August 28, 2018 - 12:02 PM EDT
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Shikun & Binui Announces Financial Results For the First Half of 2018

-  Revenues - NIS 2.7B; Net Profit - NIS 203M, Up 228% Compared With H1 2017 -

-  Order Backlog reached NIS 13.3B, Excluding NIS 3.7B in Additional Projects Won up to the reporting period and thereafter–


AIRPORT CITY, Israel, Aug. 28, 2018 /PRNewswire/ -- Shikun & Binui Ltd. (TASE: SKBN.TA), a global construction and infrastructure company headquartered in Israel, today reported its financial results for the first half and second quarter ended June 30, 2018.

Financial highlights for the 1st half of 2018:

  • Revenues totaled ~NIS 2.7 billion, down 20% compared to the first half of 2017. The decrease reflected Solel Boneh's strong performance in 2017, due to the Ashalim and Railroad Tracks projects, coupled with a decline during 2018 in the Company's international contracting activities (excluding the US), due to the slowdown of its activities in Nigeria and Columbia and the completion of projects in Ghana and Togo.  
  • Gross Margin for the period was 12% compared with 11% during the parallel period of 2017. Gross Profit for the period totaled ~NIS 325 million, compared with ~NIS 377 million for the first half of 2017.
  • Net Profit for the first half of 2018 totaled ~NIS 203 million, compared with ~NIS 89 million for the first half of 2017. The increase reflected primarily a ~NIS 331 million pre-tax capital gain generated by the sale of the Portfolio (45% of the Company's holdings in Carmeltun and 40% of its holdings in North Roads, see below).
  • Cash flow from operations, excluding investments in land and rights offerings, was a negative ~NIS 494 million. Cash flow from operations including these investments was negative ~NIS 906 million.

Income Statement highlights:

1. CONSTRUCTION

Solel Boneh

  • Progress continues in expanding the Company's construction offerings: revenues for the first half of 2018 totaled ~NIS 1.6 billion.
  • 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 line with Shikun & Binui's strategy to expand its construction offerings and will be complementary and synergistic to its other activities.
  • Primary mega projects in process: Gilboa Pumped Storage, Ashalim Thermo Solar power plant, Tel Aviv Light Rail (Western Section), the Tze'elim, the Southern Barrier, and others.

International Building and Infrastructure Contracting Activities (excluding the US)

  • Total revenues for H1 2018: ~US$ 183 million ~NIS 643 million.
  • In February 2018, the company signed an agreement to build a new airport in Uganda for ~USD 299 million.
  • In August 2018, the company received notice of the approval of an expansion for the Shagamu-Ibadan Road project in Nigeria for ~USD 220 million.
  • The company has decided to begin reporting its financial results according to the NAFEX exchange rate beginning in the second quarter of 2018, in light of Nigeria's announcement that it will cease publishing the NIFEX exchange rate beginning in January 2019. As a result, a goal has been established to reduce the gap between the NIFEX and the NAFEX exchange rates, in light of the reduction in the flow of foreign currency by the Central Bank (339 as of 30/06/18). As a result, a loss of $5m from exchange rate differences was recorded in the second quarter
  • In the second quarter a loss of US$ 16 m (NIS 59m) was recoded due to hedging activity in relation to a construction project in Uganda.
  • Segment 1 of the Colombia Toll Roads Project is now moving into operation; 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, significant changes in the scope of the project may be required due to the discovery of water springs along the original route. As a result of the delays, the project's funders have stopped allowing a further draw-down of funds until a new plan has been approved for the slowdown of work activity. In 2017, a provision of ~USD 5 million was taken in respect of the project's expected loss, and in the second quarter of 2018, another ~USD 5 million provision was taken.
  • During the second quarter of 2018, the Company decided to act in order evaluate its indirect holdings in its consolidated company SBI International Holdings AG, whether through a share deal and/or the sale of activities and/or assets (partially or in full). including the solicitation of appropriate offer, and evaluating the potential impact of such activities. No decision has yet been made to sell the International Infrastructure and Construction Division, and there is no certainty, at this stage, regarding the results of the evaluation and/or the feasibility, scope or terms of a deal. At this stage of the process, the process has no effect on the Company's financial results.

