2016 RESULTS OF OPERATIONS GUIDANCE FOR THE PRESIDENT S REPORT February 6, 2017 Makati, Philippines

Transcription

1 2016 RESULTS OF OPERATIONS GUIDANCE FOR 2017 THE PRESIDENT S REPORT February 6, 2017 Makati, Philippines 1

2 8990 s 4Q16 NET INCOME GROWS 12% 1Q16 2Q16 3Q16 4Q16 4Q15 Growth Rate Gross Sales P 2,174 P 2,571 2,441 2,226 2,283 (2%) Gross Profit 1,228 1,506 1, ,105 (11%) Operating Expense Net Income Before Tax Net Income After Tax (33%) 1,094 1,183 1, % 1,032 1,150 1, % 4Q16 net income grew by 12% versus the same quarter in 2015 despite flat gross sales. A 5% increase in resale of cancelled units increased cost of goods, resulting in an 11% decline in gross profit. There was a 33% decline in operating expenses, resulting from lower documentation and marketing expenses. After tax profit rose 12% because of a lower tax due on re-sold units and the tax-free status of more projects under the BOI Investment Priority Program (IPP) compared to last year RESULTS OF OPERATIONS 2

3 8990 GROWS 2% in net income grows 2% in Growt h Rate Gross Sales P 9,411 P 9,280 1% Gross Profit 5,014 5,105 (2%) Operating Expense 1,526 1,724 (11%) Net Income Before Tax Net Income After Tax 4,050 4,114 (2%) 3,809 3,723 2% Gross Margin 53% 55% Net Margin 40% 40% While Deca Tower EDSA, UDH Tisa, DH Indangan, and DH Catalunan Grande over-performed their annual quotas, they failed to offset the loss of potential revenues from the eight unlaunched projects. Worthwhile to note is that DECA Tower EDSA was able to contribute P900 million ahead of its timeline. Operating expenses decreased by 11% because of lower marketing and documentation expenses as well as lower taxes and licenses paid. Gross margin slipped to 53% because of the resale accounts. Net Margin remains steady at 40% RESULTS OF OPERATIONS 3

4 Core Business Performance Hits P10.8B in 2016 In units / Million pesos Growth Rate Sales Reservations 8,111 10,077 (20%) Housing Production 7,486 7,655 (2%) Housing Delivered 8,046 8,519 (6%) Housing Revenues P9.4B P9.3B 1% CTS Income P1.4B P1.2B 17% Total Revenues from Housing Operations P10.8B P10.5B 3% PAR 95% 96% Core business performance improves by 3% in 2016, due mainly to a 17% increase in CTS income performance was lower for sales reservations because of diminishing inventories resulting from delays in new projects. Housing production and deliveries dipped due to weather issues and the momentum build-up in the newly launched projects. Performing Accounts Ratio (PAR) indicating collection efficiency is stable at 95%, considering an increase of 4% in the portfolio net of migrated accounts RESULTS OF OPERATIONS 4

5 PERMITS PROCESSING AFFECTS 2016 PERFORMANCE Project Location Units to be Delivered for 2016 Value (in M Php) DH Pavia RR 2 Iloilo DH Sta. Barbara Iloilo DH Mactan Prime Cebu Urban DH Tisa 2 Cebu DH South of Bacolod Bacolod DH Toril Davao DH Mulig 1 Davao DH San Lorenzo Davao Total 2,706 2,382 We wish to emphasize that these revenues are not lost, but merely delayed. 8 projects, totaling 2,706 units with a gross value of P2.4 Billion, did not get permits on time. Permits are about to be finished and these are now part of the launches for There were new requirements and permits asked in 2016 such as: Davao Iloilo : Certificate from Water Resource Task Force Certificate from Floodway Mitigating Zone Task Force Additional Land Usage Certificate : Certificate from Provincial Assessor that land is classified as residential by the local government Cebu : Traffic Study and Detailed Drainage Study which are new requirements for the ECC 5

