Amer Group Reports 4Q / FY2013 Earnings

Transcription

1 Amer Group Reports 4Q / FY2013 Earnings 2014 expectations are high on the back of a 30% rise in New Real Estate Sales; Total reservations and contracts rising to EGP 6 billion; delivery of 803 units amounting to EGP 589 million in Real Estate Revenues for FY13. AMER.CA on the Egyptian Exchange Investor Contact Mr. Riad Refaat Chief Financial Officer riad.refaat@amer-group. com Investor Relation Contact Mohamed Zaki Tel: +20 (02) F ax : +20 (02) Mozaki@amer-group. com FY13 Highlights Revenues of EGP million, a 23.8% year-on-year decline in line with expectations given lower levels of scheduled deliveries in FY13. Gross profit of EGP million, a drop of 39.8%, partially as a result of higher COGS on rising sales in Porto October, Porto New Cairo and Porto Sharm, with a resulting gross profit margin of 36.8% Operating profit of EGP 37.6 million, a decline of 84.8% year-on-year. Net Profit after Taxes and Minority Interest of 32.0 million Total New Real Estate Sales Value of EGP 2.8 billion in FY13, up 30.5% from the previous year. Total assets of EGP 6.2 billion, up 26.0% year-on-year Cash on Balance Sheet surged 125% to EGP 818 million on the back of strong collection momentum Continued maintenance of low 0.12 debt-to-equity ratio Amer Group (AMER.CA on the EGX), a leading regional developer of large-scale, mixed-use family-friendly communities, released today its consolidated financial results for the year ending 31 December 2013, reporting a net profit of EGP 32.0 million on revenues of EGP million. Notably, Total New Real Estate Sales * in FY13, encompassing both residential and commercial units, surged 30.5% to EGP 2.8 billion despite challenging economic conditions, on a strong sales performance that underscores the appeal of the Porto brand and the soundness of the Group s sales and marketing strategy. Based on Amer Group s industry-leading two-year collection and construction cycle, the robust FY13 sales set the stage for strong revenue deliveries starting in Declines in both revenues (down 23.8%) and net earnings (off 79.4%) were in line with previously communicated management expectations on the back of both a planned lower-than-average pace of deliveries in 2013 and challenging market conditions in Egypt the Group s home market. The Porto brand embodies a holistic, family-friendly lifestyle with appeal far beyond our original vacation experience market, said Amer Group Chairman Mansour Amer. We look forward to a rising proportion of recognized revenues in the years ahead from new first-home developments including Porto New Cairo, Porto Cairo and Porto * Total New Real Estate Sales represents the total value of new unit sales made in a period, and is distinct from total revenues recognized in the Real Estate segment. The Group recognizes 100% of revenues from a real estate transaction in the quarter in which (a) the unit is ready for delivery and (b) 80% of the unit sale price has been collected from the client. Amer-group.com 1

