ODH ("Orascom Development Holding") (SIX ODHN.SW) has released its consolidated financial results for 9M 2019.
Orascom Development Holding continues to deliver strong results with a revenue growth of 42.7% and adjusted EBITDA of CHF 57.3 million.
- Total revenues surged by 42.7% to CHF 325.2 million.
- Adj. EBITDA increased by 48.8% to CHF 57.3 million vs. CHF 38.5 million in 9M 2018 (Pro-forma).
- Net losses significantly decreased by 73.4% to CHF 7.9 million vs. a loss of CHF 29.7 million in 9M 2018.
- Cashflow from operations recorded an 34.5% increase to CHF 41.7 million.
- Net real estate sales went up 142.0% to CHF 381.3 million.
- Successful issuance of a CHF 100 million bond.
- Launched first phase of Eco-Bos in Cornwall, UK.
- Launch of newest 5-stars 100-rooms Casa Cook hotel in El Gouna.
- On track to achieving full year 2019 targets.
Altdorf, 13 November 2019 - ODH continued building on its strong performance since the beginning of the year, Orascom Development Holding (ODH) achieved a top line revenue of CHF 325.2 million growing 42.7% from last year and an adjusted EBITDA of CHF 57.3 million, increasing by 48.8% vs. CHF 38.5 million in 9M 2018 (Pro-forma).
Gross profit increased by 24.1% to reach CHF 84.4 million (9M 2018: CHF 68.0 million) and adj. EBITDA also increased by 25.1% to CHF 57.3 million (9M 2018: CHF 45.8 million). EBITDA soared up by a 135.1% to CHF 59.0 million in 9M 2019 (9M 2018: CHF 25.1 million). It is important to note that EBITDA margins were affected by O West, the Group's first home project in Egypt, due to the upfront launch sales and marketing expenses incurred during the period. Higher margins from O West will start to kick in the year 2020 onwards. Cashflow from operations increased by 34.5% to CHF 41.7 million (9M 2018: CHF 31.0 million). Net Debt stood at CHF 241.7 million by end of 9M 2019.
Net losses significantly decreased by 73.4% to reach CHF 7.9 million in 9M 2019 (9M 2018: CHF 29.7 million). It is important to note that 9M 2018 figures included Tamweel Group, Citadel Azur, Royal and Club Azur Hotels that were disposed during the financial year 2018. When figures of 9M 2018 are normalised (pro-forma) for the revenues of the disposals, 9M 2019 revenues would have increased by 55.5% to CHF 325.2 million (9M 2018: CHF 209.1 million); adj. EBITDA would have increased by 48.8% to CHF 57.3 million (9M 2018: CHF 38.5 million); and net loss would have decreased by 76.7% vs. CHF 33.9 million in 9M 2018. "We are very pleased to see that ODH is performing strongly on its strategy and continues to deliver solid results after another strong quarter in terms of new real estate sales. We remain confident about our Company's ability to achieve its full year targets and we maintain our FY 2019 guidance as it is.", states Khaled Bichara, CEO of Orascom Development Holding.
Group Hotels: Continued positive momentum, backed by increase in Egyptian Tourism
The Group's hotel portfolio continued its impressive growth trajectory despite the seasonality effect especially in the Omani hotels. In 9M 2019, the hotels segment reported 11.0% growth in revenues, from CHF 109.9 million in 9M 2018 to CHF 122.0 million, and an 8.8% growth in GOP, from CHF 41.0 million to CHF 44.6 million in 9M 2019. The segment's adj. EBITDA reached CHF 38.0 million vs. CHF 37.9 million in 9M 2018. It is important to mention that 9M 2018 figures were boosted by the revenues coming from the disposal of Citadel Azur, Royal Azur and Club Azur hotels. Accordingly, adjusting the comparable period, 9M 2019 segment revenues would have increased by 17.5% and the adj. EBITDA would also have increased by 12.8% compared to the same period last year. ODH is anticipating more demand during the last quarter of 2019, coming from the opening of the 5-star 100- rooms Casa Cook hotel in El Gouna, in addition to the positive effects of the removal of the German Travel ban on Taba, Egypt & more demand on our Hawana Salalah hotels.
