UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 2015
ALON BLUE SQUARE ISRAEL LTD.
(translation of registrant’s name into English)
Europark Yakum, France Building,
Yakum 60972 Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40 F:
Form 20-F x Form 40-Fo
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ______
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.
| ALON BLUE SQUARE ISRAEL LTD. | ||||
| July 10, 2015 | By: | /s/ Elli Levinson-Sela, Adv. | ||
| Elli Levinson-Sela, Adv. | ||||
| General Counsel and Corporate Secretary | ||||
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Contact:
Alon Blue Square Israel Ltd.
Yehuda van der Walde, CFO
Toll-free telephone from U.S. and Canada: 888-572-4698
Telephone from rest of world: 972-9-961-8504
Fax: 972-9-961-8636
Email: cfo@bsi.co.il
July 10, 2015 - Yakum
ALON BLUE SQUARE ISRAEL LTD. (NYSE:BSI)
REPORTING THE RESULTS OF MEGA RETAIL LTD. AS OF MARCH 31, 2015
AND FOR THE PERIOD THEN ENDED
Further to the convening of the creditors' meeting of Mega Retail Ltd. hereinafter "Mega" On July 12, 2015, which will include a meeting of suppliers and in view of the fact that as part of Mega's debt arrangement it has been proposed to give certain suppliers the option of converting part of Mega's debt of them into share capital of the Company, the Company hereby issues condensed financial data and other information about Mega as of March 31, 2015. As approved by the board of Mega directors on May 27, 2015 for the purpose of including them in the consolidated financial statement of Alon Blue Square Ltd. for the first quarter of 2015. This summary is included in pages 3 up to 11 below.
The change in the deposit balance provided by Mega to Alon Blue Square in the first quarter derived from the Passover holiday timing and from using gift cards issued by Alon Blue Square that were used in Mega stores. As of the Company's report date, Alon Blue Square paid Mega the total deposit that amounted to NIS 194 million as of March 31, 2015 and in addition provided Mega a loan of NIS 40 million under the expected support of Alon Blue Square in the amount of NIS 100 million, a long term loan and credit line for financing events during the month of additional NIS 120 million as detailed in Mega's restructuring plan.
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MEGA RETAIL LTD.
May 27, 2015 – Rosh Ha'ain
Mega Retail Ltd.
Financial Results for the first quarter of 2015
Mega Retail Ltd. (hereinafter - the "Company"), is a company owned and controlled (100%) by Alon Blue Square Israel Ltd. (hereinafter - "the parent" or "BSI"). The parent company is a public company whose shares are traded on the Tel-Aviv and New York Stock Exchange (NYSE). The controlling shareholder of the parent company is Alon Israel Oil Company Limited. The Company is engaged in retail marketing through chain stores operated by the Company and through its subsidiaries (hereinafter "the Group"). The Company is a limited liability company incorporated in Israel, and is a resident of Israel. The Company's registered office is at 2 Amal St., Industrial Zone Afek, Israel. The financial results below are of the Company. Food retail operating of the Company is part of the food retail operating segment of Blue Square group which include the results of the Company as well as the activity of gift cards that operate in parent company, services provided by the parent and depreciation of buildings excluding rental fees to BSRE.
As of March 31, 2015, the Company operates 183 supermarkets divided as follows: "Mega in Town" - 119 branches, "Mega" - 8 branches, "YOU" - 38 branches (including outlet branch), "Zol Beshefa" - 14 branches, "Tachles" - one branch "Hazarchania of YOU" - 3 branches.
Also, as of March 31, 2015, the subsidary "Eden Teva Market" operated 9 branches and 14 branches in Mega.
The operating loss of the Company and its subsidiaries for first three months of 2015 amounted in the consolidation to NIS 80 million. In 2014, the loss in the consolidated amounted to NIS 277 million. In addition, during 2014 the Company and its subsidiaries wrote off the balance of deferred taxes and recorded tax expenses of NIS 126 million.
The Company's management has formulated an action plan that was approved by its Board of Directors which includes, among other things, (1) efficiency measures and dismissal of employees; (2) cutting advertising expenses and other expenses that are not essential to the ongoing operations of the Company; (3) inventory reduction; (4) reduction of investments to the minimum required for the normal operation of equipment and facilities; and (5) the sale of branches. In addition to carrying out these actions, the parent company has committed to provide additional financing to the Company in the aggregate amount not to exceed NIS 240 million so as to assist Mega, if necessary, in financing temporary liquidity difficulties and if there is no deviation from the branch realization plan.
