5 Nov 2015 08:00
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, JAPAN AND AUSTRALIA
3Q 2015 Earnings Release
PHD realize record financial results for 3Q2015 & 9M2015; fueled by record demand for the Company's products, accelerated construction activities, supported by a healthy financial position
Cairo/London (November 5, 2015) - Palm Hills Developments S.A.E. ("PHD" or "the Company") (EGX: PHDC.CA, PHDC.LI), a leading real estate developer in Egypt, announces its consolidated financial and operating results for the quarter ending 30 September 2015. |
Key Highlights
3Q2015
§ Gross sales (reservations) increased 83% YoY to a record high of EGP2.0 billion, driven by strong pre-sales in North Coast (Hacienda Bay and Hacienda White 2), West Cairo (Golf Extension, Golf Views), and East Cairo (Palm Hills Katameya). August 2015 marked the highest monthly sales in the Company's history recording EGP1 billion.
§ Contracted sales increased 68% YoY to EGP1.3 billion, mainly due to the increase in sales of secondary homes in North Coast as well as primary homes in West and East Cairo. § Revenue for the quarter grew to EGP1.13 billion, an increase of 133% YoY ("Year on Year") (i.e. 3Q2015 vs. 3Q2014), mainly driven by the increase in recognized revenue from standalone units (villas), delivery of apartments (majority in CASA and VGK), and improvements in construction revenue. The Company delivered 421 units in 3Q2015, a new record for the Company.
§ Gross Profit increased to EGP334 million, a growth of 55% YoY.
§ EBITDA marked 30% growth YoY to EGP214 million.
§ Net Profit after Minority Interest reached EGP182 million, a growth of 40% YoY.
9M2015
§ Gross sales reached a record of EGP4.6 billion, an increase of 62% YoY, supported by strong demand for secondary homes in the North Coast (Hacienda Bay and Hacienda White 2) alongside reservations in West Cairo (Golf Views, Golf Extension, Woodville and Palm Parks) and East Cairo (Palm Hills Katameya and Village Gate).
§ Contracted sales increased 70% YoY to EGP3.4 billion. § Revenue almost doubled to record EGP2.6 billion, a growth of 96% YoY, driven by a stronger pace of construction, and recognized revenue from standalone units.
§ The Company delivered 1,033 units, already exceeding FY2014 deliveries of 981 units, fueled by accelerated construction works worth EGP1.3 billion.
§ Gross Profit rose 94% YoY to EGP960 million, supported by the increase in top line. Gross Profit margin remained stable YoY at 37%.
§ EBITDA remarkably grew 86% YoY to record EGP673 million, with an EBITDA margin of 26%.
§ Net Profit after Minority Interest recorded a remarkable growth of 213% YoY, to reach EGP828 million with a Net Profit margin of 32%, an all time high bottom line, in comparison to the historical record of EGP545 million achieved in FY2010. |
Yasseen Mansour, Chairman Comments:
I am pleased to share with you our third quarter 2015 financial results, another record quarter for the Company, driven by strong pre-sales market, robust construction works, supported by a healthy financial position. Once again, we continued our efforts with an ongoing implementation of our four strategic pillars namely growth, earnings stabilization and diversification, improving profitability, and expediting project delivery.
We are seeing people migrating from Cairo, heading West and East much faster than in previous years, fueling demand for primary homes, despite the fact that demand during summer season is normally oriented towards secondary homes. In the North Coast, we witnessed a record quarter with pre-sales of EGP1.4 billion, of which EGP143 million were generated from the newly launched Water Villas in Hacienda Bay, another testimony to the strong and resilient Egyptian real estate market, and the strong demand for Palm Hills product offerings, positioning the Company as the top-tier developer.
On expediting projects' deliveries front, the Company delivered 1,033 units, more than what we delivered in FY2014. Moreover, the Company spent EGP1.3 billion on construction, exceeding FY2014 spending, supporting our steady focus on finalizing projects under-development by end of 2017/early 2018, and to deliver livable communities that meet our home owners' aspirations.
