Shikun & Binui Reports Strong First Quarter With Improvement Across all Operational Parameters
AIRPORT CITY, Israel, May 30, 2019 /PRNewswire/ -- Shikun & Binui Ltd. (TASE: SKBN.TA), a global construction and infrastructure company headquartered in Israel, today reported its financial results for the first quarter, ended March 31, 2019.
Tamir Cohen, Chairman of Shikun & Binui: "Shikun & Binui over the years has made ADO a leading company in the real estate market in Berlin, and has managed to realize its successful holdings and generate huge profits. These profits are now invested in new growth engines, of which their initial fruits are already visible in the Company's operations, and will continue to grow in the quarters and years ahead."
Moshe Lahmani, outgoing CEO of Shikun & Binui: "The impressive profit Shikun & Binui presents in the first quarter of 2019 is a continuation of the Company's financial strength over time, which will continue to accompany it for the years ahead."
FINANCIAL HIGHLIGHTS OF THE FIRST QUARTER OF 2019
-- Revenues for the quarter totaled NIS 1.5 billion, an increase of 9.7% compared with the corresponding quarter last year. The increase is mainly due to real estate activity in Eastern Europe and Solel Boneh's activity in Israel. -- The gross margin is 15.9%, compared with 11.5% in the corresponding period last year. Gross profit for the period amounted to NIS 236 million, compared to NIS 156 million in the corresponding quarter last year. The improvement in the gross profit and margin was mainly due to the improvement in activity in a number of projects in Africa, alongside strong results in real estate activity in Eastern Europe. -- Net profit totaled NIS 520 million, compared with NIS 27 million in the same quarter last year. -- Cash flow from operating activities in the first quarter totaled NIS 270 million, compared with a negative cash flow of NIS 670 million in the corresponding quarter last year. The strong cash flow was mainly due to an increase in collections at Solel Boneh
CONSTRUCTION
Solel Boneh: Significant volume of new projects won since the beginning of the year, alongside an increase in the scope of execution
-- Total wins of new projects from the beginning of the year until the report date, amounted to approximately NIS 1.8 billion, including winning a project for the construction of Highway 60 interchange (at NIS 520 million), establishment of a campus in Jerusalem (at NIS 700 million), and more. -- There was an increase in the scope of execution in the Tel Aviv light rail project, mainly at the stations: Abba Hillel, King Shaul and Arlosoroff.
SBI - International Building and Infrastructure Contracting Activities (excluding the US): significant improvement in profitability
-- A significant improvement in the gross margin, which reached 18.7% in the first quarter of 2019, compared with 4% in the corresponding quarter last year. The improvement in profitability was mainly due to the projects in Nigeria, the reaching of an agreement with the buyer of the project in Kenya, and the project for the construction of the airport in Uganda. -- The toll road project in Colombia: Due to the delays in the agreement, the financing provider to the project decided to stop the continuation of the debt transfer until Sections 1, 2 and 3 were handed over, and reached an agreement regarding the continuation of work in sections 4 and 5 (in which the work was suspended due to a force majeure). The financing providers to the project are in discussions to accept a waiver and an arrangement for the continued financing, and in view of the above, an appropriate provision was included in the financial statements.
US Building and Infrastructure Contracting Activities: Continued expansion of operations and implementation of the expansion strategy in the US
-- Completion of the acquisition of Infrastructure and Construction Contracting in the United States - as part of the Company's strategy to expand its operations in the United States. The company engages in the field of civil infrastructure contracting, with an emphasis on bridges, transportation infrastructure and ongoing work. -- A delay in the construction of toll roads in Texas led to a decrease in revenues for the quarter compared to the corresponding quarter, last year.
Development of the Backlog amounting to NIS 13 billion as of March 31, 2019* (in NIS millions)
*The backlog as of March 31, 2019 does not include additional construction projects which total NIS 1 billion that the Company won, up to or after the reporting date. These include the Bezalel campus in the amount of NIS 330 million, the S1 infrastructure project totaling NIS 220 million, The Rosemary interchange, Highway 60, totaling NIS 150 million, etc., and excluding the execution of those projects carried out during the period up to the date of this report. In addition, the relative decrease in the orders backlog from December 31, 2017 onwards is attributed, among other things, to the effects of the early adoption of IFRS 15.
