Orascom Development Holding ("ODH") (SIX ODHN.SW) has released its consolidated financial results for Q1 2021.

Orascom Development Holding reports net profit of CHF 3.1 million

Key Highlights of Q1 2021

- Total revenues up 14.6% to CHF 106.5 million compared to same period last year

- Net profit of CHF 3.1 million vs. a net loss of CHF 4.2 million in Q1 2020

- Operating EBITDA recorded a significant increase of 93.4% to CHF 29.4 million

- Cash balance of CHF 223.7 million, up 14.3% compared to CHF 195.7 million in FY 2020

- Net real estate sales up 35.4% to CHF 145.8 million

- Real Estate deferred revenue balance grew by 19.5% to CHF 633.8 million

Altdorf, 18 May 2021 - Orascom Development Holding started the year on solid grounds with strong operational and financial results, despite the prevailing headwinds from Covid-19 affecting our hospitality segment. The growth during the first quarter of the year was driven by significant increase in our real estate segment performance.

Financial Review

A Strong First Quarter
Revenues reached CHF 106.5 million, up 14.6% compared to CHF 92.9 million in Q1 2020, the boost in revenues resulted from the acceleration of our construction activities in our destinations in Egypt. Gross profit margin increased to 33.4%, (Q1 2020: 25.2%) with a value of CHF 35.6 million (Q1 2020: CHF 23.4 million). The Group continued to monitor its costs during the quarter with smart spending initiatives. SG&A expenses decreased by 8.4% to CHF 8.7 million in Q1 2021. The decrease was mainly due to the cost saving initiatives implemented in response to Covid-19, and the prioritization of continued cost-control measures.

Surge in operational and net profits
Operating EBITDA surged by 93.4% to CHF 29.4 million (Q1 2020: CHF 15.2 million), and EBITDA also increased by 85.6% to CHF 25.8 million (Q1 2020: CHF 13.9 million). The Group ended the quarter on a positive note, recording CHF 3.1 million in profits vs. a loss of CHF 4.2 million in 1Q 2020. It is important to note that bottom line results had a negative FX impact of CHF 1.6 million in Q1 2021 vs. a positive impact of 0.4 million in Q1 2020. The company was able to generate CHF 7.4 million in cash from operations.

ODH continued its prudent cash management and business optimization initiatives, further fortifying the group's balance sheet and maintaining an enhanced liquidity stance. Total cash balance reached CHF 223.7 million, an increase of 14.3% from CHF 195.7 million in FY 2020, total debt reached CHF 454.0 million and net debt reached CHF 230.2 million (FY 2020: CHF 233.9 million).

Group Real Estate: Sales of CHF 145.8 million in Q1 2021, a 35.4% growth compared to Q1 2020 coupled with accelerated constructions, boosting our segment's revenues to CHF 83.4 million

Real estate segment continued its outstanding operational and financial results. Growth in sales was supported by the general recovery of the home buyers' market in addition to the increased demand on secondary homes especially in the Red Sea area, Egypt and in our Omani destination Jebal Sifah, which is considered a quick gateway or "staycation" to Muscat residents. We sold 441 unit during the quarter, an increase of 42.7% compared to the same period last year. Net real estate sales reached CHF 145.8 million, an increase of 35.4% compared to CHF 107.7 million reported in Q1 2020. It is worth mentioning that Q1 2020 sales figures included CHF 18.4 million of commercial sales from the sale of the School Development Agreements in O West. Excluding the commercial sales, our real estate net sales would have increased by 63.5% to CHF 145.8 million vs. CHF 89.2 million in Q1 2020. El Gouna was the group's largest contributor to new sales during the reported period (40%), followed by O West (31%), Makadi Heights (13%), Oman (12%) and finally Lustica Bay (3%). We managed to increase our average selling prices in Q1 2021 for El Gouna by 7.3%, O West by 19.1%, Makadi Heights by 61.9% and for Jebal Sifah by 6.3% vs. the average selling prices reported in Q1 2020.

