BACK ON TRACK. Annual Report 2014

Transcription

1 BACK ON TRACK Annual Report 2014

2 4 BACK ON TRACK Orascom Development 2014 Annual Report 5 Contents 1. Strategic Pillars 2. Orascom Development at a Glance 3. Perfomance Overview: Business Segments 2.1 Company Profile 2.2 Destinations Map 2.3 Letter to Shareholders 2.4 CFO s Statement 3.1 Hotels Group s Hotel Portfolio 3.2 Real Estate and Construction 3.3 Destination Management 3.4 Land Sales 3.5 Other Operations Corporate Governance 6. Investor Information 5.1 Group Structure and Significant Shareholders 5.2 Capital Structure 5.3 Board of Directors 5.4 Executive Management 5.5 Employees 5.6 Compensation, shareholdings, and loans 5.7 Shareholders Participation 5.8 Changes of control and defense measures 5.9 External Auditors 5.10 Information Policy Countries 4.1 Egypt 4.2 UAE 4.3 Jordan 4.4 Oman 4.5 Switzerland 4.6 Morocco 4.7 Montenegro 4.8 United Kingdom Consolidated Financial Statements 2014 Orascom Development Holding AG 8. Financial Statements 2014 Orascom Development Holding AG 7.1 Consolidated statement of comprehensive income 7.2 Consolidated statement of financial position 7.3 Consolidated statement of changes in equity 7.4 Consolidated statement of cash flows 7.5 Notes to the consolidated financial statements 8.1 Income statement 8.2 Statutory balance sheet 8.3 Statement of changes in equity 8.4 Cash flow statement 8.5 Notes to the financial statements F-3 F-5 F-7 F-8 F-11 F-89 F-90 F-91 F-92 F Glossary of Terms 190

3 6 Strategic Pillars Orascom Development 2014 Annual Report 7 1. Strategic Pillars Successfully Executed on our 4 Pillar Strategy; Focusing on Growing Core Business & Maximizing Efficiency Cost Cutting & Maximizing Efficiency Growing Core Business & Accelerating Land Development and Monetization Successfully achieved the cost savings target Generated generic savings in the amount of CHF 47.4 million Optimized cost base in proportion to target revenue levels Restructured the organization making it leaner and more efficient through centralization and reducing unneeded SG&A expenses Reduced headcount by approximately 4,000 FTE since year-end 2012 Renegotiated procurement deals and reduced cost of goods sold in the hotels segment 1 3 Real Estate Addressing marketing needs through developing more efficient units & increasing inventory mix to address different market segments Focusing on adding value added amenities that add to the destination s experience and visitor spend Adopted a sub-development model whereby land is developed by third parties under strict development guidelines Hotels Orascom Hotel Management s strategy continued focusing on optimizing the hotels inventory catering to the corporate needs and the Group s market positioning. Starting off from an internal management restructure through a full revamp of the operational developments and sales processes Revisited all hotel management agreements to assess the cost-benefit case by case Developed a yield system to increase early bookings and improve cash flow planning Centralized key functions across destinations and hotels Debt Reduction & Restructuring 2 4 Focus on Value-Adding Investments Successfully ramped up considerable cash reserves to the tune of ca. CHF 100 million CHF 69.9 million was achieved through ODH 15% stake-sale in Orascom Hotels and Development (OHD) CHF 10.7 million was achieved through the sale of 12.5% stake in CMAR; Club Med Mauritius Rescheduled all principal and interest payments on (OHD) for FY 2014 Renegotiating an optimum debt refinancing package Divesting under- performing and non-core assets Succeeded in carving-out our in-house construction segment (Red Sea Construction) and budget housing operations in Egypt (Orascom Housing Communities), saving approximately CHF 8.9 for FY 2014 Sold our 12.5% stake in CMAR, Club Med Hotel in Mauritius, with a total proceed of CHF 10.7 million Continuously reviewing all lines of business to make sure we get the maximum possible value

4 8 Orascom Development at a Glance Orascom Development 2014 Annual Report 9 2. Orascom Development at a Glance ODH develops and manages fully fledged touristic towns

5 10 Orascom Development at a Glance Orascom Development 2014 Annual Report Company Profile Orascom Development is a leading developer of fully integrated destinations, including hotels, private villas and apartments, leisure facilities such as golf courses, marinas and supporting infrastructure. The Group s diversified portfolio of destinations is spread over multiple jurisdictions such as Egypt, UAE, Jordan, Oman, Switzerland, Morocco, Montenegro & United Kingdom. Orascom Development has a dual listing, a primary listing on the SIX Swiss Exchange; and a secondary listing on the EGX Egyptian Exchange. $ One of the largest land banks most diversified land banks under the direct or indirect possession of Orascom Development 3 to 5 Star Hotels to suit different standards Spearheaded by a seasoned Executive Management Team ODH is steered by a top executive management team, with unparalleled expertise in the travel, tourism and real estate sector level One of the largest hotels portfolio 32 Hotels, 17 self-managed & 15 Under Management Loyal Shareholder Base Been with the company for over 6 years The Company Adopts a Unique, Vertically Integrated, Business Model Centered on Transforming Desolate Pieces of Land into Attractive, Self-sufficient, Resort Towns New destination identification acquisition & initial concept Development Phase Operational Phase Support Functions Land Bank Monetization Real Estate Hotel Development Destination Development Master-development Real Estate Owner Services Hotel Operations Destination Operations Controlled Sale of Large Plots of Land to Third Party Developers Management Processes Support Processes Continuous Progress on Strategy Execution Achieved all communicated targets of Awards during 2014 for our hotels in Egypt, Jordan & Oman International Standard Facilities leisure activities, marinas, golf courses, hospitals and schools Dual listing on SIX and EGX More than 25 Years development experience Fully Integrated Town Developers Integrated destinations, offering hotels, residential units and luxury leisure Number of Employees 9,000 approx. 79 % of our hotels in Egypt are certified with Green Stars 8 Operating Destinations other destinations in different stages of development Real Estate Sales of CHF 1.89bn since 1997

6 12 Orascom Development at a Glance Orascom Development 2014 Annual Report Destinations Map The Group s diversified portfolio of destinations is spread over multiple jurisdictions such as Egypt, UAE, Jordan, Oman, Switzerland, Morocco, Montenegro & United Kingdom. Developing Destination Chbika Morocco Destination in the Pipeline Eco-Bos U.K. Operating Destination Andermatt Swiss Alps Switzerland Operating Destinations Jebel Sifah Salalah Beach Developing Destination As Sodah Island Destination in the Pipeline City Walk, Muscat Oman million m 2 total LAND area Egypt Jordan Other Hotels Tala Bay 17.3 million m 2 COMPLETED area 17% completed Operating Destinations El Gouna Taba Heights Haram City Makadi Developing Destinations Fayoum Qena Gardens Amoun Island Other Hotels Royal Azur & Club Azur Zahra Oberoi Montenegro Developing Destination Luštica Bay U.A.E. Operating Destination The Cove

7 14 Orascom Development at a Glance Orascom Development 2014 Annual Report Letter to Shareholders Dear Shareholders, I am pleased to present to you our Annual Report for 2014, an eventful year for Orascom Development Holding (ODH) at the strategic, operating and financial level. As they say The fruits of success always grow on the tree of hard work and the significant turn-around of ODH s bottom line results this year solidifies the hard work, determination and endurance that was undertaken over the very challenging past 3 years. The positive events that Egypt, the Group s largest operating destination and its main source of operating revenues, had witnessed starting the second half of the year 2014 to date, boosted international and domestic confidence in Egypt s stability. With the presidential inauguration in June 2014 and the upcoming parliamentary elections, the road to political reforms became clearer. This stability led the European countries to lift their travel bans on the region which translated into higher occupancy rates in our hotels and had a significant positive impact on our real estate sales. Sales increased by 32.4% compared to last year derived principally from increased sales in our Egyptian destinations (El Gouna & Makadi) and the closing of the bulk sale deal in Salalah beach with an amount of CHF 8.9 million. Furthermore, the sound implementation of our structural reforms, the adoption of the new strategic notion of bringing third-party developers along with the successful execution of our cost savings and monetization programs, all helped in boosting our gross operating profits and have strongly positioned the company to capitalize on its future growth strategy. Positive Development and Operating Performance coupled with New Strategic Initiatives The hotels segment witnessed a noticeable pick-up post the travel-ban lifts in July The Group occupancy rates for the 2H 2014 reached 60% compared to 42% in 2H 2013, taking into consideration that the full capacity of our hotels was not materialized because of the continued travel bans on the Sinai Peninsula area and the heavy floods that hit Taba in May Nevertheless we added a number of new hotels, Azur Makadi Garden Hotel, Red Sea - Egypt (283 rooms) was opened in February; whereas the five-star Rotana Salalah - Oman (399 rooms) started operation at full capacity in August The Group sold 852 real estate units for an amount of CHF 96.4 million compared to 580 units for CHF 72.8 million in 2013 ( this excludes sales coming from Andermatt, Switzerland). Egypt was the biggest contributor to that increase, with the re-launch of Joubal project in October 2014, which I am happy to say that by the end of March 2015, 98% of its units were sold out, in addition to the continued sales progress at Ancient Sands and Makadi. In El Gouna, we have become more innovative with our sales packages, offering attractive payment terms with incentives to encourage early settlement and extending payment terms to drive reservations, particularly during promotional periods. We are also planning to launch two new real estate projects, one during April 2015, under the name of Joubal Lagoons and another mixed-use project towards the end of the year, offering smaller units with lower ticket size. We are also very proud of our sustainability efforts in the destination, whereas, El Gouna was the first city in Africa and the Arab region to receive the Global Green City award in August 2014 sponsored by the United Nations Environment Program. This award is handed to cities displaying substantial measures and efforts in progress within the field of environmental sustainability, especially cities that adhere to a strict environment conservation plan and employ different mechanisms for sustainability and a greener community. In Oman, we delivered 53 units during the period under review, and the closing of the bulk sale deal in Salalah beach with an amount of CHF 8.9 million significantly contributed to the increased sales of the destination. In Montenegro, sales volume continued to witness a healthy momentum and benefitted from significant infrastructure progress with the rapid construction of the Marina and Marina apartments, scheduled to commence delivery to customers during the second quarter of The Group has recently adopted the new strategic notion of entering into sub-development agreements, in a move to accelerate the monetization of its land bank, while providing strict development guidelines, to ensure control over the development and maintain the architectural harmony of the destination. Under this strategic initiative, ODH enters into subdevelopment agreements with third-party developers through the sale of specific land plots where there are no development obligations or where the Group has developed infrastructure in order to sell the land to thirdparty developers. This establishes a reference point for the market price of our land bank and answers earlier concerns raised by the investor and analyst community concerning the value attributed to our undeveloped land. Under this notion, in 2014, Orascom Hotels and Development (OHD), the largest Egyptian subsidiary of the Group has successfully entered into an agreement with El Sewedy; an Egyptian Investor to subdevelop 160,000 m2 in El Gouna for a total value of USD 60 million. On January 4th 2015 and based on the recovery of the Egyptian economy and the increased demand on the investment opportunities in Egypt, Orascom Development successfully completed the sale of a 15% stake of OHD. The offering was oversubscribed 3.8x and generated EGP million (approximately USD 70.7 million, CHF 69.9 million). This transaction marked the return of OHD s active trading on the EGX since Changes in the Board of Directors and Executive Management At the sixth Annual General Meeting on May 12, 2014 all members of the Board of Directors, with the exception of Jean-Gabriel Pérès, stood for reelection and were confirmed in their office for a further year. In addition, Jürg Weber and Jürgen Fischer were elected as new members of the Board of Directors for a one year period. There hasn t been any changes with the core team at the Executive Management level. On the other hand, the Group made some new appointments at the subsidiary levels. New CEOs were appointed for Egypt, Oman and Montenegro, each bringing in professional expertise relevant for each country, to better support the implementation of the Group s growth strategy. Outlook for 2015 With the current positive market conditions in Egypt and the successful restructuring efforts that was done on the Group and subsidiary levels. I believe that we have set the ground for an improved development and sales strategy that will help us achieve our 2015 targets for our Egyptian subsidiary. The shift is now towards stronger growth, with focus on growing core businesses in the different jurisdictions where we have presence. We will work closely on the new strategic notion of accelerating the monetization of our land bank, taking advantage from our diversified portfolio and ultimately increasing revenue streams from Oman, Montenegro and Morocco. Even though we have successfully achieved our cost savings target for the year, we remain committed to further cost optimization and targeted monetization initiatives, making sure that enough cash is available to support the growing business while ensuring the highest returns. On behalf of our Board of Directors and Executive Management, we would like to thank all our employees for their considerable commitment. We also wish to thank our clients and business partners for the excellent working relationship we enjoy with them. I also wish to thank you, our shareholders, for the confidence and trust that you placed in our company. Samih O. Sawiris Chairman of the Board of Directors and Chief Executive Officer

8 16 Orascom Development at a Glance Orascom Development 2014 Annual Report CFO s Statement Dear Shareholders, The Group witnessed a positive turn-around this year strategically and financially. We have successfully executed on our earlier communicated four-pillar strategy, achieved the cost savings target of the year and ramped up cash reserves in the tune of CHF 100 million, which are earmarked to reduce debt and negotiate an optimum debt refinancing package. Net profit attributable to shareholders of the parent company reached of CHF 41.9 million after a loss of CHF million in FY 2013 and EBITDA reached CHF million versus CHF(80.7) million last year. Boosted revenues from ongoing operations Consolidated revenues increased by 13.1% to CHF million (FY 2013: CHF million), on the back of strong real estate & construction revenues, increased hotel occupancy rates during the second half of the year and the increased land revenues resulting from the successful third-party development agreement between Orascom Hotels and Development (OHD); Egyptian subsidiary of the Group and El Sewedy, an Egyptian Investor, to sub-develop a piece of land in El Gouna. The Real Estate and Construction segment witnessed a very strong increase in terms of revenues and sales. Revenues significantly increased to CHF 72.9 million (FY 2013: CHF 49.8 million). The increase was mainly a result of the accelerated deliveries in Egypt (El Gouna, Ancient Sands and Makadi) and Oman, whereby a total of 743 units were delivered during the year. The segment EBITDA increased to CHF 18.9 million compared to CHF (15.1) million in Contracted real estate sales, after adjusting for the exclusion of the budget housing segment, increased by 33% to CHF 87.6 million (FY 2013: CHF 50.2 million), driven by the strong sales momentum in El Gouna & Ancient Sands, which continued to benefit from its safe haven status, in addition to the successful closing of a bulk sale deal of 37 units in Al Fanar project in Salalah Beach, Oman with an amount of CHF 8.9 million. Sales in Montenegro increased by 15% year-on-year and were undoubtedly helped by the very visible construction progress of the Marina and first phase Marina apartments. The hotel segment s revenues were impacted by travel bans on Egypt imposed by several European countries during the end of 2013 and up until July The decline also resulted from the continued travel bans on Sinai and the heavy floods that hit Taba in May Important to note is that all assets and business interruption were fully insured and the majority of the claim has already been collected. Hence, revenue for the year declined to CHF million compared to CHF million last year. Still the segment showed a significant rebound during the second half of 2014, after the travel bans were lifted on the Red Sea area in Egypt promising further progress in Also, the opening of Rotana Hotel in Salalah Beach, Oman which started operating at full capacity in August 2014, postively contributed to the segment s revenue. The segment was able to achieve a positive EBITDA for the 2H 2014 of CHF 23.4 million compared to CHF 4.7 million in the comparable period. Hotels that are directly managed by the Group made the most positive contribution. The land sales revenue this year was one the major contributors to our top and bottom line results. Total segment revenues reached CHF 13.7 million compared to CHF 1.0 million in The high margins associated with this segment also helped in boosting our Gross operating profits to reach 15% versus 3% last year and EBITDA margins to reach 42% versus a negative margin last year. In addition to the enhanced operational activity, the group s bottom line results were impacted by several one-off items that contributed positively to the net profit from continuing operations. We have received gains from amounts that were under settlement with Falcon for Hotels S.A.E after reaching an amicable settlement agreement whereby, Falcon Hotels S.A.E. and its controlling shareholders have recognized the entitlement of Orascom Development, its partners and subsidiaries to receive all revenues from the Cape Citadel Hotel s operations. A five-star hotel with 514 rooms located in Sahl Hasheeh, south of Hurghada. Also and as part of the Group s cost savings and monetization strategy, the Group succeeded in deconsolidating Orascom Housing Communities (OHC) and the construction business, ultimately resulting in a gain in our books, in addition to successful closing of the share-stake sale of CMAR (Club Med Mauritius) hotel. Several other provision-reversals and net foreign exchange gains contributed to the positive results. Operating Cash flow after interest and taxes improved this year to reach CHF (26.2) million compared to CHF (52.2) million. The improvement also came as a result of the rescheduling of interest payments over the period and the reclassification of ASA in Q as an investment in associate. Successful implementation of the cost savings program The Group was able to successfully execute on its cost saving program. The generic cost savings in addition to the carve-out of the budget housing operations and the construction segment, in Egypt in June 2014, contributed positively to the company s cost savings program. As of December 2014, Orascom Development has achieved total generic savings of CHF 47.7 million compared to the cost base FY On track with our debt reduction and restructuring paving the way to a healthier balance sheet One of the main four-pillar strategy of 2014 was the debt reduction and restructuring. Our target was to collect CHF 100 million in cash and use it to reduce the some of the outstanding debt that is sitting on OHD level and waive the financial covenants for the financial year We succeeded in postponing all interest and principal payments for the year and successfully ramped up the needed cash reserves and we did that mainly through 1) the Group 15% share-stake sale in OHD on the Egyptian Stock Exchange which generated approximately CHF 69.9 million, 2) the 12.5% share-stake sale in CMAR generating gross proceeds of CHF 10.7 million and 3) the cash received for the first parcel of land from the land development agreement that OHD entered with El Sewedy; an Egyptian investor to develop 160,000 m 2 in El Gouna, generating CHF 11.5 million. The Group is now using this money and negotiating with all OHD s lenders an optimum debt refinancing package taking into account grace period, pricing, tenor and currency mix. We are also placing our efforts to relief the company from principal payments over the coming 2 years. The Egyptian mortgage subsidiary Tamweel was added back as a subsidiary after being classified as an asset held for sale. The reclassification and the increase in its business activity, resulted in an increase in the total receivables and borrowings of the Group. Focused on value-adding investments Since mid-2013, we have been prudently analysing the Group s business units and investments. The target was to make sure that our efforts, focus and capex were placed in the value adding investments that fall under the core business of the Group and add to its revenue stream. Under this initiative, we took the decision to divest non-core assets that do not primarily fall within our business model of developing-destinations and using the proceeds of which to reduce the overall debt of the Group. furthermore, we deconsolidated subsidiaries that were negatively affecting our operations at the time, namely OHC, the construction arm of the Group and ASA. Outlook for 2015 First quarter of 2015 promises further progress with the hotel Segment s performance. The preliminary occupancy readings in El Gouna & Salalah reached 70% in March. We commenced construction of the Ancient Sands Hotel, in El Gouna, during the third quarter of 2014, a five-star hotel with 56 guestrooms and 120 hotel apartments due to open in Q and have also borken-ground with the construction of Al Fanar hotel in Salalah Beach, Oman following its successful sales launch in August We are also on track with our real estate sales target of CHF million for 2015, whereby we expect the contracted values for Egypt alone in 1Q 2015 to increase from 40-60% over 1Q In terms of land sales revenue, we are due to recognize two more land parcels with a total value of USD 48 million during 1H 2015, from the subdevelopment land agreement that was signed in El Gouna with El Sewedy. In light of the more favorable market environment and after we have successfully executed on our four-pillar strategy by achieving the cost savings target for the year and collecting CHF 100 million in cash from our monetization programs to reduce debt, our emphasis going forward will be on growing the business, generating more opportunities to capitalize on the company s portfolio of hotels, real estate projects & land bank. In parallel, we will also continue pursuing our targeted monetization and cost saving initiatives, ensuring that Orascom Development enjoys flexibility to smoothly adjust to the changing operating environment and still be able to realize business opportunities as they arise. Eskandar Tooma Group Chief Financial Officer

9 18 Business Segments Orascom Development 2014 Annual Report Performance Overview: Business Segments Hotels Real Estate & Construction Destination Management Land Sales Other Operations

10 20 Business Segments Orascom Development 2014 Annual Report Hotels A Challenging Year Hotels in Egypt suffered notable airlift capacity cuts following the travel bans imposed on the country by the majority of the European countries during the end of The flashfloods that hit Taba Heights in May 2014, also had a severe impact on the segment s results, leaving the destination operating at only 37% of its capacity for three full months till the opening of two more hotels, the InterContinental Taba Height - and later Club Med Sinai Bay in December 2014, accordingly 25% of Taba Heights hotel inventory was still out-of-order until December Nonetheless, the incorporation of Orascom Hotel Management (OHM), the Group s hotel asset management subsidiary in early 2014 and the implementation of a hotel focused optimization strategy, limited the magnitude of these challenges to only a 5.6% decrease in total revenues. Revenues declined from CHF million in FY 2013 to CHF million in FY Financial Review 2014 The Recovery during 2H of 2014 Despite the fact that 25% of Taba Heights guestroom inventory remained closed for renovation post the floods through December 2014, OHM set strategies towards optimizing the hotel assets, enforcing the highest standards of efficiency and effectiveness. The applied strategy tackling reformation of the segment s operational, develop mental and sales processes afforded remarkable improvement during 2H 2014 compared to the same period in El Gouna, Red Sea, Egypt: occupancy increased from 46% during 2H 2013 to 64% in the 2H 2014; the Gross Operating Profit per Available Room (GOP PAR) increased during the same period by 240% growing from CHF 5 to CHF 17; the gross operating profit (GOP) margin increased from 13% in 2H 2013 to 30% in 2H Total hotels in Egypt: occupancy increased from 40% in 2H 2013 to 61% in 2H 2014; the GOP PAR grew from CHF 2 in 2H 2013 to CHF 11 in 2H 2014; and the GOP margin grew from 8% in 2H 2013 to 24% in 2H 2014 recording a revenue flow-through of 106%. Total hotels of the Group: occupancy increased from 42% in 2H 2013 to 60% in 2H 2014; and the GOP PAR increased by 100% during the same period. Total revenues during the 2H 2014 reached CHF 70.1 million compared to CHF 53.8 million in 2H 2013, while Adjusted EBITDA increased by 150% over the same period to reach CHF 14.5 million. Organizational and Tactical Reformation OHM started the year with a full restructuring of the segment s organizational structure primarily focusing on the middle management setup. This resulted in a much leaner and more efficient organization and cleared out all duplicated SG&A expenses. Furthermore, new support departments were introduced raising the bar of the operational efficiency reflecting positively on the EBITDA. The new procurement department, handling all development and operation-related purchases and warehouse management, over the course of 10 months afforded a total savings of CHF 0.85 million in Similarly, a new central reservation and yield management units were created to facilitate hotels cross-selling applying a flexible pricing protocol to generate the highest turnover possible. On the tactical reformation level, OHM conducted a full audit of all thirdparty hotel management contracts (65% of our inventory) to ensure fair and satisfactory returns and performance standards in times of crisis and prosperity. Audit resulted in a total annual savings of CHF 2.2 million, which led to OHM taking over the management of four hotels by December A number of actions were also applied to the OHM-managed portfolio of hotels (35% of the Group s inventory). Online sales, which represented 10% of the total business in 2014, was supported by a number of new websites and campaigns that materialized during the 2H 2014 in a 70% increase of online sales compared to the same period last year. Simultaneously, some new markets were penetrated and a number of commitment deals with major European tour operators for a total value of CHF 24.4 million were finalized. These tactics not only sustained cooperation with high-potential business partners, but also ensured steady and reliable flow of business. Product Development and New Openings To boost the average contracted room rate, a refurbishment plan across the Group s hotel portfolio in Egypt was initiated. From the renovation of a number of properties to providing free WIFI at all El Gouna hotels public areas and an IPTV infrastructure setup. The refurbishment plan was partially funded by the tour operator commitment deal returns, with minimal CAPEX pressure on the Group also witnessed a number of new hotel openings. Azur Makadi Garden Hotel, Red Sea - Egypt (283 rooms) was opened in February; whereas the five-star Rotana Salalah - Oman (399 rooms) started operation at full capacity in August. We also introduced a new concept initiative under the name of Hotel Club Concept to the Omani tourism industry by signing the country s first of its kind commitment deal between Rotana Salalah and AlpiTour (Italian tour operator) for a total value of CHF 12.1 million. Outlook for started out positively with January recording a 13% increase in revenues compared to January 2014 despite that 25% of Taba Heights guestroom inventory is still un-operational and travel bans to Taba are still on. In El Gouna and Salalah occupancy already reached the 70% mark as of March We are planning to open 2 new hotels and add a number of rooms to our portfolio during the fourth quarter of In El Gouna, Egypt; the five-star Ancient Sands Hotel is due to open with 56 guestrooms and 120 hotel apartments. In Salalah, Oman, Al Fanar Residence and Hotel will house 300 guestrooms, as for Ras Al Khaimah, UAE, The Cove Rotana Extension will add 150 new rooms to the hotel s inventory. Hotel revenues CHF 118.8m (2013: CHF 125.8m ) Adjusted EBITDA CHF 18.2m (2013: CHF 24.6m) Revenues by Countries (% total) Egypt Oman UAE Jordan The Hotels segment KPIs, as of 31 December Number of Hotel Rooms We will continue to progress on OHM s successfully proven strategy and are already exerting efforts to lift travel bans off Taba Heights. Last but not least, business that is currently being driven to Taba Heights hotels through Aqaba, Jordan, relying on Taba Heights proximity to Tala Bay through Taba Heights Marina allow a positive outlook for 2015 with promising year-end results Share of GROUPS revenue 47.4% (2013: 56.8%) Nationality of hotel guests (% total) Occupancy rate (%) Germany Russia Egypt Netherlands United Kingdom Belgium Poland Switzerland ARR (CHF) Jordan UAE France Unknown Ukraine Israel Others TRevPAR (CHF) Country Destination FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 Egypt El Gouna 2,707 2, Taba Heights 2,365 2, Others Red Sea * 1, Floating Hotels Oman Jebel Sifah Salalah Beach UAE The Cove Jordan Tala Bay ODH Group 7,896 6, * Revenues from Citadel Azur, 5 Star hotel, with 513 rooms were recognized under ODH s hotel segment post the settlement reached with Falcon Hotels S.A.E

11 22 HOTEL PORTFOLIO

12 *** 67 Rooms El Gouna In the heart of the Abu Tig Marina with the most luxurious views and the most convenient accessibility! Famed for its terrace, Ali Pasha s nightly beauty is complemented by the delicacies served at the town s only Indian Restaurant, Tandoor. *** 177 Rooms Arena Inn offers all the amenities and comforts of a holiday resort with a private swimming pool and beautifully designed waterfront restaurant. Hotel guests enjoy access to a full-service beach. *** 50 Rooms Directly overlooking the Abu Tig Marina promenade, minutes away from the beach, the 3-star Captain s Inn is one of El Gouna s most sought after small hotels welcoming divers, kite surfers, and partygoers. Red Sea, Egypt El Gouna, Mer Rouge, Egypte ***** 10 Rooms ***** 268 Rooms **** 54 Rooms **** 434 Rooms A luxury guesthouse directly set on the northern shores of Mangroovy Beach and its kitesurfing stations. A brainchild of an antiques collector, the hotel offers seclusion making it an ideal hideaway for luxury seekers. A stylish Nubian oasis exclusively situated on El Gouna s Championship 18-hole golf course. Complemented by stunning architecture, breathtaking landscapes, sparkling lagoons, the hotel is home to a spa and fitness center for ultimate serenity and rejuvenation. Be it an absolute romantic holiday or a blend of romance and action, this 4-star hotel de charm is the spot. Boasting the most relaxing views of the New Abu Tig Marina coupled with some special treats for an unforgettable romantic holiday, the Adults Only hotel is minutes away from El Gouna s northern beaches and its array of water sports offerings. The 4-star all inclusive resort managed by a family-owned Belgian hotel chain. Offering unparalleled Red Sea holidays for families with children, the resorts unique architectural design is complemented by lush landscaped gardens. ***** 554 Rooms **** 239 Rooms An upscale beachfront resort offering a relaxing atmosphere combined with a lavish selection of on-ground facilities from diving to kitesurfing, world renowned Angsana Spa outlet and a nearby professional 18-hole golf course. A beachfront resort with an all inclusive program. The 4-star hotel is built along a virgin beach expanse of a protected bay. Club-style animation and a myriad of sports activities make it a perfect choice for active families. ***** 339 Rooms **** 66 Rooms An award winning architectural mix of Arabian and Egyptian styles by the internationally renowned Michael Graves. The beachfront resort is built on nine islands surrounded by gardens offering mouthwatering cuisine, private beaches, live entertainment, outdoor heated pool, and water sports. *** 28 Rooms With only 28 guestrooms in the beautiful Abu Tig Marina, Turtle s Inn is one of El Gouna s most sought-after addresses. This modern hotel offers tastefully furnished rooms, refreshing style, and personalized service. Makadi The Cove Sinai, Egypt Ras Al Khaimah Grand Resorts Royal M A K A D I BAY ***** 491 Rooms A charming Adults Only authentic hotel fashioned to reminiscent an Upper Egypt s Mayor s mansion in its most romantic setup. The hotel is complemented by superb interior design, a private lagoon beach and is adjacent to El Gouna s lively Downtown. Located at Makadi Bay, one of Hurghada s fascinating shores, 25km away from Hurghada International Airport, the all Inclusive beachfront resort overlooks its own private sandy beach, offering seven restaurants & bars, a fully equipped water sports center, swimming pools and sports facilities. Club Club M A K A D I BAY **** 339 Rooms Only 25km away from Hurghada International Airport, the beachfront resort is easily accessible housing seven restaurants & bars, a fully equipped water sports center, swimming pools and sports facilities. **** 287 Rooms Ideally located only a few kilometers away from Hurghada, Sahl Hasheesh and Safaga; the Adults Only Azur Makadi Gardens Hotel provides easy access to most of the Red Sea s world-class waterfront destinations with clustered facilities with its sister hotels Royal Azur and Club Azur. **** 69 Rooms **** 234 Rooms The Three Corners Ocean View offers a 4-star all inclusive experience in an Adults-Only environment. The hotel is home to two unique clusters, Le Soleil and Du Port, each offering a unique atmosphere with one overlooking the seafront and the other with fabulous Marina views. **** 115 Rooms Capturing the essence of Egypt with its winding alleys and stunning features, the hotel overlooks El Gouna s lagoons and offers a tropical garden setting in the heart of the town with easy access to the vibrant Tamr Henna Square. Jebel Sifah **** 67 Rooms Designed by renowned Italian designer Alfredo Freda, the Sifawy Boutique Hotel is ideally located only 45 minutes away from the capital of Muscat in the heart of the picturesque marina town. Oman OTHER HOTELS In Egypt Salalah Beach Taba Heights Overlooking the New Abu Tig Marina with direct access to El Gouna s northern beaches, Mosaique Hotel is ideal for sun and adventure seekers. The ultra four-star hotel boasts cool décor, modern flair and amenities tailored to the convenience of its guests. ***** 283 Rooms Located on an idyllic water inlet on the Ras Al Khaimah beachfront overlooking the Arabian Gulf with 600m of pristine beach, the Cove Rotana encompasses a number of Villas that are ideally designed to accommodate families or a group of friends. Sinai, Egypt ***** 385 Rooms ***** 442 Rooms A signature Club Med Resort in the heart of Sinai. The unique Resort is set on a beautifully preserved bay covering 27 hectares, flanked by a 600 yard stretch of private beach. Inspired by traditional Oriental architecture, the Sofitel Taba Heights offers an enchanting atmosphere. Every last one of the Sofitel s guestrooms has a private balcony and garden patio facing the Red Sea. ***** 503 Rooms **** 215 Rooms The perfect business and leisure retreat, consisting of three separate structures linked by tropical garden pathways and resting on a prime waterfront location. The hotel offers 10 restaurants and bars, exclusive entertainment, swimming pools, and a fully equipped health club. Located at the heart of Taba Heights, the four-star El Wekala Golf Resort offers a multitude of activities for the whole family. Across from the hotel the greens of an expertly maintained 18-hole golf course roll softly toward El Wekala s beautiful private beach. ***** 426 Rooms ***** 394 Rooms The award winning architect Michael Graves created the beachfront resort as a paint box of colors and quirky shapes of Egyptian vaults and dome village styled architecture. Home to 3 swimming pools, a saltwater lagoon with its own beach. The resort houses eight restaurants, and a wide array of leisure facilities. The beachfront resort is situated on over 44 acres of lush gardens, 2800sqm of pools and waterfalls with over 500sqm of pristine private beach and houses seven exclusive dining outlets, a private Spa, a Steam Room, Swedish Sauna treatments and Jacuzzi. ***** 27 Rooms Offering the highest standards of hospitality and service, The Oberoi Zahra is described as one of Egypt s most spacious cruise ships with 27 cabins. Recognized by the Egyptian Ministry of Tourism as the Best Cruiser on the River Nile, the Oberoi Zahra is the only Nile Cruiser with a full-service spa. Tala Bay Jordon ***** 514 Rooms Oman An exclusive luxury resort built with natural stones and corals from the region. Located only 30 minutes away from Hurghada International Airport overlooking the Red Sea, this All Inclusive beachfront resort is home to a private harbor, 9 restaurants & bars and guarantees 100% seaview rooms. ***** 399 Rooms **** 260 Rooms An ideal family getaway located in the new resort of Tala Bay on the South Coast of Aqaba. The 4-star hotel offers an array of leisure facilities from outdoor swimming pools to a stateof-the-art fitness and sports center. A newly opened hotel offering a unique holiday experience capitalizing on the Rotana s understanding and hospitality expertise, the upscale hotel s Omaniinspired architecture features a series of clusters surrounding the main building, housing major public facilities and amenities. ***** 105 Rooms Andermatt Swiss Alps Luxurious 5-star contemporary hotel and apartment development set in the exquisite natural beauty of the Swiss Alps. Skiers of all levels and ages will enjoy the slopes reaching up to 3,000 meters above sea level. While the resort s newly conceived ecological 18-hole golf course will delight the avid golfer. **** 82 Rooms Nestled on the picturesque marina promenade of Salalah Beach and facing the Indian Ocean, the hotel offers traditional lifestyle and values. Among the recreational facilities are 2 large swimming pools, a state-of-the-art wellness center and intimate guestrooms.

13 24 Business Segments Orascom Development 2014 Annual Report Real Estate and Construction The Real Estate & Construction segment continued to see an increase in contracted sales, with segment revenues reaching CHF 72.9 million Real Estate and Construction Market in was definitely a positive year for our real estate business segment across all of our destinations. Egypt showed encouraging signs of recovery on the economic and political fronts following the Presidential election in June 2014, this boosted more confidence in Egypt s stability and translated into healthier demand in the first and second home markets. Total contracted sales in Egypt increased by 37% to reach CHF 60.5 million for the FY 2014 compared to CHF 44.3 million last year. The boost came mainly from El Gouna with the successful re-launching of the Joubal project towards the end of the period and from the Ancient Sands project where the first residents moved in during the year. In El Gouna we have become more innovative with our sales packages, offering attractive payment terms with incentives to encourage early settlement and extending payment terms to drive reservations, particularly during promotional periods. Egyptian local buyers constituted around 84% of the total sales in El Gouna, whereas European buyers who had previously made up an important part of our sales, constituted only 14% of the total sales in El Gouna. This came as a result of the travel bans that were issued up until July 2014 coupled with a weaker Euro and Sterling against the US Dollar. Oman and Montenegro continued to witness positive progress in the value of contracted sales, reaching CHF 36.0 million compared to CHF 29.0 million last year. In Oman, following the successful launch of the Al Fanar project in Salalah, we were able to complete a bulk-deal sale of 37 units to a Swedish investor, and we continue to focus on selling our built-up inventory. We also delivered 53 units during the period under review. Contracted sales during the period rose to CHF 13.9 million representing 46 units compared to 21 units last year. Montenegro continued its positive sales momentum this year, with the value of contracted sales rising by 15% to CHF 22 million during FY 2014 compared to CHF 19 million last year. Particularly pleasing was the first sales of large villas during the period which achieved sums in excess of Euro 2 million and proved that demand at the very top end exists in this spectacular project. Sales were undoubtedly helped by the very visible construction progress of the first phase Marina apartments and the Marina itself. Apart from the normal construction activities associated with our off plan sales, noticeable achievements in 2014 included the completion of the 283 room, four star, Makadi Hotel Gardens Azur in Makadi, Egypt and the 399 room, five star, Rotana Hotel in Salalah, Oman, both of which were completed during the first quarter of In El Gouna, we commenced construction of the Ancient Sands Hotel during the third quarter of 2014 and in Oman, we broke ground in the fourth quarter of 2014, with the construction of the Al Fanar hotel in Salalah, following its successful sales launch in August. In Montenegro, rapid progress was made on the new Marina project and the first phase of the 71 residential units which are expected to be delivered during the second quarter of 2015 with the first residents expected to move in the summer. Financial Review 2014 During 2014, real estate and construction revenues increased by 46.4% to reach CHF 72.9 million vs. CHF 49.8 million in FY This increase is attributed to the accelerated construction activity leading to an increase in the unit-deliveries for our projects in Egypt (El Gouna and Makadi) and in Oman. Accordingly the segment s adjusted EBITDA reached CHF 20.3 million compared to CHF 3.0 million in Orascom Development sold 852 real estate units for an amount of CHF 96.4 million compared to 580 units for CHF 72.8 million on 2013 ( this excludes sales coming from Andermatt, Switzerland). Also noteworthy was that the Group succeeded in decreasing the value of cancelled units for all its destinations during the year 2014 by almost 49% in terms of value compared to last year. In addition, we reduced the value of completed units from CHF 21 million in 2013 to CHF 18.5 million in 2014, mainly as a result of the efforts exerted with the sale of built inventory in El Gouna. Outlook for 2015 Following the positive pick up in Egypt during the second half of 2014, along with a restructuring of the real estate department in Orascom Hotels and Development (OHD), we believe that we have set the ground for an improved development and sales strategy that will help us achieve our sales target for In El Gouna, we are planning to have two new project launches during the year to appeal to a wider audience. For those projects, we are developing more efficient units; diversifying the inventory mix to address different market segments. Units that are smaller in size and accordingly more affordable to the younger generation, accompanied by more flexible payment terms. We are also accelerating our land development and monetization by adapting a new master development model, whereby land is developed by third parties under strict development guidelines to coincide with El Gouna s harmonious appeal. We already succeeded in signing a sub development agreement with a third-party investor, to sub develop 160,000 m 2 of land adjacent to the New Marina. In Oman, we expect further progress on the Al Fanar project with focus also remaining firmly on selling our built-up inventory. In Montenegro, we are redesigning some of the aspects of our first phase Marina Apartments to better adapt the product to market demand. Sales should continue to benefit from the new planned project launches, the rapid construction progress and our first residents who should be moving in during the summer of We are also planning to introduce a new rental management program in all of our destinations, adding to our products appeal so that buyers can also see an additional benefit from their purchase. The bulk - deal that we did in the Al Fanar project in Oman was the first example of this initiative, we expect to launch similar products elsewhere offering buyers a hands off managed rental investment product, producing attractive yields whilst at the same time creating residual income from the management of these projects. Real Estate and Construction revenues CHF 72.9 m (2013: CHF 49.8 m) Adjusted EBITDA CHF 20.3m (2013: CHF 3.0m) Value of contracted sales (CHF m) Egypt Oman Montenegro Contracted Sales by Buyer Nationality (% total) The Real Estate and Construction segment KPIs, as of 31 December Value of contracted units (CHF m) Share of GROUPS revenue 29.1% (2013: 22.5%) 56 Number of contracted units Egyptian Swedish Russian Swiss British Belgian Montenegro German Serbia French American Lebanese Danish Average Selling Price (CHF/sqm) Country Destination w FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 Egypt El Gouna ,497 2,536 Fayoum Haram City Makadi Oman Jebel Sifah ,857 2,412 Salalah Beach ,042 2,426 UAE The Cove Montenegro Lustica Bay ,390 4,335 ODH Group ,425 1,452 ODH ex Budget Housing ,625 2,519 Numbers net of cancellations: ODH Group ODH ex Budget Housing