RESIDENTIAL REAL ESTATE DEVELOPMENT
In the first quarter of 2019, sales of apartments totaled approximately 786 housing units (in 100% terms) in the amount of approximately NIS 919 million, of which 591 residential units were in Israel and 195 residential units were in Europe.
Additional data regarding the Company's sale of apartments (signed contracts) during the first quarter of 2019:
Apartment Units Under Company Management Including Partner Share Consolidated Companies Companies Under Joint Control Israel --- Sales 809 766 (NIS millions) --- Number of apartment sale contracts signed 591 578 --- Average price of apartments sold 1,369 1,325 (NIS thousands) --- Europe --- Sales 110 71 14 (NIS millions) --- Number of apartment sale contracts signed 195 144 14 --- Average price of apartments sold 565 496 1,022 (NIS thousands) ---
Data regarding delivery of apartments to customers during the first quarter of 2019:
Consolidated Projects Projects Under Joint Control Europe --- Revenues from apartments delivered (NIS millions) 121 1 --- Number of units delivered 235 1 --- Average price of apartments delivered (NIS thousands) 516 1,866 ---
Real Estate Initiatives in Israel: Significant Increase in the Number of Transactions Signed During the First Quarter in the Or Yam project
-- During the first quarter, deals were signed for the sale of 578 residential units totaling NIS 766 million, following the success of the Or Yam project.
RED: Real Estate Activities Internationally: Significant increase in revenues and profit following the occupancy of 265 housing units in the quarter
-- Revenues for the first quarter totaled NIS 145 million, an increase of NIS 127 million compared to the corresponding quarter, as a result of the occupancy of 265 apartments, mainly in Warsaw (120 units), Belgrade (84 units), Prague and Bucharest (61 units). -- Gross profit for the quarter amounted to NIS 35 million compared to NIS 3 million in the corresponding quarter last year.
PROJECTS & IGAs (INCOME GENERATING ASSETS)
Successful Realization of most of the Group's shares in ADO
The Company completed four transactions for the sale of 30% of ADO Group, for a total consideration of NIS 720 million. As a result, it recorded a pre-tax profit of NIS 476 million, as well as a revaluation of the balance of the investment in ADO Group (7.5%) of NIS 109 million.
In April, all the approvals required to operate the Ashalim project were received
The project is for 121 megawatts, for an operating period ending in 2043.
Road 6 Operating Company Transaction
Subsequent to the date of the current report, it is reported that Keystone REIT (Ltd.) entered into an agreement with regard to the purchase of the operating company (Derech Eretz) from third parties, with part of the holdings being transferred to the Company.
Insofar as the transactions and agreements are executed, the Company is expected to gain control of the operating companies and record an estimated profit of NIS 100 million as a result of revaluation of the investment.
Continued Implementation of steps to reduce leverage
The Company's financial debt as of March 31, 2019 was NIS 8,125 million, compared with a financial debt of NIS 8,410 million as of December 31, 2018. In addition, after the balance sheet date, the Company repaid a further NIS 260 million of debt.
The net financial debt excluding non-recourse debt and excluding liabilities in respect of leasing amounted to NIS 3,164 million at the end of the quarter, compared with NIS 3,980 million at the end of 2018.
On May 26, 2019, following the approval of the remuneration committee and the Board of Directors of the Company, the General Meeting approved the Company's engagement with regard to the terms of service and employment of Mr. Lapidot as CEO of the Company.
MANAGEMENT COMMENT
Tamir Cohen, Chairman of Shikun & Binui: "In the first quarter of 2019, the Group presented an improvement in all operational parameters. Our improvement resulted from increased activity in a variety of projects and improved profitability, but also from the significant deal for the sale of most of the Group's holdings in ADO. Over the years, Shikun & Binui has made ADO a leader in the real estate market in Berlin, and has managed to realize its successful holdings and generate a large profit. These profits are now invested in new growth engines, of which their initial fruits are already visible in the Company's operations, and will continue to grow in the quarters and years ahead. We continue to move forward in Africa, continue to expand in North America, and we will take this momentum to other areas of our activity."
