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PHDC - Palm Hills Developments News Story

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Market Cap £14.6m
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Position in Universe th / 1826

Palm Hills Develop - Annual Financial Report FYE2015

Mon 8th February, 2016 7:00am
RNS Number : 3069O
Palm Hills Developments S.A.E.
08 February 2016

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, JAPAN AND AUSTRALIA

4Q 2015 Earnings Release

PHD realizes record financial results on every front for FY2015. Revenue for the year recorded EGP3.6 billion. Gross sales exceeded EGP6 billion, with Net Profit after Minority Interest of EGP1 billion. The Board of Directors proposes a cash dividend of EGP0.15/share and bonus shares issuance of 1/20.

Cairo/London (February 7, 2016) - 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 financial year ended December 31, 2015.

Key Highlights

FY2015

Gross Sales ("reservations") stood at EGP6.3 billion, an increase of 61% YoY ("Year on Year"), a record for the Company surpassing the EGP5.5 billion mark achieved in FY2010. Growth in Gross Sales was led by the strong demand for products launched during the year in East Cairo and North Coast, complemented by our strong brand equity, successful sales efforts and marketing campaigns.

Contracted Sales grew 49% YoY to reach EGP4.4 billion.

Revenue increased 69% YoY, to record EGP3.6 billion, mainly driven by a stronger pace of construction, and recognized revenue from standalone units and apartments.

The Company delivered 1,573 units, another record for the Company, compared to 981 units handed over during FY2014, supported by accelerated construction works worth EGP1.9 billion.

Gross Profit increased 70% YoY to EGP1.2 billion, supported by the strong growth in top line. Gross Profit margin stood at 34%.

EBITDA remarkably grew 57% YoY to record EGP0.8 billion, with an EBITDA margin of 22%.

Net Profit after Minority Interest recorded a remarkable growth of 192% YoY, to reach EGP1.0 billion, a Net Profit margin of 29%, an all time high bottom line, nearly double the historical record of EGP545 million achieved in FY2010.

4Q2015

Gross Sales marked an increase of 57% YoY to record EGP1.7 billion, driven by healthy pre-sales in East Cairo including EGP628 million from Capital Gardens, following the project's successful launch mid December.

Contracted Sales increased 7% YoY to EGP1.1 billion, due to the growth in sales of primary housing mainly in East Cairo.

Revenue grew to EGP957 million, an increase of 23% YoY, supported by the increase in recognized revenue from standalone units (villas), and delivery of apartments and chalets (majority in CASA, VGK and Hacienda Bay). The Company delivered 540 units in 4Q2015, a new quarterly record for the Company.

Gross Profit amounted to EGP238 million, a growth of 13% YoY.

Net Profit after Minority Interest achieved a remarkable growth of 128% YoY reaching EGP204 million.

Yasseen Mansour, Chairman Comments:

I am very pleased to share with you our fourth quarter and full year 2015 financial results, a record year for the Company, driven by robust pre-sales market, accelerated construction works, backed by strong management team and financial position.

The Company realized a record set of financial results on all fronts for the twelve month ending December 31, 2015. Our pre-sales for the year has for the first time ever broken the EGP6 billion mark, recording EGP6.3 billion with a growth of 61% YoY, breaking our previous record of EGP5.5 billion in FY2010. Growth in pre-sales was fuelled by demand for primary housing as Egyptians continue to migrate from Cairo, heading West and East, as well as demand for secondary homes in the North Coast.

In East Cairo, we witnessed a record quarter with pre-sales of EGP889 million, of which EGP628 million were generated from the recently launched Capital Gardens, another testimony to the resilient Egyptian property market, and demand for Palm Hills Developments product offerings, positioning the Company as the top-tier developer.

We continued our efforts with expediting projects' deliveries; the Company handed over record 1,573 units, 60% more than in previous year. Moreover, the Company spent EGP1.9 billion on construction, and collected EGP2.1 billion from receivables and new sales, a growth of 48% YoY.

Our Balance Sheet maintained a strong position with Total Equity (unadjusted) of EGP6.6 billion, Receivables of EGP7.6 billion. Net Debt stood at EGP1.5 billion with Net Debt/EBITDA of 1.9x, supported by steady EBITDA growth and improvements in the Company's cash position.

Revenue for the year recorded EGP3.6 billion, alongside Gross Profit of EGP1.2 billion, an EBITDA of EGP0.8 billion, and a remarkable Net Profit after Minority Interest of EGP1.0 billion, the highest Net Profit the Company ever achieved.

