building towns - orascomdh.com 2018... · the group’s diversified portfolio of destinations is...

ANNUAL REPORT 2018

BUILDING TOWNS

BUILDING TOWNS

1989

19992019

2009

02 COUNTRIES 2.1 Egypt 242.2 Oman 36 2.3 UAE 422.4 Montenegro 442.5 Switzerland 462.6 Morocco 482.7 UK 50

03 OURPEOPLE

3.1 Our people 52

04 CORPORATEGOVERNANCE

4.1 Group Structure and Significant Shareholders 584.2 Capital Structure 604.3 Board of Directors 624.4 Executive Management 704.5 Employees 724.6 Compensation Shareholding and Loans 724.7 Shareholders' Participation 734.8 Changes of Control and Defense Measures 744.9 External Auditors 744.10 Information Policy 75

01 ATAGLANCE 1.1 Company Profile 61.2 Destinations' Map 81.3 Chairman and CEO Letter 10

1.4 Key Highlights 2018 14

06 CONSOLIDATEDFINANCIAL 84 STATEMENTS20186.1 Consolidated statement of comprehensive income F-36.2 Consolidated statement of financial position F-46.3 Consolidated statement of changes in equity F-66.4 Consolidated statement of cash flows F-76.5 Notes to the consolidated financial statements F-10

07 STATUTORYFINANCIAL STATEMENTS2018 7.1 Income statement F-857.2 Statutory balance sheet F-867.5 Notes to the financial statements F-87

08 GLOSSARYOFTERMS 183

05 INVESTORINFORMATION 76

30 YEARS BUILDING TOWNS

2018 Annual Report 3


1.1 CompanyProfile

1.2 Destinations’Map

1.3 ChairmanandCEOLetter

1.4KeyHighlights


4 2018 Annual Report 5

01 Orascom Development at a Glance

One of the Largest Land Banks

101

The Group's diversified portfolio of destinations is spread over seven countries (Egypt, UAE, Oman, Switzerland, Morocco, Montenegro and United Kingdom), with primary focus on touristic destinations. The Group currently operates 9 destinations; four in Egypt (El Gouna, Taba Heights, Makadi Heights, and Fayoum), The

Cove in the United Arab Emirates, Jebel Sifah and Hawana Salalah in Oman, Luštica Bay in Montenegro and Andermatt in Switzerland. ODH recently launched O West, the latest addition to its portfolio and its first home project in Egypt, located in the 6th of October City. Orascom Development is listed on the SIX Swiss Exchange.

ODH currently owns a land bank of 101 million sqm of which 17 million sqm is completed and a comprehensive hospitality portfolio of 7,177 rooms, which are either self-managed by Orascom Hotels Management (OHM) or by third-party hotel managers under management contracts.

Orascom Development Holding (ODH) is a leading developer of fully integrated destinations, with 30 years of experience and a proven track record of sustainable development, including hotels, private villas and apartments, leisure facilities such as golf courses, marinas and supporting infrastructure.

1.1 COMPANY PROFILE

5to3StarHotelsEmployees

8,740

million m2

9Operating

Destinations

33 Hotels

with 7,177 rooms

in 2018 Over

sales since 1997

CHF3.2 billion

7WorldClass

Marinas

6Golf Courses

International

BUILDING TOWNS

01 Orascom Development at a Glance 30 YEARS BUILDING TOWNS


TOTAL LAND AREA

COMPLETED AREA

COMPLETED

16.8%17.0million m2

101million m2

1.2 DESTINATIONS MAP

SWITZERLAND

OPERATINGDESTINATIONInvestment Held in Associates

Andermatt Swiss Alps

UAE

OPERATINGDESTINATION

The Cove

MOROCCO

DESTINATIONINTHEPIPELINE

Chbika

UK


Eco-Bos

OMAN

OPERATINGDESTINATIONS

Jebel SifahHawana Salalah

DEVELOPINGDESTINATION

As Sodah Island


City Walk, Muscat

MONTENEGRO

OPERATINGDESTINATION

Luštica Bay

EGYPT

OPERATINGDESTINATIONS

El GounaTaba HeightsMakadi HeightsFayoum

DEVELOPINGDESTINATIONS

O West

OTHERHOTELS

Zahra Oberoi

The Group’s diversified portfolio of destinations is spread over seven jurisdictions such as Egypt, UAE, Oman, Switzerland, Morocco, Montenegro and United Kingdom.



Dear shareholders,

We are pleased to announce that the year 2018 has been a pivotal year for Orascom Development Holding (ODH). We have successfully completed the turnaround of the group, moved towards a destination-based strategy, hence taking out redundant structures and layers of management, restructured our balance sheet maintaining focus on profit-driven growth.

As the business evolves and grows, the biggest challenge for any company is to ensure smooth leadership succession and cultural continuity. In this respect, we are very proud of what Orascom Development has achieved over the past couple of years, both operationally and financially, whilst maintaining the essence of the Group.

2018 has been an eventful year, and our employees around the world have once again shown a great commitment to drive the success of our company. The implementation of our destination-based strategy has positively impacted all of our destinations’ KPIs and financials and has definitely helped with the rapid construction and development of new destinations.

Our strategy was well received by the markets: ODH, our holding company listed on the Swiss Stock Exchange (SIX), was ranked the third top performer of the SMI index with a 35.5% share price improvement last year. In turn, ODE, our largest Egyptian subsidiary listed on the Egyptian Stock Exchange, was the best performing stock in its industry with a 48.2% annual share price increase and has also successfully entered the main EGX 30 Index.

StrategicPillarsofRestructuring

The first strategic pillar dealt with re-organizing of operations from business segments to a destination-based structure, transferring more authority and responsibility to each destination. We are glad to say that we hired highly competent executive managers this year and now every destination has its own CEO, focusing on monetizing its land bank in the most efficient way under the overall strategic direction of the Group. This pillar has proven to be a full success, as evidenced by a higher increase of operational efficiency, shortening of the decision-making process and improvement of market transparency. This translated into very strong operational KPIs for each segment within the different destinations compared to FY 2017.

The second pillar related to strengthening ODH’s balance sheet through reducing our net debt in Egypt and restructuring the company’s debt in other destinations. We paid down CHF 44.4 million of debt during the period 2016-18 and we enhanced our operational performance across all our destinations. At the same time, our adjusted EBITDA reached CHF 70.2 million, representing a 110.2% increase compared to CHF 33.4 million in 2017. As a result, our net debt/adjusted EBITDA went down from 14.7x in 2016 to only 3.3x in 2018. In 2019, we are planning to reduce an additional CHF 48 million of debt in Egypt by using the proceeds of the non-core asset sales program that we successfully closed in 2018 and also our excess cash from operations. In 2018, we sold four hotels for an EV of CHF 104 million, we also sold Tamweel Group for total equity of CHF 20 million.

The third strategic pillar implied the leveraging of ODH’s brand. The Group has successfully built on its strong positioning in the Egyptian market and launched our “O West” destination, marking our first entry in the “first home” market in Egypt. The sales of “O West” are very promising, demand and interest from our clients is very strong. The latter reconfirms ODH’s position as the market leader in building fully integrated towns, benefiting from its solid brand leadership and unique community management experience.

2018results

Stellarperformance

The Group ended the year on solid grounds with strong operational and financial results across all business segments. Our operations continued to improve during FY 2018, reflecting our focus on profitable growth and margin expansion. We were able to reach a new net real estate sales record of CHF 200.6 million, increased revenues by 39.2% to CHF 340.3 million in FY 2018 vs. CHF 244.4 million in FY 2017 and more than doubled our adjusted EBITDA to CHF 70.2 million vs. CHF 33.4 million and a margin of 20.6% vs. 13.7% in FY 2017. Net Debt to adjusted EBITDA reached 3.3x in FY 2018, down from 8.2x in FY 2017 and 14.7x in FY 2016.

The net loss was reduced to CHF 37.3 million in FY 2018 vs. CHF 41.1 million in FY 2017 despite the CHF 16.5 million FX losses resulting from the sale of the Citadel Azur Hotel in May 2018.

1.3 CHAIRMAN AND CEO LETTER



Trophy tour in March 2018, with more than 1,000 attendees including football stars, media celebrities and public figures. We also continued to host our successful yearly events: The International Open Squash Championship in April 2018 for men and women and the El Gouna Polo event. Additionally, In September 2018, we successfully hosted the 2nd edition of the El Gouna Film Festival, with more than 1,500 attendees. In Hawana Salalah, Oman, in January 2018 we opened Hawana Salalah Aqua Park, the first Aqua Park in Oman.

Jebel Sifah, Oman is continually cementing its position as Muscat’s premier getaway destination offering premium facilities. In December 2018, Jebel Sifah hosted the MENA region’s 1st Spartan TRIFECTA event with more than 3,500 participants. Other events, which took place at the destination, were the Sifah Stock Music Festival, Stage 4 of the Tour of Oman Race and the National Obstacle Series. In Montenegro, we opened the Luštica Bay Marina along with the 1,000-sqm-retail area. Revenues increased by a healthy 33% to CHF 35.9 million in FY 2018 signaling more growth as our destinations reach critical mass.

Outlook2019:aimingforsubstantiallyhigherrevenuesandprofits

After the successful implementation of the first phase of the turnaround strategy along with the adaption of the destination-based structure across the board, the Group now has more visibility of the performance of each destination and is, thus, in a much more comfortable position to start providing guidance.

In 2019, ODH is targeting revenues of CHF 400 million and adjusted EBITDA within the range of CHF 74 million – CHF 77 million. These estimates exclude the contribution of Citadel Azur, Royal Azur, Club Azur hotels and Tamweel Group that the Group has identified as non-core assets and has sold in 2018. Thus, when FY 2018 figures are normalized for those assets, the targeted 2019

revenues represent a 25% growth from CHF 319 million in FY 2018 and adjusted EBITDA represents 19%-24% growth from CHF 62 million in FY 2018.

The Group also projects new real estate net sales of CHF 445 million – CHF 470 million compared to CHF 200.6 million in 2018, capitalizing on its “first home” project “O West” and building on the positive momentum of El Gouna and Makadi Heights, Jebal Sifah, Hawana Salalah and Luštica Bay.

We would like to end our note with a special thanks to all our employees for their outstanding performance this year. The Group would not have achieved these excellent results without their tremendous efforts and strong support for the Group’s objectives. We also thank our real estate homeowners and travelers to our towns for their continuous loyalty and trust.

As always, special thanks go to our valued shareholders for their confidence, guidance, and support. All of the achieved has only been possible because you care deeply about our Group’s strategic vision. Your professionalism, dedication and commitment are an inspiration to all of us, and, on behalf of the Board and the Executive Committee, we would like to thank you all for this hard work and look forward to an even more positive result in 2019.

Thank you for the trust you have placed in our company!

The cash flow from operations reached CHF 56.2 million, an 87.3% increase over the same period last year. The solid operational performance and the debt restructuring in Egypt and Oman, which will lead to reduced financing costs in the future, strongly confirms that the Group is on its way back to profitability.

GroupRealEstate:cashengineforgrowth

The real estate segment continued its outstanding operational and financial results across all our destinations and managed to exceed our real estate target of the year. Net sales increased by 59% to CHF 200.6 million in FY 2018 vs. CHF 126.2 million in FY 2017. Growth in sales was driven by the increase in pricing and unit sales across all our destinations. 839 units were contracted representing a growth of 60% in 2018. Revenues increased by 86.7% to CHF 130.9 million vs. CHF 70.1 million in FY 2017 on the back of increased deliveries in El Gouna, Montenegro, Hawana Salalah and Jebal Sifah. Total deferred revenue plus deferred interest income from real estate that is yet to be recognized reached CHF 235.7 million, and total receivables increased by 55.7% to CHF 166.6 million. Both figures exclude new sales at O West, which will show in the Q1 2019 results.

In El Gouna, Egypt net real estate sales exceeded our target for the year with a 40.8% increase to CHF 111.4 million vs. CHF 79.1 million in FY 2017. Makadi Heights, Egypt - our new rising destination since April 2018 - continued to deliver strong sales closing the year at CHF 13.7 million vs. only CHF 0.1 million in FY 2017. In Jebel Sifah, Oman net real estate sales improved by 46.3% to CHF 17.3 million in 2018 vs. CHF 11.8 million in 2017. In Hawana Salalah, net real estate sales increased by 42.4% amounting to CHF 23.5 million in FY 2018 compared to CHF 16.5 million in FY 2017. In Luštica Bay, Montenegro net real estate sales surged by 97.7% to CHF

34 million vs. CHF 17.2 million in FY 2017. In Andermatt, Switzerland, net real estate sales doubled to CHF 110 million in FY 2018 compared to the same period last year. The sales figure included a bulk deal in the amount of CHF 50.5 million.

As already mentioned above, we successfully launched O West on a soft, pre-sale basis in December 2018 and sold CHF 126.3 million in only two weeks. The sold units included standalone villas, twin and town houses. The official launch started in March 2019 and included a wide range of apartments. The first launch phase comprised 340 units with a total inventory of CHF 68.9 million and an average selling price of CHF 1,045 per m2 fully finished.

GroupHotels:leveragingtherecoveryoftourism

Hotels continued to record impressive y-o-y growth in 2018. The disciplined execution of our strategy to improve products and services combined with a focused effort to maximize revenue opportunities has impacted our hotels positively, including the newly added rooms across all our destinations. Revenues increased by 19.2% to CHF 156.7 million, accompanied by a 32.1% increase in GOP to CHF 59.2 million in FY 2018 vs. CHF 44.8 million in FY 2017. The segment’s adjusted EBITDA continued its upward trend and increased by 32.6% to CHF 54.1 million vs. CHF 40.8 million in FY 2017.

Starting with El Gouna, the growing demand on the Red Sea, supported by a fully-fledged marketing campaign in the German-speaking markets, resulted in a boost in room rates. While the occupancy increased from 75% in FY 2017 to reach an impressive 80% in FY 2018, TRevPAR has also increased by 34% to CHF 67 in FY 2018 compared to CHF 50 in FY 2017. We finished the renovation of two hotels in 2018 and are working on the remaining four to be finalized in 2019. We have also signed an agreement with Thomas

Cook to develop a new 100 rooms’ luxury high-end hotel branded “Casa Cook”. The deal also includes the rebranding of the Arena Inn Hotel, to be converted into a Cook's Club Hotel, both to become operational in October 2019.

Our hotels in Hawana Salalah continued to maintain their positive performance since the beginning of the year. In 2018, the revenues increased by 24% to CHF 41.4 million vs. CHF 33.5 million in FY 2017 accompanied by a 44.2% increase in GOP to CHF 15 million vs. 10.4 million in FY 2017. Additionally, Salalah Hotels reported a TRevPAR growth of 6% from CHF 117 in 2017 to CHF 124. Last but not least, we completed the Fanar Hotel & Residences’ expansion, adding 177 rooms making it the largest hotel in Salalah. Its operation began at the end of December 2018 with 90% occupancy.

In Montenegro, The Chedi Luštica Bay opened its doors in mid-July 2017 attracting great interest among local and regional stakeholders. Operating only for around 60 days of the area’s high season, the Hotel reported CHF 2.0 million of revenues, occupancy of 48% and TRevPAR of CHF 159.

In Andermatt, Switzerland, the Chedi Andermatt revenues increased by 17.5% to CHF 26.9 million vs. 22.0 million in FY 2017. In December 2018, we opened the Radisson Blu Reussen Hotel with 224 rooms, together with the Gotthard Residences.

GroupTownManagement:streamliningoperationsandimprovingprofitability

The town management segment continued to grow as a result of the successful restructuring implemented throughout the year. We focused on streamlining operations, eliminating waste, improving profitability and quality of service, in addition to increasing the all year-round activities and events in Gouna and Oman. In El Gouna, we hosted the FIFA World Cup

Khaled BicharaChief Executive Officer

Samih O. SawirisChairman of the Board of Directors



1.4 KEY HIGHLIGHTS 2018

Group Real Estate KPIs (CHF mn)

Group Hotels KPIs (CHF mn)

2016 2017 2018

319

115

538

126 839

201

Net Sales Value (CHFmn)

Number of Units

2016 2017 2018

120131

157

3645

59

Group Adj. EBITDA(CHF mn)

2016 2017 2018

20

33

70

Group Cash Flows(CHF mn)

2016 2017 2018

30

56

(9)

Group Revenues (CHF mn)

2016 2017 2018

237 244

341

Today ODH’s operational and financial stance

CHF 200.6 million

Net Real Estate Sales of

111 room

Officially opened Chedi Luštica Bay with

CEOsfor El Gouna, Makadi, Fayoum and Eco Bos

Hired new

100 rooms' hoteland rebrand another in El Gouna, Egypt

Signed with Thomas Cook to open a new

in FY 2018

CHF 125 millionSold non-core assets for an EV of c.

224 room

Opened Radisson Blu Hotel in Andermatt with

Added 177new rooms in Al Fanar Hotel in Hawana Salalah, Oman

35.5% return

ODH share price is the 3rd best performer on the SPI during 2018 with

1st home market

Launched O West, Egypt marking our first entrance in the

48.2% in 2018

ODE, the Egyptian subsidiary entered the main index (EGX 30) and share up

Net debt to Adj. EBITDA down from

14.7x in 2016 to 3.3x in 2018

USD 2.1 billion

CBRE valued El Gouna, Egypt assets at

GOP

Revenues

Occ. Rate%

53%

63%66%



01 Orascom Development at a Glance


Total Revenue by Country 2017 (CHF mn)

% of Total Revenue by Country 2018% of Total Revenue by Country 2017

EgyptOmanUAEMontenegroOthers

EgyptOmanUAEMontenegro

61%18%

12%

9%


EgyptOmanUAEMontenegroOthers

149.2

30.3

43.8

21.1

CHF244.4 mn

CHF244.4 mn

Total Revenue by Country 2018 (CHF mn)

196.4

32.0

71.9

1.9 4.3

CHF 340.3 mn

38.2

58%

9%

11%

21%

1% 1%

Total Revenues by Segment 2017 (CHF mn) Total Revenue by Segment 2018 (CHF mn)

% of Total Revenue by Segment 2018% of Total Revenue by Segment 2017

HotelsReal EstateTown Mgt.Tamweel

54%29%

11%

6%

HotelsReal EstateTown Mgt.Tamweel

CHF 340.6MN

15.8

27

70.1131.5

CHF 244.4 mn

HotelsReal EstateTown Mgt.TamweelLand

156.5

36.1

126.6

16.8

CHF340.3 mn

Current debt by currency 2018

EGPUSDEURAEDOMR

53%

7%

7%

12%21%

Current debt by country 2018


69%

21%

7% 3%

CHF340.3 mn

CHF244.4 mn

HotelsReal EstateTown Mgt.TamweelLand

CHF340.3 mn 46%

11%

38%

4%



Business Segments FY 2018

Income Statement

Balance Sheet

FY 2018 FY 2017 %

156.5 131.5 19.0%

126.6 70.1 80.6%

4.3 - -

36.1 27.0 33.7%

16.8 15.8 6.3%

- - -

340.3 244.4 39.2%

KPIs

Hotels

Real Estate

Land

Town Management

Tamweel Group

Corporate & Unallocated Items

ODH Group

FY 2018 FY 2017 %

50.3 46.1 9.1%

42.6 19.3 120.7%

4.0 - -

-3.5 -5.5 36.4%

4.9 3.6 36.1

-43.2 -38.6 -11.9%

43.8 24.9 75.9%

FY 2018 FY 2017 %

55.0 40.8 34.8%

42.2 19.0 122.1%

4.0 - -

-3.0 -6.0 50.0%

5.2 3.9 33.3%

-33.2 -24.3 -36.6%

70.2 33.4 110.2%

REVENUE

EBITDA ADJ. EBITDA




(CHF mn) Unit FY 2018 FY 2017 %

Revenue CHF, 000 340.3 244.4 39.2%

Cost of sales CHF, 000 -231.6 -181.5 27.6%

Gross profit CHF, 000 108.7 62.9 72.8%

Gross profit margin % 31.9% 25.7% 24.1%

Investment income CHF, 000 8.3 6.9 20.3%

Administrative expenses CHF, 000 -46.8 -36.4 28.6%

Adj. EBITDA CHF, 000 70.2 33.4 110.2%

Adj. EBITDA margin % 20.6% 13.7% 50.4%

Other gains & losses CHF, 000 2.1 8.4 -75.0%

Share of associates losses CHF, 000 -17.2 -16.9 1.8%

EBITDA CHF, 000 55.1 24.9 121.3%

Depreciation CHF, 000 -26.7 -24.5 9.0%

Finance costs CHF, 000 -40.4 -35.9 12.5%

Income tax expense CHF, 000 -25.3 -5.6 351.8%

Net losses for the period CHF, 000 -37.3 -41.1 9.2%

Attributed as follows:

ODH shareholders CHF, 000 -41.4 -41.4 -

Non-controlling interest CHF, 000 4.1 0.3 1,266.7%

Basic EPS (CHF) CHF -1.10 -1.04 5.8%

(CHF mn) Unit 31.12.18 31.12.17 %

Property, plant and equipment CHF, 000 761.8 765.1 -0.4%

Inventory CHF, 000 118.5 127.6 -7.1%

Receivables CHF, 000 138.6 107.0 29.5%

Cash and bank balances CHF, 000 138.3 99.4 39.1%

Investments in associates CHF, 000 43.6 60.8 -28.3%

Other assets CHF, 000 129.6 80.8 60.4%

Non-current assets held for sale CHF, 000 5.5 107.0 -94.9%

Total assets CHF, 000 1,335.9 1,347.7 -0.9%

Borrowings CHF, 000 372.4 374.7 -0.6%

Payables CHF, 000 68.5 51.0 34.3%

Provisions CHF, 000 77.9 65.6 18.8%

Other liabilities CHF, 000 240.8 210.4 14.4%

Liabilities related to assets held for sale CHF, 000 0.5 84.4 -99.4%

Total liabilities CHF, 000 760.1 786.1 -3.3%

Non-controlling interests CHF, 000 166.5 149.1 11.7%

Equity attributable to ODE shareholders CHF, 000 409.3 412.5 -0.8%

Total liabilities and equity CHF, 000 1,335.9 1,347.7 -0.9%


COUNTRIES

2.1 Egypt

2.2 Oman

2.3 UAE

2.4 Montenegro

2.5 Switzerland

2.6 Morocco

2.7 UnitedKingdom

20



02 Countries

2. COUNTRIES

Orascom Development Orascom Development’s Land Bank

DestinationName Totallandbank Completed Under

constructionUnder

development Undeveloped

EGYPT 49.87 12.82 5.49 2.43 29.13

El Gouna 36.92 9.57 5.38 1.30 20.67

O-West 4.20 0.00 0.00 0.00 4.20

Taba Heights 4.27 2.56 0.00 0.02 1.69

Fayoum 1.08 0.26 0.08 0.07 0.67

Makadi Heights 3.39 0.43 0.03 1.03 1.89

UNITED ARAB EMIRATES 0.29 0.29 0.00 0.01 0.01

The Cove 0.29 0.285 0.00 0.01 0.01

OMAN 20.84 2.53 0.16 3.06 15.09

Jebel Sifah 6.20 0.93 0.04 0.82 4.41

Hawana Salalah 13.60 1.60 0.12 1.44 10.44

As Sodah Island 1.00 0.00 0.00 0.80 0.20

City Walk 0.04 0.00 0.00 0.00 0.04

SWITZERLAND 1.57 1.24 0.06 0.27 0.00

Andermatt 1.57 1.24 0.06 0.27 0.00

MOROCCO 15.00 0.00 0.00 3.00 12.00

Chbika 15.00 0.00 0.00 3.00 12.00

MONTENEGRO 6.92 0.10 0.76 0.28 5.78

Luštica 6.92 0.10 0.76 0.28 5.78

UNITED KINGDOM 6.54 0.00 0.00 0.00 6.54

Eco-Bos 6.54 0.00 0.00 0.00 6.54

Total 101.03 16.97 6.47 9.05 68.54

PercentageofTotalLandBankSize 16.80% 6.40% 8.96% 67.85%

Landcategories Definition

Total Land Bank

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

Completed Any plot of land where infrastructure is completed and individual elements of the projects are completed

Under construction Any plot of land where infrastructure is completed and individual elements of the projects are under construction

Under Development Any plot of land where infrastructure is under construction but not yet completed

Undeveloped Any plot with zero infrastructure (raw land)

ODH 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.

Subject to certain conditions, the Group

has, up to this date, secured land banks of approximately 101 million m2 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.

The Group has also developed nine operating destinations including El Gouna on the Red Sea Coast, Taba Heights in the Sinai Peninsula, Makadi Heights in the Red Sea district and

Byoum in Fayoum, The Cove in Ras Al Khaimah in UAE, Jebel Sifah and Hawana Salalah in Oman, Luštica Bay in Montenegro and Andermatt in Switzerland.

Furthermore, several destinations are currently in various stages of development and planning in Egypt (O West our new fully integrated destination), Oman, Morocco, and the United Kingdom.

Orascom Development Holding (ODH) has a diversified portfolio of destinations, which is spread over seven jurisdictions covering Egypt, UAE, Oman, Switzerland, Morocco, Montenegro and United Kingdom.



22

02 Countries

TOTALREVENUE

NET REAL ESTATE SALES

HOTELS OCCUPANCY RATE

UNDEVELOPED LAND AREA

TOTAL LANDAREA

El Gouna offers an unparalleled lifestyle that has attracted a growing multinational community. Year-round sunshine, shimmering lagoons, turquoise beaches and its 4-hour flight from Europe makes El Gouna the ultimate paradise escape. It boosts world-class infrastructure and premium services and also is home to some of the world’s most reputable brands in the tourism and leisure industries.

El Gouna offers a wide range of international-standard facilities, including a variety of properties from exclusive private villas to cozy apartments, all in harmony yet with a unique identity. The town boasts 17 hotels with 2,651 guest rooms with a mix of 5, 4 and 3-star accommodation, a world-class hospital, a nursing institute, two 18-hole championship golf courses, football club, stadium, co-working facilities and a landing strip. The town is mindful to everybody’s needs with conference and meeting facilities, beauty salons, spas, post office, and even a weather station. El Gouna also hosts a satellite campus of the Technische University Berlin, a variety of both international and Egyptian curriculum schools, and a library linked to the Bibliotheca of Alexandria.

Home to 3 marinas, including the Abu Tig Marina, boat owners pursue their nautical adventures freely, without interruption. El Gouna is a very child-centric community, providing safe environments for them to be pleasantly entertained so that children of all ages can have the time of their life. Residents and guests are spoilt for choice on the gastronomy front. Over 100 restaurants, bars and eateries make up a refined culinary scene. El Gouna was honored to be the first destination in Africa and the Arab Region to receive the Global Green Award, sponsored by the United Nations Environment Program.

El Gouna is Orascom Development’s flagship town. The town has a multinational community that continues to grow. El Gouna covers 10 km of pristine shoreline on the beautiful Red Sea coast with a total land area of 36.9 million sqm. El Gouna is a fully integrated, self-sufficient town, adhering to the highest global standards.

HIGHLIGHTS2018

• Launched several phases in two new real estate projects in 2018 “Ancient Sand the Villas” and “Cyan” with a total inventory of CHF 71.7 million and were all sold out.

• Hotels GOP surged by 39.5% to CHF 32.3 million in FY 2018 vs. CHF 23.3 million in FY 2017.

• Finalized the renovation works in Turtles Inn and Sheraton hotels and continuing with the other hotels.

• Signed an agreement with Thomas Cook to develop a new 100 rooms luxury beachfront hotel “Casa Cook”. The deal also includes rebranding Arena Inn Hotel, 144-room to become a Cook's Club Hotel.

• Assigned CBRE Group Inc, to conduct a fair market value study for El Gouna’s 22.9 million sqm remaining undeveloped land bank and

its 17 hotels with 2,654 guestrooms. CBRE’s report valued the remaining 22.9 million sqm of undeveloped land in El Gouna at an aggregate market value of USD 1.82 billion. The report also valued El Gouna’s 17 hotels using a Discounted Cash Flow (DCF) method at USD 303.6 million.

• Sold 7,955 sqm land plot in El Gouna for USD 1 million (USD 130 per sqm) to construct the first office building and lease it to a German based company. The company will move their business process outsourced from Bavaria, Germany to El Gouna, Egypt with more than 400 employees of different nationalities.

• El Gouna Football Club succeeded to get back to the Egyptian 1st Division League and consequently the renovation across El Gouna stadium has been finalized.

• Hired a new CEO for El Gouna, Tarek Kamel.

EL GOUNA EGYPT

• El Gouna half marathon

• Angels' investment Summit

• Zumba Competition

• Christmas concert-Harfoush

• NYE Party

• El Gouna Tennis Tournament

• Women by the Sea • World Cup trophy tour• Spinning Marathon –

Party on wheels

• Spring Festival • El Gouna Int'l Squash Open• El Gouna Polo • Ancient Sands Launch Party

• Sandbox • El Gouna Rally • Vested Summit

• Summer Street Festival

• El Gouna Film Festival

February March April May September October DecemberJune/July

KPIs FY 2018 FY 2017 % Chg

Hotels

Total number of rooms 2,649 2,657 -0.3%

Occ. for available rooms (%) 80 75 6.7%

TRevPAR (CHF) 67 50 34.0%

GOP PAR (CHF) 34 24 41.7%

RealEstate

Net sales (CHFmn) 111.4 79.1 40.8%

No of contracted units 321 258 24.4%

Avg. selling price (CHF/m2) 2,194 1,945 12.8%

Deferred revenue (CHFmn) 126.3 81.7 54.6%

Revenues(CHFmn)

Hotels 65.1 49.8 30.7%

Real Estate 64.0 41.9 52.7%

Destination Management 28.5 21.8 30.7%

ElGounaTotal(CHFmn)

Total revenues (CHFmn) 157.6 113.5 38.9%

36.92million m2

20.7 million m2

157.6CHF million

111.4 CHF million

80% Occupancy

EVENTS

02 Countries


30 YEARS BUILDING TOWNSOPERATING DESTINATION

Taba Heights is located in Taba, a small Egyptian town near the northern tip of the Gulf of Aqaba on the Sinai Peninsula, approximately 200 km north of Sharm el-Sheikh and 20 km south of the Israeli town of Eilat. Its position makes it 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. Taba International Airport is just 25 km from Taba Heights.

The town offers six 4 and 5-star hotels with a total of 2,365 guest rooms and a wide range of international-standard facilities, including a medical center, child daycare services, 111 outlets including cafés, bars, restaurants and shopping facilities, 25 hotel swimming pools, various spas, a 5-star water sports center, tennis and squash courts, a man-made salt cave and an 18-hole championship golf course. In addition, Taba Heights offers a yacht marina with berthing capacity for 50 yachts and which provides overnight mooring.

Taba Heights is our second fully self-sufficient resort town, located in Taba over a total land area of approximately 4.27 million sqm, of which approximately 2.56 million sqm has been developed. The breathtaking natural setting is complemented by an offering of lavish four and five-star hotels. Worldwide hospitality leaders provide an unparalleled experience in relaxation and leisure.

HIGHLIGHTS2018

• Successfully curbed the GOP losses from CHF 0.7 million in FY 2017 to CHF 0.3 million in FY 2018. The enhancement in the GOP figures solidifies that Taba is on the right track to achieve more positive results in 2019.

• Signed a deal with Itaka; a Polish tour operator to send 2 weekly planes “back to back”, to Taba Airport. Itaka will also add 2 more planes during 2019, which in total would increase their contribution to Taba’s room nights to 45,000.

• Hosted 4 main events across 2018 during Easter, spring break along with the new year party.

TABA HEIGHTS EGYPT

TOTAL REVENUE

8.8CHF million


1.69million m2

TOTAL LAND AREA

4.27million m2


33% Occupancy


Hotels

Total number of rooms 2,365 2,365 -

Number of rooms available 1,282 1,260 1.7%



GOP PAR (CHF) (1) (2) 500%

Revenues(CHFmn)

Hotels 6.9 4.0 72.5%


TabaHeightsTotal(CHFmn)


02 Countries



TOTAL REVENUE


HOTEL OCCUPANCY RATE


TOTAL LANDAREA

Tucked away in the heart of the beautiful Al Fayoum oasis is Byoum Residences; the first luxurious real estate destination in the area. The oasis was previously referred to as Byoum, which means sea or lake in Coptic Egyptian, and hence the inspiration behind its unique name. Framing the destination is a promenade, overlooking the pristine waters of Lake Qarun, one of the world’s oldest natural lakes, and a majestic natural protectorate on the opposite side.

The development is built on 447,720 sqm of land encompassing a diverse range of real estate products, a 4 star hotel and a commercial area. All of the units in Byoum Residence enjoy an unrivaled view of the breathtaking lake.

Located 100 km southwest of Cairo in a fabulous location overlooking the historic Lake Qarun.

1.08million m2

0.67million m2

1.4CHF million

0.7 CHF million

25% Occupancy

• Easter Event • Paramotors event • New year’s event

April October December

EVENTS

02 Countries



FAYOUMEGYPT

HIGHLIGHTS2018

• Delivered 11 real estate units in 2018 and planning to deliver 31 units during 2019.


