Shikun & Binui Reports Net Profit of NIS 426 Million in the First Nine Months of 2019
AIRPORT CITY, Israel, Nov. 28, 2019 /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 2019, ended September 30, 2019.
FINANCIAL HIGHLIGHTS OF THE FIRST NINE MONTHS OF 2019
-- Revenues in the first nine months of 2019 amounted to NIS 4.7 billion,
an increase of 12.4% compared to the corresponding period last year. The
increase was mainly due to the real estate activities in Eastern Europe.
-- Gross margin was 14% compared to 13.2% in the same period last year.
Gross profit for the period was NIS 661 million, compared with NIS 555
million in the same period last year. The improvement in the gross
profit and the margins was due to the improvements in the operations in
Africa, alongside significant apartment deliveries within the
residential real estate operations in Eastern Europe.
-- Net profit amounted to approximately NIS 426 million, compared with NIS
217 million in the same period last year.
-- Operating cash flow in the first nine months period (excluding
investment in land) amounted to NIS 502 million, compared with negative
operating cash flow of NIS 720 million in the corresponding period last
year. The positive cash flow is primarily due to an increase in the
volume of collections at SBI and collections received at the real estate
segment in Israel.
REAL ESTATE ACTIVITIES
In the first nine months of 2019, housing sales totaled 1,392 housing units (in 100% terms), amounting to NIS 1.5 billion, of which 806 housing units were in Israel and 586 housing units were in Europe.
Apartment deliveries were 1,347 (in 100% terms) of which 586 were housing units in Israel and 761 were housing units in Europe.
Additional Data on Company's Sale of Apartments (signed contracts) during Reporting Period:
Apartments under
Consolidated
Projects Under
Company management Projects - Joint Control
including partner share
Effective Portion
Israel
---
Sales 1,191 1.076
(NIS millions)
---
Number of apartment sale contracts 806 753
signed
---
Average price of apartments sold 1,477 1,428
(NIS thousands)
---
Europe
---
Sales 337 194 58
(NIS millions)
---
Number of apartment sale contracts 586 418 56
signed
---
Average price of apartments sold 575 464 1,048
(NIS thousands)
---
Data Regarding Delivery of Apartments to Customers during Reporting Period:
Consolidated
Projects Under
Projects Joint Control
Europe
---
Revenues from apartments delivered (NIS millions) 257 58
---
Number of units delivered 503 78
---
Average price of apartments delivered (NIS thousands) 512 751
---
Israel Real Estate: Significant increase in the volume of transactions signed during the first nine months of 2019 in the Or Yam project
-- During the first nine months of the year, transactions for the sale of
860 housing units (in 100% terms) were signed, amounting to NIS 1.2
billion, and this was in line with the success of the Or Yam project.
RED International Real Estate: Significant Increase in Income and Profit Following delivery of 761 Housing during the nine month reporting period
-- Revenues in the first nine months of 2019 amounted to NIS 338 million,
an increase of NIS 160 million compared to the corresponding period last
year, as a result of delivery of 597 housing units (company's share):
Warsaw (375 housing units), Prague (106 housing units), and Belgrade
(446 units).
-- Gross profit in the nine month reporting period amounted to NIS 87
million, compared with NIS 143 million in the corresponding period last
year.
Successful realization of most of the Group's shares in ADO
The Company completed four transactions to sell holdings amounting to 30% of ADO Group shares for NIS 720 million, following which it recorded a pre-tax profit of NIS 476 million, as well as pre-tax profit from a revaluation of the remaining balance of the Company's investment in ADO Group (7.5%) amounting to NIS 143 million.
PROJECT CONTRACTING
Solel Builder: Significant Volume of Wins for New Projects since Beginning of 2019
-- Total rights in projects and new works received from the beginning of
the year up to the date of this report, amounted to NIS 2.7 billion.
These include winning the road construction project and extending
bridges as part of the construction of the Eastern Railway, construction
of two other sections of the Southern Barrier, construction of the
Bezalel Campus in Jerusalem, foundation works in the Tel Aviv Spiral
Tower and others.
SBI International Infrastructure and Construction (excluding the United States): Significant improvement in profitability
-- A marked improvement in the gross margin was noted, which reached 16.9%
in the first nine months of 2019, compared with 9.1% in the same period
of last year. The improvement in profitability was mainly due to the
projects in Uganda, including the project to establish the airport in
Uganda. Net income in this segment in the first nine months was NIS 34
million, compared with a loss of NIS 130 million in the first nine
months of 2018.
