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Shikun & Binui Announces Third Quarter and Nine Month 2009 Results

 

RAMAT GAN, Israel, November 23 /PRNewswire-FirstCall/ --

- Operating Income Increases 14.2% to NIS 119 Million; Operating Margin Reaches 11.7%, up From 8.6% Last Year; Gross Margin Reaches 18.6%, up From 16.9% Last Year; Operating Cash Flow Substantially Increased to NIS 135 Million

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 three and nine month periods ended September 30, 2009.

As of January 1, 2009 the Company started recording its results based on the following business segments: Infrastructure and construction outside of Israel, Infrastructure and construction in Israel, Real Estate Development in Israel, Real Estate Development outside of Israel, Concessions, Environment and Others.

"The Company is currently well positioned to continue to tender for, and win, mega projects in both Israel and overseas. Our substantial experience and broad capabilities are key in enabling us to continue to implement our strategy in all our business sectors." commented Mr. Ofer Kotler, Chief Executive Officer of Shikun & Binui.

    Main Events of the Third Quarter and Subsequent to it:

    - The Group, through its wholly owned subsidiary SBI Infrastructure,
    signed a $230 million contract in Guatemala for the planning,
    paving and maintenance of the new 300 km northern highway - Franja
    Traversal Del Norte - one of the key access ways connecting the countries
    in Central America. The planning and paving stage will take 3.5 years and
    subsequently the company will maintain the road for the following 10
    years. The project is being financed by means of loans from the
    Guatemalan government as well as a Central American bank;

    - The Group, through a consolidated company, gained the highest rating in
    a tender issued by Israel's National Highway Company (Maatz) for the
    rehabilitation, operation and maintenance of roads throughout the
    northern part of Israel under the PFI method, for the next 20 years.
    Total expected future considerations are estimated at NIS 1.3 billion.
    The company signed an agreement with Maatz on September 14, 2009
    finalizing the terms of the win.;

    - The Company opened section 18 of the Cross Israel Highway,
    eight months ahead of schedule;

    - Shikun & Binui Real Estate sold 285 apartments throughout the country
    in the third quarter, and 721 apartments during the first nine months;

    - The Company raised NIS 200 million through a new series of
    fixed interest bearing debentures

Third Quarter 2009 Results

Revenues for the third quarter of 2009 totaled NIS 1.0 billion, compared to NIS 1.2 billion in the third quarter last year. Revenues from the Infrastructure and construction outside of Israel segment increased 10.5% reaching NIS 492 million resulting from expansion of activities.

Revenues from the Real Estate Development in Israel segment, which, under IFRS standards, are generated primarily on the handover of apartments, decreased to NIS 146 million, from the NIS 351 million in the comparable period, following a higher than average number of apartment handovers in Kiryat Ono and Ir Yamim, Netanya in the third quarter last year.

Gross profit for the third quarter totaled NIS 190 million, compared to NIS 205 million in the third quarter last year. Gross profit as a percent of revenues rose to 18.6%, from 16.9% gross margin in the comparable period last year. The higher gross margin is primarily attributed to the change in project mix, as well as the finalization of payment following completion of certain projects, including the receipt of early completion bonuses on projects completed ahead of schedule.

Sales and marketing expenses, for the third quarter, totaled NIS 64 million (6.3% of revenues), an 8.6% increase compared to the comparable period last year (4.9% of revenues) resulting from an increase in expenses associated with tenders the Group is currently bidding for in both Israel and overseas.

Operating income for the third quarter of 2009 totaled NIS 119 million (11.7% of revenues), an increase of 14.2% compared to the third quarter last year (8.6% of revenues).

Finance expenses, net, for the third quarter decreased to NIS 97 million, compared to NIS 119 million in the third quarter last year. The majority of the decrease resulted from a slight increase in the Israeli Consumer Price Index (CPI), compared to the third quarter last year, which reduced long term debenture expenses, partially offset by currency losses resulting from the impact of currency fluctuations on foreign activities.

Company's share in the equity gains\losses of affiliated companies, recorded under the equity method, totaled a loss of NIS 23.6 million attributed to the impact of the valuation of the Israeli Governments option on Derech Eretz Highway's results. In the comparable period the Company recorded a NIS 7 million equity gain.

During the third quarter the Company recorded a net loss to the amount of NIS 29 million, compared to a NIS 33 million loss in the comparable period last year.

Cash flow generated from operating activities during the third quarter of 2009 increased substantially from the third quarter last year, reaching NIS 135 million.

