9 Nov 2009 09:33
Palm Hills Developments Continues to Regain Solid Grounds with Strong Financial Results for Third Quarter 2009
Cairo, November 8, 2009 - Palm Hills Developments S.A.E. (PHD), a leading Egyptian real-estate developer, announced its financial results for the nine-month period ending 30 September 2009. PHD is listed on the Egyptian Stock Exchange and on the London Stock Exchange (LSE).
HIGHLIGHTS
Total Reservations were ahead of management expectations at EGP 1.2billion (US$ 220million) in Q3 2009, an increase of 147% from Q2 2009 of EGP 472 million (US$ 86 million) and an increase of 23% from Q3 2008 of EGP 952 million (US$174 million).
Gross contracts signed in Q3 2009 increased 15% in value to EGP 924 million (US $169 million) compared with EGP 807 million (US $148 million) in Q2 2009 and increased 27% compared with EGP 729 million (US$133 million) in Q3 2008.
PHD's customer base increased to 5,400 clients, representing a 27 % increase from December 31st 2008, benefiting from a deliberate widening of the product and pricing range to attract new customers.
Further good progress against a background of continuing uncertain world economic conditions. Net Sales in Q3 2009 recorded strong growth of 25% to EGP 303 million (US $55 million) over EGP 242 million (US $44 million) in Q2 2009.
Net operating profit for Q3 2009 increased by 70% to EGP 180 million (US $33 million) compared to EGP 106 million (US $19 million) in Q2 2009. The growth in our operating profits reflects increased revenues and a strong and successful focus on cost control
Gross profit increased by 59% to EGP 220 million (US $40 million) in Q3 2009, compared to EGP 138 million (US $25 million) in Q2 2009.
SG&A reduced 28% in absolute terms, down from EGP 133 million (US $24 million) in Nine Months 2008 to EGP 96 million (US $18 million) in Nine Months 2009.
EBITDA for Q3 2009 recorded a significant increase of 69% compared to Q2 2009 to reach EGP 182 million (US $33 million), with EBITDA margin reaching 60%.
Net Profit for Q3 2009 recorded strong growth of 38% over Q2 2009 to reach EGP 133 million (US $24 million). Total Nine Months 2009 net profit before minority reached EGP 342 million (US $63 million).
Total land bank remained at 48.8 million sqm.
Bank Debt: Equity 2: dropped from 21% at 30/9/2008 to 20% at 30/9/2009.
-----------------------------------------------------
2 (Bank Overdrafts + Term Loans) / Total Equity
Operational Performance
Cumulative reservations reached EGP 9.1 billion (approximately US $1.7 billion) at September 30 2009. Net sales and operating profit for the nine months period reached EGP 675 million (US $123 million) and EGP 364 million (US $67 million) respectively
PHD demonstrated further good progress in Q3 2009 despite the background of continuing uncertain world economic conditions. The gross value of contracted units amounted to EGP 924 million (US $169 million), compared with EGP 807 million (US $148 million) in Q2 2009 and with EGP 729 million (US$ 133 million) in Q3 2008.
Gross Reservation for Q3 2009 saw a significant increase of 147% to EGP 1.2billion (US$ 220million) compared with EGP 472 million (US$86 million) in Q2 2009. Gross cancellations were at their lowest for four quarters, with EGP 305 million (US$ 56 million) of cancellations in Q3 2009 as opposed to EGP 373 million (US$ 68 million) and EGP 625 million (US$ 114 million) in Q2 2009 and Q1 2009 respectively, an early indication that the market is regaining momentum. Gross Contracts increased by 15% from Q2 2009 and by 27% from Q3 2008.
http://www.rns-pdf.londonstockexchange.com/rns/1812C_1-2009-11-9.pdf
PHD continued to demonstrate that it has the flexibility and resources to respond quickly to benefit from new market demands. The success of our Hacienda Bay (Zone 1) project lead us to quickly launch Hacienda White (Zone 1) in Q3 2009, and this development, primarily for second home owners, is already 100% sold, this further demonstrates the success of our strategy in investing in the North Coast Area.
PHD has responded to market conditions by widening its product and pricing range to attract new customers. This has included smaller unit sizes at more affordable prices. Reflecting this, the average unit sales price during the period was EGP1.2-1.3million, approximately 20% less than 2007/8 prices, and the minimum value of inventory offering has been lowered to EGP0.5million. We have also flexed payment terms, with a reduced 5% deposit for reservations. These moves have had a positive impact on sales without diluting the quality of PHD's business, and demonstrate that demand continues for the right products.
PHD is also in the process of opening new sales offices in Europe (London) and the Gulf regions. This will expand our distribution network and will enhance our ability to generate new clients in these territories.
Financial Performance
With strong revenue growth and a significant increase in net profit figures over Q2 2009, PHD's results for the third quarter of 2009 outperformed expectations.
The increase in net sales is mainly attributed to:
1) The outperformance of our second homes sales, especially in the North Coast Area, where the total recognized land sales revenue from Hacienda Bay (Zone 1) and Hacienda White (Zone 1) reached EGP 132 million (US$ 24 million);
2) The continued progression of reserved units in the Golf and Golf Extension projects into actual contracts, amounting to EGP 245 million (US$ 45 million) with recognized land sales revenue of EGP 61 million (US$ 11 million) and EGP 77 million (US$ 14 million) respectively.