14 26 Business Segments Orascom Development 2014 Annual Report Destination Management The Segment reports a slight decrease in revenues compared to last year Destination Management Environment in 2014 The early signs of political and economic reforms, coupled by the ongoing secure image of El Gouna, has resulted in a boost in the number of visitors this year on both fronts, the hotel guests and property home owners. The launch of the 399-room, Rotana hotel in Salalah Beach Oman, has helped increase life to the destination and helped in the closing of a bulk real estate sale deal of 37 units. While the development of Lustica Bay, Montenegro, continued to meet its construction targets in This rapid progress on the ground helped in increasing awareness of the destination, giving people a preview and a real sense of what Lustica Bay is becoming in the near future. Financial Review 2014 Revenues in Orascom Development s segment Destination Management slightly decreased to CHF 13.4 million in 2014 (2013: CHF 14.6 million). Around 40% of revenues were generated from utility functions such as water or electricity generation, while the remaining 60% were derived from commercial, urban and community services as well as infrastructure and maintenance activities. The segment reported adjusted EBITDA losses of CHF 2.1 million in 2014 compared to a loss of CHF 0.6 million in Key events El Gouna City has received the Global Green Town award in August 2014 sponsored by the United Nations Environment Program. This award is handed to cities displaying substantial measures and efforts in progress within the field of environmental sustainability, especially cities that adhere to a strict environment conservation plan and employ different mechanisms for sustainability and a greener community. El Gouna is the first city to receive this award locally as well as the first in Africa and the Arab Region. The Squash Championship; was held for the second time in April In October 2014, we launched Joubal; a new real estate project offering a mix of villas and apartments and we were successfully able to sell 54% of the project within 3 months after the launch date. In May 2014, Taba Heights witnessed one of the worst floods in the region s recent history. We had to shut-down all of our six hotels and several outlets for repairs and renovations. We succeeded to re-operate 75% of the town s guestrooms post the flash floods with the continuation & reopening of three hotels (Sofitel Taba Heights, Miramar Resort Taba Heights & the Inter Continental in June 2014 and reopening of the fourth hotel (Club Med Sinai Bay) in December Orascom Development took over the management of TTC El Wekala Golf Resort and Marriott Taba Heights reintroducing them as El Wekala Golf Resort and the Bayview Resort Taba Heights respectively. The Taba Heights Golf course was among several of the town s facilities that were damaged by the floods. The Golf Club was reopened in October 2014, allowing golfers to make the most of their holidays at one of the resorts most attractive locations. The back nine holes of the golf course are currently in use and all the practice facilities, including the driving range, the putting green and the short game area are fully operational. Taba Heights water sports provider, Water-World, has partially re-opened and currently offers snorkeling trips, parasailing and semi submarine trips to explore the shores and under water wonders of the Red Sea. In December 2014, we celebrated the opening of Sands managed Casino in Miramar Hotel as the destination s first gaming center adding a new entertainment edge to the town. In Salalah Beach, Oman, the five stars, 399 rooms Rotana hotel-resort was opened in March 2014, to be the biggest hotel in the destination and we started the construction on the third hotel Al Fanar during the fourth quarter of 2014, planning to hold 300 rooms. This year also witnessed the arrival of the first Italian charter to Salalah Beach in collaboration with Alpi Tour. We also successfully handed over 33 villas and apartments and opened the first Extra Divers diving center. In Jebel Sifah, Oman, The floating fuel station was opened on the marina, 21 apartment and villas were handed over to the clients. Infrastructure including water, plumping, IT, fire, electrical and landscape was completed on the different villas and the main resort boulevard. Extra Divers diving center was also opened in the destination post the completion of Sifawy s beach. Sablat Al Sifah ; as a CSR initiative was launched during the year, to support local women to help them establish business selling traditional food, traditional handicrafts and providing services in bride and bridegroom preparation. Interest in Lustica Bay, Montenegro, has continued to flourish and the project has been delighted to welcome a host of global buyers. Construction works of the first ten apartment buildings that was activated in 2013 has continued as planned with buildings reaching their final stages of completion by the end of The second group of eight apartment buildings has also already been activated and started the detailed design process in The marina construction has moved forward and we have seen the completion of the main breakwater structure and the commencement of various other structural elements. Outlook for 2015 In Egypt, specifically in El Gouna, we will continue to strengthen our brand awareness and ensure that guests/residents experience our life as it should be vision in our destinations. We are also working on accelerating the monetization of our land bank by continuously identifying new sub-development agreements to add to the value of our land and promote healthy competition within our developments. We are also planning to launch two new real estate projects, one during April 2015, under the name of Joubal Lagoons, as an extension to the newly launched Joubal project, after the huge demand on its units and successful sales generation. We are looking into diversifying the inventory mix of El Gouna by launching a new project towards the end of the year, offering smaller units with lower ticket size and flexible payment terms. A new water station is being constructed in addition to the studying of the development of a solar power plant facility. For Oman, we will continue our focus on new real estate sales, we are also planning to deliver 44 units in Sifah and Salalah Beach. We started the construction of the Al Fanar hotel in Salalah Beach, to hold 300 hotels rooms with plans to open during the end of We will also start with Destination Management revenues CHF 13.4m (2013: CHF 14.6m ) Share of GROUPS revenue 5.4% (2013: 6.6%) Adjusted EBITDA CHF (2.1) m (2013: CHF (0.6) m ) Destination Management Revenues by Destination (% total) 75.4 El Gouna Haram City Taba Oman The Cove the mobilization period in As Sodah Island during For Montenegro, following the increased momentum of the previous years, Lustica Bay has again committed to maintain this development momentum. Sales and marketing initiatives will be expanded to reach out to new markets, and Lustica Bay should welcome its first group of homeowners in The New Year will also see the construction kickoff for the next group of apartment buildings and the first cluster of villas. Lustica Bay has also committed to break ground on the development s first hotel by the end of The marina and other infrastructure development will continue as planned. Destination Management Revenues by Service Type (% total) Utilities Commercial Services Infrastructure & Maintenance Urban Services Community Services Others

15 28 Business Segments Orascom Development 2014 Annual Report Land Sales 3.5 Other Operations A new shift in strategy leads to a 1270% increase in the segment s revenue The Group has recently adopted the new strategic notion of entering into sub-development agreements, in a move to accelerate the monetization of its land bank, while providing strict development guidelines, to ensure control over the development and maintain the architectural harmony of the destination. Under this strategic initiative the Group enters into sub development agreements with third-party developers through the sale of specific land plots where there are no development obligations or where the Group has developed infrastructure in order to sell the land to thirdparty developers. This establishes a reference point for the market price of our land bank. Revenues from such sales are included in our Land Sales segment. In September 2014, Orascom Hotels and Development (OHD), The Group s Egyptian subsidiary successfully entered into a real estate agreement with a third-party investor to sub-develop a piece of land in El Gouna. Red Sea Construction Company; the Group s affiliate will construct the project. Revenues from the sale of land, sale of land rights and the associated costs are recognized when land is delivered and the risk of ownership and control has been transferred to the buyer. During 2014, we achieved CHF 13.7 million revenues from land sales compared to CHF 1.0 million last year, the significant increase resulted mainly from the revenue recognition of the first land parcel from first subdevelopment agreement that OHD has entered into during the year, in addition to the land revenue recognition resulting from the sales of real estate units in Ancient Sands and El Gouna. The segment Other Operations combines those businesses of Orascom Development that are not classified in any of the other business segments. The segment includes activities such as mortgage financing, rental of villas and apartments, hospital and educational services, marina, limousine rentals, laundry and other services. During 2014, revenues of the segment Other Operations increased by 5.0% in 2013 to CHF 31.7 million in 2014, in particular due to the increase of Tamweel Mortgage finance business operation. Land Sales revenue Other operations revenue CHF 13.7m (2013: CHF 1.0m ) CHF 31.7m (2013: CHF 30.2m ) Share of GROUPS revenue Share of GROUPS revenue 5.4% (2013: 0.5%) % (2013: 13.6%) Adjusted EBITDA Adjusted EBITDA CHF 12.0m (2013: CHF 0.6m) CHF 9.0m (2013: CHF 9.7m) 14 13

16 30 Countries Orascom Development 2014 Annual Report Countries Egypt UAE Jordan Oman Switzerland Morocco Montenegro United Kingdom 8 operating destinations with several projects at different stages of development

17 32 Countries Orascom Development 2014 Annual Report 33 Countries Orascom Development Orascom Development has a diversified portfolio of destinations, which is spread over eight jurisdictions covering Egypt, UAE, Jordan, Oman, Switzerland, Morocco, Montenegro and United Kingdom. It is a leading developer of fully integrated and infrastructure-supported destinations that include hotels, private villas, apartments and leisure facilities namely, golf courses and marinas. Our strategy is based on the creation of value in our land bank for the medium and long-term stakeholders. To that end, we accumulate large tracts of land with enough space to develop self-sufficient communities and towns. Subjected to certain conditions, the Group has, up to this date, secured land banks of approximately million m 2 in several jurisdictions. Moreover, Orascom Development holds its undeveloped land banks primarily by way of contractual rights or usufructs, with the option to acquire legal title. Key Facts Egypt UAE Jordan Oman Switzerland Morocco Montenegro UK 8 Countries of Presence 7,382 Hotel Rooms operating million m 2 Total Land Bank The Group has also developed eight operating destinations including tourist destinations such as El Gouna on the Red Sea coast, Taba Heights in the Sinai Peninsula and Makadi in the Red Sea district in Egypt, The Cove in Ras Al Khaimah in UAE, Jebel Sifah and Salalah Beach in Oman and recently, Andermatt Swiss Alpes in Switzerland, by launching the Chedi Andermatt Hotel in December 2013, in addition to the budget housing community of Haram City in the Greater Cairo area in Egypt. Furthermore, several destinations are currently in various stages of development and planning in Oman, Morocco, Montenegro, and the United Kingdom. 17 hotels self-managed & 15 hotels under international & local hotel management 32 Operating Hotels El Gouna, Egypt, Taba Heights, Egypt, Haram City, Egypt, Makadi, Egypt, Jebel Sifah & Salalah Beach, Oman, The Cove, UAE, Andermatt, Switzerland 8 Operating Towns Orascom Development s Land Bank Destination Name Total land bank Completed Under construction Under development Undeveloped EGYPT El Gouna Taba Heights Haram City Amoun Island Fayoum Qena Gardens Makadi UNITED ARAB EMIRATES The Cove JORDAN Tala Bay OMAN Jebel Sifah Salalah Beach As Sodah Island City Walk SWITZERLAND Andermatt MOROCCO Chbika MONTENEGRO Luštica UNITED KINGDOM Eco-Bos Total Percentage of Total Land bank Size 17% 4% 8% 71% 1 An understanding has been reached between Orascom Development and the government of Oman in 2007, however no offical land has been allocated to Orascom Development yet. Land categories Total Land Bank Completed Under construction Under Development Undeveloped Definition Any plot of land, developed or undeveloped, which is under the direct or indirect possession of Orascom Development by virtue of lease, usufruct and/or ownership rights and over which Orascom Development may have further rights to develop, fully own, lease to third parties, sell to third parties, grant sub-usufruct rights to third parties, or otherwise dispose to third parties. Each plot of land is governed by the respective agreement between Orascom Development (directly or indirectly) and the respective governmental entity, shareholders, and/or investors Any plot of land where infrastructure is completed and individual elements of the projects are completed Any plot of land where infrastructure is completed and individual elements of the projects are under construction Any plot of land where infrastructure is under construction but not yet completed Any plot with zero infrastructure (raw land)

18 34 Countries Orascom Development 2014 Annual Report 35 OPERATING DESTINATION EL GOUNA, EGYPT El Gouna, the 25 year old town, is Orascom Development s flagship and the group s Life as it should be development benchmark. It is a self-sufficient, fully integrated resort town, stretching across 10 km of pristine shoreline on the beautiful Red Sea coast with a total land area of 36.9m 2. With over 24,000 residents, El Gouna is a multinational community that continues to grow. Current Resort Amenities - 16 hotels with 2,707 guestrooms, a mix of 5, 4 and 3 star hotels - 3,196 residential units sold since commercial outlets - International standard hospital - International standard schools - Public library affiliated to Bibliotheca Alexandrina - Satellite campuses of prestigious institutions including Technische Universität Berlin & American University in Cairo - Three world class marinas & a Yacht Club - Two 18-hole championship golf courses - Cable Park; a complete water sports complex Turquoise beaches, shimmering lagoons, year round sunshine and only a four hour flight from Europe, El Gouna is the true definition of paradise. It boasts world class infrastructure, upscale services and is home to some of the world s most reputable brands in the tourism and leisure industries. The town features a multitude of luxurious facilities including: a landing strip, three international standard marinas, two 18-hole championship golf courses, the Angsana Spa, a state of the art Lax Gym and an international standard hospital providing 24 hour emergency care. El Gouna is a pioneer in education with the only campus of the Technische Universität Berlin in Egypt and the Middle East, a field study center of the American University in Cairo, both international and Egyptian curriculum schools, a German-Egyptian hotel school and a nursing institute based on American training programs. The town is suitable for all ages and offers fun and diverse activities ranging from: fully equipped water sports centers, yachting, fishing, to tennis and horseback riding. It also has over a hundred restaurants and bars. In El Gouna, the options are endless. Culture is also a strong pillar of El Gouna, with a public library affiliated to the world famous Bibliotheca Alexandrina, a Culturama multimedia cultural presentation, the presence of a mosque and church, in addition to cultural festivals and major events. El Gouna is honored to be the first destination in Africa and the Arab Region to receive the Global Green Town Award in August Sponsored by the United Nations Environment Program, this award is handed to cities displaying substantial measures and efforts in progress within the fields of environmental sustainability. Progress in Launched Joubal a new real estate residence/ neighborhood - Continuing with the development of the first phase of Ancient Sands Apartment Hotel set to open in December 2015 with a total inventory of 120 apartments, 56 rooms, 2 restaurants, a bar and a café - Progressing with the renovation of Sultan Bey and Arena Inn hotels - Enhanced hotels facilities to include free WIFI at public areas. IPTV infrastructure is currently being set with a launch planned for mid Granted the Global Green Town Award by the United Nations Environment Program

19 36 Countries Orascom Development 2014 Annual Report 37 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 and home to approximately 4,000 permanent residents. The destination comprises a total land area of approximately 4.3 million m 2 with around 2.8 million m 2 already developed. Current Resort Amenities - Six 4- and 5-star Hotels with 2,365 guestrooms commercial outlets - 18-hole championship golf course - 5-star water sports center - First man made salt cave - Hospital - School The integrated upscale resort town boasts breathtaking scenery and a supreme location overlooking four countries: Egypt, Israel, Jordan, and Saudi Arabia with Taba International Airport only 25 km away. The Taba Heights Marina is the first legitimate port of entry in the region. The localized port offers maritime visitors direct access, entry and secure moorings, making the Gulf of Aqaba a much more attractive and appealing destination to sail to. The marina has approximately 11,500 m 2 of water area, with depths between 2.5 and 3 meters near the main building. The marina can comfortably accommodate up to 50 yachts and provide overnight mooring. On the 30 th of September 2012, Orascom Hotels and Development succeeded in reopening the Marina. In 2013, the Group started the development plan of the International Tourist Marina to increase the number of passengers, through constructing two luxury hall-buildings, Arrival Hall & Departure Hall, fully furnished by all required tools and equipment adding to the destination s lavish amenities and the clients exceptional experience. Taba Heights is also a popular starting point for excursions to UNESCO World Heritage sites, such as the monastery of Saint Catherine, the rose-red city of Petra, the desert of Wadi Rum, the holy city of Jerusalem and the Dead Sea. Progress in Succeeded to re-operate 75% of the town s guestroom inventory post the flashfloods that hit Taba hotels in May - Took over hotel management of the TTC El Wekala Golf Resort and Marriott Taba Heights reintroducing them as El Wekala Golf Resort & The Bayview Resort Taba Heights respectively - Celebrated the opening of the Sands Casino as the town s first gaming center and a new attraction for regional guests

20 38 Countries Orascom Development 2014 Annual Report 39 OPERATING DESTINATION HARAM CITY, EGYPT Haram City During the last quarter of 2006, Orascom Development entered the budgethousing arena, a business strategically focused on developing affordable income housing throughout Egypt. Project Amenities at completion: - 11,500 built residential units - A Clinic - Four Schools - 89 commercial outlets Orascom Housing Communities (OHC), a 35.3 % owned company by Orascom Hotels and Development, manages this line of business. Launched in 2007 as the first of its kind in Egypt, Haram City s award-winning model of affordable housing within a sustainable and fully integrated township encourages social responsibility and civil engagement. Spanning over approximately 2.6 million m 2 of land, the project is now home to more than 30,000 residents. As a truly integrated development, Haram City offers comprehensive community facilities including schools, clinics, worship houses, sporting amenities, a cinema, and 89 commercial outlets. Beyond ensuring the town s self-sustainability through employment opportunities in commercial and industrial sectors, the city hosts various projects designed to stimulate job creation and benefits the overall community as well as underprivileged segments. In order to improve the quality of education of the town students, the Group subsidizes four public schools such as Haram City Language School, making it more affordable for the enrolled students to learn English, German, and Arabic. Progress in Started the construction of 252 units to be delivered during Delivered 616 units during 2014 and started the excavation of 786 new units - Started developing the infrastructure of 120 acres (including roads, hardscape, planting, plumping pipes, water and fire pipes, and medium and low voltage cables) - Started the construction of several service buildings including (Electric substation, Police station, Orascom Language School, and a Church)

21 40 Countries Orascom Development 2014 Annual Report 41 OPERATING DESTINATION MAKADI, EGYPT Settled in the heart of the Red Sea only 30 km away from Hurghada International Airport, lays the unique residential and touristic community, Makadi. As the only residential community in Makadi Bay, the destination adds a different flavor to the area when compared to its neighboring resort based communities. Resort Amenities at Completion: - 6 hotels, a mix of 5, 4 and 3 star hotels - Commercial mall with 28 outlets - Medical center - School - Sports club - Worship areas With a mission to provide upper middle class families the opportunity to own a home at affordable prices, the town resort is now featuring a variety of residential units, Makadi Garden Azur Hotel and Makadi commercial mall. Makadi stretches across 3.5 million m 2 providing both its residents and visitors all the services and facilities that they would require and desire. Orascom Development Management, a wholly owned subsidiary of Orascom Development, acts as the Development manager in charge of design, sales, marketing and community management. Being the first gated community in Hurghada, Makadi is destined to provide the community with high quality services, among which is Hurghada s first club Makadi Club that offers social and sports activities, not to mention the spacious commercial area, hotels, medical center and school. With such services being provided, not only owners and hotel visitors of Makadi will enjoy their stay, but also all of Hurghada will find something suitable in Makadi to fulfill their needs. Progress in Started the operation of Makadi Garden Azur; a 4 star hotel, with 283 Guestrooms in February Delivered 538 residential units - Sold land plots to investors - Completed the infrastructure of 10,500 m 2 of residential and commercial areas

22 42 Countries Orascom Development 2014 Annual Report 43 OPERATING DESTINATION QENA GARDENS, EGYPT OPERATING DESTINATION FAYOUM, Egypt Following the success of Haram City, Orascom Housing Communities was allocated 0.8 million m 2 of land in the Qena Governorate, Upper Egypt, in Committed to providing high-quality affordable housing units within sustainable and fullyintegrated townships in Egypt, Qena Gardens was master planned to incorporate 8,000 residential units, a school, clinics, shopping areas, and an entertainment venue. In appreciation of its proven development record, in 1998, the Egyptian Government awarded Orascom Development a total land area of 1.2 million m 2 in Fayoum, located 100 km southwest of Cairo in an ideal location overlooking the spiritual lake of Qarun. Plans are set to develop two luxury residential communities, Byoum and Al Roboua, in Fayoum. The master plan for Byoum includes a marina, a 4-star hotel, and 265 residential units. Whereas its neighboring sister-project, Al Roboua is set to feature 36 standalone villas with supporting infrastructure. Progress in Delivered 43 units during Started the construction of 10 new units to be delivered in Finished the construction of Tamr Henna service building

23 44 Countries Orascom Development 2014 Annual Report 45 Developing Destination OTHER HOTEL AMOUN ISLAND, EGYPT ROYAL AZUR & CLUB AZUR, EGYPT Grand Resorts Royal MAKADI BAY Club Club MAKADI BAY Orascom Development entered into a lease agreement with the Egyptian Government in 2005 to develop 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 presents 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, a lounge bar, a wine cellar and a private library. Located at Makadi bay, one of Hurghada s fascinating shores, 30km away from Hurghada International airport, the two hotels overlook their own spacious private sandy beach, offering sixteen restaurants and bars, fully equipped water sports center, tennis courts, squash court, billiards, a fully equipped fitness room and swimming pools. OTHER HOTEL ZAHRA OBEROI, EGYPT Described as one of Egypt s most spacious cruise ships with 27 cabins, Oberoi Zahra offers the highest standards of hospitality and service. The Oberoi Zahra is the only Nile Cruiser with a fullservice spa and has been recognized by the Egyptian Ministry of Tourism as the Best Cruiser on the River Nile.

24 46 Countries Orascom Development 2014 Annual Report 47 OPERATING DESTINATION THE COVE, UAE The Cove is located at the entrance of the Ras Al Khaimah emirate on an idyllic water inlet at Arqoob beach overlooking the Arabian Gulf, just 8 km from the city centre, 20 km from the Ras Al Khaimah airport and an 87 km drive from Dubai. Current Resort Amenities residential units - Close proximity to two golf courses, several shopping malls and supermarkets, international schools, and hospitals of international standard The Cove Rotana Resort is an ideal destination for leisure and business travelers alike. It is in close proximity to two golf courses, shopping mall, supermarket, international school and a hospital. 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 with a 600 meters private beachfront and comprises an internationally renowned 5-star hotel operated by Rotana, exclusive real estate, and a range of upscale services and amenities. Progress in Awarded the Luxury Coastal Resort Continent Winner-2014 World Luxury Hotel Awards - Awarded the RTK Hotel Award 2014 as one of the Top 100 Hotels for RTK Travel Agents in Germany - Finalizing the construction of 150 new rooms to be added to the hotel s inventory

25 48 Countries Orascom Development 2014 Annual Report 49 OTHER HOTELS TALA BAY, JORDAN Tala Bay was the Group s first regional rollout of its model outside of Egypt. Situated on the Gulf of Aqaba in the northern Red Sea, Jordan s only sea gateway, Tala Bay 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 15 km from the Aqaba International Airport. Orascom Development owns and manages the Marina Town Plaza Hotel, which started operations in April 2008 encompassing 260 rooms. Connected to Sinai in Egypt via the Taba Heights Marina, Tala Bay is a tourist attraction known for its proximity to Sinai s cultural attractions and the ancient town of Petra in Jordan.

26 50 Countries Orascom Development 2014 Annual Report 51 OPERATING DESTINATION JEBEL SIFAH, OMAN A natural getaway located on the shores of Oman, Jebel Sifah is Orascom Development s third biggest town, set on 6.2 million m 2 with a 5km-long beachfront stretch and a backdrop of the Hajar mountain range the highest mountains in the Arabian Gulf. Resort Amenities at Completion: total residential units; including 18 completed apartment blocks - First inland marina in Oman, with a berthing capacity to hold 84 boats in water and 120 on land (opened in 2012) - Planned 18 hole PGA golf course designed by Peter Harradine - Six Hotels with 1,062 planned guest rooms; Four 5-star hotels including Four Seasons, Banyan Tree, Anantara, and One 4-star Sifawy Boutique Hotel (55 rooms opened in 2012) - Restaurants, cafes, shops, pharmacies & luxuriously appointed spas A large fully integrated tourism complex covering a vast and beautiful area, Jebel Sifah is planned to include 100% freehold residences along with all the amenities and infrastructure of a modern luxury town with the possibility for expatriates to obtain official residency permits upon property purchase. The design and architectural inspiration of the town is drawn from the rich historical traditions of Oman and will provide fantastic panoramic views of the sea and sky thanks in part to a 25% low building density. Within an hour s drive from Muscat, Jebel Sifah is also easily accessible from Europe and the Arabian Peninsula. Progress in units were handed over including 15 apartments and 6 villas - Completed the Sifawy Boutique Hotel expansion (13 Hotel Apartments) - Opened the floating fuel station on the marina - Started the Golf Course construction, and completed its design and rough shaping - Infrastructure completed in the main resort boulevard and different villa zones including water plumping, electrical linkage and landscape - Opened Extra Divers dive center

27 52 Countries Orascom Development 2014 Annual Report 53 OPERATING DESTINATION SALALAH BEACH, OMAN Salalah Beach is the Group s first and the region s only tropical destination that presents the best of modern amenities and night life combined with an age-old Arabian charm. A large, family-oriented, integrated tourism complex situated in the southern part of Oman, approximately 1,000 km from Muscat, Salalah Beach is set on 8 kilometers of pristine beach in Oman s stunning Dhofar region on the Arabian Sea as well as a man-made lagoon system extending the sea inland. Resort Amenities at Completion - 7 hotels with 1,800 planned guestrooms; 5 star & Boutique hotels including Club Méditerranée, Mövenpick Hotels &Resorts, Al Fanar hotel and Juweira Boutique hotel (64 rooms opened in 2012) Rotana Hotel (399 rooms opened March 2014) berth Marina and Marina Town - Two 18-Hole PGA Golf Courses - Retail venues, restaurants & cafes The destination comprises an area of 15.6 million m 2, located only 20 minutes away from Salalah Airport and approximately 90 minutes flight from most GCC countries. Properties are 100% freehold and come with access to all the amenities of the destination including the opportunity for expatriates to obtain official residency permits in a taxfree country. Salalah Beach is set to boast luxury apartments and villas on freehold basis, world-class hotels, sumptuous restaurants and a myriad of entertainment and retail opportunities, including two 18-hole PGA golf courses and a 200-berths inland marina. Progress in units handed over including 24 apartments and 9 villas - Opening of Rotana 5 star hotel with 399 rooms - Started the construction of the third hotel Al Fanar to include 300 rooms - The arrival of the first Italian charter to the destination in collaboration with Alpi Tour - Implemented the Sale and Leaseback system at Al Fanar Project with 37 off plan units - Opened Extra Divers dive center - Water sports and lagoon trips

28 54 Countries Orascom Development 2014 Annual Report 55 DEVELOPING DESTINATION AS SODAH ISLAND, OMAN DESTINATION IN THE PIPELINE CITY WALK, OMAN A secluded island covering 11 million m 2, As Sodah is located off the southern coast of Oman opposite Salalah Beach. The Island is set to be the region s niche destination, comprising a luxury boutique hotel. The hotel spans an area of 1 million m 2 and features exclusive pavilions with swimming pools and private access beach. The hotel s plan also includes a main lodge and a spa. City Walk Muscat is the awaited vibrant Downtown City Complex; in the Seeb area, serving the cosmopolitan capital city of Oman, Muscat. The master plan encompasses a modern administrative tower and a luxury shopping mall in addition to a five star hotel with a capacity of 270 guestrooms. The land covers an area of 120,000 m 2, ODH is planning to develop one of the biggest commercial/touristic complex in the Middle East spanning a beach-front area of 2 km.

29 56 Countries Orascom Development 2014 Annual Report 57 OPERATING DESTINATION ANDERMATT, SWITZERLAND The Andermatt Swiss Alps development is transforming the traditional Swiss Alpine village into one of the best year-round destinations in Switzerland comprising some of the finest facilities. Resort Amenities at Completion - Six 4- and 5-star hotels with 844 planned guest rooms - The Chedi Andermatt; 5-star Deluxe Hotel, commenced operations in December of 2013 with 105 rooms and suites - Approximately 500 apartments in 42 buildings - 25 exclusive bespoke chalets - Largest ski arena; Andermatt-Sedrun in Central Switzerland - 18-hole Championship golf course designed by the renowned architect Kurt Rossknecht, Lindau (GER) - Sports Centre with all-season leisure pool - Conference facilities - 35,000 m 2 of commercial space With a total land bank of approximately 1.5 million m 2, Andermatt is situated at 1,440 meters above sea level and lies approximately 1.5 hours by car from Zurich and 2 hours from Milan. Its central location results in excellent connections to the major national and international transport routes. Every building in Andermatt Swiss Alps Development has been individually designed by one of over 30 selected Swiss and international architects to create a beautiful and eclectic appearance for the master-planned resort. To maintain a perfectly harmonious and peaceful environment the village centre will be a car free zone and enough underground parking spaces are provided for visitors and residents. The new accommodation and sports facilities mean that whether you seek adrenalin or relaxation your needs are catered for in the most spectacular surroundings, from an ecologically designed 18-hole golf course meeting international tournament standards ideal for outdoor summer activities, to modernized ski facilities linking up with the neighbouring ski area of Sedrun to form a 120-kilometer ski domain. The highly integrated infrastructure and state of the art facilities will also make the village the perfect location for cultural events and congresses. In March 2013, Mr Samih Sawiris has become the new majority shareholder of ASA with a 51% share by converting his loans to the Group into ASA equity, and acts as new Executive Chairman of ASA, and is committed to invest at least CHF 150 million to secure funding of the critical size of the resort until The Group has a remaining share of interest of 49% in ASA, remains committed to the project and will benefit from any future upside. Progress in The Andermatt golf course received positive press during its first year of trial runs with an official opening scheduled for 2016, whilst having started the construction of the golf clubhouse scheduled to open by mid First complete year of operation for The Chedi Andermatt 5-star Deluxe Hotel with 105 rooms and suites - The additional Chedi-Hotel-residences body shell has been completed and those units should be finished by the end of Completion of the construction of two apartment buildings with more than 20 apartments - Progress in the construction of two further apartment buildings with more than 40 apartments to be delivered in Start of the construction of a new Hotel with residential apartments - Building of a ski arena combining Andermatt and Sedrun ski areas with new lifts is on track

30 58 Countries Orascom Development 2014 Annual Report 59 DEVELOPING DESTINATION CHBIKA, MOROCCO Coming across a location of such untapped beauty along with the unique landscape of the ocean, mountains and sand harmoniously co-existing; has contributed to the molding of Chbika s architecture with the natural surroundings. Chbika is ideally located approximately 400 km south of Agadir directly in front of the Canary Island of Fuerteventura on the Atlantic Ocean, with a total land area of 15 million m 2. Resort Amenities at Completion: - Mix of 4 and 5 star hotels - Mix of villas, apartments and customizable mansions in the Kosour neighborhood - World class marina with a capacity of 100 berths and a medina style city center - 18-hole golf course - Shopping & sports facilities, restaurants, bars, & a health center The Group is planning to turn Chbika into Morocco s first selfsufficient and fully integrated tourist destination. The master plan of the project reflects a modern oasis of harmony characterized by a western, Moroccan cultural blend. Home to eight planned hotels, 1,166 apartments and 685 villas, atmospheric riads, and even customizable mansions in the Kosour neighborhood, Chbika, like all other Orascom Development signature towns, will feature state-of-art facilities including an 18-hole championship golf course, a marina, shops, dining outlets, as well as a medina-style handcraft center and a medical facility. Progress in Started the negotiations of raising the needed funds to develop 3 hotels with a total capacity of 1,000 rooms in addition to finishing the marina and the first 9 holes of the golf course - Continued to promote the destination through the Chbika Weekends concept, hosted at the Chbika Guest House - Increased marketing activities and hosted an Italian TV reality show on site - More than 100,000 people were introduced to Chbika through new social media outlets creating the Chbika community

31 60 Countries Orascom Development 2014 Annual Report 61 DEVELOPING DESTINATION LUŠTICA BAY, MONTENEGRO Luštica Development A.D. is developing a fully integrated, self-sufficient and luxury touristic destination on the Montenegrin Adriatic coast at the idyllic Trašte Bay with a land bank of 6.9 million m 2, only 10km from Tivat airport and 60km from Croatia s Dubrovnik airport. The Group had concluded the lease and development agreement with the Government of Montenegro and the Municipality of Tivat on the 23 rd of October Resort Amenities at Completion: - Over 1, 500 residential units comprising villas, townhouses and apartments - 7 hotels - A Gary Player signature 18-hole championship golf course - Spa & wellness centre - 2 world-class marinas with a total of 226 berths - Conference centre - Year-round facilities including shops, restaurants, schools and medical services - 4-Kilometers of coastal promenade and swimming platforms Accordingly, Luštica is the lessee of a 6.9 million m 2 land bank with a lease period of 90 years and subject to further extensions. Luštica is committed to creating and operating a healthy and sustainable resort environment, Where by economic, environmental, and social aspects are balanced in the framework of every decision making process, based on the principles of sustainability while maintaining the natural beauty and cultural heritage of the land. Over the past few years, Montenegro continued to firmly establish itself as the go-to destination in Europe, ultimately increasing interest in Lustica Bay, which has been welcoming a host of global buyers. The rapid development progress of Lustica Bay in 2014 helped increase its recognition and feel of what this destination is becoming to be in the near future. Progress in Completion of first 71 apartment units - Excavation works for additional real estate clusters have been completed with expected delivery in meter of the main breakwater on the marina has been completed - Started the construction of the marina - Commenced the excavation works for the Golf Course - Construction works of the first Condo-Concept Hotel will begin during the second half of 2015

32 62 Countries Orascom Development 2014 Annual Report 63 DESTINATION IN THE PIPELINE ECO-BOS, UK The Group formally established Eco-Bos Development Ltd. in May 2010 as a joint venture with Imerys, a multinational industrial minerals company, to develop a series of sustainable communities in Cornwall United Kingdom. The total land bank is over 6.5 million m 2 divided over 6 separate sites. The scheme was originally conceived as part of the UK Government s Eco-town competition to promote the growth of sustainable communities and the innovative Eco-Bos proposals to regenerate land formerly used for minerals extraction and processing reflects the potential and aspirations of such green development initiatives. The Eco-Bos proposals will offer a mixed portfolio of around 5,000 real estate dwellings across all market sectors along with associated retail and employment spaces. Leisure and recreation facilities are also planned with proposals for one ocean-facing site including a 5 star hotel and marina development. The company continues to work closely with the local authorities in order to bring forward planning and development for the first of these sites in the near future.

33 64 Corporate Governance Orascom Development 2014 Annual Report Corporate Governance Aligning with the best practice code of corporate governance

34 66 Corporate Governance Orascom Development 2014 Annual Report 67 Corporate Governance 5.1 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 2014 financial year, the following shareholders have disclosed participation in the Company of 3 percent or more in voting rights (in accordance with Art. 20 SESTA 2 ) 3 : Orascom Development Holding AG Name of Shareholder Date of latest disclosure 4 Number of shares Percentage of ownership of the total equity capital and voting rights 5 Samih O. Sawiris 6 May 13, ,534, % Hotels Real Estate & Construction Destination Management Land Sales Other operations Janus Capital Management LLC 7 Aug. 25, ,156, % A B C The operating business of Orascom Development Holding AG ( Orascom Development or the Company ) is organized into the following segments: Hotels, Real Estate and Construction, Destination Management, and Other Segments. As of the end of the 2014 financial year, the following listed companies were part of Orascom Development s scope of consolidation: Company Orascom Development Holding AG (Altdorf, Switzerland) (Cairo, Egypt) Orascom Hotels & Development S.A.E. (Cairo, Egypt) The market capitalization of Orascom Development as per December 31, 2014 is CHF 515,203,803. Orascom Development has a dual listing with its primary listing on the main board of the SIX Swiss Exchange. The secondary listing is in the form of EDRs (Egyptian Depositary Receipts) on the EGX Egyptian Exchange (20 EDRs = 1 equity share). SIX Registration Exchange six Swiss Exchange Symbol ODHN Security number ISIN CH EGX Registration Exchange Symbol ISIN 1 The last trading day of Orascom Hotels & Development S.A.E. on EGX was on December 31, egx Egyptian Exchange ODHN egg676k1d011 EGX Registration Exchange egx Egyptian Exchange Market capitalization egp 4,312,727,955 1 Symbol ORHD ISIN egs70321c012 Orascom Hotels & Development S.A.E. is 99.68% owned by Orascom Development Pursuant to a tender offer completed in January 2011, Orascom Development increased its holding in the Egyptian subsidiary Orascom Hotels & Development S.A.E. to 99.68%. For information on the non-listed companies comprised by Orascom Development s scope of consolidation, please refer to Note 19 (Subsidiaries) of the consolidated financial statements. On September 21, 2011, Blue Ridge Capital Holdings LLC and Blue Ridge Capital Offshore Holdings LLC 8 disclosed that their participation in the Company had fallen below 3 percent in voting rights. On November 7, 2013, Orascom Development disclosed that it has terminated the securities lending agreement entered with Samih O. Sawiris under which Orascom Development was entitled to lend up to 1,286,353 registered shares of Orascom Development from Samih O. Sawiris. This termination led to the decrease of Orascom Development Holding s participation in the company 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. 2 Swiss Federal Act on Stock Exchanges and Securities Dealing. 3 The table, in accordance with the SIX Swiss Exchange s guidelines, shows significant shareholders participations as last disclosed pursuant to Art. 20 SESTA. The number 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 December 31, 2014, given that a shareholder may have purchased or sold shares subsequent to the last disclosure, but may not have thereby crossed a disclosure threshold. See also Note 5 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 of December 31, 2014, refer to Note 27.5 of the Company s non-consolidated financial statements. 4 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 (May 13, 2008). 5 The percentages shown relate to the Company s registered share capital as of 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 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. 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). 6 The shares of Samih O. Sawiris are held directly and through his entities Thursday Holding Ltd. (former TNT-Holding Ltd.) and SOS Holding Ltd. 7 Janus Capital Management LLC, with its principal office at 151 Detroit Street, Denver, CO 80206, is the investment adviser of (a) Janus Overseas Fund, with its principal office at 151 Detroit Street, Denver, CO 80206, (b) Janus Adviser International Growth Fund, with its principal office at 151 Detroit Street, Denver, CO 80206, and (c) Janus Aspen Series International Growth Portfolio, with its principal office at 151 Detroit Street, Denver, CO Blue Ridge Capital Holdings LLC, with its principal office at 660 Madison Avenue, New York, NY 10065, is the general partner of Blue Ridge Limited Partnership, with its principal office at 660 Madison Avenue, New York, NK Blue Ridge Capital Offshore Holdings LLC, with its principal office at 660 Madison Avenue, New York, NY 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.

35 68 Corporate Governance Orascom Development 2014 Annual Report Capital Structure Capital As of December 31, 2014, 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 conditional capital amounted to CHF 130,489, The authorized capital amounted to CHF 10,000, Authorized and conditional capital Authorized capital The ordinary meeting of shareholders held on May 12, 2014 (refer to Art. 4a of the Articles of Association) authorized the Board of Directors to increase the share capital of the Company by a maximum of CHF 10,000, by issuing of up to fully paid-up registered shares with a par value of CHF each until May 12, 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. As of December 31, 2014, no option rights, conversion rights, or warrants had been granted on the basis of Art. 4b. Changes in capital in the past three years 2011 At the ordinary general meeting of shareholders on May 23, 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 be equally reduced by CHF 0.65 and the amount of the reduction be 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 330,029 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 May 23, 2011 (see above) became effective on August 8, 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 The share capital was not changed in 2012 and no decisions have been made on changes in share capital. The registered share capital as of December 31, 2012 amounted to CHF 662,201, and is divided into 28,543,147 registered shares with a par value of CHF The share capital was not changed in 2013 and no decisions have been made on changes in share capital. The registered share capital as of December 31, 2013 amounts to CHF 662,201, and is divided into 28,543,147 registered shares with a par value of CHF The share capital was not changed during the year under review and no decisions have been made on changes in share capital. The registered share capital as of December 31, 2014 amounts to CHF 662,201, and is divided into 28,543,147 registered shares with a par value of CHF Shares and participation certificates The 28,543,147 registered shares with a par 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 5.7. 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 of December 31, 2013, 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 before, 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 the votes represented (ref. to Section 5.7 below). Convertible bonds and warrants/options The Company has not issued any convertible bonds, warrants or options.

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37 72 Corporate Governance Orascom Development 2014 Annual Report 73 Name Function Nationality Birth Elected first Elected until Audit Committee The current members of the Board of Directors are all non-executive, with the exception of Mr. Sawiris who has served as Chief Executive Officer of the Company on an ad interim basis since April 1, 2014 and Mr. Tooma who has served as Chief Financial Officer of the Company on an ad interim basis since September 1, With the exception of the Chairman and Mr. Tooma, none of the 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. There are no news in respect of other activities and vested interests which fall within the scope of Subsection 3.2 of the SIX Directive on Information relating to Corporate Governance. Nomination & Comp. Committee Samih O. Sawiris Chairman EGY Adil Douiri Member MOR Member - Franz Egle Member CH Member Carolina Müller-Möhl Member CH Eskandar Tooma Member EGY/CA Marco Sieber Member CH Head Jürgen Fischer Member CH Jürg Weber Member (Lead Director) CH Head Elections and terms of office The 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. 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 sixth ordinary general meeting of shareholders held on May 12, 2014, Jean-Gabriel Pérès decided not to stand for re-election. All other members of the Board of Directors were re-elected (each by separate vote) for a term of one year. Mr. Jürgen Fischer and Jürg Weber were elected as new members of the Board of Directors. Internal organizational structure Board of Directors 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 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 of Directors has delegated the management of the Company s business to the CEO. The Board of Directors appoints the CEO and the other members of Executive Management. The Board of Directors constitutes itself autonomously and appoints its 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 member of the Board of Directors 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. 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 the Audit Committee. Audit Committee The Audit Committee consists of two non-executive members of the Board of Directors as determined by the Board. The two 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 of Directors 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 decisionmaking power. Nomination & Compensation Committee The Nomination & Compensation Committee consists of two nonexecutive members of the Board of Directors as determined by the Board. The mission of the Nomination & Compensation 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 Nomination & Compensation Committee has decision-making power regarding matters of the compensation of executive members of the Board of Directors and members of Executive Management. The Nomination & Compensation Committee issues recommendations to the Board of Directors 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 it by the Board for the committee s consideration.

