4 Sep 2019 08:25
PHD achieve positive Cash Flows from Operations of EGP0.5 billion, New Sales of EGP6.0 billion during 1H2019, on track to close the year with positive Cash Flows from Operations
Cairo/London (September 4, 2019) - Palm Hills Developments S.A.E. ("PHD" or "the Company") (EGX: PHDC.CA, PHDC.LI), a leading real estate developer in Egypt, announced its consolidated financial and operating results for the financial period ended June 30, 2019.
Key Highlights
§ The Company achieved positive Cash Flows from Operations of EGP0.5 billion in 1H2019, a trend that we are confident to continue throughout the rest of 2019.
§ In 1H2019, New Sales (Residential and Commercial) amounted to EGP6.0 billion, translating into 964 units sold. Palm Hills Alexandria contributed the lion's share with EGP3.8 billion (598 units), of which EGP2.8 billion were booked during 2Q2019. While Palm Hills New Cairo recorded EGP502 million in 1H2019. New Sales came 23% lower YoY as 1H2018 seen the launch of Badya on May 3, 2018, and the sale of PK2 Mall in East Cairo during June 2018. Commercial New Sales stood at EGP363 million, supported by the launch of PHD's first dedicated business complex in West Cairo Golf Central adjacent to Bamboo and Bamboo Extension, which booked New Sales of EGP224 million in 1H2019.
§ Revenue amounted to EGP2.5 billion in 1H2019, a decrease of 25% YoY, mostly due to lower handed over residential units YoY as most projects currently under development are nearing completion, noting that PHD had c.449 units released from construction until end of 2Q2019, some of which are in non-livable zones with ongoing site development or not yet received by the respective home owner. While Revenue for the quarter stood at EGP1.6 billion. In 1H2019, PHD maintained a healthy Gross Profit margin of 40% compared to 39% in 1H2018, mainly driven by the YoY growth in the value of units delivered as well as land sales related to standalone units sold.
§ Net Profit after Tax and Minority Interest amounted to EGP451 million in 1H2019, an increase of 3% YoY, implying a Net Profit margin of 18%, a growth of 5pp YoY. In 2Q2019, Net Profit grew 44% YoY to record EGP310 million, a Net Profit margin of 20%, an improvement of 9 pp over 2Q2018.
§ The Company spent EGP1.1 billion on construction activities during 1H2019, mainly on Palm Hills New Cairo, Golf Extension, Capital Gardens, Golf Views, Palm Valley, Woodville and The Crown.
§ As the Company aims to conclude several projects during the year, a number of phases were completed in projects currently under development including the completion of Palm Valley where some home owners already commenced their interior finishing. In Woodville, Phases 1-3 were completed with ambitious plans to conclude Phase 4 by December 2019. Hacienda Bay was 100% completed, except for the phase of Water Villas.
§ On the commercial front, Lakeyard was fully renovated and became operational with the beginning of summer season offering 54 F&B, entertainment and retail outlets. Furthermore, the Company witnessed the soft opening of 2 five stars boutique hotels Le Sidi in Hacienda Bay and Mazeej in Hacienda White. Palm Hills Katameya Club commenced soft operations during August 2019.
§ PHD handed over 452 units during 1H2019 with most of the handed overs units in the following projects: Woodville, Golf Extension, Golf Views, Palm Parks, Hacienda Bay, and Hacienda White 2. The Company delivered 49 units in Palm Valley in West Cairo ahead of schedule. Notably, PHD plans to deliver c.100 units in Capital Gardens during 4Q2019, a couple of quarters ahead of planned handover schedule.
Yasseen Mansour, Chairman & Group CEO Comments:
During 2Q2019, we were keen on reporting quality set of results where we managed to generate positive Cash Flows from Operations of EGP505 million in line with our target as announced by the beginning of 2019, which is further solidifying our Balance Sheet position.
Our geographical expansion strategy in the untapped real estate markets started to bear fruit during 1H2019 with cumulative sales to date of EGP4.7 billion booked from the recent launch in Egypt's second largest governorate, Alexandria.
Despite the lower handovers YoY, our P&L showed modest growth in earnings of 3%, although we completed the construction of c.449 units in phases that still has ongoing development activities, coupled with the impact of 23% YoY decrease in New Sales. Gross Profit margin came higher than our target of 40% in 1H2019 and 42% in 2Q2019, given the impact of low margin units and easing of old backlog.
