9months 2010 Investors' Presentation - Palm Hills Developments

9months 2010 

Investors’ Presentation 

Palm Hills Developments © | November 2010

Palm Hills Developments © | November 2010 

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 of an offer to subscribe for or purchase securities of any kind and neither 

this document nor anything contained herein shall form the basis of any contract or commitment from any party 

whatsoever 

This presentation has been prepared by Palm Hills Development Company (“PHD”) and reflects the management’s 

current expectations or strategy concerning future events and are subject to known and unknown risks and 

uncertainties. 

Some of the statements in this presentation constitute "forward-looking statements" that do not directly or exclusively 

relate to historical facts. These forward-looking statements reflect PHD’s current intentions, plans, expectations, 

assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which 

are outside PHD’s control. Important factors that could cause actual results to differ materially from the expectations 

expressed or implied in the forward-looking statements include known and unknown risks. PHD undertakes no 

obligation to revise any such forward-looking statements to reflect any changes to its expectations or any change in 

circumstances, events, strategy or plans. 

Because actual results could differ materially from PHD’s current intentions, plans, expectations, assumptions and 

beliefs about the future, you are urged to view all forward-looking statements contained in this presentation with due 

care and caution and seek independent advice when evaluating investment decisions concerning PHD. 

No representation or warranty, express or implied, is made or given by or on behalf of PHD or any of its respective 

members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the 

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Agenda 

At a Glance 

Competitive Advantages 

Forward Strategy 

9M’10 Performance 


At a Glance 


AT A GLANCE 

Palm Hills Developments 

Bringing first-class 

real estate 

developments to 

the Egyptian 

market since 2005 

Publicly traded on 

the EGX and LSE 

since May 2008 

Robust growth as PHD’s 

backlog increased by 39% from 

end of 2009 and almost tripled 

since 2007 

Palm Hills Developments has almost tripled its 

backlog since 2007 

Million EGP 

4,642 

8,344 

9,383 

11,522 

13,051 

2007 2008 2009 H1 '10 9M'10 

19 projects 

launched, including 

15 under 

construction across 

Egypt 

An EGP 37.4 billion 

independently 

valued land bank 

as of October 2009 

Net profit growth 

of 230% over the 

five year period 

from 2005 to 

2009 

Palm Hills Developments has launched 19 projects 

across Egypt 

4 

6 

10 

A 47.8 million 

square meter land 

bank, including 6 

million in Saudi 

Arabia 

2005 2006 2007 2008 2009 2010 

13 

17 

19 

Investors’ Presentation | November 2010 

5

AT A GLANCE 

PHD’s Launched Projects 

With a land bank of 47.8 million m², Palm Hills has grown organically from a one-project 

company into Egypt’s largest developer with 19 projects launched 

North Coast 

Hacienda Bay �� 

Hacienda White �� 

Hacienda White 2 �� 

Seashell � 

West Cairo 

Cascade � 

Golden Palm � 

Bamboo Palm � 

Golf Views �� 

Golf Extension � 

Palm Parks �� 

Village Gardens October � 

Down Town � 

Botanica� � 

East Cairo 

Palm Hills Katameya� 

The Village �� 

The Village Gate � 

Village Gardens Katameya� 

Park View � 

Palm Hills Katameya Ext. � 

�Residential 

� Commercial 

� Hotels 

3 

Red Sea 

Palm Sokhna�� 

4 

1 

2 

5 

6 


6

AT A GLANCE 

Achieving impressive growth rates. . . 

Palm Hills Development’s rapid growth remains supported by a favorable real estate market, 

pent-up demand and a strong management team 

PHD has consistently been able to grow its 

new sales (reservations) 

New reservations p.a. 

Million EGP 

4,502 

4,302 

New contracts p.a. 

Million EGP 

527 

1,115 

2,999 

2,634 2,521 

2005 2006 2007 2008 2009 H1 '10 9M'10 

Cumulative number of units sold from 

2005 to 2010 

160 

670 

2,850 

5,515 

6,218 7,638 

8,511 

2005 2006 2007 2008 2009 H1 '10 9M'10 

… and to convert them into contracts. 

13 

210 

1,093 

3,106 3,262 

1,619 

2,665 

2005 2006 2007 2008 2009 H1 '10 9M'10 

… Allowing our backlog to grow by 39% from 

end of 2009 and by 181% since 2007 

11,522 

8,344 

9,383 

13,051 

Total backlog as of 31 December except for 2010 

Million EGP 

4,642 

2007 2008 2009 H1 '10 9M'10 


7

AT A GLANCE 

. . . That reflect on our financials. 

Our sales grew by a CAGR of 77% in 

the last 6 years 

Million EGP 

34 

78 

535 

1,235 

1,145 

05 06 07 08 09 

PHD kept debt under control while equity 

experienced steep growth 

Million EGP 

375 

75 

0 5 

1,130 

273 

2,832 

497 

3,410 

601 

4,634 

751.2 

05 06 07 08 09 9M '10 

Equity Bank debt 

Supporting prices and raising net profits, which 

expanded by 230% over the period 

Million EGP 

4 

38 

180 

658 

476 

05 06 07 08 09 

And has achieved industry-leading returns 

on equity (2009) 

PHD SODIC 

16.3% 

-6.6% 

TMG 

Holding 

4.9% 4.9% 

Avrg. 

