Tailor-Made Development

Transcription

1 Tailor-Made Development Annual Report 2010

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4 Contents 1. Key Financial Indicators p2 2. Orascom Development at a glance p4 2.1 Company profile 2.2 Destinations map 2.3 Letter to shareholders 2.4 Investor information 3. Community Developer 2010 Showcase: Andermatt Swiss Alps, Switzerland p16 4. Performance in 2010: Business review p Operational review 4.2 Financial review 4.3 Performance review 4.4 Segmental review 5. Projects Review p Egypt 5.2 United Arab Emirates 5.3 Sultanate of Oman 5.4 Switzerland 5.5 Morocco 5.6 United Kingdom 5.7 Montenegro 5.8 Romania 5.9 Jordan 6. Corporate Social Responsibility p Environmental protection 6.2 Welfare of the society 6.3 Employees 7. Corporate Governance p Group structure and significant shareholders 7.2 Capital structure 7.3 Board of Directors 7.4 Executive Management 7.5 Compensation, shareholdings and loans 7.6 Shareholders participation 7.7 Changes of control and defense measures 7.8 External auditors 7.9 Information policy 8. Glossary of Terms p92 Tailor-Made Development The Annual Report concept is designed to visually support the uniqueness of our business model. Our successful business model is implemented in various destinations; however, each project is tailormade to suite a specific unique community with its different demography and topography. And this is the Group s core value and vision to develop self-sufficient and unique communities and towns. Part I: Annual Review In this report, we present an in-depth look at Orascom Development s corporate activities, with a special section dedicated to showcase Andermatt Swiss Alps (ASA), explaining how it began and where we currently stand. Additionally, a one-on-one interview with ASA s Managing Director gives more insight to ASA s operations. We then analyze the Group s performance during 2010 with regards to each business segment, namely hotels, real estate and construction, land sales, town management, tour operations, and other operations. Also, each destination s operations, key facts and figures are presented in the projects review section; in addition to general information with regards to each country we operate in. This is followed by a review of our corporate social responsibility, then corporate governance. Part II: Financial Statements This report consists of the Group s consolidated financial statements, notes to the consolidated financial statements, and respective auditor s report. Also, the Group s standalone financial statements, notes, and auditor s report to standalone financial statements are presented in this report.

5 1. Key financial indicators 2010 Highlights 1 Total revenue CHF Million Total Revenues CHF 568 Million Total revenues CHF 586 Million Total revenues CHF 516 Million 193 Hotels Real estate and construction Land sales Town management Tours operations Other operations GROSS PROFIT EBITDA CHF Million CHF Million Net profit (before non-controlling interest) CHF Million EPS (basic & diluted) CHF Total assets CHF Million 1,660 1,886 2,093 Net debt CHF Million Net debt/ebitda New presentation for the Group s financial review The Group s underlying operational figures in 2010 were nearly in line with last year s, stipulating further recovery from the world financial crises. On the other hand, unique one-off items have impacted our results this year. First, in June 2010, the Group strategically divested a 6% stake, of its 51% ownership in the Garranah Group of companies. Secondly, 2010 witnessed strengthening of the Swiss Franc over other functional currencies utilized by our subsidiaries, primarily the US dollars and Egyptian pounds. Therefore, we will present our consolidated actual end of year results (referred to as actual or A ), and for the purpose of comparability, global and per business segment figures will be presented in 2010 performance section after neutralizing for the effect of such factors. For details on the impact of the deconsolidation of the Garranah group of companies and the translation effect resulting from the appreciating Swiss Franc, please refer to page 36. 2

6 Segment KPI 1. Hotels Hotel rooms Rooms 6,559 6,479 6,516 Occupancy rate 81% 69% 76% Egypt Egypt U.A.E. U.A.E. Jordan Jordan Rooms Percentage 20% 40% 60% 80% TRevPAR ARR CHF CHF Egypt Egypt U.A.E. U.A.E. Jordan Jordan Real Estate CHF CHF Total value of contracted units Total number of contracted units CHF Millions Egypt Contracted units 3,020 3,456 3,557 Egypt U.A.E. U.A.E. Oman Oman Switzerland Switzerland CHF Million Contracted units Average selling price CHF/m 2 (residential) CHF 2,549 3,024 4,432 Average selling price CHF/m 2 (basic affordable housing) CHF Average selling price CHF/m 2 (total) Egypt U.A.E. Oman Switzerland CHF/m

7 2.1. Company profile 2.2. Destinations map Orascom Development Holding AG (Orascom Development) is a developer of fully-integrated towns that offer hotels, private villas and apartments, leisure facilities and supporting infrastructure. Orascom Development is focusing on the creation and management of living touristic towns and more recently also on affordable housing communities. The Group operates projects at different stages of completion in Egypt, Jordan, U.A.E., Oman, Switzerland, Morocco, United Kingdom, Montenegro and Romania. Currently, the Group manages four destinations: El Gouna, the flagship project on the Red Sea Coast in Egypt, Taba Heights on the Sinai Peninsula in Egypt, The Cove in Ras Al Khaimah in the U.A.E. and Haram City, the affordable housing town in the outskirts of Cairo in Egypt. Orascom Development s proven business model combined with its high-quality portfolio and the huge land reserves result in long-term growth opportunities. The Group operates 26 hotels with 6,516 rooms, controls a land bank of approximately 118 million m 2 and employs a workforce of more than 17,119 employees. Orascom Development is listed on both the SIX Swiss Exchange and on the EGX Egyptian Exchange. SWITZERLAND PROJECTS UNDER DEVELOPMENT Andermatt MOROCCO PROJECTS UNDER DEVELOPMENT Chbika EGYPT EXISTING TOWNS El Gouna Taba Heights PROJECTS UNDER DEVELOPMENT Amoun Island Al Roboua and Byoum Makadi Bay Riyad Resort BASIC AFFORDABLE HOUSING Haram City Al Fayoum Qena Gardens OTHER HOTELS Royal Azur & Club Azur Zahra Oberoi 4

8 U.K. MONTENEGRO ROMANIA PROJECTS UNDER DEVELOPMENT Eco-Bos PROJECTS UNDER DEVELOPMENT Lustica PROJECTS UNDER DEVELOPMENT Constanta JORDAN U.A.E. OMAN EXISTING TOWNS Tala Bay EXISTING TOWNS The Cove PROJECTS UNDER DEVELOPMENT Jebel Sifah Salalah Beach As Sodah Island City Walk, Muscat 5

9 2.3. Letter to shareholders Dear Shareholders, Ladies and Gentlemen I am delighted to present to you our Annual Report for 2010, an eventful year for Orascom Development at both the strategic and operating levels. Overall, total revenues reached CHF million and we generated an EBITDA of CHF million and a net profit of CHF million which corresponds to earnings per share of CHF We reached our financial goals and are therefore able to submit to our shareholders a tax attractive nominal value repayment proposal of CHF 0.65 per share by decreasing the nominal value per share from CHF to CHF Challenging but rewarding market environment Economies around the globe were fairly sound despite some inflationary pressure and ongoing government initiatives in response to currency and budget turbulences. Consumers in the West remained confident and travelling to attractive holiday destinations saw good demand. This, combined with our attractive portfolio of hotels and resort infrastructure, led to both higher occupancy rates and an increased turnover per guest in our holiday destinations. Favorable mortgage interest rates and substantial demand for tangible assets, coupled with the fact that the number of high net worth individuals continues to grow, resulted in good demand of secondary homes. Orascom Development managed to profit from these trends as customers from around the globe continued to buy our real estate offerings in attractive locations. However, the strong Swiss Franc has offset this trend partially with a negative contribution of more than 5% or CHF 27.1 million to our results. Firm project execution skills Orascom Development creates long-term value by developing untapped land banks into integrated holiday destinations. Our proven business model coupled with a firm implementation strategy led to substantial progress in all our projects in Real estate pre-sales continued to be on a good level which allowed us to maintain our execution level and expand our already varied product portfolio. Our mature destinations and hotels served as the backbone of a consistent cash flow. Furthermore, Orascom Development continued to evaluate partnerships with leading international hotels chains. In the year under review, we signed two management agreements with the renowned Four Seasons Hotels and Resorts Group which will operate two in Jebel Sifah/Oman and in El Gouna/Egypt as well as a contract with Radisson for a luxury hotel in Andermatt. Promising new destinations A further achievement was that Orascom Development was able to advance its new projects significantly. Our first affordable housing project outside Egypt is planned to be realized in Constanta, one of the major cities in Romania on an area of 2.5 million square meters. In Montenegro, we inaugurated the start of construction of an integrated holiday village that will cover an area of 6.8 million square meters on a beautiful Adriatic coast bay. In the Cornwall project in Great Britain, an important milestone was reached when the official launch of the local development company was signed between Orascom Development and our partner Imerys. In Andermatt, where Orascom Development is building a prestigious all-year holiday resort, construction is well in progress and pre-sales of more than CHF 100 million have been secured by the end of In summary, Orascom Development has a well stocked project pipeline and is on track to put in place a paced framework for future growth. Successful capital increase and start of revaluation program Funds to implement our international growth plans and to finance our current development projects are available. Orascom Development has successfully completed a capital increase of CHF 185 million in September Existing shareholders were offered 20 new registered shares for every 93 registered shares held at an offer price of CHF A total of 4,993,460 new registered shares have been issued out of the company s authorized capital. The successful rights offering increased Orascom Development s share capital by around 18% to CHF 673 million, increasing issued shares to 28,213,118 registered shares. Furthermore, our Egyptian subsidiary Orascom Hotels & Development was able to secure a syndicated loan agreement of approximately CHF 160 million with a tenor of seven years. Those proceeds will mainly be used to optimize existing short-term loans as wells as to finance the construction of new hotels and the renovation of existing facilities in our Egyptian towns. In line with Western standards and market norms, Orascom Development has voluntarily changed its accounting policy regarding investment properties from the cost model to the fair value model using independent valuations. The company believes that this new policy will result in a more appropriate presentation of investment properties. A positive restatement effect of CHF 14.0 million has been registered in the year under review. Delisting of Egyptian subsidiary In late 2010, we launched a public tender offer to the remaining minority shareholders of our Egyptian subsidiary Orascom Hotels & Development with the intention to delist the company from the Egyptian stock exchange. Almost all minority shareholders tendered their shares to Orascom Development which now holds 99.66% in Orascom Hotels & Development. Consequently, we have started the delisting process which is expected to be completed during

10 Outlook The current year started on a positive note but unexpected events in Egypt and other countries in the Arabic world erupted in late January Although our destinations were safe at all times and not directly affected by the turmoil, sales and bookings in our Egyptian towns saw a substantial decline in the weeks following the demonstrations. We expect this trend to reverse to some extent in coming months as El Gouna and Taba Heights remain popular among foreign visitors. However, the number of flight connections offered remains subdued and will only change over time. As a consequence, we expect to see hotel revenues to drop by around 30% y-o-y in Nevertheless, the international expansion of our activities is expected to advance without interruption and real estate pre-sales in Q were in line with the same period last year. Thanks to our development skills and the projects we have initiated outside the Middle East in recent years, Orascom Development is now better protected against further unexpected political or economical problems in the Arab world. Overall, the main focus of our activities in 2011 will be the ongoing development of our projects under construction as well as those in the planning phase. Furthermore, we put emphasis on ongoing marketing efforts in order to boost pre-sales in all our projects on the market. And in-line with our strategic objectives, we will continue to evaluate both additional management agreements with leading international hotel chains and new project opportunities. Finally, we look forward to another year with a continuation of cost control measures implemented. On behalf of our Board of Directors and Executive Board, we would like to thank all our employees for their considerable commitment. We also wish to thank our client and business partners for the excellent working relationships we enjoy with them. Lastly, we wish to thank you, our shareholders, for the trust placed in our company. Samih Sawiris Chairman & CEO 7

11 Investor information Introduction Orascom Development has a dual listing with its primary listing on the main board of the SIX Swiss Exchange. The secondary listing is in the form of EDR s (each representing 1/20 of the Group s share) on the EGX Egyptian Exchange. Overview Split of Registered Shares Switzerland Shares held with SIS and for which the shareholders are registered in the share register 9,106,997 43% Egypt Dispo shares 6,977,908 Egypt Shares in custody of MCDR s depositary bank (EDRS) 9,957,744 Switzerland / Egypt split Switzerland 57% Shares in custody of MCDR 1 2,170,469 Total Shares 28,213, This balance includes 1,286,353 shares that represent the number of shares lent by Mr. Samih O. Sawiris to Orascom Development Holding AG as per the Securities Lending Agreement under which the company is entitled to borrow up to the indicated number of shares from Samih O. Sawiris. Share information EDRs information 2 Shares listing Zurich, Switzerland EDRs listing Cairo, Egypt Number of shares 16,084,905 Number of EDRs 199,154,880 ISIN code CH Conversion ratio 20 EDR = 1 equity share Ticker codes ODHN, ODHN.SW Equivalent to 9,957,744 shares ISIN code EGG676K1D011 Ticker codes ODHN.CA, ODHN.EY 2. This table presents information pertaining to EDRs only and does not include equity shares in custody of MCDR, which amount to 2,170,469 shares 8

12 Per share data 31/12/ /12/2009 Market price at year end, CHF Highest market price during the year, CHF Lowest market price during the year, CHF Number of traded shares, million Value of traded shares, CHF million Average traded shares per day 10, , Market capitalization, CHF billion Per EDR data 1 31/12/ /12/2009 Market price at year end, EGP Highest market price during the year, EGP Lowest market price during the year, EGP Number of traded EDRs, million Value of traded EDRs, EGP million Average traded EDRs per day 52, , Market Capitalization, CHF billion the first day of EDRs trading was 13 December

13 EDRs issuance and cancellation The following diagrams provide an overview on the issuance and cancellation process of EDRs typically executed by the Depositary Bank (DB) of Misr for Central Clearing, Depositary and Registry (MCDR). ISSUANCE OF EDRs Swiss Stock Exchange 1 Transfer request to move shares to Egypt 2 Moving the client s shares to MCDR s account with SIS Client SIS MCDR Egyptian Stock Exchange 4 Delivery of shares in the client s name on The EGX 11 Delivery of EDRs in the Client s name Client s Custodian 3 Transfer of shares from SIS accounts 10 Conversion of issued EDRs MCDR 5 Conversion of delivered shares against the issuance of EDRS 9 Conversion of issued EDRs 6 Delivery of shares in name of Depositary Bank Depositary Bank s Custodian 7 Notification to DB on the delivered shares 8 Issuance of EDRs (Number of shares x Conversion ratio) Depositary Bank 10

14 CANCELLATION OF EDRs Egyptian Stock Exchange 10 Delivery of shares to client (NOTE: equity share could be kept on EGX but not tradable) 11 Transfer of shares from MCDR to SIS accounts 5 Cancellation of EDRs Client s Custodian Depositary Bank 1 Cancellation request of existing EDRs against delivery of shares 2 Transfer of EDRs conversion request against delivery of shares 9 Transfer of shares to client Instructions to transfer the shares to client 8 (Number of cancelled EDRs / Conversion ratio) 4 Notification to DB for the delivered EDRs 6 Transfer of cancelled EDRs Client Depositary Bank s Custodian 3 Delivery of EDRs in DB name MCDR 7 Reduction of issued EDRs balance and notification to DB Swiss Stock Exchange Client 13 Addition of shares to the client s account SIS 12 Deduction from MCDR account balance with SIS MCDR 11

15 Shareholding structure A) Shares B) EDRs Shareholders by type Categories Number of shareholders Number of shares Legal entities 70 6,192,193 Banks 29 1,751,361 Individuals 2, ,010 Funds ,842 Pension funds 19 89,199 Other foundations 4 6,392 Total 2,993 9,106,997 EDRs holders by type Categories Number of EDRs Holders Number of EDRs Individuals 1, ,792,045 Legal entities 29 11,401,687 Funds 15 7,921,620 Other foundations 15 3,340,428 Banks 3 1,507,980 Pension funds 2 191,120 Total 1, ,154,880 Shareholders by country Country Number of shareholders Number of shares Egypt 5 5,108,377 United Kingdom 10 1,744,913 Switzerland 2,941 1,280,638 United States of America 3 680,802 Virgin Islands (British) 1 124,441 Luxembourg 2 70,730 United Arab Emirates 2 51,398 Belgium 1 35,133 Germany 10 3,112 Ireland 3 1,919 Austria 4 1,625 Netherlands 1 1,294 Thailand Brazil Liechtenstein Spain Sweden 1 55 Finland 1 40 France 1 30 Total 2,993 9,106,997 EDRs holders by country Country Number of shareholders Number of shares Egypt ,105,167 Saudi Arabia 16 11,169,160 United Kingdom 15 8,523,838 Kuwait 3 1,203,000 Cayman Islands 1 400,841 United Arab Emirates 8 202,633 Germany 2 160,520 Canada 4 156,407 Netherlands 1 72,900 Luxembourg 1 49,429 Jordan 6 28,295 Bahrain 1 22,948 Lebanon 2 21,780 Italy 2 10,700 Malaysia 1 9,100 Palestine 4 8,810 Oman 1 8,240 Thailand 1 1,060 Syria 1 52 Total 1, ,154,880 Distribution of shareholdings 1 Number of shareholders Number of shares , ,312 69, ,000 1, ,678 1,001 10, ,209 10, , , ,001 1,000, ,991,681 1,000, ,999, ,587,388 Total 2,993 9,106,997 Distribution of EDRs Holdings 1 Number of shareholders Number of shares , , ,638 1,001 10, ,835,183 10, , ,286, ,001 1,000, ,855,591 1,000, ,999, ,956,360 Total 1, ,154, Distribution of registered shares/edrs as at 31 December

16 Significant Shareholders 1 Name of major shareholders Number of shares issued Percentage of ownership Samih Sawiris 8,717, % 31.93% Thursday Holding Ltd. (controlled by Mr. Samih Sawiris' family) 7,142, % 25.30% SOS Holding Ltd. (controlledby Mr. Samih Sawiris' family) 1,126, % 2.77% Janus Capital Management LLC 1,524, % 4.98% Blue Ridge Capital Holdings LLC and Blue Ridge Capital Offshore Holdings LLC 1,059, % 3.67% Other Shareholders 8,641, % 31.35% Total 28,213, % % 1 Overview of significant registered shareholders as at 31 December 2010 Dividends policy In lieu of a dividend, Orascom Development is considering a further reduction in the company s share capital of CHF 0.65 per share by decreasing the nominal value per share from CHF to CHF This proposal is subject to the approval of the General Assembly to be held on 23 May Research coverage Bank am Bellevue Kenneth Pryce, kgp@bellevue.ch Beltone Financial Ahmed Khalil, akhalil@beltonefinancial.com Credit Suisse Ahmed Badr, ahmed.badr@credit-suisse.com EFG-Hermes Jan Pawel Hasmann, apawel@efg-hermes.com HSBC Patrick Gaffney, patrickgaffney@hsbc.com HC Ankur Khetawat, ankur.khetawat@af-hc.com Bank Sarasin Patrick Hasenböhler,patrick.hasenboehler@sarasin.ch UBS Till Leisner, till.leisner@ubs.com Zürcher Kantonalbank Marco Strittmatter, marco.strittmatter@zkb.ch Corporate calendar 23 May 2011 Annual General Meeting 06 Jun 2011 Publication of first quarter 2011 results 16 Aug 2011 Publication of second quarter 2011 results 16 Nov 2011 Publication of third quarter 2011 results Investor contacts Mamdouh Abdel Wahab Director Investor Relations ir@orascomdh.com For publications and further information visit: 13

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18 3. Showcase 2010 GOING INTERNATIONAL As El Gouna has become the model for the development and operation of leisure towns, that success prompted Orascom Development to increase activities in promising locations abroad. In this vein, an agreement was reached in 2007 to implement a new project in the Swiss alpine village Andermatt in what is now our first of several European ventures. ORASCOM DEVELOPMENT BUSINESS MODEL Growth and recurring revenues Sustainable enviromental practices CREATING VALUE It is our ambition to transform the beautiful but thus far ordinary setting of the alpine village into an eco-friendly living community. We are firmly committed to the long-term prosperity of Andermatt, where our aim is to create an exquisite destination that is an outstanding place to visit, live and work. From the earliest planning stage, every aspect of the community s needs, from facilities and infrastructure to governance, has been considered. These guidelines differentiate us from our competitors who usually only build and sell properties. Real Estate Development/ Construction Hotels Marketing/ Sales Land Bank Support Services Project Managment Today, Orascom Development is implementing an international growth strategy. Thereby, El Gouna s unique value creation model serves as the standard for all new destinations of the Group. Part of this strategic framework is both the site identification in undeveloped but promising locations and the subsequent development and marketing of fully-fledged holiday destinations offering a variety of real estate, hotels and infrastructure. All these actions are based on sustainable environmental practices, as shown in the model. 15

