MIRA INFORM REPORT

 

 

Report No. :

508164

Report Date :

11.05.2018

 

 

 

IDENTIFICATION DETAILS

 

Name :

SCOPE METALS GROUP LTD.

 

 

Registered Office :

P.O. Box 3, 3 Hamerkava Street, Re'em Industrial Zone, Bnei Ayish 6086000

 

 

Country :

Israel

 

 

Financials (as on) :

31.12.2017 (Consolidated)

 

 

Date of Incorporation :

27.04.1980

 

 

Legal Form :

Public Limited Company

 

 

Line of Business :

·         A global distribution and industrial metal supply center, handling a wide range of metals & engineering plastic products under one roof. Subject & Group operate as trades, importers, exporters and marketers in the alloys “white metal” area, including Steel & Stainless Steel, Aluminum, Copper, Bronze, Brass, Titanium, Lead and Zinc.

·         Products include pipes, bolts & nuts, fittings, welding equipment, nets and cables, fasteners, plates, etc., for the various industries and construction.

·         Subject provides also stock storage facilities, cutting and sawing services ("one-stop-shop" model).

·         Also operate in the real estate field (very low volume).

 

 

No. of Employees :

228

 

 

RATING & COMMENTS

(Mira Inform has adopted New Rating mechanism w.e.f. 23rd January 2017)

 

MIRA’s Rating :

A

 

Credit Rating

Explanation

 

Rating Comments

A

Acceptable Risk

Business dealings permissible with moderate risk of default

 

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

NOTES:

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

 

 

ECGC Country Risk Classification List

 

Country Name

Previous Rating

(30.09.2017)

Current Rating

(31.12.2017)

Israel

B1

B1

 

Risk Category

ECGC

Classification

Insignificant

 

A1

Low Risk

 

A2

Moderately Low Risk

 

B1

Moderate Risk

 

B2

Moderately High Risk

 

C1

High Risk

 

C2

Very High Risk

 

D

 

 

 

ISRAEL - ECONOMIC OVERVIEW

 

Israel has a technologically advanced free market economy. Cut diamonds, high-technology equipment, and pharmaceuticals are among its leading exports. Its major imports include crude oil, grains, raw materials, and military equipment. Israel usually posts sizable trade deficits, which are offset by tourism and other service exports, as well as significant foreign investment inflows.

Between 2004 and 2013, growth averaged nearly 5% per year, led by exports. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals, following years of prudent fiscal policy and a resilient banking sector. Israel's economy also weathered the 2011 Arab Spring because strong trade ties outside the Middle East insulated the economy from spillover effects.

Slowing domestic and international demand and decreased investment resulting from Israel’s uncertain security situation reduced GDP growth to an average of roughly 2.8% per year during the period 2014-17. Natural gas fields discovered off Israel's coast since 2009 have brightened Israel's energy security outlook. The Tamar and Leviathan fields were some of the world's largest offshore natural gas finds in the last decade. Political and regulatory issues have delayed the development of the massive Leviathan field, but production from Tamar provided a 0.8% boost to Israel's GDP in 2013 and a 0.3% boost in 2014. One of the most carbon intense OECD countries, Israel generates about 57% of its power from coal and only 2.6% from renewable sources.

Income inequality and high housing and commodity prices continue to be a concern for many Israelis. Israel's income inequality and poverty rates are among the highest of OECD countries, and there is a broad perception among the public that a small number of "tycoons" have a cartel-like grip over the major parts of the economy. Government officials have called for reforms to boost the housing supply and to increase competition in the banking sector to address these public grievances. Despite calls for reforms, the restricted housing supply continues to impact younger Israelis seeking to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed prices and customs tariffs for farmers kept food prices high in 2016. Private consumption is expected to drive growth through 2018, with consumers benefitting from low inflation and a strong currency.

In the long term, Israel faces structural issues including low labor participation rates for its fastest growing social segments - the ultraorthodox and Arab-Israeli communities. Also, Israel's progressive, globally competitive, knowledge-based technology sector employs only about 8% of the workforce, with the rest mostly employed in manufacturing and services - sectors which face downward wage pressures from global competition. Expenditures on educational institutions remain low compared to most other OECD countries with similar GDP per capita.

 

Source : CIA

 

 

COMPANY NAME AND ADDRESS

 

SCOPE METALS GROUP

 

Correct Name:         SCOPE METALS GROUP LTD.

