ANNUAL REPORT. Value Creation

Transcription

1 ANNUAL REPORT 2011 Value Creation

2 Contents 1. Facts & Figures 2 2. Board & Management Statements Message from the Chairman Interview with the CEO CFO statement Focus for Business Segments Hotels Real Estate and Construction Town Management Other Segments Countries Egypt UAE Jordan Oman Switzerland Morocco Montenegro United Kingdom Romania Sustainability Social sustainability Environmental sustainability Economic sustainability Examples of sustainability in our towns Interview with the Head of Group Design & Destination Planning Corporate Governance Group Structure and Significant Shareholders Capital structure Board of Directors Executive Management Compensation, shareholdings and loans Shareholders participation Changes of control and defense measures External auditors Information policy Investor Information Consolidated Financial Statements 2011 Orascom Development Holding AG F Consolidated statement of comprehensive income F Consolidated statement of financial position F Consolidated statement of changes in equity F Consolidated statement of cash flows F Notes to the consolidated financial statements F-9 9. Financial Statements 2011 Orascom Development Holding AG 9.1 Income statement F Statutory balance sheet F Statement of changes in equity F Cash flow statement F Notes to the financial statements F Glossary of Terms 176

3 1. Facts & Figures 2011 Highlights Revenues by Business Segment Total Assets Shareholder s Equity (after non-controlling interest) Equity Ratio Total Revenues Chf 586 Million Total Revenues Chf 516 Million Total Revenues Chf 256 Million 136 Hotels Real estate and construction Land sales Town management CHF Million 1,886 2,093 2,083 CHF Million CHF Million Tours operations Other operations Total Revenues EBITDA EBITDA (Adjusted) 1 Property, Plant and Equipment (PP&E) Net Debt Net Debt/ PP&E CHF Million CHF Million CHF Million CHF Million CHF Million CHF Million Net Profit (after non-controlling interest) EPS (basic & diluted) Capital Expenditure Net Asset Value/ Share 2 CHF Million CHF CHF Million CHF Million Note: 1 EBITDA Adjusted for extraordinary items. Note: 1 Equity ratio is calculated by dividing shareholders equity (after non-controlling interest) by total assets 2 NAV/Share is calculated by dividing equity (after non-controlling interest) by total number of shares outstanding 2 Orascom Development Annual Report

4 Orascom Development at a Glance million m2 total area Orascom Development Holding AG (Orascom Development) is a developer of fully-integrated towns that offer hotels, villas, apartments, leisure facilities and supporting infrastructure. Listed on both the SIX Swiss and EGX Egyptian exchanges, Orascom Development focuses on the creation and management of living touristic towns as well as budget housing communities. The Group is present in nine countries: Egypt, Jordan, U.A.E, Oman, Switzerland, Morocco, Montenegro, the United Kingdom and Romania. Currently, the Group manages five operating destinations: El Gouna, the flagship project on the Red Sea Coast in Egypt, Taba Heights in the Sinai Peninsula in Egypt, The Cove in Ras Al Khaimah in the U.A.E., Haram City, a budget housing town on the outskirts of Cairo and Jebel Sifah, Oman Island, Fayoum, Makadi Bay as well as Qena Gardens in Egypt; Salalah Beach in Oman, Andermatt in Switzerland, Chbika in Morocco, Lustica in Montenegro and Eco-Bos in the United Kingdom. million m2 developed area In addition, we have three destinations in the pipeline where the master planning is either ongoing or to be developed: As Sodah Island and City Walk in Oman and Constanta in Romania. 19.0% Orascom Development has a majority ownership in four stand-alone hotels: Royal Azur, Club Azur and Zahra Oberoi in Egypt and Marina Town Plaza Hotel in Jordan. The Group also operates 28 hotels with 6,589 rooms and controls a land bank of approximately million m2. developed land Furthermore, the Group has nine destinations under development in which local teams are established to handle execution. These destinations include Amoun Egypt U.A.E. Oman Switzerland million m 2 million m 2 million m 2 million m Morocco Montenegro United Kingdom Romania million m 2 million m 2 million m 2 million m2 Operating destination The Cove Operating destination El Gouna Taba Heights Haram City Operating destination Jebel Sifah Developing destination Salalah Beach Developing destination Amoun Island Fayoum Makadi Bay Qena Gardens Developing destination Developing destination Developing destination Andermatt Swiss Alps Chbika Luštica Development Destination in the pipeline Destination in the pipeline As Sodah Island City Walk, Muscat Constanta Developing destination Eco-Bos Countries are listed according to acquistion date of the land bank. Annual Report Orascom Development

5 2. Board & Management Statements 2.1 Message from the Chairman Dear Shareholders, 2011 has been a truly challenging year for Egypt, the Middle East and the world as a whole. We have witnessed a number of unexpected changes on the political and economic fronts, all of which have had a profound impact on global business. The events in the MENA Region (Middle East and North Africa), which started early in the year, significantly impacted our operations. In Egypt and Oman, tourism demand dropped which affected economic growth. Nevertheless, our hotels managed to pick up the pace with higher room occupancies towards year end. In our real estate market, construction work in Egypt came to a near halt for almost 50 days during the first half of the year resulting in comparatively lower revenues and profits. Beyond the region, high volatility in international currency markets, a deepening of the European debt crisis and slower global economic growth in the second half of the year created additional challenges for the Group. Despite these harsh market conditions, we managed to achieve several milestones in our destinations. At our Swiss destination Andermatt, considerable construction and investment progress was achieved. We completed the shell of the Chedi hotel in November, one-third of the initial construction of the car-free village Podium and finalized the earthworks for the 18-hole golf course. Even with a robust Swiss Franc and a debate surrounding the development of the ski area, we were able to reach reasonable levels of sales and reservation contracts in Andermatt. We also launched our first hotel in Jebel Sifah; Oman, the Sifawy boutique hotel with 55 rooms and suites in September and are planning to launch the pre-sales of Lustica Bay, our new destination in Montenegro, by the second quarter of These developments continue to support our financial positioning and diversification strategy in the coming years. In order to reflect the broader presence of the Group and to separate the activities of the Executive Management and the Board of Directors, I decided to hand-over my duties as CEO of Orascom Development to Dr. Gerhard Niesslein as of the 1 st of November. Dr. Niesslein is a well experienced, broadly networked real estate expert who has served as a leader of various companies in Canada and Germany and previously acted as the CEO of IVG Immobilien AG, Bonn, a listed German real estate company. In his new position, he will lead the day-to-day business of the Group and its subsidiaries. I will keep my position as Chairman of the Board of Directors and focus on developing the long-term strategic goals of the Group. Finally, I would like to thank Amr Sheta, Vice Chairman and Co-CEO, on his substantial contribution to the growth of the Group, without his active role, the Group could never have developed so vigorously. Outlook The beginning of 2012 turned out to be challenging and I expect it to continue being so for the rest of the year. Nevertheless, I strongly believe in the company s performance and I am confident that we will be able to weather the storm and emerge stronger. I remain committed to the company through my capacity as the Chairman of the Board and worked to secure CHF 125 million in credit agreements earlier this year that will enable us, together with the existing cash reserves and credit lines, to finance all of our activities for the current year. Furthermore, I am also willing to secure additional funding to cover the 2013 investment program if required. The Group has a unique business model with a proven track record, which I believe can be applied in other parts of the world. In light of the current circumstances, we have adapted the business model to create the best long-term value possible for our shareholders and increase performance by identifying credible equity investors willing to partner with the Group on potential investments. Faced with challenges ahead and influenced by the need to change while adapting to new realities, we have to better manage our costs, become more efficient in what we do and become more effective in how we do it. If we are to remain leaders, we need to implement changes swiftly and effectively. On behalf of the Board of Directors and Executive Management, we would like to thank all our employees for their commitment and the huge efforts they put forward during this time of uncertainty. We also like to thank our clients and business partners for their confidence in our business model. Lastly, we wish to thank you, our shareholders, for the trust you have always placed in the Group, and we are prepared to deliver on that trust. Samih Sawiris Chairman 6 Orascom Development Annual Report

6 2.2 Interview with the CEO Why did you join Orascom Development Holding AG? For me, Orascom Development is a unique organization with a proven business model, an experienced management team and a land bank of about million m 2 that is still largely undeveloped. But, the destination portfolio today already consists of five fully-fledged towns and further destinations under development in nine countries. The Group also operates a total of 6,589 hotel rooms. What is your current role at Orascom? As CEO, I will lead the day-to-day business of the Group and its subsidiaries. What are your first impressions about Egypt? Egypt is a fascinating country with a rich history and a long tradition. I have met a lot of enthusiastic and interesting people here and I am optimistic that also the business environment will return to growth once the current situation subsides. Which areas are you planning to focus on over the next 6-18 months? Our main focus is to become more efficient and effective in what we do and to increase transparency. We are currently reviewing our process landscape, strengthening our Group-wide business practices and more clearly aligning roles and procedures. Another area would be securing further funding requirements for our destinations. Can you give some examples of what exactly you are planning to do? Yes, of course. In light of the current circumstances, we intend to focus more on the monetization of our land bank, to identify equity partners to convert our equivalent of land into a hotel ownership or joint venture and to more closely work with sub-developers. We are in the process of setting-up a matrix structure for the Group, with clear profit and support centers. We also simplified processes for staff members with more role specialization and defined responsibilities. Given the recent changes on the global economical and political side, we decided to assess not only our existing operations, but also our developments from a legal and a financial point of view. This should enable us to come up with several solutions under various scenarios for each destination. Additionally, we successfully prolonged the maturity of our debt facilities. What is your outlook for budget housing? We believe that the Group is well-positioned to explore new opportunities in the budget housing segment as the political environment in the MENA-region improves. We have an experienced team that has the expertise to build budget housing that can combine business profitability with a consideration of the economic welfare and development of societies. Any new expansion plans or joint ventures in the pipeline? Today, we have about 94 million m 2 of undeveloped land. This should be enough residual land to keep the Group growing organically for at least a decade. Therefore, we do not intend to add any new major developments in the near future. Gerhard Niesslein Chief Executive Officer 8 Orascom Development Annual Report

