MIRA
INFORM REPORT
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Report Date : |
17.12.2008 |
IDENTIFICATION
DETAILS
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Correct Name : |
SCOPE METALS GROUP LTD. |
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Formerly Known as : |
SCOPE METALS TRADING AND TECHNICAL SERVICES LTD |
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Registered Office : |
P.O. Box 3 3 Hamerkava
Street, Re'em Industrial Zone, Bnei Ayish 60860 |
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Country : |
Israel |
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Financials (as on) : |
30.09.2008 |
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Date of Incorporation : |
27.4.1980 |
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Legal Form : |
Public Limited Liability Company |
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Line of Business : |
International trade, importers, exporters and marketers in the “white
metal” area, including stainless steel metals, aluminum, titanium and nickel
alloys. |
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 & address
SCOPE METALS GROUP LTD.
Telephone 972 8 863 10 00
Fax 972 8 863 10 20
P.O. Box 3
3 Hamerkava Street
Re'em Industrial
Zone
BNEI AYISH 60860 ISRAEL
HISTORY & LEGAL FORMATION
Originally incorporated as a private limited company, registered as per
file
No. 51-084980-5 on the 27.4.1980.
Originally
registered under the name SCOPE TRADING & FOOD MARKETING LTD., which
changed to SCOPE METALS TRADING AND TECHNICAL SERVICES LTD. on the 5.4.1981,
which changed to the present name on the 21.8.2007.
Converted into a public limited liability company, registered as per
file
No. 52-003742-5 on the 30.4.1992.
On the 8.4.1992
published a prospectus, offering shares to the public, raising a sum of US$ 2.5
million.
SHARE CAPITAL
Authorized share
capital NIS 30,000,000.00 divided into -
30,000,000
ordinary shares of NIS 1.00 each,
of which shares
amounting to NIS 10,893,971.00 were issued.
SHAREHOLDERS
1. Shmuel Shiloh, 35.8%,
2. FIMSCO HOLDINGS LTD., 30.3%, of
the FIMI Fund, controlled by Ishay Davidi,
3. CLAL INSURANCE ENTERPRISES
HOLDINGS LTD., 8%, an institutional investor,
4. Shares are also traded on the
Tel Aviv Stock Exchange.
In February 2006,
the FIMI fund signed a deal to acquire 2,935,000 shares in subject, for a sum
of NIS 157 million. The deal was finalized in April 2006.
DIRECTORS
1.
Shmuel Shiloh, Chairman,
2.
Ishay Davidi, CEO of the FIMI,
3.
Matityahu (Mati) Dov,
4.
Yarom Oren,
5.
Shalom Singer,
6.
Ms. Margit (Maggie) Shiloh,
7.
Uzi Nethanel,
8.
Dan Sion.
JOINT GENERAL MANAGERS
1.
Shmuel Shiloh,
2.
Gil Haver.
BUSINESS
International
trade, importers, exporters and marketers in the “white metal” area, including
stainless steel metals, aluminum, titanium and nickel alloys.
Subject’s products
include pipes, bolts and nuts, nets and cables, etc., which are used by
industrial plants and manufacturers in the chemical, pharmaceutical,
electronics, petrochemical, food, hi-tech and other industries.
Also importers and
marketers of engineering plastic and steel products and operate in the real
estate field.
Some 35% of sales
are for export. Exports are to India, Cyprus, Romania, Bulgaria, Moldova,
Russia, Greece, Kenya, Egypt, Turkey and the Ukraine.
Subject provides
also stock storage facilities, cutting and sawing services
("one-stop-shop" model).
Among subject’s
clientele are: ISRAEL AEROSPACE INDUSTRIES, SOLEL SOLAR SYSTEMS, RAFAEL
ARMAMENT DEVELP., INCOMAC, GOLD BAR, M.G.T. ISRAEL TASIYOT- MIFALEI
TRIFMAN, ENERGETICA GENERAL ENGINEERING AND HEAT SYSTEMS, BERMAD, A.Z. INDUSTRIES, SHATAL ENGINEERING, SELA ELECTRONICS SYSTEMS, ALUM
ESHET (OMAN), VERED EROSIA, HATECHOF ISI YOGEV, A.B.M PLASTIC INDUSTRIES, ELCON
MAMAB CONTROL INSTRUMENTS, INCO ENGIENERING SERVICES, AHARON YOSEF & SONS
PACKAGING INDUSTRIES, K & K PLASTIC ENGINEERING, etc.
