Delek Group Announces Consolidated Results for the Second Quarter of 2015

August 31, 2015 at 3:08 AM EDT

Tel Aviv, August 31, 2015, Delek Group Ltd. (TASE: DLEKG,  US ADR: DGRLY) (hereinafter: "Delek Group" or “The  Group”) announced today its results for the three month period  ending June 30, 2015. The full financial statements are available in English on  Delek Group’s website at: www.delek-group.com.

                                     
  Second Quarter of 2015 Highlights
     
  • Second  quarter net income of NIS 22 million, compared with a net loss of NIS 600  million in the same period of last year;
  •  
  • Delek Group entered a binding agreement to sell  control at Phoenix Holdings Ltd., a successful realization  of the Groups’ ongoing strategy to focus on  its E&P assets;
  •  
  • The E&P sector contributed NIS 60 million to  the Group’s net income in the second quarter of 2015 versus a NIS 13 million  loss in the same period last year;
  •  
  • The Tamar field  continued production of natural gas, selling approximately 1.8 BCM in the second  quarter of 2015, compared with 1.6 BCM last year;
  •  
  • The partners in the Aphrodite Reservoir Partners  submitted a proposed outline for the development plan to the Government of  Cyprus;
  •  
  • Declared a dividend of NIS 120 million in the  second quarter.

Group revenues for the second quarter of 2015 were approximately NIS  1.7 billion, compared to NIS 1.9 billion in the same period last year. The  decrease was due to primarily due to lower revenues from Delek Israel due to  lower distillate prices, balanced by an  increase in revenues from the E&P sector.

Operating profit in the second quarter of 2015 totaled NIS 274 million compared with NIS  162 million as reported in the same period last year, mainly due to an increase  in the E&P sector as well as the Fuel Operations segment in Israel.

Net Income for second quarter of 2015 totaled NIS 22 million,  compared with a net loss of NIS 600 million in the second quarter of 2014. The contributing factors to the net  income were the increased contribution of Oil and Gas Exploration, and Gas  Production Operations from sales of gas from the Tamar field.

Cash balance at the Delek Group  correct as of June 30th, 2015 stood at NIS 3.4 billion (including  unutilized credit lines). On June 3, 2015, Delek Group completed a  successful exchange tender offer of Series B15  Debentures to Series B31, which has an extended maturity.

The  Company announced the appointment of Mr. Idan Wallace to serve as deputy CEO of  Delek Group.

Commented Mr. Bartfeld, President and CEO of Delek Group; “Our quarterly results once again demonstrate the  financial strength and stability of the Group that places it at the forefront  of companies in the Israeli economy. During the quarter, we entered into a  binding agreement to sell Phoenix to Fosun International, at a premium of 38%  above the market price which is expected to contribute to the Group's cash  balance by NIS 1.8 billion."

Mr. Bartfeld continued, “As part  of the announced strategy of the Group in the energy sector, and in light of our  strong cash balances, we are working towards exploiting the opportunities that  exist in the international market today.  In the near future, we are looking to make a  strategic investment that will be synergistic with the Group's existing  operations. Should such a deal indeed occur, together with the Group's existing  activities in the energy sector, including the ongoing and growing activities in  Cyprus, it will increasingly solidify our position as a major player in the international  energy sector.”

 

Main Business Highlights

Contribution  of Principal Operations to Net Income (NIS millions)

                                                                                                                                                                                                                                                                                                                                                                                                                             

 

6M       
2015

6M
        2014

Q2       
2015

Q2       
2014

FY       
2014

Oil and Gas Exploration, and Gas Production Operations

127

25

60

(13)

93

Fuel Operations in Israel

55

29

40

1

18

Automotive Operations2

121

51

43

21

107

Contribution to continuing operations before sold-off operations, discontinued operations and capital and other gains

303

105

143

9

218

Insurance and finance operations in Israel (pending sale)

17

116

41

22

255

Sold-off operations

-

(12)

-

(1)

21

Capital Losses & Others1

(88)

(1,004)

(162)

(630)

(1,259)

Net Income Attributed Group’s Shareholders

232

(795)

22

(600)

(765)

 

1Data for the first six  month of 2015 includes gains of NIS 96 million on the sale of Delek USA shares  and revaluation of the balance of the investment in Delek USA, as well as NIS  55 million in gains on reversal of the impairment of the investment in The Phoenix.  This item also includes the results of other operations, unattributed finance  expenses, other expenses, and tax expenses.
2Includes recognized  gains on the sale of Mobileye shares, see Section 6 below and Note 3 to the  financial statements.
Parts of the above table have been extracted from Delek Group's First Six  months 2015 Directors Report.

Please  review the full report available on the Group's website www.delek-group.com to view the notes for  each of the items above.

Energy  & Infrastructure

Oil and Gas Exploration &  Production Sector Highlights

Tamar  Project, 11 TCF  natural gas discoveries (Tamar and Tamar SW). Tamar produced 1.8 BCM of natural gas in the second  quarter of 2015, compared with 1.6 BCM (including Yam Tethys) in the same period last  year. In addition, Tamar sold 85 thousands of barrels of condensate in the second  quarter of 2015, compared with 82 thousands of barrels in the previous year.

