Amer Group shows strong performance in 1Q-2016 with EGP 544 Million consolidated revenues, representing 18% YoY increase.

Transcription

1 Amer Group shows strong performance in 1Q-2016 with EGP 544 Million consolidated revenues, representing 18% YoY increase. AMER.CA On the Egyptian Exchange Amer Group Revenues (1Q-15 vs. 1Q- 16, EGP mn) Q1 15 Q1 16 Amer Group Gross Profit (1Q-15 vs. 1Q-16 EGP mn) Q1 15 Q1 16 Amer Group Operating Profit (1Q-15 vs. 1Q-16, EGP mn) Q-2016 Highlights 1Q-2016 Revenues reached EGP 544 Million, 18% YoY increase compared to EGP 463 Million in 1Q Gross Profit reached EGP 139 Million, with a Gross Profit Margin of 25.5%. Operating Profit reached EGP 55.5 Million, with Operating Profit Margin of 10.2%. Net Profit after Taxes and Minority Interest reached EGP 68 Million, 36% increase YoY, with a Net Profit Margin of 12.5%. Total Assets reached EGP 6.2 Billion, slightly lower than December 31, Bank Balances & Cash amounted to EGP Million compared to EGP Million in December 31, Total debt increased to EGP 275 Million vs. EGP 185 Million in December 31, Debt-to-equity ratio recorded 0.2 in 1Q-2016 vs in December 31, Amer Group (AMER, CA on EGX), the Master regional developer of large-scale, mixed-use-family-oriented communities, has released its consolidated financial results for the Financial period ending March 31, 2016 recording EGP 544 Million consolidated revenues with 18% increase YoY. We have also achieved a Net Profit of EGP 68 Million, recording an increase of 36% YoY and a Net Profit Margin of 12.5%. Q1 15 Q1 16 Amer Group Net Profit (1Q-15 vs. 1Q- 16, EGP mn) Bank Balances & Cash on the Balance Sheet reached EGP Million in March 31, 2016 while total debt increased to EGP 275 Million with a debt-to-equity ratio of 0.2x, a ratio that highlights, despite its minimal increase, 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 including the provision of utilities, the operation of garages * Total Q1 New 15 Real Estate Sales represents Q1 16 the total value of new unit s sales made in the period, and is distinct from total revenues recognized in the Real Estate development segment. The Group recognizes 100% of revenues from a real estate transaction the quarter in which (a) the unit is ready for delivery and (b) 80% of and new other investments.

2 Financial Performance Managements analysis of the Group s financial and operational performance follows, while Amer Group s full consolidated financial statements for 1Q-2016 are presently available for download at amer-group.com. EGP MN INCOME STATEMENT HIGHLIGHTS 1Q-15 1Q-16 Change REVENUES % COST OF REVENUES (293.1) (405.5) 38% GROSS PROFIT % GROSS PROFIT MARGIN 36.7% 25.5% EBIT % OPERATING PROFIT % OPERATING PROFIT MARGIN 18.5% 10.2% NET PROFIT AFTER TAX & MINORITY % NET PROFIT MARGIN 10.8% 12.5% 1.71 BALANCE SHEET HIGHLIGHTS TOTAL ASSETS 6, , % CASH % DEBT % EQUITY 1, , % DEBT/EQUITY CASHFLOW STATEMENT NET CASHFLOW OPERATING 85.0 (167.0) NET CASHFLOW INVESTMENT (59.9) (237.0) NET CASHFLOW FINANCE (79.9) Amer Group 1Q-2016 Revenues amounted to EGP 544 Million, a rise of 18% YoY (or EGP 81 million) compared to EGP 463 Million in 1Q It is worth noting that the real estate division continues to represent the largest portion of revenues accounting for 81% of total revenues, the Restaurant Division contributed to 10%, the Hotels Division 3.2%, Porto Vacation Club (PVC) 1.5% the Malls Division 2.3% and the remaining percentage from other activities. Gross Profit reached EGP 139 Million in 1Q-2016 vs. EGP 170 Million in 1Q-2015, a YoY decrease of 38%. The Gross Profit Margin reached 25.5%, vs. the 36.7% Gross Profit Margin that was achieved in March 31, Cost of revenues in 1Q was 38% higher than 1Q-2015, from EGP Million in March 31, 2015 to EGP Million in March 31, The large increase in cost of revenues was clearly driven by the increase in Amer Group top lines coupled with an increase in the construction raw materials cost, which was heavily affected by the currency devaluation.

