Orascom Development Holding AG: Continues to Deliver Strong Results and Operational Growth Across its Business Segments Recording a Revenue Growth of 2.9% to reach CHF 244.4 million vs. CHF 237.4 million in FY 2016. A significant increase in Adjusted EBITDA to reach CHF 33.4 million vs. CHF 19.6 million.

Thursday, 05 April 2018

Orascom Development Holding AG / Key word(s): Final Results/Final Results

05-Apr-2018 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
The issuer is solely responsible for the content of this announcement.

Orascom Development Holding (ODH): Continues to Deliver Strong Results and Operational Growth Across its Business Segments Recording a Revenue Growth of 2.9% to reach CHF 244.4 million vs. CHF 237.4 million in FY 2016. A significant increase in Adjusted EBITDA to reach CHF 33.4 million vs. CHF 19.6 million. 9.5% increase in net real estate sales to reach CHF 126.2 million in FY 2017 vs. CHF 115.2 million in FY 2016, with more contribution coming from El Gouna, Hawana Salalah, Sifah and Luštica Bay. Revenues grew by 2.9% to reach CHF 244.4 million vs. CHF 237.4 million in FY 2016. Hotels GOP increased by 33.6% reaching CHF 48.5 million in FY 2017 vs. CHF 36.3 million in FY 2016. Adjusted EBITDA significantly increased by 70.4% to CHF 33.4 million vs. CHF 19.6 million in FY 2016. Net Losses for the period reduced to reach CHF 41.1 million vs. CHF 243.8 million. Ordinary General Meeting of Orascom Development Egypt (ODE), largest Egyptian Subsidiary of the Group, approved the sale of non-core assets; plans to repay c. CHF 56.0 million of debt, which will generate interest savings of c. CHF 33.3 million over the coming 6 years. ODE's Board of Directors, proposed a cash dividend of EGP 1.0 per share equivalent subject to ODE's AGM approval.

 
Altdorf, 5 April 2018 - The largest Egyptian subsidiary of the Group, Orascom Development Egypt (ODE), has reported a tremendous operational success with a 78.8% increase in revenues, in local currency, compared to FY 2016 accompanied by a significant increase in its profitability. However, this operational enhancement was not fully reflected in the Group's revenues when being translated into CHF due to the 50.0% EGP devaluation against the CHF. As a result, revenues have slightly increased by 2.9% to grow from CHF 237.4 million in FY 2016 to CHF 244.4 million in FY 2017.
 
Adjusted EBITDA for the period continued to grow since the beginning of the year and reported an increase of 70.4% to reach CHF 33.4 million vs. CHF 19.6 million in FY 2016. The net loss for the reporting period was significantly reduced on the back of the enhanced operational performance across all business segments in our destinations and amounted to CHF 41.1 million vs. a net loss of CHF 243.8 million in FY 2016.
 
Our hotels segment continued its operational success recording a 9.4% increase in revenues to CHF 131.5 million coupled with a 33.6% increase in GOP reaching CHF 48.5 million vs. CHF 36.3 million in FY 2016.
 
The tourism industry in Egypt has experienced a positive development throughout the year in terms of occupancy rates and investment appetite. The devaluation of the Egyptian Pound against the foreign currency had a positive effect on the sector and contributed strongly to the pick-up in occupancy and room rates. The total number of tourists that visited Egypt in 2017 grew by 66.0% to 8.3 million from 5.0 million in 2016 and the government is targeting 12.0 million tourists in 2018.

El Gouna, Egypt, continued its leading market position within the Egyptian tourism industry.  The new strategy has recorded a boost in the hotels operational efficiency levels and led to higher bottom line results.  Occupancy rates increased by 31.6% in FY 2017 to reach 75% vs. 57% in FY 2016 and TRevPAR has also increased by 8.7% to reach CHF 50 vs. CHF 46 in FY 2016.  El Gouna hotels' GOP surged by 67.6% to reach CHF 23.3 million in FY 2017 vs. CHF 13.9 million in FY 2016.
 