With regards to recurring income portfolio, in West Cairo, we have completed all construction works in Street 88 strip-mall and successfully leased 60% of total GLA. Phase 8 office building is progressing as planned and we received an indicative interest for 70% of the project's GLA. 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 EGP110 million.

We continue to replenish our land bank, other than Capital Gardens which was secured and launched during the second half of 2015, on December 21, 2015, the Company signed the final agreement with NUCA, to co-develop on a revenue sharing basis, an integrated residential community in East Cairo spreading over 2.1 million sqm. It is expected to create 150,000 job opportunity, supported by international and local expertise. The community will house 40,000 Egyptian citizens on a built up area of up to 1.8 million sqm. Pre-sales and construction activities are expected to commence during the third quarter of 2016. We expect to reach an agreement with the Egyptian government for the co-development of a mixed use 42 million sqm in West Cairo during the first half of 2016.

We are still considering a number of land bank opportunities in the North Coast, capitalizing on the co-developments scheme and attractive acquisitions. The Company remains on track to complete projects currently under-development by end of 2017/early 2018, and capitalize on the recently announced co-development agreements to deliver solid financial results and livable communities.

Given our improving cash flow position and the existing projects coming to an end in terms of construction, on February 4, 2016, the Company's Board of Directors agreed, for the first time ever, to put forward a proposed cash dividend of EGP0.15/share and bonus shares issuance of 1/20, subject to our shareholders' approval in the upcoming Annual General Assembly planned for March 2016. Moving forward, we are planning to return excess cash to shareholders with plans to distribute almost 30% from annual free cash flows in the form of cash dividend to shareholders or share buyback - depending on market conditions.

Key Financial Indicators

EGP Million

4Q2015

4Q2014

Change

FY2015

FY2014

Change

Revenue2

957

778

23%

3,561

2,106

69%

Gross Profit

238

211

13%

1,198

705

70%

Gross Profit Margin

24.9%

27.1%

(2.2pp)

33.7%

33.5%

0.2pp

EBITDA

96

127

(24%)

770

489

57%

EBITDA Margin

10.1%

16.3%

(6.2pp)

21.6%

23.2%

(1.6pp)

Net Profit after Minority Interest

204

89

128%

1,031

353

192%

Net Profit Margin

21.3%

11.5%

9.8pp

29.0%

16.8%

12.2pp

Gross Sales (Reservations)

1,713

1,092

57%

6,332

3,936

61%

Contracted Sales

1,068

997

7%

4,435

2,979

49%

Financial Review

Revenue (net recognized sales) for FY2015 stood at EGP3.6 billion, a growth of 69% YoY, mainly driven by a stronger pace of construction, and recognized revenue from standalone units and apartments. Revenue for the quarter grew 23% YoY, to reach EGP957 million, supported by the increase in recognized revenue from standalone units (villas), and delivery of apartments and chalets (majority in CASA, VGK and Hacienda Bay). The Company delivered 540 units during the quarter and 1,573 units in FY2015, a growth of 60% YoY, including 1,157 apartments, with stand-alone units accounting for the balance.

It's worthy to highlight that average selling prices of land increased 23% YoY. In addition, average selling prices of built up area grew 15% YoY. On a project by project basis, Palm Hills Katameya, Golf Views, Golf Extension, Casa & Hacienda Bay accounted for 61% of revenue, whereby 60% of construction revenue was generated by VGK, Hacienda Bay, and Casa.

Gross Profit for FY2015 increased 70% YoY to EGP1.2 billion, supported by the strong growth in top line. Gross Profit margin stood at 34%.

Gross Profit for the quarter increased 13% YoY to EGP238 million, on the back of higher level of recognized revenue from apartments and stand-alone units, as well as construction revenue on delivered units. Gross Profit margin stood at 25%, a decrease of 2.2pp YoY, adversely impacted by a higher proportion of apartments in comparison to standalone units delivered during the quarter, which were sold during 2011 & 2012 at depressed prices.

EBITDA for FY2015 remarkably grew 57% YoY to record EGP0.8 billion, with an EBITDA margin of 22%. EBITDA for the quarter stood at EGP96 million, a decrease of 24% YoY, an EBITDA margin of 10%. EBITDA was adversely impacted by the higher deliveries of apartments carrying lower margins as opposed to standalone units.

Net Profit after Minority Interest for FY2015 recorded a remarkable growth of 192% YoY, to reach EGP1.0 billion. Net Profit margin stood at 29%, an increase of 12pp YoY. Net Profit after Minority Interest for the quarter achieved a remarkable growth of 128% YoY reaching EGP204 million.

