orascom development holding ag october 2015

Orascom Development Holding AG

October 2015

2

Introduction to Orascom Development Holding

Encountered challenges

How the Group survived the challenges…

… and is now back on track with a positive outlook

Strategic options to realize hidden value in the future

Agenda

3

Orascom Development Holding at a glance

1 Contracted real estate sales from 1997- 1H 2015 (gross amount)2 Such as marinas, golf courses, utilities, commercial, schools, hospitals, etc.3 Land on which Orascom Development has certain development rights4 As of the 30th June 2015, outstanding shares : 28,543,147

Leading developer and operator of fully integrated towns

Active in three core segments: Hotels: own 31 hotels with 7,632 rooms Real Estate & Construction: CHF 1.97 bn track record 1

Destination Management: incl. all town amenities 2

Established in 1989, with presence in over 8 jurisdictions

Around 9,380 employees in eight countries

Revenues of CHF 164.5 mn in 1H 2015

Land bank of 100.2 mn square meters, out of which 17% have beencompleted 3

Primary listing on the Swiss Stock Exchange and secondary listing on theEgyptian Stock Exchange (EDRs)

Ownership structure: Samih O. Sawiris (62.8%), Janus Capital (5.6 %) & Freefloat (31.6%) 4

4

Over 20 years ago, Orascom Development’s founder Samih O. Sawiris had a simple idea – to create a little piece of paradise on the exquisitely desolate Red Sea coast. This initial thought evolved over the years and became our principle.

1989

1991

1997

EGYPT

1998

2005

2006

2007

2008

2009

2010

2013

Year of Foundation

Developmentof TabaHeights on theGulf of Aqaba(SinaiPeninsula)

The Cove in Ras AlKhaimah (U.A.E.) thefirst destinationoutside of Egypt, alease agreementwith the Gov. todevelop AmounIsland, 22,000 m2

Project announcementof Haram City (Egypt),Jebel Sifah & SalalahBeach (Oman); signingof agreements forAndermatt (CH) &Chbika (Morocco)

New projects inCornwall (UK) & LušticaBay (Montenegro) &launch of Makadi Bay,28 km away fromHurghada

Samih O. Sawiris becomesmajority shareholder of ASA;sale of Romania project toSamih O. Sawiris & OrascomHotel Management (OHM)was established to managethe Group’s Hotel inventory

First phase ofEl Gouna flagshipproject becomesoperational

Agreement toparticipate in thedevelopment ofTala Bay, Jordan& Awarded 1.2million sqm inFayoum, Egypt

Orascom signsdevelopmentagreements withthe OmaniGovernment forfour projects

Established ODH,acquired 99.7% of OHDthrough a tender offerHeadquarter is movedto Altdorf (CH), listingon the SIX SwissExchange

Initiation of affordablehousing project inConstanta (Romania) &Allocated 0.8 million m2 inthe Qena Governorate , thesecond budget housingproject in Egypt

So far, we have successfully implemented this concept in Egypt, Jordan, UAE, Oman, Switzerland and in other projects under development in Europe

2014

Deconsolidation of OrascomHousing Communities(OHC)& its subsidiaries;budget housing andconstruction & Sale ofCMAR (Mauritius Club Med)

INTERNATIONAL EXPANSION

History- How it all started

2015

ODH sells 15%stake in OHD toreactivate itstrading,resumption oftradingeffective 6th

January 2015 &Sale of Tala Bayhotel in Jordan

5

New destination

identification acquisition &

initial concept

Hotel Operations

Real Estate

Support Functions

Operational Phase

Development Phase

Real Estate Owner Services

Destination Operations

Hotel Development

Destination Development

Land Bank Monetization

Man

agem

ent

Pro

cess

es

Sup

po

rt P

roce

sses

The Company Adopts a Unique, Vertically Integrated, Business Model Centered on Transforming Desolate Pieces of Land into Attractive, Self-sufficient, Resort Towns

ODH’s business modelincorporates owning andmanaging the whole valuechain from the raw landacquisition to developing &operating real estate, hotels,and managing thedestination:

– Securing land at nominalcosts

– Control of entire valuechain from masterplanning andconstruction to operationof a destination

– Continuous pre-sales tofinance ongoinginvestments

In parallel, management hasrecently adopted the newstrategic notion of sellinglarge plots of land to thirdparty developers, in a moveto accelerate themonetization of land (Master-development), whileproviding strict developmentguidelines, to ensure controlover the development andmaintain the architecturalharmony of the destination

