Orascom Development achieves solid operational results in 2010

In terms of geographic breakdown of revenues in 2010, the largest contributor remained Egypt with 74% followed by Oman with 16%, the V.A.E. with 6% and others with 4%. Gross profit reached CHF 175.4 million (2009: CHF 196.3 million) while the gross profit margin remained at 34% at the same time. The operating profit (EBITDA) stood at CHF 178.1 million which corresponds to an EBITDA margin of 35% (2009: 37%). Net profit before non- controlling interest was at CHF 122.3 million (2009: CHF 144.9 million). This translates into earnings per share of CHF 3.88 for 2010. Profit for “neutralized” and before exceptional provisions of CHF 15 million, following the latest events in Egypt, was in line with last year, amounting to CHF 136.7 million (2009: CHF 138.7 million).

Healthy growth in hotel segment
The hotel segment contributed CHF 37.4% to Orascom Development’s net revenues in financial year 2010. Segment revenues increased by 5% to CHF 193.1 million (CHF 183.4 million), mainly due to higher occupancy rates and increased turnover per customer. The segment result was up by 10% and reached CHF 44.5 million (2009: CHF 40.4 million) as a result of improvements on all fronts. The Group owns 26 hotels with 6’516 rooms available. On average, an occupancy rate of 76% (2009: 69%) and an average room rate of CHF 65 (2009: CHF 63) have been achieved while total revenue per room stood at CHF 87 (CHF 79). Furthermore, Orascom Development continued to evaluate partnerships with leading international hotels chains. In the year under review, we signed two management agreements with world famous Four Seasons Hotels and Resorts for new hotels in Egypt and Oman as well a contract with Radisson Blu for a luxury hotel in Andermatt.

Stable real estate sales in local currencies
Real estate and construction segment contributed 44.4% to Orascom Development’s revenues in the year under review. Segment sales declined by 5% to CHF 229.0 million (CHF 240.0 million) because of a negative currency impact of CHF 12.5 million as most of our real estate sales are conducted in US Dollars. The segment result stood at CHF 112.4 million, 7% below last year’s performance of CHF 120.7 million. 297 units with an average price of CHF 4,432 per sqm were sold off-plan to clients all over the world. The average selling price for these residential real estate units soared by a remarkable 39% owing to the start of pre-sales in Andermatt. In Budget Housing 3,260 units with an average price of CHF 476 per sqm have been sold. Deferred income of CHF 228 million at the end of 2010, which will be reflected in the Profit & Loss statements of the next two years, confirm the ability to advance existing destinations and new ones at the same time.

No significant land sales transactions
Unlike 2009, Orascom Development did not conduct any significant land sales in the year under review. Consequently, segment revenues for such occasionally executed transactions dropped to CHF 10.3 million. Town management services in our operating towns remained on the same level as last year. However, segment turnover decreased because in 2009 an extraordinary fee for the pre-opening Taba Height’s golf course of CHF 9.4 million had been included in the segment result. The consolidated financial statements no longer include revenues generated by the tours operations business of the Garranah tour operations companies. As a result, segment revenues dropped by 57% and reached CHF 28.5 million.

Further upgrade of existing towns
Our existing destinations were further improved. In our flagship town El Gouna, two boutique 5-star hotels commenced operations and 178 new apartments were sold to an international clientele. In Taba Heights, the luxurious ClubMed Taba with 385 rooms opened in the last quarter of 2010. The Cove Rotana Resort and Spa in the United Arab Emirates achieved solid organic growth while demand at Tala Bay in Jordan remained stable.

Promising new destinations
Orascom Development was able to advance its new projects significantly and invested CHF 150 million or approx. 30% of total sales for development and construction activities as well new hotels. The first affordable housing project outside Egypt is planned to be realized in Constanta, one of the major cities in Romania on an area of 2.5 million square meters. In Montenegro, we inaugurated the start of construction of an integrated holiday village that will cover an area of 6.8 million square meters on a beautiful Adriatic coast bay. In the Cornwall project in Great Britain an important milestone was reached when the official launch of the local development company was signed between Orascom Development and our partner Imerys. And in Andermatt, where Orascom Development is building a prestigious all-year holiday resort, construction is well in progress and sales of more than CHF 100 million (sales and reservations) have been secured at the end of 2010. Overall, the Group’s huge land bank offers additional potential for growth. Of the total area of 118 million sqm only 18% have been developed so far.

Sound financial position
Orascom Development has successfully completed a capital increase of CHF 185 million in September 2010 and thereby strengthened both the capital base and the balance sheet. A cash position of CHF 275 million, a net debt position of CHF 235.3 million (2009: CHF 310.3 million), a conservative leverage ratio 0.74x and an average borrowing maturity of 7.7 years with a weighted average cost of debt of 6.97% will allow for future investments in hotels and real estate products in order to advance both our projects in operation and those under construction/development.

Revaluation program
Orascom Development has changed its accounting policy regarding investment properties from the cost model to the fair value model using independent valuations provided by Ramlackhan & Co and FinCorp & CPM. This resulted in a valuation gain of CHF 29.6 million of which CHF 14.0 million was credited to the income statement 2010 and CHF 15.6 million to prior periods. The company believes that this new policy will result in a more appropriate presentation of investment properties.

Dividend proposal
The Board of Directors will propose the Annual General Meeting of 23 May 2011 a distribution of CHF 0.65 per share. The amount will be distributed in the form of a nominal value reduction.

Outlook 2011
The main focus of our activities in 2011 will be the ongoing development of our projects under construction as well as those in the planning phase. Furthermore, we put emphasis on ongoing marketing efforts in order to boost pre-sales in all our projects on the market. Nevertheless, the turmoil in Egypt and the Arab world reduced visibility of the business in these areas. The number of flight connections offered is still subdued and only to change over time. As a consequence, we expect to see hotel revenues to drop by around 30% y-o-y in 2011. However, the international expansion of our activities is expected to advance without interruption and real estate pre-sales in Q1 2011 were in line with the same period last year. Overall, Orascom Development estimates that the diversification of its revenues across different geographical areas will continue and thereby broaden its operations.


Contact:
Orascom Development Holding AG Mamdouh Abdel Wahab Director Investor Relations Tel: +41 79 846 55 60 +20 12 315 32 00 Email: ir@orascomdh.com

Swiss Media Office Philippe Blangey Tel: +41 41 874 17 11 Email: media@orascomdh.com