16 Nov 2020 13:29
PHD achieve New Sales of EGP2.9 billion in 3Q2020, a growth of 42% YoY, on track to meet the full year target of EGP12 billion. Net Debt decreased to EGP1.4 billion. Net Profit for the quarter grew 156% YoY reaching EGP238 million, complemented by positive Cash Flows from Operations of EGP1.1 billion
Cairo/London (November 16, 2020) - Palm Hills Developments S.A.E. ("PHD" or "the Company") (EGX: PHDC.CA, PHDC.LI), a leading real estate developer in Egypt, announce its consolidated financial and operating results for the financial period ended September 30, 2020.
Key Highlights
New Sales marked EGP2.9 billion in 3Q2020, a growth of 42% YoY. Growth in sales during the quarter was supported by recovery in home buying transactions following the easing of restrictions and precautionary measures previously imposed in relation to COVID-19, complemented by demand for Ready to Move products, secondary homes on the Mediterranean and Red Sea during the summer season, and an uptake in commercial sales mainly in West Cairo.
In 9M2020, New Sales (Residential and Commercial) stood at EGP7.3 billion, translating into 1,040 units sold, a growth of 21% YoY, should we remove Palm Hills Alexandria's Expression of Interest ("EOIs") of EGP2.1 billion from the comparative figure. In October 2020, the Company booked EGP1.9 billion in New Sales, on track to achieve the full year target of EGP12 billion.
Commercial New Sales amounted to EGP946 million during 9M2020, a remarkable growth of 106% YoY mostly generated from the sale of office space in Golf Central for EGP516 million, accompanied by EGP122 million in Lake yard, Westlane Boulevard by EGP110 million and The Lane by EGP100 million. In 3Q2020, Commercial New Sales recorded EGP457 million, a growth of 57% YoY.
Revenue reached EGP3.5 billion during 9M2020, almost buoyant YoY. While Revenue for 3Q2020 grew 39% YoY to EGP1.5 billion, compared with EGP1.1 billion during the same period last year. The growth in Revenue was largely driven by higher contribution from Ready to Move products that were sold and recognized during the period.
Gross Profit amounted to EGP1.3 billion in 9M2020, a gross margin of 37%, compared to 40% during the comparative period. Gross Profit for the quarter reached EGP570 million, a growth of 30% YoY. Gross margin was slightly diluted due to the handover of lower margin units that were sold during previous years. EBITDA stood at EGP718 million in 9M2020, a margin of 20%. EBITDA for the quarter almost doubled, reaching EGP342 million, as a result from Revenue growth. Net Profit after Tax and Minority Interest amounted to EGP515 million in 9M2020, a Net Profit margin of 14%. While Net Profit for the quarter recorded EGP238 million, a growth of 156% YoY.
The Company spent EGP984 million on construction activities during 9M2020. In Badya, the development of 145 units' concrete skeleton was completed alongside blockworks of 112 units. In Palm Hills New Cairo ("PHNC"), the Company will release 277 units for clients' delivery before year end. While the remaining units of PHNC's phase 1 will be handed over during 2021. In the Crown, PHD will release 63 units within livable zones during 4Q2020. The Company completed all works in Palm Hills Katameya 2 extension.
Regarding handovers, the Company delivered 502 residential and commercial units during 9M2020 mainly in the following projects: Capital Gardens, Woodville, Golf Extension, Hacienda Bay, Golf Views, Palm Parks and Palm Valley. PHD handed over 184 units during 3Q2020. The Company had an additional 572 units released from construction during 2020, yet remains ahead of delivery schedule in almost all projects.
By end of 9M2020, PHD had Ready to Move inventory worth c.EGP3.2 billion (267 units) across several projects in West Cairo, East Cairo and North Coast. The Ready to Move products are currently in high demand and will help solidify the Company's financial position further during the coming quarters.
Yasseen Mansour, Chairman & Group CEO Comments:
I am pleased to share with you our operational and financial results for the period ended September 30, 2020, where our performance witnessed remarkable improvements compared to previous quarters of 2020, despite the current challenging environment.
We had a robust summer season in terms of demand for secondary homes on the Mediterranean and Red Sea, given ongoing limitations on international travel and concerns surrounding COVID-19, complemented by the growing demand for Ready to Move products. We closed 3Q2020 with EGP2.9 billion in New Sales, a growth of 42% YoY.
