Shikun & Binui Announces Financial Results For the Third Quarter & First Nine Months of 2018
AIRPORT CITY, Israel, Nov. 26, 2018 /PRNewswire/ -- Shikun & Binui Ltd. (TASE: SKBN.TA), a global construction and infrastructure company headquartered in Israel, today reported its financial results for the third quarter and first nine months of 2018.
Financial highlights for the first nine months of 2018:
-- Revenues totaled ~NIS 4.2 billion, a decrease of 14% compared with the
first nine months of 2017. The decrease was primarily due to the decline
in Solel Boneh's execution in Israel during the period as compared to
the same period last year, mainly in the Ashalim, Railroad Tracks and
Polynam projects. In addition, there was a decline in the Company's
international contracting activities (apart from in the United States),
due to a slowdown of activities in Nigeria and Columbia and the
completion of projects in Ghana and Togo.
-- Gross margin for the period was ~13% compared with 11% during the same
period in 2017. Gross profit for the period totaled ~NIS 555 million,
compared with ~NIS 543 million for the first nine months of 2017.
-- Net profit for the first nine months of 2018 totaled ~NIS 217 million.
This is compared with ~NIS 148 million for the same period last year.
The increase primarily reflected a ~NIS 331 million pre-tax capital gain
generated from the sale of the Portfolio (45% of the Company's holdings
in Carmeltun and 40% of its holdings in North Roads). This was offset
partially by significant one-time expenses of SBI during the period,
which totaled 37 million dollars, or 131 million shekels.
-- Cash flow from operations, excluding investments in land and rights
offerings, totaled ~NIS (698) million. Cash flow from operations
including these investments totaled ~NIS (1,179) million.
Income statement highlights:
1. CONSTRUCTION
Solel Boneh
-- Continued strong execution and expansion of the Company's construction
offerings: revenues for the first nine months of 2018 were ~NIS 2.2
billion.
-- Primary "Mega Projects" in execution during the first nine months of
2018: Gilboa Pumped Storage, Ashalim Thermo Solar power plant, the Tel
Aviv Light Rail (the Red Line Western Section), Tze'elim, the Southern
Barrier, and others.
-- Acquisition of Menorah Izu Aharon Group: In February 2018, Solel Boneh
completed the acquisition of the Menorah Izu Aharon Group, a
privately-held company that engages in the execution, construction and
maintenance of complex electrical systems for lighting, railroad
crossings, traffic control and other applications. The company employs
235 workers. The acquisition is in accordance with Shikun & Binui's
strategy to expand its construction offerings and will be complementary
and synergistic to its other activities.
International Building and Infrastructure Contracting Activities (excluding the US)
-- Total revenues for the first nine months of 2018: NIS 954 million.
-- In February 2018, the company signed an agreement to build a new airport
in Uganda for ~USD 299 million.
-- In July 2018, the company received notice of the approval of an
expansion for the Shagamu-Ibadan Road project in Nigeria for ~USD 220
million (NIS 803 million).
-- Segment 1 of the Colombia Toll Roads Project is now in the process of
delivery; completion of Segments 2 and 3 is expected to be delayed and
negotiations are currently underway to extend the work period. Regarding
Segments 4 and 5, a force majeure agreement was signed with the
customer, which may result in significant changes to the scope of the
project due to the discovery of water springs along the original route.
As a result of the delays, the project's financers have decided to stop
the continued further draw-down of funds until a new plan has been
approved to move forward the construction work. In 2017, a provision of
~USD 5 million was taken in respect of the project's expected loss, and
in the first nine months of 2018, a further ~USD 12 million provision
was included.
-- During the second quarter of 2018, the Company decided to take action to
examine its indirect holdings in SBI International Holdings AG,
including the possibility of a transaction in shares and/or sale of
activities and/or assets; and to seek appropriate proposals. On November
20, 2018, the Company's Board of Directors decided to discontinue this
examination of its indirect holdings in SBI International Holdings.