6 NCR CONTRIBUTES 13% TO HOUSING DELIVERIES DELIVERED HOUSING UNITS What is notable this year is the 13% contribution of NCR in delivered units, compared to nothing last year. This translates to a 16% contribution to topline revenues in Performance per branch is now more evenly spread out with Luzon contributing 38%, Visayas at 30%, and Mindanao at 32%. The contribution of MRB to housing revenue increased from last year s 16% to 18%, while HRB contributed for the first time in top line revenue at 13% with 661 units from UDT EDSA, 183 from Tondo, 226 from Hampton, 263 from HCortez, and 386 from Tisa. Gensan 10.4% Davao 21.9% MRB, 18% Iloilo 12.4% HRB, 13% Cebu 17.1% North Luzon 11.2% South Luzon 14.1% NCR 13.0% TOP LINE REVENUE BREAKDOWN Mass Housing, 69% 2016 RESULTS OF OPERATIONS 6

7 DECA HOMES Demographics Remain Unchanged in 2016 Demographic Young: 23 to 45 years old College Educated and Licensed Professionals Employed as office workers, OFW, BPO Minimum P35,000 Gross Family Income 82% 82% 80% 84% 81% 84% 76% 78% 73% 78% 84% 77% % of Buyer s Fully Employed 100% 100% 100% Primary Residence Purpose 79% 86% 85% Demographics of DECA Homes buyers remain unchanged for the past three years, as the market continues to be fueled by young, college educated, gainfully employed, private sector office workers, OFWs and BPO employees earning at least a gross family income of P35,000 per month, and looking for their first major property purchase in the form of a family residence. 7

8 Unrealized Sales Reach 1,332 Units by End 2016 Branch Total Units Value Millions North Luzon South Luzon NCR Cebu Iloilo 1 1 Davao and Gensan Total 1,332 1,903 The Company has nationwide unrealized sales of 1,332 units ending 2016, amounting to P1.9 Billion. These unrealized sales were combination of sold units with houses/buildings for construction like in UDH Marilao and UDH H. Cortes. Of the total unrealized sales, 873 units will be taken out in 1Q17 and the remaining 459 units are scheduled in 2Q RESULTS OF OPERATIONS 8

9 RFO Inventory of 913 Units by End 2016 Branch Fresh Resale Total RFO inventory in 2016 ended at 913 units, down by 52% or 979 units from 3Q16 s 1,892 units. North Luzon South Luzon NCR Cebu Iloilo Davao Gensan Total RESULTS OF OPERATIONS 9

10 33% Increase in Assets Strengthens 8990 Balance Sheet 8990 s assets grow by 33%, mainly with new land purchases, in house financing receivables and medium and high rise building work in progress inventories. The increase in total liabilities were borrowings for construction activities, operating expenses and the increase in landbank to over 600 hectares. Higher growth rate in total liabilities versus total assets is basically due to minimal growth in equity as there were no 8990 major activity in the equities market for the year. Balance Sheet Highlights (in PhP M) Growth Rate Current Assets P 13,278 P 9,510 40% Noncurrent Assets 34,728 26,567 31% Total Assets 48,006 36,077 33% Current Liabilities 8,993 5,348 68% Noncurrent Liabilities 19,516 13,387 46% Total Liabilities 28,509 18,735 52% Equity 19,497 17,343 12% 2016 RESULTS OF OPERATIONS 10

11 8990 Meets All Covenant Ratios in continuous to meet it bond covenant ratios, in relation to its Corporate Bond issuance in July 2015, such as: (a) minimum Current Ratio of 1.0, (b) maximum Debt-to-Equity Ratio of 1.5, and (c) minimum Debt Service Ratio of Debt to Equity ratio is nearing its maximum covenant ratio, thus, in January 31, 2017, 8990 Board of Directors approved the reclassification of 100,000,000 common to preferred shares to pay off existing debts. The preferred shares shall be non-voting, nonconvertible, non-participating, redeemable, perpetual preferred shares. Key Performance Indicators Current Ratio Book Value per Share Debt to Equity Ratio Asset to Equity Ratio Asset to Debt Ratio Debt Service Ratio EPS RESULTS OF OPERATIONS 11

12 2016 HDMF TAKE-OUT VALUE INCREASES BY 5% Status Total HDMF Folders Breakdown Pre-Evaluation with HDMF For Compliance by 8990 Branches Growth Rate Unit Value Unit Value Unit Value 5,990 5,850 4,341 4,088 38% 43% ,446 1,379 2,240 2, For Take-Out TAKE-OUT 2,615 2,545 2,610 2,417 0% 5% We experienced bottlenecks in the compliance of requirements mainly due to: Expiration of buyer s proof of income; Delayed release of titles; Piecemeal release of findings; Lack of HDMF manpower. Slow processing by the Register of Deeds Take-out period is currently stretched to 3 to 5 months