Hotels

Total Number of rooms 53 50 6.0%

Occ. for available rooms (%) 25 39 -35.9%


GOP PAR (CHF) 4 1 300.0%

RealEstate

Net sales (CHFmn) 0.7 1.5 -53.3%

No of contracted units 6 21 -71.4%

Avg. selling price (CHF/m2) 668 602 11.0%

Deferred revenue (CHFmn) 1.1 1.6 -31.3%

Revenues(CHFmn)

Hotels 0.5 0.4 25.0%

Real Estate 0.9 0.8 12.5%

FayoumTotal(CHFmn)

Total revenue (CHFmn) 1.4 1.2 16.7%

Makadi Heights covers an area of 3.39 million sqm offering its residents and visitors all the services and facilities that daily life requires in high standards. This includes a built retail center, a medical center with a clinic and pharmacy and a clubhouse featuring a large pool, restaurant, a kids area, a gym and sports courts. Moreover, a beach club and commercial area will be developed in the new phase to accommodate for entertainment. Makadi Heights aims to provide upper middle class families the opportunity to own a home at affordable prices; featuring a variety of residential units ranging from apartments, townhomes and standalone villas.

Located in the heart of Makadi Bay on the Red Sea coast only 15 minutes from Hurghada International Airport, lays the unique residential and touristic community, Makadi Heights. It’s the only fully integrated and residential community occupying a prime position, 78 meters above sea level at the highest point of Makadi Bay guaranteeing unbeatable panoramic views.

TOTAL REVENUE

8.7CHF million


1.89million m2

TOTAL LANDAREA

3.39million m2


13.7 CHF million

02 Countries



MAKADI HEIGHTS EGYPT

HIGHLIGHTS2018

• In April 2018 we started an aggressive sales and marketing campaign to revive Makadi destination. We launched a new phase and we managed to sell CHF 13.7 million in FY 2018 vs. only CHF 0.1 million in FY 2017.

• Opened Makadi Heights club house.

• In May 2018 we sold Citadel Azur Hotel located in Sahl Hashish, Egypt, to "Pickalbatros Group" for an enterprise value of USD 50 million. The sale resulted in cash proceeds of USD 32 million and the deconsolidation of USD 18 million of debt.

• In end of December 2018 we concluded the sale of Royal Azur and Club Azur Hotels as well as a land plot in the Makadi destination. The sale was concluded at an enterprise value of c. CHF 47.3

million. This resulted in total cash proceeds of c. CHF 22.5 million and the deconsolidation of CHF 14.4 million of debt.

• Finalizing the sale of Makadi Gardens Hotel for CHF 6.3 million.

• Hired a new CEO for the destination.


RealEstate

Net sales (CHFmn) 13.7 0.1 -

No of contracted units 163 2 -

Avg. selling price (CHF/m2) 913 267 241.9%

Deferred revenue (CHFmn) 13.0 - -

Revenues(CHFmn)

Hotels 3.3 3.6 -8.3%

Real Estate 0.3 0.1 200.0%

Land 4.1 - -


MakadiHeightsTotal(CHFmn)


O West is set over an area of 1,000 acres and designed by world-renowned, HOK, one of the largest, most acclaimed architectural design firms in the world. HOK’s vision for O West’s master plan, provides balanced and unique neighborhoods meticulously conceptualized into the fabric of the natural attributes of the site. Through the use of “Green Fingers”, meandering green spaces that span the development, the outdoor spaces and picturesque views facilitate the core vision of social interaction in a community-focused urban environment.

The O West site boasts incredible natural topography that facilitates the integration of a civic spine along the direction of the prevailing winds to provide natural cooling. This “high street” is a pedestrian friendly access from the North to the South of the project. Cycling, walking and accessibility through the phases of O West will be a breathtaking journey in an urban environment.

O West’s landscaping is designed by EDSA, a global landscaping firm with a core competency of creating passionate, distinctive, innovative and captivating environments. EDSA’s enduring appeal is vivid through their evergreen landscaping concept, creating meandering trails that engages pedestrians and establishing a spontaneous relationship between residents and the open spaces, strengthening community interaction and celebrate the outdoors through an interconnected network of walking and cycling paths, enclosed by meticulously handpicked greenery. The design and architecture employed in O West is tailored to capture the essence of a modern dynamic community. The elegant contemporary architecture, designed by World-renowned international architects AAA+ and local architects Innovation Design Studios & Ayman Arafa Designs, bridges O West’s sustainable principles with functional architecture. With its innovative design, lavish high-ceilings, spacious areas and its fine selection of materials and equipment, every nuance has been considered without compromise. O West’s residences promise a very personalized, efficient, elegant and trendy way of living.

O West is Orascom Development’s newest addition to its towns’ portfolio in the West of Cairo. Set as a beacon of integrated living, O West is intelligently and harmoniously intertwined to offer a true wholesome town experience in 6th of October City.

4.2million m2


TOTAL LANDAREA

4.2million m2

02 Countries


30 YEARS BUILDING TOWNSDEVELOPING DESTINATION

O WESTEGYPT

LAND

• Total land Area – 4,200,000 sqm (1,000 Acres).

• Total Residential units BUA - 3,197,880 sqm.

• Total number of residential units c. 19,000 units.

• Commercial area is still under development.

SALES&CONSTRUCTION

• Total residential sales value of the project is EGP 77.0 billion (CHF 4.4 billion at current rates).

• Sales duration over 8 years.

• Collection duration over 15 years.

• Construction duration over 12 years.

NUCAPAYMENTS

• NUCA is entitled to 26% of total residential sales collection for the first 8 years.

• NUCA is entitled to a total cash payment of EGP 11.4 billion (CHF 0.65 billion) over 8 years and a primary in-kind residential BUA of 130,000 sqm delivered in year 8 which imply a land cost per sqm of EGP 1,580 (CHF 90) on a net present value basis.

• In addition to that, NUCA will be entitled to another in-kind residential BUA of 150,000 sqm (75,000 sqm in year 9 and 75,000 sqm in year 10).

HIGHLIGHTS

• We successfully held the soft launch of O West in December 2018 and sold CHF 126.3 million in only two weeks. All contracted units’ figures are not reflected in the 2018 results but will be reflected in Q1’ 19 results. The launched units included, standalone villas, twin & town houses with an average selling price of CHF 1,281 per m2 for core and shell.

• The official launch started in March 2019 included a wide range of apartments, duplexes, penthouses and lofts. The first launched phase included 340 units with a total inventory of CHF 68.9 million and an average selling price of CHF 1,045 per m2 fully finished.

• The official launch sales is progressing very well, showing very strong demand and appetite from our clients which strongly reaffirms ODH’s position as the market leader in building fully integrated towns, benefiting from its solid brand equity and unique community management experience.

With just twenty-seven Luxury Cabins and Luxury Suites, The Oberoi Zahra offers some of the most spacious, private accommodation on a luxury cruise on the Nile. Equipped with complimentary high speed Internet for up to four devices, furnished with king-size or twin beds, topped with 12" mattresses and offered a bespoke pillow menu that caters for personal preferences and sensitivities, our Luxury Cabins and Luxury Suites are supremely comfortable and convenient.

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 full-service spa and has been recognized by the Egyptian Ministry of Tourism as the “Best Cruiser on the River Nile”.


Hotels

Total number of rooms 27 27 -


TRevPAR (CHF) 202 100 102.0%

GOP PAR (CHF) 82 32 156.3%

ZahraOberoiTotal(CHFmn)


TOTAL REVENUE

1.7 CHF million


31%

02 Countries



ZAHRA OBEROIEGYPT

TOTAL REVENUE




TOTAL LANDAREA

Jebel Sifah is home to a full-range of freehold waterfront and golf-front apartments and luxury villas that can be bought or rented at highly competitive rates. Its longlist of expertly crafted properties includes marina apartments, golf and sea view luxury villas, and Golf Lake, a premium residential area comprised of 14 buildings and 131 studios, one- and two-bedroom apartments as well as lofts. The properties overlook the destination’s 9-hole Harradine golf course, with stunning views of the greens. Handover of Golf Lake properties commenced in December 2018.

The newest neighborhood, Jebel Sifah Heights is currently under construction and will offer a range of apartments enjoying stunning sea and golf views with dedicated outdoor facilities and amenities. The delivery of Phase I is expected to be in Q1 2020.

Jebel Sifah’s picturesque 84-berth Marina is a haven for yacht owners, guests and residents looking to unwind at the 4-Star Sifawy Boutique Hotel or its lively restaurants and shops. The sophisticated Marina offers an array of first-class recreation and entertainment facilities, including a diving center and exhilarating water activities.

Jebel Sifah’s offerings are enhanced with lifestyle venues including the popular The Bank Beach Club, a Mediterranean-inspired establishment featuring a new lifestyle concept to Oman with its 500-square meter infinity pool boasting 360 views of the mountains, stunning coastline and Jebal Sifah Marina.

The growing destination offers something for homeowners and visitors of every segment, with the added benefit of being easily accessible by car, water taxi, and private boats. Whether choosing to journey through the mountains or enjoying the pristine turquoise waters of Oman, Jebel Sifah promises a captivating experience like no other, and a continuing reflection of life as it should be.

Jebel Sifah is an Integrated Tourism Complex (ITC) that caters to international visitors and residents with its unique real estate, tourism and hospitality propositions. It has grown to become the home of a multicultural community and an expression of Oman’s vibrant growth and culture.

6.2million m2

4.4million m2

• National Obstacle Series (NOS) Event • First edition of Sifah Stock • XDubai Spartan TRIFECTA Race

October November December

EVENTS38% Occupancy

17.3 CHF million

20.0CHF million

02 Countries



HIGHLIGHTS2018

• Net real estate sales increased by 46.3% to CHF 17.3 million in 2018 vs. CHF 11.8 million in 2017.

• Released additional properties in “Jebel Sifah Heights”, with a total inventory of CHF 20.3 million.

• Hotel occupancy reached 38% in FY 2018.

• Commencement of Golf Lake properties handover to clients, meeting the 2-year contractual construction plan.

• Launch of international supermarket retailer SPAR.

• Opening of the Marina workshop offering a full range of services to boat owners.

• Launched the first edition of Sifah Stock, featuring local music bands to a 3,000+ audience.

• Hosted the National Obstacle Series (NOS) Event which featured inflatable obstacles in October 2018.

• Hosted the region’s first XDubai Spartan TRIFECTA Race on December 14-15 with over 3,500 participants.

OPERATING DESTINATION

JEBEL SIFAH OMAN


Hotels

Total number of rooms 67 67 -


TRevPAR (CHF) 98 106 -7.5%

GOP PAR (CHF) 5 17 -70.6%

RealEstate

Net sales (CHFmn) 17.3 11.8 46.6%




Revenues(CHFmn)

Hotels 2.4 2.6 -7.7%

Real Estate 16.6 3.1 435.5%


JebalSifahTotal(CHFmn)


TOTAL REVENUE




TOTAL LANDAREA

With a multinational homeowner community, Hawana Salalah’s luxury freehold properties offer residency in Oman to all nationalities, all enjoying spectacular views of the breath-taking ocean, marina or the tranquil lagoons.

Central to the destination are 1,100 hotel rooms spread across the popular 577-room 5-star Fanar Hotel & Residence with 3 breathtaking beaches, the elegant 422-room Salalah Rotana Resort with waterways and a coconut-fringed private beach, the 82-room marina-side Juweira Boutique Hotel and Souly Lodge, featuring 19 ocean-front, handcrafted wooden and palm frond huts.

Hawana Salalah offers residents and tourists an exceptional range of facilities and leisure options including its 170-berth superyacht marina and Oman’s first aqua park, the Hawana Aqua Park.

Brimming with life all year-round, Hawana Salalah, offers a variety of activities including an indulgent array of 32 unique restaurants and cafes. With its tropical weather and light breezes, there is no better place where visitors can discover the thrill of numerous water sports and channel into the world beyond the Indian Ocean Coastline.

Hawana Salalah is tucked away just 20 minutes from Salalah’s international airport, with regular direct flights from neighboring countries and European destinations.

Located in the Governorate of Dhofar and stretching over seven kilometers of white Indian Ocean coastline and 13.6 million square meters of land, Hawana Salalah is Oman’s largest tourism destination. It is our flagship destination in Oman and following the model successfully built in El Gouna.

• EFG Sailing Arabia • Hawana Fiesta• Dine Around

• Hawana Fiesta• Dine Around

• Hawana Fiesta• Dine Around

October November DecemberFebruary13.6million m2

10.4 million m2

51.8CHF million

23.5 CHF million

70% Occupancy

02 Countries



HAWANA SALALAH OMAN

HIGHLIGHTS2018

• Net real estate sales increased by 41.7% to reach CHF 23.5 million in FY 2018 vs. CHF 16.6 million in FY 2017.

• Successful launch and sales of “Forest Island” in August 2018 with a total inventory amounted to CHF 29.2 million. A first of its kind self-sustainable real estate project offering 208 units featuring Moorish and Modern architecture comprising of simplexes, townhouses and semi-detached villas. The project features resort-like and lifestyle amenities including kids and fitness trails, resort pools, restaurants, gym and yoga lawn.

• Hotels revenues increased by 23.4% to CHF 41.4 million in FY 2018 vs. CHF 33.5 million in 2017 and also, GOP increased by 44.2% to CHF 15 million in 2018 vs. CHF 10.4 million in 2017.

• Occupancy rates for our hotels reached 70% in 2018 despite the tropical cyclone that took place in Oman.

• Completed the construction of Fanar Hotel & Residences’ expansion of additional 177 rooms making it the largest hotel in Dhofar; operation started end of December 2018.

• Launch of the Marina fuel station in Hawana Salalah.

• Exclusive deal with Omantel suite of voice and data for homeowners, hotel guests and visitors.

• During FY18 Hawana Salalah witnessed an increase of 21% in the commercial rental of the apartments to third parties.

• The destination also welcomed five new retail outlets and six new cafes and restaurants across the Marina and hotels.


Hotels

Total number of rooms 1,081 904 19.6%

Occ. for available rooms (%) 70 72 -2.8%

TRevPAR (CHF) 124 117 6.0%

GOP PAR (CHF) 45 36 25.0%

RealEstate

Net sales (CHFmn) 23.5 16.5 42.4%

No of contracted Units 188 140 34.3%


Deferred revenue (CHFmn) 31.1 18.6 67.2%

Revenues(CHFmn)

Hotels 41.4 33.5 23.6%

Real Estate 9.2 3.3 178.8%


HawanaSalalahTotal(CHFmn)


City Walk Muscat is a beachfront commercial and business complex with approximately 47,499 sqm development area, located in North Al Hail, Muscat. The project has a stunning 355 meter waterfront and will comprise a 5-star luxury hotel, exclusive retail outlets, restaurants and cafes, a dedicated cinema complex and commercial area with offices and business headquarters.

In November 2016, the Group has signed the development agreement based on an usufruct concession for 50 years with fees payable starting from 6th year.


Covering around 1.0 million sqm, As Sodah Island is located off the southern coast of Oman opposite to Salalah Beach. The project is set to be the region’s niche destination, comprising a 32 rooms 5-star luxury boutique hotel, exclusive pavilions with swimming pools and private beach access, a main lodge and spa.

DEVELOPING DESTINATION

AS SODAH ISLANDOMAN


TOTAL LANDAREA

1.00million m2

TOTAL LANDAREA

0.80 million m2

0.04million m2

0.04 million m2


30 YEARS BUILDING TOWNSDESTINATION IN THE PIPELINE

CITY WALK MUSCATOMAN

The Cove comprises a total area of around 290,000 sqm. The Cove opening took place in early February 2009, offering 326 rooms. The total number of 330 rooms consists of 204 hotel rooms (hotel building) plus 126 rooms resulted from 65 residential units being leased back to the RAK TI and managed by Rotana as part of the hotel rooms’ inventory. Meanwhile, a new staff housing building was constructed and finished in November 2015. In addition to that, the Group decided to convert the old senior executives’ staff housing building into a 145-room hotel extension to increase the existing room capacity and was finalized and opened in June 2017. Now the hotel total number of rooms reached 475.

The Cove Rotana Resort is an ideal destination for leisure travelers and weekend breakers. The Cove offers 3 fully-equipped and flexible meeting rooms with the latest audio-visual equipment, 6 attractive choices of restaurants, bars and lounges, the fully equipped Bodylines Fitness & Wellness Club, kids area, 600 meters of pristine beach, 3 swimming pools in addition to gorgeous 3 water slides along with its own swimming pool and 7 exquisitely designed massage treatment rooms are among the many facilities offered at The Cove Rotana Resort – Ras Al Khaimah.

The Cove Rotana Resort is located on an idyllic water inlet on the Ras Al-Khaimah beachfront, offering spectacular views over 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.

TOTAL REVENUE

32.0CHF million


0.05million m2

TOTAL LANDAREA

0.29million m2


74% Occupancy

02 Countries



THE COVE UAE

HIGHLIGHTS2018

• Occupancy rates increased to reach 74% in 2018.

• GOP PAR declined from CHF 71 in 2017 to CHF 66 in 2018. Due to the added inventory from the extension that was opened late 2017.

• The Hotel total revenue increased by 5.6% to CHF 30.1 million in FY 2018; and GOP increased from CHF 11 million in FY 2017 to CHF 11.4 million in 2018.

WorldTravelAwards2018

• United Arab Emirates Leading Family Resort 2018

BBCGoodFoodMiddleEastAwards2018

• United Arab Emirates Leading Family Resort 2018

WorldLuxuryRestaurantAwards2018

• Basilico Mediterranean Restaurant – 2018 Winner Mediterranean Cuisine - Regional Winner: Middle East and

North Africa • Basilico Mediterranean

Restaurant – 2018 Best Head Chef - Regional Winner: Middle East and North Africa

TripAdvisor2018CertificateofExcellence

RasAlKhaimahPublicServiceDepartment

• Most Innovative Hotel in Waste Management 2018

• Ms. Grace Nalogon - Outstanding Green Ambassador for 2018


Hotels

Total number of rooms 475 487 -2.5%


TRevPAR (CHF) 174 184 -5.4%

GOP PAR (CHF) 65 71 -8.4%

Revenues(CHFmn)

Hotels 30.1 28.5 5.6%


TheCoveTotal(CHFmn)


AWARDSRECEIVEDFOR2018

• Festival of Fall Colors • Sara Vujosevic & Sanja Matijevic fashion show

• Live theatre monodrama on our Marina Village breakwater, with Tivat Cultural Centre

• Roman & friends, Musical compounds Music concert with violinist Roman Simovic' and friends

• A performance from Jazz Duo, Aleksandra and Ivan Aleksijevic.• String quartet “Pandora” - Kotor Art. • Shule Jovovic sextet - Jazz concert • Educational ‘Watch Out for Zebra’ kids show• Grand opening of the Chedi Hotel and Marina• “Flute trio” - Tivat cultural Centre Classical music. • Tivat Music School – BG Sax 4 “Cubalcanica” Salsa night

• Art exhibition - “Celebrating young talent”

• Predrag Jankovic concert • Kotor Time travel • Tango marathon ‘Port of tango’• Autumn Shopping Weekend

‘Seize the fall’

July August September October

TOTAL REVENUE




TOTAL LANDAREA

The goal of Luštica Bay is to create a distinct community, within an extraordinary setting, where residents can create a home around life as it should be. Combining Montenegro’s beauty and culture with Orascom Development’s experience of cultivating environmentally-centered, luxury residential living, it provides a foundation that will grow organically.

Luštica Bay is set to become a sustainable, fully-integrated, state-of-the-art touristic town. Designed to blend seamlessly into its surroundings it will become a permanent home to a few thousand residents. It comprises a variety of residential offerings, hotels and lifestyle facilities, offering both tranquility and privacy, discovery and adventure. A secluded oasis and a gateway to the rest of Montenegro.

The integrated project is planned to offer more than 2,000 residential units, villas and townhomes, 7 world class hotels, 2 marinas with mooring and docking support facilities on the Adriatic Sea, an 18-hole golf course with club house, commercial facilities, a town center, the necessary infrastructure requirements and many other amenities.

As of last year, the destination now includes the five-star Chedi Hotel with 111 rooms and a range of facilities. Additionally, we opened the first phase of the marina with 50 berths. Luštica is now a fully-fledged destination.

Luštica Development A.D. is developing this luxury touristic destination on the Montenegrin Adriatic coast within the idyllic Trašte Bay with a land bank of 6.9 million sqm and is located a short distance from three international airports (10 km from Tivat airport, 90 km from Podgorica and 46 km from Ćilipi - Dubrovnik). The Group concluded the lease and development agreement with the Government of Montenegro and the Municipality of Tivat on the 23rd of October 2009.

6.92million m2

5.78million m2

38.2CHF million

34.1 CHF million

EVENTS

48% Occupancy

02 Countries



LUŠTICA BAY MONTENEGRO

HIGHLIGHTS2018

• New homeowners settled into the Marina Village neighborhood, with the completion of several Magnolija and Kamelija residences. Construction is still underway on the final Magnolija and Kamelija buildings, as well the exclusive townhouses and stand-alone villas.

• We began construction of Luštica Bay’s town centre: Centrale.

• In August 2018, we opened The Chedi Luštica Bay Hotel the largest 5-star hotels in Boka Bay. It offers 111 rooms, two restaurants, a bar, conference and business center, an outdoor pool, spa and fitness center featuring an indoor heated pool, gymnasium and additional facilities.

Occupancy rate for the hotel reached 48% in FY 2018.

• Opened the first phase of the main marina with 50 berth the first marina to be built in Montenegro in the recent period. Following this, we will begin equipping the remaining phase of the marina, set to offer 176 berths in total.


Hotels

Total number of rooms 111 - -

Occ. for available rooms (%) 48 - -

TRevPAR (CHF) 159 - -

GOP PAR (CHF) (34) - -

RealEstate

Net sales (CHFmn) 34.1 17.2 98.3%

No of contracted units 53 56 -5.4%



Revenues(CHFmn)

Hotels 2.0 - -

Real Estate 35.6 21.1 68.7%

Destination Management 0.6 - -

LušticaBayTotal(CHFmn)


With a total land bank of approximately 1.57 million sqm, 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 date eight apartment houses are finished and handed over. With the completion of the Radisson Blu Hotel Reussen and the Gotthard Residences Andermatt Reuss has introduced a recreational Piazza Gottardo. Around the Piazza Gottardo opened stores and restaurants. 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 neighboring ski area of Sedrun to form a 120-kilometer ski domain. The highly integrated infrastructure and state of the art facilities also makes the village the perfect location for cultural events and congresses.

The Group has a share of interest of 49 % in Andermatt Swiss Alps AG, remains committed to the project and will benefit from any future upside. In June 2018 ASA again successfully sold bonds in the amount of CHF 50 million which will help in funding the necessary next steps of the development.

The innovative and sustainable Andermatt Reuss – a part of the traditional Swiss alpine village of Andermatt – became an attractive year-round destination.

• Opening Chairlift Schneehüenerstock

• Andermatt Live! (Rock / Pop Music Festival)

• Easter Festival (Classic Music Festival)

• Ground breaking Apartment house Fuchs

• Season Opening with Andermatt Swiss Alps Classics, Swiss Bike Cup and Chasing Cancellara

• Ground breaking Apartment house Eisvogel

• Early opening ski season at Gemsstock

• Opening cable car Schneehüenerstock

• Opening Radisson Blu Reussen• Piazza Gottardo day

March April May November DecemberJune September

EVENTS

TOTAL REVENUE



TOTAL LANDAREA

54% Occupancy

1.57million m2

110.0 CHF million

135.7CHF million

02 Countries



ANDERMATT SWITZERLAND

HIGHLIGHTS2018

• Net sales reached CHF 110 million (including Taurus bulk deal of CHF 50 million) vs. CHF 55 million in 2017.

• The SkiArena Andermatt-Sedrun is fully connected and started with a plus of 40% guests compared to last year into the season.

• In December 2018 we opened the Radisson Blu Reussen Hotel with 224 rooms, together with the Gotthard Residences, recording an occupancy rate of 30%.

• Occupancy Rate of Chedi Andermatt remained stable at 54%.

• The village square “Piazza Gottardo” is open. In the adjoining apartment houses are a Victorinox Shop, a Mammut Store, the restaurant Biselli with a bakery and a chocolateria.

• The third time in a row the Andermatt Swiss Alps Golf Course has been voted the best Golf course in Switzerland by the Worlf Golf Awards and Swiss Golf Award and LTG Golf Award in 2018.

• Over 20 % more golfers came to play in Andermatt.

• The apartment house Alpenrose is in operation.

• The construction of the apartment house Fuchs and the apartment house Eisvogel started. For “Fuchs” we were already able to celebrate the topping out.

• Andermatt Swiss Alps successfully issued bonds for CHF 50 million.

• Due to early snowfall the Gemsstock opened the season early – as one of the earliest in the alps – already on the 2nd of November.


Hotels

Total number of rooms 367 100 267.0%

Occ. for available rooms (%) 54 54 -

TRevPAR (CHF) 677 635 6.6%

GOP PAR (CHF) 59 (16) 468.8%

RealEstate

Net sales (CHFmn) 110 55 100.0%



Revenues(CHFmn)

Hotels 26.9 22.9 17.5%

Real Estate 90.9 34.3 165.0%


AndermattTotal(CHFmn)


The master plan of the project reflects a modern oasis of harmony characterized by a western, Moroccan cultural blend. Home to world class hotels, mix of villas and apartments, 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 a marina, shops, dining outlets, as well as a medina-style handcraft center and a medical facility.

The project has been granted the status of new integrated tourism zone. The project company (Oued Chbika) has the right to acquire and transfer freehold title to the land area of approximately 5 million sqm (Phase 1) and approximately 10 million sqm (Phase 2) subject to certain conditions, except for golf areas which will be subject to long term lease agreements. The project company has the right to transfer its rights under the development agreement subject to certain conditions.

According to the development agreement signed with the Moroccan government and in line with its vision of sustainable development and having scored the Chbika project in the Moroccan 2020 vision for sustainable tourism. We aim at developing a tourist dynamic engine of social and cultural development in the provinces of southern Morocco, incorporating local people.

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 15.0 million sqm.


12.0million m2

TOTAL LANDAREA

15.0million m2

02 Countries



CHBIKAMOROCCO

The Eco-Bos proposals will ultimately 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.

On 21st September 2018; Eco-Bos was granted outline planning consent for its proposals at the West Carclaze Garden Village site in Mid Cornwall. This is one of only 13 schemes nationwide which are recognized by the UK Government in being exemplar developments as a sustainable Garden Village settlement. The approval was given for an integrated mixed-use residential community including; up to 1,500 dwellings, community facilities (including a school and healthcare provision) plus retail and local employment. This paves the way for further progress in 2019 with on-site construction activity commencing in H2 and housing occupation in 2020. The development will be set in an extensive green heritage parkland of over 140 hectares and has already seen a high-quality employment facility open nearby to facilitate jobs in the Garden Village locality.

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 sqm divided over 6 separate sites. The scheme was originally conceived as part of the UK Government’s Eco-Town initiative to promote the growth of sustainable communities and the innovative Eco-Bos proposals plan to regenerate land formerly used for minerals extraction.


6.5million m2

TOTAL LANDAREA

6.5million m2

02 Countries



ECO-BOSUK

HIGHLIGHTS2018

• Engaged a new CEO for the destination. Mr. Maher Maksoud took up his position in November 2018 and heads up the country organization in the United Kingdom.

• The Project is on track to completing all planning and pre-construction activities during 1H 2019, aiming to launch construction in Q4 2019 and sales in Q3 2020.

OUR PEOPLE



03 Our People

Driving accelerated growth with a winning team

As our business experiences substantial growth, being proactive with human resource strategies is part of Orascom Development's plan to be able to adequately support said growth. In 2018, our HR department has worked on adapting new practices and tools to equip our new and existing destinations with the right talents that will lay the foundation for future growth and support their success within the company.

3. OUR PEOPLE

GrowingOurTeam

HR played a critical role in Orascom Development's expansion into the first homes market in Egypt, building on its expertise to hire and onboard more than 50 talents to support the company’s directions.

Focusing on our employer's branding was a key success factor that enabled us to become the employer of choice of some of the great talents in the market.

IntegrationandRotation

Integration of new employees was a key area of focus across the different destinations. We focused on integrating our teams across the different destinations through regular meetings, trainings and company events to celebrate our success. HR collaborated with the IT department to implement the HR management system across the destinations that allow self-service option to employees, thus ensuring quicker and more efficient responses to some of their regular requests. Orascom’s business expansion and growth created opportunities for some of its best employees to rotate jobs across two of its biggest destinations.

LeadershipSustainability

In 2018, HR continued working on embedding our performance culture by introducing more reward and recognition programs.

We believe in growing people from within, which is why in 2018 we introduced a leadership development program tailored to our middle management level to ensure the company’s leadership sustainability. Orascom Development also provides a wide scope of training programs in self and career development for its employees. Additionally, Orascom Development learning academy (Learn to Grow) provides our employees with the opportunity to develop their competencies and skills.

By the end of 2018, and for the first time, our learning and development function collaborated with one of the leading business schools around the world to develop and deliver an executive program tailored to all of our executive management across all our destinations.

2019TalentYear

We believe growing from within is a key success factor to our talent strategy. Talent identification and people development continues to be our top focus in 2019. Now that we have established the destination-based structure, the HR will work closely with the different destinations to build and develop Orascom’s potential talent for succession planning.

An internship program with opportunities provided at our corporate office and in El Gouna, as our biggest destination, is planned to kick-off in Q2 2019.

The coming year will also see the roll-out of more development programs as well as an assessment of the culture parameters, with the aim of enhancing employee engagement across Orascom Development destinations.

WE PARTNER WITH THE BUSINESS TO ACHIEVE OUR GROWTH STRATEGY BY

ENABLING OUR PEOPLE REALIZE THEIR POTENTIAL THROUGH ENCOURAGING A

DYNAMIC ENVIRONMENT AND FACILITATING AN ENABLING PLATFORM FOR GROWTH.

2018inaglimpse


30 YEARS BUILDING TOWNS03 Our People

4.1 GroupStructureandSignificantShareholders

4.2 CapitalStructure

4.3 BoardofDirectors

4.4 ExecutiveManagement

4.5 Employees

4.6Compensation,ShareholdingsandLoans

4.7 Shareholders'Participation

4.8 ChangesofControlandDefenseMeasures

4.9 ExternalAuditors

4.10 InformationPolicy

CORPORATE GOVERNANCE



04 Orascom Corporate Governance

4.1 GROUP STRUCTURE AND SIGNIFICANT SHAREHOLDERS

Groupstructure

The operating business of Orascom Development Holding AG (“Orascom Development” or the “Company”) is organized into the following segments: Hotels, Real Estate and Construction, Land Sales, Destination Management, and Other Operations. The Group operates pursuant to a destination based approach. The overall responsibility for each of the destinations operated by the Group lies with a destination CEO who reports to the Group CEO. The hotels’ strategy for each destination is the responsibility of the

destination CEO. Monitoring the hotels’ operator within each destination is the responsibility of the owner representative and the destination CEO.

The shares of the Company are listed on the SIX Swiss Exchange. In addition, the shares of the Company's subsidiary Orascom Development Egypt S.A.E are listed on the EGX Egyptian Exchange (EGX). See below for more information on the listing.

For a list of the group's unlisted subsidiaries see note 19 of the notes to the consolidated financial statements.

Significantshareholders

The following shareholders have disclosed as currently holding a participation in the Company of 3% or more in voting rights in accordance with Art. 120 of the Financial Market Infrastructure Act:

Cross-Shareholdings

There are no cross-shareholdings between the Company and any other entity that exceed 5% of capital or voting rights on both sides.

The number and percentage of shares and voting rights shown above conform to the situation at the time of the respective disclosure. They do not necessarily show the precise number as of December 31, 2018, as any changes only need to be reported if a relevant disclosure threshold is reached or crossed.

Aside from the above, the Company is not aware of a shareholder holding a

participation of 3% or more voting rights as of December 31, 2018. No notifications regarding disclosure of shareholdings were received by the Company and published on the reporting platform of the SIX Swiss Exchange during the reporting year. Past notifications can be accessed under https://www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html.

Company

ORASCOMDEVELOPMENTHOLDINGAG

(ALTDORF,SWITZERLAND)

The shares of Orascom Development are listed on the SIX Swiss Exchange according to the International Reporting Standard.

Listing on the SIX Swiss Exchange

Exchange SIX Swiss Exchange

Market capitalization CHF 602.1 million as of December 31, 2018

Symbol ODHN

Security number 003828567

ISIN CH0038285679

ORASCOMDEVELOPMENTEGYPTS.A.E.(CAIRO,EGYPT)

EGX Registration

Exchange EGX Egyptian Exchange

Market capitalization EGP 7,802 billion as of December 31, 2018

Symbol ORHD

ISIN EGS70321C012

Orascom Development Egypt S.A.E. is 76.59% owned by Orascom Development as of December 31, 2018.

Shareholder Numberofsharesandvotingrights

Percentageofvotingrights

SAMIHO.SAWIRISANDONSISAWIRIS1 29,359,216 72.7

1 The shares are held through the entities Thursday Holding,

SOS Holding and OS Holding, each with registered office in

George Town, Cayman Island.




58

4.2 CAPITAL STRUCTURE

Capital

As of December 31, 2018, the Company’s issued share capital amounted to CHF 202,049,630.00 and was divided into 40,409,926 registered shares with a nominal value of CHF 5.00 each.

Authorizedandconditionalcapital

Authorizedcapital

The Company does not currently have any authorized capital.

