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1Q 2015 Results 21 May 2015
1Q 2015 Results
21 May 2015
2
1Q 2015 Highlights & Market update Page 3
Strategy update & Financial review Page 5
Business segments Page 14
Outlook 2015 Page 22
Agenda
3
Key messages from ODH 1Q 2015 results
• The positive trend that Egypt has been witnessing since 2H14 coupled with the successful restructuringefforts that was done on the Group & subsidiary levels, reflected strongly on the Group’s operationalperformance across all business segments
• Revenues increased by 7.2% to CHF 74.8 mn vs. CHF 69.8mn in 1Q14 and Net profits reached CHF 3.4 mn.
• Net cash from operations was positive for the first time since 2010, reaching a value of CHF 0.4 million.
• Net debt decreased by 16.8% % to reach CHF 358.5 million (1Q 2014: CHF 431 million)
• Real Estate sales continues to witness a positive momentum to reach CHF 18.9mn vs. CHF 16.4mn backedby a substantial sales performance in El Gouna recording and a stable increase in Oman coming fromSalalah bay.
• Hotel segment was a positive contributor to the Group’s topline results, with a healthy increase inoccupancy’s and TRevPar across the board, despite the ongoing travel bans on Taba that has impacted thesegment’s profitability.
• On track with our debt reduction target, we have paid off all capitalized interest of 2014 on OHD and weexpect to finalize the ongoing bank negotiations and agree on the optimum debt refinancing packageduring 3Q 2015
4
1Q 2015 Highlights & Market update Page 3
Strategy update & Financial review Page 5
Business segments Page 13
Outlook 2015 Page 20
Agenda
5
1Q 2015: Strategic Focus
Real Estate:- Increased sales & project development, especially in Egypt, through diversifying the product mix,
introducing new sales tools and a unified sales policy . El Gouna alone witnessed a 61% increase incontracted values to reach CHF 12.9 mn (1Q 14: CHF 8.0mn)
- launched, one new project in El Gouna in April 2015 (Joubal Lagoons) and planning the launch of 3new projects/phases during the year
Hotels:- Additional management savings fees( value of CHF 0.3 mn in 1Q 15) & New commitment deals with
tour operators (value of CHF 7.0 mn in 1Q 15)- Soft opening of Ancient Sands Apartment hotels, and ongoing progress with the construction of Al
Fanar hotel in Salalah, Oman and the new extension of the Cove hotel in UAE
Land:- On track with our land monetization target of the year, new concepts of efficient land use have
been introduced at the Egyptian subsidiary level, selling plots of land to develop boat-yardworkshops and industrial kitchen manufacturing.
We remain committed to further cost optimization & targeted monetization initiatives, making surethat enough cash is available to support the growing business while ensuring the highest returns
Boost revenues from ongoing
operations while
Maximizing efficiency
Debt Reduction
On plan to reduce total debt by CHF 100 mn- Paid off all capitalized interest that was put off in FY 2014 on OHD- Ongoing negotiations with all OHD’s lenders to agree on the optimum debt refinancing package,
expected to finalize during 3Q 2015
6
Income Statement
(CHF mn) Q1 2015 Q1 2014
Revenue 74.8 69.8
Cost of sales (49.2) (56.7)
Gross profit 25.6 13.1
Gross profit margin 34% 19%
Investment income 1.8 0.9
Other gains and losses (1.0) 12.6
Administrative expenses (10.2) (10.8)
Finance costs (9.1) (6.5)
Share of gains / (losses) of associates
(2.8) (1.4)
Profit / (loss) before tax 4.3 7.9
Income tax expense (2.0) (1.9)
Non-controlling interests 1.1 (1.0)
Net profit / (loss) attributable to ODH shareholders
3.4 5.0
Basic EPS (CHF) 0.12 0.18
Notes
Revenues increased by 7.2% y/y due to enhanced hoteloperations, with positive contributions from Rotanahotel in Salalah, Oman that was not present in 1Q14 &the recognition of the second parcel of land included inthe sub-development agreement made in El Gouna.
Gross profit margin increased due to high marginsassociated with the Land segment.
Decrease of Other gains and losses was mainly due toforeign exchange losses
Increase in finance costs driven by the FX impact of the USD loans taken on the Egyptian subsidiary & the postponement of the interest payments during the year.
The increase in the share of loss in associates isprimarily due to inclusion of OHC in addition to increased losses of ASA and JPTD.