7 2.3 CFO Statement The political changes in the MENA-region, the slowdown of the world economy and the strengthening of the Swiss Franc all affected the performance of the Group during 2011; in particular as 70% of the financial statements are contributed from the Egyptian entities. Consolidated revenues accordingly declined by 50% to CHF million from CHF million in Next to the impact from the political and economical events, the strengthening of the Swiss Franc resulted in a 13.8% decrease in revenues. The operating results of the Group (EBITDA) stood at a loss of CHF 40.1 million as several extraordinary items, derived from the above mentioned events, occurred. These items in total amounted to CHF 82.8 million and include provisions (CHF 57.1 million), revaluations of investment properties (CHF 8.7 million), legal fees (CHF 5.0 million) as well as currency revaluations from the appreciation of the Swiss Franc (CHF 12.0 million). It is worth noting that more than 90% of these items are non-cash items. When adjusting for these extraordinary items, Group EBITDA was CHF 42.7 million, corresponding to an EBITDA-margin of 16.7% (2010: 34.5%). MCHF Balance sheet Total assets on the balance sheet remained broadly unchanged at CHF 2,083.2 million compared to CHF 2,093.4 million in Cash and cash equivalents decreased from CHF million to CHF 79.4 million in 2011 in connection with the construction work of real estate units (construction work in progress) that are either contracted or sold or that are ready to be sold. As a result, the inventory balance increased from CHF million in 2010 to CHF million by the end of Of the total inventory CHF million relates to construction work in progress. On the liability and equity side, the drop of shareholders`equity (after non-controlling interests) of CHF million resulted from three main components: the losses from the continued operations of CHF 69.7 million (net loss), exchange rate differences of CHF 17.6 million and revaluation of assets available for sale of CHF 34.7 million. Financing As of 31 December 2011, the net debt position of Orascom Development stood at CHF million, almost doubled when compared to 2010 (CHF million). While in 2010, the Group successfully concluded rights issue with the proceeds of CHF million, that reduced the net debt position considerably, in 2011 the increase of it indebtedness mainly stems from higher real estate inventory (plus CHF millon). The high inventory will generate a part of our future cash inflow, once the real estate units are sold. The Group is working on several financing facilities to fund expansions of hotels in Oman, Switzerland and Egypt. During 2011, Orascom Development succeeded to prolong its debt repayments. Additionally, we are currently working on restructuring our debt to further optimize the cash positions of the Group. In order to serve the long-term vision of the company, we will increasingly focus in our daily business on the functions of reporting, budgeting and controlling. Furthermore, we intend to improve our finance-related IT tools. Mahmoud Zuaiter Group Chief Financial Officer EBITDA Provisions Investment Reported properties Currency revaluations Legal Fees EBITDA Adjusted* Reported net loss (after non-controlling interests) amounted to CHF 69.7 million (2010: profit of CHF 94.9 million). Note: 1 Group net debt divided by P,P&E 10 Orascom Development Annual Report

8 2.4 Focus for 2012 Corporate Initiatives Our proven business model is based on the acquistions of untapped land and the development and management of fully integrated towns. At the heart of our operations, and thus a key long term value driver of our business model, is our land bank which we acquired in several jurisdictions. While we in essence remain committed to our business model the global environment has materially changed during the last couple of years. Among the most popular events, we faced the headwinds derived from the global financial crisis since 2008, the deepening of the debt crisis in Europe, the strengthening of the Swiss Franc and the unexpected changes on the political fronts in the MENA-region during We still feel the effects of these events, having witnessed a reduced demand for real estate and tourism among our destinations which has lead to lower profit and cash generation. Therefore, we created different initiatives to tackle the current challenges derived from the changed environment. The overall goal of these initiatives is to become more efficient and effective and to increase internal and external transparency. The key initiative is the comprehensive reengineering of the whole Group. In the framework of this reengineering, we establish a more common understanding of the business we are in. We reviewed our process landscape and optimized the related business, management and support processes. We focus on the group wide standardization of all our processes, organizational structures and tools. In addition we aligned the roles, objectives and responsibilities across the Group and improved our management principles. The implementation of the results of all these efforts in the daily business is a key factor of success for the reengineering. Hence the respective training of our staff as well as a process based management system which is accessible via our Intranet are important elements of the initiative. Raymond Cron SVP European Destinations & Responsible for Corporate Development What has changed in your development approach? Orascom Development`s land bank remains the main value driver. Today, we have 94 millon m 2 available for development. In 2012, Orascom is at a crossroad from a strategic standpoint. Over the last years, our land bank has significantly increased due to our new destinations in Morocco, Montenegro, the UK and Romania, which together added some 30 million m 2. As a consequence of this increase, we had to assess first of all the option of shifting towards a more Capital Light Strategy ; which basically means a higher share of sub-developers in our destinations. Secondly, we are in the process of internally analyzing various options to better monetize our land bank. What type of investment opportunities could you offer? Orascom as a destination and a community developer provides all activities and components associated with those life centres. Our destinations, which have a strong tourism profile include hotels, leisure infrastructures, residential real estate and necessary amenities to support our residents day to day life (such as schools, shops, restaurants and/or hospitals). All of these could create investment opportunities for third-parties. What type of investors do you want to attract? First and foremost investors who are interested to invest in undeveloped locations that are also supportive of sustainable solutions respectful of the environment. Second, the capital needs to be mid to long term as we are in the ground up business which takes time to plan, build and mature. Third, investors that like to invest in residential real estate itself, hotels, land or real estate associated with infrastructure. Finally, capital that can actively participate in our effort by contributing its ideas and past experiences with a strong penchant for low density construction. What do investors get at this stage? Beyond deploying capital, they get access to scarce land resources and they can benefit from the know-how, brand and experience of Orascom. For example, if an investor is interested to fund or co-fund a hotel, we can provide them with access to our portfolio of international hotel management companies. Co-investors as well also particpiate in the appreciation of the land value, next to an attractive return, once the project is successfully developed. A further benefit is that the investor usually can be provided with an existing highend infrastructure such as a marina, golf course or a hospital. Where are your Destinations that are attractive for investors? We are actively developing in five countries: Switzerland and Montenegro in Europe as well as Oman, Egypt and Morocco. Julien Renaudperret Chief Development Officer 12 Orascom Development Annual Report

9 3. Business Segments 3.1 Hotels and these will only be reallocated to Egypt over time. The occupancy rate in El Gouna reached 57% in December 2011, whilst these occupancies are relatively low when compared to previous periods; it is higher than in other Egyptian destinations due to El Gouna s more secure environment. Taba Heights was able to take advantage of the fact that its primary market is the United Kingdom; representing approximately 50% of all room nights, where no travel bans were issued. Furthermore, the hotel Le Maison Blue, a 12-suite luxury boutique hotel in El Gouna became operational during Hotel rooms Rooms 6,479 6,509 6,589 Oman Jordan UAE Egypt Occupancy rate 69% 76% 56% Oman Jordan UAE Egypt Our hotel operations in Jordan were heavily impacted as a result of the Syrian conflict, which is continuing to affect this market s performance ,000 3,000 5,000 7, On the other hand, The Cove Rotana Resort in the United Arab Emirates witnessed an improvement in occupancy rates as tourists perceived the Gulf as a safer region and accordingly redirected their vacations to UAE destinations. In Oman, we opened one new hotel. In Jebel Sifah, the Sifawy marina boutique hotel was launched in September 2011 offering 55 rooms and suites. In Salalah Beach, the Juweira marina boutique hotel is planned to have its soft opening in 2012, offering a total capacity of 65 rooms and suites. TRevPAR 1 ARR 3 CHF Oman CHF Jordan UAE Oman Jordan UAE The political events in the MENA region had a prolonged impact on our hotel operations. While the year 2011 started with a record high revenue for the month of January, operations started to slow-down following the political changes that began on the 25 th of January Cancellations of room reservations and a rerouting of flights resulted due to the issuance of security warnings and travel bans by many of the Group s feeder markets. The year 2011 accordingly closed with revenues reaching CHF million, showing a decrease of 29% compared to 2010 (CHF million). Average Room Rates (ARR) decreased by about 12% year-on-year from CHF 65 to CHF 57, but remained stable at constant currencies. Occupancy rates lowered from 76% in 2010 to 56% in 2011 but the Group managed to keep its full year target, as communicated during the fourth quarter of 2011, to generate occupancies in the range of 55-58%. The hotels segment remained profitable in The segment results fell by 63% to CHF 16.4 million corresponding to a 12.0% margin (2010: CHF 44.5 million, 23.0% margin). The decline in revenues and profits is a combination of: (a) one month with virtually zero occupancy in El Gouna and Taba Heights during the first quarter of 2011, (b) pre-opening expenses for 80 new rooms opened in 2011 and (c) a shift of hotel guests away from five star to four star hotels. Regionally, hotel occupancies in Egypt collapsed in February and March and accordingly we had to temporarily suspend operations at a few of our hotels. Nevertheless, occupancy rates began to slightly improve throughout the year following the removal of most travel bans. However, the number of flight connections remains subdued as capacities have been shifted to other destinations In total, Orascom`s number of operating hotel rooms increased from 6,509 rooms last year to 6,589 rooms by the end of As a Group, our target is to increase our rooms occupancy rates by developing stronger ties with selected tour operators, continuing to develop our internet sales network by selecting new third-party websites to increase online visibility and booking possibility, and increasing visibility through integrated direct booking on travel websites through Synxis. One of the main objectives for the coming period is to increase the number of guest arrivals from United Kingdom, Eastern Europe, Russia and Ukraine. Claude Chesnais Head of Segment Hotels Egypt The hotels segment KPIs, as of 31 December 2011 Number of Rooms Occupancy Rate Egypt TRevPAR 1 (CHF) Hotels I- Hotels Egypt El Gouna 2,694 2,706 76% 57% Taba Heights 2,365 2,365 78% 54% Other hotels, Red Sea % 55% Egypt subtotal 5,887 5,901 78% 55% Other regions The Cove, UAE % 77% Marina Plaza, Jordan % 47% Sifawy, Oman % Other regions subtotal % 63% Total hotels 6,482 6,562 76% 56% II- Floating hotels Floating hotels, Egypt % 25% Floating hotels subtotal % 25% Total hotels segment 6,509 6,589 76% 56% ARR 3 (CHF) 1 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 The Group openend the Sifawy Hotel in September 2011 with 55 rooms. 3 ARR: Average Room Rate 14 Orascom Development Annual Report

