of a strategic maneuver in 30
         branches of the chain that shall include completing the exit from 11
         branches until the end of the year launching new HD chain in national
         deployment of 20 branches in 2013.
         The Operating Profit rate excluding these branches is 3.9% in the
         third quarter of the year compared to 3.4% in the second quarter.

  oIn the Real Estate segment: BSRE continues the development momentum and
    inaugurated during this quarter the commercial center in Kiryat Hasharon,
    Netanya, a project it exclusively initiated. The wholesale market project
    in Tel Aviv is progressing ahead of schedule. The Comverse Building in
    Ra'anana is in construction and an additional four projects are in
    construction stages. 
  oIn thethe Non Food segment: a decrease in the operating loss in this
    quarter compared to the corresponding quarter. 

Segment Results:

    Data in millions of NIS       Q3 2012 Q3 2011
    Commercial and Fueling sites   55.5    55.2
    Supermarkets                   41.7    34.0
    Non-Food                       (6.5)   (6.5)
    Real Estate                     1.9    12.8

Results for the third quarter of 2012^[2]

Gross revenues

Revenues (including government levies) in the third quarter of 2012 amounted
to NIS 4,077.6 million (U.S. $1,042.3 million) as compared to revenues of NIS
3,956.1 million in the comparable quarter last year, an increase of 3.1%. The
main increase in revenues was due to an increase in the revenues of Dor Alon
compared to the corresponding quarter last year.

Revenues from sales,net

Revenues of the Commercial and Fueling sites segment - amounted in this
quarter to NIS 1,493.9 million (U.S. $381.9 million) as compared to NIS
1,425.6 million in the corresponding quarter last year, an increase of 4.8%.
The main increase was due to an increase in the price of petrol and an
increase in quantitative sales in the convenience stores compared to the
corresponding quarter last year.

Revenues of the Supermarkets segment- amounted in this quarter to NIS 1,685.0
million (U.S. $430.7 million) as compared to NIS 1,673.1 million in the
corresponding quarter last year, an increase of 0.7%. The increase in revenues
derives from opening 9 new branches and was partly offset by closing 6
branches in the last 12 months and reduction in the same store sales (SSS) at
a rate of 0.4% which was mainly due to the increasing competition and opening
of commercial areas and erosion in sale prices.

Revenues of the Non-Food segment - an increase in revenues by 2.4% from NIS
121.5 million in the third quarter of 2011 to NIS 124.4 million (U.S. $31.8
million) in the current quarter. The increase in revenues is mainly due to an
increase in sales in the home segment and in stores transferred from franchise
to self-operation.

Revenues of the Real Estate segment - an increase in rental income of 5.8%
from NIS 7.2 million in the third quarter of 2011 to NIS 7.6 million (U.S.
$2.0 million) in the current quarter, mainly due to an increase in leased
space, following the opening of the commercial center in Kiryat Hasharon,
Netanya, toward the end of the quarter. 

Gross profit in the third quarter of 2012 amounted to NIS 754.0 million (U.S.
$192.7 million) (22.8% of revenues) as compared to gross profit of NIS 744.8
million (23.1% 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 commercial and fueling segment.

In the Commercial and Fueling sitessegment, gross profit amounted to NIS
240.9 million (U.S. $61.6 million), (16.1% of revenues) compared to NIS 230.6
million in the comparable quarter last year (16.2% of revenues). The increase
of 4.4% in the gross profit compared to the corresponding quarter last year
mainly derived from convenience stores and was partly offset from the
reduction of marketing margin of supervised gasoline.

In the Supermarkets segment, gross profit amounted to NIS 465.3 million (U.S.
$118.9 million), (27.6% of revenues) compared to NIS 467.7 million in the
third quarter of 2011 (27.9% of revenues), a decrease of 0.5% stemming from
increasing competition resulting in price reductions.

In the Non Food segment, gross profit amounted to NIS 45.3 million (U.S. $11.6
million), (36.4% of revenues) compared to NIS 39.3 million in the comparable
quarter last year (32.3% of revenues). The increase in gross profit and gross
profit rate mainly drives from decrease in sales to franchisees and increase
in retail sales, as aforementioned. 

Selling,general and administrative expenses in the third quarter of 2012
amounted to NIS 688.5 million (U.S. $176.0 million) (20.8% of revenues),
compared to expenses of NIS 672.9 million (20.8% of revenues) in the
comparable quarter last year, an increase of 2.3%. The main increase was
recorded in the Commercial and Fueling sites segment and from launching Alon
Cellular activity that was partly offset by a decrease in these expenses in
the Supermarkets segment.

In the Commercial and Fueling sitessegment, these expenses amounted to NIS
185.2 million (U.S. $47.3 million) compared to NIS 175.4 million in the third
quarter of 2011, an increase of 5.6%, mainly deriving from opening new fueling
sites and was partly offset by efficiency measures taken starting from the
fourth quarter of 2011.

In the Supermarketssegment, selling, general and administrative expenses
amounted to NIS 425.7 million (U.S. $108.8 million) compared to expenses of
NIS 433.8 million in the comparable quarter in 2011. The main decrease derives
from decrease in salary expenses and other headquarters expenses following
efficacy measures and was partly offset by an increase in electricity and
municipal taxes expenses.

In the Non Food segment, these expenses amounted to NIS 49.0 million (U.S.
$12.5 million) (an increase of 17.1%) compared to NIS 41.8 million in the
comparable quarter in 2011. The increase derives from an increase in the
retail activity and the transition from franchise into self-operated stores.

In the Real Estate segment, these expenses amounted to NIS 4.8 million (U.S.
$1.2 million) compared to NIS 3.1 million in the comparable quarter in 2011.
The increase mainly derives from increase in salary expenses and increase in
professional fees paid to consultants as a result of an increase and expanding
the activity in various projects.

Operating profit (before other gains and losses and changes in fair value of
investment property) in the third quarter of 2012 amounted to NIS 65.5 million
(U.S. $16.7 million) (2.0% of revenues) as compared to NIS 71.9 million (2.2%
of revenues) in the comparable quarter last year, a decrease of 9.0%. The
decrease in the operating profit was mainly due to expenses from launching
Alon Cellular activity.

In the Commercial andFuelingsites segment, operating profit in this quarter
amounted to NIS 55.7 million (U.S. $14.2 million) similar to the operating
profit of NIS 55.2 million in the corresponding quarter.

In the Supermarkets segment, operating profit increased from NIS 33.9 million
in the comparable quarter last year to NIS 39.6 million (U.S. $10.1 million)
due to increase in sales and decrease in selling, general and administrative
expenses as mentioned above.

In the Non Food segment, operating loss of NIS 5.5 million in the comparable
quarter in 2011 as compared to operating loss of NIS 3.7 million (U.S. $0.9
million) due to decrease in sales to franchisees and closing stored by
franchisees.

In the Real Estate segment, a decrease from operating profit of NIS 4.1
million in the comparable quarter in 2011 to NIS 2.8 million (U.S. $0.7
million) due to increase in selling administrative and general expenses as
aforementioned.

Changes in fair value of investment property in the third quarter of 2012 the
Company recorded loss in the amount of NIS 1.0 million (U.S. $0.2 million)
compared to a profit of NIS 8.7 million in the comparable quarter last year.

Other income (expenses),net other expenses in the third quarter of 2012
amounted to NIS 3.4 million (U.S. $0.9 million) compared to other expenses of
NIS 0.8 million in the comparable quarter last year.

Operating profit amounted to NIS 61.1 million (U.S. $15.6 million) (1.8% of
revenues) as compared to operating profit of NIS 79.8 million (2.5% of
revenues) in the comparable quarter last year, a decrease of 23.4%.

Finance costs,net in the third quarter of 2012 amounted to NIS 76.3 million
(U.S. $19.5 million) as compared to net finance costs of NIS 79.0 million in
the comparable quarter last year. The decrease in finance costs, net derives
from a sharp devaluation of the NIS exchange rate in the third quarter of 2011
and was partly offset by an increase in finance expenses this quarter on CPI
linked long term loans.

Taxes on income in the third quarter of 2012 amounted to NIS 1.3 million (U.S.
$0.3 million) as compared to tax benefit of NIS 34.7 million in the comparable
quarter last year. Tax benefit in the comparable quarter derived mainly from
closing deferred taxes at realization of option to purchase Diners share.

Net loss for the third quarter of 2012 amounted to NIS 12.6 million (U.S. $3.2
million) compared to a net income of NIS 40.3 million in the third quarter of
2011, the difference derives mainly from taxes as explained above. The net
loss this quarter attributed to the Company's shareholders amounted to NIS
17.8 million (U.S. $4.5 million) or NIS 0.27 per share (U.S. $0.07) and the
income attributed to non -controlling interests amounted to NIS 5.2 million
(U.S. $1.3 million).

Cash flows for the third quarter of 2012

Cash flows from operating activities: Net cash flow provided by operating
activities amounted to NIS 155.7 million (U.S. $39.8 million) in the third
quarter of 2012 compared to NIS 51.6 million from operating activities in the
comparable quarter last year. The increase derives from a decrease in working
capital needs in the amount of NIS 26 million (U.S. $6.6 million), and tax
returns, net amounting to NIS 10.8 million (U.S $2.7 million) in the third
quarter of 2012 compared to tax paid, net amounting to NIS 20.4 million in the
comparable quarter last year.

