Munib Rashid Masri: The excellent rise in profits in 2013 is an indicator of the pertinent investment strategies of the board of directors, promising more results in the upcoming period
Samir Hulileh: High Profits are due to improved financial performance for a number of PADICO HOLDING's projects and subsidiaries
Ramallah - PADICO HOLDING has achieved significant rise in profits for the year 2013, as consolidated net profit reached USD 26.14 million, compared to USD 18.32 million for the year 2012, recording an increase of 42.7%, while operating profits (EBIT) rose by 22.7% to reach USD 37.14 million for the year 2013, compared to USD 30.26 million for the year 2012.
Mr. Munib Rashid Masri, Chairman of the Board of Directors of PADICO HOLDING, expressed his contentment with the excellent financial performance for the company in 2013, while praising the wise investment strategies of the board of directors and the enormous efforts of the executive management.
Mr. Masri also referred to the continuous and mounting growth in profits from one year to the next, which is an indicator to the success of the company's investment strategies, as he predicted further positive financial outcomes throughout the upcoming years.
Mr. Masri pointed out that this achievement coincides with PADICO HOLDING's 20th anniversary, as it succeeded throughout its lifetime to lead the investment market in the Palestinian economy while working on improving the role of the private sector as a key partner in the process of construction and development.
Going on to talk about the political situation, Mr. Masri expressed his hopes that 2014 will be the year to end the division in Palestine and restore the Palestinian national unity, as he praised recent gestures and attempts by both Fateh and Hamas, while expressing optimism that the recent rounds of meetings between the two parties can resultin signing a reconciliation agreement in order to move towards the actual implementation phase, as the Palestinian cause is the biggest loser from the continuation of this internal division. He also pointed out that the Palestinian people are looking forward to an end to this division in order to reach an agreement and start setting up for the upcoming elections.
While commenting on Kerry's economic plan, Mr. Masri assured that he welcomes any effort that aims to set the grounds for economic growth and for job creation, but he stressed that this plan must be accompanied by serious political advancements and further pressure on Israel to stop it from hindering the negotiations process
Mr. Samir Hulileh, CEO of PADICO HOLDING, said that this rise in profits came as a result of improved financial performance for a number of PADICO HOLDING'S projects and subsidiaries throughout 2013, especially through the operational profits of new projects that provided the consolidated revenue with new sources of profitable margins, in addition to the expenditure control measures approved by PADICO HOLDING board of directors and its subsidiaries. The results of this policy were reflected clearly on operating, administrative and general expenses in 2013.
Mr. Hulileh also added that this growth in PADICO HOLDING operational profits were also reflected on the performance of its stock shares by the end of 2013, as they closed at USD 1.35, showing 50% increase in value throughout 2013 in comparison to closure prices of 2012 (USD 0.90). Mr. Hulileh pointed out that the company's shares received high demand by investors, both individuals and corporations, especially in the last quarter of 2013, after the release of the third quarterly financial statement of the year.
A number of relatively significant purchases were made on PADICO HOLDING stock, most substantial of which was PALTEL Group's purchase of a major share of PADICO HOLDING, Which strengthened PADICO HOLDING's stock share price and gave further assurance and trust to investors and shareholders while reflecting positively on the Palestine Exchange (PEX) in general, and PADICO HOLDING Group companies in particular. The value of shares continued rising throughout December and February in the current year to reach USD 1.75 - 1.80 per share due to the high demand from local and foreign investors, as turnover rate per share in 2013 reached 35.1%, in comparison to 12.37% in 2012, while annual turnover per share reached 70.72% in the beginning of 2014 up till the middle of February.
Mr. Hulileh added that the significant increase in profits is due to the excellent performance for a number of PADICO HOLDING's companies, most significant of which are PALTEL Group and Palestine Industrial Investment Co. (PIIC). He also predicted that the upcoming two years will witness more profits due to the increase in the revenues of new projects like Rabiyet Al-Quds Project, Jericho Gate Project, NAKHEEL Palestine and Executive Club Project. Mr. Hulileh also pointed out that High Profits, especially the excellent financial results in 2013, are due to the investment plans and strategies adopted by the board of directors, which are starting to show more growth a year after a year, which bodes further increase in profits in the upcoming few years. It's also an indicator of the appropriate and wise company strategy of investing in a number of versatile economic sectors which makes it a more attractive investment destination for local and foreign investors.
Total consolidated revenues registered a growth rate of 10.7% in 2013, recording USD 112.70 million for 2013 compared to USD 101.81 million for 2012. This increase can be mainly attributed to the growth in operating revenues of subsidiaries by 9.9% from USD 61.62 million for 2012 to USD 67.72 million for 2013. Rising operating revenues of Palestine Industrial Investment company (PIIC) and Jerusalem Development and Investment Company (PADICO TOURISM) contributed to this growth, along with the new projects that started operations in 2011 and 2012 like Nakheel Palestine.
Another major contributor to the growth in total consolidated revenues is PADICO HOLDING's share of associates' results of operations which increased by 11.2% from USD 38.26 million in 2012 to USD 42.53 million in 2013. This mainly resulted from the increase in PALTEL Group's net profit by 11.8% from JD 82.13 million in 2012 to JD 91.83 million in 2013.