Master-development

Controlled Sale of Large Plots of Land to

Third Party Developers

6

Accomplished track-record in development of integrated touristic destinations

More than 25 years of experience in integrated real estatedevelopment, controlling the entire value chain

Acquisition of land banks in undeveloped areas at nominalcosts

In-house design & planning to better serve customer demand

Construction used to be done in-house (Egypt, Oman,Morocco) but now transferred to external contractors tomaintain operational flexibility

Local sales force in Egypt, Oman, Switzerland, Morocco andMontenegro as well as international distribution channels

Leading integrated town developer

Unique destination manager

Diversified hotel portfolio, owning 30 hotels and 1 Nile cruiseship with 7,632 rooms managed under own names and blendof local and international chains

Management contracts with leading international operators

Unique partnerships with tour operators guaranteeing highhotel occupancy rates all year round

Operation with El Gouna of world-renowned touristicdestination with strong brand recognition

El Gouna: World-renowned touristic destination

Orascom’s flagship and development benchmark

25 years old self-sufficient and fully integrated resort town,stretching across 10km of shoreline on the Red Sea

Multinational community with 24,000 residents

The town offers a range of facilities such as a hospital, two 18-hole championship golf courses, three marinas, four schools, alibrary, and two universities branches

Hotel KPIs Real Estate KPIs

CHF

6953 54 52 52 47

91

51

59

47 4849

74%

56%61%

54% 59%49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

20

40

60

80

100

ARR TRevPar Occ. Rate

61 82 121211 47 150

Value of Contracted Units, CHF mn

, CHF 000’s

83.5

24.8 19.434.9

48.7

60.3

3.42.8

2.32.5 2.5 2.5

0.0

1.0

2.0

3.0

4.0

0

20

40

60

80

100

2010 2011 2012 2013 2014 1H2015

Value of Contracted Units, CHFmn

Average Price/sqm

7






Agenda

8

Recently encountered challenges

Orascom Development

ODH continued itsexpansion strategy in anincreasingly challengingmarket environment

While other companieswere downsizing duringthe economic crisis, ODHover-leveraged its matureoperations in Egypt

Arab spring addedadditional pressure, asdestinations outsideEgypt are still in thedevelopment phase andcannot offset revenuelosses in Egypt

Organizational structureof the Group was notsuited to quickly react tothe changed environment

Economic crisis continuesto affect companies andeven countries resultingin a reshaping of themarket internationally

ODH continues todepend on its twomature destinations inEgypt as the mainsource of free cash flowgeneration

Added UK &Montenegro

Land bank of 131.3 mnm2

Total debt increases toCHF 388 mn

Cash from operations ofCHF 82.8 mn

2008

Economic crisis & globalcredit crunch hit Europe& the Middle East

ODH grows revenues by40% y/y

Record price levels andoccupancy rates ofhotels in El Gouna andTaba Heights

Real estate sales reachall time high of CHF 373mn, compared to CHF126 mn in 2007

Launch of UAE & Oman


Total debt of CHF 75 mn


20092010

Social and politicalturmoil hit the Arab world

ODH adds budgethousing project inRomania


Total debt up to CHF 512mn


Egyptian revolution andits prolonged aftermaths

Negative operating cashflow since 2011

Real Estate sales in 2013about 80% below 2008levels & hotel revenues>30% below 2008 levels

Total debt increases toCHF 604 mn in 2012

Restructuring of theGroup initiated in 2013:launch of cost savings &monetization program;total debt down to CHF480 mn

Debt excluding disposalgroups 1 reached CHF408 mn

2011-2013

1 Disposal Groups includes CMAR (Hotel in Mauritius) & Tamweel Mortgage Finance

9






Agenda

10

Fully committed majority shareholder Samih Sawiris

Mr. Samih O. Sawiris is the founder of Orascom Development Holding Majority shareholder, holding 62.8% of ODH’s shareholder capital Chairman of the Board CEO since April 2014

Functions

Financial Commitment

CV

Samih Sawiris has historically committed shareholder loans to Orascom Development Holding Since 2011 to April 2015, Mr. Sawiris has committed approximately CHF 200 mn in favor of Orascom

Development Holding. In August 2015, the Chairman renewed his commitment letter vowing to avail up to CHF 60 mn until

December 2016 should the Group require it CHF 12.9 mn were drawed-down by the Group from the new commitment until June 2015. To June 2015, total due to the Chairman amounts to CHF 73.4 mn

