Alon Holdings Blue Square - Israel Ltd. (NYSE:BSI) Announces the Financial Results for the Fourth Quarter of 2012

  Alon Holdings Blue Square - Israel Ltd. (NYSE:BSI) Announces the Financial
                    Results for the Fourth Quarter of 2012

PR Newswire

ROSH HA'AYIN, Israel, March 22, 2013

ROSH HA'AYIN, Israel, March 22, 2013 /PRNewswire/ --

  oIn the Commercial and Fueling sites: A material improvement in the
    operating profit in this quarter compared to the corresponding quarter
    last year. The operating profit in this quarter, excluding inventory loss,
    amounted to NIS 34 million (increase of 100%).
  oIn the Supermarkets segment: An improvement in the segment results in this
    quarter amounting to NIS 49.7 million (3.1% of revenues) compared to NIS
    19.4 million (1.2% of revenues) in the corresponding quarter last year (an
    increase of 156%) stemming mainly from taking efficacy measures And
    exiting from branches.
  oIn the Real Estate segment: BSRE presents a continuing improvement in NOI
    (NIS 53 million in this quarter). The Company continues the development
    and the betterment of projects under construction. After the report date,
    the sale of 50% of the Comverse Building in Ra'anana was completed in
    consideration of NIS 51 million.
  oIn the Non Food segment: in the course of the quarter, BEE Group resolved
    to realize the activity of the toy and leisure segment. The Non Food
    segment shows a loss of NIS 12.7 million, excluding the toy and leisure
    activity.
  oDividends: In April 2013, BSRE and Dor Alon are expected to distribute
    dividends at an estimated amount of NIS 70 million; the Company's share is
    NIS 55 million.

Segment Results:


  
      
    Profit from Operations in millions of NIS Q4 2012  Q4 2011  Rate of change
    ----------------------------------------- -------  -------  --------------
    Commercial and Fueling sites                 21.2    17.5       21.1%
    Supermarkets                                 49.7    19.4       156%
    Non-Food (from continuing operations)       (12.7)  (21.2)      (40%)
    Real Estate                                  19.7    18.8       4.8%

Comments of Management

Mr. David Weissman, CEO and Chief Business Officer -

"The fourth quarter marks a continuous improvement in each of the operating
segments.

Dor Alon continues to grow, alongside with an adequate coping with the
reduction of the marketing margin last year. The results of this quarter,
excluding inventory losses of supervised gasoline, were doubled compared to
the corresponding period.

BSRE continues to present an improvement in its current activity and in the
development momentum and entrepreneurship. In the fourth quarter it realized
its holdings, in the commercial center in Beer Sheva. In January 2013, the
Company admitted Harel Investments, Insurance and Financial Services Ltd. as a
partner (50%) in Comverse Building, which is under construction and currently,
completes the realization of "Beit Cohen" in Petach Tikva. These activities
strengthen the balance sheet structure and create value for the investors.

In the Supermarkets segment, Mega is improving and takes efficacy measures. In
the fourth quarter, Mega completed the exit from 7 out of the 11 planned
branches. The efficacy measures taken resulted in an improvement of 156% in
the Supermarkets segment results in this quarter.

The Company thanks Zeev Vurembrand who concluded his position in December 2012
and congratulates Mr. Motti Keren who was appointed as the CEO of Mega Retail.

In the Non Food segment, the Company resolved to merge BEE Retail with Mega,
such that the logistic center and headquarters shall be assimilated in Mega
and Na'aman shall be become a subsidiary of Mega. Furthermore, we resolved to
exit the leisure area by selling its holdings in "Kfar Hashashuim"
(hereinafter - Kfar). We expect that in the first quarter of 2013, the segment
shall become profitable.

In the fourth quarter, YouPhone brand turned into a legitimate factor, as a
cellular network, which brings innovation and the lowest prices in the market.
The rate of joining new customers stands at 20,000 per quarter.

2012 is the first year where we enjoy the fruits of investing in Diners
Israel, which is engaged in the issuance and clearance of Diners, Diners YOU
and Master Card YOU credit cards, which are issued to the club members of the
group. The Company's share in Diners' earnings this year amounted to NIS 20
million, net after taxes.  

Results for the fourth quarter of 2012^[1]

Gross revenues

Revenues (including government levies) in the fourth quarter of 2012 amounted
to NIS 3,831.9 million (U.S. $1,026.5 million) as compared to revenues of NIS
3,722.0 million in the comparable quarter last year, an increase of 3.0%. 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 1,435.2 million (U.S. $384.5 million) as compared to NIS
1,299.7 million in the corresponding quarter last year, an increase of 10.4%.
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 1,588.4
million (U.S. $425.5 million) as compared to NIS 1,647.7 million in the
corresponding quarter last year, a decrease of 3.6%. The decrease in revenues
derives mainly from a decline in sales of the same store sales (SSS) at a rate
of 2.2% compared to the corresponding period.

Revenues of the Non-Food segment^[2] - an increase in revenues by 19.6% from
NIS 64.3 million in the fourth quarter of 2011 to NIS 77.0 million (U.S. $20.6
million) in the current quarter. The increase in revenues is mainly due to an
increase in sales in the home activity and in stores transferred from
franchise to self-operation.

Revenues of the Real Estate segment - an increase in rental income of 1.1%
from NIS 9.1 million in the fourth quarter of 2011 to NIS 9.2 million (U.S.
$2.5 million) in the current quarter. 

Gross profit in the fourth quarter of 2012 amounted to NIS 681.0 million (U.S.
$182.4 million) (21.9% of revenues) as compared to gross profit of NIS 688.6
million (22.8% of revenues) in the comparable quarter last year. The decrease
in the gross profit compared to the corresponding quarter last year was mainly
due to the decrease in the gross profit in the Supermarkets and Non-food
segments.

In the Commercial and Fueling sites segment, gross profit amounted to NIS
203.0 million (U.S. $54.4 million), (14.1% of revenues) compared to NIS 204.1
million in the comparable quarter last year (15.7% of revenues). The decrease
of 0.5% in the gross profit compared to the corresponding quarter last year
mainly derived from inventory losses following a decline in supervised
gasoline prices in this quarter. The gross profit excluding the effect of the
change in fuel prices on the inventory increased by 6%. 

In the Supermarkets segment, gross profit amounted to NIS 440.9 million (U.S.
$118.1 million), (27.8% of revenues) compared to NIS 444.6 million in the
fourth quarter of 2011 (27.0% of revenues), a decrease of 0.8% stemming from
decrease in sales that was offset by an improved gross margin.

In the Non Food segment, gross profit amounted to NIS 30.7 million (U.S. $8.2
million), (39.9% of revenues) compared to NIS 30.8 million in the comparable
quarter of 2011 (47.9% of revenues), with no material change.

Selling, general and administrative expenses in the fourth quarter of 2012
amounted to NIS 661.1 million (U.S. $177.1 million) (21.2% of revenues),
compared to expenses of NIS 671.5 million (22.2% of revenues) in the
comparable quarter last year, a decrease of 1.5%. The main decrease was
recorded following efficiency measures taken in the Supermarkets segment that
was partly offset by an increase in the cellular activity. 

In the Commercial and Fueling sites segment, these expenses amounted to NIS
181.6 million (U.S. $48.6 million) compared to NIS 186.5 million in the fourth
quarter of 2011, a decrease of 2.6%, mainly deriving from efficiency measures
taken starting from the fourth quarter of 2011 that were offset from opening
new fueling sites. 

In the Supermarkets segment, selling, general and administrative expenses
amounted to NIS 401.2 million (U.S. $107.5 million) compared to expenses of
NIS 418.8 million in the comparable quarter in 2011. The main decrease derives
from decline in salary expenses and other headquarters expenses following
efficacy measures and exiting branches.

In the Non Food segment, these expenses amounted to NIS 43.7 million (U.S.
$11.7 million) compared to NIS 48.7 million in the comparable quarter in 2011.
The decrease derives from a decrease in allowance for doubtful accounts.

In the Real Estate segment, these expenses amounted to NIS 6.9 million (U.S.
$1.8 million) compared to NIS 4.1 million in the comparable quarter in 2011.
The increase mainly derives from increase in marketing expenses and the
branding of Tel Aviv Mall for the fashion week event that took place in
December 2012.

