Shikun & Binui Ends 2018 With a Marked Improvement in Profitability Metrics
AIRPORT CITY, Israel, March 27, 2019 /PRNewswire/ -- Shikun & Binui Ltd. (TASE: SKBN.TA), a global construction and infrastructure company headquartered in Israel, today reported its financial results for the fourth quarter and full year, ended December 31, 2018.
FINANCIAL HIGHLIGHTS OF 2018
-- Total revenues of NIS 6.3 billion, a decrease of 1.6% compared to those
of 2017. The decrease is due, amongst others, to a decrease in the
execution compared with the previous year at Solel Boneh Israel, mainly
due to the approaching completion of the Ashalim project. There was also
a decline in the real estate development sector in Israel due to a
decrease in revenue from the sale of apartments and land.
-- Gross profit margin was 15% compared to 13% in the same period last
year. Gross profit for the period amounted to NIS 960 million, compared
with NIS 851 million in 2017.
-- Net profit totaled NIS 559 million, compared with NIS 298 million in
2017. The increase was mainly due to a capital gain after tax of NIS 277
million from the sale of the Portfolio of assets (45% of the holdings in
Carmelton Project and 40% of the holdings in the Northern Roads
Project). It is noted that SBI was impacted by a number of events of a
one-time nature, which brought the subsidiary to a loss of US$ 37
million.
-- Cash flow from operations, excluding investments in land amounted to NIS
84 million, and the cash flow from operating activities without
neutralizing land investments was NIS 345 million.
1. CONSTRUCTION
Solel Boneh: continued significant execution and expansion of contractor offerings
-- The scope of execution during 2018 was NIS 3.3 billion.
-- The scope of project wins was approximately NIS 3 billion in 2018,
including the Tikshoov Project, the Spiral Tower, the Waste Recycling
Project, Project BIG Yehud and more.
-- Completion of the acquisition of Menorah Izu Aharon Group and
implementation of the assimilation process: a privately-held company
engaged in the construction, establishment and maintenance of lighting
systems, railway barriers, traffic lights at junctions, electricity and
other. The company has 235 employees. The acquisition is in accordance
with Shikun & Binui's strategy to expand its construction offerings and
is expected to be complementary and synergistic to its other activities.
International Building and Infrastructure Contracting Activities (excluding the US): the receipt of new projects led to an improvement in revenues in the fourth quarter
-- The scope of execution in 2018 was NIS 1.4 billion.
-- New projects received in 2018:o The expansion of the Road Projects in
Nigeria, totaling US$ 326 million;o The construction of a 2.45 km bridge
in Nigeria over the Medinawia River for US$ 150 million;o Paving a road
in Ethiopia for US$ 120 million;o The receipt of a US$ 104 million
highway project in Guatemala;o The construction of a road in Kenya for
US$ 30 million;
-- Segment 1 of the Colombia Toll Roads Project was transferred to the
customer and the period of operation as stipulated in the Concession
Agreement began; The works in sections 2 and 3 are expected to be
delayed beyond the determined remedy 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 the
construction work forward. In 2017, a provision for an expected loss of
US$ 5 million was included in respect of the project. In 2018, an
additional provision of US$ 20.5 million was recorded and a provision
for impairment was recorded.
-- On November 20, 2018, the Company's Board of Directors resolved to
discontinue its examination of its indirect holdings in SBI
International Holdings AG.
-- 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 narrowed, and there has been a
reduction in the flow of foreign currency into the Nigerian Central
Bank. As a result, the Company recorded a US$ 5 million loss related to
exchange rate fluctuations.
US Building and Infrastructure Contracting Activities: Progress in project execution led to an increase in revenues
-- The total execution in 2018 amounted to NIS 485 million, an increase of
140 million over the same period as last year, as a result of progress
in the Texas Toll Road project.
-- An agreement to acquire an infrastructure and construction contracting
company in the United States - this is part of the Company's strategy to
expand its operations in the United States. The target company engages
in the field of civil infrastructure contracting, with an emphasis on
bridges, transportation infrastructure and ongoing work. The transaction
completion is subject to certain precedent conditions.