US Building and Infrastructure Contracting Activities:

  • Total revenues for H1 2018: ~NIS 242 million from construction of the SH-288 road project in Texas.
  • Beginning from the first quarter of 2018, the results of the US Building and Infrastructure Contracting Activities division are presented separately in line with Shikun & Binui's strategic processes.

Development of the Backlog (in NIS millions)

* The backlog as of 30.6.18 does not include additional construction projects totaling ~NIS 3.7 billion that the company has won in Israel and in international markets up to or after the report date, including ~USD 150 million in roads projects in Nigeria, ~USD 120 million in roads projects in Ethiopia, ~USD 120 million in roads projects in Guatemala and the construction of a NIS 750 million (our share – 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 31.12.17 derives partially from the effect of the early adoption of the IFRS 15 reporting standard.

2. RESIDENTIAL REAL ESTATE DEVELOPMENT

Apartment Sales

  • During the first half of 2018, the company sold ~590 apartments (100% share) totaling ~NIS 612 million, including ~169 units in Israel and ~421 units in Europe.
  •  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.

 

Following is additional data regarding the Company's sale of apartments (signed contracts) during the first half of 2018:


Apartment
Units Under
Company
Management
Including
Partner Share

Consolidated
Projects

Projects
Under Joint
Control

Israel




Sales (NIS millions)

320

266

-

Number of apartment sale contracts signed

169

139

-

Average price of apartments sold (NIS thousands)

1,893

1,913

-

Europe




Sales (NIS millions)

292

205

22

Number of apartment sale contracts signed

421

319

27

Average price of apartments sold (NIS thousands)

693

643

842

 

Following is data regarding the Company's delivery of apartments to customers during the first half of 2018:


Consolidated
Projects

Projects Under
Joint Control

Europe



Revenues from apartments delivered (NIS millions)

20

22

Number of units delivered

48

32

Average price of apartments delivered (NIS thousands)

419

675

 

  • Implementation of the IFRS Standard: According to the IFRS Standard, the company reports its revenues from Israeli apartment sales 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: that is, all revenues are recognized at the time of delivery. 

3. PROJECTS & IGAs (INCOME GENERATING ASSETS)

  • Won a Concessions tender for an urban waste sorting and treatment plant: In April 2018, Israel's Tendering Committee selected Shikun & Binui and G.E.S. (equal partners) to plan, finance and construct an urban waste sorting and treatment plant under a 29.5-year concessions framework. Construction costs are projected to total ~NIS 750 million. Solel Boneh holds 50% of the Construction Contractor rights and will build the project together with G.E.S. Launch of construction is contingent upon the completion of Financial Closing.
  • Won a Concessions tender for a teleprocessing technology campus in Be'er Sheva: In June 2018, Israel's Tendering Committee announced, in respect to its tender to plan, finance, construct, operate and maintain a 170,000 m2 teleprocessing technology campus in Be'er Sheva under a 25-year concessions 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. Final approval is conditional upon fulfillment of milestones and conditions set out in the tender.
  • The company continues to implement its strategy aimed at realizing value and freeing up cash flow for investment in 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 North 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 store. 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.
  • Significant progress with portfolio of Renewable Energy projects:
    • Received conditional license for the conversion of the Etgal power plant to natural gas while expanding its generation capacity from 26MW to 186MW
    • Began construction of 6 high voltage PV projects totaling up to 60MW
    • Progress towards Financial Closing to construct high voltage PV projects totaling up to 25MW

Sale of Shikun & Binui shares:

  • On August 6, 2018, a transaction was consummated for the sale of all shares of Shikun & Binui Ltd. held by Arison Investments Ltd. to Capital Foresight Israel Investments Company LLC, which is controlled by Mr. Naty Saidoff. Subsequent to the consummation of the said transaction, the control over the Company was transferred finally to Capital LLC.
  • Capital Foresight Israel Investments Company LLC holds about 46.91% of the Company's issued and paid-up share capital, and about 47.68% of the voting rights in the Company. Capital Foresight Israel Investments Company LLC is held (100%) by the Capital Foresight Limited Partnership, whose General Partner is the partnership Saidoff Foresight LP ("the Partnership"). The General Partner of the Partnership is Naty Saidoff LLC, which is held (100%) by Naty Saidoff.