1
2
3
4
5
1
2
3
4
5
77
Adjusted EBITDA bridge
For Other gains & losses, refer to income statement slide 6
3.4
19.923.2
-1.1
9.1
2.06.6
-0.6
1.9 2.8
-0.9
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
Net ProfitNon-controlling
interestFinance
CostsTax
expenseEBITDA
Provisions &Impairments
Share in associates
Adj. EBITDAFX Losses
Adj. EBITDA reached CHF 23.2 mn compared to 1Q 2014: CHF 9.0 mn signaling improved operational performance
D&A Other gains & losses
8
Balance sheet
(CHF mn) 31.3.15 31.12.14
Property, plant and equipment 834.1 886.8
Inventories 291.2 305.6
Receivables 162.8 146.9
Cash and bank balances 142.2 100.7
Investments in associates 107.4 111.5
Other assets 218.6 229.5
Total assets 1,756.3 1,781.0
Borrowings 500.7 531.7
Payables 52.6 60.0
Provisions 75.9 83.5
Other liabilities 281.6 284.6
Total liabilities 910.8 959.8
Non-controlling interests 226.0 200.5
Equity attributable to ODH shareholders
619.5 620.7
Total liabilities and equity 1,756.3 1,781.0
Notes
Total assets & liabilities decreased as a result of the strengthening of the CHF against the other currencies (EGP & USD)
The investment in associates includes: - ASA (CHF 88.3 mn) , 49% stake - Jordan Company for Projects and Touristic
Development (JPTD) (CHF 5.1 mn), 15.6% stake - OHC (CHF 14.0 mn), 35.3% stake
Receivables increased due to increase in the operating activities, as well as the recognition of the second parcel of the land development agreement in El Gouna.
Total borrowings decreased mainly due to- The strengthening of the CHF against the EGP and
the USD- Repayment of the capitalized interest of FY 14 in
OHD Net debt decreased by 16.8% % to reach CHF 358.5 mn (1Q 2014: CHF 431 mn)
1
2
3
4
1
2
3
4
1
9
(CHF mn) Q1 2015 Q1 2014
Cash from operations 4.8 0.03
Interest paid (4.4) (7.3)
Operating Cash Flow 0.4 (7.3)
Payments for PP&E (5.9) (15.7)
Other items 1.7 (1.8)
Investing Cash Flow (4.2) (17.5)
Change in Borrowings (10.3) 9.6
Other items 61.9 3.8
Financing Cash Flow 51.4 13.4
Net change in cash/equivalents 47.6 (11.4)
Cash and bank balances beginning of period
100.7 81.2
Effects of FX changes (6.1) (0.4)
Cash and bank balances end of period 142.2 69.4
o/w: Cash and bank balances related to assets held for sale
- 5.8
o/w: Cash and bank balances as shown on balance sheet
142.2 63.6
Notes
Significant improvement in cash flow from operation:- Enhanced operations- Rescheduling of interest payments for the period - Disposal of OHC in Q2,2014.
Payments for PP&E decreased by (CHF 9.8 mn) due to the decrease in construction activity in Egypt - Most of the period’s CAPEX related to Montenegro,
Oman and UAE.
Change in Borrowings (CHF 19.9 mn) mainly as a result of: (-) Repayment of the Capitalized interest by OHD(+) Increase in Tamweel business activity
Cash Flow statement
1
2
3
1
2
3
10
458 465 454 490 532 501
20.7 20.619.1
-50
50
150
250
350
450
550
650
FY 13 1Q 14 2Q 14 3Q 14 FY 14 1Q 15
Key debt metrics
31.03.2015 31.12.14
Equity ratio (%) 48.2 46.1
Weighted average cost of debt (%) 7.9 7.6
1 Total outstanding debt of existing loans ending at each corresponding year2 Tamweel debt was added back retrospectively in all quarters after its reclassification for comparison purposes
Total debt development 2
CHF mn
On target to reduce debt by CHF 100mn , currently negotiating an optimum debt refinancing package on OHD which isexpected to finalize in 3Q 2015
Debt maturity profile 1
CHF mn, as of 31.03.15 Comments
Paid off all capitalized interest for the year 2014that was pushed off on OHD level.