Development of the Backlog* (in NIS millions)
*The backlog as of December 31, 2018 does not include additional construction projects which total NIS 1.3 billion that the Company won, up to or after the reporting date. These include an USD 120 million in Roads Project in Ethiopia, two segments of the Southern Michshal Project amounting to NIS 300 million, the Spiral Tower in the amount of NIS 163 million, Halumot Ohr Project amounting to NIS 160 million, Project BIG in Yehud amounting to NIS 133 million, etc., excluding the execution of those projects carried out during the period. 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.
2. RESIDENTIAL REAL ESTATE DEVELOPMENT
Apartment Sales
-- During 2018, the Company sold 1,325 apartments (at 100% share) totaling
~NIS 1,290 million, including 386 units in Israel and 939 units in
Europe.
Additional data regarding the Company's sale of apartments (signed contracts) during 2018:
Apartment Units Under
Consolidated
Companies
Company Management Companies Under Joint
Including Partner Share Control
Israel
---
Sales 674 562
(NIS millions)
---
Number of
apartment sale
contracts
signed 386 321
---
Average price
of apartments
sold 1,745 1,751
(NIS thousands)
---
Europe
---
Sales 616 414 57
(NIS millions)
---
Number of
apartment sale
contracts
signed 939 692 60
---
Average price
of apartments
sold 656 599 949
(NIS thousands)
---
Data regarding delivery of apartments to customers during 2018:
Consolidated Projects Under
Projects Joint Control
Europe
---
Revenues from
apartments
delivered (NIS
millions) 329 29
---
Number of units
delivered 688 39
---
Average price of
apartments
delivered (NIS
thousands) 477 723
---
-- Real Estate Activities Internationally: a significant increase in
revenues following the occupancy of projects in Warsaw, Belgrade, Prague
and Bucharest following the continued initiation of projects such as:o
Occupancy of the G-85 project in Warsaw - the occupancy of 473 housing
units and the sale of 97 housing units (at 100% share).o The launch of
the Wellport project in Belgrade, Serbia - with a total of 570 housing
units (at 100% share), out of which 95 are in execution (phase 1)o
Launch of the RPM project in Prague, Czech Republic - totaling 790
housing units (at 100% share) of which 240 are in execution (phase 1)
-- In Israel, significant progress in the municipality planning phase of
projects - the filing of the Central Bus Station plan, the approval of
the local committee for the Ramat Efal program, the approval of the
Bikel program in Ra'anana, Bikur Holim in Jerusalem and the Park
neighborhood in Be'er Sheva.o Realization of the company's share in the
IKEA store at a profit of NIS 97 million (before tax);o A significant
increase in the city urban renewal stock of apartments o Massive
acquisition of future lands in the northern Sharon region (Hadera, Kfar
Yona, Or Akiva and more)o The opening of the expansion at the Ir Yamim
mall and its refinancing of NIS 140 milliono A transaction to the
security forces membership club, Chever, for the sale of over 500
residential units in Or Yam
-- 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 277 million and cash
flow of NIS 580 million.
-- Management is in the process for the sales of 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.
-- Completed the sale of the rights in an IKEA store - the company recorded
pre-tax profit of NIS 97 million.
-- Subsequent to the date of this report, agreements were signed between
the ADO Group shareholders - four transactions for the sale of ADO Group
were completed after the date of the report by the Company, such that in
total, the Company sold 30% of the issued and paid-up capital of ADO
Group, for a total of NIS 720 million. The Company will record in its
financial statements for the first quarter of 2019, a pre-tax profit of
NIS 480 million.
-- Following completion of the above transactions, the Company holds 7.5%
of the issued and paid-up capital of ADO. These shares are subject to a
call option whereby the holder of the option is entitled to purchase the
aforementioned shares at a price of NIS 88 per share up until March 10,
2020. These shares (7.5%) are also subject to a right of refusal.
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 that 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, 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.
Energy: at the stage of completion of construction and preparation for operations of about 600 MW in 2019. There is a plan in Israel to reduce the volume of electricity generated from coal from 50% to a few percent in 2030 are expected to lead to the publication of tenders of about 15 GW by 2030 (through privatization of gas power plants, construction of gas, solar and wind power plants).