Conditionalcapital

Pursuant to Art. 4b of the Articles of Incorporation (available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Corporate Filings") regarding conditional capital, the Company's share capital may be increased by a maximum amount of CHF 30,000,000.00 through the issuance of up to 6,000,000 fully paid registered shares with a nominal value of CHF 5.00 each, (a) up to the amount of CHF 5,000,000.00 corresponding to 1,000,000 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 25,000,000.00 corresponding toCHF 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 amount of CHF 30,000,000.00 corresponds to around 14.8% of the existing share capital.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.

As of December 31, 2018, no option rights, conversion rights, or warrants had been granted on the basis of Art. 4b of the Articles of Incorporation.

For the full wording regarding the conditional share capital, see Art. 4b of the Articles of Incorporation which are available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Corporate Filings".

Changesincapitalinthepastthreeyears

2016

There were no changes in the ordinary share capital and the authorized share capital during 2016.

The Company's annual general meeting held on May 9, 2016, resolved to increase the conditional share capital pursuant to Art. 4b lit. a of the Articles of Incorporation (available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Corporate Filings") from CHF 14,489,699.20 to CHF 23,200,000.00, corresponding to 1,000,000 shares with a par value of CHF 23.20 each, and to amend Art. 4b lit. a of the Articles of Incorporation accordingly.

2017

There were no changes to the ordinary share capital or the conditional share capital during the reporting year. The Company's authorized share capital expired on May 18, 2017.

2018

The Company's annual general meeting held on May 8, 2018, resolved to reduce the Company's share capital from CHF 937,510,283.20 by CHF 753,460,653.20 to CHF 202,049,630.00, by way of reduction of the nominal value of each of the Company's registered shares from CHF 23.20 to CHF 5.00 and to allocate the aggregate amount of the capital reduction to the Company's capital contribution reserves. Accordingly, the amount of the conditional share capital was also reduced, from CHF 139,200,000.00 to CHF 30,000,000.00, while the number of shares available under the conditional share capital remained unchanged.

Sharesandparticipationcertificates

The 40,409,926 registered shares with a par value of CHF 5.00 each 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 one vote and an equal right to dividend payments. No preferential or similar rights have been granted.

As of December 31, 2018, no participation certificates (Partizipationsscheine) have been issued.

Profitsharingcertificates

The Company has not issued any profit sharing certificates (Genussscheine).

Limitationsontransferabilityandnomineeregistrations

Limitationsontransferabilityforeachsharecategory;indicationofstatutorygroupclausesandrulesforgrantingexceptions

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).

ExemptionsintheyearunderreviewNo exemptions from the limitations on transferability of shares have been granted in the year under review.

Permissibilityofnomineeregistrations;indicationofanypercentclausesandregistrationconditions

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% 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% of the issued share capital.

Procedureandconditionsforcancellingstatutoryprivilegesandlimitationsontransferability

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 (see Section 4.7 below).

Convertiblebondsandwarrants/options

The Company has not issued any convertible bonds, warrants or options.




60

4.3 BOARD OF DIRECTORS

Samih O. Sawiris CHAIRMAN

Franz Egle NON-EXECUTIVE MEMBER

After receiving his Diploma in economic engineering from the Technical University of Berlin in 1980, Mr. Sawiris founded his first company, National Marine Boat Factory. In 1996, he established Orascom Projects for Touristic Development and in 1997 Orascom Hotel Holdings, the two companies later merged to form Orascom Hotels and Development S.A.E. (OHD) which is now listed on the Egyptian Stock Exchange under the name of Orascom Development Egypt

(ODE). Furthermore, Mr. Sawiris established El Gouna Beverages Co. in 1997, which he sold in 2001 when it was the largest beverage company in Egypt. As of April 1, 2014, Mr. Sawiris took over the position of the CEO on ad-interim basis of Orascom Development until December 31, 2015. He also serves as Chairman of the Board of Directors.

Adil Douiri NON-EXECUTIVE MEMBER

Mr. Douiri is the founding shareholder and CEO of Mutandis, a publicly listed Moroccan consumer goods manufacturing group established in 2008. Mr. Douiri served in His Majesty King Mohamed VI’s Government as Minister of Tourism (2002-2004) and later as Minister for Tourism, Crafts and Social Economy (2004-2007).

In 1992 Mr. Douiri founded Casablanca Finance Group (later renamed CFG

Group), the country’s first investment bank. Today CFG Group has become CFG Bank, a full-fledged Moroccan technology driven bank, of which Mr Douiri currently serves as non-executive chairman of the board. He is also a board member of Residences Dar Saada, a publicly listed Moroccan real estate developer. Mr. Douiri graduated as an engineer from the Ecole Nationale des Ponts and Chaussees (ENPC) in Paris.

Mr. Egle’s background is in strategic development, public affairs, corporate communications, media and PR. He currently serves as a consultant for the World Economic Forum, PostFinance, Telecom Liechtenstein and Schweizer Casino Verband. After holding senior positions in the private sector, he was Head of Communications at the Swiss Federal Department of Foreign Affairs and an advisor to the Minister of Foreign Affairs from 1993 to 1998.

Between 1999 and 2006 Mr. Egle was a partner of Hirzel.Neef.Schmid.Konsulenten, a communication and financial consultancy, and is a co-founder and a member of the Board of Directors of Dynamics Group, a Swiss company providing strategic consulting, communication management and research analysis. Mr. Egle holds a Doctorate in Sociology from the University of Zurich.

Jürgen FischerNON-EXECUTIVE MEMBER

Mr. Fischer is founder and Managing Director of “The Pearl, Management Consultants DMCC” and provides senior management and leadership support for the Hospitality, Travel, Leisure and Real Estate Industry. He currently sits, as non-executive director, on the board of Azizi Developments, Dubai.

Previously, Mr. Fischer served several years as non-executive Chairman of Mövenpick Hotels & Resorts, until the company was acquired by Accor Hotels. Before creating his advisory company, Fischer worked for several subsidiaries of Dubai Holding, including the roles of CEO of Dubai Properties LLC and Senior Vice President of Tatweer Dubai, LLC. Over a period of close

to 15 years Mr. Fischer held several senior positions with Hilton International Hotels, including President Commercial Operations, President for Continental Europe, Middle East and Africa, and President Scandic Hotels AB. For the Walt Disney Company he had senior management roles in Florida and Paris.

Mr. Fischer held other senior hotel management positions in Europe, the Middle East and USA after starting his professional life as a chef. He later graduated from the Ecole Hôtelière Lausanne, Switzerland and obtained an MBA with Honors from IMD/IMEDE.




62

Carolina Müller-Möhl NON-EXECUTIVE MEMBER

Naguib S. Sawiris NON-EXECUTIVE MEMBER

Ms. Müller-Möhl is a Swiss founder, investor and philanthropist. Since 2000, Carolina Müller-Möhl has managed and presided over the Müller-Möhl Group, a single-family office that actively manages the family's investments. She currently serves on the Board of Directors of Gebrüder Müller Immobilien AG (since 2000), Neue Zürcher Zeitung (since 2010), a major media group in Switzerland, and in 2015 also became a board member of Fielmann AG, Europe's largest optician.

Furthermore, she sits on various foundation and advisory boards that support the above

causes such as Department of Economics, University of Zurich, University of St. Gallen, MBA for Women Foundation, EDGE, Avenir Suisse, Swiss Economic Forum, Art Stations Foundation and Bertelsmann Stiftung, Germany. Ms. Müller-Möhl studied politics, history and law and graduated as M.A. Political Science from Freie Universität Berlin. In recognition of her success and her philanthropic commitment, the World Economic Forum nominated her as a Young Global Leader in 2007.

Marco SieberNON-EXECUTIVE MEMBER

Mr. Sieber, born in Lucerne, Switzerland, studied economics at the Business School in Lausanne. After graduating with a business degree, in 1989 he took over the family owned company SIGA Holding Ltd. together with his brother, transforming it into a company which operates internationally. SIGA develops and produces products for the construction sector, namely in the field of energy-saving sealings.

Mr. Sawiris is the Founder and CEO of Yup (2014-present), a San Francisco based education technology company. Yup provides on-demand personalized learning through mobile chat with over 500,000 student sign-ups. Yup has raised USD 7.5 million from leading tech and education investors including Index Ventures, Floodgate Fund, and Stanford University's StartX Fund. Mr. Sawiris attended Stanford University where he designed his own major, Economic and Enterprise Engineering.

He is an active angel investor, having invested in over 20 companies including DoctorOnDemand, Transcriptic, and Womply. His investments have raised more than USD 200 million in subsequent rounds.

Jürg WeberNON-EXECUTIVE MEMBER

Mr. Weber holds an MBA with a Major in Finance and Strategic Planning from the Wharton School, University of Pennsylvania. Mr. Weber previously studied Civil Engineering at the School of Engineering in Switzerland and Microeconomics and English at the University of California, Santa Barbara.

Before his recent position as Division CEO of SIX Payment Services and Chairman of the Board of TWINT, the Swiss mobile payment solution, Mr. Weber was CEO and partial owner of Boyner Financial Services in Istanbul and an entrepreneur in card issuing, purchase finance and payment services.

Previously he was a consultant at McKinsey & Company where he served Swiss banking clients and later co-lead the founding of the Istanbul Office, leading to his nomination for Partner. Before that Mr. Weber served as project assistant to the Vice Chairman of UBS Phillips & Drew in London and as project manager for the CEO of UBS North America in New York, where he was elected into the "UBS Leadership Program" with a sponsorship for his MBA.




64

The current members of the Board of Directors are all non-executive. Mr. Sawiris served as Chief Executive Officer of the Company on an ad interim basis from April 1, 2014 to December 31, 2015. With the exception of the Chairman, none of the current 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 the Company or any of its subsidiaries.

Members of the Board of Directors Externalmandates

For restrictions regarding the number of external mandates see Art. 20 of the Articles of Incorporation which are available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Corporate Filings".

Electionsandtermsofoffice

The members of the Board of Directors and its Chairman are elected by the general meeting of shareholders individually for a term of one year until the completion of the next ordinary general meeting. The Board is composed of a minimum of three and a maximum of fifteen members. The members may be re-elected.

Internalorganizationalstructure

BoardofDirectors

The Board of Directors governs the Company and is ultimately responsible for the Company’s business strategy and management. It has the authority to decide on all corporate matters not reserved by law or the Articles of Incorporation to the general meeting of shareholders or to another body.

Subject to its inalienable duties pursuant to the law and to a number of additional matters, the Board 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.

Subject to the power of the general meeting, the Board of Directors constitutes itself autonomously and appoints its Secretary, who does not have to be a member of the Board of Directors. The Chairman of the Board of Directors calls the meetings. It is quorate 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 duties and competences of both committees are outlined below.

AuditCommittee

The Audit Committee currently consists of three non-executive members of the Board of Directors. The members and the chairman of the Audit Committee are elected by the Board of Directors. The chairman of the Committee appoints a secretary, who does not have to be a member of the committee. The three current members of the Audit Committee have broad experience in finance and accounting on the basis of their professional backgrounds.

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 decision-making power.

Nomination&CompensationCommittee

The Nomination & Compensation Committee currently consists of three non-executive members of the Board of Directors. The members are elected by the general meeting of shareholders individually for a term of one year until the completion of the next ordinary general meeting. The chairman of the Nomination & Compensation Committee is appointed by the Board of Directors. The chairman of the Committee appoints a secretary, who does not have to be a member of the committee.

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 of Directors and of Executive Management.

The Nomination & Compensation Committee issues recommendations to the Board of Directors regarding matters of the compensation of members of the Board of Directors and members of Executive Management and regarding other matters of compensation. It also issues recommendations regarding the nomination of members of the Board of Directors and of Executive Management, and other topics submitted to it by the Board for the committee’s consideration. The Nomination & Compensation Committee has no decision-making power.

The Articles of Incorporation containing the principal duties of the Nomination & Compensation Committee (art. 16) are available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Corporate Filings".

Name Function Nationality Birth Electedfirst Electeduntil

AuditCommittee

NominationandCompensation

Committee

Samih O. Sawiris Chairman Egyptian 1957 2008 2019

Adil Douiri Member Moroccan 1963 2008 2019 Member

Franz Egle Member Swiss 1957 2008 2019 Member

Jürgen Fischer Member Swiss 1955 2014 2019

Carolina Müller-Möhl Member Swiss 1968 2008 2019

Naguib S. Sawiris Member Egyptian 1991 2016 2019 Member Member

Marco Sieber Member Swiss 1959 2013 2019 Chair

Jürg Weber Lead Director Swiss 1961 2014 2019 Chair




66

WorkmethodsoftheBoardofDirectorsanditscommittees

Invitations to attend meetings of the Board of Directors or the committees are extended by the respective chairman or secretary. Any member of the Board of Directors or a committee may request the chairman of the Board of Directors or the committee, respectively, 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.

The Board of Directors meets as often as business requires, but as a general rule at least six times per year. In average, meetings therefore take place approximately every two months. Pursuant to their respective Charters, the committees of the Board of Directors shall in principle 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. Following meetings of the committees, the committee chairman informs the Board of Directors at its next meeting about the matters discussed in the committee meeting.

In the 2018 financial year, the Board of Directors convened for eight meetings, and passed two circular resolutions. Of the eight

meetings, three were held as physical meetings and five meetings were held by telephone conference. The Audit Committee convened for six meetings and the Nomination & Compensation Committee convened for three meetings.

Meetings of the Board of Directors and its committees may, upon invitation by the chairman, be attended by members of Executive Management. Members of Executive Management do not have the right to attend meetings at which decisions are taken regarding their compensation, or otherwise to participate in the decision-making process. As a rule, the Company's CEO and CFO attend meetings (or parts thereof) of the Board of Directors, which was the case in seven (for the CEO) and six (for the CFO) of the eight meetings held in the reporting year. In addition, other members of the Executive Management were present at three meetings. Further, the Company's CFO attended all six meetings of the Audit Committee in the reporting year. No advisors attended any meetings of the Board of Directors or the committees, other than representatives of the Company's auditors who attended all of the six meetings of the Audit Committee in 2018. The Company's auditors are also in regular contact with the chairman of the Audit Committee and have the right to have items added to the agenda.

Definitionofareasofresponsibility

The Board of Directors has entrusted the preparation and the execution of its decisions and the supervision of certain tasks 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.

In addition to the inalienable duties of the Board of Directors pursuant to statutory law (Art. 716a para. 1 of the Swiss Code of Obligations) and the duties of the Board of Directors’ permanent committees (as described above), certain important matters have been excluded from such delegation to the CEO and thus remain reserved to the Board of Directors, including the following:

• Issuance of securities or other capital market transactions in excess of a certain threshold;

• Granting of material loans;

• Approval of material investments, acquisitions, divestments and disposals;

• Provision of material guarantees, suretyships, liens, pledges and other securities;

• Approval of material inter-company agreements;

• Decisions with respect to conflicts of interests and related party transactions.

Informationandcontrolinstrumentsvis-a-visseniormanagement

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 are regularly invited to attend meetings of the Board, or to participate when individual agenda items are discussed, as described above. Individual members of the Board of Directors also support the Executive Management from time to time in various projects. Furthermore, members of the Board of Directors cultivate an informal exchange of ideas with the Company's management.

The Company’s management has been managing to enhance the internal governance by increasing the capacity of the internal audit functions. During the year under review, PwC Muscat has been appointed to provide the services of internal audit in Oman. In general, the internal audit function performs ad-hoc assignments in addition to the pre-planned assignments. For each assignment, a report of major findings is presented to and discussed with the management on the entity level, and corrective actions are agreed.

Executive Management meetings, chaired by the CEO, are held at least on a monthly basis in which performance of operating projects is reviewed alongside the budget and previous financial year. Key performance indicators are reviewed and updates on new projects, whether off-plan or under construction, are shared and future steps agreed upon.




68

Definitionofareasofresponsibility

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 of Directors.

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.

An Egyptian national, born 1971, Mr. Khaled Bichara currently holds the positions of Chief Executive Officer of Orascom Development Holding and its largest Egyptian subsidiary Orascom Development Egypt. He is also a Co-Founder of Accelero Capital. Mr. Bichara previously served as Group President and Chief Operating Officer of VimpelCom Ltd. He was also Chief Executive Officer of Orascom Telecom Holding S.A.E. (“OTH”) as well as Chief Operating Officer of Wind Telecomunicazioni S.pA. He played a pivotal role in the merger of VimpelCom with Wind Telecom S.p.A, for a total consideration of $25.7Bn to create the world’s sixth largest telecommunications carrier. Mr. Bichara managed ten operations across the globe through OTH and Wind Italy and 22 operations across the globe through VimpelCom. In 2009, Mr. Bichara was appointed Chief Executive Officer of OTH and Wind Telecom, bringing with him a wealth of experience in both telecommunication and information technology coupled with strong management and entrepreneurial expertise.

In 2011, Mr. Bichara also served as Group Executive Chairman of OTH as well as Chairman of Wind Italy. Mr. Bichara currently serves as a board member of various telecom and IT companies, including SUPERNAP International S.A., the developer of the world-renowned SUPERNAP data centers. He is also a board member of Orascom Construction Limited, a company dually listed on NASDAQ Dubai and the Egyptian Stock Exchange, as well as a board member of Orascom Development Egypt S.A.E., a company listed on the Egyptian Stock Exchange. Mr. Bichara is also a member of the Advisory Board for the Computer Science and Engineering Department of the American University in Cairo. He was previously a member of the GSMA board. Mr. Bichara holds a Bachelor of Science degree from the American University in Cairo.

MembersofExecutiveManagement

An Egyptian national, born 1965, Mr. Nessim has more than 20 years of experience in various fields including finance, infrastructure and hospitality. He currently holds the position of the Group’s Chief Financial Officer of Orascom Development Holding. He is also the Chief Financial Officer of Orascom Development Egypt, the Egyptian largest subsidiary of the group. Prior to joining the group, he was the Chief Financial Officer representing Beltone Private Equity in their Pick Albatros Investment.

From 2007 to 2010 he was the Group Chief Financial Officer of Mobiserve, a key player in the mobile telecom network infrastructure in 9 countries within the Middle East and South Asia. Prior to shifting his career to finance he established the operation of Raya Distribution in Algeria and managed merchandising activities in all 34 shops of Nokia and Samsung in Egypt. Mr. Nessim holds a Bachelor degree in Mechanical Engineering and he is also one of the earlier people in Egypt to hold the CFA designation in 2004.

ASHRAFNESSIM

Chief Financial 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 until 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 three 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 of Science from the University of California at Berkeley. He is also a commission member of the International Federation of the Automobile (FIA).

ABDELHAMIDABOUYOUSSEF

Chief Development Officer Hotels

KHALEDBICHARA

Chief Executive Officer

4.4 EXECUTIVE MANAGEMENT

Mrs. Faltas serves as Chief Human Resources & Organization Development Officer. She has more than 20 years of multi-disciplinary experience in Human Capital, Organizational Development, IT and Process Re-engineering. Prior to joining Orascom Development Holding, Mrs. Faltas was the VP for Operations & Human Capital in A15, where she led all centralized supporting operations including Human Resources, Administration and Management Information Systems, serving more than 10 subsidiaries, 16 regional offices and with more than 1,000 employees.

Mrs. Faltas has managed multiple strategic initiatives and change management projects including mergers, regional expansion, restructuring and many other organizational development initiatives. She started her career in 1995 as Software Engineer. In 1997, Mrs. Faltas joined LINKdotNET as Project Manager, working on many process and quality improvement assignments. As the company was expanding, she grew interest in organization development, where she was appointed HR & Operations Sr. Manager. She started her career in 1995 as Software Engineer. Mrs. Faltas is PROSCI certified change management practitioner and a Certified Trainer/Facilitator. She is also a corporate co-active coach, accredited by the International Coaching Federation. Additionally, she holds a certification in HR competency analysis profiling from HRCG Canada. She obtained her Bachelor of Science, Computer Science from the American University in Cairo in 1995.

NERMINEFALTAS

Chief Human Resources & Organization Development Officer

Tarek Gadallah serves as General Counsel of the Orascom Development Group. He has extensive experience in mergers and acquisitions, private equity, restructuring, and debt and equity capital markets transactions. His experience also includes project financing and PPP projects covering all stages of the process from inception to commercial operations. Prior to joining the group, Tarek spent eight years in private practice as senior partner with a top tier law firm in Egypt where he advised local and international clients on high value, complex and cross-border transactions across a wide range of industries including financial services, real estate, tourism, energy, and pharmaceuticals.

He also advised public companies on regulatory, compliance, and corporate governance issues. In conjunction with his corporate practice, Tarek has handled a number of high value and complex international commercial arbitration and represented financial institutions and investors in several securities and capital markets litigation. Prior to his private practice, he worked as Group General Counsel of a regional investment bank where he handled a variety of debt and equity transactions in Egypt and the GCC region. Tarek received his Master of Law from Cairo University and Executive Education in accounting and finance from Wharton Business School and Cambridge Judge Business School.

TAREKGADALLAH

General Counsel




70

4.6 COMPENSATION, SHAREHOLDINGS, AND LOANS

4.5 EMPLOYEES

As of December 31, 2018, the Company had 8,740 employees worldwide, of which 6,638 in Egypt.

Externalmandates

For restrictions regarding the number of external mandates see Art. 20 of the Articles of Incorporation which are available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Corporate Filings".

For detailed information on compensation paid to members of the Board of Directors and to members of Executive Management for the financial year 2018, and on shares and options held by and loans granted to these persons as of December 31, 2018, please refer to the Compensation Report 2018 and to Note 12.1 (Board and Executive Compensation Disclosures as Required by Swiss Law) of the consolidated financial statements (both of which are available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Financial Info").

PrinciplesoncompensationintheArticlesofIncorporation

See Art. 21 of the Articles of Incorporation which are available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Corporate Filings".

Loans,creditandpensioncontributions


Shareholderapprovalofcompensation


4.7 SHAREHOLDERS' PARTICIPATION

Votingrightsandrepresentationrestrictions

With the exception of restrictions on the registration of shares (see Section 4.2. 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. Shareholders may also have their shares represented by an independent proxy and also have the possibility to authorize and instruct such independent proxy electronically.

Statutoryquora

According to Art. 10 of the Articles of Incorporation (available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Corporate Filings"), the holders of at least 25% 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% 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% 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 is 99 years from its formation); (c) changing the Company’s purpose; and (d) any merger with another company.

Convocationofthegeneralmeetingofshareholders

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, creditors or by the general meeting of shareholders itself.

One or more shareholders representing at least 10% 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 Official Gazette of Commerce (Schweizerisches Handelsamtsblatt) or by registered letter to the shareholders of record. There must be a time period of not less than 20 calendar 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.

Recorddateforentryintotheshareregister

Only shareholders who are registered in the share register as shareholders with voting rights at the record date are entitled to attend an ordinary general meeting and to exercise their voting rights. The Board of Directors ensures that the record date is set as close as possible to the date of the ordinary general meeting. The record date is published together with the invitation to the ordinary general meeting in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt).




72

4.8 CHANGES OF CONTROL AND DEFENSE MEASURES

4.9 EXTERNAL AUDITORS

Dutytomakeanoffer

The Company's Articles of Incorporation do not provide for any “opting out” or “opting up” arrangements within the meaning of Art. 125 and Art. 135 of the Financial Market Infrastructure Act.

Clausesofchangeofcontrol

No change of control clauses benefiting members of the Board of Directors, Executive Management or other members of the Company’s management have been agreed upon, other than the acceleration provision regarding the contingent compensation of the

Company's CEO (see the Compensation Report, available on the Company's website https://www.orascomdh.com, following the links to "Investor Relations" and "Financial Info").

Durationofthemandateandtermofofficeoftheleadauditor

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 ODE is audited by Deloitte Saleh, Barsoum & Abdel Aziz, Cairo. The auditor in charge for the Company at Deloitte AG currently is Roland Muller since the 2013 financial year. 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 7, 2019 to re-elect Deloitte AG, Zurich as the statutory auditor for the 2019 financial year.

Auditingfees

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:

Informationalinstrumentspertainingtotheexternalaudit

The 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, effectiveness and independence 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 2018 representatives of the statutory auditor attended all of the six meetings of the Audit Committee.

In CHF 2018 2017

Audit Services 1,398,386 1,405,673

Audit Related Services 26,460 50,650

Tax Advisory - -

TotalFees 1,424,846 1,456,323

The CEO, the CFO, and the Investor Relations Department are primarily responsible for the communication with investors and media. The Company updates the financial community through press releases, personal contacts, discussions, and presentations held through various road shows as well as earnings results and other investor conferences.

Orascom Development is committed to an open information policy and provides shareholders, the capital market, employees and all other stakeholders with open, transparent and timely information. The information policy accords with the requirements of the SIX Swiss 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 of the SIX Swiss Exchange (ad hoc publicity). Any such releases can be accessed on the Company's website https://www.orascomdh.com (following the links to "Investor Relations" and "Press Releases"). In addition, interested parties can subscribe to receive any releases by e-mail on the Company's website (following the links to "Investor Relations" and "Contact IR").

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.

The statutory publication organ of the Company is the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt).

CorporateCalendar

Annual general meeting of shareholders: May 7, 2019

First quarter 2019 results: May 7, 2019

First half 2019 results: August 9, 2019

Third quarter 2019 results: November 13, 2019

Furtherinformationandcontact

Investors and other interested stakeholders can find further information on Orascom Development online at https://www.orascomdh.com. Stakeholders may subscribe to the Company’s e-mail alert service to receive news releases at "https://orascomdh.com/investor-relations/contact-ir." Investors may also contact the Investor Relations Department as follows:

Sara El GawahergyHead of Investor Relations and Strategic Project Management

T.: +2 022 461 8961T.: +41 41 874 17 11Mobile: +2 010 0218 5651Mobile: +41 79 156 78 [email protected]

Registeredoffice

The Company's registered office is at Gotthardstrasse 12, 6460 Altdorf, Switzerland.

4.10 INFORMATION POLICY




74

5.1 ODHShareInformation

5.2 ODEShareInformation


05 Investor Information

5. INVESTOR INFORMATION

Orascom Development Holding AG has a primary listing on the main board of the SIX Swiss Exchange. While ODH’s largest subsidiary in Egypt Orascom Development Egypt (ODE) has a primary listing on the main board of the Egyptian Stock Exchange (EGX).

5.1 ODH SHARE INFORMATION

Date 31/12/2018 31/12/2017

SWITZERLAND

Shares held with SIS and registered in the share register 20,559,120 17,659,757

Dispo shares 19,850,806 22,750,169

TotalShares 40,409,926 40,409,926

Marketcapitalization(inCHFMillion)1 602.1 444.5

Share information

Shares listing Zurich, Switzerland

Number of shares 40,409,926

ISIN code CH0038285679

Currency Swiss Franc

Index SPI

Ticker code (Bloomberg) ODHN:SW

Ticker code (Reuters) ODHN.S

Per share data 2

Date 31/12/2018 31/12/2017

Share price at year-end (in CHF) 14.90 11.00

Highest share price during the year (in CHF) 18.00 12.00

Lowest share price during the year (in CHF) 11.15 4.62

Number of traded shares (in millions) 9.93 6.29

Value of traded shares (in CHF million) 146.69 53.75

Average number of traded shares per day 41,511 25,058

Average traded value per day (in CHF) 589,133 214,134

2 Source: Bloomberg1 Market capitalization is based on FY 2018 and FY 2017 closing prices.




A)Shares

Shareholdingstructure

B)Shares

ODH Stock vs. SPI Index

Shareholders by type Significant shareholdersShareholders by country

Categories Numberofshareholders

Numberofregisteredshares

Natural persons 3,454 14,133,536

Legal persons 69 3,094,948

Banks 18 2,152,957

Investment funds 25 840,952

Public corporations 6 242,401

Pension funds 9 41,643

Foundations 5 41,401

Insurance companies 1 11,282

Total 3,587 20,559,120

Nameofmajorshareholders

2018 2017

Number of shares issued

Percentage of ownership (%)

Number of shares issued

Percentage of ownership (%)

Samih O. Sawiris 3 27,413,467 67.83 27,406,233 67.82

OS Holding 2,049,782 5.07 2,049,782 5.07

Others 10,946,677 27.09 10,953,911 27.11

Total 40,409,926 100.00 40,409,926 100.00

Country Numberofshareholders

Numberofregisteredshares

Egypt 5 35,804

Switzerland 3,464 14,650,403

Austria 16 27,535

Belgium 2 460,376

Canada 1 4,241

Cayman Islands 2 2,086,306

Czech Republic 1 90

Denmark 1 2

France 3 96,798

Germany 44 86,615

Hungary 1 120

Italy 14 11,100

Ireland 1 4,777

Liechtenstein 4 498,300

Luxembourg 2 39,029

Macedonia 1 190

Moldova 1 100

Netherlands 4 620

Portugal 1 35

Romania 1 500

Slovakia 1 50

Slovenia 1 210

Spain 5 1,573

Turkey 2 2,121

United States 3 362,372

Others 3 91,074

United Kingdom 3 2,098,779

Total 3,587 20,559,120

3 The shares of Samih O. Sawiris are held directly and through his entities Thursday Holding and SOS Holding.

60%

50 %

40 %

30 %

20 %

10 %

0 %

-10 %

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

ODH SPI

Orascom Development Holding share price is the 3rd best performer of the SPI during 2018 with 35.5% return during 2018.




ODE stock vs. EGX 30

5.2 ODE SHARE INFORMATION

Share information

Per share data 2

Egypt 31/12/2018 31/12/2017

TotalShares1 1,108,307,375 1,108,307,375

Marketcapitalization(inEGPMillion) 7,802 5,268

Shares listing Cairo, Egypt

Number of shares 1,108,307,375

ISIN code CH0038285679

Currency Egyptian Pound (EGP)

Index EGX 30

Ticker code (Bloomberg) ORHD:SW

Ticker code (Reuters) ORHD.S

60%

50 %

40 %

30 %

20 %

10 %

0 %

-10 %

-20 %

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

ODE EGX

ODE stock is the best stock performance in the real estate and tourism sector in 2018 with 48.2% return.

