Upload
others
View
11
Download
0
Embed Size (px)
Citation preview
Orascom Development Holding AG
October 2015
2
Introduction to Orascom Development Holding
Encountered challenges
How the Group survived the challenges…
… and is now back on track with a positive outlook
Strategic options to realize hidden value in the future
Agenda
3
Orascom Development Holding at a glance
1 Contracted real estate sales from 1997- 1H 2015 (gross amount)2 Such as marinas, golf courses, utilities, commercial, schools, hospitals, etc.3 Land on which Orascom Development has certain development rights4 As of the 30th June 2015, outstanding shares : 28,543,147
Leading developer and operator of fully integrated towns
Active in three core segments: Hotels: own 31 hotels with 7,632 rooms Real Estate & Construction: CHF 1.97 bn track record 1
Destination Management: incl. all town amenities 2
Established in 1989, with presence in over 8 jurisdictions
Around 9,380 employees in eight countries
Revenues of CHF 164.5 mn in 1H 2015
Land bank of 100.2 mn square meters, out of which 17% have beencompleted 3
Primary listing on the Swiss Stock Exchange and secondary listing on theEgyptian Stock Exchange (EDRs)
Ownership structure: Samih O. Sawiris (62.8%), Janus Capital (5.6 %) & Freefloat (31.6%) 4
4
Over 20 years ago, Orascom Development’s founder Samih O. Sawiris had a simple idea – to create a little piece of paradise on the exquisitely desolate Red Sea coast. This initial thought evolved over the years and became our principle.
1989
1991
1997
EGYPT
1998
2005
2006
2007
2008
2009
2010
2013
Year of Foundation
Developmentof TabaHeights on theGulf of Aqaba(SinaiPeninsula)
The Cove in Ras AlKhaimah (U.A.E.) thefirst destinationoutside of Egypt, alease agreementwith the Gov. todevelop AmounIsland, 22,000 m2
Project announcementof Haram City (Egypt),Jebel Sifah & SalalahBeach (Oman); signingof agreements forAndermatt (CH) &Chbika (Morocco)
New projects inCornwall (UK) & LušticaBay (Montenegro) &launch of Makadi Bay,28 km away fromHurghada
Samih O. Sawiris becomesmajority shareholder of ASA;sale of Romania project toSamih O. Sawiris & OrascomHotel Management (OHM)was established to managethe Group’s Hotel inventory
First phase ofEl Gouna flagshipproject becomesoperational
Agreement toparticipate in thedevelopment ofTala Bay, Jordan& Awarded 1.2million sqm inFayoum, Egypt
Orascom signsdevelopmentagreements withthe OmaniGovernment forfour projects
Established ODH,acquired 99.7% of OHDthrough a tender offerHeadquarter is movedto Altdorf (CH), listingon the SIX SwissExchange
Initiation of affordablehousing project inConstanta (Romania) &Allocated 0.8 million m2 inthe Qena Governorate , thesecond budget housingproject in Egypt
So far, we have successfully implemented this concept in Egypt, Jordan, UAE, Oman, Switzerland and in other projects under development in Europe
2014
Deconsolidation of OrascomHousing Communities(OHC)& its subsidiaries;budget housing andconstruction & Sale ofCMAR (Mauritius Club Med)
INTERNATIONAL EXPANSION
History- How it all started
2015
ODH sells 15%stake in OHD toreactivate itstrading,resumption oftradingeffective 6th
January 2015 &Sale of Tala Bayhotel in Jordan
5
New destination
identification acquisition &
initial concept
Hotel Operations
Real Estate
Support Functions
Operational Phase
Development Phase
Real Estate Owner Services
Destination Operations
Hotel Development
Destination Development
Land Bank Monetization
Man
agem
ent
Pro
cess
es
Sup
po
rt P
roce
sses
The Company Adopts a Unique, Vertically Integrated, Business Model Centered on Transforming Desolate Pieces of Land into Attractive, Self-sufficient, Resort Towns
ODH’s business modelincorporates owning andmanaging the whole valuechain from the raw landacquisition to developing &operating real estate, hotels,and managing thedestination:
– Securing land at nominalcosts
– Control of entire valuechain from masterplanning andconstruction to operationof a destination
– Continuous pre-sales tofinance ongoinginvestments
In parallel, management hasrecently adopted the newstrategic notion of sellinglarge plots of land to thirdparty developers, in a moveto accelerate themonetization of land (Master-development), whileproviding strict developmentguidelines, to ensure controlover the development andmaintain the architecturalharmony of the destination
Master-development
Controlled Sale of Large Plots of Land to
Third Party Developers
6
