ODE reports solid Q1 2022 results recording revenues of EGP 1.9 billion and a net profit of EGP 463.7 million.

Orascom Development Egypt started the year on solid grounds with strong operational and financial results, despite the headwinds from the Russian/Ukrainian conflict and the economic backdrop in Egypt, especially after the Central Bank of Egypt’s (CBE) decision to float the EGP against foreign currencies. The strong growth during the first quarter of the year was driven by significant increase in the real estate segment’s performance and enhanced business performance of the hotels and town management segments.
Financial Review:
Q1 2022:
Revenues reached EGP 1.9 billion, up 32.2% y-o-y compared to EGP 1.46 billion in Q1 2021. Gross profit increased by 18.5% to EGP 681.1 million in Q1 2022 (Q1 2021: EGP 574.9 million) with a gross margin of 35.3%. The boost in revenues and gross profit resulted from the acceleration of our construction activities, with real estate revenues reaching EGP 1.4 billion, an increase of 18.1% compared to Q1 2021, in addition to the enhanced business performance of the hotels and town management segments. Adj. EBITDA was up 22.0% to EGP 721.1 million in Q1 2022, with a 37.3% margin compared to EGP 590.9 million and a margin of 40.5% in Q1 2021. Other gains and losses reported a loss of EGP 108.2 million vs. a gain of EGP 82.4 million in Q1 2021. The FX translation loss is mainly related to the devaluation of the EGP in March 2022. Interest expense increased by 7.3% to EGP 75.2 million in Q1 2022 (Q1 2021: EGP 70.1 million) due to the increase in interest rates in March 2022. This operational excellence was reflected in our bottom-line figures with net income up 5.7% to EGP 463.7 million in Q1 2022 (Q1 2021: EGP 438.5 million). It is worth mentioning that adjusted net income excluding one-offs (which includes forex losses or gains along with any non-operational one-off transactions) increased by almost 60.6% from EGP 356.0 million in Q1 2021 to EGP 571.9 million in Q1 2022.

The Group continued to preserve a healthy balance sheet and monitor its cash balance and liquidity. During Q1 2022, we were able to increase our cash balance by 4.1% to EGP 3.2 billion. Total debt stood at EGP 3.8 billion in Q1 2022 (FY 2021: EGP 3.4 billion). The increase in debt amounts is mainly a result of the depreciation of EGP against foreign currencies. We continued to generate positive cash flows from operations, recording EGP 224.2 million in Q1 2022 (Q1 2021: EGP 396.3 million).

Group Real Estate: Net real estate sales of EGP 2.0 billion in Q1 2022, coupled with accelerated construction, boosting our segment’s revenues to EGP 1.4 billion
New real estate sales for Q1 2022 reached EGP 2.0 billion, almost flat when compared to the same period last year. O West was the group’s largest contributor to new sales (50%), followed by El Gouna (43%) and Makadi Heights (7%). We continued to increase our average selling prices per m2 across all destinations, whereby El Gouna’s average selling prices increased by 27.1%, O West’ s prices increased by 21.6% and Makadi Heights prices increased by 17.7% vs. Q1 2021. Real Estate revenues increased by 18.1% to EGP 1.4 billion (Q1 2021: EGP 1.2 billion). Adj. EBITDA also increased by 0.6% to EGP 595.2 million in Q1 2022 (Q1 2021: EGP 591.6 million). The increase in real estate revenues was driven by the accelerated construction pace across all projects. Total deferred revenue from real estate that is yet to be recognized until 2026 increased by 32.9% to EGP 12.7 billion (Q1 2021: EGP 9.6 billion). Total real estate portfolio receivables also increased by 34.2% to EGP 17.2 billion (Q1 2021: EGP 12.8 billion). Real estate cash collections for the period increased by 27.6% to EGP 1.4 billion in Q1 2022 vs. EGP 1.1 billion in Q1 2021.

Group Hotels: Revenues up 173.7% to EGP 260.6 million supported by the return of international travel
A good start for our hotel segment recording more than double digit growth for all the main operational KPIs compared to the same period last year, despite the headwinds of Omicron variant during the first 2 months of Q1 2022 and then the Russian and Ukrainian conflict affecting the hospitality industry. Revenues increased by 173.7% from EGP 95.2 million in Q1 2021 to EGP 260.6 million in Q1 2022 pushing our GOP to EGP 103.4 million, a 42.2x increase compared to Q1 2021 with only EGP 2.5 million on the back of further improvements in operational efficiencies. The segment reported an Adj. EBITDA of EGP 68.1 million in Q1 2022 compared to a negative EGP 10.0 million in Q1 2021.

Group Destination Management – Continued growth, reaping the benefits of the successful restructuring implementation
The destination management segment continued to sustain its enhanced operational performance and started the year with a solid set of results, securing recurring revenue stream to the group. Revenues in Q1 2022 increased by 50.5% to EGP 276.1 million (Q1 2021: EGP 183.5 million) while Adj. EBITDA also increased by 128.4% to EGP 78.1 million in Q1 2022 (Q1 2021: EGP 34.2 million). The notable increase in revenues and Adj. EBITDA was a consequence of a rich calendar of events across destinations and signals our operational excellence as a result of the successful restructuring implementation which we started putting in motion early 2021, thereby improving the quality and profitability of our services and amenities.