Orascom Development Holding AG — Earnings Release 2011

Jun 6, 2011

News Details

Ad-hoc | 6 June 2011 07:00

Orascom Development Q1 2011 results

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

06.06.2011 07:00

Release of an ad hoc announcement pursuant to Art. 72 KR

Press Release

Orascom Development Q1 2011 results:
- Ongoing solid real estate pre-sales

• Operational profit with an EBITDA margin of 10% despite significant
  turmoil in its biggest market Egypt

• Sound financial position

Financial results of Orascom Development for the period ending 31 March
2011 were heavily impacted by the political turmoil in Egypt while the
performance in other destinations was solid. Overall, Orascom Development
was able to withstand this unprecedented situation and the Group's business
model proved its resilience. Total turnover decreased by 55% from CHF 117
million to CHF 53 million and the net profit (after non-controlling
interests) by 98% from CHF 26 million to CHF 0.6 million. The operating
profit margin fell from 48% to 10%. Hotel revenues dropped by 40% to CHF 28
million as occupancy rates in Egypt fell to 42% following the political
unrest. Real estate and construction revenues decreased by 71% from CHF 44
million to CHF 13 million, because construction activities in Egypt have
been halted for 50 days and no revenues were recognized during this
timeframe. However, at CHF 26 million real estate pre-sales excluding basic
affordable housing were above the previous year level and confirm the
Group's ability to increase pre-sales in its new destinations. First
quarter results are not indicative for full-year 2011. In the last weeks,
the political situation in Egypt has recovered, leading to better occupancy
rates in Egyptian hotels and real estate construction activities have
picked-up. Furthermore, the second half of the year is usually much
stronger for Orascom Development.

Altdorf/Cairo, 6 June 2011 - In Q1 2001, the Orascom Development Holding AG
(Orascom Development) was materially impacted by the Egyptian revolution,
as many businesses came to a near stand-still for nearly 50 days. Despite
ongoing diversification, Egypt remains the biggest single market for the
Group and therefore the impact on overall results was significant. However,
operations outside Egypt performed in line with expectations in both hotels
and real estate and the projects under construction in Oman, Switzerland
and Morocco made good progress. Overall, the Group was able to manage the
effects of the unprecedented crisis situation in its home market and
protect its businesses successfully as highlighted by a positive operating
result whilst maintaining a sound financial position. Total consolidated
revenues declined by 55% from CHF 117 million for the same period last year
to CHF 53 million, due to the events in Egypt and the deconsolidation of
the Tours Operations activities in the second half of 2010. Gross profit
dropped by 89% from CHF 37 million to CHF 4 million and the profit for the
period (after non-controlling interests) decreased from CHF 26 million to
CHF 0.6 million. The EBITDA margin moved down from 48% in Q1 2010 to 10% in
Q1 2011.

Improved hotel performance outside Egypt
Revenues in the hotel segment decreased by 40% from CHF 46 million to CHF
28 million and amounted for 53% of the Group's sales in the period under
review. Tourism in Egypt was significantly impacted by the issuance of
security warnings and travel bans following the turmoil that started in
January 2011. As a consequence, occupancy rates in our Egyptian
destinations fell from 71% in Q1 2010 to 42% in Q1 2011 while Average Room
Rates fell from CHF 55 to CHF 48. On the other hand, hotel operations in
the U.A.E. and in Jordan improved with an occupancy rate of 77%, up from
58% a year earlier. Shortly after the end of the reporting period,
occupancy rates in Egypt have improved gradually following the removal of
most travel bans to Egypt. However, the number of flight connections
remains subdued because capacities have been shifted to other destinations
and these will only be re-allocated to Egypt over time.

Real estate pre-sales remain on solid level
Real estate and construction revenues accounted for 24% of total Group
sales. Segment turnover was at CHF 13 million, 71% below last year's level
of CHF 44 million, mainly due to the events in Egypt. Because construction
activities in Egypt had to be halted for almost 50 days, planned real
estate and construction revenues in the amount of approximately CHF 33
million (resulting from pre-sold units being under construction) had to be
postponed. Furthermore, real estate reservations in the amount of CHF 50
million were not booked yet as part of contracted units because of
administrative delays. These pre-sales will be booked in Q2 2011. The total
value of contracted units that could be considered in Q1 2011 amounted to
CHF 27 million in comparison to CHF 31 million last year. It is important
to note that - despite the administrative delays - the value of contracted
units excluding basic affordable housing was above the previous year's
performance (CHF 26.10 million vs. CHF 25.65 million) while the average
selling price surged by more than 60%. This reflects the balanced and
diversified real estate portfolio of Orascom Development as well as the
fact that the destinations outside Egypt are becoming more important and
offer protection against unfavourable developments in Egypt.

Sound financial base
With an equity ratio of 57%, Orascom Development continues to operate on a
solid capital base. The cash position of CHF 241 million will allow for
future investments in order to advance the numerous projects of the Group.

Outlook full-year 2011
In consideration of the special situation in Egypt and the seasonality in
the company's business, first quarter results should not be indicative of
2011 full-year performance. The third and fourth quarters are normally the
most important contributors to top line revenues as well as the bottom
line. Nevertheless, the turmoil in Egypt and the Arab world reduced
visibility of the business in the region. The expansion of our
international activities will advance without interruption and real estate
pre-sales are expected to remain on a good level. Orascom Development
estimates that the diversification of its revenues across different
geographical areas will continue and thereby broaden its operations. Sales
target in Andermatt for 2011 remains unchanged at CHF 120 million.

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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 12 315 32 00
Email: ir@orascomdh.com

Swiss Media Office
Philippe Blangey
Tel: +41 41 874 17 11
Email: media@orascomdh.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
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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.

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Language: English
Company: Orascom Development Holding AG
Gotthardstraße 12
6460 Altdorf
Schweiz
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

End of Announcement EquityStory News-Service

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