10 3.2 Real Estate & Construction REAL ESTATE OPERATING REVIEW The effects of the MENA-region on business operations were inevitable and took their toll on the real estate segment s business performance during For our real estate and construction segment in total, which next to the tourism real estate includes our Budget Housing activities, the year 2011 accordingly closed with revenues reaching CHF 67.0 million, showing a decrease of 71% compared to last year (CHF million). The main reason for the reduction in revenues was that construction works came to a near halt for about 50 days during the first half of the year in Egypt and Oman. Hence lower revenues were achieved, as the company can only realize real estate revenues when the actual construction work is carried out. The segments result fell 95% from CHF million (49.1% margin) to CHF 5.1 million (7.7% margin). Sales activities 2011 In terms of actual sales numbers from 2011, the Group achieved a sales level of CHF million (CHF million residential real estate and CHF 16.5 million Budget Housing), which compares to CHF million sales during 2010 (CHF million residential real estate, CHF 95.4 million Budget Housing). On a more positive side, contracted units of our Andermatt Swiss Alps project in Switzerland (ASA) increased by 13% year-on-year from CHF 62.7 million in 2010 to CHF 70.9 million in The split of real estate buyers by nationality in 2011, when measured by revenue was: 53% Switzerland, 20% Middle East, 5% each from Germany and the UK and the remaining 17% from other European buyers. Real Estate sales in Egypt were severely affected as a result of security concerns, a more hesitant attitude from foreign and local investments, a 55-day halt in the stock market, and a complete halt in construction for almost two months approximately 25% of annual working days lost. In total, Orascom sold about CHF 42.8 million worth of real estate including CHF 16.5 million from budget housing versus CHF million last year (including CHF 95.4 million from budget housing). A delay in construction in Oman as a result of the material shortage resulted in almost 50% sales decrease over the year reaching a level of CHF 13.3 million (2010: CHF 24.1 million). It is also worth mentioning that foreign exchange rate fluctuations had a significant negative impact on the Group s sales in the country. During the first quarter of 2011, Orascom Development launched the first phase of real estate sales in Chbika, Morocco. In 2011, the company sold 31 units with a value of CHF 4.5 million. Furthermore, we commenced the construction of the town marina during the previous year. Deferred income (deferred revenue) in 2011 increased compared to last year In compliance with IFRS (International Financial Reporting Standards) requirements, Orascom Development treats deferred income from the sale of real estate as a balance sheet position under other current liabilities (net of receivables). Deferred income relates to sold and contracted real estate units that are either under construction or where construction will be carried out in the following years. The corresponding revenues from deferred income will be recognized in the profit and loss statement in 2012 and the years after. By the end of 2011, the balance of deferred income amounted to CHF million and is reconciled as follows: (1) 2011 opening balance amounted to CHF million, (2) plus the total value of contracted units in 2011 of CHF million, (3) less the value of real estate revenues recognized in 2011 and other items, where total revenues amounted to CHF 67.0 million; of which CHF 53.2 million were recognized from the deferred income balance, CHF 8.0 million from extra works, and CHF 5.7 million recognized from third party construction contracts, (4) less the value of cancelled real estate units which amounted to CHF 39.2 million, where Switzerland accounted for CHF 28.1 million and the balance from cancelled units in Oman and Egypt. Due to the net present value calculation of the closing balance of deferred income for 2011, a balance of CHF 4.9 million was transferred to discount account receivable and notes receivable. Inventory As a Group, our primary focus in 2011 was to continue sale s efforts and increase cash collection. The main catalyst for this initiative was pushing the sale of built inventory across all destinations and in El Gouna specifically. Accordingly, we instituted cash programs for our clients, offering discounts for paying their outstanding balances before their due date. We also fixed the CHF rate for the Andermatt Swiss project making it all the more attractive for our customers and investors especially in Europe. Abdallah El Nockrashy Head of Segment Real Estate Total value of contracted units CHF Millions Switzerland Average selling price CHF/m 2 (residential) CHF 3,024 4,432 5,255 Oman Moroco Egypt The Real Estate KPIs, as of 31 December 2011 Average selling price CHF/m 2 (budget housing) CHF Total number of contracted units Contracted units Average selling price CHF/m 2 3,456 3, Switzerland Moroco Average selling price CHF/m 2 (total) Switzerland Oman Moroco Egypt Oman Egypt Total value of contracted units (CHF millions) ,000 8,000 12,000 16,000 20,000 Number of contracted units Hotels I- Egypt El Gouna 3,428 2, Fayoum 1,070 1, Haram City , Makadi , Egypt subtotal , Ii- U.A.E. The Cove 2, Iii-Oman Jebel Sifah 2,928 2, Salalah Beach 2,545 2, Oman Subtotal 2,724 2, Iv- Switzerland Andermatt Swiss Alps 16,373 17, V- Morocco 1 Chbika - 1, Total real estate 1,071 1, , Total real estate (Excluding budget housing) 4,432 5, Real Estate sales in Morocco started in Orascom Development Annual Report

11 3.3 Town Management 3.4 Other Segments Total revenues 2011: CHF 17.7 million 2010: CHF 17.5 million Land Sales Total Revenues 2011: CHF 2.3 million 2010: CHF 10.2 million Segment Result 2011:CHF 0.3 million losses 2010: CHF 2.2 million Occasionally, the Group sells land where there is no additional development commitments. Revenues from such sales are included in our land sales segment. Land sales segment accounted for only 1% from our total revenues during 2011 (2010: 1.9%). Segment result 2011: CHF 6.6 million losses 2010: CHF 2.5 million Tours Operations Total Revenues Segment Result Within Town Management, 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 in charge 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. The term 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). Developments and performance in 2011 We were able to increase the segment revenues in comparison to 2010 by 1% to CHF 17.7 million. However, the segment result decreased to CHF 6.6 million losses versus a CHF 2.5 million profit last year. The main reasons for the decrease of the segment result were as following. First of all, a new destination usually needs two to four years until it becomes operationally break-even. During 2011, the segment Town Management for the first time included the destinations Jebel Sifah and Salalah Beach which hardly provided any revenues, but a substantial amount of costs. In addition in our destination The Cove, U.A.E we paid a low single digit million amount for an increased use of electricity. We were challenged with the maintenance costs needed to retain the quality of offerings within our destinations as opposed by limited cash collections. A new Electricity grid with 100% power from the Government was introduced in El Gouna, Egypt. Accordingly we disconnected the diesel generators that were previously used and installed the new electricity grid through which we should receive cleaner electricity. The prior connection had a cost of CHF 10 million designed for 100 MV amperes of which 50 are already connected and therefore, with the newly introduced grid, we expect to reduce the associated running costs during future financial periods. Another milestone was realized during 2011 by signing an agreement with the renowned Troon Golf; the leader in upscale golf course management, development and marketing, to manage two of our golf courses in El Gouna and Taba Heights in Egypt. Our most recent project was a joint cooperation with the German Technical University Berlin, which is setting up a satellite campus as an external research department. In January 2012, we officially launched our TU Berlin Campus in El Gouna, which should be ready for use as of April 2012 with master courses commencing in October During 2012, we intend to focus on improving the service quality to our clients whether it s a hotel guest, real estate buyer or a member of staff. Hamza Selim SVP Destinations Management 2011: CHF 2.3 million 2010: CHF 28.5 million Other Operations Total Revenue 2011: CHF 30.5 million 2010: CHF 37.8 million 2011: CHF 0.1 million losses 2010: CHF 3.0 million Until June 30, 2010, the Group held a controlling stake in the Garranah tours operations companies. Following the sale of 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 0.9% of our total revenues in the financial period ending 31 December 2011 (2010: 5.5%). Segment Result 2011: CHF 0.3 million 2010: CHF 23.4 million The segment result in 2011 was CHF 0.3 million compared to CHF 23.4 million in The positive contribution in 2010 from the revaluation of the investment properties in Mauritius and the units rented in El Gouna (total CHF 14.1 million) did not take place in The value of the project in Mauritius in 2011 remained the same as in 2010, while the properties in El Gouna (rented restaurants, shops and apartments) reduced by CHF 4.7 million. As of the end of 2011, the total value of all investment properties owned by Orascom Development was CHF 76.4 million, compared to CHF 78.4 million in Type of service (CHF Millions) % Change Mortgage (real estate financing) (5%) Sport (golf) (50%) Rentals (23%) Hospital services (25%) Educational services (1%) Marina (21%) Limousine (29%) Laundry services (34%) Leasing % Others (81%) Total segment revenues (47%) Intersegment revenues (eliminations) (46.7) (14.4) (69%) Total revenue from external customers (19%) 18 Orascom Development Annual Report

