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PHDC - Palm Hills Developments News Story

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Last Trade - 04/04/18

Sector
Financials
Size
Micro Cap
Market Cap £14.6m
Enterprise Value £219.0m
Revenue £241.7m
Position in Universe th / 1818

Palm Hills Develop - 3rd Quarter Results

Mon 16th November, 2020 1:29pm
RNS Number : 4603F
Palm Hills Developments S.A.E.
16 November 2020
 

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)

 

 

 

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.

 

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