Real Estate revenues increased by 88.3% to CHF 83.4 million in Q1 2021 (Q1 2020: CHF 44.3 million). Operating EBITDA also increased by 204.1% y-o-y to CHF 37.4 million in Q1 2021 (Q1 2020: CHF 12.3 million). The increase in real estate revenues was driven by the accelerated construction pace across our projects in Egypt since the beginning of the year. Total deferred revenue from real estate that is yet to be recognized until 2025 increased by 19.5% to CHF 633.8 million in Q1 2021 (Q1 2020: CHF 530.2 million). Total real estate portfolio receivables increased by 31.4% to CHF 856.1 million in Q1 2021 (Q1 2020: CHF 651.4 million).

Group Hotels: Although the Segment's results was still impacted by the global pandemic, the Group was able to swiftly resort to the necessary cost saving initiatives, mitigating liquidity disruptions

Operational and financial results of the company's hotel segment during Q1 2021 were still significantly impacted by the outbreak of Covid-19 pandemic which started in early-March 2020. Pressure on the segment's operational performance is still being witnessed in 2021 on the back of weak international travel. Currently, our hotel business is highly dependent on local tourism. The company has responded to these conditions with a resolute plan to temporarily lower hotel operating costs, which mitigated the impact of disruptions on the liquidity position of these assets. Operationally, we implemented heightened cleanliness standards across our hotels to enhance the safety and wellbeing of our associates and guests. Revenues of the segment were down 70.1% to CHF 10.6 million (Q1 2020: CHF 35.5 million). Operating EBITDA of the segment was negative CHF 2.4 million in Q1 2021 compared to positive CHF 10.1 million in Q1 2020.

The Group continues to keep a close eye on protecting its cash balance and monitoring its costs. Today, all our efforts are focused on the recovery of the tourism sector. With global business trends improving slightly now with the ramp-up of the vaccine. We are optimistic and confident that the tourism will return back to some level of normalcy soon.

Group Destination Management continues its resilient performance

Destination management segment started the year with a solid set of results, securing a recurring revenue stream to the group, despite the ups and downs of the tourism cycles. Revenues in Q1 2021 were down by 4.6% to CHF 12.5 million (Q1 2020: CHF 13.1 million) while operating EBITDA reached CHF 0.6 million in Q1 2021.

The enhanced performance of the segment resulted from the successful restructuring implementation. A crucial element of our focus during the second half of the year will be put towards streamlining our segment's recurring revenues stream. Ensuring the consistent and predictable flow of revenue from this segment is part of our forward-looking strategy.

Details on Destinations

El Gouna, Red Sea - Continues to withhold its stance as being the «destination of choice»
Net real estate sales increased by 113.8% to CHF 59.0 million compared to CHF 27.6 million in Q1 2020 with 87 contracted units compared to 52 units in Q1 2020. We continued to increase our average selling prices by 7.3% to CHF 3,567 per sqm (Q1 2020: CHF 3,323 per sqm). The double-digit growth in sales was driven by our efforts to capture the continued demand from the concentration of extended-stay during the lock-down. In the reported quarter, we added new inventory of USD 64.3 million in "Shedwan" and "Ancient Sands Villas" and we are also planning to add new inventory in Cyan project, capitalizing on the great success this project witnessed when it was launched in 2019.

We are planning to deliver 238 units this year, with main deliveries happening in Tawila, Ancient Sands and Cyan, committing to meeting our contractual delivery obligations. 119 units were handed over to clients in Q1 2021. Real estate revenues continued its uptrend with a 72.2% increase to CHF 40.8 million in Q1 2021 (Q1 2020: CHF 23.7 million).

El Gouna hotels segment remains to be impacted by the pandemic and the hotels are still operating at 50% of their total capacity since June 2020, with locals representing more than 95% of the guests. With the slowdown of the business activity in the winter months, which are less attractive to the locale clientele, management swiftly proceeded to right sizing the business by the temporary full closure of 3 hotels. The decision afforded a positive GOPPAR of CHF 3. While GOP remained positive and reached CHF 0.6 million compared to CHF 5.9 million in Q1 2020. The ARR's remained stable at CHF 66. Occupancy rates were down by 58.1% to reach 26% in Q1 2021 (Q1 2020: 62%).