Egypt Avrg. UAE Avrg. KSA 

1.9% 

Source: DB – Egyptian Real Estate, 17 September 2010 

5.6% 


8

AT A GLANCE 

Shareholders value 

PHD shares offer value pricing, trading at a significant discount to net asset value 

In million EGP 

375.6 

3,410 

19,500 

33,140 

37,429 

1,966 

5,318 

Equity Net asset value Mkt Capitalization 

Equity refers to shareholders equity as of 31 December of each respective year as shown in our IFRS 

financial statements 

Net asset value refers to the annual Net Asset Valuation performed by an independent firm (CBRE) 

Market capitalization as of 31 of December of 2008 and 2009 

2006 

2007 

2008 

2009 


9

AT A GLANCE 

Long term growth prospects 

The future growth of PHD is based on 5 strong underlying fundamentals. 

Most diversified portfolio 

of projects 

Backlog of EGP 13 billion 

Strong unleveraged 

balance sheet 

Properties deliveries 

Regional expansion on 

the agenda 

19 projects, giving us exposure to upper and upper-middle 

income segments. 

PHD has used only 9 million m 2 of its 47.8 million m 2 land bank. 

Additional backlog of EGP 17. 2 billion can be generated 

within launched projects within 4 years 

With net debt to equity less than 10%, our B/S can support 

major expansion in hotels & shopping malls. 

PHD will deliver units worth EGP 2.6 bln and EGP 2.3 bln in 

2011 and 2012 respectively 

Regional expansion to start with the 6 million m 2 acquired in 

Saudi Arabia 


10

AT A GLANCE 

Organizational and Governance Structures 

Given the diversity of PHD’s projects, our structure is a balanced approach between central 

and area control within a strong corporate governance framework. PHD uses a scalable 

outsourcing model in construction, engineering and sales. 

Centralized functions 

Organizational structure Corporate governance structure 

Sales 

HR & 

Admin. 

Operations 

& Controls 

Finance 

Customer 

care 

Legal 

Engineering 

CEO 

5 Area Development VPs 

6th of October area 

New Cairo Area 

Cairo Alex desert road area 

Alex. & North Coast Area 

Red Sea Area 

Project management 

teams 

General assembly 

Board of Directors 

Audit Committee 

Chief Executive Officer 

Board Committees 

Remuneration committee 

Nomination committee 

Disclosure committee 

Other non-board committees 

Investment committee 

Pricing committee 


11

AT A GLANCE 

Analysts’ Consensus 

Broker Rating 

Target Price 

(EGP per share) 

Upside 1 

Citigroup Buy/High Risk 7.8 +35% 

Credit Suisse Outperform 7.63 +35% 

HSBC Overweight 8.00 +38% 

HC Securities Hold 7.50 +30% 

EFG Hermes Buy 7.50 +30% 

Pharos Buy 8.10 40% 

Naeem 11.3 95% 

1 based on share price of EGP 5.78 as of 30 Sep 2010. 

Upside 

� Most geographically diversified land bank 

at cheap prices. 

� Largest sales and distribution network. 

� Backlog still on the rise due to successful 

shift to upper-middle segment. 

� Low cost of land and in-house 

construction maintains higher profitability 

levels. 

� Recurring revenue set to grow. 

� Rights issue boosts liquidity. 

� Exposure to upper-middle and high-end 

income segments. 

Downside (risks) 

� High fixed-land liabilities payment. 

� Secondary homes dominate the land 

bank. 

� Volatile second homes sales 

� Land disputes in Egypt. 

� Resource management problems leading 

to project delays. 


12




Palm Hills Development’s competitive advantages and business structure allow for consistent 

outperformance of industry averages 

Best in class sales force and 

construction operations 

Strongest off-plan sales 

capabilities 

Egyptian real estate 

markets remain strong 

Secured growth from 

launched projects 

Large, diversified land bank 

at attractive prices 

Predominantly selffinancing 

business model 


14

COMPETITIVE ADVANTAGES 

Strong market fundamentals 

Fundamentals remain strong across all real estate sectors 

Residential Market 

�Huge pent-up demand: 12-16 million inhabitants in Cairo; Middle range segment is 35-40% of demand 

�Favorable demographics: Half of the population is below age 25 

�Real demand: 600,000 marriages annually 

�Still cash driven: Mortgages represent only 0.4% of GDP 

�No significant price decline witnessed in the primary market in 2009 

�Increased availability of liquidity to Egypt’s growing consumer population 

Office Market 

�Business parks are very scarce 

�Significant shortage of Grade A office space 

�No new projects before 2013 

� 80% of office spaces within residential buildings 

Robust Egyptian Real Estate Market 

Retail Market 

� Retail per capita is lower than most peer countries 

(0.05 m² per capita) 

� World-class shopping malls are non-existent 

� Retail expenditure is 15% of family budgets 

� Increased urbanization will foster retail spending 

� A significant opportunity to develop hypermarkets 


15


Growth drivers 

East & West Cairo emerging as high growth 

residential markets 

Est. area 

Est. pop. by 2017 

“Hot Spot” 

