DGAP-Adhoc: Orascom Development Holding AG: A challenging year for Orascom Development, but steady development progress and successful execution on monetization and cost savings Orascom Development Holding AG / Key word(s): Final Results/Final Results 15.04.2014 07:00 Release of an ad hoc announcement pursuant to Art. 53 KR --------------------------------------------------------------------------- A challenging year for Orascom Development, but steady development progress and successful execution on monetization and cost savings The challenging market environment due to the political instability in Egypt continued to impact Orascom Development's FY 2013 results. Net loss increased to CHF -157.8 million (FY 2012: CHF -97.3 million) due to lower revenues, less capitalization of financing costs, the devaluation of the Egyptian Pound as well as various one-off items. Adjusted EBITDA of CHF -4.5 million, however, underscores the economic viability of the Group's business model even in this tough environment. Development projects progressed according to plan, and we successfully executed on our monetization schedule and launched a comprehensive group-wide cost savings program and have implemented a number of structural reforms to realize synergies and to increase the efficiency of our operations. Altdorf/Cairo, 15 April 2014 - Orascom Development Holding AG (Orascom Development) can look back at another challenging financial year in 2013. The civilian unrest and continued political instability after the June 30th events in Egypt had a significant impact on the Group's results, particularly in the second half of 2013. Revenues decreased by 18.5% to CHF 221.4 million (FY 2012: CHF 271.8 million last year. At CHF -157.8 million, net loss attributable to owners of the parent company exceeded the prior year's level (FY 2012: CHF -97.3 million). This result can partly be attributed to lower capitalization of financing costs, the devaluation of the Egyptian Pound as well as various one-off items. Excluding these items, on a like-for-like basis, net loss was at about the same level as last year. The core operating cash flow (adjusted EBITDA) was close to break-even (CHF -4.5 million) which further supports and underscores the economic viability of the Group's business model even in this tough environment. Realization of the Group's many development projects progressed according to plan and the initiated monetization and cost savings programs will drive stabilization over the next two years. Steady development progress Orascom Development's destinations have developed according to plan in 2013. A particular highlight was the Andermatt Swiss Alps (ASA) transaction by which Samih O. Sawiris became majority shareholder of ASA and committed to invest at least CHF 150 million into ASA to secure funding of the critical size of the resort until 2017. In December, the opening of the 5-star deluxe hotel The Chedi Andermatt (105 rooms) attracted a lot of regional and international media attention and will support the promotion of the destination in Andermatt in the future. In Egypt, El Gouna once again benefited from its safe haven status and showed a nice pick-up in real estate volumes. Furthermore the completion of El Gouna Cable Park, a unique water sports complex conforming to Olympic standards, added a new attraction to Orascom Development's flagship destination. In Makadi near Hurghada, the Makadi Gardens Azur hotel (287 rooms) was completed and launched in February 2014. In Oman, funding was secured to finish the construction of the Rotana Hotel (399 rooms) in Salalah Beach, which opened in March 2014. In Montenegro, real estate sales have been progressing nicely, with the first units schedule to be delivered in January 2015. Hotel performance impacted by travel bans on Egypt during the second half of the year After a strong start into 2013, the hotel segment suffered from travel bans issued on Egypt in the second half of the year. The average occupancy rate declined to 51% (FY 2012: 57%) and revenues slipped to CHF 125.8 million (FY 2012: CHF 147.6 million), equivalent to 57% of Group revenues. The adjusted segment EBITDA amounted to CHF 25.7 million (FY 2012: CHF 42.7 million). Against the overall trend, UAE maintained a solid 81% occupancy rate, Jordan recovered from the trough in 2012 and Oman progressed as the Juweira Boutique hotel in Salalah Beach started to gain traction. TRevPAR (Total Revenues per Available Room) declined to CHF 51 (FY 2012: CHF 61). During 2013, the hotel room capacity was increased by 18 new rooms in the Juweira Boutique hotel in Salalah Beach and 25 rooms in the Sifawy Boutique hotel in Jebel Sifah. At the end of the reporting period, Orascom Development operated 6,696 hotel rooms. Real Estate and Construction performance weaker but strong sales momentum in El Gouna Revenues in the real estate and construction segment declined to CHF 49.8 million (FY 2012: 76.3 million), equivalent to 23% of Group revenues. The decrease is mainly a result of fewer deliveries in Egypt and Oman. The adjusted segment EBITDA declined to CHF 3.1 million (FY 2012: CHF 9.5 million), and was partly impacted by lower gross profit margins and higher provisions for doubtful receivables. Contracted real estate sales increased to CHF 72.8 million (FY 2012: CHF 62.0 million), driven by a strong sales momentum in El Gouna, where 43% of the inventory was sold, and a decent contribution from Montenegro. In total, 580 units were sold at an average price of CHF 1,452/m2. Monetization and cost savings drive stabilization Since the beginning of 2013, the Group has successfully realized CHF 62.5 million from its monetization program. The transaction proceeds were largely used to retire outstanding debt, to finance end of service payments and construction activities in the various destinations. In July 2013, Orascom Development has launched a group-wide cost savings program to reduce the 