Accomplished track-record in development of integrated touristic destinations
More than 25 years of experience in integrated real estatedevelopment, controlling the entire value chain
Acquisition of land banks in undeveloped areas at nominalcosts
In-house design & planning to better serve customer demand
Construction used to be done in-house (Egypt, Oman,Morocco) but now transferred to external contractors tomaintain operational flexibility
Local sales force in Egypt, Oman, Switzerland, Morocco andMontenegro as well as international distribution channels
Leading integrated town developer
Unique destination manager
Diversified hotel portfolio, owning 30 hotels and 1 Nile cruiseship with 7,632 rooms managed under own names and blendof local and international chains
Management contracts with leading international operators
Unique partnerships with tour operators guaranteeing highhotel occupancy rates all year round
Operation with El Gouna of world-renowned touristicdestination with strong brand recognition
El Gouna: World-renowned touristic destination
Orascom’s flagship and development benchmark
25 years old self-sufficient and fully integrated resort town,stretching across 10km of shoreline on the Red Sea
Multinational community with 24,000 residents
The town offers a range of facilities such as a hospital, two 18-hole championship golf courses, three marinas, four schools, alibrary, and two universities branches
Hotel KPIs Real Estate KPIs
CHF
6953 54 52 52 47
91
51
59
47 4849
74%
56%61%
54% 59%49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
20
40
60
80
100
ARR TRevPar Occ. Rate
61 82 121211 47 150
Value of Contracted Units, CHF mn
, CHF 000’s
83.5
24.8 19.434.9
48.7
60.3
3.42.8
2.32.5 2.5 2.5
0.0
1.0
2.0
3.0
4.0
0
20
40
60
80
100
2010 2011 2012 2013 2014 1H2015
Value of Contracted Units, CHFmn
Average Price/sqm
7
Introduction to Orascom Development Holding
Encountered challenges
How the Group survived the challenges…
… and is now back on track with a positive outlook
Strategic options to realize hidden value in the future
Agenda
8
Recently encountered challenges
Orascom Development
ODH continued itsexpansion strategy in anincreasingly challengingmarket environment
While other companieswere downsizing duringthe economic crisis, ODHover-leveraged its matureoperations in Egypt
Arab spring addedadditional pressure, asdestinations outsideEgypt are still in thedevelopment phase andcannot offset revenuelosses in Egypt
Organizational structureof the Group was notsuited to quickly react tothe changed environment
Economic crisis continuesto affect companies andeven countries resultingin a reshaping of themarket internationally
ODH continues todepend on its twomature destinations inEgypt as the mainsource of free cash flowgeneration
Added UK &Montenegro
Land bank of 131.3 mnm2
Total debt increases toCHF 388 mn
Cash from operations ofCHF 82.8 mn
2008
Economic crisis & globalcredit crunch hit Europe& the Middle East
ODH grows revenues by40% y/y
Record price levels andoccupancy rates ofhotels in El Gouna andTaba Heights
Real estate sales reachall time high of CHF 373mn, compared to CHF126 mn in 2007
Launch of UAE & Oman
Land bank of 117.6 mnm2
Total debt of CHF 75 mn
Cash from operations ofCHF 50.4 mn
20092010
Social and politicalturmoil hit the Arab world
ODH adds budgethousing project inRomania
Land bank of 109.6 mnm2
Total debt up to CHF 512mn
Cash from operations ofCHF 126.1 mn
Egyptian revolution andits prolonged aftermaths
Negative operating cashflow since 2011
Real Estate sales in 2013about 80% below 2008levels & hotel revenues>30% below 2008 levels
Total debt increases toCHF 604 mn in 2012
Restructuring of theGroup initiated in 2013:launch of cost savings &monetization program;total debt down to CHF480 mn
Debt excluding disposalgroups 1 reached CHF408 mn
2011-2013
1 Disposal Groups includes CMAR (Hotel in Mauritius) & Tamweel Mortgage Finance
9
Introduction to Orascom Development Holding
Encountered challenges
How the Group survived the challenges…
… and is now back on track with a positive outlook
Strategic options to realize hidden value in the future
Agenda
10
Fully committed majority shareholder Samih Sawiris
Mr. Samih O. Sawiris is the founder of Orascom Development Holding Majority shareholder, holding 62.8% of ODH’s shareholder capital Chairman of the Board CEO since April 2014
Functions
Financial Commitment
CV
Samih Sawiris has historically committed shareholder loans to Orascom Development Holding Since 2011 to April 2015, Mr. Sawiris has committed approximately CHF 200 mn in favor of Orascom