1 On May 7, 2018; we did a 5:1 stock split. 2 Source: Bloomberg

31/12/2018 31/12/2017

Share price at year-end (in EGP) 7.04 4.75

Highest share price during the year (in EGP) 7.90 4.90

Lowest share price during the year (in EGP) 3.69 1.16

Number of traded shares (in millions) 478.3 442.0

Value of traded shares (in EGP millions) 2,885.6 1,045.9

Average number of traded shares per day 1,968,235 1,811,376

Average traded value per day (in EGP) 11,874,847 4,286,624

Date Event

May 7th, 2019 Q1 2019 Results

May 7th, 2019 11th Annual General Assembly Meeting

August 9th, 2019 1H 2019 Results

November 13th, 2019 9M 2019 Results

Corporate Calendar InvestorContacts

Sara El GawahergyHead of Investor Relations and Strategic Projects Management T: +20 224 61 89 61M: +4179 156 [email protected]

For publications and further information visithttp://www.orascomdh.com/investor-relations




ORASCOM DEVELOPMENTFINANCIAL STATEMENTS



06 Orascom Financial Statement

CONTENTS

Orascom Development Holding AG (consolidated financial statements)

Consolidated statement of comprehensive income F-3

Consolidated statement of financial position F-4

Consolidated statement of changes in equity F-6

Consolidated statement of cash flows F-7

Notes to the consolidated financial statements F-10

Orascom Development Holding AG

Income statement F-85

Statutory balance sheet F-86

Notes to the financial statements F-87

CONSOLIDATED FINANCIAL STATEMENTS

TOGETHER WITH AUDITOR'S REPORT FOR

THE YEAR ENDED 31 DECEMBER 2018

06ORASCOM DEVELOPMENT HOLDING AG

Orascom Financial Statement 30 YEARS BUILDING TOWNS

F- 22018 Annual Report1F-

F-‐4

Orascom Development Holding AG Consolidated statement of financial position at 31 December 2018

CHF Notes 31 December 2018 31 December 2017

ASSETS

NON-‐CURRENT ASSETS

Property, plant and equipment 15 761,820,363 757,839,799

Investment property 16 7,328,798 7,500,868

Goodwill 17 2,810,549 2,829,971

Investments in associates 19 43,629,068 60,822,300

Non-‐current receivables 20 31,913,935 38,078,230

Deferred tax assets 13.4 4,890,587 1,007,864

Other financial assets 21 791,495 677,388

TOTAL NON-‐CURRENT ASSETS 853,184,795 868,756,420

CURRENT ASSETS

Inventories 22 118,523,819 127,583,163

Trade and other receivables 23 106,735,600 68,881,179

Current receivables due from related parties 39.1 33,106,635 23,715,470

Other current assets 24 80,577,267 45,093,158

Cash and bank balances 25 138,267,680 99,454,931

477,211,001 364,727,901

Assets held for sale 26 5,479,665 106,977,030

TOTAL CURRENT ASSETS 482,690,666 471,704,931

TOTAL ASSETS 1,335,875,461 1,340,461,351

F-‐3

Orascom Development Holding AG Consolidated statement of comprehensive income for the year ended 31 December 2018

CHF Notes 2018 2017

CONTINUING OPERATIONS Revenue 6/7 340,336,221 244,445,245

Cost of sales 7.2 (259,033,628) (207,540,762)

GROSS PROFIT 81,302,593 36,904,483

Investment income 9 8,299,295 6,912,718

Other gains 10 25,919,202 11,260,572

Administrative expenses (49,859,517) (37,406,435)

Finance costs 11 (40,409,850) (35,870,455)

Share of losses of associates 19 (17,237,395) (16,910,741)

Other losses 12 (20,104,946) (313,038)

(LOSS) BEFORE TAX (12,090,618) (35,422,896)

Income tax expense 13 (25,264,280) (5,632,519)

(LOSS) FOR THE YEAR (37,354,898) (41,055,415) OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX

Items that will not be reclassified subsequently to profit or loss

Gain on revaluation of property, plant and equipment reclassified to investment property

28.4 -‐ 15,554,571

Net (loss) on revaluation of financial assets at FVTOCI (945) 1,203,236

Remeasurement of defined benefit obligation 36 90,281 249,430

89,336 17,007,237

Items that may be reclassified subsequently to profit or loss

Exchange differences arising on translation of foreign operations

3,363,539 (7,862,574)

3,363,539 (7,862,574)

TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

3,452,875 9,144,663

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (33,902,023) (31,910,752)

(Loss)/profit attributable to:

Owners of the Parent Company (41,461,611) (41,361,129)

Non-‐controlling interests 4,106,713 305,714

(37,354,898) (41,055,415)

Total comprehensive income attributable to:

Owners of the Parent Company (37,584,175) (34,781,514)

Non-‐controlling interests 3,682,152 2,870,762

(33,902,023) (31,910,752)

Earnings per share from continuing operations

Basic 14 (1.05) (1.04)

Diluted 14 (1.05) (1.04)

Khaled Bichara Ashraf Nessim Group CEO Group CFO



F-‐6

Orascom

Develop

ment H

olding

AG

Consolidated statement o

f chang

es in equity for the year end

ed 31 Decem

ber 2018

CHF

Issued

Capital

Share

prem

ium

Treasury

shares

Share-‐based

paym

ent

reserve

PP&E

revaluation

reserve

Investments

revaluation

reserve

General

reserve

Foreign

currency

translation

reserve

Reserve

from

common

control

transactions

Equity swap

settlement

(Accum

ulated

losses)

Attribu

table

to owners of

the Parent

Company

Non

-‐controlling

interests

Total

Balance at 1 January 2017

937,510,283

98,488

,244

(26,797)

833,333

-‐ (17,256,259)

4,916,86

8 (351,669

,206)

(98,69

2,949)

(2,114,229)

(120,782,194)

451,207,094

140,467,237

591,674,331

Rest

atem

ent o

f prio

r yea

r error

(not

e 15

) -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ (7

,281

,295

) (7

,281

,295

) -‐

(7,2

81,2

95)

Restated balance at 1 January 2017

937,510,283

98,488

,244

(26,797)

833,333

-‐ (17,256,259)

4,916,86

8 (351,669

,206)

(98,69

2,949)

(2,114,229)

(128,063,489

) 443,925,799

140,467,237

584,393,036

Loss

for t

he yea

r -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ (4

1,36

1,12

9)

(41,

361,

129)

30

5,71

4 (4

1,05

5,41

5)

Oth

er com

preh

ensive

inco

me

for t

he yea

r, n

et o

f inc

ome

tax

-‐ -‐

-‐ -‐

9,97

8,47

0 1,

203,

236

-‐ (4

,851

,521

) -‐

-‐ 24

9,43

0 6,

579,

615

2,56

5,04

8 9,

144,

663

Total com

prehensive income for the year

-‐ -‐

-‐ -‐

9,978,470

1,203,236

-‐ (4,851,521)

-‐ -‐

(41,111,69

9)

(34,781,514)

2,870,762

(31,910,752)

Acq

uisitio

n of

ord

inar

y sh

ares

thro

ugh

delis

ting

of E

DRs

-‐

-‐ (5

,421

,560

) -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ (5

,421

,560

) -‐

(5,4

21,5

60)

Distrib

utio

n of

ord

inar

y sh

ares

-‐

-‐ 87

7,60

3 -‐

-‐ -‐

-‐ -‐

-‐ -‐

48,1

24

925,

727

-‐ 92

5,72

7

Shar

e-‐ba

sed

paym

ents

(not

e 38

) -‐

-‐ -‐

833,

332

-‐ -‐

-‐ -‐

-‐ -‐

-‐ 83

3,33

2 -‐

833,

332

Loss

es fr

om sal

e of

fina

ncia

l ass

ets at

FVTO

CI

-‐ -‐

-‐ -‐

-‐ 15

,880

,794

-‐

-‐ -‐

-‐ (1

5,88

0,79

4)

-‐ -‐

-‐

Acq

uisitio

n of

non

-‐con

trol

ling

inte

rest

s of

sub

sidi

ary th

roug

h sw

ap o

f sha

res of

inve

stm

ents

in ass

ocia

tes

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

(291

,390

) -‐

-‐ (2

91,3

90)

274,

409

(16,

981)

Non

-‐con

trol

ling

inte

rest

s’ sha

re in

equ

ity o

f con

solid

ated

su

bsid

iarie

s -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ 5,

523,

474

5,52

3,47

4

Balance at 31 Decem

ber 2017

937,510,283

98,488

,244

(4,570,754)

1,66

6,66

5 9,978,470

(172,229)

4,916,86

8 (356,520,727)

(98,98

4,339)

(2,114,229)

(185,007,858)

405,190,394

149,135,88

2 554,326,276

Balance at 1 January 2018

937,510,283

98,488

,244

(4,570,754)

1,66

6,66

5 9,978,470

(172,229)

4,916,86

8 (356,520,727)

(98,98

4,339)

(2,114,229)

(185,007,858)

405,190,394

149,135,88

2 554,326,276

Impa

ct o

f cha

nges

in acc

ount

ing

polic

ies

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

4,55

5,04

7 4,

555,

047

1,16

2,09

6 5,

717,14

3

Restated balance at 1 January 2018

937,510,283

98,488

,244

(4,570,754)

1,66

6,66

5 9,978,470

(172,229)

4,916,86

8 (356,520,727)

(98,98

4,339)

(2,114,229)

(180,452,811)

409,745,441

150,297,978

560,043,419

Loss

for t

he yea

r -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ (4

1,46

1,61

1)

(41,

461,

611)

4,

106,

713

(37,35

4,89

8)

Oth

er com

preh

ensive

inco

me

for t

he yea

r, n

et o

f inc

ome

tax

-‐ -‐

-‐ -‐

-‐ (9

45)

-‐ 3,

788,

100

-‐ -‐

90,2

81

3,87

7,43

6 (4

24,5

61)

3,45

2,87

5

Total com

prehensive income for the year

-‐ -‐

-‐ -‐

-‐ (945)

-‐ 3,788,100

-‐ -‐

(41,371,330)

(37,584,175)

3,68

2,152

(33,902,023)

Shar

e ca

pita

l red

uctio

n (7

35,4

60,6

53)

735,

460,

653

-‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

Acq

uisitio

n of

trea

sury

sha

res

-‐ -‐

(5,9

33,750

) -‐

-‐ -‐

-‐ -‐

-‐ 2,

114,

229

(913

,370

) (4

,732

,891

) -‐

(4,732

,891

)

Dispo

sal o

f tre

asur

y sh

ares

-‐

-‐ 5,

296,

842

-‐ -‐

-‐ -‐

-‐ -‐

-‐ 23

8,50

1 5,

535,

343

-‐ 5,

535,

343

Shar

e-‐ba

sed

paym

ents

(not

e 38

) -‐

-‐ -‐

833,

334

-‐ -‐

-‐ -‐

-‐ -‐

-‐ 83

3,33

4 -‐

833,

334

Recy

clin

g of

reva

luat

ion

of in

vest

men

t pro

perty on

dispo

sal o

f su

bsid

iary

(not

e 35

) -‐

-‐ -‐

-‐ (8

,542

,883

) -‐

-‐ -‐

-‐ -‐

-‐ (8

,542

,883

) -‐

(8,5

42,8

83)

Recy

clin

g of

fore

ign

exch

ange

diff

eren

ce o

n di

spos

al o

f su

bsid

iary

(not

e 35

) -‐

-‐ -‐

-‐ -‐

-‐ -‐

16,9

64,4

61

-‐ -‐

-‐ 16

,964

,461

-‐

16,9

64,4

61

Dispo

sal o

f non

-‐con

trol

ling

inte

rest

s of

con

solid

ated

sub

sidi

ary

(not

e 18

.2)

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

26,8

29,9

32

-‐ -‐

26,8

29,9

32

5,89

7,32

0 32

,727

,252

Acq

uisitio

n of

non

-‐con

trol

ling

inte

rest

s of

con

solid

ated

su

bsid

iary

-‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ (3

65,5

14)

-‐ -‐

(365

,514

) (3

25,0

36)

(690

,550

)

Divid

ends

distrib

utio

n -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ (2

,862

,927

) (2

,862

,927

)

Non

-‐con

trol

ling

inte

rest

sha

re in

equ

ity o

f dec

onso

lidat

ed

subs

idia

ries

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐

-‐ -‐

1,04

5,50

5 1,

045,

505

Non

-‐con

trol

ling

inte

rest

s’ sha

re in

equ

ity o

f con

solid

ated

su

bsid

iarie

s -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ -‐

-‐ 9,

345,

473

9,34

5,47

3

Balance at 31 Decem

ber 2018

202,049,630

833,948,89

7 (5,207,662)

2,499,99

9 1,435,587

(173,174)

4,916,86

8 (335,768

,166)

(72,519,921)

-‐ (222,499

,010)

408,68

3,048

167,080,465

575,763,513

F-‐5

Orascom Development Holding AG Consolidated statement of financial position at 31 December 2018


EQUITY AND LIABILITIES

CAPITAL AND RESERVES

Issued capital 27 202,049,630 937,510,283

Reserves 28 429,132,428 (347,312,031)

(Accumulated losses) 29 (222,499,010) (185,007,858)

Equity attributable to owners of the Parent Company

408,683,048 405,190,394

Non-‐controlling interests 30 167,080,465 149,135,882

TOTAL EQUITY 575,763,513 554,326,276

NON-‐CURRENT LIABILITIES

Borrowings 31 334,182,775 111,966,356

Trade and other payables 32 10,904,783 11,472,492

Retirement benefit obligation 36 467,751 508,962

Notes payable 32,987 358,173

Deferred tax liabilities 13.4 20,914,984 21,423,374

TOTAL NON-‐CURRENT LIABILITIES 366,503,280 145,729,357

CURRENT LIABILITIES

Trade and other payables 32 57,600,804 39,574,361

Borrowings 31 38,188,742 262,782,474

Due to related parties 39.1 3,469,158 3,598,344

Current tax liabilities 13.3 23,076,502 5,663,966

Provisions 33 62,564,805 65,558,335

Other current liabilities 34 208,190,652 178,820,992

393,090,663 555,998,472

Liabilities directly associated with assets held for sale 26 518,005 84,407,246

TOTAL CURRENT LIABILITIES 393,608,668 640,405,718

TOTAL LIABILITIES 760,111,948 786,135,075

TOTAL EQUITY AND LIABILITIES 1,335,875,461 1,340,461,351




F-‐8

Orascom Development Holding AG Consolidated cash flow statement for the year ended 31 December 2018

CHF Notes 2018 2017

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for property, plant and equipment 15 (60,176,585) (37,156,116) Proceeds from disposal of property, plant and equipment -‐ Net proceeds on sale of financial assets 35.5 37,474,080 3,341,013 Interest received 3,767,611 1,919,593

Net cash (used in) investing activities (18,934,894) (31,895,509)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid to non-‐controlling interests (2,862,927) -‐ Payments for treasury shares 802,452 (5,421,560) Non-‐controlling interests shares in change of equity for consolidated subsidiaries

30 41,382,175 5,523,475

Repayment of borrowings 31 (27,059,045) (21,114,120) Proceeds from borrowings 31 33,714,724 57,011,138

Net cash generated by financing activities 45,977,379 35,998,933

Net increase in cash and cash equivalents 35,220,283 23,072,836

Cash and cash equivalents at the beginning of the year 103,671,633 82,172,312

Effects of exchange rate changes on the balance of cash held in foreign currencies

(624,236) (1,573,515)

Cash and cash equivalents at the end of the year 138,267,680 103,671,633

Included in cash and cash equivalents 25 138,267,680 99,454,931

Included in assets held for sale 26 -‐ 4,216,702

F-‐7

Orascom Development Holding AG Consolidated cash flow statement for the year ended 31 December 2018

CHF Notes 2018 2017

CASH FLOWS FROM OPERATING ACTIVITIES

Loss for the year (37,354,898) (41,055,415) Adjustments for: Income tax expense recognized in profit or loss 13.1 25,264,280 5,632,519

Share of losses of associates 19 17,237,395 16,910,741

Finance costs recognized in profit or loss 11 40,409,850 35,870,455

Investment income recognized in profit or loss 9 (8,299,295) (6,912,718) Impairment loss on trade receivables 37.9 328,350 786,435 Gain on sale or disposal of property, plant and equipment 10 (36,581) (17,255) Gain in relation to settlement of borrowings 10 -‐ (6,313,871) Gain on disposal of financial investments 10/12 (11,338,543) -‐ Gain on revaluation of investment properties 16 (325,490) (616,649) Depreciation and amortization of non-‐current assets 15 21,902,050 24,458,515 Share-‐based payments 38 833,334 833,332 Loss from rescheduling of borrowings 12 3,483,796 -‐ Unrealized net foreign exchange losses 3,532,391 (4,299,773)

MOVEMENTS IN WORKING CAPITAL

(Increase) in trade and other receivables (18,476,189) (679,305) Decrease in finance lease receivables 8,129,155 4,759,269 (Increase)/decrease in inventories (8,677,939) 5,173,473 (Increase) in other assets (15,977,789) (10,858,228) Increase in trade and other payables 3,778,176 56,071 Increase/(decrease) in provisions 3,958,778 (3,068,599) Increase in other liabilities 27,818,736 9,335,427

Cash generated by operations 56,189,567 29,994,424

Interest paid (40,516,759) (7,815,303)

Income tax paid (7,495,010) (3,209,708)

Net cash generated by operating activities 8,177,798 18,969,413



Notes to the consolidated financial statements for the year ended 31 December 2018 1 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 were traded at the EGX Egyptian Exchange. One EDR represents 1/20 of an ODH share. On 1 March 2017, the Extraordinary General Meeting of ODH approved the Board of Directors' proposal regarding the voluntary delisting of the Egyptian Depositary Receipts (EDRs) from the Egyptian Exchange. The Board of Directors called the meeting in accordance with the requests of the relevant authorities in Egypt to present to the shareholders of the Company the proposal to approve the delisting. Based on the Extraordinary General Meeting's approval, the Company undertook all further actions required to complete the delisting of the EDRs. On 24 May 2017, the Listing Committee of the Egyptian Exchange approved the delisting, which was completed as at 30 May 2017. The majority of the EDR holders have chosen to swap their EDRs into shares of ODH that had previously been underlying the EDRs and only 9.9% out of the 189,123,620 EDRs were tendered to the Company for repurchase at a price of EGP 5.25 (CHF 0.29) per EDR or CHF 5.79 per ODH share. As a result, the Company acquired 935,486 own shares at the total value of CHF 5.4 million. The ODH shares remain listed at the SIX Swiss Exchange.

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 seven jurisdictions, with primary focus on touristic towns and recently affordable housing. The Group's diversified portfolio of destinations is spread over seven jurisdictions (Egypt, UAE, Oman, Switzerland, Morocco, Montenegro and United Kingdom), with primary focus on touristic destinations. The Group currently operates nine destinations; four in Egypt (El Gouna, Taba Heights, Fayoum Makadi, and Harram City), The Cove in the United Arab Emirates, Jebel Sifah and Salalah Beach in Oman, Luštica Bay in Montenegro and Andermatt in Switzerland.

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 (“IFRS”)

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 issued by the International Accounting Standards Board (IASB) that are mandatorily effective for the current year. Except for the adoption of IFRS 15, these revised Standards and the new Interpretation have not had a material effect on these consolidated financial statements. The details of the revised Standards and the new Interpretation are as follows:

Amendments to IFRS 2 Share-based Payment – Amendments in relation to classification and measurement

Amends IFRS 2 Share- based Payment to clarify the standard in relation to the accounting for cash-settled share-based payment transactions that include a performance condition, the classification of share-based payment transactions with net settlement features, and the accounting for modifications of share-based payment transactions form cash-settled to equity-settled.

The application of these amendments has had no impact on the disclosures or on the amounts recognised in the Group’s consolidated financial statements.

IFRS 9 Financial Instruments – Final version including expected loss impairment model

The Group has applied the requirements for general hedge accounting (issued in November 2013), another revised version of IFRS 9 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” (FVTOCI) measurement category for certain simple debt instruments

As the Group does not apply hedge accounting and does not measure any simple debt instruments at FVTOCI, the only requirements of IFRS 9, which are not yet applied by the Group are those on impairment of financial assets. IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

F-‐9

Index to the notes to the consolidated financial statements Page 1 General information 10 2 Application of new and revised International Financial Reporting Standards 10 3 Significant accounting policies 14

4 Critical accounting judgments and key sources of estimation uncertainty 26 5 The group and major changes in group entities 28 6 Revenue 28 7 Segment information 28 8 Employee benefits expense 32

9 Investment income 32 10 Other gains 33 11 Finance costs 33 12 Other losses 33 13 Income taxes relating to continuing operations 34

14 Earnings per share 36 15 Property, plant and equipment 37 16 Investment property 39 17 Goodwill 39

18 Subsidiaries 41 19 Investments in associates 44 20 Non-‐current receivables 47 21 Other financial assets 47 22 Inventories 48

23 Trade and other receivables 48 24 Other current assets 49 25 Cash and cash equivalents 49 26 Assets held for sale 50 27 Capital 51

28 Reserves (net of income tax) 52 29 (Accumulated losses) 55 30 Non-‐controlling interests 55 31 Borrowings 56 32 Trade and other payables 57

33 Provisions 58 34 Other current liabilities 59 35 Disposals of subsidiaries 59 36 Retirement benefit plans 61 37 Financial instruments 63

38 Share-‐based payments 70 39 Related party transactions 70 40 Non-‐cash transactions 73 41 Operating lease arrangements 73

42 Commitments for expenditure 74 43 Litigation 76 44 Subsequent events 76 45 Approval of financial statements 76



F-‐12

Impact on accumulated losses as at 1 January 2018

The following line items of the statement of financial position as at 1 January 2018 were impacted:

CHF As previously

reported IFRS

adjustment As restated

Inventories (a) 127,583,163 (17,808,854) 109,774,309

Trade and other receivables (b) 68,881,179 11,196,400 80,077,579

Other current assets (c) 45,093,158 (398,454) 44,694,704

Other current liabilities (d) (178,820,992) 12,728,051 (166,092,941)

Accumulated losses 177,726,563 (4,555,047) 173,171,516

Non-‐controlling interests (149,135,882) (1,162,096) (150,297,978)

(a) Except for land of villas, which is recognised at the point in time when the contract for the construction of the villa is signed,

revenue from construction of real estate (including land of apartment units) is recognised over time. As the output method used to measure construction progress was changed from a milestone approach to a percentage of completion approach, revenue is recognised as construction progresses and not upon reaching certain construction stages. In accordance with IFRS 15, revenue is recognized at the end of each period based on the percentage of completion even if the construction milestones used previously or revenue recognition are not yet achieved. Therefore, revenue is recognised earlier compared to the superseded standards. As a larger portion of the real estate units under construction was realised as revenue on transition to the new standard, the cost of sales recognised to that date have increased as well, leading to a reduction in inventory.

(b) Revenue adjustment reflected directly in retained earnings, due to transition to IFRS 15, has led to increase in trade receivables.

(c) Following the same concept of decrease in inventory, capitalized sales commissions were derecognised due to the earlier recognition of revenue.

(d) As construction progress is now calculated according to the percentage of completion method and not according to progress based on milestones approach, construction progress since the last construction milestone is also recognised as revenue; hence decreasing deferred revenue which was recognised upon contracting the customer.

Impact on statement of comprehensive income for 2018

In 2018, using the new accounting policy for revenue recognition in accordance with IFRS 15 instead of the superseded revenue standards resulted in additional revenue of CHF 40.2 million and additional gross profit of CHF 14.7 million.

2.2 Standards and Interpretations in issue but not yet effective

At the date of authorisation of these consolidated 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 for annual periods beginning on or after the dates indicated below, with earlier application permitted.

IFRS 16 Leases 1 January 2019

Amendments to IFRS 3 Definition of a business 1 January 2020

Amendments to IFRS 9 Prepayment Features with Negative Compensation 1 January 2019

Amendments to IAS 1 Definition of material 1 January 2020

Amendments to IAS 8 Definition of material 1 January 2020

Amendments to IAS 19 Plan Amendment, Curtailment or Settlement 1 January 2019

Amendments to IAS 28 Sale or Contribution of Assets between an investor and its Associate 1 January 2019

Various Annual Improvements to IFRS Standards 2015-‐2017 Cycle 1 January 2019

IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019

Trade and other receivables (notes 20 and 23), which are measured at amortised cost, are mainly impacted by the impairment provisions of IFRS 9. The Group applies the simplified approach to recognise lifetime expected credit losses for its trade and other receivables as required or permitted by IFRS. All other financial assets measured at amortized cost are considered having a low credit risk. Hence the Group applies the low credit simplified approach to measure the 12-month ECLs.

As the Group does not apply hedge accounting and does not measure any simple debt instruments at FVTOCI, the only requirements of IFRS 9, which are not yet applied by the Group are those on impairment of financial assets. IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

Trade and other receivables (notes 20 and 23), which are measured at amortised cost, are mainly impacted by the impairment provisions of IFRS 9. The Group applies the simplified approach to recognise lifetime expected credit losses for its trade and other receivables as required or permitted by IFRS. All other financial assets measured at amortized cost are considered having a low credit risk. Hence, the Group applies the low credit simplified approach to measure the 12-month ECLs.

The first-time application of the new impairment model for financial assets did not have any impact as at 1 January 2018.

IAS 40 Investment Property – Amendments in relation to transfers of investment property

Amend IAS 40 Investment Property to state that and entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. A change of use occurs if property meets, or ceases to meet, the definition of investment property. A change in management’s intentions for the use of a property by itself does not constitute evidence of a change in use. The list of examples of evidence is now presented as a non-exhaustive list of examples instead of the previous exhaustive list.

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 22 Foreign Currency Transactions and Advance Consideration

The interpretation addresses foreign currency transactions or parts of transactions where:

• there is consideration that is denominated or priced in a foreign currency; • the entity recognises a prepayment asset or a deferred income liability in respect of that consideration, in advance of the

recognition of the related asset, expense or income; and • the prepayment asset or deferred income liability is non-monetary.

The Interpretations Committee came to the following conclusion:

• the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability.

• If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.

The application of this new interpretation has had no impact on the disclosures or on the amounts recognised in the Group’s consolidated financial statements.

IFRS 15 Revenue from Contracts with Customers

In the current year, the Group has applied IFRS 15 Revenue from Contracts with Customers. IFRS 15 introduces a 5-step approach to revenue recognition. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Details of these new requirements as well as their impact on the Group’s consolidated financial statements are described below.

Management of ODH decided to use the modified retrospective method, in which the cumulative effect of initially applying IFRS 15 of CHF 5,717,143 is recognised as an adjustment to the opening balance of retained earnings at 1 January 2018. There was neither any impact on the statement of financial position as at 1 January 2017 nor in the statement of comprehensive income for the financial period 2017. Accordingly, ODH did not consider contracts that were completed prior to 1 January 2018.

IFRS 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what might more commonly be known as ‘accrued revenue’ and ‘deferred revenue’, however the Standard does not prohibit an entity from using alternative descriptions in the statement of financial position. Therefore, the Group has not adopted the terminology used in IFRS 15 to describe such balances. The respective amounts can be found in other assets (note 24) and other liabilities (note 34).

The Group’s accounting policies for its revenue streams are disclosed in detail in Note 3 below.



Annual Improvements to IFRS Standards 2015-2017 Cycle

Makes amendments to the following standards:

• IFRS 3 and IFRS 11 - The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

• IAS 12 - The amendments clarify that all income tax consequences of dividends (i.e. distribution of profits) should be recognised in profit or loss, regardless of how the tax arises.

• IAS 23 - The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

Management of the Group does not expect any significant changes from the amended Standards.

IFRIC 23 Uncertainty over Income Tax Treatments

The interpretation addresses the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. It specifically considers:

• whether tax treatments should be considered collectively • assumptions for taxation authorities' examinations • the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates • the effect of changes in facts and circumstances

Management of the Group does not expect any significant changes from this new interpretation.

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.

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IFRS 16 Leases

The new Standard provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. It supersedes IAS 17 Leases and its associated interpretative guidance.

IFRS 16 applies a control model to the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer.

Significant changes to lessee accounting are introduced, with the distinction between operating and finance leases removed and assets and liabilities recognised in respect of all leases (subject to limited exceptions for short-‐term leases and leases of low value assets). In contrast, the Standard does not include significant changes to the requirements for accounting by lessors.

As at 31 December 2017, the Group has non-‐cancellable operating lease commitments of CHF 3.7 million. IAS 17 does not require the recognition of any right-‐of-‐use asset or liability for future payments for these leases; instead, certain information is disclosed as operating lease in note 41. Our assessment shows that these arrangements meet the definition of a lease under IFRS 16 and therefore the Group will recognise a right-‐of-‐use asset and a corresponding liability in respect of all these leases unless they qualify for low value or short-‐term leases upon the application of IFRS 16. Even though it is not practicable to provide a reasonable estimate of the financial effect until management of the Group completes their review, the new requirements are expected to have some impact on the amounts recognised in the Group’s consolidated financial statements.

In contrast, for finance leases where the Group is a lessee and in cases where the Group is a lessor (for both operating and finance leases), management of the Group does not anticipate that the application of IFRS 16 will have a significant impact on the amounts recognised in the Group’s consolidated financial statements.

It is expected that the Group will apply the modified retrospective approach, which would mean that the cumulative effect of initially applying the standard is recognised at the date of initial application and there is no restatement of comparative information.

Amendments to IFRS 3 Business Combination

The amendments in Definition of a Business:

• clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;

• narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;

• add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;

• remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and

• add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

Management of the Group does not expect any significant changes from the amended Standard.

Amendments to IFRS 9 Financial Instruments

Amends the existing requirements in IFRS 9 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments.


Amendments to IAS 1 Presentation of Financial Statements and to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

The amendments in Definition of Material clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards.

Management of the Group does not expect any significant changes from the amended Standards.

Amendments to IAS 19 Employee Benefits

The amendments in Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) are:

• if a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement.

• in addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.


Amendments to IAS 28 Investments in Associates and Joint Ventures

The amendment clarifies that an entity applies IFRS 9 Financial Instruments to long-‐term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.




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.

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.

The Group’s policy for goodwill arising on the acquisition of an associate is described in note 3.5.

3.7 Revenue recognition Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue when it transfers control of a product or service to a customer. Revenue is reduced for estimated customer returns, rebates and other similar allowances. The Group is always acting as principal in relation to its contracts with customers.

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.

Accounting policies Segments classified by type of activity

3.7.1 Revenue on sale of land Sale of land

3.7.2 Revenue from agreements for construction of real estate Real estate and construction

3.7.3 Revenue from the rendering of services

Hotels

Destination management

Other operations

3.7.1 Revenue on sale of land Revenue from sale of land, sale of land right and associated cost are recognised when control has been transferred to the buyer. In general, control is transferred when the land is delivered to the buyer as from this point in time, the buyer has the ability to direct the use of the land and obtain substantially all of the remaining benefits. 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.

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 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 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.

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 2010.

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.

3.5 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.



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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 3.22.1 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 2018 2017

Average Year end Average Year end

1 EGP Egyptian Pound 0.0549 0.0550 0.0551 0.0554

1 USD US Dollar 0.9786 0.9848 0.9735 0.9800

1 EUR Euro 1.1551 1.1268 1.1114 1.1685

1 OMR Oman Rial 2.5406 2.5580 2.5532 2.5445

1 AED United Arab Emirates Dirham 0.2664 0.2682 0.2680 0.2664

1 MAD Moroccan Dirham 0.1043 0.1029 0.1047 0.1014

1 JOD Jordanian Dinar 1.3796 1.3885 1.3803 1.3851

F-‐17

3.7.2 Revenue from agreements for construction of real estate In general, the revenue is recognised either from agreements for construction of apartments or for construction of villas.

Apartments

For apartments, the performance obligations are not capable of being distinct as the customer cannot benefit from the goods and services either on their own or together with other readily available resources. The provided goods and services are dependent on each other. Therefore, the Group accounts for all goods and services defined in the contract as a single performance obligation. The “Unit” performance obligation in apartments include the “Land” as the land represents the plot's undivided share.

Since performance of the Group does not create an asset with an alternative use and the Group has an enforceable right to payment for performance completed to date, revenue from construction of apartments is recognised over time as construction progresses.

The Group uses the percentage-‐of-‐completion method to measure the progress towards satisfaction of the performance obligations as based on management’s assessment this represents best the progress of the respective performance obligation. The contractors’ progress reports are used to measure the percentage of completion.

Villas

For villas, management of the Group considers “land” as a separate performance obligation as the customers get the ownership of a specific and defined land plot once the contract is signed and there is no more work in progress related to land itself. The second performance obligation is the construction of the villa.

For land, revenue is recognised at the point in time where land ownership is transferred to the buyer which in general is when the contract is signed.

Revenue for the second performance obligation, being the construction of the land, is recognised over time as construction progresses. The Group uses the percentage-‐of-‐completion method to measure the progress towards satisfaction of the performance obligations. as based on management’s assessment this represents best the progress of the respective performance obligation. The contractors’ progress reports are used to measure the percentage of completion.

Financing component

In Oman and Montenegro destinations, the applied milestones payment method imposes no financing component as the customer pays only when certain milestones are reached, i.e. upon the completion of relevant works.

In Egypt, the time to build a unit is approximately two years while payment is scheduled through instalments for periods longer than five years. Accordingly, the payment schedule provides the customer with a significant benefit of financing and interest revenues are accounted for in Egypt by discounting contract value.

3.7.3 Revenue from the rendering of services

Revenue from services is recognised over time in the accounting periods in which the services are rendered.

3.7.4 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 18.

3.8 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.

3.8.1 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.

3.8.2 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.



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.

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.

3.12.3 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.

3.12.4 Income Taxes Significant judgement is required in determining liabilities related to uncertain tax positions. A current tax provision is recognised when the Group has a present obligation as a result of a past event, and it is more likely than not that the Group will be required to settle that obligation. A current tax provision is measured using the single best estimate of the likely outcome approach.

3.13 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 3.10. 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 20 – 50 years

Plant and equipment 4 – 25 years

Furniture and fixtures 3 – 20 years

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3.10 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily 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.

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).

3.11 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.

3.12 Taxation Income tax expense represents the sum of the tax currently payable and deferred tax.

3.12.1 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.

3.12.2 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.



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3.17 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.

3.18 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.

3.19 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.

3.19.1 Classification of financial assets Debt instruments that meet the following conditions are subsequently measured at amortised cost (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.

In general, cash and cash equivalents, trade and other receivables as well as amounts due from related parties are measured at amortised cost. All other financial assets are subsequently measured at fair value.

3.19.2 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.

3.19.3 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 investment revaluation reserve. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the investments.

3.14 Investment property 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.

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 or internal valuations.

Property is only transferred to, or from, investment property when, and only when, there is a change in use. A change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. If property becomes an investment property which is carried at fair value, any difference at the date of change in use between the carrying amount of the property and its fair value is recognised through other comprehensive income.

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.

3.15 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.

3.16 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.



F-‐25

3.20 Financial liabilities and equity instruments 3.20.1 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.

3.20.2 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.

3.20.3 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 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.

3.21 Derivative financial instruments If required, the Group enters into derivative financial instruments mainly to manage its exposure to interest rate and foreign exchange rate risk. 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. However, currently the Group is not applying hedge accounting in accordance with IFRS 9.

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.

F-‐24

The Group has designated all investments in equity instruments, that are not held for trading, as at FVTOCI on initial application of IFRS 9. These are included in other financial assets.

Dividends on these investments in equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established. Dividends earned are recognised in profit or loss and are included in the ‘investment income’ line item.

3.19.5 Impairment of financial assets Financial assets that are measured at amortised cost are assessed for impairment at the end of each reporting period.

ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

In general, ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-‐months (a 12-‐month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

Loss given default (“LGD”) is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, considering cash flows from collateral and integral credit enhancements. Further, the probability of default is determined based on historical date of cash flows from receivables. However, in certain cases, the Group may also consider a financial asset to be in default when internal and external information indicates that the Group is unlikely to receive the outstanding contractual amount in full before considering any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Impairment models used by the Group to calculate the ECL of its trade receivables are based on its historical credit loss experience, adjusted for forward-‐looking factors specific to the debtors and the economic environment.

Based on Group’s business history and the time value of money concept management assumes LGD on balances overdue by more than 360 days, as at this point in time they start to impose significant risks for irregular collections and losses in real value of cash.

