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Orascom Development Holding AG

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EQS-Ad-hoc News vom 05.04.2019

Orascom Development Holding AG: Orascom Development Holding: Breaks its net real estate sales record to CHF 200.6 million, increases revenues by 39.2% to CHF 340.3 million and more than doubles its Adj. EBITDA to CHF 70.2 million.

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

05-Apr-2019 / 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: Breaks its net real estate sales record to CHF 200.6 million, increases revenues by 39.2% to CHF 340.3 million and more than doubles its Adj. EBITDA to CHF 70.2 million.

Group Highlights

- Record net real estate sales of CHF 200.6 million in FY 2018 (excluding O West) vs. CHF 126.2 million in FY 2017.

- Real Estate revenues recorded an 80.6% increase to CHF 126.6 million in FY 2018.

- Hotels revenues increased by 19.0% to CHF 156.5 million accompanied by a 32.1% increase in GOP to CHF 59.2 million.

- Town management revenues increased by 33.7% to CHF 36.1 million in FY 2018.

- Total revenue growth of 39.2% to CHF 340.3 million.

- Adj. EBITDA more than doubled reaching CHF 70.2 million in FY 2018 corresponding to a solid operational margin of 20.6%.

- Net losses decreased by 9.2% to CHF 37.3 million in FY 2018 despite one-off historical legacy items (CHF 16.5 million).

- Net debt to Adj. EBITDA reached 3.3 times in 2018 coming down from 14.7 times in 2016.

- Excellent start in O West (first home market) with sales of CHF 126.3 million during the soft launch phase, which will be recognized in Q1 2019 results.

Altdorf, 5 April 2019 - Orascom Development Holding AG ends the year on solid grounds with strong operational and financial results across all business segments. Our operations continued to improve during FY 2018, reflecting our focus on profitable growth and margins expansion with revenues increasing by 39.2% to CHF 340.3 million in FY 2018 vs. CHF 244.4 million in FY 2017. Gross Profit increased by 72.8% to CHF 108.7 million and a margin of 31.9% and Adj. EBITDA more than doubled to CHF 70.2 million with a margin of 20.6% vs. CHF 33.4 million and a margin of 13.7% in FY 2017. Net Debt to Adj. EBITDA reached 3.3x in FY 2018, down from 8.2x in FY 2017 and 14.7x in FY 2016.

The net loss was reduced to CHF 37.3 million in FY 2018 vs. CHF 41.1 million in FY 2017 despite losses originated from one-time historical legacy items in the amount of CHF 16.5 million resulted from FX losses when we sold Citadel Azur Hotel in May 2018. The cash flow from operations reached CHF 56.2 million, an 87.3% increase over the same period last year. The solid operational performance and the debt restructure in Egypt and Oman, which will lead to reduced financing costs in the future, are a strong testament that the Group is on its way back to profitability.

Group Hotels:
Hotels continued to record impressive y-o-y growth in 2018, The disciplined execution of our strategy to improve products and services coupled with focused yielding to maximize revenue opportunities impacted our hotels positively including the newly added rooms across all our destinations. Revenues increased by 19.0% to CHF 156.5 million, accompanied by a 32.1% increase in GOP to CHF 59.2 million in FY 2018 vs. CHF 44.8 million in FY 2017. The segment's Adj. EBITDA continued its uptrend and increased by 34.8% to CHF 55.0 million vs. CHF 40.8 million in FY 2017.

Group Real Estate:
Real estate segment continued its outstanding operational and financial results across all our destinations and managed to exceed our real estate target of the year. Net sales increased by 59% to CHF 200.6 million in FY 2018 vs. CHF 126.2 million in FY 2017. Growth in sales was driven by the increase in pricing and unit sales across all our destinations, 839 units were contracted representing a growth of 60% in 2018. Revenues increased by 80.6% to CHF 126.6 million vs. CHF 70.1 million in FY 2017 on the back of increased deliveries in El Gouna, Montenegro, Hawana Salalah and Jebal Sifah. Total deferred revenue plus deferred interest income from real estate that is yet to be recognized till 2021 reached CHF 235.7 million and total real estate portfolio receivable increased by 42.0% to CHF 293.0 million, both figures exclude the new sales incurred for O West which will show in Q1 2019 results.