3) The increase in the net contracted units of the Katameya project by 193% from Q2 2009, with recognized land sales revenue of EGP 25 million (US$ 5 million).
PHD continued to focus on tight control of SG&A expenses, with SG&A as a percentage of net sales decreasing to 12.3% from 12.5% in Q2 2009.
EBITDA increased significantly in absolute terms by 69% in Q3 2009 to reach EGP 182 million (US $33 million) from EGP 108 million (US$ 20 million) in Q2 2009. EBITDA margins improved to 60% of net sales.
Net Profit for Q3 2009 showed significant growth of 38% over Q2 2009, with Net Profit before Minority for Nine Months 2009 reaching EGP 342 million (US $63 million).
Land Bank
PHD's strategy is to focus primarily on the execution of its existing projects and developing its sizable land bank, utilizing the current favorable cost saving conditions, boosting EBITDA margins and decreasing construction costs. Nonetheless, PHD will remain diligent regarding the pursuit of unparalleled land acquisition opportunities that complement its existing developments.
Outlook
With one of the largest populations amongst developing countries in need of adequate housing, an expanding economy and a fast developing infrastructure base, the Egyptian real estate market continues to offer PHD exciting opportunities for sustained growth.
We are benefiting from our strong business focus, careful management of all our resources and unmatched presence in the Egyptian market. We continue to develop the Group's current operations while carefully reviewing opportunities for the future. PHD is very well placed to continue to generate good growth during the rest of this year and beyond.
Yasseen Mansour, Chairman and Chief Executive Officer of PHD, said:
"Our good performance against a background of recent very challenging world economic conditions has been based on our detailed understanding of our markets, our strong business model, experienced management team and robust funding platform. The long term dynamics of our marketplace remain healthy and we are well placed to make continued good progress."
Table 1 -Nine Months 2009 vs. Nine Months 2008 Operating Results (EGP '000)1
|
| 9 Months Ended | |||
|
|
|
| 30/9/2009 | 30/9/2008 |
| SALES (NET) |
|
| 675,044 | 1,095,274 |
| Cost of Sales |
|
| (208,041) | (266,600) |
| GROSS PROFIT |
|
| 467,003 | 828,674 |
| Margin% |
|
| 69.18% | 75.66% |
| Selling, General & Administrative Expenses |
|
| (96,021) | (133,438) |
| EBITDA |
|
| 370,982 | 695,236 |
| Margin% |
|
| 54.96% | 63.48% |
| Depreciation and Amortization |
|
| (7,450) | (3,265) |
| OPERATING PROFIT (EBIT) |
|
| 363,532 | 691,972 |
| Margin% |
|
| 53.85% | 63.18% |
| Other Income |
|
| 22,015 | 41,243 |
| Interest Income - Amortization of Discount |
|
| 97,301 | 29,366 |
| Finance Costs |
|
| (42,567) | (63,723) |
| Interest Exp. - Amortization of Discount |
|
| (41,982) | (59,648) |
| PROFIT BEFORE TAX |
|
| 398,299 | 639,210 |
| Income Tax Expense |
|
| (56,663) | (96,908) |
| PROFIT FOR THE YEAR |
|
| 341,636 | 542,302 |
| Minority Interest |
|
| (51,114) | 1,909 |
| NET PROFIT AFTER MINORITY |
|
| 290,522 | 544,211 |
| Margin% |
|
| 43.04% | 49.44% |
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.
1 Figures presented are prepared according to IFRS
| Table 1 - Q3 2009 Vs. Q2 2009 Operating Results (EGP '000)2 | 3 Months Ended | |||
|
|
|
| 30/9/2009 | 30/6/2009 |
| SALES (NET) |
|
| 303,035 | 241,713 |
| Cost of Sales |
|
| (83,364) | (103,590) |
| GROSS PROFIT |
|
| 219,672 | 138,123 |
| Margin% |
|
| 72.49% | 57.14% |
| Selling, General & Administrative Expenses |
|
| (37,253) | (30,097) |
| EBITDA |
|
| 182,418 | 108,025 |
| Margin% |
|
| 60.20% | 44.69% |
| Depreciation and Amortization |
|
| (2,618) | (2,137) |
| OPERATING PROFIT (EBIT) |
|
| 179,800 | 105,888 |
| Margin% |
|
| 59.34% | 43.81% |
| Other Income |
|
| 5,572 | 4,528 |
| Interest Income - Amortization of Discount |
|
| 32,434 | 32,434 |
| Finance Costs |
|
| (18,623) | (8,766) |
| Interest Exp. - Amortization of Discount |
|
| (24,660) | (8,661) |
| PROFIT BEFORE TAX |
|
| 174,542 | 125,422 |
| Income Tax Expense |
|
| (29,085) | (18,037) |
| PROFIT FOR THE YEAR |
|
| 145,437 | 107,385 |
| Minority Interest |
|
| (12,286) | (11,160) |
| NET PROFIT AFTER MINORITY |
|
| 133,151 | 96,225 |
| Margin% |
|
| 43.94% | 39.81% |
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.