12 4. Countries Introduction Orascom Development s strategy is based on the creation of value in its land bank for the medium to long term. To that end, we accumulate large tracts of land with enough space to develop self-sufficient communities and towns. To date the Group has secured, subject to certain conditions, land banks of approximately 116 million m 2 in several jurisdictions. Orascom Development holds its undeveloped land banks primarily by way of contractual rights or usufructs with the option to acquire legal titles. 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 well-established 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 self-managed 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 hospitals and water desalination facilities) are owned and operated by majority-owned subsidiaries of the Group or rented out (such as schools). Destinations The Group has developed five fully-integrated destinations 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 budget housing community of Haram City (Greater Cairo area, Egypt). Each of these destinations has the complete infrastructure of a self-sufficient town. Recently, Jebel Sifah commenced operations adding a new operating destination. In addition, nine destinations including tourist towns and budget housing communities are currently in various stages of development and planning in Egypt, Oman, Morocco, Switzerland, Montenegro, and the United Kingdom, and also three destinations in the pipeline in Oman and Romania. Furthermore, we have participations in other hotels in development in Jordan and Egypt. The following table provides an overview of our portfolio of destinations, in operation and under development, and in the pipeline as of December 31, Destinations Portfolio Destination Name Egypt Destination Status/ Type Development start 1 (year) Total area (million m 2 ) Developed (million m 2 ) Undeveloped (million m 2 ) Developed (%) El Gouna Operating % Taba Heights Operating % Amoun Island Developing % Fayoum Developing 2007/ % Makadi Developing % Haram City Operating % Qena Gardens Developing % Royal Azur Club Azur Oberoi Zahra Other Hotel Other Hotel Other Hotel UNITED ARAB EMIRATES The Cove Operating % Jordan Tala Bay Other Hotel 2002 OMAN Jebel Sifah Operating % Salalah Beach Developing % As Sodah In the pipeline % City Walk In the pipeline % SWITZERLAND Andermatt Developing % MOROCCO Chbika Developing % MONTENEGRO Lustica Developing 2012E % UNITED KINGDOM Eco-Bos Developing 2013E % ROMANIA Constanta In the pipeline % Total % Notes: 1 Year in which the master plan is deemed final by the Group (E= estimates). 20 Orascom Development Annual Report

13 Operating Destination El Gouna, Egypt Our flagship development is a self-sufficient town built on 10 km of Red Sea coastline. The destination 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, child daycare facilities, a library linked to the Bibliotheca Alexandrina, a branch of the American University in Cairo, and TU Berlin University that should be operational in October 2012, 419 outlets including restaurants, bars, shops, various services, and a vibrant town center. The Group has a 100 percent stake in El Gouna The town started as a small collection of villas sold only to Egyptian citizens. Today, El Gouna is the premier tourism destination on the Red Sea coast. 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 financial year 2000 up to CHF 2,762/m 2 by the end of Buyers come from all over the world, with foreign nationals representing approximately 56 percent of homeowners. El Gouna has eighteen 1 operating hotels with a total capacity of 2,897 rooms. Of these, seventeen hotels are controlled by the Group with a total capacity of 2,731 rooms. Hotels accommodate holiday guests from all over the world, primarily from Europe. The following chart highlights the nationalities of hotel guests for all 12 months ending 31 December The primary requirements of a modern town are fresh water, electricity, communications, and roads. The Group has invested in all these forms of infrastructure to make El Gouna more attractive to residents and visitors. All the infrastructure is owned and operated by the Group. This currently includes a water desalination facility, sewage plants with a capacity to treat approximately 15,000 m 3 / day from El Gouna and Hurghada, an electrical power generator to provide part of the town s electrical needs in the event of a supply failure, and approximately 5,000 telephone lines and Wi-Fi network coverage for all hotels. Nationality of hotel guests during % 3% 29% 3% 4% 6% 8% 16% 9% 10% Egypt United Kingdom Switzerland Germany Netherlands Sweden Belgium France Russia 36.8 million m 2 total land area 14.7 m 2 developed area 18 operating hotels 2,897 rooms 419 outlets 22,000-24,000 permanent residents 1 As at 31 December 2011, El Gouna s 18 hotels offered a total capacity of 2,897 operating rooms, of which 17 hotels are controlled by the Group, offering a total capacity of 2,731 rooms. This excludes El Khan, 25 rooms, one star hotel, which is 100% owned by the Group and is leased to third party. 22 Orascom Development Annual Report

14 Operating Destination Taba Heights, Egypt Taba Heights is the Group s second fully self-sufficient resort town, developed after the successful model of El Gouna. The destination 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 Group s second integrated development on the shores of the Sinai Peninsula. Natural beauty and access to regional tourism destinations sets Taba Heights apart. 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 102 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. 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. There are six operating hotels with a current capacity of 2,365 rooms. To accommodate holiday guests from all over the world. Taba Heights has the necessary infrastructure of a modern town, all owned and operated by Orascom Development. It includes a water desalination facility and two town sewage treatment plants. The town is self-sufficient in terms of power supply with an installed capacity of 16 MVA of electrical power generation. Communication infrastructure includes approximately 1,000 telephone lines and a Wi-Fi network covering the whole development including hotels. Nationality of hotel guests during % 4% 4% 5% 7% 14% 27% 18% 10% 12% United Kingdom Egypt Poland France Belgium Ukraine Israel Russia Jordon 4.3 million m 2 total land area 2.8 million m 2 developed area 6 operating hotel 2,365 rooms 102 outlets 4,000 Permanent residents 24 Orascom Development Annual Report

15 Operating Destination Haram City, Egypt Haram City During the last quarter of 2006, ODH launched budget housing, a business strategically focused on developing affordable income housing throughout Egypt. To facilitate the purchase of budget housing units, we have also established Tamweel Mortgage Finance Company Realizing our vision to develop the first integrated budget housing developments in the region. Now, Haram City is a growing and thriving community. Haram City has been allocated proximally 4.2 million m 2 of land in 6 th of October city in the vicinity of Cairo where it currently plans to build 30,000 budget housing units over the next decade. 7,608 units have been delivered in the first phase of construction, including 649 units delivered in Regarding the withdrawal of land, please refer to the footnote 45 of the financial statements. 4.2 million m 2 total land area 1.9 million m 2 developed area 10,000 Completed units 30,000 Planned units 90 Outlets 26 Orascom Development Annual Report

16 Developing Destination Developing Destination Developing Destination Amoun Island, Egypt Fayoum, Egypt Qena Gardens, Egypt 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 destination 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 destination will also feature private pools, an exquisite restaurant, lounge bar, wine cellar and private library. In 1998 Orascom Development was awarded land acquisition rights by the Government of Egypt for a residential real estate destination in El Fayoum Oasis. El Fayoum is located approximately 100 km southwest of Cairo. Total land parcels secured cover approximately 1.3 million m 2. The Al Roboua project in Fayoum offers 36 standalone villas in traditional Nubian style with all supporting amenities, covering a total area of 0.07 million m 2. In 2010, OHC was allocated 0.8 million m 2 of land in the Qena governorate. The destination is planned to offer an additional 8,000 basic affordable housing units. The destination will be developed as a fully-integrated town complete with school, clinics, shopping areas, and entertainment venues. In 2011, there have been 366 completed units with a contractual delivery date in During the third quarter of 2008, the Group launched Byoum, a second real estate project in El Fayoum Oasis. The destination 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 Regarding the withdrawal of land, please refer to the footnote 45 of the financial statements. 1.3 m 2 total land area 0.6 m 2 Developed land area 0.8 m 2 total land area 22,000 m 2 total land area Group LVMH hotel partner 38 luxurious suites planned 62 Guest rooms planned 301 Residential rooms planned m 2 Developed land area 8,000 planned residential units 28 Orascom Development Annual Report

17 Developing Destination Other Hotel Other Hotel Makadi, Egypt Royal Azur & Club Azur, Egypt Zahra Oberoi, Egypt Grand Resorts Royal MAKADI BAY Club Club MAKADI BAY The destination is 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 destination is planned to offer a total capacity of approximately 1,850 residential units along with a number of amenities and facilities such as a medical complex, a school and a commercial area, 138 units have been delivered so far with 76 of which delivered in In Makadi, ODM (Orascom Development Management, a wholly owned subsidiary of Orascom Development) acts as the project manager in charge of the development, sales, marketing and community management. 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 830 guest rooms. Royal Azur, a 4-star hotel, offers 491 rooms, while Club Azur, a four star hotel, offers 339 rooms. The Oberoi Zahra offers the highest standards of hospitality and is amongst the most spacious accommodations on the Nile, with 27 cabins. The Oberoi Zahra is the only boat on the Nile with a full-service spa. Oberoi Zahra was ranked the best Nile cruiser on the river Nile by the Egyptian Ministry of Tourism during million m 2 total land area 1,850 residential units planned 30 Orascom Development Annual Report

18 Operating Destination The Cove, U.A.E In the U.A.E., the Cove represents the Group s first development in the Gulf. Homes, businesses, and a resort mark the successful application of the Group s business model. Our operational destination 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 destination is fully complete, offering 190 residential units with easy access to leisure and town facilities, including shopping malls, international schools and hospitals within Ras Al Khaimah. The 5-star Rotana Resort & Spa soft opening took place in early 2009 with 346 rooms. The second phase was completed during the fourth quarter of 2009 with the delivery of 78 residential apartments. Nationality of hotel guests during % 2% 3% 13% 18% 62% United Arab Emirates Germany Russia Switzerland Austria Others 0.3 million m 2 total land area 0.28 million m 2 developed area 268 total residential units 32 Orascom Development Annual Report