Net Debt stood at EGP1.5 billion maintaining the same level of year end 2014. However, Net Debt/EBITDA stood at 1.9x, down from 2.9x by year end 2014, supported by EBITDA growth in FY2015 alongside improvements in the Company's cash position.

By end of FY2015, Receivables stood at EGP7.6 billion; compared to EGP5.4 billion by end of 2014, supported by remarkable sales realized during the fiscal year.

Operational Review

Strong Sales Momentum

Gross Sales (reservations), which are not yet recognized as revenue, for FY2015 stood at EGP6.3 billion, a growth of 61% YoY, exceeding the EGP6 billion mark for the first time ever and surpassing FY2010 record of EGP5.5 billion.

Growth in Gross Sales was driven by the strong demand for primary housing in Golf Views, Golf Extension, Woodville, Palm Hills Katameya, Capital Gardens, and Village Gate, as well as secondary homes in the Hacienda Bay and Hacienda White 2, noting that Gross Sales in Golf extension and Woodville (West Cairo) grew 117% & 33% YoY respectively; in addition Palm Hills Katameya and Hacienda Bay marked an impressive increase of 429% & 133% YoY respectively.Gross Sales increased 57% YoY to EGP1.7 billion in 4Q2015, driven by healthy pre-sales in East Cairo (Capital Gardens and Palm Hills Katameya), West Cairo (Golf Extension, Golf Views and Woodville) and North Coast (Hacienda Bay and Hacienda White 2), the strong demand for the Company's products portfolio, backed by successful sales strategy and marketing campaigns.

Contracted Sales for the quarter increased 7% YoY to EGP1.1 billion, driven by strong sales YoY in Golf extension, Woodville, and Palm Hills Katameya. Contracted Sales for the full year recorded EGP4.4 billion, a growth of 49% YoY. During the quarter, the Company sold 706 units with a total of 2,140 units sold during the fiscal year ended December 31, 2015.

By end of FY2015, total construction spending reached EGP1.9 billion, an increase of 89% YoY. Total construction spending for the quarter amounted to EGP0.6 billion, an increase of 103% YoY.

With regards to commercial portfolio, in West Cairo, all construction works in Street 88 strip-mall were completed and 60% of the project's GLA was successfully leased. Phase 8 office building is progressing as planned and the Company received an indicative interest for 70% of the project's GLA. In East Cairo, Village Gate & VGK malls are currently under development, with outstanding reservations on VGK mall reaching EGP110 million.

Outlook

The Company is planning a number of pre-sales launches during FY2016 including: Phase 2 of Palm Hills Katameya extension (East Cairo) during 1Q2016, spanning 36 feddan, the project is made up of 166 standalone units and is expected to generate revenue of EGP1.1 billion. In addition, the Company is planning to launch the 2.1 million sqm co-development with NUCA in East Cairo during 3Q2016.

The Company expects to reach an agreement with NUCA 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.

As for the commercial portfolio, the Company expects to finalize all construction works in Phase 8 office building, Village Gate & VGK malls by end of FY2016.

With regards to FY2016 full year targets, the Company expects to spend EGP2 billion on construction, achieve Gross Sales of EGP6.5 billion and deliver around 1,600 units.

Consolidated Income Statement

(Egyptian Accounting Standards)

In EGP 000's

4Q2015

4Q2014

Change

FY2015

FY 2014

Change

Revenue

957,269

777,503

23%

3,560,585

2,106,065

69%

Cost of revenue

(718,928)

(566,842)

27%

(2,362,355)

(1,400,646)

69%

Gross profit

238,342

210,661

13%

1,198,230

705,419

70%

Margin %

24.9%

27.1%

(2.2 pp)

33.7%

33.5%

0.2 pp

General administrative, selling and marketing expenses

(161,677)

(100,604)

61%

(479,866)

(280,336)

71%

Other revenue

19,631

16,580

18%

51,393

63,818

(19%)

EBITDA

96,295

126,637

(24%)

769,756

488,901

57%

EBITDA Margin %

10.1%

16.3%

(6.2 pp)

21.6%

23.2%

(1.6 pp)

Administrative depreciation

(2,572)

(1,858)

38%

(9,115)

(7,492)

22%

Operating Profit

93,724

124,779

(25%)

760,641

481,409

58%

Less:







Interest expenses - amortization of discount on land liability

(3,129)

(6,946)

(55%)

(12,518)

(27,785)

(55%)

Finance costs & interests

(4,061)

(28,198)

