Residences Dar Saada S A : H1 2020 financial communication

Half-Year Financial Communications

Consolidated and social accounts

As of June 30, 2020

The Board of Directors met on the 29th of September 2020 under the chairmanship of Mr. Hicham BERRADA SOUNNI to review the activity and approve

the consolidated and non consolidated financial statements on June 30th, 2020.

Half Year performance was significantly impacted by the effects of the health crisis and the decreed lockdown.

The Covid-19 pandemic led to a general lockdown implemented by the Moroccan authorities for three months. The activity of Résidences Dar Saada Group was heavily impacted by both direct and indirect consequences linked to the slowdown of the national economic activity. While maintaining a sound financial structure, the group recorded a significant drop in its performance metrics of the first half of the year.

Consolidated Accounts at the end of June 2020

PRESOLD UNITS	SECURED	CONSOLIDATED	NET INCOME
	TURNOVER	TURNOVER
870 units	MAD 1,2 Billion	MAD 473 million	MAD -36 million

PRESALES WIDELY IMPACTED BY THE HEALTH ISSUE

The applied lockdown by the government and the lack of visibility regarding the end of the health issue harmed the decision-making process linked to housing acquisitions by potential buyers. Consequently, the presales level of Résidences Dar Saada Group significantly dropped during the second quarter thus impacting the performances of the first half of the year. Presales at the end of June reached 870 units compared to 2502 units in the first half of the previous year, a decrease of around 65%.

However, we have noticed a presales recovery after the end of the lockdown reaching its usual pace after the sacrifice feast. This fact gives comfort regarding the industry recovery and the deep trust in our products, especially that we have registered very few cancellations during this period. The secured turnover remains around MAD 1,2 Billion at the end of June, compared to MAD 1,3 Billion at the end of 2019.

DOWNWARD ACTIVITY DUE TO DELAYED COMPLETIONS AND LOWER SALES DURING THE LOCKDOWN PERIOD.

The sanitary crisis and the applied lockdown caused the shutdown of almost all our production sites. The tranches that should have been completed by the end of the first semester were postponed, leading to a delivery delay of reserved units and a shortfall in terms of turnover and cash collection.

The general lockdown resulted in a shutdown of various activities linked to our industry such as notaries, administrations … making a huge number of customers unable to complete the acquisition of reserved units.

Consequently, the group's turnover fell from MAD 616 M during the first semester of 2019 to MAD 470 M at the end of the first semester of 2020, a decrease of almost 24%. This performance is achieved due to the delivery of 900 units during the first half of 2020 compared to 1 320 units during the same period of 2019.

Despite the decline in revenues, the group showed commitment in terms of preserving jobs, paying suppliers and lenders. However, the level of activity during the first half of the year did not cover the costs incurred, thus generating an operating loss of MAD 3 M and a net loss of MAD 36 M.

RECEIVABLESGEARING*

6,9 Month of the turnover	40%
	*Net Debt/ (Equity+ Net Debt)

PRESALES

2 502

870

June 2019

June 2020

PRODUCTION (IN M MAD)

307

194

June 2019

June 2020

TURNOVER (IN M MAD)

616

473

June 2019

June 2020

A SOUND FINANCIAL BASIS THROUGH EFFECTIVE MANAGEMENT OF THE BALANCE SHEET AND GOOD CONTROL OF WORKING CAPITAL AND DEBT.

Despite a decline in the activity level due to the health crisis, Résidences Dar Saada Group is still in good financial health thanks to a better management of the balance sheet. The objective is to maintain an optimal cash generation in this difficult context which could be achieved through debt control, stabilization of investment, and a maintained policy of fast recovery of receivables.

Land reserve : The company has a high-quality land reserve of approximately 1,114 ha, 43% of which is located in the Casa-Rabat region. The current land reserve makes it possible to ensure the development of projects in the short and medium terms.

Receivables : Despite the general lockdown that impacted our collection policy, receivables remain under control around MAD 836 M at the end of June 2020, which represents 6.9 months of annual turnover

Finished products : We have noticed a significant drop in our inventory thanks to the policy of sales orientation towards finished units we applied from 2018. The inventory dropped from 6 932 units at the end of 2018 to 4 626 at the end of 2019 and finally reached 3 726 units at the end of this semester.

