The financials of haulage company Fridenson Logistic Services (TASE: FRDN) allow a peek into what's happening at Tel Aviv bicycle rental venture Tel-O-Fun, in which it is a 45% partner with Eitan Shamir (45%) and Danny Spielman (10%). The 2017 results indicate a continuing decline in performance and in the venture's popularity.
Tel-O-Fun's revenue fell 4% in 2017 to NIS 19.5 million, and it switched to an operating loss of NIS 1.5 million. This negative result is a continuation of the trend from the previous year, in which Tel-O-Fun recorded a decline in revenue and operating profit. Fridenson says that Tel-O-Fun's losses mainly stem from the cost of repairing and replacing vandalized locks.
The outstanding negative figure from last year is a 23% decline in the number of annual subscriptions to the service. There were 6,650 subscribers at the end of 2017, compared with 8,600 at the end of 2016. Tel-O-Fun has a NIS 200,000 deficit on shareholders' equity.
In the Tel-O-Fun venture, which it operates through FSM, Fridenson and its partners provide infrastructure and operating services for the bicycle rental system owned by the Tel Aviv Municipality, including rental stations, bicycles, computer system, website, customer service and support, maintenance, repairs, and usage fee collection. The agreement with the Tel Aviv Municipality was for ten years. The set-up stage of the project was completed in 2011, and it started operating in 2012, and has even been extended to the neighboring cities of Givatayim and Ramat Gan.
FSM has current liabilities of NIS 8 million, and its plans for meeting its obligations in the future "rest on, among other things, a forecast improvement in activity as a result of completion of the second generation locking system, and on support from the shareholders."
The Tel-O-Fun business is fairly unimportant in relation to Fridenson's total business, representing just 10% of its revenue, which rose 9% in 2017 to NIS 290 million. The company's operating profit rose 13% to NIS 17 million, but a rise in its tax expense eroded its net profit by 6%, to less than NIS 10 million.
Published by Globes [online], Israel business news - www.globes-online.com - on March 25, 2018
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