2012 cost base by CHF 50 million until the end of 2014. So far cost savings initiatives with a full annualized potential of more than CHF 38.5 million have been identified in the 2014 budget and partly already being implemented. Since December 2012, headcount, the largest single cost item, has been reduced by more than 2,400 employees, equivalent to 17% of the overall workforce. Balance sheet strengthened The ASA transaction and the subsequent deconsolidation of ASA during the first half of 2013 significantly strengthened the balance sheet of the Group, as the loans from Samih O. Sawiris to Orascom Development were converted into equity of ASA. The net debt position improved from CHF 502.2 million as per year-end 2012 to CHF 398.9 million as of December 31, 2013. The Group also succeeded in waiving the financial covenants for the financial year 2013 and is close to reaching an agreement to convert some of the short-term loans into medium-term loans. Outlook for 2014 Egypt continues to be in a political transition phase and overall visibility remains low. Nevertheless, we firmly believe that the current efforts exerted by the Egyptian government to restore economic growth, the acceptance of the new constitution as well as the expected parliamentary and presidential elections in the first half of 2014, are a step into the right direction, and will ultimately help to restore confidence that the country can return to normality and safety. The main focus of our activities will remain unchanged: identifying and implementing cost savings to match the communicated cost savings target of CHF 50 million, strengthening our balance sheet with a prime focus on reducing total debt by CHF 100 million, and continuing with our monetization plans to re-focus management capacity on value-adding investments with a main focus on our core destinations in Egypt, Oman and Montenegro along with boosting revenues from ongoing operations. In addition, we expect a marked increase of stable cash flows from the newly added hotel rooms and will continue to work on a geographic diversification of our hotel portfolio. Should the political and economic situation in Egypt continue to stabilize, we are convinced that the Group is fundamentally well positioned, to quickly recover from this down-cycle and to return to earlier positive operational levels. First indications for 1Q 2014 show a visible decline of hotel revenues against a very strong 1Q 2013, which are however offset by a strong quarter in real estate. As communicated earlier, Mr. Samih Sawiris renewed his commitment and agreed to lend the Group up to CHF 60 million until end of December 2014. In March 2014 this commitment was replaced by a new commitment, in which Mr. Samih Sawiris agreed to lend the Group up to CHF 115 million until end of April 2015. Of the last two commitments nothing has been drawn down until the date of this press release. Key figures 2013 (in CHF million) FY 2012 FY 2013 Delta Total revenues 271.8 221.4 -18.5% Gross Profit 23.4 6.5 -72.4% Gross Profit-Margin (%) 8.6% 2.9% Net income / (loss) after minorities (97.3) (157.8) Operating cash flow after interest/taxes (14.5) (52.2) Total assets 2,082.6 1,672.7 -19.7% Equity ratio (%) 45.5% 47.0% Net debt 502.2 398.92 -20.6% Adjusted EBITDA1 9.9 (4.5) 1 EBITDA adjusted for discontinued operations and non-cash items 2 Includes borrowings and cash from disposal group Financial statements and presentation The associated financial statements and presentation can be found on Orascom Developments' website www.orascomdh.com under the Investor Relations section. Telephone conference today at 2:00 pm CET A telephone conference for analysts and investors will be held in English today at 2:00 pm CET. CEO Samih O. Sawiris , CFO Eskandar Tooma and Head of Hotel Operations Abdelhamid Abouyoussef will present the FY 2013 results and will be available to answer questions. A registration is not required. Dial-in details are as follows: - Password: 21555729 - International: +44 1452 560 304 - Switzerland Toll Free: 0800 001 193 - Egypt Toll Free: 0800 000 0394 - UK Toll Free: 0800 073 8965 - US Toll Free: 1866 926 5708 A replay of the conference call will be available for one week with the following dial in details: - Access Code: 21555729 - International Replay #: +44 1452 550 000 - UK Local Call Replay #: 08717 000 145 - USA Toll Free Replay#: 1866 247 42 22 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 eight jurisdictions (Egypt, UAE, Jordan, Oman, Switzerland, Morocco, Montenegro and United Kingdom), with primary focus on touristic destinations and budget housing. The Group currently operates eight destinations; four in Egypt El Gouna, Taba Heights, Haram City and Makadi, The Cove in United Arab Emirates , Jebel Sifah and Salalah Beach in Oman 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 Director of Investor Relations Tel: +202 2461 8961 Tel: +41 41 874 17 11 Email: email@example.com Contact Media Relations firstname.lastname@example.org 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. 15.04.2014 News transmitted by EQS Schweiz AG. The issuer is responsible for the contents of the release. EquityStory publishes regulatory releases, media releases on the capital market and press releases. The EquityStory Group distributes authentic and real-time financial news for over 1'300 listed companies. The Swiss news archive can be found at www.equitystory.ch/news --------------------------------------------------------------------------- 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: email@example.com Internet: www.orascomdh.com ISIN: CH0038285679 Valor: A0NJ37 Listed: SIX End of Announcement EQS Group News-Service ---------------------------------------------------------------------------
DGAP-Adhoc: Orascom Development Holding AG: A challenging year for Orascom Development, but steady development progress and
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