16th Nov 2017 17:15
http://www.rns-pdf.londonstockexchange.com/rns/7526W_-2017-11-16.pdf
Amer Group to announce its 9M-2017 consolidated results with gross profit of 33.1% YoY.
9M-2017 Highlights · 9M-2017 Revenues reached EGP 1,636 Million compared to EGP 1,848 Million in 9M-2016. The decrease in revenue is primarily related to the PVC revenue recognition of EGP 600 Million in 9M-2016 compared to EGP 345 Million in 9M-2017. · Gross Profit reached EGP 541 Million, with a Gross Profit Margin of 33.1%. · Net Profit after Taxes and Minority Interest reached EGP 83.7 Million, with a Net Profit Margin of 5.1%. · Total Assets reached EGP 5.811 Billion, almost flat when compared to December 31, 2016. · Bank Balances & Cash amounted to EGP 880 Million compared to EGP 893 Million in December 31, 2016. · Total debt decreased 15% to reach EGP 375 Million vs. EGP 439 Million in December 31, 2016. · Land liability increased from EGP 37.3 Million in December 31, 2016 to EGP 80 Million in September 30, 2017 · Debt-to-equity ratio recorded 0.21x in 9M-2017 vs. 0.24x in December 31, 2016. |
Amer Group (AMER, CA on EGX and AMGR on LSE), the Master regional developer of large-scale, mixed-use-family-oriented communities, has released its unaudited consolidated financial results for the financial period ending September 30, 2017 recording EGP 1,636 Million consolidated revenues. We have also achieved a net profit of EGP 83.7 Million.
Bank Balances & Cash on the Balance Sheet reached EGP 880 Million in September 30, 2017 while total debt decreased to EGP 375 Million with a debt-to-equity ratio of 0.21x, a ratio that highlights the Group's robust and highly liquid financial position. Amer Group continues to ensure highest margin of safety to its shareholders by following a conservative debt policy even through periods of growth.
Amer Group is currently diversifying its exposure across different segments, focusing on generating recurring revenues through the operations of ongoing business in various sectors including Real Estate investment, Malls, Restaurants and Hotels & Vacations. It has also explored new business opportunities in complimentary fields and new other investments.
Financial Performance
EGP mn | |||
Income Statement Highlights | 9M-2017 | 9M-2016 | Change |
Revenues | 1,636.5 | 1,848.4 | -11% |
Cost of Revenues | (1,095.5) | (1,302.2) | -16% |
Gross Profit | 541.0 | 546.1 | -1% |
Gross Profit Margin | 33.1% | 29.5% | 12% |
EBIT | 259.9 | 275.1 | -6% |
Operating Profit | 195.3 | 252.6 | -23% |
Operating Profit Margin | 11.9% | 13.7% | -13% |
Net Profit after Tax & Minority | 83.7 | 151.5 | -45% |
Net Profit Margin | 5.1% | 8.2% | -38% |
Balance Sheet Highlights | |||
Total Assets | 5,811.5 | 5,891.1 | 1% |
Cash | 880.4 | 893.1 | 1% |
Debt | 375.2 | 439.3 | 17% |
Equity | 1,801.9 | 1,801.0 | 0% |
NET Debt | (505.2) | (453.8) | -10% |
Debt/Equity | 0.21 | 0.24 | 0.036 |
CAshflow statement | |||
Net cashflow operating | 12.1 | 18.6 | |
net cashflow investment | 110.7 | 209.1 | |
net cashflow finance | (200.5) | (199.5) |
Managements' analysis of the Group's financial and operational performance follows, while Amer Group's full consolidated financial statements for 9M-2017 are presently available for download at amer-group.com.
Amer Group 9M-2017 Revenues amounted to EGP 1,636 Million compared to EGP 958.4 Million in 9M-2016. It is worth noting that the real estate division continues to represent the largest portion of revenues accounting for 55% of total revenues, Porto Vacation Club (PVC) 21%, the Restaurant Division contributed to 12%, the Hotels Division 5%, and the remaining percentage from other activities.
Gross Profit reached EGP 541.0 Million in 9M-2017 vs. EGP 546.1 Million in 9M-2016, a slight decrease of 1% on a YoY basis. The Gross Profit Margin reached 33.1% compared to Gross Profit Margin of 29.5% in 9M-2016. Cost of revenues in 9M-2017 reached EGP 1,095.5 Million with cost margin of 66.9% vs. 70.5% in 9M-2016.
