Shikun & Binui : Reports Results of the First Half of 2019 With NIS 486 Million in Net Profit

AIRPORT CITY, Israel, Aug. 21, 2019 /PRNewswire/ -- Shikun & Binui Ltd. (TASE: SKBN.TA), a global construction and infrastructure company headquartered in Israel, today reported its financial results for the second quarter and first half, ended June 30, 2019.

FINANCIAL HIGHLIGHTS OF THE FIRST HALF OF 2019

• Revenues in the first half of 2019 amounted to NIS 3.1 billion, an increase of 13.3% compared to the corresponding half last year. The increase was mainly due to real estate activity in Eastern Europe.
  
  
• Gross margin was approximately 14.9% compared to 11.9% in the same period last year. Gross profit for the period was NIS 463 million, compared with NIS 325 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 486 million, compared with NIS 203 million in the same period last year.
  
  
• Cash flow from operations in the first half (excluding investment in land) amounted to NIS 509 million, compared with negative operating cash flow of NIS 505 million in the corresponding half 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 half of 2019, housing sales totaled 1,089 housing units (in 100% terms), amounting to NIS 1.2 billion, of which 709 housing units were in Israel and 380 housing units were in Europe

Apartment deliveries were 1,013 (in 100% terms), of which 421 were housing units in Israel and 592 were housing units in Europe.

Additional Data on Company's Sale of Apartments (signed contracts) during First Half of 2019:

	Apartments under Company management including partner share	Consolidated Projects – Effective Portion	Projects Under Joint Control
Israel
Sales (NIS millions)	1,014	926	-
Number of apartment sale contracts signed	709	673	-
Average price of apartments sold (NIS thousands)	1,430	1,376	-
Europe
Sales (NIS millions)	203	133	26
Number of apartment sale contracts signed	380	286	27
Average price of apartments sold (NIS thousands)	534	465	959

 

Data Regarding Delivery of Apartments to Customers during First Half of 2019:

	Consolidated Projects	Projects Under Joint Control
Europe
Revenues from apartments delivered (NIS millions)	232	29
Number of units delivered	427	37
Average price of apartments delivered (NIS thousands)	544	786

Israel Real Estate: Significant increase in the volume of transactions signed during the first half of the Or Yam project

• During the first half of the year, transactions for the sale of 709 housing units were signed, amounting to NIS 1 billion, following the success of the Or Yam project.

RED International Real Estate: Significant Increase in Income and Profit Following delivery of 592 Housing during the first half of the year

• Revenues in the first half amounted to NIS 298 million, an increase of NIS 223 million compared to the corresponding half last year, as a result of delivery of 592 housing units mainly in Warsaw (351 housing units), Belgrade (113 housing units), Prague and Bucharest (128 units).
• Gross profit in the first half amounted to NIS 80 million, compared with NIS 9 million in the corresponding half last year.

Successful realization of most of the Group's shares in ADO

The company completed four transactions to sell 30% of ADO Group shares for approximately NIS 720 million, following which it recorded a pre-tax profit of NIS 480 million, as well as pre-tax profit from revaluation of the remaining balance of the Company's investment in ADO Group (7.5%) amounting to approximately NIS 59 million.

PROJECT CONTRACTING

Solel Boneh: Significant volume of wins for new projects since the beginning of the year

• Total rights in projects and new works received from the beginning of the year up to the date of the current report, amounted to NIS 2.2 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 US): Significant improvement in profitability

• A marked improvement in the gross margin was noted, which reached 17.9% in the first half of 2019, compared with 9.6% in the first half of last year. The improvement in profitability was mainly due to projects in Nigeria, projects in Uganda as well as the project to establish the airport in Uganda. Net profit amounted to approximately NIS 38 million, compared with net loss of NIS (73) million in the same period last year.
• Toll Road Project in Colombia: On February 1, 2019, the Section 1 delivery document was signed with no penalty. With the receipt of the section by the customer, the operating period commenced as stipulated in the franchise agreement, under which the franchisee will begin to receive revenue from available payments and fees, in accordance with the agreement.
      