Operating profit (before other gains and losses and changes in fair value of
investment property) in the fourth quarter of 2012 amounted to NIS 19.9
million (U.S. $5.3 million) (0.6% of revenues) as compared to NIS 17.1 million
(0.6% of revenues) in the comparable quarter last year, an increase of 16.5%.
The increase in the operating profit was mainly due to a decrease in selling,
administrative and general expenses.

In the Commercial and Fueling sites segment, operating profit in this quarter
amounted to NIS 21.4 million (U.S. $5.7 million) compared to operating profit
of NIS 17.5 million in the corresponding quarter. The increase mainly derives
from taking efficiency measures while offsetting inventory losses followed by
a decline in petrol prices as above, without inventory losses, the operating
profit amounted to NIS 34 million. 

In the Supermarkets segment, operating profit increased from NIS 25.8 million
in the comparable quarter last year to NIS 39.7 million (U.S. $10.6 million).
The improvement in operating profit derives from taking efficiency measures
and exiting from losing branches. 

In the Non Food segment, operating loss of NIS 13.0 million (U.S. $3.5
million) as compared to an operating loss of NIS 17.9 million in the
comparable quarter last year due to decrease in administrative and general
expenses, as aforesaid.

In the Real Estate segment, a decrease from operating profit of NIS 5.0
million in the comparable quarter in 2011 to NIS 2.3 million (U.S. $0.6
million) due to increase in selling administrative and general expenses as
aforementioned.

Changes in fair value of investment property in the fourth quarter of 2012 the
Company recorded a profit in the amount of NIS 23.0 million (U.S. $6.2
million) compared to a profit of NIS 13.8 million in the comparable quarter
last year.

Other income (expenses), net other income in the fourth quarter of 2012
amounted to NIS 9.1 million (U.S. $2.4 million) compared to other expenses of
NIS 9.9 million in the comparable quarter last year.

Operating profit amounted to NIS 52.0 million (U.S. $13.9 million) (1.7% of
revenues) as compared to operating profit of NIS 21.0 million (0.7% of
revenues) in the comparable quarter last year, an increase of 147.7%.

Finance costs, net in the fourth quarter of 2012 amounted to NIS 34.2 million
(U.S. $9.1 million) as compared to net finance costs of NIS 41.6 million in
the comparable quarter last year. The decrease in finance costs, net derives
from a decline in the CPI (0.7% this quarter compared to 0.2% in the
comparable quarter last year) and was partly offset by increase in its debts.

Taxes on income in the fourth quarter of 2012 amounted to NIS 6.8 million
(U.S. $1.8 million) as compared to tax expenses of NIS 34.7 million in the
comparable quarter last year. The comparable quarter last year included the
effect of the change in tax rates on the tax reserves (mainly from 18% to
25%).

Income from continued operation for the fourth quarter of 2012 amounted to NIS
14.4 million (U.S. $3.9 million) compared to a loss of NIS 55.7 million in the
fourth quarter of 2011. The income in this quarter attributed to the Company's
shareholders amounted to NIS 4.0 million (U.S. $1.1 million) or NIS 0.06 per
share (U.S. $0.02) and the income attributed to non-controlling interests
amounted to NIS 10.4 million (U.S. $2.8 million).

Net loss from discontinued operation for the fourth quarter of 2012 amounted
to NIS 11.9 million (U.S. $3.1 million) or NIS 0.18 per share (U.S. $0.05)
compared to a loss of NIS 10.4 attributed in its entirety to the Company's
shareholders.

Cash flows for the fourth quarter of 2012

Cash flows from operating activities: Net cash flow provided by operating
activities amounted to NIS 109.4 million (U.S. $29.3 million) in the fourth
quarter of 2012 compared to NIS 141.4 million from operating activities in the
comparable quarter last year. The main decrease derives from a decrease in
credit card advances in this quarter compared to the corresponding quarter of
last year by NIS 59 million (U.S. $15.8 million) and a decrease in tax
payments of NIS 8.0 million (U.S. $2.1 million) that was partly offset by a
decrease in working capital needs in the amount of NIS 35 million (U.S. $9.4
million).

Cash flows used in investing activities: Net cash flows used in investing
activities amounted to NIS 45.6 million (U.S. $12.2 million) in the fourth
quarter of 2012 as compared to net cash used in investing activities of NIS
70.0 million in the comparable quarter. Cash flows used in investing
activities in the fourth quarter of 2012 mainly included the purchase of
investment property, property and equipment and intangible assets of total NIS
64.4 million (U.S. $17.3 million), the grant of long term loans of NIS 36.5
million (U.S. $9.8 million) mainly to an associate and was offset by proceeds
from realization of property and equipment and investment property of NIS 30.7
million (U.S. $8.2 million), and interest received of NIS 7.3 million (U.S.
$2.0 million). In the fourth quarter of 2011 the cash flows used in investing
activities mainly included the purchase of property and equipment, investment
property and intangible assets of NIS 74.5 million, investment in restricted
deposits of NIS 4.3 million and payments on account of real estate of NIS 8.1
million and was offset by collection of long-term loans receivable amounting
to NIS 16.0 million.

Cash flows used in financing activities: Net cash flows used in financing
activities amounted to NIS 37.4 million (U.S. $10.0 million) in the fourth
quarter of 2012 as compared to net cash flows deriving from financing
activities of NIS 93.9 million in the corresponding quarter last year. The
cash flows used in financing activities in the fourth quarter of 2012 mainly
included interest payments of NIS 67.4 million (U.S. $18.1 million), repayment
of loans of NIS 100.5 million (U.S. $26.9 million) and debentures repayment of
NIS 32.1 million (U.S. $8.6 million) and was partly offset by issuance of
debentures of NIS 115.2 million (U.S. $30.8 million) and receiving loans of
NIS 50.4 million (U.S. $13.5 million). The net cash flows used in financing
activities in the fourth quarter of 2011 included mainly payment of long term
loans of NIS 200.8 million, payment of a dividend of NIS 75 million, repayment
of debentures of NIS 34.2 million and was offset by long term loans received
of NIS 81.1 million and change in short term credit of NIS 209.4 million.

Results for the year 2012

Gross revenues

Revenues (including government levies) in 2012 amounted to NIS 15,805.5
million (U.S. $4,234.0 million) as compared to revenues of NIS 15,159.4
million last year, an increase of 4.3%. 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 2012 amounted to NIS
5,935.2 million (U.S. $1,589.9 million) as compared to NIS 5,301.9 million in
2011, an increase of 11.9%. 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 2012 to NIS 6,552.9 million
(U.S. $1,755.4 million) as compared to NIS 6,723.8 million last year, a
decrease of 2.5%. The decrease in revenues was due to a reduction in the same
store sales (SSS) at a rate of 2.6%.

Revenues of the Non-Food segment - amounted in 2012 to NIS 321.1 million (U.S.
$86.0 million) compared to NIS 289.0 million in 2011 an increase of 11.1%. The
increase in revenues is mainly due to an increase in the houseware stores and
in stores transferred from franchise to self-operation.

Revenues of the Real Estate segment - an increase in rental income of 9.4%
from NIS 31.0 million in 2011 to NIS 33.9 million (U.S. $9.1 million) in 2012,
due to an increase in leased space and increase of CPI. 

Gross profit in 2012 amounted to NIS 2,842.3 million (U.S. $761.4 million)
(22.1% of revenues) as compared to gross profit of NIS 2,903.8 million (23.5%
of revenues) in 2011. The decrease in the gross profit was mainly due to the
decrease in sales of the Supermarkets segment.

In the Commercial and Fueling sites segment, gross profit amounted to NIS
883.5 million (U.S. $236.7 million), (14.9% of revenues) compared to NIS 876.0
million in 2011 (16.5% of revenues). An increase in gross profit of 0.9%
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
between periods.

In the Supermarkets segment, gross profit amounted to NIS 1,788.6 million
(U.S. $479.1 million), (27.3% of revenues) compared to NIS 1,850.8 million in
2011 (27.5% of revenues), a decrease of 3.4% stemming from decrease in the
sales and erosion in gross profit.

In the Non Food segment, gross profit amounted to NIS 148.3 million (U.S.
$39.7 million), (46.2% of revenues) compared to NIS 145.9 million last year
(50.5% of revenues). The increase in gross profit mainly derives from an
increase in revenues, as aforesaid.