Development Holding. In August 2015, the Chairman renewed his commitment letter vowing to avail up to CHF 60 mn until
December 2016 should the Group require it CHF 12.9 mn were drawed-down by the Group from the new commitment until June 2015. To June 2015, total due to the Chairman amounts to CHF 73.4 mn
After receiving his Diploma in economic engineering from the Technical Universityof Berlin in 1980, Mr. Sawiris founded his first company, National Marine BoatFactory. In 1996, he established Orascom Projects for Touristic Development and in1997 Orascom Hotel Holdings, the two companies later merged to form OrascomHotels & Development S.A.E. (OHD)
Furthermore, Mr. Sawiris established El Gouna Beverages Co. in 1997, which he soldin 2001 when it was the largest beverage company in Egypt
As of 1 April 2014, Mr. Sawiris took over the position of CEO on ad-interim basis andalso serves as Chairman of the Board of Directors
11
Developed a 4 pillar strategy
Growing Core Business & Accelerating Land Development and Monetization
Real Estate Addressing marketing needs through:
Developing more efficient units Increasing inventory mix to address different
market segment Focusing on adding value added amenities
that add to the destination experience andvisitor spend
Adopting a sub-development model wherebyland is developed by third parties under strictdevelopment guidelines, signed two deals to datewith a total value of USD 80 million
Hotels Established a fully owned hotel management
company, OHM Revisited all hotel management agreements
to assess the cost-benefit case by case Developed a yield system to increase early
booking and improve cash flow planning Centralized key functions across destinations
and hotels
Cost Savings & Maximizing Efficiency
Reduce FY 2012 cost base by CHF 50 mn at FY 2014
Optimizing cost base inproportion to targetrevenue levels, genericsavings reached CHF 47.7mn in FY14
Restructured theorganization making itleaner and more efficientthrough reducingunneeded SG&A expenses
Headcount reduced byapprox. 4,000 FTE sinceyear-end 2012
Divestiture ofunderperforming assets(construction & lowincome housing)
Renegotiatedprocurement deals toreduce cost of goods soldin the hotels segment
Debt Reduction & Restructuring
Reduce total debt by CHF 92.1 mn (EGP 700 mn)
ODH sold 15% stake inOHD for CHF 64 mn &successfully sold 12.5% ofCMAR for CHF 9.9 mn,proceeds will directly go toservicing OHD’s debt
Rescheduled principal andinterest payments forOrascom Hotels andDevelopment
Negotiating an optimumdebt refinancing packagetaking into account graceperiod, pricing, tenor andcurrency mix expected to befinalized by the end of theyear
Focus on value-adding Investments
Divesting Non Core Assets
Red Sea Construction
Orascom HousingCommunities resultedin SG&A annualizedsavings of CHF 8.9 mn
CMAR, Club Med Hotelin Mauritius
12
Newly formed dedicated executive management team
ODH BOD endorsed a leaner organizational structure that better reflects the current business needs and supports therestructuring of the Group.
Manal Hussein AbdelRazek
20 years of experience inEgyptian government
CEO Egypt
Ahmed Dabbous
20 years of experience
Former CEO of SomaBay Egypt
CEO Oman
Darren Gibson
25 years of experience
Former VP of Planning& Development forEgyptian ResortCompany SAE
CEO Montenegro
Ihab Kamel (Ad interim)
13 years of experiencewithin ODH
CEO Morocco
Regional Heads
Abdelhamid Abouyoussef
Managing Partner of OrascomHotels Management
Former senior advisor to AmphorasHoliday Inn, Sharm El Sheikh
Chief Hotel Officer
Eskandar Tooma
Board Member
Former senior advisor to theEgyptian Capital Market Authorityand Ministry of Investment
Chief Financial Officer
Samih O. Sawiris
Founder and Chairman of theBoard of Directors
Chief Executive Officer
13
Introduction to Orascom Development Holding
Encountered challenges
How the Group survived the challenges…
… and is now back on track with a positive outlook
Strategic options to realize hidden value in the future
Agenda
14
ODH financial results back on track
56 59 65 57 60 57 56 52 53
020406080
2008 2009 2010 2011 2012 2013 2014 1H 2014 1H2015
Contracted sales (CHF mn)
TRevPAR (%) 1
8162
7656 57 51 51 44 51
0
50
100
2008 2009 2010 2011 2012 2013 2014 1H 2014 H1 2015
8169
87
57 61 51 48 40 49
0
50
100
2008 2009 2010 2011 2012 2013 2014 1H 2014 1H2015
336
136 173115
213
66 88 70
0
100
200
300400