38 74 Corporate Governance Orascom Development 2014 Annual Report 75 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 of the Board. Any member of the Board of Directors may request the Chairman to convene a meeting. The members of the Board of Directors 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 2014 financial year, the Board of Directors convened for six meetings, and passed four circular resolutions. Of the six meetings, five were held as physical meetings and one meeting was held by telephone conference. The Audit Committee convened for five meetings. The Nomination & Compensation Committee convened for three physical meetings and two telephone conferences. Certain members of Executive Management, participated in several meetings of the Board of Directors and the committees. Physical meetings of the Board of Directors as well as of the Audit Committee and the Nomination & Compensation Committee typically lasted approximately from three to eight hours, while telephone conferences typically lasted from thirty minutes to two hours. 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 of Directors 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 of Directors. Excluded from such delegation to the CEO are the inalienable duties of the Board of Directors 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 that comprehensive information is provided to 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. During the year under review, individual Board of Director s members supported Executive Management in various projects. Furthermore, members of the Board of Directors cultivate a regular informal exchange of ideas with Company management and regularly visit the Company s locations. The company s management has been managing to enhance the internal governance by increasing the capacity of the internal audit functions. In general, the in-house internal audit function has performed many ad-hoc assignments in addition to the pre- planned assignments. For each assignment, a report of major findings was presented to and discussed with the management on the entity level, and corrective actions were agreed. 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 upon.

39 76 Corporate Governance Orascom Development 2014 Annual Report Executive Management Definition of areas of responsibility The CEO who is responsible for the day-to-day operational management of the Company is supported by the Executive Management. The Executive Management assists the CEO in developing and implementing the strategic business plans for the Company overall as well as for the principal businesses, subject to approval by the Board. The Executive Management further reviews and coordinates significant initiatives, projects and business developments in the segments, regions and in the corporate services functions and implements Company-wide policies. Changes in the Executive Management in 2014 As of April 1, 2014, Mr. Gerhard Niesslein stepped down from his position as Chief Executive Officer and left the Company. The position of Chief Executive Officer was taken over by the Chairman, Mr. Samih O. Sawiris on an adinterim basis As of April 15, 2014, Mr. Aly Elhitamy and Mr. Julien Renaud-Perret resigned from the Executive Management and took over other positions within the company. Members of Executive Management Besides the Chairman Mr. Samih O. Sawiris who holds the position of Chief Executive officer on an ad-interim basis and the member of the Board of Directors Mr. Eskandar Tooma who holds the position of Chief Financial Officer on an ad-interim basis, the following persons form the Executive Management of the Company as of December 31, 2014: Dalia El Gezery Chief Human Resources Officer Egypt national, born 1970, Mrs. El Gezery joined the Company in 2014 as a member of the Executive Management in charge of the Human Resources activity of the Company. Prior to that, she held different senior management roles at Vodafone Egypt serving most recently as HR Director and member of the Executive Management. Earlier, Mrs. El Gezery worked for Lloyd s insurance company in the UK and AT&T/ Lucent Technologies in the Middle East & Egypt. She has a Management Diploma in Business Administration and Human Resources from the American University in Cairo and is about to complete a Master of Science in Coaching and Behavioral Change from Henley Business School at the University of Reading, UK. 5.5 Employees As of December 31, 2014, the Company had employees worldwide, of which were in Egypt. The number of employees decreased by 2 154, compared to the end of This reduction in headcount of employees is due to the political and economic situation in 2014 and the Company s cost-cutting initiatives. The company considers its relations with the employees to be good. Abdelhamid Abouyoussef Chief Hotel Officer An Egyptian National, born 1975, Mr. Abouyoussef is a tourism entrepreneur who started his career in design and installation of hotel electro-mechanical systems in 1998 moving on to Project Management and Owner s Representation till 2004 when he founded his first company Shores Hotels to manage a single hotel of 200 guestrooms. With the growth of Shores Hotels portfolio, Mr. Abouyoussef pursued Hotel Development developing 3 hotels in three different destinations across Egypt. Mr. Abouyoussef is a holder of a B.S. in Mechanical Engineering from the American University in Cairo and a Master s of Science from the University of California at Berkeley. He is also a commission member of the International Federation of the Automobile (FIA).

40 78 Corporate Governance Orascom Development 2014 Annual Report Compensation, shareholdings, and loans 5.7 Shareholders Participation For detailed information on compensation paid to members of the Board of Directors and to members of Executive Management for the financial year 2014, and on shares and options held by and loans granted to these persons as of December 31, 2014, please refer to the Compensation Report. The compensation of the members of the Board of Directors and of Executive Management is determined as specified below. The Board of Directors does not employ external advisors or systematically use external benchmarks for fixing compensation. Board of Directors: In respect to the compensation of members of the Board of Directors for their service on the Board and its committees, the Board of Directors decided in 2014 to reduce the compensation of the members of the Board of Directors to CHF for the services of the members of the Board of Directors in The compensation is paid out half in cash and half in the form of shares of the Company. The shares of the Company allocated to the members of the Board of Directors as compensation are, for that purpose, purchased by the Company on 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 for the shares. In addition to the compensation for all members of the Board of Directors, members of one of the Committees receive an additional compensation of CHF The Lead Director receives an additional compensation of CHF Such additional compensations are fully paid in shares. Executive Management: Compensation of the members of Executive Management 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 Nomination & Compensation Committee. The annual proposals and decisions concerning the compensation of the members of Executive Management are based on an evaluation of the individual performance of each member, as well as of the performance of the business area for which each member is responsible (in case of the executive members of the Board, the performance of the Orascom Development Group as a whole). The CEO forms the respective proposals in his discretion, based on his judgment of the relevant individuals and business areas achievements. The Nomination & Compensation Committee discusses the proposals presented by the CEO, approves them if deemed fit, and subsequently informs the Board of Directors of 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 to their compensation, or otherwise to participate in the decision process.. Bonus: In late 2010, the Board of Directors approved a formal bonus policy for the Executive Management. Since 2010, the bonus policy applied to the members of Executive Management. In mid 2014,as the financial performance targets were not achieved in 2013 and due to the challenging market environment, especially the political situation in Egypt, the Nomination & Compensation Committee suggested to the Board of Directors that no bonus shall be paid to the Executive Management in The Board of Directors approved this suggestion for 2013 which was accepted by the Members of the Executive Management. The new Policy includes a cash-bonus and a deferred share-bonus. 100% of the cash-bonus and 40 % of the share-bonus are based on the Executive Member s personal performance. 60 % of the share-bonus is based on the (financial) performance of the Company. The cash-bonus can reach at maximum 25% of the Executive Member s annual gross base salary. The share-bonus can reach at maximum 100% of the Executive Member s annual gross base salary. The share price that is relevant to determine the number of ODH shares to be granted to the Executive Member is the average share price of the ODH share at Zurich Stock Exchange during the last six months of the performance year (closing prices of all trading days between July 1 and December 31). For 2014, the Bonus entitlements (cash- and share-bonus) for each Member of the Executive Management are still to be assessed according to the new Policy. Voting rights and representation restrictions With the exception of restrictions on the transferability of shares (ref. to Section 5.2. above), there are no limitations on voting rights. At a general meeting of shareholders, each share entitles its owner to one vote. By means of a written proxy, each shareholder may be represented by a third person who need not himself be a shareholder. Statutory quora According to Art. 10 of the Articles of Incorporation, the holders of at least 25 percent of issued shares must be present or represented at an ordinary general meeting of shareholders for the meeting to be validly constituted. Similarly, holders of at least 50 percent of issued shares must be present or represented at an extraordinary general meeting of shareholders for the meeting to be validly constituted. Resolutions are generally passed, in the case of an ordinary general meeting of shareholders (except for matters subject to a higher majority requirement by law), with the absolute majority of the shares represented. In the case of an extraordinary general meeting of shareholders, resolutions are generally passed with a majority of two-thirds of the shares represented. Resolutions relating to the following matters, however, require a majority of 75 percent of shares represented at the meeting: (a) capital increases pursuant to Art. 650 CO and reductions of the share capital pursuant to Art. 732 CO; (b) dissolving the Company before its termination date or changing its duration (which, pursuant to the Articles of Incorporation, is 99 years from its formation); (c) changing the Company s purpose; and (d) any merger with another company. Convocation of the general meeting of shareholders An ordinary general meeting of shareholders is to be held annually following the close of the financial year. It is called by the Board of Directors or, if necessary, by the auditors. Extraordinary general meetings may be called by the Board of Directors, the auditors, the liquidators, or by the general meeting of shareholders itself. One or more shareholders representing at least 10 percent of the share capital may request in writing that the Board of Directors call an extraordinary general meeting of shareholders. The request must state the purpose of the meeting and the agenda to be submitted. General meetings of shareholders are held at the statutory seat of the Company or at such other place as determined by the Board of Directors. Notice of a general meeting of shareholders is given by means of a single publication in the Swiss Commercial Gazette (Schweizerisches Handelsamtblatt) or by registered letter to the shareholders of record. There must be a time period of not less than 20 days between the day of the publication or the mailing of the notice and the scheduled date of the meeting. The notice of the general meeting of shareholders must indicate the agenda and the motions by the Board of Directors. Agenda Shareholders who represent shares with a par value of at least CHF 1,000,000 may request that an item be placed on the agenda. The request must be communicated to the Board of Directors in writing, stating the item to be placed on the agenda and the shareholder s corresponding motion, at least 45 days prior to the general meeting of shareholders. Record date for entry into the share register In order to be entitled to participate at the 2015 ordinary general meeting of shareholders, a holder of registered shares need be inscribed in the share register as a shareholder with voting rights by May 6, 2015 at 5.00pm. 5.8 Changes of control and defense measures Duty to make an offer The Articles of Incorporation do not provide for any opting out or opting up arrangements within the meaning of Art. 22 and Art. 32 SESTA. Clauses of change of control No change of control clauses have been agreed upon.

41 80 Corporate Governance Orascom Development 2014 Annual Report External Auditors 5.10 Information Policy Duration of the mandate and term of office of the lead auditor Since the foundation of the Company on January 17, 2008, Deloitte AG, Zurich, has been the statutory auditor with responsibility for the audit of the Company s non-consolidated and consolidated financial statements. The Company s subsidiary OHD is audited by Deloitte Saleh, Barsoum & Abdel Aziz, Cairo. The auditor in charge for the Company as for the finance year 2014 at Deloitte AG is Roland Müller. A rotation cycle of 7 years is foreseen for the position of the auditor in charge. The Board of Directors will propose to the ordinary general meeting of shareholders on May 18, 2015 to re-elect Deloitte AG, Zurich as the statutory auditor for the 2015 financial year. Auditing fees Deloitte received the following fees for its services as the statutory auditor of the Company and the majority of Orascom Development companies on the one hand, and for non-audit services on the other hand: In CHF Audit Services 4,062,123 2,202,814 Tax Services - - IPO/Listing related services - - Other services - - Total non-audit services - - Total Fees 4,062,123 2,202,814 Informational instruments pertaining to the external audit The Board of Directors Audit Committee has the task of ensuring the effective and regular supervision of the statutory auditors reporting with the aim of ensuring its integrity, transparency and quality. In advance of each financial year, the proposed auditing schedule is presented to and discussed with the Audit Committee. After each audit, important observations by the statutory auditor, together with appropriate recommendations, are presented to the Audit Committee (after discussions with the CFO) during its relevant meeting. Subsequently, members of the Audit Committee receive the statutory auditors management letter in final form. During the year, the statutory auditor is in regular contact with the chairman of the Audit Committee to discuss matters arising in the performance of its task. Based on these communications the Audit Committee discusses its impression of the integrity and effectiveness of the statutory auditors work, and issues a recommendation to the Board of Directors concerning the proposal to the general meeting of shareholders whether to re-elect the statutory auditors for the following year. In its assessment, the Audit Committee places particular value on demonstrated independence and willingness to identify and challenge assumptions underlying the financial reporting, and the timely completion of audits permitting the Company to comply with its reporting obligations and its corporate communications calendar. In the year under review, representatives of the statutory auditor participated in all Audit Committee meetings. The CEO, the CFO, and the Investor Relations Department took care of the communication with investors during The company intends to update the financial community through personal contacts, discussions, and presentations held through various road shows and investor conferences. Orascom Development is committed to an open information policy and provides shareholders, the capital market, employees and all stakeholders with open, transparent and timely information. The information policy accords with the requirements of the Swiss stock exchange as well as the relevant statutory requirements. As a company listed on SIX Swiss Exchange, Orascom Development also publishes information relevant to its stock price in accordance with Art. 53 of the Listing Rules (ad hoc publicity).the financial reporting system is comprised of quarterly, interim (semiannual), and annual reports. Consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) in compliance with Swiss law and the rules of the SIX Swiss Exchange. In addition, the Company utilizes electronic news releases to report the latest changes and developments to ensure equal treatment for all capital market participants. Corporate Calendar Annual general meeting of shareholders: May 18, 2015 First quarter 2015 results: May 21, 2015 Second quarter 2015 results: Aug, 20, 2015 Third quarter 2015 results: Nov, 19, 2015 Further information and contact Investors and other interested stakeholders can find further information on Orascom Development online at Stakeholders may subscribe to the Company s alert service to receive news releases at Investors may also contact the Investor Relations Department as follows: Sara El Gawahergy Investor Relations Director T. : T. : [email protected]

42 82 Investor Information Orascom Development 2014 Annual Report Investor Information Introduction Orascom Development Holding AG has a dual listing with its primary listing on the main board of the SIX Swiss Exchange. The secondary listing is in the form of Egyptian Depository Receipts (EDRs) on the EGX Egyptian Exchange. Overview 31/12/ /12/2013 Per share data 1 31/12/ /12/2013 Switzerland Shares held with SIS and registered in the share register 13,660,513 12,472,189 Dispo shares 4,383,634 5,201,603 Egypt Share equivalents in custody of MCDR s depositary bank (EDRs) 9,623,584 9,993,939 Shares in custody of MCDR (Not Traded) 875, ,416 Total Shares 28,543,147 28,543,147 Market capitalization (in CHF billion) Share price at year-end (in CHF) Highest share price during the year (in CHF) Lowest share price during the year (in CHF) Number of traded shares (in millions) Value of traded shares (in CHF million) Average number of traded shares per day 32,646 33,584 Average traded value per day (in CHF) 563, ,181 1 Source: Thomson Reuters Share information 1 EDRs information 1 Per EDR data 1 31/12/ /12/2013 Shares listing Zurich, Switzerland EDRs listing Cairo, Egypt Market price at year-end (in EGP) Number of shares 18,919,563 ISIN code CH Currency Swiss Franc Number of EDRs 2 192,471,680 ISIN code EGG676K1D011 Currency Egyptian Pound Highest market price during the year (in EGP) Lowest market price during the year (in EGP) Number of traded EDRs (in million) Value of traded EDRs (in EGP million) 1, Ticker code (Bloomberg) ODHN:SW Ticker code (Bloomberg) ODHN:EY Average number of traded EDRs per day 649, ,226 Ticker code (Reuters) ODHN.S Ticker code (Reuters) ODHN.CA Average traded value per day (in EGP) 4,446,746 2,186,843 1 As at end of Source: Thomson Reuters 2 Implying a conversion ratio of 20:1, where 20 EDRs are equivalent to 1 registered share.

43 84 Investor Information Orascom Development 2014 Annual Report 85 Shareholding Structure A) Shares Shareholders by type Distribution of shareholdings 1 B) EDRs EDRs holders by type Distribution of EDRs holders 1 Categories Number of shareholders Number of shares Number of shareholders Number of shares Categories Number of EDRs holders Number of EDRs Number of EDRs holders Number of EDRs Natural persons 3,515 4,468,708 Legal persons 62 8,144,231 Investment trusts ,464 Banks ,268 Pension funds 10 33,469 Foundations 3 12,273 Public corporations Total 3,639 13,660, , ,173 65, ,000 1, ,982 1,001 10, ,060 10, , ,136, ,001 1,000, ,752,436 1,000, ,999, ,180,428 Total 3,639 13,660,513 Natural persons 2, ,660,251 Legal persons 24 29,587,351 Investment trusts 8 2,625,098 Banks 2 1,417,980 Pension funds 1 181,000 Foundations - - Public corporations - - Total 2, ,471, , , ,413 1,001 10, ,855,952 10, , ,361, ,001 1,000, ,579,231 1,000, ,999, ,274,389 Total 2, ,471,680 1 Distribution of registered shares/edrs as at 31 December 2014 Shareholders by country EDRs holders by country Country Number of shareholders Number of shares Cayman Islands 3 6,690,117 Egypt 7 2,558,033 Switzerland 3,490 2,401,504 Greece 1 500,444 United Kingdom 4 463,579 Belgium 2 328,134 United States of America 5 321,044 Montenegro 1 150,000 Germany 59 73,375 Unknown 4 43,525 Luxembourg 1 33,048 France 7 29,835 United Arab of Emirates 1 18,507 Malta 1 18,470 Austria 18 17,589 Italy 10 5,723 Netherlands 8 3,200 Spain 5 1,763 Macedonia 2 1,190 Canada Czech Republic Liechtenstein Hungary Turkey India 2 95 Portugal 1 35 Total 3,639 13,660,513 1 Source: Bloomberg Country Number of EDRs holders Number of EDRs Egypt 2, ,094,309 United Kingdom 14 23,060,477 Saudi Arabia 24 11,354,860 Luxembourg 2 2,054,973 Germany 2 265,000 United Arab of Emirates 5 195,019 Tunis 1 164,182 Palestine 4 118,340 Yemen 2 37,941 United States of America 6 34,069 Jordan 3 20,500 Lebanon 2 13,236 Sweden 1 10,000 Qatar 1 10,000 Malaysia 1 9,100 Oman 1 8,240 Italy 1 7,250 Morocco 1 5,000 Kuwait 1 3,500 Bahrain 1 2,840 Libya 1 2,840 Switzerland 1 4 Total 2, ,471,680 1 Source: Bloomberg

44 86 Investor Information Orascom Development 2014 Annual Report 87 Significant shareholders 1 Orascom Hotels and Development (OHD) Share information 1 Name of major shareholders Number of shares issued Percentage of ownership (%) Number of shares issued Percentage of ownership (%) Samih Sawiris 2 17,921, % 17,914, Janus Capital Management LLC 1,600, % 1,623, Others 9,021, % 9,005, Shares listing Cairo, Egypt Number of shares 221,962,324 ISIN code EGS70321C012 Currency Egyptian Pound Total 28,543, ,543, Ticker code (Reuters) ORHD.CA 1 Overview of significant shareholders as at 31 December The shares of Samih O. Sawiris are held directly and through his entities Thursday Holding, TNT Holding and SOS Holding 1 Orascom Hotels and Development is the Group s largest Egyptian subsidiary and the leading developer and operator of fully integrated towns in Egypt, with 3 mature destinations, El Gouna on the Red Sea Coast, Makadi in Hurghada and Taba Heights in the Sinai Peninsula. OHD owns 24 hotels with 6,036 rooms and is listed on the EGX Egyptian Exchange. Corporate Calendar Date Event Trading on OHD s shares has been halted since 31st of December 2009, this came as a result of ODH acquiring 99.86% of OHD s outstanding shares after the two mandatory tender offers that the Group made in 2008 and On the 11th of December 2014, ODH s board of directors decided to sell up to 15% (equivalent to 33,294,349 shares) of its Egyptian subsidiary, Orascom Hotels and Development (OHD) to reactivate its trading on the Egyptian Stock Exchange (EGX) and comply with its listing rules and regulations. The deal successfuly closed in Januay 2015 and the offering was oversubscribed 3.8x and generated EGP million (approximately USD 70.7 million, CHF 69.9 million). 18 May th Annual General Meeting 21 May 2015 First Quarter 2015 Results 20 Aug 2015 First Half 2015 Results 19 Nov 2015 Nine Months 2015 Results Research coverage Research coverage for Orascom Hotels and Development (OHD) UBS Andre Rudolf von Rohr [email protected] Naeem Holding Harshjit Oza [email protected] Investor Contacts Sara El Gawahergy Investor Relations Director Tel: [email protected] For publications and further information visit CI Capital Ankur Khetawat, CFA [email protected] Beltone Financial Habiba Hegab [email protected]

45 88 Financial Statements Orascom Development 2014 Annual Report Financial Statements Back to profitability

46 F-1 Financial Statements Orascom Development 2014 Annual Report F-2 Contents Orascom Development Orascom Development Holding AG (consolidated financial statements) Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Orascom Development Holding AG Income statement Statutory balance sheet Statement of changes in equity Cash flow statement Notes to the financial statements F- 3 F- 5 F- 7 F- 8 F- 11 F- 89 F- 90 F- 91 F- 92 F- 93 Holding Consolidated financial statements together with auditor's report for the year ended 31 December 2014 F- 2

47 F-3 Financial Statements Orascom Development 2014 Annual Report F-4 Orascom Development Holding AG Consolidated statement of comprehensive income for the year ended 31 December 2014 CHF Notes CONTINUING OPERATIONS Revenue 6/7 250,534, ,379,382 Cost of sales 7.2 (213,037,078) (214,911,304) GROSS PROFIT 37,497,887 6,468,078 Investment income 9 3,785,942 5,372,970 Other gains and losses 10 93,044,081 (39,339,604) Administrative expenses 8 (45,214,956) (70,755,383) Finance costs 11 (32,904,042) (31,025,518) Share of losses of associates 20 (9,263,608) (10,464,453) PROFIT/(LOSS) BEFORE TAX 46,945,304 (139,743,910) Income tax expense 13 (10,777,252) (20,702,988) Orascom Development Holding AG Consolidated statement of comprehensive income for the year ended 31 December 2014 CHF Notes Earnings per share from continuing and discontinued operations Basic (5.54) Diluted (5.54) Earnings per share from continuing operations Basic (5.29) Diluted (5.29) PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS DISCONTINUED OPERATIONS Profit/(loss) for the year from discontinued operations 36,168,052 (160,446,898) 14 - (7,012,723) PROFIT/(LOSS) FOR THE YEAR 36,168,052 (167,459,621) Other comprehensive income, net of income tax Items that will not be reclassified subsequently to profit or loss Net gain/(loss) on revaluation of financial assets at FVTOCI (859,630) (3,603,067) Remeasurement of defined benefit obligation , ,790 Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Net gain on hedging instruments entered into for cash flow hedges (25,516) (2,917,277) 50,541,325 (49,234,328) 76, ,931 50,618,263 (48,861,397) Samih Sawiris Chairman/Group CEO Eskandar Tooma Group CFO Total other comprehensive income for the year, net of tax 50,592,747 (51,778,674) Total comprehensive income for the year 86,760,799 (219,238,295) Profit/(loss) attributable to: Owners of the Parent Company 41,871,676 (157,786,634) Non- controlling interests (5,703,624) (9,672,987) Total comprehensive income attributable to: 36,168,052 (167,459,621) Owners of the Parent Company 77,382,677 (196,713,736) Non- controlling interests 9,378,122 (22,524,559) 86,760,799 (219,238,295)

48 F-5 Financial Statements Orascom Development 2014 Annual Report F-6 Orascom Development Holding AG Consolidated statement of financial position at 31 December 2014 CHF Notes 31 December December 2013 ASSETS NON- CURRENT ASSETS Property, plant and equipment ,759, ,992,221 Investment property 17 11,922,802 9,986,618 Goodwill 18 7,109,426 6,553,348 Investments in associates ,534, ,633,179 Non- current receivables 21 58,290,926 32,609,555 Deferred tax assets ,024,544 15,679,458 Finance lease receivables 25 26,194,794 - Other financial assets 22 9,263,177 25,826,471 TOTAL NON- CURRENT ASSETS 1,127,100, ,280,850 CURRENT ASSETS Inventories ,636, ,317,055 Trade and other receivables 24 88,642,373 52,204,925 Finance lease receivables 25 7,803,230 - Current receivables due from related parties 44 37,392,763 17,115,813 Other financial assets 22 3,662, Other current assets ,133,046 61,706,893 Cash and bank balances ,658,860 73,310, ,929, ,655,934 Non- current assets held for sale ,783,206 TOTAL CURRENT ASSETS 653,929, ,439,140 TOTAL ASSETS 1,781,029,810 1,672,719,990 Orascom Development Holding AG Consolidated statement of financial position at 31 December 2014 CHF Notes 31 December December 2013 EQUITY AND LIABILITIES CAPITAL AND RESERVES Issued capital ,201, ,201,010 Reserves 30 (140,517,530) (178,223,017) Retained earnings 31 99,060,154 58,815,939 Equity attributable to owners of the Parent Company 620,743, ,793,932 Non- controlling interests ,456, ,974,712 Total equity 821,199, ,768,644 NON- CURRENT LIABILITIES Borrowings ,785, ,666,616 Trade and other payables 34 23,074,081 25,708,424 Retirement benefit obligation , ,640 Notes payable - 3,281,431 Deferred tax liabilities ,664,639 40,967,859 Other financial liabilities ,931 Total non- current liabilities 328,768, ,974,901 CURRENT LIABILITIES Trade and other payables 34 36,923,245 30,124,918 Borrowings ,893, ,906,439 Due to related parties 44 2,950,068 15,970,895 Current tax liabilities ,125,326 2,730,298 Other financial liabilities 35-11,418,524 Provisions 36 83,456,576 95,605,112 Other current liabilities ,712, ,816, ,061, ,573,034 Liabilities directly associated with non- current assets held for sale 28-79,403,411 Total current liabilities 631,061, ,976,445 Total liabilities 959,829, ,951,346 Total equity and liabilities 1,781,029,810 1,672,719,990 Samih Sawiris Chairman/Group CEO Eskandar Tooma Group CFO F- 6

49 F-7 Financial Statements Orascom Development Holding AG Consolidated statement of changes in equity for the year ended 31 December 2014 Non- controlling interests Attributable to owners of the Parent Company Retained earnings Equity swap settlement Reserve from common control transactions Foreign currency translation reserve General reserve Investments revaluation reserve Hedging reserve Treasury shares Share premium Issued Capital CHF Balance at 1 January ,201, ,799,019 (768,308) (449,869) (18,529,412) 4,916,868 (247,327,433) (120,924,463) (10,220,295) 227,635, ,332, ,883,784 Loss for the year (157,786,634) (157,786,634) (9,672,987) Other comprehensive income for the year, net of income tax ,931 (3,603,067) - (36,382,756) ,790 (38,927,102) (12,851,572) Total comprehensive income for the year ,931 (3,603,067) - (36,382,756) - - (157,100,844) (196,713,736) (22,524,559) Treasury shares received from equity swap settlement - - (8,106,066) ,106, Acquisition of treasury shares (517,334) (517,334) Distribution of treasury shares , (374,489) 517,334 - Losses from sale of financial assets at FVTOCI ,344, (11,344,389) - - Non- controlling interests share in equity of consolidated subsidiaries (825,110) - - (825,110) 5,615,487 Balance at 31 December ,201, ,799,019 (8,499,885) (76,938) (10,788,090) 4,916,868 (283,710,189) (121,749,573) (2,114,229) 58,815, ,793, ,974,712 Balance at 1 January 2014 (note 30) 662,201, ,799,019 (8,499,885) (76,938) (10,788,090) 4,916,868 (283,710,189) (121,749,573) (2,114,229) 58,815, ,793, ,974,712 Profit for the year ,871,676 41,871,676 (5,703,624) Other comprehensive income for the year, net of income tax ,938 (859,630) - 35,459, ,114 35,511,001 15,081,746 Total comprehensive income for the year ,938 (859,630) - 35,459, ,705,790 77,382,677 9,378,122 Acquisition of ordinary shares (324,800) - (324,800) - Distribution of ordinary shares - - 3,353, (2,461,575) 891,825 - Non- controlling interests share in equity of consolidated subsidiaries 11,023, (38,919,843) Non- controlling interests share in equity of deconsolidated subsidiaries Balance at 31 December 2014 (note 30) 662,201, ,799,019 (5,471,285) - (11,647,720) 4,916,868 (248,250,610) (121,749,573) (2,114,229) 99,060, ,743, ,456,351 F Orascom Development Holding AG Consolidated cash flow statement for the year ended 31 December 2014 Orascom Development 2014 Annual Report F-8 CHF Notes CASH FLOWS FROM OPERATING ACTIVITIES Gain/(loss) for the year 36,168,052 (167,459,621) Adjustments for: Income tax expense recognized in profit or loss ,777,252 19,647,245 Share of losses of associates 20 9,263,608 10,464,453 Finance costs recognized in profit or loss 11 32,904,042 31,025,518 Interest income recognized in profit or loss 9 (3,785,942) (5,372,970) Write down on inventory 23 1,077,572 4,896,555 Impairment loss on receivables and other current assets ,838,562 1,008,962 Reversal of impairment loss on trade receivables 24 (691,934) - Impairment loss on property, plant and equipment 10/16-15,139,935 Reversal of impairment loss on PPE 10/16 (4,136,569) - Gain on sale or disposal of property, plant and equipment 10 (316,533) (615,377) Gain on revaluation of investment properties 17 (1,011,232) (1,283,684) Net gain on insurance reimbursement regarding Taba Heights 10 (9,240,974) - Gain from waiver of current account due to Garranah 10 (2,865,269) - Loss on reclassification of subsidiaries as disposal group 10/38-2,271,486 (Gain) on disposal of subsidiaries 10/38 (4,712,087) (306,553) Gain due to call/put option agreement (note 35) 10/35 (3,459,346) (Gain)/loss on deemed disposal of subsidiary 39 (9,441,641) (221,544) Gain from amounts under settlement with Falcon 10/44 (52,634,666) Impairment losses in relation to investments in associates 10/20-4,608,936 Depreciation and amortization of non- current assets 16 25,088,774 30,132,283 Unrealized net foreign exchange losses 10 (6,031,502) 13,466,333 MOVEMENTS IN WORKING CAPITAL (Increase)/decrease in trade and other receivables (19,989,620) 14,824,003 (Increase)/decrease in finance lease receivables (14,363,154) 2,483,457 (Increase) in inventories (16,729,603) (76,399,284) Decrease/(increase) in other assets 6,243,705 (8,318,516) (Decrease) in trade and other payables (663,110) (4,676,993) (Decrease)/increase in provisions (5,494,402) 22,904,978 Increase in other liabilities 23,878,406 83,673,325 Cash (used in) operations (8,327,611) (8,107,073) Interest paid (14,036,714) (39,191,525) Income tax paid (3,872,412) (4,905,154) Net cash (used in) operating activities (26,236,737) (52,203,752)

50 F-9 Financial Statements Orascom Development 2014 Annual Report F-10 Orascom Development Holding AG Consolidated cash flow statement for the year ended 31 December 2014 CHF Notes CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment 16 (27,247,588) (39,790,000) Proceeds from disposal of property, plant and equipment - 2,107,413 Proceeds on sale of financial assets (FVTOCI) 22 4,007,781 23,951,935 Payments to acquire financial assets (at amortised cost) 22 (3,977,367) (2,488,098) Proceeds on sale of financial assets (FVTPL) 22-6,661,656 Payments to acquire equity investments 39 - (5,000,000) Proceeds on disposal of subsidiary 38 10,713,614 2,935,240 Interest received 3,785,943 5,372,970 Net cash outflow on deconsolidated subsidiaries 38/39 (3,607,682) (7,700,668) Net cash (used in) investing activities (16,325,299) (13,949,552) CASH FLOWS FROM FINANCING ACTIVITIES Payment for treasury shares 30.2 (324,800) (517,334) Non controlling interests shares in changes of equity for consolidated subsidiaries 32 11,023,360 4,790,377 Repayment of borrowings 33 (7,862,332) (42,064,243) Proceeds from borrowings 33 54,887,833 87,509,726 Net cash generated by financing activities 57,724,061 49,718,526 Net increase/(decrease) in cash and cash equivalents 15,162,025 (16,434,778) Cash and cash equivalents at the beginning of the year 81,251, ,668,196 Effects of exchange rate changes on the balance of cash held in foreign currencies 4,245,619 (3,982,202) Cash and cash equivalents at the end of the year ,658,860 81,251,216 Index to the notes to the consolidated financial statements Page 1 General information 11 2 Application of new and revised International Financial Reporting Standards 11 3 Significant accounting policies 15 4 Critical accounting judgments and key sources of estimation uncertainty 28 5 The group and major changes in group entities 31 6 Revenue 31 7 Segment information 32 8 Employee benefits expense 36 9 Investment income Other gains and losses Finance costs Compensation of key management personnel Income taxes relating to continuing operations Discontinued operations Earnings per share Property, plant and equipment Investment property Goodwill Subsidiaries Investments in associates Non- current receivables Other financial assets Inventories Trade and other receivables Finance lease receivables Other current assets Cash and cash equivalents Non- current assets held for sale Capital Reserves (net of income tax) Retained earnings and dividends on equity instruments Non- controlling interests Borrowings Trade and other payables Other financial liabilities Provisions Other current liabilities Disposal of a subsidiary Deemed loss of control of subsidiary Retirement benefit plans Risk assessment disclosure required by Swiss law Financial instruments Share- based payments Related party transactions Non- cash transactions Operating lease arrangements Commitments for expenditure Litigation Other significant events that occurred during the reporting period Subsequent events Approval of financial statements 86

51 F-11 Financial Statements Orascom Development 2014 Annual Report F-12 Notes to the consolidated financial statements for the year ended 31 December GENERAL INFORMATION Orascom Development Holding AG ( ODH or the Parent Company ), a limited company incorporated in Altdorf, Switzerland, is a public company whose shares are traded on the SIX Swiss Exchange. In addition, Egyptian Depository Receipts ( EDRs ) of the Parent Company are traded at the EGX Egyptian Exchange. One EDR represents 1/20 of an ODH share. The Company and its subsidiaries (the Group ) is a leading developer of fully integrated towns that include hotels, private villas and apartments, leisure facilities such as golf courses, marinas and supporting infrastructure. The Group s diversified portfolio of projects is spread over eight jurisdictions, with primary focus on touristic towns and recently affordable housing. The Group currently operates in Egypt, Jordan, UAE, Oman, Morocco, United Kingdom and Montenegro and is continuously seeking development opportunities in untapped yet attractive locations all over the world. The Group has three existing projects: El Gouna, the flagship project, a fully- fledged town on the Red Sea coast (Egypt); Taba Heights, on the Sinai Peninsula (Egypt), the Group s second tourism destination following El Gouna s business model; and the Cove (Ras Al Khaimah, UAE), the Group s first development experience outside Egypt. In June 2014, the Group has lost control over OHC and its subsidiaries whose flagship project is Haram City, an integrated town dedicated to affordable housing in Egypt, catering for the mass population. As the Group still holds a 35.25% interest in these companies, they are consequently shown as investment in associates (refer to notes 20 and 39 for further details). In June 2013 the Group lost control over its operating companies in Switzerland, but still holds a 49% interest in these companies and consequently shows the investments as associates (refer to note 39 for further details). The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report. 2 Application of new and revised International Financial Reporting Standards ( IFRSs ) 2.1 Amendments to IFRSs and the new Interpretation that are mandatorily effective for the current year In the current year, the Group has applied a number of amendments to IFRSs and a new Interpretation issued by the International Accounting Standards Board (IASB) that are mandatorily effective for the current year. None of the revised Standards and the new Interpretation has had a material effect on these financial statements. The details of the revised Standards and the new Interpretation are as follows: Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements Investment Entities Amendments to IAS 32 Financial Instruments - Offsetting Financial Assets and Financial Liabilities The Group has applied the amendments to IAS 32 regarding offsetting financial assets and financial liabilities for the first time in the current year. The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of currently has a legally enforceable right to set- off and simultaneous realisation and settlement. The amendments have been applied retrospectively. As the Group does not have any financial assets and financial liabilities that qualify for offset, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the Group s consolidated financial statements. Amendments to IAS 36 Impairment of Assets Recoverable Amount Disclosures for Non- Financial Assets The Group has applied the amendments to IAS 36 regarding recoverable amount disclosures for non- financial assets for the first time in the current year. The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash- generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements applicable to when the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by IFRS 13 Fair Value Measurements. The application of these amendments has had no material impact on the disclosures in the Group s consolidated financial statements as the Group does not use fair value less costs of disposal to measure the recoverable amount of any of its CGUs. Amendments to IAS 39 Financial Instruments Novation of Derivatives and Continuation of Hedge Accounting The Group has applied the amendments to IAS 39 regarding novation of derivatives and continuation of hedge accounting for the first time in the current year. The amendments to IAS 39 provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment and measurement of hedge effectiveness. The amendments have been applied retrospectively. As the Group does not have any derivatives that are subject to novation, the application of these amendments has had no impact on the disclosures or on the amounts recognised in the Group s consolidated financial statements. IFRIC 21 Levies The Group has applied IFRIC 21 Levies for the first time in the current year. IFRIC 21 addresses the issue as t0 when to recognise a liability to pay a levy imposed by a government. The Interpretation defines a levy, and specifies that the obligation event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The Interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period. IFRIC 21 has been applied retrospectively. The application of this Interpretation has had no impact on the disclosures or on the amounts recognised in the Group s consolidated financial statements as the Group does not have such liabilities to pay levies. 2.2 Standards and Interpretations in issue but not yet effective At the date of authorisation of these financial statements, the Group has not adopted the following Standards and Interpretations that have been issued but are not yet effective. They will be effective on or after the dates described below. The Group has applied the amendments to IFRS 10, IFRS 12 and IAS 27 regarding Investment Entities for the first time in the current year. The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. To qualify as an investment entity, a reporting entity is required to: obtain funds from one or more investors for the purpose of providing them with investment management services commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and measure and evaluate performance of substantially all of its investments on a fair value basis Consequently amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities. As the Company is not an investment entity (assessed based on the criteria set out in IFRS 10), the application of the amendments has had no impact on the disclosures or the amounts recognised in the Group s consolidated financial statements. New, amended and revised Standards and Interpretations IFRS 9 The Group has early applied IFRS 9 (issued in November 2009 and October 2010) as at 1 January 2011 which included new requirements for the classification and measurement of financial assets and financial liabilities as well as for derecognition. However, the Group has not yet applied the requirements for general hedge accounting (issued in November 2013) and another revised version of IFRS issued in July 2014 which mainly includes a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a fair value through other comprehensive income (FCTOCI) measurement category for certain simple debt instruments. Financial liabilities are classified in a similar manner as under IAS 39, however there are differences in the requirements applying to the measurement of an entity's own credit risk, only for financial liabilities that are designated on initial recognition as at FVTOCI effective from Annual periods beginning on or after 1 January 2018

52 F-13 Financial Statements Orascom Development 2014 Annual Report F-14 IFRS 10/ IAS 28 IFRS 11 Amends IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) to clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture, as follows: - require full recognition in the investor's financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations) - require the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain or loss is recognised only to the extent of the unrelated investors interests in that associate or joint venture. These requirements apply regardless of the legal form of the transaction, e.g. whether the sale or contribution of assets occurs by an investor transferring shares in a subsidiary that holds the assets (resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves. An exception from the general requirement of full gain or loss recognition has been introduced into IFRS 10 for the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method. A new guidance has been introduced requiring that gains or losses resulting from those transactions to be recognised in the parent's profit or loss only to the extent of the unrelated investors' interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement at fair value of investments retained in any former subsidiary that has become an associate or a joint venture that is accounted for using the equity method are recognised in the former parent's profit or loss only to the extent of the unrelated investors' interests in the new associate or joint venture. Amends IFRS 11 Joint Arrangements to require an acquirer of an interest in a joint operation in which the activity constitutes a business (as defined in IFRS 3 Business Combinations) to: - apply all of the business combinations accounting principles in IFRS 3 and other IFRSs, except for those principles that conflict with the guidance in IFRS 11 - disclose the information required by IFRS 3 and other IFRSs for business combinations. The amendments apply both to the initial acquisition of an interest in joint operation, and the acquisition of an additional interest in a joint operation (in the latter case, previously held interests are not remeasured). Annual periods beginning on or after 1 January 2016 Prospectively to annual periods beginning on or after 1 January 2016 IAS 19 Various Various Amends IAS 19 Employee Benefits to clarify the requirements that relate to how contributions, to a defined benefit plan, received from employees or third parties that are linked to service should be attributed to periods of service. In addition, it permits a practical expedient if the amount of the contributions is independent of the number of years of service, in that contributions can, but are not required, to be recognised as a reduction in the service cost in the period in which the related service is rendered. Retrospective application is required. Annual Improvements Cycle Makes amendments to the following applicable standards: IFRS 3 Requires contingent consideration that is classified as an asset or a liability to be measured at fair value at each reporting date, irrespectively of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or a non- financial asset or liability IFRS 8 Requires disclosure of the judgements made by management in applying the aggregation criteria to operating segments, clarifies that reconciliations of segment assets is only required if segment assets are reported regularly IFRS 13 Clarifies that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure certain short- term receivables and payables on an undiscounted basis (amends basis for conclusions only) IAS 16 and IAS 38 Clarify that the gross amount of property, plant and equipment is adjusted in a manner consistent with a revaluation of the carrying amount IAS 24 Clarifies how payments to entities providing management services are to be disclosed Annual Improvements Cycle Makes amendments to the following applicable standards: IFRS 3 Clarifies that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself IFRS 13 Clarifies the scope of the portfolio exception in paragraph 52 IAS 40 Clarifies the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner- occupied property Annual periods beginning on or after 1 July 2014 Annual periods beginning on or after 1 July 2014 Annual periods beginning on or after 1 July 2014 IFRS 15 The new Standard IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective. The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5- step approach to revenue. Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when control of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15. Annual periods beginning on or after 1 January 2017 Various Annual Improvements Cycle Makes amendments to the following standards: IFRS 5 Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held- for- distribution accounting is discontinued IFRS 7 Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements IAS 19 Clarify that the high quality corporate bonds used in estimating the discount rate for post- employment benefits should be denominated in the same currency as the benefits to be paid IAS 34 Clarify the meaning of 'elsewhere in the interim report' and require a cross- reference Annual periods beginning on or after 1 July 2016 Unlike the scope of IAS 18, the recognition and measurement of interest income and dividend income from debt and equity investments are no longer within the scope of IFRS 15. Instead, they are within the scope of IFRS 9 Financial Instruments. The Group is currently assessing whether these changes will impact the consolidated financial statements in the period of initial application. IAS 16/ IAS 38 The amendments to IAS 16 prohibit entities from using a revenue- based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in limited circumstances. Prospectively to annual periods beginning on or after 1 January 2016

53 F-15 Financial Statements Orascom Development 2014 Annual Report F-16 3 SIGNIFICANT ACCOUNTING POLICIES 3.1 Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). 3.2 Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value or amortized cost, as appropriate and investment properties that are measured at fair value as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The principal accounting policies are set out below. 3.3 Basis of consolidation The consolidated financial statements of the Group incorporate the financial statements of the Parent Company and entities (including special purpose entities) controlled by the Parent Company (its subsidiaries). Control is achieved when the Company has power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to use its power to affect its returns The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company s voting rights in an investee are sufficient to give it power, including: The size of the Company s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; Potential voting rights held by the Company, other vote holders or other parties; Rights arising from other contractual arrangements; and Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non- controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non- controlling interests even if this results in the non- controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of a group entity to bring its accounting policies into line with the Group s accounting policies. All intra- group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Changes in the Group's ownership interests in existing subsidiaries Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non- controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non- controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Parent Company. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received or receivable and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non- controlling interests. When assets of the subsidiary are carried at re- valued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Parent Company had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity. 3.4 Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition- date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition- related costs are generally recognised in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that: deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; liabilities or equity instruments related to share- based payment arrangements of the acquiree or share- based payment arrangements of the Group entered into to replace share- based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share- based Payment at the acquisition date; and assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non- current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non- controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition- date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition- date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non- controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Non- controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non- controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction- by- transaction basis. Other types of non- controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition- date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not re- measured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is re- measured at subsequent reporting dates in accordance with IFRS 9 (or where applicable IAS 39 or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss. When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is re- measured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date. Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous version of IFRS 3.The policy described above is applied to all business combinations that took place on or after January For common control transactions in which all of the combining entities or businesses ultimately are controlled by the same party or parties both before and after the combination, and that control is not transitory, the Group recognises the difference between purchase consideration and carrying amount of net assets of acquired entities or businesses as an adjustment to equity. This accounting treatment is also applied to later acquisitions of some or all shares of the non- controlling interests in a subsidiary.