3 Operating Profit amounted to EGP 55.5 Million in 1Q-2016 vs. EGP 85.6 Million in the financial period that ended March 31, Operating Profit was normally affected by the decline in Gross Profit result in addition to 33% surge in General and Administrative expenses from EGP 48 Million in March 31, 2015 to EGP 62 Million in March 31, The increase in G&A cost was mainly due to the reclassification of some financial instruments following the restructuring plan that followed Porto Group spin-off. The Net Profit for 1Q-2016 recorded EGP 68 Million compared to EGP 50 Million in 1Q-2015, a positive increase of 36% YoY. The bottom line strong performance was mainly due to a remarkable decline in finance cost, registering 85% YoY, coupled with a large increase in FX gain from EGP 13 Million in 1Q-2015 to EGP 38 Million in 1Q-2016, a 197% increase YoY, which was driven by the currency devaluation. Total Equity in March 31, 2016 reached EGP Billion compared to EGP Billion in December 31, 2015, a slight decrease that was due to the purchase of 125 Million treasury shares in 1Q-2016 with a total amount of EGP 54 Million (22.5% higher than the market price on the day of the purchase). This exceptional expense was slightly offset by an increase in retained earnings, amounting to EGP Million in 1Q-2016 compared to EGP Million in December 31, Amer Group s debts increased in March 31, 2016 to EGP 275 Million vs. EGP 185 Million in December 31, The EGP 90 Million increase in total debt were used to finance Amer Group s acquisition of Genwa for Touristic Investment as well as the payments related to Porto Heliopolis land. Amer Group Debt-to-Equity ratio is as low as 0.2x, which reflects the Group s robust and highly secured financial position. The Group continues to ensure highest margin of safety to its shareholders by following a conservative debt policy even through periods of growth. Land liability in 1Q-2016 witnessed a remarkable decrease from EGP Million in December 31, 2015 to EGP Million in 1Q-2016, which was due to the repayment of a big portion of Porto Heliopolis land. SEGMENTS CONTRIBUTION TO TOTAL REVENUES 2% 2% 2% Real Estate Total Debt % 3% Restaurants Malls Hotels Retail & Others 81% PVC development segment. The Group recognizes 100% of revenues from a real estate transaction in the quarter in which Q1 (a) 15the unit is ready for delivery Q1 and 16(b) 80% of

4 Segment Analysis: Real Estate Investment (81% of total 1Q-2016 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 potential currency devaluation. 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 Billion as of March 31, 2016; (ii) selling the inventory that exists in its developments, which recorded as of March 31, 2016 a total of 949 units; and (iii) concluding revenue sharing agreements with third parties in its capacity as Master Developer. In 1Q-2016, Amer Group was able to deliver 984 units with an amount of EGP 442 Million vs. 510 units in 1Q-2015 which amounted to EGP Million. The units delivered were in the developments that remained under Amer Group ownership post Spin-Off (Porto Marina, Porto Sokhna Pyramids, Golf Porto Marina, Golf Porto Sokhna, Porto Matrouh, Porto Sharm, Porto South Beach and Porto Marina Residence) Management achieved new Real Estate sales of 263 units in 1Q-2016 with Real Estate sales amount of EGP 172 Million, which is in line with the adopted strategy to move toward Real Estate investment rather than regular Real Estate sales. Amer Group has secured four 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), Golf Porto Sokhna (Phase 4) and Porto Heliopolis based on a revenue share agreement equivalent to 20%, 20%, 20% and 40% respectively. Porto Group proven track record in collection and construction cycle set the stage for strong revenue streams that will be recognized on quarterly basis by Amer Group. The Group continues to invest for the future by acquiring high quality operational lands that meet or exceed the expectation of our clients. In 1Q-2016, the Group repaid a large portion of Porto Heliopolis Land that is expected to be a landmark in the Heliopolis neighborhood. Final set of design and drawings was submitted by Creative Kingdom Inc. and construction of Porto Heliopolis is expected to start soon following the issuance of needed permits. 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 longerterm strategic lands.