Selling, general and administrative expenses in 2012 amounted to NIS 2,658.2
million (U.S. $712.1 million) (20.7% of revenues), compared to expenses of NIS
2,611.8 million (21.2% of revenues) in 2011, an increase of 1.8%. The main
increase was recorded in the Non-food segment, from transfer to self-operated
stores and from costs relating to launching "You Phone" activity.

In the Commercial and Fueling sites segment, these expenses amounted to NIS
718.7 million (U.S. $192.5 million) compared to NIS 702.4 million in 2011, an
increase of 2.3%, mainly deriving from opening new fueling sites and was
partly offset by efficiency measures beginning from the fourth quarter of
2011.

In the Supermarkets segment, selling, general and administrative expenses
amounted to NIS 1,659.7 million (U.S. $444.6 million) compared to expenses of
NIS 1,673.4 million in 2011, a decrease of 0.8% that resulted from closing
branches and taking efficiency measures in the Company's headquarters. 

In the Non Food segment, these expenses amounted to NIS 160.4 million (U.S.
$43.0 million) (a decrease of 3.2%) compared to NIS 165.8 million in 2011. The
decrease derives from a decrease in allowance for doubtful accounts.

In the Real Estate segment - these expenses amounted to NIS 28.3 million (U.S.
$7.6 million) compared to NIS 15.6 million in 2011. 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 and from increase in
advertising expenses relating to the fashion week that took place in December.


Operating profit (before other gains and losses and changes in fair value of
investment property) in 2012 amounted to NIS 184.1 million (U.S. $49.3
million) (1.4% of revenues) as compared to NIS 292.0 million (2.4% of
revenues) in 2011, a decrease of 36.9%. 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 and Fueling sites segment, operating profit decreased from
NIS 173.7 million in 2011 to NIS 164.8 million (U.S. $44.1 million) in the
reported period due to the reduction of marketing margins and the impact of
petrol prices on the value of inventory and was partly offset by efficacy
measures.

In the Supermarkets segment, operating profit decreased from NIS 177.3 million
in 2011 to NIS 129.0 million (U.S. $34.5 million) in the reported period due
to decrease in sales partially offset by efficacy measures as mentioned above,
during the last quarter the company began closing 11 stores (7 in the fourth
quarter).

In the Non Food segment, operating loss decreased from NIS 19.8 million in the
comparable period to operating loss of NIS 12.1 million (U.S. $3.2 million) in
the reported period.

In the Real Estate segment, operating profit decreased from NIS 15.4 million
in the comparable period to operating profit of NIS 5.6 million (U.S. $1.5
million) in the reported period due to an increase in the selling, general and
administrative expenses as mentioned above.

Changes in fair value of investment property in 2012 the Company recorded
profit of NIS 106.4 million (U.S. $28.5 million) compared to NIS 41.9 million
in 2011. The profit in 2012 includes NIS 87.6 million from revaluation of the
commercial section in the wholesale market complex in Tel Aviv.

Other income (expenses), net in 2012, other income amounted to NIS 23.4
million (U.S. $6.3 million) compared to other expenses of NIS 16.9 million
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 2012 amounted to NIS 313.9 million (U.S. $84.1 million) as
compared to operating profit of NIS 317.0 million in the comparable period
last year, a decrease of 1.0%.

Finance costs, net in 2012 amounted to NIS 245.8 million (U.S. $65.8 million)
as compared to net finance costs of NIS 171.9 million in 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 in the amount of NIS 100 million.

Taxes on income in 2012 totaled NIS 16.6 million (U.S. $4.4 million) (an
effective tax rate of 21% as compared to the statutory rate of 25%) as
compared to tax expenses totaled NIS 48.5 million last year (an effective tax
rate of 32% as compared to the statutory rate of 24%). The effective tax rate
in 2012 was affected by recording a profit from a decrease in holding rate in
respect of which, the Company did not record deferred taxes.

Net income from continued operation in 2012 amounted to NIS 63.6 million (U.S.
$17.0 million) compared to a net income of NIS 102.3 million in 2011. The
income from continued operation in 2012 attributable to the Company's
shareholders amounted to NIS 19.3 million (U.S. $5.2 million) or NIS 0.29 per
share (U.S. $0.08) and the income attributable to the non-controlling
interests amounted to NIS 44.4 million (U.S. $11.9 million).

Net loss from discontinued operation in 2012 amounted to NIS 22.5 million
(U.S. $6.0 million) or NIS 0.34 per share (U.S. $0.09) compared to a loss of
NIS 18.6 million in 2011 attributed in its entirety to the Company's
shareholders.

Cash flows for 2012

Cash flows from operating activities: Net cash flows from operating activities
amounted to NIS 286.1 million (U.S. $76.7 million) in 2012 compared to NIS
627.6 million from operating activities in 2011. The decrease mainly derives
from purchase of real estate inventory by BSRE of NIS 249.1 million (U.S $66.7
million) in 2012 compared to purchase of real estate inventory of NIS 5.6
million last year, from decrease in operating profit of approximately NIS
107.8 million (U.S $28.9 million) and from decrease in working capital needs
net of tax returns received, net amounting to NIS 16.6 million (U.S $4.5
million) in 2012 compared to tax paid, net amounting to NIS 79.4 million last
year.

Cash flows used in investing activities: Net cash flows used in investing
activities amounted to NIS 560.0 million (U.S. $150.0 million) in 2012 as
compared to net cash used in investing activities of NIS 547.4 million in
2011. Cash flows used in investing activities in 2012 mainly included the
purchase of property and equipment, investment property and intangible assets
of total NIS 436.4 million (U.S. $116.9 million) as well as the grant of long
term loans of NIS 102.2 million (U.S. $27.3 million) mainly to an associate,
investment in restricted deposits of NIS 69.9 million (U.S. $18.7 million) and
investment in securities of NIS 178.1 million (U.S. $47.7 million), net of
proceeds from realization of securities of NIS 150.9 million (U.S. $40.4
million) proceeds from realization of property and equipment and investment
property of NIS 43.4 million (U.S. $11.6 million) and receiving a dividend in
the amount of NIS 12.5 million (U.S. $3.3 million).

Cash flows used in investing activities in 2011 included mainly purchases of
property and equipment, investment property and intangible assets, in a total
amount of NIS 347.3 million, the grant of long term loans of NIS 144.9
million, mainly to controlling shareholders and investment in restricted
deposits in the amount of NIS 102.6 million and an investment in an associate
(Diners) of NIS 36.4 million, net of proceeds from realization property and
equipment and investment property of NIS 63.5 million. 

Cash flows from financing activities: Net cash flows from financing activities
amounted to NIS 482.1 million (U.S. $129.1 million) in 2012 as compared to net
cash flows used in financing activities of NIS 110.7 million in 2011. The cash
flows from financing activities in 2012 mainly included issuance of debentures
of NIS 504.1 million (U.S. $135.0 million), receiving long term loans of NIS
594.3 million (U.S. $159.2 million) and an increase in short term bank credit
of NIS 205.4 million (U,S, $55.0 million) that was offset by interest payments
of NIS 258.8 million (U.S. $69.3 million), repayment of loans of NIS 350.3
million (U.S. $93.8 million) and debentures repayment of NIS 209.3 million
(U.S. $56.1 million). The net cash flows used in financing activities in 2011
included mainly repayment of debentures in the amount of NIS 174.9 million,
repayment of long term loans in the amount of NIS 382.5 million, and payments
of interest in the amount of NIS 222.7 million, this was offset by an increase
in short term bank credit in the amount of NIS 582.5 million and receiving
long term loans in the amount of NIS 213.7 million.

Additional Information

EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)^[^3]
in the fourth quarter of 2012 EBITDA was NIS 89.8 million (U.S. $24.1 million)
(2.9% of revenues) compared to NIS 87.8 million (2.9% of revenues) in the
comparable quarter of 2011. In 2012 EBITDA was NIS 470.4 million (U.S. $126.0
million) (3.7% of revenues) compared to NIS 568.9 million (4.6% of revenues)
in the comparable period of 2011.