Current offering 

Character 

18,000 

16,000 

14,000 

12,000 

10,000 

8,000 

6,000 

4,000 

2,000 

0 

Moscow 

Prague 

Kiev 

Budapest 

Shanghai 

Cairo 

Riyadh 

Makkah 

Madinah 

West Cairo 

6 th of October Area 

410 km2 4m 

Sheikh Zayed 

� 100+ compounds 

� 20 schools & 

universities 

� Commercial centre 

around smart 

village 

Hong Kong 

Singapore 

Rome 

Dubai 

Paris 

Barcelona 

East Cairo 

New Cairo Area 

225 km2 4m 

Katameya 

Cairo remains affordable by international 

standards 

� 80+ compounds 

� 50 schools & 

universities 

� Most exclusive 

residential suburbs 

Global residential prices USD per m² (y-axis) vs. USD GDP per capita 

(x-axis) 2008/2009 

London 

Tokyo 

Amsterdam 

Abu Dhabi 

New York 

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 

Source: Colliers International, Global Property Guide, CB Richard Ellis, PriceWaterhouse 

Coopers, Better Homes, HSBC estimates. 

Doha 

Estimates show demand exceeding supply 

Annual Supply and Demand For Residential Units 

18% 

16% 

14% 

12% 

10% 

8% 

6% 

4% 

2% 

0% 

Even among developing countries, 

Egypt has low mortgage penetration at 

less than 1% of GDP 

Syria 

Egypt 

Kuwait 

Jordan 

Russia 

Source: HSBC estimates 

Demand Supply Gap 

Upscale 75,626 73,205 2,421 

Middle 415,944 195,213 220,731 

Low-end 768,867 219,615 549,252 

Total 1,260,437 488,033 772,404 

•*Upscale, Middle and Low end Supply is estimated as 6%, 33%,61% of 

total supply respectively 

•*Upscale, Middle and Low end Demand is estimated as 15%, 40% and 

45% of total demand respectively 

Source: USAID, Prime estimate. (Upscale properties indicatively over 

EGP 1.5m/unit; Middle indicatively over EGP 0.5m/unit) 

Mortgage market development will impact 

housing demand 

Indonesia 

Brazil 

Oman 

Qatar 

KSA 

Bahrain 

India 

Lebanon 

Tunisia 

UAE 

China 

Mexico 

Philippines 

Morocco 

Thailand 

Chile 


16


One of the most diversified land banks in Egypt 

Breakdown of land bank across 8 

regional destinations 

0% 14% 

13% 

11% 

15% 

1. 6th of October 

2. New Cairo 

3. North Coast 

12% 4% 

31% 

4. Cairo Alexandria Desert Road 

5. Gamsha 

6. Ain Sokhna 

7. Alexandria 

8. Saudi Arabia 

Land acquired at submarket 

rates 

Land diversification 

Attractive second 

homes offering 

• Avg. price/m 2 = EGP 173 1 ; selling now at 

approx. EGP 3,300 2 

• Superior profitability 

1 as of June 2010 

2 based on contracted values for the period Jan.-Jun. 2010 

• Cross-selling through different locations 

• Increased customer loyalty 

• Ability to launch multiple projects 

catering to different market needs 

• Shorter cash-to-cash cycles (4 to 5 years 

from launch to hand-over) 

• Increased EBITDA margins 

• Hedge against seasonality in sales 


17


Predominantly self financing business model and 

short cash cycle 

PHD’s efficient business model, effective sales team and fast, on-time construction 

schedule means that the developer requires minimal upfront capital or ongoing working 

capital to fund its projects 

Land Acquisition Off-plan Sales 

(reservation phase) 

� 10% down 

payment 

� Balance paid over 

10 years 

� Including 3 yr. 

grace period 

� Interest bearing at 

approx. 9% 

� Master plan 

developed 

� 10% DP collected 

� Phased out sales 

plan 

� On average 50- 

70% off-plan sales 

Contracts Construction Post 

Handover 

� Licenses & Gov. 

approvals 

� Signed contracts 

� DP increased to 15% 

� Post-dated checks 

(PDC’s) received 

� PDC’s are drawn 

� Phased 

construction 

� 60-70% selffinanced 

� Units delivered 

� Full payment 

received 

� Facilities 

management 


18


Room for growth 

PHD still has 37 mln m² of unutilized land bank 

Utilized land bank, 9 mln m 2 

Unutilized land bank, 37.5 mln m 2 

Additional inventory still available for sale is approx. 