For trade receivables of the hotel and destination management segment, the Group has established a provision matrix that calculates the ECL by time buckets throughout 12 months before the reporting period

For trade receivable of the real estate segment, the Group has established an impairment test model that considers their long-‐term nature and subsequently calculates the ECL through the weighted probability of default, i.e. percentage of irregular clients having balances overdue more than 360 days throughout a range of 2-‐4 years before the reporting period.

For cash and cash equivalents as well as well as any other low credit items, if there are any, the Group applies the low credit risk simplification. At every reporting date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the credit rating of the financial asset.

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.

3.19.6 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.



F-‐27

Upon settlement of a share-‐based payment transaction in which the terms of the arrangement provide the entity with a choice of settlement, then:

– if the entity elects to settle in cash, the cash payment is accounted for as the repurchase of an equity interest (i.e. as a deduction from equity, except as noted in (c) below.

– if the entity elects to settle by issuing equity instruments, no further accounting is made (other than a transfer from one component of equity to another, if necessary), except as noted in (c) below.

– if the entity elects the settlement alternative with the higher fair value, as at the date of settlement, an additional expense is recognized for the excess value given (i.e. the difference between the cash paid and the fair value of the equity instruments that would otherwise have been issued, or the difference between the fair value of the equity instruments issued and the amount of cash that would otherwise have been paid, whichever is applicable.

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.

4.1.1 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.

4.2.1 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 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 2018 at CHF 761,820,363 and CHF 43,629,068 respectively (31 December 2017: CHF 765,121,094 and CHF 60,822,300).

In 2018 and 2017, the impairment reviews did not result in any impairment losses of property, plant and equipment or investments in associates.

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.

F-‐26

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.

3.22 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.

3.23 Share-‐based payment arrangements 3.23.1 Share-‐based payment transactions of the Parent Company Share-‐based payment transactions in which the terms of the arrangement provide the entity with the choice to settle the transaction in cash (or other assets) or in equity instruments issued by the entity, are accounted for as a cash-‐settled share-‐based payment transaction if, and to the extent that, the entity has incurred a liability to settle in cash or other assets, or as an equity-‐settled share-‐based payment transaction if, and to the extent that, no such liability has been incurred.

Share-‐based payment arrangements whose terms provide the Company with the choice to settle the transaction in cash or, at its discretion, in its own equity shares issued to employees are accounted for as equity-‐settled and measured at the fair value of the contingent consideration by reference to the market price of the Company's equity shares at the grant date. Details regarding the determination of the fair value of equity-‐settled share-‐based payment transaction are set out in note 38.

The fair value determined at the grant date of the equity-‐settled share-‐based payments is expensed on a straight-‐line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimate, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-‐settled share-‐based payment reserve in equity.



F-‐29

5 THE GROUP AND MAJOR CHANGES IN GROUP ENTITIES

The Group comprises the Parent Company and its subsidiaries operating in different countries.

There have been no major changes in the group structure since 31 December 2017 except for the following:

– Sale of non-‐controlling interests of its listed Egyptian subsidiary ODE (refer to note 18.2 for further details)

– Disposal of its Egyptian hotels “Citadel Azur Hotel”, “Royal Azur Hotel” and “Club Azur Hotel” including a land plot in Makadi (refer to notes 18.2, 26 and 35 for further details)

– Disposal of Tamweel Group (refer to notes 18.2, 26 and 35 for further details)

The group controls its subsidiaries directly and indirectly.

6 REVENUE

An analysis of the Group’s revenue for the year is as follows:

CHF 2018 2017

Revenue from the rendering of services and rental income 209,431,966 174,370,187

Revenue from agreements for construction of Real Estate and construction revenue

126,605,007 69,523,826

Revenue on sale of land 4,299,248 551,232

TOTAL 340,336,221 244,445,245

Of the total revenue from the rendering of services and rental income of CHF 209.4 million, CHF 163.8 million are recognised at point in time and CHF 45.6 million are recognised over time.

Of the total revenue from agreements for construction of Real Estate and construction revenue of CHF 126.6 million, CHF 116.8 million is recognised over time and CHF 9.8 million are recognised at point in time.

Revenue on sale of land is entirely recognised over time.

The transaction price allocated to (partially) unsatisfied performance obligation in relation to construction of real estate is nil. As permitted under the transitional provision in IFRS 15, the transaction price allocated to (partially) unsatisfied performance obligations as of 31 December 2017 is not disclosed.

Management expects that 100% of the transaction price allocated to the unsatisfied contracts as of the year ended 2018 will be recognised as revenue during the next reporting period.

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.

The real estate and construction segment includes two lines of business each of which is considered as a separate operating segment. For financial statements presentation purposes, these individual operating segments have been aggregated into a single operating segment taking into account the following factors:

– These operating segments have similar long-‐term gross profit margins;

– The nature of the products and production processes are similar.

F-‐28

4.2.2 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 761,820,363 (31 December 2017: CHF 765,121,094). 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 experiences with comparable assets. A change in the useful life of any asset may affect the amount of depreciation that is to be recognized in profit or loss for future periods.

4.2.3 Provisions The carrying amount of provisions at the end of the current reporting period is CHF 62,564,805 (31 December 2017: CHF 65,558,335). This amount is based on estimates of future costs for infrastructure completion, legal cases, government fees, employee benefits and other charges including taxes in relation to the Group’s operations (see note 33). 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.

4.2.4 Impairment of financial assets The carrying amount of the allowance for trade and other receivables at the end of the current period is CHF 16,973,569.

For trade and other receivables of the hotel and destination management segments, the probability of default is based on loss percentages of various time buckets whereas for trade and other receivables real estate segments the probability of default is based on the percentage of clients paying irregularly. For all other financial assets measured at amortised cost, a 12-‐month ECL using the low credit risk simplification was used

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future.

Refer to note 37.9 for further details on the impairment calculation of financial assets.

4.2.5 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 2018 is CHF 7,328,798 (31 December 2017: CHF 7,500,868).

The fair values at 31 December 2018 were determined based on an internal valuation model. Note 16 provides detailed information about the valuation techniques applied and the key assumptions used in the determination of the fair value of each investment property.

4.2.6 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 2018, no impairment (2017: none) was made in relation to inventory of development projects.

4.2.7 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 labour 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.

4.2.8 Liquidity shortages and related uncertainties For further details on management’s plans to manage liquidity shortages and related uncertainty please refer to note 25.1.

4.2.9 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 42.1. Due to the complexity of the projects and the ongoing negotiations, estimation of the contingent liability involves a high degree of uncertainty.



F-‐31

7.2 Se

gmen

t reven

ue and

results

The follo

wing is an an

alysis of the

Group

’s re

venu

e an

d resu

lts from

con

tinuing

ope

ratio

ns by repo

rtab

le seg

men

ts:

CHF

Total seg

men

t reven

ue

Inter-‐segm

ent reven

ue

Reven

ue externa

l customers

Cost of reven

ue

Dep

reciation

Gross profit/(loss)

Segm

ent result

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

Hotels

157,38

1,70

6 131,84

7,05

0 (882

,844

) (735

,421

) 15

6,49

8,86

2 131,111,62

9 (101

,996

,283

) (88,45

9,59

7)

(15,90

0,79

2)

(15,579,38

6)

38,601

,787

27

,072

,646

28

,358

,326

23

,187

,618

Real estate an

d co

nstruc

tion

144,00

3,93

5 10

3,00

0,58

7 (17,39

8,92

8)

(33,47

6,76

1)

126,60

5,00

7 69

,523

,826

(82,374,35

8)

(49,99

9,04

1)

(328

,254

) (433,759

) 43

,902

,395

19

,091

,026

48

,973,936

23

,520

,182

Land

sales

6,69

4,94

5 2,313,81

1 (2,395

,697

) (1,762

,579

) 4,29

9,24

8 55

1,23

2 (747

,843

) (781

,879

) (223

,307

) (260

,536

) 3,32

8,09

8 (491

,183

) 3,25

2,371

(675,820

)

Destin

ation man

agem

ent

40,774

,620

28

,526

,269

(20,83

0,44

0)

(14,41

7,84

7)

19,944

,180

14

,108

,422

(24,10

9,63

2)

(18,83

4,58

1)

(4,636

,588

) (3,795

,060

) (8,802

,040

) (8,521

,219

) (8,842

,921

) (8,470

,781

)

Other ope

ratio

ns

52,807

,512

40

,619

,840

(19,81

8,58

8)

(11,46

9,70

4)

32,988

,924

29

,150

,136

(23,05

9,756)

(25,00

7,14

9)

(5,656

,815

) (4,389

,774

) 4,27

2,35

3 (246

,787

) 4,710,08

6 45

0,06

0

Total

401,66

2,718

306,307,557

(61,326,49

7)

(61,86

2,312)

340,336,221

244,44

5,245

(232,287

,872)

(183

,082

,247)

(26,745,756)

(24,458,515)

81,302,593

36,904

,483

76,451,798

38

,011,259

Una

llocated item

s 1):

Share of (los

ses) of a

ssoc

iates

(17,23

7,39

5)

(16,91

0,74

1)

Other gains

12

,533,359

5,25

6,34

2

Other lo

sses

(6,683

,816

) (1,266

,220

)

Inve

stmen

t inc

ome

1,61

1,24

4 715,50

8

Central adm

inistration co

sts an

d directors’ salaries

(49,85

9,51

7)

(37,40

6,43

5)

Fina

nce co

sts

(28,90

6,29

1)

(23,82

2,60

9)

Loss before tax (con

tinu

ing op

erations)

(12,09

0,61

8)

(35,422,89

6)

Inco

me tax ex

pens

es

(25,26

4,28

0)

(5,632

,519

)

Loss fo

r the

year (continuing

ope

ration

s)

(37,354,89

8)

(41,055,415)

1) F

or th

e pu

rpos

es of s

egmen

t rep

ortin

g, part o

f the

amou

nts repo

rted

for the

se item

s in th

e co

nsolidated

statemen

t of c

ompreh

ensive

inco

me ha

ve bee

n alloca

ted in th

e table ab

ove to th

eir

releva

nt seg

men

ts.

The ac

coun

ting po

licies of th

e repo

rtab

le seg

men

ts are th

e same as th

e Group

’s accou

nting po

licies de

scrib

ed in

note 3. Seg

men

t result rep

resents the profit ea

rned

by ea

ch seg

men

t with

out

alloca

tion of cen

tral adm

inistration co

sts an

d directors’ salaries, sha

re of p

rofits (lo

sses) o

f assoc

iates, in

vestmen

t inc

ome, other gains

and

losses, finan

ce cos

ts and

inco

me tax ex

pens

e, as includ

ed

in th

e internal m

anag

emen

t rep

orts th

at are re

gularly

review

ed by the Boa

rd of D

irectors. This mea

sure is con

side

red be

ing mos

t relev

ant for th

e pu

rpos

es of resou

rces allo

catio

n an

d assessmen

t of

segm

ent p

erform

ance

.

F-‐30

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 2018 or 2017.

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

2018 2017

Hotels Hotels managed by international chains 71,554,085 70,394,423

Hotels managed by local chains 16,983,871 18,279,971

Hotels managed by the Group 67,960,906 42,437,235

Segment total 156,498,862 131,111,629

Real estate and construction Tourism real estate 126,605,007 69,523,826

Land sales Sales of land and land rights 4,299,248 551,232

Destination management Utilities (e.g. water, electricity) 19,944,180 14,108,422

Other operations Mortgage (Real estate financing) 14,651,435 15,680,350

Sport (Golf) 1,299,809 1,011,997

Rentals (i) 3,694,088 2,699,781

Hospital services 5,732,760 4,118,983

Educational services 1,314,011 1,202,338

Marina 3,891,551 3,614,855

Limousine 13,478 16,790

Others 2,391,792 805,042

Segment total 32,988,924 29,150,136

TOTAL 340,336,221 244,445,245 (i) Rentals include income from investment property of CHF 3,694,088 (2017: CHF 2,699,781).



F-‐33

7.4 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:

Revenue Non-‐current assets

CHF 2018 2017 2018 2017

Egypt 199,134,274 151,234,701 163,503,773 159,109,635

Oman 67,869,155 39,770,321 401,815,209 391,381,376

United Arab Emirates 31,970,532 30,282,051 60,175,923 62,629,915

Montenegro 38,182,900 21,050,689 104,683,430 94,678,223

Morocco 30,644 11,882 46,638 92,206

Others 3,148,716 2,095,601 41,734,737 67,560,578

TOTAL 340,336,221 244,445,245 771,959,710 775,451,933

The revenue realized from a single client did not exceed the rate of 10% or more of the total Group’s revenue during 2018 and 2017.

Non-‐current assets exclude investments in associates, financial instruments and deferred tax assets.

7.5 Additional information on segment results Total segment result of CHF 76.5 million (2017: CHF 38.0 million) mainly increased due to the following:

-‐ There was a significant increase in the real estate and construction segment due to the adoption of IFRS 15 and the resulting changes in accounting policies (see notes 2.1 and 3.7 for further details) as well as due to more units which were delivered in Oman, Egypt and Montenegro compared to prior year period.

-‐ The Hotel segment continued to produce impressive year on year growth in 2018. The growing demand on tourism to Egypt, in general, and the Red Sea, in particular, as well as the disciplined execution of the product improvement strategy and the focused yielding methodologies, collectively lead to higher ARRs, setting a strong base for a notable bottom line growth.

In 2018, the Group’s Hotels reported a revenue growth of 19% going from CHF 131.1 million to CHF 156.5 million (year-‐on-‐year). Supported by a flow-‐through hike of 3ppt to exceed the 34%, the Hotel report a GOP growth of 32%, going from CHF 44.8 million to CHF 59.2 million in 2018. El Gouna continues to be the biggest GOP contributor (55%) reporting a GOP growth of 39% going from CHF 23.3 million to CHF 32.5 million. The Hotels in Oman record the highest growth levels, with a GOP growth of over 41% going from CHF 10.8 million to CHF 15.2 million in 2018. In the UAE, despite the challenging economic conditions, the Cove maintained its positive momentum reporting a slight GOP growth going from CHF 11.0 million in 2017 to CHF 11.4 million in (year-‐on-‐year). Similarly, the for long challenged Taba Heights continues its steady progress towards achieving a break even result, with losses minimized to CHF 0.3 million in 2018.

Further, in 2018, the Group announced the opening of 2 new hotels in Europe. In Montenegro, The Chedi Luštica Bay (111 rooms) which was officially opened in July 2017, reporting an overall occupancy rate of 48%.

8 EMPLOYEE BENEFITS EXPENSE

CHF 2018 2017

Employee benefits expense 77,058,289 67,135,358

Thereof included in cost of sales 56,243,666 50,052,533

Thereof included in administration expenses 20,814,623 17,082,825

9 INVESTMENT INCOME

CHF 2018 2017

Interest income:

-‐ Bank deposits 3,767,611 1,919,593

-‐ Other loans and receivables 4,531,684 4,993,125

TOTAL 8,299,295 6,912,718

F-‐32

7.3 Segment assets and liabilities 7.3.1 Segment assets and liabilities

CHF 31 December 2018 31 December 2017

SEGMENT ASSETS

Hotels 548,815,929 525,422,195

Real estate and construction 560,635,843 506,542,525

Land sales 179,368,179 190,262,008

Destination management 82,462,338 76,135,895

Other operations 45,974,533 41,185,130

Segment assets before elimination 1,417,256,822 1,339,547,753

Inter-‐segment elimination (561,765,674) (517,643,154)

Segment assets after elimination 855,491,148 821,904,599

Unallocated assets 474,904,648 418,861,017

Assets held for sale 5,479,665 106,977,030

CONSOLIDATED TOTAL ASSETS 1,335,875,461 1,347,742,646


SEGMENT LIABILITIES

Hotels 298,560,539 258,196,257

Real estate and construction 314,627,401 307,527,008

Land sales 45,744,563 50,939,385



Segment liabilities before elimination 782,464,035 720,015,020

Inter-‐segment elimination (428,858,606) (427,134,521)

Segment liabilities after elimination 353,605,429 292,880,499

Unallocated liabilities 405,988,514 408,847,330

Liabilities directly associated with assets held for sale 518,005 84,407,246

CONSOLIDATED TOTAL LIABILITIES 760,111,948 786,135,075

For the purposes of monitoring segment performance and allocation of resources 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 17.

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. In 2016 and 2015 no such transfers were made.

7.3.2 Additions to non-‐current assets

CHF 2018 2017

Hotels 29,998,822 26,062,398

Real estate and construction 306,452 651,521



TOTAL 72,436,181 55,404,173



F-‐35

13 INCOME TAXES

13.1 Income tax recognised in profit or loss CHF 2018 2017

CURRENT TAX Current tax (income)/expense for the current year 13,192,071 6,774,555

Adjustments in relation to the current tax of prior years 15,322,006 -‐

28,514,077 6,774,555

DEFERRED TAX

Deferred tax (income)/expense recognized in the current year (3,249,797) (1,142,036)

Adjustments to deferred tax attributable to changes in tax rates and laws -‐ -‐

(3,249,797) (1,142,036)

TOTAL INCOME TAX EXPENSE RECOGNIZED IN THE CURRENT YEAR RELATING TO CONTINUING OPERATIONS

25,264,280 5,632,519

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:

CHF 2018 2017

Profit/(loss) before tax from continuing operations (12,090,618) (35,422,896)

Income tax expense/(benefit) calculated at 16.10% (2017: 16.10%) (1,946,589) (5,703,140)

Unrecognized deferred tax assets during the year 932,954 14,005,457

Adjustments in relation to the current tax of prior years 15,322,006 -‐

Effect of income that is exempt from taxation -‐ (10,846,156) Effect of (income)/expenses that are not (added)/deductible in determining taxable profit

10,955,909 8,176,358

INCOME TAX EXPENSE RECOGNIZED IN PROFIT OR LOSS 25,264,280 5,632,519

The average effective tax rate of 16.10% (2017: 16.10%) is the effective tax rate from countries in which the company generates taxable profit. The average effective tax rate mainly decreased due to the following:

13.2 Income tax recognized in other comprehensive income CHF 2018 2017

DEFERRED TAX

Remeasurement of property, plant and equipment reclassified to investment property

-‐ (4,552,950)

TOTAL INCOME TAX RECOGNISED IN OTHER COMPREHENSIVE INCOME -‐ (4,552,950)

13.3 Current tax assets and liabilities CHF 2018 2017

Current tax expense 28,514,078 6,774,555

Balance due in relation to current tax of prior years (5,186,927)

Foreign currency difference (250,649) (1,110,589)

CURRENT TAX LIABILITIES 23,076,502 5,663,966

Income tax liabilities include CHF 15.3 million relating to uncertain tax positions.

F-‐34

Investment income earned on financial assets by category of assets is CHF 8,299,295 (2017: CHF 6,912,718) for financial assets at amortised cost including cash and bank balances.

10 OTHER GAINS

CHF 2018 2017

Gain on disposal of Tamweel (note 35) 2,478,181 -‐

Gain on disposal of Royal (note 35) 21,949,121 -‐

Gain in relation to settlement of borrowing with a third party (i) -‐ 6,313,871

Net foreign exchange gains -‐ 4,299,781

Gain from change in fair value of investment property (note 16) 325,490 616,649

Gain on disposal of property, plant and equipment 36,581 17,255

Other gains 1,129,829 13,016

TOTAL 25,919,202 11,260,572

(i) Med Taba for Hotels signed a full settlement agreement with Proparco by agreeing to pay one lump sum final payment of EUR 11.39 million (CHF 13.3 million) corresponded to 66% of the total outstanding principle which amounted to EUR 17.25 million (CHF 20.2 million) in addition to paying 100% of the due interest till settlement date. The company paid part of the said 66% in 2016 and the final payment took place in February 2017. The 34% remaining of total outstanding principle amounting to EUR 5.87 million (CHF 6.3 million) is booked as other gain in Q1-‐2017.

11 FINANCE COSTS

CHF 2018 2017

Interest on bank overdrafts and loans (42,128,187) (37,542,292)

Total interest expense for financial liabilities not classified as at fair value through profit or loss

(42,128,187) (37,542,292)

Less: amounts included in the cost of qualifying assets (i) 1,718,337 1,671,837

TOTAL (40,409,850) (35,870,455)

(i) The amount of capitalization cost of qualifying assets (project under construction and work in progress) only changed insignificantly compared to prior year. However, overall finance cost increased by CHF 4.5 million from CHF 35.9 million to CHF 40.4 million as due to the syndication loan agreement, the outstanding borrowings were refinanced into long-‐term loans which carry higher interests.

The rate used by the Group to determine the amount of borrowing costs eligible for capitalization is 9% per annum (2017: 9% per annum).

12 OTHER LOSSES

CHF 2018 2017

Loss on disposal of Citadel (note 35) (13,088,759) -‐

Net foreign exchange (losses) (3,532,391) -‐

Loss on disposal of financial assets -‐ (313,038)

Loss from rescheduling of borrowings (3,483,796) -‐

TOTAL (20,104,946) (313,038)



F-‐37

13.5 Unrecognized deferred tax assets

Deferred tax assets not recognized at the reporting date:

CHF 2018 2017

Tax losses in Parent Company (expiry 2018) (i) 846,695,821 846,695,821

Tax losses in Parent Company (expiry 2019) (i) 1,032,630,753 1,032,630,753




Tax losses in Parent Company (expiry 2023) (i) 50,020,753 -‐

Temporary differences in subsidiaries (ii) 109,865,746 90,070,655

(i) At 31 December 2018, the Parent Company’s tax losses amounted to CHF 2,048,059,051 which mainly related to tax losses

caused by impairment charges recognized on investments as result of the original restructuring of the Group. The historical cost value of these investments was the fair value of the investments at the date 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. Therefore, and unchanged to prior year, all tax losses accumulated in the Parent Company which amounted to CHF 2,048,059,051 at 31 December 2018 were treated as unrecognized deferred tax assets.

(ii) At 31 December 2018, the Group has not recognised deferred tax assets for gains recognized at the subsidiaries level on intercompany land sales which took place in 2010. During 2018, 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.

14 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.

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:

CHF 2018 2017

EARNINGS (for basic and diluted earnings per share)

(Loss)/profit for the period attributable to owners of the parent (41,461,611) (41,361,129)

NUMBER OF SHARES (for basic and diluted earnings per share)

Weighted average number of ordinary shares for the purposes of EPS 39,657,499 39,913,457

EARNINGS PER SHARE FROM CONTINUING OPERATIONS (1.05) (1.04)

F-‐36

13.4 Deferred tax balances Deferred tax assets and liabilities arise from the following:

2018 CHF

Opening balance

Charged to income

Exchange difference

Disposal of subsidiary

Closing balance

ASSETS

Temporary differences Unrecognised foreign exchange losses

-‐ 3,665,124 3,812 3,668,936

Property, plant & equipment 1,007,864 240,452 (26,665) -‐ 1,221,651

1,007,864 3,905,576 (22,853) 4,890,587

LIABILITIES

Temporary differences

Property, plant & equipment 20,977,901 565,656 (438,364) (723,357) 20,381,836

Investment property 445,473 90,123 (2,448) -‐ 533,148

21,423,374 655,779 (440,812) (723,357) 20,914,984

NET DEFERRED TAX LIABILITY 20,415,510 (3,249,797) (417,959) (723,357) 16,024,397

2017 CHF

Opening balance

Charged to income

Exchange difference

Reclassified as assets held for

sale

Closing balance

ASSETS


Property, plant & equipment 992,920 6,352 8,592 -‐ 1,007,864

Tax losses carried forward -‐ 2,236,517 (150,387) (2,086,130) -‐

992,920 2,242,869 (141,795) (2,086,130) 1,007,864

LIABILITIES


Property, plant & equipment 21,999,483 1,559,228 (465,670) (2,115,140) 20,977,901

Investment property 926,326 (458,395) (22,458) -‐ 445,473

22,925,809 1,100,833 (488,128) (2,115,140) 21,423,374

NET DEFERRED TAX LIABILITY 21,932,889 (1,142,036) (346,333) (29,010) 20,415,510



F-‐39

CHF

Free

hold

land

B

uild

ings

P

lant

and

eq

uipm

ent

Furn

itur

e an

d fix

ture

s P

rope

rty

unde

r co

nstr

ucti

on

Ass

ets

unde

r fin

ance

leas

e To

tal

ACC

UM

ULA

TED

DEP

REC

IATI

ON

AN

D IM

PA

IRM

ENT

Bal

ance

at 1

Jan

uary

201

7 -‐

70,3

46,8

49

59,8

91,5

92

43,2

92,8

83

31,6

43,1

26

824,

565

205,

999,

015

Elim

inated

on disposals of assets

-‐

(64,60

4)

(261,811)

-‐ -‐

(326

,415)

Transfer to

investment p

roperty (note 16)

-‐ (10,841,825)

(4,826

,849

) (3,656,882)

-‐ -‐

(19,325,556)

Transfer to

inventory (note 22)

(432,918)

(137,247)

(109

,316)

-‐ -‐

(679,481)

Depreciation expense

-‐ 13,868

,240

6,853,727

3,49

7,700

-‐ 238,848

24,458,515

Foreign currency exchang

e differences

-‐ (3,339,865)

(2,093,221)

(1,611,753)

(969

,956)

(25,703)

(8,040,498

)

Bal

ance

at 3

1 D

ecem

ber 2

017

-‐ 69

,600

,481

59

,623

,398

41

,150

,821

30

,673

,170

1,

037,

710

202,

085,

580

Dispo

sal of sub

sidiaries (note 35)

-‐ (2,214,055)

(129

,016)

(83,277)

-‐ -‐

(2,426

,348)

Depreciation expense

-‐ 12,520,661

5,717,358

3,505,352

-‐ 158,679

21,902,050


e differences

-‐ (30,082)

(86,032)

(28,86

3)

45,083

(6,851)

(106

,745)

Bal

ance

at 3

1 D

ecem

ber 2

018

-‐ 79

,877

,005

65

,125

,708

44

,544

,033

30

,718

,253

1,

189,

538

221,

454,

537

CAR

RY

ING

AM

OU

NT

At 31 Decem

ber 2

017

123,593,818

379,26

8,26

4 23,338,760

10,695,042

219,159,736

1,784,179

757,839,799

At 3

1 D

ecem

ber 2

018

92,3

69,9

01

422,

184,

885

25,4

92,5

47

15,3

30,6

99

204,

829,

346

1,61

2,98

5 76

1,82

0,36

3 At 31 Decem

ber 2

018, property, plant and

equ

ipment (PPE

) of the Group

with

a carrying am

ount of C

HF 248.8 million (31 Decem

ber 2

017: CHF 183.0 million) were pledged to secure bo

rrow

ings of

the Group

as describ

ed in note 31. See note 11 fo

r the capita

lized finance cost during the year.

During 2018, the Group

has successfully com

pleted th

e sale of its Egyptian Hotels “Cita

del A

zur H

otel”, Royal Azur” and

“Club Azur” as well as a land

plot in Makadi. Further, th

e Group

has

deconsolidated Tam

weel G

roup

as they have lost con

trol. For fu

rther d

etails refer to no

tes 26

and

35.

During 2017, three hotels in M

akadi in the total fair value amou

nt of C

HF 27.9 m

illion were transferred to investment p

roperty as th

ey were rented out to

FTI, a re

lated party tour operator, fo

r three

years. The gain on

revaluation of property reclassifie

d to investment p

roperty of CHF 15.6 million is sho

wn net o

f tax with

in other com

prehensive income (note 28.4).

Error c

orrection

Capita

lised

cost of property un

der constructio

n in the amou

nt of CHF 7.3 million, that were no

t eligible to be

capita

lised

, were discovered

while preparin

g the fin

ancial statements. T

he entr ie

s incurred

in th

e fin

ancial periods from

2010 to 2016 and were no

t sub

ject to

any sched

uled

depreciation in th

e past. T

he correction is re

garded

as an error in accordance with

the provisions of IAS 8.

Prop

erty, plant and equipm

ent and accumulated

losses were thus reduced and

increased

, respectiv

ely, by CHF 7.3 million in the initia

l balance sheet as of 1 Janu

ary 2017. As this amou

nt is

immaterial com

pared to th

e total assets held by the Group

, it w

as decided

not to

present a th

ird balance sheet.

F-‐38

15 P

RO

PER

TY, P

LAN

T A

ND

EQ

UIP

MEN

T

CHF

Free

hold

land

B

uild

ings

P

lant

and

eq

uipm

ent

Furn

itur

e an

d fix

ture

s P

rope

rty

unde

r co

nstr

ucti

on

Ass

ets

unde

r fin

ance

leas

e To

tal

COST

Bal

ance

at 1

Jan

uary

201

7 12

7,58

3,76

3 42

9,85

1,72

0 83

,413

,473

55

,199

,640

26

9,66

2,29

1 2,

885,

085

968,

595,

972

Restatement o

f prio

r year error

-‐ -‐

-‐ -‐

(7,281,295)

-‐ (7,281,295)

Res

tate

d ba

lanc

e at

1 J

anua

ry 2

017

127,

583,

763

429,

851,

720

83,4

13,4

73

55,1

99,6

40

262,

380,

996

2,88

5,08

5 96

1,31

4,67

7

Add

ition

s 816,278

17,606

,569

7,44

7,453

2,735,540

26,798

,333

-‐-‐

55,404,173

Transfer to

investment p

roperty (note 16)

(135,182)

(16,806,084)

(6,145,834)

(4,087,248)

-‐ -‐

(27,174,348)

Transfer from

property un

der con

struction

-‐ 35,189

,491

940,727

-‐ (36,130,218)

-‐ -‐

Transfer to

inventories

(229

,103)

(3,528,856)

(118,692

) (138,580)

(4,460

,873)

-‐ (8,476,104)

Dispo

sals

(5,827)

-‐ (79,619)

(428,905)

-‐

(514,351)


e differences

(4,436,111)

(13,44

4,09

5)

(2,495,350)

(1,434,584)

1,244,66

8 (63,196)

(20,62

8,66

8)

Bal

ance

at 3

1 D

ecem

ber 2

017

123,

593,

818

448,

868,

745

82,9

62,1

58

51,8

45,8

63

249,

832,

906

2,82

1,88

9 95

9,92

5,37

9

Add

ition

s -‐

54,075,177

7,98

1,26

1 7,979,227

2,400,516

-‐ 72,436,181

Dispo

sal of sub

sidiaries (note 35)

(31,184,733)

(13,107,057)

(279,969

) (70,523)

(745,467)

-‐ (45,387,749)

Transfer from

property un

der con

struction

-‐ 13,041,292

44

,027

-‐ (13,085,319)

-‐ -‐


e differences

(39,184)

(816,267)

(89,222)

120,165

(2,855,037)

(19,366)

(3,698

,911)

Bal

ance

at 3

1 D

ecem

ber 2

018

92,3

69,9

01

502,

061,

890

90,6

18,2

55

59,8

74,7

32

235,

547,

599

2,80

2,52

3 98

3,27

4,90

0



F-‐41

17.1 Allocation of goodwill to cash-‐generating units Annual test for impairment

An impairment test of goodwill was performed by the Group to assess the recoverable amount of its goodwill. No impairment was recorded as 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 2018 2017

Hotel companies * Hotels 2,810,549 2,829,971

2,810,549 2,829,971

*Each subsidiary considered separately

Hotels

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 five-‐year period with an average discount rate of 23.5% per annum (2017: 21.9% per annum) was used for the value in use calculation. The discount rate is based on a risk free post-‐tax interest rate of 7.34% (the pre-‐tax risk free rate used is 9.17%; applying the 20% Egyptian tax rate for sovereign bonds, the post-‐tax risk free rate of 7.34% resulted), a beta of 1.24 (2017: 1.3) as well as a risk premium of 14.42% (2017: 8%). For the terminal value calculation, a terminal growth rate of 3% (2017: 2%) was used.

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 based on their business forecasts, 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.

F-‐40

16 INVESTMENT PROPERTY

The following table summarizes movements, which have occurred, during the current reporting period, on the carrying amount of investment property.

CHF 2018 2017

FAIR VALUE OF COMPLETED INVESTMENT PROPERTY

Balance at the beginning of the year 7,500,868 5,501,334

Addition -‐ -‐

Transfer from property, plant and equipment (note 15) -‐ 27,956,313

Reclassified to assets held for sale (note 26) -‐ (27,956,313)

Revaluation gain (through P&L) (note 10) 325,490 616,649

Foreign currency translation adjustment (497,560) 1,382,885

Balance at the end of the year 7,328,798 7,500,868

The fair values at 31 December 2018 were determined based on an internal valuation model performed by Group management. In estimating the fair value of the investment properties, management considers the current use of the properties as their highest and best use.

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 23.5% (cost of equity). For the terminal value a perpetual growth rate of 2% was used. In 2017, an average discount rate of 21.9% and a perpetual growth rate of 3% were used.

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.

CHF 2018 2017

Rental income from investment properties (i) 3,694,088 2,699,781

Direct operating expenses (including repairs and maintenance) arising from investment properties that generated rental income during the period

222,031 195,371

(i) See note 7.1 for further information on the Group’s rental income.

