Palm Hills Development Co. · EGX:PHDC
Palm Hills Development — Non-Deal Roadshow (March 2010)
34 slides from Palm Hills Development's roadshow presentation, March 2010
Slide 1: Rights issue & 2009 full year results overview
Rights issue & 2009 full year results overview Positioning for growth March 2010 0
Slide 2: Disclaimer
Disclaimer This presentation is being provided to you on a confidential basis and may not be distributed or reproduced in any form. This presentation is intended for information purposes only and does not constitute or form part of an offer for sale or subscription or an invitation or solicitation o
Slide 3: Company overview
Company overview Business Overview Shareholding Structure (1) PHD, a leading real estate developer in the Egyptian market, was established in 2005 as a sister company of Al Ethadia Co. PHD has its origins dating back to 1997 with the formation of Al Ethadia Co., which was established for the pur
Slide 4: Palm Hills is launching a EGP 700m rights issue
Palm Hills is launching a EGP 700m rights issue Offer size EGP 700m (c. USD 130m) Rights ratio 1 new share for every 2 existing shares Shares offered 349,440,000 Issue price EGP 2.00 Disc. to TERP c. 70%1 MMID has communicated its intention to fully subscribe to their entitlement in the Major shareh
Slide 5: Egypt's leading diversified real estate developer
Egypt’s leading diversified real estate developer 48.8m square metres, 32 projects with 8 under construction and additional 18 master planned; backlog Developing one of EGP 9.4bn; independent valuation EGP 38bn1 Egypt’s largest and most diversified Successful launch of 5 major developments in 20
Slide 6: Rights issue rationale and use of proceeds
Rights issue rationale and use of proceeds Rights issue proceeds of EGP 700m to target specific opportunities identified by management, with clear strategic rationale Use of proceeds Rationale Opportunity Accelerating construction c. 75% of the proceeds to fund accelerated Increasing constructio
Slide 7: Leverage current platform
Targeted use of proceeds supports the implementation of PHD’s strategy as part of its integrated funding program Funding program How does the funding program support PHD’s strategy? Right issue Debt funding Focus on projects scheduled to be delivered within the Leverage current platform Develop
Slide 8: Opportunities in a recovering market
Opportunities in a recovering market PHD witnessed a strong turnaround in H2 09 While Egyptian real estate markets proved Impact of global slow down felt in H1 09 with recovery in sales experienced in H2 09 relatively resilient during the economic crisis, +237% -45% markets exhibited weakness in
Slide 9: Timing coincides with a favourable construction cost environment
Timing coincides with a favourable construction cost environment Vertical integration and construction contracts From cyclical highs in 2007/2008, construction costs in In-house construction team gives guaranteed capacity and Egypt have fallen from historic peaks saves on external contractor’s m
Slide 10: Key Project Update
Key Project Update 2005/06/07 Launched Projects 100% 80% 60% Available 100% 100% 100% 91% 88% 40% 79% 78% 73% 64% 53% Sold 20% 0% Cascade Bamboo Golden Golf Views Katameya Bamboo Hacienda Casa The Village Palm Park Ext Bay 2008 Launched Projects 100% Available 50% 47% 54% Sold 40% 0% Golf Ext (A, B
Slide 11: Projects – progress update
Projects – progress update Gross Built up PHD Costs1 % Sold as at Sales Project timeline (year)2 Project Sector land (m2) area (m2) % Incurred % Comp. Dec 09 launch 05 06 07 08 09 10 11 12 13 14 15 16 Cascade Resi. 69,153 25,639 100% 31,482,856 100% 100% Apr 05 Golden palm Resi. 252,779 68,316 100%
Slide 12: 2009 Financial Review
Unsaved Document / 15/02/2010 / 20:06 2009 Financial Review 11
Slide 13: A challenging market backdrop showing signs of improvement
A challenging market backdrop showing signs of improvement Macro conditions Egypt was impacted by the global downturn in 2009 GDP However, H2 09 has seen a pick up as key Egyptian GDP drivers have strengthened: Suez Canal monthly revenues almost USD 400m from lows in 2009 of USD 300m and tourism
Slide 14: 2009 highlights
2009 highlights 2009 was a challenging year for PHD, Q1 started with a strong wave of cancellations amounting to EGP 625m, but this has declined to EGP 292m in Q4 09 Despite the tough economic conditions, we also succeeded in converting reservations into contracts throughout 2009.Total contracts
Slide 15: Sales progress
Sales progress Total new reservations Total cancellations Total new contracts (EGP in millions) (EGP in millions) (EGP in millions) 4,502 3,106 3,262 1,595 2,999 2,634 800 1,093 1,115 527 210 NA 13 2005 2006 2007 2008 2009 2007 2008 2009 2005 2006 2007 2008 2009 +31% +115% -29% +147% +15% -50% -18%
Slide 16: PHD regaining momentum
PHD regaining momentum Group net sales Q4 09 net sales and net reservations both ended a y-o-y (EGP in millions) +237% -45% decreasing trend -60% -8% 471 441 Q4 09 net sales represents the best single quarter in 2 325 329 303 years 242 Q4 09 net reservations represents a 747% increase as 130 1
Slide 17: Group financial highlights
Group financial highlights Group net sales (EGP in millions) +237% Q4 09 continued a 5 consecutive quarter trend of increasing +55% net sales, reaching EGP 471m (USD 86m) 471 Q4 09 sales increased 237% as compared to the same 329 303 period last year 242 140 130 Sales increased 55% q-o-q Q3 08