2008 2009 2010 2011 2012 2013 2014 1H 2015
668
317 297152 204
265 182
0
200
400
600
800
2008 2009 2010 2011 2013 2014 1H 2015
2.63.2
4.4
5.36.9
2.5 2.62.3
0
2
4
6
8
2008 2009 2010 2011 2012 2013 2014 1H 2015
Number of units sold
Average selling price (CHF’000’/m2)
Occupancy rate (%)
Average room rate (CHF)
1 Total Revenue per available room
* Revenues and KPIs of Citadel Azur, five –stars hotel with 513 rooms was added back to ODH’s hotel portfolio in FY14, post the settlement reached with Falcon Hotels
15
-40-52
-81
105
37.9
2011 2012 2013 2014 1H 2015
57 45751 48 49
56% 57%
51% 51% 52%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
10
20
30
40
50
60
70
80
90
100
2011 2012 2013 2014 1H 2015
115
216
6688 70
5.26
2.34
2.52 2.632.38
0.00
10.00
20.00
30.00
-
100.0
200.0
300.0
2011 2012 2013 2014 1H 2015
182
ODH weathered through some turbulent times and is emerging strong after the storm…
* OHC was deconsolidated in 2014, and hence, was excluded from our figures retrospectively
…Translating into Enhanced Financial Performance
EBITDA(CHF mn)
Contracted Units, Average Selling Price(Units, CHF )1 TRevPar, Occupancy Rates
(CHF, %)
Number of Contracted Units
152 271 204 265
Average Price / sqm, CHF 000’s
Value of Contracted Units, CHF mn
With the recentpolitical stability,start of aneconomic recoveryin general andrevival of thetourism sector inparticular, ODHstarted benefitingthrough increasedReal Estate Sales &Hotel revenues
The Company’srestructuringefforts over thelast period arealready bearingthe fruits of itssuccess throughgenerally positivefinancial indicators
Revenue (CHF mn)
254 272221 251
165
2011 2012 2013 2014 1H 2015
TRevPAR Occupancy Rate
16
Outlook 2015
Promising 2015
results and outlook
Real Estate On track with the real estate target of CHF 121mn for FY15 El Gouna, Egypt, Launching new inventory of USD 50 million during 3Q and 4Q 15. Makadi, Egypt, signed two new contracts with an external developer for EGP 15 mn (CHF 1.8 mn) to manage the
destination’s existing retail outlets and build its club house facility. Fayoum, Egypt finalizing the construction of the sold villas, to be delivered in 1Q16 Lustica Bay, Montenergo, held the official launch party in August recognizing the successful completion &
handover of first 10 apartment buildings marking the destination’s start of operations, Revenues to be recognizedin 9M 2015
Jebel Sifah, Oman launching phase 1 of the Sifah Golf course
Hotels Finalizing construction of Byoum Hotels due to open in 1Q16 Finalizing constriction of Ancient Sands Hotel, EL Gouna, Al Fanar Hotel in Salalah, Oman and The Cove extension,
UAE. Properties schedule to launch between Dec15 and 1Q16 The preliminary occupancy readings in El Gouna are above 70% for April and within the 80% range for the hotels
in Other Red Sea Area.
Land Finalized a new sub-development deal with a real estate developer in Egypt for 100,000m2 in El Gouna for a total
value of USD 20 million
Corporate Negotiations with all lenders on the new debt refinancing. Expected to finalize by the end of the year.
Realistic 2015 objectives
Real estate: sales target of CHF 121 mn
Land sales: target one transaction in 2015 for an amount between USD 20-40 mn
17
Introduction to Orascom Development Holding
Encountered challenges
How the Group survived the challenges…
… and is now back on track with a positive outlook
Strategic options to realize hidden value in the future
Agenda
18
Establishment of land sales department
100.2 mn m2
total area
16.9mn m2
completed
68.4%undeveloped
Country Name Total 1 Completed Under construction Under development Undeveloped
Egypt El Gouna 36.9 9.0 5.5 1.2 21.2
Taba Heights 4.3 2.6 - - 1.7
Amoun Island 0.02 - - - 0.02
Fayoum 1.1 0.2 0.1 0.1 0.7
Makadi 3.4 0.5 - - 2.9
Haram City 2.6 1.9 0.3 0.3 0.2
Qena Gardens 0.8 - - - 0.8
U.A.E. The Cove 0.3 0.3 - - -
Oman Jebel Sifah 6.2 0.2 - 1.5 4.5
Salalah Beach 13.6 0.9 0.2 1.5 11.0
As Sodah Island 1.0 - - 0.8 0.2
City Walk 2 0.1 - - - 0.1
Switzerland Andermatt 1.5 1.3 - 0.1 0.1
Morocco Chbika 15.0 - - 3.0 12.0
Montenegro Luštica 6.9 - 0.1 0.3 6.5
UK Eco-Bos 6.5 - - - 6.5
Total 100.2 16.9 6.1 8.8 68.4
Newly adapted strategy, entering into sub-development agreements to accelerate the monetization of the land bank
Sub development agreements through sale of specific land plots where there are no development obligations or where the Group hasdeveloped infrastructure in order to sell the land. This establishes reference price points for our land bank.