Among local suppliers: BETH EL ZIKHRON YAAQOV INDUSTRIES, KIDRON TRADING
& AGENCIES, etc.
Sole local agents
of:
COLOMBUS STAINLESS
(PTY) LTD., ALMAC STAINLESS TUBE (PTY) LTD.,
ANDREW MENTIS
(PTY) LTD., all of South Africa,
ROLDAN S.A., of
Spain,
STAR STAINLESS
SCREW CO., of the U.S.A.,
REDAELLI TECNA
SPA, of Italy.
Operating from
premises, a site which includes owned area of 50,360 sq. meters and 27,500
leased area (of which 35,600 sq. meters are built), in 3 Hamerkava Street,
Re'em Industrial Zone, Bnei Ayish, and from branches in the USA, China,
Romania, Poland and the Czech Republic.
Having some 800
employees (of which some 550 in subject itself), serving the whole SCOPE Group
(were 700 employees at the end of 2006).
MEANS
Consolidated B/S shows:
NIS
(thousands)
31.12.2007 30.09.2008
ASSETS
Current assets
Cash
& cash equivalents 34,681 49,377
Negotiable
securities 72,469 51,524
Customers 413,506 446,129
Other debtors 45,352 35,390
Stock __905,781 __848,477
1,471,789 1,430,897
Non-current assets
Fixed assets (net) 256,793 271,766
Goodwill & intangible assets 28,914 29,071
Other non-current assets ___47,712 ___50,161
__333,419 __350,998
1,805,208 1,781,895
======== ========
LIABILITIES
Current
liabilities 438,844 492,466
Long term
liabilities 724,610 649,884
Equity __641,754 __639,545
1,805,208 1,781,895
======== ========
Current market
value US$ 46 million.
Note: The market value of subject reflects a relatively low market value
due to the present local and global capital markets status, severely affected
by the collapse in financial markets since September 2008; subject’s market
value was 6 times higher (!) a year ago.
In April 2005,
subject raised NIS 40 million by issuing shares to institutional investors.
In March 2007,
subject completed a raise of NIS 150 million by issuing bonds to institutional
investors.
Subject intended
to offer some 26% of its shares and raise US $100 million through the New York
Stock Exchange, and already submitted draft prospectus to the American SEC.,
however it decided to back-off the issuance the public offering due to
unfavorable market condition.
There are no
charges registered on the company's assets.
ANNUAL SALES
Consolidated
Statements of Income
NIS
(thousands)
Year
ended December 31st
2005 2006 2007
Revenues 603,846 1,041,951 1,284,593
Gross profit 177,915 321,908 356,904
Operating income 88,241 170,677 161,049
Profits before
taxes on income 58,272 136,560 84,009
Net income 42,010 95,601 55,493
======== ======== ========
Consolidated first 9 months of 2008 sales were NIS
1,059,924,000 (14.4% increase comparing to the parallel period in 2007), making
a gross profit of
NIS 269,120,000, an operating income of NIS 101,256,000, and a net income of
NIS 32,116,000.
OTHER COMPANIES
ADIT INDUSTRY
BUILDINGS LTD., 100%, real estate holdings,
ILERLI TIN
PROCESSING LTD., 100%,
EL-ZON HOLDINGS LTD.,
100%, non active,
RAAS METALS, 100%,
Cyprus, non active,
GILINOX S.R.L.,
100%, Romania,
PRIMAPOL METAL
SPOT S.R.O., 100%, Czech Republic, owns PRIMASPOT DEUTSCHLAND GmbH, marketing
company in Germany and PRIMASPOT POLSKA Sp.z.o.o., of Poland,
DALIAN BEST METALS
CO. LTD. (D.B.M.), 100%, China,
SCOPE METALS USA
INC. (formerly SHINTU), 90%, USA, fully owns the 2 u/m U.S. subsidiaries:
MATERIALS TECHNOLOGY SOLUTIONS LLC. (M.T.S.) and HADCO METAL TRADING LLC.
BANKERS
Bank Leumi
Le’Israel Ltd., Central Branch (No. 800), Tel Aviv.
Bank Hapoalim
Ltd., Central Branch (No. 600), Tel Aviv.
Israel Discount
Bank Ltd., Main Branch (No. 010), Tel Aviv.
Mizrahi Tefahot
Bank Ltd., Main Business Center Branch (No. 461), Tel Aviv.
