DGAP-Adhoc: Orascom Development Holding AG: Back to profitability - Orascom Development posts first quarterly profit since 1Q 2011 Orascom Development Holding AG / Key word(s): Quarter Results/Quarter Results 28.05.2014 07:15 Release of an ad hoc announcement pursuant to Art. 53 KR --------------------------------------------------------------------------- Press Release Back to profitability - Orascom Development posts first quarterly profit since 1Q 2011 Despite the continued challenging market environment in Egypt, Orascom Development returned to profitability in 1Q 2014. The net profit attributable to shareholders of the company was CHF 5.0 million after a CHF 19.1 million loss in the comparable period. Notably, this marked the first quarterly profit since 1Q 2011, the beginning of the Egyptian Revolution. Key drivers of this pleasing result were a 21% revenue growth on the back of enhanced Real Estate & Construction activity as well as gains related to the settlement of various litigation cases. Benefits from the Group-wide cost savings program are materializing, and the ongoing review and carve-out of certain un-profitable and non-core business lines will further reduce the cost base and will help in achieving the communicated CHF 50 million savings target. Altdorf/Cairo, 28 May 2014 - After a challenging financial year 2013 and despite continued headwinds in the hotel segment, Orascom Development Holding AG (Orascom Development) returned to profitability in 1Q 2014. Revenues increased by 21% to CHF 69.8 million (1Q 2013: CHF 57.9 million), mainly due to increased real estate deliveries in Egypt. The net profit attributable to shareholders of the company reached CHF 5.0 million after a CHF 19.1 million loss in the first quarter last year. The result was partly also due to lower foreign exchange losses and gains related to the settlement of various litigation. The adjusted EBITDA for the period was CHF 9.5 million (1Q 2013: 4.3 million), again underscoring the strength of the business model even in this tough environment. Hotel performance continues to suffer from travel bans & airlift cuts on the Taba region, but mitigating measures have been initiated The hotel segment continued to suffer from travel bans issued on Egypt in the first quarter 2014. The average occupancy rate declined to 42% (1Q 2013: 56%) and revenues slipped to CHF 23.6 million (1Q 2013: CHF 34.9 million), equivalent to 34% of Group revenues. The adjusted segment EBITDA amounted to CHF 1.7 million (1Q 2013: CHF 10.2 million). TRevPAR (Total Revenues per Available Room) declined to CHF 38 (1Q 2013: CHF 58). In order to reduce the negative impact from this adverse scenario, Orascom Development has initiated various mitigating measures, including the renegotiation of management company contracts which has resulted in achieving total annual savings of CHF 2.0 million, funding of renovation works with tour-operator money, introduction of discount programs for frequent visitors and the promotion of various high profile events in the various destinations. Furthermore, the collaboration with big tour operators in Germany has already resulted in a significant growth of room nights, compared to the same period last year, and will continue to strengthen the productivity of the segment. During Q1 2014, we already succeeded in finalizing commitment deals with a total value of CHF 20.5 million covering Germany, Switzerland, Austria, Russia and East Europe, Newly added hotel capacity will contribute to a geographic revenue diversification During the quarter, the hotel room capacity was significantly increased by the opening of the Rotana hotel in Salalah Beach (5-star, 399 rooms), which achieved a decent 69% occupancy rate during its first month of operation, and the Makadi Gardens Azur hotel in Makadi (4-stars, 287 rooms). At the end of the reporting period, Orascom Development operated 7,382 hotel rooms. The newly added hotel capacity, along with the initiated mitigating measures, should help to improve the performance in the reminder of the year, and drive the geographic revenue diversification of the hotel portfolio. Accelerated real estate deliveries drive strong quarter in Real Estate & Construction segment Revenues in the Real Estate & Construction segment significantly increased to CHF 34.3 million (1Q 2013: CHF 11.0 million), equivalent to 49% of Group revenues. The increase is mainly a result of accelerated construction and delivery of real estate units in El Gouna, Ancient Sands and Makadi. The adjusted segment EBITDA increased to CHF 12.9 million (1Q 2013: CHF -5.3 million). Contracted real estate sales increased to CHF 16.4 million (1Q 2013: CHF 12.7 million), driven by a continued strong sales momentum in El Gouna and a decent contribution from Montenegro. In total, 190 units were sold