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PADICO HOLDING Records Profits of USD 23 Million for the Third Quarter of 2013.

 

Published on : 30/10/2013

 
 

Munib Rashid Masri: Promising results in line with the company’s strategy.

 

Samir Hulileh: The continuous rise in profits is due to the increase in profit margins of new projects.

 

PADICO HOLDING announced growth of 47% in pre-tax profits for the third quarter of 2013 reaching USD 23 million compared to USD 15.6 million for the same period in 2012. Consolidated net profit reached USD 22.4 million for the first nine months of 2013 recording an increase of 44%, compared to USD 15.5 million for the same period of 2012, while operational profits rose by 34% to reach USD 30.6 million for the first nine months of 2013 compared to USD 22.8 million for the same period of 2012.

   

Mr. Munib Rashid Masri, Chairman of the Board of Directors of PADICO HOLDING, said that the increased profits reflect the company’s strategy in launching fruitful projects and investments during the last three years, and that a continuous growth in profit is expected in the upcoming period.

 

Mr. Masri acclaimed the financial results amid more profits and accomplishments for PADICO HOLDING, hoping that improvements in the political and economic conditions would take place in the upcoming months. Mr. Masri expressed hope that peace talks between Palestinians and Israelis would lead to a real political solution that guarantees the legitimate rights of Palestinians and contributes to economic growth.

 

 Mr. Masri alluded to the need to resolve the existing internal division between main Palestinian parties that exerts a high price politically and economically on the Palestinian cause, especially with the perturbations faced by the Arab region. Mr. Masri also stated that Palestinian national unity is the sole guarantee to consolidate the political and economic steadfastness of the Palestinian people and their rights and maintain the legitimacy of the Palestinian cause; and called for all political parties to put pressure on the reconciliation process as soon as possible. 

  

The CEO of PADICO HOLDING, Mr. Samir Hulileh, explained that the significant growth in profits for the first nine months of 2013 was the result of the improvement in the profit margins of a number of new projects, which reflects the company’s success in diversifying its investments and engaging in various investments with meaningful and positive impact. Mr. Hulileh expressed confidence in achieving more profits over the next few years.

  Mr. Hulileh also conducted that some of these projects are still in their establishment phase and ongoing establishment expenses are reflected in the income statement, these projects include Rabiyet Al-Quds project in Jerusalem, the Executive Club in Ramallah, Jericho Gate for Real Estate Investment, and the Solid Waste Recycling Projects. These projects limited the growth of operational profits for the first nine months of 2013 by 34%. It is expected, however, that the operating profits of these projects will be reflected significantly on the financial performance of PADICO HOLDING once they start operations. Hulileh affirmed that this substantial improvement in the company’s profits in the first half of 2013 is an achievement in line with existing company plans and projections. He expressed confidence that growth in revenues from new projects will contribute to further profits by the end of the year and this growth will continue steadily over the next three years.    Consolidated Revenues  Total consolidated revenues increased by 17.6% reaching USD 84.40 million for the first nine months of 2013 compared to USD 71.78 million for the same period of 2012. This increase can be mainly attributed to the growth in operating revenues of subsidiaries by 20% from USD 42.38 million for the first nine months of 2012 to USD 50.88 million for the first nine months of 2013. Rising operating revenues of Palestine Industrial Investment Company (PIIC) contributed to this growth, along with the new projects that started operations in 2011 and 2012, as previously mentioned.   

Another major contributor to the growth in total consolidated revenues is PADICO HOLDING’s share of associates’ results of operations which increased by 9.9% from USD 28.77 million for the first nine months of 2012 to USD 31.63 million for the same period of 2013. This mainly resulted from the increase in PALTEL Group’s net profit by 9.5% from JD 62.59 million for the first nine months of 2012 to JD 68.56 million for the first nine months of 2013.

  

In addition, gains from the financial assets portfolio and other revenues registered an increase by 200% from USD 0.63 million for the first nine months of 2012 to USD 1.89 million for the same period of 2013.

  

Consolidated Expenses

 

Consolidated operating expenses increased from USD 33.68 million for the first nine months of 2012 to USD 37.64 million for the same period in 2013, thereby increasing by 11.8% amounting to USD 3.96 million. This increase in operating expenses was accompanied by a greater increase in operating revenues during the same period, as mentioned above.

