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Orascom Development Holding AG

EQS-Adhoc: Orascom Development Holding AG: Enhanced operational performance across all destinations yet bottom line results were impacted by FX losses derived from its Egyptian largest subsidiary Orascom Hotels & Development (OHD) after the Central Ba...


EQS Group-Ad-hoc: Orascom Development Holding AG / Key word(s): Final
Results/Final Results
Orascom Development Holding AG: Enhanced operational performance across all
destinations yet bottom line results were impacted by FX losses derived from its
Egyptian largest subsidiary Orascom Hotels & Development (OHD) after the Central
Bank of Egypt's (CBE) decision to float the Egyptian pound (EGP)

11-Apr-2017 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
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Revenues reached CHF 237.4 million vs. CHF 306.1 million in FY 2015Significant
increase in Oman and UAE's hotels performanceA 101% increase in net real estate
sales to reach CHF 115.2 million vs. CHF 57.3 million in FY 2015Non-cash loss of
CHF 146.1 million impacting the Group's P&L post Central Bank of Egypt's
decision to float the Egyptian pound
 Altdorf, 11 April 2017 - During 2016, Orascom Development Holding (ODH) was
challenged by several periods of volatility and turbulences.  Results were
further impacted by the political and economic backdrop in Egypt especially
after the CBE's decision to float the EGP. Nonetheless, the Group was able to
enhance operational performance across all its destinations, especially in Oman
and Montenegro. In line with the strategic decision of being selective with land
sales moving forward, the Group did not pursue any land sales in 2016. Total
revenues of the Group reached CHF 237.4 million vs. CHF 306.1 million in FY
2015, which included CHF 65.2 million of land sales revenue.
 
The decision taken by the CBE in November 2016 to float the Egyptian pound in an
attempt to stabilize the economy has had a significant impact on a lot of
companies that operate in Egypt including the Group. The 102.7% appreciation of
the U.S. Dollar against the EGP from 8.88 to 18.0 resulted in substantial
revaluations of the debt held in US Dollars at the subsidiary and subsequently
negatively impacted the Groups P&L statement with a non-cash foreign exchange
loss of CHF 113.2 million.  On the other hand, total debt of the Egyptian
subsidiary on ODH's balance sheet decreased by 24% from CHF 414.7 million to CHF
315.2 million. It is important to note that the Group's hotels and real estate
income is mostly in foreign currency and therefore ODH borrows also in USD and
benefits from a lower interest rate. Results were further impacted by
impairments in the amount of CHF 32.9 million. Gross profit reached CHF 11.3
million and the net loss attributable to shareholders for the reporting period
amounted to CHF 196.4 million vs. a net loss of CHF 19.1 million in FY 2015.
 
On the positive side, Adjusted EBITDA for the period reached CHF 19.6 million.
When results are normalized for land sales in the comparative period the
Adjusted EBITDA would have reached only CHF 15.6 million in FY 2015.
 
New destination based structure
 
Throughout the first half of 2016, important positions within the organization
have been changed and filled on the executive and top management level.  After a
strategic review, it was decided that the Company's medium to long term strategy
will be streamlined in three areas: 1) Establishment of enhanced business
practices, 2) Strengthening of ODH's balance sheet, and 3) Repositioning and
enhancement of ODH's brand.
 
ODH started working on re-organizing the current segment structure to a
destination based structure. Each destination will become a separately managed
entity headed by its own CEO or General Manager, giving more authority and
responsibility to a destination with the goal of increased operational
efficiency and shorter decision-making processes. The model is already
implemented in Fayoum and Taba.  
 
ODH will continue to capitalize on the core asset of the Group; its land bank
and the value that it pertains through the following approaches; its own
developments, sub-development of certain projects that will add value to the
destination and also by providing the market with an independent fair value of
the undeveloped land bank by an external valuator.
 
The Group is also divesting some of its non-core assets and using the proceeds
to further reduce its outstanding debt. In parallel, ODH is examining the
revaluation of some of the mature assets that have been booked at cost so far
and thus are not representing their higher market values.