Taba Heights remains the most challenging destination for the group due to the travel bans on Sinai. Nonetheless, the measurements that were implemented, comprising strict cost-cutting measures, centralization of services and suspension of operations, limited the impact and helped us to curb the GOP losses from CHF 1.0 million in FY 2016 to CHF 0.6 million in FY 2017 and is expected to cash breakeven in 2018.
 
In Sahl Hashish, Citadel Azur Hotel occupancy rates increased by 38.6% to reach 61% in FY 2017 vs. 44% in FY 2016.  In November 2017 ODH signed a sale and lease back agreement for the hotel for USD 18.0 million over 6 years.
 
For our hotels in the Gulf, we capitalized on the high demand and proven quick return on investment, and added 262 rooms. In Oman, we added 120 rooms to Al Fanar and Rotana hotels in December 2017, bringing inventory at Hawana Salalah to 904 rooms. The new rooms ran an occupancy of 93% during their first week of operation.

In UAE, 142 rooms were annexed to The Cove Rotana in May 2017, bringing inventory at The Cove to 487 rooms. The new rooms recorded an occupancy of 70% in the first 7 months of their operation.

In general, our Gulf hotels continued their positive momentum since the beginning of the reporting year and recorded a 9.0% increase in GOP to reach CHF 21.8 million in FY 2017 vs. CHF 20.0 million in FY 2016. Their contribution to the total segment revenues continued to increase to reach CHF 64.7 million representing 49.2% out of a total segment revenue of CHF 131.5 million in FY 2017.

Hawana Salalah, Oman, the Group's rising destination, hotels, continued their positive performance, GOP increased by 19.5% going from CHF 8.7 million in FY 2016 to CHF 10.4 million in FY 2017 and occupancy of 72% in FY 2017 vs. 69% in FY 2016.

Similarly, at the Cove, Rotana, GOP increased from CHF 10.8 million in FY 2016 to CHF 11.0 million in FY 2017 and overall, occupancy for the operating rooms reached 72% in FY 2017.
 
On the Group level, Hotel revenues increased by 9.4% to CHF 131.5 million in FY 2017 vs. CHF 120.2 million in FY 2016 and Adjusted EBITDA doubled in value to reach CHF 40.8 million vs. CHF 20.3 million in FY 2016.
 
Net sales increased by 9.5% to CHF 126.2 million vs. CHF 115.2 million in FY 2016 and Real Estate revenues increased by 7.0% to CHF 70.1 million vs. CHF 65.5 million in FY 2016 on the back of increased unit deliveries in El Gouna and Luštica Bay.
 
El Gouna, Egypt continued its solid performance and managed to be our top contributor in terms of sales on the back of targeted sales and marketing activities in addition to the new product offerings that catered to our different clientele.  In October 2017, we launched "Abu Tig Hill", a new high-end real estate apartment project overlooking the marina with a total inventory of USD 22.0 million, which was completely sold out. Net sales figures for the year remained almost stable reaching CHF 79.1 million vs. CHF 80.6 million despite of the 50% devaluation of the EGP against the CHF.
 
In Hawana Salalah, Oman, net sales grew by 55 times to CHF 16.5 million in FY 2017 vs. CHF 0.3 million in FY 2016. The tremendous increase in sales is mainly driven by the great success of "Lagoon Project" that was launched in August 2017 with a total inventory of CHF 31.8 million offering 232 apartments.
 
In Jebel Sifah, Oman, we capitalized on the great success of the "Golf Lake Residence" real estate project that was launched in Q4 2016 and commenced, a second phase of the project in November 2017 with a total inventory of CHF 18.0 million. We successfully sold and reserved 93% of the total project since its launch. Net sales reached CHF 11.8 million compared to CHF 15.9 million in FY 2016. Total net sales from our destinations in Oman reached CHF 28.4 million, a 75.3% increase compared to CHF 16.2 million in FY 2016.
 
In Luštica Bay, Montenegro we are progressing ahead with construction of the town-homes and the villas with plans to be finalized early 2018.  We are also progressing ahead with the construction of the Chedi hotel and finalized the Marina superstructure with plans to be opened both by summer 2018. Net sales in Luštica Bay remained almost unchanged compared to last year and reached CHF 17.2 million vs. CHF 17.3 million in FY 2016.
 
