MIRA
INFORM REPORT
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Report Date : |
25.09.2008 |
IDENTIFICATION
DETAILS
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Name : |
H & O
FASHION LTD. |
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Registered Office : |
Hutzot Shefayim Shefayim 60990 |
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Country : |
Israel |
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Financials (as on) : |
30.06.2008 |
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Date of Incorporation : |
4.10.1992 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Importers,
Designers, Marketers and Retailers of Apparel and Fashion Products, including
Handbags, Jewelry, Watches and Other Fashion Accessories, as well as
Footwear, Toiletries and Cosmetics, and Home Textile. |
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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Maximum Credit Limit : |
US$ 2,500,000. |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
name & address
H & O FASHION LTD.
Telephone 972 9 971 30 03;
971 30 33
Fax 972
9 971 30 06; 971 30 36
Hutzot Shefayim
SHEFAYIM 60990 ISRAEL
HISTORY & LEGAL FORMATION
Originally established as a private limited company, incorporated as per
file
No. 51-172534-3 on 4.10.1992 as a split off from HAMASHBIR Group.
Originally
incorporated under the name HAMASHBIR SALES WAREHOUSES LTD., which changed to
HAMASHBIR FASHION WAREHOUSES LTD. on the 1.5.1994, which changed to H & O
HAMASHBIR FASHION LTD. on the 6.11.2002, which changed to the present name on
29.3.2005.
Converted into a
public limited liability company, registered as per file
No. 52-004238-3 on 31.8.1995.
In August 1997 published a prospectus
offering shares to the public on the Tel Aviv Stock Exchange.
In September 2008,
subject announced that a merger transaction which in its framework parent
company HAMASHBIR HOLDINGS (1999) LTD. is going to publish a tender offer for
the shares held by the public. Consequently, subject’s shares will be de-listed
from trade and subject will convert into a private limited company.
Also in the
framework of the move the operations of subject and subsidiary TAG WOMAN will
be unified into TAG WOMAN and subject will become a holding company.
SHARE CAPITAL
Authorized share
capital NIS 50,000,000.00 divided into -
15,000,000
ordinary shares of NIS 1.00 each, of
which shares amounting to NIS 14,978,926.00 were issued.
SHAREHOLDERS
1. HAMASHBIR HOLDINGS (1999)
LTD., 82.8%, owned (via OR ASAF INVESTMENTS LTD.) by Avraham (Bondi) Livnat
(50%) and B. GAON RETAIL & TRADING LTD. (50%),
2. MENORAH
INSURANCE CO. LTD., 6%, institutional investor,
3. Dr.
Israel Peleg, 1.2%,
4. Shares
are also traded on the Tel Aviv Stock Exchange.
DIRECTORS
1. Dr. Israel Peleg, Chairman,
2. Moshe Gaon,
3. Alex Alon,
4. Ami Sagis,
5. Shaul Ben Zeev,
6. David Shazar,
7. Ms. Michal Avihay,
8. Yecheskel Dovrat,
9. Dr. Shlomo Segev,
10. Ms. Nira Dror.
GENERAL MANAGER
Nitzan Hadas
BUSINESS
Importers,
designers, marketers and retailers of apparel and fashion products, including
handbags, jewelry, watches and other fashion accessories, as well as footwear,
toiletries and cosmetics, and home textile.
Subject operates 2
retail chain stores: of 30 branches countrywide, under the “H&O” name, as
well as (via subsidiary) the “TAGWOMAN” chain of 32 branches, targeted at young
women audience.
Subject provides
uniforms to the Israeli Police and other Armed Forces.
Among local
suppliers: AL SRAD, ZIP FASHION MARKETING, ADA LISS GROUP, TALDOR MANAGED
SERVICES, etc.
Advertising
agency: BAUMAN - BAR-RIVNAY.
Operating from
rented offices, on an area of 800 sq. meters, in Hutzot Shefayim, Kibbutz Shefayim,
and from 30 branches nationwide.
Having
1,213 employees serving the H & O Group.