                              Telephone         972 8 863 10 00

                              Fax                   972 8 863 10 20

                              Email: info@scope.co.il

                              P.O. Box 3

                              3 Hamerkava Street

                              Re'em Industrial Zone

                              BNEI AYISH 6086000 ISRAEL

 

 

HISTORY & LEGAL FORMATION

 

Originally incorporated as a private limited company, registered as per file No. 51-084980-5 on the 27.04.1980.

Converted into a public limited company, registered as such as per file  No. 52-003742-5 on the 30.04.1992 and in parallel published a prospectus, listing its shares for trade on the Tel Aviv Stock Exchange, raising a sum of US$ 2.5 million.

Originally registered under the name SCOPE TRADING & FOOD MARKETING LTD., which changed to SCOPE METALS TRADING AND TECHNICAL SERVICES LTD. on the 05.04.1981, which changed to the present name on the 19.08.2007.

 

 

SHARE CAPITAL

 

Authorized share capital NIS 30,000,000.00, divided into: -

30,000,000 ordinary shares of NIS 1.00 each, of which 10,893,871 shares amounting to NIS 10,893,871.00 were issued.

 

 

SHAREHOLDERS

 

1.  Shmuel Shiloh (chiefly via fully owned company COTSERVE COMMERCIAL AND TECHNICAL SERVICES LTD.), 45%,

2.  Institutional Investors: MIGDAL INSURANCE (8.8%), Y.D. MORE INVESTMENTS LTD. (8.4%), HAREL (6.2%),

3.  Shares are also traded on the Tel Aviv Stock Exchange.

 

In 2006, FIMI Investment Fund acquired some 30% in subject, for NIS 157 million. During 2013 FIMI Fund sold its stake in subject (sold 9% to Shmuel Shiloh in May for NIS 45.1 million, then gradually sold the rest of its holdings.

 

 

DIRECTORS

 

1.      Shmuel Shiloh, Chairman,

2.      Yuval Ben Zeev,

3.      Ms. Ifat Adoram Zak,

4.      Eyal Shavit,

5.      Ms. Orna Lichtenstein,

6.      Eran Shmuel Hadar.

 

 

GENERAL MANAGER

 

Gil Haver.

 

 

BUSINESS

 

A global distribution and industrial metal supply center, handling a wide range of metals & engineering plastic products under one roof. Subject & Group operate as trades, importers, exporters and marketers in the alloys “white metal” area, including Steel & Stainless Steel, Aluminum, Copper, Bronze, Brass, Titanium, Lead and Zinc.

 

Products include pipes, bolts & nuts, fittings, welding equipment, nets and cables, fasteners, plates, etc., for the various industries and construction. Having an inventory of over 80,000 different items.

 

Subject provides also stock storage facilities, cutting and sawing services ("one-stop-shop" model).

 

Also operate in the real estate field (very low volume).

 

Having over 4,500 local clients, and 30 foreign clients. Foreign subsidiaries have over 9,000 clients.

 

The Group operates via subsidiaries abroad (USA, Czech Republic, Poland, Romania and China). 58% of sales were for export in 2017 (55% in 2016). Exports are to Romania, Bulgaria, Moldova, Russia, Greece, India, Cyprus, Kenya, Egypt, Turkey and Ukraine.

 

95% of purchasing is imported.

 

Among local suppliers: BETH EL ZIKHRON YAAQOV INDSTRIES, MODGAL METAL, UNITRONICS, LIROM TECHNICAL EQUIPMENT, CARMIEL PIPE FITTINGS, 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.

 

Among clientele are: ISRAEL AEROSPACE INDUSTRIES, RAFAEL ADVANCED DEFENSE SYSTEMS, INCOMAC, GOLD BAR, M.G.T. ISRAEL TASIYOT- MIFALEI TRIFMAN, ENERGETICA GENERAL ENGINEERING & HEAT SYSTEMS, BERMAD, A.Z. INDUSTRIES, SHATAL ENGINEERING, SELA ELECTRONICS SYSTEMS, ALUM ESHET (OMAN), VERED EROSIA, ISI YOGEV TECHNOLOGIES, A.B.M PLASTIC INDUSTRIES, ELCON MAMAB CONTROL INSTRUMENTS, INCO ENGIENERING SERVICES, AHARON YOSEF & SONS PACKAGING INDUSTRIES, MODOTEC, ALEX ORIGINAL, TELEMENIA, TECH-MICRON, MEM-BET, CARMEX PRECISION TOOLS, NGB TECHNOLOGIES, BSF METALS, “HAMESHAVEV” MILLING, BRAND INDUSTRIES, ALUMLIGHT, HIRSCHFELD METALS, etc.