Moshe Lahmani, outgoing CEO of Shikun & Binui: "The impressive profit which Shikun & Binui presents in the first quarter of 2019 is a continuation of the Company's long-term financial strength, which will continue to accompany it in the years ahead. The good results of the past year enable us to meet the challenges of the future, ready and firm. The various business units presented excellent results on all levels of activity. Our financial strength is a product of being conservative in the realizing assets and in the financial management of the Group. I leave behind a strong and quality organization with excellent employees and managers, and feel proud to leave against a background of such impressive results."
INVESTORS CONFERENCE CALL
Shikun & Binui will host a conference call on May 30, 2019 starting at 9am 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: 1-888-668-9141
UK: 0-800-917-5108
Israel: 03-918-0610
International: +972-3-918-0610
At: 9am Eastern Time, 6am Pacific Time, 2pm UK Time, 4pm 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; and 6) 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 Statements of Financial Position as at --- Mar-31 Mar-31 Dec-31 2019 2018 2018 (Unaudited) (Audited) NIS thousands NIS thousands NIS thousands Assets Cash and cash equivalents 2,929,252 1,635,240 2,491,867 Bank deposits 680,429 547,568 781,879 Short-term loans and investments 149,895 73,193 129,150 Short-term loans to investee companies 13,340 4,959 25,001 Trade receivables - accrued income 2,756,319 2,759,388 2,830,251 Inventory of buildings held for sale 1,510,685 1,541,471 1,587,147 Receivables and debit balances 473,825 489,128 497,394 Other investments, including derivatives 617,204 322,507 376,642 Current tax assets 45,160 22,571 39,287 Inventory 155,681 196,427 160,518 Assets classified as held for sale 384,389 654,472 716,062 Total current assets 9,716,179 8,246,924 9,635,198 Receivables and contract assets in respect of concession arrangements 1,155,885 657,291 1,065,753 Non-current inventory of land (freehold) 978,715 807,212 938,127 Non-current inventory of land (leasehold) 696,807 664,846 705,172 Investment property, net 926,985 865,211 862,282 Land rights 13,423 13,248 13,422 Receivables, loans and deposits 207,542 507,036 211,766 Investments in equity- accounted investees 437,381 634,538 403,773 Loans to investee companies 1,148,927 501,524 1,099,937 Deferred tax assets 156,859 202,716 299,144 Property, plant and equipment, and right-of- use assets, net 1,343,512 942,471 1,076,317 Intangible assets, net 372,464 292,392 364,911 Total non-current assets 7,438,500 6,088,485 7,040,604 Total assets 17,154,679 14,335,409 16,675,802
Condensed Consolidated Interim Statements of Financial Position as at (cont'd) --- Mar-31 Mar-31 Dec-31 2019 2018 2018 (Unaudited) (Audited) NIS thousands NIS thousands NIS thousands Liabilities Short-term credit from banks and others 1,367,280 1,164,185 1,529,542 Subcontractors and trade payables 1,604,975 1,331,316 1,657,591 Short-term employee benefits 173,736 138,608 160,792 Payables and credit balances including derivatives 618,176 555,752 638,652 Current tax liabilities 97,047 104,330 84,623 Provisions 163,906 259,963 172,364 Payables -customer work orders 1,426,460 1,471,982 1,483,675 Advances received from customers 495,048 408,484 323,684 Liabilities classified as held for sale 362,173 381,290 360,954 Total current liabilities 6,308,801 5,815,910 6,411,877 Liabilities to banks and others 3,356,830 2,629,407 3,200,074 Debentures 3,676,838 3,434,637 3,680,283 Employee benefits 44,554 50,907 46,130 Deferred tax liabilities 114,668 115,939 119,665 Provisions 241,172 104,003 260,418 Excess of accumulated losses over cost of investment and deferred credit balance in investee companies 125,721 54,704 97,408 Total non-current liabilities 7,559,783 6,389,597 7,403,978 Total liabilities 13,868,584 12,205,507 13,815,855 Equity Total equity attributable to owners of the Company 2,951,978 1,861,274 2,531,765 Non-controlling interests 334,117 268,628 328,182 Total equity 3,286,095 2,129,902 2,859,947 Total liabilities and equity 17,154,679 14,335,409 16,675,802