EGP 17.2 bln (including phases not launched) 

Units available for sale 1 , EGP 17 bln 

Reserved units, EGP 3.4 bln 

Contracted units, EGP 9.6 bln 

1 Covering launched projects including phases not launched yet 

Overall sales ratio in our launched 

projects/phases is approx. 66% 

200 

1,715 

1,465 

Units available for sale, 28% 

Units sold, 72% 

Deliveries to come online starting 2011 

Number of units to be delivered 

Based on contracts signed as of 30 Jun. 2010 

1,463 

772 

2010 2011 2012 2013 2014 


19


Strongest off-plan sales capabilities 

2005/06/07 Launched Projects 

100% 100% 100% 

2008 Launched Projects 

20% 

2% 

40% 46% 54% 

Golf Ext (A, B &C) Village Gate Ain Sokha 

2009/2010 Launched Projects 

5% 

94% 

29% 

53% 

5% 

5% 

94% 

4% 

79% 74% 

Cascade Bamboo Golden Golf Views Katameya Bamboo Ext Hacienda Bay Casa The Village Palm Park 

89% 

3% 

VGO VGK Botanica (Phase 1) Botanica (Phase 2) Hacienda White Hacienda White 2 Park View 

90% 

9% 

64% 

13% 

76% 

10% 

73% 

56% 

3% 

88% 

1% 

53% 

1% 

43% 

9M'10 

9M'10 

Up till FY 2009 


9M'2010 



20


Cost control & speed of delivery 

Through vertical integration and dual construction arms 

PHD’s unparalleled dual construction arms give the company the ability to simultaneously deliver multiple 

projects — a strength that lends significant sales and cash cycle advantages. 

The dual construction strategy: 

1) PHD constructs at cost for superior margins: Palm Hills Developments is the only real estate developer in 

Egypt with an in-house construction unit. 

2) PHD ensures speed, capacity and quality through a mutually exclusive agreement with Egypt’s second 

largest construction firm, Hassan Allan Construction: The companies share a joint venture, UCC, based on 

a cost plus contract basis that locks in attractive 9.5% margins, compared to the average 20 – 25% cost 

plus paid by competitors. 

Significant property deliveries in the 

coming 4 years 

200 

1,715 

1,465 1,463 

772 

2010 2011 2012 2013 2014 

No. of units to be delivered 

Significantly lower construction costs 

compared to the industry average 

9.50% 

22.50% 

PHD Industry avg. 

PHD Industry avg. 


21


Best in class sales teams 

1) Largest direct sales force in Egypt with 86 salesmen, located in sales offices 

across Cairo 

2) Exclusive agreement with Coldwell Banker to promote and sell PHD’s properties 

exclusively 

3) Expanding sales offices into Europe (London) and the Gulf Region (Dubai) to 

capture a portion of expatriate Egyptian and foreign sales 

4) New branches 

� Alexandria branch: opened 

� London office: opened 

� UAE office: in process 

� KSA office: in process 


22

Forward Strategy 


FORWARD STRATEGY 

Delivering on our strategy 

Objective Strategy Initiative 

Stimulate 

demand 

Cater to new 

market segments 

Add recurring 

revenues 

Accelerate cash 

receipts 

� New launches, new projects 

� Use PHD’s brand equity 

� Targeted marketing campaigns 

� Increased value for money 

� Innovative financial “solutions” 

� Strategic alliances with value-added 

partners 

� Hospitality 

� Retail 

� Speed up construction 

� Focus on existing land bank 

� Value engineering 

� Launched 3 new projects in 2010 

� Palm Sokhna relaunch planned early 2011 

� Launched 5 projects in 2009 

� Palm Hills Katameya extension 

� “Power of 7” 

� Burooj transaction: Egyptian expats 

� New sales offices in UK & GCC 

� Village mall due for opening June 2011 

� Macor to add 250 rooms 

� Design brief in process for West Cairo 

project 

� Phase I Casa delivered ahead of 

schedule 

� Hacienda Bay Zone 1 to be delivered 

December 2010 

� Construction revenues: 9% of reported 

revenues in H1 


24


Adding recurring revenue streams 

PHD is moving to secure recurring cash flow sources in addition to the company’s primary 

development earnings – our strategy is to partner with the strongest hospitality, retail 

operators ,and brands. 

Hospitality Projects: 

� PHD has signed management agreements with Ritz Carlton, 

Jumeirah and Nikki Beach 

� Plans include establishing 

• A 163-room Ritz Carlton in Golf Views 

• 250 rooms under Jumeirah management at Gamsha Bay 

• A Nikki Beach Hotel at Hacienda Bay due for opening 

• Additional 250 rooms under MACOR in Sharm El Sheikh & 

6 th of October Novotel 

Retail Projects: 

PHD is building its first retail shopping mall in East 

Cairo, 25,000 m² of GLA due for opening on the 

second half of 2011. 

PHD has teamed with Pradera for the management 

of all its retail assets. 

Studies are underway for the construction of a 

second mega mixed-use project in West Cairo 

(>100,000 m² of GLA) 

Projected Number of rooms under signed 

management agreements 

763 

1,013 

1,178 

1,341 

1,591 

2010 2011 2012 2013 2014 

PHD’s East Cairo Mall “Palm Galleria” 


25


Cater to new market segments. . . 

PHD is diversifying its product offerings from high-end offerings, shifting towards higher 

density, more affordable units to attract a wider customer base and increase its flexibility in 

response to changing market demands 

PHD has achieved market flexibility and 

broader market penetration – without 

sacrificing quality or pressuring per m 2 

pricing – by reducing unit size and 

introducing maximum-efficiency designs. 