Group Town Management:
Town management segment continued to grow as a result of the successful restructuring reforms that was implemented thought out the year. We focused on streamlining operations, eliminating waste, improving profitability and quality of service in addition to increasing the all year-round activities and events in Gouna and Oman. Additionally, we opened the Luštica Bay Marina along with the 1,000 sqm retail area. Revenues increased by a healthy 33.7% to CHF 36.1 million in FY 2018 signalling more growth as destinations reach critical mass.

El Gouna, Red Sea
The growing demand on the Red Sea, supported by a fully-fledged marketing campaign in the German speaking markets, resulted in a boost in room rates. While occupancy increased from 75% in FY 2017 to reach 80% in FY 2018, TREVPAR also increased by 34% to CHF 67 compared to CHF 50 in FY 2017. Continuous improvement of operational processes and cost structures resulted in an increase of GOP PAR by 42% from CHF 24 in 2017 to CHF 34. Hotels revenues increased by 31% to CHF 65.1 million vs. CHF 49.8 million in FY 2017 and GOP surged by 39.5% to reach CHF 32.5 million in FY 2018 vs. CHF 23.3 million in FY 2017. On the other hand, we signed an agreement with Thomas Cook to develop a new 100 rooms' luxury hotel "Casa Cook". The deal also includes rebranding Arena Inn Hotel (144-rooms), to become a Cook's Club Hotel. Both to be operational in Oct. 2019. We finished the renovation of two hotels in 2018 and working on the remaining four to be finalized in 2019.

Net real estate sales exceeded our target for the year and recorded a 40.8% increase to CHF 111.4 million vs. CHF 79.1 million in FY 2017. Throughout 2018 we launched 2 new projects "Ancient Sands Villas" and "Cyan" along with the last phase of "Tawila" all for a total inventory of USD 111.2 million and have successfully sold them all out. Real estate revenues increased by 53% to CHF 64 million vs. CHF 41.9 million in FY 2017.

Town management revenues increased by 31% to CHF 28.5 million vs. CHF 21.8 million in FY 2017. The increase is mainly due to the increase in activities throughout 2018 and improving the quality and profitability of our amenities.

Hawana Salalah, Oman
In Hawana Salalah, net real estate sales increased by 42.4% to CHF 23.5 million in FY 2018 compared to CHF 16.5 million in FY 2017. The increase was mainly driven by the successful launch and sales of the "Forest Island" project, launched in August 2018, with a total inventory of CHF 29.5 million offering 208 townhouses and semi-detached villas. Real Estate revenues increased to CHF 9.2 million vs. CHF 3.3 million in FY 2017.

Our hotels in Hawana Salalah continues to sustain their positive performance since the beginning of the year. In 2018, revenues increased by c. 24% to CHF 41.4 million vs. CHF 33.5 million in FY 2017 with a 44.2% increase in GOP to CHF 15 million vs. CHF 10.4 million in FY 2017. Additionally, Salalah Hotels reported a TREVPAR growth of 6% from CHF 117 in 2017 to CHF 124 in 2018 and a GOP PAR growth of over 25% going from CHF 36 in 2017 to CHF 45 in 2018. We completed the construction of Fanar Hotel & Residences' expansion of additional 177 rooms making it the largest hotel in Salalah; operation started end of December 2018 with a 90% occupancy. Moving to the town management, the destination fuel station started operating in the Marina in Q4 2018.

Luštica Bay, Montenegro
The Chedi Luštica Bay opened its doors to its first guests in mid July 2018 attracting great attention and interest from local and regional stakeholders. Operating only for around 60 days of the area's high season, the Hotel reported CHF 2.0 million revenue, occupancy of 48% and TREVPAR of CHF 159.

With the increased interest on Luštica Bay on the back of the opening of the destination's first hotel, the marina and the retail outlets, net real estate sales increased by 97.7% to CHF 34 million vs. CHF 17.2 million in FY 2017. The year 2018 started as the busiest year yet on the development and construction fronts. Besides the significant increase in sales that further emphasized demand on our project. New homeowners settled into the Marina Village neighborhood, with the completion of several residences. Construction is still underway on the final Magnolija and Kamelija buildings, as well the exclusive townhouses and stand-alone villas. In addition to that we began construction of Luštica Bay's town centre, Centrale.

On the town management side, we opened the first phase of the main marina with 50 berth the first marina to be built in Montenegro in the recent period. Following this, we will begin equipping the remaining phase of the marina, set to offer 176 berths in total.