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.

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 




June 30

June 30

December 31



2018

2017

2017



(Unaudited)

(Audited)



NIS thousands

NIS thousands

NIS thousands

Assets





Cash and cash equivalents


2,461,346

1,694,168

2,029,574

Bank deposits


531,743

623,790

657,668

Short-term loans and investments


91,303

65,819

63,050

Short-term loans to investee companies


5,035

1,686

31,854

Trade receivables – accrued income


2,716,667

3,101,150

2,454,935

Inventory of buildings held for sale


1,630,602

1,215,598

1,395,986

Receivables and debit balances


525,504

529,074

498,838

Other investments, including derivatives


271,163

187,206

241,641

Current tax assets


19,218

46,656

19,692

Inventory


190,428

194,190

176,145

Assets classified as held for sale


737,371

107,606

105,352

Total current assets


9,180,380

7,766,943

7,674,735






Receivables and contract assets





 in respect of concession arrangements


654,451

905,815

923,267

Non-current inventory of land (freehold)


1,129,682

626,225

789,699

Non-current inventory of land (leasehold)


463,335

340,550

426,609

Investment property, net


747,556

1,003,616

842,943

Land rights


13,420

13,101

13,179

Receivables, loans and deposits


456,205

522,291

522,795

Investments in equity-accounted investees


587,529

635,787

598,512

Loans to investee companies


448,805

554,795

612,054

Deferred tax assets


155,025

81,181

162,932

Property, plant and equipment, net


996,848

926,588

875,593

Intangible assets, net


283,966

207,440

150,238

Total non-current assets


5,936,822

5,817,389

5,917,821






Total assets


15,117,202

13,584,332

13,592,556

 

 

Condensed Consolidated Interim Financial Statements


Condensed Consolidated Interim Statement of Financial Position as at 




June 30

June 30

December 31



2018

2017

2017



(Unaudited)

(Audited)



NIS thousands

NIS thousands

NIS thousands

Liabilities





Short-term credit from banks and others


1,691,406

1,215,050

1,036,026

Subcontractors and trade payables


1,389,517

1,276,887

1,460,075

Short-term employee benefits


136,050

118,828

136,860

Payables and credit balances including derivatives


580,206

681,241

616,135

Current tax liabilities


72,683

102,328

105,653

Provisions


253,368

233,262

246,019

Payables - customer work orders


1,285,345

1,710,534

1,376,856

Advances received from customers


421,194

464,136

336,685

Liabilities classified as held for sale


371,301

-

-

Total current liabilities


6,201,070

5,802,266

5,314,309






Liabilities to banks and others


2,456,022

2,245,382

2,477,801

Debentures


3,659,246

3,387,920

3,402,211

Employee benefits


49,329

50,979

49,843

Deferred tax liabilities


82,285

101,602

105,719

Provisions


237,047

104,137

102,795

Excess of accumulated losses over cost of investment





 and deferred credit balance in investee companies


59,701

30,416

48,130

Total non-current liabilities


6,543,630

5,920,436

6,186,499






Total liabilities


12,744,700

11,722,702

11,500,808






Equity





Total equity attributable to owners





 of the Company


2,096,257

1,648,933

1,849,025

Non-controlling interests


276,245

212,697

242,723

Total equity


2,372,502

1,861,630

2,091,748
















Total liabilities and equity


15,117,202

13,584,332

13,592,556

 

 

Condensed Consolidated Interim Statement of Income







For the


For the six-month period ended

For the three-month period ended

year ended


June 30

June 30

June 30

June 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

2,738,400

3,441,126

1,382,982

1,554,421

6,437,307

Cost of work performed






 and sales

(2,413,633)

(3,064,406)

(1,214,205)

(1,383,957)

(5,586,065)







