Shikun & Binui Reports Second Quarter and First Half Results for 2011By Shikun Binui Ltd., PRNE
Monday, August 22, 2011
AIRPORT CITY, Israel, August 23, 2011 -
- Operating Income growth of 71.5% compared with Q2 of 2010
to a total of NIS 264 million;
Operating Profitability - 19.7% compared with 13% in Q2 of 2010
- Net Income growth in the quarter by 160% compared with Q2 of 2010 to a total of NIS 171 million
Ofer Kotler, CEO of Shikun & Binui: “The Group continues to increase the volume of activity in its strategic growth engines; in the Group’s concession projects, the realization of their value is progressing. The Group is developing capabilities in the renewable energy and water segments concurrent with its intention to make significant investments in these areas.”
Shikun & Binui Ltd. (TASE: SKBN.TA) (”Shikun & Binui” or the “Company”), a member of the Arison Group and Israel’s leading infrastructure and real estate company, announced today its results for the second quarter 2011, ended June 30th, 2011.
Key events during and subsequent to the second quarter and significant results:
- The Group’s orders backlog in the construction and infrastructures segment totaled NIS 8 billion on 30.6.2011, of which NIS 6 billion ($1.8 billion) originates in the Group’s operations outside of Israel.
- Shikun & Binui SBI Infrastructures added to and strengthened its position in Africa, and won an extension to the project it had been awarded in 2006 - paving a highway in Nigeria totaling 230 million dollars. Expansion of the project, which is still not included in the orders backlog as of the quarter-end, totals 190 million dollars, bringing the total amount of this project in Nigeria to 420 million dollars. The project will be carried out during 2011 - 2013.
- The subsidiary Shikun & Binui Real Estate sold 209 housing units in the second quarter of the year (Company’s share - 162 units for a total of NIS 219 million). In the first half of 2011, Shikun & Binui Real Estate sold 447 housing units (Company’s share - 335 units for a total of NIS 472 million).
- In renewable energy: The future solar thermal power plant in Tze’elim received approval from the United Nations to register the emissions reduction mechanism (CDM). This approval constitutes recognition of the necessity of the project and its economic and environmental feasibility, and is expected to increase the projected revenues from the project. Through this project, the Group is also realizing the sustainability vision by integrating and balancing economic considerations with environmental and social considerations.
- In July, Shikun & Binui Renewable Energy received notice from the National Energy Commission in Spain of cancellation of the suspension of the special rate for electricity produced from photo-voltaic energy in the Ulmeda Project in Spain, and that the project is entitled to benefit from the special rate. As a reminder, in the financial statements for the first quarter of 2011, the Group wrote-down the carrying value of the project by NIS 16 million. The effect of cancellation of the suspension is expected to be included in the third-quarter financial statements.
- In August, Derech Eretz Highways (operator of Highway 6) waived its right of first refusal to purchase the State’s rights to certificates of participation in Derech Eretz. In view of the high price determined for the certificates of participation, the Company elected not to participate in financing the waiving of the first right of refusal, despite its ability to finance such an acquisition. Consequently, the Company’s holdings in Derech Eretz, on a fully-diluted basis, will remain at 25.5%. The joint control agreement between the Company and Israel Infrastructures Fund (which holds the balance of the holdings in Derech Eretz) will remain in effect.
- In August, the Group raised NIS 193 million in an expansion of Series 4 debentures. Midroog gave a rating of “A2″ with a stable outlook to this expansion as well (Series 4).
Revenues from work performed and sales totaled NIS 1.3 billion in the Quarter, growth of 13% compared with the second quarter of last year.
Most of the growth was driven by the real estate development in Israel segment: growth of 38.6% in revenues compared with Q2 of last year, to a total of NIS 202 million, resulting from the accelerated rate of homes that were populated (139 units in the reporting period, compared with 78 units in Q2 of 2010)
Revenues from the infrastructures and construction outside of Israel segment had 14.7% growth compared with Q2 of 2010, to a total of NIS 763 million, driven mainly by the expansion of activities overseas.
Revenues from the renewable energy segment had growth of 43.8% compared with the second quarter of last year, to a total of NIS 23 million.
Revenues from the concessions segment, which totaled NIS 82 million, were driven by work on the project to rehabilitate and maintain highways in northern Israel that commenced in the second quarter of last year.