13 8990 Improves Cash Flow in 2016 In Million pesos Growth Rate Cash, beginning balance (0.8%) Net Cash used for operations 541 2,215 (76%) Total new borrowings 7,566 3, % 8990 s 2016 cash flow shows a significant 76% decline in net cash used in operations. Internally generated funds from take-outs from Pag-IBIG Fund, purchase of receivables of banks, and the higher levels of recurring income from the CTS Portfolio are the drivers for this decrease in net cash used in operations. Net Cash used for capital expenditure Cash balance at the end of the year 6,636 1, % % The substantial increase in new borrowings was the cash used for capital expenditure to purchase 191 hectares of land bank, valued at P5.0 Billion RESULTS OF OPERATIONS 13

14 8990 CTS Income Jumps 18% by end Growth Rate Units 20,863 20,093 4% Value (in millions) P 20,425 P 18,767 9% Interest Income from CTS Performing Accounts Ratio P 1,439 P 1,204 18% 95% 96% (1%) For 2016, 8990 s CTS Portfolio yielded P1.4 Billion in recurring income an 18% increase from last year. Total value of 8990 s CTS Portfolio stands at P20 Billion, up 9% from This marks the smallest increase in CTS since In 2016, 8990 was able to sell P945 Million of its CTS Portfolio to BDO and SBC, and a migration to HDMF of P865 million RESULTS OF OPERATIONS 14

15 8990 CTS Receivables Reach P20B or 21,000 accounts in 2017 Mix According to Interest Rate 11.5% CTS Gold Straight 4% 16% CTS 1% 11% CTS 11 85% 8.5% CTS Gold Convertible 10% Mix According to Seasoning less than 1 yr 54% 3 yrs and Above 16% 1 to 2 yrs 13% 2 to 3 yrs 17% Mix According to Terms Up to 5 yrs 1% 21 to 25 yrs 77% 6 to 10 yrs 7% 11 to 15 yrs 16 to 20 yrs 8% 7% 85% of 8990 s In House Receivables are under the CTS 11 Program, which yields 11% per annum and enjoys rebate of 1.5% for the first 5 years as long as buyers pay on time. 54% of the CTS Receivables portfolio are with seasoning period of at least one year, making almost half of the portfolio eligible for CTS Purchase arrangements with the banks. 77% of 8990 buyers choose 21 to 25 years payment term which offers them the lowest monthly amortization possible, and therefore a lower risk of default RESULTS OF OPERATIONS 15

16 Current Land Bank is Hectares in 2016 Location Area (in HA) Cost (Millions) Estimated Units Estimated Value LUZON ,000 76,000 P 99 B VISAYAS ,017 51,000 P 56 B MINDANAO ,000 P 20 B Grand Total , ,000 P 175 B In 2016, 8990 purchased 191 hectares of rawland, valued at about P5 Billion, bringing the total landbank to today. These acquisitions are the following; Metro Manila Alabang Zapote, Las Pinas ha Litex Road, Commonwealth, QC 2.0 ha Brgy. Old Balara, QC 5.0 ha Mendiola/Otis property 2.8 ha Provinces Meycauyan, Bulacan 44.0 ha AS Fortuna, Banilad, Cebu 1.8 ha Granada, Bacolod 62.0 ha San Miguel, Iloilo 70.0 ha The present landbank will provide an estimated 145,000 units with Gross Selling Value of P 175 Billion RESULTS OF OPERATIONS

17 OUR ADJUSTMENTS FOR 2017 Given the need to focus on strengthening the company s balance sheet, in the wake of increasing interest rates, and a tougher permits and licensing environment, the goal for 2017 is cash generation to pare down short-term and medium-term debt. Change the existing Organizational Structure from Centralized National to 3 Main Regions. Increase manpower nationwide from 287 to 370, which includes personnel for HDMF documentation from 45 to 67 personnel, including the hiring of two experienced executives to bring more leadership in the HDMF take-out operations. Identify projects for 100% HDMF take-out to raise HDMF level to as much as 70%. Increase the number of production from 58 sets of casting forms to 103 sets, thereby increasing annual capacity from 13,920 to 24,720 housing units. Create a Central Document warehouse for more efficient storage and access of files and documents. Increase the engineering force from 27 to 39, and establish a Quality Assurance Group to provide technical support at the site level RESULTS OF OPERATIONS 17