INVESTORS CONFERENCE CALL
Shikun & Binui will host a conference call on March 27, 2019 starting at 11am 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:
US: 1-888-281-1167
UK: 0-800-917-9141
Israel: 03-918-0650
International: +972-3-918-0650
At: 11am Eastern Time, 8am 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; 2) infrastructure and construction contracting within Israel; 3) real estate development within Israel; 4) real estate development outside of Israel; 5) renewable energy; 6) concessions; and 7) water. 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.
Consolidated Financial Statements
Consolidated Statements of Financial Position as at
December 31 December 31
2018 2017
NIS thousands NIS thousands
Assets
Cash and cash
equivalents 2,491,867 2,029,574
Bank deposits 781,879 657,668
Short-term
loans and
investments 129,150 63,050
Short-term
loans to
investee
companies 25,001 31,854
Trade
receivables -
accrued income 2,830,251 2,326,935
Inventory of
buildings held
for sale 1,587,147 1,395,986
Receivables and
debit balances 497,394 498,838
Other
investments,
including
derivatives 376,642 241,641
Current tax
assets 39,287 19,692
Inventory 160,518 176,145
Assets
classified as
held for sale 716,062 105,352
Total current
assets 9,635,198 7,546,735
Receivables and
contract
assets
in respect of
concession
arrangements 1,065,753 923,267
Non-current
inventory of
land
(freehold) 938,127 789,699
Non-current
inventory of
land
(leasehold) 705,172 426,609
Investment
property, net 862,282 842,943
Land rights 13,422 13,179
Receivables,
loans and
deposits 211,766 522,795
Investments in
equity-
accounted
investees 403,773 598,512
Loans to
investee
companies 1,099,937 612,054
Deferred tax
assets 299,144 162,932
Property, plant
and equipment,
net 1,076,317 875,593
Intangible
assets, net 364,911 150,238
Total non-
current assets 7,040,604 5,917,821
Total assets 16,675,802 13,464,556
Consolidated Financial Statements
Consolidated Statements of Financial Position as at
December 31 December 31
2018 2017
NIS thousands NIS thousands
Liabilities
Short-term credit
from banks and
others 1,529,542 1,036,026
Subcontractors and
trade payables 1,657,591 1,460,075
Short-term
employee benefits 160,792 136,860
Payables and
credit balances
including
derivatives 638,652 616,135
Current tax
liabilities 84,623 105,653
Provisions 172,364 246,019
Payables -
customer work
orders 1,483,675 1,376,856
Advances received
from customers 323,684 208,685
Liabilities
classified as
held for sale 360,954
Total current
liabilities 6,411,877 5,186,309
Liabilities to
banks and others 3,200,074 2,477,801
Debentures 3,680,283 3,402,211
Employee benefits 46,130 49,843
Deferred tax
liabilities 119,665 105,719
Provisions 260,418 102,795
Excess of
accumulated
losses over cost
of investment
and deferred
credit balance in
investee
companies 97,408 48,130
Total non-current
liabilities 7,403,978 6,186,499
Total liabilities 13,815,855 11,372,808
Equity
Total equity
attributable to
owners
of the Company 2,531,765 1,849,025
Non-controlling
interests 328,182 242,723
Total equity 2,859,947 2,091,748
Total liabilities
and equity 16,675,802 13,464,556
Consolidated Statement of Income
December 31 December 31 December 31
2018 2017 2016
NIS thousands NIS thousands NIS thousands
---
Revenues from work
performed
and sales 6,331,518 6,437,307 5,378,963
Cost of work performed
and sales (5,371,928) (5,586,065) (4,541,744)
Gross profit 959,590 851,242 837,219
Gain (loss) on sale of
investment
property 125,949 3,217 70,543
Selling and
marketing
expenses (40,089) (40,049) (32,318)
Administrative
and general
expenses (415,472) (380,824) (366,479)
Share of profits of equity accounted
investees
(net of
tax) 19,141 59,816 81,172
Other