19 Andermatt HOLISTIC DEVELOPMENT Andermatt is nestled in the mountainous Urserntal Valley at the foot of the Gotthard Massif, which for centuries was the most important North-South connection over the Alps. Due to its central position in Switzerland, the town has excellent connections to national and international transport routes. Andermatt is being developed in the same spirit as El Gouna as an all-year-round holiday destination. Our unique model is based on six core principles to generate both a unique experience for clients and value for the company: Our goals are not limited to developing and selling real estate. As we retain ownership of the project s infrastructure and the leisure facilities, and are the majority owner of hotel properties co-owned with other investors, an important part of our future income will originate from hotels operations, the rental of commercial properties and from town management services. We therefore have an intrinsic motivation to act long-term oriented and position Andermatt in the best possible way. UNCOMPROMISING STANDARDS Sustainability is at the heart of development efforts. Preserving the natural and cultural environment as well as creating short- and longterm benefits for the village are key objectives. The Andermatt project is developed in accordance with the highest ecological standards. We work closely with local residents, environmental associations, heritage protection groups, tourism organizations, and cantonal authorities towards that end. While developing, we aim to preserve the rivers and water surfaces as well as natural animal inhabitants. A carbon-free energy supply system of renewable energy sources will be implemented for the entire development. Meanwhile, the planned parking lot will offer a capacity for nearly 2,000 cars, allowing the central areas of town to be a car free zone and limit air pollution and noise substantially. Last but not least, all apartments and hotels will be built to Minergie standards, a Swiss industry label for the energy efficient construction of new buildings. INTEGRITY OF DESIGN It is our goal to respect local tradition and architecture and use these fundamentals as a guide for the planning of Andermatt Swiss Alps. With careful planning, Andermatt will retain the character of a traditional Swiss mountain village whereby the compact building style of the historic part of the town will be maintained. Each new building will have its own style and we ve orchestrated the collaboration between 30 Swiss and international architects to ensure a harmonious variety in the village. Also, the new architecture will be in perfect harmony with its alpine surroundings. Traditional materials such as wood, natural stone and glass set the modern accent of Alpine chic. 16

20 Our project will keep the old character of the town and upgrade the location significantly at the same time. Ihab Morgan, Head Destination Planning, Andermatt Swiss Alps AG POPULATION GOODWILL As a form of self-audit, we ensure a steady stream of information to the public and make sure that all relevant stakeholders are involved in the planning process. The Sales and Information Office in Andermatt has welcomed more than 30,000 visitors to date. Furthermore, the management of Andermatt Swiss Alps holds public dialogs each quarter and answers questions from the public regarding planning, construction, and development. The residents of Andermatt strongly support our development and in a referendum held March 30, 2007 an impressive 96% voted in favor of the project. COMPETITIVE EDGE The Group has been granted an exemption from the Lex Koller legislation, which restricts the acquisition of real estate by non-swiss residents. We are not faced with any direct competition in Andermatt because, after the completion of the project, there will be no significant development reserves remaining. Therefore, no other developer will be able to copy our successful approach. This allows us to further control the entire value chain of the destination, overseeing the various development stages until the resort becomes self-sufficient. This is a huge advantage due to the popularity of Swiss real estate as per current trends. SUPPLY AND DEMAND BALANCE Since there has been no real estate price bubble in Switzerland in recent years and attractive financing instruments are available, we are enjoying increased demands for our products in Andermatt. Meanwhile, apartment buildings and villas are built only once they are sold off plan, allowing us to retain pricing power during the entire project lifetime. This also brings added stability to the project as it and also creates a vibrant community since there are no built but vacant properties. Pre-sales are an important part of our financing strategy. Sales down payments allow us to maintain a conservative financing approach and limit our expenditures. Since the buyer pays part of the purchase price when signing the contract, and further substantial amounts during the construction phase of a residential unit, each unit pays for itself. These cash funds are also used to partially finance ongoing construction activities within the overall resort. Nevertheless, additional investments from the company are necessary until recurring revenues from the operation of the resort and its infrastructure can be generated. These are expected to start during the Winter of 2013/2014 and will further reduce our capital expenditures. 17

21 VALUE CREATION FOR THE GROUP As the project matures we will be able to achieve a higher average selling price for our real estate products. This will lead to incremental value creation for existing properties and have a positive effect on the value of the underlying land bank. This in turn brings added value to our company portfolio. Recurring revenues from the management of the operational resort will further spur the organic growth of the company. This effect will continue to materialize with the expansion of the destination and be further fuelled as the revenue per customer visiting the resort is increased over time. SUBSTANTIAL PROGRESS Substantial progress has been achieved in this project in the year under review, including: 3 of earth were excavated for the future 5-star luxury hotel, The Chedi Andermatt. Parts of the base plate were cast and the basement of the hotel, including the ceiling, was constructed. buildings, the emphasis was on redevelopment and preliminary work. removed and work began to cover 900 piles with concrete to stabilize the building plot. Progress was also made on the foundation of the podium as well as the gyrostabilizer. was completed, as was the work on irrigation systems. were also completed. So far, a total of CHF 136 million has been spent on the project in Andermatt. Building work will continue this spring and we estimate that 2011 activities will lead to further expenses of some CHF 100 million. By the end of 2010, reservations and purchase contracts in the amount of CHF 102 million total were concluded. Among buyers 41% are from Switzerland while most others are residents of Central Europe, North America and the Middle East. Scheduled openings Summer 2013 Golf Course Pre-Opening Winter 2013/14 The Chedi Andermatt Hotel Winter 2013/14 Sports Center Q First Residential Buildings Winter 2014/15 Radisson Blu Andermatt Hotel 18

22 The ski area will become one of the most attractive in the Alps. Bernhard Russi, Member of the Board of Directors, Andermatt Swiss Alps AG KEY RESORT FACTS Million m 2 4- and 5-star units in 42 buildings Project area Hotels Villas Apartments 18 -hole Championship golf course 35,000 m 2 Commercial space 1,970 Underground parking spaces 19

23 Q&A with Gérard Jenni Managing Director, Andermatt Swiss Alps AG 1. How did Orascom Development come to Andermatt? In 2005, Samih Sawiris was asked by the Swiss Government to consult the Andermatt local authorities on how to develop local tourism after the Swiss army pulled out of Andermatt. On the basis of an in-depth analysis he decided to launch the first development of the Group in Europe. 2. What strategic guidelines must be followed? All activities in Andermatt are following the general guidelines of the company, so maintaining a balance of development and delivery is crucial. Furthermore, plans and activities are discussed and agreed on in advance with local authorities and environmental organizations, so we have to meet those commitments as well. Strategically, all developments are sustainable and carbon-free, and real estate construction follows the Minergie standards. This will attract customers and investors who are environmentally conscious and also ensure the project s long-term sustainability. 3. What are the core advantages of Andermatt Swiss Alps? Andermatt Swiss Alps will be a fully-integrated resort offering not only hotels and homes but all other town functions and services. The client s ability to book and buy all services allows for continuity and ensures a high quality of products and services. Andermatt is geographically in the heart of Switzerland, in the middle of Zurich and Milan with their pulsing cities and international airports. This position in the heart of Switzerland is guaranteeing a high level of security for inhabitants and guest. 20

24 4. Who are your key partners? To date we have signed management contracts with GHM Ltd. for The Chedi Andermatt hotel and with Rezidor for the Hotel Radisson Blu Andermatt hotel. Major constructions works have been contracted to Swiss companies, some of which are innovative local competitors. This is a further proof of our strong relationship with local entities as we are committed to generating added-value for the town and region. 5. Who are your suppliers and how do you select them? All major suppliers are chosen after a strict bidding process. There is no protection for anyone; even local suppliers have to prove their qualifications. As a result, some local competitors have cooperated with larger Swiss companies and were awarded the bid due to their local knowledge. The best example of this is the joint venture of Joseph Baumann AG in Altdorf and local construction companies. Together they won the contract for the construction works of The Chedi hotel. 6. How is the real estate marketed? Marketing and sales of real estate units first started with the opening of the Zurich showroom near the world-famous Bahnhofstrasse in April During the summer of 2010 the Swiss market was targeted. In autumn 2010 the German and UK markets were entered, followed by the Italian market most recently. We are also offering our products through a network of well-established real estate agencies. 7. What will Andermatt contribute to the Group s P/L? Once we start operations in Winter 2013/14, we expect strong demand for The Chedi Andermatt hotel. This kind of hospitality experience will be unique in the Alps. The marketing power of our product, as well as the strong organization of our services, will have a positive impact on the Group s P&L. 8. What milestones have been reached to date? In September 2009, the ground breaking ceremony took place. Major construction works started in May 2010 and the foundation stone for The Chedi hotel was laid in August Most significant was the acceptance of the master plan by local and cantonal authorities in December Finally, in March 2010 we secured construction permits for the podium, The Chedi hotel, and the Golf course. I expect more construction milestones to follow soon. 21

25 4. Performance in Operational review Dear Reader, Operations in 2010 were influenced by healthy demand for our hotel and real estate offerings, although overshadowed by a stronger Swiss Franc, despite the ongoing efficiency and cost savings programs. This resulted in consolidated revenues of CHF 516 million and an EBITDA of CHF 178 million, with an EBITDA margin of 35%. Adjusted for one-off effects and the impact of currencies in the translation of financial results, the Group s top line decreased by a meager 2%, indicating that despite the extended effect of the world financial crisis, the underlying operational performance of the Group remained intact. The expansion of the Group s businesses was steady although we witnessed delays due to the postponement of the capital increase from May to September 2010, which reduced the financing capacity during this timeframe. The Group continues to expand its operations inline with its business model of a step by step approach. As such, it is planned to increase the number of operating destinations as well as the number of hotel rooms and real estate products in coming years. Progress has been achieved in existing destinations and future ones. Above all, we successfully commenced pre-sales in our Andermatt project in Switzerland, where real estate for the amount of CHF 102 million has been sold (based on purchase or reservation contracts), since project launch during April Overall, the Group s revenue mix did not change materially although hotels (37%) and real estate (44%) now account for more than 80% of total revenue whereas in 2009 their contribution was at around 72%. Egypt still accounts for the largest share of the Group s total revenues accounting for 74%, along contributions from Oman (16%), United Arab Emirates (6%), and the balance from Switzerland, Jordan and other countries. Living communities Our fully-fledged towns are frequented by almost 30,000 permanent residents and visitors making these destinations truly living communities. It is not only the accommodation, leisure activities and service level offered that attract and retain our customers from around the world, but also the fact that our towns expand year on year in a sustainable way while respecting local identities. Capitalizing on the Group s ability to control the entire value creation chain starting from site selection to project planning to the management of a resort, multiple advantages are achieved. It gives us flexibility to align all executives actions, hospitality positioning of the town and real estate prices remain under control so that market volatility can be reduced. With the addition of new destinations, operations will become internationalized in the coming years and will lead to a reduced dependency on the Egyptian activities. Furthermore, this will support the operational maturity of the Group with additional earnings and profits from new destinations kicking in. EBITDA Site Identification New Projects Master Planning Infrastructure Development Montenegro Cornwall Morocco Investments Pre-Sales Construction Andermatt Pre-Sales Further real estate and town facilities Budget Housing Oman Pre-Sales Ongoing town expansion El Gouna Taba Heights VAE Ongoing profits Healthy growth in hotel segment Hotel revenues increased by 5% to CHF 193 million supported by both higher bookings and increased turnover per customer. This combined with improved efficiency led to a segment result of CHF 44 million, 10% more than in the previous year, indicating the segment s recovery from the world financial crises that has impacted the tourism sector. Overall, the Group operates 26 hotels with 6,516 rooms available. On average, an occupancy rate of 76% and an average room rate of CHF65 have been achieved, while total revenue per available room stood solid at CHF 87. The Group continues its cooperation with major tour operators and significant allotments have been signed with major players such as Thomas Cook and TUI. New hotels were opened in El Gouna and Taba Heights in order to further upgrade these two destinations towards the luxury segment. In Taba Heights, the new ClubMed Sinai Bay, offering 385 rooms, will attract new guest that demand high quality and better service level. In El Gouna, the two new hotels in the marina combined with the newly opened Yacht Club El Gouna which offers berths for yachts with a length of up to 70 meters will attract an international clientele and at the same time boost the perception of El Gouna as the prime destinations for yacht owners on the red sea. Furthermore, management agreements were signed with the renowned Four Seasons Hotels and Resorts for new hotels in Egypt, and also in Oman, and another contract with Radisson Blu for a luxury hotel in Andermatt, was awarded indicating the Group s ability to retain an associate with the established market leaders in the hospitality world. Stable real estate sales in local currencies Market fundamentals for secondary homes in good locations and with an attractive price-benefit ratio remained positive. Consequently, our core activities witnessed good demand with increasing prices in all destinations on the market. 297 units with an average price of CHF 4,432 per square meter were sold off-plan to clients from all over the world. The average selling price for these residential real estate units soared by a remarkable 40%, following the introduction and conclusion of sales for residential units in the Andermatt project, where the Group s European projects are expected to accelerate the growth in the Group s overall average selling price per square meter. In Budget Housing, demand was lower as 2009 contracted units included 1,530 units sold to Cairo Governorate. In total, real estate and construction segment revenues for 2010 stood at CHF 229 million in comparison to CHF 240 million in the previous year. This decline was mainly due to a stronger Swiss Franc, which had a negative effect from translation of CHF 12 million. The gross profit reached CHF 107 million, which translates to a gross profit margin of 48%, up from 46% in The Group plans to further intensify its marketing efforts in the real estate segment and therefore new, well experienced staff has been hired in No significant land sales transactions Unlike 2009, Orascom Development did not undertake major land sales in the year under review and therefore sales in this segment declined to CHF 10 million while the segment profit decrease to CHF 3 million. Town management services in our operating towns remained on par with last year s level. However, segment turnover decreased because in 2009 an extraordinary fee for the pre-opening Taba Height s golf course of approximately CHF 9 million had been included in the segment result. Tour operations also declined as a result from the deconsolidation of the non-strategic stake in the Garranah Group of companies, which operates most of our tour operations businesses. As a result, segment revenues dropped by 57% and reached CHF 28 million. 22

26 Attractive construction costs The Group finances a majority of its real estate construction costs with presales of the respective units. Because construction costs have come down in the last two years, the profit margins on these already pre-sold real estate units will increase and thereby contribute to the profit growth of the Group. Orascom Development avoided crisis prices for its real estate units during 2008/2009 and therefore now stands to profit from attractive construction prices. Being in full control of the real estate offering in any of our towns, we are able to match the supply of units to cover the existing demand with limited room for any price confrontation. On the other hand, we closely monitor these underlying cost factors in order to avoid the reverse effect, e.g. Changes in construction material prices having a negative effect on already pre-sold real estate. Investments and residual land fuel expansion The Group invested approximately CHF 150 million in the period under review. Most of the funds were spent for new hotels and town management facilities in existing towns and our new developments in Andermatt, Cornwall and Montenegro. In Montenegro, the start of construction of an integrated holiday village that will cover an area of 6.8 million square meters on a beautiful Adriatic coast bay was inaugurated. In the Cornwall project in United Kingdom, an important milestone was reached when the official launch of the local development company was signed between Orascom Development and Imerys, the project s partner. In Andermatt, where Orascom Development is building a prestigious year-round holiday resort, construction is well in progress and real estate sales commenced successfully. The Group s huge land bank offers additional potential for growth. Of the total area of 118 million square meters, only 18% have been developed so far. Ongoing diversification in 2011 Orascom Development s business model will continue to bear fruit as the Group has a sound cash position, access to both attractive financing for its new developments as well as additional land banks in its existing destinations. The political turmoil in Egypt and the Arab world reduced visibility of our business in these areas and operations have to be managed on a more short term basis to ensure long term stability and viability of our operations. However, the expansion of the international activities in Europe is expected to go ahead as planned and without interruption. The political turmoil in Egypt in early 2011 had a negative effect on our Egypt hotels operations. While real estate sales continued to be executed during these difficult weeks, hotel operations came to a near standstill because flight connections were cancelled across the board. Although tourists demand for our destinations, the number of direct flights offered is still subdued and is expected to change over time because airlines have assigned their contingents to other destinations. As a consequence, we expect to see hotel revenues to drop by around 30% in 2011, even though we expect better bookings during summer and autumn of the current business year and remain adamant to mild the drop from the top line revenues to a lesser percentage of segment results. With a value of contracted units of CHF 273 million and deferred income stemming from real estate pre-sales in the amount of CHF 228 million, which will come to the profit and loss statement in coming financial periods, supported by a cash position of CHF 276 million, we believe that Orascom Development will be able to advance its projects under construction as well as those in the planning phase. We are expecting a challenging year but are confident that we have the financial and human resources that can proactively manage the future outcome to the benefit of all stakeholders. Amr Sheta Vice Chairman & Co-CEO 23

27 4.2. Financial review Dear Shareholder, Financial results in 2010 of Orascom Development were highlighted by five main developments. First, a negative currency effect of CHF 27 million or more than 5% of revenue due to the strength of the Swiss Franc. Second, the deconsolidation of the Garranah entities reduced total revenue by around CHF 37 million. Third, the revaluation of our investment properties, which were conducted by an independent third party provider for the first time, resulted in a gain of CHF 14 million as well as additional assets of CHF 0.9 million. Fourth, the successful capital increase in September 2010 further strengthened both our capital base and our balance sheet. Finally, Orascom Development started presales in its Andermatt project and achieved purchase and reservation contracts of CHF 102 million. Solid operational results Overall the Group s turnover decreased 12% from CHF 586 million to CHF 516 million. The decline is mainly due to the deconsolidation of Garranah (CHF 37 million) and negative currency influences (CHF 27 million) which combined accounted for CHF 64 million. Without one-off items, revenue in the year under review decreased by 2% to CHF 514 million in comparison to CHF 523 million in These factors, in combination with an additional provision of CHF 15 million that was built in 2010 in reaction to the recent political events in Egypt and the Arab World, resulted in a drop of net profit to CHF 122 million. However, the operational achievements were almost in line with 2009 if all these oneoff developments are excluded. The revenue mix remained stable with a contribution from the hotels segment of 37% and the real estate segment of 44%. The hotel segment improved its turnover by 5% to CHF 193 million and the EBIT by 10% to CHF 44 million mainly due to higher occupancy rates and higher average room rates achieved in Taba Heights, UAE and Jordan. At the same time, a big part of the costs is in local currency terms and remained nearly unchanged. Regarding real estate, sales stood at CHF 229 million, 5% below last year and the EBIT reached CHF 112 million, 7% less than in The decline was mainly caused by the weakness of the US Dollar because real estate contracts are mostly generated in US Dollars in all our destinations except in Switzerland. Margins were improved because construction costs were generally lower than in The operating profit before depreciation and amortization (EBITDA) stood at CHF 178 million representing a decline of 2%, from 37% in the previous year to 35% in the period under review. After stripping out the impact of special factors EBITDA would have declined to CHF 175 million and the EBITDA margin would have been 5% below the performance in Overhead expenses were above 2009 because extra provisions of CHF 15 million were built for any unforeseen charges or impairments that could result from the recent political events in Egypt and the Arab world. At CHF 30 million, depreciations and amortizations were higher by 1.5 million than in the previous year. Net profit margin decreased by 16% to CHF 122 million 24