Gulf hotels are on the rise and hotels in El Gouna continue to be the best in
the market
 
The Gulf hotels in Oman and UAE witnessed a notable boost in their performance
recording a 57.5% increase in GOP growing from CHF 12.7 million to CHF 20.0
million in FY 2016. Their contribution to the total segment revenues continued
to increase to reach CHF 59.3 million out of a total segment revenue of CHF
120.2 million. Demand on our hotels in Salalah, Oman continued to be
acknowledged also in the latest ITB Berlin conference. We added 84 new rooms in
Al Fanar hotel during December 2016 bringing the total room count to 302.  The
Salalah destination has been recently branded to "Hawana Salalah" and its hotels
alone recorded a 28% increase in occupancies growing from 54% to 69% and a
166.7% increase in GOP. Similarly, in UAE, The Cove Rotana continued its
positive momentum with an increase in occupancy rate to reach 78% in FY 2016 vs.
70% in FY 2015.
 
In Egypt, the severe decline in the country's tourism sector continued to affect
the segment's performance.  Tourist arrivals fell by 41.9% in FY 2016 compared
to same period last year. El Gouna, Egypt however, with its strong positioning
and strong ties with leading European tour operators, continued to be the best
performer on the market and recorded a 15.4% GOP growth from FY 2015.
 
Demand started to pick up in Taba Heights, Egypt despite of the extended travel
bans on Sinai, due to aggressive marketing campaigns implemented in Jordan and
on the local Egyptian markets. In January 2017, 100 rooms in the El Wekala Golf
Resorts out of the hotels existing 215 rooms were reopened. To date, we have a
total of 818 operating rooms in Taba Heights out of 2,365 rooms compared to only
442 rooms operating in 2015. We are also planning to open more rooms in the
coming months.   
 
A 3-year lease agreement with FTI Group for 3 of the Group's hotels in Makadi
for a total of EUR 3.3 million was signed. In Fayoum, the Byoum Lakeside Hotel
was successfully opened in September 2016 with 50 rooms recording an occupancy
of 43% during FY 2016.
 
Overall, total hotel segment revenues decreased by only 3.2% to reach CHF 120.2
million in FY 2016 vs. to CHF 124.2 million in FY 2015 while the Adjusted EBITDA
recorded a 12.2% increase from CHF 18.1 million in FY 2015 to CHF 20.3 million
in FY 2016.
 
Net contracted sales increased by 101% to CHF 115.2 million with more
contributions coming from El Gouna, Sifah and Luštica Bay

The real estate sales target for the year was exceeded with total net sales
value reaching CHF 115.2 million vs. CHF 57.3 million in 2015. El Gouna remained
the Group's most important sales contributor recording a net sales value of CHF
80.6 million in FY 2016 vs. CHF 61.1 million in FY 2015 on the back of targeted
sales and marketing activities.
 
In Jebel Sifah, Oman, a new real estate project called "Golf Lake Residence" was
launched in November 2016 with a total inventory of CHF 19.3 million and
comprising 118 apartments overlooking the golf course.  ODH managed to sell more
than 80% of the total project by February 2017. Total net sales in Oman reached
CHF 16.2 million in FY 2016.
 
Interest in Luštica Bay, Montenegro has continued to flourish. Net sales reached
CHF 17.3 million in FY 2016 compared to CHF 9.1 million in FY 2015. The Group is
progressing with the construction of the new buildings comprising 88 apartments
with plans to be delivered during the first half of 2017. Further, the marina
superstructure was finalized.
 
Total real estate revenues reached CHF 65.4 million in FY 2016 vs. CHF 66.4
million in FY 2015. Total deferred revenue from real estate that is yet to be
recognized until 2019 reached CHF 133.3 million in FY 2016 compared to CHF 143.0
million in FY 2015.
 
Outlook for FY 2017
 
Real Estate
 
In El Gouna, ODH is building on the strong base and momentum of last year's
offerings and plans to launch new phases of Tawila and Fanadir Bay with an
expected inventory of USD 40.0 million. In Fayoum, new products with a total
inventory of CHF 3.4 million in Q2 2017 will be launched. In Oman, two new
launches in Sifah and Hawana Salalah are planned and we will continue with the
construction of the water park project in Hawana Salalah.
 
Hotels
 
In El Gouna, some renovation works across the hotels are planned to further
upgrade the destination's positioning. With demand recently picking up in Taba
Heights, opening additional rooms is being considered. In Montenegro,
construction of the 5-star Chedi Hotel in Luštica Bay is expected to start
during the first half of 2017, with plans to be opened in July 2018.  In UAE, we
finalized the construction of The Cove Rotana extension, adding 145 rooms to
open during 2017.
 