After receiving his Diploma in economic engineering from the Technical Universityof Berlin in 1980, Mr. Sawiris founded his first company, National Marine BoatFactory. In 1996, he established Orascom Projects for Touristic Development and in1997 Orascom Hotel Holdings, the two companies later merged to form OrascomHotels & Development S.A.E. (OHD)

Furthermore, Mr. Sawiris established El Gouna Beverages Co. in 1997, which he soldin 2001 when it was the largest beverage company in Egypt

As of 1 April 2014, Mr. Sawiris took over the position of CEO on ad-interim basis andalso serves as Chairman of the Board of Directors

11

Developed a 4 pillar strategy

Growing Core Business & Accelerating Land Development and Monetization

Real Estate Addressing marketing needs through:

Developing more efficient units Increasing inventory mix to address different

market segment Focusing on adding value added amenities

that add to the destination experience andvisitor spend

Adopting a sub-development model wherebyland is developed by third parties under strictdevelopment guidelines, signed two deals to datewith a total value of USD 80 million

Hotels Established a fully owned hotel management

company, OHM Revisited all hotel management agreements

to assess the cost-benefit case by case Developed a yield system to increase early

booking and improve cash flow planning Centralized key functions across destinations

and hotels

Cost Savings & Maximizing Efficiency

Reduce FY 2012 cost base by CHF 50 mn at FY 2014

Optimizing cost base inproportion to targetrevenue levels, genericsavings reached CHF 47.7mn in FY14

Restructured theorganization making itleaner and more efficientthrough reducingunneeded SG&A expenses

Headcount reduced byapprox. 4,000 FTE sinceyear-end 2012

Divestiture ofunderperforming assets(construction & lowincome housing)

Renegotiatedprocurement deals toreduce cost of goods soldin the hotels segment

Debt Reduction & Restructuring

Reduce total debt by CHF 92.1 mn (EGP 700 mn)

ODH sold 15% stake inOHD for CHF 64 mn &successfully sold 12.5% ofCMAR for CHF 9.9 mn,proceeds will directly go toservicing OHD’s debt

Rescheduled principal andinterest payments forOrascom Hotels andDevelopment

Negotiating an optimumdebt refinancing packagetaking into account graceperiod, pricing, tenor andcurrency mix expected to befinalized by the end of theyear

Focus on value-adding Investments

Divesting Non Core Assets

Red Sea Construction

Orascom HousingCommunities resultedin SG&A annualizedsavings of CHF 8.9 mn

CMAR, Club Med Hotelin Mauritius

12

Newly formed dedicated executive management team

ODH BOD endorsed a leaner organizational structure that better reflects the current business needs and supports therestructuring of the Group.

Manal Hussein AbdelRazek

20 years of experience inEgyptian government

CEO Egypt

Ahmed Dabbous

20 years of experience

Former CEO of SomaBay Egypt

CEO Oman

Darren Gibson

25 years of experience

Former VP of Planning& Development forEgyptian ResortCompany SAE

CEO Montenegro

Ihab Kamel (Ad interim)

13 years of experiencewithin ODH

CEO Morocco

Regional Heads

Abdelhamid Abouyoussef

Managing Partner of OrascomHotels Management

Former senior advisor to AmphorasHoliday Inn, Sharm El Sheikh

Chief Hotel Officer

Eskandar Tooma

Board Member

Former senior advisor to theEgyptian Capital Market Authorityand Ministry of Investment

Chief Financial Officer

Samih O. Sawiris

Founder and Chairman of theBoard of Directors

Chief Executive Officer

13






Agenda

14

ODH financial results back on track

56 59 65 57 60 57 56 52 53

020406080

2008 2009 2010 2011 2012 2013 2014 1H 2014 1H2015

Contracted sales (CHF mn)

TRevPAR (%) 1

8162

7656 57 51 51 44 51

0

50

100

2008 2009 2010 2011 2012 2013 2014 1H 2014 H1 2015

8169

87

57 61 51 48 40 49

0

50

100

2008 2009 2010 2011 2012 2013 2014 1H 2014 1H2015

336

136 173115

213

66 88 70

0

100

200

300400

2008 2009 2010 2011 2012 2013 2014 1H 2015

668

317 297152 204

265 182

0

200

400

600

800

2008 2009 2010 2011 2013 2014 1H 2015

2.63.2

4.4

5.36.9

2.5 2.62.3

0

2

4

6

8

2008 2009 2010 2011 2012 2013 2014 1H 2015

Number of units sold

Average selling price (CHF’000’/m2)