2 October, the latter being one of the larger and more exciting developments we have ever undertaken. Revenue recognition in FY14 will be bolstered by deliveries from the Group s Porto South Beach, Porto Sharm, Porto Cairo Mall, Porto Golf Bay, Porto Marina Residence and The Hanging Gardens communities in Golf Porto Sokhna, among others. As we prepare to launch sales at new developments both in Egypt and in expansion markets across the region, we are now operating from a master plan for sales, construction and delivery that will ensure optimum use of our human and financial resources going forward, said Amer. Combined with our upcoming emphasis on deriving a larger proportion of our revenues from recurring sources including restaurants, commercial rents, Porto Vacation Club, and facilities management, this will result in increasingly smooth top- and bottom-line performances in the years to come. Amer Group is different: We have a consistent brand with proven mass family appeal. We see large land banks as wastes of resources and long construction and collection cycles as abominations, Amer concluded. I am exceptionally pleased with the Group s performance in 2013, which marks our decisive entry into the nation s first-home market, said Amer. From a base of zero in 2012, first homes accounted for 36.7% of all new real estate sales made by the Group in FY13. Management s analysis of the Group s financial and operational performance follows, while Amer Group s full consolidated financial statements for FY13 are presently available for download at amer-group.com. FY13 Financial Performance (all figures in EGP mn unless otherwise indicated) Revenues 1, (23.8%) COGS (9.9%) Gross Profit (39.8%) Gross Profit Margin 46.6% 36.8% (10.2 pts) Operating Profit (84.7%) Operating Profit Margin 21.3% 3.6% (17.7 pts) Net Profit After Tax & Minority (79.4%) Net Profit Margin 13.5% 3.6% (10 pts) EBIT (82.4%) Real Estate Restaurants Malls Hotels Retail and Other Total Assets 4, , % Cash % Debt (13.4%) Equity 1, , % Net Debt to Equity (15%) Total recognized Real Estate revenues accounted for 64.3% of Group revenue in FY13*, followed by Restaurants, Hotels and Malls. Primary contributors to operating profit, on the other hand, were Real Estate and the high-margin Malls * Group revenue has been reclassified to bring Malls segment revenue to the top line and for percent contribution purposes only is calculated as EGP million. See page 3 for more information. Amer-group.com 2

3 segment, which together offset losses in FY13 from the Restaurants and Hotels divisions as well as the impact of both new companies and Amer Holding. Group-wide, COGS rose slightly on the back of the mix of both the projects that dominated deliveries and the unit categories delivered at each community. Management is presently studying historical sales vs. COGS patterns in light of anticipated market demand to optimize land use (and hence margins) at each community developed going forward. The Group s 14.9% uptick in sales and marketing expenses should be benchmarked not against FY13 revenues (which were down 23.8% and include EGP 589 million in recognized land sales), but rather against FY13 Total New Real Estate Sales (up 30.5% to EGP 2.8 billion) and the total revenues of all other business segments (which closed the year down 2.2% at EGP 326 million). Other Income on the Income Statement relates primarily to Meeting Point Malls, transfer units (cancellations and rebookings), revenues from sponsorships and telefrique operations. Fully EGP 38.1 million in revenue from the Malls segment is accordingly not captured in the Group s current top line revenue figure due to present-day accounting policies. The Group is now taking the regulatory procedures necessary to revise these policies for 2014 and thus allow revenue from the Malls segment to be included in Amer Group s top line. Finance costs have risen in proportion with new sales, where the Group incurs considerable bank charges against pre-dated checks collected from clients. On the Balance Sheet front, Advances from Customers surged 69.3% to EGP 2.9 billion while Provisions were essentially stable at EGP 9.0 million, underscoring both the Group s continued ability to collect from clients and the high quality of the projected revenue stream. Cash on the Balance Sheet has more than doubled while Total Debt alongside Land Liabilities are down, emphasizing the Group s robust, highly-liquid financial position. The Group owns lands in which it plans future investments according to the company s development plan that covers 2,3 million square meters. Amer Group continues to view excessive land banks as non-productive inventory, preferring instead to acquire land on a project-by-project basis at low-to-no cost on revenue sharing agreements with land owners. Segment Analysis: Real Estate (64.3% of total FY13 Revenues) Amer Group builds and sells residential and commercial real estate at 11 Portobranded first-home and vacation communities across Egypt and is now building or in the planning stages for communities in Morocco, Jordan and Syria. Total Number of Units (Units) 18,359 19, % Units Sold (Units) 3,476 2,236 (35.7%) Total New Sales Value in FY13 (EGP mn) 2, , % Units Delivered (Units) (12.6%) Revenues Recognized in FY13 (EGP mn) (30.8%) Operating Profit (EGP mn) (63.8%) Operating Profit Margin (%) (47.7%) The rise in Total New Sales in FY13 came despite a drop-off in units sold, reflecting both enhanced pricing power at second-home destinations and the contribution of higher-value first-home sales from the Group s successful entry into this segment last year. Amer-group.com 3