54 F-17 Financial Statements Orascom Development 2014 Annual Report F Investments in associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results, assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non- current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long- term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Group s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate recognised at the date of acquisition is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss. The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases. Upon disposal of an associate that results in the Group losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with IFRS 9.The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when it loses significant influence over that associate. When a Group entity transacts with associates of the Group, profits and losses resulting from the transactions with the associate are recognised in the Group s consolidated financial statements only to the extent of interests in the associate that are not related to the Group. 3.6 Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see note 3.4) less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill acquired in a business combination is allocated, starting from the acquisition date, to each of the Group s cash- generating units (or groups of cash- generating units) that is expected to benefit from the synergies of the combination. When assessing each unit or group of units to which the goodwill is so allocated, the Group s objective is to test goodwill for impairment at a level that reflects the way the Group manages its operations and with which the goodwill would naturally be associated under the reporting system in place. A cash- generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash- generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro- rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss in the consolidated statement of comprehensive income. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash- generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. The Group s policy for goodwill arising on the acquisition of an associate is described in note Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Different policies for revenue recognition apply across the Group's business segments. The following table shows the link between the accounting policies for revenue recognition and segment information. F- 17 Accounting policies Revenue on sale of land Sale of land Segments classified by type of activity Revenue from agreements for construction of real estate Real estate and construction Construction revenue Real estate and construction Revenue from the rendering of services Hotels Destination management Other operations Dividend and interest income Other operations Rental income Other operations Revenue on sale of land Revenue from sale of land, sale of land right and associated cost are recognised when land is delivered and the significant risks, rewards of ownership and control have been transferred to the buyer, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Group and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Management uses its judgment and considers the opinion obtained from the legal advisors in assessing whether the Group s contractual and legal rights and obligations in the agreements are satisfied and the above criteria are met Revenue from agreements for construction of real estate Management uses its judgment to analyze the Group's agreements for the construction of real estate and any related agreements to conclude whether or not the contractual terms of such agreements indicate that they are, in substance, for the provision of construction services or for the delivery of goods that are not complete at the time of entering into the agreement. Such conclusion depends on the terms of the agreement and all the surrounding facts and circumstances and on whether such an agreement meets the definition of a construction contract, as described in below. In accordance with IFRIC 15, an agreement for the construction of real estate will meet the definition of a construction contract when the buyer is able to specify the major structural elements of the design of the real estate before construction begins and / or specify major structural changes once construction is in progress, whether it exercises that ability or not. Where such conditions are met, revenue and costs associated with such contracts are accounted for in accordance with IAS 11 Construction Contracts (see 3.7.3). Where an agreement for the construction of real estate does not meet the definition of a construction contract and is not for the rendering of services, then it is accounted for as a sale of goods under the scope of IAS 18 Revenue. Management concluded that all contracts entered into for the construction of real estate meet the revenue recognition criteria for the sale of goods. Accordingly, revenue from the sale of real estate is recognised when all the following conditions are satisfied: the Group has transferred to the buyer the significant risks and rewards of ownership of the real estate, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the real estate sold, the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity Construction revenue A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in term of their design, technology and function or their ultimate purpose or use. Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period measured based on the completion of a physical proportion of the contract work. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer, their amount can be measured reliably and its receipt is considered probable. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that is probable to be recovered. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When contract costs incurred to date plus recognized profits less recognized losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognized profits less recognized losses, the surplus is shown as amounts due to customers for contract work. Amounts received before the related work is performed are included in the consolidated statement of financial position, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the consolidated statement of financial position under trade and other receivables. Construction contract revenue comprises revenue arising from finishing of sold units, extra works requested by customers and any construction agreement with third parties. F- 18

55 F-19 Financial Statements Orascom Development 2014 Annual Report F Revenue from the rendering of services Revenue from services is recognised in the accounting periods in which the services are rendered Dividend and interest income Dividend income from investments other than in associates is recognised when the shareholder s right to receive payment has been established, provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset s net carrying amount on original recognition Rental income The Group s policy for recognition of revenue from operating leases is described in Cost of sales Cost of sales comprises costs related directly to the sale of goods or rendering of services. These costs include also administration expenses of revenue generating entities in the Group. Under administration expenses are costs allocated for corporate and head quarter functions as well as non revenue generating entities, such as corporate companies, holding companies and start up companies. Companies providing these services are marked as HQ in the subsidiaries' list in note Leasing Leases are classified as finance leases whenever the terms of the lease substantially transfer all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases The Group as lessor Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group's net investment outstanding in respect of the leases. Rental income from operating leases is recognized on a straight- line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight- line basis over the lease term The Group as lessee Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group s general policy on borrowing costs (see 3.10 below). Contingent rentals are recognised as expenses in the periods in which they are incurred. If a sale and leaseback transaction results in a finance lease, the asset is recognized at its previous carrying amount and any gain/loss recognized over the lease term. In case of a loss, management assesses whether the asset is impaired. Operating lease payments are recognised as an expense on a straight- line basis over the lease term, except when another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight- line basis, except when another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. 3.9 Foreign currencies The individual financial statements of each subsidiary are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the preparation of the Group s consolidated financial statements, the results and financial position of each subsidiary are translated into Swiss Franc (CHF), which is the Group s presentation currency. In preparing the financial statements of each individual group entity, transactions in currencies other than the entity s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non- monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non- monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for: Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; Exchange differences on monetary items that qualify as hedging instruments in transactions entered into to hedge certain foreign currency risks (see below for hedging accounting policies); and Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group s foreign operations are translated into Swiss Francs (CHF) using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in the Group s foreign currency reserve, a separate component in equity (attributed to non- controlling interests as appropriate). On the disposal of a foreign operation (i.e. disposal of the Group s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences accumulated in other comprehensive income in respect of that operation attributable to the owners of the Parent are reclassified to profit or loss. In the case of a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re- attributed to non- controlling interests and are not recognized in profit or loss. For all other partial disposals (i.e. reductions in the Group's ownership interest in associates that do not result in the Group losing significant influence), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the exchange rate prevailing at the end of each reporting period. Exchange differences arising are recognised in equity. The exchange rates for the major foreign currencies against CHF relevant to the annual consolidated financial statements were: Currency table Average Year end Average Year end 1 EGP Egyptian Pound USD US Dollar EUR Euro OMR Oman Rial AED United Arab Emirates Dirham MAD Moroccan Dirham JOD Jordanian Dinar Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessary take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time, as the assets are substantially ready for their intended use or sale. The following principles apply when borrowing costs are partly or fully capitalized by the Group as part of a qualifying asset: Where hedge accounting is not applied to minimize the interest rate risk on borrowings used to fund that asset and, therefore derivatives are classified as at fair value through profit or loss, all gains / losses on non- hedging derivatives are immediately recognized in profit or loss. Where variable rate borrowings are used to finance a qualifying asset and a derivative is designated to cash flow hedge the variability in interest rates on such borrowings, any gain or loss on the hedging derivative that is effective and, therefore previously recognized in other comprehensive income, is reclassified from equity to profit or loss when the hedged risk impacts profit or loss. The hedged interest component of the qualifying asset (hedged risk) impacts profit or loss when the qualifying asset is amortized, impaired or sold. Where fixed rate borrowings are used to finance a qualifying asset and a derivative is designated to hedge the fair value exposure to changes in interest rates of such borrowings, the synthetic floating interest rate that is achieved as a result of a highly effective hedge is capitalized, so that borrowing costs always reflect the hedged interest rate. The amount of borrowing costs capitalized in such a case comprises the actual fixed rate on the borrowings plus the effect of swapping this fixed rate into floating rates.

56 F-21 Financial Statements Orascom Development 2014 Annual Report F-22 Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. As the financing activity is co- ordinated centrally and generally by the parent and some of the main subsidiaries, the group determines the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on that asset. The group includes all borrowings of the parent and its subsidiaries when computing the weighted average of the borrowing costs applicable to the borrowings that are outstanding during the period other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs that an entity capitalises during the period shall not exceed the amount of borrowing costs it incurred during that period, provided that the carrying amount of the qualifying asset on which eligible borrowing costs have been capitalized does not exceed its recoverable amount (being the higher of fair value less costs to sell or amount in use for that asset) Government grants Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are received. Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non- current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable. The benefit of a government loan granted at below- market interest rates of interest is treated as a government grant and measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates Retirement benefit costs Employee pension and retirement benefits are based on the regulations and prevailing circumstances of those countries in which the Group is represented. In Switzerland, ordinary pension and retirement benefit plans qualify as defined- benefit plans and are accounted for in conformity with IAS 19 Employee Benefits. For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. Actuarial gains and losses are recognized immediately through other comprehensive income, whereas past service- costs (vested and unvested) are recognized immediately in profit or loss. The retirement benefit obligation recognised in the consolidated statement of financial position represents the present value of the defined benefit obligation reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the plan. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contribution Taxation Income tax expense represents the sum of the tax currently payable and deferred tax Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the Balance Sheet Liability Method. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax liabilities are not recognised if the temporary difference arises from goodwill and no deferred tax assets or liabilities are recognised for temporary differences resulting from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. F- 21 Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis Current and deferred tax for the year Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination Property, plant and equipment Buildings, plant and equipment, furniture and fixtures held for use in the production, supply of goods or services or for administrative purposes are stated in the consolidated statement of financial position at cost less any accumulated depreciation and accumulated impairment losses. Properties in the course of construction for production, administrative purposes or for a currently undetermined future use are carried at cost less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Group s accounting policy as described in note Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation of buildings, plant and equipment as well as furniture and fixtures commences when the assets are ready for their intended use. Freehold land is not depreciated. Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their estimated useful lives, using the straight- line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership of the leased asset will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the net sales proceeds and the carrying amount of the asset and is recognised in profit or loss. The following estimated useful lives are used in the calculation of depreciation: Buildings Plant and equipment Furniture and fixtures 3.15 Investment property years 4 25 years 3 20 years Investment properties are properties (land or a building or part of a building or both) held by the Group entities to earn rentals and / or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value at the end of each reporting period. Gains and losses arising from changes in the fair value of investment properties are recognised in profit or loss including an adjustment to the related deferred tax position in the period in which they arise. F- 22

57 F-23 Financial Statements Orascom Development 2014 Annual Report F-24 Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The fair value of investment properties reflects market conditions at the end of each reporting period and is determined without any deduction for transaction costs which the Group may incur on sale or other disposal. The fair value of investment properties is determined based on evaluations performed by independent valuators. An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de- recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised Impairment of tangible assets At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash- generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash- generating units, or otherwise they are allocated to the smallest group of cash- generating units for which a reasonable and consistent allocation basis can be identified. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash- generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash- generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash- generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash- generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss Inventories Inventories are stated at the lower of cost and net realizable value. Costs, including an appropriate portion of fixed and variable production overheads as well as other costs incurred in bringing the inventories to their present location and condition, are assigned to inventories by the method most appropriate to the particular class of inventory, with the majority being valued on a weighted average basis. For items acquired on credit and where payment terms of the transaction are extended beyond normal credit terms, the cost of that item is its cash price equivalent at the recognition date with any difference from that price being treated as an interest expense on an effective- yield basis (see note 11). Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Estimates of net realisable value are generally made on an item- by- item basis, except in circumstances, where it is more appropriate to group items of similar or related inventories. The net realizable value of an item of inventory may fall below its cost for many reasons including, damage, obsolescence, slow moving items, a decline in selling prices, or an increase in the estimate of costs to complete and costs necessary to make the sale. In such cases, the cost of that item is written- down to its net realizable value and the difference is recognized immediately in profit or loss. Properties intended for sale in the ordinary course of business or in the process of construction or development for such a sale are included in inventories. These are stated at the lower of cost and net realizable value. The cost of development properties includes the cost of land and other related expenditure attributable to the construction or development during the period in which activities are in progress that are necessary to get the properties ready for its intended sale Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. F Financial instruments Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss Financial assets All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the timeframe established by regulation or convention in the market place. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets Classification of financial assets Debt instruments that meet the following conditions are subsequently measured at amortised cost less impairment loss (except for debt investments that are designated as at fair value through profit or loss on initial recognition): The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and The contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. All other financial assets are subsequently measured at fair value Effective interest method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees or points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments measured subsequently at amortised cost. Interest income is recognised in profit or loss and is included in the investment income line item Financial assets at fair value through other comprehensive income (FVTOCI) On initial recognition, the Group can make an irrevocable election (on an instrument- by- instrument basis) to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading. A financial asset is held for trading if: it has been acquired principally for the purpose of selling it in the near term; or on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has evidence of a recent actual pattern of short- term profit- taking; or it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee. Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investments revaluation reserve. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the investments. The Group has designated all investments in equity instruments that are not held for trading as at FVTOCI on initial application of IFRS 9. Dividends on these investments in equity instruments are recognised in profit or loss when the Group s right to receive the dividends is established in accordance with IAS 18 Revenue. Dividends earned are recognised in profit or loss and are included in the investment income line item Financial assets at fair value through profit or loss (FVTPL) Investments in equity instruments are classified as at FVTPL, unless the Group designates an investment that is not held for trading as at fair value through other comprehensive income (FVTOCI) on initial recognition. Debt instruments that do not meet the amortised cost are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria but are designated as at FVTPL are measured at FVTPL. A debt instrument may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that F- 24

58 F-25 Financial Statements Orascom Development 2014 Annual Report F-26 would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Group has not designated any debt instrument as at FVTPL. Debt instruments are reclassified from amortised cost to FVTPL when the business model is changed such that the amortised cost criteria are no longer met. Reclassification of debt instruments that are designated as at FVTPL on initial recognition is not allowed. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss is included in the 'other gains and losses' line item in the consolidated statement of comprehensive income. Fair value is determined in the manner described in note Interest income on debt instruments as at FVTPL is included in the net gain or loss described above. Dividend income on investments in equity instruments at FVTPL is recognised in profit or loss when the Group's right to receive the dividends is established in accordance with IAS 18 Revenue and is included in the net gain or loss as described above Impairment of financial assets Financial assets that are measured at amortised cost are assessed for impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the asset have been affected. Objective evidence of impairment could include: significant financial difficulty of the issuer or counterparty; or breach of contract, such as a default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial re- organisation; or the disappearance of an active market for that financial asset because of financial difficulties. For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables. The amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows reflecting the amount of collateral and guarantee, discounted at the financial asset's original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised De- recognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset measured at amortised cost, the difference between the asset s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. On derecognition of a financial asset that is classified as FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is reclassified to retained earnings Financial liabilities and equity instruments Classification as debt or equity Debt and equity instruments issued by a Group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. F Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The instrument is an equity instrument if, and only if, both conditions (a) and (b) below are met: a) The instrument includes no contractual obligation: i. to deliver cash or another financial asset to another entity; or ii. to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the issuer. b) If the instrument will or may be settled in the issuer s own equity instruments, it is: i. a non- derivative that includes no contractual obligation for the issuer to deliver a variable number of its own equity instruments; or ii. a derivative that will be settled only by the issuer exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments. A contract that will be settled by the Group entity receiving or delivering a fixed number of its own equity instruments in exchange for a fixed amount of cash or another financial asset is an equity instrument. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. Repurchase of the Company s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company s own equity instruments Financial liabilities All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL. A financial liability is classified as current liability when it satisfies any of the following criteria: It is expected to be settled in the entity s normal operating cycle It is held primarily for the purposes of trading; It is due to be settled within twelve months after the reporting period; The entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other financial liabilities are classified as non- current However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Group, and commitments issued by the Group to provide a loan at below- market interest rate are measured in accordance with the specific accounting policies set out below. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if: it has been acquired principally for the purpose of reselling it in the near term; or on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short- term profit- taking; or it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument. A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or it forms part of a contract containing one or more embedded derivatives, and the entire combined contract is designated as at FVTPL in accordance with IFRS 9. Financial liabilities at FVTPL are stated at fair value. Any gains or losses arising on remeasurement of held- for- trading financial liabilities are recognised in profit or loss. Such gains or losses that are recognised in profit or loss incorporate any interest paid on the financial liabilities and are included in the other gains and losses line item in the consolidated statement of comprehensive income. F- 26

59 F-27 Financial Statements Orascom Development 2014 Annual Report F-28 However, for non- held- for- trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The remaining amount of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable to a financial liability s credit risk that are recognised in other comprehensive income are not subsequently reclassified to profit or loss. Financial liabilities subsequently measured at amortised cost Financial liabilities that are not held- for- trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the 'finance costs' line item. Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non- cash assets transferred or liabilities assumed, is recognised in profit or loss Derivative financial instruments The Group enters into a variety of derivative financial instruments mainly to manage its exposure to interest rate and foreign exchange rate risk, including foreign exchange forward contracts and interest rate swaps. Further details of derivative financial instruments are disclosed in notes 35 and 42. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re- measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognized as a financial asset; a derivative with a negative fair value is recognized as a financial liability. A derivative that has a remaining maturity of less than twelve months from the end of the reporting period or has a remaining maturity greater than twelve months but is expected to be settled within twelve months is presented as current asset or liability. A derivative that is designated and effective in a hedging relationship with a non- current hedged item is presented as a non- current asset or liability in accordance with the presentation of the hedged item. A derivative that has a maturity of more than twelve months from the end of the reporting period and is not intended to be settled within twelve months is presented as a non- current asset or liability, even if that derivative is not part of a designated and effective hedge accounting Hedge accounting The Group generally designates certain derivatives as hedging instruments in respect of foreign currency risk or interest rate risk. Hedges of foreign currency risk on firm commitments, hedges of net investments in foreign operations as well as hedges of the variability risk of interest rates are all accounted for by the Group as cash flow hedges. At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument, in a hedging relationship, is highly effective in offsetting changes in cash flows of the hedged item attributable to the hedged risk Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the other gains and losses line item. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the consolidated statement of comprehensive income as the recognised hedged item. However, when the hedged forecast transaction results in the recognition of a non- financial asset or a non- financial liability, the gains and losses previously recognized in other comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non- financial asset or non- financial liability. Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss Non- current assets held for sale Non- current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non- current asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. When a Group entity acquires a non- current asset (or disposal group) exclusively with a view to its subsequent disposal, it classifies the non- current asset (or disposal group) as held for sale at the acquisition date only if the one- year requirement above is met and it is highly probable that the other criteria above that are not met at that date will be met within a short period following the acquisition. When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non- controlling interest in its former subsidiary after the sale. Non- current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. When the above criteria required for the held for sale classification are no longer met, the Group ceases to classify the asset (or disposal group) as held for sale. At that date, the Group measures any non- current asset that ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) at the lower of: Its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortization or revaluations that would have been recognized had the asset (or disposal group) not been classified as held for sale; and Its recoverable amount at the date of subsequent decision not to sell. The Group includes any required adjustment to the carrying amount of a non- current asset (or disposal group), that ceases to be classified as held for sale, in profit or loss from continuing operations in the period in which the criteria of held for sale classification are no longer met. The Group presents that adjustment in the same caption in the statement of comprehensive income used to present any gain or loss recognized on the remeasurement of that non- current asset (or disposal group) that had been previously classified as held for sale provided that it had not met the definition of a discontinued operation upon initial classification as held- for- sale. Comparative figures in the financial statements for prior periods presented are not restated as a result of the change in the plan to sell unless the non- current asset (or disposal group) had previously met the definition of a discontinued operation, in which case, the results of operations of the component previously presented in discontinued operations is reclassified and included in income from continuing operations for the prior period presented in the statement of comprehensive income. This also applies to the presentation of the statement of cash flows. 4 CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group s accounting policies, which are described in note 3, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. 4.1 Critical judgments in applying accounting policies The following are the critical judgments, apart from those involving estimations (see note 4.2), that management has made in the process of applying the Group s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements Revenue recognition Real estate sales The operating cycle of residential construction projects predominantly starts when the Group enters into agreements to sell the real estate units off- plan. The Group treats the sale of real estate units as sale of goods in accordance with IAS 18 Revenue and IFRIC 15 Agreements for the Construction of Real Estates. Management takes the view that the critical event of revenue recognition hinges on the transfer of significant risks and rewards of ownership and control to the buyer. When management makes this assessment it ensures that the detailed criteria for revenue recognition from the sale of goods as set out in IAS 18 and IFRIC 15 - including the transfer of significant risks and rewards of ownership and control to the buyer - are satisfied and that recognition of revenue from the sale of real estate is appropriate in the current reporting period. F- 27 F- 28

60 F-29 Financial Statements Orascom Development 2014 Annual Report F-30 Given the structure of the real estate sale contracts and the application of IAS 18 and IFRIC 15 as described above, revenue recognition from residential construction projects can occur in independent stages which consist of the sale of land, constructed, but unfinished units and finished units. The transfer of significant risks and rewards of ownership and control of each stage is documented in an official delivery protocol and signed by representatives of the Group as well as the buyer Government grants Acquisition by the Group entities of part of the land used in the construction of their real estate projects from governments of the local jurisdictions in which they carry out their activities has not brought these transactions under the scope of IAS 20 Accounting for Government Grants and Disclosure of Government Assistance and, therefore, has not resulted in the recognition of government grants in the current or in prior periods. In these cases the government is the only possible seller in the market and the Group purchases the land at market prices available to all interested parties and does not obtain finance facilities from the government which would require accounting for government grants Employee benefits expense Employee benefits expense which are directly related to the sale of goods or rendering of services form part of the operation s cost of sales. Where employee benefit expense is incurred to perform head quarter functions or relate to non- revenue generating entities, such as corporate companies, holding companies and start up companies, they are allocated to administration expenses Deferred taxation on investment property For the purposes of measuring deferred tax liabilities or deferred tax assets arising from investment properties management concluded that the Group s investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sales. Therefore, in determining the Group s deferred taxation on investment properties, management has determined that the presumption that the carrying amounts of investment properties measured using the fair value model are recovered entirely through sale is rebutted. As a result, the Group has recognised deferred taxes on changes in fair value of investment properties. 4.2 Key sources of estimation uncertainty The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year Impairment of tangible assets and investments in associates At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets and investments in associates to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash- generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash- generating units, or otherwise, they are allocated to the smallest Group of cash- generating units for which a reasonable and consistent allocation basis can be identified. In light of the political development in Egypt, management reconsidered the recoverability of the Group's significant items of property, plant and equipment and its investments in associates, which are included in the consolidated statement of financial position at 31 December 2014 at CHF 886,759,617 and CHF 111,534,902 respectively (31 December 2013: CHF 766,992,221 and CHF 103,633,179). As at 31 December 2o13 the impairment review of investments in associates resulted in an impairment loss of CHF 4.6 million on the investments in Garranah entities. All investments in Garranah entities are now completely written off. The impairment losses are shown as other gains and losses (for further details see notes 10 and 20). In 2014 there were no further impairment losses recognised in relation to investments in associates. The impairment review of the Eco Bos project in the UK resulted in a partial reversal of the previous year impairment of capitalized planning costs of CHF 4.1 million as significant progress has been made in relation to planning permissions with government. In the previous year an impairment loss of CHF 10.9 million was recognised. Further, in 2013, the impairment review of the budget housing project in Haram City resulted in an impairment loss of CHF 4.3 million within property, plant and equipment. Even though the deemed loss of control in the investment in 2014 resulted in a gain of CHF 9.4 million, management does not consider part of this gain as a reversal of previous impairment, as substance of the investment has changed significantly since it became an investment in associate. The impairment losses are shown as other gains/losses (note 10). Other than that no other items of property, plant and equipment or investments in associates were impaired. Management is aware that the slow- down in processes and logistics still impacts the business operations considerably. Therefore, they periodically reconsider their assumptions in light of the macroeconomic developments regarding future anticipated margins on their products. Detailed sensitivity analysis has been carried out and management is confident that the carrying amount of these assets will be recovered in full, even if returns are reduced. This situation will be closely monitored, and adjustments made in future periods if future market activity indicates that such adjustments are appropriate Valuation of financial assets at FVTOCI Basically the fair value of financial assets at FVTOCI is based on stock quotes. However, due to extraordinary situations, as for example the political situation in Egypt, such market prices might not reflect the real value at all times. In such cases alternative valuation methods are used to determine the fair value Useful lives of property, plant and equipment The carrying value of the Group's property, plant and equipment at the end of the current reporting period is CHF 886,759,617 (31 December 2013: CHF 766,992,221). Management s assessment of the useful life of property, plant and equipment is based on the expected use of the assets, the expected physical wear and tear on the assets, technological developments as well as past experience with comparable assets. A change in the useful life of any asset may have an effect on the amount of depreciation that is to be recognized in profit or loss for future periods Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash- generating units to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash- generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill at the end of the current reporting period is CHF 7,109,426 (31 December 2013: 6,553,348). The recoverability of goodwill is tested for impairment annually during the fourth quarter, or earlier, if an indication of impairment exists. The value of goodwill is primarily dependent upon projected cash flows, discount rates (WACC) and long- term growth rates. The significant assumptions are disclosed in note 18. As at 31 December 2014 the annual impairment test showed no impairment loss (2013: none). Changes to the assumptions may result in further impairment losses in subsequent periods Provisions The carrying amount of provisions at the end of the current reporting period is CHF 83, (31 December 2013: CHF 95,605,112). This amount is based on estimates of future costs for infrastructure completion, legal cases, government fees, employee benefits and other charges including taxes in connection with the Group s operations (see note 36). As the provisions cannot be determined exactly, the amount could change based on future developments. Changes in the amount of provisions due to change in management estimates are accounted for on a prospective basis and recognized in the period in which the change in estimates arises Impairment of trade and other receivables as well as other current assets An allowance for doubtful receivables is recognized in order to record foreseeable losses arising from events such as a customer s insolvency. The carrying amount of the allowance for trade and other receivables at the end of the current reporting period is CHF 29,911,892 (31 December 2013: CHF 25,971,712) (see note 24). In determining the amount of the allowance, several factors are considered. These include the aging of accounts receivables balances, the current solvency of the customer and the historical write- off experience. A similar assessment has been done in relation to the recoverability of other current assets amounted to CHF 110,133,046 (2013: CHF 61,706,893) which includes amounts due from Falcon (see note 44), amounts due from employees and management (see note 26) as well as outstanding proceeds from the sale of the six percent stake in the former Garranah subsidiaries. To determine the need for the recognition of any impairment charge, management considered several factors, such as the contractual repayment date, current solvency of the counterparty and historical write- off experience. In 2014 and 2013 there were no impairment losses within other current assets Deferred income taxes The measurement of deferred income tax assets and liabilities is based on the judgment of management. Deferred income tax assets are only capitalized if it is probable that they can be used. Whether or not they can be used depends on whether the deductible tax temporary difference can be offset against future taxable gains. In order to assess the probability of their future use, estimates must be made of various factors including future taxable profits. At 31 December 2014 deferred income tax assets amounted to CHF 16,024,544 (31 December 2013: CHF 15,679,458) that have mainly resulted from the tax impact of carry forward tax losses (see note 13). Such deferred tax assets are only recorded when the development phase of the project has been started and it becomes evident that future taxable profits are probable. If the actual values differ from the estimates, this can lead to a change in the assessment of recoverability of the deferred tax assets and accounting for such a change, if any, is to be made on a prospective basis in the reporting periods affected by the change. As at 31 December 2014, the reassessment of the recoverability of deferred tax assets did not result in derecognised deferred tax assets (2013: CHF 11.4 million) Retirement benefit obligations The retirement benefit obligation is calculated on the basis of various financial and actuarial assumptions. The key assumptions for assessing these obligations are the discount rate, future salary and pension increases and the probability of the employee reaching retirement. The obligation was calculated using a discount rate of 1.60% (31 December 2013: 2.10%) as well as future salary increases of 1.00% (31 December 2013: 1.00%). The calculations were done by an external expert and the principal assumptions used are summarised in note 40. At 31 December 2014, the underfunding amounted to CHF 244,583 (31 December 2013: CHF 977,640). Using other basis for the calculations could have led to different results. F- 29 F- 30

61 F-31 Financial Statements Orascom Development 2014 Annual Report F Classification and valuation of investment property Generally real estate units are constructed either for the Group s own use or for the sale to third parties and carried at cost. However, when a unit may not be sold, as soon as a long term rent contract over more than 1 year is agreed with a third party at market conditions, the unit is classified as an investment property and measured at the fair value obtained from independent, third party valuation experts. The fair value of investment properties at 31 December 2014 is CHF 11,922,802 (2013: CHF 9,986,618). The fair values at 31 December 2014 were determined based on an internal valuation model. The last external valuations were prepared as at 31 December 2012 by Fincorp, an accredited valuation specialist in Egypt. Note 17 provides detailed information about the valuation techniques applied and the key assumptions used in the determination of the fair value of each investment property Net realisable value of inventory Inventory mainly includes real estate construction work under progress which is recognised at cost or net realisable value. The majority of real estate under construction (approximately three quarters) is already sold at market prices which are significantly higher than construction cost. Therefore the estimation uncertainty only relates to the unsold real estate under construction. In general the profit margins on these real estate projects are high and management currently does not expect any of these projects to be sold below cost except for the following: In 2014, an impairment of CHF 1.1 was made in relation to Omani land. In 2013, Impairment review of real estate projects in Oman showed that for some real estate units the expected market price is below its construction costs. Therefore impairment write- down of CHF 4.9 million were recognized within cost of sales (refer to note 23) Infrastructure cost The Group has an obligation under the terms of its sale and purchase agreements to develop the infrastructure of the sold land. Infrastructure cost is deemed to form part of the cost of revenue and is based on management estimate of the future budgeted costs to be incurred in relation to the project including, but are not limited to, future subcontractor costs, estimated labor costs, and planned other material costs. The provision for infrastructure costs requires the Group s management to revise its estimate of such costs on a regular basis in light of current market prices for inclusion as part of the cost of revenue Liquidity shortages and related uncertainties For further details on management s plans to manage liquidity shortages and related uncertainty please refer to note Minimum building obligations One part of the Group s business is to acquire land for the development of tourism projects. Out of these business opportunities often no legally binding commitments incur however the Group has unbinding business opportunity commitments in relation to their projects. These contingent liabilities are further explained in note Due to the complexity of the projects and the ongoing negotiations, estimation of the contingent liability involves a high degree of uncertainty. 5 THE GROUP AND MAJOR CHANGES IN GROUP ENTITIES The Group comprises the Parent Company and its subsidiaries operating in different countries. Except for the disposal of CMAR and the deemed loss of control over OHC in 2014 (for further details see note 38 and 39) as well as the deemed loss of control over the operating entities in Switzerland in 2013(for further details see note 39) there have been no major changes in the group structure during the financial period. Orascom Hotels & Development SAE ( OHD ) remains the principal operating subsidiary and is located in Egypt. The group controls its subsidiaries directly and indirectly. 6 REVENUE An analysis of the Group s revenue for the year is as follows: Revenue from the rendering of services and rental income 163,941, ,683,815 Revenue from agreements for construction of Real Estate and construction revenue 72,928,614 49,789,620 Revenue on sale of land 13,665, ,947 TOTAL 250,534, ,379,382 7 SEGMENT INFORMATION 7.1 Products and services from which reportable segments derive their revenues The Group has four reportable segments, as described below, which are the Group s strategic divisions. The strategic divisions offer different products and services and are managed separately because they require different skills or have different customers. For each of the strategic divisions, the Country CEOs and the Head of Segments review the internal management reports at least on a quarterly basis. The following summary describes the operation in each of the Group s reportable segments: Hotels Include provision of hospitality services in two to five star hotels owned by the Group which are managed by international or local hotel chains or by the Group itself. Real estate and construction Include acquisition of land in undeveloped areas and addition of substantial value by building residential real estate and other facilities in stages. Land sales Include sale of land and land rights to third parties on which the Group have developed or will develop certain infrastructure facilities and where the Group does not have further development commitments. Destination management Include provision of facility and infrastructure services at operational resorts and towns. Other operations include the provision of services from businesses not allocated to any of the segments listed above comprising rentals from investment properties, mortgages, sports, hospital services, educational services, marina, limousine rentals, laundry services and other services. None of these segments meets any of the quantitative thresholds for determining a reportable segment in 2014 or The following is an analysis of the Group's revenue from continuing operations by its major products and services. Segment Product Revenue from external customers Hotels Hotels managed by international chains 68,115,220 89,925,698 Hotels managed by local chains 21,736,538 20,362,418 Hotels managed by the Group 29,006,623 15,530,237 Segment total 118,858, ,818,353 Real estate and construction Tourism real estate 62,495,696 34,418,058 Budget Housing 5,068,138 7,791,369 Construction work 5,364,780 7,580,193 Segment total 72,928,614 49,789,620 Land sales Sales of land and land rights 13,665, ,947 Destination management Utilities (e.g. water, electricity) 13,420,210 14,606,430 Other operations Mortgage (Real estate financing) 7,831,777 7,106,153 Sport (Golf) 1,794,441 2,784,016 Rentals (i) 8,931,478 8,726,233 Hospital services 3,046,823 2,962,943 Educational services 2,126,801 2,139,000 Marina 2,348,503 2,181,401 Limousine 84, ,112 Laundry services 41,105 58,264 Others 5,456,843 3,876,910 Segment total 31,662,567 30,259,032 TOTAL 250,534, ,379,382 (i) Rentals include income from investment property of CHF 6,596,832 (2013: CHF 6,463,392) and from other short term rent contracts in hotels, marinas and golf courses of CHF 153,525 (2013: CHF 2,262,841). F- 31 F- 32

62 F-33 Financial Statements Orascom Development 2014 Annual Report F Segment revenue, depreciation and results The following is an analysis of the Group s revenue and results from continuing operations by reportable segments: Total segment revenue Inter- segment revenue Revenue external customers Cost of revenue Depreciation Gross profit/(loss) Segment result CHF Hotels 119,252, ,210,111 (394,418) (391,758) 118,858, ,818,353 (97,519,362) (95,227,073) (17,735,285) (16,528,458) 3,603,734 14,062,822 8,339,909 6,792,005 Real estate and construction 102,033, ,342,907 (29,105,008) (57,553,287) 72,928,614 49,789,620 (55,091,705) (57,080,533) (478,448) (2,957,323) 17,358,461 (10,248,236) 18,429,037 (19,292,698) Land sales 14,606, ,552 (941,430) (69,605) 13,665, ,947 (1,495,692) (330,449) (830,301) (866,913) 11,339,200 (291,415) 9,851,377 (3,391,895) Destination management 31,060,383 33,526,669 (17,640,173) (18,920,239) 13,420,210 14,606,430 (12,211,997) (14,666,100) (4,145,636) (4,386,626) (2,937,423) (4,446,296) (979,380) (5,276,667) Other operations 41,103,421 49,554,801 (9,440,854) (19,295,769) 31,662,567 30,259,032 (21,330,143) (19,607,617) (2,198,509) (3,260,212) 8,133,915 7,391,203 15,027,933 8,176,478 Total 308,056, ,610,040 (57,521,883) (96,230,658) 250,534, ,379,382 (187,648,899) (186,911,772) (25,388,179) (27,999,532) 37,497,887 6,468,078 50,668,876 (12,992,777) Unallocated items*: Share of (losses) of associates (9,263,608) (10,464,453) Other gains and losses 72,563,451 (25,455,590) Investment income 45, ,927 Central administration costs and directors salaries (45,214,956) (70,755,383) Finance costs (21,853,854) (20,615,634) Gain/loss) before tax (continuing operations) 46,945,304 (139,743,910) Income tax expenses (10,777,252) (20,702,988) Gain/(loss) for the year (continuing operations) 36,168,052 (160,446,898) * For the purpose of segment reporting, part of the amounts reported for these items in the consolidated statement of comprehensive income have been allocated in the table above to their relevant segments. The accounting policies of the reportable segments are the same as the Group s accounting policies described in note 3. Segment result represents the profit earned by each segment without allocation of central administration costs and directors salaries, share of profits (losses) of associates, investment income, other gains and losses, finance costs and income tax expense, as included in the internal management reports that are regularly reviewed by the Board of Directors. This measure is considered to be most relevant for the purpose of resources allocation and assessment of segment performance. No single customer contributed ten percent or more to the Group s revenue for both 2014 and The gain from the settlement agreement with Falcon reached in Q of CHF 9.9 million is shown in segment results of other operations whereas the residual gains from the settlement agreement with Falcon reached in Q of CHF 42.7 million are shown as unallocated items in other gains and losses (refer to note 44 for further details on this settlement agreement). In 2014, reversal of impairment losses of CHF 4.1 million regarding property, plant and equipment have been recognized for Eco Bos project in the UK which has not been allocated to one of the segments due to headquarter function of the entity. In 2013, the impairment loss of CHF 10.9 was treated equally. Further, in 2013 impairment review of the budget housing project in Haram City resulted in an impairment loss of CHF 4.3 million which was recognized in property, plant and equipment (note 16). The impairment losses have been allocated to the real estate and construction segment. No impairment loss in respect of property, plant and equipment as well as goodwill was recognized in Further,an impairment of CHF 1.1 was made in relation to Omani land in 2014 (note 23). Impairment review of real estate projects in Oman in 2013 showed that for some real estate units the expected market price is below its construction costs. Therefore a write- down of CHF 4.9 million was recognized within cost of sales (note 23). The impairment losses have been allocated to the real estate and construction segment. F Segment assets and liabilities Segment assets and liabilities CHF 31 December December 2013 SEGMENT ASSETS Hotels 696,328, ,456,076 Real estate and construction 625,036, ,133,739 Land sales 366,606, ,675,672 Destination management 166,030, ,410,313 Other operations 364,799, ,005,117 Segment assets before elimination 2,218,801,101 2,201,680,917 Inter- segment elimination (805,592,580) (980,627,865) Segment assets after elimination 1,413,208,521 1,221,053,052 Non- current assets held for sale - 149,783,206 Unallocated assets 367,821, ,883,732 CONSOLIDATED TOTAL ASSETS 1,781,029,810 1,672,719,990 CHF 31 December December 2013 SEGMENT LIABILITIES Hotels 302,924, ,676,002 Real estate and construction 446,039, ,400,241 Land sales 113,661, ,142,757 Destination management 119,983, ,699,142 Other operations 401,327, ,562,208 Segment liabilities before elimination 1,383,934,417 1,456,480,350 Inter- segment elimination (816,009,143) (964,484,289) Segment liabilities after elimination 567,925, ,996,061 Liabilities directly associated to non- current assets held for sale - 79,403,411 Unallocated liabilities 391,904, ,551,874 CONSOLIDATED TOTAL LIABILITIES 959,829, ,951,346 For the purpose of monitoring segment performance and allocation of recourses between segments, all assets and liabilities are allocated to reportable segments except for the assets of holding companies or companies which are not yet operational. Goodwill is allocated to reportable segments as described in note 18. It is the Group s policy to reassess the classification of certain assets and liabilities within the reporting segments once a certain development stage of the destination is achieved. Accordingly during 2014, management transferred some of the assets and liabilities of the Omani development entities from real estate and construction segment to other operating segments and corporate segment according to the internal management reports provided to the country CEO and the head of segment based on the latest developments achieved in the business of this destination. Further, segment assets and liabilities increased due to the reclassification of Tamweel Group (note 28). This increase was partly set off by the decrease due to the deemed loss of control of OHC and its subsidiaries (note 39) Additions to non- current assets Hotels 24,866,413 66,251,142 Real estate and construction 16,482,541 2,838,101 Land sales - - Destination management 523, ,069 Other operations 1,677,850 6,006,943 Unallocated 202,127 9,007,673 TOTAL 43,752,677 84,590,928 F- 34