Occupancy rate (%)

Average room rate (CHF)

1 Total Revenue per available room

* Revenues and KPIs of Citadel Azur, five –stars hotel with 513 rooms was added back to ODH’s hotel portfolio in FY14, post the settlement reached with Falcon Hotels

15

-40-52

-81

105

37.9

2011 2012 2013 2014 1H 2015

57 45751 48 49

56% 57%

51% 51% 52%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

10

20

30

40

50

60

70

80

90

100

2011 2012 2013 2014 1H 2015

115

216

6688 70

5.26

2.34

2.52 2.632.38

0.00

10.00

20.00

30.00

-

100.0

200.0

300.0

2011 2012 2013 2014 1H 2015

182

ODH weathered through some turbulent times and is emerging strong after the storm…

* OHC was deconsolidated in 2014, and hence, was excluded from our figures retrospectively

…Translating into Enhanced Financial Performance

EBITDA(CHF mn)

Contracted Units, Average Selling Price(Units, CHF )1 TRevPar, Occupancy Rates

(CHF, %)

Number of Contracted Units

152 271 204 265

Average Price / sqm, CHF 000’s

Value of Contracted Units, CHF mn

With the recentpolitical stability,start of aneconomic recoveryin general andrevival of thetourism sector inparticular, ODHstarted benefitingthrough increasedReal Estate Sales &Hotel revenues

The Company’srestructuringefforts over thelast period arealready bearingthe fruits of itssuccess throughgenerally positivefinancial indicators

Revenue (CHF mn)

254 272221 251

165

2011 2012 2013 2014 1H 2015

TRevPAR Occupancy Rate

16

Outlook 2015

Promising 2015

results and outlook

Real Estate On track with the real estate target of CHF 121mn for FY15 El Gouna, Egypt, Launching new inventory of USD 50 million during 3Q and 4Q 15. Makadi, Egypt, signed two new contracts with an external developer for EGP 15 mn (CHF 1.8 mn) to manage the

destination’s existing retail outlets and build its club house facility. Fayoum, Egypt finalizing the construction of the sold villas, to be delivered in 1Q16 Lustica Bay, Montenergo, held the official launch party in August recognizing the successful completion &

handover of first 10 apartment buildings marking the destination’s start of operations, Revenues to be recognizedin 9M 2015

Jebel Sifah, Oman launching phase 1 of the Sifah Golf course

Hotels Finalizing construction of Byoum Hotels due to open in 1Q16 Finalizing constriction of Ancient Sands Hotel, EL Gouna, Al Fanar Hotel in Salalah, Oman and The Cove extension,

UAE. Properties schedule to launch between Dec15 and 1Q16 The preliminary occupancy readings in El Gouna are above 70% for April and within the 80% range for the hotels

in Other Red Sea Area.

Land Finalized a new sub-development deal with a real estate developer in Egypt for 100,000m2 in El Gouna for a total

value of USD 20 million

Corporate Negotiations with all lenders on the new debt refinancing. Expected to finalize by the end of the year.

Realistic 2015 objectives

Real estate: sales target of CHF 121 mn

Land sales: target one transaction in 2015 for an amount between USD 20-40 mn

17






Agenda

18

Establishment of land sales department

100.2 mn m2

total area

16.9mn m2

completed

68.4%undeveloped

Country Name Total 1 Completed Under construction Under development Undeveloped

Egypt El Gouna 36.9 9.0 5.5 1.2 21.2

Taba Heights 4.3 2.6 - - 1.7

Amoun Island 0.02 - - - 0.02

Fayoum 1.1 0.2 0.1 0.1 0.7

Makadi 3.4 0.5 - - 2.9

Haram City 2.6 1.9 0.3 0.3 0.2

Qena Gardens 0.8 - - - 0.8

U.A.E. The Cove 0.3 0.3 - - -

Oman Jebel Sifah 6.2 0.2 - 1.5 4.5

Salalah Beach 13.6 0.9 0.2 1.5 11.0

As Sodah Island 1.0 - - 0.8 0.2

City Walk 2 0.1 - - - 0.1

Switzerland Andermatt 1.5 1.3 - 0.1 0.1

Morocco Chbika 15.0 - - 3.0 12.0

Montenegro Luštica 6.9 - 0.1 0.3 6.5

UK Eco-Bos 6.5 - - - 6.5

Total 100.2 16.9 6.1 8.8 68.4

Newly adapted strategy, entering into sub-development agreements to accelerate the monetization of the land bank

Sub development agreements through sale of specific land plots where there are no development obligations or where the Group hasdeveloped infrastructure in order to sell the land. This establishes reference price points for our land bank.