19 Other Hotels Tala Bay, Jordan Laying the foundation for the Group s first experience in the region outside Egypt. Tala Bay becomes the exciting, exquisite gateway to the Northern Red Sea. Tala Bay was the Group s first regional roll-out of its model outside of Egypt. 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 manmade 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 destination s masterplan 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 260 rooms. 260 Rooms 34 Orascom Development Annual Report

20 Operating Destination Jebel Sifah, Oman Breathtaking scenery creates the backdrop for hotels, residences, and a fully-integrated community. Premier dining, first-class hotels and a stunning marina allow Jebel Sifah to redefine luxury in Oman. 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 destination 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. In the long term, we expect to add to the hotel capacity to reach a target of 800 rooms. World-renowned hotel operators will manage the town s hotels, such as Rezidor s Hotel Missoni (250 rooms) and Four Seasons (200 rooms). During 2011, we launched the Sifawy Boutique hotel offering 55 hotel rooms; we also completed the construction of 18 apartment blocks and we developed out of which 92 apartments and 12 villas. The development of the marina was also completed with a berthing capacity to hold 84 boats in water and 120 on land. The destination is now operating with several restaurants, shops, pharmacies and mini markets are now open serving our clientele s needs. 6.2 million m 2 total land area 0.6 million m 2 developed area 800 planned hotel rooms 950 residential units planned 36 Orascom Development Annual Report

21 Developing Destination Salalah Beach, Oman Set amongst a collection of manmade lagoons with hotels and homes. The natural setting for Salalah is one of the region s most beautiful locations. Situated in the southern part of Oman approximately 1,000 km from Muscat and 15 km from the Salalah Airport, the destination 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 (391 rooms), Rotana (399 rooms), and ClubMed (398 rooms). Scheduled real estate includes 1,150 units as well as other town features. In 2011, the construction of the Juweira boutique hotel offering 65 rooms was completed and is planned to have its soft opening during May The marina apartment blocks construction is nearing completion and is expected to be finished in As of December 2011, we have developed 9 villas and 43 apartments. We also started the construction of the marina completing 10 berths out of its planned capacity of holding 174 boats in water and 120 on land. The marina is expected to be operational in Moreover, the Rotana Hotel; is currently under construction were about 40% of the construction work is completed million m 2 total land area 0.7 million m 2 developed area 1,300 planned hotel rooms 1,150 residential units planned 38 Orascom Development Annual Report

22 Destination in the Pipeline As Sodah Island, Oman Destination in the Pipeline City Walk, Muscat, Oman As Sodah is an island with a surface 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 rooms consisting of 20 guestone bedroom 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 building. During 2009, the Group signed a management agreement with Cheval Blanc (Group LVMH) to operate this luxurious property. 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. 40 Orascom Development Annual Report

23 Developing Destination Andermatt, Switzerland Located in the heart of the Swiss Alps, Andermatt is the Group s first destination in Europe. With its Alpine beauty and modern amenities, Andermatt continues to grow into an luxurious mountain retreat. In Andermatt, a Swiss mountain village, 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 destination is planned to offer 490 apartments and 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 village s hotels, such as General Hotel Management Ltd (The Chedi Andermatt) and The Carlson 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 space. 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 and flood protection infrastructure, the podium, villas and the 18-hole championship golf course started construction. Considerable progress was also achieved in 2011, both in terms of construction and investment, with sales and reservation contracts totaling CHF 102 million. (sales: CHF 71 million, reservation: CHF 31 million) will be another important year for the development of the Andermatt Swiss Alps tourist resort with work across its various construction sites continuing. We will see construction begin on the first apartment building on the 46,000 m 2 Podium site as well as the first chalet, both of which will be completed by the end of At the luxury hotel The Chedi Andermatt, finishing touches will be made to both interior renderings as well as the external façade ahead of its official opening in December At the 18-hole on-site golf course, landscaping work and construction of the Golf Clubhouse will also take place. The course will be finished in the second half of 2012 and transferred to the operator, Andermatt Swiss Alps, where it will be used for test rounds in 2013 before officially opening to the public in The projected expenditures for 2012 is CHF 115 million. 1.5 million m 2 Project area 490 units in 42 buildings Apartments 6 4- and 5-star Hotels total Villas 18-hole championship Golf Course 35,000 m 2 Commercial space 42 Orascom Development Annual Report

24 Developing Destination Chbika, Morocco A new project is born on the picturesque shores of Morocco. Activity in Chbika is centered around a vibrant marina town. 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 directly in front of the Canary Island of Fuerteventura on the Atlantic Ocean, the destination s total land bank amounts to 15 million m 2. 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. In 2011, we finally received all related land acquisition permits, completed the set up of the construction site; with the Marina basin (back-fill of cover dams) nearly completed and Marina quay walls reached 50% completion. We also commenced the construction of the first mansion walls. The first phase is expected to be operational during the fourth quarter of million m 2 total land area 2,500 Hotel rooms planned 1,851 Residential units planned 44 Orascom Development Annual Report

25 Developing Destination Luštica, Montenegro An integrated destination on the shores of the Adriatic. Homes, hotels, two marinas, and a vibrant town center bring Lustica to life. 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 destination amounts to 6.8 million m 2 in Lustica, in the municipality of Tivat. The integrated destination is planned to offer 2,350 residential units, eight hotels with a total capacity of 2,200 rooms, two marinas on the Adriatic Sea, an 18-hole golf course, a Thalasso Center, commercial facilities, a town center, and basic infrastructure requirements. We will be launching the destination presales during 2012 along with the initial construction of the access roads, clearing and the marinas. Main construction works are expected to start in million m 2 total land area 2,200 Hotel rooms planned 2,350 Real estate units planned 46 Orascom Development Annual Report

26 Developing Destination Eco-Bos, UK Destination in the Pipeline Constanta, Romania Orascom signed a joint venture with Imerys for the UK s newest Eco-Town 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 The total land bank for the project amounts to 6.6 million m 2, divided over six plots1. 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 5,000 units, including affordable housing and upscale residential units as well as leisure and recreational facilities to include a 5-star hotel and a marina with approximately 125 berths in addition to 251,000 m 2 of commercial developments aimed at job creation in the region. The master planning and design process has been initiated. A detailed planning application 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. In 2009 the Group started land acquisition in Constanta, Romania. This destination will be our first budget housing project outside of Egypt. 6.6 million m 2 total land area 5,000 Eco-homes planned 2.5 million m 2 total land area The initial Memorandum of Understanding was signed during September 2009 for 6.8 million m 2 but between then and final agreements 0.2 million m 2 was reserved due to mineral rights. Accordingly, the final agreement signed in May 2010 stated 6.6 million m Orascom Development

27 5. Sustainability Sustainability at Orascom Development Protecting the environment, respecting the social habits of the countries we operate in and safeguarding the sustainability of our developments is deeply rooted in our corporate culture. Gerhard Niesslein, CEO Orascom Development is dedicated to sustainability. As a major town developer with projects in several countries around the globe, the Group recognizes the significant impact on the areas where it operates. These projects are designed to work over the long-term, growing over time and slowly becoming prosperous communities. Therefore, as part of overall strategic planning as well as daily decision-making, the Group implements a range of sustainable practices in all fields to ensure that projects are protected for the future and conserve the pristine natural environment in which the Group operates. In all Group projects and developments actions are taken based on the assessment of three main areas of sustainability: Social Environmental Economic The following explanations show how the principles of sustainability are implemented in our daily business. Enviromental Protection Social Considerations Economic Aspects Sustainable Communities Social Bearable Equitable Environmental Viable Economic 50 Orascom Development Annual Report