  

Consolidated general and administrative expenses increased by 1.8% from USD 10.96 million for the first nine months of 2012 to USD 11.16 million for the same period in 2013. This increase resulted mainly from the consolidation of the financial statements of NAKHEEL Palestine for Agricultural Investment and Palestine Tourism Investment Company (PTIC), as the G&A expenses of these two companies were not consolidated in the first nine months ended September 30, 2012. It is important to note that without the effect of the consolidation of the two aforementioned companies, the consolidated G&A expenses for PADICO HOLDING would have been reduced by 6.3% amounting to USD 0.69 million compared to the same period of 2012. This reflects the Company’s policy to control its administrative costs, as adopted by PADICO HOLDING’s Board of Directors, and its subsidiaries.

  

Consolidated finance costs increased by 6.6% from USD 7.14 million for the first nine months of 2012 to USD 7.61 million for the same period of 2013; this resulted from an increase in average total debt from USD 203.82 million for the first nine months of 2012 to USD 222.05 million for the first nine months of 2013. Included in this debt are USD 85 million bonds that were issued by PADICO HOLDING in the second half of 2011, as well as loans of subsidiaries including NAKHEEL Palestine and PTIC that were consolidated during this period. Despite the increase in average debt during the current period compared to the same period for 2012, it is important to note that the total debt balance was reduced by 2.9% compared to the end of the year 2012.

 

Financial Position

 

Total assets increased by 1.6% reaching USD 785.93 million at the end of September 2013 compared to USD 773.75 million at the end of the year 2012.

 

Equity attributable to equity holders of the parent company increased by USD 8.77 million from USD 398.49 million by the end of the year 2012 to USD 407.26 million by the end of the third quarter of 2013, recording an increase by 2.2%.

 

Total liabilities witnessed a slight increase of 0.1% from USD 277.93 million at the end of the year 2012 to USD 278.09 million at the end of the third quarter of 2013 with an amount of USD 0.16 million. Total debt, which comprises bonds, bank loans and credit facilities, constituted 79% of total liabilities, and reached USD 218.82 million by the end of September 2013. This reflects a reduction in bonds, loans and credit facilities by 2.9% amounting to USD 6.47 million compared to the end of the year 2012 when total debt reached USD 225.29 million. It is expected that the coming financial periods will witness a continuous decrease in debt levels for PADICO HOLDING and its subsidiaries.

  Main Recent Developments  Rabiyet A-Quds Project  

PADICO HOLDING finished the final touches on “Rabiyet Al-Quds” housing project in Jerusalem, which is implemented in Al-Sharafat area located in south of Jerusalem, the project consists of the construction of 22 residential buildings, and after obtaining the "construction line" for  the land at the beginning of this year,  the company is working on concluding the  technical studies, engineering plans and design of buildings, as well as infrastructure, streets and retaining walls for the project.

 

 It is expected to start selling apartments before the end of 2013, as the company has prepared flyers and promotional material for the project. It is presumed that Rabiyet Al- Quds project will impel profitability and cash returns to PADICO HOLDING during the coming periods.

  

Jericho Gate Project

 

PADICO HOLDING is implementing Jericho Gate Project in partnership with PALTEL Group and Palestine Real Estate Investment Company (PRICO). The project is the first of its kind in Palestine and includes the development of a variety of tourist and entertainment facilities on an area of 3,000 dunums in the southern entrance of Jericho. The company has completed the preliminary structural plans and is currently commissioning detailed structural plans, including roads and infrastructure. Preparatory work on the project is expected to start at the end of this year after obtaining official approval. The company is preparing a study on the socio-economic impact of the project on Jericho, additionally; a company was assigned to create a corporate brand and a marketing strategy for the project.

 

NAKHEEL Palestine

 PADICO HOLDING established Palestine Palm Trees Project in 2010 to create the largest “Madjoul” palm tree farm in Palestine on 3,000 dunums of land. In 2013, NAKHEEL Palestine planted more than 4,500 new trees, bringing the total number of palm trees to over 26,000. Production is anticipated to total more than 260 tons of dates in the current year. The company has signed deals to purchase dates from local farmers, accordingly, total production for this year is expected to exceed 600 tons. In 2013 the company succeeded in exporting dates to international markets including Russia, America and Indonesia, and the company was awarded two gold stars in the Tasting Contest in Brussels.      

 

 
 
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