11 Aug 2008 07:00
Palm Hills Developments Announces 2008 Consolidated IFRS Interim Results
EBIT Grows by 1,937% to EGP 480.6 million (US$90.7 million)1
Cairo, August 11 2008 - Palm Hills Developments S.A.E. (PHD), a leading Egyptian real-estate developer specializing primarily in high-end residential real-estate and luxury resort projects, announced its financial results for the six-month period ending June 30, 2008. PHD is listed on Cairo & Alexandria Stock Exchanges (CASE) and on the London Stock Exchange (LSE).
HIGHLIGHTS
Strong growth: 859% increase in consolidated net sales of EGP 765.9 million (US$144.5 million) for H1 2008 (H1 2007: EGP 79.9 million/US$15.1 million). The excellent top line progress reflects the strong contributions from all projects.
Higher reservations2:169% growth reaching EGP 2,756.7 million (US$520.1 million) in H1 2008 (H1 2007: EGP 1,025.7 million/US$193.5 million). Figures quoted are gross reservations net of returns.
Total contract values: rose 785% recording EGP 1,897.6 million (US$358 million) (H1 2007: EGP 214.4 million/US$40.5 million) during the year-ago period.
EBIT: grew 1,937% to EGP 480.6 million (US$90.7 million) (H1 2007: EGP 23.6 million/US$4.5 million) with a sharp rise in EBIT margin to 63% (H1 2007: 30%)
Net profit: grew 1,498% to EGP 362 million (US$68.3 million) (H1 2007: EGP 22.6 million/US$4.3 million).
Land bank continues to grow: total land bank reached 47.5 million sqm, (+26%) since March 31, 2008.
Financial Leverage: down to 2.1x as of 30 June 2008, from 4.5x at 2007 year-end.
Commenting on the interim results, Yasseen Mansour, Chairman and CEO, said:
"Palm Hills delivered stellar performance in H1 2008 with solid sales growth, strong financial results and increased shareholders' return. PHD has managed to compile a number of absolute advantages that will continue to sustain its remarkable performance, all the way from securing exclusive affiliations with strategic partners to maintaining a formidable sales team that excels in exceeding sales targets every quarter."
___________________________________1. Based on EGP/US$5.3
2. Gross reservations net of returns
H1 2008 Financial Highlights
Overview
The financial results for H1 2008 provide direct evidence of the astounding efforts made by PHD to promote and deliver on its investment in Middle Eastern real estate. Consolidated net sales rose 859% in H1 2008 to EGP 765.9 million (US$144.5 million) (H1 2007: EGP 79.9 million/US$15.1 million) driven by solid contributions from all available projects including our first contribution form the Bamboo Extension Project.3.
PHD continues to set records such as selling 62% of phase I of the Village Gate project in New Cairo, within 30 days of its launch in June 2008. This provides a good indication of the persisting need and ever-increasing demand for value-added gated communities and points to the promising market opportunities available for integrated property projects.
Contrary to the commonly held belief in the Egyptian property market that delays in unit delivery are inevitable, PHD has brought forward its scheduled delivery dates for phases 6 and 7 ( Bamboo and Golden Palm projects) from December 2008 to August 2008 (Bamboo) and from June 2009 to November 2008 (Golden Palms).
Reservations for H1 2008 grew 169% to hit an all-time high of EGP 2,756.7 million (US$520.1 million) compared to EGP 1,025.7 million (US$193.5 million) for the same period last year. Signed contracts at Hacienda Bay, Casa, Bamboo Extension and Golf View projects drove contracts' value to EGP 1,897.6 million (US$358 million) in H1 2008 versus EGP 214.4 million (US$40.5 million) in H1 2007, with new contracted units reaching 1,145 units in H1 2008 (H1 2007: 252 units).
Despite higher Selling, General & Administrative Expenses costs stemming from active recruitment and greater expenditures on marketing and advertising activities during the summer season, as well as income tax expenses on taxable projects, bottom-line profit achieved a tremendous growth of 1498% at EGP 362 million (US$68.2 million) (2007: EGP 22.6 million/US$4.3 million)
Land Bank
PHD succeeded in expanding its land bank portfolio, currently totaling 47.5 million sqm, a considerable 26% increase from Q1 2008. Over the course of the second quarter, PHD added 9.8 million sqm including: i) 6.6 million sqm in Saudi Arabia ii) 0.8 million sqm in Sixth of October iii) 0.2 million sqm in New Cairo iv) 1.3 million sqm on the North Coast in addition to v) 1 million sqm in Aswan. PHD's diversification of its portfolio continues to be a successful means of hedging against potential market and property risks.
Outlook
Palm Hills Developments expects continued growth in 2008 driven by continued demand for its developments and leveraging on its two exclusive joint ventures agreements. The former is with Shehab Mazhar, Egypt's most prominent architect and master planner. The latter is with Allam Sons Construction Company, one of Egypt's leading construction conglomerates. These partnerships secure an exclusivity for both design and construction which will guarantee the finest living space designs and delivery timetable schedules for our clients.