Net Profit after Taxes and Minority Interest for 9M-2017 recorded EGP 83.7 Million compared to EGP 151.5 Million in 9M-2016, a decrease of 44.8% YoY driven by Finance Cost increase (from EGP 74 Million in 9M-2016 to EGP 158 Million in 9M-2017), in addition to the decrease of revenue from PVC segment.
Total Equity in 9M-2017 reached EGP 1.802 Billion compared to EGP 1.800 Billion in December 31, 2016.
Land liability in 9M-2017 registered an increase of EGP 43 Million on top of the existing EGP 37 Million, which makes a total Land Liability of EGP 80 Million in 9M-2017. The increase in Land Liability was due to additional costs to be paid by Amer Group to Matrouh Governorate for the extension of the BUA in Golf Porto Marina as requested by Amer Group.
**Malls Revenues are registered under Other Income
Segment Analysis: Real Estate Investment (55% of total 9M-2017 Revenues)
The Real Estate segment is an integral part amongst Amer Group various Lines of Business. Though it is no longer a real estate developing vehicle but rather a real estate investment and urban development arm, it plans to generate high quality of projected revenue streams. The Real Estate market remains strong in Egypt where demand is high amid shortage of property and where Egyptian buyers favor real estate asset investment as a hedge against current economic environment.
Amer Group principally builds its two-year projections for the real estate division on three main revenue streams: (i) delivering its current backlog that reached EGP 1,595 Million as of September 30, 2017; (ii) selling the inventory that exists in its developments, which recorded as of September 30, 2017 a total of 807 units; and (iii) concluding revenue sharing agreements with third parties in its capacity as Master Developer.
Amer Group recorded EGP 902 Million as Real Estate revenues for 9M-2017 compared to EGP 777 Million registered in 9M-2016 following the delivery of 985 units in 9M-2017.
Management achieved new Real Estate sales of 485 units in 9M-2017 with Real Estate sales amount of EGP 795 Million, which is in line with the adopted strategy to move toward Real Estate investment rather than regular Real Estate sales.
The Group has previously secured revenue share agreements with Porto Group. The agreements encompass the developing of 464 K Sqm, both residential and commercial units in Porto Matrouh (phase 2), Golf Porto Marina (Phase 4), and Golf Porto Sokhna (Phase 4) based on a revenue share agreement equivalent to 20% for each of the three projects.
Amer Group continues to explore a variety of Land parcels in order to secure excellent Land opportunities that will be added to its existing Land Bank, which has reached a total of 5.5 Million Sqm (out of which 2 Million Sqm are un-developed land). We have made good progress on this matter and we are in the process of finalizing a strong pipeline of longer-term strategic lands.
Real Estate LoB | ||||
Item | Units | 9M-2016 | 9M-2017 | Change |
Total Number of Units | # | 15,772 | 17,382 | 10% |
Units sold | # | 488 | 485 | -1% |
Units delivered | # | 955 | 985 | 3% |
Revenues Recognized | EGP mn | 777 | 902 | 16% |
Operating Profit | EGP mn | 110 | 136 | 24% |
Operating Profit Margin | % | 14% | 15% | |
Segment Analysis: Restaurants (12% of total 9M-2017 Revenues)
Amer Group owns and operates family-friendly restaurants under both licensed global and regional brand names and its owned proprietary brands.
Restaurants LoB | ||||
Item | Units | 9M-2016 | 9M-2017 | Change |
Operational Restaurants | # |
54 |
45 | -17% |
Total Available Seats | # |
7,037 |
6,581 | -6% |
Average Spend per Cover | EGP |
163 |
214 | 31% |
Segment Revenues | EGP mn |
191.7 |
188.5 | -2% |
Operating Profit | EGP mn |
-2.9 | -6.9 | 138% |
Operating Profit Margin | % | - | - | |
Amer Group Restaurant Segment registered a slight YoY decrease in 9M-2017 revenues recording EGP 188.5 Million compared to EGP 191.7 Million in 9M-2016, 2% decline YoY.