-- The company decided to translate its financial results based on the
NAFEX exchange rate beginning in the second quarter of 2018. This is in
light of Nigeria's announcement that it will cease publishing the NIFEX
exchange rate beginning in January 2019. In addition, the gap between
the NIFEX and NAFEX exchange rates has been narrowing, and there has
been a reduction in the flow of foreign currency into the Nigerian
Central Bank. As a result, the Company has recorded a USD 5 million loss
related to fluctuations in exchange rates.
US Building and Infrastructure Contracting Activities:
-- Total revenues for the first nine months of 2018: ~NIS 364 million from
the construction of the SH-288 toll road project in Texas.
Development of the Backlog* (in NIS millions)
*The backlog as of September 30, 2018 does not include additional construction projects which total ~NIS 2.2 billion that the Company won in Israel and in international markets, up to or after the reporting date. These include ~USD 120 million in roads projects in Ethiopia, ~USD 120 million in roads projects in Guatemala and the construction of a NIS 750 million (the Company's share of which is 50%) waste sorting and recycling center in Rishon Letzion, a project whose initiation is contingent upon the completion of a financial closing. In addition, the backlog does not include projects completed during the reporting period or after the report date. The decline in the backlog as compared with its level at December 31, 2017, was due partially from the effect of the early adoption of the IFRS 15 reporting standard.
RESIDENTIAL REAL ESTATE DEVELOPMENT
Apartment Sales
-- During the first nine months of 2018, the Company sold 953 apartments
(100% share) totaling ~NIS 985 million, including 297 units in Israel
and 656 units in Europe.
Following is additional data regarding the Company's sale of apartments (signed contracts) during the first nine months of 2018:
Apartment Units Under
Consolidated
Companies
Company Management Companies Under Joint
Including Partner Share Control
Israel
---
Sales 535 447
(NIS millions)
---
Number of apartment sale contracts signed 297 247
---
Average price of apartments sold 1,801 1,811
(NIS thousands)
---
Europe
---
Sales 450 303 45
(NIS millions)
---
Number of apartment sale contracts signed 656 486 49
---
Average price of apartments sold 685 623 916
(NIS thousands)
---
Data regarding the Company's delivery of apartments to customers during the first nine months of 2018:
Consolidated
Projects Under
Projects Joint Control
Europe
---
Revenues
from
apartments
delivered
(NIS
millions) 102 26
---
Number of
units
delivered 227 37
---
Average
price of
apartments
delivered
(NIS
thousands) 448 710
---
-- In Europe, the Company continued to launch projects and to acquire land
for future development:
-- Launch of the Zahálka project in Prague, Czech Republic: 790 units
including 240 units in Phase 1
-- Launch of the Wellport project in Belgrade, Serbia: 570 units
including 95 units in Phase 1
-- Purchase of partner's share in the City Point project in Romania for
the development of ~1,500 units (construction expected to begin in
2019)
-- Purchase of land in the Karlin quarter in the Czech Republic for the
development of ~220 units (construction expected to begin in 2020)
-- In Israel, the Company began planning for the construction of 657
apartments and commercial space in Or Yam in Or Akiva. In addition, it
initiated marketing efforts for new projects in Givat Shmuel, Ashkelon,
Kfar Yona and Harish, and building began for projects in Rishon Letzion
and Givat Shmuel.
-- Implementation of the IFRS Standard: According to the IFRS Standard, the
Company reports its revenues from apartment sales in Israel over time
according to the progress made in the each project's building and sales
processes. The policy for revenue recognition from apartment sales in
other countries remains unchanged with respect to the previous policy.
3. PROJECTS & IGAs (INCOME GENERATING ASSETS)
The Company continues to implement the strategy of increasing value and freeing up cash flow for new projects:
-- The company has completed the sale of the Portfolio (45% of its rights
in the Carmel Tunnels project and 40% of its rights in the Northern
Roads project). The sale generated a profit of NIS 272 million and cash
flow of ~NIS 580 million.