5 Real Estate LoB Item Units 1Q-15 1Q-16 Change Total Number of Units # 15,832 17,308 9% Units Sold # % Total New Sales Value EGP mn % Units Delivered # % Revenues Recognized EGP mn % Operating Profit EGP mn % Operating Profit Margin % 30% 18% Recognized Real Estate Revenues Total New Real Estate Sales Value Q1 15 Q1 16 Q1 15 Q1 16 Amer Group Land Bank Un-developed Land (Million Sqm), 2.00 Developed Land (Million Sqm), 3.50 Porto Heliopolis Porto 1% Matrouh 7% Golf Bay Marina 25% Un-developed Land Geographic Distribution Porto Sharm 12% Golf Porto Sokhna 24% Golf Porto Marina 29% Porto South Beach 2%

6 Segment Analysis: Restaurants (10% of total 1Q-2016 Revenues) Amer Group owns and operates family-friendly restaurants under both licensed global and regional brand names and its owned proprietary brands. The division includes a central kitchen that provides services to all Amer Group restaurants brands and catering operations. Restaurants LoB Item Operational Restaurants Total Available Seats Average Spend per Cover Segment Revenues Operating Profit Operating Profit Margin Units Q1-15 Q1-16 Change # % # 7,025 6,887-2% EGP % EGP mn % EGP mn (1.6) % % -4% 3% Amer Group is happy to report that the turnaround plan and operational and financial restructuring of the Restaurants division has started to pay off. The improved performance that was recorded in 1Q-2016 comes as a result of various and continuous marketing and operational efforts. 1Q-2016 revenues rose 18% YoY registering EGP 52.7 Million, whereas operating income was reversed from a loss amounting to EGP 1.6 Million in 1Q-2015 to a profit amounting to EGP 1.4 Million in 1Q-2016, which represents a YoY increase of 186%. In 1Q-2016, Amer Group capitalized on the success and the strength of its upscale dining brands Chillis and Ocean Basket and opened new outlets of its reputed branded casual dining restaurants in prime locations aiming to maximize the satisfaction of its customers. CARINOS, 5.2% STUDIO & SEAFOOD, 3.6% HALAKA, 5.8% FRESHI I_S, 1.0% OCEAN BASKET, 1.6% OTHER, 0.2% Restaurant Revenues STUDIO CHILIS, * Total New MISR, Real 29.2% Estate Sales represents the total value of new unit s 53.5% sales made in the period, and is distinct from total revenues recognized in the Real Estate development segment. The Group recognizes 100% of revenues from a real estate transaction in the quarter Q1-15 in which (a) the unit is ready for delivery Q1-16and (b) 80% of