18 Guidance 2017 Gross Revenue Net Income EARNINGS GROWTH TARGETS P 10.0 Billion to P 13.5 Billion 60% gross margin P 4.0 Billion to P 5.4 Billion 40% gross margin Gross Revenue 43% Net Income 41% CASH FLOW TARGETS HDMF Take-out Securitization Purchase of CTS Preferred Shares P 6.0 Billion P 3.0 Billion P 3.0 Billion P 5.0 Billion 2016 RESULTS OF OPERATIONS 18

19 8990 to Launch 11 New Projects for 2017 Project Type Total Units Location Units to be Delivered for 2017 Value (in M Php) Launch Date This year, 8990 will start eleven new projects, adding 60,765 units to the inventory. We expect to launch three projects in the first quarter, followed by 5 in the second and closing the third with 3 more. For 2017, 3,994 units will form 34% of this year s performance, with a value totaling P 3.7 Billion. DH Marilao MRB MRB 3,788 Bulacan March DH Pavia RR 2 Horizontal 2,967 Iloilo March DH Mactan Prime Horizontal 6,828 Cebu March DH Sta. Barbara Horizontal 10,189 Iloilo April DH South of Bacolod Horizontal 9,044 Bacolod April UDH Mactan MRB 3,507 Cebu April DH Mulig Horizontal 7,005 Davao June DH San Lorenzo Horizontal 3,749 Davao June DH Ignatius Horizontal 6,800 Davao August Leganes Horizontal 3,085 Iloilo September Urban DH Tisa 2 MRB 3,803 Cebu September Total 60,765 3,994 3, RESULTS OF OPERATIONS 19

20 11 On-Going Projects Contribute 66% to Revenue in 2017 In addition to new projects, 8990 s eleven ongoing projects provide for this year, 7,894 units nationwide, with a gross value of almost P 10 Billion. In sum, both new and ongoing projects will provide a total of 11,888 housing units and a gross value of P13.5 Billion for Project Type Location Total Units Units to be Delivered for 2017 Value (in M Php) DCRR (Economic) Horizontal Angeles 3, DH Marilao TH Horizontal Bulacan 6, UDH Hampton MRB Cavite 1, UDH Mahogany MRB Cavite DH BT3 Horizontal Cebu UDH H. Cortez MRB Cebu 1, UDH Manila MRB Manila 13,308 3,924 5,473 UDT EDSA HRB Mandaluyong 1, UDH Campville MRB Muntinlupa 1, DH GenSan (Socialized) DH GenSan (Economic) Horizontal General Santos 2, Horizontal General Santos Total 32,681 7,894 9, RESULTS OF OPERATIONS 20

21 8990 Product Mix For 2017 BREAKDOWN BY REGION NCR VS PROVINCE BREAKDOWN BY TYPE OF UNIT Mindanao, 12% Visayas, 30% Luzon, 58% NCR, 39% Province, 61% HIGH RISE, 4,324, 36% MRB, 1,974, 17% HORIZONTAL, 5,590, 47% Luzon 58% Visayas 30% Mindanao 12% Province 61% NCR 39% Horizontal 47% High Rise 36% MRB 17% 2016 RESULTS OF OPERATIONS 21

22 9.5 Billion HDMF Take-Out Target for 2017 Branch Units Value S.Luzon 1,965 1,825 N.Luzon Cebu 1,836 1,802 Iloilo 2,288 2,415 Bacolod Davao 1,648 1,721 Gensan 1, Total 9,984 9,517 All 8990 branches nationwide have committed to hit P9.5 Billion HDMF take-out for At least P6 Billion of the target will be fresh accounts, and 40% will come from the backlog of 2016 and 2015 accounts that are scheduled for migration this year. M A N A G E M E N T O P E R A T I O N S C O N F E R E N C E 4 Q

23 Dividend Pay-Out Date Amount Pay-Out 8990 Board approved the declaration of cash dividends in the amount of Five centavos (Php0.25) per share to stockholders of record of the Company as of February 6, The cash dividends shall be paid on March 6, December 12, ,899, / share March 30, ,238, / share September 06, ,899, / share February 18, ,379,497, / share November 28, ,899, / share March 06, ,379,497, / share Total 4,579,932, / share

