Slide 1: Investor Presentation 2Q 2015
Investor Presentation 2Q 2015
Slide 2: Disclaimer
Disclaimer This presentation is intended for information purposes only and does not constitute or form part of an offer for sale or subscription or an invitation or solicitation of an offer to subscribe for or purchase securities of any kind and neither this document nor anything contained herein sh
Slide 3: Agenda
AGENDA Investment Highlights 11 ERC – Egypt’s Leading Master Developer 2 ERC – Egypt’s Leading Master Developer 3 Corporate History and Recent Events Sahl Hasheesh Main Gate 4 Sahl Hasheesh – ERC’s Mega Resort Community 5 Market Opportunity Summary 6 Appendices
Slide 4: Investment Highlights
Investment Highlights Master developer of Premium mega resort Unique business model mega resorts on the Red Sea with multiple recurring revenue streams Strong shareholder base Unique value and experienced management proposition team for sub-developers and residents 4 Investor Presentation 2Q 2015
Slide 5: ERC: 1H 2015 Developments & Overview
ERC: 1H 2015 Developments & Overview Record Land Sales Record Cash Collections Cash Position Sawari Marina Land An unprecedented uptick in land sale 1H 2015 saw collections climb to ERC enjoys a healthy balance sheet, ERC received the green light from the contracts saw ERC’s total contracted record
Slide 6: Agenda
AGENDA 1 Investment Highlights ERC – Egypt’s Leading Master Developer 12 3 Corporate History and Recent Events Sahl Hasheesh Main Gate 4 Sahl Hasheesh – ERC’s Mega Resort Community 5 Market Opportunity Summary 6 Appendices
Slide 7: ERC – Egypt’s Master Developer
ERC – Egypt’s Master Developer ERC is a master developer and exclusive community manager of Manage the fully integrated, world-class communities community and supply of utilities The ERC Business Model: Implement design 1 Acquire broad acre land holdings suitable for high-quality development at nomi
Slide 8: ERC Business Model
ERC Business Model • By world-class master planners Land Identification/ • Design and construction guidelines and Three Revenue Streams Investment Acquisition conditions + ERC leverages strong brand partnerships, a comprehensive • Water Desalination Plants and Networks development model and manageme
Slide 9: Agenda
AGENDA 1 Investment Highlights 2 ERC – Egypt’s Leading Master Developer ERC – Egypt’s Leading Master Developer Corporate History and Recent Events 3 Sahl Hasheesh Main Gate 4 Sahl Hasheesh – ERC’s Mega Resort Community 5 Market Opportunity Summary 6 Appendices
Slide 10: Shareholder Information
Shareholder Information A successful public-private partnership with a stable shareholder base Legal Structure Egyptian Public Joint Stock Company KATO Investment Listing 11.96% Egyptian Exchange (EGX) Others First Arabian Company Authorized Capital (EGP) 2,000,000,000 40.48% 10.00% Paid-in Capital
Slide 11: ERC Corporate History
ERC Corporate History 2015 onwards • ERC to prepare for work on the Sawari Marina project after having received the TDA’s approval to redefine the boundaries of Sahl Hasheesh’s Phase II in May 2015 2015 • Complete internal finishing of Tawaya project within 12-18 months, SHC’s joint project with Pal
Slide 12: Emerging from the Crisis: Another Opportunity
Emerging from the Crisis: Another Opportunity Dislocations after the global financial crisis and the 2011 uprising have left Sahl Hasheesh with the opportunity to emerge as the destination of choice for investors Comfortable Cash Reserves – EGP 173 Prime Land Bank Supporting investment to boost the
Slide 13: Delayed recovery relative to peers suggests strong rebound
Delayed recovery relative to peers suggests strong rebound triggered by acceleration of sales activity and Phase III land plot issue resolution January 2011 – August 2015 (rebased to 100) EGX30 EGTS MNHD TMGH ODHN PHDC OCDI 200 180 160 140 120 100 80 60 40 20 0 13 Investor Presentation 2Q 2015
Slide 14: Agenda
AGENDA 1 Investment Highlights 2 ERC – Egypt’s Leading Master Developer ERC – Egypt’s Leading Master Developer Sahl Hasheesh Main Gate 3 Corporate History and Recent Events Sahl Hasheesh – ERC’s Mega Resort Community 4 5 Market Opportunity Summary 6 Appendices
Slide 15: A rare and established prime diving and seaside destination