…Expanding PHD’s customer base to 6,809 

at the end of the 9M’2010 

Lower Price Points = Rapidly Expanding Customer Base 

4,242 

5,379 

5,750 

6,809 

2008 9M '09 2009 9M '10 

Cumulative units sold by value range 

>2.0 

(2,500) 13% 

1.5-2.0 

(1,750) 

1.0-1.5 

(2,100) 

13% 

19% 

16% 

39% 

0-0.5 

(1,750) 

0.5-1.0 

(4,900) 

The average price of a PHD unit has fallen 11% 

since 2007, from EGP 1.7 mln to EGP 1.5 mln 

961 

1,088 

1,651 

Price range in million EGP 

(Number of units) 

1,638 

1,620 

1,489 

2005 2006 2007 2008 2009 9M'2010 


26


. . . Without sacrificing selling prices 

More affordable real estate options and a wider market have pushed up demand – and 

prices – at PHD projects 

PHD average selling prices of land (EGP per square 

meter of land) has more than tripled from 2005 

(CAGR 28% p.a.) 

964 

1,120 

2,045 

2,680 

3,001 

3,812 

2005 2006 2007 2008 2009 9M'10 

PHD average selling prices of built-up area (EGP 

per square meter of BUA) has almost doubled 

(CAGR 15% p.a.) 

PHD’s average selling price per square meter of land, EGP PHD’s average selling price per square meter of BUA, EGP 

1,749 

1,965 2,095 

2,774 

3,434 3,555 

2005 2006 2007 2008 2009 9M'10 


27

9M’2010 Performance 


9M’2010 PERFORMANCE 

Activities wrap-up 

� Q2 2010 was our best quarter ever in terms of reservations. 

� Closed the acquisition of 52% of Macor for Securities Investments Company (hotels); PHD’s 

stake has since grown to 60% 

� Successful conclusion of rights issue transaction 

• The first phase of PHD’s EGP 698.88 million rights issue was nearly 99% subscribed. 

• The second round, to cover the remaining 1%, was more than 500-times oversubscribed. 

� Conclusion of bulk sale deal with Burooj 

� New projects launched 

• Palm Hills Katameya Extension (New Cairo) 

• Hacienda White II (North Coast) 

• Botanica Phase II (Cairo-Alex Desert Road) 

• Seashell (North Coast) 

� Launch of “Power of 7” campaign 

• Seven-year payment terms for Palm Hills Katameya Extension (VGK 2) and Palm Parks. 

• The “Power of 7” contributed 145 units with a value of EGP 378.2 mln 

� Closing of approx. EGP 1.1 billion in long-term finance 

� New sales offices opened in Alexandria, London and UAE (Dubai) 

� Signature of Jumeirah management agreement 

� Signature of an MOU with Pradera 


29


Performance highlights 

Gross new reservations Total cancellations 

Gross new contracts 

EGP million EGP million EGP million 

4,502 

1,595 

527 

1,115 

2,999 

2,634 

2005 2006 2007 2008 2009 

888 

1,781 

2,521 

4,302 

H1 '09 H2'09 H1 '10 9 M'10 

1,166 

580 

52% 

773 

1,747 1,781 

Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 

0 

800 

2007 2008 2009 

998 

597 

382 

633 

H1 '09 H2'09 H1 '10 9M'10 

305 292 

13 

210 

1,093 

3,106 3,262 

2005 2006 2007 2008 2009 

1,330 

1,933 

1,619 

2,665 

H1 '09 H2'09 H1 '10 9M'10 

-18% 13% 

186 

196 

250 

Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 

924 

1,009 

507 

1,111 1,047 

Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 


30


Financial highlights 

All numbers shown in Thousand EGP 

9M 2010 

EGP 000s 

9M 2009 

EGP 000s 

Net sales 899,967 675,044 33% 

Revenue from investment property 69,548 - 

Profit Shares from hospitality activities 11,579 - 

Total revenues 981,04 675,044 45% 

Cost of sales (339,771) (208,041) 63% 

Cost of investment property (10,268) - 

Gross profit 631,056 467,003 35% 

Margin 64% 69% 

SG&A (239,257) (96,021) 149% 

EBITDA 391,799 370,982 6% 


EBIT 374,418 363,532 3% 


Others, net 56,612 34,766 63% 

Minority interest (16,372) (51,114) -68% 

Net profit after tax & minority interest 345,144 290,522 19% 


∆% 


31

9M’ 2010 PERFORMANCE 

Growth analysis 

9M’ 10 reported revenue increased by 45% versus 9M’09 

EGP million 

1,000 

800 

600 

400 

200 

- 

675 

9M'09 reported sales 

First-home projects were the major growth drivers in 9M‘10 

Golf Views, 17% 

155 

Golf Ext, 22% 

194 

HW2, 28% 

255 

180 

Land sales rev. 

-26 -15 

NPV disc. 

Others 

35 

Sales returns 

VGK,7% 

64 

PH Kat, 6% 

53 

Others, 14% 

126 

51 11 70 

Construction rev. 

Changes between 9M ‘09 and 9M ‘10 

Hospitality rev. 

