10 Nov 2008 07:00
Palm Hills Developments Announces 2008 Consolidated IFRS Third Quarter Results
EBIT Grows by 454% to EGP 692.0 million (US$128.1 million)1
Cairo, November 10 2008 - Palm Hills Developments S.A.E. (PHD), a leading Egyptian real-estate developer specializing primarily in high-end residential real-estate and luxury resort projects, announced its financial results for the nine-month period ending September 30, 2008. PHD is listed on Egyptian Exchange (EE) and on the London Stock Exchange (LSE).
HIGHLIGHTS
Strong growth: Net sales increased to EGP 1,095.1 million (USD 202.8 million) YTD, growth of 292% on YTD 2007 (EGP 279.3 million/US$ 51.7 million)
Higher reservations2: YTD Reservations were EGP 3,668.3 million (US$ 679.3 million), growth of 54% compared to last year (EGP 2,377.2 million/US$ 440.2 million)
Total contract values: Total contracts signed increased by 307% to EGP 2,593.6 million (US$ 480.3 million; YTD 2007 EGP637.9 million/US$ 118.1 million)
Excellent margin growth: EBIT margin grew from 45% in 2007 YTD to 63% in 2008 YTD
EBIT growth: Exceptional growth in EBIT to EGP 692.0 million (USD$ 128.1 million) up 454% in the last year (YTD 2007: EGP 124.9 million/US$ 23.1 million)
Net profit: grew 369% to EGP 544 million (US$100.8 million) (YTD 2007: EGP 116.1 million/US$21.5 million).
Land bank continues to grow: total land bank reached 48.3 million m2, up 31% since the beginning of the year
Bank Debt: Equity3: down to 21% as of 30 September 2008, from 59% at 2007 year-end.
1 Based on EGP/US$5.4
2 Gross reservations net of returns
3 (Bank Overdrafts + Term Loans)/Total Equity
Third Quarter 2008 Results - Financial Highlights
Overview
During the third quarter, PHD continued to deliver exceptional revenue and profit growth. Continuation of investment in new projects and sales capability saw Net Sales rise to EGP 1,095.1 million (USD 202.8 million), an increase of 292% in the last year (YTD 2007 EGP 279.3 million/US$51.7 million).
Palm Hills has also added EGP 2,593.6 million (US$ 480.3 million) of signed contracts, with particularly strong performance in Golf Views (EGP 646.9 million), Hacienda Bay (EGP 857.0 million) and Casa (EGP 348.3 million). During Q3 alone contracts grew EGP 717.5m (US$132.8 million), particularly in Hacienda Bay (EGP256 million) and Golf Views (EGP 257m).
S,G&A reduced as a percentage of net sales to 13% (YTD 2007 28%) due to growth in sales outstripping growth in costs. Costs grew as a result of significant investment in core operating infrastructure and marketing. This has improved the control environment and created a solid base to sustain growth in scale and performance.
The third quarter saw maintenance of impressive EBIT margins, achieving 64% for the third quarter alone (Q3 2007: 51%) and 63% YTD (YTD 2007: 45%). PHD has been able to sustain these margins due to attractive land sales prices.
Overall, PHD has delivered yet another set of record profits, with profit for the first three quarters reaching EGP544.2 million (US$ 100.4 million), a remarkable 369% higher than same period last year (YTD 2007: EGP116.1m/US$ 21.5m).
Land Bank
The third quarter saw selective investment in the land bank, where investments are seen to strategically complement the existing portfolio. As of today, the land bank stands at to 48.3 million m2, an increase of 31% since December 31st 2007. The land increase included the following: 0.9m m2 in 6th of October, 1.9m m2 in the North Coast, : 1.0m m2 in Aswan, and 6.6m m2 in Saudi Arabia.
Outlook
While the uncertainty in the global economy has clearly impacted investor sentiment in the Egyptian market, the underlying fundamentals of the real estate market marketplace remain intact, and the experienced management team is confident that PHD is well positioned to take advantage of the long term growth prospects for the sector.
During periods of uncertainty, real estate companies with proven track records, diverse operations and strong brands are more likely to be successful and we feel that this plays to PHD's strengths. The developments made by the business over the past 12 months in establishing alliances, acquiring a large, diversified land bank and attracting new customers means that PHD is well placed to weather the current financial downturn.