2 Figures presented are prepared according to IFRS
-----------------------------------------------
Yasseen Mansour
Chairman and Chief Executive Officer
PALM HILLS DEVELOPMENT CO.
S.A.E AND ITS SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
30 September 2009
REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF PALM HILLS DEVELOPMENT CO. S.A.E AND ITS SUBSIDIARIES
Introduction
We have reviewed the accompanying interim condensed consolidated balance sheet of Palm Hills Development Company S.A.E and its Subsidiaries ('the Group') as at 30 September 2009, comprising of the interim consolidated statement of financial position as at 30 September 2009 and the related interim consolidated statements of comprehensive income, changes in equity and cash flows for the nine-month period then ended and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting ('IAS 34'). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing. Consequently, it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.
Nabil Istanbouli
Partner
Date: 22 October 2009
Egypt
Palm Hills Developments Company S.A.E and its Subsidiaries
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the nine months ended 30 September 2009
| For the nine months ended 30 September 2009 | ||
| 2009 | 2008 | |
| Unaudited | ||
| EGP | EGP | |
| Sales, net | 675,044,461 | 1,095,273,592 |
| Cost of sales | (208,041,236) | (266,599,518) |
| ─────── | ─────── | |
| GROSS PROFIT | 467,003,225 | 828,674,074 |
| Selling and administrative expenses | (103,470,981) | (136,702,242) |
| Interest income | 105,490,457 | 60,646,333 |
| Finance costs | (84,549,555) | (123,370,598) |
| Other income | 13,825,137 | 9,962,754 |
| ─────── | ─────── | |
| PROFIT BEFORE TAX | 398,298,283 | 639,210,321 |
| Income tax expense | (56,662,585) | (96,908,342) |
| ─────── | ─────── | |
| PROFIT FOR THE PERIOD | 341,635,698 | 542,301,979 |
| ═══════ | ═══════ | |
| OTHER COMPREHENSIVE INCOME | - | - |
| ─────── | ─────── | |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX | 341,635,698 | 542,301,979 |
| ═══════ | ═══════ | |
| Profit attributable to: | 290,521,926 | 544,211,124 |
| Equity holders of the parent | 51,113,772 | (1,909,145) |
| Non-controlling interests | ─────── | ─────── |
| 341,635,698 | 542,301,979 | |
| ═══════ | ═══════ | |
| Total comprehensive income attributable to: | ||
| Equity holders of the parent | 290,521,926 | 544,211,124 |
| Non-controlling interests | 51,113,772 | (1,909,145) |
| ─────── | ─────── | |
| 341,635,698 | 542,301,979 | |
| ═══════ | ═══════ | |
| Basic earnings per share attributable to the ordinary equity holders of the parent (expressed in EGP per share) | 0.52 | 1.24 |
| ═══════ | ═══════ | |
Palm Hills Developments Company S.A.E and its Subsidiaries
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2009
| 30 September 2009 Unaudited | 31 December 2008 Audited | |
| EGP | EGP | |
| ASSETS |
| |
| Non-current assets |
| |
| Property and equipment | 560,481,810 | 543,044,803 |
| Advance payments for investments acquisition | 486,878,655 | 470,675,012 |
| Investment in an associate | 245,000 | 245,000 |
| Intangible assets | 43,725,000 | 47,700,000 |
| Notes receivable | 2,256,034,666 | 1,658,430,196 |
| ─────── | ─────── | |
| 3,347,365,131 | 2,720,095,011 | |
| ─────── | ─────── | |
| Current assets | ||
| Notes receivable | 887,627,822 | 683,086,670 |
| Accounts receivable and prepayments | 1,251,191,957 | 318,745,683 |
| Bank balances and cash | 233,766,433 | 279,712,833 |
| Financial assets at fair value through profit or loss - Held for trading | - | 203,433,368 |
| Development properties | 4,815,491,862 | 4,940,216,448 |
| ─────── | ─────── | |
| 7,188,078,074 | 6,425,195,002 | |
| ─────── | ─────── | |
| TOTAL ASSETS | 10,535,443,205 | 9,145,290,013 |
| ═══════ | ═══════ | |
| EQUITY AND LIABILITIES | ||
| Equity attributable to equity holders of the parent | ||
| Share capital | 1,397,760,000 | 931,840,000 |
| Share premium | - | 890,538,204 |
| Statutory reserve | 471,435,177 | 13,635,814 |
| Retained earnings | 1,108,716,723 | 851,375,963 |
| ─────── | ─────── | |
| 2,977,911,900 | 2,687,389,981 | |
| Non-controlling interests | 221,245,411 | 144,810,439 |
| ─────── | ─────── | |
| Total equity | 3,199,157,311 | 2,832,200,420 |
| ─────── | ─────── | |
| Non-current liabilities | ||
| Term loans | 368,211,361 | 379,591,680 |
| Land purchase liabilities | 960,494,226 | 1,652,579,957 |
| Notes payable | 1,542,146,251 | 1,172,180,388 |
| Other non-current liabilities | 257,509,935 | 164,874,504 |
| Deferred tax liability | 2,124,436 | 2,124,436 |
| ─────── | ─────── | |
| Total non-current liabilities | 3,130,486,209 | 3,371,350,965 |
| ─────── | ─────── | |
| Current liabilities | ||
| Bank overdrafts | 90,111,889 | 111,249,739 |
| Current portion of term loans | 187,670,859 | 136,405,712 |