We are still eyeing further improvement towards the end of year coming from our efficiency program, which we adopted by the beginning of 2019 and led to a decrease of 13% YoY in SG&A Expenses, along with the anticipation of further interest rates cut in the upcoming MPC meetings during 2019, noting that the 150 bps cut that took place on August, 22, is expected to yield total saving of c.EGP70-80 million per annum in Interests, Financing Cost and Land Liabilities.
Looking at our Net Debt position, it stood at EGP2.6 billion by end of 1H2019, with Receivables of EGP18 billion solidifying our Balance Sheet where Receivables cover Net Debt 6.9 times. Net Debt/EBITDA stood at 2 times by end of 1H2019.
We intend to engage in further securitization and discounting transactions of gross receivables portfolio of c.EGP1 billion during 4Q2019 as the interest rate environment improves further complemented by conclusion of projects under developments.
Despite the current challenging market conditions and continuous pressure on disposal income, our residential and commercial offerings remained compelling and we are still confident about our ability to conclude the year with strong financial and operational performance.
Financial Review
In 1H2019, Revenue amounted to EGP2.5 billion, a decrease of 25% YoY, due to lower handed over residential units YoY, noting that PHD had c.449 units released from construction, some of which are in non-livable zones with ongoing site development or not yet collected by the respective home owner. Palm Hills Alexandria contributed largely to Revenue and Gross Profit. Gross Profit stood at EGP1 billion, translating into a Gross Profit margin of 40%, mostly due to the handover of high margin units.
EBITDA stood at EGP649 million, an EBITDA margin of 26%. Net Profit after Tax and Minority Interest amounted to EGP451 million, a Net Profit margin of 18%.
Net Debt amounted to EGP2.6 billion by end of 1H2019, with Receivables of EGP18 billion solidifying our Balance Sheet where Receivables cover Net Debt 6.9 times. Net Debt/EBITDA stood at 2 times by end of 1H2019.
Operational Review
New Sales amounted to EGP6.0 billion in 1H2019, of which EGP5.7 billion was generated from residential sales and EGP363 million from the commercial segment. Palm Hills Alexandria was the largest contributor to Residential New Sales, followed by Palm Hills New Cairo, The Crown and Badya.
Commercial sales were lower YoY since 1H2018 had seen a bulk transaction related to the sale of PK2 Mall for EGP720 million. Golf Central seen major uptake following its successful launch in May 2019 with New Sales of EGP224 million. While Hale Town (the medical clinics in West Cairo) achieved New Sales of EGP59 million and The Lane Mall booked EGP51 million.
In West Cairo, New Sales amounted to EGP1.5 billion, of which EGP1.1 billion was generated from the sale of residential units, with the balance generated by the commercial segment. New Sales in West Cairo were complemented by demand for units in The Crown and Badya projects. While commercial sales were driven by the launch of Golf Central - the recently launched business complex located in Palm Hills October attached with retail including F&B outlets. The project booked New Sales of EGP224 million (23 units).
In East Cairo, New Sales stood at EGP560 million in 1H2019, mainly driven by Palm Hills New Cairo, bringing the project's cumulative New Sales to EGP7.8 billion.
North Coast and Alexandria recorded New Sales of EGP4.0 billion during 1H2019, fueled by robust demand for Palm Hills Alexandria. During 2Q2019, PHD commenced conversion of Expressions of Interests into Sales resulting in EGP3.8 billion (598 units).
The Company handed over 452 units during 1H2019 with most of handed overs units in the following projects: Woodville, Golf Extension, Golf Views, Palm Parks, Hacienda Bay, and Hacienda White 2. The Company delivered 49 units in Palm Valley in West Cairo ahead of schedule. Notably, PHD plans to deliver c.100 units in Capital Gardens during 4Q2019, a couple of quarters ahead of planned handover schedule.
It is worthy to highlight that number of memberships in Palm Club stood at 3,332 memberships by end of 1H2019.
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 41.5 million square meters ("sqm") in Egypt, including 5 million sqm in Saudi Arabia. PHD'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 1H2019, PHD delivered 10,100 units within its developments, including more than 5,064 units in 13 completed projects. Today, PHD has 10 projects under development, 4 projects in West Cairo, 4 projects in East Cairo and 2 projects in the North Coast, in addition to 5 new projects including 4 co-developments, translating into a sales backlog of c.EGP13.4 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