Table 1 - Q3 2008 & Q3 YTD 2008 Operating Results (EGP '000)4
| | Three Months Ended | Nine Months Ended | |||||
| | 30/9/2008 | 30/9/2007 | 30/9/2008 | 30/9/2007 | |||
| SALES (NET) | 329,396,112 | 199,409,117 | 1,095,273,592 | 279,276,283 | |||
| Cost of sales | -68,635,311 | -44,984,885 | -266,599,518 | -74,639,023 | |||
| GROSS PROFIT | 260,760,801 | 154,424,232 | 828,674,074 | 204,637,260 | |||
| Margin% | 79% | 77% | 76% | 73% | |||
| Selling, General & Administrative Expenses | -49,339,900 | -53,022,530 | -136,702,242 | -79,642,323 | |||
| OPERATING PROFIT (EBIT) | 211,420,901 | 101,401,702 | 691,971,832 | 124,994,937 | |||
| Margin% | 64% | 51% | 63% | 45% | |||
| Other income | 3,094,109 | 1,255,018 | 9,962,754 | 4,569,451 | |||
| Interest income - Amortization of discount | 25,952,483 | 1,637,124 | 60,646,333 | 2,567,555 | |||
| Finance costs | -29,769,054 | -12,344,388 | -123,370,598 | -19,564,912 | |||
| PROFIT BEFORE TAX | 210,698,439 | 91,949,456 | 639,210,321 | 112,567,031 | |||
| Income tax expense | -26,865,342 | - | -96,908,342 | - | |||
| PROFIT FOR THE YEAR | 183,833,097 | 91,949,456 | 542,301,979 | 112,567,031 | |||
| Minority interest | 1,314,416 | -1,514,718 | -1,909,145 | -3,525,039 | |||
| NET PROFIT AFTER MINORITY | 182,518,681 | 93,464,174 | 544,211,124 | 116,092,070 | |||
| Margin% | 70% | 61% | 66% | 57% | |||
| ANNUALISED EARNING PER SHARE | | | 1.56 | | |||
| | | | | | |||
| NO OF SHARES OUTSTANDING | | | 465,920,000 | | |||
| | | | | | |||
| PRICE TO EARNING RATIO (x)* | | | 4.8x | | |||
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.
4 Figures presented are prepared according to IFRS.
* Annualised Estimate Based on a market price of EGP7.5/share
Table 2 - Performance by Project
| Project | Sales Launch | Total Reservations5 | Total Contract Value | ||||||
| 9 months ending 30/09/07 | 9 months ending 30/09/08 | 9 months ending 30/09/08 | 9 months ending 30/09/08 | ||||||
| No. of units | Value (000) | No. of units | Value (000) | No. of units | Value (000) | No. of units | Value (000) | ||
| Cascade (6) | Mar-05 | 8 | 7,829 | - | 0 | 17 | 16,812 | - | - |
| Bamboo (7) | Jun-05 | 13 | 7,942 | - | 0 | 25 | 15,046 | - | - |
| Golden Palm (8) | Jun-05 | 13 | 22,747 | 6 | 10,211 | 13 | 20,528 | 19 | 57,951 |
| Golf Views | Jun-05 | 80 | 360,788 | 29 | 212,864 |
| 178 | 646,913 | |
| Golf Extension | Jan-08 | - | 0 | 208 | 584,884 |
| - | 0 | |
| Katameya | Jul-06 | 142 | 343,883 | 74 | 255,497 | 228 | 502,287 | 97 | 327,819 |
| Bamboo Extension | May-07 | 89 | 201,852 | 20 | 38,237 |
| 123 | 266,956 | |
| Hacienda Bay | Jul-07 | 558 | 930,127 | 299 | 601,002 |
| 473 | 857,068 | |
| Casa | Jun-07 | 676 | 424,984 | 86 | 86,111 |
| 490 | 348,285 | |
| The Village | Nov-06 | 173 | 77,045 | 108 | 76,472 | 194 | 83,239 | 147 | 88,581 |
| Palm Park | Dec-07 | 466 | 415,501 |
| - | 0 | |||
| Ain Sokhna | Feb-08 | 938 | 1,055,900 |
| - | 0 | |||
| Village Gate | Jun-08 | 436 | 331,689 |
| - | 0 | |||
| Total | 1,752 | 2,377,196 | 2,670 | 3,668,367 | 477 | 637,912 | 1,527 | 2,593,573 | |
5 Total Reservations during 2008 Net of Returns
-ENDS-
For further information please contact:
Egypt
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