HW1, 6% 

49 

Club Revenues 

981 

9M'10 reported sales 

Project name, % to total gross revenues 

Gross revenues in millions 


32

H1 2010 PERFORMANCE 

Top line growth 2011 

Re-launch of Palm Sokhna in 2011 

Conversion of Botanica’s and Palm Hills Katameya 

extension’s reservations to contracts 

Possible launch of new phases in Botanica 

Units’ deliveries in Casa, Bamboo Ext., Palm Hills 

Katameya, the Village and Hacienda Bay 


33

9M 2010 PERFORMANCE 

Capital structure 

Capitalization as of 30 September 2010 

100% 

80% 

60% 

40% 

20% 

0% 

12% 

Long Term 

Debt 

2% 

Short Term 

Debt 

86% 

86% 

12% 

Equity Total 

Net Debt to EBITDA (x) 

1.2 

1 

0.8 

0.6 

0.4 

0.2 

0 

1.01 

0.19 

0.3 

0.25 

0.2 

0.15 

0.1 

0.05 

0 

0.88 0.84 

2007 2008 2009 9M'10 

Net Debt to Equity (x) 

0.25 

0.05 

0.14 

0.09 

2007 2008 2009 9M'10 


34

Appendices 


APPENDIX 

Revenue recognition methodology 

Villas, Town, and Twin houses 

Revenue 

• Client buys a Villa for EGP 2,000,000, the value of the unit is broken down as follows (EGP 1,200,000 Land Price and EGP 800,000 Built Up Area (BuA) 

• Client Pays 10% (of the unit value) as a Reservation Fee ; EGP 200,000 , this amount goes in the Balance Sheet under “Advances From Customers” 

• Client decides to sign the Contract and pays an additional 5% (of the unit value) : EGP 100,000. 

• The Total cash amount paid by the client as of now is EGP 300,000. This amount is transferred from “Advances from Customers” to “Billing in Excess of 

Cost” . 

• The client writes down checks for the rest of the unit value; which now is EGP 1,700,000 . The written checks are discounted to represent their fair value by 

an NPV discount of 10% and are found under “Notes Receivables” 

• The land portion of the unit value, which we assumed was EGP 1,200,000, is automatically recognized as revenue at the Income Statement (Net Sales) after 

being reduced by 1) Estimated infrastructure expenditure and 2) The NPV discount portion that is related to land revenue. 

• The remaining unit value, which we assumed was EGP 800,000 for the BuA, is recognized in the Balance Sheet under “Billing in excess of cost” 

• The EGP 800,000 for the BuA will be amortized and recognized as BuA revenue only when the unit reaches 50% construction completion 

Cost 

• The land cost constitutes the acquisition cost plus actual infrastructure expenditures incurred for the sold unit and is recognized under 

the COGS 

• The Actual Expenditures incurred on the construction of the Villa will be recognized as construction cost under the Cost of Goods sold 

(COGS) only after it reaches the 50% construction completion threshold. 

Apartments 

Revenue 

• Revenue and cost for the Apartments are recognized upon unit delivery 

• The client writes down checks for the total unit value of the contracted apartment. The checks are then discounted to represent their fair value by an NPV fixed 

discount rate of 10% and the amount goes in the Balance Sheet under “Notes receivables” and “Billing in excess of cost.” Revenue will be recognized at the Income 

Statement (Net Sales) upon delivery. 

Cost 

• The actual expenditure spent on the land acquisition cost remain in the Balance Sheet under “Development Properties” and the actual expenditure spent on the 

construction cost remain in the Balance Sheet under “Billing in excess of cost” , both will be recognized on the Income Statement (COGS) upon delivery. 


36

APPENDIX 

Projects’ key data 

Table I Total development cost 

Location 

Total areas (Sq.Mt) Cost(EGP)/sq.mt 

Land BUA 1 BUA 2 Infrast. Land BUA Infrast. 

Palm Parks West Cairo 474,600 0 332,980 474,600 544 2,122 289 

Cascade, Bamboo, Golden West Cairo 520,380 102,663 36,372 520,380 246 1,200 100 

Golf Views West Cairo 2,049,432 516,602 0 2,049,432 318 1,882 105 

Golf Extension West Cairo 1,300,572 403,467 0 1,300,572 1,190 2,195 172 

Down Town (VGO) West Cairo 236,376 46,660 0 236,376 933 2,566 87 

Casa West Cairo 294,000 0 389,990 294,000 656 1,236 130 

Bamboo Extension West Cairo 168,000 59,121 0 168,000 139 1,540 150 

Botanica Cairo-Alex desert road 7,138,320 543,641 0 7,138,320 29 

Katameya Palm Hills East Cairo 928,438 305,047 0 928,438 295 2,065 100 

Village Gate East Cairo 131,040 0 138,043 131,040 113 2,037 190 

The Village East Cairo 105,000 0 83,438 105,000 525 1,870 129 

Palm Sokhna Ein Sokhna (Red Sea) 5,450,994 301,013 484,660 5,450,994 8 3,942 496 

Park View East Cairo 97,642 0 76,920 97,642 1,849 1,471 202 

Village Garden Katameya 1 East Cairo 275,100 31,670 121,410 275,100 886 

Village Garden Katameya 2 East Cairo 284,794 47,575 265,457 284,794 817 

1,489 149 

Hacienda Bay (ZONE 1) North Coast 2,306,333 198,979 200,735 2,306,333 66 2,110 265 