MEANS
Current market
value US$ 8.8 million.
There are 7
charges for unlimited amounts registered on the company's assets, in favor of
local banks.
Consolidated B/S shows:
NIS
(thousands)
31.12.2007 30.06.2008
ASSETS
Current assets:
Cash and cash equivalents 10,844 3,585
Customers 54,716 54,471
Other debtors 1,181 5,195
Stock 107,401 108,665
174,142 171,916
Non-current assets:
Fixed
Assets (net) 35,975 38,352
Goodwill 17,479 15,930
Other intangible assets
(net) 5,937 5,591
Other
non-current assets __4,578 __4,956
_63,969 _64,829
238,111 236,745
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LIABILITIES
Current liabilities 163,526 172,775
Long-term liabilities 27,431 17,553
Equity _47,154 _46,417
238,111 236,745
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ANNUAL SALES
2006 sales were
NIS 411,779,000, making a gross profit of NIS 168,653,000, an operating income
of NIS 16,374,000 and a net income of NIS 10,047,000.
These results were
prior to the amalgamation of subsidiary TAG WOMAN results, which are
amalgamated since the 2007 financial statements.
Consolidated 2007 sales were NIS 457,380,000, making a gross profit of
NIS 199,559,000, an operating income of NIS 13,527,000 and a net income of
NIS 5,610,000.
Consolidated first half of 2008 sales were NIS 236,249,000 (4.4%
increase compared to the parallel period in 2007), making a gross profit of
NIS 102,882,000, an operating income of NIS 1,070,000, ending with net loss
of NIS 3,482,000 (comparing to a net income of NIS 3,543,000 in parallel period
in 2007). Subsidiary TAG WOMAN is responsible to 90% of subject’s loss for the
period.
OTHER COMPANIES
TAG WOMAN LTD.,
100%, manufacturers and marketers of women fashion and accessories, operating
retail chain stores under the brand "Tag Woman" countrywide.
B. GAON RETAIL
& TRADING LTD. is owned as follows:
1. B. GAON HOLDINGS LTD., 85%, a
public limited liabilities company, whose shares are traded on the Tel Aviv
Stock Exchange, controlled by Sami Shamoon (25%), the Gaon family (20%), Uri
David (13.5%), Ms. Lea Pinson (9%) and others.
2. B. GAON
INVESTMENTS (1998) LTD., 10%, equally owned by brothers Moshe Gaon, Boaz Gaon, Yoav Gaon and sister Michal Avihai (heirs of Late
Benny Gaon).
2. Moshe Gaon, 5%.
B. GAON HOLDINGS
LTD., current market value US$ 48.6 million, a holding company involved in 4
lines of activities:
Retail and Trading, in which subject
is included, headed by B. GAON RETAIL & TRADING LTD. and also includes (main
holdings):
HAMASHBIR FOR
AGRICULTURAL LTD., marketers and suppliers of agriculture materials and inputs,
ACE AUTO DEPOT
LTD., 41.77%, a public limited company, whose shares are traded on the Tel Aviv
Stock Exchange, current market value US$ 48.4 million, own 100% of ACE
MARKETING CHAINS - CONSUMER PRODUCTS LTD., retail chain, importers, marketers
and retailers of do-it-yourself products known as "ACE".
Other 3 lines are
Financial services (GAON CAPITAL MARKETS LTD., 100%, holding several companies
(headed by GAON INVESTMENT HOUSE LTD.), Real estate (B. GAON REAL ESTATE LTD.,
58%, public company) and Agro-industries (headed by GAON-AGRO INDUSTRIES LTD.,
50%, public limited company, current market value US$ 36.6 million).
The Livne Family
also controls, among many others:
TASHTIT
CONSTRUCTION MACHINERY LTD., mining machinery, cranes, trucks, buses. Also
earthmoving contractors.
UNIVERSAL TRACKS
ISRAEL LTD. (U.T.I.), importers and marketers of ISUZU trucks in Israel, 50%.