operating
income 389,504 219,622 451,797
Other
operating
expenses (135,578) (130,028) (41,762)
Operating
profit 903,045 582,996 1,000,172
Financing
income 261,136 199,436 182,715
Financing
expenses (530,652) (422,471) (566,483)
Net
financing
expenses (269,516) (223,035) (383,768)
Profit before taxes
on income 633,529 359,961 616,404
Taxes on
income (74,233) (61,655) (136,455)
Profit for
the period 559,296 298,306 479,949
Attributable to:
Owners of
the Company 494,995 230,927 445,771
Non-
controlling
interests 64,301 67,379 34,178
559,296 298,306 479,949
Basic earnings per
share (in
NIS) 1.24 0.58 1.12
Diluted earnings per
share (in
NIS) 1.22 0.57 1.12
Consolidated Financial Statements
Operating Segments
Year ended December 31, 2018
Infrastructures Infrastructures Infrastructures
Real estate
Real estate Concessions Energy Other Adjustments Consolidated
and and and development development
construction construction construction (Israel) (international)
(international) (Israel) (USA)
(excluding
USA)
---
NIS thousands
---
External revenues 1,355,063 2,850,687 485,278 987,301 499,354 55,910 503,563 45,184 (450,822) 6,331,518
Inter-segment revenues - 433,445 76 (433,521)
---
Total revenues from work performed and sales 1,355,063 3,284,132 485,278 987,377 499,354 55,910 503,563 45,184 (884,343) 6,331,518
Segment costs 1,326,005 3,190,853 470,342 630,585 409,067 (299,584) 471,490 68,221 (988,097) 5,278,882
Segment results
Net operating expenses for all segments 29,058 93,279 14,936 356,792 90,287 355,494 32,073 (23,037) 103,754 1,052,636
(149,591)
Operating profit 903,045
Net financing income (expenses) allocated
to segments (70,437) (6,114) 316 (41,659) (1,856) 24,839 7,988 (7,674) 21,408 (73,189)
Net financing expenses not allocated to
segments (196,327)
Segment profit (loss) before income tax (41,379) 87,165 15,252 315,133 88,431 380,333 40,061 (30,711) (220,756) 633,529
Additional information:
---
Segment assets 4,180,720 2,956,046 124,160 4,096,704 1,559,434 620,612 1,083,260 496,265 (811,183) 14,306,018
Investment and loans to associates 9 28,267 74,013 182,906 800,141 430,284 1,759 11,332 1,528,711
Assets not allocated to segments 841,073
Total consolidated assets 16,675,802
Segment liabilities 1,506,032 2,429,300 26,738 2,644,396 1,327,415 792,653 1,330,134 307,380 (1,353,497) 9,010,551
Excess of losses over investment in investees 22,428 48,001 10,900 16,079 97,408
Liabilities not allocated to segments 4,707,896
Total consolidated liabilities 13,815,855
Long-term investments in assets 107,215 62,552 52,774 4 103,784 171,157 12,366 509,852
General investments in assets for the long-term 12,735
Total investments in assets for the
long-term - consolidated 522,587
Depreciation and amortization 121,029 50,697 1,568 20,192 1,097 3,221 16,285 12,447 (2,031) 224,505
General depreciation 12,474
Total depreciation - consolidated 236,979
Consolidated Financial Statements
Operating Segments
Year ended December 31, 2017
Infrastructures Infrastructures Infrastructures
Real estate
Real estate Concessions Energy Other Adjustments Consolidated
and and and development development
construction construction construction (Israel) (international)
(international) (Israel) (USA)
(excluding
USA)
---
NIS thousands
---
External revenues 1,508,804 3,229,094 345,405 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 from work performed and sales 1,508,804 3,520,864 345,405 1,382,675 247,775 145,359 36,689 37,939 (788,203) 6,437,307
Segment costs 1,418,035 3,397,633 300,022 1,080,708 171,682 66,398 37,789 138,995 (930,985) 5,680,277
Segment results
Net operating expenses for all segments 90,769 123,231 45,383 301,967 76,093 78,961 (1,100) (101,056) 142,782 757,030
Operating profit (174,034)