Cash flows used in investing activities: Net cash flows used in investing
activities amounted to NIS 94.5 million (U.S. $24.2 million) in the third
quarter of 2012 as compared to net cash used in investing activities of NIS
177.0 million in the comparable quarter. Cash flows used in investing
activities in the third quarter of 2012 mainly included the purchase of
investment property, property and equipment and intangible assets of total NIS
65.4 million (U.S. $16.7 million), the grant of long term loans of NIS 27.1
million (U.S. $6.9 million) mainly to an affiliate and was offset by proceeds
from realization of property and equipment of NIS 7.3 million (U.S. $1.9
million), and interest received of NIS 8.6 million (U.S. $2.2 million).

In the third quarter of 2011 the cash flows used in investing activities
mainly included the purchase of property and equipment, intangible assets and
investment property of NIS 96.2 million, investment in restricted deposits of
NIS 2.9 million, investment in short term deposits, net in the amount of NIS
8.2 million and investment in affiliate of NIS 36.4 million and was offset by
proceeds received from realizing investment property amounting to NIS 50.6
million.

Cash flows from financing activities: Net cash flows used in financing
activities amounted to NIS 18.1 million (U.S. $4.6 million) in the third
quarter of 2012 as compared to net cash flows deriving from financing
activities of NIS 108.2 million in the corresponding quarter last year. The
cash flows used in financing activities in the third quarter of 2012 mainly
included interest payments of NIS 73.9 million (U.S. $18.9 million), repayment
of loans of NIS 61.7 million (U.S. $15.8 million) and debentures repayment of
NIS 85.0 million (U.S. $21.7 million) and was partly offset by issuance of
debentures of NIS 93.4 million (U.S. $23.9 million) and receiving loans of NIS
45.6 million (U.S. $11.6 million). The net cash flows deriving from financing
activities in the third quarter of 2011 included mainly long term loans
received of NIS 23.0 million, change in short term credit of NIS 203.0 million
and was offset by repayment of debentures of NIS 2.2 million, repayment of
long term loans of NIS 55.6 million and interest paid of NIS 59.6 million.

Comments of Management

Mr. David Weissman,Chairman of the Board of Directors and Chief Business
Officer -

"The third quarter marks a continuous improvement in each of the operating
segments alongside a momentum in the business development.

Dor Alon continues to grow, alongside with an adequate coping with the
regulation which returned the Company to strong profitability.

BSRE starts to enjoy an income production from assets initiated by the Company
such as Kiryat Hasharon mall that was completed and opened to the public. The
wholesale market complex in Tel Aviv is progressing as planned. Until now,
about 85% of the apartments were sold and construction is advancing ahead of
schedule. The same situation applies to the Comverse building in Ra'anana,
which is in construction stages and an additional four projects that are in
completion stages. 

These days, the Company launched, with a great success, the cellular
activity.This activity reinforces the synergy between the various activity
arms of the group and materially advances increased the augmented purchase
baskets in Mega and Dor Alon in addition to the successful You Club and
Diners. 

On this occasion, I wish to thank Mr. Zeev Vurembrand for his contribution to
the Company in the last five years and I wish much success to Mr. Motti Keren
who was appointed as the CEO of Mega Retail. Zeev received a chain facing
complex tasks in volatile times and he leaves a leading innovative retail
chain for the coming years". 

Regarding the Supermarketssegment Mr. ZeevVurembrand,CEO, said: "The
Supermarkets segment presents a considerable improvement in the operating
profit margin in the corresponding quarter last year and in the last three
quarters and that is despite the increasing competition.

The improvement in the business results stems from implementing efficacy
measures performed by us in the prior quarters of this year. A further
improvement is expected in the business results starting in the fourth quarter
simultaneously with completing the exit from 11 losing branches.

Mega shall complete, until the end of the year, the deployment of the
self-stewarding formation in all of the branches excluding the beverages and
dairy categories that shall be deployed in the first half of 2013. This
maneuver shall enable a more adequate and economical management of the chain's
shelves similar to foreign chains and is expected to contribute to the
Company's operating profitability.

In the third quarter of 2012, the Company operated 216 branches, of which 185
branches present operating profit of 3.9%, the remaining 31 branches present
operating loss of approximately 6.1% where we shall exit from 11 losing
branches until the end of the year and 20 losing branches will be addressed
under the strategic plan".

Results for the first nine months of 2012

Gross revenues

Revenues (including government levies) in the first nine months of 2012
amounted to NIS 12,064.5 million (U.S. $3,083.9 million) as compared to
revenues of NIS 11,555.6 million in the comparable period last year, an
increase of 4.4%. The increase in revenues was mainly due to an increase in
the revenues of Dor Alon compared to the corresponding period last year.

Revenues from sales,net 

Revenues of the Commercial and Fueling sites segment - in the first nine
months of 2012 amounted to NIS 4,500.0 million (U.S. $1,150.3 million) as
compared to NIS 4,002.1 million in the first nine months of 2011, an increase
of 12.4%. The main increase was due to an increase in the prices of petrol,
quantity sales and increase in retail revenues in the convenience stores.

Revenues of the Supermarkets segment- amounted in the first nine months of
2012 to NIS 4,964.5 million (U.S. $1,269.0 million) as compared to NIS 5,076.1
million in the corresponding period last year, a decrease of 2.2%. The
decrease in revenues was due to a reduction in the same store sales (SSS) at a
rate of 3.5% and was partly offset by the net opening of 3 new branches in the
last 12 months.

Revenues of the Non-Food segment - amounted in the first nine months of 2012
to NIS 335.0 million (U.S. $85.6 million) compared to NIS 342.9 million in the
first nine months of 2011 a decrease of 2.3%. The decrease in revenues is
mainly due to a decrease in sales to franchisees and from closing stores by
franchisees which was partly offset by an increase in the houseware sector and
in stores transferred from franchise to self-operation.

Revenues of the Real Estate segment - an increase in rental income of 12.5%
from NIS 21.9 million in the first nine months of 2011 to NIS 24.7 million
(U.S. $6.3 million) in the first nine months of 2012, due to an increase in
leased space and increase of CPI. 

Gross profit in the first nine months of 2012 amounted to NIS 2,173.4 million
(U.S. $555.6 million) (22.1% of revenues) as compared to gross profit of NIS
2,226.3 million (23.6% of revenues) in the comparable period last year. The
decrease in the gross profit was mainly due to the decrease in sales of the
Supermarkets segment.

In the Commercial and Fueling sitessegment, gross profit amounted to NIS
680.5 million (U.S. $174.0 million), (15.1% of revenues) compared to NIS 672.0
million in the comparable period last year (16.8% of revenues). An increase in
gross profit of 1.3% compared to the corresponding period last year deriving
from an increase in the activity of convenience stores and an increase in
quantitative sales net of the impact of changes in the petrol prices on the
value of inventory and the marketing margins reduction.

In the Supermarkets segment, gross profit amounted to NIS 1,347.7 million
(U.S. $344.5 million), (27.1% of revenues) compared to NIS 1,406.1 million in
the corresponding period last year (27.7% of revenues), a decrease of 4.2%
stemming from decrease in the sales of SSS stores and due to the public
protest and the increasing competition.

In the Non Food segment, gross profit amounted to NIS 129.7 million (U.S.
$33.1 million), (38.7% of revenues) compared to NIS 126.3 million in the first
nine months of 2011 (36.8% of revenues). The increase in gross profit mainly
derives from an increase in retail sales and was offset by a decrease in sales
to franchisees.

Selling,general and administrative expenses in the first nine months of 2012
amounted to NIS 2,016.0 million (U.S. $515.3 million) (20.5% of revenues),
compared to expenses of NIS 1,956.6 million (20.7% of revenues) in the first
nine months of 2011, an increase of 3.0%. The main increase was recorded in
the Commercial and Fueling sites segment due to opening new fueling sites and
from costs relating to launching "You Phone" activity.

In the Commercial and Fueling sitessegment, these expenses amounted to NIS
537.1 million (U.S. $137.3 million) compared to NIS 515.8 million in the first
nine months of 2011, an increase of 4.1%, mainly deriving from opening new
fueling sites and was partly offset by efficiency measures beginning from the
fourth quarter of 2011.

In the Supermarketssegment, selling, general and administrative expenses
amounted to NIS 1,258.4 million (U.S. $321.7 million) compared to expenses of
NIS 1,254.6 million in the first nine months of 2011, an increase of 0.3% that
resulted from net opening 3 new branches and increase in electricity and
municipal taxes expenses and was partly offset by a decrease in the salary and
other operating expenses.

In the Non Food segment, these expenses amounted to NIS 135.7 million (U.S.
$34.7 million) (an increase of 9.7%) compared to NIS 123.7 million in the
first nine months of 2011. The increase derives from an increase in rental
fees expenses, increase in salary expenses as a result of an increase in the
number of self operated stores.