Total Debt decreased by CHF 31 mn in 1Q15compared to FY 14, and Net debt decreased by16.8% to reach CHF 358.5 mn (1Q 2014: CHF 431mn) as a result of the strengthening of the CHFagainst the EGP & USD and the repayment of thecapitalized interest that was pushed back by OHDin 2014
ODH maintains relationship with 22 internationalbanks located in Egypt, Jordan, UAE, Oman &Mauritius
0.0
20.0
40.0
60.0
80.0
100.0
2015 2016 2017 2018 2019 2020 2021 2022 2023
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Financing profile
Collateralization profilein %, as of 31.03.15
Interest rate structurein %, as of 31.03.15
Hotels44%
Shares22%
Others22%
Nil12%
Secured88%
Unsecured12%
Interest payments by currency in %, as of 31.03.15
Total debt by currency in %, as of 31.03.15
Fixed27%
Variable73%
Weighted average fixed interest rate: 2.49%
Weighted average variable interest rate: 5.39%
58%23%
3% 16% EGP
USD
EUR
Other
3%
38%
41%
7%
14%
EGP
USD
EUR
Others
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1Q 2015 Highlights & Market update Page 3
Strategy update & Financial review Page 5
Business segments Page 13
Outlook 2015 Page 20
Agenda
13
Business Segments Q1 2015
Revenue EBITDA Adjusted EBITDA *
(CHF mn) 1Q 2015 1Q 2014 Δ in % 1Q 2015 1Q 2014 1Q 2015 1Q 2014
Hotels 29.6 23.6 25% 3.3 4.6 2.8 2.0
Real Estate & Construction 10.7 34.3 (69%) 4.8 13.2 1.9 12.8
Land 24.0 0.3 6979% 22.3 0.2 23.8 0.3
Destination Management 3.1 4.2 (28%) (0.9) (0.3) (0.8) (0.7)
Other Operations 7.4 7.4 0% 2.4 13.5 2.3 3.0
Corporate & Unallocated Items 0 0 0% (12.0) (10.5) (6.8) (8.4)
ODH Group 74.8 69.8 7% 19.9 20.7 23.2 9.0
* Adjusted EBITDA: EBITDA adjusted for non cash items (which includes provisions & impairments, other gains and losses, FX gains & share in associates)
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Real Estate KPIs Q1 2015
Value of contracted units (CHF mn)
Number of contracted units
Average Selling Price (CHF/m2)
Country Destination 1Q 15 1Q 14 1Q 15 1Q 14 1Q 15 1Q 14
Egypt El Gouna 12.9 8.0 33 19 2,518 2,201
Haram City 1.5 2.1 105 148 238 246
Makadi 0.6 0.5 11 10 662 591
Gardania 1.2 - 2 - 1,163 -
Oman Jebel Sifah 1.5 1.5 2 2 2,771 2,809
Salalah Beach 0.9 0.1 4 - 3,535 -
U.A.E The Cove - - - - - -
Montenegro Luštica Bay 0.3 4.3 1 11 4,309 4,313
ODH Group 18.9 16.4 158 190 1,313 1,103
ODH ex Budget Housing 17.4 14.4 53 42 2,179 2,384
Numbers net of cancellations:
ODH Group 17.0 13.4 145 126
ODH ex Budget Housing 15.6 12.2 44 32
15
Real Estate inventory development
Commentary
Inventory decreased by 9.0% to CHF 76mn (FY 2014: CHF 83mn), mainly on the back of accelerated delivery of real estate unitsin Egypt.