During 2017 total real estate revenues increased by 7.0% to reach CHF 70.1 million in FY 2017 vs. CHF 65.5 million in FY 2016 on the back of increased unit deliveries especially in El Gouna and Luštica Bay. Total deferred revenue from real estate that is yet to be recognized until 2021 increased by 28.6% to reach CHF 171.4 million in FY 2017 vs. CHF 133.3 million in FY 2016. 
 
Increased activities in the different destinations with more destinations coming to life in 2018.
 
In El Gouna, following the great success of Phase I of G-space, we launched Phase II by end of December 2017 offering more private offices, meeting rooms and a large chill out area and all offices were rented out. We also finalized the construction of the Phase I expansion plan of Abydos Marina adding 10 new berths. In Hawana Salalah, we opened the Aqua Park in January 2018, the first Aqua Park in Oman. In addition, we established Wateera Rental Office to provide homeowners and visitors with high-end rental services at the destination. This in turn increased the occupancy of short and long-term rentals in Hawana Salalah. In Luštica Bay, over 1,000 sqm of marina retail shops are due for delivery in summer 2018.

Outlook for  FY 2018

Corporate
 
As part of the Group strategy to seek an optimal balance sheet structure, we successfully obtained the OGM approval of our Largest Egyptian Subsidiary "Orascom Development Egypt (ODE)" on the sale of non-core assets, which included Royal Azur, Club Azur and Makadi Gardens Hotels. The total enterprise value of the 3 hotels in addition to a land plot that we will sell in Makadi destination is c.CHF 49.0 million. ODE will only be selling its stake in each, which will result in total cash proceeds of CHF 27.4 million. The sale will also result in the deconsolidation of CHF 14.4 million of debt. We are also working on reducing the debt of the Egyptian subsidiary by c. CHF 56.0, which will generate savings of c. CHF 8.3 million in year one, and a total of c. CHF 33.3 million till 2024. We also received ODE's EGM approval on a 5:1 stock split, thus reducing its par value from EGP 5.0 per share to EGP 1.0 per share, to increase liquidity on the stock. The split is expected to be finalized in April 2018. Further, ODE's board of directors proposed a cash dividend of EGP 1.0 per share equivalent subject to ODE's AGM approval.

Real Estate

In El Gouna, we are capitalizing on the great success of our latest real estate launch in Q4 2017 called "Abu Tig Hills" which showed a huge demand from our clients and was completely sold out. That's why in January 2018 we launched Tawila phase III with inventory of USD 44.1 million and sales are positively progressing so far. Also, in April we are planning to launch a new real estate project with a total inventory of USD 80.0 million. In Makadi, we are planning to start an aggressive sales and marketing campaign to revive the destination and push back sales with plans to launch a new project in Q2 2018. Finally, for Egypt, we are holding several discussions to acquire a land plot in Cairo and the North Coast; marking our first entrance into the first and second homes market. In Oman, construction on the Golf Lake project in Jebel Sifah commenced in 2017, with plans to deliver Phase I of the project in Q4 2018. In Montenegro, we are progressing with the construction of "E" and "B" building clusters comprising 68 apartments due for delivery in 2018 and early 2019; and over 1,000 sqm of marina retail due for delivery in summer 2018.

Hotels
 
In El Gouna, we are continuing with the renovation works across some of our hotels to further upgrade the destination's positioning and we are studying the plans of adding more rooms in El Gouna in 2018. We are also planning to add more rooms and a new hotel in Hawana Salalah, Oman. In Montenegro, we are progressing ahead with the construction of the Chedi hotel and the Marina with plans to be open both by summer 2018.

Contact for Investors:                                                                                                       
Sara El Gawahergy                                                             
Head of Investor Relations                                                                               
Tel: +20 224 61 89 61
Tel: +41 418 74 17 11                                                                                        
Email: ir@orascomdh.com
 
Contact for Media Relations:
Philippe Blangey
Partner
Dynamics Group AG
Tel: +41 432 68 32 35
Email: prb@dynamicsgroup.ch

 


End of ad hoc announcement