Group Real Estate: On track to achieving the full year real estate sales target
In 9M 2019, net sales amounted to CHF 381.3 million, a growth of 142.0% year-on-year compared to CHF 157.6 million in 9M 2018. Notably, O West, the first home project in West Cairo was the largest contributor to new sales (53.7% of sales), followed by El Gouna (25.7% of sales), Oman (8.6% of sales), Lustica Bay (6.6% of sales) and finally Makadi Heights (4.9% of sales). The CHF 381.3 million net sales results reiterate our path on achieving our full year sales target of CHF 445 - 470 million. Revenues increased by 109.7% to CHF 166.9 million vs. CHF 79.6 million in 9M 2018 on the back of increased construction across all our destinations, in addition to the recognized land portion for the sold units in O West. Adj. EBITDA also increased by 58.2% to CHF 50.3 million in 9M 2019 vs. CHF 31.8 million in 9M 2018. Total deferred revenue from real estate that is yet to be recognized till 2023 increased by 95.1% to reach CHF 446.3 million in 9M 2019 vs. CHF 228.7 million in 9M 2018 and total real estate portfolio receivables also increased by 91.4% to CHF 566.9 million in 9M 2019 compared to CHF 296.2 million in 9M 2018.
Group Destination Management: Positive performance backed by a rich events calendar across all destinations
The Destination Management segment positively contributed to ODH's top line figures. The segment continued to grow thanks to the implementation of a rich calendar of events in all major destinations. Supporting the notion of "Life as it should be". Revenues recorded a 41.8% increase to CHF 36.3 million in 9M 2019 vs. CHF 25.6 million in 9M 2018. In El Gouna, ODH successfully hosted the 3rd edition of El Gouna Film Festival with more than 1,500 attendees, while in Lustica Bay the summer season was rich with more than 30 events. The Group also sponsored the first Jennifer Lopez concert in Egypt by O West.
Group Corporate Updates: Successful placement of a CHF 100 million bond
In September 2019, ODH successfully issued a CHF 100 million bond with a coupon of 3.25% and a tenor of five years in the market. This has been the first public bond issue in the history of the company. The proceeds of the bond will be used for further development of the destinations in Oman and Montenegro and for general corporate purposes. Bank Vontobel AG acted as lead manager of the transaction.
Launch of Eco-Bos in Cornwall, United Kingdom
On November 4th, the Group announced the official launch and development of its first project in Eco-Bos Developments Limited in Cornwall, UK after demonstrating its financial viability, identifying sources of finance and being awarded the necessary development permits. ODH is planning to launch the first phase of the West Carclaze Garden Village (WCGV). WCGV is a mixed-use residential development principally targeting local-primary homebuyers. This first phase uses 196,604 m2 out of the total land bank under option of over 6.5 million m2, with 270 residential units. The groundbreaking of the project is expected in February 2020 with the launch of sales in June 2020 and delivery of the first phase by the third quarter of 2024. Total expected sales of this phase is c. CHF 101 million. The destination is expected to be profitable and cash flow positive in 2022, while cumulative losses from the start of the project till it reaches profitably is expected to be within the range of ca. CHF 1.3 - CHF 2.6 million.
For the full year 2019, ODH is targeting top-line revenues of CHF 400 million and an adj. EBITDA within the range of CHF 74 - 77 million. These estimates exclude the contribution of Citadel Azur, Royal Azur, Club Azur hotels & Tamweel Group, which the Group has identified as non-core assets and disposed of 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 envisaging new real estate net sales of CHF 445 to 470 million compared to CHF 200.6 million in 2018, capitalizing on its first home project "O West" & building on the positive momentum of El Gouna and Makadi Heights, Jebal Sifah, Hawana Salalah & Luštica Bay.
Details on Destinations
El Gouna, Red Sea
El Gouna hotels continued its uptrend since the beginning of the year. The ongoing town and hotel enhancements, a rich calendar of events supported by strong international marketing campaigns continued to produce exceptional results with a revenue growth of 17.9%, from CHF 46.3 million in 9M 2018 to CHF 54.6 million in 9M 2019. adj. EBITDA also increased by 9.3% to CHF 24.7 million. Average occupancy rate reached 83% (9M 2018: 79%) with a 24.1% increase in ARR to CHF 67 (9M 2018: CHF 54). TRevPAR increased by 23.4% to CHF 79 (9M 2018: CHF 64) and GOP went up 11.5% to CHF 26.1 million (9M 2018: CHF 23.4 million). The destination is anticipating more demand in Q4 2019 with the opening of Casa Cook in El Gouna (100 rooms) in November 2019. The launch of Casa Cook hotel marks a significant milestone to the segment's operations and reiterates our delivery commitment, along with our processed timeline. With this hotel, the number of hotels in El Gouna is now 18 hotels with a total of 2,707 rooms.