| Current portion of land purchase liabilities | 401,943,007 | 298,545,082 |
| Accounts payable and accruals | 529,272,659 | 266,384,061 |
| Notes payable | 573,230,540 | 261,212,904 |
| Advances from customers | 374,011,082 | 573,596,662 |
| Billings in excess of costs | 1,992,897,279 | 1,236,749,032 |
| Income tax payable | 56,662,370 | 57,595,436 |
| ─────── | ─────── | |
| 4,205,799,685 | 2,941,738,628 | |
| ─────── | ─────── | |
| Total liabilities | 7,336,285,894 | 6,313,089,593 |
| ─────── | ─────── | |
| TOTAL EQUITY AND LIABILITIES | 10,535,443,205 | 9,145,290,013 |
| ═══════ | ══════ |
___________________
Yasseen Mansour
(Chairman)
Palm Hills Developments Company S.A.E and its Subsidiaries
INTERIM CONSOLIDATED CASH FLOW STATEMENT
For the nine months ended 30 September 2009
| For the nine months ended 30 September 2009 | ||
| 2009 | 2008 | |
| Unaudited | ||
| EGP | EGP | |
| OPERATING ACTIVITIES | ||
| Profit before tax | 398,298,283 | 639,210,322 |
| Adjustments to reconcile profit before tax to net cash flows: | ||
| Non cash: | ||
| Depreciation | 7,450,193 | 3,264,589 |
| Amortization of intangible asset | 3,975,000 | - |
| Interest income | (105,490,457) | (60,646,333) |
| Finance cost | 84,549,555 | 123,370,598 |
| Working capital adjustments: | ||
| (Increase) in notes receivable | (704,844,696) | (1,345,863,290) |
| Decrease in financial assets at fair value through profit or loss - held for trading | 203,433,368 | - |
| (Increase) in accounts receivable and prepayments | (932,446,274) | (343,337,988) |
| (Increase) in development properties | (505,945,472) | (540,294,458) |
| Increase in notes payable | 681,983,499 | - |
| Increase / (decrease) in accounts payable and accruals | 262,888,598 | (67,471,175) |
| (Decrease) in advances from customers | (199,585,580) | (23,196,881) |
| Increase in billings in excess of costs | 756,148,247 | 907,320,966 |
| Increase in other non-current liabilities | 92,635,431 | - |
| Interest paid | (42,567,303) | - |
| Tax paid | (57,595,651) | - |
| __________ | __________ | |
| Net cash flows (used in) operating activities | (57,113,259) | (707,643,650) |
| __________ | __________ | |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Purchase of properties and equipment | (24,887,200) | (52,085,859) |
| Advance payments for investments acquisition | (16,203,643) | (51,649,910) |
| Interest received | 8,189,531 | - |
| __________ | __________ | |
| Net cash flows (used in) investing activities | (32,901,312) | (103,735,769) |
| __________ | __________ | |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from shares issued | - | 99,840,000 |
| Proceeds from term loan | 39,884,828 | 219,558,526 |
| Payments for term loan | 110,140,240 | |
| Proceeds from share premium | - | 985,920,000 |
| Minority share in the capital of subsidiaries | 25,321,193 | 22,457,808 |
| ___________ | ___________ | |
| Net cash flows from financing activities | 65,206,021 | 1,437,916,574 |
| ___________ | ___________ | |
| NET INCREASE IN CASH AND CASH EQUIVALENTS | (24,808,550) | 626,537,155 |
| Cash and cash equivalents at 1 January | 168,463,094 | (99,969,750) |
| ___________ | ___________ | |
| CASH AND CASH EQUIVALENTS AT 30 SEPTEMBER | 143,654,544 | 526,567,405 |
| ═══════ | ═══════ | |
| Comprised as follows: | ||
| Bank balances and cash | 233,766,433 | 598,313,843 |
| Bank overdrafts | (90,111,889) | (71,746,438) |
| ___________ | ___________ | |
| 143,654,544 | 526,567,405 | |
| ═══════ | ═══════ | |
Palm Hills Developments Company S.A.E and its Subsidiaries
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the nine months ended 30 September 2009
| Attributable to equity holders of the parent |
|
| ||||||
|
| Share capital | Share premium | Statutory Reserve | Special reserve | Retained earnings | Total | Non-controlling interests | Total |
|
| EGP | EGP | EGP | EGP | EGP | EGP | EGP | EGP |
|
|
|
|
|
|
|
|
|
|
| As at 1 January 2009 | 931,840,000 | 890,538,204 | 13,635,814 | - | 851,375,963 | 2,687,389,981 | 144,810,439 | 2,832,200,420 |
|
| ___________ | __________ | ___________ | ___________ | _________ | __________ | __________ | __________ |
|
|
|
|
|
|
|
|
|
|
| Profit for the period | - | - | - | - | 290,521,926 | 290,521,926 | 51,113,772 | 341,635,698 |
| Other comprehensive income | - | - | - | - | - | - | - | - |
|
| ___________ | __________ | ___________ | ___________ | _________ | _________ | __________ | __________ |
| Total comprehensive income | - | - | - | - | 290,521,926 | 290,521,926 | 51,113,772 | 341,635,698 |
|
| ___________ | __________ | ___________ | ___________ | _________ | __________ | __________ | __________ |
|
|
|
|
|
|
|
|
|
|
| Transfer to reserves and retained earnings | - | (890,538,204) | 457,799,363 | 430,293,851 | 2,444,990 | - | - | - |
| Share Dividends | 465,920,000 | - | - | (430,293,851) | (35,626,149) | - | - | - |