In the Real Estate segment - these expenses amounted to NIS 21.5 million (U.S.
$5.5 million) compared to NIS 11.6 million in the comparable period last year.
The increase in expenses derives from recording a provision for management
fees in the mall company which builds the mall in the wholesale market
complex.

Operating profit (before other gains and losses and changes in fair value of
investment property) in the first nine months of 2012 amounted to NIS 157.4
million (U.S. $40.2 million) (1.6% of revenues) as compared to NIS 269.7
million (2.9% of revenues) in the comparable period last year, a decrease of
41.6%. The decrease in the operating profit was mainly due to a decrease in
sales in the Supermarkets segment and from expenses in Alon Cellular in
connection with the commencement of its activity.

In the Commercial andFuelingsites segment, operating profit decreased from
NIS 156.1 million in the comparable period to NIS 143.4 million (U.S. $36.6
million) in the reported period due to the reduction of marketing margin and
the impact of petrol prices on the value of inventory and reducing the
marketing margin and was partly offset by efficacy measures.

In the Supermarkets segment, operating profit decreased from NIS 151.5 million
in the comparable period last year to NIS 89.2 million (U.S. $22.8 million) in
the reported period due to decrease in sales as mentioned above.

In the Non Food segment, operating loss decreased from NIS 7.1 million in the
comparable period to operating loss of NIS 6.0 million (U.S. $1.5 million) in
the reported period.

In the Real Estate segment, operating profit decreased from NIS 10.4 million
in the comparable period to operating profit of NIS 3.2 million (U.S. $0.8
million) in the current period due to an increase in the selling, general and
administrative expenses as mentioned above.

Changes in fair value of investment property in the first nine months of 2012
the Company recorded profit of NIS 83.4 million (U.S. $21.3 million) compared
to NIS 28.1 million in the comparable period last year. The profit in the
first nine months of 2012 includes NIS 95 million from revaluation of the
commercial section in the wholesale market complex in Tel Aviv.

Other income (expenses),net in the first nine months of 2012, amounted to NIS
14.2 million (U.S. $3.6 million) compared to other expenses of NIS 7.1 million
in the corresponding period last year. Income in the reported period includes
profit from decrease in holding rate and loss of control in the residential
company in the wholesale market complex in Tel Aviv in the amount of NIS 19.6
million.

Operating profit in the first nine months of 2012 amounted to NIS 254.9
million (U.S. $65.2 million) as compared to operating profit of NIS 290.7
million in the comparable period last year, a decrease of 12.3%.

Finance costs,net in the first nine months of 2012 amounted to NIS 215.2
million (U.S. $55.0 million) as compared to net finance costs of NIS 134.9
million in the first nine months of 2011. The increase in finance costs, net
derives from decrease in finance income, this period compared to the
corresponding period which included revenues from revaluation of Diners
option.

Taxes on income in the first nine months of 2012 totaled NIS 9.8 million (U.S.
$2.5 million) (an effective tax rate of 20.0% as compared to the statutory
rate of 25%) as compared to tax expenses totaled NIS 12.1 million in the
comparable period last year (an effective tax rate of 7.5% as compared to the
statutory rate of 24%). The effective tax rate in this period was affected by
profit from a decrease in holding rate in respect of which, the Company did
not record deferred taxes.

Net income for the first nine months of 2012 amounted to NIS 38.6 million
(U.S. $9.8 million) compared to a net income of NIS 149.8 million in the first
nine months of 2011. The income in the reported period attributable to the
Company's shareholders amounted to NIS 4.6 million (U.S. $1.2 million) or NIS
0.07 per share (U.S. $0.02) and the profit attributable to the non-controlling
interests amounted to NIS 34 million (U.S. $8.7 million).

Cash flows for the first nine months of 2012

Cash flows from operating activities: Net cash flow from operating activities
amounted to NIS 176.7 million (U.S. $45.2 million) in the first nine months of
2012 compared to NIS 486.2 million from operating activities in the comparable
period last year. The decrease mainly derives from purchase of real estate
inventory by BSRE of NIS 248.1 million (U.S $63.4 million) compared to
purchase of real estate inventory of NIS 4.9 million in the comparable period
last year, increase in working capital needs mainly due to increase in petrol
prices and decrease in operating profit of approximately NIS 112.3 million
(U.S $28.7 million) net of tax returns received, net amounting to NIS 27.1
million (U.S $6.9 million) in the first nine months of 2012 compared to tax
paid, net amounting to NIS 61.1 million in the comparable period last year.

Cash flows used in investing activities: Net cash flows used in investing
activities amounted to NIS 514.5 million (U.S. $131.5 million) in the first
nine months of 2012 as compared to net cash used in investing activities of
NIS 477.4 million in the comparable period last year. Cash flows used in
investing activities in the first nine months of 2012 mainly included the
purchase of property and equipment, investment property and intangible assets
of total NIS 371.9 million (U.S. $95.1 million) as well as the grant of long
term loans of NIS 65.7 million (U.S. $16.8 million) mainly to the controlling
shareholders, investment in restricted deposits of NIS 69.9 million (U.S.
$17.8 million) and investment in securities of NIS 143.9 million (U.S. $36.8
million), net of proceeds from realization of securities of NIS 120.8 million
(U.S. $30.9 million) and receiving a dividend in the amount of NIS 11 million
(U.S. $2.8 million).

Cash flows used in investing activities in the first nine months of 2011
included mainly purchases of property and equipment, investment property and
intangible assets, in a total amount of NIS 272.9 million, the grant of long
term loans of NIS 155.1 million, mainly to controlling shareholders and
investment in restricted deposits in the amount of NIS 98.3 million and an
investment in an associate of NIS 36.4 million. 

Cash flows from financing activities: Net cash flows from financing activities
amounted to NIS 519.5 million (U.S. $132.8 million) in the first nine months
of 2012 as compared to net cash flows used in financing activities of NIS 16.8
million in the corresponding period last year. The cash flows from financing
activities in the first nine months of 2012 mainly included issuance of
debentures of NIS 388.9 million (U.S. $99.4 million), receiving long term
loans of NIS 543.9 million (U.S. $139.0 million) and an increase in short term
bank credit of NIS 208.3 million (U,S, $53.2 million) that was offset by
interest payments of NIS 191.3 million (U.S. $48.9 million), repayment of
loans of NIS 249.8 million (U.S. $63.9 million) and debentures repayment of
NIS 177.2 million (U.S. $45.3 million). The net cash flows used in financing
activities in the first nine months of 2011 included mainly repayment of
debentures in the amount of NIS 140.7 million, repayment of loans in the
amount of NIS 181.7 million, and payments of interest in the amount of NIS
170.0 million, this was offset by an increase in short term bank credit in the
amount of NIS 373.1 million and receiving long term loans in the amount of NIS
132.5 million.

Additional Information

1.As of September 30, 2012, the Company operated 214 supermarkets divided as
    follows: Mega In Town - 119; Mega Bool - 69; Zol Beshefa - 15; Eden Teva
    Market - 20 of which 9 Eden within Mega, Dor Alon operated - 202 fueling
    stations and 209 convenience stores and the Bee Group operates 238
    branches (of which 104 franchised).
2.EBITDA (Earnings before Interest,Taxes,Depreciation,and Amortization)^3
    In the third quarter of 2012 EBITDA was NIS 142.7 million (U.S. $36.5
    million) (4.3% of revenues) compared to NIS 140.5 million (4.4% of
    revenues) in the comparable quarter of 2011.
    In the first nine months of 2012 EBITDA was NIS 373.7 million (U.S. $95.5
    million) (3.8% of revenues) compared to NIS 476.0 million (5.0% of
    revenues) in the comparable period of 2011.

Events during the reporting period

General

a.Effective January 2012, the Company applies the amendment to IAS 12, Taxes
    on Income - deferred taxes on investment property. The adoption of the
    standard was made retrospectively. The effect of the above change on the
    presented comparative figures are decrease in provisions for deferred
    taxes of NIS 3 million and increase in accumulated earnings of NIS 2.4
    million and increase in non-controlling interests of NIS 0.6 million. The
    above amendment had no material effect on the statement of income. 
b.During the second quarter of 2012, the Company launched its operations in
    the cellular activity under the brand name "You Phone" and commenced to
    provide services to its customers.

Commercial and Fueling sites segment

a. Commitment for establishinga power plant:

On February 8, 2012, a corporation controlled by Dor Alon (55% held) entered
into a detailed agreement with Sugat Sugar Refineries Ltd. (Sugat) under which
the corporation shall establish a power plant on its premises with total
capacity of up to 124 Mega Watt. At the first stage, the plant capacity shall
be 64 Mega Watt. Under the agreement, the power plant shall provide the energy
needs of Sugat for 24 years and 11 months and in addition, the corporation may
sell steam and electricity to third parties.

It was further agreed that in the stage preceding the first stage, the
corporation shall connect the Sugat plant to the natural gas transmission
systems, shall convert the existing energy plant of Sugat to a dual system
enabling the operation by fuel oil and natural gas and shall operate and
maintain for Sugat its existing energy plant, all as determined in the
detailed agreement.

On March 1, 2012, the corporation entered into an agreement with Israel
Natural Gas Lines Ltd. ("INGL") to connect Sugat to the national transmission
system for natural gas and to provide natural gas transmission services by
INGL (the agreement).  