Net sales increased by 16.2% to CHF 98.1 million vs. CHF 84.4 million in 9M 2018 on the back of strong uptake in Ancients Sands Villas and Cyan projects. El Gouna was able to increase the average selling price per m2 by 26.9% to CHF 2,923. In the end of September 2019, the destination launched Fanadir Marina; a new high-end apartments project with a total inventory of USD 91 million. Only phase one of the project has been released amounting to USD 29 million and the company managed to sell almost 90% of the inventory released in two weeks. On the construction front, ODE is progressing with the construction of Abu Tig Hills apartments, Tawila Phase 2, Um Jammar project and Fanadir Bay 2, all to be delivered during 2020. Real estate revenues increased by 59.8% to reach CHF 69.4 million vs. CHF 43.5 million in 9M 2018; while adj. EBITDA also increased by 67.8% to CHF 40.6 million in 9M 2019 vs. CHF 24.2 million in 9M 2018.
Town management segment continued its positive performance since the beginning of the year, with a rich calendar of events making El Gouna the "chosen destination to be" all year around. This quarter El Gouna successfully hosted the 3rd edition of El Gouna Film Festival in September 2019 with more than 1,500 attendees, adding livelihood to the town and boosting this segment's performance. Revenues increased by a 37.1% to CHF 28.1 million in 9M 2019 vs. CHF 20.5 million in 9M 2018. Additionally, the destination finalized the construction and opened phase 1 of the new concert and conference centre with the delivery of all colonnades, lagoons and the open-air plaza. The construction of the concert hall building will commence in Q1 2020.
First home market: O West, Egypt
In 9M 2019, total contracted real estate sales reached CHF 204.9 million solidifying ODH's position as the number one real estate developer in West Cairo in terms of sales in one project. Capitalizing on the huge demand and the great success of the earlier launches, ODH will launch a new high-end real estate apartment phase with a total inventory of CHF 35 million in November 2019. Additionally, in September 2019, the company launched its first office spaces with an inventory of CHF 27.0 million and sales are progressing very well. Total revenues of O West reached CHF 27.7 million. Additionally, ODH will start site mobilization, earthworks and construction activities during Q4 2019, and the management is in advanced discussions with an international school to open its campus in the destination.
Hawana Salalah, Oman
Net real estate sales increased by 33.8% to CHF 26.1 million vs. CHF 19.5 million in 9M 2018. The increase was driven by the successful launch of the Phase 1 of "Forest Island" project. Capitalizing on the great success of Forest Island Phase 1, ODH launched phase 2 (Laguna Gardens) with a total inventory of CHF 43 million (310 units) in mid-August 2019. The new phase includes villas, twin houses and studios. On the construction side, the destination finalized the construction of Hawana Lagoon real estate project and started delivering units to clients. Real Estate revenues increased by 400% to CHF 30.0 million vs. CHF 6.0 million in 9M 2018.
The third quarter is usually affected by the seasonality of the destination. This year the "Khareef" season started late in mid-August, nevertheless, hotels in Hawana Salalah maintained their positive momentum with a 7.8% increase in revenues from CHF 28.1 million in 9M 2018 to CHF 30.3 million in 9M 2019. The efforts to diversify source markets and a consequent increase in selling rates led to a 7.1% increase in GOP, from CHF 9.8 million in 9M 2018 to CHF 10.5 in 9M 2019, whereby ARR increased by 5.8% to CHF 128 in 9M 2019 vs. CHF 121 in 9M 2018. Occupancy rate reached 55% in 9M 2019.
Luštica Bay, Montenegro
As for Luštica Bay, The Chedi's first full summer season successfully came to an end. In Q3 2019, The Chedi reported a revenue of CHF 2.9 million vs. CHF 1.4 million in 9M 2018 and a GOP of 1.0 million vs. CHF 0.2 million in 9M 2018. While occupancy rates recorded, a 20% increase in Q3 2019 to reach 78% compared to 65% in 9M 2018.
