Shikun & Binui Announces Financial Results For the First Quarter of 2017

AIRPORT CITY, Israel, May 29, 2017 /PRNewswire/ --

First Quarter 2017 Summary

• Strong revenues: NIS 1.8 billion compared to NIS 1.1 billion in Q1 2016;
• Completion of the sale of 40% of the company's share rights in the North Roads project for pre-tax profit of NIS 64 million
• Won 2 new concession projects in Israel: Government campus in Nazareth & court building in Hadera;
• Significant progress in renewable energy: won IEC tender for 65MW PV projects; tariff guarantees & building permit received for Tze'elim project*;
• Continued international construction activities: Besides work on mega-projects in the US & Colombia, projects won in 2 new African markets: Tanzania & Mozambique;
• High level of apartment sales: 461 units sold, including 291 in Europe;
• Board of Directors announced NIS 18 million dividend

* April, 2017

Shikun & Binui Ltd. (TASE: SKBN), a global construction and infrastructure company headquartered in Israel, today reported its financial results for the first quarter ended March 31, 2017.

Business Highlights

During and after the reporting period:

• Agreement signed to sell holdings in the Concessionaire of the North Roads project:
• In February 2017, the Company signed an agreement for the sale of 40% of its holdings in the North Roads Concessionaire. If the sale is executed, the Company expects its net profit to total ~NIS 55 million.
  
• Significant progress in renewable energy activities:
• Won the Israel Electricity Authority's tender for a 65MW PV projects.
• Tze'elim 120MW PV Project: In April 2017, the Company received tariff guarantees and a building permit for the Tze'elim 120MW PV Project.  The financial closing process is underway.
• Won 2 new Concession projects in Israel that will be executed by Solel Bonei:
• Regional government campus in Nazareth: total project value - ~NIS 400 million
• Court in Hadera: total project value - ~NIS 150 million
• Nigeria – significant work completed during the quarter:
• Work completed during Q1: ~USD 60 million (NIS 230 million)
• Q1 collections: ~USD 54 million (NIS 200 million)
• Local currency: the Nigerian currency markets continue to be volatile. Should an additional
  devaluation in the Nigerian Naira materialize, it is likely to have a material negative effect on the Company's results.
• SBI: won roads projects in Tanzania & Mozambique, new activity areas for the Company:
• Tanzania: - total value of ~USD 50 million (SBI has worked in Tanzania in the past)
•  Mozambique: - total value of ~USD 10 million
• Financing activities and processes:
• Offering of debentures: in January 2017, the Company expanded its long-term Series 8 CPI-linked bonds, raising ~NIS 345 million.
• Credit rating: in March 2017, S&P Ma'alot approved the Company's credit rating A and raised the credit rating outlook to Positive.
• Residential Real Estate:
• Q1 apartment sales were strong, with 460 apartments sold during the quarter (including 290 in Europe).

The following is additional information regarding apartment sales (signed contracts) during the first quarter:   

     Apartment sales (signed contracts) in Q1 2017:

Note: recognition of revenues from apartment sales occurs at the time of delivery to the customer, not at the time of sale

Apartments delivered in Q1 2017:

Additional Financial Data

International Contracting & Infrastructure

The Company recorded a ~NIS 18 million loss due to advances paid and currency fluctuations in the naira/dollar exchange rate in Nigeria (reflecting a devaluation of ~0.5%)

Israel Contracting & Infrastructure

Israel Real Estate Development

International Real Estate Development

Renewable Energy

Concessions

Balance Sheet Highlights:

Cash and Cash Equivalents: totaled ~NIS 1,985 as of March 31, 2017, a decline of ~NIS 1,008 million compared with December 31, 2016. The decrease was primarily due to advances received from the Ashalim Project, countered by the use of cash for advancing the projects in Nigeria and Ghana, as well as the transfer of cash into short-term deposits and financial assets.

Assets Held for Sale: declined by ~NIS 509 million compared with the end of 2016. For the reporting period, this item included an investment property in Hadera valued at ~NIS 9 million, while for the report ended December 31, 2016, this item also included the assets of a consolidated company (the Company's share of which were sold in 2017), together with a company consolidated within the Renewable Energy segment (sold in March 2017).

Accounts Receivable: totaled ~NIS 2,521 million, up ~NIS 460 million compared with the end of 2016, including a ~NIS 362 increase from international activities. Because the Company has renewed its work on projects in Nigeria, accounts receivable from Nigeria increased to ~NIS 268 million as of the end of Q1 2017. After the end of the quarter, the International Building and Infrastructure segment collected ~USD 74 million. An additional ~NIS 98 million increase in Accounts Receivable, was derived from operations within Israel.