28 compared to CHF 145 million in This translates into earnings per share of CHF 3.88; 16% less than in the previous year. This net result was positively impacted by revaluation gains of CHF 14.2 million and a profit from the Garranah sale of CHF 9.2 million. Strong balance sheet Total assets increased by 10% from CHF 1.9 billion in 2009 to CHF 2.1 billion in This materialized because of the addition of three Hotels in Egypt (Club Med in Taba Heights and 2 openings in El Gouna). On the other hand, inventories rose as work in progress (new hotels, infrastructure, etc.) soared during the reporting period. Cash and cash equivalents climbed by CHF 199 million to CHF 276 million. This improved liquidity situation is mainly attributable to the successful capital increase in autumn Liabilities surged slightly from CHF 820 million to CHF 900 million in the period under review. Main reason was the addition of financing that is related to the Hotels expansion in Oman, Switzerland and Morocco. As of 31 December 2010, a cash position of CHF 276 million, a net debt position of CHF million, a conservative leverage ratio of 0.74 and an average borrowing maturity of 7.7 years with a weighted average cost of debt of 6.97% demonstrate the Group s solid financial position. Investments fuel expansion Orascom Developments sound financial position allowed to invest substantially into new developments in existing towns but foremost into new destinations. CHF 270 million were invested in hotels and real estate. In order to advance internal processes CHF 3 million were invested for software tools as well as further improvement in efficiency. In total, Orascom Development invested CHF 273 million in This corresponds to a high investment rate of nearly 53% of the Group s current turnover. Going forward, Orascom Development is well prepared for further investments with a substantial cash position on top of several credit facilities that have not been executed yet. We generated a net free cash flow of approx. CHF 127 million which was fully re-invested in the expansion of our portfolio. Entailing the Group s ability to finance a substantial part of its growth from cash flow generated internally. Material currency impact Orascom Development has been hard hit by unusual high currency volatility in 2010, the strong Swiss Franc and the simultaneous weakness of the US Dollar, the Euro and the Egyptian Pound. The appreciation occurred with much accelerated pace than in the past and made counter-measures difficult. Our operations do not offer a natural hedge because costs (wages, construction, etc.) are usually accrued in local currencies whereas revenues are generated in Euros in the hotel segment (including all our operations in Egypt and other destinations) and in US Dollars in the real estate segment (all destinations except Andermatt which is invoicing in CHF). In total, exchange losses of CHF 27 million or more than 5% of the Group s turnover were booked. Non-strategic tour operations business Tour operation is not a core business of Orascom Development and therefore activities will be reduced almost entirely. In this respect, a milestone has been achieved in 2010 with the deconsolidation of Garranah by reducing the Group s stake to 45%. The sale resulted in an extraordinary profit of CHF 9.2 million. On the other hand, the deconsolidation is also reflected in Orascom Development s income statement which was reduced by CHF 37 million of Garanah sales. Start of revaluation program A revaluation program of the investment properties has been initiated voluntarily in Investment properties have been valued by independent third party providers (Alan Tinkler, Ramlackhan & Co and Fincorp & CPM), using the fair value model, which resulted in an appreciation of these assets of CHF 0.9 million and an extraordinary profit of CHF 14 million. It is planned to expand the revaluation process to additional components and Orascom Development intents to analyze these properties on a yearly basis. Outlook 2011 Orascom Development had a good start into 2011 with sales above comparable 2010 figures. However, with the start of the turmoil in Egypt and the Middle East in late January the situation changed and a shock like situation was noticed. February, although normally a weak month for us, was even worse and our destinations in Egypt were operating below breakeven. However, this situation changed again and in mid-april occupancy rates were back above 40% and as such are clearly above the break-even point of a 25%-35% occupancy rate, depending on the hotel. Regardless, in 2011 it is expected to have revenues shifting from the first quarter to the second quarter due to the stop of work for almost five weeks in Egypt. In all other destinations, activities go ahead as planned. With our proven business model and our solid financial structure, we expect to grow our business in Contracted units of CHF 273 million as well as deferred income of CHF 228 million at the end of 2010 will be reflected in the Profit & Loss statements of the next two years and thereby offer some protection against unexpected events. Mahmoud M. Zuaiter Group Chief Financial Officer 25

29 4.3. Year in review Performance in 2010 New presentation for the Group s performance review The Group s underlying operational figures in 2010 were nearly in line with last year s, stipulating further recovery from the world financial crises. On the other hand, unique one-off items have impacted our results this year. First, in June 2010, the Group strategically divested a 6% stake, of its 51% ownership in the Garranah Group of companies. Secondly, 2010 witnessed strengthening of the Swiss Franc over other functional currencies utilized by our subsidiaries, primarily the US dollars and Egyptian pounds. Therefore, we will present our consolidated actual end of year results (referred to as actual or A ), as well as for the purpose of comparability, global and per business segment figures such as: Revenues, Gross profit, EBITDA and Profit for the year after neutralizing the effects of (1) the impact of deconsolidating Garranah from 2009 figures and (2) foreign exchange translation on 2010 figures (referred to as neutralized or N ). Total revenues 2010A: CHF 516 million (2009A: CHF 586 million) 2010N: CHF 513 million (2009N: CHF 523 million) EBITDA 2010A: CHF 178 million (2009A: CHF 215 million) 2010N: CHF 175 million (2009N: CHF 204 million) Gross profit 2010A: CHF 175 million (2009A: CHF 196 million) 2010N: CHF 179 million (2009N: CHF 199 million) Profit for the year 2010A: CHF 122 million (2009A: CHF 145 million) 2010N: CHF 122 million (2009N: CHF 139 million) 26

30 Total actual consolidated revenues amounted to CHF 516 million (2009: CHF 586 million) with a justified drop of 12%. The top line drop is attributable to a number of reasons: (1) the strengthening of the Swiss Franc visa-vie other functional currencies utilized by Group subsidiaries accounted for half the drop. Also, (2) the impact of the deconsolidation of the tour operations segment and its related transportation arm, following the strategic sale of 6% of the Garranah Group of companies. Finally (3) unlike 2009 during which a plot of land was sold to a third party developer, 2010 had no such transactions. Meanwhile, total neutralized consolidated revenues amounted to CHF 513 million (2009: CHF 523 million), marking a decrease of 2%. Gross profit actual amounted to CHF 175 million (2009: CHF 196 million). Gross profit neutralized amounted to CHF 179 million (2009: CHF 199 million). EBITDA actual was CHF 178 million (2009: CHF 215 million). EBITDA neutralized amounted to CHF 175 million (2009: CHF 204 million). Profit for the year (profit before non-controlling interests) actual decreased by 16% to CHF 122 million (2009: CHF 145 million), yielding an actual basic and diluted earnings per share of CHF 3.88 (2009: CHF 4.59). Profit for the year (profit before non-controlling interests) neutralized and before accounting for exceptional provisions of CHF 15 million, following the latest events and circumstances in Egypt, was in line with last year, amounting to CHF 137 million (2009: CHF 139 million) aligning with management guidance. On 18 September 2010, the Board of Directors approved a plan to increase the share capital by CHF 119 million through the issuance of 4,993,460 fully paid-in registered shares at the nominal value of CHF per share. These shares were offered through a discounted-to-market rights offering with the purpose of financing current development projects. Shareholders were offered 20 new registered shares for every 93 registered shares held at an offer price of CHF per share with gross proceeds of CHF 185 million. On 30 September 2010, these new shares were issued following the exercise of 99.43% of the allocated subscription rights, pursuant to the authorized capital, which was approved by shareholders at the annual general meeting on 11 May The capital increase enabled Orascom Development to accelerate its growth plans and take advantage of currently attractive construction costs. To better finance developments plans in Egypt, Oman, and Switzerland, some of our subsidiaries obtained new loans and credit facilities, increasing borrowings by CHF 124 million over last year. As at 31 December 2010, the Group s capital structure remains solid with a net debt of CHF 235 million (2009: CHF 310 million), a leverage ratio of 0.74x (2009: 0.77x), an average borrowing maturity of 7.7 years, and a weighted average cost of debt of 6.97%. Current borrowings have been drawn in various currencies: 46% in US dollars followed by Egyptian pounds (32%), Euros (16%), with Swiss Francs and UAE Dirhams accounting for the balance. Moreover, Net debt / EBITDA is at a healthy level of 1.3 years (2009: 1.4 years), while Net debt / Market Cap reached 0.15x (2009: 0.19x). During Q2 2010, the Group recognized a gain of CHF 9 million (CHF 7.2 million net of tax) in relation to the strategic sale agreement of a 6% stake in the Garranah Group of companies. This was signed on 18 May 2010 and went into effect on 30 June The sale of a 6% stake in the subsidiaries owning the tours operations and transportation outfits as well as others owning nine floating hotels reduced the Group s interest in the Garranah entities from 51% to 45%. Pursuant to this agreement, the Group ceased to control the Garranah entities. Accordingly, the Group deconsolidated these entities and recognized them as investments in associates using the equity method. This sale is not accounted for as discontinued operations in accordance with IFRS 5, as management is of the opinion that the disposed subsidiaries did not represent a separate major line of business or a geographical area of operations and were not acquired exclusively with a view to resale. Furthermore, management has the intention to acquire significant shareholdings of companies providing services in the above mentioned activities if they match the Group s strategy. During Q3 2010, the Group voluntarily changed its accounting policy for investment properties from the cost model to the fair value model using independent valuations. The Group believes this new policy will result in a better presentation of investment properties in its financial statements. The policy was applied retroactively and comparative figures have been restated accordingly. The total impact resulted in a CHF 29.6 million appreciation allocated as follows: CHF 9.4 million in periods prior to 2009 credited to retained earnings; CHF 6.2 million during 2009 credited to that year s income statement as restated and CHF 14 million in the period ending 31 December

31 Key Financials Income Statement Indicators (CHF) 2010 A 2010 N (2) 2009 A 2009 N (1) % Change (2-1)/1 Total revenues 516,091, ,519, ,089, ,169,111 (2%) Hotels 193,128, ,281, ,360, ,412,105 15% Real estate and construction 228,990, ,473, ,041, ,041,362 1% Land sales 10,241,985 10,505,978 39,251,409 39,251,409 (73%) Town management 17,497,444 18,288,111 25,404,434 25,404,434 (28%) Tours operations 28,463,930 1,160,813 65,450,888 9,478,772 (88%) Other operations 37,769,291 39,809,098 32,581,029 32,581,029 22% Gross profit 175,389, ,358, ,297, ,366,642 (10%) Gross profit margin 34% 35% 34% 38% (8%) 122,251, ,723, ,899, ,671,980 (12%) 94,920,828 93,627, ,490, ,263,467 (7%) Basic and diluted earnings per share (EPS) (12%) EBITDA 178,080, ,957, ,642, ,382,216 (14%) EBITDA margin 35% 34% 37% 39% (13%) Revenue distribution by segment Hotels Real estate & Construction 12M M 2009 Land Sales Town Managment Tour operations Other operations Balance Sheet Indicators (CHF) 2010 A 2009 A % Change Total assets 2,093,438,187 1,885,589,062 11% Total liabilities 900,294, ,144,284 10% Total equity 1,193,143,823 1,065,444,778 12% Net debt 1 235,315, ,271,283 (24%) Net debt / EBITDA (9%) Net debt / Market Cap (21%) Leverage ratio Equity ratio Net debt is calculated by deducting cash and bank balances from total borrowings. 28

32 4.4. Segments review The business segments identified by Orascom Development represent the organizational structure as reflected in its internal management reporting systems. The Group is organized into five Group divisions and other operations. Other operations include mainly mortgage finance, rentals, and others. The following section provides an overview of business segments performance during 2010 and compares neutralized results for financial years 2009 and For more details on the impact of the deconsolidation of the Garranah group of companies and the translation effect resulting from the appreciating Swiss Franc, please refer to page Hotels Total revenues 2010A: CHF 193 million (2009A: CHF 183 million) 2010N: CHF 202 million (2009N: CHF 176 million) Operating hotel rooms 2010A: 6,516 rooms 2009A: 6,479 rooms Gross profit 2010A: CHF 47 million (2009A: CHF 40 million) 2010N: CHF 49 million (2009N: CHF 45 million) TRevPAR 2010A: CHF A: CHF 79 Occupancy rate 2010A: 76% 2009A: 69% The Group currently own 26 operating hotels (including one floating hotel) with a total 6,516 rooms. Of these, twelve hotels (3,912 rooms) are operated by renowned third-party hotel operators under management contracts. We retain the management of eight hotels (778 rooms), and six hotels (1,826 rooms) are operated by local operators. Third party hotel managers include reputable and well established operators such as Accor s Sofitel, ClubMed, Four Seasons, Hyatt Regency, InterContinental, Marriott, Mövenpick, Radisson Blu, Rotana, Starwood s Sheraton and Steigenberger. Hotels segment accounted for 37% of our total revenues in the financial year 2010 (2009: 31%). In June 2010, we reduced our stake in the Garranah subsidiaries from 51% to 45%. As a result, starting July 1, 2010, our consolidated financial statements no longer showed revenues generated by nine floating hotels as part of our hotels segment and the corresponding net income was recognized as income from investments in associates. Hotels revenue actual achieved a growth of 5% reaching CHF 193 million (2009: CHF 183 million), indicating the segment s recovery from the world financial crises that impacted the tourism sector in Moreover, after factoring in the latter and the Swiss Franc s impact on the Group s consolidated results, hotels revenue neutralized amounted to CHF 202 million (2009: CHF 176 million), with a neutralized gross profit of CHF 49 million (2009: CHF 45 million). The segment results actual amounted to CHF 44 million (2009: CHF 40 million) marking a growth of approximately 10%. The segment continued to achieve improvements on all fronts with an average occupancy rate of 76% (2009: 69%), an Average Room Rate (ARR) of CHF 65 (2009: CHF 63) and a TRevPAR of CHF 87 (2009: CHF 79). 29

33 The following tables illustrate the impact of Forex and deconsolidation of Garranah group of companies on the condensed consolidated statement of comprehensive income Hotels 5 stars 4 stars 3 stars 2 stars Total/ average Operating Hotels # hotels # rooms 3,777 2, ,516 ARR (CHF) Average occupancy (%) 76% 77% 73% 56% 76% RevPAR (CHF) TRevPAR (CHF) Total revenue (CHFm) GOP total (CHFm) GOP per room (CHF) 11,345 8,131 8,777 3,173 9,957 GOP margin (%) 32% 38% 38% 28% 34% 1. GOP is a non-ifrs measure and should be read in conjunction with Presentation of non-ifrs measures 2. Total GOP is calculated as follows: CHF 2010A 2009A Gross operating income 90,545,158 73,774,002 General and administration expenses (16,724,441) (14,464,297) Sales and marketing expenses (5,604,629) (5,169,427) Utilities (15,355,994) (13,325,613) Repair and maintenance fees (9,170,252) (8,650,423) Basic fees (2,116,140) (1,994,947) Eliminations and adjustments 23,303,158 28,345,042 Gross operating profit 64,876,860 58,514,337 As of 31 December 2010, the Group s operating hotels segment indicators were as follows. Number of Rooms Occupancy Rate TRevPAR 1 (CHF) ARR (CHF) Hotels 2010A 2009A 2010A 2009A 2010A 2009A 2010A 2009A I- HOTELS Egypt El Gouna 2, ,569 76% 73% Taba Heights 2,365 1,980 78% 64% Other hotels, Red Sea % 86% Egypt subtotal 5,887 5,368 78% 72% Other regions The Cove, UAE % 56% Marina Plaza, Jordan % 39% Other regions subtotal % 48% Total hotels 6,489 5,970 76% 69% II- Floating hotels Floating hotels, Egypt % 68% Floating hotels subtotal % 68% Total hotels segment 6,516 6,479 76% 69% TRevPAR: Total Revenue Per Available Room is similar to RevPAR but also takes into account other room revenues e.g. food and beverage, entertainment, laundry and other services. 2 As at 31 December 2010, El Gouna s 17 hotels offered a total capacity of 2,885 operating rooms, of which 16 hotels are controlled by the Group, offering a total capacity of 2,719 rooms. The table above excludes El Khan, 25 rooms, one star hotel, which is 100% owned by the Group and is leased to third party Key performance indicators for floating hotels included 9 floating hotels that are no longer presented, following the execution of the Garranah transaction. 30

34 I) Hotels Egypt El Gouna El Gouna achieved an average occupancy rate of 76% (2009: 73%) with an ARR of CHF 69 (2009: CHF 70) and a TRevPAR of CHF 91 (2009: CHF 91). The growth in room occupancies is mainly attributed to the increase in the number of guests from Germany, the Scandinavian market, and inbound tourism. During Q4 2010, two boutique hotels, Fanadir and Mosaique, commenced operations with 54 and 69 rooms respectively. Taba Heights Taba Heights achieved an average occupancy rate of 78% (2009: 64%) with an ARR of CHF 46 (2009: CHF 45), and a TRevPAR of CHF 69 (2009: CHF 55). An improvement in room occupancy was the result of an increase in the number of guests and room nights of European visitors originating from the Benelux, France, and United Kingdom. During Q4 2010, ClubMed Sinai Bay, a 385-rooms 5 star hotel commenced operations. Other hotels, Red Sea Our Red Sea hotels achieved an average occupancy rate of 84% (2009: 86%) with an ARR of CHF 48 (2009: CHF 42), and a lower TRevPAR of CHF 74 (2009: CHF 76) due to the cancellation of catering service in Club Azur hotel. Other regions United Arab Emirates The Cove Rotana Resort & Spa achieved an average occupancy rate of 63% (2009: 56%) with an ARR of CHF 169 (2009: CHF 160), and a TRevPAR of CHF 188 (2009: 163). This property accounted for approximately 9% of the hotels segment results for Jordan Marina Plaza achieved a TRevPAR of CHF 59 (2009: CHF 54) and an average occupancy rate of 50% (2009: 39%) with a lower ARR of CHF 78 (2009: CHF 91) due to competition from three new hotel openings in Tala Bay. II) Floating hotels Since 1 July 2010, the Group holds only a 45% stake in nine Nile cruisers (classified as floating hotels) and 51% stake in Zahra Oberoi, which were part of the acquisition of Garranah, offering a total of 27 cabins. The Zahra Oberoi is the only boat on the Nile with a full-service spa and was ranked the best Nile cruiser on the river Nile by the Egyptian Ministry of Tourism during Zahra Oberoi achieved an average occupancy rate of 64% (2009: 68%) with an ARR of CHF 756 (2009: CHF 699), and a TRevPAR of CHF 691 (2009: CHF 654). 2- Real estate and construction Total revenues 2010A: CHF 229 million (2009A: CHF 240 million) 2010N: CHF 241 million (2009N: CHF 240 million) Total value of contracted units A: CHF 273 million 2009A: CHF 218 million Total value of deferred income 2010A: CHF 228 million 2009A: CHF 273 million Gross profit 2010A: CHF 107 million (2009A: CHF 111 million) 2010N: CHF 115 million (2009N: CHF 111 million) Total number of contracted units (incl. basic affordable) 2010A: 3,557 units 2009A: 3,456 units The real estate and construction segment accounted for 44% of our total revenues during 2010 (2009: 41%). Real estate and construction revenues actual witnessed a decline of 5% to CHF 229 (2009: CHF 240 million), while revenues neutralized marginally increased over last year, amounting to CHF 241 million (2009: CHF 240 million). The total value of contracted real estate units amounted to CHF 273 million (2009: CHF 218 million), achieving a growth of 25%. A total of 3,557 units (2009: 3,456 units) were contracted at the average selling price of CHF 1,071/m 2 (2009: CHF 888/m 2 ). Total value of deferred income declined by 16% reaching CHF 228 million (2009: CHF 273 million). 31

35 The following table provides an overview of residential real estate sales during 2009 up to the period ending 31 December A 2009A Real Estate Sales (excluding budget housing) Off-plan sales during financial years (# units) Off-plan sales during financial years (in CHFm) Average price per m 2 (CHF) 4,432 3,183 Real Estate Sales (budget housing) Sales during financial years (# units) 3,260 3,139 Sales during financial years (in CHFm) Average price per m 2 (CHF) Real Estate segment performance Total revenue (CHFm) GOP total (CHFm) GOP margin (%) 48% 46% 1. GOP is a non-ifrs measure and should be read in conjunction with Presentation of non-ifrs measures 2. Total GOP is calculated as follows: CHF 2010A 2009A Gross operating income 124,199, ,005,625 General and administration expenses (25,345,829) (22,336,489) Sales and marketing expenses (4,897,457) (12,149,134) Utilities (20,405) (326,152) Repair and maintenance fees (2,714,192) (680,360) Eliminations and adjustments 19,464,970 18,621,982 Gross operating profit 110,686, ,135,472 Our residential real estate key performance indicators as at 31 December 2010 were as follows. Average selling price CHF/m 2 Total value of contracted units 1 (CHF millions) Number of contracted units Hotels 2010A 2009A 2010A 2009A 2010A 2009A El Gouna 3,428 4, Riyad Resort - 1, Fayoum 1, Haram City ,499 3,139 Makadi ,752 - Egypt subtotal ,496 3,364 II- U.A.E. The Cove 2,518 3, UAE subtotal 2,518 3, III-OMAN Jebel Sifah 2,928 3, Salalah Beach 2,545 2, Oman subtotal 2,724 3, Andermatt Swiss Alps 16, Total real estate 1, ,557 3, Total value of contracted units reflects balances secured from the pre-sales of residential units off the master plan, which only applies to residential real estate products. However, this does not apply to the basic affordable products, which are typically contracted and delivered at the same step. 32