Net real estate sales reached CHF 25.2 million vs. CHF 26.8 million in 9M 2018. Real estate revenues increased by 1.1% to reach CHF 18.9 million in 9M 2019. A lot of progress can be witnessed on the construction front in the destination. In the Centrale area, ODH is currently constructing four apartment buildings with 58 apartments, two of which were handed over by end of October and the other two buildings by summer 2020. The marina is on track, with a new pontoon with 35 new berths; while the 2nd and 3rd phase of the marina finishing works with the lighthouse and associated infrastructure, due to be operational for the season 2020.
In addition to the construction works, Luštica Bay strengthened its destination profile this season, by organizing an extensive events program, in part enabled with the opening of the outdoor amphitheatre in the marina, with a capacity of about 200 seats, to accommodate concerts. In this regard more than 30 events have taken place. Town Management revenues reached CHF 1.2 million in 9M 2019.
Jebel Sifah, Oman
The 67 rooms boutique hotel continued to show positive figures, whereby revenues increased by 6.3% to CHF 1.7 million vs. CHF 1.6 million in 9M 2018. GOP reached CHF 0.1 million vs. a GOP loss of CHF 0.01 million in 9M 2018. Occupancy rates increased by 14.3% to 40% compared to 35% in 9M 2018.
Real Estate sales were limited, as ODH did not launch new projects nor new inventory. Net real estate sales reached CHF 6.7 million in 9M 2019. The destination is planning to launch a new real estate project in Q4 2019 with a total inventory of CHF 49 million. The company finalized the construction and delivered Phase 1 of Sifah Heights real estate project and the final phase of the Golf Lake projects to the clients. Real estate revenues increased by 75.9% to reach CHF 19.7 million compared to CHF 11.2 million in 9M 2018, while total revenues from Sifah destination increased by 68.4% to CHF 22.9 million vs. CHF 13.6 million in 9M 2018. On the event side, the destination is hosting Jebel Sifah's Spartan TRIFECTA Race on November 15 and 16, 2019, which will feature Oman's first Hurricane Heat race.
Makadi Heights, Egypt
Makadi Heights, continued its uptrend momentum in terms of real estate sales. Net sales increased by 82.5% to CHF 18.8 million vs. CHF 10.3 million in 9M 2018 on the back of the aggressive sales and marketing campaigns implemented during the year. Moving to the Town Management side, a lot of effort was taken to revive the destination. Makadi Heights started monthly sports program to homeowners and activated several safari events and we are planning to host a big sport event in Q4 2019. Real Estate revenues increased by 166.7% to CHF 0.8 million in 9M 2019. Town Management revenues started to pick up and increased by 57.1% to reach CHF 1.1 million in 9M 2019.
Taba Heights, Egypt
ODH is anticipating a substantial increase in tourist arrivals in Taba Heights starting from November 2019, as a number of European countries will increase charter services to Taba airport. ODH remains focused on accelerating growth initiatives by building an even stronger promotional base in all European markets while continuously improving operational excellence and cost efficiency. In 9M 2019, with the existing airlift capacity from East Europe and the regional business, Taba Heights as a destination has already managed to achieve a boost in revenues and GOP. Hotels revenue soared by 63.6% to CHF 9.0 million vs. CHF 5.5 million in 9M 2018 and GOP increased by 400.0% to CHF 0.5 million vs. CHF 0.1 million in 9M 2018. Occupancy rate for the operating rooms reached 48% in 9M 2019, up 37.1% compared to the same period last year. ARR also increased by 38.5% to reach CHF 35 in 9M 2019 vs. CHF 26 in 9M 2018.
Additionally, ODH started maintenance work across the six hotels to increase the quality and to increase the room rates next year. Taba is expected to be bottom line profitable in 2020 and a full relaunch plan for the destination is currently understudy.
The Cove, UAE
Market conditions continue to be challenging, resulting in a slight decline in revenues and GOP reaching CHF 19.1 million and CHF 6.2 million respectively.
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 Byoum), 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:
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Tel: +41 418 74 17 11
Email: [email protected]
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Dynamics Group AG
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