TAAVURA CEMENT
CONTAINERS LTD., 50%, established in 1960, transporters, including transports
of ready mixed concrete, also carrying out heavy road haulage and earthmoving
works.
BANKERS
Mizrahi Tefahot Bank Ltd., Carlibach Branch (No. 494), Tel Aviv
account No. 470030.
Israel Discount Bank Ltd., Hamasger Branch (No. 088), Tel Aviv
account No. 787.
A check with the Central Banks' database did
not reveal anything detrimental on subject’s a/m accounts.
CHARACTER AND REPUTATION
Nothing
unfavorable learnt.
Subject is one of the
leading local fashion retail chains.
Its main shareholders, the Gaon family and
the Livnat family are well-known businessmen, are each heading leading local
business groups.
The Late Benjamin
(Benny) Gaon, who founded subject (based on earlier activities) was one of
Israel’s leading businessmen. He passed away in May 2008, inheriting his will
among his 4 children (equally), though his son Moshe Gaon was nominated as the
manager in practice of all the estate.
In May 2004, it
was reported that subject will start marketing the LIZ CLAIBORNE fashion brand.
In July 2005,
subject won a NIS 70 million tender of the Ministry of Defense.
In September 2005,
subject won a NIS 42 million tender to provide clothes to the Israeli Police.
In January 2006,
it was reported that subject will start marketing the MAVI brand in Israel and
in December that year, reported that subject will sell “Abercrombie &
Fitch” fashion in Israel.
On 20.11.2006 H & O FASHION signed an
agreement to acquire 63.25% of subject, in consideration of NIS 14.5 million in
cash. The sum was be divided into NIS 8 million into TAGWOMAN and NIS 6.5
million to TAGWOMAN 's founding 4 shareholders. On 27.11.2006 the Commissioner
for Trade Restrictions approved the merger. The transaction was finalized on
15.1.2007.
The TAGWOMAN chain was comprized of TAG
WOMAN LTD. and TAG WOMAN FASHION (2005) LTD.
Subject’s chairman, Mr. Peleg, said that
they intends to keep the positioning of H&O as a fashion chain to all the
family, while TAGWOMAN keep in its line.
In addition, subject was granted an option
to purchase the rest of their stakes for further sum of NIS 8.31 million -
which was exercised in June 2008 (earlier than initially determined on).
Apparently, TAGWOMAN has been in carries
hefty financial troubles, which shows up in subject’s financial statements.
Subject excersized a streamlining process in TAGWOMAN and recovery plan.
In April 2008, it
was reported that subject is launching new concept shops under the name “H&O
Look”, with investment of NIS 4 million. The first store will be opened in
Kiryat Ono and further 6 stores are planned.
Subject’s Chairan
said they will invest NIS 3 million in promotion acmpaign, in the framework of
the launching of a new line "H&O Trend" for ladies.
In August 2008,
subject’s board decided on a move to unify subject’s and subsidiary TAG WOMAN
operations, according to which all of subject’s business activities will be
transferred into TAG WOMAN, thus subject will become a holding company (as part
of a wider move described above).
The local textile
and fashion market is valued at NIS 7.5 billion per annum, NIS 6 billion of
which is attributed to the fashion branch.
According to the
Central Bureau of Statistics, the current spending for private consumption in
2007 for clothing, footwear and personal items rose by 11.3% comparing to 2006
(10% increase in 2006 from 2005), as part of the general trend in 2007 of
higher current expenses for private consumption per capita (7% increase).
According to
surveys, around 50% and more is women's fashion. Moreover, 40% of fashion
stores in Israel belong to fashion chains, the rest being private shops.
In 2006, sales to
the local market rose 13% from 2005 to NIS 5.18 billion.
Imported apparel summed up in 2006 to US$
990 million (4% increase from 2005), of which US$ 606 million were from China.
SUMMARY
Good for trade
engagements.
Maximum unsecured
credit recommended US$ 2,500,000.
FOREIGN EXCHANGE
RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.46.25 |
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UK Pound |
1 |
Rs.85.92 |
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Euro |
1 |
Rs.68.11 |
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%)