Signed two sub-development agreements through OHD (Egyptian subsidiary) in El Gouna. First over 160,000 m2 for USD 375 per m2 andthe Second over 100,000 m2 for USD 200 per m2
19
Monetization of non-core assets
The Group owns some non-core assets that do not fall directly within the business model of operation, i.e. do not fallwithin a fully-fledged destination. Accordingly, ODH considers to divest those non-core assets and realize theirpotential gains
Assets for sale include:
47,240,000 shares in Egyptian Resorts Company (ERC), one of the most actively traded listed company on the EGX,value of which as of June 2015 is CHF 5.9 mn
Royal Azur & Club Azur, two hotels in the Red Sea Area. Orascom Development owns 60% of the holding companywith a book value of CHF 10.0 mn. The holding company includes
Royal Azur, a 5 star hotel with 491 rooms Club Azur, a 4 star hotel with 339 rooms
3,341,960 shares in Jordan Projects for Touristic Development (JPTD) listed on the Amman stock exchange , bookvalue of which is CHF 4.4 mn
Investments in the holding company of the Cove Rotana Hotel in Ras Al Khaimah (UAE), with a share in the companyof 73%, implying a book value of CHF 33.5 mn
Citadel Azur Hotel, 5- Star hotel with 513 rooms, close to Makadi, Egypt valued at CHF 56 mn
20
Corporate286
Hotels112
Advanced Negotiations For An Optimum Debt Refinancing Package
1 Figures are as of ODH Financial Statements of 1H 20152 Excludes Tamweel
Total Debt Breakdown by
Entity (CHF mn) 1
Total debt by currency
( %,) 1
Loans Runoff(CHF mn) 2
Net Debt Build-up
(CHF mn) 1
Management iscurrentlyundergoing arestructuringprogram in aneffort to de-leverOHD’s balancesheet down tonormalized levels
The Company isplanning to paydown ~EGP 700mn (CHF 92.1mn)of which thecompany hadalready paid EGP270 mn (CHF35.5mn) forcapitalized interestand past dues andis negotiating withbanks toreschedule EGP1,198 mn (CHF158mn) inoverdrafts
397
68
55 51 52
12 10 10 5 0
10
20
30
40
50
60
70
80
90
100
2015 2016 2017 2018 2019 2020 2021 2022
37%
40%
7%
16%
EGP USD EUR Others
130
172
95
68 465 102
363
-
50
100
150
200
250
300
350
400
450
500
Overdrafts LTD CPLTD Tamweel Total Debt Cash Net Debt
30.06.15 31.12.14
Weighted average cost of debt (%)1 7.3 7.6
21
225
172
78 18493
392
Short termdebt
Long termdebt
shareholdersloan
LandLiabilities
Total Debt Cash Net Debt
(101)1
240 56 296
OHD Net Debt Other Projects' Net Debt ODH Consolidated Net Debt
343
291247
96
0
50
100
150
200
250
300
350
400
ODH Market Cap OHD Market Cap ODH PropotionalteStake in OHD
Other Projects's Equityvalue
Net Debt Breakdown
by Entity (CHF mn)
ODH Net Debt
Build-up (CHF mn)
Equity Value
Analysis(CHF mn)
1
2 3
The Market Values ODH’s Other Projects at a Deep Discount to Book
These figures represent the net BV3 of each of ODH’s Other Projects, totaling CHF 458 mn. This implies a deep discount (CHF 362 mn) to the
equity value derived by the market
Other Projects’
Book Value
Other Projects’
Equity Value
Market Implied
Discount
Analysis of Current Market Prices Suggests that ODH’s Other Projects are Attractively Priced
202
87
5634
3615
14 14 458
96
362
1 Excludes debt held on Tamweel; the company’s leasing arm2 As of June 30th , 20153 Net BV represents equity value + quasi-equity; which are amounts due to ODH and expected to be capitalized at a later stage
4 This represents the total consideration at which Cape Citadel (a 5-star hotel on the Red Sea Coast) was priced according to a legal dispute between ODH and Falcon
2
22
Thank you