-- The company has entered into a process for selling its rights in the
Generi 2 Government Campus project. If and when the sale is completed,
the company expects to recognize ~NIS 25-30 million in profit and ~NIS
70 million in cash flow. The project will be completed in January 2019
at the earliest.
-- The company has entered into a process for selling its rights in an
IKEA. If and when the sale is completed, the company expects to
recognize ~NIS 83-88 million in profit. Completion of the project is
contingent upon approval by regulatory authorities.
The Company announced the win of a number of new significant projects:
-- Won a tender for an urban waste sorting and treatment plant: In April
2018, Israel's Tendering Committee awarded Shikun & Binui and G.E.S. (as
equal partners) a project to plan, finance, construct and operate an
urban waste sorting and treatment plant. The project costs during the
construction phase are projected to total ~NIS 750 million. Solel Boneh
holds 50% of the rights of the Construction Contractor and will build
the project together with G.E.S. Launch of construction is contingent
upon the completion of Financial Closing. The length of the concession
period is 29.5 years.
-- Won a Concessions tender for a ICT center campus in Be'er Sheva: In June
2018, the Tendering Committee of the State of Israel announced, with
regard to its tender to plan, finance, construct, operate and maintain a
170,000 m(2) ICT (information and communications technology) campus in
Be'er Sheva under a 25-year framework, that it had selected a project
company established in equal partnership by the Company and Africa
Israel Properties Ltd. as the preferred candidate as part of the defined
process in the Concessions agreement. The final approval is conditional
upon fulfillment of milestones and conditions set out in the tender.
Agreements between the shareholders of the ADO Group:
-- On September 20, 2017, a shareholders' agreement was signed between the
Company and Dune International S.A.R. (hereinafter: "Dune") and funds
managed by companies related to Apollo Global Management LLC
(hereinafter: "Apollo"), in connection with holdings of the parties in
the A.D.O. Group Ltd. (hereinafter: "A.D.O."). Since the preconditions
for the entry into force of this agreement were not complied with, the
agreement was canceled.
-- On September 20, 2018, the Company and Dune signed a letter of consent
in connection regarding how the parties would vote on the appointment of
the directors at the upcoming annual general meeting of ADO. On the same
day, another letter of consent was signed between the Company, Dune and
Apollo, which established a right of first refusal mechanism in the
event of the transfer of ADO shares for a period of 20 months from the
date of signing the letter.
Sale of Shikun & Binui shares: On August 6, 2018, the transaction for the sale of all the shares of Shikun & Binui Ltd. held by Arison Investments Ltd. to Capital Foresight Israel Investments Company LLC, under the control of Mr. Naty Saidoff, was completed. After completion of the transaction, the control of the Company was finally transferred to Capital Foresight Israel Investments Company LLC, which holds approx. 46.91% of the Company's issued and paid up capital stock and approx. 47.68% of the voting rights in the Company. Capital Foresight Israel Investments Company LLC is held (100%) by the limited partnership The Capital Foresight Limited Partnership, in which the general partner is Saidoff Foresight, LP. The general partner in the partnership is Naty Saidoff, LLC, which is 100% held by Naty Saidoff.
Investors Conference Call
Shikun & Binui will host a conference call on November 27, 2018 starting at 10am Eastern Time to discuss the financial results. Management will also be available to answer investor's questions, after presenting the results.
To participate, please call one of the following teleconferencing numbers. Please begin placing your calls a few minutes before the conference call commences. If you are unable to connect using the toll-free numbers, try the international dial-in number.
US: 1-888-668-9141
UK: 0-800-917-5108
Israel: 03-918-0609
International: +972-3-918-0609
At: 10am Eastern Time, 7am Pacific Time, 3pm UK Time, 5pm Israel Time
For those unable to participate, the teleconference will be available for replay on the company's website at http://en.shikunbinui.co.il/ beginning 24 hours after the call.