During the quarter, the decrease in the dollar exchange rate had an offsetting effect on revenue growth, due to its impact on the revenues of the infrastructures and construction outside of Israel segment. Had the dollar exchange rate in the quarter not decreased in comparison with Q2 of 2010, an additional NIS 76 million in revenues would have been posted in this segment.
Gross profit totaled NIS 279.4 million (20.9% of revenues), an increase of 17.9% compared with the same quarter last year (20% of revenues). The growth was driven mainly by the real estate development in Israel segment (52% growth in gross profit), due to the growth in turnover and the ongoing increase in housing prices, and by the infrastructures and construction outside of Israel segment (21% growth in gross profit), due to receipt of final invoices and approval of exceptional claims from customer work orders. Had it not been for the decrease in the dollar exchange rate, compared with its rate in Q2 of 2010, gross profit of the infrastructures and construction outside of Israel segment would have been NIS 19 million higher.
The Group posted other operating income this quarter of NIS 85.5 million, of which NIS 82.2 million was driven by revaluation of the investment in the affiliate ADO, deriving from the closing of the Group’s transaction with ADO in February 2011, pursuant to which it became the largest shareholder in ADO (48%).
Operating profit totaled NIS 263.9 million (19.7% of revenues), 71.5% higher than in the second quarter of last year (13% of revenues). The growth was driven by the real estate development in Israel segment and the infrastructures and construction outside of Israel segment and by the revaluation of the investment in ADO, as discussed previously.
Net financing expenses totaled NIS 50 million, compared with NIS 47.5 million in the second quarter of last year. The similar rate of increase in the Consumer Price Index in the reporting quarter and in the second quarter last year led to similar financing expenses.
Net profit for the period totaled NIS 170.8 million, compared with NIS 65.5 million in the second quarter of last year, growth of 160%.
The Group does not revalue its investment properties and they are presented in the financial statements at historical cost.
Equity as of June 30, 2011 totaled NIS 886 million, compared with NIS 875 million on December 31, 2010. The increase in equity is due mainly to the profits of the first six months of 2011, offset by the Company’s dividend distribution to its shareholders this year.
The Company has cash and cash equivalents balances totaling NIS 768 million and an unutilized credit facility totaling NIS 911 million. During the quarter, the Group consumed cash totaling NIS 247 million, due mainly to the purchase of properties by the subsidiary Shikun & Binui Real Estate and to the project for maintaining roads in the northern Israel. In the second quarter last year, Shikun & Binui Real Estate executed mainly combination transactions and the Group recognized substantial advance payments from the activities of SBI overseas.
Total assets in the balance sheet amounted to NIS 8.6 billion.
Doron Blachar, Group CFO: Our deep involvement in concession tenders in Israel constitutes a significant growth engine. The process of creating value in concession projects and realization of their value will continue to guide us in the coming years.”
Conference call today at 16:00 IL time Telephone: +972-3-9180610
About Shikun & Binui
Shikun & Binui, a member of the Arison Group, is the leading infrastructure and real estate company in Israel. The Group’s subsidiaries have been operating since 1924. The Group’s companies have gained extensive experience in complex construction and infrastructure projects in Israel and abroad. Shikun & Binui Group has proven achievements in building, residential neighborhoods, commercial and industrial buildings, as well as large-scale transportation, infrastructure and ecological projects, water purification and desalination and development of international projects. In addition, Shikun & Binui also operates in the initiating, planning, construction and operation of projects in renewable energy. Shikun & Binui is a leading, multi-faceted and socially responsible international group that produces balance between the business, social and environmental accomplishment. The group places emphasis on honesty, transparency, innovation, and excellence. The group has accepted upon itself a leadership role in creation of a sustainable and progressive life environment.
The above noted in this release includes forward-looking statements based on Company data, as well as Company plans and estimations based on this data. The activity, results and other data may be substantially different in reality given uncertainty and various risks, including those discussed under risk factors in the Company’s financial statements and Director’s reports.
Shikun & Binui Ltd.