Our balance sheet is in its strongest position ever and now reflects proceeds of the recent Rights Issue of EGP1.65 billion, with a Total Equity (unadjusted) of EGP6.5 billion. Our Receivables currently stands at EGP7.2 billion, while Net Debt decreased to EGP1.1 billion, in comparison to EGP1.5 billion as at end of FY2014, Net Debt/EBITDA stood at 1.2x, down from 2.9x by year end 2014, supported by EBITDA growth, and improvements in the Company's cash position. We will capitalize on that strength to grow our land bank and launch new projects as the current ones reach completion over the coming three years.
We have realized a record set of financial results on all fronts for the nine month ending September 30, 2015. Revenue grew 96% YoY to reach EGP2.6 billion, Gross Profit marked an increase of 94% YoY to record EGP960 million, EBITDA increased 86% YoY to EGP673 million, and Net Profit after Minority Interest remarkably grew 213% YoY to record EGP828 million, the highest Net Profit the Company ever achieved.
With regards to recurring income portfolio, the development of Street 88 strip-mall and Phase 8 office building is progressing as planned in West Cairo. We completed construction works in Street 88, with 60% of commercial space being leased. We expect soft-opening of this community mall by beginning of 2016. In East Cairo, we are developing Village Gate & VGK malls, with plans to finalize ongoing construction works by end of 2016. Outstanding reservations on VGK mall reached EGP82 million.
We have recently agreed with Reacap Financial Investments and Svreico Real Estate Investments, to co-develop an integrated residential and commercial community in Smart Village - a business park that is home to multinational and local corporations in West Cairo - with total BUA of 59,138 m2, and estimated revenue ranging between EGP700 million and EGP800 million. We expect to sign an agreement with the Egyptian government for the co-development of a mixed use 500 feddan in East Cairo before end of this year, and expect to reach an agreement for the land in West Cairo during the first half of 2016.
We are still looking into a number of land bank opportunities in the North Coast. These milestones will enhance visibility on the Company's future pipeline and should allow re-rating of our already discounted market valuation, which doesn't reflect our robust operations and financial performance.
Key Financial Indicators
Financial Review Revenue (net recognized sales)2 for the quarter grew 133% YoY, to reach EGP1.13 billion, mainly driven by the increase in recognized revenue from standalone units, delivery of apartments (mainly in CASA and VGK), and improvements in construction revenue. The Company delivered 421 units in 3Q2015 and 1,033 units in 9M2015, a growth of 44% YoY, including 779 apartments, with stand-alone units accounting for the balance.
It's worthy to highlight that land area sold increased 47% YoY, coupled with an increase in average selling prices of land by 27%. In addition, average selling prices of Built Up Area (BUA) grew 16% YoY. Revenue for 9M2015 stood at EGP2.6 billion, a strong growth of 96% YoY.
On a project by project basis, Palm Hills Katameya, Golf Views, Golf Extension, Casa & Hacienda Bay accounted for 62% of revenue, whereby 64% of construction revenue was generated by VGK, Hacienda Bay, and Casa.
Gross Profit for the quarter increased 55% YoY to EGP334 million, on the back of higher level of recognized revenue from both stand-alone units, and construction revenue on delivered units. Gross Profit margin stood at 29.5%, a decrease of 14.9pp YoY, adversely impacted by a higher proportion of apartments in comparison to standalone units delivered during the quarter. Gross Profit for 9M2015 increased 94% YoY to EGP960 million.
EBITDA for the quarter increased 30% YoY to reach EGP214 million, an EBITDA margin of 18.9%, again adversely impacted by the higher deliveries of apartments carrying lower margins. EBITDA for 9M2015 remarkably increased by 86% YoY to record EGP673 million.
Net Profit after Minority Interest for the quarter recorded 40% YoY growth to reach EGP182 million, supported by the double digit growth in the top line. Net Profit after Minority Interest for 9M2015 amounted to EGP828 million, an increase of 213% YoY.