About the Shikun & Binui Group
The Shikun & Binui Group is a global construction and infrastructure company that operates in Israel and internationally in seven segments: 1) infrastructure and construction contracting outside of Israel (excluding the United States); 2) US infrastructure and construction contracting; 3) infrastructure and construction contracting within Israel; 4) real estate development within Israel; 5) real estate development outside of Israel; 6) renewable energy; and 7) concessions. The Group's activities focus on large, highly complex projects carried out for entities in private and public sectors with a focus on sustainability.
Safe Harbor Statement
This summary announcement was prepared solely for the convenience of the reader and does not replace Shikun & Binui Ltd.'s (hereafter - "the Company") full report. The information contained in this announcement is, by its nature, incomplete. All of its contents are provided as a supplement to the Company's report, and are subject to the declarations therein stated. This announcement includes forecasts, assessments, estimates and other information relating to the Company or its subsidiaries, or to other parties or to future events and matters, the extent of whose realization is not certain and is not under the sole control of the Company (forward-looking information, as defined in the Securities Law-1968). The key facts and data serving as the basis for this information are facts and data, among others, related to the current status of the Company and its businesses, facts and data relating to the current status of the operating segments in which the Company engages in its areas of operation, and other macroeconomic facts and data known to the Company on the preparation date of this presentation.
It is understood that forward-looking information does not constitute a fact and is based solely on subjective assessments. Forward-looking information is uncertain and for the most part, is not under the Company's control. The realization or non-realization of the forward-looking information will be influenced, among others, by the risk factors that characterize the Company's operations, as well as developments in the general environment and external factors that impact the Company's operations. The Company's future results and achievements could differ significantly from those presented in this presentation. The Company is not obligated to update or modify the said forecast or assessment, and is not obligated to update this announcement. This announcement does not constitute an offer to purchase the Company's securities or an invitation to receive such offers. An investment in securities in general, and in the Company in particular, carries risk. One must take into account that past data do not necessarily indicate future performance.
Condensed Consolidated Interim Financial Statements
Condensed Consolidated Interim Statement of Financial Position as at
---
September 30
September 30
December 31
2018 2017 2017
(Unaudited)
(Audited)
NIS
thousands NIS
thousands NIS
thousands
Assets
Cash and cash equivalents 2,112,271 1,716,625 2,029,574
Bank deposits 579,587 503,706 657,668
Short-term loans and investments 103,256 73,513 63,050
Short-term loans to investee companies 4,451 11,969 31,854
Trade receivables - accrued income 2,816,057 2,680,467 2,454,935
Inventory of buildings held for sale 1,701,217 1,254,629 1,395,986
Receivables and debit balances 532,695 481,375 498,838
Other investments, including derivatives 262,854 146,088 241,641
Current tax assets 26,821 80,123 19,692
Inventory 216,073 186,572 176,145
Assets classified as held for sale 743,245 116,776 105,352
Total current assets 9,098,527 7,251,843 7,674,735
Receivables and contract assets
in respect of concession arrangements 724,548 921,586 923,267
Non-current inventory of land (freehold) 1,175,904 815,904 789,699
Non-current inventory of land (leasehold) 425,077 375,460 426,609
Investment property, net 811,071 976,083 842,943