36 El Gouna During 2010, the total value of contracted units amounted to CHF 83.5 million (2009: CHF 97.9 million) for 211 pre-sold units (2009: 156 pre-sold units). This was accompanied by a drop of 15% in the average selling price per square meter, to CHF 3,428/m 2 (2009: CHF 4,026/m 2 ), due to the change in product mix as 178 apartments were sold (2009: 95 apartments). Fayoum By the end of 2010, the total value of contracted units amounted to CHF 4.3 million (2009: CHF 4.7 million), with 34 pre-sold units (2009: 39 pre-sold units) at the average selling price of CHF 1,070/m 2 (2009: CHF 765/m 2 ). Haram City By the end of 2010, the total value of contracted and delivered units amounted to CHF 31.6 million (2009: CHF 55.5 million) with a total of 1,499 units (2009: 3,139 units) sold at the average selling price of CHF 348/m 2 (2009: CHF 306/m 2 ). It should be noted that 2009 contracted units included 1,530 units sold to the Cairo Governorate. Makadi The Makadi project by Orascom Development & Management s (ODM), a wholly owned subsidiary of Orascom Development, is this company s first comprehensive residential and tourism project. The project is planned to offer a total capacity of approximately 4,000 hotel rooms and 5,500 residential units along with a number of amenities and facilities such as medical complex, school and commercial area. ODM acts as the project manager in charge of the development, sales, marketing and community management. By end of 2010, total value of contracted units amounted to CHF 63.7 million representing 1,752 units contracted at an average selling price of CHF 584/m 2. By year end, the total value of contracted units amounted to CHF 2.9 million (2009: CHF 1.6 million), sold at the average selling price of CHF 2,518/m 2 (2009: 3,022/m 2 ), for 5 pre-sold units (2009: 3 units). By the end of 2010, the total value of contracted units amounted to CHF 24.1 million (2009: 56.1 million) for 43 units (2009: 89 units) at the average selling price of approximately CHF 2,724/m 2 (2009: CHF 3,009). In Jebel Sifah, the total value of contracted units amounted to CHF 12.9 million/m 2 (2009: CHF 22.9 million) for 17 pre-sold units (2009: 31 units) at the average selling price of approximately CHF 2,928/m 2. In Salalah Beach, the total value of contracted units amounted to CHF 11.2 million (2009: CHF 33.2 million) for 26 pre-sold units (2009: 58 units) at the average selling price of approximately CHF 2,545/m 2. By the end of 2010, the total value of contracted units amounted to CHF 62.7 million for a total of 13 units sold at an average selling price of approximately CHF 16,373/m 2. Between April and December 2010, total reservations amounted to CHF 102 million (including contracted units). 3- Land sales Total revenues 2010A: CHF 10.2 million (2009A: CHF 39 million) 2010N: CHF 10.5 million (2009N: CHF 39 million) Gross profit 2010A: CHF 2.2 million (2009A: CHF 25 million) 2010N: CHF 2.2 million (2009N: CHF 25 million) Occasionally, the Group sells land where we have no additional development commitments or on which we have completed development of infrastructure to third party developers, this establishes a reference point for the market price of our land bank. Revenues from such sales are included in our land sales segment. Land sales segment accounted for only 2% from our total revenues during 2010 (2009: 7% including internal revenues of CHF 411 million resulting from the intergroup sale of 3.6 million m 2 of land between Group subsidiaries in Egypt). During 2009, a plot of land was sold to a third party developer in Oman. Revenues from sale of land, sale of land rights and the associated cost are recognized when land is delivered and the significant risk of ownership and control has been transferred to the buyer. 33

37 4- Town management Total revenues 2010A: CHF 17 million (2009A: CHF 25 million) 2010N: CHF 18 million (2009N: CHF 25 million) Gross profit 2010A: CHF 5 million (2009A: CHF 7 million) 2010N: CHF 2 million (2009N: CHF 7 million) The Group s involvement in a project continues after construction has been completed. Throughout our destinations, we are responsible not only for providing and maintaining top-quality hotels and residences, but for the day-to-day maintenance and upkeep of the town s power grid, desalination plants and sewage plants. We are also responsible for the town s security and other services. As a rule the town facilities and infrastructure such as hospitals and water desalination facilities, are owned and operated by one of our majority-owned subsidiaries. Town management segment accounted for 3% of our total revenues in the financial year 2010 (2009: 4%). Town management refers to all revenues generated from municipal facilities. It primarily includes revenues from utilities (such as electricity, irrigation, and telephone lines), as well as community services (such as: airport, museum, sporting club, and bakeries), urban services (such as: garbage collection, security, and fire brigade), and commercial services (such as: fish and fowl farm). Town management revenues are generated in operating towns, namely El Gouna (Egypt), Taba Heights (Egypt), The Cove (U.A.E.) and Haram City (Egypt). During 2010, general services revenues increased as clients who received their residential units during 2009 and 2010 began to pay related periodic bills. This occurs only after apartment blocks are fully finished. It should be noted that other revenues for 2009 included an extraordinary transaction as Taba Heights charged CHF 9.4 million as fees in relation to pre-opening costs of the Taba Heights golf course. Type of service (CHF Millions) 2010A 2009A % Change Utilities % Commercial services % Urban services % Infrastructure and maintenance % Community services (7%) Other (83%) Total segment revenues (9%) Intersegment revenues (eliminations) (25.07) (21.19) 18% Town management revenues (from external customers) (31%) 5- Tours operations Total revenues 2010A: CHF 28 million (2009A: CHF 65 million) 2010N: CHF 1 million (2009N: CHF 9 million) Gross profit 2010A: CHF 3 million (2009A: CHF 2 million) 2010N: CHF 0.9 million losses (2009N: CHF 0.4 million) Until June 30, 2010, the Group held a controlling stake in the Garranah tours operations companies. Following the sale of a 6% stake in the Garranah tours operations companies in June 2010, we no longer hold a controlling stake in these entities. As a result, starting July 1, 2010, our consolidated financial statements no longer show revenues generated by the tours operations business of the Garranah tours operations companies as part of our tours operations segment. Rather, the corresponding net income is recognized as income from investment in associates. Our tours operations segment accounted for 6% of our total revenues in the financial year 2010 (2009: 11%). 34

38 6- Other operations Total revenues 2010A: CHF 38 million (2009A: CHF 33 million) 2010N: CHF 40 million (2009N: CHF 33 million) Gross profit 2010A: CHF 12 million (2009A: CHF 11 million) 2010N: CHF 13 million (2009N: CHF 11 million) Other operations combine those businesses that are not classified under any of the five primary business segments. This includes mortgages, rentals of villas and apartments, hospital services and educational services, marina, limousine rentals, laundry services, and other services. We generally retain ownership of the commercial properties, generating a steady and growing stream of annual cash flows. Other operations accounted for 7% of our total revenues in the financial year 2010 (2009: 6%). The following table provides an overview of the revenues generated by our other operations. CHF million 2010A 2009A % Change Rentals % Mortgage (real estate financing) % Sport (golf) % Hospital services % Educational services % Marina % Limousine % Laundry services % Leasing % Others % Total segment revenues % Intersegment revenues (eliminations) (46.73) (17.13) 173% Total revenue from external customers % 35

39 Impact of Forex and deconsolidated of Garranah group of companies on the condensed consolidated statement of comprehensive income Revenues - CHF 2010A Impact 2010N 2009N Variance Hotels 192,391,441 (9,890,147) 202,281, ,412,105 25,869,483 Floating hotels (Garranah) 736,891 (39,975) Real estate and construction 228,990,911 (12,482,699) 241,473, ,041,362 1,432,247 Land sales 10,241,985 (263,992) 10,505,978 39,251,409 (28,745,431) Town management 17,497,444 (790,668) 18,288,111 25,404,434 (7,116,323) Tours operations 1,067,612 (93,201) 1,160,813 9,478,772 (8,317,959) Tour operation (Garranah) 27,396,318 (1,486,189) Other operations 37,769,291 (2,039,806) 39,809,098 32,581,029 7,228,069 Total 516,091,893 (27,086,676) 513,519, ,169,111 (9,649,914) Cost of revenues - CHF 2010A Impact 2010N 2009N Variance Hotels (127,578,951) 7,176,127 (134,755,079) (113,991,706) (20,763,373) Floating hotels (Garranah) (672,520) 36, Real estate and construction (118,304,812) 3,947,627 (122,252,439) (128,905,890) 6,653,451 Land sales (7,220,600) 228,658 (7,449,257) (13,708,585) 6,259,328 Town management (8,737,082) 3,499,867 (12,236,949) (14,239,646) 2,002,696 Tours operations (2,004,722) 105,436 (2,110,158) (8,745,997) 6,635,839 Tour operation (Garranah) (23,381,213) 1,268, Other operations (22,550,904) 1,453,775 (24,004,680) (18,433,773) (5,570,907) Total (310,450,804) 17,716,351 (302,808,562) (298,025,596) (4,782,965) Depreciation - CHF 2010A Impact 2010N 2009N Variance Hotels (17,775,705) 985,636 (18,761,340) (17,160,016) (1,601,324) Floating hotels (Garranah) (426,058) 23, Real estate and construction (4,012,333) 204,564 (4,216,897) (606,373) (3,610,524) Land sales (843,740) 57,452 (901,193) (724,974) (176,219) Town management (4,008,867) 280,759 (4,289,626) (3,809,216) (480,410) Tours operations (7,533) 23 (7,556) (292,380) 284,824 Tour operation (Garranah) (212,055) Other operations (2,965,147) 210,587 (3,175,733) (3,183,914) 8,181 Total (30,251,437) 1,762,557 (31,352,345) (25,776,873) (5,575,472) 36

40 Gross Profit - CHF 2010A Impact 2010N 2009N Variance Hotels 47,036,785 (1,728,383) 48,765,169 45,260,383 3,504,785 Floating hotels (Garranah) (361,687) 19, Real estate and construction 106,673,766 (8,330,508) 115,004, ,529,099 4,475,175 Land sales 2,177,645 22,117 2,155,528 24,817,850 (22,662,322) Town management 4,751,494 2,989,959 1,761,536 7,355,572 (5,594,037) Tours operations (944,643) 12,258 (956,900) 440,395 (1,397,296) Tour operation (Garranah) 3,803,051 (217,386) Other operations 12,253,240 (375,444) 12,628,685 10,963,342 1,665,343 Total 175,389,652 (7,607,767) 179,358, ,366,642 (20,008,351) Other P&L items - CHF 2010A Impact 2010N 2009N Variance Investment income 12,352,935 (613,992) 12,966,927 13,217,393 (250,466) Other gains and losses (4,214,044) 184,160 (4,398,204) 6,293,369 (10,691,573) Administrative expenses (41,713,930) 975,588 (42,689,518) (40,459,762) (2,229,756) Contingent liabilities provision (15,810,160) Gain on revaluation of investment properties 14,120,934 (809,968) Gain on Garranah / Albion transactions 9,256,133 (530,926) Finance costs (7,045,098) 1,193,282 (8,238,380) (18,949,656) 10,711,276 Share of profit of associates (1,552,599) 80,108 (1,632,707) 187,701 (1,820,408) Profit before tax 140,783,824 (7,129,515) 135,366, ,655,687 (24,289,278) Income tax expense (13,567,369) 75,440 (13,642,809) (20,983,707) 7,340,898 Taxes on investment property revaluation and Garranah (4,964,537) 284, Profit for the year from continuing operations 122,251,918 (6,769,312) 121,723, ,671,980 (16,948,380) Profit attributable to: Owners of the company 94,920,829 (6,004,091) 93,627, ,263,467 (6,636,179) Non-controlling interests 27,331,089 (765,223) 28,096,312 38,408,513 (10,312,201) 122,251,918 (6,769,314) 121,723, ,671,980 (16,948,380) EBITDA 178,080,359 (10,085,354) 174,957, ,382,216 (29,425,082) EBITDA % 34.51% 34.07% 39.07% 37

41 38

42 5. Projects review Introduction Orascom Development s strategy is based on the creation of value in real estate for the medium to long term. To that end, we continue to accumulate large tracts of land at relatively low cost with enough space to develop self-sufficient communities and towns. To date, the Group has secured, subject to certain conditions, land banks of approximately 118 million m 2 in several jurisdictions at a comparatively low cost. Orascom Development holds its undeveloped land banks primarily by way of contractual rights or usufructs with the option to acquire legal title. On these land banks, we develop fully-integrated towns, generally retaining or obtaining ownership in hotels, commercial real estate, facilities and staff housing towns while selling the residential units. The revenues generated in our towns primarily originate from the sale of residential units (villas and apartments), hotel operations, the rental of commercial properties, and the management of infrastructure and other facilities. Orascom Development retains reputable and wellestablished third party hotel operators including Accor s Sofitel, Cheval Blanc, Chedi, ClubMed, Four Seasons, Hyatt Regency, InterContinental, Marriott, Mövenpick, Radisson Blu, Rotana, Starwood s Sheraton, and Steigenberger as well as local chains in Egypt such as The Three Corners (TTC), Azur, and Optima to manage hotels in developed destinations and retain management of only niche hotels. We have established a separate legal entity for each selfmanaged hotel and while we might invite other reputable partners to participate in those hotel ownership companies, we generally retain a controlling stake. As a rule, any given town s facilities and infrastructure (including as hospitals and water desalination facilities) are owned and operated by majority-owned subsidiaries of the Group or rented out (such as schools). 39

43 Projects The Group has developed four fully-integrated towns which are currently operational: the tourist destinations of El Gouna (Red Sea coast, Egypt), Taba Heights (Sinai Peninsula, Egypt), and The Cove (Ras Al Khaimah, UAE), as well as the basic affordable housing community of Haram City (Greater Cairo area, Egypt). Each of these projects has the complete infrastructure of a self-sufficient town. In addition, thirteen projects including tourist towns and basic affordable housing communities are currently in various stages of development and planning in Egypt, Oman, Morocco, Switzerland, Montenegro, Romania and the United Kingdom. Furthermore, we have participations held for investment in a development project in Jordan and several hotels in Egypt. The following table provides an overview of our portfolio of integrated towns, projects in operation and under development, and projects held for investment as at December 31, Portfolio of Projects in Egypt Projects Start of development control program 1 / Total project area start of operations (million m 2 ) Developed area (million m 2 ) Residual Group s land project stake (million m 2 ) (%) Hotel rooms Residential planned units planned (developed) in (developed) in A) OPERATING TOWNS El Gouna 1990 / % 2, ,757 3 Taba Heights 1996 / % 2, ,405 4 B) PROJECTS UNDER CONSTRUCTION Amoun Island 2007 / 2013E % 38 - Al Roboua and Byoum / 2012E % Riyad Resort 2008 / 2011E % C) BASIC AFFORDABLE HOUSING Haram City 2007 / % 10,474 5 Al Fayoum 2008 / % - 20,000 6 Qena Gardens 2011E / 2012E % - 8,000 6 D) OTHER INVESTMENTS Group Stake 7 Number of rooms Category Royal Azur 51% 489 Five Star Club Azur 51% 339 Four Star Oberoi Zahra 51% 27 Various Notes: 1. Year in which the master plan is deemed final by the Group (E= estimates). 2. Existing hotel rooms controlled by the Group. 3. Cumulative number of residential units sold off plan as at 31 December 2010 in El Gouna. 4. Residential units planned in Taba Heights. 5. Cumulative number of 6,959 affordable housing units contracted and delivered as at 31 December 2010 in Haram City in addition to further developments expected during the project s first phase. 6. Total number of units planned over the life of the project. 7. In the respective hotel or floating hotel company. 40

44 Portfolio of Projects in Other countries Projects Start of development control program 1 / start of operations Total project area (million m 2 ) Developed area (million m 2 ) Residual land (million m 2 ) Group s project stake (%) Hotel rooms planned (developed) in the Residential units planned (developed) term UNITED ARAB EMIRATES The Cove 2005 / % OMAN Jebel Sifah 2007 / 2011E % Salalah Beach 2007 / 2011E % 1,300 1,150 As Sodah 2009 / 2013E % 32 - City Walk, Muscat 2011E / 2012E % SWITZERLAND Andermatt 2008 / 2013E % MOROCCO Chbika 2010 / 2013E % 2,500 1,851 UNITED KINGDOM Cornwall 2011E / 2013E % - 5,500 MONTENEGRO Tivat 2011E / 2015E % 2,200 2,350 ROMANIA Constanta E / 2016E % - 33,000 Projects held for investment Projects Country Start of development control program 1 Project s stake (%) Tala Bay Jordan 2002 / % Other related investments Orascom s stake (%) 4 one 4- star hotel (267 rooms) 100% Notes: 1. Year in which the master plan is deemed final by the Group (E= estimates). 2. All project s components were completed during 2009 and Dedicated for affordable housing developments. 4. In the respective hotel company. 41

45 Egypt Egypt, officially the Arab Republic of Egypt, is one of the most populous countries in Africa and the Middle East with a population of over 80 million people. Its strategic location and rich history make it a major power in Africa, the Mediterranean Basin and the Middle East. Egypt, a transcontinental country, serves as an important gate keeper to both Africa and Asia. It is largely located in the north east tip of Africa and is bordered by both the Mediterranean Sea to the north and the Red Sea to the east and has a coast line that is 2,500 km long. Egypt is a major and frequent contributor to world history and recently has been the focus of the world s attention while it enters a new era of political and social reforms. Gross domestic product, current prices Population Gross domestic product per capita, current prices 2010E 2010E 2010E USD Billion Million USD/capita

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47 Operating Town Abu Tig Marina is a favorite port for sailing enthusiasts worldwide. EL GOUNA, RED SEA OVERVIEW Our flagship development is a self-sufficient town built on 10 km of Red Sea coastline. The project has a total land area of 36.8 million m 2 of which only 14.7 million m 2 has been developed, providing a large land bank for future development. El Gouna is home to a population of 22,000 24,000 permanent residents and visitors from all over the world. The town offers international-standard facilities including a landing strip, a hospital and nursing institute, 18- hole championship golf course, three marinas, four schools, a library linked to Bibliotheca Alexandrina, a branch of the American University in Cairo, child daycare facilities, 421 outlets including restaurants, bars, shops and various services, and a vibrant town center. The Group has a 100 percent stake in El Gouna. RESIDENTIAL REAL ESTATE El Gouna s first phase in 1990 consisted of 15 houses sold exclusively to Egyptian nationals. Real estate value has increased substantially, from an average selling price of approximately CHF 1,071/ m 2 in the year 2000 up to CHF 3,428/m 2 by the end of Buyers come from all over the world, with foreign nationals representing approximately 55% percent of homeowners. HOTELS El Gouna has seventeen operating hotels with a total capacity of 2,885 rooms. Of these, sixteen hotels are controlled by the Group with a total capacity of 2,719 rooms. Hotels accommodate holiday guests from all over the world, primarily from Europe. The next chart highlights the nationalities of hotel guests for the 12 months ending 31 December

48 SWE El Gouna regularly sponsors high-visibility events such as the Pharaohs Rally. El Gouna Football Club has risen to challenge national and European clubs. The town has an independently published community magazine. KEY FACTS 36.8 million m 2 total land area 14.7 million m 2 developed area Fall ,000-24,000 permanent residents 2719 hotel rooms 17 operating hotels 421 outlets INFRASTRUCTURE The primary requirements of a modern town are fresh water, electricity, communications, and roads. We have invested in these types of infrastructure to make El Gouna more attractive to residents and visitors; all infrastructure is owned and operated by the Group. The daily requirements for potable water are produced from a water desalination facility wholly-owned by the Group. The current throughput has a capacity of 11,500 m 3 /day. The sewage plant treats approximately 15,000 m 3 /day from El Gouna and Hurghada; treated water is used to irrigate the golf course and green areas throughout the town. We have an installed capacity of 34 MVA electrical power generation, of which 16 MVA is standby electrical power, allowing us to provide part of the town s electrical source in the event of electricity supply failure. Approximately 5,000 telephone lines and a Wi-Fi network providing coverage to the entire town including hotels. The town is connected to the highway by its own 15 km network of paved roads while remote utility and new areas are interconnected by 15 km of gravel roads. We operate a public transportation network within the town and to downtown Hurghada. NATIONALITY OF GUESTS DURING 2010 CHE OTHER RUS EGY NLD FRA DEU BEL GBR 45

49 Operating Town Taba Heights affords one of the most striking natural environments and is a recognized international port of entry to Egypt. TABA HEIGHTS, SINAI OVERVIEW Taba Heights is the Group s second fully selfsufficient resort town, developed after the successful model of El Gouna. The project comprises a total land area of approximately 4.3 million m 2 with around 2.8 million m 2 already developed. The destination is situated along the Red Sea coast on the northern end of the Gulf of Aqaba, approximately 200 km north of Sharm El Sheikh and around 20 km south of the Israeli town of Eilat. Taba International Airport is only 25 km away from Taba Heights. The Group has a 99 percent stake in Taba Heights. The town is home to approximately 4,000 permanent residents including facility staff and offers a range of facilities such as a medical center, child daycare services, school, and a vibrant town center. Furthermore, the destination features 77 outlets including restaurants, cafés, bars, and retail, 16 hotel swimming pools, an 18- hole championship golf course, various spas and Egypt s first Salt Cave. The marina s 40,000 m 2 basin has a berthing capacity of 50 yachts and is host to the Red Sea s largest water activity center. Taba Heights Marina is recognized as an official international port of entry to Egypt, with an average of 33 weekly round trips to Jordan. The Egyptian Government continues to prohibit the sale of real estate in the Taba area to non-egyptian nationals, thus Taba Heights is managed exclusively as a holiday destination with limited revenue contribution from real estate rentals or sales. There are six operating 46