DEVELOPMENT PLAN ADJUSTMENTS TO DEAL WITH THE HEALTH CRISIS

The current health crisis and the general applied lockdown had a significant impact on the group's performance. Indeed, the shut down of almost all our production sites causing several completion delays, the freezing activity of our partners, and a drop in customers' visits to our sales points are the main causes of this performance. While maintaining great confidence regarding prospects, the group wants to draw the attention of its shareholders on the fact that the current health situation will have a significant impact on its performance during the current year. Meanwhile, this highlight should not generate any significant uncertainty related to business continuity.

To deal with the current situation, we have adopted new priorities :

Suspension of new land acquisition for better control of the working capital

Maintaining the sales policy of finished products inventory

Great focus on the completion of projects under construction, regardless of the segment, and development of projects with a high presale rate

These measures are intended to limit the negative effects of the crisis on the performance and the financial health of the group, and to maintain an optimal level of cash generation to ensure a promising future.

Le rapport financier semestriel est disponible sur le site : https://www.espacessaada.com/institutionnel.php/fr/publications-financieres

Pour tout complément d'information, prière de contacter la direction relations institutionnelles sur l'adresse mail : [e-mail]

Half-Year Financial Communications

Consolidated and social accounts

As of June 30, 2020

LAND RESERVE BY REGION

North Region	Casablanca - Rabat
Region
21%
43%

South region

32%

Subsaharan Africa

4%

			NET DEBT
2 992	2 946
74			67
188			188
600			600
2 131			2 092

December 2019

June 2020

Rent (IFRS 16)

Bond

Securitization

Bank Debts

FINISHED PRODUCTS INVENTORY

4 626

3 726

December 2019

June 2020

Half-Year Financial Communications

Consolidated and social accounts

As of June 30, 2020

NON CONSOLIDATED ACCOUNTS

In dirhams

In dirhams

ASSETS

Half Year 2020

Previous Fiscal Year

Equity and Liabilities

Half yearr 2020

Previous Fiscal Year

Depreciation

Gross

and provisions

Net

Net

NON-VALUED FIXED ASSETS (A)

EQUITY

. Preliminary expenses

. Share Capital

1.310.442.500,00

1.310.442.500,00

. Expenses to be split

. Less: shareholders, subscribed capital not called (1)

. Bond repayment premiums

. Called- up capital,

INTANGIBLE ASSETS (B)

. Paid-up capital

. Fixed assets in Research and Development

. Share premium, merger, contribution

1.139.413.865,28

1.139.413.865,28

D

. Patents, trademarks, rights, and similar securities

D

. Commercial fund

E

E. Revaluation Surplus

X

. Other intangible assets

X. Legal reserve

131.044.250,00

130.258.304,39

I

I

SF

TANGIBLE ASSETS (C)

SF. Other reserves

404.614.776,30

404.614.776,30

T

. Land

E

. Retained Earnings

1.494.827.833,47

1.244.264.388,32

E

. Construction

U

S

L. Net income pending allocation (2)

S

. Technical Installation, equipemtn and tools

A

A

V. Net income

137.051.506,28

251.349.390,76

. Transport equipment

TOTAL SHAREHOLDERS' EQUITY (A)

4.617.394.731,33

4.480.343.225,05

. Furniture, office equipment and amenities

. Other tangible assets

CAPITAL AND RESERVES, LOANS AND SIMILAR LIABILITIES (B)

. Investment grants

. Tangible assets in progress

FINANCIAL ASSETS (D)

. Regulated provisions

. Fixed loans

FINANCIAL DEBTS (C)

1.853.061.183,76

1.856.117.774,27

. Other financial claims

. Bond borrowings

187.500.000,00

187.500.000,00

. Equity Securities

. Other financial debts

1.665.561.183,76

1.668.617.774,27

. Other fixed assets

LONG-TERM PROVISIONS FOR RISK AND EXPENSES (D)

FOREIGN EXCHANGE TRANSLATION - ASSETS (E)

. Risk provisions

. Decrease in fixed receivables

. Expense provisions

. Increase in financial debts

TOTAL I (A + B + C + D + E)

CURRENCY TRANSLATION - EQUITY (E)

T

STOCKS (F)

T. Increase in long-term receivables

N

. Goods

N

E

E. Decrease in financial debts

. Materials and supplies, consumables

R

R

TOTAL I ( A + B + C + D + E )