First Nine Months 2009 Results

Revenues for the first nine months of 2009 totaled NIS 3.36 billion, compared to NIS 3.32 billion in the nine months last year. Revenues from the Infrastructure and construction outside of Israel segment increased 13.9% over last year reaching NIS 1.7 billion.

Gross profit totaled NIS 673 million, a 27% increase compared to the first nine months last year. Gross profit, as a percent of revenues, rose to 20%, an increase from the 16% gross margin in the comparable period last year.

Sales and marketing expenses for the first nine months of 2009 represented 5.6% of revenues totaling NIS 188 million, similar as the comparable period last year.

Operating income for the first nine months rose 38.2% reaching NIS 474 million. Operating income as a percent of revenues rose to 14.1%, an increase from the 10.3% operating margin in the first nine months last year.

Finance expenses, net, for the first nine months totaled NIS 224 million, compared to NIS 235 million in the comparable period last year. The decline primarily follows the finance expenses incurred by the overseas companies, resulting from losses incurred on currency fluctuations in the operating countries. The Company is compensated by the contractors on these losses. The finance expenses attributed to Israel declined by NIS 30 million following a slight increase, compared to the comparable period, in the Israeli CPI Index.

Company's share in the equity gains\losses of affiliated companies, recorded under the equity method, totaled a loss of NIS 47 million primarily attributed to the impact of the valuation of the Israeli Governments option on Derech Eretz Highway's results. In the comparable period last year the Company recorded a NIS 42 million equity gain, NIS 24 million of which relates to the impact the governments options bore of Derech Eretz' results. This section also includes gains resulting from the construction partnerships profits on section 18 of the Cross Israel Highway as well as losses relating to jointly controlled companies held overseas as well as companies held in the concession area.

Net income for the first nine months of 2009 totaled NIS 99 million, a 25% increase from the NIS 79 million in comparable period last year.

Cash flow generated from operating activities during the first nine months of 2009 totaled NIS 285 million, and served to finance NIS 173 million of investment activities. During the first nine months 2008 the Company generated NIS 75 million in cash from operating activities.

The group does not re-evaluate its real estate assets and records them based on their historic cost in the balance sheet.

Shareholders' equity as at September 30, 2009, totaled NIS 215 million, compared to NIS 192 million at the end of 2008. The increase primarily resulted from the first nine month 2009 net income (NIS 99 million), from translation differences resulting from the conversion of the foreign subsidiaries financial statements (NIS 10 million) primarily prepared in US dollars and Euro, offset by the dividend payment made in September 2009.

Credit. During the first nine months the Company repaid NIS 463 million of credit and paid out interest to the amount of NIS 137 million. During the period the Company received NIS 326 million of credit as well as raised NIS 197 million in credit through the issue of debentures bearing fixed shekel interest.

Working capital totaled NIS 363 million at the end of the period, compared to NIS 380 million at the end of 2008. As of September 30, 2009 the Company had cash, cash equivalents and deposits totaling NIS 1.3 billion. Furthermore, the Company has unutilized credit facilities in the amount of NIS 363 million.

Total assets, as at September 30, 2009, totaled NIS 7.5 billion.

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. 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


    In Thousand NIS              September 30      September 30  December 31
                                     2009              2008         2008
                                          (Unaudited)             (Audited)
    Assets
    Cash and cash equivalents       1,317,905           929,811    1,348,846
    Bank deposits                     238,412            32,007       44,001
    Short-term loans and investments   62,184            25,911       34,974
    Short-term loans to investee
    companies                         328,929            242875      318,598
    Trade receivables - accrued
    income                            957,265           920,125      822,029
    Receivables and debit balances    161,368           229,052      200,954
    Other investments, including
    derivatives                           732            18,262           11
    Current tax assets                 51,139            80,471       90,631
    Inventory                         197,171           195,173      192,364
    Inventory of buildings held for
    sale                              993,642         1,012,674      926,311
    Assets classified as held for
    sale                                6,248                 0            -
    Total current assets            4,314,995         3,686,361    3,978,719

    Non-current inventory of land
    (freehold)                        495,614           496,014      497,466
    Non-current inventory of land
    (leasehold)                       208,378           199,384      197,506
    Investment property, net          298,498           302,474      300,071
    Land rights                        16,508            17,424       16,478
    Long-term prepaid expenses         43,566            44,104       45,118
    Receivables, loans and deposits   299,890           467,739      513,694
    Investments in equity-accounted
    investees                         137,795           156,858      151,746
    Loans to investee companies       615,210           552,074      561,368
    Deferred tax assets               124,339           118,347      119,115
    Receivables - financial asset      47,588                 0        6,861
    Property, plant and equipment,
    net                               808,041           708,084      769,896
    Intangible assets, net             98,300            77,225       90,794
    Total non-current assets        3,193,727         3,139,727    3,270,113

    Total assets                    7,508,722         6,826,088    7,248,832


    Shikun & Binui Ltd.
    Condensed Consolidated Interim Statement of Financial Position as at
(cont.)

