1 Sep 2020 09:00
PHD achieve New Sales of EGP4.4 billion in 1H2020, including EGP2.7 billion during 2Q2020, the highest New Sales across Egypt
Cairo/London (September 1, 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 June 30, 2020.
Key Highlights
§ In 2Q2020, New Sales recorded EGP2.7 billion, a growth of 55% QoQ, compared to EGP1.7 billion in 1Q2020. Growth in sales during 2Q2020 was supported by the gradual improvements in home buying transactions following the easing of restrictions and precautionary measures previously imposed in relation to COVID-19 although April was a very slow month. In July 2020, PHD achieved New Sales of EGP1.2 billion, a growth of 204% YoY, compared with EGP410 million in July 2019.
§ New Sales (Residential and Commercial) stood at EGP4.4 billion, translating into 662 units sold during 1H2020, a growth of 10% YoY, should we remove Palm Hills Alexandria's Expression of Interest of EGP2.1 billion from 1H2019 New Sales.
§ Commercial New Sales amounted to EGP489 million during 1H2020, a growth of 34% YoY mostly driven by the sale of office space in Golf Central for EGP329 million and The Lane for EGP71 million.
§ Revenue reached EGP2.0 billion during 1H2020. Gross Profit amounted to EGP751 million in 1H2020, a gross margin of 37%, compared to 40% in 1H2019. The YoY decrease in Gross Profit margin resulted mainly from the handover of lower margin units during 1H2020. EBITDA stood at EGP377 million, a margin of 19% during 1H2020. Net Profit after Tax and Minority Interest amounted to EGP277 million, implying a Net Profit margin of 14%.
§ The Company spent EGP635 million on construction activities during 1H2020. In Badya, the development of 200 units' concrete skeleton was completed alongside blockworks of 70 units. The Company concluded all construction works in Golf Views. In the Crown, PHD commenced construction of 120 units' concrete skeleton, 80 units' blockworks and 60 units' façade works. In Capital Gardens, the Company completed more than 90% of phase 1, which encompass more than c.700 units.
§ Regarding handovers, the Company delivered 318 residential and commercial units during 1H2020 mainly in the following projects: Capital Gardens, Woodville, Golf Extension, Hacienda Bay and Palm Hills Katameya. Handovers recovered during 2Q2020 following the easing of precautionary measures. The Company had an additional 744 units released from construction during the period, of which 391 units are within livable zones. In July 2020, PHD handed over 119 units. The Company is ahead of delivery schedule in almost all projects.
§ PHD has ready to move inventory worth c.EGP3.0 billion across several projects in West Cairo, East Cairo and North Coast. The ready to move products are currently offered year-round and not just as a promotion. Units are available for immediate delivery to homebuyers with payment plans of up to 8-10 years.
§ Shareholders approved the delisting of the Company's Global Depositary Receipts' program from the London Stock Exchange during the Extraordinary Shareholder Meeting held on August 18, 2020. The Company will disclose further details on said corporate action to GDRs' holders post securing the necessary regulatory approvals.
Yasseen Mansour, Chairman & Group CEO Comments:
I am pleased to share with you our operational and financial results for the period ended June 30, 2020, where our performance has been swiftly improving mostly since beginning of June and is showing further recovery year to date, following the easing of restrictions and precautionary measure previously imposed in relation to COVID-19 pandemic.
Although April 2020 was a slow month with only EGP194 million in New Sales because of COVID-19, we ended 2Q2020 with EGP2.7 billion in New Sales, the highest New Sales in Egypt during the period. During 1H2020, we sold 662 units for EGP4.4 billion, which represents a growth of 10% YoY, should we remove Palm Hills Alexandria's Expression of Interest of EGP2.1 billion from 1H2019 New Sales. We see liquidity gradually coming back to the market, evidenced by our record July 2020 New Sales of EGP1.2 billion, which translates to a growth of 204% YoY.
The Company handed over 437 units until end of July 2020. We have outperformed our handover schedule on almost all projects on contractual delivery dates.
We reiterate our expectations with regards to the upcoming securitization transactions for a gross receivables portfolio of c.EGP1.5 billion during 4Q2020. Our Balance Sheet remains strong and flexible. As at end of 1H2020, the Company's Cash and Cash Equivalents amounted to EGP2.0 billion, while Net Debt amounted to EGP2.0 billion. Our Receivables recorded EGP21.4 billion, covering Net Debt 10.6 times in 1H2020.
Looking ahead, we expect the property market to remain uneven, with key and large developers to outperform and gain market share. We are working on reducing our Net Debt from the current EGP2.0 billion level to EGP1.5 billion by year end.
Financial Review
Revenue reached EGP2.0 billion during 1H2020. Gross Profit amounted to EGP751 million in 1H2020, a gross margin of 37%, compared to 40% in 1H2019. The YoY decrease in Gross Profit margin resulted mainly from the handover of lower margin units during 1H2020.
EBITDA stood at EGP377 million, a margin of 19% during 1H2020. Net Profit after Tax and Minority Interest amounted to EGP277 million, implying a Net Profit margin of 14%.
Net Debt decreased to EGP2.0 billion by end of 1H2020, a drop of EGP0.2 billion from 1Q2020, in line with the Company's strategy to optimize and reduce leverage. Receivables amounted to EGP21.4 billion, covering Net Debt 10.6 times. Net Debt/EBITDA stood at 1.8 times by end of 1H2020.
Operational Review
New Sales (Residential and Commercial) recorded EGP4.4 billion in 1H2020, a decrease of 28% YoY, given the comparison with a high base for 1H2019, which seen a strong uptake in Palm Hills Alexandria. Should we exclude the Palm Hills Alexandria Expression of Interest, New Sales would have demonstrated a growth of 10% YoY in 1H2020.
Despite witnessing slowdowns in homebuying transactions during April 2020, the Company had an outstanding sales performance 2Q2020 mostly in June, supported by the successful launch of Laguna Bay project in Ain Sokhna, the strong uptake for the Company's offerings in the North Coast and further interest in the ready to move products.
On the Commercial front, the segment's New Sales amounted to EGP489 million during 1H2020, a growth of 34% YoY mostly driven by the sale of office space in Golf Central for EGP329 million and The Lane for EGP71 million.
In West Cairo, New Sales amounted to EGP2.1 billion, of which residential stood at EGP1.6 billion and the remaining balance from commercial sales. The largest contributors to residential sales were Badya, The Crown, along remarkable contribution from Palm Parks, Golf Extension and Golf Views mostly on the ready to move products.
North Coast, Alexandria and Ain Sokhna witnessed robust performance during the second quarter of 2020 following the launch of Laguna Bay in June 2020, recording EGP510 million in New Sales in a matter of weeks. The three destinations combined achieved New Sales of EGP1.8 billion during 1H2020.
The Company handed over 318 residential and commercial units during 1H2020 mainly in the following projects: Capital Gardens, Woodville, Golf Extension, Hacienda Bay and Palm Hills Katameya. Handovers recovered during 2Q2020 following the easing of restrictions and curfews. The Company had an additional 744 units released from construction during the period, of which 391 units are within livable zones.