Condensed Consolidated Interim Statement of Financial Position as at
June 30 June 30 December 31 2011 2010 2010 (Unaudited) (Audited) NIS NIS thousands NIS thousands thousands Assets Cash and cash equivalents 768,262 1,147,289 1,357,613 Bank deposits 169,899 193,884 420,937 Short-term loans and investments 42,011 68,925 82,681 Short-term loans to investee companies 247,290 169,527 252,704 Trade receivables - accrued income 1,011,226 786,369 776,145 Inventory of buildings held for sale 1,461,966 1,210,017 1,390,397 Receivables and debit balances 332,155 218,810 291,803 Other investments, including derivatives 1,635 35,764 784 Current tax assets 74,025 84,955 61,431 Inventory 228,231 195,995 238,015 Assets classified as held for sale 4,875 26,678 13,478 Total current assets 4,341,575 4,138,213 4,885,988 Receivables in respect of concession arrangements 393,283 (*) 89,420 (*) 225,817 Non-current inventory of land (freehold) 413,061 444,887 443,956 Non-current inventory of land (leasehold) 329,343 173,573 164,672 Investment property, net 318,316 299,827 286,936 Land rights 17,193 17,023 17,163 Long-term prepaid expenses 5,281 3,287 4,798 Receivables, loans and deposits 184,874 377,270 140,721 Investments in equity-accounted investees 576,722 155,631 399,311 Loans to investee companies 775,258 744,157 862,079 Deferred tax assets 91,037 109,336 103,201 Property, plant and equipment, net 1,052,581 937,626 923,617 Intangible assets, net 96,351 (*) 93,299 (*) 95,728 Total non-current assets 4,253,300 3,445,336 3,667,999 Total assets 8,594,875 7,583,549 8,553,987
Shikun & Binui Ltd.
Condensed Consolidated Interim Statement of Financial Position as at (cont’d)
June 30 June 30 December 31 2011 2010 2010 (Unaudited) (Audited) NIS NIS thousands NIS thousands thousands
Liabilities Short-term credit from banks and others 929,721 722,719 648,790 Subcontractors and trade payables 975,203 683,804 844,063 Short-term employee benefits 43,607 32,715 38,367 Payables and credit balances including derivatives 488,156 (*) 307,678 490,570 Current tax liabilities 103,616 (*) 87,930 80,193 Provisions 228,786 380,697 238,862 Payables - customer work orders 499,881 609,845 718,588 Advances received from customers 915,839 743,129 872,999 Liabilities classified as held for sale - 6,195 - Dividend payable to non-controlling interests 41,428 - - Total current liabilities 4,226,237 3,574,712 3,932,432 Liabilities to banks and others 1,187,386 1,223,306 1,277,079 Debentures 2,046,922 1,933,157 2,196,502 Employee benefits 146,203 144,505 148,370 Deferred tax liabilities 27,700 (*) 33,032 33,682 Provisions 40,108 23,841 36,372 Excess of accumulated losses over cost of investment and deferred credit balance in investee companies 34,056 42,242 54,267 Total non-current liabilities 3,482,375 3,400,083 3,746,272 Total liabilities 7,708,612 6,974,795 7,678,704 Equity Total equity attributable to owners of the Company 782,428 447,088 736,255 Non-controlling interests 103,835 161,666 139,028 Total equity 886,263 608,754 875,283 Total liabilities and equity 8,594,875 7,583,549 8,553,987
Shikun & Binui Ltd.
Condensed Consolidated Interim Statement of Income
For the For the six-month For the three-month year period ended period ended ended December June 30 June 30 June 30 June 30 31 2011 2010 2011 2010 2010 (Unaudited) (Unaudited) (Audited) NIS NIS NIS NIS thousands thousands NIS thousands thousands thousands
Revenues from work performed and sales 2,665,611 2,270,358 1,336,255 1,182,191 4,871,077 Cost of work performed and sales 2,063,036 1,816,554 1,056,853 945,219 3,864,630 Gross profit 602,575 453,804 279,402 236,972 1,006,447 Gain on sale of investment property 9,534 7,309 305 7,309 14,816 Selling and marketing expenses (16,896) (11,924) (8,689) (6,614) (27,733) Administrative and general expenses (165,074) (144,959) (85,076) (72,733) (316,305) Other operating income 85,554 916 85,554 200 261,558 Other operating expenses (9,593) (15,531) (7,613) (11,234) (38,192) Operating profit 506,100 289,615 263,883 153,900 900,591 Financing income 121,523 154,505 50,149 73,383 216,140 Financing expenses (211,014) (214,987) (100,167) (120,905) (384,657) Net financing expenses (89,491) (60,482) (50,018) (47,522) (168,517) Share of profit (losses) of equity accounted investees (net of tax) (35,376) 8,633 (4,172) (4,787) (42,635) Profit before taxes on income 381,233 237,766 209,693 101,591 689,439 Taxes on income (88,434) (65,680) (38,890) (36,059) (144,336) Profit for the period 292,799 172,086 170,803 65,532 545,103 Attributable to: Owners of the Company 274,755 163,867 163,792 60,790 523,468 Non-controlling interests 18,044 8,219 7,011 4,742 21,635 292,799 172,086 170,803 65,532 545,103 Basic earnings per share (in NIS) 0.69 0.42 0.41 0.15 1.33 Diluted earnings per share (in NIS) 0.69 0.42 0.41 0.15 1.32 Number of shares used in the computation of basic earnings per share (in thousands) 395,730 394,545 396,882 394,545 394,545 Number of shares used in the Computation of diluted earnings per share (in thousands) 399,702 394,545 400,033 394,545 396,256
Shikun & Binui Ltd.