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3. Q1 2008 consolidated financials excluded the Bamboo Extension project's figures as the company's acquisition had been finalized during Q2 2008
Table 1 - Q2 2008 & H1 2008 Operating Results (EGP '000)4
|
| Q2 2007 | H1 2007 | Q2 2008 | H1 2008 |
| SALES (NET) | 70,960 | 79,867 | 441,136 | 765,877 |
| Cost of sales | (25,255) | (29,654) | (132,250) | (197,964) |
| GROSS PROFIT | 45,705 | 50,213 | 308,887 | 567,913 |
| Margin% | 64.41% | 62.87% | 70.02% | 74.15% |
| Selling, General & Administrative Expenses | (21,608) | (26,620) | (52,225) | (87,362) |
| OPERATING PROFIT (EBIT) | 24,097 | 23,593 | 256,662 | 480,551 |
| Margin% | 33.96% | 29.5% | 58.18% | 62.75% |
| Other income | 469 | 751 | 5,292 | 6,869 |
| Interest income - Amortization of discount | 1,076 | 3,494 | 26,300 | 34,694 |
| Finance costs | (7,032) | (7,221) | (59,125) | (93,602) |
| PROFIT BEFORE TAX | 18,610 | 20,618 | 229,129 | 428,512 |
| Income tax expense | 0 | 0 | (38,964) | (70,043) |
| PROFIT FOR THE YEAR | 18,610 | 20,618 | 190,165 | 358,469 |
| Minority interest | 1,762 | 2,010 | 3,694 | 3,224 |
| NET PROFIT AFTER MINORITY | 20,372 | 22,628 | 193,859 | 361,692 |
| Margin% | 29% | 28% | 44% | 47% |
| EARNING PER SHARE | 1.55 | |||
| NO OF SHARES OUTSTANDING | 465,920,000 | |||
| PRICE TO EARNING RATIO (x)* | 9.7 |
N.B
Palm Hills Developments recognizes its villas and town houses revenues from land upon signature of a contract while revenues from construction are recognized on a percentage of completion basis with a minimum threshold of 50%. Revenues from apartments and multi tenant buildings are recognized upon delivery. As a result, total revenues figure on the Income Statement during a period does not reflect neither reservations nor construction revenues from villas and town houses less than 50% completed or any revenues from apartments.
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4.Figures presented are prepared according to IFRS.
* Based on a market price of EGP 15/share
Table 2 - Performance by Project
| Project | Sales Launch | Total Reservations | Total Contract Value | ||||||
| H1 07 | H1 08 | H1 07 | H1 08 | ||||||
| No. of units | Value (000) | No. of units | Value | No. of units | Value | No. of units | Value | ||
| Cascade (6) | Mar-05 | 8 | 7,829 | 0 | 0 | 12 | 12,003 | 0 | 0 |
| Bamboo (7) | Jun-05 | 13 | 7,942 | 0 | 0 | 24 | 14,601 | 0 | 0 |
| Golden Palm (8) | Jun-05 | 13 | 22,747 | 4 | 8,167 | 10 | 14,854 | 16 | 40,496 |
| Golf Views | Jun-05 | 64 | 254,138 | 18 | 170,038 | 0 | 0 | 105 | 390,154 |
| Golf Extension | Jan-08 | 0 | 0 | 185 | 510,524 | 0 | 0 | 0 | 0 |
| Kattameya | Jul-06 | 93 | 213,654 | 68 | 227,752 | 56 | 111,126 | 84 | 268,089 |
| Bamboo Extension | May-07 | 38 | 89,061 | 17 | 30,581 | 0 | 0 | 114 | 248,423 |
| Hacienda Bay | Jul-07 | 0 | 0 | 74 | 142,499 | 0 | 0 | 355 | 621,441 |
| Casa | Jun-07 | 653 | 407,807 | 81 | 72,461 | 0 | 0 | 350 | 248,376 |
| The Village | Nov-06 | 45 | 22,545 | 104 | 73,322 | 150 | 61,786 | 121 | 80,634 |
| The Village Extension | Jun-08 | 0 | 0 | 269 | 189,529 | 0 | 0 | 0 | 0 |
| Palm Parks | Dec-07 | 0 | 0 | 422 | 368,601 | 0 | 0 | 0 | 0 |
| Ain Sokhna | Feb-08 | 0 | 0 | 879 | 963,207 | 0 | 0 | 0 | 0 |
| Grand Total |
| 927 | 1,025,723 | 2,121 | 2,756,682 | 252 | 214,371 | 1,145 | 1,897,613 |
FOR FURTHER INFORMATION CONTACT
Egypt
Rasha El Husseiny
Director Investor Relations, Financial Planning & Budgeting
Email: rasha.elhusseiny@palmhillsegypt.com
Tel: + (202) 3338 2301/2/3
Heba El Beleidy
Assistant Manager Investor Relations
Palm Hills Developments
Email : heba. elbeleidy@palmhillsegypt.com
Tel: +(202) 3338 2301/2/3
United Kingdom
James Chandler/James White
Weber Shandwick Financial
Email: jchandler@webershandwick.com/jwhite@webershandwick.com
Tel: +44 (0)207 067 0700
About Palm Hills Developments
www.palmhillsdevelopments.com
PHD is a leading real-estate developer in the Egyptian market, developing primarily high-end residential real estate and resort projects. The market value of PHD's properties as at March 1st, 2008 has been independently valued by CB Richard Ellis (CBRE) at EGP 19.5 billion (US$3.5 billion). Palm Hills Developments is listed on Cairo & Alexandria Stock Exchanges (CASE) under the symbol PHDC.CA and on London Stock Exchange (LSE) under the symbol of PHDCq.L.