28 5.1 Social Sustainability Social vision The Group s social vision is to integrate local communities, customers and employees, engaging them in the numerous activities and development opportunities available and creating lively communities in which welfare, intercultural understanding and a quality lifestyle become standard. The Group therefore focuses on a holistic development approach. Projects do not simply include homes, but also are completed with the infrastructure to serve the basic needs of the residents as well as the surrounding community. After the construction process is finished, the Group continues to be involved by conducting routine maintenance of town services, implementing certification schemes that provide checklists to ensure that the level of quality provided is never compromised. Beyond basic services, developments also provide homeowners with a wide array of premium quality services and amenities including international schools, hospitals, and research centres to state of the art marinas and hotels. The aim of these efforts is to ultimately develop sustainable communities. This requires that everyone, from corporate employees to the local population, gets involved in our projects as responsible contributing members. Through creating jobs, engaging in social causes, educational initiatives, cultural activities and social welfare, the Group ensures that every sector in the community benefits. Unified code of conduct The Group has a unified code of conduct that all employees must adhere to, part of a handbook prepared according to international standards. The Group is also guided by the principles of sustainability in the selection, development, training and management of employees. Employee Turnover The turnover rate was reduced in 2011 as a result of the outcome of exit interview surveys, loyalty programs, and improving staff recognition. Work Opportunities The group offers attractive career opportunities to locals in each destination, aimed at improving the standard of living and reduce unemployment. New Talent Management Program The newly-established Talent Management Program is a systematic planning tool for the development and placement of nominated employees to fill future vacant managerial positions in the company. This program, which already includes eighty-five employees, prepares them for the development process and promotion through talent management training plans, competency development and job rotation methods. The Human Resources department then uses the program to fill key vacant positions with highly-qualified, competent and motivated employees. Behind the management of our talent are the educational institutions offered across the project portfolio. The quality of universities, schools and other training facilities selected for towns are nothing short of the best in their field, to ensure the ideal lifestyle residents desire. The Group then works to employ graduates of those institutions in various positions in the company. Training and Education The education department is especially devoted to human development with a focus on the young generations, the key factor in building for the future. Therefore, the department s main vision is to implement internationally recognised educational standards by integrating different partners in joint projects with local institutions in different educational fields. End Human Trafficking Now initiative Developed in partnership with the United Nations Global Initiative to Fight Human Trafficking, the Group acts as a main media sponsor for the End Human Trafficking Now Initiative to encourage world leaders and businesses to fight against human trafficking through abiding by ethical business standards. Technical University Berlin in El Gouna The Technical University of Berlin (TU Berlin) has recently setup a satellite campus and external research department in El Gouna. Three Masters programs are currently under development, all targeted to the sustainable development of modern urban communities: Energy Engineering, Urban Development and Water Engineering. The first group of students is expected to start courses in September American University of Cairo in El Gouna Together with the American University in Cairo, the Group has created a campus in El Gouna for students of the university. This campus serves as an on-site research centre where students can pursue their topics in different academic fields. The branch also offers a number of continuing education and language courses for residents and guests. Elementary Schools As part of providing comprehensive education, El Gouna is home to an elementary school that offers two programs, national and international. The international program, which currently has 210 students, teaches a British curriculum and is delivered by British-trained instructors. The program is accredited by the Council of International Schools (CIS) and the British Schools of the Middle East (BSME), and is also inspected by the British system to conform with British Schools Overseas standards. The national section is a higher English language school which delivers the Egyptian National Curriculum in English. Class sizes range from 30 children in some of the primary classes to 15 in the secondary classes. All children learn Arabic and also have the opportunity to choose a second foreign language, currently French or German, from Primary Level 3. The school has produced students at the top of their level from the Red Sea Governate in the past five years. El Gouna Hotel School The Group strongly supports those working in the tourism sector by offering education opportunities for those in the hotel business. According to German training regulations, students complete their education and are rewarded with a certificate from the Chamber of Commerce in Leipzig (Germany). With an average of seventy students graduating each year, the El Gouna Hotel School has proven to be a great success and presents a unique opportunity for students from around Egypt. The goals for the future include expanding the project to other craft-based industries, especially in the construction sector. Following the successful model of the El Gouna Hotel School, the Group plans to build an international hotel school in Jebel Sifah, Oman. The school will enable future generations of Omani hoteliers to benefit from a high standard of education and grant them the necessary skills and professionalism to enhance their careers % 8% Learning about Egypt`s heritage Spearheaded by the Egyptian Museum, the Children s Museum was created in partnership with Lego to develop a place for children to learn more about Egypt s Pharaonic history by interacting with pieces of history. Replicated monuments are available for children to explore and an added play area lets children build on their own % 8.9% 0% 5% 10% 15% Sponsorship of cultural centre in Egypt The Group also supports many cultural and educational projects, including the Egyptian Center for Culture and Art. Sponsored by El Gouna, the center encourages the diversity of Egypt s cultural scene, promotes intercultural understanding and presents Egyptian oral and traditional arts. 52 Orascom Development Annual Report

29 5.2 Environmental Sustainability 5.3 Economic Sustainability Creating Green Towns Since its establishment, Orascom Development has followed the vision of green towns which serve as touristic and recreational destinations in complete harmony with the surrounding natural environment. The Group does the utmost to manage the environmental footprint and make use of simple yet refined methods as well as sophisticated and state of the art technologies to make the Group s towns sustainable for future generations. Therefore, the Group has invested in green technologies and management methods to reduce waste and energy consumption by installing recycling plants, using renewable energy and energy efficient construction methods as well as developing and implementing environmental certification standards such as the Green Star Hotel Initiative 1. Establishment of an Environmental Network In 2011, the Group established an Environmental Network to enforce and monitor the environmental performance as well as the overall sustainability of the Group s destinations. This network ensures an effective presence to reach all employees in the destinations by assigning an environmental officer to each hotel as well as one main officer responsible for the entire destination. Aside from their regular tasks, these employees are encouraged to exchange best practices and experiences among each other and collectively improve the environmental performance of the Group. Sustainable Design As an eco-friendly company, Orascom Development works to meet international standards in the construction of buildings. In the design of hotels, homes and other buildings in destinations, the Group makes sure to implement as many environmental friendly design aspects as possible, depending on the feasibility and cost benefit analysis of such an application. As a result, most buildings include numerous facets of energy efficient construction methods that lead to lower energy consumption and a more pleasant climate. Clean Energy and Carbon Neutrality To conserve energy, all of the Group s communities take extra measures to cut back on their energy consumption by using the most efficient and up to date energy-saving techniques. The Group as a whole also focuses on the development of alternative sources of energy to reach carbon neutrality. This is achieved by working with local governments to receive energy from as many clean sources as possible. The Group is striving to invest in renewable energies to reach carbon neutrality in most of its destinations to further reduce the carbon footprint of towns from sources like thermal power or CO 2 free power. To speed up this process, Orascom Development is negotiating agreements and contracts with local governments to only receive energy from clean sources such as wind, solar, and hydro. Waste Management and Recycling In most of the Group s destinations, a waste management plant is developed on site. These plants use the majority of solid waste in the creation of compost, biogas, or are donated to local projects to create basic day-to-day items for the communities. The Group constantly works to minimize waste and increase recycling efforts to achieve a zero-waste target. Water Treatment Many of the Group s destinations are located in arid climates where water conservation is essential to ensuring a better future. As a result, the Group integrates a large number of water-saving, desalination and recycling measures that can be implemented in all destinations. Each of these measures is designed to become as environmentally friendly and efficient as possible. Impacting the local economy In the development phases, the Group awards as many contracts as possible to local contractors and suppliers. During operation, a considerable amount of the shops, restaurants, and other services available in a destination are run by local small business owners, further adding value to the surrounding community. Job creation Every part of a destination s development involves the creation of jobs for the surrounding communities. Hotels, businesses, services, and infrastructure projects ensure that hundreds of positions. In Andermatt, for example, more than 1,000 new jobs are expected to become available once the development process has concluded. Creation of tax revenue Job creation and enhancing the economy around a destination also results in the increase of tax revenues to local authorities, allowing them more resources to develop the services needed to improve the overall standard of living. Egyptian Eco-certification Scheme In 2012, the Group is planning to cooperate with project partners to institutionalise the Green Star Hotel Initiative (GSHI) within the Egyptian Ministry of Tourism to become an official eco-certification scheme in Egypt. 1 Green star: Environmental label for hotels applicable to destinations throughout Egypt and the Middle East. 54 Orascom Development Annual Report

30 5.4 Examples Of Sustainability in our towns El Gouna, Egypt Egypt s most environmentally-friendly destination Taba Heights, Egypt Preserving the natural beauty Haram City, Egypt Giving back to society Jebel Sifah and Salalah Beach, Oman Sustainable luxury The town management works in cooperation with local hotels, businesses, residents and visitors to maintain, protect, and preserve its unique environment and ensure El Gouna as Egypt s most environmentally-friendly holiday destination. In the recent period, El Gouna has introduced bicycle lanes to encourage alternative modes of transportation and is in negotiations with several companies and governmental organizations to widen the use of energy-efficient construction methods and renewable energy. El Gouna also succeeded this year in receiving a connection to the national electric grid, allowing for the disconnection of the diesel generators previously used. This development brings El Gouna closer to being a carbon neutral town. Additionally, a number of environmental initiatives were held throughout the year to help encourage residents and visitors to get involved. These included educational campaigns on recycling, town clean-ups, as well as the establishment and enforcement of environmental standards and guidelines. All hotels in El Gouna have also been awarded the Green Star Hotel certificate that ensures an environmentally friendly operation and a continuous improvement in terms of energy and water savings, reduction of waste and promotes an overall culture of environmental sustainability. With one of the most striking natural settings among all the Group s destinations, Taba Heights is keen to protect the environment and maintain this key asset. The management and staff have implemented a number of initiatives and activities to constantly secure the sustainability of the destination. The resort has its own recycling centre that supports hotels and outlets to sort their waste at the source, making garbage cleaner and easier to recycle. The resort also only installs energy efficient appliances, and at least 50% of the light bulbs have already been replaced with energysaving bulbs. At the Sofitel, solar water heaters have been installed to save energy and is currently being considered for the rest of the town. Given the scarcity of clean water in the surrounding area, Taba Heights uses desalinated sea water for vegetation as well as a gauge control system for measuring consumption and preventing sudden leaks. In addition, waste water is recycled and irrigates 25% of the gardens and sports facilities. Community-wide, a cleanup day is held annually with the participation of all staff and guest volunteers to remove waste from beaches and other targeted areas. The Marriott has also planted 2,000 trees as their contribution to enhance the environment. As part of the creation of a complete budget community and enhance job creation for residents, Haram City integrates a number of sustainable businesses including Irtiqa, a waste recycling company, Malaika, an embroidery factory that offers vocational training and Banati, a rehabilitation center for street children. In 2011, the Group s subsidiary Orascom Housing Communities supported the establishment of a family planning clinic and a computer center in the central district of the community, and also since 2008 subsidizes a private school which currently is home to 180 students and is increasing by the rate of 40 students per year. Throughout the year various community activities are carried out in Haram City, reaching out to all residents. These include a celebration of world environment day where employees and residents come together to plant trees, a football tournament, and the establishment of a bazaar in the market district that offers basic household appliances and accessories to residents. 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 the placement of twelve mooring buoys, an alternative to anchoring which could potentially damage the coral reefs and harm marine life. Muriya has also conducted extensive studies to ensure minimum disruption to the coastal marine 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. A recycling plant will be located inside Jebel Sifah which, once the town is operational, will serve the project as well as the nearby village. To ensure that luxury does not reign over the surrounding environment, the Group has hired the following consultants: Island Planning Commission (IPC), a world famous landscaping consultant has been commissioned to preserve and protect local flora species, beach fringe vegetation, as well as the island s natural topography. An in-house environmental consultant to conduct 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. Muriya took the initiative to develop 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 As mentioned in several newspapers and magazines; Identity magazine and Daily News Egypt 56 Orascom Development Annual Report