Hacienda White 1 North Coast 215,024 16,592 29,086 215,024 63 2,250 723 

Hacienda White 2 North Coast 472,262 48,665 52,329 472,262 124 2,250 579 

BUA 1: Built up areas for stand alone units (Villas, Twin house, Town house, etc) 

BUA 2: Built up areas for shared buildings (Apartments’ buildings, Chalets, condominiums, etc ) 


37

APPENDIX 

Projects’ key data (Cont’d) 

Table II Land liabilities (000s EGP) 

Paid 2010 2011 2012 2013 2014 2015 2016 

Palm Parks 139,148 22,781 47,187 26,625 22,631 0 0 0 

Cascade, Bamboo, Golden 92,285 0 35,590 0 0 0 0 0 

Golf Views 408,081 4,869 128,929 109,858 0 0 0 0 

Golf Extension 243,484 42,874 268,006 198,586 198,586 198,586 198,586 198,586 

Down Town (VGO) 220,611 0 0 0 0 0 0 0 

Casa 140,207 0 52,641 0 0 0 0 

Bamboo Extension 23,400 0 0 0 0 0 0 

Botanica 210,532 0 20,100 20,100 20,100 20,100 20,100 0 

Katameya Palm Hills 73,381 0 34,816 38,298 41,780 85,376 0 0 

Village Gate 14,745 0 0 0 0 0 0 

The Village 31,180 0 8,089 15,844 0 0 0 

Palm Sokhna 13,314 0 4,544 4,374 4,203 4,033 3,863 3,693 

Park View 23,533 0 22,255 22,255 22,255 22,255 22,255 22,255 

Village Garden Katameya 1 32,192 0 30,135 30,135 30,135 30,135 30,135 30,135 

Village Garden Katameya 2 30,806 0 28,793 28,793 28,793 28,793 28,793 28,793 

Hacienda Bay (ZONE 1) 89,415 10,866 26,181 26,875 0 0 0 0 

Hacienda White 1 12,102 1,532 0 0 0 0 0 0 

Hacienda White 2 55,607 1,062 1,775 0 0 0 0 0 


38

APPENDIX 


Table III Construction Schedule 

Infrastructure BUA Hand over 

Incurred 

000 EGP 2011 2012 2013 2014 2015 

Incurred 

000sEGP 2011 2012 2013 2014 2015 

Palm Parks 4 49% 21% 16% 14% 0% 36,629 49% 18% 19% 14% 0% 2014 

Cascade, Bamboo, Golden 43,780 100% - - - - 154,460 100% - - - - 2010-11 

Golf Views 35,954 12% 35% 34% 14% 5% 86,513 25% 31% 27% 17% 1% 2013-15 

Golf Extension 11,603 37% 30% 20% 7% 6% - 25% 29% 26% 13% 7% 2013 

Down Town (VGO) 10,801 34% 33% 33% 0% 0% 11,241 35% 39% 26% 0% 0% 2013 

Casa - - - - - - 102,937 - - - - - 2011 

Bamboo Extension 17,092 100% - - - - 52,321 100% - - - - 2011 

Botanica 1,906 12% 30% 25% 25% 8% - 0% 13% 24% 30% 33% 2015 

Katameya Palm Hills 21,833 82% 12% 6% 0% 0% 254,336 70% 20% 10% 0% 0% 2011 

Village Gate 1,657 10% 35% 55% 0% 0% 62,609 54% 46% 0% 0% 0% 2012 

The Village 3,285 100% - - - - 93,672 100% - - - - 2011 

Palm Sokhna 628 19% 26% 26% 15% 15% - 0% 22% 31% 23% 24% 2014 

Park View 211 3% 11% 24% 38% 24% - 9% 28% 40% 22% 0% 2014 

Village Garden Katameya 1 - 16% 22% 43% 19% 0% - 10% 33% 40% 17% 0% 2012 

Village Garden Katameya 2 - 5% 32% 30% 25% 8% - 3% 24% 44% 24% 4% 2012 

Hacienda Bay (ZONE 1) 210,235 5% 51% 27% 17% 0% 168,850 66% 23% 11% 0% 0% 2011-12 

Hacienda White 1 4,324 6% 36% 58% 0% 0% 7,215 32% 68% 0% 0% 0% 2012 

Hacienda White 2 11% 51% 38% 0% 0% - 27% 50% 22% 0% 0% 2012 


39

APPENDIX 


Table IV Total estimated revenues % sold Contracted areas 

Total sellable areas (Sq.Mt) Sales price per sq.mt 1 No. of Units Land area BUA 1 BUA 2 

Land BUA 1 BUA 2 Land BUA Sq.Mt Sq.Mt. Sq.Mt. 