Additionally, the improved performance of financial markets in 2013 resulted in increasing gains from the financial assets portfolio, recording USD 2.32 million for 2013 compared to USD 0.1 million for201.
Consolidated operating expenses increased from USD 47.53 million for 2012 to USD 51.35 million for the same period in 2013, thereby increasing by 8.1% amounting to USD 3.82 million. This increase in operating expenses was in conjunction with greater increase in operating revenues with a rate of 9.9% during the same period, indicating increased efficiency and production capacity for many subsidiaries.
Coinciding, PADICO HOLDING's policy to control its administrative costs which was adopted by PADICO HOLDING's Board of Directors showed its results, reducing G&A expenses from USD 16.21 million for 2012 to USD 15.83 million for 2013 with a declining rate of 2.3%.
Also, financial costs witnessed a slight decrease from USD 10.23 million for 2012 to USD 10.22 million 2013, even though average total debt increased from USD 215.65 million in 2012 to reach USD 225.93 million in 2013.
Total assets increased by 4.5% reaching USD 808.23 million by the end of 2013 compared to USD 773.75 million by the end of 2012.
Equity attributable to equity holders of the parent company increased by USD 21.25 million from USD 398.49 million by the end of 2012 to USD 419.74 million by the end of 2013, recording an increase by 5.3%.
Total liabilities increased by 3.2% from USD 277.93 million by the end of 2012 to USD 286.79 million by the end of 2013 with an amount of USD 8.86 million. Total debt, which comprises bonds, bank loans and credit facilities, constituted 79% of total liabilities, and reached USD 226.58 million by the end of 2013 compared to USD 225.29 million by the end of 2012 recording a slight increase of USD 1.29 million with a rate of 0.6%, these debts include the bonds that was issued by PADICO HOLDING in 2011 with a nominal value of USD 85 million.
Main Recent Developments for Projects
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 detailed structural plan for the project including roads and infrastructure, which includes water, electricity and sanitation grids. The company also prepared a detailed study on the socio-economic impact of the project on local communities in Jericho, as it also finished working on the corporate brand for the company. By the beginning of this month in 2014, work has started on implementing infrastructure work for the first phase of the project which includes the main entrance, while also preparing the site to host a number of activities and events throughout this year.
Rabiyet Al-Quds Project
"Rabiyet Al-Quds" housing project is being implemented by PADICO HOLDING in South of Jerusalem and consists of the construction of 22 residential buildings. PADICO HOLDING finished in 2013 working on engineering plans, technical studies, and design of buildings as well as infrastructure, streets and retaining walls, all in addition to the launching plan for the project. Selling apartments for 10 residential buildings from the project will be announced very soon during the first quarter of 2014, as actual construction work will start before the end of 2014. It is presumed that Rabiyet Al- Quds project will impel profitability and cash returns to PADICO HOLDING during the coming periods.
The year 2013 was rich in achievements for NAKHEEL Palestine project, which is the largest "Madjoul" palm tree farm in Palestine established by PADICO HOLDING in 2010. NAKHEEL Palestine planted more than 4,500 new trees, bringing the total number of palm trees to over 23,000. Total production and sales mounted up to 550 tons of dates including production from the company's lands in addition to purchases from local farmers. The company has also succeeded in finding new markets for its products as it exported the first shipment of "Madjoul" dates to Norway in 2013, as it also succeeded earlier in 2013 in exporting dates to Russia, America and Indonesia. The company also won two golden medals in a tasting competition in Brussels, as it was also present in international exhibitions and conferences ending with the first Dutch-Palestinian Cooperation Forum which was held in Palestine.
Executive Club Project
PADICO HOLDING will be inaugurating the Executive Club Project during next month, this project is the first of its kind in Palestine and is implemented by Jerusalem Development and Investment Co. Ltd. (JEDICO),PADICO HOLDING's investment arm in the tourism sector. The project is located on 2,600 square meters in the Tal Al Safa neighborhood of Ramallah, and with a total investment value of over USD 6 million. Additionally, it includes three restaurants of various styles, an indoor swimming pool with outdoor gardens, support services, a multipurpose hall, a spa, and a gym.
Palestine Power Generation Co. PLC (PPGC)
Palestine Power Generation Co. PLC, which is one of PADICO HOLDINGassociates, has signed a deal in early 2014 to supply Gas through Israel. The total value of the deal summed up at USD 1.2 billion over 20 years. This deal is considered a huge achievement for the Palestinian side as it allows Palestinians to have more control over electricity generation in Palestine. The company is currently preparing to sign the final necessary agreements with the Palestinian Authority, as the power station is supposed to commence its operations by the end of 2016. PADICO HOLDING share of PPGC is 20%.
Action Plan for the Upcoming Period
Mr. Hulileh pointed out that the action plan for the upcoming period will be based on maintaining investments and improving them, as well as completing ongoing projects and improving the performance and profitability of standing projects. The company will also keep implementing its plan to reduce administrative and administrative and general expenses and reduce the indebtedness of the company throughout the upcoming few years.