31 5.4.5 Andermatt Swiss Alps, Switzerland Enhancing sustainability From the very outset of the project s planning, attention was given to ensuring sustainability in Andermatt. During 2011, the project was able to secure contractual agreements for monitoring construction transportation logistics with the Canton of Uri and for controlling all logistical activities for the resort with one of Europe s largest logistic firms. For energy, the master plan calls for the integration of a number of renewable sources including wood plant, heat of sewage water, and building facility heat reclamation. Local suppliers contracted for development have also been reviewed according the nature made label. All construction activities including the golf course, flood project, podium and Chedi Hotel concrete work are closely monitored to avoid noise and air pollution. Strict monitoring has also been carried out to the ground water and soil after finishing site decontamination works in 2010, including tests of the stream and running water of the Reuss river to protect the inhabitants as well as the alpine flora and fauna of Andermatt. To ensure the full involvement and awareness of the surrounding community, the Group follows a very transparent information policy by holding a number of informal dialogues with residents and opening the construction site for an open day in the Summer of Chbika, Morocco Respecting natural surroundings Based on research and following local customs and traditions, the Oued Chbika project is taking several measures to safeguard the natural environment and support the local community. The Group s Moroccan subsidiary, Oued Chbika Development, will invest more than 2 million CHF in social programs as per an agreement with the Moroccan government to encourage local development, and fishermen will be encouraged to use the town s marina to dock following their daily trips to nearby off-shore fishing grounds. The pink flamingo population, which is native to the site, is also being protected to ensure its health and continued satisfaction with the surrounding ecology Lustica, Montenegro Embracing the Mediterranean The project plan in Lustica Bay calls for the implementation of green construction methods such as the use of regional materials, site planning, water conservation, waste management, and reduced energy consumption to promote sustainability. The project also strives to remain consistent with the Montenegran government s Declaration of the Ecological State of Montenegro published in September of 1991 and designed to preserve the country s natural resources Eco-Bos, United Kingdom An ecologically- geared community Eco-Bos Development Ltd was one of only four projects to be awarded Eco-Town status from the UK Government in recognition of its ambitious plans to transform a number of former industrial mining sites into exemplar, sustainable low-carbon settlements. For homes construction, a national housing competition was organised and over 35 architectural practices were shortlisted to design low carbon houses for the initial phases of the project, with a focus on minimising carbon emissions and energy consumption. This was achieved by ensuring the master-plan maximises south facing housing plots for solar gain and high thermal mass construction techniques to reduce the requirement for heating. A comprehensive sustainable urban drainage system (SUDS) has been incorporated into the design to maximise the conservation and re-use of water in the development. Rain water harvesting and permeable surfaces along with the utilisation of redundant quarries for water storage are key elements of this strategy. Additionally, more than 200 hectares of land are to be open to the community for recreation, food production and other general uses. The site is also home to a number of protected species sites which have been incorporated into the wider scheme. The plan also includes for the increase of general biodiversity through the creation of some 6 hectares of priority habitat including woodland, heath land and grasslands. Water filled quarries will be converted to lakes with appropriate habitants for plants, animals and fish. The project incorporates a number of community benefits including a new school, 10 hectares of allotments and 5 hectares of food production areas, sports pitches, an extra 7km of cycle and bridleways, new and improved bus services as well as road improvements. The development will also include other community benefits in the housing area through the provision of rented or budget housing. 58 Orascom Development Annual Report

32 5.5 Interview with the Head of Group Design & Destination Planning What is your role at Orascom Development? Implementing and monitoring the Orascom vision across the Group. My role starts from the initial phases helping with site selection, developing the right ingredients for the master plan of a new destination and monitoring its progress. Then, in cooperation with the design team a unique personality is established that identifies every destination through its individual projects while following it s realization throughout construction. During this long process, we assure the quality intended within the cost constrains and time defined. We assume the parent role that gives birth to a child while monitoring its growth. It is a real joy watching all these kids growing around you...not to mention the great responsibilities attached! What are your key design principles? Architecture is the form that everybody sees plus function, so a compromise must always be made between the two. You cannot fall in love with an attractive building while the living space is not reflecting your needs. For us, both form and function are two sides of the same coin. As we have the wealth of experience to deal with huge developments, we are fortunate to have more coins. Sustainability is our insurance certificate for any destination. Our commitment to environmental protection during developing, later through managing our destinations, not only assures our long term success but increases quality and value. We collaborate with internationally-renowned architects for their professional experience. But we always make sure to engage local designers for their genuine touch and home experience. Through your long experience, what are the main lessons learned? Sharing our experience across the Group while implementing what is only applicable for every destination. Engaging the local communities in the development process guarantees the long-term support and obligation between both sides. Life changes around us and so we need to maintain a flexible mentality. What might be right today may not be valid after 5 or 10 years. With our long term commitment, we need to keep searching for the best answers. While the sales team works towards introducing our dreams to clients before commitment, the designing team works towards ensuring the enjoyment of these owners, later, while living the reality. A happy customer is our best marketing tool. How can you assure a common design quality across destinations? What is the importance of a good design on the quality of a destination? Profile: Mr. Hani S. Ayad, an Egyptian national born in 1954, heads the Group Design & Destinations Planning at Orascom Development Holding AG. Mr. Ayad joined Orascom Development 20 years ago and has more than 35 years of professional experience in master- and urban planning as well as architectural designing, working with various international firms in four continents. He holds a masters degree in architecture from the University of Minnesota, USA and is a member of The American Institute of Architects (AIA) and the National Council of Architectural Registration Boards (NCARB). In summer 2010, the University of Minnesota, honored him with its prestigious Leadership Award for International Alumni. Hani S. Ayad shares his diverse professional and personal experiences through his involvement with international conventions related to sustainable development, recycling resources, and the establishment of successful communities. Being the Head of Group Design & Destinaton Planning, I make sure that we share the prosperous experience and resources accumulated over 20 years of practice. We do not have to reinvent the wheel every time we establish a new destination. We start the process by clearly defining our vision of what we intend to accomplish. There are basic common elements to start with, finetune to fit in, while enriching it with the local culture, architecture and environment. We listen to the community needs; translate it into the right ingredients for the master plan to be developed. What works well for a destination does not mean it is the right answer for another. When we set the standards for any destination we dig for the grassroots, seeking out its soul. This gives life to our architecture. If authenticity is the magic ingredient for success, sustainability is the assurance for the destination endurance. Almost all our sites comprise of vast terrain located in virgin remote areas, except Andermatt. On the other sites, we set our own standards which in a way is good: it allows more freedom while creating the identity to this new place. In Andermatt, the challenge is not only fitting in but also tying with the existing community, with the goal of having one Andermatt. In general, the quality and distinctiveness of a destination is represented through successful architecture. It is the personality created containing the spirit of that place. This is why you cannot just copy a successful architecture of another place. We strongly value the local culture, architecture and environment of every locale thus accomplishing this individuality and quality for every destination. Giving life to these buildings is our real strength in creating the unique and special environment that everyone is searching for: Life as it should be. Hani S. Ayad, AIA NCARB Head of Design & Destinations Planning 60 Orascom Development Annual Report

33 6. Corporate Governance 6.1. Group Structure and Significant Shareholders Group Structure (Reporting Structure) Significant shareholders Since the initial public offering of the Company s shares in May 2008 through the end of the 2011 financial year, the following shareholders have disclosed participation in the Company of 3 percent or more in voting rights (in accordance with art. 20 SESDA 1 ): 2 Orascom Development Holding AG 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 13,534, % whereof held directly 7,172, % Corporate Functions 13 May 2008 whereof held through Thursday Holding Ltd. 5 5,848,741 26,28% whereof held through SOS Holding Ltd , % Janus Capital Management LLC 7 25 Aug ,156, % Hotels Real Estate and Construction Land Sales Town Management Tours Operations Other Operations Orascom Development 8 15 Dec ,286, % The operating business of the group headed by Orascom Development Holding AG (the Orascom Development Group ) is organized into the following segments: Hotels, Real Estate and Construction, Land Sales, Town Management, Tours Operations, and Other Operations. On 21 September 2011, Blue Ridge Capital Holdings LLC and Blue Ridge Capital Offshore Holdings LLC 9 disclosed that their participation in the company had fallen below 3 percent in voting rights. Aside from the above, the Company is not aware of a shareholder holding a participation of 3 percent or more of voting rights. As of the end of the 2011 financial year, the following listed companies were part of the Orascom Development Group scope of consolidation: Company Orascom Development Holding AG (Altdorf, Switzerland) SIX Registration Exchange SIX Swiss Exchange Market capitalization CHF 409,594, Symbol ODHN Security number ISIN CH Cross-Shareholdings 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. Orascom Hotels & Development S.A.E. (Cairo, Egypt) EGX Registration (Egyptian Depositary Receipts) Exchange EGX Egyptian Exchange Market capitalization EGP 2,272,034, Symbol ODNH ISIN EGG676K1D011 EGX Registration Exchange EGX Egyptian Exchange Market capitalization EGP 4,312,727,955 Symbol ORHD ISIN EGS70321C012 Orascom Hotels & Development S.A.E. is 99.68% owned by the Orascom Development Group An application to de-list Orascom Hotels & Development S.A.E. from the EGX has not yet been submitted. Pursuant to a tender offer completed in January 2011, Orascom Development increased its holding in this Egyptian subsidiary to 99.68%. 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. 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 2011, 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 2011, refer to Note 26.5 to the Company s non-consolidated financial statements. 3 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 founding of the Company, refer to Section 6.2. 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, 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 Yord 10065, is the general partner of Blue Ridge Offshore Master Limited Partnership, with its principal office at P.O. Box 309, Grand Cayman KY1-1104, Cayman Islands. 62 Orascom Development Annual Report