-- Toll Road Project in Colombia: On February 1, 2019, the handover papers
for Section 1 were signed, on October 17, 2019, the handover papers for
Section 2 were signed and on November 7, 2019, the handover papers for
Section 3 were signed.
-- The win of a project in Nigeria: In October 2019, the Nigerian
government informed SBI that it has won a tender for the construction of
a road in south-eastern Nigeria. The project includes construction of 18
km of roads, as well as construction of a number of bridges and
interchanges. The start of the project is expected in the second half of
2020 and the construction work is expected to continue for approximately
48 months. The total proceeds expected for this project are
approximately US $ 310 million. It should be clarified that as of
today's date, a binding contract has not yet been signed between the
foreign company and the Nigerian government to carry out the project
work and there is no certainty regarding the date of signing of a
binding contract, if and whether it will be signed.
SBA US Infrastructure and Construction Contracting: Continued to broaden operations and implement US expansion strategy
-- Completion of the acquisition of US Infrastructure and Construction
Contracting Company: On April 16, 2019, the transaction was completed as
part of the Company's strategy to expand its operations in the United
States. The company is engaged in civil infrastructure contracting with
an emphasis on bridges, transport infrastructure and short-term works.
-- Project SH-288: There was a delay within the project for building the
toll road in Texas. Consequently, the update to the expected completion
of the project resulted in a loss of NIS 109 million in the first nine
months of 2019.
PROJECTS AND INCOME GENERATING ASSETS
Start of Operation of the Ashalim Mega Project
In April, all approvals were required to operate the Ashalim project. The project includes the total supply of 121 megawatts of electricity, for an operating period ending in 2043. The company's share of the franchisee and operator is 50%.
Tze'elim Photovoltaic Project
In October 2019, all required approvals were obtained to operate the Tze'elim project, a photovoltaic power plant with an installed capacity of 120 MW.
The Company estimates that the gross receipts from electricity sales generated by the facility will amount to approximately NIS 75 million per year and will be spread over an operating period of 20 years*.
Road 6 Operating Company (Derech Eretz) Transaction
In May, Keystone REIT (Ltd.) entered into an agreement for the acquisition of the Road 6 Operating Company (Derech Eretz) from third parties with some of the holdings expected to be transferred to the Shikun & Binui.
As the transactions and agreements are executed, the Company is expected to increase its control of the Road 6 Operating Company and record an estimated profit of NIS 100 million as a result of the investment revaluation*.
Sale of Genari 2
In June 2019, the sale of the Genari 2 project was completed, a BOT project with a construction cost of NIS 515 million for the planning, construction, maintenance and financing of the new Jerusalem Government Campus. Net proceeds from the transaction amounted to NIS 79 million and a profit after tax of NIS 34 million.
Efficiencies
Management continued implementing steps to reduce expenses across the Group.
* Forward-looking information as defined in the Securities Law 1968, which relates to a future event or matter, the materialization of which is uncertain and not under the control of the Company alone. The information is based on estimates and forecasts as of this date, which may also not materialize or otherwise materialize due to undue delays, new information to be received, or changes that will apply to the assumptions of estimates and forecasts and /or as a result of a variety of other operational and logistical factors.
INVESTORS CONFERENCE CALL
Due to the US thanksgiving holiday, Shikun & Binui will not be hosting a conference call in English at this time.
International investors wishing to discuss the results with management are welcome to contact Shikun & Binui's international investor relations team to schedule a call with management.
The Company expects to again provide an international conference call in English following the release of fourth quarter and full year 2019 financial results, next year.
ABOUT THE SHIKUN & BINUI GROUP
Shikun & Binui is Israel's leading infrastructure and real estate company - a global corporation that operates through its subsidiaries in Israel and across the world. Active in more than 20 countries on four continents, Shikun & Binui is involved in various fields, including infrastructure, real estate development, water, energy, and concessions.