Pursuant to the agreement, INGL shall establish the infrastructures that
include, inter alia, the transmission piping and the facilities necessary to
connect the Sugat plant to natural gas and shall install the infrastructures
necessary for natural gas transmission to the power plant which is planned to
be built by the corporation on the Sugat plant premises. 

The agreement is for a period until July 31, 2029 with a renewal option of
five additional years.

Pursuant to the agreement, the corporation shall bear the connecting expenses
to the transmission system which is estimated at NIS 15 million. In addition
the corporation is committed to pay the current annual payments to INGL for
transmission services until the end of the agreement term in an immaterial
amount, regardless of whether the corporation uses the transmission services
or not. 

b. On May 31, 2012, the Water and Energy Ministry updated the supervised
marketing margin of gasoline 95 such that the marketing margin for
self-service was increased by 4.7 Agorot per litter (before VAT) and the
addition for full service was reduced by 3.8 Agorot per litter (before VAT).

c. On June 28, 2012, the Palestinian authority informed Dor Alon on
discontinuing the commitment with the company regarding the supply of fuels to
Gaza strip effective October 1, 2012. There is no material effect on the
financial results of the Commercial and Fuling sites in 2012.

Supermarkets segment

a.As of September 30, 2012, the Company operated branches in a total area
    of 380,700 sq.m. The sales per meter amounted in the third quarter of 2012
    to NIS 4,430 (U.S. $1,132) compared to NIS 4,524 in the corresponding
    quarter last year.
    Sales per meter in the first nine months of 2012 amounted to NIS 13,004
    (U.S. $3,324) compared to NIS 13,691 in the corresponding period last
    year.
    In the period of nine months ended September 30, 2012, 9 branches were
    opened in a total area of 11,700 sq.m and 6 branches were closed in a
    total area of 8,600 sq.m.
b.According to the strategy of the Company for treating losing branches, the
    subsidiary, Mega Retail, in July and August 2012, signed agreements with
    third parties under which the Company transferred the lease rights and
    sold the equipment attributed to nine of its branches for a total
    consideration of NIS 26 million. As of the date of the Financial
    Statements' approval, the Company delivered 5 branches.

Non-Food segment

On April 18, 2012, Bee Group informed that it had reached an agreement with a
franchisee (which operates together with others 24 stores in the non-food
segment - hereafter the franchisee) which experiences financial difficulties.
Based on the franchise terms with the franchisee and the said agreement, Bee
Group will take over the majority of the stores and the inventory in exchange
for the debt. Following the agreement and based on the value of the assets
that Bee Group will assume, the Company recorded a provision for doubtful
accounts in the statements of financial position for the year ended December
31, 2011 in the amount of NIS 11.2 million.

Real Estate segment

a.Comverse Building

On May 13, 2012, BSRE signed a memorandum of understanding with a third party
(the lessee), pursuant to which the Company agreed to erect a 23,000
square-meter office building on real property it owns in Ra'anana and also to
construct a 2,300 square-meter basement (the structure), both of which will be
leased to the lessee for 10 years for monthly rental fees of NIS 1,660
thousand linked to the CPI with a renewal option for an additional 5 years.
The rental fees in this period shall increase by 7.5%. BSRE has undertaken to
erect a surrounding structure at estimated cost of NIS 200 million and to
perform all of the finishing work, as far as requested by the lessee, which is
estimated at a cost NIS 75 million. BSRE will be entitled to receive from the
lessee a payment equal to 7.5% of the cost of the finishing work in addition
to monthly rental fees if BSRE will perform the finishing work.

BSRE has undertaken to finish the construction work and to transfer the
building at the end of the final quarter of 2014. BSRE and the lessee have
determined acceptable compensation mechanisms. As of the reporting date, BSRE
obtained building permits to erect the building and the construction work has
begun. Following the earthwork in the project, in September 2012, the Company
entered into an agreement with another contractor who commenced the
construction work.

 b. The wholesale market complex

  oOn May 31, 2012, Tel Aviv Lev Towers Ltd. and the Tel Aviv City Mall Ltd.
    in which BSRE held to that date indirectly 50% together with Gindi
    Investments 1 Ltd and a corporation controlled by Moshe and Yigal Gindi,
    ("Gindi"), completed the purchase of lease rights for the period ended on
    August 31, 2099 for a part of the wholesale market complex in Tel Aviv.
    The Purchasers paid the Sellers the balance of the consideration in the
    aggregate amount of approximately NIS 730 million plus VAT.
    In order to pay the Balance of Consideration, the Purchasers received
    loans of NIS 730 million from a bank. The Loans were extended for 18
    months where the principal shall be paid in one payment at the end of the
    period and the interest payments are payable quarterly. In addition to
    this loan, the Bank provided the Purchasers with an additional loan for
    two months in the amount of NIS 120 million to pay the VAT. To secure the
    loan, BSRE recorded a charge in favor of the Bank on the shares of Tel
    Aviv Lev Towers Ltd. and Tel Aviv City Mall Ltd. Furthermore, the land was
    charged in favor of the Bank.
  oDuring the third quarter, the excavation and reinforcement works in the
    project were completed and the performance of skeleton work has commenced.
    On July 3, 2012, the purchasers signed an agreement with a performing
    contractor (the contractor) to perform all skeleton work of the parking
    lots, the commercial part, public structures and other finishing work. The
    purchasers shall pay the contractor for the work an estimated amount of
    NIS 286 million (BSRE portion amounts to NIS 143 million). The agreement
    sets forth schedules and milestones for performing this work where the
    contractor committed to complete the work in 19 months from receiving the
    work commencement order. Under the agreement, the contractor committed to
    provide the purchasers with guarantees and the agreement further
    determines agreed compensation in the event of material breach by the
    contractor. In addition, the agreement set forth a mechanism to calculate
    a bonus or penalties should the contractor performs the work earlier than
    the schedules or deviate from the schedules. The work commencement order
    was delivered to the contractor on July 4, 2012.
  oOn June 29, 2011, BSRE and Gindi entered into an agreement constituting an
    appendix (the Appendix) to the Memorandum of Understandings dated April
    15, 2010, (MOU) that regulates the relations between the company and Gindi
    in all that concerns the wholesale market complex in Tel Aviv. According
    to the Appendix, Tel Aviv Lev Towers allocated to Gindi one additional
    share of NIS 1 par value for NIS 300 thousand such that after the
    allocation, Gindi holds (by chaining) in 50.5% of the issued and
    outstanding share capital of Tel Aviv Lev Towers and BSRE (by chaining)
    holds 49.5% of the issued and outstanding share capital. On June 29, 2012,
    the parties completed the above allocation.
    The residential company ceased to exist under joint control in the
    financial statements in the second quarter of BSRE and therefore the
    investment in the residential company was recorded on equity method of
    accounting. BSRE recorded in the statements of operations a gain of NIS
    19.6 million for the difference between the fair value of the Company's
    investment in the residential company upon losing control, and the
    investment balance as included in the books at this time.
  oAs of June 30, 2012, BSRE recorded in its financial statements for the
    second quarter a gain of NIS 95 million from appreciation before taxes
    stemming from revaluation of real estate in the Tel Aviv City Mall
    Company.

 c. Hadar Mall

On June 5, 2012, BSRE entered into a loan agreement to receive finance from a
group of institutional companies in    order to build an addition to the
extension to the Hadar Mall in Jerusalem, in which BSRE holds 50% of the
rights. The lenders will extend an amount of NIS 125 million over a period of
10 years during which an aggregate of NIS 42.5 million will be repaid in 17
bi-annual payments commencing on the 18th month subsequent to the date of the
loan, and the remaining sum will be repaid in a one-time payment at the end of
the loan term. BSRE has the option to obtain an additional loan of NIS 40
million upon the completion of the construction. The loan is linked to the CPI
and bears annual interest of 4.1%. As collateral for the repayment of the
loan, BSRE placed a charge on its rights in Hadar Mall in Jerusalem.

d. Eyal Logistic center

On July 12, 2012, Eyal Baribua Ltd. (Eyal Baribua) a company held at rate of
50% by BSRE, entered into a financing agreement with a bank to provide credit
line of NIS 90 million to Eyal Baribua to establish the logistic center in
Kibbutz Eyal. The credit line shall be extended for the establishment period
and after the completion of the construction and Mega's entry into the
logistic center, the credit line shall be converted into a loan where NIS 63
million shall be repaid in quarterly payments over 14 years and the balance at
the end of the loan term. The credit line and the loan shall bear variable
annual interest rate linked to the Prime. As collateral for the loan
repayment, the real estate rights shall be charged and for the establishment
period a guarantee of Eyal Baribua shareholders was granted as well.

In September 2012, Eyal Baribua received a building permit to construct the
logistic center and work was commenced according to the permit following the
earthwork in the project.

e. Commercial center project-Kiryat Hasharon,Netanya

In September 2012, the commercial center in Kiryat Hasharon, Netanya was
opened to the public. The commercial center was established by BSRE and Harel
Insurance Company. BSRE and Harel hold equally the real estate and the
commercial center. 