Operating profit loss recorded EGP 6.9 Million in 9M-2017 compared to a loss of EGP 2.9 Million in 9M-2016 due to the lower revenues coupled with the hike in the restructuring and operating costs.
Segment Analysis: Hotels (5% of total 9M-2017 Revenues)
Amer Group owns 6 Hotels scattered across its developments. The Group concluded an agreement with Accor Hotels to manage properties in Porto Sokhna and Porto Marina. The Group is in the process of concluding new agreements to manage other new properties in Porto Matrouh Beach Resort and Porto South Beach.
Hotels LoB | ||||
Item | Units | 9M-2016 | 9M-2017 | Change |
Available Rooms | room nights |
120,088 |
42,742 |
-64% |
Room Revenue | EGP mn |
93.88 |
47.99 |
-49% |
Food Revenue | EGP mn |
37.66 |
21.93 |
-42% |
Other Revenue | EGP mn |
14.22 |
3.89 |
-73% |
Total Revenue | EGP mn |
145.8 |
73.8 | -49% |
Operating Profit | EGP mn |
20.4 |
6.1 | -70% |
Operating Profit Margin | % | 14% | 8% |
-64% |
In 9M-2017, revenues for the Hotels segment recorded EGP 73.8 Million vs. EGP 145.8 Million.
The Operating result for the period recorded profit amounted EGP 6.1 Million compared to a profit of EGP 20.4 Million in 9M-2016.
Segment Analysis: Porto Vacation Club - PVC (21% of total 9M-2017 Revenues)
Amer Group views Porto Vacation Club (PVC) as an important driver of high margins revenues. PVC enables customers to share ownership and use of fully-furnished vacation accommodations, which gives the purchaser a right to use a property for a specific period of time. For many purchasers, vacation ownership is an attractive alternative rather than owning a second-home or resorting to regular hotel accommodation.
PVC | ||||
Item | Unit | 9M-2016 | 9M-2017 | Difference |
Revenues | EGP mn | 599.1 | 345.7 | -42% |
Net Profit | EGP mn | 121.3 | 45.0 | -63% |
Net Profit Margin | 20% | 37% | ||
We generate most of our revenues from three primary sources: (i) selling vacation ownership products, which is the core business of PVC segment; (ii) the collection of maintenance fee for managing our resorts and; (iii) the collection of service fee for renting vacation inventory on behalf of the PVC members.
As of September 30, 2017, the PVC memberships reached a total of 22,404. According to the agreed accounting standards (Accounting Standard No. 11 from the EAS), Amer Group has started to record revenues for PVC segment in 2015. The Group has recorded EGP 345.7 Million in 9M-2017. The remaining sales value will be recognized throughout FY-2017.
The future continues to be bright with opportunities that complement our commitment for growth. We recently announced plans for new destinations (Porto Marina - North Coast) that would also include new on-site sales locations.
Segment Analysis: Malls
Amer Group's Malls division operates six malls in four locations around Egypt, including Porto Marina Mall, Golf Marina Mall, Porto Matrouh, Mega Mall, Sky Mall and Waterfront Mall. The division produces revenues primarily through the renting of commercial units.
Malls LoB | ||||
Item | Units | 9M-2016 | 9M-2017 | Change |
Gross Leasable Area (GLA) | sqm | 44,709 | 59,223 | 32% |
Aveg. Occupancy Rate | % | 53% | 73% | - |
Revenues** | EGP mn | 30.7 | 41.4 | 35% |
Operating Profit | EGP mn | 7.5 | 13.2 | 76% |
Operating Profit Margin | % | 24% | 32% | |
** Revenues for the Mall Segment were registered under Other Income in 1H-2017 Financial Statement
As of 1H-2017, Amer Group has adopted a new financial instrument registering the revenues of the Malls segment under Other Income. The Malls Segment's Revenues recorded EGP 41.4 Million in 9M-2017 compared to EGP 30.7 Million in 9M-2016. The Operating result recorded a profit of EGP 13.2 Million compared to a profit amounted to EGP 7.5 Million in 9M-2016.
