Shikun & Binui Reports First Quarter Results

RAMAT GAN, Israel, May 29, 2011 /PRNewswire/ -- Ofer Kotler, CEO of Shikun & Binui: "In the first quarter of the year, the Group continued the growth and expansion of its operations in all of its growth engines.  The Group has the know-how, capabilities and financial resources that will facilitate further growth and expansion in the volume of its activity in Israel and internationally and continue to create value for shareholders."

Key events during and subsequent to the first quarter and significant results:

• The Group's orders backlog in the construction and infrastructures segment totaled NIS 8.8 billion on 31.3.2011, of which NIS 6.8 billion ($2 billion) originates in the Group's operations outside of Israel.

• In March, the Group announced a cash dividend distribution to shareholders of NIS 200 million, representing NIS 0.498 per share.  Last year, the Group distributed a dividend of NIS 110 million, representing NIS 0.274 per share.

• Shikun & Binui Real Estate sold 300 housing units in the first quarter of the year for a total of NIS 501 million.  Shikun & Binui Real Estate signed an agreement with the Hadera Economic Corporation for the construction of a park, shopping mall and commercial center. Subsequent to the end of the quarter, the Company was awarded a tender for the construction of 256 housing units in the city Rosh Ha'ayin.

• The first two buildings of Shikun & Binui Real Estate in Carcour, which were designed and built in accordance with Israel Green Standard 5281 were awarded the Green Standard – certification under Standard 5281 by the Standards Institute.  Both buildings were built according to the stringent Green Construction standards.

• During the First Quarter, the Group recognized impairment of NIS 16 million, in the wake of a decision by the government of Spain to temporarily suspend the tariffs for electricity from photovoltaic sources generated in the Ulmeda Project, in which the Group holds 50%.

• The subsidiary, Solel Boneh, was awarded a Design & Build tender totaling NIS 55 million, for the design and construction of the first stage of Highway 531 from Kfar Sava to Herzliya.

Revenues from projects and sales totaled NIS 1.3 billion in the Quarter, growth of 22% compared with the first quarter of last year.

Most of the growth was driven from the real estate development in Israel segment: growth of 83.5% in revenues and NIS 301 million resulting from the accelerated rate of homes that were populated (171 units in the reporting period, compared with 106 units in Q1 of 2010), and from the proceeds of sales of lots and land (NIS 56 million compared with NIS 25 million in the first quarter of last year).

Revenues from the infrastructures and constructions outside of Israel segment had 10% growth, an increase of NIS 59 million, with expansion of activity in the countries in which it operates.

Revenues from the concessions segment, which totaled NIS 63 million, were driven by work on the project to rehabilitate and maintain roads in northern Israel, which commenced in the second quarter of last year.

During the quarter, 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 the first quarter of 2010, gross profit of the infrastructures and construction outside of Israel segment would have increased by an additional NIS 27 million.

Gross profit totaled NIS 323 million (24% of revenues), increasing 49% when compared with Q1 2010 (20% of revenues).  Most of the increase refers to Real Estate development (increase of 86% in gross profit). Due to housing units prices increase that were populated in this quarter compared with the first quarter of last year. The gross profit in the infrastructure and building sector in Israel has increased in 62.5% and the gross profit outside of Israel infrastructure and construction sector has increased in 29.5%. Had the dollar exchange rate in the quarter not decreased in comparison with the first quarter of 2010, gross profit of the infrastructures and construction outside of Israel segment would have increased by an additional NIS 10 million.

General and administrative expenses totaled NIS 80 million (6% of revenues), compared with NIS 72 million in the first quarter of last year (6.6% of revenues).  The growth was driven by the increase in tender expenses and project initiation (NIS 5.5 million) and by marketing expenses (NIS 2.5 million).

Operating income totaled NIS 242 million (18.2% of revenues), 78% higher than in the first quarter of last year (12.5% of revenues).  Operating income of the real estate development in Israel segment posted growth of 142%.  Operating income of the infrastructures and construction outside of Israel segment increased by 36.9%.

Net financing costs totaled NIS 39 million in the quarter, compared with NIS 13 million in the first quarter last year, due mainly to the increase in expenses for short-term credit, which were impacted by changes in the Consumer Price Index.  In the reporting period, the CPI rose by 0.87%, compared with a decrease of 0.95% in the same quarter last year.

Group equity in losses of investees accounted for by the equity method totaled a loss of NIS 31 million, compared with income of NIS 13 million in the first quarter of last year.  The loss was due mainly to the increase in the loss attributed to the effect of the revaluation of the State's option on the results of Derech Eretz, as well as to the impairment recognized by the photovoltaic electricity-producing affiliate in Spain.

Net income totaled NIS 122 million, an increase of 14% over the first quarter of last year.

Cash flows from operating activities totaled NIS 1 million, compared with NIS 53 million in the same quarter last year.  The decrease was due mainly to the temporary slowdown in collections, due to the presidential elections conducted in several of the countries in which the Group operates internationally.

The Group does not revalue its investment property and they are presented in the financial statements at historical cost.

Equity as of March 31, 2011 totaled NIS 775 million, compared with NIS 875 million at the end of 2010.  The decrease in equity is due to the NIS 200 dividend distribution that was offset by the quarter's net income.

The Company has cash and cash equivalents balances totaling NIS 1.2 billion and an unutilized credit facility totaling NIS 929 million.

Total assets in the balance sheet amounted to NIS 8.5 billion.

Doron Blachar, Group CFO: The quarter's results reflect the expansion of the Group's activities in the various operating segments and reflect the change that the Company has undergone.  The Group's financial strength, which has been built throughout the period, supports continuation of the expansion of operations and improvement of business results, and will enable the Company to participate in the numerous infrastructure tenders being issued in Israel.

For additional information contact: Nava Ladin 03-6074717
Gelbart Kahane Investor Relations and Business Communications
Tel: +972-3-6074717
[email protected]

SOURCE Shikun & Binui Ltd.