 

Operating from premises, a site which includes owned area of 50,366 sq. meters and leased area of 27,500 sq. meters (includes 45,400 sq. meters built, of which 43,000 sq. meters warehouses), in 3 Hamerkava Street, Re'em Industrial Zone, Bnei Ayish, and from branches in the USA, China, Romania, Poland, Korea and the Czech Republic. Subsidiary KADISHI-URI also owns a plot in the USA of 100,000 sq. meters (35,000 sq. meters built), serving HADCO METAL's activities (see more in CHARACTER).

Website: www.scope.co.il

 

Having 498 employees serving whole SCOPE Group (had 533 employees in end of 2016, 614 employees in end of 2015), of which 228 employees in subject itself, in Israel (had 247 employees in end of 2016).

 

 

MEANS

 

Consolidated B/S shows:

 

                                                                                           NIS (thousands)

                                                                                       31.12.2016            31.12.2017

ASSETS

Current assets

     Cash & cash equivalents                                                  214,952                 195,280

     Other financial assets                                                        12,320                  64,320

     Customers                                                                       347,555                 290,398

     Other debtors                                                                    15,667                  18,176

     Stock                                                                              424,607                 438,767

                                                                                         1,015,101              1,006,941

Non-current assets

     Fixed assets (net)                                                            324,228                 328,339

     Goodwill & intangible assets                                              13,862                  13,929

     Other non-current assets                                                      7,268                  25,668

                                                                                           345,358                 367,936

                                                                                         1,360,459              1,374,877

                                                                                       ========            ========

 

LIABILITIES

Current liabilities

     Short-term credit from banks & current

       maturities of loans from banks, bonds                           255,316                 225,611

     Other current liabilities                                                      121,324                 128,789

                                                                                           376,640                 354,400

Non-current liabilities

     Credit from banks & others                                              533,643                 565,480

     Deferred taxes                                                                  26,548                  26,252

                                                                                           560,191                 591,732

Equity                                                                                  423,628                 428,745

                                                                                         1,360,459              1,374,877

                                                                                       ========            ========

 

 

Current market value US$ 279 million.

 

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.

 

There are no charges registered on the company's assets.

 

REVENUES

                                                                      Consolidated Statements of Income

                                                                                      NIS (thousands)

                                                                             Year ended December 31st

                                                                            2015                  2016               2017

Revenues                                                          1,436,701         1,307,884         1,201,553

Gross profit                                                         309,999            342,909            359,444

Operating income                                                  83,501            122,983            136,983

Profits before taxes on income                              57,264              96,618            109,177

Net income                                                            40,644              81,236              94,211

                                                                      ========        ========       ========

 

 

OTHER COMPANIES

 

ADIT INDUSTRY BUILDINGS LTD., 100%, real estate holdings,

ILERLI TIN PROCESSING LTD., 100%, tin processing,

GILINOX S.R.L., 100%, Romania,

SCOPE METALS USA INC., 100%, USA, fully owns 3 U.S. subsidiaries: MATERIALS TECHNOLOGY SOLUTIONS LLC. (M.T.S.) – trading in metals in the USA, KADISH-URI INVESTMENT LLC (non-active) and HADCO METAL TRADING LLC. – processing and trading in metals in the USA, which owns HADCO METAL KOREA LLC (Korea) and BUYMETAL.COM LLC (USA).

EL-ZON HOLDINGS LTD., 100%, no commercial activity,

PRIMAPOL METAL SPOT S.R.O., 100%, Czech Republic, owns ALINOX POLSKA Sp.z.o.o., of Poland which fully owns ALINOX UKRAINE LTD. of Ukraine and FIRE PROTECTION 24 SP.O.O. (Poland).

 

                                                                                                                            

BANKERS

 

Bank Leumi Le’Israel Ltd., Principal Branch Tel Aviv (No. 800), Tel Aviv.

Bank Hapoalim Ltd., Rehovot Business Branch (No. 412), Rehovot.

Israel Discount Bank Ltd., Main Branch (No. 10), 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. 46), Tel Aviv.

Union Bank of Israel Ltd., Ashdod Branch (No. 71), Ashdod.

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 considered a local leading company in the "white metals" sector.

Subject is ISO 9002 certified.

 

In 2002, subject acquired 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.

 

In 2004 subject acquired all stock of GLOBAL METALS, a local metal company which went into receivership, as well as acquiring 51% of an American metal trading company M.T.S., for a sum of US$ 500,000.