It is worth mentioning that hotels started 2020 on a positive note, recording higher revenues and occupancy rates for the months of January and February. However, starting in early-March, Covid-19 pandemic began to affect our hotels operations significantly. Today, El Gouna is operating at only 40% of its room capacity. Strong interest from local business events is being witnessed in the 2Q21 following our intensive local campaigns. In April, all El Gouna Hotels were audited by TÜV Nord Egypt for compliance with local regulations and the international best practices of food safety and culinary supply standards.

Destination management continued its positive momentum despite Covid-19 impact with revenues down only by 1.0% in Q1 2021 to CHF 10.4 million. Total revenues for El Gouna were up 16.4% to CHF 56.8 million in Q1 2021 compared to CHF 48.8 million in Q1 2020.

O West, Egypt - A good start for the first home market during Q1 2021
We sold 160 units during Q1 2021, an increase of 8.1% compared to the 148 units in Q1 2020. Net real estate sales reached CHF 45.4 million, compared to CHF 60.3 million in Q1 2020. It is worth mentioning that Q1 2020 sales figures included CHF 18.5 million of commercial sales resulted from the sale of the School Development Agreements in O West. So, excluding the commercial sales our real estate net sales would have increased by 8.6% to CHF 45.4 million in Q1 2021 vs. CHF 41.8 million in Q1 2020. Our newest launch was in February 2021, "Qemet", a real estate project with a total inventory of CHF 438.0 million. The launched phase included only CHF 99.3 million. We are also planning to add more inventory in "Qemet" during Q2 2020 capitalizing on the huge product demand.

Speed up our construction pace
We continued to speed up our construction pace in the destination with 406 villa skeleton keys already being visible and planning to start construction for the 185 sold apartments mid-May 2021. Construction of the three schools has also started in Q1 2021. The Schools are expected to be operational with the start of the academic year of September 2022. We are finalizing the development of O West Club masterplan, which will be a main add-on to the destination. In Q1 2021, a total of 160 new memberships were added to O West Club (membership fee is CHF 10,3K), bringing the total number of memberships in the club to 1,642 memberships, securing a steady recurring income flow. We hosted several events on-site allowing our homeowners and prospective clients a chance to witness the live construction progress. Events included O West Rally, Tough Mudder and a collaboration with Art D'Egypte where artists and designers worked on installations and designs that are to be integrated within O West for our future homeowners. Total revenues of O West increased by 433.3% to CHF 20.8 million (Q1 2020: CHF 3.9 million).

Jebel Sifah, Oman - Muscat's Gateway Destination on the rise
Jebal Sifah is now acting as a gateway for the residents of Muscat and continued to show a significant improvement in real estate sales and hotel usage. Net real estate sales increased by 279.5% to CHF 14.8 million in Q1 2021 (Q1 2020: CHF 3.9 million). In Jebel Sifah, "The Beachfront" real estate project which features a unique selection of 117 seafront villas, townhouses, and apartments, is trending ahead of schedule in terms of construction progress. Whereby we are starting the construction of two buildings in Jebel Sifah Heights and the new beach restaurant, in May of this year. Total real estate revenues increased by 5.9x to CHF 7.1 million in Q1 2021 (Q1 2020: CHF 1.2 million).

Short term rentals and Sifawy Boutique Hotel's occupancy were higher than last year with reliance on local tourism from Muscat residents, operating at 100% capacity during some weekends and national holidays. Hotel occupancy was at 54% in Q1 2021 in comparison to 41% in Q1 2020. Total hotel revenues remained stable at CHF 0.6 million in Q1 2021. March witnessed a remarkable increase in apartment rental room nights, primarily due to school vacations. F&B outlets, Al Sabla The Beach Bar, The Bank Beach Club, Crafty Kitchen and The View also benefitted from the increased weekend footfall. Town management revenues reached CHF 0.5 million in Q1 2021. Total revenues for Jebal Sifah destination increased by 256.5% to CHF 8.2 million in Q1 2021 (Q1 2020: CHF 2.3 million).