Issuance of bonds

a.On January 4, 2012, the bonds series of BSRE (Series D) was expanded by a
    private offering of NIS 150 million par value of bonds (Series D) to
    institutional investors for 98.5% of their par value, reflecting a return
    of 5.8%.
b.On January 25, 2012, Midroog announced on lowering its rating on bonds
    (series A and C) issued by the Company, from A1 to A2 with stable outlook.
    In addition, Midroog granted A2 rating with stable outlook for bonds up to
    NIS 200 million par value the Company intends to issue by expanding Series
    C or by issuance of new Series with a duration up to 6 years.
c.On February 15, 2012, the bonds series of Dor Alon (Series D) was expanded
    by a private offering of NIS 119.9 million par value of bonds (Series D)
    to institutional investors for 100.95% of their par value, reflecting a
    return of 6.9%.
d.On April 11, 2012, the bonds series of the Company (Series C) was expanded
    by a private offering of NIS 35 million par value of bonds (Series C) to
    institutional investors for 89.5% of their par value, reflecting a return
    of 5.7%.
e.On May 23, 2012, Midroog announced that it had assigned a "P-1" rating to
    commercial paper of up to NIS 170 million nominal value, which may be
    issued in the future by the Company. As of the reporting date NIS 71
    million were issued and are repayable at the request of the holder every 3
    months.
f.On August 20, 2012, the bonds series of Dor Alon (Series D) was expanded
    by a private offering of NIS 46 million par value of bonds (Series D) to
    institutional investors for 101.08% of their par value, reflecting a
    return of 6.9%.
g.On August 28, 2012, the bonds series of BSRE (Series D) was expanded by a
    private offering of NIS 49 million par value of bonds (Series D) to an
    institutional investor for 98.0% of their par value, reflecting a return
    of 6.0%.
h.During the third quarter, the Company's subsidiaries acquired NIS 18.1
    million par value of bonds of Series C of the Company such that as of
    September 30, 2012, the subsidiaries hold 14.3% of bonds Series C.
    Following the acquisitions, the Company recorded finance income of NIS 3.1
    million in the results for the nine months of 2012.

Post balance sheet events

a.On November 19, 2012, the Company's CEO, Mr. Zeev Vurembrand, announced
    the termination of his service at the end of February 2013.
b.On November 19, 2012, the bonds series of BSRE (Series D) was expanded by
    a private offering of NIS 110 million par value of bonds (Series D) to
    institutional investor for 107.0% of their par value, reflecting a return
    of 4.8%.
c.On November 22, 2012, the Company announced that Mr. Motti Keren has been
    appointed as CEO of Mega Retail.
d.On November 26, 2012, the Supreme Court sitting as the High Court of
    Justice rejected the petition of Dor Alon and the other fueling companies
    on the issue of reducing the supervised marketing margin.
e.On November 27, 2012, Mr. David Weissman was appointed as CEO of the
    Company and Mr. Itzhak Bader was appointed as the chairman of the Company.
    The appointments are in effect as of January 1, 2013, without changes in
    the terms of employment.

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 September 30, 2012: U.S. $1.00 equals
NIS 3.912. The translation was made solely for the convenience of the reader.

Alon Holdings Blue Square- Israel Ltd. (hereinafter: "Alon Holdings") is the
leading retail company in the State of Israel and operates in four reporting
segments: In its supermarket segment, Alon Holdings, through its 100%
subsidiary, Mega Retail Ltd., currently operates 214 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 "Non-Food" segment, Alon Holdings, through its 100% subsidiary BEE Group
Retail Ltd., operates specialist outlets in self-operation and franchises and
offers a wide range of "Non-Food" products as retailer and wholesaler. In the
Commercial and Fueling Sites segment, 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.
Dor Alon operates a chain of 202 petrol stations and 209 convenience stores
in different formats in Israel. In its Real Estate segment, Alon Holdings,
through its TASE traded 78.22% subsidiary Blue Square Real Estate Ltd., owns,
leases and develops yield generating commercial properties and projects.

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 and 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,uncertaintiesand other factors include,but are not limited to,the
following: the effect of the recession in Israel on the sales in our stores
and on our profitability; our ability to compete effectively against
low-priced supermarkets and other competitors; quarterly fluctuations in our
operating results that may cause volatility of our ADS and share price; 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; 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 31,2011.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.

                  ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

                 CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION

                      AS OF SEPTEMBER 30, 2012

                         (UNAUDITED)


                                                               Convenience translation
                               December 31,      September  30,       September 30,
                                           _______________________
                                   2011          2011      2012           2012
                               ___________ ___________ ___________ ________________
                                               NIS                    U.S. dollars
                               ____________________________________________________

                                                 In thousands
                               ____________________________________________________

    Assets   
    CURRENT ASSETS:   
     Cash and cash equivalents     76,451      101,063    258,817      66,160
     Investment in securities     300,053      286,041    317,715      81,215
     Short-term bank deposits     103,942      103,449    120,025      30,681
     Trade receivables          1,576,150    1,856,038  1,697,136     433,828
     Other accounts  receivable
      including current
      maturities of loans
      receivable                  291,790      494,777    546,555     139,712
     Derivative financial
      instruments                   2,543        5,165          -           -
     Assets classified as held
      for sale                      3,610        3,610     65,403      16,719
     Income taxes receivable      125,789      110,795     84,560      21,616
     Inventories                  676,590      682,463    703,561     179,847
                               __________    _________  _________   _________
                                3,156,918    3,643,401  3,793,772     969,778
                               __________    _________  _________   _________
    NON-CURRENT ASSETS:   
     Investments in associates    202,653      203,050    311,501      79,627
     Derivative financial
      instruments                     896        1,124        265          68
     Real estate inventories      100,035       95,470    108,572      27,754
     Payments on account of
      real estate                 191,600      180,786          -           -
     Investments in securities     33,159       25,618     34,273       8,761
     Loans receivable, net of
      current maturities          182,654      147,471    197,506      50,487
     Property and equipment,
      net                       2,942,487    2,959,410  2,917,077     745,674
     Investment property          576,093      554,656    926,104     236,734
     Intangible assets, net     1,461,070    1,462,555  1,443,305     368,943
     Other long-term receivables  142,331      155,627     34,796       8,895
     Deferred taxes               104,321       79,919    120,940      30,915
                               __________    _________  _________   _________
                                5,937,299    5,865,686  6,094,339   1,557,858
                               __________    _________  _________   _________
     Total assets               9,094,217    9,509,087  9,888,111   2,527,636
                               ==========    =========  =========   =========

                 ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

                 CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION

                      AS OF SEPTEMBER 30, 2012

                         (UNAUDITED)

                                                               Convenience translation
                               December 31,      September  30,       September 30,
                                           _______________________
                                   2011          2011      2012           2012
                               ___________ ___________ ___________ ________________
                                               NIS                    U.S. dollars
                               ____________________________________________________

                                                 In thousands
                               ____________________________________________________
          Liabilities and
       shareholders' equity

    CURRENT LIABILITIES:
    Credit and loans from
    banks and others             1,036,928     828,642    1,191,403      304,551
    Current maturities of
    debentures and convertible
    debentures                     212,726     213,781      520,206      132,977
    Current maturities of
    long-term loans from banks     311,642     336,768      251,519       64,294
    Trade payables               1,243,914   1,474,970    1,495,613      382,314
    Other accounts payable and
    accrued expenses               730,985     948,844      837,135      213,991
    Customers' deposits             27,733      28,097       27,633        7,064
    Derivative financial
    instruments                      2,814       1,249       13,283        3,396
    Income taxes payable             6,311       4,809        3,762          962
    Provisions for other
    liabilities                     78,266      75,983       75,468       19,291
                                __________   _________    _________    _________
                                 3,651,319   3,913,143    4,416,022    1,128,840
                                __________   _________    _________    _________
 

    NON CURRENT LIABILITIES:
    Long-term loans from banks
    and others, net of current
    maturities                   1,240,487   1,262,632    1,366,387      349,281
    Convertible debentures,
    net of current maturities      118,826     119,305       91,208       23,315
    Debentures, net of current
    maturities                   2,034,047   2,071,174    2,013,009      514,573
    Other liabilities              264,597     265,415      153,135       39,145
    Derivative financial
    instruments                     16,701      15,520        9,458        2,418
    Liabilities in respect of
    employee benefits, net of
    amounts funded                  62,245      52,429       62,679       16,022
    Deferred taxes                *159,769    *106,790      173,749       44,414
                                __________   _________    _________    _________
                                 3,896,672   3,893,265    3,869,625      989,168
                                __________   _________    _________    _________
    Total liabilities            7,547,991   7,806,408    8,285,647    2,118,008
                                __________   _________    _________    _________


    EQUITY:
    Equity attributed to
    equity holders of the
    Company:
    Ordinary shares of NIS 1
    par value                       79,881       79,881       79,881      20,419
    Additional paid-in capital   1,219,279    1,219,279    1,219,279     311,677
    Other reserves                  (9,672)     (20,362)      (3,772)       (964)
    Accumulated deficit          *(106,434)    * 41,601      (93,833)    (23,986)
                                __________   _________    _________    _________
                                 1,183,054    1,320,399    1,201,555     307,146