    In Thousand NIS                 September 30      September 30    Dec-31
                                        2009              2008         2008
                                             (Unaudited)            (Audited)
    Liabilities
    Short-term credit from banks
    and others                         1,123,180         1,318,845  1,116,352
    Subcontractors and trade
    payables                             630,331           617,673    608,611
    Short-term employee benefits          30,313            24,406     45,390
    Payables and credit balances
    including derivatives                294,800           271,054    260,436
    Current tax liabilities               99,405            58,530     72,732
    Provisions                           291,908           310,571    315,129
    Payables - customer work orders      673,969           543,274    727,490
    Advances received from
    customers                            534,808           568,995    453,295
    Held-to-sale commitments                   -                 0          -
    Total current liabilities          3,678,714         3,713,348  3,599,435

    Liabilities to banks and others    1,327,269           740,682  1,385,385
    Debentures                         2,074,142         2,045,283  1,852,308
    Employee benefits                    129,832           155,454    139,323
    Deferred tax liabilities              19,276            17,404     16,906
    Provisions                            25,698            25,413     26,625
    Excess of accumulated losses
    over cost of investment and
    deferred credit balance in
    affiliated companies                  39,246            35,849     36,653
    Total non-current liabilities      3,615,463         3,020,085  3,457,200

    Total liabilities                  7,294,177         6,733,433  7,056,635

    Equity
    Total equity attributable to
    equity holders of the Company        210,400            83,061    183,252
    Minority interest                      4,145             9,594      8,945
    Total equity                         214,545            92,655    192,197
    Total equity and liabilities       7,508,722         6,826,088  7,248,832


    Shikun & Binui Ltd.
    Condensed Consolidated Interim Statements of Income

                                  For the nine months   For the three months
    In thousands NIS               ended September 30    ended September 30
                                   2009        2008       2009       2008
                                   (Unaudited)                 (Unaudited)
    Revenues from work
    performed and sales       3,359,861   3,321,084   1,021,355  1,212,268
    Cost of work performed and
    sales                     2,686,670   2,791,276     831,052  1,006,752
    Gross profit                673,191     529,808     190,303    205,516
    Gain on sale of investment
    property                      7,810      22,168        -297      7,994
    Selling and marketing
    expenses                    -17,767     -17,903      -6,198     -6,041
    Administrative and general
    expenses                   -188,362    -182,256     -64,430    -59,328
    Other operating income        3,956      64,198       1,333     13,019
    Other operating expenses     -4,980     -73,239      -1,400    -56,705(*)
    Operating income            473,848     342,776     119,311    104,455
    Financing income            109,686     117,203(*)   47,098     24,138(*)
    Financing expenses         -333,224    -352,057(*) -143,819   -142,815(*)
    Net financing expenses     -223,538    -234,854     -96,721   -118,677
    Company's share in income
    of equity accounted
    investees                   -46,606      42,120      -23,592     6,995
    Income before taxes on
    income                      203,704     150,042       -1,002    -7,227
    Taxes on income            -104,855     -71,516      -28,305   -26,337
    Net income for the period    98,849      78,526      -29,307   -33,564
    Attributable to:
    Equity holders of the
    Company                     101,852      78,770      -28,029   -34,200
    Minority interest            -3,003        -244       -1,278       636
                                 98,849      78,526      -29,307   -33,564

    Basic and diluted earnings
    per share (in NIS)             0.26         0.2        -0.07     -0.09
    Number of shares used in the
    computation of earnings
    per share (in thousands)    394,545     394,545      394,545   394,545

    * Reclassified



    (continued...)

                                                     for the twelve months
    In thousands NIS                                     ended December 31
                                                                      2008
                                                                 (Audited)
    Revenues from work performed and sales                       4,446,828
    Cost of work performed and sales                             3,778,464
    Gross profit                                                   668,364
    Gain on sale of investment property                             20,895
    Selling and marketing expenses                                 -23,598
    Administrative and general expenses                           -253,765
    Other operating income                                          72,114
    Other operating expenses                                       -85,211
    Operating income                                               398,799
    Financing income                                               156,074
    Financing expenses                                            -405,306
    Net financing expenses                                        -249,232
    Company's share in income of equity
    accounted investees                                             20,677
    Income before taxes on income                                  170,244
    Taxes on income                                                -80,554
    Net income for the period                                       89,690
    Attributable to:
    Equity holders of the Company                                   91,762
    Minority interest                                               -2,072
                                                                    89,690

    Basic and diluted earnings per share (in NIS)                     0.23
    Number of shares used in the computation
    of earnings per share (in thousands)                           394,545

    * Reclassified



    Shikun & Binui Ltd.

