rascom Development Egypt (ODE) continued to achieve good results in the first half (H1) 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 EGP 744.6m, despite the ongoing headwinds from COVID-19 affecting the hospitality business.
Revenues reached EGP 3bn, up 55.8% y-o-y. Gross profit also increased by 90.9% to EGP 1.1bn. 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.
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 EGP 2.6bn, while total debt reached EGP 3.5bn and net debt reached EGP 866.7m.
ODE continued to generate positive cash flows from operations, recording a 109.4% increase to EGP 813.2m in H1 2021.
Looking into 2021, visibility remains limited as demand may still be impacted by the ongoing fluid circumstances resulting from the pandemic and the timing of the vaccine roll-out. Accordingly, ODE still stands with its earlier position and abstains from providing full-year guidance on its 2021 results; however, we remain diligent in providing updates of the evolving situation during all our quarterly results calls and market communications as needed.
We enter the second half of the year with strong momentum and are positioned to grow and continue to deliver strong returns.
For the remainder of the year, we are planning to continue accelerating our real estate construction, ultimately increasing the real segment’s revenues. We will also leverage on our town management’s operation and steady growth.
Further expanding the number of residents, demonstrating our successes in disciplined deliveries and correct targeting across all destinations. We will also provide attractive offerings for start-ups and entrepreneurs, encouraging them to come set ground in our destinations.
For the hotels segment, in July the Russian government announced that airlines can resume charter flight operations to the Egyptian resorts. The resumption of flights is expected in August 2021. While the Russians were not the typical guests in El Gouna, nevertheless, the return of Russian guests is expected to support occupancy rates at competing destinations (including Hurghada, a typical market for the Russians), which should have a positive spillover effect on both occupancy and room rates at El Gouna, hence, indirectly supporting the destination. That said, we are planning to start a more focused approach to target Russian tourists to capitalize on their return, until other core markets are actively back.
Moreover, this step should also encourage less stringent travel restrictions from other countries, further supporting occupancy levels over the medium-term. Additionally, the Group will continue to keep a close eye on protecting its cash balance and monitoring its costs. Today, all our efforts are focused on the recovery of the tourism sector.
With global business trends improving slightly now with the ramp-up of the vaccine. We are optimistic that tourism will return to some level of normalcy.