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Orascom Development records revenues of CHF170 m in 9M2015

Orascom Development records revenues of CHF170 m in 9M2015

Arab Finance: Orascom Development Holding (ODH) (ODHN) achieves turnover of CHF 169.9 million and operational profit (adjusted EBITDA) of CHF 13.9 million.   

Orascom Development Holding (ODH) results were still impacted by the political and economic backdrop in Egypt. However other destinations in Oman and Montenegro are witnessing higher levels of maturity and accordingly higher contributions to the Group’s revenues. Total revenues decreased by 30.9% to reach CHF 169.9 million compared to CHF 246.0 million in 9M 2015, mainly due to the strategic decision to become more selective with land sales which amounted to CHF 64.1 million in the comparative period. It is important to note that when results are normalized for land sales in both comparative periods, the net loss attributable to the shareholders would have reached CHF 45.8 million compared to a loss of CHF 48.4 million in 9M 2015.   

In addition, results were impacted by foreign exchange losses amounting to CHF 13.2 million. Gross profit reached CHF 9.2 million and the net loss attributable to shareholders for the reporting period amounted to CHF 60.7 million compared to a net profit of CHF 3.9 million in 9M 2015. On the positive side, adjusted EBITDA for the period reached CHF 13.9 million.

In November 2016; ODH’s largest subsidiary in Egypt, Orascom Hotels and Development (OHD) has signed a CHF 228.7 million debt refinancing package allowing the company to postpone its principal payments for the coming 3 years and its interest payments for FY 2016 with an option to postpone the interest payments for FY 2017. The rescheduling will strengthen the balance sheet of the company and thereby lead to more flexibility to advance its projects.

Oman and UAE hotels record an increase of 55.9% and 11.2% in revenues over the comparable period.

In Oman, the new management setup achieved a notable boost in the performance of the hotels with a 39% increase in occupancy growing from 44% to 61% and a 128% increase in GOP growing from CHF 2.5 million to CHF 5.9 million in 9M 2016. Omani hotels revenues have significantly increased by 55.9% from CHF 14.5 million in 9M 2015 to CHF 22.6 million in 9M 2016. Similarly, in UAE, The Cove Rotana continued its positive momentum and reported a revenue increase of 11.2% to reach CHF 19.4 million in 9M 2016 compared to CHF 17.5 million in 9M 2015 and occupancy rate grew from 67% in 9M 2015 to 78% in 9M 2016.

In Egypt, the severe decline in the country’s tourism sector continued to affect the segment’s performance. Egypt tourist arrivals fell c41% y-o-y in September 2016 compared to same period last year. Overall, tourism revenues dropped by 48.9% to USD 3.8 billion in FY15/16 compared to USD 7.4 billion in FY14/15. However, continued marketing efforts with market leading tour operators has improved local market presence along with more direct bookings. As a result, El Gouna fostered its leading market position recording an occupancy of 55% in 9M 2016 versus 66% in 9M 2015 and increase the ARR levels by 8.2% to reach CHF 53 vs. CHF 49 in 9M 2015.

In Taba Heights, demand has started to pick up since the end of Q2 2016 due to the aggressive marketing campaigns we implemented in Jordan and the local Egyptian markets. Subsequently, we managed to reopen 276 rooms out of the 503 rooms in Strand Beach & Golf Resort. To date, we have a total of 718 operating rooms in Taba Heights out of 2,365 rooms. Total occupancy of the available rooms increased to 33% in 9M 2016 vs. 19% in 9M 2015.

In Makadi, we continued to operate two hotels out of four representing 62% of the destination’s total capacity during the reporting period since Q4 2015, due to the prolonged impact resulting from the ongoing Russian travel bans. Nevertheless, we successfully introduced measures to overcome the drop in business and have signed a 3-year lease agreement starting 1st of November 2016, with FTI Group for 3 of our hotels in Makadi for a total of EUR 3.3 million per annum net to owner, subject to an annual increase of 5%. It is important to note that those 3 hotels have recorded a GOP loss of EUR 0.69 million for the 9M 2016, and have given the company a GOP of only EUR 2.5 million in FY 2015 and EUR 1.1 million in FY 2014. In Fayoum, we successfully held the soft opening of Byoum Lakeside Hotel on the 1st of September recording an occupancy of 27% during its first month of operation.

