MIRA
INFORM REPORT
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Report Date : |
25.12.2007 |
IDENTIFICATION
DETAILS
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Name : |
CASTRO MARKETING 1985 LTD. |
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Registered Office : |
31, Ort Israel Street, Industrial Zone, Bat Yam 59590 |
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Country : |
Israel |
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Date of Incorporation : |
15.4.1985 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Operating the retail chain stores of the Group, both for women
("Castro") and for men ("Castro Men") fashion. |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
name
CASTRO MARKETING 1985 LTD.
In Hebrew
CASTRO SHIVUK 1985 LTD.
address
31, Ort Israel Street
Industrial Zone
BAT YAM 59590 ISRAEL
Telephone 972 3 555 45 55
Fax 972 3 555 45
54
HISTORY
A private limited company, incorporated as per file No. 51-106440-4 on
the 15.4.1985.
Subject assumed part of the activities of parent company, CASTRO MODEL
LTD., incorporated in 1973, which was originally founded as a non-registered
business in 1947.
In November 2006, all activities of CASTRO MEN (1997) LTD. were merged
into subject.
SHARE CAPITAL
Authorized share capital NIS 2,000.00, divided into - 2,000 ordinary
shares of NIS 1.00 each, of which shares amounting to NIS 1,000.00 were issued.
SHAREHOLDERS
Subject is fully owned by CASTRO MODEL LTD., a public limited liability company
whose shares are traded on the Tel Aviv Stock Exchange, controlled (71%) by the
Castro family (the u/m directors).
DIRECTORS
1. Gabriel (Gabby) Rotter – General Manager (son-in-law of Mr. Aharon
and Mrs. Lena Castro).
2. Aharon Castro,
3. Mrs. Lena Castro, wife of Aharon,
4. Mrs. Esther Rotter, daughter of the Castro couple and wife of Gabby.
BUSINESS
Marketing company of the CASTRO MODEL Group, operating the retail chain
stores of the Group, both for women ("Castro") and for men
("Castro Men") fashion.
CASTRO MODEL Group operates as designers, importers, manufacturers (via
subcontractors in Israel and abroad), exporters and marketers of women and men
wearing apparel, footwear and fashion accessories (belts, handbags, wallets,
etc.).
Subject operates 149 stores, of which 104 in Israel, countrywide (mostly
operated by subject, the accessories stores by sister company) and 45 abroad
(operated by concessionaires, in Germany, Russia, Ukraine, Latvia, Switzerland,
Romania and Thailand).
Among CASTRO suppliers: ADI LIN FASHION ACCESSORIES, I.M. ALKALAI TRADE
& MARKETING, ENDER TEX, ARIGEI MOFET (all from
Israel), and DCK CONCESSIONS (of the UK) etc.
Operating from office premises (owned by parent co.) at the CASTRO
headquarters (on an area of 3,700 sq. meters, of which 2,400 sq. meters built,
serving the Group) in 31, Ort Israel Street, Industrial Zone, Bat Yam, from a
logistics center in Zrifin (rented, 7,500 sq. meters).
Also operating from 104 retail stores all over the country, located mainly
in shopping malls.
Having 1,465 employees serving the CASTRO MODEL Group (up 360 employees
from the previous year).
MEANS
Parent CASTRO MODEL market value US$ 130.6 million.
There are 2 charges for unlimited amounts registered on the company's assets,
in favor of Bank Leumi LeIsrael Ltd. and IBM ISRAEL Co.
Financial data is included in the consolidated Balance Sheet of the
parent company, CASTRO MODEL LTD., which shows:
NIS
(thousands)
31.12.2006 30.09.2007
ASSETS
Current assets
Cash
and cash equivalents 26,631 42,349
Short
term investments 59,045 205,581
Customers 85,904 57,118
Other
debtors 33,265 31,903
Stock
_64,237 _88,227
269,082 425,178
Investments and long term debts 35,982 33,865
Fixed assets, net _60,310 _63,867
365,374 522,910
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LIABILITIES
Current liabilities 89,060 84,230
Long term liabilities 45,046 208,285
Equity 231,268 230,395
365,374 522,910
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ANNUAL SALES
CASTRO MODEL LTD.
Consolidated
Statement of Income
NIS
(thousands)
Year
ended 31.12
2004 2005 2006
Sales 373,431 421,683 533,612
Gross profit 216,343 245,458 310,930
Operating income 49,945 57,863 78,136
Pre-tax income 52,214 62,909 77,013
Net income 31,605 38,854 44,750
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CASTRO MODEL consolidated for the first 9 months of 2007
sales NIS 411,184,000 (10% increase compared to the parallel period in 2006),
making a gross profit of NIS 236,956,000, an operating income of NIS 50,983,000
and a net income of NIS 17,020,000.
