Shikun & Binui Reports Strong Results for Q3 2016

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- NIS 141M Net Profit for Third Quarter; Company Declares NIS 65M Dividend -

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Shikun & Binui Ltd. (TASE: SKBN.TA), a global construction and infrastructure company headquartered in Israel, today announced its results for the third quarter and first nine months ended September 30, 2016.

The Group reported revenues of NIS 1.5 billion for the third quarter compared with NIS 1.2 billion for the third quarter of 2015. EBITDA for the quarter totaled NIS 254 million compared with NIS 186 million for the third quarter of 2015, while EBITDA for the first nine months of the year totaled NIS 658 million compared with NIS 657 million for the parallel period of 2015. Net profit for the quarter totaled NIS 141 million, while net profit for the nine-month period totaled 203 million. The Company’s cash balance as of September 30, 2016 was more than NIS 2 billion, reflecting its collection, during the third quarter, of USD 114 million from the Nigerian government, followed by another USD 42 million collected during October and November.

Commenting on the news, Moshe Lahmani, Chairman of Shikun & Binui, said, “The Company continues actualizing its Go West strategy and will continue to focus its growth efforts on the Americas. During 2016, we completed the Financial Closing processes for two mega-projects in the Americas, including the USD 1 billion Houston Toll Road project and the USD 600 million Colombia Toll Road project, both of which have now entered into the construction phase. As we prepare to deepen and expand our activities throughout the Americas, we look forward to the publication of the new infrastructure investment plan that is expected to be put forth by the newly-elected government of the US. In parallel, as part of our strategic objective to diversify our activities, we continue to expand our European activity engines and to prepare our Contracting, Concessions and Renewable Energy segments to participate in mega-tenders in our target regions.”

International contracting activities: During the third quarter, the Company returned to significant work levels in its international contracting activities, with the segment’s revenues for the period totaling NIS 288 million, including NIS 163 million from Nigeria. Since the beginning of 2016, the Company has collected NIS 1.6 billion from international contracting customers, including NIS 590 million from Nigeria.

Work backlog: The Group’s work backlog as of the end of the third quarter totaled NIS 17.3 billion, including NIS 9.2 billion from Israel and NIS 8.1 billion from international projects. Since the beginning of the year, the Group’s addition of the Ashalim Project, the Houston Toll Road Project and the Cundimarca Columbia Project has contributed NIS 4.5 billion to the word backlog, while additional projects from both inside and outside of Israel have added another NIS 1.25 billion to the backlog. In addition, the Company has been awarded additional projects with a value of NIS 1.3 billion that have not yet entered into the backlog, either because their contracts have not been finalized or advances have not yet been received. Projects such as these include the Israel Road 77 project, the construction of the new Rad Binat headquarters, projects for the Israeli Department of Defense, and others.

Ashalim: after successfully completing Ashalim’s partner exchange process and Financial Closing in August 2016, the project continues to move forward, leading the Company to project completion of the construction phase in line with its original schedule in mid-2018.

Realization of value from assets: on November 29. 2016, after the report date, the Company reported that it had signed an agreement with the InfraRed Fund under which it will become a 50% partner in the Concessionaire of the Cundimarca project in Columbia. Completion of the deal is contingent upon the receipt of required approvals and fulfillment of other conditions. If the deal is closed, it will contribute approximately USD 60 million in cash flow and approximately USD 35-40 million in net profit. After the sale, the Company will continue to hold 50% of the project’s Concessionaire, and will be responsible for carrying out all of the project’s construction activities. The InfraRed Fund, a leading infrastructure investment fund, is also a partner in the Group’s SH-288 project in the US and the Gilboa Pumped Storage project in Israel. The Company currently holds 25.5% of the Gilboa Pumped Storage project after having completed the sale of 49% of its holdings to the InfraRed Fund, a transaction which contributed NIS 107 million in cash flow and NIS 25.2 million in net profit. In addition, in line with the Company’s strategy to focus on existing geographic operational regions, after the balance sheet date the Company sold its holdings in PV projects in Spain, generating NIS 90 million in cash and NIS 11 million in net profit.

Debt management and extension of average debenture maturity dates: During the quarter, the Company carried out a debt swap offering, replacing NIS 740 million (face value) of Series 5 debentures with average maturity periods of 2.9 years with NIS 884 million (face value) of Series 8 debentures with average maturity periods of 6.8 years.

Real estate development: During the first nine months of 2016, the Company sold approximately 1,700 apartments, including 800 in Israel and 900 in Europe. During the third quarter, the Company was awarded a tender to build approximately 280 apartments intended for long-term rental in Jerusalem, while also purchasing development-ready land parcels in Warsaw, Prague, Belgrade and Bucharest.

ADO: During the quarter, ADO, of which the Company holds a 40% share, continued to move forward with its strategic acquisition of apartment blocks in Berlin. During 2016, it acquired properties with approximately 3,000 residential units, bringing its total holdings in Berlin to approximately 18,600 apartments.

Yaron Karisi, CEO of Shikun & Binui, added, “We continue to push ahead with the projects in our backlog while deepening the full range of our international activities. The significant achievements that we have reported during the last several months, including the massive collections and renewal of activities that we achieved in Nigeria, our successful execution of mega-projects such as the Tel Aviv Light Rail and the Gilboa Pumped Storage Project, and especially the successful Financial Closing, partner exchange and work execution that we have achieved in the Ashalim project, demonstrate beyond a doubt our skill at managing complex projects and overcoming challenges.”

Tal Raz, CFO of Shikun & Binui, commented, “Israel’s capital market continues to express its confidence in the Company, as demonstrated by the high take-up rate that we achieved for the quarter’s bond swap offering and the success of our efforts to lengthen our average debenture maturity periods. These processes serve as financial tail winds that will help us further grow our activities in both Israel and international markets. As such, our Board of Directors has resolved to declare a NIS 65 million dividend, bringing the total dividends paid since the beginning of 2016 to NIS 120 million.”

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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.

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Ella Konkis
Shikun & Binui
+972 50-7822231
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