 

In 2004 subject established a new subsidiary in the Czech Republic, which in 2005 acquired the activities of a metal trading Czech company, for € 895,000.

 

In 2006 subject acquired American metal trading firm through HADCO, a subsidiary of the USA, for a sum of US$ 11 million.

 

In 2006, subject acquired a 10,000 sq. meters plot in Romania, for a sum of € 1 million and invested in warehouses an additional € 1.7 million.

 

In 2006 subject reported it signed an agreement to purchase aluminum products in volume of US$ 40-44 million from a European plant, in the framework of subject's international expansion plans.

 

In 2009 it was reported that subject will install a solar system by GINERGIA on the roofs of its plant for NIS 1 million, and will further install a larger system for some NIS 20 million.

 

During 2014 HADCO METAL established BUYMETAL for the trade in HADCO's goods. Activities began in Q1 2015, currently in a non-significant volume.

 

In April 2015 KADISH-URI completed the acquisition of a plot of 100,000 sq. meters in the USA (35,000 sq. meters built), for US$ 9.2 million, for the activities of HADCO.

 

According to the Central Bureau of Statistics (CBS), export by the local Manufacturing of Fabricated Metal Products, Machinery & Equipment and Domestic Appliances witnessed 1.6% decrease in 2017 from 2016 to US$ 5,851.5 million, after 8.4% increase in 2016 from 2015 and 9.1% decrease in 2015 from 2014.

 

Export by local Manufacturing of Basic Metals saw 14.8% increase in 2017 from 2016 to US$ 626.4 million, a change in trend after consecutive years of decrease in export since 2012. Export by the local non-metalic mineral products manufacturing in 2017 also recorded an increase of 4.7% to US$ 454.1 million, after steady trend in the last several years.

 

The local Metal, Electricity and Infrastructure Industries manufacture 21% of Israel's industrial prodction, according to data by the Metal, Electrical and Infrastructure Industries Association, representing, large scale export-oriented industries on one hand and family-owned plants which sell to the local market.

 

2012 sales (local and export) by the said industries amounted to NIS 75 billion, of which US$ 9 billion were for export (20% of Israel's industrial export).

 

The CBS data on import of metals raw materials to the local industries: Import of Iron and Steel in 2017 summed up to US$ 2,198 million, 13.7% increase from 2016 (US$ terms, 6.5% rise in NIS currency terns),  after 1.6% decrease in 2016 from 2015 (-3% in NIS terms); Import of Precious Metals in 2017 rose by 10.6%, summing up to US$ 178 million (up 3.7% in NIS terms), after 6% rise in 2016 from the previous year; Import of Non-ferrous Metals marked 14.3% rise in 2017 from 2016 to US$ 782.5 million (7.1% in NIS terms), after 7% decrease in 2016 from 2015.

 

The CBS data on investment in imported machinery and other equipment for the manufacturing industry in 2017 (quantity change percent change on previous year): investments in the manufacture of basic metal totaled NIS 202.8 million, representing 24.5% decrease, after close to 30% increase in 2016; investments in the manufacture of fabricated metal products was NIS 1,047 million, 14.2% increase, after decrease by 1.1% in 2016.

 

 

SUMMARY

 

Good for trade engagements.

 

 

Note: Since February 2013 Israel Post has started using a new area code method of 7 digits (the old method of 5 digits is no longer valid).

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

INR 67.38

UK Pound

1

INR 91.39

Euro

1

INR 79.89

ILS

1

INR 18.83

Note: Above are approximate rates obtained from sources believed to be correct

 

 

INFORMATION DETAILS

 

Analysis Done by :

PRA

 

 

Report Prepared by :

NIT

 

 

 

RATING EXPLANATIONS

 

Credit Rating

 

Explanation

Rating Comments

A++

Minimum Risk

Business dealings permissible with minimum risk of default

A+

Low Risk

Business dealings permissible with low risk of default

A

Acceptable Risk

Business dealings permissible with moderate risk of default

B

Medium Risk

Business dealings permissible on a regular monitoring basis

C

Medium High Risk

Business dealings permissible preferably on secured basis

D

High Risk

Business dealing not recommended or on secured terms only

NB

New Business

No recommendation can be done due to business in infancy stage

NT

No Trace

No recommendation can be done as the business is not traceable

 

NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.

 

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 are as follows:

 

·         Financial condition covering various ratios

·         Company background and operations size

·         Promoters / Management background

·         Payment record

·         Litigation against the subject

·         Industry scenario / competitor analysis

·         Supplier / Customer / Banker review (wherever available)

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.