During 9M2020, we sold 1,040 units for EGP7.3 billion, which represents a growth of 21% YoY, should we remove Palm Hills Alexandria's EOIs of EGP2.1 billion from 9M2019 New Sales. In October 2020, we sold units worth EGP1.9 billion and saw strong uptake during the recent Cityscape exhibition, bringing us much closer to our EGP12 billion target for the full year. We delivered 502 units during 9M2020, and we continue to outperform our handover schedule on almost all projects on contractual delivery dates.
As we promised the market, we continue to work on reducing our Net Debt, which reached EGP1.4 billion in 9M2020, a decrease of EGP0.7 billion from 1Q2020. We hope to close the year with a Net Debt of less than c.EGP1 billion. We are still on track to conclude a securitization transaction for a gross portfolio of c.EGP1.5 billion prior to year-end, to further strengthen our Balance Sheet. Our Receivables stood at EGP21.3 billion, covering Net Debt 15 times in 9M2020.
We achieved positive Cash Flows from Operations of EGP1.1 billion in 9M2020, compared to EGP574 million during the same period last year. We expect to close the year with positive Cash Flows from Operations of c.EGP1.5 billion.
Recently, we were awarded a prime commercial land plot spreading 172,448 sqm (c.41 feddan) in West Cairo through a tender with the Egyptian government. Said plot will give us a sound commercial space to act as a catalyst for recurring income in West Cairo, similar to the 420,000 sqm (100 feddan) of Palm Hills New Cairo in the East. The new plot is strategically located in the heart of the iconic Palm Hills October adjacent to Bamboo project and will be positioned as the new downtown of Palm Hills October.
Financial Review
In 9M2020, Revenue reached EGP3.5 billion, almost buoyant with the same period last year. Revenue for 3Q2020 grew 39% YoY to EGP1.5 billion, compared to EGP1.1 billion in 3Q2019. The growth in Revenue was largely driven by higher contribution from Ready to Move products that were sold and recognized during 3Q2020.
Gross Profit amounted to EGP1.3 billion in 9M2020, a gross margin of 37%, compared to 40% in 9M2019. Gross Profit for the quarter reached EGP570 million, a growth of 30% YoY. The handover of some low margin units in 9M20020 contributed to the YoY dilution in Gross Profit margin.
EBITDA stood at EGP718 million in 9M2020, a margin of 20%. EBITDA for the quarter almost doubled, reaching EGP342 million. Net Profit after Tax and Minority Interest amounted to EGP515 million in 9M2020, a Net Profit margin of 14%. While Net Profit for the quarter recorded EGP238 million, a growth of 156% YoY.
Net Debt decreased to EGP1.4 billion by end of 9M2020, a drop of EGP0.7 billion from 1Q2020, in line with the Company's strategy to optimize and reduce leverage. Receivables amounted to EGP21.3 billion, covering Net Debt 15 times. Net Debt/EBITDA stood at 1.1 times by end of 9M2020.
Operational Review
New Sales (Residential and Commercial) recorded EGP7.3 billion in 9M2020, translating into, a decrease of 10% YoY, given the comparison with a high base for 9M2019, which had a strong uptake in Palm Hills Alexandria. Should we exclude the Palm Hills Alexandria Expression of Interest, New Sales would have shown a growth of 21% YoY in 9M2020.
New Sales recorded EGP2.9 billion in 3Q2020, a growth of 42% YoY and 10% QoQ. Growth in sales during the quarter was supported by the recovery in home buying transactions following the easing of restrictions and precautionary measures previously imposed in relation to COVID-19, complemented by strong demand for primary homes, secondary homes on the Mediterranean and Red Sea during summer season, and an uptake in commercial sales.
On the Commercial front, the segment's New Sales amounted to EGP946 million during 9M2020, a growth of 106% YoY mostly driven by the sale of office space in Golf Central for EGP516 million, accompanied by EGP122 million in Lake yard, West Lane Boulevard by EGP110 million and The Lane by EGP100 million.
In West Cairo, New Sales amounted to EGP3.3 billion, a growth of 46% YoY, of which residential stood at EGP2.5 billion and the remaining balance from commercial sales. The largest contributors to residential sales were Golf Extension, The Crown, and Woodville mostly on the ready to move products. During 3Q2020, the Company launched Westlane Boulevard, Palm Park's commercial strip, which recorded New Sales of EGP110 million.