50 An idyllic setting and relaxing spas welcome guests all year round. Taba Heights Golf Resort is acclaimed as one of the most beautiful courses in the region. The area offers some of the world s best dive spots and splendid sea life. KEY FACTS 4.3 million m 2 total land area 2.8 million m 2 developed area 4,000 permanent residents 2,365 hotel rooms 6 operating hotels 77 outlets hotels with a current capacity of 2,365 rooms, to accommodate holiday guests from all over the world. The next chart highlights the nationalities of hotel guests for the 12 months ending 31 December INFRASTRUCTURE Taba Heights has the necessary infrastructure of a modern town, all owned and operated by Orascom Development. Daily requirements for potable water are produced at a water desalination facility with a current throughput capacity of 3,500 m 3 /day. The town has a sewage treatment plants with a capacity of 2,000 m 3 /day one plant is in operation while the other is on standby. The town is self-sufficient in terms of power supply with an installed capacity of 16 MVA of electrical power generation, which will be upgraded to 20 MVA and an additional 10 MVA of emergency power. Communication infrastructure includes approximately 1,000 telephone lines and a Wi-Fi network covering the whole development including hotels. The town is connected to the highway network by its own 7 km network of paved roads in addition to another 4.5 km of internal gravel roads. NATIONALITY OF GUESTS DURING 2010 SVK OTHER POL UKR GBR FRA RUS ISR BEL EGY 47

51 Projects Under Development ASWAN AMOUN ISLAND, ASWAN AL ROBOUA & BYOUM, AL FAYOUM OASIS During 2005, Orascom Development entered into a lease agreement with the Egyptian Government regarding Amoun Island. The island is situated off the main Nile river bank in Aswan and has a total project area of 22,000 m 2. The project plan provides for an exclusive luxury boutique-style hotel to be operated by Cheval Blanc, (Group LVMH), accommodating 38 luxurious suites with lounge areas. The project will also feature private pools, an exquisite restaurant, lounge bar, wine cellar, private library. The development of the project commenced in the third quarter of 2007 and the hotel is expected to be operational by the end of KEY FACTS 22,000 m 2 total land area Group LVMH hotel partner In 1998, the company was awarded land acquisition rights by the Government of Egypt for a residential real estate project in El Fayoum Oasis. El Fayoum is located approximately 100 km southwest of Cairo. The total land parcels secured cover approximately 1.3 million m 2. The Al Roboua project offers 36 standalone villas in traditional Nubian style with all supporting amenities, covering a total area of 0.07 million m 2. The Group holds a 63 percent stake in Misr Al Fayoum Company, which owns a 100 percent stake in the project company Al Roboua. During the third quarter of 2008, the Group launched Byoum, a second real estate project in El Fayoum Oasis. The project is planned to offer 138 apartments, 127 villas with full access to an attached marina and 4-star 62-room hotel. Site development commenced during the third quarter of 2008 and residential components and the hotel are expected to be operational by mid KEY FACTS 38 luxurious suites planned 1.3 million m 2 total land area 0.07 million m 2 developed area 62 guest rooms planned 301 residential units planned 48

52 Other Hotels Grand Resorts Royal MAKADI BAY Club Club MAKADI BAY RIYAD RESORT During the second quarter of 2008, the Group launched a private residential compound on a total area of 129,815 m 2 in Makadi Bay on the Red Sea coast south of Hurghada. The project has 256 apartments and is attached to the Club Azur and Royal Azur hotels. Homeowners at Riyad Resort enjoy full access to all the amenities and facilities offered by the adjacent hotels. The Group owns a percent stake in the project. MAKADI The Makadi project is Orascom Development & Management s (ODM - a wholly owned subsidiary of Orascom Development) first comprehensive residential and tourism project located 30 km south of Hurghada at the heart of the Red Sea Rivera, covering a total area of 3.7 million m 2. The project is planned to offer a total capacity of approximately 4,000 hotel rooms and 5,500 residential units along with a number of amenities and facilities such as medical complex, school and commercial area. In Makadi, ODM acts as the project manager in charge of the development, sales, marketing and community management. ROYAL AZUR & CLUB AZUR As part of the acquisition of Garranah, the Group has acquired interest in two operational hotel properties located in Makadi Bay, south of Hurghada, Egypt. These two hotels offer a total of 828 guest rooms. Royal Azur, a 4-star hotel, offers 489 rooms, while Club Azur, a four star hotel, offers 339 rooms. The Group owns a stake of 51 percent in the two properties. KEY FACTS million m 2 total land area 256 residential units planned OBEROI ZAHRA The Oberoi Zahra offers the highest standards of hospitality and is amongst the most spacious accommodation on the Nile, with 27 cabins. The Oberoi Zahra is the only boat on the Nile with a fullservice spa. Oberoi Zahra was ranked the best Nile cruiser on the river Nile by the Egyptian Ministry of Tourism during The Group owns a stake of 51 percent in this Nile cruiser. 49

53 Basic Affordable Housing During the last quarter of 2006, we launched our budget housing subsidiary Orascom Housing Communities (OHC), a company strategically focused on building affordable housing throughout Egypt and recently pursuing developments in Romania and elsewhere. OHC is a joint venture with Equity International and Blue Ridge, two private equity firms who are also investors in OHC. Orascom Development holds a 70 percent stake in OHC. To facilitate the purchase of affordable housing units, we have also established Tamweel Mortgage Finance Company. Tamweel is one of few licensed mortgage companies in Egypt. Haram City HARAM CITY OHC has been allocated approximately 8.4 million m 2 of land in 6th of October City in the vicinity of Cairo where it plans to build just over 70,000 affordable housing units over the next decade. The allocation decree provides for a purchase option which is binding on the Egyptian Government. OHC is only entitled to exercise the option once the development conditions have been fulfilled. The first phase of construction is planned to include 10,474 constructed units. By the end of 2010 a total of 6,959 units had been completed and delivered. KEY FACTS 8.4 million m 2 total land area 1.9 million m 2 developed area 10,474 units planned in phase one 6,959 total completed units 70,000 total planned units 50

54 AL FAYOUM AL FAYOUM OHC has also been awarded approximately 2.1 million m 2 in Al Fayoum. Similar to Haram City s planned components, it is expected to include 20,000 affordable housing units with 1 or 2 bedroom homes up to 63 m 2 in size on a plot of up to 150 m 2 of land. Town infrastructure will include schools, a hospital and daycare centers. These will be operated and/or managed in cooperation with the Government of Egypt and/or non-governmental organizations. The project will also include retail and commercial property owned by OHC and lease to third parties for rental income. KEY FACTS QENA GARDENS In 2010, OHC secured 0.8 Million m 2 of land in the Qena governorate. The project is planned to offer an additional 8,000 basic affordable housing units. The project will be developed as a fully-integrated town complete with school, clinics, shopping areas, and entertainment venues. KEY FACTS 2.1 million m 2 total land area 20,000 planned residential units 0.8 million m 2 total land area 8,000 planned residential units 51

55 Operating Town U.A.E. The United Arab Emirates is a federation situated in the southeast of the Arabian Peninsula in Southwest Asia on the Persian Gulf. The U.A.E. possesses one of the most developed economies in West Asia. Its oil reserves are ranked as the world s sixth largest reserves. It is the thirty fifth largest economy at market exchange rates, and has a high per capita gross domestic product (GDP). Over the last decade it has established itself as one of the most progressive countries in the region if not the world. It has since become a financial hub, trade center and a favorite vacation destination boosting its tourism industry. Gross domestic product, current prices 2010E Population 2010E Gross domestic product per capita, current prices 2010E USD Billion Million USD/capita 48,000 52,000 56,000 60,000 68,000 NATIONALITY OF GUESTS DURING 2010 CHE AUT GBR RUS OTHER DEU THE COVE, RAS EL KHAIMAH UAE Our operational project of The Cove is located close to Ras Al Khaimah International Airport and approximately 100 km north of Dubai. The development comprises a total area of around 300,000 m 2, of which approximately 282,000 m 2 have been developed. The project is fully complete, offering 190 residential units with easy access to leisure and town facilities, including shopping malls, international schools and hospitals. The 5-star Rotana Resort & Spa soft opening took place in early 2009 with 335 rooms. The second phase of the project was completed during the fourth quarter of 2009 with the delivery of 78 residential apartments. The Group controls approximately 73 percent of the project-owning company. KEY FACTS 0.3 million m 2 total land area million m 2 developed area 268 total residential units 52

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57 Sultanate of Oman The Sultanate of Oman is the third largest country in the Arabian Peninsula. It borders the U.A.E. and Saudi Arabia. Oman s geography is very varied and considered the most beautiful in the region giving it the nick name The Jewel of the Middle East. The area of land covered by Oman is 309,500 km 2. Vast stretches of sand and gravel plains lie alongside dramatic and jagged mountains while lagoons, salt flats and oases break up the expanse of the desert. Oman has a large coast line of over 1,700 km on the Arabian Sea and the Gulf of Oman which serves as the only entrance to the Persian Gulf from the Indian Ocean. This coastline surrounding the land can vary from the white sandy beaches to majestic fjords. Oman keeps a relatively low key profile and maintains a position of non alignment and non interference in affairs of other nations. Its population is close to three million, close to a third of which are expatriates. Gross domestic product, current prices Population Gross domestic product per capita, current prices 2010E 2010E 2010E USD Billion Million USD/capita 5,000 10,000 15,000 20,000 25,000 54

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59 Project Under Construction JEBEL SIFAH Situated some 30 km from downtown Muscat, Jebel Sifah appeals to affluent residents of the country s capital with its combination of hotels, restaurants, golf course, marina, and retail facilities. The project comprises a total land area of approximately 6.2 million m 2. The initial plan includes five hotels with a total of 804 rooms, of which one hotel will be integrated with a golf course, approximately 950 residential units, a marina, and marina town along with other town features. World-renowned hotel operators will manage the town s hotels, such as Rezidor s Hotel Missoni (250 rooms), Four Season (200 rooms), and Banyan Tree (239 rooms). Construction of the first phase, commenced in August 2008, encompasses the development of a marina basin with an expected capacity of 200 berths, 18 marina apartment blocks with a total of 159 apartments, 69 villas and 39 mansions. Hotels include the Sifawy marina boutique hotel with 55 rooms and Missoni 250-room hotel. Town facilities include the 18-hole golf course, a public mosque, and child-care nursery. Infrastructure in the first phase includes road networks, water supply, a sewage treatment plant, and a power station. KEY FACTS 6.2 million m 2 total land area 0.6 million m 2 developed area 800 planned hotel rooms 950 residential units planned 56

60 Project Under Construction SALALAH BEACH Situated in the southern part of Oman approximately 1,000 km from Muscat and 15 km from the Salalah Airport, the project comprises a total land area of 25.1 million m 2. The destination is planned to include five hotels with capacity of approximately 1,300 rooms total, three of which will be under the management of international the hotel operators Mövenpick (389 rooms), Rotana (396 rooms), and ClubMed (398 rooms). Scheduled real estate includes 1,150 units as well as other town features. The first phase will encompass the development of ClubMed, a 398 room 4-star hotel, and Rotana, a 396-room 4-star hotel, Lagoon hotel (83 rooms). Real estate in the first phase consists of 62 villas as well as marina apartment blocks with 186 units. The marina basin in under way along with the construction of the Juweira 65-room marina boutique hotel. Other components include an 18-hole golf course, man-made lagoons, road networks, and basic infrastructure facilities. KEY FACTS 25.1 million m 2 total land area 0.7 million m 2 developed area 1,300 planned hotel rooms 1,150 residential units planned 57

61 Project Under Construction AS SODAH ISLAND As Sodah is an island with a surface area of around 11 million m 2 of which a total 1 million m 2 will be developed to offer a niche luxury boutique hotel. Located off the southern coast of Oman opposite Salalah Beach, As Sodah Island will comprise a luxury hotel with 32 units consisting of 20 guest-one bedroom guest pavilions, 10 two-bedroom villas and two five-bedroom villas. Each exclusive property has its own swimming pool and access to a private beach. The hotel project will also include a main lodge and a spa. During 2009, the Group has signed a management agreement with Cheval Blanc (Group LVMH) to operate this luxurious property. The mobilization phase for construction works commenced during the third quarter of 2008 with actual construction during second quarter of The destination is expected to be operational by the end of KEY FACTS 1.0 million m 2 Project area million m 2 developed area Group LVMH hotel partner 32 luxurious units planned 58

62 Project in the Pipeline CITY WALK, MUSCAT The Group is planning to develop a downtown Leisure City complex with a total built up area of 153,000 m 2, a tower with 19,400 m 2 of office space, and a mall with a built-up area of 42,000 m 2. Furthermore, the project plan includes a 5 star hotel with a capacity of 270 rooms scheduled to be managed by Grand Hyatt. KEY FACTS million m 2 total land area 19,400 m 2 office space planned 5 star hotel planned 270 hotel rooms planned 59

63 Project Under Construction Switzerland The Swiss Confederation is situated in the heart of Western Europe. Its Alpine terrain has made it famous for its beautiful scenery and landscape. Another thing Switzerland is famous for is its neutrality and has not been in a state of war since 1815, offering political stability and security for inhabitants and guest. This unique characteristic has made it home for many of the international organizations. Switzerland has also been the hub of the financial world; itself is one of the richest countries in the world by per capita gross domestic product. In 2010, Switzerland had the highest wealth per adult of any country in the world (with USD 372,692 for each person). The World Economic Forum ranked Switzerland as the most competitive country in the world, while ranked by the European Union as Europe s by far most innovative country. In addition Switzerland has been synonymous with quality of life with Zurich and Geneva having ranked 2nd and 3rd as the cities with the highest quality of life in the world. Gross domestic product, current prices 2010E Population 2010E Gross domestic product per capita, current prices 2010E USD Billion Million USD/capita 62,000 64,000 66,000 68,000 KEY FACTS 1.5 million m 2 Project area 490 units in 42 buildings Apartments ANDERMATT SWISS ALPS In Andermatt, a Swiss mountain town, the Group plans to develop a comprehensive and selfsustainable Alpine resort village as a year-round destination. Andermatt is situated at about 1,440 meters above sea level and lies approximately 120 km south of Zurich and 180 km north of Milan. The total land bank of the project amounts to approximately 1.5 million m 2. The project is planned to offer 490 apartments, and 25 private villas. In addition, six hotels classified as 4 and 5-star properties with a capacity of 844 rooms are planned. World-renowned operators will manage the town s hotels, such as General Hotel Management Ltd (The Chedi Andermatt) and Rezidor Hotel Group (Radisson Blu Andermatt). Aside from the existing 13 ski lifts, the destination will feature various leisure facilities including a professional 18-hole golf course, sports center with all-season leisure pool, and a commercial center. We plan to use a carbon-free energy supply system for the entire resort by using renewable energy sources. In addition, the planned underground parking lot in the podium will offer a capacity for a maximum of 1,970 cars, reducing air pollution and noise in the town. Subject to certain construction obligations, the Group has been granted an exemption from the Lex Koller legislation, which restricts the acquisition of real estate by non-swiss residents. Pursuant to this exemption, non-swiss residents will be able to acquire and transfer residential property without authorization until the end of Site development started in the fourth quarter of 2008 with the site-specific master plan approvals. Construction began with the launch of the first phase in September In this phase, the Chedi Andermatt hotel, basic infrastructure, the podium, and 18-hole championship golf course will be developed with operations expected during the winter of 2013/2014. Due to weather conditions during the winter season, construction works were stopped from October 2009 to April The first development phase is expected to become operational during and 5-star Hotels 18-hole championship Golf Course total Villas 35,000 m 2 Commercial space 60

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65 Project Under Construction Morocco Also known as the Kingdom of Morocco is the mose west country of Northern Africa. Strategically situated with having Atlantic and Mediterranean coastlines, but with a rugged mountainous interior, it stayed independent for centuries while developing a rich culture blended from Arab, Berber, European and African influences. Gross domestic product, current prices 2010E Population 2010E Gross domestic product per capita, current prices 2010E USD Billion Million USD/capita 2,800 3,000 3,200 3,400 KEY FACTS 15.0 million m 2 total land area 2,500 hotel rooms planned 1,851 residential units planned CHBIKA, SAHARA ATLANTIQUE In 2007, Orascom Development entered into an agreement with the Government of Morocco to develop Chbika as an integrated self-sufficient tourist destination in the south of Morocco. Located approximately 400 km south of Agadir on the Atlantic Ocean, the project s total land bank amounts to 15 million m 2. The Group currently holds a majority stake of 65 percent in Oued Chbika Development SA with the remaining 35 percent held by Caisse de Dépôt et de Gestion (CDG). Among the planned components are eight hotels with a capacity of 2,500 guest rooms, 1,166 apartments, 685 villas, golf courses, a marina, and city center facilities. The inauguration of the first phase took place in June 2009, marking the start of construction and the Group s mobilization in Morocco. This phase will encompass 5 hotels, a marina, an 18-hole golf course and approximately 1,100 real estate units. The first marina basin excavation activities are underway and the first phase is expected to be operational by end of

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67 Project Under Construction United Kingdom The United Kingdom is a sovereign state consisting of four countries: England, Northern Ireland, Scotland, and Wales. The county of Cornwall lies at the south western tip of England and enjoys coastline to its south and north. Cornwall is steeped in history with a rich cultural and industrial heritage. With a beautiful and renowned coastline, mixed with a dramatic landscape today make Cornwall rank as a leading tourist destination in the UK. Gross domestic product, current prices 2010E Population 2010E Gross domestic product per capita, current prices 2010E USD Billion Million USD/capita KEY FACTS 6.82 million m 2 total land area 5,500 Eco homes planned During the fourth quarter of 2009, the Group entered into an agreement with Imerys, a multinational industrial minerals company, to develop an integrated Eco Town in Cornwall, United Kingdom. The new joint venture was formally established in May 2010 and in which Orascom Development retains a majority stake of 75 percent with Imerys holding the balance. The total land bank for the project amounts to 6.82 million m 2, divided over six plots. The Cornwall project scheme was developed in response to the United Kingdom Government s Eco-town competition designed to promote low carbon, sustainable communities across the country. The project was one of only four to receive Eco-town accreditation from the United Kingdom Government and was the sole private led scheme to be awarded such an accolade in the United Kingdom. The project is envisaged to offer a mixed portfolio of real estate units with a total of 5,500 units, including affordable housing and upscale residential units as well as leisure and recreational facilities (a hotel and marina) plus a range of commercial developments aimed at job creation in the region. The master planning and design process has been initiated. Detailed planning permission for approximately 100 homes was submitted in February 2011 on the first phase of one of the six sites (Baal) contemporaneous with the submission of a wider outline application for the overall site of Baal and the adjacent site of West Carclaze. The development at Baal is expected to commence during 2011 with the first phase at Baal operational during

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69 Project in the Pipeline Montenegro Montenegro is a young independent state even though it has a rich history dating back to the ninth century. It declared its independence in June 2006 after spending the last century in one way or the other as part of various embodiments of Yugoslavia. Montenegro is located in south east Europe. It has a coast line on the Adriatic Sea. Its beaches, landscape and history has made it one of the top ten touristic destinations worldwide. It has a population of almost seven hundred thousand. Montenegro is also an official candidate for membership in the European Union. Gross domestic product, constant prices 2010E Population 2010E Gross domestic product per capita, current prices 2010E USD Billion Million USD/capita 5,800 6,000 6,200 6,400 6,600 6,800 KEY FACTS 6.8 million m 2 total land area 2,200 hotel rooms planned 2,350 residential units planned TIVAT, LUSTICA During the fourth quarter of 2009 Orascom Development entered into an agreement with the Government of Montenegro to develop an integrated destination on the Mediterranean s Traste Bay. The total land bank for the project amounts to 6.8 million m 2 in Lustica, in the municipality of Tivat. The Group currently holds a majority stake of 90 percent in Lustica Development AD Podgorica with the remaining 10 percent held by the Government of Montenegro. The integrated project is planned to offer 2,350 residential units, eight hotels with a total capacity of 2,200 rooms, a marina on the Adriatic Sea, an 18-hole golf course, a Thalasso Center, commercial facilities, a town center, and basic infrastructure requirements. The first phase is expected to be operational by In 2010 we initiated master planning, detailed site studies, and the first infrastructural works to connect the site to the basic services. Main construction works are expected to start in