Non-Sold completed units decreased by 16.0% from CHF 19mn in FY 2014 to CHF 16mn in Q1 2015 resulting from the enhancedsales and unit deliveries in El Gouna
Real estate inventory by destinationCHF mn
Real Estate inventory by categoryCHF mn
3
18 16
-
9
2
5
2
21
-
10
20
30
40
50
Egypt Oman Montenegro Other countries
Sold WIP Non-Sold Completed Non-Sold WIP
36
16 24
76
39
19 25
83
-
40
80
120
Sold WIP Non-Sold Completed Non-Sold WIP Total
1Q 2015 2014
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Hotels summary
Commentary
The strict application of cost-efficiency measures, the reviewed management deals, along with efforts to increase businessthrough commitment deals with new tour operators, afforded a boost in performance in Q1 2015
Taba Heights continues to operate at 75% of its capacity and suffers the European Countries’ travel bans on the region
Hotels 1Q 15 1Q1 4 Change
Occupancy rate (%) 47 44 3 ppt
ARR (CHF) 56 51 10.1%
TRevPar (CHF) 46 40 16.8%
Revenues (CHF mn) 29.6 23.6 25%
Adjusted EBITDA (CHF mn) 2.8 2.0 43%
Founded on the Hotels’ optimization strategies applied in 2014, Q1 2015 sets a positive and promising start forthe year
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Number of hotel rooms
Occupancy rate (%)
ARR (CHF)
TRevPar (CHF)
Country Destination 1Q 15 1Q 14 1Q 15 1Q 14 1Q 15 1Q 14 1Q 15 1Q 14
Egypt El Gouna 2,707 2,707 62 50 46 46 46 37
Taba Heights 2,365 2,365 12 24 43 31 10 16
Makadi & SahlHasheesh
*1,631 830 54 57 28 30 33 34
Floating Hotels 27 27 8 3 633 510 70 25
Oman Jebel Sifah 79 79 34 27 143 138 101 79
Salalah Beach 481 82 68 70 94 92 121 113
U.A.E The Cove 346 346 67 77 172 159 195 208
Jordan Tala Bay 260 260 24 45 65 59 23 41
ODH Group *7,896 6,696 47 44 56 51 46 40
Hotel KPIs Q1 2015
* Citadel Azur , five – stars hotel with 513 rooms was added back to ODH’s hotel portfolio, post the settlement reached with Falcon Hotels
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Hotels Performance Update
Additional management fee savings in 1Q 15 with a total of CHF 0.3 mn , bringing the total management fee savings since incorporation of OHM to CHF 2.5 mn
Finalized new commitment deals at a total value of CHF 7.0 mn covering the Russian and Dutch markets for MakadiHotels, and the Serbian market “NEW” for El Gouna. Total tour operator commitment deals since incorporation ofOHM is CHF 31 mn
Notable growth in both online and tour operator-generated sales revenue. Online sales revenue increased by 59% (Q-o-Q) representing 7% of the total business; similarly, tour operator sales revenue increased by 38% (Q-o-Q)representing 76% of total business
High growth potentials from the Italian market for our Oman based hotels post the successful penetration in 4Q 14. In1Q 15, the Italian market was second top producer representing 25% of total business in terms of revenue
At The Cove Rotana, actions were taken to increase share of the German market to compensate the lost Russianbusiness post the devaluation of the RUB in 4Q 14. In 1Q 15, the German business revenue increased by 33% (Q-o-Q)
Efforts to grab business to Taba Heights through Aqaba are currently in place. Signs of recovery of the destination arebeing noted with France and Belgium relaxing their travel advice, as well as the expected operation from Polandstarting Summer 2015
Progressing with the development of Al Fanar Hotel in Salalah Beach , Oman, and the Cove Rotana in Ras Al Khaima ,UAE. Both properties are due to open in December 2015
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1Q 2015 Highlights & Market update Page 3
Strategy update & Financial review Page 5
Business segments Page 13
Outlook 2015 Page 20
Agenda
20
Outlook 2015
Advanced negotiations with all lenders on an optimum debt refinancing taking into account grace period, pricing,tenor and currency mix. Expected to be finalized during the 3Q 2015
Real Estate Sales continue its positive momentum, The Egyptian Subsidiary (OHD) is close to achieving its USD 75million target of the year .
The preliminary occupancy readings in El Gouna are above 70% for April and within the 80% range for the hotels inMakadi and Sahel hasheeh.
We continue to observe increased demand on land sales and sub development interest in our core destinations , ElGouna and Oman
ODM; wholly owned subsidiary of the Group, reactivated its earlier agreement with Egyptian Resorts Company (ERC)to market Phase 1 of Sawari, accounting for 1.1 million m2 of land. ODM shall be entitled to a management anddevelopment fee amounting to 15% of the project’s earnings before tax (EBT), and a sales commission within therange of 6-8% from all sales proceeds, without being liable for any CAPEX obligations. The total revenues expectedfrom Phase 1 project are approximately USD 300 million (CHF 281 million and EGP 2.3 billion)
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IR dashboard
Date Agenda item
20 Aug 2015 First Half 2015 Results
19 Nov 2015 Nine Months 2015 Results
Corporate Calendar
Investor Relations contact
Sara El Gawahergy
Director Investor Relations
Phone EGY: +20 (0)22 461 89 61
Phone CH: +41 (0)41 874 17 11
E-Mail: [email protected]
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