Palm Parks - 0 325,293 6,745 54% 112,174 

Cascade, Bamboo, Golden 137,031 93,955 34,852 3,750 2,800 100% 230,160 150,912 31,567 

Golf Views 433,037 453,928 0 4,875 2,800 84% 432,823 300,274 - 

Golf Extension 551,675 417,680 0 3,750 2,800 60% 180,998 138,368 - 

Down Town (VGO) 48,816 52,868 0 3,427 4,090 99% 16,201 17,020 28,139 

Casa - 0 269,984 4,800 83% 168,554 

Bamboo Extension 76,716 60,792 0 3,750 2,800 93% 69,405 57,695 - 

Botanica 2,159,472 543,641 0 1,080 2,800 89% - - - 

Katameya Palm Hills 425,734 287,413 0 4,000 2,800 78% 305,836 207,435 - 

Village Gate - 0 100,071 - 6,500 48% - - 34,125 

The Village - 0 61,082 7,000 91% - - 59,047 

Palm Sokhna 574,005 301,013 484,660 2,950 4,026 54% 69,894 31,296 27,443 

Park View - 0 68,978 4,650 44% - - 366 

Village Garden Katameya 1 35,400 28,218 117,420 5,177 4,013 

82% 24,065 21,870 151,138 

Village Garden Katameya 2 35,880 40,604 208,902 4,951 2,800 

Hacienda Bay (ZONE 1) 643,325 172,936 171,967 3,367 4,720 73% 259,105 104,829 120,002 

Hacienda White 1 81,950 16,552 28,470 7,000 7,846 89% 38,407 14,472 17,956 

Hacienda White 2 121,457 50,645 61,655 6,132 4,883 56% 49,863 20,937 16,082 

BUA 1: Built up areas for stand alone units (Villas, Twin house, Town house, etc) 

BUA 2: Built up areas for shared buildings (Apartments’ buildings, Chalets, condominiums, etc ) 


40

APPENDIX 


Table V Projects' receivables 1 

000sEGP 000sEGP 000sEGP 000sEGP 000sEGP 000sEGP 000sEGP 000sEGP 

2010 2011 2012 2013 2014 2015 2016 2017 

Palm Parks 20,084 60,013 60,493 78,546 27,847 7,956 1,603 876 

Cascade, Bamboo, Golden 14,987 22,457 11,559 5,833 1,533 471 - - 

Golf Views 81,529 232,452 219,684 159,379 95,741 31,953 3,789 283 

Golf Extension 52,071 143,693 143,966 156,333 116,788 64,466 22,780 3,745 

Down Town (VGO) 9,048 28,929 29,516 29,158 37,380 10,501 1,973 169 

Casa 44,867 121,859 135,148 34,873 8,944 442 129 - 

Bamboo Extension 12,528 47,111 35,337 14,822 9,358 3,722 1,545 505 

Katameya Palm Hills 54,953 175,168 129,240 73,682 40,143 10,067 391 - 

Village Gate 8,849 28,652 29,146 33,491 11,658 2,658 369 - 

The Village 13,602 43,417 6,187 2,975 803 33 - - 

Palm Sokhna 22,140 72,656 70,497 68,338 54,992 6,521 184 - 

Park View 411 357 357 357 356 - - - 

Village Garden Katameya 49,236 108,441 108,298 108,619 127,829 72,023 16,528 1,024 

Hacienda Bay (ZONE 1) 99,988 285,936 243,556 164,214 90,375 33,725 3,970 307 

Hacienda White 1 28,835 71,531 70,953 69,547 26,715 10,039 2,577 55 

Hacienda White 2 37,528 88,788 88,938 98,126 73,055 41,469 11,974 2,989 

1 Based on contracted units only, does not include expected cash flows from reserved units 


41

APPENDIX 

Analyst coverage 

Credit Suisse 

Ahmed Badr 

Dir: + (971) 4362-0223 

Email: ahmed.badr@credit-suisse.com 

Deutsche Bank 

Athmane Benzerroug 

Dir: (+971) 4 4283938 

Email: athmane.benzerroug@db.com 

Prime Holding 

Rehab Taha 

Dir: +(202) 33005724 

Email: rtaha@egy.primegroup.org 

Pharos Research 

Karim Yehia 

Dir: + (202) 27393670 

Email: Karim.yehia@pharosholding.com 

Citigroup 

David Spiez, CFA 

Dir: +971 4 509 9747 

Email: david.spiez@citi.com 

EFG-Hermes 

Jan Pawel Hasman 

Dir: + (202) 3332-1139 

Email: jpawel@efg-hermes.com 

Naeem Holding 

Hisham Halaldeen 

Tel: + (202) 33023799 Ext. 2221 

Email:hisham.halaldeen@naeemholding.com 

HSBC 

Patrick Gaffney 

Dir: +(202) 2529 8437 

Email: patrickgaffney@hsbc.com 

HC Securities 

Ankur Khetawat 

Dir: +971 4 293 5387 

Email: ankur.khetawat@af-hc.com 

CI Capital Holding 

Hany Mohamed Samy 

Tel: + (202) 3338-6274 

Email: hsamy@cicapitalegypt.com 

Names and contact information showing above are of sell-side analysts who issue investment analysis reports on Palm Hills S.A.E. The management of PHD neither, seeks to solicit 

investment action based on any of the research reports issued by the said analysts, nor endorses its forecasts and recommendations. Analyst estimates, forecasts, and 

recommendations showing in research reports on PHD strictly represent their own view; independent of Company’s management. PHD’s management’s liability is limited to factual 

information stated in these reports. 


42

9months 2010 Investors' Presentation - Palm Hills Developments

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