Isracard becomes more efficient – the capital market

The Isracard board of directors approved the efficiency plan, which includes the retirement of about 100 employees in a collective agreement, in addition to the termination of the employment of about 100 additional employees employed through outsourcing or a personal contract during 2021. The cost of the retirement plan is estimated by the company at NIS 35-45 million. . The expected annual savings from these moves, after their completion, is about NIS 40-50 million per year. This is in fact good news for shareholders – an addition of tens of millions to the bottom line, means an addition of hundreds of millions to the value of the company, which is currently traded at NIS 2 billion. If we refer to the company’s current multiplier – about 8, then in a rough calculation, this is an added value of at least NIS 200 million.

The employees in the collective agreement that will be included in the proposed retirement plan will receive increased compensation at a rate of up to 200% in excess of the amount of compensation provided by law. These employees will retire by the end of 2021. This plan has been formulated together with the company’s employee representatives.

In the meantime, the company announced the cessation of a technological project (implementation of an external platform) and a move towards self-development of the essential basic components of the project, as part of preparing to implement the group’s strategy alongside dynamic changes in the competitive environment and macroeconomic environment.

In the company’s view, the cessation of the project is expected to help the company streamline its resource allocation and diversion to support current business and operational needs, and the transition costs for self-development of the project’s essential components are significantly lower than the project’s continuation. In light of the termination of the project, the company estimates that in its financial statements for the year ending December 31, 2020, a one-time expense in the range of NIS 67-71 million before tax will be recorded.

Dr. Ron Wexler, CEO of the Isracard Group: “The streamlining measures and the voluntary retirement plan that we announced today are part of a broad strategic plan to change the face of the Isracard Group. It is clear to us that the handling of the company’s expenses is necessary and required, and we will continue to act on the issue.

“Isracard’s management works in cooperation with the employees’ representatives in order to lead these changes by agreement, for the benefit of all Isracard’s stakeholders – shareholders, employees, suppliers and customers.”