It should be noted, that CASTRO ended the 3rd quarter of 2007
with a net loss (of NIS 5,859,000), emanating mainly from financial effects and
expenses.
Subject ended 2004 with a net profit of NIS 9,042,000.
Subject ended 2005 with a net profit of NIS 7,482,000.
Subject ended 2006 with a net profit of NIS 18,362,000.
OTHER COMPANIES
CASTRO MEN (1997) LTD., 100% owned by subject.
CASTRO MODEL LTD.,
parent company, also holds:
CASTRO UK LTD., 100%, U.K., holds 49% of CASTRO DEUTSCHLAND GmbH & Co
KG, Germany (51% held by HEINE of Germany)
CASTRO SINGAPORE PTE LTD., 100%, Singapore, holds 100% of CASTRO ASIA
(MACAO COMMERCIAL OFFSHORE) LTD.
DIVA FASHION ACCESSORIES ISRAEL LTD., 50%, operating the fashion
accessories chain of the Group.
BANKERS
Subject is working
with all local bankers, with central branches, mainly with:
Bank Leumi LeIsrael Ltd., Central Branch (No. 800), Tel Aviv.
Bank Hapoalim Ltd., Central Branch (No. 600), Tel Aviv.
CHARACTER AND REPUTATION
Nothing unfavorable learned.
Subject is one of the leading fashion chains in Israel (design and
retail), with remarkable rate of growth in recent years, jointly with main
rival FOX and other chains. Subject is also, since 2003, one of the pioneers in
the fashion retail business expansion abroad.
In November 2003 CASTRO Group signed an agreement with German company
HEINE GmbH, establishing CASTRO GERMANY (49% and 51% respectively).
In 2004 a concession agreement was signed with a Russian company, and
following, in 2005, also with other foreign concessionaires.
In mid 2005, subject, jointly with British partner DCK, launched its new
sub-chain for fashionable jewelries and accessories called "Diva",
offering some 20,000 items. Initial investment reported of NIS 16 million.
In January 2007, subject opened its third "Castro Shoes &
Bags" store, for selling footwear and fashion accessories, in Giron Mall,
Ashkelon, with investment of NIS 500,000.
In August 2007, subject launched a campaign for a new jeans line, called
"Dark Jeans", with investment of NIS 2 million.
In November 2007, subject invested NIS 4 million in its winter campaign.
The advertising agency handling subject is REUVENI FRIDAN.
According to the Chairman of the Textile and
Fashion division of the Industrialists’ Association, the sales of the textile
industry in 2006 reached NIS 10 billion, a 6% rise comparing to 2005. Sales to
the local market rose 13% to NIS 5.18 billion. The forecast overall sales by
the sectors to 2007 is a further rise of 7%.
The Israel Export and International Cooperation Institute published that
the export by the Textile, Footwear and Leather industries in 2006 grew by 1%
and reached US$ 1.085 billion. Export is expected to rise in 2007 to US$ 1.13
billion.
Most exports were the North American markets (49%).
Imported apparel summed up to US$ 990 million (4% increase from 2005),
of which US$ 606 million were from China.
The Israeli Chamber of Commerce notes that the Chinese production
comprises over 20% of the imported textile goods followed by France (14%),
Italy (12%), Hong Kong and Turkey (around 10% each), Spain (7%) and the U.S.A.
(4%).
The increase in imports emanates from the exposure to foreign markets
policy by the State.
The local industry is also in the midst of a
crisis, forcing streamlining process, the shift of textile manufacturing to low
labor cost countries. According to the Industrialists’ Association, the large
plants moved most manufacturing activities abroad in recent years, while dozens
plants and workshops were closed down (10 manufacturing firms ceased activities
during 2006).
1,500 workers were fired in the textile industry
during 2005 and 500 during 2006. There are 18,300 total employed in the textile
sector.
According to the Central Bureau of Statistics, the current spending per
capita in 2006 in clothing and footwear rose by 5.8% comparing to 2005, as part
of the general trend in 2006 of higher current expenses for private consumption
per capita (3% increase).
The general growth trend continued into the 1st quarter of
2007, where private expenditure for private consumption rose by 11.8% comparing
to the parallel period in 2006 and the expenditure in current consumption per
capita went up by 3.8%.
SUMMARY
Good for trade engagements.
RATING
EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)