Amer Group Balance Sheet for 9M-2017
Item (EGP) | 30-Sept-17 | 31-DEC-16 | |
Non-current Assets | |||
Fixed Assets | 700,909,013 | 854,706,543 | |
Projects Under Construction | 115,295,920 | 104,838,887 | |
Investment Property Assets | 288,167,990 | 293,087,888 | |
Intangible Assets | 141,313 | 141,313 | |
Investments in Associates | 5,001,000 | 5,001,000 | |
Down Payment for Purchase of Investments in Companies | - | 34,550,752 | |
Restricted Deposits due to Units Owners | 657,765,138 | 653,495,849 | |
Total Non-current Assets | 1,767,280,374 | 1,945,822,232 | |
Current Assets | |||
Development Properties | 2,279,143,575 | 2,446,179,568 | |
Inventories | 31,750,561 | 21,879,139 | |
Accounts & Notes Receivables | 472,708,955 | 269,459,045 | |
Prepayments & Other Receivables | 380,173,092 | 314,694,650 | |
Bank Balances & Cash | 880,429,125 | 893,057,958 | |
Total Current Assets | 4,044,205,308 | 3,945,270,360 | |
Total Assets | 5,811,485,682 | 5,891,092,592 | |
Current Liabilities | |||
Provisions | 2,379 | 3,045,926 | |
Bank Overdrafts | 38,881,162 | 38,410,342 | |
Land Purchase Liability | 29,385,102 | 37,410,342 | |
Advances from Customers | 1,527,536,106 | 1,620,510,942 | |
Accounts & Notes Payable | 438,545,539 | 478,758,431 | |
Term Loans | 57,086,873 | 68,328,884 | |
Income Tax Payable | 17,277,814 | 23,801,418 | |
Accrued Expenses & Other Payables | 871,620,371 | 791,393,469 | |
Total Current Liabilities | 2,980,335,346 | 3,061,615,432 | |
Working Capital | 1,063,869,962 | 883,654,928 | |
Total Invested Funds | 2,831,150,336 | 2,829,477,160 | |
Financed as Follows: | |||
Equity | |||
Share Capital | 1,003,099,822 | 911,908,929 | |
Translation of Foreign Entity | 246,721,555 | 246,542,676 | |
Legal Reserve | 50,733,848 | 50,733,848 | |
General Reserve | 12,055,859 | 12,055,859 | |
Other Reserves | 7,976,113 | 7,976,113 | |
Retained Earnings | 475,134,981 | 551,676,535 | |
Minority Interest | 6,184,085 | 20,077,961 | |
Total Equity | 1,801,906,263 | 1,800,971,921 | |
Non-current Liabilities | |||
Term Loans | 279,226,047 | 332,519,795 | |
Land Purchase Liability | 50,655,485 | - | |
Deposits due to Units Owners | 657,765,138 | 653,495,849 | |
Notes Payable | - | 1,643,000 | |
Deferred Tax Liability | 41,597,403 | 40,846,595 | |
Total Non-current Liabilities | 1,029,244,073 | 1,028,505,239 | |
Total Equity & Long Term Liabilities | 2,831,150,336 | 2,829,477,160 |
Amer Group Income Statement for 9M-2017
Item (EGP) | 9M-2017 | 9M-2016 | Change |
Revenue | 1,636,474,564 | 1,848,385,286 | -11% |
Cost of Revenue | (1,095,479,196) | (1,302,243,707) | -16% |
Gross Profit | 540,995,368 | 546,141,579 | -1% |
Selling and Marketing Exp | (144,830,205) | (83,598,582) | 73% |
General and Admin Exp | (190,081,002) | (188,342,900) | 1% |
Other Income | 137,125,063 | 72,714,582 | 89% |
Other Operating Exp | (147,930,556) | (94,319,628) | 56.8% |
Operating Profit | 195,278,668 | 252,595,051 | -23% |
Finance Cost | (158,257,570) | (74,076,656) | 114% |
FX Gain (Loss) | 64,648,096 | 22,527,663 | 187% |
Profit for the Year Before Tax | 101,669,194 | 201,046,058 | -49% |
Income Tax | (17,962,282) | (49,525,500) | -64% |
Profit for the Year | 83,706,912 | 151,520,558 | -44.8% |
Riad Refaat | Ola Tayel | |
Chief Financial Officer | Investor Relations Director | |
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, Mall, 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 currently at 11%; 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.
Disclaimer
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.
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