| Non-controlling interests - share in capital of subsidiaries |
- |
- |
- |
- |
- |
- |
25,321,193 |
25,321,193 |
|
| ___________ | ___________ | ___________ | ___________ | _________ | __________ | __________ | __________ |
| At 30 September 2009 (Unaudited) | 1,397,760,000 | - | 471,435,177 | - | 1,108,716,723 | 2,977,911,907 | 221,245,411 | 3,199,157,311 |
|
| ══════ | ══════ | ══════ | ══════ | ══════ | ══════ | ══════ | ══════ |
|
|
|
|
|
|
|
|
|
|
| As at 1 January 2008 | 800,000,000 | - | 13,635,814 | - | 218,173,380 | 1,031,809,194 | 98,642,068 | 1,130,451,262 |
|
| ___________ | __________ | ___________ | ___________ | _________ | __________ | __________ | __________ |
|
|
|
|
|
|
|
|
|
|
| Profit for the period | - | - | - | - | 544,211,124 | 544,211,124 | (1,909,145) | 542,301,979 |
| Other comprehensive income | - | - | - | - | - | - | - | - |
|
| ___________ | __________ | ___________ | ___________ | _________ | __________ | __________ | __________ |
| Total comprehensive income | - | - | - | - | 544,211,124 | 544,211,124 | (1,909,145) | 542,301,979 |
|
| ___________ | __________ | ___________ | ___________ | _________ | __________ | __________ | __________ |
|
|
|
|
|
|
|
|
|
|
| Proceeds from shares issued | 99,840,000 | 985,920,000 | - | - | - | 1,085,760,000 | - | 1,085,760,000 |
| Share Dividends | 32,000,000 | - | - | - | (32,000,000) | - | - | - |
| Non-controlling interests - share in capital of subsidiaries | - | - | - | - | - | - | 22,457,808 | 22,457,808 |
|
| ___________ | __________ | ___________ | ___________ | _________ | __________ | __________ | __________ |
| At 30 September 2008 (Unaudited) | 931,840,000 | 985,920,000 | 13,635,814 | - | 730,384,504 | 2,661,780,318 | 119,190,731 | 2,780,971,049 |
|
| ══════ | ══════ | ══════ | ══════ | ══════ | ══════ | ══════ | ══════ |
Palm Hills Developments Company S.A.E and its Subsidiaries
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2009
1. ACTIVITIES
Palm Hills for Development Company (S.A.E) was established according to the Investment Incentives and Guarantees Law No. (8) of 1997 and the Companies Law No.159 of 1981 and their executive regulations, taking into consideration the statutes of the Capital Market Law No. 95 of 1992 and its executive regulations. The company's headquarter is located in 6th of October City in Giza Governorate, where the main branch is located in Smart Village.
The company is registered in the Commercial Register under No. (6801) on 10 January 2005, and was listed in the unofficial schedule no. (2) Of the Cairo and Alexandria Stock Exchanges on 27 December 2006. The company got listed in the official schedule no. (1) Of the Cairo and Alexandria Stock Exchange on April 2008 and in London stock exchange on 8 May 2008.
The company was established to invest in real estate in the New Cities and New Urban Communities including building, constructing, possessing and managing residential compounds, resorts, villas and tourist villages, sale or lease as well as all the services, facilities, leasing and construction of integrated projects and managing the entertainment activities associated with the company's in activities. All such activities are subject to the approval of appropriate authorities.
All the company operations are located in Egypt; it has only one identifiable business segment which real estate development.
The company participated in the capital of eleven subsidiary companies as follows:
New Cairo for Real Estate Developments S.A.E
New Cairo for Real Estate Development S.A.E. is registered in Egypt under commercial registration number 12613 under the provisions of the Investment Guarantees and Incentives law No. 8 of 1997 and the Companies' Law No 159 of 1981 and the statutes of Capital Market Law No 95 of 1992. The company is located in plot 36 South investors' area in new Cairo. The company is engaged in construction, management, and the sale of hotels, motels, buildings and residential compounds and the purchase, development, dividing and sale of land.
The company's fiscal year ended 31 December of each year.
Royal Gardens for Real Estate Investment Company S.A.E
Royal Gardens for Real Estate Investment Company S.A.E. is registered in Cairo under commercial registration number 21574 under the provisions of under the provisions of the Investment Guarantees and Incentives law No. 8 of 1997 and the Companies' Law No 159 of 1981 and the statutes of Capital Market Law No 95 of 1992. The company is located in 11 El-Nakhil Street - Dokki-Giza. The company is engaged in real estate investment in cities and new urban communities and the set up, execution, acquisition, and management of urban communities, resorts, villas and tourist villages through sale or lease. The company is also involved in all other types of related services such as finance leasing and construction.
