Orascom Development Holding AG — Earnings Release 2011

Nov 16, 2011

News Details

Ad-hoc | 16 November 2011 06:00

Orascom Development 9M 2011 results

Orascom Development Holding AG / Key word(s): Quarter Results

16.11.2011 06:00

Release of an ad hoc announcement pursuant to Art. 53 KR

Press Release

Orascom Development 9M 2011 results:
- Turbulences in Egypt heavily impacting results

• Revenues of CHF 163 million and operational profit margin (EBITDA) of
  4%

• Real estate pre-sales up by 30% reaching CHF 85 million (excluding
  budget housing)

• Full-year 2011 revenues expected at CHF 260-280 million with an EBITDA
  margin in the range of 2-4%

The financial results of Orascom Development for the period ending 30
September 2011 were heavily impacted by the political turmoil in Egypt and
the Arab World. Despite a turnover decrease of more than 50% the Group was
still able to achieve an operational profit and thereby demonstrating that
the business model performs even under adverse conditions. Total revenues
declined by 57% to CHF 163 million and an EBITDA of CHF 6 million was
generated. Hotel revenues dropped by 40% to CHF 84 million due to the
decline in occupancy rates as almost 90% of the Group's operating rooms are
located in Egypt. Real estate and construction revenues decreased by 76% to
CHF 41 million due to a slowdown in construction works in both Egypt and
Oman. However, the Group's diversification strategy continued to be
successful. At CHF 85 million, real estate pre-sales (excluding budget
housing) increased by 30% compared to the last year's level confirming the
Group's ability to benefit from its diversified portfolio of projects. The
Group remains conservatively financed with an equity ratio of 55%. Orascom
Development expects to achieve total revenues of CHF 260-280 million and an
EBITDA margin of 2-4% in 2011.

Altdorf/Cairo, 16 November 2011 - The negative impact of the political and
economic upheavals in Egypt and the Arab World continued to negatively
affect the results of Orascom Development Holding AG (Orascom Development
or the Group) during the third quarter 2011. The destinations in Egypt and
Oman suffered particularly whilst results in Switzerland and the other
European destinations were in line with expectations. This unfavorable
operating environment combined with the deconsolidation of the Tours
Operations activities in the second quarter of 2010 resulted in a decrease
of total consolidated revenues of 57% from CHF 380 million in the previous
year to CHF 163 million in the period under review. Gross profit declined
by 78% from CHF 112 million to CHF 25 million. Administrative expenses
surged due to provisions for investments in the Middle East and legal
charges in the amount of CHF 17 million. Furthermore, the revaluation of
bank balances in foreign currencies led to further losses of CHF 14
million. These effects turned the operating profit of CHF 6 million into a
loss for the period (after non-controlling interests) of CHF 19 million.
The EBITDA margin moved down from 40% in the first nine months of 2010 to
4% in the reporting period. The Group remains conservatively financed with
an equity ratio of 55% and a leverage ratio of 0.82. This solid balance
sheet structure would allow increasing the level of indebtedness in order
to finance projects or the construction of hotels.

Hotel occupancy rates rising again
Egypt remains the biggest market for the Group with 90% of all operating
rooms located in this country. As a consequence, revenues in the hotel
segment decreased by 40% from CHF 140 million to CHF 84 million and
amounted to 51% of the Group's revenues in the period under review.
Occupancy rates fell strongly with the outbreak of the revolution in Egypt
and reached their lowest level of 24% in February 2011. Since then, hotels
have witnessed a healthy recovery in room occupancy rates which reached 54%
at of 30 September 2011 compared to 74% a year earlier. These lower
occupancy rates combined with the weakness of the Euro, the main currency
under which contracts with tour operators are signed, led to lower Average
Room Rates which fell from CHF 63 to CHF 54. The Group is now reassessing
its hotel sales strategy and plans to develop an internet-based sales
network in order to both increase the number of guests and boost revenues
in its Egyptian hotels. Flight connections to Egypt remain below past
levels because capacities have been shifted to other destinations. However,
the situation is improving gradually as some tour operators are adding
flight capacities while other operators cancel their charters at the same
time.

Real estate pre-sales up 30% (excluding budget housing)
Real estate and construction revenues accounted for 25% of total revenues.
Segment revenues amounted to CHF 41 million, 76% below last year's level of
CHF 172 million mainly due to a slowdown in construction activities and the
strengthening Swiss Franc which affected revenues by CHF 17 million.
Construction activities in Egypt were subdued throughout the period under
review including a complete halt for almost 50 days during the first
quarter of 2011. Furthermore, lower collections of receivables in Oman
significantly affected the pace of construction. In Europe, Orascom
Development continued to advance construction in its strategic project in
Andermatt and has achieved sound pre-sales. This solid performance is
reflected in a rising total value of contracted units which increased from
CHF 91 million to CHF 93 million. It is important to note that these real
estate pre-sales excluding budget housing increased by 30% from CHF 65
million to CHF 85 million. Deferred income - the value of all contracted
units under construction - reached CHF 255 million (up from CHF 189 million
a year ago) and will positively affect the income statement in the coming
quarters. Overall, destinations outside Egypt are becoming more important
and offer some protection against unfavorable developments in the Group's
home market which is expected to remain weak at least until end of the
year.