Makadi Heights, Egypt - Robust growth across all aspects
Makadi Heights started the year with robust growth in real estate net sales reaching CHF 18.4 million in Q1 2021 (Q1 2020: CHF 5.6 million), up 3.3x y-o-y. 106 units were sold in Q1 2021 versus only 37 units in Q1 2020. We were able to increase our average selling prices per sqm by 61.9% in Q1 2021 to CHF 1,659. The increase in sales was driven by our strategy to capture the demand with a tailored product mix suited for today's market dynamics. The recent launch of Makadi Heights' newest cluster "Cape ", with a total inventory of c. CHF 23.4 million witnessed very compelling demand. We also added c. CHF 4.1 million of inventory in "Topio". We are planning to expand the Cape cluster by adding CHF 30 million in inventory in Q2 2021, capitalizing on the huge success of the project. We are continuing to speed up the construction of Phase 2 of the project with plans to deliver 244 units in 2022.

Real estate revenues increased by 15.8x to CHF 6.3 million (Q1 2020: CHF 0.4 million). With a full team present in the destination, a lot of effort was put into reviving its livelihood to ramp-up occupancy rates and accommodate real estate prices, such as launching mega events, closing deals with anchor tenants, kick starting resale and rental services, and revamping public landscaping and services. We also started monthly sports program to homeowners in an effort to keep them engaged and increase the destination's livelihood. In March 2021, we successfully hosted "Makadi Heights Football Tournament" the first mega event in 2021. Total revenues from Makadi Heights increased by 8.3x to CHF 6.6 million (Q1 2020: CHF 0.8 million).

The Cove, UAE - Continues to be the best performing hotel destinations
The Cove, Ras Al Khaimah, continues to be the best performing destination. The Hotel's occupancy declined by 7ppts to stand at 43%, down from 51% in Q4 2020 and 20ppts compared to Q1 2020. On the operational level, the hotel reported a total revenue of CHF 3.6 million in Q1 2021 (Q1 2020: CHF 5.1 million), GOPPAR reached CHF 24, down from CHF 36 in Q1 2020. All measures to optimize operational costs are in place and we continue to capitalize on local and regional business through targeted sales promotions and market campaigns. We anticipate that demand for The Cove will return to pre-Covid levels once our traditional source markets open up for travel.

Hawana Salalah, Oman - Hotels remain closed
Hawana Salalah continue to be profoundly impacted by COVID-19. Though hotels' occupancy remains on the very low levels due to locally enforced lockdowns, real estate construction progress was steady during Q1 2021. Lily project is in the pre-delivery stage of finishing, with handover expected to commence in June 2021, while the construction of Laguna Gardens is progressing as scheduled with on-time delivery of Phase I commencing at the end of Q4 2021. Net real estate sales decreased by 57.4% to CHF 2.9 million in Q1 2021 compared to CHF 6.8 million in Q1 2020 and real estate revenues reached CHF 5.1 million in Q1 2021. Total hotels revenues were down 97% to CHF 0.4 million in Q1 2021. The Salalah Rotana Resort and Juweira Boutique Hotel operations continued to be closed during Q1 2021, while Fanar Hotel & Residences operated at 5% occupancy, with the hotel's beaches only accessible to hotel guests, as per the Supreme Committee directives. Efforts in Hawana Salalah remain geared towards minimizing costs to the lowest possible levels, while attracting local business through awareness campaigns and targeted sales promotions.

In April, a 6:00 pm curfew was imposed, which we expect to have a negative impact on retail performance in coming months. On the costs side, Destination Management team was able to reduce operational costs by freezing new hires and controlling expenditure on materials. The Hawana Aqua Park remains closed. Total revenues from Hawana Salalah destination decreased by 76.5% to CHF 6.1 million in Q1 2021 (Q1 2020: CHF 26.0 million).

Luštica Bay, Montenegro - Experienced a positive start to the year
Additional activities to increase the overall attractiveness of the destination supported hotel occupancies and F&B revenues. Occupancy rates reached 9% in Q1 2021 compared to 4% in Q1 2020. Our regional sales efforts, in addition to, favourable weather conditions afforded an increase in the hotel's revenues and GOP.