Jebel Sifah, Oman
Net real estate sales increased by 46.3% to CHF 17.3 million in 2018 vs. CHF 11.8 million in 2017. We released additional properties in "Jebel Sifah Heights", with a total inventory of CHF 20.3 million. Additionally, we delivered 131 real estate units in the Golf Lake real estate project meeting the 2-year contractual construction plan.

Jebel Sifah is continually cementing its position as Muscat's premier getaway destination offering premium facilities. In December 2018, Jebel Sifah hosted the MENA region's 1st Spartan TRIFECTA event with over than 3,500 participants.

Makadi Heights, Egypt
Makadi Heights, our new rising destination continued to deliver strong sales, whereby net sales increased to CHF 13.7 million vs. only CHF 0.1 million in FY 2017. Real Estate and Town management revenues doubled compared to last year, bringing the total revenues for the destination to CHF 8.7 million compared to CHF 4.2 million in 2017.

First home market: O West, Egypt
We successfully held the soft launch of O West in December 2018 and sold CHF 126.3 million in only two weeks. All contracted units' figures are not reflected in the 2018 results but will be reflected in Q1' 19 results. The launched units included, standalone villas, twin and town houses with an average selling price of CHF 1,281 per m2 for core and shell.

The official launch started in March 2019 included a wide range of apartments, duplexes, penthouses and lofts. The first launched phase included 340 units with a total inventory of CHF 68.9 million and an average selling price of CHF 1,045 per m2 fully finished. The official launch sales is progressing very well, showing very strong demand and appetite from our clients which strongly reaffirms ODH's position as the market leader in building fully integrated towns, benefiting from its solid brand equity and unique community management experience.

Taba Heights, Egypt
We are still working to minimize the effect of the current travel bans imposed on the area through maintaining close control on expenses, as well as developing strategic partnerships with several prominent East European tour operators. Whereas the impact of the new partnerships is only due to reflect strongly in 2019; still, in 2018 hotels revenues increased by 73% to CHF 6.9 million in FY 2018 vs. CHF 4.0 million in FY 2017. Occupancy rates increased to 33% in FY 2018 vs. 27% in FY 2017.

The Cove, UAE
The Cove, UAE sustained its performance levels despite the challenging market conditions in the UAE. In 2018, the Hotel reported occupancy of 74% vs.72% in FY 2017, alongside a slightly decreased TREVPAR from CHF 184 in FY 2017 to CHF 174 in FY 2018. GOP PAR declined from CHF 71 in FY 2017 to CHF 66 in FY 2018; as a result of the added inventory from the extension that was opened late 2017. The hotel yet reported an overall growth in revenues from CHF 28.5 million in FY 2017 to CHF 30.1 million in FY 2018 and a growth in GOP to CHF 11.4 million in FY 2018.

Outlook 2019
After the successful implementation of the first phase of the turnaround strategy along with the adaption of the destination-based structure across the board, the Group now has more visibility on the performance of each destination and thus is in a much more solid position to start giving guidance for 2019.

ODH is targeting topline revenues of CHF 400 million and an Adjusted EBITDA within the range of CHF 74 million - CHF 77 million. These estimates exclude the contribution of Citadel Azur, Royal Azur, Club Azur hotels and Tamweel Group that the Group has identified as non-core assets and disposed in 2018. Thus, when FY 2018 figures are normalized for those assets, the targeted 2019 revenues represent a 25% growth from CHF 319 million in FY 2018 and the Adj. EBITDA represents 19%-24% growth from CHF 62 million in FY 2018.

The Group is also eyeing new real estate net sales of CHF 445 million - CHF 470 million compared to CHF 200.6 million in 2018, capitalizing on its first home project "O West" and building on the positive momentum of El Gouna and Makadi Heights, Jebal Sifah, Hawana Salalah and Luštica Bay.

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 nine destinations; four in Egypt (El Gouna, Taba Heights, Makadi Heights and Bayoum), The Cove in the United Arab Emirates, Jebel Sifah and Hawana Salalah in Oman, Luštica Bay in Montenegro and Andermatt in Switzerland.

Contact for Investors:
Sara El Gawahergy
Head of Investor Relations
Head of Strategic Projects Management

Tel: +20 224 61 89 61
Tel: +41 418 74 17 11

Contact for Media Relations:
Philippe Blangey
Dynamics Group AG
Tel: +41 432 68 32 35


End of ad hoc announcement

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