24 Project Status Update We have 2 Finished Projects We have 11 On-Going Projects We have 11 Projects for Launching 7 Branches North Luzon 3 NCR 3 South Luzon 2 Cebu 5 Iloilo 3 Davao 3 General Santos 2 Bacolod 1 24

25 DECA HOMES BELLAVISTA SOUTH LUZON 3,881 UNITS Percent of Completion: 100% Date to Finish: DECEMBER

26 DECA HOMES TANZA SOUTH LUZON 632 UNITS Percent of Completion: 100% Date to Finish: DECEMBER

27 DECA CLARK RESORT AND RESIDENCES NORTH LUZON ON-GOING 5,237 UNITS Percent of Completion: 72% Date to Finish: DECEMBER

28 DECA HOMES MARILAO/ URBAN DECA HOMES MARILAO (MIXED MRB AND TOWNHOUSES) NORTH LUZON ON-GOING 4,606 UNITS Percent of Completion: 10 % Date to Finish: DECEMBER

29 URBAN DECA TOWER - EDSA NCR ON-GOING 1,148 UNITS Percent of Completion: 86% Date to Finish: JULY

30 URBAN DECA HOMES CAMPVILLE NCR ON-GOING 1,024 UNITS Percent of Completion: 85% Date to Finish: September

31 URBAN DECA HOMES MANILA NCR ON-GOING 13,212 UNITS (Total of 13 Buildings) Percent of Completion: 12% Date to Finish: DECEMBER

32 URBAN DECA HOMES HAMPTON SOUTH LUZON ON-GOING 1, 988 UNITS Percent of Completion: 15% Date to Finish: DECEMBER

33 URBAN DECA HOMES MAHOGANY SOUTH LUZON ON-GOING 548 UNITS Percent of Completion: 1% Date to Finish: DECEMBER

34 URBAN DECA HOMES H. CORTES VISAYAS ON-GOING 1,400 UNITS Percent of Completion: 23% Date to Finish: December

35 DECA HOMES PAVIA RESORT AND RESIDENCES PHASE 1 VISAYAS ON-GOING 2,125 UNITS Percent of Completion: 95% Date to Finish: September

36 DECA HOMES PAVIA RESORT AND RESIDENCES PHASE 2 VISAYAS ON-GOING 2,982 UNITS Percent of Completion: 37% Date to Finish: November

37 URBAN DECA HOMES MACTAN VISAYAS FOR LAUNCHING 3,507 UNITS Percent of Completion: 0% Date to Finish: DECEMBER

38 DECA HOMES MACTAN PRIME VISAYAS FOR LAUNCHING 6,828 UNITS Percent of Completion: 0% Date to Finish: March

39 URBAN DECA HOMES TISA PHASE 2 VISAYAS FOR LAUNCHING 3,803 UNITS Percent of Completion: 0% Date to Finish: June

40 URBAN DECA HOMES TISA PHASE 1 VISAYAS ON-GOING 976 UNITS Percent of Completion: 96% Date to Finish: March

41 DECA HOMES BAYWALK TALISAY 3 VISAYAS ON-GOING 729 UNITS Percent of Completion: 61% Date to Finish: December

42 STA. BARBARA VISAYAS FOR LAUNCHING 10,187 UNITS Percent of Completion: 3% Date to Finish: July

43 DECA HOMES SOUTH BACOLOD VISAYAS FOR LAUNCHING 9,044 UNITS Percent of Completion: 1% Date to Finish: December

44 LEGANES VISAYAS FOR LAUNCHING 3,085 UNITS Percent of Completion: 0% Date to Finish: September

45 DECA HOMES IGNATIUS MINDANAO FOR LAUNCHING 6,800 UNITS Percent of Completion: 0% Date to Finish: September

46 DECA HOMES MULIG MINDANAO FOR LAUNCHING 7,005 UNITS Percent of Completion: 0% Date to Finish: July

47 DECA HOMES INDANGAN MINDANAO ON-GOING 3,239 UNITS Percent of Completion: 98% Date to Finish: May

48 DECA HOMES CATALUNAN GRANDE MINDANAO ON-GOING 649 UNITS Percent of Completion: 98% Date to Finish: May

49 DECA HOMES GENSAN 1 MINDANAO ON-GOING 2,778 UNITS Percent of Completion: 70% Date to Finish: December