7 Segment Analysis Hotels (3.2% of total 1Q-2016 Revenues) Amer Group owns and manages 7 Hotels scattered across its developments. The Hotels division manages properties in Porto Marina, Porto Golf Marina and Porto Sokhna and has inaugurated new properties in Porto Matrouh Beach Resort and Porto South Beach. Hotels LoB Item Units Q1-15 Q1-16 Change Available Rooms room nights 27,417 45,087 64% Room Revenue EGP mn % Food Revenue EGP mn % Other Revenue EGP mn % Total Revenue EGP mn % Operating Profit EGP mn (5.4) (7.3) 36% Operating Profit Margin % -47% -43% -8% Amer Group Hotels distinguishes itself by offering a complete package of family-oriented resort destinations where retail shops, restaurants and other entertainments activities are available in a single location. The Group mainly targets domestic clientele, which makes this segment relatively immune to the volatility of the Tourism sector. In 1Q-2016, revenues for the Hotels segment rose 48% YoY, recording EGP 17.1 Million vs. EGP 11.6 Million registered revenues in 1Q The increase in revenues was mainly driven by 28.2% YoY increase in total guests following the opening of Porto South Beach Hotel as well as Al Jabal Hotel, which were opened towards the second half of FY2015. The opening of new hotels has positively affected the various components of the Hotel segment s revenues in terms of room, food and other revenues. The Operating profit has though declined on the back of increased Cost of Revenue and G&A Cost that witnessed a rise of 68.6%% and 55.2% respectively. This significant increase was to a great extent due to the opening of Porto South Beach and Al Jabal Hotels and their related expenses in addition to the increased inflation in Egypt that affected the utilities expenses and the maintenance costs. All of which have substantially affected the YoY Operating result of the Hotel segment. Hotels Segment Total Revenue 17.1 SOUTH BEACH, 20.7% MATROUH, 0.1% Porto World, 2.3% Marina, 2.0% Golf Marina, 0.1% 11.6 CANCUN, 23.7% development 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 Soukhna, (b) 80% of 48.4% EL-JABAL, Q1-15 Q %

8 Segment Analysis Porto Vacation Club - PVC (1.5% of total 1Q-2016 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 Units 1Q-15 1Q-16 Difference Revenues EGP mn Net Profit Before Tax EGP mn (13,6) 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 March 31, 2016, the PVC memberships that corresponded to 1,652 vacation units reached a total of 18,754. According to the agreed accounting standards (Accounting Standard No. 11 from the EAS), Amer Group has started to record revenues for PVC segment in The Group has recorded EGP 7.9 Million in 1Q The remaining sales value will be recognized through the lifetime of the vacation ownership program. The PVC segment witnessed strong Financing Revenues in 1Q-2016, amounting to EGP 14.1 Million, which has offset the Cost of Revenue, the Selling and Marketing Expenses and the G&A Costs, leading to a Net Profit before Tax of EGP 9.2 Million after accounting for the segment s other revenues. The future continues to be bright with opportunities that complement our commitment for growth. We recently announced plans for new destinations (Dead Sea Jordan) that would also include new on-site sales locations.

9 Segment Analysis Malls (2.3% of total 1Q-2016 Revenues) Amer Group s Malls division operates eight malls in four locations around Egypt, including Meeting Point Tagamoa, Porto Marina Mall, Golf Marina Mall, Porto Cairo Mall, Porto Matrouh Mall, Mega Mall, Sky Mall and Waterfront Mall. The division produces revenues primarily through commissions generated from leasing units to commercial operators on behalf of units owners as well as management fees for each facility. Malls LoB Item Units Q1-15 Q1-16 Change Gross Leasable Area (GLA) sqm 115, ,944-4% Number of Tenants # % Aveg. Occupancy Rate % 73% 62% -16% Revenues EGP mn % Operating Profit EGP mn 7.1 (4.0) -155% Operating Profit Margin % 46% -31% -168% Malls Segment s Revenues recorded EGP 12.6 Million in 1Q-2016 compared to EGP 15.4 Million in 1Q-2015, a YoY decline of 18%. Operating Income decreased from EGP 7.1 Million in 1Q-2015 to record a loss of EGP 4 Million in 1Q-2016 driven by high operating expenses and high G&A costs. The Group s portfolio comprises 8 malls with gross leasable area of 110.9K sqm, which is slightly lower YoY. The contraction in Malls GLA is the result of the restructuring and redesign plan which has been adopted by management, aiming to enhance the overall performance of the Malls segment. In 1Q-2016, the occupancy rate reached 62% down from 73% in March 31, Malls Revenues 12.6 Porto Cairo Mall, 37.8% Porto Matrouh, Mega, 21.4% Porto Marina, 19.5% Golf Marina, 2.0% Meeting Point, 15.1% Q1-15 Q1-16 Water Front, 3.2% Sky, 0.4%