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71 Project in the Pipeline Romania Romania is located at the crossroads of Central and Southeastern Europe. Romania is the ninth largest country of the European Union by area, and has the seventh largest population of the European Union with 21.5 million citizens. Its capital and largest city is Bucharest the sixth largest city in the E.U. with about two million citizens. Many north-eastern areas of Romania s territories were occupied by the Soviet Union, and Romania forcibly became a socialist republic and a member of the Warsaw Pact. With the fall of the Iron Curtain and the 1989 Revolution, Romania started a series of political and economic reforms. After a decade of post-revolution economic problems, Romania made economic reforms and joined the European Union on 1 January Romania is now an upper-middle income country with high human development, although within the European Union, Romania s income level remains one of the lowest. Gross domestic product, current prices Population Gross domestic product per capita, current prices USD Billion Million USD/capita 2,000 4,000 6,000 8,000 10,000 KEY FACTS 2.5 million m 2 total land area 33,000 residential units planned 70% Group s stake in project CONSTANTA In 2009, the Group entered into an agreement with the Government of Romania to develop a basic affordable housing project in Constanta, one of Romania s major cities. This project will be our first affordable housing project outside of Egypt. The Group retains a majority stake of 70 percent of the project company, while Unilast, a Romanian partner will retain the balance. The project area will initially cover a total area of 2.5 million m 2 located 11 km from Constanta s city center. The project is planned to offer a total of 33,000 units to be developed over three phases with each phase offering approximately 11,000 units. The project s master plan is currently under development and the first phase is expected to be operational in five years. 68

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73 Held for Investment Jordan Jordan, officially the Hashemite Kingdom of Jordan, is a kingdom on the East Bank of the River Jordan in Western Asia. It borders Saudi Arabia to the east and south-east, Iraq to the east, Syria to the north and West Bank and Israel to the west, sharing control of the Dead Sea. Much of Jordan is covered by the Arabian Desert. However, the northwestern part of Jordan is part of the Fertile Crescent. The capital city is Amman. Modern Jordan is predominantly urbanized. Jordan is classified as a country of high human development by the 2010 Human Development Report. Furthermore, The Kingdom has been classified as an emerging market with a free market economy by the CIA World Fact Book. It has more Free Trade Agreements than any other country in the region. Gross domestic product, current prices 2010E Population 2010E Gross domestic product per capita, current prices 2010E USD Billion Million USD/capita 3,600 3,800 4,000 4,200 4,400 4,600 KEY FACTS 15.64% Group s stake in Tala Bay 100% Group s stake in Marina Plaza Hotel TALA BAY, GULF OF AQABA Following the Group s invitation to develop the country s first integrated resort project, Tala Bay was the Group s first regional roll-out of its model outside of Egypt. The project is being developed by Jordan Projects for Touristic Development (JPTD), a company listed on the Amman Stock Exchange in which the Group holds a minority share of percent. Tala Bay is situated on the Gulf of Aqaba in the northern Red Sea, which is Jordan s only sea gateway. The destination is built on a man-made lagoon and is one of the largest tourism destinations in the country, covering a land area of approximately 2.7 million m 2. The project is located on the outskirts of Aqaba, approximately 10 km from the Aqaba International Airport. The project master plan includes residential villas and apartments, a marina, championship golf course, and commercial facilities. Tala Bay is planned to include four hotels with a total capacity of 1,300 rooms. One of these hotels, the Marina Town Plaza, is wholly owned by the group and commenced operations in April 2008 with 267 rooms. 70

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75 6. Corporate social responsibility We do everything in our capacity to protect and respect the natural and cultural environment of any chosen destination or investment we take part in. Amr Sheta, Vice Chairman & Co-CEO 72

76 Sustainable Communities EL GOUNA Egypt s most environmentally friendly destination El Gouna has been officially recognized as Egypt s most environmentally-friendly holiday destination. Egypt s Ministry of Tourism said it expects El Gouna to be one of the world s top green destinations by the end of With this aim, El Gouna management works in cooperation with local hotels, businesses, residents and visitors to maintain, protect, and preserve its unique environment. 1. Green Gouna The Green Gouna initiative aims to involve members of the community in protection and preservation through education, recycling, cleanup campaigns, and the establishment and the enforcement of environmental standards and guidelines. A number of environmental practices have been enacted for the benefit of the town: land and sea As a result of these and other sustainable programs, a number of hotels in El Gouna have been awarded certification by Green Globe International, a non-profit organization that promotes environmentally and socially responsible tourism. Also, in December 2010, El Gouna received first prize for best environmental practices as a private business from Saudi Arabia Environmental Management in a ceremony held at Bibliotheca Alexandrina. 2. Water Management El Gouna supplies its own water by desalinating sea and well water and utilizing treated waste water for irrigation of the golf course and greenery throughout the resort. The town s sewage treatment plant has six modules each with a capacity of 1000 m 3 per day. Water saving nasals helped reduce water consumption. 3. Energy Efforts are implemented to conserve energy throughout the town including energy saving cards in hotel guest rooms as well as energy saving lamps and usage of solar energy. 4. El Gouna Farms El Gouna Farm offers a variety of highly beneficial organic products for the town s consumption and is closely related to the Fowl Farm. The farm breeds turkeys (average 7,500 per year), chickens (average 21,000 per year), sheep (average 200 per year), and goats (average 120 per year). The town food waste is used to feeding the animals, and in turn their organic waste is used as fertilizer for the surrounding farm agriculture including olive trees and jojoba plants. El Gouna farm was certified by Suolo e Salute (an Italian control and certification body for food industry and environment). The companies controlled by Suolo e Salute are allowed to export their organic products directly towards the most important markets in the world. Suolo e Salute is accredited by the United States Department of Agriculture for the USDA-NOP label (National Organic Program), by the Ministry of Agriculture of Japan for the JAS label (Japanese Agricultural Standard) and by the Canadian Food Inspection Agency for the COR label (Canada Organic Regime). Suolo e Salute is allowed to operate in compliance with standards Bio Suisse (Switzerland), CARTV (Québec), AB France (France), Soil Association (U.K.) and KRAV (Sweden). A Fish Farm was also established in 2000 to make use of rejected water from the desalinating units. The farm consists of 10 connected fish ponds, two separate shrimp ponds, and three duck houses to help fertilize the farming water. The area adjacent to the fish farm ponds feature trees and bushes that can tolerate the desert climate and salty soil, including Acacia, Casuarinas, Eucalyptus, Tamarix and Mangrove. In addition the farm has attracted different species of birds. Over four years, the farm catalogued visits by 41 different species of birds. 5. Waste Management El Gouna has a zero-waste system whereby over 85% of waste is recycled. The administration also upholds existing national legislation regarding the dumping of construction materials. The town s Solid Waste and Recycling Plant consist of three factories, one bio gas unit, two stores and a gallery. 25% of the solid waste is recycled in El Gouna, whereas the remainder is sold via intermediaries to recycling plants all over Egypt (such as aluminum, glass, and steel factories). Aiming to expand efforts in cultural enrichment and hoping to make El Gouna a platform for literary exchange, the El Gouna Library a branch of Bibliotheca Alexandrina offers the first Writers Residency program in the MENA region. Launched in early 2010, the program hosts 4 to 6 writers for a month-long session three times per year allowing participants a unique opportunity to work on their project while interacting with writers from different walks of life. TABA HEIGHTS A destination that cares With one of the most striking natural settings among all our destinations, Taba Heights is especially keen to protect the environment and maintain this key asset. The resort has its own recycling center that sorts waste from the hotels and outlets. Treated salt water is used to water the 18-hole golf course, resulting in significant saving of fresh water consumption. Hotels also take initiatives to enhance the environment, such as Marriott s planting of 2,000 trees. Each quarter a clean-up campaign is undertaken as volunteers from the resort collect rubbish from outside the resort in an exemplary effort to keep 73

77 the Sinai clean. To further raise awareness among visitors, an ongoing children s painting competition serves as a friendly way to teach children about the marine environment and the importance of protecting the coral reefs. The town s awardwinning water sports center sponsors this activity. HARAM CITY, 6th of OCTOBER, EGYPT Giving back to society 1. Waste Management The Ertiqaa service company established in January 2008 operates from a location in Haram City. The company s goal is to improve solid waste management practices in Egypt through the collection and recycling of the waste produced by households and commercial, industrial, and service activities. As part of this goal, the company collects and recycles waste in the town. Aside from keeping the town free of garbage in public spaces, this improves the health of residents by reducing microbes and the probability of disease in this lower-income community. Additionally, the company provides job opportunities to local residents to allow them to provide for their families with an improved standard of living. The company offers residences, meals, and transportation for employees. 2. Community Service: As part of Orascom Development s responsibility towards the society in which we operate we ve created a rehabilitation center for homeless street children. The Ana El Masry (I, the Egyptian) center in Haram City provides accommodation and vocational training and serves as an outlet for hand-crafted products by program participants.. Haram City hosts the Malaika factory, a main producer of Egyptian luxury cotton bed linens with hand embroidered designs. The factory does not only focus on economic activity, but it also has a vital social role. The factory provides employment opportunities for unprivileged women. The Malaika factory s main goal is to empower women to take charge of their economic future and promote their independence. As such, the concept on which the Malaika factory was founded illustrates that luxury brands and social responsibility can go hand in hand. We are global citizens, responsible for our actions as developers Julien Renaud-Perret, Chief Development Officer 74

78 3. Best Community Experience Award During September 2010 OHC, the Group s affordable housing subsidiary, was awarded the Middle East award at the Affordable Housing Development Summit. Haram City was declared to provide the Best Community Experience. This award recognizes the company s efforts and achievements to provide a particular quality of life for residents. MURIYA, OMAN PROJECTS Oman s first taste of sustainable luxury 1. Mooring Buoys In its efforts to preserve the rich and vibrant marine and coral life in the Sultanate of Oman and under the supervision of the Ministry of Environment and Climate Affairs, Muriya (the Group s Omani subsidiary) sponsored 12 mooring buoys, so instead of anchoring which would potentially damage the coral reefs, boat users will be able to tie their boats to the floating mooring buoys to avoid any damage particularly to the coral reefs that provides food and shelter to marine life. Muriya has conducted extensive research and studies to ensure minimum disruption to the coastal marina life. Both Jebel Sifah and Salalah Beach include inland marinas thereby not building into the sea. Furthermore, excavation of the marina basins has been carried out keeping the ecological impact in mind. The Group is implementing a low density building policy for all its projects wherein a maximum of 25% of land will be developed, leaving the remaining 75% for natural attractions. 2. Jebel Sifah recycling plant A recycling plant will be located inside the destination. In the operational phase, the objective is to serve the project and the surrounding Jebel Sifah village recycling needs. An exclusive luxury eco-lodge boutique hotel is being introduced by Cheval Blanc, the newest French hotel operator established by the LVMH Hotel Management, an entity of the Louis Vuitton Moet Hennessy Group (LVMH). To ensure that luxury does not reign over the surrounding environment, the Group hired the following consultants: famous landscaping consultant has been commissioned to preserve and protect local flora species, beach fringe vegetation, as well as the island s natural topography. Group s environmental consultant is conducting a routine quarterly environmental monitoring of the ambient air quality in the region, marine water quality, dust monitoring and diesel generator emissions monitoring to ensure there is no adverse construction impact on the natural environment of the island. 75

79 4. Education: International Hotel School Muriya took an initiative to develop a project to establish a hotel school with international standards according to the local market requirements in cooperation with the Omani Ministry of Tourism and Ministry of Education. The International Hotel School at Sifah village started its operations in September ANDERMATT SWISS ALPS, SWITZERLAND Taking sustainability one step further From the very outset of the development of the project, maximum importance was given to sustainability of the social, ecological and economic aspects. in close cooperation with local residents, environmental associations, heritage organizations, tourism promoters, and cantonal authorities. standards. MINERGIE is an acknowledged Swiss quality label for ecologically acceptable construction for buildings designed to save energy. ensures a CO 2 -neutral power supply that does not release CO 2 therefore working against global warming. Sustainability (LOHAS) standard for upscale sustainable living by reducing an individual s use of natural resource by altering methods of transportation, energy consumption and diet. convenience of mobility for the guests: erected platform which houses infrastructure for parking, deliveries, and disposal on two subterranean floors. accessed directly from underground parking. areas easy to reach. are employed. OUED CHBIKA, SAHARA ATANTIQUE, MOROCCO Respecting natural surroundings In the Oued Chbika project the Group is taking several measures to safeguard the natural environment and support local society. On one hand the pink flamingo population native to the project site will be protected. On the other hand, the Group s Moroccan subsidiary, Oued Chbika Development, will invest MAD 20 million in social programs for local residents as per an agreement with the Moroccan government. Finally, local fishermen will be encouraged to use the town s marina to dock following their daily trips to the nearby off-shore fishing grounds, their primary source of income. UNITED KINGDOM The vision of the Eco-Bos project is to realize an extraordinary opportunity to positively transform former industrial land to create truly sustainable communities. These measures will bring new homes, jobs and leisure facilities to the Mid-Cornwall region and by doing so the Group s involvement will have a major economic, environmental, and social impact with long-term benefits. 1. Transportation such as cycling and walking. throughout the town. 2.Energy and water principle of creating a town that readily encourages low carbon living and working. and achieve an 80% reduction of annual carbon emissions, from the current 11 tones per person per day to less than 2 tons. primary resources and energy. widespread use of renewable energy, including deep geo-thermal energy that utilizes energy that can be captured from deep underground, wind power, anaerobic digestions,, biomass,, and solar thermal and photo-voltaic panels which use the energy from the sun. technologies for enhanced energy and water management. places to live in. 3. Employment and economy of new settlements, emerging. technologies, tourism, professional occupations, and wider community services. 4. Quality of life carbon construction. services. production. improved wildlife, space for outdoor sporting activities, and opportunities for sustainable tourism. 76

80 Corporate Initiatives 1. Human Trafficking The End Human Trafficking Now! movement has been developed in partnership with the UN GIFT (United Nations Global Initiative to Fight Human Trafficking) to encourage world leaders and businesses to fight against human trafficking through abiding by ethical business standards. Orascom Development was a main sponsor for the project s communications plan in collaboration with top media partners. 2. Children s Museum An initiative spearheaded by the Egyptian Museum, the concept of the Children s Museum is to develop a place for children to learn more about Egypt s history and Pharoanic era by interacting with pieces of history. The replicated monuments were all made out of Lego with an added play area for kids to make their own monuments. Orascom Development has been recognized as the official sponsor along with the Danish brand, Lego. Employees At Orascom Development, we fully support our 17,119 employees to grow as individuals. Our focus on staff training and development is critical to our philosophy of offering employees development opportunities and also serves to maintain the competitive edge of our team. The Group aims to create a positive environment where employees can reach their potential both personally and professionally. The Group is finalizing a unified code of conduct that all employees must adhere to. This will be part of an employee handbook that is being prepared according to international standards. Employee satisfaction is measured by calculating the turnover rate on a department level, as well as subsidiary and country levels. During Q4 2010, the Group s Board of Directors approved a new compensation policy for the Management Team. The compensation mix places more weight on the variable compensation rather than the fixed income. 77

81 7. Corporate Governance 7.1. Group Structure and Significant Shareholders Group structure The operating business of the group headed by Orascom Development Holding AG (the Orascom Development Group ) is organized into the following divisions: Hotels, Real Estate and Construction, Land Sales, Town Management, Tours Operations, and Other Operations. The Group s headquarters consists of personnel who perform functions spanning several or all divisions, including corporate functions and members of the Executive Management. Orascom Development Holding AG Corporate Functions Hotels Real Estate and Construction Land Sales Town Management Tours Operations Other Operations As of the end of the 2010 financial year, the following listed companies were part of the Orascom Development scope of consolidation: Company Orascom Development Holding AG (Altdorf, Switzerland) SIX Registration Exchange SIX Swiss Exchange Market capitalization CHF 1,693,874,051 Symbol ODHN Security number ISIN CH EGX Registration (Egyptian Depositary Receipts) Exchange EGX Egyptian Exchange Market capitalization EGP 8,321, Symbol ODNH ISIN EGG676K1D011 Orascom Hotels & Development S.A.E. (Cairo, Egypt) EGX Registration Exchange EGX Egyptian Exchange Market capitalization EGP 4,312,727,955 Symbol ORHD ISIN EGS70321C012 Orascom Hotels & Development S.A.E. is 99.66% owned by the Orascom Development Group An application to de-list Orascom Hotels & Development S.A.E. from the EGX is in progress and expected to become effective in the first half of Pursuant to a tender offer completed in January 2011, Orascom Development increased its holding in this Egyptian subsidiary to 99.66%. For information on the non-listed companies comprised by the Orascom Development Group s scope of consolidation, please refer to Note 18 (Subsidiaries) to the consolidated financial statements (page F-44). 78

82 Significant shareholders Since the initial public offering of the Company s shares in May 2008 through the end of the 2010 financial year, the following shareholders have disclosed participation in the Company of 3 percent or higher voting rights (in accordance with art. 20 SESDA 1 ): 2 Name of Shareholder Date of latest disclosure 3 Number of shares Percentage of ownership of the total equity capital and voting rights 4 Samih O. Sawiris 13 May ,534, whereof held directly 7,172, % whereof held through Thursday Holding Ltd. 5 5,848, % whereof held through SOS Holding Ltd , % Janus Capital Management LLC 7 25 Aug ,156, % Orascom Development 8 15 Dec ,286, % Blue Ridge Capital Holdings LLC Blue Ridge Capital Offshore Holdings LLC 9 13 May , % Aside from the above, the Company is not aware of a shareholder holding a participation of 3 percent or more of voting rights. There are no cross-shareholdings between the Company and any other entity that would exceed 5 percent of capital or voting rights on both sides. 1. Swiss Federal Act on Stock Exchanges and Securities Dealing. 2. The table, in accordance with the SIX Swiss Exchange s guidelines, shows significant shareholders participations as last disclosed pursuant to art. 20 SESDA. The numbers of shares and percentages shown conform to the situation at the time of the respective last disclosure. They do not necessarily conform to the situation as per 31 December 2010, given that a shareholder may have purchased or sold shares subsequent to the last disclosure but not thereby crossed a disclosure threshold. See also fn. 4 in respect of the percentages shown. For information on the participations of shareholders exceeding 3 percent of voting rights as reflected in the Company s share register as at 31 December 2010, refer to Note 13 to the Company s nonconsolidated financial statements, page F The date indicated is (a) as from 2010, the date of publication on the SIX Swiss Exchange s online database; (b) prior to 2010, the date of the issue of the Swiss Commercial Gazette in which the disclosure was published or, in those cases where the latest disclosure was made in or in conjunction with the Offering Circular published by the Company in the course of the initial public offering of its shares, the date of the Offering Circular (13 May 2008). 4. The percentages shown relate to the Company s registered share capital as at the date of the respective disclosure. For information on changes in capital since the Company founding, refer to Section 2.3 below (page 82). In those cases where the latest disclosure was made in or in conjunction with the Offering Circular published by the Company in the course of the initial public offering of its shares, the percentages shown are those disclosed as Expected holding upon completion of the Offering (assuming full exercise of Over-Allotment Option). 5. Thursday Holding Ltd. (formerly TNT Holding Ltd.), c/o M&C Corporate Services Limited, PO Box 309GT Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. Wednesday (Cayman Island) Trust (formerly TNT (Cayman Island) Trust) owns Thursday Holding Ltd. Samih O. Sawiris has the ability to exercise the voting rights of Thursday Holding Ltd. 6. SOS Holding Ltd., c/o M&C Corporate Services Limited, PO Box 309GT Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. SOS (Jersey) Trust owns SOS Holdings Ltd. Samih O. Sawiris has the ability to exercise the voting rights of SOS Holding Ltd. 7. Janus Capital Management LLC, with its principal office at 151 Detroit Street, Denver, CO , is the investment adviser of (a) Janus Overseas Fund, with its principal office at 151 Detroit Street, Denver, CO , (b) Janus Adviser International Growth Fund, with its principal office at 151 Detroit Street, Denver, CO , and (c) Janus Aspen Series International Growth Portfolio, with its principal office at 151 Detroit Street, Denver, CO Orascom Development and Samih O. Sawiris entered into a Securities Lending Agreement under which the Company is entitled to borrow from Samih O. Sawiris up to the indicated number of shares. On 2 December 2010 the indicated number of shares was transferred to the Company. 9. Blue Ridge Capital Holdings LLC, with its principal office at 660 Madison Avenue, New York, New York 10065, is the general partner of Blue Ridge Limited Partnership which held 533,984 shares, with its principal office at 660 Madison Avenue, New York, New York Blue Ridge Capital Offshore Holdings LLC, with its principal office at 660 Madison Avenue, New York, New York 10065, is the general partner of Blue Ridge Offshore Master Limited Partnership, which held 317,676 shares, with its principal office at P.O. Box 309, Grand Cayman KY1-1104, Cayman Islands. 79