63 F-35 Financial Statements Orascom Development 2014 Annual Report F Geographical information The Group currently operates in eight principal geographical areas Egypt, Oman, United Arab Emirates, Jordan, Switzerland, UK, Montenegro and Morocco. The Group's revenue from continuing operations from external customers by location of operations and information about its non- current assets by location of assets are detailed below: 1) Revenue Non- current assets Egypt 179,478, ,577, ,052, ,592,192 Oman 29,508,674 14,528, ,994, ,516,083 United Arab Emirates 27,492,152 29,183,238 50,502,966 46,673,395 Jordan 4,292,627 4,757,173 16,094,931 14,749,391 Montenegro ,771,026 24,892,362 Switzerland 1) Morocco 25,003 22,018 1,848,240 3,107,753 Others 9,738,197 12,311,816 10,527,294 6,001,011 TOTAL 250,534, ,379, ,791, ,532,187 All operations in Switzerland except for the holding company have been deconsolidated in 2013 due to deemed loss of control of ASA and its subsidiaries (note 39). They are now classified as investments in associates (note 20). Non- current assets exclude investments in associates, financial instruments and deferred tax assets. 7.5 Additional information on segment results The aftermath of the Arab Spring continues to affect the Group s performance in 2014 as the political uncertainty and the after- effects of the extraordinary events that took place in Egypt and other countries in the Middle East have had a significant impact on the general business environment in these countries. The slow- down in processes and logistics does still impact the business operations considerably. However, during 2014 we saw an increase in business activity which is also reflected in the segment results. Total segment result of CHF 54.6 million (2013: CHF (13.0) million) mainly increased due to the following: There was a significant increase in the real estate and construction segment mainly due to an increase in delivered units in El Gouna and Makadi as well as in the budget housing project. There was a significant decrease in the hotel segment result in the first half of 2014 compared to prior year however for the second half of the year there was a significant increase compared to prior year resulting in an overall increase. The overall increase is mainly due to the following: Post the application of a travel ban to Taba and a travel warning on the Red Sea in general by most Western European countries in mid February 2014, tourism to Taba and El Gouna declined severely affecting the Segment s TRevPAR (total revenue per available room) and accordingly overall profits (note 49). In the second half of 2014 some major European countries relaxed their travel bans on Egypt which lead to an increase in revenues. On 8 May 2014, Taba witnessed one of the worst floods in its recent history resulting in a complete shutdown of the hotels in Taba Heights (29% of the Group s overall guestroom inventory). Within Q three of the hotels, representing more than half of the room capacity, reopened. However, throughout December there was still 25% of Taba Height s guestroom inventory out- of- order. Projected to be fully operational in December 2013 where we had a full HR setup in place, Salalah Rotana continued to be a cost center for approximately 4 months till the hotel was partially opened end of March 2014 with an inventory of 135 rooms vs. the full capacity of 400 rooms. The devaluation of the Russian Rouble had a negative impact on the hotel business in Makadi and UAE. The cost saving efforts applied throughout the hotel segment has yielded a more efficient operation and despite a small decline in total revenues, 2014 marked an improved flow- through compared to During 2014 a subsidiary of the Group entered with a third- party investor into an agreement to sub- develop of a real estate and touristic project in El Gouna with a total land area of 160,000 square meter, of which 32,000 squared meter have been delivered this year for revenue consideration of USD 12 million (CHF 11.0 million). The subsidiary s affiliate Red Sea Construction shall undertake the construction of the aforementioned project. 8 EMPLOYEE BENEFITS EXPENSE Employee benefits expense 77,960, ,235,949 Thereof included in cost of sales 60,765,365 78,252,105 Thereof included in administration expenses 17,194,963 23,983,844 9 INVESTMENT INCOME Interest income: - Bank deposits 587,509 1,527,315 - Other loans and receivables 3,198,433 3,845,655 TOTAL 3,785,942 5,372,970 Investment income earned on financial assets by category of assets is CHF 3,785,942 (2013: CHF 5,372,970) for loans and receivables including cash and bank balances.. Gains or (losses) relating to financial assets classified as at fair value through profit or loss is included in Other gains and losses in note OTHER GAINS AND LOSSES Gain from amounts under settlement with Falcon (note 44) 52,634,666 - Gain from deemed loss of control of subsidiaries (note 39, 44) 9,441,641 - Gain on disposal of subsidiaries (note 38) 4,712, ,553 Gain due to call/put option agreement (note 35) 3,459,346 - Net gain on insurance case regarding Taba Heights (i) 9,240,974 - Gain from waiver of current account due to Garranah (ii) 2,865,269 - Gain from change in fair value of investment property (note 17) 1,011,232 1,283,684 Gain on disposal of property, plant and equipment 316, ,377 Net foreign exchange gain/(losses) 6,031,502 (13,466,333) Reversal of impairment losses on property, plant and equipment (note 16) 4,136,569 Impairment losses and provisions in relation to budget housing project (iii) - (11,120,794) Impairment losses on property, plant and equipment (note 16) - (10,901,693) Impairment losses in relation to investments in associates (iv) - (4,608,936) Loss on reclassification of subsidiaries as disposal group (v) - (2,271,486) Other (losses)/gains (805,738) 824,024 TOTAL 93,044,081 (39,339,604) (i) In May 2014, Taba Heights, one of the major destinations of the Group in Egypt, faced storms and flooding which affected part of the infrastructure, part of the golf course as well as some of the furniture and fixtures of the resort building. Even though management did not expect any losses as the assets were fully insured, certain assets in the total amount of CHF 7.2 million were impaired without recognizing a corresponding amount due from the insurance company as the contingent asset was not virtually certain at that time. During December 2014 a final settlement was reached with the insurance company for a total amount of CHF 16.5 million allocated between the property damages as described above and business interruption. Considering other cost involved in solving the case, this led to a net gain of CHF 9.2 million which represents mainly compensation for lost revenue due to business interruption as well as the difference between the historical cost and the estimated cost to recover the damaged assets. - Other operations mainly increased because of the amount under settlement with Falcon which was released in Q (refer to note 44 for further details). F- 36

64 F-37 Financial Statements Orascom Development 2014 Annual Report F-38 (ii) Royal for Investments and Touristic Development ( Royal ), a group subsidiary, had a current account payable with Garranah Family of CHF 2.8 million. Pursuant to the mutual understandings and agreements between the parties, it has been agreed that Garranah Family waives their amounts due from Royal (iii) Impairment losses and provisions in relation to budget housing project in Haram City (notes 16 and 36) (iv) Impairment losses in relation to investment in Garranah (note 20) (v) Impairment losses in relation to reclassification of Sole project in Romania as disposal group (note 38) 11 FINANCE COSTS Interest on bank overdrafts and loans (36,027,536) (39,428,624) Interest on call and put option arrangements (1,167,711) (1,125,375) Total interest expense for financial liabilities not classified as at fair value through profit or loss (37,195,247) (40,553,999) Less: amounts included in the cost of qualifying assets (i) 4,291,205 9,528,481 TOTAL (32,904,042) (31,025,518) (i) The amount of capitalization cost of qualifying assets (project under construction and work in progress) has decreased compared to prior year. This is mainly due to decreased activities in relation to the current hotel projects and real estate projects in Egypt and Oman, which are eligible for the capitalization of interest expense. This led to an increase in finance cost by CHF 1.9 million from CHF 31.0 million to CHF 32.9 million. To enhance the liquidity of the Group, management negotiated with several banks in Egypt to capitalise the interest payments due to this period and with the period until the end of Q instead of paying them on their scheduled due dates. This had no impact on finance expense recognised in the statement of comprehensive income, however reduced the finance cost paid shown in the cash flow statement. The rate used by the Group to determine the amount of borrowing costs eligible for capitalization is 8.09% per annum (2013: 8.22% per annum). 12 COMPENSATION OF KEY MANAGEMENT PERSONNEL Salaries 4,880,870 5,121,333 Other short- term employee benefits 637,619 1,314,447 Post employment benefits 105, ,896 TOTAL COMPENSATION OF KEY MANAGEMENT PERSONNEL 5,623,549 6,698,676 There is a compensation plan in place for the Board of Directors which consists of a fixed compensation subject to an annual review. As to the compensation of the members of Executive Management, the base salary is 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 SAE, or (in case of members appointed at a later time) determined in a discretionary decision of the CEO approved by the Nomination & Compensation Committee. In respect of the bonus part of the compensation, proposals by the CEO are presented to the Nomination & Compensation Committee which discusses such proposals and approves them if deemed fit. The annual proposals and decisions concerning the compensation of the members of Executive Management are based on an evaluation of the individual performance of each member, as well as of the performance of the business area for which each member is responsible (in case of the executive members of the Board, the performance of the Orascom Development Group as a whole). The CEO forms the respective proposals in his discretion, based on his judgment of the relevant individuals' and business areas' achievements. The disclosures required by the Swiss Code of Obligations on Board and Executive committee compensation are shown in the compensation report Holding of Shares ODH shares OHD OHD ODH shares shares shares BOARD OF DIRECTORS Samih Sawiris 1 Chairman 17,921,069-17,914,355 - Franz Egle Member 37,106-28,572 - Adil Douiri Member 23,359-15,735 - Carolina Müller- Möhl Member 28,006-19,472 - Jean- Gabriel Pérès 2 Member ,166 - Eskandar Tooma 3 Member 43,000-7,624 - Marco Sieber 3 Member 17,334-8,800 - Luciano Gabriel Member TOTAL BOARD OF DIRECTORS 18,069,874 18,012,724 - EXECUTIVE MANAGEMENT Samih Sawiris 5, 6 CEO Gerhard Niesslein 6 CEO Eskandar Tooma 5 CFO - - see above see above Mahmoud Zuaiter 7 CEO Hotel ,750 - Abdelhamid Abouyoussef 7 Chief Hotels Officer 40, Julien Renaud- Perret 8 Chief Development Officer - - 6,000 - Aly Elhitamy 9 Chief Construction Officer Dalia El Gezery 10 Chief Human Resources Officer TOTAL EXECUTIVE MANAGEMENT 40,000-30,374 - total includes direct and indirect holding ownership as per note As of the Annual General Assembly of 12 May 2014, Mr. Pérès decided not to stand for re- election As of 15 May 2013 Eskandar Tooma and Marco Sieber were elected as new members of Board of Directors. Jürgen Fischer and Jürg Weber were elected as members of the Board of Directors on 12 May The holding of shares of Samih Sawiris (CEO since 1 March 2014) and Eskandar Tooma (CFO since 1 September 2013) are shown within the Board of Directors table. As at 28 February 2014 Gerhard Niesslein has left the Group. Samih Sawiris has been appointed as Group CEO As at 1 March 2014 Mahmoud Zuaiter has resigned from Executive Management as he has been appointed Managing Director of Jordan Projects for Tourism Development (JPTD); an associate of the Group. Abdelhamid Abouyoussef has been appointed as CHO (Chief Hotels Officer) As at 15 April 2014 Julien Renaud- Perret resigned from the Executive Management As at 15 April 2014 Aly Elhitamy resigned from Executive Management As at 1 September 2014 Dalia El Gezery has been appointed as Chief Human Resources Officer An amount of CHF 412,500 (2013: CHF 762,500) is due from key executives relating to the allocation of OHD shares in 2007 as detailed in note 26. No loans or credits were granted to members of the Board, the Executive Management or parties closely linked to them during 2014 and Total compensation of directors and Executive Management is part of the employees benefit expense allocated between cost of sales and administrative expenses (see note 8).

65 F-39 Financial Statements Orascom Development 2014 Annual Report F Income taxes relating to continuing operations 13.1 Income tax recognised in profit or loss CURRENT TAX Current tax (income)/expense for the current year 6,177,188 4,027,640 Adjustments recognized in the current year in relation to the current tax of prior years DEFERRED TAX - 6,177,188 4,027,640 Deferred tax (income)/expense recognized in the current year 4,102,537 5,313,539 Adjustments to deferred tax attributable to changes in tax rates and laws 497,527 - Write- down of deferred tax assets - 11,361,809 TOTAL INCOME TAX EXPENSE RECOGNIZED IN THE CURRENT YEAR RELATING TO CONTINUING OPERATIONS 4,600,064 16,675,348 10,777,252 20,702,988 The following table provides reconciliation between income tax expense recognized for the year and the tax calculated by applying the applicable tax rates on accounting profit: Profit/(loss) before tax from continuing operations 46,945,304 (139,743,910) Income tax expense/(benefit) calculated at 20.96% (2013: 16.43%) 9,840,069 (22,960,865) Unrecognized deferred tax assets during the year 10,006,436 27,952,461 Effect of income that is exempt from taxation (13,790,123) (3,012,581) Reassessment of recoverability of deferred tax assets - 11,361,809 Effect of deferred tax balances due to changes in income tax 497,527 - Effect of (income)/expenses that are not (added)/deductible in determining taxable profit 4,223,343 7,362,164 INCOME TAX EXPENSE RECOGNIZED IN PROFIT OR LOSS 10,777,252 20,702,988 The average effective tax rate of 20.96% (2013: 16.43%) is the effective tax rate from countries in which the company generates taxable profit. The average effective tax rate mainly increased due to the following: On June 4, 2014 the Egyptian President approved the Income Tax Law No. 44 of 2014 to add another bracket of the income tax of 5% for taxable profits exceeding 1 MEGP. This tax bracket will be temporarily imposed on natural and legal personalities for the three years 2014 to 2016 in accordance with the income tax law No 91 of 2005.The decree was published in the official gazette on the same date, and is effective from the next date of the publishing, which was June 30, 2014, when the Egyptian President approved the Income Tax Law No. 53 of 2014 to amend some of the Income Tax Law No 91 of 2005 and Stamp Tax Law No 111 of Income tax recognized in other comprehensive income DEFERRED TAX Fair value measurement of hedging instruments entered into in a cash flow hedge - (112,467) Remeasurement of defined benefit obligation - - TOTAL INCOME TAX RECOGNISED IN OTHER COMPREHENSIVE INCOME - (112,467) Current tax assets and liabilities Current tax expense 6,177,187 4,027,640 Balance due in relation to the current tax of prior years - 986,165 Advance payment in relation to current tax of current year (525,565) (1,689,949) Foreign currency difference 473,704 (593,558) CURRENT TAX LIABILITIES 6,125,326 2,730, Deferred tax balances Deferred tax assets and liabilities arise from the following: 2014 Opening Charged to balance income CHF Exchange difference Transfer from disposal group Acquisition/ disposal of Subsidiary Closing balance ASSETS Temporary differences Property, plant & equipment 4,767, , ,473 - (593,510) 5,380,705 Tax losses 10,911,758 (1,282,575) 739, ,476 10,643,839 Provisions Pension plan ,679,458 (535,533) 1,198, ,476 (593,510) 16,024,544 LIABILITIES Temporary differences Property, plant & equipment 35,630,064 4,084,486 2,110,331 76,541 (5,864) 41,895,558 Investment property 4,918, , , ,769,081 Provisions 382,471 (382,471) Pension plan 37,221 (37,221) ,967,859 4,064,531 2,561,572 76,541 (5,864) 47,664,639 NET DEFERRED TAX LIABILITY 25,288,401 4,600,064 1,362,919 (198,935) 587,646 31,640, CHF Opening balance Charged to income Exchange difference Recognized in other comprehen- sive income Acquisition/ disposal of Subsidiary Closing balance ASSETS Temporary differences Property, plant & equipment 10,767,353 (5,794,199) (205,454) - - 4,767,700 Cash flow hedges 112, (112,467) - - Tax losses 15,243, ,208 (244,029) - (5,025,305) 10,911,758 Provisions 4,839,371 (4,127,676) (424,050) - (287,645) - Pension plan 134, (134,168) - 31,097,243 (8,984,667) (873,533) (112,467) (5,447,118) 15,679,458 LIABILITIES Temporary differences Property, plant & equipment 31,227,168 6,610,666 (2,186,963) - (20,807) 35,630,064 Investment property 9,096, ,618 (800,307) - (4,055,370) 4,918,103 Provisions - 402,397 (19,926) ,471 Pension plan 37, ,221 40,360,551 7,690,681 (3,007,196) - (4,076,177) 40,967,859 NET DEFERRED TAX LIABILITY 9,263,308 16,675,348 (2,133,663) 112,467 1,370,941 25,288,401 F- 40

66 F-41 Financial Statements Orascom Development 2014 Annual Report F Unrecognized deferred tax assets Deferred tax assets not recognized at the reporting date: Tax losses in Parent Company (expiry in 2016) (i) 275,640, ,640,031 Tax losses in Parent Company (expiry 2018) (i) 846,695, ,695,821 Tax losses in Parent Company (expiry 2019) (i) 1,032,630,753 1,032,630,753 Tax losses in Parent Company (expiry 2020) (i) 29,383,250 29,383,250 Tax losses in Parent Company (expiry 2021) (i) 23,004,590 - Temporary differences in subsidiaries (ii) 248,597, ,117,480 (i) At 31 December 2013 the Parent Company s tax losses amounted to CHF 2,184,349,855 which mainly related to tax losses caused by impairment charges recognized on investments as a consequence of the original restructuring of the Group. The historical cost value of these investments was the fair value of the investments on the occasion of the stock market listing in Switzerland. The Parent Company incorporated in Switzerland is a holding company and enjoys a privileged taxation for dividend income from subsidiaries, as such income is tax exempted if certain criteria are met. The Parent Company does not expect to have any substantial income streams other than tax exempted dividend income in the foreseeable future and therefore it is not probable that the unused tax losses can be utilized. As a consequence and unchanged to prior year, all of the tax losses accumulated in the Parent Company which amounted to CHF 2,207,354,445 at 31 December 2014 were treated as unrecognized deferred tax assets. (ii) At 31 December 2014, the Group has not recognised deferred tax assets for gains recognized at the subsidiaries level on intercompany land sales which took place in 2010 in the amount of CHF 226,234,692 (31 December 2013: CHF 208,506,740). During 2014, the Group has not recognised any deferred tax asset on the sale transaction as the development of this land either has not yet been started or is still in the early stages of development and therefore it is not evident that future taxable profits are probable. The residual temporary differences are unrecognized tax losses in subsidiaries which expire in Discontinued operations 14.1 Description of discontinued operations Deemed loss of control of ASA and its subsidiaries On 25 June 2013 the Group lost control over ASA due to various capital increases in ASA in which the Group did not fully participate. For further details regarding the capital increases and the corresponding deemed loss of control please refer to note 39. As ASA and its subsidiaries represent the entire Swiss operations of the Group, which is considered a major geographical area of operations of the Group, the sold operations are recognized as discontinued operations and are presented accordingly Analysis of loss for the period from discontinued operations The result of the discontinued operation included in the consolidated statement of comprehensive income is set out below. The comparative loss and cash flows from discontinued operations have been re- presented to include this operation classified as discontinued in the comparative period. GAIN/(LOSS) FOR THE PERIOD FROM DISCONTINUED OPERATIONS Revenue - 3,800,321 Cost of sales - (5,275,684) Gross profit/(loss) - (1,475,363) Investment income - - Other gains and losses - 20,030 Administrative expenses - (6,819,476) Finance costs - (15,201) (Loss) before tax - (8,290,010) Income tax - 1,055,743 (Loss) after tax - (7,234,267) Gain on deemed loss/disposal of discontinued operations - 221,544 GAIN/(LOSS) FOR THE PERIOD FROM DISCONTINUED - OPERATIONS (7,012,723) CASH FLOWS FROM DISCONTINUED OPERATIONS Net cash flows from operating activities - 8,149,515 Net cash flows from investing activities - (23,785,208) Net cash flows from financing activities - 13,552,530 CASH FLOWS FROM DISCONTINUED OPERATIONS - (2,083,163) 15 EARNINGS PER SHARE Basic earnings per share is calculated by dividing the earnings from continuing operations attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. As the company does not have any dilutive potential, the basic and diluted earnings per share are the same. BASIC AND DILUTED EARNINGS PER SHARE From continuing operations 1.47 (5.29) From discontinued operations - (0.25) TOTAL BASIC AND DILUTED EARNINGS PER SHARE 1.47 (5.54) The earnings from continuing operations and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as follows: Gain/(loss) for the year attributable to the equity holders of the Parent Company 41,871,676 (157,786,634) Less: Loss for the year from discontinued operations - 7,012,723 Earnings from continuing operations (for basic and diluted earnings per share) 41,871,676 (150,773,911) Weighted average number of shares for the purposes of EPS 28,441,489 28,495,780

67 F-43 Financial Statements Orascom Development 2014 Annual Report F PROPERTY, PLANT AND EQUIPMENT CHF Freehold land Buildings Plant and equipment Furniture and fixtures Property under construction Assets under finance lease Total COST Balance at 1 January ,585, ,731, ,031,193 80,743, ,530,106-1,227,621,667 Additions - 2,726,375 2,039, ,140 78,979,990-84,590,928 Disposals / transfers (133,551) (84,848) (779,216) (927,521) - - (1,925,136) Derecognized on loss of control of subsidiaries - (2,055,321) (656,589) (646,762) (207,782,339) - (211,141,011) Transfer to non- current assets held for sale - (236,205) (144,802) (402,687) (99,749) - (883,443) Sale and leaseback of assets - (1,545,157) (5,391,066) - - 6,936,223 - Foreign currency exchange differences (10,693,935) (48,693,077) (11,034,011) (8,286,574) (8,640,277) - (87,347,874) Balance at 1 January ,757, ,843, ,064,932 71,325, ,987,731 6,936,223 1,010,915,131 Additions 14,379 2,052, ,276 2,280,024 39,194,574-43,752,677 Transfer from inventory - 17,488, ,093,306-30,581,679 Transfer from property under construction 53,263 78,757,174 9,118,286 4,475,547 (92,404,270) - - Transfer from non- current assets held for sale , ,290 Disposals (304,671) (265,574) (9,381,654) (1,357,848) - - (11,309,747) Derecognized on loss of control of subsidiaries (57,420) (1,961,863) (3,132,716) (2,942,158) (2,131,525) - (10,225,682) Foreign currency exchange differences 14,515,219 52,390,228 10,691,019 8,030,137 11,248,909-96,875,512 Balance at 31 December ,978, ,304, ,571,143 82,522, ,988,725 6,936,223 1,161,300,860 F- 43 CHF Freehold land Buildings Plant and equipment Furniture and fixtures Property under construction Assets under finance lease Total ACCUMULATED DEPRECIATION AND IMPAIRMENT Balance at 1 January ,684,248 83,196,018 52,759, ,640,047 Eliminated on disposals of assets - (59,153) (237,578) (136,369) - - (433,100) Derecognized on disposal of a subsidiary - (408,901) (587,094) (443,224) - - (1,439,219) Transfer to non- current assets held for sale - (19,344) (121,525) (228,333) - - (369,202) Sale and leaseback of assets - (83,052) (621,435) ,487 - Depreciation expense - 11,400,108 9,482,869 8,856, ,202 30,132,283 Impairment expense - 4,257, ,882,922-15,139,935 Foreign currency exchange differences - (10,227,337) (9,667,866) (3,852,631) - - (23,747,834) Balance at 1 January ,543,582 81,443,389 56,955,328 10,882,922 1,097, ,922,910 Transfer from non- current assets held for sale , ,552 Eliminated on disposals of assets - (14,140) (6,765,529) (922,844) - - (7,702,513) Derecognized on loss of control of subsidiaries - (1,255,945) (2,522,606) (2,848,529) - - (6,627,080) Depreciation expense - 8,685,229 9,925,531 6,084, ,202 25,088,774 Reversal of impairment loss (4,136,569) - (4,136,569) Foreign currency exchange differences - 10,143,695 8,491,907 4,206, ,445-23,751,169 Balance at 31 December ,102,421 90,572,692 63,719,441 7,655,798 1,490, ,541,243 CARRYING AMOUNT At 31 December ,757, ,299,670 34,621,543 14,370, ,104,809 5,838, ,992,221 At 31 December ,978, ,201,593 32,998,451 18,802, ,332,927 5,445, ,759,617 At 31 December 2014, property, plant and equipment (PPE) of the Group with a carrying amount of CHF 91.6 million (31 December 2013: CHF 86.7 million) were pledged to secure borrowings of the Group as described in note 33. See note 11 for the capitalized finance cost during the year. The impairment review of the Eco Bos project in the UK resulted in a partial reversal of the previous year impairment of capitalized planning costs of CHF 4.1 million. The reason for the reversal is that the company has made significant progress as it has started to submit the needed documentation for obtaining the planning permissions with government. In the previous year an impairment loss of CHF 10.9 million was recognised. Further, in 2013, the impairment review of the budget housing project in Haram City resulted in an impairment loss of CHF 4.3 million within property, plant and equipment. Even though the deemed loss of control over the investment in 2014 resulted in a gain of CHF 9.6 million, management does not consider part of this gain as a reversal of previous impairment, as substance of the investment has changed significantly since it became an investment in associate. The impairment losses are shown as other gains/losses (note 10).

68 F-45 Financial Statements Orascom Development 2014 Annual Report F INVESTMENT PROPERTY The following table summarizes movements, which have occurred, during the current reporting period, on the carrying amount of investment property. FAIR VALUE OF COMPLETED INVESTMENT PROPERTY Balance at the beginning of the year 9,986,618 78,903,321 Transfer to assets held for sale - (68,845,434) Revaluation gain/(loss) 1,011, ,176 Foreign currency translation adjustment 924,952 (263,445) Balance at the end of the year 11,922,802 9,986,618 The fair values at 31 December 2014 were determined based on an internal valuation model performed by Group management. The last external valuations were prepared as at 31 December 2012 by Fincorp, an accredited valuation specialist in Egypt. The internal valuation model relies on the Discounted Cash Flow (DCF) method to determine the fair value of the investment property. The Discounted Cash Flow (DCF) approach describes a method to value the investment property using the concepts of the time value of money. All future cash flows are estimated and discounted to give them a present value. This valuation method is in conformity with the International Valuation Standards. The same method was used for any previous external valuations. As investment property only consists of a few properties in Egypt, management has decided to use an internal valuation model due to efficiency and cost saving reasons. For the valuation of the investment property which is situated in Egypt the model used cash flow projections based on financial budgets for the next five years and an average discount rate of 19.5% (cost of equity). For the terminal value a perpetual growth rate of 3% was used. In 2013 an average discount rate of 20% and a perpetual growth rate of 3% was used. As at 31 March 2013 the investment properties of CMAR were reclassified as non- current assets held for sale and were deconsolidated during For further details refer to notes 28 and 38. The Group s remaining investment properties are located in Egypt. All of the Group s investment property is held under freehold interests. The following table summarizes income and direct operating expenses from investment properties rented out to third parties. Rental income from investment properties (i) 6,596,832 6,463,392 Direct operating expenses (including repairs and maintenance) arising from investment properties that generated rental income during the period (i) See note 7.1 for further information on the Group s rental income. 167, , Allocation of goodwill to cash- generating units Annual test for impairment An impairment test of goodwill was performed by the Group in order to assess the recoverable amount of its goodwill. No impairment was recorded as a result of this test. All cash- generating units were tested for impairment using the Discounted Cash Flow (DCF) method in accordance with IFRS. The Group s business segments have been identified as cash generating units. The DCF model utilized to evaluate the recoverable amounts of these units was based on a five year projection period. A further description of the assumptions used in the model is given in the following paragraphs. The carrying amount of goodwill that has been allocated for impairment testing purposes is as follows: CHF Segment Hotel companies * Hotels 7,109,426 6,553,348 *Each subsidiary considered separately 7,109,426 6,553,348 Hotels As already mentioned, Egypt has been on the brink of social and political turmoils in the past few years. While the Egyptian uprising has come with the promise of major political reform, it has led to the temporary disruption of economic activity. Looking beyond the current crisis, Egypt can benefit from maintaining its current momentum towards economic liberalization, privatization, and a more efficient government. This will improve Egypt s economic position and help foster a sustained growth once the inevitable global economic upturn materializes. In light of the previously mentioned analysis, the impairment model has taken the current economic situation of Egypt into close consideration. The recoverable amount of each cash- generating unit has been determined based on a value in use calculation which uses cash flow projections based on the financial budgets approved by management covering a ten- year period that consists of two phases. The first phase is a 5- year period which shows the evolving status of the hotel segment indicated by being back to the operating standards of before the 2011 revolution. And the second phase is a 5- year period which shows the steady performance of the hotel operation. An average discount rate of 19.5% per annum (2013: 20% per annum) was used for the value in use calculation. The discount rate is based on a risk free pre- tax interest rate of 12.0%, a beta of 1.00 as well as a risk premium of 7.5%. For the terminal value calculation, a terminal growth rate of 3% was used. No impairment loss (2013: CHF nil) was recognized due to impairment test described above. Sensitivity analysis where the average discount rate was increased by 4.5% and the growth rate reduced by 0.5%, which according to management is a reasonably possible change in key assumptions, did not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash- generating unit. Furthermore, management believes that any reasonably possible change in the key assumptions (sensitivity analysis) on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash- generating unit. 18 GOODWILL Cost 7,109,426 6,553,348 Accumulated impairment losses - - Carrying amount at end of year 7,109,426 6,553,348 COST Balance at beginning of year 6,553,348 7,331,756 Effect of foreign currency exchange differences 556,078 (778,408) Balance at end of year 7,109,426 6,553,348

69 F-47 Financial Statements Orascom Development 2014 Annual Report F SUBSIDIARIES The Group has control over all the subsidiaries below either directly or indirectly through subsidiaries controlled by the Parent Company. Details of the Group s significant subsidiaries at the end of the reporting period are as follows: Country Company name Domicile FC Egypt Share/paid- in capital Proportion of ownership interest and voting power held by the Group Abu Tig for Hotels Company Red Sea EGP 2,550, % 2 Accasia for Hotels Company Cairo EGP 25,000, % 5 Arena for Hotels Company S.A.E Cairo EGP 20,000, % 4 Azur for Floating Hotels Company S.A.E (ii) Cairo EGP 3,000, % 5 Captain for Hotels Company Red Sea EGP 768, % 3 El Dawar for Hotels Company Cairo EGP 9,560, % 3 El Khamsa for Hotels & Touristic Establishments El Golf for Hotels Company & Touristic Establishments Red Sea EGP 48,000, % Cairo EGP 19,000, % 5 El Gouna for Hotels Company S.A.E Cairo EGP 79,560, % 5 El Gouna Hospital Company Red Sea EGP 19,000, % El Gouna Services Company Red Sea EGP 250, % El Mounira for Hotels Company S.A.E Red Sea EGP 13,000, % 4 El Tebah for Hotels & Touristic Establishments Company Cairo EGP 52,000, % 5 El Wekala for Hotels Company Cairo EGP 39,000, % 4 International Company for Taba Touristic Projects (Taba Resorts) Cairo EGP 96,000, % 5 International Hotel Holding Cairo EGP 452,367, % Marina 2 for Hotels & Touristic Establishments Company Marina 3 for Hotels & Touristic Establishments Company Cairo EGP 19,250, % 4 Cairo EGP 26,000, % 4 Med Taba for Hotels Company S.A.E Cairo EGP 51,000, % 4 Misr El Fayoum for Touristic Development Company S.A.E Cairo EGP 28,000, % Mokbela for Hotels Company S.A.E Cairo EGP 85,000, % 5 Orascom Hotels & Development S.A.E Cairo EGP 1,109,811, % Orascom Housing Company Cairo EGP 22,000, % Paradisio for Hotels & Touristic Establishments Company S.A.E Red Sea EGP 18,500, % 4 Rihana for Hotels Company S.A.E Red Sea EGP 13,000, % 4 Roaya for Tourist & Real Estate Development SAE Royal for Investment & Touristic Development S.A.E Red Sea EGP 50,000, % Cairo EGP 50,000, % 4 Taba First Hotel Company S.A.E Cairo EGP 105,000, % 5 Taba Heights Company S.A.E South Sinai EGP 157,510, % Tamweel Leasing Finance Co. ILC Cairo EGP 30,000, % Tamweel Mortgage Finance Company S.A.E Cairo EGP 100,000, % Tawila for Hotel Company S.A.E Cairo EGP 68,000, % 5 Segment HO* R&C LS DM Other HQ Country Company name Domicile FC Jordan Share/paid in capital Proportion of ownership interest and voting power held by the Group Golden Beach for Hotels Company Aqaba JOD 8,200, % 4 Montenegro Lustica Development Ad Podgorica Morocco Oued Chibika Development (SA) Chbika Rive Hotel Oman Madrakah Hotels Management Company LLC Muriya Tourism Development Company (S.A.O.C) Salalah Beach Tourism Development Company (S.A.O.C) Sifah Tourism Development Company (S.A.O.C) Wateera Property Management Company LLC United Arab Emirates RAK Tourism Investment FZC Podgo- rica Casa- blanca Casa- blanca EUR 25, % MAD 286,117, % MAD 66,000, % UC Muscat OMR 4,350, % Muscat OMR 7,500, % Muscat OMR 16,600, % Muscat OMR 17,700, % Muscat OMR 270, % Ras al Khaimah AED 7,300, % 5 United Kingdom Eco- Bos Development Limited Cornwall GBP 10,000, % Abbreviations: HO Hotels R&C Real estate and construction LS Land sales DM Destination management HQ Headquarter or not yet operational Other Other operations * Number of stars the hotel holds UC Hotel under construction Segment HO* R&C LS DM Other HQ

70 F-49 Financial Statements Orascom Development 2014 Annual Report F Details of non- wholly owned subsidiaries that have material non- controlling interests The table below shows details of non- wholly owned subsidiaries of the Group that have material non- controlling interests. The assessment whether a non- controlling interest is material is based on the carrying amounts of such non- controlling interests. Name of subsidiary Proportion of ownership interest and voting power held by non- controlling interests Profit/(loss) allocated to non- controlling interests Accumulated non- controlling interests 31/12/ /12/ /12/ /12/ /12/ /12/2013 Sifah Tourism Development Co % 30.00% (1,353,085) (3,749,116) 33,934,956 20,511,917 RAK Tourism Investment FZC 27.00% 27.00% 625,824 1,067,063 13,052,857 11,161,151 Club Mediterranee Albion Resort % (916,792) 3,555,404-41,075,870 Individually immaterial subsidiaries with non- controlling interests 153,468, ,225,774 TOTAL 200,456, ,974,712 We have added RAK Tourism Investment FZC as subsidiary that has material non- controlling interests due to the fact that CMAR was sold in 2014 and management would like to show the two subsidiaries with the most significant non- controlling interests. Summarised financial information in respect of each of the Group s subsidiaries that has material non- controlling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations. Sifah RAK CMAR 31/12/ /12/ /12/ /12/ /12/ /12/2013 Current assets 141,168, ,328,863 10,016,995 8,292,906-4,009,242 Non- current assets 44,382,705 30,269,685 67,557,216 61,857,447-70,120,082 Current liabilities (72,389,577) (97,124,726) (15,055,296) (18,627,757) - (3,835,932) Non- current liabilities (45,471) (100,766) (14,175,000) (10,185,000) - (23,403,130) Equity attributable to owners (79,181,565) (47,861,139) (35,291,058) (30,176,445) - (5,814,392) Non- controlling interests (33,934,956) (20,511,917) (13,052,857) (11,161,151) - (41,075,870) Revenue 8,675,599 7,767,674 27,304,223 29,183,234 6,597,581 5,432,791 Profit/(loss) for the year (4,510,282) (12,497,057) 2,317,865 3,952,087 (1,046,566) 4,058,680 attributable to owners (3,157,197) (8,747,940) 1,692,041 2,885,024 (129,774) 503,276 attributable to non- controlling interests (1,353,085) (3,749,117) 625,824 1,067,063 (916,792) 3,555,404 Other comprehensive income for the year (482,760) 486, ,556 (152,881) - (1,556) attributable to owners (337,932) 340, ,296 (111,603) - (193) attributable to non- controlling interests Total comprehensive income for the year (144,828) 145,874 52,260 (41,278) - (1,363) (4,993,042) (12,010,811) 2,511,421 3,799,206 (1,046,566) 4,057,124 attributable to owners (3,495,129) (8,407,568) 1,833,337 2,773,421 (129,774) 503,083 attributable to non- controlling interests (1,497,913) (3,603,243) 678,084 1,025,785 (916,792) 3,554,041 Net cash inflow/(outflow) (47,864) (2,019,876) 4,897,974 (35,074) (1,498,062) (57,127) from operating activities (38,415,439) (21,651,530) 5,135,105 5,971,945 1,742,668 3,812,945 from investing activities - 350,599 (237,131) (16,277,635) - - from financing activities 38,367,575 19,281,055-10,270,616 (3,240,730) (3,870,072) Except for exchange differences arising on translating the foreign operations there are no other items of other comprehensive income. 20 INVESTMENTS IN ASSOCIATES Details of the Group s associates at the end of the reporting period are as follows: Name of associate Place of incorporation Proportion of ownership interest and voting power held by the Group Carrying value (CHF ) Andermatt Swiss Alps AG (i) Switzerland 49.00% 90,196,802 99,079,109 Orascom Housing Communities (ii) Cairo 35.25% 16,029,990 - Jordan Company for Projects and Touristic Development (iii) Jordan 15.64% 5,308,110 4,554,070 Orascom for Housing and Establishments (iv) Cairo 39.90% - - International Stock Company for Floating Hotels & Touristic Establishments (v) Cairo 30.00% - - Mirotel for Floating Hotels Company (v) Cairo 30.00% - - Tarot Garranah & Merotil for Floating Hotels (v) Cairo 30.00% - - Tarot Tours Company (Garranah) S.A.E (v) Cairo 30.00% - - Al Tarek for Tourist & Hotel Cruises (v) Cairo 30.00% - - TOTAL 111,534, ,633,179 The Group measures all its associates using the equity method of accounting as described in policy 3.5 of the notes to the consolidated financial statements. None of the Group s equity- method investments are listed on Stock Exchanges and, accordingly, they do not have quoted market prices. Management considers ASA and OHC as the only associate that are material to the Group. The Group did not receive any dividends during the current year from its material investments (2013: none). The Group has stopped recognizing its share of losses of its other immaterial associates. The Group s unrecognized share of losses amounts to CHF 1,419,799 and CHF 1,559,038 both for the current year and cumulatively as of 31 December (i) Andermatt Swiss Alps AG On 25 June 2013 the Group lost control over Andermatt Swiss Alps AG ( ASA ) due to various capital increases in ASA in which the Group did not fully participate. With a remaining share of interest of 49% in ASA, the investment is classified as investment in associates. For further details regarding the capital increases and the corresponding deemed loss of control refer to note 39. The fair value of ASA on initial recognition as investment in associates is based on a third- party valuation which supported the transaction price paid by Mr. Samih Sawiris. ASA is not subject to any restrictions on transferring funds to ODH whether resulting from regulatory requirements, borrowing arrangements or contractual arrangements between ASA and ODH. Summarised financial information in respect of ASA is set out below: Current assets 282,957, ,313,568 Non- current assets 188,639, ,951,675 Current liabilities (158,352,780) (179,257,610) Non- current liabilities (140,147,295) (81,387,102) Net assets 173,096, ,620,531 Revenue for the period 107,576,494 50,716,932 (Loss) for the period (17,495,386) (18,312,860) Other comprehensive income for the period (629,265) (245,138) Total comprehensive income for the period (18,124,651) (18,557,998) Group s share of comprehensive income for the period (8,881,079) (9,093,419)