17 GOODWILL

CHF 2018 2017

Cost 2,810,549 2,829,971

Accumulated impairment losses -‐ -‐

Carrying amount at end of year 2,810,549 2,829,971

CHF 2018 2017

COST

Balance at beginning of year 2,829,971 2,893,347

Effect of foreign currency exchange differences (19,422) (63,376)

Balance at end of year 2,810,549 2,829,971



F-‐43

Country – Company name Domicile FC Share/paid

in capital

Proportion of ownership interest and voting power held by the Group

Segment

HO* R&C LS DM Other HQ

Montenegro

Lustica Development Ad Podgorica Podgo-‐rica

EUR 11,025,000 90.90%

Morocco

Oued Chibika Development (SA) Casa-‐blanca

MAD 367,420,258 55.00%

Chbika Rive Hotel Casa-‐blanca

MAD 66,000,000 100.00% UC

Oman Madrakah Hotels Management Company LLC

Muscat OMR 4,350,000 70.00%

Muriya Tourism Development Company (S.A.O.C)

Muscat OMR 25,525,800 70.00%

Salalah Beach Tourism Development Company (S.A.O.C)

Muscat OMR 35,922,530 70.00%

Sifah Tourism Development Company (S.A.O.C)

Muscat OMR 42,947,800 70.00%

Soda Tourism Development Co. 2) Muscat OMR 12,646,260 49.00%

Wateera Property Management Company LLC

Muscat OMR 270,000 70.00%

United Arab Emirates

RAK Tourism Investment FZC Ras al Khaimah

AED 7,300,000 73.00% 5

United Kingdom Eco-‐Bos Development Limited Cornwall GBP 10,000,000 75.00%

1) The direct ownership of ODE in Azur for Floating Hotels Company S.A.E. is 51% therefore the Group has control over this company even though from a Group perspective the ownership is below 50%.

2) The Group has control over Soda Tourism Development Company as one of Group’s subsidiaries holds a 70% interest.

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

F-‐42

18 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 Share/paid-‐ in capital

Proportion of ownership interest and voting power held by the Group

Segment

HO* R&C LS DM Other HQ

Egypt

Abu Tig for Hotels Company Red Sea EGP 3,412,500 84.54% 2

Accasia for Hotels Company Cairo EGP 25,000,000 84.54% 5

Arena for Hotels Company S.A.E Cairo EGP 20,000,000 100.00% 4

Azur for Floating Hotels Company S.A.E 1)

Cairo EGP 3,000,000 43.24% 5

Captain for Hotels Company Red Sea EGP 768,750 84.54% 3

El Dawar for Hotels Company Cairo EGP 9,560,000 84.54% 3

El Khamsa for Hotels & Touristic Establishments

Red Sea EGP 48,000,000 84.51%

El Golf for Hotels Company & Touristic Establishments

Cairo EGP 22,000,000 84.54% 5

El Gouna for Hotels Company S.A.E Cairo EGP 79,560,000 59.78% 5

El Gouna Hospital Company Red Sea EGP 19,000,000 64.02%

El Gouna Services Company Red Sea EGP 250,000 84.79%

El Mounira for Hotels Company S.A.E Red Sea EGP 14,000,000 63.35% 4 El Tebah for Hotels & Touristic Establishments Company

Cairo EGP 52,000,000 59.77% 5

El Wekala for Hotels Company Cairo EGP 39,000,000 63.56% 4 International Company for Taba Touristic Projects (Taba Resorts)

Cairo EGP 96,000,000 54.84% 5

International Hotel Holding Cairo EGP 452,367,300 84.54%

Marina 2 for Hotels & Touristic Establishments Company

Cairo EGP 19,250,000 50.72% 4

Marina 3 for Hotels & Touristic Establishments Company

Cairo EGP 26,000,000 84.54% 4

Med Taba for Hotels Company S.A.E Cairo EGP 51,000,000 56.61% 4 Misr El Fayoum for Touristic Development Company S.A.E

Cairo EGP 28,000,000 57.03%

Mokbela for Hotels Company S.A.E Cairo EGP 85,000,000 69.62% 5

Orascom Development Egypt S.A.E Cairo EGP 1,108,307,375 84.79%

Orascom Housing Company Cairo EGP 22,000,000 84.79% Paradisio for Hotels & Touristic Establishments Company S.A.E

Red Sea EGP 18,500,000 84.54% 4

Rihana for Hotels Company S.A.E Red Sea EGP 13,000,000 50.72% 4

Roaya for Tourist & Real Estate Development SAE

Red Sea EGP 50,000,000 63.15%

Royal for Investment & Touristic Development S.A.E

Cairo EGP 50,000,000 52.25% 4

Taba First Hotel Company S.A.E Cairo EGP 105,000,000 50.68% 5

Taba Heights Company S.A.E South Sinai

EGP 157,510,000 83.94%

Tamweel Leasing Finance Co. ILC Cairo EGP 50,000,000 73.08%

Tamweel Mortgage Finance Company S.A.E

Cairo EGP 100,000,000 74.18%

Tawila for Hotel Company S.A.E Cairo EGP 68,000,000 84.54% 5 Mozn Investment and Tourism S.A.E. Red Sea EGP 268,520,000 99.99% 5



F-‐45

18.2 Changes in the Group’s ownership interests which have occurred during the year 2018

On 15 April 2018, in line with the Group’s strategy of enhancing its balance sheet and increasing the liquidity of the stock of its listed Egyptian subsidiary ODE, ODH has successfully sold 18.2 million shares of ODE (8.2%) to a set of strategic investors through an accelerated book building process. The net proceeds of the sale of CHF 32.7 million which are recognised directly through equity (for further details refer to the statement of changes in equity) will be used to finance the Group’s expansion plans in Oman and Montenegro for the year, further diversifying the revenue contribution coming from the different destinations. As at 31 December 2018, the Company owns 76.6% of ODE shares.

On 3 May 2018, the Group has successfully completed the sale of its Egyptian Hotel “Citadel Azur Hotel”. Further, in December 2018, the Group completed the sale of its Egyptian Hotels “Royal Azur” and “Club Azur” as well as a land plot in Makadi. For further details refer to notes 26 and 35.

Further, in December 2018, the Group has deconsolidated Tamweel Group as they have lost control over Tamweel Group. For further details refer to notes 26 and 35.

2017

In 2017, the 30% interest in Garranah Group subsidiaries, was swapped into a 3% interest in the share capital of Royal for Investment & Touristic Development S.A.E., a consolidated subsidiary of the Group.

19 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/ business

Proportion of ownership interest and voting

power held by the Group

Carrying value (CHF )

2018 2018 2017

Andermatt Swiss Alps AG (i) Switzerland 49.00% 21,710,837 40,450,887

Orascom Housing Communities (ii) Cairo 35.25% 3,120,202 3,676,791

Jordan Company for Projects and Touristic Development (iii)

Jordan 18.33% 13,125,542 14,136,976

Red Sea for Construction & Deveolpment (iv) Cairo 40.20% 5,672,487 2,557,646

Orascom for Housing and Establishments (v) Cairo 39.90% -‐ -‐

TOTAL 43,629,068 60,822,300

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, OHC,JPTD and RSCD 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 (2017: none).

(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.

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.

F-‐44

18.1. 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

31/12/2018 31/12/2017 31/12/2018 31/12/2017 31/12/2018 31/12/2017

Orascom Development Egypt S.A.E.

24.90% 15.21% 7,803,715 3,648,362 25,242,112 31,058,373

Sifah Tourism Development Co. 30.00% 30.00% (2,544,614) (4,889,586) 22,082,218 23,708,323

RAK Tourism Investment FZC 27.00% 27.00% (97,633) (150,315) 12,424,532 12,461,818

Individually immaterial subsidiaries with non-‐controlling interests 107,331,603 81,907,368

TOTAL 167,080,465 149,135,882

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.

ODE Sifah RAK

31/12/2018 31/12/2017 31/12/2018 31/12/2017 31/12/2018 31/12/2017

Current assets 250,677,736 306,605,525 66,196,046 66,314,322 10,902,505 10,411,272

Non-‐current assets 238,334,492 229,312,500 91,305,458 93,896,183 77,167,558 78,801,530

Current liabilities (142,563,407) (403,449,128) (83,894,112) (80,824,590) (21,942,028) (18,586,965)

Non-‐current liabilities (237,911,714) (34,195,887) -‐ (358,173) (20,111,250) (24,470,955)

Equity attributable to owners (76,040,300) (67,214,637) (51,525,174) (55,319,419) (33,592,254) (33,693,064)

Non-‐controlling interests (25,242,112) (31,058,373) (22,082,218) (23,708,323) (12,424,532) (12,461,818)

Revenue 193,257,452 140,872,883 18,951,361 7,296,611 31,970,532 30,282,051

Profit/(loss) for the year 31,340,221 23,986,600 (8,482,046) (16,298,620) (361,603) (556,723)

attributable to owners 23,536,506 20,338,238 (5,937,432) (11,409,034) (263,970) (406,408) attributable to non-‐controlling interests

7,803,715 3,648,362 (2,544,614) (4,889,586) (97,633) (150,315)

Other comprehensive income for the year

77,135,824 91,692,090 -‐ -‐ -‐ -‐

attributable to owners 57,929,004 77,745,723 -‐ -‐ -‐ -‐ attributable to non-‐controlling interests

19,206,820 13,946,367 -‐ -‐ -‐ -‐

Total comprehensive income for the year

108,476,045 115,678,690 (8,482,046) (16,298,620) (361,603) (556,723)

attributable to owners 81,465,510 98,083,961 (5,937,432) (11,409,034) (263,970) (406,408) attributable to non-‐controlling interests

27,010,535 17,594,729 (2,544,614) (4,889,586) (97,633) (150,315)

Net cash inflow/(outflow) (1,300,918) 24,204,292 (517,964) 1,563,536 (430,734) 2,512,310

from operating activities 9,990,682 29,306,416 (6,461,161) 1,563,536 (1,011,190) 2,512,310

from investing activities (1,124,833) (5,383,471) (698,020) -‐ (253,377) -‐

from financing activities (10,166,767) 281,347 6,641,217 -‐ 833,833 -‐

Except for exchange differences arising on translating the foreign operations there are no other items of other comprehensive income.



F-‐47

(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.

Summarised financial information in respect of JPTD is set out below:

2018 2017

Current assets 29,797,896 44,432,071

Non-‐current assets 126,852,392 126,104,154

Current liabilities (28,254,848) (28,194,386)

Non-‐current liabilities (56,788,557) (56,667,036)

Net assets 71,606,883 85,674,803

Revenue for the year 29,964,760 30,239,944

Profit/(loss) for the year (5,977,529) (5,455,537)

Other comprehensive income for the year -‐ -‐

Total comprehensive income for the year (5,977,529) (5,455,537)

Group’s share of comprehensive income for the year (1,095,681) (1,000,000)

Reconciliation of the above summarised financial information to the carrying amount of the interest in JPTD recognised in the consolidated financial statements:

2018 2017

Net assets of the associate over Group level 71,606,883 77,124,801

Proportion of the Group’s ownership interest in JPTD 18.33% 18.33%

Carrying amount of the Group’s interest in JPTD 13,125,542 14,136,976

(iv) Red Sea for Construction & Development (“RSCD”)

During 2016, Red Sea for Construction & Development, of which the Group held a direct interest of 0.4% as well as an indirect interest of 14% through OHC, increased its share capital from EGP 25 million to EGP 50 million. Of these EGP 25 million, the Group invested EGP 20 million (CHF 2.2 million), resulting in a total interest of 40.20%. Hence, the investment is now classified as an associate. The investment in associates is initially recognised at the consideration paid for the capital increase with any previously acquired interests recognised at fair value.

Summarised financial information in respect of RSCD is set out below:

2018 2017

Current assets 53,158,670 41,795,236



Non-‐current liabilities -‐ -‐

Net assets 14,110,664 4,708,635


Profit/(loss) for the year 7,783,930 2,254,919


Total comprehensive income for the year 7,783,930 2,254,919

Group’s share of comprehensive income for the year 3,129,140 906,478

F-‐46

Summarised financial information in respect of ASA is set out below:

2018 2017

Current assets 273,573,914 196,032,749



Non-‐current liabilities (463,131,299) (386,339,753)

Net assets 28,823,788 71,567,339


(Loss) for the year (38,245,000) (32,853,708)

Other comprehensive income for the year -‐


Group’s share of comprehensive income for the year (18,740,050) (16,098,317)

Reconciliation of the above summarised financial information to the carrying amount of the interest in ASA recognised in the consolidated financial statements:

2018 2017


Proportion of the Group’s ownership interest in ASA 49% 49%

Carrying amount of the Group’s interest in ASA 21,710,837 40,450,887

(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.

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 was CHF 14.6 million.

Summarised financial information in respect of OHC is set out below:

2018 2017

Current assets 27,759,230 23,644,459



Non-‐current liabilities -‐ (1,646,628)

Net assets 8,851,636 8,558,974


Profit/(loss) for the year (1,506,020) (2,039,700)



Group’s share of comprehensive income for the year (530,804) (718,902)

Reconciliation of the above summarised financial information to the carrying amount of the interest in OHC recognised in the consolidated financial statements:

2018 2017


Proportion of the Group’s ownership interest in OHC 35.25% 35.25%

Carrying amount of the Group’s interest in OHC 3,120,202 3,676,791



F-‐49

22 INVENTORIES

CHF 2018 2017

Construction work in progress (i) 75,706,627 78,022,922

Land held for development under purchase agreements (ii) 19,488,101 25,443,635

Other inventories (iii) 23,329,091 24,116,606

TOTAL 118,523,819 127,583,163

(i) This amount includes real estate construction work under progress. The real estate units are sold off plan. The main reasons

for the decrease in inventory compared to 31 December 2017 are adjustment due to the first-‐time adoption of the new revenue standard (note 2.1) as well as completed and delivered units mainly in Egypt and Montenegro in 2018. For further details on the net realisable value of construction work in progress refer to note 4.2.6.

(ii) In 2008, the finance leases between ODE and General Authority for Touristic and Development (“GATD”) in Egypt for development of land were terminated and replaced with purchase agreements with GATD. On May 2008, ODE 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, ODE 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 ODE.

(iii) This amount includes hotels inventory of CHF 13.8 million (2017: CHF 15.2 million) as well as completed but unsold units of CHF 9.5 million (2017: CHF 8.9 million)

In 2018 and 2017, no inventory was written down.

23 TRADE AND OTHER RECEIVABLES

CHF 2018 2017

Trade receivables (i) 87,354,948 52,946,546

Notes receivable 36,354,221 33,627,466

Credit loss allowance (note 37.9) (16,973,569) (17,692,833)

TOTAL 106,735,600 68,881,179

(i) Trade and other receivables increased by CHF 13.5 million due to reclassification from non-‐current receivables as well as due to increased operating activities. The increase was partly netted of by foreign currency translation losses due to the devaluation of the Egyptian Pound (note 28.6). 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 customer’s default.

F-‐48

Reconciliation of the above summarised financial information to the carrying amount of the interest in RSCD recognised in the consolidated financial statements:

2018 2017


Proportion of the Group’s ownership interest in RSCD 40.20% 40.20%

Carrying amount of the Group’s interest in RSCD 5,672,487 2,557,645

(v) 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 2018 is unchanged to prior year. In previous years, the investment was reduced to CHF nil as the losses in their last financial statements exceeded the carrying amount of the investment.

20 NON-‐CURRENT RECEIVABLES

CHF 2018 2017

Trade receivables 7,639,751 20,352,879

Notes receivable 24,274,184 17,725,351

TOTAL 31,913,935 38,078,230 Non-‐current receivables include long term receivables for land and real estate contracts, which will be collected over an average collecting period of 5.5 years (2017: 5.5 years)

For details on the calculation of the loss allowance, refer to note 37.9.

The decrease in non-‐current receivables is mainly due to reclassifications within the real estate segment as well as foreign currency exchange losses.

Receivables with a carrying amount of CHF 11.2million (2017: CHF 13.4 million) have been pledged to secure borrowings.

21 OTHER FINANCIAL ASSETS

Details of the Group’s other financial assets are as follows:

CHF Current Non-‐current

2018 2017 2018 2017

Financial assets carried at fair value through other comprehensive income (FVTOCI)

Nasr City company for Housing & Development (N.C.H.R.) -‐ 1,614 2,548 Egyptian Resort Company (i) -‐ 329 331 Reclaim Limited -‐ 648,342 533,724 Desert Cruise LLC -‐ 115,108 114,502 Camps and Lodges Company -‐ 16,497 16,612 Palestine for Tourism Investment Company -‐ 9,418 9,483 El Koseir Company -‐ 187 188

TOTAL -‐ 791,495 677,388

(i) Egyptian Resort Company

In September 2017, the Group sold its 47.224 million shares in the listed Egyptian Resort Company, the Group’s most significant financial asset within other financial assets for total proceeds of CHF 3.3 million. Accumulated losses of CHF 15.9 million, which were accumulated within reserves, were reclassified to retained earnings upon sale of the shares. Prior to the sale of the shares, a total of CHF 1.2 million was recorded in net losses on financial assets at FVTOCI within other comprehensive income in 2017.



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result in total cash proceeds of CHF 27.4 million (for further details refer to note 35). Also, ODH through its Egyptian subsidiary Orascom Development Egypt (ODE) has signed the sale contract for all of its stake of 87% in Tamweel Group at a total equity valuation of the equivalent of approximately CHF 20 million (for further details refer to note 26(ii)). In addition to this sale, the Group has also sold its 100% stake in "Citadel Azur Hotel" located in Sahl Hashish, Egypt, for an EV of CHF 48.4 million (for further details refer to note 26). Also, in April 2018, an 8.2% stake of ODE was successfully sold to a set of strategic investors for a total of approximately CHF 32.7 million (note 6).

Those sale transactions will further strengthen our financing position and solidify our thesis and will strengthen our balance sheet moving forward and will be utilized for the expansion plans that are needed in Oman and Montenegro which will help us to continue invest our capital to drive growth and prioritize our time and resources to build a stronger and sustainable organization.

In April 2019, the Chairman signed a new letter of commitment to avail up to CHF 15 million until the end of December 2020. Of the amount previously committed in April 2018, a total amount of CHF 5.3 million was drawn-‐down by the Group until the end of December 2018. Management believes that these plans are sufficient to substantially mitigate the liquidity risk.

26 ASSETS HELD FOR SALE

CHF 2018 2017

ASSETS HELD FOR SALE

Related to Royal (i) -‐ 26,423,943

Related to Makadi (i) 5,479,665 5,271,224

Related to Tamweel (ii) -‐ 75,281,863

Total assets held for sale 5,479,665 106,977,030

LIABILITIES ASSOCIATED WITH ASSETS HELD FOR SALE

Related to Royal (i) -‐ (21,711,826)

Related to Makadi (i) (518,005) (23,878)

Related to Tamweel (ii) -‐ (62,671,542)

Total liabilities associated with assets held for sale (518,005) (84,407,246)

(i) Disposal of Royal and Makadi

During 2017, ODE, the largest Egyptian subsidiary of the Group, has signed the final offer for the sale of 100% of its equity stake in Makadi Gardens, Royal Azur and Club Azur (“Royal and Makadi”).

A contract was signed with a related party at an amount of USD 24.2 million (CHF 23.8 million) and all required procedures to finalize the sale and transfer of ownership of the Royal company were finalized in Q4 2018. As a result, ODE lost control on Royal for Investment and Touristic and derecognised the disposal group excluding the Makadi garden hotel from its financial statements as of December 2018.

The required procedures to finalize the sale of the Makadi garden hotel are still in process. Therefore, this part of the disposal group is still classified as disposal group for the year ended December 2018.

The disposal group does not qualify as discontinued operation as it is neither separate major line of business nor geographical area of operations.

(ii) Disposal of Tamweel

In the second half of 2016, the Board of Directors decided to sell its stake in Tamweel Group companies (“Tamweel”) and management has engaged a third party as sell side advisor. On 24 May 2018, ODE, the largest Egyptian subsidiary of the Group, signed the final sale contract for all its stake in Tamweel at a value of EGP 360 million (CHF 19.7 million) to a consortium of investors. The consortium includes (Ebtikar for Financial Investment S.A.E (related parties), TCV and Acquire).

As per the terms and conditions stated in the sale contract, which was approved by the ordinary general assembly of ODE on 24 June 2018, the agreement became effective for both parties during November 2018. The company initiated the share transfer and sent the instructions to the broker to be finalized. ODE also notified the Egyptian stock exchange authority. The sale contract stated also restrictions on ODE which prevent the company from taking any managerial or operational decisions related to Tamweel management. As a result, ODE lost control over Tamweel and derecognised the disposal group upon the completion of all the conditions precedents and depositing the cash proceeds in the escrow account prior to 31 December 2018. Transfer of title is still subject to regulatory approvals.

Tamweel does not qualify as discontinued operation as it is neither a separate major line of business nor a geographical area of operations.

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24 OTHER CURRENT ASSETS

CHF 2018 2017

Advance to suppliers (i) 17,741,539 17,521,523

Amount due in relation to sale of Tamweel group (note 35) (iii) 16,794,712 -‐

Other debit balances (iii) 9,790,609 3,270,349

Prepaid expenses 9,448,793 5,109,475

Prepaid sales commissions related to uncompleted units 8,660,620 5,825,684

Withholding tax (iii) 5,849,677 5,390,628

Advance payment or OWEST “New Project” 4,915,476

Letters of guarantee – cash margin (iii) 2,317,702 340,795

Deposit with others (iii) 2,101,064 6,341,227

Accrued revenue (iii) 1,452,469 460,547

Cash imprest (iii) 834,246 655,037

Down payments for investments 425,066 -‐

Amounts due from employees and the management team (ii) (iii) 245,294 177,893

TOTAL 80,577,267 45,093,158

(i) Advance to suppliers relates to advances paid in Oman, Egypt and Montenegro. The increase is mainly due to increases in advances in Montenegro and Oman.

(ii) This amount is due from employees and management team including executive board members as a result of receiving two million ODE shares in 2007. These shares were previously issued based on a general assembly resolution in ODE 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 38). All shares were swapped at a rate of 1:10 for ODH shares in 2008. 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. As the share price decreased substantially since the allocation of the shares, provisions against these receivables were recognized in 2011 and 2012. 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 2012. This resulted in a residual amount of CHF 264,825(2017: 177,893) which is due from employees and management team including executive board members and a residual provision of CHF 264,825 (2017: CHF 177,893). All other amounts due were netted off.

(iii) These other currents assets in the total amount of CHF 39.4 million are considered financial assets in accordance with IFRS 9 (note 37.3). None of these financial assets are overdue or impaired.

25 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:

CHF 2018 2017

Cash and cash equivalents 138,267,680 99,454,931

Cash and cash equivalents included in assets held for sale -‐ 4,216,702

Balance at the end of the year 138,267,680 103,671,633

25.1 Management’s plans to manage liquidity shortages and related uncertainty ODH continues to deliver strong results and operational growth across all its business segments. The successful execution of the three-‐pillar strategy that as communicated to the market back in June 2016 resulted into enhanced operational and financial results. ODH is a unique group with an exceptional record of accomplishment and a very promising future. The Group has been growing its revenue stream from all its destinations and increasing its profitability.

In 2018, so far, the Group has successfully delivered on the initiatives that have been communicated to the market. During 2018, the Group signed the sale of 3 hotels in Makadi area on the Red Sea, owned by ODE, for a total EV of CHF 49.0 million, which will



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27.3 Authorized capital

There is no such capital as at 31 December 2018 and 31 December 2017, respectively.

27.4 Conditional capital

The share capital may be increased by a maximum amount of CHF 30.0 million through the issuance of up to 6 million fully paid registered shares with a nominal value of CHF 5.00 each

a) up to the amount of CHF 5 million corresponding to 1 million 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 25 million corresponding to 5 million 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 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.

At 31 December 2018, no option rights, conversion rights or warrants had been granted on that basis.

27.5 Significant shareholders 2018 2017

CHF Number of shares % Number of shares %

Samih Sawiris (i) 25,305,508 62.62% 25,075,479 62.06%

Thursday Holding 2,086,306 5.16% 2,316,335 5.73%

OS Holding 2,049,782 5.07% 2,049,782 5.07%

SOS Holding 21,653 0.05% 14,419 0.03%

Others 10,946,677 27.10% 10,953,911 27.11%

TOTAL 40,409,926 100.00% 40,409,926 100.00%

(i) The shares of Samih Sawiris are held directly and through his entities Thursday Holding, OS Holding and SOS Holding.

28 RESERVES (NET OF INCOME TAX)

CHF 2018 2017

Share premium (note 28.1) 833,948,897 98,488,244

Treasury shares (note 28.2) (5,207,662) (4,570,754)

Share-‐based payment reserve (note 28.3) 2,499,999 1,666,665

PP&E revaluation reserve (28.4) 1,435,587 9,978,470

Investments revaluation reserve (note 28.5) (173,174) (172,229)

General reserve (note 28.6) 4,916,868 4,916,868

Foreign currencies translation reserve (note 28.7) (335,768,166) (356,520,727)

Reserve from common control transactions (note 28.8) (72,519,921) (98,984,339)

Equity swap settlement (note 28.9) -‐ (2,114,229)

TOTAL 429,132,428 (347,312,031)

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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:


Makadi Royal Makadi Tamweel

Non-‐current assets

Property, plant and equipment -‐ -‐ -‐ 447,763

Investment property 5,479,665 22,685,089 5,271,224 -‐

Non-‐current receivables -‐ -‐ -‐ 25,104,069

Finance lease receivables -‐ -‐ -‐ 26,651,469

Current assets -‐ -‐

Inventories -‐ -‐ -‐ 418,575

Trade and other receivables -‐ -‐ -‐ 10,303,374

Finance lease receivables -‐ -‐ -‐ 8,627,401

Other financial assets -‐ -‐ -‐ 785,499

Other currents assets -‐ 1,453,446 -‐ 1,012,419

Cash and bank balances -‐ 2,285,408 -‐ 1,931,294

Assets classified as assets held for sale 5,479,665 26,423,943 5,271,224 75,281,863

Non-‐current liabilities

Non-‐current borrowings -‐ (11,266,012) -‐ (42,244,751)

Deferred tax liabilities (518,005) (4,917,902) (23,878) (265)

Current liabilities -‐

Trade and other payables -‐ (191,569) -‐ (1,334)

Current borrowings -‐ (3,135,150) -‐ (16,904,409)

Current tax liabilities -‐ -‐ -‐ (876,114)

Provisions -‐ -‐ -‐ (332,749)

Other current liabilities -‐ (2,201,193) -‐ (2,311,920)

Liabilities associated with assets classified as assets held for sale

(518,005) (21,711,826) (23,878) (62,671,542)

Net assets classified as disposal group 4,961,660 4,712,117 5,247,346 12,610,321

The above amounts represent the carrying amounts on date of reclassification. No adjustments to fair value less costs to sell had to be made.

27 CAPITAL

27.1 Issued capital CHF 2018 2017

Par value per share 5.00 23.20 CHF

Number of ordinary shares issued and fully paid 40,409,926 40,409,926

Issued capital 202,049,630 937,510,283

27.2 Fully paid ordinary shares In line with the Board of Director’s proposal, the shareholders resolved at the Annual General Meeting on 8 May 2018 to reduce the nominal value of the Company’s shares from CHF 23.20 to CHF 5.00 each and to allocate the aggregate amount of the capital reduction to the Company’s capital contribution reserves.

There were no changes to the share capital in 2017.



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28.6 General reserve 2018 2017



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 ODE, 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 330 029 of the borrowed ODH shares to Mr. Samih Sawiris on 28 July 2011 by way of capital increase, which is further explained in note 39. 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 2013. 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”.

28.7 Foreign currencies translation reserve CHF 2018 2017

Balance at beginning of year (356,520,727) (351,669,206)

Recycling of exchange differences related to disposal of subsidiaries 16,964,461

Exchange differences arising on translating the foreign operations 3,788,100 (4,851,521)

Balance at end of year (335,768,166) (356,520,727)

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 control of a foreign operation.

In 2018, the Egyptian Pound as well as the USD dollar only changed insignificantly against the Swiss Franc.

28.8 Reserve from common control transactions CHF 2018 2017


Disposal of non-‐controlling interest in ODE (note 18.2) 26,829,332 -‐

Acquisition of non-‐controlling interests in subsidiary through swap of shares of investments in associates

(365,514) (291,390)


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 2008. This new structure became effective by way of a share exchange between the shareholders of the initial holding company (ODE) and the new holding company (ODH). Following this acquisition through exchange of equity instruments, ODH became the parent of ODE with an ownership stake of 98.05%, later increased to 98.16% at 31 December 2008.

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 (ODE) 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 (ODE) 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.

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28.1 Share premium CHF 2018 2017


Share capital reduction 735,460,653 -‐


28.2 Treasury shares CHF 2018 2017

Balance at beginning of year (4,570,754) (26,797)

Acquisition of treasury shares (i) (5,933,750) (5,421,560)

Distribution of treasury shares (ii) 5,296,842 877,603


As of 31 December 2018, the Company owned 705,033 own shares (31 December 2017: 785,234).

(i) During 2018, ODH acquired a total of 34,745 treasury shares at a total amount of CHF 0.5 million

(ii) During 2018, ODH transferred a total of 69,946 own shares to the members of the Board of Directors as part of their remuneration (CHF 0.4 million). The treasury shares reserve, which values the shares at original purchase price, has been reduced accordingly and the resulting difference has been recognized as gain directly through retained earnings (CHF 238,501).

During 2017, ODH transferred a total of 150,768 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 0.9 million), has been reduced accordingly and the resulting difference has been recognized as gain directly through retained earnings (CHF 48,124).

28.3 Share-‐based payment reserve CHF 2018 2017

Balance at beginning of year 1,666,665 833,333

Share-‐based payments (note 38) 833,334 833,332


28.4 PP&E revaluation reserve CHF 2018 2017

Balance at beginning of year 9,978,470 -‐

Recycling of revaluation reserve related to disposal of subsidiaries (8,542,883)

Revaluation gain on property reclassified from PP&E to investment property -‐ 9,978,470


On reclassification of property from property, plant and equipment to investment properties (see notes 15 and 16), the property was revalued at its fair value with the revaluation gain recognised through other comprehensive income. For the revaluation a DCF model was used using a 5-‐year cash flow plan. The cost of capital used was 21.87% of which the pre-‐tax risk free rate is 15.0% (post-‐tax risk free rate 12%) and the risk premium 8%. Further a beta of 1.23 as used

28.5 Investments revaluation reserve CHF 2018 2017

Balance at beginning of year (172,229) (17,256,259)

Reclassification of accumulated losses to retained earnings on sale of investment -‐ 15,880,794

Net gain/(loss) arising on revaluation of financial assets at FVTOCI (945) 1,203,236

Balance at end of year (173,174) (172,229)

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”).



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31 BORROWINGS

Current Non-‐current

CHF 2018 2017 2018 2017

Secured -‐ at amortized cost

Credit facilities (i) 16,077,799 117,783,982 -‐ -‐

Bank loans (ii) 21,598,822 144,462,463 334,182,775 111,450,697

Finance lease 512,121 536,029 -‐ 515,659

TOTAL 38,188,742 262,782,474 334,182,775 111,966,356

31.1 Summary of borrowing arrangements The weighted average contractual effective interest rate for all credit facilities and loans is 9.25% (2017: 8.75%). 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 37.10.1.

(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 2018 is 6.56% (2017: 10.78%).

(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 248.8 million (2017: CHF 183.0 million) and receivables with a carrying amount of CHF 11.2million (2017: CHF 13.4 million) have been pledged to secure borrowings (see notes 15 and 20).

In 2018, borrowings decreased by CHF 2.4 million mainly due to the disposal of Mozn (CHF 17.6 million). The decrease was partly set-‐off by to new loan agreements in Oman, measurement of modification of financial liabilities in Egypt and sale and lease back agreements with Tamweel,

31.2 Loan agreements

31.2.1 Syndication loan agreement

In 2016, ODE, an Egyptian subsidiary, signed a syndication agreement with all its short-‐term lenders while subsequently signing a common terms and inter-‐creditor agreement (CTIA) with all lenders (including both the short-‐term lenders and exiting medium term lenders). The syndication agreement groups all short-‐term lenders under one contract and is rescheduling the debt from short term loans (overdraft lines) to one single medium-‐term loan with a door to door tenor of 8.5 years from the date of signing the CTIA. The CTIA is a document that governs the terms of all ODE loans (the newly signed syndication agreement and the existing bilateral medium-‐term loans) so that terms are unified except for the collateral structure which is unique to each individual legal document.

It is worth to mention that the previously mentioned cash proceeds from the ODE relisting was used to pay down the bank debt balances of ODE in 2016 on a pro-‐rata basis and that ODE rescheduled all its existing bilateral medium-‐term loans to loans with a door to door tenor of 7.5 years from the date of signing the CTIA.

All ODE loans after the signed transaction were granted a 3-‐years grace period of loan principal repayment from 30 June 2016 and the ability to capitalize the interest expense for the full year 2016 as well as to capitalize the interest expense for the first half year of 2017.

In 2018, all conditions required to effect the terms under both loan agreements were finalized, accordingly, the effectiveness letter has been received from the inter-‐creditor agent confirming the effectiveness of both agreements on 14 May 2018. This led to a reclassification of loans from current to non-‐current borrowings.

According to CTIA, all interest rates of loans granted to ODE were unified at 5.75% over 6 month libor rate for foreign currency borrowings, and 3% over CBE corridor lending rate for EGP borrowings.

CTIA includes a specified mechanism for dividends distribution upon payment of all Interest and installment previously due in addition to the next upcoming interest and instalment due after the cash dividends. Each bank holds the collateral structure which is unique to each individual legal document.