A rare and established prime diving and seaside destination Phase 1 Alexandria Cairo Hurghada Sahl Hasheesh Phase 3 Phase 2 Luxor On program to become the no. 1 destination for seaside hospitality, residential and entertainment developers 15 Investor Presentation 2Q 2015
Slide 16: A master-planned project roughly two-thirds the size of Manhattan
A master-planned project roughly two-thirds the size of Manhattan Sahl Hasheesh is a unique, purpose-built Red Sea destination 18 km south of Hurghada International Airport and approximately 470 km • 18 km south of Hurghada Int’l Airport from Cairo. The year-round development – approximately two-thi
Slide 17: A WATG Master Plan
A WATG Master Plan Phase III pending Tourism Development Authority (TDA) approval Phase III shapes and brings online phased districts totaling 20 million square meters, and is the key to transforming the development from a pure resort to a thriving resort city. The WATG design introduces the heart o
Slide 18: Sahl Hasheesh: Progress Benchmarks
Sahl Hasheesh: Progress Benchmarks Phases I and II of Sahl Hasheesh are currently home to more than 3,000 Phase 1 6 million m² hotel rooms and suites managed by brands including Premier Le Rêve, Premier Romance, Pyramisa and Old Palace, in addition to 1,500 • Fully finished: 1,632 rooms (four projec
Slide 19: A unique value proposition for Investors & Sub-Developers
A unique value proposition for … 1. Investors & Sub-Developers Controlled Supply Large – yet strategically released – land phases deployed based on development and ROI protection. Land supply around Hurghada is eroding quickly, while future sites at Sahl Hasheesh are easily brought online on short t
Slide 20: and for Tourists & Residents
and for … 2. Tourists & Residents Community Management in an Upscale Resort Architectural integrity and cohesion guaranteed by strict design guidelines coupled with innovative design concepts promise an ideal physical environment. Community management controls and regulations ensure an uncommonly hi
Slide 21: ERC Business Model – The Case at Sahl Hasheesh
ERC Business Model – The Case at Sahl Hasheesh Land Identification/ Three Revenue Streams Investment Acquisition ERC leverages strong brand partnerships, a comprehensive development model and management structures that are transferable across projects and sectors – our ambition is to build a prolifi
Slide 22: Revenue Stream 1: Land Sales
Revenue Stream 1 & Land Sales SAHL HASHEESH RED SEA, EGYPT
Slide 23: Revenue Stream 1: Land Sales
Revenue Stream 1: Land Sales Transfer of Ownership Occurs Upon Project Completion and Operation to Prevent Developer and Investor Speculation Review Offer Acceptance + CapEx Construction • Offer received from • Sales contract signed 1. Plans reviewed against • Infrastructure coordination developers/
Slide 24: Revenue Stream 1: Land Sales Industry-Beating Model
Revenue Stream 1: Land Sales Industry-Beating Model 2.7 million m² (excluding Phase III) remain in the pipeline at Sahl Hasheesh. Average sales price grew at a CAGR of 90% before the global financial crisis and profit margins reached 84%. Weighted Average Sales Price/m² Achieved (USD) Weighted Avera
Slide 25: Revenue Stream 2: Real Estate Development
Revenue Stream 2 Real Estate Development: Strategic Projects and Sahl Hasheesh Company
Slide 26: SHC Land Bank and Strategic Developments | Overview
1 SHC Land Bank and Strategic Developments | Overview ERC’s subsidiary Sahl Hasheesh Company (SHC) is developing approximately 700,000 m² of commercial and residential property Sole developer for Phases I and II downtown Strategic plots acquired at market prices for mixed-use For Future Development
Slide 27: SHC Strategic Developments | Tawaya with Palm Hills Developments
1 SHC Strategic Developments | Tawaya with Palm Hills Developments Project Highlights • A partnership between SHC and Palm Hills Developments to build an exclusive waterfront residential project in the Old Town of Sahl Hasheesh. • With this strategic alliance, ERC is targeting the build-up of a loca
Slide 28: ERC Strategic Developments | Sawari Marina with Orascom DH
2 ERC Strategic Developments | Sawari Marina with Orascom DH • 2.5 mn m2 exclusive community centered around a world-class yacht club and marina Project Highlights • Water across 117,000 m2 to host 330+ boats and yachts from 10-60+ m in length • Total area of Phase 1: 1.1 mn m2 • Two 5-star and one