71 F-51 Financial Statements Orascom Development 2014 Annual Report F-52 Reconciliation of the above summarised financial information to the carrying amount of the interest in ASA recognised in the consolidated financial statements: Net assets of the associate over Group level 184,075, ,202,263 Proportion of the Group s ownership interest in ASA 49% 49% Carrying amount of the Group s interest in ASA 90,196,802 99,079,109 (ii) Orascom Housing Communities ( OHC ) In June 2014 the Group lost control over OHC as they did not participate in the capital increase of OHC. With a remaining share of interest of 35.25% in OHC, the investment is classified as investment in associates. For further details regarding the capital increase and the corresponding deemed loss of control please refer to note 39. The fair value of OHC on initial recognition as investment in associates is based on a fair value which has been determined by Fincorp, an accredited valuation specialist in Egypt, using a DCF model. With a remaining share of interest of 35.25% the fair value on initial recognition as at 30 June 2014 is CHF 14.6 million. The corresponding gain on deemed loss of control is recognised as other gains and losses in the statement of comprehensive income (note 10). Summarised financial information in respect of OHC is set out below: Current assets 79,379,143 - Non- current assets 20,947,368 - Current liabilities (67,135,387) - Non- current liabilities (10,192,868) - Net assets 22,998,256 - Revenue for the period 11,469,344 - Profit/(loss) for the period (1,018,677) - Other comprehensive income for the period - - Total comprehensive income for the period (1,018,677) - Group s share of comprehensive income for the period (359,084) - Reconciliation of the above summarised financial information to the carrying amount of the interest in OHC recognised in the consolidated financial statements: Net assets of the associate over Group level 45,475,149 - Proportion of the Group s ownership interest in OHC 35.25% - Carrying amount of the Group s interest in ASA 16,029,990 - (iii) Jordan Company for Projects and Touristic Development (JPTD) JPTD is investing in property, destination management and development in Aqaba in Jordon. Since 2008 the Group exercised significant influence with their two active board members out of eleven leading to changes in the JPTD s Executive Management and provision of essential technical information. The proportion of ownership interest held by the Group at 31 December 2014 is unchanged to prior year. (iv) Orascom for Housing and Establishment The company develops real estate and housing projects located in Egypt for the low cost sector. The proportion of ownership interest held by the Group at 31 December 2014 is unchanged to prior year. In 2013, the investment was reduced to CHF nil as the losses in their last financial statements exceeded the carrying amount of the investment. (v) ODH investments in Garranah Group subsidiaries The Group continues to hold a 30% interest in the four operating floating hotels and a tour operator entity of the Garranah Group. As at 31 December 2013, the residual carrying amount of the investments in Garranah were fully impaired and an impairment loss of CHF 4.6 million was recognized in the statement of comprehensive income as other gains and losses as described in note 10. Aggregate financial information in respect of the Group s associates that are not individually material is set out below: Total assets 81,092,031 55,434,933 Total liabilities (49,262,959) (29,433,029) Net assets 31,829,072 26,001,904 Group s share of net assets of individually not material associates 4,978,067 10,260,119 Total revenue 17,915,095 3,382,703 Total (loss) for the period (149,904) (8,181,090) Other comprehensive income for the period - - Total comprehensive income for the period (149,904) - Group s share of comprehensive income of individually not material associates (23,445) (1,371,034) 21 NON- CURRENT RECEIVABLES Trade receivables 43,506,645 10,175,696 Notes receivable 14,784,281 22,433,859 TOTAL 58,290,926 32,609,555 Non- current receivables include long term receivables for real estate contracts, which will be collected over an average collecting period of 5.5 years (2013: 5.5 years). Accounts receivables from the mortgage company (Tamweel Mortgage Finance Company S.A.E.), one of OHD subsidiaries, were reclassified from non- current assets held for sale in For further details refer to note 28. The collection period for these accounts receivables is 10 years. None of these non- current receivables is impaired and/or overdue. In 2014, Tamweel Mortgage Finance Company S.A.E. has pledged trade receivable with carrying amount of CHF 27,549,223 to secure borrowings (note 33). 22 OTHER FINANCIAL ASSETS Details of the Group s other financial assets are as follows: CHF Current Non- current Financial assets carried at fair value through profit or loss (FVTPL) Held for trading non- derivative financial assets - certificates of mutual funds (i) Financial assets carried at fair value through other comprehensive income (FVTOCI) Nasr City company for Housing & Development (N.C.H.R.) (ii) - - 3,574 1,748 Egyptian Resort Company (iii) - - 8,017,512 6,845,395 Reclaim Limited - - 1,183,019 1,108,473 Falcon for Hotels SAE (iv) ,816,404 Camps and Lodges Company ,775 32,055 Palestine for Tourism Investment Company ,824 21,960 El Koseir Company Financial assets carried at amortized cost Bonds issued by the Egyptian Government (13.35%, December 2015) 3,245, Bonds issued by the Egyptian Government (14.5%, 11 December 2015) 417, TOTAL 3,662, ,263,177 25,826,471

72 F-53 Financial Statements Orascom Development 2014 Annual Report F-54 (i) Certificates mutual fund The Group holds certificates in Mutual Funds and these certificates are recorded at their redemption price at year end. (ii) Nasr City Company for Housing & Development (N.C.H.R.) On 22 July 2013 the Group sold its stake in N.C.H.R. keeping a minimal investment of 500 shares. The exit transaction resulted in sales proceeds of CHF 24.0 million. The accumulated losses of CHF 11.3 million were reclassified from investment revaluation reserve to retained earnings. Proceeds were used to pay back borrowings (see note 33 for further details). (iii) Egyptian Resort Company The investment in Egyptian Resort Company ( ERC ) remains unchanged to prior year. The company is acting as the developer of the hotel and real estate project in Sahel Hashish (Egypt). Since March 2011, ERC is involved in a dispute with the General Authority for Tourism and Development ( GATD ). Following the generally positive market environment, the share price of the Egyptian Resort Company has increased by 17% in 2014 after it witnessed losses in This increase in the carrying value of Egyptian Resort Company shares held by the Group amounts to CHF 1.2 million of which CHF 0.4 million are recorded in net gains on financial assets at FVTOCI within other comprehensive income. The residual CHF 0.8 million are foreign currency exchange gains which are also shown within other comprehensive income. (iv) Falcon Company for hotels Based on the settlement with Falcon for Hotels S.A.E., which is further described in note 36, the investment with a fair value of CHF 17.8 million has been derecognised in the second quarter of Any gains from this settlement are shown within the statement of comprehensive income as other gains and losses (note 10). 23 INVENTORIES Construction work in progress (i) 200,114, ,464,129 Land held for development under purchase agreements (ii) 69,498,933 67,416,226 Other inventories (iii) 36,022,984 67,436,700 TOTAL 305,636, ,317,055 (i) This amount includes real estate construction work under progress. The real estate units are sold off plan. The decrease is mainly due to the deemed loss of control of OHC (note 39), transfer of inventory to property, plant and equipment (note 16) as well as recognized revenue in Egypt and Oman. The decrease is partly netted off by new construction work in Montenegro, Oman and Egypt. For further details on the net realisable value of construction work in progress refer to note (ii) In 2008, the finance leases between OHD and General Authority for Touristic and Development ( GATD ) for development of land were terminated and replaced with purchase agreements with GATD. On May 2008, OHD signed a new purchase agreement with GATD to purchase a plot of land and paid a down payment of 27% and the remaining balance is payable in equal annual instalment commencing upon the expiry of the grace period of three years. In addition, OHD is required to pay an annual interest at the rate of 5% after the grace period with each instalment. The value of land shown above is for those plots of land assigned for development and not yet sold by OHD. (iii) This amount includes hotels inventory of CHF 17.5 million (2013: CHF 19.5 million) as well as completed but unsold units of CHF 18.5 million (2013: CHF 47.9 million) In 2014, an impairment of CHF 1.1 was made in relation to Omani land. In 2013, Impairment review of real estate projects in Oman showed that for some real estate units the expected market price is below its construction costs. Therefore impairment write- down of CHF 4.9 million were recognized within cost of sales. 24 TRADE AND OTHER RECEIVABLES Trade receivables (i) 90,509,359 49,087,641 Notes receivable 28,044,906 29,088,996 Allowance for doubtful debts (see below) (29,911,892) (25,971,712) TOTAL 88,642,373 52,204,925 (i) Trade receivables increased mainly due to the reclassification of Tamweel from non- current assets held for sale (note 28) as well as receivables recognized in the amount of CHF 11.5 million in relation to the sale of land in El Gouna. The average credit period on sales of real- estate is 5.5 years. No contractual interest is charged on trade receivables arising from the sale of real estate units. Interest is only charged in case of customers default. The Group has recognised an allowance for doubtful debts of 33% (2013: 53%) based on individual bad debts and allowances due to past due amounts. Allowances for doubtful debts are recognised against trade receivables based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty's current financial position. Movement in the allowance for doubtful debt: Balance at beginning of year (25,971,712) (42,730,631) Impairment losses recognised on receivables (1,838,562) (1,008,962) Amounts written off during the year as uncollectable 384,335 14,686,894 Impairment losses reversed (allowance no longer used) 691,934 - Reclassified (from)/to assets held for sale (678,031) 707,985 Foreign exchange translation gains and losses (2,499,856) 2,373,002 Balance at end of year (29,911,892) (25,971,712) Included in the Group s trade and other receivable balance are debtors with a carrying amount of CHF 33.7 million (2013: CHF 25.0 million) which are past due but not impaired at the reporting date. The Group has not built an allowance for impairment loss for the past due amounts reported below as there has not been a significant change in credit quality and the amounts are still considered recoverable (see note 42). Aging of receivables that are past due but not impaired: Less than 30 days 9,397,861 7,893,198 Between 30 to 60 days 5,667,716 4,001,179 Between 60 to 90 days 3,462,440 1,051,388 Between 90 to 120 days 1,665, ,557 More than 120 days 13,492,192 11,316,669 TOTAL 33,686,156 25,018, FINANCE LEASE RECEIVABLES Current finance lease receivables 7,803,230 - Non- current finance lease receivables 26,194,794 - TOTAL 33,998, Leasing arrangements Tamweel Leasing Finance Co., a subsidiary of the Group entered into finance lease arrangements for buildings, cars, equipment, computer hardware and software as a lessor. All leases are denominated in EGP. The average term of finance leases entered into was ten years. In 2013 Tamweel Leasing Finance Co. was classified as a disposal group. As management currently does not expect to sell the disposal group in due time anymore certain criteria for the classification as held for sale are no longer met and the Group ceases to classify the disposal group as held for sale (note 28). Except for the reclassified leasing arrangements of Tamweel Leasing Finance Co., there are no further leasing arrangements within the Group. F- 54

73 F-55 Financial Statements Orascom Development 2014 Annual Report F Amounts receivable under finance lease Present value of Minimum lease payments minimum lease payments Not later than one year 12,944,312-7,803,230 - Later than one year and not later than five years 33,144,465-25,410,143 - Later than five years 901, ,651-46,990,157-33,998,024 - Less: unearned finance income (12,992,133) Present value of minimum lease payments 33,998,024-33,998,024 - The interest rate inherent in the leases is fixed at the contract date for the entire lease term. The average effective interest rate contracted was approximately 15.5% per annum as at 31 December The finance lease receivables as at 31 December 2014 included CHF 337,939 which were past due. None of these was impaired. 26 OTHER CURRENT ASSETS Amounts due in relation to settlement with Falcon (note 44) 58,492,943 - Other debit balances (i) 23,166,238 20,644,510 Advance to suppliers (ii) 6,131,464 20,605,059 Withholding tax 4,727,504 4,243,865 Deposit with others 3,502,719 3,612,777 Prepaid expenses 5,637,953 3,287,481 Prepaid sales commissions related to uncompleted units 4,110,723 3,063,017 Letters of guarantee cash margin 624,879 2,995,786 Amounts due from employees and the management team (iii) 2,027,433 2,004,270 Urban development authority - 489,800 Accrued revenue 1,344, ,446 Cash imprest 325, ,769 Down payments for investments 41,313 38,113 TOTAL 110,133,046 61,706,893 (i) Included in other debit balances as at 31 December 2014 is an amount of CHF 12.o million which is due from an insurance company in relation to the storms at Taba Heights (refer to note 10 for further details). In 2013, an amount of CHF 10.2 million which was the value of OHC withdrawn land amounting to CHF 8.7 million as well as infrastructure expenditures located on the withdrawn land in Fayoum amounting to CHF 1.5 million, was included in other debit balances. (ii) Advance to suppliers relates to advances paid in Oman and Egypt. The decrease is mainly due to the deemed loss of control of OHC (see note 39 for further details). (iii) This amount is due from employees and management team including executive board members as a result of receiving two million OHD shares in These shares were previously issued based on a general assembly resolution in OHD dated 13 February 2006 authorizing the company to issue 2 million shares at par to be used to allocate to employees and management team (see note 44). All of these shares were swapped at a rate of 1:10 for ODH shares in On one side payment of the share price was deferred and payback period was extended each year, on the other side employees and management were instructed not to sell their unpaid shares. Due to the fact that the share price decreased substantially since the allocation of the shares, provisions against these receivables were recognized in 2011 and In March 2013, the terms and conditions of the final settlement were ultimately determined by the Board of Directors based on the share price as at 31 December This resulted in an amount of CHF 1,831,250 (2013: 1,831,250) which is due from employees and management team including executive board members and a residual provision of CHF 1,068,750 (2013: CHF 1,068,750). All other amounts due were netted off. The reduction in the amount due from employee and management is not considered remuneration as the shares were not ready for use until this final settlement agreement. Therefore only the issuance of shares to the employees and management in 2007 should be regarded as remuneration. 27 CASH AND CASH EQUIVALENTS For the purposes of the consolidated cash flow statement, cash and cash equivalents include cash on hand, demand deposits and balances at banks. Cash equivalents are short- term, highly liquid investments of maturities of three months or less from the acquisition date, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents at year end as shown in the consolidated statement of cash flows can be reconciled to the related items in the consolidated statement of financial position as follows: Cash and cash equivalents 100,658,860 73,310,785 Cash and cash equivalents included in non- current assets held for sale - 7,940,431 Balance at the end of the year 100,658,860 81,251, Management s plans to manage liquidity shortages and related uncertainty Following the political turmoil in Egypt and other Arab countries the market segments where the group operates became severely affected. The Group s real estate and hotel operations in Egypt initially suffered significantly. Oman destinations have been facing a reduction in tourism and real estate revenues due to secondary impact of the Arab spring and the slowdown of the Gulf Cooperation Council (GCC) economies; a trend that is now reversing in the GCC countries. Accordingly, the operating cash flows of the group have significantly decreased in the last three years. In 2014, key indicators in Egypt have started to show initial signs of slow recovery. The current cash flows from normal operations are not, on their own, sufficient to finance the current operational costs, the capital expenditures commitment as well as the other planned but not committed investments in the Group s destinations in addition to the debt repayment obligations. Although there is certain flexibility in the timing of capital expenditures and management believes that debt repayment may be re- negotiated, there is a need to generate extra liquidity in addition to the operational cash flows. The actions taken by the group so far towards managing this situation are as follows: New Loan and Commitment from Chairman In March 2014 Mr. Samih Sawiris signed a letter of commitment in favour of the Group to avail up to CHF 115 million until the end of April Of the committed amount CHF 38.8 million CHF were drawn- down by the Group until the end of December Further, in April 2015 the Chairman renewed his commitment letter vowing to avail up to CHF 50 million until 31 May 2016 should the Group require it. Monetization plan Management has also prepared a monetization plan in 2012 to sell certain assets and implement other actions to generate cash. This has and will continue to free up cash to be injected into the business of the group. For 2014, CHF 21.7 million have been realized through this monetization plan through the sale of CMAR and the part of the land sale realized in Management expects to realize an additional CHF million from further monetization items in 2015 including the sale of 15% stake in OHD at the beginning of the year (note 50) and the sale of the residual land related to the sub- development agreement in El Gouna (note 7.5). Management is continuously looking for local partner to inject funds into new projects in Oman and Montenegro. Further, management is considering to propose new financing structures on ODH level, including new debt, equity or structured equity instruments. However, should the action steps under the monetization plan not be sufficient to fund the Group s operations, then the group intends to postpone certain planned capital expenditure investments that are discretionary; such postponement of these projects will result in shifting their related revenues forward to the future until they are completed. From an operational perspective management is still working on several cost saving initiatives that should generate further savings in overhead expenses, direct expenses and interest expenses. These initiatives target enhancing the performance of the group in certain segments where we believe that there is room for enhancement mainly in the hotel segment in Egypt. Management believes that these plans are sufficient to substantially mitigate the liquidity risk. Given that there is a certain degree of uncertainty in major countries where the Group operates, namely Egypt and Oman, the loan from our Chairman as noted above is extended to support the company in the coming few months should such uncertainties prevail. However management keeps monitoring the events as they unfold in case further immediate action is required. F- 55 F- 56

74 F-57 Financial Statements Orascom Development 2014 Annual Report F NON- CURRENT ASSETS HELD FOR SALE (i) NON- CURRENT ASSETS HELD FOR SALE Related to CMAR (i) - 74,129,324 Related to Tamweel (ii) - 75,653,882 Total non- current assets held for sale LIABILITIES ASSOCIATED WITH NON- CURRENT ASSETS HELD FOR SALE 149,783,206 Related to CMAR (i) - (27,239,062) Related to Tamweel (ii) - (52,164,349) Total liabilities associated with non- current assets held for sale Disposal of CMAR (79,403,411) On 5 December 2012, European Investment Bank (EIB) served a letter to a subsidiary of the Group notifying EIB s intention to sell their interest in the shares of Club Méditerranée Albion Resort Ltd. (CMAR) based on the Put option and Call option Agreement dated April 2006 between International Holding for Hotels Company (IHH), European Investment Bank (EIB), and Société de Promotion ET De Participation pour la Cooperation Economique (PROPARCO). Subsequently, on 15 January 2013, IHH served to PROPARCO a letter notifying IHH s intention to exercise the Call Option, through which the Group will acquire the residual interests in the share capital of CMAR. It was the Group s intention to sell its investment in CMAR within few months to a third party. Therefore, in February 2013, a third party has been mandated to put the investment on the market and find a suitable buyer and CMAR was reclassified as held for sale in Q Contrary to the expectation of management, the sales process has taken longer than expected and has been ongoing for more than 12 months. On 1 July 2014, the Group was successful in concluding a sales purchase agreement with a third party and the settlement agreements with the development banks were finally signed. After having received the approval of the Prime Minister of Mauritius as well as the Minister of Housing and Land of Mauritius before year end, the closing and final payment incurred in December Therefore, CMAR was deconsolidated at 31 December CMAR does not qualify as discontinued operation as it is neither a separate major line of business nor a geographical ara of operations. (ii) Planned disposal of Tamweel In their August 2013 meeting the Board of Directors decided to sell its Tamweel Group companies ( Tamweel ) and management has engaged a third party as sell side advisor. The sale process has been started in mid September 2013 after all necessary documentation had been prepared by the sell side advisor. In mid September 2014 the Group received an offer from an interested third party which was turned down as the offered price was below the expectation of the Board of Directors and management. As management currently does not expect to sell the disposal group in due time anymore certain criteria for the classification as held for sale are no longer met and the Group ceases to classify the disposal group as held for sale. The non- current assets held for sale and the liabilities associated with non- current assets held for sale were reclassified at their carrying amounts before the disposal group was classified as held for sale, adjusted for any depreciation which would have been recognised had Tamweel not been classified as held for sale. Tamweel did not qualify as discontinued operation as it is neither a separate major line of business nor a geographical area of operations. The non- current assets held for sale and the liabilities associated with non- current assets held for sale were reclassified from the following categories of assets and liabilities: CHF 31 December December 2013 CMAR Tamweel CMAR Tamweel Property, plant and equipment ,242 Investment property (i) ,120,082 - Non- current receivables ,650,052 Deferred tax assets ,402 Finance lease receivables ,708,685 Non- current assets ,120,082 54,146,381 Inventories ,510 Trade and other receivables ,806,826 Finance lease receivables ,926,185 Other financial assets ,406,013 Other current assets - - 1,486,781 2,614,997 Cash and bank balances - - 2,522,461 5,417,970 Current assets - - 4,009,242 21,507,501 Assets classified as non- current assets held for sale ,129,324 75,653,882 Borrowings ,548,575 30,641,965 Deferred tax liabilities - - 3,854,555 75,964 Non- current liabilities ,403,130 30,717,929 Trade and other payables ,323 Borrowings - - 2,898,088 18,512,150 Current tax liabilities ,208,076 Provisions ,681 Other current liabilities ,844 1,287,190 Current liabilities - - 3,835,932 21,446,420 Liabilities associated with assets classified as non- current assets ,239,062 52,164,349 held for sale Net assets classified as disposal group ,890,262 23,489,533 (i) Investment property is valued at fair value based on a valuation prepared by a third party valuer. 29 CAPITAL 29.1 Issued capital Par value per share CHF CHF Number of ordinary shares issued and fully paid 28,543,147 28,543,147 Issued capital 662,201, ,201, Fully paid ordinary shares There were no changes to the share capital in the current as well as in the comparative financial year.

75 F-59 Financial Statements Orascom Development 2014 Annual Report F Authorized capital The Board of Directors is authorized to increase the share capital of the Company by a maximum of CHF 10 million by issuing of up to fully paid- up registered shares with a par value of CHF each until 12 May A partial increase is permitted Conditional capital The share capital may be increased by a maximum amount of CHF 130,489,699 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 14,489,699 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 Parent 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 Parent Company or one of its group companies. The subscription rights of the shareholders shall be excluded. The Board of Directors shall determine the conditions of the option rights, the issue price, the dividend entitlements as well as the type of contribution. At 31 December 2014, no option rights, conversion rights or warrants had been granted on that basis Significant shareholders The following significant shareholders are known to us. (i) CHF Number of shares % Number of shares % Samih Sawiris (i) 17,921, % 17,914, % Janus Capital Management LLC 1,600, % 1,623, % Others 9,021, % 9,005, % TOTAL 28,543, % 28,543, % The shares of Samih Sawiris are held directly and through his entities Thursday Holding and SOS Holding. 30 RESERVES (NET OF INCOME TAX) Share premium (note 30.1) 243,799, ,799,019 Treasury shares (note 30.2) (5,471,285) (8,499,885) Cash flow hedging reserve (note 30.3) - (76,938) Investments revaluation reserve (note 30.4) (11,647,720) (10,788,090) General reserve (note 30.5) 4,916,868 4,916,868 Foreign currencies translation reserve (note 30.6) (248,250,610) (283,710,189) Reserve from common control transactions (note 30.7) (121,749,573) (121,749,573) Equity swap settlement (note 30.8) (2,114,229) (2,114,229) TOTAL (140,517,530) (178,223,017) 30.1 Share premium Balance at beginning of year 243,799, ,799,019 Balance at end of year 243,799, ,799, Treasury shares Balance at beginning of year (8,499,885) (768,308) Acquisition of treasury shares (i) (324,800) (8,623,400) Distribution of treasury shares (ii) 3,353, ,823 Balance at end of year (5,471,285) (8,499,885) As of 31 December 2014, the Company owned 105,246 own shares (31 December 2013: 150,701). A total of 150,612 own shares were received in 2010 (26,171 shares) and 2013 (124,441 shares) as part of the compensation for the sale of the six percent stake in the former Garranah subsidiaries (note 30.8). (i) On 13 May 2014 and 24 December 2014 a total of 14,000 own shares were acquired from employees resulting in an increase of the treasury shares of CHF 0.3 million. (ii) On 1 February 2014, ODH transferred 59,455 own shares to the members of the Board of Directors as part of their remuneration (CHF 0.9 million). The treasury shares reserve, which values the shares at original purchase price (CHF 3.4 million), has been reduced accordingly and the resulting difference has been recognized as loss directly through retained earnings (CHF 2.5 million) (note 31) Cash flow hedging reserve Balance at beginning of year (76,938) (449,869) Gain (loss) arising on changes in fair value of hedging instruments entered into for cash flow hedges 76,938 - Interest rate swaps - 485,398 Income tax related to gains/losses recognised in other comprehensive income - (112,467) Balance at end of year - (76,938) The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non- financial hedged item, consistent with the relevant accounting policy. The only interest rate swap outstanding expired in June Investments revaluation reserve Balance at beginning of year (10,788,090) (18,529,412) Loss from sale of financial assets at FVTOCI - 11,344,389 Net (loss) arising on revaluation of financial assets at FVTOCI (859,630) (3,603,067) Balance at end of year (11,647,720) (10,788,090) The investments revaluation reserve represents the cumulative gains and (losses) arising on the revaluation of financial assets at fair value through other comprehensive income ( FVTOCI ) General reserve Balance at beginning of year 4,916,868 4,916,868 Balance at end of year 4,916,868 4,916,868 On 3 December 2010, the Parent Company borrowed 1,286,353 ODH shares from Mr. Samih Sawiris free of charge under a securities lending agreement. These shares were intended to be used for the tender offer regarding the buy- out of the remaining shareholders of Orascom Hotels & Development SAE (OHD), a company listed at the EGX. The borrowed ODH shares were not accounted for as treasury shares by the Group, as Mr. Samih Sawiris retained the significant rights, such as dividend and voting rights, during the borrowing period as per contractual provisions. Under the above mentioned securities lending agreement the Parent Company has returned of the borrowed ODH shares to Mr. Samih Sawiris on 28 July 2011 by way of capital increase, which is further explained in note 44. All of the remaining 956,324 shares, which were not used during the above mentioned tender offer, were returned to Mr. Samih Sawiris by 31 December The difference between the balance, which was reported in equity as equity swap settlement, measured at the fair value of the share at the end of the tender offer, and the fair value amount of the capital increase was recognised as general reserve. F- 60

76 F-61 Financial Statements Orascom Development 2014 Annual Report F Foreign currencies translation reserve Balance at beginning of year (283,710,189) (247,327,433) Exchange differences arising on translating the foreign operations 32,676,176 (36,382,756) Exchange difference reclassified to profit or loss on disposal of foreign operations 2,783,403 - Balance at end of year (248,250,610) (283,710,189) Exchange differences relating to the translation of the results and net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency (CHF) are recognized directly in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the foreign currency translation reserve in respect of translating the results and net assets of foreign operations are reclassified to profit or loss on the disposal and/or deemed loss of a foreign operation (refer to note 38 for further details on disposal of CMAR and note 39 for further details on deemed loss of control of OHC). In 2014 the Swiss Franc weakened against both the USD and Egyptian Pound by 11.7% and 8.5% respectively. This led to foreign exchange gains for the period of CHF 35.4 million Reserve from common control transactions Balance at beginning of year (121,749,573) (120,924,463) Non- controlling interests share in equity of consolidated subsidiaries - (825,110) Balance at end of year (121,749,573) (121,749,573) The reserve from common control transactions mainly relates to the restructuring of the group and the set up of a new holding company during May This new structure became effective by way of a share exchange between the shareholders of the initial holding company (OHD) and the new holding company (ODH). Following this acquisition through exchange of equity instruments, ODH became the parent of OHD with an ownership stake of 98.05%, later increased to 98.16% at 31 December Whereas the new holding company (ODH) is ultimately owned and controlled by the same major shareholders, management decided that this Group reorganisation was for the purpose of capital restructuring and it has been accounted for as a continuation of the financial statements of the initial holding Group (OHD) in the 2008 consolidated financial statements Management concluded that the above Group restructure is classified as a transaction under common control since the combining entities are ultimately controlled by the same parties both before and after the combination and that control is not transitory. However, since IFRS 3 Business Combinations excludes from its scope business combinations involving entities or businesses under common control (common control transactions), IAS 8 requires management to develop and apply an accounting policy that results in information that is relevant and reliable. Management used its judgment in developing and applying an accounting policy for common control transactions arising from the Group s capital restructuring as follows: Recognition of the assets acquired and liabilities assumed of the initial holding Group (OHD) at their previous carrying amounts; Recognition of the difference between purchase consideration and the previous carrying amount of net assets acquired as an adjustment to equity; Transaction costs, which were incurred in relation to the issuance of ODH shares, have been recognised as a reduction to the reserve from common control transaction. Amount included in the consolidated statement of changes in equity Equity swap settlement Balance at beginning of year (2,114,229) (10,220,295) Acquisition of treasury shares - 8,106,066 Balance at end of year (2,114,229) (2,114,229) The consolidated statement of changes in equity includes a balance of CHF (2.1) million outstanding at 31 December 2014 which has originally arisen from the Group s sale of the six percent stake in Garranah companies to the Garranah family during The unsettled consideration at 31 December 2012 amounted to CHF 10.6 million of which CHF 10.2 million were reported as a negative component in equity. The remaining balance arising from such sale of CHF 0.4 million was classified as trade and other receivables. On 12 November 2013, the Garranah family has settled part of the outstanding consideration by transferring 124,441 ODH shares. This led to a corresponding transfer of CHF 8.1 million from this reserve to treasury shares (note 30.2). The residual amount as at 31 December 2014 is due to EDRs which are held in an escrow account and remained unchanged since 31 December F RETAINED EARNINGS AND DIVIDENDS ON EQUITY INSTRUMENTS Balance at beginning of year 58,815, ,635,661 Profit/(loss) attributable to owners of the Parent Company 41,871,676 (157,786,634) Remeasurement gain/(loss) on defined benefit obligation 834, ,790 Loss from sale of financial assets at FVTOCI transferred from revaluation reserve - (11,344,389) Distribution of treasury shares (note 30.2) (2,461,575) (374,489) Balance at end of year 99,060,154 58,815,939 During 2013 and 2014 no dividends had been paid. In respect of the current year, the Board of Directors does not propose a dividend or a capital reduction to the shareholders at the Annual General Meeting. 32 NON- CONTROLLING INTERESTS Balance at beginning of year 218,974, ,883,784 Share of (loss)/profit for the year (5,703,624) (9,672,987) Exchange differences arising on translation of foreign operations 15,081,746 (12,851,572) Non- controlling interest share in equity of consolidated subsidiaries (i) 11,023,360 5,615,487 Non- controlling interest share in equity of deconsolidated subsidiaries (ii) (38,919,843) - Balance at end of year 200,456, ,974,712 (i) For 2014 and 2013 the amount represents NCI share in capital increases mainly due to share contributions to Salalah and Sifah (Oman). (ii) The amount represents the NCI share in CMAR which was deconsolidated in December 2014 (note 38) 33 BORROWINGS Current Non- current Secured - at amortized cost Credit facilities (i) 181,599, ,373, Bank loans (ii) 91,560,770 33,948, ,224, ,373,333 Finance lease (iii) 732, ,495 4,560,618 5,293,283 TOTAL 273,893, ,906, ,785, ,666, Summary of borrowing arrangements The weighted average contractual effective interest rate for all credit facilities and loans are 8.12% (2013: 7.46%). It is calculated by dividing the forecasted contractual interest expense due next year by the total outstanding credit facilities and bank loans at the end of the current reporting period. For a breakdown of debts bearing variable and fixed interest see note (i) Credit facilities used by the group are revolving facilities used to finance working capital requirements and they are available in multiple currencies. The average interest rate for the credit facilities for year 2014 is 9.31% (2013: 8.83%). (ii) Bank loans are current and non- current loans and have in general variable interest rates including a mark up. Property, plant and equipment with a carrying amount of CHF 91.6 million (2013: CHF 86.7 million) and receivables with a carrying amount of CHF 27.5 million (2013: CHF 12.4 million) have been pledged to secure borrowings (see notes 16 and 21). In 2014 borrowings increased due to the reclassification of Tamweel from liabilities directly associated with non- current assets held for sale of CHF 53.3 million (note 28), new non- current bank loans for subsidiaries in Egypt of CHF 8.5 million as well as capitalization of interest and the weakening of the Swiss Franc against EGP and USD. The increase was partly set- off by instalment payments of total CHF 22.0 million. F- 62

77 F-63 Financial Statements Orascom Development 2014 Annual Report F-64 (iii) In April 2013 El- Gouna Electric Company, an Egyptian subsidiary of ODH, entered into a sale and leaseback agreement with Nile Finance Company by selling their power plant with a carrying value of EGP 45.8 million (CHF 6.2 million) to the finance company for a total value of EGP 40 million (CHF 5.4 million) and leasing it back for a period of 80 months for a total lease value of EGP 66.3 million (CHF 8.9 million). At the end of the lease period El- Gouna Electric Company has the right to acquire the leases power plant for a residual value of EGP 1,000 (CHF 128). Based on the agreement the lease obligation was recognized at the present value of the minimum lease payments of CHF 5.4 million whereas the asset was reclassified to assets held under finance lease within property, plant and equipment at its carrying amount of CHF 6.2 million (refer to note 16) Breach of loan agreement The Egyptian economy continued to suffer through 2014 as it is still recovering from post revolution turmoil. The tourism sector, the main pillar industry, has been especially affected, which has led to a decrease in the number of incoming tourists evidenced by a decline in occupancy rates. Our subsidiary in Egypt, being the main pillar of the Group, has been greatly affected by the surrounding circumstances and this has had a direct adverse influence, reflected in the declining profitability and cash flow of the Group which was exacerbated by the announcement of travel bans to Egypt by most European countries as a result of terrorist attacks which occurred in early Our project in Taba Heights was furthermore affected by devastating floods in May 2014 which lead to a halt in operations. Due to the aforementioned factors and the resulting low cash flow, which fell short of meeting financial obligations, the Group has exerted a great deal of effort to negotiate with its banks a rescheduling scheme, which aimed to reschedule all 2014 due instalments and their accompanying interest expense. When negotiations started during November 2013, the portion of long term debts (due during 2014) was CHF 55.3 million (hotels & real estate segments representing CHF 23.1 million) while the related interest expense was CHF 16.5 million (hotels & real estate segments representing CHF 2.1 million). Due to the long track record the Group has had with its banks and due to the current economic conditions, in 2014 the Group has succeeded in negotiating rescheduling its due instalments amounting to CHF 46.3 million and interest expense under the CPLTD for 9.9 million. The residual amounts, which were due in 2014, were paid accordingly in On companies with loans which have rescheduled due instalments there are restrictions on dividend distributions until the due instalments are paid. It is worth highlighting that to accomplish this rescheduling scheme, the Group was involved in negotiations, which have led to the successful receipt of formal commitment letters from the relevant banks, in addition to signing part of the Amended Loan Agreement (ALA) and others in process with the new run- offs which are expected to relieve the burden of the current financial obligations. All such actions undertaken by the Group led to steadily waiving covenants testing by the banks for As at 31 December 2014, the Group has obtained financial covenant waiver from all of its banks for TRADE AND OTHER PAYABLES Non- current trade payables 23,074,081 25,708,424 Current trade and other payables 36,923,245 30,124,918 TOTAL 59,997,326 55,833, OTHER FINANCIAL LIABILITIES Financial liabilities carried at amortized cost Put option and call option agreement CMAR (i) - 11,418,524 Derivatives that are designated and effective as hedging instruments carried at fair value Hedging liabilities - 372,931-11,791,455 Current - 11,418,524 Non- current - 372,931 TOTAL - 11,791,455 Put option and call option agreement - CMAR (i) Pursuant to the Put option and Call option Agreement dated April 2006 between Orascom Holding for Hotels Company (IHH), European Investment Bank (EIB), and Société de Promotion ET De Participation pour la Cooperation Economique (PROPARCO). IHH (a subsidiary) unconditionally and irrevocably undertakes to purchase all or part of EIB and PROPARCO shares in Club Méditerranée Albion Resort Ltd. (CMAR) during the put period ending 31 March 2016 if EIB and PROPARCO exercise their rights. In addition, IHH had a right to buy all or part of the shares of EIB and PROPARCO during the call period ending 31 March A financial liability was initially recognised at fair value amounting to CHF 13 million which is the present value of the amount to be redeemed to the other shareholders if they were to exercise the option on the last day of the option period (future value at 2016: CHF 28 million). The difference between the present value and final redemption amount is interest expense that is recognized in profit or loss over the life of the financial liability using an effective interest rate of 6.75%. This financial liability was subsequently measured at amortised cost in each subsequent period (details of accounting policy are disclosed in note 3.21 to the financial statements). The interest expense recognised in the year amounted to CHF 1,167,711 (2013: CHF 1,125,375) (note 11). Starting 1 January 2007, CMAR has been deemed to be controlled due to the potential voting rights arising from the call option the Group has over 42.5% of EIB s and PROPARCO s interests in CMAR, in addition to the existing voting rights of 12.5%. Therefore, CMAR was regarded as a subsidiary and consolidated for the first time in 2007 based on the Group s present ownership interest in CMAR of 12.5% with the financial asset derecognised. On 5 December 2012, EIB served to IHH a letter notifying EIB s intention to exercise the Put Option. Subsequently, on 15 January 2013, IHH served to PROPARCO a letter notifying IHH s intention to exercise the Call Option. As at 31 December 2013 still only a letter notifying EIB s intention to exercise the put option had been received. However, the shares had not yet been paid. As the Put Option agreement states that the ownership benefits and the voting rights of the put shares are transferable to IHH only upon payment of the put price, the Group continued to consolidate CMAR with an ownership interest of 12.5%. On 1 July 2014, the Group was successful in concluding a sales purchase agreement regarding CMAR with a third party and the closing and final payment incurred in December 2014 and the put and call options were derecognised with a gain of CHF 3.5 million which is recognised in profit or loss as other gain (refer to note 10; for further details on this transaction refer to note 38). Trade and other payables increased mainly due to payables in relation to construction activities in Montenegro.

