Shikun & Binui Announces Second Quarter and First Half 2017 Results

AIRPORT CITY, Israel, Aug. 30, 2017 /PRNewswire/ -- Shikun & Binui Ltd. (TASE: SKBN), a global construction and infrastructure company headquartered in Israel, today reported its financial results for the second quarter and first half ended June 30, 2017.

Main Highlights

• H1 2017 revenues: ~NIS 3.5 billion compared with ~NIS 2.2 billion in H1 2016
• New Concessions Projects in Israel: Government campus in Nazareth, courthouse in Hadera & a project for Israel's Ministry of Defense & won IEC's tender for a 64MW photo-voltaic (PV) project
• Progress in the ongoing activities in Renewable Energy: received license for building the Etgal Power Station in Ashdod
• Continued International Construction Activities: Work continued on mega-projects in the US & Colombia; The Company won projects in 2 new African markets - Tanzania & Mozambique;
• Apartment sales amounted to 824 units during H1, out of which 522 were in Europe 
• Yaron Karisi, the Company's CEO announced on July his intention to leave the Company;

 Business highlights during and after the reporting period:

• Agreement to sell holdings in the Concessionaire of the North Roads project:
  In February 2017, the Company sold 40% of its holdings in the Concessionaire of the North Roads project, recording ~NIS 64 million in pre-tax net profit.
• Progress with Renewable Energy activities:
• Received a license to build the 64MW Etgal Natural Gas Power Plant.
• Won the Israel Electric Company's tender for a 64MW PV project.
• Won new Concessions projects in Israel (to be executed by Solel Bonei):
• Regional government campus in Nazareth: total project value ~NIS 400 million.
• Courthouse in Hadera: total project value ~NIS 150 million.
• SBI:
• Nigeria
  - Work completed during H1: ~USD 105 million (NIS 370 million).
  - USD 61 million (NIS 215 million) were collected during H1; and additional ~USD 40 million thereafter (NIS 140 million).
  - Local currency: the Nigerian currency is not stable. Any additional devaluations, should they occur, could likely have a material negative effect on the Company's results.
• Won roads projects totaling USD 60 million in Tanzania & Mozambique, both representing new areas of activity for the Company.
• Financing activities and processes:
  Offering of debentures: in January 2017, the Company expanded its Series 8 CPI-linked bonds, raising additional ~NIS 345 million.
  Credit rating: in March 2017, Ma'alot raised the Company's credit rating to A with a positive outlook.
• Residential Real Estate:
  During H1, the Company sold 824 apartments, including 522 in Europe.

Below includes additional information regarding apartment sales (signed contracts) during the first half of 2017:

   Apartment Sales (signed contracts) in H1 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 H1 2017:

Additional Financial Data:

International Contracting & Infrastructure

Israel Contracting & Infrastructure

Israel Real Estate Development

International Real Estate Development

Renewable Energy

Concessions

Balance Sheet Highlights:

Cash and Cash Equivalents: totaled ~NIS 1,694 as of June 30, 2017, a ~NIS 1,299 million decline compared with their level at December 31, 2016. The decrease was primarily due to the progress in the execution of the Ashalim Project, the use of cash in projects being carried out in Nigeria, Ghana and Colombia, as well as the transfer of ~USD 117 million to short-term deposits and to financial assets.

Assets Held for Sale: declined by ~NIS 410 million compared with the end of 2016. As of the reporting date, this item included an investment in Carmelton, a portion of the investment in the North Roads project, a portion of the loans granted to these projects, and investment property in Hadera valued at ~NIS 9 million. For the report period ended December 31, 2016, this item also included the assets of a consolidated company (the Company's share of which were sold in 2017), and a company consolidated within the Renewable Energy segment (sold in March 2017).

Accounts Receivable: totaled ~NIS 2,636 million, up ~NIS 575 million compared with the end of 2016, including a ~NIS 266 increase from international activities. Because the Company has renewed its work on projects in Nigeria, accounts receivable owed to the Company by the Nigerian Government increased to ~NIS 86 million as of June 30, 2017. After the end of the period, the International Building and Infrastructure segment collected ~USD 81 million, including ~USD 40 million from Nigeria. Accounts Receivable increased by an additional ~NIS 309 million due to operations within Israel, representing primarily work performed on the Tel Aviv Light Rail project and several Design/Build and PPP projects being carried out for the Israel Government whose payments are tied to the completion of milestones, with payments due when the projects reach a relatively advanced stage of execution.

Building Inventory Held for Sale: increased by ~NIS 85 million compared with the end of 2016, with NIS 38 million attributable to activities in Israel and ~NIS 47 to international activities. The rise in Israel 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 countered by the delivery of apartments in projects in Yokneam, Hod Hasharon, Tirat Hacarmel and Netanya. The increase in the inventory of international buildings held for sale was primarily due to the activation of land totaling ~NIS 47 million (primarily in Poland) and from a ~NIS 50 million investment in those projects, countered by the delivery of apartments in Poland valued at ~NIS 68 million.