The First
International Bank of Israel Ltd., Tel Aviv Main Branch (No. 046), Tel Aviv.
Also working with:
Mercantile Discount Bank Ltd., Beit Maiya Branch (No. 656), Tel Aviv, account
No. 56782.
A check with the Central Banks' data base
did not reveal negative information regarding subject’s a/m account.
CHARACTER AND REPUTATION
Nothing
unfavorable learned.
Subject is ISO
9002 certified.
Subject is
considered a local leading company in the "white metals" sector.
Founded in 1997, the FIMI Fund, which invested in subject, is one of the
leading local investment funds with equity of circa US$ 1.25 billion. It is
Israel's first dedicated mezzanine and buy-out fund, managed by its founder
Ishay Davidi. It carried out so far over 50 major transactions valued at more
than US$ 800 million. Its investors list includes institutional and private
investors from the United States and Israel. The entrance of FIMI, was designed
to assist the Group in promoting its sales in the international markets, where
FIMI has significant capabilities.
In March 2002,
subject signed a deal to acquire all the activities (including goodwill, stock,
machinery and equipment) of 2 sister companies FEINGOLD STEEL INDUSTRIES LTD.
and FEINGOLD STEELS (1960) LTD., for a sum of US$ 3.6 million. FEINGOLD was a
veteran and well-known Group in the steel field, hence contributed to subject’s
capacities.
In June 2004, it
was reported that subject acquired all stock of GLOBAL METALS, a local metal
company which went into receivership.
In July 2004, it
was reported that subject won a NIS 30 million deal to provide metal to the
ISRAEL AEROSPACE INDUSTRIES. In September 2005, the deal was extended by
further NIS 85 – 100 million.
Also In July 2004,
it was reported that subject signed a deal to acquire 51% of an American metal
trading company M.T.S., for a sum of US$ 500,000.
In October 2004,
subject established a new subsidiary in the Czech Republic, which in March 2005
acquired the activities of a metal trading Czech company, for a sum of €
895,000.
In February 2006,
subject completed a deal acquiring an American metal trading firm through
HADCO, a subsidiary established for this purpose in the USA, for a sum of US$
11 million (US$ 3 million for the company and US$ 8 million for the stock).
In May 2006,
subject opened a branch in China.
In June 2006,
subject acquired a 10,000 sq. meters plot in Romania, for a sum of € 600,000.
In December 2006
subject reported it has signed an agreement to purchase aluminum products in
volume of US$ 40-44 million from a European plant. This is in the framework of
subject's international expansion plans. Products will be marketed worldwide,
as well as in Israel.
During 2007,
subject reported it has been increasing its penetration efforts in Esatern
European markets, via its subsidiaries.
Subject's
significant customer, ISRAEL AEROSPACE INDUSTRIES, informed subject that as of
2008, subject will no longer be their sole supplier for aerospace products (in
the metal field) anymore.
The local economy grew constantly since
2004, although local construction sector saw a much slower pace. During 2005,
2006 and 2007 most indicators in the building and infrastructure sectors have
shown improvements. 2008 started good, however the turmoil in global financial
markets has its negative effects on the local market as well.
In the metal and aluminum sectors,
estimations were on dismissals of some 2,200 employees in 2008 due to the
market conditions.
According to the Chairman of the Metal and
Electricity sectors at the Manufacturers’ Association, overall sales of the
various metal related industrial sectors in 2007 reached NIS 75.7 billion
(increased by 7% from 2006, representing a growing trend the 4th
year in a raw). Most sales by the Metals Sector are to the local market.
On the background of the global market
conditions, the estimations at the end of 2008 for a further mild grow of 2%
for the year, have been changed and prospects are that the metal sectors will
end at a stable trend.
The aluminum sector is now facing a drastic
fall in aluminum prices, after metal prices in Israel rose significantly in the
last couple of years as part of the global trend.
Investment in machinery and equipment from
import for the metal products sector in 2007 rose by 21% (in real terms)
comparing to 2006 to NIS 1.28 billion and by 44% for the basic metals sector
(to NIS 0.3 billion).
SUMMARY
Good for trade engagements.
Maximum unsecured credit recommended several US$ millions.
FOREIGN EXCHANGE
RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.47.33 |
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UK Pound |
1 |
Rs.73.92 |
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Euro |
1 |
Rs.66.69 |
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%)