Outlook full-year 2011
Orascom Development expects to achieve full-year 2011 revenues in the range
of CHF 260-280 million and an EBITDA margin of 2-4%. Nevertheless, the
Group estimates that the diversification of its revenues across different
geographical areas will continue and thereby broaden its operations and
diversify the risk.

Key financials

Income Statement Indicators 9M 2011 9M 2010 % Change
Total revenues 162,899,7 380,080 (57%)
11 ,453
Hotels 83,719,302 139,526 (40%)
,900
Real estate and construction 41,416,644 171,737 (76%)
,542
Land sales 1,464,929 781,994 87%
Town management 13,524,948 16,244, (17%)
053
Tours operations 1,544,418 29,246, (95%)
280
Other operations 21,229,470 22,543, (6%)
684
Gross profit 24,590,084 111,597 (78%)
,606
Gross profit margin 15% 29% (48%)
EBITDA 6,382,471 151,066 (96%)
,875
EBITDA margin 4% 40% (90%)
Loss/Profit for the period (before non- (18,778,8 99,856, (119%)
controlling interest) 02) 714
Loss/Profit for the period (after non- (18,929,7 76,007, (125%)
controlling interest) 29) 021
Basic and diluted earnings per share (0.67) 3.27 (120%)
(EPS)

Balance Sheet Indicators 9M 2011 12M 2010 % Change
Total assets 1,991,653,106 2,093,438,187 (5%)
Total liabilities 894,521,033 900,294,363 (1%)
Total equity 1,097,132,073 1,193,143,824 (8%)
Net debt1 407,951,360 235,315,984 73%
Net debt/EBITDA 63.92 1.56 3997%
Net debt/Market Cap 0.82 0.20 310%
Leverage ratio2 0.82 0.75 9%
Equity ratio3 0.55 0.57 (4%)

1 Net debt is calculated by deducting cash and bank balances from total
borrowings.
2 Leverage ratio is calculated by dividing total liabilities by total
equity.
3 Equity ratio is calculated by dividing total equity by total assets.

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Information and Explaination of the Issuer to this News:

About the Group

Orascom Development Holding AG (Orascom Development) is a leading developer
of fully integrated towns that include hotels, private villas and
apartments, leisure facilities such as golf courses, marinas and supporting
infrastructure. Orascom Development's diversified portfolio of projects is
spread over nine jurisdictions, with primary focus on touristic towns and
recently affordable housing.

Orascom Touristic Establishments (OTE) was established in 1989 setting the
first step in building the Group's track record in the development of
integrated towns. After some name changes and reorganization, the main
business was held under Orascom Hotels & Development (OHD). Since the
settlement of the public exchange offer by Orascom Development for OHD,
Orascom Development became the new parent of OHD. Orascom Development has a
dual listing, with a primary listing on the main board of the SIX Swiss
Exchange (ISIN: CH0038285679) and a secondary listing on the EGX Egyptian
Exchange (ISIN: EGG676K1D011). In December 2009, the Group modified its
secondary listing on the EGX. While the Group's shares had previously been
trading on both the SIX and the EGX in Swiss Francs, Orascom Development at
that time procured the issuance and listing of Egyptian Depositary Receipts
(EDRs; each EDR representing 1/20 of the Group's share) which are currently
trading on the EGX in Egyptian pounds. The objective of this modification
is to improve trading and liquidity on the EGX.

Today, Orascom Development operates in nine jurisdictions (Egypt, Jordan,
UAE, Oman, Switzerland, Morocco, United Kingdom, Montenegro and Romania)
and is continuously seeking development opportunities in untapped yet
attractive locations all over the world. The Group has four existing
projects: El Gouna, the flagship project, a fully-fledged town on the Red
Sea coast (Egypt). Taba Heights, on the Sinai Peninsula (Egypt), is the
Group's second tourism destination following El Gouna's business model. The
Cove (Ras Al Khaimah, UAE) is the Group's first development experience
outside Egypt. Haram City, an integrated town dedicated to affordable
housing in Egypt, catering for the mass population.

For further information, please contact:
Orascom Development Holding AG
Mamdouh Abdel Wahab
Director Investor Relations
Tel: +41 79 846 55 60
+20 122 315 32 00
Email: ir@orascomdh.com

Orascom Development Holding AG
Swiss Media Office
Philippe Blangey
Tel: +41 41 874 17 11
Email: media@orascomdh.com

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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.

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Language: English
Company: Orascom Development Holding AG
Gotthardstraße 12
6460 Altdorf
Switzerland
Phone: +41 41 874 17 11
Fax: +41 41 874 17 12
E-mail: ir@orascomdh.com
Internet: www.orascomdh.com
ISIN: CH0038285679
Swiss Security Number: A0NJ37
Listed: SIX

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