34 6.2. Capital Structure Capital As at 31 December 2011, the Company s issued share capital amounted to CHF 662,201, and was divided into 28,543,147 registered shares with a nominal value of CHF each, fully paid in. The authorized capital amounted to CHF 108,343, while the conditional capital amounted to CHF 130,489, 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 108,343, by issuing of up to 4,669,971 fully paid-up registered shares with a par value of CHF each until May 23, 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 130,489, 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 14,489, 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 116,000,000 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 2011, no option rights, conversion rights, or warrants had been granted on the basis of Art. 4b. Changes in capital in the past three years 2009 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 At the ordinary general meeting of shareholders on 23 May 2011 it was resolved to reduce the share capital by CHF 18,338, from CHF 672,882, to CHF 654,544, by reducing the nominal value of each of the 28,213,118 registered shares from CHF to CHF and to remit the amount of reduction of CHF 0.65 per registered share to the shareholders. At the same meeting it was resolved that the nominal value of any shares created from authorized or conditional capital in accordance with Art. 4a and Art. 4b of the Articles of Incorporation (cf. next paragraph) until completion of the capital reduction equally reduced by CHF 0.65 and the amount of the reduction remitted to the respective shareholders. At its meetings of July 14, 2011 and July 28, 2011 (i.e. before the share capital reduction described in the preceding paragraph had become effective), 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 7,871, through the issuance of new registered shares, from CHF 672,882, to CHF 680,754,055.95, divided into 28,543,147 registered shares with a nominal value of CHF each. The share capital reduction resolved by the shareholders on 23 May 2011 (see above) became effective on 8 August The payment for the reduction of CH 0.65 per registered share amounted to a total of CHF 18,553, The registered share capital after the reduction amounts to CHF 662,201, and is divided into 28,543,147 registered shares with a par value of CHF each. Shares and participation certificates The 28,543,147 registered shares with a nominal value of CHF are fully paid in. They 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 Section 6.6. 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 2011, no participation certificates (Partizipationsscheine) have been issued. Profit sharing certificates The Company has not issued any profit sharing certificates (Genussscheine). 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 below). Exemptions in the year under review No exemptions from the limitations on transferability of shares 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 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 6.6 below). Convertible bonds and warrants/options The Company has not issued any convertible bonds, warrants or options. 64 Orascom Development Annual Report

35 6.3. Board of Directors Samih O. Sawiris Amr Sheta Adil Douiri Franz Egle Luciano Gabriel Carolina Müller-Möhl Jean-Gabriel Peres Nicholas N. Cournoyer Chairman Executive Member (until October 2011 Vice Chairman) Non Executive Member Non Executive Member Non-Executive Member, Lead Director Non Executive Member Non Executive Member Non Executive Member 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 subsidiary companies. 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 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. 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 Stockholmbased technology company serving the financial industry. Mr. Douiri graduated as an engineer from the Ecole Nationale des Ponts & Chaussées (ENPC) in Paris. 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. 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. 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. 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 Group to manage two of its hotels. Nicholas N. Cournoyer is a finance and capital markets specialist. He is currently the Managing Director of Montpelier Investment Management LLP, London, an investment company focusing on Emerging Market equities and distressed debt. Prior to founding Montpelier in 1992, Mr. Cournoyer was with The Chase Manhattan Bank from 1982 to 1991, first working in its sovereign and corporate debt restructuring teams in Central and South America ( ), then establishing its New Yorkbased Emerging Markets debt trading group (1985) and finally heading a similar operation in London ( ). He is also the Managing Director of Montpelier Capital Advisors (Monaco) SAM and resides in Monaco. He holds a Bachelor s degree in Arts from the Connecticut College (New London, CT). 66 Orascom Development Annual Report

36 Members of the board Name Function Nationality Birth EM/ NEM Elected first Elected until Audit Committee Samih O. Sawiris Chairman EGY 1957 EM Amr Sheta Member EGY 1967 EM Adil Douiri Member MOR 1963 NEM Member - Franz Egle Member CH 1957 NEM Luciano Gabriel Member, Lead Director CH 1953 NEM Chair Chair Nomination & Comp. Committee Carolina Müller-Möhl Member CH 1968 NEM Member Jean-Gabriel Pérès Member F 1957 NEM Member Member Nicholas Cournoyer Member UK / US 1958 NEM EM = Executive Member; NEM = Non-Executive Member None of the non-executive members of the Board of Directors held executive positions with Orascom Development during the three financial years preceding the year under review. Other than as individually mentioned above, none of these members, and no enterprise or organization represented by them, maintains any substantial business relationship with an Orascom Development subsidiary. 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 third ordinary general meeting of shareholders held on 23 May 2011, 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 7 May 2012, all of them, except Mr. Sheta, 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, 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 a member ex officio 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 a member ex officio 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. 68 Orascom Development Annual Report

37 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. 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 2011 financial year, the Board of Directors convened for 11 meetings, and passed 1 circular resolution. Of the 11 meetings, there were four physical meetings, and seven were meetings held by telephone conference. The Audit Committee convened for two physical meetings. The Nomination & Compensation Committee convened for three meetings, one was a physical meeting, and two were meetings held by telephone conference. Certain members of the Executive Management, in particular the CEO and the CFO, participated in several meetings of the Board and the committees. Physical meetings of the Board as well as the Audit Committee and the Nomination & Compensation Committee typically lasted approximately from three to five 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. 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 although 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 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 vis-a-vis senior management To ensure comprehensive information of the Board of Directors on the performance of the functions delegated by it, 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 CEO and the CFO were 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. Furthermore, Board members cultivate a regular informal exchange of ideas with Company management and regularly visit the Company s locations. In May 2011, for instance, the Board visited the project in Andermatt, Switzerland. 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 the Executive Management and executive members of the Board) with monthly, quarterly, semiannual 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. A system to automatically generate all MIS reports from the existing financial system became fully operational during In respect of the Company s system of risk assessment and management, please also refer to Note 37 (Risk Assessment Disclosure Required by Swiss Law) to the consolidated financial statements (page F-69) and Note 13 (Risk Assessment) to the standalone financial statements (p. F-92). Executive Management meetings, chaired by the CEO, are held on a (at least) monthly basis in which performance of operating projects is 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. 70 Orascom Development Annual Report

38 There are no management contracts with companies outside the Group. 6.4 Executive Management Members of the Executive Management Gerhard Niesslein, CEO Born 1954, Austrian national. Dr.. Niesslein joined the Orascom Development Group as the Company s CEO on November 1, He is an experienced real estate expert who served in leading positions at various companies in Canada and Germany during the last 35 years. After holding real estate-related positions at Deutsche Bank and Commerzbank, he became a member of the Board of Landesbank Hessen-Thüringen (Helaba) responsible for real estate financings, investments and funds. In 1999, he became CEO of DeTe Immobilien GmbH (the real estate business of Deutsche Telekom). Since 2008, he was CEO of IVG Immobilien AG, Bonn, one of the big real estate companies in Europe with assets under management of approx. EUR 22 billion. Gerhard Niesslein studied law at the University of Vienna and earned a doctorate in Julien Renaud-Perret, Chief Development Officer Born 1968, French national. 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. Amr Sheta, Co-CEO Born 1967, Egyptian national. 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 degree in economics and a Master s degree in management from the American University in Cairo as well as a diploma in project appraisal and investment management (PAIM) from Harvard. Since November 2011, he has focused his attention on the Orascom Development Group s business in Egypt. Early in 2012, Mr. Sheta announced that he will resign from the Company s Executive Management effective 7 May Hamza Selim, SVP Destination Management Born 1961, Egyptian national. 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. Mahmoud M. Zuaiter, Group Chief Financial Officer Born 1967, German national. 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. Raymond Cron, SVP European Destinations Born 1959, Swiss national. 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. 72 Orascom Development Annual Report

39 6.5 Compensation, shareholdings and loans Other members of senior management attending the executive managment meeting The following members of the Company s senior management, although not members of Executive Management, are regularly invited to participate in Executive Management meetings as guests: Abdalla ElNockrashy, Head of segment Real Estate Born 1960, American national. 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, Head of segment Hotels Born 1951, French national. 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. For detailed information on compensation paid to members of the Board of Directors and of Executive Management for the financial year 2011, and on shares and options held by and loans granted to these persons as at 31 December 2011, please refer to Note 12.1 (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: In respect of 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 2011 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. In respect of the annual salary review and bonus determination, proposals by the executive members of the Board 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). Salary Review: The annual proposals and decisions concerning the development of the base salaries of 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 and the CEO, the performance of the Orascom Development Group as a whole). The executive members of the Board form the respective proposals in their discretion, based on their judgment of the relevant individuals and business areas achievements. Bonus: In late 2010, the Board of Directors approved a formal bonus policy ( Policy ) for the group, which has applied as from the 2011 financial year (see, however, below in respect of a waiver of bonuses for 2011) 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: Firstly, a target figure for the group s EBTDA (Earnings Before Tax, 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). Secondly, several individual bonus targets are set for members of Executive 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 Development 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. Due to the exceptionally difficult economic environment during the year under review, all members of the Executive Management have waived the entitlement to any bonus for Orascom Development Annual Report