    Non-controlling interests     *363,172     *382,280      400,909     102,482
                                __________   _________    _________    _________
    Total equity                 1,546,226    1,702,679    1,602,464     409,628
                                __________   _________    _________    _________
    Total liabilities and
    equity                       9,094,217    9,509,087    9,888,111   2,527,636
                                ==========   =========    =========    =========

             * Retroactive application, see events during the reporting
             period


               ALONHOLDINGS BLUE SQUARE-ISRAELLTD.
                CONSOLIDATED STATEMENTS OF INCOME

           FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER 30,
2012

                    (UNAUDITED)

                                                                         Convenience
                                                                         translation
                                                                           for the
                                                                         nine months
                    Year ended      Nine months         Three months        ended
                     December          ended               ended         September
                       31,           September 30,      September 30,        30,
                                ___________________   ________________
                       2011       2011       2012      2011      2012       2012
                   ___________  ________  _________   _______  _______    ___________
                                                                            U.S.
                                                NIS                       dollars
                   ___________________________________________________    ___________
                                  In thousands (except per share data)
                   __________________________________________________________________
    Revenues        15,296,255 11,555,604 12,064,483  3,956,136  4,077,628  3,083,968
    Less -
    government
    levies           2,813,671  2,112,439  2,238,043    728,554    764,801    572,097
                   ___________  _________  _________  _________  _________  _________
    Net revenues    12,482,584  9,443,165  9,826,440  3,227,582  3,312,827  2,511,871
    Cost of sales    9,566,876  7,216,831  7,653,012  2,482,719  2,558,812  1,956,291
                   ___________  _________  _________  _________  _________  _________
    Gross profit     2,915,708  2,226,334  2,173,428    744,863    754,015    555,580
    Selling,
    general and
    administrative
    expenses         2,638,845  1,956,614  2,016,045    672,924    688,531    515,349
                   ___________  _________  _________  _________  _________  _________
    Operating
    profit before
    other gains and
    losses and
    changes in fair
    value of
    investment
    property           276,863    269,720    157,383     71,939     65,484     40,231
    Other gains          1,358      1,637     22,057        637      2,212      5,638
    Other losses       (19,577)    (8,752)    (7,846)    (1,468)    (5,651)    (2,005)
    Increase in
    fair value of
    investment
    property, net       41,913     28,132     83,368      8,687       (966)    21,311
                   ___________  _________  _________  _________  _________  _________
    Operating
    profit             300,557    290,737    254,962     79,795     61,079     65,175
    Finance income     156,837    145,889     57,867     14,575     20,515     14,792
    Finance
    expenses          (332,839)  (280,858)  (273,076)   (93,593)   (96,777)   (69,805)
                   ___________  _________  _________  _________  _________  _________
    Finance
    expenses, net     (176,002)  (134,969)  (215,209)   (79,018)   (76,262)   (55,013)
    Share in gains
    of associates        5,746      6,153      8,669      4,836      3,865      2,216
                   ___________  _________  _________  _________  _________  _________
    Income (loss)
    before taxes on
    income             130,301    161,921     48,422      5,613    (11,318)    12,378
    Taxes on income     46,588     12,135      9,797    (34,670)     1,273      2,504
                    ___________  _________  _________  _________  _________  _________
    Net income
    (loss) for the
    period              83,713    149,786     38,625     40,283    (12,591)     9,874
                    ===========  =========  =========  =========  =========  =========

    Attributable
    to:
    Equity holders
    of the Company      59,513    128,796      4,609    33,849  (17,873)       1,179
                    ___________  _________  _________  _________  _________  _________
    Non-controlling
    interests           24,200     20,990     34,016     6,434     5,282       8,695
                    ___________  _________  _________  _________  _________  _________
    Earnings per
    ordinary share
    or ADS
    attributable to
    equity holders
    of the company
    Basic                 0.90       1.95       0.07      0.51     (0.27)        0.02
                    ___________  _________  _________  _________  _________  _________
    Fully diluted         0.79       1.84       0.07      0.42     (0.27)        0.02
                    ___________  _________  _________  _________  _________  _________
    Weighted
    average number
    of shares or
    ADSs used for
    computation of
    earnings per
    share:
    Basic               65,940     65,935     65,954    65,954    65,954       65,954
                    ___________  _________  _________  _________  _________  _________
    Fully diluted       66,167     66,202     65,954    66,072    65,954       65,954
                    ___________  _________  _________  _________  _________  _________

                 ALONHOLDINGS BLUE SQUARE-ISRAELLTD.
                CONSOLIDATED STATEMENTS OF CASH FLOWS

           FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER 30,
2012

                     (UNAUDITED)

                                                                       Convenience
                                                                       translation
                                                                         for the
                                                                          nine
                                                                         months
                                     Nine months      Three months        ended
                     Year ended         ended            ended          September
                     December 31,    September 30,    September 30,        30,
                    _____________  _______________    ______________
                         2011       2011    2012      2011      2012      2012
                    _____________  ______  _______    ______  ______   __________
                                                                          U.S.
                                                                         dollars
                                                                           in
                                     NIS in thousands                   thousands
                    ________________________________________________   __________
    CASH FLOWS FROM
    OPERATING
    ACTIVITIES:
    Income (loss)
    before taxes on
    income            130,301     161,921    48,422     5,613 (11,318)      12,378
    Income tax
    received
    (paid), net      (79,368)    (61,053)    27,066  (20,427)   10,799       6,919
    Adjustments for
    cash generated
    from operations   576,664     385,287   101,291    66,459  156,192      25,891
                    __________  _________  ________   _______  _______   _________
    Net cash
    provided (used
    in) by
    operating
    activities        627,597     486,155   176,779    51,645  155,673      45,188
                    __________  _________  ________   _______  _______   _________
    CASH FLOWS FROM
    INVESTING
    ACTIVITIES:
    Purchase of
    property and
    equipment       (261,101)   (214,259) (162,047)  (78,947) (40,696)    (41,423)
    Purchase of
    investment
    property         (55,524)    (42,466) (171,992)   (9,607) (21,974)    (43,965)
    Purchase of
    intangible
    assets           (30,717)    (16,156)  (37,928)   (7,680)  (2,703)     (9,695)
    Proceeds from
    collection of
    (investment in)
    short-term bank
    deposits, net     (5,858)     (5,365)  (16,083)   (8,246) (18,414)     (4,111)
    Proceeds from
    sale of
    property and
    equipment          12,864      12,592     9,044     1,209    7,262       2,312
    Proceeds from
    sale of
    investment
    property           50,600      50,600     3,610    50,600        -         923
    Investment in
    restricted
    deposits        (102,603)    (98,309)  (69,910)   (2,903)        -    (17,871)
    Proceeds from
    sale of
    marketable
    securities        118,957      77,404   120,885    28,980   11,078      30,901
    Investment in
    marketable
    securities      (122,646)    (71,399) (143,937)  (24,599) (10,052)    (36,794)
    Dividend
    received                -           -    11,000         -        -       2,812
    Acquisition of
    equity
    accounted
    investee         (36,415)    (36,405)         -  (36,405)        -           -
    Grant of loans
    to jointly
    controlled
    companies           (200)       (200)  (29,300)     (200) (26,000)     (7,490)
    Grant of loans
    to controlling
    shareholders    (144,962)   (155,163)  (36,416)  (92,821)  (1,148)     (9,309)
    Payments on
    account of real
    estate            (9,187)     (1,117)  (19,099)   (1,117)  (2,752)     (4,882)
    Collection of
    long-term loans    22,885       6,838    12,807     1,724    2,246       3,274
    Net outflow
    from
    realization of
    proportionately
    consolidated
    company                 -           -   (3,085)         -        -       (789)
    Interest
    received           16,552      16,030    17,965     2,948    8,602       4,592
                    __________  _________  ________   _______  _______   _________
    Net cash used
    in investing
    activities      (547,355)   (477,375) (514,486) (177,064) (94,551)   (131,515)
                    __________  _________  ________   _______  _______   _________

              ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

               CONSOLIDATED STATEMENTS OF CASH FLOWS

           FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER 30,
2012

                      (UNAUDITED)