Building Inventory Held for Sale: increased by ~NIS 261 million compared with the end of 2016, primarily due to activities in Israel, together with an additional ~NIS 67 million rise in international activities. The rise in Israel primarily reflected the Company's investment in projects in Pardes Hanna, Hod Hasharon, the Tzukei Hashmura project in Netanya, Yokneam, Ashkelon and Rosh Ha'ayin, as well as from properties categorized as building inventory held for sale and an increase in combination deals. This was balanced by the delivery of apartments in Yokneam, Hod Hasharon, Tirat Hacarmel and Netanya. The increase in the international building inventory held for sale was primarily due from the management of properties totaling ~NIS 47 million (primarily in Poland) and from a ~NIS 26 million investment in those projects.

Land Inventory: declined by ~NIS 206 million compared with its level at the end of 2016, due primarily to the reclassification of lands totaling NIS 164 million in Rishon Letzion and Givat Shmuel as Building Inventory (due to the initiation of construction).

Obligations Related to Concessions Agreements: increased by ~NIS 60 million compared with its level at the end of 2016, due primarily a ~NIS 63 million investment in the BOT Jerusalem Government Office Buildings project.

Debts, Loans and Deposits: increased by ~NIS 158 million compared with its level at the end of 2016, due primarily a ~NIS 170 million investment for the Tze'elim project.

Investments and Loans to Subsidiaries: increased by ~NIS 127 million compared with the end of 2016, including ~NIS 52 million for changes in loans made to subsidiary companies (principal and interest) and ~NIS 24 million due to the recording of part of the Company's results in the net profits of those companies. An additional increase of ~NIS 86 million was due to the recording of an investment in the Concessionaire of the North Roads upgrade and maintenance project, as a result of the Company's sale of 40% of its holdings in the Concessionaire (and the recording of the remaining holdings according to the equity method). This was balanced by a ~NIS 41 million decrease associated with the recording of part of the Company in funds for cash flow bridging transactions and translation funds.

Fixed Assets: a decrease of ~NIS 55 million compared with their value at the end of 2016.

Short Term Credit from Banks and Other Institutions: up NIS 43 million compared with the end of 2016, due primarily to a rise in current maturities of long-term dated bonds (totaling ~NIS 50 million).

Advances Received on Contract Work: down ~NIS 183 million compared with the end of 2016. In Israel, advances declined by ~NIS 318 million, due primarily to the deployment of advances paid on the Ashalim project. This was countered by a ~NIS 135 million increase in advances paid on international projects, primarily in Nigeria.

Advances Received from Apartment Sales, net: up ~NIS 67 million compared with the end of 2016 (including NIS 58 million from Israel), after exclusion of ~NIS 266 million in advances from apartment sales in Israel that had been credited to the income statement.

Long-term Debt: up ~NIS 266 million compared with the end of 2016. The Company's outstanding bonds and bank debt totaled ~NIS 5,858 as of March 31, 2017, compared with NIS 5,577 million at the end of 2016, an increase of ~NIS 281 million. The change derived primarily from the expansion of the Series 8 Debentures, raising ~NIS 345 million, and from the taking of a new ~NIS 148 million long-term loan. This was balanced by the retirement of ~NIS 53 million in long term loans and bond repayments of ~NIS 118 million. In addition, a decrease of ~NIS 50 million was recorded due to a rise in current maturities of long-term debt and a ~NIS 21 million decline as a result of currency translation adjustments. The total of Other Debt, Employee Benefits, Delayed Taxes, Provisions and Accumulated Losses of Subsidiaries totaled ~NIS 302 million.

Shareholders' Equity: the Company's Shareholders' Equity as of March 31, 2017 totaled ~NIS 1,868 million compared with ~NIS 2,071 million as at December 31, 2016. The ~NIS 203 million decline was primarily due to the translation of the financial reports of the Company's international subsidiaries (~NIS 183 million), which are denominated primarily in US Dollars and Euros; from a ~NIS 74 million dividend payment; and from cash flow bridging transactions totaling ~NIS 16 million. This decline was countered partially by the Company's first quarter net profit of ~NIS 68 million.

Operating Cash Flow: the Company's cash flow generated by operating activities during the first quarter of 2017 totaled ~NIS 698 million compared with ~NIS 364 million in the first quarter of 2016. The increase derived primarily from the increase in Accounts Receivable net of advances received by the Israel Building and Infrastructure segments totaling ~NIS 270 million, mainly for the Ashalim project, the Tel Aviv Light Rail project, and a number of roads and building projects, together with ~NIS 129 million from the International Building and Infrastructure segment, representing primarily funds owed at the end of the quarter by projects in Nigeria, most of have now been paid. This was countered by the recording of a ~NIS 6 million investment in land inventory during the quarter, compared with ~NIS 163 million in land inventory investments during the first quarter of 2016.

About the Shikun & Binui Group

The Shikun & Binui Group is a global construction and infrastructure company that operates in Israel and internationally in six 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.

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.