10 Amer Group Post Spin-Off Balance Sheet for 1Q-2016 Item (EGP) 31-MAR DEC-15 Non-current Assets Fixed Assets 1,053,060,208 1,052,165,554 Projects Under Construction 226,174, ,156,915 Investment Property Assets 282,101, ,636,970 Intangible Assets 169, ,526 Investments in Associates 5,001,000 2,500,500 Down Payment for Purchase of Investments in Companies 32,839,209 25,197,776 Restricted Deposits due to Units Owners 585,464, ,916,027 Deferred Tax Liability - - Total Non-current Assets 2,184,810,459 2,153,317,268 Current Assets Development Properties 2,915,627,535 3,060,577,800 Inventories 25,807,559 25,083,832 Accounts & Notes Receivables 121,221, ,588,499 Prepayments & Other Receivables 383,936, ,316,318 Bank Balances & Cash 537,800, ,333,775 Total Current Assets 3,984,393,782 4,126,900,224 Total Assets 6,169,204,241 6,280,217,492 Current Liabilities Provisions 4,236,794 4,503,755 Bank Overdrafts 41,720,731 40,691,845 Land Purchase Liability 286,141, ,438,204 Advances from Customers 2,275,601,369 2,561,162,788 Accounts & Notes Payable 433,088, ,663,002 Term Loans 125,237,019 69,977,352 Income Tax Payable 64,976,096 49,886,025 Accrued Expenses & Other Payables 831,109, ,068,277 Total Current Liabilities 4,062,111,319 3,996,391,248 Working Capital (77,717,537) 130,508,976 Total Invested Funds 2,107,092,922 2,283,826,244 Financed as Follows:

11 Equity Share Capital 911,908, ,908,928 Translation of Foreign Entity 11,697, ,014 Legal Reserve 50,733,848 42,859,122 General Reserve 12,055,859 12,055,869 Other Reserves 7,976,113 7,976,113 Retained Earnings 440,501, ,370,489 Equity Attributable for Majority Owners (53,804,154) - Minority Interest 15,095,561 14,433,682 Total Equity 1,396,164,539 1,423,929,217 Non-current Liabilities Term Loans 107,854,481 74,311,457 Land Purchase Liability - 177,854,417 Deposits due to Units Owners 585,464, ,916,027 Notes Payable 763, ,752 Deferred Tax Liability 16,845,963 15,083,374 Total Non-current Liabilities 710,928, ,897,027 Total Equity & Long Term Liabilities 2,107,092,922 2,283,826,244 Amer Group Income Statement Post Spin-Off for 1Q-2016 Item (EGP) 1Q Q-2015 Change Revenue 544,343, ,081,936 18% Cost of Revenue (405,480,684) (293,050,240) 38% Gross Profit 138,863, ,031,696-18% Selling and Marketing Exp (21,469,054) (27,362,141) -22% General and Admin Exp (62,002,296) (46,774,793) 33% Other Income 14,074,072 11,508,901 22% Other Operating Exp (13,933,942) (21,838,583) -36% Operating Profit 55,531,960 85,565,080-35% Finance Cost (4,783,721) (30,969,397) -85% FX Gain (Loss) 38,249,626 12,859, % Profit for the Year Before Tax 88,997,865 67,455,106 32% Income Tax (20,919,081) (17,454,990) 20% Profit for the Year 68,078,784 50,000,116 36%

12 Shareholder Structure 1Q % 35% SOL GLOBAL HOLDING LIMITED AMER WAKF LTD Lantess Internatinal Limited Egyptian Wakf Limited 3% 3% 7% 2% 10% 15% Mohamed El- Amin Ragb FINEBY ESTATES LIMITED Treasury Stock free floting Investor Relations Contacts Riad Refaat Chief Financial Officer About Amer Group Noha Agaiby Investor Relations Director Established in 2007, Amer Group is the Middle East and North Africa s leading developer of large-scale mixed-use familyfriendly 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 at 15%; 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.