    Business Operating Segments

    In thousands NIS        nine month period ended September 30, 2009


                     Infrastructure Infrastructure Real Estate  Real Estate
                      and Building,  and Building,  Development, Development,
                           Oversees         Israel        Israel     Oversees
                                                     (Unaudited)
    Revenues from
    external              1,700,402      1,003,207       565,329        4,304
    Revenues between
    sectors                       0         85,434         6,287            0
    Total revenues        1,700,402      1,088,641       571,616        4,304
    Net sector
    income (loss)
    before tax              278,253         26,569       124,042      -35,184


    In thousands NIS        nine month period ended September 30, 2009
    (continued...)

                      Concessions  Environment  Others   Adjust. Consolidated
                      (Unaudited)
    Revenues from
    external                    0       86,784    -165        0     3,359,861
    Revenues between
    sectors                     0            0       0  -91,721             0
    Total revenues              0       86,784    -165  -91,721     3,359,861
    Net sector
    income (loss)
    before tax            -39,300       -3,202  -7,802 -139,672       203,704


                              nine month period ended September 30, 2008

                     Infrastructure Infrastructure   Real Estate  Real Estate
                    and Building,     and Building, Development, Development,
                        Oversees            Israel       Israel     Oversees
                                                     (Unaudited)
    Revenues from
    external              1,492,960      1,025,245       586,526       13,760
    Revenues between
    sectors                       0         82,063         5,906            0
    Total revenues        1,492,960      1,107,308       592,432       13,760
    Net sector
    income (loss)
    before tax              262,097         18,623        91,865      -33,027


                             nine month period ended September 30, 2008

                 Concessions    Environment   Others    Adjust.  Consolidated
                 (Unaudited)
    Revenues from
    external               0         99,157   103,436        0      3,321,084
    Revenues between
    sectors                0              0     1,800  -89,769              0
    Total revenues         0         99,157   105,236  -89,769      3,321,084
    Net sector
    income (loss)
    before tax        14,608         -1,316  39,033   -163,775        150,042


    Shikun & Binui Ltd.

                           three month period ended September 30, 2009

                     Infrastructure Infrastructure Real Estate  Real Estate
                      and Building,  and Building, Development, Development,
                          Oversees         Israel        Israel     Oversees
                                                                 (Unaudited)
    Revenues from
    external               492,017         351,296      143,729          378
    Revenues between
    sectors                      0          39,585        2,133            0
    Total revenues         492,017         390,881      145,862          378
    Net sector
    income (loss)
    before tax              58,701          16,425       34,472       -7,313

                    Concessions Environment   Others  Adjust. Consolidated
                                (Unaudited)
    Revenues from
    external                  0      35,114   -1,179        0    1,021,355
    Revenues between
    sectors                   0           0        0  -41,718            0
    Total revenues            0      35,114   -1,179  -41,718    1,021,355
    Net sector
    income (loss)
    before tax          -23,117        -609   -4,793  -74,768       -1,002

                           three month period ended September 30, 2008

                     Infrastructure Infrastructure  Real Estate  Real Estate
                      and Building,  and Building,  Development, Development,
                           Oversees         Israel        Israel    Oversees

    Revenues from
    external                445,111        370,627       348,556        4,862
    Revenues between
    sectors                       0         16,739         2,355            0
    Total revenues          445,111        387,366       350,911        4,862
    Net sector
    income (loss)
    before tax               73,164          9,236        49,010      -15,678

    * Reclassified



                    Concessions  Environment  Others   Adjust. Consolidated
                    (Unaudited)
    Revenues from
    external                  0       42,046   1,066        0     1,212,268
    Revenues between
    sectors                   0            0      49  -19,143             0
    Total revenues            0       42,046   1,115  -19,143     1,212,268
    Net sector
    income (loss)
    before tax            6,560       -3,259 -31,215  -95,045        -7,227



    Company Contact:                  Investor Relations Contacts:
    Doron Blachar, CFO                Ehud Helft / Fiona Darmon
    Shikun & Binui                    GK Investor Relations
    Tel: +972-3-630-1518              Tel: +1-646-797-2868 / +97-52-695-4400
                                      email: info@gkir.com

SOURCE Shikun & Binui Ltd.

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