Shikun & Binui Announces Second Quarter 2010 Results

RAMAT GAN, Israel, Aug. 22 /PRNewswire-FirstCall/ -- 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 yesterday its results for the second quarter 2010, ended June 30th, 2010.

"The Group is continuing to expand the activities of its key businesses, particularly in infrastructure and construction, both in Israel and abroad.  In addition, the Group is also looking to make significant investments in the area of renewable energy and water," commented Mr. Ofer Kotler, Chief Executive Officer of Shikun & Binui.

Main Events of the Second Quarter and Subsequent to it:

• The company increased its stake in Derech Eretz, the concessioner of road 6, for an investment of NIS 150 million, following this investment the company will hold 50% of Derech Eretz. The acquisition will be financed from internal resources.
• The Group's orders backlog in the construction and infrastructure segment totaled NIS 9.4 billion as of June 30, 2010, an increase of 11% compared with March 31, 2010 and an increase of 21% compared with December 31, 2009.
• In the second quarter of the year, Shikun & Binui Real Estate sold 379 units totaling NIS 523 million, and since the beginning of the year it sold 619 units for total of NIS 811 million.  In August, Shikun & Binui Real Estate sold 50% of its rights in property in the city of Ashkelon at a pre-tax gain of NIS 35 million (which will not be recognized as part of the Q2 financial statements).  
• The subsidiary, Solel Boneh Israel, began work on the P.F.I project for the Israeli National Roads Company for the rehabilitation, operation and maintenance of roads located in the North of Israel for the amount of NIS 1.7 billion.  The closing of the financing of the project occurred at the end of June 2010.  
• Shikun & Binui SBI Infrastructures was awarded a tender to pave a highway in Nigeria in the amount of $290 million.  The rehabilitation and paving of this project is expected to last 4 years.

Second Quarter 2010 Results

Revenues from Projects and Sales totaled NIS 1.18 billion this quarter, an increase of 5.2% compared with the second quarter of 2009.  International revenues from the Construction & Infrastructure segment totaled NIS 666 million, increasing by 10.4% compared with corresponding quarter last year.  Fluctuations in the exchange rate between the shekel and the dollar impacted SBI revenues. In the second quarter of 2009, the average exchange rate was NIS 4.07 per U.S. dollar while this quarter the average was NIS 3.78. The effect of this difference resulted in a decrease in the Israeli shekel reported revenues of about NIS 56 million, compared to the same quarter last year. Israeli revenues from the Construction & Infrastructure segment totaled NIS 365 million, increasing 4.9% compared with the corresponding quarter last year.  Revenues from the Real Estate Development segment totaled NIS 146 million compared with NIS 169 million in the corresponding quarter last year, with the decrease stemming mainly from the timing of recognition of income from the sale of apartments.

Gross profit totaled NIS 237 million (20% of revenues), increasing 8% when compared with Q2 of 2009 (19.5% of revenues).  

General and administrative expenses totaled NIS 73 million (representing 6.2% of revenues), increasing 25.1% when compared with Q2 of 2009 (5.2% of revenues).  The increase is attributed to organizational changes supporting the geographical expansion of SBI Infrastructures entry into a new international market, as part of its strategic plan.  Also contributing to the rise is the increased expenditure growth in initiating renewable energy projects as well as an advertising campaign.

Operating income totaled NIS 154 million (13% of revenues), compared with NIS 163 million (14.5% of revenues) in Q2 2009.  

Financing costs net totaled NIS 47.5 million, decreasing 46% when compared with the second quarter of 2009.  The decrease in financing expenses is attributed to a lower increase in the CPI index compared to Q2/2009, which affected the long-term credit costs, and due to a decrease of the group's financing costs in foreign currencies.

Company's share in the results of investee companies accounted for by the equity method totaled a loss of NIS 5 million, compared with an income of NIS 1.4 million in Q2 2009.  

Net income amounted to NIS 65.5 million, increasing 59% when compared with Q2 2009.  

Cash flow from operating activities totaled NIS 219 million.

Shareholders' equity totaled NIS 609 million, compared with NIS 508 million on December 31^st, 2009.  The increase is mainly attributed to first half profit in the amount of NIS 172 million as well as translation adjustments which amounted to NIS 34 million, which were partially offset by a dividend distribution of NIS 108 million.

Total assets amounted to NIS 7.6 billion.

Key Highlights in the First Half 2010

Revenues from Projects and Sales for the first half of 2010 totaled NIS 2.27 billion, compared with NIS 2.34 billion in the same period of 2009. The decrease is mainly attributed to the Real Estate Development segment in Israel, which saw a higher recognition of revenue in the first half of last year.  Likewise, the completion of Section 18 of the Highway 6 also led to decrease in revenue in the same period of 2009. International revenues from the Construction & Infrastructure segment increased in the first half of 2010 by about 6.1%.

Gross profit totaled NIS 454 million (20% of revenues), compared with NIS 483 million (20% of revenues) in the same period last year.  The decrease is mainly attributed to projects that were finished as well as the approval of an exceptional claim in the Construction & Infrastructure segment abroad in the corresponding period last year.

General and administrative expenses totaled NIS 145 million (representing 6.4% of revenues), increasing 17% when compared with the corresponding period last year (5.3% of revenues).  The increase is attributed to adjusting organizational processes with expanding activities, in particular, SBI Infrastructures entry to a new international market, as part of the strategic plan.  Also contributing to the rise, was the increased expenditure growth in initiating renewable energy projects as well as an advertising campaign.

Operating income totaled NIS 290 million (12.8% of revenues), compared with NIS 355 million (15.2% of revenues) in the same period last year.  

Financing costs net decreased by 52% when compared with the corresponding period last year and are attributed to a lower increase in the CPI index, which affected the long-term credit costs, and due to a decrease of the group's operational costs in foreign currencies.

Company's share in the results of investee companies accounted for by the equity method totaled NIS 9 million, compared with a loss of NIS 23 million in the corresponding period last year, which is attributed to the value of the state options for "Derech Eretz" Results (Highway 6).  

Net income amounted to NIS 172 million, increasing 34.2% when compared with the corresponding period last year.  

Cash flow from operating activities totaled NIS 271 million, increasing 81% when compared with the corresponding period last year and is attributed predominantly to the ongoing profit net depreciation costs and change in working capital.

Working capital totaled NIS 541 million, compared with NIS 485 million in the corresponding quarter last year.

The Company ended the quarter with cash balances and equivalents, totaling NIS 1.147 billion and an unutilized credit facility amounting to NIS 725 million.

Doron Blachar, the Group's CFO said: "The Group's shareholder's equity has steadily grown, resulting in an improvement in the financial resilience of the Company, which serves as a testament to the company's current operations.  

The financial strength of the company enabled it to finance from its own resources the acquisition of 12/5% of Derech Eretz and will continue to support the company growth strategy."

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.

SOURCE Shikun & Binui Ltd.