Overall, total hotel segment revenues decreased by 6.7% to reach CHF 85.9 million in 9M 2016 compared to CHF 92.1 million in 9M 2015.

Total real estate sales reached CHF 74.3 million during the 9M 2016, with a noticeable boost in sales of Q3 2016 alone recording an increase of 87.8% to reach CHF 16.9 million versus CHF 9.0 million in Q3 2015.

Enhanced sales performance during the quarter with contributions coming mainly from El Gouna and Montenegro. The increase came on the back of targeted sales and marketing activities that we started implementing with our new launches during Q2 2016. In El Gouna, the Fanadir bay project that we launched in April 2016 got solid demand and has sold almost 75% of its inventory. We also launched a limited project called «The West Villas» in July, holding 11 units for a total value of USD 3.0 million, which has successfully sold out during 48 hours from its launch.

Lustica Bay, Montenegro, continued its strong sales momentum since the beginning of the year. We were able to conclude a bulk sale’s deal for EUR 3.9 million pushing the value of contracted units to CHF 12.0 million in 9M 2016 compared to CHF 6.4 million in 9M 2015. We finalized the marina superstructure and progressing ahead of schedule with the construction of the new F&G building comprising 88 apartments.

In Oman, we are moving on track with the development of the Sifah Golf course, planned to be launched in Q4 2016. We have successfully launched a new real estate project called «Golf Lake Residence» with a total inventory of CHF 19.3 million, comprising of 118 apartments overseeing the golf course and have opened the first phase for sale.

Total real estate revenues reached CHF 44.2 million in 9M 2016 compared to CHF 55.4 million in 9M 2015. The Group’s total value of contracted units in 9M 2016 reached CHF 74.3 million compared to CHF 78.5 million in 9M 2015 and the net value of contracted units reached CHF 68.6 million compared to CHF 46.0 million in 9M 2015. Total deferred revenue from real estate that is yet to be recognized until 2018 reached CHF 155.6 million in 9M 2016 compared to CHF 143.9 million in 9M 2015.

Outlook for FY 2016

Corporate

In-line with the company’s initiative to focus on its core destinations in Egypt, Oman and Montenegro, the Group is undertaking efforts to sell its non-strategic assets and accordingly has reclassified Tamweel Group companies as an asset held for sale.

It is important to note that post the recent decision of the CBE to float the Egyptian pound and raising the interest rates for deposites in EGP by approximately 3.0%. The value of monetary assets and liabilities in subsequent periods may differ and may affect the statement of profit and loss. The severity of the impact is currently being assessed.

Real Estate

In Egypt and Oman, we are capitalizing on the new project launches, ‘Tawila’ in El Gouna launched in October, and ‘Golf Lake Residence’ in Sifah launched in November, recorded positive sales momentum. We are still planning the launch of further products in Fayoum, Egypt, with a total inventory of USD 3.4 million in Q1 2017.

In Salalah, Oman, we are planning the construction of the water park project during Q4 2016. In Montenegro, we are speeding up construction progress expecting to deliver the F&G buildings in early 2017.

In addition, we are currently studying several opportunities for the first and second home markets in Egypt.

Hotels

In Montenegro, we are progressing with the development plans of the 5-star Chedi Hotel in Lustica Bay planning to start construction during Q4 2014. In Oman, we are finalizing the construction of Al Fanar extension (84 new rooms) to the existing hotel portfolio, bringing its total room count to 302 by December 2016. In UAE, we are finalizing the construction of The Cove Rotana extension, adding 145 rooms to open during Q1 2017.

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