Land rights 13,422 13,129 13,179
Receivables, loans and deposits 392,189 526,622 522,795
Investments in equity-accounted investees 588,147 645,224 598,512
Loans to investee companies 882,921 565,362 612,054
Deferred tax assets 171,803 138,195 162,932
Property, plant and equipment, net 1,040,838 909,429 875,593
Intangible assets, net 289,860 198,769 150,238
Total non-current assets 6,515,780 6,085,763 5,917,821
Total assets 15,614,307 13,337,606 13,592,556
Condensed Consolidated Interim Financial Statements
Condensed Consolidated Interim Statement of Financial Position as at
---
September 30
September 30
December 31
2018 2017 2017
(Unaudited)
(Audited)
NIS
thousands NIS
thousands NIS
thousands
Liabilities
Short-term credit from banks and others 1,763,325 1,187,957 1,036,026
Subcontractors and trade payables 1,384,132 1,354,735 1,460,075
Short-term employee benefits 138,744 128,344 136,860
Payables and credit balances including derivatives 573,799 565,563 616,135
Current tax liabilities 78,627 92,965 105,653
Provisions 212,628 254,424 246,019
Payables - customer work orders 1,149,628 1,479,057 1,376,856
Advances received from customers 463,844 143,151 336,685
Dividend payable 7,764
Liabilities classified as held for sale 356,871
Total current liabilities 6,121,598 5,213,960 5,314,309
Liabilities to banks and others 3,037,014 2,433,375 2,477,801
Debentures 3,671,036 3,394,548 3,402,211
Employee benefits 47,474 49,788 49,843
Deferred tax liabilities 77,310 143,821 105,719
Provisions 259,812 106,522 102,795
Excess of accumulated losses over cost of investment
and deferred credit balance in investee companies 47,814 26,653 48,130
Total non-current liabilities 7,140,460 6,154,707 6,186,499
Total liabilities 13,262,058 11,368,667 11,500,808
Equity
Total equity attributable to owners
of the Company 2,064,796 1,762,111 1,849,025
Non-controlling interests 287,453 206,828 242,723
Total equity 2,352,249 1,968,939 2,091,748
Total liabilities and equity 15,614,307 13,337,606 13,592,556
Condensed Consolidated Interim Statement of Income
---
For the
For the nine-month period ended For the three-month period ended
year ended
September 30
September 30
September 30
September 30
December 31
2018 2017 2018 2017 2017
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
---
NIS thousands
NIS thousands
NIS thousands
NIS thousands
NIS thousands
---
Revenues from work
performed and sales 4,201,757 4,916,022 1,463,357 1,474,896 6,437,307
Cost of work performed
and sales (3,646,908) (4,372,751) (1,233,275) (1,308,345) (5,586,065)
Gross profit 554,849 543,271 230,082 166,551 851,242
Gain (loss) on sale of
investment property 23,966 640 (2,253) 3,217
Selling and marketing expenses (28,975) (28,599) (10,240) (9,311) (40,049)
Administrative and general
expenses (301,705) (277,119) (96,665) (90,382) (380,824)
Share of profits
of equity accounted
investees (net of tax) 22,574 20,440 3,429 3,809 59,816
Other operating income 359,265 99,864 17,661 15,731 219,622
Other operating expenses (105,340) (41,629) (44,892) (7,906) (130,028)
Operating profit 524,634 316,868 97,122 78,492 582,996
Financing income 203,019 134,968 56,433 13,659 199,436
Financing expenses (407,598) (299,406) (131,000) (60,849) (422,471)
Net financing expenses (204,579) (164,438) (74,567) (47,190) (223,035)
Profit before taxes
on income 320,055 152,430 22,555 31,302 359,961
Taxes on income (103,504) (4,033) (8,738) 28,067 (61,655)
Profit for the period 216,551 148,397 13,817 59,369 298,306
Attributable to:
Owners of the Company 184,733 116,102 (1,554) 51,679 230,927
Non-controlling interests 31,818 32,295 15,371 7,690 67,379
216,551 148,397 13,817 59,369 298,306
Basic earnings (loss) per
share (in NIS) 0.46 0.29 (0.004) 0.13 0.58
Diluted earnings (loss) per
share (in NIS) 0.46 0.29 (0.004) 0.13 0.57
Consolidated Financial Statements
Operating Segments
For the nine month period ended September 30, 2018 (unaudited)
Infrastructures
and
Infrastructures
construction
Infrastructures
and