83 7.2. Capital structure Capital As at 31 December 2010, the Company s issued share capital amounted to CHF 672,882, and was divided into 28,213,118 registered shares with a nominal value of CHF each, fully paid in. The authorized capital amounted to CHF 155,979 while the conditional capital amounted to CHF 134,145, Authorized and conditional capital Authorized capital Art. 4a of the Company s articles of incorporation ( Articles of Incorporation ), relating to its authorized capital, reads as follows: The board of directors is authorized to increase the share capital of the Company by a maximum of CHF 155, by issuing of up to 6,540 fully paid-up registered shares with a par value of CHF each until May 11, A partial increase is permitted. The board of directors determines the date of issue, the issue price, the type of contribution, the date of dividend entitlement as well as the allocation of non exercised pre-emptive rights. The board of directors can withdraw or limit the pre-emptive rights of the shareholders in case of (i) the use of shares in connection with mergers, acquisitions, financing and/or refinancing of mergers, acquisitions and other investment projects, (ii) national and international offerings of shares for the purpose of increasing the free float or to meet applicable listing requirements, (iii) an over-allotment option (greenshoe) being granted to one or more financial institutions in connection with an offering of shares and (iv) conversion of loans, securities or equity securities (including shares of subsidiaries) into shares Conditional capital Art. 4b of the Articles of Incorporation, relating to the Company s conditional capital, reads as follows: The share capital may be increased by a maximum amount of CHF 134,145, through the issuance of up to 5,624,556 fully paid registered shares with a nominal value of CHF each, (a) up to the amount of CHF 14,895, corresponding to 624,556 fully paid registered shares through the exercise of option rights granted to the members of the board and the management, further employees and/or advisors of the company or its subsidiaries, (b) up to the amount of CHF 119,250,000 corresponding to 5,000,000 fully paid registered shares through the exercise of conversion rights and/or warrants granted in connection with the issuance of newly or already issued bonds or other financial instruments by the Company or one of its group companies. The subscription rights of the shareholders shall be excluded. The board of directors may restrict or withdraw the right for advance subscription (Vorwegzeichnungsrecht) of the shareholders in connection with (i) the financing (refinancing inclusively) of acquisitions of enterprises or parts thereof, participations or other investment projects of the company and/or its subsidiaries or (ii) the placement of convertible bonds or financial instruments with conversion or option rights on the national or international capital market. In case the right of advance subscription (Vorwegzeichnungsrecht) will be withdrawn, (x) the bonds or financial instruments have to be placed at market conditions, (y) the period of time for exercising the conversion rights or the option rights may not exceed 10 years and (z) the exercise or conversion price of the new registered shares has to be fixed at the conditions of the market. The terms and conditions of the convertible bonds or financial instruments with option or conversion rights, the issue price of the new shares, the dividend entitlement as well as the type of contribution shall be determined by the board of directors. At 31 December 2010, no option rights, conversion rights, or warrants had been granted on the basis of Art. 4b Changes in capital in the past three years The Company was founded on 15 January 2008 and registered with the Commercial Register of the Canton of Uri on 17 January 2008 with a share capital of CHF 100,000, divided into 1,000 fully paid-up registered shares with a nominal value of CHF 100 each. At an extraordinary general meeting of shareholders on 29 February 2008 it was resolved to split the registered shares by a reduction of their nominal value from CHF 100 to CHF 25 each, resulting in a share capital of CHF 100,000 divided into 4,000 fully paid-up registered shares with a nominal value of CHF 25 each. At an extraordinary general meeting of shareholders on 6 May 2008 it was resolved to increase the share capital by CHF 520,363,175 through the issuance of 20,814,527 new registered shares to CHF 520,463,175 divided into 20,818,527 registered shares with a nominal value of CHF 25 each. The new shares were issued as a consideration for the shareholders of the Group s former parent Orascom Hotels & Development S.A.E. ( OHD ) who tendered their OHD shares in connection with the Company s exchange offer (the Exchange Offer ), which took place prior to the listing of the Company s shares on the Main Segment of the SIX Swiss Exchange on 14 May A total of 208,145,270 OHD shares were contributed in exchange for the new shares of the Company. On 13 May 2008 the board of directors of the Company (the Board of Directors ) resolved, based on the authorization included in Art. 4a of the Articles of Incorporation, to increase the share capital by CHF 31,250,000 through the issuance of 1,250,000 new registered shares against contributions in cash to CHF 551, divided into 22,068,527 registered shares with a nominal value of CHF 25 each. On 19 May 2008 the Board of Directors resolved, based on the authorization included in Art. 4a of the Articles of Incorporation, to increase the share capital by CHF 12,160,275 through the issuance of 486,411 new registered shares to CHF 563,873,450 divided into 22,554,938 registered shares with a nominal value of CHF 25 each. The new shares were issued as a consideration for the contribution of a total of 4,864,110 further OHD Shares. 80

84 On 10 June 2008 the Board of Directors resolved, based on the authorization included in Art. 4a of the Articles of Incorporation, to increase the share capital by CHF 4,625,000 through the issuance of 185,000 new registered shares against contributions in cash to CHF 568,498,450 divided into 22,739,938 registered shares with a nominal value of CHF 25 each. On 18 December 2008 the Board of Directors resolved, based on the authorization included in Art. 4a of the Articles of Incorporation, to increase the share capital by CHF 11,993,000 through the issuance of 479,720 new registered shares to CHF 580,491,450 divided into 23,219,658 registered shares with a nominal value of CHF 25 each. The new shares were issued as a consideration for the contribution of a total of 4,797,204 further OHD Shares. At the ordinary general meeting of shareholders on 4 May 2009 it was resolved to reduce the share capital by CHF 11,609,829 from CHF 580,491,450 to CHF 568,881,621 by reducing the nominal value of each of the 23,219,658 registered shares from CHF 25 to CHF The amount of the reduction of CHF 0.50 per registered share was remitted to shareholders. At the ordinary general meeting of shareholders on 11 May 2010 it was resolved to reduce the share capital by CHF 15,092, from CHF 568,881,621 to 553,788, by reducing the nominal value of each of the 23,219,658 registered shares from CHF to CHF The amount of the reduction of CHF 0.65 per registered share was remitted to shareholders. On 29 September 2010 the Board of Directors resolved, based on the authorization included in Art. 4a of the Articles of Incorporation to increase the share capital by CHF 119,094,021 through the issuance of 4,993,460 new registered shares to CHF 672,882, divided into 28,213,118 registered shares with a nominal value of CHF each Shares and participation certificates The 28,213,118 registered shares with a nominal value of CHF each referred to in Section are fully paid in. These are in the form of dematerialized securities (Wertrechte, within the meaning of the Swiss Code of Obligations) and intermediated securities (Bucheffekten, within the meaning of the Swiss Federal Intermediated Securities Act). Each registered share carries an equal right to dividend payments. Voting rights are described in Secion The voting rights of registered shares held by the Company or any of its subsidiaries are suspended. No preferential or similar rights have been granted. As at 31 December 2010, no participation certificates (Partizipationsscheine) have been issued Limitation on transferability and nominee registrations Limitations on transferability for each share category; indication of statutory group clauses and rules for granting exceptions Pursuant to Art. 5 of the Articles of Incorporation, the Company maintains a share register in which the full name, address, and nationality (in case of legal entities, the company name and registered office) of the holders and usufructuaries of registered shares are recorded. Upon application to the Company, acquirers of registered shares will be recorded in the share register as shareholders with the right to vote, provided that they explicitly declare to have acquired the shares in their own name and for their own account. Acquirers who do not make this declaration will be recorded in the share register as shareholders without the right to vote (for an exception to permit nominee registrations, see Section ) Exemptions in the year under review No exemptions from the limitations on transferability of shares (see Sections and ) have been granted in the year under review Permissibility of nominee registrations; indication of any percent clauses and registration conditions Pursuant to the Company s Regulations on the Registration of Nominees, the Company may register a nominee in its share register as a shareholder with the right to vote if either such nominee s shareholdings do not exceed 5 percent of the issued share capital as set forth in the Commercial Register. Or, if such nominee s shareholdings exceed that threshold, the respective nominee discloses to the Company the names, addresses, locations or registered offices, nationalities and the number of shares held on behalf of all beneficial owners whose beneficial shareholdings exceed 0.5 percent of the issued share capital Procedure and conditions for cancelling statutory privileges and limitations on transferability The Articles of Incorporation do not provide for any privileges. The limitations on transferability of the Company s shares, as described in Section above, may be cancelled by a resolution (amending the Articles of Incorporation) of an ordinary general meeting of shareholders reuniting the absolute majority of votes represented at the meeting, or by a resolution of an extraordinary general meeting of shareholders reuniting a majority of two thirds of votes represented (see Section below) Profit sharing certificates The Company has not issued any profit sharing certificates (Genussscheine) Convertible bonds and warrants/options The Company has not issued any convertible bonds, warrants or options. 81

85 7.3. Board of Directors Members of the Board SAMIH O. SAWIRIS Chairman After receiving his Diploma in economic engineering from the Technical University of Berlin in 1980, Mr. Sawiris founded his first company, National Marine Boat Factory. In 1996 he established Orascom Projects for Touristic Development and in 1997 Orascom Hotel Holdings, the two companies that later merged to form Orascom Hotels & Development S.A.E. (OHD). He has served as CEO and chairman of OHD since its incorporation. Furthermore, Mr. Sawiris established El Gouna Beverages Co. in 1997, which he sold in 2001 when it was the largest beverage company in Egypt. He also serves as chairman or as a member of the board of a number of Orascom Development Group subsidiary companies. AMR SHETA Vice Chairman Mr. Sheta has 19 years experience in corporate and investment banking. He started at Chase National Bank Egypt in Appointed manager of the credit department in 1993, he was involved in setting up the bank s investment banking arm CIIC in From 2000 to 2005 he ran CIIC s proprietary private equity fund with a portfolio worth approximately CHF 350 million. Mr. Sheta has been associated with the Orascom Development Group in various capacities since 1989 and serves as a member of the board of several subsidiary companies. Mr. Sheta holds a Bachelor s in economics and a Master s in management from the American University in Cairo as well as a diploma in project appraisal and investment management (PAIM) from Harvard. ADIL DOUIRI Non-Executive Member Mr. Douiri is the founding shareholder and CEO of Mutandis, a Moroccan investment company established in Mr. Douiri served in His Majesty King Mohamed VI s Government as Minister of Tourism ( ) and later as Minister for Tourism, Crafts & Social Economy ( ). In 1992 Mr. Douiri founded Casablanca Finance Group (later renamed CFG Group), the country s first investment bank. Until 2002 he acted as chairman of its supervisory board and is still a board member. He is also a board member of BMCE Bank, the third largest Moroccan commercial bank, and MFEx, a Stockholm-based technology company serving the financial industry. Mr. Douiri graduated as an engineer from the Ecole Nationale des Ponts & Chaussées (ENPC) in Paris. FRANZ EGLE Non-Executive Member Mr. Egle s background is in strategy development, corporate communications, media and PR. After holding senior positions in the private sector he was in charge of communications at the Swiss Federal Department of Foreign Affairs and advisor to the Minister of Foreign Affairs ( ). Before co-founding Dynamics Group, a Swiss company providing strategic consulting, communication management and research analysis, Mr. Egle was a partner of Hirzel.Schmid. Nef Konsulenten, a communication and financial consultancy firm ( ). Mr. Egle holds a Doctor s degree in sociology from the University of Zurich. Dynamics Group, where Mr. Egle is a Senior Partner, has been retained by the Group to provide services in the field of communications. 82

86 LUCIANO GABRIEL Lead Director Mr. Gabriel is delegate of the board of directors and CEO of PSP Swiss Property Group (PSP). Prior to joining PSP, Mr. Gabriel worked for Union Bank of Switzerland ( ), where he held management positions in corporate finance, risk management, international corporate account management and business development. From 1998 to 2002 he was responsible for corporate finance and group treasury at Zurich Financial Services. He serves as a member of the executive board of the European Public Real Estate Association (EPRA). Mr. Gabriel completed his studies in economics at the Universities of Bern and Rochester (NY, USA) and his activity as assistant in economics at the University of Bern in 1983 with the title of Dr.rer.pol. Non-Executive Member Ms. Müller-Möhl has been president of the Müller-Möhl Group since From 1999 to 2000 she was vice chair of the board of Müller-Möhl Holding AG, after working as a journalist and advertising and PR consultant. She is currently a member of the board of directors of Nestlé S.A. and the chairperson of Hyos Invest Holding AG. After gaining an International Baccalaureate at Upper School Salem International College (Germany), Ms. Müller-Möhl studied politics, history and law at the University of Heidelberg and at the Otto-Suhr Institut at the Freie Universität Berlin. She graduated with a Master s degree in political science and complete further studies at the London School of Economics and at the Europainstitut of the University of Basel. Non-Executive Member Mr. Pérès has more than 20 years of experience in senior appointments in the hospitality and luxury consumer brands segments. Since 1999 he has served as President and CEO of Mövenpick Hotels & Resorts. From 1985 to 1996 he worked with the Le Méridien Group, where he first had responsibility for development in Africa and the Middle East and as of 1989 was a member of group executive management and head of the Asia Pacific region. Mr. Pérès holds an MBA degree from the Ecole Supérieure des Sciences Economiques et Commerciales (ESSEC). Mövenpick Hotels & Resorts has been retained by the Orascom Development Group to manage two of its hotels. Name Function Nationality Birth EM/ NEM 1 Elected first Elected until Audit Committee Nomination & Comp. Committee Samih O. Sawiris Chairman EGY 1957 EM Amr Sheta Vice-Chairman EGY 1967 EM Adil Douiri Member MOR 1963 NEM Member - Franz Egle Member CH 1957 NEM Luciano Gabriel Lead Director CH 1953 NEM Chair Chair Carolina Müller-Möhl Member CH 1968 NEM Member Jean-Gabriel Pérès Member F 1957 NEM Member Member EM = Executive Member; NEM = Non-executive Member. 83

87 7.3.2 Elections and terms of office The Company s Board of Directors is elected by the general meeting of shareholders. In accordance with the Articles of Incorporation, the Board is composed of a minimum of three and a maximum of fifteen members, whose term of office shall not exceed three years (a year for that purpose meaning the period between two ordinary general meetings of shareholders). Each member s term of office is determined upon his or her election, and there are no limits on re-election. At the Company s second ordinary general meeting of shareholders held on 11 May 2010, all present members of the Board were re-elected (each by separate vote) for a term of one year. At the upcoming ordinary general meeting of shareholders to be held on 23 May 2011, all of them will stand for re-election (expected to take place by separate vote) for an additional term of one year. At the upcoming ordinary general meeting of shareholders to be held on 23 May 2011, all of them will stand for re-election (expected to take place by separate vote) for an additional term of one year Internal organizational structure Board The Board of Directors governs the Company and is ultimately responsible for the Company s business strategy and management. It has the authority to decide on all corporate matters not reserved by law or the Articles of Incorporation to the general meeting of shareholders or to another body. Subject to its inalienable duties pursuant to the law and to a number of additional matters (see below Sections and 7.3.4), the Board has delegated the management of the Company s business to the CEO. The Board appoints the CEO and the other members of Executive Management. The Board of Directors constitutes itself autonomously and appoints its Chairman and secretary, who does not have to be a member of the Board. It may deliberate if a majority of members are present at a meeting. Decisions are taken by the majority of votes cast. In case of a deadlock, the Chairman has a casting vote. A Board member shall abstain from voting if he or she has a personal interest in a matter other than an interest in his or her capacity as shareholder of the Company. In order to ensure good corporate governance and a balance of leadership and control for the Company, a Lead Director has been appointed. The Lead Director must be non-executive, and is elected by the Board of Directors for a term of one year. He has the right to access any files or records of the Company or to solicit information from any member of Executive Management at any time Committees Two permanent committees have been formed to support the Board of Directors; these are the Audit Committee and the Nomination & Compensation Committee. The Lead Director chairs either of the permanent committees. The duties and competences of either committee are as below Audit Committee The Audit Committee consists of three or more non-executive members of the Board of Directors as determined by the Board. The three Audit Committee members currently appointed have broad experience in finance and accounting on the basis of their professional backgrounds. The Lead Director is ex officio member of the Audit Committee. The mission of the Audit Committee is to assist the Board of Directors in the discharge of its responsibilities with respect to financial reporting and audit. The committee reports and issues recommendations to the Board regarding yearly and interim financial statements, the auditing process, the internal control system, the integrity and effectiveness of the Company s external and internal auditors and other topics submitted to it by the Board from time to time. The Audit Committee has no decision making power Nomination & Compensation Committee The Nomination & Compensation Committee consists of three or more non-executive members of the Board of Directors as determined by the Board. Currently, the Nomination & Compensation Committee consists of three members. The Lead Director is ex officio member of the Nomination & Compensation Committee. The mission of the Committee is to assist the Board of Directors in the discharge of its responsibilities and to discharge certain responsibilities of the Board relating to compensation and nomination of members of the Board and of Executive Management. The committee has decision-making power regarding matters of the compensation of executive members of the Board of Directors and members of Executive Management. The committee issues recommendations to the Board without having decision-making power regarding other matters of compensation, the nomination of Board members and members of Executive Management, and other topics submitted to by the Board for the committee s consideration Work methods of the Board of Directors and its committees Invitations to attend meetings of the Board of Directors are extended by the Chairman or the secretary. Any member of the Board may request the Chairman to convene a meeting. The members of the Board and the committees are provided with all necessary supporting material before a meeting is held, enabling them to prepare for discussion of the relevant agenda items. Pursuant to their respective Charters, the committees of the Board of Directors convene at least once (in the case of the Nomination & Compensation Committee) or twice a year (in the case of the Audit Committee), but can be summoned by their respective chairman as often as the business requires. 84

88 Meetings of the Audit Committee may, upon invitation by its chairman and in an advisory function, be attended by members of Executive Management. The Company s auditors are in regular contact with the chairman of the Audit Committee and have the right to have items added to its agenda. In the 2010 financial year, the Board of Directors convened for eight meetings, and passed one circular resolution. Of the eight meetings, three were physical meetings, and five were meetings held by telephone conference. The Audit Committee convened for one physical meeting. The Nomination & Compensation Committee convened for two physical meetings with certain members of the Executive Management, in particular the CFO, participating. Physical meetings of the Board as well as the Audit Committee and the Nomination & Compensation Committee typically lasted approximately two to four hours, while telephone conferences typically lasted from thirty minutes to one hour Definition of areas of responsibility Based on the provision of Art. 15 of the Articles of Incorporation governing the delegation of duties, the Board of Directors has entrusted the preparation and the execution of certain of its decisions, the supervision of certain tasks, as well as certain decision-making powers to the permanent committees as described in section The Board has delegated the management of the Company s business to the CEO, who may further delegate any of his duties and competencies to Executive Management and other members of the Company s management though the CEO remains fully responsible for all duties and competencies delegated to him by the Board. Excluded from such delegation to the CEO are the inalienable duties of the Board as defined by law (art. 716a para. 1 of the Swiss Code of Obligations), the duties of the Board s permanent committees (as described in Section above), and decisions on the following matters which remain reserved to the Board: 1. The approval of the issuance of securities or other capital market transactions, and the entering into loan agreements in excess of CHF 80 million; 2. The approval of investments and acquisitions (including land acquisitions, whether by way of contract or by rights in rem, or acquisitions of companies and participations in companies) as well as divestments, dispositions and asset disposals in excess of CHF 20 million; 3. The entering into agreements with a value in excess of CHF 20 million (subject to 1. above); 4. The provision of guarantees, suretyships, liens and pledges and other security in excess of CHF 20 million; 5. The approval of inter-company agreements of a value exceeding CHF 20 million Information and control instruments To ensure comprehensive information, members of Executive Management and other senior managers are regularly invited by the Chairman or the Lead Director to attend meetings of the Board, or to participate when individual agenda items are discussed. For example, during the year under review, the CFO was present at all physical meetings of the Board of Directors. Also during the year under review, individual Board members supported Executive Management in various projects. For instance, a Board member was involved in the review of policies and procedures regarding the Company s investor relations. Furthermore, Board members cultivate a regular informal exchange of ideas with Company management and regularly visit the Company s locations. In early December 2010, for instance, the Board visited various sites in Egypt and Jordan. An internal audit and controlling function is maintained at group level, which during the year under review performed several group-wide audits and controls throughout the various legal entities and at the different locations where the group is active. In each case a report of major findings was presented to and discussed with the management on the entity level, and corrective action was agreed. The agreed-upon action was followed up on and documented. In order to ensure the information of the governing bodies, a summarized report in respect to each audit was sent to Executive Management and executive members of the Board, including the most material points to be addressed in the short term. The internal audit and controlling function and the Company s statutory auditors regularly liaise throughout the year to coordinate their activities. The company employs a Management Information System (MIS) which provides Company management (including executive members of the Board) with monthly, quarterly, semi-annual and annual reports for the different entities and segments within the Group. Other members of the Board receive reports on a quarterly basis or upon request. These results are then consolidated per division and at group level. Subsequently, the results are compared to the previous financial year and budgets and projections are updated on a quarterly basis. Key performance indicator reports are also produced for the various segments on a monthly, quarterly and annual basis and submitted to management for necessary comparison to the budgeted figures and previous results. Based on those reports the Board is informed in subsequent meeting of substantial deviations. Justifications are requested and corrective action is taken where necessary. Executive Management meetings, chaired by the Chairman or Vice- Chairman in their capacity as CEO and Co-CEO respectively, are held on a monthly basis with performance of operating projects reviewed alongside the budget and previous financial year. Key performance indicators are reviewed as described in the preceding paragraph. Updates on new projects, whether off-plan or under construction, are shared and future steps agreed. A system to automatically generate all MIS reports from the existing financial system was implemented in 2010 and expected to be fully operational during