In East Cairo, New Sales stood at EGP0.7 billion in 9M2020, a modest growth of 3.1% YoY.
While in the North Coast, Alexandria and Ain Sokhna, New Sales reached EGP3.2 billion in 9M2020, supported by the strong demand for our flagship Hacienda brand in North Coast, which aggregately contributed EGP1.6 billion to the region's sales followed by Palm Hills Alexandria and Palm Hills Sokhna (Laguna Bay).
The Company delivered 502 residential and commercial units during 9M2020 mainly in the following projects: Capital Gardens, Woodville, Golf Extension, Hacienda Bay, Golf Views, Palm Parks and Palm Valley. PHD handed over 184 units during 3Q2020. The Company had an additional 572 units released from construction during 2020. Yet, it remains ahead of delivery schedule in almost all projects.
Consolidated Income Statement 2
(Egyptian Accounting Standards)
In EGP 000's | 3Q2020 | 3Q2019 | % | 9M2020 | 9M2019 | % |
Revenue | 1,541,004 | 1,104,945 | 39% | 3,549,216 | 3,620,020 | (2%) |
Cost of Revenue | (971,448) | (667,609) | 46% | (2,229,080) | (2,175,103) | 2% |
Gross Profit | 569,556 | 437,336 | 30% | 1,320,136 | 1,444,917 | (9%) |
Gross Profit margin | 37% | 40% | (3pp) | 37% | 40% | (3pp) |
General Administrative, Selling and Marketing Expenses | (228,013) | (260,646) | (13%) | (601,739) | (618,452) | (3%) |
EBITDA | 341,543 | 176,690 | 93% | 718,397 | 826,465 | (13%) |
EBITDA margin | 22% | 16% | 6pp | 20% | 23% | (3pp) |
Administrative Depreciation | (22,880) | (20,678) | 11% | (70,031) | (62,204) | 13% |
Operating Profit | 318,663 | 156,012 | 104% | 648,366 | 764,261 | (15%) |
Less: |
|
|
|
|
|
|
Finance Cost & Interests | (71,385) | (23,192) | 208% | (176,271) | (127,874) | 38% |
Securitization of Notes Receivables | - | 3,014 | NA | - | (41,001) | NA |
Interest on Land Purchase Liabilities | (29,438) | (53,838) | (45%) | 44,507 | (154,418) | (129%) |
Provisions | - | (214) | NA | - | 67,749 | NA |
Add: |
|
|
|
|
|
|
Interest Income - Amortization of Discount on Notes Receivables | 4,280 | 22,359 | (81%) | 12,840 | 67,076 | (81%) |
Gain on Investment in Fair Value through profit or loss | 1,747 | 2,861 | (39%) | 5,906 | 8,293 | (29%) |
Interest Income on Held to Maturity Investments | 12,884 | 11,122 | 16% | 29,104 | 72,030 | (60%) |
Net Profit Before Income Tax & Minority Interest | 236,751 | 118,123 | 100% | 564,453 | 656,116 | (14%) |
Income Tax Expense | 17,811 | 6,686 | 166% | (27,658) | (60,553) | (54%) |
Deferred Tax | 50 | 274 | (82%) | 240 | 544 | (56%) |
Net Profit After Tax | 254,512 | 124,535 | 104% | 536,555 | 595,019 | (10%) |
Non-Controlling Interest | (16,550) | (31,703) | (48%) | (22,009) | (50,707) | (57%) |
Net Profit After Tax & Minority Interest | 237,962 | 92,832 | 156% | 514,546 | 544,312 | (5%) |
Net Profit After Tax & Minority Interest margin | 15% | 8% | 7pp | 14% | 15% | (1pp) |
Consolidated Balance Sheet
(Egyptian Accounting Standards
EGP Thousand | September 30, 2020 | December 31, 2019 |
Long-Term Assets |
|
|
Investments in Associates | 149,790 | 143,370 |
Investment Property | 387,257 | 393,483 |
Notes Receivable - Long Term | 14,763,524 | 15,318,677 |
Projects Under Construction | 1,651,902 | 1,739,437 |
Advance Payments for Investments Acquisitions | 287,908 | 194,907 |
Fixed Assets (net) | 1,414,843 | 1,353,869 |
Deferred Tax Asset | 3,310 | 3,549 |
Employee Stock Ownership Plan | 55,380 | 68,172 |
Other Long - Term Assets | 2,937 | 1,391 |
Total Long - Term Assets | 18,716,854 | 19,216,854 |
Current Assets |
|
|
Works in Process | 7,506,550 | 8,115,250 |
Held to Maturity Investments | 1,307,717 | 924,376 |
Cash | 1,596,398 | 1,375,178 |
Notes Receivable - Short Term | 5,239,309 | 4,691,813 |
Investments at Fair Value | 70,711 | 87,513 |