Slide 18: Revenue & cost breakdown
Revenue & cost breakdown Revenue contribution Cost breakdown Q4 09 Q4 09 FY 09 FY 09 17
Slide 19: Earnings performance
Earnings performance EBITDA (EGP in millions) +215% -64% -58% -15% +215% -22% 213 258 182 225 213 142 182 108 142 81 108 81 45 45 2008 2009 2008 2009 2008 2009 2008 2009 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 Q2 Q3 Q4 EBITDA margin 65% 32% 62% 45% 60% 30% 69% 62% 59% 45% 65% 60% 32% 30% Net profit (
Slide 20: Financing position
Financing position Interest coverage ratio(1) Interest coverage ratio remains strong 19.5x 19.8x One of the least levered public real estate companies in the MENA region 6.8x Total debt to total assets of 7.0% nm nm Total debt to equity ratio is of 21.6% 2005A 2006A 2007A 2008A 2009A PHD e
Slide 21: Income Statement-Snap Shot (Q-o-Q)
Income Statement-Snap Shot (Q-o-Q) Q4 2009 Q3 2009 ∆% Q4 2008 ∆% Net sales 470,750 303,035 55% 139,532 237% Cost of sales (246,479) (83,364) 196% (26,740) 822% Gross profit 224,271 219,672 2% 112,792 99% Margin 48% 72% 81% SG&A (82,292) (37,253) 121% (67,701) 22% EBITDA 141,979 182,418 -22% 45,091 2
Slide 22: Income Statement-Snap Shot (YTD)
Income Statement-Snap Shot (YTD) FY Dec 2009 FY Dec 2008 ∆% Net sales 1,145,795 1,234,806 -7% Cost of sales (454,520) (293,340) 55% Gross profit 691,274 941,466 -27% Margin 60% 76% SG&A (178,313) (201,139) -11% EBITDA 512,962 740,327 -31% Margin 45% 60% Depreciation (10,001) (10,266) EBIT 502,960 73
Slide 23: Balance Sheet Snap-Shot
Balance Sheet Snap-Shot As of As of 31-Dec-09 31-Dec-08 000s LE 000s LE Property and equipment 572,724 543,045 Adv. Payments for acquisitions 164,686 470,650 Others 42,645 47,945 Notes receivable 2,501,188 1,658,430 Total non current assets 3,281,243 2,720,070 Notes receivable 1,514,156 1,001,857 Ba
Slide 24: Investment highlights
Unsaved Document / 15/02/2010 / 20:06 Investment highlights 23
Slide 25: Palm Hills – the leader in Egyptian real estate
Palm Hills – the leader in Egyptian real estate 1. Egyptian real estate markets remain strong 6. Best in class management, 2. Large, diversified land bank sales force and construction secured at attractive prices operations 5. Reputation for quality, 3. Predominantly self reliability and the strateg
Slide 26: 1. Egyptian real estate market fundamentals remain strong
1. Egyptian real estate market fundamentals remain strong Demand and prices Supply and growth Fundamentals are strong – domestic growth and large Market dynamics differ to the rest of GCC young population Negative sentiment in regional markets reduces Need-based demand: likelihood of regiona
Slide 27: 1. Egyptian real estate market fundamentals remain strong (cont'd)
1. Egyptian real estate market fundamentals remain strong (cont’d) East and West Cairo Emerging as Growth Residential Markets Estimates Show Demand Exceeding Supply West Cairo East Cairo Annual Supply and Demand For Residential Units 6th of October Area New Cairo Area Demand Supply Gap Est. area 410
Slide 28: 2. One of the largest and most diversified land banks in Egypt
2. One of the largest and most diversified land banks in Egypt Land acquired at sub-market rates (avg. price/m2 = EGP 137; 48.8m square metres, 32 projects with 8 under construction and 3 8 now trading at c. EGP 1,500 levels) 4 additional 18 master planned 1 2 Land bank diversification allows: 6
Slide 29: 3. Predominantly self financing business model
3. Predominantly self financing business model Minimal upfront capital required to fund construction Land acquisition: Acquired from the government on attractive terms: Initial payment, followed by instalments funded by pre-sales Government has shown flexibility in periods of reduced sales, de
Slide 30: 4. Demonstrated flexibility to meet changing end market demand
4. Demonstrated flexibility to meet changing end market demand Flexibility to meet demands of increasingly diverse customers Units sold by price point (Number of units, cumulative; Price point in EGP m) Historically catered to upper-middle income clients Continues to respond to new market condit
Slide 31: 5. Brand name synonymous with quality and reliability
5. Brand name synonymous with quality and reliability Excellent reputation and strong brand recognition in the Egyptian market amongst current and prospective customers and business partners Enhanced through: Support from the Company’s shareholders including the Mansour and Maghraby families
Slide 32: 6. Best in class sales force and construction operations
6. Best in class sales force and construction operations Sales and Largest direct sales force in Egypt with 86 salesmen, located in sales offices across Cairo marketing Exclusive agreement with Coldwell Banker to promote and sell PHD’s properties exclusively Expanding sales offices into Europe
Slide 33: 6. Best in class management team
6. Best in class management team Graduated from the George Washington University with a degree in Finance Mr. Yasseen Mansour Chairman of Credit Agricole Egypt and Mantrac/Untrac Chairman & CEO Chairman of MMID Chairman of the McDonald’s franchise in Egypt Mr. Sherif Seif El Nasr Mr. Ashraf
Slide 34: Thank You
Unsaved Document / 15/02/2010 / 20:06 Thank You 33
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