Events during the reporting period

General

a.In December 2012, the Company resolved to realize Kfar Hashashuim that
    coordinates the activity of the leisure and toy activity of the Company
    under the Non-food segment. The Company intends to complete the
    realization of the activity in 2013. As of December 31, 2012, the Company
    includes the assets and liabilities attributed to Kfar Hashashuim in the
    consolidated statements of financial position in the item of the assets
    and liabilities held for sale under current assets and liabilities. The
    statements of income, including comparative figures, were restated such
    that the results of discontinued operation were separated from continued
    operation and were presented separately after the income from continued
    operation. Operating segment reporting presents the segments' results from
    continued operation before taxes.
b.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.
c.During the second quarter of 2012, the Company launched its operations in
    the cellular activity under the brand name "YouPhone" and commenced to
    provide services to its customers.
d.On November 19, 2012, the Company's CEO, Mr. Zeev Vurembrand, announced
    the termination of his service at the end of February 2013.
e.On November 22, 2012, the Company announced that Mr. Motti Keren has been
    appointed as CEO of Mega Retail. Mr. Motti Keren commenced his service on
    January 1, 2013.
f.On November 27, 2012, Mr. David Weissman was appointed as CEO of the
    Company and Mr. Itzhak Bader was appointed chairman of the Company. The
    appointments are in effect as of January 1, 2013, without changes in the
    terms of employment.

Commercial and Fueling sites segment

a.As of December 31, 2012, Dor Alon operated - 202 fueling stations and 209
    convenience stores.
b.Commitment for establishing a 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. On December 9, 2012, the Corporation
    entered into an agreement to purchase natural gas from the partners in
    Tamar partnership (the partnership agreement) for the purpose of operating
    existing installations and a power plant, when established, the purpose of
    which, is to supply the energy needs of Sugat. Dor Alon's Board of
    Directors approved the transaction as an extraordinary transaction, in
    which the controlling shareholders may have a personal interest, pursuant
    to the Companies' Regulations (Relieves in Transactions with Interested
    Parties) - 2000. Pursuant to the agreement, Tamar partnership partners
    committed to supply the partnership with natural gas at a scope of up to
    1.68 billion square meters according to the conditions set forth in the
    supply agreement. The term of agreement is 15 years or the end of
    consuming the contractual quantity, whichever is earlier, and is expected
    to commence at the beginning of 2014.
c.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).
d.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. No material effect is
    expected on the financial results of the Commercial and Fuling sites
    segment in 2012.

Supermarkets segment

a.As of December 31, 2012, the Company operated 212 supermarkets divided as
    follows: Mega In Town - 119; Mega Bool - 67; Zol Beshefa - 15; Eden Teva
    Market - 20 of which 9 Eden within Mega.
b.As of December 31, 2012, the Company operated branches in a total area of
    369,000 sq.m. The sales per meter amounted in the fourth quarter of 2012
    to NIS 4,210 (U.S. $1,128) compared to NIS 4,394 in the corresponding
    quarter last year.
    Sales per meter in 2012 amounted to NIS 17,180 (U.S. $4,602) compared to
    NIS 18,090 in the corresponding period last year.
    In the year ended December 31, 2012, 10 branches, net, were opened in a
    total area of 13,400 sq.m and 9 branches were closed in a total area of
    20,490 sq.m.
c.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 7 branches.

Non Food segment

a.As of December 31, 2012, Bee Group operates 138 branches (of which 21
    franchised).
b.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.
c.In December 2012, the Company resolved to realize Kfar Hashashuim that
    coordinates the activity of the leisure and toy activity of the Company
    under the Non-food segment, and as of December 31, 2012, operates 81
    stores, mostly by franchisees.

 The following are the operating results of Kfar Hashashuim for the fourth
quarter and for the year ended December 31, 2012


                                 Year ended December  Three months ended December
                                     31                        31
                             -------------------- ----------------------------
                                2012       2011           2012          2011
                             --------- ---------- -------------- -------------
                                             NIS in thousands
                             -------------------------------------------------

    Revenues                   115,214    136,808         24,402        18,602
    Gross profit                23,308     11,941         11,206           820
    Operating loss            (11,485)   (15,103)        (4,606)       (9,909)
                             --------- ---------- -------------- -------------
    Net loss from
    discontinuing
    operations                (22,468)   (18,609)        (11,861)      (10,366)
                             --------- ---------- -------------- -------------
                             --------- ---------- -------------- -------------

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 a part of 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. On January 21, 2013, BSRE entered into an agreement for the
sale of half of its rights in the property to Harel Investments, Insurance and
Financial Services Ltd. in return for NIS 51 million and shall bear 50% of the
remaining establishment costs. In addition, BSRE is entitled to an additional
consideration for building rights of 2,500 sq.m that were not yet utilized and
according to the agreement such consideration is to be payable in a later
date.

The agreement further determines that if the building rights in the real
estate are increased, Harel shall have the option to purchase 50% of these
rights at a consideration to be determined according to the value of the
rights. A collaboration agreement was signed between BSRE and Harel.

b.The wholesale market complex

  oOn May 31, 2012, Tel Aviv Lev Towers Ltd. (the "Residential company") and
    the Tel Aviv City Mall Ltd. (the "Purchasers") 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, according to the agreements, in
    the aggregate amount of approximately NIS 730 million (BSRE share - NIS
    365 million) plus VAT. The sellers may be entitled to an additional
    consideration that shall be derived from the sale price of the apartments
    in the project. As of the date of this report, the sellers are not
    entitled to additional consideration.

    In order to pay the Balance of Consideration, the Purchasers received
    loans of NIS 730 million (NIS 487 million to Tel Aviv Lev Towers Ltd and
    NIS 243 million to Tel Aviv City Mall Ltd.) 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 of Prime + 2% are payable
    quarterly. The loan may be repaid early. To secure the loans, BSRE
    recorded a charge in favor of the Bank on the rights in the land and BSRE
    committed to provide unlimited guarantee in the amount of 50% of the
    purchasers' debts in addition to other collaterals and commitments. On
    December 31, 2012, the bank's consent to provide an additional loan to Tel
    Aviv City Mall Ltd. was received, provided that certain conditions are
    met, at the original loan repayment date and at the loan principal amount
    (NIS 243 million) attributed to Tel Aviv City Mall Ltd.
    The additional loan shall be repaid in one payment until January 15, 2014.
    The loan agreement determines that the bank may call the loan for
    immediate repayment.
  oDuring the 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) 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 at the end of
    the second quarter of 2012 and therefore the investment in Tel Aviv Lev
    Towers Ltd. was recorded on equity method of accounting. BSRE recorded in
    the statements of income, under other income (expenses), a gain of NIS
    19.6 million representing 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.
  oIn 2012, BSRE recorded a gain of NIS 87.6 million from appreciation before
    taxes stemming from revaluation of real estate in the Tel Aviv City Mall
    Company.
  oIn December 2012, building permits were received for 652 apartments in the
    project and for two parking levels. BSRE estimates that building permits
    for the remaining 70 apartments, commercial space and parking shall be
    received in 2013.
  oAs of the date of this report, the residential company signed 619 sale
    agreements for the sale of apartments in a total amount of NIS 1,239
    million out of which, NIS 603 million were received as of the date of the
    report.

c.Hadar Mall

In the first quarter of 2012, the construction of an additional commercial
floor in Hadar Mall (BSRE share in the mall is 50%) with a total area of
12,000 sq.m and upper three parking levels with a total area of 22,000 sq.m
was commenced.

BSRE estimates that construction shall be completed in the last quarter of
2013. 

On June 5, 2012, BSRE entered into a loan agreement (the loan) 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 effective December 2013 and the balance will be repaid in a
one-time at the end of the loan term. The loan is linked to the CPI and bears
annual interest of 4.1%. BSRE has the option to receive an additional loan of
NIS 40 million upon completing the construction. The additional loan shall be
linked to the CPI and bear interest according to a mechanism determined in the
loan agreement and shall be repaid on the same dates as the loan repayment
dates. 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
(18 months) and after the completion of the construction and Mega's entry into
the logistic center, the credit line shall be converted into a loan for 15
years 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 credit line and 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. Construction
is expected to be completed at the beginning of 2014. 

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.

f.Option for the sale of Cohen Building in Petach Tikva

In November 2012, BSRE granted an option to purchase the property in Petach
Tikva subject to certain conditions in return for NIS 56 million. On March 6,
2013, the option was exercised and a sale agreement was signed under which 20%
of the consideration was paid and the balance shall be paid in two equal
installments after 120 days and 150 days. 

