Total revenues surged by 43.3% to CHF 223.0 million.
Adj. EBITDA increased by 19.1% to CHF 41.7 million in 1H 2019.
Net losses significantly decreased by 90.9% to CHF 1.5 million vs. a loss of CHF 16.4 million in 1H 2018.
Cashflow from operations recorded an 86.0% increase to CHF 19.9 million.
Deferred Revenue balance increased to CHF 385.4 million, a 107.4% increase from CHF 185.8 million.
Net Real Estate sales went up 188.6% to CHF 284.6 million.
Signed the CHF 228.1 million debt rescheduling package, which will result in interest savings of CHF 19 million over 6 years.
Outlook FY 2019 confirmed with revenues of CHF 400 million and adjusted EBITDA in the range of CHF 74-77 million.

Altdorf: Orascom Development Holding AG continued to deliver positive financial and operational results with a 43.3% increase in revenue to CHF 223.0 million compared to CHF 155.6 million in 1H 2018. The increase was backed by an increase in all business segments with more contribution from the real estate segment.

Gross profit increased by 24.6% to reach CHF 61.7 million (1H 2018: CHF 49.5 million) reflecting the strong operational performance. For 1H 2019, the Adj. EBITDA increased by 19.1% to CHF 41.7 million vs. CHF 35.0 million in 1H 2018. EBITDA also increased by 124.6% to CHF 43.8 million in 1H 2019 vs. CHF 19.5 million in 1H 2018. It is important to note that EBITDA margins were affected by O West, our 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. The Hotels segment continued to grow despite the seasonality of the quarter affecting mainly the hotels in the Gulf and Egypt. The Real Estate segment’s revenue grew significantly and was the largest contributor to ODH’s top-line growth. The Destination Management segment also continued to grow, with destinations moving closer to scalability. Cashflow from operations increased by 86.0% to CHF 19.9 million (1H 2018: CHF 10.7 million).

The enhanced operational performance across all segments was reflected in the bottom-line figures. Net losses significantly decreased by 90.9% to reach CHF 1.5 million in 1H 2019 compared to a net loss of CHF 16.4 million in 1H 2018. It is important to note that 1H 2018 figures included Tamweel Group, Citadel Azur, Royal and Club Azur Hotels that were disposed during 2018. When figures of 1H 2018 are normalised for the revenues of the disposals, 1H 2019 revenues would have increased by 56.9% to CHF 223.0 vs. CHF 142.1 million in 1H 2018; and net loss would have reached CHF 1.5 million vs. a net loss of CHF 19.1 million in 1H 2018. “We are very pleased with the performance of the Group so far across the different destinations and are very confident about our company’s ability to achieve its FY 2019 targets of the year. The Group is currently undertaking a lot of initiatives in its different destinations, all geared towards fastening the road to scalability and shortening the timeline to profitability”, states CEO Khaled Bichara.

Group Hotels: Substantial growth despite seasonality effects
In 1H 2019, the Hotels segment continued to show double digit growth. The increase was backed by the improving performance of the Egyptian tourism sector since the beginning of the year in addition to the enhanced performance of our Omani hotels. A 14.1% growth in total revenue, from CHF 73.3 million in 1H 2018 to CHF 83.6 million in 1H 2019, accompanied by further operational enhancements, resulted in a 17.8% increase in GOPPAR, from CHF 28 in 1H 2018 to CHF 33 in 1H 2019 and an 18.6% increase in GOP, from CHF 27.9 million in 1H 2018 to CHF 33.1 million in 1H 2019. The segment’s Adj. EBITDA continued its uptrend and increased by 6.5% to CHF 27.8 million vs. CHF 26.1 million in 1H 2018. ODH is anticipating a further increase in demand during the second half of the year on the back of the opening of the two Thomas cook hotels in El Gouna, in addition to the removal of the German Travel ban on Taba, Egypt. It is worth mentioning that 1H 2018 figures included revenues from Citadel Azur, Royal Azur and Club Azur hotels that were sold and deconsolidated during 2018. Accordingly, when hotels figures are normalized for disposals of those hotels, 1H 2019 segment revenues would have increased by 22.6% and the Adj. EBITDA would have also increased by 20.9% compared to the same period last year.