The Company has already begun implementing some of the above measures and intends to implement the remaining stages of the plan without delay. Management intends to constantly monitor the progress of the implementation of the plan to assure that the scope of the measures taken is sufficient. The Company's management believes that the urgent implementation in short deadlines, as much as possible, of the above measures will bring the Company to a steady course of action.
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MEGA RETAIL LTD.
Results for the first quarter of 2015
Revenues in the first quarter of 2015 amounted to NIS 1,389.6 million compared to revenues of NIS 1,424.6 million in the comparable quarter last year, a decrease of 2.5%.
The increase in same store sales in this quarter compared to the comparable quarter last year amounts to 3.2%.
Gross profit in the first quarter of 2015 amounted to NIS 344.4 million (25% of revenues) compared to a gross profit of NIS 375.3 million (26.33% of revenues) in the comparable quarter last year.
Selling, general and administrative expensesin the first quarter of 2015 amounted to NIS 411.1 million (30% of revenues), compared to expenses of NIS 427.5 million (30% of revenues) in the comparable quarter last year. The main decrease derives from decrease in expenses due to closing branches and efficacy measures.
Operating loss (before other income and expenses) amounted to NIS 67 million (4.8 % of revenues) in the first quarter of 2015 as compared to NIS 52 million (3.7% of revenues) in the comparable quarter last year.
Other expenses, netin the first quarter of 2015 amounted toNIS 13.7 million as compared to NIS 13.8 million in the first quarter of 2014.
Operating loss before financingamounted to NIS 80.4million (5.8% of revenues) in the first quarter of 2015 as compared to NIS 65.9 million (4.6% of revenues) in the comparable quarter last year.
Financing expenses, netin the first quarter of 2015 amounted toNIS 6.6 million as compared to financing expenses of NIS 5.4 million in the comparable quarter last year.
Lossin the first quarter of 2015 amounted toNIS 87.0 million as compared to a loss of NIS 50.4 million in the comparable quarter last year.
Negative EBITDAin the first quarter of 2015 amounted toNIS 34 million (2.4% of revenues) as compared to NIS 20.7 million (1.5% of revenues) in the comparable quarter last year.
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MEGA RETAIL LTD.
Condensed operating data:
| Year ended December 31, | Three months | |||||
2014 | 2014 | 2015 | ||||
| Supermarkets segment: | ||||||
| Increase (decrease) same stores' sales (S.S.S) | (3.6%) | (9.9%) | 3.2% | |||
| Number of stores at the end of the period | 197 | 210 | 192 | |||
| Stores opened during the period | 3 | 1 | - | |||
| Stores closed during the period | 19 | 4 | 5 | |||
| Total selling space at the end of the period (sq.m) | 303,424 | 345,200 | 294,652 | |||
| Openings of branches(sq.m) | 4,263 | 1,262 | - | |||
| Closings of branches(sq.m) | (46,566) | (6,517) | (8,772) | |||
| Reduction of spaces (sq.m) | (14,273) | - | - | |||
| Sales per square meter | 18,028 | 4,179 | 4,373 | |||
| Sales per employee (NIS in thousands) | 1,183 | 282 | 298 | |||
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MEGA RETAIL LTD.
Cash flows for the first quarter of 2015
Cash flows from operating activities: Net cash flow provided by operating activities amounted to NIS 84.4 million in the first quarter of 2015 compared to net cash flow provided by operating activities of NIS 113.5 million in the comparable quarter last year. The decrease derives from a change in the net working capital of NIS 23.4 million.
Cash flows used in investing activities: Net cash flows used in investing activities amounted to NIS 35.7 million in the first quarter of 2015 as compared to net cash flows used in investing activities of NIS 127.4 million in the comparable quarter last year. Cash flows used in investing activities in this quarter mainly included the purchase of property and equipment, and intangible assets of NIS 25.2 million, increase in credit to the parent company in the amount of NIS 20.4 million net of proceeds from the sale of an investment in associate of NIS 9.8 million. In the first quarter of 2014, cash flows used in investing activities mainly included the purchase of property and equipment, and intangible assets of NIS 29.0 million, increase in credit to the parent company in the amount of NIS 98.6 million
Cash flows used in financing activities: Net cash flows used in financing activities amounted to NIS 34.5 million in this quarter as compared to net cash flows provided by financing activities of NIS 22.1 million in the corresponding quarter last year. The cash flows used in financing activities this quarter mainly included repayment of long term loans of NIS 24.3 million, decrease in short term credit of NIS 4.5 million and interest payments of NIS 5.7 million. The net cash flows provided by financing activities in the first quarter of 2014 included mainly the receipt of long term loan of NIS 100 million net of repayment of long term loans of NIS 2.4 million, decrease in short term credit of NIS 69.9 million and interest payments of NIS 5.6 million.