Signed two sub-development agreements through OHD (Egyptian subsidiary) in El Gouna. First over 160,000 m2 for USD 375 per m2 andthe Second over 100,000 m2 for USD 200 per m2

19

Monetization of non-core assets

The Group owns some non-core assets that do not fall directly within the business model of operation, i.e. do not fallwithin a fully-fledged destination. Accordingly, ODH considers to divest those non-core assets and realize theirpotential gains

Assets for sale include:

47,240,000 shares in Egyptian Resorts Company (ERC), one of the most actively traded listed company on the EGX,value of which as of June 2015 is CHF 5.9 mn

Royal Azur & Club Azur, two hotels in the Red Sea Area. Orascom Development owns 60% of the holding companywith a book value of CHF 10.0 mn. The holding company includes

Royal Azur, a 5 star hotel with 491 rooms Club Azur, a 4 star hotel with 339 rooms

3,341,960 shares in Jordan Projects for Touristic Development (JPTD) listed on the Amman stock exchange , bookvalue of which is CHF 4.4 mn

Investments in the holding company of the Cove Rotana Hotel in Ras Al Khaimah (UAE), with a share in the companyof 73%, implying a book value of CHF 33.5 mn

Citadel Azur Hotel, 5- Star hotel with 513 rooms, close to Makadi, Egypt valued at CHF 56 mn

20

Corporate286

Hotels112

Advanced Negotiations For An Optimum Debt Refinancing Package

1 Figures are as of ODH Financial Statements of 1H 20152 Excludes Tamweel

Total Debt Breakdown by

Entity (CHF mn) 1

Total debt by currency

( %,) 1

Loans Runoff(CHF mn) 2

Net Debt Build-up

(CHF mn) 1

Management iscurrentlyundergoing arestructuringprogram in aneffort to de-leverOHD’s balancesheet down tonormalized levels

The Company isplanning to paydown ~EGP 700mn (CHF 92.1mn)of which thecompany hadalready paid EGP270 mn (CHF35.5mn) forcapitalized interestand past dues andis negotiating withbanks toreschedule EGP1,198 mn (CHF158mn) inoverdrafts

397

68

55 51 52

12 10 10 5 0

10

20

30

40

50

60

70

80

90

100

2015 2016 2017 2018 2019 2020 2021 2022

37%

40%

7%

16%

EGP USD EUR Others

130

172

95

68 465 102

363

-

50

100

150

200

250

300

350

400

450

500

Overdrafts LTD CPLTD Tamweel Total Debt Cash Net Debt

30.06.15 31.12.14

Weighted average cost of debt (%)1 7.3 7.6

21

225

172

78 18493

392

Short termdebt

Long termdebt

shareholdersloan

LandLiabilities

Total Debt Cash Net Debt

(101)1

240 56 296

OHD Net Debt Other Projects' Net Debt ODH Consolidated Net Debt

343

291247

96

0

50

100

150

200

250

300

350

400

ODH Market Cap OHD Market Cap ODH PropotionalteStake in OHD

Other Projects's Equityvalue

Net Debt Breakdown

by Entity (CHF mn)

ODH Net Debt

Build-up (CHF mn)

Equity Value

Analysis(CHF mn)

1

2 3

The Market Values ODH’s Other Projects at a Deep Discount to Book

These figures represent the net BV3 of each of ODH’s Other Projects, totaling CHF 458 mn. This implies a deep discount (CHF 362 mn) to the

equity value derived by the market

Other Projects’

Book Value

Other Projects’

Equity Value

Market Implied

Discount

Analysis of Current Market Prices Suggests that ODH’s Other Projects are Attractively Priced

202

87

5634

3615

14 14 458

96

362

1 Excludes debt held on Tamweel; the company’s leasing arm2 As of June 30th , 20153 Net BV represents equity value + quasi-equity; which are amounts due to ODH and expected to be capitalized at a later stage

4 This represents the total consideration at which Cape Citadel (a 5-star hotel on the Red Sea Coast) was priced according to a legal dispute between ODH and Falcon

2

22

Thank you

orascom development holding ag october 2015

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