Orascom Development Holding AG: has released its consolidated financial results for Q1 2023.

Ad hoc announcement pursuant to Art. 53 LR.

Orascom Development Holding (“ODH”) (SIX ODHN.SW) has released its consolidated financial results for Q1 2023.

ODH total revenues reached CHF 130.9 million and net profit of CHF 10.5 million, despite the significant devaluation of the Egyptian pound which had a negative translation effect on Q1 2023 income statement reported in Swiss Francs

Key Highlights of Q1 2023:

• Total revenues reached CHF 130.9 million
• Adjusted EBITDA reached CHF 36.7 million with a margin of 28.0%
•  Net profit reached CHF 10.5 million 
•  Net real estate sales recorded sales of CHF 105.6 million
•  Signed a Master Agreement with the Egyptian Authorities during Q1 2023 that unlocks additional value from our Gouna’s flagship project

Altdorf, 17 May 2023 – During 2023 ODH was challenged by several periods of volatility and turbulence. Results were further impacted by the political and economic backdrop in Egypt especially after the Central Bank of Egypt’s (CBE) decision to float the Egyptian Pound (EGP) against foreign currencies. The appreciation of the U.S. Dollar against the EGP resulted in substantial revaluations of the debt held in US Dollars at the subsidiary and subsequently negatively impacted the Group’s P&L statement with a non-cash foreign exchange loss of CHF 13.7 million in Q1 2023.

Financial Review 
Q1 2023:

Revenues reached CHF 130.9 million, down by 7.8% (Q1 2022: CHF 141.9 million).  While gross profit reached CHF 42.4 million (Q1 2022: CHF 43.7 million) with a gross margin of 32.4% in Q1 2023 vs. 30.8% in Q1 2022. Although operational performance improved in Egypt, the significant devaluation of the EGP had a negative translation effect on Q1 2023 income statement. The tremendous increase of 36.2% in hotels revenue to CHF 40.6 million in Q1 2023 from CHF 29.8 million partially offset the decline in real estate revenues, resulting in a 7.8% decline in total revenues. Adj. EBITDA reached CHF 36.7 million (Q1 2022: CHF 37.5 million), with an improved Adj. EBITDA margin of 28.0% in Q1 2023. Other gains and losses reported a loss of CHF 15.4 million in Q1 2023. The one-off FX translation loss is mainly related to the devaluation of the EGP against foreign currencies that took place in January 2023. Our share of associates reported a profit of CHF 7.6 million vs. CHF 11.6 million in Q1 2022. The weakened performance in the associates was mainly driven by the lower performance of our share in Andermatt Swiss Alps, whereby the company reported a profit of CHF 7.3 million in Q1 2023 vs. a profit of CHF 10.3 million in Q1 2022 as the company did not pursue any land sales in Q1 2023 vs. same period last year. Finance costs increased by 16.5% to CHF 10.6 million in Q1 2023 (Q1 2022: CHF 9.1 million) due to the increase in interest rates.

Despite the challenging worldwide market environment ODH was able to overcome many of these headwinds to end the quarter with net income of CHF 10.5 million in Q1 2023 vs. CHF 17.5 million in Q1 2022. Adjusted net income excluding one-offs (which includes forex losses or gains along with any non-operational one-off transactions) would have reached CHF 25.9 million in Q1 2023 vs. CHF 26.6 million in Q1 2022.

Group Real Estate: Net real estate sales of CHF 105.6 million in Q1 2023, and segment’s revenues of CHF 76.8 million

New real estate sales for Q1 2023 reached CHF 105.6 million (Q1 2022: CHF 133.0 million). In Egyptian currency, the net real estate sales performance of the Group’s Egyptian subsidiary, ODE, has improved during Q1 2023. Yet, this operational enhancement was not totally reflected in ODH’s value of contracted units when translated into CHF. In Egyptian Pounds, the Egyptian subsidiary’s net real estate sales have increased by 35.9% vs Q1 2022. In Q1 2023 El Gouna slightly surpassed O West as the group’s largest contributor to new sales during the reported period (33%), followed by O West (32%), Makadi Heights (14%), Oman (11%), Lustica Bay (9%) and finally our latest addition West Carclaze in the UK (1%). Our average selling prices were affected by the EGP devaluation thus resulting in a decrease in Egypt’s sales. However, in local currency we managed to increase our average selling prices in Q1 2023 in El Gouna by 68.0%, in O West by 61.3%, and in Makadi Heights by 23.6%. Furthermore, we managed to increase our average selling prices in Swiss Francs also, as illustrated in Luštica Bay by 30.8% and in Sifah by 19.8% vs. the average selling prices reported in Q1 2022. Real estate revenues decreased by 18.4% to CHF 76.8 million in Q1 2023 (Q1 2022: CHF 94.1 million). Adj. EBITDA reached CHF 29.3 million in Q1 2023. Total deferred revenue from real estate that is yet to be recognized until 2027 recorded CHF 617.3 million in Q1 2023 (Q1 2022: CHF 712.2 million). Real estate cash collection also decreased by 7.5% to CHF 81.8 million in Q1 2023 due to the devaluation of the EGP.