Group Real Estate: Enhanced sales results and increased unit deliveries pushed the segment’s revenues
The Real Estate segment continued its solid operational and financial performance across all destinations. Net real estate sales increased significantly by 188.6% to CHF 284.6 million in 1H 2019 (1H 2018: CHF 98.6 million). Growth in sales was driven by the increase in unit sales in our first home market project in Cairo “O West” as well as El Gouna, Makadi Heights, Hawana Salalah and Luštica Bay. 1,058 units were contracted in 1H 2019 representing a growth of 135.1%. The segment’s revenue was the largest contributor to ODH’s top-line growth this quarter which jumped by 101.2% to CHF 116.9 million (1H 2018: CHF 58.1 million), on the back of increased deliveries across all our destinations in addition to the recognized land portion for the sold units in O West. The segment’s Adj. EBITDA recorded a 47.0% increase to reach CHF 34.7 million vs. CHF 23.6 million in 1H 2018. Total deferred revenue from real estate that is yet to be recognized until 2023 increased by 107.9% to reach CHF 385.4 million vs. CHF 185.8 million in 1H 2018. Additionally, total real estate portfolio receivable increased by 86.4% to CHF 512.0 million.

Group Destination Management: Increased revenues signaling more growth as destinations approach critical mass
The Destination Management segment continued to grow with more destinations moving closer to scalability. Some destinations like El Gouna, have long reached critical mass, while others, like Oman and Montenegro, are on their way to achieving sustainable growth. Revenues increased by 42.4% to CHF 22.5 million in 1H 2019 compared to CHF 15.8 million in 1H 2018, signaling growth and additional contributions from all destinations.

Group Corporate Updates: Completion of the monetization plan of Egypt’s non-core assets and debt rescheduling
ODH successfully concluded the sale of its non-core assets in Egypt with the completion of the sale of Tamweel Group for a total equity valuation of CHF 20 million and started receiving the CHF 18.5 million in cash proceeds. The Group also recently sold its 51% equity stake in the floating boat for an enterprise value of CHF 4 million. In June 2019, it was announced that the largest subsidiary in Egypt, Orascom Development Egypt (ODE) has successfully signed a CHF 228.1 million debt rescheduling package with the Egyptian banks. The transaction involved the immediate cash payment of CHF 19.5 million out of a total CHF 38.9 million, while the remaining to be paid during 2019. ODE's lenders agreed to reduce the interest rate margin on the foreign currency debt by 100 bps. This will result in savings of CHF 4 million in interest payments for 2019 and a total of CHF 19 million over the 6 years period (2019-2024).

Outlook 2019
For the full year 2019, ODH is targeting top-line revenues of CHF 400 million and an Adjusted EBITDA within the range of CHF 74 million to CHF 77 million. These estimates exclude the contribution of Citadel Azur, Royal Azur, Club Azur hotels and Tamweel Group that 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 million to CHF 470 million compared to CHF 200.6 million in 2018, capitalizing on its first home project “O West” and building on the positive momentum of El Gouna and Makadi Heights, Jebal Sifah, Hawana Salalah and Luštica Bay.


Details on Destinations
El Gouna, Red Sea
El Gouna hotels revenue grew by 21.8% to CHF 35.8 million vs. CHF 29.4 million in 1H 2018. GOP increased by 17.6% to CHF 18.0 million vs. CHF 15.3 million in 1H 2018. TRevPAR increased by 31.1% to CHF 80 compared to CHF 61 in 1H 2018, while ARR increased 28.8% to CHF 67 compared to CHF 52 in 1H 2018. It is worth mentioning that occupancy rate increased by 7.7% to 84% vs. 78% in 1H 2018. With the opening of Cook´s Club El Gouna (144 rooms) in mid-August 2019, and Casa Cook El Gouna (100 rooms) in October 2019, we anticipate a further increase in demand during the second half of the year.

Net real estate sales increased by 12.4% to CHF 67.8 million vs. CHF 60.3 million in 1H 2019. In April we added new inventory in Ancient Sand with a total amount of USD 12 million that was sold out in two weeks. On the construction side, we are progressing with the construction of Abu Tig Hills apartments to be delivered in Q4 2019, in addition to Tawila Phase 2, Um Jammar project and Fanadir Bay 2. Real estate revenues increased by 61.5% to reach CHF 47.8 million compared to CHF 29.6 million in 1H 2018.

Destination Management continued with its uptrend performance and rose by 35.6% to CHF 17.9 million (1H 2018: CHF 13.2 million). On the events side we are planning to host the 3rd edition of El Gouna Film Festival in September 2019. Following the immense success of the film festival we are now pursuing the inauguration of a concert and conference centre to be the best in Egypt.

First home market: O West, Egypt
In 1H 2019, total contracted real estate sales reached CHF 160.6 million. We are planning to launch a new high-end real estate apartment phase; with a total inventory of CHF 35.0 million in September of this year.

Total revenues reached CHF 23.8 million. It is worth mentioning that in 2019, only the land portion of the villas that were sold will be recognized as revenues. Higher margins from O West will start to kick in the year 2020 onwards. We will start site mobilization, earthworks and construction activities of O West during Q4 2019 and we are in advanced discussions with an international school to open its campus in O West.