Corporate
 
The Group will continue with the implementation of the new destination based
structure and put emphasis on further efficiency improvements.  

Presentation
The associated financial statements and presentation can be found on Orascom
Developments' websitehttps://www.orascomdh.com/en/investor-relations/financial-r
eports.htmlunder the Investor Relations section. 
Telephone conference today at 4:00 pm CET/CLT (Zurich and Cairo Time)
Orascom Development invites you to its FY 2016 results conference call on 11
April 2017 at 4:00 pm CET/CLT (Zurich and Cairo Time). The call will include an
address from the Chairman Samih Sawiris, a presentation from the CEO Khaled
Bichara and the CFO Ashraf Nessim, followed by a Q&A session.  A registration is
not required.Conference password: 94028741International: +44 (0) 1452 555
566Switzerland Toll Free: 0800 828 006Switzerland Local Number: 0315 800
059Egypt Toll Free: 0800 000 0318UK Toll Free: 0800 694 0257US Toll Free: 1866
966 9439 
A replay of the conference call will be available for two weeks with the
following dial in details:Access Code: # 94028741International: +44 (0) 1452 55
00 00UK National: 08717000145US Toll Free: 1866 247 4222Available until 25 April
2017
About Orascom Development Holding AG

Orascom Development is a leading developer of fully integrated destinations that
include hotels, private villas and apartments, leisure facilities such as golf
courses, marinas and supporting infrastructure. Orascom Development's
diversified portfolio of destinations is spread over seven jurisdictions (Egypt,
UAE, Oman, Switzerland, Morocco, Montenegro and United Kingdom), with primary
focus on touristic destinations. The Group currently operates ten destinations;
five in Egypt (El Gouna, Taba Heights, Fayoum Makadi, and Harram City), The Cove
in the United Arab Emirates, Jebel Sifah and Hawana Salalah in Oman, Luštica Bay
in Montenegro and Andermatt in Switzerland. Orascom Development has a dual
listing, with a primary listing on the SIX Swiss Exchange and a secondary
listing on the EGX Egyptian Exchange.
 
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
 
Disclaimer & Cautionary Statement
 
The information contained in this e-mail, its attachment and in any link to our
website indicated herein is not for use within any country or jurisdiction or by
any persons where such use would constitute a violation of law. If this applies
to you, you are not authorized to access or use any such information. Certain
statements in this e-mail and the attached news release may be forward-looking
statements, including, but not limited to, statements that are predications of
or indicate future events, trends, plans or objectives. Forward-looking
statements include statements regarding our targeted profit improvement, return
on equity targets, expense reductions, pricing conditions, dividend policy and
underwriting claims improvements. Undue reliance should not be placed on such
statements because, by their nature, they are subject to known and unknown risks
and uncertainties and can be affected by other factors that could cause actual
results and Orascom Development Holding AG's plans and objectives to differ
materially from those expressed or implied in the forward-looking statements (or
from past results). Factors such as (i) general economic conditions and
competitive factors, particularly in our key markets; (ii) performance of
financial markets; (iii) levels of interest rates and currency exchange rates;
and (vii) changes in laws and regulations and in the policies of regulators may
have a direct bearing on Orascom Development Holding AG's results of operations
and on whether Orascom Development Holding AG will achieve its targets. Orascom
Development Holding AG undertakes no obligation to publicly update or revise any
of these forward-looking statements, whether to reflect new information, future
events or circumstances or otherwise. It should further be noted, that past
performance is not a guide to future performance. Please also note that interim
results are not necessarily indicative of the full-year results. Persons
requiring advice should consult an independent adviser.
 
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End of ad hoc announcement------------------------------------------------------

Language: English

Company:  Orascom Development Holding AG

          Gotthardstraße 12

          6460 Altdorf

          Switzerland

Phone:    +41 41 874 17 17

Fax:      +41 41 874 17 07

E-mail:ir@orascomdh.com

Internet: www.orascomdh.com

ISIN:     CH0038285679

Valor:    A0NJ37

Listed:   SIX Swiss Exchange



 

End of Announcement EQS Group News Service

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563953  11-Apr-2017 CET/CEST
 



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