Net Debt for the third quarter of 2015 amounted to EGP1.1 billion in comparison to EGP1.5 billion as at end of 2014. Net Debt/EBITDA3 stood at 1.2x, down from 2.9x by year end 2014, supported by EBITDA growth in 9M2015 alongside improvements in the Company's cash position.
By end of 3Q2015, Receivables stood at EGP7.2 billion; compared to EGP5.4 billion by end of 2014, supported by strong sales achieved year to date.
Operational Review Continued Healthy Sales Momentum
Gross sales (reservations), which are not yet recognized as revenue, increased 83% YoY to EGP2 billion in 3Q2015, driven by strong pre-sales in the North Coast, namely Hacienda Bay & Hacienda White 2, on the back of high demand for secondary homes during summer season, alongside the Company's successful sales strategy and marketing campaigns. Gross sales for 9M2015 stood at EGP4.6 billion, an increase of 62% YoY, fuelled by higher level of reservations in Golf extension and Woodville by 120% & 127% respectively, as well as amplified reservations in Palm Hills Katameya and Hacienda Bay by 530% & 152% respectively.
In 3Q2015, Contracted sales increased 68% YoY to EGP1.3 billion, driven by stronger sales YoY in Haceinda Bay, Golf extension, Woodville, and Palm Hills Katameya. Contracted sales grew 70% YoY to EGP3.4 billion by end of 9M2015. During the quarter, the Company sold 549 units, with a total of 1,434 units sold for the nine months ending September 30, 2015.
Total construction spending reached EGP353 million during the quarter, an increase of 51% YoY. By end of 9M2015, total construction works amounted to EGP1.3 billion, an increase of 84% YoY.
Outlook
The Company is planning to launch pre-sales on KM45 in cooperation with MNHD prior to year end. The Company expects to launch pre-sales on 44 feddan (PK2 triangle), adjacent to Palm Hills Katameya project (East Cairo), once the final agreement is signed with New Urban Communities Authority ("NUCA") for the land. It is also planning to launch pre-sales of Smart Village Residence, an integrated residential and commercial community in Smart Village (West Cairo) by 1Q2016.
In addition, the Company expects to sign the final agreement with the Egyptian government for the co-development of a mixed use 500 feddan in East Cairo before the end of this year, and expects to reach an agreement for the land in West Cairo during the first half of 2016. The Company is also looking into a number of land bank opportunities in the North Coast.
With the record operational and financial performance achieved during 9M2015, the Company expects to close FY2015 with highly favorable results. The Company has a total sales backlog (unrecognized pre-sales) exceeding EGP8 billion, coupled with an available for sale inventory that's expected to generate over EGP13 billion of revenue, supported by a healthy financial position, gearing the Company to attain its growth plans.
The Company remains on track to deliver its FY2015 financial targets with total expected pre-sales in excess of EGP5 billion, revenue of EGP3 billion, Net Profit of EGP1 billion, and to deliver 1,500 homes.