  
  Due to the delays in the schedule in the agreement, the financers decided to suspend the continued financing until the handovers of sections 2 and 3, and reached agreement on the continuing of work on sections 4 and 5 (in which the works were delayed due to a force majeure). However, the franchisee and the financiers are in discussions regarding the receipt of a waiver and arranging for continued financing to establish sections 4 and 5. Given the above, an appropriate provision has been made and included in the financial statements.

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 marine 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 53 million in the first half of 2019.

PROJECTS AND INCOME GENERATING ASSETS

In April, all approvals were required to operate the Ashalim project

The project totals the supply of 121 megawatts of electricity, for an operating period ending in 2043.

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.

Genari 2 Transaction

In June, 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.

Continued takes steps to reduces financial leverage

The Company's financial debt as at June 30, 2019 was NIS 8.0 billion, compared with NIS 8.4 billion as of December 31, 2018.

Net financial debt, excluding non-recourse loans, was NIS 3.5 billion at the end of June, compared with NIS 4.0 billion at the end of 2018.

Streamlining

Management continued implementing steps to reduce expenses across the Group.

On May 26, 2019, following the approval of the Compensation Committee and the Board of Directors of the Company, the Company approved the engagement of Mr. Lapidot's terms and employment as the Company's CEO. Mr. Lapidot began his term on June 2, 2019.

INVESTORS CONFERENCE CALL

Shikun & Binui will host a conference call in English for investors on August 21, 2019 starting at 10:30am 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:	1-888-407-2553
UK:	0-800-917-9141
Israel:	03-918-0650
International:	[phone]

At: 10:30am Eastern Time, 7:30am Pacific Time, 3:30pm UK Time, 5:30pm 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

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 Statements of Financial Position as at
		June 30	June 30	December 31
		2019	2018	2018
		(Unaudited)		(Audited)
		NIS thousands	NIS thousands	NIS thousands
Assets
Cash and cash equivalents		2,420,067	2,461,346	2,491,867
Bank deposits		774,132	531,743	781,879
Short-term loans and investments		173,071	91,303	129,150
Short-term loans to investee companies		13,663	5,035	25,001
Trade receivables – accrued income		3,008,727	2,716,667	2,830,251
Inventory of buildings held for sale		1,681,839	1,630,602	1,587,147
Receivables and debit balances		417,505	525,504	497,394
Other investments, including derivatives		476,843	271,163	376,642
Current tax assets		50,085	19,218	39,287
Inventory		162,324	190,428	160,518
Assets classified as held for sale		-	737,371	716,062
Total current assets		9,178,256	9,180,380	9,635,198
Receivables and contract assets
in respect of concession arrangements		1,219,536	654,451	1,065,753
Non-current inventory of land (freehold)		989,352	1,129,682	938,127
Non-current inventory of land (leasehold)		489,286	463,335	705,172
Investment property, net		984,425	747,556	862,282
Land rights		13,431	13,420	13,422
Receivables, loans and deposits		235,836	456,205	211,766
Investments in equity-accounted investees		498,136	587,529	403,773
Loans to investee companies		1,154,886	448,805	1,099,937
Deferred tax assets		155,491	155,025	299,144
Property, plant and equipment, and right-of-use assets		1,426,263	996,848	1,076,317
Intangible assets, net		442,933	283,966	364,911
Total non-current assets		7,609,575	5,936,822	7,040,604
Total assets		16,787,831	15,117,202	16,675,802

 

 

Condensed Consolidated Interim Statements of Financial Position as at (cont'd)
		June 30	June 30	December 31
		2019	2018	2018
		(Unaudited)		(Audited)
		NIS thousands	NIS thousands	NIS thousands
Liabilities
Short-term credit from banks and others		1,517,719	1,691,406	1,529,542
Subcontractors and trade payables		1,678,399	1,389,517	1,657,591
Short-term employee benefits		174,101	136,050	160,792
Payables and credit balances including derivatives		544,548	580,206	638,652
Current tax liabilities		93,364	72,683	84,623
Provisions		177,026	253,368	172,364
Payables - customer work orders		1,565,590	1,285,345	1,483,675
Advances received from customers		508,153	421,194	323,684
Liabilities classified as held for sale		-	371,301	360,954
Dividend payable		60,000		-
Total current liabilities		6,318,900	6,201,070	6,411,877
Liabilities to banks and others		3,354,157	2,456,022	3,200,074
Debentures		3,455,895	3,659,246	3,680,283
Employee benefits		44,795	49,329	46,130
Deferred tax liabilities		109,451	82,285	119,665
Provisions		172,164	237,047	260,418
Excess of accumulated losses over cost of investment
and deferred credit balance in investee companies		165,241	59,701	97,408
Total non-current liabilities		7,301,703	6,543,630	7,403,978
Total liabilities		13,620,603	12,744,700	13,815,855
Equity
Total equity attributable to owners of the Company		2,826,012	2,096,257	2,531,765
Non-controlling interests		341,216	276,245	328,182
Total equity		3,167,228	2,372,502	2,859,947
Total liabilities and equity		16,787,831	15,117,202	16,675,802