Land Inventory: declined by ~NIS 161 million compared with its level at the end of 2016, due primarily to the NIS 183 million reclassification of lands in Rishon Letzion and Givat Shmuel as Building Inventory (due to the initiation of construction). Inventories of land for international projects reflected a ~NIS 51 million increase due to the consolidation, for the first time, of projects in the Czech Republic and a ~NIS 6 million increase related to currency translations, countered partially by a ~NIS 42 million reclassification of land held for building due to the beginning of the construction phase of a project in Poland.

Obligations Related to Concessions Agreements: increased by ~NIS 84 million compared with their level at the end of 2016, reflecting primarily a ~NIS 92 million investment in the BOT Generi 2 office building project in Jerusalem excluding ~NIS 8 million depreciation related to the redemption of financial assets related to the Tel Aviv Student Dormitories project and energy projects.

Debts, Loans and Deposits: increased by ~NIS 136 million compared with their level at the end of 2016, due primarily a ~NIS 150 million investment in the Tze'elim project.

Investments and Loans to Subsidiaries: decreased by ~NIS 13 million compared with the end of 2016, including ~NIS 51 million for changes in loans made to subsidiary companies (principal and interest) and a ~NIS 17 million increase due to the recording of part of the Company's results in the net profits of those companies. A ~NIS 7 million rise derived from the Pumped Storage project, and an additional ~NIS 11 million increase derived from the consolidation of a residential real estate development company in Prague. In addition, a ~NIS 79 million increase was recorded for 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 countered by a ~NIS 20 million decrease related to the sale of the Company's shares in ADO (within the framework of the public sale tender that was carried out during the reporting period); a ~NIS 34 million decline related to the realization of profits from the Building Contractor of the project in Texas; a ~NIS 95 million decrease associated with reclassifications to assets held for sale (in light of the Company's intention to sell to potential investors part of its holdings in projects such as the Carmel Tunnels, the North Roads project and other projects); and an additional ~NIS 28 million decrease due to the recording of the Company's share in funds for hedging cash flow transactions and translation funds.

Fixed Assets: down ~NIS 115 million compared with their value at the end of 2016.

Short Term Credit from Banks and Other Institutions: up NIS 170 million compared with the end of 2016, due primarily to a rise in current maturities of long-term loans (totaling ~NIS 229 million).  This was countered by the repayment of short-term bank loans totaling ~NIS 57 million and ~NIS 2 million related to the currency translations.

Advances Received on Contract Work: down ~NIS 40 million compared with the end of 2016, In Israel, advances received declined by ~NIS 120 million due primarily to the drawdown of advances paid on the Ashalim project. This was countered by an ~NIS 80 million increase in advances paid on international projects, primarily in Nigeria.

Advances Received from Apartment Sales, net: down ~NIS 68 million compared with the end of 2016 (including NIS 44 million from Israel), after exclusion of ~NIS 672 million in advances from apartment sales in Israel that had been credited to the income statement.

Long-term Debt: up ~NIS 18 million compared with the end of 2016. The Company's outstanding bonds and bank debt totaled ~NIS 5,633 as of June 30, 2017, compared with NIS 5,577 million at the end of 2016, an increase of ~NIS 56 million. The change derived primarily from the expansion of the Series 8 Debentures, raising ~NIS 345 million, and from the taking of new long-term loans totaling ~NIS 275 million. This was countered by the retirement of ~NIS 109 million in long term loans and bond repayments of ~NIS 259 million. In addition, a decline of ~NIS 229 million was recorded due to a rise in current maturities of long-term debt and a ~NIS 17 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 280 million.

Shareholders' Equity: the Company's Shareholders' Equity as of June 30, 2017 totaled ~NIS 1,763 million compared with ~NIS 2,071 million as at December 31, 2016. The ~NIS 308 million decrease derived primarily from the translation of the financial reports of the Company's international subsidiaries (~NIS 273 million), which are denominated primarily in US Dollars and Euros; from a ~NIS 91 million dividend payment; and from cash flow bridging transactions totaling ~NIS 27 million. This decline was countered partially by the Company's H1 net profit of ~NIS 79 million.

Operating Cash Flow: the cash flow used by the Company for ongoing activities during the first half of 2017 totaled ~NIS 616 million compared with ~NIS 312 million for H1 2016, representing a ~NIS 304 million increase in negative cash flow. The increase derived primarily from the increase in Accounts Receivable net of account payables – customers of the Israel Construction and Infrastructure division totaling ~NIS 200 million, which was primarily due to the Ashalim project, the Tel Aviv Light Rail project and a number of roads and building projects, together with a ~NIS 445 million increase from the International Building and Infrastructure segment, representing primarily funds owed at the end of the quarter by projects in Nigeria, most of which were paid after the report date. This was countered by the recording of an ~NIS 11 million investment in land inventory during the period, compared with ~NIS 367 million in land inventory investments during the first half of 2016.

Work Backlog:

• The backlog as of June 30, 2017 does not includes additional construction projects totaling ~NIS 1.9 billion that the Company's Concessions, Renewable Energy, Real Estate and Infrastructure segments have won up to or after the report date in Israel and abroad.
• The backlog as of June 30, 2017, does not include the revenues expected to be received from Energy or Concessions projects.

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.