6.470.455.915,09

6.336.460.999,32

S

R

. Products under production

RE

U

. Intermediary and residual products

UI

CURRENT LIABILITIES (F)

1.218.627.320,63

1.101.608.804,84

C

C

T. Suppliers and accounts payable

540.997.417,42

557.665.772,19

. Finished products

S

I

L. Creditor clients, advances and down payments

125.634.566,35

110.352.696,04

TRADING ASSETS RECEIVABLES (G)

T

. Suppliers, debtors, advances and down payments

I

9.735.104,28

6.955.971,98

E

B

. Staff

S

A

. Customers and related accounts

7.125.684,83

2.525.962,54

S

I. Social Organisation

A

. Staff

L

. State

349.899.101,26

272.281.687,03

. State

. Partner accounts

10.668.391,41

10.668.391,41

. Associate accounts

. Other creditors

110.830.459,52

88.675.194,48

. Other debtors

. Regularization accounts - Liabilities

63.736.595,56

52.483.129,17

Y

. Accruals and prepayments

Y

OTHER PROVISIONS FOR RISK AND EXPENSES (G)

509.914,56

413.000,00

INVESTMENT SECURITIES (H)

R

R

U

CURRENCY TRANSLATION - ASSETS (I)

U

CURRENCY TRANSLATION - LIABILITIES (ELEM. CIRCUL.) (H)

S

. Current elements

S

A

A

TOTAL II ( F + G + H )

1.219.137.235,19

1.102.021.804,84

E

TOTAL II (F+G+H+I)

E

TREASURY - LIABILITIES

R

R

T

TREASURY - ASSETS

T. Discount credit

. Checks and cash values

. Short term loans

365.000.000,00

355.000.000,00

.Banks,Corporatetreasury,andpostofficecheckaccounts

. Banks (accounts payable)

43.751.383,97

165.838.983,04

. Cash

TOTAL III

TOTAL III

408.751.383,97

520.838.983,04

OVERALL TOTAL I + II + III

8.098.344.534,25

7.959.321.787,20

OVERALL TOTAL (I + II + III)

In dirhams

PROFIT & LOSS STATEMENT

OPERATIONS

Half year

Previous

Allocated

On the previous

Total

Half Year

for period 1

fiscal year 2

3 = 1 + 2

4

• OPERATING REVENUES
  Sales of goods

Sale of good and services produced

Turnover

Change in stocks of products (1)

Fixed assets manufactured by the company for itself

General operating grants

Other Operating Revenue

Operating write-backs: Transfer of expenses

II TOTAL I

OPERATING EXPENSES

Cost of goods sold (2)

Purchases consumed of materials and supplies (2)

Other external costs

Taxes and duties

Staff costs

Other operating expenses

Operating Provisions

III TOTAL II

IV OPERATING INCOME (I-II)

FINANCIAL REVENUES

Income from equity securities and other investment

Exchange Gains

Interests and other financial income

Financial write-backs: expenses' transfer

V TOTAL IV

FINANCIAL EXPENSES

Interest Expenses

Foreign exchange loss

Other financial expenses

Financial depreciation

VI TOTAL V

VII FINANCIAL INCOME (IV-V)

VIII CURRENT INCOME (III+ VI)

NON-CURRENT INCOME

Income from sales of fixed assets

Balance subsidies

Times on capital grants

Other long-term income

Extraordinary write-backs - expenses transfer

IX TOTAL VIII

NON-CURRENT EXPENSES

Net amortization of assets sold

Granted Subsidies

Other non-current expenses

Non-current depreciation, amortization and provision

X TOTAL IX

XI NON CURRENT INCOME (VIII-IX)

XII INCOME BEFORE TAXES (VII+X)

XIII INCOME TAXES

XIV NET INCOME

XV TOTAL REVENUE (I+IV+VII)

XVI TOTAL EXPENSES (II+V+IX+XII)

NET INCOME (Total Income - Total Expenses)

Half-Year Financial Communications

Consolidated and social accounts

As of June 30, 2020

CONSOLIDATED ACCOUNTS (IFRS)