Hawana Salalah, Oman
In Hawana Salalah, net real estate sales continued to strongly increase, soaring by 85.6% to CHF 21.8 million compared to CHF 11.8 million in 1H 2018. The increase was mainly driven by the successful launch of the Phase 1 of “Forest Island” project. We are planning to launch Phase 2 of the project with a total inventory of CHF 43.0 million. Real Estate revenues increased 10 times to CHF 20.5 million compared to only CHF 2.1 million. The increase in real estate revenues was witnessed on the back of the early unit deliveries in Hawana Lagoons real estate project.

Hotels in Hawana Salalah maintained its positive momentum with a 21.4% increase in revenue from CHF 19.2 million in 1H 2018 to CHF 23.3 million in 1H 2019, despite the seasonality effect of the quarter which also included Ramadan. Our efforts to diversify source markets and a consequent increase in selling rates lead to a 15% increase in GOPPAR, from CHF 41 to CHF 47 whereby ARR increased by 12.7% to CHF 123 in 1H 2019 vs. CHF 109 in 1H 2018. GOP showed a significant increase of 38.8%, from CHF 6.7 million in 1H 2018 to CHF 9.3 million in 1H 2019. Occupancy rates reached 64% during 1H 2019.

Luštica Bay, Montenegro
Net real estate sales continued its uptrend since the beginning of the year recording a 60% increase to reach CHF 13.6 million vs. CHF 8.5 million in 1H 2018. Construction is still underway on Luštica Bay’s town centre, Centrale. Operating only for around 90 days of the area’s high season, the Hotel reported CHF 1.5 million revenue, occupancy of 34% and TREVPAR of CHF 98.

Jebel Sifah, Oman
The 67 rooms boutique hotel continued to show positive figures, whereby revenues increased by 8.3% to CHF 1.3 million vs. CHF 1.2 million in 1H 2018. GOP also increased by 76.9% to CHF 0.23 million vs. CHF 0.13 million in 1H 2018. Occupancy rates increased by 17.9% to 46% compared to 39% in 1H 2018.

Real Estate sales were limited as we did not launch new projects. Net real estate sales reached CHF 6.7 million in 1H 2019. We are planning to launch a new real estate project in September with a total inventory of CHF 49 million. Construction of other real estate projects is progressing ahead of schedule, target delivery of Phase 1 - Sifah Heights is expected in September 2019. Additionally, we are handing over the final phase of the Golf Lake projects to the clients. Real estate revenues increased by 61.7% to reach CHF 13.1 million compared to CHF 8.1 million in 1H 2018, while total revenues from Sifah destination increased by 57.1% to CHF 15.4 million compared to CHF 9.8 million in 1H 2018.

Makadi Heights, Egypt
Makadi Heights continued to deliver excellent real estate sales results on the back of our new sales and marketing campaign efforts accompanied by an efficient masterplan. Net sales increased by 116.7% to CHF 13.0 million vs. CHF 6.0 million in 1H 2018. Destination Management revenues started to pick up and increased by 66.7% to CHF 0.5 million in 1H 2019. In addition, we are finalizing the legal documents for Makadi Gardens Hotel that was sold for CHF 6.4 million.

Taba Heights, Egypt
The continuous efforts to regain the destination’s positioning on the international travel map has started to show positive effects, whereby revenues doubled from CHF 2.3 million in 1H 2018 to CHF 4.6 million.  Occupancy increased by 77.3% to reach 39% compared to 22% 1H 2018. The revenue increase along with the streamlined operational structure allowed the destination to breakeven in 1H 2019.   In July, the German Ministry of Foreign Affairs announced that it has removed restrictions on all German airlines - imposed in October 2015 - to travel to Taba. As a result, the Group acted quickly and started negotiations with German Tour operators to commence charter flights to Taba as of November 2019 and therefore we anticipate a positive overall financial result for the destination in 2019. With other middle European countries also expected to lift travel restrictions, we should witness a significant influx of business into the destination during 2020 and a return to pre - Arab Spring performance in the following years. Now, with the lifting of the restrictions, the potential upside for the destination can be achieved, noting that in 2010, Taba Heights used to generate approximately USD 20 million of pure EBITDA.

The Cove, UAE
Despite challenging market conditions in Ras El Kheima and a general decline of revenues in the region, The Cove Rotana managed to maintain performance levels of 2018, with a hotel revenue of CHF 14.4 million and a GOP of CHF 5.6 million in Q1 2019 and occupancy rate of 71%. Total UAE revenues reached CHF 15.4 million.

© Press Release 2019

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