4 Notably, the EGP 2.8 billion in Total New Sales Value in FY13 now includes EGP million in sales to the Porto Vacation Club. Beginning in 1Q14, management will report separately on the activities of the Porto Vacation Club, which the Group sees as an important driver of high-margin revenues going forward. The Real Estate division is targeting deliveries in FY14 at South Beach, Porto Sharm, Porto Cairo Mall, Porto Golf Bay, Porto Marina Residence and the Hanging Gardens communities in Golf Porto Sokhna. Sales efforts in FY14 will focus on Porto Sixth of October, Porto New Cairo, Porto Cairo and Porto Sharm in Egypt alongside the planned launch of Porto Dead Sea in Jordan for which licenses have been obtained, and Porto Agadir in Morocco where procedures are underway to obtain licenses. The latter represent a decisive move outside of Egypt, the Group s home market, as management aims to take the proven Porto concept into other high-potential markets with room to grow an attractive, family-friendly brand. Management will replicate in expansion markets the same formula as in Egypt, first establishing the market for family-centered vacation communities, then penetrating the higher margin firsthome segments. Expansion territories will serve as springboards for the roll-out of the complete Porto experience, from golf courses and child-focused animation activities to Amer-brand restaurants and vacation clubs. Segment Analysis: Restaurants (21.5% of total FY13 Revenues) Amer Group owns and operates family-friendly restaurants under both licensed global and regional brand names and its own proprietary brands. The division includes a central kitchen that provides services to all Amer Group restaurant brands and catering operations. Operational restaurants (Restaurants) (5.8%) Total Available Seats (Seats) 9,668 9,050 (6.4%) Average Spend per Cover (EGP mn) % Segment Revenue (EGP mn) (7.0%) Operating Profit (EGP mn) (3.0) (8.2) n/m Operating Profit Margin (%) (1.4) (4.2) n/m While the Restaurants division accounts for a more than a fifth of total Group revenues, its contribution to operating profit was a net negative in both 2012 and Management has retained senior Egyptian entrepreneur and banker Alaa Samaha to manage the Group s Restaurant activities in a turnaround scenario. The new management team s emphasis at Tropicana for Projects (TP, one of two segment subsidiaries and the primary operator of restaurants) will be on operational and financial restructuring and the implementation of world-class governance standards. In the fourth quarter, TP began negotiations to acquire rights to a new upscale dining franchise and began finalization of two new Amer-owned brands for launch in FY14. The division is also open to new licensing opportunities for Amer-owned brands, where it sees strong potential in the Gulf Cooperation Council (GCC) countries at this time. Tropicana for Food Industries (TFI), the division s second subsidiary, supplies all Amer-operated restaurants. The Group has planned new investment in TFI to allow it to improve efficiency and capacity with a view to providing food Amer-group.com 4

5 preparation services for non-amer brands. Segment Analysis: Malls (4.2% of total FY13 Revenues) Amer Group s Malls division operates Meeting Point malls in six locations around Egypt, including Porto New Cairo, Porto Marina, Porto Golf Marina, Sky mall, Waterfront Mall, and Mega Mall. The division generates revenues primarily through commissions generated from leasing units to commercial operators on behalf of unit owners as well as management fees for each facility. Gross Leasable Area (GLA) (sqm) 56,013 51,092 (8.8%) Number of Tenants (Tenants) % Revenues (EGP mn) % Operating Profit (EGP mn) % Operating Profit Margin (%) 29.9% 30.4% 1.9% The year-on-year decrease in GLA comes as a result of the Division eliminating a planned but low-margin floor at an under-development property. A key contributor of high-margin revenues, the Malls division will launch this year the Porto Cairo Mall and continue lease-out activities at Porto October while preparing to enter Jordan and Morocco. Management is also focused on securing global anchor tenants for the new Porto Cairo and Porto October malls. The division is targeting a portfolio of 17 managed properties by the end of Segment Analysis: Hotels (7.3% of total FY13 Revenues) Amer Group s Hotels division manages properties in Porto Marina, Porto Golf Marina and Porto Sokhna and is developing new properties in Porto Matrouh Beach Resort. Available Rooms (Room nights) 289, ,528 (5.7%) Room Revenues (EGP mn) % Food Revenues (EGP mn) (13.8%) Other Revenues (EGP mn) (56.5%) Total Revenues (EGP mn) % Operating Profit (EGP mn) (6.5) (5.8) (10.5%) Operating Profit Margin (%) (9.8) (8.7) 11.67% Amer Group views a vibrant Hotels division as central to its communities. Negative contributions to operating profit from three of our properties came on the back of adverse economic conditions in Egypt (which, together with national events, saw domestic tourism decline) as well as the impact of travel advisories and tourism confidence on the foreign tourism market. The Group looks forward to a sharp and steady recovery in Hotel division performance as Egypt makes progress on its roadmap and exits the current transition period. New openings this year will be in Porto Matrouh Beach Resort, Porto South Beach, Proto Sharm and Porto Tartous in Syria. Amer-group.com 5