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.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 an
    institutional investor for 107.0% of their par value, reflecting a return
    of 4.8%.
i.In 2012, the Company's subsidiaries acquired NIS 18.5 million par value of
    bonds of Series C of the Company, of which NIS 8.3 million par value of
    bonds Series C were realized or redeemed, such that as of December 31,
    2012, the subsidiaries hold 8.9% of bonds Series C.
j.On January 31, 2013, the bonds series of Dor Alon (Series C and D) were
    expanded by a private offering of NIS 21 million par value of bonds
    (Series C) to institutional investors for 97.95% of their par value,
    reflecting a return of 5.3% and NIS 129 million par value of bonds (Series
    D) for 103.8% of their par value, reflecting a return of 5.2%.

Post balance sheet events

a.BSRE announced on a dividend distribution in the amount of NIS 50 million
    (U.S. $13.4 million), the share of the Company NIS 39 million (U.S. $10.4
    million). The dividend shall be paid on April 23, 2013.
b.Dor Alon announced on a dividend distribution in the amount of NIS 20
    million (U.S. $5.4 million), the share of the Company NIS 15.7 million
    (U.S. $4.2 million). The dividend shall be paid on April 9, 2013

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 December 31, 2012: U.S. $1.00 equals
NIS 3.733. 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 five reporting
segments: In its supermarket segment, Alon Holdings, as a pioneer in the
modern food retail, through its 100% subsidiary, Mega Retail Ltd., currently
operates 212 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. In other segments, Alon
Holdings through its 100% subsidiary, Alon Cellular Ltd, operates an MVNO
network in Israel and through Diners Club Israel Ltd., an associate held at
49%, which operates in the sector of issuance and clearance of YOU credit
cards to the customer club members of the group. 

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 DECEMBER 31, 2012

                (UNAUDITED)


                                                      Convenience
                                                     translation
                                     December  31,     December 31,
                               -------------------- ---------------

                                    2011      2012          2012
                               ---------   -------- ---------------
                                          NIS          U.S. dollars
                               -------------------- ---------------
                                         In thousands
                              ------------------------------------
            Assets
  
    CURRENT ASSETS:  
     Cash and cash equivalents    76,451    285,034         76,355
     Investment in securities    300,053    325,313         87,145
     Short-term bank deposits    103,942     96,176         25,764
     Trade receivables         1,576,150  1,430,983        383,333
     Other accounts
     receivable including
     current maturities of
     loans receivable            291,790    274,862         73,630
     Derivative financial
     instruments                   2,543          -              -
     Assets of disposal groups
     classified as held for sale   3,610    228,131         61,112
     Income taxes receivable     125,789     92,814         24,863
     Inventories                 676,590    654,209        175,250
                               ---------   -------- --------------
                               3,156,918  3,387,522        907,452
                               ---------   -------- --------------
  
    NON-CURRENT ASSETS:  
     Investments in associates   202,653    349,157         93,533
     Derivative financial
     instruments                     896      1,790            480
     Real estate inventories     100,035    106,064         28,412
     Payments on account of
     real estate                 191,600          -              -
     Investments in securities    33,159     48,609         13,021
     Loans receivable, net of
     current maturities          182,654    206,784         55,391
     Property and equipment,
     net                       2,942,487  2,867,496        768,148
     Investment property         576,093    970,114        259,878
     Intangible assets, net    1,461,070  1,406,795        376,854
     Other long-term
     receivables                 142,331     33,640          9,011
     Deferred taxes              104,321    121,935         32,664
                               ---------   -------- --------------
                               5,937,299  6,112,384      1,637,390
                               ---------   -------- --------------
     Total assets              9,094,217  9,499,906      2,544,842
                               ---------   -------- --------------
                               ---------   -------- --------------



           ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

        CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

             AS OF DECEMBER 31, 2012

                (UNAUDITED)


                                                        Convenience
                                                        translation
                                                         December
                                       December 31,         31,
                                  -----------------   -------------

                                      2011      2012       2012
                                  --------  --------  -------------
                                                           U.S.
                                           NIS            dollars
                                  -----------------   -------------
                                             In thousands
                                  ---------------------------------
    Liabilities and shareholders'
                equity

    CURRENT LIABILITIES:
    Credit and loans from banks
    and others                      1,036,928 1,169,229     313,214
    Current maturities of
    debentures and
    convertible debentures            212,726   556,188     148,992
    Current maturities of
    long-term loans from banks        311,642   251,463      67,362
    Trade payables                  1,243,914 1,249,743     334,782
    Other accounts payable and
    accrued expenses                  730,985   647,587     173,477
    Customers' deposits                27,733    28,011       7,504
    Derivative financial
    instruments                         2,814    17,566       4,706
    Income taxes payable                6,311    10,124       2,712
    Provisions for other
    liabilities                        78,266    62,681      16,791
    Liabilities of disposal
    groups classified as
    held for sale                           -    87,794      23,518
                                    ---------  --------  ----------
                                    3,651,319 4,080,386   1,093,058
                                    ---------  --------  ----------

    NON CURRENT LIABILITIES:
    Long-term loans from banks
    and others, net of current
    maturities                      1,240,487 1,264,396     338,708
    Convertible debentures, net
    of current maturities             118,826    90,402      24,217
    Debentures, net of current
    maturities                      2,034,047 2,048,829     548,843
    Other liabilities                 264,597   148,865      39,878
    Derivative financial
    instruments                        16,701     6,382       1,710
    Liabilities in respect of
    employee benefits, net of
    amounts funded                     62,245    70,529      18,893
    Deferred taxes                   *159,769   183,776      49,230
                                    ---------  --------  ----------
                                    3,896,672 3,813,179   1,021,479
                                    ---------  --------  ----------
    Total liabilities               7,547,991 7,893,565   2,114,537
                                    ---------  --------  ----------

    EQUITY:
    Equity attributed to equity holders of
    the Company:
    Ordinary shares of NIS 1 par
    value                              79,881    79,881      21,399
    Additional paid-in capital      1,219,279 1,219,279     326,622
    Other reserves                    (9,672)     9,245       2,476
    Accumulated deficit            *(106,434) (114,965)    (30,797)
                                    ---------  --------  ----------
                                    1,183,054 1,193,440     319,698
    Non-controlling interests        *363,172   412,901     110,607
                                    ---------  --------  ----------
    Total equity                    1,546,226 1,606,341     430,305
                                    ---------  --------  ----------
    Total liabilities and equity    9,094,217 9,499,906   2,544,842
                                    ---------  --------  ----------
                                    ---------  --------  ----------

             * Retroactive application, see events during the reporting
             period


            ALONHOLDINGS BLUE SQUARE-ISRAELLTD.
             CONSOLIDATED STATEMENTS OF INCOME

        FOR YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2012

                  (UNAUDITED)


                                                                   Convenience
                                                                   Translation
                                                                       for
                                                                    the year
                              Year ended       Three months ended     ended
                                                                    December
                             December 31,         December 31,         31,
                         --------------------- ------------------- -----------
                            2011       2012      2011      2012       2012
                         ---------- ---------- --------- --------- -----------
                                                                       U.S.
                                            NIS                       dollars
                         ----------------------------------------- -----------
                                 In thousands (except per share data)
                         -----------------------------------------------------
    Revenues             15,159,447 15,805,539 3,722,049 3,831,867   4,234,005
    Less - government
    levies                2,813,671  2,955,154   701,232   717,111     791,630
                         ---------- ---------- --------- --------- -----------
    Net revenues         12,345,776 12,850,385 3,020,817 3,114,756   3,442,375
    Cost of sales         9,442,009 10,008,056 2,332,263 2,433,754   2,680,969
                         ---------- ---------- --------- --------- -----------
    Gross profit          2,903,767  2,842,329   688,554   681,002     761,406
    Selling, general and
    administrative
    expenses              2,611,801  2,658,198   671,502   661,135     712,081
                         ---------- ---------- --------- --------- -----------
    Operating profit
    before other gains
    and losses and
    changes in fair
    value of investment
    property                291,966    184,131    17,052    19,867      49,325
    Other gains               1,637     39,058         -     16,888     10,463
    Other losses           (18,529)   (15,663)   (9,854)   (7,816)     (4,196)
    Increase in fair
    value of investment
    property, net            41,913    106,399    13,781    23,030      28,502
                         ---------- ---------- --------- --------- -----------
    Operating profit        316,987    313,925    20,979    51,969      84,094
    Finance income          156,567     73,875     9,358    14,143      19,790
    Finance expenses      (328,493)  (319,644)  (50,968)  (48,315)    (85,627)
                         ---------- ---------- --------- --------- -----------
    Finance expenses,
    net                   (171,926)  (245,769)  (41,610)  (34,172)    (65,837)
    Share in gains
    (losses) of
    associates                5,746     12,024     (407)     3,355       3,221
                         ---------- ---------- --------- --------- -----------
    Income (loss) before
    taxes on income         150,807     80,180  (21,038)    21,152      21,478
    Taxes on income          48,485     16,561    34,669     6,765       4,437
                         ---------- ---------- --------- --------- -----------
    Net income (loss)
    from continuing
    operation               102,322     63,619  (55,707)    14,387      17,044
 