Aphrodite, a 4.5 TCF (Contingent & Prospective) natural gas discovery located  in the Block 12 license, off the coast of Cyprus. On June 5, 2015, Delek Group’s gas  subsidiaries together with Noble Energy submitted to the Government of Cyprus a  Declaration of Commerciality of the Aphrodite natural gas Reservoir, located in  the area of Block 12 in Cyprus. On June 10, 2015, the Aphrodite Reservoir  Partners submitted a proposed outline for development plan of the Aphrodite  Reservoir to the Government of Cyprus.
  With regard to developments on the regulatory front: following both the decision by the Ministerial Committee for National  Security (decision B/6 of June 25, 2015) on increasing natural gas production at  the Tamar field and for accelerated development of the Leviathan, Karish, and  additional natural gas fields (June 30, 2015), a draft framework was formulated  by the Ministry of National Infrastructures, together with the Delek Group and  its partners.

The draft framework was issued for public comment by July 21, 2015 and on  August 16, 2015, the Israeli Government approved the framework obtaining an  exemption under Section 52 to the Antitrust Law.

The approved new  framework provides a mechanism for regulatory stability for at least 10 years,  does not reopen existing contracts and agreements, and allows Delek Group to  retain its current ownership in Leviathan. It covers the following elements, amongst others:

     
  • Ownership in Leviathan to remain unchanged;
  •  
  • A chapter on structural changes in the natural gas  market, mainly concerning the sale of all of the Limited Partnerships and  Nobel's rights in licenses Karish (366/Alon C) and Tanin (364/Alon A) within 14  months; the sale of all of the Limited Partnerships' rights in the Tamar and  Dalit leases; and sale of Nobel's rights in the Tamar and Dalit leases so that  they not exceed 25% within an interim period of 6 years from the exemption  date;
  •  
  • Setting prices and additional conditions in new contracts  for selling natural gas from Tamar and Leviathan for the interim period, until  competition is introduced into the local energy sector;
  •  
  • Clarifications and amendments to the Government decision  442 (of June 23, 2013), concerning exportation and taxation conditions for  natural gas export agreements.

 

A convenience translation  of the Government’s approved framework is available on the Delek Group’s  website.

Gas Production  Summary.Net income from the sector for the second quarter of 2015  was NIS 60 million, an increase compared to a net loss of NIS 13 million in the  same period in 2014. This year-over-year increase in was due, among other  things, to greater revenues from natural gas sales to customers in the Tamar  Project and lower finance expenses.
 
  Downstream Energy Sector  Highlights

Delek – the Israel Fuel Company Ltd. (fully  held by Delek Group); Contribution to net income in the second quarter of 2015  amounted to NIS 40 million compared with a contribution of NIS 1 million in the  same period last year. The increase was partly seasonal and also due gains on  inventory versus an inventory loss in the same quarter of last year.

Insurance  and Financial Services

On June 21, 2015, the  Group entered into a binding agreement with Fosun International Limited for the  sale of all the Company's holdings in Phoenix Holdings Ltd (52.3%). The  consideration set in the binding agreement dated June 21, 2015 was  approximately NIS 1,823 million. The parties are in the process of obtaining  all the necessary regulatory approvals required.

 

Dividend Distribution

On August 30, 2015, the  Board of Directors of Delek Group declared a cash dividend distribution for the  second quarter of 2015 in the amount of approximately NIS 120 million (approximately  NIS 10.2209 per share) to the shareholders on record as of September 8, 2015  and the dividend will be paid on September 24, 2015.

 

Conference Call Details

The Company will be hosting a conference  call in English on Monday, August 31, 2015.  Management will also be available to answer investor questions.
  To participate, please call one of  the following teleconferencing numbers.   Please begin placing your calls at least 5 minutes before the conference  call commences. If you are unable to connect using the toll-free numbers,  please try the international dial-in number.
  US Dial-in Number: 1-866-407-2553
  UK Dial-in Number: 0-800-051-8913
  ISRAEL Dial-in Number: 03- 9180687
  INTERNATIONAL Dial-in Number:  +972-3-9180687
  At:
  9:30am Eastern Time, 2:30pm UK Time, 4:30pm Israel Time

 

On the call, Mr. Gabi Last,  Chairman of the Board of Directors, Mr. Asi Bartfeld, CEO, Mr. Barak Mashraki,  CFO, and Mrs. Leora Pratt Levin, the Chief Legal Counsel will review and  discuss the results, and will be available to answer your questions.

 

About  The Delek Group

The Delek Group, Israel's dominant  integrated energy company, is the pioneering leader of the natural gas  exploration and production activities that are transforming the Eastern  Mediterranean's Levant Basin into one of the energy industry's most promising  emerging regions. Having discovered Tamar and Leviathan, two of the world's  largest natural gas finds since 2000, Delek and its partners are now developing  a balanced, world-class portfolio of exploration, development and production  assets with total gross natural gas resources discovered since 2009 of  approximately 40 TCF.

In addition, Delek Group has a number of  assets in downstream energy, water desalination, and in the finance sector.

For more information on Delek Group please  visit www.delek-group.com or Email: investor@delek-group.com

 

Contact

           

International    Investor Relations
      Dina    Vince
      Tel:    +972 9 863 8443
      Email: dinav@delek-group.com