78 F-65 Financial Statements Orascom Development 2014 Annual Report F PROVISIONS CHF 31 December December 2013 Current 83,456,576 95,605,112 Non- Current - - TOTAL 83,456,576 95,605,112 CHF Provision for infrastructure completion Provision for legal cases Provision for governmental fees Provision for employee benefits Other provisions (i) (ii) (iii) (iv) (v) Balance at 1 January ,560,732 25,212,062 5,973,503 11,962,952 33,895,863 95,605,112 Additional provisions recognized Provision reversed as no longer required Reductions arising from payments Transfer from liabilities directly associated with non- current assets held for sale Derecognized on deemed loss of control of subsidiary Exchange differences arising on translation of foreign operations Balance at 31 December 2014 Total - 5,566,585-18,253 3,217,998 8,802,836 - (7,126,560) - - (803,488) (7,930,048) (74,392) - - (6,915,064) (4,440,836) (11,430,292) , ,872 - (6,523,899) - - (2,795,675) (9,319,574) 990,005 2,239,310 1,080, ,405 2,430,668 7,304,670 19,476,345 19,367,498 7,053,785 5,630,546 31,928,402 83,456,576 (i) Provision for infrastructure completion relates to committed cash outflows for the development of the necessary infrastructure to make the project area that is usually located in remote regions, habitable and attractive. Such provisions are recorded for land and real estate sales on the date on which all the criteria for revenue recognition are met, in case that the cash outflows for related infrastructure costs have not yet been incurred and take place with the upcoming twelve months. (ii) Provision for legal cases consists of expected cash outflows for the settlement of pending litigations. The decrease is primarily due the Falcon case which is described in note 44 as well as the deemed loss of control of OHC (see note 39 for details), which included a provision for possible additional payments for land in relation to the Group s budget housing activities. (iii) Provision for government fees relates to cash outflows for fees due on the sale of land and / or any profit thereon which were recorded during the current year. Such provision is calculated and recorded using the locally enacted fee structures. Management expects the related cash outflow to take place within the upcoming twelve months. (iv) Provision for employee benefits partly relates to compulsory termination payments to foreign employees in Oman. The provision is based on their actual salaries. As the work permits for these employees are reconsidered by the Government on annual basis, the related cash outflows are likely to take place within the upcoming twelve months. In 2014 the main decrease is due to end of service benefits which were paid in 2014 as a result of the cost saving programme of the Group. (v) This provision mainly includes charges, services and consultancy fees for the Group's current year's operations which have not yet been finally negotiated as well as provisions in relation to various assets of the Group. In addition it covers the Group s exposures to tax risks. Management expects the related cash outflows to take place within the upcoming twelve months. Management annually reviews and adjusts these provisions based on the latest developments, discussions and agreements with the involved parties. 37 OTHER CURRENT LIABILITIES Advances from customers (i) 82,662,944 80,921,247 Other credit balances (ii) 16,358,884 33,778,041 Accrued expenses (iii) 35,399,070 26,424,453 Deposits from others 12,680,170 7,102,357 Taxes payable (other than income taxes) 8,615,329 7,503,677 Amounts due to shareholders (iv) 70,803,877 39,242,834 Due to management companies 1,192, ,239 TOTAL 227,712, ,816,848 (i) Advances from customers include amounts received (progress payments) from buyers of real estate units between the time of the initial agreement and contractual completion. The increase is mainly related to advances from customers in Montenegro, Oman and Egypt. The increase is partly netted off revenue recognition in Oman and Egypt as well as deemed loss of control of OHC (note 39). (ii) The decrease due to other credit balances in ODH in relation to advanced payments made by third parties in 2013 (CHF 18.4 million) was netted off by an increase due to reclassification of Tamweel from liabilities directly associated with non- current assets held for sale (note 28) (iii) Accrued expenses mainly include operating costs for the hotel and destination management activities. The increase is in line with the general increase in activities in the hotel and destination management segments. (iv) ) Amounts due to shareholders include amounts owed to Mr. Samih Sawiris in the total of CHF 69.4 million (2013: CHF 31.8 million) as well as amounts owed to other shareholders in the total of CHF 1.4 million (2013: CHF 3.3 million). In 2013, there were as well amounts owed to non controlling shareholders for planned capital increases in several subsidiaries in Egypt in the total of CHF 1.7 million. 38 DISPOSAL OF A SUBSIDIARY 38.1 Description of transactions 2014 On 1 July 2014, the Group was successful in concluding a sales purchase agreement regarding CMAR with a third party and settlement agreements with the development banks were signed. After having received the approval of the Prime Minister of Mauritius as well as the Minister of Housing and Land of Mauritius before year end, the closing and final payment incurred in December Therefore, CMAR was deconsolidated at 31 December CMAR does not qualify as discontinued operation as it is neither a separate major line of business nor a geographical area of operations In the first three months of 2013 it has been agreed to sell the Sole - Project in Romania ( Sole/OBHI ), which mainly consists of plots of land, to Mr. Samih Sawiris. Therefore it was reclassified as disposal group. As the actual sales price of CHF 2.9 million, which is supported by a valuation report of an independent valuer, was lower than the carrying amount, an impairment loss of CHF 2.3 million was recognized in other gains and losses when the investment was reclassified as a disposal group (note 10). In October 2013, the sale and purchase agreement was signed. Sole/OBHI does not qualify as a discontinued operation as it is neither a separate major line of business nor a geographical area of operations Consideration received CHF CMAR Sole/OBHI Consideration received in cash and cash equivalents 10,713,614 2,935,240 Other consideration received - - Total consideration received 10,713,614 2,935,240

79 F-67 Financial Statements Orascom Development 2014 Annual Report F Analysis of assets and liabilities over which control was lost CHF CMAR Sole/OBHI Non- current assets Property, plant and equipment - 3,740,470 Investment property 61,065,361 - Current assets Other currents assets 1,360,773 85,945 Cash and bank balances 921,515 90,455 Non- current liabilities Non- current borrowings (14,603,343) Trade and other payables - (258,298) Deferred tax liabilities (4,337,073) - Current liabilities Trade and other payables - (18,100) Current borrowings (2,905,358) - Other current liabilities (614,554) (1,011,785) Net assets and non- controlling interests disposed of 40,887,321 2,628, Gain on disposal of subsidiaries CHF CMAR Sole/OBHI Consideration received 10,713,614 2,935,240 Net assets derecognized/disposed of (5,110,915) (2,628,687) Foreign currency translation reserve recycled to profit or loss (890,612) - Gain on disposal 4,712, , Net cash inflow on disposal of subsidiaries CHF CMAR Sole/OBHI Consideration received in cash and cash equivalents 10,713,614 2,935,240 Less: cash and cash equivalent balances disposed of (921,515) (90,455) Total net cash inflow 9,792,099 2,844, DEEMED LOSS OF CONTROL OF SUBSIDIARY 39.1 Description of transactions Deemed loss of control of Orascom Housing Communities (2014) In June 2014, the share capital of Orascom Housing Communities ( OHC ) was increased by EGP 180 million (CHF 22.3 million) from EGP 185 million (CHF 22.9 million) to EGP 365 million (CHF 45.2 million) through capital contribution from Mr. Samih Sawiris (refer to note 44). As the Group did not participate in the capital increase, their share of interest decreased from 69.34% to 35.25% which results in a loss of control. Therefore the investment was deconsolidated in Q and is now classified as an investment in associates (for further details refer to note 20) as the Group still maintains significant influence in the investment. As OHC and its subsidiaries do not represent a major line of business or a principal geographical area of operations of the Group, the sold operations are not recognized as discontinued operations Deemed loss of control of ASA and its subsidiaries (2013) On 26 March 2013, the Board of Directors of ODH and Mr. Samih Sawiris agreed to improve the capitalization of its Swiss subsidiary Andermatt Swiss Alps (ASA). On 25 June 2013, as a result of the agreement mentioned above, the share capital of ASA was increased through the following steps: CHF million (71,262 shares at nominal value CHF 1,000) through debt equity swap of the loans due to ODH CHF million (110,441 shares at nominal value of CHF 1,000) through debt equity swap of the loans due to Mr. Samih Sawiris CHF million (7,444 shares at nominal value of CHF 1,000) as cash contribution from Mr. Samih Sawiris As a consequence of the transaction existing loans between the Group and Mr. Samih Sawiris were fully offset and the indebtedness of the Group was therefore reduced. The transaction has improved the debt- to- equity ratio of the Group and will reduce interest expense in the future. Furthermore, Mr. Samih Sawiris will invest at least CHF 150 million of new equity or subordinated loans into ASA in order to secure funding of the resort Andermatt until Since the transaction Mr. Samih Sawiris has already injected another CHF 46 million of cash into ASA. As a result of the various capital increases, Mr. Samih Sawiris has become the new majority shareholder of ASA with a 51% share by converting his loans to the Group into ASA equity, and acts as new Executive Chairman of ASA. The Group has lost control over ASA during this transaction. As at 30 June 2013 the Group has a remaining share of interest of 49% in ASA. Therefore the investment was deconsolidated in June 2013 and is now classified as an investment in associates (for further details refer to note 20). As ASA and its subsidiaries represent the entire Swiss operations of the Group, which is considered a major geographical area of operations of the Group, the sold operations are recognized as discontinued operations and are presented accordingly. For further details refer to note Analysis of assets and liabilities over which control was lost CHF OHC ASA Non- current assets Property, plant and equipment 3,598, ,630,390 Investment in associates - 12,984,634 Trade and other receivables 2,238,437 2,087,100 Deferred tax assets 569,195 5,061,272 Other financial assets - 149,300 Current assets Inventories 47,264, ,111,841 Trade and other receivables 936,915 4,615,887 Due from related parties 9,098,662 - Other current assets 7,636,554 13,072,860 Cash and bank balances 2,686,167 7,610,213 Non- current liabilities Borrowings (8,595,187) (17,386,046) Trade and other payables (1,787,157) (100,000) Retirement benefit obligation - (1,253,199) Deferred tax liabilities (5,624) - Current liabilities Current borrowings due to future shareholders (used for capital increase in ASA) - (110,441,000) Trade and other payables (1,781,229) (18,266,812) Current borrowings (6,971,059) - Due to related parties (17,873,132) (7,117,374) Provisions (8,985,239) (648,156) Other current liabilities (14,631,980) (145,970,424) Net assets over which control was lost (including non- controlling interests of subsidiaries) 13,398, ,140,486 F- 68

80 F-69 Financial Statements Orascom Development 2014 Annual Report F Gain from deemed loss of control CHF OHC ASA Group s share of deconsolidated net assets over OHC Group Adjustments on ODH Group level Foreign currency translation reserve recycled to profit or loss 9,290,799 (2,216,946) (1,892,791) Net assets over which control was lost 5,181, ,140,486 Fair value of investment in associates 14,622, ,362,030 Gain from deemed loss of control 9,441, ,544 The gain from deemed loss of control, which represents the gain attributable to measuring the residual investment at fair value, is recognised in the statement of comprehensive income within other gains and losses for OHC (note 10) and discontinued operations for ASA (see note 14) Net cash outflow from deemed loss of control CHF OHC ASA Consideration paid in cash and cash equivalents - - Less: cash and cash equivalent balances disposed of (2,686,167) (7,610,213) Total net cash outflow (2,686,167) (7,610,213) The pension funds can change their financing system (contributions and future payments) at any time. Also, when there is a deficit which cannot be eliminated through other measures, the pension funds can oblige the entity to pay a restructuring contribution. For the pension funds of the Group such a deficit currently cannot occur as the plans are fully reinsured. However, the pension funds could cancel the contracts and the entities of the Group would have to join another pension fund. In the current and comparative period no plan amendments, curtailments or settlements occurred. However, along with the deemed loss of control of subsidiaries (for further details refer to note 39) the respective defined benefit obligations have been derecognised. The fully reinsured pension funds have concluded insurance contracts to cover the insurance and investment risk. The board of each pension fund is responsible for the investment of assets and the investment strategies are defined in a way that the benefits can be paid out on due date. The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out on 31 December The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method. Amounts recognised in profit or loss in respect of these defined benefit plans are as follows: Current service cost 201, ,439 Net interest expense 21,251 29,825 Administration cost excl. cost for managing plan assets 1,842 2,521 Expense recognised in profit or loss 224, ,785 Amounts recognised in other comprehensive income in respect of these defined benefit plans are as follows: 40 RETIREMENT BENEFIT PLANS 40.1 Defined contribution plans Since 2014 no such defined contribution plans exist anymore in the Group.In previous years employees of specific subsidiaries in the Group (such as Eco- Bos Development Ltd (UK), Oued Chbika Development SA (Morocco), Orascom International Hotel and Development (France) and Luštica Development a.d. (Montenegro)) were members of private or state- managed retirement benefit plans operated by insurance companies or the relevant Jurisdictions Social Insurance Authorities. The subsidiaries were required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. Qualifying employees of these subsidiaries were also required to contribute to such schemes at a different percentage deducted from their salaries. Benefits are payable to qualifying employees, by the relevant insurance companies and authorities, on attainment of a retirement age specified in the plans. The only obligation of the Group with respect to the retirement benefit plan was to make the specified contributions. The total expense recognised in the consolidated statement of comprehensive income of 2013 was CHF 841, Defined benefit plans The Group operates fund defined benefit plans for qualifying employees in Switzerland. Under the plans, the employees are entitled to retirement benefits and risk insurance for death and disability. No other post- retirement benefits are provided to these employees. The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out on 31 December Swiss pension plans need to be administered by a separate pension fund that is legally separated from the entity. The law prescribes certain minimum benefits. The pension plans of the employees of the Swiss entities are carried out by collective funds with Allianz Suisse Lebensversicherungs- Gesellschaft. Under the pension plans, the employees are entitled to retirement benefits and risk insurance for death and disability. The boards of the various pension funds are composed of an equal number of representatives from both employers and employees. Due to the requirements of IAS 19 the above mentioned pension plans are classified as defined benefit plans. The pension plans are described in detail in the corresponding statues and regulations. The contributions of employers and employees in general are defined in percentages of the insured salary. The retirement pension is calculated based on the old- age credit balance on retirement multiplied by the fixed conversion rate. The employee has the option to withdraw the capital at once. The death and disability pensions are defined as percentage of the insured salary. The assets are invested directly with the corresponding pension funds. Remeasurement (gain)/loss on defined benefit obligation (832,194) (694,189) Return on plan assets excl. interest income (1,920) 8,399 Expense recognised in other comprehensive income (834,114) (685,790) The amount included in the consolidated statement of financial position arising from the Group s obligation in respect of its defined benefit plans is as follows: CHF 31 December December 2013 Present value of funded defined benefit obligation 699,685 3,683,606 Fair value of plan assets (455,102) (2,705,966) Net liability arising from defined benefit obligation 244, ,640 Movements in the present value of the defined benefit obligation in the current year were as follows: Opening defined benefit obligation 3,683,606 9,694,301 Derecognised obligation due to deemed loss of control of subsidiaries (note 39) - (4,652,792) Current service cost 201, ,439 Interest expense on defined benefit obligation 53,859 93,235 Contributions from plan participants 123, ,809 Benefits (paid)/deposited (2,531,664) (2,008,718) Remeasurement (gain)/loss on defined benefit obligation (832,194) (694,189) Administration cost (excluding cost for managing plan assets) 1,842 2,521 Closing defined benefit obligation 699,685 3,683,606 F- 69

81 F-71 Financial Statements Orascom Development 2014 Annual Report F FINANCIAL INSTRUMENTS Movements in the present value of the plan assets in the current period were as follows: Opening fair value of plan assets 2,705,966 7,089,648 Derecognised assets due to deemed loss of control of subsidiaries (note 39) - (3,399,593) Interest income on plan assets 32,608 63,410 Return on plan assets excluding interest income 1,920 (8,399) Contributions from the employer 123, ,809 Contributions from plan participants 123, ,809 Benefits (paid)/deposited (2,531,664) (2,008,718) Closing fair value of plan assets 455,102 2,705,966 The respective insurance company is providing reinsurance of these assets and bears all market risk on these assets. The actual return on plan assets was CHF 34,528 (2013: CHF 55,011). The principal assumptions used for the purposes of the actuarial valuations were as follows: Discount rates 1.60% 2.10% Expected rates of salary increase 1.00% 1.00% Expected pension increases 0.00% 0.00% The following sensitivity analyses - based on the principal assumptions - have been determined based on reasonably possible changes to the assumptions occurring at the end of the reporting period: If the discount rate would be 25 basis points (0.25 percent) higher (lower), the defined benefit obligation would decrease by CHF 0.7 million (increase by CHF 0.7 million if all other assumptions were held constant If the expected salary growth would increase (decrease) by 0.25%, the defined benefit obligation would increase by CHF 0.7 million (decrease by CHF 0.7 million if all other assumptions were held constant If the life expectancy would increase (decrease) with one year for both men and women, the defined benefit obligation would increase by CHF 0.7 million (decrease by CHF 0.7 million if all other assumptions were held constant The average duration of the defined benefit obligation at the end of the reporting period is 17.5 years (2013: 17.3 years) The Group expects to make a contribution of CHF 88,801 to the defined benefit plans during the next financial year (2013: CHF 374,565). 41 RISK ASSESSMENT DISCLOSURE REQUIRED BY SWISS LAW Organizational and process measures have been designed to identify and mitigate risks throughout the Group at an early stage. The responsibility for risk assessment and management is primarily allocated to the segments and entities. However, Group Finance has implemented monitoring and consolidating measures. The Group s entities report to the Group Finance on their current operations and financial situation regularly. Various reports and analysis have been implemented to allow the Group to monitor the operations closely and immediately identify risks and initiate mitigating actions. In addition, the Group Finance has established during 2008 a new function for risk assessment and internal control. A risk matrix has been created that was populated by the most significant entities of the Group. The Group has centralized certain functions (e.g. treasury, asset management, information technology and human resources) to be able to identify and control risks more closely. The Group initiated a plan to centralize the legal and internal audit functions in order to mitigate the risks in an effective and efficient way. Group Finance assesses and consolidates all information from the entities and shares and discusses it with the Group Management on a regular basis. A more formal reporting on risks over financial reporting was made prior to year- end to the Board of Directors. The Board of Directors in turn has performed a risk assessment covering longer- term operational and strategic risks to the Group. The conclusions of such risk assessments have also been considered by Group Finance. As the Group CFO is consistently and closely involved in the risk assessment process and the preparation of the consolidated financial statements it is ensured that all conclusions from the Group- wide risk assessment are adequately considered in the consolidated financial statements Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group s overall strategy remains unchanged since The capital structure of the Group consists of net debt (borrowings, as detailed in note33, offset by cash and bank balances) and equity of the Group (comprising issued capital, share premium, reserves, retained earnings and non- controlling interests as detailed in notes 29 to 32). The Group is not subject to any externally imposed capital requirements. According to the Group s internal policies and procedures, the Executive Management reviews the capital structure on a regular basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital. The Group has a target gearing ratio of 40% to 45% determined as the proportion of net debt to equity. The gearing ratio at 31 December 2014 of 52.49% (see below) increased mainly due to the reclassification of Tamweel (see note 28 for further details) and was still outside the target recommended by the committee even though it was partially offset by the gains for the period. The gearing ratio at the end of the reporting period was as follows: Debt (i) 531,678, ,573,055 Cash and cash equivalents (100,658,860) (73,310,785) Net debt 431,019, ,262,270 Equity (ii) 821,199, ,388,849 Net debt to equity ratio 52.49% 48.49% (i) Debt is defined as long- and short- term borrowings (excluding derivatives), as detailed in (note 33). (ii) Equity includes all capital and reserves of the Group and non- controlling interests that are managed as capital excluding equity of disposal groups Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3.19 Financial instruments Categories of financial instruments Financial assets Cash and bank balances 100,658,860 73,310,785 Fair value through profit or loss ( FVTPL) Held for trading non- derivative financial assets Fair value through other comprehensive income (FVTOCI) 9,263,177 25,826,471 Financial assets measured at amortised cost (i) 316,239, ,642,178 Financial liabilities Derivative instrument in designated hedge accounting relationship - 372,931 At amortised cost (ii) 739,675, ,972,848 (i) Includes trade and other receivables, finance lease receivables as well as those other non- current and current assets that meet the definition of a financial asset. A total of CHF 15.9 million (2013: CHF 27.0 million) of other current assets does not meet the definition of a financial asset. (ii) Includes trade and other payables, borrowings, notes, other financial liabilities as well as other current liabilities that meet the definition of a financial liability. A total of CHF 82.7 million (2013: CHF 80.9 million) of other current liabilities does not meet the definition of a financial liability. F- 72

82 F-73 Financial Statements Orascom Development 2014 Annual Report F Financial risk management objectives In the course of its business, the Group is exposed to a number of financial risks. This note presents the Group s objectives, policies and processes for managing its financial risk and capital. The Group s Corporate Treasury function provides services to the business, co- ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. Other price risk includes equity price risk, settlement risk and commodity price risk. It is, and has been throughout 2014 and 2013, the Group s policy not to use derivatives without an underlying operational transaction or for trading (i.e. speculative) purposes. The Group seeks to minimise the effects of these risks mainly through operational and finance activities and, on occasional basis, using derivative financial instruments to hedge these risk exposures. The use of financial derivatives is governed by the Group s internal policies and procedures approved by the Board of Directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non- derivative financial instruments, and the investment of excess liquidity. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Corporate Treasury function reports monthly to the Executive Management. The Group Treasury Director carries out risk management under the Group s guidelines Market risk The Group s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see 42.6 below) and interest rates (see 42.7 below). Driven by the need, the Group s policy is to enter into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including: forward foreign exchange contracts to hedge the exchange rate risk arising on sales in foreign currency to the tourism / real estate industry; interest rate swaps to mitigate the risk of rising interest rates 42.6 Foreign currency risk management The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. The currencies, in which these transactions primarily are denominated, are US Dollar (USD), Euro (EUR) and Egyptian Pound (EGP). Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts. The Group s main foreign exchange risk arises from sales in foreign currency to the tourism / real estate industry, which generates a net foreign currency surplus for the Group. The Group has strong inflows in foreign currency, mainly US Dollar, Euro, Oman Rial and Egyptian Pound. Out of the total receivables on hand at the end of the reporting period, receivables in USD have accounted for 10% (2013: 35%), in EUR for 7% (2013: 7%),in EGP for 70% (2013: 33%), in OMR 11% (2013: 25%), in AED 2% (2013: 0%) and in CHF for 0% (2013: 0%) respectively. To mitigate the above risk exposures, where possible, the Group borrows in matching currencies to create a natural hedge. The following table shows the carrying amounts of borrowings, at the end of the reporting period, in the major currencies in which they are issued. Borrowing USD 212,352,764 40% 184,329,115 45% EGP 207,579,670 39% 109,585,004 27% EUR 38,060,391 7% 60,977,623 15% OMR 51,972,816 10% 34,196,498 8% AED 17,011,260 3% 15,280,021 4% JOD 4,701,726 1% 4,204,794 1% CHF - 0% - - Total 531,678, % 408,573, % At the end of the reporting period, the carrying amounts of the Group s major foreign currency denominated monetary assets (mainly receivables and finance lease receivables) and monetary liabilities (mainly borrowings), at which the Group is exposed to currency rate risk, are as follows: CHF Liabilities Assets Currency- USD 212,352, ,329,115 18,642,806 26,654,271 Currency- EUR 38,060,391 60,977,623 13,747,717 6,154,662 Currency- EGP 207,206, ,585, ,555,530 27,973,883 Residual foreign exchange exposure is managed by hedging through entering into foreign currency forward contracts. The main reason for the increase in the share of financial assets and liabilities in EGP is the reclassification of Tamweel from non- current assets held for sale in 2014 (refer to note 28 for further details). Currency risk has also recently developed due to the Group s investments in different markets such as those in Egypt, UAE, Oman, Jordan, Morocco and the UK. Again, the Group borrows in the local currency of the investment and uses the above mentioned strategies to mitigate residual currency risk Foreign currency sensitivity analysis As discussed above, the Group is mainly exposed to the US Dollar (USD), Euro (EUR) and Egyptian Pound (EGP) arising from sales in these currencies to the tourism / real estate industry. The following table details the Group s sensitivity to a 5% increase and decrease in CHF against the relevant foreign currencies. The (5%) is the sensitivity rate used when reporting foreign currency risk internally to key management and represents management s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. The sensitivity analysis includes outstanding borrowings, impact of the changes in the fair value of derivative instruments designated as cash flow hedges and receivables in foreign currencies and, where appropriate, loans to foreign operations within the Group where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower. A positive number below indicates an increase in profit or equity where the CHF strengths 5% against the relevant currency. For a 5% weakening of the CHF against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be negative. CHF Currency USD Impact Currency EUR Impact Currency EGP Impact Profit or loss 9,685,498 7,883,742 1,215,634 2,741,148 3,882,573 3,786,667 Equity - 55, The Group's sensitivity to foreign currency has changed in accordance with the changes in EGP, USD and AED borrowings. Forward foreign exchange contracts It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency receipts within 25% to 30% of the exposure generated. At 31 December 2014, the Group has no outstanding forward foreign currency exchange contracts. During the current year the Group did not enter into any forward foreign currency exchange contracts to hedge part of the Group s receivables denominated in EUR and USD. During 2014, no ineffectiveness has been recognised in profit or loss arising from the Group s hedging activities Interest rate risk management The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost- effective hedging strategies are applied. The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note. The Group held one interest rate swap contract (IRS) under which the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on the agreed notional principal amount. The notional amount of the IRS contract is based on the outstanding amount of one of the long- term borrowings. The group was engaged in this contract on September 2008 and it expired in June 2014.

83 F-75 Financial Statements Orascom Development 2014 Annual Report F-76 As the interest rate swap exchanged floating rate interest amounts for fixed rate interest amounts it was designated as a cash flow hedge in order to reduce the Group s cash flow exposure resulting from variable interest rates on borrowings. The interest rate swap and the interest payments on the borrowing occured simultaneously and the amount accumulated in equity was reclassified in profit or loss over the period that the floating rate interest payments on debt affected profit or loss. The Group received the fair value of the swap from the counterparty bank at the end of each reporting period and is disclosed below. The average interest rate was based on the outstanding balances at the end of the reporting period. Management has assessed that the cash flow hedge was 100% effective and therefore the entire change in fair value of the interest rate swap was recognised in other comprehensive income and accumulated in equity (note 30.3). The following table details the notional principal amount and remaining terms of the interest rate swap contract outstanding at the end of the reporting period: Last instalment date Average contracted Notional principal amount Fair value assets (liabilities) Fixed interest rate CHF CHF Jun % - 34,012,686 - (372,931) The interest rate swap settled on a half- yearly basis. The floating rate on the interest rate swaps was based on LIBOR for 6 months. The Group settled the difference between the fixed and floating interest rate on a net basis Interest rate sensitivity analysis The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non- derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the end of reporting period was outstanding for the whole year. A 100 basis point (1%) increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management s assessment of the reasonably possible change in interest rates. If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Group s profit for the year ended 31 December 2014 would decrease / increase by CHF 2.4 million (2013: decrease / increase by CHF 2.1 million). This is mainly attributable to the Group s exposure to interest rates on its variable rate borrowings Other price risks The Group is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group credit risk arises from transactions with counterparties, mainly individual customers and corporations. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group s exposure to credit risk is, to a great extent, influenced by the individual characteristics of each customer. Risk control assesses the credit quality of the customer, taking into account its financial position, past experience, other publicly available financial information, its own trading records and other factors, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group s exposure is continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Trade receivables consist of a large number of customers, spread across various industries and geographical areas. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities. The credit risk on sales of real estate is limited because the Group controls this risk through the property itself by registering the unit in the name of the customer only after receiving the entire amount due from the customer. Counterparty risk is also minimized by ensuring that 80% of derivative financial instruments, money market investments and current account deposits are placed with financial institutions whose credit standings are above Aa1 and 20% above BB+. The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group s maximum exposure to credit risk without taking account of the value of any collateral obtained Liquidity risk management Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Group s short-, medium- and long- term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Regarding management s plans to manage liquidity shortages and related uncertainty please refer to note As of 31 December 2014, total un- drawn facilities, that the Group has at its disposal in order to further reduce liquidity risk, are CHF 34.1 million (31 December 2013: CHF 13.0 million). Further, please refer to note 27.1 regarding the disclosures on management s plans to manage liquidity shortages and related uncertainties Liquidity and interest risk tables The following tables detail the Group's remaining contractual maturity for its non- derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows. To the extent that interest cash flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Group may be required to pay. Maturities of non- derivative financial liabilities 2014 Weighted average Less than 6 6 months to effective CHF month one year interest 1 5 years 5 + years Total rate Non- interest bearing - 184,923,049-23,074, ,997,130 Variable interest rate instruments 7.61% 224,423,848 41,227, ,964,695 3,840, ,456,580 Fixed interest rate instruments 9.46% 13,349,876 33,054,320 96,194,546 36,454, ,053,446 TOTAL 422,696,773 74,281, ,233,322 40,295, ,507, Weighted average effective CHF interest rate Less than 6 month 6 months to one year 1 5 years 5 + years Total Non- interest bearing - 156,619,355-28,989, ,609,210 Variable interest rate instruments 6.74% 38,417, ,157, ,503,357 8,118, ,197,263 Fixed interest rate instruments 9.40% 13,593,175 42,698,531 70,579,108 36,478, ,348,933 TOTAL 208,630, ,856, ,072,320 44,596, ,155,406 Counterparty Rating Credit limit Carrying amount Credit limit Carrying amount Bank 1 B- 37,373,138 34,402,872 25,721,504 23,004,496 * Bank 2 B- 13,910,000 15,029,772 12,822,000 12,441,250 Bank 3-37,280,946 46,257,060 33,547,458 39,569,956 Bank 4-24,864,125 25,709,289 22,270,211 21,143,712 * Bank 5 B- 13,423,150 14,176,207 12,113,585 12,108,269 * Outstanding amount includes interest charged The amounts included above for variable interest rate instruments for liabilities is subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period Impairment losses on financial assets Impairment loss on trade receivables 1,838,562 1,008,962 TOTAL 1,838,562 1,008,962 F- 75 F- 76

84 F-77 Financial Statements Orascom Development 2014 Annual Report F Fair value measurement Fair value of financial instruments carried at amortised cost Except as detailed in the following table, management considers that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values. 31 December December 2013 CHF Carrying amount Fair value Carrying amount Fair value Financial liabilities Borrowings/bank loans 531,928, ,898, ,573, ,377,273 Finance lease receivables As at 31 December 2014, the fair value of finance lease receivables was estimated to be CHF 34.0 million using a 15.5% discount rate based on an average six year tenor and adding a credit margin that reflects the secured nature of the receivables. As at 31 December 2013 no such receivables existed as they were reclassified as part of a disposal group (note 28) Valuation techniques and assumptions applied for the purposes of measuring fair value The fair values of financial assets and financial liabilities are determined as follows: The fair values of financial assets with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices (includes unlisted and listed equity investments classified as at FVTPL and FVTOCI respectively). The Group receives the fair values of foreign currency forward contracts and interest rate swaps from the counterparty banks. Foreign currency forward contracts are usually measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts. Interest rate swaps are usually measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates. The fair values of other financial assets and financial liabilities (excluding those described above) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis. Specifically, significant assumptions used in determining the fair value of the following financial assets and liabilities are set out below Fair value measurements recognised in the consolidated statement of financial position The following table provides an analysis of financial and non- financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: fair value measurements are those derived from inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs) CHF Level 1 Level 2 Level 3 Total Financial assets at FVTPL Non- derivative financial assets held for trading Financial assets at FVTOCI Listed and unlisted shares measured at FV 8,021,086-1,242,091 9,263,177 8,021,086-1,242,091 9,263,177 Derivative financial liabilities designated in an effective hedge relationship Other assets at fair value Investment property 1) ,922,802 11,922, ,922,802 11,922, CHF Level 1 Level 2 Level 3 Total Financial assets at FVTPL Non- derivative financial assets held for trading Financial assets at FVTOCI Listed and unlisted shares measured at FV 6,847,143-18,979,328 25,826,471 6,847,143-18,979,328 25,826,471 Derivative financial liabilities designated in an effective hedge relationship - 372, , , ,931 Other assets at fair value Investment property 1) 9,986,618 9,986,618 9,986,618 9,986,618 There were no transfers between Level 1 and 2 in the period. The financial assets at FVTOCI were measured at fair value based on a method that combined the earning and net equity book values of the companies. 1) The reconciliation for investment property is shown in note 17. Reconciliation of Level 3 fair value measurements of financial assets Unquoted equity securities Opening balance 18,979,328 19,755,926 Total gains or( losses) recognized in other comprehensive income 70,763 (429,848) Purchases - Disposals (17,808,000) (173,450) Derecognized on loss of control of subsidiaries (173,300) Closing balance 1,242,091 18,979,328 1) In June 2014, ODH and its subsidiaries have reached an amicable settlement to end their disputes with Falcon, which have been going on since As a part of the overall settlement agreement, ODH lost its interest in the share capital of Falcon and therefore derecognised the financial investment in June For further details on the overall settlement agreement please refer to note Derivatives The financial statements include interest rate swaps which are measured at fair value (note 35). Fair value is determined by the counterparty (financial institution) at mark to market. Management considers that the carrying amounts of financial liabilities recorded at amortised cost in the financial statements approximate their fair values 43 SHARE- BASED PAYMENTS At 31 December 2014 and unchanged to prior year, the Group did not have any share option or participation schemes in place and had not granted any ODH shares to the members of the Board or the Executive Management. The Group compensates the members of the Board with a fixed fee of CHF 951,063(note 12.1) which is payable in unrestricted shares of the Parent Company based on the quoted market price at grant date as well as in cash. The amount has been recognized in the consolidated statement of comprehensive income as part of administrative expenses. It will be transferred to the members of the Board in 2015.

85 F-79 Financial Statements Orascom Development 2014 Annual Report F RELATED PARTY TRANSACTIONS A party (a company or individual) is related to an entity if: a) directly, or indirectly through one or more intermediaries, the party: i. controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries); ii. has an interest in the entity that gives it significant influence over the entity; or iii. has joint control over the entity; b) the party is an associate of the entity or a joint venture in which the entity is a venture (both defined in IAS 28 Investments in Associates and Joint Ventures); c) the party is a member of the key management personnel of the entity or its parent; d) the party is a close member family of any individual referred to in (a) or (b); e) the party is an entity that is controlled, jointly controlled or significantly influenced by, or which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (a) or (b); or f) the party is a post- employment benefit plan for the benefit of employees of the entity, or of any entity that is related party of the entity. Balances and transactions between the Group and its subsidiaries, which are related parties of the Group, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below. During the year, the Group purchased services from companies in which members of the Board have a partnership or significant influence through ownership during the reporting period. These services related to the leasing of office space (see note 12). The following balances were outstanding at the end of the reporting period: Due from related parties Due to related parties Financial instruments Red Sea Company for Construction & Develop. 9,287, ,861 - Three Corners Company 9,660,819 8,189, Orascom Housing Community 3,492, El Gouna Football Club 2,934,630 3,460, Falcon for Hotels - 260,360 13,286,192 Kingdom Co. 1,553,099 1,379, Camps and lodges 1,254,502 1,121, Iskan International Projects 51,314 46, Andermatt Swiss Alps AG ,990 Other (balances less than CHF each) 817, , ,922 10,670 Non controlling shareholders Tarot Tours Garanah 39,483 29,009 1,983,925 1,842,043 Mirotel For Floating Hotels 542, , Tarot Garranah for touristic transportation 86,298 79, Tarot & Merotil Garranah for hotels 175, , Close family members Samih Sawiris (i) Close family companies FTI 5,093, Orascom for Touristic Establishments company (OTEC) 1,110,583 1,025, TU Berline University 710, , Other Related Party Receivables 582, Total 37,392,763 17,115,813 2,950,068 15,970,895 Current 37,392,763 17,115,813 2,950,068 15,970,895 Non- current Total 37,392,763 17,115,813 2,950,068 15,970,895 (i) Current accounts due to Mr. Samih Sawiris are disclosed in note 37. Transactions involving Mr. Samih Sawiris, Chairman, CEO and major shareholder: Falcon During previous financial periods Orascom Development & Management Ltd ( ODM ), a Group s subsidiary, entered into a development agreement with Falcon for Hotels S.A.E. ( Falcon ), under which ODM was to undertake the development activities of the land bank owned by Falcon. Due to Falcon s non- compliance with the terms of the development agreement, ODM filed a legal claim against Falcon asking for remuneration for profits ODM missed out on as a result of the non- compliance with the said agreement. During the first quarter of 2014 the following agreement was reached: International Hotels Holding ( IHH ), a Group s subsidiary, had a current account due to Falcon at the amount of CHF 13.3 million. Pursuant to the settlement agreement and the current account assignment agreement between Falcon, ODM and IHH, the current account between Falcon and IHH mentioned above has been assigned and waived by Falcon, representing the remuneration requested by ODM. ODM has discharged Falcon from any liabilities and future claims related to the development agreement. As a consequence of this agreement, the remaining receivable due from Joud Fund of CHF 3.4 million, which is part of the legal dispute, was derecognized as well. Therefore, the settlement agreement led to a net gain of CHF 9.9 million. In June 2014 the final settlement agreement regarding all the litigation proceedings in relation to the securities purchase agreement and the development of the land bank as well as the proceeds from sale of Joud Funds was signed by both parties which had the following impact on the consolidated financial statements of ODH: The Group will recover its receivables due from Joud Fund of USD 40 million (CHF 35.6 million), which arose due to the development of the land bank. As these receivables were fully impaired in previous periods, the reimbursement led to a corresponding gain as at 30 June Further, the agreement also provides for the full recovery of the Group s investment in Falcon which as a consequence was derecognised within other financial assets (note 21). Hence, the provision in relation to the investment in Falcon of USD 20 million (CHF 17.8 million) was partly reversed with USD 7.8 million (CHF 7.1 million) (note 36). The remaining provision is kept in the books for any potential tax liabilities and other future settlement cost in relation to the settlement agreement. In total the settlements with Falcon as described above resulted in a total net gain of CHF 52.6 million which is recognised within other gains and losses (note 10). The amount due from Falcon of USD 60 million (CHF 59.8 million), which is due within the next 12 months (31 December 2015), has been discounted to its present value of USD 58.7 (CHF 58.5 million) as at 31 December 2014 as the outstanding amount is non- interest bearing. The discounting will be released over the next 12 months as interest income. It is shown in the consolidated statement of financial position as other current assets and is secured by hotel property. In accordance with the settlement agreement both parties have opened an escrow account and placed in escrow the shares of the company that ultimately holds Citadel Azur hotel. Acquisition of majority share in Andermatt Swiss Alps and its subsidiaries (2013) For further details on this transaction please refer to note 39. Purchase of shares from OHD On 17 January 2007 OHD allocated to employees and the management team (including the chairman and the executive board members) an amount of 2 million shares for full consideration being the market price as of that day. Mr. Samih Sawiris acquired under this transaction 330,000 shares at the market price. Amounts due from Mr. Samih Sawiris under this transaction are included in Other assets as amounts due from employees and management team and amounted to CHF0.4 million at 31 December 2014 (31 December 2013: CHF 0.4 million). There are no amounts due from executive board members under this transaction in 2014 (CHF 0.6 million included in other current assets in 2013) (see note 26(iii)). Taba Heights Company transactions One of the Group companies had been granted the right to acquire freehold title to the project's land by the Tourism Development Authority. Due to foreign ownership restrictions on the Sinai Peninsula becoming applicable in connection with the reorganization in 2008, the respective Group company had to be transferred to Mr. Samih Sawiris, major shareholder and of Egyptian nationality. Mr. Samih Sawiris entered into a binding agreement to retransfer these shares subject to approval of the competent authorities, and that until such retransfer, the Group would be put into a position as the full economic beneficiary of these shares. This entails, inter alia, an irrevocable assignment of dividends and the authorization to collect dividends, exercise voting rights related to these shares and cause the sale of shares with no additional rights of Mr. Samih Sawiris in any value received. F- 79

