UHY Clients
Orascom Hotels and Development
23rd September, 2009
Orascom Hotels and Development
UHY is at the forefront of transferring clients’ accountancy practices to comply with International Financial Reporting Standards (IFRS) in countries that have so far adopted the quality practice standards in all or some of their industry sectors.
A leading integrated town developer in Egypt and the Middle East – Orascom Hotels and Development (OHD) – has relied on UHY Khaled Elfakhrani & Co., our Egyptian member firm based in Cairo, to help with this transition.
OHD was recently acquired by Orascom Development Holding which is listed on the SWX Swiss Exchange, Zurich. The finance function has relocated to Altdorf, Switzerland, where the Group's new headquarters have been established.
In 2007, OHD achieved a turnover of EGP 1,896 million (USD 355 million) and a net profit of EGP 479 million (USD 90 million).
The Group is a developer of fully integrated towns that offer hotels, private villas and apartments, leisure facilities such as golf courses and marinas, as well as supporting infrastructure.
It is also the largest owner of hotel rooms in Egypt, which are either self-managed under the Group's own brands, or managed by international hoteliers such as Hyatt, Mövenpick, Sheraton, Steigenberger, Marriott, ClubMed, ACCOR and InterContinental. For the period ending 31 December 2007, the Group's room portfolio stood at a total of 5,063 operating rooms in 21 hotels.
During 2007, the Group entered the budget housing market, through its subsidiary, Orascom Housing Communities (OHC), which is strategically focused on offering affordable housing across Egypt. OHC's initial plan is to develop 8.4 million sq m on the outskirts of Cairo, with an expected capacity of 50,000 units. Currently, approximately 10,000 units have been built. Moreover, OHC is planning a second site in Al Fayoum Governorate on a total area of 2.1 million sq m, with initial plans to develop 20,000 units.
A key long-term value driver for the Group is its land bank, and it has secured, or is in the course of securing, large land banks in untapped yet attractive locations with development potential in Egypt, Morocco, Oman, the United Arab Emirates and Switzerland. This high quality portfolio, combined with a proven business model, is expected to result in long-term growth opportunities. The Group's first and largest integrated town, El Gouna, is the benchmark for this development model, with a total land area of 36.8 million sq m, out of which approximately 11 million sq m have been developed to date.
Currently, El Gouna houses a population of 10,000 to 15,000 inhabitants. It offers more than 2,500 hotel rooms; two marinas with more than a 240-berth capacity; an international 18-hole US PGA golf course; a hospital; and a landing strip, as well as other town features. The value of residential properties in this destination has appreciated by a compounded annual growth rate of 29% over the past seven years.
Throughout all its communities, OHD takes responsibility for day-to-day upkeep of its power grids, desalination plants, roads, schools, hospitals, golf courses, marinas and security. The Group retains ownership of all commercial properties (shops, marina slips, staff housing, etc.), so controlling the quality of offering and generating a growing stream of annual cash flows. Its own construction capacity of more than 10,000 workers includes its own brick factory to ensure delivery of high-quality developments.
The Group continues to expand and diversify its operations outside Egypt, with the aim of exporting its development model elsewhere. It has several projects under development in Jordan, Mauritius, Morocco, Oman, Switzerland and the UAE.
UHY’s firm in Egypt, UHY Khaled Elfakhrani & Co., provides accountancy services for the Group’s transition to IFRS and auditing for several of the Group’s subsidiaries. Five UHY technical staff support the assignment from Cairo and the client service team also participates in the Group consolidation package.
“We chose UHY because of their accountancy expertise, commitment and dedication to the assignment, as well as their in-depth, local knowledge," says the Group’s Senior Vice-President (Finance and Investment), Mahmoud Zuaiter (pictured right), “and because their services are at least at the same level as those provided by our Big Four auditor."
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