Condensed Consolidated Interim Statements of Income --- For the For the three-month period ended year ended Mar-31 Mar-31 Dec-31 2019 2018 2018 (Unaudited) (Audited) NIS thousands NIS thousands NIS thousands Revenues from work performed and sales 1,487,120 1,355,418 6,331,518 Cost of work performed and sales (1,251,122) (1,199,428) (5,371,928) Gross profit 235,998 155,990 959,590 Gain (loss) on sale of investment property (310) 2,971 125,949 Selling and marketing expenses (12,526) (10,204) (40,089) Administrative and general expenses (92,391) (97,583) (415,472) Share of profits (losses) of equity accounted investees (net of tax) (36,878) (976) 19,141 Other operating income 614,331 6,484 389,504 Other operating expenses (4,772) (11,462) (135,578) Operating profit 703,452 45,220 903,045 Financing income 123,886 100,609 261,136 Financing expenses (124,720) (94,480) (530,652) Net financing expenses (834) 6,129 (269,516) Profit before taxes on income 702,618 51,349 633,529 Taxes on income (183,882) (24,117) (74,233) Profit for the period 518,736 27,232 559,296 Attributable to: Owners of the Company 508,700 17,099 494,995 Non-controlling interests 10,036 10,133 64,301 518,736 27,232 559,296 Basic earnings per share (inNIS) 1.27 0.04 1.24 Diluted earnings per share (inNIS) 1.27 0.04 1.22
Condensed Consolidated Interim Statements of Comprehensive Income (Loss) --- For the For the three-month period ended year ended Mar-31 Mar-31 Dec-31 2019 2018 2018 (Unaudited) (Audited) NIS thousands NIS thousands NIS thousands Profit for the period 518,736 27,232 559,296 Other comprehensive income (loss) Other comprehensive income (loss) items that after initial recognition in comprehensive income were or will be transferred to profit or loss Foreign currency translation differences for foreign operations (107,330) 63,607 227,416 Effective portion of change in fair value of hedge of foreign operation 5,240 (1,880) (11,240) Net change in fair value of financial assets at fair value through other comprehensive income, net of tax 18,885 (17,721) 13,398 Effective portion of change in fair value of cash flow hedge 14,496 9,511 17,447 Other comprehensive loss items that will not be transferred to profit loss Re-measurement of defined benefit plan, net of tax 141 Total other comprehensive income (loss) (68,709) 53,517 247,162 Total comprehensive income for the period 450,027 80,749 806,458 Total comprehensive income attributable to: Owners of the Company 439,507 70,652 736,807 Non-controlling interests 10,520 10,097 69,651 Total comprehensive income for the period 450,027 80,749 806,458
Operating Segments --- For the three month period ended March 31, 2019 (unaudited) Infrastructures and Infrastructures construction Infrastructures and (international) and Real estate Real estate construction (excluding construction development development (Israel) USA) (USA) (Israel) (international) Concessions Energy Other Adjustments Consolidated NIS thousands Total external revenues 659,724 321,884 78,702 244,998 145,085 13,968 72,022 12,005 (61,268) 1,487,120 Inter-segment revenues 97,687 19 (97,706) Total revenues 757,411 321,884 78,702 245,017 145,085 13,968 72,022 12,005 (158,974) 1,487,120 Segment profit (loss) before income tax 22,874 59,640 (32,861) 46,248 26,239 37,204 15,077 579,756 (51,559) 702,618 For the three month period ended March 31, 2018 (unaudited) Infrastructures and Infrastructures construction Infrastructures and (international) and Real estate Real estate construction (excluding construction development development (Israel) USA) (USA) (Israel) (international) Concessions Energy Other Adjustments Consolidated NIS thousands Total external revenues 666,513 322,158 106,343 273,998 18,276 10,764 60,465 9,261 (112,360) 1,355,418 Inter-segment revenues 72,510 19 (72,529) Total revenues 739,023 322,158 106,343 274,017 18,276 10,764 60,465 9,261 (184,889) 1,355,418 Segment profit (loss) before income tax 28,497 11,807 14,793 59,796 (9,155) 23,666 (10,850) (7,764) (59,441) 51,349
Operating Segments(cont'd) --- For the year ended December 31, 2018 (audited) Infrastructures and Infrastructures construction Infrastructures and (international) and Real estate Real estate construction (excluding construction development development (Israel) USA) (*) (USA) (*) (Israel) (international) Concessions Energy Other Adjustments Consolidated NIS thousands Total 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 1,355,063 3,284,132 485,278 987,377 499,354 55,910 503,563 45,184 (884,343) 6,331,518 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
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.