 

 

Condensed Consolidated Interim Statements of Income (Loss)
	For the six-month period ended		For the three-month period ended		For the year ended
	June 30	June 30	June 30	June 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	3,101,915	2,738,400	1,614,795	1,382,982	6,331,518
Cost of work performed
and sales	(2,638,878)	(2,413,633)	(1,387,756)	(1,214,205)	(5,371,928)
Gross profit	463,037	324,767	227,039	168,777	959,590
Gain on sale of
investment property	1,608	26,219	1,918	23,248	125,949
Selling and marketing expenses	(21,576)	(18,735)	(9,050)	(8,531)	(40,089)
Administrative and general
expenses	(241,925)	(205,040) (*)	(149,534)	(107,457) (*)	(415,472)
Share of profits (losses)
of equity accounted
investees (net of tax)	(65,924)	19,145	(29,046)	20,121	19,141
Other operating income	721,163	339,934	106,832	333,450	389,504
Other operating expenses	(8,610)	(58,778) (*)	(3,838)	(47,316) (*)	(135,578)
Operating profit	847,773	427,512	144,321	382,292	903,045
Financing income	234,332	146,586	110,446	45,977	261,136
Financing expenses	(362,336)	(276,598)	(237,616)	(182,118)	(530,652)
Net financing expenses	(128,004)	(130,012)	(127,170)	(136,141)	(269,516)
Profit before taxes
on income	719,769	297,500	17,151	246,151	633,529
Taxes on income	(234,037)	(94,766)	(50,155)	(70,649)	(74,233)
Profit (loss) for the period	485,732	202,734	(33,004)	175,502	559,296
Attributable to:
Owners of the Company	464,802	186,287	(43,898)	169,188	494,995
Non-controlling interests	20,930	16,447	10,894	6,314	64,301
	485,732	202,734	(33,004)	175,502	559,296
Basic earnings per
share (inNIS)	1.16	0.47	(0.11)	0.42	1.24
Diluted earnings per
share (inNIS)	1.15	0.46	(0.11)	0.42	1.22
(*)           Reclassified.

 

 

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
				For the
		For the three-month period ended		year ended
		March 31	March 31	December 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 six month period ended June 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	1,322,412	675,183	329,670	469,052	298,305	30,939	105,801	22,310	(151,757)	3,101,915
Inter-segment revenues	205,789	-	-	38	-	-	-	-	(205,827)	-
Total revenues	1,528,201	675,183	329,670	469,090	298,305	30,939	105,801	22,310	(357,584)	3,101,915
Segment profit (loss) before
income tax	63,435	101,480	(79,616)	64,554	64,614	140,527	844	523,838	(159,907)	719,769

 

 

	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
	(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

 

 

Operating Segments (cont'd)
	For the three month period ended June 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	662,688	353,299	250,968	224,054	153,220	16,971	33,779	10,305	(90,489)	1,614,795
Inter-segment revenues	108,102	-	-	19	-	-	-	-	(108,121)	-
Total revenues	770,790	353,299	250,968	224,073	153,220	16,971	33,779	10,305	(198,610)	1,614,795
Segment profit (loss) before
income tax	40,561	41,839	(46,754)	18,306	38,375	103,323	(14,233)	(55,918)	(108,348)	17,151

 

 

	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
	(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

 

 

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
[phone]	GK Investor & Public Relations
[e-mail]	[phone]
	[e-mail]

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SOURCE Shikun & Binui Ltd.