at an average price of CHF 1,103/m2 including the budget housing segment. Group wide cost savings program on track, while focusing on value adding investments The Group-wide cost savings program is on track, that said, Orascom Development managed to exceed its internal overhead cost savings target for 1Q 2014 by 12%. Furthermore, the ongoing review and carve-out of unprofitable and non-core business lines will further decrease the cost base and will help in achieving the earlier communicated savings target of CHF 50 million until the end of 2014. No material financial loss expected from recent storm and flood damages in Taba Heights In May 2014, Taba Heights, one of the major destinations of the Group in Egypt, was hit by severe storms and flooding which damaged part of the infrastructure (e.g. Golf course) and buildings (mainly equipment and furniture on ground floor level) of the resort. As of today, management cannot estimate the magnitude of the damages, however does not expect any material losses as the assets and operations were fully insured. Outlook for 2014 Orascom Development is moving according to its earlier communicated plans for the year regarding cost savings, debt reduction and restructuring, boosting revenues from ongoing operations and focusing on value adding investments. This quarter marked tangible results of our ongoing efforts and 1H 2014 will continue to reflect on the outcome of our new strategy as we remain committed to our targets. In May 2014, the Group, through its Egyptian subsidiary Orascom Hotels and Development and other subsidiaries in Egypt, signed a memorandum of understanding with Egyptian Resorts Company (ERC) to divest its majority stakes in selected non-core assets in Egypt. The portfolio of assets targeted for sale includes three to four hotels and a significant undeveloped land bank in the Sahl Hasheesh area on the Red Sea. This portfolio, however, does not include any assets of the Group's flagship destination El Gouna. Pending an independent financial valuation, the transaction value is estimated at CHF 110 - 130 million. ERC will pay for the transaction using cash proceeds from a capital increase and any remaining balance via issuing shares in ERC to Orascom. Subject to ERC's final board and ordinary general meeting of the shareholders and other Egyptians regulatory approvals, Orascom Development expects the transaction to close within five to seven months. As far as our hotel segment is concerned, management is confident that the current geographic diversification of the hotel portfolio, together with enhanced operational efficiency and cost cutting, will increase the segment's current profitability levels. Adding to that, the social and political atmosphere that is expected post the presidential elections in Egypt promises good pick-up of tourism, which accordingly would imply significant upside in terms of hotel revenues and cash flow generation during the remainder of the year. Key figures 1Q 2014 (in CHF million) 1Q 2013 1Q 2014 Delta Total revenues 57.9 69.8 20.6% Gross Profit 2.8 13.2 367.8% Gross Profit-Margin (%) 4.8% 18.9% Net income / (loss) after minorities (19.1) 5.0 Operating cash flow after interest/taxes (40.0) (7.3) Total assets1 1,672.7 1,660.3 -0.7% Equity ratio (%)1 45.5% 46.4% Net debt1 3 398.9 416.3 4.4% Adjusted EBITDA2 4.3 9.5 1 For 2013 as per 31 December 2013 2 EBITDA adjusted for discontinued operations and non-cash items 3 Includes borrowings and cash of disposal groups 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 Chief Hotel Officer Abdelhamid Abouyoussef will present the 1Q 2014 results and will be available to answer questions. A registration is not required. Dial-in details are as follows: - Password: 49917986 - International: +44 1452 555 566 - Switzerland Toll Free: 0800 828 006 - Egypt Toll Free: 0800 000 0318 - UK Toll Free: 0800 694 0257 - US Toll Free: 1866 966 9439 A replay of the conference call will be available for one week with the following dial in details: - Access Code: 49917986 - 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: +20 224 61 89 61 Tel: +41 418 74 17 11 Email: firstname.lastname@example.org Contact Media Relations email@example.com 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. 28.05.2014 News transmitted by EQS Schweiz AG. The issuer is responsible for the contents of the release. EQS 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: firstname.lastname@example.org Internet: www.orascomdh.com ISIN: CH0038285679 Valor: A0NJ37 Listed: SIX End of Announcement EQS Group News-Service ---------------------------------------------------------------------------
DGAP-Adhoc: Orascom Development Holding AG: Back to profitability - Orascom Development posts first quarterly profit since 1Q
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