    Net loss
    from discontinued
    operation              (18,609)   (22,468)  (10,366)   (11,861)     (6,019)
                         ---------- ---------- --------- --------- -----------
                             83,713     41,151  (66,073)     2,526      11,025
                         ---------- ---------- --------- --------- -----------
                         ---------- ---------- --------- --------- -----------
    Attributable to:
    Equity holders of
    the Company              59,513      3,213  (69,283)   (7,822)         (858)
                         ---------- ---------- --------- --------- -----------
    Non-controlling
    interests                24,200     44,364     3,210    10,348      11,883
                         ---------- ---------- --------- --------- -----------

    Earnings per
    ordinary share or
    ADS attributable to
    equity holders of
    the company
    Basic
    Continuing
    operations                 1.18       0.29    (0.89)      0.06        0.08
    Discontinued
    operation                (0.28)     (0.34)    (0.16)    (0.18)      (0.09)
                         ---------- ---------- --------- --------- -----------
                               0.90       (0.05)    (1.05)    (0.12)      (0.01)
                         ---------- ---------- --------- --------- -----------
                         ---------- ---------- --------- --------- -----------

    Fully diluted
    Continuing
    operations                 1.07       0.29    (0.89)      0.06        0.08
    Discontinued
    operation                (0.28)     (0.34)    (0.16)    (0.18)      (0.09)
                         ---------- ---------- --------- --------- -----------
                               0.79      (0.05)    (1.05)    (0.12)      (0.01)
                         ---------- ---------- --------- --------- -----------
                         ---------- ---------- --------- --------- -----------


    Weighted average
    number of shares or
    ADSs used for
    computation of
    earnings per share:
    Basic                    65,940     65,954    65,954    65,954      65,954
                         ---------- ---------- --------- --------- -----------
    Fully diluted            66,167     65,954    65,954    65,954      65,954
                         ---------- ---------- --------- --------- -----------


           ALONHOLDINGS BLUE SQUARE-ISRAELLTD.
           CONSOLIDATED STATEMENTS OF CASH FLOWS

       FOR THE YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2012

                    (UNAUDITED)


                                                                   Convenience
                                                                   translation
                                                                       for
                                                                    the year
                               Year ended      Three months ended     ended
                                                                    December
                              December 31,        December 31,         31,
                             ----------------  ------------------  -----------
                              2011       2012      2011      2012     2012
                                                                      U.S.
                                                NIS                  dollars
                            ------------------------------------  -----------
                                             In thousands
                             -------------------------------------------------  
    CASH FLOWS FROM
    OPERATING
    ACTIVITIES:
    Income (loss)
    before taxes on
    income from
    continuing
    operations          150,807      81,180  (21,038)      21,152       21,478
    Net income
    (loss) from
    discontinued
    operation          (20,506)    (17,468)  (10,582)     (6,861)      (4,679)
    Income tax
    received
    (paid), net        (79,368)      16,647  (18,315)    (10,419)        4,459
    Adjustments for
    cash generated
    from operations     576,664     206,783   191,377     105,491       55,393
                       --------   ---------  --------   ---------     --------

    Net cash
    provided by
    operating
    activities          627,597     286,142   141,442     109,363       76,651
                       --------   ---------  --------   ---------     --------
    CASH FLOWS FROM
    INVESTING
    ACTIVITIES:
    Purchase of
    property and
    equipment         (261,101)   (201,273)  (46,842)    (39,226)     (53,917)
    Purchase of
    investment
    property           (55,524)   (191,706)  (13,058)    (19,713)     (51,354)
    Purchase of
    intangible
    assets             (30,717)    (43,439)  (14,561)     (5,511)     (11,636)
    Proceeds from
    collection of
    (investment in)
    short-term bank
    deposits, net       (5,858)       7,766     (493)      23,849        2,080
    Proceeds from
    sale of
    property and
    equipment            12,864      20,187       272      11,142        5,408
    Proceeds from
    sale of
    investment
    property             50,600      23,198         -      19,588        6,214
    Investment in
    restricted
    deposits          (102,603)    (69,910)   (4,294)           -     (18,728)
    Proceeds from
    sale of
    marketable
    securities          118,957     150,945    41,553      30,060       40,435
    Investment in
    marketable
    securities        (122,646)   (178,149)  (51,247)    (34,212)     (47,723)
    Dividend
    received                  -      12,500         -       1,500        3,348
    Acquisition of
    equity
    accounted
    investee           (36,415)           -         -           -            -
    Grant of long
    term loans            (200)    (63,800)         -    (34,500)     (17,091)
    Grant of loans
    to controlling
    shareholders      (144,962)    (38,377)    10,201     (1,961)     (10,280)
    Payments on
    account of real
    estate              (9,187)    (23,937)   (8,070)     (4,838)      (6,412)
    Collection of
    long-term loans
    receivable           22,885      13,785    16,047         978        3,693
    Net outflow
    from
    realization of
    proportionately
    consolidated
    company                   -     (3,085)         -           -        (826)
    Interest
    received             16,552      25,256       512       7,291        6,766
                      ---------   ---------   --------   ---------   ---------
    Net cash used
    in investing
    activities        (547,355)   (560,039)  (69,980)    (45,553)    (150,023)
                      ---------   ---------   --------   ---------   ---------


          ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

           CONSOLIDATED STATEMENTS OF CASH FLOWS

      FOR THE YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2012

                 (UNAUDITED)



                                                                   Convenience
                                                                   translation
                                                                       for
                                                                    the year
                               Year ended      Three months ended     ended
                                                                    December
                              December 31,        December 31,         31,
                              ---------------      --------------   -----------
                              2011       2012      2011      2012       2012
                              ---------------      --------------   -----------
                                                NIS                 U.S dollars
                              ------------------------------------  -----------
                                              In thousands            
                              -------------------------------------------------
    CASH FLOWS FROM
    FINANCING ACTIVITIES:
    Purchase of treasury
    shares                   (4,035)         -         -         -           -
    Dividends paid          (75,000)         -  (75,000)         -           -
    Dividend paid to
    non-controlling
    interests               (30,669)         -  (13,848)         -           -
    Issuance of debentures         -   504,136         -   115,194     135,048
    Repayment of
    debentures             (174,955) (209,321)  (34,206)  (32,130)    (56,073)
    Transactions with
    non-controlling
    interests in
    subsidiary without
    loss of control         (15,217)     (467)   (7,290)         -       (125)
    Receipt of long-term
    loans                    213,648   594,298    81,101    50,399   (159,201)
    Repayment of long-term
    loans                  (382,557) (350,357) (200,843) (100,524)    (93,854)
    Repayment of long term
    credit from
    trade payables           (1,750)         -     (465)         -           -
    Short-term credit from
    banks and others, net    582,503   205,390   209,445   (2,928)      55,020
    Proceeds from issue of
    shares relating to
    share based payments
    in the company and a
    subsidiary                   143         -         3         -           -
    Settlement of forward
    contracts                      -   (2,808)         -         -       (752)
    Interest paid          (222,771) (258,788)  (52,799)  (67,436)    (69,324)
                           --------- ---------  --------  --------    --------
    Net cash provided by
    (used in) financing
    activities             (110,660)   482,083  (93,902)  (37,425)     129,141
                           --------- ---------  --------  --------    --------
    INCREASE (DECREASE) IN
    CASH AND CASH
    EQUIVALENTS AND BANK
    OVERDRAFTS              (30,418)   208,186  (22,440)    26,385      55,769
    Translation
    differences on cash
    and cash equivalents          37       (1)        35      (47)           -
    BALANCE OF CASH AND
    CASH EQUIVALENTS AND
    BANK OVERDRAFTS AT
    BEGINNING OF PERIOD      104,131    73,750    96,155   255,597      19,756
                           --------- ---------  --------  --------    --------

    BALANCE OF CASH AND
    CASH EQUIVALENTS AND
    BANK OVERDRAFTS AT END
    OF PERIOD                 73,750   281,935    73,750   281,935      75,525
                           --------- ---------  --------  --------    --------