6 Segment Analysis: Retail and Others (2.7% of total FY13 Revenues) Other Group activities include the Porto Vacation Club, Total Facilities Management (Total FM, which provides facilities management and maintenance for all Amer Group developments), Porto Home (home furnishing retail), newly established entities, special purpose vehicles and holding-level functions at Amer Group. Revenues (EGP mn) % Operating Profit (EGP mn) (62.2) (71.3) n/m Recent Corporate Developments The Group appointed Mr. Alaa Samaha, a veteran Egyptian entrepreneur and banker with more than 35 years of industry experience in Egypt and Saudi Arabia, as head of the Group s Restaurants division. In this capacity, Mr. Samah is a member of the Board of Directors of Amer Holding and additionally serves as Chairman and Managing Director of the Division s two subsidiaries: Tropocana for Projects and Tropicana for Food Industries. Prior to joining Amer Group, Mr. Samaha was Chairman of the Principal Bank for Development and Agricultural Credit (Egypt s largest bank by branch network with 1,200 locations and units nationwide and 23,000 employees). He was earlier Advisor to the Minister of Finance; Managing Director and Chief Executive of BLOM Bank Egypt; and a general manager of CIB, Egypt s largest private-sector bank. Mr. Samaha has an extensive history of service as a non-executive board member to leading companies in Egypt and Saudi Arabia, particularly in the finance sector. Amer-group.com 6

7 Shareholder Structure Free Float MANSOUR AMER 3.51 MOHAMED EL-AMIN RAGB AMER WAKF LTD SOL GLOBAL HOLDING LTD. FINEBY ESTATES LTD About Amer Group Established in 2007, Amer Group is the Middle East and North Africa s leading developer of large-scale mixed-use family-friendly destinations that combine upscale residential, retail and office space in addition to world-class restaurants. Amer Group operates across four primary interlinked lines of business, including Real Estate, Malls, Restaurants and Hotels; other wholly-owned Amer subsidiaries offer facilities management, sales and vacation club services, among others, to Amer developments. Listed on the Egyptian Exchange (EGX) under the symbol AMER.CA, Amer Group is headquartered in Cairo. The company takes pride in developing new communities; creating jobs; and embracing family values at all of its developments. In 2008, the lead shareholders donated 33% of its shares to an Egyptian endowment to support funding for charity projects. The endowment s shareholding following the company s IPO stands at 24%; all returns support charities as part of the Group s mission to support social investing. Learn more about our Group and our projects at amer-group.com. Forward Looking Statements Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Amer Group. Such statements involve known and unknown risks, uncertainties and other factors; undue reliance should not be placed thereon. Certain information contained herein constitutes targets or forward-looking statements, which can be identified by the use of forward-looking terminology such as may, will, seek, should, expect, anticipate, project, estimate, intend, continue or believe or the negatives thereof or other variations thereon or comparable terminology. Actual events or results or the actual performance of Amer Group may differ materially from those reflected or contemplated in such targets or forward-looking statements. The performance of Amer Group is subject to risks and uncertainties. Amer-group.com 7