31.2.2 Common Terms Agreement

In Q4 2018, Salalah Investment and Tourism Development, an Omani subsidiary, signed two long term loan (LTL) agreements with two different lenders with a door to door tenor of 14 years including 1-‐year grace period of loan principal repayment, while subsequently signing a common terms agreement (CTA) with both lenders which is a document that governs the terms of all both LTLs so that terms are unified except for the collateral structure which is unique to each individual legal document.

All previous loans and facilities were fully repaid and settled in Q4 2018.

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28.9 Equity swap settlement CHF 2018 2017


Acquisition of treasury shares 2,114,229 -‐

Balance at end of year -‐ (2,114,229)

The consolidated statement of changes in equity includes a balance of CHF 2.1 million outstanding at 31 December 2018 which has originally arisen from the Group’s sale of the six percent stake in Garranah companies to the Garranah family during 2010. 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 28.2). The residual amount as at 31 December 2017 as due to EDRs which were held in an escrow account and remained unchanged since 31 December 2014. In 2018, those EDRs were transferred to ODH and the equity swap settlement reserve booked out. The residual loss was booked through accumulated losses.

29 ACCUMULATED LOSSES

CHF 2018 2017


Restatement due to prior year error (note 15) -‐ (7,281,295)

Impact of changes in accounting policies (note 2.1) 4,555,047 -‐

Restated balance at beginning of year (180,452,811) (128,063,489)

Loss attributable to owners of the Parent Company (41,461,611) (41,361,129)

Remeasurement gain/(loss) on defined benefit obligation 90,281 249,430

Reclassification of accumulated losses from investment revaluation reserve on sale of investment

-‐ (15,880,794)

Treasury shares received from equity settlement (913,370) -‐

Distribution of treasury shares (note 28.2) 238,501 48,124


During 2017 and 2018, 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.

30 NON-‐CONTROLLING INTERESTS

CHF 2018 2017


Impact of changes in accounting policies 1,162,096 -‐

Restated balance at beginning of year 150,297,978 140,467,237

Share of gain/(loss) for the year 4,106,713 305,714

Exchange differences arising on translation of foreign operations (424,561) (3,011,053)

Revaluation gain on property reclassified from PP&E to investment property -‐ 5,576,101

Acquisition of non-‐controlling interests in subsidiary through swap of shares of investments in associates

-‐ 274,409

Acquisition of non-‐controlling interest share in consolidated subsidiary (325,036) -‐

Dividend distribution (2,862,927) -‐

Disposal of non-‐controlling interests of deconsolidated subsidiary 1,045,505 -‐

Disposal of non-‐controlling interests of consolidated subsidiary 5,897,320 -‐

Other non-‐controlling interest share in equity of consolidated subsidiaries 9,345,473 5,523,474




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33 PROVISIONS

CHF 2018 2017

Current 62,564,805 65,558,335

Non-‐Current -‐ -‐

TOTAL 62,564,805 65,558,335

CHF Provision for infrastructure completion

Provision for legal cases

Provision for governmental

fees

Provision for employee benefits

Other provisions

Total

(i) (ii) (iii) (iv) (v)

Balance at 1 January 2018 12,123,235 19,203,791 2,114,733 6,485,636 25,630,940 65,558,335

Additional provisions recognized

205,275 1,236,388 2,506,279 1,208,469 1,298,697 6,455,108

Reductions arising from payments

-‐ (9,203) (185,170) (90,148) (2,211,809) (2,496,330)

Disposal of subsidiaries -‐ (6,934,130) -‐ -‐ -‐ (6,934,130)

Exchange differences (10,476) 68,652 (104,203) 43,755 (15,906) (18,178)

Balance at 31 December 2018

12,318,034 13,565,498 4,331,639 7,647,712 24,701,922 62,564,805

(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.

(ii) Provision for legal cases consists of expected cash outflows for the settlement of pending litigations. The increase is primarily due to various new legal cases in Egypt and Oman.

(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.

(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.

(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 annually reviews and adjusts these provisions based on the latest developments, discussions and agreements with the involved parties.

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31.3 Reconciliation of liabilities arising from financing activities

Non-‐cash changes

CHF 1 January 2018

Financing Cash-‐flows

FX Accrued Interest

Disposal of groups

Other 31 December 2018

Credit facilities 117,783,982 (6,382,995) (810,893) 12,126 -‐ (94,524,421) 16,077,799

Bank loans and finance leases

256,964,848 9,045,818 (55,437) 8,330,913 (17,614,237) 99,621,813 356,293,718

Borrowings of disposal groups (note 26)

73,550,322 -‐ (425,373) 112,065 (70,200,987) (3,036,027) -‐

Shareholder’s loan (note 34)

47,433,682 3,992,856 808,091 494,638 -‐ -‐ 52,729,267

TOTAL 495,732,834 6,655,679 (483,612) 8,949,742 (87,815,224) 2,061,365 425,100,784

Non-‐cash changes

CHF 1 January

2017 Financing Cash-‐flows

FX Accrued Interest

Other 31 December

2017

Credit facilities 94,290,856 5,565,159 (2,267,111) 20,195,078 -‐ 117,783,982

Bank loans and finance leases 275,277,643 3,226,107 (7,697,394) 1,855,138 (15,696,646) 256,964,848

Borrowings of disposal groups (note 26)

52,154,439 (648,780) (1,104,114) -‐ 23,148,777 73,550,322

Shareholder’s loan (note 34) 20,730,879 27,754,532 1,214,950 -‐ (2,266,679) 47,433,682

TOTAL 442,453,817 35,897,018 (9,853,669) 22,050,216 5,185,452 495,732,834

Other non-‐cash changes mainly include reclassifications as disposal group.

32 TRADE AND OTHER PAYABLES

CHF 2018 2017

Non-‐current trade payables 10,904,783 11,472,492

Current trade and other payables 57,600,804 39,574,361

TOTAL 68,505,587 51,046,853

Trade and other payables increased by CHF 18.1 million mainly due to increased operating activities. There were no other significant changes in 2018.



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35.3 Analysis of assets and liabilities over which control was lost CHF Royal Tamweel Citadel

Non-‐current assets

Property, plant and equipment -‐ 500,149 41,709,850

Projects under progress -‐ 751,402

Investment property 21,870,394

Trade and other receivables -‐ 27,683,372 -‐

Finance lease receivables 20,021,848

Current assets

Inventories -‐ 150,252 196,735

Trade and other receivables 413,011 14,077,789 3,234,746

Finance lease receivables 7,127,866

Due from related parties -‐ -‐ 22,546,002

Other financial assets -‐ 1,053,594 -‐

Other currents assets 1,455,702 426,636 2,796,877

Cash and bank balances 3,293,990 2,980,689 740,524

Non-‐current liabilities

Non-‐current borrowings (8,741,417) (51,322,311) (14,166,375)

Deferred tax liabilities (4,054,531) (19,492) (745,724)

Current liabilities

Trade and other payables (41,182) (1,316) (489,057)

Current borrowings (5,803,041) (4,324,809) (3,905,277)

Provisions -‐ (636,573) (6,934,130)

Current tax liabilities -‐ (665,862) -‐

Other current liabilities (2,205,979) (1,331,323) (1,985,400)

Net assets disposed of (including non-‐controlling interests) 6,186,947 15,720,509 43,750,173

35.4 Gain/(loss) on disposal of subsidiaries CHF Royal Tamweel Citadel

Fair value of consideration received/due 17,398,681 16,777,264 48,358,154

Share of net assets disposed of (3,885,403) (13,676,843) (43,750,173)

Foreign currency translation reserve recycled to profit or loss (107,040) (127,844) (16,729,577)

Revaluation of PPE/investment property recycled to profit or loss 8,542,883 -‐ -‐

Sales commissions -‐ (494,396) (967,163)

Gain/(loss) on disposal 21,949,121 2,478,181 (13,088,759)

35.5 Net cash inflow on disposal of subsidiaries CHF Royal Tamweel Citadel

Consideration received in cash and bank balances 17,398,681 -‐ 27,090,602

Less: cash and bank balances disposed of (3,293,990) (2,980,689) (740,524)

Total net cash inflow on disposal of subsidiaries 14,104,691 (2,980,689) 26,350,078

Consideration received for sale of Tamweel is deferred until final regulatory approvals are received and cash is released from escrow account.

F-‐60

34 OTHER CURRENT LIABILITIES

CHF 2018 2017

Advances from customers (i) 67,256,584 69,771,218

Amounts due to shareholders (ii) (iv) 53,186,740 50,952,940

Other credit balances (iv) 27,884,736 17,028,412

Accrued expenses (iii) (iv) 26,129,625 16,744,504

Deposits from others (iv) 22,494,928 16,061,812

Taxes payable (other than income taxes) (iv) 10,380,859 7,482,690

Due to management companies (iv) 857,180 779,416

TOTAL 208,190,652 178,820,992

(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.

(ii) Amounts due to shareholders include amounts owed to Mr. Samih Sawiris in the total of CHF 48.0 million (2017: CHF 47.7 million) as well as amounts owed to other shareholders in the total of CHF 5.2 million (2017: 3.3 million).

(iii) Accrued expenses mainly include operating costs for the hotel and destination management activities. The decrease is mainly due to increased operating activities.

(iv) These other current liabilities in the total amount of CHF 140.9 million are considered financial liabilities in accordance with IFRS 9.

35 DISPOSALS OF SUBSIDIARIES

35.1 Description of transactions As part of the Group’s strategy to monetize its non-‐core assets, management of ODH decided to sell the following assets:

Citadel Azur Hotel

On 3 May 2018, the Group concluded the sale of its 100% stake in the 514 rooms hotel located in Sahl Hashish, Egypt, to a third party.

Royal Azur Hotel, Club Azur Hotel as well as Makadi land plot

On 27 December 2018, the Group completed the sale of its stake in Royal Azur Hotel and Club Azur Hotel as well as a land plot in the Makadi destination to a related party. For further details on the transaction refer to note 26.

35.2 Consideration received CHF Royal Tamweel Citadel

Consideration received in cash and bank balances 17,398,681 -‐ 27,090,602

Deferred consideration recognised within receivables -‐ 16,777,264 9,542,453

Amounts received as loan in prior years -‐ -‐ 11,725,099

Total consideration received/due 17,398,681 16,777,264 48,358,154



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Movements in the present value of the defined benefit obligation in the current year were as follows:

CHF 2018 2017

Opening defined benefit obligation 1,699,265 1,808,042

Current service cost 143,048 203,511

Past service cost -‐ -‐

Interest expense on defined benefit obligation 12,146 7,484

Contributions from plan participants 98,547 96,058

Benefits (paid)/deposited (169,792) (173,452)

Remeasurement (gain)/loss on defined benefit obligation (89,410) (243,282)

Administration cost (excluding cost for managing plan assets) 850 904

Closing defined benefit obligation 1,694,654 1,699,265

Movements in the present value of the plan assets in the current period were as follows:

CHF 2018 2017

Opening fair value of plan assets 1,190,303 1,160,810

Interest income on plan assets 8,427 4,681

Return on plan assets excluding interest income 871 6,148

Contributions from the employer 98,547 96,058

Contributions from plan participants 98,547 96,058

Benefits (paid)/deposited (169,792) (173,452)

Closing fair value of plan assets 1,226,903 1,190,303

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 9,298 (2017: CHF 10,829).

The principal assumptions used for the purposes of the actuarial valuations were as follows:

2018 2017

Discount rates 1.10% 0.70%

Expected rates of salary increase 1.00% 1.00%

Expected pension increases 0.00% 0.00%

Mortality table BVG2015 GT BVG2015 GT

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 0.1 million (increase by CHF 0.1 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 0.0 million (decrease by CHF 0.0 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 0.0 million (decrease by CHF 0.0 million if all other assumptions were held constant

The average duration of the defined benefit obligation at the end of the reporting period is 18.4 years (2017: 19.8 years)

The Group expects to make a contribution of CHF 102,488 to the defined benefit plans during the next financial year (2017: CHF 91,694).

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36 RETIREMENT BENEFIT PLANS

36.1 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 2018.

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.

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.

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 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:

CHF 2018 2017

Current service cost 143,048 203,511

Net interest expense 3,719 2,803

Administration cost excl. cost for managing plan assets 850 904

Expense recognised in profit or loss 147,617 207,218 Amounts recognised in other comprehensive income in respect of these defined benefit plans are as follows:

CHF 2018 2017

Remeasurement (gain)/loss on defined benefit obligation (89,410) (243,282)

Return on plan assets excl. interest income (871) (6,148)

Expense recognised in other comprehensive income (90,281) (249,430)

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:


Present value of funded defined benefit obligation 1,694,654 1,699,265

Fair value of plan assets (1,226,903) (1,190,303)

Net liability arising from defined benefit obligation 467,751 508,962



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37.3 Categories of financial instruments CHF 2018 2017

Financial assets

Cash and bank balances 138,267,680 103,671,633

Other non-‐current financial assets 791,495 677,388

Fair value through other comprehensive income (FVTOCI) 791,495 677,388

Trade and other receivables 138,649,535 142,366,852

Finance lease receivables -‐ 35,278,870

Due from related parties 33,106,635 23,715,470

Other current financial assets -‐ 785,499

Other current assets 39,385,773 19,102,341

Financial assets measured at amortised cost (i) 211,141,943 221,249,032

Financial liabilities

Borrowings 372,371,517 448,299,152

Trade and other payables 68,505,587 51,239,756

Note payable 32,987 358,173

Due to related parties 3,469,158 3,598,344

Other current liabilities 140,934,068 113,562,888

Financial liabilities at amortised cost (ii) 585,313,317 617,058,313

(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 36.3 million (2017: CHF 28.5 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 67.3 million (2017: CHF 69.8 million) of other current liabilities does not meet the definition of a financial liability.

37.4 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 2018 and 2017, 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.

37.5 Market risk The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see note 37.6 below) and interest rates (see note 37.7 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

F-‐64

37 FINANCIAL INSTRUMENTS

37.1 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 2010.

The capital structure of the Group consists of net debt (borrowings, as detailed in note 31, 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 27 to 30).

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 2018 of 40.66% (see below) decreased due to the disposal of various dis0osal groups and the related disposal of borrowings. These measures ensured that the target recommended by the committee was met as at 31 December 2018.

The gearing ratio at the end of the reporting period was as follows:

CHF 2018 2017

Debt (i) 372,371,517 448,299,152

Cash and cash equivalents (note 25) (138,267,680) (103,671,633)

Net debt 234,103,837 344,627,519

Equity (ii) 575,763,513 561,607,571

Net debt to equity ratio 40.66% 61.36%

(i) Debt is defined as long-‐ and short-‐term borrowings (excluding derivatives), as detailed in (note 31) as well as long-‐ and short-‐

term borrowings included in disposal groups classified as held for sale (note 26). (ii) Equity includes all capital and reserves of the Group and non-‐ controlling interests that are managed as capital excluding

equity of disposal groups.

37.2 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 3.18 Financial instruments.



F-‐67

CHF Currency USD Impact Currency EUR Impact Currency EGP Impact Currency OMR Impact

2018 2017 2018 2017 2018 2017 2018 2017

Profit or loss 4,710,129 6,476,115 326,142 833,888 1,460,477 1,612,353 4,225,465 3,306,704

Equity -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐

The Group's sensitivity to foreign currency has changed in accordance with the changes in EGP, USD, EUR and OMR borrowings.

37.7 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.

During 2018 and 2017 the Group did not hold any derivative financial instruments.

37.7.1 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 2017 would decrease / increase by CHF 2.6 million (2017: decrease / increase by CHF 2.8 million). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings.

37.8 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.

37.9 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 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 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.

Impairment of financial assets For hotel and destination management, the probability of default is based loss percentages of various time buckets whereas for real estate the probability of default is based on the percentage of clients paying irregularly.

Trade receivables of hotel and destination management

The Group uses a provision matrix to calculate ECLs for trade receivables of the hotel and destination management segment. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns.

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-‐looking information. For instance, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in one of the segments or geographical areas,

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37.6 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 60% (2017: 67%), in EUR for 17% (2017: 7%), in EGP for 12% (2017: 14%), in OMR 11% (2017: 9%) and in AED 3% (2017: 3%) 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

CHF 2018 2017

USD 177,025,741 48% 200,676,030 54%

OMR 99,760,440 27% 76,145,140 20%

EGP 46,183,315 12% 47,042,502 13%

EUR 25,268,521 7% 24,223,292 6%

AED 24,133,500 6% 26,636,000 7%

CHF -‐ 0% 25,866 0%

Total 372,371,517 100% 374,748,830 100%

At the end of the reporting period, the carrying amounts of the Group’s major foreign currency denominated monetary assets (mainly receivables) and monetary liabilities (mainly borrowings), at which the Group is exposed to currency rate risk, are as follows:

CHF Liabilities Assets

2018 2017 2018 2017

Currency-‐USD 177,025,741 200,676,030 82,823,162 71,153,696

Currency OMR 99,760,440 76,145,140 15,251,139 10,011,052

Currency-‐EGP 46,183,315 47,042,502 16,973,767 14,795,441

Currency-‐EUR 25,268,521 24,223,292 18,745,685 7,545,537

Residual foreign exchange exposure is managed by hedging through entering into foreign currency forward contracts if needed.

Currency risk has also recently developed due to the Group’s investments in different markets such as those in Egypt, UAE, Oman, 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.

37.6.1 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 expected change in foreign exchange rates (excluding any one-‐off influences due to decisions by government or central banks). 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.



F-‐69

Maturities of non-‐derivative financial liabilities

2018 Weighted average effective interest

rate

Less than 6 month

6 months to one year

1 – 5 years 5 + years Total CHF

Non-‐interest bearing -‐ 156,928,496 -‐ 10,498,721 -‐ 167,427,217 Variable interest rate instruments 10.29% 26,154,987 24,711,389 270,598,302 26,405,247 347,869,925 Fixed interest rate instruments 6.31% 6,054,005 14,788,064 41,264,369 119,600,881 181,707,319

TOTAL 189,137,488 39,499,453 322,361,392 146,006,128 697,004,461

2017 Weighted average effective interest

rate

Less than 6 month

6 months to one year

1 – 5 years 5 + years Total CHF

Non-‐interest bearing -‐ 152,222,479 -‐ 11,830,665 -‐ 164,053,144 Variable interest rate instruments 9.56% 126,799,711 128,467,173 33,527,731 9,015,209 297,809,824

Fixed interest rate instruments 6.76% 11,099,062 20,959,279 75,705,934 16,922,330 124,686,605

TOTAL 290,121,252 149,426,452 121,064,330 25,937,539 586,549,573

CHF 2018 2017

Counterparty Rating Credit limit Carrying amount Credit limit Carrying amount

Syndication -‐ 81,009,033 81,009,033 -‐ -‐

Bank 1 B-‐ 62,058,256 62,058,256 63,363,373 74,186,175 *

Bank 2 -‐ 57,231,350 57,231,350 72,826,661 75,674,738

Bank 3 -‐ 49,880,220 49,880,220 -‐ -‐

Bank 4 -‐ 49,880,220 49,880,220 36,464,328 36,464,328

Bank 5 A 44,633,099 45,654,151 84,818,671 90,143,782

Bank 2 -‐ -‐ -‐ 5,426,260 6,231,994 *

Bank 3 -‐ -‐ -‐ 23,431,289 25,092,410

Bank 4 AA-‐ -‐ -‐ 10,335,780 11,946,049 *

Bank 5 B-‐ -‐ -‐ 11,184,740 11,204,658 * Outstanding amounts 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.

37.11 Fair value measurement 37.11.1 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 2018 31 December 2017

CHF Carrying amount Fair value Carrying amount Fair value

Financial liabilities

Borrowings/bank loans 372,371,517 375,083,208 448,299,152 449,547,578

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the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-‐looking estimates are analysed.

The following table details the risk profile of trade receivables based on the Group’s provision matrix. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished between the Group’s different customer base.

Trade receivables – days past due

31 December 2018 Not past due 31-‐60 61-‐180 181-‐360 >360 Total

Expected credit loss rate 0.19% 0.24% 0.60 89.23% 100%

Estimated total gross carrying amount at default

18,690,859 16,614,096 2,907,467 2,492,114 830,705 41,535,241

Lifetime ECL (35,513) (39,874) (17,445) (2,223,713) (830,705) (3,147,250)

Trade receivables of real estate segment

Based on historical data available, for the trade receivables of the real estate segment, the Group did not observe any significant instances of defaulting in recent years. Based on this business history and the time value of money, management assessed that a loss given default is only applicable to balances overdue my more than 360 days. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, considering cash flows from collateral and integral credit enhancements. Further, the probability of default is determined based on historical date of cash flows from receivables.

Based on the above, the weighted average ECL of the Group is 12.3%, resulting in a bad debt provision as at 31 December 2018 of CHF 13.8 million.

Other financial assets at amortised cost

For all other financial assets measured at amortised cost, including cash and cash equivalents, impairment is based on a 12-‐monthts ECL using the low cred risk operational simplification in assessing the significant increase in credit risk. As at 31 December 2018, none of the of the other financial assets measured at amortised cost are impaired.

Movement in credit loss allowance:

CHF 2018 2017


Impairment losses recognised on receivables (328,350) (786,435)

Amounts written off during the year as uncollectable 314,211 306,664

Impairment losses reversed (allowance no longer used) -‐ 365,144

Reclassified (from)/to assets held for sale -‐ 952,388

Foreign exchange translation gains and losses 733,403 (190,206)


37.10 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 25.1.

As of 31 December 2018, the Group did not have any un-‐drawn facilities at its disposal in order to further reduce liquidity risk (31 December 2017: CHF 26.7 million).

37.10.1 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.



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38 SHARE-‐BASED PAYMENTS

The Company has contractually granted a variable compensation amount to its new CEO, Khaled Bichara (“Contingent Compensation”). The compensation amount is due 6 years after the start date (1 January 2016) or earlier if an acceleration event occurs. In summary, the compensation amount is 10% of the share price increase above an annual average increase of 8% (based on the fixed spot share price of CHF 11.37). The Contingent Compensation will be paid in cash or, at ODH’s discretion, in shares if the annual average increases in the share price are met. As of 9 May 2016, the General Assembly of ODH approved the abovementioned compensation plan. The calculated fair value of the Contingent Compensation as at grant date of CHF 5.0 million, which was calculated by an independent third-‐party valuation company, is recognised over the 6-‐year vesting period on a linear basis within profit or loss. The accumulated amount is shown as a separate share-‐based payment reserve within equity.

The Group compensates the members of the Board with a fixed fee of CHF 1.1 million (note 39.3) 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 2019.

39 RELATED PARTIES

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 venturer (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 in Cairo.

Compensation of key management personnel is disclosed in note 39.3.

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37.11.2 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.

37.11.3 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).

2018

CHF Level 1 Level 2 Level 3 Total

Financial assets at FVTOCI

Listed and unlisted shares measured at FV 1,943 -‐ 789,552 791,495

1,943 -‐ 789,552 791,495

Other assets at fair value

Investment property 1) -‐ -‐ 7,328,798 7,328,798

-‐ -‐ 7,328,798 7,328,798

2017

CHF Level 1 Level 2 Level 3 Total

Financial assets at FVTOCI

Listed and unlisted shares measured at FV 33,123 -‐ 644,265 677,388

33,123 -‐ 644,265 677,388

Other assets at fair value

Investment property 1) -‐ -‐ 7,500,868 7,500,868

-‐ -‐ 7,500,868 7,500,868

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 16.

Reconciliation of Level 3 fair value measurements of financial assets

Unquoted equity securities

CHF 2018 2017

Opening balance 677,388 624,566

Additions -‐ -‐

Total gains/(losses) recognized in other comprehensive income 112,164 52,822

Closing balance 789,552 677,388



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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.

Securities lending agreement

For further details on this transaction refer to note 28.6.

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.

FTI

The Group has rented out 3 hotels at Makadi destination to FTI – an entity owned by the main shareholder of the Company Mr. Samih Sawiris with an interest of 35 %. FTI is the fourth largest tour operator in Europe. The annual rent is fixed at EUR 3.3 million (CHF 3.6 million) for 3 years to be renewed with the agreement of both parties with a 5 % annual increase (note 15).

The group has completed its sale of 100% of its equity stake in Royal Azur and Club Azur as well as hotel of Makadi Gardens and piece of land. Refer to notes 26 and 35 for further details

Red Sea

The total amount of construction work and services with Red Sea for Construction & Development S.A.E (note 19) reached EGP 563 million (CHF 31.0 million) (2017: EGP 279 million (CHF 15.4 million).

39.3 Compensation of key management personnel CHF 2018 2017

Salaries 4,044,167 4,519,999

Other short-‐term employee benefits 2,004,973 216,000

Post-‐employment benefits 18,000 36,000

Share-‐based payments 833,333 833,333

TOTAL COMPENSATION OF KEY MANAGEMENT PERSONNEL 6,900,473 5,605,332

In addition to the amounts mentioned above, the CEO was granted a contingent compensation which is dependent solely on the development of the share price of the Company. For further details on this share-‐based payment refer to notes 28.3 and 38.

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 ODE, 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.

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).

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39.1 Related party balances The following balances were outstanding at the end of the reporting period:

Due from related parties Due to related parties

CHF 2018 2017 2018 2017

Financial instruments

Three Corners Company 7,025,526 5,299,826 -‐ -‐

Red Sea Company for Construction & Develop. 3,331,889 4,565,327 -‐ -‐

Orascom Housing Community 4,805,165 2,995,370 -‐ -‐

El Gouna Football Club 3,155,882 901,541 -‐ -‐

El Gouna for Educational Establishment and Techn.

-‐ -‐ -‐ -‐

Kingdom Co. 5,310,566 618,225 -‐ -‐

Camps and lodges 514,933 518,628 -‐ -‐

Iskan International Projects 6,554 6,599 2,625,312 2,691,572

Andermatt Swiss Alps 508,317 355,791 -‐ -‐

Desert Cruise LLC 250,477 -‐

Other (balances less than CHF 120 000 each) 246,232 515,522 26,170 66,943

Non-‐controlling shareholders

Mirotel For Floating Hotels 182,196 185,777 -‐ -‐

Tarot & Merotil Garranah for hotels 69,468 69,948 -‐ -‐

Tarot Garranah for touristic transportation 34,116 34,352 -‐ -‐

Tarot Tours Garanah -‐ 16,503 817,676 839,829

Close family members

Samih Sawiris – (i) -‐ -‐ -‐ -‐

Close family companies

Meeting Point Egypt 4,423,863 5,064,902 -‐ -‐

FTI 2,798,090 2,085,676 -‐ -‐ Orascom for Touristic Establishments company (OTEC)

439,649 440,871 -‐ -‐

TU Berline University 3,712 40,612 -‐ -‐

Orascom International Hotels & Development -‐ -‐ -‐ -‐

Total 33,106,635 23,715,470 3,469,158 3,598,344

Current 33,106,635 23,715,470 3,469,158 3,598,344

Non-‐current -‐ -‐ -‐ -‐

Total 33,106,635 23,715,470 3,469,158 3,598,344

(i) Current accounts due to Mr. Samih Sawiris are disclosed in note 34. Transactions involving Mr. Samih Sawiris, Chairman and major shareholder:

39.2 Related party transactions Purchase of shares from ODE

On 17 January 2007 ODE 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 CHF 0.2 million at 31 December 2018 (31 December 2017: CHF 0.2 million). There are no amounts due from executive board members under this transaction in 2018 and 2017. (see note 24(ii)).

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,



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41.1.3 Non-‐cancellable operating lease commitments

Total of future minimum lease payments

CHF 2018 2017

Not longer than 1 year 232,800 232,800

Longer than 1 year and not longer than 5 years 931,200 931,200

Longer than 5 years 2,328,000 2,560,800

TOTAL 3,492,000 3,724,800

In respect of non-‐cancellable operating leases, no liabilities have been recognised.

41.2 The Group as lessor

41.2.1 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 Makadi (Egypt). 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. No material non-‐cancellable operating lease receivables exist as at 31 December 2018.

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 16.

42 COMMITMENTS FOR EXPENDITURE

The following commitments for expenditure have been made for the future development of the respective projects:

CHF 2018

Eco-‐Bos Development Limited (i) 4,039,241 (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.

42.1 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 are incurred. However, the Group has non-‐binding business opportunity commitments in relation to their projects. In particular, the Group has minimum building obligations (“MBOs”) which are included in their development agreements (“DAs”) with the relevant governments in Oman, Morocco and Montenegro.

The contingent liabilities in relation to the MBOs in Montenegro, Oman and Morocco are assessed by the management of the Group as follows:

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 number of Hotels and Golf Courses within an indicative timeline. Based on this indicative timeline, the project companies have been initially 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 2015.

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 2018. The Sifah and Salalah project companies engaged in exhaustive negotiations with the Omani Government. Finally, on 30 June 2015, the Group and the Omani Government signed the Addenda in which they officially agreed on the extension of the deadline for completion of the MBOs to be 1st January 2020 and 1st January 2018 for Sifah and Salalah respectively.

Furthermore, the Parties agreed to amend certain elements of the MBOs. With regards to Sifah project, the Parties agreed that the Project Company shall deliver 500 hotel keys over three hotels instead of four hotels. The project company has so far finalized 68 rooms. Additionally, the project company shall be required to either develop an aquarium or a waterpark or increase the number of hotel keys by 60 rooms, at its sole discretion.

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39.4 Holding of Shares

2018 2017

BOARD OF DIRECTORS

Samih Sawiris1 Chairman 27,413,467 27,406,233

Franz Egle Member 89,576 78,849

Adil Douiri Member 52,130 42,191

Carolina Müller-‐Möhl Member 63,795 54,600

Naguib S. Sawiris Member 16,847 9,613

Marco Sieber Member 59,304 48,577

Jürgen Fischer Member 114,278 113,196

Jürg Weber Member 65,259 51,451

TOTAL BOARD OF DIRECTORS 27,874,656 27,804,710

EXECUTIVE MANAGEMENT

Khaled Bichara CEO 35,837 -‐

Ashraf Nessim CFO -‐ -‐

Abdelhamid Abouyoussef Chief Hotels Officer 100,000 100,000

Nermine Faltas 2 Chief Human Resources & Organization Development Officer

-‐ -‐

Tarek Gadallah 2 Group General Counsel -‐ -‐

TOTAL EXECUTIVE MANAGEMENT 135,837 100,000

1 total includes direct and indirect holding ownership as per note 27.4. 2 Member of the Executive Management since 1 April 2017

As at 31 December 2018, an amount of CHF 0.2 million was due from key executives relating to the allocation of ODE shares in 2007. No other loans or credits were granted to members of the Board, the Executive Management or parties closely linked to them during 2018 and 2017.

40 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 1.7 million over projects under constructions (note 11).

– Capitalization of interest of CHF 8.5 million on borrowings (note 31.3)

– Transfer of treasury shares to Board of Directors as part of their remuneration of 2017 which was paid in 2018 (note 28.2)

– Deferred consideration of CHF 16.8 million in relation to sale of Tamweel group (note 35)

– Acquisition of property, plant and equipment of CHF 12.2 million with deferred payment recognised in trade and other payables

41 OPERATING LEASE ARRANGEMENTS

41.1 The Group as lessee 41.1.1 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.

41.1.2 Payments recognised as an expense in the period

CHF 2018 2017

Minimum lease payments 520,898 485,889

TOTAL 520,898 485,889



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Therefore, it is evident that the Government of Montenegro accepts responsibility for delays in the implementation of the contracted obligations, which resulted in the inability of the company Lustica Development to fulfill its obligations. We expect that the formal confirmation of such a situation, through the signing of an annex to the Lease and Development Agreement, will be realized in the second part of this year 2019.

Risk assessment of contingent liability

The 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, as described herein, 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 the relevant local authorities and thereby working alongside each concerned 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.

43 LITIGATION

There were no significant open litigations at 31 December 2018 and 31 December 2017.

44 SUBSEQUENT EVENTS

In its meeting held on February 19, 2019, the Monetary Policy Committee (MPC) in Egypt decided to cut the overnight deposit rate, overnight lending rate, and the rate of the Central Bank of Egypt's (CBE) main operation by 100 basis points to 15.75%, 1675%, and 16.25%, respectively. The discount rate was also cut by 100 basis points to 16.25%

There have been no other significant events subsequent to 31 December 2018.

45 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the directors and authorized for issue on 4 April 2019.

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Similarly, with regards to Salalah project, it was agreed in the Addendum that the project company would deliver 700 hotel keys and replace the 18-‐hole golf course with a waterpark while the remaining MBO requirements remain unchanged. The Salalah Addendum also stipulates that the project company shall grant, transfer and assign to the Omani Government an area of land amounting to two million square meters, while the Omani Government undertook to provide all pending licenses to the Project Company. To date, the project company in Salalah has completed 3 hotels with a total number of 904 keys.

The Group has requested the Omani Government to merge the required minimum number of keys, and as such the Project Companies shall be required to complete a total number of 1200/1260 keys among both Sifah and Salalah projects. Moreover, the Group requested the Omani Government to reduce the required number of holes in the golf course contemplated in the Sifah project from 18 to 9. The said request was due to the anticipated shortage in the water resources in the area as suggested by the experts. In March 2017, the Omani government approved both requests and sent a letter to that effect to be finalized by January 2020.

During 2018, an additional 178 hotel rooms were built as the extension of the Fanar Hotel. The total number of hotel rooms is currently 1082 in Salalah Project.