(Continued - 2)

               ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

               CONSOLIDATED STATEMENTS OF CASH FLOWS

         FOR THE YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2012

                    (UNAUDITED)


   

                                                                   Convenience
                                                                   translation
                                                                       for
                                                                    the year
                               Year ended      Three months ended     ended
                                                                    December
                              December 31,        December 31,         31,
                             ---------------      --------------   ---------
                             2011      2012      2011      2012       2012
                            ---------------      --------------   ---------  
                                                                      U.S.
                                             NIS                    dollars
                            -----------------------------------   --------- 
                                              In thousands
                            -----------------------------------------------   
        Net cash provided
        by operating
    (a) activities:
        Adjustments for:
        Depreciation and
        amortization         273,746   286,751    70,158    71,714      76,815
        Increase in fair
        value of
        investment
        property, net       (41,913) (106,399)  (13,781)  (23,030)    (28,502)
        Gain from decrease
        in holding rate in
        proportionately
        consolidated
        company                    -  (19,622)         -         -     (5,256)
        Share in losses
        (gains) of
        associates           (5,309)  (12,024)       407   (3,355)     (3,221)
        Share based
        payment                3,270     (493)       582   (1,815)       (132)
        Loss (gain) from
        sale and disposal
        of property and
        equipment, net         2,448   (14,475)     2,319   (15,526)     (3,877)
        Provision for
        impairment of
        property and
        equipment, net         7,815         -     6,474         -           -
        Loss (gain) from
        changes in fair
        value of
        derivative
        financial
        instruments        (107,553)     7,072     5,353   (2,089)       1,894
        Linkage
        differences on
        monetary assets,
        debentures, loans
        and other long
        term liabilities      71,465    33,876   (8,914)  (18,803)       9,075
        Employee benefit
        liability, net           177     2,114     (324)     1,680         566
        Decrease
        (increase) in
        value of
        investment in
        securities,
        deposits and
        long-term
        receivables, net       1,190   (7,228)   (2,074)   (2,511)     (1,936)
        Interest paid, net   184,963   214,236    49,426    52,408      57,390
        Changes in
        operating assets
        and liabilities:
        Investment in real
        estate inventories   (5,637) (249,134)     (720)   (1,002)    (66,738)
        Payments on
        account of real
        estate inventories   (8,852)  (11,692)   (2,485)         -     (3,132)
        Increase in trade
        receivables and
        other accounts       104,743    76,796   502,532   437,638      20,572
        Increase in
        advances from
        purchasers of
        apartments           102,603    64,618     4,294         -      17,309
        Decrease in trade
        payables and other
        accounts payable    (10,198)  (45,640) (427,743) (404,816)    (12,226)
        Decrease
        (increase) in
        inventories            3,706  (11,973)     5,873    14,998     (3,208)
                           --------- ---------  --------  --------    --------
                             576,664   206,783   191,377   105,491      55,393
                           --------- ---------  --------  --------    --------

(Concluded - 3)

            ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

            CONSOLIDATED STATEMENTS OF CASH FLOWS

       FOR THE YEAR AND THREE MONTH PERIOD ENDED DECEMBER 31, 2012

                  (UNAUDITED)


                                                                  Convenience
                                                                  translation
                                                                      for
                                               Three months
                            Year ended            ended          the year ended
                           December 31,        December 31,       December 31,
                          ---------------      --------------    --------------
                              2011    2012      2011    2012           2012
                          --------- -------    ------  ------    --------------
                                          NIS                     U.S. dollars
                          -----------------------------------    --------------
                                           In thousands
                          -----------------------------------------------------

    (b) Supplementary
    information on
    investing and
    financing
    activities not
    involving cash
    flows:
    Issue of shares
    upon conversion of
    convertible
    debentures                  896      -       -         -            -
                           -------- ------  ------   -------        ------
    Purchase of
    property and
    equipment on credit      10,769 27,886  10,769    27,886        7,465
                           -------- ------  ------   -------        ------
    Issue of shares
    against acquisition
    of shares in
    subsidiary              154,433      -       -         -            -
                           -------- ------  ------   -------        ------


             ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

                   NET LIABILITIES

                     (UNAUDITED)


                                                                  Convenience
                                                                  translation
                                               December 31,       December 31,
                                             -------------------  ------------
                                             2011        2012         2012
                                             -------  ----------  ------------
                                                    NIS           U.S. dollars
                                             -------------------  ------------
                                                      In thousands
                                             ---------------------------------
                                                    Alon Holdings *
                                             ---------------------------------

    Cash and cash equivalence                   1,909       2,039          546
    Investment in securities                   64,657      68,429       18,331
                                             ---------   ---------   ---------
    Total assets                               66,566      70,468       18,877
                                             ---------   ---------   ---------


    Long- term debt:
    Credit and loans from banks and
    others                                    195,764     347,572       93,108
    Bank loans                                171,555     156,639       41,961
    Debentures                                232,341     171,002       45,808
                                             ---------   ---------   ---------
    Total long-term debt                      599,660     675,213      180,877
                                             ---------   ---------   ---------

    Equity:
    Equity attributable to equity holders
    of the company:                       (1,183,054) (1,193,440)    (319,698)
                                            ---------   ---------   ---------
                                           
    Total capitalization                    (533,094)   (604,745)    (162,000)
                                             ---------   ---------   ---------
                                             ---------   ---------   ---------

  oNet 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 YEAR AND THREE MONTH PERIOD ENDED
DECEMBER 31, 2012

                         (UNAUDITED)


                                                                     Convenience
                                                                  translation
                                                                      for
                                                                   the year
                               Year ended     Three months ended     ended
                                                                   December
                              December 31,       December 31,         31,
                            --------------    ----------------   ----------
                             2011     2012      2011      2012       2012
                            ------  ------    -------   ------   ----------
                                                                      U.S.
                                             NIS                     dollars
                            -----------------------------------  ------------
                                          In thousands            
                            -------------------------------------------------
    Net income from continuing
    operations               102,322    63,619  (55,707)     14,387      17,044
    Taxes on income          48,485    16,561    34,669     6,765       4,437
    Share in losses
    (gains) of associates   (5,746)  (12,024)       407   (3,355)     (3,221)
    Finance expenses, net   171,926   245,769    41,610    34,172      65,837
    Other losses (gains) ,
    net                      16,892  (23,395)     9,854   (9,072)     (6,267)
    Increase in fair value
    of investment property (41,913) (106,399)  (13,781)  (23,030)    (28,506)
    Depreciation and
    amortization            273,746   286,751    70,158    71,714      76,815
    Share based payment       3,270     (493)       582   (1,815)       (132)
                             ------   ------    -------   ------    ----------
    EBITDA                  568,986   470,389    87,796    89,766     126,008
                             ------   ------    -------   ------    ----------


ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

FOR THE THREE MONTH PERIOD AND YEAR ENDED DECEMBER 31, 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, Real Estate in addition to other segment which includes Cellular
activity and the Company's share in the issuance and clearance activity of
credit cards. The segments' results include the operating profit before
financial expenses from continued operations. The segments' results for prior
periods were adjusted in order to reflect the segment's results and the
adjustment to the results in the consolidated report for those periods from
continued operations^[4]. 

The Company's 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 December 31, 2012, Mega Retail operated 212 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) - Mostly through its subsidiary, BEE Group
    Retail Ltd. ("BEE Group"), the Company is engaged in non-food retail and
    wholesale activities. As of December 31, 2012, the Company operated 138
    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.
5.Others - Alon Holdings through its 100% subsidiary, Alon Cellular Ltd,
    operates an MVNO network in Israel and through Diners Club Israel Ltd., an
    associate held at 49%, which operates in the sector of issuance and
    clearance of YOU credit cards to the customer club members of the group. 

ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

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

FOR THE THREE MONTH PERIOD AND YEARENDED DECEMBER 31, 2012

(UNAUDITED)

Note 1 - Segment reporting (continued)


                               Three months ended December 31, 2012
                              ------------------------------------- 
                               Commercial
                              and Fueling
                                 sites     Supermarkets   Non-Food
                              -----------  ------------   --------
                                         NIS in thousands
                              ------------------------------------

    Net segment revenues       1,435,249     1,588,373      76,966
    Inter segment revenues        11,514             -       3,409
    Gross profit                 203,010       440,938      30,747
    Depreciation and
    amortization                  24,952        42,024       3,109
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property                      21,372        39,719    (12,976)
    Segment profit                21,231        49,655    (12,729)
    Unallocated corporate
    expenses
    Financial expenses,
    net
    Share in gains of
    associates, net
    Income before taxes on
    income


Table continued


                                    Three months ended December 31, 2012
                             -------------------------------------------------                              Real
                             Estate   Others  Adjustments   Total consolidated
                             ------   ------  -----------   ------------------
                                            NIS in thousands
                             -------------------------------------------------
    Net segment revenues     9,236     4,932        -         3,114,756
    Inter segment revenues       -         -  (14,923)                -
    Gross profit             9,236    (3,500)     571           681,002
    Depreciation and
    amortization                 -         -    1,629            71,714
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property                 2,343   (8,491) (17,082)           24,885
    Segment profit          19,641   (8,491) (12,320)           56,987
    Unallocated corporate
    expenses                                                    (5,018)
    Financial expenses,
    net                                                        (34,172)
    Share in gains of
    associates, net                                              3,355
                                                                ------
    Income before taxes on
    income                                                      21,152
                                                                ------
                                                                ------


ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

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

FOR THE THREE MONTH PERIOD AND YEARENDED DECEMBER 31, 2012

(UNAUDITED)

Note 1 - Segment reporting (continued)


                            Three months ended December 31, 2011
                          --------------------------------------
                          Commercial
                          and Fueling
                             sites      Supermarkets    Non-Food
                          ------------  ------------    --------
                                      NIS thousands
                          --------------------------------------
    Net segment revenues     1,299,707     1,647,696      64,333
    Inter segment
    revenues                    12,231        -            3,929
    Gross profit               204,052       444,618      30,803
    Depreciation and
    amortization                26,858        39,187       2,612
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property                   17,540        25,803     (17,868)
    Segment profit             17,465        19,387     (21,230)
    Unallocated
    corporate expenses
    Financial expenses,
    net
    Share in gains of
    associates, net
    Income before taxes
    on income


Table continued


                           Three months ended December 31, 2011
                           ----------------------------------------
                            Real                          Total
                           Estate   Others Adjustments consolidated
                           ------   ------ ----------- ------------
                                     NIS thousands
                           ----------------------------------------
    Net segment revenues   9,081      -            -    3,020,817
    Inter segment
    revenues                   -      -      (16,160)           -
    Gross profit           9,081      -            -      688,555
    Depreciation and
    amortization               -      -        1,501       70,158
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property               5,007  3,717     (12,018)      22,181
    Segment profit        18,787  3,717     (12,018)      26,108
    Unallocated
    corporate expenses                                    (5,129)
    Financial expenses,
    net                                                  (41,610)
    Share in gains of
    associates, net                                         (407)
                                                           ------
    Income before taxes
    on income                                            (21,038)
                                                         --------
                                                         --------


ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

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

FOR THE THREE MONTH PERIOD AND YEARENDED DECEMBER 31, 2012

(UNAUDITED)

Note 1 - Segment reporting (continued)


                             Year ended December 31, 2012
                           ---------------------------------- 
                            Commercial
                            and Fueling
                               sites    Supermarkets Non-Food
                           ------------ -----------  --------
                                      NIS thousands
                           ----------------------------------

    Net segment revenues   5,935,249     6,552,909    321,116
    Inter segment revenues    41,197             -     29,458
    Gross profit             883,510     1,788,615    148,348
    Depreciation and
    amortization              96,759       169,563     11,438
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property                 164,781       128,951    (12,072)
    Segment profit           164,662       139,666    (15,450)
    Unallocated corporate
    expenses
    Financial expenses,
    net
    Share in gains of
    associates, net
    Income before taxes on
    income


Table continued

  
                                  Year ended December 31, 2012
                            -------------------------------------------
                              Real                            Total
                             Estate    Others  Adjustments consolidated
                            --------   ------  ----------- ------------
                                          NIS thousands
                            -------------------------------------------
    Net segment revenues    33,926      7,185        -     12,850,385
    Inter segment revenues       -          -  (70,655)             -
    Gross profit            33,926    (11,571)    (499)     2,842,329
    Depreciation and
    amortization                 -          -     8,991       286,751
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property                 5,583    (14,027) (64,817)       208,399
    Segment profit         125,871    (14,027) (62,529)       338,193
    Unallocated corporate
    expenses                                                 (24,268)
    Financial expenses,
    net                                                     (245,769)
    Share in gains of
    associates, net                                            12,024
                                                               ------
    Income before taxes on
    income                                                     80,180
                                                               ------
                                                               ------



                           Year ended December 31, 2011
                         -----------------------------------
                          Commercial
                          and Fueling
                             sites     Supermarkets Non-Food
                         ------------  ------------ --------
                                   NIS thousands
                         -----------------------------------

    Net segment revenues 5,301,865     6,723,845    289,045
    Inter segment
    revenues                36,087             -     31,810
    Gross profit           876,040     1,850,764    145,942
    Depreciation and
    amortization            96,130       159,601     12,011
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property              173,681        177,346    (19,813)
    Segment profit        173,578        169,697    (28,952)
    Unallocated
    corporate expenses
    Financial expenses,
    net
    Share in gains of
    associates, net
    Income before taxes
    on income



                            Year ended December 31, 2011
                         -----------------------------------------
                            Real                          Total
                           Estate  Others Adjustments consolidated
                         --------  ------ ----------- ------------ 
                                    NIS thousands
                         -----------------------------------------

    Net segment revenues 31,021      -          -     12,345,776
    Inter segment
    revenues                  -      -    (67,897)             -
    Gross profit         31,021      -          -      2,903,767
    Depreciation and
    amortization              -      -      6,004        273,746
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property             15,395  6,552   (38,485)        314,676
    Segment profit       57,307  6,552   (38,485)        339,697
    Unallocated
    corporate expenses                                  (22,710)
    Financial expenses,
    net                                                (171,926)
    Share in gains of
    associates, net                                       5,746
                                                          -----
    Income before taxes
    on income                                           150,807
                                                        -------
                                                        -------


ALON HOLDINGS BLUE SQUARE - ISRAEL LTD.

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

FOR THE THREE MONTH PERIOD AND YEARENDED DECEMBER 31, 2012

(UNAUDITED)

Note 1 - Segment reporting (continued)


                          Year ended December 31, 2012
                         -----------------------------------
                           Commercial
                          and Fueling
                             sites     Supermarkets Non-Food
                         ------------  ------------ --------
                              U.S. dollars in thousands
                         -----------------------------------

    Net segment revenues 1,589,941     1,755,400      86,021
    Inter segment
    revenues                11,036        -            7,891
    Gross profit           236,676       479,137      39,740
    Depreciation and
    amortization            25,920        45,423       3,064
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property               44,142        34,543        (233)
    Segment profit         44,110        37,414      (4,137)
    Unallocated
    corporate expenses
    Financial expenses,
    net
    Share in gains of
    associates, net
    Income before taxes
    on income

Table continued

  
                              Year ended December 31, 2012
                           ------------------------------------------

                            Real                           Total
                           Estate    Others  Adjustments consolidated
                           ------    ------  ----------- ------------
                                     U.S. dollars in thousands
                           ------------------------------------------
    Net segment revenues   9,088      1,925        -      3,442,375
    Inter segment
    revenues                   -          -  (18,927)             -
    Gross profit           9,088    (3,100)     (134)       761,406
    Depreciation and
    amortization               -         -      2,408        76,815
    Operating profit
    (loss) before other
    gains and losses net
    and changes in fair
    value of investment
    property               1,496    (3,758)  (17,363)        55,827
    Segment profit        33,718    (3,758)  (16,750)        90,596
    Unallocated
    corporate expenses                                      (6,502)
    Financial expenses,
    net                                                    (65,837)
    Share in gains of
    associates, net                                           3,221
                                                              -----
    Income before taxes
    on income                                                21,478
                                                             ------
                                                             ------

1. 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.

2. The data of the Non-food segment are presented net of the discontinued
operation in the toy and leisure activity. The data of the discontinued
operation are included in the statements of operations in the discontinued
operation item. For discontinued operation results for the quarter and the
year, see events in the reported period in the Non- food segment of this
report.

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.

4. In December 2012, BEE group resolved to realize the activity of the leisure
and toy into the discontinued operating results. See material events in the
reported period, in the Non Food segment.

 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