For the six month period ended June 30, 2011 Infrastructures and Infrastructures Real estate construction and Real estate development outside of construction development outside of Israel in Israel in Israel Israel Concessions (Unaudited) NIS thousands Total external revenues 1,439,123 519,790 499,099 2,132 145,221 Inter-segment revenues - 189,901 3,790 - - Total revenues 1,439,123 709,691 502,889 2,132 145,221 Segment profit (loss) before income tax 274,817 23,018 177,169 49,226 38,675 (Table continued) Renewable energy Water Other Adjustments Consolidated (Unaudited) NIS thousands Total external revenues 42,141 18,105 - - 2,665,611 Inter-segment revenues - - - (193,691) - Total revenues 42,141 18,105 - (193,691) 2,665,611 Segment profit (loss) before income tax (29,786) (7,632) (5,769) (138,485) 381,233
For the six month period ended June 30, 2011 Infrastructures and Infrastructures Real estate construction and Real estate development outside of construction development outside of Israel in Israel in Israel Israel Concessions (Unaudited) NIS thousands Total external revenues 1,282,307 615,348 305,346 3,402 - Inter-segment revenues - 56,157 4,244 - - Total revenues 1,282,307 671,505 309,590 3,402 - Segment profit (loss) before income tax 234,388 9,457 94,343 (24,267) (*)39,406 (Table continued) Renewable energy Water Other Adjustments Consolidated (Unaudited) NIS thousands Total external revenues 37,061 26,894 - - 2,270,358 Inter-segment revenues - - - (60,401) - Total revenues 37,061 26,894 - (60,401) 2,270,358 Segment profit (loss) before income tax (18,355) (8,622) (*)(2,523)(*)(86,061) 237,766
Operating Segments (cont’d)
For the three month period ended June 30, 2011 Infrastructures and Infrastructures Real estate construction and Real estate development outside of construction development outside of Israel in Israel in Israel Israel Concessions (Unaudited) NIS thousands Total external revenues 762,811 257,666 200,365 708 82,353 Inter-segment revenues - 104,546 1,738 - - Total revenues 762,811 362,212 202,103 708 82,353 Segment profit (loss) before income tax 139,209 9,811 70,904 52,206 29,018 (Table Continued) Renewable energy Water Other Adjustments Consolidated (Unaudited) NIS thousands Total external revenues 23,144 9,208 - - 1,336,255 Inter-segment revenues - - - (106,284) - Total revenues 23,144 9,208 - (106,284) 1,336,255 Segment profit (loss) before income tax (5,581) (5,983) (4,171) (75,720) 209,693
For the three month period ended June 30, 2011 Infrastructures and Infrastructures Real estate construction and Real estate development outside of construction development outside of Israel in Israel in Israel Israel Concessions (Unaudited) NIS thousands Total external revenues 665,611 339,724 144,082 2,043 - Inter-segment revenues - 25,510 2,003 - - Total revenues 665,611 365,234 146,085 2,043 - Segment profit (loss) before income tax 120,220 8,612 52,555 (15,921) (*)18,745 (Table Continued) Renewable energy Water Other Adjustments Consolidated (Unaudited) NIS thousands Total external revenues 15,884 14,847 - - 1,182,191 Inter-segment revenues - - - (27,513) - Total revenues 15,884 14,847 - (27,513) 1,182,191 Segment profit (loss) before income tax (6,214) (6,537) (*)(2,426) (*)(67,443) 101,591
Doron Blachar, CFO
Shikun & Binui
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