(international)
and
Real estate
Real estate
construction
(excluding
construction
development
development Renewable
(Israel)
USA)
(USA)
(Israel) (
international
)
Concessions
energy Other
Adjustments
Consolidated
---
NIS thousands
---
Total external revenues 2,041,856 953,918 363,869 765,606 178,667 33,167 183,227 31,815 (350,368) 4,201,757
Inter-segment revenues 240,868 57 (240,925) -
Total revenues 2,282,724 953,918 363,869 765,663 178,667 33,167 183,227 31,815 (591,293) 4,201,757
Segment profit (loss) before
income tax 76,295 (110,986) 24,085 173,878 (3,844) 372,557 (1,807) (24,938) (185,185) 320,055
For the nine month period ended September 30, 2017 (unaudited)
Infrastructures
and
Infrastructures
construction
Infrastructures
and
(international)
and
Real estate
Real estate
construction
(excluding
construction
development
development Renewable
(Israel)
USA)
(USA)
(Israel) (
international
)
Concessions
energy Other
Adjustments
Consolidated
---
NIS thousands
---
Total external revenues 2,539,870 1,147,218 235,081 952,856 181,494 135,530 29,045 30,202 (335,274) 4,916,022
Inter-segment revenues 229,394 57 (229,451) -
Total revenues 2,769,264 1,147,218 235,081 952,913 181,494 135,530 29,045 30,202 (564,725) 4,916,022
Segment profit (loss) before
income tax 79,645 59,791 30,982 108,036 (726) 107,864 (4,766) (63,208) (165,188) 152,430
Consolidated Financial Statements
Operating Segments
For the three month period ended September 30, 2018 (unaudited)
Infrastructures
and
Infrastructures
construction
Infrastructures
and
(international)
and
Real estate
Real estate
construction
(excluding
construction
development
development Renewable
(Israel)
USA)
(USA)
(Israel) (
international
)
Concessions
energy Other
Adjustments
Consolidated
---
NIS thousands
---
Total external revenues 612,145 310,398 122,064 289,182 103,851 10,831 94,602 11,113 (90,829) 1,463,357
Inter-segment revenues 111,084 19 (111,103) -
Total revenues 723,229 310,398 122,064 289,201 103,851 10,831 94,602 11,113 (201,932) 1,463,357
Segment profit (loss) before
income tax 23,602 (54,013) 258 72,296 14,600 25,635 7,940 (8,265) (59,498) 22,555
For the three month period ended September 30, 2017 (unaudited)
Infrastructures
and
Infrastructures
construction
Infrastructures
and
(international)
and
Real estate
Real estate
construction
(excluding
construction
development
development Renewable
(Israel)
USA)
(USA)
(Israel) (
international
)
Concessions
energy Other
Adjustments
Consolidated
---
NIS thousands
---
Total external revenues 810,982 321,035 82,123 263,764 75,300 29,881 10,208 6,241 (124,638) 1,474,896
Inter-segment revenues 70,839 19 (70,858) -
Total revenues 881,821 321,035 82,123 263,783 75,300 29,881 10,208 6,241 (195,496) 1,474,896
Segment profit (loss) before
income tax 29,337 6,325 10,944 25,468 3,525 29,655 (1,476) (12,359) (60,117) 31,302
Consolidated Financial Statements
Operating Segments
For the year ended December 31, 2017 (audited)
Infrastructures
and
Infrastructures
construction
Infrastructures
and
(international)
and
Real estate
Real estate
construction
(excluding
construction
development
development Renewable
(Israel)
USA)
(USA)
(Israel) (
international
)
Concessions
energy Other
Adjustments
Consolidated
---
NIS thousands
---
Total external revenues 3,229,094 1,508,804 345,405 1,382,599 247,775 145,359 36,689 37,939 (496,357) 6,437,307
Inter-segment revenues 291,770 76 (291,846) -
Total revenues 3,520,864 1,508,804 345,405 1,382,675 247,775 145,359 36,689 37,939 (788,203) 6,437,307
Segment profit (loss) before
income tax 114,603 85,111 44,933 274,692 47,711 120,431 6,977 (109,465) (225,032) 359,961
IR Contacts
Company
External Investor Relations
Inbal Uliansky
Ehud Helft
+972 (3) 630 1058
GK Investor Relations
inbal_u@shikunbinui.com
+1 617 418 3096
shikunbinuni@gkir.com
View original content:http://www.prnewswire.com/news-releases/shikun--binui-announces-financial-results-for-the-third-quarter--first-nine-months-of-2018-300755054.html
SOURCE Shikun & Binui Ltd.