Net financing income (expenses) allocated 582,996
to segments (5,658) (8,628) (450) (27,275) (28,382) 41,470 8,077 (8,409) (35,176) (64,431)
Net financing expenses not allocated to
segments (158,604)
Segment profit (loss) before income tax 85,111 114,603 44,933 274,692 47,711 120,431 6,977 (109,465) (225,032) 359,961
Additional information:
---
Segment assets 3,885,086 2,586,918 34,722 3,678,622 1,164,247 527,631 521,311 202,121 (764,322) 11,836,336
Investment and loans to associates 9 22,364 115,367 249,980 700,895 4,043 281,857 1,374,515
Assets not allocated to segments 253,705
Total consolidated assets 13,464,556
Segment liabilities 1,258,243 2,128,444 12,526 2,492,016 1,077,656 694,223 397,521 270,530 (1,083,551) 7,247,608
Excess of losses over investment in investees 18,122 10,169 10,231 4,968 43,490
Liabilities not allocated to segments 4,081,710
Total consolidated liabilities 11,372,808
Long-term investments in assets 32,247 48,510 68,696 1,950 607 6,263 23,133 181,406
General investments in assets for the long-term 10,451
Total investments in assets for the
long-term - consolidated 191,857
Depreciation and amortization 134,144 49,897 1,264 18,881 5,118 15,037 95,622 (438) 319,525
General depreciation 11,788
Total depreciation - consolidated 331,313
Consolidated Financial Statements
Operating Segments
Year ended December 31, 2016
Infrastructures Infrastructures Infrastructures Real estate
Real estate Concessions Energy Other Adjustments Consolidated
and and and development development
construction construction construction (Israel) (international)
(international) (Israel) (USA)
(excluding
USA)
NIS thousands
---
External revenues 1,336,215 2,324,394 153,497 1,278,810 146,254 427,383 44,679 40,259 (372,528) 5,378,963
Inter-segment revenues 142,574 444,259 76 (586,909)
Total revenues from work performed and sales 1,478,789 2,768,653 153,497 1,278,886 146,254 427,383 44,679 40,259 (959,437) 5,378,963
Segment costs 1,163,973 2,685,902 148,904 978,106 126,888 91,155 4,492 80,205 (1,074,171) 4,205,454
Segment results 314,816 82,751 4,593 300,780 19,366 336,228 40,187 (39,946) 114,734 1,173,509
Net operating expenses for all segments (173,337)
Operating profit 1,000,172
Net financing income (expenses) allocated (162,075) (144) (4) (3,628) (21,498) 18,965 (17,995) (6,766) (26,019) (219,164)
to segments
Net financing expenses not allocated to
segments (164,604)
Segment profit (loss) before income tax 152,741 82,607 4,589 297,152 (2,132) 355,193 22,192 (46,712) (249,226) 616,404
Additional information:
---
Segment assets 4,329,653 2,829,745 9,862 4,842,449 877,053 1,057,995 313,365 301,671 (727,944) 13,833,849
Investment and loans to associates 9 49,257 23,820 112,294 153,323 599,010 8,775 307,741 1,254,229
Assets not allocated to segments 89,972
Total consolidated assets 15,178,050
Segment liabilities 1,441,179 2,316,586 58 3,887,424 769,551 1,115,350 196,740 384,871 (1,041,509) 9,070,250
Excess of losses over investment in investees 17,572 9,689 2,059 1,120 30,440
Liabilities not allocated to segments 4,006,219
Total consolidated liabilities 13,106,909
Long-term investments in assets 39,389 48,488 50,279 1,298 82,132 3,302 69,043 293,931
General investments in assets for the long-term 9,644
Total investments in assets for the
long-term - consolidated 303,575
Depreciation and amortization 160,642 42,233 205 18,877 5,060 10,661 24,924 (472) 262,130
General depreciation 10,467
Total depreciation - consolidated 272,597
CONTACTS
Shikun & Binui
Inbal Uliansky
+972(3)630-1058
inbal_u@shikunbinui.com
External Investor Relations
Ehud Helft
GK Investor Relations
+1-617-418-3096
shikunbinuni@gkir.com
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SOURCE Shikun & Binui Ltd.