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 Statements of Financial Position as at
September 30
September 30
December 31
2019 2018 2018
(Unaudited)
(Audited)
NIS
thousands NIS
thousands NIS
thousands
Assets
Cash and cash equivalents 2,471,529 2,112,271 2,491,867
Bank deposits 679,694 579,587 781,879
Short-term loans and investments 182,988 103,256 129,150
Short-term loans to investee companies 19,345 4,451 25,001
Trade receivables - accrued income 2,773,142 2,816,057 2,830,251
Inventory of buildings held for sale 1,739,249 1,701,217 1,587,147
Receivables and debit balances 433,516 532,695 497,394
Other investments, including derivatives 414,619 262,854 376,642
Current tax assets 53,881 26,821 39,287
Inventory 181,224 216,073 160,518
Assets classified as held for sale 2,639 743,245 716,062
Total current assets 8,951,826 9,098,527 9,635,198
Receivables and contract assets
in respect of concession arrangements 1,301,016 724,548 1,065,753
Non-current inventory of land (freehold) 1,192,906 1,175,904 938,127
Non-current inventory of land (leasehold) 252,486 425,077 705,172
Investment property, net 1,023,352 811,071 862,282
Land rights 13,435 13,422 13,422
Receivables, loans and deposits 232,054 392,189 211,766
Investments in equity-accounted investees 507,104 588,147 403,773
Loans to investee companies 1,049,016 882,921 1,099,937
Deferred tax assets 177,244 171,803 299,144
Property, plant and equipment, and right-of-use assets 1,388,903 1,040,838 1,076,317
Intangible assets, net 481,699 289,860 364,911
Total non-current assets 7,619,215 6,515,780 7,040,604
Total assets 16,571,041 15,614,307 16,675,802
Condensed Consolidated Interim Financial Statements
---
Condensed Consolidated Interim Statements of Financial Position as at (cont'd)
September 30
September 30
December 31
2019 2018 2018
(Unaudited)
(Audited)
NIS
thousands NIS
thousands NIS
thousands
Liabilities
Short-term credit from banks and others 1,551,574 1,763,325 1,529,542
Subcontractors and trade payables 1,660,671 1,384,132 1,657,591
Short-term employee benefits 148,947 138,744 160,792
Payables and credit balances including derivatives 629,095 573,799 638,652
Current tax liabilities 135,555 78,627 84,623
Provisions 181,956 212,628 172,364
Payables - customer work orders 1,378,071 1,149,628 1,483,675
Advances received from customers 513,964 463,844 323,684
Liabilities classified as held for sale 356,871 360,954
Dividend payable 32,500
Total current liabilities 6,232,333 6,121,598 6,411,877
Liabilities to banks and others 3,416,040 3,037,014 3,200,074
Debentures 3,440,464 3,671,036 3,680,283
Employee benefits 45,263 47,474 46,130
Deferred tax liabilities 93,003 77,310 119,665
Provisions 157,472 259,812 260,418
Excess of accumulated losses over cost of investment
and deferred credit balance in investee companies 185,544 47,814 97,408
Total non-current liabilities 7,337,786 7,140,460 7,403,978
Total liabilities 13,570,119 13,262,058 13,815,855
Equity
Total equity attributable to owners
of the Company 2,700,192 2,064,796 2,531,765
Non-controlling interests 300,730 287,453 328,182
Total equity 3,000,922 2,352,249 2,859,947
Total liabilities and equity 16,571,041 15,614,307 16,675,802
Condensed Consolidated Interim Financial Statements
---
Condensed Consolidated Interim Statements of Income (Loss)
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
2019 2018 2019 2018 2018
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
---
NIS thousands
NIS thousands
NIS thousands
NIS thousands
NIS thousands
---
Revenues from work
performed and sales 4,723,124 4,201,757 1,621,209 1,463,357 6,331,518
Cost of work performed
and sales (4,062,012) (3,646,908) (1,423,134) (1,233,275) (5,371,928)
Gross profit 661,112 554,849 198,075 230,082 959,590
Gain (loss) on sale of
investment property 2,423 23,966 815 (2,253) 125,949
Selling and marketing expenses (32,612) (28,975) (11,036) (10,240) (40,089)
Administrative and general
expenses (356,415) (301,705) (114,490) (96,665) (415,472)
Share of profits (losses)
of equity accounted
investees (net of tax) (150,108) 22,574 (84,184) 3,429 19,141
Other operating income 731,544 359,265 10,381 19,331 389,504
