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DGAP-Adhoc: Orascom Development Holding AG: 1H 2014: Orascom Development records a net profit of CHF 31.5 mn, despite continued pressure on Egypt's hotel operations.

August 25, 2014

Orascom Development Holding AG / Key word(s): Half Year Results/Half Year Results 26.08.2014 07:00 Release of an ad hoc announcement pursuant to Art. 53 KR --------------------------------------------------------------------------- Press Release 1H 2014: Orascom Development records a net profit of CHF 31.5 mn, despite continued pressure on Egypt's hotel operations. Orascom Development generated CHF 31.5 million in net profit attributable to shareholders of the company after a CHF 48.0 million loss in the comparable period. Key drivers of this result were significant overhead savings of CHF 20 million compared to FY 2012 cost base, strong real estate & construction revenues, compensating for a weaker hotel performance, one-off gains related to the settlement of the Falcon case and deconsolidation of OHC. The successful carve-out of the budget housing operations and construction segment in Egypt marks an important milestone in further reducing the Group's cost base. Altdorf/Cairo, 26 August 2014 - Orascom Development Holding AG's (Orascom Development) revenues increased in 1H 2014 by 2% to CHF 120.6 million (1H 2013: CHF 118.3 million), as strong Real Estate & Construction revenues compensated for a weaker hotel performance. The net profit attributable to shareholders of the company reached CHF 31.5 million after a CHF 48.0 million loss in the same period last year. The result was significantly impacted by delivering on the Group's cost savings initiatives by achieving CHF 20 million of overhead savings compared to FY 2012 cost base, one-off gains related to the settlement of the Falcon case (CHF 52.6 million) and the deemed loss of control of OHC and its subsidiaries (CHF 9.4 million). The adjusted EBITDA for the period was CHF 10.7 million (1H 2013: 1.6 million). Revenues in Real Estate & Construction segment more than doubled compared to prior year Revenues in the Real Estate & Construction segment significantly increased to CHF 49.5 million (1H 2013: CHF 22.3 million), equivalent to 41% of Group revenues. The increase is mainly a result of accelerated delivery of real estate units in Egypt (El Gouna, Ancient Sands and Makadi). The adjusted segment EBITDA increased to CHF 15.8 million (1H 2013: CHF -4.6 million). Contracted real estate sales increased to CHF 35.0 million (1H 2013: CHF 31.0 million), driven by a continued strong sales momentum in El Gouna and a positive contribution from Montenegro. In total, 403 units were sold at an average price of CHF 1,116/m2 including the budget housing segment. Hotels continued to suffer from travel restrictions on Egypt and inventory loss in Taba Heights during 1H 2014, with significant improvement being witnessed during 2H 2014. The hotel segment continued to suffer from travel bans to the Sinai Peninsula and general travel warnings on the Red Sea area issued by most Western European countries at the beginning of the year. In addition, flooding in May 2014 resulted in a 29% room capacity loss in Taba Heights. The average occupancy rate declined to 42% (1H 2013: 59%) and revenues slipped to CHF 48.8 million (1H 2013: CHF 72.0 million), equivalent to 40% of Group revenues. The adjusted segment EBITDA amounted to CHF 2.3 million (1H 2013: CHF 18.9 million). TRevPAR (Total Revenues per Available Room) declined to CHF 39 (1H 2013: CHF 60). On the positive side, the announced cost savings measures increased operational efficiency and resulted in an improved flow-through compared to 1H 2013, despite the significant decline in revenues. The Group expects a significant improvement in the hotels operations during the second half of the year. With the presidential inauguration in June 2014 and the upcoming parliamentary elections, the road to political reforms became clearer, which boosted international and domestic confidence in Egypt's stability. Accordingly, most travel bans were lifted towards the beginning of the second half of 2014, with occupancy rates rising in the weeks since. Moreover, the Egyptian Ministry of Finance is working on a stimulus package to promote private sector investments in select industries, including tourism. We also finished the restoration of 3 hotels in Taba Heights which are now fully operational and are finalizing the necessary works on the other 3 hotels which are expected to be operational by the end of the year. At the end of the reporting period, the Group operated 7,382 hotel rooms. Carve-out of budget housing operations and construction segment in Egypt successfully completed In June 2014Orascom Development successfully completed the carve-out of OHC and its subsidiaries, including Red Sea for Construction, the entity overseeing most of the construction activities in Egypt. Following a capital increase of OHC by CHF 22.3 million, in which Orascom Development did not participate, the Group's stake was diluted from 69.34% to 35.25% which resulted in a loss of control. Effective Q2 2014 the investment in OHC has been deconsolidated and is now classified as an investment in associates. The transaction led to a gain of CHF 9.4 million in Q2 2014 mainly due to the difference between fair value and carrying value of the residual interest in OHC. The OHC transaction significantly contributes to the Group's savings program by reducing contracted and non-contracted labor by about 2,500 FTE. Management expects first positive P&L effects to become visible in Q3 2014. Subsequent events In August 2014, a bulk deal was signed for the sale of 71 units within the newly launched Al Fanar project in Salalah Beach (Oman) for a total purchase price of OMR 6.9 million (c. CHF 16.3 million). According to the payment terms the Group will receive a 40% advance payment split over two tranches until September 15th, 2014 and the remaining 60% until November 30th, 2014. The first tranche with the value of CHF 0.5 million has already been received. In July 2014, the Group successfully closed the share sale of CMAR, the holding company of a Club Med hotel in Mauritius, to an US investment company. Settlement of the deal is pending final approval of the Prime Minister of Mauritius, which is expected to take between three to six months. In May 2014, the Group announced the signing of a Memorandum