FINANCIAL POSITION STATEMENTS

			in K MAD
	Assets	30/06/20	31/12/19
	Goodwill
	Intangible Assets	7.152	7.518
	Tangible Assets	87.763	95.586
	Investment Property
	Long term loan
	Shares in net assets of equity affiliates
	Available-for-sale securities	50	50
	Other financial assets	4.133	4.164
	Total Financial Assets	4.183	4.214
	Deferred tax assets	30.640	31.928
	Total Non-Current Assets	129.737	139.246
	Inventories and net outstanding	4.285.718	4.556.833
	Net account receivables	835.528	895.447
	Other third parties	3.281.441	2.926.620
	Receivables on disposals of short-term assets
	Short term debt
	Cash and cash equivalents	321.464	421.082
	Total Current Assets	8.724.151	8.799.983
	Non current available-for-sale assets
	Total Assets	8.853.888	8.939.229

			in K MAD
	Equity and Liabilities	30/06/20	31/12/19
	Capital	1.310.443	1.310.443
	Issue and merger premiums	1.107.212	1.107.212
	Reserves	1.971.482	1.666.941
	Reserves related to the change in fair value of financial instruments
	Reserves related to employee benefits
	Net Income of the year	(36.102)	304.208
	Currency translation
	EQUITY GROUP SHARE	4.353.035	4.388.803
	Minority reserves	114	132
	Minority income	(9)	(13)
	MINORITY SHAREHOLDERS' EQUITY	105	118
	EQUITY	4.353.140	4.388.921
	Long term perpetual subordinated notes
	Convertible bonds
	Other long-term debt	2.194.267	2.033.148
	Indebtedness linked to long-term financing leases	55.182	63.477
	Deferred tax liabilities	9.446	8.729
	Provisions for non-current liabilities and charges	5	8
	TOTAL NON-CURRENT LIABILITIES	2.258.901	2.105.362
	Suppliers	566.658	590.923
	Third parties and corporate tax	656.724	536.692
	Provisions for current liabilities and charges	531	440
	Short-term financial debts (incl. finance lease)	483.593	678.435
	Banks	534.342	638.455
	TOTAL CURRENT LIABILITIES	2.241.847	2.444.945
	Liabilities linked to non-current assets available for sale
	TOTAL LIABILITIES	8.853.888	8.939.229

COMPREHENSIVE INCOME STATEMENT

					in K MAD
	Comptes	30/06/20	30/06/19
	Turnover		472.647		616.443
	Other income from operations		(324.394)		(260.842)
	REVENUES FROM ORDINARY ACTIVITIES		148.253		355.602
	Purchases used and external charges		(111.535)		(168.126)
	Staff costs		(35.265)		(37.125)
	Taxes and duties		(2.700)		(5.610)
	Other operating income and expenses		3.201		4.709
	Net depreciation, amortisation and provisions		(5.282)		(5.522)
	EXPENSES FROM ORDINARY ACTIVITIES		(151.582)		(211.674)
	CURRENT OPERATING INCOME		(3.329)		143.928
	Disposals of assets
	Restructuring costs
	Disposals of subsidiaries and equity investments
	Negative Goodwill
	Other non-current operating income & expenses		(4.009)		(4.032)
	OPERATING INCOME		(7.338)		139.895
	Financial result		(23.683)		(26.478)
	Share in net income of investments accounted for using the equity method
	PRE-TAX INCOME FROM CONSOLIDATED COMPANIES		(31.021)		113.417
	Corporate tax		(3.175)		(30.835)
	Deferred tax		(1.915)		1.130
	NET INCOME FROM CONSOLIDATED COMPANIES		(36.110)		83.712
	Share in net income/loss of equity affiliates
	NET INCOME FROM CONTINUED OPERATIONS		(36.110)		83.712
	Net result from discontinued operations
	THE CONSOLIDATED GROUP'S EARNINGS		(36.110)		83.712
	Minority interests		(9)		(8)
	NET INCOME GROUP SHARE		(36.102)		83.720
	INCOME OF THE CONSOLIDATED GROUP		(36.110)		83.712
	Other comprehensive income
	Foreign Currency Translation
	Reassessment of hedging derivatives
	Available-for-sale financial assets' reassessment
	Reassessment of fixed assets
	Actuarial gap on defined benefit plans
	After-Tax comprehensive income share of equity affiliates
	Tax effect
	Total other comprehensive income (after tax)
	Net Income		(36.110)		83.712
	attributable to the Group		(36.102)		83.720
	attributable to minority interests		(9)		(8)