Net real estate sales started to pick up and increased by 75.9% to CHF 5.1 million (Q1 2020: CHF 2.9 million). In the Marina Village area, we are finalizing the construction of 23 units. In the Central area we started the construction of 48 units. Real estate revenues increased by 7.1% to CHF 3.0 million in Q1 2021. Infrastructure for water supply and transport to the golf course is currently being developed, while works on the first holes and the irrigation pipeline will start in Q2 2021. New retail outlets are expected to feature in Marina Village for summer 21. Additionally, we added two tennis courts, one beach volleyball court, and a basketball/multisport court. We also upgraded the golf area with additional facilities. Total revenues for Luštica Bay increased by 16.1% y-o-y to CHF 3.6 million.

Taba Heights, Egypt - Cash burn rate reduction with several cost savings initiatives in place.
Taba Heights continues to struggle due to Covid-19 impact and remains the most challenging destination to the group. Borders are still closed since March 2020. Accessibility from within Egypt has always been, and continues to be, a major challenge. During Q1 2021, only Strand Beach & Golf Resort has been opened with 163 rooms out of the existing 503 rooms and is filled by local business. We will continue to reduce our cash burn rate and implement several cost savings initiatives while making sure to have Taba Heights ready to re-open at full capacity when circumstances improve, and tourists return. During Q1 2021, total revenues reached CHF 0.2 million (Q1 2020: CHF 1.7 million). Occupancy rate remained low at 4% compared to 28% in Q1 2020. Taba Heights GOP loss narrowed down by 50% to CHF 0.4 million Q1 2021.

Outlook 2021: Path towards a sustained recovery
Looking into 2021, visibility remains limited as demand may still be impacted by the ongoing fluid circumstances resulting from the pandemic and the timing of the vaccine roll-out. Accordingly, ODH still stands with its earlier position and abstains from providing full-year guidance on its 2021 results; however, we remain diligent in providing updates of the evolving situation during all our quarterly results calls and market communications as needed.

Q1 2021 was a great quarter for ODH, and a strong start to our fiscal year. We believe that we are well-positioned to accomplish our strategic initiatives and have the right team in place to continue to build on our legacy of success. We have seen solid growth across our real estate and town management segments that has helped us compensate the drop in our hotels segment, as Covid-19 ramifications continue the weight on the segment's performance.

For the remainder of the year, we are planning to continue accelerating our real estate construction to meet contractual dates, ultimately increasing the real segment's revenues. We will also leverage on our town management's operation and steady growth. Further expanding the number of residents, demonstrating our successes in disciplined deliveries and correct targeting across all destinations. We will also provide attractive offerings for start-ups and entrepreneurs, encouraging them to come set ground in our destinations. For the hotels segment, the Group will continue to keep a close eye on protecting its cash balance and monitoring its costs. Today, all our efforts are focused on the recovery of the tourism sector. With global business trends improving slightly now with the ramp-up of the vaccine. We are optimistic and confident that tourism will return to some level of normalcy soon. The Group has also sustained a healthy balance sheet and a strong capital position that we believe will help us navigate the challenges of the current evolving environment.

About Orascom Development Holding AG:
ODH is a leading developer of fully integrated destinations that include hotels, private villas and apartments, leisure facilities such as golf courses, marinas and supporting infrastructure. ODH's diversified portfolio of destinations is spread over 7 jurisdictions (Egypt, UAE, Oman, Switzerland, Morocco, Montenegro, and United Kingdom), with primary focus on touristic destinations. ODH currently operates nine destinations: four in Egypt (El Gouna, Taba Heights, Makadi Heights and Byoum), The Cove in the United Arab Emirates, Jebel Sifah and Hawana Salalah in Oman, Luštica Bay in Montenegro, and Andermatt in Switzerland. The shares of ODH are listed on SIX Swiss Exchange. ODH recently launched O West, the latest addition to its portfolio and its first project in Cairo, Egypt, located in the Sixth of October City.

Head of Investor Relations
Head of Strategic Projects Management
Tel: +20 224 61 89 61
Tel: +41 418 74 17 11
Email: ir@orascomdh.com

Contact for Media Relations:
Philippe Blangey
Partner
Dynamics Group AG
Tel: +41 432 68 32 35
Email: prb@dynamicsgroup.ch

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