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MEGA RETAIL LTD.
Events during the reporting period
| a. | In March, after the fulfillment of the conditions precedent, the Company sold for NIS 9.8 million 50% of its holdings in Radio Lelo Hafsaka Ltd. and Radio Hatzafon Holdings Ltd. Following the sale, a capital gain of NIS 1.6 million resulted to the Company. Following the sale, the Company's holding rate in the radio companies is 16.5%. |
| b. | Following the resolution of the Board Directors to commence measures to cease the operations of Dr. Baby Ltd. expenses of NIS 3 million were recorded for the provision for impairment of assets and NIS 3 million for expected rental fees due to the closure. The expenses were included in the item of other expenses. |
Subsequent events (until of approving financial statements on May 27, 2015):
| a. | On April 2, 2015, the Company exercised the call option to purchase the shares of the partner in Tachles Retail Ltd. for NIS 4 million. |
| b. | In May 2015, the Company's CEO, Mr. Moti Keren informed the Board of Directors of his intention to end his tenure. |
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MEGA RETAIL LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF MARCH 31, 2015
(UNAUDITED)
December 31, | March 31, | |||||||||||
2014 | 2014 | 2015 | ||||||||||
| NIS In thousands | ||||||||||||
| A s s e t s | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | 6,175 | 5,808 | 15,019 | |||||||||
| Investment in securities | 297 | 408 | 297 | |||||||||
| Parent company | 173,441 | 200,948 | 193,818 | |||||||||
| Trade receivables and other receivables: | ||||||||||||
| Trade receivables | 267,372 | 327,067 | 334,750 | |||||||||
| Other | 39,778 | 59,052 | 38,448 | |||||||||
| Income taxes receivable | 3,268 | 2,412 | 2,657 | |||||||||
| Inventories | 319,379 | 436,975 | 379,441 | |||||||||
| 809,710 | 1,032,670 | 964,430 | ||||||||||
| NON-CURRENT ASSETS: | ||||||||||||
| Investments accounted for using equity method | 16,282 | 13,433 | 8,696 | |||||||||
| Property and equipment, net | 562,067 | 578,164 | 549,005 | |||||||||
| Other long-term receivables | 89,600 | 87,107 | 78,034 | |||||||||
| Deferred taxes | - | 145,537 | - | |||||||||
| Intangible assets, net | 324,406 | 347,497 | 326,241 | |||||||||
| 992,355 | 1,171,738 | 961,976 | ||||||||||
| Total assets | 1,802,065 | 2,204,408 | 1,926,406 | |||||||||
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MEGA RETAIL LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF MARCH 31, 2015
(UNAUDITED)
December 31, | March 31, | |||||||||||
2014 | 2014 | 2015 | ||||||||||
| NIS In thousands | ||||||||||||
| Liabilities and shareholders’ equity | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Credit and loans from banks and others | 320,339 | 147,018 | 310,541 | |||||||||
| Current maturities of long-term loans from banks | 59,024 | 52,715 | 59,531 | |||||||||
| Trade payables | 746,039 | 872,252 | 974,454 | |||||||||
| Related party | 38,757 | 44,632 | 41,272 | |||||||||
| Other trade payables | 223,928 | 258,526 | 250,309 | |||||||||
| Other liabilities | 6,813 | 9,114 | 7,027 | |||||||||
| 1,394,900 | 1,384,257 | 1,643,134 | ||||||||||
| NON CURRENT LIABILITIES: | ||||||||||||
| Long-term loans from banks and others, net of current maturities | 250,860 | 270,915 | 225,318 | |||||||||
| Derivative financial instruments | 1,193 | 2,175 | 1,109 | |||||||||
| Other liabilities | 58,025 | 64,025 | 46,782 | |||||||||
| Liabilities in respect of employee benefits, net of amounts funded | 61,046 | 62,938 | 60,551 | |||||||||
| 371,124 | 400,053 | 333,760 | ||||||||||
| Total liabilities | 1,766,024 | 1,784,310 | 1,976,894 | |||||||||
| EQUITY: | ||||||||||||
| Ordinary shares | 91,730 | 91,730 | 91,730 | |||||||||
| Other reserves | 474,956 | 474,956 | 474,956 | |||||||||
| Accumulated deficit | (530,645 | ) | (146,588 | ) | (617,174 | ) | ||||||
| Total equity | 36,041 | 420,098 | (50,488 | ) | ||||||||