The company's fiscal year ended 31 December of each year.
Palm Hills Middle East Company for Real Estate Investment S.A.E and Its Subsidiary
Palm Hills Middle East Company for Real Estate Investment S.A.E and its subsidiary, Middle East Company for Real Estate and Touristic Investment S.A.E are engaged in real estate investment in new cities and urban communities, and also the construction, ownership and management of residential compounds, resorts, and villas. The company and its subsidiary are also involved in the sale and lease and other related services for managing integrated projects and entertainment activities.
The company is registered in Egypt under commercial registration number 21091. The company's subsidiary is registered in Egypt under commercial registration number 25016. Both companies are registered under the provisions of under the provisions of the Investment Guarantees and Incentives law No. 8 of 1997 and the Companies' Law No 159 of 1981 and the statutes of Capital Market Law No 95 of 1992.
The companies' fiscal year ended 31 December of each year.
Middle East for Development and Investment Touristic S.A.E
Middle East for Development and Investment Touristic S.A.E. is registered in Egypt under commercial registration number 25015 under the provisions of the Investment Guarantees and Incentives law No. 8 of 1997 and the Companies' Law No 159 of 1981 and the statutes of Capital Market Law No 95 of 1992. The company is located in 40 Lebanon Street - Mohandessin- Giza.
The company is engaged in real estate investment in cities and new urban communities and the set up, execution, acquisition, and management of urban communities, resorts, villas and tourist villages through sale or lease. The company is also involved in all other types or relevant services such as finance lease and construction of the company's projects or others'.
The company's fiscal year ended 31 December of each year.
Gamsha for Tourist Development S.A.E
Gamsha for Tourist Development S.A.E. is registered in Egypt under commercial registration number 23889 under the provisions of the Companies' Law No 159 of 1981. The company is located in 11 El Nakhil Street-Dokki-Giza. The company is engaged in real estate investments in new cities, urban communities, remote areas and regions outside the old valley.
The company's fiscal year ended 31 December of each year.
Nile Palm Al-Naeem for Real Estate Development S.A.E
Nile Palm Al-Naeem for Real estate Development S.A.E. is registered in Egypt under commercial registration number 27613 under the provisions of the Investment Guarantees and Incentives law No. 8 of 1997 and the Companies' Law No 159 of 1981 and the statutes of Capital Market Law No 95 of 1992. The company is located in 40 Lebanon Street - Mohandessin- Giza. The company is engaged in real estate investment in new cities and urban communities, and also in the construction, ownership and management of residential compounds, resorts, and villas.
The company's fiscal year ended 31 December of each year.
Saudi Urban Development Company S.A.E
Saudi Urban Development (Company) S.A.E. is registered in Egypt under commercial registration number 1971 under the provisions of the Companies' Law No 159 of 1981. The company is located in 72 Gamet El-Dewal El Arabia Street-Mohandeseen-Cairo. The company is engaged in the construction of advanced residential projects.
The company's fiscal year ended 31 December of each year.
Rakeen Egypt for Real Estate Investment S.A.E
Rakeem Egypt for Real Estate Investment S.A.E. is registered in Egypt under commercial registration number 22996 under the provisions of the Investment Guarantees and Incentives law No. 8 of 1997 and the Companies' Law No 159 of 1981 and the statutes of Capital Market Law No 95 of 1992. The company is located in 6th of October City. The company is engaged in leasing, construction and operation of hotels, motels, resorts and residential compounds, construction, generation of electricity, desalination of water, land acquisition, dividing and constructing villas, residential units and offices malls and the marketing thereof..
The company's fiscal year ended 31 December of each year.
Al Naeem for Hotels and Touristic Villages S.A.E
Al Naeem for Hotels and Touristic Villages S.A.E. is registered in Egypt under commercial registration number 32915 under the provisions of the Investment Guarantees and Incentives law No. 8 of 1997 and the Companies' Law No 159 of 1981 and the statutes of Capital Market Law No 95 of 1992. The company is located in 6th of October City. The company is engaged in construction and operation of hotels in Hamata.
The company's fiscal year ended 31 December of each year.
Gawda for Trade Services S.A.E
Gawda for Trade Services S.A.E. is registered in Egypt under commercial registration number 10242 under the provisions of the Companies' Law No 159 of 1981. The company is located in 66 Gamet El-Dewal El Arabia Street-Mohandeseen-Cairo. The company is engaged in real estate investments in new cities, urban communities, remote areas and regions.
The company's fiscal year ended 31 December of each year.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Basis of preparation
The interim condensed consolidated financial statements for the nine months ended 30 September 2009 have been prepared in accordance with IAS 34 Interim Financial Reporting.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2008.
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2008, except for the adoption of new Standards and Interpretations as at 1 January 2009, noted below:
- IAS 23 (Amendment), 'Borrowing costs' (effective from 1 January 2009). The amendment requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The group is applying IAS 23 (Amendment) retrospectively from 1 January 2009.
- IAS 1 (Revised), 'Presentation of financial statements' (effective from 1 January 2009). The revised standard will prohibit the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The group is applying IAS 1 (Revised) from 1 January 2009.