Group Hotels: A significant surge in the hospitality portfolio, with huge increases in revenues and GOP across all our hotels

Our hotel segment had a good start, recording more than double digit growth for all main operational KPIs compared to the same period last year despite the global economic headwinds. Our hotels in the GCC are on the rise and hotels in El Gouna continue to be among the best in Egypt. Our hotels exhibited solid growth during the quarter, primarily driven by strong average daily rates and enduring leisure demand and an increase in occupancy rates across all our hotels. With further room for occupancy to increase, we look forward to it growing steadily in the future. Total revenues during Q1 2023 increased by 36.2% to CHF 40.6 million (Q1 2022: CHF 29.8 million) pushing our GOP to CHF 19.9 million, a 109.5% increase (Q1 2022: CHF 9.5 million). The winter season ended with promising results, as guests traveled further, stayed longer, and spent more at our hotels. Accelerating TRevPAR growth expanded our operating leverage and led us to generate CHF 13.8 million in Adj. EBITDA during Q1 2023, up 165.4% vs. Q1 2022.

Group Destination Management: Increased activities in the different destinations with more destinations coming to life in 2023

Our destination management segment results were affected by the devaluation of the EGP with revenues in Q1 2023 down by 25.0% to CHF 13.5 million (Q1 2022: CHF 18.0 million) while Adj. EBITDA reached CHF 0.6 million in Q1 2023.

Details on Destinations

El Gouna, Red Sea:
New real estate sales during Q1 2023 reached CHF 34.9 million (Q1 2022: CHF 49.7 million). In EGP, the net real estate sales performance of El Gouna has increased by 33.5% vs. Q1 2022. Our real estate average selling prices decreased to CHF 3,947/sqm vs. CHF 4,461 in Q1 2022, however in EGP we increased our average selling prices by 68.0% compared to Q1 2022. Throughout Q1 2023, we added a total new inventory of CHF 18.0 million in “Art Island” & “Ancient Sands Residences” real estate projects. A total of 703 units are being constructed with plans to deliver 462 units throughout 2023, of which 66 units were already delivered during Q1 2023. Real estate revenues recorded CHF 38.6 million (Q1 2022: CHF 44.1 million).

El Gouna continued its leading market position within Egypt’s tourism industry. Our revised business model, which demonstrated special focus on direct business conversions at higher average daily rates, delivered good quarterly results, benefiting from the destination’s leading local and regional market positioning. Revenues increased by 8.6% to CHF 16.5 million (Q1 2022: CHF 15.2 million). Hotels’ occupancy levels increased from 60% to 69% in Q1 2023. GOP increased by 56.1% to CHF 10.3 million during Q1 2023. Foreigners represented 87% of our total hotels' occupancy during Q1 2023. Moving to hotel development, we are progressing with the renovation process across Sheraton Miramar Resort El Gouna and The Three Corners Ocean View Hotel, with plans to be finalized during Q2 2023 and we successfully finalized the renovation of the Steigenberger Golf Resort El Gouna during February 2023. Town management revenues recorded CHF 10.8 million (Q1 2022: CHF 15.5 million). El Gouna total revenues reached CHF 65.9 million in Q1 2023 (Q1 2022: CHF 74.8 million).

O West, Egypt:
O West faced the same effect as El Gouna due to the EGP devaluation and recorded CHF 33.5 million in sales for Q1 2023, (Q1 2022: CHF 58.6 million). Average selling prices were CHF 1,703 per sqm in Q1 2023. In EGP currency, net sales increased by 8.6% vs. Q1 2022. On the development side, we are speeding up our construction pace, whereby we completed the construction of 444 villas and are progressing with the construction of 1,015 apartments and 236 townhouses, with plans to start delivering 710 units in Q2 2023. We started the construction of 119 units in the O West Business District. The construction work at O West Club is progressing as planned and is expected to be partially open by Q3 2023. O West recorded total revenues of CHF 21.0 million in Q1 2023 (Q1 2022: CHF 30.9 million).

Makadi Heights, Egypt:
Net real estate sales during Q1 2023 increased by 75.3% to CHF 14.9 million (Q1 2022: CHF 8.5 million). Additionally, we managed to increase our number of contracted units to 104 in Q1 2023, a 166.7% increase compared to 39 in Q1 2022. Makadi Heights is expecting to deliver a total of 350 units by 2023, most of which are early deliveries due to accelerating construction efforts. Total revenues from Makadi Heights reached CHF 2.4 million.

Hawana Salalah, Oman:
Hawana Salalah continued to witness a positive change of events, operationally and financially. Net real estate sales increased by 31.5% to CHF 7.1 million for Q1 2023 (Q1 2022: CHF 5.4 million). Total hotel revenues increased by 105.6% to CHF 14.6 million (Q1 2022: CHF 7.1 million). GOP reached CHF 7.3 million in Q1 2023 a tremendous 305.6% increase compared to CHF 1.8 million in Q1 2022. Occupancy rates increased to 85% in Q1 2023 vs. 54% in Q1 2022. Total revenues from Hawana Salalah increased by 61.9% to CHF 19.1 million (CHF 11.8 million in Q1 2022) benefiting from the rise in demand of the hospitality industry in Salalah.