of Understanding (MoU) with Egyptian Resorts Company (ERC) to divest select non-core assets in Egypt. On 24 August 2014 this MoU expired as both parties did not reach a mutual agreement to continue with the transaction. The expiration of the MoU also terminates the exclusivity rights that were granted to ERC in connection with the agreement and releases both parties from any further obligations. Outlook for 2014 While 1H 2014 was materially impacted by the low performance of the hotel segment, Orascom Development is already witnessing improvements in its Egyptian hotel's operations. The Group should also be able to start recognizing revenue in Montenegro for the first real estate deliveries starting in either FY 2014 or Q1 2015. Apart from improving operational performance, debt reduction and restructuring remain the key topics to improve the current cash flow situation. That said the Group is at advanced discussions with its lenders to reschedule all commitments from March 2014 until the end of Q1 2015. Having sustained its full activities during the period of unrest through executing on its earlier communicated strategies, the management is now capitalizing on Egypt's improved economic and political outlook, making use of its strong hotel portfolio and real estate projects to boost the Group's performance. Key figures 1H 2014 (in CHF million) 1H 2014 1H 2013 Delta Total revenues 120.6 118.3 2.0% Gross Profit 16.3 5.1 219.6% Gross Profit-Margin (%) 13.5% 4.3% Net income / (loss) attributable to ODH 31.5 (48.0) shareholders shareholders Operating cash flow after interest/taxes (22.3) (40.6) Total assets1 1,631.3 1,672.7 (2.5)% Equity ratio (%)1 48.1% 45.5% 5.7% Net debt1 3 425.2 398.9 6.6% Adjusted EBITDA2 10.7 1.6 568.8% 1 For 2013 as per 31 December 2013 2 EBITDA adjusted for discontinued operations and non-cash items 3 Includes borrowings and cash of disposal groups Financial statements and presentation The associated financial statements and presentation can be found on Orascom Developments' website www.orascomdh.com under the Investor Relations section. Telephone conference today at 1:30 pm CET A telephone conference for analysts and investors will be held in English today at 1:30 pm CET. CEO Samih O. Sawiris, CFO Eskandar Tooma and Chief Hotel Officer Abdelhamid Abouyoussef will present the 1H 2014 results and will be available to answer questions. A registration is not required. Dial-in details are as follows: - Password: 49950580 - International: +44 1452 555 566 - Switzerland Toll Free: 0800 828 006 - Egypt Toll Free: 0800 000 0318 - UK Toll Free: 0800 694 0257 - US Toll Free: 1866 966 9439 A replay of the conference call will be available for one week with the following dial in details: - Access Code: 49950580 - International Replay #: +44 1452 550 000 - UK Local Call Replay #: 08717 000 145 - USA Toll Free Replay#: 1866 247 42 22 About Orascom Development Holding AGOrascom Development is a leading developer of fully integrated destinations that include hotels, private villas and apartments, leisure facilities such as golf courses, marinas and supporting infrastructure. Orascom Development's diversified portfolio of destinations is spread over eight jurisdictions (Egypt, UAE, Jordan, Oman, Switzerland, Morocco, Montenegro and United Kingdom), with primary focus on touristic destinations and budget housing. The Group currently operates eight destinations; four in Egypt El Gouna, Taba Heights, Haram City and Makadi, The Cove in United Arab Emirates , Jebel Sifah and Salalah Beach in Oman and Andermatt in Switzerland. Orascom Development has a dual listing, with a primary listing on the SIX Swiss Exchange and a secondary listing on the EGX Egyptian Exchange. Contact for Investors: Sara El Gawahergy Director of Investor Relations Tel: +20 224 61 89 61 Tel: +41 418 74 17 11 Email: ir@orascomdh.com Contact Media Relations media@orascomdh.com Disclaimer & Cautionary Statement The information contained in this e-mail, its attachment and in any link to our website indicated herein is not for use within any country or jurisdiction or by any persons where such use would constitute a violation of law. If this applies to you, you are not authorized to access or use any such information. Certain statements in this e-mail and the attached news release may be forward-looking statements, including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Forward-looking statements include statements regarding our targeted profit improvement, return on equity targets, expense reductions, pricing conditions, dividend policy and underwriting claims improvements. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and Orascom Development Holding AG's plans and objectives to differ materially from those expressed or implied in the forward looking statements (or from past results). Factors such as (i) general economic conditions and competitive factors, particularly in our key markets; (ii) performance of financial markets; (iii) levels of interest rates and currency exchange rates; and (vii) changes in laws and regulations and in the policies of regulators may have a direct bearing on Orascom Development Holding AG's results of operations and on whether Orascom Development Holding AG will achieve its targets. Orascom Development Holding AG undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise. It should further be noted, that past performance is not a guide to future performance. Please also note that interim results are not necessarily indicative of the full-year results. Persons requiring advice should consult an independent adviser. 26.08.2014 News transmitted by EQS Schweiz AG. The issuer is responsible for the contents of the release. EQS publishes regulatory releases, media releases on the capital market and press releases. The EquityStory Group distributes authentic and real-time financial news for over 1'300 listed companies. The Swiss news archive can be found at www.equitystory.ch/news --------------------------------------------------------------------------- Language: English Company: Orascom Development Holding AG Gotthardstraße 12 6460 Altdorf Switzerland Phone: +41 41 874 17 17 Fax: +41 41 874 17 07 E-mail: ir@orascomdh.com Internet: www.orascomdh.com ISIN: CH0038285679 Valor: A0NJ37 Listed: SIX End of Announcement EQS Group News-Service ---------------------------------------------------------------------------


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