Gross profit

324,767

376,720

168,777

170,464

851,242







Gain on sale of






 investment property

26,219

640

23,248

-

3,217

Selling and marketing expenses

(18,735)

(19,288)

(8,531)

(10,611)

(40,049)

Administrative and general






 expenses

(214,040)

(186,737)

(116,457)

(96,417)

(380,824)

Share of profits (losses)






 of equity accounted






 investees (net of tax)

19,145

16,631

20,121

(7,380)

59,816

Other operating income

339,934

84,133

333,450

7,918

219,622

Other operating expenses

(49,778)

(33,723)

(38,316)

(27,267)

(130,028)







Operating profit

427,512

238,376

382,292

36,707

582,996







Financing income

146,586

121,309

45,977

58,665

199,436

Financing expenses

(276,598)

(238,557)

(182,118)

(99,814)

(422,471)







Net financing expenses

(130,012)

(117,248)

(136,141)

(41,149)

(223,035)







Profit (loss) before taxes






 on income

297,500

121,128

246,151

(4,442)

359,961

Taxes on income

(94,766)

(32,100)

(70,649)

5,340

(61,655)







Profit for the period

202,734

89,028

175,502

898

298,306







Attributable to:






Owners of the Company

186,287

64,423

169,188

(12,913)

230,927

Non-controlling interests

16,447

24,605

6,314

13,811

67,379








202,734

89,028

175,502

898

298,306







Basic earnings (loss) per






 share (in NIS)

0.47

0.16

0.42

(0.03)

0.58







Diluted earnings (loss) per






 share (in NIS)

0.46

0.16

0.42

(0.03)

0.57

 

 

Consolidated Financial Statements


Operating Segments



For the six month period ended June 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

1,429,711

643,520

241,805

476,424

74,816

22,336

88,625

20,702

(259,539)

2,738,400

Inter-segment revenues

129,784

-

-

38

-

-

-

-

(129,822)

-












Total revenues

1,559,495

643,520

241,805

476,462

74,816

22,336

88,625

20,702

(389,361)

2,738,400












Segment profit (loss) before











 income tax

52,693

(56,973)

23,827

101,582

(18,444)

346,922

(9,747)

(16,673)

(125,687)

297,500




For the six month period ended June 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

1,728,888

826,183

152,958

689,092

106,194

105,649

18,837

23,961

(210,636)

3,441,126

Inter-segment revenues

158,555

-

-

38

-

-

-

-

(158,593)

-












Total revenues

1,887,443

826,183

152,958

689,130

106,194

105,649

18,837

23,961

(369,229)

3,441,126












Segment profit (loss) before











 income tax

50,308

53,466

20,038

82,568

(4,251)

78,209

(3,290)

(50,849)

(105,071)

121,128


 

 

Consolidated Financial Statements  


Operating Segments



For the three month period ended June 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

763,198

321,362

135,462

202,426

56,540

11,572

28,160

11,441

(147,179)

1,382,982

Inter-segment revenues

57,274

-

-

19

-

-

-

-

(57,293)

-












Total revenues

820,472

321,362

135,462

202,445

56,540

11,572

28,160

11,441

(204,472)

1,382,982












Segment profit (loss) before











 income tax

24,196

(68,780)

9,034

41,786

(9,289)

323,256

1,103

(8,909)

(66,246)

246,151




For the three month period ended June 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

766,496

365,727

82,377

324,177

86,202

31,884

9,755

12,526

(124,723)

1,554,421

Inter-segment revenues

61,344

-

-

19

-

-

-

-

(61,363)

-












Total revenues

827,840

365,727

82,377

324,196

86,202

31,884

9,755

12,526

(186,086)

1,554,421












Segment profit (loss) before











 income tax

22,568

8,595

10,436

32,379

5,759

2,375

3,142

(34,720)

(54,976)

(4,442)

 

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 IR                            

Inbal Uliansky                                                                  

Ehud Helft/Kenny Green  

+972(3)6301058

GK Investor Relations

[email protected]                                              

 +1-617-418-3096


[email protected]

 


Source: PR Newswire (August 28, 2018 - 12:02 PM EDT)

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