- IAS 27 (Revised), 'Consolidated and separate financial statements', (effective from 1 July 2009). The revised standard requires the effects of all transactions with non controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. The group will apply IAS 27 (Revised) prospectively to transactions with non-controlling interests from 1 January 2010.
- IFRS 3 (Revised), 'Business combinations' (effective from 1 July 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on
an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair vale or at the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition-related costs should be expensed. The group applying IFRS 3 (Revised) prospectively to business combinations for which the acquisition date is on or after 1 July 2009.
- IAS 23 (Amendment), 'Borrowing costs' (effective from 1 January 2009). The amendment is part of the IASB's annual improvements project published in May 2008. The definition of borrowing costs has been amended so that interest expense is calculated using the effective interest method defined in IAS 39 'Financial instruments: Recognition and measurement'. This eliminates the inconsistency of terms between IAS 39 and IAS 23. The group is applying the IAS 23 (Amendment) prospectively to the capitalisation of borrowing costs on qualifying assets from 1 January 2009.
- IAS 28 (Amendment), 'Investments in associates' (and consequential amendments to IAS 32, 'Financial Instruments: Presentation', and IFRS 7, 'Financial instruments: Disclosures') (effective from 1 January 2009). The amendment is part of the IASB's annual improvements project published in May 2008. An investment in associate is treated as a single asset for the purposes of impairment testing. Any impairment loss is not allocated to specific assets included within the investment, for example, goodwill. Reversals of impairment are recorded as an adjustment to the investment balance to the extent that the recoverable amount of the associate increases. The group is applying the IAS 28 (Amendment) to impairment tests related to investments in subsidiaries and any related impairment losses from 1 January 2009.
- IAS 36 (Amendment), 'Impairment of assets' (effective from 1 January 2009). The amendment is part of the IASB's annual improvements project published in May 2008. Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. The group is applying the IAS 28 (Amendment) and provide the required disclosure where applicable for impairment tests from 1 January 2009.
- IAS 1 (Amendment), 'Presentation of financial statements' (effective from 1 January 2009). The amendment is part of the IASB's annual improvements project published in May 2008. The amendment clarifies that some rather than all financial assets and liabilities classified as held for trading in accordance with IAS 39, 'Financial instruments: Recognition and measurement' are examples of current assets and liabilities respectively. The group is applying the IAS 39 (Amendment) from 1 January 2009. It is not expected to have an impact on the group's financial statements.
- There are a number of minor amendments to IFRS 7, 'Financial instruments: Disclosures', IAS 8, 'Accounting policies, changes in accounting estimates and errors', IAS 10, 'Events after the reporting period', IAS 18, 'Revenue' and IAS 34, 'Interim financial reporting', which are part of the IASB's annual improvements project published in May 2008 (not addressed above). These amendments are unlikely to have an impact on the group's accounts and have therefore not been analysed in detail.
Interpretations and amendments to existing standards those are effective and not relevant for the group's operations
The following interpretations and amendments to existing standards have been published and are mandatory for the group's accounting periods beginning on or after 1 January 2009 or later periods but are not relevant for the group's operations:
- IAS 16 (Amendment), 'Property, plant and equipment' (and consequential amendment to IAS 7, 'Statement of cash flows') (effective from 1 January 2009). The amendment will not have an impact on the group's operations because none of the group's companies ordinary activities comprise renting and subsequently selling assets.
- IAS 27 (Amendment), 'Consolidated and separate financial statements' (effective from 1 January 2009). The amendment will not have an impact on the group's operations because it is the group's policy for an investment in subsidiary to be recorded at cost in the standalone accounts of each entity.
- IAS 28 (Amendment), 'Investments in associates' (and consequential amendments to IAS 32, 'Financial Instruments: Presentation' and IFRS 7, 'Financial instruments: Disclosures') (effective from 1 January 2009). The amendment will not have an impact on the group's operations because it is the group's policy for an investment in an associate to be equity accounted in the group's consolidated accounts.
- IAS 29 (Amendment), 'Financial reporting in hyperinflationary economies' (effective from 1 January 2009). The amendment will not have an impact on the group's operations, as none of the group's subsidiaries or associates operate in hyperinflationary economies.
- IAS 31 (Amendment), 'Interests in joint ventures' (and consequential amendments to IAS 32 and IFRS 7) (effective from 1 January 2009). The amendment will not have an impact on the group's operations as there are no interests held in joint ventures.
- IAS 38 (Amendment), 'Intangible assets' (effective from 1 January 2009). The amendment will not have an impact on the group's operations, as all intangible assets are amortised using the straight-line method.
- IAS 40 (Amendment), 'Investment property' (and consequential amendments to IAS 16) (effective from 1 January 2009). The amendment will not have an impact on the group's operations, as there are no investment properties are held by the group.
- IAS 41 (Amendment), 'Agriculture' (effective from 1 January 2009). The amendment will not have an impact on the group's operations as no agricultural activities are undertaken.
- IAS 20 (Amendment), 'Accounting for government grants and disclosure of government assistance' (effective from 1 January 2009). The amendment will not have an impact on the group's operations as there are no loans received or other grants from the government.
