Orascom Development Egypt (ODE) continued to achieve good results in the first half-year of 2021 supported by a solid performance of the real estate segment and efficient cost management. The Group’s top line revenue growth was enabled by improved market sentiments, supported by expectations of a gradual economic recovery, and a healthy housing demand for our real estate products. The momentum driven by our real estate segment led to a net profit of LE 744.6 million, despite the ongoing headwinds from Covid-19 affecting the hospitality business.
Revenues reached LE 3.0 billion, up 55.8% y-o-y. Gross profit also increased by 90.9% to LE 1.1 billion. We were not only able to maintain our healthy gross profit margins, but increase it to 37.2%, (1H 2020: 30.4%). The Group continued to manage its costs successfully during the period with smart spending initiatives across the board. SG&A expenses decreased by 10.0% to LE 54.6 million in 1H 2021. Adj. EBITDA more than double to LE 1.15 billion in 1H 2021, with a 38.6% margin vs. LE 560.6 million and a margin of 29.2%. EBITDA also increased by 136.6% to LE 1.23 billion in 1H 2021. Interest expense decreased by 16.8% to EGP 134.9 million in 1H 2021 due to the decrease in Libor and Corridor rates. Net profit for the period surged by 342.2% to LE 744.6 million in 1H 2021. ODE continued its prudent cash management and business optimization initiatives, further fortifying the Group’s balance sheet and maintaining an enhanced liquidity stance. Total cash and cash equivalent balance reached LE 2.6 billion, while total debt reached LE 3.5 billion and net debt reached LE 866.7 million. We continued to generate positive cash flows from operations, recording a 109.4% increase to LE 813.2 million in 1H 2021.
Topline performance remained strong, benefitting primarily from the robust growth in our real estate segment in addition to the slight recovery in the hotel’s business. Revenues increased by a solid 50.7% to reach EGP 1.5 billion in Q2 2021. While gross profit also increased by 51.2% to LE 538.0 million in Q2 2021 with a gross margin of 35.1% (Q2 2020: EGP 355.8 million and a margin of 35.0%). Adj. EBITDA was up in Q2 2021 by 64.2% to 563.4 million with a margin of 36.7% vs. LE 343.2 million and a margin of 33.7%. EBITDA also surged by 100.7% to LE 537.8 million in Q2 2021. In line with this background net profit was up 4.0x to LE 306.1 million in Q2 2021 (Q2 2020: LE 76.5 million).
Group Real Estate: Achieved new sales of LE 4.0 billion in 1H 2021, a growth of 40% y-o-y, translating into revenue growth of 112.7% coupled with accelerated construction activities across all destinations.
New net sales amounted to LE 4.0 billion in 1H 2021, a growth of 40% y-o-y, translating into 647 units sold. The surge in new sales was supported by the steady improvements in home buying transactions across all projects. It is worth mentioning that 1H 2020 sales figures included LE 509.1 million of commercial sales. Excluding commercial sales, net sales would have increased by 68.7% vs. LE 2.3 billion in 1H 2020. El Gouna was the largest contributor to new sales (51%), O West (34%) and Makadi Heights (15%). Real estate revenues increased by 112.7% to LE 2.3 billion and Adj. EBITDA increased by 164.9% to LE 1.1 billion in 1H 2021. Real estate deferred revenue that is yet to be recognized until 2026 increased by 27.5% to LE 10.2 billion in 1H 2021. Total real estate portfolio receivables increased by 38.4% to EGP 14.2 billion in 1H 2021. While real estate cash collections increased by 63% to LE 2.1 billion in 1H 2021.
O West
Net real estate sales reached LE 1.35 billion in 1H 2021 vs. LE 1.5 billion in 1H 2020. It is worth mentioning that 1H 2020 sales figures included EGP 509.1 million of commercial sales. Excluding those commercial sales, net sales would have increased by 34.5% to LE 1.35 billion in 1H 2021 vs. LE 1.0 billion in 1H 2020. We also managed to increase our average selling prices by 21.3% to LE 28,345/sqm. Speeding up construction pace of which 423 skeleton keys are already being visible. While construction of O West apartments (185 units) started early June 2021. During the quarter a total of 118 new memberships were added to O West Club (membership fee is LE 180,000), securing a steady recurring income flow to ODE. Total revenues of O West increased by 219.4% to LE 731.0 million (1H 2020: LE 228.9 million).
Makadi Heights
Makadi Heights c LE ontinued to record stellar operational and financial results with net sales of 583.9 million, 402.1% increase over the LE 116.3 million reported in 1H 2020. We also continued to increase our average selling prices by 69.6% to EGP 28,311/sqm in 1H 2021. Real estate revenues increased by 29.7x to LE 243.3 million in 1H 2021 (1H 2020: LE 8.2 million) benefiting from continuous increase in construction pace across the project. Outstanding commercial leasing progress is being witnessed in the destination with signing multiple agreements, all planning to begin operations in Q3 2021. Destination management segment revenues also increased by 36.5% to EGP 10.1 million in 1H 2021. Total revenues from Makadi destination increased by 13.2x to LE 253.4 million (1H 2020: LE 19.2 million).