Slide 29: ERC Strategic Developments | Jamaran
2 ERC Strategic Developments | Jamaran • An exclusive enclave of sea-side villas along the coast of Sahl Hasheesh SOLD OUT • Four designs to choose from, with each possessing a unique architecture style while embodying the elegance, simplicity and charm associated with Sahl Hasheesh seaside living •
Slide 30: Revenue Stream 3: Community and Utilities Management
Revenue Stream 3 Community and Utilities Management
Slide 31: Revenue Stream 3: Community and Utilities Management
Revenue Stream 3: Community and Utilities Management ERC’s extensive infrastructure investments position it as the exclusive utilities and services provider – a model that generates sustainable cash flows 1 cost recovery and 3 profit centers from recurring revenues Supply of Community Water Electric
Slide 32: Agenda
AGENDA 1 Investment Highlights 2 ERC – Egypt’s Leading Master Developer ERC – Egypt’s Leading Master Developer 3 Corporate History and Recent Events Sahl Hasheesh Main Gate 4 Sahl Hasheesh – ERC’s Mega Resort Community Market Opportunity Summary 5 6 Appendices
Slide 33: High stock liquidity with high growth potential
High stock liquidity with high growth potential … Shares Outstanding 1,050,000,000 52-Week Performance Chart (rebased to 100) Share Price* EGP 1.01 120 EGX30 EGTS Market Cap.* EGP 1,060,500,000 100 Average Daily Volume** 14.3 million 80 First Half 2015 60 Revenue EGP 299.5 million 40 EBT EGP 203.8 m
Slide 34: Backed by a solid balance sheet
… backed by a solid balance sheet Consolidated Liquid Assets and Liabilities (EGP millions) 509.4 534.2 443.5 467.5 278.0 331.9 551.9 384.2 216.4 226.9 260.6 208.1 252.4 336.2 199.5 329.8 342.0 309.2 359.3 273.8 238.6 260 271.2 236.3 271.6 143.1 200.0 162.0 173.1 108.9 98.1 Cash & TB Total Receivabl
Slide 35: Agenda
AGENDA 1 Investment Highlights 2 ERC – Egypt’s Leading Master Developer ERC – Egypt’s Leading Master Developer 3 Corporate History and Recent Events Sahl Hasheesh Main Gate 4 Sahl Hasheesh – ERC’s Mega Resort Community 5 Market Opportunity Summary Appendices 6
Slide 36: Tourism on the Egyptian Red Sea
Tourism Sector Resilience, returning tourists and continued investment boost sector Tourist Arrivals to Egypt | Millions Breakdown of Arrivals by Region of Origin | Year 2014 Jan. 25 uprising Germany lifts Americans, 2.5% others, 4.4% Sharm El-Sheikh travel warning attacks 14.7 June 30 Arabs, 16.4%
Slide 37: ERC’s Vision, Mission & Strategy
ERC’s Vision, Mission & Strategy VISION MISSION STRATEGY To become a regional master developer To make our shareholders proud of the To successfully implement the identified of international-standard mega company’s standards, reputation, initiatives to ensure the success of our communities by design
Slide 38: Management Team (1/2)
Management Team (1/2) Mohamed Kamel, Chief Executive Officer Mr. Kamel is a former Board Member of ERC and Vice President of Corporate Development. Prior to ERC, he served in various roles with KATO Investment including Corporate Vice President for Strategy and Governance and Business Development Ma
Slide 39: Management Team (2/2)
Management Team (2/2) Sherif Omar, Director — Planning and Design Mr. Omar joined ERC in 2003 as Chief Mechanical Engineer, supervising a number of projects including the construction of a sewage treatment plant and a water pump station. He became Head of Infrastructure, Planning and Design in 2010.
Slide 40: Select Consolidated Financials
Select Consolidated Financials From the Income Statement (EGP mn) 2009 2010 2011 2012 2013 2014 1H 2015 Revenue 25.8 14.9 28.2 40.5 28.9 51.3 299.5 Gross Profit 11.4 (5.8) (1.0) (11.3) (23.1) (42.4) 194.1 EBT 8.1 (7.8) (3.2) (107.0) (43.1) (40.5) 204.0 Net Income (3.4) (9.4) (7.4) (110.0) (47.7) (41
Slide 41: The Marina of Sahl Hasheesh, under development in partnership with Orascom
The Marina of Sahl Hasheesh, An exclusive waterfront In-house development of sea- The downtown commercial under development in residential project in the Old front residential villas with area and public beach of Sahl partnership with Orascom Town of Sahl Hasheesh, co- exquisite open water views and
Slide 42: www.erc-egypt.com
www.erc-egypt.com www.sahlhasheesh.com