In January 2019, the Project company an Addendum to the Development Agreements with the Omani Government extending the MBO Completion Date of the remaining 109 rooms in Sifah project to January 2022.

Morocco

The DA of Morocco 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 2015. Since then the project company has created the organisational structure 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. In addition, 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.

Meanwhile, the project company is in negotiations with potential partners to start the development of the first phase of the project.

In parallel to the above, the project company is negotiating with the Moroccan Government and is expecting to reach its approval regarding the amendment of the DA in light of the new deal to be reached with the potential partners as mentioned here above.

Montenegro

In Montenegro, the investment obligations contemplated by the DAs span over three phases of development, namely the initial phase, second phase and third phase. The date of completion of the initial phase is due by 2017.

The initial phase of the project entails the completion of a four-‐star hotel, in addition to a main mooring area, an 18-‐hole golf course and a club house, as well as a town centre with several facilities.

However, due to the Government’s delay in fulfilling its obligations specified in the DA and the Closing Protocol signed between the Government of Montenegro, Municipality of Tivat and the project company, the time for completing and finalizing the MBO shall be extended proportionally to the time consumed by the Government in fulfilling the said obligations.

To that effect, the project company has notified the Government several times in writing with the delay of the Government in fulfilling its obligation. The notification included reference to the finalization of the infrastructure and undertaking the required action by the Government with regard to the land expropriations on the quarry area and the main hotel site in order to enable the project company to start the construction of the hotel as required under the abovementioned initial phase. It should be noted that, to date, no official response has been received from the Government.

However, to prove its goodwill, LD constructed a hotel in the Marina Village with a capacity of 111 rooms under the name of the “Chedi” The Chedi officially starts operating in July 2018. Based on the foregoing, the remaining rooms to be constructed in the Initial Phase as per the LD are 189 hotel rooms instead of 300. The Main Mooring Area has been finalized and started operating in July 2018. As for the Golf Course, the heavy excavation is nearly completed and LD started the rough shaping of the first 4 holes.

The LDA and the Closing Protocol are under no risk of termination and it is definite that LD is and will be entitled to 4-‐years extension of the deadline of delivering the Initial Phase under the MBO so long as the Government did not fulfil its obligations as detailed hereinabove. Also, the remaining phases will be extended accordingly.

During end 2018, several meetings were held with the Government of Montenegro, which, accepts that it has failed to fulfill certain obligations that caused Lustica’s inability to secure the execution of the MBO and MIO. This position has been confirmed during the meetings that were held at the end of November 2018 with the Minister of Tourism, the Secretary of the Secretariat for Development Projects and the Mayor of the Tivat Municipality as the most important entities in the Government that monitor the realization of the Lustica Bay project. Furthermore, the position of the Minister of Tourism acknowledged the delays in the implementation of the contracted obligations by the Government, which relate to the expropriation of land, providing adequate traffic accessibility as well as timely construction of communal infrastructure.



Orascom Development Holding AG Report of the Statutory Auditor

for the Year Ended December 31, 2018

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Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Revenue recognition Key audit matter How the scope of our audit

responded to the key audit matter

As at December 31, 2018, the Group consolidated statement of comprehensive income included revenue of CHF 340.3 million. The two major streams are revenue from services contracts and revenue from agreements for constructions of real estate.

The Group has adopted IFRS 15 at January 1, 2018 using the modified retrospective application, with the cumulative effect of initially applying the standard to be adjusted to the opening equity 2018, and therefore the comparative information has not been restated and continues to be reported under IAS 18 and IAS 11

Revenue recognition is complex due to several types of customer contracts utilized in their different business segments. Further, revenue recognition involves significant judgement and estimates made by Management including, whether contracts contain multiple performance obligations, which should be accounted for separately and the most appropriate method for revenue recognition for identified performance obligations. Significant number of performance obligations has to be accounted for over time, which requires Management to assess the degree of completion. An additional complexity is added by the fact that agreements for construction of real estate include a finance component in certain countries.

The risk is, therefore, that revenue is not recognized in the correct period, did not occur, or is recorded with an incorrect value.

Refer to note 3.7 Revenue recognition, note 6 Revenue, and note 7 Segment information.

We tested the design and implementation of the Group’s relevant key controls in respect of revenue recognition.

Our audit procedures on revenue recognition impairments included:

• Assessing, if the new revenue recognition accounting policy complies with IFRS 15

• performing substantive analytical procedures

• assessing the opening equity adjustment approach and taking detail tests of adjustments recorded for specific contracts

• performing detail tests on transactions throughout the year and specifically at year-end and obtain contracts

• obtaining progress reports from construction companies, if possible, and inspect construction sites for real estate revenues on sample basis to test the percentage of completion

• performing detail test for the finance component

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Statutory Auditor’s Report To the General Meeting of ORASCOM DEVELOPMENT HOLDING AG, ALTDORF Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Orascom Development Holding AG and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2018, and the consolidated statements of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and notes to the consolidated financial statements for the year then ended, including a summary of significant accounting policies. In our opinion the consolidated financial statements (pages F-3 to F-76) give a true and fair view of the consolidated financial position of the Group as at December 31, 2018, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law. Basis for Opinion We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Deloitte AG General-Guisan-Quai 38 8022 Zürich Schweiz Telefon: +41 (0)58 279 6000 Fax: +41 (0)58 279 6600 www.deloitte.ch





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Recoverability of receivables Key audit matter How the scope of our audit


The Group’s statement of financial position includes CHF 31.9 million non-current receivables, and CHF 106.7 million trade and other receivables representing 10.4% of total Group assets. The Group records required allowance at each month-end.

The Group needs to execute significant judgement in assessing the collectability of the receivables, because a material portion of the receivables are collected over an average collecting period of 5.5 years. The main markets of the Group have significant uncertainty around recoverability predictions for such a period.

Refer to note 20 Non-current receivables, and note 23 Trade and other receivables.

We tested the design and implementation of the Group’s relevant key controls in respect of the expected credit loss process.

Our audit procedures on the recoverability of receivables included:

• corroborating expected credit loss with management

• perform detail test for receivables and expected credit loss

• assessing the counterparties credit risk based on publicly available information and historical information/experience for receivables



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Impairments of property, plant and equipment Key audit matter How the scope of our audit


The Group’s statement of financial position includes CHF 761.8 million of property, plant and equipment (PP&E), representing 57.0% of total Group assets. In accordance with IFRS, these balances are tested annually for impairment, if there are triggering events present. A recoverable amount, which is lower than the book results in an impairment.

The Group achieved to generate positive cash inflows from operations in 2018. However, the Group still realized a loss for the year. This prevailing condition is an indicator for impairments on the assets used to generate sufficient operating cash flows to realize a profit. The impairment test includes significant Management judgment about future cash flows generated with these assets.

Refer to note 15 Property, plant and equipment.

We tested the design and implementation of the Group’s relevant key controls in respect of the PP&E impairment process.

Our audit procedures on the PP&E impairments included:

• corroborating impairment tests with management and members of the Board of Directors

• auditing the specific valuation for land

• auditing the valuations of the hotels and verify the value of the hotel is higher than the PP&E allocated to the respective hotel

• obtaining assistance from internal valuation specialists to evaluate valuation models for the significant locations Egypt, Oman, and Montenegro

• challenging the destinations under development with the current year’s progress, its own plans and the outlook to generate positive cash-flows





F-‐83

Other Information in the Annual Report The Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements of the Company, the compensation report and our auditor’s reports thereon. The annual report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

Responsibility of the Board of Directors for the Consolidated Financial Statements The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.



F-‐82

Financing and Liquidity Key audit matter How the scope of our audit


We identified that the most significant assumption in the assessment on its ability to continue as a going concern is liquidity within the Group, which is ensured by the commitment from the chairman of the Board of Directors to provide up to CHF 15 million cash until December 2020. The calculations supporting the assessment require management to make judgments on estimated future cash-inflows and cash-outflows.

The Group’s cash projection is fundamental to assess the appropriateness of the basis adopted for the preparation of the financial statements and therefore represents a key audit matter.

Refer to note 25.1 Management’s plans to manage liquidity shortages and related uncertainty.

We tested the design and implementation of the Group’s key relevant controls and assessed the appropriateness of the methodology applied for the cash projection that builds the basis for the Group’s going concern conclusion. Our audit procedures on the cash projection underlying the going concern conclusion included:

• corroborating cash projection with management and members of the Board of Directors

• testing mathematical accuracy of the liquidity forecast

• critically assessing how the Group’s assumptions tie back to the budget approved by the Board of Directors

• audit that the necessary waivers are obtained which support exclusion of cash-outflow for loan repayments and interest payments

• performing historical back testing to obtain an understanding of the past precision for the commitments from the chairman of the Board of Directors to identify potential management bias effects included in the cash projections





F-‐84

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

A further description of our responsibilities for the audit of the consolidated financial statements is located at the website of EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-companies.This description forms part of our auditor’s report.

Report on Other Legal and Regulatory Requirements In accordance with article 728a paragraph 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of 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 Roland Mueller Adrian Kaeppeli Licensed Audit Expert Licensed Audit Expert Auditor in Charge Zurich, April 5, 2019 ROM/AKA

STATUTORY FINANCIAL STATEMENTS

TOGETHER WITH AUDITOR'S REPORT FOR

THE YEAR ENDED 31 DECEMBER 2018

07ORASCOM DEVELOPMENT HOLDING AG



F-‐87

Orascom Development Holding AG Statutory balance sheet


Assets

Current assets Cash at bank 3.1 24,085,009 4,136,744 Other current receivables -‐ Related parties -‐ 8,876 -‐ Third parties 3.2 8,945,211 241,184

Total current assets 33,030,220 4,386,804

Non-‐current assets Other non-‐current receivables – Affiliated Companies 3.3 6,523,745 11,907,553 Investments in subsidiaries 3.4 1,400,570,890 1,463,297,834 Tangible fixed assets 3.5 1,104 29,782

Total non-‐current assets 1,407,095,739 1,475,298,169

Total assets 1,440,125,959 1,479,684,973

Liabilities and shareholders’ equity

Current liabilities Trade creditors 233,277 87,596 Current interest-‐bearing liabilities -‐ Shareholder 3.6 48,042,280 42,746,695 Other current liabilities 3.7 -‐ 25,866 Provision and similar items required by law 3.8 -‐ 577,308 Accrued expenses 3,255,475 2,654,050

Total current liabilities 51,531,032 46,091,515

Non-‐current liabilities Non-‐current interest-‐bearing liabilities – Affiliated Companies

26,424,716 21,454,390

Deferred currency translation gain 298,103 520,749

Total non-‐current liabilities 26,772,819 21,975,139

Total liabilities 78,253,851 68,066,654

Shareholders’ equity 3.9 Share capital 3.10 202,049,630 937,510,283 Statutory capital reserves Capital contribution reserve (privileged) of which reserves from tax privileged capital contributions

3.11 2,858,520,175 2,858,520,175

Statutory retained earnings 748,004,091 12,543,438 Accumulated losses (2,441,507,071) (2,392,399,984) Own shares 3.12 (5,194,717) (4,555,593)

Total shareholders' equity 1,361,872,108 1,411,618,319

Total liabilities and shareholders‘ equity 1,440,125,959 1,479,684,973


F-‐86

Orascom Development Holding AG Income statement

CHF Notes 2018 2017

Gross revenue from services 448,234 158,257

Dividend income 3.4 9,353,775

Total income 9,802,009 158,257

Staff costs (6,217,244) (5,651,075)

Other operational costs (4,170,533) (2,774,402)

Depreciation on fixed assets items (4,569) (4,805)

Loss on sale of investment 3.4 (50,466,921) -‐

Provisions released/(built), net 207,308 (6,705,000)

Total operating expenditure (60,651,959) (15,135,282)

Operating loss (50,849,950) (14,977,025)

Financial expenses 3.13 (779,469) (486,929)

Financial income 3.14 1,736,492 20,206,238

Total financial income / (expenses) 957,023 19,719,309

Total loss before taxes (49,892,927) 4,742,284

Direct taxes (127,826) -‐

Annual (loss)/gain (50,020,753) 4,742,284




F-‐89

2.7 Tangible Fixed Assets The straight-‐line depreciation method is used for tangible fixed assets according to their expected useful life. Useful life is established as follows and is revised each year:

– Machinery and Equipment 5 Years

– Office Equipment and Computers 3 Years

– Furniture and fixtures 3 Years

2.8 Own shares Own Shares are recorded at acquisition cost on the balance sheet as a deduction to equity. If they are resold at a later date, the profit or loss is recorded in retained earnings, respectively accumulated losses.

2.9 Shareholder rights and options Own shares are allocated to management and administrative bodies or to employees as shareholder rights or options. The difference between the acquisition value and any payments to counterparties during share allocation is shown as staff costs.

2.10 Leasing transactions Leasing and rental contracts are accounted for in accordance with legal ownership. Expenses as a lessee or tenant are recorded corresponding as expenditure in the relevant period.

2.11 Contingent compensation The company performs an assessment for their contingent compensation arrangement and disclose it as contingent liability as long as the compensation is not probable. If the assessment comes to the conclusion that the compensation is more likely than not, the company is recording an accrual for the estimated compensation.

3 INFORMATION RELATING TO ITEMS ON THE BALANCE SHEET AND INCOME STATEMENT

3.1 Cash and cash equivalents


of which in CHF 219,821 215,118

of which in USD 21,289,521 1,288,698

of which in EUR 2,308,902 2,388,458

of which in GBP 12,819 13,768

of which in EGP 253,946 230,702

Total cash and cash equivalents 24,085,009 4,136,744

3.2 Other current receivables – third parties Accounts receivables include a position in the amount of CHF 0 (31 December 2017: CHF 207,308), whose value was determined by the market value of ODH EDRs until delisting of EDRs. Since delisting of EDRs, this position is valued at lower of historical value as per delisting of the EDRs or of market value of the corresponding ODH shares. A provision is formed for the whole outstanding amount of CHF 207,308. During 2018, ODH have received the shares so the provision was cancelled

3.3 Other non-‐current receivables – affiliated companies During 2017 there was a significant decrease compared 2016 due to a liability to equity conversion at ORH Investment Holding Ltd (“ORHI”) in the amount of CHF 260 million. The company converted their receivables due from ORH to equity, which increased the investment value of ORH Investment. During 2018 ORHI have settled the due amount.

3.4 Investments in subsidiaries 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 reduces the carrying value by the amount of any impairment losses.

F-‐88

Notes to the financial statements 1 GENERAL INFORMATION Orascom Development Holding AG was established in Switzerland as Joint Stock Company and is domiciled in Altdorf, Uri. 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.

The accounts for the period from 1 January to 31 December 2018 were approved by the Board of Directors on 4 April 2019. The Company has an annual average of less than 10 full-‐time employees (previous year: less than 10 full-‐time employees).

2 KEY ACCOUNTING AND VALUATION PRINCIPLES

2.1 Principal of financial reporting The present accounts for Orascom Development Holding AG have been prepared in accordance with the requirements of the Swiss Financial Reporting Law. The main accounting and valuation principles used, which are not already specified by the Swiss Code of Obligations, are described as follows.

2.2 Estimates and Assumptions made by management Financial reporting under the Swiss Code of Obligations requires certain estimates and assumptions to be made by management. These are on-‐going and are based on past experience and other factors (e.g. expectations of future results for investments and budget). The result subsequently achieved may change from these estimates. Items in the accounts, which are based on the estimates and assumptions made by management, are as follows:

– Investments

– Provisions

2.3 Foreign currency items The currency in which Orascom Development Holding AG operates is Swiss Francs (CHF). Transactions in foreign currencies are converted into the currency in which the company operates (CHF) at the exchange rate on the day of the transaction takes place.

– Monetary assets and liabilities in foreign currencies are converted into CHF at the exchange rate on the balance sheet date. Any profit or losses from the exchange are recorded in the income statement except net unrealized gain from non-‐current items, which are deferred in the balance sheet.

– Non-‐monetary assets and liabilities at historical costs are converted at the foreign exchange rate at the time of the transaction.

2.4 Related parties Related parties include subsidiary companies (affiliated companies), members of the Board of Directors and Orascom Development Holding AG shareholders. Transactions with related parties take place under proper market conditions (dealing at an arm’s length).

2.5 Cash and cash equivalents and current assets with a stock exchange price The cash and current assets with a stock exchange price include cash holdings, bank deposits and short-‐term money market investments maturing in a maximum of 3 months. They are recorded at their nominal value.

2.6 Current assets with a stock exchange price and financial assets Current assets with a stock exchange price are valued at the stock exchange price on the balance sheet closing date. There is no provision for a fluctuation reserve. Financial assets include long-‐term securities without a stock exchange price or an observable market price. These are valued no higher than the acquisition cost less any value adjustment.



F-‐91

3.6 Current interest-‐bearing liabilities – shareholder The balance of “Current interest-‐bearing liabilities – Shareholder” as at 31 December 2018 is due to Mr. Samih O. Sawiris in the amount of CHF 48,042,280 (31 December 2016: CHF 42,746,695).

In April 2019, the Chairman signed a letter of commitment to avail up to CHF 15 million until the end of December 2020 to manage liquidity shortage and related uncertainty within the Group.

3.7 Other current liabilities


Third parties -‐ 25,866

Total other current liabilities -‐ 25,866

3.8 Provisions


Provision for disputes -‐ 370,000

Bad debt provision -‐ 207,308

Total provisions and similar items required by law -‐ 577,308

3.9 Shareholders’ equity movements The following table shows the shareholders’ equity movement:

CHF Share capital

Statutory capital

reserves (tax privileged)

Statutory retained earnings

Accumulated losses

Own shares

Total

Balance at 01/01/2017

937,510,283 2,858,520,175 12,543,438 (2,397,193,303) (8,725) 1,411,371,868

Acquisition of own shares

-‐ -‐ -‐ -‐ (5,421,560) (5,421,560)

Distribution to Board Members and revaluation

-‐ -‐ -‐ 51,035 874,692 925,727

Profit for the period

-‐ -‐ -‐ 4,742,284 -‐ 4,742,284


937,510,283 2,858,520,175 12,543,438 (2,392,399,984) (4,555,593) 1,411,618,319


937,510,283 2,858,520,175 12,543,438 (2,392,399,984) (4,555,593) 1,411,618,319

Capital reduction

(735,460,663) -‐ 735,460,663 -‐ -‐ -‐

Acquisition of own shares

-‐ -‐ -‐ -‐ (5,933,749) (5,933,749)

Disposal of own shares

463,438 4,888,828 5,742,374

Distribution to Board Members and revaluation

-‐ -‐ -‐ 450,228 405,797 856,025

Loss for the period

-‐ -‐ -‐ (50,020,753) -‐ (50,020,753)


202,049,630 2,858,520,175 748,004,091 (2,441,507,071) (5,194,717) 1,361,872,108

F-‐90

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, for which an external appraiser is mandated to derive the aggregate market value for the vacant land bank and a high discount is applied to be conservative.

For the operating projects, DCF valuation techniques have been applied for the hotels and real estate segments to reflect the evolving status and the expected steady performance of the operations over a time period ranging from 5 to 10 years. Major underlying assumptions have been used depending on the segment such as occupancy and average room rates for hotels and number of units to be sold and average selling price for real estate. These assumptions affecting the future projections take into consideration the various political, economic and operational facts prevailing at the time of preparing the valuations. Future developments may impact the value.

As at 31 December 2018, the Company directly holds the following investments:

Company, domicile, purpose Ownership %* Share capital

31 December

2018 31 December

2017

Orascom Development Egypt S.A.E. 75.10% 84.79% EGP 1,130,473,523 (previously: Orascom Hotels & Development 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 100.00% 100.00% EUR 1,000 Management company

ORH Investment Holding Ltd, BVI 100.00% 100.00% USD 385,000,000 International holding company

Lustica Development AD, Montenegro 92.75% 90.82% EUR 69,559,781 Real estate development, hotel management

Andermatt Swiss Alps AG, Switzerland (ASA) 49.00% 49.00% CHF 231,147,000 Real estate development

Orascom Development International AG, Switzerland 100.00% 100.00% CHF 1,400,000 Real estate development

Orascom Hotels Management AG, Switzerland 100.00% 100.00% CHF 18,000,000

Hotel Management

* The voting rights are equal to the ownership percentage

The share capital for Orascom Development Egypt has increased by EGP 22 million, the increase is made by capital contribution. The decrease in the Ownership percentage for Orascom Development Egypt is due to the sale of 8.2% to the market. The company realised a loss of CHF 50,466,921

The company received a dividend from Orascom Development Egypt S.A.E. in the amount of CHF 9,353,775.

In 2017, the company built a provision of CHF 7 million against the investment in Orascom Hotels Management (OHM) because it is unclear whether OHM will be able to generate sufficient profits from revenue with Orascom Group to support it carrying value. During 2018, the company have increased the capital of OHM by CHF 5 million, the increase is made by capital contribution.

3.5 Tangible fixed assets


Machinery and equipment -‐ 24,110

Office equipment and computers 1,104 5,672

Total tangible fixed assets 1,104 29,782



F-‐93

4 OTHER INFORMATION, WHICH IS NOT ALREADY VISIBLE IN THE BALANCE SHEET OR INCOME STATEMENT

4.1 Residual amount of leasing liabilities Leasing liabilities, which will not expire and may not be terminated within twelve months, are subject to the following repayment structure:


< 1 year 232,800 232,800

1 – 5 years 931,200 931,200

> 5 years 2,328,000 2,560,800

Total 3,492,000 3,724,800

4.2 Total amount of assets pledged or assigned to secure own liabilities and assets under reservation of ownership 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 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 2018, 36,985 ASA shares owned by the Company (31 December 2017: 36,985) with a net book value of CHF 957 each, amounting to a total book value of CHF 35,384,945 (31 December 2017: 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 2017: CHF 1,000,000).

Orascom Development Egypt S.A.E. (ODE)

As at 31 December 2018, 171,375,460 ODE shares owned by the Company (31 December 2017: 172,561,960) with a net book value of CHF 0.92 each, amounting to a total book value of CHF 157.8 million (31 December 2017: CHF 158.9 million), have been pledged as a security. The reduction in the number of shares pledged as a security was the result of a pledge release on 1,186,500 ODE shares which were originally pledged to the European Investment Bank and Proparco. As at 7 May 2018, ODE made a stock split of 1 to 5 shares, and so the prior year figures have been adjusted to reflect the share split.

Island Lastavica with fortress Mamula in Herceg Novi

As at 31 January 2014, Orascom Development Holding submitted a bid pursuant to the invitation to tender issued 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 300,000. Accordingly, a fully secured bid bond/guarantee was issued favour the government of Montenegro against a blocked cash deposit of EUR 330,000 (110% of the amount of the guarantee). As a result of the award of the long-‐term lease, the government of Montenegro requested a performance bond/guarantee against the development works in the amount of EUR 1,500,000. In December 2018, the company blocked a cash deposit of EUR 1,650,000 (110% of the amount of the guarantee) to secure the performance bond/guarantee which was issued by the same bank. Simultaneously, the original bid bond/guarantee was cancelled, and the cash deposit block of EUR 330,000 was released.

4.3 Shareholder rights and options held by management and Board of Directors and information on allocation of shares and options to executive officers, directors and employees Shareholder Rights and Allocation of Shares to Board of Directors:

The compensation of the members of the Board of Directors amounts to gross CHF 120’000 for each member. In addition to this base compensation, the members (and chairmen) of the Audit Committee and of the Nomination and Compensation Committees receive an additional compensation of gross CHF 20,000. The Lead Director receives an additional compensation of gross CHF 40,000.

For 2018, the base compensation and additional compensation for the Lead of Director and committee members were fully paid in shares. The shares of the Company allocated to the members of the Board of Directors as compensation are, for that purpose and if not available to the Company already, purchased by the company on the market. The relevant share price to determine the number of shares to be granted to each member of the Board of Directors was the average of the daily volume-‐weighted average share prices at SIX Swiss Exchange during the 10-‐trading day period ending on January 31, 2019 (grant date). The members of the Board of Directors do not have any specific further shareholder rights and do not participate in any additional share allocation plans.

F-‐92

3.10. Share Capital As at 31 December 2018 the company’s share capital of CHF 202,049,630 (31 December 2017: CHF 937,510,283) was divided into 40,409,926 (31 December 2017: shares 40,409,926) registered shares with a par value of CHF 5 (31 December 2017 23.20) each. The share capital is fully paid-‐in. The registered shares of the company are listed on the Swiss Exchange (SIX).

On 30 May 2017 , following the delisting approval issued by the Listing Committee of the Egyptian Exchange (EGX) on 24, May 2017, the Company has successfully completed the previously announced delisting of the company’s Egyptians Depositary Receipts (EDRs) from the EGX. The majority of the EDR holders have chosen to swap their EDRs into shares of the Company that had previously been underlying the EDRs and only 9.9% out of the 189,123,620 EDRs were tendered to the company for repurchase at a price of EGP 5.25 (CHF 0.29) Per EDR or CHF 5.79 per ODH share (1 ODH share is underlying 20 EDRs).

On 8 May 2018 -‐ The shareholders resolved to reduce the nominal value of the Company's shares from CHF 23.20 to CHF 5.00 each and to allocate the aggregate amount of the capital reduction to the Company's capital contribution reserves.

3.11 Statutory capital reserves from tax contributions As of 1 January 2011, Swiss tax authorities have introduced a regulation concerning capital contribution reserves. Distributions from such reserves are exempt from Swiss income and withholding tax. In order to reflect this regulation, capital contribution reserves have been classified separately in the balance sheet. The capital contribution reserves in the amount of CHF 2,999,972,181 have been approved by the tax authorities. An amount of CHF 141,452,006 out of this statutory capital reserves from tax contributions has been used in the capital increase through converting it in share capital, as the offering price was CHF 11.28, which was below the par value CHF 23.20. Therefore, the capital contribution reserves from tax contributions decreased to CHF 2,858,520,175 as per 31 December 2018.

3.12 Own shares transactions

Number of shares Book value in CHF CHF 2018 2017 2018 2017

As of 1 January 785,234 516 4,555,593 8,725

Distribution to Board Members (69,946) (150,768) (405,797) (874,692)

Sales (359,970) -‐ (4,888,828) -‐

Purchase 405,771 935,486 5,933,749 5,421,560

As of 31 December 761,089 785,234 5,194,717 4,555,593

3.13 Finance expenses

CHF 2018 2017

Interest expense 665,686 486,929

Foreign exchange loss, net 113,783 -‐

Total finance expenses 779,469 486,929

3.14 Finance income

CHF 2018 2017

Interest income 1,736,492 2,559,663

Foreign exchange gain, net -‐ 17,646,575

Total finance income 1,736,492 20,206,238



F-‐95

Statutory Auditor’s Report To the General Meeting of ORASCOM DEVELOPMENT HOLDING AG, ALTDORF Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Orascom Development Holding AG, which comprise the balance sheet as at December 31, 2018 and the income statement and notes for the year then ended, including a summary of significant accounting policies. In our opinion the financial statements (pages F-85 to F-93) as at December 31, 2018 comply with Swiss law and the Company’s articles of incorporation. Basis for Opinion We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Deloitte AG General-Guisan-Quai 38 8022 Zürich Schweiz Telefon: +41 (0)58 279 6000 Fax: +41 (0)58 279 6600 www.deloitte.ch

F-‐94

Shareholder Rights and Allocation of Shares to Members of the Executive Management:

The bonus policy of the Group for members of the Executive Management includes a cash-‐bonus and a deferred share-‐bonus. 100% of the cash-‐bonus and 40% of the share-‐bonus are based on the member of the Executive Management’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.

No deferred share bonus was paid out for 2018. The Board of Directors decided to compensate for the fact that no deferred share bonus was paid by increasing the cash bonus paid for 2018 above the aforementioned maximum of 25%.

The members of the Executive Management do not have any specific further shareholder rights and do not participate in any additional share allocation plans.

4.4 Share ownership by the Board of Directors and Management As of 31 December 2018, a total of 28,010,493 shares were held by members of the Board of Directors or members of Management (31 December 2017: 27,904,710).

Name Function 31 December 2018 31 December 2017

Samih Sawiris Chairman of the Board 27,413,467 27,406,233

Adil Douiri Board member 52,130 42,191

Franz Egle Board member 89,576 78,849

Jürgen Fischer Board member 114,278 113,196

Carolina Müller-‐Möhl Board member 63,795 54,600

Naguib S. Sawiris Board member 16,847 9,613

Marco Sieber Board member 59,304 48,577

Jürg Weber Board member 65,259 51,451

Khaled Bichara Chief Executive Officer 35,837 -‐

Abdelhamid Abouyoussef Chief Hotels Officer 100,000 100,000

TOTAL 28,010,493 27,904,710

4.5 Significant shareholders As of 31 December 2018, the following shareholders held more than 5% of voting rights:

31 December 2018 31 December 2017

Samih Sawiris 62.62% 62.06%

Thursday Holding 5.16% 5.73%

OS Holding 5.07% 5.07%

4.6 Liabilities towards staff pension schemes No Pension liability as at 31 December 2018 (31 December 2017: CHF 0).

4.7 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.

4.8 Contingent liability The Company has contractually granted a variable compensation amount to its new CEO, Khaled Bichara (“Contingent Compensation”). The Compensation amount is due 6 years after the start date (1 January 2016) or earlier if an acceleration event occurs. In summary, the compensation amount is 10% of the share price increase above an annual average increase of 8% (based on the fixed spot share price of CHF 11.37). The contingent Compensation will be paid in cash or, at ODH’s discretion, in shares if the annual average increases in the share price are met. As of 9 May 2016, the General Assembly of ODH approved the abovementioned compensation plan.

4.9 Subsequent events There have been no significant events subsequent to 31 December 2018.



ORASCOM DEVELOPMENT HOLDING AG Statutory Auditor’s Report


F-‐97

Liquidity and financing Key audit matter How the scope of our audit responded

to the key audit matter

We identified that the most significant assumption in the Company’s assessment of its ability to continue as a going concern is liquidity within the Group, which is ensured by the commitment from the chairman of the board of directors to provide up to CHF 15 million cash until December 2020. The calculations supporting the assessment require management to make judgments on estimated future cash-inflows and cash-outflows. Liquidity cannot just be considered from a stand-alone perspective, it needs to be addressed for the whole Group, as if liquidity issues on subsidiaries’ level result in going concern issues for subsidiaries such going concern issues could trigger impairments on the Company’s level (ultimate holding), which could impact the Company’s going concern.

The Group’s cash projection is fundamental to assess the appropriateness of the basis adopted for the preparation of the financial statements and therefore represents a key audit matter.

Refer to Note 3.6 Current interest-bearing liabilities - shareholder for the actual shareholder’s loan from the chairman of the Board of Directors.

We tested the design and implementation of the relevant controls and assessed the appropriateness of the methodology applied for the cash projection that builds the basis for the Group’s going concern conclusion and consequently also for the stand-alone conclusion. Our audit procedures on the cash projection underlying the going concern conclusion, amongst others, included:

• corroborating cash projection with management and members of the Board of Directors

• testing arithmetical accuracy of the liquidity forecast

• testing the Group’s assumptions tie back to the budget approved by the Board of Directors

• audit that the necessary waivers are obtained which support exclusion of cash-outflow for loan repayments and interest payments

• evaluating management’s ability to accurately forecast by comparing actual with historical information to obtain an understanding of the past precision for the commitments from the chairman of the Board of Directors to identify potential management bias effects included in the cash projections

Responsibility of the Board of Directors for the Financial Statements The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swiss law and the Company’s articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.



F-‐96

Investments in subsidiaries Key audit matter How the scope of our audit responded


The statutory balance sheet presents investments in subsidiaries amounting to CHF 1,401 million as at December 31, 2018, which is further explained in Note 3.4 Investments in subsidiaries.

There are triggering events present indicating that investments in subsidiaries are potentially impaired.

Management’s annual impairment test for investments in subsidiaries is considered to be judgmental, as the value investments in subsidiaries is depending on political and economic assumptions for middle east and especially Egypt, which are inherently uncertain. As the balance is material to the statutory financial statements as a whole, and includes significant estimates about the future, the impairment testing for investments in subsidiaries represents a key audit matter.

We tested the design and implementation of the Company’s relevant controls.

We assessed the appropriateness of management’s accounting policies regarding the valuation of investments in subsidiaries.

We challenged the impairment tests for investments in subsidiaries, and critically assessed whether the assumption are appropriate for the different valuations that support the value of investments in subsidiaries.

We have involved internal valuation specialists to assist us in reviewing the valuation models and validating the discount rates applied to ensure compliance with IAS 36 “Impairment of Assets”. Further, they performed sensitivity analysis.

We validated the appropriateness and completeness of the related disclosures in the financial statements.

Liquidity and financing Key audit matter How the scope of our audit responded






F-‐98

In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-companies.This description forms part of our auditor’s report. Report on Other Legal and Regulatory Requirements

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 recommend that the financial statements submitted to you be approved. Furthermore, we draw attention to the fact that half of the share capital and legal reserves are no longer covered (article 725 paragraph 1 CO). Deloitte AG Roland Mueller Adrian Kaeppeli Licensed Audit Expert Licensed Audit Expert Auditor in Charge Zurich, April 5, 2019 ROM/AKA

08GLOSSARY 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 and 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.

M2: 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

08 Glossary of TermsOrascom Financial Statement 30 YEARS BUILDING TOWNS

97F- 1832018 Annual Report

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