| Total liabilities and equity | 1,802,065 | 2,204,408 | 1,926,406 | |||||||||
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MEGA RETAIL LTD.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2015
(UNAUDITED)
| Year ended | Three months ended | |||||||||||
December 31, | March 31, | |||||||||||
2014 | 2014 | 2015 | ||||||||||
| NIS In thousands | ||||||||||||
| Revenues | 5,828,324 | 1,424,633 | 1,389,645 | |||||||||
| Cost of sales | 4,329,609 | 1,049,292 | 1,045,253 | |||||||||
| Gross profit | 1,498,715 | 375,341 | 344,392 | |||||||||
| Selling, general and administrative expenses | 1,737,936 | 427,479 | 411,088 | |||||||||
| Loss before Other losses | (239,221 | ) | (52,138 | ) | (66,696 | ) | ||||||
| Other losses | 37,436 | 13,764 | 13,747 | |||||||||
| Operating profit | (276,657 | ) | (65,902 | ) | (80,443 | ) | ||||||
| Finance income | 3,105 | 1,930 | 1,730 | |||||||||
| Finance expenses | (34,562 | ) | (7,317 | ) | (8,288 | ) | ||||||
| Finance expenses, net | (31,457 | ) | (5,387 | ) | (6,558 | ) | ||||||
| Loss before gains of associates | (308,114 | ) | (71,289 | ) | (87,001 | ) | ||||||
| Share in gains of associates | 3,777 | 877 | 472 | |||||||||
| Loss before gains of associates | (304,337 | ) | (70,412 | ) | (86,529 | ) | ||||||
| Taxes on income (tax benefit) | 131,385 | (20,035 | ) | - | ||||||||
| Loss | (435,722 | ) | (50,377 | ) | (86,529 | ) | ||||||
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MEGA RETAIL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2015
(UNAUDITED)
| Year ended | Three months ended | |||||||||||
December 31, | March 31, | |||||||||||
2014 | 2014 | 2015 | ||||||||||
| NIS In thousands | ||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net cash provided by operating activities (a) | 14,133 | 113,836 | 83,804 | |||||||||
| Income tax received (paid) | (1,156 | ) | (300 | ) | 611 | |||||||
| Net cash provided by operating activities | 12,977 | 113,536 | 84,415 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Purchase of property and equipment | (139,877 | ) | (26,455 | ) | (22,131 | ) | ||||||
| Purchase of intangible assets | (22,500 | ) | (2,571 | ) | (3,052 | ) | ||||||
| Proceeds from sale of property and equipment | 65,928 | 193 | - | |||||||||
| Proceeds from sale of investment in associate | - | - | 9,822 | |||||||||
| Increase in credit to the parent company, net | (71,109 | ) | (98,616 | ) | (20,377 | ) | ||||||
| Interest received | 25 | 5 | - | |||||||||
| Net cash used in investing activities | (167,533 | ) | (127,444 | ) | (35,738 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Receipt of long-term loans | 120,000 | 100,000 | - | |||||||||
| Repayment of long-term loans | (37,310 | ) | (2,410 | ) | (24,288 | ) | ||||||
| Short-term credit from banks | 105,250 | (69,859 | ) | (4,499 | ) | |||||||
| Interest paid | (22,988 | ) | (5,580 | ) | (5,747 | ) | ||||||
| Net cash provided by (used in) financing activities | 164,952 | 22,151 | (34,534 | ) | ||||||||
| INCREASE IN CASH AND CASH EQUIVALENTS AND BANK CREDIT | 10,396 | 8,243 | 14,143 | |||||||||
| BALANCE OF CASH AND CASH EQUIVALENTS AND BANK CREDIT AT BEGINNING OF PERIOD | (9,520 | ) | (9,520 | ) | 876 | |||||||
| BALANCE OF CASH AND CASH EQUIVALENTS AND BANK CREDIT AT END OF PERIOD | 876 | (1,277 | ) | 15,019 | ||||||||
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MEGA RETAIL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2015
(UNAUDITED)
| Year ended | Three months ended | |||||||||||
December 31, | March 31, | |||||||||||
2014 | 2014 | 2015 | ||||||||||
| NIS In thousands | ||||||||||||
| (a) Net cash provided by operating activities: | ||||||||||||
| Loss before taxes on income | (304,337 | ) | (70,412 | ) | (86,529 | ) | ||||||
| Adjustments for: | ||||||||||||
| Depreciation and amortization | 131,927 | 31,477 | 32,313 | |||||||||
| Share in profit of associates, net | (3,777 | ) | (877 | ) | (472 | ) | ||||||