Luštica Bay, Montenegro:
Net real estate sales increased by 40.6% to CHF 9.0 million for Q1 2023 (Q1 2022 CHF 6.4 million). Our average selling prices also increased by 30.8% to CHF 6,080/sqm vs. Q1 2022. Construction works are moving on plan, which is evident by the construction of 168 units in the “Centrale” and “Marina Village” areas and the finalization of two commercial residential buildings with retail spaces on ground floors. On the hotel side, The Chedi Hotel witnessed stability in terms of revenue, recording CHF 0.5 million in both Q1 2023 and 2022, despite lower occupancy rates of 10% during Q1 2023 (Q1 2022: 45%). Additionally, our town management revenues increased by 25.0% to CHF 0.5 million during Q1 2023. Total revenues from Luštica Bay were CHF 4.5 million (Q1 2022: CHF 6.1 million).

Jebel Sifah, Oman:
Net real estate sales slightly increased to reach CHF 4.5 million (Q1 2022: CHF 4.4 million). We managed to increase our average selling prices by 19.8% to CHF 2,961/sqm vs. Q1 2022. Construction progress and real estate deliveries in Jebel Sifah are continuing at a steady speed. Total revenues for Jebal Sifah increased by 32.3% to CHF 7.8 million in Q1 2023 (Q1 2022: CHF 6.0 million).

The Cove, UAE:
The Hotel’s occupancy rates reached 79% in Q1 2023 up from 67% in Q1 2022. Operationally, GOP increased by 21.1% to CHF 2.3 million vs. Q1 2022. Total revenues for The Cove increased by 7.0% to CHF 6.1 million (Q1 2022: CHF 5.7 million).

Outlook 2023:
The fiscal year 2023 started with challenging notes on both global and local fronts as global economic uncertainty intensified with the Russian and Ukrainian conflict. The global economic ramifications have pushed most central banks to raise interest rates. While the current state of the global business environment is uncertain and poses some operational challenges, we are confident that our strategies and business fundamentals will carry us forward through the challenging times. In 2023, we will continue to navigate the short-term challenges while striving to meet our long-term commitments. Despite the current uncertainties, we remain confident in the outlook for the global hospitality and real estate markets.

As always, we will remain focused on expanding our operations, protecting our profitability, and unlocking new value for our shareholders. The situation remains fluid and the outlook is subject to uncertainty. The management is closely monitoring the market developments. Nevertheless, we are continuing to abstain, at least for the time being, from providing guidance for 2023.

Presentation:

The associated financial statements and presentation can be found under the IR section of Orascom Developments’ website under the following links:

https://www.orascomdh.com/investor-relations

Telephone conference today at 2:00 pm CET (Zurich Time):

Orascom Development invites you to its Q1 2023 results conference call on 17 May 2023: at 2:00 PM CET (Zurich Time). Chief Executive Officer, Omar El Hamamsy, Chief Financial Officer, Ashraf Nessim, and Director of Investor Relations, Ahmed Abou El Ella will present Q1 2023 results and will be available to answer questions. A registration is not required.

Dial-in details are as follows:

Click here for webinar link

Event number: 989 5242 7370

Event password:  980994

A call recording will be available after the call

Contact for Investors:      
Ahmed Abou El Ella     
Director of Investor Relations    

Tel: +20 224 61 89 61
mobile: +20 122129 5555      
Email: ir@orascomdh.com

About Orascom Development Holding AG:

Orascom Development Holding is a leading international developer specializing in vibrant, integrated communities in Europe, the Middle East, and North Africa. For more than 30 years, Orascom Development has been a pioneer in creating destinations where people are inspired to live, work, and play with passion and purpose.

From El Gouna’s stunning Egyptian coastal town by the Red Sea to Andermatt Swiss Alps’ breath-taking, year-round mountain destination, each master-planned community is a testament to Orascom Development's commitment to place-making at its finest. The integrated towns harmoniously combine residential areas with private villas and apartments, hotels, and award-winning leisure and commercial amenities – including golf courses, marinas, sports facilities, retail shops and restaurants.

Orascom Development owns a land bank of more than 100 million square meters with nearly 40% developed or under development into thriving communities in Egypt (El Gouna, Makadi Heights, O West, Taba Heights, and Byoum), in the GCC (The Cove in the UAE and Jebel Sifah and Hawana Salalah in Oman), and in Europe (Andermatt Swiss Alps in Switzerland, Luštica Bay in Montenegro and West Carclaze Garden Village in the UK). Orascom Development’s hospitality portfolio includes 33 premium and luxury hotels with more than 7,000 rooms across Europe, the Middle East, and North Africa. ODH shares are listed on the SIX Swiss Exchange.

For more information, please visit https://www.orascomdh.com/.

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