89 7.4. Executive Management Members of the Executive Management SAMIH O. SAWIRIS Egyptian national, born 1957, Chairman of the Board and CEO. After receiving his Diploma in economic engineering from the Technical University of Berlin in 1980, Mr. Sawiris founded his first company, National Marine Boat Factory. He also established El Gouna Beverages Co. in 1997, which he sold in 2001 when it was the largest beverage company in Egypt. In 1996 he established Orascom Projects for Touristic Development and in 1997 Orascom Hotel Holdings, the two companies that later merged to form Orascom Hotels & Development S.A.E. (OHD). He has served as CEO since the company s incorporation. AMR SHETA Egyptian national, born 1967, Vice-Chairman and Co-CEO. Mr. Sheta started his career at Chase National Bank Egypt in 1989 and was appointed manager of the credit department in He was involved in setting up the bank s investment banking arm CIIC in 1996 and ran its proprietary private equity fund with a portfolio worth approximately CHF 350 million from 2000 to He holds a Bachelor s in economics and a Master s in management from the American University in Cairo as well as a diploma in project appraisal and investment management (PAIM) from Harvard. MAHMOUD M. ZUAITER German national, born 1967, Group Chief Financial Officer. Mr. Zuaiter s career spans 14 years of experience with the Intercontinental Hotels Group, culminating in the position of Director of Finance for the Middle East & Africa region. He played a role in operations in Germany, the United Kingdom, Belgium, the Netherlands, Dubai, Saudi Arabia, Bahrain, Jordan, Lebanon, and Egypt. Mr. Zuaiter joined the Group in Educated in Germany, Mr. Zuaiter holds an MBA degree from Columbus University and is a qualified financial accountant. 86

90 For detailed information on compensation paid to members of the Board of Directors and of Executive Management for the financial year 2009, and on shares held by and loans granted to these persons as at 31 December 2009, please refer to Note 11 (Board and Executive Compensation Disclosures as Required by Swiss Law) to the consolidated financial statements. French national, born 1968, Chief Development Officer. Mr. Renaud-Perret joined the Group in 2006 as a member of Executive Management in charge of worldwide development activities. Prior to that, he was a member of the executive committee of Club Méditerranée responsible for the group strategy and implementation with respect to resort development and asset management. Mr. Renaud-Perret started his career with Euro Disney SCA, where he held positions in finance and strategic planning. He was educated in France and holds an MBA degree from INSEAD. HAMZA SELIM Egyptian national, born 1961, SVP Destination Management and CEO Egypt Hotels. Prior to joining the Group in 2005 Mr. Selim worked extensively with Hyatt Regency, serving as general manager for its Taba Heights property as well as area general manager for Egypt. Other positions he held with Hyatt included regional director of marketing for the Middle East and as general manager for hotels in Jeddah and Dubai. Mr. Selim holds a Bachelor s degree in business administration from Cairo University, Egypt. RAYMOND CRON Swiss national, born 1959, SVP European Destinations. Since 1989 Mr. Cron held top management positions in major construction companies in Switzerland. In 1996 he was appointed managing director and member of the executive board in a key Swiss construction enterprise. He was also Director General of the Federal Office of Civil Aviation (FOCA) from 2004 to He joined the Group at the end of Mr. Cron graduated from the Swiss Federal Institute of Technology (ETH) in Zurich and completed postgraduate studies in business management at BWI/ ETH in Zurich. 87

91 7.4.2 Other members of the senior management ABDALLA ELNOCKRASHY American national, born 1960, Head of International Real Estate Prior to joining the Orascom Development Group in 2006, Mr. ElNockrashy served as executive vice president with Power Group INT (PGI) in the United States for three years. From 1997 to 2004, he held the position of regional director of sales and marketing with Polaris Industries, a U.S. producer of power sports vehicles. Earlier in his career, Mr. ElNockrashy spent thirteen years with Goodyear Tires and Rubber Company. He holds an MBA degree from the University of Phoenix and a BA degree in business administration from the American University in Cairo. CLAUDE CHESNAIS French national, born 1951, VP Hospitality Operations Mr. Chesnais is responsible for the Orascom Development Group s hospitality and hotel operations. Prior to joining Orascom, Mr. Chesnais for the major part of his career worked with Hilton International, where he held various managerial responsibilities for over 25 years, finally as vice president operations for the Gulf and Arabian Peninsula based in Dubai. Thereafter, he held the position of executive vice president for the Middle East with Helnan International Hotels, and lately, from 2003 to 2006, he was the managing director at Iberotel Egypt, a TUI company. HANI S. AYAD Egyptian national, born 1954, Head of Design & Destinations Planning Mr. Ayad joined Orascom Development Group in He has more than 35 years of professional experience in master and urban planning and architectural designing with various international firms over four continents. He holds a master degree in architecture from the University of Minnesota and is a member of the American Institute of Architects (AIA) as well as the National Council of Architectural Registration Boards (NCARB). 88

92 7.5. Compensation, shareholdings and loans For detailed information on compensation paid to members of the Board of Directors and of Executive Management for the financial year 2010, and on shares and options held by and loans granted to these persons as at 31 December 2010, please refer to Note 12 (Board and Executive Compensation Disclosures as Required by Swiss Law) to the consolidated financial statements. The compensation of the members of the Board of Directors and of Executive Management is determined as specified below. The Company does not have any formal stock ownership or option plans for members of the Board of Directors or Executive Management. It does not employ external advisors or systematically use external benchmarks for fixing compensation. Board of Directors. With respect to the compensation of Board members for their service on the Board of Directors and on its committees, the Board decided in 2008, in its discretion, on the amount of the annual remuneration per member (CHF for all Board members, except for the Lead Director in whose case the amount is CHF ), and on the form in which that remuneration is discharged (i.e. half in cash and half in the form of shares of the Company). This decision of the Board, in which all Board members participated at the time, remained in effect for the 2010 financial year. The shares of the Company allocated to the members of the Board as compensation are, for that purpose, purchased by the Company in the market, and their valuation (for purposes of the calculation of the number of shares allocated to each member) is based on the average purchase price paid by the Company. Executive Management. Compensation of the members of Executive Management (including the executive members of the Board of Directors), for their service in Executive Management, consists of a base salary which is annually reviewed, and a bonus payment which is annually determined, as further described below. The initial base salaries of the members of Executive Management were either (in case of members who have served in that capacity since the Company was formed in 2008) carried over from their previous employment with Orascom Hotels & Development S.A.E., or (in case of members appointed at a later time) they were determined in a discretionary decision of the CEO and Co-CEO approved by the Nomination & Compensation Committee. With respect to the annual salary review and bonus determination, proposals by the executive members of the Board (CEO and Co-CEO) are presented to the Nomination & Compensation Committee which discusses such proposals, approves them if deemed fit, and subsequently informs the Board on its decisions. Members of Executive Management do not have a right to attend meetings of the Nomination & Compensation Committee at which decisions are taken in respect of their compensation, or otherwise to participate in the decision process (except for the executive members of the Board who make proposals to the Committee for their own compensation). The annual proposals and decisions concerning the compensation of the members of Executive Management are based on an evaluation of the individual performance of each member, as well as of the performance of the business area for which he is responsible (in case of the executive members of the Board, the performance of the Orascom Development Group as a whole). The CEO and Co-CEO form the respective proposals in their discretion, based on their judgment of the relevant individuals and business areas achievements. In 2010, the total of bonus payments to members of Executive Management amounted to 29.73% of the total of their base salaries, the minimum being 0% and the maximum 60%. At its meeting of 8 December 2010, the Board of Directors approved a formal bonus policy ( Policy ) for the group, which applies as from the 2011 financial year and covers the members of Executive Management as well as lower levels of management. For members of Executive Management, the Policy provides that their target bonus may be in the range of 0-75% of their base salary, and that it may be paid in cash or (for 50% of the bonus at most) in the form of unrestricted shares of the Company. Details in respect of compensation paid in the form of shares, if any, remain to be defined separately. The amount of the bonus paid to members of Executive Management for a particular year (percentage of the target bonus) is determined, pursuant to the Policy, based on two categories of targets: Depreciation and Amortization, excluding revaluations) is annually defined, the achievement of which determines the bonus entitlement of the members of Executive Management in respect of three fourths of the target bonus. The entitlement for this part of the bonus rises, in defined steps, from 0% (in case of achievement of less than 95% of the EBTDA target) to 100% (in case of achievement of % of the target) and further to a maximum of 150% (in case of achievement of more than 110% of the target). Management in the beginning of each year, which in the aggregate determine the member s entitlement in respect of one fourth of the target bonus (e.g. where five individual targets are set, each target will determine the entitlement to 5% of the target bonus). Such individual targets comprise both quantitative and qualitative targets. While individual quantitative targets can only be achieved or not achieved, the qualitative targets admit of partial achievement in steps of 33, 50, 67 and 100%, leading to respective percentages of entitlement. Example: If, in a particular year, the Orascom Group has achieved 98% of its target for EBTDA, and an individual member of Executive Management has, out of five individually set bonus targets, achieved three, failed to achieve one, and achieved one (qualitative) target to 50%, then his bonus entitlement will be as follows: (80% of 75%) + (70% of 25%) = 60% % = 77.5% of his target bonus. 89

93 7.6. Shareholders participation Voting rights and representation restrictions With the exception of restrictions on the transferability of shares (see Section above), there are no limitations on voting rights. At a general meeting of shareholders, each share entitles its owner to one vote. By means of a written proxy, each shareholder may be represented by a third person who need not himself be a shareholder. According to Art. 10 of the Articles of Incorporation, the holders of at least 25 percent of issued shares must be present or represented at an ordinary general meeting of shareholders for the meeting to be validly constituted. Similarly, holders of at least 50 percent of issued shares must be present or represented at an extraordinary general meeting of shareholders for the meeting to be validly constituted. Resolutions are generally passed, in the case of an ordinary general meeting of shareholders (except for matters subject to a higher majority requirement by law), with the absolute majority of the shares represented. In the case of an extraordinary general meeting of shareholders, resolutions are generally passed with a majority of two thirds of the shares represented. Resolutions relating to the following matters, however, require a majority of 75 percent of shares represented at the meeting: (a) capital increases pursuant to art. 650 CO and reductions of the share capital pursuant to art. 732 CO; (b) dissolving the Company before its termination date or changing its duration; (c) changing the Company s purpose; and (d) any merger with another company Convocation of the general meeting of shareholders An ordinary general meeting of shareholders is to be held annually following the close of the financial year. It is called by the Board of Directors or, if necessary, by the auditors. Extraordinary general meetings may be called by the Board of Directors, the auditors, the liquidators, or by the general meeting of shareholders itself. One or more shareholders representing at least 10 percent of the share capital may request in writing that the Board of Directors call an extraordinary general meeting of shareholders. The request must state the purpose of the meeting and the agenda to be submitted. General meetings of shareholders are held at the statutory seat of the Company or at such other place as determined by the Board of Directors. Notice of a general meeting of shareholders is given by means of a single publication in the Swiss Commercial Gazette (Schweizerisches Handelsamtblatt) or by registered letter to the shareholders of record. There must be a time period of not less than 20 days between the day of the publication or the mailing of the notice and the scheduled date of the meeting. The notice of the general meeting of shareholders must indicate the agenda and motions by the Board of Directors Agenda Shareholders who represent shares with a par value of at least CHF 1,000,000 may request that an item be placed on the agenda. The request must be communicated to the Board of Directors in writing, stating the item to be placed on the agenda and the shareholder s corresponding motion, at least 45 days prior to the general meeting of shareholders Record date for entry into the share register In order to be entitled to participate at the 2011 ordinary general meeting of shareholders, a holder of registered shares need be inscribed in the share register as a shareholder with voting rights by 11 May Changes of control and defense measures Duty to make an offer The Articles of Incorporation do not provide for any opting out or opting up arrangements within the meaning of Art. 22 and Art. 32 SESDA Clauses of change of control No change of control clauses have been agreed upon Auditors Duration of the mandate and term of office of the lead auditor Since the foundation of the Company on 17 January 2008, Deloitte AG, Zurich, have been the statutory auditors with responsibility for the audit of the Company s non-consolidated and consolidated financial statements. The Company s subsidiary OHD is audited by Deloitte Saleh, Barsoum & Abdel Aziz, Cairo. The auditor in charge for the Company at Deloitte AG, Hans- Peter Wyss, took up office as of the 2008 financial year. A rotation cycle of 7 years is foreseen for the position of the auditor in charge. The Board of 90

94 7.9. Information policy Directors will propose to the ordinary general meeting of shareholders on 23 May 2011 to re-elect Deloitte AG, Zurich as the statutory auditors for the 2011 financial year Auditing fees Deloitte received the following fees for their services as the statutory auditors of the Company and the majority of Orascom Development Group companies on the one hand, and for non-audit services on the other hand: In CHF Audit Services 2,522,155 2,051,928 Tax Services 19, ,000 Public offering 329,344 - Other services - 19,000 Total non-audit services 349, ,000 Total fees 2,871,399 2,258, Informational instruments pertaining to the external audit The Board of Directors Audit Committee has the task of ensuring the effective and regular supervision of the statutory auditors reporting with the aim of ensuring its integrity, transparency and quality. In advance of each financial year, the proposed auditing schedule is presented to and discussed with the Audit Committee. After each audit important observations by the statutory auditors, together with appropriate recommendations, are presented to the Audit Committee (after discussions with the CFO) during its relevant meeting. Subsequently, members of the Audit Committee receive the statutory auditors management letter in final form. During the year, the statutory auditors are in regular contact with the chairman of the Audit Committee to discuss matters arising in the performance of their task. (e.g. during the 2010 financial year, they convened for four meetings with the Committee chairman, physically or in some cases by telephone conference) Based on these communications the Audit Committee discusses its impression of the integrity and effectiveness of the statutory auditors work, and issues a recommendation to the Board concerning the proposal to the general meeting of shareholders whether to re-elect the statutory auditors for the following year. In its assessment, the Audit Committee places particular value on demonstrated independence and willingness to identify and challenge assumptions underlying the financial reporting, and the timely completion of audits permitting the Company to comply with its reporting obligations and its corporate communications calendar. The Chairman, Vice Chairman, CFO, and Director of Investor Relations are responsible for communication with investors. In addition to personal contacts, discussions, presentations held throughout various road shows and investor conferences, the Company is planning its second Investor Day event in The exact date and further details on this event shall be announced in due course. The financial reporting system comprises of quarterly, interim (semi-annual) and annual reports. Consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) in compliance with Swiss law and the rules of the SIX Swiss Exchange. In addition, the Company utilizes electronic news releases to report the latest changes and developments to ensure equal treatment for all capital market participants. Communications Calendar Annual general meeting of shareholders: 23 May 2011 First quarter 2011 results: 06 June 2011 Second quarter 2011 results: 16 Aug 2011 Third quarter 2011 results: 16 Nov 2011 Further information and contact Investors and other interested stakeholders can find further information on the Orascom Development Group online at Direct links to the pages where news releases of the Company (including news releases issued pursuant to ad-hoc publicity rules) are available at Stakeholders may subscribe to the Company s alert service to receive news releases at Investors may also contact the Director Investor Relations: Mamdouh Abdel Wahab ir@orascomdh.com In the year under review, representatives of the statutory auditors participated in one meeting of the Board of Directors as well as in the Audit Committee meeting (in which the Company s internal auditor also participated). 91

95 Glossary of Terms AG Aktiengesellschaft (abbr. AG) is the German name for a stock corporation. ARR Average Room Rate is a statistical unit often used in the lodging industry. The ARR is calculated by dividing the room revenue (excluding services and taxes) earned during a specific period by the number of occupied rooms. AUT Austria BEL Belgium CHE Switzerland Company Orascom Development Holding AG. DEU Germany EBIT Earnings Before Interest and Taxes is an indicator of a company s profitability, calculated as total revenue minus total expenses, excluding tax and interest. EBIT is also referred to as Operating Earnings, Operating Profit and Operating Income. The indicator is also known as Profit Before Interest and Taxes (PBIT), and is equal to the net income with interest and taxes added back to it. EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization is an indicator of a company s financial performance, calculated as total revenue less total expenses, excluding tax, interest, depreciation and amortization. EBITDA is essentially net income with interest, taxes, depreciation, and amortization added back to it, and can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. EGY Egypt EGX The Egyptian Exchange is one of the oldest stock markets established in the Middle East. The Egyptian Exchange traces its origins to 1883 when the Alexandria Stock Exchange was established, followed by the Cairo Stock Exchange in 1903 FRA France GBR Great Britain GOP Gross Operating Profit means the profit of our hotel business after deducting operating costs and before deducting amortization and depreciation expenses. It excludes all costs related to non-hotel operations. Group Orascom Development Holding AG and its subsidiaries. Km 2 Square kilometer KPI Key Performance Indicators are financial and nonfinancial metrics used to help an organization define and measure progress toward organizational goals. KW Kilowatt M 2 square meter M 3 cubic meter MBA The Master of Business Administration is a master s degree in business administration. MCDR Misr for Central Clearing, Depository and Registry provides securities settlement and custody services in Egypt by applying central depository system, effect central registry of securities traded in the Egyptian capital market and facilitate securities trading on dematerialized shares. MD A Managing Director is the highest ranking executive role at companies depending on each company s organizational structure and delegated scope of work. MENA Middle East and North Africa MIS Management Information System Management Information System is a system or process that provides the information to manage an organization effectively. MIS and the information it generates is generally considered essential components of prudent and reasonable business decisions. Financial Accounting Systems and subsystems are one type of institutional MIS. MVA Megavolt ampere NATO The North Atlantic Treaty Organization is an intergovernmental military alliance based on the North Atlantic Treaty which was signed on 4 April The NATO headquarters are in Brussels, Belgium, and the organization constitutes a system of collective defense whereby its member states agree to mutual defense in response to an attack by any external party. NLD Netherlands NAV Net Asset Value is a term used to describe the value of an entity s assets less the value of its liabilities NGO A Non-Governmental Organization is a legally constituted organization created by natural or legal persons that operates independently from any government. In the cases in which NGOs are funded totally or partially by governments, the NGO maintains its non-governmental status by excluding government representatives from membership in the organization. POL Poland RevPAR Revenue Per Available Room equals average room rate (ARR) multiplied by average occupancy. RUS Russia SESTA Swiss Federal Act on Stock Exchanges and Securities Trading of 24 March 1995 (Bundesgesetz vom 24. März 1995 über die Börsen und den Effektenhandel, BEHG) SIS SIS SegaInterSettle AG provides securities settlement and custody services in the Switzerland. SIX Swiss Exchange The SIX Swiss Exchange is Switzerland s principal stock exchange and part of the Cash Markets Division of SIX Group. It operates several trading platforms and is the marketplace for various types of securities. The SIX Swiss Exchange is supervised by the Swiss Financial Market Supervisory Authority (FINMA). SVK Slovakia SWE Sweden TRevPAR Total Revenue Per Available Room is similar to RevPAR but also takes into account other room revenues e.g. food and beverage, entertainment, laundry and other services. UAE United Arab Emirates UKR Ukraine 92

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