86 F-81 Financial Statements Orascom Development 2014 Annual Report F-82 Iskan International Project W.L.L. Inc. Transaction Iskan International Project FZC (Iskan) entered into a purchase agreements with Sifah Tourism Development Company (S.A.O.C) and Salalah Beach Tourism Development Company (S.A.O.C) to acquire a total of 172 real estate properties. Mr. Samih Sawiris is a major shareholder in Iskan and the contracts are based on normal commercial terms and conditions. In the second quarter of 2012, 51 real estate properties of the remaining 134 units were re- acquired by the Group to increase the number of available hotel rooms in the Oman subsidiaries. The residual 83 units owned by Iskan as at 31 December 2014 have a value of USD 28.2 million (equals CHF 28.0 million). As a result of the re- acquisition trade and other receivables balances in the Group s consolidated financial statements were reduced from US$ 23.7 million (equals CHF 23.6 million) as at year end 2011 to US$ 2.3 million (equals CHF 2.3 million) as at 31 December 2013 which are still outstanding as at 31 December 2014, however were netted against prepayments received from Iskan for other units. No related revenue has been recognized during the current period. Securities lending agreement For further details on this transaction refer to note Rental contract for office building in Cairo Orascom Hotel and Development, a major subsidiary of Orascom Development Holding AG, has rented part of its administrative headquarter in Nile City from a joint stock company owned by the major shareholders and others. Capital increase in Orascom Housing Communities OHC called for a rights issue to strengthen its capital base and meet its commitments. Mr. Samih Sawiris, who held a non- controlling interest in OHC before the capital increase, was the only party to subscribe to OHC s capital call resulting in ODH s deemed loss of control in 2014 (refer to note 39 for further details). FTI FTI is the fourth largest tour operator in Europe. In 2014, Mr. Samih Sawiris acquired a 35% stake in this tour operator. In 2014, revenue transactions for a total of CHF were done with FTI. Explanation of other movements The increase in receivables due from related parties is mainly due to former subsidiaries which have been deconsolidated in 2014 and are now shown as related parties Non- cancellable operating lease commitments Total of future minimum lease payments Not longer than 1 year 232, ,800 Longer than 1 year and not longer than 5 years 931, ,200 Longer than 5 years 3,259,200 3,492,000 TOTAL 4,423,200 4,656,000 In respect of non- cancellable operating leases, no liabilities have been recognised The Group as lessor Leasing arrangements Operating leases relate to the investment property owned by the Group with lease terms of between 1 and 4 years for premises in El Gouna (Egypt) and 25 years for the resort in Mauritius (CMAR classified as disposal group). These lease contracts do not include a lease extension option and are subject to renegotiation at the end of the lease term. The lessee does not have an option to purchase the property at the expiry of the lease period. As CMAR was sold in 2014 no material non- cancellable operating lease receivables exist as at 31 December Rental income earned by the Group from its investment properties and direct operating expenses arising on the investment properties for the year are set out in note Non- cancellable operating lease receivables Not later than 1 year - 5,378,507 Later than 1 year and not longer than 5 years - 22,611,457 Later than 5 years - 30,903,182 TOTAL - 58,893, NON- CASH TRANSACTIONS During the current year, the Group entered into the following non- cash investing and financing activities which are not reflected in the consolidated statement of cash flow: Capitalization of interest of CHF 4.3 million over projects under constructions (see note 11). Settlement agreement with Falcon resulting in a net gain of CHF 52.6 million (note 44) Transfer of assets from inventory to property, plant and equipment of CHF 30.6 million (note 16) Reclassification of Tamweel from non- current assets held for sale (note 28) Deemed loss of control of OHC (note 39) 46 OPERATING LEASE ARRANGEMENTS 46.1 The Group as lessee Leasing arrangements Operating leases relates to car lease with lease terms of between 2 to 4 years and office facilities with lease terms of 25 years. The Group (as a lessee) does not have an option to purchase these leased assets at the expiry of the lease periods Payments recognised as an expense in the period Minimum lease payments 562,731 1,041,668 TOTAL 562,731 1,041, COMMITMENTS FOR EXPENDITURE The following commitments for expenditure have been made for the future development of the respective projects: CHF Salalah Beach Tourism Development Company (S.A.O.C) Sifah Tourism Development Company (S.A.O.C) Eco- Bos Development Limited (i) ,726,874 1,098,103 4,974,280 (i) As per the property management agreement between Eco- Bos and Imerys (shareholder in Eco- Bos), Eco- Bos has the right but not the obligation (American call option maturing in 2030) to purchase part or all of 6.6 million square meters (divided on 7 independent plots), which is currently owned by Imerys Mineral Limited. An annual option premium is paid to retain the rights and the purchase price is calculated based on an agreed dynamic pricing formula. The trigger event of the option(s) is at the full discretion of Eco- Bos and shall only be exercised when building permits are attained. Currently Eco- Bos is in negotiations with the local authorities and other investors and is taking its time to optimize on the best alternatives for the development Minimum Building Obligations Beside the legally binding commitment for expenditure mentioned above the following should be considered: One part of the Group s business is to acquire land for the development of tourism projects. Out of these business opportunities often no legally binding commitments incur however the Group has unbinding business opportunity commitments in relation to their projects. In particular the Group has minimum building obligations ( MBOs ) for the next five years which are included in their development agreements ( DAs ) with the relevant governments in Oman, Morocco and Montenegro. While the potential near term financial impact is insignificant for Montenegro as deadlines for such obligations are still several years away, the contingent liabilities in relation to the MBOs in Oman and Morocco need further consideration and are assessed by management of the Group as follows: F- 82

87 F-83 Financial Statements Orascom Development 2014 Annual Report F-84 Oman According to the DAs for Salalah and Sifah, the project companies, which are subsidiaries of the Group, shall use their best efforts to substantially complete a defined amount of Hotels and Golf Courses within an indicative timeline. Based on this indicative timeline, the project companies have been granted an extension of time for the substantial completion (which is defined as the material elements of the specific MBOs) of the MBOs that elapses on 1 January In Salalah, the project company shall develop three or four hotels, which shall be fixed at a total of 700 keys in addition to an 18- holes golf course. To date, the project company has completed 2 hotels with a total number of 481 keys and preparatory works for the golf course have also been finalized. In Sifah, the project company shall complete a total of 500 keys in addition to an 18- holes golf course. To date, the project company has completed 1 hotel with 55 keys, in addition to 25 apartments, which shall be annexed to the aforementioned hotel. The project company has further assigned the rights and obligations of completing two additional hotels to Jebel Resort Development Company (an external developer). The first hotel is 180 keys and the second is still under study, as the drawings have not been completed. Based on the right to request an extension of the completion date, which is included in the DAs, the Group has requested an extension for the time of completion of the residual MBOs until The completion timelines dictated by the DAs are subject to two general standards which must be taken into consideration wherever there is a delay in completion. As per the DA, the project companies must perform the MBOs on or before the completion date using (i) their Best Efforts, and (ii) in applying Best International Practices. These two standards are in the favour of the project companies, specifically when taking into account the exigent economic and financial environment during which the project companies had to comply with the completion dates. The difficulty in completion is supported by conclusive evidence that financial institutions in Oman have refrained from providing any financing for development of tourism projects for a period of over two years as of the Arab Spring. Notwithstanding such difficulties in financing, the project companies have progressed extensively in their development, given the circumstances. The developments that have been finalized by the project companies to date have not been matched by any other developer in Oman. This provides irrefutable evidence that even if a delay occurs, the project companies would not be in breach of the DAs, since they will have satisfied the threshold dictated by the DAs. Based on the foregoing, the request to extend the MBO completion date to 2018 is hence reasonable. Based on the aforementioned, the Sifah and Salalah project companies engaged in exhaustive negotiations with the Omani Government. Finally the parties agreed to hold a meeting in order to discuss the furtherance and the development of the Sifah and Salalah projects. During such meeting, held on November 23, 2014, the project companies requested the Omani Government to allow for the extension of the deadline for the completion of the MBOs as previously explained. Consequently the Omani Ministry of Finance along with the Omani Ministry of Tourism granted their approval, in principle, to such request, therefore extending the deadline for completion of the MBOs until January 1, A formal initial extension until June 2015 was granted in writing by the Ministry of Tourism in order to finalize the amendment of the DAs. Currently the project companies and the Omani Government are negotiating the amendment of the DAs in order to incorporate the extended deadline. Morocco In Morocco, the DA does not contemplate the concept of MBOs. However it sets out a timeline for the performance of the essential elements of a development plan. These essential elements have no fixed dates but are rather governed by interconnected milestones that change the date automatically on the occurrence of an agreed milestone. In 2010 the project company obtained an exception entitling it to finalize three hotels in 2013 and the remaining two in Since then the project company has created the organisational structures for the creation of three hotels and the related infrastructure. However, further process by the project companies was delayed by various factors outside the control of the project companies and they therefore have solid grounds for requesting further extensions. Especially since the DA states that in the event the delay is for reasons outside of the control of the project company, this would be taken into consideration when assessing whether the project company has fulfilled its obligations or not. In furtherance and in compliance with the obligations to which the project company is committed to, a new hotel holding structure has been proposed, the main goal of which is the creation of the 3 Hotels and the associated infrastructure, which is part of phase 1. The scope of investment for the aforementioned hotel holding structure is approximately CHF 129,244,874.The financing package is currently being finalized, the equity partners are already identified, the shareholder agreement for the hotel holding entity is currently under review, and the debt is currently being secured. While in theory the indicative date of completion of the essential elements of the project has elapsed on January, 2015, the Group is very much comfortable with the outcome of the negotiations between the Government of Morocco and the project company. On September 16, 2014 the Moroccan Government granted the project company an initial approval regarding the new hotel holding structure, as well as the project company s request to extend the timeline for completion of Phases 1 and 2.The Moroccan Government and the project company are currently finalizing and settling on the delivery dates and the final number of room keys encompassed under each phase. Therefore, the Group is confident that the extended timeline will seamlessly accommodate the new hotel holding structure. Risk assessment of contingent liability Management has analysed the various MBOs and is comfortable with the current status of the MBOs and the minimum investment obligations. Albeit that certain delays have or may potentially occur, all such delays were well founded and are premised on legal grounds that would protect the Group from any exposure. The Group has exerted a great deal of negotiations in all destinations to ensure that any delays are communicated to local authorities and thereby working alongside the government in rescheduling and extending the completion dates. Additionally, the Group has worked on securing finance schemes to accommodate the newly developed restructuring of the investment obligations, or in cases were completion dates are at risk, expending the necessary amounts to comply with the contractual obligations. 48 LITIGATION Falcon The financial statements of Falcon Company for Hotels ( Falcon ) were incorporated into ODH s consolidated financial statements on 31 December 2008 in accordance with the International Financial Reporting Standards, as a result of the business combination previously effected through one of ODH s subsidiaries whereby control had existed over Falcon at that time. Subsequent to the first time consolidation, but prior to the completion of the transfer of the legal title on the Egyptian Stock Exchange (EGX), a dispute over the Falcon securities purchase agreement had arisen. At the beginning of October 2009, the Group ceased consolidating Falcon due to changes in Falcon s management resulting in a loss of control for the Group which was one of the reasons of the dispute. Several arbitration and litigation proceedings involving Falcon, the Group and third parties were pending. In July 2013, an award was issued in favour of one of ODH s subsidiaries establishing ODH s subsidiary right for compensation for the breaches made by Falcon and its owners. The exact amount of the compensation was supposed to be subject to another set of arbitration proceedings. This had a significant positive impact on strengthening the position of the Group in recovering all its losses suffered as a result of this dispute. As a result, settlement negotiations have commenced with Falcon and a memorandum of understanding, setting forth the basic terms of the settlement, was successfully signed on 8 January The parties to the dispute have continued to negotiate the remaining terms of the settlement and have reached a final form of the settlement agreement, which was signed by all parties involved on 20 June 2014 and thus ending all disputes in this connection. The impact of the settlement agreement on the consolidated financial statements is further disclosed in note 44. In execution of the terms and conditions of the settlement agreement the parties have agreed to transfer the shares of the company fully owning the Citadel Azur hotel to a special purpose vehicle to be held in an escrow account for a period of 18 months from the date of signature of the settlement and escrow agreements. According to the terms of the settlement agreement, ODH shall obtain by Q2 2016, either the amount of USD 60 million in cash, or in the full undisputed ownership of the Citadel Azur hotel. It is worth noting that ODH is entitled to the full revenues of the Citadel Azur hotel until the end of the escrow period. Withdrawals of land by the government Land withdrawal of 6th of October in Egypt 2000 Acres With reference to the purchased land in Sixth of October city (2000 acres) in Egypt, the Urban Communities Authority (the Authority ) related to the Ministry of Housing (the Ministry ) issued its resolution on 11 December 2011 to grant one of the associates of ODH an area of 1,000 acres rather than 2,000 acres on the condition of completing the construction works on this area not later than 30 September Since it was challenging for the associate to fulfil the construction obligation during that period of time and as it is contrary to the terms of the initial contract with the Authority, the Group s entity challenged this decision and filed an administrative complaint against it. This has resulted in further complications; as the Urban Communities Authority has then decided to withdraw the allocation of another 380 acres, accordingly the Group s entity now has just 620 acres. The Group s associate further challenged this decision and is in the process of going through several administrative and judicial channels to overturn. No administrative resolution or decision has been issued as of the date of these financial statements. It is expected that this process will be lengthy. Nevertheless, some progress has been made with the Interim Government and there seems to be a possibility of reaching a settlement of this matter. Currently there are discussions with the Ministry of Housing that involves also the Ministry of Investment in order to enable OHC to redeem the entire land against the payment of the full price in advance. OHC is also attempting to get 10 years to develop the whole remaining land.

88 F-85 Financial Statements Orascom Development 2014 Annual Report F-86 OHC resorted to the dispute resolution committee under the auspices of the Ministry requesting the Authority to perform their contractual obligation under the agreement. The aforementioned committee decided that the matter should be referred to court, and accordingly OHC requested the administrative court to cause the Authority and the Ministry to perform their contractual obligations as well as cancelling the administrative decision of the Ministry interpreting the Agreement as having a total duration of 5 years. Land withdrawal at Al Fayoum Project: In addition, Fayoum Governorate, Egypt, issued a resolution on 11 June 2011 to terminate the contract signed 9 June 2007 for the purchase of a piece of land in Fayoum Governorate, Egypt, taking into consideration that the Group started major construction work on that land worth EGP 11 million (equals CHF 1.4 million). The associate of ODH requested the cancellation of this decision. As a result, the Conciliation Commission within the Governorate of Fayoum issued a resolution on 3 October 2011 recommending the cancellation of the termination decision issued by the Fayoum Governorate. On the basis of this decision, the associate has raised a law suit to the Egyptian judiciary to cancel the decision or, alternatively, to be receiving compensation from the government equivalent to the buildings constructed on the land repossessed by the Governorate. No judgement or decision has been issued as of the date of this report. Land withdrawal at Royal Azur In January 2012, Royal Azur for Tourism and Real Estate Development ( Royal ) agreed, as part of an overall settlement with the Tourism Development Authority ( TDA ), to voluntarily relinquish its legal claims and return the land. As part of the settlement, Royal would take the land subject of dispute on a leasing basis together with the buildings until an agreement is reached for the repurchase of the land by Royal. This undoubtedly allows Royal the time to rethink the entire purchasing scheme and avoids a lengthy litigation with the TDA. 50 SUBSEQUENT EVENTS Sale of a 15% stake of Egyptian subsidiary Orascom Hotels and Development (OHD) On 4 January 2015 ODH completed the subscription in the public offering of its Egyptian subsidiary OHD, through the sale of 33,294,349 shares at a price of EGP (approximately USD 2.12, CHF 2.10) per share. The offering generated EGP million (approximately USD 70.7 million, CHF 69.9 million) in total proceeds for the Group. As a result of strong investor demand (oversubscription of 3.8x in total), ODH elected to proceed with the sale of a 15% stake in OHD, which is the top end of the range approved by ODH s Board of Directors. This transaction marks the return of OHD s active trading on the EGX since Long- term lease of the Lastavica Island with the Mamula Fortress in the Bay of Kotor, Montenegro. ODH and Montenegro s Minister of Sustainable Development and Tourism signed in Podgorica, Montenegro, a preliminary contract for the long- term lease of the Lastavica Island with the Mamula Fortress which is located in the Bay of Kotor, Montenegro (the Mamula Project ). The preliminary contract which is currently pending approval from the Parliament of Montenegro, as well as the final confirmation from the Government, provides for a 49- year lease period. The investment in the Mamula Project is planned to take place via a joint venture company for which financing has been fully secured between Mr. Samih O. Sawiris and ODH. 51 APPROVAL OF FINANCIAL STATEMENTS The financial statements were approved by the directors and authorized for issue on 13 April OTHER SIGNIFICANT EVENTS THAT OCCURRED DURING THE REPORTING PERIOD Political situation in Egypt The positive events that Egypt, the Group s largest operating destination and its main source of operating revenues, had witnessed starting the second half of the year 2014 to date, boosted international and domestic confidence in Egypt s stability. With the presidential inauguration in June 2014 and the upcoming parliamentary elections, the road to political reforms became clearer. This stability had a significant positive impact on our real estate sales, coupled with the travel bans lifts, which translated into higher occupancy rates in our hotels. In March 2015, Egypt held the Egyptian Economic Development Conference in Sharm El Sheikh, attracting leading figures from the business and political fronts. The Egyptian government highlighted the extensive reforms that it has already implemented and others that will be put in place to restore fiscal stability, drive growth, attract investment and ultimately improve the social welfare of the Egyptian people. The conference drew delegates from more than 80 countries, 25 international organisations and many international companies and was considered a major milestone in the implementation of the country s ambitious growth program, ending with an announcement by Investment Minister Ashraf Salman that $175.2 billion in agreements, contracts and memoranda of understanding had been signed during the conference. The management is now capitalizing on Egypt s improved economic and political outlook, making use of its strong hotel portfolio and real estate projects and land bank to boost the Group s performance. Damages due to storms at Taba Heights In May 2014, Taba Heights, one of the major destinations of the Group in Egypt, faced storms and flooding which affected part of the infrastructure, part of the golf course as well as some of the furniture and fixtures of the resort building. No losses incurred for the Group as the assets were fully insured and final settlement with insurance company has been reached (refer to note 10 for further details). Planned acquisition of selected non- core assets in Egypt by ERC In May 2014, the Group announced the signing of a Memorandum of Understanding (MoU) with Egyptian Resorts Company (ERC) to divest select non- core assets in Egypt. On 24 August 2014 this MoU expired as both parties did not reach a mutual agreement to continue with the transaction. The expiration of the MoU also terminates the exclusivity rights that were granted to ERC in connection with the agreement and releases both parties from any further obligations.

89 F-87 Financial Statements Orascom Development 2014 Annual Report F-88 Deloitte AG General Guisan-Quai 38 Postfach 2232 CH-8022 Zürich Tel: +41 (0) Fax: +41 (0) Orascom Development REPORT OF THE STATUTORY AUDITOR To the General meeting of Orascom Development Holding AG, Altdorf Report of the Statutory Auditor on the Consolidated Financial Statements As Statutory Auditor, we have audited the accompanying consolidated financial statements of Orascom Development Holding AG, Altdorf, which comprise the consolidated statement of financial position as at 31 December 2014, and the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated cash flow statement and notes (pages F- 3 to F- 86) for the year then ended. Board of Directors Responsibility The Board of Directors is responsible for the preparation of these consolidated financial statements in accordance with International Financial Reporting Standards and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Holding AG Statutory financial statements together with auditor's report for the year ended 31 December 2014 Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards and the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity s preparation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements for the year ended 31 December 2014 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards and comply with Swiss law. Report on Other Legal Requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of the consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved. Deloitte AG F- 88 Roland Müller Licensed Audit Expert Auditor in Charge Adrian Käppeli Licensed Audit Expert Zurich, 14 April 2015

90 F-89 Financial Statements Orascom Development 2014 Annual Report F-90 Orascom Development Holding AG Income statement CHF Notes Revenue Interest income 4,061,827 4,246,371 Management fee 81, ,830 Other revenues 60,955 40,309 Total revenues 4,204,777 4,735,510 Operating expenses Personnel expenses (4,522,150) (11,903,129) Marketing expenses (33,269) (94,021) Depreciation of fixed assets (13,664) (33,969) Other operating expenses (3,311,329) (4,684,220) Total operating expenses (7,880,412) (16,715,339) Other income/expenses Amortization of incorporation and organization costs 4 (2,608,990) (3,454,864) Impairment on investments 8 (135,106,473) (4,899,970) Interest expense (2,735,957) (3,664,627) Provisions (438,000) - Exchange rate differences (5,916,097) (5,383,960) Total other income/(expenses) (146,805,517) (17,403,421) Extraordinary revenue Extraordinary revenue 35,616,000 - Total extraordinary revenue 19 35,616,000 - Net (loss) for the period (114,865,152) (29,383,250) Orascom Development Holding AG Statutory balance sheet CHF Notes 31 December December 2013 Assets Current assets Cash at bank 7,114,324 23,431,206 Other receivables - Affiliated companies - 1,606,623 - Related parties 14,373 15,106 - Third parties , ,143 Own shares 11 1,723,579 2,192,700 Total current assets 9,748,322 28,022,778 Non- current assets Fixed assets 5 365, ,139 Incorporation and organization costs 4-2,608,990 Receivables Affiliated companies 191,863, ,094,433 Investments 8 1,281,732,390 1,400,445,993 Total non- current assets 1,473,961,434 1,556,653,555 Total assets 1,483,709,756 1,584,676,333 Liabilities and shareholders equity Short- term liabilities Other payables - Shareholder 7 65,007,240 24,389,017 - Affiliated companies 561, ,990 - Third parties 309, ,250 Accrued expenses 2,681,942 2,614,428 Provisions 438,000 1,519,578 Deposit received 18-18,402,000 Total short- term liabilities 68,997,886 48,310,263 Long- term liabilities Other payables - Affiliated companies 38,961,597 45,626,627 Long- term liabilities 248, ,671 Total long- term liabilities 39,210,250 45,999,298 Total liabilities 108,208,136 94,309,561 Shareholders equity Share capital 9 662,201, ,201,010 Reserve for own shares 1,723, ,600 Capital contribution reserve (privileged) 10 - Additional paid- in capital (agio) 2,257,026,456 2,257,026,456 - Reserve for own shares - - 1,720,610 - Other reserve 742,945, ,225,115 Other reserve 9 10,819,858 11,953,838 Accumulated losses (2,184,349,857) (2,154,966,607) Net (loss) of the period (114,865,152) (29,383,250) Total shareholders' equity 1,375,501,620 1,490,366,772 Total liability and shareholders equity 1,483,709,756 1,584,676,333 Samih Sawiris Chairman/Group CEO Eskandar Tooma Group CFO F- 90

91 F-91 Financial Statements Orascom Development 2014 Annual Report F-92 Orascom Development Holding AG Statement of changes in equity F- 91 Other reserves Retained earnings Total Reserve for own shares Additional paid- in capital (agio) CHF Share capital Balance at 1 January ,201,010 2,507,026, , ,720,855 (2,154,966,607) 1,519,750,022 Reallocation of reserves - (250,000,000) - 250,000, Own shares - - 2,433,725 (2,433,725) - - Distribution to Board Members and revaluation - - (891,823) 891, (Loss) for the period (29,383,250) (29,383,250) Balance at 31 December ,201,010 2,257,026,456 2,310, ,178,953 (2,184,349,857) 1,490,366,772 Balance at 1 January ,201,010 2,257,026,456 2,310, ,178,953 (2,184,349,857) 1,490,366,772 Repurchase of own shares ,800 (324,800) - - Distribution to Board of Directors - - (911,430) 911, Loss for the period (114,865,152) (114,865,152) Balance at 31 December ,201,010 2,257,026,456 1,723, ,765,583 2,299,215,009) 1,375,501,620 2,257,026, ,945,725 2,999,972,181 Thereof privileged capital contribution reserve Orascom Development Holding AG Cash flow statement Cash flows from operating activities (Loss) for the period (114,865,152) (29,383,250) Depreciation of fixed assets 13,664 33,969 Amortization of incorporation and organization cost 2,608,990 3,454,864 Impairment on investments 135,106,473 4,899,970 Provision formed (1,081,578) (829,095) Other non- cash transactions (35,146,879 - Movements in working capital (Increase)/decrease in trade and other receivables (218,270) 1,400,768 (Increase) in due from affiliated parties (4,388,780) (24,735,807) (Decrease) in trade and other payables (143,949) (84,748) (Decrease) in due to affiliated parties (6,935,517) (13,899,291) (Decrease)/increase in other liabilities (18,333,776) 17,893,381 Cash used in operating activities (43,384,774) (41,249,239) Cash flows from investing activities Increase in investments of subsidiaries (16,392,870) - Net cash used in investing activities (16,392,870) Cash flows from financing activities Increase in liabilities towards shareholder 43,460,762 61,702,106 (Decrease) in bank overdrafts - (10,678,409) (Increase of own shares - (517,334) Net cash generated from financing activities 43,460,762 50,506,363 Net (decrease)/increase in cash and cash equivalents (16,316,882) 9,257,124 Cash and cash equivalents as at beginning of the financial year 23,431,206 14,174,082 Cash and cash equivalents as at end of the financial year 7,114,324 23,431,206

92 F-93 Financial Statements Orascom Development 2014 Annual Report F-94 Notes to the financial statements 1 GENERAL The purpose of the Company is the direct or indirect acquisition, durable management and disposal of participations in domestic or foreign enterprises, in particular in the field of real estate, tourism, hotels, construction, resort management, financing of real estate and related industries as well as the provision of related services. 2 PLEDGED ASSETS TO SECURE OWN OBLIGATIONS Andermatt Swiss Alps (ASA) Andermatt Swiss Alps AG (ASA) has obligations towards the canton of Uri and the municipality of Andermatt. ASA is responsible for the construction of certain parts of the tourism resort Andermatt. Within certain periods of time or should the construction work be stopped for whatever reason, ASA has the obligation to rebuild the relevant plots of land to the original state. As at 31 December 2014, 36,985 ASA shares owned by the Company (2013; 36,985) with a net book value of CHF 957 each, amounting to a total book value of CHF 35,384,945 (2013: CHF 35,384,945), have been pledged as a security to the canton and municipality. Additionally, land with a value of CHF 1,000,000 has been pledged (31 December 2013: CHF 1,000,000). Orascom Hotels and Development S.A.E. (OHD) As at 31 December 2014, OHD shares owned by the Company (31 December 2013; ) with a net book value of CHF 4.55 each, amounting to a total book value of CHF million (31 December 2013: CHF million), have been pledged as a security Island Lastavica with fortess Mamula in Herceg Novi As at 31 January 2014, Orascom Development Holding submitted a bid pursuant to the invitation to tender by the tender committee for valorisation of tourism location for the purpose of long term lease of the site island lastavica with fortress Mamula in Herceg Novi with an amount of EUR OTHER PAYABLES SHAREHOLDER The balance of Other payables Shareholder as at 31 December 2014 is due to Mr. Samih O. Sawiris in the amount of CHF 65,007,240 (31 December 2013: CHF 24,389,017). 8 INVESTMENTS Investments are valued at acquisition cost less adjustments for impairment. On a regular basis the Company s management reviews the recoverable value of the Company s investments in the various destinations, and accordingly reduce the carrying value by impairment losses if any. The Egyptian revolution in 2011 has negatively affected the performance of the Company s Egyptian arm under Orascom Hotels & Development S.A.E. ( OHD ). OHD s different operating segments, especially the real estate and hotels being the key revenue and value drivers of OHD, have been negatively affected by the deteriorated economic conditions that took place in Egypt. This is represented in downsized demand on real estate purchases and declined flow of tourists. During 2013 the performance of OHD s different segments continued to suffer from the events. Management believes that after the presidential election that took place at the end of May 2014, Egypt will return to stability and continuous recovery within the next 5 years. However, against this background, there still remains significant uncertainty in relation to the future economic performance. The valuation model of the Company captures the different investments, whether greenfield projects, brownfield projects, or operating projects. The valuation model adopts various approaches depending on the category of the project, as for the greenfield projects and brownfield projects, the model keeps it at investment cost given the uncertainty of the future assumptions and the absence of track record for those projects. One of the major contributors to the investments value is land banks in Egypt. Its value depends very much on developments and sales that are achievable over a long- term period. Due to this long- term view and the current political and economic situation there remains a significant uncertainty. For the operating projects, DCF valuation techniques applying a two- phase model for the hotels segment were used. The first phase is a 5- year period which shows the evolving status of the hotel segment indicated by being back to the operating standards of before the 2011 revolution. And the second phase is a 5 year period which shows the steady performance of the hotel operations. Major underlying assumptions are occupancy and average room rates for hotels and the number of real estate units to be sold. The various assumptions and future projections incorporate the various political, economic and operational facts prevailing at the time of preparing the valuations. Future developments may impact the value. The impairment analysis for OHD investment resulted in an impairment of CHF 135 million. The impairment analysis was based on a third party valuation. At 31 December 2014, the Company directly holds the following investments: 3 OFF- BALANCE- SHEET LEASING COMMITMENTS Office rent 4,423,200 4,656,000 4 INCORPORATION COSTS Incorporation costs relate to the public offering in relation to the capital increase in September Incorporation costs are capitalised and amortised over a period of five years. As of 31 December 2014 all incorporation costs have been amortised. 5 FIRE INSURANCE VALUE OF FIXED ASSETS The fire insurance value of fixed assets at 31 December 2014 amounts to CHF 731,000 (31 December 2013: CHF 731,000). 6 LIABILITIES TOWARDS STAFF PENSION SCHEMES There are no liabilities as at 31 December 2014 (31 December 2013: CHF 30,593). Company, domicile, purpose Ownership % Share capital 31 December December 2013 Orascom Hotels & Development S.A.E % 99.68% EGP 1,008,229,044 (previously: EL Gouna Development & Hotels S.A.E.), Egypt Real estate development, hotel management Arena for Hotels Company S.A.E., Egypt 99.85% 99.85% EGP 20,000,000 Hotel operation Orascom Development & Management Limited, Cyprus % % EUR 1,000 Management company ORH Investment Holding Ltd, BVI % % USD 125,000,000 International holding company Lustica Development AD, Montenegro 99.88% 51.00% EUR 10,012,750 Real estate development, hotel management Andermatt Swiss Alps AG, Switzerland (ASA) 49.00% % CHF 231,147,000 Real estate development Orascom Development International AG, Switzerland % % CHF 1,400,000 Real estate development Orascom Hotels Management AG, Switzerland % 0.00% CHF 3,000,000 Hotel Management F- 94

93 F-95 Financial Statements Orascom Development 2014 Annual Report F-96 Andermatt Swiss Alps AG As of 25 June 2013 the capital of Andermatt Swiss Alps (ASA) was increased from CHF 42,000,000 to CHF 231,147,000. The Company participated in this capital increase by converting its loan receivable in the amount of CHF 71,262,000 into capital. Mr. Samih O. Sawiris participated with an amount of CHF 117,885,000. He paid an amount of CHF 7,444,000 in cash and converted a receivable in the amount of CHF 110,441,000 into capital. The latter amount represented the Company s payable to Mr. Samih O. Sawiris as at 25 June 2013, which was transferred to Mr. Samih O. Sawiris together with a receivable from ASA in the same amount. As a result of this transaction, Mr. Samih O. Sawiris became the new majority shareholder with a 51% share and will act as new Executive Chairman of ASA. On the other hand, the Company remained shareholder with a 49% share, but lost control over ASA. In connection with the loss of control for the ASA investment, the Company performed a fair value valuation, which resulted in impairment in the amount of CHF 4,899,970 in SHAREHOLDERS EQUITY As at 31 December 2014 the Company's share capital of CHF 662,201,010 was divided into 28,543,147 registered shares with a par value of CHF each. The share capital is fully paid- in. The registered shares of the Company are listed on the Swiss Exchange (SIX). The Company has also issued Egyptian Depository Rights (EDRs) which are traded on the Egyptian Stock Exchange (EGX). Par Value CHF Shares # CHF Share capital ,543, ,201,010 Authorized capital ,034 10,000,000 Conditional capital ,624, ,489, PRIVILEGED CAPITAL CONTRIBUTION RESERVES As of 1 January 2011, Swiss tax authorities introduced a new regulation concerning capital contribution reserves. The new regulation foresees the exemption of distributions from the capital contribution reserves, which were received after 31 December 1996 from Swiss income and withholding tax. In order to reflect this new regulation, capital contribution reserves have been classified separately in the balance sheet. The tax authorities have approved capital contribution reserves in the amount of CHF 2,999,972,182. As accumulated losses as of 31 December 2012 exceeded more than half of the share capital and legal reserves, the General Assembly approved as part of the Annual General Meeting of 13 May 2013 the proposal of the Board of Directors to reallocate CHF 250,000,000 additional paid- in capital (agio) to Other reserve in order to meet the requirements of article 725 paragraph 1 CO. 13 RISK ASSESSMENT Orascom Development Holding AG, as the Parent Company of the Group, is fully integrated into the Group- wide internal risk assessment process. Such assessment is performed bottom- up and top- down with final conclusions consolidated in the Group Finance Function. The Group s entities report periodically to the Group Finance on their current operations and financial situation. Various reports and analysis have been implemented to allow the Group to monitor the operations closely and immediately identify risks. In managing the Companies vital activities and controlling the risks within those activities the Company pursuits a policy of centralization at the corporate level in which the bank accounts, the fixed assets, the collection of receivables and material transactions are controlled at the corporate level with certain approvals required to exercise or execute any of the above. Management is efficiently and effectively assisted into taking decisions based on the short term operating level and long term strategic level through the various reports that are provided through the system. In addition to that there is a monthly as well as quarterly reporting package and a set of key performance indicators on the entity and segment level that enable the management to monitor the business, take decisions and undergo corrective action whenever necessary. In addition, the Group Finance has a function for risk assessment and internal control. A risk matrix is regularly updated for the most significant entities of the Group. All information from the entities is reviewed and consolidated by Group Finance and is shared and discussed with the Executive Management on a regular base. A more formal reporting on risks over financial reporting was made prior to year- end to the Board of Directors. The Board of Directors in turn performs and reviews its risk assessment on an annual basis covering more long- term operational and strategic risks to the Group. The conclusions of such risk assessment are also considered by Group Finance. The risk mitigating actions are performed on the segment and entity level. The Group has centralized certain functions to be able to identify and control risks more closely. This risk assessment also covers the specific risks related to unconsolidated financial statements of Orascom Development Holding AG. 14 SIGNIFICANT SHAREHOLDERS Name of holder Number of shares 31 December December 2013 %- ownership of total equity capital and voting rights Number of shares %- ownership of total equity capital and voting rights Samih Sawiris (i) 17,921, % 17,914, % Janus Capital Management LLC 1,600, % 1,623, % Others 9,021, % 9,005, % TOTAL 28,543, % 28,543, % 11 OWN SHARES (i) The shares of Samih Sawiris are held directly and through his entities Thursday Holding (Ex- TNT Holding) and SOS Holding. As of 31 December 2014, the Company had 105,246 own shares (31 December 2013: 150,701) at an average transaction price of CHF per share (31 December 2013: CHF per share). Own shares are stated at the lower of cost or market value for an amount of CHF 1,723,580 (31 December 2013: CHF 2,192,700). 12 ACCOUNTS RECEIVABLES FROM THIRD PARTIES Accounts receivables include a position in the amount of CHF (31 December 2013: ), whose value is determined by the market value of ODH EDRs. This position is valued at lower of cost or market. 15 REMUNERATION OF THE BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT Information on compensation of Executive Officers and Directors in accordance with Article 663bbis, Swiss Code of Obligations (CO), is included in the Company s separate Compensation Report. The information regarding the beneficial ownership of Executive Officers and Directors in accordance with Article 663c, CO is provided in the consolidated financial statements. 16 JOINT LIABILITY IN FAVOUR OF THIRD PARTY The company, together with certain Swiss subsidiaries, is part of a Swiss value added tax (VAT) group, resulting in a joint liability for taxation for VAT purposes.

94 F-97 Financial Statements Orascom Development 2014 Annual Report F CONTINGENT LIABILITIES On 6 September 2012, Bellevue Hotels and Apartments Development AG (BHAD) and Acuro Immobilien AG entered into a real estate purchase agreement (the Purchase Agreement) and Orascom Development Holding AG guarantees for this agreement in the event that BHAD should not be able to fulfil its duties against Acuro. The guaranty is limited to CHF 100 million. This agreement is in the sense of article 111 of the Swiss Code of Obligations and not as a surety pursuant to article 492 et seqq of the Swiss Code of Obligations. 18 DEPOSIT RECEIVED The company entered in an agreement with FTI, a tour operator, on behalf of Orascom Hotels Management AG (OHM), which was under establishment in The company received CHF 18 million as an advance for this agreement. At the beginning of 2014 OHM was established and the advance balance was transferred from the company to OHM. On November 16 th the agreement with FTI has been cancelled and ODH has paid this amount back to OHM who in turn paid it to FTI. Proposed appropriation of reserves As accumulated losses exceed more than half of the share capital and legal reserves; the Board of Directors proposes to the General Assembly the reallocation of CHF 150,000,000 Additional paid- in capital (agio) to Other reserve in order to meet its obligations in relation to article 725 paragraph 1 CO: Capital Contribution Reserve (in CHF) Before Reallocation Reallocation After Reallocation Additional paid- in capital (agio) 2,257,026,456 (150,000,000) 2,107,026,456 Other reserve 742,945, ,000, ,945,725 Total capital contribution reserve 2,999,972,181-2,999,972, FALCON SETTLEMENT AGREEMENT On 20 June 2014 the final settlement agreement regarding all litigation proceedings in relation to the securities purchase agreement and the development of the land bank with Falcon was signed by ODH and the Alfy Family. This resulted in a gain of CHF 35.6 million. In relation to this settlement agreement, ODH and ORH Investment Holding Ltd (ORHIH) entered into an agreement where ODH transfers the respective receivable of USD 40 million to ORHIH. Ultimately, the entire settlement amount is secured through securities that will be held in an escrow account with Julius Baer Bank. 20 SIGNIFICANT NON- CASH TRANSACTIONS The following significant non- cash transactions are eliminated in the cash- flow statement: In June 2014, the company has reversed the impaired receivable of Joud Fund in the amount of CHF 35,616, as a gain and transferred this receivable to ORH Investment Holding Ltd. There is a non- cash transaction by an amount of CHF 469,120 which represents the Treasury shares acquisitions, distributions and adjustment of market to market. There is a non- cash transaction by an amount of CHF 2,842,539 which represents the settlement of the shareholder current account with a related party. There is a non- cash transaction by an amount of CHF 135,106,473 which represents the Impairment of OHD Investments.

95 F-99 Financial Statements Orascom Development 2014 Annual Report F-100 Deloitte AG General Guisan-Quai 38 Postfach 2232 CH-8022 Zürich Tel: +41 (0) Fax: +41 (0) Report on Other Legal Requirements REPORT OF THE STATUTORY AUDITOR To the General meeting of Orascom Development Holding AG, Altdorf Report of the Statutory Auditor on the Financial Statements As Statutory Auditor, we have audited the accompanying financial statements of Orascom Development Holding AG, which comprise the balance sheet as of 31 December, 2014, and the income statement, cash- flow statement, statement of changes in equity and notes (pages F- 89 to F- 97) for the year then ended. Board of Directors Responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of reserves (F- 98) complies with Swiss law and the company s articles of incorporation. We recommend that the financial statements submitted to you be approved. Furthermore, we draw your attention to the fact that half of the share capital and legal reserves are not covered by net assets as required by article 725 paragraph 1 CO. The approval of the proposed appropriation of reserves will remedy this situation. Deloitte AG Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements for the year ended 31 December 2014 comply with Swiss law and the company s articles of incorporation. Emphasis of Matter Without qualifying our opinion, we draw your attention to note 8 to the financial statements disclosing the existence of a significant uncertainty relating to the valuation of the investments in subsidiaries. Roland Müller Licensed Audit Expert Auditor in Charge Zurich, 14 April 2015 Adrian Käppeli Licensed Audit Expert

96 190 Glossary of Terms Orascom Development 2014 Annual Report Glossary of Terms AG: Aktiengesellschaft (abbr. AG) is the German name for a stock corporation. ARR: Average Room Rate is a statistical unit often used in the lodging industry. The ARR is calculated by dividing the room revenue (excluding services and taxes) earned during a specific period by the number of occupied rooms. Company: Orascom Development Holding AG. EBIT: Earnings Before Interest and Taxes is an indicator of a company s profitability, calculated as total revenue minus total expenses, excluding tax and interest. EBIT is also referred to as Operating Earnings, Operating Profit and Operating Income. The indicator is also known as Profit before Interest and Taxes (PBIT), and is equal to the net income with interest and taxes added back to it. EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization is an indicator of a company s financial performance, calculated as total revenue less total expenses, excluding tax, interest, depreciation and amortization. EBITDA is essentially net income with interest, taxes, depreciation, and amortization added back to it, and can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. EBITDA Adjusted: Earnings Before Interest, Taxes, Depreciation and Amortization adjusted to better reflect optimization of core operating activities net of any extraordinary items such as Provisions & impairments, FOREX losses, Capitalized G&A expenses, Share in associates and Fair value differences EDRs: Egyptian Depository Receipts EFSA: Egyptian Financial Supervisory Authority EGX: The Egyptian Exchange is one of the oldest stock markets established in The Middle East. The Egyptian Exchange traces its origins to 1883 when the Alexandria Stock Exchange was established, followed by the Cairo Stock Exchange in 1903 GOP: Gross Operating Profit means the profit of our hotel business after deducting operating costs and before deducting amortization and depreciation expenses. It excludes all costs related to non-hotel operations. GOP PAR: Gross Operating Profit per Available Room a key performance indicator for the hotel industry, defined as total gross operating profit (GOP) per available room per day Group: Orascom Development Holding AG and its subsidiaries. KPI: Key Performance Indicators are financial and non-financial metrics used to help an organization define and measure progress toward organizational goals. M 2 : square meter M3: cubic meter MBA: The Master of Business Administration is a master s degree in business administration. MCDR: Misr for Central Clearing, Depository and Registry provides securities settlement and custody services in Egypt by applying central depository system, effect central registry of securities traded in the Egyptian capital market and facilitate securities trading on dematerialized shares. MENA: Middle East and North Africa MV: Megavolt NAV: Net Asset Value is a term used to describe the value of an entity s assets less the value of its liabilities OHM: Orascom Hotels Management RevPAR: Revenue Per Available Room equals average room rate (ARR) multiplied by average occupancy. SESTA: Swiss Federal Act on Stock Exchanges and Securities Trading of 24 March 1995 (Bundesgesetz vom 24. März 1995 über die Börsen und den Effektenhandel, BEHG) SIS: SIS SegaInterSettle AG provides securities settlement and custody services in the Switzerland. SIX Swiss Exchange: The SIX Swiss Exchange is Switzerland s principal stock exchange and part of the Cash Markets Division of SIX Group. It operates several trading platforms and is the marketplace for various types of securities. The SIX Swiss Exchange is supervised by the Swiss Financial Market Supervisory Authority (FINMA). TRevPAR: Total Revenue Per Available Room is similar to RevPAR but also takes into account other room revenues e.g. food and beverage, entertainment, laundry and other services. UAE: United Arab Emirates UK: United Kingdom

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