Consolidated Income Statement (Egyptian Accounting Standards)
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In EGP 000's | 3Q2015 | 3Q2014 | Change | 9M2015 | 9M2014 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | 1,132,117 | 486,867 | 133% | 2,603,315 | 1,328,562 | 96% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of revenue | (798,406) | (270,994) | 195% | (1,643,427) | (834,631) | 97% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit | 333,711 | 215,874 | 55% | 959,889 | 493,930 | 94% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Margin % | 29.5% | 44.3% | (14.9 pp) | 36.9% | 37.2% | (0.3 pp) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General administrative, selling and marketing expenses | (127,621) | (84,179) | 52% | (318,189) | (178,905) | 78% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other revenue | 8,183 | 33,324 | (75%) | 31,762 | 47,238 | (33%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA | 214,274 | 165,018 | 30% | 673,461 | 362,264 | 86% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA Margin % | 18.9% | 33.9% | (15 pp) | 25.9% | 27.3% | (1.4 pp) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Administrative depreciation | (2,316) | (814) | 185% | (6,544) | (5,634) | 16% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Profit | 211,958 | 164,204 | 29% | 666,917 | 356,629 | 87% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expenses - amortization of discount on land liability | (3,129) | (6,946) | (55%) | (9,388) | (20,838) | (55%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance costs & interests | (4,013) | (15,312) | (74%) | (34,444) | (47,888) | (28%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest on land purchase liabilities | (42,246) | (34,448) | 22% | (150,704) | (105,681) | 43% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision | - | - | - | (99,662) | (182) | NA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains on investments in fair value through profit or loss | 1,233 | 1,163 | 6% | 3,581 | 3,639 | (2%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income - amortization of discount on notes receivables | 23,050 | 34,063 | (32%) | 69,149 | 102,188 | (32%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 7,545 | 219 | NA | 8,328 | 2,336 | 256% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital gains on investment property | - | - | - | 425,736 | - | NA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Profit Before Income Tax | 194,398 | 142,943 | 36% | 879,512 | 290,202 | 203% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (3,333) | (6,684) | (50%) | (13,745) | (7,136) | 93% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax | (1,000) | (60) | NA | (1,200) | (180) | NA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Profit after Tax | 190,064 | 136,199 | 39% | 864,567 | 282,886 | 206% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest | (8,041) | (6,503) | 24% | (36,599) | (18,752) | 95% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Profit after Tax & Minority Interest | 182,023 | 129,696 | 40% | 827,968 | 264,134 | 213% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Margin % | 16.1% | 26.6% | (10.6 pp) | 31.8% | 19.9% | 11.9 pp | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Balance Sheet
(Egyptian Accounting Standards)
EGP 000's | September 30, 2015 | December 31, 2014 | |
Long-Term Assets | |||
Investments in Associates | 77,987 | 77,163 | |
Investment Property | 854,665 | 1,085,977 | |
Held to Maturity Investments | 878,755 | 19,657 | |
Notes Receivable - Long Term | 5,885,610 | 2,665,165 | |
Projects Under Construction | 845,517 | 857,379 | |
Advance Payments for Investments Acquisitions | 204,111 | 204,111 | |
Fixed Assets (net) | 326,432 | 312,469 | |
Deferred Tax Asset | 2,722 | 3,999 | |
Other Long Term Assets | 1,391 | 1,391 | |
Total Long-Term Assets | 9,077,189 | 5,227,311 | |
Current Assets | |||
Works in Process | 6,611,468 | 6,099,636 | |
Cash & Cash Equivalents | 743,956 | 194,949 | |
Notes Receivable - Short Term | 549,178 | 1,571,754 | |
Investments at Fair Value | 61,151 | 56,856 | |
Accounts Receivable | 757,554 | 1,121,983 | |
Suppliers - Advance Payments | 406,422 | 373,202 | |
Debtors & Other Debit Balances | 199,341 | 116,797 | |
Due from Related Parties | 218,021 | 105,749 | |
Total Current Assets | 9,547,090 | 9,640,925 | |
Total Assets | 18,624,279 | 14,868,236 | |
Current Liabilities | |||
Banks - Credit Balances | 37,861 | 39,198 | |
Advances from Customers | 5,961,838 | 5,071,634 | |
Completion of Infrastructure Liabilities | 65,341 | 123,662 | |
Provisions | 108,629 | 9,063 | |
Current Portion of Land Purchase Liabilities | 215,823 | 216,569 | |
Due to Related Parties | 233,532 | 646,313 | |
Investment Purchase Liabilities | 44,257 | 44,257 | |
Notes Payable - Short Term | 686,351 | 805,228 | |
Current Portion of Term Loans | 65,265 | 174,410 | |
Suppliers & Contractors | 485,578 | 405,055 | |
Income Tax Payable | 96,115 | 83,979 | |
Creditors & Other Credit Balances | 392,077 | 410,672 | |
Total Current Liabilities | 8,392,668 | 8,030,038 | |
Working Capital | 1,154,422 | 1,610,887 | |
Total Investment | 10,231,611 | 6,838,198 | |
Financed as Follows: | |||
Shareholders' Equity | |||
Issued and Paid-In Capital | 4,344,640 | 2,696,640 | |