Accounts Receivable | 1,336,184 | 1,272,279 |
Suppliers - Advance Payments | 488,230 | 451,528 |
Debtors & Other Debit Balances | 913,313 | 917,361 |
Due from Related Parties | 425,009 | 418,965 |
Total Current Assets | 18,883,423 | 18,254,266 |
Total Assets | 37,600,277 | 37,471,118 |
Current Liabilities |
|
|
Banks - Credit Balances | 21,735 | 87,238 |
Banks - Overdraft | 1,051,408 | 963,312 |
Advances from Customers | 14,496,309 | 14,212,609 |
Completion of Infrastructure Liabilities | 58,062 | 95,083 |
Provisions | 182,535 | 180,718 |
Current Portion of Land Purchase Liabilities | 173,423 | 235,683 |
Notes Payable - Short Term | 1,180,996 | 1,750,902 |
Current Portion of Term Loans | 228,788 | 295,133 |
Suppliers & Contractors | 847,596 | 762,160 |
Income Tax Payable | 32,237 | 97,622 |
Creditors & Other Credit Balances | 833,788 | 630,784 |
Due to Joint Arrangements Partners | 1,590,591 | 1,081,182 |
Due to related Parties | 6,639 | 6,639 |
Total Current Liabilities | 20,704,109 | 20,399,065 |
Working Capital | (1,820,687) | (2,144,802) |
Total Investment | 16,896,168 | 17,072,053 |
Financed as Follows: |
|
|
Shareholders' Equity |
|
|
Issued and Paid-In Capital | 6,235,199 | 6,235,199 |
Legal Reserve | 779,730 | 738,358 |
Special Reserve | 176,513 | 176,513 |
Treasury Shares | (46,990) | - |
ESOP Re-measurement Reserve | (22,620) | (9,828) |
Retained Earnings | 1,100,683 | 995,811 |
Net Profit for the period | 514,546 | 846,785 |
Equity Attributable to Equity Holders of Parent Co. | 8,737,062 | 8,982,838 |
Non-Controlling Interest | 567,957 | 554,742 |
Total Shareholders' Equity | 9,305,019 | 9,537,581 |
Long Term Liabilities |
|
|
Land Purchase Liabilities | 96,647 | 150,258 |
Notes Payable - Long Term | 1,736,380 | 1,438,142 |
Other Long-Term Liabilities - Residents' Association | 2,706,412 | 2,372,856 |
Loans | 3,051,708 | 2,801,073 |
Due to Joint Arrangements Partners | - | 772,143 |
Total Long-Term Liabilities | 7,591,148 | 7,534,472 |
Total Equity & Long-Term Liabilities | 16,896,167 | 17,072,053 |
Cash Flow Statement
(Egyptian Accounting Standards)
EGP Thousand | September 30, 2020 | September 30, 2019 |
Net Profit for the Period (Before Income Tax & Non-Controlling Interest) | 564,453 | 656,116 |
Interest on Land Purchase Liabilities | 83,041 | 154,418 |
Administrative Depreciation | 76,019 | 76,869 |
Provision Formed | - | 2,391 |
Finance Costs & Interest | 176,271 | 127,874 |
Interest on Discounted Receivables | - | 41,001 |
Share of Profit/Loss of Associates | 5,579 | (8,767) |
Gain (loss) on Disposal of Fixed Assets | (64) | (725) |
Interest Income - Amortization of Discount on Notes Receivables | (12,841) | (67,076) |
Gains on Investments in Fair Value through Profit or Loss | (5,906) | (8,293) |
Provisions no Longer Required | - | (70,139) |
Gains and losses on Held to Maturity Investments | (29,104) | (72,030) |
Interest Rebate from Land Purchase Liabilities | (127,548) | - |
Operating Profit Before Changes in Working Capital Items | 729,901 | 831,637 |
Cash flow from Operating Activities |
|
|
Change in Work in Process | 508,058 | (754,364) |
Change in Notes Receivables | 20,497 | 795,630 |
Change in Investments in Fair Value through Profit or Loss | 16,802 | 642,836 |
Change in Held to Maturity Investments | (383,340) | (11,082) |
Change in Accounts Receivable | (63,904) | (139,345) |
Change in Suppliers - Advance Payments | (36,702) | (17,954) |
Change in Debtors & Other Debit Balances | 4,049 | (373,011) |
Change in Due from Related Parties | (6,043) | (50,179) |
Change in Advances from Customers | 283,699 | 312,039 |
Provisions | 1,817 | (939) |
Change in Due to Related Parties | - | 31,960 |
change in Notes Payables | (227,161) | (462,947) |
Change in Suppliers & Contractors | 85,435 | 92,699 |