Other operating expenses (18,634) (105,340) (10,024) (46,562) (135,578)
Operating profit (loss) 837,310 524,634 (10,463) 97,122 903,045
Financing income 320,962 203,019 169,965 56,433 261,136
Financing expenses (453,943) (407,598) (174,942) (131,000) (530,652)
Net financing expenses (132,981) (204,579) (4,977) (74,567) (269,516)
Profit (loss) before taxes
on income 704,329 320,055 (15,440) 22,555 633,529
Taxes on income (278,095) (103,504) (44,058) (8,738) (74,233)
Profit (loss) for the period 426,234 216,551 (59,498) 13,817 559,296
Attributable to:
Owners of the Company 402,434 184,733 (62,368) (1,554) 494,995
Non-controlling interests 23,800 31,818 2,870 15,371 64,301
426,234 216,551 (59,498) 13,817 559,296
Basic earnings (loss) per
share (in NIS) 1.00 0.46 (0.16) (0.004) 1.24
Diluted earnings (loss) per
share (in NIS) 0.99 0.46 (0.15) (0.004) 1.22
Condensed Consolidated Interim Financial Statements
---
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
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
2019 2018 2019 2018 2018
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited) (Audited)
---
NIS thousands
NIS thousands
NIS thousands
NIS thousands NIS thousands
---
Profit (loss) for the period 426,234 216,551 (59,498) (13,817) 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 (237,429) 120,803 (87,279) (19,314) 227,416
Effective portion of change in
fair value of hedge of foreign
operation 5,240 (6,400) 920 (11,240)
Net change in fair value of
financial assets at fair value
through other comprehensive
income, net of tax 30,825 (50,963) 12,750 (9,536) 13,398
Effective portion of change in
fair value of cash flow hedge 1,536 21,231 (6,421) (7,652) 17,447
Other comprehensive income
items that will not be
transferred to profit loss
Re-measurement of defined
benefit plan, net of tax - 141
---
Total other comprehensive
income (loss) (199,828) 84,671 (80,950) (35,582) 247,162
Total comprehensive income
(loss) for the period 226,406 301,222 (140,448) (21,765) 806,458
Total comprehensive income
(loss) attributable to:
Owners of the Company 204,003 272,300 (141,507) (32,973) 736,807
Non-controlling interests 22,403 28,922 1,059 11,208 69,651
Total comprehensive income
(loss) for the period 226,406 301,222 (140,448) (21,765) 806,458
Condensed Consolidated Interim Financial Statements
---
Operating Segments
For the nine month period ended September 30, 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 1,988,452 954,407 607,311 779,007 338,289 30,939 145,212 33,419 (153,912) 4,723,124
Inter-segment revenues 318,275 57 (318,332) -
Total revenues 2,306,727 954,407 607,311 779,064 338,289 30,939 145,212 33,419 (472,244) 4,723,124
Segment profit (loss) before
income tax 89,053 112,671 (149,198) 110,852 64,330 127,007 (21,719) 584,015 (212,682) 704,329
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
(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
Condensed Consolidated Interim Financial Statements
---
Operating Segments (cont'd)
For the three month period ended September 30, 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 666,040 279,224 277,641 309,955 39,984 39,411 11,109 (2,155) 1,621,209
Inter-segment revenues 112,486 19 (112,505) -
Total revenues 778,526 279,224 277,641 309,974 39,984 39,411 11,109 (114,660) 1,621,209
Segment profit (loss) before
income tax 25,618 11,192 (69,583) 46,298 (284) (13,520) (22,563) 60,177 (52,775) (15,440)
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
(Israel)
(USA)
(USA)
(Israel) (
international
)
Concessions Energy Other
Adjustments
Consolidated
NIS thousands
---
Total external revenues 612,145 310,398 122,066 289,182 103,851 10,831 94,602 11,113 (90,831) 1,463,357
Inter-segment revenues 111,084 19 (111,103)
Total revenues 723,229 310,398 122,066 289,201 103,851 10,831 94,602 11,113 (201,934) 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
Condensed Consolidated Interim Financial Statements
---
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
Investor Relations
Leon Vasilnitzky
Ehud Helft
+972(3)630-5894
GK Investor & Public Relations
leon_v@shikunbinui.com
+1-617-418-3096
shikunbinuni@gkir.com
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SOURCE Shikun & Binui Ltd.