                                                                      Convenience
                                                                      translation
                                                                        for the
                                                                         nine
                      Year                            Three months      months
                      ended    Nine months ended         ended           ended
                    December                                           September
                       31,       September 30,       September 30,        30,
                              ____________________  __________________
                      2011       2011      2012      2011      2012      2012
                   _________  _________  _________  _________  _______  ________
                                                                         U.S.
                                                                      dollars in
                                    NIS in thousands                   thousands
                   ___________________________________________________  ________
    CASH FLOWS FROM
    FINANCING
    ACTIVITIES:
    Purchase of
    treasury shares   (4,035)    (4,035)         -         -        -           -
    Dividends paid   (75,000)          -         -         -        -           -
    Dividend paid
    to
    non-controlling
    interests        (30,669)   (16,821)         -         -        -           -
    Issuance of
    debentures              -          -   388,942         -   93,375      99,423
    Repayment of
    debentures      (174,955)  (140,749) (177,191)   (2,190) (85,035)    (45,294)
    Transactions
    with
    non-controlling
    interests in
    subsidiary
    without loss of
    control          (15,217)          -         -         -        -           -
    Receipt of
    long-term loans   213,648    132,547   543,899    23,000   45,640     139,033
    Repayment of
    long-term loans (382,557)  (181,714) (249,833)  (55,604) (61,726)    (63,863)
    Repayment of
    long term
    credit from
    trade
    payables          (1,750)    (1,285)         -     (415)        -           -
    Short-term
    credit from
    banks and
    others,
    net               582,503    373,058   208,318   203,068   66,177      53,251
    Proceeds from
    issue of shares
    relating to
    share based
    payments in the
    company and a
    subsidiary            143        140         -         -        -           -
    Acquisition of
    shares from
    non-controlling
    interests               -    (7,927)     (467)         -      215       (119)
    Settlement of
    forward
    contracts               -         -    (2,808)         -  (2,808)       (718)
    Interest paid   (222,771)  (169,972) (191,352)  (59,624) (73,944)    (48,914)
                    _________  ________  _________  ________ ________    ________
    Net cash
    provided by
    (used in)
    financing
    activities      (110,660)   (16,758)   519,508   108,235 (18,106)     132,799
                    _________  ________  _________  ________ ________    ________
    INCREASE
    (DECREASE)IN
    CASH AND CASH
    EQUIVALENTS AND
    BANK OVERDRAFTS  (30,418)    (7,978)   181,801  (17,184)   43,016      46,472
    Translation
    differences on
    cash and cash
    equivalents            37          2        46         4       23          12
    BALANCE OF CASH
    AND CASH
    EQUIVALENTS AND
    BANK OVERDRAFTS
    AT BEGINNING OF
    PERIOD            104,131    104,131    73,750   113,335  212,558      18,853
                    _________  ________  _________  ________ ________    ________
    BALANCE OF CASH
    AND CASH
    EQUIVALENTS AND
    BANK OVERDRAFTS
    AT END OF
    PERIOD             73,750     96,155   255,597    96,155  255,597      65,337
                    =========  ========  =========  ======== ========    ========

    (a)
    Net cash
    provided by
    operating
    activities:
    Adjustments
    for:
    Depreciation
    and
    amortization      273,746   203,588   215,037    67,716    76,675      54,968
    Increase in
    fair value of
    investment
    property, net    (41,913)  (28,132)  (83,368)   (8,687)       966    (21,311)
    Gain from
    decrease in
    holding rate in
    proportionately
    consolidated
    company                 -         -  (19,622)         -         -     (5,016)
    Share in gains
    of associates     (5,309)   (5,716)   (8,669)   (4,836)   (3,865)     (2,217)
    Share based
    payment             3,270     2,688     1,322       810       595         338
    Loss (gain) from
    sale and disposal
    of property and
    equipment, net      2,448       129     1,051     (483)     (167)         269
    Provision for
    impairment of
    property and
    equipment, net      7,815     1,341         -        36         -           -
    Loss (gain)
    from changes in
    fair value of
    derivative
    financial
    instruments     (107,553) (112,906)     9,161   (9,381)     8,395       2,342
    Linkage
    differences on
    monetary
    assets,
    debentures,
    loans and other
    long term
    liabilities        71,465    80,379    52,679    10,952    22,883      13,466
    Employee
    benefit
    liability, net        177       501       434     (817)     2,030         111
    Decrease
    (increase) in
    value of
    investment in
    securities,
    deposits and
    long-term
    receivables,
    net                 1,190     3,264   (4,717)       911   (2,375)     (1,206)
    Interest paid,
    net               184,963   135,537   161,828    51,427    65,717      41,367
    Changes in
    operating
    assets and
    liabilities:
    Investment in
    real estate
    inventories       (5,637)   (4,917) (248,132)     (817)     (329)    (63,429)
    Payments on
    account of real
    estate
    inventories       (8,852)   (6,367)  (11,692)   (2,693)         -     (2,989)
    Decrease
    (increase) in
    trade
    receivables and
    other accounts    104,743 (397,789) (360,842) (261,759) (200,032)    (92,240)
    Increase in
    advances from
    purchasers of
    apartments        102,603    98,309    69,910     2,903         -      17,871
    Increase
    (decrease) in
    trade payables
    and other
    accounts
    payable          (10,198)   417,545   353,882   218,656   203,359      90,461
    Decrease
    (increase) in
    inventories         3,706   (2,167)  (26,971)     2,521  (17,660)     (6,894)
                    _________  ________  _________  ________ ________    ________
                      576,664   385,287   101,291    66,459   156,192      25,891
                    =========  ========  =========  ======== ========    ========
    (b)
    Supplementary
    information
    on investing
    and financing
    activities
    not involving
    cash flows:
    Issue of
    shares upon
    conversion of
    convertible
    debentures           896       901      -         -            -            -
                    =========  ========  =========  ======== ========    ========
    Purchase of
    property and
    equipment on
    credit            10,769    11,588     20,375   11,588     20,375       5,208
                    =========  ========  =========  ======== ========    ========
    Advances from
    customers
    deposited in
    restricted
    use deposit           -        465         -       465          -          -
                    =========  ========  =========  ======== ========    ========
    Issue of
    shares
    against
    acquisition
    of shares in
    subsidiary       154,433   154,433         -    154,433         -          -
                    =========  ========  =========  ======== ========    ========


                 ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

                      NET LIABILITIES

                       (UNAUDITED)

                                                                   Convenience
                                                                   translation
                                     December                       September
                                        31,       September 30,        30,
                                                 ______________
                                       2011      2011      2012       2012
                                    _________   _______  ________   __________
                                                    NIS            U.S. dollars
                                    _____________________________   __________
                                                   In thousands
                                    __________________________________________
                                                  Alon Holdings *
                                    __________________________________________
    Cash and cash equivalence            1,909     2,576     1,811         463
    Investment in securities            64,657    63,082    67,198      17,177
                                    __________   _______   _______    ________
    Total assets                        66,566    65,658    69,009      17,640
                                    ==========   =======   =======    ========
    Short term and Long-term debt:
    Short term loans from banks and
    others                             195,764   145,526   336,336      85,976
    Long term loans from banks         171,555   189,073   175,213      44,789
    Debentures                         232,341   240,456   172,564      44,111
                                    __________   _______   _______    ________
    Total long-term debt               599,660   575,055   684,113     174,876
                                    ==========   =======   =======    ========
    Equity:
    Equity attributable to equity
    holders of the company:          1,183,054 1,320,399 1,201,555     307,146
                                    __________   _______  ________    ________
    Total debt, net                  (533,094) (509,397) (615,104)   (157,236)
                                    ==========  ========  ========    ========


*Net of grant of loans or loans received from subsidiaries

                 ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

            RECONCILIATION BETWEEN NET INCOME FOR THE PERIOD AND
EBITDA

            FOR THE NINE AND THREE MONTH PERIOD ENDED SEPTEMBER
30, 2012

                       (UNAUDITED)

                                                                   Convenience
                                                                   translation
                                                                     for the
                                                                      nine
                        Year                                         months
                       ended      Nine months      Three months       ended
                      December  ended September   ended September   September
                        31,           30,               30,            30,
                                _______________   _______________
                        2011     2011     2012     2011     2012      2012
                      ________  ______  _______   ______  _______  ___________
                                                                      U.S.
                                                                   dollars in
                                    NIS in thousands                thousands
                      ___________________________________________  ___________
    Net income (loss)
    for the period      83,713  149,786   38,625   40,283 (12,591)       9,874
    Taxes on income     46,588   12,135    9,797  (34,670)  1,273        2,504
    Share in gains of
    associates         (5,746)  (6,153)  (8,669)  (4,836)  (3,865)     (2,216)
    Finance expenses,
    net                176,002  134,969  215,209   79,018   76,262      55,013
    Other losses
    (gains), net        18,219    7,115 (14,211)      831    3,439     (3,633)
    Changes in fair
    value of
    investment
    property          (41,913) (28,132) (83,368)  (8,687)      966    (21,311)
    Depreciation and
    amortization       273,746  203,588  215,037   67,717   76,675      54,968
    Share based
    payment              3,270    2,688    1,322      810      595         338
                      ________  _______  _______  _______  _______    ________
    EBITDA             553,879  475,996  373,742  140,466  142,754      95,537
                      ========  =======  =======  =======  =======    ========


                ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

             FOR THE THREE AND NINE MONTH PERIOD ENDED SEPTEMBER
30, 2012

                       (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 segments: Supermarkets, Commercial and Fueling sites, Non-Food Retail and
Wholesale and Real Estate.

The Company's four operating segments consist of the following:

1.Commercial and Fueling 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 commercial and fueling 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 total 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 September 30, 2012, Mega Retail operated 214 supermarkets.
    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).
3.Non-Food (Retail and Wholesale) - Some through its subsidiary, BEE Group
    Retail Ltd. ("BEE Group"), the Company is engaged in non-food retail and
    wholesale activities. As of September 30, 2012, the Company operated 238
    non-food retail outlets, some through franchisees, with specialties in
    houseware and home textile, toys, leisure, and infant. This segment also
    includes properties owned through Blue Square Real Estate ("BSRE") which
    are used by the segment.
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.