(86%)

(38,504)

(76,086)

(49%)

Interest on land purchase liabilities

75,711

(34,448)

NA

(74,993)

(140,129)

(46%)

Provision

(4,990)

(300)

NA

(104,653)

(482)

NA

Add:







Gains on investments in fair value through profit or loss

2,715

1,243

119%

6,296

4,882

29%

Interest income - amortization of discount on notes receivables

23,050

34,063

(32%)

92,198

136,250

(32%)

Interest income

39,648

1,703

2,228%

47,976

4,039

1,088%

Capital gains on investment property

-

-

-

425,736

-

NA

Net Profit Before Income Tax

222,667

91,895

142%

1,102,179

382,097

189%

Income tax expense

(32,025)

(11,520)

178%

(45,770)

(18,655)

145%

Deferred tax

9,226

10,015

(8%)

8,026

9,835

(18%)

Net Profit after Tax

199,868

90,391

121%

1,064,435

372,277

185%

Non-controlling interest

3,657

(1,235)

NA

(32,942)

(19,987)

65%

Net Profit after Tax & Minority Interest

203,525

89,156

128%

1,031,493

353,290

192%

Margin %

21.3%

11.5%

(9.8 pp)

29.0%

16.8%

12.2 pp

Consolidated Balance Sheet

(Egyptian Accounting Standards)

EGP 000's

December 31, 2015

December 31, 2014

Long-Term Assets



Investments in Associates

78,506

77,163

Investment Property

854,665

1,085,977

Notes Receivable - Long Term

4,546,282

2,665,165

Projects Under Construction

858,654

857,379

Advance Payments for Investments Acquisitions

184,336

184,336

Fixed Assets (net)

334,623

317,778

Deferred Tax Asset

11,948

3,999

Other Long Term Assets

1,391

5,514

Total Long-Term Assets

6,870,404

5,197,349

Current Assets



Works in Process

6,540,616

6,101,970

Held to Maturity Investments

613,046

19,657

Cash & Cash Equivalents

965,670

202,384

Notes Receivable - Short Term

2,371,035

1,607,196

Investments at Fair Value

67,113

56,856

Accounts Receivable

704,029

1,121,983

Suppliers - Advance Payments

384,777

373,202

Debtors & Other Debit Balances

174,854

118,980

Due from Related Parties

172,392

90,204

Total Current Assets

11,993,531

9,692,432

Total Assets

18,863,935

14,889,781

Current Liabilities



Banks - Credit Balances

31,035

39,198

Banks - Overdraft

80,237

-

Advances from Customers

6,169,792

5,008,131

Completion of Infrastructure Liabilities

173,648

133,837

Provisions

116,844

11,594

Current Portion of Land Purchase Liabilities

263,319

216,569

Due to Related Parties

226,319

646,313

Investment Purchase Liabilities

44,257

44,257

Notes Payable - Short Term

473,693

816,018

Current Portion of Term Loans

80,814

174,410

Suppliers & Contractors

406,850

414,281

Income Tax Payable

46,631

88,485

Creditors & Other Credit Balances

345,368

416,092

Total Current Liabilities

8,458,807

8,009,186

Working Capital

3,534,725

1,683,246

Total Investment

10,405,129

6,880,595

Financed as Follows:



Shareholders' Equity



Issued and Paid-In Capital

4,344,640

2,696,640

Legal Reserve

585,104

566,470

Special Reserve

524,213

524,213

Retained Earnings (Deficit)

(171,751)

(260,444)

Net Profit for the Period/Year

1,031,493

353,290

Equity Attributable to Equity Holders of Parent Co.

6,313,699

3,880,169

Non-controlling Interest

270,774

256,176

Total Shareholders' Equity

6,584,473

4,136,345

Long Term Liabilities



Land Purchase Liabilities

268,236

350,434

Notes Payable - Long Term

148,532

536,511

Other Long Term Liabilities - Residents' Association

485,600

395,362

Loans

2,918,287

1,461,943

Total Long Term Liabilities

3,820,656

2,744,250

Total Equity & Long Term Liabilities

10,405,129

6,880,595

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 26.4 million square meters ("sqm") in Egypt, including 5 million sqm in Saudi Arabia. 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 FY2015, PHD delivered more than 4,300 units within its developments, including more than 1,500 units in 11 completed projects. Today, PHD has 13 projects under development, 5 projects in West Cairo, 6 projects in East Cairo and 2 projects in North Coast, translating into a sales backlog exceeding EGP8.4 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

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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The company news service from the London Stock Exchange
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