DGAP-Adhoc: Orascom Development Holding AG: Back to profitability - Orascom Development posts first quarterly profit since 1Q

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
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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: ir@orascomdh.com

Contact Media Relations
media@orascomdh.com
     
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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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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
 
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