The minor amendments to IAS 20 'Accounting for government grants and disclosure of government assistance', and IAS 29, 'Financial reporting in hyperinflationary economies', IAS 40, 'Investment property', and IAS 41, 'Agriculture', which are part of the IASB's annual improvements project published in May 2008 (not addressed above). These amendments will not have an impact on the group's operations as described above.
- IFRS 2 (Amendment), 'Share-based payment' (effective from 1 January 2009). The amendment will not have an impact on the group's operations as there are no share-based-payments made by the group.
- IAS 32 (Amendment), 'Financial instruments: Presentation', and IAS 1 (Amendment), 'Presentation of financial statements' - 'Puttable financial instruments and obligations arising on liquidation' (effective from 1 January 2009). These amendments will not have an impact on the group's operations.
- IFRS 1 (Amendment) 'First time adoption of IFRS', and IAS 27 'Consolidated and separate financial statements '(effective from 1 January 2009). These amendments will not have an impact on the group's operations.
- IFRS 5 (Amendment), 'Non-current assets held-for-sale and discontinued operations' (and consequential amendment to IFRS 1, 'First-time adoption') (effective from 1 July 2009). These amendments will not have an impact on the group's operations.
- IAS 38 (Amendment), 'Intangible assets'(effective from 1 January 2009). The amendment will not have an impact on the group's operations.
- IAS 19 (Amendment), 'Employee benefits' (effective from 1 January 2009). The amendment will not have an impact on the group's operations.
- IAS 39 (Amendment), 'Financial instruments: Recognition and measurement' (effective from 1 January 2009). The amendment will not have an impact on the group's operations.
- IFRS 8, 'Operating segments', IFRS 8 replaces IAS 14, 'Segment reporting', The amendment will not have an impact on the group's operations as the group does not have identifiable business or geographical segments.
3. SHARE CAPITAL
| Date | Authorised | No. of shares | Par value | Issued and fully paid |
| Establishment date | 350,000,000 | 1,215,000 | 100 | 121,500,000 |
| 20 December 2006 | 350,000,000 | 3,070,000 | 100 | 307,000,000 |
| 13 May 2007 | 1,500,000,000 | 4,000,000 | 100 | 400,000,000 |
| 15 May 2007 | 1,500,000,000 | 6,000,000 | 100 | 600,000,000 |
| 6 November 2007 | 1,500,000,000 | 8,000,000 | 100 | 800,000,000 |
| 27 March 2008 | 3,500,000,000 | 416,000,000 | 2 | 832,000,000 |
| 8 May 2008 | 3,500,000,000 | 465,920,000 | 2 | 931,840,000 |
| 18 June 2009* | 3,500,000,000 | 698,880,000 | 2 | 1,397,760,000 |
* The Share Capital was increased from EGP 931,840,000 to EGP 1,397,760,000 based on the Company's General Assembly Meeting approval dated 31 March 2009. The company distributed 232,960,000 share dividends (one share for each two shares). The new shares were listed in Cairo Stock exchange on 18 June 2009.
4. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
| For the nine months ended 30 September 2009 | ||
|
| 2009 | 2008 |
|
| EGP | EGP |
| Net profit attributable to ordinary equity holders of the parent |
290,521,926 |
544,211,124 |
| Weighted average number of ordinary shares outstanding during the period |
554,992,942 |
437691513 |
|
| ──────── | ──────── |
|
| 0.52 | 1.24 |
|
| ════════ | ════════ |
- No figure for dilutive earnings per share has been given as the company has not issued any instruments that might be potentially diluted.
5. GROUP ENTITIES
| 2009 | 2008 | 2007 | |
| % | % | % | |
| Subsidiaries | |||
| New Cairo for Real Estate Developments S.A.E | 99.99% | 99.87% | 74.9% |
| Royal Gardens for Real Estate Investment Company S.A.E | 51% | 51% | 51% |
| Palm Hills Middle East Company for Real Estate Investment S.A.E and its subsidiary, Middle East Company for Real Estate and Touristic Investment S.A.E | 99.95% 87.5% | 99.95% 87.5% | 99.95% 87.5% |
| Middle East for Development and Investment Touristic S.A.E | 58.75% | 58.75% | 58.75% |
| Gamsha for Tourist Development S.A.E | 59% | 59% | 59% |
| Nile Palm Al-Naeem for Real Estate Development S.A.E | 51% | 51% | 50% |
| Saudi Urban Development Company S.A.E | 51% | 51% | 51% |
| Rakeen Egypt for Real Estate Investment S.A.E | 97% | 97% | 97% |
| Al Naeem for the hotels and touristic Villages SAE | 60% | 60% | - |
| Gawda for trade services SAE | 99.98% | 99.98% | - |
| An associate | |||
| Coldwell Banker - Palm Hills for Real Estate Investments - S.A.E | 49% | 49% | - |
| Under incorporation | |||
| New East Cairo for Real Estate Development. SAE | 89% | 89% | - |
| Saultan Company - Saudi SAE | 51% | 51% | - |
| Villamora for Real Estate Development Company SAE | 65% | 65% | - |
| Citi for real estate development SAE | 51% | 51% | - |
| United group for real estate development SAE | 49% | 49% | - |