Legal Reserve | 584,508 | 566,470 | |
Special Reserve | 524,213 | 524,213 | |
Retained Earnings (Deficit) | (51,684) | (302,616) | |
Net Profit for the Period/Year | 827,968 | 353,290 | |
Equity Attributable to Equity Holders of Parent Co. | 6,229,645 | 3,837,997 | |
Non-controlling Interest | 274,201 | 255,951 | |
Total Shareholders' Equity | 6,503,846 | 4,093,948 | |
Long Term Liabilities | |||
Land Purchase Liabilities | 326,618 | 350,434 | |
Notes Payable - Long Term | 292,689 | 536,511 | |
Other Long Term Liabilities - Residents' Association | 463,076 | 395,362 | |
Loans | 2,645,383 | 1,461,943 | |
Total Long Term Liabilities | 3,727,765 | 2,744,250 | |
Total Equity & Long Term Liabilities | 10,231,611 | 6,838,198 | |
About Palm Hills Developments Palm Hills Developments, a leading real estate developer in Egypt, is a joint stock company established in 1997. Palm Hills builds integrated communities and has one of the most diversified land bank portfolios, spreading over 24 million square meters ("sqm") in Egypt, including 5 million sqm in Saudi Arabia that's currently earmarked for sale. The Company's product offerings include primary homes on both West Cairo and East Cairo, as well as secondary homes by the Mediterranean Sea (North Coast).
As at end of 3Q2015, PHD delivered more than 3,800 units within its developments, including more than 1,400 units in 11 completed projects. Today, PHD has 12 projects under development, 5 in West Cairo, 5 in East Cairo and 2 in North Coast, translating into a global sales backlog exceeding EGP8 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 also has a GDR listing on the London Stock Exchange, and is traded under the symbol "PHDC.LI". For more information visit: www.palmhillsdevelopments.com/
Investor Relations Contacts Mamdouh Abdelwahab Ahmed Nour El-Din Hassan Tel +202 35351200, Extension 1503 Investor.relations@phdint.com
Disclaimer The information contained herein is restricted and is not for publication, distribution or release, directly or indirectly, in or into, the United States of America, Canada, Australia or Japan.
This document does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefore. The Rights Issue and the distribution of this document and other information in connection with the Rights Issue in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
The price and value of, and income from, the securities issued in the Rights Issue may go down as well as up. Persons needing advice should consult a professional adviser.
The Rights Issue is not being made in or into the United States of America or to any U.S. person (as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act")). These materials are not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from the registration requirements of Securities Act. The Company has not registered, and does not intend to register, any portion of the Rights Issue in the United States, and does not intend to conduct a public offering of any securities in the United States.
No person has been authorized to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorized by the Company. In addition, no agent or representative of the Company accepts any responsibility whatsoever for the contents of this document and no representation or warranty express or implied, is made by any agent or representative as to the information set out in this document.
Neither the content of the Company's website (or any other website, including but not limited to the websites of the Company's subsidiaries, joint ventures or restricted affiliates) nor the content of any website accessible from hyperlinks on the Company's website (or any other website, including but not limited to the websites of the Company's subsidiaries, joint ventures or restricted affiliates) is incorporated into, or forms part of, this announcement.
This document contains forward-looking statements, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or including the words "targets," "believes," "expects," "aims," "intends," "may," "anticipates," "would," "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the Company's actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which it will operate in the future. These forward-looking statements speak only as at the date of this document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any of such statements are based.
This communication is only directed at (i) persons who are outside the United Kingdom; (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The securities referred to herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this communication or any of its contents.
Any offer of securities to the public that may be deemed to be made pursuant to this communication in any EEA Member State that has implemented Directive 2003/71/EC (as amended and together with any applicable implementing measures in any Member State, the "Prospectus Directive") is only addressed to qualified investors in that Member State within the meaning of the Prospectus Directive. This document is an advertisement and not a prospectus for the purposes of the applicable measures implementing the Prospectus Directive and as such does not constitute an offer to sell or the solicitation of an offer to purchase securities.
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