                  ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

               FOR THE THREE AND NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2012

                          (UNAUDITED)

Note 1 - Segment reporting (continued)

                                      Three months ended September 30, 2012
                 _________________________________________________________________________
                 Commercial
                    and
                  Fueling                          Real                           Total
                   sites  Supermarkets  Non-Food  Estate Others  Adjustments  consolidated
                 _______  ____________  ________  ______ ______  ___________  ____________
                                                 NIS in thousands
                 _________________________________________________________________________
    Net segment
    sales       1,493,893 1,685,006      124,408  7,649    1,871           -     3,312,827
    Inter
    segment
    sales          12,447         -        8,832      -        -     (21,279)            -
    Gross profit
    (loss)        240,862   465,282       45,335  7,649   (4,044)     (1,069)      754,015
    Depreciation
    and
    amortization   24,337    45,331        2,903      -        -       4,104        76,675
    Operating
    profit
    (loss)
    before other
    gains and
    losses net
    and changes
    in fair
    value of
    investment
    property       55,664    39,619       (3,669) 2,847    (9,517)   (12,833)       72,111
    Segment
    profit         55,463    41,688       (6,502) 1,881    (9,517)   (15,307)       67,706
    Unallocated
    corporate
    expenses                                                                        (6,627)
    Financial
    expenses,
    net                                                                            (76,262)
    Share in
    gains of
    associates,
    net                                                                              3,865
                                                                                   ________
    Income
    before taxes
    on income                                                                      (11,318)
                                                                                   ========


                                      Three months ended September 30, 2011
                 _________________________________________________________________________
                 Commercial
                    and
                  Fueling                          Real                           Total
                   sites  Supermarkets  Non-Food  Estate Others  Adjustments  consolidated
                 _______  ____________  ________  ______ ______  ___________  ____________
                                                 NIS in thousands
                 _________________________________________________________________________
    Net segment
    sales         1,425,661 1,673,149   121,545   7,227       -           -    3,227,582
    Inter
    segment
    sales             9,248         -     7,514       -       -     (16,762)           -
    Gross profit    230,601   467,714    39,321   7,227       -           -      744,863
    Depreciation
    and
    amortization     23,454    40,233     2,528       -       -       1,501       67,716
    Operating
    profit
    (loss)
    before other
    gains and
    losses net
    and changes
    in fair
    value of
    investment
    property         55,168   33,942     (5,516) 4,084  (2,399)      (7,415)      77,864
    Segment
    profit           55,205   34,023     (6,466)12,772  (2,399)      (7,415)      85,720
    Unallocated
    corporate
    expenses                                                                      (5,925)
    Financial
    expenses,
    net                                                                          (79,018)
    Share in
    gains of
    associates,
    net                                                                            4,836
                                                                                 ________
    Income
    before taxes
    on income                                                                      5,613
                                                                                 ========


                   ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

               FOR THE THREE AND NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2012

                           (UNAUDITED)

Note 1 - Segment reporting (continued)

                                      Nine months ended September 30, 2012
                 _________________________________________________________________________
                 Commercial
                    and
                  Fueling                          Real                           Total
                   sites  Supermarkets  Non-Food  Estate Others  Adjustments  consolidated
                 _______  ____________  ________  ______ ______  ___________  ____________
                                                 NIS in thousands
                 _________________________________________________________________________
    Net segment
    sales        4,500,001  4,964,534    334,962  24,690   2,253          -      9,826,440
    Inter
    segment
    sales           29,682          -     26,049       -       -    (55,731)             -
    Gross profit
    (loss)         680,500  1,347,675    129,703  24,690  (8,071)    (1,069)     2,173,428
    Depreciation
    and
    amortization    71,807    127,538      8,330       -       -      7,362        215,037
    Operating
    profit
    (loss)
    before other
    gains and
    losses net
    and changes
    in fair
    value of
    investment
    property      143,409      89,233     (5,977)  3,240 (20,236)   (33,036)       176,633
    Segment
    profit        143,431      90,011     (9,714)106,230 (20,236)   (35,510)       274,212
    Unallocated
    corporate
    expenses                                                                       (19,250)
    Financial
    expenses,
    net                                                                           (215,209)
    Share in
    gains of
    associates,
    net                                                                              8,669
                                                                                  ________
    Income
    before taxes
    on income                                                                       48,422
                                                                                  ========



                                       Nine months ended September 30, 2011
                 _________________________________________________________________________
                 Commercial
                    and
                  Fueling                          Real                           Total
                   sites  Supermarkets  Non-Food  Estate Others  Adjustments  consolidated
                 _______  ____________  ________  ______ ______  ___________  ____________
                                                 NIS in thousands
                 _________________________________________________________________________
    Net segment
    sales        4,002,158  5,076,148    342,919  21,940      -            -     9,443,165
    Inter
    segment
    sales          23,856           -     27,881       -      -      (51,737)            -
    Gross profit  671,988   1,406,146    126,260  21,940      -            -     2,226,334
    Depreciation
    and
    amortization   69,272     120,414      9,399       -      -        4,503       203,588
    Operating
    profit
    (loss)
    before other
    gains and
    losses net
    and changes
    in fair
    value of
    investment
    property      156,141     151,543     (7,138) 10,388 (3,535)     (20,098)      287,301
    Segment
    profit        156,113     150,310    (12,993) 38,520 (3,535)     (20,098)      308,317
    Unallocated
    corporate
    expenses                                                                      (17,580)
    Financial
    expenses,
    net                                                                          (134,969)
    Share in
    gains of
    associates,
    net                                                                             6,153
                                                                                  ________
    Income
    before taxes
    on income                                                                     161,921
                                                                                  ========

                 ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

              FOR THE THREE AND NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2012

                       (UNAUDITED)

Note 1 - Segment reporting (continued)

                                       Year ended December 31, 2011
                 _________________________________________________________________________
                 Commercial
                    and
                  Fueling                          Real                           Total
                   sites  Supermarkets  Non-Food  Estate Others  Adjustments  consolidated
                 _______  ____________  ________  ______ ______  ___________  ____________
                                                 NIS in thousands
                 _________________________________________________________________________
    Net segment
    sales       5,301,865  6,723,845    425,853  31,021      -           -      12,482,584
    Inter
    segment
    sales          36,087          -     31,810       -      -     (67,897)              -
    Gross profit  876,040  1,850,764    157,883  31,021      -           -       2,915,708
    Depreciation
    and
    amortization   96,130    159,601    12,011        -      -       6,004         273,746
    Operating
    profit
    (loss)
    before other
    gains and
    losses net
    and changes
    in fair
    value of
    investment
    property     173,681    177,346   (34,915)  15,395  (5,698)    (26,235)       299,574
    Segment
    profit       173,578    169,697   (45,382)  57,307  (5,698)    (26,235)       323,267
    Unallocated
    corporate
    expenses                                                                      (22,710)
    Financial
    expenses,
    net                                                                          (176,002)
    Share in
    gains of
    associates,
    net                                                                             5,746
                                                                                  ________
    Income
    before taxes
    on income                                                                     130,301
                                                                                  ========

                                   Nine months ended September 30, 2012
                 _________________________________________________________________________

                 Commercial
                    and
                  Fueling                          Real                         Total
                   sites    Supermarkets Non-Food Estate Others  Adjustments consolidated
                 __________ ____________ ________ ______ ______  ___________ _____________
                                        U.S. dollars in thousands
                 _________________________________________________________________________

    Net segment
    sales        1,150,307  1,269,053    85,624   6,311    576             -    2,511,871
    Inter
    segment
    sales           7,588           -     6,659       -      -       (14,247)           -
    Gross profit
    (loss)        173,952     344,498    33,155   6,311 (2,063)         (273)     555,580
    Depreciation
    and
    amortization   18,356      32,602     2,129       -      -         1,881       54,968
    Operating
    profit
    (loss)
    before other
    gains and
    losses net
    and changes
    in fair
    value of
    investment
    property       36,659     22,810    (1,528)     828 (5,173)      (8,445)       45,151
    Segment
    profit         36,664     23,009    (2,483)  27,155 (5,173)      (9,077)       70,095
    Unallocated
    corporate
    expenses                                                                       (4,920)
    Financial
    expenses,
    net                                                                           (55,013)
    Share in
    gains of
    associates,
    net                                                                             2,216
                                                                                  ________
    Income
    before taxes
    on income                                                                      12,378
                                                                                  ========

--------------------------------------------------

1. EBITDA is a measure that is not in accordance with Generally Accepted
Accounting Principles (Non-GAAP), reconciliation between net income for the
period and EBITDA, see below.

2. The Company operates in four segments: Supermarkets, Commercial and Fueling
sites, Non Food retail and wholesale and Real Estate. Segmental information is
included in this report below.

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

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, depreciation and amortization. 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. 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.
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 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 EBITDA which is
presented in this press release.

 Contact:

 Alon Holdings Blue Square-Israel Ltd.
 Dror Moran, CFO
 Toll-free telephone from U.S. and Canada: 888-572-4698
 Telephone from rest of world: 972-3-928-2220
 Fax: 972-3-928-2299
 Email: cfo@bsi.co.il

SOURCE Alon Holdings Blue Square-Israel Ltd
 
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