Income Tax Paid | (93,043) | (253,309) |
Change in Creditors and Other Credit Balances | 203,004 | (43,756) |
Change in Other Long Term - Residents' Association | 333,556 | 398,415 |
Change in Guaranteed Payments - Joint Arrangements | (262,734) | (424,808) |
Change in Completion of Infrastructure | (37,021) | - |
Net Cash (Used In) Operating Activities | 1,076,869 | 573,533 |
Cash Flows from Investing Activities |
|
|
Payments for Purchase of Fixed Assets | (35,994) | (26,110) |
Proceeds from Sale of Fixed Assets | 228 | 889 |
Payments for Associates Investment | (93,001) | - |
Payments to Sisters Companies | (12,000) | (50,000) |
Payments for Projects Under Construction | (21,751) | (5,141) |
Payments Advance for Investments | (881) | (20,174) |
Other Payments | (1,547) | - |
Proceeds from Investments in Fair Value through Profit or Loss | 5,906 | 8,293 |
Proceeds from Held to Maturity Investments | 29,104 | 72,030 |
Cash Flows from Investing Activities | (129,936) | (20,213) |
Cash Flows from Financing Activities |
|
|
Credit Balance | (65,503) | 68,321 |
Banks - Overdraft | 88,096 | 154,313 |
Treasury Shares | (46,990) | - |
Adjustments to Retained Earnings | (700,541) | (260,872) |
Minority Interests | (8,794) | (9,789) |
Securitization of Notes Receivables | - | (41,001) |
Deferred Tax | - | 3 |
Proceeds from Loans | 702,142 | 78,979 |
Repayment of Loans | (517,851) | (676,428) |
Finance Costs & Interests | (176,271) | (127,874) |
Net Cash Provided by Financing Activities | (725,712) | (814,348) |
Net Cash Flow During the Period | 221,221 | (261,028) |
Cash & Cash Equivalents at Beginning of the Period | 1,375,178 | 955,738 |
Cash & Cash Equivalents as at September 30, 2020 | 1,596,399 | 694,709 |
About Palm Hills Developments
Palm Hills Developments ("PHD"), a leading real estate developer in Egypt, is a joint stock company established in 1997. The Company builds integrated communities and has one of the most diversified land bank portfolios, spreading over 42.3 million square meters ("sqm"). PHD's product offerings include primary homes on both West Cairo and East Cairo, as well as secondary homes in the North Coast (Mediterranean Sea) and Ain Sokhna (Red Sea).
As at end of 9M2020, PHD delivered 11,090 units within its developments. Today, PHD has 9 projects under development, 3 projects in West Cairo, 3 projects in East Cairo and 3 projects in the North Coast and Alexandria, in addition to 7 new projects including 6 co-developments, translating into a sales backlog of c.EGP15 billion. PHD is one of the most liquid and actively traded stocks on the Egyptian Stock Exchange and is traded under the symbol "PHDC.CA". The Company has a GDR listing on the London Stock Exchange and is traded under the symbol "PHDC.LI". For more information, please visit: www.palmhillsdevelopments.com/
Investor Relations Contacts
Mamdouh Abdelwahab
Radwa Abu Elnaga
Tel +202 35351200, Extension 1504
Investor.relations@phdint.com
Disclaimer
This presentation contains statements that could be construed as forward looking. These statements appear in several places in this presentation and include statements regarding the intent, belief or current expectations of the number of units to be delivered, construction spending, projects' timelines and estimates regarding future growth of the business, financial results and other aspects of the activity and situation relating to the Company. Such forward looking statements are no guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors. You are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date of this presentation, which is not intended to reflect Palm Hills Developments business or acquisition strategy or the occurrence of unanticipated events.