| Gain from realization of investment in associate | - | - | (1,611 | ) | ||||||||
| Gain (loss) from sale and impairment of property and equipment | (8,376 | ) | 3,311 | 4,532 | ||||||||
| Gain from changes in fair value of derivative financial instruments | (1,173 | ) | (192 | ) | (84 | ) | ||||||
| Linkage differences on assets and long term loans, net | 851 | (466 | ) | (896 | ) | |||||||
| Employee benefit liability, net | (10,293 | ) | (9,282 | ) | (495 | ) | ||||||
| Interest paid, net | 22,963 | 5,575 | 5,747 | |||||||||
| (172,215 | ) | (40,866 | ) | (47,495 | ) | |||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Decrease (increase) in trade receivables | 56,569 | (3,126 | ) | (67,378 | ) | |||||||
| Decrease (increase) in other accounts receivables | 4,703 | (22,249 | ) | 1,635 | ||||||||
| Decrease (increase) in inventories | 61,903 | (55,693 | ) | (60,062 | ) | |||||||
| Increase in trade payables and other accounts payable | 63,173 | 235,770 | 257,104 | |||||||||
| 186,348 | 154,702 | 131,299 | ||||||||||
| 14,133 | 113,836 | 83,804 | ||||||||||
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MEGA RETAIL LTD.
Repayment of long term loans from banks in Israel as of March 31, 2015
NIS CPI | NIS | Gross | Total | |||||||||||||
NIS in thousands | ||||||||||||||||
| First year | 21,436 | 38,095 | 8,102 | 67,633 | ||||||||||||
| Second year | 21,436 | 35,644 | 6,590 | 63,670 | ||||||||||||
| Third year | 21,436 | 25,125 | 4,930 | 51,491 | ||||||||||||
| Fourth year | 21,436 | 22,500 | 3,545 | 47,481 | ||||||||||||
| Fifth year and thereafter | 77,741 | - | 3,294 | 81,035 | ||||||||||||
| 163,485 | 121,364 | 26,461 | 311,310 | |||||||||||||
Events from the date of approving Mega's financial statements from May 27, 2015.
From May 27, 2015, the approval date of Mega's financial statements for the first quarter and until the date of issuing this report, The Company, Alon Blue Square have published the following reports relating to Mega:
| a. | Immediate report dated June 3, 2015 number 39360 regarding the appointment of Raviv Brookmayer as the CEO of Mega. |
| b. | Immediate report dated June 21, 2015 number 52479 regarding the approval of a new agreement between Mega, the Histadrut and the employees' committee. |
| c. | Immediate report dated June 29, 2015 number 58944 regarding the filing of Mega's application to the court seeking a debt arrangement. |
| d. | Immediate report dated July 1, 2015 number 62616 regarding the filing of Mega's application to the court seeking creditors' arrangement. |
| e. | Immediate report dated July 1, 2015 number 63075 regarding the approval of the court for convening debt arrangement meeting in Mega. |
| f. | Immediate report dated July 6, 2015 number 66051 regarding the approval by the Board of Directors of Alon Blue Square of the arrangement between the suppliers and Mega which includes the right to convert debt into the shares of Alon Blue Square. |
The change in the deposit balance provided by Mega to Alon Blue Square in the first quarter derived from the Passover holiday timing and from using gift cards issued by Alon Blue Square that were used in Mega stores. As of the Company's report date, Alon Blue Square paid Mega the total deposit that amounted to NIS 194 million as of March 31, 2015 and in addition provided Mega a loan of NIS 40 million under the expected support of Alon Blue Square in the amount of NIS 100 million, a long term loan and credit line for financing events during the month of additional NIS 120 million as detailed in Mega's restructuring plan.
As of the date of issuing this report, the management of Mega estimates that there are substantial doubts regarding the existence of a going concern assumption the materialization of which depends, among others, upon the approval of the creditors arrangement by the court and the development of the Company's business in the upcoming period.
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